UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
(Amendment No. )
Check the appropriate box: | ||
¨ | Preliminary Information Statement | |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2)) | |
x | Definitive Information Statement |
VAPOR CORP.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box): | ||||
x | No fee required | |||
¨ | Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies:
| |||
| ||||
(2) | Aggregate number of securities to which transaction applies:
| |||
| ||||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
| ||||
(4) | Proposed maximum aggregate value of transaction:
| |||
| ||||
(5) | Total fee paid: | |||
| ||||
¨ | Fee paid previously with preliminary materials. | |||
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid:
| |||
| ||||
(2) | Form, Schedule or Registration Statement No.:
| |||
| ||||
(3) | Filing Party:
| |||
| ||||
(4) | Date Filed:
| |||
| ||||
Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
VAPOR CORP.
3001 Griffin Road
Dania Beach, Florida 333312
(888) 766-5351
INFORMATION STATEMENT
PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14c-2 THEREUNDER
NOTICE OF STOCKHOLDER ACTION BY WRITTEN CONSENT
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND A PROXY
Dear Stockholders:
Vapor Corp. (“Vapor,” the “Company,” “we,” “us” or “our”) is sending you this Information Statement to inform you that the holders of a majority of the outstanding shares of our common stock (the “Majority Holders”) have approved by written consent in lieu of a special stockholders’ meeting (the “Written Consent”) the reincorporation of the Company to the State of Delaware from the State of Nevada (the “Reincorporation”).
The Reincorporation was approved by our board of directors on November 21, 2013; and on November 21, 2013 the Majority Holders executed the Written Consent in accordance with the Nevada Revised Statutes. The Majority Holders and their respective approximate ownership percentage of our common stock, which total in the aggregate 51.8% of the outstanding shares of our common stock, are as follows: Kevin Frija (6.3%), Jeffrey Holman (7.2%), Doron Ziv (9.3%), Tamar Galazan (6.6%), Adam Frija (5.5%), Isaac Galazan (5.9%), Harlan Press (0.7%), Special Situations Fund III, L.P. (7.2%), Special Situations Cayman Fund, L.P. (2.1%) and Special Situations Private Equity Fund, L.P. (1.0%).
Not having to convene a special stockholders’ meeting to approve the Reincorporation is permitted by Section 78.320 of the Nevada Revised Statutes which generally provides that any action required to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
This Information Statement is being delivered to inform our stockholders of record on November 21, 2013 of the Reincorporation before it becomes effective in accordance with Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended. The Reincorporation will become effective as soon as possible, but not sooner than 20 days following the date that this Information Statement is first mailed to our stockholders of record on the foregoing record date. We expect to mail this Information Statement on or about December 9, 2013. The entire cost of mailing this Information Statement will be borne by us.
Under Nevada law, our stockholders will be entitled to dissenter’s rights of appraisal upon completion of the Reincorporation.
By Order of the Board of Directors, | ||
| /s/ Kevin Frija | |
Kevin Frija, Chief Executive Officer and member of the Board |
December 9, 2013
REINCORPORATION OF THE COMPANY TO THE STATE OF DELAWARE
FROM THE STATE OF NEVADA
Our board of directors approved the reincorporation of the Company to the State of Delaware from the State of Nevada (the “Reincorporation”) in order to satisfy the Company’s obligation to reincorporate not later than December 31, 2013 under the purchase agreement it entered into on October 22, 2013 (the “Purchase Agreement”) with various institutional and individual accredited investors and certain of the Company’s executive officers and directors to raise gross proceeds of $10 million in a private placement of 16,666,667 shares of its common stock at a per share price of $0.60.
On October 29, 2013, we completed the private placement contemplated by the Purchase Agreement and received net proceeds from it of approximately $9 million, after paying placement agent fees and estimated offering expenses, which we will use to fund our growth initiatives and for working capital purposes.
Certain of the Majority Stockholders who approved the Reincorporation by the Written Consent are parties to the Purchase Agreement and did so in accordance with their obligations under the Purchase Agreement.
As described below, we will complete the Reincorporation pursuant to a plan of conversion (the “Plan of Conversion”) and our stockholders who did not approve the Reincorporation will be entitled to dissenter’s rights of appraisal upon completion of the Reincorporation.
We believe that the Reincorporation will benefit the Company and our stockholders because (i) Delaware corporate law is more comprehensive, widely used and extensively interpreted than other state corporate laws, including Nevada corporate law, (ii) Delaware is a preferred jurisdiction for the purpose of raising capital in the financial community and (iii) The NASDAQ Capital Market on which the Company is required to list its shares of common stock not later than July 29, 2014 in accordance with the Purchase Agreement does not look favorably upon Nevada as a jurisdiction of incorporation.
The Plan of Conversion
The Reincorporation will be effected pursuant to the Plan of Conversion in substantially the form attached hereto asAppendix A. The Plan of Conversion provides that the Company will convert from a Nevada corporation to a Delaware corporation (“Vapor Delaware”) and thereafter be subject to the laws of the State of Delaware. The Reincorporation will be considered, in effect, a continuation of existence of the Company, with the existence of Vapor Delaware deemed to have commenced when the Company was first formed in Nevada.
2
General actions that will occur pursuant to the Plan of Conversion
Pursuant to the Plan of Conversion, Delaware General Corporate Law, as amended (the “DGCL”), and the Nevada Revised Statutes, as amended (the “NRS”), upon conversion:
• | The Company will cease to be governed by the NRS and will be deemed a Delaware corporation subject to the DGCL; |
• | Vapor Delaware will be deemed to be the same entity as the Company for all purposes under the laws of Delaware, with the Company’s existence deemed to have commenced when the Company was first formed in Nevada; |
• | Vapor Delaware will continue to have all of the rights, powers and assets of the Company; |
• | Vapor Delaware will continue to have all the debts, liabilities and duties of the Company; |
• | All of the Company’s issued and outstanding shares will be automatically converted into issued and outstanding shares of common stock of Vapor Delaware, without any action on the part of the stockholders; |
• | All of the Company’s issued and outstanding warrants or other convertible rights will be automatically converted into issued and outstanding warrants or other convertible rights, respectively, of Vapor Delaware, upon the same terms and subject to the same conditions as set forth in the applicable warrant or other convertible right, and will be exercisable for the same number of shares of Vapor Delaware as the number of shares of the Company it was exercisable for before the conversion; |
• | Each stock option and other equity-based award issued and outstanding pursuant to employee benefit plans will automatically be converted into a stock option or other equity-based award with respect to the same number of shares of Vapor Delaware as the number of shares of the Company it was exercisable for before the conversion, upon the same terms and subject to the same conditions as set forth in the applicable plan under which the award was granted and in the agreement reflecting the award; |
• | All of the Company’s employee benefit plans (including stock option and other equity-based plans) will continue to be the employee benefit plans of Vapor Delaware; and |
• | Each director and officer of the Company will continue to hold their respective offices with Vapor Delaware. |
The Company will execute and file (1) articles of conversion, substantially in the form attached hereto asAppendix B (“Articles of Conversion”), with the Secretary of State of the State of Nevada, (2) a certificate of conversion, substantially in the form attached hereto asAppendix C (the “Certificate of Conversion”), with the Secretary of State of the State of Delaware, and (3) a certificate of incorporation, substantially in the form attached hereto asAppendix D (the “Delaware Certificate of Incorporation”), with the Secretary of State of the State of Delaware. The Delaware Certificate of Incorporation will be Vapor Delaware’s certificate of incorporation upon completion of the Reincorporation. Additionally, the bylaws substantially in the form attached hereto asAppendix E (the “Delaware Bylaws”) will be Vapor Delaware’s bylaws upon completion of the Reincorporation.
Effect of the Reincorporation on the Company’s Securities
Common Stock
The authorized capital stock of the Company currently consists of 250,000,000 shares of common stock, par value $0.001 per share, and 1,000,000 shares of preferred stock, par value $0.001 per share. Upon effectiveness of the Reincorporation, the authorized capital stock of Vapor Delaware will be the same as the authorized capital stock of the Company immediately prior to the Reincorporation. Pursuant to the Plan of Conversion, each share of common stock, par value $0.001 per share, of the Company that is issued and outstanding immediately prior to the Reincorporation will automatically convert into one share of common stock, $0.001 par value per share, of Vapor Delaware.
3
Each stock certificate representing issued and outstanding shares of common stock of the Company will continue to represent the same number of shares of common stock or preferred stock of Vapor Delaware without any action on the part of the stockholder.
Options
Each option to acquire shares of the Company’s common stock outstanding immediately prior to the Reincorporation shall convert into an equivalent option to acquire the same number of shares of the common stock of Vapor Delaware, upon the same terms and conditions.
Warrants and Other Rights
Each warrant or other right to acquire shares of the Company’s common stock outstanding immediately prior to the Reincorporation will convert into an equivalent warrant or other right to acquire the same number of shares of Vapor Delaware common stock, upon the same terms and conditions.
No effect on the Trading of Common Stock and the Company’s SEC Reporting Obligations
The Reincorporation will not affect the trading of the Company’s shares of common stock on the OTC Bulletin Board under the same symbol “VPCO.OB”. Vapor Delaware will continue to file periodic reports and other documents as and to the extent required by the rules and regulations of the Securities and Exchange Commission (“SEC”). Shares of the Company’s common stock that are freely tradable prior to the Reincorporation will continue to be freely tradable as shares of Vapor Delaware common stock, and shares of the Company’s common stock that are subject to restrictions prior to the Reincorporation will continue to be subject to the same restrictions as shares of Vapor Delaware common stock. The Reincorporation will not change the respective positions of the Company or its stockholders under federal securities laws.
No Action is required by Stockholders to receive Shares of Vapor Delaware
No action will be required on the part of the Company’s stockholders to receive shares of Vapor Delaware upon completion of the Reincorporation. Pursuant to the Plan of Conversion, the issued and outstanding shares of common stock of the Company will automatically be converted into shares of common stock of Vapor Delaware and certificates representing shares of common stock of the Company will automatically be deemed to represent shares of common stock of Vapor Delaware.
Stockholders are not required to exchange their Certificates
Stockholders that wish to receive certificates of Vapor Delaware in exchange for their certificates of the Company, may submit their certificates for exchange to the Company’s transfer agent at:
Island Stock Transfer
15500 Roosevelt Boulevard
Suite 301
Clearwater, Florida 33760
No changes to the Board of Directors, Business, Management, or Employee Benefit Plans of the Company
The Reincorporation would affect only a change in the legal domicile of the Company and certain other changes of a legal nature, the most significant of which are described in this Information Statement under “General Actions that will occur pursuant to the Plan of Conversion” and “Changes to Stockholder Rights Before and After the Reincorporation”. The Reincorporation will not result in any change in the business, management, fiscal year, assets or liabilities or employee benefit plans. The Company’s directors and officers immediately prior to the effective date of the
4
Reincorporation will continue to be the directors and officers of Vapor Delaware. All of the Company’s employee benefit plans will be continued by Vapor Delaware, and each stock option and other equity-based award issued and outstanding pursuant to such plans will automatically be converted into a stock option or other equity-based award with respect to the same number of shares of Vapor Delaware, upon the same terms and subject to the same conditions as set forth in the applicable plan under which the award was granted and in the agreement reflecting the award. Upon completion of the Reincorporation, these plans will be assumed by Vapor Delaware. Upon completion of the Reincorporation, Vapor Delaware will continue the Company’s other employee benefit arrangements upon the terms and subject to the conditions currently in effect.
Changes to Stockholder Rights Before and After the Reincorporation
Although Vapor Delaware’s Delaware Certificate of Incorporation and Delaware Bylaws contain many similar provisions from the Company’s existing Articles of Incorporation and Bylaws, they also include certain provisions that are different from the provisions contained in the Company’s existing Articles of Incorporation and Bylaws. The following discussion briefly summarizes some of the changes resulting from the Reincorporation and the significant differences between the NRS (Nevada law), the Company’s existing Articles of Incorporation and Bylaws and the DGCL (Delaware law), Vapor Delaware’s Delaware Certificate of Incorporation and Delaware Bylaws. The foregoing summary does not purport to be a complete statement of the respective rights of holders of our common stock and Vapor Delaware common stock, and is qualified in its entirety by reference to the NRS and DGCL, respectively, and to the Company’s existing Articles of Incorporation and Bylaws and Vapor Delaware’s Delaware Certificate of Incorporation and Delaware Bylaws, respectively.
Provision | Nevada Law and Company’s Articles of Incorporation and Bylaws | Delaware Law and Vapor Delaware’s Delaware Certificate of Incorporation and Bylaws | Notes | |||
Amendment of Charter Documents | Nevada law requires a vote of the corporation’s board of directors followed by the affirmative vote of the majority of shares present or in person and entitled to vote to approve any amendment to the articles of incorporation. If any proposed amendment would adversely alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series adversely affected by the amendment. Nevada law provides that, unless otherwise prohibited by any bylaw adopted by the stockholders, the directors may adopt, amend or repeal any bylaw, including any bylaw adopted by the stockholders. The articles of incorporation may grant the | Delaware law requires a vote of a corporation’s board of directors followed by the affirmative vote of the majority of shares present in person or represented by proxy and entitled to vote to approve any amendment to the certificate of incorporation, unless a greater percentage vote is required by the certificate of incorporation. Where a separate vote by class or series is required, the affirmative vote of a majority of the shares of such class or series is required unless the certificate of incorporation requires a greater percentage vote. Further, Delaware law states that if an amendment would increase or decrease the aggregate number of authorized shares of a class, increase or decrease the par value of shares of a class or alter or change the powers, preferences or special rights of a particular class or | The Delaware Certificate of Incorporation also provides that the affirmative vote of the holders of at least 66 2/3% of the voting power of all then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter or repeal the provisions in the Certificate of Incorporation relating to the exculpation of directors and indemnification of directors and officers. |
5
authority to adopt, amend or repeal bylaws exclusively to the directors. | series of stock so as to affect them adversely, the class or series so affected shall be given the power to vote as a class notwithstanding the absence of any specifically enumerated power in the certificate of incorporation. Delaware law also states that the power to adopt, amend or repeal the bylaws of a corporation shall be vested in the stockholders entitled to vote, provided that the corporation in its certificate of incorporation may confer such power on the board of directors in addition to the stockholders. | |||||
The Company’s existing Articles of Incorporation and Bylaws provide that the bylaws of the Company may be amended by the Board or stockholders, except the Board may not alter or repeal bylaws that the stockholders have expressly provided may not be amended or repealed by the Board. | The Delaware Certificate of Incorporation and the Delaware Bylaws provide that the Board and stockholders are authorized to adopt, alter, amend or repeal the bylaws, provided that such action by stockholders relating to the exculpation of directors and the indemnification of officers and directors requires the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then outstanding shares of capital stock entitled to vote generally in the election of directors, voting together as a single class. | |||||
Number of Directors | Nevada law provides that a corporation must have at least one director, and may provide in its articles of incorporation or in its bylaws for a fixed number of directors or a variable number of directors, and for the manner in which the number of directors may be increased or decreased. | Delaware law provides that a corporation must have at least one or more directors to be fixed as provided in the bylaws of the corporation, unless the certificate of incorporation fixes the number of directors, in which case a change in the number of directors shall be made only by amendment of the certificate of incorporation. | Nevada and Delaware law are substantially similar in respect to setting the number of directors of the Company. | |||
The Company’s existing Bylaws provide that the Board shall consist of at least one (1) member, as shall be fixed from time to time by the Board or the stockholders. | The Delaware Bylaws provide that the Board shall consist of at least one (1) member, as shall be fixed from time to time by the Board or the stockholders. | The Company’s existing Bylaws and the Delaware Bylaws are the same in this regard. |
6
Classified Board of Directors | Under Nevada law, the articles of incorporation or the bylaws may provide for the classification of directors as to the duration of their respective terms of office or as to their election by one or more authorized classes or series of shares. At least one-fourth of the total number of the directors must be elected annually. | Under Delaware law, the certificate of incorporation or the bylaws may provide for the classification of directors into as many as three classes with staggered terms of office. The certificate of incorporation may provide the holders of any class or series of stock the right to elect 1 or more directors. In addition, the certificate of incorporation may confer upon 1 or more directors voting powers greater than or less than those of other directors. | Nevada and Delaware law are substantially similar in respect to classification of the Board. | |||
The Company’s existing Articles of Incorporation and Bylaws do not provide for a classified board of directors. | The Delaware Certificate of Incorporation and the Delaware Bylaws will not provide for a classified board of directors. | The Delaware Certificate and Bylaws and the Company’s existing Articles of Incorporation and Bylaws are identical in this regard. | ||||
Term of Board of Directors | Nevada law provides that, unless otherwise provided in the articles of incorporation or bylaws, each director holds office after the expiration of his or her term until a successor is elected and qualified at an annual meeting of stockholders, or until the director resigns or is removed. | The default rule in Delaware is that each director shall hold office until the next annual meeting of stockholders (and until such director’s successor is elected and qualified) or until such director’s earlier resignation or removal. | Nevada and Delaware law are substantially similar in respect to the term of directors. | |||
The Company’s existing Bylaws provide that each director shall hold office until the next annual shareholder meeting or until his or her successor is elected and qualified. | The Delaware Bylaws provide that each director shall hold office until such director’s successor is elected and qualified. | The Delaware Bylaws and the Company’s existing Bylaws are identical in this regard. | ||||
Removal of Directors | Nevada law provides that the any director may be removed, with or without cause, from office by the vote of stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to vote. With respect to corporations that elect directors with cumulative voting, any director or directors who constitute fewer than all of the directors may | Delaware law provides that a director may be removed with or without cause by the holders of a majority in voting power of the issued and outstanding stock entitled to vote, except that (1) members of a classified board of directors may be removed only for cause, unless the certificate of incorporation provides otherwise, and (2) in the case of a corporation having | Nevada and Delaware law are substantially similar in respect to the removal of directors. |
7
not be removed except upon vote of the stockholders owning sufficient shares to prevent each director’s election at the time of removal. | cumulative voting, directors may not be removed in certain situations without satisfying certain stockholder approval requirements. | |||||
The Company’s existing Bylaws provide that directors may be removed, with or without cause, by a vote of two-thirds of the shares of outstanding stock entitled to vote at an election of directors. | The Delaware Bylaws provide that any director may be removed by the holders of a majority of shares then entitled to vote at an election of directors. | The Delaware Bylaws reduce the voting requirement for stockholders to remove a director. | ||||
Filling Vacancies on the Board of Directors | Nevada law provides that all vacancies, including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors, though less than a quorum, unless it is otherwise provided in the articles of incorporation. Unless otherwise provided in the articles of incorporation, pursuant to a resignation by a director, the board may fill the vacancy or vacancies with each director so appointed to hold office during the remainder of the term of office of the resigning director or directors. | Delaware law provides that, unless otherwise provided in the certificate of incorporation or bylaws of a corporation, vacancies may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Further, if, at the time of filling any vacancy, the directors then in office shall constitute less than a majority of the whole board, the Delaware Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office. | Delaware law provides greater protection to the Company’s stockholders by permitting stockholders representing at least 10% of the issued and outstanding shares to apply to the Delaware Court of Chancery to have an election of directors in the situation where the directors in office constitute less than a majority of the whole Board. | |||
The Company’s existing Bylaws provide that vacancies on the Board shall be filled by a vote of the directors then in office, though less than a quorum, or by a sole remaining director. | The Delaware Bylaws provide that any vacancy on the board of directors may be filled by only a majority vote of the directors then in office, though less than a quorum, or by a sole remaining director. | The Delaware Bylaws provide the same appointment rights as the Company’s existing Bylaws. | ||||
Cumulative Voting | Nevada law permits cumulative voting only if the articles of incorporation provide for cumulative voting and certain procedures regarding notice are followed. | Delaware law permits corporations to provide for cumulative voting in the corporation’s certificate of incorporation. | Nevada and Delaware law are substantially similar in respect to cumulative voting for directors. |
8
The Company’s existing Articles of Incorporation do not provide for cumulative voting. | The Delaware Certificate of Incorporation does not provide for cumulative voting. | The Delaware Certificate of Incorporation and the Company’s existing Articles of Incorporation are identical in respect to not allowing cumulative voting. | ||||
Board Action by Written Consent | Under Nevada law, unless otherwise stated in the articles of incorporation or bylaws, any action required or permitted to be taken at a meeting of the board of directors or committee of the board of directors may be taken without a meeting if, before or after the action, a written consent thereto is signed by all the members of the board except any interested directors. | Under Delaware law, unless otherwise stated in the articles of incorporation or bylaws, any action required or permitted to be taken at any meeting of the board of directors or committee of the board of directors may be taken without a meeting if all members of the board consent thereto in writing, or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board, or committee. | Nevada and Delaware law are substantially similar in respect to the action by written consent. | |||
The Company’s existing Articles of Incorporation and Bylaws do not change this statutory provision. | The Delaware Certificate of Incorporation and the Delaware Bylaws do not change this statutory provision. | |||||
Interested Party Transactions | Nevada law provides that no contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other entity of which one or more of its directors or officers are directors or officers, or in which one or more of its directors or officers have a financial interest, is void or voidable if (a) the director’s or officer’s interest in the contract or transaction is known to the board, committee or stockholders and the transaction is approved or ratified by the board, committee or stockholders in good faith by a vote sufficient for the purpose (without counting the vote of the interested director or officer), (b) the fact of the common interest is not known to the director or officer at the time the transaction is | Delaware law provides that no contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other entity of which one or more of its directors or officers are directors or officers, or in which one or more of its directors or officers have a financial interest, is void or voidable if (a) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or known to the board of directors or a committee thereof, which authorizes the contract or transaction in good faith by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less | Nevada and Delaware law are substantially similar, with Delaware law providing additional provisions for the approval of related party transactions by stockholders. |
9
brought before the board, or (c) the contract or transaction is fair to the corporation at the time it is authorized or approved. | than a quorum, (b) the material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or known to the stockholders entitled to vote thereon and the contract or transaction is specifically approved in good faith by the stockholders or (c) the contract or transaction is fair to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee thereof, or the stockholders. | |||||
The Company’s existing Articles of Incorporation and Bylaws do not change this statutory rule. | The Delaware Certificate of Incorporation and Delaware Bylaws will not change this statutory rule. | |||||
Stockholder Voting- Quorum | Nevada law provides that a majority of the voting power, present in person or by proxy at a meeting of stockholders (regardless of whether the proxy has authority to vote on all matters), constitutes a quorum for the transaction of business. | Delaware law provides that a majority of shares entitled to vote, present in person or by proxy, constitutes a quorum at a stockholder meeting. | Nevada and Delaware law are substantially similar in respect to quorum requirements. | |||
The Company’s existing Bylaws provide that a majority of the voting power, present in person or by proxy at a meeting of stockholders constitutes a quorum for the transaction of business. | The Delaware Bylaws provide that a majority of the voting power, present in person or by proxy at a meeting of stockholders constitutes a quorum for the transaction of business. | The Delaware Bylaws and the Company’s existing Bylaws are identical in respect to quorum requirements. | ||||
Stockholder Voting-Action | Action by the stockholders on a matter other than the election of directors is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action. | In all matters other than the election of directors, the affirmative vote of the majority shares present in person or by proxy at the meeting and entitled to vote on the subject matter constitutes the act of the stockholders. Where are separate vote by a class or series or classes or series is required, a majority of the outstanding shares of such class or series, present in person or by proxy, generally constitutes a quorum and the affirmative vote of the majority of shares of such class or series present in person or by proxy constitutes the act of such class or series. | Nevada and Delaware law are substantially similar in respect to stockholder voting. |
10
The Company’s existing Bylaws provide that action by the stockholders on a matter is approved by a majority of the stock present or represented and voting on the matter, except when a different vote is required by law, the articles of incorporation or the bylaws (such as the election of directors which is determined by a plurality of the votes cast). | The Delaware Bylaws provide that action by the stockholders on a matter is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action, unless the affirmative vote of a greater number is required by the Bylaws, the Certificate of Incorporation or the DGCL (such as the election of directors which is determined by a plurality of the votes cast). | The Delaware Bylaws have a lower voting requirement than the Company’s existing bylaws. | ||||
Director Elections | Nevada law provides that, unless otherwise stated in the articles or bylaws, the election of directors shall be by a plurality of the vote. | Delaware law provides that, unless otherwise stated in the certificate or bylaws, the election of directors shall be by a plurality of the vote. | Nevada and Delaware law are substantially similar in respect to the election of directors. | |||
The Company’s existing Bylaws are silent on the vote required for election of directors. Nevada law by default provides that election of directors is by a plurality of the vote. | The Delaware Bylaws provide that the election of directors shall be by a plurality of the vote. | The Delaware Bylaws provide for the same standard for election of directors as is currently applicable to the Company, but makes this standard explicit in the bylaws rather than defaulting to Nevada law. | ||||
Stockholder Action by Written Consent | Nevada law provides that, unless the articles of incorporation or the bylaws 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 the outstanding stock having at least the minimum number of votes that would be necessary to authorize or take such action at a meeting consent to the action in writing. | Delaware law provides that, unless the certificate of incorporation provides otherwise, any action required to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted consent to the action in writing. In addition, the corporation is required to give | Nevada and Delaware law are substantially similar in relation to action by written consent of the stockholders. |
11
prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent to those stockholders who did not consent in writing. | ||||||
The Company’s existing Bylaws provide that an action, except for the election of directors, may be taken without a meeting if a consent in writing is signed by at least a majority of the voting power. | The Delaware Bylaws provide that any action required to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted consent to the action in writing. | The Company’s existing Bylaws and the Delaware Bylaws are identical in this regard except that the Delaware Bylaws permit stockholder action by written consent with respect to the election of directors. | ||||
Stockholder Vote for Mergers and Other Corporate Reorganizations | Under Nevada law, a majority of outstanding shares entitled to vote, as well as approval by the board of directors is required for a merger or a sale of substantially all of the assets of the corporation. Generally, Nevada law does not require a stockholder vote of the surviving corporation in a merger if: (a) the plan of merger does not amend the existing articles of incorporation; (b) each share of stock of the surviving corporation outstanding immediately before the effective date of the merger is an identical outstanding share after the merger; (c) the number of voting shares outstanding immediately after the merger, plus the number of voting shares issued as a result of the merger, either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger, will not exceed by more than 20% the total number of voting shares of the surviving domestic corporation outstanding immediately before the merger; and (d) the number of participating shares outstanding immediately after the merger, plus | Under Delaware law, a majority of outstanding shares entitled to vote, as well as approval by the board of directors is required for a merger or a sale of substantially all of the assets of the corporation. Generally, Delaware law does not require a stockholder vote of the surviving corporation in a merger (unless the corporation provides otherwise in its certificate of incorporation) if: (a) the plan of merger does not amend the existing certificate of incorporation; (b) each share of stock of the surviving corporation outstanding immediately before the effective date of the merger is an identical outstanding share after the merger; and (c) either no shares of common stock of the surviving corporation and no shares, securities or obligations convertible into such stock are to be issued or delivered under the plan of merger, or the authorized unissued shares or shares of common stock of the surviving corporation to be issued or | Nevada and Delaware law are substantially similar in relation to stockholder approval of mergers and other corporate reorganizations. |
12
the number of participating shares issuable as a result of the merger, either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger, will not exceed by more than 20% the total number of participating shares outstanding immediately before the merger. | delivered under the plan of merger plus those initially issuable upon conversion of any other shares, securities or obligations to be issued or delivered under such plan do not exceed 20% of the shares of common stock of such constituent corporation outstanding immediately prior to the effective date of the merger. | |||||
The Company’s existing Articles of Incorporation and Bylaws do not change this statutory rule. | The Delaware Certificate of Incorporation and Delaware Bylaws do not change this statutory rule. | |||||
Special Meetings of Stockholders | Under Nevada law, unless otherwise provided in the articles of incorporation or bylaws, the entire board of directors, any two directors or the president may call annual and special meetings of the stockholders and directors. | Under Delaware law, a special meeting of stockholders may be called by the board of directors or by such persons as may be authorized by the certificate of incorporation or by the bylaws. | Nevada law provides for explicit authority to call special meetings to any two directors and the president, whereas Delaware law leaves discretion to the certificate of incorporation or the bylaws. | |||
The Company’s existing Bylaws provide that special meetings of stockholders may be called by the chairman of the Board, the Board, or the holders of not less than one-fourth of all shares entitled to vote at the meeting. | The Delaware Bylaws provide that a special meeting may be called at any time by the chairperson of the Board, the chief executive officer, by a majority of the Board or the holders of not less than one-fourth of all shares entitled to vote at the meeting. | The Company’s existing Bylaws and the Delaware Bylaws are substantially the same. | ||||
Failure to Hold an Annual Meeting of Stockholders | Nevada law provides that if a corporation fails to elect directors within 18 months after the last election of directors, a Nevada district court will have jurisdiction in equity and may order an election upon petition of one or more stockholders holding at least 15% of the voting power. | Delaware law provides that if an annual meeting for election of directors is not held on the date designated or an action by written consent to elect directors in lieu of an annual meeting has not been taken within 30 days after the date designated for the annual meeting, or if no date has been designated, for a period of 13 months after the latest to occur of the organization of the corporation, its last annual meeting or the last action by written consent to elect directors in lieu of an annual meeting, the Court of Chancery may summarily order a meeting to be held upon the application of any stockholder or director. | Delaware law provides for a shorter interval than Nevada law (13 months vs. 18 months) before a shareholder can apply to a court to order meeting for the election of directors. Nevada law requires that application to be made by a stockholder holding at least 15% of the voting power, whereas Delaware law permits any stockholder or director to make the application. |
13
The Company’s existing Articles of Incorporation and Bylaws do not change this statutory rule, but the Company’s Bylaws do provide that the annual meeting shall be held on the second Tuesday of the third month after the end of the Company’s fiscal year (or the next succeeding business day if such date is a legal holiday). The Company’s existing Bylaws provide that if the Company fails to have an annual meeting for the election of directors, the stockholders may call a special meeting for that purpose. | The Certificate of Incorporation and Delaware Bylaws will not change this statutory rule. The Delaware Bylaws provide that the annual meeting of the stockholders shall be held for the election of directors at such date and time as may be designated by resolution of the board of directors, provided that the Board may determine that that meeting not be held at any place and instead be held solely by means of remote communication as authorized Delaware law. | |||||
Limitation on Director Liability | Under Nevada law, unless the articles of incorporation or an amendment thereto (filed on or after October 1, 2003) provides for greater individual liability, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that: (a) the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer; and (b) the breach of those duties involved intentional misconduct, fraud or a knowing violation of law. | Under Delaware law, if a corporation’s certificate of incorporation so provides, the personal liability of a director for breach of fiduciary duty as a director may be eliminated or limited. A corporation’s certificate of incorporation, however, may not limit or eliminate a director’s personal liability (a) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (b) for acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law, (c) for the payment of unlawful dividends, stock repurchases or redemptions, or (d) for any transaction in which the director received an improper personal benefit. | Delaware law is more extensive in the enumeration of actions under which the Company may not eliminate a director’s personal liability. | |||
The Company’s existing Articles of Incorporation do not change this statutory provision. | The Delaware Certificate of Incorporation will not change this statutory provision. | |||||
Indemnification | Under Nevada law, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, | Under Delaware law, a corporation may indemnify any person who was or is a party or is threatened to be made a party |
14
pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit or proceeding if the person: (a) is not liable pursuant to NRS 78.138; or (b) acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful. However, indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. To the extent that such person has been successful on the merits or otherwise in defense of any proceeding subject to the Nevada indemnification laws, the corporation shall indemnify him or her against expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense. | to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if: the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. With respect to actions by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit is brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. A director or officer who is successful, on the merits or otherwise, in defense of any proceeding subject to the |
15
Delaware corporate statutes’ indemnification provisions shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith. | ||||||
The Company’s existing Articles of Incorporation and Bylaws do not change this statutory provision. | The Delaware Certificate of Incorporation and the Delaware Bylaws will not change this statutory provision. | |||||
Advancement of Expenses | Nevada law provides that the articles of incorporation, the bylaws or an agreement made by the corporation may provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and 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 by a court of competent jurisdiction that the director or officer is not entitled to be indemnified by the corporation. | Delaware law provides that expenses incurred by an officer or director of the corporation 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 such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it is ultimately determined that such person is not entitled to be indemnified by the corporation as authorized under the indemnification laws of Delaware. Such expenses may be so paid upon such terms and conditions as the corporation deems appropriate. Under Delaware law, unless otherwise provided in its certificate of incorporation or bylaws, a corporation has the discretion whether or not to advance expenses. | ||||
The Company’s existing Articles of Incorporation and Bylaws do not alter this statutory provision. | The Delaware Bylaws provide for advanced payment of expenses in accordance with the statutory provision. | |||||
Declaration and Payment of Dividends | Under Nevada law, except as otherwise provided in the articles of incorporation, a board of directors may authorize and the corporation may make distributions to its stockholders, including distributions on shares that are partially paid. However, no | Under Delaware law, subject to any restriction contained in a corporation’s certificate of incorporation, the board of directors may declare, and the corporation may pay, dividends or other distributions upon the shares of its capital stock either | Delaware law is more restrictive than Nevada law with respect to when dividends may be declared and paid. |
16
distribution may be made if, after giving effect to such distribution: (a) the corporation would not be able to pay its debts as they become due in the usual course of business; or (b) except as otherwise specifically allowed by the articles of incorporation, the corporation’s total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution. | (a) out of “surplus” or (b) in the event that there is no surplus, out of the net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year, unless net assets (total assets in excess of total liabilities) are less than the capital of all outstanding preferred stock. “Surplus” is defined as the excess of the net assets of the corporation over the amount determined to be the capital of the corporation by the board of directors (which amount cannot be less than the aggregate par value of all issued shares of capital stock). | |||||
The Company’s existing Articles of Incorporation do not change this statutory provision. | The Delaware Certificate of Incorporation does not change this statutory provision. | |||||
Business Combinations | Nevada law prohibits certain business combinations between a Nevada corporation and an interested stockholder for three years after such person becomes an interested stockholder. Generally, an interested stockholder is a holder who is the beneficial owner of 10% or more of the voting power of a corporation’s outstanding stock and at any time within three years immediately before the date in question was the beneficial owner of 10% or more of the then outstanding stock of the corporation. After the three year period, business combinations remain prohibited unless they are (a) approved by the board of directors prior to the date that the person first became an interested stockholder or a majority of the outstanding voting power not beneficially owned by the interested party, or (b) the interested stockholder satisfies certain fair-value requirements. An interested stockholder is (i) a person that beneficially owns, directly or indirectly, 10% or more of the voting power of the outstanding voting shares of a | Delaware law prohibits, in certain circumstances, a “business combination” between the corporation and an “interested stockholder” within three years of the stockholder becoming an “interested stockholder.” Generally, an “interested stockholder” is a holder who, directly or indirectly, controls 15% or more of the outstanding voting stock or is an affiliate of the corporation and was the owner of 15% or more of the outstanding voting stock at any time within the three-year period prior to the date upon which the status of an “interested stockholder” is being determined. A “business combination” includes a merger or consolidation, a sale or other disposition of assets having an aggregate market value equal to 10% or more of the consolidated assets of the corporation or the aggregate market value of the outstanding stock of the corporation and certain transactions that would increase the interested |
17
corporation, or (ii) an affiliate or associate of the corporation who, at any time within the past three years, was an interested stockholder of the corporation. | stockholder’s proportionate share ownership in the corporation. This provision does not apply where, among other things, (i) the transaction which resulted in the individual becoming an interested stockholder is approved by the corporation’s board of directors prior to the date the interested stockholder acquired such 15% interest, (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 at the time the transaction commenced, or (iii) at or after the date the person becomes an interested stockholder, the business combination is approved by a majority of the board of directors of the corporation and an affirmative vote of at least 66 2/3% of the outstanding voting stock at an annual or special meeting and not by written consent, excluding stock not owned by the interested stockholder. This provision also does not apply if a stockholder acquires a 15% interest inadvertently and divests itself of such ownership and would not have been a 15% stockholder in the preceding three years but for the inadvertent acquisition of ownership. | |||||
The Company’s existing Articles of Incorporation have expressly elected not to be governed by this statutory provision as is permitted by this statutory provision. | The Delaware Certificate of Incorporation has expressly elected not to be governed by this statutory provision as is permitted by this statutory provision. | |||||
Taxes and Fees | Nevada charges corporations incorporated in Nevada nominal annual corporate fees based on the value of the corporation’s authorized stock with a minimum fee of $35,000, as well as a $200 business license fee, and does not impose any franchise taxes on corporations. | Delaware imposes annual franchise tax fees on all corporations incorporated in Delaware. The annual fee ranges from a nominal fee to a maximum of $180,000, based on an equation consisting of the number of shares authorized, the number of shares outstanding and the net assets of the corporation. |
18
Dissenter’s Rights of Appraisal for Stockholders who did not approve the Reincorporation
Any holder of record shares of the Company’s stock who did not approve the Reincorporation may seek to receive the appraised value for his, her or its shares of the Company’s common stock if such stockholder fully complies with the provisions of NRS Sections 92A.300 – 92A.500.
No later than 10 days after the Reincorporation is completed, the Company will send a written dissenters’ notice and form, accompanied by a copy of NRS Sections 92A.300 – 92A.500 inclusive to each stockholder who did not vote in favor of the Reincorporation. The dissenters’ notice will state the effective date of the Reincorporation, where the payment demand must be sent, and where and when share certificates must be deposited. It will set a date, not fewer than 30 nor more than 60 days after delivery of the notice, by which the payment demand must be received from the dissenting stockholder. The notice will include a form for demanding payment that will require the stockholder asserting dissenters’ rights to certify whether or not the stockholder acquired beneficial ownership of the shares before December 9, 2013, the date of the first announcement to the stockholders of the terms of the proposed Reincorporation, and that the stockholder did not vote in favor of the transaction. Please note that shares acquired after December 9, 2013, referred to in this section as after-acquired shares, may be subject to different treatment in accordance with NRS Section 92A.470 than shares acquired before that date.
A stockholder who receives a dissenters’ notice must comply with the terms of the notice. A stockholder asserting dissenters’ rights who does so by demanding payment, depositing his certificates in accordance with the terms of the notice and certifying that beneficial ownership was acquired before December 9, 2013, will retain all other rights of a stockholder until these rights are cancelled or modified by the Reincorporation.
Dissenters’ rights under NRS Section 92A.400 may be asserted either by a beneficial stockholder or a stockholder of record. A record stockholder may assert dissenters’ rights as to fewer than every share registered in his/her name only if he/she objects for all shares beneficially owned by any one person and notifies the Company in writing of the name and address of each person on whose behalf he/she asserts dissenters’ rights. A beneficial stockholder may assert dissenters’ rights as to shares held on his/her behalf only if he/she submits to the Company the stockholder of record’s written consent before or at the time he/she asserts dissenters’ rights and he does so for all shares that he/she beneficially owns or over which he/she has the power to direct the vote.
Within 30 days after receipt of a payment demand, the Company will pay in cash to each stockholder who complied with the terms of the dissenters’ notice the amount the Company estimates to be the fair value of the shares, plus interest, except that the Company may withhold payment from a dissenter as to after-acquired shares, at which point it shall offer its estimate of fair value of such shares, plus interest, to the dissenter in accordance with NRS 92A.470. The payment will be accompanied by the Company’s balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, an income statement for that year, a statement of changes in stockholder’s equity and the latest available interim financial statements; a statement of the Company’s estimate of the fair value of the shares; an explanation of how the interest was calculated; a statement of the dissenter’s right to demand payment under NRS 92A.480; and a copy of NRS Sections 92A.300 – 92A.500. Within 30 days of payment or offered payment, if a dissenting stockholder believes that the amount paid is less than the fair value of the shares or that the interest due is incorrectly calculated, the stockholder may notify the Company in writing of his/her own estimate of the fair value of the shares and interest due. If this kind of claim is made by a stockholder, and it cannot be settled, the Company is required to petition the district court of the county in which the Company’s registered office is located in the State of Nevada to determine the fair value of the shares and accrued interest within 60 days after receiving the payment demand.
19
The costs and expenses of a court proceeding will be determined by the court and generally will be assessed against the Company, but these costs and expenses may be assessed as the court deems equitable against all or some of the stockholders demanding appraisal who are parties to the proceeding if the court finds the action of the stockholders in failing to accept the Company’s payment or offered payment was arbitrary, vexatious or not in good faith. These expenses may include the fees and expenses of counsel and experts employed by the parties.
Dissenter’s appraisal rights under the NRS are complex and the above is intended only as a brief summary of the material provisions of the procedures a stockholder must follow in order to perfect his/her appraisal rights. A copy of Sections 92A.300 – 92A.500 is attached hereto asAppendix F and should be reviewed for the complete procedure. The above summary does not constitute any legal or other advice nor does it constitute a recommendation that stockholders exercise their dissenters’ rights under NRS Sections 92A.300 – 92A.500. All references in NRS Sections 92A.300 – 92A.500 and in this summary to a “stockholder” or “holders of shares of the Company’s common stock” are to the record holder or holders of the shares of the Company’s common stock entitled to vote as to which dissenters’ rights are asserted. A person having a beneficial interest in shares of the Company’s common stock held of record in the name of another person, such as a broker, fiduciary, depositary or other nominee, must act promptly to cause the record holder to follow the steps summarized below properly and in a timely manner to perfect dissenters’ rights, or must assert his own dissenters’ right and submit a written consent of the stockholder of record in accordance with NRS 92A.400.
All written notices to assert dissenters’ rights should be sent to the Secretary of the Company at 3001 Griffin Road, Dania Beach, Florida 33312.
Accounting Treatment of the Reincorporation
The Reincorporation will have no effect on the Company or Vapor Delaware from an accounting perspective, as there will be no change in the entity resulting from the Reincorporation. As such, the financial statements of the Company previously filed with the SEC as of and for all periods through the date of this Information Statement remain the financial statements of Vapor Delaware.
Federal Income Tax Consequences of the Reincorporation
The discussion of U.S. federal income tax consequences set forth below is for general information only and does not purport to be a complete discussion or analysis of all potential tax consequences that may apply to a stockholder. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any stockholder of the Company. Stockholders are urged to consult their tax advisors to determine the particular tax consequences of the Reincorporation, including the applicability and effect of federal, state, local, foreign and other tax laws.
The following discussion sets forth certain U.S. federal income tax consequences of the Reincorporation to the Company’s stockholders who hold their shares of stock as a capital asset. It does not address all of the federal income tax consequences that may be relevant to particular stockholders based upon their individual circumstances or to stockholders who are subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies, dealers in securities, foreign holders or holders who acquired their stock pursuant to the exercise of employee stock options or otherwise as compensation.
The following disclosure is based on the Internal Revenue Code of 1986, as amended (the “Code”), laws, regulations, rulings and decisions in effect as of the date of this Information Statement, all of which are subject to change, possibly with retroactive effect, and to differing interpretations. The following disclosure does not address the tax consequences to the Company’s stockholders under state, local and foreign laws. The Company has neither requested nor received a tax opinion from legal counsel with respect to the consequences of the Reincorporation. No rulings have been or will be requested from the Internal Revenue Service with regard to the consequences of Reincorporation. There can be no assurance that future legislation, regulations, administrative rulings or court decisions would not alter the consequences set forth below.
20
For purposes of this summary, the term “U.S. Holder” means a beneficial owner of Company common stock participating in the Reincorporation or exercising dissenters’ rights that is for U.S. federal income tax purposes: (i) an individual who is a citizen or resident of the U.S.; (ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S.; (iii) an estate whose income is subject to U.S. federal income taxation regardless of its source; or (iv) a trust that (A) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (B) has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.
The Reincorporation is intended to qualify as a tax-deferred reorganization within the meaning of Section 368(a) of the Code. However, the Company has not sought or obtained an opinion of legal counsel or a ruling from the IRS regarding any of the tax consequences of the Reincorporation, and there can be no assurance that the IRS will not challenge the qualification of the Reincorporation as a Code Section 368 reorganization. If the Reincorporation qualifies as a reorganization, then the following U.S. federal income tax consequences will result for U.S. Holders who exchange their Company common stock for Vapor Delaware common stock pursuant to the Reincorporation:
• | No gain or loss will be recognized in the Reincorporation; |
• | The aggregate tax basis in the Vapor Delaware common stock received in the Reincorporation will equal the aggregate tax basis in the Company common stock surrendered in the Reincorporation; and |
• | The holding period in the Vapor Delaware common stock received in the Reincorporation will include the holding period of the Company common stock surrendered in the Reincorporation (provided the latter was held by you as a capital asset at the time of the consummation of the Reincorporation). |
A U.S. Holder that exercises dissenters’ rights in the Reincorporation and is paid cash in exchange for all of such holder’s Company common stock generally will recognize gain or loss in an amount equal to the difference, if any, between (i) the amount of cash received by such U.S. Holder in exchange for Company common stock (other than amounts, if any, that are or are deemed to be interest for U.S. federal income tax purposes, which amounts will be taxed as ordinary income) and (ii) the tax basis of such U.S. Holder in such Company common stock surrendered.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED
STOCKHOLDER MATTERS
At the record date of November 21, 2013, we had 80,982,629 outstanding shares of our common stock. The following table sets forth information regarding the beneficial ownership of our common stock as of the record date by:
• | each person whom we know beneficially owns more than 5% of our common stock; |
• | each of our named executive officers and directors; and |
• | all of our executive officers and directors as a group. |
Beneficial ownership and percentage ownership are determined in accordance with the rules and regulations of the SEC and include voting or investment power with respect to shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose. In computing the number of shares
21
beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to warrants, options and other convertible securities held by that person that are currently convertible or exercisable, or convertible or exercisable within 60 days of the record date are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.
The percentage of beneficial ownership is based on 80,982,629 shares of common stock outstanding on the record date.
Unless otherwise indicated and subject to community property laws where applicable, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. Unless otherwise indicated, the address for each person is our address at 3001 Griffin Road, Dania Beach, Florida 33312.
Name and Address of Beneficial Owner(1) | Number of Shares of Common Stock Beneficially Owned | Percentage of Common Stock Beneficially Owned | ||||||
Greater than 5% Stockholders: | ||||||||
Doron Ziv (2) | 8,130,108 | 9.9 | % | |||||
Jeffrey Holman (3) | 6,405,548 | 7.9 | % | |||||
Kevin Frija (4) | 6,007,189 | 7.4 | % | |||||
Tamar Galazan | 5,353,750 | 6.6 | % | |||||
Adam Frija (5) | 5,064,720 | 6.2 | % | |||||
Isaac Galazan (6) | 4,817,343 | 5.9 | % | |||||
Austin W. Marxe and David M. Greenhouse (7) | 8,333,335 | 10.3 | % | |||||
Named Executive Officers and Directors (not otherwise included above): | ||||||||
Harlan Press (8) | 701,655 | * | ||||||
Christopher Santi (9) | 55,556 | * | ||||||
|
|
|
| |||||
All executive officers and directors as a group (5 persons) | 21,300,056 | 25.5 | % |
* | Represents ownership of less than 1%. |
(1) | This table and the information in the notes below are based upon information supplied by the named persons, including reports and amendments thereto filed on Schedule 13D, Schedule 13G, Form 3 and Form 4 with the SEC. |
(2) | Includes 600,000 shares issuable upon exercise of currently exercisable stock options and 15,504 shares issuable upon exercise of currently exercisable common stock purchase warrants. The named person is a member of our Board of Directors and an employee of our company and serves as a director of our operating subsidiary Smoke Anywhere USA, Inc. |
(3) | Includes 600,000 shares issuable upon exercise of currently exercisable stock options. The named person is a member of our Board of Directors and serves as our President and serves as a director of our operating subsidiary Smoke Anywhere USA, Inc. |
(4) | Includes 900,000 shares issuable upon exercise of currently exercisable stock options and 22,372 shares issuable upon exercise of currently exercisable common stock purchase warrants. The named person serves as our Chief Executive Officer and sole director. |
22
(5) | Includes 600,000 shares issuable upon exercise of currently exercisable stock options. The named person serves as our director of licensing and business development and is the brother of Mr. Kevin Frija, our Chief Executive Officer and a member of our Board of Directors. |
(6) | Includes 600,000 shares issuable upon exercise of currently exercisable stock options. The named person serves as a director of our operating subsidiary Smoke Anywhere USA, Inc. |
(7) | Consists of (i) 5,833,334 shares owned by Special Situations Fund III QP, L.P., or SSFQP, (ii) 1,666,667 shares owned by Special Situations Cayman Fund, L.P., or SSF Cayman and (iii) 833,334 shares owned by Special Situations Private Equity Fund, L.P., or SSF Private Equity. MGP Advisers Limited Partnership, or MGP, is the general partner of SSFQP. AWM Investment Company, Inc., or AWM, is the general partner of MGP, the general partner of and investment adviser to SSF Cayman and the investment adviser to SSF Private Equity. Austin W. Marxe and David M. Greenhouse are the principal owners of MGP and AWM. Through their control of MGP and AWM, Messrs. Marxe and Greenhouse share voting and investment control over the portfolio securities of each of the funds listed above. The address of Messrs. Marxe and Greenhouse is 527 Madison Avenue, Suite 2600, New York, NY 10022. |
(8) | Includes 116,667 shares issuable upon exercise of currently exercisable stock options and 15,504 shares issuable upon exercise of currently exercisable common stock warrants. The named person serves as our Chief Financial Officer. |
(9) | Consists of 55,556 shares issuable upon exercise of currently exercisable options. The named person serves as our Chief Operating Officer. |
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
None of the Company’s executive officers or directors has a substantial interest, direct or indirect, by security holdings or otherwise in the Reincorporation which is not shared by all of the Company’s stockholders.
WHERE YOU CAN FIND MORE INFORMATION
The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and files reports and other information with the SEC. Such reports and other information filed by the Company may be inspected and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C.20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the SEC’s public reference rooms. The SEC also maintains a website that contains reports, proxy statements and other information regarding registrants that file electronically with the SEC. The address of the SEC’s web site ishttp://www.sec.gov.
23
APPENDICES
A. | Plan of Conversion | |
B. | Nevada Articles of Conversion | |
C. | Delaware Certificate of Conversion | |
D. | Delaware Certificate of Incorporation | |
E. | Delaware Bylaws | |
F. | Nevada Law on Dissenter’s Rights of Appraisal |
24
Appendix A
PLAN OF CONVERSION
of
VAPOR CORP.,
a Nevada corporation
into
VAPOR CORP.,
a Delaware corporation
This Plan of Conversion dated as of November 21, 2013 (together with all of the exhibits attached hereto, this “Plan”) is hereby adopted by Vapor Corp., a Nevada corporation (the “Company”), in order to set forth the terms, conditions and procedures governing the conversion of the Company from a Nevada corporation to a Delaware corporation pursuant to Section 265 of the General Corporation Law of the State of Delaware, as amended (the “DGCL”), and Sections 92A.105 and 92A.120 of the Nevada Revised Statutes, as amended (the “NRS”).
RECITALS
WHEREAS, the Company is a corporation organized and existing under the laws of the State of Nevada; and
WHEREAS, the form, terms and provisions of this Plan have been authorized, approved and adopted by (a) the Board in order for the Company to satisfy its obligations under the Purchase Agreement the Company entered into on October 22, 2013 (the “Purchase Agreement”) with various institutional and individual accredited investors and certain of the Company’s executive officers and directors and (b) the holders of a majority of the outstanding shares of the Company Common Stock (as defined in Section 5a. below) by written consent in lieu of a special stockholders’ meeting (some of whom are parties to the Purchase Agreement and did so in accordance with their obligations under the Purchase Agreement).
NOW, THEREFORE,that the Company hereby adopts the Plan as follows:
1. Conversion.
a. Upon the Effective Date (as defined in Section 4 below), the Company shall be converted from a Nevada corporation to a Delaware corporation pursuant to Section 265 of the DGCL and Sections 92A.105 and 92A.120 of the NRS (the “Conversion”) and the Company, as converted to a Delaware corporation (the “Resulting Company”), shall thereafter be subject to all of the provisions of the DGCL, except that notwithstanding Section 106 of the DGCL, the existence of the Resulting Company shall be deemed to have commenced on the date the Company commenced its existence in the State of Nevada.
A-1
b. As promptly as practicable following the adoption of the Plan, the Company shall cause the Conversion to be effective by:
i. executing and filing (or causing the execution and filing of) Articles of Conversion pursuant to Section 92A.205 of the NRS, substantially in the form attached hereto asExhibit A (the “Articles of Conversion”), with the Secretary of State of the State of Nevada;
ii. executing and filing (or causing the execution and filing of) a Certificate of Conversion pursuant to Sections 103 and 265 of the DGCL, substantially in the form attached hereto asExhibit B (the “Certificate of Conversion”), with the Secretary of State of the State of Delaware; and
iii. executing and filing (or causing the execution and filing of) a Certificate of Incorporation of the Resulting Company, substantially in the form attached hereto asExhibit C (the “Certificate of Incorporation”), with the Secretary of State of the State of Delaware.
c. Upon the Effective Date, the Bylaws substantially in the form attached hereto asExhibit D (the “Delaware Bylaws”) shall be the bylaws of the Resulting Company.
2. Effect of Conversion.
a. Upon the Effective Date, the name of the Resulting Company shall continue to be “Vapor Corp.”
b. Upon the Effective Date, by virtue of the Conversion and without any further action on the part of the Company or its stockholders, the Resulting Company shall, for all purposes of the laws of the State of Delaware, be deemed to be the same entity as the Company existing immediately prior to the Effective Date. Upon the Effective Date, by virtue of the Conversion and without any further action on the part of the Company or its stockholders, for all purposes of the laws of the State of Delaware, all of the rights, privileges and powers of the Company existing immediately prior to the Effective Date, and all property, real, personal and mixed, and all debts due to the Company existing immediately prior to the Effective Date, as well as all other things and causes of action belonging to the Company existing immediately prior to the Effective Date, shall remain vested in the Resulting Company and shall be the property of the Resulting Company and the title to any real property vested by deed or otherwise in the Company existing immediately prior to the Effective Date shall not revert or be in any way impaired by reason of the Conversion; but all rights of creditors and all liens upon any property of the Company existing immediately prior to the Effective Date shall be preserved unimpaired, and all debts, liabilities and duties of the Company existing immediately prior to the Effective Date shall remain attached to the Resulting Company upon the Effective Date, and may be enforced against the Resulting Company to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by the Resulting Company in its capacity as a corporation of the State of Delaware. The rights, privileges, powers and interests in property of the Company existing immediately prior to the Effective Date, as well as the debts, liabilities and duties of the Company existing immediately prior to the Effective Date, shall not be deemed, as a consequence of the Conversion, to have been transferred to the Resulting Company upon the Effective Date for any purpose of the laws of the State of Delaware.
A-2
c. The Conversion shall not be deemed to affect any obligations or liabilities of the Company incurred prior to the Conversion or the personal liability of any person incurred prior to the Conversion.
3. Taxes. The Company intends for the Conversion to constitute a tax-free reorganization qualifying under Section 368(a) of the Internal Revenue Code of 1986, as amended. Accordingly, neither the Company nor any of its stockholders should recognize gain or loss for federal income tax purposes as a result of the Conversion (other than any stockholder that validly exercises dissenter’s appraisal rights).
4. Effective Date. The Conversion shall become effective upon the last to occur of the filing of the Articles of Conversion with the Secretary of State of the State of Nevada and the Certificate of Conversion and the Delaware Certificate of Incorporation with the Secretary of State of the State of Delaware (the time of the effectiveness of the Conversion, the “Effective Date”).
5. Effect of Conversion on the Company’s Securities. Upon the Effective Date, by virtue of the Conversion and without any further action on the part of the Company or its stockholders:
a. Each share of common stock of the Company, $0.001 par value per share (“Company Common Stock”) that is issued and outstanding immediately prior to the Effective Date shall convert into one validly issued, fully paid and nonassessable share of common stock, $0.001 par value per share, of the Resulting Company (“Resulting Company Common Stock”).
b. Each option to acquire shares of Company Common Stock outstanding immediately prior to the Effective Date shall convert into an equivalent option to acquire the same number of shares of Resulting Company Common Stock, upon the same terms and conditions as were in effect immediately prior to the Effective Date.
c. Each warrant or other right to acquire shares of Company Common Stock outstanding immediately prior to the Effective Date shall convert into an equivalent warrant or other right to acquire the same number of shares of Resulting Company Common Stock, upon the same terms and conditions as were in effect immediately prior to the Effective Date.
d. All of the outstanding certificates representing shares of Company Common Stock immediately prior to the Effective Date shall be deemed for all purposes to continue to evidence ownership of and to represent the same number of shares of Resulting Company Common Stock.
6.Effect of the Conversion on Employee Benefit, Stock Option and Other Equity-Based Plans.Upon the Effective Date, by virtue of the Conversion and without any further action on the part of the Company or its stockholders, each employee benefit plan, stock option plan, and other equity-based plan of the Company shall continue to be a plan of the Resulting Company. To the extent that any such plan provides for the issuance of Company Common Stock, upon the Effective Date, such plan shall be deemed to provide for the issuance of Resulting Company Common Stock.
A-3
7. Effect of Conversion on Directors and Officers. Upon the Effective Date, by virtue of the Conversion and without any further action on the part of the Company or its stockholders, the members of the Board and the officers of the Company holding their respective offices in the Company existing immediately prior to the Effective Time shall continue in their respective offices as members of the Board and officers of the Resulting Company.
8. Dissenters’ Appraisal Rights. Upon the Effective Date, in accordance with NRS Sections 92A.300– 92A.500, the Resulting Company shall afford each stockholder of record (as defined in NRS 92A.330) of shares of Company Common Stock who does not approve the Plan of Conversion the right to receive the appraised value for his, her or its shares of the Company Common Stock if such stockholder fully complies with the provisions of NRS Sections 92A.300 – 92A.500.
9. Further Assurances. If, at any time after the Effective Date, the Resulting Company shall determine or be advised that any deeds, bills of sale, assignments, agreements, documents or assurances or any other acts or things are necessary, desirable or proper, consistent with the terms of the Plan, (a) to vest, perfect or confirm, of record or otherwise, in the Resulting Company its right, title or interest in, to or under any of the rights, privileges, immunities, powers, purposes, franchises, properties or assets of the Company existing immediately prior to the Effective Date, or (b) to otherwise carry out the purposes of the Plan, the Resulting Company and its officers and directors are hereby authorized to solicit in the name of the Resulting Company any third-party consents or other documents required to be delivered by any third-party, to execute and deliver, in the name and on behalf of the Resulting Company all such deeds, bills of sale, assignments, agreements, documents and assurances and do, in the name and on behalf of the Resulting Company, all such other acts and things necessary, desirable or proper to vest, perfect or confirm its right, title or interest in, to or under any of the rights, privileges, immunities, powers, purposes, franchises, properties or assets of the Company existing immediately prior to the Effective Date and otherwise to carry out the purposes of the Plan.
10. Copy of Plan of Conversion. After the Effective Date, a copy of this Plan shall be kept on file at the officers of the Resulting Company, and any stockholder of the Resulting Company (or former stockholder of the Company) may request a copy of this Plan at no charge at any time.
11. Termination; Amendment. At any time prior to the Effective Date, the Plan may be terminated or amended by action of the Board if, in the opinion of the Board, such action would be in the best interests of the Company and its stockholders.
12. Third Party Beneficiaries. The Plan shall not confer any rights or remedies upon any person other than as expressly provided herein.
13. Severability. Whenever possible, each provision of the Plan will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of the Plan is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of the Plan.
[SIGNATURE PAGE FOLLOWS]
A-4
IN WITNESS WHEREOF, the Company has caused this Plan of Conversion to be duly executed as of the date first above written.
VAPOR CORP. | ||
By: | /s/ Harlan Press | |
Harlan Press | ||
Chief Financial Officer |
A-5
EXHIBIT A
FORM OF ARTICLES OF CONVERSION
A-6
EXHIBIT B
FORM OF CERTIFICATE OF CONVERSION
A-7
EXHIBIT C
FORM OF CERTIFICATE OF INCORPORATION
A-8
EXHIBIT D
FORM OF DELAWARE BYLAWS
A-9
Appendix B
ROSS MILLER Secretary of State 204 North Carson Street, Suite 1 Carson City, Nevada 89701-4520 (775) 684-5708 Website: www.nvsos.gov
| ||||
Articles of Conversion (PURSUANT TO NRS 92A.205) Page 1
|
USE BLACK INK ONLY - DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
Articles of Conversion
(Pursuant to NRS 92A.205)
1. | Name and jurisdiction of organization of constituent entity and resulting entity: |
Vapor Corp. | ||||
Name of constituent entity
| ||||
Nevada | Corporation | |||
Jurisdiction | Entity type * | |||
and,
| ||||
Vapor Corp. | * | |||
Name of resulting entity
| ||||
Delaware | Corporation | |||
Jurisdiction | Entity type * |
2. | A plan of conversion has been adopted by the constituent entity in compliance with the law of the jurisdiction governing the constituent entity. |
3. | Location of plan of conversion: (check one) |
¨ | The entire plan of conversion is attached to these articles. |
þ | The complete executed plan of conversion is on file at the registered office or principal place of business of the resulting entity. |
¨ | The complete executed plan of conversion for the resulting domestic limitedpartnership ison file at the records office required by NRS 88.330. |
* | corporation, limited partnership, limited-liability limited partnership, limited-liability company or business trust . |
This form must be accompanied by appropriate fees.
B-1 | Nevada Secretary of State 92A Conversion Page 1 Revised: 8-31-11 |
ROSS MILLER Secretary of State 204 North Carson Street, Suite 1 Carson City, Nevada 89701-4520 (775) 684-5708 Website: www.nvsos.gov
| ||||
Articles of Conversion (PURSUANT TO NRS 92A.205) Page 2
|
USE BLACK INK ONLY - DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
4. | Forwarding address where copies of process may be sent by the Secretary of State of Nevada (if a foreign entity is the resulting entity in the conversion): |
Attn: | Chief Financial Officer | |||
c/o:
| 3001 Griffin Road Dania Beach, Florida 33312
|
5. | Effective date and time of filing: (optional) (must not be later than 90 days after the certificate is filed) |
Date: | Time: |
6. | Signatures - must be signed by: |
1. If constituent entity is a Nevada entity: an officer of each Nevada corporation; all general partners of each Nevada limited partnership or limited-liability limited partnership; a manager of each Nevada limited-liability company with managers or one member if there are no managers; a trustee of each Nevada business trust; a managing partner of a Nevada limited-liability partnership (a.k.a. general partnership governed by NRS chapter 87).
2. If constituent entity is a foreign entity: must be signed by the constituent entity in the manner provided by the law governing it.
Name of constituent entity | ||||||||||||
X | Chief Financial Officer | |||||||||||
Signature | Title | Date |
* | Pursuant to NRS 92A.205(4) if the conversion takes effect on a later date specified in the articles of conversion pursuant to NRS 92A.240, the constituent document filed with the Secretary of State pursuant to paragraph (b) subsection 1 must state the name and the jurisdiction of the constituent entity and that the existence of the resulting entity does not begin until the later date. |
This statement must be included within the resulting entity’s articles.
FILING FEE: $350.00
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
This form must be accompanied by appropriate fees.
B-2 | Nevada Secretary of State 92A Conversion Page 2 Revised: 8-31-11 |
Appendix C
STATE OF DELAWARE
CERTIFICATE OF CONVERSION
FROM A NON-DELAWARE CORPORATION
TO A DELAWARE CORPORATION
PURSUANT TO SECTION 265 OF THE
DELAWARE GENERAL CORPORATION LAW
1. | The jurisdiction where the Non-Delaware Corporation first formed is the State of Nevada. |
2. | The jurisdiction immediately prior to filing this Certificate of Conversion is the State of Nevada. |
3. | The date the Non-Delaware Corporation first formed is July 17, 1985. |
4. | The name of the Non-Delaware Corporation immediately prior to filing this Certificate of Conversion is Vapor Corp. |
5. | The name of the Corporation as set forth in the Certificate of Incorporation is Vapor Corp. |
6. | This Certificate of Conversion shall be effective at 11:59 pm on December , 2013. |
IN WITNESS WHEREOF, the undersigned being duly authorized to sign on behalf of the converting Non-Delaware Corporation has executed this Certificate of Conversion on the day of December, 2013.
By: | ||
Harlan Press Chief Financial Officer |
C-1
Appendix D
CERTIFICATE OF INCORPORATION
OF
VAPOR CORP.
I, the undersigned, for the purpose of creating and organizing a corporation under the provisions of and subject to the requirements of the General Corporation Law of the State of Delaware ( as the same may be amended and supplemented from time to time, the “DGCL”), certify as follows:
1. The name of the corporation is Vapor Corp. (the “Corporation”).
2. The address of the registered office of the Corporation in the State of Delaware is 160 Greentree Drive, Suite 101, City of Dover, County of Kent, Delaware 19904. The name of the registered agent of the Corporation at such address is National Registered Agents, Inc.
3. The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.
4. The total number of shares of stock which the Corporation is authorized to issue is [ ] million ( ). [ ] million ( ) shares shall be common stock, par value $0.001 per share (“Common Stock”), and [ ] shares ( ) shall be preferred stock, par value $0.001 per share (“Preferred Stock”). Except as otherwise provided in this Certificate of Incorporation, authority is hereby vested in the Board of Directors of the Corporation from time to time to provide for the issuance of shares of one or more series of Preferred Stock and in connection therewith to fix by resolution or resolutions providing for the issue of any such series, the number of shares to be included therein, the voting powers thereof, and such of the designations, preferences and relative participating, optional or other special rights and qualifications, limitations and restrictions of each such series, including, without limitation, dividend rights, voting rights, rights of redemption, or conversion into Common Stock rights, and liquidation preferences, to the fullest extent now or hereafter permitted by the Delaware General Corporation Law and any other provisions of this Amended and Restated Certificate of Incorporation. The Board of Directors is further authorized to increase or decrease (but not below the number of such shares of such class or series then outstanding) the number of shares of any such class or series subsequent to the issuance of shares of that class or series.
5. The name and mailing address of the incorporator(s) of the Corporation are:
Name Harlan Press | Address 3001 Griffin Road Dania Beach, Florida 33312 |
D-1
6. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors of the Corporation. The number of directors which shall constitute the whole Board of Directors shall be fixed by, or in the manner provided in, the bylaws of the Corporation (the “Bylaws”).
7. Unless and except to the extent that the Bylaws shall so require, the vote by stockholders on any matter, including the election of directors, need not be by written ballot.
8. The Corporation expressly elects not to be subject to the provisions of Section 203 of the Delaware General Corporation Law.
9. To the fullest extent permitted by the DGCL, 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. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. No amendment to, modification of or repeal of this Section 10 shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment, modification or repeal.
10. Subject to any provisions in the Bylaws of the Corporation related to indemnification of directors or officers of the Corporation, the Corporation is authorized to indemnify, to the fullest extent permitted by applicable law, any director, officer, employee or agent of the Corporation who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any such Proceeding.
A right to indemnification or to advancement of expenses arising under a provision of this Certificate of Incorporation or the Bylaws of the Corporation shall not be eliminated or impaired by an amendment to this Certificate of Incorporation or the Bylaws of the Corporation after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
11. In furtherance of and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the directors then in office. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation.
D-2
12. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon the stockholders herein are granted subject to this reservation. Notwithstanding any other provision of this Certificate of Incorporation, and in addition to any other vote that may be required by law or the terms of any series of Preferred Stock, the affirmative vote of the holders of at least 66 2/3% of the voting power of all then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, alter or repeal Section 9, Section 10 and this last sentence of Section 12 of this Certificate of Incorporation.
13. This Certificate of Incorporation shall be effective at 11:59 pm on , 2013.
I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a corporation pursuant to the DGCL, do make this Certificate of Incorporation, hereby acknowledging, declaring, and certifying that the foregoing Certificate of Incorporation is my act and deed and that the facts herein stated are true, and have accordingly hereunto set my hand this day of December, 2013.
Incorporator
|
Harlan Press |
D-3
Appendix E
BYLAWS
OF
VAPOR CORP.
a Delaware corporation
SECTION 1. OFFICES
The principal office of Vapor Corp., a Delaware corporation (the “Corporation”), shall be located at the principal place of business or such other place as the Board of Directors (the “Board”) may designate. The Corporation may have such other offices, either within or without the State of Delaware, as the Board may designate or as the business of the Corporation may require from time to time.
SECTION 2. STOCKHOLDERS
2.1 Annual Meeting
The annual meeting of the stockholders shall be held on such date and at such time as shall be fixed by resolution of the Board, at the principal office of the Corporation, or such other place as fixed by the Board, for the purpose of electing directors and transacting such other business as may properly come before that meeting;provided, however, that the Board may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211 of the General Corporation Law of the State of Delaware (the “DGCL”).
2.2 Special Meetings
(a) Special meetings of the stockholders of the Corporation may be called, for any purpose as is a proper matter for stockholder action under Delaware law, by (i) the Chairperson of the Board, (ii) the Chief Executive Officer, (iii) the Board pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption) or (iv) by the stockholders of the Corporation of not less than one-fourth of all the shares entitled to vote at a meeting of stockholders.
(b) For a special meeting called pursuant to Section 2.2(a), the Board shall determine the time and place of such special meeting. Following determination of the time and place of the meeting, the Secretary shall cause a notice of meeting to be given to the stockholders entitled to vote, in accordance with the provisions of Section 2.4. No business may be transacted at a special meeting otherwise than as specified in the notice of meeting.
E-1
(c) In no event shall an adjournment or a postponement of a special meeting for which notice has been given, or the public announcement thereof has been made, commence a new time period for the giving of a stockholder’s notice as described above.
2.3 Place of Meeting
All meetings shall be held at the principal office of the Corporation, or at such other place as designated by the Board, either within or without the State of Delaware.
2.4 Notice of Meeting
(a) The Corporation shall cause to be delivered to each stockholder entitled to notice of, or to vote at, an annual or special meeting of stockholders, either personally or by mail, not less than ten (10) days nor more than sixty (60) days before that meeting, written notice stating the date, time and place of that meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which that meeting is called.
(b) Notice to a stockholder of an annual or special stockholders’ meeting shall be in writing. Such notice, if in comprehensible form, is effective (i) when mailed, if it is deposited in the United States mail, postage pre-paid, and is correctly addressed to that stockholder’s address as specified in the Corporation’s then current record of stockholders, or (ii) when received by that stockholder, if it is delivered by electronic transmission, facsimile transmission or private courier.
(c) If an annual or special stockholders’ meeting is adjourned to a different date, time, or place, notice of the new date, time, or place shall not be required if the new date, time, or place is announced at that meeting before adjournment, unless a new record date for the adjourned meeting is, or must be, fixed pursuant to (i) Section 2.6, or (ii) the DGCL.
2.5 Waiver of Notice
(a) Whenever any notice is required to be given to any stockholder pursuant to the provisions of these Bylaws, the Certificate of Incorporation of the Corporation or the DGCL, a waiver thereof in writing, signed by the person or persons entitled to such notice or by electronic transmission by such person, whether before or after such meeting, and delivered to the Corporation for inclusion in the minutes for filing with the corporate records, shall be deemed equivalent to the giving of such notice.
(b) The attendance of a stockholder at a meeting in person, by remote communication or, if applicable, by proxy shall be a waiver of each objection to lack of, or defect in, notice of such meeting or of consideration of a particular matter at that meeting, unless that stockholder, at the beginning of that meeting or prior to consideration of such matter, objects to holding that meeting, transacting business at that meeting, or considering the matter when presented at that meeting.
E-2
2.6 Fixing of Record Date for Determining Stockholders
For the purpose of determining stockholders entitled to notice of, or to vote at, any meeting of stockholders, or any adjournment thereof, or stockholders entitled to receive payment of any dividend, or to make a determination of stockholders for any other purpose, the Board may fix in advance a date as the record date for any such determination. Such record date shall be not more than sixty (60) days nor less than ten (10) days prior to the date of any such meeting nor more than sixty (60) days before any other action to which the record date relates. If no record date is fixed for the determination of stockholders entitled to notice of, or to vote at, a meeting, or to receive payment of a dividend, the record date shall be 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. Such determination shall apply to any adjournment of that meeting;provided, however, that the Board may fix a new record date for the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance with Section 213 of the DGCL and this Section 2.6 at the adjourned meeting.
2.7 Stockholders’ List
At least ten (10) days before every meeting of stockholders, a complete alphabetical list of the stockholders entitled to notice of that meeting shall be made, arranged by voting group, and within each voting group by class or series, with the address of and number of shares held by each stockholder;provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the meeting date, the list will reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be examined by any stockholder who is present. If the meeting is held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and then number of shares held by each of them.
2.8 Quorum
The holders of a majority of the voting power of the capital stock issued and outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders. If a quorum is not present for a matter to be acted upon, then either (a) the Chairperson of the meeting, or (b) a majority of the voting power of the stockholders entitled to vote at that meeting may adjourn that meeting from time to time. If the necessary quorum is present or represented at a reconvened meeting following such an adjournment, any business may be transacted that might have been transacted at the meeting as originally called.
E-3
2.9 Manner of Acting
If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the affirmative vote of a greater number is required by these Bylaws, the Certificate of Incorporation or the DGCL.
2.10 Proxies
A stockholder may vote by proxy executed in writing by that stockholder or by his or her attorney-in-fact. Such proxy shall be effective when received by the Secretary of the Corporation or other officer or agent authorized to tabulate votes at the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. All proxies must be filed with the Secretary of the Corporation at the beginning of each meeting in order to be counted in any vote at the meeting. Subject to the limitation set forth in the last clause of the second sentence of this Section 2.10, a duly executed proxy that does not state that it is irrevocable shall continue in full force and effect unless (a) revoked by the person executing it, before the vote pursuant to that proxy, by a writing delivered to the Corporation stating that the proxy is revoked or by a subsequent proxy executed by, or attendance at the meeting and voting in person by, the person executing the proxy, or (b) written notice of the death or incapacity of the maker of that proxy is received by the Corporation before the vote pursuant to that proxy is counted.
2.11 Voting of Shares
Each outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to a vote at a meeting of stockholders.
2.12 Voting for Directors
Each stockholder may vote, in person or by proxy, the number of shares owned by such stockholder that are entitled to vote at an election of directors, for as many persons as there are directors to be elected and for whose election such shares have a right to vote. Unless otherwise provided in the Certificate of Incorporation, directors are elected by a plurality of the votes cast by shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors at a meeting at which a quorum is present.
2.13 Adjournment And Notice Of Adjourned Meetings
Any meeting of stockholders, whether annual or special, may be adjourned from time to time either by the Chairperson of the meeting or by the vote of a majority of the shares present in person, by remote communication, if applicable, or represented by proxy at the meeting. When a meeting is adjourned to another time or place, if any, notice need not be given of the adjourned meeting if the date, time and place, if any, thereof and the means of remote communications (if any) by which the stockholders and proxy holders may be deemed present in person and vote at
E-4
such adjourned meeting, are announced at the meeting at which the adjournment is taken;provided, however, that if the adjournment is for more than 30 days or a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting.
2.14 Stockholder Action by Written Consent Without a Meeting
Unless otherwise provided in the Certificate of Incorporation, any action required by the DGCL to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivered made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated consent delivered in the manner required by this Section 2.14, written consents signed by a sufficient number of holders to take action are delivered to the Corporation as aforesaid. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be give to those stockholders who have not consent in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for notice of such meeting had been the date that written consents signed by a sufficient number of holders to take action were delivered to the Corporation as provided in Section 228 of the DGCL.
2.15 Conduct of Business
(a) At every meeting of stockholders, the Chairperson of the Board, or, if a Chairperson has not been appointed or is absent, the Chief Executive Officer of the Corporation, or, if the Chief Executive Officer is absent, a chairperson of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy, shall act as Chairperson. The Secretary of the Corporation, or another person directed to do so by the Chief Executive Officer, shall act as secretary of the meeting.
(b) The Board shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board, if any, the Chairperson of the meeting 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 Chairperson, are necessary, appropriate or convenient for the proper conduct of
E-5
the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the Corporation and their duly authorized and constituted proxies and such other persons as the Chairperson shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting. Unless and to the extent determined by the Board or the Chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure.
SECTION 3. BOARD OF DIRECTORS
3.1 General Powers
The business and affairs of the Corporation shall be managed by the Board, except as may be otherwise provided in these Bylaws, the Certificate of Incorporation or the DGCL.
3.2 Number, Tenure and Qualifications
The authorized number of directors shall be determined from time to time by resolution of the Board or the stockholders of the Corporation; provided that the Board shall consist of at least one (1) member. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires. The terms of the directors expire at the next annual stockholder’s meeting following their election. Despite the expiration of a director’s term, however, the director shall continue to serve until such director’s successor is elected and qualified. Directors need not be stockholders unless so required by the Certificate of Incorporation.
3.3 Annual and Regular Meetings
An annual meeting of the Board shall be held without additional notice immediately after and at the same place as the annual meeting of stockholders.
By resolution, the Board, or any committee thereof, may specify the time and place for holding regular meetings thereof, either within or outside the State of Delaware, without notice other than such resolution.
3.4 Special Meetings
Special meetings of the Board or any committee designated by the Board may be called by or at the request of the Chairperson of the Board, or the Chief Executive Officer or any two directors and, in the case of any special meeting of any committee designated by the Board, by the Chairperson thereof. The person or persons authorized to call special meetings may fix any place either within or without the State of Delaware as the place for holding any special Board or committee meeting called by them.
E-6
3.5 Meetings by Telecommunications
Members of the Board or any committee designated by the Board may participate in a meeting of the Board or such committee by use of any means of telecommunications equipment pursuant to which all persons participating may simultaneously hear each other during such meeting. Participation by such method shall be deemed presence in person at such meeting.
3.6 Notice of Special Meetings
Notice of a special Board or committee meeting specifying the date, time and place of such meeting shall be given to a director in writing, by electronic transmission or orally by telephone or in person as specified below. Neither the business to be transacted at, nor the purpose of, any special meeting need be specified in the notice of such meeting.
3.6.1 Personal Delivery
If delivery is by personal service, the notice shall be effective if delivered at the address specified on the records of the Corporation at least 24 hours before the date and time of the meeting.
3.6.2 Delivery by Mail
If notice is delivered by mail, the notice shall be deemed effective if deposited in the official government mail at least five (5) days before the date and time of the meeting properly addressed to a director at his or her address specified on the records of the Corporation with postage prepaid.
3.6.3 Oral Notice
If notice is delivered orally, by telephone or in person, the notice shall be effective if personally given to a director at least 24 hours before the date and time of the meeting.
3.6.4 Notice by Facsimile Transmission
If notice is delivered by facsimile transmission, the notice shall be deemed effective if the content thereof is transmitted to the office of a director, at the facsimile number specified on the records of the Corporation, at least 24 hours before the date and time of the meeting, and receipt is either confirmed by confirming transmission equipment or acknowledged by the receiving office.
E-7
3.6.5 Notice by Private Courier
If notice is delivered by private courier, the notice shall be deemed effective if delivered to the courier, properly addressed and prepaid, by such time that the courier guarantees delivery at least 24 hours before the date and time of the meeting.
3.6.6 Notice by Other Electronic Means
If notice is delivered by electronic mail or other electronic means, the notice shall be delivered at least 24 hours before the date and time of the meeting.
3.7 Waiver of Notice
3.7.1 Written Waiver
Whenever any notice is required to be given to any director pursuant to the provisions of these Bylaws, the Certificate of Incorporation or the DGCL, a waiver thereof in writing, executed at any time, specifying the meeting for which notice is waived, signed by the person or persons entitled to such notice, and filed with the minutes or corporate records, shall be deemed equivalent to the giving of such notice.
Waiver of notice by electronic transmission shall be the equivalent of an executed written waiver and may be delivered at any time before or after the meeting.
3.7.2 Waiver by Attendance
The attendance of a director at a Board or committee meeting shall constitute a waiver of notice of such meeting, unless such director, at the beginning of the meeting, or promptly upon such director’s arrival, objects to holding the meeting or transacting any business at the meeting and does not thereafter vote for or assent to action taken at the meeting.
3.8 Quorum
A majority of the number of directors determined by or in the manner provided by these Bylaws shall constitute a quorum for the transaction of business at any meeting of the Board.
3.9 Manner of Acting
The act of the majority of the directors present at a Board or committee meeting at which there is a quorum shall be the act of the Board or committee, unless the vote of a greater number is required by these Bylaws, the Certificate of Incorporation or the DGCL.
3.10 Action by Board of Directors or Committee Without a Meeting
Any action which could be taken at a meeting of the Board or of any committee appointed by the Board may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and such
E-8
writing or writings or transmission or transmissions are filed with the minutes of proceedings of the Board or committee. The action shall be effective when the last signature is placed on the consent, unless the consent specifies an earlier or later date. Such written consent, which shall have the same effect as a unanimous vote of the directors or such committee, shall be inserted in the minute book as if it were the minutes of a Board or committee meeting.
3.11 Resignation
Any director may resign at any time by delivering notice in writing or by electronic transmission to the Chairperson of the Board, the Board, or to the registered office of the Corporation. Such resignation shall take effect at the time specified in the notice, or if no time is specified, upon delivery. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Once delivered, a notice of resignation is irrevocable unless revocation is permitted by the Board.
3.12 Removal
Subject to any limitations imposed by the DGCL, one or more members of the Board (including the entire Board) may be removed at any time, with or without cause, by the affirmative vote of the holders of a majority of the voting power of all the then outstanding shares of voting stock of the Corporation entitled to vote at an election of directors. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.
3.13 Vacancies
Any vacancy occurring on the Board, including a vacancy resulting from an increase in the number of directors, may be filled by the stockholders, by the Board, by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board, or by a sole remaining director. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office; except that the term of a director elected by the Board to fill a vacancy expires at the next stockholders’ meeting at which directors are elected. Any directorship to be filled by reason of an increase in the number of directors may be filled by the affirmative vote of a majority of the number of directors fixed by these Bylaws prior to such increase for a term of office continuing only until the next election of directors by the stockholders. Any directorship not so filled by the directors shall be filled by election at the next annual meeting of stockholders or at a special meeting of stockholders called for that purpose. A vacancy that will occur at a specific later date by reason of a resignation effective at such later date or otherwise may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs.
If at any time, by reason of death or resignation or other cause, the Corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the
E-9
person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the Certificate of Incorporation or these Bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL.
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the voting stock at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.
3.14 Minutes
The Board shall keep minutes of its meetings and shall cause them to be recorded in books kept for that purpose.
3.15 Executive and Other Committees
3.15.1 Creation of Committees
The Board, by resolution adopted by a majority of the number of directors fixed in the manner provided by these Bylaws, may appoint standing or temporary committees, including an Executive Committee, from its own number. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. The Board may invest such committee(s) with such powers as it may see fit, subject to such conditions as may be prescribed by the Board, these Bylaws, the Certificate of Incorporation and the DGCL.
3.15.2 Authority of Committees
Any such committee, to the extent provided in the resolution of the Board or in these Bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (a) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (b) adopt, amend or repeal any Bylaw of the Corporation.
E-10
3.15.3 Quorum and Manner of Acting
A majority of the number of directors composing any committee of the Board, as established and fixed by resolution of the Board, shall constitute a quorum for the transaction of business at any meeting of such committee.
3.15.4 Minutes of Meetings
All committees so appointed shall keep regular minutes of their meetings and shall cause them to be recorded in books kept for that purpose.
3.15.5 Resignation
Any member of any committee may resign at any time by delivering written notice thereof to the Board, the Chairperson of the Board or the Corporation. Any such resignation shall take effect at the time specified in the notice, or if no time is specified, upon delivery. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Once delivered, a notice of resignation is irrevocable unless revocation is permitted by the Board.
3.15.6 Removal
The Board may remove from office any member of any committee elected or appointed by it, but only by the affirmative vote of not less than a majority of the number of directors fixed by or in the manner provided by these Bylaws.
3.16 Compensation
By resolution of the Board, directors and committee members may be paid their expenses, if any, of attendance at each Board or committee meeting, or a fixed sum for attendance at each Board or committee meeting, or a staled salary as a director or a committee member, or a combination of the foregoing. No such payment shall preclude any director or committee member from serving the Corporation in any other capacity and receiving compensation therefor.
3.17 Chairperson of the Board of Directors
If appointed, the Chairperson of the Board shall perform such duties as shall be assigned to him or her by the Board from time to time and shall preside over meetings of the Board and stockholders unless an officer is appointed or designated by the Board as Chairperson of such meeting.
E-11
SECTION 4. OFFICERS
4.1 Number
The officers of the Corporation shall be a Chief Executive Officer, a President, one or more Vice Presidents, a Chief Financial Officer, a Secretary and a Treasurer, or the equivalent thereof, each of whom shall be appointed by the Board. One or more Vice Presidents and such other officers and assistant officers, including a Chairperson of the Board, may be appointed by the Board; such officers and assistant officers to hold office for such period, have such authority and perform such duties as are provided in these Bylaws or as may be provided by resolution of the Board. Any officer may be assigned by the Board any additional title that the Board deems appropriate. The Board may delegate to any officer or agent the power to appoint any such subordinate officers or agents and to prescribe their respective terms of office, authority and duties. Any two or more offices may be held by the same person.
4.2 Appointment and Term of Office
The officers of the Corporation shall be appointed by the Board. Unless an officer dies, resigns, or is removed from office, he or she shall hold office until his or her successor is appointed.
4.3 Resignation
Any officer may resign at any time by delivering notice in writing or by electronic transmission to the Corporation. Any such resignation shall take effect at the time specified in the notice, or if no time is specified, upon delivery. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Once delivered, a notice of resignation is irrevocable unless revocation is permitted by the Board.
4.4 Removal
Subject to the rights, if any, of an officer or agent under any contract of employment, any officer or agent appointed by the Board may be removed by the affirmative vote of a majority of directors in office at the time, with or without cause, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Appointment of an officer or agent shall not of itself create contract rights.
4.5 Vacancies
A vacancy in any office because of death, resignation, removal, disqualification, creation of a new office or any other cause may be filled by the Board for the unexpired portion of the term, or for a new term established by the Board. If a resignation is made effective at a later date, and the Corporation accepts such future effective date, the Board may fill the pending vacancy before the effective date, if the Board provides that the successor does not take office until the effective date.
E-12
4.6 Chairperson of the Board of Directors
If appointed, the position of Chairperson of the Board shall not constitute an officer position of the Corporation, unless specifically designated as such by the Board. The Chairperson of the Board shall be a Board position as outlined in Section 3.17.
4.7 Chief Executive Officer
Subject to the provisions of these Bylaws and to the direction of the Board, the Chief Executive Officer shall be responsible for the general control and management of the business, affairs and policies of the Corporation and shall have control over its officers and shall see that all orders and resolutions of the Board are implemented. The Chief Executive Officer shall have the power to sign all certificates, contracts and other instruments on behalf of the Corporation. In general, the Chief Executive Officer shall perform duties commonly incident to the office. The Chief Executive Officer shall report directly to the Board and shall have the right to delegate any of his or her powers to any other officer or employee and shall have the authority to appoint Vice Presidents of the Corporation.
4.8 President
The President shall be subject to the direction and control of the Chief Executive Officer and shall have general active management of the business, affairs and policies of the Corporation. The President shall have the power to sign all certificates, contracts and other instruments on behalf of the Corporation. In general, the President shall perform all duties incidental to the office and such other duties as are prescribed by the Board from time to time. If the Board has elected a Chief Executive Officer and that officer is absent, disqualified from action, unable to act or refuses to act, then the President shall have the powers of, and shall perform the duties of, the Chief Executive Officer.
4.9 Vice President
Each Vice President, if any, shall be subject to the direction and control of the Chief Executive Officer and the President of the Corporation and shall have such powers and duties as the Chief Executive Officer or the President may from time to time prescribe.
4.10 Chief Financial Officer
The Chief Financial Officer shall be subject to the direction and control of the Chief Executive Officer and shall have primary responsibility for the financial affairs of the Corporation and shall perform such other duties as the Chief Executive Officer or the Board may from time to time prescribe.
4.11 Secretary
The Secretary shall (a) prepare and keep the minutes of meetings of the stockholders and the Board in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be responsible for
E-13
custody of the corporate records and seal of the Corporation; (d) keep registers of the address of each stockholder and director; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform all duties incident to the office of Secretary and such other duties as the Chief Executive Officer or by the Board may prescribe from time to time. In the absence of the Secretary, an Assistant Secretary may perform the duties of the Secretary.
4.12 Treasurer
The Treasurer shall have the responsibility for maintaining the financial records of the Corporation. The Treasurer shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions of the financial condition of the Corporation. The Treasurer shall also perform the other duties as the Chief Executive Officer may from time to time prescribe.
4.13 Salaries
The salaries of the officers shall be fixed from time to time by the Board or by any person or persons to whom the Board has delegated such authority. No officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the Corporation.
SECTION 5. STOCK
5.1 Issuance of Stock
No shares of stock of the Corporation shall be issued unless authorized by the Board, which authorization shall include the maximum number of shares to be issued and the consideration to be received for each share. Before the Corporation issues shares, the Board shall determine that the consideration received or to be received for such shares is adequate. In the absence of fraud, such determination by the Board shall be conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid and nonassessable.
5.2 Certificates for Shares
The shares of the Corporation shall be represented by certificates or shall be uncertificated. Certificates representing shares of the Corporation, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law and as shall be determined by the Board. Such certificates shall be signed by, or in the name of the Corporation by the Chairperson of the Board or the Chief Executive Officer or the President or any Vice President and by the Treasurer or Assistant Treasurer or the Secretary or any Assistant Secretary. Any or all of the signatures on the certificate may be a facsimile. The Corporation shall not have power to issue a certificate in bearer form. All certificates shall be consecutively numbered or otherwise identified.
E-14
Notwithstanding anything to the contrary in these Bylaws, at all times that the Corporation’s stock is listed on a stock exchange, such shares shall comply with all direct registration system eligibility requirements established by such exchange, including any requirement that shares of the Corporation’s stock be eligible for issue in book-entry form. All issuances and transfers of shares of the Corporation’s stock shall be entered on the books of the Corporation with all information necessary to comply with such direct registration system eligibility requirements, including the name and address of the person to whom the shares are issued, the number of shares issued and the date of issue.
5.3 Stock Records
The stock transfer books shall be kept at the registered office or principal place of business of the Corporation or at the office of the Corporation’s transfer agent or registrar. The name and address of each person to whom shares are issued, together with the class and number of shares represented by each stock certificate, if any, and the date of issue thereof, shall be entered on the stock transfer books of the Corporation. The person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
5.4 Transfer of Shares
Transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation pursuant to authorization or document of transfer made by the holder of record thereof or by his or her legal representative, who shall furnish proper evidence of authority to transfer, or by his or her attorney-in-fact authorized by power of attorney duly executed and filed with the Secretary of the Corporation. In the case of shares of the Corporation represented by certificates, certificates surrendered to the Corporation for transfer shall be cancelled and no transfer of such shares shall be made until the former certificates for a like number of shares have been surrendered and cancelled.
5.5 Lost or Destroyed Certificates
In the case of shares of the Corporation represented by certificates, where such certificate or certificates are lost, destroyed or mutilated, a new certificate may be issued therefor upon such terms and indemnity to the Corporation as the Board may prescribe.
SECTION 6. General Matters
6.1. Fiscal Year
The fiscal year of the Corporation shall be the calendar year;provided, however, that the Board may select a different fiscal year by resolution at any time for purposes of federal income taxes, or otherwise.
E-15
6.2 Seal
The Board may adopt a seal of the Corporation, which will consist of the name of the Corporation and the state of its incorporation.
6.3 Books and Records
Any records maintained by the Corporation in the regular course of business, including its stock ledger, books of account and minute books, may be maintained on any information storage device or method;provided thatthe records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to applicable law.
6.4 Dividends
Subject to applicable law and the Certificate of Incorporation, dividends upon the shares of capital stock of the Corporation may be declared by the Board at any regular or special meeting of the Board. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock, unless otherwise provided by applicable law or the Certificate of Incorporation.
6.5 Certificate of Incorporation
All references in these Bylaws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the Corporation, as amended or restated and in effect from time to time.
6.6 Voting Stock in Other Entities
Unless a resolution of the Board otherwise provides, the Chairman of the Board, the Chief Executive Officer, the President or the Chief Financial Officer, from time to time, may (or may appoint one or more attorneys or agents to) cast the votes which the Corporation may be entitled to cast as a shareholder, interestholder or otherwise in any other corporation or other entity, any of whose shares or securities may be held by the Corporation, at meetings of the holders of the shares or other securities of the other corporation or entity.
6.7 Construction; Definitions
Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes a corporation, other legal entity and a natural person.
E-16
SECTION 7. INDEMNIFICATION
7.1 Right to Indemnification of Directors and Officers
Any person who was or is made a party or is threatened to be made a party to 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 or officer 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 or other enterprise, including service with respect to an employee benefit plan (an “indemnitee”), shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith, provided such person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Such indemnification shall continue as to an indemnitee who has ceased to be a director or officer and shall inure to the benefit of the indemnitee’s heirs, executors and administrators;provided, however, that, except as provided in Section 7.3 or with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board.
7.2 Right to Advancement of Expenses
The right to indemnification conferred in Section 7.1 shall include the right to be paid by the Corporation the expenses incurred in defending any proceeding for which such right to indemnification is applicable in advance of its final disposition (an “advancement of expenses”);provided, however, that, if the DGCL requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise.
Notwithstanding the foregoing, unless such right is acquired other than pursuant to this Section 7, no advance shall be made by the Corporation to an officer of the Corporation (except by reason of the fact that such officer is or was a director of the Corporation, in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (a) by the Board by a majority vote of the disinterested directors, even though less than a quorum, or (b) by
E-17
a committee of disinterested directors designated by majority vote of the disinterested directors, even though less than a quorum, or (c) if there are no disinterested directors or the disinterested directors so direct, by independent legal counsel in a written opinion to the Board, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Corporation.
7.3 Right of Indemnitee to Bring Suit
The rights to indemnification and to the advancement of expenses conferred in Sections 7.1 and 7.2 shall be contract rights. If a claim under Sections 7.1 and 7.2 is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the full amount of the claim. If the indemnitee is successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit to the fullest extent permitted by law. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Section 7 or otherwise shall be on the Corporation.
7.4 Non-Exclusivity of Rights
The rights conferred on any person in this Section 7 shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation’s Certificate of Incorporation, these Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
7.5 Insurance
The Corporation may purchase and maintain insurance, at its expense, to protect itself and any person who was or is a director, officer, employee or agent of the Corporation or was or is serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.
7.6 Indemnification of Employees and Agents of the Corporation
The Corporation may, to the extent authorized from time to time by the Board, grant rights to indemnification, and to the advancement of expenses, to any employee or agent of the Corporation to the fullest extent of the provisions of this Section 7 with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.
E-18
7.7 No Presumption of Bad Faith
The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal proceeding, that the person had reasonable cause to believe that the conduct was unlawful.
7.8 Survival of Rights
The rights conferred on any person by this Section 7 shall continue as to a person who has ceased to be a director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
7.9 Amendments to Law
For purposes of this Section 7, the meaning of “law” within the phrase “to the fullest extent not prohibited by law” shall include, but not be limited to, the DGCL, as the same exists on the date hereof or as it may be amended;provided, however, that in the case of any such amendment, such amendment shall apply only to the extent that it permits the Corporation to provide broader indemnification rights than the DGCL permitted the Corporation to provide prior to such amendment.
7.10 Savings Clause
If this Section 7 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, the Corporation shall indemnify each director, officer or other agent to the fullest extent permitted by any applicable portion of this Section 7 that shall not have been invalidated, or by any other applicable law.
Section 7.11 Effect of Repeal or Modification
Any amendment, alteration or repeal of this Section 7 shall not adversely affect any right or protection hereunder or any person in respect of any act or commission occurring prior to such amendment, alteration or repeal.
E-19
7.12 Certain Definitions
For the purposes of this Section 7, the following definitions shall apply:
(a) The term “proceeding” shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement and appeal of any threatened, pending or completed action, suit or proceeding, whether brought in the right of the Corporation or otherwise and whether civil, criminal, administrative or investigative, in which the director or officer may be or may have been involved as a party or otherwise by reason of the fact that the director or officer is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise.
(b) The term “expenses” shall be broadly construed and shall include, without limitation, all costs, charges and expenses (including fees and disbursements of attorneys, accountants and other experts) actually and reasonably incurred by a director or officer in connection with any proceeding, all expenses of investigations, judicial or administrative proceedings or appeals, and any expenses of establishing a right to indemnification under these Bylaws, but shall not include amounts paid in settlement, judgments or fines.
(c) “Corporation” shall mean Vapor Corp. and any successor corporation thereof. The term “corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section 10 with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.
(d) References to a “director”, “executive officer”, “officer”, “employee” or “agent” of the Corporation shall include, without limitation, situations where such person is serving at the request of the Corporation as, respectively, a director, executive officer, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.
(e) References to “other enterprises” shall include employee benefit plans. References to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan. References to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries. A person who acted in good faith and in a manner the person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Section 7.
E-20
SECTION 8. AMENDMENTS
The Board is expressly empowered to adopt, alter, amend or repeal these Bylaws. Any adoption, alteration, amendment or repeal of these Bylaws by the Board shall require the approval of a majority of the authorized number of directors. The stockholders also shall have power to adopt, alter, amend or repeal these Bylaws;provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation, such action by stockholders with respect to Section 7 (in whole or in part) of these Bylaws and the proviso of this Section 8 shall require the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
The foregoing Bylaws were adopted by the Board of Directors and the stockholders of the Corporation on November 21, 2013 and effective on December , 2013.
|
Kevin Frija Secretary |
E-21
Appendix F
NEVADA REVISED STATUTES SECTIONS 92A.300-92A.500
RIGHTS OF DISSENTING OWNERS
NRS 92A.300 Definitions. As used inNRS 92A.300 to92A.500, inclusive, unless the context otherwise requires, the words and terms defined inNRS 92A.305 to92A.335, inclusive, have the meanings ascribed to them in those sections.
(Added to NRS by1995, 2086)
NRS 92A.305 “Beneficial stockholder” defined. “Beneficial stockholder” means a person who is a beneficial owner of shares held in a voting trust or by a nominee as the stockholder of record.
(Added to NRS by1995, 2087)
NRS 92A.310 “Corporate action” defined. “Corporate action” means the action of a domestic corporation.
(Added to NRS by1995, 2087)
NRS 92A.315 “Dissenter” defined. “Dissenter“means a stockholder who is entitled to dissent from a domestic corporation’s action underNRS 92A.380 and who exercises that right when and in the manner required byNRS 92A.400 to92A.480, inclusive.
(Added to NRS by1995, 2087; A1999, 1631)
NRS 92A.320 “Fair value” defined. “Fair value,” with respect to a dissenter’s shares, means the value of the shares determined:
1. Immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable;
2. Using customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal; and
3. Without discounting for lack of marketability or minority status.
(Added to NRS by1995, 2087; A2009, 1720)
NRS 92A.325 “Stockholder” defined. “Stockholder“means a stockholder of record or a beneficial stockholder of a domestic corporation.
(Added to NRS by1995, 2087)
NRS 92A.330 “Stockholder of record” defined. “Stockholder of record” means the person in whose name shares are registered in the records of a domestic corporation or the beneficial owner of shares to the extent of the rights granted by a nominee’s certificate on file with the domestic corporation.
(Added to NRS by1995, 2087)
NRS 92A.335 “Subject corporation” defined. “Subject corporation” means the domestic corporation which is the issuer of the shares held by a dissenter before the corporate action creating the dissenter’s rights becomes effective or the surviving or acquiring entity of that issuer after the corporate action becomes effective.
(Added to NRS by 1995, 2087)
F-1
NRS 92A.340 Computation of interest. Interest payable pursuant toNRS 92A.300 to92A.500, inclusive, must be computed from the effective date of the action until the date of payment, at the rate of interest most recently established pursuant toNRS 99.040.
(Added to NRS by1995, 2087; A2009, 1721)
NRS 92A.350 Rights of dissenting partner of domestic limited partnership. A partnership agreement of a domestic limited partnership or, unless otherwise provided in the partnership agreement, an agreement of merger or exchange, may provide that contractual rights with respect to the partnership interest of a dissenting general or limited partner of a domestic limited partnership are available for any class or group of partnership interests in connection with any merger or exchange in which the domestic limited partnership is a constituent entity.
(Added to NRS by1995, 2088)
NRS 92A.360 Rights of dissenting member of domestic limited-liability company. The articles of organization or operating agreement of a domestic limited-liability company or, unless otherwise provided in the articles of organization or operating agreement, an agreement of merger or exchange, may provide that contractual rights with respect to the interest of a dissenting member are available in connection with any merger or exchange in which the domestic limited-liability company is a constituent entity.
(Added to NRS by1995, 2088)
NRS 92A.370 Rights of dissenting member of domestic nonprofit corporation.
1. Except as otherwise provided in subsection 2, and unless otherwise provided in the articles or bylaws, any member of any constituent domestic nonprofit corporation who voted against the merger may, without prior notice, but within 30 days after the effective date of the merger, resign from membership and is thereby excused from all contractual obligations to the constituent or surviving corporations which did not occur before the member’s resignation and is thereby entitled to those rights, if any, which would have existed if there had been no merger and the membership had been terminated or the member had been expelled.
2. Unless otherwise provided in its articles of incorporation or bylaws, no member of a domestic nonprofit corporation, including, but not limited to, a cooperative corporation, which supplies services described inchapter 704 of NRS to its members only, and no person who is a member of a domestic nonprofit corporation as a condition of or by reason of the ownership of an interest in real property, may resign and dissent pursuant to subsection 1.
(Added to NRS by1995, 2088)
NRS 92A.380 Right of stockholder to dissent from certain corporate actions and to obtain payment for shares.
1. Except as otherwise provided inNRS 92A.370 and92A.390and subject to the limitation in paragraph (f), any stockholder is entitled to dissent from, and obtain payment of the fair value of the stockholder’s shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic corporation is a constituent entity:
(1) If approval by the stockholders is required for the merger byNRS 92A.120 to92A.160, inclusive, or the articles of incorporation, regardless of whether the stockholder is entitled to vote on the plan of merger; or
(2) If the domestic corporation is a subsidiary and is merged with its parent pursuant toNRS 92A.180.
F-2
(b) Consummation of a plan of conversion to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be converted.
(c) Consummation of a plan of exchange to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be acquired, if the stockholder’s shares are to be acquired in the plan of exchange.
(d) Any corporate action taken pursuant to a vote of the stockholders to the extent that the articles of incorporation, bylaws or a resolution of the board of directors provides that voting or nonvoting stockholders are entitled to dissent and obtain payment for their shares.
(e) Accordance of full voting rights to control shares, as defined inNRS 78.3784, only to the extent provided for pursuant toNRS 78.3793.
(f) Any corporate action not described in this subsection that will result in the stockholder receiving money or scrip instead of a fraction of a share except where the stockholder would not be entitled to receive such payment pursuant toNRS 78.205,78.2055 or78.207. A dissent pursuant to this paragraph applies only to the fraction of a share, and the stockholder is entitled only to obtain payment of the fair value of the fraction of a share.
2. A stockholder who is entitled to dissent and obtain payment pursuant toNRS 92A.300 to92A.500, inclusive, may not challenge the corporate action creating the entitlement unless the action is unlawful or fraudulent with respect to the stockholder or the domestic corporation.
3. Subject to the limitations in this subsection, from and after the effective date of any corporate action described in subsection 1, no stockholder who has exercised the right to dissent pursuant toNRS 92A.300 to92A.500, inclusive, is entitled to vote his or her shares for any purpose or to receive payment of dividends or any other distributions on shares. This subsection does not apply to dividends or other distributions payable to stockholders on a date before the effective date of any corporate action from which the stockholder has dissented. If a stockholder exercises the right to dissent with respect to a corporate action described in paragraph (f) of subsection 1, the restrictions of this subsection apply only to the shares to be converted into a fraction of a share and the dividends and distributions to those shares.
(Added to NRS by1995, 2087; A2001, 1414,3199;2003, 3189;2005, 2204;2007, 2438;2009, 1721;2011, 2814)
NRS 92A.390 Limitations on right of dissent: Stockholders of certain classes or series; action of stockholders not required for plan of merger.
1. There is no right of dissent with respect to a plan of merger, conversion or exchange in favor of stockholders of any class or series which is:
(a) A covered security under section 18(b)(1)(A) or (B) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(1)(A) or (B), as amended;
(b) Traded in an organized market and has at least 2,000 stockholders and a market value of at least $20,000,000, exclusive of the value of such shares held by the corporation’s subsidiaries, senior executives, directors and beneficial stockholders owning more than 10 percent of such shares; or
(c) Issued by an open end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1 et seq., as amended, and which may be redeemed at the option of the holder at net asset value,
è unless the articles of incorporation of the corporation issuing the class or series or the resolution of the board of directors approving the plan of merger, conversion or exchange expressly provide otherwise.
F-3
2. The applicability of subsection 1 must be determined as of:
(a) The record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the corporate action requiring dissenter’s rights; or
(b) The day before the effective date of such corporate action if there is no meeting of stockholders.
3. Subsection 1 is not applicable and dissenter’s rights are available pursuant toNRS 92A.380 for the holders of any class or series of shares who are required by the terms of the corporate action requiring dissenter’s rights to accept for such shares anything other than cash or shares of any class or any series of shares of any corporation, or any other proprietary interest of any other entity, that satisfies the standards set forth in subsection 1 at the time the corporate action becomes effective.
4. There is no right of dissent for any holders of stock of the surviving domestic corporation if the plan of merger does not require action of the stockholders of the surviving domestic corporation underNRS 92A.130.
5. There is no right of dissent for any holders of stock of the parent domestic corporation if the plan of merger does not require action of the stockholders of the parent domestic corporation underNRS 92A.180.
(Added to NRS by1995, 2088; A2009, 1722;2013, 1285)
NRS 92A.400 Limitations on right of dissent: Assertion as to portions only to shares registered to stockholder; assertion by beneficial stockholder.
1. A stockholder of record may assert dissenter’s rights as to fewer than all of the shares registered in his or her name only if the stockholder of record dissents with respect to all shares of the class or series beneficially owned by any one person and notifies the subject corporation in writing of the name and address of each person on whose behalf the stockholder of record asserts dissenter’s rights. The rights of a partial dissenter under this subsection are determined as if the shares as to which the partial dissenter dissents and his or her other shares were registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter’s rights as to shares held on his or her behalf only if the beneficial stockholder:
(a) Submits to the subject corporation the written consent of the stockholder of record to the dissent not later than the time the beneficial stockholder asserts dissenter’s rights; and
(b) Does so with respect to all shares of which he or she is the beneficial stockholder or over which he or she has power to direct the vote.
(Added to NRS by1995, 2089; A2009, 1723)
NRS 92A.410 Notification of stockholders regarding right of dissent.
1. If a proposed corporate action creating dissenter’s rights is submitted to a vote at a stockholders’ meeting, the notice of the meeting must state that stockholders are, are not or may be entitled to assert dissenter’s rights underNRS 92A.300 to92A.500, inclusive. If the domestic corporation concludes that dissenter’s rights are or may be available, a copy ofNRS 92A.300 to92A.500, inclusive, must accompany the meeting notice sent to those record stockholders entitled to exercise dissenter’s rights.
2. If the corporate action creating dissenter’s rights is taken by written consent of the stockholders or without a vote of the stockholders, the domestic corporation shall notify in writing all stockholders entitled to assert dissenter’s rights that the action was taken and send them the dissenter’s notice described inNRS 92A.430.
(Added to NRS by1995, 2089; A1997, 730;2009, 1723;2013, 1286)
F-4
NRS 92A.420 Prerequisites to demand for payment for shares.
1. If a proposed corporate action creating dissenter’s rights is submitted to a vote at a stockholders’ meeting, a stockholder who wishes to assert dissenter’s rights with respect to any class or series of shares:
(a) Must deliver to the subject corporation, before the vote is taken, written notice of the stockholder’s intent to demand payment for his or her shares if the proposed action is effectuated; and
(b) Must not vote, or cause or permit to be voted, any of his or her shares of such class or series in favor of the proposed action.
2. If a proposed corporate action creating dissenter’s rights is taken by written consent of the stockholders, a stockholder who wishes to assert dissenter’s rights with respect to any class or series of shares must not consent to or approve the proposed corporate action with respect to such class or series.
3. A stockholder who does not satisfy the requirements of subsection 1 or 2 andNRS 92A.400 is not entitled to payment for his or her shares under this chapter.
(Added to NRS by1995, 2089; A1999, 1631;2005, 2204;2009, 1723;2013, 1286)
NRS 92A.430 Dissenter’s notice: Delivery to stockholders entitled to assert rights; contents.
1. The subject corporation shall deliver a written dissenter’s notice to all stockholders of record entitled to assert dissenter’s rights in whole or in part, and any beneficial stockholder who has previously asserted dissenter’s rights pursuant toNRS 92A.400.
2. The dissenter’s notice must be sent no later than 10 days after the effective date of the corporate action specified inNRS 92A.380, and must:
(a) State where the demand for payment must be sent and where and when certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to what extent the transfer of the shares will be restricted after the demand for payment is received;
(c) Supply a form for demanding payment that includes the date of the first announcement to the news media or to the stockholders of the terms of the proposed action and requires that the person asserting dissenter’s rights certify whether or not the person acquired beneficial ownership of the shares before that date;
(d) Set a date by which the subject corporation must receive the demand for payment, which may not be less than 30 nor more than 60 days after the date the notice is delivered and state that the stockholder shall be deemed to have waived the right to demand payment with respect to the shares unless the form is received by the subject corporation by such specified date; and
(e) Be accompanied by a copy ofNRS 92A.300 to92A.500, inclusive.
(Added to NRS by1995, 2089; A2005, 2205;2009, 1724;2013, 1286)
NRS 92A.440 Demand for payment and deposit of certificates; loss of rights of stockholder; withdrawal from appraisal process.
1. A stockholder who receives a dissenter’s notice pursuant toNRS 92A.430 and who wishes to exercise dissenter’s rights must:
(a) Demand payment;
(b) Certify whether the stockholder or the beneficial owner on whose behalf he or she is dissenting, as the case may be, acquired beneficial ownership of the shares before the date required to be set forth in the dissenter’s notice for this certification; and
F-5
(c) Deposit the stockholder’s certificates, if any, in accordance with the terms of the notice.
2. If a stockholder fails to make the certification required by paragraph (b) of subsection 1, the subject corporation may elect to treat the stockholder’s shares as after-acquired shares underNRS 92A.470.
3. Once a stockholder deposits that stockholder’s certificates or, in the case of uncertified shares makes demand for payment, that stockholder loses all rights as a stockholder, unless the stockholder withdraws pursuant to subsection 4.
4. A stockholder who has complied with subsection 1 may nevertheless decline to exercise dissenter’s rights and withdraw from the appraisal process by so notifying the subject corporation in writing by the date set forth in the dissenter’s notice pursuant toNRS 92A.430. A stockholder who fails to so withdraw from the appraisal process may not thereafter withdraw without the subject corporation’s written consent.
5. The stockholder who does not demand payment or deposit his or her certificates where required, each by the date set forth in the dissenter’s notice, is not entitled to payment for his or her shares under this chapter.
(Added to NRS by1995, 2090; A1997, 730;2003, 3189;2009, 1724)
NRS 92A.450 Uncertificated shares: Authority to restrict transfer after demand for payment. The subject corporation may restrict the transfer of shares not represented by a certificate from the date the demand for their payment is received.
(Added to NRS by1995, 2090; A2009, 1725)
NRS 92A.460 Payment for shares: General requirements.
1. Except as otherwise provided inNRS 92A.470, within 30 days after receipt of a demand for payment pursuant toNRS 92A.440, the subject corporation shall pay in cash to each dissenter who complied withNRS 92A.440 the amount the subject corporation estimates to be the fair value of the dissenter’s shares, plus accrued interest. The obligation of the subject corporation under this subsection may be enforced by the district court:
(a) Of the county where the subject corporation’s principal office is located;
(b) If the subject corporation’s principal office is not located in this State, in the county in which the corporation’s registered office is located; or
(c) At the election of any dissenter residing or having its principal or registered office in this State, of the county where the dissenter resides or has its principal or registered office.
è The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation’s balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, a statement of income for that year, a statement of changes in the stockholders’ equity for that year or, where such financial statements are not reasonably available, then such reasonably equivalent financial information and the latest available quarterly financial statements, if any;
(b) A statement of the subject corporation’s estimate of the fair value of the shares; and
(c) A statement of the dissenter’s rights to demand payment underNRS 92A.480 and that if any such stockholder does not do so within the period specified, such stockholder shall be deemed to have accepted such payment in full satisfaction of the corporation’s obligations under this chapter.
(Added to NRS by1995, 2090; A2007, 2704;2009, 1725;2013, 1287)
F-6
NRS 92A.470 Withholding payment for shares acquired on or after date of dissenter’s notice: General requirements.
1. A subject corporation may elect to withhold payment from a dissenter unless the dissenter was the beneficial owner of the shares before the date set forth in the dissenter’s notice as the first date of any announcement to the news media or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment, within 30 days after receipt of a demand for payment pursuant toNRS 92A.440, the subject corporation shall notify the dissenters described in subsection 1:
(a) Of the information required by paragraph (a) of subsection 2 ofNRS 92A.460;
(b) Of the subject corporation’s estimate of fair value pursuant to paragraph (b) of subsection 2 ofNRS 92A.460;
(c) That they may accept the subject corporation’s estimate of fair value, plus interest, in full satisfaction of their demands or demand appraisal underNRS 92A.480;
(d) That those stockholders who wish to accept such an offer must so notify the subject corporation of their acceptance of the offer within 30 days after receipt of such offer; and
(e) That those stockholders who do not satisfy the requirements for demanding appraisal underNRS 92A.480shall be deemed to have accepted the subject corporation’s offer.
3. Within 10 days after receiving the stockholder’s acceptance pursuant to subsection 2, the subject corporation shall pay in cash the amount offered under paragraph (b) of subsection 2 to each stockholder who agreed to accept the subject corporation’s offer in full satisfaction of the stockholder’s demand.
4. Within 40 days after sending the notice described in subsection 2, the subject corporation shall pay in cash the amount offered under paragraph (b) of subsection 2 to each stockholder described in paragraph (e) of subsection 2.
(Added to NRS by1995, 2091; A2009, 1725;2013, 1287)
NRS 92A.480 Dissenter’s estimate of fair value: Notification of subject corporation; demand for payment of estimate.
1. A dissenter paid pursuant toNRS 92A.460 who is dissatisfied with the amount of the payment may notify the subject corporation in writing of the dissenter’s own estimate of the fair value of his or her shares and the amount of interest due, and demand payment of such estimate, less any payment pursuant toNRS 92A.460. A dissenter offered payment pursuant toNRS 92A.470 who is dissatisfied with the offer may reject the offer pursuant toNRS 92A.470 and demand payment of the fair value of his or her shares and interest due.
2. A dissenter waives the right to demand payment pursuant to this section unless the dissenter notifies the subject corporation of his or her demand to be paid the dissenter’s stated estimate of fair value plus interest under subsection 1 in writing within 30 days after receiving the subject corporation’s payment or offer of payment underNRS 92A.460 or92A.470 and is entitled only to the payment made or offered.
(Added to NRS by1995, 2091; A2009, 1726)
NRS 92A.490 Legal proceeding to determine fair value: Duties of subject corporation; powers of court; rights of dissenter.
1. If a demand for payment pursuant toNRS 92A.480 remains unsettled, the subject corporation shall commence a proceeding within 60 days after receiving the demand and petition the court to determine the fair value of the shares and accrued interest. If the subject corporation does not commence the proceeding within the 60-day period, it shall pay each dissenter whose demand remains unsettled the amount demanded by each dissenter pursuant to NRS 92A.480 plus interest.
F-7
2. A subject corporation shall commence the proceeding in the district court of the county where its principal office is located in this State. If the principal office of the subject corporation is not located in this State, the right to dissent arose from a merger, conversion or exchange and the principal office of the surviving entity, resulting entity or the entity whose shares were acquired, whichever is applicable, is located in this State, it shall commence the proceeding in the county where the principal office of the surviving entity, resulting entity or the entity whose shares were acquired is located. In all other cases, if the principal office of the subject corporation is not located in this State, the subject corporation shall commence the proceeding in the district court in the county in which the corporation’s registered office is located.
3. The subject corporation shall make all dissenters, whether or not residents of Nevada, whose demands remain unsettled, parties to the proceeding as in an action against their shares. All parties must be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced under subsection 2 is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers have the powers described in the order appointing them, or any amendment thereto. The dissenters are entitled to the same discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to a judgment:
(a) For the amount, if any, by which the court finds the fair value of the dissenter’s shares, plus interest, exceeds the amount paid by the subject corporation; or
(b) For the fair value, plus accrued interest, of the dissenter’s after-acquired shares for which the subject corporation elected to withhold payment pursuant toNRS 92A.470.
(Added to NRS by1995, 2091; A2007, 2705;2009, 1727;2011, 2815;2013, 1288)
NRS 92A.500 Assessment of costs and fees in certain legal proceedings.
1. The court in a proceeding to determine fair value shall determine all of the costs of the proceeding, including the reasonable compensation and expenses of any appraisers appointed by the court. The court shall assess the costs against the subject corporation, except that the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if the court finds the subject corporation did not substantially comply with the requirements ofNRS 92A.300 to92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously or not in good faith with respect to the rights provided byNRS 92A.300 to92A.500, inclusive.
3. If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the subject corporation, the court may award to those counsel reasonable fees to be paid out of the amounts awarded to the dissenters who were benefited.
F-8
4. In a proceeding commenced pursuant toNRS 92A.460, the court may assess the costs against the subject corporation, except that the court may assess costs against all or some of the dissenters who are parties to the proceeding, in amounts the court finds equitable, to the extent the court finds that such parties did not act in good faith in instituting the proceeding.
5. To the extent the subject corporation fails to make a required payment pursuant toNRS 92A.460,92A.470 or92A.480, the dissenter may bring a cause of action directly for the amount owed and, to the extent the dissenter prevails, is entitled to recover all expenses of the suit.
6. This section does not preclude any party in a proceeding commenced pursuant toNRS 92A.460 or92A.490 from applying the provisions ofN.R.C.P. 68 orNRS 17.115.
(Added to NRS by1995, 2092; A2009, 1727)
F-9