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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PortaCom Wireless, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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PORTACOM WIRELESS, INC.
8055 W. MANCHESTER AVENUE, SUITE 730
PLAYA DEL REY, CALIFORNIA 90293
EXTRAORDINARY AND SPECIAL GENERAL MEETING
TO BE HELD DECEMBER 23, 1996
-----------------
SUPPLEMENT TO
PROXY STATEMENT
(INFORMATION CIRCULAR)
This Supplement to Proxy Statement (generally referred to in British Columbia
as an Information Circular) is furnished as a supplement to the Proxy Statement
that was circulated to you recently by the management of PortaCom Wireless,
Inc., a British Columbia, Canada, corporation (the "Company") in connection with
the solicitation of proxies to be used at the extraordinary and special general
meeting of stockholders of the Company to be held on December 23, 1996.
As indicated in the Proxy Statement, the Company has applied for a permit from
the California Department of Corporations (the "Department") authorizing the
sale and issuance of securities in the transactions that will be considered at
the meeting. The Department has scheduled a hearing on the fairness of the
transactions for Monday, December 9, 1996 (see accompanying Notice of Hearing).
The Department has asked the Company not to accept proxies until after the
fairness hearing. Accordingly, DO NOT RETURN YOUR PROXY TO PACIFIC CORPORATE
TRUST COMPANY UNTIL AFTER DECEMBER 9, 1996 (but before the deadline set out in
the Proxy Statement for depositing proxies). If you return your proxy card prior
to December 9, 1996, your proxy will have to be discarded and the Company will
send another proxy to you for completion and resubmission, prior to the deadline
for depositing proxies with Pacific Corporate Trust Company.
Dated at Playa Del Rey, California this 26th day of November, 1996
ON BEHALF OF THE BOARD
Douglas C. MacLellan
President, Chief Executive Officer and Director
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BEFORE THE DEPARTMENT OF CORPORATIONS
STATE OF CALIFORNIA
In the Matter of the Application of ) NOTICE OF HEARING
) PURSUANT TO
) SECTION 25142
PORTACOM WIRELESS, INC., ) OF THE CALIFORNIA
) CORPORATIONS
Wyoming corporation ) CODE
)
for a Permit authorizing the sale and )
issuance of securities pursuant to )
Section 25121 of the Corporate Securities )
Law of 1968, as amended )
)
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AND
In the Matter of the Application of )
)
PORTACOM WIRELESS, INC., )
a Delaware corporation )
)
for a Permit authorizing the sale )
and issuance of securities )
pursuant to Section 25121 of the )
Corporate Securities Law of 1968, )
as amended )
)
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TO: PORTACOM WIRELESS, INC.,
a British Columbia corporation
8055 West Manchester Avenue, Suite 730
Playa del Rey, California 90293
Attn: Michael Richard
PORTACOM WIRELESS, INC.
a Delaware corporation
8055 West Manchester Avenue, Suite 730
Playa del Rey, California 90293
Attn: Michael Richard
DAY CAMPBELL & McGILL
3070 Bristol Street
Suite 650
Costa Mesa, California 92626
Attn: Leonard J. McGill, Esq.
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GODINHO, SINCLAIR
Suite 1020
Montreal Trust Centre
510 Burrard Street
Vancouver, British Columbia
Canada
V6C 38A
Attn: Harley D. Sinclair
MCCULLOUGH O'CONNOR IRWIN
1100 - 888 Dunsmuir Street
Vancouver, B.C., Canada
V6C 3K4
Attn: Doug Irwin
THOMAS N. LONG, P.C.
American National Bank Building
1912 Capitol Avenue, Suite 406
Cheyenne, Wyoming
Attn: Thomas N. Long, Esq.
All Holders of outstanding shares, convertible notes, warrants, options and
performance shares of
PORTACOM WIRELESS, INC.
a British Columbia corporation
All Holders of outstanding shares, convertible notes, warrants, options and
performance shares of
PORTACOM WIRELESS, INC.,
a Delaware corporation
NOTICE
NOTICE IS HEREBY GIVEN THAT A HEARING, PURSUANT TO SECTION 25142 OF THE
CORPORATE SECURITIES LAW OF 1968, AS AMENDED (CSL), WILL BE HELD:
Date: December 9, 1996
Time: 9:30 a.m.
Place: Hearing Rooms A, B, & C
5th Floor
3700 Wilshire Boulevard
Los Angeles, California 90010
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before the Commissioner of Corporation of the State of California or a duly
authorized representative for the purpose of determining the fairness of the
terms and conditions of the proposed offer and sale of securities or delivery of
other consideration as described in the applications filed November 5, 1996 by
PortaCom Wireless, Inc., a Wyoming corporation and PortaCom Wireless, Inc., a
Delaware corporation. The hearing is being held to satisfy the requirements of
Section 3(a)(10) of the Securities Act of 1933. The hearing will be conducted
under the Rules set forth in Article II, Subchapter 1, Title 10, California Code
of Regulations, commencing Section 250.17.
All interested parties may be present at the hearing and may, but need not be,
represented by counsel. Each interested party is entitled to present evidence as
to the fairness of the terms and conditions of the proposed issuance of
securities or delivery of other consideration. Each interested party is entitled
to seek the issuance of subpoenas and subpoenas duces tecum to compel the
attendance of witnesses and the production of books, records and other materials
by applying in a timely and reasonable manner to Wallace M. Wong, Senior
Corporations Counsel, Department of Corporations, 3700 Wilshire Boulevard, 6th
Floor, Los Angeles, California 90010. Interested parties unable to attend the
hearing may submit correspondence or other materials for consideration at the
hearing by causing timely delivery of such correspondence or other materials to
the Department of Corporations.
THE PARTIES
PortaCom Wireless, Inc., a British Columbia corporation. PortaCom Canada is a
British Columbia corporation with its principal offices located at 8055 West
Manchester Avenue, Suite 730, Playa del Rey, California 90293. PortaCom Canada,
incorporated on July 7, 1989, is a holding company and a sole stockholder of its
direct and indirect wholly owned subsidiary corporations, Extreme Telecom, Inc.,
formerly known as PCBX Systems, Inc. ("Systems"), Extreme Laboratories, Inc.,
formerly known as Spheric Audio Laboratories, Inc. ("Laboratories"), PortaCom
International, Ltd. ("PIL") and PortaCom Delaware (defined herein collectively
as "Subsidiaries"). PortaCom Delaware is a direct wholly owned subsidiary of
PortaCom Canada, and Systems, Laboratories and PIL are each wholly owned
subsidiaries of PortaCom Delaware. As of the date hereof, the Subsidiaries are
wholly-owned subsidiaries of PortaCom Canada. Other than the PIL, the operations
of the Subsidiaries are dormant. PIL is currently engaged in the
telecommunications business as a developer and operator of companies providing
cellular and wireless communications services in selected developing world
markets. The Subsidiaries will maintain their separate corporate existence after
the change of domicile of their parent, PortaCom Canada, to Wyoming and the
subsequent Merger and reincorporation in Delaware. Following the Merger,
PortaCom Canada will have been merged into PortaCom Delaware and Systems,
Laboratories and PIL will remain wholly owned subsidiaries of PortaCom Delaware.
PortaCom Wireless, Inc., a Wyoming corporation. Subject to stockholder and
regulatory approval, prior to the effective time (the "Effective Time") of the
Merger, PortaCom Canada will change its domicile to Wyoming by way of a
discontinuance under the British Columbia Company Act and a continuance under
the Wyoming Business Corporation Act (the "Wyoming Corporation Act") and shall
thereafter be governed by corporate charter documents adopted in accordance with
the Wyoming Corporation Act. Upon its discontinuance from the British Columbia
and the issuance of a Certificate of Continuation in Wyoming, PortaCom Canada
will become "PortaCom Wireless,
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Inc., a Wyoming corporation" and the outstanding shares of PortaCom Canada
common stock will be deemed for all purposes to evidence ownership of, and to
represent, shares of PortaCom Wyoming.
PortaCom Wireless, Inc., a Delaware corporation. PortaCom Delaware is a
Delaware corporation with its principal offices located at 8055 West Manchester
Avenue, Suite 730, Playa del Rey, California 90293. PortaCom Delaware,
incorporated on September 12, 1994, is a wholly owned subsidiary of PortaCom
Canada which was incorporated to facilitate the reincorporation of PortaCom
Wyoming into Delaware, and since inception has been a passive holding
corporation for the other Subsidiaries.
BRIEF DESCRIPTION OF THE ISSUANCE TRANSACTIONS
The Change of Domicile to Wyoming. Subject to stockholder and regulatory
approval, PortaCom Canada will change its domicile to Wyoming by way of a
continuation under the Wyoming Corporation Act and shall thereafter be governed
by corporate charter documents adopted in accordance with the Wyoming
Corporation Act, as a result of which the outstanding shares of PortaCom
Wyoming's common stock immediately after issuance of the Certificate of
Continuance will be deemed for all purposes to evidence ownership of, and to
represent, shares of PortaCom Wyoming.
Merger. The Merger is a reverse two (2) party merger involving the merger of
PortaCom Wyoming (a publicly traded parent corporation) into PortaCom Delaware
(a wholly owned subsidiary corporation), with PortaCom Delaware to be the
surviving corporation. To accomplish the foregoing, each share of PortaCom
Wyoming common stock which is issued and outstanding prior to the Merger will be
changed and converted into one (1) fully paid share of PortaCom Delaware's
common stock and each share of PortaCom Delaware's common stock issued and
outstanding immediately prior to the Merger will be canceled and returned to the
status of authorized but unissued shares.
The Merger must be approved by (i) stockholders representing at least fifty
(50%) percent of the outstanding shares of common stock of PortaCom Wyoming and
(ii) the board of directors of PortaCom Delaware. As of the Effective Time of
the Merger, PortaCom Delaware will be a wholly owned subsidiary of PortaCom
Wyoming. As of the Effective Time of the Merger, PortaCom Wyoming will have
ninety-one (91) stockholders of record and 11,956,010 shares of common stock
outstanding.
CHANGES IN RIGHTS OF CURRENT STOCKHOLDERS
DUE TO CHANGE OF DOMICILE TO DELAWARE
Upon consummation of the change of domicile to Wyoming and after the Effective
Time of the Merger, PortaCom Canada will become a company governed by the
Delaware General Corporation Law (the "Delaware Corporation Law"). Differences
between the British Columbia
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Company Act and the Delaware Corporation Law and between PortaCom Canada's
existing Memorandum and Articles (the "Canadian Constating Documents") and the
Certificate of Incorporation and Bylaws of PortaCom Delaware (the "Delaware
Constating Documents"), will result in various changes to the capital structure
of PortaCom Canada and in the rights of current stockholders of PortaCom Canada.
By approving the change of domicile to Wyoming and the subsequent Merger and
reincorporation in Delaware, stockholders of PortaCom Canada will be authorizing
the replacement of the Canadian Constating Documents with the Delaware
Constating Documents.
The following summary compares the rights that stockholders of PortaCom Canada
currently have under the British Columbia Company Act and the Canadian
Constating Documents to the rights that they will have under the Delaware
Corporation Law and the Delaware Constating Documents. This summary does not
propose to be complete and is qualified in its entirety by reference to the
Certificate of Incorporation and Bylaws of PortaCom Delaware, the text of which
is attached to the Proxy Statement as Exhibit A, and on file with the California
Department of Corporations.
Since PortaCom Canada effectively is changing its jurisdiction of
incorporation, from the British Columbia, Canada to Delaware, a description of
the differences between Wyoming and Delaware law has not been included in this
Notice of Hearing.
Quorum of Shareholders. Under the British Columbia Constating Documents, a
quorum shall consist of one individual present in person or by proxy and holding
not less than one voting share of the Company. The Delaware Constating Documents
provide that the holders of a majority of the outstanding shares entitled to
vote shall constitute a quorum.
Notice, Adjournment and Place of Stockholders' Meetings. The British Columbia
Company Act requires that notice of stockholders' meetings be given at least
twenty-one (21) days before a meeting unless the stockholders waive or reduce
the notice period by unanimous consent in writing. The Delaware Constating
Documents require such notice to be given between ten (10) and sixty (60) days
before a meeting.
Both British Columbia and Delaware law provide for adjournments of
stockholders' meetings. The British Columbia Constating Documents require notice
of the adjournment if the adjournment is for ten (10) days or more. Delaware
Corporation Law requires that if the adjournment is for more than thirty (30)
days or if a new record date is fixed, notice must be given to the stockholders
as for an original meeting.
The British Columbia Company Act requires all meetings of stockholders to be
held in British Columbia unless the prior consent of the British Columbia
Registrar of Companies is obtained to hold a meeting outside the province. The
Delaware Corporation Law permits meetings of stockholders to be held at such
place as is designated by or in the manner provided in the bylaws, or, if not so
designated, at the registered office of the company in Delaware.
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Stockholder Consent in Lieu of Meeting. British Columbia law provides that
written consent in lieu of a meeting can only be utilized where a company is not
a reporting company. The Company is a reporting company in British Columbia.
Therefore, the British Columbia Constating Documents do not provide for
stockholder consent in lieu of a meeting.
The Delaware Corporation Law provides that any action that may be taken at a
stockholders' meeting may be taken without a meeting, without prior notice and
without a vote if a consent in writing is signed and dated by the holders of
shares having at least the number of votes necessary to pass such a resolution
at a stockholders' meeting unless the corporation's certificate of incorporation
provides otherwise. No written consent will be effective to take the corporate
action to which it refers, unless written consents sufficient to take the action
are delivered to the corporation within sixty (60) days of the earliest dated
consent delivered. The Delaware Constating Documents currently permit written
consent in lieu of a stockholder's meeting. There is no similar provision in the
British Columbia Constating Documents.
Director Qualifications, Election and Removal of Directors and Filling
Vacancies on the Board of Directors. The British Columbia Constating Documents
provide that the Company shall have at least three directors but not more than
15 directors. The British Columbia Company Act requires that a company have at
least three (3) directors. The majority of the directors must be ordinarily
resident in Canada, and one (1) director must be ordinarily resident in the
Province of British Columbia. The directors may not be persons under the age of
eighteen (18), undischarged bankrupts, persons found to be mentally infirm,
corporations, or persons convicted of certain offenses relating to corporate
activities or fraud or that had certain registrations with the British Columbia
Securities Commission canceled.
Except as may otherwise be provided in the certificate of incorporation or in
specific provisions of the Delaware Corporation Law, a Delaware corporation is
required to be managed by a board of directors consisting of one (1) or more
members. The number of directors or the manner of selecting them must be
included in the corporation's bylaws, unless the certificate of incorporation
fixes the number of directors. The certificate of incorporation or the bylaws
may prescribe certain requirements for directors, including that they be
stockholders. PortaCom Delaware's Certificate of Incorporation provides that the
size of its board of directors shall be fixed by resolution of the Board but
contains no provisions regarding directors' qualifications.
Under both the British Columbia Constating Documents and the Delaware
Constating Documents, directors are elected at each annual meeting. Both the
British Columbia Constating Documents and the Delaware Constating Documents
provide that, subject to certain limitations, vacancies on the Board may be
filled by the remaining directors for the remainder of the unexpired term, even
where the remaining directors constitute less than a quorum of the Board of
Directors. The British Columbia Constating Documents provide that between annual
general meetings of stockholders the directors may appoint additional directors,
provided that the number of additional directors does not exceed one-third of
the number elected at the last annual meeting. The Delaware Constating Documents
provide that any vacancy resulting from an increase in the number of directors
may be filled by the remaining directors for the remainder of the current term
of the new directorship.
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Under the British Columbia Company Act, directors generally may be removed
before the expiration of their term by a special resolution approved by
seventy-five percent (75%) of the votes cast on the resolution at a meeting
called for that purpose, and a replacement for the director so removed may be
appointed by an ordinary resolution approved by a majority of the votes cast.
The Delaware Constating Documents provide that the directors may be removed
with or without cause by a vote of a majority of all holders of voting stock.
Right to Call Special Meetings and Nomination of Directors. Under the British
Columbia Company Act, stockholders holding in aggregate not less than ten
percent (10%) of the shares having the right to vote at a meeting at which
directors will be elected may nominate directors by delivering such nomination
to the company's registered office not less than thirty-five (35) days before
the date of the meeting. The British Columbia Company Act also provides that the
holders of five percent (5%) of the issued shares with a right to vote at a
general meeting can requisition the calling of a general meeting within four (4)
months of the date of the requisition. Stockholders may deliver to the Company's
registered office at least eight (8) days before the date the Company is
required to send out notice of the requisitioned meeting a written statement not
exceeding one thousand (1,000) words explaining the position of the
requisitionists for inclusion in the information circular being sent to
stockholders in respect of the meeting.
Regulations of the Securities and Exchange Commission provide that any
stockholder may nominate directors and bring other business before an annual
stockholders meeting by delivering written notice of the nomination or other
business to the company's head office generally one hundred and twenty (120)
days prior to the date specified in the previous year's proxy materials for the
current year's meeting. Under the Delaware Corporation Law, a special meeting of
stockholders may be called by the board of directors or by any other person
authorized to do so in the certificate of incorporation or the bylaws. The
Delaware Constating Documents permit a special meeting to be called by the
president, the chairman of the board of directors, a majority of the directors
or stockholders entitled to cast at least 10% of the votes at the meeting.
Amendment to Internal Affairs. Under the British Columbia Company Act, any
amendment to the articles or memorandum of a company will generally require
approval by Special Resolution, which is a resolution passed by a majority of
not less than seventy-five percent (75%) of the votes cast by stockholders in
person or by proxy on the resolution. The company also, by Special Resolution
approved by seventy-five percent (75%) of the holders of shares who vote in
person or by proxy on such resolution, may create or add special rights or
restrictions to any shares, whether issued or unissued.
A separate class resolution of preferred stockholders, if any, must be
approved by a separate resolution (a) consented to in writing by all holders of
preferred shares; or (b) presented at a meeting of holders of preferred shares,
called for such purpose, at which at least ten percent (10%) of the issued and
outstanding preferred shares are represented in person or by proxy and passed by
the affirmative vote of at least seventy-five percent (75%) of the votes cast.
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The holders of (a) not less than ten percent (10%) of the shares entitled to
vote and who did vote against the Special Resolution; (b) the holders of not
less than ten percent (10%) of the class of shares whose rights are affected by
the Special Resolution and who voted against the Special Resolution; or (c) the
holders of ten percent (10%) of a series of shares whose rights are affected
differently from those attached to another series of the same share class
affected by the Special Resolution, and who voted against the Special
Resolution, may within fourteen (14) days of the Special Resolution apply to the
court to have it set aside. On such an application, the court may set aside or
affirm the resolution or require the company to purchase the shares of any
stockholder.
The Delaware Corporation Law requires the approval of the holders of a
majority of the outstanding stock entitled to vote for any amendment to the
certificate of incorporation unless the certificate of incorporation requires a
higher level of approval. PortaCom Delaware's Certificate of Incorporation does
not provide for such a higher level. Whether or not provided in the certificate
of incorporation, holders of the outstanding shares of a class are entitled to
vote as a class upon a proposed amendment that would change the number of shares
authorized in the class, change the par value of the shares of such class, or
adversely change the powers, preferences, or special rights of the shares of the
class. The number of authorized shares in a class, however, may be increased or
decreased (but not below the number outstanding) by a majority vote of the
stockholders of the corporation without a class vote, if so provided in (a) the
original certificate of incorporation, (b) an amendment creating the class or
adopted before shares of the class were issued, or (c) an amendment approved by
a majority of the holders of shares of the class.
The Delaware General Corporation law provides that a corporation's bylaws may
be amended by the corporation's stockholders, or, if so provided in the
corporation's certificate of incorporation, by the corporation's directors.
PortaCom Delaware's Certificate of Incorporation provides that PortaCom
Delaware's directors may amend PortaCom Delaware's bylaws.
Anti-takeover Provisions and Interested Stockholder. Except under certain
circumstances the Delaware Corporation Law prohibits a "business combination"
between the corporation and an "interested stockholder" within three (3) years
of the stockholder becoming an "interested stockholder." Generally, an
"interested stockholder" is a person or group that directly or indirectly,
controls fifteen percent (15%) or more of the outstanding voting stock or is an
affiliate or associate of the corporation and was the owner of fifteen percent
(15%) or more of such voting stock at any time within the previous three (3)
years. A "business combination" includes a merger, consolidation, sale or other
disposition of assets having an aggregate value in excess of ten percent (10%)
of the aggregate market value of the consolidated assets of the corporation or
its outstanding stock, and certain transactions that would increase the
interested stockholder's proportionate share ownership in the corporation. This
provision does not apply where (a) the business combination is approved by the
corporation's board of directors prior to the date the interested stockholder
became an interested stockholder; (b) the interested stockholder acquired at
least eighty-five percent (85%) of the outstanding voting stock of the
corporation in the transaction in which the stockholder became an interested
stockholder excluding, for determining the number of shares outstanding, shares
held by persons who are directors and also officers and by employee stock plans
in which participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered; (c) the business combination
is approved by a majority of the board of directors and the affirmative vote
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of two-thirds of the votes entitled to be cast by disinterested stockholders at
an annual or special meeting, (d) the corporation does not have a class of
voting stock that is listed on a national securities exchange, authorized for
quotation on an interdealer quotation system of a registered national securities
association, or held by more than two thousand (2,000) stockholders unless any
of the foregoing results from action taken, directly or indirectly, by an
interested stockholder or (e) the corporation has opted out of this provision.
PortaCom Delaware has not opted out of these provisions governing business
combinations as permitted under the Delaware Corporation Law.
The British Columbia Company Act does not contain comparable provisions with
respect to business combinations. See "Transactions With Officers and Directors"
below.
Mergers, Sales of Assets and Other Extraordinary Transactions. Under the
British Columbia Company Act, certain extraordinary corporate actions, such as
certain amalgamations, continuances, sales, leases or exchanges of all or
substantially all the assets of a corporation and other extraordinary corporate
actions such as liquidations, dissolutions or arrangements, are required to be
approved by Special Resolution (a resolution passed by a majority of not less
than seventy-five percent (75%) of the votes cast by the stockholders who voted
on the resolution either in person or by proxy) and, in certain cases, such
Special Resolution is also required to be approved by stockholders separately as
a class or series.
The Delaware Corporation Law provides that, unless otherwise specified in a
corporation's certificate of incorporation or unless the provisions of the
Delaware Corporation Law relating to "business combinations" discussed above are
applicable, a sale or other disposition of all or substantially all of the
corporation's assets, a merger or consolidation of the corporation with another
corporation or a dissolution of the corporation requires the affirmative vote of
the board of directors of each constituent corporation plus, with certain
exceptions, the affirmative vote of a majority of the outstanding stock entitled
to vote on the proposal. In a merger, approval by the stockholders of a
constituent corporation is not required if (a) the constituent corporation will
be the surviving corporation, its certificate of incorporation will not be
amended in the merger, its common stock will not be diluted by more than twenty
percent (20%) and each share of its stock outstanding before the merger will be
an identical outstanding or treasury share after the effective date of the
merger; or (b) the corporation is a subsidiary of a parent corporation that owns
at least ninety percent (90%) of the subsidiary's outstanding stock before the
merger, and the parent corporation is merging the subsidiary into itself or one
or more other corporations of which the parent owns ninety percent (90%) of the
outstanding stock.
Transactions With Officers and Directors. The British Columbia Company Act
provides that every director who is in any way, directly or indirectly,
interested in a proposed contract or transaction with the company must disclose
the nature and extent of such interest and is liable to account to the company
for any profit made as a consequence of the company entering into such
transaction unless he (a) disclosed his interest at the meeting of directors
where the proposed transaction was first considered; (b) after his disclosure,
the transaction was approved by the directors and (c) he abstained from voting
on such transaction; or unless the contract or transaction was fair and
reasonable to the company and, after full disclosure by the director, the
transaction is approved by a Special Resolution of the company's stockholders.
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Under the Delaware Corporation Law, contracts or transactions in which a
director or officer is financially interested are not automatically void or
voidable, if approved by the stockholders or the directors under substantially
the same circumstances as in British Columbia. Approval by the stockholders,
however, requires only a simple majority. Board approval must be by a majority
of the disinterested directors, but interested directors may be counted for
purposes of establishing a quorum.
Dissent Rights. The British Columbia Company Act provides that stockholders of
a British Columbia company are entitled to exercise dissent rights and to be
paid the fair value of their shares in connection with certain matters including
(a) the continuance of the company into another jurisdiction; (b) the company
providing financial assistance to a person in connection with the acquisition by
that person of shares in the capital of the company (unless that person either
alone or with his associates will end up owning not less than 90% of the issued
shares of the company and authorization by Special Resolution is obtained); (c)
the sale, lease or disposition of substantially the whole of the business of the
company; (d) the alteration of the company's memorandum by changing any
restriction on the business to be carried on by the company or on its powers;
(e) any amalgamation of the company with another company; (f) where, in the
event of the company being wound up, the transfer, sale or arrangement of the
company's business involves the assumption of liability or the payment of money
by the stockholders of the company. Stockholders who voted in favor of a
resolution in connection with the foregoing may not subsequently exercise
dissent rights in respect of that resolution.
Under the Delaware Corporation Law, a person generally is entitled to demand
appraisal of and obtain payment of the fair value of the shares that the person
holds in a Delaware corporation, if the corporation is party to a plan of merger
or consolidation. However, the right to demand appraisal does not apply to
stockholders if: (a) they are stockholders of a surviving corporation and a vote
of the corporation's stockholders is not necessary to authorize the merger or
consolidation; (b) the shares held by the stockholders are of a class or series
registered on the New York Stock Exchange or the American Stock Exchange,
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc., or are held of
record by more than 2,000 stockholders on the date set to determine the
stockholders entitled to vote on the merger or consolidation. Notwithstanding
the above, appraisal rights are available for the shares of any class or series
of stock of a Delaware corporation if the holders are required by the terms of
an agreement of merger or consolidation to accept for their stock anything
except: (a) shares of stock of the corporation surviving or resulting from the
merger or consolidation; (b) shares of stock of any other corporation which, at
the effective date of the merger or consolidation, will be listed on the New
York Stock Exchange or the American Stock Exchange, designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc., or held of record by more than 2,000
stockholders; (c) cash in lieu of fractional shares of the corporations
described in (a) and (b); or (d) any combination of the shares of stock and cash
in lieu of fractional shares described in (a), (b) and (c).
In a short-form merger under Section 253 of the Delaware Corporation Law, a
parent corporation and one or more subsidiary corporations of which the parent
owns at least 90% of the outstanding shares may merge into the parent
corporation or one of the subsidiaries. Stockholders of the parent corporation
in the short-form merger are not entitled to appraisal rights, whether the
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parent corporation survives the merger or not. Dissenting minority stockholders
of a disappearing subsidiary in a short-form merger under the Delaware
Corporation Law are entitled to appraisal rights.
A Delaware corporation may provide in its certificate of incorporation that
appraisal rights shall be available for the shares of any class or series of its
stock as the result of an amendment to its certificate of incorporation, any
merger or consolidation to which the corporation is a party, or a sale of all or
substantially all of the assets of the corporation. PortaCom Delaware's
Certificate of Incorporation does not expand the appraisal rights to which its
stockholders otherwise are entitled under the Delaware Corporation Law.
Derivative Actions. Under the British Columbia Company Act, a stockholder,
director or any other person who, in the opinion of the court is a proper person
to apply (a "complainant") may, with leave of the court, bring an action in the
name of and on behalf of the company to enforce a right, duty or obligation owed
to the company or to obtain damages for any breach thereof. A complainant (as
defined above) also may defend, with leave of the court, in the name and on
behalf of the company, any action brought against the company. A stockholder or
director may apply to the court for such leave on notice to the company if (a)
he has made reasonable efforts to cause the directors of the company to
commence, diligently prosecute or defend the action; (b) he is acting in good
faith; (c) it is prima facie in the interests of the company that the action be
brought or defended; and (d) in the case of an application by a stockholder, he
was a stockholder of the company at the time of the event giving rise to the
cause of action. No action brought or defended as a derivative action can be
settled or discontinued without approval of the court.
Derivative actions may be brought in Delaware by a stockholder on behalf of,
and for the benefit of the corporation. The Delaware Corporation Law provides
that a stockholder must aver in the complaint that he was a stockholder of the
corporation at the time of the transaction of which he complains, and the
stockholder must remain a stockholder until the derivative action is concluded.
However, no action may be brought by a stockholder unless he first seeks
remedial action on his claim from his corporation's board of directors, unless
such a demand for redress is excused. The board of directors of a Delaware
corporation can appoint an independent litigation committee to review a
stockholder's request for a derivative action, and the litigation committee,
acting reasonably and in good faith, can terminate the stockholder's action
subject to court's review of such committee's independence, good faith and
reasonable investigation. Under the Delaware Corporation Law, the court in a
derivative action may apply a variety of legal and equitable remedies on behalf
of the corporation which vary depending on the facts and circumstances of the
case and the nature of the action brought. Attorneys' fees may be awarded where
prosecuting or settling the action confers a specific and substantial benefit on
the corporation.
Oppression Remedy. The British Columbia Company Act contains an oppression
remedy that enables the court, if satisfied upon application by a complainant
(as defined above in "Derivative Action") that (a) the affairs of the company
are being conducted or the powers of the directors are being exercised in an
oppressive manner, or (b) some act of the company has been done or is threatened
or some resolution has been passed or is proposed that is unfairly prejudicial,
to make any order it considers appropriate, including the cancellation of any
transaction, the purchase of shares
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of any stockholder, appointment of a receiver, the winding up of the company,
compensation to the complainant and the rectification of any corporate record.
Delaware Corporation Law does not provide a statutory remedy specifically like
the British Columbia Company Act oppression remedy. However, the Delaware law
provides a variety of legal and equitable remedies to a corporation's
stockholders for improper acts or omissions of a corporation, its officers and
directors. In an action alleging a breach of fiduciary duty by the directors of
a corporation the "business judgment rule" must be overcome. Simply stated, the
business judgment rule creates a rebuttable presumption in court that
disinterested directors' decisions have been made in good faith, with due care
and in the best interests of the corporation, absent a showing of intentional
misconduct or gross negligence.
Investigations. The British Columbia Company Act provides that, on application
by shareholders holding not less than twenty percent (20%) of the issued shares
of any class of a corporation's stock, or on application of a corporation, the
court may appoint an inspector to investigate the affairs and management of a
corporation or its affiliates.
The Delaware Corporation Law provides that any stockholder has the right to
inspect the books and records of the corporation upon written demand under oath
for a purpose reasonably related to such person's interest as a stockholder. The
stockholder may compel inspection by court order, if the corporation refuses to
permit such inspection or does not respond within five (5) business days.
The British Columbia Company Act also allows any stockholder to inspect the
corporate records of a company which is a reporting company under the British
Columbia Company Act (except for directors' minutes, documents and instruments
approved by the directors and mortgages created or assumed by the Company).
Indemnification of Officers and Directors. Under the British Columbia Company
Act and pursuant to the British Columbia Constating Documents, the Company may
indemnify a director or officer, a former director or officer or a person who
acts or has acted at the Company's request as a director or officer of a body
corporate of which the Company is or was a stockholder or creditor against all
costs, charges and expenses, including an amount paid to settle an action or
satisfy a judgment, reasonably incurred by him in respect of any civil, criminal
or administrative action or proceeding to which he is made a party by reason of
being or having been a director or officer of the Company or such body corporate
if (a) he acted honestly and in good faith with a view to the best interests of
the company and (b), in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful. In respect of an action by or on behalf
of PortaCom Delaware or such body corporate, a company may, with court approval,
provide indemnification against all costs, charges and expenses reasonably
incurred by such persons in connection with such action who fulfill the
conditions set forth in (a) and (b) immediately above. The British Columbia
Company Act requires court approval of any indemnification by a British Columbia
corporation.
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The Delaware Corporation Law permits a corporation to adopt a provision in its
certificate of incorporation eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, with the following exceptions: (a) a breach of
the director's duty of loyalty; (b) payment of an unlawful stock dividend or
making an unlawful stock repurchase or redemption; (c) acts or omissions not in
good faith or involving intentional misconduct or a knowing violation of law; or
(d) in any transaction in which the director derived an improper personal
benefit. PortaCom Delaware's Certificate of Incorporation eliminates the
liability of directors of the corporation for monetary damages to the fullest
extent permissible under Delaware law.
The Delaware Corporation Law permits a corporation to indemnify its directors,
officers, employees and other agents under circumstances similar to those for
which the British Columbia Constating Documents provide. The Delaware Constating
Documents require PortaCom Delaware to indemnify all such persons whom it has
the power to indemnify to the fullest extent legally permissible by the Delaware
Corporation Law. PortaCom Delaware's bylaws permit PortaCom Delaware to advance
expenses to a director or officer, provided that the director or executive
officer undertakes to repay amounts advanced unless it is ultimately determined
that such person ultimately is entitled to indemnification, and subject to such
other conditions as the Board may impose.
Indemnification rights conferred on a person by PortaCom Delaware's bylaws are
deemed to be contractual, in that their repeal or modification shall have
prospective effect only and shall not affect rights in effect under the bylaws
at the time of an alleged occurrence, act or omission that is the basis of a
proceeding against the person or the corporation. Indemnification rights to
which a person becomes entitled under PortaCom Delaware's bylaws continue after
the person ceases to be a director, officer, employee or other agent of PortaCom
Delaware.
Indemnification rights under the Delaware Corporation Law are not exclusive.
Accordingly, PortaCom Delaware's bylaws specifically permit PortaCom Delaware to
indemnify its directors, officers, employees and other agents pursuant to an
agreement, bylaw provision, stockholder vote or vote of disinterested directors
or otherwise, any or all of which may provide indemnification rights broader
than those currently available under the British Columbia or Delaware
indemnification statutes.
Both the Delaware Constating Documents and British Columbia Constating
Documents provide that PortaCom Delaware and the Company, respectively, may
purchase insurance on behalf of those persons entitled to be indemnified by the
Company.
Dividends and Distributions. Under the British Columbia Company Act, directors
of a company shall not declare or pay a dividend if there are reasonable grounds
for believing that the company is, or would after the payment be, insolvent.
Preemptive Rights. Neither the Delaware Corporation Law, nor the British
Columbia Company Act (with respect to reporting companies), automatically
provides for preemptive rights to acquire a corporation's unissued stock.
However, such right expressly may be granted to the stockholders in a
corporation's certificate of incorporation under the Delaware Corporation Law.
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Neither the Delaware Constating Documents nor the British Columbia Constating
Documents provide for preemptive rights.
The Delaware Corporation Law generally provides that a corporation may declare
and pay dividends out of surplus (defined as the excess, if any, of net assets
over stated capital) or, when no surplus exists, out of net profits for the
fiscal year in which the dividend is declared and/or the preceding fiscal year,
subject to any restrictions contained in a corporation's certificate of
incorporation. PortaCom Delaware's certificate of incorporation contains no such
restrictions. Dividends may not be paid out of net profits if the stated capital
of the corporation is less than the amount of stated capital represented by
outstanding preferred stock, if any.
THE FAIRNESS HEARING
All interested parties may be present at the hearing and may, but need not be,
represented by counsel. Each interested party is entitled to present evidence as
to the fairness of the terms and conditions of the proposed issuance of
securities or delivery of other consideration. Each interested party is entitled
to seek the issuance of subpoenas and subpoenas duces tecum to compel the
attendance of witnesses and the production of books, records and other materials
by applying in a timely and reasonable manner to Wallace M. Wong, Senior
Corporations Counsel, Department of Corporations, 3700 Wilshire Boulevard, 6th
Floor, Los Angeles, California 90010. Interested parties unable to attend the
hearing may submit correspondence or other materials for consideration at the
hearing by causing timely delivery of such correspondence or other materials to
the Department of Corporations.
The Hearing will be held for the purpose of enabling the Commissioner of
Corporations to determine the fairness of the terms and conditions of the deemed
exchange of securities in connection with the change of domicile and the
subsequent Merger. Such determination will be based upon the Application and all
papers and documents filed in connection therewith. Section 25142 of the
California Corporations Code authorizes the Commissioner of Corporations to hold
such Hearing when securities will be issued in exchange for other outstanding
securities (whether or not the security or transaction is exempt from
qualification), to approve the terms and conditions of such issuance and
exchange, and to determine whether such terms and conditions are fair, just and
equitable.
If the California Department of Corporations determines the change of domicile
from the British Columbia, Canada to Wyoming and the subsequent Merger and
reincorporation in Delaware to be fair to the stockholders of Applicant, that
determination will form the basis for effecting the change of domicile and
Merger without registration under the Securities Act of 1933, as amended, in
reliance on the exemption provided by Section 3(a)(10) thereunder.
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FURTHER INFORMATION
For further information concerning this matter, reference is made to the
Application of PortaCom Wireless, Inc. and all papers filed in connection
therewith at the Department of Corporations, 3700 Wilshire Blvd., 6th Floor, Los
Angeles, California 90010, File Nos. 309-1210 and File No. 309-1212.
At Los Angeles, California Keith Bishop
Commissioner of Corporations
November 25, 1996
By: /s/ Wallace M. Wong
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Wallace M. Wong
Senior Corporations Counsel
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