UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
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[X] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to Section 240.14a-12
CAPITAL GROWTH SYSTEMS, INC.
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CAPITAL GROWTH SYSTEMS, INC.
1100 EAST WOODFIELD ROAD
SCHAUMBURG, ILLINOIS 60173
(630) 872-5800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 30, 2004
To the Stockholders of Capital Growth Systems, Inc.:
The Annual Meeting of Stockholders of Capital Growth Systems, Inc. will be
held on June 30, 2004, at 10:00 a.m., at 444 North Michigan Avenue, Suite 2500,
Chicago, Illinois 60611, for the following purposes:
1. To elect five directors to serve until the next annual meeting of
stockholders or until their successors are elected or qualified;
2. To change our name from "Capital Growth Systems, Inc." to "Nexvu
Business Solutions, Inc.";
3. To increase the number of shares of common stock that we are
authorized to issue under our Articles of Incorporation;
4. To change our state of incorporation from Florida to Delaware; and
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record as of the close of business on May 21, 2004,
will be entitled to notice of and to vote at the meeting or at any adjournment
thereof. A copy of our Form 10-KSB for the transition period ended December 31,
2003 is enclosed.
By Order of The Board of Directors:
/s/ Rory Herriman
Rory Herriman
Secretary
Schaumburg, Illinois
May 28, 2004
YOUR VOTE IS IMPORTANT
REGARDLESS OF WHETHER YOU EXPECT TO ATTEND THE ANNUAL MEETING OF
STOCKHOLDERS, YOU ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED FOR
MAILING IN THE UNITED STATES. YOUR PROMPT RESPONSE WILL ASSURE THAT A QUORUM IS
PRESENT AT THE MEETING AND SAVE US THE EXPENSE OF FURTHER SOLICITATION OF
PROXIES.
CAPITAL GROWTH SYSTEMS, INC.
1100 EAST WOODFIELD ROAD
SCHAUMBURG, ILLINOIS 60173
PROXY STATEMENT
PROXY SOLICITATION AND GENERAL INFORMATION
This proxy statement is furnished to the holders of shares of common stock
of Capital Growth Systems, Inc., a Florida corporation, in connection with the
solicitation of proxies by our Board of Directors for use at the annual meeting
of stockholders to be held on June 30, 2004, at 10:00 a.m., at 444 North
Michigan Avenue, Suite 2500, Chicago, Illinois 60611, and any adjournment
thereof. Our by-laws require our directors to call and hold an annual meeting of
stockholders each year. We are first mailing this proxy statement and the
enclosed proxy card to our stockholders on or about May 28, 2004. Stockholders
who wish to attend the meeting should contact us at (630) 872-5800.
Only stockholders of record at the close of business on May 21, 2004 will
be entitled to notice of and to vote at the meeting. As of this date, 16,000,454
shares of our common stock, par value $0.0001 per share, having one vote each,
were issued and outstanding. A majority of the outstanding shares of our common
stock, represented at the meeting in person or by proxy, will constitute a
quorum.
We will bear all costs associated with the solicitation of proxies,
including the cost of preparing, printing and mailing this proxy statement and
the reimbursement of record holders of shares of common stock for their expenses
in forwarding proxy materials to beneficial owners of these shares. Following
the original solicitation of proxies by mail, proxies may be solicited by our
officers and employees by telephone, facsimile, telegraph or in person. These
officers and employees will not be additionally compensated for soliciting
proxies.
Shares represented by properly executed proxies in the accompanying form
received by the Board of Directors prior to the meeting will be voted at the
meeting. Shares not represented by properly executed proxies will not be voted.
If a stockholder specifies a choice with respect to any matter to be acted upon,
the shares represented by that proxy will be voted as specified. If the
stockholder does not specify a choice, in an otherwise properly-executed proxy,
with respect to any proposal referred to therein, the shares represented by that
proxy will be voted with respect to that proposal in accordance with the
recommendations of the Board of Directors described herein. A stockholder who
signs and returns a proxy in the accompanying form may revoke it by giving
written notice of revocation to us before the proxy is voted at the meeting,
executing and delivering a later-dated proxy, or attending the meeting and
voting the shares in person.
The affirmative vote of the holders of a plurality of the votes cast by
the stockholders entitled to vote at the meeting is required for the election of
directors. This means that the five nominees receiving the highest number of
"For" votes will be elected as directors. With regard to the election of
directors, votes may be cast in favor or withheld; votes that are withheld will
be
excluded entirely from the vote and will have no effect. The affirmative vote of
a majority of the shares of common stock present in person or represented by
proxy at the meeting is required for approval of the change of our name, the
amendment to our Articles of Incorporation to increase the number of shares of
common stock that we are authorized to issue and the reincorporation from
Florida to Delaware.
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SUMMARY TERM SHEET
The following is only a summary of certain information contained in this
proxy statement. You should carefully review this entire proxy statement along
with the attached exhibits to understand fully the proposal to elect directors,
the proposal to change our name, the proposal to increase our authorized common
stock and the reincorporation proposal.
- - PROPOSAL TO ELECT DIRECTORS (SEE PAGES 5-7): We are proposing to elect
five directors to the Board of Directors until our next annual meeting or
their successors are duly elected and qualified.
- - PROPOSAL TO CHANGE NAME (SEE PAGE 14): We are proposing to change our name
from "Capital Growth Systems, Inc." to "Nexvu Business Solutions, Inc."
- - PROPOSAL TO INCREASE AUTHORIZED SHARES (SEE PAGES 14-15): We are proposing
to increase the number of shares that we are authorized to issue under our
articles of incorporation from 25,000,000 to 50,000,000.
- - REINCORPORATION PROPOSAL (SEE PAGES 15-33): We are proposing to change our
state of incorporation from Florida to Delaware by merging into a wholly
owned subsidiary incorporated in Delaware. The name of the Delaware
corporation, which will be our successor in the merger, is Nexvu Business
Solutions, Inc.
- - OUR REASONS FOR THE REINCORPORATION PROPOSAL (SEE PAGE 16): The primary
reason for the reincorporation from Florida to Delaware is to obtain the
benefits of Delaware's comprehensive, widely used and extensively
interpreted corporate law.
- - EFFECT OF APPROVING THE REINCORPORATION PROPOSAL (SEE PAGES 16-18): If our
stockholders approve the reincorporation proposal, we will reincorporate
by merging into Nexvu Business Solutions, Inc., which is currently our
subsidiary and is a Delaware corporation. In effect, we would be
reincorporating in Delaware. A vote in favor of the reincorporation
proposal is a vote in favor of the Agreement and Plan of Merger, dated
April 13, 2004, by and between us and Nexvu Business Solutions, Inc. under
which we and Nexvu Business Solutions, Inc. would merge to complete the
reincorporation merger. The proposed reincorporation merger would NOT
result in any change in the business, management, fiscal year, assets or
liabilities or location of our principal facilities. Assuming that the
reincorporation merger is completed, our directors and officers
immediately before the effective date of the reincorporation merger would
become the directors and officers of the surviving corporation.
- - EFFECT OF NOT APPROVING THE REINCORPORATION PROPOSAL (SEE PAGE 18): If our
stockholders do not approve the reincorporation proposal, we would not
consummate the merger and would continue to operate as a Florida
corporation.
- - WHAT YOU WOULD RECEIVE IN THE REINCORPORATION MERGER (SEE PAGE 17): On the
effective date of the reincorporation merger, your shares of our common
stock would become an equivalent number of shares of common stock of the
surviving corporation. Each of your shares of common stock, par value
$0.0001, with respect to which you have not validly perfected dissenters'
rights, automatically would be converted into one share of common stock,
par value $0.00001, of Nexvu Business Solutions, Inc. You would not need
to exchange your existing stock certificates for stock certificates of the
surviving corporation.
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- - DISSENTERS RIGHTS (SEE PAGES 31-32): Under Florida law, stockholders are
entitled to dissent from the reincorporation merger and, if the
reincorporation merger is consummated, to receive "fair value" for their
shares in cash by complying with the provisions on dissenters' rights in
Florida law that are set forth in Sections 607.1301 to 607.1333 of the
Florida Business Corporation Act. One of the conditions to the merger is
that holders of no more than 1% of our outstanding shares continue to have
the right to exercise appraisal rights in connection with the merger.
- - TAX EFFECTS OF THE REINCORPORATION (SEE PAGES 32-33): We believe that the
reincorporation merger would be tax free to our stockholders and that you
would be entitled to the same basis in the shares of the surviving
corporation as you had in our shares of common stock.
- - CHANGES IN STOCKHOLDER RIGHTS (SEE PAGES 19-30): If we and Nexvu Business
Solutions, Inc. effect the reincorporation merger, Delaware law and the
certificate of incorporation and by-laws of the surviving corporation
would govern the rights of all of our stockholders.
- - RECOMMENDATIONS OF OUR BOARD OF DIRECTORS: Our Board of Directors
recommends that you vote "FOR" the election of our five nominees for
director, "FOR" the proposal to change our name, "FOR" the proposal to
increase our authorized shares and "FOR" the reincorporation proposal.
Approval of the reincorporation proposal would constitute approval of the
merger agreement and therefore of the reincorporation merger.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION
OF THE NOMINEES FOR DIRECTOR (PROPOSAL NO. 1), "FOR" THE PROPOSAL TO CHANGE OUR
NAME (PROPOSAL No. 2), "FOR" THE PROPOSAL TO INCREASE OUR AUTHORIZED SHARES
(PROPOSAL NO. 3) AND "FOR" THE REINCORPORATION PROPOSAL (PROPOSAL NO. 4).
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ELECTION OF DIRECTORS
The Board of Directors has nominated the five persons named below for
election as directors at the meeting to serve until our 2005 annual meeting of
stockholders or until their elected successors are qualified. Our by-laws
provide that the Board of Directors must consist of not less than two and no
more than seven persons. At the present time, our board consists of five
persons. All of the nominees below are presently serving as members of the Board
of Directors. Each nominee has consented to have his name appear as a nominee in
this proxy statement and to serve as a director if elected. Should any nominee
become unable to serve as a director, shares of common stock represented at the
meeting by valid proxies may be voted for the election of a substitute nominee
or nominees as may be designated by the Board of Directors. The Board of
Directors has no reason to believe that any nominee will be unable to serve as a
director. It is our policy that all directors should attend our annual meeting.
We did not hold an annual meeting in 2003. Each of our directors will be present
at our annual meeting.
The following information is provided concerning the nominees for election
as our directors:
NAME PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
Robert Geras Mr. Geras has served as our Chairman of the
Age 66 Board since the completion in January 2004
Director since 2004 of our merger with Nexvu Technologies, LLC,
which is described in "Business -- Merger
with Nexvu Technologies, LLC." Mr. Geras
served as the Chairman of Nexvu
Technologies, LLC from June 2003 through the
date of the merger. Mr. Geras is also an
early investor and second largest
shareholder of Merge Technologies Inc., a
successful Nasdaq-listed company, which
provides eHealth connectivity products for
medical imaging and other clinical
information. Mr. Geras has also served as a
director and/or early-stage investor in
VideoHomeTours, a provider of visual content
management and marketing services for large
brokerage firms; ShowingTime.com, a complete
Internet scheduling and productivity tool
for real estate agents; Exadigm, Inc., a
company engaged in the development and sale
of electronic payment processing equipment
utilizing wi-fi technology; and 20/20
Technologies, LLC, a provider of bandwidth
and connectivity to the high speed data
transmission industry.
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NAME PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
Scott Allen Mr. Allen has served as a director and our
Age 41 Chief Executive and Chief Financial Officer
Director since 2004 since the completion of our merger with
Nexvu Technologies, LLC. Mr. Allen also
served as the Chief Executive Officer and
President of Nexvu Technologies, LLC from
July 2003 through the date of the merger.
Between October 2001 and June 2003, Mr.
Allen served as the Vice President, Product
Management for the Sniffer Technologies
division of Network Associates, Inc. a
Nasdaq-listed company. Previously, Mr. Allen
was employed with Network Associates for
seven years. During his tenure at Network
Associates, Mr. Allen held key contributor
roles in the sales organization.
Rory Herriman Mr. Herriman has served as a director and
Age 33 our Chief Technology Officer since the
Director since 2004 completion of our merger with Nexvu
Technologies, LLC. Mr. Herriman served as
the Chief Technology Officer of Nexvu
Technologies, LLC from May 2002 through the
date of the merger. From 1997 until 2002,
Mr. Herriman served as the Senior Director
of Technology Architecture and Engineering
at Sears, Roebuck & Company where he defined
and executed enterprise-wide technology
direction in the areas of
telecommunications, networking and
computing.
Douglas Stukel Mr. Stukel has served as a director of ours
Age 34 since August 2003. Mr. Stukel, together with
Director since 2003 Mr. Wiskowski, led the investor group which
purchased the current majority stake in us.
In addition, Mr. Stukel is a co-founder of
Premier Holdings of Illinois, LLC, a
distributor of medical supplies based in
Joliet, Illinois. Mr. Stukel served as the
president of Cendant Home Funding, a
residential mortgage company based in
Joliet, Illinois, from 1997 until 2001. Mr.
Stukel is also a co-founder of Momentum
Capital, LLC, a privately held advisory and
consulting firm..
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NAME PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
Lee Wiskowski Mr. Wiskowski has served as a director since
Age 37 the completion of our merger with Nexvu
Director since 2003 Technologies, LLC. From August 2003 through
the date of the merger, Mr. Wiskowski served
as our Chief Executive Officer, Chief
Financial Officer, President and as a
director. Mr. Wiskowski was a co-founder of
Madison Securities and a co-founder of
Advanced Equities, both NASD licensed
broker-dealers registered in all 50 states.
Mr. Wiskowski sold his interest to the other
principals of Advanced Equities
approximately three years ago, and has been
engaged in the investment and advisory
business since that time through Grander,
LLC, and Momentum Capital, LLC, both
privately held advisory and consulting
firms.
Our Board of Directors has determined that Mr. Geras is independent under
the rules of the Nasdaq Stock Market.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
NAMED ABOVE.
CERTAIN INFORMATION REGARDING
THE BOARD OF DIRECTORS
COMPENSATION OF DIRECTORS
We did not pay any compensation to directors during our fiscal year ended
May 31, 2003, or the transition period ended December 31, 2003, nor do we have a
current policy with regard to compensation of directors. We may in the future
adopt a policy with regard to compensation of directors.
BOARD MEETINGS/COMMITTEES
In 2003, the Board of Directors held one meeting, at which all directors
were present. The Board of Directors presently has a Compensation Committee, a
Nominating Committee and an Audit Committee. The composition, functions and
responsibilities of each committee are described in the paragraphs that follow.
Compensation Committee. The Compensation Committee is responsible for
reviewing, determining and establishing the salaries, bonuses and other
compensation of our executive officers and to administer our 2003 Long-Term
Incentive Plan. Our Compensation Committee is comprised of Messrs. Geras, Stukel
and Wiskowski. We did not pay any compensation to executive officers, or to any
other employees, in the transition period ended December 31, 2003,
7
or the fiscal year ended May 31, 2003. Accordingly, our Compensation Committee
has not yet met. However, the Compensation Committee intends to meet in
connection with grants pursuant to our 2003 Long-Term Incentive Plan and other
administrative matters relating to the plan, and establish compensation for our
executive officers in the future.
Nominating Committee. The Nominating Committee is responsible for making
recommendations to the Board of Directors relating to the appropriate size,
functioning and needs of the Board of Directors, which includes recruitment and
retention of high quality Board members. Our Nominating Committee is comprised
of Messrs. Geras, Stukel and Wiskowski. Mr. Geras is considered independent
under the rules of the Nasdaq Stock Market. The Nominating Committee did not
meet during our 2003 fiscal year. Candidates for director nominees will be
assessed in the context of the current composition of the board, our operating
requirements and the long-term interests of stockholders.
The Nominating Committee has not established specific minimum age,
education, years of business experience or specific types of skills for
potential candidates, but, in general, expects qualified candidates will have:
the ability to comprehend our strategic goals and help guide us towards the
accomplishment of those goals; personal integrity and a strong sense of ethics;
sufficient time to devote to our affairs; and knowledge of, and experience with
regard to our industry, regulations governing public companies, the geographic
locations within which we operate, sound business practices or accounting and
financial reporting. In addition, each director must satisfy other criteria that
the Nominating Committee determines are relevant in light of our needs and those
of the Board. The Nominating Committee intends to use the same standards for
judging nominees recommended by the Nominating Committee and nominees presented
by stockholders. In the case of incumbent directors, the Nominating Committee
will review each director's overall service to us during his term in deciding
whether to renominate the director.
The Nominating Committee will consider a director candidate recommended by
stockholders. To be considered by the Nominating Committee for nomination and
inclusion in our proxy statement for our 2005 Annual Meeting, a stockholder must
notify our secretary no later than January 28, 2005. Notices should be sent to:
Capital Growth Systems, Inc., 1100 East Woodfield Road, Schaumburg, Illinois
60173 Attn: Corporate Secretary. Notices should include the following
information:
- the candidate's name and contact information;
- a brief description of the candidate's background and qualifications;
- the reasons that the recommending stockholder believes the candidate would
be well suited for our Board of Directors;
- a statement by the candidate that the candidate is willing and able to
serve on the Board of Directors;
- a statement by the recommending stockholder that the candidate meets the
criteria established by the Board; and
- a brief description of the recommending stockholder's ownership of our
common stock and the term during which his or her shares have been held.
The Nominating Committee may refuse to consider the recommendation of any person
not made in compliance with this procedure.
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The Nominating Committee operates under a written charter. The charter is
not available on our website, but is attached as Exhibit A to this proxy
statement.
Audit Committee. The Audit Committee is responsible for selection and
oversight of our independent auditors, reviewing with the independent auditors
the scope and results of the audit engagement, establishing and monitoring our
financial policies and control procedures, reviewing and monitoring the
provision of non-audit services by our independent auditors and reviewing all
potential conflict of interest situations. The Audit Committee is comprised of
Messrs. Geras, Stukel and Wiskowski. Mr. Geras is considered independent under
the rules of the Nasdaq Stock Market. The Audit Committee did not meet during
our 2003 fiscal year. We presently do not have a director who would qualify as
an "audit committee financial expert" as defined in Item 401(e) of Regulation
S-B. Given our present situation, we feel it would be overly costly and
burdensome and is not warranted to retain an independent director who would
qualify as an "audit committee financial expert." We will consider adding an
audit committee financial expert if our business grows and adding such a person
would be less burdensome.
REPORT OF THE AUDIT COMMITTEE.
The Audit Committee oversees the financial reporting process of Capital
Growth Systems, Inc. on behalf of the company's Board of Directors. Management
has the primary responsibility for the financial statements and the reporting
process, including the systems of internal controls. In fulfilling its oversight
responsibilities, the Audit Committee reviewed and discussed the audited
financial statements for the transition fiscal year ended December 31, 2003 with
management, including a discussion of the quality and acceptability of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Audit Committee discussed with the independent auditors, who are
responsible for expressing an opinion on conformity of those audited financial
statements with generally accepted accounting principles, the independent
auditors' judgments as to the quality and acceptability of the company's
accounting principles and such other matters as are required to be discussed
with the independent auditors under SAS 61, entitled Communications with Audit
Committees. In addition, the Audit Committee has discussed with the independent
auditors the auditors' independence from management and the company, including
the matters in the written disclosures and letter from the independent auditors
to the Audit Committee required by Independence Standard Board Standard No. 1.
The Audit Committee has also considered whether the provision of non-audit
related services by the independent auditors is compatible with maintaining the
independent auditors' independence and found it to be acceptable.
The Audit Committee met with our independent auditors, with and without
management present, and discussed the overall scope of their audit, the results
of their examinations, their evaluations of the company's internal controls and
the overall quality of the company's financial reporting.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the company's Annual Report on Form 10-KSB for the
fiscal year ended May 31, 2003 and for the
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transition period ended December 31, 2003 for filing with the Securities and
Exchange Commission.
Our Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is included as Exhibit B to this Proxy Statement.
Robert Geras
Douglas Stukel
Lee Wiskowski
SHARE OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
CHANGE IN CONTROL
On January 28, 2004, we completed a business combination by entering into
an Agreement and Plan of Merger under which we acquired 100% of the ownership of
Nexvu Technologies, LLC, a Delaware limited liability company, which we will
refer to in this prospectus as "Nexvu." The form of this business combination
was a forward triangular merger with our wholly owned subsidiary, Nexvu
MergerSub, LLC, a Delaware limited liability company. Nexvu was the survivor of
the merger and we serve as its holding company. Nexvu is engaged in the
development and sale of application performance management software to large and
mid-sized companies for use in connection with their computer network systems
and applications.
The form of the transaction was a merger in which we issued 8,558,500
shares of our common stock to the members of Nexvu in exchange for 100% of the
membership interests in Nexvu. In addition, under a loan conversion agreement,
we issued:
- 577,500 shares of common stock, the amount necessary for the
conversion of bridge loans funded by Nexvu members and outstanding
prior to the merger, into shares of our common stock at $0.9523809
per share, or approximately $550,000 in total; and
- warrants expiring December 31, 2006 to purchase common stock at
$1.35 per share based upon 50% warrant coverage with respect to all
bridge loans funded, for a total of 288,750 warrants.
The merger agreement also required a simultaneous closing of the issuance of a
private offering for common stock of not less than $2,000,000, up to a maximum
of $7,000,000, subject to increase in our sole discretion, at $1.35 per share,
and the conversion of bridge loan principal amounts to equity so that we would
own 100% of Nexvu, which would be substantially debt free as of the merger
closing. We raised a total of $7,652,075 from the sale of our common stock in
the private offering through April 15, 2004, in addition to the capital raised
by conversion of the bridge loans.
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The merger agreement further provided that, on closing of the merger, at
least three designees of Nexvu, all of whom were Nexvu's principal officers,
would become members of our Board of Directors. These persons were elected to
the following positions: Scott Allen, CEO and CFO; Rory Herriman, Chief
Technology Officer; and Robert T. Geras, Chairman of the Board. We also entered
into an indemnification agreement at the closing of the merger in which we
agreed to indemnify and hold harmless all five of our directors against
specified liabilities for actions taken in good faith on our behalf or on behalf
of Nexvu.
The consideration for our merger with Nexvu was determined in arms-length
negotiations between Nexvu and us and includes a premium over the net book value
of the assets acquired based upon our own assessment of the market value of
Nexvu's assets and the benefits of combining Nexvu with us. Nexvu had raised in
excess of $4,000,000 of capital from its founders and early investors prior to
the merger with us.
The merger operated as a change of control because after the merger the
owners of Nexvu held approximately 64% of our common stock, and as a result of
three of Nexvu's officers being named to our board of directors.
BENEFICIAL OWNERSHIP
The following table sets forth, as of May 21, 2004, the names, addresses,
amount and nature of beneficial ownership and percent of such ownership of:
- each person known to our to be the beneficial owner of more than
five percent of our common stock;
- each director; and
- all directors and executive officers, as a group.
Except as otherwise indicated in the footnotes to the table, the persons named
below have sole voting and investment power with respect to the shares
beneficially owned by them. In general, a person is deemed to be a "beneficial
owner" of a security if that person has or shares the power to vote or direct
the voting of the security, or the power to dispose of or to direct the
disposition of the security. A person is also deemed to be a beneficial owner of
any securities of which the person has the right to acquire beneficial ownership
within 60 days. The beneficial ownership percentages are based on 16,000,454
shares outstanding as of May 21, 2004.
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NAME AND ADDRESS OF BENEFICIAL AMOUNT AND NATURE OF
OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
----- ----------------------- ----------------
Robert T. Geras 2,257,837(2) 14.01%
Carl C. Greer Trust 2,266,282(3) 13.92%
Craig Siegler 1,459,278(4) 9.03%
David Lies 1,304,375(5) 8.09%
Balkin Family Limited Partnership 1,093,186(6) 6.79%
Rory Herriman(7) 618,871(8) 3.77%
Scott Allen(7) 591,678(9) 3.60%
Douglas Stukel(10) 434,482(11) 2.67%
Lee Wiskowski(10) 325,407(12) 2.00%
All Directors and Executive Officers as a 4,228,275 24.20%
Group (5 persons)
(1) Except pursuant to applicable marital property laws or as indicated in the
footnotes to this table, to our knowledge, each stockholder identified in
the table possesses sole voting and investment power with respect to all
common stock shown as beneficially owned by the stockholder.
(2) Includes warrants to purchase 111,111 shares held by Mr. Geras. Mr. Geras'
business address is 55 East Erie Street, Suite 2905, Chicago, Illinois
60611.
(3) Includes warrants held by the Carl C. Greer Trust to acquire 277,778
shares. The business address of the trust is c/o Thomas Floyd, 4501 West
127th Street, Suite D, Alsip, Illinois 60803.
(4) Includes warrants held by Mr. Siegler to acquire 162,500 shares. Mr.
Siegler's business address is 388 Melford Road, Deerfield, Illinois 60035.
(5) Includes warrants to purchase 111,111 held by Mr. Lies, 97,392 shares
owned by Mr. Lies' wife, and warrants to purchase 9,259 shares held by Mr.
Lies' wife. Mr. Lies disclaims beneficial ownership of shares held by his
wife or issuable upon the exercise of warrants held by his wife. The
address of Mr. Lies is 1210 Sheridan Road, Wilmette, Illinois 60091.
(6) Includes warrants held by the Balkin Family Limited Partnership to acquire
92,593 shares. The address of the partnership is 1145 Green Bay Road,
Glencoe, Illinois 60022.
(7) The business address of Mr. Herriman and Mr. Allen is Nexvu Technologies,
LLC, 1100 East Woodfield Road-Suite 100, Schaumburg, Illinois 60173.
(8) Includes options to purchase 430,000 shares held by Mr. Herriman.
(9) Includes options to purchase 430,000 shares held by Mr. Allen.
(10) The business address of Mr. Wiskowski and Mr. Stukel is 980 N. Michigan
Avenue, Suite 1120, Chicago, Illinois 60611.
(11) Includes 250,000 shares issuable upon the exercise of a warrant held by
Mr. Stukel.
(12) Includes 72,407 shares owned by Grander, L.L.C., of which Mr. Wiskowski is
the sole member, and 250,000 shares issuable upon the exercise of a
warrant held by Mr. Wiskowski.
Currently there is no market for our common stock, nor is any market
likely to develop in the near future. As of May 21, 2004, we had 195 holders of
record of our common stock
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Our executive officers, directors and stockholders beneficially owning
more than 10% of our common stock are required under the Securities Exchange Act
of 1934 to file reports of
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ownership of our common stock with the Securities and Exchange Commission.
Copies of those reports must also be furnished to us. Based solely upon a review
of the copies of reports furnished to us and written representations that no
other reports were required, we believe that during the preceding year all
filing requirements applicable to executive officers, directors and stockholders
beneficially owning more than 10% of our common stock have been complied with.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
GENERAL INFORMATION ON EXECUTIVE COMPENSATION
Through December 31, 2003, neither of our directors or officers had
received any salary or other compensation of any kind, other than reimbursement
for out-of-pocket expenses incurred on our behalf, during the fiscal year ended
May 31, 2003 or the transition period of June 1, 2003 through December 31, 2003.
As a result of the merger with Nexvu Technologies, LLC, we will compensate
our directors and officers for their services to us. The agreements we have
entered into to date with our executive officers are described below.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with each of Scott Allen and
Rory Herriman under which each is entitled to a base salary of $175,000 per
year. Under these agreements, each of Mr. Allen and Mr. Herriman may receive
bonuses in the discretion of the Board of Directors, with a target bonus of 50%
of base salary. Mr. Allen and Mr. Herriman are each entitled to receive under
their respective employment agreements, options to acquire 430,000 shares of our
common stock under our Long-Term Incentive Plan, vesting over a four-year period
through January 2, 2007, with acceleration in the event of a change in control.
In addition, each of Mr. Allen and Mr. Herriman is entitled to a bonus in the
event of a successful change in control, such as a merger or sale of our
Company, equal to the lesser of 299% of their base salary as of the date of the
change in control, or one percent of the amount by which the value of the
transaction to our stockholders exceeds the product of the highest prior price
at which we sold our shares, multiplied by the number of our outstanding shares
of ours as of the date the change of control occurs.
Each employment agreement has a term ending at the end of the calendar
year and will automatically renew for additional one-year periods unless
terminated by us or the executive on written notice at least two months before
expiration of the current term. Under the agreements, if employment is
terminated without cause, or the agreement does not automatically renew, he is
entitled to receive severance of one year's pay, payable in regular monthly
increments. The agreements also provide for a lump sum payment of 90 days' pay
in the event of death or disability.
LONG-TERM INCENTIVE PLAN
In December 2003, we adopted the 2003 Long-Term Incentive Plan for key
employees and other persons providing assets or services to us. The plan
provides for the issuance of stock-based awards to key employees as part of
their overall compensation. A total of 2,285,000
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restricted shares of common stock, stock options or other equity-based
compensation can be issued under the plan. It is expected that a substantial
portion of these options will be allocated to existing management and other
persons assisting us in our endeavors. Presently, we have issued 1,691,500
restricted shares under the plan.
PROPOSAL TO CHANGE OUR NAME FROM CAPITAL GROWTH SYSTEMS, INC.
TO NEXVU BUSINESS SOLUTIONS, INC.
Our Board of Directors recommends changing our name from Capital Growth
Systems, Inc. to Nexvu Business Solutions, Inc. in order to better reflect our
current and planned future operations as a result of our recent acquisition of
Nexvu Technologies, LLC.
The currently outstanding stock certificates evidencing shares of our
common stock bearing the name "Capital Growth Systems, Inc." will continue to be
valid and represent shares of our common stock following the name change. In the
future, new certificates will be issued bearing our new name, but this will in
no way affect the validity of your current stock certificates.
The change in our name is reflected in the proposed Articles of Amendment
to our Articles of Incorporation included as Exhibit C to this proxy statement.
However, this proposal is not dependent on stockholders approving our
reincorporation, described below. If this proposal is approved by stockholders,
but our reincorporation to Delaware is not approved by stockholders, we intend
to amend our current Articles of Incorporation filed in Florida to reflect the
change in our corporate name.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
PROPOSAL TO CHANGE OUR NAME TO NEXVU BUSINESS SOLUTIONS, INC.
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Our Articles of Incorporation currently authorize us to issue 25,000,000
shares of common stock and 5,000,000 shares of preferred stock, par value
$0.0001 per share. As of May 21, 2004, we had issued and outstanding 16,000,454
shares of common stock, leaving us, in the opinion of our Board of Directors,
with an insufficient number of shares of common stock available for issuance
necessary for us to efficiently continue and increase the size of our
operations. Accordingly, the Board of Directors recommends an increase in the
number of shares of common stock we are authorized to issue from 25,000,000
shares to 50,000,000 shares.
The additional shares of common stock to be authorized for issuance upon
the adoption of the above amendment would possess rights identical to the
currently authorized common stock. The stockholders of common stock are entitled
to one vote for each share held of record on all matters to be voted on by the
stockholders. All voting is on a non-cumulative basis. The stockholders of
common stock do not have any preemptive rights, conversion rights, or applicable
redemption or sinking fund provisions. The amendment to authorize the issuance
of additional shares of common stock will not have any effect on the par value
of the common stock. Nevertheless, the issuance of additionally authorized
shares of common stock would affect the
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voting rights of our current stockholders because there would be an increase in
the number of outstanding shares entitled to vote on corporate matters,
including the election of directors, if and when any of these shares of common
stock are issued in the future.
If the Board of Directors determines that an issuance of shares of our
common stock is in our best interest and our stockholders' best interest, the
issuance of additional shares would have the effect of diluting the earnings per
share or book value per share of the outstanding shares of common stock or the
stock ownership or voting rights of a stockholder.
An increase in the number of authorized shares of common stock will enable
us to take advantage of various potential business opportunities through the
issuance of our securities, including, among other things: issuing stock
dividends to existing stockholders; providing equity incentives to employees;
officers or directors, establishing certain strategic relationships with other
companies; and expanding our business through acquisitions. We have no present
agreements to acquire any businesses.
POTENTIAL ANTI-TAKEOVER EFFECTS OF THE AMENDMENT
The increase in the number of authorized shares of common stock and the
subsequent issuance of all or a portion of those shares could have the effect of
delaying or preventing a change of control without further action by our
stockholders. Subject to applicable regulatory requirements, we could issue
shares of authorized and unissued common stock in one or more transactions that
would make a change of control more difficult and therefore less likely. Any
issuance of additional shares could have the effect of diluting the earnings per
share and book value per share of the outstanding shares of common stock or the
stock ownership and voting rights of a person seeking to obtain control of our
company.
The proposal to increase our authorized shares is not dependent on
stockholders approving our reincorporation, described below. If this proposal is
approved by stockholders, but our reincorporation to Delaware is not approved by
stockholders, we intend to amend our current Articles of Incorporation to
reflect the increase in authorized shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
PROPOSAL TO INCREASE OUR AUTHORIZED SHARES FROM 25,000,000 TO 50,000,000.
PROPOSAL TO CHANGE OUR STATE OF INCORPORATION FROM FLORIDA TO DELAWARE
We propose to reincorporate from the State of Florida to the State of
Delaware. The reincorporation will be effected pursuant to an Agreement and Plan
of Merger, dated as of April 15, 2004, by and between us and Nexvu Business
Solutions, Inc., a Delaware corporation and our wholly-owned subsidiary, which
we will refer to as "Nexvu Delaware." On April 13, 2004 and April 15, 2004,
respectively, our board of directors and that of Nexvu Delaware unanimously
approved the merger agreement, and subsequently we, as the sole stockholder of
Nexvu Delaware, adopted the merger agreement. The merger agreement is included
as Exhibit D to this proxy statement.
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REASONS FOR THE REINCORPORATION
Delaware is a nationally recognized leader in adopting and implementing
comprehensive and flexible corporate laws. The General Corporation Law of the
State of Delaware is frequently revised and updated to accommodate changing
legal and business needs. With our growth and changes in the composition of our
management and board of directors in the recent year, we think it will be
beneficial to us and our stockholders to obtain the benefits of Delaware
corporate law.
Delaware courts have developed considerable expertise in dealing with
corporate legal issues and produced a substantial body of case law construing
Delaware corporate laws, with multiple cases concerning areas that no Florida
court has considered. Because our judicial system is based largely on legal
precedents, the abundance of Delaware case law should serve to enhance the
relative clarity and predictability of many areas of corporate law, which should
offer added advantages by allowing our Board of Directors and management to make
corporate decisions and take corporate actions with greater assurance as to the
validity and consequences of those decisions and actions.
Reincorporation from Florida to Delaware also may make it easier to
attract future candidates willing to serve on our board of directors, because
many of these candidates already will be familiar with Delaware corporate law,
including provisions relating to director indemnification, from their past
business experience.
ANTI-TAKEOVER IMPLICATIONS
Delaware, like many other states, permits a corporation to include in its
certificate of incorporation or by-laws or to otherwise adopt measures designed
to reduce a corporation's vulnerability to unsolicited takeover attempts. Our
Board of Directors, however, is not proposing the reincorporation merger to
prevent a change in control and is not aware of any present attempt by any
person to acquire control of us or to obtain representation on our Board of
Directors. Our Board of Directors has no current plans to implement any
defensive strategies to enhance the ability of the Board of Directors to
negotiate with an unsolicited bidder.
With respect to implementing defensive strategies, Delaware law is
preferable to Florida law because of the substantial judicial precedent on the
legal principles applicable to defensive strategies. As a Florida corporation or
a Delaware corporation, we could implement some of the same defensive measures.
As a Delaware corporation, however, we would benefit from the predictability of
Delaware law on these matters.
NO CHANGE IN BUSINESS, MANAGEMENT, JOBS OR PHYSICAL LOCATION
The reincorporation merger will change our legal domicile. However, the
reincorporation merger will not result in any change in headquarters, business,
jobs, management, location of any of our offices or facilities, number of
employees, assets, liabilities or net worth, other than as a result of the costs
incident to the reincorporation merger, which are immaterial. Our management,
including all directors and officers, will remain the same in connection with
the reincorporation merger and will assume identical positions with Nexvu
Delaware. There will be no new employment agreements for executive officers or
other direct or indirect interests of the
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current directors or executive officers in the reincorporation merger as a
result of the reincorporation.
REGULATORY APPROVAL
To our knowledge, the only required regulatory or governmental approval or
filings necessary in connection with the consummation of the reincorporation
merger would be the filing of articles of merger with the Secretary of State of
Florida and the filing of a certificate of merger with the Secretary of State of
Delaware.
NEXVU DELAWARE
Nexvu Delaware, our wholly-owned subsidiary, was incorporated on April 13,
2004, under the name "Nexvu Business Solutions, Inc." exclusively for the
purpose of merging with us. The address and phone number of Nexvu Delaware's
principal office are the same as our current address and phone number. Before
the reincorporation merger, Nexvu Delaware will have no material assets or
liabilities and will not have carried on any business. Upon completion of the
reincorporation merger, the rights of the stockholders of Nexvu Delaware will be
governed by Delaware corporate law and the Certificate of Incorporation and the
By-laws of Nexvu Delaware. The Delaware Certificate of Incorporation and the
Delaware By-laws are attached as Exhibits E and F to this proxy statement,
respectively.
THE MERGER AGREEMENT
The merger agreement provides that we will merge with and into Nexvu
Delaware, with Nexvu Delaware being the surviving corporation. Under the merger
agreement, Nexvu Delaware will assume all of our assets and liabilities,
including obligations under our outstanding indebtedness and contracts, and we
will seek to exist as a corporate entity. Our existing board of directors and
officers will become the board of directors and officers of Nexvu Delaware for
identical terms of office. Our subsidiary will become a subsidiary of Nexvu
Delaware.
At the effective time of the reincorporation merger, each outstanding
share of our common stock, $0.0001 par value, automatically will be converted
into one share of common stock of Nexvu Delaware, $0.00001 par value. You will
not have to exchange your existing stock certificates for stock certificates of
Nexvu Delaware. Instead, the surviving corporation intends to issue substitute
stock certificates to replace the existing certificates and will notify you when
these new certificates are issued. The merger agreement was unanimously approved
by our Board of Directors and the Board of Directors of Nexvu Delaware and later
was adopted by us, as the sole stockholder of Nexvu Delaware. Approval of the
reincorporation proposal, which constitutes approval of the merger agreement,
requires the affirmative vote of the holders of a majority of our common stock.
Under the merger agreement, we and Nexvu Delaware promise to take all
actions that Delaware law and Florida law require for us and Nexvu Delaware to
effect the reincorporation merger. Nexvu Delaware also promises to qualify to do
business as a foreign corporation in the states in which we are qualified to do
business before we and Nexvu Delaware complete the reincorporation merger.
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The merger agreement provides that the respective obligations of us and
Nexvu Delaware under the merger agreement are subject to the following
conditions:
- Our stockholders and the sole stockholder of Nexvu Delaware have
approved or adopted, as the case may be, the merger agreement;
- No court or governmental authority, whether by statute, rule,
regulation, executive order, decree, ruling, injunction or other
order, has prohibited, restrained, enjoined or restricted the
consummation of the reincorporation merger; and
- Holders of our common stock holding no more than one percent of our
outstanding common stock continue to have a right to exercise
appraisal rights in connection with the merger.
If we and Nexvu Delaware effect the reincorporation merger, all of our
employee benefit plans, including stock option and other equity-based plans,
would be continued by the surviving corporation, and each stock option and other
equity-based award issued and outstanding pursuant to these plans would be
converted automatically into a stock option or other equity-based award with
respect to the same number of shares of common stock of the surviving
corporation, upon the same terms and subject to the same conditions as set forth
in the applicable plan under which the award was granted and in the agreement
reflecting the award.
If our stockholders approve the reincorporation merger, we and Nexvu
Delaware plan to complete the reincorporation merger as soon as practicable
after the annual meeting. The merger agreement provides that our Board of
Directors or that of Nexvu Delaware may abandon the reincorporation merger for
any reason, notwithstanding stockholder approval. If the stockholders do not
approve the reincorporation merger, we and Nexvu Delaware would not consummate
the merger and we would continue to operate as a Florida corporation.
Under Florida law, our stockholders have the right to dissent with respect
to the reincorporation proposal and to receive from us payment in cash for the
fair value of their shares of common stock if we and Nexvu Delaware consummate
the reincorporation merger. see "Rights of Dissenting Stockholders" below.
VOTE REQUIRED FOR THE REINCORPORATION PROPOSAL
Florida law requires the affirmative vote of a majority of the holders of
our common stock to approve the merger agreement pursuant to which we and Nexvu
Delaware would effect the reincorporation merger. A vote in favor of the
reincorporation proposal is a vote to approve the merger agreement and therefore
the reincorporation merger. A vote in favor of the reincorporation proposal is
also effectively a vote in favor of the certificate of incorporation of Nexvu
Delaware and the by-laws of Nexvu Delaware. If our stockholders approve the
merger agreement and the reincorporation merger becomes effective, the
certificate of incorporation of Nexvu Delaware and the by-laws of Nexvu Delaware
in effect immediately before the effective date of the reincorporation merger
would become the certificate of incorporation and by-laws of the surviving
corporation. The Certificate of Incorporation and By-laws of Nexvu Business
Solutions, Inc. are attached to this proxy statement as Exhibits E and F,
respectively.
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COMPARISON OF STOCKHOLDER RIGHTS BEFORE AND AFTER THE REINCORPORATION
The By-laws and Certificate of Incorporation of Nexvu Delaware have been
drafted so that the impact of the reincorporation merger on stockholder rights
will be minimal. However, there are some material changes between our Articles
of Incorporation and the corresponding organizational documents for Nexvu
Delaware. First, the par value of the shares of common and preferred stock of
Nexvu Delaware will be $0.00001, as compared with $0.0001 for our common and
preferred stock. Second, Nexvu Delaware's by-laws will permit its Board of
Directors to fix the exact number of its directors, so long as the number is
between two and nine. Our by-laws do not grant this power to our Board of
Directors. Third, under the Certificate of Incorporation of Nexvu Delaware, the
Board of Directors may amend the corporation's by-laws, although this does not
limit the ability of the stockholders to also amend the by-laws. Power to amend
our by-laws rests only with our stockholders.
Other than as described in the preceding paragraph, the proposal presented
in this proxy to increase our authorized shares, there will be no material
changes in stockholder rights. As a result, the voting rights, votes required
for the election of directors and other matters, removal of directors,
indemnification provisions, procedures for amending our Articles of
Incorporation, procedures for the removal of directors, dividend and liquidation
rights, examination of books and records and procedures for setting a record
date will not change in any material way. There are, however, material
differences between the Florida Business Corporation Act, or "FBCA," and the
Delaware General Corporation Law, or "DGCL," which are summarized in the chart
below. This chart is not intended as an exhaustive list of all differences, and
is qualified in its entirety by reference to Florida and Delaware law.
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FLORIDA LAW DELAWARE LAW
----------- ------------
REMOVAL OF DIRECTORS The FBCA entitles stockholders of Florida Under the DGCL, the affirmative vote of a majority
corporations to remove directors either for cause of the shares entitled to vote for the election of
or without cause, unless the articles of directors is required to remove directors, with or
incorporation provide that removal may be only for without cause, subject to specified exceptions
cause. Our articles of incorporation do not relating to directors elected by the holders of a
require that a director may be removed only for class or series, and corporations that have a
cause. classified board of directors. Directors elected by
a particular voting group may only be removed by the
stockholders of that voting group.
INTERESTED DIRECTOR The FBCA provides that a contract or other Under the DGCL, specified contracts or transactions
transaction between a Florida corporation and any in which one or more of a corporation's directors
of its directors or any entity in which one of its has an interest are not void or voidable solely
directors or officers holds a position of office because of such interest if such contract or
or a financial interest will not be void because transaction:
of such relationship or interest or because that
director was present at the meeting of directors - is ratified by the corporation's stockholders or
which authorized that transaction if: a majority of disinterested members of the board
of directors or a committee of the board if the
- the fact of the relationship or interest is material facts of the contract or transaction
disclosed or known to the board and the are disclosed or known or
transaction is authorized by a sufficient
number of votes when the vote of the - was fair to the corporation at the time it was
interested director is excluded; approved. Any ratification of such a contract or
transaction by the stockholders must be made by
- the fact of the relationship or interest is a majority of all stockholders in good faith.
disclosed or known to the stockholders
entitled to vote and they authorize the
contract or transaction; or
- the contract or transaction is fair and
reasonable to the corporation.
ACTION BY WRITTEN Except as otherwise provided in a corporation's Under the DGCL, a contract or other transaction
CONSENT articles of incorporation, the FBCA generally between a Delaware corporation and any of its
provides that action of stockholders may be taken directors or any entity in which one of its
without a meeting if signed written consents are directors or officers holds a position of office or
obtained by the holders of not less than a minimum a financial interest will not be void because of
number of votes that would be necessary to such relationship or interest, because that director
authorize or take such action at a meeting at was present at the meeting of directors at which the
which all shares entitled to
20
vote thereon were present and voted. Our articles transaction was authorized or because the interested
do not provide otherwise. directors vote was counted in connection with the
authorization if:
- the material facts relating to the relationship
and contract or transaction are disclosed or
known to the board and the board authorizes the
transaction by a sufficient number of votes of
disinterested directors, even if the
disinterested directors are less than a quorum;
- the material facts relating to the relationship
and contract or transaction are disclosed or
known to the stockholders, and the contract or
transaction is specifically approved in good
faith by a stockholder vote; or
- the contract or transaction is fair to the
corporation.
CERTIFICATE OF The FBCA generally requires approval by a majority The DGCL provides that the certificate of
INCORPORATION of directors and by holders of a majority of the incorporation of a Delaware corporation may be
AMENDMENT OF ARTICLES shares entitled to vote on any amendment to a amended upon adoption by the board of directors of
OF INCORPORATION AND Florida corporation's articles of incorporation. a resolution setting forth the proposed amendment
In addition, the amendment must be approved by a and declaring its advisability, followed by the
majority of the votes entitled to be cast on the affirmative vote of a majority of the outstanding
amendment by any class or series of shares with shares entitled to vote. It also provides that a
respect to which the amendment would create certificate of incorporation may provide for a
dissenters' rights. The board of directors must greater or lesser vote than would otherwise be
recommend the amendment to the stockholders, required by the DGCL. Nexvu Delaware's certificate
unless the board of directors determines that of incorporation does not so provide.
because of conflict of interest or other special
circumstances it should make no recommendation and
communicates the basis for its determination to
the stockholders with the amendment.
AMENDMENT OF BY-LAWS Our by-laws state that the power to amend or Under the DGCL, stockholders have the authority to
repeal the by-laws is vested in our stockholders. make, alter, amend or repeal the by-laws of a
corporation and this power may be delegated to the
board of directors in the certificate of
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incorporation. Nexvu Delaware's by-laws provide
that the directors may amend the certificate of
incorporation, but this power does not alter the
power of the stockholders to also amend the
by-laws.
STOCKHOLDER ACTION A majority of the shares entitled to vote, When a quorum is present, the vote of the holders
represented in person or by proxy shall constitute of a majority of each class of the shares of stock
a quorum of a meeting of stockholders. Generally, having voting power present in person or
and except for specified fundamental actions, the represented by proxy shall decide any question
affirmative vote of a majority of the shares brought before such meeting, unless the question is
represented at the meeting and entitled to vote on one upon which, by express provision of the DGCL or
the subject matter thereof constitutes the act of of the certificate of incorporation, a different
the stockholders. vote is required, in which case such express
provision shall govern and control the decision of
such question.
CONSIDERATION FOR Shares may be issued for consideration consisting Shares with par value may be issued for
ISSUANCE OF SHARES of any tangible or intangible property or benefit consideration in a form determined by the board of
to the corporation, including cash, promissory directors.
notes, services performed, promises to perform
services evidenced by a written contract, or other In the absence of "actual fraud," in the
securities of the corporation. transaction, the judgment of the board as to the
value of the consideration is conclusive.
Before the corporation issues shares, the board of
directors must determine that the consideration No provisions restrict the ability of the board to
received or to be received for shares to be issued authorize the issuance of stock for a promissory
is adequate and the board's determination is note of any type, including an unsecured or
conclusive to the extent relevant in determining nonrecourse note or a note secured only by the
whether the shares are validly issued, fully paid, shares.
and non-assessable.
Shares with par value cannot be issued for
consideration with a value that is less than the
par value. Shares without par value can be issued
for any consideration determined to be valid by the
board.
LOANS TO DIRECTORS Any Florida corporation may lend money to, Any Delaware corporation may lend money to,
guarantee any obligation of, or otherwise assist guarantee any obligation of, or otherwise assist
any officer, director, or employee of the any officer, director, or employee of the
corporation or of a subsidiary, whenever, in the corporation or of a subsidiary, if, in the judgment
judgment of the board of of the
22
directors, the loan, guaranty, or assistance may board of directors, the loan, guaranty, or
reasonably be expected to benefit the corporation. assistance may reasonably be expected to benefit
The loan, guaranty, or other assistance may be the corporation. The loan, guaranty, or other
with or without interest and may be unsecured or assistance may be with or without interest and may
secured in such manner as the board of directors be unsecured or secured in such manner as the board
shall approve, including, without limitation, a of directors shall approve, including, without
pledge of shares of stock of the corporation. limitation, a pledge of shares of stock of the
These loans, guarantees and other types of corporation..
assistance are subject to the provisions outlined
in "Interested Director" above.
SPECIAL MEETINGS Under our by-laws, special meetings of The DGCL provides that special meetings of the
stockholders may be called by the Chairman of the stockholders of a corporation may be called by the
Board, the President, the Board of Directors, or corporation's board of directors or by such other
by holders of at least 10% of our outstanding persons as may be authorized in the corporation's
shares, for the purpose stated in the notice that certificate of incorporation or by-laws. Nexvu
the meeting is called. Delaware's by-laws provide that holders of at least
10% of the company's outstanding shares may call a
meeting for a purpose stated in the notice that the
meeting is called.
STANDARD OF CONDUCT FOR Under the FBCA, directors also have a fiduciary Under the DGCL, the standards of conduct for
DIRECTORS relationship to their corporation and its directors have developed through written opinions
stockholders and, as such, are required to of the Delaware courts. Generally, directors of
discharge their duties as a director in good faith Delaware corporations are subject to a duty of
with the care an ordinarily prudent person in a loyalty and a duty of care. The duty of loyalty has
like position would exercise under similar been said to require directors to refrain from
circumstances and in a manner they reasonably self-dealing and the duty of care requires
believe to be in the best interests of the directors managing the corporate affairs to use
corporation. In discharging his or her duties, a that amount of care which ordinarily careful and
director may consider such factors as the director prudent persons would use in similar circumstances.
deems relevant, including the long-term prospects In general, gross negligence has been established
and interests of the corporation and its as the test for breach of the standard for the duty
stockholders, and the social, economic, legal, or of care in the process of decision-making by
other effects of any action on the employees, directors of Delaware corporations. When directors
suppliers, customers of the corporation or its act consistently with their duties of loyalty and
subsidiaries, the communities and society in which care, their decisions generally are presumed to be
the corporation or its subsidiaries operate, and valid under the business judgment rule.
the economy of the state and the nation.
INDEMNIFICATION OF The FBCA permits a corporation to indemnify The DGCL generally permits indemnification of a
DIRECTORS AND OFFICERS officers, directors, employees and agents against person who acted in good faith and in a manner that
liability for actions taken he
23
in good faith and in a manner they reasonably reasonably believed to be in or not opposed to the
believed to be in, or not opposed to, the best best interests of the corporation. Nexvu Delaware's
interests of the corporation, and with respect to by-laws do not depart from this standard. In
any criminal action, which they had no reasonable general, the indemnification provided for by the
cause to believe was unlawful. The FBCA provides DGCL is not deemed to be exclusive of any
that a corporation may advance reasonable expenses non-statutory indemnification rights provided to
of defense to a director or officer upon receipt directors, officers and employees under any by-law,
of an undertaking to reimburse the corporation if agreement or vote of stockholders or disinterested
indemnification is ultimately determined not to be directors.
appropriate, and to other employees and agents
upon such terms and conditions as the board deems
appropriate. The corporation must reimburse a
successful defendant for expenses, including
attorneys' fees, actually and reasonably incurred.
LIMITATION OF LIABILITY The FBCA provides that a director is not The DGCL permits a corporation to include in its
personally liable for monetary damages to the certificate of incorporation a provision
corporation or any other person for any action or eliminating or limiting the personal liability of a
failure to act regarding corporate management or director to the corporation or its stockholders for
policy unless the director breached or failed to monetary damages for beach of fiduciary duty as a
perform his duties as a director and such breach director, except that such provision may not limit
or failure constitutes (a) a violation of criminal the liability of a director for (a) any breach of
law, unless the director had reasonable cause to the director's duty of loyalty to the corporation
believe his conduct was lawful or had no or its stockholders, (b) acts or omissions not in
reasonable cause to believe his conduct was good faith or which involve intentional misconduct
unlawful, (b) a transaction from which the or a knowing violation of law, (c) liability under
director derived an improper personal benefit, (c) the DGCL for unlawful payment of dividends or stock
a circumstance for which a director is liable for purchases or redemptions, or (d) any transaction
an unlawful distribution, (d) in a derivative from which the director derived an improper
action or an action by a stockholder, constitutes personal benefit. Nexvu Delaware's Certificate
conscious disregard for the best interests of the contains a provision limiting the liability of its
corporation or willful misconduct or (e) in a directors in this manner.
proceeding other than a derivative action or an
action by a stockholder, constitutes recklessness
or an act or omission which was committed in bad
faith, with malicious purpose or in a manner
exhibiting wanton and willful disregard of human
rights, safety or property.
DIVIDENDS The FBCA permits a corporation's board of The DGCL permits a corporation to declare and pay
directors to make distributions to its dividends out of surplus or, if there is no
stockholders unless, after giving effect to such surplus, out of net profits for the fiscal year in
distribution, the corporation would be unable to which the dividend is declared and/or for the
pay its debts as they become due in the usual preceding fiscal year as long as the amount of
course of business, or would be left with total capital of the corporation
assets that are less than the
24
sum of its total liabilities plus its obligations following the declaration and payment of the
upon dissolution to satisfy preferred stockholders dividend is not less than the aggregate amount of
whose preferential rights are superior to those the capital represented by the issued and
receiving the distribution. Under the FBCA, a outstanding stock of all classes having a
corporation's redemption of its own common stock preference upon the distribution of assets. In
is deemed a distribution. addition, the DGCL generally 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.
VOTE ON CERTAIN Under the FBCA, and subject to the exceptions The DGCL generally provides that, unless otherwise
FUNDAMENTAL ISSUES discussed below, the approval of a merger, specified in a corporation's certificate of
dissolution or sale of all or substantially all of incorporation or unless the provisions of the DGCL
a corporation's assets other than in the regular relating to business combinations are applicable,
course of business generally requires the a sale or other disposition of all or
recommendation of the corporation's board of substantially all of the corporation's assets, a
directors and an affirmative vote of holders of a merger or consolidation of the corporation with
majority of the corporation's outstanding shares. another corporation or a dissolution of the
Unless required by the articles of incorporation, corporation requires the affirmative vote of the
however, the vote of the stockholders of a board of directors plus the affirmative vote of a
corporation surviving a merger is not required if: majority of the outstanding stock entitled to vote
thereon. However, under the DGCL, unless required
- the articles of incorporation of the surviving by its certificate of incorporation, no vote of
corporation will not substantially differ from the stockholders of a constituent corporation
its articles of incorporation before the surviving a merger is necessary to authorize such
merger; and merger if:
- each stockholder of the surviving corporation - the agreement of merger does not amend the
immediately prior to the effective date will certificate of incorporation of any
hold the same number of shares, with identical constituent corporation;
designations, preferences, limitations and
relative rights immediately after the merger; - each share of stock of such constituent
and corporation outstanding before the merger is
to be an identical outstanding or treasury
This transaction does qualify for the above share of the surviving corporation after such
exception, and therefore adoption by the board of merger;
directors and approval by a majority vote of the
stockholders is required. - either no shares of common stock of the
surviving corporation and no shares,
securities or obligations convertible into
such common stock are to be issued under such
25
agreement of merger, or the number of shares
of common stock issued or so issuable does not
exceed 20% of the number of shares of stock
outstanding immediately prior to such merger;
and other specified conditions are satisfied.
In addition, the DGCL provides that a parent
corporation that is the record holder of at least
90% of the outstanding shares of each class of
stock of a subsidiary may merge the subsidiary
into the parent corporation without the approval
of such subsidiary's stockholders or board of
directors. Neither Nexvu Delaware's certificate of
incorporation nor its by-laws alter this
stockholder approval requirement.
BUSINESS COMBINATION Section 607.0901 of the FBCA, informally known as Section 203 of the DGCL limits specified business
RESTRICTIONS the "fair price statute," provides that the combinations of Delaware corporations with
approval of the holders of two-thirds of the interested stockholders. Under the DGCL, an
voting shares of a corporation, other than the "interested stockholder," defined as a stockholder
shares beneficially owned by an "interested whose beneficial ownership in the corporation is
shareholder," as defined below, would be required at least 15% of the outstanding voting securities,
to effectuate specified transactions, including a cannot enter specified business combinations with
merger, consolidation, specified sales of assets, the corporation for a period of three years
specified sales of shares, liquidation or following the time that such stockholder became an
dissolution of the corporation and interested stockholder unless:
reclassification of securities involving a Florida
corporation and an interested shareholder, - before such time, the corporation's board of
referred to as an "affiliated transaction." An directors approved either the business
"interested shareholder" is defined as the combination or the transaction in which the
beneficial owner of more than 10% of the stockholder became an interested stockholder;
outstanding voting shares of the corporation. The
above special voting requirement is in addition to - upon consummation of the transaction in which
the vote required by any other provision of the any person becomes an interested stockholder,
FBCA or by a corporation's articles of the interested stockholder owned at least 85%
incorporation. of the voting stock of the corporation
outstanding at the time the transaction
The special voting requirement does not apply if commenced, excluding shares owned by specified
any of the following circumstances: employee stock ownership plans and persons who
are both directors and officers of the
- the affiliated transaction is approved by a
majority of the corporation's disinterested
directors;
- the corporation has not had more than
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300 stockholders of record at any time during corporation; or
the three years preceding the announcement of
the affiliated transaction; - at or subsequent to such time, the business
combination is both approved by the board of
- the interested shareholder has beneficially directors and authorized at an annual or
owned at least 80% of the corporation's voting special meeting of stockholder, not by written
stock for five years preceding the date on consent, by the affirmative vote of at least
which the affiliated transaction is first two-thirds of the outstanding voting stock not
publicly announced or communicated generally owned by the interested stockholder.
to the corporation's stockholders;
A corporation may elect in certificate of
- the interested shareholder beneficially owns incorporation, not to be governed by Section 203
at least 90% of the corporation's voting of the DGCL. The certificate of incorporation of
shares, excluding shares acquired in Nexvu Delaware has a provision stating that the
transactions not approved by a majority of corporation will not be governed by Section 203
disinterested directors;
- the corporation is an investment company
registered under the Investment Company Act of
1940; or
- in the affiliated transaction, consideration
is to be paid to the holders of each class or
series of voting shares and all of the
following conditions are met:
- the cash and fair value of other
consideration to be paid per share to all
holders of voting shares equals the
highest per share price paid by the
interested shareholder, or specified
alternative benchmarks, if higher;
- the consideration to be paid in the
affiliated transaction is in cash or in
the same form as previously paid by the
interested shareholder or if multiple
forms, then in cash or the form used to
acquire the largest number of shares;
- during the portion of the
27
three years preceding the announcement of
the affiliated transaction that the
interested shareholder has been an
interested shareholder, except as approved
by a majority of the disinterested
directors, there has been no failure to
declare and pay at the regular date any
full periodic dividends, no decrease in
dividends, and no increase in the voting
shares owned by the interested
shareholder;
- during this portion of the three-year
period, except as approved by a majority
of the disinterested directors, there has
been no benefit to the interested
shareholder in the form of loans,
guaranties or other financial assistance
or tax advantages provided by the
corporation; and
- unless approved by a majority of the
disinterested directors, a proxy or
information statement describing the
affiliated transaction shall have been
mailed to holders of voting shares at
least 25 days before consummation of the
affiliated transaction.
Section 607.0902 of the FBCA, informally known as
the "control-share acquisition
28
statute," provides that any acquisition by a
person, either directly or indirectly, of
ownership of, or the power to direct the voting
power with respect to, issued and outstanding
"control shares," as defined below, is a
"control-share acquisition." "Control shares" are
shares that, but for this section of the FBCA,
would have voting power with respect to the shares
of a Florida corporation that, when added to all
other shares owned by such person, would entitle
that person to exercise or direct the exercise of
the voting power of the corporation in the
election of directors within any of the following
ranges of voting power:
- one-fifth or more but less than one-third of
all voting power;
- one-third or more but less than a majority of
all voting power; or
- a majority or more of all voting power.
A control-share acquisition must be approved by a
majority of each class of outstanding voting
securities of such corporation, excluding the
shares held or controlled by the person seeking
approval, before the control shares may be voted.
A special meeting of stockholders must be held by
the corporation to approve a control-share
acquisition within 50 days after a request for
such meeting is submitted by the person seeking to
acquire control. The acquisition of shares of the
corporation does not constitute a control-share
acquisition if, among other circumstances, the
acquisition has been approved by the board of
directors of a public corporation before the
acquisition or a merger is effected in compliance
with the applicable provisions of the FBCA, if the
corporation is a party to the agreement of merger.
CUMULATIVE VOTING Under the FBCA, stockholders do not have a right The DGCL provides that the certificate of
to cumulate their votes for directors unless the incorporation of any corporation may grant
articles of incorporation so provide. Our articles stockholders the right to cumulate their votes.
of incorporation do not provide for cumulative Nexvu Delaware's certificate does not grant to
voting. The FBCA stockholders
29
provides that directors are elected by a plurality the right to cumulate votes in the election of
of votes cast by the shares entitled to vote in directors. The DGCL provides that directors are
the election at a meeting at which a quorum is elected by a plurality of votes cast by the shares
present. entitled to vote in the election at a meeting at
which a quorum is present.
DISSENTERS' RIGHTS OF Under the FBCA, any stockholder of a corporation Under the DGCL, appraisal rights may be available
APPRAISAL has the right to dissent from, and obtain fair in connection with a statutory merger or
value of his or her shares in the event of, a consolidation in specified situations. Appraisal
number of corporate actions including but not rights are not available under the DGCL when a
limited to: (i) a plan of merger to which the corporation is to be the surviving corporation and
corporation is a party if the stockholder is no vote of its stockholders is required to approve
entitled to vote on the merger, or if the the merger or consolidation. In addition, no
stockholder is a stockholder of a subsidiary that appraisal rights are available to holders of
is merged with its parent; (ii) consummation of a shares of any class of stock which is either: (i)
plan of share exchange to which the corporation is listed on a national securities exchange or
a party as the corporation the shares of which included on the Nasdaq, or; (ii) held of record by
will be acquired, if the stockholder is entitled more than 2,000 stockholders, unless the
to vote on the plan; (iii) consummation of a sale stockholders are required by the terms of the
or exchange of all, or substantially all, of the merger or consolidation to accept anything other
property of the corporation, other than in the than: (A) shares of the surviving corporation; (B)
usual and regular course of business, if the shares of stock that are listed on a national
stockholder is entitled to vote on the sale or securities exchange or included on Nasdaq or held
exchange; (iv) any corporate action taken, to the of record by more than 2,000 stockholders; (C)
extent the articles of incorporation provide that cash in lieu of fractional shares, or (D) any
a voting or nonvoting stockholder is entitled to combination of the above.
dissent and obtain payment for his or her shares;
and (v) with regard to shares issued before Stockholders who perfect their appraisal rights
October 1, 2003, any amendment to the are entitled to receive cash from the corporation
corporation's articles of incorporation that equal to the value of their shares as established
affect the shareholder's rights in a manner by judicial appraisal. Corporations may enlarge
described in the statute. Unless the articles of these statutory rights by including in their
incorporation of a corporation otherwise provide, certificate of incorporation a provision allowing
dissenters' rights will not be available to the the appraisal rights in any merger or
holders of any shares of any class or series consolidation in which the corporation
which, on the applicable record date, were either participates. Nexvu Delaware's Certificate does
registered on a national securities exchange or not contain a provision enlarging such appraisal
included on Nasdaq or held of record by not fewer rights.
than 2,000 stockholders if the shares had a market
value of at least $10 million. Neither our
articles of incorporation nor our by-laws contain
any provisions granting additional appraisal
rights.
30
ACCOUNTING TREATMENT
The reincorporation merger would be accounted for as a reverse merger
under which, for accounting purposes, we would be considered the acquiror and
the surviving corporation would be treated as the successor to our historical
operations. Accordingly, the historical financial statements of Nexvu
Technologies, LLC, which became our subsidiary as the result of a merger in
January 2004 and which is considered our predecessor for accounting purposes, as
of and for all periods through the date of this proxy statement, would be
treated as the financial statements of the surviving corporation.
APPRAISAL RIGHTS
Stockholders complying with Sections 607.1301, 607.1302, 607.1303,
607.1320, 607.1321, 607.1323, 607.1324 and 607.1326 of the Florida Business
Corporation Act, which we will refer to as the "Florida statute" in this section
are entitled to appraisal rights in connection with the reincorporation merger.
Copies of these provisions of the Florida statute are attached hereto as Exhibit
G.
Section 607.1302 of the Florida statute provides that a stockholder is
entitled to appraisal rights and to obtain payment of the fair value of that
stockholder's shares in the event of, among other things, consummation of a
merger to which the stockholder is entitled to vote.
Under Section 607.1321 of the Florida statute, if a stockholder wishes to
assert appraisal rights in connection with the Merger, he or she must deliver to
us, within 20 days after receiving notice from us that they may be entitled to
such rights, written notice of the stockholder's intent to demand payment if the
merger is completed.
If the merger becomes effective, we must deliver a written appraisal
notice and form, together with financial statements, to all stockholders who
satisfied the requirements of Section 607.1321 of the Florida statute,
specifying the date the corporate action became effective. The form must state,
among other things:
- where the form must be sent;
- where certificates must be deposited and the date by which those
certificates must be deposited;
- a date by which we must receive the completed form;
- an estimate of the fair value of the shares and an offer to pay each
stockholder who is entitled to appraisal rights the fair value.
A stockholder who wishes to exercise appraisal rights must return the form
by the date specified in the notice. Alternatively, a stockholder who is
dissatisfied with our offer of estimated fair value as set forth in the notice
must notify us of his or her estimate of the fair value of shares by the due
date for the form and demand payment of that estimate plus interest. Failure to
return the form and, if applicable, share certificates, or notify us of his or
her estimate of fair value by the due date will cause the stockholder to waive
the right to demand payment.
31
A stockholder may withdraw its exercise of appraisal rights by notifying
us, in writing, by the date designated in the appraisal notice. A stockholder
who fails to withdraw in this manner may not thereafter withdraw without our
written consent. If the stockholder accepts our offer for payment of the
estimated fair value for the shares, payment will be made within 90 days after
our receipt of the form.
The costs and expenses of any dissent proceeding will be determined by the
court and will ordinarily be assessed against us, but costs and expenses may be
assessed against all or some of the dissenting stockholders, in such amounts as
the court deems equitable, to the extent the court finds such dissenting
stockholders acted "arbitrarily, vexatiously or not in good faith" in demanding
payment after receiving an offer of payment from us. The court may also assess
the reasonable fees and expenses of counsel and experts for the respective
parties, in amounts the court finds equitable:
- against us and in favor of any or all dissenting stockholders if the
court finds that we did not substantially comply with the relevant
requirements of Florida law; or
- against us or a dissenting stockholder, 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 the Florida law.
- If the court finds that the services of counsel for any dissenting
stockholder were of substantial benefit to the other dissenting
stockholders similarly situated, and that the fees for the services
should not be assessed against us, the court may award such counsel
reasonable fees to be paid out of the amounts awarded to dissenting
stockholders who were benefited.
The above is only a summary of Florida's dissenters' rights provisions,
and is qualified in its entirety by reference to the provisions thereof, the
text of which is set forth as Exhibit G to this proxy statement. We urge each
stockholder to carefully read the full text of the provisions of Florida law
governing dissenters' rights.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF REINCORPORATION
We intend the reincorporation to be a tax-free reorganization under the
Internal Revenue Code. Assuming the reincorporation qualifies as a
reorganization, the holders of our common stock will not recognize any gain or
loss under the Federal tax laws as a result of the occurrence of the
reincorporation, and neither will Capital Growth Systems, Inc. or Nexvu Business
Solutions, Inc. Each holder will have the same basis in our common stock
received as a result of the reincorporation as that holder has in the
corresponding Capital Growth Systems, Inc. common stock held at the time the
reincorporation occurs.
We have discussed solely U.S. federal income tax consequences and have
done so only for general information. We did not address all of the federal
income tax consequences that may be relevant to particular stockholders based
upon individual circumstances or to stockholders who are subject to special
rules, such as, financial institutions, tax-exempt organizations, insurance
32
companies, dealers in securities, foreign holders or holders who acquired their
shares as compensation, whether through employee stock options or otherwise. We
did not address the tax consequences under state, local or foreign laws.
We based our discussion on the Internal Revenue Code, laws, regulations,
rulings and decisions in effect as of the date of this proxy statement, all of
which are subject to differing interpretations and change, possibly with
retroactive effect. We have neither requested nor received a tax opinion from
legal counsel or rulings from the Internal Revenue Service regarding the
consequences of reincorporation. There can be no assurance that future
legislation, regulations, administrative rulings or court decisions would not
alter the consequences we discussed above.
You should consult your own tax advisor to determine the particular tax
consequences to you of the reincorporation, including the applicability and
effect of federal, state, local, foreign and other tax laws.
EFFECTIVE TIME
If approved by the requisite vote of the holders of shares of our common
stock, it is anticipated that the reincorporation merger, and consequently the
reincorporation, will become effective as soon as practicable after the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
PROPOSAL TO CHANGE OUR STATE OF INCORPORATION FROM FLORIDA TO DELAWARE.
INFORMATION ON AUDITORS
Russell & Atkins, PLC were our auditors for the transition period ended
December 31, 2003 and the fiscal year ended May 31, 2003. We do not expect a
representative of Russell & Atkins, PLC to be present at our annual meeting.
We have not yet selected independent auditors for the year ended December
31, 2004, because the audits of our financial statements for the transition
period ended December 31, 2003 and the fiscal year ended May 31, 2003, and for
Nexvu Technologies, LLC, our predecessor for accounting purposes, have only
recently been completed. Our audit committee intends to make a recommendation to
our board regarding our independent auditors for 2004 in the near future.
AUDIT FEES
For their audit of our annual financial statements and for their review of
the financial statements to our Quarterly Reports on Form 10-Q, Russell &
Atkins, PLC billed us a total of $6,250 for the transition period ended December
31, 2003, $5,750 for the fiscal year ended May 31, 2003 and $4,500 for the
fiscal year ended May 31, 2002.
In addition, Russell & Atkins, PLC also billed us in connection with the
audits of the financial statements of Nexvu Technologies, LLC, which became our
subsidiary as the result of a merger in January 2004. Russell & Atkins billed us
a total of $9,500 for their audit of the financial statements of Nexvu
Technologies for the year ended December 31, 2003, and a total of
33
$8,500 for the audit of the financial statements of Nexvu Technologies for the
year ended December 31, 2002.
AUDIT-RELATED FEES
Russell & Atkins, PLC did not bill us for audit-related fees for the
transition period ended December 31, 2003, the fiscal year ended May 31, 2003,
or the fiscal year ended May 31, 2002.
TAX FEES
Russell & Atkins, PLC did not bill us for tax matters for the transition
period ended December 31, 2003, the fiscal year ended May 31, 2003 or the fiscal
year ended May 31, 2002.
ALL OTHER FEES
We did not pay any other fees to Russell & Atkins, PLC during the
transition period ended December 31, 2003, the fiscal year ended May 31, 2003 or
the fiscal year ended May 31, 2002.
PRE-APPROVAL OF AUDIT AND NON-AUDIT FEES
The Audit Committee has adopted a policy requiring pre-approval by the
committee of all services, both audit and non-audit, to be provided to us by our
independent auditor. The Audit Committee did not meet during 2003, but intends
to follow this policy for 2004 and all future years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 1, 2003, we entered into a Business and Financial Advisory
Agreement with Grander, LLC, of which Lee Wiskowski is the sole member. For its
services, Grander and its designees have been paid a fee of $765,000 for
advising us in connection with the structuring of our acquisition of Nexvu,
establishment of commercial and strategic partnerships and joint ventures,
development of our marketing plans, financial models, financial strategies and
structuring of our private offering.
On March 31, 2004, we entered into Advisory Services Agreements with each
of Lee Wiskowski and Douglas Stukel, both of whom are members of our Board of
Directors. Pursuant to the agreements, Mr. Wiskowski and Mr. Stukel will provide
financial advisory services in connection with mergers and acquisitions and
provide analysis as to strategic alternatives. As consideration for such
services, Mr. Stukel and Mr. Wiskowski were each granted a three-year warrant,
exercisable at $1.35 per share, to purchase 250,000 shares of our common stock
on or before March 31, 2007.
The warrants have a cashless exercise provision. Each of Mr. Stukel and
Mr. Wiskowski has a right of first refusal during the term of his agreement and
for a period of six months thereafter to with respect to merger and
acquisitions.
34
DATE FOR RECEIPT OF PROPOSALS
In order for stockholder proposals to be included in the proxy materials
for the 2005 meeting of stockholders, any such proposal must be received by us
at our executive offices not later than January 28, 2005 and meet all other
applicable requirements for inclusion therein. If a stockholder intends to
present a proposal at our 2005 Annual Meeting, but has not sought the inclusion
of such proposal in our proxy materials, the proposal must be received by us on
or before April 13, 2005, or our management proxies for the 2005 Annual
Meeting will be entitled to use their discretionary voting authority if the
proposal is then raised at the meeting, without any discussion of the matter in
our proxy materials.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Stockholders and other parties interested in communicating directly with
the Chairman of the Board or with our directors as a group may do so by writing
to Chairman of the Board, Capital Growth Systems, Inc., 1100 Woodfield Road,
Schaumburg, Illinois 60173. Stockholder messages will be forwarded directly to
the directors specified by the stockholder.
OTHER BUSINESS
The Board of Directors is not aware of any other matter to come before the
meeting. However, if any such matter does come before the meeting which requires
the vote of the stockholders, it is the intention of the persons named in the
enclosed proxies to vote the shares of common stock represented by the proxies
in accordance with the recommendations of our management and their judgment on
the matter.
By order of the Board of Directors,
/s/ Rory Herriman
-----------------
Rory Herriman, Secretary
Schaumburg, Illinois
May 28, 2004
35
EXHIBIT A
NOMINATING COMMITTEE CHARTER
OF CAPITAL GROWTH SYSTEMS, INC.
The Nominating Committee's responsibilities and powers as delegated by the board
of directors are set forth in this charter. The Committee relies to a
significant extent on information and advice provided by management and
independent advisors. Whenever the Committee takes an action, it exercises its
independent judgment on an informed basis that the action is in the best
interests of the company and its stockholders.
1. STATUS
- The Nominating Committee (the "Committee") is a committee of the
board of directors.
2. PURPOSE
- As set forth herein, the Committee shall, among other things,
discharge the responsibilities of the board of directors relating to
the appropriate size, functioning and needs of the board including,
but not limited to, recruitment and retention of high quality board
members.
3. MEMBERSHIP
- The Committee shall consist of at least three members of the board
of directors as determined from time to time by the board. Each
member shall be "independent" in accordance with the listing
standards of the Nasdaq Stock Market, as amended from time to time,
and as defined in the Corporation's by-laws, as amended from time to
time.
- The board of directors shall elect the members of this Committee at
the first board meeting practicable following the annual meeting of
stockholders and may make changes from time to time pursuant to the
provisions below. Unless a chair is elected by the board of
directors, the members of the Committee shall designate a chair by
majority vote of the full Committee membership.
- A Committee member may resign by delivering his or her written
resignation to the chairman of the board of directors, or may be
removed by majority vote of the board of directors by delivery to
such member of written notice of removal, to take effect at a date
specified therein, or upon delivery of such written notice to such
member if no date is specified.
4. MEETINGS AND COMMITTEE ACTION
- The Committee shall meet at least as often as may be required by the
Corporation's by-laws, as amended from time to time, and at such
times as it deems necessary to fulfill its responsibilities.
Meetings of the Committee shall be called by the chairman
A-1
of the Committee upon such notice as is provided for in the by-laws
of the Corporation's with respect to meetings of the board of
directors. A majority of the members shall constitute a quorum.
Actions of the Committee may be taken in person at a meeting or in
writing without a meeting. Actions taken at a meeting, to be valid,
shall require the approval of a majority of the members present and
voting. Actions taken in writing, to be valid, shall be signed by
all members of the committee. The Committee shall report its minutes
from each meeting to the board of directors.
- The chairman of the Committee shall establish such rules as may from
time to time be necessary or appropriate for the conduct of the
business of the Committee. At each meeting, the chairman shall
appoint as secretary a person who may, but need not, be a member of
the Committee. A certificate of the secretary of the Committee
setting forth the names of the members of the Committee or actions
taken by the Committee shall be sufficient evidence at all times as
to the persons constituting the Committee, or such actions taken.
5. DUTIES AND RESPONSIBILITIES
The Committee's duties and responsibilities include:
- Developing the criteria and qualifications for membership on the
board.
- Developing programs for the continuing education of all directors
and for the orientation of new directors.
- Creating a format to review each of the directors; conducting the
reviews annually in accordance with the format; and distributing the
reviews results to all board members for their review and
consideration.
- Evaluating, on an annual basis, the Committee's performance.
6. POWERS AND AUTHORITY
Subject to such specific constraints as may be imposed by the board of
directors, the board of directors delegates to the Committee all powers and
authority that are necessary or appropriate to fulfill its duties and
responsibilities hereunder, including but not limited to:
- Recruiting, reviewing and nominating candidates for election to the
board of directors or to fill vacancies on the board of directors.
- Reviewing candidates proposed by stockholders, and conducting
appropriate inquiries into the background and qualifications of any
such candidates.
A-2
EXHIBIT B
AUDIT COMMITTEE CHARTER
OF CAPITAL GROWTH SYSTEMS, INC.
ORGANIZATION
The audit committee shall be composed of board members who are independent
of the management of Capital Growth Systems, Inc. (the "Company") and are free
of any relationship that would interfere with their exercise of independent
judgment as a committee member. Such members of the audit committee shall be
able to read and understand fundamental financial statements or will become able
to do so in a reasonable period of time after the appointment to the audit
committee. At least one member of the audit committee shall have past employment
experience in finance or requisite professional certificate in accounting or
other comparable experience or background.
The audit committee shall meet at least two times annually, or more
frequently as circumstances required.
STATEMENT OF POLICY
Senior operating management of the Company, as overseen by the board of
directors, is responsible for the Company's internal controls. The audit
committee shall assist the Company's board members in fulfilling their
responsibility to the stockholders, potential stockholders and investment
community relating to the reliability of financial reporting, the effectiveness
and efficiency of operations and compliance with applicable laws and
regulations. In so doing, the audit committee shall be responsible for
maintaining open communication among board members, the independent auditors and
the management of the Company.
RESPONSIBILITIES
In carrying out its responsibility, the audit committee will:
- Review and recommend to the board the independent auditors to be
selected to audit the financial statements of the Company. In
addition, the committee will review the auditors' fees to determine
whether they are appropriate for the services they render.
- Meet with the independent auditors and management of the Company to
review the scope of the proposed audit for the current year and the
audit procedures to be performed.
- Meet with the independent auditors and management of the Company at
the conclusion of the audit to review the results of the audit,
including any comments or recommendations of the independent
auditors, especially the contents of any auditors' letter to
management.
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- Confirm and assure the independence of the independent auditors and
review any management consulting services provided by the
independent auditors and related fees.
- Pre-approve all audit and non-audit services to be provided by the
independent auditors or their affiliates.
- Verify that no member of the Company's management has been a member
of the independent auditors' audit engagement team within the one
year period preceding the commencement of audit procedures by the
independent auditors.
- Require that the Company's independent auditors inform the audit
committee of what the independent auditors consider to be critical
accounting policies relating to the preparation of the Company's
financial statements.
- Review with the independent auditors and with the financial and
accounting personnel the adequacy and effectiveness of the Company's
internal controls and elicit any recommendations for improving the
internal controls or particular areas where new or more detailed
controls or procedures are desirable.
- Review legal and regulatory matters that may have a material effect
on the financial statements.
- Inquire of management and the independent auditors regarding
significant risks or exposures and assess the steps management has
taken to minimize such risks and exposures to the Company.
- Review the financial statements contained in the Form 10-K annual
report and the annual report to stockholders with management and the
independent auditors.
- Verify that the Company's auditors have reviewed the Company's
financial information prior to filing the Company's Form 10-Q
Reports.
- Inquire of the independent auditors regarding their qualitative
judgments about the appropriateness, not just the acceptability, of
the accounting principles and the clarity of the financial
disclosures. Also inquire of the auditors regarding their reasoning
in accepting or questioning management's significant estimates,
changes or proposed changes in accounting principles and disclosure
practices management employs for new transactions or events.
- Provide sufficient opportunity at all meetings of the audit
committee for the independent auditors to meet with the members of
the audit committee without members of management present. Among the
items to be discussed in these meetings are the independent
auditors' evaluation of the Company's financial personnel and the
cooperation which the independent auditors received during the
course of the audit.
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- Consider whether audit committee members are provided with
appropriate background information and training and, when necessary,
seek such information and training from management or the
independent auditors.
- Submit the minutes of all meetings of the audit committee to the
board.
- Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this
purpose if, in its judgment, that is appropriate.
- Review the Company's proxy statement disclosure concerning the
report of the audit committee and the independence of the members of
the audit committee, include the audit committee charter as an
exhibit to the Company's proxy statement at least once every three
years, review and reassess the adequacy of the audit committee
charter on an annual basis and recommend any changes to the audit
committee charter to the board.
- Review the disclosure made to stockholders related to audit and
non-audit services provided by, and fees paid to, the independent
auditors.
- Discuss earnings press releases, as well as financial information
and earnings guidance provided to analysts and rating agencies.
- When deemed appropriate, obtain advice and assistance from outside
legal, accounting and other advisers.
- Determine that the members of the audit committee satisfy all
requirements of the rules of The Nasdaq Stock Market, Inc.
("Nasdaq"), relating to audit committee members, as amended from
time to time and as interpreted by the Board in its business
judgment, within the time frames established in the rules,
regardless of whether such rules would otherwise be applicable to
the Committee. The Committee shall establish and maintain practices
to provide reasonable assurance of the Company's compliance with the
Nasdaq rules relating to audit committee members. The following
persons are not considered independent pursuant to NASD Rule
4200(a)(14):
(A) a director who is employed by the Company or any of its
affiliates for the current year or any of the past three
years;
(B) a director who accepts any compensation from the Company or
any of its affiliates in excess of $60,000 during the previous
fiscal year, other than compensation for board service,
benefits under a tax-qualified retirement plan, or
non-discretionary compensation;
(C) a director who is a member of the immediate family of an
individual who is, or has been in any of the past three years,
an employee of the Company or any of its affiliates as an
executive officer. Immediate family includes a person's
spouse, parents, children, siblings, mother-in-law,
father-in-law,
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brother-in-law, sister-in-law, son-in-law, daughter-in-law,
and anyone who resides in such person's home;
(D) a director who is a partner in, or a controlling stockholder
or an executive officer of, any for-profit business
organization to which the Company made, or from which the
Company received, payments (other than those arising solely
from investments in the company's securities) that exceed 5%
of the Company's or business organization's consolidated gross
revenues for that year, or $200,000, whichever is more, in any
of the past three years; and
(E) a director who is employed as an executive of another entity
where any of the Company's executives serve on that entity's
Compensation Committee.
- Establish a policy that is disseminated throughout the Company which
provides that any employee of the Company may inform any officer or
director of the Company of any complaints concerning, or the
occurrence of any activity which the employee believes relates to,
misleading accounting, internal accounting or auditing matters.
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EXHIBIT C
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF
CAPITAL GROWTH SYSTEMS, INC.
Pursuant to the provisions of Section 607.1006 of the Florida statutes,
CAPITAL GROWTH SYSTEMS, INC., a corporation organized and existing under and by
virtue of the Florida Business Corporation Act (the "Corporation"), adopts the
following Articles of Amendment to its Articles of Incorporation:
1. The Articles of Incorporation were filed with the Secretary of State
of the State of Florida on September 23, 1999.
2. The Articles of Incorporation are hereby amended by striking Article
I thereof and substituting the following:
ARTICLE I
NAME
The name of the corporation shall be:
NEXVU BUSINESS SOLUTIONS, INC.
The address of the principal office of this corporation shall be:
1100 East Woodfield Road
Schaumburg, Illinois 60173
3. This Amendment was adopted by the Corporation's Shareholders at the
Corporation's Annual Meeting of Shareholders held on June 30, 2004.
The number of votes cast were sufficient for approval.
Dated as of the ___th day of May, 2004.
/s/ SCOTT ALLEN
--------------------
SCOTT ALLEN
CHIEF EXECUTIVE OFFICER
C-1
EXHIBIT D
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated April 15, 2004 (the "Agreement"),
is between Capital Growth Systems, Inc., a Florida corporation ("CGSI"), and
Nexvu Business Solutions, Inc. ("Nexvu") and a wholly-owned subsidiary of CGSI.
CGSI and Nexvu are sometimes hereinafter collectively referred to as the
"Constituent Corporations."
RECITALS
WHEREAS, CGSI is a corporation organized and existing under the laws of
the State of Florida, and, as of the date hereof, has 16,000,454 shares of
common stock, par value $0.0001 per share, issued and outstanding ("CGSI Common
Stock").
WHEREAS, Nexvu is a corporation organized and existing under the laws of
the State of Delaware, and, as of the date hereof, has 1,000 shares of common
stock, par value $0.00001 per share, issued and outstanding ("Nexvu Common
Stock"), all of which are held by CGSI.
WHEREAS, the respective Boards of Directors of CGSI and Nexvu have adopted
and approved, as the case may be, this Agreement, which is the plan of merger
for purposes of the Florida Business Corporation Act and the agreement of merger
for purposes of the Delaware General Corporation Law, and the transactions
contemplated by this Agreement, including the Merger (as hereinafter defined).
WHEREAS, the Board of Directors of CGSI has determined that for the
purpose of effecting the reincorporation of CGSI in the State of Delaware, this
Agreement and the transactions contemplated by this Agreement, including the
Merger, are advisable and in the best interests of CGSI and its shareholders,
and the Board of Directors of Nexvu has determined that this Agreement and the
transactions contemplated by this Agreement, including the Merger, are advisable
and in the best interests of Nexvu and its sole stockholder.
WHEREAS, the respective Boards of Directors of CGSI and Nexvu have
determined to recommend this Agreement and the Merger to their respective
shareholders and stockholder, as the case may be.
NOW THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, CGSI and Nexvu hereby agree, subject to the terms and conditions
hereinafter set forth, as follows:
ARTICLE I
THE MERGER
1.1 Merger. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the Florida Business Corporation Act, CGSI
shall be merged with and into Nexvu (the "Merger"), whereupon the separate
existence of CGSI shall cease and Nexvu shall be, and is hereinafter sometimes
referred to as, the "Surviving Corporation."
1.2 Filing and Effectiveness. The Merger shall become effective, upon
the filing of (i) the certificate of merger with the Secretary of State of the
State of Delaware and (ii) the articles of
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merger with the Secretary of State of the State of Florida, unless another date
and time is set forth in the certificate of merger and the articles of merger.
The date and time when the Merger shall become effective is referred to herein
as the "Effective Date of the Merger."
1.3 Effect of the Merger. On the Effective Date of the Merger, the
separate existence of CGSI shall cease, and the Merger shall have the effects
set forth in the applicable provisions of the Delaware General Corporation Law
and the Florida Business Corporation Act.
ARTICLE II
CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Nexvu in effect immediately prior to the Effective Date of the Merger shall be,
as of the Effective Date of the Merger, the certificate of incorporation of the
Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
2.2 By-laws. The By-laws of Nexvu in effect immediately prior to the
Effective Date of the Merger shall be, as of the Effective Date of the Merger,
the by-laws of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
2.3 Directors and Officers. The directors and officers of the Surviving
Corporation as of the Effective Date of the Merger shall be the same as the
directors and officers of CGSI immediately prior to the Effective Date of the
Merger.
ARTICLE III
MANNER OF CONVERSION OF SHARES
3.1 CGSI Common Stock. Upon the Effective Date of the Merger, each
share of CGSI Common Stock (excluding shares held by shareholders who perfect
their dissenters' rights of appraisal as provided in Section 3.2 of this
Agreement) that is issued and outstanding immediately prior thereto shall, by
virtue of the Merger and without any action by the Constituent Corporations, the
holder of such shares or any other person, be converted into the right to
receive one fully paid and nonassessable share of Nexvu Common Stock (the
"Merger Consideration"). As of the Effective Date of the Merger, all shares of
CGSI Common Stock shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist and each certificate that
previously represented such shares of CGSI Common Stock shall thereafter
represent the Merger Consideration for all such shares.
3.2 Dissenting Shareholders. Any holder of shares of CGSI Common Stock
who perfects his or her dissenters' rights of appraisal in accordance with and
as contemplated by Section 607.1302 of the Florida Business Corporation Act
shall be entitled to receive the value of such shares in cash as determined
pursuant to Sections 607.1320 through 607.1333 of the Florida Business
Corporation Act; provided, however, that no such payment shall be made to any
dissenting shareholder unless and until such dissenting shareholder has complied
with the applicable provisions of the Florida Business Corporation Act, and
surrendered to the Surviving Corporation the certificate or certificates
representing the shares for which payment is being made. In the event that after
the Effective Date of the Merger a dissenting shareholder of CGSI fails to
perfect, or effectively withdraws or loses, his or her right to appraisal and of
payment for
D-2
his or her shares, such dissenting shareholder shall be entitled to receive the
Merger Consideration in accordance with Section 3.1 upon surrender of the
certificate or certificates representing the shares of CGSI Common Stock held by
such shareholder.
3.3 CGSI Options, Stock Purchase Rights and Other Equity-Based Awards.
Upon the Effective Date of the Merger, the Surviving Corporation shall assume
and continue any and all stock option, stock incentive and other equity-based
award plans heretofore adopted by CGSI (individually, an "Equity Plan" and,
collectively, the "Equity Plans"), and shall reserve for issuance under each
Equity Plan a number of shares of Nexvu Common Stock equal to the number of
shares of CGSI Common Stock so reserved immediately prior to the Effective Date
of the Merger. Each unexercised option or other right to purchase CGSI Common
Stock granted under and by virtue of any such Equity Plan which is outstanding
immediately prior to the Effective Date of the Merger shall, upon the Effective
Date of the Merger, become an option or right to purchase Nexvu Common Stock on
the basis of one share of Nexvu Common Stock for each share of CGSI Common Stock
issuable pursuant to any such option or stock purchase right, and otherwise on
the same terms and conditions and at an exercise or conversion price per share
equal to the exercise or conversion price per share applicable to any such CGSI
option or stock purchase right. Upon the Effective Date of the Merger, each
warrant to purchase CGSI Common Stock which is outstanding immediately prior to
the Effective Date of the Merger shall, upon the Effective Date of the Merger,
become a warrant to purchase Nexvu Common Stock on the basis of one share of
Nexvu Common Stock for each share of CGSI Common Stock issuable immediately
prior to the Effective Date of the Merger pursuant to any such warrant, and
otherwise on the same terms and conditions and at an exercise price per share
equal to the exercise price per share applicable to any such CGSI warrant
immediately prior to the Effective Date of the Merger. Each other equity-based
award relating to CGSI Common Stock granted or awarded under any of the Equity
Plans which is outstanding immediately prior to the Effective Date of the Merger
shall, upon the Effective Date of the Merger, become an award relating to Nexvu
Common Stock on the basis of one share of Nexvu Common Stock for each share of
CGSI Common Stock to which such award relates and otherwise on the same terms
and conditions applicable to such award immediately prior to the Effective Date
of the Merger.
3.4 Nexvu Common Stock. Upon the Effective Date of the Merger, each
share of Nexvu Common Stock issued and outstanding immediately prior thereto
shall, by virtue of the Merger and without any action by the Constituent
Corporations, the holder of such shares or any other person, be cancelled
without compensation therefor and returned to the status of authorized but
unissued shares.
3.5 Exchange of Certificates.
(a) After the Effective Date of the Merger, each holder of an
outstanding certificate representing CGSI Common Stock (excluding holders
of certificates who perfect their dissenters' rights of appraisal as
provided in Section 3.2 of this Agreement) may, at such holder's option,
surrender the same for cancellation to such entity as the Surviving
Corporation so designates as exchange agent (the "Exchange Agent"), and
each such holder shall be entitled to receive in exchange therefor a
certificate or certificates representing the Merger Consideration. Until
so surrendered, each outstanding certificate
D-3
theretofore representing CGSI Common Stock shall be deemed for all
purposes to represent the Merger Consideration and the associated Rights.
(b) The registered owners of CGSI Common Stock on the books
and records of CGSI immediately prior to the Effective Date of the Merger
(excluding registered owners who perfect their dissenters' rights of
appraisal as provided in Section 3.2 of this Agreement) shall be the
registered owners of Nexvu Common Stock on the books and records of Nexvu
immediately after the Effective Time of the Merger, and the holders of
shares of CGSI Common Stock, until such certificates shall have been
surrendered for transfer or conversion or otherwise accounted for by the
Surviving Corporation, shall be entitled to exercise any voting and other
rights with respect to, and receive dividends and other distributions
upon, the shares of Nexvu Common Stock that the holders of CGSI Common
Stock would be entitled to receive pursuant to the Merger.
(c) Each certificate representing Nexvu Common Stock so issued
in the Merger shall bear the same legends, if any, with respect to the
restrictions on transfer that appeared on the certificates representing
CGSI Common Stock so converted and given in exchange therefor, unless
otherwise determined by the Board of Directors of the Surviving
Corporation in compliance with applicable laws.
(d) If any certificate representing shares of Nexvu Common
Stock is to be issued in a name other than the name in which the
certificate surrendered in exchange therefor is registered, the following
conditions must be satisfied before the issuance thereof: (i) the
certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer; (ii) such transfer shall otherwise be proper;
and (iii) the person requesting such transfer shall pay to the Exchange
Agent any transfer or other taxes payable by reason of issuance of such
new certificate in a name other than the name of the registered holder of
the certificate surrendered or shall establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not payable.
ARTICLE IV
GENERAL PROVISIONS
4.1 Covenants of CGSI. CGSI covenants and agrees that it will on or
before the Effective Date of the Merger take all such other actions as may be
required by the Delaware General Corporation Law and the Florida Business
Corporation Act to effect the Merger.
4.2 Covenants of Nexvu. Nexvu covenants and agrees that it will on or
before the Effective Date of the Merger:
(a) take such action as may be required to qualify to do
business as a foreign corporation in the states in which CGSI is qualified
to do business immediately before the Effective Date of the Merger and in
connection therewith irrevocably appoint an agent for service of process
as required under the applicable provisions of the relevant state laws;
(b) take all such other actions as may be required by the
Delaware General Corporation Law and the Florida Business Corporation Act
to effect the Merger.
D-4
4.3 Conditions to the Obligations of the Constituent Corporations to
Effect the Merger. The respective obligation of each Constituent Corporation to
effect the Merger shall be subject to the satisfaction at or prior to the
Effective Date of the Merger of the following conditions:
(a) The Agreement shall have been approved by a majority of
the outstanding shares of CGSI Common Stock entitled to vote on the
Agreement, and the Agreement shall have been adopted by the affirmative
vote of a majority of the outstanding shares of Nexvu Common Stock
entitled to vote on the Agreement.
(b) No statute, rule, regulation, executive order, decree,
ruling, injunction or other order (whether temporary, preliminary or
permanent) shall have been enacted, entered, promulgated or enforced by
any court or governmental authority of competent jurisdiction which
prohibits, restrains, enjoins or restricts the consummation of the Merger;
provided, however that the Constituent Corporations shall use their
reasonable best efforts to cause any such decree, ruling, injunction or
other order to be vacated or lifted.
(c) Holders of shares of CGSI Common Stock holding no more
than ten percent (10%) of the outstanding CGSI Common Stock shall continue
to have a right to exercise appraisal, dissenters' or similar rights under
applicable law with respect to their CGSI Common Stock by virtue of the
merger.
4.4 Further Assurances. From time to time, as and when required by
Nexvu, CGSI shall execute and deliver or shall cause to be executed and
delivered such deeds and other instruments, and CGSI shall take or cause to be
taken any actions as shall be appropriate or necessary, (a) to vest or perfect
in Nexvu or confirm that Nexvu shall have record ownership of or otherwise own
the title to and possession of all the property, interests, assets, rights,
privileges, immunities, powers, franchises and authority of CGSI on the
Effective Date of the Merger or shortly thereafter and (b) to carry out the
purposes of or to effectuate this Agreement by the Effective Date of the Merger
or shortly thereafter, unless a specific deadline is established by this
Agreement.
4.5 Abandonment. At any time before the Effective Date of the Merger,
this Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of any Constituent Corporation,
notwithstanding the approval or adoption, as the case may be, of this Agreement
by the shareholders or stockholder, as the case may be, of any or both of the
Constituent Corporations.
4.6 Registered Office. The registered office of the Surviving
Corporation in the State of Delaware is located at 9 East Loockerman, Dover,
Delaware 19901 and National Registered Agents, Inc. is the registered agent of
the Surviving Corporation at such address.
4.7 Agreement. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation in Schaumburg,
Illinois, and copies thereof will be furnished to any shareholder or
stockholder, as the case may be, of either Constituent Corporation, upon request
and without cost.
D-5
4.8 Governing Law. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware (without giving effect to principles of conflicts of laws)
and, so far as applicable, the merger provisions of the Florida Business
Corporation Act.
4.9 Counterparts. In order to facilitate the filing and recording of
this Agreement, this Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
D-6
IN WITNESS WHEREOF, CGSI and Nexvu have caused this Agreement to be
executed as of the day and year first above written by their respective duly
authorized officers.
CAPITAL GROWTH SYSTEMS, INC., NEXVU BUSINESS SOLUTIONS, INC., a
a Florida corporation Delaware corporation
-------------------- --------------------
BY: /s/ SCOTT ALLEN BY: /s/ SCOTT ALLEN
NAME: Scott Allen NAME: Scott Allen
TITLE: Chief Executive Officer TITLE: Chief Executive Officer
D-7
EXHIBIT E
CERTIFICATE OF INCORPORATION OF NEXVU BUSINESS SOLUTIONS, INC.
I. The name of the Corporation is Nexvu Business Solutions, Inc.
II. The address of its registered office in the State of Delaware is 9
East Loockerman, in the City of Dover, 19901, County of Kent. The name of its
registered agent at such address is National Registered Agents, Inc.
III. The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
IV. The total number of shares of stock which the Corporation shall
have authority to issue are:
50,000,000 Common Stock, par value $.00001 per share
5,000,000 Preferred Stock, par value $.00001 per share
The Preferred Stock may be issued from time to time, in one or more
series, and each series shall be known and designated by designations as may be
stated and expressed in a resolution or resolutions adopted by the Board of
Directors of the Corporation and as shall have been set forth in a certificate,
made, executed, acknowledged, filed and recorded in the manner required by the
laws of the State of Delaware in order to make the same effective. Each series
shall consist of the number of shares as shall be stated and expressed in the
resolution(s) providing for the issuance of Preferred Stock of the series
together with the additional number of shares as the Board of Directors by
resolution(s) may, from time to time, determine to issue as part of the series.
Unless otherwise provided with respect to any series, shares of any series may
be issued in fractional shares. All shares of any one series of Preferred Stock
shall be alike in every particular respect except that shares issued at
different times may accumulate dividends from different dates. The Board of
Directors shall have the power and authority to state and determine, in the
resolution(s) providing for the issue of each series of Preferred Stock, the
number of shares of each series authorized to be issued, the voting powers (if
any) and the designations, preferences and relative participating, optional or
other rights appertaining to series, and the qualifications, limitations or
restrictions of the series (including, but not limited to, full power and
authority to determine as to the Preferred Stock of each series, the rate(s) of
dividends payable thereon, the times of payment of the dividends, the prices and
manner upon which the Preferred Stock of the series may be redeemed, the amount
or amounts payable thereon in the event of liquidation, dissolution or winding
up of the Corporation, and the right (if any) to convert the same into, and/or
to purchase, stock of any other class or series). The Board of Directors may,
from time to time, decrease the number of authorized shares of any series of
Preferred Stock (but not below the number of shares of any series of Preferred
Stock then outstanding). The foregoing provisions of this paragraph with respect
to the creation or issuance of series of Preferred Stock shall be subject to any
additional conditions with respect thereto which may be contained in any
resolutions then in effect which shall have theretofore been adopted in
accordance with the
E-1
foregoing provisions of this paragraph with respect to any then outstanding
series of Preferred Stock.
V. The Corporation is to have perpetual existence.
VI. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the bylaws of the Corporation, subject to any specific limitation provided by
any bylaws adopted by the stockholders.
VII. Meetings of stockholders may be held within or outside of the
State of Delaware, as the bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the bylaws) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the bylaws of the Corporation. Elections of directors
need not be by written ballot unless the bylaws of the Corporation shall so
provide.
VIII. A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper personal benefit. If the General Corporation Law of the State of
Delaware, or any other applicable law, is amended to authorize corporation
action further eliminating or limiting the personal liability of directors, then
the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the General Corporation Law of the State of
Delaware, or any other applicable law, as so amended. Any repeal or modification
of this Article VIII by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
IX. The Corporation shall indemnify, to the full extent that it shall
have power under applicable law to do so and in a manner permitted by such law,
any person made or threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a director or
officer of the Corporation against liabilities and expenses reasonably incurred
or paid by such person in connection with such action, suit or proceeding. The
Corporation may indemnify, to the full extent that it shall have power under
applicable law to do so and in a manner permitted by such law, any person made
or threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was an 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 liabilities and expenses reasonably
incurred or paid by such person in connection with such action, suit or
proceeding. The words "liabilities" and "expenses" shall include, without
limitation: liabilities, losses, damages, judgments, fines, penalties, amounts
paid in settlement, expenses, attorneys' fees and costs. The indemnification
provided by or granted pursuant to this Article IX shall not be deemed exclusive
of any other rights to which any person indemnified or being advanced expenses
may
E-2
be entitled under any statute, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person.
The Corporation may purchase and maintain insurance on behalf of any
person referred to in the preceding paragraph against any liability asserted
against 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 the provisions of this
Article IX or otherwise.
For purposes of this Article IX, references to the "Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees or agents, so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under the
provisions of this Article IX with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
The provisions of this Article IX shall be deemed to be a contract between
the Corporation and each director or officer who serves in any such capacity at
any time while this Article IX and the relevant provisions of the General
Corporation Law of the State of Delaware or other applicable law, if any, are in
effect, and any repeal or modification of such law or of this Article IX shall
not affect any rights or obligations then existing with respect to any state of
facts then or theretofore existing or any action, suit or proceeding theretofore
or thereafter brought or threatened based in whole or in part upon any such
state of facts.
For purposes of this Article IX, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner not
opposed to the best interests of the Corporation.
X. Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of the General Corporation Law of the State of
Delaware or on the application of
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trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of the General Corporation Law
of the State of Delaware, order a meeting of the creditors or class of
creditors, and/or of the stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths (3/4) in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
XI. The Corporation hereby expressly elects not to be governed by
Section 203 of the General Corporation Law of the State of Delaware.
XII. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by law, and all rights conferred upon the
stockholders herein are granted subject to this reservation.
XIII. The name and address of incorporator is as follows:
Carol Detert 118 West Edwards, Suite 200
Springfield, Illinois 62704
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, makes this Certificate of
Incorporation, hereby declaring and certifying that the facts herein stated are
true, and accordingly, has hereunto set his hand this _______ day of May, 2004.
____________________________
Incorporator
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EXHIBIT F
BY-LAWS OF NEXVU BUSINESS SOLUTIONS, INC.
ARTICLE I
OFFICES
The corporation shall continuously maintain in the State of Delaware, a
registered office and a registered agent whose office is identical with such
registered office and may have other offices within or without the state. The
address of the corporation's registered office in the State of Delaware is 9
East Loockerman Street, Dover, Delaware 19901. The name of the corporation's
registered agent at such address is National Registered Agents, Inc. The
corporation reserves the power to change its registered agent and registered
office at any time.
ARTICLE II
STOCKHOLDERS
Section 1. ANNUAL MEETING. An annual meeting of the stockholders shall be
held not less than thirty (30) days after delivery of the annual report, but
within six (6) months after the end of each fiscal year, for the purpose of
electing directors and for the transaction of such other business, as may come
before the meeting.
Section 2. SPECIAL MEETINGS. Special meetings of the stockholders may be
called either by the chairman of the board, the president, the board of
directors, or by any stockholders who hold in the aggregate not less than ten
percent (10%) of the outstanding shares of common stock for the purpose or
purposes stated in the call of the meeting.
Section 3. PLACE OF MEETINGS. Each meeting of the stockholders for the
election of directors shall be held at the offices of the corporation in
Schaumburg, Illinois, unless the board of directors shall by resolution
designate any other place of such meeting. Meetings of stockholders for any
other purpose may be held at such place, within or without the State of
Delaware, and at such time as shall be determined pursuant to Section 2 of this
Article II, and stated in the notice of the meeting or in a duly executed waiver
of notice thereof. The board of directors may, in its sole discretion, determine
that the meeting shall not be held at any place, but may instead be held solely
by means of remote communication.
Section 4. NOTICE OF MEETINGS. A written notice of each meeting of
stockholders, stating the place if any, date and hour of the meeting, the means
of remote communication, if any, by which stockholders and proxy holders may be
deemed to be present in person and vote at such meeting, and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be given to each stockholder entitled to vote at the meeting. Unless otherwise
provided by the General Corporation Law of Delaware ("Delaware Law"), the notice
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting, and, if mailed, shall be deposited in the United States
mail, postage prepaid, both directed to the stockholder at his address as it
appears on the records of the corporation. No notice need be given to any person
with whom communication is unlawful, nor shall there be any duty to apply for
any permit or license to give notice to any such person. Notice given shall not
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be effective as to any notice returned as undeliverable if the notice was given
by electronic transmission.
Section 5. WAIVER OF NOTICE. Anything herein to the contrary
notwithstanding, with respect to any stockholder meeting, any stockholder who in
person or by proxy shall have waived in written notice or by electronic
transmission of the meeting, either before or after such meeting, or who shall
attend the meeting in person or by proxy, shall be deemed to have waived notice
of such meeting unless he attends 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.
Section 6. QUORUM; MANNER OF ACTING AND ORDER OF BUSINESS. Subject to the
provisions of these by laws, the Certificate of Incorporation and Delaware Law
as to the vote that is required for a specified action, the presence in person,
by proxy, or by electronic transmission of the holders of a majority of the
outstanding shares of the corporation entitled to vote at any meeting of
stockholders shall constitute a quorum for the transaction of business. The vote
of the holders of a majority of the shares of the corporation's stock entitled
to vote, present in person represented by proxy, or by electronic transmission,
shall be binding on all stockholders of the corporation, unless the vote of a
greater number or voting by classes is required by law or the Certificate of
Incorporation or these by laws. The stockholders present at a duly called or
held meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum.
In the absence of a quorum, stockholders holding a majority of the shares
present in person, by proxy, or by electronic transmission are entitled to vote,
regardless of whether or not they constitute a quorum, or if no stockholders are
present, any officer entitled to preside at or act as secretary of the meeting,
may adjourn the meeting to another time and place. Any business which might have
been transacted at the original meeting may be transacted at any adjourned
meeting at which a quorum is present. No notice of an adjourned meeting need be
given if the time, place, if any, thereof, and the means of remote
communications, if any, by which stockholders and proxy holders may be deemed to
be present in person and vote at such adjourned meeting, are announced at the
meeting at which the adjournment is taken except that, if adjournment is for
more than thirty (30) days or if, after the adjournment, a new record date is
fixed for the meeting, notice of the adjourned meeting shall be given pursuant
to Section 4 of this Article II.
Meetings of the stockholders shall be presided over by the chairman of the
board, or in his absence by the president, or in his absence by a vice
president, or in the absence of the foregoing persons by a chairman designated
by the board of directors, or in the absence of such designation by a chairman
chosen at the meeting. The secretary shall act as secretary of the meeting, but
in his absence the chairman of the meeting may appoint any person to act as
secretary of the meeting. The order of business at all meetings of the
stockholders shall be determined by the chairman. The order of business so
determined, however, may be changed by vote of the holders of a majority of the
shares present at the meeting in person or represented by proxy.
Section 7. VOTING; PROXIES. Each stockholder of record on the record date,
as determined pursuant to Section 6 of Article VI, shall be entitled to one vote
for every share
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registered in his name. However, all elections of directors shall be by written
ballot, unless otherwise provided in the certificate of incorporation; if
authorized by the board of directors, such requirement of a written ballot shall
be satisfied by a ballot submitted by electronic transmission, provided that any
such electronic transmission must either set forth or be submitted with
information from which it can be determined that the electronic transmission was
authorized by the stockholder or proxy holder. Each stockholder entitled to vote
at any meeting of stockholders or to express consent to or dissent from
corporate action in writing or by electronic transmission without a meeting may
authorize another person to act for him by proxy. No proxy shall be valid after
three years from its date of execution, unless the proxy provides for a longer
period.
Section 8. INSPECTORS OF ELECTION.
(a) In advance of any meeting of stockholders, the board of\
directors may appoint inspectors of election to act at each meeting of
stockholders and any adjournment thereof. If inspectors of election are
not so appointed, the chairman of the meeting may, and upon the request of
any stockholder or his proxy shall, appoint inspectors of election at the
meeting. The number of inspectors shall be either one or three. If
appointed at the meeting upon the request of one or more stockholders or
proxies, the vote of the holders of a majority of shares present shall
determine whether one or three inspectors are appointed. In any case any
person appointed as an inspector fails to appear or fails or refuses to
act, the vacancy may be filled by appointment made by the directors in
advance of the convening of the meeting or at the meeting by the person
acting as chairman.
(b) The inspectors of election shall determine the outstanding
stock of the corporation, the stock represented at the meeting and the
existence of a quorum, shall receive votes, ballots, or consents, shall
count and tabulate all votes and shall determine the result; and in
connection therewith, the inspector shall determine the authority,
validity and effect of proxies, hear and determine all challenges and
questions, and do such other ministerial acts as may be proper to conduct
the election or vote with fairness to all stockholders. If there are three
inspectors of election, the decision, act or certificate of a majority is
effective in all respects as the decision, act or certificate of all. If
no inspectors of election are appointed, the secretary shall pass upon all
questions and shall have all other duties specified in this Section 8.
(c) Upon request of the chairman of the meeting or any
stockholder or his proxy, the inspector(s) of election shall make a report
in writing of any challenge or question or other matter determined by him
and shall execute a certificate of any fact found in connection therewith.
Any such report or certificate shall be filed with the record of the
meeting.
Section 9. ACTION WITHOUT A MEETING.
(a) Any action required to be taken at any annual or special
meeting of stockholders, or any action which may be taken at any annual or
special meeting of stockholders may be taken without a meeting, without
prior notice and without a vote, if a consent in writing or by electronic
transmission, setting forth the action so taken, shall be signed by the
holders of outstanding shares having not less than the minimum number of
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votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and
voted and shall be delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of
business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded.
Delivery made to the corporation's registered office shall be by hand or
by certified or registered mail, return receipt requested. Every written
consent shall bear the date of signature of each stockholder who signs the
consent and no written consent shall be effective to take the corporate
action referred to therein unless, within sixty (60) days of the earliest
dated consent delivered in the manner required by this Section 9, Article
II to the corporation, written consents signed by a sufficient number of
stockholders to take action are delivered to the corporation in such
manner. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
(b) The action to elect directors by consent can satisfy the
annual meeting requirement if either (i) the stockholder consent is
unanimous or (ii) all directorships corresponding to those to which
directors could have been elected if an annual meeting had been held are
vacant and filled by the action by consent. Replacement of incumbent
directors by less than unanimous stockholder consent will require their
removal or resignation prior to the effectiveness of the consent action
that substitutes for the election at the annual meeting.
(c) Telegram, cablegram or other electronic transmission
consenting to an action to be taken and transmitted by a stockholder or
proxy holder, or by a person or persons authorized to act for a
stockholder or proxy holder, shall be deemed to be written, signed and
dated for the purposes of this section, provided the transmission is
delivered with information from which the corporation can determine (i)
that it was transmitted by the stockholder or proxy holder or by a person
authorized to act for the holder and (ii) the date on which such
stockholder or proxy holder or person authorized to act transmitted such
telegram, cablegram, or electronic transmission. The date on which the
electronic transmission is transmitted shall be deemed to be the date on
which such consent was signed.
Section 10. REVOCATION OF CONSENT. Any stockholder giving a written
consent, or the stockholder's proxy holders, or a transferee of the shares or a
personal representative of the stockholder or its respective proxy holder, may
revoke the consent by writing or electronic transmission or transmissions
received by the corporation prior to the time that written consents of the
number of shares required to authorize the proposed action have been filed with
the secretary of the corporation, but may not do so thereafter. Such revocation
is effective upon its receipt by the secretary of the corporation.
Section 11. ELECTRONIC NOTICE. Any notice to stockholders given by the
corporation under the certificate of incorporation or the by-laws shall be
effective if given by a form of electronic transmission consented to by the
stockholder to whom the notice is given. Any such consent shall be revocable by
the stockholder by written notice to the corporation. Any such consent shall be
deemed revoked if (1) the corporation is unable to deliver by electronic
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transmission two consecutive notices given by the corporation in accordance with
such consent and (2) such inability becomes known to the secretary or an
assistant secretary of the corporation or to the transfer agent, or other person
responsible for the giving of notice; provided, however, the inadvertent failure
to treat such inability as a revocation shall not invalidate any meeting or
other action.
ARTICLE III
DIRECTORS
Section 1. NUMBER, TENURE AND QUALIFICATIONS.
(a) The number of directors of the corporation shall be not
less than two (2) nor more than nine (9) members, the exact number of
which shall be fixed from time to time by the board of directors. Each
director elected shall hold office until the next annual meeting of
stockholders or until his successor shall have been duly elected and
qualified or until his earlier resignation or removal. Unless the
Certificate of Incorporation fixes the number of directors, the number of
directors may be increased or decreased from time to time by an amendment
of this section; but no decrease shall have the effect of shortening the
term of any incumbent director. Directors need not be residents of the
State of Delaware, or stockholders of the corporation.
(b) Any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors, unless otherwise
provided under Delaware Law or the Certificate of Incorporation.
Section 2. RESIGNATIONS. Any director may resign at any time by notice
given in writing or by electronic transmission to the chairman of the board or
to the president.
Section 3. MEETINGS. Meetings of the board of directors may be called by
or at the request of the chairman of the board, the president or a majority of
the directors. The person or persons authorized to call meetings of the board of
directors may fix any place as the place for holding any meeting of the board of
directors called by them. Meetings of the board of directors may be held within
or outside the State of Delaware.
Section 4. BUSINESS OF MEETINGS. Except as otherwise expressly provided in
these by laws, any and all business may be transacted at any meeting of the
board of directors.
Section 5. NOTICE OF MEETINGS. Notice stating the place, date and hour of
the meeting shall be given to each director either by mail not less than
forty-eight (48) hours before the date of meeting, by telephone, telegram or
electronic mail on twenty-four (24) hours' notice or on such shorter notice as
the person or persons calling such meeting may deem appropriate under the
circumstances.
Section 6. ATTENDANCE BY TELEPHONE. Directors may participate in meetings
of the board of directors by means of conference telephone or other
communications equipment by means of which all directors participating in the
meeting can hear one another, and such participation shall constitute presence
in person at the meeting.
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Section 7. QUORUM AND MANNER OF ACTING; ADJOURNMENT. A majority of the
directors shall constitute a quorum for the transaction of business at any
meeting of the board of directors and the act of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
board.
Section 8. ACTION WITHOUT A MEETING. Any action which could be taken at a
meeting of the board of directors may be taken without a meeting if all of the
directors consent to the action in writing, or by electronic transmission and
the writing or a copy of the electronic transmission, as the case may be, is
filed with the minutes of proceedings of the board.
Section 9. FILLING OF VACANCIES. A vacancy or vacancies in the board of
directors shall exist when any previously authorized position of director is not
then filled by a duly elected director, whether caused by death, resignation or
removal.
Vacancies and newly created directorships resulting from an increase in
the authorized number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the Certificate of Incorporation or the by laws, or may apply to the Court of
Chancery for a decree summarily ordering an election as provided in Section 211
of Delaware Law.
Section 10. COMPENSATION OF DIRECTORS. The board of directors shall have
the authority to fix the compensation of directors, unless otherwise provided in
the Certificate of Incorporation.
Section 11. PRESIDING OFFICER. The presiding officer at any meeting of the
board of directors shall be the chairman of the board, or in his absence, any
other director elected chairman by vote of a majority of the directors present
at the meeting.
Section 12. COMMITTEE. The board of directors, by resolution adopted by a
majority of the number of directors fixed by the by laws or otherwise, may
designate one (1) or more committees, each committee to consist of one (1) or
more directors of the corporation, which committees, to the extent provided in
such resolution, shall have and exercise all of the authority of the board of
directors in the management of the corporation, except as otherwise required by
law. The board of directors may designate one (1) or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee.
Section 13. ELECTION. All elections of directors shall be by written
ballot, unless otherwise provided in the certificate of incorporation; if
authorized by the board of directors, such requirement of a written ballot shall
be satisfied by a ballot submitted by electronic transmission, provided that any
such electronic transmission must either set forth or be submitted with
information from which it can be determined that the electronic transmission was
authorized by the stockholder or proxy holder.
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ARTICLE IV
OFFICERS
Section 1. NUMBER. The officers of the corporation may consist of the
chairman of the board, the president, one or more vice presidents (the number
thereof to be determined by the board of directors), the secretary, the
treasurer and such assistant secretaries and assistant treasurers or any other
officers hereunto authorized or elected by the board of directors. Any two or
more offices may be held by the same person.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the corporation
shall be elected by the board of directors at their first meeting and thereafter
at any subsequent meeting and shall hold their offices for such term as
determined by the board of directors. Each officer shall hold office until his
successor is duly elected and qualified, or until his death or disability, or
until he resigns or is removed from his duties in the manner hereinafter
provided.
Section 3. REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by a majority of the directors then in office, at any
meeting of the board of directors. Any officer may resign at any time by giving
written notice to the corporation. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein.
Section 4. VACANCIES. A vacancy in any office because of death,
resignation or removal or any other cause may be filled for the unexpired
portion of the term by the board of directors.
Section 5. CHAIRMAN OF THE BOARD. The chairman of the board of the
corporation shall be the chief executive officer of the corporation. The
chairman of the board shall preside at all meetings of the board of directors,
and at all stockholders' meetings, whether annual or special, at which he is
present and shall exercise such other powers and perform such other duties as
the board of directors may from time to time assign to him or as may be
prescribed by these by laws. In the event that the chairman of the board is not
present at a directors' meeting or stockholders' meeting, the president of the
corporation shall serve in his place and stead. Except in those instances in
which the authority to execute is expressly delegated to another officer or
agent of the corporation, or a different mode of execution is expressly
prescribed by the board of directors or these by laws, he may execute for the
corporation certificates for its shares, and any contracts, deeds, mortgages,
bonds or other instruments which the board of directors has authorized to be
executed, and he may accomplish such execution either under or without the seal
of the corporation, or either individually with the secretary, any assistant
secretary or any other officer hereunto authorized by the board of directors,
according to the requirements of the form of the instrument.
Section 6. PRESIDENT. The president shall be the chief operating officer
of the corporation. Subject to the direction and control of the board of
directors, the president shall be in charge of the business of the corporation;
he shall see that the resolutions and directions of the board of directors are
carried into effect, except in those instances in which that responsibility is
specifically assigned to some other person by the board of directors; and in
general, he shall discharge all duties incident to the office of president and
such other duties as may be prescribed
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by the board of directors from time to time. He shall preside at all annual
meetings of the stockholders. Except in those instances in which the authority
to execute is expressly delegated to another officer or agent of the
corporation, or a different mode of execution is expressly prescribed by the
board of directors or these by laws, he may execute for the corporation,
certificates for its shares, and any contracts, deeds, mortgages, bonds or other
instruments which the board of directors have authorized to be executed, and he
may accomplish such execution either under or without the seal of the
corporation, or either individually or with the secretary, any assistant
secretary or any other officer hereunto authorized by the board of directors,
according to the requirements of the form of the instrument. He may vote all
securities which the corporation is entitled to vote, except as and to the
extent such authority shall be vested in a different officer or agent of the
corporation by the board of directors.
Section 7. VICE PRESIDENT. The vice president (or in the event there be
more than one vice president, each of the vice presidents), if one shall be
elected, shall assist the president in the discharge of his duties, as the
president may direct and shall perform such other duties as from time to time
may be assigned to him by the president or by the board of directors. In the
absence of the president or in the event of his inability or refusal to act, the
vice president shall perform the duties of the president, and when so acting,
shall have the powers of and be subject to all the restrictions upon the
president. In the event there be more than one vice president, vice presidents
shall be selected to perform the duties of the president in the order designated
by the board of directors, or by the president if the board of directors have
not made such a designation, or in the absence of any designation, then in the
order of seniority of tenure as vice president. Except in those instances in
which the authority to execute is expressly delegated to another officer or
agent of the corporation, or a different mode of execution is expressly
prescribed by the board of directors or these by laws, the vice president (or
each of them if there are more than one) may execute for the corporation,
certificates for its shares and any contracts, deeds, mortgages, bonds or other
instruments which the board of directors have authorized to be executed, and he
may accomplish such execution either under or without the seal of the
corporation, and either individually or with the secretary, any assistant
secretary or any other officer hereunto authorized by the board of directors,
according to the requirements of the form of the instrument.
Section 8. TREASURER. The treasurer, if any, shall be the principal
accounting and financial officer of the corporation. The treasurer shall: (i)
have charge of and be responsible for the maintenance of the adequate books and
records for the corporation; (ii) have charge and custody of all funds and
securities of the corporation, and be responsible therefor and for the receipt
and disbursement thereof; and (iii) perform all the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the board of directors. If required by the board
of directors, the treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the board of directors
may determine.
Section 9. SECRETARY. The secretary shall: (i) record the minutes of the
stockholders and of the board of directors' meetings in one or more books
provided for that purpose; (ii) see that all notices are duly given in
accordance with the provisions of these by laws or as required by law; (iii) be
custodian of the corporate books and records and of the seal of the corporation;
(iv) keep a register of the post office address of each stockholder which shall
be furnished to the secretary by such stockholder; (v) sign with the chairman of
the board or the
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president or a vice president or any other officer hereunto authorized by the
board of directors, certificates for the shares of the corporation, the issue of
which shall have been authorized by the board of directors, and any contracts,
deeds, mortgages, bonds or other instruments which the board of directors have
authorized to be executed, according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the board of directors or these by laws; (vi) have general charge of the stock
transfer books of the corporation; and (vii) perform all duties incident to the
office of secretary and such other duties as from time to time may be assigned
to him by the president or by the board of directors.
Section 10. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The assistant
treasurers and assistant secretaries shall perform such duties as shall be
assigned to them by the board of directors. When the secretary is unavailable,
any assistant secretary may sign with the president, or a vice president, or any
other officer hereunto authorized by the board of directors, any contracts,
deeds, mortgages, bonds or other instruments according to the requirements of
the form of the instrument, except when a different mode of execution is
expressly prescribed by the board of directors or these by laws. The assistant
treasurers shall, respectively, if required by the board of directors, give
bonds for the faithful discharge of their duties in such sums and with such
sureties as the board of directors shall determine.
Section 11. SALARIES. The salaries of the officers shall be fixed from
time to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation and such authority
may be general or confined to specific instances.
Section 2. LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name, unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued by the name of
the corporation, shall be signed by such officer or officers, agent or agents of
the corporation and in such manner as shall from time to time be determined by
resolution of the board of directors.
Section 4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the board of directors may
select.
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ARTICLE VI
CERTIFICATES OF STOCK AND THEIR TRANSFER
Section 1. STOCK RECORD AND CERTIFICATES. Records shall be kept by or on
behalf of the corporation, which shall contain the names and addresses of
stockholders, the number of shares held by them respectively, and the number of
certificates, if any, representing the shares, and in which there shall be
recorded all transfers of shares. Every stockholder shall be entitled to a
certificate signed by the chairman of the board of directors, or the president
or a vice president, and by the treasurer or an assistant treasurer, or the
secretary or an assistant secretary of the corporation, certifying the class and
number of shares owned by him in the corporation, provided that any and all
signatures on a certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the corporation
with the same effect as if he or it were such officer, transfer agent or
registrar at the date of issue.
Section 2. TRANSFER AGENTS AND REGISTRARS. The board of directors may, in
its discretion, appoint one or more responsible banks, corporations or trust
companies as the board may deem advisable, from time to time, to act as transfer
agents and registrars of shares of the corporation; and, when such appointments
shall have been made, no certificate for shares of the corporation shall be
valid until countersigned by one of such transfer agents and registered by one
of such registrars.
Section 3. STOCKHOLDERS' ADDRESSES. Every stockholder or transferee shall
furnish the secretary or a transfer agent with the address to which notice of
meetings and all other notices may be served upon or mailed to such stockholder
or transferee, and in default thereof, such stockholder or transferee shall not
be entitled to service or mailing of any such notice.
Section 4. LOST CERTIFICATES. In case any certificate for shares of the
corporation is lost, stolen or destroyed, the board of directors, in its
discretion, or any transfer agent duly authorized by the board, may authorize
the issue of a substitute certificate in place of the certificate so lost,
stolen or destroyed. The corporation may require the owner of the lost, stolen
or destroyed certificate or his legal representative to give the corporation 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 or uncertified shares.
Section 5. DISTRIBUTIONS TO STOCKHOLDERS. To the extent permitted by
Delaware Law and subject to any restrictions contained in the Certificate of
Incorporation, the directors may declare and pay dividends upon the shares of
its capital stock in the manner and upon the terms and conditions provided by
Delaware Law and the Certificate of Incorporation.
Section 6. RECORD DATES. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders, or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of shares or for the purpose of
any other lawful action, the board of directors may fix, in advance,a
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record date which shall be not more than sixty (60) nor less than ten (10) days
before the date of any meeting of stockholders, and not more than sixty (60)
days prior to any other action.
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.
In order that the corporation may determine the stockholders entitled to
consent to corporate action in writing or by electronic transmission without a
meeting, 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 date shall not be more than ten (10) days
after the date upon which the resolution fixing the record date is adopted by
the board of directors. In such case, those stockholders, and only those
stockholders, who are stockholders of record on the date fixed by the board of
directors shall, notwithstanding any subsequent transfer of shares on the books
of the corporation, be entitled to notice of and to vote at such meeting of
stockholders, or any adjournment thereof, or to express consent to such
corporate action in writing without a meeting, or entitled to receive payment of
such dividend or other distribution or allotment of rights, or entitled to
exercise rights in respect of any such change, conversion or exchange of shares
or to participate in any such other lawful action.
Section 7. TRANSFERS OF SHARES. Shares of the corporation may be
transferred by delivery of the certificates therefor, accompanied either by an
assignment in writing on the back of the certificates, or by written power of
attorney to sell, assign and transfer the same, signed by the record holder
thereof; but no transfer shall affect the right of the corporation to pay any
distribution upon the shares to the holder of record thereof, or to treat the
holder of record as the holder in fact thereof for all purposes, and no transfer
shall be valid, except between the parties thereto, until such transfer shall
have been made upon the books of the corporation.
Section 8. REPURCHASE OF SHARES ON OPEN MARKET. The corporation may
purchase its shares on the open market and invest its assets in its own shares,
provided that in each case the consent of the board of directors shall have been
obtained.
ARTICLE VII
INDEMNIFICATION AND INSURANCE
Section 1. DEFINITIONS. For the purposes of this Article VII the following
definitions shall apply:
"Agent" means any person who: (i) is or was an employee or other agent of
the corporation as determined from time to time by the board of directors; or
(ii) is or was serving at the request of the corporation as an employee or agent
of another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise ("enterprise"); or (iii) was an employee or agent of a foreign
or domestic corporation which was a predecessor corporation of the corporation
or of another enterprise at the request of such predecessor corporation.
"Director" means any such person as defined by Article III of these
by-laws.
"Officer" means any such person as defined by Article IV of these by-laws.
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"Predecessor corporation" shall include any constituent corporations
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers and agents, so that any person
who is or was an officer, director or agent of such constituent corporation, or
is or was serving at the request of such constituent corporation as an officer,
director or agent of another enterprise, shall stand in the same position under
and subject to the provisions of this Article VII (including, without
limitation, the provisions of Section 5 of this Article VII) with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
"Proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative, or investigative and
whether internal or external to the corporation.
"Expenses" includes, without limitation, attorneys' fees and any expenses
of establishing a right to indemnification under this Article VII.
"Losses" mean the total amount which the agent becomes legally obligated
to pay in connection with any proceeding, including judgments, fines, amounts
paid in settlement and expenses.
Section 2. THIRD PARTY ACTIONS. The corporation shall indemnify any person
who was or is a party or is threatened to be made a party to, or otherwise
becomes involved in, any Proceeding (other than an action by or in the right of
the corporation) by reason of the fact that he is or was an Officer or Director
of the corporation and may at the discretion of the board of directors indemnify
any person who was or is a party or is threatened to be made a party to, or
otherwise becomes involved in, any Proceeding (other than an action by or in the
right of the corporation) by reason of the fact that he is or was an Agent of
the corporation against Losses paid in settlement actually and reasonably
incurred by him in connection with such Proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in such a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal Proceeding, had reasonable cause to believe that
his conduct was unlawful.
Section 3. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to, or otherwise becomes involved in, any Proceeding by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that he
is or was an Officer or Director of the corporation and may at the discretion of
the board of directors indemnify any person who was or is a party or is
threatened to be made a party to, or otherwise becomes involved in, any
Proceeding by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was an Agent against Expenses actually
and reasonably incurred by him in connection with the defense or settlement of
such Proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and
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except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery or
the court in which such Proceeding was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
Expenses which the Delaware Court of Chancery or such other court shall deem
proper.
Section 4. SUCCESSFUL DEFENSE. To the extent that an Officer or Director
of the corporation has been successful on the merits or otherwise in defense of
any Proceeding referred to in Sections 2 and 3 of this Article VII, or in
defense of any claim, issue or matter therein, he shall be indemnified against
Expenses actually and reasonably incurred by him in connection therewith. To the
extent that an Agent of the corporation has been successful on the merits or
otherwise in defense of any Proceeding referred to in Sections 2 and 3 of this
Article VII, or in defense of any claim, issue or matter therein, he may, at the
discretion of the board of directors, be indemnified against Expenses actually
and reasonably incurred by him in connection therewith.
Section 5. DETERMINATION OF CONDUCT. Any indemnification under Sections 2
and 3 of this Article VII, (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the Officer, Director or Agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in Sections 2
and 3 of this Article VII. Such determination shall be made by the Board of
Directors by a majority vote of directors.
Section 6. PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred by an Officer
or Director in connection with a Proceeding shall be paid by the corporation in
advance of the final disposition of such Proceeding upon receipt of an
undertaking by or on behalf of such Officer or Director to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this Article VII. Expenses incurred by an Agent
in connection with a Proceeding may be paid by the corporation in advance of the
final disposition of such Proceeding upon receipt of an undertaking by or on
behalf of such Agent to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the corporation as authorized in
this Article VII.
Section 7. INDEMNITY NOT EXCLUSIVE. The indemnification and advancement of
Expenses provided by, or granted pursuant to, the other provisions of this
Article VII shall not be deemed exclusive of any other rights to which a person
seeking indemnification or advancement of Expenses may be entitled under any
by-law, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
Section 8. INSURANCE INDEMNIFICATION. The corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was an
Officer Director or Agent of the corporation against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability under the provisions of this Article VII.
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Section 9. HEIRS, EXECUTORS AND ADMINISTRATORS. The indemnification and
advancement of Expenses provided by, or granted pursuant to, this Article VIII
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be an Officer or Director and shall inure to the
benefit of the heirs, executors and administrators of such a person. The
indemnification and advancement of Expenses provided by, or granted pursuant to,
this Article VII may, at the discretion of the board of directors, continue as
to a person who has ceased to be an Agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 10. FURTHER AMENDMENT. Notwithstanding any provision in this
Article VII to the contrary, in the event the General Corporation Law of the
State of Delaware is either amended to provide, or interpreted by judicial or
other binding legal decision to provide, broader indemnification rights than
those contained herein, such broader indemnification rights shall be provided to
any and all persons entitled to be indemnified pursuant to the General
Corporation Law of the State of Delaware, the intent of this provision being to
permit the corporation to indemnify, to the full extent permitted by the General
Corporation Law of the State of Delaware, persons whom it may indemnify
thereunder.
ARTICLE VIII
AMENDMENTS
Unless otherwise provided in the Certificate of Incorporation the power to
make, alter, amend or repeal the by laws of the corporation shall be vested in
the stockholders entitled to vote. The by laws may contain any provisions for
the regulation and management of the affairs of the corporation not inconsistent
with Delaware Law or the Certificate of Incorporation.
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EXHIBIT G
PROVISIONS OF FLORIDA BUSINESS CORPORATION ACT RELATING TO
APPRAISAL RIGHTS
607.1301 APPRAISAL RIGHTS; DEFINITIONS.
The following definitions apply to Sections 607.1302-607.1333:
(1) "Affiliate" means a person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with another person or is a senior executive thereof. For purposes of Section
607.1302(2)(d), a person is deemed to be an affiliate of its senior executives.
(2) "Beneficial stockholder" means a person who is the beneficial owner
of shares held in a voting trust or by a nominee on the beneficial owner's
behalf.
(3) "Corporation" means the issuer of the shares held by a stockholder
demanding appraisal and, for matters covered in Section 607.1322-607.1333,
includes the surviving entity in a merger.
(4) "Fair value" means the value of the corporation's shares
determined:
(a) Immediately before the effectuation of the corporate action to
which the stockholder objects.
(b) Using customary and current valuation concepts and techniques
generally employed for similar businesses in the context of the transaction
requiring appraisal, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable to the corporation
and its remaining stockholders.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the rate of interest on judgments in this
state on the effective date of the corporate action.
(6) "Preferred shares" means a class or series of shares the holders of
which have preference over any other class or series with respect to
distributions.
(7) "Record stockholder" means the person in whose name shares are
registered in the records of the corporation or the beneficial owner of shares
to the extent of the rights granted by a nominee certificate on file with the
corporation.
(8) "Senior executive" means the chief executive officer, chief
operating officer, chief financial officer, or anyone in charge of a principal
business unit or function.
(9) "Shareholder" means both a record stockholder and a beneficial
stockholder.
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607.1302 RIGHT OF STOCKHOLDERS TO APPRAISAL.
1. (1) A stockholder is entitled to appraisal rights, and to obtain
payment of the fair value of that stockholder's shares, in the event of any of
the following corporate actions:
(a) Consummation of a merger to which the corporation is a party if
stockholder approval is required for the merger by Section 607.1103 and the
stockholder is entitled to vote on the merger or if the corporation is a
subsidiary and the merger is governed by Section 607.1104;
(b) Consummation of a share exchange to which the corporation is a party
as the corporation whose shares will be acquired if the stockholder is entitled
to vote on the exchange, except that appraisal rights shall not be available to
any stockholder of the corporation with respect to any class or series of shares
of the corporation that is not exchanged;
(c) Consummation of a disposition of assets pursuant to Section 607.1202
if the stockholder is entitled to vote on the disposition, including a sale in
dissolution but not including a sale pursuant to court order or a sale for cash
pursuant to a plan by which all or substantially all of the net proceeds of the
sale will be distributed to the stockholders within 1 year after the date of
sale;
(d) Any other amendment to the articles of incorporation, merger, share
exchange, or disposition of assets to the extent provided by the articles of
incorporation, by-laws, or a resolution of the board of directors, except that
no by-law or board resolution providing for appraisal rights may be amended or
otherwise altered except by stockholder approval; or
(e) With regard to shares issued prior to October 1, 2003, any amendment
of the articles of incorporation if the stockholder is entitled to vote on the
amendment and if such amendment would adversely affect such stockholder by:
1. Altering or abolishing any preemptive rights attached to any of his or
her shares;
2. Altering or abolishing the voting rights pertaining to any of his or
her shares, except as such rights may be affected by the voting rights of new
shares then being authorized of any existing or new class or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any of his
or her shares, when such exchange, cancellation, or reclassification would alter
or abolish the stockholder's voting rights or alter his or her percentage of
equity in the corporation, or effecting a reduction or cancellation of accrued
dividends or other arrearages in respect to such shares;
4. Reducing the stated redemption price of any of the stockholder's
redeemable shares, altering or abolishing any provision relating to any sinking
fund for the redemption or purchase of any of his or her shares, or making any
of his or her shares subject to redemption when they are not otherwise
redeemable;
5. Making noncumulative, in whole or in part, dividends of any of the
stockholder's preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of the stockholder's
preferred shares; or
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7. Reducing any stated preferential amount payable on any of the
stockholder's preferred shares upon voluntary or involuntary liquidation.
(2) Notwithstanding subsection (1), the availability of appraisal rights
under paragraphs (1)(a), (b), (c), and (d) shall be limited in accordance
with the following provisions:
(a) Appraisal rights shall not be available for the holders of shares of
any class or series of shares which is:
1. Listed on the New York Stock Exchange or the American Stock Exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.; or
2. Not so listed or designated, but has at least 2,000 stockholders and
the outstanding shares of such class or series have a market value of at least
$10 million, exclusive of the value of such shares held by its subsidiaries,
senior executives, directors, and beneficial stockholders owning more than 10
percent of such shares.
(b) The applicability of paragraph (a) shall be determined as of:
1. The record date fixed to determine the stockholders entitled to receive
notice of, and to vote at, the meeting of stockholders to act upon the corporate
action requiring appraisal rights; or
2. If there will be no meeting of stockholders, the close of business on
the day on which the board of directors adopts the resolution recommending such
corporate action.
(c) Paragraph (a) shall not be applicable and appraisal rights shall be
available pursuant to subsection (1) for the holders of any class or series of
shares who are required by the terms of the corporate action requiring appraisal
rights to accept for such shares anything other than cash or shares of any class
or any series of shares of any corporation, or any other proprietary interest of
any other entity, that satisfies the standards set forth in paragraph (a) at the
time the corporate action becomes effective.
(d) Paragraph (a) shall not be applicable and appraisal rights shall be
available pursuant to subsection (1) for the holders of any class or series of
shares if:
1. Any of the shares or assets of the corporation are being acquired or
converted, whether by merger, share exchange, or otherwise, pursuant to the
corporate action by a person, or by an affiliate of a person, who:
a. Is, or at any time in the 1-year period immediately preceding approval
by the board of directors of the corporate action requiring appraisal rights
was, the beneficial owner of 20 percent or more of the voting power of the
corporation, excluding any shares acquired pursuant to an offer for all shares
having voting power if such offer was made within 1 year prior to the corporate
action requiring appraisal rights for consideration of the same kind and of a
value equal to or less than that paid in connection with the corporate action;
or
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b. Directly or indirectly has, or at any time in the 1-year period
immediately preceding approval by the board of directors of the corporation of
the corporate action requiring appraisal rights had, the power, contractually or
otherwise, to cause the appointment or election of 25 percent or more of the
directors to the board of directors of the corporation; or
2. Any of the shares or assets of the corporation are being acquired or
converted, whether by merger, share exchange, or otherwise, pursuant to such
corporate action by a person, or by an affiliate of a person, who is, or at any
time in the 1-year period immediately preceding approval by the board of
directors of the corporate action requiring appraisal rights was, a senior
executive or director of the corporation or a senior executive of any affiliate
thereof, and that senior executive or director will receive, as a result of the
corporate action, a financial benefit not generally available to other
stockholders as such, other than:
a. Employment, consulting, retirement, or similar benefits established
separately and not as part of or in contemplation of the corporate action;
b. Employment, consulting, retirement, or similar benefits established in
contemplation of, or as part of, the corporate action that are not more
favorable than those existing before the corporate action or, if more favorable,
that have been approved on behalf of the corporation in the same manner as is
provided in Section 607.0832; or
c. In the case of a director of the corporation who will, in the corporate
action, become a director of the acquiring entity in the corporate action or one
of its affiliates, rights and benefits as a director that are provided on the
same basis as those afforded by the acquiring entity generally to other
directors of such entity or such affiliate.
(e) For the purposes of paragraph (d) only, the term "beneficial owner"
means any person who, directly or indirectly, through any contract, arrangement,
or understanding, other than a revocable proxy, has or shares the power to vote,
or to direct the voting of, shares, provided that a member of a national
securities exchange shall not be deemed to be a beneficial owner of securities
held directly or indirectly by it on behalf of another person solely because
such member is the recordholder of such securities if the member is precluded by
the rules of such exchange from voting without instruction on contested matters
or matters that may affect substantially the rights or privileges of the holders
of the securities to be voted. When two or more persons agree to act together
for the purpose of voting their shares of the corporation, each member of the
group formed thereby shall be deemed to have acquired beneficial ownership, as
of the date of such agreement, of all voting shares of the corporation
beneficially owned by any member of the group.
(3) Notwithstanding any other provision of this section, the articles of
incorporation as originally filed or any amendment thereto may limit or
eliminate appraisal rights for any class or series of preferred shares, but any
such limitation or elimination contained in an amendment to the articles of
incorporation that limits or eliminates appraisal rights for any of such shares
that are outstanding immediately prior to the effective date of such amendment
or that the corporation is or may be required to issue or sell thereafter
pursuant to any conversion, exchange, or other right existing immediately before
the effective date of such amendment shall not apply to any
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corporate action that becomes effective within 1 year of that date if such
action would otherwise afford appraisal rights.
(4) A stockholder entitled to appraisal rights under this chapter may not
challenge a completed corporate action for which appraisal rights are available
unless such corporate action:
(a) Was not effectuated in accordance with the applicable provisions of
this section or the corporation's articles of incorporation, by-laws, or board
of directors' resolution authorizing the corporate action; or
(b) Was procured as a result of fraud or material misrepresentation.
607.1320 NOTICE OF APPRAISAL RIGHTS.
(1) If proposed corporate action described in Section 607.1302(1) is to be
submitted to a vote at a stockholders' meeting, the meeting notice must state
that the corporation has concluded that stockholders are, are not, or may be
entitled to assert appraisal rights under this chapter. If the corporation
concludes that appraisal rights are or may be available, a copy of Sections
607.1301-607.1333 must accompany the meeting notice sent to those record
stockholders entitled to exercise appraisal rights.
(2) In a merger pursuant to Section 607.1104, the parent corporation must
notify in writing all record stockholders of the subsidiary who are entitled to
assert appraisal rights that the corporate action became effective. Such notice
must be sent within 10 days after the corporate action became effective and
include the materials described in Section 607.1322.
(3) If the proposed corporate action described in Section 607.1302(1) is
to be approved other than by a stockholders' meeting, the notice referred to in
subsection (1) must be sent to all stockholders at the time that consents are
first solicited pursuant to Section 607.0704, whether or not consents are
solicited from all stockholders, and include the materials described in Section
607.1322.
607.1303 ASSERTION OF RIGHTS BY NOMINEES AND BENEFICIAL OWNERS.
(1) A record stockholder may assert appraisal rights as to fewer than all
the shares registered in the record stockholder's name but owned by a beneficial
stockholder only if the record stockholder objects with respect to all shares of
the class or series owned by the beneficial stockholder and notifies the
corporation in writing of the name and address of each beneficial stockholder on
whose behalf appraisal rights are being asserted. The rights of a record
stockholder who asserts appraisal rights for only part of the shares held of
record in the record stockholder's name under this subsection shall be
determined as if the shares as to which the record stockholder objects and the
record stockholder's other shares were registered in the names of different
record stockholders.
(2) A beneficial stockholder may assert appraisal rights as to shares of
any class or series held on behalf of the stockholder only if such stockholder:
(a) Submits to the corporation the record stockholder's written consent to
the assertion of such rights no later than the date referred to in Section
607.1322(2)(b)2.
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(b) Does so with respect to all shares of the class or series that are
beneficially owned by the beneficial stockholder.
607.1321 NOTICE OF INTENT TO DEMAND PAYMENT.
(1) If proposed corporate action requiring appraisal rights under Section
607.1302 is submitted to a vote at a stockholders' meeting, or is submitted to a
stockholder pursuant to a consent vote under Section 607.0704, a stockholder who
wishes to assert appraisal rights with respect to any class or series of shares:
(a) Must deliver to the corporation before the vote is taken, or within 20
days after receiving the notice pursuant to Section 607.1320(3) if action is to
be taken without a stockholder meeting, written notice of the stockholder's
intent to demand payment if the proposed action is effectuated.
(b) Must not vote, or cause or permit to be voted, any shares of such
class or series in favor of the proposed action.
(2) A stockholder who does not satisfy the requirements of subsection (1)
is not entitled to payment under this chapter.
607.1322 APPRAISAL NOTICE AND FORM.
1. (1) If proposed corporate action requiring appraisal rights under
Section 607.1302(1) becomes effective, the corporation must deliver a written
appraisal notice and form required by paragraph (2)(a) to all stockholders who
satisfied the requirements of Section 607.1321. In the case of a merger under
Section 607.1104, the parent must deliver a written appraisal notice and form to
all record stockholders who may be entitled to assert appraisal rights.
(2) The appraisal notice must be sent no earlier than the date the
corporate action became effective and no later than 10 days after such date and
must:
(a) Supply a form that specifies the date that the corporate action became
effective and that provides for the stockholder to state:
1. The stockholder's name and address.
2. The number, classes, and series of shares as to which the stockholder
asserts appraisal rights.
3. That the stockholder did not vote for the transaction.
4. Whether the stockholder accepts the corporation's offer as stated in
subparagraph (b)4.
5. If the offer is not accepted, the stockholder's estimated fair value of
the shares and a demand for payment of the stockholder's estimated value plus
interest.
(b) State:
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1. Where the form must be sent and where certificates for certificated
shares must be deposited and the date by which those certificates must be
deposited, which date may not be earlier than the date for receiving the
required form under subparagraph 2.
2. A date by which the corporation must receive the form, which date may
not be fewer than 40 nor more than 60 days after the date the subsection (1)
appraisal notice and form are sent, and state that the stockholder shall have
waived the right to demand appraisal with respect to the shares unless the form
is received by the corporation by such specified date.
3. The corporation's estimate of the fair value of the shares.
4. An offer to each stockholder who is entitled to appraisal rights to pay
the corporation's estimate of fair value set forth in subparagraph 3.
5. That, if requested in writing, the corporation will provide to the
stockholder so requesting, within 10 days after the date specified in
subparagraph 2., the number of stockholders who return the forms by the
specified date and the total number of shares owned by them.
6. The date by which the notice to withdraw under Section 607.1323 must be
received, which date must be within 20 days after the date specified in
subparagraph 2.
(c) Be accompanied by:
1. Financial statements of the corporation that issued the shares to be
appraised, consisting of a balance sheet as of the end of the fiscal year ending
not more than 15 months prior to the date of the corporation's appraisal notice,
an income statement for that year, a cash flow statement for that year, and the
latest available interim financial statements, if any.
2. A copy of Sections 607.1301-607.1333.
607.1323 PERFECTION OF RIGHTS; RIGHT TO WITHDRAW.
(1) A stockholder who wishes to exercise appraisal rights must execute and
return the form received pursuant to Section 607.1322(1) and, in the case of
certificated shares, deposit the stockholder's certificates in accordance with
the terms of the notice by the date referred to in the notice pursuant to
Section 607.1322(2)(b)2. Once a stockholder deposits that stockholder's
certificates or, in the case of uncertificated shares, returns the executed
forms, that stockholder loses all rights as a stockholder, unless the
stockholder withdraws pursuant to subsection (2).
(2) A stockholder who has complied with subsection (1) may nevertheless
decline to exercise appraisal rights and withdraw from the appraisal process by
so notifying the corporation in writing by the date set forth in the appraisal
notice pursuant to Section 607.1322(2)(b)6. A stockholder who fails to so
withdraw from the appraisal process may not thereafter withdraw without the
corporation's written consent.
(3) A stockholder who does not execute and return the form and, in the
case of certificated shares, deposit that stockholder's share certificates if
required, each by the date set forth in the notice described in subsection (2),
shall not be entitled to payment under this chapter.
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607.1324 SHAREHOLDER'S ACCEPTANCE OF CORPORATION'S OFFER.
(1) If the stockholder states on the form provided in Section 607.1322(1)
that the stockholder accepts the offer of the corporation to pay the
corporation's estimated fair value for the shares, the corporation shall make
such payment to the stockholder within 90 days after the corporation's receipt
of the form from the stockholder.
(2) Upon payment of the agreed value, the stockholder shall cease to have
any interest in the shares.
607.1326 PROCEDURE IF STOCKHOLDER IS DISSATISFIED WITH OFFER.--
1. (1) A stockholder who is dissatisfied with the corporation's offer as
set forth pursuant to Section 607.1322(2)(b)4. must notify the corporation on
the form provided pursuant to Section 607.1322(1) of that stockholder's estimate
of the fair value of the shares and demand payment of that estimate plus
interest.
(2) A stockholder who fails to notify the corporation in writing of that
stockholder's demand to be paid the stockholder's stated estimate of the fair
value plus interest under subsection (1) within the timeframe set forth in
Section 607.1322(2)(b) 2. waives the right to demand payment under this section
and shall be entitled only to the payment offered by the corporation pursuant to
Section 607.1322(2)(b)4.
607.1331 COURT COSTS AND COUNSEL FEES.
1. (1) The court in an appraisal proceeding commenced under 1 Section
607.1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the stockholders demanding appraisal, in amounts the
court finds equitable, to the extent the court finds such stockholders acted
arbitrarily, vexatiously, or not in good faith with respect to the rights
provided by this chapter.
(2) The court in an appraisal proceeding may also assess the fees and
expenses of counsel and experts for the respective parties, in amounts the court
finds equitable:
(a) Against the corporation and in favor of any or all stockholders
demanding appraisal if the court finds the corporation did not substantially
comply with Sections 607.1320 and 607.1322; or
(b) Against either the corporation or a stockholder demanding appraisal,
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 this chapter.
(3) If the court in an appraisal proceeding finds that the services of
counsel for any stockholder were of substantial benefit to other stockholders
similarly situated, and that the fees for those services should not be assessed
against the corporation, the court may award to such counsel reasonable fees to
be paid out of the amounts awarded the stockholders who were benefited.
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(4) To the extent the corporation fails to make a required payment
pursuant to Section 607.1324, the stockholder may sue directly for the amount
owed and, to the extent successful, shall be entitled to recover from the
corporation all costs and expenses of the suit, including counsel fees.
(1) Note.--Section 607.1330 does not exist. It was included in H.B. 1623
but was deleted from the bill before it was passed. House Bill 1623 became ch.
2003-283.
607.1332 DISPOSITION OF ACQUIRED SHARES.
Shares acquired by a corporation pursuant to payment of the agreed value
thereof or pursuant to payment of the judgment entered therefor, as provided in
this chapter, may be held and disposed of by such corporation as authorized but
unissued shares of the corporation, except that, in the case of a merger or
share exchange, they may be held and disposed of as the plan of merger or share
exchange otherwise provides. The shares of the surviving corporation into which
the shares of such stockholders demanding appraisal rights would have been
converted had they assented to the merger shall have the status of authorized
but unissued shares of the surviving corporation.
607.1333 LIMITATION ON CORPORATE PAYMENT.
(1) No payment shall be made to a stockholder seeking appraisal rights if,
at the time of payment, the corporation is unable to meet the distribution
standards of Section 607.06401. In such event, the stockholder shall, at the
stockholder's option:
(a) Withdraw his or her notice of intent to assert appraisal rights, which
shall in such event be deemed withdrawn with the consent of the corporation; or
(b) Retain his or her status as a claimant against the corporation and, if
it is liquidated, be subordinated to the rights of creditors of the corporation,
but have rights superior to the stockholders not asserting appraisal rights, and
if it is not liquidated, retain his or her right to be paid for the shares,
which right the corporation shall be obliged to satisfy when the restrictions of
this section do not apply.
(2) The stockholder shall exercise the option under paragraph (1)(a) or
paragraph (b) by written notice filed with the corporation within 30 days after
the corporation has given written notice that the payment for shares cannot be
made because of the restrictions of this section. If the stockholder fails to
exercise the option, the stockholder shall be deemed to have withdrawn his or
her notice of intent to assert appraisal rights.
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CAPITAL GROWTH SYSTEMS, INC.
1100 EAST WOODFIELD ROAD
SCHAUMBURG, ILLINOIS 60173
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CAPITAL GROWTH
SYSTEMS, INC.
The undersigned hereby appoints Scott Allen and Rory Herriman, and each
of them, as Proxies, with the power to appoint their substitutes, and hereby
authorizes them to represent and to vote, as designated on the reverse side, all
the shares of common stock of Capital Growth Systems, Inc. (the "Corporation")
held of record by the undersigned on May 21, 2004, at the Annual Meeting of
Stockholders when convened on June 30, 2004, or any adjournment thereof.
1. ELECTION OF DIRECTORS -- Proposal to elect five Directors to hold
office until the next Annual Meeting of Stockholders, or otherwise as
provided in the Corporation's Certificate of Incorporation (check one
box):
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as withheld in the space to vote for all of the
provided below) nominees listed below
NOMINEES: Mr. Robert Geras, Mr. Scott Allen, Mr. Rory Herriman, Mr. Douglas
Stukel and Mr. Lee Wiskowski.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR "ALL" WITH RESPECT TO ITEM 1.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- ------------------------------
2. APPROVE NAME CHANGE FROM CAPITAL GROWTH SYSTEMS, INC. TO NEXVU BUSINESS
SOLUTIONS, INC.:
|_| FOR |_| AGAINST |_| ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL TO
CHANGE THE NAME OF CAPITAL GROWTH SYSTEMS, INC. TO NEXVU BUSINESS SOLUTIONS,
INC.
3. APPROVE INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
25,000,000 TO 50,000,000:
|_| FOR |_| AGAINST |_| ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 25,000,000 TO
50,000,000.
4. APPROVE THE AGREEMENT AND PLAN OF MERGER, DATED AS OF APRIL 15, 2004 BY
AND BETWEEN THE CORPORATION AND NEXVU BUSINESS SOLUTIONS, INC., A
DELAWARE CORPORATION AND A WHOLLY-OWNED SUBSIDIARY OF THE CORPORATION,
UNDER WHICH THE CORPORATION WILL REINCORPORATE IN THE STATE OF DELAWARE
BY MERGING WITH AND INTO NEXVU BUSINESS SOLUTIONS, INC., WITH NEXVU
BUSINESS SOLUTIONS, INC. SURVIVING THE MERGER:
|_| FOR |_| AGAINST |_| ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL TO
CHANGE ITS STATE OF INCORPORATION FROM FLORIDA TO DELAWARE.
OTHER BUSINESS--in their discretion, the Proxies are authorized to
transact any other business as may properly come before the meeting, or any
adjournment thereof.
This proxy, when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR Proposals One through Four.
--------------------------------------------
Signature Date
--------------------------------------------
Signature Date
NOTE: Sign exactly as name appears above. If
joint tenant, both should sign. If attorney,
executor, administrator, trustee or
guardian, give full title as such. If a
corporation, please sign corporate name by
President or authorized officer. If a
partnership, sign in full partnership name
by authorized person.
Please contact Rory Herriman at (630) 872-5800 with any questions regarding the
above.
PLEASE PROMPTLY INITIAL, DATE, SIGN AND RETURN THE CARD USING THE ENCLOSED
ENVELOPE.