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SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ]Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
JAWS TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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JAWS TECHNOLOGIES, INC.
1013-17TH AVENUE, S.W.
CALGARY, ALBERTA, CANADA T2T 0A7
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 31, 2000
The 2000 Annual Meeting of Stockholders of JAWS Technologies, Inc. (the
"Company") will be held at the River Cafe, Prince's Island Park, Calgary,
Alberta, Canada, on Wednesday, May 31, 2000 at 3:00 p.m., local time, to
consider and act upon the following matters:
1. To consider and vote upon a proposal to approve the minutes of the
1999 Annual Meeting of Stockholders;
2 To elect five directors to serve until the next Annual Meeting of
Stockholders;
3. To consider and vote upon a proposal to change the Company's
domicile from Nevada to Delaware (the "Migration Merger");
4. To consider and vote upon a proposal to ratify the selection by the
board of directors of the Company of Ernst & Young LLP as the
independent auditors of the Company for the fiscal year ending
December 31, 2000; and
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on April 25, 1999 are
entitled to notice of, and to vote at, the meeting. The stock transfer books of
the Company will remain open for the purchase and sale of the Company's common
stock, par value $.001 per share. All stockholders are cordially invited to
attend the meeting.
By Order of the Board of Directors
Vikki Robinson, Secretary
Calgary, Alberta
Canada
April 28, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
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JAWS TECHNOLOGIES, INC.
1013-17TH Street, S.W.
Calgary, Alberta, Canada T2T 0A7
Proxy Statement for the 2000 Annual Meeting of Stockholders
To Be Held on May 31, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the board of directors of Jaws Technologies, Inc. (the "Company") for
use at the 2000 Annual Meeting of Stockholders to be held on May 31, 2000 and at
any adjournment or adjournments of that meeting (the "Annual Meeting"). All
proxies will be voted in accordance with the instructions contained therein, and
if no choice is specified, the proxies will be voted in favor of the matters set
forth in the accompanying Notice of Meeting. Any proxy may be revoked by a
stockholder at any time before it is exercised by delivery of written revocation
to the Secretary of the Company.
The Company's Annual Report for the year ended December 31, 1999, is being
mailed to stockholders with the mailing of this Notice of Meeting and Proxy
Statement on or about April 29, 2000.
Voting Securities and Votes Required
On April 25, 2000, the record date for the determination of stockholders
entitled to notice of and to vote at the meeting, there were outstanding and
entitled to vote an aggregate of [24,293,142] shares of common stock of the
Company, par value $0.001 per share ("Common Stock"), and one share of special
series A preferred voting stock (the "Special Series A Preferred Voting Stock"),
having a par value of $0.001 per share and a liquidation preference of $0.001
per share. Each share of Common Stock is entitled to one vote and the one share
of Special Series A Preferred Voting Stock is entitled to a number of votes
equal to the number of outstanding exchangeable shares of the Company's
subsidiary, JAWS Acquisition Corp., an Alberta corporation ("JAC"), which are
not owned by the Company or an entity controlled by the Company. On April 25,
2000 (the record date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting), there were ________ exchangeable shares
of JAC outstanding that were not owned by the Company or an entity controlled by
the Company. Accordingly, an aggregate of __________ votes may be cast on the
matters set forth in the Notice of Annual Meeting (consisting of [24,293,142]
votes that may be cast in respect of the Common Stock and _______ votes that may
be cast in respect of the shares of Special Series A Preferred Voting Stock).
Holders of shares of Common Stock and the holder of the Special Series A
Preferred Voting Stock are to vote together as a single class on all matters
submitted to the Company's stockholders for approval.
Under the Company's Bylaws, the holders of a majority of the shares of
Common Stock issued, outstanding and entitled to vote on any matter shall
constitute a quorum with respect to that matter at the Annual Meeting.
Stockholders holding shares of Common Stock who are present in person or
represented by proxy (including stockholders who abstain from voting their
shares or who do not vote with respect to
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one or more of the matters presented for stockholder approval) will be counted
for purposes of determining whether a quorum is present.
The affirmative vote of the holders of a plurality of votes cast by the
stockholders entitled to vote at the Annual Meeting is required for the election
of directors. The affirmative vote of a majority of the outstanding stock
entitled to vote thereon, and a majority of the outstanding stock of each class
entitled to vote thereon as a class is required in order to effect the Migration
Merger. The affirmative vote of a majority of the votes entitled to be cast on
the matter is required for the approval of each of the other matters to be voted
upon.
Stockholders who abstain from voting as to a particular matter, and shares
held in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter. Accordingly,
abstentions and "broker non-votes" will have the effect of a vote "No" on the
voting on a matter.
Stock Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information, as of March 31, 2000,
with respect to any person (including any "group," as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) who is known to the Company to be the beneficial owner of more
than five percent of any class of the Company's voting securities, and as to
those shares of the Company's equity securities beneficially owned by each of
its directors and nominees for director, the executive officers of the Company
named in the Summary Compensation Table under the heading "Compensation of
Executive Officers" below, and all of its directors and executive officers as a
group. Unless otherwise specified in the table below, such information, other
than information with respect to the directors and officers of the Company, is
based on a review of statements filed, or that should have been filed, with the
Securities and Exchange Commission pursuant to Sections 13(d), 13(f), and 13(g)
of the Exchange Act with respect to the Company's Common Stock. As of March 31,
2000, there were 24,293,142 shares of Common Stock outstanding, 50,000
additional shares issuable upon the exercise of options within the next 60 days,
and no shares of Common Stock reserved for issuance to holders of JAC
exchangeable shares.
The number of shares of Common Stock beneficially owned by each person is
determined under the rules of the Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which such person has sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after March 31, 2000 through
the exercise of any stock option or other right. Unless otherwise indicated,
each person has sole investment and voting power (or shares such power with his
or her spouse) with respect to the shares set forth in the following table. The
inclusion herein of any shares deemed beneficially owned does not constitute an
admission of beneficial ownership of those shares.
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Name and Address of Number of Shares
Beneficial Owner(1) Beneficially Owned Percent of Class(2)
------------------- ------------------ -------------------
Robert J. Kubbernus(3) ............................................ 1,544,300 6.34%
Julia L. Johnson(4)................................................ 306,408 1.25%
Arthur Wong(5)..................................................... 313,208 1.28%
Riaz Mamdani(6).................................................... 1,306,000 5.36%
John S. Burns Q.C.(7).............................................. 50,000 0.20%
All directors and executive officers as a group (5 persons)........ 3,519,916 14.46%
Thomson Kernaghan & Co. Limited(8)................................. 4,915,743 20.19%
363 Bay Street, 10th Floor
Toronto, Ontario
Canada M5H 2V2
Glentel Inc.(9).................................................... 2,034,000 8.35%
Suite 2700, 4710 Kingsway
Burnaby, British Columbia
Canada V5H 4M2
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(1) Unless otherwise stated, the business address of each of the stockholders
named in the table is C/O JAWS Technologies, Inc. 1013-17th Avenue S.W.,
Calgary, Alberta, Canada, T2T 0A7. Except as otherwise indicated, to our
knowledge, the persons named in the table have sole voting and investment
power with respect to all shares of common stock shown as beneficially
owned by them.
(2) Percentage ownership is calculated in accordance with the Securities and
Exchange Commission's Rule 13d- 3(d)(1).
(3) Includes 350,000 shares issuable upon the exercise of options exercisable
at $0.48 until July 23, 2002. Includes 350,000 shares issuable upon the
exercise of options exercisable at $1.50 per share until December 31,
2002. Includes 250,000 shares issuable upon the exercise of options
exercisable at $1.88 per share until December 31, 2002.
(4) Includes 150,000 shares of common stock issuable upon the exercise of
options exercisable at $0.48 per share until December 31, 2003.
(5) Includes 200,000 shares of common stock issuable upon the exercise of
options at $0.48 per share until December 31, 2003.
(6) Includes 100,000 options to purchase common shares at $0.15 per share
until February 22, 2002. Also includes (i) 250,000 options to purchase
shares of common stock at $.87 per share until December 31, 2002, (ii)
250,000 options to purchase shares of common stock at $1.88 per share
until December 31, 2002, and (iii) 200,000 options to purchase shares of
common stock at $1.50 per share until December 31, 2002.
(7) Includes 50,000 shares of common stock issuable upon the exercise of
options exercisable within the next sixty days at $5.88 per share. Does
not include options to purchase 150,000 common shares that vest at a later
date.
(8) Includes 217,642 shares of common stock issuable upon exercise of warrants
issued to Thomson Kernaghan, as placement agent, in connection with JAWS'
private placement financing which was consummated on December 31, 1999
(the "Private Placement Transaction") and 58,824 shares of common stock
issuable upon exercise of warrants issued to Thomson Kernaghan & Co.
Limited, as placement agent ("Thomson Kernaghan"), in connection with
JAWS' private placement financing which was consummated on February 22,
2000.
(9) Includes 834,000 shares of common stock issuable upon the exercise of
warrants. 65.2% of the outstanding shares of Glentel are controlled by TCG
International, Inc. The natural person, with sole or shared voting and
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investment power over the shares held of record by Glentel, through TCG
International, Inc. is Arthur Skidmore, c/o Glentel Inc., Suite 2700, 4710
Kingsway, Burnaby, British Columbia, Canada V5H 4M2.
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PROPOSAL NO. 1: APPROVAL OF THE MINUTES OF
THE 1999 ANNUAL MEETING OF STOCKHOLDERS
GENERAL
The persons named in the enclosed proxy will vote to approve the minutes
of the 1999 Annual General Meeting of Stockholders, in the form attached as
Appendix A-1 hereto and the Reconvened Meeting of Stockholders, in the form
attached as Appendix A-2 hereto, unless the proxy is marked otherwise. If a
stockholder returns a proxy without contrary instructions, the persons named as
proxies will vote to approve the minutes of the 1999 Annual Meeting of
Stockholders.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF
THE MINUTES OF THE 1999 ANNUAL GENERAL MEETING OF STOCKHOLDERS AND THE
RECONVENED MEETING OF STOCKHOLDERS.
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ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect as directors
the five nominees named below, unless the proxy is marked otherwise. If a
stockholder returns a proxy without contrary instructions, the persons named as
proxies will vote to elect as directors the nominees named below, each of whom
is currently a member of the board of directors of the Company.
Each director will be elected to hold office until the 2001 Annual Meeting
of Stockholders and until his successor is duly elected and qualified or until
his earlier death, resignation or removal. All of the nominees have indicated
their willingness to serve, if elected; however, if any nominee should be unable
to serve, the shares represented by proxies may be voted for a substitute
nominee designated by the board of directors of the Company.
There are no family relationships between or among any officers or
directors of the Company.
Set forth below are the name and age of each member of, or nominee to, the
board of directors of the Company, and the positions and offices held by him,
his principal occupation and business experience during the past five years, the
names of other publicly held companies of which he serves as a director and the
year of the commencement of his term as a director of the Company. Information
with respect to the number of shares of Common Stock beneficially owned by each
director, directly or indirectly, as of March 31, 2000, appears above under the
heading "Stock Ownership of Certain Beneficial Owners and Management."
Nominees For Director
ROBERT J. KUBBERNUS, age 40, has served as Chairman of the Board, Chief
Executive Officer and President of JAWS Alberta since October 1997 and of JAWS
Technologies, Inc., a Nevada corporation, since February 1998. Mr. Kubbernus
resigned as President of JAWS Alberta in July 1999 upon Mr. Tej Minhas'
appointment to that position. Mr. Kubbernus' primary responsibilities have been
to oversee security product developers, provide executive direction and develop
key contacts with governmental authorities, investors, clients, insurance
underwriters and the investment community. From October 1992 to September 1997,
Mr. Kubbernus held the position of President and Chief Executive Officer of
Bankton Financial Corporation, a company which provided business and lending
advisory services, where he led a team of corporate financial consultants who
specialized in the placement of debt instruments with institutional and private
lenders.
RIAZ MAMDANI , age 32, has been Chief Financial Officer of JAWS since July
1999. Previous to this appointment, he was Director of Corporate Finance from
March 1999 to July 1999. Mr. Mamdani is responsible for the development of
operational financing including securities issuances, the documentation needed
to close these issuances, establishing and implementing professional
relationships and assisting in matters of corporate compliance as well as
company structure. From May 1996 to August 1998, Mr. Mamdani was a Barrister and
Solicitor with Beaumont Church, a Calgary-based law firm, where his practice
focused in the areas of Corporate, Commercial and Securities law. From May 1992
to April 1996, he was a Pharmacist at the Foothills Hospital in Calgary while
attending law school at the University of Calgary, from September 1993 to May
1996. Mr. Mamdani graduated with a Bachelor of Law degree from the University of
Calgary in 1996. He also graduated from the University of Manitoba with a
Bachelor of Science degree in Pharmacy in 1992.
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JULIA L. JOHNSON, age 37, serves as the Chairman of the Florida
Information Service Technology Task Force (Internet Task Force), having been
appointed by Governor Jeb Bush in August 1999. Ms. Johnson has served as (i) a
member of the Florida Public Service Commission, a state agency which regulates
utility companies, from December 1992 to December 1999, (ii) state Chairperson
of the Federal/State Joint Board on Universal Service, a task force within the
Federal Communications Commission from 1996 to 1999, and (iii) a board member
for the Markle Foundation, a project that encourages the use of new
communications technologies for socially beneficial purposes, since 1996. Before
being appointed to the Florida Public Service Commission, Ms. Johnson served as
the Director of Legislative Affairs and senior land use attorney for the
Department of Community Affairs from November 1990 to December 1992, where she
was the chief lobbyist representing the agency before the Florida Legislature on
land use issues. Ms. Johnson graduated with a Juris Doctorate, with a
concentration in corporate and real estate transactions, from the University of
Florida School of Law in 1988, as well as a Bachelor of Science in Business
Administration from the University of Florida in 1985.
ARTHUR WONG, age 30, provides strategic direction to JAWS in the area of
channel development. Since 1992, Mr. Wong has founded three technology
companies. He has been CEO of Security-Focus.com, a database of security
knowledge and resources , since August of 1999 where he is responsible for the
management and direction of an internet security portal. From May 1998 to July
1999, Mr. Wong was the Director of Channel Development for Active Security at
Network Associates Inc. of Santa Clara, California, the world's largest
independent network security and management software company , where he was
responsible for the development and adoption of worldwide integrated security
initiatives and where he also developed standards for new security
infrastructures and worked on its integration and adaption. From July 1996 to
April 1998, he was CEO of Secure Networks Inc. of Calgary, Alberta, a company he
founded. Secure Networks developed internet security tools and offered security
consulting before it was acquired by Network Associates Inc. From April 1993 to
June 1996, Mr. Wong was President of Millennium Systems Canada Inc., a company
he founded and managed, which was a computer hardware distributor and
integrator. Since June 1994 he has been the managing director and founder of H20
Entertainment Corp., a Calgary based organization that develops products for
Nintendo and its N64 game platform. Mr. Wong graduated with a Bachelor of
Science in Communications from the University of Calgary in 1991.
JOHN S. BURNS Q.C., age 59, has been a partner of the law firm Bennett
Jones since ____, 199 . His areas of practice are principally corporate,
corporate finance and securities law. Mr. Burns acts for public and private
corporations, securities issuers and underwriters. His practice focuses on
mergers and acquisitions, public and private offerings, corporate
restructurings, cross border financings and oil, gas and banking transactions.
He has participated in conferences and panels and has authored a number of
papers and articles with respect to these areas of law. Mr. Burns is a board
member of several public and private corporations and served as a Public
Governor of the Alberta Stock Exchange from _______ to _______. He also served
as a member of the Board of Governors of the Olympic Trust of Canada,
Strathcoma-Tweedsmuir school and is a member of the law societes of Alberta and
Upper Canada and the Calgary and Canadian Bar Associations. Mr. Burns graduated
for the University of Alberta with a Bachelor of Arts degree in 1963 and a law
degree from Dalhousie Law School in 1966.
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BOARD RECOMMENDATION
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR EACH OF ROBERT
J. KUBBERNUS, RIAZ MAMDANI, JULIA L. JOHNSON, ARTHUR WONG, AND JOHN S. BURNS
Q.C., AS DIRECTORS OF THE COMPANY TO HOLD OFFICE UNTIL THE 2001 ANNUAL MEETING
OF STOCKHOLDERS OR UNTIL HIS SUCCESSOR IS DULY ELECTED AND QUALIFIED OR UNTIL
HIS EARLIER DEATH, RESIGNATION OR REMOVAL.
Board and Committee Meetings
The board of directors of the Company established an audit committee
consisting of Julia L. Johnson and Arthur Wong, each of whom is an independent
director on the Company's board of directors, and Riaz Mamdani, the Chief
Financial Officer and a director of the Company. The audit committee makes
recommendations to the board of directors of the Company concerning the
engagement of independent public accountants, it reviews with the independent
public accountants the scope and results of the audit engagement, it approves
professional services provided by the independent public accountants, it reviews
the independence of the independent public accountants, it considers the range
of audit and non-audit fees, and it reviews the adequacy of the Company's
internal accounting controls. The audit committee met four times during 1999.
The board of directors of the Company established a compensation committee
consisting of Julia L. Johnson and Arthur Wong, each of whom is an independent
director on the board of directors of the Company. The compensation committee
determines and establishes compensation levels on an annual basis for the
Company's executive officers and administers the Company's Stock Option Plan.
The compensation committee met four times in 1999. See "Report of Compensation
Committee" below.
The Company does not have a nominating committee or a committee serving a
similar function. Nominations are made by and through the full board of
directors of the Company.
The Company's board of directors held four meetings during 1999. Each
director attended 100% of the total number of meetings (including consents in
lieu of meetings) of the board of directors.
Compensation of Directors
Out-of-pocket expenses of the Company's directors, related to their
attendance at meetings of the board of directors, are paid by the Company.
Pursuant to the terms of a directors' agreement by and between the Company and
each of Ms. Johnson, Mr. Wong and Mr. Burns, the Company is obligated to
compensate such directors for services rendered as directors in cash or in
shares of common stock in an amount per annual term equal to $60,000. In
addition, all non-employee directors are eligible to receive stock options under
the Company's 1998 Stock Option Plan. On July 23, 1998, Mr. Wong and Ms. Johnson
each received 200,000 options to purchase 200,000 shares of Common Stock,
respectively, at an exercise price of $0.48 per share under the Company's 1998
Stock Option Plan. On April 13, 2000, Mr. Burns received 200,000 options to
purchase 200,000 shares of Common Stock at an exercise price of $5.88 per share
under the Company's 1998 Stock Option Plan. The Company does not currently
provide additional compensation for committee participation or special
assignments of the Company's board of directors. No other payments have been
made to any member of the Company's board of directors.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names, ages and positions of the
current executive officers of the Company.
NAME AGE POSITION
---- --- --------
Robert J. Kubbernus......................... 40 Chairman of the Board, Chief Executive Officer,
President and Director
Tej Minhas ........................... 39 (1)
Riaz Mamdani .......................... 32 Chief Financial Officer and Director
Vera Gmitter .......................... 41 (1)
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(1) Mr. Minhas and Ms. Gmitter are neither directors nor officers of the
Company, but are included in this table because, as senior officers of
JAWS Technologies Inc., an Alberta corporation ("JAWS Alberta"), they have
performed policy-making functions in respect of the Company. Mr. Minhas is
the President and Chief Operating Officer of JAWS Alberta and Ms. Gmitter
is Vice President, Administration of JAWS Alberta.
Messrs. Kubbernus's and Mamdani's biographies are set forth under
"Election of Directors -- Nominees for Director."
TEJ MINHAS. Mr. Minhas has served as President and Chief Operating Officer
of JAWS Alberta since July 1999. Mr. Minhas is responsible for developing and
implementing strategic and tactical plans for each department, key alliance
development, managing marketing projects, implementing the corporate vision and
maintaining and improving corporate culture. From August 1998 to June 1999, he
was the Vice President of Technology for JAWS Alberta where his primary
responsibilities were to oversee all aspects of the Technology Department
including strategic planning, software engineering, business systems
infrastructure management, technology vendor relations, security consulting and
technical support. From April 1996 to July 1998, Mr. Minhas was the Vice
President of Technology for AgriTech International Corporation, a creator of
global information systems for the agricultural sector, where he was involved
with strategic IT planning, human resource planning, marketing support
management, executive reporting, vendor relations, industry alliances and IS
Business development. From April 1992 to March 1996, he was the Canadian
District Manager, Professional Services for Sybase Canada, an international
database and tools company, where his responsibilities included the
profitability of Canadian operations. The Canadian District was comprised of
offices in Toronto, Ottawa, and Calgary. In this role, Mr. Minhas duties
included marketing strategy development and execution, sales force management,
staff & consultant recruiting, and the operation of a certification and training
centre. Mr. Minhas graduated with a Bachelor of Science, Computer Science
Specialty, from the University of Toronto in 1985.
VERA GMITTER. Ms. Gmitter has served as Vice President, Administration of
JAWS Alberta since February 1998. Her current responsibilities at JAWS Alberta
include developing policies and procedures, government regulation, export,
trademark, finance, accounting, legal, public compliance and human resources as
well as managing over the day to day operations of JAWS Alberta. From July 1997
to June 1998, Ms. Gmitter held the position of General Manager for Bankton
Financial Corporation. In this
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position she directed daily operations for the corporation, which specialized in
custom finance solutions. From September 1987 to July 1997 Ms. Gmitter was the
owner of 396406 Alberta Ltd., a holding company for a restaurant, concession
contracts, retail store and a sign and graphics business, for which she was
President. Ms. Gmitter graduated with a Bachelor of Arts degree in Political
Science and Economics from Augustana University in 1995.
Compensation of Executive Officers
Summary Compensation Table. The following table sets forth certain
information with respect to the annual and long-term compensation for the last
three fiscal years of the Company's President and Chief Executive Officer and
the Company's other executive officers (including former executive officers)
whose total annual salary and bonus for 1999 exceeded $100,000.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------- ---------------
All
Securities Other
Other Annual Underlying Compensation
Compensation Options/SARs ($)
Name and Principal Position Year Salary ($) Bonus($) ($)
--------------------------- ---- ---------- -------- ------------ ------------- ------------
Robert J. Kubbernus 1999 $180,000 -- -- --
Chairman of the Board, 1998 180,000 -- -- 600,000 --
Chief Executive Officer
and President 1997 45,000 -- -- 350,000 --
200,000(1)
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(1) These options were to be granted to Mr. Kubbernus in connection with the
acquisition of JAWS Alberta by the Company on February 10, 1998. Such
options have not yet been granted.
Option Grant Table. The following table sets forth certain information
regarding options granted during the year ended December 31, 1999 by the Company
to the Company's executive officers.
OPTION/SAR GRANTS IN LAST YEAR
Individual Grants
-----------------------------------------------------------------
Percent of Market
Total Price of
Number of Options/ Securities Potential Realizable Value
Securities SARs Exercise Underlying at Assumed Annual Rates of
Underlying Granted to or Options/ Stock Price Appreciation
Options/SARs Employees In Base SARs For Option Term(2)
Granted Fiscal Price On Grant Expiration 5%($) 10%($)
Name (#)(1) Year ($/sh) Date Date 0%($)
- ------------------------- --------------- ------------- ----------- ------------- ------- ----- ------------
Robert J. Kubbernus 600,000 28.17% (1) (1) (1) $314,447 $796,871(4)
Tej Minhas 25,000 1.17% $ 2.41 $0.6250 5-17-02 $ 47,167 $119,531
Riaz Mamdani 700,000 32.86% (3) $0.6250 (3) $ 39,306 $ 99,609(5)
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Vera Gmitter..... 33,000 1.55% $0.62 $0.62 5-17-02 $ 39,306 $ 99,609
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(1) Of the 600,000 options granted, 350,000 shares of common stock are
exercisable at $1.50 per share for a period which expires on December 31,
2002 and 250,000 shares of common stock are exercisable at $1.88 per share
for a period which expires on December 31, 2002.
(2) Amounts represent hypothetical gains that could be achieved for options if
exercised and sold at the end of the option term. These gains are based on
assumed rates of stock price appreciation of 5% and 10% compounded
annually from the date options are granted. Actual gains, if any, on stock
option exercises will depend on the future performance of the Common Stock
on the date on which the options are sold.
(3) Of the 700,000 options granted, (i) 250,000 shares of common stock are
exercisable at $.87 per share for a period which expires on December 31,
2002, (ii) 250,000 shares of common stock are exercisable at $1.88 per
share for a period which expires on December 31, 2002, and (iii) 200,000
shares of common stock are exercisable at $1.50 per share for a period
which expires on December 31, 2002.
(4) Of the 600,000 options received by Mr. Kubbernus, 250,000 options were
issued at an exercise price below the then current market price of shares
of JAWS common stock. The value at grant date market price for 250,000 of
the options is $875,000.
(5) Of the 700,000 options received by Mr. Mamdani, 250,000 options were
issued at an exercise price below the then current market price of shares
of JAWS common stock. The value at grant date market price for 250,000 of
the options is $875,000.
Year-End Option Table. The following table sets forth certain information
regarding options held as of December 31, 1999 by the Named Executive Officers.
None of the Company's executive officers exercised stock options in 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST YEAR AND
YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
SHARES VALUE FYEAR-ENDED (#) FY-ENDED (US$)
ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE (1)
- ------------------------------- --------------- -------- ------------------------- -----------------------
Robert J. Kubbernus............ 0 0 350,000 Exercisable 2,478,000
0 0 350,000 Exercisable 2,121,000
0 0 250,000 Exercisable 1,420,000
0 0 200,000 Unexercisable 1,412,000
Tej Minhas 0 0 29,333 Exercisable 210,904
0 0 29,333 Unexercisable 210,904
0 0 29,333 Unexercisable 210,904
0 0 25,000 Unexercisable 128,750
Riaz Mamdani 0 0 100,000 Exercisable 1,672,500
0 0 250,000 Exercisable 1,420,000
0 0 250,000 Exercisable 1,212,000
0 0 200,000 Exercisable 210,904
Vera Gmitter 0 0 49,500 Exercisable 374,220
0 0 33,000 Unexercisable 249,480
- ------------------------
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(1) Value is based on the closing sales price of the Company's Common Stock on
December 31, 1999 ($7.56), the last trading day of the Company's 1999
fiscal year, less the applicable option exercise price.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's board of directors, which is
currently comprised of two non-employee directors, Julia L. Johnson and
Arthur Wong, is responsible for determining the compensation and benefit
packages of each executive officer and recommending it to the Company's board of
directors. The Compensation Committee sets the compensation for executive
officers and establishes compensation policies for the Company's Chief Executive
Officer and all other executive officers of the Company. Certain decisions of
the Compensation Committee are subject to approval of the Company's board of
directors.
The Company's executive compensation program is designed to promote the
achievement of the Company's business goals, and, thereby, to maximize corporate
performance and stockholder returns. Executive compensation consists of a
combination of base salary and stock-based incentives. The Compensation
Committee considers stock incentives to be a critical component of an
executive's compensation package in order to help align executive interests with
stockholder's interests.
Compensation Philosophy
The objective of the executive compensation program is to align
compensation with business objectives and individual performance, and to enable
the Company to attract, retain and reward executive officers who are expected to
contribute to the long-term success of the Company. The Company's executive
compensation philosophy is based on the principles of competitive and fair
compensation and sustained performance.
- COMPETITIVE AND FAIR COMPENSATION
The Company is committed to providing an executive compensation
program that helps attract and retain highly qualified executives.
To ensure that compensation is competitive, the Company compares its
compensation practices with those of other companies in the industry
and sets its compensation guidelines based on this review. The
Company believes compensation for its executive officers is within
the range of compensation paid to executives with comparable
qualifications, experience and responsibilities in the same or
similar businesses and of comparable size and success. The Company
also strives to achieve equitable relationships both among the
compensation of individual officers and between the compensation of
officers and other employees throughout the organization.
- SUSTAINED PERFORMANCE
Executive officers are rewarded based upon corporate performance and
individual performance. Corporate performance is evaluated by
reviewing the extent to which strategic and business plan goals are
met, including such factors as achievement of operating
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budgets, timely development and commercial introduction of new
processes and products, establishment of strategic licensing and
development alliances with third parties and performance relative to
competitors. Individual performance is evaluated by reviewing
attainment of specified individual objectives and the degree to
which teamwork and Company values are fostered.
In evaluating each executive officer's performance, the Company generally
conforms to the following process:
- Company and individual goals and objectives are established at the
beginning of the performance cycle.
- At the end of the performance cycle, the accomplishments of the
executive's goals and objectives and his contributions to the
Company are evaluated.
- The executive's performance is then compared with peers within the
Company and the results are communicated to the executive.
- The comparative results, combined with comparative compensation
practices of other companies in the industry, are then used to
determine salary and stock compensation levels.
Annual compensation for the Company's executives generally consists of a
base salary and from time to time, the Committee may consider the granting of
stock options and the payment of cash bonuses based upon performance in a
particular year.
The salary for executives is generally set by reviewing compensation for
competitive positions in the market and the historical compensation levels of
the executives. Increases in annual salaries are based on actual corporate and
individual performance against targeted performance and various subjective
performance criteria. Targeted performance criteria vary for each executive
based on his area of responsibility, and may include achievement of the
operating budget for the Company as a whole or of a business group of the
Company, continued innovation in development and commercialization of the
Company's technology and products, timely development and commercial
introduction of new products or processes, implementation of financing
strategies and establishment of strategic licensing and development alliances
with third parties. Subjective performance criteria include an executive's
ability to motivate others, develop the skills necessary to grow as the Company
matures, recognize and pursue new business opportunities and initiate programs
to enhance the Company's growth and success. The Committee does not use a
specific formula based on these targeted performance and subjective criteria,
but instead makes an evaluation of each executive officer's contributions in
light of all such criteria.
Compensation at the executive officer level also includes the long-term
incentives afforded by stock options. The stock option program is designed to
promote the identity of long-term interests between the Company's employees and
its shareholders and assist in the retention of executives. The size of option
grants is generally intended to reflect the executive's position with the
Company and his contributions to the Company, including his success in achieving
the individual performance criteria described above. All stock options granted
to executive officers in 1999 were granted at fair market value on the date of
grant, except for options to purchase 250,000 shares of Common Stock to each of
Messrs. Kubbernus and Mamdani which, in each case were issued at an exercise
price below the then-current market price determined by calculating the average
closing stock price over the immediately preceding sixty day period. During
1999, all executive officers received options to purchase an aggregate of
1,358,000 shares of Common Stock, at a weighted average exercise price of $
per share.
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Base Salaries
The base salaries of the Company's executive officers have been set by
reviewing compensation for competitive positions in the market and the
historical compensation levels of such executives. The employment agreement
between the Company and Mr. Kubbernus is described more fully under "Certain
Relationship and Related Transactions."
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million paid to the corporation's Chief
Executive Officer and four other most highly compensated executive officers.
Qualifying performance compensation will not be subject to the deduction limit
if certain requirements are met. The Company intends to structure the
performance-based portion of the compensation of its executive officers (which
currently consists of stock option grants and performance based bonuses
described above), in a manner that complies with the new statute to mitigate any
disallowance of deductions.
Compensation Committee
Julie L. Johnson
Arthur Wong
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the compensation committee are Ms. Johnson and Mr.
Wong. Neither Ms. Johnson nor Mr. Wong were at any time during 1999, or
formerly, an officer or employee of the Company or any subsidiary of the
Company, nor has any member of the compensation committee had any relationship
with the Company requiring disclosure under Item 404 of Regulation S-K under the
Exchange Act.
COMPARATIVE STOCK PERFORMANCE
The comparative stock performance graph below compares the cumulative
stockholder return on the Common Stock of the Company for the period from
January 27, 1997 through the year ended December 31, 1999 with the cumulative
total return on (i) the Nasdaq Composite Index (the "Nasdaq Index"), and (ii)
theAmex Computer Index (assuming the investment of $100 in the Company's Common
Stock (at the initial public offering price), the Nasdaq Index and the Amex
Computer Index on January 27, 1997 and reinvestment of all dividends).
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Measurement points are on [January 27], 1997 and the last trading day of
the years ended December 31, 1997, December 31, 1998, and December 31, 1999.
Nasdaq AMEX
Corporate Computer
JAWS Index Index
---- --------- -------
February 10, 1998 100 100 100
June 30, 1998 60 111 111
January 1, 1999 42 128 157
June 30, 1999 213 157 195
December 31, 1999 756 238 274
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PROMOTERS
Robert J. Kubbernus, the Chairman of the Board, Chief Executive Officer
and a Director of the Company and Bankton Financial Corporation, a company which
provides business and lending advisory services controlled by Robert Kubbernus,
are the promoters of the Company and JAWS Alberta, a wholly-owned subsidiary of
the Company. Bankton Financial Corporation was a founding shareholder in the
Company and beneficial ownership of any shares of the Company owned by Bankton
Financial Corporation are attributed to Mr. Kubbernus. Until January 1, 2000 the
Company did not pay Mr. Kubbernus directly for his services, but rather paid
directly to Bankton Financial Corporation $180,000 per year for Mr. Kubbernus'
services. Bankton and Robert Kubbernus were also founding shareholders of JAWS
Alberta and received shares in the common stock of "e-biz" solutions, inc., a
Nevada corporation, in consideration for their shares of JAWS Alberta. Robert
Kubbernus and Bankton Financial Corporation each subscribed for shares of the
common stock of JAWS Alberta and paid consideration equal to $0.01 per share for
these shares. As described below, on February 10, 1998, Mr. Kubbernus received
315,000 shares in the common stock of "e-biz" solutions, inc. (now named JAWS
Technologies, Inc., a Nevada corporation) worth $315,000 and Bankton Financial
Corporation received 322,000 shares in the common stock of e-biz worth $322,000,
in each case in connection with the acquisition of JAWS Alberta.
PURCHASE OF JAWS ALBERTA
On February 10, 1998, when the Company was still known as "e-biz"
solutions, inc., the Company entered into an agreement with the shareholders of
JAWS Alberta to purchase all of the 1,000 issued and outstanding shares of JAWS
Alberta for 1,500,000 restricted shares of "e-biz" solutions, inc.. Pursuant to
this agreement, the following people received common stock of "e-biz" solutions,
inc., in consideration for their shares of JAWS Alberta, as follows:
JAWS Alberta Shareholder Number of E-Biz Shares Received
------------------------ -------------------------------
Robert Kubbernus 315,000
Bankton Financial Corporation (1) 322,000
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Chell McNeill, Inc.(2) 637,000
- --------------
(1) Robert Kubbernus is the controlling shareholder of Bankton Financial
Corporation. Robert Kubbernus is to be granted 200,000 options to purchase
shares of the common stock at $0.50 per share.
(2) Cameron Chell, who resigned as a director of JAWS on November 30, 1999, is
the controlling shareholder of Chell McNeill, Inc. Cameron Chell was also
to be granted 200,000 options to purchase shares of the common stock of
"e-biz" solutions, inc. at $0.50 per share.
TRANSACTIONS WITH THOMSON KERNAGHAN
As of March 31, 2000, Thomson Kernaghan is the holder of 4,915,743 shares
of the Company's common stock, representing 20.19% of the issued and
outstanding shares of common stock of the Company. Pursuant to the terms of a
placement agency between the Company and Thomson Kernaghan, dated February 15,
2000, in connection with the private placement of 588,238 Units of the Company,
each Unit consisting of one share of common stock and one warrant to purchase
one-half share of common stock for $6.50 per share, at $4.25 per Unit (the
"February Canadian Agency Agreement"), Thomson Kernaghan received a sales
commission of 7% of the offering and a 3% financial advisory fee (an aggregate
of $250,001.10). Also pursuant to the February Canadian Agency Agreement,
Thomson Kernaghan also received 58,824 warrants, each warrant exercisable for
one share of common stock at an exercise price of $4.25 per share.
Pursuant to the terms of a placement agency agreement between the Company
and Thomson Kernaghan, dated December 31, 1999, in connection with the private
placement of 2,176,418 Units of the Company, each Unit consisting of one share
of common stock and one warrant to purchase one-half share of common stock for
$6.50 per share, at $4.25 per Unit (the "Canadian Agency Agreement"), Thomson
Kernaghan received a sales commission of 7% of the offering and a 3% financial
advisory fee (an aggregate of $924,977). Also pursuant to the Canadian Agency
Agreement, Thomson Kernaghan also received 217,642 warrants, each warrant
exercisable for one share of common stock at an exercise price of $4.25 per
share.
In addition, Thomson Kernaghan and the Company have entered into a
consulting agreement effective July 1, 1999 pursuant to which Thomson Kernaghan
provides advisory services to the Company, including without limitation,
advising on business and financial matters. The consulting agreement terminates
on June 30, 2000 unless it is extended by mutual agreement thereafter. Under the
terms of the consulting agreement, the Company has agreed to pay Thomson
Kernaghan the lesser of (i) 7,500 shares of the Company's common stock; and (ii)
that number of shares of the Company's common stock equal to $25,000 divided by
95% of the average price of the Company's common stock for each calendar month
over the year of the agreement. Payments under the consulting agreement are to
be made semi-annually, with the final payment being on June 30, 2000. In
addition, the Company has agreed to pay Thomson Kernaghan a fee of 2% of the
gross value of any merger and acquisition transaction in which Thomson Kernaghan
advises the Company.
On September 25, 1998, the Company entered into a $2,000,000, 10%
Convertible Debenture Agreement with Thomson Kernaghan that included 1,428,572
warrants to purchase 1,428,572 common shares at $0.28 per common share. On April
27, 1999, the Company and Thomson Kernaghan amended the debenture agreement,
increasing the principal amount of the convertible debentures to $5,000,000.
Subsequently, a total of $1,520,000 was advanced pursuant to the amended
debenture agreement.
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On November 17, 1999, the Company and Thomson Kernaghan executed a
Debenture Acquisition Agreement Amendment and Settlement Agreement (the
"Settlement Agreement") in order to settle the outstanding obligations of the
parties. The Settlement Agreement settles the conversion terms of the $1,520,000
advanced under the amended debenture agreement and the exercise of outstanding
warrants issued under the amended debenture agreement and terminates all further
obligations related to the amended debenture agreement.
Debentures issued pursuant to the amended debenture agreement were
converted to 5,127,672 shares of the Company's common stock and warrants were
exercised for the issuance of 2,180,220 shares in the Company's common stock on
November 23, 1999.
CONSULTING FEES
Since January 1, 2000, Robert J. Kubbernus has been employed directly by
the Company pursuant to the terms of an employment agreement which provides for
an annual base salary of $300,000 per annum. Prior to entering into the
employment agreement the Company paid Bankton Financial Corporation, a company
controlled by Mr. Kubbernus, a consulting fee of $180,000 for services rendered
to the Company by Mr. Kubbernus. Mr. Kubbernus and Bankton Financial Corporation
are shareholders and promoters of the Company and continue to direct and promote
the company's future development.
LEASE OF PREMISES
The Company entered into an agreement to lease premises from Shelbourne
Place Holding Corp. ("Shelbourne"), pursuant to which the Company is renting
approximately 10,000 square feet of commercial space and is obligated to pay
Shelbourne $95,600 per annum, plus operating costs of approximately $42,000 per
annum, for a five-year term commencing November 1, 1998. Riaz Mamdani, a
director and the Chief Financial Officer of the Company, owns a majority of the
shares of Shelbourne. The Company is also the lessee in a lease for
approximately 3,000 sq. ft. with Manufacturers Life under a lease which the
Company entered into prior to entering into its lease with Shelbourne. The
Company vacated these premises in 1998 when it moved into the Shelbourne
premises. The Company pays approximately $31,000 per annum for these premises
and has sub-leased some of this space to offset approximately $13,000 per annum
of the rental expense associated therewith for the remainder of the lease term.
TRANSACTIONS WITH FUTURELINK
Mr. Chell has resigned as Chief Executive Officer and director of
FutureLink. Robert J. Kubbernus was a director of FutureLink until he resigned
in November 1999. FutureLink is an application service provider and supplies
network and software services to the Company. These services are provided to the
Company on normal commercial terms consistent with the terms FutureLink has with
other clients. In 1998 and 1999 the value of the services provided to the
Company by FutureLink was $76,612 and $84,420, respectively.
TRANSACTIONS WITH GLENTEL INC.
The Company has an alliance with Glentel to explore and develop secure
wireless data products that will incorporate the Company's security products
into applications such as mobile two-way radio, satellite, paging, cellular and
PCS. Because product development is in the planning phase for research and
development, the Company and Glentel have not yet derived any material business
from this alliance and
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neither the Company nor Glentel presently know what interest each party will
have in any products or services they may jointly develop. Unless the planning
phase is successful in generating a plan for research and development, the
Company may never generate revenues from this agreement. Glentel is a principle
stockholder of the Company.
PROVISION OF STATIONERY AND OFFICE SUPPLIES
Mr. Mamdani was a director of Willsons Stationers, a stationery and office
supplies company, from November 1998 to August 13, 1999. Until recently, the
Company purchased all of its stationery and office supplies from Willsons at
prices paid by non-related parties in arm's-length transactions.
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PROPOSAL NO. 2: REINCORPORATION IN DELAWARE
INTRODUCTION
For the reasons set forth below, the board of directors of the Company
believes that it is in the best interests of the Company and its stockholders to
change the state of incorporation of the Company from Nevada to Delaware (the
"Reincorporation Proposal"). STOCKHOLDERS ARE URGED TO READ CAREFULLY THIS
SECTION OF THE PROXY STATEMENT, INCLUDING THE RELATED EXHIBITS REFERENCES BELOW
AND ATTACHED HERETO, BEFORE VOTING ON THE REINCORPORATION PROPOSAL. Throughout
this Proxy Statement, the term "JAWS Nevada" or the "Company" refers to JAWS
Technologies, Inc., the existing Nevada corporation, and the term "JAWS
Delaware" refers to JAWS Technologies, Inc., the new Delaware corporation, a
wholly-owned subsidiary of JAWS Nevada, which is the proposed successor to JAWS
Nevada pursuant to the Reincorporation Proposal.
As discussed below, the principal reasons for the Reincorporation Proposal
are the greater flexibility of Delaware corporation law and the substantial body
of case law interpreting that law. The Company believes that its stockholders
will benefit from the well-established principles of corporate governance that
Delaware law affords. The Certificate of Incorporation for JAWS Delaware (the
"Delaware Certificate") is substantially similar to the Articles of
Incorporation currently in effect for JAWS Nevada (the "Company Articles"), with
minor exceptions discussed herein. The Reincorporation Proposal is not being
proposed in order to prevent an unsolicited takeover attempt, and the Company's
board of directors is not aware of any present attempt by any person to acquire
control of the Company, obtain representation on the Company's board of
directors or take any action that would materially affect the governance of the
Company.
The Reincorporation Proposal will be effected by merging JAWS Nevada with
and into JAWS Delaware (the "Merger"). Upon completion of the Merger, JAWS
Nevada, as a corporate entity, will cease to exist and JAWS Delaware will
continue to operate the business of the Company under its current name JAWS
Technologies, Inc.
Pursuant to the Agreement and Plan of Merger, in substantially the form
attached hereto as APPENDIX B(the "Merger Agreement"), each outstanding share of
Common Stock (the "Company Common Stock") will be automatically converted into
one share of JAWS Delaware common stock, par value $0.001 per share (the
"Delaware Company Common Stock"), upon the effective date of the Merger and the
outstanding share of Special Series A Preferred Stock, par value $0.001 per
share, of the Company (the "Series A Preferred Stock"), will be automatically
converted into one share of Special Series A Preferred Stock, par value $0.001
per share, of JAWS Delaware (the "Delaware Company Preferred Stock") upon the
Effective Date of the Merger. EACH STOCK CERTIFICATE REPRESENTING ISSUED AND
OUTSTANDING SHARES OF THE COMMON STOCK OR SERIES A PREFERRED STOCK WILL CONTINUE
TO REPRESENT THE SAME NUMBER OF SHARES OF THE DELAWARE COMPANY COMMON STOCK OR
DELAWARE COMPANY PREFERRED STOCK, AS APPLICABLE. IT WILL NOT BE NECESSARY FOR
STOCKHOLDERS TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK
CERTIFICATES OF JAWS DELAWARE. HOWEVER, STOCKHOLDERS MAY EXCHANGE THEIR
CERTIFICATES IF THEY SO CHOSE. The Common Stock is listed for trading on the OTC
Bulletin Board under the symbol "JAWZ" and, after the Merger, the Delaware
Company Common Stock will continue to be traded on the OTC Bulletin Board
without interruption, under the same symbol "JAWZ" as the shares of Company
Common Stock are currently traded.
Under Nevada law and pursuant to the Company Articles, the affirmative
vote of the holders of at least, voting together as a single class, a majority
of the shares of Common Stock and Series A Preferred Stock outstanding and
entitled to vote, voting together as a single class, are required to approve and
adopt the Merger Agreement and the transactions contemplated thereby. See "Vote
Required for the Reincorporation Proposal." The Reincorporation Proposal has
been unanimously approved by the
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Company's board of directors. If approved by the stockholders, it is anticipated
that the Merger will become effective as soon as practicable (the "Effective
Date") following the annual meeting of stockholders. However, pursuant to the
Merger Agreement, the Merger may be abandoned or the Merger Agreement may be
amended by the board of directors of the Company (except that certain principle
terms may not be amended without stockholder approval) either before or after
stockholder approval has been obtained and prior to the Effective Date.
The discussion set forth below is qualified in its entirety by reference
to the Merger Agreement, the Company Articles of Incorporation, the Company
Bylaws, and the Delaware Certificate and the Delaware Bylaws, copies of which
are attached hereto as Appendices B through D, respectively.
APPROVAL OF THE REINCORPORATION PROPOSAL WILL CONSTITUTE APPROVAL OF THE
MERGER AGREEMENT, THE DELAWARE CERTIFICATE AND THE DELAWARE BYLAWS AND ALL
PROVISIONS THEREOF.
VOTE REQUIRED FOR REINCORPORATION PROPOSAL
Pursuant to Nevada law and the Company Articles, the affirmative vote of
the holders of at least a majority of the shares of Company Common Stock and the
Series A Preferred Stock outstanding and entitled to vote, voting together as a
single class, are required to approve and adopt the Reincorporation Proposal and
the transactions contemplated thereby. At the record date, there were [ ] shares
of Company Common Stock outstanding and one share of special series A preferred
voting stock outstanding. Approval of the Reincorporation Proposal will
constitute approval of the Merger Agreement, the Delaware Certificate and the
Delaware Bylaws and the provisions thereof.
SPECIFIC RIGHTS OF DISSENTING SHAREHOLDERS
Pursuant to Nevada corporate law, Nevada Revised Statutes ("NRS") Sections
92A.300-92A.500 attached hereto as Appendix ___, and Company shareholder is
entitled to dissent from this proposed corporate action, and to obtain the
statutory prescribed fair value of his or her shares of Common Stock. 'Fair
value' for this purpose means the value of the shares immediately before the
effectuation of the corporate action to which the shareholder objects, excluding
any appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable. Although the shareholder is entitled to dissent
and obtain payment therefor, the shareholder may not challenge the corporate
action creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the corporation. If a shareholder wishes to assert dissenter's
rights, that shareholder must: (i) deliver to the Company, before the vote is
taken, written notice of his intent to demand payment for his shares if the
Merger is effectuated; and (ii) must not vote his shares in favor of the
proposed action. A shareholder who does not satisfy the requirements referenced
in the preceding sentence is not entitled to payment for his shares under NRS
Chapter 92A. The Company will notify shareholders who satisfy the requirements
to asset dissenter's rights of the time period during which such rights may be
exercised.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR
THE PROPOSED REINCORPORATION.
PRINCIPLE REASONS FOR THE PROPOSED REINCORPORATION
By changing the state of incorporation of the Company from Nevada to
Delaware, the Company will receive the following advantages:
Prominence; Predictability and Flexibility of Delaware Law. For many
years, Delaware has followed a policy of encouraging incorporation in that
state. In furtherance of that policy, Delaware has been a leader in adopting,
construing and- implementing comprehensive, flexible corporate laws responsive
to the legal and business needs of corporations organized in Delaware. Many
corporations, have chosen Delaware initially as a state of incorporation or have
subsequently changed corporate domicile to Delaware in a manner similar to that
proposed by the Company. Because of Delaware's prominence as the state of
incorporation for many major corporations, both the legislature and courts in
Delaware have demonstrated an ability and a willingness to act quickly and
effectively to meet changing business needs. The Delaware courts have developed
considerable expertise in dealing with corporate issues and a substantial body
of case
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23
law has developed construing Delaware law and establishing public policies with
respect to corporate legal affairs.
Increased Ability to Attract and Retain Qualified, Directors. Both Nevada
and Delaware law permit a corporation to include a provision in its charter that
reduces or limits the monetary liability of directors for breaches of fiduciary
duty in certain circumstances. The Company believes that, in general, Delaware
case law regarding a corporation's ability to limit director liability is more
developed and provides more guidance than Nevada law.
Well-Established Principles of Corporate Governance. There is substantial
judicial precedent in the Delaware, courts as to the legal principles applicable
to measures that may be taken by a corporation and as to the conduct of the
board of directors of the Company such as under the business judgment rule and
other standards. The Company believes that its stockholders will benefit from
the well-established principles of corporate governance that Delaware law
affords.
No Change in Board Members, Business, Management, Employee Benefit Plans
or Location of Principal Facilities of the Company. The Reincorporation Proposal
will effect only a change in the legal domicile of the Company and certain other
changes of a legal nature, certain of which are described in this Proxy
Statement. The Reincorporation Proposal will NOT result in any change in the
name, business, management, fiscal year, assets or liabilities (except to the
extent of legal and other costs of effecting the Merger) or location of the
principal facilities of the Company. All employee benefit, stock option and
employee stock purchase plans of the Company will be assumed and continued by
JAWS Delaware, and each option or right issued pursuant to such plans will
automatically be converted into an option or right to purchase the same number
of shares of Delaware Common Stock, at the same price per share, upon the same
terms, and subject to the same conditions. Stockholders should note that
approval of the Reincorporation Proposal will also constitute approval of the
assumption of these plans by JAWS Delaware. Other employee benefit arrangements
of JAWS Nevada will also be continued by JAWS Delaware upon the terms and
subject tot he conditions currently in effect. As noted above, after the Merger,
shares of Delaware Common Stock will continue to be traded, without
interruption, on the same exchange OTC Bulletin Board and under the same symbol
"JAWZ" as the shares of Company Common Stock are currently traded. The Company
believes that the Reincorporation Proposal will not affect any of its material
contracts with any third parties and that JAWS Nevada's rights and obligations
under such material contracts will continue and be assumed by JAWS Delaware.
ANTITAKEOVER IMPLICATIONS
Delaware, like many other states, permits a corporation to adopt a number
of measures designed to reduce a corporation's vulnerability to unsolicited
takeover attempts through amendment of the corporation's certificate of
incorporation or bylaws or otherwise. The Reincorporation Proposal is NOT being
proposed in order to prevent such a change in control and the board of directors
of the Company is not aware of any present attempt to acquire control of the
Company or to obtain representation on the Company's board of directors.
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The board of directors of the Company, however, believes that future
unsolicited takeover attempts may be unfair or disadvantageous to us and our
stockholders because, among other reasons:
- a non-negotiated takeover bid may be timed to take advantage of
temporarily depressed stock prices;
- a non-negotiated takeover bid may be designed to foreclose or minimize
the possibility of more favorable competing bids or alternative transactions;
- a non-negotiated takeover bid may involve the acquisition of only a
controlling interest in the Company's stock, without affording all stockholders
the opportunity to receive the same economic benefits; and
- certain of the Company's contractual arrangements provide that they may
not be assigned pursuant to a transaction which results in a "change of control"
of the Company without the prior written consent of the licensor or other
contracting party.
By contrast, in a transaction in which a potential acquirer must negotiate
with an independent board of directors, the board of directors can and should
take account of the underlying and long-term values of the business, technology
and other assets, the possibility of alternative transactions on more favorable
terms, anticipated favorable developments in the business not yet reflected in
the stock price and equality of treatment among all stockholders.
Certain aspects of the Reincorporation Proposal may have the effect of
deterring hostile takeover attempts. Section 203 of the General Corporation Law
of the State of Delaware, from which JAWS Delaware does not intend to opt out,
restricts certain "business combinations" with "interested stockholders" for
three years following the date that a person becomes an "interested
stockholder," unless the board of directors approves the business combination.
Despite the belief of the Company's board of directors as to the benefits
to our stockholders of the Reincorporation Proposal, it may be disadvantageous
to the extent that it has the effect of discouraging a future takeover attempt
which is not approved by the Company's board of directors, but which a majority
of the stockholders may deem to be in their best interests or in which
stockholders may receive a substantial premium for their shares over the then
current market value or their cost basis in such shares. As a result of such
effects of the Reincorporation Proposal, stockholders who might wish to
participate in an unsolicited tender offer may not have an opportunity to do so.
In addition, to the extent that provisions of Delaware law enable the Company's
board of directors to resist a takeover or change in control of the Company,
such provisions could make it more difficult to change the existing board and
management.
THE ARTICLES OF INCORPORATION AND BYLAWS OF THE COMPANY AND THE CERTIFICATE OF
INCORPORATION AND BYLAWS OF JAWS DELAWARE
The provision of the Company Articles and the Company' Bylaws (the
"Company Bylaws") are substantially similar to the Delaware Certificate and the
bylaws of JAWS Delaware (the "Delaware Bylaws"). However, while the Company has
no present intention to do so, JAWS Delaware could, in the future, implement
certain other changes by amendment to the Delaware Certificate or the Delaware
Bylaws. See "Significant Differences Between the
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Corporation Laws of the Nevada and Delaware." This discussion of the Delaware
Certificate and the Delaware Bylaws is qualified by reference to Appendix C and
Appendix D hereto, respectively.
Authorized Capital Stock. The Company Articles currently authorizes the
Company to issue up to 95,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $0.001 per share, of the Company ("Company
Preferred Stock"). The Delaware Certificate authorizes JAWS Delaware to issue up
to 95,000,000 shares of Delaware Common Stock and 5,000,000 shares of preferred
stock, par value $0.001 per share, of JAWS Delaware ("Delaware Preferred
Stock"). Like the Company Articles, the Delaware Certificate permits the
Company's board of directors to determine the rights, powers and preferences, if
any, and the qualifications, limitations or restrictions, if any, of the
authorized and unissued Delaware Preferred Stock.
Limitation of Liability of Directors or Officers. The Company Articles and
the Delaware Certificate both provide for the elimination of personal monetary
liability of directors and officers to the maximum extent permissible under the
law of the respective states. The Company Articles, in accordance with the
Nevada law, limit the personal liability of directors or officers of the Company
for breaches of fiduciary duty other than for acts or omissions which involve
intentional misconduct, fraud or knowing violations of law. The Delaware
Certificate, in accordance with Delaware law, limits the personal liability of
directors for breaches of fiduciary duty other than for (i) breaches of the duty
of loyalty to JAWS Delaware or its stockholders, (ii) acts or omissions not in
good faith or involving intentional misconduct or a knowing violation of law,
(iii) unlawful payment of dividend or unlawful purchase or redemption of stock,
or (iv) any transaction from which the director derived an improper personal
benefit. Thus, the Delaware Certificate may not limit to as great an extent as
the Company Articles, the personal liability of directors of JAWS Delaware. In
addition, in compliance with Delaware law, the Delaware Certificate only limits
the personal liability of directors of JAWS Delaware as opposed to both
directors and officers under the Company Articles. For a more detailed
explanation of the foregoing, see "--Significant Differences Between the
Corporation Laws of Nevada and Delaware."
Removal of Directors. The Company Bylaws provide that the board of
directors of the Company or the shareholders of the Company may, by majority
vote, declare vacant the office of a director who has been declared incompetent
by an order of a court of competent jurisdiction or if the director has been
convicted of a felony. The Delaware Bylaws provide no similar removal provision,
and in accordance with Delaware law, provide that any director or the entire
board of directors may be removed with or without cause by the holders of a
majority of the voting power of the outstanding shares of capital stock of JAWS
Delaware entitled to vote at an election of directors. For a more detailed
explanation of the foregoing, see "-- Significant Differences Between the
Corporation Laws of Nevada and Delaware."
Filling Vacancies on the Board of Directors. The Company Bylaws, in
accordance with Nevada law, provide that vacancies on the Company's board of
directors may be filled by a majority of the remaining directors, though less
than a quorum. The Delaware Bylaws, in accordance with Delaware law, similarly
provide that vacancies on the board of directors of JAWS Delaware may be filled
by a majority of the remaining directors, although less than a quorum. For a
more detailed explanation of the foregoing, see "--Significant Differences
Between the Corporation Law of Nevada and Delaware."
Power to Call Special Stockholders' Meetings. The Company Bylaws provide
that special meetings of stockholders may be called by the President or by the
Board of Directors, and must be called by the President at the written request
of not less than 51% of the issued and outstanding shares of capital stock of
the Company. The Delaware Bylaws contain a similar provision governing the
calling of special meetings of stockholders.
The Company Bylaws provide that if, after the filling of any vacancy on
the board of directors, the directors elected by the stockholders constitute
less than a majority of the total number of directors then in office, any holder
or holders of shares representing five percent (5%) or more of the total
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number of shares entitled to vote may call a special meeting of stockholders to
elect the entire board of directors. The Delaware Bylaws do not give the holders
of five percent (5%) of the total number of stockholders of JAWS Delaware
outstanding and entitled to vote the power to call a special meeting for the
purpose of electing a new board of directors after filling any vacancy on the
Board of Directors. Instead, Delaware law provides that if an annual meeting for
the election of directors is not held for a period of thirty (30) days from the
date designated, or action by written consent in lieu of an annual meeting has
not been taken for a period of thirty (30) days after the date designated, or if
no date has been designated for a period of thirteen months after the last
annual meeting or last action by written consent in lieu of an annual meeting, a
stockholder or director may apply to the Court of Chancery of the State of
Delaware for an order to hold an annual meeting for the election of directors.
For a more detailed explanation of the foregoing, see "--Significant Differences
Between the Corporation Law of Nevada and Delaware."
Amendment of Bylaws. The Company Bylaws permit, in accordance with Nevada
law, the board of directors to amend the Company Bylaws. The board of
directors, however, may only amend the existing Company Bylaws by the vote of
all directors and may only adopt additional Company Bylaws by the vote of a
majority of directors present.
In contrast, the Delaware Bylaws provide that the Delaware Bylaws may be
amended or repealed and new Delaware Bylaws adopted by the vote of a majority
of directors present at a meeting at which a quorum of the board of directors
is present.
SIGNIFICANT DIFFERENCES BETWEEN THE CORPORATION LAWS OF NEVADA AND DELAWARE
JAWS Nevada is incorporated under the laws of the State of Nevada and JAWS
Delaware is incorporated under the laws of the State of Delaware. On
consummation of the Merger, the stockholders of the Company, whose rights
currently are governed by Nevada law and the Company Articles and the Company
Bylaws, which were created pursuant to Nevada law, will become stockholders of a
Delaware company, JAWS Delaware, and their rights as stockholders will then be
governed by Delaware law and the Delaware Certificate and the Delaware Bylaws
which were created under Delaware law.
Although the corporate statutes of Nevada and Delaware are similar,
certain differences exist. The most significant differences, in the judgment of
the management of the Company, are summarized below. This summary is not
intended to be complete, and stockholders should refer to the General
Corporation Law of the State of Delaware (the "DGCL") and the Nevada Business
Corporation Act ("Nevada law") to understand how these laws apply to the Company
and JAWS Delaware.
Classified Board of Directors. The DGCL permits any Delaware corporation
to classify its board of directors into as many as three classes as equally as
possible with staggered terms of office. After initial implementation of a
classified board, one class will be elected at each annual meeting of the
stockholders to serve for a term of one, two or three years (depending upon the
number of classes into which directors are classified) or until their successors
are elected and take office. Nevada law also permits corporations to classify
boards of directors provided that at least one-fourth of the total number of
directors is elected annually. The Company does not have a classified board, nor
will JAWS Delaware's board of directors be classified in connection with the
Migration Merger.
Removal of Directors. With respect to removal of directors, under the
Nevada law, any one or all of the directors of a corporation may be removed by
the holders of not less than two-thirds of the voting power of a corporation's
issued and outstanding stock. Nevada does not distinguish between removal of
directors with and without cause. Under the Delaware Law, directors of a
corporation without a classified board may be removed with or without cause, by
the holders of a majority of shares then entitled to vote in an election of
directors.
Power to Call Special Stockholders' Meetings. Nevada does not specifically
provide for the calling of annual or special meetings of stockholders of a
Nevada corporation. In contrast, the DGCL permits special meetings of
stockholders to be called by the board of directors or by such persons
authorized by the
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corporation's certificate of incorporation or bylaws. The DGCL also provides
that if a corporation fails to hold an annual meeting for the election of
directors or there is no written consent to elect directors in lieu of an annual
meeting taken, in both cases for a period of thirty (30) days after the date
designated for the annual meeting, a director or stockholder of the corporation
may apply to the Court of Chancery of the State of Delaware to order an annual
meeting for the election of directors.
Cumulative Voting. Cumulative voting for directors entitles stockholders
to cast a number of votes that is equal to the number of voting shares held
multiplied by the number of directors to be elected. Stockholders may cast all
such votes either for one nominee or distribute such votes among up to as many
candidates as there are positions to be filled. Cumulative voting may enable a
minority stockholder or group of stockholders to elect at least one
representative to the board of directors where such stockholders would not
otherwise be able to elect any directors.
Nevada law permits cumulative voting in the election of directors as long
as the articles of incorporation provide for cumulative voting and certain
procedures for the exercise of cumulative voting are followed. A Delaware
corporation may provide for cumulative voting in the corporation's certificate
of incorporation. The Company opted out of cumulative voting by failing to
include a provision granting cumulative voting rights in the Company Articles.
JAWS Delaware also did not adopt cumulative voting in that the Delaware
Certificate will not provide for cumulative voting in the election of directors.
Because neither the Company or JAWS Delaware utilizes cumulative voting,
there will be no difference in stockholders' rights with respect to this issue.
Vacancies. Under the DGCL, subject to the rights, if any, of any series of
preferred stock to elect directors and to fill vacancies on the board of
directors, vacancies on the board of directors may be filled by the affirmative
vote of a majority of the remaining directors then in office, even if less than
a quorum. Any director so appointed will hold office for the remainder of the
full term of the class of directors in which the vacancy occurred.
Similarly, Nevada law provides that vacancies may be filled by a majority
of the remaining directors, though less than a quorum, unless the articles of
incorporation provide otherwise. The Company Bylaws and the Delaware Bylaws
address the issue of director vacancies in the same manner. Therefore, the
change from Nevada law to Delaware law will not alter stockholders' rights with
respect to filling vacancies.
Indemnification of Officers and Directors and Advancement of Expenses.
Delaware and Nevada have substantially similar provisions regarding
indemnification by a corporation of its officers, directors, employees and
agents. Delaware and Nevada law differ in their provisions for advancement of
expenses incurred by an officer or director in defending a civil or criminal
action, suit or proceeding. The DGCL provides that expenses incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation in
advance of the final disposition of the action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined that he or she is not entitled to be indemnified
by the corporation. A Delaware corporation has the discretion to decide whether
or not to advance expenses, unless it provides for mandatory advancement in its
certificate of incorporation or bylaws. Under Nevada law, the articles of
incorporation, bylaws or an agreement made by the corporation may provide that
the corporation must pay advancements of expenses in advance of the final
disposition of the action, suit or proceedings upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined that he or she is not entitled to be indemnified by the corporation.
Thus, a corporation may have
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no discretion to decide whether or not to advance expenses. There will be no
difference in stockholders' rights with respect to this issue because the
Company Articles and the Delaware Certificate to be in effect after the Merger
each provide for the mandatory advancement of expenses. In addition, the board
of directors of JAWS Delaware shall have the mandatory authority to indemnify
directors and officers of the Company. The Board of Directors shall retain the
discretionary authority to authorize the indemnification of employees and
agents, subject to certain conditions under the Delaware Law.
Limitation on Personal Liability of Directors. A Delaware corporation is
permitted to adopt provisions in its certificate of incorporation limiting or
eliminating the liability of a director to a company and its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
liability does not arise from certain proscribed conduct, including breach of
the duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or liability to the
corporation based on unlawful dividends or distributions or improper personal
benefit. The Delaware Certificate will limit the liability of directors to JAWS
Delaware to the fullest extent permitted by law.
While Nevada law has a similar provision permitting the adoption of
provisions in the articles of incorporation limiting personal liability, the
Nevada provision differs in two respects. First, the Nevada provisions applies
to both directors and officers. Second, while the Delaware provision excepts
from limitation on liability of breach of the duty of loyalty, the Nevada
counterpart does not contain this exception. Thus, the Nevada provision
expressly permits a corporation to limit the liability of officers, as well as
directors, and permits limitation of liability arising from a breach of the duty
of loyalty. The Company Articles limits the personal liability to the Company of
both directors and officers. The Delaware Certificate adopts a narrower
limitation on liability, and officers will therefore remain potentially liable
to JAWS Delaware. JAWS Delaware, however, may determine to indemnify such
persons in its discretion subject to the conditions of the Delaware Law and the
Delaware Certificate.
Dividends. The DGCL is more restrictive than Nevada law with respect to
when dividends may be paid. Under the Delaware Law, unless further restricted in
the certificate of incorporation, a corporation may declare and pay dividends,
out of surplus, or if no surplus exists, out of net profits for the fiscal year
in which the dividend is declared and/or the preceding fiscal year (provided
that the amount of capital of the corporation is not less than the aggregate
amount of the capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets). In addition, the
Delaware Law provides that a corporation may redeem or repurchase its shares
only if the capital of the corporation is not impaired and such redemption or
repurchase would not impair the capital of the corporation.
Nevada law provides that no distribution (including dividends on, or
redemption or repurchases of, shares of capital stock) may be made if, after
giving effect to such distribution, the corporation would not be able to pay its
debts as they become due in the usual course of business, or, except as
specifically permitted 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 at the time of a dissolution to satisfy the preferential rights
of preferred stockholders.
Restrictions on Business Combinations. Both the DGCL and Nevada law
contain provisions restricting the ability of a corporation to engage in
business combinations with an interested stockholder. Under the DGCL, a
corporation is not permitted to engage in a business combination with any
interested stockholder for a three-year period following the time such
stockholder became an interested stockholder, unless (i) the transaction
resulting in a person becoming an interested stockholder, or the business
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combination, is approved by the board of directors of the corporation before the
person becomes an interested stockholder; (ii) the interested stockholder
acquires 85% or more of the outstanding voting stock of the corporation in the
same transaction that makes it an interested stockholder (excluding shares owned
by persons who are both officers and directors of the corporation, and shares
held by certain employee stock ownership plans); or (iii) on or after the date
the person becomes an interested stockholder, the business combination is
approved by the corporation's board of directors and by the holders of at least
66 2/3% of the corporation's outstanding voting stock at an annual or special
meeting (and not by written consent), excluding shares owned by the interested
stockholder. The DGCL defines "interested stockholder" generally as a person who
owns 15% or more of the outstanding shares of a corporation's voting stock.
Nevada law regulates business combinations more stringently. First, an
"interested stockholder" is defined as a beneficial owner (directly or
indirectly) of ten percent (10%) or more of the voting power of the outstanding
shares of the corporation. Second, the three-year moratorium can be lifted only
by advance approval by a corporation's board of directors. Finally, after the
three-year period, combinations with "interested stockholders" remain prohibited
unless (i) they are approved by the board of directors, the disinterested
stockholders or a majority of the outstanding voting power not beneficially
owned by the interested party, or (ii) the interested stockholders satisfy
certain fair value requirements. As in Delaware, a Nevada corporation may
opt-out of the statute with appropriate provisions in its articles of
incorporation.
Neither the JAWS Nevada, nor JAWS Delaware have opted out of the
applicable statutes with appropriate provisions of the Company Articles or the
Delaware Certificate.
Amendment to Articles of Incorporation/Certificate of Incorporation or
Bylaws. In general, both the DGCL and Nevada law require the approval of the
holders of a majority of all outstanding shares entitled to vote to approve
proposed amendments to a corporation's certificate/articles of incorporation.
Both the DGCL and Nevada law also provide that in addition to the vote above,
the vote of a majority of the outstanding shares of a class may be required to
amend the certificate of incorporation or articles of incorporation. Neither
state requires stockholder approval for the board of directors of a corporation
to fix the voting powers, designation, preferences, limitations, restrictions
and rights of a class of stock provided that the corporation's organizational
documents grant such power to its board of directors. Both Nevada law and the
DGCL permit, in general, the number of authorized shares of any such class of
stock to be increased or decreased (but not below the number of shares then
outstanding) by the board of directors unless otherwise provided in the articles
of incorporation or resolution adopted pursuant to the certificate of
incorporation, respectively.
Actions by Written Consent of Stockholders. Nevada law and the DGCL each
provide that, unless the articles/certificate of incorporation of incorporation
provides otherwise, any action required or permitted to be taken at a meeting of
the stockholders may be taken without a meeting if the holders of outstanding
stock having at least the minimum number of votes that would be necessary to
authorize or take such action at a meeting consents to the action in writing. In
addition, the DGCL requires the corporation to give prompt notice of the taking
of corporate action without a meeting by less than unanimous written consent to
those stockholders who did not consent in writing. The Company Articles does not
limit stockholder action by written consent. Similarly, the Delaware Certificate
does not limit stockholder action by written consent.
Stockholder Vote for Mergers and Other Corporation Reorganizations. In
general, both jurisdictions require authorization by an absolute majority of
outstanding shares entitled to vote, as well as approval by the board of
directors, with respect to the terms of a merger or a sale of substantially all
of the assets of the corporation. The DGCL does not require a stockholder vote
of the surviving corporation in a merger (unless
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the corporation provides otherwise in its certificate of incorporation) if: (a)
the merger agreement 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 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 twenty percent (20%) of the shares of
common stock of such constituent corporation outstanding immediately prior to
the effective date of the merger. Nevada law does not require a stockholder vote
of the surviving corporation in a merger under substantially similar
circumstances.
Dissenters' Rights. In both jurisdictions, dissenting stockholders of a
corporation engaged in certain major corporate transactions are entitled to
appraisal rights. Appraisal rights permit a stockholder to receive cash equal to
the fair value of the stockholder's shares, in lieu of the consideration such
stockholder would otherwise receive in any such transaction.
Under the DGCL, such fair market value is determined exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, and such appraisal rights are not available: (a) with respect to
the sale, lease or exchange of all or substantially all of the assets of a
corporation; (b) with respect to a merger or consolidation by a corporation the
shares of which are either listed on a national securities exchange or are held
of record by more than 2,000 holders if such stockholders receive only shares of
the surviving corporation or shares of any other corporation that are either
listed on a national securities exchange or held of record by more than 2,000
holder, plus cash in lieu of fractional shares of such corporations; or (c) to
stockholders of a corporation surviving a merger if no vote of the stockholders
of the surviving corporation is required to approve the merger under Delaware
law.
Under Nevada law, a stockholder is entitled to dissent from, and obtain
payment for the fair value of his or her shares in the event of the consummation
of a plan of merger or plan of exchange in which the corporation is a party and
to the extent that the articles of incorporation, bylaws or a resolution of the
board of directors provide that voting or nonvoting stockholders are entitled to
dissent and obtain payment for their shares any corporate action taken pursuant
to a vote of the stockholders. As with the DGCL, Nevada law provides an
exception to dissenters' rights. Holders of securities (i) listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the NASD, (ii) held by more than 2,000
stockholders of record, or (iii) who are not required to vote on the plan of
merger, are generally not entitled to dissenters' rights, unless (A) the
articles of incorporation of the corporation issuing the shares provide
otherwise or (B) the holders of the class or series are required to accept
anything other than (or a combination of such consideration) cash, owners
interest, or cash in lieu of fractional shares and owner's interest in the
surviving entity or another entity whose shares were listed on a national
exchange, the NASD or held by at least 2,000 holders of record.
Stockholder Inspection Rights. The DGCL grants any stockholder the right
to inspect and to copy for any proper purpose the corporation's stock ledger, a
list of its stockholders, and its other records. A proper purpose is one
reasonably related to such person's interest as a stockholder. Directors also
have the right to examine the corporation's stock ledger, a list of its
stockholders and its other records for a purpose reasonably related to their
positions as directors.
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Nevada law provides the right to inspect the corporation's financial
records for only a shareholder who (i) owns at least 15% of the corporation's
issued and outstanding shares, or (ii) has been authorized in writing by the
holder(s) of at least 15% of the issued and outstanding shares. To inspect the
corporation's stock ledger, the stockholder must have been a stockholder of
record for six months prior to demanding inspection.
Stockholder Derivative Suits. Under both the DGCL and Nevada law, a
stockholder may bring a derivative action on behalf of the corporation only if
the stockholder was a stockholder of the corporation at the time of the
transaction in question or the stockholder acquired the stock thereafter by
operation of law.
Special Meetings of Stockholders. The DGCL permits special meetings of
stockholders to be called by the board of directors or by any other person
authorized in the certificate of incorporation or bylaws to call a special
stockholder meeting. Nevada law does not address the manner in which special
meetings of stockholders may be called. The Company Bylaws provide that special
meetings of the stockholders may be called by the President or by JAWS Nevada's
board of directors, and must be called by the President at the written request
of not less than 51% of the issued and outstanding shares of capital stock of
the Company. Similarly, the Delaware Bylaws provide that the President or JAWS
Delaware's board of directors may call a special meeting of the stockholders,
and that the President must call a special meeting of the stockholders if not
less than 51% of the issued and outstanding shares of capital stock of JAWS
Delaware request in writing.
Dissolution. Under Nevada law, if a corporation has issued stock, the
board of directors must act to recommend dissolution of the corporation to the
stockholders of the corporation to effect a dissolution of the corporation. The
corporation must notify each stockholder entitled to vote on dissolution and the
stockholders entitled to vote thereon must approve the dissolution. Under the
DGCL, unless the board of directors of JAWS Delaware approves the proposal to
dissolve, the dissolution must be unanimously approved by the written consent of
stockholders entitled to vote thereon. Only if the dissolution is initially
approved by the board of directors may the dissolution be approved by a majority
of the stockholders of JAWS Delaware entitled to vote thereon.
Interested Director Transactions. Under both Nevada and Delaware law,
certain contracts or transactions in which one or more of a corporation's
directors has an interest are not void or voidable because of such interest,
provided that certain conditions, such as obtaining the required approval and
fulfilling the requirements of good faith and full disclosure, are met. With
certain minor exceptions, the conditions are similar under Nevada and Delaware
law.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material U.S. federal income tax
consequences of the Merger to JAWS Nevada and its stockholders.
The Company has received an opinion from Paul, Hastings, Janofsky & Walker
LLP to the effect that the Merger will constitute a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986 (the
"Code"), and that for federal income tax purposes:
(1) Neither JAWS Nevada nor its stockholders will recognize any gain or
loss by reason of the exchange of JAWS Nevada Common Stock for JAWS Delaware
Common Stock, or the transfer of assets (subject to liabilities) by JAWS Nevada
to JAWS Delaware in connection with the Merger.
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(2) The shares of JAWS Delaware Common Stock issued as a result of the
Merger in the hands of a stockholder will have an aggregate basis for computing
gain or loss equal to the aggregate basis of shares of JAWS Nevada Common Stock
(less that portion, if any, allocable to fractional shares) held by that
stockholder immediately prior to the Merger.
(3) The holding period of the shares of JAWS Delaware Common Stock issued
as a result of the Merger in the hands of a stockholder will include the period
during which the stockholder held the shares of JAWS Nevada Common Stock prior
to the Merger provided the shares of JAWS Nevada Common Stock were held as a
capital asset at the effective time of the Merger.
(4) A stockholder who receives solely cash pursuant to such stockholder's
statutory dissenters or appraisal right will be treated as having received such
payment in redemption of such stockholder's JAWS Nevada Common Stock, as
provided in Section 302(a)(1) of the Code. Each affected stockholder is urged to
consult such stockholder's own tax advisor for the effect of such redemption
(i.e., exchange or dividend treatment) in light of such stockholder's particular
facts and circumstances
The tax analysis and conclusions stated above are limited to certain U.S.
federal income tax consequences of the Merger. Tax consequences to foreign
persons may vary depending on the law of the applicable jurisdiction. Each
stockholder is urged to consult such stockholder's tax advisor to determine the
specific tax consequences of the Merger to such stockholder.
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PROPOSAL 3: RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors of the Company, upon the recommendation of the
Audit Committee, has selected the accounting firm of Ernst & Young LLP to serve
as independent auditors of the Company for the fiscal year ending December 31,
2000, Ernst & Young LLP has served as the Company's independent auditors since
the Company's inception in January 1997 and is considered by management of the
Company to be well qualified. The Company has been advised by that firm that
neither it nor any member thereof has any financial interest, direct or
indirect, in the Company or any of its subsidiaries in any capacity. A
representative of Ernst & Young LLP will be present at the Annual Meeting, will
be given the opportunity to make a statement if he or she so desires and will be
available to respond to appropriate questions.
Although the Company is not required to submit the ratification of the
selection of its independent auditors to a vote of shareholders, the Company's
board of directors believes that it is a sound policy to do so. In the event
that the majority of the votes cast are against the selection of Ernst & Young
LLP, the directors will consider the vote and the reasons therefor in future
decisions on the selection of independent auditors.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL
TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE
COMPANY.
OTHER MATTERS
The Company's board of directors does not know of any other matters which
may come before the meeting. However, if any other matters are properly
presented to the meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
All costs of solicitation of proxies will be borne by the
Company. In addition to solicitations by mail, the Company's directors, officers
and regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph, facsimile and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and the Company will reimburse them for their
reasonable out-of-pocket expenses incurred in connection with the distribution
of proxy materials.
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DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2001
Annual Meeting of Stockholders must be received by the Company at its principal
office in Calgary, Alberta, Canada not later than December 31, 2000 for
inclusion in the proxy statement for that meeting.
By Order of the Board of Directors
VIKKI ROBINSON
Secretary
April 28 , 2000
THE BOARD OF DIRECTORS OF THE COMPANY ENCOURAGES STOCKHOLDERS
TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
A PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR
COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THIS MEETING MAY VOTE
THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
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APPENDIX A-1
PROPOSED MINUTES OF 1999 STOCKHOLDERS' MEETING
MINUTES OF THE ANNUAL GENERAL MEETING OF SHAREHOLDERS
OF JAWS TECHNOLOGIES INC.
January 8, 1999
An Annual General Meeting of Shareholders for JAWS Technologies Inc.
was held on Friday, January 8, 1999 at the Eau Claire Room North in the Westin
Hotel at 3:00pm.
Mr. Robert Kubbernus called the meeting to order at 3:15pm Calgary
time. Mr. Kubbernus acted as Chairman of the meeting.
OPENING REMARKS
Mr. Kubbernus called attention to the Order of Business for the meeting
and introduced Vikki Robinson as secretary of the meeting, Vera Gmitter as
minute-taker of the meeting, Joan Moody and Susan McDonald of Alberta Compliance
Services as scrutineers of the meeting and US Stock Transfer as proxy validator
and tabulator. Mr. Kubbernus also introduced members of the senior management
team who were present, Mr. Mitch Tarr, Mr. Garry Leitch, Ms. Vera Gmitter and
Mr. Tej Minhas.
INTRODUCTION OF BOARD'S PROXIES
Mr. Kubbernus introduced himself and Mr. Cameron Chell as the proxies
appointed for this meeting by the Board of Directors.
INTRODUCTION OF DIRECTOR NOMINEES
Mr. Kubbernus introduced the members of the Board who were up for
re-election. Present were Mr. Robert Kubbernus and Mr. Cameron Chell. Not
present were Ms. Julia Johnson and Mr. Arthur Wong.
EVIDENCE OF NOTICE
Ms. Robinson submitted the affidavit of mailing in which notice of the
meeting was given to shareholders commencing on December 11, 1998.
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PROXY REGISTRATION
Mr. Kubbernus asked if there was anyone at the meeting who was acting
as proxy for an absent shareholder and who had not presented evidence of his or
her authority. No one at the meeting responded to this question.
QUORUM NOTED
Mr. Kubbernus stated that the Inspector of Election had certified that
a quorum was present and that the meeting may proceed.
CHAIRMAN'S SPEECH
Mr. Kubbernus then delivered a speech regarding the events of 1998. Mr.
Kubbernus then opened the floor for questions and discussions. Mr. Kubbernus
then moved on to the formal items of business for the meeting.
INSPECTOR'S REPORT
Ms. Robinson announced that the report from US Stock Transfer stated
that they had supervised the verification of proxies received by JAWS
Technologies Inc. for use at this meeting and had deposited with the secretary
all proxies executed by shareholders of record on November 10, 1998. Mr.
Kubbernus then asked for a motion to adopt the report, place it on file and
insert a copy into the minutes of this meeting. Mr. Cameron Chell moved that the
Inspector's report be adopted, placed on file and inserted into the minutes of
the meeting. Riaz Mamdani seconded the motion. See Exhibit "D" to these minutes.
BALLOT ITEMS / POLLS OPEN
Mr. Kubbernus declared that the meeting would now address the four
items of business as outlined and described in detail in the proxy statement and
then declared the polls open.
ELECTION OF DIRECTORS
Ms. Robinson formally placed the board's slate of directors before the
meeting. Mr. Mamdani seconded all nominees. Mr. Kubbernus asked if there was any
discussion and there was none so he declared the nominations closed.
INCREASE THE AUTHORIZED SHARES
Ms. Robinson declared that the Board of Directors had approved a
proposal to increase the authorized shares of the Company and amend the articles
of incorporation to reflect such increase. Mr. Mamdani seconded the proposal.
Mr. Kubbernus asked if there was any discussion and there was none.
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STOCK OPTION PLAN
Mr. Kubbernus declared that it was now in order to consider to approve the
Company's 1998 Stock Option Plan but noted that the Plan attached to the proxy
material mailed to shareholders contained an error. He also stated that it was
the Board of Director's original intent to have a maximum of 20% of the issued
and outstanding shares reserved for the granting of stock options and not the
1,400,000 shares stated in the proxy. He then stated that he would like to
adjourn this motion until February 4, 1999 in order to have time to change the
plan to reflect the Board's original intent. Ms. Robinson then stated that the
Board of Director's had approved a proposal to adjourn the motion. Mr. Mamdani
seconded the proposal. Mr. Kubbernus asked if there was any discussion and there
was none.
TRANSACT SUCH OTHER BUSINESS
Ms. Robinson stated that the Board of Directors had approved a proposal
to transact such other business as may properly come before the meeting or any
adjournment. Mr. Mamdani seconded the proposal. Mr. Kubbernus asked if there was
any discussion and there was none.
DISTRIBUTION OF BALLOTS / CLOSE POLLS
Mr. Kubbernus announced that any shareholder who has not already voted
by proxy could vote by ballot at this time. Two shareholders voted by ballot and
gave the ballots to Joan Moody from Alberta Compliance Services. There was a
short pause for the collection of ballots and Mr. Kubbernus then declared the
polls closed.
REPORT OF INSPECTOR OF ELECTIONS PRELIMINARY RESULTS
Ms. Robinson read the preliminary results based on the voting of shares
represented by valid proxies on file and tabulated that morning to show that the
election of the four directors to serve on the board until the next annual
general meeting of shareholders had been approved.
There were not enough votes collected to pass the board's request to
increase the authorized shares of the Company and to amend the company's
articles of incorporation to reflect such increase, therefore this motion would
be adjourned until February 4, 1999 so that the votes could be collected.
The Board's request to approve the Company's 1998 Stock Option Plan
would be adjourned until February 4, 1999 for reasons of an error in the proxy
statement.
The Board's request to transact such other business as may properly
come before the meeting or any adjournment had been approved.
This concluded the report of preliminary voting and that the final
results would be announced prior to February 10, 1999.
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ADJOURNMENT
Mr. Kubbernus asked for a motion to adjourn the meeting with respect to
items 2 & 3 until February 4, 1999 at 3:00pm at the Westin Hotel. Mr. Cameron
Chell moved that the Annual Meeting of Shareholders of 1999 reconvene with items
two and three on February 4, 1999 at 3:00pm at the Westin Hotel. Mr. Mamdani
seconded the motion. Mr. Kubbernus ordered that it be so.
_______________________________
Secretary
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APPENDIX A-2
PROPOSED MINUTES OF 1999 RECONVENED STOCKHOLDERS' MEETING
MINUTES OF THE RECONVENED MEETING OF SHAREHOLDERS
OF JAWS TECHNOLOGIES INC.
February 4, 1999
A reconvened Meeting of Shareholders for JAWS Technologies Inc. was
held on Thursday, February 4, 1999 at the Lakeview Mount Royal Room in the
Westin Hotel at 3:00pm.
Mr. Robert Kubbernus called the meeting to order at 3:11pm Calgary
time. Mr. Kubbernus acted as Chairman of the meeting.
INTRODUCTION OF THE BOARD'S PROXIES
Mr. Kubbernus introduced himself and Ms. Vikki Robinson as the proxies
appointed for this meeting by the Board of Directors.
INTRODUCTION OF INSPECTOR OF ELECTION
Mr. Kubbernus introduced Joan Moody and Susan McDonald of Alberta
Compliance Services as the appointed scrutineers and US Stock Transfer as proxy
validator and tabulator.
EVIDENCE OF NOTICE
Ms. Robinson declared that as well as the original notice of mailing to
shareholders on December 10, 1998 for the January 8, 1999 meeting that notice
was again mailed on January 19, 1999 and submitted an affidavit to that effect.
QUORUM NOTED
Mr. Kubbernus stated that the Inspector of Election had certified that
a quorum was present and that the meeting may proceed.
INSPECTOR'S REPORT
Ms. Robinson announced that the report from US Stock Transfer stated
that they had supervised the verification of proxies received by JAWS
Technologies Inc. for use at this meeting and had deposited with the Secretary
all proxies executed by shareholders of record on November 10, 1998. Mr.
Kubbernus then asked for a motion to adopt the report, place it on file and
insert a
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copy into the minutes of this meeting. Ms. Vera Gmitter moved that the
Inspector's report be adopted, placed on file and inserted into the minutes of
the meeting. Mr. Riaz Mamdani seconded the motion.
BALLOT ITEMS / POLLS OPEN
Mr. Kubbernus declared that the meeting would now address the two item
of business and declared the polls open.
INCREASE THE AUTHORIZED SHARES
Ms. Robinson declared that the Board of Directors had approved a
proposal to increase the authorized shares of the Company and to amend the
Company's Articles of Incorporation to reflect such an increase. Mr. Mamdani
seconded the proposal. Mr. Kubbernus asked if there was any discussion and there
was none.
STOCK OPTION PLAN
Ms. Robinson declared that the Board of Directors had approved a
proposal to approve the Company's 1998 Stock Option Plan as amended in the
notice of adjournment. Mr. Mamdani seconded the proposal. Mr. Kubbernus asked if
there was any discussion and there was none.
CLOSE POLLS
Mr. Kubbernus declared the polls closed.
REPORT OF INSPECTOR OF ELECTIONS PRELIMINARY RESULTS
Ms. Robinson read the preliminary results based on the voting of shares
represented by valid proxies on file and tabulated that morning to show that the
board's request to increase the Company's authorized shares and to amend the
Company's Articles of Incorporation to reflect such increase had passed.
The Board's request to approve the Company's 1998 Stock Option Plan as
amended in the notice of adjournment had been passed.
This concluded the report of preliminary voting and that the final
results would be announced prior to March 5, 1999.
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CLOSING
Mr. Kubbernus asked for a motion to close the adjourned meeting of
shareholders of 1999. Ms. Vera Gmitter moved that the adjourned annual meeting
of shareholders of 1999 be closed. Mr. Mamdani seconded the motion. Mr.
Kubbernus ordered that it be so.
_________________________________
Secretary
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APPENDIX B
FORM OF MERGER AGREEMENT
AGREEMENT AND PLAN OF MERGER
OF
JAWS TECHNOLOGIES, INC.
(A NEVADA CORPORATION)
WITH AND INTO
JAWS TECHNOLOGIES, INC.
(A DELAWARE CORPORATION)
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of April __, 2000 between JAWS TECHNOLOGIES, INC., a Nevada
corporation ("JAWS Nevada"), and, JAWS TECHNOLOGIES, INC., a Delaware
corporation ("JAWS Delaware").
RECITALS
WHEREAS, JAWS Nevada is a corporation duly organized and existing under
the laws of the State of Nevada;
WHEREAS, JAWS Delaware is a corporation duly organized and existing
under the laws of the State of Delaware; and
WHEREAS, the Board of Directors of each of JAWS Nevada and JAWS
Delaware deem it desirable to merge JAWS Nevada with and into JAWS Delaware so
that JAWS Delaware is the surviving corporation on the terms provided herein
(the "Merger").
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
MERGER
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1.1 THE MERGER. Upon the Effective Date (as defined in Section 1.5) and
subject to and upon the terms of conditions provided in this Agreement and the
applicable provisions of the General Corporation Law of the State of Delaware
(the "DGCL") and the General Corporation Law of the State of Nevada (the
"NGCL"), JAWS Nevada will merge with and into JAWS Delaware, the separate
corporate existence of JAWS Nevada shall cease, and JAWS Delaware shall be the
surviving corporation. JAWS Delaware is hereinafter sometimes referred to as the
"Surviving Corporation."
1.2 CONSTITUENT CORPORATIONS. The name, address, jurisdiction of
organization and governing law of each of the constituent corporations is as
follows:
(a) JAWS Technologies, Inc., a corporation organized under and
governed by the laws of the State of Nevada with an address at 1013 17th Avenue
S.W., Calgary, Alberta, Canada T2T 0A7; and
(b) JAWS Technologies, Inc., a corporation organized under and
governed by the laws of the State of Delaware with an address at 1013 17th
Avenue S.W., Calgary, Alberta, Canada T2T 0A7.
1.3 SURVIVING CORPORATION. JAWS Technologies, Inc., a corporation
organized under the laws of the State of Delaware, shall be the surviving
corporation.
1.4 ADDRESS OF PRINCIPAL OFFICE OF SURVIVING CORPORATION. The address
of the principal office of JAWS Delaware as the Surviving Corporation shall be
1013 17th Avenue Southwest, Calgary, Alberta, Canada T2T 0A7.
1.5 CLOSING: EFFECTIVE DATE. The Merger shall be effective (the
"Effective Date"), on the date upon which the last of the following shall have
been completed:
(a) This Agreement and the Merger shall have been adopted and
recommended to the stockholders of JAWS Nevada by the board of directors of JAWS
Nevada and approved by a majority voting power of JAWS Nevada, in accordance
with the requirements of the DGCL and the NGCL;
(b) This Agreement and the Merger shall have been adopted and
approved by the the board of directors of JAWS Delaware in accordance with the
requirements of the DGCL;
(c) No vote of the stockholders of JAWS Delaware shall be necessary
to approve this Agreement and authorize the Merger because no shares of JAWS
Delaware shall have been issued prior to the adoption by the board of directors
of JAWS Delaware of the resolution approving this Agreement;
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(d) The effective date of the Merger as stated in the executed
Articles of Merger filed with the Secretary of State of the State of Nevada; and
(e) An executed Certificate of Merger or an executed counterpart of
this Agreement meeting the requirements of the DGCL shall have been filed with
the Secretary of State of the State of Delaware.
1.6 EFFECT OF THE MERGER. The effect of the Merger shall be as provided
in this Agreement, the Certificate of Merger, and the applicable provisions of
the DGCL and the NGCL. Without limiting the foregoing, on the Effective Date,
all the property, rights, privileges, powers and franchises of JAWS Nevada shall
vest in JAWS Delaware, as the Surviving Corporation, and all debts, liabilities
and duties of JAWS Nevada shall become the debts, liabilities and duties of JAWS
Delaware, as the Surviving Corporation.
1.7 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) From and after the Effective Date, the Certificate of
Incorporation of JAWS Delaware as in effect immediately prior to the Effective
Date, shall be the Certificate of Incorporation of the Surviving Corporation.
(b) From and after the Effective Date, the Bylaws of JAWS Delaware
as in effect immediately prior to the Effective Date, shall be the Bylaws of the
Surviving Corporation.
1.8 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. From and after
the Effective Date, the directors or officers of JAWS Delaware serving as
directors or officers of JAWS Delaware immediately prior to the Effective Date,
shall be the directors and officers of the Surviving Corporation.
ARTICLE II
CONVERSION OF SHARES
2.1 CONVERSION OF STOCK. Upon the Effective Date, by virtue of the
Merger and without any action on the part of the holders of any outstanding
shares of capital stock or other securities of JAWS Nevada, each share of common
stock of JAWS Nevada, par value $0.001 per share ("Company Common Stock"),
issued and outstanding immediately prior to the Effective Date shall be
converted into one (1) fully paid and nonassessable share of Common Stock, par
value $0.001 per share, of the Surviving Corporation ("Delaware Common Stock"),
and the sole share of Special Series A Preferred Stock of JAWS Nevada, par value
$0.001 per share ("Company Preferred Stock"), issued and outstanding immediately
prior to the Effective Date shall be converted into one (1) fully paid and
nonassessable share of Special Series A Preferred Stock, par value $0.001 per
share, of the Surviving Corporation ("Delaware Preferred Stock"). Upon the
Effective Date, by virtue of the Merger and without any action on the part of
the holders of any outstanding shares of capital stock or other securities of
JAWS Nevada, each certificate which, immediately prior to the Effective Date
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represented a share or shares of Company Common Stock or the share of Company
Preferred Stock shall represent an equivalent number of shares of Delaware
Common Stock or Delaware Preferred Stock, as applicable.
2.2 DELAWARE COMMON STOCK. Upon the Effective Date, each share of
Delaware Common Stock or Delaware Preferred Stock issued and outstanding
immediately prior to the Merger, if any, shall, by virtue of the Merger and
without any action by the holder thereof or JAWS Delaware, cease to be
outstanding, and shall be canceled and returned to the status of authorized but
unissued shares and any holder of certificates which immediately prior to the
Effective Date represented such shares of Delaware Common Stock or Delaware
Preferred Stock shall thereafter cease to have any rights with respect to such
shares.
2.3 JAWS NEVADA EMPLOYEE PLANS AND OPTIONS.
(a) Upon the Effective Date, each outstanding and unexercised option or
other right to purchase or security convertible into Company Common Stock shall
become an option or right to purchase or a security convertible into Delaware
Common Stock on the basis of one share of Delaware Common Stock for each share
of Company Common Stock issuable pursuant to such option, stock purchase right
or convertible security, on the same terms and conditions and at an exercise
price per share equal to the exercise price applicable to any such JAWS Nevada
option, stock purchase right or convertible security on the Effective Date.
There are no options or stock purchase rights for or securities convertible into
the preferred stock of JAWS Nevada, par value $0.001 per share.
(b) A number of Delaware Common Stock shall be reserved for issuance
upon the exercise of options, stock purchase rights and convertible securities
equal to the number of shares of Company Common Stock so reserved immediately
prior to the Effective Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF JAWS NEVADA. JAWS Nevada hereby
covenants and agrees that it:
(a) Is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and has all the requisite power
and authority to own, lease and operate its properties and assets and to carry
on its business as it is now being conducted;
(b) Is duly qualified to do business as a foreign person, and is in
good standing, in each jurisdiction where the character of its properties or the
nature of its activities make such qualification necessary;
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(c) Is not in violation of any provisions of its articles of
incorporation or bylaws; and
(d) Has full corporate power and authority to execute and deliver
this Agreement and, assuming the approval of this Agreement by the stockholders
of JAWS Nevada in accordance with the NGCL, consummate the Merger and the other
transactions contemplated by this Agreement.
3.2 REPRESENTATIONS AND WARRANTIES OF JAWS DELAWARE. JAWS Delaware
hereby covenants and agrees that it:
(a) Is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all the requisite
power and authority to own, lease and operate its properties and assets and to
carry on its business as it is now being conducted;
(b) Is duly qualified to do business as a foreign person, and is in
good standing, in each jurisdiction where the character of its properties or the
nature of its activities make such qualification necessary;
(c) Is not in violation of any provisions of its certificate of
incorporation or bylaws; and
(d) Has full corporate power and authority to execute and deliver
this Agreement and, assuming, prior to the issuance of shares of stock of JAWS
Delaware, the approval of the board of directors of JAWS Delaware in accordance
with the DGCL, consummate the Merger and the other transactions contemplated by
this Agreement.
ARTICLE IV
TERMINATION
4.1 TERMINATION. At any time prior to the Effective Date, this
Agreement may be terminated and the Merger abandoned for any reason whatsoever
by the Board of Directors of either JAWS Nevada or JAWS Delaware, or both of
them, notwithstanding the approval of this Agreement and the Merger by a
majority of the voting power of JAWS Nevada.
ARTICLE V
FURTHER ASSURANCES
5.1 FURTHER ASSURANCES AS TO JAWS NEVADA. From time to time, as and
when required by JAWS Delaware or by its successors or assigns, there shall be
executed and delivered on behalf of JAWS Nevada such deeds and other
instruments, and there shall be taken or caused to be taken by JAWS Delaware
such further and other actions as shall be appropriate or necessary in order to
vest or perfect in or conform of record or otherwise by JAWS Delaware the title
to and possession
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of all the property, interests, assets, rights, privileges, immunities, powers,
franchises and authority of JAWS Nevada and otherwise to carry out the purposes
of this Agreement, the officers and directors of JAWS Delaware are fully
authorized in the name and on behalf of JAWS Nevada or otherwise to take any and
all such action and to execute and deliver any and all such deeds and other
instruments.
ARTICLE VI
MISCELLANEOUS
6.1 AMENDMENT. Subject to applicable law, at any time prior to the
Effective Date, this Agreement may be amended, modified or supplemented only by
the written agreement of JAWS Nevada and JAWS Delaware.
6.2 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement, nor
any right, interest or obligation hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. This Agreement is not intended to
confer any rights or benefits upon any person other than the parties hereto.
6.3 REGISTERED OFFICE. The registered office of the Surviving
Corporation in the State of Delaware shall be One Rodney Square, 10th Floor,
10th and King Streets, in the City of Wilmington, County of New Castle, 19801
and RL&F Service Corp. shall be the registered agent of the Surviving
Corporation at such address.
6.4 EXECUTED AGREEMENT. Executed copies of this Agreement will be on
file at the principal place of business of the Surviving Corporation at JAWS
Delaware at 1013 17th Avenue Southwest, Calgary, Alberta, Canada T2T 0A7, and
copies of this Agreement will be furnished to any stockholder of any of the
parties hereto, upon request and without cost.
6.5 GOVERNING LAW. This Agreement shall in all respects be interpreted
by, and construed, interpreted and enforced in accordance with and pursuant to
the laws of the State of Delaware and, so far as applicable, by the provisions
of the NGCL.
6.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.7 ENTIRE AGREEMENT; MODIFICATION. This Agreement and the documents
referred to herein are intended by the parties as a final expression of their
agreement with respect to the subject matter hereof, and are intended as a
complete and exclusive statement of the terms and conditions of that agreement,
and there are not other agreements or understandings, written or oral, among the
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parties, relating to the subject matter hereof. This Agreement supercedes all
prior agreements and understandings, written or oral, among the parties with
respect to the subject matter hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have duly executed this Agreement as of the date first stated above.
JAWS TECHNOLOGIES, INC.
(A Nevada corporation)
By:_________________________________
Name:
Title:
JAWS TECHNOLOGIES, INC.
(A Delaware corporation)
By:_________________________________
Name: Tej Minhas
Title: President
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CERTIFICATE OF THE
SECRETARY OF
JAWS TECHNOLOGIES, INC.
The undersigned, ___________________, Secretary of JAWS Technologies,
Inc., a Delaware corporation (the "Company") HEREBY CERTIFIED that the foregoing
Agreement and Plan of Merger (the "Merger Agreement") of JAWS Technologies, Inc.
(a Nevada corporation) with and into JAWS Technologies, Inc. (a Delaware
corporation), dated as of April __, 2000, was adopted pursuant to Section 251(f)
of the General Corporation Law of the State of Delaware and that no shares of
capital stock of JAWS Technologies, Inc., a Delaware corporation ("JAWS
Delaware") were issued prior to the adoption by the board of directors of JAWS
Delaware of the resolution approving the Merger Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
___ day of April, 2000.
_____________________________
Name:
Office: Secretary
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APPENDIX C
FORM OF DELAWARE CERTIFICATE OF INCORPORATION
CERTIFICATE OF INCORPORATION
OF
JAWS TECHNOLOGIES, INC.
I, the undersigned, for the purposes of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
execute this Certificate of Incorporation and do hereby certify as follows:
FIRST. The name of the corporation is JAWS Technologies, Inc.
SECOND. The address of the corporation's registered office in the State
of Delaware is The Corporation Trust Company, 1209 Orange Street, in the City of
Wilmington, County of New Castle, 19801. The name of its registered agent at
such address is RL&F Service Corp.
THIRD. The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH. The total number of shares of stock which the corporation shall
have authority to issue is 100,000,000 shares, divided into 95,000,000 shares of
common stock, par value $0.001 per share (the "Common Stock") and 5,000,000
shares of preferred stock, par value $0.001 per share (the "Preferred Stock").
A. Common Stock.
(1) Voting. Except as may otherwise be provided in this Certificate
of Incorporation (including any certificate filed with the Secretary of State of
the State of Delaware establishing the terms of a series of Preferred Stock in
accordance with Section B of this Article FOURTH) or by applicable law, each
holder of Common Stock, as such, shall be entitled to one (1) vote for each
share of Common Stock held of record by such holder on all matters on which
stockholders generally are entitled to vote, and no holder of any series of
Preferred Stock, as such, shall be entitled to any voting powers in respect
thereof.
(2) Dividends. Subject to applicable law and the rights, if any, of
the holders of any outstanding series of Preferred Stock, dividends may be
declared and paid on the Common Stock at such times and in such amounts as the
Board of Directors in its discretion shall determine.
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(3) Liquidation. Upon the dissolution, liquidation or winding up of
the corporation, subject to the rights, if any, of the holders of any
outstanding series of Preferred Stock, the holders of the Common Stock shall be
entitled to receive the assets of the corporation available for distribution to
its stockholders ratably in proportion to the number of shares held by them.
B. Preferred Stock. The Board of Directors of the corporation is hereby
expressly authorized, by resolution or resolutions thereof, to provide, out of
the unissued shares of Preferred Stock, for series of Preferred Stock and, with
respect to each such series, to fix the number of shares constituting such
series and the designation of such series, the voting powers (if any) of the
shares of such series, and the preferences and relative, participating, optional
or other special rights, if any, and any qualifications, limitations or
restrictions thereof, of the shares of such series. The voting powers,
preferences and relative, participating, optional and other special rights of
each series of Preferred Stock, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other series
at any time outstanding.
C. Special Series A Preferred Stock.
(1) Designation and Amount. A series of Preferred Stock consisting
of one (1) share of such stock, is hereby designated as "Special Series A
Preferred Voting Stock."
(2) Voting. The holder of the outstanding share of Special Series A
Preferred Voting Stock shall be entitled to cost at any relevant date to the
number of votes (including for purposes of determining the presence of a quorum)
determined in accordance with the terms and conditions of each of the following:
(i) the rights, privileges, restrictions and conditions
attached to the Exchangeable Shares in the capital of Jaws Acquisition Corp.
("JAC"), a corporation incorporated under the laws of the Province of Alberta;
(ii) the Support Agreement dated effective November 30, 1999
between the corporation and JAC, as the same may from time to time be amended;
and
(iii) the Voting and Exchange Trust Agreement dated effective
November 30, 1999 among the corporation, JAC and the Montreal Trust Company of
Canada, as the same may from time to time be amended.
on all matters presented to the holders of Common Stock of the corporation, with
the Special Series A Preferred Voting Stock and Common Stock voting together as
a single class. Except as provided herein, the Special Series A Preferred Voting
Stock shall have no other voting rights except as required by law.
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(3) Dividend. Except as otherwise prohibited by law, no dividend
shall be paid to the holder of Special Series A Preferred Voting Stock.
(Section) 170 Board Discretion in Del. "except as otherwise provided by the
Board" or similar.
(4) Liquidation. The share of Special Series A Preferred Voting
Stock shall be entitled to $0.001 on liquidation dissolution or winding up of
the corporation, whether voluntary or involuntary, in preference to any shares
of Common Stock of the corporation, but only after the liquidation preference of
any other shares of Preferred Stock of the corporation has been paid in full.
(5) Exchange; Redemption and Other Rights. The Special Series A
Preferred Voting Stock is not convertible into any other class or series of the
capital stock of the corporation or into cash, property or other rights, and may
not be redeemed, except pursuant to the last sentence of this Section C(5). The
share of Special Series A Preferred Voting Stock purchased or otherwise acquired
by the corporation shall be deemed retired and shall be canceled and may not
thereafter be reissued or otherwise disposed of by the corporation. In addition
to any vote required by law, for so long as any Exchangeable Shares in the
capital of JAC shall be outstanding, the number of shares comprising the Special
Series A Preferred Voting Stock shall not be increased or decreased and no other
term of the Special Series A Preferred Voting Stock shall be amended, except
upon the affirmative vote of the holder of the outstanding share of Special
Series A Preferred Voting Stock. At such time as no Exchangeable Shares in the
capital of JAC shall be outstanding, the Special Series A Preferred Voting Stock
shall automatically be redeemed, with $0.001 preference due and payable upon
such redemption.
(6) Restriction; Amendment. So long as the share of Special Series
A Preferred Voting Stock is outstanding, the corporation shall (a) fully comply
with all terms of the Exchangeable Shares in the capital of JAC and with all
contractual obligations of the corporation associated with such Exchangeable
Shares and (b) not amend, alter, change or repeal this Section C(6) except upon
the written approval of the holder of the outstanding share of Special Series A
Preferred Voting Stock.
FIFTH. The incorporator of the corporation is Caterina McCellan, whose
mailing address is c/o Paul, Hastings Janofsky & Walker LLP, 399 Park Avenue,
New York, New York 10022.
SIXTH. Unless and except to the extent that the Bylaws of the
corporation shall so require, the election of directors of the corporation need
not be by written ballot.
SEVENTH. In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors of the corporation
is expressly authorized to make, alter and repeal the Bylaws of the corporation,
subject to the power of the stockholders of the corporation to alter or repeal
any Bylaw whether adopted by them or otherwise.
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EIGHTH. A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended. Any amendment,
modification or repeal of the foregoing sentence shall not adversely affect any
right or protection of a director of the corporation hereunder in respect of any
act or omission occurring prior to the time of such amendment, modification or
repeal.
NINTH. The corporation reserves the right at any time, and from time to
time, to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed by law; and all rights, preferences and privileges
of whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the rights reserved in this
article.
The undersigned incorporator hereby acknowledges that the foregoing
certificate of incorporation is his act and deed on this the ___ day of April,
2000.
____________________________________
Caterina McCellan
Incorporator
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APPENDIX D
FORM OF DELAWARE BYLAWS
BYLAWS OF
JAWS TECHNOLOGIES, INC.
ARTICLE I
STOCKHOLDERS
Section 1.01 Annual Meeting. If required by applicable law, the annual
meeting of the stockholders shall be held for the election of directors at such
date, place (either within or without the State of Delaware) and time as shall
be designated by resolution of the Board of Directors. Any other business may be
transacted at the annual meeting. If the Board of Directors shall fail to
designate an annual meeting of the stockholders as set forth above, the annual
meeting of the stockholders of the corporation shall be held during the month of
November or December of each year as determined by the Board of Directors. If
the election of the directors is not held on the day designated herein for any
annual meeting of the stockholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held as soon thereafter as is
convenient.
Section 1.02 Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called by the President or the Board of Directors
and shall be called by the President at the written request of the holders of
not less than 51% of the issued and outstanding shares of capital stock of the
corporation. All business lawfully to be transacted by the stockholders may be
transacted at any special meeting at any adjournment thereof. However, no
business shall be acted upon at a special meeting, except that referred to in
the notice of the special meeting, unless all of the outstanding capital stock
of the corporation is represented either in person or by proxy. Where all of the
capital stock is represented at a special meeting, any lawful business may be
transacted and the meeting shall be valid for all purposes.
Section 1.03 Place of Meetings. Any meeting of the stockholders of the
corporation may be held at its principal office in the State of Delaware or such
other place within or without of the State of Delaware as the Board of Directors
may designate.
Section 1.04 Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, the secretary shall give to all
stockholders entitled to vote at such meeting, written notice, or other form of
notice permitted by applicable law, of such meeting not less than ten (10) days,
nor more than sixty (60) days, before the date of such meeting unless otherwise
provided by applicable law; which notice shall stated the place, date and time
of the
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meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Except as otherwise provided herein, the notice
shall be in writing (or other form of notice permitted by applicable law) and
delivered personally or mailed to the stockholders at their addresses appearing
on the books of the corporation. If mailed, the giving of such notice shall be
deemed delivered the date the same is deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as appears on the
records of the corporation.
Section 1.05 Waiver of Notice. Any written waiver of notice, signed by
the stockholder entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a stockholder at a
meeting shall constitute a waiver of notice of such meeting, except when the
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at nor
the purpose of any annual or special meeting of the stockholders need be
specified in any written waiver of notice.
Section 1.06 Fixing Date for Determination of Stockholders of Record.
In order that the corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date: (1) in the case of determination of
stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty (60)
nor less than ten (10) days before the date of such meeting; (2) in the case of
determination of stockholders entitled to express consent to corporate action in
writing without a meeting, shall not be more than ten (10) days from the date
upon which the resolution fixing the record date is adopted by the Board of
Directors; and (3) in the case of any other action, shall not be more than sixty
(60) days prior to such other action. If no record date is fixed: (1) the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; (2) the record
date for determining stockholders entitled to express consent to corporate
action in writing without a meeting, when no prior action of the Board of
Directors is required by law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation in accordance with applicable law, or, if prior action by the
Board of Directors is required by law, shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action; and (3) the record date for determining stockholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
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Section 1.07 Quorum; Adjourned Meetings.
(a) Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, at any meeting of the stockholders, the
presence in person or by proxy of the holders of a majority in voting
power of the outstanding shares of capital stock entitled to the vote
at the meeting, shall constitute a quorum.
(b) In the absence of a quorum, the holders of a majority of
the voting power of the outstanding shares of capital stock entitled to
vote at the meeting so represented and entitled to vote may adjourn
the meeting from time to time until holders of the amount of stock
required to constitute a quorum shall be in attendance. At any such
adjourned meeting at which a quorum shall be present, any business may
be transacted which might have been transacted as originally called.
When a stockholders' meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken,
unless the adjournment is for more than thirty (30) days or if after
adjournment a new record date is set, in which event notice thereof
shall be given to each stockholder of record entitled to vote at the
meeting.
Section 1.08 Voting.
(a) Except as otherwise provided by or pursuant to the
Certificate of Incorporation, each stockholder entitled to vote at a
meeting of stockholders, such stockholders's duly authorized proxy or
attorney-in-fact shall be entitled to one (1) vote for each share of
capital stock held by such stockholder.
(b) If a quorum is present, the affirmative vote of holders of
a majority in voting power of the outstanding shares of capital stock
of the Corporation present at the meeting and entitled to vote on any
matter shall be the act of the stockholders, unless a vote of greater
number or voting by classes is required by applicable laws, the rules
or regulations of any stock exchange applicable to the corporation, the
Certificate of Incorporation and these Bylaws.
(c) The corporation shall be entitled to treat the person in
whose name any share of its stock is registered as the owner thereof
for all purposes and shall not be bound to recognize any equitable or
other claim to, or interest in, such share on the part of any other
person, whether or not the corporation shall have notice thereof,
except as expressly provided by applicable law.
Section 1.09 Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to a corporate action in writing
without a meeting may authorize another person or persons to act for such
stockholder by proxy. No proxy shall be
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valid after the expiration of three (3) years from the date of execution
thereof, unless the proxy provides for a longer period. A proxy shall be
irrevocable if the proxy states that it is irrevocable and is coupled with an
interest sufficient to support an irrevocable power. Revocation of a proxy that
is not irrevocable may be effected by attending the meeting and voting in person
or by filing an instrument revoking the same or by delivering a duly-executed
proxy bearing a later date to the Secretary of the corporation.
Section 1.10 Order of Business. At the annual stockholders
meeting, the regular order of business shall be as follows.
(a) Determination of stockholders present and
existence of quorum;
(b) Reading and approval of the minutes of the
previous meeting or meetings;
(c) Reports of the Board of Directors, the President,
Treasurer and Secretary of the corporation, in the
order named;
(d) Reports of committees;
(e) Election of directors;
(f) Unfinished business;
(g) New business;
(h) Adjournment.
Section 1.11 Action Without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action required or permitted 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 consented to in writing by the
holders of a majority of the shares entitled to vote or such greater proportion
as may be required by applicable law, the Certificate of Incorporation, or these
Bylaws. Such consents 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
minutes of proceedings of stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall, to the
extent required by law, be given to those stockholders who have not consented 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 such meeting had been
the date that written consents signed by a sufficient number of holders to take
the action were delivered to the corporation.
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Section 1.12 List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting, as
required by applicable law. Except as otherwise provided by law, the stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list of stockholders or the books of the
corporation, or to vote in person or by proxy at any meeting of stockholders.
ARTICLE II
DIRECTORS
Section 2.01 Number, Tenure and Qualifications. Except as otherwise
provided herein, the Board of Directors of the corporation shall consist of at
least one (1) but no more than nine (9) persons, the number thereof to be
determined from time to time by resolution of the Board of Directors. Directors
shall be elected at the annual meeting of the stockholders of the corporation
and who shall hold office for one (1) year or until their successors are elected
and qualify subject to a director's earlier death, resignation, disqualification
or removal.
Section 2.02 Resignation. Any director may resign at any time upon
giving written notice to the corporation. If the Board of Directors accepts the
resignation of a director tendered to take effect at a future date, the Board of
Directors shall elect a successor to fill such vacancy when the resignation
becomes effective.
Section 2.03 Reduction in Number. No reduction of the number or
directors shall have the effect of removing any director prior to the expiration
of his term of office.
Section 2.04 Removal. Any director of the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the voting
power of the outstanding shares of capital stock then entitled to vote at an
election of directors.
Section 2.05 Vacancies.
(a) Unless otherwise provided by law or the Certificate of
Incorporation, a vacancy in the Board of Directors because of death,
resignation, removal, change in number of directors, or otherwise may
be filled by the stockholders at any regular or special meeting or any
adjourned meeting thereof, or by the remaining director(s) by the
affirmative vote of a majority thereof, although less than a quorum, or
by a sole remaining director. Each successor so elected shall hold
office until the next annual meeting of stockholders or until a
successor shall have been duly-elected and qualified.
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(b) If, at the time of the filing of any vacancy or newly
created directorship, the directors then in office shall constitute
less than a majority of the whole board, the Court of Chancery of the
State of Delaware may, upon application of stockholder(s) holding at
least 10% of the total shares at the time outstanding and entitled to
vote for such directors, summarily order an election to be held to fill
any such vacancies, or to replace any directors chosen by the directors
then in office as provided above.
Section 2.06 Regular Meetings. Immediately following the adjournment
of, and at the same place as, the annual meeting of the stockholders, the Board
of Directors, including directors newly elected, shall hold its annual meeting
without notice, other than this provision, to elect officers of the corporation
and to transact such further business as may be necessary or appropriate. The
Board of Directors may provide by resolution the place, (within or without the
State of Delaware), date and hour for holding additional regular meetings.
Section 2.07 Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman and shall be called by the Chairman upon
the request of any two (2) directors or the President of the corporation.
Section 2.08 Place of Meetings. Any meeting of the directors of the
corporation may be held at its principal office, or at such other place within
or without of the State of Delaware as the Board of Directors may designate.
Section 2.09 Notice of Meetings. Except as otherwise provided in
Section 2.06, the Chairman shall deliver to all directors written notice (or any
other form of notice permitted by applicable law) of any special meeting, at
least three (3) days before the date of such meeting, by delivery of such notice
personally or mailing such notice first class mail, or by telegram, telecopier,
telephone or other means of electronic transmission. If mailed, the notice shall
be deemed delivered two (2) business days following the date the same is
deposited in the United States mail, postage prepaid. Any director may waive
notice of any meeting in writing, and the attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, unless such attendance is
for the express purpose of objecting, at the beginning of the meeting, to the
transaction or business threat because the meeting is not properly called or
convened. Neither the business to be transacted at, nor the purpose of any
regular or special meeting of directors need be specified in any written waiver
of notice.
Section 2.10 Quorum: Adjourned Meetings.
(a) At all meetings of the Board of Directors, a majority of
the whole Board of Directors shall constitute a quorum for the
transaction of business.
(b) At any meeting of the Board of Directors where a quorum is
not present, a majority of those present may adjourn the meeting, from
time to time, until a quorum is present, and no notice of such
adjournment shall be required.
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At any adjourned meeting where a quorum is present, any business may be
transacted which could have been transacted at the meeting originally
called.
Section 2.11 Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting if a written consent thereto is signed by all of
the members of the Board of Directors or of such committee. Such written consent
or consents shall be filed with the minutes of the proceedings of the Board of
Directors or committee. Such action by written consent shall have the same force
and effect as the unanimous vote of the Board of Directors or committee.
Section 2.12 Telephonic Meetings. Meetings of the Board of Directors or
any committee thereof may be held through the use of a conference telephone or
similar communications equipment so long as all members participating in such
meeting can hear one another at the time of such meeting. Participation in such
a meeting constitutes presence in person at such meeting.
Section 2.13 Board Decisions. Except where applicable, the Certificate
of Incorporation or these Bylaws otherwise provide, the affirmative vote of a
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 2.14 Powers and Duties.
(a) Except as otherwise provided by the Certificate of
Incorporation or applicable law, the Board of Directors is invested
with the authority to manage and direct the affairs of the corporation.
(b) The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors
of the corporation. The Board of Directors may designate one or more
directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the
absence or disqualification of a member of the committee, the member or
members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting
in place of any such absent or disqualified member. Any such committee,
to the extent permitted by law and to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all
the powers and authority of the Board of Directors in the management of
the business and affairs of the corporation, and may authorize the seal
of the corporation to be affixed to all papers which may require it.
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Section 2.15 Compensation. The directors shall be allowed and paid all
necessary expenses incurred in attending any meetings of the board.
Section 2.16 Order of Business. The order of business at any meeting of
the Board of Directors shall be as follows:
(a) Determination of members present and existence of quorum;
(b) Reading and approval of the minutes of any previous
meeting or meetings;
(c) Reports of officers and committeemen;
(d) Election of officers;
(e) Unfinished business;
(f) New business;
(g) Adjournment.
ARTICLE III
OFFICERS
Section 3.01 Election. The Board of Directors, at its first meeting
following the annual meeting of stockholders, shall elect a President, a
Secretary and a Treasurer to hold office for one (1) year next coming and until
their successors are elected and qualified or until their earlier resignation or
renewal. Any person may hold two or more offices. The Board of Directors may,
from time to time, by resolution, appoint one or more Vice Presidents, Assistant
Secretaries, Assistant Treasurers and transfer agents of the corporation as it
may deem advisable and prescribe their duties; and fix their compensation.
Section 3.02 Removal; Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed by the Board of Directors
whenever, in its judgment, the best interest of the corporation would be served
thereby. Any officer may resign at any time upon written notice to the
corporation without prejudice to the rights, if any, of the corporation under
any contract to which the resigning officer is a party.
Section 3.03 Vacancies. Any vacancy in any office because of death,
resignation, removal, or otherwise may be filled by the Board of Directors for
the unexpired portion of the term of such office.
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Section 3.04 President. The President shall be the general manager and
executive officer of the corporation, subject to the supervision and control of
the Board of Directors, and shall direct the corporate affairs, with full power
to execute all resolutions and orders of the Board of Directors not especially
entrusted to some other officer of the corporation. The President shall preside
at all meetings of the stockholders and shall sign the certificates of stock
issued by the corporation, and shall perform such other duties as shall be
prescribed by the Board of Directors. Unless otherwise ordered by the Board of
Directors, the President shall have full power and authority on behalf of the
corporation to attend and to act and to vote at any meetings of the stockholders
of any corporation in which the corporation may hold stock and, at any such
meetings, shall possess and may exercise any and all rights and powers incident
to the ownership of such stock. The Board of Directors, by resolution from time
to time, may confer like powers on any person or persons in place of the
President to represent the corporation for these purposes.
Section 3.05 Vice President. The Board of Directors may elect one or
more Vice Presidents who shall be vested with all the powers and perform all the
duties of the President whenever the President is absent or unable to act,
including the signing of the certificates of stock issued by the corporation,
and the Vice President shall perform such other duties as shall be prescribed by
the Board of Directors.
Section 3.06 Secretary. The Secretary shall have the duty to record the
proceedings of the meetings of stockholders or directors and shall keep the
minutes of all meetings of the stockholders and the Board of Directors in books
provided for that purpose. The Secretary shall attend to the giving and service
of all notices of the corporation, may sign with the President in the name of
the corporation all contracts authorized by the Board of Directors or
appropriate committee, shall have the custody of the corporate seal, shall sign
the certificates of stock issued by the corporation, shall have charge of stock
certificate books, transfer books and stock ledgers, and such other books and
papers as the Board of Directors or appropriate committee may direct, and shall,
in general perform all duties incident to the office of the Secretary. All
corporate books kept by the Secretary shall be open for examination by any
director for a purpose reasonably related to the director's position as a
director.
Section 3.07 Assistant Secretary. The Board of Directors may appoint an
Assistant Secretary who shall have such powers and perform such duties as may be
prescribed for him or her by the Board of Directors.
Section 3.08 Treasurer. The Treasurer shall be the chief financial
officer of the corporation, subject to the supervision and control of the Board
of Directors, and shall have custody of all the funds and securities of the
corporation. When necessary or proper, the Treasurer shall endorse on behalf of
the corporation for collection checks, notes and other obligations, and shall
deposit all monies to the credit of the corporation in such bank or banks or
other depository as the Board of Directors may designate, and shall sign all
receipts and vouchers for payments made by the corporation. Unless otherwise
specified by the Board of Directors, the Treasurer shall sign with the President
all bills of exchange and promissory notes of the corporation, shall also have
the care and custody of the stocks, bonds, certificates, vouchers,
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evidence of debts, securities and such other property belong to the corporation
as the Board of Directors shall designate, and shall sign all papers required by
law, by these Bylaws or by the Board of Directors to be signed by the Treasurer.
The Treasurer shall enter regularly in the books of the corporation, to be kept
for that purpose, full and accurate accounts of all monies received and paid on
account of the corporation and whenever required by the Board of Directors, the
Treasurer shall render a statement of any or all accounts. The Treasurer shall
perform all acts incident to the position of Treasurer subject to the control of
the Board of Directors. The Treasurer shall, if required by the Board of
Directors, give a bond to the corporation in such sum and with such security as
shall be approved by the Board of Directors for the faithful performance of all
the duties of the Treasurer and for restoration to the corporation in the event
of the Treasurer's death, resignation, retirement, or removal from office, of
all books, records, papers, vouchers, money and other property belonging to the
corporation. The expense of such bond shall be borne by the corporation.
Section 3.09 Assistant Treasurer. The Board of Directors may appoint an
Assistant Treasurer who shall have such powers and perform such duties as may be
prescribed by the Board of Directors, and the Board of Directors may require the
Assistant Treasurer to give a bond to the corporation in such sum and with such
security as it may approve, for the faithful performance of the duties of
Assistant Treasurer, and for the restoration to the corporation, in the event of
the Assistant Treasurer's death, resignation, retirement or removal from office,
of all books, records, papers, vouchers, money and other property belonging to
the corporation. The expense of such bond shall be borne by the corporation.
ARTICLE IV
CAPITAL STOCK
Section 4.01 Certificates. The shares of the corporation shall be
evidenced by certificates for shares of stock in such form as shall be
prescribed by the Board of Directors, and shall be signed by the President or
the Vice President and also by the Secretary or an Assistant Secretary. Any or
all of the signatures on the certificate may be by facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of such issue. Each certificate shall contain the
name of the record holder, the number, designation, if any, class or series of
shares represented, a statement of summary of any applicable rights,
preferences, privileges, or restrictions thereon, and a statement that the
shares are assessable, if applicable. All certificates shall be consecutively
numbered. The name and address of the stockholders, the number of shares, and
the date of issue shall be entered on the stock transfer books of the
corporation.
Section 4.02 Surrender: Lost or Destroyed Certificates. The corporation may
issue a new certificate of stock in the place of any certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed and the corporation
may require the owner of the lost, stolen
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or destroyed certificate, or his legal representative to, prior to the issuance
of a replacement, provide the corporation with a bond sufficient to indemnify
the corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
ARTICLE V
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
Section 5.01 Records. Any records maintained by the corporation in the
regular course of its business, including its stock ledger, books of account,
and minute books, may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, microphotographs, or any other information storage device,
provided that the records so kept can be converted into clearly legible form
within a reasonable time.
Section 5.02 Right of Inspection.
(a) The corporation's stock ledger, list of stockholders and
its other books and records shall be open to inspection upon the
written demand under oath stating the purpose thereof of any
stockholder, in person or by attorney or other agent, during usual
business hours for a purpose reasonably related to such holder's
interest as a stockholder. Such inspection may be made in person or by
agent or attorney, provided the demand under oath shall be accompanied
by a power of attorney or such other writing which authorizes the
attorney or other agent to so act on behalf of the stockholder and the
right of inspection includes the right to copy and make extracts. The
demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
(b) Every director shall have the right to examine the
corporation's stock ledger, a list of its stockholders and its other
books and records for a purpose reasonably related to the director's
position as a director.
Section 5.03 Corporate Seal. The Board of Directors may, by resolution,
authorize a seal, and the seal may be used by causing it, or a facsimile, to be
impressed or affixed or reproduced or otherwise. Except when otherwise
specifically provided herein, any officer of the corporation shall have the
authority to affix the seal to any document requiring it.
Section 5.04 Fiscal Year. The fiscal year of the corporation shall be
the calendar year or such other term as may be fixed by resolution of the Board
of Directors.
ARTICLE VI
INDEMNIFICATION
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Section 6.01 Right to Indemnification. The corporation shall indemnify
and hold harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person (an "Indemnitee") who
was or is made or is threatened to be made a party or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he, or a person for
whom he 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 or officer of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such Indemnitee. The
indemnification provided by this Section 6.01 shall continue as to a person who
has ceased to be a director or officer and shall inure to the benefit of the
heirs, executors and administrators of such person.
Section 6.02 Prepayment of Expenses. The corporation shall pay the
expenses (including attorneys' fees) incurred by a person described in the first
sentence of Section 6.1 hereof (an "Article VI Person") in defending any
proceeding in advance of its final disposition, provided, however, that, to the
extent required by law, such payment of expenses in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
by the Article VI Person to repay all amounts advanced if it should be
ultimately determined that the Article VI Person is not entitled to be
indemnified under this Article VI or otherwise.
Section 6.03 Nonexclusivity of Rights. The rights conferred on any
Article VI Person by this Article VI shall not be exclusive of any other rights
which such Article VI Person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, these by-laws, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 6.04 Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article VI shall not adversely affect any right or
protection hereunder of any Article VI Person in respect of any act or omission
occurring prior to the time of such repeal or modification. This Article VI may
be amended by the stockholders of the corporation only by the vote of 66 2/3% of
each class of the outstanding stock of the corporation, voting separately as a
single class. Notwithstanding anything else contained in these Bylaws or the
Certificate of Incorporation to the contrary, Article VI of these Bylaws may
only be amended by the Board of Directors by the vote of 80% of the whole Board
of Directors and the holders of 66 2/3% of each class of the outstanding stock
of the corporation, voting separately as a single class.
Section 6.05 Other Indemnification and Prepayment of Expenses. This
Article VI shall not limit the right of the corporation, to the extent and in
the manner permitted by law, to indemnify and to advance expenses to persons
other than Article VI Persons when and as authorized by appropriate corporate
action.
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Section 6.06 Insurance. The corporation shall have the power to
purchase and maintain insurance on behalf of any person who 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 any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the corporation would have the power to indemnify such person against such
liability under this Article VI.
ARTICLE VII
BYLAWS
Section 7.01 Amendment. These Bylaws may be altered, amended or
repealed, and new Bylaws made, by the Board of Directors by the affirmative vote
of a majority of the directors present at a meeting at which a quorum is
present, but the stockholders may make additional Bylaws and may alter and
repeal any Bylaws whether adopted by them or otherwise.
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APPENDIX E
NEVADA REVISED STATUTES
NRS 92A.005 Definitions. As used in this chapter, unless the context otherwise
requires, the words and terms defined in NRS 92A.007 to 92A.080, inclusive, have
the meanings ascribed to them in those sections.
(Added to NRS by 1995, 2079; A 1997, 726; 1999, 1626)
NRS 92A.007 "Approval" and "vote" defined.
NRS 92A.007 "Approval" and "vote" defined. "Approval" and "vote" as
describing action by directors or stockholders mean the vote by directors in
person or by written consent, or action of stockholders in person, by proxy or
by written consent.
(Added to NRS by 1997, 726)
NRS 92A.008 "Business trust" defined.
NRS 92A.008 "Business trust" defined. "Business trust" means:
1. A domestic business trust; or
2. An unincorporated association formed pursuant to, existing under or
governed by the law of a jurisdiction other than this state and generally
described by NRS 88A.030.
(Added to NRS by 1999, 1626)
NRS 92A.010 "Constituent document" defined.
NRS 92A.010 "Constituent document" defined. "Constituent document"
means the articles of incorporation or bylaws of a corporation, whether or not
for profit, the articles of organization or operating agreement of a
limited-liability company or the certificate of limited partnership or
partnership agreement of a limited partnership.
(Added to NRS by 1995, 2079)
NRS 92A.015 "Constituent entity" defined.
NRS 92A.015 "Constituent entity" defined. "Constituent entity" means,
with respect to a merger, each merging or surviving entity and, with respect to
an exchange, each entity whose owner's interests will be acquired or each entity
acquiring those interests.
(Added to NRS by 1995, 2079)
NRS 92A.020 "Domestic" defined.
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NRS 92A.020 "Domestic" defined. "Domestic" as applied to an entity
means one organized and existing under the laws of this state.
(Added to NRS by 1995, 2079)
NRS 92A.022 "Domestic business trust" defined.
NRS 92A.022 "Domestic business trust" defined. "Domestic business
trust" means a business trust formed and existing pursuant to the provisions of
chapter 88A of NRS.
(Added to NRS by 1999, 1626)
NRS 92A.025 "Domestic corporation" defined.
NRS 92A.025 "Domestic corporation" defined. "Domestic corporation"
means a corporation organized and existing under chapter 78, 78A or 89 of NRS,
or a nonprofit cooperative corporation organized pursuant to NRS 81.010 to
81.160, inclusive.
(Added to NRS by 1995, 2079; A 1997, 726)
NRS 92A.030 "Domestic limited-liability company" defined.
NRS 92A.030 "Domestic limited-liability company" defined. "Domestic
limited- liability company" means a limited-liability company organized and
existing under chapter 86 of NRS.
(Added to NRS by 1995, 2079)
NRS 92A.035 "Domestic limited partnership" defined.
NRS 92A.035 "Domestic limited partnership" defined. "Domestic limited
partnership" means a limited partnership organized and existing under chapter 88
of NRS.
(Added to NRS by 1995, 2079)
NRS 92A.040 "Domestic nonprofit corporation" defined.
NRS 92A.040 "Domestic nonprofit corporation" defined. "Domestic
nonprofit corporation" means a corporation organized or existing under chapter
82 of NRS, including those listed in NRS 82.051.
(Added to NRS by 1995, 2079)
NRS 92A.045 "Entity" defined.
NRS 92A.045 "Entity" defined. "Entity" means a foreign or domestic
corporation, whether or not for profit, limited-liability company, limited
partnership or business trust.
(Added to NRS by 1995, 2079; A 1999, 1626)
NRS 92A.050 "Exchange" defined.
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NRS 92A.050 "Exchange" defined. "Exchange" means the acquisition by one
or more foreign or domestic entities of all an owner's interests or one or more
classes or series of an owner's interests of one or more foreign or domestic
entities.
(Added to NRS by 1995, 2079)
NRS 92A.055 "Foreign" defined.
NRS 92A.055 "Foreign" defined. "Foreign" as applied to an entity means
one not organized or existing under the laws of this state.
(Added to NRS by 1995, 2079)
NRS 92A.060 "Limited partner" defined.
NRS 92A.060 "Limited partner" defined. "Limited partner" means a person
who has been admitted to a limited partnership as a limited partner in
accordance with the partnership agreement.
(Added to NRS by 1995, 2079)
NRS 92A.070 "Member" defined.
NRS 92A.070 "Member" defined. "Member" means:
1. A person who owns an interest in, and has the right to participate
in the management of the business and affairs of a domestic limited-liability
company; or
2. A member of a nonprofit corporation which has members.
(Added to NRS by 1995, 2080)
NRS 92A.075 "Owner" defined.
NRS 92A.075 "Owner" defined. "Owner" means the holder of an interest
described in NRS 92A.080.
(Added to NRS by 1995, 2080)
NRS 92A.080 "Owner's interest" defined.
NRS 92A.080 "Owner's interest" defined. "Owner's interest" means shares
of stock in a corporation, membership in a nonprofit corporation, the interest
of a member of a limited-liability company or a beneficial owner of a business
trust, or the partnership interest of a general or limited partner of a limited
partnership.
(Added to NRS by 1995, 2080; A 1999, 1626)
NRS 92A.100 Authority for merger; approval, contents and form ...
NRS 92A.100 Authority for merger; approval, contents and form of plan
of merger.
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1. Except as limited by NRS 78.411 to 78.444, inclusive, one or more
domestic entities may merge into another entity if the plan of merger is
approved pursuant to the provisions of this chapter.
2. The plan of merger must set forth:
(a) The name, address and jurisdiction of organization and governing
law of each constituent entity;
(b) The name, jurisdiction of organization and kind of entity or
entities that will survive the merger;
(c) The terms and conditions of the merger; and
(d) The manner and basis of converting the owner's interests of each
constituent entity into owner's interests, rights to purchase owner's interests,
or other securities of the surviving or other entity or into cash or other
property in whole or in part.
3. The plan of merger may set forth:
(a) Amendments to the constituent documents of the surviving entity;
and
(b) Other provisions relating to the merger.
4. The plan of merger must be in writing.
(Added to NRS by 1995, 2080; A 1997, 726)
NRS 92A.110 Authority for exchange; approval, contents and for...
NRS 92A.110 Authority for exchange; approval, contents and form of plan
of exchange.
1. Except as a corporation is limited by NRS 78.411 to 78.444,
inclusive, one or more domestic entities may acquire all of the outstanding
owner's interests of one or more classes or series of another entity not already
owned by the acquiring entity or an affiliate thereof if the plan of exchange is
approved pursuant to the provisions of this chapter.
2. The plan of exchange must set forth:
(a) The name, address and jurisdiction of organization and governing
law of each constituent entity;
(b) The name, jurisdiction of organization and kind of each entity
whose owner's interests will be acquired by one or more other entities;
(c) The terms and conditions of the exchange; and
(d) The manner and basis of exchanging the owner's interests to be
acquired for owner's interests, rights to purchase owner's interests, or other
securities of the acquiring or any other entity or for cash or other property in
whole or in part.
3. The plan of exchange may set forth other provisions relating to the
exchange.
4. This section does not limit the power of a domestic entity to
acquire all or part of the owner's interests or one or more class or series of
owner's interests of another person through a voluntary exchange or otherwise.
5. The plan of exchange must be in writing.
(Added to NRS by 1995, 2080; A 1997, 726)
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NRS 92A.120 Approval of plan of merger or exchange for domesti...
NRS 92A.120 Approval of plan of merger or exchange for domestic
corporation.
1. After adopting a plan of merger or exchange, the board of directors
of each domestic corporation that is a constituent entity in the merger, or the
board of directors of the domestic corporation whose shares will be acquired in
the exchange, must submit the plan of merger, except as otherwise provided in
NRS 92A.130, or the plan of exchange for approval by its stockholders.
2. For a plan of merger or exchange to be approved:
(a) The board of directors must recommend the plan of merger or
exchange to the stockholders, unless the board of directors determines that
because of a conflict of interest or other special circumstances it should make
no recommendation and it communicates the basis for its determination to the
stockholders with the plan; and
(b) The stockholders entitled to vote must approve the plan.
3. The board of directors may condition its submission of the proposed
merger or exchange on any basis.
4. The domestic corporation must notify each stockholder, whether or
not he is entitled to vote, of the proposed stockholders' meeting in accordance
with NRS 78.370. The notice must also state that the purpose, or one of the
purposes, of the meeting is to consider the plan of merger or exchange and must
contain or be accompanied by a copy or summary of the plan.
5. Unless this chapter, the articles of incorporation or the board of
directors acting pursuant to subsection 3 require a greater vote or a vote by
classes of stockholders, the plan of merger or exchange to be authorized must be
approved by a majority of the voting power unless stockholders of a class of
shares are entitled to vote thereon as a class. If stockholders of a class of
shares are so entitled, the plan must be approved by a majority of all votes
entitled to be cast on the plan by each class and representing a majority of all
votes entitled to be voted.
6. Separate voting by a class of stockholders is required:
(a) On a plan of merger if the plan contains a provision that, if
contained in the proposed amendment to the articles of incorporation, would
entitle particular stockholders to vote as a class on the proposed amendment;
and
(b) On a plan of exchange by each class or series of shares included in
the exchange, with each class or series constituting a separate voting class.
7. Unless otherwise provided in the articles of incorporation or the
bylaws of the domestic corporation, the plan of merger may be approved by
written consent as provided in NRS 78.320.
(Added to NRS by 1995, 2081)
NRS 92A.130 Approval of plan of merger for domestic corporation...
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NRS 92A.130 Approval of plan of merger for domestic corporation:
Conditions under which action by stockholders of surviving corporation is not
required.
1. Action by the stockholders of a surviving domestic corporation on a
plan of merger is not required if:
(a) The articles of incorporation of the surviving domestic corporation
will not differ from its articles before the merger;
(b) Each stockholder of the surviving domestic corporation whose shares
were outstanding immediately before the effective date of the merger will hold
the same number of shares, with identical designations, preferences, limitations
and relative rights immediately 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 percent 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 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 percent the total number of participating shares
outstanding immediately before the merger.
2. As used in this section:
(a) "Participating shares" means shares that entitle their holders to
participate without limitation in distributions.
(b) "Voting shares" means shares that entitle their holders to vote
unconditionally in elections of directors.
(Added to NRS by 1995, 2082)
NRS 92A.140 Approval of plan of merger or exchange for domesti...
NRS 92A.140 Approval of plan of merger or exchange for domestic limited
partnership; "majority in interest of the partnership" defined.
1. Unless otherwise provided in the partnership agreement or the
certificate of limited partnership, a plan of merger or exchange involving a
domestic limited partnership must be approved by all general partners and by
limited partners who own a majority in interest of the partnership then owned by
all the limited partners. If the partnership has more than one class of limited
partners, the plan of merger must be approved by those limited partners who own
a majority in interest of the partnership then owned by the limited partners in
each class.
2. For the purposes of this section, "majority in interest of the
partnership" means a majority of the interests in capital and profits of the
limited partners of a domestic limited partnership which:
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(a) In the case of capital, is determined as of the date of the
approval of the plan of merger or exchange.
(b) In the case of profits, is based on any reasonable estimate of
profits for the period beginning on the date of the approval of the plan of
merger or exchange and ending on the anticipated date of the termination of the
domestic limited partnership, including any present or future division of
profits distributed pursuant to the partnership agreement.
(Added to NRS by 1995, 2082; A 1997, 727)
NRS 92A.150 Approval of plan of merger or exchange for domesti...
NRS 92A.150 Approval of plan of merger or exchange for domestic
limited-liability company. Unless otherwise provided in the articles of
organization or an operating agreement:
1. A plan of merger or exchange involving a domestic limited-liability
company must be approved by members who own a majority of the interests in the
current profits of the company then owned by all of the members; and
2. If the company has more than one class of members, the plan of
merger must be approved by those members who own a majority of the interests in
the current profits of the company then owned by the members in each class.
(Added to NRS by 1995, 2082; A 1997, 727; 1999, 1627)
NRS 92A.160 Approval of plan of merger or exchange for domesti...
NRS 92A.160 Approval of plan of merger or exchange for domestic
nonprofit corporation.
1. A plan of merger or exchange involving a domestic nonprofit
corporation must be adopted by the board of directors. The plan must also be
approved by each public officer or other person whose approval of a plan of
merger or exchange is required by the articles of incorporation of the domestic
nonprofit corporation.
2. If the domestic nonprofit corporation has members entitled to vote
on plans of merger or exchange, the board of directors of the domestic nonprofit
corporation must recommend the plan of merger or exchange to the members, unless
the board of directors determines that because of a conflict of interest or
other special circumstances it should make no recommendation and it communicates
the basis for its determination to the members with the plan.
3. The board of directors may condition its submission of the proposed
merger or exchange on any basis.
4. The members entitled to vote on a plan of merger or exchange must
approve the plan at a meeting of members called for that purpose, by written
consent pursuant to NRS 82.276, or by a vote by written ballot pursuant to NRS
82.326.
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5. The corporation must notify, in the manner required by NRS 82.336,
each nonprofit member of the time and place of the meeting of members at which
the plan of merger or exchange will be submitted for a vote.
6. Unless the articles of incorporation of the domestic nonprofit
corporation or the board of directors acting pursuant to subsection 3 require a
greater vote or a vote by classes of members, the plan of merger or exchange to
be authorized must be approved by a majority of a quorum of the members unless a
class of members is entitled to vote thereon as a class. If a class of members
is so entitled, the plan must be approved by a majority of a quorum of the votes
entitled to be cast on the plan by each class.
7. Separate voting by a class of members is required:
(a) On a plan of merger if the plan contains a provision that, if
contained in the proposed amendment to articles of incorporation, would entitle
particular members to vote as a class on the proposed amendment; and
(b) On a plan of exchange by each class or series of memberships
included in the exchange, with each class or series constituting a separate
voting class.
(Added to NRS by 1995, 2082)]
NRS 92A.165 Approval of merger by trustees and beneficial owne...
NRS 92A.165 Approval of merger by trustees and beneficial owners of
certain business trusts. Unless otherwise provided in the certificate of trust
or governing instrument of a business trust, a merger must be approved by all
the trustees and beneficial owners of each business trust that is a constituent
entity in the merger.
(Added to NRS by 1999, 1626)
NRS 92A.170 Abandonment of planned merger or exchange before a...
NRS 92A.170 Abandonment of planned merger or exchange before articles
of merger or exchange are filed. After a merger or exchange is approved, and at
any time before the articles of merger or exchange are filed, the planned merger
or exchange may be abandoned, subject to any contractual rights, without further
action, in accordance with the procedure set forth in the plan of merger or
exchange or, if none is set forth, in the case of:
1. A domestic corporation, whether or not for profit, by the board of
directors;
2. A domestic limited partnership, unless otherwise provided in the
partnership agreement or certificate of limited partnership, by all general
partners;
3. A domestic limited-liability company, unless otherwise provided in
the articles of organization or an operating agreement, by members who own a
majority in interest of the company then owned by all of the members or, if the
company has more than one class of members, by members who own a majority in
interest of the company then owned by the members in each class; and
4. A domestic business trust, unless otherwise provided in the
certificate of trust or governing instrument, by all the trustees.
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(Added to NRS by 1995, 2083; A 1999, 1627)
NRS 92A.175 Termination of planned merger or exchange after ar...
NRS 92A.175 Termination of planned merger or exchange after articles of
merger or exchange are filed. After a merger or exchange is approved, at any
time after the articles of merger or exchange are filed but before an effective
date specified in the articles which is later than the date of filing the
articles, the planned merger or exchange may be terminated in accordance with a
procedure set forth in the plan of merger or exchange by filing articles of
termination pursuant to the provisions of NRS 92A.240.
(Added to NRS by 1999, 1626)
NRS 92A.180 Merger of subsidiary into parent.
NRS 92A.180 Merger of subsidiary into parent.
1. A parent domestic corporation, whether or not for profit, parent
domestic limited-liability company or parent domestic limited partnership owning
at least 90 percent of the outstanding shares of each class of a subsidiary
corporation, 90 percent of the percentage or other interest in the capital and
profits of a subsidiary limited partnership then owned by both the general and
each class of limited partners or 90 percent of the percentage or other interest
in the capital and profits of a subsidiary limited-liability company then owned
by each class of members may merge the subsidiary into itself without approval
of the owners of the owner's interests of the parent domestic corporation,
domestic limited-liability company or domestic limited partnership or the owners
of the owner's interests of a subsidiary domestic corporation, subsidiary
domestic limited-liability company or subsidiary domestic limited partnership.
2. The board of directors of the parent corporation, the managers of a
parent limited-liability company with managers unless otherwise provided in the
operating agreement, all the members of a parent limited-liability company
without managers unless otherwise provided in the operating agreement, or all
the general partners of the parent limited partnership shall adopt a plan of
merger that sets forth:
(a) The names of the parent and subsidiary; and
(b) The manner and basis of converting the owner's interests of the
disappearing entity into the owner's interests, obligations or other securities
of the surviving or any other entity or into cash or other property in whole or
in part.
3. The parent shall mail a copy or summary of the plan of merger to
each owner of the subsidiary who does not waive the mailing requirement in
writing.
4. The parent may not deliver articles of merger to the secretary of
state for filing until at least 30 days after the date the parent mailed a copy
of the plan of merger to each owner of the subsidiary who did not waive the
requirement of mailing.
5. Articles of merger under this section may not contain amendments to
the constituent documents of the surviving entity.
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(Added to NRS by 1995, 2083; A 1997, 727; 1999, 1627)
NRS 92A.190 Merger or exchange with foreign entity.
NRS 92A.190 Merger or exchange with foreign entity.
1. One or more foreign entities may merge or enter into an exchange of
owner's interests with one or more domestic entities if:
(a) In a merger, the merger is permitted by the law of the jurisdiction
under whose law each foreign entity is organized and governed and each foreign
entity complies with that law in effecting the merger;
(b) In an exchange, the entity whose owner's interests will be acquired
is a domestic entity, whether or not an exchange of owner's interests is
permitted by the law of the jurisdiction under whose law the acquiring entity is
organized;
(c) The foreign entity complies with NRS 92A.200 to 92A.240, inclusive,
if it is the surviving entity in the merger or acquiring entity in the exchange
and sets forth in the articles of merger or exchange its address where copies of
process may be sent by the secretary of state; and
(d) Each domestic entity complies with the applicable provisions of NRS
92A.100 to 92A.180, inclusive, and, if it is the surviving entity in the merger
or acquiring entity in the exchange, with NRS 92A.200 to 92A.240, inclusive.
2. When the merger or exchange takes effect, the surviving foreign
entity in a merger and the acquiring foreign entity in an exchange shall be
deemed:
(a) To appoint the secretary of state as its agent for service of
process in a proceeding to enforce any obligation or the rights of dissenting
owners of each domestic entity that was a party to the merger or exchange.
Service of such process must be made by personally delivering to and leaving
with the secretary of state duplicate copies of the process and the payment of a
fee of $25 for accepting and transmitting the process. The secretary of state
shall forthwith send by registered or certified mail one of the copies to the
surviving or acquiring entity at its specified address, unless the surviving or
acquiring entity has designated in writing to the secretary of state a different
address for that purpose, in which case it must be mailed to the last address so
designated.
(b) To agree that it will promptly pay to the dissenting owners of each
domestic entity that is a party to the merger or exchange the amount, if any, to
which they are entitled under or created pursuant to NRS 92A.300 to 92A.500,
inclusive.
3. This section does not limit the power of a foreign entity to acquire
all or part of the owner's interests of one or more classes or series of a
domestic entity through a voluntary exchange or otherwise.
(Added to NRS by 1995, 2086; A 1997, 728; 1999, 1628)
NRS 92A.200 Articles of merger or exchange: Filing and content...
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NRS 92A.200 Articles of merger or exchange: Filing and contents. After
a plan of merger or exchange is approved as required by this chapter, the
surviving or acquiring entity shall deliver to the secretary of state for filing
articles of merger or exchange setting forth:
1. The name and jurisdiction of organization of each constituent
entity;
2. That a plan of merger or exchange has been adopted by each
constituent entity;
3. If approval of the owners of one or more constituent entities was
not required, a statement to that effect and the name of each entity;
4. If approval of owners of one or more constituent entities was
required, the name of each entity and a statement for each entity that:
(a) The plan was approved by the unanimous consent of the owners; or
(b) A plan was submitted to the owners pursuant to this chapter
including:
(1) The designation, percentage of total vote or number of
votes entitled to be cast by each class of owner's interests entitled to vote
separately on the plan; and
(2) Either the total number of votes or percentage of owner's
interests cast for and against the plan by the owners of each class of interests
entitled to vote separately on the plan or the total number of undisputed votes
or undisputed total percentage of owner's interests cast for the plan separately
by the owners of each class, and the number of votes or percentage of owner's
interests cast for the plan by the owners of each class of interests was
sufficient for approval by the owners of that class;
5. In the case of a merger, the amendment to the articles of
incorporation, articles of organization, certificate of limited partnership or
certificate of trust of the surviving entity; and
6. If the entire plan of merger or exchange is not set forth, a
statement that the complete executed plan of merger or plan of exchange is on
file at the registered office if a corporation, limited-liability company or
business trust, or office described in paragraph (a) of subsection 1 of NRS
88.330 if a limited partnership, or other place of business of the surviving
entity or the acquiring entity, respectively.
(Added to NRS by 1995, 2084; A 1997, 729; 1999, 1629)
NRS 92A.210 Articles of merger, exchange or termination: Fee f...
NRS 92A.210 Articles of merger, exchange or termination: Fee for
filing. The fee for filing articles of merger, articles of exchange or articles
of termination is $125.
(Added to NRS by 1995, 2085; A 1999, 1629)
NRS 92A.220 Articles of merger or exchange: Duty when entire p...
NRS 92A.220 Articles of merger or exchange: Duty when entire plan of
merger or exchange is not set forth. If the entire plan of merger or exchange is
not set forth, a copy of the plan of merger or exchange must be furnished by the
surviving or acquiring entity, on request and without cost, to any owner of any
entity which is a party to the merger or exchange.
(Added to NRS by 1995, 2085)
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NRS 92A.230 Articles of merger or exchange: Execution.
NRS 92A.230 Articles of merger or exchange: Execution.
1. Articles of merger or exchange must be signed by each domestic
constituent entity as follows:
(a) By the president or a vice president of a domestic corporation,
whether or not for profit;
(b) By all the general partners of a domestic limited partnership;
(c) By a manager of a domestic limited-liability company with managers
or by all the members of a domestic limited-liability company without managers;
and
(d) By a trustee of a domestic business trust.
2. If the domestic entity is a corporation, the articles must also be
signed by the secretary or an assistant secretary.
3. Articles of merger or exchange must be signed by each foreign
constituent entity in the manner provided by the law governing it.
4. As used in this section, "signed" means to have executed or adopted
a name, word or mark, including, without limitation, a digital signature as
defined in NRS 720.060, with the present intention to authenticate a document.
(Added to NRS by 1995, 2085; A 1997, 730; 1999, 1630)
NRS 92A.240 Effective date of merger or exchange; filing of ar...
NRS 92A.240 Effective date of merger or exchange; filing of articles of
termination before effective date.
1. A merger or exchange takes effect upon filing the articles of merger
or exchange or upon a later date as specified in the articles, which must not be
more than 90 days after the articles are filed.
2. If the filed articles of merger or exchange specify such a later
effective date, the constituent may file articles of termination before the
effective date, setting forth:
(a) The name of each constituent entity; and
(b) That the merger or exchange has been terminated pursuant to the
plan of merger or exchange.
3. The articles of termination must be executed in the manner provided
in NRS 92A.230.
(Added to NRS by 1995, 2085; A 1999, 1630)
NRS 92A.250 Effect of merger or exchange.
NRS 92A.250 Effect of merger or exchange.
1. When a merger takes effect:
(a) Every other entity that is a constituent entity merges into the
surviving entity and the separate existence of every entity except the surviving
entity ceases;
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(b) The title to all real estate and other property owned by each
merging constituent entity is vested in the surviving entity without reversion
or impairment;
(c) The surviving entity has all of the liabilities of each other
constituent entity;
(d) A proceeding pending against any constituent entity may be
continued as if the merger had not occurred or the surviving entity may be
substituted in the proceeding for the entity whose existence has ceased;
(e) The articles of incorporation, articles of organization,
certificate of limited partnership or certificate of trust of the surviving
entity are amended to the extent provided in the plan of merger; and
(f) The owner's interests of each constituent entity that are to be
converted into owner's interests, obligations or other securities of the
surviving or any other entity or into cash or other property are converted, and
the former holders of the owner's interests are entitled only to the rights
provided in the articles of merger or any created pursuant to NRS 92A.300 to
92A.500, inclusive.
2. When an exchange takes effect, the owner's interests of each
acquired entity are exchanged as provided in the plan, and the former holders of
the owner's interests are entitled only to the rights provided in the articles
of exchange or any rights created pursuant to NRS 92A.300 to 92A.500, inclusive.
(Added to NRS by 1995, 2085; A 1999, 1630)
NRS 92A.260 Liability of owner.
NRS 92A.260 Liability of owner. An owner that is not personally liable
for the debts, liabilities or obligations of the entity pursuant to the laws and
constituent documents under which the entity was organized does not become
personally liable for the debts, liabilities or obligations of the surviving
entity or entities of the merger or exchange unless the owner consents to
becoming personally liable by action taken in connection with the plan of merger
or exchange.
(Added to NRS by 1995, 2081)
NRS 92A.300 Definitions.
NRS 92A.300 Definitions. As used in NRS 92A.300 to 92A.500, inclusive,
unless the context otherwise requires, the words and terms defined in NRS
92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those
sections.
(Added to NRS by 1995, 2086)
NRS 92A.305 "Beneficial stockholder" defined.
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 by 1995, 2087)
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NRS 92A.310 "Corporate action" defined.
NRS 92A.310 "Corporate action" defined. "Corporate action" means the
action of a domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.315 "Dissenter" defined.
NRS 92A.315 "Dissenter" defined. "Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.400 to
92A.480, inclusive.
(Added to NRS by 1995, 2087; A 1999, 1631)
NRS 92A.320 "Fair value" defined.
NRS 92A.320 "Fair value" defined. "Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
(Added to NRS by 1995, 2087)
NRS 92A.325 "Stockholder" defined.
NRS 92A.325 "Stockholder" defined. "Stockholder" means a stockholder
of record or a beneficial stockholder of a domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.330 "Stockholder of record" defined.
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 by 1995, 2087)
NRS 92A.335 "Subject corporation" defined.
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)
NRS 92A.340 Computation of interest.
NRS 92A.340 Computation of interest. Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
action until the date
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of payment, at the average rate currently paid by the entity on its principal
bank loans or, if it has no bank loans, at a rate that is fair and equitable
under all of the circumstances.
(Added to NRS by 1995, 2087)
NRS 92A.350 Rights of dissenting partner of domestic limited p...
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 by 1995, 2088)
NRS 92A.360 Rights of dissenting member of domestic limited-li...
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 by 1995, 2088)
NRS 92A.370 Rights of dissenting member of domestic nonprofit ...
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 his 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 in
chapter 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 by 1995, 2088)
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NRS 92A.380 Right of stockholder to dissent from certain corpo...
NRS 92A.380 Right of stockholder to dissent from certain corporate
actions and to obtain payment for shares.
1. Except as otherwise provided in NRS 92A.370 and 92A.390, a
stockholder is entitled to dissent from, and obtain payment of the fair value of
his 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 party:
(1) If approval by the stockholders is required for the merger
by NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation and he is
entitled to vote on the merger; or
(2) If the domestic corporation is a subsidiary and is merged
with its parent under NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic
corporation is a party as the corporation whose subject owner's interests will
be acquired, if he is entitled to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the stockholders
to the event 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.
2. A stockholder who is entitled to dissent and obtain payment under
NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.390 Limitations on right of dissent: Stockholders of c...
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 or
exchange in favor of stockholders of any class or series which, at the record
date fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting at which the plan of merger or exchange is to be acted on,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or held
by at least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the shares
provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in
lieu of fractional owner's interests of:
(I) The surviving or acquiring entity; or
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(II) Any other entity which, at the effective date of the
plan of merger or exchange, were either listed on a national securities
exchange, included in the national market system by the National Association of
Securities Dealers, Inc., or held of record by a least 2,000 holders of owner's
interests of record; or
(2) A combination of cash and owner's interests of the kind
described in sub-subparagraphs (I) and (II) of subparagraph (1) of paragraph
(b).
2. 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 under NRS 92A.130.
(Added to NRS by 1995, 2088)
NRS 92A.400 Limitations on right of dissent: Assertion as to p...
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 name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf he
asserts dissenter's rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he dissents and his 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 behalf only if:
(a) He 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) He does so with respect to all shares of which he is the beneficial
stockholder or over which he has power to direct the vote.
(Added to NRS by 1995, 2089)
NRS 92A.410 Notification of stockholders regarding right of di...
NRS 92A.410 Notification of stockholders regarding right of dissent.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those
sections.
2. If the corporate action creating dissenters' 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
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430.
(Added to NRS by 1995, 2089; A 1997, 730)
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NRS 92A.420 Prerequisites to demand for payment for shares.
NRS 92A.420 Prerequisites to demand for payment for shares.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to
assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in favor of the proposed action. 2. A
stockholder who does not satisfy the requirements of subsection 1 and
NRS 92A.400 is not entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2089; 1999, 1631)
NRS 92A.430 Dissenter's notice: Delivery to stockholders entit...
NRS 92A.430 Dissenter's notice: Delivery to stockholders entitled to
assert rights; contents.
1. If a proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, the subject corporation shall deliver a
written dissenter's notice to all stockholders who satisfied the requirements to
assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, 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 he 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
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
(Added to NRS by 1995, 2089)
NRS 92A.440 Demand for payment and deposit of certificates; re...
NRS 92A.440 Demand for payment and deposit of certificates; retention
of rights of stockholder.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
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(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
2. The stockholder who demands payment and deposits his certificates,
if any, before the proposed corporate action is taken retains all other rights
of a stockholder until those rights are canceled or modified by the taking of
the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2090; A 1997, 730)
NRS 92A.450 Uncertificated shares: Authority to restrict trans...
NRS 92A.450 Uncertificated shares: Authority to restrict transfer after
demand for payment; retention of rights of stockholder.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
(Added to NRS by 1995, 2090)
NRS 92A.460 Payment for shares: General requirements.
NRS 92A.460 Payment for shares: General requirements.
1. Except as otherwise provided in NRS 92A.470, within 30 days after
receipt of a demand for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount the subject corporation
estimates to be the fair value of his 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 corporation's registered office is located;
or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. 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 and the latest available interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair value
of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under
NRS 92A.480; and
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(e) A copy of NRS 92A.300 to 92A.500, inclusive.
(Added to NRS by 1995, 2090)
NRS 92A.470 Payment for shares: Shares acquired on or after da...
NRS 92A.470 Payment for shares: Shares acquired on or after date of
dissenter's notice.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first 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,
after taking the proposed action, it shall estimate the fair value of the
shares, plus accrued interest, and shall offer to pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
subject corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated, and
a statement of the dissenters' right to demand payment pursuant to NRS 92A.480.
(Added to NRS by 1995, 2091)
NRS 92A.480 Dissenter's estimate of fair value: Notification o...
NRS 92A.480 Dissenter's estimate of fair value: Notification of
subject corporation; demand for payment of estimate.
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of
his shares and interest due, if he believes that the amount paid pursuant to NRS
92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of his
shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing
within 30 days after the subject corporation made or offered payment for his
shares.
(Added to NRS by 1995, 2091)
NRS 92A.490 Legal proceeding to determine fair value: Duties o...
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 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.
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2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was 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
his shares, plus interest, exceeds the amount paid by the subject corporation;
or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment pursuant to
NRS 92A.470.
(Added to NRS by 1995, 2091)
NRS 92A.500 Legal proceeding to determine fair value: Assessme...
NRS 92A.500 Legal proceeding to determine fair value: Assessment of
costs and fees.
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 of NRS 92A.300 to 92A.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 by NRS 92A.300 to 92A.500, inclusive.
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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.
4. In a proceeding commenced pursuant to NRS 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. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
(Added to NRS by 1995, 2092)
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PRELIMINARY MATERIAL -- APRIL 18, 2000
JAWS TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF JAWS TECHNOLOGIES, INC. FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 31, 2000.
The undersigned, as a holder of shares of common stock, ("Shares") in JAWS
Technologies, Inc. (the "Company"), hereby appoints Robert J. Kubbernus and Riaz
Mamdani, and each of them, with full power of substitution, to vote all Shares
for which the undersigned is entitled to vote through the execution of a proxy
with respect to the Annual Meeting of the Stockholders to be held on May 31,
2000 or any adjournment thereof.
You may revoke this proxy at any time by forwarding to the Company a
subsequently dated proxy received by the Company prior to the Annual Meeting.
Returned proxy cards will be voted (1) as specified on the matters listed
below; (2) in accordance with the Board of Directors' recommendations if the
proxy is signed but where no specification is made; and (3) in accordance with
the judgment of the proxies on any other matters that may properly come before
the meeting. Please mark your choice like this: X
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3
AND 4.
PROPOSAL 1 -- APPROVAL OF MINUTES OF 1999 ANNUAL MEETING: Approval of the
minutes of the 1999 Annual Meeting of Stockholders.
(check one box) [ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 2 -- THE ELECTION OF DIRECTORS PROPOSAL: Approval of the election of
Robert J. Kubbernus, Riaz Mamdani, Julia L. Johnson, Arthur Wong and John S.
Burns Q.C. to serve as a director of the Company until the next Annual Meeting
of the Stockholders.
(check one box for each director) Robert J. Kubbernus [ ] FOR [ ] AGAINST [ ] ABSTAIN
Julia L. Johnson [ ] FOR [ ] AGAINST [ ] ABSTAIN
Riaz Mamdani [ ] FOR [ ] AGAINST [ ] ABSTAIN
Arthur Wong [ ] FOR [ ] AGAINST [ ] ABSTAIN
John S. Burns Q.C. [ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 3 -- THE CHANGE OF DOMICILE PROPOSAL: Approval to change the Company's
domicile from the State of Nevada to the State of Delaware.
(check one box) [ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 4 -- THE INDEPENDENT AUDITORS PROPOSAL: Approval to ratify selection by
the Board of Directors of the Company of Ernst & Young LLP as the independent
auditors of the Company for the fiscal year ending December 31, 2000.
(check one box) [ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued, and to be signed, on the other side)
91
(continued from other side)
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1,
2, 3 AND 4.
PRINT AND SIGN YOUR NAME BELOW EXACTLY AS IT APPEARS HEREON AND DATE THIS
CARD. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE, AS SUCH. JOINT OWNERS SHOULD EACH SIGN. IF A
CORPORATION, PLEASE SIGN AS FULL CORPORATE NAME BY PRESIDENT OR AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AN AUTHORIZED
PERSON.
Dated: , 2000
---------------------------------------------
--------------------------------------------------------
SIGNATURE (TITLE, IF ANY)
--------------------------------------------------------
SIGNATURE IF HELD JOINTLY
-------------------------------------
TITLE OR AUTHORITY
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY USING THE ENCLOSED POSTAGE
PAID ENVELOPE TO: STEPHEN T. SPURGEON, JAWS TECHNOLOGIES, INC., 1013 17TH
AVENUE, S.W., CALGARY, ALBERTA, T2T 0A7. IF YOU HAVE ANY QUESTIONS, PLEASE CALL
STEPHEN T. SPURGEON AT (403) 508-5055