prem14c.htm
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 by Rule 14c-5(d)(2))
[ ] Definitive
Information Statement
Integrated
Media Holdings, Inc.
(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 amount on which 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.
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[ ]
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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 offering fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of the
filing.
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1) Amount
previously paid:
2) Form,
Schedule or Registration Statement No.:
3) Filing
Party:
4) Date
Filed:
INTEGRATED
MEDIA HOLDINGS, INC.
12000
Westheimer Rd Ste 340
Houston,
TX 77077-6531
Telephone
(281) 600-6000 ext 105 – Facsimile (713)-462-1980
NOTICE
OF ACTION TO BE TAKEN PURSUANT TO THE WRITTEN
CONSENT
OF MAJORITY STOCKHOLDERS IN LIEU OF
A
SPECIAL MEETING OF THE STOCKHOLDERS, DATED JANUARY 4, 2008
To
Our Stockholders:
NOTICE
IS HEREBY GIVEN to inform the holders of record of shares of common stock and
preferred stock of Integrated Media Holdings, Inc. (the “Company,” “us,” “we,”
or “our”), that as of the close of business on February 8, 2008 (the “Record
Date”) our board of directors and a majority of our stockholders voted in favor
of resolutions which accomplished the following:
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·
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Implemented
a reverse stock split of our common stock outstanding as of February 8,
2008 (the “Record Date”) on the basis of one post-split share for every
thirty (30) pre-split shares (the “Reverse Stock Split”);
and
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·
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Reincorporation
in Nevada by merger with and into our wholly-owned Nevada subsidiary,
Integrated Media Holdings, Inc.
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·
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Approved
the Articles of Incorporation of our Nevada subsidiary that will become
the Articles of Incorporation of the Company on the effective time of the
reincorporation and reverse split.
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·
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Authorized
our board of directors to change the name of the Company to a name
selected by the board of directors effective upon the filing of an
amendment to the existing Certificate of Incorporation, the amendment or
adoption of new Articles of
Incorporation.
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WE
ARE NOT ASKING YOU FOR A PROXY
AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
The
actions were authorized January 19, 2008 by the beneficial owners of a majority
of the Series A Preferred Stock by directing Cloud Capital Corp., the record
owner, to vote said shares. The consenting beneficial owners hold a
total of 17,588 shares of our common stock and 2,926,787 shares of
our Series A Preferred Stock, which votes together with the common stock on an
as-if converted basis. For purposes of voting, each share of Series A Preferred
Stock is convertible into 9.6 shares of our common
stock. Accordingly, the Consenting Stockholder has the right to vote
an aggregate of 28,114,743 shares of our common stock. This equals
53% of the total voting power entitled to vote on the foregoing resolutions as
of the Record Date. The beneficial owners directed the voted in favor of the
corporate actions and possessed the power to pass the corporate actions without
the concurrence of any of our other stockholders.
The
accompanying Information Statement is furnished pursuant to Section 14(c) of the
Securities Exchange Act of 1934 and Regulation 14C and Schedule 14C
thereunder.
We
are mailing the Information Statement on or about _________, 2008 to
stockholders of record of the Company at the close of business on the Record
Date.
By
Order of the Board of Directors,
William
L. Sklar, President and Chief Executive Officer
______________,
2008
SUMMARY
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TRANSACTION:
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Reincorporation
in Nevada
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PURPOSE:
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To
provide greater flexibility and simplicity in corporate transactions,
reduce taxes and other costs of doing business, See "Reincorporation in Nevada -
Principal Reasons for Reincorporation"
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TRANSACTION:
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Reverse
Stock Split
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PURPOSE:
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To
increase the market price of our common stock in order to attract more
investor interest.
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TRANSACTION:
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Authorization
of the board of directors to change corporate name
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PURPOSE:
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Will
enable the board of directors to select a new corporate name to reflect
the business of the Company.
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RECORD
DATE:
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February
8, 2008
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METHOD:
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Merger
of IMHI - Delaware with and into our wholly-owned Nevada subsidiary, IMHI
- Nevada See "Reincorporation in Nevada - Principal Features of the
Reincorporation."
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EXCHANGE
RATIOS:
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One
(1) share of IMHI - Nevada common stock will be issued for each 30 shares
of IMHI - Delaware common stock held as of the record date and cash
payment for each fractional share of IMHI - Nevada common stock that would
otherwise be issued. See "Reincorporation in Nevada – Principal Features
of the Reincorporation."
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EFFECTIVE
DATE:
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____________
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ADDITIONAL
PROVISIONS:
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Exchange
of outstanding certificates representing shares of IMHI -
Delaware common stock for certificates representing shares of Integrated,
Media Nevada common stock. See "Reincorporation in Nevada - How to
Exchange IMHI - Delaware Certificates for IMHI - Nevada
Certificates."
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The
beneficial owners of 53% of the total issued and outstanding shares of the
Company’s capital stock entitled to vote on these matters approved the adoption
of the Reverse Stock Split, the Reincorporation, the New Articles and the
proposed name change by written consent dated as of January 19,
2008. This Information Statement is furnished only to inform
stockholders of the Company of the above actions taken by the majority
stockholder of the Company before such action takes effect in accordance with
the Securities Exchange Act of 1934, as amended from time to time (the “Exchange
Act”).
The
elimination of the need for a special or annual meeting of stockholders to
ratify or approve the New Articles to affect the Reverse Stock Split, the
Reincorporation and name change is authorized by Section 228(a) of the Delaware
General Corporation Law (“DGCL”), which provides that the written consent of
stockholders holding at least a majority of the voting power may be substituted
for such a special or annual meeting. In order to eliminate the costs
and management time involved in holding a special or annual meeting and in order
to effect or ratify the Reverse Stock Split and other actions described herein
as early as possible in order to accomplish the purposes of the Company as
hereafter described, the board of directors of the Company voted to utilize the
written consent of stockholders holding a majority of the voting power of the
Company.
OUTSTANDING
SHARES AND VOTING RIGHTS
As
of the Record Date, the Company’s authorized capitalization consists of
100,000,000 shares of common stock, $.001 par value, of which 16,419,262 were
issued and outstanding, 5,000,000 shares of preferred stock, $.001 par value, of
which 4,500,000 have been designated as Series A Preferred Stock, and 100,000
have been designated as Series B Preferred Stock. There are 3,810,242 Series A
and no Series B were issued and outstanding. Holders of common stock
of the Company have no preemptive rights to acquire or subscribe to any of the
additional shares of common stock. Each share of common stock
entitles its holder to one vote on each matter submitted to the
stockholders. Each share of Series A Preferred Stock entitles its
holder to 9.6 votes (due to 9.6-to-1 conversion ratio) on each matter submitted
to the stockholders. Notwithstanding the foregoing, however, because
a consenting stockholder holding at least a majority of the voting rights of all
outstanding shares of capital stock has voted in favor of the foregoing
proposals by resolution dated January 19, 2008 and has sufficient voting power
to approve such proposals through its ownership of capital stock, no other
stockholder consents will be solicited in connection with this Information
Statement.
The
Company has asked brokers and other custodians, nominees and fiduciaries to
forward this Information Statement to the beneficial owners of the common stock
held of record by such persons and will reimburse such persons for out-of-pocket
expenses incurred in forwarding such material.
This
Information Statement will serve as written notice to stockholders pursuant to
Section 228(e) of the DGCL.
TABLE
OF CONTENTS
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QUESTIONS
AND ANSWERS
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1
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REVERSE
STOCK SPLIT
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3
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REINCORPORATION
IN NEVADA
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5
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Principal
Reasons for Reincorporation
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5
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Principal
Features of the Reincorporation
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5
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How
to Exchange IMHI - Delaware for IMHI - Nevada Certificates
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6
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Capitalization
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6
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Significant
Differences Between the Corporation Laws of Nevada and
Delaware
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6
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DEFENSES
AGAINST HOSTILE TAKEOVERS
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10
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APPRAISAL
RIGHTS
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11
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CHANGE
OF CORPORATE NAME
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11
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ADDITIONAL
INFORMATION
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12
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This
Information Statement is first being sent to stockholders on or about February
___, 2008. The following questions and answers are intended to respond to
frequently asked questions concerning the reincorporation of Integrated Media
Holdings, Inc. a Delaware corporation (“IMHI – Delaware”) in Nevada. These
questions do not, and are not intended to, address all the questions that may be
important to you. You should carefully read the entire Information Statement, as
well as its appendices and the documents incorporated by reference in this
Information Statement.
Q:
WHY IS IMHI - DELAWARE REINCORPORATING TO NEVADA?
A: Nevada imposes no income
taxes or franchise taxes on Nevada corporations. We believe that we
will be able to save tax expenses in Nevada when we obtain profitable
operation.
Q:
WHY ISN'T IMHI - DELAWARE HOLDING A MEETING OF STOCKHOLDERS TO APPROVE THE
REINCORPORATION?
A: The board of directors has
already approved the reincorporation plan and has received the written consent
of officers, directors, and affiliates that represent a majority of our
outstanding shares of common stock and other voting interests. Under
Delaware General Corporation Law and our Certificate of Incorporation this
transaction may be approved by the written consent of a majority of the shares
entitled to vote on it. Since we have already received written consents
representing the necessary number of shares, a meeting is not necessary and
represents a substantial and avoidable expense.
Q:
WHAT ARE THE PRINCIPAL FEATURES OF THE REINCORPORATION?
A: The reincorporation will be
accomplished by a merger of IMHI - Delaware with and into
our wholly owned subsidiary, Integrated Media Holdings, Inc., a Nevada
corporation (“IMHI – Nevada”) One and one-fifth fully paid and non-assessable
share of IMHI –Nevada will be issued for each outstanding share of our common
stock that is held by our stockholders. In addition, one fully paid and
non-assessable share of IMHI - Nevada will be issued for any fractional share
that would be issuable as a result of the reincorporation. The shares of IMHI
–Delaware will cease to trade on the over-the-counter bulletin board market and
the shares of IMHI – Nevada will begin trading in their place
beginning on February ___, 2008, under a new trading symbol and CUSIP Number
that has not yet been assigned. Other securities of IMHI –Delaware,
such as preferred stock, options, warrants, other rights to purchase common
stock, and securities exchangeable for or convertible into our common stock will
also be exchanged for similar securities issued by IMHI – Nevada.
Q: HOW WILL THE REINCORPORATION
AFFECT THE OWNERS, OFFICERS, DIRECTORS AND EMPLOYEES OF IMHI – DELAWARE?
A:
After the effective date of the reincorporation and the exchange of your stock
certificates, you will own the same class and the same percentage of IMHI
–Nevada, subject only to insignificant differences relating to the elimination
of fractional shares. Our officers, directors and employees will
become the officers, directors and employees of IMHI – Nevada after the
effective date of the reincorporation. IMHI – Nevada will continue our business
at the same locations and with the same assets.
Q: HOW DO I EXCHANGE CERTIFICATES OF
IMHI – DELAWARE FOR CERTIFICATES OF IMHI – NEVADA?
A:
Enclosed with this Information Statement is a letter of transmittal and
instructions for surrendering certificates representing our shares. If you are a
record stockholder, you should complete the letter of transmittal and send it
with certificates representing our shares to the address set forth in the
letter. Upon surrender of a certificate for cancellation with a duly executed
letter of transmittal, IMHI – Nevada will issue a new certificate representing
the number of whole shares of IMHI – Nevada as soon as practical after the
effective date of the reincorporation. If you hold our stock in street name or
in a brokerage account, we encourage you to request that certificate be issued
to you so that you can exchange it for a certificate representing shares of IMHI
– Nevada
Q:
WHAT HAPPENS IF I DO NOT SURRENDER MY CERTIFICATES OF IMHI –
DELAWARE?
A: YOU ARE NOT REQUIRED TO SURRENDER CERTIFICATES
REPRESENTING SHARES OF IMHI – DELAWARE TO RECEIVE SHARES OF IMHI –
NEVADA. Until you receive shares of IMHI – Nevada you are
entitled to receive notice of or vote at stockholder meetings and receive
dividends or other distributions on the shares of IMHI – Nevada
Q:
WHAT IF I HAVE LOST MY IMHI - DELAWARE CERTIFICATES?
A:
If you have lost your IMHI - Delaware certificates, you should contact our
transfer agent as soon as possible to have a new certificate
issued. You may be required to post a bond or other security to
reimburse us for any damages or costs if the certificate is later delivered for
conversion.
A:
No. Under the General Corporation Law of the State of Delaware, you are not
entitled to appraisal and purchase of your stock as a result of the
reincorporation.
Q:
WHO WILL PAY THE COSTS OF REINCORPORATION?
A.
IMHI – Nevada will pay all of the costs of reincorporation in Nevada, including
distributing this Information Statement and the cost of exchanging certificates
representing shares of IMHI – Delaware for certificates representing shares of
IMHI – Nevada We may also pay brokerage firms and other custodians for their
reasonable expenses for forwarding information materials to the beneficial
owners of our common stock. We do not anticipate contracting for other services
in connection with the reincorporation.
Q:
WILL I HAVE TO PAY TAXES ON THE NEW CERTIFICATES?
A:
We believe that the reincorporation is not a taxable event and that you will be
entitled to the same basis in the shares of IMHI – Nevada that you had in our
common stock. EVERYONE'S TAX SITUATION IS DIFFERENT AND YOU SHOULD CONSULT WITH
YOUR PERSONAL TAX ADVISOR REGARDING THE TAX EFFECT OF THE
REINCORPORATION.
INFORMATION
REGARDING BENEFICIAL OWNERSHIP OF PRINCIPAL
SHAREHOLDERS,
DIRECTORS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of February 8, 2008 with respect to (i) each
director of the Company; (ii) each executive officer; (iii) all executive
officers and directors of the Company as a group; and (iv) each party known by
us to be the beneficial owner of more than 5% of our common
stock. Unless otherwise indicated, the mailing address for each party
listed below is c/o Integrated Media Holdings, Inc., 12000 Westheimer Rd Ste
340, Houston, TX 77077-6531. This table is based upon information
supplied by current and former officers, directors and principal stockholders.
Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, we believe that the stockholder named
in this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
16,419,262 shares of our common stock outstanding on February 8, 2008 adjusted
as required by rules promulgated by the Securities and Exchange
Commission.
The
number and percentage of shares beneficially owned is determined in accordance
with Rule 13d-3 of the Securities Exchange Act and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under that
rule, beneficial ownership includes any shares as to which the individual or
entity has voting power or investment power and any shares that the individual
has the right to acquire within 60 days through the exercise of any stock
option or other right. Unless otherwise indicated in the footnotes or table,
each person or entity has sole voting and investment power, or shares such
powers with his or her spouse, with respect to the shares shown as beneficially
owned.
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Name
and Address of Beneficial Owner
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Percent
of Shares Outstanding
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Executive
Officers and Directors
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William
L. Sklar (1)
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110,000
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*
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%
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Five
Percent Shareholders
None
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All
Directors and Executive
Officers
as a Group (1 person)(1)
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110,000
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*
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%
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_____________________________
*
Less than one
percent.
(1) Held
under the terms of two custodian agreements that grant exclusive voting,
dispositive and any other economic rights to the beneficial owners named in the
agreements. None of the parties to the agreements beneficially own or
have the right to acquire (as hereinafter defined), individually, 5% of the
total outstanding shares of common stock. The number of shares
assumes completion of the Reverse Split authorized by the board of directors and
majority shareholders described in the succeeding paragraph.
REVERSE
STOCK SPLIT
General
The
board of directors has adopted, and the majority stockholder of the Company has
approved, pursuant to the written consent dated as of January 19, 2008, a
Reverse Stock Split.
The
board of directors of the Company approved the adoption of the Reverse Stock
Split by unanimous written consent as it believes the corporate actions are in
the best interests of the Company and its stockholders.
Vote
Required
Adoption
of the Reverse Stock Split requires approval by holders of at least a majority
of the outstanding shares of the Company’s common stock who are present, or
represented, and entitled to vote thereon, at a special or annual meeting of
stockholders. Section 228(a) of the DGCL provides that the written consent of
stockholders holding at least a majority of the voting power may be substituted
for such a special or annual meeting.
Our
board of directors fixed the close of business on February 8, 2008 as the record
date for determining the stockholders entitled to notice of the above described
actions.
The
actions have been authorized by the beneficial owners of a majority of the
Series A Preferred Stock by directing Cloud Capital Corp., the record owner, to
vote said shares. The consenting beneficial owners hold a total of
17,568 shares of our common stock and 2,926,787 shares of our Series A Preferred
Stock, which votes together with the common stock on an as-if converted basis.
For purposes of voting, each share of Series A Preferred Stock is convertible
into 9.6 shares of our common stock. Accordingly, the beneficial
owners have the right to vote an aggregate of 28,114,723 shares of our common
stock. This equals 53% of the total voting power entitled to vote on
the foregoing resolutions as of the Record Date. The beneficial owners directed
the voted in favor of the corporate actions and possessed the power to pass the
corporate actions without the concurrence of any of our other
stockholders.
Distribution
and Costs
We
will pay all costs associated with the distribution of this information
statement, including the costs of printing and mailing. In addition, we will
only deliver one information statement to multiple stockholders sharing an
address, unless we have received contrary instructions from one or more of the
stockholders. Also, we will promptly deliver a separate copy of this information
statement and future stockholder communication documents to any stockholder at a
shared address to which a single copy of this information statement was
delivered, or deliver a single copy of this information statement and future
stockholder communication documents to any stockholder or stockholders sharing
an address to which multiple copies are now delivered, upon written request to
us at our address noted above.
Stockholders
may also address future requests regarding delivery of information statements
and/or annual reports by contacting us at the address noted above.
Dissenters’
Right of Appraisal
No
action will be taken in connection with the proposed corporate actions by our
board of directors or the voting stockholders for which the DGCL, our Amended
and Restated Certificate of Incorporation or the Company’s bylaws provide a
right of a stockholder to dissent and obtain appraisal of or payment for such
stockholder’s shares.
Effect
of the Reverse Stock Split
The Reverse Stock Split would not
affect the registration of our common stock under the Securities Exchange Act of
1934, as amended, nor will it change our periodic reporting and other
obligations thereunder.
The
number of stockholders of record would not be affected by the Reverse Stock
Split except shareholders entitled to less than one share will be
eliminated. The authorized number of shares of our common stock and
the par value of our common stock under our Articles of Incorporation that will
become our Articles of Incorporation because of the reincorporation, will remain
the same following the effective time of the Reverse Stock Split.
The
number of shares of our common stock issued and outstanding as of February 8,
2008 would be reduced following the effective date of the Reverse Stock Split in
accordance with the following formula: every thirty (30) shares of our common
stock owned by a stockholder will automatically be changed into and become one
new share of our common stock. Any shares issued and outstanding after February
8, 2008 would be unaffected. Our Series A Preferred Stock contains a provision
that prevents the adjustment of the conversion ratio in the event of a reverse
stock split or combination. Accordingly, the conversion ratio of the Series A
Preferred Stock will remain unaffected by the Reverse Stock Split and, as of
February 8, 2008, each outstanding share of Series A Preferred Stock will
continue to be convertible into 9.6 shares of our common stock.
As
described below, all fractional share amounts resulting from the Reverse Stock
Split will be paid in cash in lieu of issuing any fractional share.
We
currently have no intention of going private, and this proposed Reverse Stock
Split is not intended to be a first step in a going private transaction and will
not have the effect of a going private transaction covered by Rule 13e-3 of the
Exchange Act. Moreover, the Reverse Stock Split does not increase the risk of us
becoming a private company in the future. We will continue to be subject to the
periodic reporting requirements of the Securities Exchange Act of 1934 following
the Reverse Stock Split of our common stock.
The
number of authorized but unissued shares of our common stock effectively will be
increased significantly by the Reverse Stock Split of our common stock and the
Reincorporation described below. The Reverse Stock Split will have the effect of
decreasing the number of our outstanding shares of our common
stock.
The
issuance in the future of such additional authorized shares may have the effect
of diluting the earnings per share and book value per share, as well as the
stock ownership and voting rights, of the currently outstanding shares of our
common stock.
The
effective increase in the number of authorized but unissued shares of our common
stock may be construed as having an anti-takeover effect by permitting the
issuance of shares to purchasers who might oppose a hostile takeover bid or
oppose any efforts to amend or repeal certain provisions of our articles of
incorporation or bylaws. Such a use of these additional authorized shares could
render more difficult, or discourage, an attempt to acquire control of the
Company through a transaction opposed by our board of directors. At this time,
our board of directors does not have plans to issue any common shares resulting
from the effective increase in our authorized but unissued shares created by the
Reverse Stock Split and Reincorporation.
Federal
Income Tax Consequences
We
will not recognize any gain or loss as a result of the Reverse Stock
Split.
The
following description of the material federal income tax consequences of the
Reverse Stock Split to our stockholders is based on the Internal Revenue Code of
1986, as amended, applicable Treasury Regulations promulgated thereunder,
judicial authority and current administrative rulings and practices as in effect
on the date of this information statement. Changes to the laws could alter the
tax consequences described below, possibly with retroactive effect. We have not
sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service regarding the federal income tax consequences of the Reverse
Stock Split. This discussion is for general information only and does not
discuss the tax consequences that may apply to special classes of taxpayers
(e.g., non-residents of the United States, broker/dealers or insurance
companies). The state and local tax consequences of the Reverse Stock Split may
vary significantly as to each stockholder, depending upon the jurisdiction in
which such stockholder resides. You are urged to consult your own tax advisors
to determine the particular consequences to you.
We
believe that the likely federal income tax effects of the Reverse Stock Split
will be that a stockholder who receives a reduced number of shares of our common
stock will not recognize gain or loss. With respect to a Reverse Stock Split,
such a stockholder’s basis in the reduced number of shares of our common stock
will equal the stockholder’s basis in its old shares of our common stock. The
holding period of the post-effective Reverse Stock Split shares received will
include the holding period of the pre-effective Reverse Stock Split shares
exchanged.
Effective
Date
The
Reverse Stock Split will become effective as of 5:00 p.m. Eastern Standard Time
on the later of: (i) the date we file the Certificate of Merger with the
Delaware Secretary of State, or (ii) we file the Articles of Merger with the
Nevada Secretary of State; however, the Reverse Stock Split will only effect
those shares of our common stock outstanding as of February 8, 2008.
Effectively, this makes the effective date February 8, 2008. Accordingly, except
for stockholders who currently hold fewer than thirty shares, on such date, all
shares of our common stock that were issued and outstanding immediately on
February 8, 2008 will be, automatically and without any action on the part of
the stockholders, converted into new shares of our common stock in accordance
with the thirty-for-one exchange ratio.
REINCORPORATION
IN NEVADA
The following discussion summarizes
certain aspects of our reincorporation in Nevada. This summary does
not include all of the provisions of the Plan and Agreement of Merger between
Integrated Media Holdings, Inc., a Delaware corporation (“IMHI - Delaware”) and
Integrated Media Holdings, Inc., a Nevada corporation (“IMHI – Nevada”), a copy
of which is attached hereto as Exhibit “A,” or the Articles of Incorporation of
IMHI - Nevada, a copy of which is attached hereto as Exhibit
“B.” Copies of the bylaws of IMHI - Delaware are available for
inspection at our principal office and we will send copies to stockholders upon
request.
Principal
Reasons for Reincorporation
We believe that the reincorporation in
Nevada will give us more flexibility and simplicity in various corporate
transactions. Nevada has adopted Revised Statutes that includes by
statute many concepts created by judicial rulings in other jurisdictions and
provides additional rights in connection with the issuance and redemption of
stock.
We also believe our reincorporation in
Nevada will save expenses for taxes and fees because Nevada imposes no corporate
income taxes on corporations that are incorporated in Nevada.
The reincorporation will be effected by
the merger of IMHI - Delaware, with and into our wholly owned subsidiary, IMHI -
Nevada. IMHI - Nevada will be the surviving entity.
On the Effective Date, (i) each of our
stockholders will be entitled to receive one fully paid and non-assessable
shares of IMHI - Nevada for each thirty (30) shares of our common stock
outstanding as of the Record Date and cash payment for any fractional interest
that they would be entitled to receive, (ii) each share of IMHI - Nevada common
stock owned by IMHI - Delaware will be canceled and resume the status of
authorized and unissued IMHI - Nevada common stock, and (iii) IMHI - Delaware
will cease its corporate existence in the State of Delaware. We
anticipate that the shares of IMHI - Delaware will cease trading on the first
trading date following the Effective Date and shares of IMHI - Nevada will begin
trading in their place but under a new CUSIP number and trading
symbol.
The Articles of Incorporation and
by-laws of IMHI - Nevada are significantly different from the Certificate of
Incorporation and by-laws of IMHI - Delaware. Because of the
differences between the Certificate of Incorporation and by-laws of IMHI -
Delaware and the laws of the State of Delaware, which govern IMHI - Delaware,
and the Articles of Incorporation and by-laws of IMHI - Nevada and the laws of
the State of Nevada, which govern IMHI - Nevada, your rights as stockholders
will be affected by the reincorporation. See the information under
“Significant Differences
Between the Corporation Laws of Nevada and Delaware” for a summary of the
differences between the Certificate of Incorporation and by-laws of IMHI -
Delaware and the laws of the State of Delaware and the Articles of Incorporation
and by-laws of IMHI - Nevada and the laws of the State of
Nevada.
The board of directors and officers of
IMHI - Nevada consists of the same person that is currently our director and
officer. Our daily business operations will continue at the principal
executive offices at 12000 Westheimer Rd Ste 340, Houston, TX
77077-6531.
How
to Exchange IMHI - Delaware for IMHI - Nevada Certificates
Enclosed are (i) a form letter of
transmittal and (ii) instructions for surrender of your certificates
representing our common stock in exchange for certificates representing shares
of IMHI - Nevada common stock. Upon surrender of a certificate
representing our common stock to IMHI - Nevada, together with a duly executed
letter of transmittal, IMHI - Nevada will issue, as soon as practicable, a
certificate representing the number of shares of IMHI - Nevada each stockholder
is entitled to receive.
If you own our shares through a nominee
or in a brokerage account, you do not have a certificate to submit for
exchange. Usually, your nominee or broker will submit certificates
representing our shares for exchange on your behalf. We recommend
that you contact your nominee or broker and confirm that a certificate is
submitted for exchange.
Because of the reincorporation in
Nevada, holders of our common stock, preferred stock, warrants and options are
not required to exchange their certificates for IMHI - Nevada
certificates. Dividends and other distributions declared after the
Effective Date with respect to common stock or preferred stock of IMHI -
Delaware and payable to holders of record thereof after the Effective Date will
be paid to the holder of any unsurrendered common stock or preferred
stock certificate of IMHI - Delaware and, which by virtue of the
reincorporation are represented thereby and such holder will be entitled to
exercise any right as a shareholder of IMHI - Delaware and, until such holder
has surrendered the certificate of IMHI - Delaware. Holders of
warrants or options will be entitled to exercise any right as a holder of IMHI -
Delaware, until such holder has surrendered the certificate of IMHI -
Delaware.
Capitalization
Our authorized capital consists of
100,000,000 shares of common stock, $.001 par value, and 5,000,000 shares of
Preferred stock, $.001 par value. As of February 8, 2008, the record
date for those stockholders entitled to notice of the reincorporation, there
were 16,419,262 shares of our common stock and 3,810,242 shares of our Series A
Convertible Preferred Stock outstanding. The authorized capital of
IMHI - Nevada consists of 500,000,000 shares of capital stock divided into
480,000,000 shares of common stock, $.001 par value per share, and 20,000,000
shares of preferred stock, $.001 par value per share. The board of
directors of IMHI - Nevada has adopted designations, rights and preferences for
Series A Convertible Preferred Stock which are identical to the rights and
preferences of the Series A Preferred Stock issued by IMHI -
Delaware. As a result of the reincorporation, exchange of the common
stock and conversion of the Series A Convertible Preferred Stock, IMHI - Nevada
will have outstanding approximately 1,765,086 shares of common stock and no
shares of Series A Convertible Preferred Stock. The reincorporation
did not affect our total stockholder equity or total
capitalization.
Significant
Differences Between the Corporation Laws of Nevada and Delaware
IMHI - Delaware is incorporated under
the laws of the State of Delaware. On the Effective Date of the Reincorporation,
our stockholders, whose rights currently are governed by Delaware Law and the
IMHI - Delaware Certificate of Incorporation and the IMHI - Delaware by-laws,
which were created pursuant to Delaware Law, will become stockholders of a
Nevada company with the same name, and their rights as stockholders will then be
governed by Nevada Law and the Nevada Articles of Incorporation and the Nevada
by-laws which were created under Nevada Law.
The corporate statutes of Nevada and
Delaware have certain differences, summarized below. This summary is
not intended to be complete, and is qualified by reference to the full text of,
and decisions interpreting, Delaware law and Nevada law.
Removal of Directors. Under
Delaware law, members of a classified board of directors may only be removed for
cause. Removal requires the vote of a majority of the outstanding shares
entitled to vote for the election of directors. Nevada law provides
that any or all directors may be removed by the vote of two-thirds of the voting
interests entitled to vote for the election of directors. Nevada does
not distinguish between removal of directors with and without
cause. However, the Nevada Articles provide that directors may only
be removed for cause by the vote of not less than 75% of the outstanding shares
entitled to vote for the election of directors. The reincorporation
will make it more difficult for the stockholders of IMHI - Nevada to remove a
member of the board of directors because it increases the number of shares that
must be voted for removal.
Special Meetings of
Stockholders. Delaware law permits special meetings of stockholders to be
called by the board of directors or by any other person authorized in the
certificate of incorporation or bylaws to call a special stockholder meeting.
Nevada law does not address the manner in which special meetings of stockholders
may be called but permits corporations to determine the manner in which meetings
are called in their bylaws. The Certificate of Incorporation and bylaws of IMHI
- Delaware and the Articles of Incorporation and bylaws of IMHI - Nevada each
provide that special meetings of the stockholders may be called only by the
board of directors or a committee of the board of directors that is delegated
the power to call special meetings by the board of directors. There will be no
change to this provision as a result of the reincorporation.
Special Meetings Pursuant to
Petition of Stockholders. Delaware law provides that a director or a
stockholder of a corporation may apply to the Court of Chancery of the State of
Delaware if the corporation fails to hold an annual meeting for the election of
directors or there is no written consent to elect directors in lieu of an annual
meeting taken, in both cases for a period of thirty (30) days after the date
designated for the annual meeting or if there is no such date designated, within
thirteen (13) months after the last annual meeting. Nevada law is more
restrictive. Under Nevada law stockholders having not less than 15% of the
voting interest may petition the district court to order a meeting for the
election of directors if a corporation fails to call a meeting for that purpose
within eighteen (18) months after the last meeting at which directors were
elected. The reincorporation may make it more difficult for the stockholders of
IMHI - Nevada to require that an annual meeting be held without the consent of
the board of directors.
Cumulative Voting. Cumulative
voting for directors entitles stockholders to cast a number of votes that is
equal to the number of voting shares held multiplied by the number of directors
to be elected. Stockholders may cast all such votes either for one nominee or
distribute such votes among up to as many candidates as there are positions to
be filled. Cumulative voting may enable a minority stockholder or group of
stockholders to elect at least one representative to the board of directors
where such stockholders would not otherwise be able to elect any directors. Both
Delaware and Nevada law permit cumulative voting if provided for in the
certificate or articles of incorporation and pursuant to specified procedures.
Neither the Certificate of Incorporation of IMHI - Delaware nor the Articles of
Incorporation of IMHI - Nevada provide for cumulative voting. The
reincorporation does not change the rights of the stockholders to cumulate their
votes.
Indemnification of Officers and
Directors and Advancement of Expenses. Delaware and Nevada have
substantially similar provisions regarding indemnification by a corporation of
its officers, directors, employees and agents. Delaware and Nevada law differ in
their provisions for advancement of expenses incurred by an officer or director
in defending a civil or criminal action, suit or proceeding. Delaware law
provides that expenses incurred by an officer or director in defending any
civil, criminal, administrative or investigative action, suit or proceeding may
be paid by the corporation in advance of the final disposition of the action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined that he
or she is not entitled to be indemnified by the corporation. A Delaware
corporation has the discretion to decide whether or not to advance expenses,
unless its certificate of incorporation or bylaws provides for mandatory
advancement. Nevada law differs in two respects: First, Nevada law applies to
advance of expenses incurred by both officers and directors. Second, under
Nevada law, the articles of incorporation, bylaws or an agreement made by the
corporation may provide that the corporation must pay advancements of expenses
in advance of the final disposition of the action, suit or proceedings upon
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined that he or she is not entitled to be
indemnified by the corporation. There will be a difference in stockholders'
rights with respect to this issue because the bylaws of IMHI - Delaware do not
provide for the mandatory advancement of expenses of directors and officers and
the IMHI – Nevada by laws do so provide.
Limitation on Personal Liability of
Directors. Delaware law permits a corporation to adopt provisions
limiting or eliminating the liability of a director to a company and its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such liability does not arise from certain proscribed conduct,
including breach of the duty of loyalty, acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law or liability
to the corporation based on unlawful dividends or distributions or improper
personal benefit. The Certificate of Incorporation of IMHI - Delaware excludes
director liability to the maximum extent allowed by Delaware law. Nevada law
permits, and IMHI - Nevada has adopted, a broader exclusion of liability of both
officers and directors to the corporation and its stockholders, providing for an
exclusion of all monetary damages for breach of fiduciary duty unless they arise
from act or omissions which involve intentional misconduct, fraud or a knowing
violation of law or payments of dividends or distributions in excess of the
amount allowed. The reincorporation will result in the elimination of any
liability of an officer or director for a breach of the duty of loyalty unless
arising from intentional misconduct, fraud, or a knowing violation of
law.
Dividends. Delaware law is
more restrictive than Nevada law with respect to when dividends may be paid.
Under the Delaware law, unless further restricted in the certificate of
incorporation, a corporation may declare and pay dividends, out of surplus, or
if no surplus exists, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year (provided that the amount
of capital of the corporation is not less than the aggregate amount of the
capital represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets). In addition, the
Delaware law provides that a corporation may redeem or repurchase its shares
only if the capital of the corporation is not impaired and such redemption or
repurchase would not impair the capital of the corporation. Nevada
law provides that no distribution (including dividends on, or redemption or
repurchases of, shares of capital stock) may be made if, after giving effect to
such distribution, the corporation would not be able to pay its debts as they
become due in the usual course of business, or, except as specifically permitted
by the articles of incorporation, the corporation's total assets would be less
than the sum of its total liabilities plus the amount that would be needed at
the time of a dissolution to satisfy the preferential rights of preferred
stockholders. The reincorporation makes it possible for IMHI - Nevada
to pay dividends or other distributions that would not be payable under Delaware
law.
Restrictions on Business
Combinations. Both Delaware and Nevada law contain provisions restricting
the ability of a corporation to engage in business combinations with an
interested stockholder. Under Delaware law, a corporation which is listed on a
national securities exchange, included for quotation on the Nasdaq Stock Market
or held of record by more than 2,000 stockholders, is not permitted to engage in
a business combination with any interested stockholder for a three-year period
following the time such stockholder became an interested stockholder, unless (i)
the transaction resulting in a person becoming an interested stockholder, or the
business combination, is approved by the board of directors of the corporation
before the person becomes an interested stockholder; (ii) the interested
stockholder acquires 85% or more of the outstanding voting stock of the
corporation in the same transaction that makes it an interested stockholder
(excluding shares owned by persons who are both officers and directors of the
corporation, and shares held by certain employee stock ownership plans); or
(iii) on or after the date the person becomes an interested stockholder, the
business combination is approved by the corporation's board of directors and by
the holders of at least 66 2/3% of the corporation's outstanding voting stock at
an annual or special meeting (and not by written consent), excluding shares
owned by the interested stockholder. Delaware law defines “interested
stockholder” generally as a person who owns 15% or more of the outstanding
shares of a corporation's voting stock.
Nevada law regulates business
combinations more stringently. First, an “interested stockholder” is defined as
a beneficial owner (directly or indirectly) of ten percent (10%) or more of the
voting power of the outstanding shares of the corporation. Second, the
three-year moratorium can be lifted only by advance approval by a corporation's
board of directors. Finally, after the three-year period, combinations with
“interested stockholders” remain prohibited unless (i) they are approved by the
board of directors, the disinterested stockholders or a majority of the
outstanding voting power not beneficially owned by the interested party, or (ii)
the interested stockholders satisfy certain fair value requirements. As in
Delaware, a Nevada corporation may opt-out of the statute with appropriate
provisions in its articles of incorporation.
We have not opted out of the applicable
statutes and the more stringent requirements of Nevada law apply to mergers and
combinations after the Effective Date of the reincorporation.
Amendment to Articles of
Incorporation/Certificate of Incorporation or Bylaws. Both
Delaware and Nevada law require the approval of the holders of a majority of all
outstanding shares entitled to vote to approve proposed amendments to a
corporation's certificate or articles of incorporation. Both Delaware and Nevada
law also provide that in addition to the vote of the stockholders, the vote of a
majority of the outstanding shares of a class may be required to amend the
certificate of incorporation or articles of incorporation. Neither state
requires stockholder approval for the board of directors of a corporation to fix
the voting powers, designation, preferences, limitations, restrictions and
rights of a class of stock provided that the corporation's organizational
documents grant such power to its board of directors. Both Delaware and Nevada
law permit the number of authorized shares of any such class of stock to be
increased or decreased (but not below the number of shares then outstanding) by
the board of directors unless otherwise provided in the articles of
incorporation or resolution adopted pursuant to the certificate of
incorporation, respectively. The IMHI Nevada Articles require not
less than 75% of the outstanding shares entitled to vote for the election of
directors.
Actions by Written Consent of
Stockholders. Both Delaware and Nevada law provide that,
unless the articles or certificate of incorporation provides otherwise, any
action required or permitted to be taken at a meeting of the stockholders may be
taken without a meeting if the holders of outstanding stock having at least the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote consents to the action in
writing. The Nevada Articles provide that action may be taken by
written consent of the shareholders only if expressly approved by the Board of
Directors. Delaware law requires the corporation to give prompt
notice of the taking of corporate action without a meeting by less than
unanimous written consent to those stockholders who did not consent in writing.
Nevada law does not require notice to the stockholders of action taken by less
than all of the stockholders.
Stockholder Vote for Mergers and
Other Corporation Reorganizations. Both jurisdictions require
authorization by an absolute majority of the outstanding voting rights, as well
as approval by the board of directors, of the terms of a merger or a sale of
substantially all of the assets of the corporation. Neither Delaware nor Nevada
law require a stockholder vote of the surviving corporation in a merger (unless
the corporation provides otherwise in its certificate of incorporation) if: (a)
the merger agreement does not amend the existing certificate of incorporation of
the surviving corporation; (b) each share of stock of the surviving corporation
outstanding immediately before the effective date of the merger is an identical
outstanding share after the merger; and (c) either no shares of common stock of
the surviving corporation and no shares, securities or obligations convertible
into such stock are to be issued or delivered under the plan of merger, or the
authorized unissued shares or shares of common stock of the surviving
corporation to be issued or delivered under the plan of merger plus those
initially issuable upon conversion of any other shares, securities or
obligations to be issued or delivered under such plan do not exceed twenty
percent (20%) of the shares of common stock of such constituent corporation
outstanding immediately prior to the effective date of the merger.
DEFENSES
AGAINST HOSTILE TAKEOVERS
The following discussion summarizes the
reasons for, and the operation and effects of, certain provisions in the IMHI -
Nevada Articles of Incorporation which management has identified as potentially
having an anti-takeover effect. It is not intended to be a complete description
of all potential anti-takeover effects, and it is qualified in its entirety by
reference to the IMHI - Nevada Articles of Incorporation. Substantially similar
provisions were contained in the IMHI - Delaware Certificate of Incorporation
and the reincorporation does not change the nature of the anti-takeover
provisions or their effect.
The anti-takeover provisions of the
IMHI - Nevada Articles of Incorporation are designed to minimize the possibility
of a sudden acquisition of control of IMHI - Nevada which has not been
negotiated with and approved by the IMHI - Nevada board of directors. These
provisions may tend to make it more difficult to remove the incumbent members of
the board of directors. The provisions would not prohibit an acquisition of
control of IMHI - Nevada or a tender offer for all of its capital stock.
However, to the extent these provisions successfully discourage the acquisition
of control of IMHI - Nevada or tender offers for all or part of its capital
stock without approval of the board of directors, they may
have the effect of preventing an acquisition or tender offer which might be
viewed by stockholders to be in their best interests.
Tender offers or other non-open market
acquisitions of stock are usually made at prices above the prevailing market
price. In addition, acquisitions of stock by persons attempting to acquire
control through market purchases may cause the market price of the stock to
reach levels which are higher than would otherwise be the case. Anti-takeover
provisions may discourage such purchases, particularly those of less than all of
the outstanding capital stock, and may thereby deprive stockholders of an
opportunity to sell their stock at a temporarily higher price. These provisions
may therefore decrease the likelihood that a tender offer will be made adversely
affect those stockholders who would desire to participate in a tender offer.
These provisions may also serve to insulate incumbent management from change and
to discourage not only sudden or hostile takeover attempts, but any attempts to
acquire control which are not approved by the board of directors, whether or not
stockholders deem such transactions to be in their best interests.
Authorized Shares of Capital
Stock. The IMHI - Nevada Articles of Incorporation authorizes the
issuance of up to 20,000,000 shares of serial preferred stock, without any
action on the part of the stockholders. Shares of IMHI - Nevada's serial
preferred stock with voting rights could be issued and would then represent an
additional class of stock required to approve any proposed acquisition. This
preferred stock, together with authorized but unissued shares of common stock
(the Articles of Incorporation authorizes the issuance of up to 480,000,000
shares of common stock), could represent additional capital stock required to be
purchased by an acquiror. If the board of directors of IMHI - Nevada determined
to issue an additional class of voting preferred stock to a person opposed to a
proposed acquisition, such person might be able to prevent the acquisition
single-handedly.
Stockholder Meetings. Nevada
law provides that the annual stockholder meeting may be called by a
corporation's board of directors or by such person or persons as may be
authorized by a corporation's articles of incorporation or bylaws. The IMHI -
Nevada Articles of Incorporation provides that annual stockholder meetings may
be called only by the IMHI - Nevada board of directors or a duly designated
committee of the board. Although IMHI - Nevada believes that this provision will
discourage stockholder attempts to disrupt the business of IMHI - Nevada between
annual meetings, its effect may be to deter hostile takeovers by making it more
difficult for a person or entity to obtain immediate control of IMHI -
Nevada
Classified Board of Directors and
Removal of Directors. IMHI - Nevada's Articles of Incorporation provides
that the board of directors is to be divided into three classes which shall be
as nearly equal in number as possible. The directors in each class serve for
terms of three years, with the terms of one class expiring each year. Each class
currently consists of approximately one-third of the number of directors. Each
director will serve until his successor is elected and qualified. A classified
board of directors could make it more difficult for stockholders, including
those holding a majority of IMHI - Nevada's outstanding stock, to force an
immediate change in the composition of a majority of the board of directors.
Since the terms of only one-third of the incumbent directors expire each year,
it requires at least two annual elections for the stockholders to change a
majority, whereas a majority of a non-classified board may be changed in one
year. The provision for a staggered board of directors affects every election of
directors and is not triggered by the occurrence of a particular event such as a
hostile takeover. Thus a staggered board of directors makes it more difficult
for stockholders to change the majority of directors even when the reason for
the change would be unrelated to a takeover.
Restriction of Maximum Number of
Directors and Filling Vacancies on the Board of Directors. Nevada law
requires that the board of directors of a corporation consist of one or more
members and that the number of directors shall be set by or in the manner
described in the corporation's articles of incorporation or bylaws. IMHI -
Nevada's Articles of Incorporation provides that the number of directors
(exclusive of directors, if any, to be elected by the holders of preferred
stock) shall not be less than one or more than 15, as shall be provided from
time to time in accordance with the bylaws. The power to determine the number of
directors within these numerical limitations is vested in the board of directors
and requires the concurrence of at least two-thirds of the entire board of
directors. The effect of such provisions may be to prevent a person or entity
from quickly acquiring control of IMHI - Nevada through an increase in the
number of the directors and election of nominees to fill the newly created
vacancies.
Restriction on Business Combination
If, at
any time during the ten years from the effective date of the IMHI – Nevada
Articles, if any person shall acquire more than 20% of any class of Common
Stock. With respect to each vote in excess of 20% which such record
holders would otherwise be entitled to cast without giving effect to this
paragraph , the record holders in the aggregate shall be entitled to cast only
one-hundredth of a vote. The limitation on voting rights shall terminate:
(i) the date that any person becomes the beneficial owner of shares of stock
representing at least 75% of the total number; or (ii) the date on which, as a
result of such limitation of voting rights, the Common Stock will be delisted
from any stock exchange.
Approval of Certain Business
Combination. A vote of (i) at least 75%, and (ii) at least a majority of
the votes, not including
shares deemed beneficially owned by a Related Person, shall be required in order
to authorize specified
transactions with the Related Person.
IMHI
– Nevada Articles shall not require the vote of greater than 85% of the voting
power of the outstanding shares entitled to vote for the approval of a Business
Combination.
Advance Notice Requirements for
Nomination of Directors and Proposal of New Business at Annual Stockholder
Meetings. IMHI - Nevada's Articles of Incorporation provide that any
stockholder desiring to make a nomination for the election of directors or a
proposal for new business at a stockholder meeting must submit written notice
not less than 30 or more than 60 days in advance of the meeting: provided,
however, that if less than forty days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed, as prescribed,
to the Secretary of the Corporation not later than the close of the tenth day
following the day on which notice of the meeting was mailed to stockholders.
This advance notice requirement may give management time to solicit its own
proxies in an attempt to defeat any dissident slate of nominations. Similarly,
adequate advance notice of stockholder proposals will give management time to
study such proposals and to determine whether to recommend to the stockholders
that such proposals be adopted. In certain instances, such provisions could make
it more difficult to oppose management's nominees or proposals, even if the
stockholders believe such nominees or proposals are in their interests. These
provisions may tend to discourage persons from bringing up matters disclosed in
the proxy materials furnished to the stockholders and could inhibit the ability
of stockholders to bring up new business in response to recent
developments.
APPRAISAL
RIGHTS
The reincorporation will be conducted
as a merger of IMHI - Delaware into our wholly owned subsidiary pursuant to
Section 253 of the General Corporation Law of the State of Delaware. Delaware
law does not provide for any right of appraisal or redemption in connection with
mergers of a parent corporation into its subsidiary. The stockholders are not
entitled to receive consideration in lieu of the shares of IMHI –
Nevada.
CHANGE
OF CORPORATE NAME
The
Reincorporation and adoption of the IMHI – Articles will enable the board of
directors to select a new corporate name and a time in the future to reflect the
business of the Company.
ADDITIONAL
INFORMATION
The
Company has received no indication from any of its directors or non-employee
directors of any intent to oppose any action to be taken by the Company. There
have been no proposals for action submitted to the Company by any stockholders
other than the proposal which is the subject of this Information
Statement.
By
Order of the Board of Directors,
William
L. Sklar, President and Chief Executive Officer
____________,
2008
EXHIBIT
A
PLAN
AND AGREEMENT OF MERGER
OF
Integrated
Media Holdings, Inc.
(A
DELAWARE CORPORATION)
AND
Integrated
Media Holdings, Inc.
(A
NEVADA CORPORATION)
PLAN AND AGREEMENT OF MERGER
entered into on February___, 2008, by and between IMHI - Delaware, a Delaware
corporation (“IMHI-Delaware”), and IMHI - Nevada, a Nevada corporation
(“IMHI-Nevada”).
WHEREAS, IMHI - Delaware is a
business corporation of the State of Delaware with its registered office therein
located at 1209 Orange Street, Wilmington, County of Newcastle, Delaware;
and
WHEREAS, the total number of
shares of stock which IMHI - Delaware has authority to issue is 105,000,000, of
which 100,000,000 are common stock, $.001 par value per share, and 5,000,000 are
preferred stock, $.001 par value per share; and
WHEREAS, IMHI - Nevada is a
business corporation of the State of Nevada with its registered office therein
located at 613 Saddle Rider Court, Henderson, Nevada; and
WHEREAS, the total number of
shares of stock which IMHI - Nevada has authority to issue is 500,000,000, of
which 480,000,000 are common stock, $.001 par value per share, and 20,000,000
are preferred stock, $.001 par value per share; and
WHEREAS, the Delaware General
Corporation Law Act permits a merger of a business corporation of the State of
Delaware with and into a business corporation of another jurisdiction;
and
WHEREAS, the General
Corporation Law of the State of Nevada permits the merger of a business
corporation of another jurisdiction with and into a business corporation of the
State of Nevada; and
WHEREAS, IMHI - Delaware and
IMHI - Nevada and the respective Boards of Directors thereof declare it
advisable and to the advantage, welfare, and best interests of said corporations
and their respective stockholders to merge IMHI - Delaware with and into IMHI -
Nevada pursuant to the provisions of the Delaware General Corporation Law and
pursuant to the provisions of the General Corporation Law of the State of Nevada
upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in
consideration of the premises and of the mutual agreement of the parties hereto
hereby determine and agree as follows.
ARTICLE
I
MERGER
1.1.
CONSTITUENT CORPORATIONS. The name, address and jurisdiction of organization of
each of the constituent corporations are set forth below.
A. IMHI - Delaware, a corporation
organized under and governed by the laws of the State of Delaware with a
principal place of business at 12000 Westheimer Rd, Ste 340, Houston, Texas (the
“terminating corporation”).
B. IMHI – Nevada, a corporation
organized under and governed by the laws of the State of Nevada with a principal
place of business at12000 Westheimer Rd, Ste 340, Houston, Texas (the “surviving
corporation”).
1.2.
SURVIVING CORPORATION. IMHI - Nevada shall be the surviving
corporation. The principal place of business, Articles of
Incorporation, bylaws, officers and directors of IMHI - Nevada shall survive the
merger without amendment or revision and be the principal place of business,
Articles of Incorporation, bylaws, officers and directors of the surviving
corporation.
1.3.
MERGER. On the Effective Date (as hereinafter set forth) and subject to the
terms and conditions of this Agreement, the applicable provisions of the
Delaware General Corporation Law (“Delaware Law”), and the applicable provisions
of Title 7, Chapter 78 of the Nevada Revised Statutes (“Nevada Law”), IMHI -
Delaware is merged with and into IMHI - Nevada. The separate existence of IMHI -
Delaware shall cease on and after the Effective Date.
ARTICLE
II
EXCHANGE
AND CONVERSION OF SHARES
2.1.
CONVERSION OF CAPITAL STOCK.
A. On the Effective Date, each thirty
(30) issued and outstanding shares of the common stock, $.001 par value per
share, of IMHI - Delaware shall be converted into the right to receive one (1)
fully paid and non-assessable share of the common stock, $.001 par value per
share, of IMHI - Nevada.
B. On the Effective Date, each issued
and outstanding share of the preferred stock of any series or class of IMHI -
Delaware shall be converted into the right to receive one fully paid and
non-assessable share of preferred stock, $.001 par value per share, of IMHI -
Nevada with substantially identical rights and preferences.
2.2.
FRACTIONAL SHARES. No fractional shares or script representing fractional shares
shall be issued by IMHI - Nevada as a result of the merger. Each fractional
share that would otherwise result from the merger shall be cancelled and
returned to the authorized and unissued capital stock of IMHI - Nevada and the
holder shall be paid cash in an amount equal to the market value of one full
share.
2.3.
CANCELLATION OF EXISTING SHARES. On the Effective date, each share of
the common stock, $.001 par value per share, of IMHI - Nevada outstanding
immediately prior to the merger shall be cancelled and returned to the
authorized and unissued capital stock of IMHI - Nevada.
ARTICLE
III
ADDITIONAL
COVENANTS AND AGREEMENTS
3.1.
OUTSTANDING OPTIONS AND WARRANTS. Except to the extent otherwise provided in
outstanding options, warrants, and other rights to purchase shares of the common
stock, $.001 par value per share, of IMHI - Delaware, each option, warrant or
other right to purchase thirty (30) shares of the common stock, $.001 par value
per share, of IMHI - Delaware, shall be exercisable to purchase one (1) share of
the common stock, $.001 par value per share, of IMHI - Nevada for an exercise
price in the amount of 30 times the original on the remaining same terms and
conditions.
3.2.
SUBMISSION TO SERVICE IN DELAWARE. IMHI - Nevada agrees that it may be served
with process in the State of Delaware in any proceeding for enforcement of any
obligation of the IMHI - Nevada arising from this merger, including any suit or
other proceeding to enforce the rights of any stockholders as determined in
appraisal proceedings pursuant to the provisions of Section 262 of the Delaware
General Corporation laws, and irrevocably appoints the Secretary of State of
Delaware as its agent to accept services of process in any such suit or
proceeding.
3.3.
COOPERATION. The parties hereto agree that they will cause to be executed and
filed and recorded any document or documents prescribed by Delaware Law or
Nevada Law, and that they will cause to be performed all necessary acts within
the State of Delaware and the State of Nevada and elsewhere to effectuate the
merger herein provided for.
3.4.
ADDITIONAL ASSURANCES. IMHI - Delaware hereby appoints the officers and
directors, each acting alone, as its true and lawful attorneys in fact to do any
and all acts and things, and to make, execute, deliver, file, and record any and
all instruments, papers, and documents which shall be or become necessary,
proper, or convenient to carry out or put into effect any of the provisions of
this Agreement or of the merger herein provided for.
ARTICLE
IV
EFFECTIVE
DATE
4.1.
EFFECTIVE DATE. This merger shall be effective in the State of Delaware and the
State of Nevada on the last to occur of the following (the “Effective
Date”):
A. the approval of this Agreement by
the stockholders of IMHI - Delaware in accordance with Delaware Law;
or
B. the date this Agreement, or a
certificate of merger meeting the requirements of Delaware Law, is filed with
the Secretary of State of the State of Delaware; or
C. the date this Agreement, or articles
of merger meeting the requirements of Nevada Law, is filed with the Secretary of
State of the State of Nevada
4.2.
TERMINATION. Notwithstanding the full approval and adoption of this Agreement,
the said Agreement may be terminated by either party at any time prior to the
filing thereof with the Secretary of State of the State of Nevada.
4.3.
AMENDMENT. Notwithstanding the full approval and adoption of this Agreement,
this Agreement may be amended at any time and from time to time prior to the
filing thereof with the Secretary of State of the State of Nevada except that,
without the approval of the stockholders of IMHI - Delaware and the stockholders
of IMHI - Nevada, no such amendment may (a) change the rate of exchange for any
shares of IMHI - Delaware or the types or amounts of consideration that will be
distributed to the holders of the shares of stock of IMHI - Delaware; (b) change
any term of the Articles of Incorporation of IMHI - Nevada; or (c) adversely
affect any of the rights of the stockholders of IMHI - Delaware or IMHI -
Nevada.
ARTICLE
V
MISCELLANEOUS
5.1.
COUNTERPARTS. This Agreement may be executed in one or more counterparts, each
of which may have different signatures and be signed at different times. When
all parties have signed at least one counterpart, each counterpart shall be
deemed complete and shall constitute the same instrument.
5.2.
ENTIRE AGREEMENT. This Agreement and the is intended by the parties to be the
final expression of their agreement with respect to the matter set forth herein
and is intended to contain all of the terms of such agreement without the need
to refer to other documents. There are no other understandings, written or oral,
among the parties with respect to the matter set forth herein.
5.3.
AMENDMENT. This Agreement may not be amended except by a written instrument
signed by the parties hereto.
IN WITNESS WHEREOF, this Agreement is
hereby executed upon behalf of each of the parties thereto this February ___,
2008.
INTEGRATED
MEDIA HOLDINGS, INC. a Delaware corporation
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By::
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Name:
____________________
Title:
Chief Executive Officer & President
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INTEGRATED
MEDIA HOLDINGS, INC. a Nevada corporation
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By::
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Name:
____________________
Title:
Chief Executive Officer & President
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EXHIBIT
B
ARTICLES
OF INCORPORATION
OF
INTEGRATED
MEDIA HOLDINGS, INC.
(a
Nevada corporation)
For the purpose of associating to
establish a corporation under the provisions and subject to the requirements of
Title 7, Chapter 78 of Nevada Revised Statutes, and the acts amendatory thereof,
and hereinafter sometimes referred to as the General Corporation Law of the
State of Nevada, the undersigned incorporator does hereby adopt and make the
following Articles of Incorporation:
ARTICLE
I
NAME
The
name of the Corporation is Integrated Media Holdings, Inc. (hereinafter, the
“Corporation).
ARTICLE
II
REGISTERED
OFFICE AND AGENT
The
name of the Corporation's resident agent in the State of Nevada is Inc. Plan of
Nevada, and the street address of the said resident agent where process may be
served on the Corporation is 613 Saddle River Court, Henderson, Nevada 89015.
The mailing address and the street address of the said resident agent are
identical.
ARTICLE
III
POWERS
The
purpose for which the Corporation is organized is to transact all lawful
business for which corporations may be incorporated pursuant to the laws of the
State of Nevada. The Corporation shall have all the powers of a corporation
organized under the General Corporation Law of the State of Nevada.
ARTICLE
IV
TERM
The
Corporation is to have perpetual existence.
ARTICLE
V
CAPITAL
STOCK
A. Number and
Designation. The total number of shares of all classes that
this Corporation shall have authority to issue shall be 500,000,000, of which
480,000,000 shall be shares of common stock, par value $0.001 per share (“Common
Stock”), and 20,000,000 shall be shares of preferred stock, par value $0.001 per
share (“Preferred Stock”). The shares may be issued by the
Corporation from time to time as approved by the board of directors of the
Corporation without the approval of the stockholders except as otherwise
provided in this Article V or the rules of a national securities exchange if
applicable. The consideration for subscriptions to, or the purchase
of, the capital stock to be issued by a corporation shall be paid in such form
and in such manner as the board of directors shall determine. The
board of directors may authorize capital stock to be issued for consideration
consisting of cash, any tangible or intangible property or any benefit to the
corporation, or any combination thereof. In the absence of actual
fraud in the transaction, the judgment of the directors as to the value of such
consideration shall be conclusive. The capital stock so issued shall
be deemed to be fully paid and nonassessable stock upon receipt by the
corporation of such consideration. In the case of a stock dividend,
the part of the surplus of the Corporation which is transferred to stated
capital upon the issuance of shares as a stock dividend shall be deemed to be
the consideration for their issuance.
A
description of the different classes and series (if any) of the Corporation's
capital stock, and a statement of the relative powers, designations, preferences
and rights of the shares of each class and series (if any) of capital stock, and
the qualifications, limitations or restrictions thereof, are as
follows:
B. Undesignated Common
Stock. Shares of Common Stock not at the time designated as
shares of a particular series pursuant to this Article (V)(B) or any other
provision of these Articles of Incorporation may be issued from time to time in
one or more additional series or without any distinctive
designation. The board of directors may determine, in whole or in
part, the preferences, voting powers, qualifications and special or relative
rights or privileges of any such series before the issuance of any shares of
that series. The board of directors shall determine the number of
shares constituting each series of Common Stock and each series shall have a
distinguishing designation.
C. Common
Stock. Except as provided in these Articles or the designation
of any series or class of capital stock, the holders of the Common Stock shall
exclusively posses all voting power. Subject to the provisions of
these Articles, each holder of shares of Common Stock shall be entitled to one
vote for each share held by such holders.
Whenever there shall have been paid, or
declared and set aside for payment, to the holders of the outstanding shares of
any class or series of stock having preference over the Common Stock as to the
payment of dividends, the full amount of dividends and sinking fund or
retirement fund or other retirement payments, if any, to which such holders are
respectively entitled in preference to the Common Stock, then dividends may be
paid on the Common Stock, and on any class or series of stock entitled to
participate therewith as to dividends, out of any assets legally available for
the payment of dividends, but only when and as declared by the board of
directors of the Corporation.
In the event of any liquidation,
dissolution or winding up of the Corporation, after there shall have been paid,
or declared and set aside for payment, to the holders of the outstanding shares
of any class having preference over the Common Stock in any such
event, the full preferential amounts to which they are respectively entitled,
the holders of the Common Stock and of any class or series of stock entitled to
participate therewith, in whole or in part, as to distribution of assets shall
be entitled, after payment or provision for payment of all debts and liabilities
of the Corporation, to receive the remaining assets of the Corporation available
for distribution, in cash or in kind.
Each share of Common Stock shall have
the same relative powers, preferences and rights as, and shall be identical in
all respects with, all the other shares of Common Stock of the
Corporation.
D. Serial Preferred
Stock. Shares of Preferred Stock not at the time designated as
shares of a particular series pursuant to this Article (V)(D) or any other
provision of these Articles of Incorporation may be issued from time to time in
one or more additional series. The board of directors may determine,
in whole or in part, the preferences, voting powers, qualifications and special
or relative rights or privileges of any such series before the issuance of any
shares of that series. The board of directors shall determine the
number of shares constituting each series of Preferred Stock and each series
shall have a distinguishing designation. Each share of each series of
serial preferred stock shall have the same relative powers, preferences and
rights as, and shall be identical in all respects with, all the other shares of
the Corporation of the same series, except the times from which dividends on
shares which may be issued from time to time of any such series may begin to
accrue.
E. Series A
Convertible Preferred Stock. There shall be a series of
Convertible Preferred Stock designated as “Series A Convertible Preferred
Stock.” Such series is referred to herein as the “Series A Preferred
Stock.”
1. Amount. The
number of shares constituting Series A Preferred Stock shall be
4,500,000.
2. Stated
Capital. The amount to be represented in stated capital at all
times for each share of Convertible Preferred Stock shall be $.001.
3. Rank. All
shares of Convertible Preferred Stock shall rank prior to all of the
Corporation’s Common Stock, par value $.001 per share (the “Common Stock”), now
or hereafter issued, both as to payment of dividends and as to distributions of
assets upon liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary.
4. Dividends. No
dividends shall be payable to the holder of shares of Convertible Preferred
Stock.
5. Liquidation
Preference.
(a) The liquidation value of shares of
this Series, in case of the voluntary or involuntary liquidation, dissolution or
winding-up of the Company, shall be $.001 per share.
(b) In the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, the holders
of shares of this Series shall be entitled to receive the liquidation value of
such shares held by them until the liquidation value of all shares of
Convertible Preferred Stock shall have been paid in full. Upon
payment in full of the liquidation value to which the holders of shares of the
shares of Convertible Preferred Stock are entitled, the holders of shares of
this Series will not be entitled to any further participation in any
distribution of assets by the Company.
(c) Neither a consolidation or merger
of the Company with or into any other corporation, nor a merger of any other
corporation with or into the Company, nor a sale or transfer of all or any part
of the Company's assets for cash or securities or other property shall be
considered a liquidation, dissolution or winding-up of the Company within the
meaning of this Paragraph 5.
6. Voting
Rights. Except as otherwise required by law, each share of
outstanding Convertible Preferred Stock shall entitle the holder thereof to vote
on each matter submitted to a vote of the stockholders of the Corporation and to
have the number of votes equal to the number (including any fraction) of shares
of Common Stock into which such share of Convertible Preferred Stock is then, or
in the future if shareholder vote is within the 1st
anniversary of the issue date of Convertible Preferred Stock, convertible
pursuant to the provisions hereof at the record date for the determination of
shareholders entitled to vote on such matters or, if no such record date is
established, at the date such vote is taken or any written consent of
stockholders becomes effective. Except as otherwise required by law
or by these Articles, the holders of shares of Common Stock and Convertible
Preferred Stock shall vote together and not as separate classes.
7. No
Redemption. The shares of Convertible Preferred Stock are not
redeemable.
8. Conversion
Provisions.
(a)
Conversion at Option
of the Holders. Provided that, and only to the extent that,
the Corporation has a sufficient number of shares of authorized but unissued and
unreserved Common Stock available to issue upon conversion, each share of
Convertible Preferred Stock shall be convertible, at the option of the holder
thereof, at any time on or after the date of issue, into fully paid and
nonassessable shares of Common Stock and such other securities and property as
hereinafter provided, initially at the rate of 9.6 shares of Common Stock for
each full share of Convertible Preferred Stock (“Conversion
Ratio”).
For
the purpose of these Articles, the term “Common Stock” shall initially mean the
class designated as Common Stock, par value $.001 per share, of the Corporation
as of February 1, 2008 subject to adjustment as hereinafter
provided.
(b)
Mechanics of
Conversion. Any holder of shares of Convertible Preferred
Stock desiring to convert such shares into Common Stock shall surrender the
certificate or certificates for such shares of Convertible Preferred Stock at
the office of the transfer agent for the Convertible Preferred Stock, which
certificate or certificates, if the Corporation shall so require, shall be duly
endorsed to the Corporation or in blank, or accompanied by proper instruments of
transfer to the Corporation or in blank, accompanied by irrevocable written
notice to the Corporation that the holder elects so to convert such shares of
Convertible Preferred Stock and specifying the name or names (with address) in
which a certificate or certificates for Common Stock are to be
issued.
(c)
Conversion Ratio.
The Conversion Ratio shall be subject to adjustment as
follows:
(i)
In case the Company shall (A) pay a dividend or make a distribution in Common
Stock, or (B) subdivide or reclassify its outstanding shares of Common Stock
into a greater, but not smaller, number of shares, the Conversion Ratio in
effect immediately prior thereto shall be adjusted retroactively as provided
below so that the Conversion Ratio thereafter shall be by multiplying the
Conversion Ratio at which such shares of this Series were theretofore
convertible by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately following such action and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately prior thereto. Such adjustment shall be made whenever any event
listed above shall occur and shall become effective retroactively immediately
after the record date in the case of a dividend and shall become effective
immediately after the effective date in the case of a subdivision or
reclassification. In the event of a subdivision or reclassification of
Common Stock into a smaller number of shares, the Conversion Ratio shall not be
adjusted.
(ii)
In case the Company shall issue rights or warrants to all holders of its Common
Stock entitling them (for a period expiring within 45 days after the record date
therefor) to subscribe for or purchase shares of Common Stock at a price per
share less than the current market price per share of Common Stock (as
determined in accordance with the provisions of subclause (iv) of this clause
(d)) at the record date therefor (the “Current Market Price”), or in case the
Company shall issue other securities convertible into or exchangeable for Common
Stock for a consideration per share of Common Stock deliverable upon conversion
or exchange thereof less than the Current Market Price; then the Conversion
Ratio in effect immediately prior thereto shall be adjusted retroactively as
provided below so that the Conversion Ratio therefor shall be equal to the price
determined by multiplying the Conversion Ratio at which shares of this Series
were theretofore convertible by a fraction of which the denominator shall be the
number of shares of Common Stock outstanding on the date of issuance of such
convertible or exchangeable securities, rights or warrants plus the number of
additional shares of Common Stock offered for subscription or purchase and of
which the numerator shall be the number of shares of Common Stock outstanding on
the date of issuance of such shares, convertible or exchangeable securities,
rights or warrants plus the number of additional shares of Common Stock which
the aggregate offering price of the number of shares of Common Stock so offered
would purchase at the Current Market Price per share of Common Stock (as
determined in accordance with the provisions of subclause (iv) of this clause
(d). Such adjustment shall be made whenever such convertible or
exchangeable securities rights or warrants are issued, and shall become
effective retroactively immediately after the record date for the determination
of stockholders entitled to receive such securities. However upon the
expiration of any right or warrant to purchase Common Stock the issuance of
which resulted in an adjustment in the Conversion Ratio pursuant to this
subclause (ii), if any such right or warrant shall expire and shall not have
been exercised, the Conversion Ratio shall be recomputed immediately upon such
expiration and effective immediately upon such expiration shall be increased to
the price it would have been (but reflecting any other adjustments to the
Conversion Ratio made pursuant to the provisions of this clause (d) after the
issuance of such rights or warrants) had the adjustment of the Conversion Ratio
made upon the issuance of such rights or warrants been made on the basis of
offering for subscription or purchase only that number of shares of Common Stock
actually purchased upon the exercise of such rights or warrants actually
exercised.
(iii)
In case the Company shall distribute to all holders of its Common Stock
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) shares of capital
stock (other than Common Stock), evidences of its indebtedness or assets
(excluding cash dividends) or rights to subscribe (excluding those referred to
in subclause (ii) of this clause (d)), then in each such case the number of
shares of Common Stock into which each share of this Series shall thereafter be
convertible shall be determined by multiplying the number of shares of Common
Stock into which such share of this Series was theretofore convertible by a
fraction of which the numerator shall be the number of outstanding shares of
Common Stock multiplied by the Current Market Price per share of Common Stock
(as determined in accordance with the provisions of subclause (iv) of this
clause (d)) on the date of such distribution and of which the denominator shall
be the product of the number of outstanding shares of Common Stock and the
Current Market Price per share of Common Stock, less the aggregate fair market
value (as determined by the Board of Directors of the Company, whose
determination shall be conclusive, and described in a statement filed with the
transfer agent for the shares of this Series) of the capital stock, assets or
evidences of indebtedness so distributed or of such subscription
rights. Such adjustment shall be made whenever any such distribution
is made, and shall become effective retroactively immediately after the record
date for the determination of stockholders entitled to receive such
distribution.
(iv)
For the purpose of any computation under subclause (ii) and (iii) of this clause
(d), the Current Market Price per share of Common Stock at any date shall be
deemed to be the average Sale Price for the thirty consecutive trading days
commencing forty-five trading days before the day in question. As
used herein, “Sale Price” means the closing sales price of the Common Stock (or
if no sale price is reported, the average of the high and low bid prices) as
reported by the principal national or regional stock exchange on which the
Common Stock is listed or, if the Common Stock is not listed on a national or
regional stock exchange, as reported by national Association of Securities
Dealers Automated Quotation System and if not so reported then as reported by
the Electronic Bulletin Board or the National Quotation Bureau
Incorporated.
(v)
No adjustment in the Conversion Ratio shall be required unless such adjustment
would require an increase of at least 1% in the price then in effect; provided,
however, that any adjustments which by reason of this subclause (v) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this paragraph 8 shall
be made to the nearest cent.
(vi)
In the event that, at any time as a result of an adjustment made pursuant to
subclause (i) or subclause (iii) of this clause (d), the holder of any share of
this Series thereafter surrendered for conversion shall become entitled to
receive any shares of the Company other than shares of the Common Stock,
thereafter the number of such other shares so receivable upon conversion of any
share of this Series shall be subject to adjustment from time to time in a
manner and on the terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in subclauses (i) through (v) of this
clause (d), and the other provisions of this clause (d) with respect to the
Common Stock shall apply on like terms to any such other shares.
(vii)
Whenever the conversion rate is adjusted, as herein provided, the Company shall
promptly file with the transfer agent for this Series, a certificate of an
officer of the Company setting forth the conversion rate after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and a
computation thereof. Such certificate shall be conclusive evidence of
the correctness of such adjustment. The Company shall promptly cause
a notice of the adjusted conversion rate to be mailed to each registered holder
of shares of this Series.
(d)
If any of the following events occur, namely (i) any reclassification or change
(other than a combination of reclassification into a smaller number of shares)
of outstanding shares of Common Stock issuable upon conversion of shares of this
Series (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision) or (ii) any
consolidation or merger to which the Company is a party (other than a
consolidation or merger to which the Company is the continuing corporation and
which does not result in any classification of, or change (other than a change
in par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision) in, outstanding shares of Common Stock);
then the Company or such successor, as the case may be, shall provide in its
Certificate of Incorporation that each share of this Series shall be convertible
into the kind and amount of shares of stock and other securities or property
receivable upon such reclassification, change, consolidation or merger by a
holder of the number of shares of Common Stock issuable upon conversion of each
such share of this Series immediately prior to such reclassification, change,
consolidation or merger. Such Certificate of Incorporation shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in clause (d). The
Company shall cause notice of the execution of any such event contemplated by
this paragraph to be mailed to each holder of shares of this Series As soon as
practicable.
The
above provisions of this clause (d) shall similarly apply to successive
reclassifications, consolidations and mergers.
(e) By
duly adopted resolution of its board of directors, the Company at any time may
increase the Conversion Ratio, temporarily or otherwise, by any amount, but in
no event shall such Conversion Ratio require the issuance of Common Stock for
less than the par value of the Common Stock at the time such reduction is
made.
Whenever
the Conversion Ratio is increased pursuant to this subclause (e), the Company
shall mail to the holders a notice of the increased Conversion
Ratio. The notice shall state the increased Conversion Ratio and the
period it will be in effect.
An
increase in the Conversion Ratio does not change or adjust the Conversion Ratio
otherwise in effect for purposes of subclauses (d) and (e) of this paragraph
8.
9. Protective
Provisions.
(a)
Reservation of Shares;
Transfer Taxes; Etc. The Corporation shall at all times serve
and keep available, out of its authorized and unissued stock, solely for the
purpose of effecting the conversion of the Convertible Preferred Stock, such
number of shares of its Common Stock free of preemptive rights as shall from
time to time be sufficient to effect the conversion of all shares of Convertible
Preferred Stock from time to time outstanding. The Corporation shall
from time to time, in accordance with the laws of the State of Nevada, increase
the authorized number of shares of Common Stock if at any time the number of
shares of Common Stock not outstanding shall not be sufficient to permit the
conversion of all the then outstanding shares of Convertible Preferred
Stock.
If any shares of Common Stock required
to be reserved for purposes of conversion of the Convertible Preferred Stock
hereunder require registration with or approval of any governmental authority
under any Federal or State law before such shares may be issued upon conversion,
the Corporation will in good faith and as expeditiously as possible endeavor to
cause such shares to be duly registered or approved, as the case may
be. If the Common Stock is listed on the New York Stock Exchange or
any other national securities exchange, the Corporation will, if permitted by
the rules of such exchange, list and keep listed on such exchange, upon official
notice of issuance, all shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock.
The
Corporation will pay any and all issue or other taxes that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of the
Convertible Preferred Stock. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue or delivery of Common Stock (or other securities or assets) in a
name other than that which the shares of Convertible Preferred Stock so
converted were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of such tax or has established, to the satisfaction of the Corporation,
that such tax has been paid.
(b)
Class Voting
Rights. So long as the Convertible Preferred Stock is
outstanding, the Corporation shall not, without the affirmative vote or consent
of the holders of at least a majority of all outstanding Convertible Preferred
Stock voting separately as a class, (i) Amend, alter or repeal (by merger or
otherwise) any provision of the Articles of Incorporation or the By-Laws of the
Corporation, as amended, so as adversely to affect the relative rights,
preferences, qualifications, limitations or restrictions of the Convertible
Preferred Stock, (ii) authorize or issue, or increase the authorized amount of,
any additional class or series of stock, or any security convertible into stock
of such class or series, ranking prior to the Convertible Preferred Stock in
respect of the payment of dividends or upon liquidation, dissolution or winding
up of the Corporation or (iii) effect any reclassification of the Convertible
Preferred Stock. A class vote on the part of the Convertible
Preferred Stock shall, without limitation, specifically not be deemed to be
required (except as otherwise required by law or resolution of the Corporation’s
Board of Directors) in connection with: (a) the authorization, issuance or
increase in the authorized amount of any shares of any other class or series of
stock which ranks junior to, or on a parity with, the Convertible Preferred
Stock in respect of the payment of dividends and distributions upon liquidation,
dissolution or winding up of the Corporation; or (b) the authorization, issuance
or increase in the amount of any bonds, mortgages, debentures or other
obligations of the Corporation.
The affirmative vote or consent of the
holders of a majority of the outstanding Convertible Preferred Stock, voting or
consenting separately as a class, shall be required to (a) authorize any sale,
lease or conveyance of all or substantially all of the assets of the
Corporation, or (b) approve any merger, consolidation or compulsory share
exchange of the Corporation with or into any other person unless (i) the terms
of such merger, consolidation or compulsory share exchange do not provide for a
change in the terms of the Convertible Preferred Stock and (ii) the Convertible
Preferred Stock is, after such merger, consolidation or compulsory share
exchange on a parity with or prior to any other class or series of capital stock
authorized by the surviving corporation as to dividends and upon liquidation,
dissolution or winding up other than any class or series of stock of the
Corporation prior to the Convertible Preferred Stock as may have been created
with the affirmative vote or consent of the holders of at least 66-2/3% of the
Convertible Preferred Stock (or other than a class or series into which such
prior stock is converted as a result of such merger, consolidation or share
exchange).
10. Outstanding
Shares. For purposes of these Articles, all shares of
Convertible Preferred Stock shall be deemed outstanding except (i) from the date
of surrender of certificates representing shares of Convertible Preferred Stock,
all shares of Convertible Preferred Stock converted into Common Stock; (ii) the
effective date of a recapitalization referred to in clause 8(c), and (iii) from
the date of registration of transfer, all shares of Convertible Preferred Stock
held of record by the Corporation or any subsidiary of the
Corporation.
11. Certain
Definitions. As used in these Articles, the following terms
shall have the following respective meanings:
“Affiliate” of any specified
person means any other person directly or indirectly controlling or controlled
by or under common control with such specified person. For purposes
of this definition, “control” when used with respect to any person means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities or otherwise; and
the term “controlling” and “controlled” having meanings correlative to the
foregoing.
“Common Shares” shall mean any
stock of the Company which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which is not subject to redemption
by the Company. However, Common Shares issuable upon conversion of
shares of this series shall include only shares of the class designated as
common Shares as of the original date of issuance of shares of this Series, or
shares of the Company of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from such reclassifications bears to the total
number of shares of all classes resulting from all such
reclassifications.
ARTICLE
VI
PREEMPTIVE
RIGHTS
No
holder of any of the shares of any class or series of stock or of options,
warrants or other rights to purchase shares of any class or series of stock or
of other securities of the Corporation shall have any preemptive right to
purchase or subscribe for any unissued stock of any class or series, or any
unissued bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock or carrying any right to purchase
stock may be issued pursuant to resolution of the board of directors of the
Corporation to such persons, firms, corporations or associations, whether or not
holders thereof, and upon such terms as may be deemed advisable by the board of
directors in the exercise of its sole discretion.
ARTICLE
VII
REPURCHASE
OF SHARES
The
Corporation may from time to time, pursuant to authorization by the board of
directors of the Corporation and without action by the stockholders, purchase or
otherwise acquire shares of any class, bonds, debentures, notes, scrip,
warrants, obligations, evidences or indebtedness, or other securities of the
Corporation in such manner, upon such terms, and in such amounts as the board of
directors shall determine; subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
shares of the Corporation outstanding at the time of the purchase or acquisition
in question or as are imposed by law.
ARTICLE
VIII
MEETINGS
OF STOCKHOLDERS; CUMULATIVE VOTING
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A.
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No
action that is required or permitted to be taken by the stockholders of
the Corporation at any annual or special meeting of stockholders may be
effected by written consent of stockholders in lieu of a meeting of
stockholders, unless the action to be effected by written consent of
stockholders and the taking of such action by such written consent have
expressly been approved in advance by the board of directors of the
Corporation.
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B.
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Special
meeting of the stockholders of the Corporation for any purpose or purposes
may be called at any time by the board of directors of the Corporation, or
by a committee of the board of directors which has been duly designated by
the board of directors and whose powers and authorities, as provided in a
resolution of the board of directors or in the bylaws of the Corporation,
include the power and authority to call such meetings but such special
meetings may not be called by another person or
persons.
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C.
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There
shall be no cumulative voting by stockholders of any class or series in
the election of directors of the
Corporation.
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D.
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Meetings
of stockholders may be held at such place as the bylaws may
provide.
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ARTICLE
IX
NOTICE
FOR NOMINATIONS AND PROPOSALS
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A.
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Nominations
for the election of directors and proposals for any new business to be
taken up at any annual or special meeting of stockholders may be made by
the board of directors of the Corporation or by any stockholder of the
Corporation entitled to vote generally in the election of directors. In
order for a stockholder of the Corporation to make any such nominations
and/or proposals at an annual meeting or such proposals at a special
meeting, he or she shall give notice thereof in writing, delivered or
mailed by first class United States mail, postage prepaid, to the
Secretary of the Corporation of not less than thirty days or more than
sixty days prior to any such meeting; provided, however, that if less than
forty days' notice of the meeting is given to stockholders, such written
notice shall be delivered or mailed, as prescribed, to the Secretary of
the Corporation not later than the close of the tenth day following the
day on which notice of the meeting was mailed to stockholders. Each such
notice given by a stockholder with respect to nominations for the election
of directors shall set forth (1) the name, age, business address and, if
known, residence address of each nominee proposed in such notice, (2) the
principal occupation or employment of each such nominee, and (3) the
number of shares of stock of the Corporation which are beneficially owned
by each such nominee. In addition, the stockholder making such nomination
shall promptly provide any other information reasonably requested by the
Corporation.
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B.
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Each
such notice given by a stockholder to the Secretary with respect to
business proposals to bring before a meeting shall set forth in writing as
to each matter: (1) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at
the meeting; (2) the name and address, as they appear on the Corporation's
books, of the stockholder proposing such business; (3) the class and
number of shares of the Corporation which are beneficially owned by the
stockholder; and (4) any material interest of the stockholder in such
business. Notwithstanding anything in these Articles to the contrary, no
business shall be conducted at the meeting except in accordance with the
procedures set forth in this
Article.
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C.
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The
Chairman of the annual or special meeting of stockholders may, if the
facts warrant, determine and declare to such meeting that a nomination or
proposal was not made in accordance with the foregoing procedure, and, if
he should so determine, he shall so declare to the meeting and the
defective nomination or proposal shall be disregarded and laid over for
action at the next succeeding adjourned, special or annual meeting of the
stockholders taking place thirty days or more thereafter. This provision
shall not require the holding of any adjourned or special meeting of
stockholders for the purpose of considering such defective nomination or
proposal.
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ARTICLE
X
DIRECTORS
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A.
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Initial Board of
Directors. The initial board of directors shall consist
of one person, who shall serve until the initial meeting of directors and
the election of his replacement. The initial director shall
be:
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William
L. Sklar 12000 Westheimer Rd Ste 340, Houston, TX
77077-6531
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B.
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Number;
Vacancies. The number of directors of the Corporation
shall be such number, not less than one nor more than 15 (exclusive of
directors, if any, to be elected by holders of preferred stock of the
Corporation), as shall be provided from time to time in a resolution
adopted by the board of directors, provided that no decrease in the number
of directors shall have the effect of shortening the term of any incumbent
director, and provided further that no action shall be taken to decrease
or increase the number of directors from time to time unless at least
two-thirds of the directors then in office shall concur in said
action. Exclusive of directors, if any, elected by holders of
preferred stock, vacancies in the board of directors of the Corporation,
however caused, and newly created directorships shall be filled by a vote
of two-thirds of the directors then in office, whether or not a quorum,
and any director so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of the class to which the
director has been chosen expires and when the director's successor is
elected and qualified. The board of directors shall be classified in
accordance with the provisions of Section B of this Article
X.
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C.
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Classified
Board. The board of directors of the Corporation (other
than directors which may be elected by the holders of preferred stock)
shall be divided into three classes of directors which shall be designated
Class I, Class II and Class III. The members of each class shall be
elected for a term of three years and until their successors are elected
and qualified. Such classes shall be as nearly equal in number as the then
total number of directors constituting the entire board of directors shall
permit, exclusive of directors, if any, elected by holders of preferred
stock, with the terms of office of all members of one class expiring each
year. Should the number of directors not be equally divisible by three,
the excess director or directors shall be assigned to Classes I or II as
follows: (1) if there shall be an excess of one directorship over the
number equally divisible by three, such extra directorship shall be
classified in Class I; and (2) if there be an excess of two directorships
over a number equally divisible by three, one shall be classified in Class
I and the other in Class II. At the first meeting of the board of
directors of the Corporation, directors of Class I shall be elected to
hold office for a term expiring at the first annual meeting of
stockholders, directors of Class II shall be elected to hold office for a
term expiring at the second succeeding annual meeting of stockholders and
directors of Class III shall be elected to hold office for a term expiring
at the third succeeding annual meeting thereafter. Thereafter, at each
succeeding annual meeting, directors of each class shall be elected for
three-year terms. Notwithstanding the foregoing, the director whose term
shall expire at any annual meeting shall continue to serve until such time
as his successor shall have been duly elected and shall have qualified
unless his position on the board of directors shall have been abolished by
action taken to reduce the size of the board of directors prior to said
meeting.
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D.
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Increase and Reduction in
Directors. Should the number of directors of the
Corporation be reduced, the directorship(s) eliminated shall be allocated
among classes as appropriate so that the number of directors in each class
is as specified in the position(s) to be abolished. Notwithstanding the
foregoing, no decrease in the number of directors shall have the effect of
shortening the term of any incumbent director. Should the
number of directors of the Corporation be increased, other than directors
which may be elected by the holders of preferred stock, the additional
directorships shall be allocated among classes as appropriate so that the
number of directors in each class is as specified in the immediately
preceding paragraph.
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E.
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Directors Elected by Preferred
Stockholders. Whenever the holders of any one or more
series of preferred stock of the Corporation shall have the right, voting
separately as a class, to elect one or more directors of the Corporation,
the board of directors shall include said directors so elected in addition
to the number of directors fixed as provided in this Article
X. Notwithstanding the foregoing, and except as otherwise may
be required by law, whenever the holders of any one or more series of
preferred stock of the Corporation elect one or more directors of the
Corporation, the terms of the director or directors elected by such
holders shall expire at the next succeeding annual meeting of
stockholders.
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F.
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In
furtherance, but not in limitation of the powers conferred by statute, the
board of directors is expressly authorized to do the
following:
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(a)
Designate one (1) or more committees, each committee to consist of one or more
of the directors of the Corporation and such number of natural persons who are
not directors as the board of directors shall designate, which to the extent
provided in the Resolution, or in the by-laws of the Corporation, shall have and
may exercise the powers of the board of directors in the management of the
business and affairs of the Corporation.
(b) As provided by Nevada Revised
Statutes 78.140, without repeating the section in full here, the same is adopted
and no contract or other transaction between this Corporation and any of its
officers, agents or directors shall be deemed void or voidable solely for that
reason. The balance of the provisions of the code section cited, as
it now exists, allowing such transactions, is hereby incorporated into this
Article as though more fully set forth, and such Article shall be read and
interpreted to provide the greatest latitude in its application.
(c) As provided by Nevada Revised
Statutes 78.207, without repeating the section in full here, the board of
directors shall have the authority to change the number of shares of any class
or series, if any, of authorized stock by increasing or decreasing the number of
authorized shares of the class or series and correspondingly increasing or
decreasing the number of issued and outstanding shares of the same class or
series held by each stockholder of record at the effective date and time of the
change by a resolution adopted by the board of directors, without obtaining the
approval of the stockholders.
(d) If a proposed increase or decrease
in the number of issued and outstanding shares of any class or series would
adversely alter or change any preference or any relative or other right given to
any other class or series of outstanding shares, then the decrease must be
approved by the vote, in addition to any vote required, of the holders of shares
representing a majority of the voting power of each class or series whose
preference or rights are adversely affected by the increase or decrease,
regardless of limitations or restrictions on the voting power
thereof. The increase or decrease does not have to be approved by the
vote of the holders of shares representing a majority of the voting power in
each class or series whose preference or rights are not adversely affected by
the increase or decrease.
(e) Special meetings of the
stockholders may be called only by the board of directors or a committee of the
board of directors that is delegated the power to call special meetings by the
board of directors.
(f) Change the name of the
Corporation at any time and from time to time to any name authorized by Nevada
Revised Statutes 78.039.
ARTICLE
XI
REMOVAL
OF DIRECTORS
Notwithstanding
any other provision of these Articles or the bylaws of the Corporation, any
director or all the directors of a single class (but not the entire board of
directors) of the Corporation may be removed, at any time, but only for cause
and only by the affirmative vote of the holders of at least 75% of the voting
power of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the stockholders called for that
purpose. Notwithstanding the foregoing, whenever the holders of any
one or more series of preferred stock of the Corporation shall have the right,
voting separately as a class, to elect one or more directors of the Corporation,
the preceding provisions of this Article XI shall not apply with respect to the
director or directors elected by such holders of preferred stock.
ARTICLE
XII
ACQUISITION
OF CAPITAL STOCK
A.
Definitions. For the
purpose of this Article:
(1)
The term “Act” shall mean the Securities Exchange Act of 1934, as amended, and
any successor statute.
(2)
The term “acting in concert” shall mean (i) knowing participation in a joint
activity or conscious parallel action towards a common goal whether or not
pursuant to an express agreement, and (ii) a combination or pooling of voting or
other interest in the Corporation's outstanding shares of capitol stock for a
common purpose, pursuant to any contract, understanding, relationship, agreement
or other arrangement, whether written or otherwise.
(3)
The term “acquire,” “acquisition” or “acquiring” with respect to the acquisition
of any security of the Corporation shall refer to the acquisition of such
security by any means whatsoever, including without limitation, an acquisition
of such security by gift, by operation of law, by will or by intestacy, whether
voluntarily or involuntarily.
(4)
The term “Code” means the Internal Revenue Code of 1986, as amended, and any
successor statute.
(5)
The term “Common Stock” means all Common Stock of the Corporation and any other
securities issued by the Corporation which are treated as stock for purposes of
Section 382 of the Code.
(6)
The term “Fair Market Value” of the Common Stock shall mean the average of the
daily closing prices of the Common Stock for 15 consecutive trading days
commencing 20 trading days before the date of such computation. The closing
price is the last reported sale price on the principal securities exchange on
which the Common Stock is listed or, if the Common Stock is not listed on any
national securities exchange, the NASDAQ National Marked System, or, if the
Common Stock is not designated for trading on the NASDAQ National Market System,
the average of the closing bid and asked prices as reported on NASDAQ or, if not
so reported, as furnished by the National Quotation Bureau Incorporated. In the
absence of such a quotation, the Corporation shall determine the current market
price on a reasonable and appropriate basis of the average of the daily closing
prices for 15 consecutive trading days commencing 20 trading days before the
date of such computation.
(7)
The term “own,” “owing,” “ownership” or “owning” refer to the ownership of
securities within the meaning of Section 382 of the Code after taking into
account the attribution rules of Section 382(l)(3) of the Code and the
regulations promulgated hereunder.
(8)
The term “Person” shall mean any individual, firm, corporation, partnership,
joint venture or other entity and shall include any group composed of such
person and any other person with whom such person or any Affiliate or Associate
(as those terms are defined in Rule 12b-2 of the General Rules and Regulations
under the Act) of such person has any agreement, arrangement or understanding,
directly or indirectly, for the purposes of acquiring, holding, voting or
disposing of Common Stock, and any other person who is a member of such
group.
(9)
The term “Transfer Agent” shall mean the transfer agent with respect to the
Common Stock nominated and appointed by the board of directors from time to
time.
B.
Acquisition of Control
Shares.
(1)
If, at any time during the ten years from the effective date of these Articles,
any Person shall acquire the beneficial ownership (as determined pursuant to
Rules 13d-3 and 13d-5 under the Act) of more than 20% of any class of Common
Stock, then the record holders of Common Stock beneficially owned by such
acquiring Person shall have only the voting rights set forth in this paragraph B
on any matter requiring their vote or consent. With respect to each vote in
excess of 20% of the voting power of the outstanding shares of Common Stock
which such record holders would otherwise be entitled to cast without giving
effect to this paragraph B, the record holders in the aggregate shall be
entitled to cast only one-hundredth of a vote. A Person who is a record owner of
shares of Common Stock that are beneficially owned simultaneously by more than
one person shall have, with respect to such shares, the right to cast the least
number of votes that such person would be entitled to cast under this paragraph
B by virtue of such shares being so beneficially owned by any of such acquiring
Persons. The effect of the reduction in voting power required by this paragraph
B shall be given effect in determination the presence of a quorum for purposes
of convening a meeting of the stockholders of the Corporation.
(2)
The limitation on voting rights prescribed by this paragraph B shall terminate
and be of no force and effect as of the earliest to occur of: (i) the date that
any person becomes the beneficial owner of shares of stock representing at least
75% of the total number of votes entitled to be cast in respect of all
outstanding shares of stock, before giving effect to the reduction in votes
prescribed by this paragraph B; or (ii) the date (the “Reference Date”) one day
prior to the date on which, as a result of such limitation of voting rights, the
Common Stock will be delisted from any exchange (including by ceasing to be
temporarily or provisionally authorized for listing with) the New York Stock
Exchange (the “NYSE”) or the American Stock Exchange (the “AMEX”), or be no
longer authorized for inclusion (including by ceasing to be provisionally or
temporarily authorized for inclusion) on the National Association of Securities
Dealers, Inc. Automated Quotation System/National Market System (“NASDAQ/NMS”);
provided, however, that (a) such termination shall not occur until the earlier
of (x) the 90th day after the Reference Date or (y) the first day on or after a
Reference Date that there is not pending a proceeding under the rules of the
NYSE, the AMEX or the NASDAQ/NMS or any other administrative or judicial
proceeding challenging such delisting or removal of authorization of the Common
Stock, an application for listing of the Common stock with the NYSE or the AMEX
or for authorization for the Common Stock to be including on
the NASDAQ/NMS, or an appeal with respect to any such application, and (b) such
termination shall not occur by virtue of such delisting or lack of authorization
if on or prior to the earlier of the 90th day after the Reference Date or the
day on which no proceeding, application or appeal of the type described in (y)
above is pending, the Common Stock is approved for listing or continued listing
on the NYSE or the AMEX or authorized for inclusion or continued inclusion on
the NASDAQ/NMS (including any such approval or authorization which is temporary
or provisional). Nothing contained herein shall be construed so as to prevent
the Common Stock from continuing to be listed with the NYSE or AMEX or
continuing to be authorized for inclusion on the NASDAQ/NMS in the event that
the NYSE, AMEX or NASDAQ/NMS, as the case may be, adopts a rule or is governed
by an order, decree, ruling or regulation of the Securities and Exchange
Commission which provides in whole or in part that companies having Common Stock
with differential voting rights listed on the NYSE or the Amex or authorized for
inclusion on the NASDAQ/NMS may continue to be so listed or
included.
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C.
Exceptions. The
restrictions contained in this Article XII shall not apply to (1) any
underwriter or member of an underwriting or selling group involving a
public sale or resale of securities of the Corporation or a subsidiary
thereof; provided, however, that upon completion of the sale or resale of
such securities, no such underwriter or member of such selling group is a
beneficial owner of more than 4.9% of any class of equity security of the
Corporation, (2) any revocable proxy granted pursuant to a proxy
solicitation in compliance with section 14 of the Act by a stockholder of
the Corporation or (3) any employee benefit plans of the Corporation. In
addition, the Continuing Directors of the Corporation, the officers and
employees of the Corporation and its subsidiaries, the directors of
subsidiaries of the Corporation, the employee benefit plans of the
Corporation and its subsidiaries, entities organized or established by the
Corporation or any subsidiary thereof pursuant to the terms of such plans
and trustees and fiduciaries with respect to such plans acting in such
capacity shall not be deemed to be a group with respect to their
beneficial ownership of voting stock of the Corporation solely by virtue
of their being directors, officers or employees of the Corporation or a
subsidiary thereof or by virtue of the Continuing Directors of the
Corporation, the officers and employees of the Corporation and its
subsidiaries and the directors of subsidiaries of the Corporation being
fiduciaries or beneficiaries of an employee benefit plan of the
Corporation or a subsidiary of the Corporation. Notwithstanding the
foregoing, no director, officer or employee of the Corporation or any of
its subsidiaries or group of any of them shall be exempt from the
provisions of this Article XII should any such person or group become a
beneficial owner of more than 20% of any class of equity security of the
Corporation.
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D.
Construction. A
majority of the Continuing Directors, as defined in Article XIII, shall
have the power to construe and apply the provisions of paragraphs B, C and
D of this Article XII and to make all determinations necessary or
desirable to implement such provisions, including but not limited to
matters with respect to (1) the number of shares beneficially owned by any
person, (2) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in the definition
of beneficial ownership, (3) the application of any other definition or
operative provision of this Article XII to the given facts or (4) any
other matter relating to the applicability or effect of paragraphs B, C
and D of this Article XII. Any constructions, applications, or
determinations made by the Continuing Directors pursuant to paragraphs B,
C and D of this Article XII in good faith and on the basis of such
information and assistance as was then reasonably available for such
purpose shall be conclusive and binding upon the Corporation and its
stockholders.
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E.
Partial
Invalidity. If any provision of this Article XII or any application
of any such provision is determined to be invalid by any federal or state
court having jurisdiction over the issues, the validity 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.
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ARTICLE
XIII
APPROVAL
OF CERTAIN BUSINESS COMBINATIONS
The
stockholder vote required to approve Business Combinations (as hereinafter
defined) shall be as set forth in this section.
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A.
(1) Except as otherwise expressly provided in this Article XIII, and in
addition to any other vote required by law, the affirmative vote required
by law, the affirmative vote of the holders of (i) at least 75% of the
voting power of the outstanding shares entitled to vote thereon (and, if
any class or series of shares is entitled to vote thereon separately the
affirmative vote of the holders of at least 75% of the outstanding shares
of each such class or series), and (ii) at least a majority of the
outstanding shares entitled to vote thereon, not including shares deemed
beneficially owned by a Related Person (as hereinafter defined), shall be
required in order to authorize (a) any merger or consolidation of the
Corporation or a subsidiary of the Corporation with or into a Related
person (as hereinafter defined); (b) any sale, lease, exchange, transfer
or other disposition, including without limitation, a mortgage or pledge,
of all or any Substantial Part (as hereinafter defined) of the assets of
the Corporation (including without limitation any voting securities of a
subsidiary) or of a subsidiary, to a Related Person; (c) any merger or
consolidation of a Related Person with or into the Corporation or a
subsidiary of the Corporation; (d) any sale, lease, exchange, transfer or
other disposition of all or any Substantial Part of the assets of a
Related Person to the Corporation or a subsidiary of the Corporation; (e)
the issuance of any securities of the Corporation or a subsidiary of the
Corporation to a Related Person other than on a pro rata basis to all
holders of capital stock of the Corporation of the same class or classes
held by the Related person, pursuant to a stock split, stock dividend or
distribution or warrants or rights, and other than in connection with the
exercise or conversion of securities exercisable for or convertible into
securities of the Corporation or any of its subsidiaries which securities
have been distributed pro rata to all holders of capital stock of the
Corporation; (f) the acquisition by the Corporation or a subsidiary of the
Corporation of any securities of a Related Person; (g) any
reclassification of the common stock of the Corporation, or any
recapitalization involving the common stock of the Corporation or any
similar transaction (whether or not with or into or otherwise involving a
Related Person) that has the effect directly or indirectly, of increasing
by more than 1% the proportionate share of the outstanding shares of any
class of equity or convertible securities of the Corporation or any
subsidiary that are directly or indirectly owned by any Related Person;
and (h) any agreement, contract or other arrangement providing for any of
the transactions described in this Article
XIII.
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(2)
Such affirmative vote shall be required notwithstanding any other provision of
these Articles, any provision of law, or any agreement with any regulatory
agency or national securities exchange which might otherwise permit a lesser
vote or no vote; provided, however, that in no instance shall the provisions of
this Article XIII require the vote of greater than 85% of the voting power of
the outstanding shares entitled to vote thereon for the approval of a Business
Combination.
(3)
The term “Business Combination” as used in this Article XIII shall mean any
transaction which is referred to in any one or more of subparagraphs A(1)(a)
through (h) above.
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B.
The provisions of paragraph A shall not be applicable to any particular
Business Combination, and such Business Combination shall require only
such affirmative vote as is required by any other provision of these
Articles, any provision of law, or any agreement with any regulatory
agency or national securities exchange, if the Business Combination shall
have been approved in advance by a two-thirds vote of the Continuing
Directors (as hereinafter defined; provided, however, that such approval
shall only be effective if obtained at a meeting at which a continuing
Director Quorum (as hereinafter defined) is
present.
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C.
For the purposes of this Article XIII the following definitions
apply:
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(1)
The term “Related Person” shall mean and include (i) any individual,
corporation, partnership or other person or entity which together with its
“affiliates” or “associates” (as those terms are defined in the Act)
“beneficially owns” (as that there is defined in the Act) in the aggregate 10%
or more of the outstanding shares of the common stock of the Corporation; and
(ii) any “affiliate” or “associate” (as those terms are defined in the Act) of
any such individual, Corporation, partnership or other person or entity;
provided, however, that the term “Related Person” shall not include the
Corporation, any subsidiary of the Corporation, any employee benefit plan,
employee stock plan of the Corporation or of any subsidiary of the Corporation,
or any trust established by the Corporation in connection with the foregoing, or
any person or entity organized, appointed, established or holding shares of
capital stock of the Corporation for or pursuant to the terms of any such plan,
nor shall such term encompass shares of capital stock of the Corporation held by
any of the foregoing (whether or not held in a fiduciary capacity or otherwise).
Without limitation, any shares of the common stock of the Corporation which any
Related Person has the right to acquire pursuant to any agreement, or upon
exercise or conversion rights, warrants or options, or otherwise, shall be
deemed “beneficially owned” by such Related Person.
(2)
The term “Substantial Part” shall mean more than 25% of the total assets of the
entity at issue, as of the end of its most recent fiscal year ending prior to
the time the determination is made.
(3)
The term “Continuing Director” shall mean any member of the board of directors
of the Corporation who is unaffiliated with and who is not the Related Person
and was a member of the board prior to the time that the Related Person became a
Related Person, and any successor of a Continuing Director who is unaffiliated
with and who is not the Related Person and is recommended to succeed a
Continuing Director by a majority of Continuing Directors then on the board. (4)
The term “Continuing Director Quorum” shall mean two-thirds of the Continuing
Directors capable of exercising the powers conferred on them.
ARTICLE
XIV
EVALUATION
OF BUSINESS COMBINATIONS
In
connection with the exercise of its judgment in determining what is in the best
interests of the Corporation and of the stockholders, when evaluating a Business
Combination (as defined in Article XIII) or a tender or exchange offer, the
board of directors of the Corporation shall, in addition to considering the
adequacy of the amount to be paid in connection with any such transaction,
consider all of the following factors and any other factors which it deems
relevant; (A) the social and economic effects of the transaction on the
Corporation and its subsidiaries, employees and customers, creditors and other
elements of the communities in which the Corporation and its subsidiaries
operate or are located; (B) 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 and the possible effect of such
conditions upon the Corporation and its subsidiaries and the other elements of
the communities in which the Corporation and its subsidiaries operate or are
located; and (C) the competence, experience, and integrity of the acquiring
person or entity and its or their management.
ARTICLE
XV
INDEMNIFICATION
Any
person who was or is a party or is or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (whether or not by or in the right of
the Corporation) by reason of the fact that he is or was a director, officer,
incorporator, employee, or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, incorporator, employee,
partner, trustee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise (including an employee benefit plan), shall be
entitled to be indemnified by the Corporation to the full extent then permitted
by law against expenses (including counsel fees and disbursements), judgments,
fines (including excise taxes assessed on a person with respect to an employee
benefit plan), and amounts paid in settlement incurred by him in connection with
such action, suit, or proceeding and, if so requested, the Corporation shall
advance (within two business days of such request) any and all such expenses to
the person indemnified; provided, however, that (i) the foregoing obligation of
the Company shall not apply to a claim that was commenced by the person
indemnified without the prior approval of the Board of Directors. Such right of
indemnification shall inure whether or not the claim asserted is based on
matters which antedate the adoption of this Article XV. Such right of
indemnification shall continue as to a person who has ceased to be a director,
officer, incorporator, employee, partner, trustee, or agent and shall inure to
the benefit of the heirs and personal representatives of such a person. The
indemnification provided by this Article XV shall not be deemed exclusive of any
other rights which may be provided now or in the future under any provision
currently in effect or hereafter adopted of the bylaws, by any agreement, by
vote of stockholders, by resolution of disinterested directors, by provisions of
law, or otherwise.
ARTICLE
XVI
LIMITATIONS
ON DIRECTORS' LIABILITY
No
director or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for damages for breach of fiduciary duty as a
director or officer, except: (A) for acts or omissions that involve intentional
misconduct, fraud or a knowing violation of law; or (B) the payment of
distributions in violation of Nevada Revised Statutes Sec.78.300. If
the General Corporation law of the State of Nevada is amended after the date of
filing of these Articles to further eliminate or limit the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the General Corporation
Law of the State of Nevada, as so amended. Any repeal or modification of the
foregoing paragraph by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
ARTICLE
XVII
AMENDMENT
OF BYLAWS
In
furtherance and not in limitation of the powers conferred by statute, the board
of directors of the Corporation is expressly authorized to adopt, repeal, alter,
amend and rescind the bylaws of the Corporation by a vote of two-thirds of the
board of directors. Notwithstanding any other provision of these Articles or the
bylaws of the Corporation, and in addition to any affirmative vote required by
law (and notwithstanding the fact that some lesser percentage may be specified
by law), the bylaws shall be adopted, repealed, altered, amended or rescinded by
the stockholders of the Corporation only by the vote of the holders of not less
than 75% of the voting power of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class) cast at a meeting of the stockholders called for
that purpose (provided that notice of such proposed adoption, repeal,
alteration, amendment or rescission is included in the notice of such meeting),
or, as set forth above, by the board of directors.
ARTICLE
XVIII
AMENDMENT
OF ARTICLES OF INCORPORATION
Subject
to the provisions hereof, the Corporation reserves the right to repeal, alter,
amend or rescind any provision contained in these Articles in the manner now or
hereafter prescribed by law, and all rights conferred on stockholders herein are
granted subject to this reservation. Notwithstanding the foregoing at any time
and from time to time, the provisions set forth in Articles VIII, IX, X, XI,
XII, XIII, XIV, XV, XVI, XVII and this Article XVIII may be repealed, altered,
amended or rescinded in any respect only if the same is approved by the
affirmative vote of the holders of not less than 75% of the voting power of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as a single
class) cast at a meeting of the stockholders called for that purpose (provided
that notice of such proposed adoption, repeal, alteration, amendment or
rescission is included in the notice of such meeting).