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:
[ X ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
SRM NETWORKS, INC.
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(Name of Registrant as specified in its charter)
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(Name of Person(s) Filing Proxy Statement), if other than Registrant
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3). [ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
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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 how it was determined):
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(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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SRM NETWORKS, INC.
1241 North Central Avenue, Suite 7
Glendale, CA 91202
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NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 21, 2002
TO THE SHAREHOLDERS OF SRM NETWORKS, INC.:
NOTICE IS HEREBY GIVEN, that the Special Meeting of the shareholders
(the "Meeting") of SRM Networks, Inc., a corporation formed under the laws of
the State of Nevada (the "Company") will be held at 2:00 P.M. on August 21, 2002
at the offices of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, at 101 East
52nd Street, New York, NY, 10022 for the following purpose:
1. To consider and vote upon a proposal to approve the Agreement and Plan
of Merger and all transactions and developments contemplated thereby,
the purpose of which is to change the state of incorporation of the
Company from Nevada to Delaware (the "Reincorporation").
The purpose of the Merger is to reincorporate the Company in the State
of Delaware. If the Merger is approved, the Company will be merged with and into
a newly formed Delaware company that will have been incorporated for no other
purpose. The Merger will effect no material change but to the Company's state of
incorporation, the authorization of shares of preferred stock and the
discontinuance of the provision barring shareholders of the Company from acting
pursuant to written consent without a meeting. Shareholders will not receive any
cash, stock or other property in connection with, or as a result of, the Merger.
Shareholders of record at the close of business on July 5, 2002 are
entitled to notice of and to vote at the Meeting or any adjournment or
postponement thereof. Whether you expect to attend the Meeting in person or not,
please sign, fill out, date and return the enclosed proxy in the self-addressed,
postage-paid envelope also enclosed. If you attend the Meeting and prefer to
vote in person, you can revoke your proxy.
PLEASE NOTE THAT MR. JAN BARCIKOWSKI, THE COMPANY'S CONTROLLING SHAREHOLDER, HAS
INFORMED THE COMPANY THAT HE WILL BE VOTING "FOR" PROPOSAL 1 ABOVE. THE NUMBER
OF VOTES HELD BY THE CONTROLLING SHAREHOLDER IS SUFFICIENT TO SATISFY THE
SHAREHOLDER VOTE REQUIREMENT FOR THE PROPOSAL AND NO ADDITIONAL VOTES WILL
CONSEQUENTLY BE NEEDED TO APPROVE THE PROPOSAL.
By Order of the Board of Directors,
Jan Barcikowski
President, CEO and Chairman
July __, 2002
SRM NETWORKS, INC.
1241 North Central Avenue, Suite 7
Glendale, CA 91202
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PRELIMINARY PROXY STATEMENT
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SPECIAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 21, 2002
This Proxy Statement is being furnished in connection with the
solicitation by the board of directors of SRM Networks, Inc. (the "Company"),
for use at the Special Meeting (the "Meeting") of shareholders (the
"Shareholders") of the Company to be held on August 21, 2002 at 2:00 P.M. at the
offices of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, at 101 East 52nd
Street, New York, NY, 10022 and at any adjournment or postponement thereof.
Only Shareholders of record at the close of business on July 5, 2002
(the "Record Date") are entitled to vote at the Meeting. As of the Record Date,
there were issued and outstanding 35,475,000 shares of the Company's common
stock (the "Common Shares"). Each outstanding Common Share is entitled to one
vote on all matters properly coming before the Meeting. All properly executed,
unrevoked proxies on the enclosed form of proxy that are received in time will
be voted in accordance with the Shareholder's directions and, unless contrary
directions are given, will be voted for the proposal (the "Proposal") described
below. Anyone giving a proxy may revoke it at any time before it is exercised by
giving the board of directors of the Company written notice of the revocation,
by submitting a proxy bearing a later date or by attending the Meeting and
voting in person.
The presence in person or by properly executed proxy of holders
representing a majority of the issued and outstanding shares of the Company's
Common Stock entitled to vote is necessary to constitute a quorum for the
transaction of business at the Meeting. Votes cast by proxy or in person at the
Meeting will be tabulated by the inspector of elections appointed for the
Meeting, who will determine whether or not a quorum is present. Shares of Common
Stock represented by proxies that are marked "abstain" will be included in the
determination of the number of shares present and voting for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions are not counted as voted either for or against a Proposal. Brokers
holding Common Shares for beneficial owners in "street name" must vote those
shares according to specific instructions they receive from the owners. However,
brokers have discretionary authority to vote on "routine" matters. Absent
specific instructions from the beneficial owners in the case of "non-routine"
matters, the brokers may not vote the shares. "Broker non-votes" result when
brokers are precluded from exercising their discretion on certain types of
proposals. Shares that are voted by brokers on some but not all of the matters
will be treated as shares present for purposes of determining the presence of a
quorum on all matters, but will not be treated as shares entitled to vote at the
Meeting on those matters as to which instructions to vote are not provided by
the owner.
The Board of Directors of the Company has adopted and approved
the Proposal set forth herein and recommends that the Company's Shareholders
vote "FOR" the Proposal. Approval of the Proposal requires the affirmative vote
of a majority of the Company's outstanding Common Shares.
PLEASE NOTE THAT MR. BARCIKOWSKI, THE COMPANY'S CONTROLLING
SHAREHOLDER, HAS INFORMED THE COMPANY THAT HE WILL BE VOTING "FOR" THE PROPOSAL.
THE NUMBER OF VOTES HELD BY THE CONTROLLING SHAREHOLDER IS SUFFICIENT TO SATISFY
THE SHAREHOLDER VOTE REQUIREMENT FOR THE PROPOSAL AND NO ADDITIONAL VOTES WILL
CONSEQUENTLY BE NEEDED FOR ITS APPROVAL.
This Proxy Statement, the accompanying Notice of Meeting and the form
of proxy have been first sent to the Shareholders on or about __________, 2002.
The date of this Proxy Statement is __________, 2002
TABLE OF CONTENTS
Page
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SUMMARY............................................................................................................
QUESTIONS AND ANSWERS ABOUT THE MEETING............................................................................
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS..................................................................
PROPOSAL 1: APPROVAL OF THE MERGER................................................................................
Description of the Merger.................................................................................
Summary Term Sheet...............................................................................
Material Terms of the Merger.....................................................................
Terms of the Merger Agreement....................................................................
Certain United States Federal Income Tax Consequences............................................
Accounting Treatment of the Merger...............................................................
Appraisal Rights.................................................................................
Interest of Certain Persons in the Merger........................................................
Security Ownership of Certain Beneficial Owners and Management............................................
Description of Securities.................................................................................
Comparison of Rights of Security-holders..................................................................
Shareholder Vote Required.................................................................................
STATEMENT OF ADDITIONAL INFORMATION................................................................................
GENERAL AND OTHER MATTERS..........................................................................................
SOLICITATION OF PROXIES............................................................................................
SHAREHOLDER PROPOSALS..............................................................................................
EXHIBIT A - Merger Agreement..............................................................................
EXHIBIT B - Certificate of Incorporation of SRM Networks, Inc.............................................
EXHIBIT C - Bylaws of SRM Networks, Inc...................................................................
SUMMARY
The following is a summary of the terms of the Proposal. This summary
is qualified by the more detailed description appearing elsewhere in this proxy
statement. Unless otherwise indicated, all references to "we", "us", and "our"
refer to SRM Networks, Inc., a corporation formed under the laws of the State of
Nevada. We urge you to carefully read this Proxy Statement, and the exhibits
hereto, in their entirety because the information in this summary is not
complete.
- The only item to be voted on at this meeting of our shareholders is the
proposal to approve the Agreement and Plan of Merger whereby we will
merge with and into SRM Networks, Inc., a corporation formed under the
laws of the State of Delaware, to which we refer as SRM Delaware. See
"Proposal 1:
Approval of the Merger - Material Terms of the Merger."
- The Agreement and Plan of Merger provides that each issued and
outstanding share of our common stock shall be converted into one share
of common stock of SRM Delaware. As a result of the merger transaction,
we shall cease to exist and all of our rights, assets, liabilities and
obligations shall become the rights, assets, liabilities and
obligations of SRM Delaware. See "Proposal 1: Approval of the Merger -
Material Terms of the Merger."
- The sole purpose of the Agreement and Plan of Merger is to
reincorporate our company in the State of Delaware. The certificate of
incorporation of SRM Delaware is substantially similar to our articles
of incorporation, with a few exceptions discussed under "Proposal 1:
Approval of the Merger - Material Terms of the Merger," including the
increased authorization of shares of preferred stock; see "Proposal 1:
Approval of the Merger - Comparison of Rights of Security-holders" for
a discussion of differences in our charter documents and state law.
- The reincorporation will not result in any change in our business,
directors, management, fiscal year, assets or liabilities or the
location of our principal executive offices. SRM Delaware has no
current business operations, as it was incorporated for the sole
purpose of effecting the Merger with us. Upon the Merger of our company
into SRM Delaware, SRM Delaware will conduct the business that we are
currently conducting.
- The conversion ratio in the Merger is one-to-one. Neither the number of
shares nor the percentage thereof held by each of our shareholders will
change as a result of the Merger. Each share of SRM Delaware's common
stock outstanding after the effective time of the Merger will entitle
the holder thereof to voting rights, dividend rights and liquidation
rights substantially equivalent to the rights of holders of our common
stock prior to the effective time of the Merger (except as provided
below - see "Comparison of Rights of Security-holders").
- It will not be necessary for our shareholders, a term we use to
distinguish the security-holders of our company from the future
security-holders of SRM Delaware (to whom we refer as "stockholders"),
to send us their certificates for shares of our common stock. See
Section "Proposal1: Approval of the Merger - Description of the
Merger."
- Shareholder approval of the Proposal requires the affirmative vote of a
majority of our outstanding shares of common stock. Our controlling
shareholder has already informed us that he will be voting in favor of
the proposal set forth herein. The number of votes held by our
controlling shareholder is sufficient to satisfy the shareholder vote
requirement for the proposal. Therefore, no additional votes will be
needed for its approval. See "Questions and Answers About the Meeting."
QUESTION AND ANSWERS ABOUT THE MEETING
What is being voted on at the Meeting?
Our board of directors is asking shareholders to consider only one item
at this Meeting:
To approve the Agreement and plan of Merger attached hereto as Exhibit
A as executed by and between the our company and SRM Delaware on July __, 2002
and all transactions and developments contemplated thereby (collectively, the
"Merger");
What are the main terms of the Merger with SRM Delaware?
We are currently governed by Nevada law. We are proposing the merger
with SRM Delaware solely to reincorporate under Delaware law. We need at least a
majority of the votes entitled to be cast to approve the merger for it to be
adopted. If the merger agreement is adopted:
We will merge with and into SRM Delaware, a Delaware corporation. SRM
Delaware will be the surviving corporation in the merger.
We will continue to do business under the name of "SRM Networks, Inc."
Our business, directors, management, fiscal year, assets or liabilities
and the location of our principal executive offices will remain unchanged by the
merger.
We will be governed by Delaware law and by the certificate of
incorporation and bylaws of SRM Delaware, which are similar to our articles of
incorporation and bylaws and are attached to this proxy statement as Exhibit B
and Exhibit C, respectively, with the exception that we will be authorized to
issue 32,000,000 shares of preferred stock and that shareholders of SRM Delaware
will not be prohibited from taking corporate action pursuant to written consent
in lieu of a meeting.
What rights do I have if I am opposed to the Merger?
Under Nevada law, we are not required to provide dissenting
shareholders with a right of appraisal on the matter to be voted upon at the
Meeting and shareholders are accordingly not granted this right. Shares of our
common stock will automatically be converted into shares of common stock of SRM
Delaware with no action required on your part.
Who can vote at the Meeting?
Our board of directors has set July 5, 2002 as the record date for the
Meeting. Only persons holding shares of our common stock of record at the close
of business on the record date will be entitled to receive notice of and to vote
at the Meeting. Each share of our common stock will be entitled to one vote per
share on each matter properly submitted for vote to our shareholders at the
Meeting. On the record date there were 35,475,000 shares of our common stock
outstanding held by a total of 10 shareholders of record.
What constitutes a quorum for the Meeting?
To have a quorum, we need one-third of the votes entitled to be cast to
be present, in person or by proxy, including votes as to which authority to vote
on any proposal is withheld, shares of stock abstaining as to any proposal, and
broker non-votes (where a broker submits a proxy but does not have authority to
vote a customer's shares of stock on one or more matters) on any proposal, will
be considered present at the Meeting for purposes of establishing a quorum for
the transaction of business at the Meeting. Each will be tabulated separately.
The shares held by Jan Barcikowski, our controlling shareholder, suffice for a
quorum to be met, and we have been informed by Mr. Barcikowski that he will be
present at the Meeting, whether in person or by proxy.
How do I vote?
If you complete and properly sign the accompanying proxy card and
return it to us, it will be voted as you direct, unless you later revoke the
proxy. Unless instructions to the contrary are marked, or if no instructions are
specified, shares of stock represented by a proxy will be voted for the
proposals set forth on the proxy, and in the discretion of the persons named as
proxies on such other matters as may properly come before the Meeting. If you
are a registered shareholder, that is, if you hold your shares of stock in
certificate form, and you attend the Meeting, you may deliver your completed
proxy card in person. If you hold your shares of stock in "street name," that
is, if you hold your shares of stock through a broker or other nominee, and you
wish to vote in person at the Meeting, you will need to obtain a proxy form from
the institution that holds your shares of stock.
2
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change your vote
at any time before the proxy is exercised by filing with our Secretary, at the
address indicated above, either a written notice of revocation, a duly executed
proxy bearing a later date, or if you vote in person at the Meeting. The powers
of the proxy holders will be suspended if you attend the Meeting in person and
so request. However, attendance at the Meeting will not by itself revoke a
previously granted proxy.
Any written notice of revocation sent to us must include the
shareholder's name and must be received prior to the Meeting to be effective.
What vote is required to approve each item?
The Merger.
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The approval of the merger with and into SRM Delaware requires the
affirmative vote of a majority of our outstanding votes that are entitled to be
cast at the Meeting. The shares of stock held by Mr. Barcikowski represent
enough votes to approve this proposal and he has informed us that he intends to
approve the merger with and into SRM Delaware.
Other Matters.
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If you hold your shares of stock in "street name," your broker or
nominee may not be permitted to exercise voting discretion with respect to some
of the matters to be acted upon. Thus, if you do not give your broker or nominee
specific instructions, your shares of stock may not be voted on those matters
and will not be counted in determining the number of shares of stock necessary
for approval. Shares of stock represented by such "broker non-votes" will,
however, be counted in determining whether there is a quorum.
Votes cast by proxy will be tabulated by an automated system
administered by Pacific Stock Transfer Company, our transfer agent. Votes cast
by proxy or in person at the Meeting will be counted by the independent person
that we will appoint to act as election inspector for the Meeting.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information included in this Proxy Statement may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). This information may involve known and unknown
risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from our future results,
performance or achievements expressed or implied by any forward-looking
statements. Forward-looking statements, which involve assumptions and describe
the our future plans, strategies and expectations, are generally identifiable by
use of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend" or "project" or the negative of these words or other
variations on these words or comparable terminology. These forward_looking
statements are based on assumptions that may be incorrect, and there can be no
assurance that these projections included in these forward_looking statements
will come to pass. Our actual results could differ materially from those
expressed or implied by the forward_looking statements as a result of various
factors. We undertake no obligation to update publicly any forward_looking
statements for any reason, even if new information becomes available or other
events occur in the future.
3
PROPOSAL 1
APPROVAL OF THE MERGER
DESCRIPTION OF THE MERGER
On July __, 2002, an Agreement and Plan of Merger was signed by and
between our company and SRM Networks, Inc., a corporation incorporated in the
State of Delaware ("SRM Delaware"). The Agreement and Plan of Merger is referred
to in this Proxy Statement as the Merger Agreement.
The Merger Agreement provides for a tax-free reorganization pursuant to
the provisions of Section 368 of the Internal Revenue Code, whereby we will be
merged with and into SRM Delaware, our separate corporate existence shall cease,
and SRM Delaware shall continue as the surviving corporation of the merger (the
"Merger"). In the Merger, each issued and outstanding share of our common stock
shall be converted into one share of common stock of SRM Delaware with no action
required on the part our shareholders.
Our board has recommended that our state of incorporation be changed
from Nevada to Delaware. Reincorporation in Delaware will not result in any
change in our business, management, assets, liabilities or net worth.
Reincorporation in Delaware will allow us to take advantage of certain
provisions of the corporate laws of Delaware.
The following are answers to some of the questions about the Merger
that you, as one of our shareholders, may have. We urge you to read this Proxy
Statement, including the Merger Agreement, carefully because the information in
this section is not complete.
Summary Term Sheet
Who are we Merging with?
We are merging with SRM Delaware, Delaware corporation to which we
refer as SRM Delaware.
Has the Board of Directors approved the Merger?
Yes. The Merger Agreement was executed on July __, 2002. Our board of
directors approved the Merger Agreement, and all transactions and developments
contemplated thereby and resolved to seek approval of our shareholders therefor
on July __, 2002.
How will the Merger work?
The Merger will be a very simple, straight-forward transaction. We will
merge with and into SRM Delaware and cease to exist as a separate entity. SRM
Delaware will be the surviving corporation.
Do I have the right to vote on the Merger?
Yes, you do. That is the main purpose of this Proxy Statement. We are
soliciting your vote in favor of the Merger.
Is your financial condition relevant to my decision whether to vote for the
Merger?
No, we do not believe that it is. The business of our company will not
change, nor will any of our officers or directors. In addition, no securities
are being issued as a result of the Merger, whether to a third party or
otherwise. We are not paying any finders' fees, brokers' fees or any other such
fees nor have we engaged the services of an investment bank or other entity to
advise us.
How do I exchange my shares of common stock?
You do not. Your shares will automatically be converted into shares of
common stock of SRM Delaware. You have the right to vote on the Merger, but
there is no step that you are required to take.
How many shares will I have after the Merger?
The number of shares you own will remain the same.
4
What is the conversion ratio?
The ratio is one-for-one.
What are the benefits of the reincorporation?
The purpose of the reincorporation is to change the state of our
incorporation from Nevada to Delaware and to take advantage of the benefits
offered by Delaware corporate law. The reincorporation is intended to permit us
to be governed by the Delaware General Corporation Law (which we refer to as the
"DGCL") rather than by the Nevada Revised Statutes (which we refer to as the
"NRS").
The principal reasons that led our board of directors to determine
that reincorporation in Delaware is in the best interests of our company and our
shareholders are outlined below:
(i) The State of Delaware has long been the leader in adopting,
construing and implementing comprehensive, flexible
corporation laws that are conducive to the operational needs
and independence of corporations domiciled in that State;
(ii) The corporation law of Delaware is widely regarded as the most
extensive and well-defined body of corporate law in the United
States;
(iii) Both the legislature and the courts in Delaware have
demonstrated an ability and a willingness to act quickly and
effectively to meet changing business needs, and
(iv) The Delaware judiciary has acquired considerable expertise in
dealing with complex corporate issues. Moreover, the Delaware
courts have repeatedly shown their willingness to accelerate
the resolution of complex corporate issues to meet the needs
of parties engaged in corporate litigation.
We anticipate that the DGCL will continue to be interpreted and
construed in significant court decisions, thus lending greater predictability
and guidance in managing and structuring the internal affairs of our company and
our relationships and contacts with others. In addition, see "Comparison of
Rights of Security-holders" below.
What are the disadvantages of the reincorporation?
Despite the belief of our board that the reincorporation is in the best
interests of our company and that of our shareholders, the NRS and the DGCL
differ in some respects. The DGCL may not afford stockholders the same rights as
the NRS. On balance, however, we believe it is favorable for us to reincorporate
in Delaware.
What is the effect of the reincorporation on our company?
The reincorporation has been approved by our board of directors, as has
the Merger Agreement attached hereto as Exhibit A whereby the reincorporation
will be effectuated. If we receive approval for the proposal to adopt the Merger
Agreement, the Merger will become effective when a certificate of merger and
articles of merger are filed with the Secretary of State of Delaware and the
Secretary of State of Nevada, respectively. This filing is anticipated to be
made as soon as possible after the Meeting. At the effective time of the Merger:
We will merge with and into SRM Delaware, with SRM Delaware being the
surviving corporation;
Our board of directors will not change;
We will cease to be governed by the NRS and will be governed by the
DGCL; and
SRM Delaware will be governed by its certificate of incorporation and
bylaws, which we have attached as Exhibit B and Exhibit C to this proxy
statement.
The reincorporation is subject to conditions, including approval by a
majority of the votes entitled to be cast at the meeting of our shareholders to
which this Proxy Statement relates.
5
What is the effect of the reincorporation on the holders of our securities?
The reincorporation will have minimal effect on our existing security
holders. At the effective time of the Merger, all our securities will be
converted into securities of SRM Delaware. At the effective time of the Merger,
the conversion will occur as follows:
All of our common stock will be converted into shares of common stock,
$.001 par value, of SRM Delaware;
Each share certificate that represented a share of our common stock
immediately prior to the effective time of the Merger will thereafter be deemed
to represent one share of SRM Delaware's common stock without any action on the
part of the holder;
We have no derivatives outstanding.
Will our business change after the reincorporation?
No. The reincorporation will not result in any change in our business,
directors, management, fiscal year, assets or liabilities or the location of our
principal executive offices. SRM Delaware will also have its principal office
located at 1241 North Central Avenue, Suite 7, Glendale, CA 91202. SRM Delaware
has no current business operations, as it was incorporated for the sole purpose
of effecting the Merger with us. Upon the Merger of our company into SRM
Delaware, SRM Delaware will conduct the business that we are currently
conducting.
Each share of SRM Delaware's common stock outstanding after the
effective time of the Merger will entitle the holder thereof to voting rights,
dividend rights and liquidation rights equivalent to the rights of holders of
our common stock prior to the effective time of the Merger (except as provided
below - see "Comparison of Rights of Security-holders"). Shares of our common
stock are currently traded on the over-the-counter market and are quoted on the
OTC Bulletin Board under the symbol "SRMW." Following the effective date of the
Merger, shares of common stock of SRM Delaware will remain traded on the
over-the-counter market. Our symbol will in all likelihood change, but we cannot
tell you what our new symbol will be.
How do the rights of shareholders compare before and after the reincorporation?
We are organized as a corporation under the laws of Nevada. If the
reincorporation is approved, we will merge with SRM Delaware and will then be a
corporation incorporated under the laws of Delaware following the Merger. As a
Nevada corporation, we are governed by the NRS, our articles of incorporation
and our bylaws. As a Delaware corporation we will be governed by; the DGCL, SRM
Delaware's certificate of incorporation, attached to this proxy statement as
Exhibit B, as may be further amended from time to time and SRM Delaware's
bylaws, attached to this proxy statement as Exhibit C, as may be further amended
from time to time.
Certain material differences between the applicable Nevada and Delaware
law and among these documents are summarized below. The comparison of certain
rights of our shareholders before and after the reincorporation set forth below
is not complete and is subject to and qualified in its entirety by reference to
Nevada law, Delaware law, SRM Delaware's certificate of incorporation, SRM
Delaware's bylaws, our articles of incorporation and our bylaws, copies of which
may be obtained from us by writing us at 1241 North Central Avenue, Suite 7,
Glendale, CA 91202, attention Secretary.
Will the shares to be issued in the Merger be freely trading?
The shares that are not currently freely trading will remain
restricted. No shares will be "issued" as that term is typically understood.
Rather, currently outstanding shares will be converted into shares of SRM
Delaware. We do not anticipate that the Merger will in any way affect the status
of our shares that are currently freely trading, other than that their ticker
symbol will change.
When do you expect the Merger to be completed?
We hope to complete the Merger as soon as possible, assuming that all
the conditions to the closing of the Merger as set forth in the Merger Agreement
are completed to the satisfaction of the parties.
6
What are the tax consequences of the Merger?
The Merger is intended to qualify as a tax-free reorganization for
United States federal income tax purposes. If the Merger does so qualify, no
gain or loss would generally be recognized by our U.S. shareholders upon
conversion of their shares of common stock in our company into shares of common
stock in SRM Delaware pursuant to the Merger. We believe, but cannot assure you,
that there will no tax consequences for holders of our shares. You are urged to
consult your own tax advisor for tax implications related to your particular
situation.
What remedy do I have if I did not vote for the Merger?
Nevada law does not require the provision of appraisal rights in this
situation and we will not provide such rights.
What do I need to do in order to vote?
After reading this document, you will need to execute the Proxy Card
provided you herewith, and any other documents applicable to you that are
included in this packet. Alternatively, you may appear at the Meeting and vote
in person.
Who can help answer my questions?
If you have more questions about the Merger you should contact
Jody R. Samuels, Esq., at:
Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP
101 East 52nd Street, 9th Floor
New York, NY 10022
Telephone No.: (212) 752-9700
If you have questions about our business, you should contact Jan Barcikowski,
President CEO, at:
SRM Networks, Inc.
1241 North Central Avenue, Suite 7
Glendale, CA 91202
Telephone: (818) 243-1181
Material Terms of the Merger
In order to effect the reincorporation (the "Reincorporation") of SRM
Networks, Inc. (the "Company") in Delaware, the Company will be merged with and
into SRM Delaware, a newly formed company incorporated in Delaware. Prior to the
merger (the "Merger"), SRM Delaware will not have engaged in any activities
except in connection with the proposed transaction. The mailing address and
telephone number of SRM Delaware and its telephone number are the same as those
of the Company. As part of its approval and recommendations of the Company's
reincorporation in Delaware, the board of directors of the Company (the "Board")
has approved, and recommends to its shareholders (the "Shareholders") for their
adoption and approval, the Agreement and Plan of Merger dated July __, 2002 (the
"Merger Agreement") pursuant to which the Company will be merged with and into
SRM Delaware. The full texts of the Merger Agreement, the certificate of
incorporation (the "Certificate") and bylaws (the "Bylaws") of the successor
Delaware corporation under which the Company's business will be conducted after
the Merger are attached hereto as Exhibit A, Exhibit B and Exhibit C
respectively. The discussion contained in this Proxy Statement is qualified in
its entirety by reference to such Exhibits.
According to the terms of the Merger Agreement by and between the
Company on the one side and SRM Delaware on the other side, the Company and SRM
Delaware have determined that the Merger between the Company and SRM Delaware is
in the best interests of their respective security-holders. The Merger is to be
effected through a conversion of the shares of common stock currently issued and
outstanding (the "Common Shares) into shares of common stock of SRM Delaware
(the "Common Stock")
7
The Certificate provides for the authorization of thirty-two million
(32,000,000) shares of so-called "blank check" preferred stock (the "Blank Check
Preferred Stock"). The Board and the board of SRM Delaware (the "SRM Delaware
Board") believe that it is advisable and in the best interests of SRM Delaware
and its stockholders (the "Stockholders") to have available for issuance such
shares in order to provide SRM Delaware with greater flexibility in financing
its continued operations and undertaking capital restructuring, financing and
future acquisitions. The Board believes that Blank Check Preferred Stock will
provide SRM Delaware with a capital structure better suited to meet its short
and long term capital needs. Having the Blank Check Preferred Stock will permit
SRM Delaware to negotiate the precise terms of an equity instrument by simply
creating a new series of preferred stock without incurring the cost and delay in
obtaining stockholder approval. This will, in the anticipation of the Board,
allow SRM Delaware to more effectively negotiate with, and satisfy the precise
financial criteria of, any investor or transaction in a timely manner.
Consequently, once authorized, the dividend or interest rates,
conversion rates, voting rights, redemption prices, maturity dates and similar
characteristics of such preferred stock will be determined by the SRM Delaware
Board, without the necessity of obtaining approval of the Stockholders.
The Company's Articles contain a provision prohibiting the Shareholders
from acting by written consent in lieu of a meeting. The Board has concluded
that this provision is not in the best interests of the Company and the
Shareholders. Consequently, it was determined not to replicate this provision by
virtue of the Merger; accordingly, neither the Certificate nor the Bylaws
contains it.
The terms of the Merger Agreement are more fully described below.
Terms of the Merger Agreement
The following discussion summarizes the material terms of the Merger
Agreement but does not purport to be a complete statement of all provisions of
the Merger Agreement and is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached to this Proxy Statement as Exhibit A.
Shareholders are urged to read the Merger Agreement carefully as it is the legal
document that governs the Merger.
The Merger. Subject to the terms and conditions of the Merger
Agreement, the Company shall be merged with and into SRM Delaware, the Company's
separate legal existence shall cease and SRM Delaware shall continue as the
surviving corporation.
Effect of the Merger. The presently issued and outstanding Common
Shares shall be converted on a one-for-one basis into shares of Common Stock.
SRM Delaware, as the surviving corporation, shall continue unaffected and
unimpaired by the Merger with all of its purposes and powers. SRM Delaware shall
be governed by the DGCL and succeed to all rights, assets, liabilities and
obligations of the Company in accordance with the DGCL.
Articles of Incorporation and Bylaws of SRM Delaware Following the
Merger. The Merger Agreement provides that the Certificate of Incorporation and
Bylaws of SRM Delaware, as in effect at the Effective Time, will be the
Certificate of Incorporation and Bylaws, respectively, of the surviving
corporation following the Merger.
Directors and Officers of SRM Delaware Following the Merger. The Merger
Agreement provides that the directors and officers of the Company as of the
Effective Time shall be the directors and officers of SRM Delaware, who shall
serve as directors and officers of SRM Delaware until their respective
successors are duly elected or appointed and qualified.
Conditions to the Merger. The obligations of the Company and SRM
Delaware to effect the Merger are subject to the satisfaction or waiver on or
prior to the Effective Time of the approval of the Shareholders of the Merger
Agreement, as well as approval of Mr. Barcikowski acting in his current capacity
of SRM Delaware's sole stockholder. In addition, both the Company and SRM
Delaware shall have taken all necessary action to authorize the execution,
delivery and performance of the Merger Agreement.
Certain United States Federal Income Tax Consequences
The Merger is intended to qualify for federal income tax purposes as a
"reorganization" within the meaning of Section 368(a)(1)(F) of the Code. In
general, provided that the Merger does so qualify, no gain or loss will be
recognized for federal income tax purposes by holders of Common Shares with
respect thereto on the conversion of their Common Shares into shares of Common
Stock and no gain or loss will be recognized for federal income tax purposes by
the Company or SRM Delaware.
8
Accounting Treatment of the Merger
The transaction is expected to be accounted for as a reverse
acquisition in which the Company is the accounting acquiror and SRM Delaware is
the legal acquiror. The management of the Company will be the management of SRM
Delaware. Since the Merger is expected to be accounted for as a reverse
acquisition and not a business combination, no goodwill is expected to be
recorded in connection therewith and the costs incurred in connection with the
Merger are expected to be accounted for as a reduction of additional paid-in
capital.
Appraisal Rights
Under Nevada law, the state in which the Company is incorporated, the
Company is not required to provide dissenting Shareholders with a right of
appraisal on the matter to be voted upon in connection herewith and Shareholders
are accordingly not provided with such right.
Interests of Certain Persons in the Merger
No director, executive officer, associate of any director or executive
officer, or any other person has any substantial interest, direct or indirect,
by security holdings or otherwise, resulting from the Proposal set forth herein,
which is not shared by all other Shareholders pro rata.
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of July __, 2002, the Company's authorized capitalization consisted
of 50,000,000 Common Shares, par value $.001 per share. As of July __, 2002,
there were 35,475,000 Common Shares outstanding, all of which were fully paid,
non-assessable and entitled to vote. Each Common Share entitles its holder to
one vote on each matter submitted to the Shareholder.
The following table sets forth, as of July __, 2002, the number of
Common Shares of the Company owned by (i) each person who is known by the
Company to own of record or beneficially five percent (5%) or more of the
Company's outstanding shares, (ii) each director of the Company, (iii) each of
the executive officers, and (iv) all directors and executive officers of the
Company as a group. Unless otherwise indicated, each of the persons listed below
has sole voting and investment power with respect to the shares beneficially
owned.
Number of Common Shares Percentage of Common Shares
Name and Address of Beneficial Owner Beneficially Owned (1) Beneficially Owned
------------------------------------ ---------------------- ------------------
Jan Barcikowski
Hegibach Strasse 22
8032 Zurich, Switzerland 27,500,000 77.6%
All Directors and Officers as a group
(1 persons) 27,500,000 77.6%
---------
(1) Pursuant to the rules and regulations of the Securities and Exchange
Commission, shares of common stock that an individual or group has a right to
acquire within 60 days pursuant to the exercise of options or warrants are
deemed to be outstanding for the purposes of computing the percentage ownership
of such individual or group, but are not deemed to be outstanding for the
purposes of computing the percentage ownership of any other person shown in the
table.
10
DESCRIPTION OF SECURITIES
Common Shares
The Company is authorized to issue 50,000,000 Common Shares, par value
$.001 per such share and 5,000,000 shares of preferred stock (the "Preferred
Shares"), par value $.001 per such share. As of July __, 2002, there were
35,475,000 Common Shares issued and outstanding and no Preferred Shares issued
and outstanding.
Each Shareholder is entitled to a pro rata share of cash distributions
on their Common Shares made to Shareholders, including dividend payments. The
holders of Common Shares are entitled to one vote for each share of record on
all matters to be voted on by Shareholders. There is no cumulative voting with
respect to the election of directors or any other matter. Therefore, the holders
of more than 50% of the Common Shares voted for the election of those directors
can elect all of the directors. The holders of Common Shares are entitled to
receive dividends when, as and if declared by the Board from funds legally
available therefor. Cash dividends are at the sole discretion of the Board. In
the event of the Company's liquidation, dissolution or winding up, the holders
of Common Shares are entitled to share ratably in all assets remaining available
for distribution to them after payment of the Company's liabilities and after
provision has been made for each class of stock, if any, having any preference
in relation to the Common Shares. Holders of Common Shares have no conversion,
preemptive or other subscription rights, and there are no redemption provisions
applicable thereto.
Dividend Policy. The Company has never declared or paid a cash dividend
on its capital stock. The Company does not expect to pay cash dividends on
Common Shares in the foreseeable future. The Company currently intends to retain
its earnings, if any, for use in its business. Any dividends declared in the
future will be at the discretion of the Board and subject to any restrictions
that may be imposed by the Company's creditors, if any.
Preferred Shares
The Company is authorized to issue 5,000,000 shares of preferred stock.
SRM Delaware, however, is authorized to issue 32,000,000 shares of "blank check"
preferred stock, par value $.001 per share ("Blank Check Preferred Stock"), none
of which is issued. The SRM Delaware Board is vested with authority to divide
the shares of Blank Check Preferred Stock into series and to fix and determine
the relative rights and preferences of the shares of any such series.
SRM Delaware was incorporated with the ability to issue shares of Blank
Check Preferred Stock and provisions authorizing the SRM Delaware Board to
designate and issue such shares because the Board believes that it is advisable
and in the best interests of the surviving corporation to have available shares
of preferred stock to provide it with greater flexibility in financing its
operations and undertaking capital restructuring, financing and future
acquisitions. The Board believes that the Blank Check Preferred Stock will
provide SRM Delaware with a capital structure better suited to meet its short
and long term capital needs. Having Blank Check Preferred Stock will permit the
SRM Delaware Board to negotiate the precise terms of an equity instrument by
simply creating a new series of preferred stock without incurring the cost and
delay in obtaining stockholder approval. The Board believes that this will allow
SRM Delaware to more effectively negotiate with, and satisfy the precise
financial criteria of, any investor or transaction in a timely manner.
Consequently, the dividend or interest rates, conversion rates, voting
rights, redemption prices, maturity dates and similar characteristics of such
preferred stock will be determined by the SRM Delaware Board, without the
necessity of obtaining approval of the Stockholders. Please see the Certificate
attached as Exhibit B hereto for the provision authorizing the Blank Check
Preferred Stock.
Transfer Agent
The Company's transfer agent is Pacific Stock Transfer Company. The
transfer agent's mailing address is 500 East Warm Springs Road, Suite 240, Las
Vegas, Nevada, 89119.
11
COMPARISON OF THE RIGHTS OF SECURITY-HOLDERS
General
The Board has recommended that the Company's state of incorporation be
changed from Nevada to Delaware. Reincorporation in Delaware will not result in
any change in the business, management, assets, liabilities or net worth of the
Company. Reincorporation in Delaware will allow the Company to take advantage of
certain provisions of the corporate laws of Delaware. The purposes and effects
of the proposed change are summarized below.
Assuming Shareholder approval of the Reincorporation and upon
acceptance for filing of the appropriate certificates of merger with the
Secretary of State of Delaware and the Secretary of State of Nevada, the Company
will be merged with and into SRM Delaware pursuant to the Merger Agreement,
resulting in a change in the Company's state of incorporation. The Company will
then be subject to the Delaware General Corporation Law (the "DGCL") and the
Certificate of Incorporation and Bylaws set forth in Exhibit B and Exhibit C,
respectively. Upon the effective time of the Reincorporation, each outstanding
share of stock of the Company will automatically be converted into one share of
the corresponding class of stock of SRM Delaware.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF SRM DELAWARE. OUTSTANDING STOCK
CERTIFICATES OF THE COMPANY SHOULD NOT BE DESTROYED OR SENT TO THE COMPANY.
The Board believes that the Reincorporation will provide greater
flexibility for both the management and business of the Company.
Delaware is a favorable legal and regulatory environment in which to
operate. For many years, Delaware has followed a policy of encouraging
incorporation in that state and, in furtherance of that policy, has adopted
comprehensive, modern and flexible corporate laws which are periodically updated
and revised to meet changing business needs. As a result, many major
corporations have initially chosen Delaware for their domicile or have
subsequently reincorporated in Delaware. The Delaware courts have developed
considerable expertise in dealing with corporate issues, and a substantial body
of case law has developed construing Delaware law and establishing public
policies with respect to Delaware corporations thereby providing greater
predictability with respect to corporate legal affairs. In addition, many
investors and securities professionals are more familiar and comfortable with
Delaware corporations than corporations governed by the laws of other
jurisdictions, even where the laws are similar.
The Company is a Nevada corporation and the Nevada Revised Statutes
(the "NRS") and the Articles of Incorporation and the bylaws of the Company
govern the rights of its shareholders. SRM Delaware is a Delaware corporation
and the rights of its stockholders are governed by the DGCL and the Certificate
of Incorporation and Bylaws of SRM Delaware. For purposes of the following
discussion, the terms DGCL and NRS shall be understood to include all law of the
respective state, whether statutory or otherwise.
Certain Material Differences Between the Corporation Laws of
Nevada and Delaware
Authorized Capital
The authorized capital stock of the Company consists of 50,000,000 shares of
$0.001 par value Common Stock, of which 35,475,000 are issued and outstanding as
of the date hereof and 5,000,000 Preferred Shares, par value $0.001 per share,
none of which is issued and outstanding.
The authorized capital stock of SRM Delaware consists of 50,000,000 shares of
Common Stock, par value $0.001 per share, one of which is issued and
outstanding, and 32,000,000 shares of blank check preferred stock, par value
$0.001 per share (the "Blank Check Preferred Stock"), none of which is issued
and outstanding. Both the Company's Articles and SRM Delaware's Certificate
authorize the respective board of directors to issue shares of preferred stock
in one or more series and to fix the designations, preferences, powers and
rights of the shares to be included in each series.
12
Voting Power of Common Stock
Each holder of Common Shares has the right to cast one vote for each such Common
Share held of record on all matters voted on by the Shareholders, including the
election of directors. Shareholders have no cumulative voting rights.
Each holder of shares of Common Stock has the right to cast one vote for each
share of Common Stock held of record on all matters voted on by the
Stockholders, including the election of directors. Stockholders have no
cumulative voting rights.
Board of Directors
The Company's Articles require that the number of its directors shall be between
one and fifteen. The Company's board presently consists of one director.
Directors are elected at the annual meeting of shareholders, and at each annual
meeting thereafter. Directors are elected by a majority of the votes cast at a
meeting of shareholders by such shareholders as are entitled to vote on the
election of directors.
SRM Delaware's Bylaws do not require that a specific number of directors shall
serve on its board. SRM Delaware's board presently consists of one director.
Directors are elected at the annual meeting of stockholder, and at each annual
meeting thereafter. Directors are elected by a majority of the votes cast at a
meeting of stockholders by such stockholders as are entitled to vote on the
election of directors.
Classified Board of Directors
The Delaware Law permits any Delaware corporation to classify its board of
directors into as many as three classes with staggered terms of office. After
initial implementation of a classified board, one class will be elected at each
annual meeting of the stockholders to serve for a term of three years or until
their successors are elected to take office.
The Nevada Law also permits corporations to classify boards of directors
provided that at least one-fourth of the total number of directors is elected
annually. Since neither the Company nor SRM Delaware has a classified board,
there will be no difference in stockholders' rights with respect to this issue;
while the Articles do provide for a classified board, there is at present no
more than one director of the Company, thus vitiating the applicability of the
provision.
Cumulative Voting
Cumulative voting for directors entitles stockholders to cast a number of votes
that is equal to the number of voting shares held multiplied by the number of
directors to be elected. Stockholders may cast all such votes either for one
nominee or distribute such votes among up to as many candidates as there are
positions to be filled. Cumulative voting may enable a minority stockholder or
group of stockholders to elect at least one representative to the board of
directors where such stockholders would not otherwise be able to elect any
directors.
The Nevada Law permits cumulative voting in the election of directors as long as
certain procedures are followed. A Delaware corporation may provide for
cumulative voting in the corporation's certificate of incorporation. Since
neither SRM Delaware nor the Company utilizes cumulative voting, there will be
no significant difference in stockholders' rights with respect to this issue.
Vacancies on the Board of Directors
Under the Delaware Law, vacancies on the board of directors will be filled by
the affirmative vote of a majority of the remaining directors then in office,
even if less than a quorum unless otherwise provided in the certificate of
incorporation or bylaws. Any director so appointed will hold office for the
remainder of the full term of the class of directors in which the vacancy
occurred.
Similarly, the Nevada Law provides that vacancies may be filled by a majority of
the remaining directors, though less than a quorum, unless the articles of
incorporation provide otherwise. The Bylaws of SRM Delaware and bylaws of the
Company address the issue of director vacancies in substantially the same
manner. Therefore, the change from Delaware law to Nevada law will not alter
stockholders' rights with respect to filling vacancies.
13
Removal of Directors
Under both the Delaware Law and the Nevada Law, any director or the entire board
of directors may be removed, with or without cause, upon the vote of the shares
entitled to vote in the election of directors. Under the Delaware Law, a
majority vote is required to remove a director. Under the Nevada Law, a director
may be removed only by the vote of stockholders casting not less than two-thirds
of the outstanding voting rights. The Company has further increased the
stringency of this stipulation by including in its Articles a provision
requiring that (1) a minimum affirmative vote of 75% be voted to remove the
director, and (2) that any such removal must be for cause. No such provision in
the Certificate.
Indemnification of Officers and Directors and Advancement of Expenses
The Delaware Law and the Nevada Law have substantially identical provisions
regarding indemnification by a corporation of its officers, directors, employees
and agents, except that the Nevada Law provides broader indemnification in
connection with stockholder derivative lawsuits. The Delaware Law and the Nevada
Law differ in their provisions for advancement of expenses incurred by an
officer or director in defending a civil or criminal action, suit or proceeding.
The Delaware Law provides that expenses incurred by an officer or director in
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
the action, suit or proceeding upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined that
he or she is not entitled to be indemnified by the corporation. Thus, a Delaware
corporation has the discretion to decide whether or not to advance expenses.
Under the Nevada Law, the articles of incorporation, bylaws or an agreement made
by the corporation may provide that the corporation must pay advancements of
expenses in advance of the final disposition of the action, suit or proceedings
upon receipt of an undertaking by or on behalf of the director or officer to
repay the amount if it is ultimately determined that he or she is not entitled
to be indemnified by the corporation. Thus, a corporation may have no discretion
to decide whether or not to advance expenses. There will be no difference in
stockholders' rights with respect to this issue because the Bylaws and the
Company's bylaws each provide for advancement of expenses.
Limitation on Personal Liability of Directors
A Delaware corporation is permitted to adopt provisions in its certificate of
incorporation limiting or eliminating the liability of a director to a company
and its stockholders for monetary damages for breach of fiduciary duty as a
director, unless that liability arises from breach of the duty of loyalty, acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, unlawful payment of dividends or unlawful stock
purchase or redemption, or transactions from which the director derives improper
personal benefit. SRM Delaware's Certificate contains a provision limiting, to
the extent permitted by the Delaware Law, the liability of directors to SRM
Delaware for breach of fiduciary duty.
The Nevada Law provides that, with certain statutory exceptions, a director or
officer is not individually liable to the corporation or its stockholders for
any damages as a result of any act or omission in his capacity as a director or
officer unless it is proven that his act of omission constituted a breach of his
fiduciary duties as a director or officer and his breach involved intentional
misconduct, fraud or a knowing violation of the law. This provision is broader
than the analogous provision in the Delaware Law, in that it is mandatory rather
than optional, covers officers as well as directors and, unlike the Delaware
Law, does not exclude from the limitation of liability any act or omission
constituting breach of that director or officer's duty of loyalty. The Articles
state that personal liability of the directors and officers of the Company is
eliminated for breaches of fiduciary duty.
14
Dividends
The Delaware Law is more restrictive than the Nevada Law with respect to when
dividends may be paid. Under the Delaware Law, subject to any restrictions
provided in the certificate of incorporation, a corporation may declare
dividends out of surplus, or if no surplus exists, out of net profits for the
fiscal year in which the dividend is declared and/or the preceding fiscal year
(provided that the amount of capital of the corporation following the
declaration and payment of the dividend is not less than the aggregate amount of
the capital represented by the issued and outstanding stock of all classes
having a preference upon the distribution of assets).
The Nevada Law provides that except as otherwise provided in its articles of
incorporation, no distribution (including dividends on, or redemption or
repurchases of, shares of capital stock) may be made if, after giving effect to
such distribution, the corporation would not be able to pay its debts as they
become due in the usual course of business, or the corporation's total assets
would be less than the sum of its total liabilities plus the amount that would
be needed at the time of a liquidation to satisfy the preferential rights of
preferred stockholders.
Restrictions on Business Combinations
Both the Delaware Law and the Nevada Law contain provisions restricting the
ability of a corporation to engage in business combinations with an interested
stockholder.
Under the Delaware Law, a corporation is not permitted to engage in a business
combination with any interested stockholder for a three-year period following
the date such stockholder became an interested stockholder, unless (i) the
transaction resulting in a person becoming an interested stockholder, or the
business combination, is approved by the board of directors of the corporation
before the person becomes an interested stockholder; (ii) upon consummation of
the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the outstanding
voting stock of the corporation outstanding at the time the transaction
commenced (excluding shares owned by persons who are both officers and directors
of the corporation, and shares held by certain employee stock ownership plans);
or (iii) at or after the date the person becomes an interested stockholder, the
business combination is approved by the corporation's board of directors and by
the holders of at least two thirds of the corporation's outstanding voting stock
at an annual or special meeting and not by written consent, excluding shares
owned by the interested stockholder. The Delaware Law defines "interested
stockholder" generally as a person who owns 15% or more of the outstanding
shares of a corporation's voting stock. The Delaware Law allows corporations to
opt-out of the statute with provisions expressly electing not to be governed by
such statutory provisions.
The Nevada Law regulates business combinations more stringently. First, an
interested stockholder is defined as a beneficial owner of ten percent (10%) or
more of the voting power. Second, the three-year moratorium can be lifted only
by advance approval by a corporation's board of directors, as opposed to the
Delaware Law's provision that allows interested stockholder combinations with
board or stockholder approval. Finally, after the three-year period,
combinations remain prohibited unless they are approved by the board of
directors or a majority of the outstanding voting power not beneficially owned
by the interested party, or the interested stockholders satisfy certain
fair-value requirements. As in Delaware, a Nevada corporation may opt out of the
statute with appropriate provisions in its articles of incorporation. Neither
SRM Delaware's Certificate nor the Articles contains provisions electing not to
be governed by such statutory provisions. In fact, the Articles contain
extensive limitations on business combinations; however, the Merger satisfies
the pertinent tests and it will thus not be constrained or affected by the
Company's stringent requirements.
Amendment to Certificate/Articles of Incorporation
Both the Delaware Law and the Nevada Law provide that approval of proposed
amendments to a corporation's certificate (in Delaware) or articles (in Nevada)
of incorporation require the affirmative vote of holders of a majority of all
outstanding shares entitled to vote, with each stockholder being entitled to one
vote for each share so held. Both states provide that the board of directors may
without stockholder approval fix the voting powers, designations, preferences,
limitations, restrictions and rights of a class of stock, on condition that the
corporation's organizational documents grant that power to its board of
directors. Holders of the outstanding shares of a particular class are entitled
to vote as a class on a proposed amendment if the amendment would alter or
change the power, preferences or special rights of one or more series of any
class so as to affect them adversely.
15
Under the Nevada Law, but not under the Delaware Law, the number of authorized
shares of any such class of stock may be increased or decreased and the number
of shares outstanding may be correspondingly increased or decreased by a
resolution adopted by the board of directors without stockholders approval.
Actions by Written Consent of Stockholders
Each of the Nevada Law and the Delaware Law provides that, unless the
certificate (in Delaware) or articles (in Nevada) of incorporation provide
otherwise, any action required or permitted to be taken at a meeting of the
stockholders may be taken without a meeting if the holders of outstanding stock
having at least the minimum number of votes that would be necessary to authorize
or take such action at a meeting consents to the action in writing. In addition,
the Delaware Law requires the corporation to give prompt notice of the taking of
corporate action without a meeting by less than unanimous written consent to
those stockholders who did not consent in writing. The Articles contain a
provision restricting the Shareholders from acting by written consent in lieu of
a meeting; the Certificate does not.
Stockholder Vote for Mergers and Other Corporate Reorganizations
In general, both jurisdictions provide that merger of a corporation or sale of
substantially all of its assets requires the approval of a majority of
outstanding shares entitled to vote, as well as approval by the board of
directors. Neither the Nevada Law nor the Delaware Law requires stockholder
approval by the stockholders of a surviving corporation in a merger or
consolidation as long as the surviving corporation issues no more than 20% of
its voting stock in the transaction.
Dissenters' Rights
In both jurisdictions, dissenting stockholders of a corporation engaged in
certain major corporate transactions are entitled to appraisal rights. Appraisal
rights permit a stockholder to receive cash equal to the fair market value of
the stockholder's shares (as determined by agreement of the parties or by a
court) in lieu of the consideration such stockholder would otherwise receive in
any such transaction.
Under the Delaware Law, appraisal rights are generally available for the shares
of any class or series of stock of a Delaware corporation in a merger or
consolidation, provided that no appraisal rights are available for the shares of
any class or series of stock which, at the record date for the meeting held to
approve such transaction, were either (1) listed on a national securities
exchange or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.
("NASD") or (2) held of record by more than 2,000 stockholders. Even if the
shares of any class or series of stock meet the requirements of clause (1) or
(2) above, appraisal rights are available for such class or series if the
holders thereof receive in the merger or consolidation anything except:
- shares of stock of the corporation surviving or resulting from such
merger or consolidation;
- shares of stock of any other corporation which at the effective
date of the merger or consolidation is either listed on a national securities
exchange, or designated as a national market system security on an interdealer
quotation system by the NASD or held of record by more than 2,000 stockholders;
- cash in lieu of fractional shares; or
- any combination of the foregoing.
No appraisal rights are available to stockholders of the surviving corporation
if the merger did not require their approval.
Under the Nevada Law, a stockholder is entitled to dissent from, and obtain
payment for the fair value of his or her shares in the event of (i) consummation
of a plan of merger, if approval by the stockholders is required and the
stockholder is entitled to vote on the merger or if the domestic corporation is
a subsidiary and is merged with its parent, (ii) a plan of exchange in which the
corporation is a party, or (iii) any corporate action taken pursuant to a vote
of the stockholders, if the articles of incorporation, bylaws or a resolution of
the board of directors provides that voting or nonvoting stockholders are
entitled to dissent and obtain payment for their shares.
16
As with the Delaware Law, the Nevada Law provides an exception to dissenters'
rights. Holders of securities listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the NASD or held by at least 2,000 stockholders of record are
generally not entitled to dissenters' rights. This exception is not, however,
available if the articles of incorporation of the corporation issuing the shares
state that it is not available, or if the holders of the class or series are
required under the plan of merger or exchange to accept for the shares anything
except specified kinds of consideration (which are essentially identical to
those specified in the analogous provision of the Delaware Law). The Articles
contain no provision amending the NRS.
Stockholder Inspection Rights
The Delaware Law grants any stockholder of record the right to inspect and to
copy for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other records. A proper purpose is one reasonably related
to such person's interest as a stockholder. Directors also have the right to
examine the corporation's stock ledger, a list of its stockholders and its other
records for a purpose reasonably related to their positions as directors.
Under the Nevada Law, only a stockholder of record who owns at least 15% of the
corporation's outstanding shares, or has been authorized in writing by holders
of at least 15% of the outstanding shares, is entitled to inspect and make
copies of the corporation's financial records. Only a person who has been a
stockholder of record for at least six months, or who owns at least 5% of the
corporation's outstanding shares or has been authorized in writing by holders of
at least 5% of the outstanding shares, is entitled to inspect and make copies of
the corporation's stock ledger, articles of incorporation and bylaws.
Derivative Suits
Under both the Delaware Law and the Nevada Law, a stockholder may bring a
derivative action on behalf of the corporation only if the stockholder was a
stockholder of the corporation at the time of the transaction in question or the
stockholder acquired the stock thereafter by operation of law.
Special Meetings of Stockholders
The Delaware Law permits special meetings of stockholders to be called by the
board of directors or by any other one or more persons authorized in the
certificate of incorporation or bylaws to call a special stockholder meeting.
The Nevada Law permits the entire board of directors, any two directors, or the
president to call special meetings of stockholders, unless the articles of
incorporation or bylaws provide otherwise.
SRM Delaware's Bylaws and the Company's bylaws each provide that a special
meeting of stockholders may be called at any time by the Chairman of the Board
or a majority of the members of the Board of Directors. In addition, the
Company's bylaws permit the President or stockholders holding no less than ten
percent (10%) of the issued and outstanding shares of the Company to call a
special meeting; SRM Delaware's Bylaws contain no such provisions.
Shareholder Vote Required
Approval of the Merger Agreement will, pursuant to Section 92A.120 of
the Nevada Revised Statutes, require the affirmative vote of a majority of the
shares entitled to be cast therefor. PLEASE NOTE THAT THE COMPANY'S CONTROLLING
SHAREHOLDER HAS ALREADY INFORMED THE COMPANY THAT HE WILL BE VOTING "FOR" THIS
PROPOSAL. THE NUMBER OF VOTES HELD BY THE CONTROLLING SHAREHOLDER IS SUFFICIENT
TO SATISFY THE SHAREHOLDER VOTE REQUIREMENT FOR THIS PROPOSAL AND, THEREFORE, NO
ADDITIONAL VOTES WILL BE NEEDED TO APPROVE THIS PROPOSAL.
17
The Board of Directors recommends that the Shareholders vote "FOR" the
Proposal to approve the Merger Agreement and all transactions and developments
contemplated thereby.
18
GENERAL AND OTHER MATTERS
Management knows of no matters other than the matters described above
that will be presented to the Meeting. However, if any other matters properly
come before the Meeting, or any of its postponements or adjournments, the person
or persons voting the proxies will vote them in accordance with his or their
best judgment on such matters.
SOLICITATION OF PROXIES
The Company is making the solicitation of proxies and will bear the
costs associated therewith. Solicitations will be made by mail only. The Company
will reimburse banks, brokerage firms, other custodians, nominees and
fiduciaries for reasonable expenses incurred in sending proxy material to
beneficial owners of the Company's Common Stock.
SHAREHOLDER PROPOSALS
The Board of Directors has not yet determined the date on which the
next annual meeting of Stockholders of the Company will be held. Any proposal by
a Stockholder intended to be presented at the Company's next annual meeting of
Stockholders must be received at the offices of the Company a reasonable amount
of time prior to the date on which the information or proxy statement for that
meeting are mailed to Stockholders in order to be included in the Company's
information or proxy statement relating to that meeting.
By Order of the Board of Directors,
Jan Barcikowski,
CEO, President and Chairman of the Board
July __, 2002
19
PRELIMINARY COPIES
GENERAL PROXY - SPECIAL MEETING OF SHAREHOLDERS OF SRM NETWORKS, INC.
The undersigned hereby appoints Jan Barcikowski, with full power of
substitution, proxy to vote all of the shares of common stock of SRM Networks,
Inc., a Nevada corporation (the "Company") held by the undersigned and with all
of the powers the undersigned would possess if personally present at the Special
Meeting of shareholders of the Company to be held at the offices of Gersten,
Savage, Kaplowitz, Wolf & Marcus, LLP, 101 East 52nd Street, New York, NY, 10022
on August 21, 2002 at 2:00 P.M. local time and at all adjournments thereof,
upon the matters specified below, all as more fully described in the Proxy
Statement dated July ___, 2002 and with the discretionary powers upon all other
matters which come before the meeting or any adjournment thereof.
This Proxy is solicited on behalf of the Company's Board of Directors.
1. To approve the Merger Agreement attached as Exhibit A to the Proxy
Statement by and between the Company and SRM Networks, Inc., a Delaware
corporation, as of July ___, 2002 and all transactions and developments
contemplated thereby.
o FOR o AGAINST o ABSTAIN
Every properly signed proxy will be voted in accordance with the
specifications made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
The undersigned hereby acknowledges receipt of a copy of the
accompanying Notice of Meeting and Proxy Statement and hereby revokes any proxy
or proxies heretofore given.
Please mark, date, sign and mail your proxy promptly in the envelope
provided.
Date: August ___, 2002
--------------------------------------------
(Print name of Shareholder)
--------------------------------------------
(Print name of Shareholder)
--------------------------------------------
Signature
--------------------------------------------
Signature
Number of Shares ___________________________
Note: Please sign exactly as name appears in the
Company's records. Joint owners should each sign.
When signing as attorney, executor or trustee,
please give title as such.
Exhibit A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made and
entered into on July ___, 2002, pursuant to Section 92A.190 of the Nevada
Revised Statutes (the "NRS") and Section 252 of the General Corporation Law of
the State of Delaware (the "GCL") by and between SRM Networks, Inc., a Nevada
corporation ("SRM"), and SRM Networks, Inc., a Delaware corporation ("SRM
Delaware"), each of which at times being referred to herein individually as a
"Constituent Corporation" and collectively as the "Constituent Corporations."
W I T N E S S E T H:
WHEREAS, SRM is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada with an authorized capital
stock consisting of 50,000,000 shares of common stock, $.001 par value per share
(the "Common Shares"), 35,475,000 of which are issued and outstanding on the
date hereof, and 5,000,000 shares of preferred stock, par value $0.001 per share
(the "Preferred Shares"), none of which is outstanding on the date hereof;
WHEREAS, there are issued and outstanding no options to purchase Common
Shares (the "SRM Options") or warrants to purchase such shares (the "SRM
Warrants");
WHEREAS, the Delaware Corporation is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
with an authorized capital stock consisting of 50,000,000 shares of common
stock, $.001 par value per share (the "Common Stock"), one share of which is
issued and outstanding on the date hereof and held by Jan Barcikowski, the
President of the Delaware Corporation, and 32,000,000 shares of preferred stock,
$.001 par value per share (the "Preferred Stock"), none of which is issued and
outstanding;
WHEREAS, the Delaware Corporation has no options (the "Delaware
Options") or warrants (the "Delaware Warrants") issued and outstanding;
WHEREAS, the respective Boards of Directors of the Constituent
Corporations have authorized and approved the merger of the Nevada Corporation
with and into the Delaware Corporation subject to and upon the terms and
conditions of this Merger Agreement (the "Merger") and Sections 92A.120 and
92A.190 of the NRS and Section 252 of the GCL, and have approved this Merger
Agreement and directed that it be executed by the undersigned officers and that
it be submitted to the shareholders of each of the Constituent Corporations for
their approval; and
WHEREAS, it is the intention of the Constituent Corporations that the
Merger shall be a tax-free reorganization within the meaning of Section 368
(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE in consideration of the premises, which are hereby
incorporated into the terms hereof, and the mutual covenants and agreements
herein contained, and for the purpose of stating the terms and conditions of the
merger, the mode of effectuating the same, and other details and provisions that
are deemed desirable, the parties have agreed and do hereby agree, subject to
the terms and conditions set forth as follows:
ARTICLE I
TERMS OF MERGER
1.1 MERGER. On the Effective Date of the Merger (as hereinafter
defined), in accordance with the provisions of the NRS and the GCL, the Nevada
Corporation shall be merged with and into the Delaware Corporation (at times
referred to herein as the "Surviving Corporation") upon the terms and conditions
set forth in the subsequent provisions of this Merger Agreement.
1.2 APPROVAL OF SHAREHOLDERS. This Merger Agreement shall be submitted
as promptly as practicable to the respective shareholders of the Nevada
Corporation and the Delaware Corporation as provided by the NRS, the GCL and
Section 14 of the Securities and Exchange Act of 1934, as amended, and the
federal rules and regulations promulgated thereunder. After adoption and
approval of this Merger Agreement and all the transactions and developments
contemplated hereby by the respective shareholders of the Nevada Corporation and
the Delaware Corporation, and provided this Merger Agreement is not terminated
and abandoned pursuant to the provisions hereof, Articles of Merger shall be
filed in accordance with the applicable provisions of the NRS and a Certificate
of Merger shall be filed in accordance with the applicable provisions of the
GCL.
1.3 FILINGS AND EFFECTIVENESS. As soon as practicable following the
date of execution hereof, the Nevada Corporation and the Delaware Corporation
will, subject to the approval by the shareholders of each of the Constituent
Corporations, cause (i) the Articles of Merger along with any other required
document to be filed with the Secretary of State of the State of Nevada pursuant
to Section 92A.200 of the NRS, and (ii) the Certificate of Merger along with any
other required document to be filed with the Office of the Secretary of the
State of Delaware pursuant to Section 252 of the GCL. The Merger shall become
effective upon the occurrence of each of the following actions:
(a) All of the conditions precedent to the consummation of the Merger
specified in this Merger Agreement shall have been satisfied or duly waived;
(b) Executed Articles of Merger meeting the requirements of the NRS
shall have been filed with the Secretary of State of the State of Nevada and
said Secretary of State shall have accepted such Articles of Merger;
(c) An executed Certificate of Merger meeting the requirements of the
GCL shall have been accepted by the Secretary of the State of Delaware and said
Secretary of State shall have issued a Certificate of Merger; and
(d) The Constituent Corporations shall have performed all other
requirements of the GCL and the NRS, as the case may be.
The date and time when the Merger shall become effective, as aforesaid,
is herein called the "Effective Date" and "Effective Time," respectively.
1.4 EFFECT OF MERGER.
(a) As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of Common Shares, the presently
issued and outstanding Common Shares shall be converted on a one-for-one basis
into shares of Common Stock.
(b) At and after the Effective Time, the Merger shall be effective as
provided in the applicable provisions of the GCL and the NRS. The corporate
existence of the Delaware Corporation, as the Surviving Corporation, with all of
its purposes and powers, shall continue unaffected and unimpaired by the Merger,
and, as the Surviving Corporation, it shall be governed by the GCL and succeed
to all rights, assets, liabilities and obligations of the Nevada Corporation in
accordance with the GCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, except as otherwise provided herein, all
the property, rights, privileges, powers and franchises of the Delaware
Corporation and the Nevada Corporation shall vest in the Surviving Corporation,
and all debts, liabilities and duties of the Delaware Corporation and the Nevada
Corporation shall become the debts, liabilities and duties of the Surviving
Corporation. The separate existence and corporate organization of the Nevada
Corporation shall cease at the Effective Time, with the Delaware Corporation
continuing as the Surviving Corporation of the Merger.
1.6 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION. The
Certificate of Incorporation of the Delaware Corporation as in effect
immediately prior to the Effective Date of the Merger shall continue in full
force and effect as the Certificate of Incorporation of the Surviving
Corporation until duly amended in accordance with the provisions thereof and
applicable law.
1.7 BY-LAWS OF SURVIVING CORPORATION. The By-Laws of the Delaware
Corporation as in effect immediately prior to the Effective Date of the Merger
shall continue in full force and effect as the By-Laws of the Surviving
Corporation until altered, amended or repealed as provided in the By-Laws or as
provided by applicable law.
2
1.8 DIRECTORS OF SURVIVING CORPORATION. The directors of the Nevada
Corporation as of the Effective Date of the Merger shall be and become the
directors of the Surviving Corporation.
1.9 OFFICERS OF SURVIVING COMPANY. The officers of the Nevada
Corporation as of the Effective Date of the Merger shall be and become the
officers of the Surviving Corporation.
ARTICLE II
CONDITIONS TO MERGER
The obligations of the Constituent Corporations to consummate the
Merger are subject to satisfaction of the following conditions:
2.1 AUTHORIZATION.
(a) The holders of at least a majority of the outstanding Common Shares
and shares of Common Stock shall have approved this Merger Agreement and the
Merger. All necessary action shall have been taken to authorize the execution,
delivery and performance of this Merger Agreement by each of the Constituent
Corporations.
ARTICLE III
GENERAL PROVISIONS
3.1 BINDING AGREEMENT. This Merger Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns; provided, however, that this Merger Agreement may not be assigned by
any party without the written consent of the other party.
3.2 AMENDMENTS. The Boards of Directors of the Nevada Corporation and
the Delaware Corporation may amend this Merger Agreement at any time prior to
the filing of this Merger Agreement (or a certificate in lieu thereof) with the
Secretary of State of Delaware, provided that an amendment made subsequent to
the adoption of this Merger Agreement by the shareholders of either the Nevada
Corporation or the Delaware Corporation shall not: (i) alter or change the
amount or kind of shares, securities, cash, property and/or rights to be
received in exchange for or on conversion of all or any of the shares of any
class or series thereof of the Nevada Corporation or the Delaware Corporation,
(ii) alter or change any term of the Certificate of Incorporation of the
Surviving Corporation, or (iii) alter or change any of the terms and conditions
of this Merger Agreement if such alteration or change would adversely affect the
holders of any class or series of capital stock of either the Nevada Corporation
or the Delaware Corporation.
3.3 FURTHER ASSURANCES. From time to time, as and when required by the
Delaware Corporation or by its successors or assigns, there shall be executed
and delivered on behalf of the Nevada Corporation such deeds and other
instruments, and there shall be taken or caused to be taken by the Nevada
Corporation such further and other actions as shall be appropriate or necessary
in order to vest or perfect in or confirm of record or otherwise by the Delaware
Corporation the title to and possession of all the property, rights, privileges,
powers, franchises, assets, immunities and authority of the Nevada Corporation
and otherwise to carry out the purposes of this Merger Agreement. The officers
and directors of the Delaware Corporation are fully authorized in the name and
on behalf of the Nevada Corporation or otherwise to take any and all such action
and to execute and deliver any and all such deeds or other instruments.
3.4 ABANDONMENT. At any time before the Effective Date of the Merger,
this Merger Agreement may be terminated and the Merger may be abandoned for any
reason whatsoever by the Board of Directors of either the Nevada Corporation or
the Delaware Corporation, or by both, by the adoption of appropriate resolutions
and written notification thereof to the other party to the Merger,
notwithstanding the approval of this Merger Agreement by the shareholders of the
Nevada Corporation or the Delaware Corporation, or by both. In the event of the
termination of this Merger Agreement and the abandonment of the Merger pursuant
to the provisions of this section, this Merger Agreement shall become void and
have no effect, without any liability on the part of either of the Constituent
Corporations or their respective officers, directors or shareholders in respect
thereof.
3
3.5 GOVERNING LAW. This Merger Agreement shall be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of New York and, so far as applicable, the merger provisions of the GCL
and the NRS.
[Signatures on following page]
4
IN WITNESS WHEREOF, each of the undersigned corporations has caused
this Merger Agreement to be signed in its corporate name by its duly authorized
officer as of the date first written above.
SRM NETWORKS, INC.
a Nevada corporation
By:
-----------------------
Jan Barcikowski,
President
SRM NETWORKS, INC.
a Delaware corporation
By:
-----------------------
Jan Barcikowski,
President
5
Exhibit B
CERTIFICATE OF INCORPORATION
OF
SRM NETWORKS, INC.
* * * *
FIRST: The name of the corporation is SRM Networks, Inc. (the
"Corporation").
SECOND: The address of its registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose or purposes of the Corporation shall be to engage
in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The aggregate number of shares which the Corporation is
authorized to issue is eighty-two million (82,000,000),
divided into classes as follows:
A. Fifty million (50,000,000) shares of common stock,
$.001 par value per share (hereinafter called the
"Common Stock"), divided into two classes as follows;
B. Thirty-two million (32,000,000) shares of preferred
stock, $.001 par value per share, to be issued in
series (the "Preferred Stock").
The following is a statement of the designations,
powers, preferences and rights, and the
qualifications, limitations or restrictions with
respect to the Preferred Stock of the Corporation:
The shares of Preferred Stock may be issued in one or
more series, and each series shall be so designated
as to distinguish the shares thereof from the shares
of all other series. Authority is hereby expressly
granted to the Board of Directors of the Corporation
to fix, subject to the provisions herein set forth,
before the issuance of any shares of a particular
series, the number, designations and relative rights,
preferences, and limitations of the shares of such
series including (1) voting rights, if any, which may
include the right to vote together as a single class
with the Common Stock and any other series of the
Preferred Stock with the number of votes per share
accorded to shares of such series being the same as
or different from that accorded to such other shares,
(2) the dividend rate per annum, if any, and the
terms and conditions pertaining to dividends and
whether such dividends shall be cumulative, (3) the
amount or amounts payable upon such voluntary or
involuntary liquidation, (4) the redemption price or
prices, if any, and the terms and conditions of the
redemption, (5) sinking fund provisions, if any, for
the redemption or purchase of such shares, (6) the
terms and conditions on which such shares are
convertible, in the event the shares are to have
conversion rights, and (7) any other rights,
preferences and limitations pertaining to such series
which may be fixed by the Board of Directors pursuant
to the Delaware General Corporation Law.
FIFTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to
make, alter or repeal the by-laws of the Corporation.
SIXTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director except for
liability (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived any improper
personal benefit.
SEVENTH: The name and address of the sole incorporator is: Henry
Nisser, c/o Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP,
101 East 52nd Street, New York, New York 10022.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate, hereby
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hands this 15th day of
July, 2002.
/s/ Henry Nisser
----------------------------------------------
Henry Nisser, Law Clerk
Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP
101 East 52nd Street
New York, New York 10022
Exhibit C
BYLAWS OF
SRM NETWORKS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
ARTICLE I
OFFICES AND RECORDS
Section 1.1. DELAWARE OFFICE. The principal office of SRM Networks,
Inc. (the "Corporation") in the State of Delaware shall be located in the City
of Wilmington, County of New Castle, and the name and address of its registered
agent is The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware.
Section 1.2. OTHER OFFICES. The Corporation may have such other
offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time to
time require.
Section 1.3. BOOKS AND RECORDS. The books and records of the
Corporation may be kept at the Corporation's headquarters or at such other
locations outside the State of Delaware as may from time to time be designated
by the Board of Directors.
ARTICLE II
STOCKHOLDERS
Section 2.1. ANNUAL MEETINGS. An annual meeting of stockholders shall
be held for the election of directors at such date, time and place, either
within or without the State of Delaware, as may be designated by resolution of
the Board of Directors from time to time. Any other proper business may be
transacted at the annual meeting.
Section 2.2. SPECIAL MEETINGS. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board or a
majority of the members of the Board of Directors.
Section 2.3. NOTICE OF MEETINGS. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given that shall state the place, date and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the Certificate of Incorporation or
these Bylaws, the written notice of any meeting shall be given not less than ten
or more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his or her address as it appears on the records of the
Corporation.
Section 2.4. ADJOURNMENTS. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof is announced at the meeting at which the adjournment is taken.
At the adjourned meeting the Corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 2.5. QUORUM. Except as otherwise provided by law, the
Certificate of Incorporation or these Bylaws, at each meeting of stockholders
the presence in person or by proxy of the holders of shares of stock having a
majority of the votes which could be cast by the holders of all outstanding
shares of stock entitled to vote at the meeting shall be necessary and
sufficient to constitute a quorum. In the absence of a quorum, the stockholders
so present may, by majority vote, adjourn the meeting from time to time in the
manner provided in Section 2.4 of these Bylaws until a quorum shall attend.
Shares of its own stock belonging to the Corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the Corporation,
shall neither be entitled to vote nor be counted for quorum purposes; provided,
however, that the foregoing shall not limit the right of the Corporation to vote
stock, including but not limited to its own stock, held by it in a fiduciary
capacity.
Section 2.6. ORGANIZATION. Meetings of stockholders shall be presided
over by the Chairman of the Board, or in his or her absence by the President, or
in the absence of the foregoing persons by a chairman designated by the Board of
Directors, or in the absence of such designation by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his or her
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 2.7. VOTING.
(a) Except as otherwise provided by law, the Certificate of
Incorporation, or these Bylaws, any corporate action, other than the election of
Directors, the affirmative vote of the majority of shares entitled to vote on
that matter and represented either in person or by proxy at a meeting of
stockholders at which a quorum is present shall be the act of the stockholders
of the Corporation.
(b) Unless otherwise provided for in the Certificate of
Incorporation of the Corporation, Directors will be elected by a majority of the
votes cast by the shares, present in person or by proxy, entitled to vote in the
election at a meeting at which a quorum is present and each stockholder entitled
to vote has the right to vote the number of shares owned by him or her for as
many persons as there are Directors to be elected. The Board of Directors may at
any time amend this provision to reduce the number of votes cast for the
election of a director to a plurality of the votes cast in the manner provided
immediately above.
(c) Except as otherwise provided by statute, the Certificate
of Incorporation, or these Bylaws, at each meeting of stockholders, each
stockholder of the Corporation entitled to vote thereat, shall be entitled to
one vote for each share registered in his or her name on the books of the
Corporation.
Section 2.8 PROXIES. Each stockholder entitled to vote or to express
consent or dissent without a meeting, may do so either in person or by proxy, so
long as such proxy is executed in writing by the stockholder himself or herself,
or by his or her attorney-in-fact thereunto duly authorized in writing. Every
proxy shall be revocable at will unless the proxy conspicuously states that it
is irrevocable and the proxy is coupled with an interest. A telegram, telex,
cablegram, or similar transmission by the stockholder, or as a photographic,
photostatic, facsimile, shall be treated as a valid proxy, and treated as a
substitution of the original proxy, so long as such transmission is a complete
reproduction executed by the stockholder. No proxy shall be valid after the
expiration of three years from the date of its execution, unless otherwise
provided in the proxy. Such instrument shall be exhibited to the Secretary at
the meeting and shall be filed with the records of the Corporation.
Section 2.9 ACTION WITHOUT A MEETING. Unless otherwise provided for in
the Certificate of Incorporation of the Corporation, any action to be taken at
any annual or special stockholders' meeting, may be taken without a meeting,
without prior notice and without a vote if a written consent or consents is/are
signed by the stockholders of the Corporation having not less than the minimum
number of votes necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereat were present and voted is delivered by hand
or by certified or registered mail, return receipt requested, to the Corporation
to its principal place of business or an officer or agent of the Corporation
having custody of the books in which proceedings of stockholders' meetings are
recorded.
Section 2.10. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
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 a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors and which record date: (i) in the case of determination
of stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty nor
less than ten days before the date of such meeting and (ii) in the case of any
other action, shall not be more than sixty days prior to such other action. If
no record date is fixed: (i) 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 and (ii) 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 thereto. 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.
Section 2.11. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The Secretary
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. The stock ledger
shall be the only evidence as to which stockholders are entitled to examine the
stock ledger, the list of stockholders or the books of the Corporation, or to
vote in person or by proxy at any meeting of stockholders.
Section 2.12. CONDUCT OF MEETINGS. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of stockholders shall have the right and
authority to prescribe such rules, regulations and procedures and to do all such
acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) rules and procedures for maintaining
order at the meeting and the safety of those present; (iii) limitations on
attendance at or participation in the meeting to stockholders of record of the
Corporation, their duly authorized and constituted proxies or such other persons
as the chairman of the meeting shall determine; (iv) restrictions on entry to
the meeting after the time fixed for the commencement thereof; and (v)
limitations on the time allotted to questions or comments by participants.
Unless and to the extent determined by the Board of Directors or the chairman of
the meeting, meetings of stockholders shall not be required to be held in
accordance with the rules of parliamentary procedure.
Section 2.13. INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE POLLS.
The Board of Directors by resolution may appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate has been
appointed to act, or if all inspectors or alternates who have been appointed are
unable to act, at a meeting of stockholders, the chairman of the meeting shall
appoint one or more inspectors to act at the meeting. Each inspector, before
discharging his or her duties, shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality and according to the best of
his or her ability. The inspectors shall have the duties prescribed by the
General Corporation Law of the State of Delaware. The chairman of the meeting
shall fix and announce at the meeting the date and time of the opening and the
closing of the polls for each matter upon which the stockholders will vote at a
meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors. In addition to the powers and authorities by these Bylaws expressly
conferred upon them, the Board of Directors may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by law, by the
Certificate of Incorporation or by these Bylaws required to be exercised or done
by the stockholders.
Section 3.2. NUMBER; QUALIFICATIONS. The Board of Directors need not be
composed of a particular number of members nor must such number be within any
particular range, unless the Certificate of Incorporation, an amendment to these
Bylaws or the Board of Directors shall otherwise provide. The number of
Directors shall until such time, if ever, be determined from time to time by
resolution of the Board of Directors. Directors need not be stockholders or
residents of the State of Delaware.
Section 3.3. ELECTION, RESIGNATION. The first Board of Directors shall
hold office until the first annual meeting of stockholders and until their
successors have been duly elected and qualified or until there is a decrease in
the number of Directors. Thereafter, each Director will be elected at the annual
meeting of stockholders and shall hold office until the annual meeting of the
stockholders next succeeding his or her election, or until his or her prior
death, resignation or removal. Any Director may resign at any time upon written
notice to the Board of Directors, the President or the Secretary of the
Corporation. Such resignation shall be effective upon receipt unless the notice
specifies a later time for that resignation to become effective.
Section 3.4. VACANCIES. Any newly created directorship resulting from
an increase in the authorized number of Directors or any vacancy occurring in
the Board of Directors by reason of death, resignation, retirement,
disqualification, removal from office or any other cause may be filled by the
affirmative vote of the remaining members of the Board of Directors, though less
than a quorum of the Board of Directors, and each Director so elected shall hold
office until the expiration of the term of office of the Director whom he or she
has replaced or until his or her successor is elected and qualified. If there
are no Directors in office, then an election of Directors may be held in the
manner provided by statute. No decrease in the number of Directors constituting
the whole Board shall shorten the term of any incumbent Director.
Section 3.5. REGULAR MEETINGS. Regular meetings of the Board
of Directors may be held at such places within or without the State of Delaware
and at such times as the Board of Directors may from time to time determine, and
if so determined notices thereof need not be given.
Section 3.6. SPECIAL MEETINGS. Special meetings of the Board
of Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, the President, the
Secretary, or by any two members of the Board of Directors. Notice of the date,
time and place of a special meeting of the Board of Directors shall be delivered
by the person or persons calling the meeting personally, by facsimile or by
telephone to each Director or sent by first-class mail or telegram, charges
prepaid, addressed to each Director at that Directors' address as it is shown on
the records of the Corporation. If the notice is mailed, it shall be deposited
in the United States mail at least four days before the time of the holding of
the meeting. If the notice is delivered personally or by telephone or telegraph,
it shall be delivered at least forty-eight hours before the time of the holding
of the special meeting. If by facsimile transmission, such notice shall be
transmitted at least twenty-four hours before the time of holding of the special
meeting. Any oral notice given personally or by telephone may be communicated
either to the Director or to a person at the office of the Director who the
person giving the notice has reason to believe will promptly communicate it to
the Director. The notice need not specify the purpose or purposes of the special
meeting or the place of the special meeting, if the meeting is to be held at the
principal office of the Corporation.
Section 3.7. TELEPHONIC MEETINGS PERMITTED. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting thereof by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Bylaw shall constitute presence in person at such meeting.
Section 3.8. QUORUM; VOTE REQUIRED FOR ACTION; ADJOURNMENT. At all
meetings of the Board of Directors a majority of the whole Board of Directors
shall constitute a quorum for the transaction of business. Except in cases in
which the Certificate of Incorporation or these Bylaws otherwise provide, the
vote of a majority of the Directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. A majority of the Directors
present, whether or not a quorum, may adjourn any meeting to another time and
place. Notice of the time and place of holding an adjourned meeting need not be
given unless the meeting is adjourned for more than twenty-four hours. If the
meeting is adjourned for more than twenty-four hours, then notice of the time
and place of the adjourned meeting shall be given to the Directors who were not
present at the time of the adjournment in the manner specified in Section 3.6.
Section 3.9. ORGANIZATION. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, or in his or her absence by a
chairman chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his or her absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
Section 3.10. INFORMAL ACTION BY DIRECTORS. Unless otherwise restricted
by the Certificate of Incorporation or these Bylaws, 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 members of the Board of
Directors or such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or such committee.
Section 3.11. FEES AND COMPENSATION OF DIRECTORS. Directors and members
of committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Board of Directors. This Section 3.11 shall not be construed to preclude any
Director from serving the Corporation in any other capacity as an officer,
agent, employee or otherwise and receiving compensation for those services.
Section 3.12 REMOVAL. One or more or all the Directors of the
Corporation may be removed for cause at any time by the stockholders, at a
special meeting of the stockholders called for that purpose, provided however,
such Director shall not be removed if the Certificate of Incorporation or Bylaws
provides that its Directors shall be elected by cumulative voting and there are
a sufficient number of shares cast against his or her removal, which if
cumulatively voted at an election of Directors would be sufficient to elect him
or her.
ARTICLE IV
COMMITTEES
Section 4.1. COMMITTEES. The Board of Directors may designate from
among its members one or more standing or special committees, each committee to
consist of one or more of the Directors of the Corporation. The Board of
Directors may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of the committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or she or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in place
of any such absent or disqualified member. Any such committee, to the extent
permitted by law and to the extent provided in the resolution of the Board of
Directors, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it.
Section 4.2. COMMITTEE RULES. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may make, alter
and repeal rules for the conduct of its business. In the absence of such rules
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article III of these Bylaws.
Section 4.3. MINUTES OF MEETINGS. All committees appointed in
accordance with Section 4.1 shall keep regular minutes of their meetings and
shall cause them to be recorded in books kept for that purpose in the office of
the Corporation.
ARTICLE V
OFFICERS
Section 5.1. DESIGNATIONS. The officers of the Corporation shall be a
Chairman of the Board, a President, a Secretary, Chief Financial Officer and, at
the discretion of the Board of Directors, one or more Directors and one or more
Vice-Presidents (one or more of whom may be Executive Vice-Presidents). The
Board of Directors shall appoint all officers. Any two or more offices may be
held by the same individual.
Section 5.2. APPOINTMENT AND TERM OF OFFICE. The officers of the
Corporation shall be appointed annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of the
stockholders. Each officer shall hold office until a successor shall have been
appointed and qualified, or until such officer's earlier death, resignation or
removal.
Section 5.3. POWERS AND DUTIES. If the Board appoints persons to fill
the following positions, such officers shall have the power and duties set forth
below:
(a) THE CHAIRMAN: The Chairman shall have general control and
management of the Board of Directors and may also be the President of the
Corporation. He or she shall preside at all meetings of the Board of Directors
at which he or she is present. He or she shall have such other powers and
perform such other duties as from time to time may be conferred or imposed upon
him or her by the Board of Directors.
(b) THE PRESIDENT: The President of the Corporation shall be
generally responsible for the proper conduct and the day to day operations of
the business of the Corporation. He or she shall possess power to sign all
certificates, contracts and other instruments of the Corporation. In the absence
of the Chairman, he or she shall preside at all meetings of the stockholders. He
or she shall perform all such other duties as are incident to his or her office
or are properly required of him or her by the Board of Directors.
(c) CHIEF FINANCIAL OFFICER: The Chief Financial Officer shall
keep or cause to be kept adequate and correct books and records of accounts of
the properties and business transactions of the Corporation, including accounts
of its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any Director. The Chief Financial Officer shall
(1) deposit corporate funds and other valuables in the Corporation's name and to
its credit with depositories designated by the Board of Directors; (2) make
disbursements of corporate funds as authorized by the Board of Directors; (3)
render a statement of the corporation's financial condition and an account of
all transactions conducted as chief financial officer whenever requested by the
President or the Board of Directors; and (4) have other powers and perform other
duties as prescribed by the President or the Board of Directors or the Bylaws.
Unless the board of directors has elected a separate Treasurer, the Chief
Financial Officer shall be deemed to be the treasurer for purposes of giving any
reports or executing any certificates or other documents.
(d) VICE PRESIDENT: Each Vice-President shall have such
powers and discharge such duties as may be assigned to him or her from time to
time by the President or the Board of Directors.
(e) SECRETARY AND ASSISTANT SECRETARIES: The Secretary shall
issue notices for all meetings, shall keep minutes of all meetings, shall have
charge of the seal and the corporate books, and shall make such reports and
perform such other duties as are incident to his or her office, or are properly
required of him or her by the Board of Directors. The Assistant Secretary, if
any, or Assistant Secretaries in order designated by the Board of Directors,
shall perform all of the duties of the Secretary during the absence or
disability of the Secretary, and at other times may perform such duties as are
directed by the President or the Board of Directors.
Section 5.4. DELEGATION. In the case of the absence or inability to act
of any officer of the Corporation and of any person herein authorized to act in
such officer's place, the Board of Directors may from time to time delegate the
powers or duties of such officer to any other officer or any Director or other
person whom it may in its sole discretion select.
Section 5.5. VACANCIES. Vacancies in any office arising from any cause
may be filled by the Board of Directors at any regular or special meeting of the
Board. The appointee shall hold office for the unexpired term and until his or
her successor is duly elected and qualified.
Section 5.6. OTHER OFFICERS. The Board of Directors, or a duly
appointed officer to whom such authority has been delegated by Board resolution,
may appoint such other officers and agents as it shall deem necessary or
expedient, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors.
Section 5.7. RESIGNATION. An officer may resign at any time by
delivering notice to the Corporation. Such notice shall be effective when
delivered unless the notice specifies a later effective date. Any such
resignation shall not affect the Corporation's contract rights, if any, with the
officer.
Section 5.8. REMOVAL. Any officer elected or appointed by the Board of
Directors may be removed at any time, with or without cause, by the affirmative
vote of a majority of the whole Board of Directors, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Section 5.9. BONDS. The Board of Directors may, by resolution, require
any and all of the officers to give bonds to the Corporation, with sufficient
surety or sureties, conditioned for the faithful performance of the duties of
their respective offices, and to comply with such other conditions as may from
time to time be required by the Board of Directors.
ARTICLE VI
STOCK
Section 6.1. ISSUANCE OF SHARES. No shares of the Corporation shall be
issued unless authorized by the Board of Directors or a duly constituted
committee thereof. Such authorization shall include the number of shares to be
issued, the consideration to be received and a statement regarding the adequacy
of the consideration.
Section 6.2. CERTIFICATES. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the Corporation by the Chairman
of the Board of Directors, if any, or the President or a Vice President, and the
Secretary or an Assistant Secretary, of the Corporation certifying the number of
shares owned by him or her in the Corporation. Any of or all the signatures on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
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 date
of issue.
Section 6.3. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF
NEW CERTIFICATES. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or his or her legal representative, to give the
Corporation indemnification or a bond sufficient to indemnify it against any
claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate.
Section 6.4. TRANSFERS OF STOCK.
(a) Transfers of stock shall be made only upon the stock
transfer records of the Corporation, which records shall be kept at the
registered office of the Corporation or at its principal place of business, or
at the office of its transfer agent or registrar. The Board of Directors may, by
resolution, open a share register in any state of the United States, and may
employ an agent or agents to keep such register and to record transfers of
shares therein.
(b) Shares of certificated stock shall be transferred by
delivery of the certificates therefor, accompanied either by an assignment in
writing on the back of the certificates or an assignment separate from the
certificate, or by a written power of attorney to sell, assign and transfer the
same, signed by the holder of said certificate. No shares of certificated stock
shall be transferred on the records of the Corporation until the outstanding
certificates therefor have been surrendered to the Corporation or to its
transfer agent or registrar.
Section 6.5. SHARES OF ANOTHER CORPORATION. Shares owned by the
Corporation in another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the Board of Directors may determine or, in the
absence of such determination, by the President of the Corporation.
ARTICLE VII
INDEMNIFICATION
Section 7.1. RIGHT TO INDEMNIFICATION. The Corporation shall indemnify
and hold harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was or is made or
is threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he or she, or a person for whom he or
she is the legal representative, is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses (including attorneys' fees) reasonably incurred by such
person. Notwithstanding the preceding sentence, the Corporation shall be
required to indemnify a person in connection with a proceeding (or part thereof)
initiated by such person only if the proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
Section 7.2. PREPAYMENT OF EXPENSES. The Corporation shall pay the
expenses (including attorneys' fees) incurred in defending any proceeding in
advance of its final disposition; provided, however, that the payment of
expenses incurred by a Director or officer in advance of the final disposition
of the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article VII or otherwise.
Section 7.3. CLAIMS. If a claim for indemnification or payment of
expenses under this Article VII is not paid in full within sixty days after a
written claim therefor has been received by the Corporation, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification or payment of
expenses under applicable law.
Section 7.4. NON-EXCLUSIVITY OF RIGHTS. The rights conferred
on any person by this Article VII shall not be exclusive of any other rights
which such person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, these Bylaws, agreement, vote of stockholders
or Directors or otherwise.
Section 7.5. OTHER INDEMNIFICATION. The Corporation's obligation, if
any, to indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any amount such person
may collect as indemnification from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit enterprise.
Section 7.6. AMENDMENT OR REPEAL. Any repeal or modification of the
foregoing provisions of this Article VII shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. FISCAL YEAR. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
Section 8.2. SEAL. The corporate seal shall have the name of the
Corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
Section 8.3. WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS,
DIRECTORS AND COMMITTEES. Any written waiver of notice, 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 was not lawfully called
or convened. Neither the business to be transacted at nor the purpose of any
regular or special meeting of the stockholders, Directors or members of a
committee of Directors need be specified in any written waiver of notice.
Section 8.4. INTERESTED DIRECTORS; QUORUM. No contract or transaction
between the Corporation and one or more of its Directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its Directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the Director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or her or their
votes are counted for such purpose, if: (i) the material facts as to his or her
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 of Directors
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 (ii) the material facts as to
his or her 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 (iii) 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. Common or interested Directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
Section 8.5. BOOKS AND RECORDS. The Corporation shall maintain
appropriate accounting records and shall keep as permanent records minutes of
all meetings of its stockholders and Board of Directors, a record of all actions
taken by the Board of Directors without a meeting and a record of all actions
taken by a committee of the Board of Directors. In addition, the Corporation
shall keep at its registered office or principal place of business, or at the
office of its transfer agent or registrar, a record of its stockholders, giving
the names and addresses of all stockholders in alphabetical order by class of
shares showing the number and class of the shares held by each. Any books,
records and minutes may be in written form or any other form capable of being
converted into written form within a reasonable time.
Section 8.6. AMENDMENT OF BYLAWS. In furtherance and not in limitation
of the powers conferred upon it by law, the Board of Directors is expressly
authorized to adopt, repeal or amend the Bylaws of the Corporation by the vote
of a majority of the entire Board of Directors. The Bylaws of the Corporation
shall be subject to alteration or repeal, and new Bylaws may be made, by a
majority vote of the stockholders at the time entitled to vote in the election
of Directors even though these Bylaws may also be altered, amended or repealed
by the Board of Directors.