<PAGE> 1
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
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
Definitive Proxy Statement [X] Commission only (as permitted by
Definitive Additional Materials [ ] Rule 14a-6(e)(2))
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 [ ]
CYTATION.COM INCORPORATED
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
------------------------------------------------------------------------
(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> 2
CYTATION.COM INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 11, 1999
Cytation.com Incorporated ("Cytation") hereby gives notice that it will
hold its annual meeting of stockholders at the offices of Foley, Hoag & Eliot
LLP, One Post Office Square, 16th Floor, Conference Room 16M, Boston,
Massachusetts 02109 on Thursday, November 11, 1999, beginning at 10:00 a.m.,
local time, for the following purposes:
1. To elect 4 Directors;
2. To consider and vote upon a proposal to adopt a 1999 Stock Option
Plan;
3. To consider and vote upon a proposed Plan of Reincorporation that
would:
o change the Company's state of incorporation from New York
to Delaware,
o change its name from Cytation.com Incorporated to
CollegeLink.com Incorporated, and
o classify the Board of Directors (collectively, the "Plan
of Reincorporation").
4. To transact such other business as may properly come before the
annual meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 22,
1999 as the record date for the determination of the stockholders of Cytation
entitled to receive notice of the annual meeting and to vote at the meeting.
Only stockholders of record on that date are entitled to receive notice of the
annual meeting and to vote at the meeting or any adjournment thereof.
By order of the Board of Directors,
KEVIN J. HIGH
President
November 1, 1999
Newport, Rhode Island
<PAGE> 3
YOUR VOTE IS IMPORTANT
PLEASE SIGN AND RETURN THE ENCLOSED PROXY,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE> 4
CYTATION.COM INCORPORATED
55 HAMMARLUND WAY
NEWPORT, RHODE ISLAND 02842
(401) 845-8800
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 11, 1999
This proxy statement relates to the 1999 annual meeting of stockholders
of Cytation.com Incorporated. The annual meeting will take place as follows:
Date: November 11, 1999
Time: 10:00 a.m.
Place: Foley, Hoag & Eliot LLP
Conference Room 16M
16th Floor
One Post Office Square
Boston, MA 02109
The Board of Directors of Cytation is soliciting proxies for the annual
meeting and adjournments of the annual meeting. If a stockholder returns a
properly executed proxy, the shares represented by the proxy will be voted in
accordance with the stockholder's directions. If a stockholder does not specify
a vote on any proposal, the shares covered by his or her proxy will be voted on
that proposal as management recommends. Cytation encourages its stockholders to
vote on all proposals.
Cytation is mailing this proxy statement and the enclosed form of proxy
to stockholders on or about November 1, 1999.
PURPOSE OF THE ANNUAL MEETING
At the annual meeting, we will submit four proposals to the
stockholders:
Proposal 1: To elect 4 Directors;
Proposal 2: To adopt a 1999 Stock Option Plan; and
Proposal 3: To change the Company's state of incorporation
from New York to Delaware, change its name from
Cytation.com Incorporated to CollegeLink.com
Incorporated, and classify the Board of Directors
(collectively, the "Plan of Reincorporation").
Currently, we do not intend to submit any other proposals to the
stockholders at the annual meeting. The Board of Directors was not aware, a
reasonable time before mailing this proxy statement to stockholders, of any
other business that may be properly presented for action at the annual meeting.
If any other business comes before the annual meeting, the persons present will
have discretionary authority to vote the shares they own or represent by proxy
in accordance with their judgment.
RECORD DATE
Our Board of Directors has fixed the close of business on Friday,
October 22, 1999 as the record date for the annual meeting. Only stockholders of
record on that date are entitled to receive notice of the meeting and to vote
<PAGE> 5
at the meeting or any adjournment of the meeting. At the close of business on
October 22, 1999, there were issued and outstanding 9,846,340 shares of
Cytation's common stock, which are entitled to cast 9,846,340 votes, and 890,000
shares of Series A Convertible Preferred Stock, which were entitled to cast
890,000 votes. (The Series A Convertible Preferred Stock and Cytation's common
stock are together called "voting stock" here.) At the close of business on
October 22, 1999, there were also issued and outstanding 279,771 shares of
Cytation's Series B Convertible Preferred Stock, which are entitled to cast
279,771 votes with regard to Proposal 3, and 1,000,000 shares of Series C
Convertible Preferred Stock, which were entitled to cast 1,000,000 votes with
regard to Proposal 3.
QUORUM
Our by-laws provide that a quorum at the annual meeting will be a
majority in interest of all stock issued, outstanding and entitled to vote at
the meeting. We will treat shares of voting stock represented by a properly
signed and returned proxy as present at the meeting for purposes of determining
the existence of a quorum at the meeting. In general, we will count votes
withheld from any nominee for election as Director, abstentions and broker
"non-votes" as present or represented for purposes of determining the existence
of a quorum. A broker "non-vote" occurs when a broker or nominee holding shares
for a beneficial owner does not vote on a proposal because the broker or nominee
does not have discretionary voting power and has not received instructions from
the beneficial owner with respect to that proposal.
TABULATION OF VOTES
Proposal 1. The election of the Directors will require the affirmative
vote of a majority of the shares of voting stock properly cast on the proposal.
Abstentions, votes withheld from Director-nominees, and broker non-votes will
not count as votes cast for or against the election of the Director-nominee and
accordingly will not affect the outcome of the vote.
Proposal 2. To adopt a 1999 Stock Option Plan will require the
affirmative vote of a majority of the shares of voting stock properly cast on
the proposal. Abstentions and broker non-votes will not count as votes cast for
or against the proposal and accordingly will not affect the outcome of the vote.
Proposal 3. To approve the proposed Plan of Reincorporation will
require the affirmative vote of two-thirds of the shares of voting stock
(including Series A shares) and a majority of the shares of Series A, Series B
and Series C stock, voting separately by class, properly cast on the proposal.
Abstentions and broker non-votes will not count as votes cast for or against the
proposal and accordingly will not affect the outcome of the vote.
American Securities Transfer & Trust, our transfer agent, will tabulate
votes at the annual meeting. The transfer agent will tabulate the vote on each
matter submitted to stockholders separately.
REVOCATION OF PROXIES
A stockholder who has executed a proxy may revoke the proxy at any time
before it is exercised as the annual meeting in three ways: (a) by giving
written notice of revocation to the Secretary of Cytation at our headquarters,
55 Hammarlund Way, Newport, Rhode Island 02842; (b) by signing and returning a
later dated proxy; or (c) by attending the annual meeting and informing the
Secretary of Cytation in writing that he or she wishes to vote in person. Mere
attendance at the annual meeting will not in and of itself revoke the proxy.
Accordingly, stockholders who have executed and returned proxies in advance of
the annual meeting may change their votes at any time before or at the annual
meeting.
SOLICITATION OF PROXIES
We will pay our own costs of soliciting proxies. We will reimburse
brokers, banks, fiduciaries, nominees and others for the out-of-pocket expenses
and other reasonable clerical expenses they incur in forwarding proxy materials
to beneficial owners of voting stock held in their names. Certain of our
Directors, officers and employees
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<PAGE> 6
may solicit proxies, without additional remuneration, by telephone, facsimile,
electronic mail, telegraph and in person. We expect that the expenses of this
special solicitation will be nominal. At present, we do not expect to pay any
compensation to any person for the solicitation of proxies, although we may
engage a third-party proxy solicitation firm in connection with the annual
meeting.
DISSENTER'S RIGHTS OF APPRAISAL
Under New York law, holders of our voting stock are not entitled to
dissent from any of the proposals to be presented at the annual meeting or to
demand appraisal of their shares as a result of the approval of any of those
proposals.
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<PAGE> 7
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL 1
ELECTION OF DIRECTORS
AN AFFIRMATIVE VOTE OF A MAJORITY OF THE COMMON STOCK REPRESENTED IN
PERSON OR BY PROXY AT THE ANNUAL MEETING IS NECESSARY TO ELECT THE DIRECTORS.
Proxies will be voted as indicated on a returned proxy card. If there are no
voting instructions then the proxy holders will vote the proxies received by
them FOR the nominees named below.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF ALL OF THE NOMINEES NAMED BELOW TO SERVE AS OUR DIRECTORS UNTIL THE
NEXT ANNUAL MEETING OR UNTIL THEIR SUCCESSORS HAVE BEEN ELECTED AND QUALIFIED.
NOMINEES
The Board of Directors has set the number of Board members at six for
the upcoming year. Each Director is elected to hold office until the next annual
meeting or until their respective successors are elected and qualified. The
Board of Directors has nominated four of the current members of the Board for
re-election. They are: Richard A. Fisher, Kevin J. High, Jai N. Gupta and Mark
Rogers. The biographical information of these nominees for Director is set forth
below. If for any reason any of such nominees should become unavailable for
election, the persons named in the proxy may vote the proxy for the election of
a substitute. However, each nominee has consented to serve as a Director if
elected, and the Board of Directors has no reason to believe that any of the
nominees will become unavailable for election. The holder of our Series C
Convertible Preferred Stock has the right to appoint one Director, but has not
yet appointed anyone.
DIRECTORS AND EXECUTIVE OFFICERS
Our current Directors are as follows:
NAME AGE* POSITION
- ----------------- ---- -----------------------------------------
Richard A. Fisher 53 Chairman of the Board and General Counsel
Kevin J. High 34 President and Director
Jai N. Gupta 52 Director
Mark Rogers 39 Director
Michael W. Bryant 54 Director
*As of October 22, 1999.
RICHARD A. FISHER, CHAIRMAN AND GENERAL COUNSEL. Mr. Fisher has been
Chairman of our Board of Directors and our General Counsel since February 1999.
Mr. Fisher was a co-founder of our predecessor, where he served as Chairman of
the Board and General Counsel from August 1996 to February 1999. From January
1996 to August 1996 and at various times thereafter, Mr. Fisher provided legal
and other consulting services to a number of start up and early stage companies.
From July 1987 through September 1994, Mr. Fisher was Chairman, Chief Executive
Officer and General Counsel of, and from October 1994 to December 1995, a
consultant to, Quadrax Corporation, which he co-founded to engage in the
manufacture and sale of advanced composite materials. Mr. Fisher also has been a
tax and corporate partner in the Boston, Massachusetts law firm of Foley, Hoag
and Eliot, which is our legal counsel, and Assistant to the Chief Counsel of the
Internal Revenue Service in Washington, DC.
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<PAGE> 8
Mr. Fisher holds a BA in Economics from Northwestern University (1968) and a
Juris Doctor from the University of Virginia School of Law (1971).
KEVIN J. HIGH, PRESIDENT AND DIRECTOR. Mr. High has been one of our
Directors and our President since February 1999. Mr. High was a co-founder of
our predecessor, where he served as Vice President from April 1996 to December
1996 and from December 1996 to February 1999 as Chief Executive Officer. From
April 1991 to April 1996, Mr. High served as Branch Manager of the Middletown,
Rhode Island office of the Corporate Securities Group, Inc., a national
brokerage firm with about 800 securities brokers in about 80 offices throughout
the United States. Mr. High served as a vice president of Shearson Lehman
Brothers, a national brokerage firm, from August 1989 to April 1991.
JAI N. GUPTA, DIRECTOR. Dr. Gupta has been one of our Directors since
February 1999 and served as a director of our predecessor from June 1998 to
February 1999. Dr. Gupta is the founder and president of EER Systems Inc., a
Washington, D.C. based aerospace firm which is a principal shareholder of the
Company. EER Systems, founded in 1979, offers a broad range of systems design,
development and integration capabilities, specializing in aerospace flight,
information and training systems. Dr. Gupta holds a BS in Electrical Engineering
from the Indian Institute of Technology, New Delhi, India; an MS in Electrical
Engineering from the Queen's University, Ontario, Canada (1970); a Ph.D. degree
in Electrical Engineering from Purdue University (1974); and a Masters of
Science in Administration degree from George Washington University (1978).
MARK ROGERS, DIRECTOR. Mr. Rogers has been one of our Directors since
February 1999 and served as a director of our predecessor from April 1998 to
February 1999. Since 1989, Mr. Rogers has been a principal in NFT Ventures,
including acting as interim CEO and CFO as well as managing the venture capital
fund. Mr. Rogers serves as an advisor to several computer software companies in
California, Utah and Texas and is a director of several other high-tech
companies. Mr. Rogers holds a BBA from Pace University (1981).
MICHAEL W. BRYANT, DIRECTOR. Mr. Bryant has been one of our Directors
since February 1999 and served as a director of our predecessor from June 1998
to February 1999. Mr. Bryant is the Director of Corporate Affairs for EER
Systems Inc. He has more than twenty-five years of experience in personnel and
training systems. Mr. Bryant also leads the EER consulting team supporting the
White House and Department of Defense Advanced Distributive Learning Initiative.
Prior to joining EER Systems in 1986, he served in personnel and training policy
positions in the Office of the Secretary of Defense. He also served as a
director of the Defense Training and Performance Data Center and is the founder
and chairman of the Defense Manpower Roundtable, a seminar group of current and
former senior administration and "think-tank" officials from the personnel
policy arena. Mr. Bryant holds a BS in Mathematics from Siena College (1965) and
an MBA in Operations Research from Tulane University (1972.
The holder of our Series C Convertible Preferred Stock has the right to
appoint one Director but has not yet appointed anyone.
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<PAGE> 9
Our management consists of the following personnel, in addition to
those Directors named above who are also officers:
NAME AGE* POSITION
- ----------------- ---- -----------------------------------------
Edward F. Hayes 52 Chief Financial Officer
Thomas J. Burgess 34 Senior Vice President and President,
CollegeLink.com Incorporated
Anne Marie Gleason. 43 Vice President and Vice President,
College Relations, CollegeLink.com
Incorporated
William Fink 42 Vice President-- Network Operations
Gerald A. Paxton 56 Senior Advisor
*As of October 22, 1999.
EDWARD F. HAYES, CHIEF FINANCIAL OFFICER. Mr. Hayes has served as our
Chief Financial Officer since April 1999. Prior to joining us, from May 1996 to
February 1999, he served as Chief Financial Officer and Engineering Group
Manager for Northeast Engineers & Consultants, Inc., a civil engineering firm.
From October 1987 to May 1996, Mr. Hayes was President and co-founder of
Advantage Business Computers, Inc., which provided computer programming and
consulting services, network installation, and training for commercial and
individual clients. He also served twenty-two years in the United States Navy in
fiscal and inventory management and submarine and industrial support positions.
Mr. Hayes has taught for Pennsylvania State University, Chapman College, New
Hampshire College, Salve Regina University, and the US Naval War College in
multiple business and mathematics disciplines. Mr. Hayes holds a BA in
Mathematics from Holy Cross College (1968), an MS in Computer Systems Management
from George Washington University (1974), an MBA from Rensselaer Polytechnic
Institute (1975), and an MA in National Defense Studies from the US Naval War
College (1985).
THOMAS J. BURGESS, SENIOR VICE PRESIDENT AND PRESIDENT, COLLEGELINK.COM
INCORPORATED. Mr. Burgess has served as President of our wholly owned
subsidiary, CollegeLink.com Incorporated since August 1999. From January 1999
through August 1999, Mr. Burgess was President of ECI, Inc., CollegeLink.com's
predecessor. From February 1998 through January 1999, he served as CEO of 9th
Square, Inc., an Internet e-commerce and advertising software company. From
January 1995 to June 1997, Mr. Burgess served as Chief Executive Officer of
echoMEDIA, Inc., an Internet advertising technology business which, in December
of 1997, merged with Softbank Interactive Marketing. He also served as a
consultant to echoMEDIA from July 1997 to February 1998. Mr. Burgess has a BA
from Providence College (1987).
ANNE MARIE GLEASON, VICE PRESIDENT AND VICE PRESIDENT, COLLEGE
RELATIONS, COLLEGELINK.COM INCORPORATED. Ms. Gleason has served as our Vice
President, College Relations since June 1999. Ms. Gleason served as Vice
President of Marketing of our predecessor from November 1997 to June 1999. From
April 1988 to November 1997, Ms. Gleason was Area Manager -- New England for a
supplier of technical adhesive machinery. Ms. Gleason has also held senior sales
and marketing positions with Augat, Inc. and Anaconda Industries. Ms. Gleason
holds a BS in Business Management from Providence College (1977).
WILLIAM FINK, VICE PRESIDENT - NETWORK OPERATIONS. Mr. Fink has served
as our Vice President of Network Operations since February 1999. From November
1998 to February, 1999, Mr. Fink served as a consultant for the United States
Navy Information Technology Department. Mr. Fink is a co-founder of our
predecessor and served as its Chief Technical Officer from April 1996 through
June 1998. Mr. Fink was in the United States Navy between 1976 and 1996. During
his last five years in the Navy, Mr. Fink was the sole network administrator
responsible for the system design, installations, administration and technical
support of a multi-location, 250 user, wide area/local area Novell Network. Mr.
Fink holds an AS in General Studies from City University, Seattle, Washington
(1992).
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Mr. Fink is a college instructor of PC networking (PCLAN), advanced MS-DOS, MS
Windows and Windows 95 operating system platforms. Mr. Fink also teaches
"Connecting Businesses to the Internet" for International Learning Tree
International, Inc.
GERALD A. PAXTON, SENIOR ADVISOR. Mr. Paxton has served as our Senior
Advisor since August 1999. Mr Paxton was the founder of our predecessor and
served as its Chief Executive Officer from 1991 until our acquisition of ECI,
Inc. in August 1999. Prior to founding ECI, Mr. Paxton spent twenty years in
various sales and marketing capacities at Digital Equipment Corp. ("DEC"), where
he progressed to become Vice President of United States Sales Operations. He
also served as Vice President of Industry Marketing for DEC with worldwide
responsibility for manufacturing, healthcare and education industries. Mr.
Paxton holds a BS in Engineering from the Case Institute of Technology (1965)
and is a graduate of the Management Development Program at Harvard Business
School (1980).
Our Board of Directors consists of a single class of Directors. Except
for one Director to be appointed by the holder of our Series C Preferred Stock,
each Director is elected each year at the annual meeting of stockholders to hold
office for a term of one year and until his successor has been duly elected and
qualified. The number of Directors has been fixed at five, and there are
currently no vacancies on the Board of Directors, but all of the Directors'
terms will expire at the annual meeting.
Our executive officers are appointed by and serve at the discretion of
the Board of Directors. There are no family relationships among any of our
executive officers or Directors.
BOARD COMMITTEES
We established an audit committee and a compensation committee in May
1999. The audit committee consists of Jai Gupta and Mark Rogers. The audit
committee reviews our internal accounting procedures and consults with and
reviews the services provided by our independent accountants. The compensation
committee consists of Michael Bryant and Mark Rogers. The compensation committee
reviews and recommends to the Board of Directors the compensation and benefits
of all our officers and Directors, including stock compensation and loans, and
establishes and reviews general policies relating to the compensation and
benefits of our employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to establishing the compensation committee, the Board of
Directors as a whole performed the functions delegated to the compensation
committee. No member of the Board of Directors or the compensation committee
serves as a member of the Board of Directors or compensation committee of any
entity that has one or more executive officers serving as a member of our Board
of Directors or compensation committee.
MEETINGS OF THE BOARD
Since our merger with Stylex Homes, Inc. on March 5, 1999, the Board of
Directors met one time and acted by unanimous written consent seven times. No
incumbent Director attended fewer than 75% of the total number of meetings held
by the Board and committees of the Board on which he served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
Outside Directors who are not principals of shareholders which own more
than 10% of our common stock receive an annual option to purchase 10,000 shares
of our common stock. The price is determined as the closing bid price of the
stock on the date of our annual meeting. Further, each Director entitled to a
grant of options receives annual compensation of $1,000. All Directors receive
reimbursement for out-of-pocket expenses incurred in attending meetings of the
Board.
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EXECUTIVE COMPENSATION SUMMARY
The following table sets forth the total compensation paid or accrued
for our chief executive officer and our four other most highly compensated
executive officers who were employed by us at June 30, 1999, excluding officers
paid less than $100,000 annually (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------
NAME AND OTHER ANNUAL SECURITIES ALL OTHER
PRINCIPAL POSITION FISCAL YEAR ENDED SALARY COMPENSATION UNDERLYING OPTIONS COMPENSATION
- ------------------ ----------------- -------- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C>
Richard A. Fisher June 30, 1999 $105,093 -- 414,412 --
June 30, 1998 $ 60,622 -- -- --
Chairman June 30, 1997 $ 27,404 -- -- --
Kevin J. High June 30, 1999 $126,040 -- 414,412 --
President June 30, 1998 $ 90,865 -- -- --
June 30, 1997 $ 54,928 -- -- --
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth grants of stock options to each of the
Named Executive Officers during the fiscal year ended June 30, 1999. No stock
appreciation rights were granted during the fiscal year ended June 30, 1999.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED ANNUAL
SECURITIES TOTAL OPTIONS EXERCISE RATES OF STOCK PRICE
UNDERLYING GRANTED TO OR BASE APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE EXPIRATION OPTION TERM (2)
NAME GRANTED FISCAL YEAR (1) PER SHARE DATE 5%($) 10%($)
- ---- --------- --------------- ----------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Fisher 14,412 1.24% $2.50 June 30, 2008 $ 22,659 $ 57,423
400,000 34.30% $4.00 February 11, 2004 $442,051 $976,816
Kevin J. High 14,412 1.24% $2.50 June 30, 2008 $ 22,659 $ 57,423
400,000 34.30% $4.00 February 11, 2004 $442,051 $976,816
</TABLE>
(1) Based on an aggregate of 1,161,185 shares subject to options granted to
employees during fiscal year 1999.
(2) These amounts represent hypothetical gains that could be achieved for the
option if exercised at the end of the option term. These gains are based on
assumed rates of stock appreciation of 5% and 10% compounded annually from
the date the option was granted to its expiration date and are not
presented to forecast possible future appreciation, if any, in the price of
our common stock. The gains shown are net of the option exercise price, but
do not include deductions for taxes or other expenses associated with the
exercise of the option or the sale of the underlying shares. The actual
gains, if any, on the exercise of the option will depend on the future
performance of our common stock, the optionee's continued employment
through the vesting period applicable to the option and the date on which
the option is exercised.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information regarding stock options
exercised by Named Executive Officers in the fiscal year ended June 30, 1999,
and exercisable and unexercisable stock options held as of June 30, 1999 by each
of the Named Executive Officers. The value of unexercised in-the-money options
has been calculated
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by determining the difference between the exercise price per share payable upon
exercise of such options and the closing market price on June 30, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR-END AT FISCAL YEAR-END
ACQUIRED VALUE ---------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Fisher -- -- 136,936 277,476 $219,366 $499,770
Kevin J. High -- -- 136,936 277,476 $219,366 $499,770
</TABLE>
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with our Chairman and
President. Each agreement provides for three years of employment commencing
February 11, 1999 at an annual salary of $175,000. The salary levels have been
increased to $200,000 based on our obtaining in excess of $7,000,000 of new
equity capital since commencement of these employment agreements. Pursuant to
these agreements, each of the officers has received options to purchase up to
400,000 shares of common stock at an exercise price of $4.00 per share. These
options vest in equal monthly installments over 24 months commencing on the date
of grant. In addition, Messrs. Fisher and High on September 1, 1999, were each
granted options to purchase 100,000 shares of common stock at $5 per share.
If either employee is terminated by us without cause or terminates
their employment agreement for good reason, such employee will receive from us
their then applicable base salary and continuation of benefits until the later
of the expiration of the term of their employment agreement or two years after
the date of termination. In addition, all outstanding options held by such
employee shall become immediately exercisable in full.
The employment agreements also provide that we will provide life
insurance policies and a monthly automobile allowance for these employees.
BENEFIT PLANS
We maintain a 401(k) plan, qualified under Section 401(k) of the
Internal Revenue Code of 1986, as amended. All of our employees who are at least
21 years of age are eligible to make salary reduction contributions pursuant to
the 401(k) plan. A participant may contribute a maximum of 15% of his or her
pre-tax salary, commissions and bonuses through payroll deductions (up to the
statutorily prescribed annual limit of $10,000 in 1998) to the 401(k) plan.
1996 STOCK OPTION PLAN
Our predecessor adopted our 1996 stock plan (the "1996 Plan") on
December 16, 1996. The 1996 Plan authorizes the grant of incentive stock options
in accordance with section 422 of the Internal Revenue Code of 1996 and
non-qualified options. We have reserved a total of 1,441,250 shares of common
stock for issuance under the 1996 Plan. No incentive stock option may be granted
under the 1996 Plan after December 16, 2006. In certain situations, including
changes in our capital structure due to a stock dividend, stock split,
recapitalization, reorganization, merger, consolidation, combination or the
like, the Board of Directors may, in order to prevent changes in the existing
rights of optionholders, adjust the number and class of shares available for
option grants under the 1996 Plan or revise the terms of outstanding options
under the 1996 Plan. However, the Board shall not make any adjustment that would
disqualify an incentive stock option or that would change the minimum number of
shares issuable upon exercise of an option.
Our officers and other key employees are eligible to receive incentive
stock options under the 1996 Plan. They, together with other persons who are not
employees of our company but who may provide services to us, are also eligible
to receive non-qualified options. Options may be granted in combination with or
in place of awards
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<PAGE> 13
granted under any other employee plan maintained by us. The aggregate fair
market value of common stock with respect to which incentive stock options are
exercisable for the first time by any employee during any calendar year may not
exceed $100,000.
The term of any incentive stock option granted under the 1996 Plan may
not exceed ten years or, in case of an optionee holding 10% of our shares, five
years from the date of the grant. The 1996 Plan imposes certain restrictions on
exercisability of options in the event of termination of the optionees'
employment with our company.
Our Board of Directors administers the 1996 Plan. The Board of
Directors has the authority at any time to suspend, terminate or amend the 1996
Plan, to grant options under the 1996 Plan, to determine the terms of each
option, to designate options as incentive stock options or non-qualified
options, to prescribe, amend and rescind rules and regulations relating to the
1996 Plan, and to make all such other determinations in connection with the
administration of the 1996 Plan. All actions taken and determinations made by
the Board of Directors will be final and binding upon us, the optionees and all
other interested persons.
The terms and conditions of option agreements may vary. Under the 1996
Plan the exercise price of incentive stock options may not be less than 100%,
or, in case of an optionee who owns stock possessing more than 10% of the total
combined voting power of our capital stock, 110%, of the fair market value of
our common stock on the date the option is granted.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee established by the Board of Directors is
composed of two outside directors, Michael Bryant and Mark Rogers. The
Compensation Committee has general responsibility for our executive compensation
policies and practices, including responsibility for establishing the specific
compensation of our executive officers. The following report summarizes our
executive officer compensation policies for the fiscal year ended June 30, 1999.
(References below to the "Compensation Committee" should be deemed to refer to
the full Board of Directors with respect to the period between July of 1999 and
May of 1999, when the full Board performed the functions of the Compensation
Committee.)
Compensation Objectives
Cytation's executive compensation programs are generally designed to
relate executive compensation to improvements in Cytation's financial
performance and corresponding increases in stockholder value. Decisions
concerning executive compensation are intended to:
establish incentives that will link executive officer compensation to
Cytation's stock performance and motivate executives to attain
Cytation's quarterly and annual financial targets and to promote
Cytation's long-term financial success; and provide a total
compensation package that is competitive within the industry and that
will assist Cytation to attract and retain executives who will
contribute to the long-term financial success of Cytation.
Executive Compensation
Cytation's executive compensation package for the fiscal year ended
June 30, 1999 consisted of two principal components: (1) base salary and (2)
long-term incentive compensation in the form of stock options. Cytation's
executive officers were also eligible to participate in other employee benefit
plans, including health and life insurance plans and a 401(k) retirement plan,
on substantially the same terms as other employees who met applicable
eligibility criteria, subject to any legal limitations on the amounts that could
have been contributed or the benefits that could have been paid under these
plans. In addition, the employment contracts with our Chairman and President
included a salary increase (effective retroactively to January, 1999) to $200,00
from $175,000, if we obtained $7,000,000 of new equity capital. This goal was
met, and their salaries were increased.
Cytation's executive compensation policy emphasizes stock options in
order to align the interests of management with the stockholders' interests in
the financial performance of Cytation for fiscal quarters, the fiscal year and
the longer term. In granting stock options, the Compensation Committee
considered in part the value of options held by the executive officers and the
extent to which the Compensation Committee believed those options would provide
sufficient motivation to the executive officers to achieve Cytation's goals.
During the fiscal year ended June 30, 1999, Messrs. Fisher and High were each
granted options to purchase 400,000 shares of common stock, which options vest
in 24 monthly increments commencing February 11, 1999, and options to purchase
14,412 shares of common stock, 25 percent of which are vested with an additional
25 percent each to vest at December 31 of 2000, 2001, and 2002. The Compensation
Committee believes that the grant of options that vest over an extended period
provides significant incentive for executive officers to continue their efforts
on behalf of Cytation and to create long-term value for Cytation's stockholders.
The executive officers' base salaries for the fiscal year ended June
30, 1999 were increased from their salaries in the prior fiscal year (with
respect to our predecessor, Web Services, Inc.) as the capital necessary to
enable us to compensate these officers in a manner commensurate with their level
of experience and quality of performance became available. Also, as noted above,
salaries for our Chairman and President were increased to $200,000 from $175,000
based on achieving the financing goals set forth in their employment contracts.
Chief Executive Officer Compensation
Consistent with Cytation's overall executive officer compensation
policy, Cytation's approach to the Chief
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<PAGE> 15
Executive Officer's compensation package in the fiscal year ended June 30, 1999
was to be competitive with other companies in the industry. The Compensation
Committee believes that this approach provided additional incentive to Mr.
Fisher to achieve Cytation's performance goals and enhance stockholder value.
Salary for Cytation's Chief Executive Officer was designed to give him assurance
of a base level of compensation commensurate with his position and duration of
employment with Cytation and competitive with salaries for officers holding
comparable positions in the industry.
Policy Regarding Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code limits Cytation's ability to
deduct compensation in excess of $1.0 million paid to the Chief Executive
Officer and the four most highly compensated officers of Cytation (other than
the Chief Executive Officer) in any year, unless the compensation qualifies as
"performance-based compensation." The Compensation Committee's policy with
respect to Section 162(m) is to make every reasonable effort to cause
compensation to be deductible by Cytation while simultaneously providing
executive officers of Cytation with appropriate rewards for their performance.
The aggregate base salaries and bonuses of Cytation's executive officers have
not historically exceeded, and are not in the foreseeable future expected to
exceed, the $1.0 million limit, and all stock options granted to executive
officers are intended to qualify as performance-based compensation.
The Compensation Committee
Michael Bryant
Mark Rogers
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<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have in the past borrowed money from certain of our officers. Such
loans have since been repaid in full. In no case did the amount borrowed exceed
$60,000 at any one time.
We have also borrowed $300,000 from EER Systems, Inc. ("EER"), one of
our shareholders. One of our current Directors, Jai Gupta, is the president of
EER. This loan has since been repaid in full.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
At the close of business on October 22, 1999, there were issued and
outstanding 9,846,340 shares of common stock, 890,000 shares of Series A
Preferred Stock, 279,771 shares of Series B Preferred Stock, and 1,000,000
shares of Series C Preferred Stock. On October 22, 1999, the closing bid and
asked price of Cytation's common stock as reported on the Over-the-Counter
Electronic Bulletin Board were $6.125 and $6.3125 per share, respectively.
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of our
outstanding common stock on October 18, 1999 by (i) each of our Directors and
executive officers, (ii) all of our Directors and executive officers as a group,
and (iii) each shareholder who was known by us to be the beneficial owner of
more than five percent (5%) of our outstanding shares. Unless otherwise noted
below, the address of each person listed on the table is c/o Cytation.com
Incorporated, 55 Hammarlund Way, Newport, Rhode Island 02842.
NUMBER OF SHARES PERCENTAGE OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) STOCK OUTSTANDING
- ------------------------ ---------------------- -----------------
Kevin J. High (2) ........... 1,426,898 13.97%
Richard A. Fisher (3) ....... 964,813 9.45%
William Fink (4) ............ 721,636 7.07%
Ann Marie Gleason (5)........ 319,958 3.13%
Mark Rogers (6) ............. 161,420 1.58%
Thomas J. Burgess (7) ....... 92,889 *
Jai N. Gupta (8) ............ 43,238 *
Michael Bryant (9)........... 43,238 *
EER Systems (10) ............ 1,500,345 14.69%
All Directors and Officers
as a Group .................. 3,774,090 36.95%
*Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
SEC. For purposes of calculating the number of shares and the
percentage beneficially owned by that person or entity, 366,668 shares
of common stock issuable by us pursuant to options which may be
exercised within 60 days after October 18, 1999 and not subject to
repurchase by us are deemed to be beneficially owned and outstanding.
However, these shares are not deemed to be beneficially owned and
outstanding for purposes of computing the percentage beneficially owned
by any other person or entity.
Except as otherwise indicated, each stockholder named in the table has
sole voting and investment power with respect to the shares set forth
opposite such stockholder's name. For purposes of calculating the
percentage beneficially owned, the number of shares deemed outstanding
before the offering includes: (a) 9,846,340 shares of common stock
outstanding as of October 18, 1999; (b) 2,169,771 shares of common
stock issuable upon the conversion of preferred stock (assuming the
maximum number of shares to be
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<PAGE> 17
issued upon conversion); and (c) the presently exercisable options and
presently exercisable warrants held by that person.
(2) Includes 1,243,564 shares of common stock and 183,334 shares of common
stock issuable pursuant to options. Excludes 331,078 shares of common
stock issuable pursuant to options.
(3) Includes 781,479 shares of common stock held by Karen B. Fisher, the
wife of Richard A. Fisher, and 183,334 shares of common stock issuable
pursuant to options granted to Richard A. Fisher. Excludes 331,078
shares of common stock issuable pursuant to options granted to Richard
A. Fisher.
(4) Includes 721,636 shares of common stock.
(5) Includes 319,938 shares of common stock.
(6) Includes 161,420 shares of common stock. Excludes 10,000 shares of
common stock issuable pursuant to options.
(7) Includes 92,889 shares of common stock. Excludes 300,000 shares of
common stock issuable pursuant to options. Excludes 27,760 shares of
common stock issuable upon conversion of Series B Preferred Stock.
(8) Includes 43,238 shares of common stock.
(9) Includes 43,238 shares of common stock. Excludes 10,000 shares of
common stock issuable pursuant to options.
(10) The address for EER is 10289 Aerospace Road, Seabrook, Maryland 20706.
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<PAGE> 18
PROPOSAL 2
APPROVAL OF STOCK OPTION PLAN
Proposal Two concerns the approval of Cytation's 1999 Stock Option Plan
(the "1999 Plan"). The 1999 Plan is designed to provide additional incentive to
employees and certain other individuals providing services to or acting as
Directors of Cytation or any parent or subsidiary of Cytation. We believe that
the grant of stock options under the 1999 Plan provides individuals with a
long-term interest in our growth and success. We believe the grant of incentive
and nonqualified stock options provides such additional incentive by giving
individuals the opportunity to acquire a proprietary interest, or increase their
existing proprietary interest, in Cytation through the acquisition of shares of
common stock.
AN AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTING STOCK REPRESENTED IN
PERSON OR BY PROXY AT THE ANNUAL MEETING IS NECESSARY TO APPROVE THE 1999 PLAN.
Proxies will be voted as indicated on a returned proxy card. If there are no
voting instructions then the proxy holders will vote the proxies received by
them FOR the nominees named below.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSAL TO APPROVE CYTATION'S 1999 --- PLAN.
SUMMARY OF THE 1999 PLAN
The full text of the 1999 Plan is printed as EXHIBIT D and stockholders
should review it prior to voting. The following is a summary of the material
features of the 1999 Plan:
We adopted our 1999 Plan on October 1999 subject to stockholder
approval. Only our officers and key employees may participate in the 1999 Plan.
The 1999 Plan authorizes the grant of incentive stock options and non-qualified
stock options. We have reserved a total of 1,550,000 shares of common stock for
issuance upon exercise of outstanding options under the 1999 Plan, subject to
adjustment in the event of any stock dividend, stock split, recapitalization,
reorganization, or certain defined changes of control. The number of shares with
respect to which options may be granted to any participant under the 1999 Plan
may not exceed 750,000 shares in any calendar year.
Our Board of Directors administers the 1999 Plan. The Board has the
authority to adopt, amend and repeal the administrative rules, guidelines and
practices relating to the 1999 Plan and to interpret its provisions. The Board
may delegate authority under the 1999 Plan to one or more committees of the
Board and, subject to certain limitations, to one or more of our executive
officers. Subject to certain limitations contained in the 1999 Plan, the Board
of Directors, the compensation committee or any other committee or any executive
officer to whom the Board delegates authority, as the case may be, selects the
recipients of options and determines the number of shares of common stock
covered by options, the dates upon which such options become exercisable, the
exercise price and duration of options, and all other terms and conditions of
option grants.
Options under the 1999 Plan may be granted at an exercise price which
may be less than, equal to or greater than the fair market value of our common
stock on the date of the grant. The exercise price of options may be paid in
cash, by check, by a "cashless exercise" through a broker, by surrender to us of
common shares, or by any combination of the foregoing permitted forms of
payment. Under present law, incentive stock options and options intended to
qualify as performance-based compensation under Section 162(m) of the Internal
Revenue Code of 1986 may not be granted with an exercise price less than the
fair market value of the common stock on the date of the grant (or less than
110% of the fair market value in the case of incentive stock options granted to
optionees holding more than 10% of the combined voting power of our capital
stock).
In the event of certain defined change in control events, all
outstanding options under the 1999 Plan shall accelerate and become immediately
exercisable for a period of fifteen days (or such period as the Board may
prescribe) immediately prior to the scheduled consummation of the change of
control. Upon consummation of the change of control, the 1999 Plan and all
outstanding and unexercised options shall terminate as of the effective date
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<PAGE> 19
of the change in control unless the 1999 plan is continued after the change in
control and such options are assumed by the surviving entity.
No incentive stock option may be granted under the 1999 Plan after
August 31, 2009, but the vesting and effectiveness of options previously granted
may extend beyond that date. Our Board of Directors may at any time amend,
suspend or terminate the 1999 Plan.
As of the date of this Proxy Statement, options to acquire 625,000
shares of our common stock have been granted under the 1999 Plan.
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<PAGE> 20
PROPOSAL 3
TO ADOPT A PLAN OF REINCORPORATION AND MERGER THAT WOULD:
o CHANGE CYTATION'S STATE OF INCORPORATION FROM NEW YORK TO
DELAWARE,
o CHANGE CYTATION'S NAME FROM CYTATION.COM INCORPORATED TO
COLLEGELINK.COM INCORPORATED, AND
o CLASSIFY THE BOARD OF DIRECTORS (COLLECTIVELY, THE "PLAN OF
REINCORPORATION").
The Board of Directors has unanimously approved a proposal to:
o change the Company's state of incorporation from New York
to Delaware,
o change its name from Cytation.com Incorporated to
CollegeLink.com Incorporated, and
o classify the Board of Directors.
The Company as the sole stockholder of CollegeLink.com Incorporated, a
Delaware corporation and a wholly-owned subsidiary of the Company formed by the
Company for the Plan of Reincorporation, has approved four alternative
resolutions that authorize CollegeLink.com Incorporated's Board of Directors to
file one of four amendments to CollegeLink.com Incorporated's certificate of
incorporation with the Secretary of the State of Delaware, to effect a plan of
recapitalization within ninety days of the date of the proposed merger of the
company with CollegeLink.com Incorporated. See "Material Changes in the Delaware
Company Certificate, By-Laws and Reverse Split Amendments from the Company
Certificate and By-Laws" below.
Throughout this Proposal Three, the term "Company" refers to the
existing New York corporation and the term the "Delaware Company" refers to
CollegeLink.com Incorporated, a Delaware corporation and a wholly-owned
subsidiary of the Company formed by the Company for the Plan of Reincorporation.
The address and phone number of the principal executive office of the Delaware
Company are the same as those of the Company.
AN AFFIRMATIVE VOTE OF AT LEAST TWO-THIRDS OF THE OUTSTANDING VOTING
STOCK OF THE COMPANY (INCLUDING SERIES A STOCK), AND OF A MAJORITY OF
OUTSTANDING SHARES OF SERIES A, SERIES B AND SERIES C STOCK VOTING SEPARATELY BY
CLASS, REPRESENTED IN PERSON OR BY PROXY AT THE ANNUAL MEETING, IS REQUIRED FOR
APPROVAL OF THE PROPOSED PLAN OF REINCORPORATION. Proxies will be voted as
indicated on a returned proxy card. If there are no voting instructions then the
proxy holders will vote the proxies received by them FOR the nominees named
below.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSED PLAN OF REINCORPORATION.
The Plan of Reincorporation will be effected by merging the Company
with and into the Delaware Company (the "Merger") in accordance with the terms
of an Agreement and Plan of Merger (the "Merger Agreement"). Upon completion of
the Merger:
o the Company will cease to exist;
o the Delaware Company will continue to operate the business of the
Company under the name "CollegeLink.com Incorporated";
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<PAGE> 21
o the Board of Directors will be divided into three classes;
o the Class I Director will be Jai N. Gupta, and will serve until the
next annual meeting or until his successor is elected and qualified, the Class
II Director will be Mark Rogers, and will serve until the 2001 annual meeting or
until his successor is elected and qualified, and the Class III Directors will
be Kevin J. High and Richard A. Fisher, and will serve until the 2002 annual
meeting or until their successors are qualified;
o the shareholders of the Company will automatically become the
shareholders of the Delaware Company;
o the shareholders will have rights as shareholders of the Delaware
Company and no longer as shareholders of the Company, and such rights will be
governed by Delaware law, the Delaware Company's certificate of incorporation
(the "Delaware Company Certificate") and the Delaware Company's by-laws (the
"Delaware Company By-laws") rather than by New York law, the Company's existing
certificate of incorporation (the "Company Certificate") and the Company's
existing by-laws (the "Company By-laws"); and
o options and warrants to purchase shares of the Company's common stock
automatically will be converted into options and warrants to acquire an equal
number of shares of the Delaware Company's common stock.
The Company as the sole stockholder of the Delaware Company has
approved four alternative resolutions that authorize the Delaware Company's
Board of Directors to file one of four amendments to the Delaware Company
Certificate with the Secretary of the State of Delaware, to effect a plan of
recapitalization within ninety days of the date of the Merger (the "Termination
Date"), pursuant to which either (a) every two shares of the Delaware Company's
issued and outstanding common stock, $.001 par value, (the "Old Delaware Company
Shares") will be automatically converted into one new share of common stock (a
"New Delaware Company Share"), or (b) every three Old Delaware Company Shares
will be automatically converted into two New Delaware Company Shares, or (c)
every four Old Delaware Company Shares will be automatically converted into
three New Delaware Company Shares, or (d) every five Old Delaware Company Shares
will be automatically converted into four New Delaware Company Shares (each a
"Reverse Split"). The Board of Directors may abandon any or all of the proposed
amendments prior to filing without further action by the stockholders. The Board
of Directors may only file such an amendment if the Board of Directors
determines that it is in the best interests of the Delaware Company. Once an
amendment authorizing a Reverse Split is filed, the Board of Directors has no
authority to file additional amendments without further stockholder action. If
an amendment authorizing a Reverse Split has not been filed by the Termination
Date, the authority of the Board of Directors under the existing stockholder
resolution lapses.
The Plan of Reincorporation will not result in any change in the
physical location, business, management, assets, liabilities, net worth or
employee benefit plans of the Company. The Directors and officers of the Company
immediately prior to the Merger will serve as the Directors and officers of the
Delaware Company following the Merger. Following the Merger, we expect the
Delaware Company's common stock to be listed on the Over-the-Counter Electronic
Bulletin Board under the symbol "CLNK."
Approval of the Plan of Reincorporation will constitute approval of the
Merger, the Merger Agreement, the change of name, the classification of the
Board of Directors, and the Reverse Split. Following the Meeting, if the Plan of
Reincorporation is approved, the Company, upon satisfaction of applicable
regulatory requirements, will submit the Merger Agreement to the offices of the
New York Secretary of State and the Delaware Secretary of State for filing.
The shareholders' approval of the Plan of Reincorporation will
constitute their approval of all of the provisions of the Delaware Company
Certificate and Delaware Company By-laws, including those provisions relating to
the name change, the Reverese Split, the classification of the Board of
Directors, the limitation of director liability and indemnification of directors
and officers under Delaware law, and including those provisions having
"anti-takeover" implications, which may be significant to the Company and its
shareholders in the future. The governance of the Delaware Company by Delaware
law, the Delaware Company Certificate and the Delaware Company By-laws will
alter certain rights of the shareholders.
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<PAGE> 22
The shareholders' approval of the Plan of Reincorporation will mean
that after the Merger, the certificate of incorporation of the Delaware Company
as it exists immediately prior to the Merger will be the certificate of
incorporation of the surviving company. Such certificate of incorporation and
the resolution approving the filing of an amendment thereto will be in the form
attached as EXHIBIT A.
Under the Merger Agreement, each outstanding share of the Company's
common stock will automatically be converted into one share of the Delaware
Company's common stock upon the effective time of the merger. Each stock
certificate representing issued and outstanding shares of the Company's common
stock will continue to represent the same number of shares of common stock of
the Delaware Company unless and until the Board of Directors implements the
Reverse Split. UNLESS AND UNTIL THE BOARD OF DIRECTORS IMPLEMENTS A REVERSE
SPLIT, IT WILL NOT BE NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR EXISTING
COMPANY STOCK CERTIFICATES FOR THE DELAWARE COMPANY STOCK CERTIFICATES.
The discussion set forth below is a summary of the Merger Agreement and
certain of its effects. It is qualified in its entirety by reference to the
Merger Agreement attached to this Proxy Statement as EXHIBIT B.
The Plan of Reincorporation has been approved unanimously by the Board
of Directors. If approved by the shareholders, the Proposed Plan of
Reincorporation will become effective upon the filing of the Merger Agreement
and related documentation with the Secretary of State of both Delaware and New
York (the "Effective Time"). The Board of Directors intends that the Proposed
Plan of Reincorporation be consummated as soon as practicable following the
Meeting and the satisfaction of applicable regulatory requirements. Nonetheless,
the Merger Agreement allows for the Board of Directors to abandon or postpone
the Proposed Plan of Reincorporation or to amend the Merger Agreement either
before or after the shareholders' approval has been obtained and before the
Effective Time, if circumstances arise causing the Board of Directors to deem
either such action advisable.
REASONS FOR THE PLAN OF REINCORPORATION
In recent years, a number of major public corporations have obtained
the approval of their stockholders to reincorporate in Delaware. The Board of
Directors believes it is beneficial and important that the Company also obtain
the advantages of Delaware law. The Board of Directors believes the proposed
change in domicile is in the best interests of the Company and its stockholders
for several reasons, including: (i) the greater predictability and flexibility
afforded by Delaware corporate law and its greater responsiveness to corporate
needs, (ii) the more favorable and predictable corporate environment afforded by
Delaware to corporate directors and officers, and (iii) the greater certainty
afforded by Delaware law with respect to directors' duties in the face of
takeover offers and with respect to anti-takeover measures.
Advantages of Delaware Law. For many years, Delaware has followed a
policy of encouraging incorporation under its jurisdiction. In furtherance of
that policy, Delaware has long been the leading state in adopting, construing
and implementing comprehensive and flexible corporate laws responsive to the
legal and business needs of corporations. As a result, Delaware's General
Corporation Law has become widely regarded as the most well-defined body of
corporate law in the United States. Because of Delaware's prominence as the
state of incorporation for many major corporations, both the legislature and
courts in Delaware have demonstrated an ability and a willingness to act quickly
and effectively to meet changing business needs. The Delaware courts have
developed considerable expertise in dealing with corporate issues and a
substantial body of case law, establishing public policies with respect to
corporate legal affairs. Delaware has a more highly developed body of case law
interpreting its corporate statutes than New York, giving Delaware corporate law
an added measure of predictability that is useful in a judicial system based
partly on precedent. These factors often provide the directors and management of
Delaware corporations with greater certainty and predictability in managing the
affairs of the corporation. Furthermore, the Delaware court system provides for
the relatively expeditious resolution of corporate disputes. Delaware has a
specialized Court of Chancery which hears cases involving corporate law and
lacks jurisdiction over tort or criminal cases. Moreover, appeals to the Supreme
Court of Delaware in important cases can be made and decided relatively rapidly.
For these reasons, many American corporations have selected Delaware for
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<PAGE> 23
their corporate domicile either initially or through subsequent reincorporation.
Directors and Officers. The Board of Directors believes that
reincorporation under Delaware law will enhance the Company's ability to attract
and retain qualified directors and officers as well as encourage directors and
officers to continue to make independent decisions in good faith on behalf of
the Company. The law of Delaware offers reduced risk and greater certainty and
stability from the perspective of those who serve as corporate officers and
directors. The intense competition that has characterized the software and
Internet industry has greatly expanded the challenges and risks facing the
directors and officers of companies within the software and Internet industry.
To date, the Company has not experienced difficulty in retaining directors or
officers. However, as a result of the significant potential liability and
relatively small compensation associated with service as a director, the Company
believes that the better understood, more favorable, and comparatively stable
corporate environment afforded by Delaware will enable it to compete more
effectively with other public companies, most of which are incorporated in
Delaware, in the recruitment of talented and experienced directors and officers.
The parameters of director and officer liability are more extensively
addressed in Delaware court decisions and are therefore better defined and
better understood than under New York law. In addition, the protection from
liability and ability to provide indemnification for directors and officers is
somewhat greater under Delaware law than under existing New York law.
Accordingly, the Board of Directors believes that the Company's corporate
objectives can be better achieved by reincorporating in Delaware, and by
including provisions in the certificate of incorporation and by-laws of the
Delaware company to eliminate personal liability of directors and officers and
to provide for their indemnification to the maximum extent permitted by Delaware
law.
The Board of Directors believes that Delaware law strikes an
appropriate balance with respect to personal liability of directors and
officers, and that reincorporation in Delaware will enhance the Company's
ability to recruit and retain directors and officers in the future, while
providing appropriate protection for stockholders from possible abuses by
directors and officers. In this regard, it should be noted that directors'
personal liability is not, and cannot be, eliminated under Delaware law for
intentional misconduct, bad faith conduct or any transaction from which the
director derives an improper personal benefit, or for violations of federal laws
such as the federal securities laws.
The Board of Directors considered the predictability and flexibility of
Delaware law and the efficiency of its judicial process when it approved the
present proposal. In addition, the Company has never maintained executive
offices in the State of New York.
Possible Disadvantages. Despite the unanimous belief of the Board of
Directors that the Plan of Reincorporation is in the best interests of the
Company and its shareholders, Delaware law has been criticized by some
commentators on the grounds that it does not afford minority shareholders the
same substantive rights and protections as are available in a number of other
states. In addition, following a reincorporation by the Company in Delaware, the
Company may be able to complete a business combination which it would be unable
to complete if the Company remained incorporated in New York. Such a business
combination may be opposed by some shareholders. For a comparison of
shareholders' rights under Delaware and New York law, see "Comparison of
Certificate and By-laws Provisions of the Delaware Company and the Company and
Provisions in the DGCL and NYBCL" below.
Furthermore, following the Merger the Delaware Company's Board of
Directors will be divided into three classes expiring each year at the Company's
annual meeting or special meeting in lieu thereof. This proposal could restrict
the ability of stockholders to change the composition of the Board by extending
the time required to elect a majority of the directors from one to two years,
under most circumstances. In addition, the Company, as sole stockholder of the
Delaware Company, has authorized a Reverse Split to be effected in the
discretion of the Board of Directors. See "Comparison of Certificate and By-laws
Provisions of the Delaware Company and the Company and provisions in the DGCL
and NYBCL" below.
AUTHORIZED SHARES OF CAPITAL STOCK
As of the date hereof, the Company Certificate authorizes 100,000,000
shares of common stock, par value
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<PAGE> 24
$0.001 per share (the "Common Shares"), of which 9,846,340 Common Shares are
issued and outstanding, and 10,000,000 shares of preferred stock, $.01 par
value. The preferred stock may be issued in one or more series, each of such
series to have such terms, including voting rights as stated or expressed in the
Company Certificate and in the resolution or resolutions providing for the issue
of such series adopted by the Board of Directors. 2,500,000 shares of preferred
stock have been designated Series A (the "Series A Shares") of which 890,000
Series A Shares are issued and outstanding, 300,000 shares of preferred stock
have been designated Series B (the "Series B Shares") of which 279,771 Series B
Shares are issued and outstanding, 1,000,000 shares of preferred stock have been
designated Series C (the "Series C Shares") of which 1,000,000 Series C Shares
are issued and outstanding, and 6,200,000 shares are undesignated and available
for issuance.
The Delaware Company Certificate provides for 100,000,000 shares of
common stock, par value $0.001 per share, and 10,000,000 shares of preferred
stock, $.01 par value. The preferred stock may be issued in one or more series,
each of such series to have such terms, including voting rights, as stated or
expressed in the Delaware Company Certificate and in the resolution or
resolutions providing for the issue of such series adopted by the Board of
Directors. 2,500,000 shares of preferred stock have been designated Series A
(the "Series A Shares") of which 890,000 Series A Shares will be issued and
outstanding upon completion of the Merger, 300,000 shares of preferred stock
have been designated Series B (the "Series B Shares") of which 279,771 Series B
Shares will be issued and outstanding upon completion of the Merger, 1,000,000
shares of preferred stock have been designated Series C (the "Series C Shares")
of which 1,000,000 Series C Shares will be issued and outstanding upon
completion of the Merger, and 6,200,000 shares are undesignated and available
for issuance. The terms of each series of preferred stock of the Delaware
Company will be substantially identical to the corresponding series of preferred
stock of the Company. The Delaware Corporation will not issue any shares of any
stock in connection with the Plan of Reincorporation, other than the shares into
which the old shares will convert.
CONVERSION OF STOCK CERTIFICATES
After the Plan of Reincorporation becomes effective, the Delaware
Company will issue a press release announcing that the transaction has occurred.
At the same time, the holders of the old shares of the Company will become
holders of the new shares of the Delaware Company. Shares of the Company will
automatically convert into shares of the Delaware Company, on these terms:
o The conversion will be on a one-for-one basis.
o Each share of the Company's Series A, Series B and Series C preferred
stock which is outstanding at the effective time will become one share of the
preferred stock of the corresponding series of the Delaware Company.
o Each share of the common stock of the Company which is outstanding at
the effective time will become one share of the common stock of the Delaware
Company.
At the effective time, each Company stock certificate which was
outstanding just before the Plan of Reincorporation will automatically represent
the same number of Delaware Company shares. Therefore, shareholders of the
Company will not need to exchange their stock certificates for new Delaware
Company stock certificates immediately following the Plan of Reincorporation.
However, if the Reverse Split is implemented, shareholders of the Company will
need to exchange their stock certificates for new ones. ACCORDINGLY,
SHAREHOLDERS SHOULD NOT DESTROY THEIR OLD CERTIFICATES AND SHOULD NOT SEND THEIR
OLD CERTIFICATES TO THE COMPANY OR THE COMPANY'S TRANSFER AGENT, EITHER BEFORE
OR AFTER THE EFFECTIVE TIME OF THE PLAN OF REINCORPORATION, UNLESS AND UNTIL THE
REVERSE SPLIT IS IMPLEMENTED.
TRADING OF THE STOCK
After the Plan of Reincorporation, those who were formerly shareholders
of the Company may continue to make sales or transfers using their Company stock
certificates. The Delaware Company will issue new certificates
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representing shares of the Delaware Company's common stock for transfers
occurring after the effective date. On request, the Delaware Company will issue
new certificates to anyone who holds the Company's stock certificates. Any
request for new certificates will be subject to normal requirements including
proper endorsement, signature guarantee, if required, and payment of applicable
taxes.
Shareholders whose shares of the Company were freely tradable before
the Plan of Reincorporation will own shares of the Delaware Company which are
freely tradable after the Plan of Reincorporation. Similarly, any shareholders
holding securities with transfer restrictions before the Plan of Reincorporation
will hold shares of the Delaware Company which have the same transfer
restrictions after the Plan of Reincorporation. For purposes of computing the
holding period under Rule 144 of the Securities Act of 1933, as amended, those
who hold the Delaware Company's stock certificates will be deemed to have
acquired their shares on the date they originally acquired their shares in the
Company.
After the Plan of Reincorporation, the Delaware Company will continue
to be a publicly held company, with its common stock tradable on the
Over-the-Counter Electronic Bulletin Board under the symbol "CLNK." The Delaware
Company will also file with the Securities and Exchange Commission and provide
to its shareholders the same types of information that the Company has
previously filed and provided.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN OF REINCORPORATION
The following discussion addresses certain federal income tax
considerations that are generally applicable to holders of common stock of the
Company who receive common stock of the Delaware Company in exchange for their
common stock of the Company in the Plan of Reincorporation. This discussion does
not address all of the tax consequences of the Plan of Reincorporation that may
be relevant to particular stockholders in light of their particular
circumstances, such as stockholders who are dealers in securities, who are
foreign persons or who acquired their common stock of the Company through stock
option or stock purchase programs or in other compensatory transactions. In
addition, the following discussion does not address the tax consequences of
transactions effected prior to or after the Plan of Reincorporation (whether or
not such transactions are in connection with the Plan of Reincorporation).
Finally, no foreign, state or local tax considerations are addressed herein.
Accordingly, the Company's Shareholders are urged to consult their own tax
advisors as to the specific tax consequences to them of the Plan of
Reincorporation and related transactions, including the applicable federal,
state, local and foreign tax consequences to them of the Plan of Reincorporation
and such related transactions.
The following discussion is based on the interpretation of the Code,
applicable Treasury Regulations, judicial authority and administrative rulings
and practice, all as of the date hereof. The Internal Revenue Service (the
"IRS") is not precluded from adopting a contrary position. In addition, there
can be no assurance that future legislative, judicial or administrative changes
or interpretations will not adversely affect the accuracy of the statements and
conclusions set forth herein. Any such changes or interpretations could be
applied retroactively and could affect the tax consequences of the Plan of
Reincorporation to the Company, the Delaware Company and/or the Company's
stockholders.
Subject to the limitations, qualifications and exceptions described
herein, and assuming the Plan of Reincorporation qualifies as a reorganization
within the meaning of Section 368(a) of the Code (a "Reorganization"), the
following federal income tax consequences will generally result:
(a) No gain or loss will be recognized by holders of the common stock
of the Company upon receipt of common stock of the Delaware Company pursuant to
the Plan of Reincorporation;
(b) The aggregate tax basis of the common stock of the Delaware Company
received by each stockholder of the Company in the Plan of Reincorporation will
be equal to the aggregate tax basis of the common stock of the Company
surrendered in exchange therefor;
(c) The holding period of the common stock of the Delaware Company
received by each stockholder of the Company will include the period for which
such stockholder held the common stock of the Company
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surrendered in exchange therefor, provided that such common stock of the Company
was held by such stockholder as a capital asset at the time of the Plan of
Reincorporation; and
(d) No gain or loss will be recognized by the Company or the Delaware
Company as a result of the Reincorporation.
Neither the Company nor the Delaware Company has requested a ruling
from the IRS with respect to the federal income tax consequences of the Plan of
Reincorporation. The Company will, however, obtain an opinion from Foley, Hoag &
Eliot, LLP to the effect that the Reincorporation will constitute a
Reorganization (the "Tax Opinion"). The Tax Opinion will neither bind the IRS
nor preclude the IRS from asserting a contrary position. In addition, the Tax
Opinion will be subject to certain assumptions, exceptions and qualifications
and will be based upon the truth and accuracy of representations made by the
Company, the Delaware Company and possibly certain stockholders of the Company.
A successful IRS challenge to the Reorganization status of the Plan of
Reincorporation would result in a stockholder recognizing gain or loss with
respect to each share of common stock of the Company exchanged in the Plan of
Reincorporation equal to the difference between the stockholder's basis in such
share and the fair market value, as of the time of the Plan of Reincorporation,
of the common stock of the Delaware Company received in exchange therefor. In
such event, a stockholder's aggregate basis in the shares of common stock of the
Delaware Company received in the exchange would equal their fair market value on
such date, and the stockholder's holding period for such shares would not
include the period during which the stockholder held common stock of the
Company.
Even if the Plan of Reincorporation qualifies as a Reorganization, a
stockholder would recognize gain if, and to the extent that, the stockholder
received (directly or indirectly) consideration other than common stock of the
Delaware Company in exchange for the stockholder's common stock of the Company
or to the extent that the common stock of the Delaware Company were considered
to be received in exchange for services or property other than solely for common
stock of the Company. All or a portion of such gain could be taxable as ordinary
income. Under the terms of the Merger Agreement, no such consideration other
than common stock of the Delaware Company will be issued in the Plan of
Reincorporation.
The Company's stockholders will be required to attach a statement to
their tax returns for the year of the reincorporation that contains the
information listed in Treasury Regulation Section 1.368-3(b). Such statement
must include the stockholder's tax basis in the stockholder's common stock of
the Company and a description of the common stock of the Delaware Company
received.
ACCOUNTING TREATMENT OF THE MERGER
In accordance with generally accepted accounting principles, the
Company expects that the Merger will be accounted for as a reorganization of
entities under common control at historical cost.
REGULATORY APPROVALS
The Merger is not expected to be consummated until the Company has
obtained all required consents of governmental authorities. To the Company's
knowledge, the only required consent to the consummation of the Merger will be
the filing of a Certificate of Merger by the Tax Commissioner of the State of
New York with the Secretary of State of the State of New York.
ABANDONMENT
The Board of Directors will have the right to abandon the Merger
Agreement and take no further action towards reincorporating the Company in
Delaware at any time before the Plan of Reincorporation becomes effective, even
after shareholder approval, if for any reason the Board of Directors determines
that it is not advisable to proceed with the Plan of Reincorporation.
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COMPARISON OF CERTIFICATE AND BY-LAWS PROVISIONS OF THE DELAWARE COMPANY AND THE
COMPANY AND PROVISIONS IN THE DGCL AND NYBCL
The relative rights of the shareholders of the Delaware Company and the
Company and a number of other corporate governance matters will differ between
the Delaware Company and the Company. These differences arise as a result of
differences between the General Corporation Law of Delaware ("DGCL") and the New
York Business Corporation Law ("NYBCL") and differences between each company's
respective certificates of incorporation and by-laws. The following discussion
identifies what the Board of Directors, with the advice of counsel, believes to
be the most significant of these differences.
Shareholders are advised that many provisions of the DGCL and NYBCL may
be subject to differing interpretations, and that those offered herein may be
incomplete in certain respects. The following discussion is not a substitute for
direct reference to the statutes themselves or for professional interpretation
of them. In addition, the following discussion is qualified in its entirety by
reference to the DGCL, the NYBCL, case law applicable in Delaware or New York,
the Delaware Company Certificate attached hereto as EXHIBIT A, the Delaware
Company By-laws attached hereto as EXHIBIT C, and the Company Certificate and
Company By-laws, copies of which are available for inspection at the principal
office of the Company and copies of which will be sent to shareholders upon
request.
Consideration for Shares. Under the NYBCL, stock certificates cannot be
issued until full payment has been made, except for shares purchased under a
stock option plan permitting installment payments. Under the DGCL, however, a
corporation can receive cash, services, personal or real property, leases of
real property or any combination of these as payment in full or in part for the
shares. A purchaser of shares under the DGCL may pay an amount equal to or
greater than the par value of such shares if the corporation receives a binding
obligation of the purchaser to pay the balance of the purchase price.
Dividends and Redemption of Stock. Subject to its charter provisions, a
corporation may generally pay dividends, redeem shares of its stock or make
other distributions to stockholders if the corporation is solvent and would not
become insolvent because of the dividend, redemption or distribution. The assets
applied to such a distribution may not be greater than the corporation's
"surplus." The NYBCL defines surplus as the excess of net assets over stated
capital, and allows the board to adjust stated capital. The DGCL, on the other
hand, defines surplus as the excess of net assets over capital, and allows the
board to adjust capital (for shares with par value, the capital need only equal
the aggregate par value of such shares). If there is no surplus, the DGCL allows
the corporation to apply net profits from the current or preceding fiscal year,
or both, unless the corporation's net assets are less than the capital
represented by issued and outstanding stock which has a preference on any
distribution of assets.
Both the NYBCL and the DGCL permit redemptions only when the
corporation has outstanding shares of at least one class of voting stock which
is not subject to the redemption.
Issuance of Rights and Options to Directors, Officers or Employees.
Under the NYBCL, the issuance of stock rights or stock options to directors,
officers or employees, as well as plans providing therefore, must be approved by
a majority of votes cast at a shareholders meeting. The DGCL does not require
shareholder approval of such transactions.
Vote Required for Certain Transactions. Until February 1998, the NYBCL
required the holders of two-thirds of the outstanding stock of a New York
corporation to approve certain mergers, consolidations or sales of all or
substantially all the corporation's assets that may occur outside the ordinary
course of business. Since February 1998, however, a New York corporation may
provide in its charter that the holders of a majority of the outstanding stock
may approve such transactions. The Corporation has not adopted such a charter
provision. Under the DGCL, holders of a majority of the outstanding stock
entitled to vote on such transactions have the power to approve a merger,
consolidation or sale of all or substantially all the assets without a special
provision in the charter, unless the charter provides otherwise. Furthermore, in
the case of a merger under the DGCL, stockholders of the surviving
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corporation do not have to approve the merger at all, unless the charter
provides otherwise, if (a) no amendment of the surviving corporation's
certificate of incorporation is made by the merger agreement; (b) each
outstanding or treasury share of the surviving corporation before the merger is
to be an identical outstanding or treasury share of the surviving corporation
after the merger; and (c) the merger results in no more than a 20% increase in
its outstanding common stock.
Special voting requirements may apply to certain business combinations
with interested shareholders. See the discussion below under the heading
"Business Combinations with Interested Shareholders."
Indemnification of Directors and Officers. The NYBCL and the DGCL both
allow a corporation to indemnify its directors and officers in connection with
derivative and non-derivative actions. However, both generally require that the
person to be indemnified must have acted in good faith and in a manner the
person reasonably believed to be consistent with the best interests of the
corporation. Also, with respect to derivative actions where the person is
adjudged to be liable to the corporation, indemnification is not permitted
unless a court determines that the person is fairly entitled to such
indemnification. The NYBCL additionally provides that indemnification may not be
made in connection with derivative actions where a pending claim is settled or
otherwise disposed of, or in any action where the liability arises from actions
taken in bad faith, intentional wrongdoing, or where an improper personal
benefit was derived. The Company Certificate does not address indemnification of
directors and officers. The Delaware Company Certificate generally provide for
indemnification to the maximum extent permitted by applicable law.
Insurance for Directors and Officers. The NYBCL permits a corporation
to purchase insurance for its directors and officers against liabilities arising
from actions and omissions of the insured person, provided that such insurance
does not provide for any payment, other than cost of defense, where a final
adjudication adverse to the insured director or officer establishes that his
acts of active and deliberate dishonesty were material to the cause of action so
adjudicated, or that he personally gained a financial profit or other advantage
to which he was not legally entitled. The DGCL permits a corporation to purchase
insurance for its directors, officers, employees or agents against any liability
incurred in such capacity.
Limitation of Directors' Liability. The NYBCL permits a corporation to
provide in its certificate of incorporation a provision limiting the personal
liability of a director to the corporation or its shareholders for damages for
any breach of duty in such capacity, except for the liability of any director if
a judgment or other final adjudication adverse to him establishes that (i) his
acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law; (ii) he personally gained in fact a financial profit
or other advantage to which he was not legally entitled; or (iii) his acts were
in violation of certain provisions concerning dividends, distributions and loans
to directors. However, the Company Certificate does not contain such a
provision.
The DGCL permits a corporation to provide in its certificate of
incorporation a provision limiting the personal liability of a director to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except with respect to (i) any breach of the director's duty
of loyalty; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) the payment of
certain unlawful dividends or distributions; or (iv) any transaction from which
the director derived an improper personal benefit. The Delaware Company
Certificate contains such a provision.
Classification of Directors. Both laws permit "classified" boards of
directors, which means the directors have staggered terms that do not all expire
at once. The NYBCL permits as many as four classes, the DGCL only three. The
Delaware Company Certificate has classified its Board of Directors into three
classes.
Number of Directors. The Company By-laws generally provide that the
number of directors constituting the Board will be two, except where the Board
or the shareholders fix a greater number. The NYBCL allows shareholders to
increase or decrease the size of the board. The Delaware Company By-laws provide
that the Board shall consist of at least three directors, as set by the Board.
Removal of Directors. Under the NYBCL, generally, directors may be
removed by the shareholders for
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cause. Also, the certificate of incorporation or the specific provisions of a
by-law adopted by the shareholders may provide for such removal by action of the
board, except in the case of any director elected by cumulative voting, or by
the holders of the shares of any class or series, or holders of bonds, voting as
a class, when so entitled by the provisions of the certificate of incorporation.
Neither the Company Certificate nor Company By-laws have such a provision. If
the certificate of incorporation or the by-laws so provide, any or all of the
directors may be removed without cause by vote of the shareholders. The Company
By-laws provide that any director or the entire Board of Directors may be
removed, with or without cause, by a vote of shareholders.
Under the DGCL, generally, directors may be removed with or without
cause by a majority vote of the shareholders, unless the certificate of
incorporation provides otherwise. The Delaware Company Certificate does not
provide otherwise.
Transactions with Interested Directors. The NYBCL provides several
methods for establishing the validity of transactions between a corporation and
interested directors. One method requires a vote of the board or a committee
that would be sufficient for such purpose without counting the vote of such
interested director, or, if the votes of the disinterested directors are
insufficient to constitute an act of the board or committee, by unanimous vote
of the disinterested directors. The comparable provision of the DGCL requires
only the affirmative vote of a majority of the disinterested directors, without
requiring that such vote would be sufficient alone to be the act of the board or
committee.
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Loans and Guarantees of Obligations of Directors. Under the NYBCL (as
applicable to the Company), a corporation may not lend money to or guarantee the
obligation of a director of the corporation unless the loan or guarantee is
approved by the shareholders, with the holders of a majority of the votes of the
shares entitled to vote thereon constituting a quorum, but shares held by
directors who are benefitted by such loan or guarantee are not entitled to vote
or to be included in the determination of a quorum. Under the DGCL, a board of
directors may authorize loans or assistance to or guarantees of indebtedness of
employees and officers, including any employee or officer who is a director,
whenever, in the judgment of the board, such loan, assistance or guaranty may
reasonably be expected to benefit the corporation.
Business Combinations with Interested Shareholders. Provisions in both
laws may help to prevent or delay changes of corporate control. In particular,
both the NYBCL and the DGCL restrict or prohibit an interested stockholder from
entering into certain types of business combinations unless the board of
directors approves the transaction in advance.
Under the NYBCL, an interested shareholder is generally prohibited from
entering into certain types of business combinations with a New York corporation
for a period of five years after becoming an interested shareholder, unless the
board of directors approved either the business combination or the acquisition
of stock by the interested shareholder before the interested shareholder
acquired his or her shares. An "interested shareholder" under the NYBCL is
generally a beneficial owner of at least 20% of the corporation's outstanding
voting stock. "Business combinations" under the NYBCL include mergers and
consolidations between corporations or with an interested shareholder; sales,
leases, mortgages or other dispositions to an interested stockholder of assets
with an aggregate market value which either (1) equals 10% or more of the
corporation's consolidated assets or outstanding stock, or (2) represents 10% or
more of the consolidated earning power or net income of the corporation; issues
and transfers of stock with an aggregate market value of at least 5% in relation
to the outstanding stock of the corporation; liquidation or dissolution of the
corporation proposed by or in connection with an interested shareholder;
reclassification or recapitalization of stock that would increase the
proportionate stock ownership of an interested shareholder; and the receipt by
an interested shareholder of benefit from loans, guarantees, pledges or other
financial assistance or tax benefits provided by the corporation.
After the five-year period referred to in the NYBCL, the law allows
such business combinations if either the board of directors or a majority of the
outstanding voting stock not owned by the interested shareholder have approved
the business combination or the purchase of stock by the interested shareholder
before the interested shareholder acquired his or her shares. Business
combinations are also permitted when certain statutory "fair price" requirements
are met.
Section 203 of the DGCL generally prohibits an interested shareholder
from entering into certain types of business combinations with a Delaware
corporation for three years after becoming an interested shareholder. An
"interested shareholder" under the DGCL is any person other than the corporation
and its majority-owned subsidiaries who owns at least 15% of the outstanding
voting stock, or who owned at least 15% within the preceding three years, and
this definition includes affiliates of the corporation.
Briefly described, the prohibited combinations include: mergers or
consolidations; sales, leases, exchanges or other dispositions of 10% or more of
(1) the aggregate market value of all assets of the corporation or (2) the
aggregate market value of all the outstanding stock of the corporation;
issuances or transfers by the corporation of its stock that would increase the
proportionate share of stock owned by the interested shareholder; receipt by the
interested shareholder of the benefit of loans, advances, guarantees, pledges or
other financial benefits provided by the corporation; or any other transaction,
with certain exceptions, that increases the proportionate share of the stock
owned by the interested shareholder.
A Delaware corporation may choose not to have Section 203 of the DGCL
apply. The Delaware Company has chosen, however, to accept the protections of
Section 203, and therefore the Delaware Certificate will not waive those
protections. Nevertheless, Section 203 will not apply in the following cases:
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o If, before the shareholder became an interested shareholder, the
board of directors approved the business combination or the transaction that
resulted in the shareholder becoming an interested shareholder.
o If, after the transaction that resulted in the shareholder becoming
an interested shareholder, the interested shareholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, subject to technical calculation rules.
o If, on or after the time the interested shareholder became an
interested shareholder, the board of directors approved the business
combination, and at least two-thirds of the outstanding voting stock which is
not owned by the interested shareholder also ratified the business combination
at a shareholders' meeting. The NYBCL prohibits, in the absence of an exemption,
any "business combination" (as therein defined) between a corporation and an
"interested shareholder" for five years after the date that the interested
shareholder became an interested shareholder unless, prior to that date, the
board of directors of the corporation approved the business combination or the
transaction that resulted in the interested shareholder becoming an interested
shareholder. After five years, such a business combination is permitted only if
(i) it is approved by a majority of the shares not owned by the interested
shareholder or by an affiliate or associate of the interested shareholder; or
(ii) certain statutory fair price requirements are met. An "interested
shareholder" is, among others, any person who beneficially owns, directly or
indirectly, 20% or more of the outstanding voting shares of the corporation.
Shareholder Action by Written Consent. The NYBCL permits shareholder
action without a meeting upon the written consent of all outstanding shares
entitled to vote on the matter, unless the certificate of incorporation permits
majority shareholder consent. The Company Certificate does not so permit. The
DGCL permits shareholder action without a meeting upon the written consent of
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize such action at a meeting at which all
shares entitled to vote thereon were present and voted, unless the certificate
of incorporation provides otherwise. However, the Delaware Company Certificate
does not permit action by majority written consent.
Inspection of Shareholders List. The NYBCL requires five days' written
notice from a shareholder of record to inspect the list of record shareholders
for any purpose reasonably related to the person's interest as a shareholder.
Under the DGCL, any shareholder may inspect the shareholders list for any
purpose reasonably related to the person's interest as a shareholder. In
addition, for at least ten days prior to each shareholders meeting, a Delaware
corporation must make available for examination a list of shareholders entitled
to vote at the meeting.
Dissenters' Rights. The NYBCL provides that a dissenting shareholder
has the right to receive the fair value of his shares if he complies with
certain procedures and objects to (i) certain mergers and consolidations, (ii)
certain dispositions of assets requiring shareholder approval, (iii) certain
share exchanges, or (iv) certain amendments to the certificate of incorporation
which adversely affect the rights of such shareholder. The DGCL provides such
appraisal rights only in the case of shareholders objecting to certain mergers
or consolidations (which class of mergers or consolidations is somewhat narrower
than the class giving rise to appraisal rights under the NYBCL), unless
additional appraisal rights are provided in the certificate of incorporation.
The Delaware Company Certificate does not provide any such additional appraisal
rights.
Appraisal Rights. Generally, "appraisal rights" entitle dissenting
shareholders to receive the fair value of their shares in the merger or
consolidation of a corporation or in the sale of all or substantially all its
assets. The NYBCL also extends appraisal rights to an exchange of a
corporation's shares.
The NYBCL provides that dissenting shareholders have no appraisal
rights if their shares are listed on a national securities exchange. But in the
case of shares not listed on an exchange, appraisal rights under the NYBCL allow
any shareholder of a New York corporation, with various exceptions, to receive
fair value for his or her shares in such transactions. Regardless of listing on
an exchange, appraisal rights may be unavailable under the NYBCL in a merger
between a parent corporation and its subsidiary where only one of them is a New
York corporation, or in a merger between a parent and subsidiary where both are
New York corporations and the parent owns at least 90% of the subsidiary. Also,
appraisal rights are available to shareholders who are not allowed to vote on a
merger or
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consolidation and whose shares will be canceled or exchanged for cash or
something else of value other than shares of the surviving corporation or
another corporation. When appraisal rights are available, the shareholder may
have to request the appraisal and follow other required procedures.
Similarly, under the DGCL, appraisal rights are not available to a
shareholder if the corporation's shares are listed on a national securities
exchange or held by more than 2,000 shareholders of record, or if the
corporation will be the surviving corporation in a merger which does not require
the approval of the surviving corporation's shareholders. But, regardless of
listing on an exchange, a dissenting shareholder in a merger or consolidation
has appraisal rights under the DGCL if the transaction requires him or her to
exchange shares for anything of value other than one or more of (a) shares of
stock of the surviving corporation or of a new corporation which results from
the merger or consolidation, (b) shares of another corporation which will be
listed on a national securities exchange or held by more than 2,000 shareholders
of record after the merger or consolidation occurs, or (c) cash instead of
fractional shares of the surviving corporation or another corporation.
Holding Company Reorganization. The DGCL permits a corporation, unless
otherwise prohibited by its certificate of incorporation (the Delaware Company
Certificate has no such prohibition), to reorganize as a holding company without
shareholder approval. The reorganization contemplated by the statute is
accomplished by merging the subject corporation with or into a direct or
indirect wholly-owned subsidiary of the corporation and converting the stock of
the corporation into stock of another direct or indirect wholly-owned subsidiary
of the corporation, which would be the new holding company. The DGCL protects
certain rights of shareholders in connection with these transactions, but there
can be no assurance that such protection would be satisfactory in any specific
transaction. The NYBCL has no analogous provisions allowing holding company
reorganizations without shareholder approval.
Special Meetings. The Company By-laws provide that special meetings of
shareholders may be called at the behest of the president, a majority of the
Board of Directors or the holders of one-third of the shares of the Company
entitled to vote at such meeting. The Delaware Company Certificate provides that
special meetings of shareholders may be called at the behest of the president or
a majority of the Board of Directors.
Proxies. Under the NYBCL, a proxy shall not be voted or acted upon
after 11 months from its date unless such proxy provides for a longer period.
Under the DGCL and Delaware Company By-laws, a proxy shall not be voted or acted
upon after three years from its date unless such proxy provides for a longer
period.
MATERIAL CHANGES IN THE DELAWARE COMPANY CERTIFICATE, BY-LAWS AND REVERSE SPLIT
AMENDMENTS FROM THE COMPANY CERTIFICATE AND BY-LAWS
The Delaware Company Certificate and By-laws will be in effect and will
govern the rights of stockholders in the event Proposal Three is approved and
the merger of the Company into the Delaware Company takes place. The Delaware
Company Certificate is substantially similar to the Company Certificate. Except
for the provisions relating to corporate purpose, indemnification and limitation
of liability, the ability to call special meetings of shareholders, and amending
the By-laws, the differences between the two are primarily as a result of
differences between the NYBCL and the DGCL as discussed above. In addition, the
Company, as sole stockholder of the Delaware Company, has authorized a Reverse
Split to be effected in the discretion of the Board of Directors. Set forth
below is a summary of the material changes in the Delaware Company Certificate
and By-laws from the current Company Certificate and By-laws. The By-laws of the
Delaware Company and the Company are substantially similar except that the
By-laws of the Delaware Company reflect the DGCL and the provisions of the
Delaware Company Certificate.
The following summary does not purport to be a complete statement of
such changes or of the Delaware Company Certificate and By-laws and is qualified
in its entirety by reference to such charter and by-laws documents. Copies of
the Certificate of Incorporation and By-laws of the Company are available for
inspection at the principal office of the Company and copies will be sent to
shareholders upon request.
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Name of Corporation. The Delaware Company, the stock of which will be
issued to shareholders in the Merger, will be named CollegeLink.com
Incorporated.
Indemnification and Limitation of Liability. The Delaware Company
Certificate and By-laws provide for indemnification of directors and officers
(including provisions authorizing the advancement of expenses incurred in
connection with certain applicable proceedings) to the fullest extent permitted
by the DGCL.
Provisions relating to indemnification of directors and officers of the
Company are included in the Company's By-laws rather than in the Company
Certificate. Such provisions provide for indemnification of directors and
officers to the fullest extent permitted by applicable law.
The Delaware Company By-laws expressly authorize the corporation to
purchase and maintain directors and officers liability insurance to insure
against liabilities or losses incurred in such capacities whether or not the
corporation would have the power to indemnify the individual under the DGCL.
There is no similar provision in the Company Certificate or By-laws.
Furthermore, the Delaware Company Certificate provides that a director
of the corporation shall not be liable to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director to the fullest
extent permitted by Delaware Law. There is no similar provision in the Company
Certificate. This provision in the Delaware Company Certificate is intended to
afford directors additional protection and limit their potential liability from
suits alleging a breach of the duty of care by a director. As a result of the
inclusion of such a provision, shareholders may be unable to recover monetary
damages against directors for actions taken by them that constitute negligence
or that are otherwise in violation of their duty of care, although it may be
possible to obtain injunctive or other equitable relief with respect to such
actions. If equitable remedies are found not to be available to shareholders in
any particular situation, shareholders may not have an effective remedy against
a director in connection with such conduct.
In general, the purpose of the changes in the Delaware Company
Certificate is to provide indemnification and exculpation provisions that are
customary in modern charter documents of Delaware corporations (particularly in
charter documents of major, public corporations that have incorporated in
Delaware).
Anti-takeover provisions of the Delaware Company Certificate. The
Company does not believe that its Articles of Incorporation and By-laws as
presently constituted contain any provisions which are intended to have an
anti-takeover effect. However, under the Articles of Incorporation 90,153,660
shares of common stock and 7,830,229 shares of preferred stock remain authorized
and not reserved for any purpose and are available for issuance. Although these
shares were authorized to allow the Board of Directors, without further
stockholder approval, to issue additional shares of the Company's capital stock
to raise capital or to effect potential acquisitions in the future, the
authorization of such additional shares could incidentally have an anti-takeover
effect, in that such shares could potentially be issued in such manner as to
hamper the efforts of persons who might attempt to gain control of the Company.
Also, Article Fourth of the Restated Certificate specifically provides that the
Board has the authority to create the special terms and conditions of the
preferred stock which it issues. The Board is authorized to establish the number
of shares of preferred stock to be issued in any series it decides to issue, and
to fix the voting powers, designations, preferences and relative, participating,
optional or other special rights of the preferred stock, including voting rights
and conversion rights, and the qualifications, limitations and restrictions
thereon. Accordingly, it is possible for the Board to seek to authorize the
issuance of a series of preferred stock with rights and preferences that could
affect an attempt to acquire control of the Corporation. For example, such
additional authorized shares could potentially be issued to dilute the stock
ownership of persons seeking to obtain control of the Company, or shares of
preferred stock with favorable voting rights, such as the right to elect certain
additional directors, or to provide the holders of other special rights could be
created and issued to parties that support the management of the Company. The
Delaware Company Certificate contains substantially identical provisions.
In addition, the following provisions of the Delaware Company
Certificate, combined with the power of the Board of Directors to issue shares
of authorized preferred stock, may have the effect of maintaining the continuity
of management and may make changes in management more difficult, even if a
majority of stockholders might consider such changes advisable.
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Classification of Board of Directors. The Company's Board of Directors
consists of a single class of Directors. Each Director is elected each year at
the annual meeting of stockholders to hold office for a term of one year and
until his successor has been duly elected and qualified. The number of Directors
has been fixed at five, and there are currently no vacancies on the Board of
Directors, but all of the Directors' terms will expire at the annual meeting.
Article Fifth of the Delaware Company Certificate (Delaware Article
Fifth) divides the Board of Directors into three classes, labeled Class I, Class
II and Class III, each containing, insofar as possible, an equal number of
directors, with the term of one of the three classes expiring each year at the
Company's annual meeting or special meeting in lieu thereof.
Under Delaware Article Fifth, there will be limits prescribed for the
size of the entire Board of Directors with a minimum set at three directors and
a maximum set at twelve directors, exclusive of directors to be elected by any
class or series of the Delaware Company's stock other than common stock voting
separately as a class. The exact number of directors, and the number of members
of each class of directors, would be fixed or changed from time to time within
such limits by resolution of the Board of Directors. The provisions of Delaware
Article Fifth would not apply to any director elected by holders of a class or
series of the Delaware Company's preferred stock at any time such holders might
have a right to vote separately as a class for the election of directors.
If the proposed Plan of Reincorporation is approved the Class I
Director of the Delaware Company will be Jai N. Gupta, and will serve until the
next annual meeting or until his successor is elected and qualified, the Class
II Director will be Mark Rogers, and will serve until the 2001 annual meeting or
until his successor is elected and qualified, and the Class III Directors will
be Kevin J. High and Richard A. Fisher, and will serve until the 2002 annual
meeting or until their successors are qualified. Delaware Article Fifth provides
that any vacancy on the Board of Directors resulting from an increase in the
number of Directors may be filled by the affirmative vote of a majority of the
Directors then in office, and any other vacancy on the Board of Directors may be
filled by the affirmative vote of a majority of the Directors then in office,
although less than a quorum, or by a sole remaining Director. Any Director
elected to fill a vacancy not resulting from an increase in the number of
Directors would serve for a term equivalent to the remaining unserved portion of
the term of such newly elected Director's predecessor.
Under Delaware law, the holders of a majority of a corporation's
outstanding shares may remove directors with or without cause unless such power
of removal is limited by the corporation's certificate of incorporation. The
Delaware Company Certificate contains no provision limiting such power. Such law
also provides that if a corporation's certificate of incorporation provides for
classification of directors, directors may be removed only for cause unless
otherwise set forth in the certificate of incorporation. Cause is not defined
under Delaware law for this purpose. Delaware Article Fifth provides that
incumbent Directors may be removed by a majority of stockholders only for
"Cause." "Cause," for the purposes of the Delaware By-law provision, is defined
as (a) willful and continued material failure, refusal or inability to perform
one's duties to the Corporation or the willful engaging in gross misconduct
materially and demonstrably damaging to the Corporation; or (b) conviction for
any crime involving moral turpitude or any other illegal act that materially and
adversely reflects upon the business, affairs or reputation of the Company or on
one's ability to perform one's duties to the Corporation.
The Board of Directors believes that Delaware Article Fifth will
enhance the likelihood of continuity and stability in the composition of the
Delaware Company's Board of Directors and in the policies formulated by the
Board, in that only about one-third of the Delaware Company's Board of Directors
will be subject to election each year. Staggered terms will also guarantee that,
except in the unusual circumstances of the death or resignation of Directors,
approximately two-thirds of the Delaware Company's Directors, or more, at any
one time would have at least one year's experience as Directors of the Delaware
Company.
Delaware Article Fifth will also restrict the ability of stockholders
of the Delaware Company to change the composition of the Delaware Company's
Board of Directors by extending the time required to elect a majority of
Directors from one to two years, under most circumstances. Thus, the existence
of a classified Board may have an
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anti-takeover effect because a person who has gained voting control of the
Delaware Company will be unable to gain immediate control of the Board of
Directors unless he can obtain sufficient votes to amend Delaware Article Fifth
pursuant to the requirements for such an amendment as set forth therein. See
"Supermajority Requirements for Amendment of Delaware Article Fifth" below.
Delaware Article Fifth will thus tend to make more difficult, or
discourage, any attempt to remove management of the Delaware Company by means of
a merger, a tender offer for the Delaware Company's stock, a proxy contest or
any other transaction resulting in a change in control, even where such an
action would be favorable to the Delaware Company's stockholders or was
supported by a majority of the stockholders. Delaware Article Fifth would also
make it more difficult for the Delaware Company's stockholders to change the
composition of the Board and the Delaware Company's management, even for reasons
of performance of the present Board and management. The provisions of Delaware
Article Fifth would be applicable to every election of Directors and not just
elections occurring in connection with a specified event such as a hostile
tender offer.
Elimination of Stockholder Action by Written Consent. Under Delaware
law, any actions required or permitted to be taken by stockholders may be taken
(unless a company's certificate of incorporation otherwise provides) without a
stockholder meeting, without prior notice and without a stockholder vote if
written consents setting forth the action to be taken are signed by the holders
of stock having the requisite number of votes. The Delaware Company Certificate
prohibits stockholder action by written consent in Delaware Article Fifth.
The elimination of stockholder action by written consent will ensure
that all stockholders of the Delaware Company will have notice of, and the
opportunity to participate in determining, any proposed stockholder action and
would prevent the holders of a majority of the voting power of the Delaware
Company from using the written consent procedure to take stockholder action
unilaterally and without prior notice. The Board of Directors believes it is
important that stockholders be able to discuss matters which may affect their
rights, that the Board and the stockholders be able to give advance
consideration to any such action, and that it is therefore appropriate for
stockholders of a publicly held corporation to take action affecting the
corporation and its stockholders only at a meeting.
The elimination of stockholder action by written consent may have the
effect of delaying consideration of a stockholder proposal until the next annual
meeting unless a special meeting is called by the Board, the Chairman of the
Board or the President. In addition, elimination of the written consent
procedure may lengthen the amount of time required to take stockholder action,
since certain actions by written consent are not subject to the minimum notice
requirement of a stockholders meeting.
Because elimination of the procedures for stockholders to act by
written consent could make more difficult an attempt to obtain control of the
Delaware Company, such action could have the effect of deterring a third party
from making a tender offer or otherwise attempting to obtain control of the
Delaware Company. By eliminating stockholder action by written consent, the
Board intends to encourage persons seeking to acquire control of the Delaware
Company to initiate such an acquisition through negotiations with the Delaware
Company's management and the Board. However, any provision in the Delaware
Company Certificate which effectively requires a potential acquiror to negotiate
with the Delaware Company's management and the Board could be characterized as
increasing management's and the Board's ability to retain their positions with
the Delaware Company and to resist a transaction which may be desired by, or be
beneficial to, the Delaware Company's stockholders.
Elimination of the written consent procedure also means that a meeting
of stockholders would be required in order for the Delaware Company's
stockholders to replace the Board. With the proposed classified Board, two such
meetings would ordinarily be required. Thus, elimination of stockholder action
by written consent will make the removal of Directors more difficult.
Accordingly, the effect of Delaware Article Fifth may be, under certain
circumstances, to deter, impede or delay actions that are desired by, or
beneficial to, some or all of the Delaware Company's stockholders, including
stockholder attempts to change the membership of the Board and the initiation or
consummation of certain business transactions, such as an acquisition,
reorganization or recapitalization of the Delaware Company.
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Supermajority Required to Amend Delaware Article Fifth. Under Delaware
law, amendments to the Restated Certificate of Incorporation may be made with
the approval of holders of majority of the Company's outstanding common stock,
as the Delaware Company Certificate does not currently provide otherwise.
Delaware Article Fifth also provides that any amendment to the Delaware Company
Certificate that would amend, alter or repeal Delaware Article Fifth would
require the vote of the holders of seventy-five percent (75%) of all shares of
stock of the Delaware Company entitled to vote at a meeting held for the purpose
of voting on such further amendment. The 75% requirement would not apply in the
case of such an amendment recommended to the stockholders pursuant to a
resolution of the Board of Directors approved by two-thirds of the "Continuing
Directors." "Continuing Directors," for the purposes of Delaware Article Fifth,
are (a) Directors of the Delaware Company who are or become Directors on the
date on which Delaware Article Fifth is adopted by the stockholders, or (b) any
Director elected by a majority of the Continuing Directors then in office to
succeed any Director to fill any vacancy on the Board of Directors. This
"supermajority" requirement is designed to prevent the circumvention of Delaware
Article Fifth described herein by any person or persons holding more than 50%
but less than 75% of the voting stock.
Authorization of Reverse Stock Split of Common Stock. The Company as
the sole stockholder of the Delaware Company has approved four alternative
resolutions that authorize the Delaware Company's Board of Directors to file one
of three amendments to the Delaware Company Certificate with the Secretary of
the State of Delaware, to effect a plan of recapitalization within ninety days
of the date of the Merger (the "Termination Date"), pursuant to which either (a)
every two shares of the Delaware Company's issued and outstanding common stock,
$.001 par value, (the "Old Delaware Company Shares") will be automatically
converted into one new share of common stock (a "New Delaware Company Share"),
or (b) every three Old Delaware Company Shares will be automatically converted
into two New Delaware Company Shares, or (c) every four Old Delaware Company
Shares will be automatically converted into three New Delaware Company Shares,
or (d) every five Old Delaware Company Shares will be automatically converted
into four New Delaware Company Shares (each a "Reverse Split"). The Board of
Directors may abandon any or all of the proposed amendments prior to filing
without further action by the stockholders. The Board of Directors may only file
such an amendment if the Board of Directors determines that it is in the best
interests of the Delaware Company. Once an amendment authorizing a Reverse Split
is filed, the Board of Directors has no authority to file additional amendments
without further stockholder action. If an amendment authorizing a Reverse Split
has not been filed by the Termination Date, the authority of the Board of
Directors under the existing stockholder resolution lapses.
If the Board takes this action, in lieu of issuing less than one whole
share resulting from a Reverse Split to holders of an odd number of shares, the
Delaware Company will determine the fair value of each outstanding share of
common stock held on the effective date of a Reverse Split. The Delaware
Company's stockholders who hold an odd number of shares on the effective date of
a Reverse Split will be entitled to receive, in lieu of a fractional share, cash
in respect of such fraction.
Reasons for a Reverse Split.
o Reduced likelihood of adverse effect of a low stock price on the
trading market of the Common Stock. The Board of Directors believes that low
trading prices of the common stock may have an adverse impact upon the efficient
operation of the trading market in the securities. In particular, brokerage
firms often charge a greater percentage commission on low-priced shares than
that which would be charged on a transaction in the same dollar amount of
securities with a higher per share price. Also, the Board of Directors believes
that some brokerage firms may be reluctant to recommend purchases of low-priced
stock to their clients or make a market in such shares, which tendencies may
adversely affect the Company. A Reverse Split may lessen these adverse effects
if it results in a higher price per share of the common stock. Stockholders
should note that the effect of a Reverse Split upon the market prices for the
common stock cannot be accurately predicted. In particular, there is no
assurance that prices for shares of the common stock after a Reverse Split will
be increased proportionately compared to the price for shares of the common
stock immediately prior to a Reverse Split. Furthermore, there can be no
assurance that a Reverse Split will achieve the desired results, nor can there
be any assurance that a Reverse Split will not adversely impact the market price
of the common stock or, alternatively, that any increased price per share of the
common stock immediately after a Reverse Split will be sustained for any
prolonged period of time. In addition, a Reverse
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Split may have the effect of creating odd lots of stock for some stockholders
and such odd lots may be more difficult to sell or have higher brokerage
commissions associated with the sale of such odd lots.
o Facilitation of Public Offering. The Company plans to raise financing
through an underwritten offering. The Company believes that it may be difficult
to obtain such financing on desirable terms if the trading price of the Common
Stock is too low. The Company does not know what, if any, Reverse Split may be
needed to obtain the desired financing. For this reason, the Company has
authorized Reverse Splits of one for two, two for three, three for four, and
four for five and given the Board of Directors authority to abandon any or all
of these amendments, if the Board of Directors believes such action necessary to
obtain the proposed financing.
o Greater Availability of Common Stock for future issuances. As of
September 30, 1999, there were 9,846,340 shares of common stock issued and
outstanding, and outstanding warrants, convertible debt and options were
convertible into approximately 3,396,988 shares of common stock. As of that date
2,440,369 shares of common stock were reserved for issuance upon conversion of
outstanding shares of Cytation's preferred stock.
Assuming a one for two Reverse Split is effected, the Board of
Directors would have the authority to issue 92,158,152 additional shares of
common stock without further stockholder approval, which the Board of Directors
believes would provide sufficient shares for such corporate purposes as the
Board of Directors may determine to be necessary or desirable. These purposes
may include, without limitation, raising additional equity capital, acquiring
other businesses in exchange for shares of common stock, entering into
collaborative arrangements with other companies, or acquiring complementary
technologies, products or businesses from third parties in exchange for common
stock. Other corporate purposes may include issuing shares of common stock in
connection with strategic alliances or other corporate partnering programs and
issuing shares of common stock to raise additional working capital for ongoing
operations. The Company may also issue additional shares of common stock to
attract and retain valuable employees by the issuance of additional stock
options, including additional shares reserved for future option grants under
stock option plans.
Under the Delaware General Corporation Law, the Board of Directors
generally may issue authorized but unissued shares of common stock without
further stockholder approval. The Board of Directors does not currently intend
to seek stockholder approval prior to any future issuance of additional shares
of common stock, unless stockholder action is required in a specific case by
applicable law, the rules of any exchange or market on which our securities may
then be listed, or our Certificate of Incorporation or By-Laws then in effect.
Effect of a Reverse Split. The issuance of any additional shares of
common stock may, depending on the circumstances under which those shares are
issued, reduce stockholders' equity per share and may reduce the percentage
ownership of common stock of existing stockholders. However, the Company will
receive consideration for any additional shares of common stock issued, which
could reduce or eliminate the economic effect to each stockholder of such
dilution.
Authorized but unissued shares of common stock could be used to make
more difficult a change in control of Cytation. For example, such shares could
be sold to purchasers who might side with the Board of Directors in opposing a
takeover bid that the Board determines not to be in the best interests of
Cytation and its stockholders. The Company is not aware of any pending or
threatened efforts to obtain control of Cytation, and the Board of Directors has
no current intention to use any issuance of common stock to impede a takeover
attempt.
If the Board of Directors effects a Reverse Split, as soon as
practicable after the effective date of a Reverse Split, the Delaware Company
will mail a letter of transmittal to each holder of record of a stock
certificate or certificates which represent issued common stock outstanding on
the effective date of a Reverse Split. The letter of transmittal will contain
instructions for the surrender of such certificate or certificates to the
Company's designated exchange agent in exchange for certificates representing
the number of whole shares of the common stock (plus the cash in lieu of any
fractional share) into which the shares of common stock have been converted as a
result of a Reverse Split. No cash payment will be made or new certificate
issued to a stockholder until he has surrendered his outstanding certificates
together with the letter of transmittal to our transfer agent.
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If effected, as a result of a Reverse Split, the number of whole shares
of common stock held by stockholders of record as of the close of business on
the effective date of a Reverse Split will be reduced proportionately to reflect
the Reverse Split actually effected and each stockholder will receive cash in
lieu of any fractional share. The authorized shares of common stock will consist
of 100,000,000 shares, $0.001 par value per share. A Reverse Split will not
affect a stockholder's percentage ownership interest in the Delaware Company or
proportional voting power, except for minor differences resulting from the
payment of cash in lieu of fractional shares. The terms of the Delaware
Company's common stock and of its preferred stock, and the rights and privileges
of the holders of such shares, will be unaffected by a Reverse Split. The number
of shares of common stock issued and outstanding will be reduced. Consequently,
the aggregate par value of the issued common stock will be reduced and the
number of authorized but unissued shares of common stock will be greater, after
a Reverse Split. Future issuances of common stock may have the effect of
diluting the earnings per share and book value per share, as well as the stock
ownership and voting rights, of outstanding common stock. As a Reverse Split
will increase the number of authorized but unissued shares of common stock, it
may be construed as having an anti-takeover effect by permitting the issuance of
shares to purchasers who might oppose a hostile takeover bid or oppose any
efforts to amend or repeal certain provisions of the Delaware Company's
Certificate or By-laws.
A Reverse Split, if effected, may leave certain stockholders with an
odd lot of common stock (i.e., a number of shares less than 100). These shares
may be more difficult to sell, or require a greater commission to sell, than
shares in multiples of 100.
A Reverse Split will not affect the registration of the common stock
under the Exchange Act, and we have no current intention of terminating our
registration under the Exchange Act.
Upon implementation of a Reverse Split, the total number of shares
currently reserved for conversion of preferred stock, outstanding warrants,
grants of stock options and all stock options previously granted would be
decreased proportionately. The cash consideration payable per share upon
exercise of the stock warrants and options would be increased proportionately.
The Delaware Company's transfer agent will furnish stockholders with
the necessary materials and instructions for the surrender and exchange of stock
certificates at the appropriate time. Stockholders will not be required to pay a
transfer or other fee in connection with the exchange of certificates.
Stockholders should not submit any certificates to the transfer agent
until requested to do so.
Federal Tax Consequences of a Reverse Split. The following description
of the material federal income tax consequences of a Reverse Split is based upon
the Internal Revenue Code of 1986, as amended, the applicable Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices all as in effect on the date of this Proxy
Statement. The Company has not sought and will not seek an opinion of counsel or
a ruling from the Internal Revenue Service regarding the federal income tax
consequences of a Reverse Split. This discussion is for general information only
and does not discuss consequences which may apply to special classes of
taxpayers (e.g., non-resident aliens, broker-dealers or insurance companies) and
does not discuss the tax consequences under the laws of any foreign, state or
local jurisdictions. Stockholders are urged to consult their own tax advisors to
determine the particular consequences to them.
In general, the federal income tax consequences of the proposed Reverse
Split will vary among stockholders depending upon whether they receive some cash
in lieu of fractional shares which would be due them as a result of a Reverse
Split or receive only New Delaware Company Shares in exchange for Old Delaware
Company Shares. The Company believes that because the Reverse Split is not part
of a plan to increase periodically a stockholder's proportionate interest in the
Company's assets or earnings and profits, a Reverse Split probably will have the
following federal income tax effects:
1. A stockholder who receives solely New Delaware Company Shares will
not recognize gain or loss on the exchange. In the aggregate, the stockholder's
basis in the common stock represented by New Delaware Company Shares will equal
the holder's basis in the common stock represented by Old Delaware Company
Shares.
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2. A stockholder who receives some cash in lieu of fractional shares
which would be due such stockholder as a result of a Reverse Split will
generally be treated as having received such payment as a distribution in
redemption of the fractional share which might otherwise have been issued as a
result of a Reverse Split, as provided in Section 302(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). Each affected stockholder must consult
such stockholder's own tax advisor for the tax effect of such redemption (i.e.,
exchange or dividend treatment) in light of such stockholder's particular facts
and circumstances.
3. A Reverse Split will constitute a reorganization within the meaning
of Section 368(a)(1)(E) of the Code, and we will not recognize any gain or loss
as a result of a Reverse Split.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE PROPOSAL TO ADOPT THE PLAN OF REINCORPORATION.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
Cytation's executive officers and Directors, as well as persons who own more
than 10% of a registered class of Cytation's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission. Regulations of the SEC require such executive officers, Directors
and stockholders to furnish Cytation with copies of all Section 16(a) forms they
file.
Based solely upon a review of the Forms 3, 4 and 5 and amendments
thereto furnished to Cytation with respect to fiscal year ended June 30, 1999,
or written representations that Form 5 was not required for such year, Cytation
believes that all Section 16(a) filing requirements applicable to its executive
officers, Directors and greater-than-ten-percent stockholders were fulfilled in
a timely manner, except that William Fink failed to file his Form 3 on a timely
basis.
INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Radin, Glass & Co. LLP as
independent accountants to audit the financial statements of Cytation for the
fiscal year ending June 30, 1999.
Cytation expects that representatives of Radin, Glass & Co. LLP will be
present at the annual meeting, will have an opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions
from stockholders.
STOCKHOLDER PROPOSALS
If any stockholder would like to include any proposal in Cytation's
proxy materials for its next annual meeting of stockholders or special meeting
in lieu thereof, the stockholder must comply with the requirements of Rule 14a-8
under the Securities Exchange Act of 1934. Among other requirements, Cytation
must receive the proposal at its executive offices no later than Tuesday,
February 29, 2000.
AVAILABLE INFORMATION
STOCKHOLDERS OF RECORD ON OCTOBER 22, 1999 WILL RECEIVE COPIES OF THIS
PROXY STATEMENT AND CYTATION'S 1998 ANNUAL REPORT TO STOCKHOLDERS, WHICH
CONTAINS A COPY OF CYTATION'S ANNUAL REPORT ON FORM 10-K (EXCLUDING EXHIBITS).
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EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
COLLEGELINK.COM INCORPORATED
FIRST: The name of the corporation is CollegeLink.com Incorporated (the
"Corporation").
SECOND: The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, Wilmington, Delaware, County of New Castle, and
the name of its registered agent at such address is Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock that the Corporation shall
have the authority to issue shall be 110,000,000 shares, consisting of
100,000,000 shares of common stock, $0.001 par value per share ("Common Stock"),
and 10,000,000 shares of preferred stock, $.01 par value per share ("Preferred
Stock").
The following is a statement of the designations and the powers,
privileges and rights, and the qualifications, limitations or restrictions
thereof in respect of each class of capital stock of the Corporation:
A. COMMON STOCK.
1. GENERAL. The voting, dividend and liquidation rights of the
holders of the Common Stock are subject to and qualified by the rights of the
holders of the Preferred Stock of any Series as may be designated by the Board
of Directors upon any issuance of the Preferred Stock of any series.
2. VOTING. The holders of Common Stock will be entitled to one
vote per share on all matters to be voted on by the stockholders of the
Corporation. There shall be no cumulative voting.
3. DIVIDENDS. Dividends may be declared and paid on the Common
Stock from funds lawfully available therefor as and when determined by the Board
of Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. LIQUIDATION. Upon the dissolution or liquidation of the
Corporation, whether voluntary or involuntary, holders of Common Stock will be
entitled to receive all assets of the Corporation available for distribution to
its stockholders, subject to any preferential liquidation rights of any then
outstanding Preferred Stock.
B. PREFERRED STOCK.
Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. No share of
Preferred Stock that is redeemed, purchased or acquired by the Corporation may
be reissued except as otherwise provided herein or by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided herein, in any
such resolution or resolutions, or by law.
Authority is hereby expressly granted to the Board of Directors from
time to time to issue the Preferred Stock in one or more series, and in
connection with the creation of any such series, by resolution or resolutions
providing for the issue of the shares thereof, to determine and fix such voting
powers, full or limited, or no voting powers, and such designations, preferences
and relative participating, optional or other special rights, and
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qualifications, limitations or restrictions thereof, including, without
limitation thereof, dividend rights, conversion rights, redemption privileges
and liquidation preferences, as shall be stated and expressed in such
resolutions, all to the full extent now or hereafter permitted by the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
the resolutions providing for issuance of any series of Preferred Stock may
provide that such series shall be superior or rank equally or be junior to the
Preferred Stock of any other series to the extent permitted by law. Except as
otherwise provided by law or by this Certificate of Incorporation, no vote of
the holders of the Preferred Stock or Common Stock shall be a prerequisite to
the issuance of any shares of any series of the Preferred Stock authorized by
and complying with the conditions of the Certificate of Incorporation, the right
to have such vote being expressly waived by all present and future holders of
the capital stock of the Corporation.
C. SERIES A PREFERRED SHARES
1. DESIGNATION AND INITIAL NUMBER. Of the 10,000,000 authorized
shares of Preferred Stock two million five hundred thousand (2,500,000) shall be
designated the "Series A Preferred Shares". The Stated Value of the Series A
Preferred Stock shall be $4.00 per share, and the Par Value of the Series A
Preferred Stock shall be $.01 per share.
2. DISTRIBUTIONS. The holders of the Series A Preferred Stock
shall be entitled to receive, out of funds at the time legally available for
payment of dividends in the State of Delaware, a cumulative dividend at the rate
of six percent (6%) per share per annum, payable quarterly in equal installments
on the first day of each successive quarter each year, if, as and when
determined by the Board of Directors, before any dividend shall be set apart or
paid on any other capital stock for such year.
3. CONVERSION. The Series A Preferred Stock shall be convertible
into Common Stock as hereinafter provided and, when so converted, shall be
canceled and retired and shall not be reissued as such:
(a) Any holder of the Series A Preferred Stock may at any
time or from time to time convert such stock into the Common Stock of the
Company, on presentation and surrender to the Company, of the certificates of
the Series A Preferred Stock to be so converted together with the Notice of
Conversion ("Conversion Notice").
Conversion shall be deemed to have been effected on
the date the Conversion Notice is given by the Investor to the Company (the
"Conversion Date"). Within 10 business days after receipt of the Conversion
Notice, the Company shall issue and deliver by hand against a signed receipt
therefor or by United States registered mail, return receipt requested, or by
overnight delivery service, to the address designated by the Investor in the
Conversion Notice, a stock certificate or stock certificates of the Company
representing the number of shares of Common Stock to which such Investor is
entitled and a check or cash in payment of all accrued and unpaid dividends.
(b) Each holder of Series A Preferred Stock shall have
the right to convert such Series A Preferred Stock on and subject to the
following terms and conditions:
(i) The Series A Preferred Stock shall be
converted into Common Stock at the conversion rate, determined as hereinafter
provided, in effect at the time of conversion. Unless such conversion rate shall
be adjusted as hereinafter provided, the conversion rate shall be one (1) share
of Common Stock for each share of Series A Preferred Stock so converted at $4.00
per share ("Conversion Ratio").
(ii) In order to convert Series A Preferred Stock
into Common Stock, the holder thereof shall on any business day surrender to
American Securities Transfer, Inc., whose address is 12039-Z2 West Alameda
Parkway, Lakewood, Colorado 80228 (or any other transfer agent designated by the
Company by written notice to the holders of Series A Preferred Stock), the
certificate or certificates representing such shares, duly endorsed to the
Company or in blank, and give written notice to the Company at said office of
the number of said shares which such holder elects to convert. Conversion of the
Series A Preferred Stock shall be deemed to have been effected on the date a
conversion notice is given by the Investor to the Company, and the person or
persons
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entitled to receive the Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the date of any conversion,
the Company shall issue and deliver a certificate or certificates representing
the number of shares of Common Stock issuable upon such conversion, together
with cash in lieu of any fraction of a share, to the person or persons entitled
to receive same. In case of the conversion of only a part of the shares of any
holder of Series A Preferred Stock, the Company shall also issue and deliver to
such holder a new certificate of Series A Preferred Stock representing the
number of shares of such Series A Preferred Stock not converted by such holder.
(c) The Company may require mandatory conversion of all,
but not less than all, of the Series A Preferred Stock on or after the first
anniversary of the initial purchase and sale of the Series A Preferred Stock
("the Mandatory Conversion Date"), provided that:
(i) The average closing bid price of the Company
on the Over-the-Counter Bulletin Board or the Nasdaq Stock Exchange or other
principal trading market for the Common Stock, as applicable, for the twenty
(20) consecutive trading days immediately preceding the Mandatory Conversion
Date has exceeded $6.00 per share, or;
(ii) If there is a reorganization of the Company
involving an exchange of Company's Common Stock for shares of a United States
domiciled corporation the shares of which are trading on a national exchange or
on the Nasdaq Stock Market.
Conversion of the Series A Preferred Shares to Common
Stock pursuant to this paragraph 3(c) shall be deemed to have occurred on the
Mandatory Conversion Date whether or not an Investor delivers to the Company its
certificate or certificates for the Series A Preferred Stock.
(d) The Conversion Ratio shall be subject to adjustment
as follows:
(i) In case issued and outstanding shares of
Common Stock shall be subdivided or split up into a greater number of shares of
the Common Stock, the Conversion Ratio in effect at the opening of business on
the business day immediately preceding the date fixed for the determination of
the stockholders whose shares of Common Stock shall be subdivided or split up
(the "Split Record Date") shall be proportionately increased, and in case issued
and outstanding shares of Common Stock shall be combined into a smaller number
of shares of Common Stock, the Conversion Ratio in effect at the opening of
business on the business day immediately preceding the date fixed for the
determination of the stockholders whose shares of Common Stock shall be combined
(the "Combination Record Date") shall be proportionately decreased, such
increase or decrease, as the case may be, becoming effective immediately after
the opening of business on the business day immediately after the Split Record
Date or the Combination Record Date, as the case may be.
(ii) In case of any capital reorganization, any
reclassification of the stock of the Company (other than as a result of a stock
dividend or subdivision, split up or combination of shares), or the merger of
the Company with or into another person or entity (other than a merger in which
the Company is the continuing corporation and which does not result in any
change in the Common Stock) or of the sale, exchange, lease, transfer or other
disposition of all or substantially all of the properties and assets of the
Company as an entirety or the participation by the Company in a share exchange
as the corporation the stock of which is to be acquired, the Series A Preferred
Stock shall (effective on the opening of business on the date after the
effective date of such reorganization, reclassification, merger, sale or
exchange, lease, transfer or other disposition or share exchange) be convertible
into the kind and number of shares of stock or other securities or property of
the Company or of the corporation resulting from surviving such merger or to
which such properties and assets shall have been sold, exchanged, leased,
transferred or otherwise disposed or which was the corporation whose securities
were exchanged for those of the Company to which the holder of the number of
shares of Common Stock deliverable (at the close of business on the date
immediately preceding the effective date of such reorganization,
reclassification, merger, sale, exchange, lease, transfer or other disposition
or share exchange) upon conversion of Series A Preferred Stock would have been
entitled upon such reorganization, reclassification, merger, sale, exchange,
lease, transfer or other disposition or share exchange. The provisions of this
subparagraph 3(b)(ii) shall similarly apply to successive
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reorganizations, reclassifications, mergers, sales, exchanges, leases, transfers
or other dispositions or other share exchanges.
(iii) Whenever the Conversion Ratio shall be
adjusted as provided herein, the Company shall prepare and send to the holders
of the Series A Preferred Stock a statement, signed by the chief financial
officer of the Company, showing in detail the facts requiring such adjustment
and the Conversion Ratio that shall be in effect after such adjustment.
(iv) In the event the Company shall propose to
take any action of the types described in paragraph 3 hereof, the Company shall
give notice to the holder of Series A Preferred Stock, which notice shall
specify the record date, if any, with respect to any such action and the date on
which such action is to take place. Such notice shall be given on or prior to
the earlier of 30 days prior to the record date or the date which such action
shall be taken. Such notice shall also set forth such facts with respect thereto
as shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Ratio and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of the Series A Preferred Stock. Failure to give
notice in accordance with this paragraph 3(d)(iv) shall not render such action
ultra vires, illegal or invalid.
(e) No adjustment of the conversion rate shall be made in
any of the following cases:
(i) upon the grant or exercise of stock options
hereafter granted, or under any employee stock option plan now or hereafter
authorized, to the extent that the aggregate of the number of shares which may
be purchased under such options and the number of shares issued under such
employee stock purchase plan is less than or equal to ten percent (10%) of the
number of shares of Common Stock outstanding on January 1 of the year of the
grant or exercise;
(ii) shares of Common Stock issued upon the
conversion of Series A Preferred Stock;
(iii) shares issued in connection with the
acquisition by the Company or by any subsidiary of the Company of 80% or more of
the assets of another corporation, and shares issued in connection with the
acquisition by the Company or by any subsidiary of the Company of 80% or more of
the voting shares of another corporation (including shares issued in connection
with such acquisition of voting shares of such other corporation subsequent to
the acquisition of an aggregate of 80% of such voting shares), shares issued in
a merger of the Company or a subsidiary of the Company with another corporation
in which the Company or the Company's subsidiary is the surviving corporation,
and shares issued upon the conversion of other securities issued in connection
with any such acquisition or in any such merger;
(iv) shares issued by way of dividend or other
distribution on Common Stock excluded from the calculation of the adjustment
under this paragraph 3(e)(iv) or on Common Stock resulting from any subdivision
or combination of Common Stock so excluded; or
(v) shares issued pursuant to all stock options
and warrants outstanding on the date of the filing of this Certificate of
Amendment to the Certificate of Incorporation of the Company ("Certificate").
(f) Whenever the conversion rate is adjusted as herein
provided, the Company shall prepare a certificate signed by the Treasurer of the
Company setting forth the adjusted conversion rate and showing in reasonable
detail the facts upon which such adjustment is based. As promptly as
practicable, the Company shall cause a copy of such certificate to be mailed to
each holder of record of issued and outstanding Series A Preferred Stock at the
address of such holder appearing on the Company's books.
(g) The Company shall pay all taxes that may be payable
in respect of the issue or delivery of Common Stock on conversion of Series A
Preferred Stock pursuant hereto, but shall not pay any tax which may
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be payable with respect to income or gains of the holder of any Series A
Preferred Stock or Common Stock or any tax which may be payable in respect of
any transfer involved in the issue and delivery of the Common Stock in a name
other than that in which the Series A Preferred Stock so converted was
registered, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount of any such tax,
or has established, to the satisfaction of the Company, that such tax has been
paid.
(h) Upon conversion of any shares of Series A Preferred
Stock, the holders of the shares of Series A Preferred Stock so converted shall
not be entitled to receive any dividends declared with respect to such shares of
Series A Preferred Stock unless such dividends shall have been declared by the
Board of Directors and the record date for such dividends shall have been on or
before the date such shares shall have been converted. No payment or adjustment
shall be made on account of dividends declared and payable to holders of Common
Stock of record on a date prior to the date of conversion.
(i) No fractional shares or scrip representing fractional
shares shall be issued upon the conversion of any shares of Series A Preferred
Stock. If more than one share of Series A Preferred Stock shall be surrendered
for conversion at one time by the same holder, the number of full shares
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of such shares so surrendered. If the conversion of any share of Series A
Preferred Stock results in a fraction, an amount equal to such fraction
multiplied by the current market of the Common Stock on the day of conversion
shall be paid to such holder in cash by the Company.
(j) The Company shall at all times reserve and keep
available, free from preemptive rights, out of its authorized Common Stock, for
the purpose of effecting the conversion of the issued and outstanding Series A
Preferred Stock, the full number of shares of Common Stock then deliverable in
the event and upon the conversion of all of the Series A Preferred Stock then
issued and outstanding.
4. LIQUIDATION OR DISSOLUTION. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of the
Company, the holders of the issued and outstanding Series A Preferred Stock
shall be entitled to receive for each share of Series A Preferred Stock, before
any distribution of the assets of the Company shall be made to the holders of
any other capital stock, a dollar amount equal to the Stated Value thereof plus
all accrued and unpaid distributions declared thereon, without interest. After
such payment shall have been made in full to the holders of the issued and
outstanding Series A Preferred Stock, or funds necessary for such payment shall
have been set aside in trust for the account of the holders of the issued and
outstanding Series A Preferred Stock so as to be and continue to be available
therefor, then, before any further distribution of the assets of the Company
shall be made, a dollar amount equal to that already distributed to the holders
of the Series A Preferred Stock shall be distributed pro-rata to the holders of
the other issued and outstanding capital stock of the Company, subject to the
rights of any other class of capital stock set forth in the Certificate of
Incorporation, as amended, of the Company. After such payment shall have been
made in full to the holders of such other issued and outstanding capital stock,
or funds necessary for such payment shall have been set aside in trust for the
account of the holders of such other issued and outstanding capital stock so as
to be and continue to be available therefor, the holders of the issued and
outstanding Series A Preferred Stock shall be entitled to participate with the
holders of all other classes of issued and outstanding capital stock in the
final distribution of the remaining assets of the Company, and, subject to any
rights of any other class of capital stock set forth in the Certificate of
Incorporation, as amended, of the Company, the remaining assets of the Company
shall be divided and distributed ratably among the holders of both the Series A
Preferred Stock and the other capital stock then issued and outstanding
according to the proportion by which their respective record ownership of shares
of the Series A Preferred Stock and such capital stock bears to the total number
of shares of the Series A Preferred Stock and such capital stock then issued and
outstanding. If, upon such liquidation, dissolution, or winding up, the assets
of the Company distributable, as aforesaid, among the holders of the Series A
Preferred Stock shall be insufficient to permit the payment to them of said
amount, the entire assets shall be distributed ratably among the holders of the
Series A Preferred Stock. A consolidation or merger of the Company, a share
exchange, a sale, lease, exchange or transfer of all or substantially all of its
assets as an entirety, or any purchase or redemption of stock of the Company of
any class, shall not be regarded as a "liquidation, dissolution, or winding up
of the affairs of the Company" within the meaning of this paragraph 4.
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5. VOTING RIGHTS. Except as otherwise provided in paragraph 6
below, each share of Series A Preferred Stock is entitled to one vote, voting
together with the holders of shares of Common Stock and not as a class, on each
matter submitted to a vote at a meeting of stockholders of the Company.
6. CHANGES IN TERMS OF SERIES A PREFERRED STOCK. The terms of the
Series A Preferred Stock may not be amended, altered or repealed, and no class
of capital stock or securities convertible into capital stock shall be
authorized which has superior rights to the Series A Preferred Stock as to
distributions, liquidation or vote, without the consent of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock.
7. NO IMPLIED LIMITATIONS. Except as otherwise provided by
express provisions of this Certificate, nothing herein shall limit, by inference
or otherwise, the discretionary right of the Board of Directors to classify and
reclassify and issue any shares of Series A Preferred Stock and to fix or alter
all terms thereof to the full extent provided in the Certificate of
Incorporation, as amended, of the Company.
8. GENERAL PROVISIONS. In addition to the above provisions with
respect to the Series A Preferred Stock, such Series A Preferred Stock shall be
subject to, and entitled to the benefits of the provisions set forth in this
Certificate of Incorporation with respect to Preferred Stock generally.
9. NOTICES. All notices required or permitted to be given by the
Company with respect to the Series A Preferred Stock shall be in writing, and if
delivered by first class United States mail, postage prepaid, or by overnight
delivery service, to the holders of the Series A Preferred Stock at their last
addresses as they shall appear upon the books of the Company, shall be
conclusively presumed to have been duly given, whether or not the stockholder
actually receives such notice; provided, however, that failure to duly give such
notice by mail, or any defect in such notice, to the holders of any stock
designated for redemption, shall not affect the validity of the proceedings for
the redemption of any other shares of Preferred Stock.
D. SERIES B PREFERRED SHARES
1. DESIGNATION. Of the 10,000,000 shares of authorized Preferred
Stock, 300,000 shall be designated and known as "Series B Preferred Stock".
2. CONVERSION. The holders of Series B Preferred Stock shall have
conversion rights as follows:
(a) DEFINITIONS. For the purposes of this Section 2, the
following definitions shall apply:
"AUTOMATIC CONVERSION DATE" means the first anniversary of the
Original Issue Date.
"AUTOMATIC CONVERSION DATE PRICE" means the average of the
closing bid price per share of the Common Stock (as quoted on
the Nasdaq OTC Bulletin Board, or the Nasdaq Stock Market, as
the case may be) for the 20 consecutive trading days
immediately preceding the Automatic Conversion Date.
"CLOSING DATE PRICE" means $7.625.
"COMMON STOCK" means the common stock, $.001 par value per
share, of the Corporation.
"OPTIONAL CONVERSION DATE PRICE" means, with respect to a
given date, the average of the closing bid price per share of
the Common Stock (as quoted on the Nasdaq OTC Bulletin Board,
or the Nasdaq Stock Exchange, as the case may be) for the 10
consecutive trading days immediately preceding such date.
"ORIGINAL ISSUE DATE" of the Company's Series B Preferred
Stock means August 10, 1999, the first date on which a share
of Series B Preferred Stock of Cytation.com Incorporated, a
predecessor company, was issued in New York.
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"SERIES B CONVERSION PRICE" is the price at which shares of
Common Stock shall be deliverable upon conversion of Series B
Preferred Stock without the payment of any additional
consideration by the holder thereof.
"TRANSFER AGENT" means American Securities Transfer, Inc.,
whose address is 12039-Z2 West Alameda Parkway, Lakewood,
Colorado 80228, and any successor transfer agent appointed by
the Corporation.
(b) RIGHT TO CONVERT; CONVERSION PRICE. Subject to the
terms and conditions of this Section 2, each share of Series B Preferred Stock
shall be convertible, without the payment of any additional consideration by the
holder thereof at the office of the Transfer Agent, into such number of fully
paid and nonassessable shares of Common Stock as is determined by dividing
$15.00 (which amount shall be subject to equitable adjustment whenever there
shall occur a stock dividend, stock split, combination of shares,
reclassification or other similar event with respect to the Series B Preferred
Stock) by the Series B Conversion Price, determined as hereinafter provided, in
effect at the time of conversion.
(c) AUTOMATIC CONVERSION.
(i) TIMING AND PRICE. Each share of Series B
Preferred Stock shall automatically be converted into shares of Common Stock on
the Automatic Conversion Date. For the purposes of this Section 2(c), the Series
B Conversion Price on the Automatic Conversion Date shall be equal to the
greater of (i) the Closing Date Price (which amount shall be subject to
equitable adjustment whenever there shall occur a stock dividend, stock split,
combination of shares, reclassification or other similar event with respect to
the Common Stock) and (ii) the Automatic Conversion Date Price.
(ii) MECHANICS. On the Automatic Conversion Date,
the Series B Preferred Stock shall be converted automatically without any
further action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Transfer Agent; PROVIDED, that
the Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless certificates
evidencing such shares of the Series B Preferred Stock being converted are
either delivered to the Transfer Agent, or the holder notifies the Transfer
Agent that such certificates have been lost, stolen, or destroyed and executes
an agreement satisfactory to the Corporation to indemnify the Corporation from
any loss incurred by it in connection therewith and, if the Corporation so
elects, provides an appropriate indemnity bond. On the Automatic Conversion
Date, all rights with respect to the Series B Preferred Stock so converted shall
terminate except for the right of the holder thereof, upon surrender of the
holder's certificate or certificates therefor, to receive certificates for the
number of shares of Common Stock into which such Series B Preferred Stock has
been converted. Upon the automatic conversion of the Series B Preferred Stock,
the holders of such Series B Preferred Stock shall surrender the certificates
representing such shares at the office of the Transfer Agent. If so required by
the Transfer Agent, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Transfer Agent, duly executed by the registered holder or by
the holder's attorney duly authorized in writing. Upon surrender of such
certificates there shall be issued and delivered to such holder, promptly at
such office and in the holder's name as shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of Common
Stock into which the shares of the Series B Preferred Stock surrendered were
convertible on the Automatic Conversion Date. No fractional share of Common
Stock shall be issued upon automatic conversion of the Series B Preferred Stock.
In lieu of any fractional share to which the holder would otherwise be entitled,
the Corporation shall pay cash equal to such fraction multiplied by the
Automatic Conversion Date Price.
(d) OPTIONAL CONVERSIONS.
(i) TIMING AND PRICE. Each share of Series B
Preferred Stock may be converted into shares of Common Stock, at the option of
the holder thereof, at any time (i) after the Original Issue Date, (ii)
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prior to the Automatic Conversion Date and (iii) that the Optional Conversion
Date Price is greater than $15.00 (which amount shall be subject to equitable
adjustment whenever there shall occur a stock dividend, stock split, combination
of shares, reclassification or other similar event with respect to the Common
Stock). For the purposes of this Section 2(d), the Series B Conversion Price
applicable to an optional conversion pursuant to this Section 2(d) shall be the
Optional Conversion Date Price on the date of the Conversion Notice (as defined
below).
(ii) MECHANICS. In order to convert his shares of
Series B Preferred Stock into shares of Common Stock pursuant to this Section
2(d), a holder of Series B Preferred Stock shall surrender the certificate or
certificates therefor at the office of the Transfer Agent, and shall give
written notice (the "CONVERSION NOTICE") to the Transfer Agent at such office
that the holder elects to convert the same and shall state therein the holder's
name or the name or names of the holder's nominees in which the holder wishes
the certificate or certificates for shares of Common Stock to be issued. On the
date of conversion, all rights with respect to the Series B Preferred Stock so
converted shall terminate, except any of the rights of the holders thereof, upon
surrender of their certificate or certificates therefor, to receive certificates
for the number of shares of Common Stock into which such Series B Preferred
Stock has been converted. If so required by the Transfer Agent, certificates
surrendered for conversion shall be endorsed or accompanied by written
instrument or instruments of transfer, in form satisfactory to the Transfer
Agent, duly executed by the registered holder or by the holder's attorney duly
authorized in writing. No fractional share of Common Stock shall be issued upon
optional conversion of the Series B Preferred Stock. In lieu of any fractional
share to which the holder would otherwise be entitled, the Corporation shall pay
cash equal to such fraction multiplied by the Optional Conversion Date Price on
the date of the Conversion Notice. The Corporation shall cause the Transfer
Agent, as soon as practicable after surrender of the certificate or certificates
for conversion, issue and deliver at such office to such holder of Series B
Preferred Stock, or to the holder's nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which the holder shall
be entitled as aforesaid, together with cash in lieu of any fraction of a share.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of the Conversion Notice, and the person or persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(e) NOTICES. All notices required or permitted to be sent
pursuant to this Section 2 shall be deemed sufficient if contained in a written
instrument and delivered in person or duly sent by first-class mail postage
prepaid or by fax or DHL, Federal Express or other recognized express courier
service, addressed to the intended recipient at the recipient's address as it
appears on the books of the Corporation.
3. DIVIDENDS. The holders of shares of Series B Preferred Stock
shall not be entitled to receive any dividends.
4. LIQUIDATION RIGHTS. The holders of shares of Series B
Preferred Stock shall not be entitled to any preferential payment or
distribution in the event of any liquidation, dissolution or winding up of the
Corporation, but shall share ratably on an as-converted basis assuming automatic
conversion in any distribution of the assets of the Corporation to all the
holders of Common Stock.
5. VOTING RIGHTS. Except as otherwise required by law or as set
forth in the Certificate of Incorporation of the Corporation, the holders of
Series B Preferred Stock shall not be entitled to vote on any matter or to
notice of any meeting of the stockholders.
6. NO REISSUANCE OF PREFERRED STOCK. No share or shares of Series
B Preferred Stock acquired by the Corporation by reason of conversion or
otherwise shall be reissued, and all such shares shall be cancelled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.
7. RESIDUAL RIGHTS. All rights accruing to the outstanding shares
of the Corporation not expressly provided for to the contrary herein shall be
vested in the Common Stock.
E. SERIES C PREFERRED SHARES
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1. DESIGNATION, INITIAL NUMBER AND DATE OF ISSUE. Of the
10,000,000 shares of authorized Preferred Stock, 1,000,000 shall be designated
and known as the "Series C Preferred Stock" (the "Series C Preferred Stock").
The Stated Value of the Series C Preferred Stock shall be $4.00 per share, and
the Par Value of the Series C Preferred Stock shall be $.01 per share. September
30, 1999, the date on which the Series C Preferred Stock of Cytation.com
Incorporated, a predecessor company, was issued in New York is referred to
herein as the "Date of Issue" of the Company's Series C Preferred Stock.
2. DISTRIBUTIONS. The holders of the Series C Preferred Stock
shall be entitled to receive, when and as declared by the Board of Directors of
the Company, out of funds at the time legally available for payment of dividends
in the State of Delaware, a cumulative dividend at an annual rate, based on a
year of 360 days consisting of 12 thirty-day months, equal to 6% applied to the
amount of the Stated Value per share of Series C Preferred Stock. Such dividends
shall be payable in respect of each share of Series C Preferred Stock quarterly,
in arrears, on the last day of March, June, September and December in each year
(each a "Dividend Payment Date"), commencing on the first such date to occur
which is at least thirty days after its Date of Issue. The dividend payable on
the first Dividend Payment Date shall be calculated and based on the period from
the Date of Issue through such Dividend Payment Date. Each period commencing on
the later of the Date of Issue of a share of the Series C Preferred Stock or the
first day after the last preceding Dividend Payment Date and ending on the next
Dividend Payment Date or, in the case of a final dividend, the effective date of
a liquidating distribution or conversion of such shares of Series C Preferred
Stock into Common Stock is referred to herein as a "Dividend Period." If the
date fixed for payment of a final liquidating distribution on any shares of
Series C Preferred Stock or the date on which any shares of Series C Preferred
Stock are converted into Common Stock does not coincide with a Dividend Payment
Date, then subject to the provisions hereof relating to such liquidating
distribution or conversion, the final Dividend Period applicable to such shares
shall be the period from the last Dividend Payment Date prior to the date such
liquidating distribution or conversion occurs through the effective date of such
liquidating distribution or conversion.
3. CONVERSION. Subject to the limitation set forth in PARAGRAPH
3(k) below, the Series C Preferred shall be convertible into such number of
fully paid, validly issued and nonassessable shares of Common Stock, free and
clear of any liens, claims or encumbrances as hereinafter provided and, when so
converted, shall be canceled and retired and shall not be reissued as such:
(a) Any holder of the Series C Preferred Stock may at any
time or from time to time convert such stock into the Common Stock of the
Company. In order to convert the Series C Preferred Stock into Common Stock, the
holder thereof on any business day must present and surrender to the Company at
its offices located at 55 Hammarlund Way, Newport, RI 02842 (or such other
address as the Company shall designate) the certificate or certificates of the
Series C Preferred Stock to be converted into Common Stock, duly endorsed to the
Company or in blank, together with a notice of conversion, which shall state
therein the number of shares to be converted and the name or names in which such
holder wishes the certificate or certificates for Common Stock to be issued
("CONVERSION NOTICE").
(b) Each holder of Series C Preferred Stock shall have
the right to convert such Series C Preferred Stock on and subject to the
following terms and conditions:
(i) The Series C Preferred Stock shall be
converted into Common Stock at the conversion ratio, determined as hereinafter
provided, in effect at the time of conversion. Unless such conversion ratio
shall be adjusted as hereinafter provided, the conversion ratio shall be one (1)
share of Common Stock for each share of Series C Preferred Stock ("CONVERSION
RATIO").
(ii) The conversion of the Series C Preferred
Stock shall be deemed to have occurred on the date the holder thereof provides
and surrenders, as the case may be, to the Company, pursuant to paragraph 3(a)
hereof, a Conversion Notice and the certificate or certificates representing the
Series C Preferred Stock to be converted into Common Stock, duly endorsed to the
Company or in blank. The person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of
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such Common Stock at such time. As promptly as practicable on or after the date
of any conversion, but in no event later than 10 business days following the
receipt by the Company of the Conversion Notice, the Company shall issue and
deliver by hand against a signed receipt therefor or by United States registered
mail, return receipt requested, or by overnight delivery service, to the address
designated by the holder in the Conversion Notice, a stock certificate or stock
certificates of the Company representing the number of shares of Common Stock to
which such holder is entitled, together with check or cash in lieu of any
fraction of a share and in payment of all accrued and unpaid dividends, to the
person or persons entitled to receive same. In case of the conversion of only a
part of the shares of any holder of Series C Preferred Stock, the Company shall
also issue and deliver to such holder a new certificate of Series C Preferred
Stock representing the number of shares of such Series C Preferred Stock not
converted by such holder.
(c) (i) Subject to the limitation set forth in
PARAGRAPH 3(k) below, the Company may require mandatory conversion of all, but
not less than all, of the Series C Preferred Stock on or after the first
anniversary of the initial purchase and sale of the Series C Preferred Stock
(the "MANDATORY CONVERSION DATE"), provided that (x) after the first anniversary
of the initial purchase and sale of the Series C Preferred Stock the average
closing bid price of the Company's Common Stock on the Over-the-Counter Bulletin
Board or the Nasdaq Stock Exchange, as applicable, for the 20 consecutive
trading days immediately preceding the Mandatory Conversion Date has exceeded
$6.00 per share; and (y) the Company elected to mandatory convert all other
series of Preferred Stock.
(ii) Conversion of the Series C Preferred Stock
into Common Stock pursuant to this paragraph 3(c) shall be deemed to have
occurred on the Mandatory Conversion Date whether or not the holder of such
stock delivers to the Company its certificate or certificates for the Series C
Preferred Stock. Anything in this Section 3(c) to the contrary notwithstanding,
the Company may not require the conversion of any shares of Series C Preferred
Stock unless, concurrently with such mandatory conversion, the Company shall
also require the mandatory conversion of the same Pro Rata Proportion (as
hereinafter defined) of shares of the Series A Preferred Stock of the Company.
For the purposes of the preceding sentence "Pro Rata Proportion" shall mean a
fraction the numerator of which shall be the number of shares of Series C
Preferred Stock or Series A Preferred Stock, as the case may be, subject to
mandatory conversion and the denominator of which shall be all outstanding
shares of Series C Preferred Stock or Series A Preferred Stock, as the case may
be.
(d) The Conversion Ratio shall be subject to adjustment
as follows:
(i) If the Company subdivides (e.g., stock
dividend) or splits up the issued and outstanding shares of Common Stock into a
greater number of shares of the Common Stock, the Conversion Ratio in effect at
the opening of business on the business day immediately preceding the date fixed
for the determination of the stockholders whose shares of Common Stock shall be
subdivided or split up (the "SPLIT RECORD DATE") shall be proportionately
increased, and in case issued and outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the Conversion Ratio
in effect at the opening of business on the business day immediately preceding
the date fixed for the determination of the stockholders whose shares of Common
Stock shall be combined (the "COMBINATION RECORD DATE") shall be proportionately
decreased, such increase or decrease, as the case may be, becoming effective
immediately after the opening of business on the business day immediately after
the Split Record Date or the Combination Record Date, as the case may be.
(ii) In case of any capital reorganization, any
reclassification of the stock of the Company (other than as a result of a stock
dividend or subdivision, split up or combination of shares), or the merger of
the Company with or into another person or entity (other than a merger in which
the Company is the continuing corporation and which does not result in any
change in the Common Stock) or of the sale, exchange, lease, transfer or other
disposition of all or substantially all of the properties and assets of the
Company as an entirety or the participation by the Company in a share exchange
as the corporation the stock of which is to be acquired, the Series C Preferred
Stock shall (effective on the opening of business on the date after the
effective date of such reorganization, reclassification, merger, sale or
exchange, lease, transfer or other disposition or share exchange) be convertible
into the kind and number of shares of stock or other securities or property of
the Company or of the surviving corporation resulting from such merger or to
which such properties and assets shall
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have been sold, exchanged, leased, transferred or otherwise disposed or which
was the corporation whose securities were exchanged for those of the Company to
which the holder of the number of shares of Common Stock deliverable (at the
close of business on the date immediately preceding the effective date of such
reorganization, reclassification, merger, sale, exchange, lease, transfer or
other disposition or share exchange) upon conversion of Series C Preferred Stock
would have been entitled upon such reorganization, reclassification, merger,
sale, exchange, lease, transfer or other disposition or share exchange. The
provisions of this subparagraph 3(b)(ii) shall similarly apply to successive
reorganizations, reclassifications, mergers, sales, exchanges, leases, transfers
or other dispositions or other share exchanges.
(iii) If the Company shall issue to the holders of
its Common Stock rights or warrants to subscribe for or purchase shares of its
Common Stock at a price less than 90% of the Current Market Price (as defined
below in this paragraph) of the Company's Common Stock at the record date fixed
for the determination of the holders of Common Stock entitled to such rights or
warrants, the conversion rate in effect immediately prior to said record date
shall be increased, effective at the opening of business on the next following
full business day, to an amount determined by multiplying such conversion rate
by a fraction the numerator of which is the number of shares of Common Stock of
the Company outstanding immediately prior to said record date plus the number of
additional shares of its Common Stock offered for subscription or purchase and
the denominator of which is said number of shares outstanding immediately prior
to said record date plus the number of shares of Common Stock of the Company
which the aggregate subscription or purchase price of the total number of shares
so offered would purchase at the Current Market Price of the Company's Common
Stock at said record date. The term "Current Market Price" at said record date
shall mean the average of the daily last reported sale prices per share of the
Company's Common Stock on the principal stock exchange on which the Common Stock
is then listed during the 20 consecutive full business days commencing with the
30th full business day before said record date, provided that if there was no
reported sale on any such day or days there shall be substituted the average of
the closing bid and asked quotations on that exchange on that day, and provided
further that if the Common Stock was not listed on any stock exchange on any
such day or days there shall be substituted the average of the lowest bid and
the highest asked quotations in the over-the-counter market on that day.
(iv) Whenever the Conversion Ratio shall be
adjusted as provided herein, the Company shall prepare and send to the holders
of the Series C Preferred Stock a statement, signed by the chief financial
officer of the Company, showing in detail the facts requiring such adjustment
and the Conversion Ratio that shall be in effect after such adjustment.
(v) In the event the Company shall propose to
take any action of the types described in PARAGRAPH 3(d) hereof, the Company
shall give notice to the holder of Series C Preferred Stock, which notice shall
specify the record date, if any, with respect to any such action and the date on
which such action is to take place. Such notice shall be given on or prior to
the earlier of 30 days prior to the record date or the date which such action
shall be taken. Such notice shall also set forth such facts with respect thereto
as shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Ratio and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of the Series C Preferred Stock. Failure to give
notice in accordance with this PARAGRAPH 3(d)(v) shall not render such action
ultra vires, illegal or invalid.
(e) No adjustment of the Conversion Ratio shall be made
in any of the following cases:
(i) the grant or exercise of stock options
hereafter granted, or under any employee stock option plan now or hereafter
authorized, to the extent that the aggregate of the number of shares which may
be purchased under such options and the number of shares issued under such
employee stock option plan is less than or equal to ten percent (10%) of the
number of shares of Common Stock outstanding on January 1 of the year of the
grant or exercise;
(ii) the issuance of shares of Common Stock in
connection with the acquisition by
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the Company or by any subsidiary of the Company of 80% or more of the assets of
another corporation, and shares issued in connection with the acquisition by the
Company or by any subsidiary of the Company of 80% or more of the voting shares
of another corporation (including shares issued in connection with such
acquisition of voting shares of such other corporation subsequent to the
acquisition of an aggregate of 80% of such voting shares), shares issued in a
merger of the Company or a subsidiary of the Company with another corporation in
which the Company or the Company's subsidiary is the surviving corporation, and
shares issued upon the conversion of other securities issued in connection with
any such acquisition or in any such merger;
(iii) the issuance of shares of Common Stock
pursuant to all stock options, warrants and convertible securities outstanding
on the date of the filing of this Certificate of Amendment to the Certificate of
Incorporation of the Company ("CERTIFICATE").
(iv) sales of Common Stock of the Company for
cash in an underwritten public offering.
(f) Whenever the Conversion Ratio is adjusted as herein
provided, the Company shall prepare a certificate signed by the Treasurer of the
Company setting forth the adjusted conversion ratio and showing in reasonable
detail the facts upon which such adjustment is based. As promptly as
practicable, the Company shall cause a copy of such certificate to be mailed to
each holder of record of issued and outstanding Series C Preferred Stock at the
address of such holder appearing on the Company's books.
(g) The Company shall pay all taxes that may be payable
in respect of the issue or delivery of Common Stock on conversion of Series C
Preferred Stock pursuant hereto, but shall not pay any tax which may be payable
with respect to income or gains of the holder of any Series C Preferred Stock or
Common Stock or any tax which may be payable in respect of any transfer involved
in the issue and delivery of the Common Stock in a name other than that in which
the Series C Preferred Stock so converted was registered, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of any such tax, or has established, to the
satisfaction of the Company, that such tax has been paid.
(h) (i) Upon conversion of any shares of Series C
Preferred Stock pursuant to paragraphs 3(a) and (b) hereof, the holders of such
shares of Series C Preferred Stock so converted shall not be entitled to receive
any dividends declared with respect to such shares of Series C Preferred Stock
unless such dividends shall have been declared by the Board of Directors and the
record date for such dividends shall have been on or before the date such shares
shall have been converted. No payment or adjustment shall be made on account of
dividends declared and payable to holders of Common Stock of record on a date
prior to the date of the conversion of shares of Series C Preferred Stock
pursuant to paragraphs 3(a) and 3(b) hereof.
(ii) Upon the mandatory conversion of any shares
of Series C Preferred Stock pursuant to paragraph 3(c) hereof, the holders of
such shares of Series C Preferred Stock so converted shall be entitled to
receive a dollar amount equal to all accrued dividends and unpaid distributions
prior to the Mandatory Conversion Date, whether or not declared thereon.
(i) No fractional shares or scrip representing fractional
shares shall be issued upon the conversion of any shares of Series C Preferred
Stock. If more than one share of Series C Preferred Stock shall be surrendered
for conversion at one time by the same holder, the number of full shares
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of such shares so surrendered. If the conversion of any share of Series C
Preferred Stock results in a fraction, an amount equal to such fraction
multiplied by the current market value of the Common Stock on the day of
conversion shall be paid to such holder in cash by the Company. For purposes of
this paragraph 3(i), "current market value of Common Stock" shall mean the value
of the Common Stock as reflected in the last trade of the Common Stock on the
date of conversion.
(j) The Company shall at all times reserve and keep
available, free from
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preemptive rights, out of its authorized Common Stock, for the purpose of
effecting the conversion of the issued and outstanding Series C Preferred Stock,
the full number of shares of Common Stock then deliverable in the event and upon
the conversion of all of the Series C Preferred Stock then issued and
outstanding.
(k) In no event shall PNC Bank Corp. or any indirect or
direct subsidiary thereof (collectively, "PNC") be entitled to convert any
shares of Series C Preferred Stock nor shall the Company be entitled to require
conversion of any shares of Series C Preferred Stock in excess of that number of
shares of Series C Preferred Stock upon the conversion of which the sum of (1)
the number of shares of Common Stock beneficially owned (as such term is defined
for the purposes of Rule 13(d) promulgated under the Securities Exchange Act of
1934, as amended) by PNC and (2) the number of shares of Common Stock issuable
upon the conversion of the number of shares of Series C Preferred Stock with
respect to which the determination in this provision is made, would result in
the beneficial ownership by PNC of five percent (5%) or more of the issued and
outstanding shares of Common Stock and any series of voting preferred stock of
the Company unless PNC has provided to the Company a written opinion of counsel
that a greater percentage of beneficial ownership of such capital stock is
permissible pursuant to then applicable laws or regulations.
4. LIQUIDATION OR DISSOLUTION. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of the
Company, the holders of the issued and outstanding Series C Preferred Stock
shall be entitled to receive for each share of Series C Preferred Stock, before
any distribution of the assets of the Company shall be made to the holders of
any other class of capital stock, except for holders of the Series A Convertible
Preferred Stock which shall have the rights and preferences set forth above, a
dollar amount equal to the Stated Value thereof plus all accrued and unpaid
distributions whether or not earned or declared thereon, without interest. After
payments in full have been made to all holders of any series of the issued and
outstanding preferred stock of the Company, or funds necessary for such payment
shall have been set aside in trust for the account of the holders of any series
of the issued and outstanding preferred stock of the Company, so as to be and
continue to be available therefor, then, before any further distribution of the
assets of the Company shall be made, a dollar amount equal to that already
distributed to the holders of any series of the issued and outstanding preferred
stock of the Company shall be distributed pro-rata to the holders of the other
issued and outstanding classes of capital stock of the Company, subject to the
rights of any other class of capital stock set forth in the Certificate of
Incorporation, as amended, of the Company. After such payment shall have been
made in full to the holders of such other issued and outstanding capital stock,
or funds necessary for such payment shall have been set aside in trust for the
account of the holders of such other issued and outstanding capital stock so as
to be and continue to be available therefor, the holders of the issued and
outstanding Series C Preferred Stock shall be entitled to participate with the
holders of all other classes of issued and outstanding capital stock in the
final distribution of the remaining assets of the Company, and, subject to any
rights of any other class of capital stock set forth in the Certificate of
Incorporation, as amended, of the Company, the remaining assets of the Company
shall be divided and distributed ratably among the holders of both the Series C
Preferred Stock and the other capital stock then issued and outstanding
according to the proportion by which their respective record ownership of shares
of Common Stock Equivalents (as defined below in this paragraph) bears to the
total number of shares of Common Stock Equivalents then issued and outstanding.
"Common Stock Equivalents" shall mean all shares of Common Stock that are
outstanding plus all shares of Common Stock issuable upon conversion of Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock or the Series
C Preferred Stock or any other series of convertible preferred stock of the
Company. If, upon such liquidation, dissolution, or winding up, the assets of
the Company distributable, as aforesaid, among the holders of any series of
preferred stock of the Company shall be insufficient to permit the payment to
them of said amount, the entire assets shall be distributed ratably among the
holders of any series of issued and outstanding preferred stock of the Company.
A consolidation or merger of the Company, a share exchange, a sale, lease,
exchange or transfer of all or substantially all of its assets as an entirety,
or any purchase or redemption of stock of the Company of any class, shall not be
regarded as a "liquidation, dissolution, or winding up of the affairs of the
Company" within the meaning of this paragraph 4.
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5. VOTING RIGHTS AND BOARD REPRESENTATION
(a) Except as otherwise required by applicable law, the
Series C Preferred Stock shall not be entitled to vote on any matter.
(b) So long as there are at least 500,000 shares of
Series C Preferred Stock outstanding (which number shall be subject to
proportional adjustment to reflect any subdivisions, splits or reverse stock
splits of the Series C Preferred Stock) the holders of the Series C Preferred
Stock voting separately as a class shall be entitled, as such holders voting
separately as a class may determine, to elect one director to the Board of
Directors or to appoint one observer to the Board of Directors.
6. CHANGES IN TERMS OF SERIES C PREFERRED STOCK. The terms of the
Series C Preferred Stock may not be amended, altered or repealed, and no class
of capital stock or securities convertible into capital stock shall be
authorized, including by way of a merger, which has superior rights to the
Series C Preferred Stock as to distributions or liquidation, without the consent
of the holders of at least two-thirds of the outstanding shares of Series C
Preferred Stock. This Section 6 shall in no way limit the Company's abilities to
issue securities which are pari passu with the Series C Preferred Stock.
7. NO IMPLIED LIMITATIONS. Except as otherwise provided by
express provisions of this Certificate, nothing herein shall limit, by inference
or otherwise, the discretionary right of the Board of Directors to classify and
reclassify and issue any shares of Series C Preferred Stock and to fix or alter
all terms thereof to the full extent provided in the Certificate of
Incorporation, as amended, of the Company.
8. GENERAL PROVISIONS. In addition to the above provisions with
respect to the Series C Preferred Stock, such Series C Preferred Stock shall be
subject to, and entitled to the benefits of, the provisions set forth in the
Company's Certificate of Incorporation, as amended, of the Company with respect
to preferred stock generally but not with respect any series of preferred stock
in particular.
9. NOTICES. All notices required or permitted to be given by the
Company with respect to the Series C Preferred Stock shall be in writing, and if
delivered by first class United States mail, postage prepaid, or by overnight
delivery service, to the holders of the Series C Preferred Stock at their last
addresses as they shall appear upon the books of the Company, shall be
conclusively presumed to have been duly given, whether or not the stockholder
actually receives such notice; provided, however, that failure to duly give such
notice by mail, or any defect in such notice, to the holders of any stock
designated for redemption, shall not affect the validity of the proceedings for
the redemption of any other shares of Series C Preferred Stock.
FIFTH: In furtherance of and not in limitation of powers conferred by statute,
it is further provided that:
(a) (1) The business and affairs of the Corporation shall be
managed under the direction of a Board of Directors, consisting of not less than
three nor more than twelve Directors, the number of which shall be determined
from time to time by resolution adopted by affirmative of a majority of
Directors then in office. The Directors shall be classified with respect to the
time for which they shall severally hold office by dividing them into three
classes, Class I, Class II and Class III, each consisting as nearly as possible
of one-third of the whole number of the Board of Directors. All Directors shall
hold office until their successors are chosen and qualified, or until their
earlier death, resignation, disqualification or removal. At the first election
of Directors following adoption of this provision by the stockholders of the
Corporation, Class I Directors shall be elected for a term of one year; Class II
Directors shall be elected for a term of two years; and Class III Directors
shall be elected for a term of three years; and at each annual election
thereafter, successors to the Directors whose terms shall expire that year shall
be elected to hold office for a term of three years, so that the term of office
of one class of Directors shall expire in each year. Any vacancy on the Board of
Directors that results from an increase in the number of Directors may be filled
by the affirmative vote of a majority of the Directors then in office, and any
other vacancy on the Board of Directors may be filled by the affirmative vote of
a majority of the Directors then in office, although less than a quorum, or by a
sole remaining Director. Any Director elected to fill a vacancy not resulting
from an increase in the number of Directors shall serve for a term equivalent to
the remaining unserved portion of the term of such newly elected
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Director's predecessor.
Notwithstanding the foregoing, whenever the holders
of any one or more classes or series of preferred stock issued by the
Corporation shall have the right, voting separately by class or series, to elect
Directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the terms of the Certificate of Incorporation applicable thereto,
and such Directors shall not be divided into classes pursuant to this Article
FIFTH (a)(1) unless expressly provided by such terms.
(2) RESIGNATION OR REMOVAL OF DIRECTORS. Any director
or the entire Board of Directors may be removed for "Cause," as hereinafter
defined, by the holders of a majority of the stock issued and outstanding and
entitled to vote at an election of directors; provided, however, that the
directors elected by a particular class of stockholders may be removed only by
the vote of the holders of a majority of the shares of such class. No director
may be removed without "Cause" by vote of the stockholders. Any director may
resign at any time by delivering a resignation in writing to the principal
executive officer or the secretary or to a meeting of the Board of Directors.
Such resignation shall be effective upon receipt unless specified to be
effective at some other time; and without in either case the necessity of its
being accepted unless the resignation shall so state. No director resigning and
(except where a right to receive compensation shall be expressly provided in a
duly authorized written agreement with the Corporation) no director removed
shall have any right to receive compensation as such director for any period
following the director's resignation or removal, or any right to damages on
account of such removal, whether the director's compensation be by the month or
by the year or otherwise; unless in the case of a resignation, the directors, or
in the case of removal, the body acting on the removal, shall in their or its
discretion provide for compensation. For purposes of this Section 4.16, "Cause"
means:
(A) willful and continued material failure, refusal
or inability to perform one's duties to the Corporation or the willful engaging
in gross misconduct materially and demonstrably damaging to the Corporation; or
(B) conviction for any crime involving moral
turpitude or any other illegal act that materially and adversely reflects upon
the business, affairs or reputation of the Company or on one's ability to
perform one's duties to the Corporation.
(3) Any action required or permitted to be taken by
the stockholders of the Corporation must be effected at a duly called annual or
special meeting of such holders and may not be effected by any consent in
writing by such holders. Special meetings of the stockholders, for any purpose
or purposes, unless otherwise prescribed by law or by this Certificate of
Incorporation, may be called by the Chairman of the Board of Directors or the
President and shall be called by the President or Secretary at the request in
writing of a majority of the Board of Directors. Such request shall state the
purpose or purposes of the proposed meeting and business to be transacted at any
special meeting of the stockholders.
(4) No amendment to the Certificate of Incorporation
of the Corporation shall amend, alter, or repeal any of the provisions of this
Article FIFTH (a) unless the amendment effecting such amendment, alteration or
repeal shall receive the affirmative vote of or consent of the holders of
seventy-five percent (75%) of all shares of stock of the Corporation entitled to
vote at a meeting of stockholders held for the purpose of voting on such
amendment, considered for the purposes of this Article FIFTH as one class;
provided that this paragraph FIFTH (a)(4) shall not apply to, and such
seventy-five percent (75%) vote shall not be required for, any such amendment
recommended to the stockholders pursuant to a resolution of the Board of
Directors approved by two-thirds of the Continuing Directors. For purposes of
this paragraph FIFTH (a)(4), a "Continuing Director" shall mean any Director of
the Corporation who is or becomes a Director on the date that this Article FIFTH
is first adopted by the Corporation's stockholders or any Director elected by a
majority of the Continuing Directors then in office to succeed any Director or
to fill any vacancy on the Board of Directors whether resulting from an increase
in the number of Directors or otherwise.
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(b) Subject to any applicable requirements of law, the books of
the Corporation may be kept outside the State of Delaware at such locations as
may be designated by the Board of Directors or in the By-Laws of the
Corporation.
(c) The Board of Directors may from time to time determine
whether, to what extent, at what times and places and under what conditions and
regulations the accounts, books and records of the Corporation, or any of them,
shall be open to the inspection of the stockholders, and no stockholder shall
have any right to inspect any account, book or document of the Corporation
except as and to the extent expressly provided by law or expressly authorized by
resolution of the Board of Directors.
(d) Except as provided to the contrary in the provisions
establishing a class of stock, the number of authorized shares of such class may
be increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of a majority of the stock of the
Corporation entitled to vote, voting as a single class.
(e) In addition to the powers and authority herein or by law
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of the laws of the
State of Delaware, this Certificate of Incorporation and any By-Laws adopted by
the stockholders; provided, however, that no By-Laws hereafter adopted by the
stockholders shall invalidate any prior act of the directors which would have
been valid if such By-Laws had not been adopted.
SIXTH: The following provisions shall apply with respect to the indemnification
of, and advancement of expenses to, certain parties as set forth below:
A. INDEMNIFICATION.
1. PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION.
The Corporation shall indemnify each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation), by reason of the
fact that such person is or was, or has agreed to become, a director or officer
of the Corporation, or is or was serving or has agreed to serve, at the request
of the Corporation, as a director, officer or trustee of, or in a similar
capacity with, another corporation (including any partially or wholly owned
subsidiary of the Corporation), partnership, joint venture, trust or other
enterprise (including any employee benefit plan) (each of such persons being
referred to as an "Indemnitee"), or by reason of any action alleged to have been
taken or omitted in such capacity, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the Indemnitee or on the Indemnitee's behalf in connection with such
action, suit or proceeding and any appeal therefrom, if (A) the Indemnitee acted
in good faith and in a manner the Indemnitee reasonably believed to be in, or
not opposed to, the best interests of the Corporation and (B) with respect to
any criminal action or proceeding, the Indemnitee had no reasonable cause to
believe the Indemnitee's conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the Indemnitee did not act in good faith, did not act in a manner that the
Indemnitee reasonably believed to be in, or not opposed to, the best interests
of the Corporation or, with respect to any criminal action or proceeding, did
not have reasonable cause to believe that the Indemnitee's conduct was unlawful.
Notwithstanding anything to the contrary in this Article SIXTH, except as set
forth in Section C.2. of this Article SIXTH, the Corporation shall not indemnify
an Indemnitee seeking indemnification in connection with a proceeding (or part
thereof) initiated by the Indemnitee unless the initiation thereof was approved
by the Board of Directors of the Corporation.
2. PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in the
Corporation's favor by reason of the fact that the Indemnitee is or was, or has
agreed to become, a director or officer of the Corporation, or is or was serving
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as a director, officer or trustee of, or in a similar capacity with, another
corporation (including any partially or wholly owned subsidiary of the
Corporation), partnership, joint venture, trust or other enterprise (including
any employee benefit plan), or by reason of any action alleged to have been
taken or omitted in such capacity, against all expenses (including attorneys'
fees) and amounts paid in settlement actually and reasonably incurred by the
Indemnitee or on the Indemnitee's behalf in connection with such action, suit or
proceeding and any appeal therefrom, if the Indemnitee acted in good faith and
in a manner the Indemnitee reasonably believed to be in, or not opposed to, the
best interests of the Corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which the Indemnitee shall have
been adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery of Delaware shall determine upon application that, despite
the adjudication of such liability but in view of all the circumstances of the
case, the Indemnitee is fairly and reasonably entitled to indemnity for such
expenses (including attorneys' fees) that the Court of Chancery of the State of
Delaware shall deem proper.
3. EXPENSES OF SUCCESSFUL INDEMNITEE. Notwithstanding any other
provision of this Article SIXTH, to the extent that an Indemnitee has been
successful, on the merits or otherwise (including a disposition without
prejudice), in defense of any action, suit or proceeding referred to in Section
A.1. or 2. of this Article SIXTH, or in defense of any claim, issue or matter
therein, or on appeal from any such action, suit or proceeding, the Indemnitee
shall be indemnified against all expenses (including attorneys' fees) actually
and reasonably incurred by the Indemnitee or on the Indemnitee's behalf in
connection therewith. Without limiting the foregoing, if any action, suit or
proceeding is disposed of, on the merits or otherwise (including a disposition
without prejudice), without (A) the disposition being adverse to the Indemnitee,
(B) an adjudication that the Indemnitee was liable to the Corporation, (C) a
plea of guilty or nolo contendere by the Indemnitee, (D) an adjudication that
the Indemnitee did not act in good faith and in a manner the Indemnitee
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and (E) with respect to any criminal proceeding, an adjudication
that the Indemnitee had reasonable cause to believe the Indemnitee's conduct was
unlawful, the Indemnitee shall be considered for the purposes hereof to have
been wholly successful with respect thereto.
4. PARTIAL INDEMNIFICATION. If any Indemnitee is entitled under
any provision of this Section A. to indemnification by the Corporation for a
portion, but not all, of the expenses (including attorneys' fees), judgments,
fines or amounts paid in settlement actually and reasonably incurred by the
Indemnitee or on the Indemnitee's behalf in any appeal therefrom, the
Corporation shall indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.
B. ADVANCEMENT OF EXPENSES.
Subject to Section C.2. of this Article SIXTH, in the event that the
Corporation does not assume a defense pursuant to Section C.1. of this Article
SIXTH of any action, suit, proceeding or investigation of which the Corporation
receives notice under this Article SIXTH, any expenses (including attorneys'
fees) incurred by an Indemnitee in defending a civil or criminal action, suit,
proceeding or investigation or any appeal therefrom shall be paid by the
Corporation in advance of the final disposition of such matter; provided,
however, that the payment of such expenses incurred by an Indemnitee in advance
of the final deposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of the Indemnitee to repay all amounts so advanced
in the event that it shall ultimately be determined that the Indemnitee is not
entitled to be indemnified by the Corporation as authorized in this Article
SIXTH. Any such undertaking by an Indemnitee shall be accepted without reference
to the financial ability of the Indemnitee to make such repayment.
C. PROCEDURES.
1. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to
any Indemnitee's right to be indemnified, the Indemnitee must promptly notify
the Corporation in writing of any action, suit, proceeding or investigation
involving the Indemnitee for which indemnity will or may be sought. With respect
to any action, suit, proceeding or investigation of which the Corporation is so
notified, the Corporation will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee; provided that the Corporation
shall not be entitled, without the consent of the
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Indemnitee, to assume the defense of any claim brought by or in the right of the
Corporation or as to which counsel for the Indemnitee shall have reasonably
concluded that there may be a conflict of interest or position on any
significant issue between the Corporation and the Indemnitee in the conduct of
the defense of such claim. After notice from the Corporation to the Indemnitee
of its election so to assume such defense, the Corporation shall not be liable
to the Indemnitee for any legal or other expenses subsequently incurred by the
Indemnitee in connection with such claim, other than as provided in this Section
C.1. The Indemnitee shall have the right to employ the Indemnitee's own counsel
in connection with such claim, but the fees and expenses of such counsel
incurred after notice from the Corporation of its assumption of the defense
thereof shall be at the expense of the Indemnitee unless (A) the employment of
counsel by the Indemnitee has been authorized by the Corporation, (B) counsel to
the Indemnitee has reasonably concluded that there may be a conflict of interest
or position on any significant issue between the Corporation and the Indemnitee
in the conduct of the defense of such action or (C) the Corporation has not in
fact employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of counsel for the Indemnitee shall be at the
expense of the Corporation except as otherwise expressly provided by this
Article SIXTH.
2. REQUESTS AND PAYMENT. In order to obtain indemnification or
advancement of expenses pursuant to this Article SIXTH, an Indemnitee shall
submit to the Corporation a written request therefor, which request shall
include documentation and information as is reasonably available to the
Indemnitee and is reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification or advancement of expenses. Any
such indemnification or advancement of expenses shall be made promptly, and in
any event within sixty days after receipt by the Corporation of the written
request of the Indemnitee, unless with respect to requests under Section A.1.,
A.2. or B. of this Article SIXTH, the Corporation determines, by clear and
convincing evidence, within such sixty-day period, that any Indemnitee did not
meet the applicable standard of conduct set forth in Section A.1. or A.2. of
this Article SIXTH. Such determination shall be made in each instance by (A) a
majority vote of the directors of the Corporation consisting of persons who are
not at that time parties to the action, suit or proceeding in question
("disinterested directors"), even though less than a quorum, (B) a majority vote
of a quorum of the outstanding shares of capital stock of all classes entitled
to vote for directors, which quorum shall consist of stockholders who are not at
that time parties to the action, suit, proceeding or investigation in question,
(C) independent legal counsel (who may be regular legal counsel to the
Corporation), or (D) a court of competent jurisdiction.
3. REMEDIES. The right of an Indemnitee to indemnification or
advancement of expenses pursuant to this Article SIXTH shall be enforceable by
the Indemnitee in any court of competent jurisdiction if the Corporation denies,
in whole or in part, a request of an Indemnitee in accordance with the preceding
Paragraph 2. or if no disposition thereof is made within the sixty-day period
referred to in the preceding Paragraph 2. Unless otherwise provided by law, the
burden of proving that an Indemnitee is not entitled to indemnification or
advancement of expenses pursuant to this Article SIXTH shall be on the
Corporation. Neither the failure of the Corporation to have made a determination
prior to the commencement of such action that indemnification is proper in the
circumstances because the Indemnitee has met any applicable standard of conduct,
nor an actual determination by the Corporation pursuant to the preceding Section
C.2. that the Indemnitee has not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that the Indemnitee has not
met the applicable standard of conduct. The Indemnitee's expenses (including
attorneys' fees) incurred in connection with successfully establishing the
Indemnitee's right to indemnification, in whole or in part, in any such
proceeding shall also be indemnified by the Corporation.
D. RIGHTS NOT EXCLUSIVE.
The right of an Indemnitee to indemnification and advancement of
expenses pursuant to this Article SIXTH shall not be deemed exclusive of any
other rights to which the Indemnitee may be entitled under any law (common or
statutory), agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in the Indemnitee's official capacity and as to
action in any other capacity while holding office for the Corporation, and shall
continue as to an Indemnitee who has ceased to serve in the capacity with
respect to which the Indemnitee's right to indemnification or advancement of
expenses accrued, and shall inure to the benefit of the estate, heirs, executors
and administrators of the Indemnitee. Nothing contained in this Article SIXTH
shall be
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deemed to prohibit, and the Corporation is specifically authorized to enter
into, agreements with officers and directors providing indemnification rights
and procedures supplemental to those set forth in this Article SIXTH. The
Corporation may, to the extent authorized from time to time by its Board of
Directors, grant indemnification rights to other employees or agents of the
Corporation or other persons serving the Corporation and such rights may be
equivalent to, or greater or less than, those set forth in this Article SIXTH.
In addition, the Corporation may purchase and maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation (including any partially or wholly owned
subsidiary of the Corporation), partnership, joint venture, trust or other
enterprise (including any employee benefit plan) against any expense, liability
or loss incurred by such a person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the General
Corporation Law of the State of Delaware.
E. SUBSEQUENT EVENTS.
1. AMENDMENTS OF ARTICLE OR LAW. No amendment, termination or
repeal of this Article SIXTH or of any relevant provisions of the General
Corporation Law of the State of Delaware or any other applicable law shall
affect or diminish in any way the rights of any Indemnitee to indemnification
under the provisions of this Article SIXTH with respect to any action, suit,
proceeding or investigation arising out of or relating to any actions,
transactions or facts occurring prior to the effective date of such amendment,
termination or repeal. If the General Corporation Law of the State of Delaware
is amended after adoption of this Article SIXTH to expand further the
indemnification permitted to any Indemnitee, then the Corporation shall
indemnify the Indemnitee to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended, without the need for
any further action with respect to this Article SIXTH.
2. MERGER OR CONSOLIDATION. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article SIXTH with respect to any action, suit,
proceeding or investigation arising out of or relating to any actions,
transactions or factors occurring prior to the date of such merger or
consolidation.
F. INVALIDATION.
If any or all of the provisions of this Article SIXTH shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable provision of this
Article SIXTH that shall not have been invalidated and to the fullest extent
permitted by the General Corporation Law of the State of Delaware or any other
applicable law.
G. DEFINITIONS.
Unless defined elsewhere in this Amended and Restated Certificate of
Incorporation, any term used in this Article SIXTH and defined in Section 145(h)
or (i) of the General Corporation Law of the State of Delaware shall have the
meaning ascribed to such term in such Section.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a
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majority in number representing three-fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
EIGHTH: No director of the Corporation shall be personally liable to the
Corporation or to any of its stockholders for monetary damages arising out of
such director's breach of fiduciary duty as a director of the Corporation,
except to the extent that the elimination or limitation of such liability is not
permitted by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended. No amendment to or repeal of this ARTICLE
EIGHTH shall apply to or have any effect on the liability or alleged liability
of any director of the Corporation for or with respect to any acts or omissions
of the director occurring prior to such amendment or repeal.
NINTH: The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation in the manner now or
hereafter prescribed by statute and this Certificate of Incorporation, and all
rights conferred upon stockholders herein are granted subject to this
reservation. Notwithstanding the foregoing, any other provision of law, this
Certificate of Incorporation or the By-Laws, and notwithstanding the fact that a
lesser percentage may be specified by law, the affirmative vote of the holders
of at least seventy-five percent (75%) of the shares of capital stock of the
corporation issued and outstanding and entitled to vote shall be required to
amend or repeal, or to adopt any provision inconsistent with, Article FIFTH or
Article NINTH of this Certificate of Incorporation.
TENTH: The name and the mailing address of the sole incorporator of the
Corporation is:
NAME MAILING ADDRESS
---- ---------------
Justin Y. Bernold, Esquire Foley, Hoag & Eliot LLP
One Post Office Square
Boston, MA 02109
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of
November, 1999.
/s/ Justin Y. Bernold
------------------------------------
Justin Y. Bernold, Sole Incorporator
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COLLEGELINK.COM INCORPORATED
MINUTES OF THE SPECIAL MEETING OF THE SOLE STOCKHOLDER
NOVEMBER 1, 1999
A special meeting of the sole stockholder of CollegeLink.com
Incorporated, a Delaware corporation (the "corporation"), was held on November
1, 1999, at the offices of the corporation at 55 Hammarlund Way, Newport, Rhode
Island. The sole stockholder waived notice of the meeting pursuant to Section
3.6 of the By-laws. The sole purpose of the meeting was to consider the
following votes, all of which were adopted unanimously:
VOTED: That the Board of Directors is hereby authorized to adopt and
file with the Secretary of State of the State of Delaware an amendment to the
Certificate of Incorporation ("One For Two Reverse Split Amendment") within
ninety days of any merger between the corporation and Cytation.com Incorporated,
a corporation duly organized and existing under the laws of the State of New
York (the "Merger"), that would result in a one for two reverse stock split of
all outstanding shares of Common Stock but would not change the authorized
number of shares of capital stock or the par value of such shares, on the
condition that no other amendment to Article Fourth of the corporation's
Certificate of Incorporation shall have been filed subsequent to the date first
written above, if the Board of Directors deems such reverse stock split to be in
the best interests of the Corporation. If the Board of Directors chooses to
adopt the One for Two Reverse Split Amendment, it shall do so by passing the
following Resolution, and amending Article Fourth of the Certificate of
Incorporation as per the following Resolution:
"RESOLVED: That the Certificate of Incorporation of the
corporation be amended by inserting between the first and second
paragraphs of Article Fourth the following paragraphs:
"At the same time as the filing of this Amendment to the
Certificate of Incorporation with the Secretary of the State of
Delaware becomes effective, each two (2) shares of common stock of the
corporation, par value of $0.001 per share (the "Old Common Stock"),
issued and outstanding or held in the treasury of the Corporation
immediately prior to the effectiveness of such filing, shall be
combined, reclassified and changed into one (1) fully paid and
nonassessable share of Common Stock.
"Each holder of record of a certificate or certificates for
one or more shares of the Old Common Stock shall be entitled to receive
as soon as practicable, upon surrender of such certificate, a
certificate or certificates representing the largest whole number of
shares of Common Stock to which such holder shall be entitled pursuant
to the provisions of the immediately preceding paragraph. Any
certificate for one or more shares of the Old Common Stock not so
surrendered shall be deemed to represent one share of the Common Stock
for each two (2) shares of the Old Common Stock previously represented
by such certificate.
"No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon such combination and
reclassification of the Old Common Stock into shares of Common Stock.
Instead of there being issued any fractional shares of Common Stock
which would otherwise be issuable upon such combination and
reclassification, the corporation shall pay to the holders of the
shares of Old Common Stock which were thus combined and reclassified
cash in respect of such fraction in an amount equal to the same
fraction of the market price per share of the Common Stock (as
determined in a manner prescribed by the Board of Directors) at the
close of business on the date such combination and reclassification
becomes effective."
FURTHER VOTED: That at any time prior to the effectiveness of the
filing of the foregoing amendment to the corporation's Certificate of
Incorporation with the Secretary of State of the State of Delaware effecting a
one for two reverse stock split, notwithstanding authorization of the proposed
amendment by the stockholders of the corporation, the Board of Directors may
abandon such proposed amendment without further action by the stockholders.
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VOTED: That the Board of Directors is hereby authorized to adopt and
file with the Secretary of State of the State of Delaware an amendment to the
Certificate of Incorporation ("Two For Three Reverse Split Amendment") within
ninety days of the Merger, that would result in a one for two reverse stock
split of all outstanding shares of Common Stock but would not change the
authorized number of shares of capital stock or the par value of such shares, on
the condition that no other amendment to Article Fourth of the corporation's
Certificate of Incorporation shall have been filed subsequent to the date first
written above, if the Board of Directors deems such reverse stock split to be in
the best interests of the Corporation. If the Board of Directors chooses to
adopt the Two For Three Reverse Split Amendment, it shall do so by passing the
following Resolution, and amending Article Fourth of the Certificate of
Incorporation as per the following Resolution:
"RESOLVED: That the Certificate of Incorporation of the
corporation be amended by inserting between the first and second
paragraphs of Article Fourth the following paragraphs:
"At the same time as the filing of this Amendment to the
Certificate of Incorporation with the Secretary of the State of
Delaware becomes effective, each three (3) shares of common stock of
the corporation, par value of $0.001 per share (the "Old Common
Stock"), issued and outstanding or held in the treasury of the
Corporation immediately prior to the effectiveness of such filing,
shall be combined, reclassified and changed into two (2) fully paid and
nonassessable shares of Common Stock.
"Each holder of record of a certificate or certificates for
one or more shares of the Old Common Stock shall be entitled to receive
as soon as practicable, upon surrender of such certificate, a
certificate or certificates representing the largest whole number of
shares of Common Stock to which such holder shall be entitled pursuant
to the provisions of the immediately preceding paragraph. Any
certificate for one or more shares of the Old Common Stock not so
surrendered shall be deemed to represent two (2) shares of the Common
Stock for each three (3) shares of the Old Common Stock previously
represented by such certificate.
"No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon such combination and
reclassification of the Old Common Stock into shares of Common Stock.
Instead of there being issued any fractional shares of Common Stock
which would otherwise be issuable upon such combination and
reclassification, the corporation shall pay to the holders of the
shares of Old Common Stock which were thus combined and reclassified
cash in respect of such fraction in an amount equal to the same
fraction of the market price per share of the Common Stock (as
determined in a manner prescribed by the Board of Directors) at the
close of business on the date such combination and reclassification
becomes effective."
FURTHER VOTED: That at any time prior to the effectiveness of the
filing of the foregoing amendment to the corporation's Certificate of
Incorporation with the Secretary of State of the State of Delaware effecting a
two for three reverse stock split, notwithstanding authorization of the proposed
amendment by the stockholders of the corporation, the Board of Directors may
abandon such proposed amendment without further action by the stockholders.
VOTED: That the Board of Directors is hereby authorized to adopt and
file with the Secretary of State of the State of Delaware an amendment to the
Certificate of Incorporation ("Three For Four Reverse Split Amendment") within
ninety days of the Merger, that would result in a three for four reverse stock
split of all outstanding shares of Common Stock but would not change the
authorized number of shares of capital stock or the par value of such shares, on
the condition that no other amendment to Article Fourth of the corporation's
Certificate of Incorporation shall have been filed subsequent to the date first
written above, if the Board of Directors deems such reverse stock split to be in
the best interests of the Corporation. If the Board of Directors chooses to
adopt the Three For Four Reverse Split Amendment, it shall do so by passing the
following Resolution, and amending Article Fourth of the Certificate of
Incorporation as per the following Resolution:
"RESOLVED: That the Certificate of Incorporation of the
corporation be amended by inserting
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between the first and second paragraphs of Article Fourth the following
paragraphs:
"At the same time as the filing of this Amendment to the
Certificate of Incorporation with the Secretary of the State of
Delaware becomes effective, each four (4) shares of common stock of the
corporation, par value of $0.001 per share (the "Old Common Stock"),
issued and outstanding or held in the treasury of the Corporation
immediately prior to the effectiveness of such filing, shall be
combined, reclassified and changed into three (3) fully paid and
nonassessable share of Common Stock.
"Each holder of record of a certificate or certificates for
one or more shares of the Old Common Stock shall be entitled to receive
as soon as practicable, upon surrender of such certificate, a
certificate or certificates representing the largest whole number of
shares of Common Stock to which such holder shall be entitled pursuant
to the provisions of the immediately preceding paragraph. Any
certificate for one or more shares of the Old Common Stock not so
surrendered shall be deemed to represent three (3) shares of the Common
Stock for each four (4) shares of the Old Common Stock previously
represented by such certificate.
"No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon such combination and
reclassification of the Old Common Stock into shares of Common Stock.
Instead of there being issued any fractional shares of Common Stock
which would otherwise be issuable upon such combination and
reclassification, the corporation shall pay to the holders of the
shares of Old Common Stock which were thus combined and reclassified
cash in respect of such fraction in an amount equal to the same
fraction of the market price per share of the Common Stock (as
determined in a manner prescribed by the Board of Directors) at the
close of business on the date such combination and reclassification
becomes effective."
FURTHER VOTED: That at any time prior to the effectiveness of the
filing of the foregoing amendment to the corporation's Certificate of
Incorporation with the Secretary of State of the State of Delaware effecting a
three for four reverse stock split, notwithstanding authorization of the
proposed amendment by the stockholders of the corporation, the Board of
Directors may abandon such proposed amendment without further action by the
stockholders.
VOTED: That the Board of Directors is hereby authorized to adopt and
file with the Secretary of State of the State of Delaware an amendment to the
Certificate of Incorporation ("Four For Five Reverse Split Amendment") within
ninety days of the Merger, that would result in a four for five reverse stock
split of all outstanding shares of Common Stock but would not change the
authorized number of shares of capital stock or the par value of such shares, on
the condition that no other amendment to Article Fourth of the corporation's
Certificate of Incorporation shall have been filed subsequent to the date first
written above, if the Board of Directors deems such reverse stock split to be in
the best interests of the Corporation. If the Board of Directors chooses to
adopt the Four for Five Reverse Split Amendment, it shall do so by passing the
following Resolution, and amending Article Fourth of the Certificate of
Incorporation as per the following Resolution:
"RESOLVED: That the Certificate of Incorporation of the
corporation be amended by inserting between the first and second
paragraphs of Article Fourth the following paragraphs:
"At the same time as the filing of this Amendment to the
Certificate of Incorporation with the Secretary of the State of
Delaware becomes effective, each five (5) shares of common stock of the
corporation, par value of $0.001 per share (the "Old Common Stock"),
issued and outstanding or held in the treasury of the Corporation
immediately prior to the effectiveness of such filing, shall be
combined, reclassified and changed into four (4) fully paid and
nonassessable shares of Common Stock.
"Each holder of record of a certificate or certificates for
one or more shares of the Old Common Stock shall be entitled to receive
as soon as practicable, upon surrender of such certificate, a
certificate or certificates representing the largest whole number of
shares of Common Stock to which such holder shall be entitled pursuant
to the provisions of the immediately preceding paragraph. Any
certificate for one or
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more shares of the Old Common Stock not so surrendered shall be deemed
to represent four (4) shares of the Common Stock for each five (5)
shares of the Old Common Stock previously represented by such
certificate.
"No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon such combination and
reclassification of the Old Common Stock into shares of Common Stock.
Instead of there being issued any fractional shares of Common Stock
which would otherwise be issuable upon such combination and
reclassification, the corporation shall pay to the holders of the
shares of Old Common Stock which were thus combined and reclassified
cash in respect of such fraction in an amount equal to the same
fraction of the market price per share of the Common Stock (as
determined in a manner prescribed by the Board of Directors) at the
close of business on the date such combination and reclassification
becomes effective."
FURTHER VOTED: That at any time prior to the effectiveness of the
filing of the foregoing amendment to the corporation's Certificate of
Incorporation with the Secretary of State of the State of Delaware effecting a
four for five reverse stock split, notwithstanding authorization of the proposed
amendment by the stockholders of the corporation, the Board of Directors may
abandon such proposed amendment without further action by the stockholders.
VOTED: That if the Board of Directors files any of the One for Two, Two
for Three, Three for Four, Four for Five Reverse Split Amendments (collectively,
the "Reverse Split Amendments"), it shall no longer be authorized to file any
other of the Reverse Split Amendments without further action of the
stockholders.
VOTED: That if the Board of Directors does not file any Reverse Split
Amendment within ninety days of the Merger, the Board of Director's authority to
file such amendment shall lapse.
There being no further business to come before the meeting, on motion
duly made and seconded, it was unanimously
VOTED: To adjourn.
Adjourned.
A true record.
Attest: /s/ Richard Fisher
-----------------------------------
Richard A. Fisher
Recorder of the Meeting
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EXHIBIT B
FORM OF AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Plan of Merger") is made and
entered into as of ___________, 1999 by and between Cytation.com Incorporated, a
New York corporation ("Cytation"), having its principal place of business at 55
Hammarlund Way, Newport, Rhode Island 02842, and CollegeLink.com Incorporated, a
Delaware corporation ("CollegeLink"), having its principal place of business at
55 Hammarlund Way, Newport, Rhode Island 02842.
W I T N E S S E T H:
WHEREAS, CollegeLink was incorporated on ______, 1999, and is a
corporation duly organized and existing under the laws of the State of Delaware;
WHEREAS, Cytation is a corporation duly organized and existing under
the laws of the State of New York;
WHEREAS, on the date of this Plan of Merger, Cytation has authority to
issue100,000,000 shares of common stock, par value $0.001 per share (the "Common
Shares"), of which 9,846,340 Common Shares are issued and outstanding, and
10,000,000 shares of preferred stock, $.01 par value, of which (a) 2,500,000
shares have been designated Series A (the "Series A Shares") of which 890,000
Series A Shares are issued and outstanding, (b) 300,000 shares have been
designated Series B (the "Series B Shares") of which 279,771 Series B Shares are
issued and outstanding and (c) 1,000,000 shares have been designated Series C
(the "Series C Shares") of which 1,000,000 Series C Shares are issued and
outstanding, and (d) 6,200,000 shares are undesignated and available for
issuance.
WHEREAS, on the date of this Plan of Merger, CollegeLink is a
wholly-owned subsidiary of Cytation and has authority to issue 100,000,000
shares of common stock, par value $.001 per share (the "CollegeLink Common
Stock"), of which 100 shares are issued and outstanding and owned by Cytation,
and 10,000,000 shares of preferred stock, $.01 par value, of which (a) 2,500,000
shares have been designated Series A, (b) 300,000 shares have been designated
Series B, (c) 1,000,000 shares have been designated Series C, and (d) 6,200,000
shares are undesignated and available for issuance, and of which no shares are
issued or outstanding; and
WHEREAS, the respective Boards of Directors of CollegeLink and Cytation
have approved this Plan of Merger and the Board of Directors of Cytation has
directed that this Plan of Merger be submitted to a vote of its stockholders;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, Cytation and CollegeLink hereby agree to merge as follows:
1. MERGER. Cytation shall be merged with and into CollegeLink, and
CollegeLink shall survive the merger (the "Merger"). The address of the
registered office of CollegeLink in Delaware is Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware.
The Merger shall be effective upon filing of a Certificate of Ownership
and Merger with the Secretary of State of Delaware and a Certificate of Merger
with the New York Department of State (the "Effective Date").
2. SUCCESSION. On the Effective Date, CollegeLink shall succeed to
Cytation in the manner of and as more fully set forth in Section 259 of the
Delaware General Corporation Law. All corporate acts, plans, policies,
agreements, arrangements, approvals and authorizations of Cytation, its
shareholders, 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 CollegeLink and shall be as effective and
binding thereon as the same were with respect to Cytation, except that Jai
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N. Gupta shall be the Class I director, Mark Rogers shall be the class II
director, and Kevin J. High and Richard A. Fisher shall be the Class III
directors.
3. DIRECTORS AND OFFICERS AND GOVERNING DOCUMENTS. The directors and
officers of CollegeLink shall be the same upon the Effective Date as they are
immediately prior thereto, except that Jai N. Gupta shall be the Class I
director, Mark Rogers shall be the class II director, and Kevin J. High and
Richard A. Fisher shall be the Class III directors. The Certificate of
Incorporation of CollegeLink, as in effect on the Effective Date, shall continue
to be the Certificate of Incorporation of CollegeLink as the surviving
corporation without change or amendment until further amended in accordance with
the provisions thereof and applicable laws. The By-Laws of CollegeLink, as in
effect on the Effective Date, shall continue to be the By-Laws of CollegeLink as
the surviving corporation without change or amendment until further amended in
accordance with the provisions thereof and applicable laws.
4. FURTHER ASSURANCES. From time to time, as and when required by
CollegeLink or by its successors and assigns, there shall be executed and
delivered on behalf of Cytation 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 or necessary in order to vest, perfect or confirm, of
record or otherwise, in CollegeLink the title to and possession of all the
property, interest, assets, rights, privileges, immunities, powers, franchises
and authority of Cytation, and otherwise to carry out the purposes of this Plan
of Merger, and the officers and directors of CollegeLink are fully authorized to
take any and all such action and to execute and delivery any and all such deeds
and other instruments.
5. CAPITAL STOCK OF CYTATION. Upon the Effective Date, by virtue of the
Merger and without any action on the part of the holder hereof, each share of
Cytation Common Stock outstanding immediately prior thereto shall be changed and
converted into one (1) fully-paid and non-assessable share of CollegeLink Common
Stock; each share of Cytation Series A Preferred Stock outstanding shall be
changed and converted into one (1) fully-paid and non-assessable share of
CollegeLink Series A Preferred Stock; each share of Cytation Series B Preferred
Stock outstanding shall be changed and converted into one (1) fully-paid and
non-assessable share of CollegeLink Series B Preferred Stock; and each share of
Cytation Series C Preferred Stock outstanding shall be changed and converted
into one (1) fully-paid and non-assessable share of CollegeLink Series C
Preferred Stock.
6. STOCK CERTIFICATES. On and after the Effective Date, all of the
outstanding certificates which prior to that time represented shares of Cytation
Common Stock shall be deemed for all purposes to evidence ownership of and to
represent the shares of CollegeLink Common Stock into which the shares of
Cytation Common Stock represented by such certificates have been converted as
herein provided; all of the outstanding certificates which prior to that time
represented shares of Cytation Series A Preferred Stock shall be deemed for all
purposes to evidence ownership and to represent the shares of CollegeLink Series
A Preferred Stock into which the shares of Cytation Series A Preferred Stock
represented by such certificates have been converted as herein provided; all of
the outstanding certificates which prior to that time represented shares of
Cytation Series B Preferred Stock shall be deemed for all purposes to evidence
ownership and to represent the shares of CollegeLink Series B Preferred Stock
into which the shares of Cytation Series B Preferred Stock represented by such
certificates have been converted as herein provided; and all of the outstanding
certificates which prior to that time represented shares of Cytation Series C
Preferred Stock shall be deemed for all purposes to evidence ownership and to
represent the shares of CollegeLink Series C Preferred Stock into which the
shares of Cytation Series C Preferred Stock represented by such certificates
have been converted as herein provided. The registered owner on the books and
records of CollegeLink or its transfer agent of any such outstanding stock
certificate shall, until such certificate shall have been surrendered for
transfer or otherwise accounted for to CollegeLink or its transfer agent, have
and be entitled to exercise any voting and other rights with respect to, and to
receive any dividend and other distributions upon the shares of CollegeLink
Common Stock, CollegeLink Series A Preferred Stock, CollegeLink Series B
Preferred Stock, or CollegeLink Series C Preferred Stock as the case may be,
evidenced by such outstanding certificate as above provided.
7. CONTINUATION AND RATIFICATION OF OPTIONS TO PURCHASE COMMON STOCK.
The Cytation 1999 Stock Option Plan (the "Cytation 1999 Option Plan") shall
continue in effect as the 1999 Stock Option Plan of CollegeLink (the
"CollegeLink 1999 Option Plan"). Each option to purchase Common Stock of
Cytation granted under the Cytation 1999 Option Plan immediately prior to the
Effective Time shall, by virtue of the Merger and
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without any action on the part of the holder thereof, become an option to
purchase, at the same exercise price and on the same terms, one share of
CollegeLink Common Stock under the CollegeLink 1999 Stock Option Plan.
8. COLLEGELINK COMMON STOCK. Forthwith upon the Effective Date, the 100
shares of CollegeLink Common Stock presently issued and outstanding in the name
of Cytation shall be cancelled and retired and resume the status of authorized
and unissued shares of CollegeLink Common Stock, and no shares of CollegeLink
Common Stock or other securities of CollegeLink shall be issued in respect
thereof.
9. EMPLOYEE BENEFIT PLANS. As of the Effective Date, CollegeLink hereby
assumes all obligations of Cytation under any and all employee benefit plans in
effect as of said date or with respect to which employee rights or accrued
benefits are outstanding as of said date including, without limitation, all
issued and outstanding options.
10. COVENANT OF COLLEGELINK. CollegeLink covenants and agrees that on
or before the Effective Date it will qualify to do business as a foreign
corporation in the State of New York.
11. AMENDMENT. Subject to applicable law, at any time before or after
approval and adoption by the stockholders of Cytation, this Plan of Merger may
be amended, supplemented or modified in any manner.
12. ABANDONMENT. At any time before the Effective Date, this Plan of
Merger may be terminated and the Merger may be abandoned by the Board of
Directors of either Cytation or CollegeLink, or both, notwithstanding approval
of this Plan of Merger by the stockholders of Cytation.
13. COUNTERPARTS. In order to facilitate the filing and recording of
this Plan of Merger, the same may be executed in any number of counterparts,
each of which shall be deemed to be an original and the same agreement.
The remainder of this page is left blank intentionally.
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IN WITNESS WHEREOF, the Plan of Merger, having first been duly approved
by resolutions of the Boards of Directors of CollegeLink and Cytation, is hereby
executed as of the date first above written on behalf of each of said two
corporations by their respective officers thereunto duly authorized.
ATTEST: COLLEGELINK.COM INCORPORATED
a Delaware corporation
_____________________________ By: ______________________________
Assistant Secretary President
ATTEST: CYTATION.COM INCORPORATED
a New York corporation
_____________________________ By: ______________________________
Assistant Secretary President
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EXHIBIT C
BY-LAWS OF COLLEGELINK.COM INCORPORATED
Section 1. CERTIFICATE OF INCORPORATION AND BY-LAWS
1.1 These by-laws are subject to the certificate of incorporation
of the corporation. In these by-laws, references to the certificate of
incorporation and by-laws mean the provisions of the certificate of
incorporation and the by-laws as are from time to time in effect.
Section 2. OFFICES
2.1 REGISTERED OFFICE. The registered office shall be in the City
of Wilmington, County of New Castle, State of Delaware.
2.2 OTHER OFFICES. The corporation may also have offices at such
other places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation may
require.
Section 3. STOCKHOLDERS
3.1 LOCATION OF MEETINGS. All meetings of the stockholders shall
be held at such place either within or without the State of Delaware as shall be
designated from time to time by the board of directors. Any adjourned session of
any meeting shall be held at the place designated in the vote of adjournment.
3.2 ANNUAL MEETING. The annual meeting of stockholders shall be
held at 10:00 a.m. on the second Thursday in November in each year (unless that
day be a legal holiday at the place where the meeting is to be held, in which
case the meeting shall be held at the same hour on the next succeeding day not a
legal holiday)(the "Specified Date") or at such other date and time as shall be
designated from time to time by the board of directors, at which they shall
elect a board of directors and transact such other business as may be required
by law or these by-laws or as may properly come before the meeting.
3.3 SPECIAL MEETING IN PLACE OF ANNUAL MEETING. If the election
for directors shall not be held on the day designated by these by-laws, the
directors shall cause the election to be held as soon thereafter as convenient,
and to that end, if the annual meeting is omitted on the day herein provided
therefor or if the election of directors shall not be held thereat, a special
meeting of the stockholders may be held in place of such omitted meeting or
election, and any business transacted or election held at such special meeting
shall have the same effect as if transacted or held at the annual meeting, and
in such case all references in these by-laws to the annual meeting of the
stockholders, or to the annual election of directors, shall be deemed to refer
to or include such special meeting. Any such special meeting shall be called and
the purposes thereof shall be specified in the call, as provided in Section 3.4.
3.4 NOTICE OF ANNUAL MEETING. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten nor more than
sixty days before the date of the meeting. Such notice may specify the business
to be transacted and actions to be taken at such meeting. No action shall be
taken at such meeting unless such notice is given, or unless waiver of such
notice is given by the holders of outstanding stock having not less than the
minimum number of votes necessary to take such action at a meeting at which all
shares entitled to vote thereon were voted. Prompt notice of all action taken in
connection with such waiver of notice shall be given to all stockholders not
present or represented at such meeting.
3.5 OTHER SPECIAL MEETINGS. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by law or by the
certificate of incorporation, may be called by the chairman of the board
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or the president and shall be called by the president or the secretary at the
request in writing of a majority of the board of directors. Such request shall
state the purpose or purposes of the proposed meeting and business to be
transacted at any special meeting of the stockholders.
3.6 NOTICE OF SPECIAL MEETING. Written notice of a special meeting
stating the place, date and hour of the meeting and the purpose or purposes for
which the meeting is called, shall be given not less than ten nor more than
sixty days before the date of the meeting, to each stockholder entitled to vote
at such meeting. No action shall be taken at such meeting unless such notice is
given, or unless waiver of such notice is given by the holders of outstanding
stock having not less than the minimum number of votes necessary to take such
action at a meeting at which all shares entitled to vote thereon were voted.
Prompt notice of all action taken in connection with such waiver of notice shall
be given to all stockholders not present or represented at such meeting.
3.7 NOTICE OF STOCKHOLDER BUSINESS AT A MEETING OF THE
STOCKHOLDERS.
Unless otherwise prescribed by law or by the certificate of
incorporation, the following provisions of this Section 3.7 shall apply to the
conduct of business at any meeting of the stockholders. (As used in this Section
3.7, the term annual meeting shall include a special meeting in lieu of an
annual meeting.)
(a) At any meeting of the stockholders, only such business
shall be conducted as shall have been brought before the meeting (i) pursuant to
the Corporation's notice of meeting, (ii) by or at the direction of the board of
directors or (iii) by any stockholder of the Corporation who is a stockholder of
record at the time of giving of the notice provided for in paragraph (b) of this
Section 3.7, who shall be entitled to vote at such meeting and who complies with
the notice procedures set forth in paragraph (b) of this Section 3.7.
(b) For business to be properly brought before any meeting of
the stockholders by a stockholder pursuant to clause (iii) of paragraph (a) of
this Section 3.7, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation (i) in the case of an annual meeting, not less than
sixty days nor more than ninety days prior to the Specified Date, regardless of
any postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if the annual meeting of stockholders or a special
meeting in lieu thereof is to be held on a date prior to the Specified Date, and
if less than seventy days' notice or prior public disclosure of the date of such
annual or special meeting is given or made, notice by the stockholder to be
timely must be so delivered or received not later than the close of business on
the tenth day following the earlier of the date on which notice of the date of
such annual or special meeting was mailed or the day on which public disclosure
was made of the date of such annual or special meeting; and (ii) in the case of
a special meeting (other than a special meeting in lieu of an annual meeting),
not later than the tenth (10th) day following the earlier of the day on which
notice of the date of the scheduled meeting was mailed or the day on which
public disclosure was made of the date of the scheduled meeting. A stockholder's
notice to the Secretary shall 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 meeting and the reasons for conducting such
business at the meeting, (ii) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, the name and
address of the beneficial owner, if any, on whose behalf the proposal is made,
and the name and address of any other stockholders or beneficial owners known by
such stockholder to be supporting such proposal, (iii) the class and number of
shares of the Corporation which are owned beneficially and of record by such
stockholder of record, by the beneficial owner, if any, on whose behalf the
proposal is made and by any other stockholders or beneficial owners known by
such stockholder to be supporting such proposal, and (iv) any material interest
of such stockholder of record and/or of the beneficial owner, if any, on whose
behalf the proposal is made, in such proposed business and any material interest
of any other stockholders or beneficial owners known by such stockholder to be
supporting such proposal in such proposed business, to the extent known by such
stockholder.
(c) Notwithstanding anything in these by-laws to the contrary,
no business shall be conducted at a meeting except in accordance with the
procedures set forth in this Section 3.7. The person presiding at the meeting
shall, if the facts warrant, determine that business was not properly brought
before the meeting and in accordance with the procedures prescribed by these
by-laws, and if he should so determine, he shall so declare at the
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meeting and any such business not properly brought before the meeting shall not
be transacted. Notwithstanding the foregoing provisions of this Section 3.7, a
stockholder shall also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended (or any successor provision), and the rules and
regulations thereunder with respect to the matters set forth in this Section
3.7.
(d) This provision shall not prevent the consideration and
approval or disapproval at the meeting of reports of officers, directors and
committees of the board of directors, but, in connection with such reports, no
new business shall be acted upon at such meeting unless properly brought before
the meeting as herein provided.
3.8 STOCKHOLDER LIST. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
3.9 QUORUM OF STOCKHOLDERS. The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise required by
law, or by the certificate of incorporation or by these by-laws. Except as
otherwise provided by law, no stockholder present at a meeting may withhold his
shares from the quorum count by declaring his shares absent from the meeting.
3.10 ADJOURNMENT. Any meeting of stockholders may be adjourned from
time to time to any other time and to any other place at which a meeting of
stockholders may be held under these by-laws, which time and place shall be
announced at the meeting, by a majority of votes cast upon the question, whether
or not a quorum is present. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
3.11 PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by waiving notice of any meeting, objecting
to or voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by his
attorney-in-fact. No proxy shall by voted or acted upon after three years from
its date unless such proxy provides for a longer period. Except as provided by
law, a revocable proxy shall be deemed revoked if the stockholder is present at
the meeting for which the proxy was given. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and, if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest with which it
is coupled is an interest in the stock itself or an interest in the corporation
generally. The authorization of a proxy may but need not be limited to specified
action, provided, however, that if a proxy limits its authorization to a meeting
or meetings of stockholders, unless otherwise specifically provided such proxy
shall entitle the holder thereof to vote at any adjourned session but shall not
be valid after the final adjournment thereof.
3.12 INSPECTORS. If required to do so by Section 231 of the
Delaware General Corporation Law or other applicable law or regulation, the
directors or the person presiding at the meeting shall appoint one or more
inspectors of election and any substitute inspectors to act at the meeting or
any adjournment thereof. If not so required, the directors or the person
presiding at the meeting may, but need not, appoint such inspectors and
substitute inspectors. In either event, the inspectors and substitute inspectors
shall have such duties and responsibilities as are required by applicable law or
regulation and such other duties and responsibilities not inconsistent therewith
as the directors or the person presiding at the meeting shall deem appropriate.
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3.13 ACTION BY VOTE. When a quorum is present at any meeting,
whether the same be an original or an adjourned session, a plurality of the
votes properly cast for election to any office shall elect to such office and a
majority of the votes properly cast upon any question other than an election to
an office shall decide the question, except when a larger vote is required by
law, by the certificate of incorporation or by these by-laws. No ballot shall be
required for any election unless requested by a stockholder present or
represented at the meeting and entitled to vote in the election.
3.14 NO ACTION BY CONSENT. Any action required or permitted to be
taken by the stockholders of the corporation must be effected at a duly
constituted annual or special meeting of such holders and may not be effected by
any consent in writing by such stockholders.
Section 4. DIRECTORS
4.1 NUMBER. The board shall consist of not less than three nor
more than twelve directors, the number of which shall be determined from time to
time by resolution adopted by affirmative vote of a majority of directors then
in office. Subject to the foregoing and to the provisions of the certificate of
incorporation, the number of directors may be increased or decreased at any time
or from time to time by vote of a majority of directors then in office, except
that such decrease by vote of directors shall only be made to eliminate
vacancies existing by reason of the death, resignation or removal of one or more
directors. The directors shall be elected at the annual meeting of stockholders
except as provided in Section 4.4 of these by-laws. directors need not be
stockholders.
4.2 TENURE. The directors shall be classified with respect to the
time for which they shall severally hold office by dividing them into three
classes, each consisting of one-third of the whole number of the board of
directors, and all directors shall hold office until their successors are chosen
and qualified, or until their earlier death, resignation, or removal. At the
first meeting held for election of the board of directors pursuant to such
classification, directors of the first class shall be elected for a term of one
year; directors of the second class shall be elected for a term of two years;
directors of the third class shall be elected for a term of three years; and at
each annual election thereafter, successors to the directors whose terms shall
expire that year shall be elected to hold office for a term of three years, so
that the term of office of one class of directors shall expire in each year.
4.3 POWERS. The business of the corporation shall be managed by or
under the direction of the board of directors which shall have and may exercise
all the powers of the corporation and do all such lawful acts and things as are
not by law, the certificate of incorporation or these by-laws directed or
required to be exercised or done by the stockholders.
4.4 VACANCIES. Except as otherwise provided by law or by the
certificate of incorporation, vacancies and any newly created directorships
resulting from any increase in the number of directors shall be filled only by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director. When one or more directors shall resign from the board,
effective at a future date, a majority of the directors then in office,
including those who have resigned, shall have power to fill such vacancy or
vacancies, the vote or action by writing thereon to take effect when such
resignation or resignations shall become effective. The directors shall have and
may exercise all their powers notwithstanding the existence of one or more
vacancies in their number, subject to any requirements of law or of the
certificate of incorporation or of these by-laws as to the number of directors
required for a quorum or for any vote or other actions.
4.5 NOMINATION OF DIRECTORS.
The following provisions of this Section 4.5 shall apply to the
nomination of persons for election to the board of directors.
(a) Nominations of persons for election to the board of
directors of the corporation may be made (i) by or at the direction of the board
of directors or (ii) by any stockholder of the corporation who is a stockholder
of record at the time of giving of notice provided for in paragraph (b) of this
Section 4.5, who shall be
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entitled to vote for the election of directors at the meeting and who complies
with the notice procedures set forth in paragraph (b) of this Section 4.5.
(b) Nominations by stockholders shall be made pursuant to
timely notice in writing to the Secretary of the corporation. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the corporation, not less than sixty days nor
more than ninety days prior to the Specified Date, regardless of any
postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if the annual meeting of stockholders or a special
meeting in lieu thereof is to be held on a date prior to the Specified Date, and
if less than seventy days' notice or prior public disclosure of the date of such
annual or special meeting is given or made, notice by the stockholder to be
timely must be so delivered or received not later than the close of business on
the tenth day following the earlier of the day on which notice of the date of
such annual or special meeting was mailed or the day on which public disclosure
was made of the date of such annual or special meeting. Such stockholder's
notice shall set forth (x) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, or pursuant to any other
then existing statute, rule or regulation applicable thereto (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); (y) as to the stockholder giving the
notice (1) the name and address, as they appear on the corporation's books, of
such stockholder and (2) the class and number of shares of the corporation which
are beneficially owned by such stockholder and also which are owned of record by
such stockholder; and (z) as to the beneficial owner, if any, on whose behalf
the nomination is made, (1) the name and address of such person and (2) the
class and number of shares of the corporation which are beneficially owned by
such person. 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 as a director. At the request of the
board of directors, any person nominated by the board of directors for election
as a director shall furnish to the secretary of the corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee.
(c) No person shall be eligible to serve as a director of the
corporation unless nominated in accordance with the procedures set forth in this
Section 4.5. The person presiding at the meeting shall, if the facts warrant,
determine that a nomination was not made in accordance with the procedures
prescribed by these by-laws, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
Notwithstanding the foregoing provisions of this Section 4.5, a stockholder
shall also comply with all applicable requirements of the Securities Exchange
Act of 1934, as amended (or any successor provision), and the rules and
regulations thereunder with respect to the matters set forth in this by-law.
4.6 COMMITTEES. The board of directors may, by vote of a majority
of the whole board, (a) designate, change the membership of or terminate the
existence of any committee or committees, each committee to consist of one or
more of the directors; (b) designate one or more directors as alternate members
of any such committee who may replace any absent or disqualified member at any
meeting of the committee; and (c) determine the extent to which each such
committee shall have and may exercise the powers and authority of the board of
directors in the management of the business and affairs of the corporation,
including the power to authorize the seal of the corporation to be affixed to
all papers which require it and the power and authority to declare dividends or
to authorize the issuance of stock; excepting, however, such powers which by
law, by the certificate of incorporation or by these by-laws they are prohibited
from so delegating. In the absence or disqualification of any member of such
committee and his alternate, if any, the member or members thereof present at
any meeting and not disqualified from voting, whether or not constituting 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. 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 board or such
rules, its business shall be conducted as nearly as may be in same manner as is
provided by these by-laws for the conduct of business by the board of directors.
Each committee shall keep regular minutes of its meetings and report the same to
the board of directors upon request.
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4.7 REGULAR MEETING. Regular meetings of the board of directors
may be held without call or notice at such place within or without the State of
Delaware and at such times as the board may from time to time determine,
provided that notice of the first regular meeting following any such
determination shall be given to absent directors. A regular meeting of the
directors may be held without call or notice immediately after and at the same
place as the annual meeting of the stockholders.
4.8 SPECIAL MEETINGS. Special meetings of the board of directors
may be held at any time and at any place within or without the State of Delaware
designated in the notice of the meeting, when called by the chairman of the
board or president, or by one-third or more in number of the directors,
reasonable notice thereof being given to each director by the secretary or by
the chairman of the board or president or by any one of the directors calling
the meeting.
4.9 NOTICE. It shall be reasonable and sufficient notice to a
director to send notice by mail at least forty-eight hours or by telegram or
telecopy at least twenty-four hours before the meeting, addressed to him at his
usual or last known business or residence address or to give notice to him in
person or by telephone at least twenty-four hours before the meeting. Notice of
a meeting need not be given to any director if a written waiver of notice,
executed by him before or after the meeting, is filed with the records of the
meeting, or to any director who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him. Neither notice of a
meeting nor a waiver of a notice need specify the purposes of the meeting.
4.10 QUORUM. Except as may be otherwise provided by law, by the
certificate of incorporation or by these by-laws, at any meeting of the
directors a majority of the directors then in office shall constitute a quorum;
a quorum shall not in any case be less than one-third of the total number of
directors constituting the whole board. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.
4.11 ACTION BY VOTE. Except as may be otherwise provided by law, by
the certificate of incorporation or by these by-laws, when a quorum is present
at any meeting the vote of a majority of the directors present shall be the act
of the board of directors.
4.12 ACTION WITHOUT A MEETING. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting if all the members of the board or of such
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the records of the meetings of the board or of such
committee. Such consent shall be treated for all purposes as the act of the
board or of such committee, as the case may be.
4.13 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE. Unless
otherwise restricted by the certificate of incorporation or these by-laws,
members of the board of directors or of any committee thereof may participate in
a meeting of such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Such participation shall constitute presence in
person at such meeting.
4.14 COMPENSATION. Unless otherwise restricted by the certificate
of incorporation or these by-laws, the board of directors shall have the
authority to fix from time to time the compensation of directors. The directors
may be paid their expenses, if any, of attendance at each meeting of the board
of directors and the performance of their responsibilities as directors and may
be paid a fixed sum for attendance at each meeting of the board of directors
and/or a stated salary as director. No such payment shall preclude any director
from serving the corporation or its parent or subsidiary corporations in any
other capacity and receiving compensation therefor. The board of directors may
also allow compensation for members of special or standing committees for
service on such committees.
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4.15 INTERESTED DIRECTORS AND OFFICERS.
(a) No contract or transaction between the corporation
and one or more of its directors or officers, or between the corporation and any
other corporation, partnership, association, or other organization in which one
or more of the corporation's directors or officers are directors or officers, or
have a financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the board or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(1) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
board of directors or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a majority of
the disinterested directors, even though the disinterested directors be less
than a quorum; or
(2) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the
corporation as of the time it is authorized, approved or ratified, by the board
of directors, a committee thereof, or the stockholders.
(b) Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
4.16 RESIGNATION OR REMOVAL OF DIRECTORS. Any director or the
entire board of directors may be removed for "Cause," as hereinafter defined, by
the holders of a majority of the stock issued and outstanding and entitled to
vote at an election of directors; provided, however, that the directors elected
by a particular class of stockholders may be removed only by the vote of the
holders of a majority of the shares of such class. No director may be removed
without "Cause" by vote of the stockholders. Any director may resign at any time
by delivering a resignation in writing to the principal executive officer or the
secretary or to a meeting of the board of directors. Such resignation shall be
effective upon receipt unless specified to be effective at some other time; and
without in either case the necessity of its being accepted unless the
resignation shall so state. No director resigning and (except where a right to
receive compensation shall be expressly provided in a duly authorized written
agreement with the corporation) no director removed shall have any right to
receive compensation as such director for any period following the director's
resignation or removal, or any right to damages on account of such removal,
whether the director's compensation be by the month or by the year or otherwise;
unless in the case of a resignation, the directors, or in the case of removal,
the body acting on the removal, shall in their or its discretion provide for
compensation. For purposes of this Section 4.16, "Cause" means:
(a) willful and continued material failure, refusal or
inability to perform one's duties to the corporation or the willful engaging in
gross misconduct materially and demonstrably damaging to the corporation; or
(b) conviction for any crime involving moral turpitude or
any other illegal act that materially and adversely reflects upon the business,
affairs or reputation of the Company or on one's ability to perform one's duties
to the corporation.
Section 5. NOTICES
5.1 FORM OF NOTICE. Whenever, under the provisions of law, or of
the certificate of incorporation or of these by-laws, notice is required to be
given to any director or stockholder, such notice may be given by mail,
addressed to such director or stockholder, at his address as it appears on the
records of the corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Unless written notice by mail is required by law, written notice
may also be given by telegram,
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cable, telecopy, commercial delivery service, telex or similar means, addressed
to such director or stockholder at his address as it appears on the records of
the corporation, in which case such notice shall be deemed to be given when
delivered into the control of the persons charged with effecting such
transmission, the transmission charge to be paid by the corporation or the
person sending such notice and not by the addressee. Oral notice or other
in-hand delivery (in person or by telephone) shall be deemed given at the time
it is actually given.
5.2 WAIVER OF NOTICE. Whenever notice is required to be given under the
provisions of law, the certificate of incorporation or these by-laws, a written
waiver thereof, signed by the person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any meeting of the stockholders, directors or members of a
committee of the directors need be specified in any written waiver of notice.
Section 6. OFFICERS AND AGENTS
6.1 ENUMERATION; QUALIFICATION. The officers of the corporation shall
be a president, a chairman of the board, a treasurer, a secretary and such other
officers, if any, as the board of directors from time to time may in its
discretion elect or appoint including without limitation one or more vice
presidents. Any officer may be, but none need be, a director or stockholder. Any
two or more offices may be held by the same person.
6.2 POWERS. Subject to law, to the certificate of incorporation and to
the other provisions of these by-laws, each officer shall have, in addition to
the duties and powers herein set forth, such duties and powers as are commonly
incident to his office and such additional duties and powers as the board of
directors may from time to time designate.
6.3 ELECTION. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, a secretary and a
treasurer. Other officers may be appointed by the board of directors at such
meeting, at any other meeting or by written consent. At any time or from time to
time, the directors may delegate to any officer their power to elect or appoint
any other officer or any agents.
6.4 TENURE. Each officer shall hold office until the first meeting of
the board of directors following the next annual meeting of the stockholders and
until his successor is elected and qualified unless a shorter period shall have
been specified in terms of his election or appointment, or in each case until he
sooner dies, resigns, is removed or becomes disqualified. Each agent of the
corporation shall retain his authority at the pleasure of the directors, or the
officer by whom he was appointed or by the officer who then holds agent
appointive power.
6.5 CHAIRMAN, PRESIDENT AND VICE PRESIDENT. The chairman shall share
executive authority with the president. The president shall be the chief
executive officer and shall, with the chairman, have direct and active charge of
all business operations of the corporation and shall, with the chairman, have
general supervision of the entire business of the corporation, subject to the
control of the board of directors. The chairman shall preside at all meetings of
the stockholders and of the board of directors at which he is present, except as
otherwise voted by the board of directors.
The president or treasurer shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
Any vice presidents shall have such duties and powers as shall be
designated from time to time by the board of directors or by the president.
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6.6 TREASURER AND ASSISTANT TREASURERS. The treasurer shall be in
charge of the corporation's funds and valuable papers, and shall have such other
duties and powers as may be assigned to him from time to time by the board of
directors or by the president.
Any assistant treasurers shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
treasurer.
6.7 SECRETARY AND ASSISTANT SECRETARIES. The secretary shall record all
proceedings of the stockholders, of the board of directors and of committees of
the board of directors in a book or series of books to be kept therefor and
shall file therein all writings of, or related to, action by stockholder or
director consent. In the absence of the secretary from any meeting, an assistant
secretary, or if there is none or he is absent, a temporary secretary chosen at
the meeting, shall record the proceedings thereof. Unless a transfer agent has
been appointed, the secretary shall keep or cause to be kept the stock and
transfer records of the corporation, which shall contain the names and record
addresses of all stockholders and the number of shares registered in the name of
each stockholder. The secretary shall have such other duties and powers as may
from time to time be designated by the board of directors or the president.
Any assistant secretaries shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
secretary.
6.8 RESIGNATION AND REMOVAL. Any officer may resign at any time by
delivering his resignation in writing to the president or the secretary or to a
meeting of the board of directors. Such resignation shall be effective upon
receipt unless specified to be effective at some other time, and without in any
case the necessity of its being accepted unless the resignation shall so state.
The board of directors may at any time remove any officer either with or without
cause. The board of directors may at any time terminate or modify the authority
of any agent. No officer resigning and (except where a right to receive
compensation shall be expressly provided in a duly authorized written agreement
with the corporation) no officer removed shall have any right to any
compensation as such 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 in the case of
a resignation, the directors, or in the case of removal, the body acting on the
removal, shall in their or its discretion provide for compensation.
6.9 VACANCIES. If the office of the president or the treasurer or the
secretary becomes vacant, the directors may elect a successor by vote of a
majority of the directors then in office. If the office of any other officer
becomes vacant, any person or body empowered to elect or appoint that office may
choose a successor. Each such successor shall hold office for the unexpired term
of his predecessor, and in the case of the president, the treasurer and the
secretary until his successor is chosen and qualified, or in each case until he
sooner dies, resigns, is removed or becomes disqualified.
Section 7. CAPITAL STOCK
7.1 STOCK CERTIFICATES. Each stockholder shall be entitled to a
certificate stating the number and the class and the designation of the series,
if any, of the shares held by him, in such form as shall, in conformity to law,
the certificate of incorporation and the by-laws, be prescribed from time to
time by the board of directors. Such certificate shall be signed by the
president or a vice-president and (i) the treasurer or an assistant treasurer or
(ii) the secretary or an assistant secretary. Any of or all the signatures on
the certificate may be a facsimile. In case an officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed on such
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent, or registrar at the time
of its issue.
7.2 LOST CERTIFICATES. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed
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certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
Section 8. TRANSFER OF SHARES OF STOCK
8.1 TRANSFER ON BOOKS. Subject to any restrictions with respect to
the transfer of shares of stock, 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 therefor properly endorsed or accompanied by a written
assignment and power of attorney properly executed, with necessary transfer
stamps affixed, and with such proof of the authenticity of signature as the
board of directors or the transfer agent of the corporation 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 receive notice
and to vote or to give any consent with respect thereto and to be held liable
for such calls and assessments, if any, as may lawfully be made thereon,
regardless of any transfer, pledge or other disposition of such stock until the
shares have been properly transferred on the books of the corporation.
It shall be the duty of each stockholder to notify the corporation of
his post office address.
Section 9. GENERAL PROVISIONS
9.1 RECORD DATE. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty days nor less than ten days before the date
of such meeting, nor more than sixty days prior to any other action to which
such record date relates. 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. If no record date is fixed,
(a) 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 next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held;
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the day on which the
first written consent is expressed; and
(c) 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.
9.2 DIVIDENDS. Dividends upon the capital stock of the corporation
may be declared by the board of directors at any regular or special meeting or
by written consent, pursuant to law. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the certificate
of incorporation.
9.3 PAYMENT OF DIVIDENDS. Before payment of any dividend, there
may be set aside out of any funds of the corporation available for dividends
such sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shall think conducive to
the interest of the corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.
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9.4 CHECKS. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
9.5 FISCAL YEAR. The fiscal year of the corporation shall begin on
the first of January in each year and shall end on the last day of December next
following, unless otherwise determined by the board of directors.
9.6 SEAL. The board of directors may, by resolution, adopt a
corporate seal. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the word "Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise. The seal may be altered from time to time by the board
of directors.
Section 10. AMENDMENTS
10.1 BY THE BOARD OF DIRECTORS. 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.
10.2 BY THE STOCKHOLDERS. Except as otherwise provided in Section
10.3, 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.
10.3 CERTAIN PROVISIONS. Notwithstanding any other provision of
law, the certificate of incorporation or these by-laws, and notwithstanding the
fact that a lesser percentage may be specified by law, the affirmative vote of
the holders of at least two-thirds of the shares of capital stock of the
corporation issued and outstanding and entitled to vote shall be required to
amend or repeal, or to adopt any provision inconsistent with, Section 3.5,
Section 3.7, Section 3.14, Section 4 and Section 10 of these by-laws.
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EXHIBIT D
CYTATION.COM INCORPORATED
1999 STOCK OPTION PLAN
1. NAME AND PURPOSE. This Plan shall be known as the Cytation.com 1999
Stock Option Plan (the "Plan"). The purpose of the Plan is to advance the
interests and increase the value of Cytation.com Incorporated (the "Company") by
providing material incentive for the continued services of key and valuable
employees. Awards under the Plan shall be granted in the form of incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended ("ISOs") or non-qualified stock options.
2. DEFINITIONS. For purposes of this Plan, the following terms shall
have the meanings set forth below:
"ACCELERATION EVENT" means (i) a Change in Control, (ii) a change in
the composition of the Board during any period of two consecutive years such
that individuals who at the beginning of the period were members of the Board
cease for any reason to constitute at least a majority thereof, unless the
election or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period, or (iii) a complete liquidation of the
Company.
"ADMINISTRATOR" means the Board, or the Compensation Committee of the
Board or such other person(s) to whom the Board has delegated the responsibility
of administering the Plan.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means, (i) in the case of any Optionee whose employment with
the Company is governed by an employment agreement, the meaning given to such
term in such employment agreement, and (ii) for all other Optionees, as
determined in good faith by the Administrator, (1) gross negligence in the
performance of any of material duties and responsibilities; (2) willful
dishonesty, fraud or material misconduct with respect to the business or affairs
of the Company, (3) the conviction of a felony crime, (4) chronic absenteeism,
or (5) chronic alcohol abuse or illegal drug abuse.
"CHANGE IN CONTROL" means (i) a consolidation or merger of the Company
with or into any other corporation, or any other entity or person, other than a
wholly-owned subsidiary of the Company, excluding any transaction in which the
stockholders of the Company immediately prior to the transaction will maintain
voting control or own at least 50% (in each case, in substantially the same
proportion as before such event) of the resulting entity after the transaction;
(ii) any corporate reorganization, including an exchange offer, in which the
Company shall not be the continuing or surviving entity resulting from such
reorganization, excluding any transaction in which the stockholders of the
Company immediately prior to the transaction will maintain voting control or own
at least 50% (in each case, in substantially the same proportion as before such
event) of the resulting entity after the transaction; or (iii) the sale of a
substantial portion of the Company's assets, which shall be deemed to occur on
the date that any one person, or more than one person acting as a group,
acquires (or has acquired during the 12 month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total fair market value equal to more than 75% of the total fair market
value of all the assets of the Company.
"COMMON SHARES" means shares of the Company's common stock, $.001 par
value, reserved for issuance under the Plan.
"EFFECTIVE DATE" means September 1, 1999.
"FAIR MARKET VALUE" means, for any given day, the closing bid for the
Common Shares on such day.
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"OPTIONEE" means an eligible employee or other person who performs
services for the Company that is granted an option pursuant to the Plan.
3. ADMINISTRATION. The Plan shall be administered by the Administrator.
The Administrator may establish, subject to the provisions of the Plan, such
rules and regulations as it deems necessary for the proper administration of the
Plan, and make such determinations and take such action in connection therewith
or in relation to the Plan as it deems necessary or advisable, consistent with
the Plan.
4. ELIGIBILITY. Officers and key employees of the Company and its
affiliates shall be eligible to participate in the Plan as determined by the
Administrator.
5. SHARES SUBJECT TO THE PLAN.
(a) The Common Shares to be issued and delivered by the Company upon
exercise of options granted under the Plan may be either authorized but unissued
shares or treasury shares.
(b) The aggregate number of Common Shares of the Company which may be
issued under the Plan shall not exceed 1,550,000 shares, all or any portion of
which may be ISOs; subject, however, to the adjustment provided in Section 9 in
the event of certain changes in the Company's capital structure. No option may
be granted under this Plan which could cause such maximum limit to be exceeded.
(c) Common Shares covered by an option which is no longer exercisable
with respect to such shares shall again be available for issuance under this
Plan.
6. GRANT OF OPTIONS. The Administrator may from time to time, in its
discretion and subject to the provisions of the Plan, grant options to eligible
employees or other persons who perform services for the Company, provided
however, that any grant of an ISO prior to the approval of the Plan by the
Company's stockholders shall be conditioned on and subject to stockholder
approval of the Plan. Each option shall be embodied in an option agreement
signed by the Optionee and the Company providing that the option shall be
subject to the provisions of this Plan and containing such other provisions as
the Administrator may prescribe not inconsistent with the Plan. The option
agreement shall specify whether the option is a non-qualified option or an ISO.
No ISO may be granted subsequent to August 31, 2009. Subject to adjustment as
provided in Section 9, in any fiscal year of the Company, the aggregate number
of Common Shares as to which options may be granted to any one participant shall
not exceed 750,000 shares.
7. TERMS AND CONDITIONS OF OPTION. All options granted under the Plan
shall contain such terms and conditions as the Administrator may from time to
time determine, subject to the foregoing and following limitations and
requirements:
(a) OPTION PRICE: The price of Common Shares covered by any option
granted under the Plan shall be determined by the Administrator provided,
however, that in the case of an ISO the option price shall not be less than 100%
of the Fair Market Value of the Common Shares on the date of grant.
(b) PERIOD WITHIN WHICH OPTION MAY BE EXERCISED: The period of each
option shall be fixed by the Administrator, but no option may be exercised after
the expiration of ten years from the date the option is granted. The
Administrator may, in its discretion, determine as a condition of any option,
that all or a stated percentage of the Common Shares covered by such option
shall become exercisable, in installments or otherwise, only after the
completion of a specified service requirement by the Optionee or the achievement
of certain performance criteria. In addition, the Administrator may impose such
other restrictions and conditions on the exercisability of options as the
Administrator, in its discretion, may approve. Notwithstanding the foregoing,
and except as otherwise provided in Section 9(iv) hereof, all options shall
become immediately exercisable in full upon an Acceleration Event.
(c) 10% STOCKHOLDER: Notwithstanding any other provision of this Plan,
the price per Common Share covered by an ISO granted to an Optionee who, at the
time such option is granted, owns shares possessing more
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than 10% of the total combined voting power of all classes of shares of the
Company or its subsidiaries shall be at least 110% of the Fair Market Value of
the Common Shares subject to the option. In addition, any such option may not be
exercised after the expiration of five years from the date the ISO is granted.
(d) GRANT LIMITATION: The aggregate Fair Market Value of Common Shares
with respect to which ISOs are exercisable for the first time by any Optionee
during any calendar year (determined at the time the option is granted) shall
not exceed $100,000.
(e) TERMINATION OF OPTION BY REASON OF TERMINATION OF EMPLOYMENT:
Unless the Administrator in its discretion determines otherwise, if an
Optionee's employment (or contractual relationship, which shall hereafter be
referred to as employment) with the Company terminates for any reason, including
death or disability (within the meaning of Section 22(e)(3) of the Internal
Revenue Code), any portion of options granted under this Plan to such Optionee
which are not exercisable by reason of Section 7(b) hereof shall terminate
immediately. Any remaining portion of such options shall terminate if not
exercised within the period provided for in the option agreement.
Notwithstanding the foregoing, if an Optionee's employment is
terminated for Cause, all outstanding options held by such Optionee, whether
vested or unvested, shall terminate immediately.
(f) NON-TRANSFERABILITY: Each option and all rights thereunder shall be
exercisable during the Optionee's lifetime only by him and shall be
non-assignable and non-transferable by the Optionee except, in the event of the
Optionee's death, by his will or by the laws of descent and distribution. In the
event the death of an Optionee occurs, the representative or representatives of
the estate, or the person or persons who acquired (by bequest or inheritance)
the rights to exercise the options may exercise such options in whole or in part
prior to the expiration of the applicable exercise period, as specified in
Section 7(e) above.
(g) COMPLIANCE WITH SECURITIES LAWS: Options granted and shares issued
by the Company upon exercise of options shall be granted and issued only in full
compliance with all applicable securities laws, including laws, rules and
regulations of the Securities and Exchange Commission and applicable state Blue
Sky Laws. With respect thereto, the Administrator may impose such conditions on
transfer, restrictions and limitations as it may deem necessary and appropriate
to assure compliance with such applicable securities laws.
(h) MODIFICATION OR CANCELLATION OF OPTION: The Administrator shall
have the authority to effect, at any time and from time to time, with the
consent of the affected Optionee or Optionees, the modification of the terms of
any option agreement (subject to the limitations hereof), including, but not
limited to, the acceleration of any vesting or exercisability requirements upon
the occurrence of a change in control or otherwise.
(i) DISPOSITION OF SHARES: No option granted under this Plan shall
qualify as an ISO within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended, if the Common Shares acquired pursuant to the exercise of
the option are transferred, other than by will or by the laws of descent and
distribution, within two years of the date such option was granted or within one
year after the transfer of Common Shares to the Optionee pursuant to such
exercise.
8. METHOD OF EXERCISE. An option granted under this Plan may be
exercised by written notice to the Administrator, signed by the Optionee, or by
such other person as is entitled to exercise such option. The notice of exercise
shall state the number of Common Shares in respect of which the option is being
exercised, and shall either be accompanied by the payment of the full option
price for such Common Shares, or shall fix a date (not more than ten business
days from the date of such notice) for the payment of the full option price of
the Common Shares being purchased. The purchase price may be paid (i) in cash,
(ii) subject to the approval of the Administrator, the delivery to the Company
of Common Shares already owned by the Optionee (which shall be valued for this
purpose at the Fair Market Value on the day immediately preceding the date of
transfer to the Company), or (iii) any combination of the above. A certificate
or certificates for the Common Shares of the Company purchased through the
exercise of an option shall be issued in regular course after the exercise of
the option and payment therefore. During the option period no person entitled to
exercise any option granted under this Plan shall have any of the rights or
privileges of a
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<PAGE> 83
stockholder with respect to any Common Shares issuable upon
exercise of such option until certificates representing such Common Shares shall
have been issued and delivered.
9. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
(a) The existence of outstanding options shall not affect in any way
the right or ability of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Shares or the rights hereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business or substantially all of the outstanding stock of
the Company, or any other corporate act or proceeding, whether of a similar
character or otherwise.
(b) If the Company shall effect a subdivision, consolidation or
reclassification of shares or other capital readjustment or recapitalization,
the payment of a stock dividend, or other increase or reduction in the number of
voting shares outstanding, without receiving compensation therefor in money,
services or property, then the number, class, and per share price of Common
Shares shall be appropriately adjusted in such a manner as to entitle an
Optionee to receive upon exercise of an option, for the same aggregate cash
consideration, the same total number and class of shares as he would have
received as a result of the event requiring the adjustment.
(c) Except as hereinbefore expressly provided, the issue by the Company
of shares of stock of any class, for cash or property, or for labor or services,
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of Common
Shares then subject to outstanding options.
(d) In the event of a Change in Control, except as otherwise provided
below, all options outstanding under the Plan shall accelerate and become
immediately exercisable for a period of fifteen days, or such longer or shorter
period as the Board may prescribe (the "notice period"), immediately prior to
the scheduled consummation of such Change in Control, provided, however, that
any such acceleration and any exercise of options during the notice period shall
be (i) conditioned upon the consummation of the Change in Control and (ii)
effective only immediately before the consummation of such Change in Control.
Upon consummation of any such event, the Plan and all outstanding but
unexercised options shall terminate. Notwithstanding the foregoing, to the
extent provision is made in writing in connection with such Change in Control
for the continuation of the Plan and the assumption of options under the Plan
theretofore granted, or for the substitution for such options of new options
covering the stock of a successor company, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kinds of shares or units and
exercise prices, then the Plan and options theretofore granted shall continue in
the manner and under the terms so provided, and the acceleration and termination
provisions set forth in the first two sentences of this Section 9(d) shall be of
no effect. The Company shall send written notice of a Change in Control to all
individuals who hold options not later than the time at which the Company gives
notice thereof to its stockholders.
10. AMENDMENT OR TERMINATION. The Administrator may terminate this Plan
at any time, and may amend the Plan at any time or from time to time; provided,
however, that any amendment that would increase the aggregate number of shares
that may be issued under the Plan, materially increase the benefits accruing to
employees under the Plan, or materially modify the requirements as to
eligibility for participation in the Plan shall be subject to the approval of
the Company's stockholders to the extent required by Internal Revenue Code
Section 422, other applicable laws or any other governing rules or regulations
except that such increase or modification that may result from adjustments
authorized by Section 9 does not require such approval. If the Plan is
terminated, any unexercised option shall continue to be exercisable in
accordance with its terms, except as provided in Section 9 above.
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<PAGE> 84
11. COMPANY RESPONSIBILITY. All expenses of this Plan, including the
cost of maintaining records, shall be borne by the Company. The Company shall
have no responsibility or liability (other than under applicable Securities
Acts) for any act or thing done or left undone with respect to the price, time,
quantity, or other conditions and circumstances of the purchase of the Common
Shares under the terms of the Plan, so long as the Company acts in good faith.
12. TAX WITHHOLDING. Any grant of an option hereunder shall provide as
determined by the Administrator for appropriate arrangements for the
satisfaction by the Company and the Optionee of all federal, state, local or
other income excise or employment taxes or tax withholding requirements
applicable to the exercise of the option or the later disposition of the Common
Shares thereby acquired and all such additional taxes or amounts as determined
by the Administrator in its discretion, including, without limitation, the right
of the Company or any subsidiary thereof to receive transfers of Common Shares
or other property from the Optionee or to deduct or withhold in the form of
Common Shares from any transfer to an Optionee, in such amount or amounts deemed
required or appropriate by the Administrator in its sole and absolute
discretion.
13. IMPLIED CONSENT. Every Optionee, by the acceptance of an option
under this Plan shall be deemed to have consented to be bound, on his own behalf
and on behalf of his heirs, assigns, and legal representatives, by all of the
terms and conditions of this Plan.
14. NO EFFECT ON EMPLOYMENT STATUS. The fact that an employee or any
other person has been granted an option under this Plan shall not limit or
otherwise qualify the right of the Company to terminate his employment at any
time.
15. DELAWARE LAW TO GOVERN. This Plan shall be construed and
administered in accordance with and governed by the laws of the State of
Delaware.
IN WITNESS WHEREOF, the Company has caused this 1999 Stock Option Plan
to be executed by its duly authorized officer as of this ___ day of
_______________, 1999.
CYTATION.COM INCORPORATED
By:____________________________
Title: ________________________
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<PAGE> 85
PROXY CYTATION.COM INCORPORATED PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Cytation.Com Incorporated, Inc. hereby
appoints Richard A. Fisher and Kevin J. High and each or either of them, proxies
(with power of substitution to each and to each substitute appointed pursuant to
such power) of the undersigned to vote all shares of stock of the Corporation
held by the undersigned or which the undersigned may be entitled to vote at the
Special Meeting of Stockholders of the Corporation to be held November 11, 1999,
and at any and all adjournments thereof, with all powers the undersigned would
possess if personally present, as indicated below upon the matters set forth
herein and more fully described in the Notice for said Meeting and in their
discretion upon all other matters which may properly come before said Meeting.
The undersigned hereby revokes all proxies, if any, hitherto given by him to
others for said Meeting.
IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED, THE SHARES REPRESENTED
HEREBY WILL BE VOTED. IF A CHOICE IS SPECIFIED BELOW BY THE STOCKHOLDER WITH
RESPECT TO A MATTER TO BE ACTED UPON, THE SHARES WILL BE VOTED UPON SUCH MATTER
IN ACCORDANCE WITH THE SPECIFICATION SO MADE. IN THE ABSENCE OF ANY
SPECIFICATION, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH
MATTER LISTED BELOW.
- --------------------------------------------------------------------------------
A [X] Please mark your votes as in this example
With- For All
For hold Except
Item 1 To elect the following nominees as directors of
the Corporation: [ ] [ ] [ ]
Richard A. Fisher
Kevin J. High
Jai N. Gupta
Mark Rogers
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE,
MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME OF THE
NOMINEE. YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEES.
For Against Abstain
Item 2 To adopt a 1999 Stock Option Plan. [ ] [ ] [ ]
Item 3 To approve the proposed "Plan of Reincorporation" [ ] [ ] [ ]
Item 4 To transact such further business as may [ ] [ ] [ ]
properly come before the Meeting, or any
adjournment or adjournments thereof.
Check here if you plan to attend the Annual Meeting [ ]
SIGNATURE(S)______________________DATE________1999 _____________________________
DATE __________ 1999 IF HELD JOINTLY
NOTE: Please date, sign exactly as name appears hereon and return promptly.
If the shares are registered in the names of two or more persons, both
should sign. Executors, administrators, trustees, guardian, attorneys
and corporate officers should add their titles.
<PAGE> 86
PROXY CYTATION.COM INCORPORATED PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Cytation.Com Incorporated, Inc. hereby
appoints Richard A. Fisher and Kevin J. High and each or either of them, proxies
(with power of substitution to each and to each substitute appointed pursuant to
such power) of the undersigned to vote all shares of stock of the Corporation
held by the undersigned or which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders of the Corporation to be held November 11, 1999,
and at any and all adjournments thereof, with all powers the undersigned would
possess if personally present, as indicated below upon the matters set forth
herein and more fully described in the Notice for said Meeting and in their
discretion upon all other matters which may properly come before said Meeting.
The undersigned hereby revokes all proxies, if any, hitherto given by him to
others for said Meeting.
IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED, THE SHARES REPRESENTED
HEREBY WILL BE VOTED. IF A CHOICE IS SPECIFIED BELOW BY THE STOCKHOLDER WITH
RESPECT TO A MATTER TO BE ACTED UPON, THE SHARES WILL BE VOTED UPON SUCH MATTER
IN ACCORDANCE WITH THE SPECIFICATION SO MADE. IN THE ABSENCE OF ANY
SPECIFICATION, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH
MATTER LISTED BELOW.
- --------------------------------------------------------------------------------
A [X] Please mark your votes as in this example
For Against Abstain
Item 3 To approve the proposed "Plan of Reincorporation" [ ] [ ] [ ]
Check here if you plan to attend the Annual Meeting [ ]
SIGNATURE(S) _____________________________ DATE __________ 1999
_____________________________ DATE __________ 1999 IF HELD JOINTLY
NOTE: Please date, sign exactly as name appears hereon and return promptly. If
the shares are registered in the names of two or more persons, both should
sign. Executors, administrators, trustees, guardian, attorneys and
corporate officers should add their titles.
<PAGE> 87
[CYTATION.COM LETTERHEAD]
Richard A. Fisher
Chairman of the Board of Directors
November 1, 1999
Dear Shareholder:
Cytation.com emerged from its fiscal year ended June 30, 1999 a very different
company than when the year began. We changed our name, merged into a SEC
reporting company, commenced the active trading of our securities, secured a
$3 million investment from The Provident Companies, and agreed to acquire ECI,
Inc., the leading provider of electronic college applications and related
services. In the first four months of this year, we closed ECI, received a
$4 million equity investment from PNC Bank Corp., and entered into agreements to
acquire Student Success, Inc., the leading provider of on-site college
preparation seminars to hundreds of thousands of high school seniors, and the
Online Scouting Network, a leading online high school athlete recruiting
company.
We have decided to focus our business exclusively on providing high value added
services to college bound students. With our many partners and affiliates such
as PNC and The College Board, we provide these students and their families a
complete solution to the challenges of the college admissions process. You will
note in the enclosed Proxy Statement that we propose to change our name to
CollegeLink.com Incorporated to reflect more clearly what business we are in and
our dedication to serving this market.
We have built an enviable management team headed up by Kevin High and Tom
Burgess. We expect that five key executives will join us from Student Success
and Online Scouting Network, and we have been fortunate to retain the services
of Nancy Gleason and Bill Fink through our transition.
These are exciting times for Internet industry participants, and we have an
exciting range of innovative online and supporting services to offer and a plan
to bring them to market. We look forward to reporting our progress to you at our
Annual Meeting.
Sincerely,
/s/ Richard Fisher
809 Aquidneck Avenue, Middletown, RI 02842 www.cytation.com
1-800-275-5895/(401)845-8800 Fax: (401)845-8816
