SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary Information [ ]Confidential, For Use Of The
Statement Commission Only (As Permitted
By Rule 14c-5 (d)(2)
[ ] Definitive Information Statement
NOVO NETWORKS, INC.
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computedpursuant 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:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, of the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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First mailed to stockholders on or about September __, 2001.
[Novo Logo]
NOTICE OF ACTION TAKEN WITHOUT A MEETING
Novo Networks, Inc., a Delaware corporation (the "Company"),
proposes to effect a 1-for-7 reverse stock split of its common
stock and to reduce its authorized number of shares of common
stock from 200 million to 30 million shares, each as further
described in the attached Information Statement. On August 24,
2001, the Board of Directors of the Company approved the adoption
of the reverse stock split and the reduction in authorized
capital. THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE
REVERSE STOCK SPLIT AND THE REDUCTION IN AUTHORIZED CAPITAL IS IN
THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS.
On August 24, 2001, the holders of the majority of the
outstanding shares of the Company's voting stock executed a
written consent approving the reverse stock split and the
reduction in authorized capital. THE COMPANY IS NOT ASKING FOR A
PROXY, AND YOU ARE REQUESTED NOT TO SEND TO THE COMPANY A PROXY.
The attached Information Statement is being provided to you
pursuant to Rule 14c-2 under the Securities Exchange Act of 1934,
as amended. The Information Statement contains a more detailed
description of the reverse stock split. I encourage you to read
the Information Statement thoroughly.
By order of the Board of Directors:
-----------------------------------
Stuart J. Chasanoff,
Senior Vice President
General Counsel and Secretary
NOVO NETWORKS, INC.
300 Crescent Court, Suite 1760
Dallas, Texas 75201
INFORMATION STATEMENT
AND
NOTICE OF ACTION TAKEN WITHOUT A MEETING
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
September ___, 2001
This Information Statement and Notice of Action Taken
Without a Meeting (collectively, the "Information Statement") is
furnished to the stockholders of our company, Novo Networks,
Inc., a Delaware corporation (the "Company"), to provide
information with respect to an action taken by written consent of
the holders of a majority of our voting capital stock (a) to
effect a 1-for-7 reverse stock split (the "Reverse Split") of our
common stock and (b) to reduce our authorized number of shares of
common stock from 200 million to 30 million, as further described
herein. Our voting capital stock (the "Voting Stock") consists
of our outstanding common stock, par value $0.00002 per share,
and Series D Convertible Preferred Stock, par value $.00002 per
share.
On August 24, 2001, our board of directors determined that
it was advisable and in the best interest of the Company and our
stockholders to approve the reverse stock split and the reduction
of our authorized capital. On August 24, 2001, IEO Investments
Limited, Infinity Emerging Subsidiary Limited, and Infinity
Investors Limited, representing approximately 51.4% of our
outstanding Voting Stock, gave their written consent to the
approval and adoption of the reverse stock split and the
reduction of our authorized capital.
This Information Statement is being sent to our stockholders
on or about September ___, 2001. The record date established by
our board for the purposes of determining the number of
outstanding shares of Voting Stock of the Company was the date of
the stockholder consent, August 24, 2001 (the "Consent Date").
Pursuant to the regulations promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the
approval and adoption of the reverse stock split and the
reduction of our authorized capital will not become effective
until at least 20 days after we have mailed this Information
Statement to our stockholders of record on the Consent Date.
The elimination for the need for a special meeting of the
stockholders to approve the reverse stock split is made possible
by Section 228 of the Delaware General Corporation Law (the
"DGCL") which provides that the written consent of the holders of
outstanding shares of the Voting Stock, having not less than the
minimum number of votes which would be necessary to authorize or
take such action at a meeting at which all shares entitled to
vote thereon were present and voting, may be substituted for such
a meeting. Pursuant to Section 228 of the DGCL, a majority of
the outstanding shares of the Voting Stock entitled to vote
thereon is required in order to approve the reverse stock split
and the reduction of our authorized capital. Our board decided
to obtain the written consent of the holders of a majority of the
outstanding shares of the Voting Stock in order to (i) eliminate
the costs and management time required to hold a special meeting
of stockholders and (ii) implement the reverse stock split and
reduction in authorized capital as soon as possible, and
therefore accomplish the purposes of the reverse stock split, as
described herein, in a timely manner.
Pursuant to Section 228 of the DGCL, we are required to
provide prompt notice of the taking of a corporate action
without a meeting to stockholders who have not consented in
writing to such action. This Information Statement constitutes
notice of action taken without a meeting as is required by
Section 228 of the DGCL.
1
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS INFORMATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
OUTSTANDING VOTING STOCK OF THE COMPANY
Record Date and Outstanding Voting Securities
At the close of business on the Consent Date, we had issued
and outstanding approximately:
- 52,495,422 shares of issued and outstanding common
stock held by approximately 1,077 stockholders of
record;
- No shares of issued and outstanding Series A
Convertible Preferred Stock (the "Preferred A Stock");
- 4,500 shares of issued and outstanding Series B
Convertible Preferred Stock (the "Preferred B Stock")
held by 18 stockholders of record;
- 14,570 shares Series C Convertible Preferred Stock (the
"Preferred C Stock") held by 7 stockholders of record; and
- 7,000 shares of Series D Convertible Preferred Stock
(the "Preferred D Stock") held by 2 stockholders of record.
An additional 326,087, 813,966 and 1,000,000 shares of
common stock are issuable upon the conversion of the outstanding
Preferred B Stock, Preferred C Stock and Preferred D Stock,
respectively.
Each share of common stock is entitled to one vote and each
share of Preferred D Stock votes on an as-converted basis with
the common stock. The common stock and the Preferred D Stock
constitute our only outstanding securities eligible to vote on
the approval and adoption of the reverse stock split and proposed
reduction of our authorized capital.
The stockholders that executed the written consent hold
approximately 51.4% of the Voting Stock and have effective
control of the Company through the voting power of their shares.
Our board has established September 4, 2001 as the record
(the "Record Date") for determining the stockholders entitled to
participate in the reverse stock split.
Our principal executive offices are located at 300 Crescent
Court, Suite 1760, Dallas, Texas 75201. Our telephone number is
(214) 777-4100.
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DESCRIPTION OF THE REVERSE STOCK SPLIT
Our board of directors and stockholders have approved
amendments (the "Amendments") to Article Fourth of our
amended and restated certificate of incorporation to effect a
1-for-7 reverse stock split and to reduce our authorized number
of shares of common stock from 200 million shares to 30 million
shares. The proposed amendments will reduce the number of issued
and outstanding shares of our common stock by approximately 86
percent, with each seven shares of common stock currently outstanding
("Old Shares") becoming one share of our common stock following the
reverse stock split ("New Shares"). The text of the proposed
amendments is attached to this Information Statement as Appendix A.
Purposes of the Reverse Stock Split
Our board of directors believes that the reverse stock split is desirable
for several reasons. Our common stock is currently listed on the
Nasdaq National Market. In order for our common stock to
continue to be listed on the Nasdaq National Market, we must
satisfy various continued listing requirements established by
Nasdaq. Among other requirements, (i) persons other than our
officers, directors and 10% beneficial owners must hold shares of
our common stock having an aggregate market value equal to at
least $5.0 million, (ii) we must maintain net tangible assets of
at least $4.0 million, (iii) at least 400 persons must own at
least 100 shares of our common stock and (iv) our common stock
must have a minimum bid price of at least $1.00 per share.
The primary reason for the reverse stock split is to combine
our outstanding shares of common stock to increase the price per
share of our common stock and regain compliance with a minimum
bid price requirement for continued listing on the Nasdaq
National Market. On July 11, 2001, we received a letter from The
Nasdaq Stock Market notifying us that our common stock failed to
maintain a minimum bid price of $1.00 for 30 consecutive trading
days, as required by the continued maintenance standards
established by The Nasdaq Stock Market. This letter provided us
a grace period of 90 calendar days, or until October 9, 2001, to
regain compliance with a minimum bid price requirement.
In addition, on August 2, 2001, following our announcement
of the bankruptcy filings by certain of our subsidiaries, we
received an additional letter from Nasdaq requesting additional
information from us regarding our business plans and operations
and our ability to maintain compliance with the continuing listing
requirements of The Nasdaq Stock Market. This request included,
among other items, information regarding our plan to regain and
sustain compliance with the $1.00 minimum bid price requirement.
Our board of diretors expects that the reverse stock split will
result in the bid price of our common stock meeting or exceeding
Nasdaq's minimum bid price requirement, at least initially. The
decrease in the number of shares of common stock outstanding as a
consequence of the proposed reverse stock split should increase the
per share price of our common stock to at least $1.00, which would
enable us to meet the minimum bid price requirements for continued
listing if such $1.00 bid price were maintained for at least ten (10)
consecutive trading days. Additionally, the increase in the bid price
may enhance the acceptability of our common stock by institutional
investors, as well as the financial community and the investing public
at large. However, we cannot assure our stockholders that the
market price of our common stock will rise in proportion to the
reduction in the number of outstanding shares resulting from the
reverse stock split or that the market price of our common stock
will remain above $1.00 after the reverse stock split. In
addition, we cannot assure our stockholders that we will be able
to address any other concerns that the Nasdaq may have regarding
our continued listing.
If the market price for our common stock remains below $1.00
per share and we are no longer listed on Nasdaq, our common stock
may be deemed to be penny stock. If our common stock is
considered penny stock, it would be subject to rules that impose
additional sales practices on broker-dealers who sell our
securities. For example, broker-dealers must make a special
suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale.
Also, a disclosure schedule must be prepared before any
transaction involving a penny stock, and disclosure is required
about (i) sales commissions payable to the broker-dealer and the
registered representative and (ii) current quotations for the
securities. Monthly statements are also required to be sent
disclosing recent price information for the penny stock held in
the account and information on the limited market in penny stocks.
Because of these additional obligations, some brokers may not
effect transactions in penny stocks. This could have an adverse
effect on the liquidity of our common stock.
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In addition, even if we are unable to maintain our Nasdaq
listing, we believe our current depressed trading price has
resulted in larger than normal percentage changes in our trading
price. We anticipate less volatility in our trading price if the
trading price of our common stock increases following the effectiveness
of the reverse stock split.
Purpose of the Reduction in Authorized Capital
As a result of the reverse stock split, we will have a
significant number of authorized but unissued shares of common
stock unless we reduce our authorized capital. Because we are a
Delaware corporation and our franchise taxes are determined, in
part, based upon our authorized capital stock, the reduction in
the number of authorized shares of common stock from 200 million
to 30 million is expected to result in a nominal reduction of our
franchise taxes.
Effectiveness of the Reverse Stock Split and Reduction in
Authorized Capital
The reverse stock split and reduction in our authorized
capital will become effective when we file an amendment to our
amended and restated certificate of incorporation with the Secretary
of State of Delaware. We expect to file this amendment shortly after
the expiration of the 20-day period following the mailing of this
Information Statement. Our board of directors has discretion not
to carry out the reverse stock split and reduction in our authorized
capital if it determines at any time prior to the effective date
either (i) that the reverse stock split is not necessary to avoid
the delisting of our common stock from The Nasdaq National
Market, based on market prices at the time, or (ii) that the reverse
stock split and reduction in our authorized capital will not
otherwise be in the best interests of our stockholders. Upon the
filing of the amendment, all the Old Shares will be converted
into New Shares as set forth in the amendment.
Certificates and Fractional Shares
No fractional shares will be issued as a result of the
reverse stock split. In lieu thereof, each stockholder whose Old
Shares are not evenly divisible by seven (7) will be entitled to
receive a whole New Share for any fractional share at no
additional cost. We do not expect the number of New Shares to be
issued in connection with rounding up such fractional interests
to be material.
As soon as practicable after the effective date, we will
request all stockholders to return their stock certificates
representing Old Shares outstanding on the effective date in
exchange for certificates representing the number of New Shares
into which the Old Shares have been converted as a result of the
reverse stock split. Each stockholder will receive a letter of
transmittal from our transfer agent containing instructions on
how to exchange certificates. STOCKHOLDERS SHOULD NOT SUBMIT
THEIR OLD CERTIFICATES TO THE TRANSFER AGENT UNTIL THEY RECEIVE
THESE INSTRUCTIONS. In order to receive new certificates,
stockholders must surrender their old certificates in accordance
with the transfer agent's instructions, together with a properly
executed and completed letter of transmittal. Upon such
surrender, a certificate representing the New Shares will be
issued and forwarded to the stockholder. Until surrender, each
certificate representing Old Shares will continue to be valid and
represent New Shares equal to one-seventh of the number of Old
Shares plus any shares issued as a result of rounding. The
decrease in the number of outstanding shares will have no effect
on either our periodic reporting requirements with the Securities
and Exchange Commission (the "Commission")or our Nasdaq Stock Market
minimum listing requirements.
Stockholders whose shares are held in brokerage accounts or
"street name" do not need to submit Old Share certificates for
exchange. These shares will automatically reflect the new
quantity of shares based on the 1-for-7 reverse stock split.
Effect of the Reverse Stock Split
The principal effect of the reverse stock split will be to
decrease the number of shares of common stock outstanding from
approximately 52,495,422 shares to approximately 7,499,346 shares
(subject to adjustment for rounding). In addition, our board
of directors has taken appropriate action to adjust proportionately
the number of shares of common stock issuable upon the exercise of
outstanding options and warrants, and to adjust the related
exercise
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prices, to reflect the reverse stock split. As a result,
following the effective date, the number of shares of common
stock issuable upon the exercise of outstanding options and
warrants will be reduced from approximately 13,142,952 shares to
approximately 1,877,565 shares (subject to adjustment for
rounding). The maximum number of shares of common stock that may
be issued under our 1999 Omnibus Securities Plan will
automatically adjust because such maximum number equals 15% of
our outstanding common stock. The maximum number of shares
issuable under our 2001 Stock Incentive Plan will be decreased
from 12,000,000 shares to 1,714,286 shares. The board of directors
will also take appropriate action to adjust proportionately the
number of shares of common stock issuable upon the conversion of our
various series of outstanding preferred stock, and to adjust the
related conversion prices, to reflect the reverse stock split.
As a result, following the effective date, the number of shares
of common stock issuable upon the conversion of our outstanding
shares of preferred stock will be reduced from approximately
2,140,053 shares to approximately 305,722 shares (subject to
adjustment for rounding).
The reduction in the number of outstanding shares is
expected to increase the bid price of our common stock, although
there can be no assurance that the price will increase in
proportion to the 1-for-7 reverse stock split ratio. The trading
price of our common stock depends on many factors, many of
which are beyond our control.
The liquidity of our common stock may be adversely affected
by the reduced number of shares outstanding after the reverse
stock split. In addition, the reverse stock split will increase
the number of stockholders who own odd-lots. An odd-lot is fewer
than 100 shares. Stockholders who hold odd-lots may experience an
increase in the cost of selling their shares and may have greater
difficulty in making sales.
The New Shares will be fully paid and non-assessable. The
amendment will not change the terms of our common stock. The New
Shares of new common stock will have the same voting rights and
rights to dividends and distributions and will be identical in
all other respects to the Old Shares. Each stockholder's percentage
ownership of the New Shares will not be altered, except for the effect
of the rounding fractional shares.
In connection with the reverse stock split, we will reduce
our number of authorized shares of common stock from 200,000,000 to
30,000,000 shares.
Certain Federal Income Tax Consequences
We have not sought and will not seek an opinion of counsel
or a ruling from the Internal Revenue Service regarding the
federal income tax consequences of the reverse stock split.
However, we believe that because the reverse stock split is not
part of a plan to increase periodically a stockholder's
proportionate interest, the reverse stock split will have the
following effects. The receipt of New Shares in the reverse
stock split should not result in any taxable gain or loss to
stockholders for federal income tax purposes (except in the case
of the portion of whole New Shares attributable to the rounding
up to the nearest whole number of New Shares in lieu of
fractional shares as described below). A stockholder's tax basis
in any New Shares received as a result of the reverse stock split
will be equal, in the aggregate, to his or her basis in the Old
Shares, increased by the income or gain herein. New Shares
attributable to the rounding up to the nearest whole number
constitute a disproportionate dividend distribution. Such
stockholders should generally recognize ordinary income to the
extent of earnings and profits of the Company allocated to the
portion of each New Share attributable to the rounding up
process, and the remainder of the gain, if any, shall be treated
as received from the exchange of property. For tax purposes, the
holding period of the shares immediately prior to the effective
date of the reverse stock split will be included in the holding
period of the New Shares if the Old Shares were capital assets in
the hands of such stockholder. The portion of the New Shares
attributable to rounding up for fractional shares will have a
holding period commencing on the effective date of the reverse
stock split. The proposed reverse stock split will constitute a
reorganization within the meaning of Section 368(1)(B) of the
Internal Revenue Code of 1986, as amended, and the Company will
not recognize any gain or loss as a result of the reverse stock split.
5
No rights of dissent
Stockholders have no right under Delaware law or our amended and
restated certificate of incorporation or bylaws to exercise dissenters'
rights of appraisal with respect to the reverse stock split.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Beneficial Ownership of Certain Shareholders, Directors and
Executive Officers
The following table sets forth information with respect to
the beneficial ownership of our common stock by:
* each of our named executive officers and directors;
* all of our executive officers and directors as a
group; and
* each person, or group of affiliated persons, known to
us to own beneficially more than 5% of our common
stock.
In accordance with the rules of the Commission, the following
table gives effect to the shares of common stock that could be issued
upon the exercise of outstanding options and common stock purchase
warrants within 60 days of August 1, 2001. Unless otherwise noted in
the footnotes to the following table, and subject to community property
laws where applicable, the following individuals have sole voting and
investment control with respect to the shares beneficially owned
by them. Unless otherwise indicated, the address of each
executive officer and director is Novo Networks, Inc., 300
Crescent Court, Suite 1760, Dallas, Texas 75201.
Shares of Common Stock
beneficially owned
------------------------
Person or group Number(1) Percent(2)
- --------------------------------------- ------------ ----------
Named Executive Officers and Directors:
Barrett N. Wissman (3)................ 18,708,800 34.7%
Mark R. Graham (4).................... 361,000 *
Olaf Guerrand-Hermes (5).............. 553,000 1.0%
Jan R. Horsfall (6)................... 250,000 *
Clark K. Hunt (7)..................... 19,135,000 36.4%
J. Stevens Robling (8)................ 545,000 1.1%
Stuart J. Chasanoff (9)............... 390,833 *
Chad E. Coben (10).................... 570,000 1.1%
Daniel J. Wilson (11)................. 1,140,000 2.1%
Samuel Litwin (12).................... 1,718,333 3.3%
Jeffrey A. Marcus (13)................ 4,414,800 7.8%
Thomas P. McMillin (14)............... 1,561,000 2.9%
All executive officers and directors
as a group (11 persons)(15).......... 33,350,683 57.7%
Beneficial Owners of 5% or More of
Our Outstanding Common Stock:
IEO Investments Limited (16).......... 10,316,200 19.3%
Infinity Emerging Opportunities 16.2%
Limited (17)......................... 8,683,800
Infinity Emerging Subsidiary Limited
(18).................................. 8,683,800 16.2%
Infinity Investors Limited (19)........ 8,500,000 15.9%
Hunt Asset Management, L.L.C. (20)..... 10,316,200 19.3%
HW Capital, LP (21).................... 8,638,800 16.2%
HW Partners, LP (22)................... 8,500,000 15.9%
______________
* Represents less than one percent (1%).
(1) We have calculated the percentages of shares beneficially
owned based on 52,495,422 shares of common stock outstanding
at August 1, 2001. For purposes of this table, a person is
deemed to have beneficial ownership of the number of shares
of common stock that such person has the right to acquire
pursuant to the exercise of stock options exercisable within
60 days.
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(2) For purposes of computing the percentage of outstanding
shares of common Stock held by such person, any shares of
common stock which such person has the right to acquire
pursuant to the exercise of a stock option exercisable
within 60 days is deemed to be outstanding, but is not
deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(3) Includes (a) 25,000 shares of common stock owned directly,
(b) 8,683,800 shares of common stock owned by Infinity
Emerging Subsidiary Limited and 8,500,000 shares of common
stock owned by Infinity Investors Limited and (c) options to
purchase 1,500,000 shares of common stock. Mr. Wissman
disclaims beneficial ownership of the shares of common stock
held by Infinity Emerging Subsidiary Limited and Infinity
Investors Limited.
(4) Includes (a) 125,000 shares of common stock owned by a
corporation controlled by Mr. Graham, (b) 136,000 shares of
common stock owned by a partnership as to which Mr. Graham
has shared control and (c) options to purchase 100,000
shares of common stock.
(5) Includes (a) 3,000 shares of common stock owned directly and
(b) options to purchase 550,000 shares of common stock.
(6) Includes options to purchase 250,000 shares of common stock.
(7) Includes (a) 35,000 shares of common stock owned directly,
(b) 10,316,200 shares of common stock owned by IEO Holdings
Limited and 8,638,800 shares of common stock owned by
Infinity Emerging Subsidiary Limited and (c) options to
purchase 100,000 shares of common stock. Mr. Hunt disclaims
beneficial ownership of the shares of common stock held by
IEO Investments Limited and Infinity Emerging Subsidiary
Limited.
(8) Includes (a) 120,000 shares of common stock owned directly
(b) options to purchase 425,000 shares of common stock.
(9) Includes (a) 57,500 shares of common stock owned directly
and (b) options to purchase 333,333 shares of common stock.
(10) Includes (a) 60,000 shares of common stock owned directly
and (b) options to purchase 510,000 shares of common stock.
(11) Includes (a) 120,000 shares of common stock owned directly
and (b) options to purchase 1,020,000 shares of common
stock.
(12) Includes (a) 1,405,000 shares of common stock owned
directly, (b) 30,000 shares of common stock owned indirectly
and (c) options to purchase 283,333 shares of common stock.
Mr. Litwin's employment with the Company terminated on July 27,
2001. Mr. Litwin's address is 540 4th Street, Absecon, New
Jersey 08201.
(13) Includes (a) 504,800 shares of common stock owned directly
and (b) options to purchase 3,910,000 shares of common
stock. Mr. Marcus resigned as the Chairman of the Board of
Directors and the Chief Executive Officer of the Company
effective June 7, 2001. Mr. Marcus' address is 100 Crescent
Court, Suite 700, Dallas, Texas 75201.
(14) Includes (a) 201,000 shares of common stock owned directly
and (b) options to purchase 1,360,000 shares of common
stock. Mr. McMillin resigned as Senior Executive Vice
President and Chief Operating Officer of the Company
effective June 7, 2001. Mr. McMillin's address is 2000 East
Lamar Boulevard, Suite 590, Arlington, Texas 76006.
(15) Includes options to purchase 5,298,717 shares of common
stock. Excludes shares held by Messrs. Marcus, McMillin and
Litwin.
(16) This information is based on information reported by the
stockholder in filings made with the Commission. The
address of IEO Investments Limited is Hunkins Waterfront Plaza,
Main Street Post Office Box 556, Charlestown, Nevis, West Indies.
(17) This information is based on information reported by the
stockholder in filings made with the Commission. The
address of Infinity Emerging Opportunities Limited is
Hunkins Waterfront Plaza, Main Street Post Office Box 556,
Charlestown, Nevis, West Indies.
(18) This information is based on information reported by the
stockholder in filings made with the Commission. The
address of Infinity Emerging Subsidiary Limited is Hunkins
Waterfront Plaza, Main Street Post Office Box 556,
Charlestown, Nevis, West Indies.
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(19) This information is based on information reported by the
stockholder in filings made with the Commission. The
address of Infinity Investors Limited is Hunkins Waterfront
Plaza, Main Street Post Office Box 556, Charlestown, Nevis,
West Indies.
(20) This information is based on information reported by the
stockholder in filings made with the Commission. The
address of Hunt Asset Management, L.L.C. is 1601 Elm Street,
40th Floor, Dallas, Texas.
(21) This information is based on information reported by the
stockholder in filings made with the Commission. The
address of HW Capital, L.P. is 1601 Elm Street, 40th Floor,
Dallas, Texas.
(22) This information is based on information reported by the
stockholder in filings made with the Commission. The
address of HW Partners, L.P. is 300 Crescent Court, Suite
1760, Dallas, Texas.
8
COMPANY CONTACT INFORMATION
All inquiries regarding the Company should be addressed to
the Company's principal executive offices: Novo Networks, Inc.,
300 Crescent Court, Suite 1760, Dallas, Texas 75201, attention:
General Counsel, telephone (214) 777-4170,
By Order of the Board of Directors:
/s/
------------------------------
Stuart J. Chasanoff,
Senior Vice President
General Counsel and Secretary
September ___, 2001
9
Appendix A
----------
Certificate of Amendment
to
Amended and Restated
Certificate of Incorporation
of
Novo Networks, Inc.
Pursuant to Section 242 of the Delaware General Corporation
Law
Novo Networks, Inc. (the "Corporation"), a corporation
existing under and by virtue of the Delaware General Corporation
Law (the "DGCL"), does hereby certify:
FIRST: The name of the Corporation is Novo Networks, Inc.
SECOND: The Board of Directors of the Corporation (the
"Board"), acting by written consent on August 24, 2001, in
accordance with the applicable provisions of the DGCL and the
Corporation's Bylaws, did duly adopt resolutions (a) approving
the amendment to the Corporation's Amended and Restated Certificate of
Incorporation described herein (the "Amendment"), (b) directing that the
Amendment be submitted to the stockholders of the Corporation
(the "Stockholders") for their consideration and approval, and
(c) directing that, upon approval and adoption of such amendment
by the Stockholders of the Corporation, this amendment be
executed and filed with the Secretary of State of Delaware and
elsewhere as may be required by law.
THIRD: A majority of the Stockholders of the Corporation
acting by written consent on August 24, 2001, adopted resolutions
adopting the Amendment.
FOURTH: The resolutions adopted by the Stockholders are as
follows:
"RESOLVED, that the first paragraph of Article
FOURTH of the Amended and Restated Certificate of
Incorporation of the Corporation relating to the total
number of shares of stock which this Corporation shall
have authority to issue be and hereby is deleted and
the following new first paragraph of Article FOURTH be
inserted in lieu thereof:
FOURTH: The aggregate number of which
the Corporation shall have the authority to
issue is 55 million, consisting of 30 million
shares of Common Stock, par value $0.00002
per share (the "Common Stock"), and (ii) 25
million shares of Preferred Stock, par value
$0.00002 per share (the "Preferred Stock").
RESOLVED, that Article FOURTH of the Amended and
Restated Certificate of Incorporation of the
Corporation be amended to add at the end of part B
thereof the following paragraph:
Effective upon the filing of a
Certificate of Amendment to the Amended and
Restated Certificate of Incorporation with
the Secretary of State of the State of
Delaware (the "Effective Date"), each seven
(7) shares of Common Stock, $.00002 par value
per share (the "Old Common Stock"), then
issued and outstanding or held in the
treasury of the Corporation at the close of
business on the Effective Date shall
automatically be combined into one (1) share
of Common Stock, $.00002 par value per share
(the "New Common Stock"), of the Corporation
without any further action by the holders of
such shares of Old Common Stock (and any
fractional shares resulting from such
exchange will not be issued but will be
rounded up and exchanged from one (1) whole
share of New Common Stock). Each stock
certificate representing shares of Old Common
Stock shall thereafter represent that number
of shares of New Common Stock into which the
shares of Old Common Stock represented by
such certificate shall have been combined;
provided, however, that each person holding
of record a stock certificate or certificates
that represented shares of Old
10
Common Stock shall receive, upon surrender of
such certificate or certificates, a new
certificate or certificates evidencing and
representing the number of shares of New
Common Stock to which such person is
entitled. The New Common Stock issued in
this exchange shall have the same rights,
preferences and privileges as the Common
Stock.
FURTHER RESOLVED, that the filing of a Certificate
of Amendment to the Amended and Restated Certificate of
Incorporation of the Corporation with the Secretary of
State of the State of Delaware, and elsewhere as
required by law, to effect the foregoing amendment to
the Amended and Restated Certificate of Incorporation
be, and it hereby is, approved, ratified and confirmed
in all respects."
FIFTH: This Certificate of Amendment to the Amended
and Restated Certificate of Incorporation has been duly
adopted and is being filed in accordance with the provisions
of Section 242 of the DGCL.
IN WITNESS WHEREOF, the Secretary of this Corporation
has hereunto set his hand this ___ day of ________, 2001.
NOVO NETWORKS, INC.
--------------------------------
By:
------------------------------
Its:
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