SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
|X| Preliminary information statement |_| Confidential, for use of the
Commission only (as permitted
|_| Definitive information statement by Rule 14-5(2))
TEK DIGITEL CORPORATION
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF TEK DIGITEL CORPORATION
TO BE HELD AUGUST 3, 2001
TO THE SHAREHOLDERS OF TEK DIGITEL CORPORATION:
NOTICE IS HEREBY GIVEN that TEK DigiTel Corporation will hold its
Annual Meeting of Shareholders on Friday, August 3, 2001, at 10:00 a.m., Eastern
Daylight Time, at 20030 Century Boulevard, Suite 201, Germantown, Maryland
20874.
The enclosed Information Statement is furnished to holders of the
outstanding common stock and Series A, Voting Convertible Preferred Stock of TEK
DigiTel Corporation, a Wyoming corporation, in connection with the prior
approval of the corporate actions described below. All necessary shareholder
commitments to approve the matters referred to in the Information Statement have
been obtained; and, the enclosed Information Statement is furnished solely for
the purpose of informing TEK's shareholders, in the manner required under the
Securities Exchange Act of 1934, of these corporate actions before they take
effect.
The Information Statement is being mailed on or about July 13, 2001 to
all shareholders of record as of the close of business on June 1, 2001.
The matters to be presented at the annual meeting have been adopted by
unanimous resolution of the Board of Directors and are as follows:
1. Election of the following individuals as Directors, each to
serve a one year term:
o Enghe Chimood
o Thomas Yang
o Ke-ou Chao
o Sharming Lin
2. Approval of a proposal to reincorporate (or change the
domicile of) TEK from a Wyoming corporation to a Maryland
corporation by merger of TEK into a newly formed, wholly-owned
subsidiary of TEK incorporated in Maryland; and
3. Transaction of any other business properly presented at the
annual meeting and any adjournment or postponement of the
meeting.
By Order of the Board of Directors,
Enghe Chimood
Co-Chairman of the Board
Germantown, Maryland
July 13, 2001
TEK DIGITEL CORPORATION
20030 CENTURY BOULEVARD, SUITE 201
GERMANTOWN, MARYLAND 20874
PRIMARY EXCHANGE: OVER THE COUNTER BULLETIN BOARD
TICKER SYMBOL: TEKI
INFORMATION STATEMENT
2001 ANNUAL MEETING OF SHAREHOLDERS
AUGUST 3, 2001
MAILED TO SHAREHOLDERS ON OR ABOUT JULY 13, 2001
TEK DIGITEL CORPORATION
INFORMATION STATEMENT
TABLE OF CONTENTS
Page
----
INFORMATION STATEMENT .............................................................................................. 1
SPECIAL NOTE REGARDING THIS INFORMATION STATEMENT .................................................................. 2
FORWARD-LOOKING STATEMENTS ......................................................................................... 2
OTHER AVAILABLE INFORMATION ........................................................................................ 2
SUMMARY OF INFORMATION STATEMENT ................................................................................... 3
Reasons for Reincorporation Transaction .................................................................. 3
Approval by the Board of Directors ....................................................................... 3
Shareholder Approval Previously Obtained ................................................................. 3
INTRODUCTION ....................................................................................................... 3
PROPOSAL 1: ELECTION OF DIRECTORS ....................................................................... 4
PROPOSAL 2: REINCORPORATION PROPOSAL .................................................................... 4
Principal Features of the Reincorporation Proposal .............................................. 5
Purpose for Reincorporation Proposal ............................................................ 6
Comparison of Shareholder Rights ................................................................ 6
Capital Stock ........................................................................... 7
Payments of Dividends ................................................................... 7
Board of Directors ...................................................................... 8
Cumulative Voting for Directors ......................................................... 8
Board Vacancies ......................................................................... 9
Limitations on Liability; Indemnification ............................................... 9
Notice of Shareholder Nominations and Proposals ......................................... 10
Shareholders' Inspection Rights ......................................................... 11
Special Meetings of Shareholders ........................................................ 11
Shareholder Action Without a Meeting .................................................... 12
Shareholders' Rights in Certain Transactions ............................................ 12
Possible Disadvantages of the Reincorporation Proposal .......................................... 13
New Charter Anti-takeover Provisions ............................................................ 13
Business Combination and Control Share Provisions ............................................... 13
Amendment of Charter and Bylaws ................................................................. 14
Constituency Provision .......................................................................... 14
Board Authority to Change Authorized Stock ...................................................... 14
Classified Board Of Directors ................................................................... 14
Maryland Unsolicited Takeovers Act (MUTA) ....................................................... 15
Removal of Directors .................................................................... 15
Size of the Board of Directors; Vacancies ............................................... 15
Special Meetings of Shareholders ........................................................ 16
Election Not To Be Subject to MUTA ...................................................... 16
Objectives And Potential Effects Of Anti-takeover Provisions and Election to be Subject to MUTA . 16
Potential Disadvantages Of Anti-takeover Provisions and Election to be Subject to MUTA .......... 17
Tax Consequences ................................................................................ 18
Vote Required ................................................................................... 18
Dissenter's Rights of Appraisal ................................................................. 19
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VOTING SECURITIES AND PRINCIPAL HOLDERS ............................................................................ 21
EXECUTIVE COMPENSATION ............................................................................................. 23
Summary Compensation Table ............................................................................... 23
Executive Employment Agreements .......................................................................... 23
Option Grants and Option Exercises in Fiscal Year 2000 ................................................... 24
Directors' Compensation .................................................................................. 24
1997 Employee Stock Compensation Plan .................................................................... 24
1997 Compensatory Stock Option Plan ...................................................................... 24
2001 Omnibus Stock Plan .................................................................................. 24
INDEPENDENT AUDITORS ............................................................................................... 24
MERGERS, CONSOLIDATIONS, ACQUISITIONS AND SIMILAR MATTERS .......................................................... 25
Merger and Surviving Corporation ......................................................................... 25
Share Conversion ......................................................................................... 25
Survivor's Succession to Corporate Rights ................................................................ 25
Survivor's Succession to Corporate Acts, Plans, Contracts and Similar Rights ............................. 26
Survivor's Rights to Assets, Liabilities, Reserves, etc. ................................................. 26
Directors and Officers ................................................................................... 26
Principal Office ......................................................................................... 26
Adoption ................................................................................................. 26
Appraisal Rights and Notification ........................................................................ 26
Effective Date ........................................................................................... 26
Delivery of Shares ....................................................................................... 26
Financial Information .................................................................................... 27
Regulatory Requirements .................................................................................. 27
Reports, Opinions or Appraisals .......................................................................... 27
Past, Present or Proposed Material Contracts ............................................................. 27
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON ........................................... 27
VOTING REQUIREMENT AND PROCEDURES .................................................................................. 27
ANNEXES
- -------
I. Agreement and Plan of Merger between TEK DigiTel Corporation and TEK
DigiTel Corporation II, dated __________, 2001.
II. Certificate of Incorporation of TEK DigiTel Corporation II.
III. Articles of Incorporation of TEK DigiTel Corporation II.
IV. Bylaws of TEK DigiTel Corporation II.
V. MUTA Provisions.
VI. Form of Dissenting Shareholder's Payment Demand Form.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
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TEK DIGITEL CORPORATION
20030 CENTURY BOULEVARD, SUITE 201
GERMANTOWN, MARYLAND 20874
(301) 916-7600
- --------------------------------------------------------------------------------
INFORMATION STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 3, 2001
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.
This Information Statement is furnished by the Board of Directors of
TEK DigiTel Corporation, a Wyoming corporation ("TEK") in connection with the
annual meeting of shareholders of TEK DigiTel Corporation, to be held on Friday,
August 3, 2001, at 10:00 a.m. Eastern Daylight Time. The meeting will be held at
TEK's corporate headquarters at 20030 Century Boulevard, Suite 201, Germantown,
Maryland 20874. This Information Statement and the accompanying Notice of Annual
Meeting of Shareholders are first being mailed to shareholders on or about July
13, 2001. Only shareholders of record at the close of business on Friday, June
1, 2001 (the "record date"), are entitled to notice of the meeting and any
adjournment of the meeting.
The matters to be presented at the meeting have been adopted by the
unanimous resolution of the Board of Directors and are as follows:
o Election of four Directors;
o Approval of a proposal to change TEK's domicile from the State
of Wyoming to the State of Maryland by merging TEK with and
into its wholly-owned subsidiary, TEK DigiTel Corporation II,
a Maryland corporation ("TEK II"); and
o Consideration of any other matter that may properly come
before the annual meeting.
No person is authorized to give any information or to make any
representation not contained in this Information Statement, and if given or
made, such information or representations should not be relied upon as having
been authorized by the company. The delivery of this Information Statement shall
not, under any circumstances, create any implication that the information
contained herein is correct as of any time subsequent to the date hereof or the
date of such document, or that there has been no change in the affairs of the
company since the date hereof or the date of such document.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY. PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.
This Information Statement is first being mailed to shareholders on or
about July 13, 2001.
The date of this Information Statement is ________, 2001.
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SPECIAL NOTE REGARDING THIS INFORMATION STATEMENT
PLEASE NOTE THAT THIS IS NOT A PROXY STATEMENT OR A REQUEST FOR YOUR
VOTE, BUT RATHER AN INFORMATION STATEMENT DESIGNED TO INFORM YOU OF THE
CORPORATE ACTIONS THAT WILL OCCUR IF CERTAIN CONDITIONS PRECEDENT ARE MET AND TO
PROVIDE YOU WITH INFORMATION ABOUT THE MERGER AND THE BACKGROUND OF THE MERGER.
IF THE OTHER CONDITIONS ARE MET, THE MERGER UNDER THE AGREEMENT AND PLAN OF
MERGER WILL TAKE PLACE AS SOON AS PRACTICABLE FOLLOWING THE DATE OF THE ANNUAL
MEETING.
FORWARD-LOOKING STATEMENTS
This Information Statement contains certain forward-looking statements
that can sometimes be identified by the use of forward-looking words such as
"may", "will", "anticipate", "plan", "estimate" or "intend" or comparable
terminology. These statements are subject to known and unknown risks,
uncertainties and other factors, including, but not limited to TEK's limited
operating history, history of operating losses, substantial indebtedness and
substantial capital requirements, that could cause actual results to differ
materially from those contemplated by the statements. TEK does not undertake to
publicly update or revise its forward-looking statements even if experience or
future changes make it clear that any projected results expressed or implied
therein will not be realized. Additional information on risk factors that could
potentially affect TEK's financial results may be found in TEK's public filings
with the Securities and Exchange Commission and press releases. Many of these
filings may be accessed through the SEC's website at: http://www.sec.gov.
OTHER AVAILABLE INFORMATION
We are subject to the information requirements of the Securities
Exchange Act of 1934, and, accordingly, file reports, proxy statements and other
information with the Securities and Exchange Commission. These documents may be
read and copied at the SEC's Public Reference Room at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. We are an electronic filer with the SEC. The SEC maintains a web
site that contains reports, proxy and information statements and other
information regarding issuers that file electronically with the SEC. The address
of the SEC's web site is: http://www.sec.gov. These documents may also be
requested from TEK at 20030 Century Boulevard, Suite 201, Germantown, Maryland
20874, Attention: Thomas Yang, Chief Operating Officer. Our web site address is:
http://www.tekdigitel.com.
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SUMMARY OF INFORMATION STATEMENT
Reasons for Reincorporation Transaction
TEK's Board of Directors believes that the reincorporation is in the
best interest of TEK, its shareholders and customers after considering many
factors, including, among other things, TEK's corporate headquarters are located
in Maryland, Maryland General Corporation Law authorizes the formation of
corporations without liability to the shareholders beyond their investment, and
it establishes a broad framework of rules governing the rights and duties of the
corporation toward third persons and the rights and duties of the corporation,
shareholders, directors and officers.
Approval by the Board of Directors
TEK's Board of Directors unanimously determined that the proposed
reincorporation is in the best interests of TEK and its shareholders and
approved the Agreement and Plan of Merger and the transactions contemplated
thereby, including the reincorporation.
Shareholder Approval Previously Obtained
As of June 1, 2001, 25,132,532 shares of TEK common stock were
outstanding, and 2,036,495 shares of TEK Series A, Voting Convertible Preferred
Stock, were outstanding, in the aggregate representing 31,242,017 votes entitled
to be cast on that date. The Wyoming Business Corporation Act and TEK's Articles
of Incorporation require that the directors be elected by plurality vote and
that all other actions be approved by shareholders holding a majority of the
votes entitled to be cast, which, on June 1, 2001, consisted of 15,621,009
votes.
As of June 11, 2001, TEK's Board of Directors had received the
commitment of a sufficient number and percentage of votes entitled to be cast on
the matters described in this Information Statement to approve the corporate
actions. A written commitment, signed by shareholders owning 58.06% of TEK's
outstanding voting power, was filed with TEK's corporate Secretary on June 11,
2001. Their voting power is sufficient to satisfy the voting requirements of the
Wyoming Business Corporation Act and TEK's Articles of Incorporation and Bylaws.
Therefore, your vote is not required to approve the matters described in this
Information Statement or to consummate the merger.
INTRODUCTION
TEK's Board of Directors, along with shareholders Tseng Yun Tsai and
Glocom, Inc. own in excess of a majority of TEK's outstanding voting securities.
As of June 11, 2001, they have committed, in writing, to approve the following
corporate actions:
o Election of the following Directors:
Enghe Chimood
Thomas Yang
Ke-ou Chao
Sharming Lin
o Proposal to change TEK's domicile from the State of Wyoming to
the State of Maryland by merging TEK with and into its
wholly-owned subsidiary, TEK DigiTel Corporation II, a
Maryland corporation.
No other approvals or votes are required or necessary. See the captions
"Shareholder Approval Previously Obtained", "Approval by the Board of Directors"
and "Voting Securities and Principal Holders".
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PROPOSAL 1: ELECTION OF DIRECTORS
Section 4.02 of TEK's bylaws authorizes the number of directors to
consist of not less than one and not more than five directors. Directors are
elected by a plurality vote at each annual meeting of shareholders. The
Directors currently are Enghe Chimood, Thomas Yang, Ke-ou Chao and Sharming Lin.
Pursuant to written commitment of the requisite number of shares eligible to
vote, they will be elected to serve as Directors until the 2002 annual meeting
of shareholders or until their earlier death, resignation, or removal from
office.
Pursuant to TEK's bylaws, any vacancy occurring in the Board of
Directors, except those resulting from an increase in the number of directors,
may be filled by the affirmative vote of a majority of the remaining Directors,
though less than a quorum, or by a sole remaining Director. A director elected
to fill a vacancy shall be elected for the unexpired term of his predecessor in
office. Any directorship to be filled by reason of an increase in the number of
Directors shall be filled by the affirmative vote of a majority of the entire
Board or by a majority of the votes cast at any annual meeting or at a special
meeting of shareholders called for that purpose, or by means of written
shareholder consents taken in lieu of a meeting. Every director chosen to fill a
vacancy shall hold office until the next annual meeting of shareholders or until
his successor has been elected and qualified.
Pursuant to a written commitment signed by shareholders owning 58.06%
of TEK's outstanding voting power on June 11, 2001, Enghe Chimood, Thomas Yang,
Ke-ou Chao and Sharming Lin will be elected as directors of TEK to serve until
the 2002 annual meeting of shareholders or until their earlier death,
resignation or removal from office. Their voting power is sufficient to satisfy
the plurality voting requirements of the Wyoming Business Corporation Act and
TEK's Articles of Incorporation and Bylaws. Therefore, no further consents,
votes or proxies are needed, and none are requested.
PROPOSAL 2: REINCORPORATION PROPOSAL
TEK currently has no business operations other than as the parent
holding company of its wholly-owned Maryland operating subsidiary, ATC Group,
Inc.
TEK's Board of Directors unanimously approved a proposal to change
TEK's state of incorporation from Wyoming to Maryland by means of a merger (the
"Merger") of TEK with and into TEK DigiTel Corporation II, a Maryland
corporation ("TEK II"), a newly formed, wholly-owned subsidiary of TEK (the
"Reincorporation Proposal"). The principal office of TEK II is the same as that
of TEK, 20030 Century Boulevard, Suite 201, Germantown, Maryland 20874,
telephone (301) 916-7600. TEK II will be the surviving corporation, the effect
of which will be a change in the law applicable to TEK's corporate affairs from
the Wyoming Business Corporation Act ("Wyoming Law") to the Maryland General
Corporation Law ("Maryland Law"), including certain differences in shareholder
rights. See "Comparison of Shareholder Rights".
The following discussion summarizes certain aspects of the
Reincorporation Proposal, including certain material differences between Wyoming
Law and Maryland Law. This summary is not intended to be a complete description
of the Reincorporation Proposal or the differences between shareholder rights
under Wyoming Law or Maryland Law, and is qualified in its entirety by reference
to:
o the Agreement and Plan of Merger dated _____________, 2001
between TEK and TEK II (the "Merger Agreement") attached to
this Information Statement as Annex I,
o the Articles of Incorporation of TEK II (the "New Charter")
attached to this Information Statement as Annex III, and
o the Bylaws of TEK II (the "New Bylaws") attached to this
Information Statement as Annex IV.
Copies of TEK's Certificate of Incorporation (the "Present Charter")
and Bylaws (the "Present Bylaws") are available for inspection at TEK's
executive office, and copies will be provided to shareholders upon request.
TEK's Board of Directors unanimously approved the Reincorporation
Proposal and, for the reasons discussed below, believes that it serves the best
interests of TEK and its shareholders to change TEK's state of
4
incorporation from Wyoming to Maryland. TEK's shareholders are not being asked
to vote upon the Reincorporation Proposal (including the adoption of the Merger
Agreement and the approval of the New Charter and the New Bylaws) at the annual
meeting. The Reincorporation Proposal is required to be approved by the
shareholders who hold at least a majority of TEK's voting power. As of June 11,
2001, TEK's Board of Directors had received the commitment of a sufficient
number and percentage of TEK's voting power entitled to vote on the matters
described. These shareholders have irrevocably consented in writing to approve
the Reincorporation Proposal. Their voting power is sufficient to satisfy the
voting requirements of the Wyoming Business Corporation Act and TEK's Articles
of Incorporation and Bylaws.
Approval of the Reincorporation Proposal by a majority of the
outstanding voting power constitutes adoption of the Merger Agreement and
approval of the Merger, the New Charter and the New Bylaws. Pursuant to the
terms of the Merger Agreement, the New Charter and New Bylaws will replace the
Present Charter and Present Bylaws as the charter documents affecting corporate
governance and shareholders' rights. See "Comparison of Shareholder Rights".
Accordingly, shareholders are urged to read carefully this Information Statement
and the attached Annexes.
Principal Features of the Reincorporation Proposal
At the Effective Date of the Merger, TEK's separate existence will
cease and TEK II, as the surviving corporation, will succeed to all TEK's
business, properties, assets and liabilities. Each share of TEK's common stock
issued and outstanding immediately prior to the Effective Date will, by virtue
of the Merger, be converted into one share of TEK II common stock, no par value.
At the Effective Date, certificates which immediately prior to the Effective
Date represented shares of TEK's common stock will be deemed for all purposes to
represent the same number of shares of TEK II's common stock. It will not be
necessary for TEK shareholders to exchange their existing stock certificates for
TEK II stock certificates. However, when outstanding certificates representing
shares of TEK's common stock are presented for transfer after the Merger, new
certificates representing shares of TEK II common stock will be issued. New
certificates will also be issued upon the request of any shareholder, subject to
normal requirements as to proper endorsement, signature, guarantee, if required,
and payment of applicable taxes, if any.
Following consummation of the Merger, TEK II's common stock will be
listed for trading on the OTC Bulletin Board, the market on which TEK's common
stock is currently listed for trading. TEK II's common stock will be listed
under the symbol "TEKI", TEK's current symbol. Delivery of existing stock
certificates representing TEK's common stock will constitute "good delivery" of
TEK II shares in transactions subsequent to the Effective Date of the Merger.
Approval of the Reincorporation Proposal will effect a change in the
legal domicile of TEK and certain other changes of a legal nature, as described
in this Information Statement. TEK's reincorporation will not, in and of itself,
result in any change in TEK's business, management, location of the principal
executive offices, assets, liabilities or shareholders' equity. Only TEK's
corporate name will have changed from TEK DigiTel Corporation to TEK DigiTel
Corporation II, which the Board of Directors intends to change to TEK DigiTel
Corporation after filing Articles of Merger with the Maryland State Department
of Assessments and Taxation. The number of directors comprising TEK II's Board
of Directors will be three initially, each of whom is currently a director of
TEK. The executive officers of TEK II are currently serving as the executive
officers of TEK. Shareholders should note that approval of the Reincorporation
Proposal constitutes ratification of all of the directors currently serving as
directors of TEK. See "Comparison of Shareholder Rights--Board of Directors".
Pursuant to the terms of the Merger Agreement, each option to purchase
TEK's common stock outstanding immediately prior to the Effective Date of the
Merger under TEK's 1997 Compensatory Stock Option Plan and TEK's 1997 Employee
Stock Compensation Plan will become an option to purchase TEK II common stock,
subject to the same terms and conditions as set forth in the applicable plan and
the applicable grant agreement. All other employee benefit plans and other
agreements and arrangements of TEK will be continued by TEK II upon the same
terms and subject to the same conditions. Approval of the Reincorporation
Proposal constitutes approval by TEK's shareholders of TEK II's assumption of
TEK's employee benefit plans and arrangements.
The proposed reorganization will be consummated as soon as possible
after August 3, 2001 and any requisite waiting periods. The Merger Agreement,
Wyoming Law and Maryland Law provide, however, that the
5
Merger may be abandoned by the Board of Directors of either TEK or TEK II prior
to the Effective Date, either before or after shareholder approval.
In addition, the Merger Agreement may be amended prior to the Effective
Date, either before or after shareholder approval; provided, however, that the
Merger Agreement may not be amended after shareholder approval if the amendment
would:
o alter or change the amount or kind of shares or other
consideration to be received by shareholders in the Merger,
o alter or change any term of the New Charter,
o alter or change any of the terms and conditions of the Merger
Agreement if such alteration or change would adversely affect
the shareholders, or
o otherwise violate applicable law.
TEK's Board of Directors has made no determination as to any
circumstances which may prompt a decision to abandon the proposed
reincorporation or amend the Merger Agreement.
Purpose for Reincorporation Proposal
The Board of Directors believes that reincorporating TEK in the State
of Maryland is in TEK's and its shareholders' best interests, in order to obtain
the benefits of Maryland Law in any potential acquisition of TEK. The Board
believes that the interests of TEK and its shareholders are best served by
encouraging a potential acquirer of TEK to negotiate with the Board of Directors
prior to any acquisition or change of control. In addition, because TEK's
headquarters and operating subsidiary are located in Maryland, the Board of
Directors believes that it is more convenient and economical to be a Maryland
corporation.
Although, as a Wyoming corporation, TEK could put in place provisions
that would encourage negotiation by a potential acquirer, the Board of Directors
believes that as a Maryland corporation, provisions are available to TEK that
are more favorable in an acquisition context. See "Comparison of Shareholder
Rights", "New Charter Anti-takeover Provisions" and "Maryland Unsolicited
Takeover Act".
Accordingly, after considering the advantages and disadvantages of the
Reincorporation Proposal, including the differences between Wyoming Law and
Maryland Law, the Board of Directors concluded that the benefits to TEK and its
shareholders of being a Maryland corporation outweigh the benefits, if any, of
remaining a Wyoming corporation. See "Comparison of Shareholder Rights",
"Possible Disadvantages of the Reincorporation Proposal" and "Potential
Disadvantages of Anti-takeover Provisions and Election to be Subject to MUTA".
Comparison of Shareholder Rights
Upon consummation of the Merger, TEK will be governed by Maryland Law
and by the New Charter and Bylaws. Although it is impracticable to compare all
of the aspects in which Maryland Law and Wyoming Law differ, the following is a
summary of certain significant differences between the provisions of these laws
and the Present and New Charters and Bylaws. This discussion is not intended to
be a complete statement of the differences affecting the rights of shareholders,
but, rather, summarizes material differences and certain important similarities.
The discussion is qualified in its entirety by reference to the New Charter, the
New Bylaws and the Maryland Unsolicited Takeovers Act, Title 3, Subtitle 8 of
Maryland Law ("MUTA") which are attached as Annexes III, IV and V, respectively,
to this Information Statement, and the Present Charter and Present Bylaws,
copies of which are available for inspection at TEK's executive office or will
be provided to shareholders upon request.
6
Capital Stock
TEK's authorized capital stock consists of 50,000,000 shares of common
stock, no par value per share and 20,000,000 shares of preferred stock, no par
value per share. As authorized by the Wyoming Business Corporation Act, by
unanimous written consent on June 15, 1998, the Board of Directors established a
series of preferred stock, known as Series A, Voting Convertible Preferred
Stock, consisting of 2,100,000 shares, $.001 par value per share. As of June 1,
2001, 25,132,532 shares of common stock were issued and outstanding and
2,036,495 shares of TEK's Series A, Voting Convertible Preferred Stock were
issued and outstanding. Under the New Charter, TEK II's authorized capital stock
consists of 100,000,000 shares of common stock and 20,000,000 shares of
preferred stock. Of the 20,000,000 shares of preferred stock, 2,100,000 shares
are designated as Series A, Voting Convertible Preferred Stock.
The Present Charter authorizes the Board of Directors to issue
preferred stock from time to time in one or more series subject to applicable
provisions of law, and the Board of Directors is authorized to fix the
designations, powers, preferences and relative participating, optional and other
special rights of such shares, including voting rights (which could be multiple
or as a separate class) and conversion rights. TEK also has a substantial number
of authorized but unissued shares of common stock available for issuance. The
authorized but unissued shares of common stock are available for general
corporate purposes, including but not limited to possible issuance as stock
dividends or stock splits, in future mergers or acquisitions, in a future
underwritten or other public offering, under a shareholder rights plan or under
stock-based compensation plans. The authorized but unissued shares of preferred
stock are similarly available for issuance in future mergers or acquisitions, in
a future underwritten public offering or private placement or for other general
corporate purposes. Except as required by law or as otherwise required to
approve the transaction in which the additional authorized shares of common
stock or authorized shares of preferred stock would be issued, no shareholder
approval is required for the issuance of these shares. Accordingly, TEK's Board
of Directors, without shareholder approval, can issue preferred stock with
voting and conversion rights which could adversely affect the voting power of
the existing holders of common stock.
The New Charter authorizes the Board of Directors to authorize the
issuance from time to time of shares of TEK II's stock of any class and
securities convertible into shares of TEK II's stock, of any class or classes,
for such consideration as the Board of Directors may deem advisable. The Board
of Directors also has the power to classify or reclassify any unissued stock, by
setting or changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of such stock.
TEK II, as the surviving corporation, will have a substantial number of
authorized but unissued shares of common stock available for issuance. The
authorized but unissued shares of common stock are available for general
corporate purposes, including but not limited to possible issuance as stock
dividends or stock splits, in future mergers or acquisitions, in a future
underwritten or other public offering, under a shareholder rights plan or under
stock-based compensation plans. Except as required by law or as otherwise
required to approve the transaction in which the additional authorized shares of
common stock or other class of stock would be issued, no shareholder approval is
required for the issuance of these shares. Accordingly, the Board of Directors,
without shareholder approval, can issue shares with voting and conversion rights
which could adversely affect the voting power of the existing holders of common
stock.
Payments of Dividends
TEK's ability to pay dividends on its capital stock is limited by
certain restrictions imposed on Wyoming corporations generally and, after the
Merger, TEK II's ability to pay dividends on its capital stock will be limited
by certain restrictions imposed on Maryland corporations generally. Under
Wyoming Law and Maryland Law, distributions may be declared and paid unless,
after giving effect to the distribution:
o the corporation would not be able to pay its debts as they
become due in the usual course of business, or
o the corporation's total assets would be less than the sum of
its total liabilities plus the amount that would be needed, if
the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights on
dissolution are superior to those receiving the distribution.
7
Maryland Law permits the payment of dividends if, after the dividends
have been paid, the corporation is able to pay its debts as they become due in
the usual course of business (equity test for insolvency), and the corporation's
total assets are not less than the sum of its total liabilities plus the amount
that would be needed, if the corporation were to be dissolved at the time of the
dividend payment, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
dividend (balance sheet test for insolvency). In addition, Maryland Law
generally provides that a corporation may redeem or repurchase its shares only
if the same equity and balance sheet test for insolvency are satisfied. In
determining whether the balance sheet test has been satisfied, the Board may:
o use financial statements prepared on the basis of accounting
practices that are reasonable under the circumstances;
o make its determination based on a fair valuation, including,
but not limited to, unrealized appreciation and depreciation;
or
o make its determination based upon any other method that is
reasonable in the circumstances.
Wyoming Law states that shares may be issued pro-rata and without
consideration to the corporation's shareholders or to the shareholders of one or
more classes or series. This type of issuance of shares is a share dividend.
Shares of one class or series may not be issued as a share dividend in respect
of shares of another class or series unless:
o the articles of incorporation so authorize;
o a majority of the votes entitled to be cast by the class or
series to be issued approve the issue; or
o there are no outstanding shares of the class or series to be
issued.
If the Board of Directors does not fix the record date for determining
shareholders entitled to a share dividend, it is the date the Board of Directors
authorizes the share dividend.
Board of Directors
Under the Present Charter and Bylaws, TEK's Board of Directors consists
of not less than one and not more than five directors, as set from time to time
by the Board of Directors or the shareholders. Directors are elected by a
plurality vote at each annual meeting of shareholders and hold office until the
next annual meeting of shareholders and until his or her successor is elected
and qualified. The New Charter designates four initial directors to be elected
to staggered three year terms and until their successors are duly chosen and
qualified. The number of directors may be increased or decreased pursuant to the
New Bylaws, but may not be less than three or the number of shareholders. See
also, "Maryland Unsolicited Takeovers Act--Size of the Board of Directors;
Vacancies".
Information about TEK's current directors is set forth under "Directors
and Executive Officers". The approval of the Reincorporation Proposal by TEK's
shareholders is also deemed to have approved these persons as directors of TEK
II without further action and without changes in their terms.
Cumulative Voting for Directors
Under cumulative voting, each share of stock entitled to vote in the
election of directors has a number of votes equal to the number of directors to
be elected. A shareholder may then cast all of his votes for a single candidate,
or may allocate them among as many candidates as the shareholder may chose.
Under both Wyoming and Maryland Law, shares may not be cumulatively voted for
the election of directors unless the certificate of incorporation specifically
provides for cumulative voting. Neither TEK's Wyoming Articles of Incorporation
nor TEK II's Maryland Articles of Incorporation provide for cumulative voting in
the election of directors.
8
Board Vacancies
Under the Present Bylaws and New Bylaws vacancies occurring on the
Board of Directors, except those resulting from an increase in the number of
directors, may be filled by the affirmative vote of a majority of the remaining
Directors, though less than a quorum, or by a sole remaining Director. A
director elected to fill a vacancy is elected for the unexpired term of his
predecessor in office. Any directorship to be filled by reason of an increase in
the number of Directors is filled by the affirmative vote of a majority of the
entire Board or by a majority of the votes cast at any annual meeting or at a
special meeting of shareholders called for that purpose, or by means of written
shareholder consents taken in lieu of a meeting. Every director chosen to fill a
vacancy will hold office until the next annual meeting of shareholders or until
his successor has been elected and qualified. See also, "Maryland Unsolicited
Takeovers Act--Size of the Board of Directors; Vacancies".
Limitations on Liability; Indemnification
The Present Charter contains a provision that eliminates or limits a
director's personal liability for monetary damages to the corporation or its
shareholders for any breach of fiduciary duty as a director, other than:
o for any breach of the director's duty of loyalty to the
corporation or its shareholders;
o for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
o for a willful or negligent violation of the requirements of
Wyoming Law pertaining to distributions; or
o for any transaction from which the director derived an
improper personal benefit.
The New Charter contains a provision that eliminates or limits a
director's personal liability for monetary damages to the extent otherwise
required by Maryland Law. Under Maryland Law, this would exclude liability to
the extent:
o it is proved that the person actually received an improper
benefit or profit in money, property, or services;
o that a judgment or other final adjudication adverse to the
person is entered on a finding that the person's action, or
failure to act, was the result of active and deliberate
dishonesty and was material to the cause of action; or
o it is against a director or officer of a banking institution,
credit union, savings and loan, or subsidiary thereof.
The indemnification provisions contained in the Present and New Bylaws,
as governed by Wyoming Law and Maryland Law, respectively, are similar. Both
provisions generally allow for indemnification of officers and directors to the
fullest extent permitted by law. In general, Maryland Law and Wyoming Law permit
a corporation to provide complete indemnification for settlements, judgments and
expenses actually and reasonably incurred in proceedings other than derivative
actions (i.e., actions brought against such persons by or on behalf of the
corporation), subject to certain statutory limitations.
Under Wyoming Law, indemnification is permitted if the indemnitee acted
in good faith and in a manner the person reasonably believed to be in, or at
least not opposed to, the corporation's best interests, and in a criminal
proceeding, had no reasonable cause to believe that the conduct was unlawful.
Under Maryland Law, indemnification is permitted unless the individual acted in
bad faith or with active and deliberate dishonesty, actually received an
improper personal benefit in money, property or services, or in the case of a
criminal proceeding had reasonable cause to believe that the conduct was
unlawful.
Maryland Law also generally permits indemnification for amounts paid in
settlement (including expenses) of derivative suits, whereas the Wyoming Law
permits indemnification of expenses only. Maryland Law and Wyoming Law both,
however, prohibit such indemnification if the proposed indemnitee is adjudged
liable to the corporation, except upon application to a court which determines
that such person is reasonably entitled to such
9
indemnification. The rights to indemnification and to the advancement of
expenses are not exclusive of any other right which any person may have or
hereafter acquire under any statute, the New Charter, the New Bylaws, agreement,
vote of shareholders or directors, or otherwise.
Notice of Shareholder Nominations and Proposals
TEK's present Bylaws are silent as to the procedures that shareholders
must comply with to nominate a candidate for election as director at an annual
meeting or to include a shareholder proposal in the company's proxy statement.
Thus, the provisions of Wyoming Law relating to director nominations and Rule
14a-8 of the Securities Exchange Act of 1934 (the "Exchange Act"), or its
successor provision, control with regard to these issues. Generally, a
nomination is required to be:
o written;
o delivered to, or mailed and received at, TEK's executive
offices not less than 60 days nor more than 90 days prior to
the date of the scheduled annual meeting; and
o accompanied by:
o the name, age, business address and residence of the
shareholder and each person whom the shareholder
proposes to nominate for election or re-election as a
director;
o the principal occupation or employment of such
persons;
o the number of shares of TEK stock which are
beneficially owned by such persons that is required
to be disclosed in solicitations of proxies with
respect to nominees for election as directors,
pursuant to Regulation 14A under the Exchange Act;
and
o the name and address, as they appear on TEK's books,
of the shareholder making the nomination and any
other shareholder known by such shareholder to
support such nomination, and the number of shares of
TEK stock beneficially owned by all such
shareholders.
If notice or public disclosure of the date of the annual meeting occurs
less than 70 days prior to the date of the annual meeting, shareholders must
deliver to TEK, or mail and have received by TEK, the nomination and the
required attendant information no later than the close of business on the tenth
day following the earlier of the day on which the notice of the date of the
annual meeting was mailed or the day on which the public disclosure was made.
Under the New Bylaws, to be properly brought before an annual meeting,
business must be:
o specified in the corporation's notice of the annual meeting
(or any supplement thereto);
o brought before the annual meeting by or at the direction of
the Board of Directors (or the Chairman of the Board or the
President); or
o properly brought before the annual meeting by a shareholder.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a shareholder, the shareholder must
have given timely notice thereof in writing to the Chairman of the Board. The
New Bylaws provide that, nominations of persons for election to the Board of
Directors may be made at the annual meeting, by or at the direction of the Board
of Directors, or by any nominating committee or person appointed by the Board of
Directors, or by any shareholder entitled to vote for the election of directors
at the annual meeting who complies with the notice procedures set forth below.
Such nominations, other than those made by or at the direction of the Board of
Directors or by any nominating committee or person appointed by the Board of
Directors, can only be made pursuant to timely notice in writing to the Chairman
of the Board.
10
To be timely, the shareholder's notice must be delivered to or mailed
and received by the Chairman of the Board not less than 60 days nor more than 90
days prior to the annual meeting (or, with respect to a proposal required to be
included in TEK II's proxy statement pursuant to Rule 14a-8 of the Exchange Act,
or its successor provision, not less than 90 days nor more than 120 days prior
to the date of mailing the notice for the preceding year's annual meeting);
provided, however, that in the event that less than 30 days notice or prior
public disclosure of the date of the annual meeting is given or made, notice by
the shareholder to be timely must be so received by the Chairman of the Board
not later than the close of business on the tenth day following the earlier of
the day on which the notice of the date of the annual meting was mailed or the
day on which the first public disclosure of the date of the annual meeting was
made.
The shareholder's notice must set forth:
o as to each person whom the shareholder proposes to nominate
for election as a director:
o the name, age, business address and residence address
of the person;
o the principal occupation or employment of the person;
o the class and number of shares of stock of TEK II
which are beneficially owned by the person; and
o any other information relating to the person that is
required to be disclosed in solicitations for proxies
for election of directors pursuant to the rules and
regulations under the Exchange Act;
o as to each matter the shareholder proposes to bring before the
annual meeting, a brief description of the business desired to
be brought before the annual meeting:
o the reasons for conducting that business at the
annual meeting; and
o any material interest of the shareholder in that
business; and
o as to the shareholder giving the notice:
o the name and address of the shareholder;
o the class and number of shares of TEK II which are
beneficially owned by the shareholder; and
o a representation that the shareholder intends to
appear in person or by proxy at the annual meeting to
bring that business before the meeting.
TEK II may require any proposed nominee to furnish other information
as may reasonably be required by TEK II to determine the eligibility of the
proposed nominee to serve as a TEK II director.
Shareholders Inspection Rights
Under Wyoming Law a shareholder may inspect a corporation's stock
ledgers, the shareholder list and its other books and records for any purpose
reasonably related to the person's interest as a shareholder. Maryland Law
provides that a corporation's books of account, its stock ledger and the
shareholders' list may be inspected only by one or more persons who together
have been shareholders of record for at least six months and who together hold
at least 5% of the outstanding stock of any class.
Special Meetings of Shareholders
The Present Bylaws provide that special meetings of shareholders may
be called at any time by the Chairman of the Board, the President or by a
majority of the Board of Directors. The President must call a special
11
meeting upon the Secretary's receipt of written demand for a special meeting by
the holder or holders of not less than 10% of the total voting power. The New
Bylaws provide that special meetings of shareholders may be called by the
Chairman of the Board, the President or by a majority of the Board of Directors.
The Secretary must call a special meeting upon the written request of
shareholders entitled to cast at least a majority of all the votes entitled to
be cast at the meeting. See also, "Maryland Unsolicited Takeovers Act--Special
Meetings of Shareholders".
Shareholder Action Without a Meeting
The Present Charter and Present Bylaws, as permitted under Wyoming Law,
provide that shareholder action may be taken at a special or annual meeting of
shareholders or by written consent, if prior notice is given to all voting
shareholders and the action is taken by the holders of all shares entitled to
vote on the action. Maryland Law and the New Bylaws provide that any action to
be taken or which may be taken at any annual or special meeting may be taken,
without a meeting if a consent in writing, setting forth the action so taken is
given by the holders of all outstanding shares entitled to vote on the matter.
Shareholders' Rights in Certain Transactions
Maryland Law provides generally, with certain exceptions, that a
shareholder of a Maryland corporation has the right to demand and receive
payment of the fair value of the shareholder's stock from a successor
corporation if:
o the corporation merges or consolidates with another
corporation;
o the shareholder's stock is to be acquired in a share exchange;
o the corporation transfers its assets other than in the
ordinary course of business; or
o the corporation alters its charter in a way which alters
contractual rights, as expressly set forth in the charter, of
any outstanding stock and substantially adversely affects the
shareholder's rights, unless the right to do so is reserved by
the corporation's charter.
A shareholder must file a written demand for the fair cash value of
his/her shares with the corporation within certain time periods, depending on
the transaction involved. Maryland Law provides that the right to fair value
does not apply, with certain exceptions, if:
o the stock is listed on a national securities exchange, or is
designated as a national or small cap market system security
on an inter-dealer quotation system by the National
Association of Securities Dealers, Inc.;
o the stock is that of a successor in a merger, unless the
merger alters the contract rights of the stock as expressly
set forth in the charter and the charter does not reserve the
right to do so, or the stock is to be changed or converted in
whole or in part in the merger into something other than
either stock in the successor or cash, scrip, or other rights
or interests arising out of the provisions for the treatment
of fractional shares of stock in the successor; or
o the stock is that of an open-end investment company registered
with the Securities and Exchange Commission and the value
placed on the stock in the transaction is its net asset value.
Wyoming Law provides shareholders with similar rights to dissent from,
and to obtain payment of the fair value of his/her shares in the event of the
following corporate actions:
o the corporation merges or consolidates with another
corporation;
o the shareholder's stock is to be acquired in a share exchange;
o the corporation transfers its assets other than in the
ordinary course of business; or
o the corporation alters its Articles of Incorporation in a way
that materially and adversely affects rights with respect to
dissenters' shares.
12
These rights are available with respect to the Merger. After
shareholder approval and consummation of the Merger, shareholders will have
dissenters' rights under Maryland Law, with certain exceptions, in future
transactions.
Possible Disadvantages of the Reincorporation Proposal
Despite the Board of Directors' belief that the Reincorporation
Proposal is in the best interests of TEK and its shareholders, shareholders
should be aware that many provisions of the New Charter, the New Bylaws and
Maryland Law have not received extensive scrutiny and interpretation by the
Maryland courts. The Board of Directors, however, believes Maryland Law will
provide TEK II with the comprehensive, flexible structure that it needs to
operate effectively. See also, "Potential Disadvantages Of Anti-takeover
Provisions and Election to be Subject to MUTA".
New Charter Anti-takeover Provisions
Several provisions contained in the New Charter and Bylaws, and under
Maryland Law could have the effect of discouraging an acquisition of TEK or
stock purchases in furtherance of an acquisition, and could, under certain
circumstances, discourage transactions which might otherwise have a favorable
effect on the price of TEK's common stock. These provisions may serve to make it
more difficult to remove incumbent management and may also discourage an attempt
to acquire control of TEK that is not approved by the Board of Directors. As a
result, shareholders who might desire to participate in, or benefit from, such a
transaction may not have an opportunity to do so. As of the date of this
Information Statement, the Board of Directors is not aware that any person or
group has indicated an intention or desire to institute a takeover of TEK.
Business Combination and Control Share Provisions
Maryland Law requires consolidations, mergers, share exchanges and
certain asset transfers to be approved by 2/3 of the corporation's voting power;
however, this voting requirement can be reduced to a majority of the
corporation's voting power, as so provided in the New Charter. Wyoming Law
requires shareholder approval, in general, of consolidations, mergers, share
exchanges and dispositions of substantially all of a corporation's property,
other than in the usual and regular course of business, by a majority of all the
votes entitled to be cast on the plan.
Maryland Law regulates transactions with major shareholders after they
become major shareholders. Maryland Law prohibits an interested shareholder from
engaging in a wide range of business combinations, i.e., engaging in mergers,
dispositions of 10% or more of its assets, issuances of stock and other
transactions with a person or group that owns 10% or more of the voting stock of
the corporation (an "interested shareholder"), for a period of five years after
the interested shareholder crosses the 10% threshold. Maryland Law also provides
for certain exemptions from these restrictions on transactions involving an
interested shareholder.
The Maryland Law provisions discussed above will generally apply to TEK
II; however, the New Charter provides that such provisions will not apply to any
business combination of TEK II or any subsidiary of TEK II with Arelnet Ltd.;
any person that becomes an interested shareholder as a result of a transfer of
securities to such person pursuant to a written agreement that provides for the
exemption to which Arelnet Ltd. or any of its affiliates or associates is a
party or any affiliates or associates of those persons.
Wyoming Law does not contain similar provisions.
Maryland Law also contains a control share statute which requires an
interested shareholder who acquires a threshold percentage of stock in a target
corporation to obtain the approval of non-interested shareholders before it may
exercise voting rights. Under Maryland Law, certain notice and informational
filings and special shareholder meeting and voting procedures must be followed
prior to consummation of a proposed "control share acquisition", which is
defined as any acquisition of an issuer's shares which would entitle the
acquirer, immediately after such acquisition, directly or indirectly, to
exercise or direct the exercise of voting power of the issuer in the election of
directors within any of the following ranges of voting power:
o 1/10 or more but less than 1/3 of the voting power;
o 1/3 or more but less than a majority of the voting power; or
o a majority or more of the voting power.
13
Assuming compliance with the notice and information filings prescribed
by statute, the proposed control share acquisition may be made only if the
acquisition is approved by 2/3 of the issuer's voting power, excluding the
combined voting power of the "interested shares". "Interested shares" are those
shares held by the intended acquirer and the issuer's directors and officers.
The New Charter opts out of these control share provisions of Maryland Law so
that the provisions will not apply to TEK II.
Wyoming Law does not contain any similar type of statute.
Amendment of Charter and Bylaws
Under the Present Charter and Wyoming Law, the charter may be amended
by the Board of Directors without shareholder action with respect to certain
amendments; however, certain other amendments require the shareholders to
approve the amendment by a majority of the votes cast on the amendment. Under
the New Charter, amendment to the charter may be made when approved by a
majority of the Board of Directors and a majority of the outstanding shares
entitled to vote. The Present Bylaws may be amended by a majority vote of the
Board of Directors, subject to the shareholders' right to change or repeal any
bylaws created by the Board of Directors or adopt new bylaws by vote of at least
a majority of the total voting power. The New Charter and Bylaws provide that
the Board of Directors, and not the shareholders, shall have the exclusive power
to make, alter, amend, restate or repeal any provision of the New Bylaws.
Constituency Provision
Maryland Law permits a corporation to include in its charter a
provision that allows the Board of Directors of a corporation, in considering a
potential acquisition of control of the corporation, to consider the effect of
the potential acquisition of control on shareholders, employees, suppliers,
customers, and creditors of the corporation and the communities where offices or
other establishments of the corporation are located. The New Charter includes
such a provision.
Board Authority to Change Authorized Stock
Maryland Law permits a corporation to include in its charter a
provision that allows the Board of Directors of a corporation, with the approval
of a majority of the entire Board of Directors, and without action by the
shareholders of the corporation, to amend the charter of the corporation to
increase or decrease the aggregate number of shares of stock of the corporation
or the number of shares of stock of any class or series that the corporation has
authority to issue. The New Charter includes such a provision.
Classified Board Of Directors
Under the Present Charter and Bylaws, members of the Board of Directors
are elected for a term that expires at the next annual meeting of shareholders.
The New Bylaws divide TEK II's Board of Directors into three classes of
directors, Class I, Class II and Class III, with the number of directors in each
class to be as nearly equal as possible, and with each class to be elected for a
term that expires at the annual meeting of shareholders in the third year
following the election of the class. The number of directors of TEK II is
currently fixed at four, with Class I comprised of two directors and Classes II
and III each comprised of one director.
In order to place the classes of directors on a staggered basis for
purposes of annual elections, the directors in Classes I, II and III will hold
office until the first, second and third annual meetings of shareholders,
respectively, and until their successors are elected and qualify. Thus, after
the meeting to which this Information Statement relates, shareholders will elect
approximately one-third of the directors at each annual meeting of shareholders.
14
The following individuals were appointed to the Board of Directors of
TEK II: Enghe Chimood and Sharming Lin, who will serve as Class I directors and
their term of office will expire at the 2002 annual meeting of shareholders;
Thomas Yang, who will serve as a Class II director and his term of office will
expire at the 2003 annual meeting of shareholders; and Ke-ou Chao, who will
serve as a Class III director and his term of office will expire at the 2004
annual meeting of shareholders.
Maryland Unsolicited Takeovers Act (MUTA)
Maryland Law provides certain protections with respect to unsolicited
takeover bids to Maryland corporations that are reporting companies under the
Exchange Act and have at least three directors who:
o are not officers or employees of the corporation;
o are not persons seeking to acquire control of the corporation
("Acquiring Persons");
o are not directors, officers, affiliates or associates of an
Acquiring Person; and
o were not nominated or designated as directors by an Acquiring
Person.
The provisions are discussed below and are set forth in Subtitle 8 of
Title 3 of Maryland Law, which is attached to this Information Statement as
Annex V.
The Board of Directors of a Maryland corporation can elect to be
subject to any or all of the provisions of MUTA by resolution of the Board of
Directors without the approval of the shareholders. If a corporation elects to
be subject to MUTA, the provisions of MUTA supersede any conflicting provisions
of the corporation's charter and bylaws. See "New Charter Anti-takeover
Provisions" and "Amendment of Charter and Bylaws".
The New Charter and Bylaws have reserved the right for the Board of
Directors to elect for TEK II to be subject to the provisions set forth in MUTA;
however, TEK II's Board of Directors has no present intention to increase the
size of the Board. Nevertheless, in the future, if TEK II becomes eligible for
the MUTA provisions, the Board of Directors intends to elect for TEK II to be
subject to all the provisions of MUTA.
Removal of Directors
Under the Present Charter and Bylaws, any director or the entire Board
of Directors may be removed, with or without cause, by a majority of
all shares then entitled to vote at a meeting. Following TEK II's
eligibility and election to be subject to MUTA, shareholders will only
be permitted to remove directors for cause and upon a vote of at least
2/3 of all the votes entitled to be cast generally in the election of
directors.
Size of the Board of Directors; Vacancies
The Present and New Charters and Bylaws provide for a set number of
directors. By action of TEK and TEK II's Board of Directors, the
current number of directors is fixed at four. Following TEK II's
eligibility and election to be subject to MUTA, the number of directors
will be fixed from time to time exclusively by the Board, which will
not cause the term of any incumbent director to be shortened. Under the
Present and New Charters and Bylaws, a vacancy on the Board of
Directors caused by the removal of a director may be filled by the
shareholders. Following TEK II's eligibility and election to be subject
to MUTA, each vacancy on the Board of Directors that results from an
increase in the size of the Board of Directors or the death,
resignation or removal of a director may be filled only by the
affirmative vote of a majority of the remaining directors in office,
even if the remaining directors do not constitute a quorum. Any
director so elected by the Board to fill a vacancy would become a
member of the same class as the director he or she succeeds and would
hold office for the remainder of the term of that class and until his
or her successor is elected and qualified.
15
Special Meetings of Shareholders
Under MUTA, a corporation's secretary may call a special meeting of
shareholders only on written request of the shareholders entitled to
cast at least a majority of all the votes entitled to be cast at the
meeting.
Election Not To Be Subject to MUTA
Under MUTA, if a corporation elects to be subject to a provision or
provisions of MUTA, the provision or provisions will not apply to a
corporation to the extent that the corporation subsequently elects not
to be subject to the provision or provisions in the same manner in
which it previously elected to become subject to the provision or
provisions. Because TEK II intends to elect to be subject to all of the
provisions of MUTA, when eligible, by resolution of the Board of
Directors without shareholder approval, TEK II may only elect to not be
subject to a provision of MUTA by a resolution of the Board of
Directors.
Objectives And Potential Effects Of Anti-takeover Provisions and Election to be
Subject to MUTA
The Board believes that the provisions of the New Charter that may have
anti-takeover effects and the provisions of MUTA will be in the best interests
of TEK II and its shareholders because such provisions should enhance the
continuity and stability of TEK II's management and the Board's policies. Having
a classified board of directors provides that, at any given time, at least 2/3
of the directors will have at least one year of experience as TEK II directors
and with its business affairs and operations. New directors will therefore have
an opportunity to become familiar with TEK II's affairs and to benefit from the
experience of co-members of the Board who have served for longer than one year
terms. Although the Board believes TEK has not experienced problems with
continuity and stability of leadership and policy to date, it hopes to avoid
these problems for TEK II in the future. The Board also believes that
classification will enhance TEK II's ability to attract and retain well
qualified individuals who are able to commit the time and resources to
understand its business affairs and operations. The continuity and quality of
leadership that results from a classified board should, in the opinion of the
Board, promote the long-term value of TEK II following the Merger.
The Board also believes that the anti-takeover provisions and the MUTA
provisions are in the best interests of TEK II and its shareholders because they
should, when adopted, complement the business combination provisions under
Maryland Law (see "Business Combination and Control Share Provisions") and
reduce the possibility that a third party could effect a sudden or surprise
change in control of the Board. Many companies have implemented anti- takeover
provisions for this purpose. These provisions are designed to reduce the
vulnerability of TEK II to an unsolicited takeover proposal, particularly a
proposal that does not contemplate the acquisition of all the TEK II outstanding
shares, or an unsolicited proposal for the restructuring or sale of all or part
of TEK II; however, such provisions would not prevent a negotiated acquisition
with the cooperation of the Board, and a negotiated acquisition could be
structured in a manner that would shift control of the Board to representatives
of the acquirer as part of the transaction.
To effect these objectives, under the classified board provisions, at
least two annual meetings of shareholders, rather than one, will be required to
effect a change in a majority of Board members. The delay afforded by these
provisions would help to ensure that the Board, if confronted by a hostile
tender offer, proxy contest or other surprise proposal from a third party who
has acquired a block of the common stock, will have sufficient time to review
the proposal and appropriate alternatives to the proposal, and to act in a
manner which it believes to be in the best interest of TEK II and its
shareholders. If a potential acquirer were to purchase a significant or
controlling interest in TEK II, the acquirer could, if the Board is not
classified, quickly obtain control of the Board and thereby remove TEK II's
management, which could severely curtail TEK II's ability to negotiate
effectively with the potential acquirer on behalf of all other shareholders. The
threat of quickly obtaining control of the Board could deprive the Board of the
time and information necessary to evaluate the proposal, to study alternative
proposals, and to help ensure that the best price is obtained in any transaction
which may ultimately be undertaken.
The MUTA provisions that prevent the removal of directors "without
cause" and limit the ability of the shareholders to call a special meeting (at
which a director may be removed) also serve to ensure continuity on the Board in
the face of a hostile bidder. Specifically, allowing shareholders to remove a
director without cause could be used to subvert the protections afforded by the
creation of a classified board. One method employed by takeover bidders to
obtain control of a Board of Directors is to acquire a significant percentage of
a corporation's outstanding shares through a tender offer or open market
purchase and to use the voting power of those shares to remove the incumbent
directors and replace them with nominees chosen by the hostile bidder, who would
be more willing to
16
approve the terms of a merger or other business combination on terms less
favorable to the other shareholders of the corporation than those which would
have been approved by the removed directors.
Requiring cause in order to remove a director and limiting the ability
of the hostile bidder to call a special meeting precludes the use of this
strategy, thereby encouraging potential takeover bidders to obtain the
cooperation of the existing Board before attempting a takeover. Likewise, the
New Charter provision limiting authority to amend the Bylaws to the Board of
Directors serves to prevent a hostile bidder from eliminating the notice and
other requirements set forth in the New Bylaws for director nominations.
Accordingly, these provisions support the concept of a classified board in its
intended effect of moderating the pace of a change in the Board of Directors.
Also, the Board believes that the classified board, director removal,
special meeting and bylaws amendment provisions will properly condition a
director's continued service upon his or her ability to serve rather than his or
her position relative to a dominant shareholder including existing large
shareholders. Prohibiting a shareholder or group of shareholders from forcing
rapid change on the Board is an essential part of the overall structure being
proposed to encourage individuals or groups who desire to propose takeover bids
or similar transactions to negotiate with the Board of Directors. These
provisions prevent a shareholder with a majority of the voting power of TEK II
from subverting the requirements of the MUTA and anti-takeover provisions.
An alternative strategy used by some hostile bidders is to make an
offer to purchase a corporation and then commence litigation to force the Board
of Directors of the corporation to cooperate in the transaction notwithstanding
its unwillingness to do so. The constituency provision set forth in the New
Charter is designed to strengthen the position of TEK II's Board of Directors in
any such litigation. For example, if a hostile bidder alleged in litigation that
the Board has an obligation to cooperate with the hostile bidder due to an
obligation to obtain the highest possible price for shareholders, the Board's
ability to consider the effects of a transaction on other constituencies could
serve as a defense. In the face of such defense, the hostile bidder would be
forced to negotiate with the Board the terms of any transaction.
The increase in the amount of authorized stock under the New Charter
and the provision in the New Charter permitting the Board to increase TEK II's
authorized stock without the approval of shareholders will permit the Board to
implement additional anti-takeover provisions in the future, such as a class of
preferred stock or a shareholder rights plan. In the face of a hostile bidder,
such provisions, if adopted, would serve to complement the MUTA and
anti-takeover provisions discussed above.
Potential Disadvantages Of Anti-takeover Provisions and Election to be Subject
to MUTA
The MUTA and anti-takeover provisions discussed above will operate in
complementary fashion, to generally delay, deter or impede changes in control of
the Board or the approval of certain shareholder proposals which would have the
effect of facilitating changes in control of the Board, even if the holders of a
majority of the TEK II common stock may believe the change or actions would be
in their best interests. For example, classifying the Board will operate to
increase the amount of time required for new shareholders to obtain control of
TEK II without the cooperation or approval of the incumbent Board, even if the
new shareholders hold or acquire a majority of the voting power. Elimination of
the right of shareholders to remove directors without cause, increasing the
proportion of shareholders necessary to call a special meeting and limiting
bylaws changes solely to the Board of Directors may make the removal of any
director more difficult (unless the holders of 2/3 of the outstanding TEK II
common stock agree and cause is readily apparent), even if the holders of a
majority of the outstanding TEK II common stock believe removal to be in their
best interests.
Further, the constituency provision permits the Board to consider the
effect a potential acquisition may have on employees, suppliers, customers, and
creditors of TEK II and the communities where offices or other establishments of
TEK II are located. These constituencies may have interests that are in conflict
with the interests of TEK II shareholders and a consideration of their interests
may prevent a transaction that the holders of a majority of the outstanding TEK
II common stock believe to be in their best interests. The increase in
authorized shares in the New Charter and the Board's ability to increase the
authorized shares under the New Charter will enable to the Board to implement
additional anti-takeover devices that may also serve to prevent a transaction
that a majority of shareholders believe to be in their best interests.
17
As a result, these provisions could have the effect of making it easier
for directors to remain in office for reasons relating to their own self
interest, and because the Board has the power to retain and discharge
management, also have the effect of making it easier for management to remain in
office for reasons relating to their own self interest. Additionally, one of the
effects of the anti-takeover provisions may be to discourage certain tender
offers and other attempts to change control of TEK II, even though shareholders
might feel those attempts would be beneficial to them or to TEK II. Because
tender offers for control usually involve a purchase price higher than the
prevailing market price, these provisions may have the effect of preventing or
delaying a bid for TEK II's shares which could be beneficial to TEK II and its
shareholders.
Even though the MUTA and anti-takeover provisions may have these
potential disadvantages, the Board nevertheless believes that the various
protections afforded to the shareholders from the inclusion of anti-takeover
provisions in the New Charter and a subsequent election to be subject to MUTA
outweigh the potential disadvantages.
Tax Consequences
The proposed Merger will be a tax free reorganization under the
Internal Revenue Code of 1986, as amended. Accordingly:
o no gain or loss will be recognized for federal income tax
purposes by TEK shareholders as a result of the Merger; and
o the basis and holding period for the stock of TEK II received
by TEK shareholders in exchange for TEK II common stock will
be the same as the basis and holding period of TEK stock
exchanged therefor.
The Merger will have no federal income tax effect on TEK. State, local
or foreign income tax consequences to shareholders may vary from the federal tax
consequences described above, and shareholders should consult their own tax
advisors as to the effect of the Reincorporation Proposal under applicable
state, local or foreign income tax laws.
Vote Required
Pursuant to Wyoming Law and the Present Charter, the affirmative vote
of the holders of a majority of all the votes entitled to be cast on the plan is
required for approval of the Merger to effectuate the reincorporation of TEK in
Maryland. Requisite shareholder approval of the Reincorporation Proposal also
constitutes specific approval of the Merger Agreement, the New Charter and New
Bylaws, and of all other transactions and proceedings relating to the Merger,
including ratification of the appointment of the directors of TEK II in the
classes as set forth under "Classified Board of Directors", the assumption by
the surviving corporation of TEK's employee benefit plans and agreements, and
TEK's obligations under such plans and agreements.
As of June 11, 2001, TEK's Board of Directors had received the
commitment of a sufficient number and percentage of votes entitled to be cast on
the matters described in this Information Statement to approve the corporate
actions. A written commitment signed by shareholders owning 58.06% of TEK's
outstanding voting power was filed with TEK's corporate Secretary on June 11,
2001. Their voting power is sufficient to satisfy the voting requirements of the
Wyoming Business Corporation Act and TEK's Articles of Incorporation and Bylaws.
Therefore, your vote is not required to approve the matters described in this
Information Statement or to consummate the Merger.
18
Dissenter's Rights of Appraisal
Under both Wyoming and Maryland Law, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to receive cash equal to the fair market value of the
shares held by such shareholder (as determined by a court of competent
jurisdiction or by agreement of the shareholder and the corporation), in lieu of
the consideration such shareholder would otherwise receive in the transaction.
TEK's shareholders are afforded dissenters' rights of appraisal under
the laws of the State of Wyoming.
Section 17-16-1302 of the Wyoming Business Corporation Act ("Wyoming
Law"), provides that any shareholder, regardless of whether a vote is required,
is entitled to dissent from and to obtain payment of the fair value of his
shares held in the consummation of any plan if required by W.S. 17-16-1103 or
17-16-1111 or the articles of incorporation and the shareholder is entitled to
vote on the merger or consolidation. Under W.S. 17-16-1103, shareholder approval
is required to approve the Merger.
Pursuant to Section 17-16-1320 of Wyoming Law, a corporation is
required to send a notice to all shareholders as of the applicable record date,
regardless of whether such shareholders are entitled to vote, notifying them
that they are entitled to assert dissenters' rights under Wyoming Law. A
shareholder who wishes to assert dissenters' rights must deliver to the
corporation, before the vote is taken, written notice of intent to demand
payment for his shares if the proposed actions are effectuated; and such
shareholder may not vote any shares in favor of the proposed actions. In order
to assert dissenters' rights, a shareholder must have been a shareholder with
respect to the shares for which payment is demanded as of the date the proposed
corporate action creating dissenters' rights is submitted to a vote at a
shareholders' meeting, if such approval is required, or as of the effective date
of the corporate action, if no such approval is required.
Pursuant to Section 17-16-1322 of Wyoming Law, the dissenters are
required to receive written notice no later than 10 days after the corporate
action was taken and the notice must:
o state the address at which the corporation will receive
payment demands and an address at which certificates for
certificated shares must be deposited;
o inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after payment demand
is received;
o supply a form for demanding payment, that includes the date of
the first announcement to the news media or to shareholders of
the terms of the proposed corporate action and requires that
the dissenter certify whether or not he acquired beneficial
ownership of the shares before that date; and
o set a date by which the corporation must receive the payment
demand and by which date certificates for certificated shares
must be deposited, which date may not be fewer than 30 nor
more than 60 days after the date the required notice is
delivered.
The notice must also advise shareholders that they must have been a
shareholder with respect to the shares for which payment is demanded as of the
date of the proposed corporate action or its effective date, as outlined above,
and such notice must be accompanied by a copy of the dissenters' rights
provisions of Wyoming Law. Accordingly, a copy of Article 13 of Wyoming Law is
attached to this Information Statement as Annex VII and is incorporated herein
by reference.
The procedure for demanding payment requires a shareholder to:
o deliver to the corporation a payment demand, which may be in
the form outlined above and attached as Annex VI, or may be
stated in some other written instrument;
o deposit the certificated shares in accordance with the
dissenters' notice; and
19
o if required by the corporation in its dissenters' notice,
certify that such shareholder was a holder of the shares for
which demand of payment has been made on the date of submittal
of the proposed corporate action to the shareholders, or the
effective date, if no such approval was required.
Upon receipt of a demand for payment from a shareholder holding
uncertificated shares, and in lieu of the deposit of certificates representing
these shares, the corporation may restrict the transfer of these shares until
the proposed corporate action is taken, or 60 days, in the event such action is
abandoned. See Sections 17-16-1324 and 1326.
Section 17-16-1325 provides that the corporation must pay each
dissenter who complied with all of the provisions of the Wyoming Law and,
subject to certain restrictions relating to shares acquired after the
announcement of the proposed corporate action as provided in Section 17-16-1327,
the amount the corporation estimates to be the fair value of his shares, plus
accrued interest. Each payment made must be accompanied by the corporation's
balance sheet for the end of its most recent fiscal year, and if not available,
a fiscal year ending not more than 16 months before the date of payment; an
income statement for such period; a statement of changes in shareholder's
equity; and the latest available interim financial statements, if any. The
corporation must also provide a statement of the corporation's estimate of the
fair value of the shares, an explanation of how the interest was calculated, a
statement of the dissenters' right to demand payment under Section 17-16-1328,
and a copy of Article 13 of Wyoming Law. Accordingly, a copy of Article 13 is
attached as Annex VII to this Information Statement and is incorporated herein
by reference.
Section 17-16-1328 of Wyoming Law provides that a dissenter who has not
accepted an offer made by the corporation pursuant to Section 17-16-1327 of
Wyoming Law may notify the corporation in writing of the shareholder's own
estimate of the fair value for the shares and demand payment of this estimated
amount, plus interest, if:
o the shareholder believes the amount offered is less than the
fair value;
o the corporation failed to make payment of its fair value
within 60 days after the date set by the corporation for
payment; or
o the corporation, having failed to take the proposed corporate
action, does not return the deposited certificates or release
any transfer restrictions imposed on uncertificated shares.
A dissenter waives his right to demand payment under Section 17-16-1328
unless he notifies the corporation of his demand in writing within 30 days after
the corporation made or offered to pay the fair value of the shares.
If a demand under Section 17-16-1328 remains unresolved, the
corporation must commence a proceeding within 60 days after receipt of the
counter-payment demand from the dissenting shareholder and petition the court to
determine the fair value of the shares and the amount of interest; if the
corporation does not commence the proceeding within the 60 day period, it must
pay each dissenter whose demand remains unresolved the amount demanded. Any such
action shall be brought in the district court in the county where the
corporation maintains its registered office (Cheyenne, Wyoming), and all
dissenters who have satisfied all requirements of any counter- proposal for the
payment of the fair value of their shares and whose demands remain unresolved,
must be made party to the action. The court may appoint one or more persons to
determine the fair value of the shares, and each dissenter made party to the
proceeding is, entitled to judgment for the amount, if any, by which the court
finds the fair value of the shares, plus interest, exceeded the amount paid by
the corporation; or the fair value, plus interest, of the dissenters' after
acquired shares for which the corporation elected to withhold payment under
Section 17-16-1327. The court may assess costs and counsel fees, including the
reasonable compensation expenses of appraisers appointed by the court. These
fees will be assessed against the corporation, except that the court may assess
costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds that the dissenters acted arbitrarily,
vexatiously or not in good faith in making demand for payment of the fair value
of their shares. The court may also assess fees and expenses of counsel, in
amounts the court finds equitable, against the corporation and in favor of any
or all dissenters if the court finds that the corporation did not substantially
comply with the requirements of Sections 17-16-1320 through 17-16-1328 or
against either the corporation or one or more dissenters, 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. If the court finds
that the services of counsel for any
20
dissenters were of substantial benefit to other dissenters similarly situated,
and that the fees for those services should not be assessed against the
corporation, the court may award to those counsel reasonable fees to be paid out
of the amounts awarded the dissenters who were benefitted. See Section
17-16-1331.
As of June 11, 2001, TEK's Board of Directors had received the
commitment of a sufficient number and percentage of votes entitled to be cast on
the matters described in this Information Statement to approve the corporate
actions. A written commitment signed by shareholders owning 58.06% of TEK's
outstanding voting power was filed with TEK's corporate Secretary on June 11,
2001. Their voting power is sufficient to satisfy the voting requirements of the
Wyoming Business Corporation Act and TEK's Articles of Incorporation and Bylaws.
Therefore, your vote is not required to approve the matters described in this
Information Statement or to consummate the Merger.
The information contained in this Information Statement, the Form of
Dissenting Shareholders' Payment Demand Form which is attached to this
Information Statement as Annex VI and Article 13 of Wyoming Law which is
attached to this Information Statement as Annex VII, constitute the only notice
any dissenting shareholder will be provided under Wyoming Law relative to
dissenting shareholders' rights of appraisal.
VOTING SECURITIES AND PRINCIPAL HOLDERS
As of Friday, June 1, 2001, the record date for the determination of
holders of TEK's voting power entitled to notice of and to vote at the meeting
and any adjournment of the meeting, a total of 25,132,532 shares of common stock
were outstanding and 2,036,495 shares of Series A, Voting Convertible Preferred
Stock were outstanding. The combined classes of stock are entitled to a total of
31,242,017 votes on the matters to be voted on at the meeting.
The following table sets forth the shareholdings of TEK's directors and
executive officers and those persons who owned more than 5% of TEK's voting
stock as of the record date:
PERCENT OF
OUTSTANDING
PERCENT OF SHARES OF SHARES OF
OUTSTANDING SERIES A CONVERTIBLE
SHARES OF SHARES OF CONVERTIBLE SERIES A
COMMON COMMON SERIES A PREFERRED TOTAL
STOCK STOCK PREFERRED STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY BENEFICIALLY STOCK BENEFICIALLY VOTING
OF 5% HOLDER OWNED OWNED (1) OWNED (2) OWNED (3) OWNERSHIP (4)
------------ ----- --------- --------- --------- -------------
Glocom, Inc. 1,073,468 4.27 357,823 17.57 6.87
20010 Century Blvd, Suite 300
Germantown, MD 20874
Tseng Yun Tsai 10,000,000 39.79 -- -- 32.01
218 Sec. 2 Tun
Hwa S. Rd.
Taipei, Taiwan
Enghe Chimood 971,664 3.87 323,888 15.90 6.22
Thomas Yang (5) 1,127,780 4.49 375,927 18.46 7.22
21
PERCENT OF
OUTSTANDING
PERCENT OF SHARES OF SHARES OF
OUTSTANDING SERIES A CONVERTIBLE
SHARES OF SHARES OF CONVERTIBLE SERIES A
COMMON COMMON SERIES A PREFERRED TOTAL
STOCK STOCK PREFERRED STOCK PERCENT OF
NAME AND ADDRESS BENEFICIALLY BENEFICIALLY STOCK BENEFICIALLY VOTING
OF 5% HOLDER OWNED OWNED (1) OWNED (2) OWNED (3) OWNERSHIP (4)
------------ --------- --------- --------- --------- -------------
Ke-ou Chao 896,458 3.57 298,820 14.67 5.74
Sharming Lin -- -- -- -- --
Executive Officers and Directors, 2,995,902 11.93 998,635 49.03 19.18
as a Group (4 persons)
<FN>
- ---------------------------------------
(1) Percentage calculated based on 25,132,532 shares of common stock issued and outstanding. Calculation excludes common stock
issuable upon conversion of preferred shares of which 1,003,162 are currently convertible into shares of common stock at a
6:1 ratio. Calculation also excludes outstanding stock options. (See "Mergers, Consolidations, Acquisitions and Similar
Matters - Share Conversion".)
(2) The Series A voting convertible preferred shares are eligible for conversion into shares of common stock at a rate of six
shares of common stock for each share of preferred stock owned under certain conditions as described below.
(3) Each share of Serie A voting convertibl preferred stock entitles its holder to cast three votes on every matter placed
befor shareholders for consideration. Each share of common stock entitles its holder to one vote. As a result, percentages
are calculated based on a total of 6,109,48 votes for all outstanding Series voting convertible preferred stock and
25,132,532 votes fo common stock outstanding.
(4) The Series A voting convertible preferred shares are eligible for conversion into shares of common stock at varying
conversion ratios for each share of preferred stock owned under certain conditions. As a result, total percentages are
calculated based on the sum of 1,003,162 shares of outstanding Series A voting convertible preferred stock being converted
into 6,018,972 shares of common stock and 6,109,485 eligible votes on each matter placed before shareholders for
consideration.
(5) Includes 400,000 shares owned individually by Mr. Yang's spouse and 200,000 owned by Mr. Yang as custodian for his minor
son.
</FN>
22
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by,
or paid to our Chief Executive Officer and our other officers for their services
in all capacities rendered during 2000, 1999 and 1998.
SUMMARY COMPENSATION TABLE
NAME PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
---- ------------------ ---- ------ ----- -------
Enghe Chimood Chief Executive Officer, 2000 $ 70,500 -- --
President and Co-Chairman of 1999 71,015 -- --
the Board of Directors 1998 56,193 -- --
Thomas Yang Chief Operating Officer and 2000 72,807 -- --
Co-chairman of the Board of 1999 78,652 -- --
Directors 1998 46,537 -- --
Ke-ou Chao Chief Technical Officer, 2000 72,808 -- --
Secretary and Director 1999 70,769 -- --
1998 56,193 -- --
The amount of other annual compensation received by each named
executive officer consisted primarily of the use of company-owned vehicles and
did not exceed either $50,000 or 10% of each executive's annual salary and
bonus.
Executive Employment Agreements
On April 22, 1999, TEK entered into an executive employment agreement
with Thomas Yang, and on January 20, 2000, TEK entered into executive employment
agreements with Ke-ou Chao and Enghe Chimood. The agreements terminate on June
30, 2002, without a renewal option. During the term of the agreements, Mr.
Chimood will serve as Chief Executive Officer and Co-Chairman the Board; Mr.
Yang will serve as Chief Operating Officer and Co-Chairman of the Board; and Mr.
Chao will serve as Vice President, Engineering and Director.
The executives are required to devote substantially all of their
business time and effort to TEK's business. Under the agreements, the executives
receive the following annual base salaries:
Enghe Chimood Thomas Yang Ke-ou Chao
------------- ----------- ----------
4/22/99 to 6/30/99 N/A $60,000, prorated N/A
7/1/99 to 6/30/00 N/A $70,000 N/A
1/20/00 to 6/30/01 $70,000, prorated N/A $70,000, prorated
7/1/00 to 6/30/01 $150,000 (1) $150,000 (1) $150,000 (1)
7/1/01 to 6/30/02 $170,000 $150,000 $150,000
- -----------------
<FN>
(1) In July 2000, this executive decided to defer $80,000 of his base
salary, for the period beginning July 1, 2000 and ending June 30, 2001,
until a later date.
</FN>
In addition, under the terms of the agreements, the above executives
receive customary employee benefits which include health and life insurance and
use of a company leased vehicle.
The employment agreements also contain provisions in the event of a
change in control if the executive's employment is involuntarily terminated,
without serious cause and without breach of the agreement's non-compete,
confidentiality and certain other provisions, by the entity acquiring control of
TEK. TEK must pay the executive his earned but unpaid base salary and incentive
compensation as of the date of termination and any shares of series a voting
convertible preferred stock owned by the executive will automatically convert
into shares of TEK common stock. The merger between TEK and TEK II will not
trigger the executives' change in control provision.
23
OPTION GRANTS AND OPTION EXERCISES IN FISCAL YEAR 2000
TEK did not grant any of the executives named in the Summary
Compensation Table any stock options in 2000; and, none of the named executives
exercised any options during 2000.
Directors' Compensation
The directors receive no cash compensation for their services as
directors. Directors Chimood, Yang and Chao are also executive officers and
receive salaries and other compensation as described above. Mr. Lin was
appointed to the Board of Directors on May 21, 2001 and has received no cash
compensation, but may receive stock options, for his services as a director.
1997 Employee Stock Compensation Plan
TEK's predecessor, Diversified Technologies, Inc., adopted the 1997
Employee Stock Compensation Plan (the ESC Plan) for employees, officers,
directors and advisors to the company on January 18, 1997. This plan was assumed
by TEK in July 1998 and currently remains in effect. Under the terms of the ESC
Plan, 1,000,000 shares of common stock were reserved for issuance upon the grant
of awards under this plan. The ESC Plan will be terminated on the Effective Date
of the Merger and no further awards will be made under this plan. The Board of
Director's Compensation Committee (or the full Board) administers the ESC Plan
and has sole power to award common shares pursuant to the plan. Awards of ESC
Plan shares may be made as compensation for services rendered, directly or in
lieu of other compensation payable, as a bonus in recognition of past service or
performance, or may be sold to eligible persons. ESC Plan shares awarded other
than for services rendered may not be sold for less than their fair value on the
grant date. As of March 31, 2001, _______ common shares had been awarded under
this plan.
1997 Compensatory Stock Option Plan
TEK's predecessor, Diversified Technologies, Inc., adopted the 1997
Compensatory Stock Option Plan (the CSO Plan) for employees on January 18, 1997.
This plan was assumed by TEK in July 1998 and currently remains in effect. Under
the terms of the CSO Plan, as modified in 1999, 4,500,000 shares of common stock
were reserved for issuance upon the exercise of options granted under this plan
and TEK's 1999 New Hired Employee Stock Compensation policy. The CSO Plan
provides for the issuance of non-statutory stock options that are not intended
to qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended. The CSO Plan will be terminated on
the Effective Date of the Merger and no further awards will be made under this
plan. Currently, the full Board administers the plan. CSO Plan options may be
granted at exercise prices determined by the Board of Directors, but the
exercise price may not be less than 85% of the fair market value of the common
stock on the date of the option grant. As of March 31, 2001, _________ options
had been granted under this plan.
2001 Omnibus Stock Plan
On _____ __, 2001, TEK II's Board of Directors adopted the 2001 Omnibus
Stock Plan (the Omnibus Plan) for directors, consultants, officers and other
employees, vendors and strategic partners. Under the terms of the Omnibus Plan,
10,000,000 shares or options to purchase shares were authorized for issuance
under the plan. The Omnibus Plan authorizes grants of restricted stock,
incentive stock options, non-qualified stock options, stock appreciation rights,
phantom stock or performance awards. The Omnibus Plan expires ten years after
the adoption of the plan and is administered by the Board of Directors or the
Board's Compensation Committee. As of the date of this Information Statement, no
shares or options to purchase shares have been granted under this plan.
INDEPENDENT AUDITORS
Grant Thornton LLP, Certified Public Accountants, served as TEK's
independent auditors for the 2000 fiscal year. TEK has been advised by Grant
Thornton LLP that none of its members have any financial interest in the
corporation. In addition to performing customary audit services, Grant Thornton
LLP assisted the corporation with preparation of their federal and state tax
returns, and provided assistance in connection with regulatory matters, charging
TEK for such services at its customary hourly billing rates. These non-audit
services were approved by the
24
corporation's Board of Directors after due consideration of the effect of the
performance thereof on the independence of the auditors and after the conclusion
by the corporation's Board of Directors that there was no effect on the
independence of the auditors. The Board of Directors has engaged Grant Thornton
LLP as the corporation's independent auditors for the fiscal year ending
December 31, 2001.
Fees for the last annual audit and SAS 71 quarterly reviews totaled
$90,112. All other fees totaled $137,956 and included audits of the December 31,
1999 and 1998 financial statements and assistance with SEC regulatory and income
tax filings.
MERGERS, CONSOLIDATIONS, ACQUISITIONS AND SIMILAR MATTERS
TEK has executed an Agreement and Plan of Merger, whereby TEK will
merge with and into TEK II, with TEK II being the surviving corporation. This
discussion summarizes certain aspects of the Merger. This summary is not
intended to be a complete description of the Merger Agreement and related
transactions and is qualified in its entirety by reference to the Merger
Agreement attached to this Information Statement as Annex I.
Merger and Surviving Corporation
TEK will merge with and into TEK II; TEK II will be the surviving
corporation and the separate existence of TEK shall cease. Until amended,
modified or otherwise altered, the Articles of Incorporation of TEK II shall
continue to be the Articles of Incorporation of the surviving corporation and
the Bylaws of TEK II shall become the Bylaws of the surviving corporation.
Share Conversion
On the Effective Date of the Merger, each issued and outstanding share
of TEK common stock will be converted into one share of TEK II common stock, no
par value per share, and each issued and outstanding share of TEK Series A,
Voting Convertible Preferred Stock will be converted into one share of TEK II
Series A, Voting Convertible Preferred Stock, no par value per share.
TEK's Articles of Incorporation, as amended, provide that, if TEK
enters into a "reorganization", including a merger where TEK is not the
surviving corporation, each share of Series A preferred stock issued and
outstanding on the Effective Date of the Merger will be converted into the
number and kind of shares that will be received by a person holding the number
of TEK common shares into which the shares of Series A preferred stock will be
convertible on the Effective Date of the Merger. As of the date of this
Information Statement, 1,033,334 shares (or 1/2 of the issued and outstanding
shares of Series A preferred stock) are eligible for conversion into shares of
TEK's common stock at a 6:1 ratio. Of those shares currently eligible for
conversion, 30,172 Series A shares have been converted into shares of TEK common
stock. Pursuant to a written waiver of conversion rights executed by all Series
A preferred shareholders, at the Effective Date of the Merger, the remaining
1,033,333 shares of Series A preferred stock will not immediately become
convertible into shares of TEK II's common stock, but rather, will retain the
same rights, including conversion rates and conditions, in TEK II.
Survivor's Succession to Corporate Rights
The surviving corporation will possess all the rights, privileges,
powers and franchises of a public and a private nature, and be subject to all of
TEK's restrictions, disabilities and duties. All TEK's property, real, personal,
and mixed, and all debts due to TEK on whatever account, as well as for stock
subscriptions and other things in action or belonging to TEK will be vested in
the surviving corporation. All property, rights, privileges, powers and
franchises, and all and every other interest will be thereafter the property of
the surviving corporation as they were of TEK, and the title to any real estate
vested by deed or otherwise in TEK will not revert or be in any way impaired by
reason of the Merger. However, all rights of creditors and all liens upon any
TEK property will be preserved
25
unimpaired, and all debts, liabilities and duties of TEK will thenceforth attach
to the surviving corporation and may be enforced against it to the same extent
as if such debts, liabilities and duties had been incurred or contracted by it.
Specifically, but not by way of limitation, the surviving corporation will be
responsible and liable to dissenting shareholders who are accorded and who
preserve rights of appraisal as required by Wyoming Law; and any action or
proceeding whether civil, criminal or administrative, pending by or against TEK
will be prosecuted as if the Merger had not taken place, or the surviving
corporation may be substituted in such action or proceeding.
Survivor's Succession to Corporate Acts, Plans, Contracts and Similar Rights
All TEK's corporate acts, policies, contracts, approvals and
authorizations, its shareholders, its Board of Directors, committees, elected or
appointed by its Board of Directors, and its officers and agents, which were
valid and effective immediately prior to the Effective Date of the Merger, will
be taken for all purposes as the acts, policies, contracts, approvals and
authorizations of the surviving corporation and will be effective and binding
thereon.
Survivor's Rights to Assets, Liabilities, Reserves, etc.
TEK's assets, liabilities, reserves and accounts will be recorded on
the books of the surviving corporation at the amounts at which they,
respectively, are carried on TEK's books, subject to such adjustments or
eliminations of inter-company items as may be appropriate in giving effect to
the Merger.
Directors and Officers
TEK's directors and officers, who are the same as the surviving
corporation's directors and officers, will remain the directors and officers of
the surviving corporation.
Principal Office
TEK's principal office, which is the same as the principal office of
the surviving corporation, will remain the principal office of the surviving
corporation.
Adoption
The Merger must be adopted by the affirmative vote of at least a
majority of all the TEK votes entitled to be cast on the Merger.
Appraisal Rights and Notification
TEK shareholders will be accorded all rights, privileges and be subject
to all of the obligations contained within Wyoming Law regarding rights of
appraisal, and the surviving corporation will be obligated to notify TEK's
shareholders as provided therein.
Effective Date
The Effective Date of the Merger will be the date when the Articles and
Certificate of Merger are filed and accepted by Maryland's State Department of
Assessments and Taxation and at such time as all applicable provisions of
Maryland and Wyoming Law have been met.
Delivery of Shares
On the Effective Date of the Merger, the separate existence of TEK will
cease and TEK II will be the surviving corporation. Each share of TEK's common
stock issued and outstanding immediately prior to the Effective Date will, by
virtue of the Merger, be converted into one share of TEK II common stock, no par
value. At the Effective Date, certificates, which immediately prior to the
Effective Date represented shares of TEK's common stock, will be deemed for all
purposes to represent the same number of shares of TEK II common stock. It is
not necessary for TEK shareholders to exchange their existing stock certificates
for TEK II stock certificates. However, when outstanding TEK stock certificates
are presented for transfer after the Merger, new stock certificates,
representing shares of TEK II common stock, will be issued. New stock
certificates will also be issued upon the request of a
26
shareholder, subject to normal requirements as to proper endorsement, signature,
guarantee, if required, and payment of applicable taxes, if any.
Financial Information
Neither TEK nor TEK II has engaged in any extraordinary restructuring
or reorganization transactions or asset transfer in connection with or in
anticipation of the change of domicile. TEK II is a wholly-owned subsidiary of
TEK, incorporated solely to facilitate the Merger and reincorporation.
Management believes that financial information regarding TEK and TEK II is not
material to a determination of whether TEK should change its domicile from the
State of Wyoming to the State of Maryland. Upon consummation of the Merger, TEK
II's financials will be those of TEK.
Regulatory Requirements
With the exception of filings to be made with the Secretary of State of
the State of Wyoming and the Maryland State Department of Assessments and
Taxation, no federal or state regulatory requirements must be complied with or
approvals must be obtained in connection with the Merger and change of domicile.
Reports, Opinions or Appraisals
No report, opinion or appraisal has been sought in connection with the
Merger and change of domicile.
Past, Present or Proposed Material Contracts
In addition to the Merger Agreement, the material terms of which are
set forth in this section of the Information Statement and in its entirety as
Annex I, on May 21, 2001, TEK entered into an investment arrangement with First
International Computer Inc., the parent company of TEK's strategic partner
Formosa Industrial Computing. The financing arrangement is in the form of a six
month, 6% convertible note. As part of the transaction, Mr. Sharming Lin,
Formosa Industrial Computing's Chief Executive Officer, was appointed to TEK's
Board of Directors.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION
TO MATTERS TO BE ACTED UPON
No director, officer, or any associate of any of the foregoing persons,
has any substantial interest, direct or indirect, by security holding or
otherwise, in the change of domicile from the State of Wyoming to the State of
Maryland, which is not shared by all other shareholders, pro rata, and in
accordance with their respective interests in TEK.
VOTING REQUIREMENT AND PROCEDURES
Under Wyoming Law, a quorum is required for the transaction of
business. The presence of a majority of the shares of TEK's stock entitled to
vote at a meeting constitutes a quorum. Each TEK common stock shareholder is
entitled to one vote for each share of common stock held and each TEK Series A
preferred stock shareholder is entitled to three votes for each share of Series
A preferred stock held. Each director must be elected by the shareholders by a
plurality vote. The Reincorporation Proposal, including the Merger Agreement,
must be approved by the shareholders who hold at least a majority of TEK's
voting power. Abstentions will not be considered in the tallying of votes.
As of June 11, 2001, TEK's Board of Directors had received the
commitment of shareholders owning 58.06% of TEK's voting power, which is
sufficient to transact business at the annual meeting and to approve the
corporate actions described in this Information Statement. Thus, at TEK's annual
meeting, Enghe Chimood, Thomas Yang, Ke- ou Chao and Sharming Lin will be
elected directors of TEK and the Reincorporation Proposal, including the Merger
Agreement and related transactions, pursuant to which TEK will change its
domicile from the State of Wyoming to the State of Maryland will be adopted,
ratified and approved by the requisite voting requirements of Wyoming Law and
TEK's Articles of Incorporation and Bylaws. No further consents, votes or
proxies are needed, and none are requested.
27
ANNEXES
I. Agreement and Plan of Merger between TEK DigiTel Corporation and TEK
DigiTel Corporation II, dated __________, 2001.
II. Certificate of Incorporation of TEK DigiTel Corporation II.
III. Articles of Incorporation of TEK DigiTel Corporation II.
IV. Bylaws of TEK DigiTel Corporation II.
V. MUTA Provisions.
VI. Form of Dissenting Shareholder's Payment Demand Form.
VII. Sections 17-16-1301 through 17-16-1328 of Wyoming Law.
ANNEX I
AGREEMENT AND PLAN OF MERGER
BETWEEN
TEK DIGITEL CORPORATION
AND
TEK DIGITEL CORPORATION II
DATED __________, 2001
ANNEX I
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Merger Agreement") dated as of
________, 2001, is entered into by and between TEK DIGITEL CORPORATION II, a
Maryland corporation ("TEK II"), and TEK DIGITEL CORPORATION, a Wyoming
corporation ("TEK").
A. TEK II was formed as a wholly-owned subsidiary of TEK in
connection with a proposal for the reorganization of TEK
approved by TEK's board of directors.
B. The reorganization of TEK is to be effected by merging TEK
with and into TEK II and causing the shareholders of TEK to
become the shareholders of TEK II, with TEK II being the
surviving corporation, and with each outstanding share of
common stock of TEK being deemed at the effective time of the
merger to be one share of common stock of TEK II.
C. The Maryland General Corporation Law (the "Maryland Law") and
the Wyoming Business Corporation Act (the "Wyoming Law")
permit the reorganization of TEK into TEK II provided that TEK
and TEK II each adopts a plan of merger which sets forth the
terms and conditions of the proposed merger, the mode of
carrying the merger into effect, the manner and basis of
converting the shares of each corporation into shares or other
securities or obligations of the surviving corporation and
other applicable provisions.
D. The boards of directors of TEK and TEK II have determined that
it is advisable and in the best interests of the shareholders
that TEK merge with and into TEK II upon the terms and subject
to the conditions of this Merger Agreement for the purpose of
effecting the change in domicile of TEK in the State of
Maryland, and have approved this Merger Agreement.
E. The parties intend by this Merger Agreement to effect a
"reorganization" under Section 368 of the Internal Revenue
Code of 1986, as amended.
In consideration of the premises and the agreements set forth herein,
the receipt and sufficiency of which are hereby acknowledged, TEK and TEK II
hereby agree as follows:
1. Merger.
TEK shall merge with and into its wholly-owned subsidiary, TEK
II and TEK II shall be the surviving corporation (the
"Merger"). TEK II is hereinafter sometimes referred to as the
"Surviving Corporation". Provided the conditions set forth in
paragraph 7 have been met, the Merger shall become effective
as of the date of the later to occur of the filing of Articles
of Merger with the Secretary of State of Wyoming in accordance
with the Wyoming Law and the date of the filing of Articles of
Merger with the Maryland State Department of Assessments and
Taxation in accordance with the Maryland Law and any requisite
waiting periods.
2. Manner and Basis of Converting Shares.
TEK II has authority to issue 120,000,000 shares of capital
stock, initially classified as 100,000,000 shares of common
stock, no par value per share, and 20,000,000 shares of
preferred stock, no par value per share, of which TEK II is
authorized to issue 2,100,000 shares of Series A, Voting
Convertible Preferred Stock, no par value per share. TEK II
has 100 shares of common stock issued and outstanding, all of
which are owned by TEK. TEK II does not have any preferred
stock issued and outstanding. TEK has authority to issue the
following shares of capital stock: (i) 50,000,000 shares of
common stock, no par value per share, of which 25,132,532
shares were issued and outstanding as of June 1, 2001; (ii)
20,000,000 shares of preferred stock, no par value, of which
no shares other than the Series A, Voting Convertible
Preferred Stock next described are outstanding; and (iii)
2,100,000 shares of Series A, Voting Convertible Preferred
Stock, $.001 par value per share, of which 2,036,495 were
issued and outstanding as of June 1, 2001. Upon the Merger
becoming effective, (a) each outstanding share of common stock
of TEK shall immediately be deemed to be one share of common
stock of TEK II without an exchange of certificates or any
action on the part of the shareholders thereof; (b) the 100
shares of common stock of TEK II owned by TEK, that shall then
be owned by TEK II by virtue of the Merger, shall be retired
and resume the status of authorized and unissued shares and
any capital represented by such shares shall be eliminated;
and (c) each outstanding share of Series A, Voting Convertible
Preferred Stock of TEK shall immediately be deemed to be one
share of Series A, Voting Convertible Preferred Stock of TEK
II without an exchange of certificates or any action on the
part of the shareholders thereof.
3. Articles of Incorporation and Bylaws.
The Articles of Incorporation and Bylaws of TEK II in effect
on the effective date of the Merger shall be the Articles of
Incorporation and Bylaws of TEK II as the Surviving
Corporation until further amended in accordance with the
Maryland Law.
4. Officers and Directors.
The persons who are executive officers of TEK II immediately
prior to the effective time of the Merger shall be the
executive officers of the Surviving Corporation thereafter,
without change, until their successors have been elected and
qualified. The directors of TEK II at the effective time of
the Merger shall be the directors of the Surviving
Corporation, in accordance with the Articles of Incorporation
of TEK II until their successors have been elected and
qualified.
5. Succession.
Upon the Merger becoming effective, TEK shall merge with and
into TEK II, the Surviving Corporation, and TEK shall cease to
exist. The Surviving Corporation shall possess all the rights,
privileges, powers and franchises of a public as well as of a
private nature, and shall be subject to all the restrictions,
disabilities and duties of TEK; and all the rights,
privileges, powers and franchises of TEK, and all property,
real, personal and mixed, and all debts due to TEK on whatever
account, as well as for share subscriptions and all other
things in action, shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be
thereafter the property of the Surviving Corporation as they
were of TEK, and the title to any real estate vested by deed
or otherwise shall not revert or be in any way impaired by
reason of the Merger; but all rights of creditors and all
liens upon any property of TEK shall be preserved unimpaired,
and all debts, liabilities and duties of TEK shall thenceforth
attach to the Surviving Corporation and may be enforced
against it to the same extent as if such debts, liabilities
and duties had been incurred or contracted by it. The
employees and agents of TEK shall become the employees and
agents of the Surviving Corporation and shall be entitled to
the same rights and benefits which they enjoyed as employees
and agents of TEK.
6. Further Assurances.
Each of TEK II and TEK shall execute or cause to be executed
all documents and shall take or cause to be taken all actions
and do or cause to be done all things necessary, proper or
advisable under the laws of the States of Wyoming and Maryland
to consummate and effect the Merger and further the purpose of
this Merger Agreement, including, without limitation, the
filing of requisite Articles of Merger in both States.
7. Conditions.
Consummation of the Merger and related transactions is subject
to satisfaction of the following conditions prior to the
effective time of the merger:
(a) The Merger shall have been approved by the requisite
vote of shareholders of TEK and TEK II, and all
necessary action shall have taken place to authorize
the execution, delivery and performance of this
Merger Agreement by TEK and TEK II.
(b) All regulatory approvals necessary in connection with
the consummation of the Merger and the transactions
contemplated thereby shall have been obtained.
I-2
(c) No suit, action, proceeding or other litigation shall
have been commenced or threatened to be commenced
which, in the opinion of TEK or TEK II would pose a
material restriction on or impair consummation of the
Merger, performance of this Merger Agreement or the
conduct of the business of TEK II after the effective
time, or create a risk of subjecting TEK or TEK II,
or their respective shareholders, officers, or
directors, to material damages, costs, liability or
other relief in connection with the Merger or this
Merger Agreement.
8. Termination; Amendment.
This Merger Agreement may be terminated and the Merger
abandoned or deferred by either TEK II or TEK by appropriate
resolution of the board of directors of either TEK II or TEK
at any time prior to the merger becoming effective
notwithstanding approval of this Merger Agreement by the
shareholders of TEK or TEK II, or both, if circumstances arise
which, in the opinion of the board of directors of TEK or TEK
II make the Merger inadvisable or such deferral of the time of
consummation of the Merger advisable. Subject to applicable
law and subject to the rights of the shareholders to approve
any amendment that would have a material adverse effect on the
shareholders, this Merger Agreement may be amended, modified
or supplemented by written agreement of the parties hereto at
any time prior to the effective time of the Merger with
respect to any of the terms contained herein.
IN WITNESS WHEREOF this Agreement and Plan of Merger has been executed
and attested to by the persons indicated below as of _______________, 2001.
TEK DIGITEL CORPORATION II,
ATTEST: a Maryland Corporation
_______________________________ By: ________________________________________
Ke-ou Chao, Secretary Enghe Chimood, Chief Executive Officer
TEK DIGITEL CORPORATION,
ATTEST: a Wyoming Corporation
_______________________________ By: ________________________________________
Ke-ou Chao, Secretary Enghe Chimood, Chief Executive Officer
I-3
ANNEX II
CERTIFICATE OF INCORPORATION
OF
TEK DIGITEL CORPORATION II
ANNEX III
ARTICLES OF INCORPORATION
OF
TEK DIGITEL CORPORATION II
ANNEX III
ARTICLES OF INCORPORATION
OF
TEK DIGITEL CORPORATION II
The undersigned, being a natural person and acting as incorporator,
does hereby form a business corporation in the State of Maryland, pursuant to
the provisions of the Maryland General Corporation Law.
ARTICLE I
INCORPORATOR
------------
The name of the incorporator is Enghe Chimood.
The incorporator's address, including the street and number, if any,
including the county or municipal area, and including the state or county, is:
20030 Century Boulevard, Suite 201, Montgomery County, Germantown, MD
20874
The incorporator is at least eighteen years of age.
The incorporator is forming the corporation named in this Charter under
the general laws of the State of Maryland, to wit, the Maryland General
Corporation Law.
ARTICLE II
NAME AND DURATION
-----------------
The name of the corporation is TEK DigiTel Corporation II (the
"Corporation"). The duration of the Corporation shall be perpetual.
ARTICLE III
PURPOSES
A. The purposes for which the Corporation is formed are:
1. To engage in any lawful act or activity for which
corporations may be organized under the general laws
of the State of Maryland now or hereafter in force
including the Maryland General Corporation Law; and
2. To engage in any one or more businesses or
transactions, or to acquire all or any portion of any
entity engaged in any one or more businesses or
transactions which the Board of Directors may from
time to time authorize or approve, whether or not
related to the business described elsewhere in this
Article, or to any other business at the time or
theretofore engaged in by the Corporation.
3. The foregoing enumerated purposes and objects shall
be in no way limited or restricted by reference to,
or inference from, the terms of any other clause of
this or any other Article of the Charter of the
Corporation, and each shall be regarded as
independent; and they are intended to be and shall be
construed as powers as well as purposes and objects
of the Corporation and shall be in addition to and
not in limitation of the general powers of
corporations under the general laws of the State of
Maryland including the Maryland General Corporation
Law.
III-1
ARTICLE IV
PRINCIPAL OFFICE IN MARYLAND
AND RESIDENT AGENT
------------------
The present address of the principal office of the Corporation in the
State of Maryland is 20030 Century Boulevard, Suite 201, Montgomery County,
Germantown, MD 20874.
The resident agent of the Corporation is Enghe Chimood, whose address is
20030 Century Boulevard, Suite 201, Germantown, Montgomery County, MD 20874.
Said resident agent is a citizen of the State of Maryland, who resides at 2609
Oakenshield Drive, Rockville, Montgomery County, Maryland.
ARTICLE V
CAPITAL STOCK
-------------
SECTION 1. AUTHORIZED CAPITAL STOCK.
(a) Authorized Shares.
The total number of shares of capital stock of all classes
that the Corporation has authority to issue is 120,000,000,
initially classified as 100,000,000 shares of common stock, no
par value per share (the "Common Stock"), and 20,000,000
shares of preferred stock, no par value per share (the
"Preferred Stock"). Of the 20,000,000 shares of Preferred
Stock, 2,100,000 shares are hereby designated as the "SERIES
A, VOTING CONVERTIBLE PREFERRED STOCK." Shares of this series
are herein referred to as the "Series A Preferred Stock." A
majority of the entire Board of Directors, without action by
the stockholders, may amend the Charter to increase or
decrease the aggregate number of shares of stock or the number
of shares of stock of any class or series that the Corporation
has authority to issue.
The Common Stock and the Preferred Stock shall each constitute
separate classes of capital stock of the Corporation.
(b) Terminology and Aggregate Par Value.
All classes of capital stock are equity stock and all classes
of capital stock are referred to herein as "Stock." There is
no aggregate par value of all of the Corporation's authorized
Stock.
SECTION 2. CLASSIFICATION AND RECLASSIFICATION OF STOCK.
(a) Power of Board to Classify or Reclassify Stock.
The Board of Directors shall have the power, in its sole
discretion and without limitation, to classify or reclassify
any unissued Stock, whether now or hereafter authorized, by
setting, altering or eliminating in any one or more respects,
from time to time, before the issuance of such Stock, any
feature of such Stock, including, but not limited to, the
designation, preferences, conversion or other rights, voting
powers, qualifications or terms and conditions of redemption
of, or limitations as to dividends and any other restrictions
on, such Stock. The power of the Board of Directors to
classify and reclassify any of the shares of capital stock
shall include, without limitation, subject to the provisions
of the Charter, authority to classify or reclassify any
unissued shares of such stock into a class or classes of
preferred stock, preference stock, special stock or other
stock, and to divide and classify shares of any class into one
or more series of such class, by determining, fixing or
altering one or more of the following:
(i) The distinctive designation of such class or series
and the number of shares which constitute such class
or series; provided that, unless otherwise prohibited
by the terms of such or any other class or series,
the number of shares of any class or series may be
decreased by the Board of Directors in connection
with any classification or reclassification of
unissued shares and the number of shares of such
class or series may be increased by the Board of
III-2
Directors in connection with any such classification
or reclassification, and any shares of any class or
series which have been redeemed, purchased, otherwise
acquired or converted into shares of Common Stock or
any other class or series shall become part of the
authorized capital stock and be subject to
classification and reclassification as provided in
this subparagraph.
(ii) Whether or not and, if so, the rates, amounts and
times at which, and the conditions under which,
dividends shall be payable on shares of such class or
series, whether any such dividends shall rank senior
or junior to or on a parity with the dividends
payable on any other class or series of stock, and
the status of any such dividends as cumulative,
cumulative to a limited extent or non-cumulative and
as participating or non-participating.
(iii) Whether or not shares of such class or series shall
have voting rights, in addition to any voting rights
provided by law and, if so, the terms of such voting
rights.
(iv) Whether or not shares of such class or series shall
have conversion or exchange privileges and, if so,
the terms and conditions thereof, including provision
for adjustment of the conversion or exchange rate in
such events or at such times as the Board of
Directors shall determine.
(v) Whether or not shares of such class or series shall
be subject to redemption and, if so, the terms and
conditions of such redemption, including the date or
dates upon or after which they shall be redeemable
and the amount per share payable in case of
redemption, which amount may vary under different
conditions and at different redemption dates; and
whether or not there shall be any sinking fund or
purchase account in respect thereof, and if so, the
terms thereof.
(vi) The rights of the holders of shares of such class or
series upon the liquidation, dissolution or winding
up of the affairs of, or upon any distribution of the
assets of, the Corporation, which rights may vary
depending upon whether such liquidations dissolution
or winding up is voluntary or involuntary and, if
voluntary, may vary at different dates, and whether
such rights shall rank senior or junior to or on a
parity with such rights of any other class or series
of stock.
(vii) Whether or not there shall be any limitations
applicable, while shares of such class or series are
outstanding, upon the payment of dividends or making
of distributions on, or the acquisition of, or the
use of moneys for purchase or redemption of, any
stock of the Corporation, or upon any other action of
the Corporation, including action under this
subparagraph, and, if so, the terms and conditions
thereof.
(viii) Any other preferences, rights, restrictions,
including restrictions on transferability, and
qualifications of shares of such class or series, not
inconsistent with law and the Charter of the
Corporation.
(b) Ranking of Stock.
For the purposes hereof and of any articles supplementary to
the Charter providing for the classification or
reclassification of any shares of capital stock or of any
other charter document of the Corporation (unless otherwise
provided in any such articles or document), any class or
series of stock of the Corporation shall be deemed to rank:
(i) Prior to another class or series either as to
dividends or upon liquidation, if the holders of such
class or series shall be entitled to the receipt of
dividends or of amounts distributable on liquidation,
dissolution or winding up, as the case may be, in
preference or priority to holders of such other class
or series.
III-3
(ii) On a parity with another class or series either as to
dividends or upon liquidation, whether or not the
dividend rates, dividend payment dates or redemption
or liquidation price per share thereof be different
from those of such others, if the holders of such
class or series of stock shall be entitled to receipt
of dividends or amounts distributable upon
liquidation, dissolution or winding up, as the case
may be, in proportion to their respective dividend
rates or redemption or liquidation prices, without
preference or priority over the holders of such other
class or series.
(iii) Junior to another class or series either as to
dividends or upon liquidation, if the rights of the
holders of such class or series shall be subject or
subordinate to the rights of the holders of such
other class or series in respect of the receipt of
dividends or the amounts distributable upon
liquidation, dissolution or winding up, as the case
may be.
SECTION 3. COMMON STOCK.
The Common Stock shall have the following designation, preferences,
conversion or other rights, voting powers, qualifications and terms and
conditions of redemption, limitations as to dividends and any other
restrictions, and such others as may be afforded by law:
(a) Voting Rights.
Subject to action, if any, by the Board of Directors, pursuant
to Section 2 of this Article V, each share of Common Stock
shall have one vote, and, except as otherwise provided in
respect of the Preferred Stock or any class of stock hereafter
classified or reclassified, the exclusive voting power for all
purposes shall be vested in the holders of the Common Stock.
Shares of Common Stock shall not have cumulative voting
rights.
(b) Dividend and Distribution Rights.
After provision(s) with respect to preferential dividends on
any then outstanding classes of preferred stock, if any, fixed
by the Board of Directors pursuant to Section 2 of this
Article V or as otherwise provided for in this Article V shall
have been satisfied, and after satisfaction of any other
requirements, if any, including with respect to redemption
rights and preferences, of any such classes of preferred
stock, then and thereafter the holders of Common Stock shall
be entitled to receive, pro rata in relation to the number of
shares of Common Stock held by them, such dividends or other
distributions as may be declared from time to time by the
Board of Directors out of funds legally available therefor.
(c) Liquidation Rights.
In the event of the voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, all of the net
assets of the Corporation, if any, remaining after (i) payment
or provision for payment of the debts and other liabilities of
the Corporation, and (ii) after distribution in full of the
preferential amounts, if any, fixed pursuant to Section 2 of
this Article V or as otherwise provided for in Section 4 of
this Article V, to be distributed to the holders of any then
outstanding Preferred Stock, and (iii) subject to the right,
if any, of the holders of any outstanding Preferred Stock to
participate further in any liquidating distributions, shall be
distributed to the holders of the Common Stock, ratably in
proportion to the number of shares of Common Stock held by
them.
III-4
SECTION 4. PREFERRED STOCK.
The Preferred Stock, which unless specifically provided otherwise
includes the Series A Preferred Stock, shall have the following designation,
preferences, conversion or other rights, voting powers, qualifications and terms
and conditions of redemption, limitations as to dividends and any other
restrictions, and such others as may be afforded by law:
(a) Voting Rights.
(i) In General.
Subject to action, if any, by the Board of Directors,
pursuant to Section 2 of this Article V, and except
as otherwise specifically provided in Section 4 of
this Article V with respect to the holders of "Series
A Preferred Stock" of the Corporation, the holders of
shares of Preferred Stock shall not have voting
rights and, except as otherwise provided herein, when
entitled to vote shall not be entitled to vote as a
separate class on any matters submitted to a vote of
the stockholders
(A) Except as otherwise provided herein or by
law, the holders of shares of Preferred
Stock and the holders of shares of Common
Stock shall vote together as one class on
all matters submitted to a vote of
stockholders of the Corporation.
(B) Except as otherwise provided by law, the
Charter of the Corporation shall not be
amended in any manner which would materially
alter or change the powers, preferences or
special rights of the holders of Preferred
Stock so as to affect them adversely without
the affirmative vote of the holders of a
majority or more of the outstanding shares
of Preferred Stock, voting separately as a
class.
(ii) Series A Preferred Stock Voting Rights.
The shares of Series A Preferred Stock shall have the
right to vote in elections of directors and on other
matters generally as to which shareholders of the
Company may vote. Each share of Series A Preferred
Stock shall be entitled to cast three (3) votes on
every matter placed before shareholders for
consideration. The shares of Series A Preferred Stock
shall vote with the shares of Common Stock and not as
a separate class. Any matter which requires the
approval of the holders of the Series A Preferred
Stock shall require only the affirmative vote of a
majority of the votes cast by the holders of such
shares, voting as a separate class, at any lawful
meeting of such holders which commences with a
quorum; of if such shares vote by means of written
consent in lieu of a meeting, the concurrence of only
a majority of the holders of the Series A Preferred
Stock shall be necessary.
(b) Dividend and Distribution Rights.
(i) In General.
Subject to the prior and superior rights of the
holders of any shares of any class or series of
Preferred Stock ranking prior and superior with
respect to dividends, the holders of shares of
Preferred Stock shall be entitled to receive, when,
as and if declared by the Corporation's Board of
Directors (as used in this Article V, the "Board")
out of funds legally available for that purpose,
dividends payable in cash on a certain day (as
specified by the Board). In the event the Corporation
shall at any time after the effective date of this
Charter (the "Rights Declaration Date") (i) declare
any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such
case the amount to which holders of shares of
Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such
amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding
immediately after such event and the denominator of
which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
The Corporation shall declare a dividend or
distribution on the Preferred Stock as provided in
paragraph (A) above immediately after it declares a
dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock).
III-5
Dividends shall begin to accrue and be cumulative on
outstanding shares of Preferred Stock from the
Dividend Payment Date next preceding the date of
issue of such shares of Preferred Stock, unless the
date of issue of such shares is prior to the record
date for the first Dividend Payment Date, in which
case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the
date of issue is a Dividend Payment Date or is a date
after the record date for the determination of
holders of shares of Preferred Stock entitled to
receive a dividend and before such Dividend Payment
Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Dividend
Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of
Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the
time outstanding. The Board may fix a record date for
the determination of holders of shares of Preferred
Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date
shall be no more than thirty (30) days prior to the
date fixed for the payment thereof.
(ii) Series A Preferred Stock.
The holders of the shares of Series A Preferred Stock
shall not be entitled to receive any dividends
thereon; provided, that, if a dividend is declared on
the Common Stock of the Corporation or on any series
of Preferred Stock ranking equal or junior to the
Series A Preferred Stock, then in such event the
holders of the Series A Preferred Stock shall be
entitled to receive a proportional share of such
dividend, based upon the proportion of the number of
shares of Series A Preferred Stock then outstanding
to the total number of shares of Common and Preferred
Stock entitled to share in such dividend.
(c) Redemption.
(i) In General.
The outstanding shares of Preferred Stock, at the
option of the Board, may be redeemed as a whole, or
in part, at any time, or from time to time, at a cash
price per share equal to the fair market value of the
Common Stock as determined by the Board in good
faith.
(ii) Series A Preferred Stock.
The shares of Series A Preferred Stock shall not be
subject to redemption.
(d) Conversion Right (Series A Preferred Stock only).
(i) Conversion into Common Stock. Each share of Series A
Preferred Stock may, subject to all terms and
conditions of this Section 4(d) and subject to
adjustment as provided below, at any time after
issuance, be converted at the option of the holder
thereof into fully paid, nonassessable Common Stock
of the Corporation, no par value per share.
(ii) Maximum Conversion Rate. Each share of Series A
Preferred Stock may be converted into six (6) fully
paid, nonassessable shares of Common Stock of the
Corporation, subject to the following conversion
conditions:
A. one-fourth (1/4th) of the shares of Series A
Preferred Stock held may be converted when
the two-port Voice Server owned by the
Corporation's wholly owned subsidiary, ATC
Group, Inc., a Maryland corporation, has
successfully completed original beta testing
by a customer, as evidenced by the
customer's final written acceptance
specifying all testing carried out and test
results;
B. one-fourth (1/4th) of the shares of Series A
Preferred Stock held may be converted when
the four-port Voice Service owned by the
Corporation's wholly owned
III-6
subsidiary, ATC Group, Inc., a Maryland
corporation, has successfully completed
original beta testing by a customer, as
evidenced by the customer's final written
acceptance specifying all testing carried
out and test results;
In addition to the customer's final written
acceptance as called for in subparagraphs
(A) and (B) preceding, it shall also be a
conversion condition that the Corporation's
full Board by unanimous vote determines that
the customer's beta testing occurred as
represented in the final written acceptance
and that such testing was reasonably
appropriate to evaluate fitness of the
tested device for its intended use;
C. one-fourth (1/4th) of the shares of Series A
Preferred Stock held may be converted when
the Corporation and all subsidiaries have on
a combined basis achieved an aggregate of
Five Million Dollars (US $5,000,000.00) in
booked sales, evidenced by firm purchase
orders, firm distribution agreements,
license agreements, royalty agreements or
other written agreements committing
contracting parties to purchase a minimum
specified dollar amount of product
(collectively, the "Sales Agreements"),
subject to no condition, contingency or
limitations other than product delivery and
satisfying technical specifications made
part of the Sales Agreements; and
D. one-fourth (1/4th) of the shares of Series A
Preferred Stock held may be converted when
the Corporation and all subsidiaries have on
a combined basis achieved an aggregate of
Ten Million Dollars (US$10,000,000.00) in
booked sales, evidenced by Sales Agreements
that are not subject to any condition,
contingency or limitation other than product
delivery and satisfying technical
specifications made part of the Sales
Agreements.
In addition to the booked sales required by
subparagraphs (C) and (D) preceding, it
shall also be a conversion condition that
the Corporation's full Board by unanimous
vote determines that all Sales Agreements
which evidence the booked sales are valid,
arm's length agreements and appropriate to
the Corporation's operations.
The four (4) conversion conditions of this
Section 4(d) need not be satisfied in any
particular order, nor is the satisfaction of
any conversion condition dependent upon the
prior satisfaction of any other conversion
condition.
(iii) Automatic Conversion at Maximum Conversion Rate.
Notwithstanding the provisions of Section 4(d)(ii)
preceding, if the Corporation has not realized US
$1,000,000.00 in cash or other value from an offering
of its securities prior to deduction of
offering-related expenses and other non-operating
expenses not to exceed US $100,000.00, (the
"Qualifying Amount") within six (6) months following
the date of original issuance of the Series A
Preferred Stock ("Original Issue Date"), then each
share of Series A Preferred Stock shall,
automatically and without any requirements to satisfy
any conversion conditions of this Section 4(d) and
without need of any further action on the part of
holders of Series A Preferred Stock except to
surrender the Series A Preferred Stock certificates
to the Corporation's Secretary for conversion, be
converted into and thereafter represent six (6)
shares of the Common Stock of the Corporation;
provided, however, that if on the date which is six
(6) months following the Original Issue Date, a total
of at least $650,000.00 has been realized by the
Corporation in cash or other value from an offering
of its securities prior to deductions, then the
six-month period in which the Corporation must raise
the Qualifying Amount shall be extended to eight (8)
months following the Original Issue Date.
(iv) When Conversion Date Determinable by Board. For
purposes of this Section 4(d), the term
"Reorganization" includes any merger, consolidation,
share exchange, or other business combination
pursuant to which the Corporation is not the
surviving corporation after the effective date of the
Reorganization, and any sale or lease of all or
substantially all of the assets of the Corporation,
and the term "Reorganization Agreement" shall mean a
plan or
III-7
agreement with respect to a Reorganization. In the
even the Corporation consummates a Reorganization,
every share of Series A Preferred Stock issued and
outstanding on the Reorganization's effective date
shall on such date be converted into the number and
kind of shares or other property that would be
received by a person holding the number of shares of
Common Stock of the Corporation into which the shares
of Series A Preferred Stock would be convertible on
the effective date.
Notwithstanding any other provisions of this
Paragraph 4(d), if the conversion conditions set
forth in subparagraphs 4(d)(ii)(A) and 4(d)(ii)(B)
have been satisfied by the Reorganization's effective
date, then any requirement set forth herein to
satisfy the conversion conditions set forth in
subparagraphs 4(d)(ii)(C) and 4(d)(ii)(D) shall be
waived and such two conditions shall be deemed to
have been fully satisfied. If on the Reorganization's
effective date the conversion conditions set forth in
subparagraphs 4(d)(ii)(A) and 4(d)(ii)(B) have not
been satisfied, then the immediately following
paragraph shall apply to the holders of the Series A
Preferred Stock.
In regard to any conversion conditions which at the
time of execution of the Reorganization Agreement
have not been satisfied, the Board shall, prior to
such effective date, in good faith determine the
extent to which such remaining conversion conditions
have been partially satisfied. (For example,
achieving $1,000,000.00 in booked sales would satisfy
one-fifth (1/5th) of the subparagraph 4(d)(ii)(C)
conversion condition and one-tenth (1/10th) of the
subparagraph 4(d)(ii)(d) conversion condition,
respectively.) The Board shall then determine the
number of shares of the Corporation's common stock
into which the shares of Series A Preferred Stock may
be converted, which shall be in proportion to the
extent the remaining conversion conditions have then
been partially satisfied. The determination of the
Board in this matter shall be final and binding for
all purposes.
(v) Automatic Conversion at Minimum Conversion Rate. On
the fifth (5th) anniversary of the Original Issue
Date of the Series A Preferred Stock, every share of
Series A Preferred Stock which has not theretofore
satisfied any of the foregoing conversion conditions
in this Section 4(d) and been converted to Common
Stock shall, automatically and without any
requirement to satisfy any conversion conditions of
this Section 4(d) and without need of any further
action on the part of holders of Series A Preferred
Stock except to surrender the Series A Preferred
Stock certificates to the Corporation's Secretary for
conversion, be converted into and thereafter
represent one (1) share of the common stock of the
Corporation.
(vi) Other Matters Relating to Conversion. The shares of
Common Stock of the Corporation into which shares of
Series A Preferred Stock are converted ("Conversion
Shares") will not be registered under the Securities
Act of 1933, as amended ("Act"), but shall be issued
in reliance upon Section 4(2) of the Act or Rule 505
or 506 of Regulation D under the Act, or Regulation S
under the Act, or other available exemption from
registration under the Act. Conversion shall be
deemed to occur on the date a certificate evidencing
shares of Series A Preferred Stock being converted is
presented to the Corporation or to the Corporation's
transfer agent and registrar, properly endorsed and
accompanied by the proper fee payable for issuance of
the Conversion Shares. Each certificate evidencing
Series A Preferred Shares or Conversion Shares shall
be subject to such restrictions, conditions and
limitations, and shall bear such restrictive legends,
if any, as are required by applicable laws, rules and
regulations.
(vii) Other Adjustments to Conversion Rates. The conversion
rates set forth in this Section 4(d) will be subject
to further adjustment if the Corporation is
reorganized, merged, consolidated or party to a plan
of exchange with another corporation pursuant to
which stockholders of the Corporation receive any
shares of stock or other securities, or in the event
of any sale or other transfer of all or substantially
all of the Corporation's assets, or in case of any
reclassification of the Common Stock. Holders of
shares of the Series A Preferred Stock shall be
entitled, after the occurrence of any such event, to
receive on conversion thereof
III-8
the kind and amount of shares of stock or other
securities, cash or other property receivable upon
such event by a holder of the number of shares of
Common Stock into which the shares of Series A
Preferred Stock might have been converted immediately
prior to occurrence of the event. In the event of a
split or combination, the number of Conversion Shares
issuable shall be appropriately adjusted. For
purposes of this paragraph, the term "stockholder"
means a holder of Common Stock.
(viii) No Fractional Shares Issuable. No fractional share of
Common Stock, or scrip or other instrument
representing a fractional share of Common Stock,
shall be issued upon conversion of any share of
Series A Preferred Stock. If any such conversion
results in a fractional share of Common Stock being
issuable, the Corporation shall issue a whole share
if the fraction is one-half (0.50) or more, and the
converting holder shall forfeit the fraction if less
than one-half (0.50).
(e) Rights on Liquidation, Dissolution, or Winding Up.
(i) In General.
(A) Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the
Corporation, no distribution shall be made
to the holders of shares of stock ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to
the Preferred Stock unless, prior thereto,
the holders of shares of Preferred Stock
shall have received an amount equal to any
accrued and unpaid dividends and
distributions thereon, whether or not
declared, to the date of such payment (the
"Preferred Stock Liquidation Preference").
Following the payment of the full amount of
the Preferred Stock Liquidation Preference,
holders of Preferred Stock and holders of
shares of Common Stock shall receive their
ratable and proportionate share of the
remaining assets to such Preferred Stock and
Common Stock, on a per share basis,
respectively.
(B) In the event, however, that there are not
sufficient assets available to permit
payment in full of the Preferred Stock
Liquidation Preference and the liquidation
preferences of all other series of preferred
stock, if any, which rank on a parity with
the Preferred Stock, then such remaining
assets shall be distributed ratably to the
holders of such parity shares in proportion
to their respective liquidation preferences.
(ii) Series A Preferred Stock.
(A) Payment of Liquidation Preference. In the
event of any voluntary or involuntary
liquidation, dissolution or winding-up of
the Corporation, the holders of shares of
Series A Preferred Stock shall be
subordinate to all claims of the
Corporation's creditors and to claims of the
holders of every series of the Corporation's
Preferred Stock ranking senior upon
liquidation to the Series A Preferred Stock,
but otherwise are entitled to receive a
liquidation preference in the amount of
$.001 per share, before any payment is made
to any holder of shares of the Common Stock
or any series of Preferred Stock ranking
junior to the shares of Series A Preferred
Stock. After the payment of such liquidation
preference and any liquidation preferences
payable to holders of any other series of
Preferred Stock, the holders of the shares
of Series A Preferred Stock shall share
ratably with the holders of the
Corporation's Common Stock and all series of
Preferred Stock ranking on a parity with or
junior to the Series A Preferred Stock in
the Corporation's assets available for
distribution to its shareholders.
(B) Effect of Reorganization. Neither the
consolidation or merger of the Corporation
with or into any other corporation nor the
lease, exchange, sale or transfer of all or
substantially all of the Corporation's
assets shall be deemed to be a liquidation,
III-9
dissolution or winding up of the
Corporation's affairs, whether voluntary or
otherwise, within the meaning of this
Section 4(e).
(f) Certain Restrictions.
Whenever dividends or distributions payable on Preferred Stock
as provided in Section 4 of this Article V are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Preferred
Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise
acquire for consideration any shares of stock ranking
junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Preferred Stock;
(ii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation,
dissolution or winding up) with the Preferred Stock,
provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding
up) to the Preferred Stock; or
(iii) Purchase or otherwise acquire for consideration any
shares of Preferred Stock, or any shares of stock
ranking on a parity with the Preferred Stock, except
in accordance with a purchase offer made in writing
or by publication (as determined by the Board) to all
holders of such shares upon such terms as the Board,
after consideration of the respective annual dividend
rates and other relative rights and preferences of
the respective series and classes, shall determine in
good faith will result in fair and equitable
treatment among the respective series or classes.
(g) Certain Corporate Actions.
The Corporation shall not amend its Charter without the prior
approval of the holders of the Series A Preferred Stock,
voting as a separate class, if such amendment would directly
or indirectly effect any adverse change in any of the rights,
preferences or privileges of, or limitations provided for
herein for the benefit of, the holders of Series A Preferred
Stock. Without limiting the generality of the foregoing, no
such amendment may be effected without such approval if such
amendment would:
(i) Reduce the amount payable to the holders of Series A
Preferred Stock upon the voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation, or change the seniority of the
liquidation preferences of the holder of Series A
Preferred Stock relative to the rights upon
liquidation, dissolution or winding up of the holders
of any other class or series of the Corporation's
Stock; or
(ii) Cancel or modify the right of holders of Series A
Preferred Stock to convert such shares to Common
Shares of the Corporation, all as set forth herein.
(h) Ranking of Preferred Stock.
(i) In General.
The Board of Directors may set the ranking of all
series of Preferred Stock in relation to all other
classes or series of the Corporation's Stock as to
the payment of dividends and the distribution of
assets.
III-10
(ii) Series A Preferred Stock
The shares of the Series A Preferred Stock shall rank
junior to all series of Preferred Stock of the
Corporation hereafter created, unless such
subsequently created series expressly ranks on a
parity with or subordinate to the Series A Preferred
Stock. The Corporation may issue other shares of
another class or series of Preferred Stock after the
date hereof which rank on a parity with or senior to
the Series A Preferred Stock.
(i) Status of Certain Shares.
Shares of Series A Preferred Stock which (A) have been
redeemed, converted, exchanged, purchased, retired or
surrendered to the Corporation, or (B) have been reacquired in
any other manner, or (C) have not been sold or issued and
which by determination of the Board shall not be sold or
issued as Series A Preferred Stock, shall have the status of
authorized and unissued preferred shares and may be reissued
by the Board as shares of any other series of Preferred Stock.
In any such event, the Board may but shall not be required to
file an amendment to the Corporation's Charter with the
Maryland State Department of Assessments and Taxation to
reflect any such fact.
(j) Tax Matters.
The holders of Series A Preferred Stock shall be solely liable
for and shall pay any and all taxes and other governmental
charges, of every kind, that may be imposed in respect of the
issue or delivery of Common Shares upon redemption or
conversion of Series A Preferred Stock. The Corporation may
withhold certain of such shares of Common Stock in order to
satisfy the Corporation's tax withholding obligations or take
similar steps to ensure that such taxes and charges are duly
paid. If the Corporation becomes liable for or pays any such
taxes due to acts of a Series A Preferred Stock holder, it
may, in order to recoup the amount of such tax or tax
liability:
(i) withhold the amount of such tax or tax liability from
any funds whatever in or coming into the
Corporation's possession and belonging to such
holder, including dividends declared on the Series A
Preferred Stock and payable to such holder; and/or
(ii) cancel and reissue in the Corporation's name such
number of shares of Series A Preferred Stock, based
upon the original issue price per share, as will
equal the amount of the tax paid or tax liability
incurred.
(k) No Limit Imposed on Corporate Powers.
Except to the extent expressly set forth herein, the issuance
and existence of the Series A Preferred Stock shall not affect
in any way the right or power of the Corporation or its
shareholders to make or authorize any and all adjustments,
recapitalizations, reorganizations or other changes in the
Corporation's capital structure or its business, or any merger
or consolidation of the Corporation, or any issue of bonds,
debentures or other indebtedness, or the dissolution or
liquidation of the Corporation, or any sale, exchange or
transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar
character or otherwise.
SECTION 5. GENERAL PROVISIONS.
(a) Interpretation and Ambiguities.
The Board of Directors shall have the power to interpret and
to construe the provisions of this Article V and the Board of
Directors shall have the power to determine the application of
the provisions of this Article V with respect to any situation
based on the facts known to it, and any such interpretation,
construction and determination shall be final and binding on
all interested parties, including the stockholders.
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(b) Severability.
If any provision of this Article V or any application of any
such provision is determined to be void, invalid or
unenforceable by any court having jurisdiction over the issue,
the validity and enforceability of the remaining provisions
shall not be affected and other applications of such provision
shall be affected only to the extent necessary to comply with
the determination of such court.
ARTICLE VI
THE BOARD OF DIRECTORS
----------------------
SECTION 1. AUTHORIZED NUMBER AND INITIAL DIRECTORS.
The business and affairs of the Corporation shall be managed by a Board
of Directors. The Corporation shall have four (4) directors, which number may be
increased or decreased pursuant to the Bylaws of the Corporation. The number of
directors shall not be less than the lesser of three (3) or the number of
stockholders; but shall never be less than the minimum number permitted by the
General Laws of the State of Maryland now or hereafter in force. The Bylaws of
the Corporation shall set forth the qualifications, term, duties and powers of
the Board of Directors. The persons who shall serve as directors effective
immediately and until their successors are duly elected and qualify are as
follows:
Enghe Chimood
Thomas Yang
Ke-ou Chao
Sharming Lin
SECTION 2. CONFLICT OF INTEREST.
No contract or other transaction between the Corporation and any other
corporation, partnership, individual or other entity and no act of the
Corporation shall in any way be affected or invalidated by the fact that any of
the directors of the Corporation are directors, principals, partners or officers
of such other entity, or are pecuniarily or otherwise interested in such
contract, transaction or act; provided that (i) the existence of such
relationship or other interest shall be disclosed or known to the Board of
Directors or to a committee of the Board of Directors if the matter involves a
committee decision, and the contract, transaction or act shall be authorized,
approved or ratified by a majority of disinterested directors on the Board of
Directors or on such committee, as the case may be, even if the number of
disinterested directors constitutes less than a quorum or (ii) the contract,
transaction or act shall be authorized, ratified or approved in any other manner
permitted by the Maryland General Corporation Law.
SECTION 3. PERMISSIBLE CONSIDERATIONS BY BOARD OF DIRECTORS
The Board of Directors, in considering a potential acquisition of
control of the Corporation, is permitted to consider the effect of the potential
acquisition on the stockholders, employees, suppliers, customers, and creditors
of the Corporation and the communities in which offices or other establishments
of the Corporation are located.
ARTICLE VII
AMENDMENTS
----------
SECTION 1. AMENDMENTS TO CHARTER.
A majority of the Board of Directors, subject to the affirmative vote
of a majority of the outstanding shares of Stock entitled to vote when required,
shall have the right to make, amend, alter, change, restate or repeal any
provision contained in the Charter, including any amendments changing the terms
or contract rights, as expressly set forth in the Charter, of any of its
outstanding Stock by classification, reclassification or otherwise.
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SECTION 2. AMENDMENTS TO BYLAWS.
The Board of Directors shall have the exclusive power to make, amend,
alter, change, restate or repeal any provision contained in the Corporation's
Bylaws.
ARTICLE VIII
PREEMPTIVE RIGHTS
-----------------
No holder of shares of Stock of any class or series shall have any
preemptive rights to subscribe for or purchase or receive any part of any new or
additional shares of Stock of any class or series, or any bonds or securities
convertible into stock of any class of the Corporation; provided, however, that
the Board of Directors may, in authorizing the issuance of shares of stock of
any class, confer any preemptive right that the Board of Directors may deem
advisable in connection with such issuance.
ARTICLE IX
INDEMNIFICATION AND LIMITATION OF LIABILITY
-------------------------------------------
SECTION 1. MANDATORY INDEMNIFICATION.
The Corporation shall indemnify its current acting and its former
directors and officers against any and all liabilities and expenses incurred in
connection with their services in such capacities to the maximum extent
permitted by the Maryland General Corporation Law, as from time to time amended.
SECTION 2. DISCRETIONARY INDEMNIFICATION.
If approved by the Board of Directors, the Corporation may indemnify
its officers, employees, agents and persons who serve and have served, at its
request as a director, officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture or other enterprise or employee benefit
plan to the extent determined to be appropriate by the Board of Directors.
SECTION 3. ADVANCING EXPENSES PRIOR TO A DECISION.
The Corporation shall advance expenses to its directors and officers
entitled to mandatory indemnification to the maximum extent permitted by the
Maryland General Corporation Law, as from time to time amended, and may in the
discretion of the Board of Directors advance expenses to officers, employees,
agents and others who may be granted indemnification.
SECTION 4. OTHER PROVISIONS FOR INDEMNIFICATION.
The Board of Directors may, by bylaw, resolution or agreement, make
further provision for indemnification of directors, officers, employees and
agents.
SECTION 5. LIMITATION OF LIABILITY OF DIRECTORS.
To the maximum extent that limitations on the liability of directors
and officers are permitted by the Maryland General Corporation Law, as from time
to time amended, no director or officer of the Corporation shall have any
liability to the Corporation or its stockholders for money damages. This
limitation on liability applies to events occurring at the time a person serves
as a director or officer of the Corporation whether or not such person is a
director or officer at the time of any proceeding in which liability is
asserted.
SECTION 6. EFFECT OF AMENDMENT OR REPEAL.
No amendment or repeal of any section of this Article, or the adoption
of any provision of the Corporation's Charter inconsistent with this Article,
shall apply to or affect in any respect the rights to indemnification or
limitation of liability of any director of the Corporation with respect to any
alleged act or omission which occurred prior to such amendment, repeal or
adoption.
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ARTICLE X
BUSINESS COMBINATION STATUTE
----------------------------
[RESERVED FOR WHEN ELIGIBLE]
The provisions of Title 3, Subtitle 6 (Special Voting Requirements) of
the Maryland General Corporation Law, including but not limited to Section
3-602, shall not apply to any business combination of the Corporation or any
subsidiary of the Corporation with (a) Arlenet Ltd.;(b) any person that becomes
an interested stockholder as a result of a transfer of securities of the
Corporation, including the transfer of voting rights or other interests in any
such securities, to such person pursuant to a written agreement that provides
for such exemption to which Arelnet Ltd. or any affiliate or associate of
Arelnet Ltd. is a party; or (c) any affiliate or associate of the persons named
in (a) and/or (b). As used in this Article X, the terms "affiliate",
"associate", "business combination", interested stockholder", and "subsidiary"
shall have the meanings ascribed to them in Title 3, Subtitle 6 of the Maryland
General Corporation Law.
ARTICLE XI
CONTROL SHARE LAW
-----------------
[RESERVED FOR WHEN ELIGIBLE]
Any acquisition of any shares of Stock of the Corporation, including
any acquisition of voting rights or other interests in any such Stock, shall be
exempt from the provisions of Title 3, Subtitle 7 of the Maryland General
Corporation Law (Voting Rights of Certain Control Shares). Accordingly, the
provisions of Title 3, Subtitle 7 of the Maryland General Corporation Law shall
not apply to this Corporation.
ARTICLE XII
MARYLAND UNSOLICITED TAKEOVERS ACT
----------------------------------
[RESERVED FOR WHEN ELIGIBLE]
The Corporation hereby reserves the right to elect to be subject to any
or all provisions of Title 3, Subtitle 8 (Corporations and Real Estate
Investment Trusts - Unsolicited Takeovers) of the Maryland General Corporation
Law, including but not limited to Sections 3-801 to 3-805, by resolution of the
Board of Directors, at such time as the Corporation shall be eligible for the
unsolicited takeover protections afforded by Title 3, Subtitle 8 of the Maryland
General Corporation Law.
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation on the ____ day of , 2001, and have acknowledged such adoption and
signing to be my act.
----------------------------------------
Enghe Chimood, Incorporator
CONSENT OF RESIDENT AGENT
THE UNDERSIGNED, hereby consents to act as resident agent in Maryland
for the entity named in the attached instrument.
- -----------------------------------
Signature
Printed Name: Enghe Chimood
--------------------------------
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ANNEX IV
BYLAWS
OF
TEK DIGITEL CORPORATION II
ANNEX IV
BYLAWS
OF
TEK DIGITEL CORPORATION II,
A MARYLAND CORPORATION
TABLE OF CONTENTS
ARTICLE I - OFFICES.....................................................................................................1
Section 1. PRINCIPAL OFFICE.............................................................................1
Section 2. ADDITIONAL OFFICES...........................................................................1
ARTICLE II - STOCKHOLDERS................................................................................................1
Section 1. ANNUAL MEETING...............................................................................1
Section 2. SPECIAL MEETING..............................................................................1
Section 3. PLACE OF MEETINGS............................................................................1
Section 4. NOTICE.......................................................................................1
Section 5. QUORUM; ADJOURNMENTS.........................................................................2
Section 6. VOTING.......................................................................................2
Section 7. PROXIES......................................................................................2
Section 8. ORGANIZATION.................................................................................2
Section 9. CONDUCT OF BUSINESS..........................................................................3
Section 10. CONDUCT OF VOTING............................................................................3
Section 11. ADVANCE NOTICE PROVISIONS FOR ELECTION OF DIRECTORS .........................................3
Section 12. ADVANCE NOTICE PROVISIONS FOR BUSINESS TO BE TRANSACTED AT ANNUAL
MEETING......................................................................................4
Section 13. LIST OF STOCKHOLDERS.........................................................................5
Section 14. VOTING OF STOCK BY CERTAIN HOLDERS...........................................................5
Section 15. INFORMAL ACTION BY STOCKHOLDERS..............................................................5
Section 16. MEETING BY TELEPHONE CONFERENCE..............................................................5
ARTICLE III - DIRECTORS..................................................................................................6
Section 1. GENERAL POWERS; QUALIFICATIONS...............................................................6
Section 2. NUMBER AND TENURE............................................................................6
Section 3. GENERAL TERM OF OFFICE; CLASSES OF DIRECTORS.................................................6
Section 4. REMOVAL OF DIRECTORS.........................................................................6
Section 5. RESIGNATION..................................................................................7
Section 6. FILLING VACANCIES............................................................................7
Section 7. REGULAR MEETINGS.............................................................................7
Section 8. SPECIAL MEETINGS.............................................................................7
Section 9. NOTICE.......................................................................................7
Section 10. QUORUM.......................................................................................8
Section 11. VOTING.......................................................................................8
Section 12. TELEPHONE MEETINGS...........................................................................8
Section 13. INFORMAL ACTION BY DIRECTORS.................................................................8
Section 14. COMPENSATION OF DIRECTORS....................................................................8
Section 15. LOSS OF DEPOSIT..............................................................................8
Section 16. SURETY BONDS.................................................................................8
Section 17. CERTAIN RIGHTS OF DIRECTORS..................................................................8
Section 18. PRESUMPTION OF ASSENT........................................................................8
Section 19. CERTAIN OTHER DETERMINATIONS BY THE BOARD OF DIRECTORS.......................................9
Section 20. RESERVED POWERS OF THE BOARD OF DIRECTORS....................................................9
Section 21. ADVISORY DIRECTORS...........................................................................9
ARTICLE IV - COMMITTEES..................................................................................................9
Section 1. NUMBER, TENURE AND QUALIFICATIONS............................................................9
Section 2. POWERS.......................................................................................9
Section 3. CONDUCT OF BUSINESS.........................................................................10
ARTICLE V - OFFICERS....................................................................................................10
Section 1. GENERAL PROVISIONS..........................................................................10
Section 2. ELECTION, TENURE AND REMOVAL OF OFFICERS....................................................10
Section 3. CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER ..........................................10
Section 4. VICE-CHAIRMAN...............................................................................11
Section 5. PRESIDENT AND CHIEF OPERATING OFFICER.......................................................11
Section 6. VICE-PRESIDENTS.............................................................................11
Section 7. CHIEF FINANCIAL OFFICER, TREASURER AND CONTROLLER ..........................................11
Section 8. SECRETARY...................................................................................11
Section 9. ASSISTANT AND SUBORDINATE OFFICERS..........................................................11
Section 10. SALARIES....................................................................................12
Section 11. DELEGATION OF AUTHORITY.....................................................................12
ARTICLE VI - INDEMNIFICATION............................................................................................12
Section 1. PROCEDURE...................................................................................12
Section 2. EXCLUSIVITY, ETC............................................................................12
Section 3. SEVERABILITY; DEFINITIONS...................................................................13
ARTICLE VII - STOCK.....................................................................................................13
Section 1. BOARD AUTHORIZATION OF SHARE ISSUANCES......................................................13
Section 2. PREEMPTIVE RIGHTS...........................................................................13
Section 3. CERTIFICATES................................................................................13
Section 4. TRANSFERS...................................................................................14
Section 5. LOST CERTIFICATE............................................................................14
Section 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE .........................................14
Section 7. STOCK LEDGER................................................................................14
Section 8. CERTIFICATION OF BENEFICIAL OWNERS..........................................................14
ARTICLE VIII - PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS.............................................................15
Section 1. RELATED PARTY TRANSACTIONS..................................................................15
Section 2. OTHER CONSIDERATIONS........................................................................15
Section 3. STOCKHOLDER PROPOSALS.......................................................................16
Section 4. VOTING REQUIREMENTS.........................................................................16
ARTICLE IX - FISCAL YEAR................................................................................................16
ARTICLE X - DIVIDENDS...................................................................................................16
Section 1. DECLARATION.................................................................................16
Section 2. CONTINGENCIES...............................................................................16
ARTICLE XI - INVESTMENT POLICY..........................................................................................16
ARTICLE XII - SEAL......................................................................................................17
Section 1. SEAL........................................................................................17
Section 2. AFFIXING SEAL...............................................................................17
ARTICLE XIII - WAIVER OF NOTICE.........................................................................................17
ARTICLE XIV - FINANCE...................................................................................................17
Section 1. CONTRACTS...................................................................................17
Section 2. CHECKS AND DRAFTS...........................................................................17
Section 3. DEPOSITS....................................................................................17
Section 4. ANNUAL STATEMENT OF AFFAIRS.................................................................18
ARTICLE XV - BUSINESS COMBINATIONS......................................................................................18
ARTICLE XVI - CERTAIN ELECTIONS [RESERVED FOR WHEN ELIGIBLE]............................................................18
Section 1. ELECTION OF SUBTITLE 8 PROVISIONS REGARDING UNSOLICITED TAKEOVERS...........................18
Section 2. EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE ...........................................18
ARTICLE XVII - SUNDRY PROVISIONS........................................................................................18
Section 1. BOOKS AND RECORDS...........................................................................18
Section 2. BONDS.......................................................................................19
Section 3. VOTING UPON SHARES IN OTHER CORPORATIONS....................................................19
Section 4. MAIL........................................................................................19
Section 5. CONTRACTS AND AGREEMENTS....................................................................19
Section 6. FACSIMILE SIGNATURES........................................................................19
Section 7. RELIANCE UPON BOOKS, REPORTS AND RECORDS....................................................19
Section 8. TIME PERIODS................................................................................19
ARTICLE XVI - AMENDMENT OF BYLAWS.......................................................................................20
MARYLAND BYLAWS
OF
TEK DIGITEL CORPORATION II
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE
The principal office of the Corporation shall be located in Maryland at
such place as the Board of Directors may designate.
SECTION 2. ADDITIONAL OFFICES
The Corporation may have its principal executive offices and additional
offices at such places as the Board of Directors may from time to time determine
or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
SECTION 1. ANNUAL MEETING
The Corporation shall hold an annual meeting of its stockholders to
elect directors and transact any other business within its powers at such time
and on such date as the Chairman of the Board or the Board of Directors shall
set. Except as the Charter or statute provides otherwise, any business may be
considered at an annual meeting without the purpose of the meeting having been
specified in the notice. Failure to hold an annual meeting does not invalidate
the Corporation's existence or affect any otherwise valid corporate acts.
SECTION 2. SPECIAL MEETING
At any time in the interval between annual meetings, a special meeting
of the stockholders may be called by the Chairman of the Board, the President,
or by a majority of the Board of Directors by a vote at a meeting or in writing
(addressed to the Chairman of the Board of the Corporation) with or without a
meeting. Subject to the procedures set forth in Section 11 of this Article II
and this Section, special meetings of the stockholders shall be called by the
Secretary at the request of stockholders only on the written request of
stockholders entitled to cast at least a majority of all the votes entitled to
be cast at the meeting. A request for a special meeting shall state the purpose
of such meeting and the matters proposed to be acted on at such meeting. The
Secretary shall inform the stockholders making such request of the reasonably
estimated costs of preparing and mailing a notice of the meeting and, upon such
stockholders' payment to the Corporation of such costs, the Secretary shall give
notice to each stockholder entitled to notice of the meeting. The Board of
Directors shall have sole power to fix the date and time of the special meeting.
SECTION 3. PLACE OF MEETINGS
Meetings of stockholders shall be held at such place as is set from
time to time by the Board of Directors.
SECTION 4. NOTICE
Not less than ten nor more than 90 days before each meeting of
stockholders, the Secretary shall give written notice of the meeting to each
stockholder entitled to vote at such meeting and to each stockholder not
entitled to vote who is entitled to notice of the meeting. The notice shall
state the time and place of the meeting and, if a special meeting or notice of
the purpose is required by statute, the purpose of the meeting. Notice is given
to a stockholder
IV-1
when it is personally delivered to the stockholder, left at the stockholder's
residence or usual place of business, mailed to him or her at his or her address
as it appears on the records of the Corporation or transmitted to the
stockholder by electronic mail to any electronic mail address of the stockholder
or by any other electronic means. Notwithstanding the foregoing provisions, each
person who is entitled to notice waives notice if he or she before or after the
meeting signs a waiver of the notice which is filed with the records of the
stockholders' meetings or is present at the meeting in person or by proxy.
SECTION 5. QUORUM; ADJOURNMENTS
Unless any statute or the Charter provides otherwise, at a meeting of
stockholders, the presence in person or by proxy of stockholders entitled to
cast a majority of all the votes entitled to be cast at such meeting shall
constitute a quorum; but this section shall not affect any requirement under any
statute or the Charter of the Corporation for the vote necessary for the
adoption of any measure.
Whether or not a quorum is present at any meeting of the stockholders,
a majority of the stockholders entitled to vote at such meeting, present in
person or by proxy, shall have power to adjourn the meeting from time to time to
a date not more than 120 days after the original record date without notice
other than announcement at the meeting. At such adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the meeting as originally notified.
SECTION 6. VOTING
A plurality of all the votes cast at a meeting of stockholders duly
called and at which a quorum is present shall be sufficient to elect a director.
In all elections for directors, each share may be voted for as many individuals
as there are directors to be elected and for whose election the share is
entitled to be voted. A majority of the votes cast at a meeting of stockholders
duly called and at which a quorum is present shall be sufficient to approve any
other matter which may properly come before the meeting, unless more than a
majority of the votes cast is required by statute or by the Charter of the
Corporation. Unless otherwise provided in the Charter with respect to a
particular class or series of stock, each outstanding share of stock, regardless
of class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of stockholders; however, a share is not entitled to be voted if any
installment payable on it is overdue and unpaid.
SECTION 7. PROXIES
A stockholder may vote the stock the stockholder owns of record either
in person or by proxy. A stockholder may sign a writing authorizing another
person to act as proxy. Signing may be accomplished by the stockholder or the
stockholder's authorized agent signing the writing or causing the stockholder's
signature to be affixed to the writing by any reasonable means, including
facsimile signature. A stockholder may authorize another person to act as proxy
by transmitting, or authorizing the transmission of, an authorization by a
telegram, cablegram, datagram, electronic mail or any other electronic or
telephonic means to the person authorized to act as proxy or to any other person
authorized to receive the proxy authorization on behalf of the person authorized
to act as the proxy, including a proxy solicitation firm, proxy support service
organization, or other person authorized by the person who will act as proxy to
receive the transmission. Unless a proxy provides otherwise, it is not valid
more than 11 months after its date. A proxy is revocable by a stockholder at any
time without condition or qualification unless the proxy states that it is
irrevocable and the proxy is coupled with an interest. A proxy may be made
irrevocable for so long as it is coupled with an interest. The interest with
which a proxy may be coupled includes an interest in the stock to be voted under
the proxy or another general interest in the Corporation or its assets or
liabilities. Before or at the time of the meeting, a proxy shall be filed with
the Secretary of the Corporation or with any person authorized by the Secretary
to receive proxy authorizations and who shall promptly submit such proxy
authorizations to the Secretary.
SECTION 8. ORGANIZATION
The Chairman of the Board or, if the Board of Directors has designated
another person, such other person, or, in the absence of such other person, the
highest ranking officer of the Corporation who is present shall call to order
any meeting of the stockholders and act as chairman of the meeting. In the
absence of the Secretary of the Corporation, the secretary of the meeting shall
be such person as the chairman of the meeting appoints. The chairman of the
meeting
IV-2
shall have the power, in his sole discretion, to adjourn, recess, delay or
otherwise postpone the date or time of any annual or special meeting of
stockholders.
SECTION 9. CONDUCT OF BUSINESS
Nominations of persons for election to the Board of Directors and the
proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (a) pursuant to the Corporation's notice of
meeting, (b) by or at the direction of the Board of Directors or (c) by any
stockholder of the Corporation (i) who was a stockholder of record at the time
of giving notice(s) provided for in Section 11 and Section 12 of this Article
II, (ii) who is entitled to vote at the meeting and (iii) who complied with the
notice(s) procedures set forth in Section 11 and Section 12 of this Article II.
Nominations of persons for election to the Board of Directors and the proposal
of business to be considered by the stockholders may be made at a special
meeting of stockholders (a) only pursuant to the Corporation's notice of meeting
and (b), in the case of nominations of persons for election to the Board of
Directors, (i) by or at the direction of the Board of Directors or (ii) by any
stockholder of the Corporation (A) who was a stockholder of record at the time
of giving notice provided for in Section 11, (B) who is entitled to vote at the
meeting and (C) who complied with the notice procedures set forth in Section 11
of this Article II. The chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in Section 11 and
Section 12 of this Article II and this Section and, if any proposed nomination
or business is not in compliance with Section 11 and Section 12 of this Article
II and this Section, to declare that such defective nomination or proposal be
disregarded.
SECTION 10. CONDUCT OF VOTING
At all meetings of stockholders, unless the voting is conducted by
inspectors, the proxies and ballots shall be received, and all questions
touching the qualification of voters and the validity of proxies, the acceptance
or rejection of votes and procedures for the conduct of business not otherwise
specified by these Bylaws, the Charter or law, shall be decided or determined by
the chairman of the meeting. If demanded by stockholders, present in person or
by proxy, entitled to cast 10% in number of votes entitled to be cast, or if
ordered by the chairman of the meeting, the vote upon any election or question
shall be taken by ballot. Before any meeting of the stockholders, the Board of
Directors may appoint persons to act as inspectors of election at the meeting
and any adjournment thereof. If no inspectors of election are so appointed, the
chairman of the meeting may, and on the request of stockholders, present in
person or by proxy, entitled to cast 10% in number of votes entitled to be cast,
shall appoint inspectors of election at the meeting. The number of inspectors
shall be either one or three. If inspectors are appointed at a meeting on the
request of stockholders, the holders of a majority of shares present in person
or by proxy shall determine whether one or three inspectors are to be appointed.
No candidate for election as a director at a meeting shall serve as an inspector
thereat. If any person appointed as inspector fails to appear or fails or
refuses to act, the chairman of the meeting may, and upon the request of any
stockholder shall, appoint a person to fill that vacancy. The inspectors shall:
determine the number of shares outstanding and the voting power of each, the
shares represented at the meeting, the existence of a quorum, and the
authenticity, validity and effect of proxies; receive votes, ballots or
consents; hear and determine all challenges and questions in any way arising in
connection with the right to vote; count and tabulate all votes or consents;
determine when polls shall close; determine the result; and do any other acts
that may be proper to conduct the election or vote with fairness to all
stockholders. Unless so demanded or ordered, no vote need be by ballot and
voting need not be conducted by inspectors.
SECTION 11. ADVANCE NOTICE PROVISIONS FOR ELECTION OF DIRECTORS
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as directors of the Corporation.
Nominations of persons for election to the Board of Directors may be made at any
annual meeting of stockholders, or at any special meeting of stockholders called
for the purpose of electing directors, (a) by or at the direction of the Board
of Directors (or any duly authorized committee thereof) or (b) by any
stockholder of the Corporation (i) who is a stockholder of record on the date of
the giving of the notice provided for in this Section and on the record date for
the determination of stockholders entitled to vote at such meeting and (ii) who
complies with the notice procedures set forth in this Section. A stockholder's
notice must be delivered to or mailed and received by the Chairman of the Board
at the principal executive offices of the Corporation (a) in the case of an
annual meeting, not less than 60 days nor more than 90 days prior to the first
anniversary of the date of mailing of the notice for the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the stockholder must be so
IV-3
delivered not earlier than the 120th day prior to the date of mailing of the
notice for such annual meeting and not later than the close of business on the
later of the 90th day prior to the date of mailing of the notice for such annual
meeting or the tenth day following the day on which public announcement of the
date of mailing of the notice for such meeting is first made; and (b) in the
case of a special meeting of stockholders called for the purpose of electing
directors, not later than the close of business on the tenth day following the
day on which notice of the date of the special meeting was mailed or public
disclosure of the date of the special meeting was made, whichever first occurs.
A stockholder's notice to the Chairman of the Board must be in writing and set
forth (a) as to each person whom the stockholder proposes to nominate for
election as a director, all information relating to such person that is required
to be disclosed in connection with solicitations of proxies for election of
directors pursuant to Regulation 14A of the Exchange Act, and the rules and
regulations promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and address of such stockholder as they appear on the
Corporation's books and of the beneficial owner, if any, on whose behalf the
nomination is made, (ii) the class or series and number of shares of capital
stock of the Corporation which are owned beneficially or of record by such
stockholder and such beneficial owner, (iii) a description of all arrangements
or understandings between such stockholder and each proposed nominee and any
other person or persons (including their names) pursuant to which the
nomination(s) are to be made by such stockholder, (iv) a representation that
such stockholder intends to appear in person or by proxy at the meeting to
nominate the persons named in its notice and (v) any other information relating
to such stockholder that would be required to be disclosed in a proxy statement
or other filings required to be made in connection with solicitations of proxies
for election of directors pursuant to Regulation 14A of the Exchange Act and the
rules and regulations promulgated thereunder. Such notice must be accompanied by
a written consent of each proposed nominee to be named as a nominee and to serve
as a director if elected. No person shall be eligible for election as a director
of the Corporation unless nominated in accordance with the procedures set forth
in this Section. If the chairman of the meeting determines that a nomination was
not made in accordance with the foregoing procedures, the chairman of the
meeting shall declare to the meeting that the nomination was defective and such
defective nomination shall be disregarded. No adjournment or postponement of a
meeting of stockholders shall commence a new period for the giving of notice of
a stockholder proposal hereunder.
SECTION 12. ADVANCE NOTICE PROVISIONS FOR BUSINESS TO BE TRANSACTED AT
ANNUAL MEETING
No business may be transacted at an annual meeting of stockholders,
other than business that is either (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of Directors
(or any duly authorized committee thereof), (b) otherwise properly brought
before the annual meeting by or at the direction of the Board of Directors (or
any duly authorized committee thereof) or (c) otherwise properly brought before
the annual meeting by any stockholder of the Corporation (i) who is stockholder
of record on the date of the giving of the notice provided for in this Section
and on the record date for the determination of stockholders entitled to vote at
such annual meeting and (ii) who complies with the notice procedures set forth
in this Section. A stockholder's notice must be delivered to or mailed and
received by the Chairman of the Board at the principal executive offices of the
Corporation not less than 90 days nor more than 120 days prior to the first
anniversary of the date of mailing of the notice for the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than 60 days from
such anniversary date, notice by the stockholder must be so delivered not
earlier than the 120th day prior to the date of mailing of the notice for such
annual meeting and not later than the close of business on the later of the 90th
day prior to the date of mailing of the notice for such annual meeting or the
tenth day following the day on which public announcement of the date of mailing
of the notice for such meeting is first made. A stockholder's notice to the
Chairman of the Board must in writing set forth as to each matter such
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address of
such stockholder as they appear on the Corporation's books and of the beneficial
owner, if any, on whose behalf the proposal is made, (iii) the class or series
and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder and such beneficial owner, (iv) a
description of all arrangements or understandings between such stockholder and
any other person or persons (including their names) in connection with the
proposal of such business by such stockholder and any material interest of such
stockholder in such business and (v) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting. No business shall be conducted at the annual
meeting of stockholders except business brought before the annual meeting in
accordance with the procedures set forth in Section 11 of this Article II or in
this Section, provided, however, that once business has been properly brought
before the annual meeting in accordance with such procedures, nothing in Section
11 of this Article II nor in this Section shall be deemed to preclude discussion
by any stockholder of any such business. If the chairman of an annual meeting
IV-4
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the chairman of the meeting shall
declare to the meeting that the business was not properly brought before the
meeting and such business shall not be transacted. No adjournment or
postponement of a meeting of stockholders shall commence a new period for the
giving of notice of a stockholder proposal hereunder.
SECTION 13. LIST OF STOCKHOLDERS
At each meeting of stockholders, a full, true and complete list of all
stockholders entitled to vote at such meeting, showing the number and class of
shares held by each and certified by the transfer agent for such class or by the
Secretary, shall be furnished by the Secretary.
SECTION 14. VOTING OF STOCK BY CERTAIN HOLDERS
Stock registered in the name of a corporation, partnership, trust or
other entity, if entitled to be voted, may be voted by the president or a vice
president, a general partner or trustee thereof, as the case may be, or a proxy
appointed by any of the foregoing individuals, unless some other person who has
been appointed to vote such stock pursuant to a bylaw or a resolution of the
board of directors of such corporation or other entity presents a certified copy
of such bylaw or resolution, in which case such person may vote such stock. Any
director or other fiduciary may vote stock registered in his or her name as such
fiduciary, either in person or by proxy.
The Board of Directors may adopt by resolution a procedure by which a
stockholder may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date of
closing of the stock transfer books, the time after the record date of closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified stock in place of the stockholder who makes the certification.
SECTION 15. INFORMAL ACTION BY STOCKHOLDERS
Except as provided below, any action required or permitted to be taken
at a meeting of stockholders may be taken without a meeting if a unanimous
written consent which sets forth the action and is signed by each stockholder
entitled to vote on the matter is filed with the records of stockholders
meetings. Unless the Charter requires otherwise, the holders of any class of
stock other than Common Stock, entitled to vote generally in the election of
directors, may take action or consent to any action by the written consent of
stockholders entitled to cast not less than the minimum number of votes that
would be necessary to authorize or take the action at a stockholders meeting if
the Corporation gives notice of the action to each stockholder not later than 10
days after the effective time of the action.
SECTION 16. MEETING BY TELEPHONE CONFERENCE
If permitted in the sole discretion of the chairman of the meeting,
stockholders may participate in meetings by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
constitutes presence in person at such meeting.
IV-5
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS; QUALIFICATIONS
The business and affairs of the Corporation shall be managed under the
direction of its Board of Directors. All powers of the Corporation may be
exercised by or under authority of the Board of Directors, except as conferred
on or reserved to the stockholders by statute or by the Charter or Bylaws.
SECTION 2. NUMBER AND TENURE
The Corporation shall have at least one director. The Corporation shall
have the number of directors provided in the Charter until changed as herein
provided. The Board of Directors shall be divided into three classes as and in
the manner provided in this Article. Except as the Charter provides otherwise, a
majority of the entire Board of Directors may alter the number of directors set
by the Charter not to exceed 15 or less than the minimum number then permitted
herein, but the action may not affect the tenure of office of any director. Each
director shall hold office for such term as is specified in this Article and
until his or her successor is elected and qualified, or until his or her
resignation, removal (in accordance with this Article), retirement or death.
SECTION 3. GENERAL TERM OF OFFICE; CLASSES OF DIRECTORS
The directors of the Corporation shall be divided into three classes,
Class I, Class II and Class III, as follows:
(1) The term of office of Class I shall be until the 2002 annual
meeting of stockholders and until their successors shall be
elected and have qualified and thereafter shall be for three
years and until their successors shall be elected and have
qualified;
(2) the term of office of Class II shall be until the 2003 annual
meeting of stockholders and until their successors shall be
elected and have qualified and thereafter shall be for three
years and until their successors shall be elected and have
qualified; and
(3) the term of office of Class III shall be until the 2004 annual
meeting of stockholders and until their successors shall be
elected and have qualified and thereafter shall be for three
years and until their successors shall be elected and have
qualified.
The number of directors in each class shall be as nearly equal in
number as possible. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain or attain, if
possible, the equality of the number of directors in each class. If such
equality is not possible, the increase or decrease shall be apportioned among
the classes in such a way that the difference in the number of directors in any
two classes shall not exceed one. The names of the individuals who will serve as
initial directors until their successors are elected and qualified are as
follows:
Class I: Enghe Chimood
Sharming Lin
Class II: Thomas Yang
Class III: Ke-ou Chao
SECTION 4. REMOVAL OF DIRECTORS
Subject to the rights of holders of any class separately entitled to
elect one or more directors, a director may be removed from office but only for
cause and only by the affirmative vote of the holders of at least 75% of the
combined voting power of all shares of capital stock entitled to be cast in the
election of directors voting together as a single class, at a meeting of
stockholders called expressly for that purpose.
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SECTION 5. RESIGNATION
Any director may resign at any time by sending a written notice of such
resignation to the home office of the Corporation addressed to the Chairman of
the Board. Unless otherwise specified therein such resignation shall take effect
upon receipt thereof by the Chairman of the Board.
SECTION 6. FILLING VACANCIES
Subject to the rights of the holder of any class of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies on the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office, or other cause shall be filled by the affirmative vote of a majority of
the remaining directors then in office (whether or not constituting a quorum)
or, unless the Corporation has elected to be subject to the provisions of
Section 3-804(c) of the Maryland General Corporation Law, the required vote of
the stockholders of the Corporation. A director so chosen by the stockholders
shall hold office for the balance of the term then remaining. Unless the
Corporation has elected to be subject to the provisions of Section 3-804(c) of
the Maryland General Corporation Law, a director so chosen by the remaining
directors shall hold office until the next annual meeting of stockholders, at
which time the stockholders shall elect a director to hold office for the
balance of the term then remaining. No decrease in the number of directors
constituting the Board of Directors shall affect the tenure of office of any
director.
SECTION 7. REGULAR MEETINGS
After each meeting of stockholders at which directors shall have been
elected, the Board of Directors shall meet as soon thereafter as practicable for
the purpose of organization and the transaction of other business. In the event
that no other time and place are specified by resolution of the Board of
Directors or announced by the Chairman of the Board at such stockholders
meeting, the Board of Directors shall meet immediately following the close of,
and at the place of, such stockholders meeting. Any other regular meeting of the
Board of Directors shall be held on such date and time and at such place as may
be designated from time to time by the Board of Directors. No notice of such
meeting following a stockholders meeting or any other regular meeting shall be
necessary if held as hereinabove provided.
SECTION 8. SPECIAL MEETINGS
Special meetings of the Board of Directors may be called by a majority
of the Directors then in office or at the request of the Chairman. A special
meeting of the Board of Directors shall be held on such date and at any place as
may be designated from time to time by the Board of Directors. In the absence of
designation such meeting shall be held at such place as may be designated in the
call.
SECTION 9. NOTICE
Except as provided in Article III, Section 7, the Chairman of the Board
or the Chairman of the Board's designee shall give notice to each director of
each regular and special meeting of the Board of Directors. The notice shall
state the time and place of the meeting. Notice is given to a director when it
is delivered personally to him or her, left at his or her residence or usual
place of business, or sent by telegraph, facsimile transmission or telephone, at
least 24 hours before the time of the meeting or, in the alternative by mail to
his or her address as it shall appear on the records of the Corporation, at
least 72 hours before the time of the meeting. Unless these Bylaws or a
resolution of the Board of Directors provides otherwise, the notice need not
state the business to be transacted at or the purposes of any regular or special
meeting of the Board of Directors. No notice of any meeting of the Board of
Directors need be given to any director who attends except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened, or to any
director who, in writing executed and filed with the records of the meeting
either before or after the holding thereof, waives such notice. Any meeting of
the Board of Directors, regular or special, may adjourn from time to time to
reconvene at the same or some other place, and no notice need be given of any
such adjourned meeting other than by announcement.
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SECTION 10. QUORUM
A majority of the entire Board of Directors shall constitute a quorum
for the transaction of business at any meeting of the Board of Directors,
provided that, if less than a majority of such directors are present at said
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice, and provided further that if, pursuant to the
Charter of the Corporation or these Bylaws, the vote of a majority of a
particular group of directors is required for action, a quorum must also include
a majority of such group.
SECTION 11. VOTING
The action of a majority of the directors present at a meeting at which
a quorum is present shall be the action of the Board of Directors, unless the
concurrence of a greater or lesser proportion is required for such action by the
Charter, these Bylaws or applicable statute.
SECTION 12. TELEPHONE MEETINGS
Directors may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Participation in a meeting by
these means constitutes presence in person at a meeting.
SECTION 13. INFORMAL ACTION BY DIRECTORS
Any action required or permitted to be taken at a meeting of the Board
of Directors may be taken without a meeting, if a unanimous consent in writing
to such action is signed by each director and such written consent is filed with
the minutes of proceedings of the Board of Directors.
SECTION 14. COMPENSATION OF DIRECTORS
Unless restricted by the Charter, the Board of Directors shall have the
authority to fix the fees and other compensation of directors for their service
as directors, including, without limitation, their services as members of
committees of the Board of Directors.
SECTION 15. LOSS OF DEPOSIT
No director shall be liable for any loss which may occur by reason of
the failure of the bank, trust company, savings and loan association or other
institution with whom moneys or stock have been deposited.
SECTION 16. SURETY BONDS
Unless required by law, no director shall be obligated to give any bond
or surety or other security for the performance of any of his or her duties.
SECTION 17. CERTAIN RIGHTS OF DIRECTORS
The directors shall have no responsibility to devote their full time to
the affairs of the Corporation. Any director, officer, employee or agent of the
Corporation, in his or her personal capacity or in a capacity as an affiliate,
employee, or agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in addition to those
of or relating to the Corporation.
SECTION 18. PRESUMPTION OF ASSENT
A director of the Corporation who is present at a meeting of the Board
of Directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless his or her dissent or abstention
shall be entered in the minutes of the meeting or unless he or she shall file
his or her written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the Secretary of the Corporation immediately after
the adjournment of the meeting. Such right to
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dissent shall not apply to a director who votes in favor of such action or fails
to make his or her dissent known at the meeting.
SECTION 19. CERTAIN OTHER DETERMINATIONS BY THE BOARD OF DIRECTORS.
The determination as to any of the following matters, made in good
faith by or pursuant to the direction of the Board of Directors consistent with
the Charter and in the absence of actual receipt of an improper benefit in
money, property or services or active and deliberate dishonesty established by a
court, shall be final and conclusive and shall be binding upon the Corporation
and every holder of Stock: the manner in which distributions are to be made to
stockholders; the amount of the net income of the Corporation for any period and
the amount of assets at any time legally available for the payment of dividends,
redemption of Stock or the payment of other distributions on Stock; the amount
of paid-in surplus, net assets, annual or other net profit, net assets in excess
of capital, undivided profits or excess of profits over losses on sales of
assets; the amount, purpose, time of creation, increase or decrease, alteration
or cancellation of any reserves or charges and the propriety thereof (whether or
not any obligation nor liability for which such reserves or charges shall have
been created shall have been paid or discharged); the fair value, or any sale,
bid or asked price to be applied in determining the fair value, of any asset
owned or held by the Corporation; and any matters relating to the acquisition,
holding and disposition of any assets of the Corporation.
SECTION 20. RESERVED POWERS OF THE BOARD OF DIRECTORS
The enumeration and definition of particular powers of the Board of
Directors included in this Article III shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or any
other provision of the charter of the Corporation, or construed or deemed by
inference or otherwise in any manner to exclude or limit the powers conferred
upon the Board of Directors under the general laws of the State of Maryland as
now or hereafter in force.
SECTION 21. ADVISORY DIRECTORS
The Board of Directors may by resolution appoint advisory directors to
the Board of Directors, who may also serve as directors emeriti, and shall have
such authority and receive such compensation and reimbursement as the Board of
Directors shall provide. Advisory directors or directors emeriti shall not have
the authority to participate by vote in the transaction of business.
ARTICLE IV
COMMITTEES
SECTION 1.
QUALIFICATIONS
The Board of Directors may appoint from among its members an executive
committee and other committees, composed of one or more directors, to serve at
the pleasure of the Board of Directors. The Board of Directors may designate, if
it desires, other Directors as alternative members who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of any member of any committee and any alternate member in his
place, the member or members of the committee present at the meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may by
unanimous vote appoint another member of the Board of Directors to act at the
meeting in the place of the absent or disqualified member.
SECTION 2. POWERS
The Board of Directors may delegate to committees appointed under
Section 1 of this Article IV any of the powers of the Board of Directors, except
the power to authorize dividends on stock, elect directors, issue stock other
than as provided below, recommend to the stock-holders any action which requires
stockholder approval, amend these Bylaws, or approve any merger or share
exchange which does not require stockholder approval. If the Board of Directors
has given general authorization for the issuance of stock providing for or
establishing a method or procedure for determining the maximum number of shares
to be issued, a committee of the Board, in accordance with that general
authorization or any stock option or other plan or program adopted by the Board
of Directors, may authorize or fix the
IV-9
terms of stock subject to classification or reclassification and the terms on
which any stock may be issued, including all terms and conditions required or
permitted to be established or authorized by the Board of Directors.
SECTION 3. CONDUCT OF BUSINESS
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provisions shall be made
for notice to members of all meetings; a majority of the members shall
constitute a quorum, and all matters shall be determined by a majority vote of
the members present. Action may be taken by any committee without a meeting if
all members thereof consent thereto in writing, and the writing or writings are
filed with the minutes of the proceedings of such committee.
Members of a committee of the Board of Directors may participate in a
meeting by means of a conference telephone or similar communications equipment
if all persons participating in the meeting can hear each other at the same
time. Participation in a meeting by these means constitutes presence in person
at a meeting.
ARTICLE V
OFFICERS
SECTION 1. GENERAL PROVISIONS
The officers of the Corporation may include a chairman of the board, a
vice-chairman, a chief executive officer, a president, one or more
vice-presidents, a secretary, a treasurer, a chief financial officer and
controller and such other subordinate officers as may from time to time be
appointed by the Board of Directors. The Board of Directors shall designate who
serve as chief executive officer, who shall have the general supervision of the
business and affairs of the Corporation. In the absence of any designation, the
Chairman of the Board shall serve as chief executive officer and the President
shall serve as chief operating officer. In the absence of the Chairman of the
Board, or if there be none, the President shall be the chief executive officer.
The same person may hold both offices. The Chairman of the Board shall be a
director, and the other officers may be directors.
SECTION 2. ELECTION, TENURE AND REMOVAL OF OFFICERS
Officers shall be elected by the Board of Directors, which shall
consider that subject at its first meeting after every annual meeting of
stockholders and at other meetings as may be appropriate to fill a vacancy in an
office. The Board of Directors may from time to time authorize any committee or
officer to appoint assistant and subordinate officers. Election or appointment
of an officer, employee or agent shall not of itself create contract rights.
Each officer shall hold his office until his successor is elected and qualified
or until his earlier resignation or removal. Any two or more offices except
president and vice president may be held by the same person. The Board of
Directors (or, as to any assistant or subordinate officer, any committee or
officer authorized by the Board) may remove an officer at any time, with or
without cause. The removal of an officer does not prejudice any of his or her
contract rights. The Board of Directors (or, as to any assistant or subordinate
officer, any committee or officer authorized by the Board) may fill a vacancy
which occurs in any office for the unexpired portion of the term.
SECTION 3. CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
The Chairman of the Board may also be the Chief Executive Officer (CEO)
of the Corporation. Subject to the provisions of these Bylaws and to the
direction of the Board of Directors, the CEO shall have the responsibility for
the general management and control of the affairs and business of the
Corporation and shall perform all duties and have all powers which are commonly
incident to the office of chief executive or which are delegated to him by the
Board of Directors and may perform any duties of the president. The term
"Chairman" in these Bylaws shall mean the Chairman of the Board unless the
context clearly indicates that it is intended to mean the chairman of a
specified committee or meeting.
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SECTION 4. VICE-CHAIRMAN
The Vice-Chairman, if any, shall exercise such duties as are delegated
to him by the Chairman, and he shall report primarily to the Chairman. In the
absence or disability of the Chairman, the Vice-Chairman shall perform the
duties of the Chairman, subject to the right of the Board of Directors to
designate another officer to perform some or all of these duties.
SECTION 5. PRESIDENT AND CHIEF OPERATING OFFICER
The President may also be the Chief Operating Officer (COO) of the
Corporation and shall perform all duties incident to the office of the chief
operating officer and such other duties as from time to time may be assigned to
him by the Board of Directors or, to the extent not inconsistent with any
assignment by the Board of Directors, by the Chairman. Unless otherwise provided
by resolution of the Board of Directors, the President, in the absence of the
Chairman of the Board, shall preside at all meetings of the Board of Directors
and of the stockholders at which the President shall be present. The President
may execute, in the name of the Corporation, all authorized deeds, mortgages,
bonds, contracts or other instruments, except in cases in which the signing and
execution thereof shall have been expressly delegated to some other officer or
agent of the Corporation.
SECTION 6. VICE-PRESIDENTS
Each vice-president shall perform such duties as the Board of Directors
shall prescribe. In the absence or disability of the President, the
vice-president who is designated by the Board of Directors shall perform the
duties and exercise the powers of the President.
SECTION 7. CHIEF FINANCIAL OFFICER, TREASURER AND CONTROLLER
The Chief Financial Officer (CFO) shall have general supervision of all
the accounts and books of account of the Corporation and of all accounting
personnel and shall supervise all controls with respect to the monies and
securities of the Corporation. The CFO shall advise and report to the Chairman
and the President of the Corporation with respect to corporate financial and
accounting policy, compliance with contractual restrictions affecting the
Corporation's finances, negotiations with the Corporation's lenders and
prospective lenders and investors and such general financial and accounting
matters as may be requested by the Chairman or President. When requested by the
Chairman or the Board of Directors or the Audit Committee or its chairman, the
CFO shall report to the Board of Directors or Audit Committee on financial and
accounting matters. The Treasurer and Controller shall report to the CFO. The
Treasurer shall have direct responsibility for handling of the monies and
securities of the Corporation, and the Controller shall be directly responsible
for corporate accounting; provided, however, that the Board of Directors may, in
its discretion from time to time, specify additional duties for the Treasurer or
Controller or, in the absence of such specification by the Board of Directors,
the Chairman, President or CFO may assign additional duties. In the absence of a
Treasurer or Controller, the Board shall so designate another individual or
individuals to perform the functions of each such office.
SECTION 8. SECRETARY
The Secretary shall keep the minutes of the meetings of the
stockholders, of the Board of Directors, and of any committees, in books
provided for the purpose; the Secretary shall see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by law;
the Secretary shall be custodian of the records of the Corporation; the
Secretary may witness any document on behalf of the Corporation, the execution
of which is duly authorized, see that the corporate seal is affixed where such
document is required to desired to be under its seal, and, when so affixed, may
attest the same. In general, the Secretary shall perform such other duties
customarily performed by a secretary of a corporation, and shall perform such
other duties and have such other powers as are from time to time assigned to the
Secretary by the Board of Directors, the chief executive officer, or the
President.
SECTION 9. ASSISTANT AND SUBORDINATE OFFICERS
The assistant and subordinate officers of the Corporation are all
officers below the office of Vice-President, Secretary, or Treasurer. The
assistant or subordinate officers shall have such duties as are from time to
time assigned to them by the Board of Directors, the chairman, or the President.
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SECTION 10. SALARIES
The salaries and other compensation or remuneration, of whatever kind,
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 and other compensation
or remuneration by reason of the fact that he or she is also a director of the
Corporation.
SECTION 11. DELEGATION OF AUTHORITY
The Board of Directors may from time to time delegate the powers or
duties of any officer to any other officers or agent, notwithstanding any
provision hereof.
ARTICLE VI
INDEMNIFICATION
SECTION 1. PROCEDURE
Any indemnification, or payment of expenses in advance of the final
disposition of any proceeding, shall be made promptly, and in any event within
60 days, upon the written request of the director or officer entitled to seek
indemnification (the "Indemnified Party"). The right to indemnification and
advances hereunder shall be enforceable by the Indemnified Party in any court of
competent jurisdiction, if (i) the Corporation denies such request, in whole or
in part; or (ii) no disposition thereof is made within 60 days. The Indemnified
Party's costs and expenses incurred in connection with successfully establishing
his or her right to indemnification, in whole or in part, in any such action
shall also be reimbursed by the Corporation. It shall be a defense to any action
for advance for expenses that (a) a determination has been made that the facts
then known to those making the determination would preclude indemnification or
(b) the Corporation has not received both (i) an undertaking as required by law
to repay such advances in the event it shall ultimately be determined that the
standard of conduct has not been met and (ii) a written affirmation by the
Indemnified Party of such Indemnified Party's good faith belief that the
standard of conduct necessary for indemnification by the Corporation has been
met.
SECTION 2. EXCLUSIVITY, ETC.
The indemnification and advance of expenses provided by the Charter and
these Bylaws shall not be deemed exclusive of any other rights to which a person
seeking indemnification or advance of expenses may be entitled under any law
(common or statutory), or any agreement, vote of stockholders or disinterested
directors or other provision that is consistent with law, both as to action in
his or her official capacity and as to action in another capacity while holding
office or while employed by or acting as agent for the Corporation, shall
continue in respect of all events occurring while a person was a director or
officer after such person has ceased to be a director or officer, and shall
inure to the benefit of the estate, heirs, executors and administrators of such
person. The Corporation shall not be liable for any payment under this Bylaw in
connection with a claim made by a director or officer to the extent such
director or officer has otherwise actually received payment under an insurance
policy, agreement, vote or otherwise, of the amounts otherwise indemnifiable
hereunder. All rights to indemnification and advance of expenses under the
Charter and hereunder shall be deemed to be a contract between the Corporation
and each director or officer of the Corporation who serves or served in such
capacity at any time while this Bylaw is in effect. Nothing herein shall prevent
the amendment of this Bylaw, provided that no such amendment shall diminish the
rights of any person hereunder with respect to events occurring or claims made
before its adoption or as to claims made after its adoption in respect of events
occurring before its adoption. Any repeal or modification of this Bylaw shall
not in any way diminish any rights to indemnification or advance of expenses of
such director or officer or the obligations of the Corporation arising hereunder
with respect to events occurring, or claims made, while this Bylaw or any
provision hereof is in force, nor shall such repeal or modification diminish any
person's rights to indemnification or advances of expenses or performance of
other obligations of the Corporation under any agreement of indemnification
between the Corporation and such person.
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SECTION 3. SEVERABILITY; DEFINITIONS
The invalidity or unenforceability of any provision of this Article VI
shall not affect the validity or enforceability of any other provision hereof.
The phrase "this Bylaw" in this Article VI means this Article VI in its
entirety.
ARTICLE VII
STOCK
SECTION 1. BOARD AUTHORIZATION OF SHARE ISSUANCES
The Board of Directors of the Corporation may authorize the issuance
from time to time of Stock of any class, whether now or hereafter authorized, or
securities convertible into Stock of any class, whether now or hereafter
authorized, for such consideration as the Board of Directors may deem advisable,
subject to such restrictions or limitations, if any, as may be set forth in the
Charter or the Bylaws of the Corporation.
SECTION 2. PREEMPTIVE RIGHTS
No holder of any Stock or any other securities of the Corporation,
whether now or hereafter authorized, shall have any preemptive right to
subscribe for or purchase any Stock or any other securities of the Corporation
other than such, if any, as the Board of Directors, in its sole discretion, may
determine and at such price or prices and upon such other terms as the Board of
Directors, in its sole discretion, may fix; and any Stock or other securities
which the Board of Directors may determine to offer for subscription may, as the
Board of Directors in its sole discretion shall determine, be offered to the
holders of any class, series or type of Stock or other securities at the time
outstanding to the exclusion of the holders of any or all other classes, series
or types of stock or other securities at the time outstanding.
SECTION 3. CERTIFICATES
Each stockholder shall be entitled to a certificate or certificates
which shall represent and certify the number of shares of each class of stock
held by him or her in the Corporation. Each certificate shall be signed by the
Chairman of the Board, the President or a Vice President and countersigned by
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer and may be sealed with the actual seal or a facsimile thereof, if any,
of the Corporation. The signatures may be either manual or facsimile.
Certificates shall be consecutively numbered; and if the Corporation shall, from
time to time, issue several classes or series of stock, each class or series may
have its own number or letter sequence. A certificate is valid and may be issued
whether or not an officer who signed it is still an officer when it is issued.
Each stock certificate shall include on its face the name of the Corporation,
the name of the stockholder or other person to whom it is issued, and the class
of stock and number of shares it represents. Each certificate shall also include
on its face or back (a) a statement of any restrictions on transferability and a
statement of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of the stock of each class which the
Corporation is authorized to issue, of the differences in the relative rights
and preferences between the shares of each series of a preferred or special
class in series which the Corporation is authorized to issue, to the extent they
have been set, and of the authority of the Board of Directors to set the
relative rights and preferences of subsequent series of a preferred or special
class of stock or (b) a statement which provides in substance that the
Corporation will furnish a full statement of such information to any stockholder
on request and without charge. Such request may be made to the Chairman of the
Board. Except as provided in the Maryland Uniform Commercial Code - Investment
Securities, the fact that a stock certificate does not contain or refer to a
restriction on transferability that is adopted after the date of issuance does
not mean that the restriction is invalid or unenforceable. A certificate is
valid and may be issued whether or not an officer who signed it is still an
officer when it is issued. A certificate may not be issued until the stock
represented by it is fully paid. A certificate representing stock validly issued
by a constituent corporation in a merger in which the Corporation is the
surviving corporation shall be valid to the extent provided in the Agreement or
Articles of Merger notwithstanding that the form of the certificate does not
comply with the requirements for a certificate issued by the Corporation.
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SECTION 4. TRANSFERS
The Board of Directors shall have the power and authority to make such
rules and regulations as it may deem expedient concerning the issue, transfer
and registration of certificates of stock; and may appoint transfer agents and
registrars thereof. The duties of the transfer agent and registrar may be
combined.
SECTION 5. LOST CERTIFICATE
The Board of Directors of the Corporation may determine the conditions
for issuing a new stock certificate in place of one which is alleged to have
been lost, stolen or destroyed, or the Board of Directors may delegate such
power to any officer or officers of the Corporation. In their discretion, the
Board of Directors or such officer or officers may require the owner of the
certificate to give a bond, with sufficient surety, to indemnify the Corporation
against any loss or claim arising as a result of the issuance of a new
certificate. In their discretion, the Board of Directors or such officer or
officers may refuse to issue such new certificate save upon the order of some
court having jurisdiction in the premises.
SECTION 6. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE
The Board of Directors may, and shall have the sole power to, set a
record date or direct that the stock transfer books be closed for a stated
period for the purpose of making any proper determination with respect to
stockholders, including which stockholders are entitled to request a special
meeting of stockholders, notice of a meeting of stockholders, vote at a meeting
of stockholders, receive a dividend, or be allotted other rights. The record
date may not be prior to the close of business on the day the record date is
fixed nor, subject to Article II, Section 5, more than 90 days before the date
on which the action requiring the determination will be taken; the transfer
books may not be closed for a period longer than 20 days; and, in the case of a
meeting of stockholders, the record date or the closing of the transfer books
shall be at least ten days before the date of the meeting. Any shares of the
Corporation's own stock acquired by the Corporation between the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders and the time of the meeting may be voted at the meeting by the
holder of record as of the record date and shall be counted in determining the
total number of outstanding shares entitled to be voted at the meeting.
If no record date is fixed and the stock transfer books are not closed
for the determination of stockholders, (a) the record date for the determination
of stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day on which the notice of meeting is
mailed; and (b) the record date for the determination of stockholders entitled
to receive payment of a dividend or an allotment of any other rights shall be
the close of business on the day on which the resolution of the directors,
declaring the dividend or allotment of rights, is adopted.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, except where the determination has been made
through the closing of the transfer books and the stated period of closing has
expired.
SECTION 7. STOCK LEDGER
The Corporation shall maintain at its principal office or at the office
of its transfer agent, an original or duplicate share ledger containing the name
and address of each stockholder and the number of shares of each class held by
such stockholder. The stock ledger may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection.
SECTION 8. CERTIFICATION OF BENEFICIAL OWNERS
The Board of Directors may adopt by resolution a procedure by which a
stockholder of the Corporation may certify in writing to the Corporation that
any shares of stock registered in the name of the stockholder are held for the
account of a specified person other than the stockholder. The resolution shall
set forth the class of stockholders who may certify; the purpose for which the
certification may be made; the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must be received by
the
IV-14
Corporation; and any other provisions with respect to the procedure which the
Board of Directors considers necessary or desirable. On receipt of a
certification which complies with the procedure adopted by the Board of
Directors in accordance with this Section, the person specified in the
certification is, for the purpose set forth in the certification, the holder of
record of the specified stock in place of the stockholder who makes the
certification.
ARTICLE VIII
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF THE
STOCKHOLDERS AND DIRECTORS
SECTION 1. RELATED PARTY TRANSACTIONS
Without limiting any other procedure available by law or otherwise to
the Corporation, the Board of Directors may authorize any agreement or other
transaction with any person, corporation, association, company, trust,
partnership (limited or general) or other organization, although one or more of
the directors or officers of the Corporation may be a party to any such
agreement or any officer, director, stockholder or member of such other party
(an "Interested Officer/Director"), and no such agreement or transaction shall
be invalidated or rendered void or voidable solely by reason of the existence of
any such relationship if: (i) the existence is disclosed or known to the Board
of Directors, and the contract or transaction is authorized, approved or
ratified by the affirmative vote of a majority of the disinterested directors,
even if they constitute less than a quorum of the Board of Directors; or (ii)
the existence is disclosed to the stockholders entitled to vote, and the
contract or transaction is authorized, approved or ratified by a majority of the
votes cast by the stockholders entitled to vote, other than the votes of the
stock held of record by the Interested Officers/ Directors; or (iii) the
contract or transaction is fair and reasonable to the Corporation. Any
Interested Officer/Director of the Corporation or the stock owned by them or by
a corporation, association, company, trust, partnership (limited or general) or
other organization in which an Interested Officer/Director may have an interest,
may be counted in determining the presence of a quorum at a meeting of the Board
of Directors or a committee of the Board of Directors or at a meeting of the
stockholders, as the case may be, at which the contract or transaction is
authorized, approved or ratified.
SECTION 2. OTHER CONSIDERATIONS
The Board of Directors shall, in connection with the exercise of its
business judgment involving a Business Combination (as defined in Section 3-601
of the Maryland General Corporation Law) or any actual or proposed transaction
which would or may involve a change in control of the Corporation (whether by
purchases of shares of stock or any other securities of the Corporation in the
open market, or otherwise, tender offer, merger, consolidation, dissolution,
liquidation, sale of all or substantially all of the assets of the Corporation,
proxy solicitation or otherwise), in determining what is in the best interests
of the Corporation and its stockholders and in making any recommendation to its
stockholders, give due consideration to all relevant factors, including but not
limited to (a) the economic effect, both immediate and long-term, upon the
Corporation's stockholders, including stockholders, if any, who do not
participate in the transaction; (b) the social and economic effect on the
employees, customers of, and others dealing with, the Corporation and its
subsidiaries and on the communities in which the Corporation and its
subsidiaries operate or are located; (c) whether the proposal is acceptable
based on the historical and current operating results or financial condition of
the Corporation; (d) whether a more favorable price could be obtained for the
Corporation's stock or other securities in the future; (e) the reputation and
business practices of the offeror and its management and affiliates as they
would affect the employees of the Corporation and its subsidiaries; (f) the
future value of the stock or any other securities of the Corporation; (g) any
antitrust or other legal and regulatory issues that are raised by the proposal;
and (h) the business and financial condition and earnings prospects of the
acquiring person or entity, including but not limited to debt service and other
existing financial obligations, financial obligations to be incurred in
connection with the acquisition, and other likely financial obligations of the
acquiring person or entity. If the Board of Directors determines that any
proposed Business Combination (as defined in Section 3-601 of the Maryland
General Corporation Law) or actual or proposed transaction which would or may
involve a change in control of the Corporation should be rejected, it may take
any lawful action to defeat such transaction, including but not limited to any
or all of the following: advising stockholders not to accept the proposal;
instituting litigation against the party making the proposal; filing complaints
with governmental and regulatory authorities; acquiring the stock or any of the
securities of the Corporation; selling or otherwise issuing authorized but
unissued stock, other securities or granting options or rights
IV-15
with respect thereto; acquiring a company or assets which would create an
antitrust or other regulatory problem for the party making the proposal; and
obtaining a more favorable offer from another individual or entity.
SECTION 3. STOCKHOLDER PROPOSALS
For any stockholder proposal to be presented in connection with an
annual meeting of stockholders of the Corporation, including any proposal
relating to the nomination of a director to be elected to the Board of Directors
of the Corporation, the stockholders must have given timely written notice
thereof in writing to the Chairman of the Board of the Corporation in the manner
and containing the information required by the Bylaws. Stockholder proposals to
be presented in connection with a special meeting of stockholders will be
presented by the Corporation only to the extent required by Section 2-502 of the
Maryland General Corporation Law.
SECTION 4. VOTING REQUIREMENTS
Notwithstanding any provision of law requiring the authorization of any
action by a greater proportion than a majority of the total number of shares of
all classes of capital stock or the total number of shares of any class of
capital stock, such action shall be valid and effective if authorized by the
affirmative vote of the holders of a majority of the total number of shares of
all classes and entitled to vote thereon, except as otherwise provided in the
Charter of the Corporation. All mergers, consolidations, share exchanges,
recapitalization or dissolutions to which the Corporation is a party and all
sales of all or substantially all the assets of the Corporation shall not be
valid and effective unless advised by at least 75% of the Board of Directors.
ARTICLE IX
FISCAL YEAR
The Corporation's fiscal year end shall be December 31; however, the
Board of Directors shall have the power, from time to time, to fix the fiscal
year of the Corporation by a duly adopted resolution.
ARTICLE X
DIVIDENDS
SECTION 1. DECLARATION
Dividends upon the stock of the Corporation may be declared by the
Board of Directors, subject to the provisions of law and the Charter of the
Corporation. Dividends may be paid in cash, property or stock of the
Corporation, subject to the provisions of law and the Charter.
SECTION 2. CONTINGENCIES
Before payment of any dividends, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors may from time to time, in its absolute discretion, think proper as
a reserve fund for contingencies, for equalizing dividends, for repairing or
maintaining any property of the Corporation or for such other purpose as the
Board of Directors shall determine to be in the best interest of the
Corporation, and the Board of Directors may modify or abolish any such reserve
in the manner in which it was created.
ARTICLE XI
INVESTMENT POLICY
Subject to the provisions of the Charter of the Corporation, the Board
of Directors may from time to time adopt, amend, revise or terminate any policy
or policies with respect to investments by the Corporation as it shall deem
appropriate in its sole discretion.
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ARTICLE XII
SEAL
SECTION 1. SEAL
The Board of Directors may authorize the adoption of a seal by the
Corporation. The seal shall have inscribed thereon the name of the Corporation
and the year of its organization. The Board of Directors or a committee thereof
may authorize one or more duplicate seals and provide for the custody thereof.
SECTION 2. AFFIXING SEAL
Whenever the Corporation is required to place its seal to a document,
it shall be sufficient to meet the requirements of any law, rule or regulation
relating to a seal to place the word "(seal)" adjacent to the signature of the
person authorized to execute the document on behalf of the Corporation.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Charter of
the Corporation or these Bylaws or pursuant to applicable law, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated herein, shall be deemed equivalent to the giving
of such notice. Neither the business to be transacted at nor the purpose of any
meeting need be set forth in the waiver of notice, unless specifically required
by statute. The attendance of any person at any meeting shall constitute a
waiver of notice of such meeting, except where such person attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE XIV
FINANCE
SECTION 1. CONTRACTS
To the extend permitted by applicable law, and except as otherwise
prescribed by the Charter of the Corporation or these Bylaws, the Board of
Directors may authorize any officer, employee or agent to enter into any
contract or to execute and deliver any instrument in the name of and on behalf
of the Corporation. Such authority may be general or confined to specific
instances. Any agreement, deed, mortgage, lease or other document executed by
one or more of the directors or by an authorized person shall be valid and
binding upon the Board of Directors and upon the Corporation when authorized or
ratified by action of the Board of Directors.
SECTION 2. CHECKS AND DRAFTS
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness, in 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 the Board of Directors.
SECTION 3. 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 designate.
IV-17
SECTION 4. ANNUAL STATEMENT OF AFFAIRS
The President or Chief Financial Officer shall prepare annually a full
and correct statement of the affairs of the Corporation, to include a balance
sheet and a financial statement of operations for the preceding fiscal year. The
statement of affairs shall be provided to the stockholders within 120 days after
the end of the fiscal year and shall be placed on file at the Corporation's
principal office.
ARTICLE XV
BUSINESS COMBINATIONS
[RESERVED FOR WHEN ELIGIBLE]
The Corporation has elected to incorporate in the State of Maryland
with the intention to rely on the provisions of Subtitle 6, Special Voting
Requirements, (Sections 3-601 through Sections 3-603) of the Maryland General
Corporation Law ("Subtitle 6") as it may be amended or renumbered from time to
time; provided, however, that in the event the provisions of Subtitle 6 are
effectively repealed or otherwise deleted from the Maryland General Corporation
Law or any other Maryland statute governing the Corporation, the Corporation
hereby incorporates by reference in this Article XV the provisions of Subtitle 6
as in effect on the date of the Corporation's incorporation in Maryland with the
same effect as if such provisions had been set forth in full text in this
Article XV.
ARTICLE XVI
CERTAIN ELECTIONS
[RESERVED FOR WHEN ELIGIBLE]
SECTION 1. ELECTION OF SUBTITLE 8 PROVISIONS REGARDING UNSOLICITED
TAKEOVERS
The Corporation hereby reserves the right to elect to be subject to any
or all provisions of Sections 3-801 to 3- 805 of Title 3, Subtitle 8 of the
Maryland General Corporation Law, by resolution of the Board of Directors.
SECTION 2. EXEMPTION FROM CONTROL SHARE ACQUISITION STATUTE
The provisions of Sections 3-701 to 3-709 of the Maryland General
Corporation Law shall not apply to any share of the capital stock of the
Corporation. Such shares of capital stock are exempted from such Sections to the
fullest extent permitted by Maryland law.
ARTICLE XVII
SUNDRY PROVISIONS
SECTION 1. BOOKS AND RECORDS
The Corporation shall keep correct and complete books and records of
its accounts and transactions and minutes of the proceedings of its stockholders
and Board of Directors and of any executive or other committee when exercising
any of the powers of the Board of Directors. The books and records of the
Corporation may be in written form or in any other form which can be converted
within a reasonable time into written form for visual inspection. Minutes shall
be recorded in written form but may be maintained in the form of a reproduction.
The original or a certified copy of these Bylaws shall be kept at the principal
office of the Corporation.
IV-18
SECTION 2. BONDS
The Board of Directors may require any officer, agent or employee of
the Corporation to give a bond to the Corporation, conditioned upon the faithful
discharge of his or her duties, with one or more sureties and in such amount as
may be satisfactory to the Board of Directors.
SECTION 3. VOTING UPON SHARES IN OTHER CORPORATIONS
Stock of other corporations, associations or trusts, registered in the
name of the Corporation, may be voted by the Chairman, President, a Vice-
President or a proxy appointed by any of them. The Board of Directors, however,
may by resolution appoint some other person to vote such shares, in which case
such person shall be entitled to vote such shares upon the production of a
certified copy of such resolution.
SECTION 4. MAIL
Any notice or other document which is required by these Bylaws to be
mailed shall be deposited in the United States mails, postage prepaid.
SECTION 5. CONTRACTS AND AGREEMENTS
To the extent permitted by applicable law, and except as otherwise
prescribed by the Charter or these Bylaws, the Board of Directors may authorize
any officer, employee or agent of the Corporation to enter into any contract or
execute and deliver any instrument in the name of and on behalf of the
Corporation. Such authority may be general or confined to specific instances or
transactions. A person who hold more than one office in the Corporation may not
act in more than one capacity to execute, acknowledge, or verify an instrument
required by law to be executed, acknowledged, or verified by more than one
officer.
SECTION 6. FACSIMILE SIGNATURES
In addition to the provisions for the use of facsimile signatures
elsewhere specifically authorized in these Bylaws, facsimile signatures of any
officer or officers of the Corporation may be used whenever and as authorized by
the Board of Directors or a committee thereof.
SECTION 7. RELIANCE UPON BOOKS, REPORTS AND RECORDS
Each director and officer of the Corporation shall, in the performance
of his or her duties with respect to the Corporation, be entitled to rely on any
information, opinion report or statement, including financial statement or other
financial data, prepared or presented by an officer or employee of the
Corporation whom the director or officer reasonably believes to be reliable and
competent in the matters presented, by a lawyer, certified public accountant or
other person as to a matter which the director or officer reasonably believes to
be within the person's professional or expert competence or by a committee of
the Board of Directors on which the director does not serve, as to a matter
within its designated authority, if the director believes the committee to merit
confidence.
SECTION 8. TIME PERIODS
In applying any provision of these Bylaws which require that an act be
done or not done a specified number of days prior to an event or that an act be
done during a period of a specified number of days prior to an event, calendar
days shall be used, the day of the doing of the act shall be excluded and the
day of the event shall be included.
IV-19
ARTICLE XVI
AMENDMENT OF BYLAWS
In furtherance of, and not in limitation of, the powers conferred by
statute and the Corporation's Charter, the Board of Directors of the Corporation
is expressly authorized to make, repeal, alter, amend and rescind the Bylaws of
the Corporation.
IV-20
ANNEX V
MUTA PROVISIONS
ANNEX V
SUBTITLE 8. OF TITLE 3 OF THE MARYLAND GENERAL CORPORATION LAW
CORPORATIONS AND REAL ESTATE INVESTMENT TRUSTS - UNSOLICITED TAKEOVERS
3-801. Definitions.
(a) In general. In this subtitle the following words have the
meanings indicated.
(b) Acquiring person. "Acquiring person" means a person who is
seeking to acquire control of a corporation.
(c) Act. "Act" includes an omission or failure to act.
(d) Affiliate. "Affiliate" means a person that directly, or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, a specified
person.
(e) Associate. "Associate", when used to indicate a relationship
with any person, means;
(1) Any corporation or organization (other than the
corporation or a subsidiary of the corporation) of
which such person is an officer, director, or partner
or is, directly or indirectly, the beneficial owner
of 10 percent or more of any class of equity
securities;
(2) Any trust or other estate in which such person has a
substantial beneficial interest or a to which such
person serves as trustee or in a similar fiduciary
capacity; and
(3) Any relative or spouse of such person, or any
relative of such spouse, who has the same principal
residence as such person or who is a director or
officer of the corporation or any of its affiliates.
(f) Beneficial owner. "Beneficial owner", when used with respect
to any stock, means a person:
(1) That, individually or with any of its affiliates or
associates, beneficially owns stock, directly or
indirectly; or
(2) That, individually or with any of its affiliates or
associates, has:
(i) The right to acquire stock (whether such
right is exercisable immediately or only
after the passage of time), pursuant to any
agreement, arrangement, or understanding or
upon the exercise of conversion rights,
exchange rights, warrants or options, or
otherwise; or
(ii) The right to vote stock pursuant to any
agreement, arrangement, or understanding; or
(3) That has any agreement, arrangement, or understanding
for the purpose of acquiring, holding, voting, or
disposing of stock with any other person that
beneficially owns, or whose affiliates or associates
beneficially own, directly or indirectly, such shares
of stock.
(g) Charter. "Charter" includes the declaration of trust of a real
estate investment trust.
(h) Control. "Control", including the terms "controlling",
"controlled by", and "under common control with", means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by
contract, or otherwise, and the beneficial ownership of 10 %
or more of the votes entitled to be cast by a corporation's
stock creates a presumption of control.
V-1
(i) Corporation. "Corporation" includes a real estate investment
trust as defined in Title 8 of this article.
(j) Director. "Director" includes a trustee of a real estate
investment trust.
(k) Equity security. "Equity security" means:
(1) Any stock or similar security, certificate of
interest, or participation in any profit sharing
agreement, voting trust certificate, or certificate
of deposit for an equity security;
(2) Any security convertible, with or without
consideration, into an equity security, or any
warrant or other security carrying any right to
subscribe to or purchase an equity security; or
(3) Any put, call, straddle, or other option or privilege
of buying an equity security from or selling an
equity security to another without being bound to do
so.
(l) Real estate investment trust. "Real estate investment trust"
has the meaning stated in Title 8 of this article.
(m) Stockholder. "Stockholder" includes a shareholder of a real
estate investment trust.
(n) Subsidiary. "Subsidiary" means any corporation of which stock
having a majority of the votes entitled to be cast is owned,
directly or indirectly, by the corporation.
3-802. Applicability of subtitle.
(a) In general. Notwithstanding any other provision in this
article except subsection (b) of this section, this subtitle
applies to each corporation that:
(1) Has a class of equity securities registered under the
Federal Securities Exchange Act of 1934; and
(2) Elects to be subject to any or all provisions, in
whole or in part, of this subtitle by provision in:
(i) Its charter or bylaws; or
(ii) A resolution of its board of directors.
(b) Director requirements.
(1) This subtitle applies only to a corporation that has
at least three directors who, at the time of any
election to become subject to the provisions of this
subtitle:
(i) Are not officers or employees of the
corporation;
(ii) Are not acquiring persons;
(iii) Are not directors, officers, affiliates, or
associates of an acquiring person; and
(iv) Were not nominated or designated as
directors by an acquiring person,
(2) A director does not fail to satisfy paragraph (1) of
this subsection because the director:
(i) Owns securities issued by the corporation;
V-2
(ii) Is entitled to compensation, retirement,
severance, or other benefits as a director
of the corporation; or
(iii) Might continue to serve as a director of the
corporation or become a director of an
acquiring person.
(3) This subtitle does not apply to a corporation to the
extent that the corporation elects not to be subject
to any provision of this subtitle to which it has
previously elected to be subject, if the corporation
elects not to be subject to the provision in the same
manner in which it elected to become subject to the
provision, including the satisfaction of subsection
(d) (1) of this section, if applicable.
(c) Complete or partial opt out permitted. The charter of a
corporation may contain a provision or the board of directors
may adopt a resolution that prohibits the corporation from
electing to be subject to any or all provisions of this
subtitle.
(d) Supplementary filings.
(1) A corporation shall file articles supplementary with
the Department if:
(i) The corporation elects to be subject to any
or all provisions of this subtitle by
resolution of the board of directors or
bylaw amendment; or
(ii) The Board of directors adopts a resolution
in accordance with subsection (c) of this
section that prohibits the corporation from
electing to be subject to any or all
provisions of this subtitle.
(2) The articles supplementary shall describe any
provision of this subtitle to which the corporation:
(i) Has elected to become subject; or
(ii) May not elect to become subject in
accordance with the resolution of the board.
(3) Stockholder approval is not required for the filing
of articles supplementary in accordance with
paragraph (1) of this subsection.
3-803. Directors Classes.
(a) Designation.
(1) Before the first annual meeting of stockholders after
a corporation elects to be subject to this subtitle,
the board of directors shall designate by resolution,
from among its members, directors to serve as Class I
Directors, Class II Directors, and Class III
Directors.
(2) To the extent possible, the classes shall have the
same number of directors.
(b) Terms of office - Class I Directors. - The term of office of
the Class I Directors shall continue until the first annual
meeting of stockholders after the date on which the
corporation becomes subject to this subtitle and until their
successors are elected and qualify.
(c) Terms of office - Class II Directors. - The term of office of
the Class II Directors shall continue until the second annual
meeting of stockholders after the date on which the
corporation becomes subject to this subtitle and until their
successors are elected and qualify.
V-3
(d) Terms of office - Class III Directors. - The term of office of
the Class III Directors shall continue until the third annual
meeting of stockholders following the date on which the
corporation becomes subject to this subtitle and until their
successors are elected and qualify.
(e) Succession. At each annual meeting of the stockholders of a
corporation, the successors to the class of directors whose
term expires at that meeting shall be elected to hold office
for a term continuing until:
(1) The annual meeting of stockholders held in the third
year following the year of their election; and
(2) Their successors are elected and qualify.
(f) Retained corporate powers. This subtitle does not limit the
power of a corporation by provision in its charter to:
(1) Confer on the holders of any class or series of
preference or preferred stock the right to elect one
or more directors; and
(2) Designate the terms and voting powers of the
directors, which may vary among the directors.
3-804. Removal, number, and vacancy.
(a) Removal. Notwithstanding any other lesser proportion of votes
required by a provision in the charter or the bylaws, but
subject to 2-406(b) (3) of this article the stockholders for a
corporation may remove any director by the affirmative vote of
at least two-thirds of all the votes entitled to be cast by
the stockholders generally in the election of directors.
(b) Number. Subject to 2-402(a) of this article but
notwithstanding any provision in the charter or bylaws, the
number of directors of a corporation shall be fixed only by
vote of the board of directors.
(c) Vacancy.
(1) Notwithstanding any provision in the charter or
bylaws, this subsection applies to a vacancy that
results from:
(i) An increase in the size of the board of
directors;
(ii) The death, resignation, or removal of a
director.
(2) Each vacancy on the board of directors of a
corporation may be filled only by the affirmative
vote of a majority of the remaining directors in
office, even if the remaining directors do not
constitute a quorum.
(3) Any director elected to fill a vacancy shall hold
office:
(i) For the remainder of the full term of the
class of directors in which the vacancy
occurred; and
(ii) Until a successor is elected and qualifies.
V-4
3-805. Special meetings of stockholders.
Notwithstanding any provision in the charter or bylaws, the secretary
of a corporation may call a special meeting of stockholders only:
(1) On the written request of the stockholders entitled to cast at
least a majority of all the votes entitled to be cast at the
meeting; and
(2) In accordance with the procedures set forth under 2-502(b) (2)
and (3) and (e) of this article.
V-5
ANNEX VI
FORM OF DISSENTING SHAREHOLDER'S PAYMENT DEMAND FORM
ANNEX VI
FORM OF
DISSENTING SHAREHOLDER'S PAYMENT DEMAND FORM
TEK DigiTel Corporation
20030 Century Boulevard, Suite 201
Germantown, MD 20874
Re: Proposed Change of Domicile of TEK DigiTel Corporation, a Wyoming
corporation ("TEK"), to the State of Maryland, by merger of TEK with
and into its wholly-owned subsidiary, TEK DigiTel Corporation II, a
Maryland corporation ("TEK II").
Dear Ladies and Gentlemen:
The undersigned hereby dissents with respect to the proposed change of
domicile of TEK from the State of Wyoming to the State of Maryland, pursuant to
a merger of TEK into TEK II.
I hereby demand payment for the fair value of my "certificated" shares,
which are described below, and I demand that payment be forwarded to the address
indicated below.
The undersigned represents and warrants that the undersigned was the
owner of the shares covered by this demand on the date of the shareholders' vote
concerning the merger effecting TEK's change of domicile and related
transactions.
I understand that this demand for payment must be received on or before
September 4, 2001, which is a period thirty days after the date on which the
proposed action is intended to take effect.
If the undersigned is other than the "record holder" of the shares for
which demand for payment is made, the undersigned will provide evidence of the
purchase of such shares at the time demand for payment is made.
The undersigned acknowledges that this Dissenting Shareholder's Payment
Demand Form was accompanied by a copy of the applicable provisions of the
Wyoming Business Corporation Act relating to such dissenting shareholder's
rights of appraisal.
- ------------------------------- ----------------------------------
Date Signature
- ------------------------------- ----------------------------------
Address Print Name
- -------------------------------
City and State Zip
- ------------------------------- ----------------------------------
Stock Certificate Number(s) Number of Shares Represented
ANNEX VII
SECTIONS 17-16-1301 THROUGH 17-16-1328 OF WYOMING LAW
ANNEX VII
ARTICLE 13
DISSENTERS' RIGHTS
17-16-1301. DEFINITIONS. (a) As used in this article: (i) "Beneficial
shareholder" means the person who is a beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder; (ii) "Corporation" means
the issuer of the shares held by a dissenter before the corporate action, or the
surviving, new, or acquiring corporation by merger, consolidation, or share
exchange of that issuer; (iii) "Dissenter" means a shareholder who is entitled
to dissent from corporate action under W.S. 17-16-1302 and who exercises that
right when and in the manner required by W.S.17-16- 1320 through 17-16-1328;
(iv) "Fair value," with respect to a dissenter's shares, means the value of the
shares immediately before the effectuation of the corporate action to which the
dissenter objects, excluding any appreciation or depreciation in anticipation of
the corporate action unless exclusion would be inequitable; (v) "Interest" means
interest from the effective date of the corporate action until the date of
payment, at the average rate currently paid by the corporation on its principal
bank loans, or, if none, at a rate that is fair and equitable under all the
circumstances; (vi) "Record shareholder" means the person in whose names shares
are registered in the records of a corporation or the beneficial owner of shares
to the extent of the rights granted by a nominee certificate on file with a
corporation; (vi) "Shareholder" means the record shareholder or the beneficial
shareholder.
17-16-1302. RIGHT TO DISSENT. (a) A shareholder is entitled to dissent from, and
to obtain payment of the fair value of his shares in the event of, any of the
following corporate actions: (i) Consummation of a plan of merger or
consolidation to which the corporation is a party if: (A) Shareholder approval
is required for the merger or the consolidation by W.S. 17-16-1103 or 17-16-1111
or the articles of incorporation and the shareholder is entitled to vote on the
merger or consolidation; or (B) The corporation is a subsidiary that is merged
with its parent under W.S. 17-16-1104; (ii) Consummation of a plan of share
exchange to which the corporation is a party as the corporation whose shares
will be acquired, if the shareholder is entitled to vote on the plan; (iii)
Consummation of a sale or exchange of all, or substantially all, of the property
of the corporation other than in the usual and regular course of business, if
the shareholder is entitled to vote on the sale or exchange, 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 shareholders within one (1) year after the date
of sale; (iv) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it: (A)
Alters or abolishes a preferential right of the shares; (B) Creates, alters or
abolishes a right in respect of redemption, including a provision respecting a
sinking fund for the redemption or repurchase, of the shares; (C) Alters or
abolishes a preemptive right of the holder of the shares to acquire shares or
other securities; (D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or (E)
Reduces the number of shares owned by the share holder to a fraction of a share
if the fractional share so created is to be acquired for cash under W.S.
17-16-604. (a) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the Board of
Directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares. (b) A shareholder entitled to dissent and
obtain payment for his shares under this article may not challenge the corporate
action creating his entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
17-16-1303. DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (a) A record shareholder
may assert dissenters' rights as to fewer than all the shares registered in his
name only if he dissents with respect to all shares beneficially owned by any
one(1) person and notifies the corporation in writing of the name and address of
each person on whose behalf he asserts dissenters' rights. The rights of a
partial dissenter under this subsection are determined as if the shares as to
which he dissents and his other shares were registered in the names of different
shareholders. (b) A beneficial shareholder may assert dissenters' rights as to
shares held on his behalf only if: (i) He submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and (ii) He does so with
respect to all shares of which he is the beneficial shareholder or over which he
has power to direct the vote.
17-16-1320. NOTICE OF DISSENTERS' RIGHTS. (a) If proposed corporate action
creating dissenters' rights under W.S. 17- 16-1302 is submitted to a vote at a
shareholders' meeting, the meeting notice shall state that shareholders are or
may be entitled to assert dissenters' rights under this article and be
accompanied by a copy of this article. (b) If corporate
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action creating dissenters' rights under W.S.17-16-1302 is taken without a vote
of shareholders, the corporation shall notify in writing all shareholders
entitled to assert dissenters rights that the action was taken and send them the
dissenters' notice described in W.S. 17-16-1322.
17-16-1321. NOTICE OF INTENT TO DEMAND PAYMENT. If proposed corporate action
creating dissenters' rights under W.S. 17-16-1302 is submitted to a vote at a
shareholders' meeting, a shareholder who wishes to assert dissenters' rights
shall deliver to the corporation before the vote is taken written notice of his
intent to demand payment for his shares if the proposed action is effectuated
and shall not vote his shares in favor of the proposed action. (b) A shareholder
who does not satisfy the requirements of subsection (a) of this section is not
entitled to payment for his shares under this article.
17-16-1322. DISSENTERS NOTICE. If proposed corporate action creating dissenters'
rights under W.S. 17-16-1302 is authorized at a shareholders' meeting, the
corporation shall deliver a written dissenters notice to all shareholders who
satisfied the requirements of W.S. 17-16-1321. (b) The dissenters' notice shall
be sent no later than ten(10) days after the corporate action was taken, and
shall: (i) State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited; (ii) Inform holders of
uncertificated shares to what extent transfer of the shares will be restricted
after the payment demand is received; (iii) Supply a form for demanding payment
that includes the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action and requires that the
person asserting dissenters' rights certify whether or not he acquired
beneficial ownership of the shares before that date; (iv) Set a date by which
the corporation shall receive the payment demand, which date may not be fewer
than thirty (30) nor more than sixty (60) days after the date the notice
required by subsection (a) of this section is delivered; and (v) Be accompanied
by a copy of this article.
17-16-1323. DUTY TO DEMAND PAYMENT. (a) A shareholder sent a dissenters' notice
described in W.S.17-16-1322 shall demand payment, certify whether he acquired
beneficial ownership of the shares before the date required to beset forth in
the dissenters' notice pursuant to W.S.17-16-1322(b)(iii), and deposit his
certificates in accordance with the terms of the notice. (b) The shareholder who
demands payment and deposits his share certificates under subsection (a) of this
section retains all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate action. (c) A
shareholder who does not demand payment or deposit his share certificates where
required, each by the date set in the dissenters' notice, is not entitled to
payment for his shares under this article.
17-16-1324. SHARE RESTRICTIONS. The corporation may restrict the transfer of
uncertificated shares from the date the demand for their payment is received
until the proposed corporate action is taken or the restrictions released under
W.S. 17-16-1326. (b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
17-16-1325. PAYMENT. Except as provided in W.S. 17-16-1327, as soon as the
proposed corporate action is taken, or upon receipt of a payment demand, the
corporation shall pay each dissenter who complied with W.S. 17-16-1323 the
amount the corporation estimates to be the fair value of his shares, plus
accrued interest. (b) The payment shall be accompanied by: (i) The corporation's
balance sheet as of the end of a fiscal year ending not more than sixteen (16)
months before the date of payment, an income statement for that year, a
statement of changes in shareholders' equity for that year, and the latest
available interim financial statements, if any; (ii) A statement of the
corporation's estimate of the fair value of the shares; (iii) An explanation of
how the interest was calculated; (iv) A statement of the dissenter's right to
demand payment under W.S. 17-16-1328; and (v) A copy of this article.
17-16-1326. FAILURE TO TAKE ACTION. If the corporation does not take the
proposed action within sixty (60) days after the date set for demanding payment
and depositing share certificates, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares. (b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under W.S. 17-16-1322 and repeat the payment demand
procedure.
17-16-1327. AFTER-ACQUIRED SHARES. A corporation may elect to withhold payment
required by W.S. 17-16-1325 from a dissenter unless he was the beneficial owner
of the shares before the date set forth in the dissenters' notice as the date of
the first announcement to news media or to shareholders of the terms of the
proposed corporate action. (b) To the extent the corporation elects to withhold
payment under subsection (a) of this section, after taking the proposed
corporate action, it shall estimate the fair value of the shares, plus accrued
interest, and shall pay this amount to each dissenter who agrees to accept it in
full satisfaction of his demand. The corporation shall send with its offer a
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statement of its estimate of the fair value of the shares, an explanation of how
the interest was calculated, and a statement of the dissenter's right to demand
payment under W.S. 17-16-1328.
17-16-1328. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER. (a) A
dissenter may notify the corporation in writing of his own estimate of the fair
value of his shares and amount of interest due, and demand payment of his
estimate, less any payment under W.S. 17-16-1325, or reject the corporation's
offer under W.S.17-16-1327 and demand payment of the fair value of his shares
and interest due, if: (i) The dissenter believes that the amount paid under
W.S.17-16-1325 or offered under W.S. 17-16-1327 is less than the fair value of
his shares or that the interest due is incorrectly calculated; (ii) The
corporation fails to make payment under W.S.17-16-1325 within sixty (60) days
after the date set for demanding payment; or (iii) The corporation, having
failed to take the proposed action, does not return the deposited certificates
or release the transfer restrictions imposed on uncertificated shares within
sixty (60) days after the date set for demanding payment. (b) A dissenter waives
his right to demand payment under this section unless he notifies the
corporation of his demand in writing under subsection (a) of this section within
thirty (30) days after the corporation made or offered payment for his shares.
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