SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[X] Preliminary Proxy Statement [_] Confidential, For Use of the
Commission Only (As Permitted by Rule 14a-6(e)(2))
</TABLE>
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
VIANET TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid 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>
VIANET TECHNOLOGIES, INC.
83 Mercer Street
New York, New York 10012
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 1, 2000
New York, New York
May 15, 2000
The Annual Meeting of Stockholders (the "Annual Meeting") of Vianet
Technologies, Inc., a Nevada corporation (the "Company"), will be held at the
Dallas Marriott Quorom, 14901 Dallas Parkway, Dallas, Texas 75240 on June 1,
2000 at 10:00 AM (local time) for the following purposes:
1. To elect six directors to the Corporation's Board of Directors, each to
hold office until his successor is elected and qualified or until his earlier
resignation or removal (Proposal No. 1);
2. To approve the adoption of a classified board of directors with
staggered terms (Proposal No. 2);
3. To approve an amendment to the Company's Articles of Incorporation to
authorize a class of preferred stock to be designated by the Board of Directors
(Proposal No. 3);
4. To approve the Company's 1999 Employee Stock Option Plan and to reserve
up to 5,000,000 shares of Common Stock for issuance thereunder (Proposal No. 4);
5. To approve a change in the state of incorporation of the Company from
the state of Nevada to the state of Delaware (Proposal No. 5);
6. To consider and act upon a proposal to ratify the Board of Directors'
selection of Edward A. Isaacs & Company LLP as the Corporation's independent
auditors for the fiscal year ending December 31, 2000 (Proposal No. 6); and
7. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
The foregoing items of business, including the nominees for directors,
are more fully described in the Proxy Statement which is attached and made a
part of this Notice.
The Board of Directors has fixed the close of business on May 3, 2000
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournment or postponement thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you expect to attend the Annual Meeting in
person, you are urged to mark, date, sign and return the enclosed proxy card as
promptly as possible in the postage-prepaid envelope provided to ensure your
representation and the presence of a quorum at the Annual Meeting. If you send
in your proxy card and then decide to attend the Annual Meeting to vote your
shares in person, you may still do so. Your proxy is revocable in accordance
with the procedures set forth in the Proxy Statement.
By Order of the Board of Directors,
/s/ Elizabeth Disiere
Elizabeth Disiere
Secretary
IMPORTANT
---------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. IF A QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED EXPENSE OF
RE-ISSUING THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND SO DESIRE, YOU
MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY
<PAGE>
VIANET TECHNOLOGIES, INC.
83 Mercer Street
New York, New York 10012
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of Vianet Technologies, Inc., a Nevada
corporation (the "Company"), of proxies in the enclosed form for use in voting
at the Annual Meeting of Stockholders (the "Annual Meeting") to be held at the
Dallas Marriott Quorom, 14901 Dallas Parkway, Dallas, Texas 75240 on June 1,
2000 at 10:00 AM (local time), and any adjournment or postponement thereof. Only
holders of record of the Company's common stock, $.001 par value per share (the
"Common Stock"), on May10, 2000 (the "Record Date") will be entitled to vote at
the Meeting. At the close of business on the Record Date, the Company had
outstanding 22,544,195 shares of Common Stock.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to its exercise. Any proxy given is revocable
prior to the Meeting by an instrument revoking it or by a duly executed proxy
bearing a later date delivered to the Secretary of the Company. Such proxy is
also revoked if the stockholder is present at the Meeting and elects to vote in
person.
The Company will bear the entire cost of preparing, assembling,
printing and mailing the proxy materials furnished by the Board of Directors to
stockholders. Copies of the proxy materials will be furnished to brokerage
houses, fiduciaries and custodians to be forwarded to the beneficial owners of
the Common Stock. In addition to the solicitation of proxies by use of the mail,
some of the officers, directors and regular employees of the Company may
(without additional compensation) solicit proxies by telephone or personal
interview, the costs of which the Company will bear.
This Proxy Statement and the accompanying form of proxy is being sent
or given to stockholders on or about May 15, 2000.
Stockholders of the Company's Common Stock are entitled to one vote for
each share held. Such shares may not be voted cumulatively.
Each validly returned proxy (including proxies for which no specific
instruction is given) which is not revoked will be voted "FOR" each of the
proposals as described in this Proxy Statement and, at the proxy holders'
discretion, on such other matters, if any, which may come before the Meeting
(including any proposal to adjourn the Meeting).
Determination of whether a matter specified in the Notice of Annual
Meeting of Stockholders has been approved will be determined as follows. Those
persons will be elected directors who receive a plurality of the votes cast at
the Meeting in person or by proxy and entitled to vote on the election.
Accordingly, abstentions or directions to withhold authority will have no effect
on the outcome of the vote. For each other matter specified in the Notice of
Annual Meeting of Stockholders, the affirmative vote of a majority of the shares
of Common Stock present at the Meeting in person or by proxy and entitled to
vote on such matter is required for approval. Abstentions will be considered
shares present in person or by proxy and entitled to vote and, therefore, will
have the effect of a vote against the matter. Broker non-votes will be
considered shares not present for this purpose and will have no effect on the
outcome of the vote. Directions to withhold authority to vote for directors,
abstentions and broker non-votes will be counted for purposes of determining
whether a quorum is present for the Meeting.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
At the Annual Meeting, the stockholders will elect six (6) directors to
serve until the next Annual Meeting of Stockholders or until their respective
successors are elected and qualified. In the event any nominee is unable or
unwilling to serve as a director at the time of the Annual Meeting, the proxies
may be voted for the balance of those nominees named and for any substitute
nominee designated by the present Board or the proxy holders to fill such
vacancy, or for the balance of the nominees named without nomination of a
substitute, or the size of the Board may be reduced in accordance with the
Bylaws of the Company. The Board has no reason to believe that any of the
persons named below will be unable or unwilling to serve as a nominee or as a
director if elected.
Assuming a quorum is present, the six nominees receiving the highest
number of affirmative votes of shares entitled to be voted for them will be
elected as directors of the Company for the ensuing year. Unless marked
otherwise, proxies received will be voted "FOR" the election of each of the six
nominees named below. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such a manner as will ensure the election of as many of the nominees
listed below as possible, and, in such event, the specific nominees to be voted
for will be determined by the proxy holders.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Jeremy T.G. Posner 54 Chairman of the Board
Peter Leighton 47 President, CEO and Director
Robert H. Bailey 57 Director
Darrell J. Elliott 53 Director
Timothy P. Sullivan 58 Director
F. Paul Whitlock 59 Director
</TABLE>
The following information with respect to the principal occupation or
employment of each nominee for director, the principal business of the
corporation or other organization in which such occupation or employment is
carried on, and such nominee's business experience during the past five years,
has been furnished to the Company by the respective director nominees:
Jeremy Posner is a co-founder of Vianet and has been the Chairman of the
company since its inception. From 1988 to 1997, Mr. Posner was a Senior Vice
President and Director of Intelect Communications Inc. Prior to joining
Intelect, Mr. Posner headed an international investment group where he assisted
emerging companies, raised venture capital and provided management consulting
services. Mr. Posner holds an MBA from York University, Toronto Canada, and a
Bachelor of Laws degree from the University of Birmingham, England.
Peter Leighton is a co-founder of Vianet and has been President and Chief
Executive Officer of the company since its inception. From 1989 to 1997, he was
the Chief Executive Officer of Intelect Communications, Inc. He has over fifteen
years of experience working with companies in the US, Europe and South America.
Mr. Leighton is a member of the Canadian Institute of Chartered Accountants and
has a B.Sc. Engineering Science degree from Exeter University in England.
Robert H. Bailey has been a Director of Vianet since March 1999. For more
than ten years, Mr. Bailey has been Vice President of AMS Planning & Research
Corp., a consulting firm to the arts and entertainment industry, providing
capital facility development planning, market research and strategic consulting
services. He obtained a Bachelor of Science degree from the University of
British Columbia and an MBA from York University, Toronto Canada.
Darrell Elliott has been a Director of Vianet since March 1999. Mr. Elliott
is Senior Vice President for MDS Capital Corp and President of MDS Ventures
Pacific Inc. Prior to August 1998 he worked for approximately nine years with
Royal Bank Capital Corporation as Regional Vice President. Mr. Elliott obtained
a B.A. (Hons) Economics degree from the University of South Africa (Pretoria)
and has over 27 years of merchant banking, venture capital and related business
operations experience.
<PAGE>
Timothy P. Sullivan is standing for election as a Director of Vianet for
the first time. Mr. Sullivan is currently Vice President and General Manager,
Optical Area Networking for Lucent Technologies, Inc. Previously he held senior
management positions with Connectware, Inc., Nortel and IBM. Mr. Sullivan has a
BSEE degree from the University of Notre Dame, South Bend, Indiana.
F. Paul Whitlock has been a Director of Vianet since March 1999. Mr.
Whitlock is the founder and Director of NetGain Consulting Limited, a UK based
firm providing management consulting and project management services to the
telecommunications industry. He previously held a series of senior
telecommunications and information technology management positions with Nortel
Networks in Europe and The Plessey Company. Mr. Whitlock gained a Bachelors
Degree in Electrical Engineering from Sheffield University, England and an MBA
from York University, Toronto Canada.
No director or executive officer of the Company has any family relationship
with any other director or executive officer of the Company.
Directors serve until the next annual meeting of stockholders or until
their successors are elected and qualified. Officers serve at the discretion of
the Board of Directors.
Notwithstanding the foregoing, in the event that Proposal No. 2 is
approved, the Board of Directors would be divided into three classes, designated
Class I, Class II and Class III. Any director in Class I will hold office until
the first annual meeting of stockholders following the 2000 annual meeting; any
director in Class II will hold office until the second annual meeting of
stockholders following the 2000 annual meeting; and any director in Class III
will hold office until the third annual meeting of stockholders following the
2000 annual meeting; and, in each case, until their successors are duly elected
and qualified or until their earlier resignation, removal from office or death.
As a result, only one class of directors will be elected at each subsequent
annual meeting of stockholders, with the remaining classes continuing their
respective three-year terms.
If Proposal No. 2 is adopted, the directors of the Company, will be divided
into classes as follows:
STANDING FOR ONE YEAR TERMS:
Peter Leighton
Timothy P. Sullivan
STANDING FOR TWO YEAR TERMS:
Robert H. Bailey
Darrell J. Elliot
STANDING FOR THREE YEAR TERMS:
Jeremy Posner
F. Paul Whitlock
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1999, the Board of Directors
of the Corporation held six (6) meetings and acted by unanimous written consent
on fourteen (14) occasions. All directors attended all of the meetings of the
Board of Directors during the last fiscal year.
The Board of Directors has an Audit Committee and a Compensation
Committee. The Audit Committee is composed of three directors, Messrs. Bailey,
Elliott and Whitlock. The Audit Committee is responsible for (a) recommending
the engagement and termination of the independent public accountants to audit
the financial statements of the Company, (b) overseeing the scope of the
external audit services, (c) reviewing adjustments recommended by the
independent public accountant and address disagreements between the independent
public accountants and management, (d) reviewing the adequacy of internal
controls and management's handling of identified material inadequacies and
reportable conditions in the internal controls over financial reporting and
compliance with laws and regulations, and (e) supervises the internal audit
function, which may include approving the selection, compensation and
termination of internal auditors. The Audit Committee met two (2) times during
the last fiscal year.
The Compensation Committee consists of three directors, Messrs. Bailey,
Elliott and Whitlock. The Committee is responsible for overseeing the
compensation of the executive officers and directors, including annual executive
salaries, bonuses and cash incentives and long-term equity incentives, to ensure
that such officers and directors receive adequate and fair compensation. The
Compensation Committee also administers the Company's stock option plans. The
Compensation Committee met two (2) times during the last fiscal year.
The Board does not have a nominating committee or a committee
performing the functions of a nominating committee. Although there are no formal
procedures for stockholders to nominate persons to serve as directors, the Board
will consider nominations from stockholders, which should be addressed to
Elizabeth Disiere at the Company's address set forth above.
COMPENSATION OF DIRECTORS
Directors currently each receive a cash fee of $12,000 per annum for
services provided in that capacity and are reimbursed for reasonable
out-of-pocket expenses incurred in connection with attendance at meetings of the
Board or any committee thereof they attend. During the 1999 fiscal year, Mssrs.
Bailey, Elliott and Whitlock were each granted 20,000 shares of Common Stock and
40,000 options to purchase shares of Common Stock as compensation for their
services as directors of the Company.
The proxy holders intend to vote the shares represented by proxies for
all of the board's nominees, except to the extent authority to vote for the
nominees is withheld.
RECOMMENDATION OF THE BOARD:
---------------------------
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE.
<PAGE>
PROPOSAL NO. 2
ADOPTION OF CLASSIFIED BOARD OF DIRECTORS
The Company does not currently have a classified board of directors.
The directors of the Nevada Company are set forth in Proposal One.
Nevada law permits, but does not require, the adoption of a classified
board of directors with staggered terms. A maximum of three classes of directors
is permitted by Nevada law, with members of one class to be elected each year
for a maximum term of three years. Classification of the Board of Directors
might make it more difficult for a person acquiring shares to take immediate
control of the Board of Directors. If this proposal is approved, the Company's
Certificate of Incorporation and Nevada Bylaws will be amended to provide for a
classified Board of Directors with three classes of directors (the "Classified
Board Provision").
Under the Classified Board Provision, the Board of Directors would be
divided into three classes, designated Class I, Class II and Class III. Any
director in Class I will hold office until the first annual meeting of
stockholders following the 2000 annual meeting; any director in Class II will
hold office until the second annual meeting of stockholders following the 2000
annual meeting; and any director in Class III will hold office until the third
annual meeting of stockholders following the 2000 annual meeting; and, in each
case, until their successors are duly elected and qualified or until their
earlier resignation, removal from office or death. As a result, only one class
of directors will be elected at each subsequent annual meeting of stockholders,
with the remaining classes continuing their respective three-year terms.
If this Proposal is adopted, the directors of the Company will be
divided into classes as follows:
STANDING FOR ONE YEAR TERMS:
Peter Leighton
Timothy P. Sullivan
STANDING FOR TWO YEAR TERMS:
Robert H. Bailey
Darrell J. Elliot
STANDING FOR THREE YEAR TERMS:
Jeremy Posner
F. Paul Whitlock
By approving Proposal Two, stockholders will be approving the
Classified Board Provision, the election of the same directors as would be
elected to the Board of Directors of the Company in the event Proposal One is
approved by the stockholders, and the initial classification of directors set
forth above.
Classification of directors is likely to provide the Board of Directors
with greater continuity and experience, since normally at least one member of
the Board of Directors would be in such member's second year of service and at
least one member of the Board of Directors would be in such member's third year
of service. Although the Board of Directors is not aware of any problems
experienced by the Company in the past with respect to continuity and stability
of leadership and policy, the Board of Directors believes that a classified
Board of Directors could decrease the likelihood of such problems arising in the
future.
Adoption of the Classified Board Provision may significantly extend the
time required to elect a new majority to the Board of Directors. Presently, the
Nevada Articles allow a change in control of the Board of Directors by a
majority of the Company's stockholders at a single annual meeting or special
meeting of stockholders. With the Classified Board Provision, unless directors
are removed, it will require at least two annual meetings of stockholders for a
majority of stockholders that is less than a two-thirds majority to make a
change in control of the Board of Directors, since only a minority of the
directors will be elected at each meeting. A significant effect of a classified
Board of Directors may be to deter hostile takeover attempts because an acquirer
would experience delay in replacing a majority of the directors. However, a
classified Board of Directors will also make it more difficult for stockholders
to effect a change in control of the Board of Directors, even if such a change
in control is sought due to dissatisfaction with the performance of the
Company's directors.
The existence of a classified Board may deter so-called "creeping
acquisitions" in which a person or group seeks to acquire: (i) a controlling
position without paying a normal control premium to the selling stockholders;
(ii) a position sufficient to exert control over the Company through a proxy
contest or otherwise; or (iii) a block of stock with a view toward attempting to
promote a sale or liquidation or a repurchase by the Company of the block at a
premium, or an exchange of the block for assets of the Company. Faced with a
classified Board of Directors, such a person or group would have to assess
carefully its ability to control or influence the Company. Furthermore, the
ability of the incumbent Board of Directors to respond appropriately to a
creeping acquisition will be strengthened. If free of the necessity to act in
response to an immediately threatened change in control, the Board of Directors
can act in a more careful and deliberative manner to make and implement
appropriate business judgments in response to a creeping acquisition.
RECOMMENDATION OF THE BOARD:
---------------------------
THE BOARD RECOMMENDS A VOTE FOR ADOPTION OF A CLASSIFIED BOARD OF DIRECTORS.
<PAGE>
PROPOSAL NO. 3
AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION TO AUTHORIZE A CLASS
OF PREFERRED STOCK TO BE DESIGNATED BY THE BOARD OF DIRECTORS
The Board of Directors of the Company has unanimously determined that it is
advisable and in the best interest of the Company to amend the Company's
Articles of Incorporation to authorize 10,000,000 shares of preferred stock to
be designated by the Board of Directors. Attached as Exhibit A and incorporated
herein by reference is the text of the proposed amendment to the Articles of
Incorporation.
The Company currently has no authorized stock other than Common Stock. If this
proposal is approved, the Board of Directors will be entitled to issue up to
10,000,000 shares of "blank check" preferred stock in one or more series for
such consideration and on such terms as the Board of Directors determines in its
sole discretion, without further authorization by the Company's stockholders.
The term "blank check" preferred stock refers to stock for which the
designations, preferences, conversion rights, dividend rights, voting rights,
redemption prices, maturity dates and similar matters are determined by the
Board of Directors.
The Board of Directors believes that it is advisable to authorize the preferred
stock and have it available for issuance in connection with possible future
transactions, such as financings and acquisitions. "Blank check" preferred stock
allows the Company greater flexibility than Common Stock in financings and
acquisitions because the Company can more precisely satisfy the financial
criteria of any investor or acquisition candidate.
The Company currently has no arrangements, understandings or commitments with
respect to the issuance of any of the preferred stock. There will not be any
statutory preemptive rights with respect to the preferred stock.
Although the Board of Directors has no present intention of doing so, it could
issue shares of preferred stock (within the limits imposed by applicable law)
that could make more difficult of discourage an attempt to obtain control of the
Company by means of a merger, tender offer, proxy contest or other means. The
issuance of preferred stock could be used to create voting or other impediments
or to discourage persons seeking to gain control of the Company by selling
preferred stock to purchasers favorable to the Board of Directors. In addition,
the Board of Directors could issue a series of preferred stock which entitles
the holders to vote either separately as a class or with the holders of Common
Stock, on any merger, sale or exchange of assets by the Company or any other
extraordinary corporate transaction. The issuance of a series of preferred stock
could be used to dilute the stock ownership of a person or entity seeking to
obtain control of the Company should the Board of Directors consider the action
of such entity or person to not be in the best interest of the stockholders and
the Company. Such issuance of preferred stock could also have the effect of
diluting the earnings per share and book value per share of the Common Stock.
Accordingly, this proposal to amend the Articles of Incorporation may be deemed,
under certain circumstances which may or may not occur, to be an anti-takeover
measure. However, this proposal is not being presented as, and it is not part
of, any plan to adopt a series of anti-takeover measures.
RECOMMENDATION OF THE BOARD:
---------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENT OF THE
COMPANY'S ARTICLES OF INCORPORATION TO AUTHORIZE A CLASS OF PREFERRED STOCK.
<PAGE>
PROPOSAL NO. 4
APPROVAL OF THE 1999 EMPLOYEE STOCK OPTION PLAN
At the Annual Meeting, the Company's stockholders are being asked to
approve the 1999 Employee Stock Option Plan (the "1999 Option Plan"), as
amended, and to authorize 5,000,000 shares of Common Stock for issuance
thereunder. The following is a summary of principal features of the 1999 Option
Plan. The summary, however, does not purport to be a complete description of all
the provisions of the 1999 Option Plan. Attached as Exhibit A and incorporated
herein by reference is the text of the 1999 Employee Stock Option Plan.
GENERAL
The 1999 Option Plan was adopted by the Board of Directors in March
1999, and provided for the issuance of up to 2,000,000 options. In February
2000, the Board of Directors approved an amendment to the 1999 Option Plan to
increase the number of options available for grant to 5,000,000. The Board of
Directors has reserved 5,000,000 shares of Common Stock for issuance under the
1999 Option Plan.
Over the period from March 1, 1999, to the date of this Proxy, the
Company has granted options to purchase an aggregate of 1,167,000 shares of
Common Stock under the 1999 Option Plan, including options to purchase a total
of 760,000 shares of Common Stock issued to officers and directors of the
Company. The following table sets forth the number of options granted to the
Company's officers and directors under the 1999 Option Plan:
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF OPTION SHARES
<S> <C>
Peter Leighton, President, Chief
Executive Officer and Director 200,000
Jeremy T.G. Posner, Chairman 200,000
Bruce Arnstein, Chief Operating Officer 150,000
Vincent Santivasci, Chief Financial Officer 50,000
Elizabeth Disiere, Secretary 40,000
Darrell Elliott, Director 40,000
Robert Bailey, Director 40,000
Paul Whitlock, Director 40,000
</TABLE>
Under the Plan, options may be granted which are intended to qualify as
Incentive Stock Options ("ISOs") under Section 422 of the Internal Revenue Code
of 1986 (the "Code") or which are not ("Non-ISOs") intended to qualify as
Incentive Stock Options thereunder. The 1999 Option Plan and the right of
participants to make purchases thereunder are intended to qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"). The 1999 Option Plan is not a qualified deferred
compensation plan under Section 401(a) of the Internal Revenue Code and is not
subject to the provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
PURPOSE
The primary purpose of the 1999 Option Plan is to attract and retain
the best available personnel for the Company in order to promote the success of
the Company's business and to facilitate the ownership of the Company's stock by
employees. The ability of a company to offer a generous stock option program has
now become a standard feature in the industry in which the company operates. In
the event that the 1999 Option Plan is not adopted the Company may have
considerable difficulty in attracting and retaining qualified personnel,
officers, directors and consultants.
<PAGE>
ADMINISTRATION
The 1999 Option Plan, is administered by the Company's Board of
Directors, as the Board of Directors may be composed from time to time. All
questions of interpretation of the 1999 Option Plan are determined by the Board,
and its decisions are final and binding upon all participants. Any determination
by a majority of the members of the Board of Directors at any meeting, or by
written consent in lieu of a meeting, shall be deemed to have been made by the
whole Board of Directors.
Notwithstanding the foregoing, the Board of Directors may at any time,
or from time to time, appoint a committee (the "Committee") of at least two
members of the Board of Directors, and delegate to the Committee the authority
of the Board of Directors to administer the Plan. Upon such appointment and
delegation, the Committee shall have all the powers, privileges and duties of
the Board of Directors, and shall be substituted for the Board of Directors, in
the administration of the Plan, subject to certain limitations.
Members of the Board of Directors who are eligible employees are
permitted to participate in the 1999 Option Plan, provided that any such
eligible member may not vote on any matter affecting the administration of the
1999 Option Plan or the grant of any option pursuant to it, or serve on a
committee appointed to administer the 1999 Option Plan. In the event that any
member of the Board of Directors is at any time not a "disinterested person", as
defined in Rule 16b-3(c)(3)(i) promulgated pursuant to the Securities Exchange
Act of 1934, the Plan shall not be administered by the Board of Directors, and
may only by administered by a Committee, all the members of which are
disinterested persons, as so defined.
ELIGIBILITY
Under the 1999 Option Plan, options may be granted to key employees,
officers, directors or consultants of the Company, as provided in the 1999
Option Plan.
TERMS OF OPTIONS
The term of each Option granted under the Plan shall be contained in a
stock option agreement between the Optionee and the Company and such terms shall
be determined by the Board of Directors consistent with the provisions of the
Plan, including the following:
(a) Purchase Price. The purchase price of the Common Shares subject to each
ISO shall not be less than the fair market value, or in the case of the
grant of an ISO to a Principal Stockholder, not less that 110% of fair
market value of such Common Shares at the time such Option is granted.
The purchase price of the Common Shares subject to each Non-ISO shall
be determined at the time such Option is granted, but in no case less
than 85% of the fair market value of such Common Shares at the time
such Option is granted.
(b) Vesting. The dates on which each Option (or portion thereof) shall be
exercisable and the conditions precedent to such exercise, if any,
shall be fixed by the Board of Directors, in its discretion, at the
time such Option is granted.
(c) Expiration. The expiration of each Option shall be fixed by the Board
of Directors, in its discretion, at the time such Option is granted;
however, unless otherwise determined by the Board of Directors at the
time such Option is granted, an Option shall be exercisable for ten
(10) years after the date on which it was granted (the "Grant Date").
Each Option shall be subject to earlier termination as expressly
provided in the 1999 Option Plan or as determined by the Board of
Directors, in its discretion, at the time such Option is granted.
(d) Transferability. No Option shall be transferable, except by will or the
laws of descent and distribution, and any Option may be exercised
during the lifetime of the Optionee only by him. No Option granted
under the Plan shall be subject to execution, attachment or other
process.
(e) Option Adjustments. The aggregate number and class of shares as to
which Options may be granted under the Plan, the number and class
shares covered by each outstanding Option and the exercise price per
share thereof (but not the total price), and all such Options, shall
each be proportionately adjusted for any increase decrease in the
number of issued Common Shares resulting from split-up spin-off or
consolidation of shares or any like Capital adjustment or the payment
of any stock dividend.
<PAGE>
Except as otherwise provided in the 1999 Option Plan, any Option
granted hereunder shall terminate in the event of a merger,
consolidation, acquisition of property or stock, separation,
reorganization or liquidation of the Company. However, the Optionee
shall have the right immediately prior to any such transaction to
exercise his Option in whole or in part notwithstanding any otherwise
applicable vesting requirements.
(f) Termination, Modification and Amendment. The 1999 Option Plan (but not
Options previously granted under the Plan) shall terminate ten (10)
years from the earlier of the date of its adoption by the Board of
Directors or the date on which the Plan is approved by the affirmative
vote of the holders of a majority of the outstanding shares of capital
stock of the Company entitled to vote thereon, and no Option shall be
granted after termination of the Plan. Subject to certain restrictions,
the Plan may at any time be terminated and from time to time be
modified or amended by the affirmative vote of the holders of a
majority of the outstanding shares of the capital stock of the Company
present, or represented, and entitled to vote at a meeting duly held in
accordance with the applicable laws of the State of Nevada.
STOCK APPRECIATION RIGHTS
The 1999 Option Plan also permits the granting of one or more Stock
Appreciation Rights to eligible participants. Such Stock Appreciation Rights may
be granted either independent of or in tandem with Options granted to the same
participant. Stock Appreciation Rights granted in tandem with Options may be
granted simultaneously with, or, in the case of Non-Qualified Stock Options,
subsequent to, the grant to the participant of the related Options; provided,
however, that: (i) any Option shall expire and not be exercisable upon the
exercise of any Stock Appreciation Right with respect to the same share, (ii)
any Stock Appreciation Right shall expire and not be exercisable upon the
exercise of any Option with respect to the same share, and (iii) an Option and a
Stock Appreciation Right covering the same share of Common Stock may not be
exercised simultaneously. Upon exercise of a Stock Appreciation Right with
respect to a share of Common Stock, the participant shall be entitled to receive
an amount equal to the excess, if any, of (A) the fair market value of a share
of Common Stock on the date of exercise over (B) the exercise price of such
Stock Appreciation Right.
FEDERAL INCOME TAX ASPECTS OF THE 1999 OPTION PLAN
THE FOLLOWING IS A BRIEF SUMMARY OF THE EFFECT OF FEDERAL INCOME
TAXATION UPON THE PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE PURCHASE OF
SHARES UNDER THE 1999 OPTION PLAN. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE
AND DOES NOT ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES TO TAXPAYERS WITH
SPECIAL TAX STATUS. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE PROVISIONS OF
THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
PARTICIPANT MAY RESIDE, AND DOES NOT DISCUSS ESTATE, GIFT OR OTHER TAX
CONSEQUENCES OTHER THAN INCOME TAX CONSEQUENCES. THE COMPANY ADVISES EACH
PARTICIPANT TO CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES
OF PARTICIPATION IN THE 1999 OPTION PLAN AND FOR REFERENCE TO APPLICABLE
PROVISIONS OF THE CODE.
The 1999 Option Plan and the right of participants to make purchases
thereunder are intended to qualify under the provisions of Sections 421, 422 and
423 of the Code. Under these provisions, no income will be recognized by a
participant prior to disposition of shares acquired under the 1999 Option Plan.
If the shares are sold or otherwise disposed of (including by way of
gift) more than two years after the first day of the offering period during
which shares were purchased (the "Offering Date"), a participant will recognize
as ordinary income at the time of such disposition the lesser of (a) the excess
of the fair market value of the shares at the time of such disposition over the
purchase price of the shares or (b) 15% of the fair market value of the shares
on the first day of the offering period. Any further gain or loss upon such
disposition will be treated as long-term capital gain or loss. If the shares are
sold for a sale price less than the purchase price, there is no ordinary income
and the participant has a capital loss for the difference.
If the shares are sold or otherwise disposed of (including by way of
gift) before the expiration of the two-year holding period described above, the
excess of the fair market value of the shares on the purchase date over the
purchase price will be treated as ordinary income to the participant. This
excess will constitute ordinary income in the year of sale or other disposition
even if no gain is realized on the sale or a gift of the shares is made. The
balance of any gain or loss will be treated as capital gain or loss and will be
treated as long-term capital gain or loss if the shares have been held more than
one year.
<PAGE>
In the case of a participant who is subject to Section 16(b) of the
Exchange Act, the purchase date for purposes of calculating such participant's
compensation income and beginning of the capital gain holding period may be
deferred for up to six months under certain circumstances. Such individuals
should consult with their personal tax advisors prior to buying or selling
shares under the 1999 Option Plan.
The ordinary income reported under the rules described above, added to
the actual purchase price of the shares, determines the tax basis of the shares
for the purpose of determining capital gain or loss on a sale or exchange of the
shares.
The Company is entitled to a deduction for amounts taxed as ordinary
income to a participant only to the extent that ordinary income must be reported
upon disposition of shares by the participant before the expiration of the
two-year holding period described above.
RESTRICTIONS ON RESALE
Certain officers and directors of the Company may be deemed to be
"affiliates" of the Company as that term is defined under the Securities Act.
The Common Stock acquired under the 1999 Option Plan by an affiliate may be
reoffered or resold only pursuant to an effective registration statement or
pursuant to Rule 144 under the Securities Act or another exemption from the
registration requirements of the Securities Act.
RECOMMENDATION OF THE BOARD:
---------------------------
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE 1999 EMPLOYEE STOCK OPTION PLAN.
<PAGE>
PROPOSAL NO. 5
REINCORPORATION FROM NEVADA TO DELAWARE
The Board of Directors of the Company has approved a proposal to change
the Company's state of incorporation from Nevada to Delaware. The primary
purpose of this reincorporation is to allow the Company to benefit from
Delaware's well-developed corporate law.
PRINCIPAL REASONS FOR THE REINCORPORATION
The primary reason for the Board's recommendation of the
reincorporation is the well-developed case law interpreting the state of
Delaware General Corporate Law ("Delaware GCL"), which the Board believes will
allow it to more effectively perform its duties. Although the Private
Corporations Law of the State of Nevada ("Nevada Code") is relatively similar to
the Delaware GCL, there is a lack of predictability under Nevada law resulting
from the limited body of case law interpreting the Nevada Code. The Delaware GCL
and the court decisions construing it, on the other hand, are widely regarded as
the most extensive and well-defined body of corporate law in the United States.
This body of case law is based in part on Delaware's long-established policy of
encouraging companies to incorporate in that state. In furtherance of that
policy, Delaware has been a leader in adopting comprehensive, modern and
flexible corporate laws that are periodically updated and revised to meet
changing business needs. As a result, many major corporations have initially
chosen Delaware for their domicile or have subsequently reincorporated in
Delaware in a manner similar to that proposed by the Company. Following from
these conditions, Delaware's courts have developed considerable expertise in
dealing with corporate issues, and a substantial body of case law has developed
construing Delaware law and establishing public policies with respect to
corporate legal issues. Thus, for example, relative to other states Delaware
provides greater guidance to directors in the context of dealing with major
transactions, including potential changes in corporate control, along with more
general corporate matters. The Board therefore believes that the overall effect
of the reincorporation will be to enhance the Board's ability to consider all
appropriate courses of action with respect to significant transactions,
including takeover attempts, for the benefit of all stockholders. Moreover, the
Board believes that enhanced certainty with respect to the duties of directors
is a significant benefit to the Company and its stockholders and could be an
important factor in attracting and retaining quality persons to serve on the
Board of Directors.
The Company believes that the reincorporation will also allow the
Company to make use of the increased flexibility and certain other features
afforded by Delaware law which the Board of Directors believes will encourage
potential acquirors in any takeover attempts to negotiate directly with the
Board of Directors. Takeover attempts have become increasingly common in recent
years. Takeover attempts which have not been negotiated with and approved by the
board of directors can seriously disrupt the business and management of a
company and cause such company to suffer great expense. Such attempts may also
take place at inopportune times and may involve terms which may be less
favorable to all of the stockholders than would be available in a transaction
negotiated and approved by the board of directors can be carefully planned and
undertaken at an opportune time in order to obtain maximum value for the company
and all of its stockholders. In addition, in the case of a proposal for the
board of directors to analyze the proposal thoroughly and to present that
analysis to the stockholders in the most effective manner.
Unsolicited or hostile takeover attempts are frequently structured in
ways which the Board of Directors believes may not be in the best interests of
all of the stockholders. Although a takeover attempt may be made at a price
substantially above then current market prices, such offers are sometimes made
for less than all of the outstanding shares of a target company. As a result,
stockholders may be presented with the alternatives of either partially
<PAGE>
liquidating their investment at a time which may be disadvantageous or retaining
their investment as minority stockholders in an enterprise which is controlled
by persons whose objectives may be different from those of the remaining
minority stockholders. A takeover attempt may take the form of a two-tier offer
in which cash is offered for a portion of the target company's outstanding
shares and thereafter securities that re or may be worth less than the cash
portion are offered for the remaining shares. Furthermore, hostile takeover
attempts are sometimes timed and designed to foreclose or minimize the
possibility of more favorable competing bids, which frequently may result in
stockholders losing the opportunity to receive and consider alternative and
possibly more attractive proposals.
The Board of Directors recognizes that takeover attempts which have not
been negotiated with and approved by a target company's board of directors do
not always have the unfavorable consequences or effects described above. See
"Possible Negative Considerations" below. However, the Board of Directors
believes that the potential disadvantages of unapproved takeover attempts are
sufficiently great that prudent steps to reduce the likelihood of such takeover
attempts are in the best interests of the Company and all of its stockholders.
Accordingly, the Board of Directors believes that it is in the best interests of
the Company and its stockholders to encourage potential acquirors to negotiate
directly with Board of Directors and that certain of the changes resulting from
the Reincorporation will encourage such negotiations and may discourage hostile
takeover attempts. It is also the Board of Directors' view that the existence of
these provisions should not discourage anyone from proposing a merger or other
transaction at a price reflective of the true value of The Company and which is
in the best interests of all of its stockholders. No aspect of the
Reincorporation would prevent any person from making a tender offer to The
Company stockholders or prevent any stockholder from accepting such an offer.
The reincorporation does not reflect knowledge on the part of the Board
of Directors or management of any proposed or threatened takeover or other
attempt to acquire control of the Company. The Board of Directors is not aware
of any tender offer, leveraged buyout, proxy contests or other similar
transaction involving a change in control of the Company that is now pending or
under consideration. Management does not currently have under consideration, and
does not have any current intention to propose or adopt, any other measures
which might discourage takeovers apart from those proposed in this information
statement. However the Board of Directors may adopt such measures at some time
in the future, which may or may not require stockholder approval.
POSSIBLE NEGATIVE CONSIDERATIONS
Notwithstanding the belief of the Board of Directors as to the benefits
to the Stockholders of the Reincorporation, the Stockholders should recognize
that one of the effects of the Reincorporation may be to discourage a future
attempt to acquire control of The Company which is not presented to and approved
by the Board of Directors, but which a substantial number and perhaps even a
majority of the The Company stockholders might believe to be in their best
interests or in which the Stockholders might receive substantial premium for
their shares over then current market prices, as a result, the Stockholders who
might desire to participate in such a transaction may not have an opportunity to
do so. In addition, unapproved tender offers and takeover attempts may be made
at times and in circumstances which are beneficial to and in the interest of the
Stockholders. Tender offers or takeover attempts do not all have features of the
type described above which may be to the disadvantage of the Stockholders.
Furthermore, it is not always the case than an unsolicited offer will be less
advantageous than a company-negotiated transaction such transactions can provide
the Stockholders with considerable value for their shares and can be in the
interests of all the Stockholders.
<PAGE>
The Board of Directors has considered these potential disadvantages and
has unanimously concluded that the potential benefits of the Reincorporation
significantly outweigh its possible disadvantages.
SUMMARY OF THE PROPOSED TRANSACTION
The following discussion summarizes certain aspects of the proposed
reincorporation of the Company in Delaware. If approved by the Company's
stockholders, the proposed reincorporation would be effected by merging the
Company into a wholly-owned subsidiary of the Company (the "Surviving
Corporation"), which will be incorporated under the laws of Delaware for the
purpose of effecting the proposed merger (the "Merger"). The Merger would be
accomplished pursuant to the terms of an Agreement and Plan of Merger between
the Company and the Surviving Corporation in substantially the form included
herein as Appendix C (the "Merger Agreement"). The Surviving Corporation will
continue under the name Vianet Technologies, Inc.
At the effective time of the Merger, the Surviving Corporation will be
governed by the Delaware GCL and by the new Certificate of Incorporation (the
"Delaware Certificate") attached hereto as Appendix D and the new Bylaws (the
"Delaware Bylaws") attached hereto as Appendix E. The reincorporation will not
result in any change in the Company's business, assets or liabilities, will not
cause its corporate headquarters to be moved and will not result in any
relocation of management or other employees.
With certain exceptions, the Delaware GCL is substantially similar to
the Nevada Code. For a discussion of the material differences in stockholders'
rights and the powers of management under the Delaware GCL and the Nevada Code,
see "Material Differences Between the Corporation Laws of Delaware and Nevada,"
below. Except to the extent that changes are dictated by the application of the
Delaware GCL, the Delaware Certificate and Delaware Bylaws will be substantially
similar to the Company's present Articles of Incorporation and Bylaws (the
"Nevada Articles" and the "Nevada Bylaws," respectively). See "Material
Differences Between the Charter of the Company and the Surviving Corporation,"
below.
Upon effectiveness of the Merger, each share of Common Stock of the
Company will automatically be converted into a share of Common Stock of the
Surviving Corporation, and stockholders of the Company will automatically become
stockholders of the Surviving Corporation. Certificates for the Common Stock of
the Company will be deemed to represent the same number of shares as represented
by the Company's current certificates prior to the Merger. IT WILL NOT BE
NECESSARY FOR STOCKHOLDERS TO EXCHANGE THEIR COMPANY STOCK CERTIFICATES,
ALTHOUGH STOCKHOLDERS MAY EXCHANGE THEIR CERTIFICATES IF THEY WISH.
In addition, upon effectiveness of the Merger each outstanding option or right
to acquire shares of Common Stock of the Company will be converted into an
option or right to acquire an equal number of shares of Common Stock of the
Delaware Company, under the same terms and conditions as the original options or
rights. All of the Company's employee benefit plans, including the 1999 Option
Plan will be adopted and continued by the Delaware Company following the
reincorporation. Stockholders should recognize that approval of the proposed
reincorporation will constitute approval of the adoption and assumption of such
plans by the Delaware Company.
Under Nevada law, the affirmative vote of a majority of the outstanding
shares is required for approval of the proposed Merger and reincorporation. If
approved by the stockholders at the Annual Meeting, it is anticipated that the
reincorporation would be completed as soon thereafter as practicable. The
proposed Merger and reincorporation may be abandoned or the Merger Agreement may
be amended (with certain exceptions), either before or after stockholder
approval has been obtained, if, in the opinion of the Board of Directors,
circumstances arise that make such action advisable.
Adoption and approval of the Merger will affect certain rights of
stockholders. Accordingly, stockholders are urged to read carefully this entire
Proposal No. 5 and the annexes hereto before voting on this Proposal No. 5.
<PAGE>
CERTAIN CONSEQUENCES OF THE MERGER
The Merger will not result in any change in the name, business,
management, assets, liabilities or net worth of the Company. The Company will
continue to maintain its executive offices in New York, New York. The
capitalization, consolidated financial condition and results of operations of
the Surviving Corporation immediately after consummation of the Merger will be
the same as those of the Company immediately prior to the consummation of the
Merger.
Consummation of the Merger is subject to stockholder approval. Upon
satisfaction of that condition, the Merger will be consummated as follows:
EFFECTIVE DATE. The Merger will take effect at the later of the date on which a
certificate of Ownership and Merger is filed with the Secretary of State of
Delaware and Articles of Merger with the Secretary of State of Nevada (the
"Effective Date"), which filing is anticipated to be made as soon as practicable
after the adoption and approval of the Merger Agreement by the stockholders of
the Company. On the Effective Date of the Merger, the separate corporate
existence of the Company will cease, and stockholders of the Company will become
stockholders of the Surviving Corporation governed by the Delaware GCL, the
Delaware Certificate and the Delaware Bylaws.
MANAGEMENT AFTER THE MERGER. Upon effectiveness of the Merger, the Board of
Directors of the Surviving Corporation will consist of those persons elected to
the Board of Directors of the Company at the Annual Meeting and those persons
continuing to serve as directors at the time of the Annual Meeting. Such persons
and their respective terms of office are set forth above under the caption
"Election of Directors," above. The directors will continue to hold office as
directors of the Surviving Corporation for the same term for which they would
otherwise serve as directors of the Company in accordance with Proposal No.1
above. It should be noted, however, that, in the event that Proposal No. 2 above
is approved, the directors will continue to hold office as directors for the
staggered terms specified in Proposal No. 2. The individuals serving as
executive officers of the Company immediately prior to the Merger will serve as
executive officers of the Surviving Corporation upon the effectiveness of the
Merger.
CAPITALIZATION OF THE SURVIVING CORPORATION; STOCK CERTIFICATES. The authorized
number of shares of common stock of the Company is currently 100,000,000, $0.001
par value. The authorized number of shares of common stock of the Surviving
Corporation will continue to be 100,000,000, $0.001 par value (the "Surviving
Corporation Common Stock"). In addition, provided that Proposal No. 3 above is
approved, the Surviving Corporation will also have 10,000,000 shares, $0.001 par
value, of authorized but unissued Preferred Stock. See, "Material Differences
Between the Charter of the Company and the Surviving Corporation," below.
In the Merger, Company Common Stock will be converted, share for share,
without any action on the part of the holder thereof, into the Surviving
Corporation Common Stock. The Surviving Corporation Common Stock will not have
preemptive rights and will not be subject to assessment. All shares of the
Surviving Corporation Common Stock to be issued in the Merger will be fully paid
and nonassessable. As holders of stock in a Delaware corporation, the Surviving
Corporation stockholders will have the rights provided by the Delaware GCL, the
Delaware Certificate and the Delaware Bylaws. See "Material Differences Between
the Corporation Laws of Nevada and Delaware," below.
Each outstanding certificate representing shares of Company Common
Stock will continue to represent the same number of shares of the Surviving
Corporation Common Stock until submitted for transfer to the Surviving
Corporation. IT WILL NOT BE NECESSARY FOR STOCKHOLDERS OF THE COMPANY TO
EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK CERTIFICATES OF THE
SURVIVING CORPORATION.
Continental Stock Transfer & Trust Company, which is transfer agent and
registrar for the Company, will act as transfer agent and registrars for the
Surviving Corporation.
<PAGE>
COMPANY EMPLOYEE STOCK INCENTIVE PLAN. The Company's equity incentive plan will
not be changed in any material respect by the Merger. Each option to purchase
shares of Company Common Stock outstanding immediately prior to the Merger
pursuant to the Company's 1999 Option Plan, subject to stockholder approval,
will be converted into an option to purchase the same number of shares of the
Surviving Corporation Common Stock upon the same terms and conditions as in
effect immediately prior to the Effective Date. See Proposal No. 4 above for a
summary of the Company's 1999 Option Plan.
INDEBTEDNESS OF THE COMPANY. All indebtedness of the Company outstanding on the
Effective Date will be assumed by the Surviving Corporation in connection with
the Merger. To the Company's knowledge, no indebtedness of the Company will be
accelerated as a result of the proposed transaction.
TRADING OF THE SURVIVING CORPORATION COMMON STOCK. It is anticipated that the
Surviving Corporation Common Stock will be quoted on the Over-The-Counter
Bulletin Board (or the Nasdaq SmallCap Market, should the Company become listed
on the Nasdaq SmallCap Market) without interruption, and that such market will
consider the delivery of existing stock certificates of the Company as
constituting "good delivery" of shares of the Surviving Corporation in
transactions subsequent to the Merger.
AMENDMENT, DEFERRAL OR TERMINATION OF THE AGREEMENT OF MERGER. The Merger
Agreement provides that the Boards of Directors of the Company may amend the
Merger Agreement prior to or after approval of the Merger by the stockholders of
the Company but not later than the Effective Date; provided that no such
amendment may be made that is not approved by such stockholders if it would
affect the principal terms of the Merger Agreement.
The Merger Agreement also provides that the Board of Directors of the
Company may terminate and abandon the Merger or defer its consummation for a
reasonable periods, notwithstanding stockholder approval, if in the opinion of
the Board of Directors, such action would be in the best interests of the
Company.
FEDERAL INCOME TAX CONSEQUENCES. It is anticipated that the Merger will be
treated as a tax-free reorganization under the Internal Revenue Code of 1986, as
amended. Accordingly, no gain or loss will be recognized by holders of Company
Common Stock or by the Company or the Surviving Corporation as a result of the
consummation of the Merger. Each former holder of Company Common Stock will have
the same tax basis in the Surviving Corporation Common Stock received pursuant
to the Merger as he has in Company Common Stock held by him at the time of the
consummation of the Merger. Each stockholder's holding period with respect to
such the Surviving Corporation Common Stock will include the period during which
he held the corresponding Company Common Stock, provided the latter is held as a
capital asset at the time of consummation of the Merger. The foregoing is only a
summary of the federal income tax consequences and is not tax advice. No ruling
from the Internal Revenue Service and no opinion of counsel with respect to the
tax consequences of the Merger have been or will be sought by the Company.
CERTAIN SIGNIFICANT DIFFERENCES BETWEEN THE CHARTER DOCUMENTS OF THE
COMPANY AND THE SURVIVING CORPORATION
In general, the Company's corporate affairs are governed at present by
the corporate law of Nevada, the Company's state of incorporation, and by the
Nevada Articles and the Nevada Bylaws, which have been adopted pursuant to
Nevada law. The Nevada Articles and Nevada Bylaws are available for inspection
during business hours at the principal executive offices of the Company. In
addition, copies may be obtained by writing to the Company at Vianet
Technologies, Inc., 83 Mercer Street, New York, New York 10012, Attention:
Corporate Secretary.
In March 1999, the Company's predecessor, Vianet Technologies, Inc., a
Delaware corporation ("Vianet Delaware"), merged with and into Radar Resources,
Inc., a Nevada corporation ("Radar"). Upon completion of Vianet Delaware's
merger with Radar, Radar changed its name to Vianet Technologies, Inc ("Vianet")
and began operating as the current company. As a result of the foregoing, the
Company's existing Bylaws consist of the Bylaws adopted by the founders of Radar
prior to the merger by the Company's predecessor with and into Radar. Upon
review of such Bylaws, the board of directors has concluded that, for the
orderly operation of a publicly held company, the Nevada ByLaws are deficient in
many respects. Further, the board of directors believes that the reincorporation
presents the Company with an opportunity to adopt more new, more comprehensive
Bylaws that will allow the Company to fully avail itself of the comprehensive,
modern and flexible corporate laws that exist in the State of Delaware.
<PAGE>
If the reincorporation proposal is adopted, the Company will merge
into, and its business will be continued by, the Delaware Company. Following the
merger, issues of corporate governance and control would be controlled by
Delaware, rather than Nevada law. The Nevada Articles and Nevada Bylaws, will,
in effect, be replaced by the Certificate of Incorporation of the Delaware
Company (the "Delaware Certificate") and the bylaws of the Delaware Company (the
"Delaware Bylaws"), copies of which are attached as Exhibits D and E to this
Proxy. Accordingly, the differences among these documents and between Delaware
and Nevada law are relevant to your decision whether to approve the
reincorporation proposal.
The most significant differences between the provisions of the Nevada
Articles and the Nevada Bylaws and the provisions of the Delaware Certificate
and the Delaware Bylaws, and the reasons for, and certain possible effects of,
the implementation of certain of these provisions, are summarized below.
Shareholders are requested to read the following discussion in conjunction with
the Merger Agreement, the Delaware Certificate and the Delaware Bylaws attached
to this Proxy Statement.
AUTHORIZED CAPITAL STOCK. The Company is currently authorized to issue
10,000,000 shares of common stock, $.001 par value per share. The Surviving
Corporation shall be authorized to issue 100,000,000 shares of common stock,
$.001 par value per share. In addition, provided that Proposal No. 3 above is
approved, the Surviving Corporation will also have 10,000,000 shares, $0.001 par
value, of authorized but unissued Preferred Stock. See, "Material Differences
Between the Charter of the Company and the Surviving Corporation," below.
LIMITATIONS ON CALL OF MEETINGS AND ACTION BY WRITTEN CONSENT OF STOCKHOLDERS.
The Nevada Bylaws provided, in accordance with the Nevada GCL, that a special
meeting of stockholders may be called by the board of directors or the holders
of shares entitled to cast not less than a majority of the votes at such
meeting. The Delaware Bylaws provide that a special meeting of stockholders may
be called by the Chairman of the Board, the President or the Board of Directors,
and shall be called by the President or the Secretary at the request in writing
of a majority of the directors or stockholders entitled to vote or as otherwise
required by the Delaware General Corporation Law. However, the advance notice
provisions described below make it more difficult for stockholders to bring any
business before an annual meeting or to nominate persons for election to the
Board of Directors of The Surviving Corporation.
Both the Delaware GCL and the Nevada GCL permit stockholders, unless
specifically prohibited by the certificate or articles of incorporation, to take
action without a meeting by the written consent of the holders of at least the
number of shares necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted. Action by
written consent may, in some circumstances, permit the taking of stockholder
action opposed by the board of directors more rapidly than would be possible if
a meeting of stockholders were required. The Nevada Bylaws provided and the
Delaware Bylaws currently provide for such stockholder action by written
consent. However, the Delaware Bylaws provide that Section 3 of Article I and
Article II (in its entirety) of the By-Laws may each only be altered, amended or
repealed by the affirmative vote of the holders of at least seventy-five percent
(75%) of the votes which all the stockholders would be entitled to cast in any
annual election.
VOTING AND PROXIES. Both the Nevada Bylaws and the Delaware Bylaws provide that
stockholders may vote in person or may authorize another person or persons to
vote or act for him by written proxy. The Nevada Bylaws provide that no such
proxy shall be voted or acted upon after six months from the date of its
execution, unless the proxy expressly provides for a longer period, which period
in no case shall exceed seven (7) years from its execution. The Delaware Bylaws
provide that no such proxy shall be voted or acted upon after six months from
the date of its execution, unless the proxy expressly provides for a longer
period, which period in no case shall exceed three (3) years from its execution.
<PAGE>
NUMBER OF DIRECTORS. The Nevada Bylaws provided that the number of directors of
the Company should not be less than one (1) or such other number as may be
determined by the Board of Directors. The exact number of directors could be
changed by an amendment of the Nevada Bylaws adopted by the Board of Directors.
The Delaware Bylaws provide that the number of directors which shall constitute
the whole Board of Directors shall be determined by resolution of the Board of
Directors, but in no event shall be less than three (3). The number of directors
may be changed outside of the foregoing limits only by an amendment to the
Delaware Bylaws. See "Amendment of Bylaws" below.
REMOVAL OF DIRECTORS. The Nevada Bylaws do not contain any provisions regarding
removal of directors. The Nevada Bylaws do, however, provide, as permitted by
the Nevada GCL, that a vacancy in the board of directors, unless the vacancy was
created by a stockholder removal of a director, shall be filled for the
unexpired term by a majority vote of the remaining directors, thought less than
a quorom.
The Delaware Bylaws provide, as permitted by the Delaware GCL, that directors
may be removed with or without cause only by the affirmative vote of the holders
of a 75% of the outstanding securities of The Surviving Corporation then
entitled to vote. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the Board, shall be filled
only by vote of a majority of the directors then in office, although less than a
quorum, or by a sole remaining director.
While the Company does not currently have a classified board of directors, the
Surviving Corporation will have a classified board of directors.
ELECTIONS; CLASSIFIED BOARD OF DIRECTORS. As stated above, the Company does not
currently have a classified board of directors. The directors of the Nevada
Company, who will also be the directors of the Delaware Company if the
reincorporation proposal is approved, are set forth in Proposal 1.
If Proposal No. 2 is adopted, the directors of the Delaware Company, who are
also the current directors of the Company, will be divided into classes as
follows:
STANDING FOR ONE YEAR TERMS:
Peter Leighton
Timothy P. Sullivan
STANDING FOR TWO YEAR TERMS:
Robert H. Bailey
Darrell J. Elliot
STANDING FOR THREE YEAR TERMS:
Jeremy Posner
F. Paul Whitlock
NOMINATION OF DIRECTORS. The Delaware Bylaws provide that nominations of persons
for election to the Board of Directors of the Surviving Corporation shall be
made only at a meeting of stockholders and only (i) by or at the direction of
the Board of Directors, or (ii) by any stockholder of the Surviving Corporation
entitled to vote for the election of directors at the meeting who timely
complies with the notice procedures therein set forth. To be timely, a
stockholder's notice must be delivered to or mailed to and received at the
principal executive offices of the Surviving Corporation not less than sixty
(60) days nor more than ninety (90) days prior to the meeting; provided,
however, that in the event that less than seventy (70) days notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received not later than the close
of business on the tenth day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made, whichever occurs
first.
The Board of Directors believes that advance notice of nominations by
stockholders will afford a meaningful opportunity to consider the qualifications
of the proposed nominees and, to the extent deemed necessary or desirable by the
Board of Directors, will provide an opportunity to inform stockholders about
such qualifications. Although this nomination procedure does not give the Board
of Directors any power to approve or disapprove of stockholder nominations for
the election of directors, this nomination procedure may have the effect of
precluding a nomination for the election of directors at a particular annual
meeting if the proper procedures are not followed and may discourage or deter a
stockholder from conducting a solicitation of proxies to elect its own directors
or otherwise attempting to obtain control of The Surviving Corporation.
<PAGE>
There are no comparable notice requirements in the Nevada Articles or Nevada
Bylaws.
BUSINESS INTRODUCED BY STOCKHOLDERS AT ANNUAL MEETINGS. The Delaware Bylaws
provide that, where business introduced by a stockholder is not specified in the
notice of annual meeting, then in addition to any other applicable requirements,
for business to be properly introduced by a stockholder at an annual meeting of
the stockholders, the stockholder must have given timely notice thereof in
writing to the Secretary of the Surviving Corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received by the
Secretary of the Surviving Corporation in the same manner and subject to the
same time requirements provided for stockholder notice of nominations to the
Board of Directors. See "Certain Significant Differences Between the Charter
Documents of the Company and the Surviving Corporation - Nominations of
Directors" above. A stockholder's notice must set forth as to each matter the
stockholder proposes to bring before the meeting (i) a brief description of the
business desired to be brought before the annual meeting, (ii) the name and
record address of the stockholder proposing such business; (iii) the class and
number of shares of the Surviving Corporation Common Stock which are
beneficially owned by the stockholder, and (iv) any material interest of the
stockholder in such business.
The purpose of requiring advance notice of business to be brought by a
stockholder before an annual meeting is to enable the Board of Directors to give
advance notice of such business to the stockholders generally, and to afford the
Board of Directors a meaningful opportunity to consider the merits of the matter
to be raised by stockholders. Although this procedure does not give the Board of
Directors any power to approve or disapprove such matters, this procedure may
have the effect of precluding the consideration of matters at a particular
annual meeting if the proper procedures are not followed, even if approval of
such matters may be deemed by some stockholders to be beneficial to The
Surviving Corporation and its stockholders.
There are no comparable requirements in the Nevada Articles or Nevada
Bylaws.
ELECTION OF OFFICERS. The Nevada Bylaws provide that officers shall be appointed
by the Board of Directors at the first meeting held after the election of the
Board of Directors. The Delaware Bylaws provide that the officers shall be
appointed annually by the Board of Directors at the first meeting held after the
election of the Board of Directors, and each officer shall hold office until
such officer shall resign or shall be removed by the Board of Directors (either
with or without cause) or otherwise disqualified to serve, or the officer's
successor shall be appointed and qualified. Any limitation on the foregoing
powers of the Board of Directors of the Surviving Corporation with regard to the
election and removal of officers may therefore only be effected by an amendment
to the Delaware Bylaws. See "Amendment of Bylaws".
AMENDMENT OF CHARTER. Pursuant to Delaware and Nevada law, the Delaware
Certificate and the Nevada Articles may be amended if the Board of Directors
adopts a resolution setting forth the proposed amendment, declares its
advisability and calls a special meeting of stockholders for the consideration
of such amendment or directing that the amendment proposed be considered at the
next annual meeting of the stockholders. At the meeting, the amendment must be
approved by a majority of the outstanding shares entitled to vote thereon.
AMENDMENTS OF BYLAWS. The Nevada Articles provide that the Nevada Bylaws could
be amended, altered or repealed by the Board of Directors, subject to the power
of the stockholders to amend, alter or repeal the Nevada Bylaws.
Pursuant to the Delaware Certificate, the Delaware Bylaws may be
altered, amended or repealed by the Board of Directors. Accordingly, the
Delaware Bylaws currently in effect may be altered, amended or repealed in the
future by the Board of Directors without the requirement of stockholder
approval. However, the Delaware Bylaws do provide that a majority of
stockholders may alter, amend or repeal the Delaware Bylaws, except that Section
3 of Article I (the provisions of the Bylaws relating to calling special
meetings of stockholders) and Article II (the provisions of the Bylaws relating
to directors) may only be altered, amended or repealed by the affirmative vote
of the holders of at least seventy-five percent (75%) of the votes which all the
stockholders would be entitled to cast in any annual election. The power of the
Board of Directors to alter, amend or repeal a bylaw which may be expressly
adopted or amended by the stockholders is unclear under the Delaware GCL.
The purpose of increasing the percentage of shareholders required to
approve an alteration, amendment, or repeal of the provisions of the Bylaws
relating to calling special meetings of stockholders and directors is to allow
the Company to make use of the increased flexibility and certain other features
afforded by Delaware law which the Board of Directors believes will encourage
potential acquirors in any takeover attempts to negotiate directly with the
Board of Directors.
<PAGE>
INDEMNIFICATION. The Nevada GCL and the Delaware GCL have similar provisions and
limitations regarding indemnification by a corporation of its officers,
directors, employees and other agents. Each provides that indemnification is
mandatory under certain circumstances (generally in respect of expenses incurred
by an indemnified party who is successful on the merits in the proceeding giving
rise to the claim for indemnification) and permissive in others, subject to
authorization. The standard of conduct required of a person seeking
indemnification from a corporation is generally the same under Nevada and
Delaware law and requires that a person seeking indemnification shall have 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, in the case of a criminal proceeding,
have no reasonable cause to believe his conduct was illegal.
The Nevada GCL and the Delaware GCL state expressly that the
indemnification provided for therein shall not be deemed exclusive of any other
rights under any other bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise.
The Nevada GCL and the Delaware GCL provide that expenses may be
advanced to officers and directors in a specific case upon receipt of an
undertaking to repay such amount if it is ultimately determined that such
indemnified party is not entitled to be indemnified. In addition, both Delaware
and Nevada law permit the determination as to whether an officer or director has
met the applicable standard of conduct to be made in certain circumstances by
independent legal counsel.
The Nevada Articles and Nevada Bylaws imposed and the Delaware
Certificate and Delaware Bylaws currently provide for indemnification of any
director, officer, employee or agent to the fullest extent authorized or
permitted by law (as now or hereafter in effect).
LIMITATION ON PERSONAL LIABILITY OF DIRECTORS. Delaware corporations are
permitted to adopt charter provisions limiting, or even eliminating, the
liability of a director or a company and its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that such liability does
not arise from certain proscribed conduct, including breach of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law or liability to the corporation based
on unlawful dividends or distributions or improper personal benefit.
While the Nevada Code has a similar provision permitting the adoption of
provisions in the articles of incorporation limiting personal liability, the
Nevada provision differs in two respects. First, the Nevada provision applies to
both directors and officers. Second, while the Delaware provision excepts from
limitation on liability a breach of the duty of loyalty, the Nevada counterpart
does not contain this exception. Thus, the Nevada provision permits a
corporation to limit directors and officers from personal liability arising from
a breach of the duty of loyalty.
The Delaware Certificate, like the Nevada Articles, contains a provision
limiting the personal liability of directors. However, unlike the Delaware
Certificate, the Nevada Articles also limit the liability of officers. Under the
laws of either state, the charter provision will not have any effect on the
availability of equitable remedies such as an injunction or recision based upon
a breach of the duty of care, or on liabilities that arise under certain federal
statutes such as the securities laws.
CERTAIN SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF NEVADA AND
DELAWARE
The Nevada GCL and the Delaware GCL differ in many respects, and
consequently it is not practical to summarize all of such differences. The
following is a summary of certain significant differences which may affect the
rights and interests of stockholders.
<PAGE>
CHANGE IN NUMBER OF DIRECTORS. The Nevada GCL provides that the number of
directors of a corporation may be increased or decreased in such manner as
provided in the articles of incorporation, or by an amendment thereto, or by the
bylaws of the corporation.
The Delaware GCL permits the board of directors of a corporation to
change the authorized number of directors by amendment to the bylaws or in the
manner provided in the bylaws, unless the certificate of incorporation fixes the
number of directors, in which case a change in the number of directors may be
made only by an amendment of such certificate.
REMOVAL OF DIRECTORS. Under the Nevada GCL, a director or the entire board of
directors may be removed with or without cause, by the affirmative vote of the
holders of at least two-thirds of the shares then entitled to vote.
Under the Delaware GCL, a director or the entire board of directors of
a corporation can be removed with or without cause by the holders of a majority
of shares then entitled to vote in an election of directors. The term "cause" is
not defined in the Delaware GCL. Consequently, questions concerning the legal
standard for "cause" may have to be judicially determined, which determination
could be difficult, expensive and time-consuming.
DIVIDENDS. Under the Delaware GCL, unless otherwise provided in the certificate
of incorporation, a corporation may declare and pay dividends, out of surplus,
or if no surplus exists, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year (provided that the amount
of capital of the corporation following the declaration and payment of the
dividend is not less than the aggregate amount of the capital represented by the
issued and outstanding stock of all classes having a preference upon the
distribution of assets). In addition, the Delaware GCL provides that a
corporation may redeem or repurchase its shares only out of surplus.
The Nevada Code provides that no distribution (including dividends on, or
redemption or repurchases of, shares of capital stock) may be made if after
giving effect to such distribution, the corporation would not be able to pay its
debts as they become due in the usual course of business, or the corporation's
total assets would be less than the sum of its total liabilities plus the amount
that would be needed at the time of a liquidation to satisfy the preferential
rights of preferred stockholders.
Neither the Company nor the Surviving Corporation currently intends to pay
dividends or make any other distribution on its capital stock. Nevertheless, the
difference between the Delaware GCL and the Nevada Code with respect to amounts
available for dividends or other distributions could conceivably affect future
dividends or other distribution, if any are declared.
CALL OF SPECIAL MEETING OF STOCKHOLDERS. Under the Nevada GCL, a special meeting
of stockholders may be called by the board of directors, the chairman of the
board, the president, the holders of shares entitled to cast not less than 10%
of the votes at the special meeting, or such additional persons as may be
provided in the articles of incorporation or bylaws.
Under the Delaware GCL, special meetings of stockholders may be called
by the board of directors or by such other person or persons as may be
authorized by the certificate of incorporation or by the bylaws. The Delaware
Bylaws provide that such meetings may be called by the Chairman of the Board,
the President or the Board of Directors, and shall be called by the President or
the Secretary at the request in writing of a majority of the directors or
stockholders entitled to vote or as otherwise required by the Delaware General
Corporation Law.
INDEMNIFICATION OF OFFICERS AND DIRECTORS. Nevada and Delaware law have similar
provisions and limitations regarding indemnification by a corporation of its
officers, directors, employees, and agents. The Nevada and Delaware laws state
expressly that the indemnification provided for therein shall not be deemed
exclusive of any other rights under any other bylaws, agreement, vote of
stockholders or disinterested directors or otherwise. In addition, Delaware and
Nevada law permit court approval of such indemnification under certain
conditions and permit determination regarding indemnification to be made by
independent legal counsel, among others. See "Certain Significant Differences
Between the Charter Documents of the Company and The Surviving Corporation -
Indemnification."
<PAGE>
PERSONAL LIABILITY OF DIRECTORS. A discussion of the Delaware law provision with
respect to the personal liability of directors is included above under "Certain
Significant Differences Between the Charter Documents of the Company and The
Surviving Corporation - Personal Liability of Directors." No comparable
provision exists under Nevada law.
VOTE REQUIRED FOR CERTAIN MERGERS AND CONSOLIDATIONS. Delaware law relating to
mergers and other corporate reorganizations is substantially the same as Nevada
law in a number of respects. Both Nevada and Delaware law provide for
stockholder votes (except as indicated below and for certain mergers between a
parent company and its 90% owned subsidiary) of both the acquiring and acquired
corporation to approve mergers and of the selling corporation for the sale by a
corporation of substantially all of its assets. Both Nevada and Delaware law
provide for a stockholder vote to approve the dissolution of a corporation.
Both Delaware and Nevada law do not require a stockholder vote of the
surviving corporation in a merger if (i) the merger agreement does not amend the
existing certificate of incorporation, (ii) each outstanding or treasury share
of the surviving corporation before the merger is unchanged after the merger,
and (iii) the number of shares to be issued by the surviving corporation in the
merger does not exceed 20% of the shares outstanding immediately prior to such
issuance.
INSPECTION OF STOCKHOLDER LISTS. The Nevada GCL provides for an absolute right
of inspection of the stockholder list upon five (5) days written demand for any
stockholder holding 5% or more of a corporation's outstanding shares or any
stockholder who has been a stockholder of record for at least six (6) months
immediately preceding his demand.
The Delaware GCL does not provide for any similar absolute right of
inspection, but does permit any stockholder of record to inspect the stockholder
list for any purpose reasonably related to such person's interest as a
stockholder and, for a ten (10) day period preceding a stockholder meeting for
any purpose germane to the meeting.
APPRAISAL RIGHTS IN MERGERS. Under both Nevada and Delaware law, a dissenting
stockholder of a corporation participating in certain transactions may, under
varying circumstances, receive cash in the amount of the fair market value of
his shares (as determined by a court), in lieu of the consideration he would
otherwise receive in any such transaction. Unless a corporation's certificate or
articles of incorporation provide otherwise, Delaware and Nevada law do not
provide for dissenters' rights of appraisal with respect to (i) a merger or
consolidation by a corporation, the shares of which are either listed on a
national securities exchange or widely held (by more than 2,000 stockholders),
if such stockholders receive shares of the surviving corporation or of such a
listed or widely-held corporation; or (ii) stockholders of a corporation
surviving a merger if no vote of the stockholders of the surviving corporation
is required if the number of shares to be issued in the merger does not exceed
20% of the shares of the surviving corporation outstanding immediately prior to
the merger and certain other conditions are met.
RESTRICTIONS ON BUSINESS COMBINATIONS/CORPORATION CONTROL. Both the Delaware GCL
and the Nevada Code contain provisions restricting the ability of a corporation
to engage in business combinations with an interested stockholder. Under the
Delaware GCL, except under certain circumstances, a corporation is not permitted
to engage in a business combination with any interested stockholder for a
three-year period following the date such stockholder became an interested
stockholder. The Delaware GCL defines as interested stockholder generally as a
person who owns 15% or more of the outstanding shares of such corporation's
voting stock.
Under the Nevada Code, except under certain circumstances which vary from the
exceptions under the Delaware GCL, business combinations with interested
stockholders are not permitted for a period of three years, following the date
such stockholder became an interested stockholder. The Nevada Code defines an
interested stockholder, generally, as a person who owns 10% or more, rather than
15% or more under the Delaware GCL, of the outstanding shares of the
corporations' voting stock.
<PAGE>
In addition, the Nevada Code generally disallows the exercise of voting rights
with respect to "control shares" of an "issuing corporation" held by an
"acquiring person," unless such voting rights are conferred by a majority vote
of the disinterested stockholders. "Control shares" are the voting shares of an
issuing corporation acquired in connection with the acquisition of a
"controlling interest." "Controlling interest" is defined in terms of threshold
levels of voting share ownership, which thresholds, whenever each may be
crossed, trigger applications of the voting bar with respect to the shares newly
acquired.
The Nevada Code also permits directors to resist a change or potential change in
control of the corporation if the directors determine that the change or
potential change is opposed to or not in the best interest of the corporation.
TENDER OFFER STATUTE. Nevada's "Acquisition of Controlling Interest Statute"
applies to Nevada corporations that have at least 200 stockholders, with at
least 100 stockholders of record being Nevada residents, and that do business
directly or indirectly in Nevada. As of May 10, 2000, the Company had less than
100 stockholders of record who were Nevada residents. The Company also believes
that it was not "doing business" in Nevada (a term that is not defined in the
statute). Accordingly, the statute was not applicable to the Company at the
effective date of the reincorporation. Where applicable, the statute prohibits
an acquiror from voting shares of a target company's stock after exceeding
certain threshold ownership percentages, until the acquiror provides certain
information to the company and a majority of the disinterested stockholders vote
to restore the voting rights of the acquiror's shares at a meeting called at the
request and expense of the acquiror. If the voting rights of such shares are
restored, stockholders voting against such restoration may demand payment for
the "fair value" of their shares (which is generally equal to the highest price
paid in the transaction subjecting the stockholder to the statute).
Delaware law has been widely viewed to permit a corporation greater flexibility
in governing its internal affairs and its relationships with stockholders and
other parties than do the laws of many other states, including Nevada. In
particular, Delaware law permits a corporation to adopt a number of measures
designed to reduce a corporation's vulnerability to hostile takeover attempts.
Such measures are either not currently permitted or are more narrowly drawn
under Nevada law. In addition, certain types of "poison pill" defenses (such as
stockholder rights plans) have been upheld by Delaware courts, while Nevada
courts have yet to decide on the validity of such defenses, thus rendering their
effectiveness in Nevada less certain.
As discussed above, numerous differences between Nevada and Delaware law,
effective without additional action by The Surviving Corporation, could have a
bearing on unapproved takeover attempts. One such difference is the existence of
a Delaware statute regulating tender offers, which statute is intended to limit
coercive takeovers of companies incorporated in that state. Delaware law
provides that a corporation may not engage in any business combination with any
interested stockholder for a period of three (3) years following the date that
such stockholder became an interested stockholder, unless (i) prior to the date
the stockholder became an interested stockholder the Board of Directors approved
the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, or (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock, or (iii) the
business combination is approved by the Board of Directors and authorized by
two-thirds of the outstanding voting stock which is not owned by the interested
stockholder. An interested stockholder means any person that is the owner of 15%
or more of the outstanding voting stock, however, the statute provides for
certain exceptions to parties who otherwise would be designated interested
stockholders, including an exception for parties that held 15% or more of the
outstanding voting stock as of December 23, 1987. Any corporation may decide to
opt out of the statute in its original certificate of incorporation or, at any
time, by action of its stockholders. The Surviving Corporation has no present
intention of opting out of the statute.
<PAGE>
There can be no assurance that the Board of Directors would not adopt any
further anti-takeover measures available under Delaware law (some of which may
not require stockholder approval). Moreover, the availability of such measures
under Delaware law, whether or not implemented, may have the effect of
discouraging a future takeover attempt which a majority of The Surviving
Corporation's stockholders may deem to be in their best interests or in which
stockholders may receive a premium for their shares over then current market
prices. As a result, stockholders who might desire to participate in such
transactions may not have the opportunity to do so. Stockholders should
recognize that, if adopted, the effect of such measures, along with the
possibility of discouraging takeover attempts, may be to limit in certain
respects the rights of stockholders of The Surviving Corporation compared with
the rights of stockholders of the Company.
The Board of Directors recognizes that hostile takeover attempts do not always
have the unfavorable consequences or effects described above and may frequently
be beneficial to the stockholders, providing all of the stockholders with
considerable value for their shares. However, the Board of Directors believes
that the potential disadvantages of unapproved takeover attempts (such as
disruption of the Company's business and the possibility of terms which may be
less than favorable to all of the stockholders than would be available in a
Board-approved transaction) are sufficiently great such that prudent steps to
reduce the likelihood of such takeover attempts and to enable the Board of
Directors to fully consider the proposed takeover attempt and actively negotiate
its terms in the best interests of the Company and its stockholders.
In addition to the various anti-takeover measures that are now available to The
Surviving Corporation following the reincorporation due to the application of
Delaware law, The Surviving Corporation also retains the rights currently
available to the Company under Nevada law to issue shares of its authorized but
unissued capital stock. Following the reincorporation, shares of authorized and
unissued Common Stock of The Surviving Corporation could (within the limits
imposed by applicable law), be issued in one or more transactions. Any such
issuance of additional stock could have the effect of diluting the earnings per
share and book value per share of existing shares of Common Stock, and such
additional shares could be used to dilute the stock ownership of persons seeking
to obtain control of The Surviving Corporation.
It is not the present intention of the Board of Directors to seek stockholder
approval prior to any issuance of the Common Stock of The Surviving Corporation,
except as required by law or regulation. Frequently, opportunities arise that
require prompt action, and it is the belief of the Board of Directors that the
delay necessary for stockholder approval of a specific issuance would be a
detriment to The Surviving Corporation and its stockholders.
<PAGE>
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
INTRODUCTION
Stockholders of the Company who object to the terms of the Merger are entitled
to certain rights under the provisions of Nevada Law, attached hereto as Exhibit
F. A PERSON HAVING A BENEFICIAL INTEREST IN THE SHARES OF THE COMPANY WHICH,
HOWEVER, ARE HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BROKER OR
NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD STOCKHOLDER TIMELY AND PROPERLY
TO FOLLOW THE STEPS SET FORTH BELOW.
SUMMARY
Any stockholder who desires to exercise his statutory dissenters' rights must
submit prior to the meeting, a written demand for the payment for his shares.
(Such a written demand should be directed to the Corporate Secretary of the
Company at the Company's executive offices.) Stockholders who voted in favor of
the Reincorporation may not exercise dissenters' rights.
DISSENTING SHARES LOSE THEIR STATUS AS SUCH IF THE FOLLOWING OCCURS: THE
STOCKHOLDER FAILS TO TIMELY DEMAND WRITTEN PAYMENT FOR HIS SHARES.
FAIR CASH VALUE
The stockholders of the Company who elect to exercise their statutory
dissenters' rights under Nevada law and who properly and timely perfect them, by
following the steps summarized above, are entitled to receive for their Company
Common Stock the fair cash value of such shares within thirty (30) days after
the written demand for payment for their shares is served on the Company. Such
fair cash value is to be determined as of the date before the vote on the Merger
Agreement, excluding any element of value arising from the expectation or the
accomplishment of the Merger. Such dissenting stockholders also lose their
status as stockholders and become creditors of the Company. Upon payment of the
fair cash value such stockholders must transfer their shares to the Company.
If a demand for payment by a dissenting stockholder remains unpaid for sixty
(60) days, the Company shall petition the district court of Clark County, Nevada
to appoint appraisers to appraise the fair cash value of the dissenting
stockholder's shares.
RECOMMENDATION OF THE BOARD:
---------------------------
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE REINCORPORATION.
PROPOSAL NO. 6
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Edward Isaacs & Company LLP has served as the Company's independent
auditors since 1999 and has been appointed by the Board to continue as the
Company's independent auditors for the fiscal year ending December 31, 2000. In
the event that ratification of this selection of auditors is not approved by a
majority of the shares of Common Stock voting at the Annual Meeting in person or
by proxy, the Board will reconsider its selection of auditors. Edward Isaacs &
Company LLP has no interest, financial or otherwise, in the Company.
A representative of Edward Isaacs & Company LLP is not expected to be
present at the Annual Meeting.
The proxy holders intend to vote the shares represented by proxies to
ratify the Board of Directors' selection of Edward Isaacs & Company LLP as the
Corporation's independent auditors for the fiscal year ending December 31, 2000.
<PAGE>
RECOMMENDATION OF THE BOARD:
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
EDEARD ISAACS & COMPANY LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2000.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding ownership
of the Company's Common Stock as of April 7, 2000, by all persons known by the
Company to be beneficial owners of five percent (5%) or more of the outstanding
shares of Common Stock.
<TABLE>
<CAPTION>
Number of Shares Approximate
Beneficially Percentage of
Name* Owned Common Stock**
<S> <C> <C> <C>
Jeremy T.G. Posner 2,280,829 (1) 10.7%
Peter Leighton 2,000,000 (2) 9.4%
Georgetown Vianet 1,066,656 (3) 5.0%
c/o Charles R. Holzer,
23 E. 74th Street, New York, NY 10021
WorldCorp Management Group, Inc. 2,230,000 (4) 10.5%
6245 North Federal Highway, Suite 400
Fort Lauderdale, Florida 33308
</TABLE>
- -------------------
* Except as noted above, the address for the above identified officers and
directors of the Company is c/o Vianet Technologies, Inc., 83 Mercer Street, New
York, New York, 10012.
** Percentages are based upon the assumption that the stockholder has
exercised all of the currently exercisable options he or she owns which are
currently exercisable or exercisable within 60 days and that no other
stockholder has exercised any options he or she owns.
(1) Includes (i) an aggregate of 2,046,391 shares owned by entities controlled
by Jeremy Posner, (ii) 232,520 shares which may be issued pursuant to
warrants and options owned by Mr. Posner, which options are currently
exercisable, and (iii) 1,918 shares owned by Mr. Posner's wife, as to which
he disclaims beneficial ownership.
(2) Includes (i) 1,800,000 shares owned by entities controlled by Peter Leighton
and his wife, and (ii) 200,000 shares that may be issued pursuant to
warrants and options owned by Mr. Leighton, which options are currently
exercisable.
(3) Includes 266,664 shares and 266,664 class A, B and C common stock purchase
warrants, respectively.(4)Includes 270,000 shares and 1,960,000 common stock
purchase warrants.
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding ownership
of the Company's Common Stock as of April 7, 2000, by (i) each director of the
Company, (ii) each of the executive officers named in the Summary Compensation
Table of this proxy statement (the "Named Executive Officers"), and (iii) all
directors and executive officers of the Company as a group.
Outstanding Common Stock Beneficially Owned
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Shares of
Name and Address of Beneficial Owner** Common Stock Percentage of Voting Stock
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jeremy T.G. Posner 2,280,829(1) 10.7%
Peter Leighton 2,000,000(2) 9.4%
Bruce Arnstein 48,899(4) *
Vincent Santivasci 6,666(5) *
Elizabeth Disiere 40,000(6) *
Robert H. Bailey 20,470(3) *
Darrell J. Elliot 20,000(3) *
F. Paul Whitlock 20,000(3) *
</TABLE>
* Less than one percent.
** The address for each director and officer is c/o Vianet Technologies,
Inc., 83 Mercer Street, 3rd Floor, New York, N.Y. 10012.
(1) Includes (i) an aggregate of 2,046,391 shares owned by entities controlled
by Jeremy Posner, (ii) 232,520 shares which may be issued pursuant to
warrants and options owned by Mr. Posner, which options are currently
exercisable, and (iii) 1,918 shares owned by Mr. Posner's wife, as to which
he disclaims beneficial ownership.
(2) Includes (i) 1,800,000 shares owned by entities controlled by Peter Leighton
and his wife, and (ii) 200,000 shares that may be issued pursuant to
warrants and options owned by Mr. Leighton, which options are currently
exercisable.
(3) Does not include 40,000 shares which may be issued under outstanding stock
options, 2/3 of which shares are not exercisable and subject to a two year
vesting period.
(4) Does not include 150,000 shares which may be issued under outstanding stock
options, 2/3 of which shares are not exercisable and subject to a one year
vesting period.
(5) Does not include 50,000 shares which may be issued under outstanding stock
options, which shares are not exercisable and subject to a three year
vesting period.
(6) Includes 40,000 shares which may be issued under outstanding stock options.
These outstanding options are fully vested.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain summary information with respect
to the compensation paid to the Company's Chief Executive Officer, Chairman of
the Board and the Company's Chief Operating Officer, for services rendered in
all capacities to the Company for the fiscal period ended December 31, 1999.
Other than as listed below, the Company had no executive officers whose total
annual salary and bonus exceeded $100,000 for that fiscal year:
<TABLE>
<CAPTION>
Long-Term Compensation
Other
Compen-sation
Name Position Year Salary(1) Bonus
Awards Payouts
Restricted Securities LTIP All
Stock Underlying Payouts Other
Award(s) Options/ ($) Compen
($) SARs -sation
(#)(2) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Peter Leighton President 1999 $125,000 $---- $---- ---- ---- ---- ----
and Chief
Executive
Officer
Jeremy Posner Chairman 1999 $ 75,000 $---- $---- ---- ---- ---- ----
Bruce Arnstein Chief 1999 $101,000 $---- $---- ---- ---- ---- ----
Operating
Officer
</TABLE>
- ----------------
(1) As of December 31, 1999, Mr. Leighton's annual salary from Vianet is
$250,000, Mr. Posner's annual salary from Vianet is $150,000 and Mr.
Arnstein's annual salary from Vianet is $250,000.
(2) The number of securities under options granted reflects the number of
Vianet Shares that may be purchased upon the exercise of such options.
STOCK OPTIONS GRANTS AND EXERCISES
The following table shows the value at December 31, 1999 of unexercised
options held by the named executive officers:
<PAGE>
<TABLE>
<CAPTION>
STOCK OPTIONS GRANTS AND EXERCISES
The following table shows the value at December 31, 1999 of unexercised
options held by the named executive officers:
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-end Option Values
Number of securities Value of unexercised
underlying unexercised in-the-money optionsat fiscal
options at fiscal year-end
year-end (#) ($)
Name Shares acquired on Value Realized Exercisable/unexercisable Exercisable/unexercisable*
exercise (#) ($)
<S> <C> <C> <C> <C>
Peter Leightron, Nil Nil 200,000 / Nil (1) $612,500(2)
President and Chief
Executive Officer
Jeremy Posner, Nil Nil 200,000 / Nil (1) $612,500(2)
Chairman
Bruce Arnstein, Nil Nil 66,667 / 83,333 (1) $170,834(2)
Chief Operating
Officer
</TABLE>
- ---------------------------
(1) Represents presently exercisable options to purchase 200,000 shares of
common stock at $1.00 per share. (2) Assumes a fair market value of $4.0625 per
share of common stock which is the closing price for the
Company's common stock on December 31, 1999.
EMPLOYMENT CONTRACTS
In March 2000, Vianet's Board of Directors approved a two-year
employment agreement with Bruce Arnstein, effective as of November 24, 1999,
pursuant to which Mr. Arnstein has been retained as Chief Operating Officer of
the Company at an annual salary of $250,000. Mr. Arnstein is entitled to a bonus
pursuant to his employment agreement at the discretion of the Board of Directors
or compensation committee. In addition, the employment agreement provides that
Vianet shall issue four year options to purchase an aggregate of 150,000 shares
of common stock at an exercise price equal to the Closing Bid price for the
common stock on November 24, 1999, 100,000 of which options shall May 1, 2000
and the remaining 50,000 options of which shall vest November 1, 2000. Such
options shall also have piggy-back registration rights. The employment agreement
contains a covenant not to compete whereby Mr. Arnstein agrees, for the term of
the employment agreement, not to (i) directly or indirectly solicit any customer
or known prospective customer who has contracted with Vianet to purchase
products or services during the then preceding twelve month period. The
employment agreement is terminable at will by either party upon sixty days
written notice to the other after the initial two-year term. In the event that
Vianet and Mr. Arnstein mutually agree to terminate the employment agreement
prior to the expiration of the term of the employment agreement, Mr. Arnstein
shall be paid through the term of the employment agreement, and any stock
options that have not vested by the effective date of termination shall become
vested.
<PAGE>
TRANSACTIONS WITH MANAGEMENT
In April 2000, Vianet entered into three-year consulting agreements
with CFM Capital Limited, an entity owned and controlled by Peter Leighton, and
Xelix Capital Limited., an entity owned and controlled by Jeremy Posner,
effective as of January 1, 2000. The consulting agreements provide for base fees
to CFM Capital Limited of $250,000 and base fees to Xelix Capital Limited of
$150,000 per year (the "Base Fee"). In addition, consulting agreements provide
that Vianet shall pay such additional compensation as shall be determined from
time to time by the Board of Directors based upon the attainment of specific
criteria as agreed to from time to time. The consulting agreements also provide
for reimbursement of reasonable costs and expenses incurred. The consulting
agreement are terminable (i) by either party in the event the other party fails
to perform in accordance with the provisions of this Agreement, or (ii) by
Vianet, at any time, upon thirty (30) days written notice. Upon termination the
consultant shall cease all provision of services and no invoice shall be made
for services performed after notice of suspension or termination. Upon
termination, for any reason except breach of this agreement by consultant,
Vianet shall pay to consultant an amount equal to or a change in control of
Vianet, in addition to earned but unpaid Consulting Fees payable in accordance
with Section 3, Vianet shall pay to Consultant severance in the amount equal to
two times the Base Fee. The severance amount shall be payable in quarterly
installments with the first payment due not later than thirty (30) days after
termination. Except for the foregoing terms, Vianet has not entered into other
employment or consulting agreements with any of the Named Executive Officers.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of stockholders intended to be presented at next year's
Annual Meeting of Stockholders must be received by Elizabeth Disiere, Vianet
Technologies, Inc., 83 Mercer Street, New York, New York, no later than January
16, 2001.
OTHER PROPOSED ACTION
The Board of Directors is not aware of any other business that will
come before the Meeting, but if any such matters are properly presented, the
proxies solicited hereby will be voted in accordance with the best judgment of
the persons holding the proxies. All shares represented by duly executed proxies
will be voted at the Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Company's Common
Stock (collectively, "Reporting Persons") to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and changes in
ownership of the Company's Common Stock. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on its review of the copies of
such reports received or written representations from certain Reporting Persons
that no other reports were required, the Company believes that during its fiscal
year ended December 31, 1999, all Reporting Persons complied with all applicable
filing requirements.
AVAILABILITY OF CERTAIN DOCUMENTS REFERRED TO HEREIN
THIS PROXY STATEMENT REFERS TO CERTAIN DOCUMENTS OF THE COMPANY THAT ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS ARE AVAILABLE TO ANY
PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS
DELIVERED, UPON ORAL OR WRITTEN REQUEST, WITHOUT CHARGE, DIRECTED TO ELIZABETH
DISIERE, VIANET TECHNOLOGIES, INC., 83 MERCER STREET, NEW YORK, NEW YORK 10012,
TELEPHONE NUMBER (212) 219-7680. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, SUCH REQUESTS SHOULD BE MADE BY MAY 20, 2000.
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business that will be
presented to the Annual Meeting. If any other business is properly brought
before the Annual Meeting, proxies in the enclosed form will be voted in respect
thereof as the proxy holders deem advisable.
It is important that the proxies be returned promptly and that your
shares be represented. Stockholders are urged to mark, date, execute and
promptly return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ ELIZABETH DISIERE
Elizabeth Disiere
Secretary
New York, New York
May 15, 2000
<PAGE>
PROXY PROXY
VIANET TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING TO BE HELD ON JUNE 1, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter Leighton and Jeremy Posner, or
either of them, as proxies, each with the power to appoint his substitute, to
represent and to vote all the shares of common stock of Vianet Technologies,
Inc. (the "Company"), which the undersigned would be entitled to vote, at the
Company's Annual Meeting of Stockholders to be held on June 1, 2000 and at any
adjournments thereof, subject to the directions indicated on the reverse side
hereof.
In their discretion, the Proxies are authorized to vote upon any other
matter that may properly come before the meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE,
BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
ALL NOMINEES AND FOR THE PROPOSALS LISTED ON THE REVERSE SIDE.
IMPORTANT--This Proxy must be signed and dated on the reverse side.
<PAGE>
THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT!
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of
Vianet Technologies, Inc. to be held at the Dallas Marriott Quorom, 14901 Dallas
Parkway, Dallas, Texas 75240 on June 1, 2000 at 10:00 a.m. (local time).
Please read the proxy statement which describes the proposals and
presents other important information, and complete, sign and return your proxy
promptly in the enclosed envelope.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1-5
1. ELECTION OF DIRECTORS -- For Withhold
Nominees:
Jeremy T.G. Posner [_] [_]
Peter Leighton [_] [_]
Robert H. Bailey [_] [_]
Darrell J. Elliott [_] [_]
Timothy P. Sullivan [_] [_]
F. Paul Whitlock [_] [_]
(Except nominee(s) written above)
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
2. Proposal to adopt a classified [_] [_] [_]
Board of Directors.
For Against Abstain
3. Proposal to approve an amendment to [_] [_] [_]
the Company's Articles of Incorporation
to authorize a class of preferred stock
For Against Abstain
4. Proposal to approve the Company's 1999 [_] [_] [_]
Employee Stock Option Plan.
For Against Abstain
5. Proposal to approve the Company's [_] [_] [_]
Reincorporation to Delaware.
For Against Abstain
6. Proposal to ratify Edward Isaacs LLP [_] [_] [_]
as independent auditors.
</TABLE>
If you plan to attend the Annual Meeting please mark this box [_]
Dated:________________, 2000
Signature ______________________________________________________________________
Name (printed) _________________________________________________________________
Title __________________________________________________________________________
Important: Please sign exactly as name appears on this proxy. When signing
as attorney, executor, trustee, guardian, corporate officer, etc., please
indicate full title.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
VIANET TECHNOLOGIES, INC.
FIRST: The name of the corporation is Vianet Technologies, Inc. (the
"Corporation").
SECOND: That the Board of Directors of the Corporation, in lieu of meeting
by consent, adopted the following resolution:
RESOLVED that the Board of Directors hereby declares it advisable and in
the best interest of the Corporation that Article FOUR of the Certificate of
Incorporation be amended to read as follows:
1. The total number of shares which the corporation shall have authority to
issue is 110,000,000, all of which have a par value of $0.001; 100,000,000 of
said shares are Common Stock and 10,000,000 of said shares are Preferred Stock.
2. The powers, preferences and rights, and the qualifications, limitations
and restrictions of the Corporation's Common Stock and Preferred Stock are as
follows:
(a) holders of the Corporation's Common Stock as a class, have equal
ratable rights to receive dividends when, as and if declared by the Board
of Directors, out of funds legally available therefor and are entitled upon
liquidation of the Company to share ratably in the net assets available for
distribution, are not redeemable and have no pre-emptive or similar rights;
and holders of the Corporation's Common Stock have one non-cumulative vote
for each share held of record on all matters to be voted on by the
Corporation's stockholders.
(b) the shares of Preferred Stock may be issued in series, and shall
have such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative participating, optional or other
special rights, and qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions providing
for the issuance of such stock adopted from time to time by the Board of
Directors. The Board of Directors is hereby expressly vested with the
authority to determine and fix in the resolution or resolutions providing
for the issuances of Preferred Stock the voting powers, designations,
preferences and rights, and the qualifications, limitations or restrictions
thereof, of each such series to the full extent now or hereafter permitted
by the laws of the State of Delaware.
THIRD: The vote by which the stockholders holding shares in the Corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a vote
by classes or series, or as may be required by the provisions of the articles of
incorporation have voted in favor of the amendments is
- -------------------------------.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed this ___ day of June __, 2000.
- ------------------------ -----------------------
Peter Leighton, President Elizabeth Disiere, Secretary
State of:___________________
County of:_________________
This instrument was acknowledged before me on ________________, 2000 by Peter
Leighton as President as designated to sign this certificate of Vianet
Technologies, Inc.
- ---------------------------
Notary Public Signature
<PAGE>
EXHIBIT B
VIANET TECHNOLOGIES, INC.
1999 STOCK INCENTIVE PLAN
1. Purpose
The purpose of this 1999 Stock Incentive Plan (the "Plan") of Vianet
Technologies, Inc., a Nevada corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall include
any of the Company's present or future subsidiary corporations as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a significant interest, as determined by the Board of
Directors of the Company (the "Board").
2. Eligibility
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant".
3. Administration, Delegation
(1) Administration by Board of Directors. The Plan will be administered by the
Board. The Board shall have authority to grant Awards and to adopt, amend and
repeal such administrative rules, guidelines and practices relating to the Plan
as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.
(2) Delegation to Executive Officers. To the extent permitted by applicable law,
the Board may delegate to one or more executive officers of the Company the
power to make Awards and exercise such other powers under the Plan as the Board
may determine, provided that the Board shall fix the maximum number of shares
subject to Awards and the maximum number of shares for any one Participant to be
made by such executive officers.
(3) Appointment of Committees. To the extent permitted by applicable law, the
Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). If and when the common
stock, $.01 par value per share, of the Company (the "Common Stock") is
registered under the Securities Exchange Act of 1934 (the "Exchange Act"), the
Board shall appoint one such Committee of not less than two members, each member
of which shall be an "outside director" within the meaning of Section 162(m) of
the Code and a "non-employee director" as defined in Rule 16b-3 promulgated
under the Exchange Act. All references in the Plan to the "Board" shall mean the
Board or a Committee of the Board or the executive officer referred to in
Section 3(b) to the extent that the Board's powers or authority under the Plan
have been delegated to such Committee or executive officer.
<PAGE>
4. Stock Available for Awards.
--------------------------
(1) Number of Shares. Subject to adjustment under Section 8, Awards may be made
under the Plan for up to 5,000,000 shares of Common Stock. If any Award expires
or is terminated, surrendered or canceled without having been fully exercised or
is forfeited in whole or in part or results in any Common Stock not being
issued, the unused Common Stock covered by such Award shall again be available
for the grant of Awards under the Plan, subject, however, in the case of
Incentive Stock Options (as hereinafter defined), to any limitation required
under the Code. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.
(2) Per-Participant Limit. Subject to adjustment under Section 8, for Awards
granted after the Common Stock is registered under the Exchange Act, the maximum
number of shares of Common Stock with respect to which an Award may be granted
to any Participant under the Plan shall be 100,000 per calendar year. The
per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code.
5. Stock Options
(1) General. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
(2) Incentive Stock Options. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
(3) Exercise Price. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.
(4) Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement.
(5) Exercise of Option. Options may be exercised by delivery to the Company of a
written notice of exercise signed by the proper person or by any other form of
notice (including electronic notice) approved by the Board together with payment
in full as specified in Section 5(f) for the number of shares for which the
Option is exercised.
(6) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option
granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise provide in an
option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price or (ii) delivery by the Participant
to the Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price;
(3) when the Common Stock is registered under the Exchange Act, by delivery of
shares of Common Stock owned by the Participant valued at their fair market
value as determined by (or in a manner approved by) the Board in good faith
("Fair Market Value"), provided (i) such method of payment is then permitted
under applicable law and (ii) such Common Stock was owned by the Participant at
least six months prior to such delivery;
5
<PAGE>
(4) to the extent permitted by the Board, in its sole discretion by (i) delivery
of a promissory note of the Participant to the Company on terms determined by
the Board, or (ii) payment of such other lawful consideration as the Board may
determine; or
(5) by any combination of the above permitted forms of payment.
6. Restricted Stock
(1) Grants. The Board may grant Awards entitling recipients to acquire shares of
Common Stock, subject to the right of the Company to repurchase all or part of
such shares at their issue price or other stated or formula price (or to require
forfeiture of such shares if issued at no cost) from the recipient in the event
that conditions specified by the Board in the applicable Award are not satisfied
prior to the end of the applicable restriction period or periods established by
the Board for such Award (each, a "Restricted Stock Award").
(2) Terms and Conditions. The Board shall determine the terms and conditions of
any such Restricted Stock Award, including the conditions for repurchase (or
forfeiture) and the issue price, if any. Any stock certificates issued in
respect of a Restricted Stock Award shall be registered in the name of the
Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
<PAGE>
7. Other Stock-Based Awards
The Board shall have the right to grant other Awards based upon the
Common Stock having such terms and conditions as the Board may determine,
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Stock and the grant of stock appreciation
rights.
8. Adjustments for Changes in Common Stock and Certain Other Events
(1) Changes in Capitalization. In the event of any stock split, reverse stock
split, stock dividend, recapitalization, combination of shares, reclassification
of shares, spin-off or other similar change in capitalization or event, or any
distribution to holders of Common Stock other than a normal cash dividend, (i)
the number and class of securities available under this Plan, (ii) the
per-Participant limit set forth in Section 4(b), (iii) the number and class of
securities and exercise price per share subject to each outstanding Option, (iv)
the repurchase price per share subject to each outstanding Restricted Stock
Award, and (v) the terms of each other outstanding Award shall be appropriately
adjusted by the Company (or substituted Awards may be made, if applicable) to
the extent the Board shall determine, in good faith, that such an adjustment (or
substitution) is necessary and appropriate. If this Section 8(a) applies and
Section 8(c) also applies to any event, Section 8(c) shall be applicable to such
event, and this Section 8(a) shall not be applicable.
(2) Liquidation or Dissolution. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.
(3) Acquisition and Change in Control Events
(1) Definitions
(1) An "Acquisition Event" shall mean:
(1) any merger or consolidation of the
Company with or into another entity
as a result of which the Common
Stock is converted into or exchanged
for the right to receive cash,
securities or other property; or
(2) any exchange of shares of the
Company for cash, securities or
other property pursuant to a
statutory share exchange
transaction.
<PAGE>
(2) A "Change in Control Event" shall mean:
(1) the acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership of any capital
stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) 30% or more of either
(x) the then-outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (y) the
combined voting power of the then-outstanding securities of
the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (i),
the following acquisitions shall not constitute a Change in
Control Event: (A) any acquisition directly from the Company
(excluding an acquisition pursuant to the exercise,
conversion or exchange of any security exercisable for,
convertible into or exchangeable for common stock or voting
securities of the Company, unless the Person exercising,
converting or exchanging such security acquired such
security directly from the Company or an underwriter or
agent of the Company), (B) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company, or
(C) any acquisition by any corporation pursuant to a
Business Combination (as defined below) which complies with
clauses (x) and (y) of subsection (iii) of this definition;
or (1)
(2) such time as the Continuing Directors (as defined
below) do not constitute a majority of the Board (or, if
applicable, the Board of Directors of a successor
corporation to the Company), where the term "Continuing
Director" means at any date a member of the Board (x) who
was a member of the Board on the date of the initial
adoption of this Plan by the Board or (y) who was nominated
or elected subsequent to such date by at least a majority of
the directors who were Continuing Directors at the time of
such nomination or election or whose election to the Board
was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall
be excluded from this clause (y) any individual whose
initial assumption of office occurred as a result of an
actual or threatened election contest with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents, by or on
behalf of a person other than the Board; or
(3) the consummation of a merger, consolidation,
reorganization, recapitalization or statutory share exchange
involving the Company or a sale or other disposition of all
or substantially all of the assets of the Company (a
"Business Combination"), unless, immediately following such
Business Combination, each of the following two conditions
is satisfied: (x) all or substantially all of the
individuals and entities who were the beneficial owners of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more
<PAGE>
than 50% of the then-outstanding shares of common stock and
the combined voting power of the then-outstanding securities
entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in
such Business Combination (which shall include, without
limitation, a corporation which as a result of such
transaction owns the Company or substantially all of the
Company's assets either directly or through one or more
subsidiaries) (such resulting or acquiring corporation is
referred to herein as the "Acquiring Corporation") in
substantially the same proportions as their ownership of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities, respectively, immediately prior to such
Business Combination and (y) no Person (excluding the
Acquiring Corporation or any employee benefit plan (or
related trust) maintained or sponsored by the Company or by
the Acquiring Corporation) beneficially owns, directly or
indirectly, 30% or more of the then-outstanding shares of
common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of
such corporation entitled to vote generally in the election
of directors (except to the extent that such ownership
existed prior to the Business Combination).
(2) Effect on Options
(1) Acquisition Event. Upon the occurrence of an
Acquisition Event (regardless of whether such event also
constitutes a Change in Control Event), or the execution by
the Company of any agreement with respect to an Acquisition
Event (regardless of whether such event will result in a
Change in Control Event), the Board shall provide that all
outstanding Options shall be assumed, or equivalent options
shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof); provided that if such
Acquisition Event also constitutes a Change in Control
Event, except to the extent specifically provided to the
contrary in the instrument evidencing any Option or any
other agreement between a Participant and the Company, such
assumed or substituted options shall be immediately
exercisable in full upon the occurrence of such Acquisition
Event. For purposes hereof, an Option shall be considered to
be assumed if, following consummation of the Acquisition
Event, the Option confers the right to purchase, for each
share of Common Stock subject to the Option immediately
prior to the consummation of the Acquisition Event, the
consideration (whether cash, securities or other property)
received as a result of the Acquisition Event by holders of
Common Stock for each share of Common Stock held immediately
prior to the consummation of the Acquisition Event (and if
holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that
if the consideration received as a result of the Acquisition
Event is not solely common stock of the acquiring or
succeeding corporation (or an affiliate thereof), the
Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received
upon the exercise of Options to consist solely of common
stock of the acquiring or succeeding corporation (or an
affiliate thereof) equivalent in fair market value to the
per share consideration received by holders of outstanding
shares of Common Stock as a result of the Acquisition Event.
<PAGE>
Notwithstanding the foregoing, if the acquiring or
succeeding corporation (or an affiliate thereof) does not
agree to assume, or substitute for, such Options, then the
Board shall, upon written notice to the Participants,
provide that all then unexercised Options will become
exercisable in full as of a specified time prior to the
Acquisition Event and will terminate immediately prior to
the consummation of such Acquisition Event, except to the
extent exercised by the Participants before the consummation
of such Acquisition Event; provided, however, in the event
of an Acquisition Event under the terms of which holders of
Common Stock will receive upon consummation thereof a cash
payment for each share of Common Stock surrendered pursuant
to such Acquisition Event (the "Acquisition Price"), then
the Board may instead provide that all outstanding Options
shall terminate upon consummation of such Acquisition Event
and that each Participant shall receive, in exchange
therefor, a cash payment equal to the amount (if any) by
which (A) the Acquisition Price multiplied by the number of
shares of Common Stock subject to such outstanding Options
(whether or not then exercisable), exceeds (B) the aggregate
exercise price of such Options.
(2) Change in Control Event that is not an Acquisition
Event. Upon the occurrence of a Change in Control Event that
does not also constitute an Acquisition Event, except to the
extent specifically provided to the contrary in the
instrument evidencing any Option or any other agreement
between a Participant and the Company, all Options
then-outstanding shall automatically become immediately
exercisable in full.
(3) Effect on Restricted Stock Awards
(1) Acquisition Event that is not a Change in Control
Event. Upon the occurrence of an Acquisition Event that is
not a Change in Control Event, the repurchase and other
rights of the Company under each outstanding Restricted
Stock Award shall inure to the benefit of the Company's
successor and shall apply to the cash, securities or other
property which the Common Stock was converted into or
exchanged for pursuant to such Acquisition Event in the same
manner and to the same extent as they applied to the Common
Stock subject to such Restricted Stock Award.
<PAGE>
(2) Change in Control Event. Upon the occurrence of a
Change in Control Event (regardless of whether such event
also constitutes an Acquisition Event), except to the extent
specifically provided to the contrary in the instrument
evidencing any Restricted Stock Award or any other agreement
between a Participant and the Company, all restrictions and
conditions on all Restricted Stock Awards then-outstanding
shall automatically be deemed terminated or satisfied.
(4) Effect on Other Awards
(1) Acquisition Event that is not a Change in Control
Event. The Board shall specify the effect of an Acquisition
Event that is not a Change in Control Event on any other
Award granted under the Plan at the time of the grant of
such Award.
(2) Change in Control Event. Upon the occurrence of a
Change in Control Event (regardless of whether such event
also constitutes an Acquisition Event), except to the extent
specifically provided to the contrary in the instrument
evidencing any other Award or any other agreement between a
Participant and the Company, all other Awards shall become
exercisable, realizable or vested in full, or shall be free
of all conditions or restrictions, as applicable to each
such Award.
9. General Provisions Applicable to Awards
(1) Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.
(2) Documentation. Each Award shall be evidenced by a written instrument in
such form as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.
(3) Board Discretion. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
(4) Termination of Status. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
<PAGE>
(5) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may, to the extent then permitted under applicable law, satisfy
such tax obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.
(6) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
(7) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
(8) Acceleration. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of restrictions in full or in part or that any other Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.
10. Miscellaneous
(1) No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(2) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
<PAGE>
(3) Effective Date and Term of Plan. The Plan shall become effective on the
date on which it is adopted by the Board, but no Award granted to a Participant
designated by the Board as subject to Section 162(m) of the Code by the Board
shall become exercisable, vested or realizable, as applicable to such Award,
unless and until the Plan has been approved by the Company's stockholders to the
extent stockholder approval is required by Section 162(m) in the manner required
under Section 162(m) (including the vote required under Section 162(m)). No
Awards shall be granted under the Plan after the completion of ten years from
the earlier of (i) the date on which the Plan was adopted by the Board or (ii)
the date the Plan was approved by the Company's stockholders, but Awards
previously granted may extend beyond that date.
(4) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that to the extent required by
Section 162(m) of the Code, no Award granted to a Participant designated as
subject to Section 162(m) by the Board after the date of such amendment shall
become exercisable, realizable or vested, as applicable to such Award (to the
extent that such amendment to the Plan was required to grant such Award to a
particular Participant), unless and until such amendment shall have been
approved by the Company's stockholders as required by Section 162(m) (including
the vote required under Section 162(m)).
(5) Governing Law. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Nevada, without regard to any applicable conflicts of law.
<PAGE>
Exhibit C
EXHIBIT C
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Merger Agreement"), is made as
of _________, 2000, by and between Vianet Technologies, Inc., a Nevada
corporation (the "Company"), and Vianet Technologies, Inc., a Delaware
corporation ("Vianet Delaware," and together with the Company, the "Constituent
Corporations").
This Merger Agreement has been approved, adopted, certified, executed
and acknowledged by each of the Constituent Corporations in accordance with
Section 252 of the General Corporation Law of the State of Delaware.
The authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, par value $0.001 ("Company Common Stock"), and the
authorized capital stock of Vianet Delaware consists of 100,000,000 shares of
Common Stock, $0.001 par value (the "Vianet Delaware Common Stock"), and
10,000,000 shares of Preferred Stock, $0.001 par value. The directors of the
Constituent Corporations deem it advisable and to the advantage of said
corporations that the Company merge into Vianet Delaware upon the terms and
conditions provided herein.
NOW, THEREFORE, the parties hereby adopt the plan of reorganization
encompassed by this Merger Agreement and hereby agree that the Company shall
merge into Vianet Delaware on the following terms, conditions and other
provisions:
1. TERMS AND CONDITIONS
1.1 MERGER. The Company shall be merged with and into Vianet Delaware,
which shall be the surviving corporation effective at the earlier of the date
when this Merger Agreement is filed as part of the required Articles of Merger
with the Secretary of State of the State of Nevada or the date when a
certificate of Merger is filed with the Secretary of State of the State of
Delaware (the "Effective Date").
1.2 SUCCESSION. On the Effective Date, Vianet Delaware shall succeed to
all of the rights, privileges, powers, immunities and franchises and all the
property, real, personal and mixed of the Company, without the necessity for any
separate transfer. Vianet Delaware shall thereafter be responsible and liable
for all liabilities and obligations of the Company, and neither the rights of
creditors nor any liens on the property of the Company shall be impaired by the
merger.
1.3 COMMON STOCK OF THE COMPANY AND VIANET DELAWARE. Upon the Effective
Date, by virtue of the merger and without any further action on the part of the
Constituent Corporations or their stockholders, (i) each share of Company Common
Stock issued and outstanding immediately prior to the Effective Date shall be
changed and converted into and become one fully paid and nonassessable share of
Vianet Delaware Common Stock; and (ii) each share of Vianet Delaware Common
Stock issued and outstanding immediately prior to the Effective Date shall be
cancelled and returned to the status of authorized but unissued shares, without
the payment of any consideration therefor.
<PAGE>
1.4 STOCK CERTIFICATES. On and after the Effective Date, all of the
outstanding certificates that prior to that time represented shares of Company
Common Stock shall be deemed for all purposes to evidence ownership of and to
represent the shares of Vianet Delaware into which the shares of the Company
represented by such certificates have been converted as provided herein and
shall be so registered on the books and records of Vianet Delaware or its
transfer agents. The registered owner of any such outstanding stock certificate
shall, until such certificate shall have been surrendered for transfer or
conversion or otherwise accounted for to Vianet Delaware or its transfer agents,
have and be entitled to exercise any voting and other rights with respect to and
to receive any dividend and other distributions upon the shares of Vianet
Delaware evidenced by such outstanding certificate as provided above.
1.5 OPTIONS. On the Effective Date, Vianet Delaware will assume and
continue the stock option plan of the Company and any successor plan or plans,
and the outstanding and unexercised portions of all options to buy Company
Common Stock shall become options for the same number of shares of Vianet
Delaware Common Stock with no other changes in the terms and conditions of such
options, including exercise prices, and effective upon the Effective Date,
Vianet Delaware hereby assumes the outstanding and unexercised portions of such
options and the obligations of the Company with respect thereto.
1.6 ACTS, PLANS, POLICIES, AGREEMENTS, ETC. All corporate acts, plans,
policies, agreements, arrangements, approvals and authorizations of the Company,
its stockholders, Board of Directors and committees thereof, officers and agents
which were valid and effective immediately prior to the Effective Date, shall be
taken for all purposes as the acts, plans, policies, agreements, arrangements,
approvals and authorizations of Vianet Delaware and shall be as effective and
binding thereon as the same were with respect to the Company.
2. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 CERTIFICATE OF INCORPORATION AND BYLAWS. The Certificate of
Incorporation and Bylaws of Vianet Delaware as in effect immediately prior to
the Effective Date shall remain the Certificate of Incorporation and Bylaws of
Vianet Delaware after the Effective Date.
2.2 DIRECTORS AND OFFICERS. On the Effective Date, the Board of
Directors of Vianet Delaware will consist of the members of the Board of
Directors of the Company immediately prior to the Merger. The directors will
continue to hold office as directors of Vianet Delaware for the same term for
which they would otherwise serve as directors of the Company. The individuals
serving as executive officers of the Company immediately prior to the Merger
will serve as executive officers of Vianet Delaware upon the effectiveness of
the Merger.
3. MISCELLANEOUS
3.1 FURTHER ASSURANCES. From time to time, and when required by Vianet
Delaware or by its successors and assigns, there shall be executed and delivered
on behalf of the Company such deeds and other instruments, and there shall be
taken or caused to be taken by it such further and other action, as shall be
appropriate and necessary in order to vest or perfect, or to conform of record
or otherwise, in Vianet Delaware the title to and possession of all the
property, intents, assets, rights, privileges, immunities, powers, franchises
and authority of the Company and otherwise to carry out the purposes of this
Merger Agreement, and the directors and officers of the Company are fully
authorized in the name and on behalf of the Company or otherwise to take any and
all such action and to execute and deliver any and all such deeds and other
instruments.
<PAGE>
3.2 AMENDMENT. At any time before or after approval by the stockholders
of the Company, this Merger Agreement may be amended in any manner (except that
any of the principal terms may not be amended without the approval of the
stockholders of the Company) as may be determined in the judgment determined in
the judgment of the respective Boards of Directors of the Company and Vianet
Delaware to be necessary, desirable or expedient in order to clarify the
intention of the parties hereto or to effect or facilitate the purpose and
intent of this Merger Agreement.
3.3 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 the Company, notwithstanding the approval of this Merger Agreement
by the stockholders of the Company, or the consummation of the merger may be
deferred for a reasonable period if, in the opinion of the Board of Directors of
the Company, such action would be in the best interests of the Constituent
Corporations.
3.4 GOVERNING LAW. This Merger Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.
<PAGE>
EXHIBIT D
ARTICLES OF INCORPORATION
CERTIFICATE OF INCORPORATION
OF
VIANET TECHNOLOGIES, INC.
FIRST: The name of the corporation is Vianet Technologies, Inc.
SECOND: The address of its registered office in the State of Delaware is
1013 Centre Road, City of Wilmington, 19805, County of New Castle; and the
registered agent of the corporation in the State of Delaware at such address is
Corporation Service Company.
THIRD: The nature of the business or purposes to be conducted or promoted
by the corporation is: To engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
FOURTH: 1. The total number of shares which the corporation shall have
authority to issue is 110,000,000, all of which have a par value of $0.001;
100,000,000 of said shares are Common Stock and 10,000,000 of said shares are
Preferred Stock.
2. The powers, preferences and rights, and the qualifications, limitations
and restrictions of the Corporation's Common Stock and Preferred Stock are as
follows:
(a) holders of the Corporation's Common Stock as a
class, have equal ratable rights to receive dividends when,
as and if declared by the Board of Directors, out of funds
legally available therefor and are entitled upon liquidation
of the Company to share ratably in the net assets available
for distribution, are not redeemable and have no pre-emptive
or similar rights; and holders of the Corporation's Common
Stock have one non-cumulative vote for each share held of
record on all matters to be voted on by the Corporation's
stockholders.
(b) the shares of Preferred Stock may be issued in
series, and shall have such voting powers, full or limited,
or no voting powers, and such designations, preferences and
relative participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or
resolutions providing for the issuance of such stock adopted
from time to time by the Board of Directors. The Board of
Directors is hereby expressly vested with the authority to
determine and fix in the resolution or resolutions providing
for the issuances of Preferred Stock the voting powers,
designations, preferences and rights, and the
qualifications, limitations or restrictions thereof, of each
such series to the full extent now or hereafter permitted by
the laws of the State of Delaware.
FIFTH: The corporation is to have perpetual existence.
<PAGE>
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter or repeal
the By-Laws of the corporation.
SEVENTH: Meetings of stockholders may be held within or without the State
of Delaware, as the By-Laws may provide. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the corporation. Elections of directors
need not be by written ballot unless the By-Laws of the corporation shall so
provide.
EIGHTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders, directors or any other person herein are granted subject to this
reservation.
NINTH: No director of the corporation shall be personally liable to the
corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, as the same exists or hereafter may be amended, or (iv) for any
transaction from which the director derived an improper personal benefit. If the
Delaware General Corporation Law hereafter is amended to authorize the further
elimination or limitation of the liability of directors, then the liability of a
director of the corporation, in addition to the limitation on personal liability
provided herein, shall be limited to the fullest extent permitted by the amended
Delaware General Corporation Law. Any repeal or modification of this Article by
the stockholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
corporation existing at the time of such repeal or modification.
TENTH: The name and mailing address of the incorporator is:
Jeremy Posner
c/o Vianet Technologies, Inc.
83 Mercer Street
New York, New York 10012
I, THE UNDERSIGNED, being the sole incorporator, hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this Certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this ___ day of ______, 2000.
------------------------
Jeremy Posner
<PAGE>
EXHIBIT E
BY-LAWS
OF
VIANET TECHNOLOGIES, INC.
ARTICLE I. - Stockholders
1. Place of Meetings. All meetings of stockholders shall be held at such
place within or without the State of Delaware as may be designated from time to
time by the Board of Directors, the Chairman of the Board or the President or,
if not so designated, at the registered office of the corporation.
2. Annual Meeting. The annual meeting of stockholders for the election of
directors and for the transaction of such other business as may properly be
brought before the meeting shall be held on a date to be fixed by the Board of
Directors, the Chairman of the Board or the President (which date shall not be a
legal holiday in the place where the meeting is to be held) at the time and
place to be fixed by the Board of Directors, the Chairman of the Board or the
President and stated in the notice of the meeting. If no annual meeting is held
in accordance with the foregoing provisions, the Board of Directors shall cause
the meeting to be held as soon thereafter as is convenient. If no annual meeting
is held in accordance with the foregoing provisions, a special meeting may be
held in lieu of the annual meeting, and any action taken at that special meeting
shall have the same effect as if it had been taken at the annual meeting, and in
such case all references in these By-Laws to the annual meeting of the
stockholders shall be deemed to refer to such special meeting.
3. Special Meetings. Special meetings of stockholders may be called at any
time only by the Chairman of the Board, the President or the Board of Directors,
and shall be called by the President or the Secretary at the request in writing
of a majority of the directors or stockholders entitled to vote or as otherwise
required by the Delaware General Corporation Law. Business transacted at any
special meeting of stockholders shall be limited to matters relating to the
purpose or purposes stated in the notice of meeting.
4. Notice of Meetings. Except as otherwise provided by law, written notice
of each meeting of stockholders, whether annual or special, shall be given not
less than 10 nor more than 60 days before the date of the meeting to each
stockholder entitled to vote at such meeting. The notices of all meetings shall
state the place, date and hour of the meeting. The notice of a special meeting
shall state, in addition, the purpose or purposes for which the meeting is
called. If mailed, notice is given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the corporation.
<PAGE>
5. Voting List. The officer who has charge of the stock ledger of the
corporation shall prepare, at least 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
10 days prior to the meeting, at a place within the city 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 of the meeting, and may be inspected by any
stockholder who is present.
6. Quorum. Except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote at
the meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business.
7. Adjournments. Any meeting of stockholders may be adjourned to any other
time and to any other place at which a meeting of stockholders may be held under
these By-Laws by the stockholders present or represented at the meeting and
entitled to vote, although less than a quorum, or, if no stockholder is present,
by any officer entitled to preside at or to act as Secretary of such meeting. It
shall not be necessary to notify any stockholder of any adjournment of less than
30 days if the time and place of the adjourned meeting are announced at the
meeting at which adjournment is taken, unless after the adjournment a new record
date is fixed for the adjourned meeting. At the adjourned meeting, the
corporation may transact any business which might have been transacted at the
original meeting.
8. Voting and Proxies. Each stockholder shall have one vote for each share
of stock entitled to vote held of record by such stockholder and a proportionate
vote for each fractional share so held, unless otherwise provided by law, the
Certificate of Incorporation or these By-Laws. Each stockholder of record
entitled to vote at a meeting of stockholders may vote in person or may
authorize another person or persons to vote or act for him by written proxy
executed by the stockholder or his authorized agent. No such proxy shall be
voted or acted upon after six months from the date of its execution, unless the
proxy expressly provides for a longer period, which period in no case shall
exceed three (3) years from its execution. Such instrument shall be exhibited to
the Secretary at the meeting and shall be filed with the records of the
Corporation.
<PAGE>
9. Action at Meeting. When a quorum is present at any meeting, the holders
of a majority of the stock present or represented and voting on a matter (or if
there are two or more classes of stock entitled to vote as separate classes,
then in the case of each such class, the holders of a majority of the stock of
that class present or represented and voting on a matter) shall decide any
matter to be voted upon by the stockholders at such meeting, except when a
different vote is required by express provision of law, the Certificate of
Incorporation or these By-Laws. Any election of directors by stockholders shall
be determined by a plurality of the votes cast by the stockholders entitled to
vote at the election.
10. Nomination of Directors. Only persons who are nominated in accordance
with the following procedures shall be eligible for election as directors.
Nomination for election to the Board of Directors of the corporation at a
meeting of stockholders may be made by the Board of Directors or by any
stockholder of the corporation entitled to vote for the election of directors at
such meeting who complies with the notice procedures set forth in this Section
10. Such nominations, other than those made by or on behalf of the Board of
Directors, shall be made by notice in writing delivered or mailed by first class
United States mail, postage prepaid, to the Secretary, and received not less
than 60 days nor more than 90 days prior to such meeting; provided, however,
that if less than 70 days' notice or prior public disclosure of the date of the
meeting is given to stockholders, such nomination shall have been mailed or
delivered to the Secretary not later than the close of business on the 10th day
following the date on which the notice of the meeting was mailed or such public
disclosure was made, whichever occurs first. Such notice shall set forth (a) as
to each proposed nominee (i) the name, age, business address and, if known,
residence address of each such nominee, (ii) the principal occupation or
employment of each such nominee, (iii) the number of shares of stock of the
corporation which are beneficially owned by each such nominee, and (iv) any
other information concerning the nominee that must be disclosed as to nominees
in proxy solicitations pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including such person's written consent to be named as
a nominee and to serve as a director if elected); and (b) as to the stockholder
giving the notice (i) the name and address, as they appear on the corporation's
books, of such stockholder and (ii) the class and number of shares of the
corporation which are beneficially owned by such stockholder. The corporation
may require any proposed nominee to furnish such other information as may
reasonably be required by the corporation to determine the eligibility of such
proposed nominee to serve as a director of the corporation.
The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
<PAGE>
11. Notice of Business at Annual Meetings. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or (c) otherwise properly brought before an annual meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, if such business relates to the election of directors of the
corporation, the procedures in Section 10 of Article I must be complied with. If
such business relates to any other matter, the stockholder must have given
timely notice thereof in writing to the Secretary. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not less than 60 days nor more than 90 days prior to
the meeting; provided, however, that in the event that less than 70 days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the date on which
such notice of the date of the meeting was mailed or such public disclosure was
made, whichever occurs first. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (b) the name and address, as they appear on the corporation's books, of
the stockholder proposing such business, (c) the class and number of shares of
the corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding anything
in these By-Laws to the contrary, no business shall be conducted at any annual
meeting except in accordance with the procedures set forth in this Section 11
and except that any stockholder proposal which complies with Rule 14a-8 of the
proxy rules (or any successor provision) promulgated under the Securities
Exchange Act of 1934, as amended, and is to be included in the corporation's
proxy statement for an annual meeting of stockholders shall be deemed to comply
with the requirements of this Section 11.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 11, and if he should so
determine, the chairman shall so declare to the meeting that any such business
not properly brought before the meeting shall not be transacted.
12. Action without Meeting. Except as otherwise provided by the Certificate
of Incorporation, whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by any
provisions of the Corporation Law or the Certificate of Incorporation or of
these By-Laws, the meeting and vote of shareholders may be dispensed with if the
majority of the stockholders who would have been entitled to vote upon the
action if such meeting were held shall consent in writing to such corporate
action being taken.
13. Organization. The Chairman of the Board, or in his absence the Vice
Chairman of the Board, or the President, in the order named, shall call meetings
of the stockholders to order, and shall act as chairman of such meeting,
provided, however, that the Board of Directors may appoint any stockholder to
act as chairman of any meeting in the absence of the Chairman of the Board. The
Secretary of the corporation shall act as secretary at all meetings of the
stockholders; but in the absence of the Secretary at any meeting of the
stockholders, the presiding officer may appoint any person to act as secretary
of the meeting.
<PAGE>
ARTICLE II. - Directors
1. General Powers. The business and affairs of the corporation shall be
managed by or under the direction of a Board of Directors, who may exercise all
of the powers of the corporation except as otherwise provided by law, the
Certificate of Incorporation or these By-Laws.
2. Number; Election and Qualification. The number of directors which shall
constitute the whole Board of Directors shall be determined by resolution of the
Board of Directors, but in no event shall be less than three. The number of
directors may be decreased at any time and from time to time by a majority of
the directors then in office, but only to eliminate vacancies existing by reason
of the death, resignation, removal or expiration of the term of one or more
directors. The directors shall be elected at the annual meeting of stockholders
by such stockholders as have the right to vote on such election. Directors need
not be stockholders of the corporation.
3. Classes of Directors. The Board of Directors shall be and is divided
into three classes: Class I, Class II and Class III. No one class shall have
more than one director more than any other class. If a fraction is contained in
the quotient arrived at by dividing the designated number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class I, and if such fraction is two-thirds, one of the extra directors shall be
a member of Class I and one of the extra directors shall be a member of Class
II, unless otherwise provided from time to time by resolution adopted by the
Board of Directors.
4. Terms of Office. Each director shall serve for a term ending on the date
of the third annual meeting following the annual meeting at which such director
was elected; provided, that each initial director in Class I shall serve for a
term ending on the date of the annual meeting of stockholders in 2001; each
initial director in Class II shall serve for a term ending on the date of the
annual meeting of stockholders in 2002, and each initial director in Class III
shall serve for a term ending on the date of the annual meeting of stockholders
in 2003; and provided further, that the term of each director shall be subject
to the election and qualification of his successor and to his earlier death,
resignation or removal.
<PAGE>
5. Allocation of Directors Among Classes in the Event of Increases or
Decreases in the Number of Directors. In the event of any increase or decrease
in the authorized number of directors, (i) each director then serving as such
shall nevertheless continue as a director of the class of which he or she is a
member and (ii) the newly created or eliminated directorships resulting from
such increase or decrease shall be apportioned by the Board of Directors among
the three classes of directors so as to ensure that no one class has more than
one director more than any other class. To the extent possible, consistent with
the foregoing rule, any newly created directorships shall be added to those
classes whose terms of office are to expire at the latest dates following such
allocation, and any newly eliminated directorships shall be subtracted from
those classes whose terms of offices are to expire at the earliest dates
following such allocation, unless otherwise provided from time to time by
resolution adopted by the Board of Directors.
6. Quorum; Action at Meeting. (a) At all meetings of the Board of
Directors, the presence of a majority of the entire Board shall be necessary and
sufficient to constitute a quorum for the transaction of business, except as
otherwise provided by law, by the Certificate of Incorporation, or by these
By-Laws.
(b) A majority of the directors present at the time and place of any
regular or special meeting, although less than a quorum, may adjourn the same
from time to time without notice, until a quorum shall be present.
7. Removal. Directors of the corporation may be removed only for cause by
the affirmative vote of the holders of at least seventy-five percent (75%) of
the votes which all the stockholders would be entitled to cast in any annual
election of directors or class of directors.
8. Vacancies. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the Board, shall be filled
only by vote of a majority of the directors then in office, although less than a
quorum, or by a sole remaining director. A director elected to fill a vacancy
shall be elected to hold office until the next election of the class for which
such director shall have been chosen, subject to the election and qualification
of his successor and to his earlier death, resignation or removal.
9. Resignation. Any director may resign by delivering his written
resignation to the corporation at its principal office or to the Chairman of the
Board or Secretary. Such resignation shall be effective upon receipt unless it
is specified to be effective at some other time or upon the happening of some
other event.
<PAGE>
10. Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such time and place, either within or without the State
of Delaware, as shall be determined from time to time by the Board of Directors;
provided that any director who is absent when such a determination is made shall
be given notice of the determination. A regular meeting of the Board of
Directors may be held without notice immediately after and at the same place as
the annual meeting of stockholders.
11. Special Meetings. Special meetings of the Board of Directors may be
held at any time and place, within or without the State of Delaware, designated
in a call by the Chairman of the Board, President, or two or more directors.
12. Notice of Special Meetings. Notice of any special meeting of directors
shall be given to each director by the Secretary or by the officer or one of the
directors calling the meeting. Notice shall be duly given to each director (i)
by giving notice to such director in person or by telephone at least 24 hours in
advance of the meeting, (ii) by sending a telegram, telecopy or telex, or
delivering written notice by hand, to his last known business or home address at
least 24 hours in advance of the meeting, or (iii) by mailing written notice to
his last known business or home address at least 72 hours in advance of the
meeting. A notice or waiver of notice of a meeting of the Board of Directors
need not specify the purposes of the meeting.
13. Meetings by Telephone Conference Calls. Directors or any members of any
committee designated by the directors may participate in a meeting of the Board
of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation by such means shall constitute
presence in person at such meeting.
14. Action by Consent. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee of the Board of Directors
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent to the action in writing, and the written consents are
filed with the minutes of proceedings of the Board or committee.
<PAGE>
15. Committees. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members of the committee 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 of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors
and subject to the provisions of the General Corporation Law of the State of
Delaware, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it. Each such committee shall keep minutes and make such reports as
the Board of Directors may from time to time request. Except as the Board of
Directors may otherwise determine, any committee may make rules for the conduct
of its business, but unless otherwise provided by the directors or in such
rules, its business shall be conducted as nearly as possible in the same manner
as is provided in these By-Laws for the Board of Directors.
16. Compensation of Directors. Directors may be paid such compensation for
their services and such reimbursement for expenses of attendance at meetings as
the Board of Directors may from time to time determine. No such payment shall
preclude any director from serving the corporation or any of its parent or
subsidiary corporations in any other capacity and receiving compensation for
such service.
ARTICLE III. - Officers
1. Enumeration. The officers of the corporation shall consist of a Chairman
of the Board, President, a Secretary, a Treasurer and such other officers with
such other titles as the Board of Directors shall determine, including, but not
limited to, a Chief Executive Officer, a Vice Chairman of the Board, and one or
more Vice Presidents, Assistant Treasurers, and Assistant Secretaries. The Board
of Directors may appoint such other officers as it may deem appropriate.
2. Election. The President, Treasurer and Secretary shall be elected
annually by the Board of Directors at its first meeting following the annual
meeting of stockholders. Other officers may be appointed by the Board of
Directors at such meeting or at any other meeting.
3. Qualification. No officer need be a stockholder. Any two or more offices
may be held by the same person.
4. Tenure. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, each officer shall hold office until his
successor is elected and qualified, unless a different term is specified in the
vote choosing or appointing him, or until his earlier death, resignation or
removal.
5. Resignation and Removal. Any officer may resign by delivering his or her
written resignation to the corporation at its principal office or to the
Chairman of the Board, President or Secretary. Such resignation shall be
effective upon receipt unless it is specified to be effective at some other time
or upon the happening of some other event.
Any officer may be removed at any time, with or without cause, by vote of a
majority of the entire number of directors then in office.
<PAGE>
Except as the Board of Directors may otherwise determine, no officer who
resigns or is removed shall have any right to any compensation as an officer for
any period following his resignation or removal, or any right to damages on
account of such removal, whether his compensation be by the month or by the year
or otherwise, unless such compensation is expressly provided in a duly
authorized written agreement with the corporation.
6. Vacancies. The Board of Directors may fill any vacancy occurring in any
office for any reason and may, in its discretion, leave unfilled for such period
as it may determine any offices other than those of President, Treasurer and
Secretary. Each such successor shall hold office for the unexpired term of his
predecessor and until his successor is elected and qualified, or until his
earlier death, resignation or removal.
7. Chairman of the Board and Vice Chairman of the Board. The Board of
Directors shall appoint a Chairman of the Board. If the Board of Directors
appoints a Chairman of the Board, he shall perform such duties and possess such
powers as are assigned to him by the Board of Directors. Unless otherwise
provided by the Board of Directors, he shall preside at all meetings of the
stockholders, and if he is a director, at all meetings of the Board of
Directors. In addition, the Board of Directors may appoint a Vice Chairman of
the Board, who shall, in the absence or disability of the Chairman of the Board,
perform the duties and exercise the powers of the Chairman of the Board and
shall perform such other duties and possess such other powers as may from time
to time be vested in him or her by the Board of Directors.
8. Chief Executive Officer. The Board of Directors may appoint a Chief
Executive Officer. The person designated as the Chief Executive Officer of the
Company shall, subject to the direction of the Board of Directors, have general
charge and supervision of the business of the corporation.
9. President. Unless the Board of Directors has designated the Chairman of
the Board or another officer as Chief Executive Officer, the President shall be
the Chief Executive Officer of the corporation. The President shall perform such
other duties and shall have such other powers as the Chief Executive Officer or
the Board of Directors may from time to time prescribe.
10. Vice Presidents. Any Vice President shall perform such duties and
possess such powers as the Board of Directors or the Chief Executive Officer may
from time to time prescribe. In the event of the absence, inability or refusal
to act of the Chief Executive Officer, then, in the order determined by the
Board of Directors, the President (if he is not the Chief Executive Officer) and
the Vice President (or if there shall be more than one, the Vice Presidents)
shall perform the duties of the Chief Executive Officer and when so performing
shall have all the powers of and be subject to all the restrictions upon the
Chief Executive Officer. The Board of Directors may assign to any Vice President
the title of Executive Vice President, Senior Vice President or any other title
selected by the Board of Directors.
<PAGE>
11. Secretary and Assistant Secretaries. The Secretary shall perform such
duties and shall have such powers as the Board of Directors or the Chief
Executive Officer may from time to time prescribe. In addition, the Secretary
shall perform such duties and have such powers as are incident to the office of
the secretary, including without limitation the duty and power to give notices
of all meetings of stockholders and special meetings of the Board of Directors,
to attend all meetings of stockholders and the Board of Directors and keep a
record of the proceedings, to maintain a stock ledger and prepare lists of
stockholders and their addresses as required, to be custodian of corporate
records and the corporate seal and to affix and attest to the same on documents.
Any Assistant Secretary shall perform such duties and possess such powers
as the Board of Directors, the Chief Executive Officer or the Secretary may from
time to time prescribe. In the event of the absence, inability or refusal to act
of the Secretary, the Assistant Secretary (or if there shall be more than one,
the Assistant Secretaries in the order determined by the Board of Directors)
shall perform the duties and exercise the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at any meeting
of stockholders or directors, the person presiding at the meeting shall
designate a temporary secretary to keep a record of the meeting.
12. Treasurer and Assistant Treasurers. The Treasurer shall perform such
duties and shall have such powers as may from time to time be assigned to him or
her by the Board of Directors or the Chief Executive Officer. In addition, the
Treasurer shall perform such duties and have such powers as are incident to the
office of treasurer, including without limitation the duty and power to keep and
be responsible for all funds and securities of the corporation, to deposit funds
of the corporation in depositories selected in accordance with these By-Laws, to
disburse such funds as ordered by the Board of Directors, to make proper
accounts of such funds, and to render as required by the Board of Directors
statements of all such transactions and of the financial condition of the
corporation.
The Assistant Treasurers shall perform such duties and possess such powers
as the Board of Directors, the Chief Executive Officer or the Treasurer may from
time to time prescribe. In the event of the absence, inability or refusal to act
of the Treasurer, the Assistant Treasurer (or if there shall be more than one,
the Assistant Treasurers in the order determined by the Board of Directors)
shall perform the duties and exercise the powers of the Treasurer.
13. Salaries. Officers of the corporation shall be entitled to such
salaries, compensation or reimbursement as shall be fixed or allowed from time
to time by the Board of Directors.
<PAGE>
Article IV. - Capital Stock
1. Issuance of Stock. Unless otherwise voted by the stockholders and
subject to the provisions of the Certificate of Incorporation, the whole or any
part of any unissued balance of the authorized capital stock of the corporation
or the whole or any part of any unissued balance of the authorized capital stock
of the corporation held in its treasury may be issued, sold, transferred or
otherwise disposed of by vote of the Board of Directors in such manner, for such
consideration and on such terms as the Board of Directors may determine.
2. Certificates of Stock. Every holder of stock of the corporation
shall be entitled to have a certificate, in such form as may be prescribed by
law and by the Board of Directors, certifying the number and class of shares
owned by him or her in the corporation. Each such certificate shall be signed
by, or in the name of the corporation by, the Chairman or Vice Chairman, if any,
of the Board of Directors, or the President or a Vice President, and the
Treasurer or any Assistant Treasurer, or the Secretary or an Assistant Secretary
of the corporation. Any or all of the signatures on the certificate may be a
facsimile.
Each certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Certificate of Incorporation, the
By-Laws, applicable securities laws or any agreement among any number of
stockholders or among such holders and the corporation shall have conspicuously
noted on the face or back of the certificate either the full text of the
restriction or a statement of the existence of such restriction.
3. Transfers. Except as otherwise established by rules and regulations
adopted by the Board of Directors, and subject to applicable law, shares of
stock may be transferred on the books of the corporation by the surrender to the
corporation or its transfer agent of the certificate representing such shares
properly endorsed or accompanied by a written assignment or power of attorney
properly executed, and with such proof of authority or the authenticity of
signature as the corporation or its transfer agent may reasonably require.
Except as may be otherwise required by law, by the Certificate of Incorporation
or by these By-Laws, the corporation shall be entitled to treat the record
holder of stock as shown on its books as the owner of such stock for all
purposes, including the payment of dividends and the right to vote with respect
to such stock, regardless of any transfer, pledge or other disposition of such
stock until the shares have been transferred on the books of the corporation in
accordance with the requirements of these By-Laws.
<PAGE>
4. Lost, Stolen or Destroyed Certificates. The corporation may issue a
new certificate of stock in place of any previously issued certificate alleged
to have been lost, stolen, or destroyed, upon such terms and conditions as the
Board of Directors may prescribe, including the presentation of reasonable
evidence of such loss, theft or destruction and the giving of such indemnity as
the Board of Directors may require for the protection of the corporation or any
transfer agent or registrar.
5. Record Date. The Board of Directors may fix in advance a date as a
record date for the determination of the stockholders entitled to notice of or
to vote at any meeting of stockholders, or entitled to receive payment of any
dividend or other distribution or allotment of any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action. Such record date 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 to
which such record date relates.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day before the day on which notice is given,
or, if notice is waived, at the close of business on the day before the day on
which the meeting is held. The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
ARTICLE V. - General Provisions
1. Fiscal Year. Except as from time to time otherwise designated by the
Board of Directors, the fiscal year of the corporation shall begin on the first
day of January of each year and end on the last day of December in each year.
2. Corporate Seal. The corporate seal shall be in such form as shall be
approved by the Board of Directors.
3. Dividends. Subject to applicable law, dividends may be declared and paid
out of any funds available therefor, as often, in such amounts, and at such time
or times as the Board of Directors may determine.
4. Waiver of Notice. Whenever any notice whatsoever is required to be given
by law, by the Certificate of Incorporation or by these By-Laws, a waiver of
such notice either in writing signed by the person entitled to such notice or
such person's duly authorized attorney, or by telecopy or any other available
method, whether before, at or after the time stated in such waiver, or the
appearance of such person or persons at such meeting in person or by proxy,
shall be deemed equivalent to such notice.
<PAGE>
5. Voting of Securities. Except as the directors may otherwise designate,
the Chairman of the Board or Treasurer may waive notice of, and act as, or
appoint any person or persons to act as, proxy or attorney-in-fact for this
corporation (with or without power of substitution) at any meeting of
stockholders or shareholders of any other corporation or organization, the
securities of which may be held by this corporation.
6. Evidence of Authority. A certificate by the Secretary, or an Assistant
Secretary, or a temporary Secretary, as to any action taken by the stockholders,
directors, a committee or any officer or representative of the corporation shall
as to all persons who rely on the certificate in good faith be conclusive
evidence of such action.
7. Certificate of Incorporation. All references in these By-Laws to the
Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the corporation, as amended and in effect from time to time.
8. Conflicts of Interest; Transactions with Interested Parties. Any
conflicts of interest that may arise between the Corporation and the interests
of its officers and directors will be resolved in a fair manner which will
protect the interest of the Corporation pursuant to Delaware law. No contract or
transaction between the corporation and one or more of the directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of the directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or a
committee of the Board of Directors which authorizes the contract or transaction
or solely because his or their votes are counted for such purpose, if:
a. The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum;
b. The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
c. The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee of the Board of Directors, or the stockholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction.
<PAGE>
9. Severability. Any determination that any provision of these By-Laws is
for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-Laws.
10. Pronouns. All pronouns used in these By-Laws shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
person or persons may require.
ARTICLE VI. - Amendments
1. By the Stockholders.
(a) Section 3 of Article I and Article II (in its entirety) of
these By-Laws may each only be altered, amended or repealed by the affirmative
vote of the holders of at least seventy-five percent (75%) of the votes which
all the stockholders would be entitled to cast in any annual election.
(b) Except as provided in paragraph (a) of this Section 1,
these By-Laws may be altered, amended or repealed or new by-laws may be adopted
by the affirmative vote of the holders of a majority of the shares of the
capital stock of the corporation issued and outstanding and entitled to vote at
any regular or special meeting of stockholders, provided notice of such
alteration, amendment, repeal or adoption of new by-laws shall have been stated
in the notice of such regular or special meeting.
2. By the Board of Directors. Except as provided in paragraph (a) of
Section 1 of this Article VI, these By-Laws may be altered, amended or repealed
or new by-laws may be adopted by the affirmative vote of a majority of the
directors present at any regular or special meeting of the Board of Directors at
which a quorum is present.
ARTICLE VIII. - INDEMNITY
The Corporation shall indemnify to the full extent authorized by law
any person made or threatened to be made a party to an action or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director, officer or employee or
agent of the Corporation or any predecessor of the Corporation or serves or
served any other enterprise as a director, officer or employee or agent at the
request of the Corporation or any predecessor of the Corporation.
<PAGE>
EXHIBIT F
NEVADA REVISED STATUTES CHAPTERS 92A.300 THROUGH 92A.500
RIGHTS OF DISSENTING OWNERS
92A.300 DEFINITIONS.--As used in NRS 92A.300 to 92A.500, inclusive, unless the
context otherwise requires, the words and terms defined in NRS 92A.305 to
92A.335, inclusive, have the meanings ascribed to them in those sections.
92A.305 "BENEFICIAL STOCKHOLDER" DEFINED.--"Beneficial stockholder" means a
person who is a beneficial owner of shares held in a voting trust or by a
nominee as the stockholder of record.
92A.310 "CORPORATE ACTION" DEFINED.--"Corporate action" means the action of a
domestic corporation. 92A.315 "DISSENTER" DEFINED.--"Dissenter" means a
stockholder who is entitled to dissent from a domestic corporation's action
under NRS 92A.380 and who exercises that right when and in the manner required
by NRS 92A.410 to 92A.480, inclusive.
92A.320 "FAIR VALUE" DEFINED.--"Fair value," with respect to a dissenter's
shares, means the value of the shares immediately before the effectuation of the
corporate action to which he objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be inequitable.
92A.325 "STOCKHOLDER" DEFINED.--"Stockholder" means a stockholder of record or a
beneficial stockholder of a domestic corporation.
92A.330 "STOCKHOLDER OF RECORD" DEFINED.--"Stockholder of record" means the
person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
92A.335 "SUBJECT CORPORATION" DEFINED.--"Subject corporation" means the domestic
corporation which is the issuer of the shares held by a dissenter before the
corporate action creating the dissenter's rights becomes effective or the
surviving or acquiring entity of that issuer after the corporate action becomes
effective.
92A.340 COMPUTATION OF INTEREST.--Interest payable pursuant to NRS 92A.300 to
92A.500, inclusive, must be computed from the effective date of the action until
the date of payment, at the average rate currently paid by the entity on its
principal bank loans or, if it has no bank loans, at a rate that is fair and
equitable under all of the circumstances.
92A.350 RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED PARTNERSHIP.--A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
<PAGE>
92A.360 RIGHTS OF DISSENTING MEMBER OF DOMESTIC LIMITED-LIABILITY COMPANY.--The
articles of organization or operating agreement of a domestic limited-liability
company or, unless otherwise provided in the articles of organization or
operating agreement, an agreement of merger or exchange, may provide that
contractual rights with respect to the interest of a dissenting member are
available in connection with any merger or exchange in which the domestic
limited-liability company is a constituent entity.
92A.370 RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT CORPORATION.--1.
Except as otherwise provided in subsection 2 and unless otherwise provided in
the articles or bylaws, any member of any constituent domestic nonprofit
corporation who voted against the merger may, without prior notice, but within
30 days after the effective date of the merger, resign from membership and is
thereby excused from all contractual obligations to the constituent or surviving
corporations which did not occur before his resignation and is thereby entitled
to those rights, if any, which would have existed if there had been no merger
and the membership had been terminated or the member had been expelled.
2. Unless otherwise provided in its articles of incorporation or bylaws, no
member of a domestic nonprofit corporation, including, but not limited to, a
cooperative corporation, which supplies services described in chapter 704 of NRS
to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest in
real property, may resign and dissent pursuant to subsection 1.
92A.380 RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPORATE ACTIONS AND TO
OBTAIN PAYMENT FOR SHARES.--1. Except as otherwise provided in NRS 92A.370 to
92A.390, a stockholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic corporation is a
party:
(1) If approval by the stockholders is required for the merger by NRS
92A.120 to 92A.160, inclusive, or the articles of incorporation and he is
entitled to vote on the merger; or
(2) If the domestic corporation is a subsidiary and is merged with its
parent under NRS 92A. 180.
(b) Consummation of a plan of exchange to which the domestic corporation is
a party as the corporation whose subject owner's interests will be acquired, if
he is entitled to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the stockholders to
the event that the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting stockholders are entitled
to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment under NRS 92A.300
to 92A.500, inclusive, may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to him or
the domestic corporation.
92A.390 LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF CERTAIN CLASSES OR
SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF MERGER.--1. There is no
right of dissent with respect to a plan of merger or exchange in favor of
stockholders of any class or series which, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting at
which the plan of merger or exchange is to be acted on, were either listed on a
national securities exchange, included in the national market system by the
National Association of Securities Dealers, Inc., or held by at least 2,000
stockholders of record, unless:
<PAGE>
(a) The articles of incorporation of the corporation issuing the shares
provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu of
fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan
of merger or exchange, were either listed on a national securities exchange,
included in the national market system by the National Association of Securities
Dealers, Inc., or held of record by a least 2,000 holders of owner's interests
of record; or
(2) A combination of cash and owner's interests of the kind described
in sub-subparagraphs (I) and (II) of subparagraph (1) of paragraph (b).
2. There is no right of dissent for any holders of stock of the surviving
domestic corporation if the plan of merger does not require action of the
stockholders of the surviving domestic corporation under NRS 92A.130.
92A.400 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO PORTIONS ONLY TO SHARES
REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL STOCKHOLDER.--1. A
stockholder of record may assert dissenter's rights as to fewer than all of the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the subject corporation in
writing of the name and address of each person on whose behalf he asserts
dissenter's rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares held on
his behalf only if:
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the beneficial
stockholder or over which he has power to direct the vote.
92A.410 NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF DISSENT.--1. If a
proposed corporate action creating dissenters' rights is submitted to a vote at
a stockholders' meeting, the notice of the meeting must state that stockholders
are or may be entitled to assert dissenters' rights under NRS 92A.300 to
92A.500, inclusive, and be accompanied by a copy of those sections.
<PAGE>
2. If the corporate action creating dissenters' rights is taken BY WRITTEN
CONSENT OF THE STOCKHOLDERS OR without a vote of the stockholders, the domestic
corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430. (Last amended by Ch. 208, L. '97, eff.10-1-97.)
Ch. 208, L. '97, eff. 10-1-97, added matter in italic.
92A.420 PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES.--1. If a proposed
corporate action creating dissenters' rights is submitted to a vote at a
stockholders' meeting, a stockholder who wishes to assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1 is
not entitled to payment for his shares under this chapter.
92A.430 DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED TO ASSERT RIGHTS;
CONTENTS.--1. If a proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, the subject corporation shall deliver a
written dissenter's notice to all stockholders who satisfied the requirements to
assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to
what extent the transfer of the shares will be restricted after the demand for
payment is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of the
proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the subject corporation must receive the demand
for payment, which may not be less than 30 nor more than 60 days after the date
the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
92A.440 DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES; RETENTION OF RIGHTS
OF STOCKHOLDER.--1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
<PAGE>
2. The stockholder who demands payment and deposits his certificates, if any,
BEFORE THE PROPOSED CORPORATE ACTION IS TAKEN retains all other rights of a
stockholder until those rights are canceled or modified by the taking of the
proposed corporate action.
3. The stockholder who does not demand payment or deposit his certificates
where required, each by the date set forth in the dissenter's notice, is not
entitled to payment for his shares under this chapter. (Last amended by Ch. 208,
L. '97, eff. 10-1-97.) Ch. 208, L. '97, eff. 10-1-97, added matter in italic.
92A.450 UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER AFTER DEMAND FOR
PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER.--1. The subject corporation may
restrict the transfer of shares not represented by a certificate from the date
the demand for their payment is received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
92A.460 PAYMENT FOR SHARES: GENERAL REQUIREMENTS.--1. Except as otherwise
provided in NRS 92A.470, within 30 days after receipt of a demand for payment,
the subject corporation shall pay each dissenter who complied with NRS 92A.440
the amount the subject corporation estimates to be the fair value of his shares,
plus accrued interest. The obligation of the subject corporation under this
subsection may be enforced by the district court:
(a) Of the county where the corporation's registered office is
located; or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement
of income for that year, a statement of changes in the stockholders' equity
for that year and the latest available interim financial statements, if
any;
(b) A statement of the subject corporation's estimate of the fair
value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under NRS
92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
92A.470 PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE OF DISSENTER'S
NOTICE.--1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment, after
taking the proposed action, it shall estimate the fair value of the shares, plus
accrued interest, and shall offer to pay this amount to each dissenter who
agrees to accept it in full satisfaction of his demand. The subject corporation
shall send with its offer a statement of its estimate of the fair value of the
shares, an explanation of how the interest was calculated, and a statement of
the dissenters' right to demand payment pursuant to NRS 92A.480.
<PAGE>
92A.480 DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF SUBJECT CORPORATION;
DEMAND FOR PAYMENT OF ESTIMATE.--1. A dissenter may notify the subject
corporation in writing of his own estimate of the fair value of his shares and
the amount of interest due, and demand payment of his estimate, less any payment
pursuant to NRS 92A.460, or reject the offer pursuant to NRS 92A.470 and demand
payment of the fair value of his shares and interest due, if he believes that
the amount paid pursuant to NRS 92A.460 or offered pursuant to NRS 92A.470 is
less than the fair value of his shares or that the interest due is incorrectly
calculated.
2. A dissenter waives his right to demand payment pursuant to this section
unless he notifies the subject corporation of his demand in writing within 30
days after the subject corporation made or offered payment for his shares.
92A.490 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF SUBJECT CORPORATION;
POWERS OF COURT; RIGHTS OF DISSENTER.--1. If a demand for payment remains
unsettled, the subject corporation shall commence a proceeding within 60 days
after receiving the demand and petition the court to determine the fair value of
the shares and accrued interest. If the subject corporation does not commence
the proceeding within the 60-day period, it shall pay each dissenter hose demand
remains unsettled the amount demanded.
2. A subject corporation shall commence the proceeding in the district court of
the county where its registered office is located. If the subject corporation is
a foreign entity without a resident agent in the state, it shall commence the
proceeding in the county where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign entity was located.
3. The subject corporation shall make all dissenters, whether or not residents
of Nevada, whose demands remain unsettled, parties to the proceeding as in an
action against their shares. All parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced under
subsection 2 is plenary and exclusive. The court may appoint one or more persons
as appraisers to receive evidence and recommend a decision on the question of
fair value. The appraisers have the powers described in the order appointing
them, or any amendment thereto. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) For the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the subject corporation;
or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment pursuant to
NRS 92A.470.
92A.500 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT OF COSTS AND
FEES.--1. The court in a proceeding to determine fair value shall determine all
of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment.
<PAGE>
2. The court may also assess the fees and expenses of the counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if
the court finds the subject corporation did not substantially comply with the
requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.
3. If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the subject corporation, the
court may award to those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may assess the
costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters who are parties to the proceeding, in
amounts the court finds equitable, to the extent the court finds that such
parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced pursuant
to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68 or NRS 17.
115.
