prer14c.htm
SCHEDULE
14C/A
(Amendment
No. 3)
(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:
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3)
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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):
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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.
524 East
Weddell Drive
Sunnyvale,
CA 94089
Telephone
(408) 744-1331– Facsimile (408) 744-1711
NOTICE
OF ACTION TAKEN AND TO BE TAKEN PURSUANT TO THE WRITTEN
CONSENT
OF THE MAJORITY STOCKHOLDERS IN LIEU OF
A
SPECIAL MEETING OF THE STOCKHOLDERS
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”) that on ________, 2008 , our board of directors
and stockholders holding a majority of our voting shares will vote
in favor of the following resolutions:
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·
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A
reverse stock split of our common stock outstanding as of ____________
(the “Record Date”) on the basis of one post-split share for every thirty
(30) pre-split shares (the “Reverse Stock
Split”);
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·
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Reincorporation
in Nevada and change of our corporate name by merger with and into our
wholly-owned Nevada subsidiary, Arrayit Corporation;
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·
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The
Articles of Incorporation of our Nevada subsidiary will become the
Articles of Incorporation of the Company on the effective time of the
reincorporation and reverse split;
and
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·
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The
ratification of the amendments to our Series A Preferred Stock and Series
C Preferred Stock which is described in greater detail
below.
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WE
ARE NOT ASKING YOU FOR A PROXY
AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
The
actions have been approved by our board of directors and will be
approved by shareholders holding 2,926,786 shares of our Series A Preferred
Stock, which in aggregate can vote a total of 28,097,155 shares
of our voting stock and shareholders holding 100,000 shares of our Series C
Preferred Stock, which in aggregate can vote a total of 35,000,000 shares of our
voting stock, representing an aggregate of 63,097,146 voting shares or 70.8% of
our total voting shares based on 89,096,378 voting shares outstanding (the
“Majority Shareholders”). The total of 89,096,378
voting shares outstanding represents 17,499,262 shares of common stock issued
and outstanding, which each vote one (1) share on shareholder matters, a
total of 3,697,611 shares of Series A Preferred Stock issued and
outstanding, which each vote 9.6 shares on shareholder matters, and a total
of 103,143 shares of our Series
C Preferred Stock issued and outstanding, which each vote 350 shares on
shareholder matters .
The
accompanying Information Statement is furnished pursuant to Section 14(c) of the
Securities Exchange Act of 1934, as amended , 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,
_____________________________________________
Rene’ A.
Schena, Chairman and Chief Executive Officer
November _____,
2008
TABLE
OF CONTENTS
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SUMMARY
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QUESTIONS
AND ANSWERS
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OUTSTANDING
SHARES AND VOTING RIGHTS AT ______________, 2008
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RECENT
CHANGE IN CONTROL OF THE COMPANY
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TELECHEM
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INFORMATION
REGARDING BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS, DIRECTORS AND
MANAGEMENT
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REVERSE
STOCK SPLIT
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REINCORPORATION
IN NEVADA
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Principal
Reasons for Reincorporation
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Principal
Features of the Reincorporation
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How
to Exchange Company Certificates for Arrayit
Certificates
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Capitalization
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Significant
Differences Between the Corporation Laws of Nevada and
Delaw are
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DEFENSES
AGAINST HOSTILE TAKEOVERS
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APPRAISAL
RIGHTS
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CHANGE
OF CORPORATE NAME
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ADDITIONAL
INFORMATION
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SUMMARY
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OVERVIEW
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Effective
February 21, 2008, TeleChem International, Inc., a Delaware corporation,
became a wholly owned, Nevada, subsidiary of the Company by merger into
the Company’s wholly owned Nevada subsidiary. The three
transactions summarized below simultaneously will: (i)
reincorporate the Company from Delaware to Nevada, (ii) consolidate
(“reverse split”) the outstanding shares of the Company’s common
stock in the ratio of 1 new share for each 30 old shares, without
affecting the number of outstanding shares of Series A Preferred Stock or
Series C Preferred Stock ; and (iii) change the corporate name of the
Company to Arrayit Corporation
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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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METHOD:
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Merger
of the Company with and into our wholly-owned Nevada subsidiary, Arrayit
Corporation. See “Reincorporation in Nevada - Principal
Features of the 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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EXCHANGE
RATIOS:
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One
(1) share of Arrayit common stock will be issued for each 30 of our shares
of common stock held as of the record date and cash payment for each
fractional share of Arrayit common stock that would otherwise be
issued. See “Reincorporation in Nevada – Principal Features of
the Reincorporation.”
One
(1) share of Arrayit Series A Preferred Stock will be issued for each one
(1) share of our Series A Preferred Stock held as of the record
date. As a result of the Reverse Stock Split of our issued and
outstanding common stock, the conversion ratio of our Series A Preferred
Stock will be automatically reduced to 0.32 shares of common stock for
each one (1) share of Series A Preferred Stock converted, which conversion
ratio equals the prior conversion ratio, 9.6 divided by 30 in connection
with the Reverse Stock Split.
The
Company’s outstanding shares of Series C Preferred Stock will not be
affected by the reverse stock split and will instead convert into Series C
Preferred Stock of Arrayit upon the effective date of the reverse split,
with substantially similar rights as the Company’s Series C Preferred
Stock as amended.
See
“Reincorporation in Nevada – Principal Features of the
Reincorporation.”
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TRANSACTION:
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Change
corporate name to Arrayit Corporation
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PURPOSE:
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A
new corporate name to more accurately reflect the business of the
Company.
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METHOD:
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Merger
of the Company with and into our wholly-owned Nevada subsidiary, Arrayit
Corporation.
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RECORD
DATE:
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_________,
2008
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EFFECTIVE
DATE:
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_________,
2008
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ADDITIONAL
PROVISIONS:
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Exchange
of outstanding certificates representing shares of Company common stock
for certificates representing shares of Arrayit common
stock. See “Reincorporation in Nevada -
How to Exchange Company Certificates for Arrayit
Certificates.”
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TRANSACTION:
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Approval
of the Amendments to the Company’s Series A Preferred Stock and Series C
Preferred Stock.
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PURPOSE:
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To
clarify certain and amend certain matters included in the terms of such
preferred stock.
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METHOD:
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The
Company’s Majority Shareholders will approve the amendments to the
Company’s Series A and Series C Preferred Stock pursuant to a written
consent to action without
meeting.
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The
beneficial owners of approximately 70.8% of the total voting
shares of the Company’s capital stock entitled to vote on these matters
will approve the adoption of the Reverse Stock Split, the
Reincorporation, the New Articles, the amendments to the Series A Preferred
Stock and Series C Preferred Stock and the name change by a written
consent to action without meeting dated as of ___________,
2008. This Information Statement is furnished only to inform
stockholders of the Company of the above actions which will be taken by
the Majority Shareholders of the Company before such action can take
effect in accordance with the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).
Because
the consenting stockholders holding a majority of the voting rights of all of
the outstanding shares of capital stock will vote in favor of the
foregoing proposals by resolution on ____________, 2008, have sufficient
voting power to approve such proposals through their ownership of capital stock,
no other stockholder consents will be solicited in connection with this
Information Statement.
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 believes it is in
the best interests of the shareholders to utilize the written consent of
stockholders holding a majority of the voting power of the Company, rather
than holding a special meeting of shareholders.
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.
This
Information Statement is first being sent to stockholders on or about __________
___, 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 into a Nevada
corporation . 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 THE COMPANY 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 levied on our profitable
operation.
Q: WHY
ISN'T THE COMPANY HOLDING A MEETING OF STOCKHOLDERS TO APPROVE THE
REINCORPORATION?
A: The board of
directors has already approved the reincorporation plan and will receive
the written consent of our shareholders who are officers and
directors, and the Majority Shareholders which represent a majority of
our outstanding voting shares . 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 already have received confirmation that a majority of our
voting shares will approve the transactions discussed herein , a
formal shareholders 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 the Company with and into
our wholly owned subsidiary, Arrayit Corporation, a Nevada corporation
(“Arrayit”). One fully paid and non-assessable share of Arrayit will
be issued for each 30 outstanding shares of our common stock. Our
Series A Preferred Stock and Series C Preferred Stock will not take part in the
reverse split, and as such, one fully paid and non-assessable share of Arrayit’s
Series A Preferred Stock and Series C Preferred Stock will be issued for each
one outstanding share of our Series A Preferred Stock and Series C Preferred
Stock that are held by our Series A Preferred Stock and Series C Preferred Stock
shareholders, respectively . In addition, cash will be paid for
any fractional share that would be issuable to any holder of our common stock
(at the equivalent of $_____ per share) as a result of the
reincorporation. Additionally, as a result of the Reverse Stock Split of
our issued and outstanding common stock, the conversion ratio of our Series A
Preferred Stock will be automatically reduced to 0.32 shares of common stock for
each one (1) share of Series A Preferred Stock converted, which conversion ratio
equals the prior conversion ratio, 9.6 divided by 30 in connection with the
Reverse Stock Split. The shares of the Company will cease
to trade on the over-the-counter bulletin board market and the
shares of Arrayit will begin trading in their place beginning on the effective
date of the reincorporation, under a new trading symbol and new CUSIP
number that has not yet been assigned. Other securities of the
Company, such as 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 Arrayit, adjusted in connection
with the Reverse Stock Split.
Q: HOW
WILL THE REINCORPORATION AFFECT THE NUMBER OF SHARES OF COMMON STOCK AND
PREFERRED STOCK WE ARE AUTHORIZED TO ISSUE?
A: Upon completion
of the reincorporation, the number of common shares we are authorized to
issue will increase from 100 million to 480 million and the number of preferred
shares we are authorized to issue will increase from 5 million to 20
million.
Q: AFTER
COMPLETION OF THE REINCORPORATION, REVERSE SPLIT AND REINCORPORATION, AND
CONVERSION OF ALL SHARES OF CONVERTIBLE STOCK AND OUTSTANDING DEBT, HOW MANY
SHARES WILL BE OUTSTANDING?
A: After
completion of the actions described in this Information Statement, the
17,499,262 outstanding shares of the Company’s common stock will convert
into 583,309 shares of Arrayit’s common stock (not including any fractional
shares of common stock purchased in connection with the Reverse Stock Split),
the 3,697,611 outstanding shares of Series A Preferred Stock will convert
into 3,697,611 outstanding shares of Arrayit’s Series A Preferred Stock, and
the 103,143 outstanding shares of the Company’s Series C Preferred Stock
will automatically convert into 103,143 shares of Arrayit’s Series C Preferred
Stock. The reincorporation will also trigger the forgiveness of a total of
$1,993,450 of principal outstanding debt of the Company along with various
accrued and unpaid interest, and the cancellation of 2,926,787 shares of Series
A Preferred Stock shares and the cancellation of 593,314 pre-Reverse Stock Split
shares (19,778 post Reverse Stock Split shares) of our common stock by
various unrelated shareholders pursuant to individual agreements between such
shareholders, the holders of the Company’s debt and the Company for the issuance
of 12,478,357 newly issued post-Reverse Stock Split shares of our common stock
(collectively the “Cancellations”). Therefore, subsequent to the
Reverse Stock Split and after the Cancellations , the total number of
outstanding shares of common stock the Company will have will be
13,041,888 (the 593,314 post-Reverse Stock Split shares minus the 19,778
cancelled common shares as a result of the Cancellations); the total number of
Series A Preferred Stock shares will be 770,824 shares (the 3,697,611
original shares minus the 2,926,787 cancelled Series A Preferred Stock
shares as a result of the Cancellations), and the total number of Series C
Preferred Stock shares outstanding will remain at 103,143
shares.
Q: HOW
WILL THE REINCORPORATION AFFECT OUR OWNERS, OFFICERS, DIRECTORS AND
EMPLOYEES?
A: Our
officers, directors and employees will become the officers, directors and
employees of Arrayit after the effective date of the
reincorporation. Arrayit will continue our business at the same
locations and with the same assets.
Q: HOW
WILL THE ACTIONS DESCRIBED HERE AFFECT MY SECURITIES AND PERCENTAGE OF
OWNERSHIP OF THE COMPANY?
A: After the
Telechem merger and before any of the actions described in this Information
Statement, the outstanding security holders of the Company’s
common stock represent 19.6% of the Company’s total voting shares, the
outstanding security holders of the Company’s Series A Preferred Stock represent
39.8% of the Company’s total voting shares, and the holders of the Company’s
Series C Preferred Stock represent 40.5% of the Company’s total voting
shares. Following the effective date of the reincorporation,
increase in authorized shares, name change, reverse split, and
Cancellations , subject only to insignificant differences relating to the
purchase of fractional shares, all of the Company’s current common
stockholders will hold in aggregate 26.4% of the Company’s total voting shares,
the Company’s Series A Preferred Stock shareholders will hold in aggregate
0.5% of the Company’s total voting shares, and the Company’s Series C Preferred
Stock shareholders will hold 73 .1% of the Company’s voting
shares.
Q: HOW
DOES THE REINCORPORATION, REVERSE SPLIT AND REINCORPORATION RELATE TO OUR MERGER
WITH TELECHEM?
A: The
actions described in this information statement are an integral part of the
reorganization and recapitalization of the Company in order to move forward as a
modern life sciences company incorporated in a more friendly corporate tax
jurisdiction, with an appropriate name and capital structure.
Q: HOW DO I EXCHANGE COMPANY
CERTIFICATES FOR CERTIFICATES OF ARRAYIT?
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, Arrayit will issue a new certificate
representing the number of whole shares of Arrayit 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 Arrayit.
Q: WHAT
HAPPENS IF I DO NOT SURRENDER MY COMPANY CERTIFICATES?
A: You
are not required to surrender certificates representing Company shares to
receive shares of Arrayit. Until you receive shares of Arrayit you
are entitled to receive notice of or vote at stockholder meetings and receive
dividends or other distributions on the shares of Arrayit.
Q: WHAT
IF I HAVE LOST MY COMPANY CERTIFICATES?
A: If
you have lost your Company 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. Arrayit
will pay all of the costs of reincorporation in Nevada, including distributing
this Information Statement and the cost of exchanging certificates representing
shares of the Company for certificates representing shares of Arrayit. 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 Arrayit 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.
OUTSTANDING
SHARES AND VOTING RIGHTS AT __________, 2008
As of
________, 2008, the record date for the consent to action
authorizing the actions described in this Information Statement
(the “Record Date”) the Company’s authorized capitalization
consisted of 100,000,000 shares of common stock, $.001 par value
per share, of which 17,499 ,262 shares were issued and outstanding,
and 5,000,000 shares of preferred stock, $.001 par value per
share , of which 1 ,000 shares had been designated as Series A
Preferred Stock, 100 ,000 had been designated as Series B Preferred
Stock, and 103,143 had been designated as Series C Preferred
Stock. A total of 3,697,611 shares of Series A Preferred
Stock, no shares of Series B Preferred Stock, and 103,143 shares
of Series C Preferred Stock were issued and outstanding as of the Record
Date . Each share of Series A Preferred Stock entitles its holder
to 9.6 votes (based upon the 9.6-to-1 conversion ratio) on each matter submitted
to the stockholders and each share of Series C Preferred Stock entitles its
holder to 350 votes on each matter submitted to the stockholders (based upon the
350-to-1 conversion ratio). 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. Therefore, as of the Record Date, the common stock
shareholders were able to vote 17,499,262 voting shares, the Series A Preferred
Stock shareholders were able to vote a total of 35,497,066 voting shares, and
the Series C Preferred Stock shareholders were able to vote 36,100,050 voting
shares, which in aggregate represented 89,096,378 total voting shares as of the
Record Date.
The
following table sets forth information regarding the beneficial ownership of our
common stock and preferred stock by the officers, directors and
shareholders holding beneficial ownership of greater than five percent
of the Company’s common stock:
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Name
and Address of Beneficial Owner
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Common
Stock
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Total
Voting Percentage of Common Stock
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Series
A Preferred Stock
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Total
Voting Percentage of Series A Preferred Stock
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Total
Shares The Series A Preferred Stock are Able to Vote
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Series
C Preferred Stock
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Total
Voting Percentage of Series C Preferred Stock
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Total
Shares The Series C Preferred Stock are Able to Vote
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Total
Voting Shares Based on All Voting Shares Outstanding
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Total
%
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Officers and
Directors
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Rena’
A Schena, Chief Executive Officer, Chief Financial Officer and
Director
524
East Weddell Drive
Sunnyvale,
California 94089
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0
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0.0%
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0
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0.00%
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0
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42,857
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41.6%
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14,999,950
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14,999,950
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16.8%
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Mark
Schena, Director
524
East Weddell Drive
Sunnyvale,
California 94089
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0
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0.0%
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0
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0.00%
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0
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14,286
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13.9%
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5,000,100
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5,000,100
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5.6%
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William
L. Sklar, Director
524
East Weddell Drive
Sunnyvale,
California 94089
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19,996
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(1)
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0.1%
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98,807
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2.67%
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948,543
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0
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0.0%
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0
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968,539
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1.1%
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Todd
Martinsky, Director
524
East Weddell Drive
Sunnyvale,
California 94089
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0
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0.0%
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0
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0.00%
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0
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28,571
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27.7%
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9,999,850
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9,999,850
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11.2%
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Paul
K. Haje
Director
of Advertising and Public Relations
524
East Weddell Drive
Sunnyvale,
California 94089
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0
|
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0.0%
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0
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0.00%
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0
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14,286
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13.9%
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5,000,100
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5,000,100
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5.6%
|
|
|
|
|
|
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|
|
|
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Greater Than 5%
Shareholders
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WV
Fiber, LLC (2)
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4,055,448
|
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23.2%
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0
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0.00%
|
0
|
0
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0.0%
|
0
|
4,055,448
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4.6%
|
|
Mashrua
Shipping & Transport Ltd. (3)
|
1,000,000
|
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5.7%
|
0
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0.00%
|
0
|
0
|
0.0%
|
0
|
1,000,000
|
1.1%
|
|
WEM
Equity Capital Investments, Ltd.
3111
Rosemary Park Lane
Houston,
Texas 77082(4)
|
71,946
|
(1)
|
0.4%
|
355,505
|
9.61%
|
3,412,851
|
0
|
0.0%
|
0
|
3,484,797
|
3.9%
|
|
Briarpatch,
Ltd.
2038
Albans,
Houston,
Texas 77005(5)
|
71,946
|
(1)
|
0.4%
|
355,505
|
9.61%
|
3,412,851
|
0
|
0.0%
|
0
|
3,484,797
|
3.9%
|
|
Donald
Sapaugh
12000
Westheimer
Suite
340
Houston,
Texas 77077
|
44,003
|
(1)
|
0.3%
|
217,432
|
5.88%
|
2,087,349
|
0
|
0.0%
|
0
|
2,131,352
|
2.4%
|
|
Hunter
Carr
12000
Westheimer
Suite
340
Houston,
Texas 77077
|
43,452
|
(1)
|
0.2%
|
214,707
|
5.81%
|
2,061,187
|
0
|
0.0%
|
0
|
2,104,639
|
2.4%
|
|
First
Sage Equity, Inc. (6)
227
Edgewood
Friendswood,
Texas 77546
|
50,137
|
(1)
|
0.3%
|
247,739
|
6.70%
|
2,378,293
|
0
|
0.0%
|
0
|
2,428,430
|
2.7%
|
|
Phillip
Johnson
12000
Westheimer
Suite
340
Houston,
Texas 77077
|
41,781
|
(1)
|
0.2%
|
206,449
|
5.58%
|
1,981,911
|
0
|
0.0%
|
0
|
2,023,691
|
2.3%
|
|
Jukka
Tolonen
|
40,151
|
(1)
|
0.2%
|
198,398
|
5.37%
|
1,904,616
|
0
|
0.0%
|
0
|
1,944,768
|
2.2%
|
|
Fairfield
Financing, Inc. (7)
221
West Exchange Ave. Suite 221
Ft.
Worth, Texas 76184
|
50,137
|
(1)
|
0.3%
|
247,739
|
6.70%
|
2,378,293
|
0
|
0.0%
|
0
|
2,428,430
|
2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
of the Officers and Directors as a Group (5 Persons)
|
19,996
|
|
0.1%
|
98,807
|
2.67%
|
948,543
|
100,000
|
97.0%
|
35,000,000
|
35,968,539
|
40.4%
|
The
table above does not include the potential conversion rights of any of the
Company’s outstanding convertible notes, as such note holders have agreed,
pursuant to the terms of privately negotiated agreements to sell such
outstanding notes, certain shares of common stock and Series A Preferred Stock
to certain individuals and entities, including certain of those individuals and
entities described above in connection with the Cancellations. A
requirement of the negotiation of the transactions contemplated in connection
with the Cancellations was that the ownership of the convertible notes would
rest in the name of the individuals and entities who agreed to purchase such
notes, Series A Preferred Stock and common stock and that the only transactions
which would be undertaken in connection with the extinguishment of the
convertible notes would be the Cancellations.
(1) Held
under the terms of a custodian agreement that grants exclusive voting,
dispositive and any other economic rights to the beneficial owners named in the
agreements and provides that no beneficial owner is affiliated with any other
beneficial owner and the beneficial owners are not acting and will not act as a
group.
(2)
The Company is not aware of the individual with investment authority over the
shares beneficially owned by WV Fiber, LLC, which entity is currently in
Bankruptcy.
(3)
The Company is not aware of the individual with investment authority over the
shares beneficially owned by Mashrua Shipping & Transport
Ltd.
(4) The
natural person with dispositive authority over securities of the company is
William E. McIlwain at the above address.
(5) The
natural person with dispositive authority over securities of the company is Brad
Fleming at the above address.
(6)
The natural person with dispositive authority over securities of the company is
Joe Wiley.
(7)
The natural person with dispositive authority over securities of the company is
O. Preston Smith.
RECENT
CHANGE IN CONTROL OF THE COMPANY
Effective
February 21, 2008, the Company completed the Plan and Agreement of Merger by and
among the Company, TeleChem International, Inc., the majority shareholders of
TeleChem, Endavo Media and Communications, Inc., a Delaware corporation and TCI
Acquisition Corp., a Nevada corporation, and wholly owned subsidiary of the
Company. Consummation of the merger did not require a vote of our
shareholders. The Company issued 103,143 shares of Series C Preferred
Stock to the shareholders of TeleChem on or about February 21,
2008 , in exchange for 100% of the equity interests of TeleChem resulting in
TeleChem becoming a wholly owned subsidiary of the
Company. The Series C Preferred Stock is convertible into
36,100, 050 shares of common stock a the option of the holder ,
after, but not before, the effective date of the reverse split described in this
Information Statement, and
only pursuant to the terms and conditions of the Series C Preferred Stock as
amended (as described below).
The
reincorporation will also trigger the forgiveness of a total
of $1,993, 450 of principal outstanding debt of the Company along with
various accrued and unpaid interest (totaling approximately $3,457,699 as of
September 30, 2008), and the cancellation of 2,926,786 Series A Preferred Stock
shares and the cancellation of 593,314 pre-Reverse Stock Split shares (19,778
post Reverse Stock Split) of our common stock by various unrelated shareholders
pursuant to individual agreements between such shareholders, the holders of the
Company’s debt and the Company for the issuance of 12,478,357 newly issued
post-Reverse Stock Split shares of our common stock (collectively the
“Cancellations”). Therefore, subsequent to the Reverse Stock Split
and after the Cancellations, the total number of outstanding shares of
common stock the Company will have will be 13,041,888 (the 593,314
post-Reverse Stock Split shares minus the 19,778 cancelled common shares as a
result of the Cancellations); the total number of Series A Preferred Stock
shares will be 770,824 shares (the 3,697,611 original shares minus the 2,926,787
cancelled Series A Preferred Stock shares as a result of the Cancellations), and
the total number of Series C Preferred Stock shares outstanding will remain
103,143 shares.
The
effect of the conversions is reflected in the table in the section entitled
“Information Regarding
Beneficial Ownership of Principal shareholders, Directors and
Management.”
The
conversion of the shares of Series C Preferred Stock and certain of the
Cancellations will simplify the Company’s balance sheets and make the
financial performance of the Company easier for investors to
understand.
On the
effective date of the merger, the following persons will serve as executive
officers and directors to serve for the next year and until their successors are
elected and qualified.
|
NAME
|
AGE
|
POSITION
|
|
|
|
|
|
Rene’
A. Schena
|
45
|
Chairman
, Director, CEO & CFO
|
|
|
|
|
|
Todd
J. Martinsky
|
43
|
Director,
Vice President & COO
|
|
|
|
|
|
Mark
Schena, Ph.D.
|
45
|
Chief
Technology Officer, Director, Secretary & Treasurer
|
|
|
|
|
|
William
L. Sklar
|
60
|
Director
|
|
|
|
|
|
Paul
Haje
|
52
|
Director
of Advertising and Public Relations
|
Ms. Schena
holds a degree in Language Studies from the University of California Santa
Cruz. She has 23 years experience in international business,
including translation, contract documentation and commodities trading with a
subsidiary of ConAgra from 1985 to 1988, and as a chemical import and
distribution specialist, department manager, and later President of NuSource
Chemical Corporation.
She
founded TeleChem International, Inc. in 1993, continuing the import and export
chemical distribution specialty, expanding into government bid business, and
moving into the biotech sector in 1996. TeleChem is a market leader
in DNA microarray technology, providing tools and expertise for the explosive
functional genomics and diagnostic screening markets. In 2002 and
again in 2003, TeleChem made Inc. Magazine’s list of the top 500 fastest growing
privately held companies in the USA. In 2005, the Silicon Valley Business
Journal recognized Ms Schena as the President of the 11th largest
woman-owned business enterprise in the Silicon Valley. Ms. Schena’s
long-term contacts in the chemical industry, strong business background and
management expertise are key contributions to TeleChem's
infrastructure. Ms. Schena is the sister of Mr. Martinsky and the
wife of Dr. Schena.
Mr. Martinsky
, Co-founder of TeleChem International, Inc., previously served as
director of education and consulting at the Codd and Date Consulting
Group. Mr. Martinsky has led the ArrayIt Division to play a
significant role in the microarray industry. He has authored several book
chapters and other scientific literature and has become an internationally
recognized lecturer, writer, consultant and teacher. In addition to
providing consulting services, Mr. Martinsky has spearheaded ArrayIt’s technical
support team since 1997. Along with his daily technical and business
direction of the ArrayIt Product line, Mr. Martinsky established successful
alliances with corporate partners in manufacturing, reagents, equipment and
distribution. He is responsible for an educational outreach program
that ensures that the broadly patented ArrayIt Micro Spotting Device is applied
in the field with optimal scientific and technological accuracy. He is currently
serving on the panel that is crafting future regulatory requirements for
microarray manufacturing for the United States Pharmacopeia. Mr.
Martinsky is the brother of Ms. Schena.
Dr. Schena
is a world-renowned biochemist whose research focuses on microarray
technology, genomics, proteomics, genotyping, molecular diagnostics, and gene
expression. Dr. Schena and his colleagues at Stanford University
published the first paper on microarrays in 1995 (Science 270, 467-470),
catalyzing the explosive proliferation of microarray technology at academic and
commercial institutions internationally. The 95’ Science paper is the
most highly cited paper in the history of Arabidopsis research and a recent
article in The Scientist places Dr. Schena at positions 1 and 2 on the
“microarray family tree”, confirming his role as the founder of microarray
technology and substantiating his status as the Father of Microarray Technology.
More than 20,000 laboratories in 35 countries are using microarrays to explore
basic questions in biology, chemistry, agriculture and medicine, and the
proliferation of the technology has resulted in more than 26,000 publications
since the original 95’ Science publication. Dr. Schena is the husband of Ms.
Schena.
Dr.
Schena’s success can be traced to an incomparable scientific pedigree. He
trained as a postdoctoral fellow with Dr. Ronald W. Davis in the Department of
Biochemistry at the Beckman Center at Stanford University, and earned a Ph.D.
with Dr. Keith R. Yamamoto in the Department of Biochemistry at UCSF, graduating
first in an exceptional class. Dr. Schena performed his undergraduate
thesis work with Dr. Daniel E. Koshland, Jr. in the Biochemistry Department at
UC Berkeley, earning a baccalaureate degree with greatest achievement and
highest honors in 1984. As a professional scientist, he has authored more
than thirty scientific papers and books on subjects ranging from bacteria and
yeast to plants and humans, and has campaigned tirelessly with scientists,
physicians, federal regulatory agencies, granting agencies, and charitable
organizations to promote microarray technology for the betterment of humankind.
Dr. Schena edited the first two books on microarrays, DNA Microarrays: A
Practical Approach by Oxford University Press, and Microarray Biochip Technology
by Eaton Publishing Company, wrote the first microarray textbook Microarray
Analysis for J. Wiley & Sons, and the first book on the proteomic
applications of microarrays entitled Protein Microarrays by Jones &
Bartlett. Dr. Schena has recently completed a new methods book DNA
Microarrays-Methods Express for Scion Publishing, and continues to lecture
widely, having given more than 120 speeches in 15 countries since 1995. Dr.
Schena was featured as one of the “Stars of Genomics” on the NOVA television
special Cracking the Code of Life, which received more than 100,000,000 viewers
worldwide, and is the most highly funded science documentary in United States
history.
Dr.
Schena is currently a Visiting Scholar and Consultant in the ArrayIt® Life
Sciences Division at TeleChem International, Inc. Dr. Schena is also
the Chairman of NGS-ArrayIt, Inc and the Founder and President of Mark Schena
Inc., an educational consulting company providing consulting services to a host
of leading organizations such as Affymetrix, AlphaGene, ArrayIt, Biodot, Cartesian
Technologies, Clontech, diaDexus, General
Scanning, Genomic Solutions, GSI Lumonics, Incyte
Pharmaceuticals, Irell and Manella, Johnson & Johnson, Morrison &
Foerster, Motorola, Packard Instruments, Perkins Coie, Roche, Synteni,
Technology Mentors, TeleChem International, Wilson Sonsini, Goodrich &
Rosati, and others. Dr. Schena resides with Ms. Rene Schena, the
Founder and President of TeleChem International, Inc., in Los Altos,
California.
Mr. Sklar
has served as a consultant with Willmar Management Corp. since
1988. Since September 2004 Mr. Sklar has been the Chairman and a
Director of PaperFree Medical Solutions, Inc., a company trading on the OTC
BB. Since October 26, 2005 Mr. Sklar has been a director of Radiate
Research a public company. From July 1983 to October 1988 Mr. Sklar
was the owner of Western Bag & Burlap a textile manufacturer. Mr.
Sklar holds a Bachelor of Commerce from the University of
Toronto.
Mr. Haje
joined TeleChem in 1999 as the Director of Advertising and Public
Relations. He has successfully produced 63 major trade shows in the
USA and Canada, 17 workshops, 11 VIP events, 76 unique full page print
advertising campaigns, 18 direct mail campaigns, e-mail blasts, web site imagery
and two full color company catalogs. In 2003, Mr. Haje won the 2003
Signet Advertising Award for Best Full Page Ad in the life sciences
sector. Mr. Haje represented the company at the United States Food
and Drug Administration’s Microarray Quality Control projects I and II, drawing
important attention in the scientific press to the company and its H25K Whole
Human Genome Chip. H25K was one of only seven microarray platforms
allowed to participate in the project, including Affymetrix, Agilent, Illumina,
GE Healthcare and Applied BioSystems. Mr. Haje has promoted the
ArrayIt brand name through company exposure on prime time television, in cover
stories, feature articles, trade publications, newsletters and web
broadcasts. TV includes PBS NOVA, ABC Night Line, CNBC Business
Odyssey. He has regularly booked cover stories and feature articles
in Science, The Scientist, Nature, Genetic Engineering News, BioTechniques,
Genome Technology, American Chemical Society, JAMA, PharmaGenomics, Genomics and
Proteomics, BioScience Technology, BioArray News, BioInform, and Genome
Web.
TELECHEM
TeleChem,
the Company’s wholly owned subsidiary, is a result of the February 21, 2008
merger of TeleChem and the Company’s wholly-owned Nevada
subsidiary. TeleChem’s business activities are in the life
sciences, chemical trading and disease diagnostics areas. It was
founded in 1993 by Rene’ Schena and Todd Martinsky as a chemical import
and export trading company. TeleChem’s chemicals division provides
customers with the raw materials required for plastics, water soluble
fertilizers, and alternative fuels. TeleChem entered the
biotechnology sector with the creation of the Arrayit® Life Sciences
Division in 1996. Because of the public interest in the Human Genome
Project and microarray technology, TeleChem focused on microarray products and
services for the research, pharmaceutical and diagnostics
markets. TeleChem’s Arrayit® Division currently provides its
patented microarray platform (US 6,101,946) to more than 3,000 installations
serving an estimated 10,000 laboratories, making it the most widely used
microarray technology in the world. Supporting instruments, kits,
reagents, and hardware complete the Arrayit® line of more than 400
products making up what management believes is a universal microarray platform
for any type of biomolecule.
During
the year 2001, the Diagnostics Division was started in order to leverage the
patented (6,913,879) multi-patient technology for genetic screening and
testing. This next generation microarray format allows clinical
laboratories to examine tens of thousands of patients on a single microarray,
providing much more cost-effective gene information for population-wide
diagnostics than traditional “single patient” microarrays. The
company is currently developing or has developed tests for many major human
diseases including cystic fibrosis, sickle cell anemia, and
cancer. Arrayit intends to compete in the $20 billion
molecular diagnostics arena.
The
TeleChem customer base includes major universities, pharmaceutical and biotech
companies, agricultural and chemical companies, government agencies, national
research foundations and private sector enterprises around the
world. The company website receives more than 1,000,000 hits per
month and the Shopping Cart allows on-line product ordering 24 hours a day. The
website makes available the Electronic Library free-of-charge to the tens of
thousands of researchers worldwide who wish to keep pace with the microarray
literature. TeleChem scientists were featured on NOVA’s television show
“Cracking the Code of Life” in 2001. The company received the Rising
Star Award from the City of Sunnyvale in 2002 and 2003, the Silicon Valley Top
50 Award from the San Jose Business Journal in 2003, and consecutive selection
to the Inc. 500 List in 2002 and 2003 by Inc. magazine.
TeleChem’s
principal office is in Sunnyvale, California. TeleChem presently has nine
employees and three full-time consultants .
INFORMATION
REGARDING BENEFICIAL OWNERSHIP OF PRINCIPAL
SHAREHOLDERS,
DIRECTORS AND MANAGEMENT
FOLLOWING
THE REVERSE STOCK SPLIT AND REINCORPORATION
The
following table sets forth certain information regarding the beneficial
ownership of our common and preferred stock immediately after the effective date
of the reincorporation of the Company, taking into account the Reverse Stock
Split and Cancellations, 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 capital voting stock. Unless otherwise
indicated, the mailing address for each party listed below is c/o Integrated
Media Holdings, Inc., 524 East Weddell Drive, Sunnyvale, CA
94089. 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 stockholders named in this
table have sole voting and investment power with respect to the shares indicated
as beneficially owned. Applicable percentages are based on 13,041,888
shares of our common stock outstanding immediately after the reverse split.
Subsequent to the Reverse Stock Split and after the Cancellations, the total
number of outstanding shares of common stock the Company will have will be
13,041,888 (the 593,314 post-Reverse Stock Split shares minus the 19,778
cancelled common shares as a result of the Cancellations); the total number of
Series A Preferred Stock shares will be 770,824 shares (the 1,183,236 shares
minus the 2,926,787 cancelled Series A Preferred Stock shares as a result of the
Cancellations), and the total number of Series C Preferred Stock shares
outstanding will remain 103,143 shares.
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.
|
|
Common
Stock
|
|
Total
Voting Percentage of Common Stock
|
Series
A Preferred Stock (1)
|
Total
Voting Percentage of Series A Preferred Stock (1)
|
Total
Shares The Series A Preferred Stock are Able to Vote
(1)
|
Series
C Preferred Stock
|
Total
Voting Percentage of Series C Preferred Stock
|
Total
Shares The Series C Preferred Stock are Able to Vote
|
Total
Voting Shares Based on All Voting Shares Outstanding
|
Total
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officers and
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
Rena’
A Schena, Chief Executive Officer, Chief Financial Officer and
Director
524
East Weddell Drive
Sunnyvale,
California 94089
|
0
|
|
0.0%
|
0
|
0%
|
0
|
42,857
|
0%
|
14,999,950
|
14,999,950
|
30.4%
|
|
Mark
Schena, Director
524
East Weddell Drive
Sunnyvale,
California 94089
|
0
|
|
0.0%
|
0
|
0%
|
0
|
14,286
|
0%
|
5,000,100
|
5,000,100
|
10.1%
|
|
William
L. Sklar, Director
524
East Weddell Drive
Sunnyvale,
California 94089
|
125,000
|
|
1%
|
0
|
0%
|
0
|
0
|
0%
|
0
|
125,000
|
0.3%
|
|
Todd
Martinsky, Director
524
East Weddell Drive
Sunnyvale,
California 94089
|
0
|
|
0.0%
|
0
|
0%
|
0
|
28,571
|
0%
|
9,999,850
|
9,999,850
|
20.2%
|
|
Paul
K. Haje
Director
of Advertising and Public Relations
524
East Weddell Drive
Sunnyvale,
California 94089
|
0
|
|
0.0%
|
0
|
0%
|
0
|
14,286
|
0%
|
5,000,100
|
5,000,100
|
10.1%
|
|
|
|
|
|
|
|
|
|
0%
|
|
|
|
|
Greater than 5%
Shareholders
|
|
|
|
|
|
|
|
0%
|
|
|
|
|
WEM
Equity Capital Investments, Ltd.
3111
Rosemary Park Lane
Houston,
Texas 77082(2)
|
2,000,000
|
|
15.3%
|
0
|
0%
|
0
|
0
|
0%
|
0
|
2,000,000
|
4.0%
|
|
Briarpatch,
Ltd.
2038
Albans,
Houston,
Texas 77005(3)
|
2,000,000
|
|
15.3%
|
0
|
0%
|
0
|
0
|
0%
|
0
|
2,000,000
|
4.0%
|
|
Donald
Sapaugh
12000
Westheimer
Suite
340
Houston,
Texas 77077
|
1,100,000
|
|
8.4%
|
0
|
0%
|
0
|
0
|
0%
|
0
|
1,100,000
|
2.2%
|
|
Hunter
Carr
12000
Westheimer
Suite
340
Houston,
Texas 77077
|
1,100,000
|
|
8.4%
|
0
|
0%
|
0
|
0
|
0%
|
0
|
1,100,000
|
2.2%
|
|
Phillip
Johnson
12000
Westheimer
Suite
340
Houston,
Texas 77077
|
1,100,000
|
|
8.4%
|
0
|
0%
|
0
|
0
|
0%
|
0
|
1,100,000
|
2.2%
|
|
Jukka
Tolonen
|
1,000,000
|
|
7.7%
|
0
|
0%
|
0
|
0
|
0%
|
0
|
1,000,000
|
2.0%
|
|
Fairfield
Financing, Inc. (4)
221
West Exchange Ave. Suite 221
Ft.
Worth, Texas 76184
|
1,300,000
|
|
10.0%
|
0
|
0%
|
0
|
0
|
0%
|
0
|
1,300,000
|
2.6%
|
|
Kickapoo
Kapital (5)
12000
Westheimer
Suite
340
Houston,
Texas 77077
|
700,000
|
|
5.4%
|
0
|
0%
|
0
|
0
|
0%
|
0
|
700,000
|
1.4%
|
|
All
of the Officers and Directors as a Group (5 Persons)
|
125,000
|
|
1.0%
|
0
|
0%
|
0
|
100,000
|
97.0%
|
35,000,000
|
35,125,000
|
71.1%
|
* Less
than 1%.
(1)
The Company is not aware of who the beneficial owners of its Series A Preferred
Stock will be following the Reverse Stock Split and Cancellations, but does not
believe that such information is material, since in aggregate, such holders will
only hold a total of approximately 0.50% of the voting power of the Company post
Reverse Stock Split and post-Cancellations due to the fact that the Conversion
Ratio (which determines the number of voting shares each Series A Preferred
Stock share can vote) of the Series A Preferred Stock will be reduced from 9.6
shares of common stock for each share of Series A Preferred Stock held to 0.32
shares for each Series A Preferred Stock held (9.6/30) as a result of the
Reverse Stock Split, which affects the Conversion Ratio of the Series A
Preferred Stock due to the recent amendments to the Series A Preferred
Stock.
(2) The
natural person with dispositive authority over securities of the company is
William E. McIlwain at the above address.
(3) The
natural person with dispositive authority over securities of the company is Brad
Fleming at the above address.
(4)
The natural person with dispositive authority over securities of the company is
O. Preston Smith.
(5)
The natural person with dispositive authority over securities of the company is
Joanna Hoover, the company’s controlling officer.
REVERSE
STOCK SPLIT
General
The board
of directors has approved, and the Majority Shareholders of the Company
will approve , pursuant to a written consent to action dated
_________, 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 voting shares of the Company’s 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 ______________, 2008 as the record
date for determining the stockholders entitled to notice of the above described
actions.
The
actions will be authorized by the Majority Shareholders (as described
above ). Accordingly, the Majority Shareholders will direct the
vote in favor of the corporate actions discussed herein and possess 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 will 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.
Common
Stock
The
number of shares of our common stock issued and outstanding as of the record
date of the Reverse Stock Split , _____________, 2008 will 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.
After affecting the Reverse Stock
Split and the reincorporation, the Company will have a total of approximately
583,309 shares of common stock issued and outstanding (which
amount does not take into account the Cancellations). Subsequent to
the Cancellations, the Company will have 13,041,888 shares of common stock
issued and outstanding, which number includes the 583,309 shares of common stock
outstanding immediately following the Reverse Stock Split minus the 19,788
post-Reverse Stock Split shares which certain shareholders have agreed to cancel
in connection with the Cancellations and the issuance of an aggregate of
12,478,357 shares of common stock to certain shareholders in consideration for
the cancellations.
Preferred
Stock
Our
Series A Preferred Stock, as amended , contains a provision that adjusts
the conversion ratio in the event of a reverse stock split or combination.
Accordingly, the number of common shares issuable upon conversion of the Series
A Preferred Stock will be reduced by the Reverse Stock Split. Our
Series C Preferred Stock does not contain such a provision and will not
therefore be affected by the Reverse Stock Split .
After affecting the Reverse Stock
Split and the reincorporation and the Cancellations, the Company will have a
total of approximately 770,824 shares of Series A Preferred Stock issued and
outstanding. Due to the reduction in the Conversion Ratio of the
Series A Preferred Stock from 9.6 shares for each share of Series A Preferred
Stock to 0.32 shares for each share of Series A Preferred Stock converted, the
total number of shares which the post-Cancellation number of Series A Preferred
Stock will be eligible to be converted into will be reduced to approximately
246,663 shares of common stock.
After affecting the Reverse Stock
Split and reincorporation, the Company will still have 103,143 shares of Series
C Preferred Stock issued and outstanding, as such shares of Series C Preferred
Stock are not affected by the Reverse Stock Split or the
reincorporation.
-------------------------------
As
described herein , all fractional common stock share amounts resulting
from the Reverse Stock Split will be paid for in cash by the Company at the
rate of $__________ per share for common stock.
The
following table represents the capitalization of the Company after completion of
the reverse split, conversion of all Series C Preferred Stock shares and
convertible debt.
|
DESCRIPTION
|
TOTAL
POTENTIAL OUTSTANDING SHARES PRIOR TO THE REINCORPORATION AND REVERSE
STOCK SPLIT
|
|
SHARES
CANCELLED AS A RESULT OF THE CANCELLATIONS (IN PRE-REVERSE SPLIT
AMOUNTS)
|
|
SHARES
ISSUED AS A RESULT OF THE CANCELLATIONS (IN PRE-REVERSE SPLIT
AMOUNTS)
|
TOTAL
POTENTIAL OUTSTANDING SHARES FOLLOWING THE REINCORPORATION AND REVERSE
STOCK SPLIT
|
|
|
Outstanding
Common Shares
|
17,499,262
|
|
(593,314)
|
|
12,478,357
|
13,041,888
|
|
|
Issuable
upon Conversion of Series C Preferred
(to
TeleChem Shareholders)
|
36,100,050
|
(1)
|
|
|
|
36,100,050
|
(1)
|
|
Issuable
upon Conversion of Series A Preferred
|
35,497,066
|
|
(28,097,146)
|
(2)
|
|
246,663
|
(3)
|
|
Reserved
for exercise of Stock Warrants
|
3,000,000
|
(4)
|
|
|
|
100,000
|
(4)
|
|
Reserved
under the Company’s 2004 Stock Option Plan
|
21,500,000
|
|
|
|
|
21,500,000
|
|
|
Total
Issued and Reserved and Unissued
|
113,596,378
|
|
|
|
|
70,988,601
|
|
|
TOTAL
AUTHORIZED
|
100,000,000
|
|
|
|
|
480,000,000
|
|
|
Difference
|
(13,596,378)
|
|
|
|
|
409,011,399
|
|
(1)
Represents shares of Series C Preferred Stock which will be automatically
converted into shares of common stock upon the effective date of the
reincorporation. The Company’s Series C Preferred Stock will not be
affected by the terms of the Reverse Stock Split.
(2)
Represents the cancellation of 2,926,786 shares of Series A Preferred
Stock.
(3)
The number of shares of common stock in the table above reflects the total
number of shares of common stock which would be issued upon the conversion of
the Series A Preferred Stock subsequent to the Reverse Stock Split and
Cancellations, which will affect a change in the Conversion Ratio of the Series
A Preferred Stock from 9.6 shares of common stock for each share of Series A
Preferred Stock converted to 0.32 shares of common stock for each share of
Series A Preferred Stock converted.
(4)
Represents one warrant to purchase 1,250,000 shares of our common stock at an
exercise price of $0.01 per share, which is held by Recap Marketing and
Consulting, L.L.P. (“Recap” and the “Recap Warrants”) and one warrant to
purchase 1,750,000 shares of our common stock held by Paul Hamm, our former
Chief Executive Officer.
.
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 Exchange Act following the Reverse Stock
Split.
The
number of authorized but unissued shares of our common stock will
effectively 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 or Series A Preferred 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 or Series A Preferred Stock will
equal the stockholder’s basis in its old shares of our common stock or Series
A Preferred Stock , respectively . 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 and Series A Preferred Stock outstanding
as of _____________, 2008 (the “Effective Date”). Effectively, this makes
the effective date __________, 2008. Accordingly, on such date, all shares of
our common stock that are issued and outstanding on _________, 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 one-for- thirty
exchange ratio. Any factional shares left after the Reverse Stock
Split will be paid for in cash by the Company at the rate of $__________ per
share for common stock.
REINCORPORATION
IN NEVADA
The
following discussion summarizes certain aspects of our reincorporation in Nevada
(the “Reincorporation”). This summary does not include all of
the provisions of the Amended and Restated Plan and Agreement of Merger between
the Company and Arrayit Corporation., a Nevada corporation (“Arrayit”), a copy
of which is attached hereto as Exhibit “A,” or the Articles of Incorporation of
Arrayit (formerly Integrated Media Holdings, Inc.) as amended a copy of
which is attached hereto as Exhibit “B.” Copies of the bylaws of
Arrayit are available for inspection at our principal office and we will send
copies to stockholders upon request.
The
Company entered into an Amended and Restated Plan and Agreement of Merger to
amend and clarify several sections of its original Plan and Agreement of Merger,
including to:
|
·
|
Clarify
that the corporate name of Arrayit, Arrayit’s registered office and agent,
and all of the Company’s outstanding agreements, stock option plans,
December 19, 2005, Form S-8 Registration Statement, the Company’s
committees, and code of ethics shall survive the Reincorporation;
and
|
|
·
|
To
reflect the prior name change of the Company’s wholly owned Nevada
subsidiary from Integrated Media Holdings, Inc. to Arrayit Corporation in
connection with the prior merger of TeleChem into Integrated Media
Holdings, Inc., the Company’s wholly owned subsidiary, which resulted in
the name change of the Company’s subsidiary to Arrayit
Corporation.
|
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 the Company, with and into our
wholly owned subsidiary, Arrayit. Arrayit will be the surviving
entity.
On the
Effective Date, each of our common stockholders will be entitled to
receive one fully paid and non-assessable share of common stock of
Arrayit, respectively, for each thirty (30) shares of our common stock,
outstanding as of the Record Date, with any fractional shares being
paid for in cash by the Company at the rate of $__________ per share
for common stock , and (ii) the Company will cease its corporate existence
in the State of Delaware. We anticipate that the shares of the
Company will cease trading on the first trading date following the Effective
Date and shares of Arrayit will begin trading in their place but under a new
CUSIP number and trading symbol.
The
Articles of Incorporation and by-laws of Arrayit are significantly different
from the Certificate of Incorporation and by-laws of the
Company. Because of the differences between the Certificate of
Incorporation and by-laws of the Company and the laws of the State of Delaware,
which govern the Company, and the Articles of Incorporation and by-laws of
Arrayit and the laws of the State of Nevada, which govern Arrayit, 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 the Company and the laws of the State of Delaware and the Articles of
Incorporation and by-laws of Arrayit and the laws of the State of
Nevada.
Following
the Reincorporation, the members of our Board of Directors and officers will
remain the same and become officers and Directors of Arrayit. Our
daily business operations will continue at the principal executive offices at
524 East Weddell Drive, Sunnyvale, CA 94089.
Upon
completion of the reincorporation, the Articles of Incorporation of Arrayit will
become the Articles of Incorporation of the Company. Therefore the
number of common shares we are authorized to issue will increase from 100
million to 480 million. After the effective date of the reverse split
we plan to issue 12,478,357 shares of common stock in connection with the
Cancellations. We have no present plans to issue any additional
shares of common stock.
In
addition, upon completion of the reincorporation, when the Articles of
Incorporation of Arrayit become the Articles of Incorporation of the Company,
the number of preferred shares we are authorized to issue will increase
from 5 million to 20 million. We have no present plans to issue any
additional shares of preferred stock.
How
to Exchange Company Certificates for Arrayit Certificates
Enclosed
are (i) a form letter of transmittal and (ii) instructions for surrender of your
certificates representing our common stock, Series A Preferred Stock and
Series C Preferred Stock in exchange for certificates representing shares of
Arrayit common stock, Series A Preferred Stock, or Series C Preferred Stock,
respectively . Upon surrender of a certificate representing our
common stock, Series A Preferred Stock, or Series C Preferred Stock to
Arrayit, together with a duly executed letter of transmittal, Arrayit will
issue, as soon as practicable, a certificate representing the number of shares
of Arrayit 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 Arrayit
certificates. Dividends and other distributions declared after the
Effective Date with respect to common stock or preferred stock of the Company
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 the Company and, which by virtue of the reincorporation are represented
thereby and such holder will be entitled to exercise any right as a shareholder
of the Company and, until such holder has surrendered the certificate of the
Company. Holders of warrants or options will be entitled to exercise
any right as a holder of the Company, until such holder has surrendered the
certificate of the Company.
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 the Record Date, there were 17,499 ,262 shares of our common stock
3, 697,611 shares of our Series A Preferred Stock outstanding and
103,143 shares of our Series C Preferred Stock issued and
outstanding . The authorized capital of Arrayit 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 Arrayit has
adopted designations, rights and preferences for Series A Convertible Preferred
Stock, and Series C Preferred Stock which are identical to the rights and
preferences of the Series A Preferred Stock and Series C Preferred Stock
issued by the Company. As the Company does not currently have any Series
B Preferred Stock issued, no Series B Preferred Stock has been designated in
Arrayit. As a result of the reincorporation, exchange of the common
stock, the Cancellations, Arrayit will have outstanding approximately
13,041,888 shares of common stock. The number of
outstanding shares of our Series A and Series C Preferred Stock will not be
affected by the Reverse Stock Split or Reincorporation. The
reincorporation will not affect our total stockholder equity or total
capitalization.
Significant
Differences Between the Corporation Laws of Nevada and Delaware
The
Company is incorporated under the laws of the State of Delaware. On the
Effective Date of the Reincorporation, our stockholders, whose rights are
currently governed by Delaware Law and the Company Certificate of Incorporation
and the Company by-laws, which were created pursuant to Delaware Law, will
become stockholders of a Nevada company with the name Arrayit Corporation, 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 Arrayit 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 the Company and the Articles of Incorporation and
bylaws of Arrayit 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 Arrayit 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 the Company nor the Articles of
Incorporation of Arrayit 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 the Company do not
provide for the mandatory advancement of expenses of directors and officers and
the Arrayit 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 the Company excludes
director liability to the maximum extent allowed by Delaware law. Nevada law
permits, and Arrayit 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 acts 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 Arrayit 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 Arrayit 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 Arrayit 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 Arrayit Articles of Incorporation.
Substantially similar provisions were contained in the Company’s
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 Arrayit Articles of Incorporation are designed
to minimize the possibility of a sudden acquisition of control of Arrayit which
has not been negotiated with and approved by the Arrayit 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 Arrayit or a tender offer for all of its capital
stock. However, to the extent these provisions successfully discourage the
acquisition of control of Arrayit 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 Arrayit 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 Arrayit'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 Arrayit 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 Arrayit Articles of Incorporation provides that annual stockholder
meetings may be called only by the Arrayit board of directors or a duly
designated committee of the board. Although Arrayit believes that this provision
will discourage stockholder attempts to disrupt the business of Arrayit 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
Arrayit.
Classified Board of Directors and
Removal of Directors. Arrayit's Articles of Incorporation provide 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 Arrayit'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. Arrayit'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 Arrayit 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 Arrayit 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 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, the record holders in the aggregate shall be
entitled to cast only one-hundredth of one 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 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 shall be given effect in
determination the presence of a quorum for purposes of convening a meeting of
the stockholders of the Corporation.
The
limitation on voting rights prescribed by this paragraph 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; 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 stock exchange or automated quotation
system.
The
term “Related Person” means and includes (i) any individual, corporation,
partnership or other person or entity which together with its “affiliates” or
“associates” (as those terms are defined in the Securities Act of 1933, as
amended (the “Act”)) which “beneficially owns” (as that term is defined in the
Act) in the aggregate 10% or more of the outstanding shares of the common stock
of the Company; and (ii) any “affiliate” or “associate” (as those terms are
defined in the Act) of any such individual, Company, partnership or other person
or entity; provided, however, that the term “Related Person” does not include
the Company, any subsidiary of the Company, any employee benefit plan, employee
stock plan of the Company or of any subsidiary of the Company, or any trust
established by the Company in connection with the foregoing, or any person or
entity organized, appointed, established or holding shares of capital stock of
the Company for or pursuant to the terms of any such plan, nor shall such term
encompass shares of capital stock of the Company 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 Company 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 .
Approval of Certain Business
Combination. Except as otherwise expressly provided in the
Arrayit Articles and in addition to any other 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, is required
in order to authorize (a) any merger or consolidation of the Company or a
subsidiary of the Company with or into a Related Person; (b) any sale, lease,
exchange, transfer or other disposition, including without limitation, a
mortgage or pledge, of all or any substantial part of the assets of the Company
(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 Company or a subsidiary of the Company; (d) any sale,
lease, exchange, transfer or other disposition of all or any Substantial Part of
the assets of a Related Person to the Company or a subsidiary of the Company;
(e) the issuance of any securities of the Company or a subsidiary of the Company
to a Related Person other than on a pro rata basis to all holders of capital
stock of the Company 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 Company or any of its
subsidiaries which securities have been distributed pro rata to all holders of
capital stock of the Company; (f) the acquisition by the Company or a subsidiary
of the Company of any securities of a Related Person; (g) any reclassification
of the common stock of the Company, or any recapitalization involving the common
stock of the Company 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
Company 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 paragraph.
Such
affirmative vote is required notwithstanding any other provision of the
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 the Arrayit
Articles 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.
Advance Notice Requirements for
Nomination of Directors and Proposal of New Business at Annual Stockholder
Meetings. Arrayit'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 Company 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 the Company 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 Arrayit.
CHANGE
OF CORPORATE NAME
The
name change which will be affected in connection with the Reincorporation
and adoption of the Arrayit Articles will more accurately reflect the business
of the Company.
AMENDMENT
TO SERIES A AND SERIES C PREFERRED STOCK
The Majority Shareholders will
ratify certain amendments to our Series A Preferred Stock and Series C Preferred
Stock, described below, which amendments were affected on November 24, 2008 (the
“Preferred Stock Amendments”). Substantially similar amendments to
the Preferred Stock Amendments have also been made to Arrayit’s Articles of
Incorporation.
Specifically, the Preferred Stock
Amendments amended the Company’s Series A Preferred Stock to clarify that such
Series A Preferred Stock would be subject to a subdivision or reclassification
of the Company’s outstanding capital stock. As a result, the
conversion ratio of the Company’s Series A Preferred Stock will be reduced from
9.6 shares of common stock for each Series A Preferred Stock converted to 0.32
shares of common stock for each Series A Preferred Share Converted (9.6/30) in
connection with the Reverse Stock Split. Other than the amendment to
the Series A Preferred Stock clarifying that it would be subject to subdivisions
of the Company’s outstanding capital stock, similar to the Reverse Stock Split,
the Company’s Series A Preferred Stock remains the same as originally
designated.
The Company’s Series C Preferred
Stock was amended in connection with the Preferred Stock Amendments to revise
the conversion rights of such Series C Preferred Stock. Prior to the
Preferred Stock Amendments, any outstanding shares of Series A Preferred Stock
would automatically convert into shares of the Company’s common stock in a ratio
of one to three hundred and fifty (the “Conversion Ratio”) upon the Company’s
Reincorporation. Subsequent to the Preferred Stock Amendments, the
holders of the Company’s Series C Preferred Stock have the option to convert up
to 10% of the total number of shares of Series C Preferred Stock issued to such
holder into shares of the Company’s common stock at the Conversion Ratio, during
any 90 day period. Additionally, any shares of Series C Preferred
Stock not converted during any 90 day period are not carried forward to the next
90 day period.
The Preferred Stock Amendments have
already been affected in the state of Delaware for the Company and Nevada for
Arrayit and the Majority Shareholders will ratify such Preferred Stock
Amendments via consent to action without meeting. As such, the
Company is not asking for your vote, but simply giving you notice of the vote
which will be taken.
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 proposals which are
the subject of this Information Statement.
By Order
of the Board of Directors,
_____________________________________
Rene’ A.
Schena, Chairman and Chief Executive Officer
November
_____, 2008
EXHIBIT
A
AMENDED
AND RESTATED PLAN AND AGREEMENT OF MERGER
of
Integrated
Media Holdings, Inc.
(A
Delaware Corporation)
and
Arrayit
Corporation
(A Nevada
Corporation)
AMENDED AND RESTATED PLAN AND
AGREEMENT OF MERGER entered into on April 08, 2008, by and between
Integrated Holdings, Inc., a Delaware corporation (“Integrated Media”), and
Arrayit Corporation, a Nevada corporation (“Arrayit”).
WHEREAS, Integrated Media is a
business corporation of the State of Delaware whose registered agent is The
Corporation Trust Company and its registered office therein is located at 1209
Orange Street, Wilmington, County of Newcastle, Delaware; and
WHEREAS, the total number of
shares of stock which Integrated Media 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, Arrayit is a business
corporation of the State of Nevada whose registered agent is Inc. Plan of Nevada
and its registered office therein is located at 613 Saddle Rider Court,
Henderson, Nevada; and
WHEREAS, the total number of
shares of stock which Arrayit 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 Revised Statutes
of the State of Nevada permit the merger of a business corporation of another
jurisdiction with and into a business corporation of the State of Nevada;
and
WHEREAS, Integrated Media and
Arrayit 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 Integrated Media with and into Arrayit 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.
Integrated Media, a corporation organized under and governed by the laws of the
State of Delaware with a principal place of business at 524 East Weddell Drive,
Sunnyvale, CA 94089 (the “terminating corporation”).
B.
Arrayit, a corporation organized under and governed by the laws of the State of
Nevada with a principal place of business at 12000 Westheimer Rd, Ste 340,
Houston, Texas (the “surviving corporation”).
1.2.
SURVIVING
CORPORATION. Arrayit shall be the surviving
corporation. The corporate name, Articles of Incorporation, bylaws,
registered agent and registered office of Arrayit shall survive the merger
without amendment or revision and be the Articles of Incorporation, bylaws,
registered agent and registered office of the surviving
corporation.
1.3.
SURVIVING CORPORATE
MATTERS. The principal place of business, officers and
directors, indemnification agreements with officers and directors, all binding
agreements, the Amended and Restated 2004 Directors, Officers and Consultants
Stock Option, Stock Warrant and Stock Award Plan registered with the Securities
and Exchange Commission on Form S-8 effective December 19, 2005, as well as
creation and adoption of the Executive Committee, Compensation Committee, Audit
Committee, Code of Business Ethics, and Governance Committee shall survive the
merger without amendment or revision and be the indemnification agreements with
officers and directors, other binding agreements, the Amended and Restated 2004
Directors, Officers and Consultants Stock Option, Stock Warrant and Stock Award
Plan, the Executive Committee, Compensation Committee, Audit Committee, Code of
Business Ethics, and Governance Committee 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”), Integrated Media is merged with and into
Arrayit. The separate existence of Integrated Media 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 Integrated Media 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 Arrayit.
B. On the
Effective Date, each issued and outstanding share of the preferred stock of any
series or class of Integrated Media shall be converted into the right to receive
one fully paid and non-assessable share of preferred stock, $.001 par value per
share, of Arrayit with substantially identical rights and
preferences.
2.2.
FRACTIONAL SHARES. No
fractional shares or script representing fractional shares shall be issued by
Arrayit 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 Arrayit 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 Arrayit outstanding immediately prior to the
merger shall be cancelled and returned to the authorized and unissued capital
stock of Arrayit.
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 Integrated Media, each option, warrant or other right to
purchase thirty (30) shares of the common stock, $.001 par value per share, of
Integrated Media, shall be exercisable to purchase one (1) share of the common
stock, $.001 par value per share, of Arrayit for an exercise price in the amount
of 30 times the original exercise price on the remaining same terms and
conditions.
3.2.
SUBMISSION TO SERVICE IN
DELAWARE. Arrayit agrees that it may be served with process in the State
of Delaware in any proceeding for enforcement of any obligation of the Arrayit
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.
Integrated Media 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 Integrated Media 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 Integrated Media and the stockholders of
Arrayit, no such amendment may (a) change the rate of exchange for any shares of
Integrated Media or the types or amounts of consideration that will be
distributed to the holders of the shares of stock of Integrated Media; (b)
change any term of the Articles of Incorporation of Arrayit; or (c) adversely
affect any of the rights of the stockholders of Integrated Media or
Arrayit.
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 as of
the 8th day of
April, 2008.
INTEGRATED
MEDIA HOLDINGS, INC. a Delaware corporation
|
By::
|
|
|
|
William
L. Sklar, Chief Executive Officer &
President
|
ARRAYIT
CORPORATION a Nevada corporation
|
By::
|
|
|
|
Rene’
A. Schena, Chairman & Chief Executive
Officer
|
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, Inc., 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
therefore) 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 therefore (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 therefore 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).
EXHIBIT 2.01
ARTICLES OF INCORPORATION
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).
EXHIBIT 2.02
Certificate of Amendment changing name from Integrated Media
Holdings, Inc. to Arrayir Corp.
Certificate
of Amendment to Articles of Incorporation
For
Nevada Profit Corporations
(Pursuant
to NRS 78.380 – Before Issuance of Stock)
1. Name
of corporation:
Integrated
Media Holdings, Inc.
2. The
articles have been amended as follows (provide article numbers, if
available):
Article 1
is amended to read as follows:
ARRAYIT
CORPORATION
3. The
undersigned declare that they constitute at least two-thirds of the
incorporators, or of
The board
of directors x (check one box only)
4.
Effective date of filing (optional): ___________________
5. The
undersigned affirmatively declare that to the date of this certificate, no stock
of the corporation has been issued.
6.
Signatures (If more than two signatures, attach an 8 ½” x 11” plain sheet with
the additional signatures.)
X
/s/ William L. Sklar
IMPORTANT:
Failure to include any of the above information and submit the proper fees may
cause this filing to be rejected.
This form
must be accompanied by appropriate fees. Nevada Secretary of State Amend 78.380
2007
Revised
on : 01/01/07
EXHIBIT 2.03
Amendment to Articles of Incorporation
Exhibit
A
to
Certificate
of Amendment to Articles of Incorporation
of
Arrayit
Corporation
8. Conversion
Provisions.
(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, (B) subdivide or reclassify its outstanding shares of Common Stock into a
greater number of shares, or (c) reclassification or combination into a 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.
Exhibit
B
to
Certificate
of Amendment to Articles of Incorporation
of
Arrayit
Corporation
F. Series C
Convertible Preferred Stock
1. DESIGNATION. This
series of Preferred Stock shall be designated “Series C Convertible Preferred
Stock” (the “SERIES C PREFERRED STOCK”).
2. NUMBER OF SHARES AND PAR
VALUE. The number of shares constituting the Series C
Preferred Stock shall be equal to 103,143. Each share of the Series C
Preferred Stock shall have $.001 par value.
3. RELATIVE
SENIORITY. The Series C Preferred Stock shall, in respect of
the right to participate in distributions or payments in the event of any
liquidation, dissolution or winding up of the Corporation, rank (a) pari passu
with the Common Stock (as defined below) of the Corporation and with any other
class or series of stock of the Corporation, the terms of which specifically
provide that such class or series shall rank pari passu with the Series C
Preferred Stock in respect of the right to participate in distributions or
payments in the event of any liquidation, dissolution or winding up of the
Corporation; and (b) junior to any other class or series of stock of the
Corporation, the terms of which specifically provide that such class or series
shall rank senior to the Series C Preferred Stock in respect of the right to
participate in distributions or payments in the event of any liquidation,
dissolution or winding up of the Corporation. The term “COMMON STOCK”
shall mean all shares now or hereafter authorized of any class of common stock
of the Corporation.
4. NO LIQUIDATION
PREFERENCE. In the event of any voluntary or involuntary
liquidation, dissolution, or winding-up of the Corporation, after distribution
in full of the preferential amounts, if any, to be distributed to the holders of
shares of any series of Preferred Stock, having a priority on liquidation
superior to that of the Series C Preferred Stock, the holders of shares of
Series C Preferred Stock shall be entitled to participate with the Common Stock
in all of the remaining assets of the Corporation available for distribution to
its stockholders, ratably with the holders of Common Stock in proportion to the
number of shares of Common Stock held by them, assuming for each holder of
Series C Preferred Stock on the record date for such distribution that each
holder was the holder of record of the number (including any fraction) of shares
of Common Stock into which the shares of Series C Preferred Stock then held by
such holder are then convertible. A liquidation, dissolution, or
winding-up of the Corporation, as such terms are used in this Section 4, shall
not be deemed to be occasioned by or to include any merger of the Corporation
with or into one or more corporations or other entities, any acquisition or
exchange of the outstanding shares of one or more classes or series of the
Corporation, or any sale, lease, exchange, or other disposition of all or a part
of the assets of the Corporation.
5. VOTING
RIGHTS. Except as otherwise required by law, each share of
outstanding Series C 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 Series C Preferred Stock is then
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 this Certificate, the holders of shares of Common Stock
and Series C Preferred Stock shall vote together and not as separate
classes.
6. DIVIDENDS AND
DISTRIBUTIONS. If any dividend or other distribution payable
in cash, securities or other property, including a dividend payable in shares of
Common Stock, is declared on the Common Stock, each holder of shares of Series C
Preferred Stock on the record date for such dividend or distribution shall be
entitled to receive on the date of payment or distribution of such dividend or
other distribution the same cash, securities or other property which such holder
would have received on such record date if such holder was the holder of record
of the number (including any fraction) of shares of Common Stock into which the
shares of Series C Preferred Stock then held by such holder are then
convertible. No dividend or other distribution shall be declared or
paid on the Common Stock unless an equivalent dividend or other distribution
that satisfies this Section 6 is declared or paid on the Series C Preferred
Stock.
7. CONVERSION. The
holders of the Series C Preferred Stock shall have conversion rights as
follows:
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(a) Conversion
Ratio. The holder of each share of Series C Preferred
Stock shall have the right (the “Conversion Right”), at such holder’s
option, to convert such share, without cost, on the terms and at the times
specified in this Section 7, into the number of fully paid and
non-assessable shares of Common Stock as specified by the Conversion Ratio
that is in effect at the time of conversion; 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 of all outstanding shares of Series C Preferred
Stock. The initial “Conversion Ratio” for the Series C
Preferred Stock is 350:1. The Conversion Ratio shall be subject
to adjustment from time to time as provided in this Section
7.
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(b) Shares Eligible for
Conversion. The below specified number of shares of Series C
Preferred Stock shall be eligible for conversion during each successive 90 days,
commencing 90 days after the effective date of an increase in the number of
authorized but unissued shares of Common Stock sufficient to issue upon
conversion of all outstanding shares of Series C Preferred Stock.
The
number of Series C Preferred Shares eligible for conversion during each 90 day
period is 10% (ten percent) of the original number of shares of Series C
Preferred Stock issued to each original holder (“Eligible
Shares”). Any Eligible Shares not converted during any 90 day period
may not be cumulated and carried forward to the next 90 day
period. Any subsequent owner or holder of all or any part of Series C
Preferred Stock shall be subject to the same eligibility provisions applicable
to the original holder of such shares.
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(c) Mechanics of
Conversion. A holder of any share of Series C Preferred
Stock may exercise the Conversion Right of such share by surrendering the
certificate therefor, duly endorsed, at the office of the Corporation or
of any transfer agent for the Series C Preferred Stock, together with a
written notice to the Corporation which shall state: (A) that such holder
elects to convert the same, (B) the number of shares issued to the
original holder of such shares; and (C) the number of Eligible Shares and
the number of shares of Series C Preferred Stock being
converted. Thereupon the Corporation shall promptly issue and
deliver to the holder of such shares a certificate or certificates for the
number of whole shares of Common Stock to which such holder shall be
entitled. In lieu of any fractional shares to which the holder
would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the then fair market value (as determined in good
faith by the Board of Directors of the Corporation) of the Common
Stock. If the certificate evidencing the Series C Preferred
Stock being converted shall also evidence shares of Series C Preferred
Stock not being converted, then the Corporation shall also deliver to the
holder of such certificate a new stock certificate evidencing the Series C
Preferred Stock not converted. The conversion of any shares of
Series C Preferred Stock shall be deemed to have been made immediately
prior to the close of business on the date that the shares of Series C
Preferred Stock to be converted are surrendered to the Corporation, and
the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such
date. Any dividends or distributions declared but unpaid at the
time of conversion with respect to the Series C Preferred Stock so
converted, including any dividends declared on the Common Stock to which
the Series C Preferred Stock is entitled pursuant to Section 6 above,
shall be paid to the holder of Common Stock issued upon conversion of the
Series C Preferred Stock upon the payment date
therefore.
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The
Corporation shall give written notice to each holder of a share of Series
C Preferred Stock promptly upon the liquidation, dissolution or winding up
of the Corporation, and not more than fifty (50) nor less than twenty (20)
days before the anticipated date of consummation of any acquisition of the
Corporation or any sale of all or substantially all of the assets of the
Corporation and no such acquisition of the Corporation or sale of assets
shall be effective until such notice shall have been
given.
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(d)
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Adjustment of Conversion
Ratio. The Conversion Ratio for each share of Series C
Preferred Stock and the kind of securities issuable upon the conversion of
any share of Series C Preferred Stock shall be adjusted from time to time
as follows:
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(i) Subdivision or Combination
of Shares. If the Corporation at any time effects an increase
in the number of outstanding shares of Common Stock by subdivision, the
Conversion Ratio shall be increased in the same proportions as the Common Stock
is subdivided, in each case effective automatically upon, and simultaneously
with, the effectiveness of the subdivision which gives rise to the
adjustment. If the Corporation at any time effects a decrease in the
number of outstanding shares of Common Stock by combination the Conversion shall
remain the same and unchanged.
(ii) Reclassification,
Consolidation or Merger. If at any time, as a result of (A) a
capital reorganization or reclassification (other than a subdivision or
combination which gives rise to an adjustment of the Conversion Ratio pursuant
to Section 7(d)(i)); or (B) a merger or consolidation of the Corporation with
another corporation (whether or not the Corporation is the surviving
corporation), the Common Stock issuable upon the conversion of the Series C
Preferred Stock shall be changed into or exchanged for the same or a different
number of shares of any class or classes of stock of the Corporation or any
other corporation, or other securities convertible into such shares, then, as a
part of such reorganization, reclassification, merger or consolidation,
appropriate adjustments shall be made in the terms of the Series C Preferred
Stock (or of any securities into which the Series C Preferred Stock is changed
or for which the Series C Preferred Stock is exchanged), so that: (x) the
holders of Series C Preferred Stock or of such substitute securities shall
thereafter be entitled to receive, upon conversion of the Series C Preferred
Stock or of such substitute securities, the kind and amount of shares of stock,
other securities, money and property which such holders would have received at
the time of such capital reorganization, reclassification, merger, or
consolidation, if such holders had converted their Series C Preferred Stock
immediately prior to such capital reorganization, reclassification, merger, or
consolidation, and (y) the Series C Preferred Stock or such substitute
securities shall thereafter be adjusted on terms as nearly equivalent as may be
practicable to the adjustments theretofore provided in this Section
7(d). No consolidation or merger in which the Corporation is not the
surviving corporation shall be consummated unless the surviving corporation
shall agree, in writing, to the provisions of this Section
7(d)(ii). The provisions of this Section 7(d)(ii) shall similarly
apply to successive capital reorganizations, reclassifications, mergers, and
consolidations.
(iii) Other Action Affecting
Common Stock. If at any time the Corporation takes any action
affecting its Common Stock which, in the opinion of the Board of Directors of
the Corporation, would have an adverse effect upon the Conversion Rights of the
Series C Preferred Stock and the foregoing conversion ratio adjustment
provisions are not strictly applicable but the failure to make any adjustment
would adversely affect the Conversion Rights, then the Conversion Ratio and the
kind of securities issuable upon the conversion of Series C Preferred Stock
shall be adjusted to preserve, without dilution, the Conversion Rights in such
manner and at such time as the Board of Directors of the Corporation may in good
faith determine to be equitable in the circumstances.
(iv) Notice of
Adjustments. Whenever the Conversion Ratio or the kind of
securities issuable upon the conversion of any one of or all of the Series C
Preferred Stock shall be adjusted pursuant to Sections 7(d)(i) - (iii) above,
the Corporation shall make a certificate signed by its Chief Financial Officer,
Secretary or Assistant Secretary, setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Board of Directors of the Corporation made any determination hereunder), and the
Conversion Ratio and the kind of securities issuable upon the conversion of the
Series C Preferred Stock after giving effect to such adjustment, and shall cause
copies of such certificate to be mailed (by first class mail postage prepaid) to
each holder of Series C Preferred Stock promptly after each
adjustment.
(e) Full
Consideration. All shares of Common Stock which shall be
issued upon the conversion of any Series C Preferred Stock (which is itself
fully paid and non-assessable) will, upon issuance, be fully paid and
non-assessable. The Corporation will pay such amounts and will take
such other action as may be necessary from time to time so that all shares of
Common Stock which shall be issued upon the conversion of any Series C Preferred
Stock will, upon issuance and without cost to the recipient, be free from all
pre-emptive rights, taxes, liens and charges with respect to the issue
thereof.
(f) No Impairment. The
Corporation will not, by amendment of its Articles of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation but will at all times in good faith
assist in the carrying out of all the provisions of this Section 7 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of the Series C Preferred Stock against
impairment.
(g) Cancellation of Series C Preferred
Stock. No share of Series C Preferred Stock acquired by the
Corporation upon conversion, redemption or purchase shall be reissued and all
such shares shall be canceled, retired and returned to the status of authorized
and unissued shares of undesignated preferred stock. The Corporation
may take such appropriate corporate action to reduce the authorized number of
Series C Preferred Stock accordingly.
8. PROTECTIVE
PROVISIONS. In addition to any other rights provided by law,
so long as at least one share of Series C Preferred Stock is outstanding, the
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than a majority of the outstanding shares of
the Series C Preferred Stock voting together as a single class:
(a) amend
or repeal any provision of the Corporation’s Articles of Incorporation, Bylaws
or this Certificate of Designation if such action would materially and adversely
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, the Series C Preferred
Stock;
(b)
increase or decrease (other than by conversion) the total number of authorized
shares of Series C Preferred Stock;
(c)
create or issue any series or class, reclassify any authorized capital stock of
the Corporation into stock of any series or class, increase the authorized or
issued amount of any class or series of stock, or authorize, create, issue or
reclassify any obligation or security convertible or exchangeable into or
evidencing a right to purchase capital stock of any class or series, that ranks
prior to the Series C Preferred Stock as to dividends or rights upon
liquidation, dissolution or winding up;
(d) issue
any Common Stock after the date on which Series C Preferred Stock has been last
issued and sold, whether or not subsequently reacquired or retired by the
Corporation, for a consideration per share less than fair market value of the
Common Stock (as determined in good faith by the Board of Directors of the
Corporation) at such issuance or deemed issuance other than: (1) shares of
Common Stock issued in transactions giving rise to adjustments under Sections
7(d)(i) or (ii) above, (2) shares of Common Stock issued upon conversion of
shares of Series C Preferred Stock, or (3) shares issued upon the conversion of
Convertible Securities (as defined below) if the issuance of such Convertible
Securities did not violate Section 8(e) below;
(e) issue
any Convertible Securities with respect to which the Effective Price is less
than the fair market value of the Common Stock (as determined in good faith by
the Board of Directors of the Corporation), at such issuance or deemed
issuance. “CONVERTIBLE SECURITIES” means all rights or options for
the purchase of, or stock or other securities convertible into, Common Stock
(other than Common Stock issued for the purposes set forth in Sections 8(d)(1)
or (2) above) or other Convertible Securities, whenever and each time
issued. The “EFFECTIVE PRICE” with respect to any Convertible
Securities means the result of dividing: (1) the sum of (x) the total
consideration, if any, received by the Corporation for the issuance of such
Convertible Securities, plus (y) the minimum consideration, if any, payable to
the Corporation upon exercise or conversion of such Convertible Securities
(assuming that the full amount of securities issuable upon exercise or
conversion are issued), plus (z) the minimum consideration, if any, payable to
the Corporation upon exercise or conversion of any Convertible Securities
issuable upon exercise or conversion of such Convertible Securities, by: (2) the
maximum number of Common Stock (other than Common Stock issued for the purposes
set forth in Sections 8(d)(1) or (2) above) issuable upon exercise or conversion
of such Convertible Securities or of any Convertible Securities issuable upon
exercise or conversion of such Convertible Securities; or
(f) sell,
convey, or otherwise dispose of or encumber all or substantially all of its
property or business or merge or consolidate with any other corporation (other
than a wholly-owned subsidiary corporation) or effect any transaction or series
of related transactions in which more than fifty percent (50%) of the voting
power of the Corporation is disposed of.
9. SEVERABILITY OF
PROVISIONS. If any voting powers, preferences and relative,
participating, optional and other special rights of the Series C Preferred Stock
and qualifications, limitations and restrictions thereof set forth in this
resolution (as such resolution may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other voting powers, preferences and relative, participating,
optional and other special rights of Series C Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this
resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other special rights of Series C Preferred Stock and
qualifications, limitations and restrictions thereof shall, nevertheless, remain
in full force and effect, and no voting powers, preferences and relative,
participating, optional or other special rights of Series C Preferred Stock and
qualifications, limitations, and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Series C Preferred Stock and
qualifications, limitations and restrictions thereof unless so expressed
herein.