UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
Information
Statement Pursuant to Section 14(c)
of
the
Securities Exchange Act of 1934
Check
the
appropriate box:
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Preliminary
Information Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
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Definitive
Information Statement
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MEDIAVEST,
INC.
(Name
of Registrant As Specified In Charter)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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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 the amount on which the filing
fee is
calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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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 offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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NOTICE
OF
ACTION
OF STOCKHOLDERS BY WRITTEN CONSENT
Dear
Stockholder:
Notice
is
hereby given that we have received in lieu of a meeting, written consents from
stockholders representing a majority of our outstanding shares of common stock
and preferred stock, on an as-converted basis, approving (1) the reincorporation
(the “Reincorporation”) of Mediavest, Inc., a New Jersey corporation
(“Mediavest” or the “Company”), in Delaware by merger with and into its
wholly-owned, newly formed Delaware subsidiary, Mandalay Media, Inc.
(“Mandalay”), and (2) the Company’s 2007 Employee, Director and Consultant Stock
Plan (the “2007 Plan”).
WE
ARE NOT ASKING YOU FOR A PROXY AND
YOU
ARE REQUESTED NOT TO SEND US A PROXY.
As
of the
close of business on September 27, 2007, the record date for shares entitled
to
notice of and to sign written consents in connection with the Reincorporation
and the adoption of the 2007 Plan, there were 21,730,000 shares of our common
stock, par value $0.0001 per share, issued and outstanding and 100,000 shares
of
Series A Convertible Preferred Stock, par value $0.0001 per share, issued and
outstanding. Each share of our common stock and preferred stock is entitled
to
one vote. Prior to the mailing of this Information Statement, certain of our
stockholders holding a majority of our outstanding common stock and preferred
stock, on an as-converted basis, signed written consents approving the
Reincorporation and the 2007 Plan. As a result, the Reincorporation and the
2007
Plan has been approved, and neither a meeting of our stockholders nor additional
written consents are necessary to effectuate the Reincorporation or adopt the
2007 Plan.
The
Reincorporation is intended to be effective at 12:01 a.m., Eastern Standard
Time, on or about November 5, 2007. The Reincorporation will result in the
following:
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the
Company will be governed by the laws of the State of Delaware and
by a new
Certificate of Incorporation
and new Bylaws prepared in accordance with Delaware law;
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the
corporate name of the Company will change to “Mandalay Media,
Inc.”;
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the
Company’s authorized capital stock, consisting of 101,000,000 shares of
authorized capital stock, of which 100,000,000
shares are common stock, par
value $0.0001 per share,
and 1,000,000 shares are preferred stock, par
value $0.0001 per share, will convert to 101,000,000 shares of authorized
capital stock of Mandalay, consisting
of 100,000,000 shares of common stock, par value $0.0001 per share,
and
1,000,000 shares of preferred
stock, par value $0.0001 per share;
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the
persons currently serving as officers and directors of the Company
will
continue to serve in their respective
capacities after the Reincorporation;
and
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Mandalay
will: (i) accede to all of the rights, privileges, immunities and
powers
of the Company; (ii)
acquire and possess all of the property of the Company whether real,
personal or mixed; and (iii) assume
all of the debts, liabilities, obligations and duties of the
Company.
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The
enclosed Information Statement is first being sent to stockholders on or about
[___________]. It is intended to provide certain information regarding the
Reincorporation and the 2007 Plan to the stockholders who have not given their
written consent to the foregoing actions.
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Sincerely
yours,
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/s/
Robert S. Ellin
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Robert
S. Ellin,
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Chief
Executive Officer
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THIS
INFORMATION STATEMENT IS BEING PROVIDED TO
YOU
BY
THE BOARD OF DIRECTORS OF THE COMPANY
MEDIAVEST,
INC.
2121
Avenue of the Stars
Suite
2550
Los
Angeles, CA 90067
(310)
601-2500
October
[__], 2007
NOT
TO SEND US A PROXY
This
Information Statement has been filed with the Securities and Exchange Commission
and is being furnished pursuant to Regulation 14C of the Securities Exchange
Act
of 1934, as amended (the "Exchange Act"), to the holders (the "Stockholders")
of
common stock, par value $0.0001 per share ("Common Stock"), and preferred stock,
par value $0.0001 per share (“Preferred Stock”), of Mediavest, Inc., a New
Jersey Corporation (the "Company"), to notify such Stockholders of the
following:
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On
September 27, 2007, the Company received written consents in lieu
of a
meeting of Stockholders from the holders of 14,300,000 shares of
Common
Stock, representing approximately 66% of the total issued and outstanding
shares of Common Stock, and 100,000 shares of Series A Convertible
Preferred Stock, par value $0.0001 per share (“Series A Preferred Stock”),
representing 100% of the total issued and outstanding shares of Preferred
Stock (collectively, the “Majority Stockholders”), approving the
reincorporation of the Company from the State of New Jersey to the
State
of Delaware (the “Reincorporation”);
and
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On
September 27, 2007, the Company received written consents in lieu
of a
meeting of Stockholders from the Majority Stockholders approving
the
Company’s 2007 Employee, Director and Consultant Stock Plan (the “2007
Plan”).
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On
September 27, 2007, pursuant to New Jersey Business Corporation Act (“NJBCA”)
§14A:6-7.1, the Board of Directors of the Company had unanimously approved the
above actions, subject to stockholder approval. The NJBCA permits the majority
of the outstanding shares of voting capital stock entitled to vote on a
particular matter to approve and authorize actions by written consent of a
majority of the shares outstanding as if the actions were undertaken at a duly
constituted meeting of our stockholders. The Majority Stockholders approved
both
the Reincorporation and the 2007 Plan by written consent as set forth
above. Accordingly, your consent is not required and is not being
solicited in connection with the approval of the Reincorporation or the 2007
Plan.
The
entire cost of furnishing this Information Statement will be borne by the
Company. The Company will request brokerage houses, nominees, custodians,
fiduciaries and other like parties to forward this Information Statement to
the
beneficial owners of the Common Stock held of record by them. The Board of
Directors has fixed the close of business on September 27, 2007 as the record
date (the "Record Date") for the determination of stockholders who are entitled
to receive this Information Statement.
You
are
being provided with this Information Statement pursuant to Section 14C of the
Exchange Act and Regulation 14C and Schedule 14C thereunder. This Information
Statement is being mailed on or about [________ __], 2007 to all Stockholders
of
record as of the Record Date.
OUTSTANDING
VOTING SECURITIES
As
of the
Record Date, the Company had 21,730,000 shares of Common Stock issued and
outstanding, and 100,000 shares of Series A Preferred Stock issued and
outstanding, consisting of all of the Company’s issued and outstanding capital
stock.
On
September 27, 2007, the holders of 14,300,000 shares of Common Stock,
representing approximately 66% of the shares of Common Stock then outstanding,
and 100,000 shares of Series A Preferred Stock, representing 100% of the shares
of Preferred Stock then outstanding, executed and delivered to the Company
written consents approving the Reincorporation of the Company from the State
of
New Jersey to the State of Delaware and the 2007 Plan. Because the action has
been approved by the Majority Stockholders, no proxies are being solicited
with
this Information Statement. The NJBCA provides in substance that unless the
Company's certificate of incorporation provides otherwise, stockholders may
take
action without a meeting of stockholders and without prior notice if a consent
or consents in writing, setting forth the action so taken, is or are signed
by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to take such action at a meeting at which all
shares entitled to vote thereon were present.
The
following actions were taken based upon the unanimous recommendation of the
Company’s Board of Directors (the “Board of Directors”) and the written consent
of the Majority Stockholders:
ACTION
1
General
Information
The
following questions and answers are intended to respond to frequently asked
questions concerning the Reincorporation of the Company in Delaware. 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.
Questions
and Answers
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Q:
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Why
is Mediavest reincorporating in Delaware?
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A:
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Delaware
has adopted a General Corporation Law that is generally recognized
as one
of the most comprehensive and progressive state corporate statutes.
Therefore, we believe that the Reincorporation in Delaware will
give us
more flexibility and simplicity in various corporate transactions.
Also,
the Delaware courts have provided extensive case law with respect
to
corporate matters, which will provide the Company greater predictability
and reduce certain uncertainties and risks in conducting our
business.
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Q:
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Why
isn’t Mediavest holding a meeting of stockholders to approve the
Reincorporation?
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A:
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The
Board of Directors has already approved the Reincorporation and
has
received the written consent of the Majority Stockholders, who
represent a
majority of our outstanding shares of common stock and preferred
stock, on
an as-converted basis. Under New Jersey law, this transaction may
be
approved by the written consent of a majority of the shares entitled
to
vote thereon. Because we have already received written consents
representing the necessary number of shares, a meeting is not necessary
and represents a substantial and avoidable
expense.
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Q:
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What
are the principal features of the Reincorporation?
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A:
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The
Reincorporation will be accomplished by a merger of Mediavest with
and
into its wholly-owned, newly formed subsidiary, Mandalay Media,
Inc., a
Delaware corporation, effectively changing our corporate name to
“Mandalay
Media, Inc.” One new share of the Mandalay common stock will be issued for
each share of Mediavest common stock, and one new share of the
Mandalay
preferred stock will be issued for each share of Mediavest preferred
stock
that is held by our stockholders at the effective time of the
Reincorporation. Following the reincorporation, the shares of Mediavest
will cease to trade on the Over-the-Counter Bulletin Board and
the shares
of Mandalay will begin trading in their place, under the same trading
symbol “MVSI.OB”.
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Q:
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How
will the Reincorporation affect my ownership of
Mediavest?
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A:
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After
the Reincorporation becomes effective, you will own the same percentage
of
Mandalay that you owned of Mediavest immediately prior to the
Reincorporation.
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Q:
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How
will the Reincorporation affect the officers, directors and employees
of
Mediavest?
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A:
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The
officers, directors and employees of Mediavest will become the
officers,
directors and employees of Mandalay after the
Reincorporation.
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Q:
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How
will the Reincorporation affect the business of
Mediavest?
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A:
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Mandalay
will continue the business of Mediavest at the same locations and
with the
same assets. Mediavest will cease to exist at the effective time
of the
Reincorporation.
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Q:
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How
do I exchange stock certificates of Mediavest for stock certificates
of
Mandalay?
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A:
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After
the Reincorporation, our transfer agent will send you the documents
necessary to exchange your stock certificates.
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Q:
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What
happens if I do not surrender my stock certificates of
Mediavest?
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Although
we encourage you to surrender your stock certificates, you are
not
required to do so in order to continue to have the rights as a
stockholder
of Mandalay.
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Q:
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What
if I have lost my Mediavest stock certificates?
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A:
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If
you have lost your Mediavest stock 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.
Our
transfer agent may be reached at:
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American
Stock Transfer & Trust Company
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59
Maiden Lane - Plaza Level
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New
York, New York 10038
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Attn:
Barry Rosenthal
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Tel:
(718) 921-8380
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Q:
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Can
I require the Company to purchase my stock as a result of the
Reincorporation?
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A:
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Yes.
Under New Jersey law, you are entitled to appraisal and purchase
of your
stock as a result of the Reincorporation. See the section entitled
“Dissenters’ Rights of Appraisal.”
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Q:
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Who
will pay the costs of Reincorporation?
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A:
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The
Company will pay all of the costs of the Reincorporation, including
the
costs of printing and distributing this Information Statement and
related
legal and accounting services. 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. Each stockholder must pay the costs of exchanging
his or
her stock certificates for new stock certificates.
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Q:
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Will
I have to pay taxes as a result of the Reincorporation?
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We
believe that the Reincorporation is not a taxable event and that
you will
be entitled to the same aggregate basis in the shares of Mandalay
that you
had in your shares of Mediavest. EVERYONE’S TAX SITUATION IS DIFFERENT,
AND YOU SHOULD CONSULT WITH YOUR PERSONAL TAX ADVISOR REGARDING
THE TAX
EFFECTS OF THE REINCORPORATION.
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The
following discussion summarizes certain aspects of the Reincorporation of the
Company in Delaware. This summary does not include all of the provisions of
the
Plan and Agreement of Merger between Mediavest and Mandalay, a copy of which
is
attached hereto as Exhibit
A
(the
“Merger Agreement”), the Certificate of Incorporation of Mandalay (the “Mandalay
Certificate”), a copy of which is attached hereto as Exhibit
B,
or the
Bylaws of Mandalay (the “Mandalay Bylaws”), a copy of which is attached hereto
as Exhibit
C.
Copies
of the Restated Certificate of Incorporation, as amended, and the Bylaws of
Mediavest (the “Mediavest Certificate” and the “Mediavest Bylaws,” respectively)
are available for inspection at the principal office of the Company and copies
will be sent to stockholders upon request. THE DISCUSSION CONTAINED IN THIS
INFORMATION STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER
AGREEMENT, THE MANDALAY CERTIFICATE, THE MANDALAY BYLAWS, AND THE APPLICABLE
PROVISIONS OF NEW JERSEY CORPORATE LAW AND DELAWARE CORPORATE LAW.
Principal
Reasons for Reincorporation in Delaware.
We
believe that the Reincorporation will give us a greater measure of flexibility
and simplicity in corporate governance than is available under New Jersey law
and will increase the marketability of our securities. The Delaware General
Corporation Law (the “DGCL”) is generally recognized as one of the most
comprehensive and progressive state corporate statutes. Accordingly, to the
extent the DGCL addresses matters of corporate concern more thoroughly than
the
corporate statutes of other states and is more reflective of current trends
and
developments in the business community, by reincorporating the Company in
Delaware, the Company (through its successor, Mandalay) will be better suited
to
take advantage of business opportunities as they arise and to provide for its
ever-changing business needs. In addition, there exists in Delaware a
substantial body of case law with respect to corporate matters, including the
governance of the internal affairs of a corporation and its relationships and
contacts with others. This has brought about greater predictability under
Delaware law and has therefore reduced the uncertainties and risks commonly
associated with resolving disputes of a corporate nature and structuring the
internal affairs of a corporation and its relationships and contacts with
others. As a result, many major corporations have initially incorporated in
Delaware or have changed their corporate domiciles to Delaware in a manner
similar to that which we are proposing. For these reasons, we believe that
the
Company’s business and affairs can be conducted to better advantage if the
Company is able to operate under Delaware law. See “Comparison of Significant
Provisions of the Corporation Laws of Delaware and New Jersey.”
Principal
Features of the Reincorporation.
The
Reincorporation will be effected by the merger of Mediavest with and into
Mandalay pursuant to the Merger Agreement, resulting in a change in our state
of
incorporation from New Jersey to Delaware and a change in our corporate name
from Mediavest, Inc. to “Mandalay Media, Inc.” Mandalay is currently a
wholly-owned subsidiary of Mediavest, incorporated under the DGCL for the sole
purpose of effecting the Reincorporation. The Reincorporation will become
effective at 12:01 a.m., Eastern Standard time, on or about November 5, 2007
or
such later time as the required merger documents have been filed in, and
accepted by, Delaware and New Jersey (the “Effective Time”). Following the
merger, Mandalay will be the surviving corporation and will operate under the
name “Mandalay Media, Inc.”
At
the
Effective Time:
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each
outstanding share of Mediavest common stock, par value $0.0001
per share
(the “Mediavest Common Stock”), will be converted into one share of
Mandalay common stock, par value $0.0001 per share (the “Mandalay Common
Stock”);
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each
outstanding share of Mediavest preferred stock, par value $0.0001
per
share (the “Mediavest Preferred Stock”), will be converted into one share
of Mandalay preferred stock, par value $0.0001 per share (the “Mandalay
Preferred Stock”), with each share of Series A Preferred Stock of
Mediavest converting into one share of the Series A Convertible
Preferred
Stock, par value $0.0001 per share, of Mandalay;
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each
outstanding share of Mandalay Common Stock or Mandalay Preferred
Stock
held by Mediavest will be retired and canceled and will resume
the status
of authorized and unissued Mandalay Common Stock or Mandalay Preferred
Stock, as applicable;
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each
share of Mediavest Common Stock and Mediavest Preferred Stock will
be
cancelled and retired;
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Mediavest
will cease to exist;
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our
corporate name will change to “Mandalay Media, Inc.”;
and
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Mandalay
will: (i) accede to all of the rights, privileges, immunities
and powers
of Mediavest; (ii) acquire and possess all of the property of
Mediavest
whether real, personal or mixed; and (iii) assume all of the
debts,
liabilities, obligations and duties of
Mediavest.
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After
the
Effective Time, the Company will be governed by the Mandalay Certificate, the
Mandalay Bylaws and the DGCL, which include a number of provisions that are
not
present in the Mediavest Certificate, the Mediavest Bylaws or the NJBCA.
Accordingly, as described below, a number of significant changes in
stockholders’ rights will be effected in connection with the Reincorporation,
some of which may be viewed as limiting the rights of stockholders. See
“Comparison of Significant Provisions of the Corporation Laws of Delaware and
New Jersey.”
No
federal or state regulatory requirements must be complied with and no approvals
must be obtained in order to consummate the Reincorporation.
Effective
Date of Merger.
The
effectiveness of the Reincorporation is conditioned upon the filing of a
Certificate of Merger with the State of New Jersey and a Certificate of Merger
with State of Delaware. We anticipate filing documents in the respective states
twenty (20) days after the date of mailing of this Information Statement, at
which time the Reincorporation will become effective. As a result of the
Reincorporation, we will cease our corporate existence in the State of New
Jersey.
Pursuant
to the terms of the Merger Agreement, the merger may be abandoned by the Board
of Directors of Mediavest and Mandalay at any time prior to the Effective Time.
In addition, the Board of Directors of Mediavest may amend the Merger Agreement
at any time prior to the Effective Time, but no amendment may, without approval
by a majority of the outstanding shares of Mediavest Common Stock and Mediavest
Preferred Stock, voting together as a single class, change the consideration
to
be received in exchange for the Mediavest Common Stock or Mediavest Preferred
Stock, change any term of the Mandalay Certificate, or change any of the terms
and conditions of the Merger Agreement if such change would adversely affect
the
holders of Mediavest Common Stock or Mediavest Preferred Stock.
No
Change in Business, Management or Board Members.
After
the
Effective Time, the business operations of Mandalay will continue as they are
presently conducted by Mediavest. The members of the Board of Directors of
Mandalay will be the same persons presently serving on the Board of Directors
of
Mediavest. The individuals who will serve as executive officers of Mandalay
will
be the same persons who currently serve as executive officers of Mediavest.
Such
persons and their respective positions are set forth below under the caption
“Officers and Directors.”
Change
in Authorized Capital.
The
authorized capital stock of Mandalay will consist of 100,000,000 shares of
common stock, par value $0.0001 per share (“Mandalay Common Stock”), and
1,000,000 shares of preferred stock, par value $0.0001 per share (“Mandalay
Preferred Stock”), of which 100,000 shares will be designated as Series A
Convertible Preferred Stock. The unissued Mandalay Preferred Stock will be
issuable in series by action of the Board of Directors. The Board of Directors
will be authorized, without further action by the stockholders, to fix the
designations, powers, preferences and other rights and the qualifications,
limitations or restrictions of the unissued Mandalay Preferred Stock, including
preferences and other terms that might discourage takeover attempts by third
parties.
Under
New
Jersey law, a dissenting stockholder of a corporation engaged in certain major
corporate transactions may, under certain circumstances, be entitled to
appraisal rights. Appraisal rights permit a stockholder to receive cash in
the
amount of the fair market value of his or her shares in lieu of the
consideration that he or she would otherwise receive in any such transaction.
See the section below entitled “Dissenters’ Rights of Appraisal.”
Exchange
of Stock Certificates.
After
the
Effective Time, and upon surrender for cancellation of a stock certificate
representing Mediavest Common Stock or Mediavest Preferred Stock, as applicable
(a “Mediavest Stock Certificate”), the holder of such stock certificate will be
entitled to receive a stock certificate for Mandalay Common Stock or Mandalay
Preferred Stock, as applicable (each, a “Mandalay Stock Certificate”). The
Mandalay Stock Certificate will represent that number of shares of Mandalay
Common Stock or Mandalay Preferred Stock, as applicable, into which the
Mediavest Common Stock or Mediavest Preferred Stock, represented by the
surrendered Mediavest Stock Certificate have been converted in the merger,
and
the surrendered Mediavest Stock Certificate, will be cancelled.
Although
we encourage you to exchange your Mediavest Stock Certificates for Mandalay
Stock Certificates, holders of Mediavest Common Stock or Mediavest Preferred
Stock are not required to do so. Dividends and other distributions declared
after the Effective Time with respect to Mandalay Common Stock and Mandalay
Preferred Stock, and payable to holders of record thereof after the Effective
Time, will be paid to the holder of any unsurrendered Mediavest Stock
Certificate with respect to the shares of Mandalay Common Stock or Mandalay
Preferred Stock which by virtue of the merger are represented by such Mediavest
Stock Certificate. Such holder of an unsurrendered Mediavest Stock Certificate
will also be entitled to exercise all voting and other rights as a holder of
Mandalay Common Stock or Mandalay Preferred Stock, as applicable.
Dissenters’
Rights of Appraisal.
Dissenters’
rights will be available to stockholders with respect to the Reincorporation
and
will be governed by Sections 14A:11-1 to 14A:11-3 of the NJBCA. If a stockholder
does not approve the Reincorporation, such stockholder will be entitled to
dissent. A stockholder who wishes to exercise dissenters’ rights should deliver
his written notice of dissent to the Company within 20 days of receipt of this
Information Statement, stating that he intends to demand payment for his shares
if the Reincorporation is consummated. Any stockholder who does not follow
the
foregoing is not entitled to payment for his shares under the NJBCA. We will,
no
later than 10 days after the Reincorporation is effective, send a dissenters’
notice to any stockholders who filed a notice of dissent. The dissenters’ notice
will: (i) state where demand for payment must be sent and when and where the
share certificates for shares of our Common Stock and Preferred Stock must
be
deposited; (ii) inform the holders of shares not represented by certificates
to
what extent the transfer of the shares will be restricted after the demand
for
payment is received; (iii) supply a form for demanding payment; (iv) set a
date
by which we must receive the demand for payment; and (v) be accompanied by
a
copy of Sections 14A:11-1 to 14A:11-3
of the
NJBCA.
Within
20 days after the mailing of the dissenters’ notice, a stockholder wishing to
exercise dissenters’ rights must send a written demand for payment of the fair
value of his shares of Common Stock and/or Preferred Stock. Not later than
20
days after making such written demand for payment, the stockholder shall submit
the certificate(s) representing his Common Stock and/or Preferred Stock to
the
Company.
Upon
filing a notice of election to dissent, a dissenting stockholder will cease
to
have any of the rights of a stockholder except the right to be paid the fair
value of his Company stock pursuant to the NJBCA. If a stockholder loses his
dissenters’ rights, either by withdrawal of his demand or otherwise, he will not
have the right to receive a cash payment for his Company stock and will be
reinstated to all of his rights as a stockholder as they existed at the time
of
the filing of his demand.
Within
10
days after the expiration of the period within which a stockholder may make
written demand to be paid the fair value of his shares, we will mail to each
dissenting stockholder: (i) our financial statements for the year ended December
31, 2006; (ii) a statement of the estimate of the fair value; (iii) an
explanation of how interest was calculated; and (iv) those other items required
by Sections
14A:11-1 to 14A:11-3 of
the
NJBCA. Upon surrender of the certificate(s) representing such shares, and no
later than 30 days after the expiration of the 10 day period, we shall pay
to
each dissenter who complied with the provisions of Sections
14A:11-1 to 14A:11-3 of
the
NJBCA the amount we estimate to be the fair value of the shares, plus accrued
interest. The fair value of the shares is equal to the value of the shares
immediately before the consummation of the merger, excluding any appreciation
or
depreciation in anticipation of the merger unless exclusion would be
inequitable. A dissenting stockholder may reject the payment and serve upon
the
Company, within such 30 day window, a written demand that it commence an action
in the New Jersey Superior Court for the determination of the fair value of
the
shares.
This
description is not intended to be
complete. If you are considering exercising your dissenters’ rights with respect
to the Reincorporation, please review Sections 14A:11-1 to 14A:11-3 of the
NJBCA, particularly the steps required to perfect dissenters’ rights, a copy of
which is attached hereto as Exhibit D. Failure to take any one of the
required steps may result in termination of your dissenters’ rights under New
Jersey law. If you are considering dissenting, you should consult with your
own
legal advisor.
Capitalization.
The
authorized capital of Mediavest on the Record Date consisted of 100,000,000
shares of Common Stock, par value $0.0001 per share, and 1,000,000 shares of
Preferred Stock, par value $0.0001 per share. As of the Record Date,
approximately 21,730,000 shares of Mediavest Common Stock and 100,000 shares
of
Mediavest Preferred Stock were outstanding, all of which were shares of Series
A
Preferred Stock. The authorized capital of Mandalay, which will be the
authorized capital of the Company after the Reincorporation, consists of
100,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000
shares of preferred stock, par value $0.0001 per share. After the Effective
Time, Mandalay will have approximately 21,730,000 shares of common stock and
100,000 shares of preferred stock issued and outstanding, all of which will
be
shares of Series A Convertible Preferred Stock. 3,000,000 shares of Mandalay
Common Stock will be reserved for issuance under the Company’s 2007 Employee,
Director and Consultant Stock Plan. Therefore, at the Effective Time, the
Company will have approximately 75,270,000 shares of Mandalay Common Stock
and
900,000 shares of Mandalay Preferred Stock available for issuance. The
Reincorporation will not affect total stockholder equity or total capitalization
of the Company.
The
Board
of Directors may in the future authorize, without further stockholder approval,
the issuance of such available shares to such persons and for such consideration
upon such terms, including dividend or interest rates, conversion prices, voting
rights, redemption prices, maturity dates and other similar terms, as the Board
of Directors determines. Such issuance could result in significant dilution
of
the voting power and, possibly, the stockholders’ equity, of then-existing
stockholders. The Board of Directors believes it prudent to have shares of
Mandalay Preferred Stock available for such corporate purposes as the Board
of
Directors may from time to time deem necessary and advisable including, without
limitation, acquisitions, the raising of additional capital and assurance of
flexibility of action in the future.
The
issuance of additional authorized Mandalay Common Stock or Mandalay Preferred
Stock may have the effect of deterring or preventing persons seeking to take
control of Mandalay through a tender offer, proxy contest or otherwise or from
causing removal of incumbent management or a corporate transaction such as
a
merger. For example, the issuance of Mandalay Common Stock or Mandalay Preferred
Stock could be used to deter or prevent such a change of control through
dilution of stock ownership of persons seeking to take control or by rendering
a
transaction proposed by such persons more difficult.
Comparison
of Significant Provisions of the Corporation Laws of Delaware and New
Jersey.
After
the
Effective Time, the stockholders of Mediavest, whose rights currently are
governed by New Jersey law and the Mediavest Certificate and Mediavest Bylaws,
will become stockholders of Mandalay, and their rights as stockholders will
then
be governed by Delaware law and the Mandalay Certificate and Mandalay Bylaws.
Although
the corporate statutes of New Jersey and Delaware are similar, certain
differences exist. The most significant differences, in the judgment of the
management of Mediavest, are summarized below. This summary is not intended
to
be complete, and stockholders should refer to the New Jersey General Corporation
Law and the Delaware General Corporation Law to understand how these laws apply
to Mediavest and Mandalay.
Annual
Meetings.
Under
Delaware law, if the annual meeting for the election of directors is not held
on
the designated date, or action by written consent to elect directors in lieu
of
an annual meeting has not been taken, the directors are required to cause that
meeting to be held as soon as is convenient. If there is a failure to hold
the
annual meeting or to take action by written consent to elect directors in lieu
of an annual meeting for a period of 30 days after the designated date for
the
annual meeting, or if no date has been designated for a period of 13 months
after the latest to occur of the organization of the corporation, its last
annual meeting or the last action by written consent to elect directors in
lieu
of an annual meeting, the Court of Chancery may summarily order a meeting to
be
held upon the application of any stockholder or director. Similarly, under
New
Jersey law, if the annual meeting is not held for a period of 30 days after
the
date so designated, or if no such date has been designated for a period of
13
months after the organization of the corporation or after its last annual
meeting, then the Superior Court of New Jersey may summarily order a meeting
and/or the election of directors to be held, upon application of any
shareholder.
Special
Meetings of Stockholders.
New
Jersey law provides that a special meeting of shareholders may be called by
the
president, the board of directors or by such other officers, directors or
shareholders as may be provided in the bylaws. Upon application of the holder
or
holders of not less than 10% of all the shares entitled to vote at a meeting,
the Superior Court of New Jersey, for good cause shown, may order that a special
meeting be called. The Mediavest Bylaws provide that special meetings may be
called by the Chairman of the Board of Directors, the President, the Secretary,
or a majority of the Board of Directors. A special meeting may also be called
by
the President or Secretary upon the written request of stockholders who together
own of record 25% of the outstanding stock of all classes entitled to vote
at
such meeting. 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 meeting. The Mandalay Bylaws
provide that the Board of Directors or the record holders of at least a majority
of the issued and outstanding shares may call a special meeting of the
stockholders.
Actions
by Written Consent of Stockholders.
New
Jersey law and Delaware law each provide that, unless the 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 consents to the action
in writing. In addition, 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.
Duration
of Proxies. Under
Delaware law, a proxy executed by a stockholder will remain valid for a period
of three years unless the proxy provides for a longer period. Under New Jersey
law, a proxy is effective only for a period of eleven months unless the proxy
expressly provides for a longer period.
Removal
of Directors.
Under
New Jersey law, a director may be removed for cause or, unless otherwise
provided in the certificate of incorporation, without cause by the shareholders
by the affirmative vote of the majority of the votes cast by the holders of
shares entitled to vote for the election of directors. The Mediavest Bylaws
further provide that a director may be removed, with or without cause, by a
vote
of a majority of the Board of Directors. Under Delaware law and the Mandalay
Bylaws, directors of a corporation may be removed from office, with or without
cause, by the holders of a majority of shares then entitled to vote at an
election of directors. The Reincorporation will not alter stockholders’ rights
with respect to the removal of directors.
Vacancies
in Directors.
Under
Delaware law, subject to the rights, if any, of any series of preferred stock
to
elect directors and to fill vacancies on the Board of Directors, vacancies
on
the Board of Directors may be filled by the vote of a majority of the remaining
directors then in office, even if less than a quorum. Under New Jersey law,
unless the certificate of incorporation or bylaws provide otherwise, all
vacancies, including those caused by an increase in the number of directors,
may
be filled by the affirmative vote of a majority of the remaining directors
then
in office, even if less than a quorum. The Mediavest Bylaws and the Mandalay
Bylaws also both provide that vacancies on the Board of Directors may be filled
by vote of the stockholders. The Reincorporation will not alter stockholders’
rights with respect to filling director vacancies.
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.
New
Jersey law permits cumulative voting in the election of directors if the
certificate of incorporation provides for cumulative voting and certain
procedures for the exercise of cumulative voting are followed. Delaware law
also
permits cumulative voting if provided for in the certificate of incorporation.
The Mediavest Certificate does not provide for the right of cumulative voting,
and the Mandalay Bylaws expressly deny the right of cumulative voting in the
election of directors. Because neither Mediavest nor Mandalay utilizes
cumulative voting, there will be no difference in stockholders’ rights with
respect to this issue.
Indemnification
of Officers and Directors and Advancement of Expenses.
Delaware and New Jersey have substantially similar provisions regarding
indemnification by a corporation of its officers, directors, employees and
agents. The Mediavest Certificate requires indemnification of Mediavest’s
directors and officers to the fullest extent permitted under applicable law.
New
Jersey law provides that a director, officer, employee or agent may, in general,
be indemnified by the corporation if he has acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. In addition, under New
Jersey law, corporations must indemnify a director to the extent the director
has been successful on the merits or otherwise. Expenses incurred by a director,
officer, employee or agent in connection with such a proceeding may be paid
by
the corporation in advance of the final disposition of the proceeding as
authorized by the board of directors upon receipt of an undertaking by or on
behalf of such individual to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified as provided for under
New
Jersey law. The indemnification and advancement of expenses provisions under
New
Jersey law are not exclusive of any other rights to which a director, officer,
employee or agent may be entitled under the corporation’s certificate of
incorporation or bylaws.
Similarly,
the DGCL authorizes broad indemnification rights which corporations may provide
to their directors, officers, employees and other corporate agents. Delaware
law
generally permits a corporation to indemnify its directors and officers against
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with a third party action, other than a
derivative action, and against expenses actually and reasonably incurred in
the
defense or settlement of a derivative action, provided that there is a
determination that the individual acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation.
The
determination must be made, in the case of an individual who is a director
or
officer at the time of determination, by: a majority of the directors who are
not parties to the action, suit or proceeding, even though less than a quorum;
a
committee of these directors designated by a majority vote of these directors,
even though less than a quorum; independent legal counsel, regardless of whether
a quorum of these directors exists; or a majority vote of the stockholders,
at a
meeting at which a quorum is present. The Mandalay Certificate requires
indemnification of Mandalay’s directors and officers to the fullest extent
permitted under applicable law, with respect to expenses (including attorneys’
fees), judgments, fines, penalties and amounts paid in settlement, actually
and
reasonably incurred by any person in connection with any actual or threatened
proceeding by reason of the fact that such person is or was a director or
officer of Mandalay or is or was serving at the request of Mandalay as a
director or officer of another entity, employee benefit plan or other
enterprise.
The
right
to indemnification includes the right to receive payment of expenses in advance
of the final disposition of such proceeding. Delaware law provides that expenses
incurred by an officer or director in defending any proceeding may be paid
by
the corporation in advance of the final disposition of the 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. The Mandalay
Certificate provides for such mandatory advancement. Directors and officers
will
not be indemnified for expenses or liabilities incurred in connection with
proceedings brought against such persons otherwise than in the capacities in
which they serve Mandalay. Under the DGCL and the Mandalay Bylaws, Mandalay
may
provide the same indemnification to its employees and agents as it provides
to
its directors and officers. Under Delaware law, rights to indemnification need
not be limited to those provided by statute. As a result, under Delaware law
and
the Mandalay Certificate, Mandalay will be permitted to indemnify its directors
and officers, within the limits established by law and public policy, pursuant
to an express contract, a bylaw provision, a stockholder vote or otherwise,
any
or all of which could provide indemnification rights broader than those
expressly provided for under New Jersey or Delaware law. In addition, the
Mandalay Certificate and Mandalay Bylaws authorize Mandalay to purchase and
maintain indemnity insurance, if it so chooses to guard against future
expense.
In
recent
years, investigations, actions, suits and proceedings, including actions, suits
and proceedings by or in the right of a corporation to procure a judgment in
its
favor, seeking to impose liability on, or involving as witnesses, directors
and
officers of publicly-held corporations have become increasingly common. Such
proceedings are typically very expensive, whatever their eventual outcome.
In
view of the costs and uncertainties of litigation in general, it is often
prudent to settle proceedings in which claims against a director or officer
are
made. Settlement amounts, even if immaterial to the corporation involved and
minor compared to the enormous amounts frequently claimed, often exceed the
financial resources of most individual defendants. Even in proceedings in which
a director or officer is not named as a defendant, he may incur substantial
expenses and attorneys’ fees if he is called as a witness or otherwise becomes
involved in the proceeding. As a result, an individual may conclude that the
potential exposure to the costs and risks of proceedings in which he or she
may
become involved may exceed any benefit to such person from serving as a director
or officer of a public corporation. This is particularly true for directors
who
are not also officers of the corporation. The broad scope of indemnification
now
available under Delaware law will permit Mandalay to continue to offer its
directors and officers protection against these risks. The Board of Directors
believes that such protection is reasonable and desirable in order to enhance
Mandalay’s ability to attract and retain qualified directors as well as to
encourage directors to continue to make good faith decisions on behalf of
Mandalay with regard to the best interests of Mandalay and its stockholders.
The
Board
of Directors recognizes that Mandalay may in the future be obligated to incur
substantial expense as a result of the indemnification rights conferred under
the Mandalay Certificate, which are intended to be as broad as possible under
applicable law.
Limitation
on Personal Liability of Directors.
New
Jersey law permits a corporation to include a provision which eliminates or
limits the personal liability of a director or officer to a corporation or
its
shareholders for monetary damages for breach of any duty owed to the corporation
or its shareholders, provided that no such provision may eliminate or limit
the
liability of a director for any breach of duty based upon an act or omission
(i)
in breach of the director’s duty of loyalty to the corporation or its
shareholders, (ii) not in good faith or involving a knowing violation of law,
or
(iii) resulting in receipt by such person of an improper personal benefit.
The
Mediavest Certificate limits the liability of directors to Mediavest to the
fullest extent permitted by New Jersey law.
A
Delaware corporation is permitted to adopt provisions in its certificate of
incorporation limiting or eliminating the liability of a director to a company
and its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such liability does not arise from certain proscribed
conduct, including breach of the duty of loyalty, acts or omissions not in
good
faith or which involve intentional misconduct or a knowing violation of law
or
liability to the corporation based on unlawful dividends or distributions or
improper personal benefit. The Mandalay Certificate will limit the liability
of
directors to Mandalay to the fullest extent permitted by Delaware law. The
Board
of Directors believes that such provision will better enable Mandalay to attract
and retain as directors effective individuals with the experience and background
required to direct Mandalay’s business and affairs.
Directors
have been subject to substantial monetary damage awards in recent years.
Traditionally, courts have not held directors to be insured against losses
a
corporation may suffer as a consequence of the directors’ good faith exercise of
business judgment, even if, in retrospect, the directors’ decision was an
unfortunate one. In the past, directors have had broad discretion to make
decisions on behalf of the corporation under the “business judgment rule.” This
rule offers protection to directors who, after reasonable investigation and
deliberation, adopt a course of action that they reasonably and in good faith
believe will benefit the corporation, but which ultimately proves to be
disadvantageous. Under those circumstances, courts have typically been reluctant
to subject directors’ business judgments to further scrutiny. Some recent court
cases have, however, imposed significant personal liability on directors for
failure to exercise an informed business judgment with the result that the
potential exposure of directors to monetary damages has increased. Consequently,
legal proceedings against directors relating to decisions made by directors
on
behalf of corporations have significantly increased in number, cost of defense
and level of damages claimed. Whether or not such an action is meritorious,
the
cost of defense can be well beyond the personal resources of a director. The
Delaware General Assembly considered such developments a threat to the quality
and stability of the governance of Delaware corporations because of the
unwillingness of directors, in many instances, to serve without adequate
protection and because of the deterrent effect on entrepreneurial
decision-making by directors who serve without such protection. In response,
the
Delaware General Assembly has adopted provisions of the DGCL which permit a
corporation to include in its charter a provision to limit or eliminate, with
certain exceptions, the personal liability of directors to a corporation and
its
stockholders for monetary damages for breach of their fiduciary duties.
The
Board
of Directors believes that the limitation on directors’ liability permitted
under Delaware law will assist Mandalay in attracting and retaining qualified
directors by limiting directors’ exposure to liability. The Reincorporation
proposal will implement this limitation on liability of the directors of
Mandalay, as Article IX of the Mandalay Certificate provides that to the fullest
extent that the DGCL now or hereafter permits the limitation or elimination
of
the liability of directors, no director will be liable to Mandalay or its
stockholders for monetary damages for breach of fiduciary duty. Under this
provision, Mandalay’s directors will not be liable for monetary damages for acts
or omissions occurring after the Effective Time of the Reincorporation, even
if
they should fail to satisfy their duty of care (which requires directors to
exercise informed business judgment in discharging their duties) through
negligence or gross negligence.
Article
IX of the Mandalay Certificate would not limit or eliminate any liability of
directors for acts or omissions occurring prior to the Effective Time. As
provided under Delaware law, Article IX cannot eliminate or limit the liability
of directors for:
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breaches
of their duty of loyalty to Mandalay;
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acts
or omissions not in good faith or involving intentional misconduct
or a
knowing violation of law;
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paying
a dividend or effecting a stock repurchase or redemption which is
illegal
under the DGCL; or
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transactions
from which a director derived an improper personal benefit.
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Further,
Article IX would not affect the availability of equitable remedies, such as
an
action to enjoin or rescind a transaction involving a breach of a director’s
duty of care. Article IX pertains to breaches of duty by directors acting as
directors and not to breaches of duty by directors acting as officers (even
if
the individual in question is also a director). In addition, Article IX would
not affect a director’s liability to third parties or under the federal
securities laws.
The
Board
of Directors recognizes that Article IX may reduce the likelihood of derivative
litigation against directors, and may discourage or deter stockholders from
instituting litigation against directors for breach of their fiduciary duties,
even though such an action, if successful, might benefit Mandalay and its
stockholders. However, given the difficult environment and potential for
incurring liabilities currently facing directors of publicly-held corporations,
the Board of Directors believes that Article IX is in the best interests of
Mandalay and its stockholders, because it should enhance our ability to retain
highly qualified directors and reduce a possible deterrent to entrepreneurial
decision-making. In addition, the Board of Directors believes that Article
IX
may have a favorable impact over the long term on the availability, cost, amount
and scope of coverage of directors’ liability insurance, should the Company
desire to acquire such insurance for the protection of directors. The Board
of
Directors believes that these provisions will provide a better balancing of
the
legal obligations of, and protections for, directors and will contribute to
the
quality and stability of our corporate governance. The Board of Directors has
concluded that the benefit to stockholders of improved corporate governance
outweighs any possible adverse effects on stockholders of reducing the exposure
of directors to liability and broadening indemnification rights.
Dividends.
Delaware law is more restrictive than New Jersey law with respect to when
dividends may be paid. Under 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, 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. New Jersey law provides that,
subject to any restrictions in the certificate of incorporation, a corporation
may pay a dividend at the discretion of its board of directors. In addition,
New
Jersey law prohibits a corporation from repurchasing or redeeming its shares
if:
(i) after giving effect to such repurchase or redemption, the corporation would
be unable to pay its debts as they become due in the usual course of business
or
the corporation's total assets would be less than its total liabilities; (ii)
after giving effect to such repurchase or redemption, the corporation would
have
no equity outstanding; (iii) the redemption price exceeded that specified in
the
securities acquired plus, in the case of shares entitled to cumulative
dividends, the dividends which would have accrued to the next dividend date
following the date of acquisition; or (iv) such repurchase or redemption is
contrary to any restrictions contained in the corporation's certificate of
incorporation.
Amendment
to Certificate
Incorporation and Bylaws. In general, both Delaware law and New Jersey 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
of incorporation. Both Delaware law and New Jersey law also provide that in
addition to the vote above, the vote of a majority of the outstanding shares
of
a class of stock may be required to amend the certificate of incorporation.
While Delaware law provides that a certificate of incorporation may provide
for
a greater or lesser vote than would otherwise be required by Delaware law,
New
Jersey law provides that the certificate of incorporation may require a greater
vote than would otherwise be required under New Jersey law. Neither state
requires stockholder approval for the Board of Directors of a corporation to
fix
the rights, powers and preferences of a class of stock, if the corporation’s
organizational documents grant such power to its Board of Directors. Both the
Mediavest Certificate and the Mandalay Certificate grant this power to the
Board
of Directors with respect to the preferred stock of Mediavest and Mandalay,
respectively. The Mediavest Bylaws provide that they may be amended by majority
vote of the Board of Directors or by a majority vote of the holders of
outstanding shares entitled to vote. The Mandalay Bylaws provide that they
may
be amended by the vote of the Board of Directors or holders of a majority of
the
shares then entitled to vote.
Stockholder
Vote for Mergers and Other Corporation Reorganizations.
In
general, both Delaware law and New Jersey law require authorization by an
absolute majority of outstanding shares entitled to vote, as well as approval
by
the Board of Directors, with respect to the terms of a merger or a sale of
substantially all of the assets of the corporation. Delaware law does not
require a stockholder vote of the surviving corporation in a merger (unless
the
corporation provides otherwise in its certificate of incorporation) if:
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the
merger agreement does not amend the existing certificate of incorporation;
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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
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either
none or a limited number of shares of common stock of the surviving
corporation are issued under
the plan of merger.
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New
Jersey law does not require a stockholder vote of the surviving corporation
in a
merger under substantially similar circumstances, although there is no
requirement that either none or a limited number of shares of common stock
are
issued under the plan of merger. However, New Jersey law does require that
the
number of voting shares and participating shares outstanding immediately after
the merger, plus the number of voting shares and participating shares issuable
on conversion of other securities or on exercise of rights and warrants issued
pursuant to the merger, will not exceed by more than 40% the total number of
voting shares or participating shares, as applicable, of the surviving
corporation outstanding immediately before the merger.
Defenses
Against Hostile Takeovers.
Section
203 of the DGCL contains certain “anti-takeover” provisions that apply to a
Delaware corporation unless the corporation elects not to be governed by such
provisions in its certificate of incorporation or bylaws. Section 203 prohibits
a corporation from engaging in any “business combination” with any person that
owns 15% or more of its outstanding voting stock for a period of three years
following the time that such stockholder obtained ownership of more than 15%
of
the outstanding voting stock of the corporation. A business combination includes
any merger, consolidation or sale of substantially all of a corporation’s
assets. The three-year waiting period does not apply, however, if any of the
following conditions are met:
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the
Board of Directors of the corporation approved either the business
combination or the transaction which
resulted in such stockholder owning more than 15% of such stock before
the
stockholder obtained
such ownership;
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after
the transaction which resulted in the stockholder owning more than
15% of
the outstanding voting
stock of the corporation is completed, such stockholder owns at least
85%
of the voting stock of
the corporation outstanding at the time that the transaction commenced;
or
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at
or after the time the stockholder obtains more than 15% of the outstanding
voting stock of the corporation,
the business combination is approved by the Board of Directors and
authorized at an annual
or special meeting of stockholders (and not by written consent) by
the
affirmative vote of at least
662/3%
of the outstanding voting stock that is not owned by the acquiring
stockholder.
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In
addition, Section 203 does not apply to any person who became the owner of
more
than 15% of a corporation’s stock if it was as a result of action taken solely
by the corporation.
Such
a
takeover bid may not proceed until after the receipt by the filing party of
the
Bureau's permission. Such permission may not be denied unless the Bureau, after
a public hearing, finds that (i) the financial condition of the offeror is
such
as to jeopardize the financial stability of the target company or prejudice
the
interests of any employees or security holders who are unaffiliated with the
offeror, (ii) the terms of the offer are unfair or inequitable to the security
holders of the target company, (iii) the plans and proposals which the offeror
has to make any material change in the target company's business, corporate
structure, or management are not in the interest of the target company's
remaining security holders or employees, (iv) the competence, experience and
integrity of those persons who would control the operation of the target company
are such that it would not be in the interest of the target company's remaining
security holders or employees to permit the takeover, or (v) the terms of the
takeover bid do not comply with the provisions of Chapter 10A of the New Jersey
Business Corporation Act.
The
New
Jersey Shareholder Protection Act, adopted in 1986, restricts "business
combinations" between a resident domestic corporation and its interested
stockholders. An "interested stockholder" generally is (i) a person that
beneficially owns 10% or more of the voting power of the corporation, or (ii)
an
affiliate or associate of the corporation that held a 10% or greater beneficial
ownership interest at any time within the prior five years. A "business
combination" includes any merger or consolidation of the resident business
corporation or any of its subsidiaries with the interested stockholder or an
entity affiliated or associated with the interested stockholder. Business
combinations also include any sale, lease or other disposition to or with the
interested stockholder of more than 10% of the corporation's assets by value;
the issuance or transfer to the interested stockholder of stock with a value
greater than 5% of the corporation's outstanding stock; the adoption of a plan
of liquidation or dissolution pursuant to an arrangement or agreement with
the
interested stockholder or its affiliate or associate; and various other
significant transactions.
The
Shareholder Protection Act does not apply to a business combination with an
interested stockholder if the corporation was not listed on a national
securities exchange at the time the interested stockholder acquired his or
its
10% interest in the company (the "stock acquisition date"). Otherwise, the
Shareholder Protection Act generally prohibits a resident domestic corporation
from engaging in a business combination with an interested stockholder for
a
period of five years following the stock acquisition date unless the business
combination is approved by the corporation's board of directors prior to the
stock acquisition date.
Unless
it
falls under certain excluded categories of transactions, a business combination
with an interested stockholder is also prohibited unless any one of the
following three conditions are satisfied:
| |
§
|
the
board of directors approves the business combination prior to the
stock
acquisition date;
|
| |
§
|
if
the business combination occurs more than five years from the stock
acquisition date, the holders of two-thirds of the corporation's
voting
stock not beneficially owned by the interested stockholder approve
the
business combination by an affirmative vote;
or
|
| |
§
|
if
the business combination occurs more than five years from the stock
acquisition date, the transaction meets certain requirements designed
to
ensure, among other things, that the shareholders unaffiliated with
the
interested stockholder receive for their shares the higher of (i)
the
maximum price paid by the interested stockholder during the five
years
preceding the announcement date or the date the interested stockholder
became such, whichever is higher, or (ii) the market value of the
corporation's common stock on the announcement date or the interested
stockholder's stock acquisition date, whichever yields a higher
price.
|
Restriction
of Maximum Number of Directors and Filling Vacancies on the Board of
Directors.
Delaware law and New Jersey law require that the Board of Directors of a
corporation consist of one or more members and that the number of directors
be
set by the corporation’s bylaws, unless it is set by the corporation’s
certificate of incorporation. The Mediavest Bylaws provide that the number
of
directors will be no less than one. The power to determine the number of
directors and the power to fill any unoccupied seat or vacancies, is vested
in
the Board of Directors. The Mandalay Bylaws provide that the number of directors
will be determined from time to time by the Board of Directors. The power to
determine the number of directors within these numerical limitations and the
power to fill vacancies, whether occurring by reason of an increase in the
number of directors or by resignation or removal, is vested in the Board of
Directors. The overall effect of such provisions may be to prevent a person
or
entity from quickly acquiring control of Mandalay, for example, through an
increase in the number of the directors and election of nominees to fill the
newly created vacancies, and thus makes it more likely that existing management
will continue in office.
Interested
Director Transactions.
Under
Delaware law, contracts or transactions in which one or more of a corporation’s
directors has an interest are not void or voidable because of such interest
if
certain conditions are met. To meet these conditions, either (i) the
stockholders or the disinterested directors must approve any such contract
or
transaction after the full disclosure of material facts, or (ii) the contract
or
transaction must have been fair as to the corporation at the time it was
approved. Under Delaware law, if board approval is sought, the contract or
transactions must be approved by a majority of the disinterested directors
(even
though less than a quorum).
New
Jersey law does not automatically void contracts or transactions between a
corporation and one of the corporation’s directors. Under New Jersey law, a
contract or transaction may not be voided solely because:
|
|
• |
the
contract is between the corporation and a director of the corporation
or
an entity in which a director
of the
corporation has a financial interest;
|
|
|
• |
an
interested director is present at the meeting of the board of directors
that authorizes or approves the
contract
or transaction; or
|
|
|
• |
the
vote or votes of the interested director are counted for purposes
of
authorizing or approving the contract
or
transaction involving the interested transaction.
|
Contracts
or transactions such as those described above are permissible if:
|
|
• |
the
facts surrounding the contract or transaction are known to the board
of
directors and the board of directors
authorize, approve or ratify the contract or transaction in good
faith by
unanimous written consent or
by affirmative vote of a majority of the disinterested
directors;
|
|
|
• |
the
fact of the common directorship or interest is disclosed to the
stockholders and
they authorize, approve or
ratify the contract or transaction;
or
|
|
|
• |
the
contract or transaction is fair and reasonable as to the corporation
at
the time it is authorized or approved.
|
Appraisal
Rights.
Under
both Delaware and New Jersey law, a dissenting stockholder of a corporation
engaged in certain major corporate transactions may, under certain limited
circumstances, be entitled to appraisal rights. Appraisal rights permit a
stockholder to receive cash in the amount of the fair market value of his or
her
shares (as determined by agreement of the parties or a court), in lieu of the
consideration that he or she would otherwise receive in any such transaction.
Under
Delaware law, unless the certificate of incorporation of a corporation provides
otherwise, appraisal rights are only available with respect to a merger or
consolidation of a corporation under certain limited circumstances. No appraisal
rights are provided in the case of a sale or transfer of all or substantially
all of the corporation’s assets or an amendment to the corporation’s certificate
of incorporation. Moreover, Delaware law does not provide appraisal rights
in
connection with a merger or consolidation, unless the certificate of
incorporation provides otherwise, to the owners of shares of a corporation
that,
at the record date fixed to determine the stockholders entitled to receive
notice of and to vote at the meeting of stockholders to act upon the merger
or
consolidation, is either:
|
|
• |
listed
on a national securities exchange; or
|
|
|
• |
held
of record by more than 2,000 stockholders;
|
unless
the applicable agreement of merger or consolidation requires the owners of
these
shares to receive, in exchange for these shares, anything other than shares
of
stock of the resulting or surviving corporation or shares of stock of any other
corporation listed on a national securities exchange, designated as described
above, or held of record by more than 2,000 holders.
New
Jersey law provides that stockholders of a corporation are entitled to dissent
from and obtain payment of the fair market value of his or her shares in the
event of the following corporate transactions:
|
|
• |
consummation
of a plan of merger or consolidation to which the New Jersey corporation
is a party, provided
that approval by stockholders of the surviving corporation is required
for
the merger; or
|
|
|
• |
consummation
of any sale, lease, exchange or other disposition of all or substantially
all of the assets of a corporation
not in the usual or regular course of business as conducted by such
corporation.
|
However,
appraisal rights are not provided in such transactions, unless the certificate
of incorporation provides otherwise:
|
|
• |
to
the holders of shares of any class that is either listed on a national
securities exchange or held of record by
more than 1,000 stockholders;
|
|
|
• |
to
stockholders who receive in such transaction cash and/or securities
which
are listed on a national securities
exchange or held of record by not less than 1,000 stockholders;
or
|
|
|
• |
where,
pursuant to a plan of dissolution of the corporation which provides
for
distribution of substantially all
of its net assets to stockholders, such stockholders receive cash
and/or
securities which are
listed on a national
securities exchange or held of record by not less than 1,000
stockholders.
|
Federal
Income Tax Consequences of the Reincorporation.
The
following discussion summarizes the material U.S. federal income tax
consequences of the Reincorporation that are applicable to you as a Company
stockholder. It is based on the Internal Revenue Code of 1986, as amended (the
“Code”), applicable Treasury regulations, judicial authority, and administrative
rulings and practice, all as of the date of this Information Statement and
all
of which are subject to change, including changes with retroactive effect.
The
discussion below does not address any state, local or foreign tax consequences
of the Reincorporation. Your tax treatment may vary depending upon your
particular situation. You also may be subject to special rules not discussed
below if you are a certain kind of Company stockholder, including, but not
limited to: an insurance company; a tax-exempt organization; a financial
institution or broker-dealer; a person who is neither a citizen nor resident
of
the United States or entity that is not organized under the laws of the United
States or political subdivision thereof; a holder of Company shares as part
of a
hedge, straddle or conversion transaction; a person that does not hold Company
shares as a capital asset at the time of the Reincorporation; or an entity
taxable as a partnership for U.S. federal income tax purposes.
The
Company will not request an advance ruling from the Internal Revenue Service
as
to the U.S. federal income tax consequences of the Reincorporation or any
related transaction. The Internal Revenue Service could adopt positions contrary
to those discussed below and such positions could be sustained. You are urged
to
consult with your own tax advisors and financial planners as to the particular
tax consequences of the Reincorporation to you, including the applicability
and
effect of any state, local or foreign laws, and the effect of possible changes
in applicable tax laws.
It
is
expected that the Reincorporation will have the following U.S. federal income
tax consequences:
|
|
• |
no
gain or loss will be recognized by Mediavest, Mandalay or the stockholders
of Mediavest who receive Mandalay Common Stock or Mandalay Preferred
Stock
in exchange for their Mediavest Common Stock or Mediavest Preferred
Stock,
as applicable, in connection with the
Reincorporation;
|
|
|
• |
the
aggregate adjusted tax basis of Mandalay Common Stock or Mandalay
Preferred Stock received by a stockholder
of Mediavest as a result of the Reincorporation will be the same
as the
stockholder’s aggregate
adjusted tax basis in the shares of Mediavest Common Stock or Mediavest
Preferred Stock, as applicable,
converted into such Mandalay Common Stock or Mandalay Preferred Stock;
and
|
| |
•
|
a
stockholder who receives Mandalay Common Stock or Mandalay Preferred
Stock
pursuant to the Reincorporation will include in its holding the holding
period of his Mediavest Common Stock or Mediavest Preferred Stock,
as
applicable. State, local or foreign income tax consequences to
stockholders may vary from the federal income tax consequences described
above.
|
YOU
ARE
URGED TO CONSULT YOUR OWN TAX ADVISOR AS TO THE CONSEQUENCES OF THE
REINCORPORATION UNDER ALL APPLICABLE TAX LAWS.
ACTION
2
2007
EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN
On
September 27, 2007 the Board of Directors and the Majority Stockholders approved
the 2007 Employee, Director and Consultant Stock Plan (the “2007 Plan”). Under
the 2007 Plan, employees, directors and consultants of the Company (the
“Eligible Participants”) may be issued stock awards as compensation for their
services to the Company. The 2007 Plan authorizes and entitles the Company
to
issue to Eligible Participants awards to purchase up to 3,000,000 shares of
Common Stock. The 2007 Plan will continue in effect until September 27, 2017.
Our
2007
Plan provides that no participant may receive awards for more than 500,000
shares of Common Stock in any fiscal year. Shares of Common Stock reserved
for
awards under the 2007 Plan that are forfeited or are canceled will be added
back
to the share reserve available for future awards. However, shares of Common
Stock tendered in payment for an award or shares of Common Stock withheld for
taxes will not be available again for grant.
Our
Board
of Directors and management all believe that the effective use of stock-based
long-term incentive compensation is vital to our ability to achieve strong
performance in the future. The 2007 Plan will maintain and enhance the key
policies and practices adopted by our management and Board of Directors to
align
employee and shareholder interests. In addition, our future success depends,
in
large part, upon our ability to maintain a competitive position in attracting,
retaining and motivating key personnel. We believe that the 2007 Plan is
essential to permit our management to continue to provide long-term,
equity-based incentives to present and future key employees, consultants and
directors and to give us the flexibility we need to make various types of awards
in light of the recent changes in tax and accounting rules relating to
equity-based compensation.
The
2007
Plan is required to be approved by our stockholders in order to ensure (i)
favorable federal income tax treatment for grants of incentive stock options
under Section 422 of the Code and (ii) continued eligibility to receive a
federal income tax deduction for the compensation to be received by our named
executive officers upon the exercise of stock options to be issued under the
2007 Plan by complying with Rule 162(m) of the Code.
The
following is a brief summary of the 2007 Plan. This summary is qualified in
its
entirety by reference to the text of the 2007 Plan, a copy of which is attached
as Exhibit
E
to this
Information Statement.
Material
Features of our 2007 Plan
The
2007
Plan will allow us, under the direction of the Board of Directors and any
committee to which the Board of Directors delegates its authority, to make
grants of stock options, restricted and unrestricted stock awards and other
stock-based awards to employees, consultants and directors (approximately 8
people) who, in the opinion of the Board of Directors, are in a position to
make
a significant contribution to our long-term success. The purpose of these awards
is to attract and retain key individuals, further align employee and shareholder
interests, and to closely link compensation with Company performance. The 2007
Plan will provide an essential component of the total compensation package,
reflecting the importance that we place on aligning the interests of key
individuals with those of our shareholders.
Stock
Options.
Stock
options granted under the 2007 Plan may either be incentive stock options,
which
are intended to satisfy the requirements of Section 422 of the Code, or
non-qualified stock options, which are not intended to meet those requirements.
The exercise price of a stock option may not be less than 100% of the fair
market value of our common stock on the date of grant, unless it is a
non-qualified stock option the terms of which comply with the requirements
of Section 409A of the Code, or it is granted to a consultant to whom Section
409A does not apply. If an incentive stock option is granted to an individual
who owns more than 10% of the combined voting power of all classes of our
capital stock, the exercise price may not be less than 110% of the fair market
value of our common stock on the date of grant and the term of the option may
not be longer than five years.
Award
agreements for stock options include rules for exercise of the stock options
after termination of service. Options may not be exercised unless they are
vested, and no option may be exercised after the end of the term set forth
in
the award agreement. Generally, stock options will be exercisable for three
months after termination of service for any reason other than death or total
and
permanent disability, and for 12 months after termination of service on account
of death or total and permanent disability.
Restricted
Stock.
Restricted stock is common stock that is subject to restrictions, including
a
prohibition against transfer and a substantial risk of forfeiture, until the
end
of a “restricted period” during which the grantee must satisfy certain vesting
conditions. If the grantee does not satisfy the vesting conditions by the end
of
the restricted period, the restricted stock is forfeited.
During
the restricted period, the holder of restricted stock has the rights and
privileges of a regular shareholder, except that the restrictions set forth
in
the applicable award agreement apply. For example, the holder of restricted
stock may vote and receive dividends on the restricted shares; but he or she
may
not sell the shares until the restrictions are lifted.
Other
Stock-Based Awards.
The 2007
Plan also authorizes the grant of other types of stock-based compensation
including, but not limited to stock appreciation rights, phantom stock awards,
and restricted stock unit awards.
2007
Plan Administration. In
accordance with the terms of our 2007 Plan, our Board of Directors will
administer the 2007 Plan. The Board of Directors may delegate part of its
authority and powers under our 2007 Plan to a committee of the Board of
Directors, but only the Board of Directors (or a sub-committee thereof) may
make
awards to participants who are directors or executive officers of Mediavest,
Inc. or consultants to Mediavest, Inc. In accordance with the provisions of
the
2007 Plan, the Board of Directors, or its designee, will determine the terms
of
awards, including:
| |
·
|
which
employees, directors and consultants will be granted
awards;
|
| |
·
|
the
number of shares subject to each award;
|
| |
·
|
the
vesting provisions of each award;
|
| |
·
|
the
termination or cancellation provisions applicable to awards;
and
|
| |
·
|
all
other terms and conditions upon which each award may be granted in
accordance with the 2007 Plan.
|
In
addition, our Board of Directors may, in its discretion, amend any term or
condition of an outstanding award provided (i) such term or condition as amended
is permitted by our 2007 Plan, (ii) any such amendment shall be made only with
the consent of the participant to whom such award was made, if the amendment
is
adverse to the participant and (iii) any
such
amendment of any option shall be made only after a determination as to whether
such amendment would cause any adverse tax consequences for the holder of any
option including, but not limited to, pursuant to Section 409A of the
Code.
If
our
common stock shall be subdivided or combined into a greater or smaller number
of
shares or if we issue any shares of common stock as a stock dividend, the number
of shares of our common stock deliverable upon exercise of an option issued
or
upon issuance of an award shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase
price
per share to reflect such subdivision, combination or stock
dividend.
Upon
a
merger or other reorganization event, our Board of Directors, may, in their
sole
discretion, take any one or more of the following actions pursuant to our 2007
Plan, as to some or all outstanding awards:
|
|
· |
provide
that all outstanding options shall be assumed or substituted by the
successor corporation;
|
|
|
· |
upon
written notice to a participant provide that the participant's unexercised
options will terminate immediately prior to the consummation of such
transaction unless exercised by the participant;
|
|
|
· |
in
the event of a merger pursuant to which holders of our common stock
will
receive a cash payment for each share surrendered in the merger,
make or
provide for a cash payment to the participants equal to the difference
between the merger price times the number of shares of our common
stock
subject to such outstanding options, and the aggregate exercise price
of
all such outstanding options, in exchange for the termination of
such
options; and/or
|
|
|
· |
provide
that outstanding awards shall be assumed or substituted by the successor
corporation, become realizable or deliverable, or restrictions applicable
to an award will lapse, in whole or in part, prior to or upon the
merger
or reorganization event.
|
Our
2007
Plan may be amended by our shareholders. It may also be amended by our Board
of
Directors, provided that any amendment approved by our Board of Directors which
is of a scope that requires shareholder approval as required by stock market
rules, in order to ensure favorable federal income tax treatment for any
incentive stock options under Code Section 422, or for any other reason is
subject to obtaining such shareholder approval. Our 2007 Plan expires on
September 27, 2017.
Federal
Income Tax Consequences
The
material federal income tax consequences of the issuance and exercise of stock
options and other awards under the 2007 Plan, based on the current provisions
of
the Code and regulations, are as follows. Changes to these laws could alter
the
tax consequences described below. This summary assumes that all awards granted
under the 2007 Plan are exempt from or comply with, the rules under Section
409A
of the Code related to nonqualified deferred compensation.
| |
·
|
Incentive
Stock Options: Incentive
stock options are intended to qualify for treatment under Section 422
of the Code. An
incentive stock option does not result in taxable income to the optionee
or deduction to us at the time it is granted or exercised, provided
that
no disposition is made by the optionee of the shares acquired pursuant
to
the option within two years after the date of grant of the option
nor
within one year after the date of issuance of shares to the optionee
(referred to as the "ISO holding period"). However, the difference
between
the fair market value of the shares on the date of exercise and the
option
price will be an item of tax preference includible in "alternative
minimum
taxable income" of the optionee. Upon disposition of the shares after
the
expiration of the ISO holding period, the optionee will generally
recognize long term capital gain or loss based on the difference
between
the disposition proceeds and the option price paid for the shares.
If the
shares are disposed of prior to the expiration of the ISO holding period,
the optionee generally will recognize taxable compensation, and we
will
have a corresponding deduction, in the year of the disposition, equal
to
the excess of the fair market value of the shares on the date of
exercise
of the option over the option price. Any additional gain realized
on the
disposition will normally constitute capital gain. If the amount
realized
upon such a disqualifying disposition is less than fair market value
of
the shares on the date of exercise, the amount of compensation income
will
be limited to the excess of the amount realized over the optionee's
adjusted basis in the shares.
|
· Non-Qualified
Options:
| |
|
Options
otherwise qualifying as incentive stock options, to the extent the
aggregate fair market value of shares with respect to which such
options
are first exercisable by an individual in any calendar year exceeds
$100,000, and options designated as non-qualified options will be
treated
as options that are not incentive stock
options.
|
| |
|
A
non-qualified option ordinarily will not result in income to the
optionee
or deduction to us at the time of grant. The optionee will recognize
compensation income at the time of exercise of such non-qualified
option
in an amount equal to the excess of the then value of the shares
over the
option price per share. Such compensation income of optionees may
be
subject to withholding taxes, and a deduction may then be allowable
to us
in an amount equal to the optionee's compensation
income.
|
| |
|
An
optionee’s initial basis in shares so acquired will be the amount paid on
exercise of the non-qualified option plus the amount of any corresponding
compensation income. Any gain or loss as a result of a subsequent
disposition of the shares so acquired will be capital gain or
loss.
|
· Stock
Grants:
| |
|
With
respect to stock grants under our 2007 Plan that result in the issuance
of
shares that are either not restricted as to transferability or not
subject
to a substantial risk of forfeiture, the grantee must generally recognize
ordinary income equal to the fair market value of shares received.
Thus,
deferral of the time of issuance will generally result in the deferral
of
the time the grantee will be liable for income taxes with respect
to such
issuance. We generally will be entitled to a deduction in an amount
equal
to the ordinary income recognized by the
grantee.
|
| |
|
With
respect to stock grants involving the issuance of shares that are
restricted as to transferability and subject to a substantial risk
of
forfeiture, the grantee must generally recognize ordinary income
equal to
the fair market value of the shares received at the first time the
shares
become transferable or are not subject to a substantial risk of
forfeiture, whichever occurs earlier. A grantee may elect to be taxed
at
the time of receipt of shares rather than upon lapse of restrictions
on
transferability or substantial risk of forfeiture, but if the grantee
subsequently forfeits such shares, the grantee would not be entitled
to
any tax deduction, including as a capital loss, for the value of
the
shares on which he previously paid tax. The grantee must file such
election with the Internal Revenue Service within 30 days of the
receipt
of the shares. We generally
will be entitled to a deduction in an amount equal to the ordinary
income
recognized by the grantee.
|
· Stock
Units:
| |
|
The
grantee recognizes no income until the issuance of the shares. At
that
time, the grantee must generally recognize ordinary income equal
to the
fair market value of the shares received. We generally
will be entitled to a deduction in an amount equal to the ordinary
income
recognized by the grantee.
|
New
Plan Benefits
The
amounts of grants under the 2007 Plan are not determinable and will be granted
at the sole discretion of the Board of Directors, or other delegated persons
and
we cannot determine at this time either the persons who will receive awards
under the 2007 Plan or the amount or types of any such awards and no such awards
have been granted to date.
On
October __, 2007, the closing market price per share of our common stock was
$[___], as reported by the Over-the-Counter Bulletin Board.
EXECUTIVE
COMPENSATION
The
current officers and directors are: (i) Robert S. Ellin, Chief Executive Officer
and Chairman of the Board of Directors, (ii) James F. Lefkowitz, President,
(iii) Jay A. Wolf, Chief Operating Officer, Chief Financial Officer, Secretary
and Director, (iv) Peter Guber, Co-Chairman of the Board of Directors, (v)
Paul
Schaeffer, Vice Chairman of the Board of Directors, (vi) David Chazen, Director
and (vii) Barry Regenstein, Director. The following table sets forth the
compensation paid during our last fiscal year to our “Principal Executive
Officer” and two other named executive officers.
Summary
Compensation Table
|
Name
and
Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock
Awards
|
|
Option
Awards
|
|
Non-Equity
Incentive Plan Compensation
|
|
Change in
Pension Value and Nonqualified Deferred Compensation
Earnings
|
|
All Other
Compensation
|
|
Total
|
|
|
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
|
Robert
S. Ellin,
Chief
Executive
Officer
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
107,000
|
(2)
|
|
107,000
|
(2)
|
|
Jay
A. Wolf,
Chief
Operating Officer,
Chief
Financial Officer
and
Secretary
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
107,000
|
(3)
|
|
107,000
|
(3)
|
|
David
Chazen,
President
|
|
|
2006
|
|
|
40,000
|
(1)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
0
|
(4)
|
|
40,000
|
|
(1)
Mr.
Chazen was paid $10,000 per month for his services as our President from August
3, 2006 until January 31, 2007, when Mr. Chazen became a partner in Trinad
Advisors II, an affiliate of Trinad.
(2)
Mr.
Ellin is a principal of Trinad Management, LLC. On September 14, 2006, we
entered into a Management Agreement with Trinad Management pursuant to which
we
will pay Trinad Management a management fee of $90,000 per quarter, plus
reimbursement of all expenses reasonably incurred by Trinad Management in
connection with the provision of management services. Either party may terminate
with prior written notice. However, in the event the company terminates the
Management Agreement, we shall pay to Trinad a termination fee of $1,000,000.
(3)
Mr.
Wolf is a principal of Trinad Management, LLC. On September 14, 2006, we entered
into a Management Agreement with Trinad Management pursuant to which we will
pay
Trinad Management a management fee of $90,000 per quarter, plus reimbursement
of
all expenses reasonably incurred by Trinad Management in connection with the
provision of management services. Either party may terminate with prior written
notice. However, in the event the company terminates the Management Agreement,
we shall pay to Trinad a termination fee of $1,000,000.
(4)
Mr.
Chazen was granted, for his services as a director, a warrant to purchase
150,000 shares of our common stock, having an exercise price of $2.50 and an
expiration date of August 2, 2008.
On
February 8, 2005, Robert S. Ellin became the Chairman of the Board of Directors,
our Chief Executive Officer and President, Jay A. Wolf became a director, our
Chief Financial Officer, Chief Operating Officer and Secretary, and Barry
Regenstein became a director. On August 3, 2006, upon the appointment of Mr.
David Chazen as President and a member of the Board of Directors, we agreed
to
compensate him for his services as President at a rate of $10,000 per month.
This compensation was terminated on January 31, 2007 when Mr. Chazen became
a
partner in Trinad Advisors II, an affiliate of Trinad. In addition, Mr. Chazen
was granted, for his services as a director, a warrant to purchase 150,000
shares of our common stock, having an exercise price of $2.50 and an expiration
date of August 2, 2008. On August 3, 2006, Mr. Barry Regenstein was granted,
for
his services as a director, a warrant to purchase 50,000 shares of our common
stock, having an exercise price of $2.50 and an expiration date of August 2,
2008. The warrants granted to Messrs. Chazen and Regenstein contain standard
piggyback registration rights. We recognized approximately $111,000 of
stock-based compensation expense related to the issuance of such
warrants.
We
have
no further plans for compensating our directors for their service in their
capacity as directors, although such directors are expected in the future to
receive stock options to purchase common shares as awarded by our Board of
Directors or (as to future stock options) a compensation committee which may
be
established. Directors are entitled to reimbursement for reasonable travel
and
other out-of-pocket expenses incurred in connection with attendance at meetings
of our Board of Directors. Our Board of Directors may award special remuneration
to any director undertaking any special services on our behalf other than
services ordinarily required of a director.
On
September 14, 2006, we entered into a Management Agreement with Trinad
Management, LLC, an affiliate of Trinad Capital Master Fund Ltd., which is
one
of our principal shareholders. Pursuant to the terms of the Management
Agreement, which is for a term of 5 years, Trinad Management will provide
certain management services, including, without limitation the sourcing,
structuring and negotiation of a potential business combination transaction
involving the company. We have agreed to pay Trinad a management fee of $90,000
per quarter, plus reimbursement of all expenses reasonably incurred by Trinad
in
connection with the provision of management services. Either party may terminate
with prior written notice. However, in the event the company terminates the
Management Agreement, we shall pay to Trinad a termination fee of $1,000,000.
Management fee expenses for the year ended December 31, 2006 totaled
$107,000.
Other
than as described above, there are no management agreements with our directors
or executive officers and we do not anticipate that written agreements will
be
put in place in the foreseeable future.
We
have
no plans or arrangements with respect to remuneration received or that may be
received by our named executive officers to compensate such officers in the
event of termination of employment (as a result of resignation, retirement,
change of control) or a change of responsibilities following a change of
control.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED
STOCKHOLDER MATTERS
The
following tables set forth certain information regarding the beneficial
ownership of our Common Stock as of September 27, 2007 by (i) each of our
directors, (ii) each named executive officer in the Summary Compensation Table
in the Executive Compensation Section, (iii) all persons, including groups,
known to us to own beneficially more than five percent (5%) of the outstanding
common stock, and (iv) all current executive officers and directors as a group.
As of September 27, 2007, there were a total of 21,730,000 shares of Common
Stock outstanding.
|
Name
and Address of Owner (1)
|
|
Number
of
Shares
Beneficially
Owned(2)
|
|
Percentage
Owned
|
|
|
|
|
|
|
|
|
|
Lyrical
Partners, L.P.
(3)
405
Park Avenue, 6th Floor
New
York, NY 10022
|
|
|
3,000,000
|
|
|
12.9
|
%
|
|
|
|
|
|
|
|
|
|
|
David
E. Smith(4)
888
Linda Flora Drive
Los
Angeles, CA 90049
|
|
|
4,000,000
|
|
|
16.9
|
%
|
| |
|
|
|
|
|
|
|
|
Robert
S. Ellin(5)
|
|
|
9,400,000
|
|
|
43.1
|
%
|
|
|
|
|
|
|
|
|
|
|
Jay
A. Wolf(6)
|
|
|
9,400,000
|
|
|
43.1
|
%
|
|
|
|
|
|
|
|
|
|
|
David
Chazen(7)
|
|
|
150,000
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
Barry
I. Regenstein(8)
|
|
|
50,000
|
|
|
*
|
|
| |
|
|
|
|
|
|
|
|
Peter
Guber(9)
|
|
|
4,500,000
|
|
|
20.7
|
%
|
| |
|
|
|
|
|
|
|
|
Paul
Schaeffer(10)
|
|
|
500,000
|
|
|
2.30
|
%
|
| |
|
|
|
|
|
|
|
|
All
current directors and named executive officers as
A
group (four persons)
|
|
|
14,600,000
|
|
|
66.3
|
%
|
*None.
(1)
Except as otherwise indicated, the address of each of the following persons
is
c/o Mediavest, Inc., 2121 Avenue of the Stars, Suite 2550, Los Angeles, CA
90067.
(2)
Except as specifically indicated in the footnotes to this table, the persons
named in this table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them, subject to community
property laws where applicable. Beneficial ownership is determined in accordance
with the rules of the SEC. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, shares of common stock
subject to options, warrants or rights held by that person that are currently
exercisable or exercisable, convertible or issuable within 60 days of April
16,
2007, are deemed outstanding. Such shares, however, are not deemed outstanding
for the purpose of computing the percentage ownership of any other
person.
(3)
Lyrical Multi-Manager Fund, LP beneficially owns 2,000,000 units (1,000,000
of
which are shares of common stock and 1,000,000 of which are shares of common
stock issuable upon conversion of warrants held by Lyrical Multi-Manager Fund,
LP) and Lyrical Multi-Manager Offshore Fund Ltd. beneficially owns 1,000,000
units (500,000 of which are shares of common stock and 500,000 of which are
shares of common stock issuable upon conversion of warrants held by Lyrical
Multi-Manager Offshore Fund Ltd.) of the company. Lyrical Partners, L.P., as
the
investment manager of Lyrical Multi-Manager Fund, LP and Lyrical Multi-Manager
Offshore Fund Ltd., has the sole power to vote and dispose of the 3,000,000
shares of common stock held collectively by Lyrical Multi-Manager Fund, LP
and
Lyrical Multi-Manager Offshore Fund Ltd. This information is based solely
on a Schedule 13D filed by Jeffrey Keswin with the SEC on February 13, 2007,
which reported ownership as of September 12, 2006.
(4)
David
E. Smith beneficially owns 4,000,000 units, consisting of 2,000,000 shares
of
common stock of the company and 2,000,000 warrants to purchase one share of
common stock. This information is based solely on a Schedule 13D filed by David
E. Smith with the SEC on November 27, 2006, which reported ownership as of
September 25, 2006.
(5)
Consists of 9,300,000 shares of common stock held by Trinad Capital Master
Fund,
Ltd. and 100,000 shares of common stock issuable upon conversion of 100,000
shares of Series A Convertible Preferred Stock held by Trinad Management, LLC.
Trinad Management, LLC is an affiliate of, and provides investment management
services to, Trinad Capital Master Fund, Ltd. Robert Ellin and Jay Wolf are
the
managing members of Trinad Management, LLC. As a result, each may be deemed
indirectly to beneficially own an aggregate of 9,400,000 shares of common stock.
Mr. Ellin disclaims beneficial ownership of these securities except to the
extent of his pecuniary interest therein.
(6)
Consists of 9,300,000 shares of common stock held by Trinad Capital Master
Fund,
Ltd. and 100,000 shares of common stock issuable upon conversion of 100,000
shares of Series A Convertible Preferred Stock held by Trinad Management, LLC.
Trinad Management, LLC is an affiliate of, and provides investment management
services to, Trinad Capital Master Fund, Ltd. Robert Ellin and Jay Wolf are
the
managing members of Trinad Management, LLC. As a result, each may be deemed
indirectly to beneficially own an aggregate of 9,400,000 shares of common stock.
Mr. Wolf disclaims beneficial ownership of these securities except to the extent
of his pecuniary interest therein.
(7)
Consists of a warrant to purchase 150,000 shares of our common
stock.
(8)
Consists of a warrant to purchase 50,000 shares of our common
stock.
(9)
Consists of 4,500,000 shares of common stock. The securities indicated are
held
indirectly by Mr. Guber through the Guber Family Trust for which he serves
as a trustee. Mr. Guber disclaims beneficial ownership of these securities
except to the extent of his pecuniary interest.
(10)
Consists of 500,000 shares of common stock. The securities indicated are held
indirectly by Mr. Schaeffer through the Paul and Judy Schaeffer Living
Trust for which he serves as a trustee. Mr. Schaeffer disclaims beneficial
ownership of these securities except to the extent of his pecuniary
interest.
Changes
in Control
We
are
unaware of any contract or other arrangement the operation of which may at
a
subsequent date result in a change in control of our company.
INTEREST
OF CERTAIN PERSONS IN OR OPPOSITION
TO MATTERS TO BE ACTED UPON
No
person
who has been a director or officer of the Company at any time since the
beginning of the last fiscal year, nominee for election as a director of the
Company, nor associate of the foregoing persons has any substantial interest,
direct or indirect, in the Company’s change of state of incorporation or the
approval and adoption of the 2007 Plan
that
differs from that of other shareholders of the Company. No director of the
Company opposed the Reincorporation or the approval and adoption of the 2007
Plan.
This
Information Statement may contain certain “forward-looking” statements as such
term is defined by the Securities and Exchange Commission (the “SEC”) in its
rules, regulations and releases, which represent our expectations or beliefs,
including, but not limited to, statements concerning our operations, economic
performance, financial condition, growth and acquisition strategies,
investments, and future operational plans. For this purpose, any
statements contained herein that are not statements of historical fact may
be
deemed to be forward-looking statements. Without limiting the generality
of the foregoing, words such as “may,” “will,” “expect,” “believe,”
“anticipate,” “intend,” “could,” “estimate,” “might,” or “continue” or the
negative or other variations thereof or comparable terminology are intended
to
identify forward-looking statements. These statements, by their nature,
involve substantial risks and uncertainties, certain of which are beyond our
control, and actual results may differ materially depending on a variety of
important factors, including uncertainty related to acquisitions, governmental
regulation and any other factors discussed in our filings with the
SEC.
DELIVERY
OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS
One
Information Statement will be delivered to multiple stockholders sharing an
address unless we receive contrary instructions from one or more of the
stockholders sharing such address. Upon receipt of such notice, we will
undertake to promptly deliver a separate copy of this Information Statement
to
the stockholder at the shared address to which a single copy of the Information
Statement was delivered and provide instructions as to how the stockholder
can
notify us that the stockholder wishes to receive a separate copy of this
Information Statement or other communications to the stockholder in the
future. In the event a stockholder desires to provide us with such notice,
it may be given verbally by telephoning our offices at (310)
601-2500, or
by
mail to our address at 2121 Avenue of the Stars, Suite 2550, Los Angeles, CA
90067.
MISCELLANEOUS
Mediavest
requests brokers, custodians, nominees and fiduciaries to forward this
Information Statement to the beneficial owners of Mediavest Common Stock, and
Mediavest will reimburse such holders for their reasonable expenses in
connection therewith. Additional copies of this Information Statement may be
obtained at no charge from Mediavest’s transfer agent,
American
Stock Transfer & Trust Company, 59
Maiden
Lane - Plaza Level, New York, New York 10038, Attn: Barry Rosenthal, Tel:
(718) 921-8380.
EXHIBIT
INDEX
|
|
PLAN
AND AGREEMENT OF MERGER
|
| |
|
|
B.
|
CERTIFICATE
OF INCORPORATION OF MANDALAY MEDIA, INC.
|
| |
|
|
C.
|
BYLAWS
OF MANDALAY MEDIA, INC.
|
| |
|
|
D.
|
NEW
JERSEY BUSINESS CORPORATION ACT SECTIONS 14A:11-1 THROUGH
14A:11-3
|
| |
|
|
E.
|
2007
EMPLOYEE, DIRECTOR AND CONSULTANT STOCK
PLAN
|
EXHIBIT
A
PLAN
AND AGREEMENT OF MERGER
THIS
PLAN
AND AGREEMENT OF MERGER (this “Agreement”), dated as of September 27, 2007, is
made and entered into by and between MANDALAY
MEDIA, INC.,
a
Delaware corporation (“Mandalay”), and
MEDIAVEST, INC.,
a New
Jersey corporation (“Mediavest”).
WITNESSETH:
WHEREAS,
Mandalay is a corporation duly organized and existing under the laws of the
State of Delaware, having been incorporated on September 14, 2007;
WHEREAS,
Mediavest is a corporation duly organized and existing under the laws of the
State of New Jersey, having been incorporated on November 6, 1998; and
WHEREAS,
the Boards of Directors and the stockholders representing at least a majority
of
the outstanding shares of voting capital stock entitled to vote of Mandalay
and
Mediavest, have approved this Agreement under which Mediavest shall be merged
with and into Mandalay with Mandalay being the surviving corporation (such
merger being hereinafter referred to as the “Merger”).
NOW,
THEREFORE, in consideration of the premises, the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree that Mediavest shall
be merged with and into Mandalay on the terms and conditions hereinafter set
forth.
ARTICLE
I
MERGER
Effective
the later to occur of (i) 12:01 a.m. Eastern Standard time, on or about November
5, 2007, or (ii) the time the Certificate of Merger is accepted for filing
in
New Jersey and the Certificate of Merger is accepted for filing in Delaware
(the
“Effective Time”), Mediavest shall be merged with and into Mandalay in
accordance with the Delaware General Corporation Law (“DGCL”) and the Business
Corporation Act of the State of New Jersey (“NJBCA”), and the separate existence
of Mediavest shall cease and Mandalay (hereinafter sometimes referred to as
the
“Surviving Corporation”) shall continue to exist under the name of Mandalay by
virtue of, and shall be governed by, the laws of the State of Delaware. The
address of the registered office of the Surviving Corporation in the State
of
Delaware will be 615 South Dupont Highway, City of Dover, County of Kent. The
name of the Surviving Corporation’s registered agent at such address is National
Corporate Research, Ltd.
ARTICLE
II
CERTIFICATE
OF INCORPORATION
OF
THE SURVIVING CORPORATION
The
Certificate of Incorporation of the Surviving Corporation shall be the
Certificate of Incorporation of Mandalay without change, as in effect
immediately prior to the Effective Time, unless and until thereafter amended
as
provided by applicable law. A copy of the Certificate of Incorporation of
Mandalay is attached hereto as Exhibit
A.
ARTICLE
III
BYLAWS
OF THE SURVIVING CORPORATION
The
Bylaws of Mandalay shall be the Bylaws of the Surviving Corporation as in effect
immediately prior to the Effective Time without change, unless and until amended
or repealed in accordance with applicable law.
ARTICLE
IV
EFFECT
OF MERGER ON STOCK
OF
CONSTITUENT CORPORATIONS
4.01
At
the Effective Time, each authorized share of common stock of Mediavest,
consisting
of 100,000,000 shares of Common Stock, par value $0.0001 per share (the
“Mediavest Common Stock”),
of
which 21,730,000 shares are, as of the date hereof, issued and
outstanding,
shall
be converted into one (1) share of common stock, par value $0.0001 per share,
of
the Surviving Corporation (the “Mandalay Common Stock”).
4.02
At
and after the Effective Time, each share of Mediavest Common Stock shall be
cancelled and retired and, by virtue of the Merger and without further action,
shall cease to exist.
4.03
At
the Effective Time, each authorized share of preferred stock of Mediavest,
consisting
of 1,000,000 shares of Preferred Stock, par value $0.0001 per share (the
“Mediavest Preferred Stock”),
of
which 100,000
shares
of Series A Convertible Preferred Stock, par value $0.0001 per share (the
“Mediavest Series A Preferred Stock”), are, as of the date hereof, issued and
outstanding,
shall
be converted into one (1) share of preferred stock, par value $0.0001 per share,
of the Surviving Corporation (the “Mandalay Preferred Stock”), with each share
of Mediavest Series A Preferred Stock converting into one (1) share of the
Series A Convertible Preferred Stock, par value $0.0001 per share, of Mandalay.
4.04
At
and after the Effective Time, each share of Mediavest Preferred Stock shall
be
cancelled and retired and, by virtue of the Merger and without further action,
shall cease to exist.
4.05
At
and after the Effective Time, all documentation which prior to that time
evidenced and represented Mediavest Common Stock or Mediavest Preferred Stock,
as applicable, shall be deemed for all purposes to evidence ownership of and
to
represent those shares of Mandalay Common Stock or Mandalay Preferred Stock,
as
applicable, into which the Mediavest Common Stock or Mediavest Preferred Stock,
as applicable, represented
by such documentation has been converted as herein provided and shall be so
registered on the books and records of Mandalay. The registered owner of any
outstanding stock certificate evidencing Mediavest Common Stock or Mediavest
Preferred Stock, as applicable, shall, until such certificate shall have been
surrendered for transfer or conversion or otherwise accounted for to Mandalay
or
its transfer agent, have and be entitled to exercise any voting and other rights
with respect to and to receive any dividend and other distributions upon the
shares of Mandalay Common Stock or Mandalay Preferred Stock, as applicable,
evidenced by such outstanding certificate as above provided.
ARTICLE
V
CORPORATE
EXISTENCE, POWERS AND
LIABILITIES
OF SURVIVING CORPORATION
5.01
On
the Effective Time, the separate existence of Mediavest shall cease and
Mediavest shall be merged with and into the Surviving Corporation in accordance
with the provisions of this Agreement. Thereafter, the Surviving Corporation
shall possess all of the rights, privileges, powers and franchises as well
of a
public as of a private nature, and shall be subject to all the restrictions,
disabilities and duties of Mediavest; and all rights, privileges, powers and
franchises of Mediavest, and all property, real, personal and mixed, and all
debts due to each of them on whatever account, as well as stock subscriptions
and all other things in action or belonging to Mediavest shall be vested in
the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter effectually
the
property of the Surviving Corporation as they were of Mediavest, and the title
to any real estate, whether by deed or otherwise, vested in Mediavest shall
not
revert or be in any way impaired by reason of the Merger; but all rights of
creditors and all liens upon any property of Mediavest shall be preserved
unimpaired, and all debts, liabilities and duties shall thenceforth attach
to
the Surviving Corporation and may be enforced against it to the same extent
as
if said debts, liabilities and duties had been incurred or contracted by it.
5.02
Mediavest agrees that it will execute and deliver (or cause to be executed
and
delivered) all such deeds, assignments and other instruments, and will take
or
cause to be taken such further or other action as the Surviving Corporation
may
deem necessary or desirable in order to vest in and confirm to the Surviving
Corporation title to and possession of all the property, rights, privileges,
immunities, powers, purposes and franchises, and all and every other interest,
of Mediavest and otherwise to carry out the intent and purposes of this
Agreement.
ARTICLE
VI
OFFICERS
AND DIRECTORS
OF
SURVIVING CORPORATION
At
the
Effective Time, the officers and directors of Mediavest shall become the
officers and directors of the Surviving Corporation, and such persons shall
hold
office in accordance
with the Bylaws of the Surviving Corporation or until their respective
successors shall have been appointed or elected and qualified.
ARTICLE
VII
APPROVAL
BY STOCKHOLDERS;
AMENDMENT;
EFFECTIVE TIME
7.01
This
Agreement and the Merger contemplated hereby are subject to approval by the
requisite vote of the stockholders of Mediavest in accordance with New Jersey
law. As promptly as practicable after approval of this Agreement by such
stockholders in accordance with applicable law, duly authorized officers of
Mandalay and Mediavest shall make and execute a Certificate of Merger or other
applicable certificates or documentation effecting this Agreement and shall
cause such document or documents to be filed with the Secretaries of State
of
the States of Delaware and New Jersey, respectively, in accordance with the
applicable Delaware and New Jersey law.
7.02
The
respective Boards of Directors of Mandalay and Mediavest may amend this
Agreement at any time prior to the Effective Time, provided that an amendment
made subsequent to the approval of the Merger by the stockholders of Mediavest
shall not (1) alter or change the amount or kind of shares, securities, cash,
property or rights to be received in exchange for or on conversion of all or
any
Mediavest Common Stock or Mediavest Preferred Stock; (2) alter or change any
term of the Certificate of Incorporation of the Surviving Corporation; or (3)
alter or change any of the terms and conditions of this Agreement if such
alteration or change would adversely affect the holders of any Mediavest Common
Stock or Mediavest Preferred Stock.
ARTICLE
VIII
PAYMENT
OF FEES AND FRANCHISE TAXES
The
Surviving Corporation shall be responsible for the payment of all fees and
franchise taxes of Mediavest relating to or required to be paid in connection
with the Merger.
ARTICLE
IX
TERMINATION
OF MERGER
This
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time, whether before or after stockholder approval of this Agreement,
by the consent of the Board of Directors of Mandalay and the Board of Directors
of Mediavest.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their respective officers, all as of the day and year first above written.
|
|
|
a
Delaware corporation
|
| |
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
| |
|
|
MEDIAVEST,
INC.,
|
|
a
New Jersey corporation
|
| |
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
[Signature
page to Merger Agreement]
EXHIBIT
A
CERTIFICATE
OF INCORPORATION
EXHIBIT
B
CERTIFICATE
OF INCORPORATION
OF
MANDALAY
MEDIA, INC.
The
undersigned, for
the
purpose of organizing a corporation under the provisions and subject to
the
requirements of the Delaware General Corporation Law (the “DGCL”), hereby
certifies that:
FIRST:
The name
of the corporation is Mandalay Media, Inc. (the “Corporation”).
SECOND:
The
address of the Corporation’s registered office in the State of Delaware is 615
South DuPont Highway, Dover, Delaware 19901, Kent County. The name of its
registered agent at such address is National Corporate Research, Ltd.
THIRD:
The
purpose of the Corporation is to engage in any lawful act or activity for
which
corporations may be organized under the DGCL.
FOURTH:
A. The
total
number of shares of all classes of stock which the Corporation shall have
authority to issue is One Hundred and One Million (101,000,000), consisting
of:
(i)
100,000,000 shares of common stock, par value $0.0001 per share (the “Common
Stock”) and
(ii)
1,000,000 shares of preferred stock, par value $0.0001 per share (the “Preferred
Stock”).
The
number of authorized shares of any such class or classes or series may
be
increased or decreased (but not below the number of shares then outstanding)
by
the affirmative vote of the holders of the capital stock of the Corporation
entitled to vote thereon, without a vote of the holders of the Common Stock
or
the Preferred Stock (or of any series thereof), voting as a separate class,
unless a vote of any such holders is specifically required herein pursuant
to
the terms of any Preferred Stock.
B. Common
Stock.
1.
General.
The
voting, dividend and liquidation and other rights of the holders of the
Common
Stock are expressly made subject to and qualified by the rights of the
holders
of any series of Preferred Stock.
2.
Voting
Rights.
The
holders of record of the Common Stock are entitled to one vote per share
on
all matters to be voted on by the Corporation's stockholders.
3.
Dividends.
Dividends may be declared and paid on the Common Stock from funds lawfully
available therefor if, as and when determined by the Board of Directors
in their
sole discretion, subject to provisions of law, any provision of this Certificate
of Incorporation, as amended from time to time, and subject to the relative
rights and preferences of any shares of Preferred Stock authorized, issued
and
outstanding hereunder.
4.
Liquidation.
Upon
the dissolution, liquidation or winding up of the Corporation, whether
voluntary
or involuntary, holders of record of the Common Stock will be entitled
to
receive pro rata
all
assets of the Corporation available for distribution to its stockholders,
subject, however, to the liquidation rights of the holders of Preferred
Stock
authorized, issued and outstanding hereunder.
C.
Preferred
Stock.
Authority
is hereby expressly granted to the Board of Directors from time to time
to
designate and issue Preferred Stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing
for
the issue of the shares thereof, to determine and fix such voting powers,
full
or limited, or no voting powers, and such designations, preferences and
relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend
rights,
conversion rights, redemption privileges and liquidation preferences, as
shall
be stated and expressed in such resolutions, all to the full extent now
or
hereafter permitted by the DGCL. Without limiting the generality of the
foregoing, the resolutions providing for the designation and issuance of
any
series of Preferred Stock may provide that such series shall be superior
or rank
equally or be junior to Preferred Stock of any other series to the extent
permitted by law. No vote of the holders of Preferred Stock or the Common
Stock
shall be a prerequisite to the issuance of any shares of any series of
Preferred
Stock authorized by and complying with the conditions of the Certificate
of
Incorporation, the right to have such vote being expressly waived by all
present
and future holders of the capital stock of the Corporation.
There
is
hereby created, out of the 1,000,000 shares of Preferred Stock of the
Corporation remaining authorized, unissued and undesignated, a series of
the
Preferred Stock consisting of 100,000 shares, which series shall have the
following powers, designations, preferences and relative, participating,
optional or other rights, and the following qualifications, limitations
and
restrictions (in addition to any powers, designations, preferences and
relative,
participating, optional or other rights, and any qualifications, limitations
and
restrictions, set forth in this Certificate of Incorporation which are
applicable to the Preferred Stock):
1. Designation
of Amount.
(a)
One
hundred thousand (100,000) shares of Preferred Stock shall be, and hereby
are,
designated the "Series A Convertible Preferred Stock" (the "Series A Preferred
Stock"), par value $0.0001 per share.
(b)
Subject to the requirements of the DGCL and this Certificate of Incorporation,
the number of shares of Preferred Stock that are designated as Series A
Preferred Stock may be increased or decreased by vote of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series
A
Preferred Stock to a number less than the number of such shares then outstanding
plus the number of such shares reserved for issuance upon the exercise
of
outstanding options, rights or warrants or upon the conversion of any other
outstanding securities issued by the Corporation that are convertible into
or
exercisable for Series A Preferred Stock. Any shares of Series A Preferred
Stock
converted, redeemed, purchased or otherwise acquired by the Corporation
in any
manner whatsoever shall, automatically and without further action, be retired
and canceled promptly after the acquisition thereof.
2.
Certain Definitions.
Unless
the context otherwise requires, the terms defined in this Section 2 shall
have,
for all purposes of this resolution, the meanings specified (with terms
defined
in the singular having comparable meanings when used in the
plural).
"Affiliate"
shall mean, with respect to any person, any other person directly or indirectly
controlling or controlled by or under direct or indirect common control
with
such specified person and, in the case of a person who is an individual,
shall
include (i) members of such specified person's immediate family (as defined
in
Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act)
and
(ii) trusts, the trustee and all beneficiaries of which are such specified
person or members of such person's immediate family as determined in accordance
with the foregoing clause (i). For the 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, by contract or otherwise; and the terms
"affiliated," "controlling" and "controlled" have meanings correlative
to the
foregoing.
"Conversion
Date" shall have the meaning ascribed to such term in Section 6(d).
"Conversion
Price" shall mean the Original Purchase Price of each share of Common Stock,
subject to adjustment from time to time in accordance with Section
6(c).
"Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended, and the
rules
and regulations promulgated thereunder.
"Initial
Issue Date" shall mean the date that shares of Series A Preferred Stock
are
first issued by the Corporation.
"Original
Purchase Price" shall mean the per share purchase price for a share of
Series A
Preferred Stock of $1.00, or such other price set forth in the Purchase
Agreement or other subscription agreements pursuant to which Series A Preferred
Stock is sold.
"person"
shall mean any individual, partnership, company, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated
organization, government or agency or political subdivision thereof, or
other
entity.
"Purchase
Agreement" shall mean the Series A Convertible Preferred Stock Purchase
Agreement, dated as of October 12, 2006, by and between the Corporation
and the
purchaser identified therein.
"Securities
Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"Series
A
Preferred Stock" shall have the meaning set forth in Section 1.
"Series
A
Recapitalization Event" shall mean any stock dividend, stock split, combination,
reorganization, recapitalization, reclassification, or other similar event
involving a change in the capital structure of the Series A Preferred
Stock.
"Subsidiary"
means, with respect to any person, (a) a company a majority of whose capital
stock with voting power, under ordinary circumstances, to elect directors
is at
the time, directly or indirectly, owned by such person, by a subsidiary
of such
person, or by such person and one or more subsidiaries of such person,
(b) a
partnership in which such person or a subsidiary of such person is, at
the date
of determination, a general partner of such partnership, or (c) any other
person
(other than a company) in which such person, a subsidiary of such person
or such
person and one or more subsidiaries of such person, directly or indirectly,
at
the date of determination thereof, has (i) at least a majority ownership
interest, (ii) the power to elect or direct the election of the directors
or
other governing body of such person, or (iii) the power to direct or
cause
the
direction of the affairs or management of such person. For purposes of
this
definition, a person is deemed to own any capital stock or other ownership
interest if such person has the right to acquire such capital stock or
other
ownership interest, whether through the exercise of any purchase option,
conversion privilege or similar right.
3.
Voting
Rights.
(a)
General. Except as otherwise provided by the DGCL and in addition to any
voting
rights provided by the DGCL or other applicable law, the holders of Series
A
Preferred Stock shall be entitled to vote (or render written consents)
together
with the holders of the Common Stock and any other class or series of capital
stock of the Corporation entitled to vote together with the holders of
the
Common Stock as a single class on all matters submitted for a vote of (or
written consents in lieu of a vote as permitted by the DGCL, the Certificate
of
Incorporation and the Bylaws) holders of Common Stock; and shall have such
other
voting rights as are specified in this Certificate of Incorporation. When
voting
together with the holders of Common Stock, each share of Series A Preferred
Stock shall entitle the holder thereof to cast one vote for each vote that
such
holder would be entitled to cast had such holder converted its Series A
Preferred Stock into shares of Common Stock as of the record date for
determining the stockholders of the Corporation eligible to vote on any
such
matter or, if no such record date is established, at the date such vote
is taken
or any written consent of stockholders is solicited. The holders of Series
A
Preferred Stock shall be entitled to receive notice of any stockholders'
meeting
in accordance with the Certificate of Incorporation and Bylaws of the
Corporation.
(b)
Waivers. Except to the extent otherwise provided in this Certificate of
Incorporation or required by the DGCL, the holders of the Series A Preferred
Stock may, via affirmative vote or written consent in lieu thereof, waive
any
rights of the holders of the Series A Preferred Stock set forth in this
Certificate of Incorporation.
4.
Dividends.
(a)
Dividend Amount. If the Board of Directors shall declare a dividend payable
upon
the then outstanding shares of Common Stock, the holders of the outstanding
shares of Series A Preferred Stock shall be entitled to the amount of dividends
on the Series A Preferred Stock as would be declared payable on the largest
number of whole shares of Common Stock into which the shares of Series
A
Preferred Stock held by each holder thereof could be converted pursuant
to the
provisions of Section 6 hereof, such number to be determined as of the
record
date for determination of holders of Common Stock entitled to receive such
dividend or, if no such record date is established, as of the date of such
dividend. Such determination of "whole shares" shall be based upon the
aggregate
number of shares of Series A Preferred Stock held by each holder, and not
upon
each share of Series A Preferred Stock so held by the holder.
(b)
Distributions Other than Cash. Whenever the distributions provided for
in this
Section 4 shall be payable in property other than cash, the value of such
distribution shall be the fair market value thereof as determined in good
faith
by the Board of Directors. All distributions (including distributions other
than
cash) made hereunder shall be made pro rata to the holders of Series A
Preferred
Stock.
(c)
Equitable Adjustments. All numbers relating to the calculation of dividends
shall be subject to an equitable adjustment in the event of any Series
A
Recapitalization Event.
5.
Liquidation
Preference.
(a)
Liquidation Preference of Series A Preferred Stock. In the event of any
liquidation, dissolution, or winding up of the Corporation, whether voluntary
or
involuntary, or in the event of its insolvency, the holders of Series A
Preferred Stock shall be entitled to have set apart for them, or to be
paid, out
of the assets of the Corporation available for distribution to stockholders
(whether such assets are capital, surplus or earnings) after provision
for
payment of all debts and liabilities of the Corporation in accordance with
the
DGCL, before any distribution or payment is made with respect to any shares
of
Common Stock or any other class or series of capital stock of the Corporation
designated to be junior to the Series A Preferred Stock and subject to
the
liquidation rights and preferences of any class or series of Preferred
Stock
designated to be senior to, or on a parity with, the Series A Preferred
Stock
with respect to liquidation preferences, an amount equal to the greater
of (i)
$10.00 per share of Series A Preferred Stock (which amount shall be subject
to
an equitable adjustment in the event of any Series A Recapitalization Event)
and
(ii) such amount as would have been payable on the largest number of whole
shares of Common Stock into which the shares of Series A Preferred Stock
held by
each holder thereof could have been converted immediately prior to such
event of
liquidation, dissolution or winding up pursuant to the provisions of Section
6
hereof.
(b)
Insufficient Assets. If, upon any liquidation, dissolution, or winding
up of the
Corporation, whether voluntary or involuntary, the assets legally available
for
distribution among the holders of the Series A Preferred Stock shall be
insufficient to permit payment to such holders of the full preferential
amount
as provided for in Section 5(a) above, then such holders shall share ratably
in
any distribution of available assets according to the respective amounts
which
would otherwise be payable with respect to the shares of Series A Preferred
Stock held by them upon such liquidating distribution if all amounts payable
on
or with respect to such shares were paid in full, based upon the aggregate
liquidation value payable upon all shares of Series A Preferred Stock then
outstanding.
(c)
Cash-Out Election.
(i)
Each
holder of Series A Preferred Stock may elect, by written notice to the
Corporation given within 10 days after any such transaction is consummated,
to
treat any of the following transactions as a dissolution or winding up
of the
Corporation for the purposes of this Section 5: (1) a consolidation or
merger of
the Corporation with or into any other corporation or corporations, (2)
a sale
of all or substantially all of the assets of the Corporation, (3) the issuance
and/or sale by the Corporation in a single or integrated transaction of
shares
of Common Stock (or securities convertible into shares
of
Common Stock) constituting a majority of the shares of Common Stock outstanding
immediately following such issuance (treating all securities convertible
into
shares of Common Stock as having been fully converted and all options and
other
rights to acquire shares of Common Stock or securities convertible into
shares
of Common Stock as having been fully exercised) and (4) any other form
of
acquisition or business combination where the Corporation is the target
of such
acquisition and where a change in control occurs such that the person or
entity
seeking to acquire the Corporation has the power to elect a majority of
the
Board of Directors as a result of the transaction (each such event an
"Acquisition"); provided, however, that each holder of Series A Preferred
Stock
shall have the right to elect the benefits of the provisions of Section
6(c)(iv)
hereof in lieu of receiving payment in liquidation, dissolution or winding
up of
the Corporation pursuant to this Section 5.
(ii)
the
provisions of this Section 5(c) shall not apply to any reorganization,
merger or
consolidation involving (1) only a change in the state of incorporation
of the
Corporation, or (2) a merger of the Corporation with or into a wholly-owned
subsidiary of the Corporation that is incorporated in the United State
of
America.
(d)
Distributions Other than Cash. Whenever the distribution provided for in
this
Section 5 shall be payable in property other than cash, the value of such
distribution shall be the fair market value thereof as determined in good
faith
by the Board of Directors of the Corporation. All distributions (including
distributions other than cash) made hereunder shall be made pro rata to
the
holders of Series A Preferred Stock.
(e)
Equitable Adjustments. The amounts to be paid or set aside for payment
as
provided above in this Section 5 shall be proportionately increased or
decreased
in inverse relation to the change in the number of outstanding shares resulting
from any Series A Recapitalization Event.
6.
Conversion
Rights.
(a)
General. Subject to and upon compliance with the provisions of this Section
6,
each holder of shares of Series A Preferred Stock shall be entitled, at
its
option, at any time, to convert all or any such shares of Series A Preferred
Stock into the number of fully paid and nonassessable shares of Common
Stock
equal to the number obtained by dividing (i) the Original Purchase Price
of such
Series A Preferred Stock, plus the amount of any accumulated but unpaid
dividends as of the Conversion Date by (ii) the Conversion Price in effect
at
the close of business on the Conversion Date (determined as provided in
this
Section 6).
(b)
Fractions of Shares. No fractional shares of Common Stock shall be issued
upon
conversion of shares of Series A Preferred Stock. If more than one share
of
Series A Preferred Stock shall be surrendered for conversion at one time
by the
same holder, the number of full shares of Common Stock to be issued shall
be
computed on the basis of the aggregate number of shares of Series A Preferred
Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion
of any
shares of Series A Preferred Stock, the Corporation shall pay a cash adjustment
in respect of such fractional share in an amount equal to the product of
such
fraction multiplied by the fair market value of one share of Common Stock
on the
Conversion Date as determined in good faith by the Board of
Directors.
(c)
Adjustments to Conversion Price. The Conversion Price shall also be subject
to
adjustment from time to time as follows:
(i)
Upon
Stock Dividends, Subdivisions or Splits. If, at any time after the date
hereof,
the number of shares of Common Stock outstanding is increased by a stock
dividend payable in shares of Common Stock or by a subdivision or split-up
of
shares of Common Stock, then, following the record date for the determination
of
holders of Common Stock entitled to receive such stock dividend, or to
be
affected by such subdivision or split-up, the Conversion Price shall be
appropriately decreased so that the number of shares of Common Stock issuable
on
conversion of Series A Preferred Stock shall be increased in proportion
to such
increase in outstanding shares.
(ii)
Upon
Combinations. If, at any time after the date hereof, the number of shares
of
Common Stock outstanding is decreased by a combination of the outstanding
shares
of Common Stock into a smaller number of shares of Common Stock, then,
following
the record date to determine shares affected by such combination, the Conversion
Price shall be appropriately increased so that the number of shares of
Common
Stock issuable on conversion of each share of Series A Preferred Stock
shall be
decreased in proportion to such decrease in outstanding shares.
(iii)
Capital Reorganization or Reclassification. If the Common Stock issuable
upon
the conversion of the Series A Preferred Stock shall be changed into the
same or
different number of shares of any class or classes of stock, whether by
capital
reorganization, reclassification or otherwise (other than a subdivision
or
combination or shares of stock dividend provided for elsewhere in this
Section
6(c), or the sale of all or substantially all of the Corporation's properties
and assets to any other person), then and in each such event the holder
of each
share of Series A Preferred Stock shall have the right thereafter to convert
such share into the kind and amount of shares of stock and other securities
and
property receivable upon such reorganization, reclassification or other
change
by holders of the number of shares of Common Stock into which such shares
of
Series A Preferred Stock might have been converted, as the case may be,
immediately prior to such reorganization, reclassification or change, all
subject to further adjustment as provided herein.
(iv)
Capital Reorganization, Merger or Sale of Assets. If at any time or from
time to
time there shall be a capital reorganization of the Common Stock (other
than a
subdivision, combination, reclassification, or exchange of shares provided
for
elsewhere in this Section 6) or a merger or consolidation of the Corporation
with or into
another corporation, or the sale of all or substantially all of the
Corporation's properties and assets to any other person, then, as a part
of such
reorganization, merger, or consolidation or sale, provision shall be made
so
that holders of Series A Preferred Stock, as the case may be, shall thereafter
be entitled to receive upon conversion of the Series A Preferred Stock,
the
number of shares of stock or other securities or property of the Corporation,
or
of the successor corporation resulting from such merger, consolidation
or sale,
to which such holder would have been entitled if such holder had converted
its
shares of Series A Preferred Stock immediately prior to such capital
reorganization, merger, consolidation or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
6(c) with respect to the rights of the holders of the Series A Preferred
Stock
after the reorganization, merger, consolidation or sale to the end that
the
provisions of this Section 6(c), including adjustment of the Conversion
Price
then in effect for the Series A Preferred Stock and the number of shares
issuable upon conversion of the Series A Preferred Stock) shall be applicable
after that event in as nearly equivalent a manner as may be
practicable.
(v)
Deferral in Certain Circumstances. In any case in which the provisions
of this
Section 6(c) shall require that an adjustment shall become effective immediately
after a record date of an event, the Corporation may defer until the occurrence
of such event (1) issuing to the holder of any Series A Preferred Stock
converted after such record date and before the occurrence of such event
the
shares of capital stock issuable upon such conversion by reason of the
adjustment required by such event and issuing to such holder only the shares
of
capital stock issuable upon such conversion before giving effect to such
adjustments, and (2) paying to such holder any amount in cash in lieu of
a
fractional share of capital stock pursuant to Section 6(b) above; provided,
however, that the Corporation shall deliver to such holder an appropriate
instrument or due bills evidencing such holder's right to receive such
additional shares and such cash.
(d)
Exercise of Conversion Privilege. In order to exercise the conversion privilege,
the holder of any share of Series A Preferred Stock shall surrender the
certificate evidencing such share of Series A Preferred Stock, duly endorsed
or
assigned to the Corporation in blank, at any office or agency of the Corporation
maintained for such purpose, accompanied by written notice to the Corporation
at
such office or agency that the holder elects to convert such Series A Preferred
Stock or, if less than the entire amount thereof is to be converted, the
portion
thereof to be converted. Series A Preferred Stock shall be deemed to have
been
converted immediately prior to the close of business on the date (the
"Conversion Date") of surrender of such shares of Series A Preferred Stock
for
conversion in accordance with the foregoing provisions, and at such time
the
rights of the holder of such shares of Series A Preferred Stock as a holder
shall cease, and the person or persons entitled to receive the Common Stock
issuable upon conversion shall be treated for all purposes as the record
holder
or holders of such Common Stock as and after such time. As promptly as
practicable on or after the Conversion Date, the Corporation shall issue
and
shall deliver at any office or agency of the Corporation maintained for
the
surrender of Series A Preferred Stock a certificate or certificates for
the
number of full shares of Common Stock issuable upon conversion, together
with
payment in lieu of any fraction of a share, as provided in Section 6(b).
In the
case of any certificate evidencing shares of Series A Preferred Stock that
is
converted in part only, upon such conversion the Corporation shall also
execute
and deliver a new certificate evidencing the number of shares of Series
A
Preferred Stock that are not converted.
(e)
Notice of Adjustment of Conversion Price. Whenever the provisions of Section
6(c) require that the Conversion Price be adjusted as herein provided,
the
Corporation shall compute the adjusted Conversion Price in accordance with
Section 6(c) and shall prepare a certificate signed by the Corporation's
chief
executive officer or chief financial officer setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon which
such
adjustment is based, and such certificate shall forthwith be filed at each
office or agency maintained for such purpose for conversion of shares of
Series
A Preferred Stock and mailed by the Corporation at its expense to all holders
of
Series A Preferred Stock at their last addresses as they shall appear in
the
stock register.
(f)
Corporation to Reserve Common Stock. The Corporation shall at all times
reserve
and keep available, free from preemptive rights, out of the authorized
but
unissued Common Stock or out of the Common Stock held in treasury, for
the
purpose of effecting the conversion of Series A Preferred Stock, the full
number
of shares of Common Stock then issuable upon the conversion of all outstanding
shares of Series A Preferred Stock. Before taking any action that would
cause an
adjustment reducing the conversion price below the then par value (if any)
of
the shares of Common Stock deliverable upon conversion of the Series A
Preferred
Stock, the Corporation will take any corporate action that, in the opinion
of
its counsel, is necessary in order that the Corporation may validly and
legally
issue fully paid and non-assessable shares of Common Stock at such adjusted
conversion price.
(g)
Taxes
on Conversions. The Corporation will pay any and all original issuance,
transfer, stamp and other similar taxes that may be payable in respect
of the
issue or delivery of shares of Common Stock on conversion of Series A Preferred
Stock pursuant hereto. The Corporation shall not, however, be required
to pay
any tax which may be payable in respect of any transfer involved in the
issue
and delivery of shares of Common Stock in a name other than that of the
holder
of the share(s) of Series A Preferred Stock to be converted, 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 any such tax, or has established
to the
satisfaction of the Corporation that such tax has been paid.
FIFTH:
The name
and mailing address of the sole incorporator of the Corporation is Nyisha
Shakur, c/o Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 666
Third
Avenue, New York, New York 10017.
SIXTH:
The
Corporation is to have perpetual existence.
SEVENTH:
For the
management of the business and for the conduct of the affairs of the
Corporation, and in further definition and not in limitation of the powers
of
the Corporation and of its directors and of its stockholders or any class
thereof, as the case may be, conferred by the State of Delaware, it is
further
provided that:
A. The
management of the business and the conduct of the affairs of the Corporation
shall be vested in its Board of Directors. The number of directors which
shall
constitute the whole Board of Directors shall be fixed by, or in the manner
provided in, the Bylaws. The phrase “whole Board” and the phrase “total number
of directors” shall be deemed to have the same meaning, to wit, the total number
of directors which the Corporation would have if there were no vacancies.
No
election of directors need be by written ballot.
B. After
the
original or other Bylaws of the Corporation have been adopted, amended
or
repealed, as the case may be, in accordance with the provisions of
Section 109 of the DGCL, and, after the Corporation has received any
payment for any of its stock, the power to adopt, amend, or repeal the
Bylaws of
the Corporation may be exercised by the Board of Directors of the Corporation.
C. The
books
of the Corporation may be kept at such place within or without the State
of
Delaware as the Bylaws of the Corporation may provide or as may be designated
from time to time by the Board of Directors of the Corporation.
EIGHTH:
The
Corporation shall, to the fullest extent permitted by Section 145 of the
DGCL,
as the same may be amended and supplemented from time to time, indemnify
and
advance expenses to, (i) its directors and officers, and (ii) any person
who at
the request of the Corporation is or was serving as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or
other enterprise, from and against any and all of the expenses, liabilities,
or
other matters referred to in or covered by said section as amended or
supplemented (or any successor), provided, however, that except with respect
to
proceedings to enforce rights to indemnification, the Bylaws of the Corporation
may provide that the Corporation shall indemnify any director, officer
or such
person in connection with a proceeding (or part thereof) initiated by such
director, officer or such person only if such proceeding (or part thereof)
was
authorized by the Board of Directors of the Corporation. The Corporation,
by
action of its Board of Directors, may provide indemnification or advance
expenses to employees and agents of the Corporation or other persons only
on
such terms and conditions and to the extent determined by the Board of
Directors
in its sole and absolute discretion. The indemnification provided for herein
shall not be deemed exclusive of any other rights to which those indemnified
may
be entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in their official capacity and
as to
action in another capacity while holding such office, and shall continue
as to a
person who has ceased to be a director, officer, employee, or agent and
shall
inure to the benefit of the heirs, executors and administrators of such
a
person.
NINTH:
No
director of the Corporation shall be liable to the Corporation or any of
its
stockholders
for monetary damages for breach of fiduciary duty as a director, provided
that
this provision does not eliminate or limit the liability of the director
(i) for
any breach of the director’s duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 of
the DGCL, or (iv) for any transaction from which the director derived an
improper personal benefit. For purposes of the prior sentence, the term
“damages” shall, to the extent permitted by law, include without limitation, any
judgment, fine, amount paid in settlement, penalty, punitive damages, excise
or
other tax assessed with respect to an employee benefit plan, or expense
of any
nature (including, without limitation, reasonable counsel fees and
disbursements). Each person who serves as a director of the Corporation
while
this Article NINTH
is
in
effect shall be deemed to be doing so in reliance on the provisions of
this
Article NINTH,
and
neither the amendment or repeal of this Article NINTH,
nor the
adoption of any provision of this Certificate of Incorporation inconsistent
with
this Article NINTH,
shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for, arising out of, based upon, or in connection
with any acts or omissions of such director occurring prior to such amendment,
repeal, or adoption of an inconsistent provision. The provisions of this
Article
NINTH
are
cumulative and shall be in addition to and independent of any and all other
limitations on or eliminations of the liabilities of directors of the
Corporation, as such, whether such limitations or eliminations arise under
or
are created by any law, rule, regulation, bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise.
TENTH:
From
time
to time any of the provisions of this Certificate of Incorporation may
be
amended, altered or repealed, and other provisions authorized by the laws
of the
State of Delaware at the time in force may be added or inserted in the
manner
and at the time prescribed by said laws, and all rights at any time conferred
upon the stockholders of the Corporation by this Certificate of Incorporation
are granted subject to the provisions of this Article TENTH.
IN
WITNESS WHEREOF,
I have
made, signed, and sealed this Certificate of Incorporation as of September
14,
2007.
EXHIBIT
C
MANDALAY
MEDIA, INC.
Incorporated
under the laws
of
the State of Delaware
BYLAWS
Adopted
as of September 14, 2007
BYLAWS
OF
MANDALAY
MEDIA, INC.
ARTICLE I
OFFICES
1.1 Registered
Office.
The
initial registered office of Mandalay Media, Inc. (the “Corporation”) in the
State of Delaware shall be at 615 South Dupont Highway, Kent County,
Dover, DE
19901, and the registered agent in charge thereof shall be National
Corporate
Research, Ltd.
1.2 Other
Offices.
The
Corporation may also have an office or offices at any other place or
places
within or outside the State of Delaware.
ARTICLE
II
MEETING
OF STOCKHOLDERS
2.1 Annual
Meetings.
The
annual meeting of stockholders of the Corporation (the “Stockholders”) for the
election of directors, and for the transaction of such other business
as may
properly come before the meeting, shall be held at such place, date
and hour as
shall be fixed by the board of directors of the Corporation (the “Board”) and
designated in the notice or waiver of notice thereof, except that no
annual
meeting need be held if all actions, including the election of directors,
required by the Delaware General Corporation Law (the “DGCL”) to be taken at the
annual meeting of Stockholders are taken by written consent in lieu
of meeting
pursuant to Section 2.11 of this Article II.
2.2 Special
Meetings.
A
special
meeting of Stockholders for any purpose or purposes may be called by
the Board,
the chairman of the board (the “Chairman”), the chief executive officer of the
Corporation (the “CEO”), the president of the Corporation (the “President”) or
the record holders of at least a majority of the issued and outstanding
shares
of Common Stock of the Corporation (the “Common Stock”), to be held at such
place, date and hour as shall be designated in the notice or waiver
of notice
thereof.
2.3 Notice
of Meetings.
Except
as
otherwise required by statute, the Corporation’s Certificate of Incorporation
(the “Certificate”) or these bylaws of the Corporation (the “Bylaws”), notice of
each annual or special meeting of the Stockholders shall be given to
each
Stockholder of record entitled to vote at such meeting not less than
10 nor more
than 60 days before the day on which the meeting is to be held, by
delivering
written notice thereof to him personally, or by mailing a copy of such
notice,
postage prepaid, directly to him at his address as it appears in the
records of
the Corporation, or by transmitting such notice thereof to him at such
address
by telegraph, cable or other telephonic transmission. Every such notice
shall
state the place, the date and hour of the meeting, and, in case of
a special
meeting, the purpose or purposes for which
the
meeting is called. Notice of any meeting of Stockholders shall not
be required
to be given to any Stockholder who shall attend such meeting in person
or by
proxy, or who shall, in person or by his attorney thereunto authorized,
waive
such notice in writing, either before or after such meeting. Except
as otherwise
provided in these Bylaws, neither the business to be transacted at,
nor the
purpose of, any meeting of the Stockholders need be specified in any
such notice
or waiver of notice. Notice of any adjourned meeting of Stockholders
shall not
be required to be given, except when expressly required by law.
2.4 Quorum.
At
each
meeting of Stockholders, except where otherwise provided by the Certificate
or
these Bylaws, the holders of a majority of the issued and outstanding
shares of
Common Stock entitled to vote at such meeting, present in person or
represented
by proxy, shall constitute a quorum for the transaction of business.
In the
absence of a quorum, a majority in interest of the Stockholders present
in
person or represented by proxy and entitled to vote, or, in the absence
of all
the Stockholders entitled to vote, any officer entitled to preside
at, or act as
secretary of, such meeting, shall have the power to adjourn the meeting
from
time to time, until Stockholders holding the requisite amount of stock
to
constitute a quorum shall be present or represented. At any such adjourned
meeting at which a quorum shall be present, any business may be transacted
which
might have been transacted at the meeting as originally called.
2.5 Place
of Meetings.
Annual
meetings or special meetings of Stockholders may be held at any place
within or
without the State of Delaware as may be selected from time to time
by the Board,
Chairman, CEO or President.
2.6 Organization.
Unless
otherwise determined by the Board, at each meeting of the Stockholders,
one of
the following shall act as chairman of the meeting and preside thereat,
in the
following order of precedence:
(a) the
Chairman;
(b) the
CEO;
(c) the
President;
(d) any
director, officer or Stockholder of the Corporation designated by the
Board to
act as chairman of such meeting and to preside thereat if the Chairman,
CEO or
President shall be absent from such meeting; or
(e) a
Stockholder of record who shall be chosen chairman of such meeting
by a majority
in voting interest of the Stockholders present in person or by proxy
and
entitled to vote thereat.
The
secretary of the Corporation (the “Secretary”) or, if he shall be presiding over
such meeting in accordance with the provisions of this Section 2.6
or if he
shall be absent from such meeting, the person (who shall be an Assistant
Secretary of the Corporation, if an Assistant Secretary has been appointed
and
is present) whom the chairman of such meeting shall appoint, shall
act as
secretary of such meeting and keep the minutes thereof.
2.7 Order
of Business.
The
order
of business at each meeting of the Stockholders shall be determined
by the
chairman of such meeting, but such order of business may be changed
by a
majority in voting interest of those present in person or by proxy
at such
meeting and entitled to vote thereat.
2.8 Voting.
Except
as
otherwise provided by law, the Certificate or these Bylaws, at each
meeting of
Stockholders, each Stockholder shall be entitled to one vote in person
or by
proxy for each share of Common Stock held by him and registered in
his name on
the books of the Corporation on the date fixed pursuant to Section
6.7 of
Article VI of the Bylaws as the record date for the determination of
Stockholders entitled to vote at such meeting. Persons holding stock
in a
fiduciary capacity shall be entitled to vote the shares so held. A
person whose
stock is pledged shall be entitled to vote, unless, in the transfer
by the
pledgor on the books of the Corporation, he has expressly empowered
the pledgee
to vote thereon, in which case only the pledgee or his proxy may represent
such
stock and vote thereon. If shares or other securities having voting
power stand
in the record of two or more persons, whether fiduciaries, members
of a
partnership, joint tenants, tenants in common, tenants by the entirety
or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, unless the secretary shall be given written
notice
to the contrary and furnished with a copy of the instrument or order
appointing
them or creating the relationship wherein it is so provided, their
acts with
respect to voting shall have the following effect:
(a) if
only
one votes, his act binds all;
(b) if
more
than one votes, the act of the majority so voting binds all; and
(c) if
more
than one votes, but the vote is evenly split on any particular matter,
such
shares shall be voted in the manner provided by law.
If
the
instrument so filed shows that any such tenancy is held in unequal
interests, a
majority or even-split for the purposes of this Section 2.8 shall be
a majority
or even-split in interest. The Corporation shall not vote directly
or indirectly
any share of its own capital stock. Any vote of stock may be given
by the
Stockholder entitled thereto in person or by his proxy appointed by
an
instrument in writing, subscribed by such Stockholder or by his attorney
thereunto authorized, delivered to the secretary of the meeting; provided,
however,
that no
proxy shall be voted after three years from its date, unless said proxy
provides
for a longer period. At all meetings of the Stockholders, all matters
(except
where other provision is made by law, the Certificate or these Bylaws)
shall be
decided by the vote of a majority in interest of the Stockholders present
in
person or by proxy at such meeting and entitled to vote thereon, a
quorum being
present. Unless demanded by a Stockholder present in person or by proxy
at any
meeting and entitled to vote thereon, the vote on any question need
not be by
ballot. Upon a demand by any such Stockholder for a vote by ballot
upon any
question, such vote by ballot shall be taken. On a vote by ballot,
each ballot
shall be signed by the Stockholder voting, or by his proxy, if there
be such
proxy, and shall state the number of shares voted.
2.9 Inspection.
The
chairman of the meeting may at any time appoint one or more inspectors
to serve
at any meeting of the Stockholders. Any inspector may be removed, and
a new
inspector or inspectors appointed, by the Board at any time. Such inspectors
shall decide upon the qualifications of voters, accept and count votes,
declare
the results of such vote, and subscribe and deliver to the secretary
of the
meeting a certificate stating the number of shares of stock issued
and
outstanding and entitled to vote thereon and the number of shares voted
for and
against the question, respectively. The inspectors need not be stockholders
of
the Corporation, and any director or officer of the Corporation may
be an
inspector on any question other than a vote for or against his election
to any
position with the Corporation or on any other matter in which he may
be directly
interested. Before acting as herein provided, each inspector shall
subscribe an
oath faithfully to execute the duties of an inspector with strict impartiality
and according to the best of his ability.
2.10 List
of Stockholders.
It
shall
be the duty of the Secretary or other officer of the Corporation who
shall have
charge of its stock ledger to prepare and make, at least 10 days before
every
meeting of the Stockholders, a complete list of the Stockholders entitled
to
vote thereat, arranged in alphabetical order, and showing the address
of each
Stockholder and the number of shares registered in the name of each
Stockholder.
Such list shall be open to the examination of any Stockholder, for
any purpose
germane to any such meeting, during ordinary business hours, for a
period of at
least 10 days prior to such meeting, either at a place within the city
where
such meeting is to be held, which place shall be specified in the notice
of the
meeting or, if not so specified, at the place where the meeting is
to be held.
Such list shall also be produced and kept at the time and place of
the meeting
during the whole time thereof, and may be inspected by any Stockholder
who is
present.
2.11 Stockholders'
Consent in Lieu of Meeting.
Any
action required by the DGCL to be taken at any annual or special meeting
of the
Stockholders of the Corporation, or any action which may be taken at
any annual
or special meeting of such Stockholders, may be taken without a meeting,
without
prior notice and without a vote, by a consent in writing, as permitted
by the
DGCL.
2.12 Action
by Means of Conference Telephone or Similar Communications Equipment.
Any
one
or more of the Stockholders may participate in a meeting of the Stockholders
by
means of conference telephone or similar communications equipment by
which all
persons participating in the meeting can hear each other, and participation
in a
meeting by such means shall constitute presence in person at such meeting.
ARTICLE
III
BOARD
OF DIRECTORS
3.1 General
Powers.
The
business, property and affairs of the Corporation shall be managed
by or under
the direction of the Board, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by law
or by the
Certificate directed or required to be exercised or done by the Stockholders.
3.2 Number
and Term of Office.
The
number of directors shall be fixed from time to time by the Board.
Directors
need not be Stockholders. Each director shall hold office until his
successor is
elected and qualified, or until his earlier death or resignation or
removal in
the manner hereinafter provided.
3.3 Election
of Directors.
At
each
meeting of Stockholders for the election of directors at which a quorum
is
present, the persons receiving the greatest number of votes, up to
the number of
directors to be elected, of the Stockholders present in person or by
proxy and
entitled to vote thereon shall be the directors; provided, however,
that for
purposes of such vote no Stockholder shall be allowed to cumulate his
votes.
Unless an election by ballot shall be demanded as provided in Section
2.8 of
Article II, election of directors may be conducted in any manner approved
at
such meeting.
3.4 Resignation,
Removal and Vacancies.
Any
director may resign at any time by giving written notice to the Board,
Chairman,
CEO, President or Secretary. Such resignation shall take effect at
the time
specified therein or, if the time be not specified, upon receipt thereof;
and
unless otherwise specified therein, the acceptance of such resignation
shall not
be necessary to make it effective.
Any
director or the entire Board may be removed, with or without cause,
at any time,
by vote of the holders of a majority of the shares then entitled to
vote at an
election of directors or by written consent of the Stockholders pursuant
to
Section 2.11 of Article II.
Vacancies
occurring on the Board for any reason may be filled by vote of the
Stockholders
or by a Stockholders' written consent pursuant to Section 2.11 of Article
II, or
by vote of the Board or by a directors' written consent pursuant to
Section 3.6
of this Article III. If the number of directors then in office is less
than a
quorum, such vacancies may be filled by a vote of a majority of the
directors
then in office.
3.5 Meetings.
(a) Annual
Meetings.
As soon
as practicable after each annual election of directors, the Board shall
meet for
the purpose of organization and the transaction of other business,
unless it
shall have transacted all such business by written consent pursuant
to Section
3.6 of this Article III.
(b) Other
Meetings.
Other
meetings of the Board shall be held at such times and at such places
as the
Board, Chairman, CEO, President or any director shall from time to
time
determine.
(c) Notice
of Meetings.
Notice
shall be given to each director of each meeting, including the time,
place and
purpose of such meeting. Notice of each such meeting shall be mailed
to each
director, addressed to him at his residence or usual place of business,
at least
two days before the date on which such meeting is to be held, or shall
be sent
to him at such place by telegraph, cable, wireless or other form of
recorded
communication, or be delivered personally or by telephone not later
than the day
before the day on which such meeting is to be held, but notice need
not be given
to any director who shall attend such meeting. A written waiver of
notice,
signed by the person entitled thereto, whether before or after the
time of the
meeting stated therein, shall be deemed equivalent to notice.
(d) Place
of Meetings.
The
Board may hold its meetings at such place or places within or outside
the State
of Delaware as the Board may from time to time determine, or as shall
be
designated in the respective notices or waivers of notice thereof.
(e) Quorum
and Manner of Acting.
A
majority of the total number of directors then in office shall be present
in
person at any meeting of the Board in order to constitute a quorum
for the
transaction of business at such meeting, and the vote of a majority
of those
directors present at any such meeting at which a quorum is present
shall be
necessary for the passage of any resolution or act of the Board, except
as
otherwise expressly required by law or these Bylaws. In the absence
of a quorum
for any such meeting, a majority of the directors present thereat may
adjourn
such meeting from time to time until a quorum shall be present.
(f) Organization.
At each
meeting of the Board, one of the following shall act as chairman of
the meeting
and preside thereat, in the following order of precedence:
(i) the
Chairman;
(ii) the
CEO
(if a director);
(iii) the
President (if a director); or
(iv) any
director designated by a majority of the directors present.
The
Secretary or, in the case of his absence, an Assistant Secretary, if
an
Assistant Secretary has been appointed and is present, or any person
whom the
chairman of the meeting shall appoint shall act as secretary of such
meeting and
keep the minutes thereof.
3.6 Directors'
Consent in Lieu of Meeting.
Any
action required or permitted to be taken at any meeting of the Board
may be
taken without a meeting, without prior notice and without a vote, if
a consent
in writing, setting forth the action so taken, shall be signed by all
of the
directors then in office and such consent is filed with the minutes
of the
proceedings of the Board.
3.7 Action
by Means of Conference Telephone or Similar Communications Equipment.
Any
one
or more members of the Board may participate in a meeting of the Board
by means
of conference telephone or similar communications equipment by which
all persons
participating in the meeting can hear each other, and participation
in a meeting
by such means shall constitute presence in person at such meeting.
3.8 Committees.
The
Board
may, by resolution or resolutions passed by a majority of the whole
Board,
designate one or more committees, such committee or committees to have
such name
or names as may be determined from time to time by resolution adopted
by the
Board, and each such committee to consist of one or more directors
of the
Corporation, which to the extent provided in said resolution or resolutions
shall have and may exercise the powers of the Board in the management
of the
business and affairs of the Corporation and may authorize the seal
of the
Corporation to be affixed to all papers which may require it. A majority
of all
the members of any such committee may determine its action and fix
the time and
place of its meetings, unless the Board shall otherwise provide. The
Board shall
have power to change the members of any such committee at any time,
to fill
vacancies and to discharge any such committee, either with or without
cause, at
any time.
ARTICLE
IV
4.1 Executive
Officers.
The
principal officers of the Corporation shall be, if appointed, a Chairman,
CEO,
President, Secretary and Treasurer, and such other officers as the
Board may
appoint pursuant to Section 4.3 of this Article IV. Any two or more
offices may
be held by the same person.
4.2 Authority
and Duties.
All
officers, as between themselves and the Corporation, shall have such
authority
and perform such duties in the management of the Corporation as may
be provided
in these Bylaws or, to the extent so provided, by the Board.
4.3 Other
Officers.
The
Corporation may have such other officers, agents and employees as the
Board may
deem necessary, including one or more Vice Presidents, Assistant Secretaries
or
Assistant Treasurers, each of whom shall hold office for such period,
have such
authority and perform such duties as the Board, Chairman, CEO, President
and
Secretary may from time to time determine. The Board may delegate to
any
principal officer the power to appoint and define the authority and
duties of,
or remove, any such officers, agents or employees.
4.4 Term
of Office, Resignation and Removal.
All
officers shall be elected or appointed by the Board and shall hold
office for
such term as may be prescribed by the Board. Each officer shall hold
office
until his successor has been elected or appointed and qualified or
until his
earlier death or resignation or removal in the manner hereinafter provided.
The
Board may require any officer to give security for the faithful performance
of
his duties.
Any
officer may resign at any time by giving written notice to the Board,
Chairman,
CEO, President or Secretary. Such resignation shall take effect at
the time
specified therein or, if the time be not specified, at the time it
is accepted
by action of the Board. Except as aforesaid, the acceptance of such
resignation
shall not be necessary to make it effective.
All
officers and agents elected or appointed by the Board shall be subject
to
removal at any time by the Board or by the Stockholders with or without
cause.
4.5 Vacancies.
If
the
office of Chairman, CEO, President or Secretary becomes vacant for
any reason,
the Board shall fill such vacancy, and if any other office becomes
vacant, the
Board may fill such vacancy. Any officer so appointed or elected by
the Board
shall serve only until such time as the unexpired term of his predecessor
shall
have expired, unless reelected or reappointed by the Board.
4.6 The
Chairman.
The
Chairman shall give counsel and advice to the Board and the officers
of the
Corporation on all subjects concerning the welfare of the Corporation
and the
conduct of its business and shall perform such other duties as the
Board may
from time to time determine. Unless otherwise determined by the Board,
he shall
preside at meetings of the Board and of the Stockholders at which he
is present.
4.7 The
Chief Executive Officer.
The
CEO
shall have general and active management and control of the business
and affairs
of the Corporation subject to the control of the Board and shall see
that all
orders and resolutions of the Board are carried into effect. The CEO
shall from
time to time make such reports of the affairs of the Corporation as
the Board of
Directors may require and shall perform such other duties as the Board
may from
time to time determine.
4.8 The
President.
Subject
to the control of the Board and the CEO, the President shall in general
supervise and control the business and affairs of the Corporation.
4.9 The
Secretary.
The
Secretary shall, to the extent practicable, attend all meetings of
the Board and
all meetings of the Stockholders and shall record all votes and the
minutes of
all proceedings in a book to be kept for that purpose. He may give,
or cause to
be given, notice of all meetings of the Stockholders and of the Board,
and shall
perform such other duties as may be prescribed by the Board, Chairman,
CEO or
President, under whose supervision he shall act. He shall keep in safe
custody
the seal of the Corporation and affix the same to any duly authorized
instrument
requiring it and, when so affixed, it shall be attested by his signature
or by
the signature of the Treasurer or, if appointed, an Assistant Secretary
or an
Assistant Treasurer. He shall keep in safe custody the certificate
books and
Stockholder records and such other books and records as the Board may
direct,
and shall perform all other duties incident to the office of Secretary
and such
other duties as from time to time may be assigned to him by the Board,
Chairman,
CEO or the President.
4.10 The
Treasurer.
The
Treasurer shall have the care and custody of the corporate funds and
other
valuable effects, including securities, shall keep full and accurate
accounts of
receipts and disbursements in books belonging to the Corporation and
shall
deposit all moneys and other valuable effects in the name and to the
credit of
the Corporation in such depositories as may be designated by the Board.
The
Treasurer shall disburse the funds of the Corporation as may be ordered
by the
Board, taking proper vouchers for such disbursements, shall render
to the
Chairman, CEO, President and directors, at the regular meetings of
the Board or
whenever they may require it, an account of all his transactions as
Treasurer
and of the financial condition of the Corporation and shall perform
all other
duties incident to the office of Treasurer and such other duties as
from time to
time may be assigned to him by the Board, Chairman, CEO or the President.
ARTICLE
V
CONTRACTS,
CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
5.1 Execution
of Documents.
The
Board
shall designate, by either specific or general resolution, the officers,
employees and agents of the Corporation who shall have the power to
execute and
deliver deeds, contracts, mortgages, bonds, debentures, checks, drafts
and other
orders for the payment of money and other documents for and in the
name of the
Corporation, and may authorize such officers, employees and agents
to delegate
such power (including authority to redelegate) by written instrument
to other
officers, employees or agents of the Corporation. Unless so designated
or
expressly authorized by these Bylaws, no officer, employee or agent
shall have
any power or authority to bind the Corporation by any contract or engagement,
to
pledge its credit or to render it liable pecuniarily for any purpose
or amount.
5.2 Deposits.
All
funds
of the Corporation not otherwise employed shall be deposited from time
to time
to the credit of the Corporation or otherwise as the Board or Treasurer,
or any
other officer of the Corporation to whom power in this respect shall
have been
given by the Board, shall select.
5.3 Proxies
with Respect to Stock or Other Securities of Other Corporations.
The
Board
shall designate the officers of the Corporation who shall have authority
from
time to time to appoint an agent or agents of the Corporation to exercise
in the
name and on behalf of the Corporation the powers and rights which the
Corporation may have as the holder of stock or other securities in
any other
corporation, and to vote or consent with respect to such stock or securities.
Such designated officers may instruct the person or persons so appointed
as to
the manner of exercising such powers and rights, and such designated
officers
may execute or cause to be executed in the name and on behalf of the
Corporation
and under its corporate seal or otherwise, such written proxies, powers
of
attorney or other instruments as they may deem necessary or proper
in order that
the Corporation may exercise its powers and rights.
ARTICLE
VI
SHARES
AND THEIR TRANSFER; FIXING RECORD DATE
6.1 Certificates
for Shares.
Every
owner of stock of the Corporation shall be entitled to have a certificate
certifying the number and class of shares owned by him in the Corporation,
which
shall be in such form as shall be prescribed by the Board. Certificates
shall be
numbered and issued in consecutive order and shall be signed by, or
in the name
of, the Corporation by the Chairman, CEO, President or any Vice President,
and
by the Treasurer (or an Assistant Treasurer, if appointed) or the Secretary
(or
an Assistant Secretary, if appointed). In case any officer or officers
who shall
have signed any such certificate or certificates shall cease to be
such officer
or officers of the Corporation, whether because of death, resignation
or
otherwise, before such certificate or certificates shall have been
delivered by
the Corporation, such certificate or certificates may nevertheless
be adopted by
the Corporation and be issued and delivered as though the person or
persons who
signed such certificate had not ceased to be such officer or officers
of the
Corporation.
6.2 Record.
A
record
in one or more counterparts shall be kept of the name of the person,
firm or
corporation owning the shares represented by each certificate for stock
of the
Corporation issued, the number of shares represented by each such certificate,
the date thereof and, in the case of cancellation, the date of cancellation.
Except as otherwise expressly required by law, the person in whose
name shares
of stock stand on the stock record of the Corporation shall be deemed
the owner
thereof for all purposes regarding the Corporation.
6.3 Transfer
and Registration of Stock.
The
transfer of stock and certificates which represent the stock of the
Corporation
shall be governed by Article 8 of Subtitle 1 of Title 6 of the Delaware
Code
(the Uniform Commercial Code), as amended from time to time.
Registration
of transfers of shares of the Corporation shall be made only on the
books of the
Corporation upon request of the registered holder thereof, or of his
attorney
thereunto authorized by power of attorney duly executed and filed with
the
Secretary of the Corporation, and upon the surrender of the certificate
or
certificates for such shares properly endorsed or accompanied by a
stock power
duly executed.
6.4 Addresses
of Stockholders.
Each
Stockholder shall designate to the Secretary an address at which notices
of
meetings and all other corporate notices may be served or mailed to
him, and, if
any Stockholder shall fail to designate such address, corporate notices
may be
served upon him by mail directed to him at his post-office address,
if any, as
the same appears on the share record books of the Corporation or at
his last
known post-office address.
6.5 Lost,
Destroyed and Mutilated Certificates.
The
holder of any shares of the Corporation shall immediately notify the
Corporation
of any loss, destruction or mutilation of the certificate therefor,
and the
Board may, in its discretion, cause to be issued to him a new certificate
or
certificates for such shares, upon the surrender of the mutilated certificates
or, in the case of loss or destruction of the certificate, upon satisfactory
proof of such loss or destruction, and the Board may, in its discretion,
require
the owner of the lost or destroyed certificate or his legal representative
to
give the Corporation a bond in such sum and with such surety or sureties
as it
may direct to indemnify the Corporation against any claim that may
be made
against it on account of the alleged loss or destruction of any such
certificate.
6.6 Regulations.
The
Board
may make such rules and regulations as it may deem expedient, not inconsistent
with these Bylaws, concerning the issue, transfer and registration
of
certificates for stock of the Corporation.
6.7 Fixing
Date for Determination of Stockholders of Record.
(a) In
order
that the Corporation may determine the Stockholders entitled to notice
of or to
vote at any meeting of Stockholders or any adjournment thereof, the
Board may
fix a record date, which record date shall not precede the date upon
which the
resolution fixing the record date is adopted by the Board, and which
record date
shall be not more than 60 nor less than 10 days before
the date of such meeting. If no record date is fixed by the Board,
the record
date for determining Stockholders entitled to notice of or to vote
at a meeting
of Stockholders shall be at the close of business on the day next preceding
the
day on which notice is given, or, if notice is waived, at the close
of business
on the day next preceding the day on which the meeting is held. A determination
of Stockholders of record entitled to notice of or to vote at a meeting
of
Stockholders shall apply to any adjournment of the meeting; provided,
however,
that
the Board may fix a new record date for the adjourned meeting.
(b) In
order
that the Corporation may determine the Stockholders entitled to consent
to
corporate action in writing without a meeting, the Board may fix a
record date,
which record date shall not precede the date upon which the resolution
fixing
the record date is adopted by the Board, and which date shall be not
more than
10 days after the date upon which the resolution fixing the record
date is
adopted by the Board. If no record date has been fixed by the Board,
the record
date for determining Stockholders entitled to consent to corporate
action in
writing without a meeting, when no prior action by the Board is required
by the
DGCL, shall be the first date on which a signed written consent setting
forth
the action taken or proposed to be taken is delivered to the Corporation
by
delivery to its registered office in the State of Delaware, its principal
place
of business or an officer or agent of the Corporation having custody
of the book
in which proceedings of meetings of Stockholders are recorded. Delivery
made to
the Corporation's registered office shall be by hand or by certified
or
registered mail, return receipt requested. If no record date has been
fixed by
the Board and prior action by the Board is required by the DGCL, the
record date
for determining Stockholders entitled to consent to corporate action
in writing
without a meeting shall be at the close of business on the day on which
the
Board adopts the resolution taking such prior action.
(c) In
order
that the Corporation may determine the Stockholders entitled to receive
payment
of any dividend or other distribution or allotment of any rights or
the
Stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful
action,
the Board may fix a record date, which record date shall not precede
the date
upon which the resolution fixing the record date is adopted, and which
record
date shall be not more than 60 days prior to such action. If no record
date is
fixed, the record date for determining Stockholders for any such purpose
shall
be at the close of business on the day on which the Board adopts the
resolution
relating thereto.
ARTICLE
VII
INDEMNIFICATION
AND INSURANCE
7.1 Indemnification.
(a) As
provided in the Certificate, to the fullest extent permitted by the
DGCL as the
same exists or may hereafter be amended, a director of the Corporation
shall not
be liable to the Corporation or its Stockholders for breach of fiduciary
duty as
a director.
(b) Without
limitation of any right conferred by paragraph (a) of this Section
7.1, each
person who was or is made a party or is threatened to be made a party
to or is
otherwise involved in any threatened, pending or completed action,
suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she
is or was a
director, officer or employee of the Corporation or is or was serving
at the
request of the Corporation as a director, officer or employee of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter
an
"indemnitee"), whether the basis of such proceeding is alleged action
in an
official capacity while serving as a director, officer or employee
or in any
other capacity while serving as a director, officer or employee, shall
be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the DGCL, as the same exists or may hereafter be amended
(but, in
the case of any such amendment, only to the extent that such amendment
permits
the Corporation to provide broader indemnification rights than permitted
prior
thereto), against all expense, liability and loss (including attorneys'
fees,
judgments, fines, excise taxes or amounts paid in settlement) reasonably
incurred or suffered by such indemnitee in connection therewith and
such
indemnification shall continue as to an indemnitee who has ceased to
be a
director, officer or employee and shall inure to the benefit of the
indemnitee's
heirs, testators, intestates, executors and administrators; provided,
however,
that
such person acted in good faith and in a manner he reasonably believed
to be in,
or not opposed to, the best interests of the Corporation, and with
respect to a
criminal action or proceeding, had no reasonable cause to believe his
conduct
was unlawful; provided further,
however,
that no
indemnification shall be made in the case of an action, suit or proceeding
by or
in the right of the Corporation in relation to matters as to which
it shall be
adjudged in such action, suit or proceeding that such director, officer,
employee or agent is liable to the Corporation, unless a court having
jurisdiction shall determine that, despite such adjudication, such
person is
fairly and reasonably entitled to indemnification; provided further,
however,
that,
except as provided in Section 7.1(c) of this Article VII with respect
to
proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part
thereof)
initiated by such indemnitee only if such proceeding (or part thereof)
initiated
by such indemnitee was authorized by the Board. The right to indemnification
conferred in this Article VII shall be a contract right and shall include
the
right to be paid by the Corporation the expenses incurred in defending
any such
proceeding in advance of its final disposition (hereinafter an "advancement
of
expenses"); provided,
however,
that,
if the DGCL requires, an advancement of expenses incurred by an indemnitee
in
his or her capacity as a director or officer (and not in any other
capacity in
which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only
upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"),
by
or on behalf of such indemnitee, to repay all amounts so advanced if
it shall
ultimately be determined by final judicial decision from which there
is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under
this
Section or otherwise.
(c) If
a
claim under Section 7.1(b) of this Article VII is not paid in full
by the
Corporation within 60 days after a written claim has been received
by the
Corporation, except in the case of a claim for an advancement of expenses,
in
which case the applicable period shall be 20 days, the indemnitee may
at any
time thereafter bring suit against the Corporation to recover the unpaid
amount
of the claim. If successful in whole or in part in any such suit, or
in a suit
brought by the Corporation to recover an advancement of expenses pursuant
to the
terms of any undertaking, the indemnitee shall be entitled to be paid
also the
expense of prosecuting or defending such suit. In (i) any suit brought
by the
indemnitee
to
enforce a right to indemnification hereunder (but not in a suit brought
by the
indemnitee to enforce a right to an advancement of expenses) it shall
be a
defense that, and (ii) in any suit by the Corporation to recover an
advancement
of expenses pursuant to the terms of an undertaking, the Corporation
shall be
entitled to recover such expenses upon a final adjudication that, the
indemnitee
has not met the applicable standard of conduct set forth in the DGCL.
Neither
the failure of the Corporation (including the Board, independent legal
counsel,
or the Stockholders) to have made a determination prior to the commencement
of
such suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set
forth in
the DGCL, nor an actual determination by the Corporation (including
the Board,
independent legal counsel or the Stockholders) that the indemnitee
has not met
such applicable standard of conduct, shall create a presumption that
the
indemnitee has not met the applicable standard of conduct or, in the
case of
such a suit brought by the indemnitee, be a defense to such suit. In
any suit
brought by the indemnitee to enforce a right to indemnification or
to an
advancement of expenses hereunder, or by the Corporation to recover
an
advancement of expenses pursuant to the terms of an undertaking, the
burden of
proving that the indemnitee is not entitled to be indemnified, or to
such
advancement of expenses, under this Section
or otherwise shall be on the Corporation.
(d) The
rights to indemnification and to the advancement of expenses conferred
in this
Article VII shall not be exclusive of any other right which any person
may have
or hereafter acquire under any statute, the Certificate, agreement,
vote of
Stockholders or disinterested directors or otherwise.
7.2 Insurance.
The
Corporation may purchase and maintain insurance, at its expense, to
protect
itself and any person who is or was a director, officer, employee or
agent of
the Corporation or any person who is or was serving at the request
of the
Corporation as a director, officer, employer or agent of another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Corporation would have the power
to
indemnify such person against such expense, liability or loss under
the DGCL.
ARTICLE
VIII
The
Board
may provide a corporate seal, which shall be in the form of a circle
and shall
bear the full name of the Corporation, the year of incorporation of
the
Corporation and the words and figures "Corporate Seal - Delaware.”
The
fiscal year of the Corporation shall be the calendar year unless otherwise
determined by the Board.
Any
bylaw
(including these Bylaws) may be adopted, amended or repealed by the
vote of the
holders of a majority of the shares then entitled to vote or by the
Stockholders' written consent pursuant to Section 2.11 of Article II,
or by the
vote of the Board or by the directors' written consent pursuant to
Section 3.6
of Article III.
*
* * *
*
EXHIBIT
D
NEW
JERSEY BUSINESS CORPORATION ACT SECTIONS 14A:11 -14A:13
§
14A:11-1. Right of shareholders to dissent
(1)
Any
shareholder of a domestic corporation shall have the right to dissent
from any
of the following corporate actions
(a)
Any
plan of merger or consolidation to which the corporation is a party,
provided
that, unless the certificate of incorporation otherwise provides
(i)
a
shareholder shall not have the right to dissent from any plan of
merger or
consolidation with respect to shares
(A)
of a
class or series which is listed on a national securities exchange
or is held of
record by not less than 1,000 holders on the record date fixed
to determine the
shareholders entitled to vote upon the plan of merger or consolidation;
or
(B)
for
which, pursuant to the plan of merger or consolidation, he will
receive (x)
cash, (y) shares, obligations or other securities which, upon consummation
of
the merger or consolidation, will either be listed on a national
securities
exchange or held of record by not less than 1,000 holders, or (z)
cash and such
securities;
(ii)
a
shareholder of a surviving corporation shall not have the right
to dissent from
a plan of merger, if the merger did not require for its approval
the vote of
such shareholders as provided in section 14A:10-5.1
or in
subsection 14A:10-3(4),
14A:10-7(2)
or
14A:10-7(4);
(iii)
a
shareholder of a corporation shall not have the right to dissent
from a plan of
merger, if the merger did not require, for its approval, the vote
of the
shareholders as provided in subsection (6) of N.J.S.
14A:10-3;
or
(b)
Any
sale, lease, exchange or other disposition of all or substantially
all of the
assets of a corporation not in the usual or regular course of business
as
conducted by such corporation, other than a transfer pursuant to
subsection (4)
of N.J.S.
14A:10-11,
provided that, unless the certificate of incorporation otherwise
provides, the
shareholder shall not have the right to dissent
(i)
with
respect to shares of a class or series which, at the record date
fixed to
determine the shareholders entitled to vote upon such transaction,
is listed on
a national securities exchange or is held of record by not less
than 1,000
holders; or
(ii)
from
a transaction pursuant to a plan of dissolution of the corporation
which
provides for distribution of substantially all of its net assets
to shareholders
in accordance with their respective interests within one year after
the date of
such transaction, where such transaction is wholly for
(A)
cash;
or
(B)
shares, obligations or other securities which, upon consummation
of the plan of
dissolution will either be listed on a national securities exchange
or held of
record by not less than 1,000 holders; or
(C)
cash
and such securities; or
(iii)
from a sale pursuant to an order of a court having jurisdiction.
(2)
Any
shareholder of a domestic corporation shall have the right to dissent
with
respect to any shares owned by him which are to be acquired pursuant
to section
14A:10-9.
(3)
A
shareholder may not dissent as to less than all of the shares owned
beneficially
by him and with respect to which a right of dissent exists. A nominee
or
fiduciary may not dissent on behalf of any beneficial owner as
to less than all
of the shares of such owner with respect to which the right of
dissent
exists.
(4)
A
corporation may provide in its certificate of incorporation that
holders of all
its shares, or of a particular class or series thereof, shall have
the right to
dissent from specified corporate actions in addition to those enumerated
in
subsection 14A:11-1(1),
in
which case the exercise of such right of dissent shall be governed
by the
provisions of this Chapter.
§
14A:11-2. Notice of dissent; demand for payment; endorsement of
certificates
(1)
Whenever a vote is to be taken, either at a meeting of shareholders
or upon
written consents in lieu of a meeting pursuant to section 14A:5-6,
upon a
proposed corporate action from which a shareholder may dissent
under section
14A:11-1,
any
shareholder electing to dissent from such action shall file with
the corporation
before the taking of the vote of the shareholders on such corporate
action, or
within the time specified in paragraph 14A:5-6(2)(b)
or
14A:5-6(2)(c),
as the
case may be, if no meeting of shareholders is to be held, a written
notice of
such dissent stating that he intends to demand payment for his
shares if the
action is taken.
(2)
Within 10 days after the date on which such corporate action takes
effect, the
corporation, or, in the case of a merger or consolidation, the
surviving or new
corporation, shall give written notice of the effective date of
such corporate
action, by certified mail to each shareholder who filed written
notice of
dissent pursuant to subsection 14A:11-2(1),
except
any who voted for or consented in writing to the proposed action.
(3)
Within 20 days after the mailing of such notice, any shareholder
to whom the
corporation was required to give such notice and who has filed
a written notice
of dissent pursuant to this section may make written demand on
the corporation,
or, in the case of a merger or consolidation, on the surviving
or new
corporation, for the payment of the fair value of his shares.
(4)
Whenever a corporation is to be merged pursuant to section 14A:10-5.1
or
subsection 14A:10-7(4)
and
shareholder approval is not required under subsections 14A:10-5.1(5)
and
14A:10-5.1(6),
a
shareholder who has the right to dissent pursuant to section 14A:11-1
may, not
later than 20 days after a copy or summary of the plan of such
merger and the
statement required by subsection 14A:10-5.1(2)
is
mailed to such shareholder, make written demand on the corporation
or on the
surviving corporation, for the payment of the fair value of his
shares.
(5)
Whenever all the shares, or all the shares of a class or series,
are to be
acquired by another corporation pursuant to section 14A:10-9,
a
shareholder of the corporation whose shares are to be acquired
may, not later
than 20 days after the mailing of notice by the acquiring corporation
pursuant
to paragraph 14A:10-9(3)(b),
make
written demand on the acquiring corporation for the payment of
the fair value of
his shares.
(6)
Not
later than 20 days after demanding payment for his shares pursuant
to this
section, the shareholder shall submit the certificate or certificates
representing his shares to the corporation upon which such demand
has been made
for notation thereon that such demand has been made, whereupon
such certificate
or certificates shall be returned to him. If shares represented
by a certificate
on which notation has been made shall be transferred, each new
certificate
issued therefor shall bear similar notation, together with the
name of the
original dissenting holder of such shares, and a transferee of
such shares shall
acquire by such transfer no rights in the corporation other than
those which the
original dissenting shareholder had after making a demand for payment
of the
fair value thereof.
(7)
Every
notice or other communication required to be given or made by a
corporation to
any shareholder pursuant to this Chapter shall inform such shareholder
of all
dates prior to which action must be taken by such shareholder in
order to
perfect his rights as a dissenting shareholder under this Chapter.
§
14A:11-3. "Dissenting shareholder" defined; date for determination
of fair value
(1)
A
shareholder who has made demand for the payment of his shares in
the manner
prescribed by subsection 14A:11-2(3),
14A:11-2(4)
or
14A:11-2(5)
is
hereafter in this Chapter referred to as a "dissenting
shareholder."
(2)
Upon
making such demand, the dissenting shareholder shall cease to have
any of the
rights of a shareholder except the right to be paid the fair value
of his shares
and any other rights of a dissenting shareholder under this
Chapter.
(3)
"Fair
value" as used in this Chapter shall be determined
(a)
As of
the day prior to the day of the meeting of shareholders at which
the proposed
action was approved or as of the day prior to the day specified
by the
corporation for the tabulation of consents to such action if no
meeting of
shareholders was held; or
(b)
In
the case of a merger pursuant to section 14A:10-5.1
or
subsection 14A:10-7(4)
in which
shareholder approval is not required, as of the day prior to the
day on which
the board of directors approved the plan of merger; or
(c)
In
the case of an acquisition of all the shares or all the shares
of a class or
series by another corporation pursuant to section 14A:10-9,
as of
the day prior to the day on which the board of directors of the
acquiring
corporation authorized the acquisition, or, if a shareholder vote
was taken
pursuant to section 14A:10-12,
as of
the day provided in paragraph 14A:11-3(3)(a).
In
all
cases, "fair value" shall exclude any appreciation or depreciation
resulting
from the proposed action.
EXHIBIT
E
MEDIAVEST,
INC.
2007
EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN
| |
Unless
otherwise specified or unless the context otherwise
requires, the
following terms, as used in this Mediavest, Inc.
2007 Employee, Director
and Consultant Stock Plan, have the following
meanings:
|
| |
|
Administrator
means the Board of Directors, unless it has delegated
power to act on its
behalf to the Committee, in which case the Administrator
means the
Committee.
|
| |
|
Affiliate
means a corporation which, for purposes of Section
424 of the Code, is a
parent or subsidiary of the Company, direct or
indirect.
|
| |
|
Agreement
means an agreement between the Company and a Participant
delivered
pursuant to the Plan, in such form as the Administrator
shall
approve.
|
| |
|
Board
of Directors
means the Board of Directors of the
Company.
|
| |
|
Cause
means dishonesty with respect to the Company or any
Affiliate,
insubordination, substantial malfeasance or non-feasance
of duty,
unauthorized disclosure of confidential information,
breach by the
Participant of any provision of any employment, consulting,
advisory,
nondisclosure, non-competition or similar agreement
between the
Participant and the Company, and conduct substantially
prejudicial to the
business of the Company or any Affiliate; provided,
however, that any
provision in an agreement between the Participant
and the Company or an
Affiliate, which contains a conflicting definition
of Cause for
termination and which is in effect at the time of
such termination, shall
supersede this definition with respect to that Participant.
The
determination of the Administrator as to the existence
of Cause will be
conclusive on the Participant and the
Company.
|
| |
|
Code
means the United States Internal Revenue Code of
1986, as
amended.
|
| |
|
Committee
means the committee of the Board of Directors to
which the Board of
Directors has delegated power to act under or pursuant
to the provisions
of the Plan.
|
| |
|
Common
Stock
means shares of the Company’s common stock, $.0001 par value per
share.
|
| |
|
Company
means Mediavest, Inc., a New Jersey
corporation.
|
| |
|
Disability
or
Disabled
means permanent and total disability as defined in
Section 22(e)(3) of the
Code.
|
| |
|
Employee
means any employee of the Company or of an Affiliate
(including, without
limitation, an employee who is also serving as an
officer or director of
the Company or of an Affiliate), designated by the
Administrator to be
eligible to be granted one or more Stock Rights under
the
Plan.
|
| |
|
Fair
Market Value
of
a Share of Common Stock means:
|
(1) If
the
Common Stock is listed on a national securities exchange or
traded in the
over-the-counter market and sales prices are regularly reported for the Common
Stock, the closing or, if not applicable, the last price of
the Common Stock on
the composite tape or other comparable reporting system for
the trading day on
the applicable date and if such applicable date is not a trading
day, the last
market trading day prior to such date;
(2) If
the
Common Stock is not traded on a national securities exchange
but is traded on
the over-the-counter market, if sales prices are not regularly
reported for the
Common Stock for the trading day referred to in clause (1), and if bid and
asked prices for the Common Stock are regularly reported, the
mean between the
bid and the asked price for the Common Stock at the close of
trading in the
over-the-counter market for the trading day on which Common
Stock was traded on
the applicable date and if such applicable date is not a trading
day, the last
market trading day prior to such date; and
(3) If
the
Common Stock is neither listed on a national securities exchange
nor traded in
the over-the-counter market, such value as the Administrator,
in good faith,
shall determine.
| |
|
ISO
means an option meant to qualify as an incentive
stock option under
Section 422 of the Code.
|
| |
|
Non-Qualified
Option
means an option which is not intended to qualify
as an
ISO.
|
| |
|
Option
means an ISO or Non-Qualified Option granted under
the
Plan.
|
Participant
means an
Employee, director or consultant of the Company or an Affiliate
to whom one or
more Stock Rights are granted under the Plan. As
used
herein, “Participant” shall include “Participant’s Survivors” where the context
requires.
| |
|
Plan
means this Mediavest, Inc. 2007 Employee, Director
and Consultant Stock
Plan.
|
| |
|
Shares
means shares of the Common Stock as to which Stock
Rights have been or may
be granted under the Plan or any shares of capital
stock into which the
Shares are changed or for which they are exchanged
within the provisions
of Paragraph 3 of the Plan. The Shares issued under the Plan may
be
authorized and unissued shares or shares held by
the Company in its
treasury, or both.
|
| |
|
Stock-Based
Award
means a grant by the Company under the Plan of an
equity award or an
equity based award which is not an Option or a Stock
Grant.
|
| |
|
Stock
Grant
means a grant by the Company of Shares under the
Plan.
|
| |
|
Stock
Right
means a right to Shares or the value of Shares of
the Company granted
pursuant to the Plan -- an ISO, a Non-Qualified Option,
a Stock Grant or a
Stock-Based Award.
|
| |
|
Survivor
means a deceased Participant’s legal representatives and/or any person or
persons who acquired the Participant’s rights to a Stock Right by will or
by the laws of descent and
distribution.
|
The
Plan
is intended to encourage ownership of Shares by Employees and
directors of and
certain consultants to the Company and its Affiliates in order
to attract and
retain such people, to induce them to work for the benefit
of the Company or of
an Affiliate and to provide additional incentive for them to
promote the success
of the Company or of an Affiliate. The Plan provides for the
granting of ISOs,
Non-Qualified Options, Stock Grants and Stock-Based Awards.
| 3. |
SHARES
SUBJECT TO THE PLAN.
|
(a) The
number of Shares which may be issued from time to time pursuant
to this Plan
shall be three million (3,000,000) shares, or the equivalent
of such number of
Shares after the Administrator, in its sole discretion, has
interpreted the
effect of any future stock split, stock dividend, combination,
recapitalization
or similar transaction in accordance with Paragraph 24 of the
Plan.
(b)
If an
Option ceases to be “outstanding”, in whole or in part (other than by exercise),
or if the Company shall reacquire (at not more than its original
issuance price)
any Shares issued pursuant to a Stock Grant or Stock-Based
Award, or if any
Stock Right expires or is forfeited, cancelled, or otherwise
terminated or
results in any Shares not being issued, the unissued Shares
which were subject
to such Stock Right shall again be available for issuance from
time to time
pursuant to this Plan. Notwithstanding the foregoing, if a
Stock Right is
exercised, in whole or in part, by tender of Shares or if the
Company’s tax
withholding obligation is satisfied by withholding Shares,
the number of Shares
deemed to have been issued under the Plan for purposes of the
limitation set
forth in Paragraph 3(a) above shall be the number of Shares
that were subject to
the Stock Right or portion thereof, and not the net number
of Shares actually
issued.
| 4. |
ADMINISTRATION
OF THE PLAN.
|
The
Administrator of the Plan will be the Board of Directors, except
to the extent
the Board of Directors delegates its authority to the Committee,
in which case
the Committee shall be the Administrator. Subject to the provisions
of the Plan,
the Administrator is authorized to:
| |
a.
|
Interpret
the provisions of the Plan and all Stock Rights and
to make all rules and
determinations which it deems necessary or advisable
for the
administration of the Plan;
|
| |
b.
|
Determine
which Employees, directors and consultants shall
be granted Stock
Rights;
|
| |
c.
|
Determine
the number of Shares for which a Stock Right or Stock
Rights shall be
granted, provided, however, that in no event shall
Stock Rights with
respect to more than 500,000 Shares
be granted to any Participant in any fiscal
year;
|
| |
d.
|
Specify
the terms and conditions upon which a Stock Right
or Stock Rights may be
granted;
|
| |
e.
|
Make
changes to any outstanding Stock Right, including,
without limitation, to
reduce or increase the exercise price or purchase
price, accelerate the
vesting schedule or extend the expiration date, provided
that no such
change shall impair the rights of a Participant under
any grant previously
made without such Participant’s consent;
|
| |
f.
|
Buy
out for a payment in cash or Shares, a Stock Right
previously granted
and/or cancel any such Stock Right and grant in substitution
therefor
other Stock Rights, covering the same or a different
number of Shares and
having an exercise price or purchase price per share
which may be lower or
higher than the exercise price or purchase price
of the cancelled Stock
Right, based on such terms and conditions as the
Administrator shall
establish and the Participant shall accept;
and
|
| |
g.
|
Adopt
any sub-plans applicable to residents of any specified
jurisdiction as it
deems necessary or appropriate in order to comply
with or take advantage
of any tax or other laws applicable to the Company
or to Plan Participants
or to otherwise facilitate the administration of
the Plan, which sub-plans
may include additional restrictions or conditions
applicable to Stock
Rights or Shares issuable pursuant to a Stock
Right;
|
provided,
however, that all such interpretations, rules, determinations,
terms and
conditions shall be made and prescribed in the context of not
causing any
adverse tax consequences under Section 409A of the Code and
preserving the tax
status under Section 422 of the Code of those Options which
are designated as
ISOs. Subject to the foregoing, the interpretation and construction
by the
Administrator of any provisions of the Plan or of any Stock
Right granted under
it shall be final, unless otherwise determined by the Board
of Directors, if the
Administrator is the Committee. In addition, if the Administrator
is the
Committee, the Board of Directors may take any action under
the Plan that would
otherwise be the responsibility of the Committee.
To
the
extent permitted under applicable law, the Board of Directors
or the Committee
may allocate all or any portion of its responsibilities and
powers to any one or
more of its members and may delegate all or any portion of
its responsibilities
and powers to any other person selected by it. The Board of
Directors or the
Committee may revoke any such allocation or delegation at any
time.
| 5. |
ELIGIBILITY
FOR PARTICIPATION.
|
The
Administrator will, in its sole discretion, name the Participants
in the Plan,
provided, however, that each Participant must be an Employee,
director or
consultant of the Company or of an Affiliate at the time a
Stock Right is
granted. Notwithstanding the foregoing, the Administrator may
authorize the
grant of a Stock Right to a person not then an Employee, director
or consultant
of the Company or of an Affiliate; provided, however, that
the actual grant of
such Stock Right shall be conditioned upon such person becoming
eligible to
become a Participant at or prior to the time of the execution
of the Agreement
evidencing such Stock Right. ISOs may be granted only to Employees.
Non-Qualified Options, Stock Grants and Stock-Based Awards
may be granted to any
Employee, director or consultant of the Company or an Affiliate.
The granting of
any Stock Right to any individual shall neither entitle that
individual to, nor
disqualify him or her from, participation in any other grant
of Stock
Rights.
| 6. |
TERMS
AND CONDITIONS OF OPTIONS.
|
Each
Option shall be set forth in writing in an Option Agreement,
duly executed by
the Company and, to the extent required by law or requested
by the Company, by
the Participant. The Administrator may provide that Options
be granted subject
to such terms and conditions, consistent with the terms and
conditions
specifically required under this Plan, as the Administrator
may deem appropriate
including, without limitation, subsequent approval by the shareholders
of the
Company of this Plan or any amendments thereto. The Option
Agreements shall be
subject to at least the following terms and conditions:
| |
a.
|
Non-Qualified
Options:
Each Option intended to be a Non-Qualified Option
shall be subject to the
terms and conditions which the Administrator determines
to be appropriate
and in the best interest of the Company, subject
to the following minimum
standards for any such Non-Qualified
Option:
|
|
|
i. |
Option
Price:
Each Option Agreement shall state the option price
(per share)
of the Shares covered by each Option, which option
price shall
be determined
by the Administrator but shall not be less than the
Fair Market
Value
per share of Common Stock unless the terms of such
Option complies
with the requirements of Section 409A of the Code
or is granted
to
a consultant to whom Section 409A does not
apply.
|
.
| |
|
ii.
|
Number
of Shares:
Each Option Agreement shall state the number of Shares
to which it
pertains.
|
| |
|
iii.
|
Option
Periods:
Each Option Agreement shall state the date or dates
on which it first is
exercisable and the date after which it may no longer
be exercised, and
may provide that the Option rights accrue or become
exercisable in
installments over a period of months or years, or
upon the occurrence of
certain conditions or the attainment of stated goals
or
events.
|
| |
|
iv.
|
Option
Conditions:
Exercise of any Option may be conditioned upon the
Participant’s execution
of a Share purchase agreement in form satisfactory
to the Administrator
providing for certain protections for the Company
and its other
shareholders, including requirements
that:
|
| |
|
|
A.
|
The
Participant’s or the Participant’s Survivors’ right to sell or transfer
the Shares may be restricted; and
|
| |
|
|
B.
|
The
Participant or the Participant’s Survivors may be required to execute
letters of investment intent and must also acknowledge
that the Shares
will bear legends noting any applicable
restrictions.
|
| |
b.
|
ISOs:
Each Option intended to be an ISO shall be issued
only to an Employee and
be subject to the following terms and conditions,
with such additional
restrictions or changes as the Administrator determines
are appropriate
but not in conflict with Section 422 of the Code
and relevant regulations
and rulings of the Internal Revenue
Service:
|
| |
|
i.
|
Minimum
standards:
The ISO shall meet the minimum standards required
of Non-Qualified
Options, as described in Paragraph 6(a) above, except
clause (i)
thereunder.
|
| |
|
ii.
|
Option
Price:
Immediately before the ISO is granted, if the Participant
owns, directly
or by reason of the applicable attribution rules
in Section 424(d) of
the Code:
|
| |
|
|
A.
|
10%
or
less
of
the total combined voting power of all classes of
stock of the Company or
an Affiliate, the Option price per share of the Shares
covered by each ISO
shall not be less than 100% of the Fair Market Value
per share of the
Shares on the date of the grant of the Option;
or
|
| |
|
|
B.
|
More
than 10% of the total combined voting power of all
classes of stock of the
Company or an Affiliate, the Option price per share
of the Shares covered
by each ISO shall not be less than 110% of the Fair
Market Value on the
date of grant.
|
| |
|
iii.
|
Term
of Option:
For Participants who own:
|
| |
|
|
A.
|
10%
or
less
of
the total combined voting power of all classes of
stock of the Company or
an Affiliate, each ISO shall terminate not more than
ten years from the
date of the grant or at such earlier time as the
Option Agreement may
provide; or
|
| |
|
|
B.
|
More
than 10% of the total combined voting power of all
classes of stock of the
Company or an Affiliate, each ISO shall terminate
not more than five years
from the date of the grant or at such earlier time
as the Option Agreement
may provide.
|
| |
|
iv.
|
Limitation
on Yearly Exercise:
The Option Agreements shall restrict the amount of
ISOs which may become
exercisable in any calendar year (under this or any
other ISO plan of the
Company or an Affiliate) so that the aggregate Fair
Market Value
(determined at the time each ISO is granted) of the
stock with respect to
which ISOs are exercisable for the first time by
the Participant in any
calendar year does not exceed
$100,000.
|
| 7. |
TERMS
AND CONDITIONS OF STOCK GRANTS.
|
Each
offer of a Stock Grant to a Participant shall state the date
prior to which the
Stock Grant must be accepted by the Participant, and the principal
terms of each
Stock Grant shall be set forth in an Agreement, duly executed
by the Company
and, to the extent required by law or requested by the Company,
by the
Participant. The Agreement shall be in a form approved by the
Administrator and
shall contain terms and conditions which the Administrator
determines to be
appropriate and in the best interest of the Company, subject
to the following
minimum standards:
| |
(a)
|
Each
Agreement shall state the purchase price (per share),
if any, of the
Shares covered by each Stock Grant, which purchase
price shall be
determined by the Administrator but shall not be
less than the minimum
consideration required by the New Jersey Business
Corporation Act on the
date of the grant of the Stock
Grant;
|
| |
(b)
|
Each
Agreement shall state the number of Shares to which
the Stock Grant
pertains; and
|
| |
(c)
|
Each
Agreement shall include the terms of any right of
the Company to restrict
or reacquire the Shares subject to the Stock Grant,
including the time and
events upon which such rights shall accrue and the
purchase price
therefor, if any.
|
| 8. |
TERMS
AND CONDITIONS OF OTHER STOCK-BASED AWARDS.
|
The
Administrator shall have the right to grant other Stock-Based
Awards based upon
the Common Stock having such terms and conditions as the Administrator
may
determine, including, without limitation, the grant of Shares
based upon certain
conditions, the grant of securities convertible into Shares
and the grant of
stock appreciation rights, phantom stock awards or stock units.
The principal
terms of each Stock-Based Award shall be set forth in an Agreement,
duly
executed by the Company and, to the extent required by law
or requested by the
Company, by the Participant. The Agreement shall be in a form
approved by the
Administrator and shall contain terms and conditions which
the Administrator
determines to be appropriate and in the best interest of the
Company.
The
Company intends that the Plan and any Stock-Based Awards granted
hereunder be
exempt from the application of Section 409A of the Code or
meet the requirements
of paragraphs (2), (3) and (4) of subsection (a) of Section
409A of the Code
(and any successor provisions of the Code) and the regulations
and other
guidance issued thereunder (the “Requirements”), to the extent applicable, and
be operated in accordance with such Requirements so that any
compensation
deferred under any Stock-Based Award (and applicable investment
earnings) shall
not be included in income under Section 409A of the Code. Any
ambiguities in the
Plan shall be construed to effect the intent as described in
this Paragraph 8.
| 9. |
EXERCISE
OF OPTIONS AND ISSUE OF SHARES.
|
An
Option
(or any part or installment thereof) shall be exercised by
giving written notice
to the Company or its designee, together with provision for
payment of the full
purchase price in accordance with this Paragraph for the Shares
as to which the
Option is being exercised, and upon compliance with any other
condition(s) set
forth in the Option Agreement. Such notice shall be signed
by the person
exercising the Option, shall state the number of Shares with
respect to which
the Option is being exercised and shall contain any representation
required by
the Plan or the Option Agreement. Payment of the purchase price
for the Shares
as to which such Option is being exercised shall be made (a) in United
States dollars in cash or by check, or (b) at the discretion of the
Administrator, through delivery of shares of Common Stock having
a Fair Market
Value equal as of the date of the exercise to the cash exercise
price of the
Option and held for at least six months, or (c) at the discretion of the
Administrator, by having the Company retain from the shares
otherwise issuable
upon exercise of the Option, a number of shares having a Fair
Market Value equal
as of the date of exercise to the exercise price of the Option,
or (d) at the
discretion of the Administrator, by delivery of the grantee’s personal recourse
note bearing interest payable not less than annually at no
less than 100% of the
applicable Federal rate, as defined in Section 1274(d) of the Code, or
(e) at the discretion of the Administrator, in accordance with
a cashless
exercise program established with a securities brokerage firm,
and approved by
the Administrator, or (f) at the discretion of the Administrator, by any
combination of (a), (b), (c), (d) and (e) above or (g) at the
discretion of the
Administrator, payment of such other lawful consideration as
the Administrator
may determine. Notwithstanding the foregoing, the Administrator
shall accept
only such payment on exercise of an ISO as is permitted by
Section 422 of the
Code.
The
Company shall then reasonably promptly deliver the Shares as
to which such
Option was exercised to the Participant (or to the Participant’s Survivors, as
the case may be). In determining what constitutes “reasonably promptly,” it is
expressly understood that the issuance and delivery of the
Shares may be delayed
by the Company in order to comply with any law or regulation
(including, without
limitation, state securities or “blue sky” laws) which requires the Company to
take any action with respect to the Shares prior to their issuance.
The Shares
shall, upon delivery, be fully paid, non-assessable Shares.
The
Administrator shall have the right to accelerate the date of
exercise of any
installment of any Option; provided that the Administrator
shall not accelerate
the exercise date of any installment of any Option granted
to an Employee as an
ISO (and not previously converted into a Non-Qualified Option
pursuant to
Paragraph 27) without the prior approval of the Employee if
such acceleration
would violate the annual vesting limitation contained in Section
422(d) of the
Code, as described in Paragraph 6(b)(iv).
The
Administrator may, in its discretion, amend any term or condition
of an
outstanding Option provided (i) such term or condition as amended
is permitted
by the Plan, (ii) any such amendment shall be made only with
the consent of the
Participant to whom the Option was granted, or in the event
of the death of the
Participant, the Participant’s Survivors, if the amendment is adverse to the
Participant, and (iii) any such amendment of any Option shall
be made only after
the Administrator determines whether such amendment would constitute
a
“modification” of any Option which is an ISO (as that term is defined in Section
424(h) of the Code) or would cause any adverse tax consequences
for the holder
of any Option including, but not limited to, pursuant to Section
409A of the
Code.
| 10. |
ACCEPTANCE
OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE
OF SHARES.
|
A
Stock
Grant or Stock-Based Award (or any part or installment thereof)
shall be
accepted by executing the applicable Agreement and delivering
it to the Company
or its designee, together with provision for payment of the
full purchase price,
if any, in accordance with this Paragraph for the Shares as
to which such Stock
Grant or Stock-Based Award is being accepted, and upon compliance
with any other
conditions set forth in the applicable Agreement. Payment of
the purchase price
for the Shares as to which such Stock Grant or Stock-Based
Award is being
accepted shall be made (a) in United States dollars in cash
or by check, or (b)
at the discretion of the Administrator, through delivery of
shares of Common
Stock held for at least six months and having a Fair Market
Value equal as of
the date of acceptance of the Stock Grant or Stock Based-Award
to the purchase
price of the Stock Grant or Stock-Based Award, or (c) at the
discretion of the
Administrator, by delivery of the grantee’s personal recourse note bearing
interest payable not less than annually at no less than 100%
of the applicable
Federal rate, as defined in Section 1274(d) of the Code, or
(d) at the
discretion of the Administrator, by any combination of (a),
(b) and (c) above;
or (e) at the discretion of the Administrator, payment of such
other lawful
consideration as the Administrator may determine.
The
Company shall then, if required by the applicable Agreement,
reasonably promptly
deliver the Shares as to which such Stock Grant or Stock-Based
Award was
accepted to the Participant (or to the Participant’s Survivors, as the case may
be), subject to any escrow provision set forth in the applicable
Agreement. In
determining what constitutes “reasonably promptly,” it is expressly understood
that the issuance and delivery of the Shares may be delayed
by the Company in
order to comply with any law or regulation (including, without
limitation, state
securities or “blue sky” laws) which requires the Company to take any action
with respect to the Shares prior to their issuance.
The
Administrator may, in its discretion, amend any term or condition
of an
outstanding Stock Grant, Stock-Based Award or applicable Agreement
provided (i)
such term or condition as amended is permitted by the Plan,
(ii) any such
amendment shall be made only with the consent of the Participant
to whom the
Stock Grant or Stock-Based Award was made, if the amendment
is adverse to the
Participant, and (iii) any such amendment shall be made only
after the
Administrator determines whether such amendment would cause
any adverse tax
consequences to the Participant, including, but not limited
to, pursuant to
Section 409A of the Code.
| 11. |
RIGHTS
AS A SHAREHOLDER.
|
No
Participant to whom a Stock Right has been granted shall have
rights as a
shareholder with respect to any Shares covered by such Stock
Right, except after
due exercise of the Option or acceptance of the Stock Grant
or as set forth in
any Agreement, and tender of the full purchase price, if any,
for the Shares
being purchased pursuant to such exercise or acceptance and
registration of the
Shares in the Company’s share register in the name of the
Participant.
| 12. |
ASSIGNABILITY
AND TRANSFERABILITY OF STOCK RIGHTS.
|
By
its
terms, a Stock Right granted to a Participant shall not be
transferable by the
Participant other than (i) by will or by the laws of descent
and distribution,
or (ii) as approved by the Administrator in its discretion
and set forth in the
applicable Agreement. Notwithstanding the foregoing, an ISO
transferred except
in compliance with clause (i) above shall no longer qualify
as an ISO. The
designation of a beneficiary of a Stock Right by a Participant,
with the prior
approval of the Administrator and in such form as the Administrator
shall
prescribe, shall not be deemed a transfer prohibited by this
Paragraph. Except
as provided above, a Stock Right shall only be exercisable
or may only be
accepted, during the Participant’s lifetime, by such Participant (or by his or
her legal representative) and shall not be assigned, pledged
or hypothecated in
any way (whether by operation of law or otherwise) and shall
not be subject to
execution, attachment or similar process. Any attempted transfer,
assignment,
pledge, hypothecation or other disposition of any Stock Right
or of any rights
granted thereunder contrary to the provisions of this Plan,
or the levy of any
attachment or similar process upon a Stock Right, shall be
null and
void.
| 13. |
EFFECT
ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN
FOR CAUSE OR DEATH OR
DISABILITY.
|
Except
as
otherwise provided in a Participant’s Option Agreement, in the event of a
termination of service (whether as an employee, director or
consultant) with the
Company or an Affiliate before the Participant has exercised
an Option, the
following rules apply:
| |
a.
|
A
Participant who ceases to be an employee, director
or consultant of the
Company or of an Affiliate (for any reason other
than termination for
Cause, Disability, or death for which events there
are special rules in
Paragraphs 14, 15, and 16, respectively), may exercise
any Option granted
to him or her to the extent that the Option is exercisable
on the date of
such termination of service, but only within such
term as the
Administrator has designated in a Participant’s Option
Agreement.
|
| |
b.
|
Except
as provided in Subparagraph (c) below, or Paragraph
15 or 16, in no event
may an Option intended to be an ISO, be exercised
later than three months
after the Participant’s termination of
employment.
|
| |
c.
|
The
provisions of this Paragraph, and not the provisions
of Paragraph 15 or
16, shall apply to a Participant who subsequently
becomes Disabled or dies
after the termination of employment, director status
or consultancy;
provided, however, in the case of a Participant’s Disability or death
within three months after the termination of employment,
director status
or consultancy, the Participant or the Participant’s Survivors may
exercise the Option within one year after the date
of the Participant’s
termination of service, but in no event after the
date of expiration of
the term of the Option.
|
| |
d.
|
Notwithstanding
anything herein to the contrary, if subsequent to
a Participant’s
termination of employment, termination of director
status or termination
of consultancy, but prior to the exercise of an Option,
the Board of
Directors determines that, either prior or subsequent
to the Participant’s
termination, the Participant engaged in conduct which
would constitute
Cause, then such Participant shall forthwith cease
to have any right to
exercise any Option.
|
| |
e.
|
A
Participant to whom an Option has been granted under
the Plan who is
absent from the Company or an Affiliate because of
temporary disability
(any disability other than a Disability as defined
in Paragraph 1 hereof),
or who is on leave of absence for any purpose, shall
not, during the
period of any such absence, be deemed, by virtue
of such absence alone, to
have terminated such Participant’s employment, director status or
consultancy with the Company or with an Affiliate,
except as the
Administrator may otherwise expressly provide; provided
however that for
ISOs any leave of absence granted by the Administrator
of greater than
ninety days unless pursuant to a contract or statute
that guarantees the
right to reemployment shall cause such ISO to become
a Non-Qualified
Option.
|
| |
f.
|
Except
as required by law or as set forth in a Participant’s Option Agreement,
Options granted under the Plan shall not be affected
by any change of a
Participant’s status within or among the Company and any Affiliates,
so
long as the Participant continues to be an employee,
director or
consultant of the Company or any
Affiliate.
|
|
14.
|
EFFECT
ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE.
|
Except
as
otherwise provided in a Participant’s Option Agreement, the following rules
apply if the Participant’s service (whether as an employee, director or
consultant) with the Company or an Affiliate is terminated
for Cause prior to
the time that all his or her outstanding Options have been
exercised:
| |
a.
|
All
outstanding and unexercised Options as of the time
the Participant is
notified his or her service is terminated for Cause
will immediately be
forfeited.
|
| |
b.
|
Cause
is not limited to events which have occurred prior
to a Participant’s
termination of service, nor is it necessary that
the Administrator’s
finding of Cause occur prior to termination. If the
Administrator
determines, subsequent to a Participant’s termination of service but prior
to the exercise of an Option, that either prior or
subsequent to the
Participant’s termination the Participant engaged in conduct
which would
constitute Cause, then the right to exercise any
Option is
forfeited.
|
|
15.
|
EFFECT
ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.
|
Except
as
otherwise provided in a Participant’s Option Agreement:
| |
a.
|
A
Participant who ceases to be an employee, director
or consultant of the
Company or of an Affiliate by reason of Disability
may exercise any Option
granted to such Participant:
|
(i) To
the
extent that the Option has become exercisable but has not been
exercised on the
date of Disability; and
(ii) In
the
event rights to exercise the Option accrue periodically, to
the extent of a pro
rata portion through the date of Disability of any additional
vesting rights
that would have accrued on the next vesting date had the Participant
not become
Disabled. The proration shall be based upon the number of days
accrued in the
current vesting period prior to the date of Disability.
| |
b.
|
A
Disabled Participant may exercise such rights only
within the period
ending one year after the date of the Participant’s Disability,
notwithstanding that the Participant might have been
able to exercise the
Option as to some or all of the Shares on a later
date if the Participant
had not become Disabled and had continued to be an
employee, director or
consultant or, if earlier, within the originally
prescribed term of the
Option.
|
| |
c.
|
The
Administrator shall make the determination both of
whether Disability has
occurred and the date of its occurrence (unless a
procedure for such
determination is set forth in another agreement between
the Company and
such Participant, in which case such procedure shall
be used for such
determination). If requested, the Participant shall
be examined by a
physician selected or approved by the Administrator,
the cost of which
examination shall be paid for by the
Company.
|
|
16.
|
EFFECT
ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
CONSULTANT.
|
Except
as
otherwise provided in a Participant’s Option Agreement:
| |
a.
|
In
the event of the death of a Participant while the
Participant is an
employee, director or consultant of the Company or
of an Affiliate, such
Option may be exercised by the Participant’s
Survivors:
|
(i)
To
the
extent that the Option has become exercisable but has not been
exercised on the
date of death; and
(ii) In
the
event rights to exercise the Option accrue periodically, to
the extent of a pro
rata portion through the date of death of any additional vesting
rights that
would have accrued on the next vesting date had the Participant
not died. The
proration shall be based upon the number of days accrued in
the current vesting
period prior to the Participant’s date of death.
| |
b.
|
If
the Participant’s Survivors wish to exercise the Option, they must
take
all necessary steps to exercise the Option within
one year after the date
of death of such Participant, notwithstanding that
the decedent might have
been able to exercise the Option as to some or all
of the Shares on a
later date if he or she had not died and had continued
to be an employee,
director or consultant or, if earlier, within the
originally prescribed
term of the Option.
|
|
17.
|
EFFECT
OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS.
|
In
the
event of a termination of service (whether as an employee,
director or
consultant) with the Company or an Affiliate for any reason
before the
Participant has accepted a Stock Grant, such offer shall terminate.
For
purposes of this Paragraph 17 and Paragraph 18 below, a Participant
to whom a
Stock Grant has been offered and accepted under the Plan who
is absent from work
with the Company or with an Affiliate because of temporary
disability (any
disability other than a Disability as defined in Paragraph
1 hereof), or who is
on leave of absence for any purpose, shall not, during the
period of any such
absence, be deemed, by virtue of such absence alone, to have
terminated such
Participant’s employment, director status or consultancy with the Company
or
with an Affiliate, except as the Administrator may otherwise
expressly
provide.
In
addition, for purposes of this Paragraph 17 and Paragraph 18
below, any change
of employment or other service within or among the Company
and any Affiliates
shall not be treated as a termination of employment, director
status or
consultancy so long as the Participant continues to be an employee,
director or
consultant of the Company or any Affiliate.
|
18.
|
EFFECT
ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN
FOR CAUSE OR DEATH OR
DISABILITY.
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Except
as
otherwise provided in a Participant’s Stock Grant Agreement, in the event of a
termination of service (whether as an employee, director or
consultant), other
than termination for Cause, Disability, or death for which
events there are
special rules in Paragraphs 19, 20, and 21, respectively, before
all forfeiture
provisions or Company rights of repurchase shall have lapsed,
then the Company
shall have the right to cancel or repurchase that number of
Shares subject to a
Stock Grant as to which the Company’s forfeiture or repurchase rights have not
lapsed.
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19.
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EFFECT
ON STOCK GRANTS OF TERMINATION OF SERVICE FOR CAUSE.
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Except
as
otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply if the Participant’s service (whether as an employee, director or
consultant) with the Company or an Affiliate is terminated
for
Cause:
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a.
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All
Shares subject to any Stock Grant that remain subject
to forfeiture
provisions or as to which the Company shall have
a repurchase right shall
be immediately forfeited to the Company as of the
time the Participant is
notified his or her service is terminated for
Cause.
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b.
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Cause
is not limited to events which have occurred prior
to a Participant’s
termination of service, nor is it necessary that
the Administrator’s
finding of Cause occur prior to termination. If the
Administrator
determines, subsequent to a Participant’s termination of service, that
either prior or subsequent to the Participant’s termination the
Participant engaged in conduct which would constitute
Cause, then the
Company’s right to repurchase all of such Participant’s Shares shall
apply.
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20.
|
EFFECT
ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.
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Except
as
otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply if a Participant ceases to be an employee, director or
consultant of the
Company or of an Affiliate by reason of Disability: to the
extent the forfeiture
provisions or the Company’s rights of repurchase have not lapsed on the date of
Disability, they shall be exercisable; provided, however, that
in the event such
forfeiture provisions or rights of repurchase lapse periodically,
such
provisions or rights shall lapse to the extent of a pro rata
portion of the
Shares subject to such Stock Grant through the date of Disability
as would have
lapsed had the Participant not become Disabled. The proration
shall be based
upon the number of days accrued prior to the date of Disability.
The
Administrator shall make the determination both of whether
Disability has
occurred and the date of its occurrence (unless a procedure
for such
determination is set forth in another agreement between the
Company and such
Participant, in which case such procedure shall be used for
such determination).
If requested, the Participant shall be examined by a physician
selected or
approved by the Administrator, the cost of which examination
shall be paid for
by the Company.
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21.
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EFFECT
ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR
OR
CONSULTANT.
|
Except
as
otherwise provided in a Participant’s Stock Grant Agreement, the following rules
apply in the event of the death of a Participant while the
Participant is an
employee, director or consultant of the Company or of an Affiliate:
to the
extent the forfeiture provisions or the Company’s rights of repurchase have not
lapsed on the date of death, they shall be exercisable; provided,
however, that
in the event such forfeiture provisions or rights of repurchase
lapse
periodically, such provisions or rights shall lapse to the
extent of a pro rata
portion of the Shares subject to such Stock Grant through the
date of death as
would have lapsed had the Participant not died. The proration
shall be based
upon the number of days accrued prior to the Participant’s death.
| 22. |
PURCHASE
FOR INVESTMENT.
|
Unless
the offering and sale of the Shares to be issued upon the particular
exercise or
acceptance of a Stock Right shall have been effectively registered
under the
Securities Act of 1933, as now in force or hereafter amended
(the “1933 Act”),
the Company shall be under no obligation to issue the Shares
covered by such
exercise unless and until the following conditions have been
fulfilled:
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a.
|
The
person(s) who exercise(s) or accept(s) such Stock
Right shall warrant to
the Company, prior to the receipt of such Shares,
that such person(s) are
acquiring such Shares for their own respective accounts,
for investment,
and not with a view to, or for sale in connection
with, the distribution
of any such Shares, in which event the person(s)
acquiring such Shares
shall be bound by the provisions of the following
legend which shall be
endorsed upon the certificate(s) evidencing their
Shares issued pursuant
to such exercise or such grant:
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“The
shares represented by this certificate have been
taken for investment and
they may not be sold or otherwise transferred by
any person, including a
pledgee, unless (1) either (a) a Registration Statement
with respect to
such shares shall be effective under the Securities
Act of 1933, as
amended, or (b) the Company shall have received an
opinion of counsel
satisfactory to it that an exemption from registration
under such Act is
then available, and (2) there shall have been compliance
with all
applicable state securities laws.”
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b.
|
At
the discretion of the Administrator, the Company
shall have received an
opinion of its counsel that the Shares may be issued
upon such particular
exercise or acceptance in compliance with the 1933
Act without
registration thereunder.
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23.
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DISSOLUTION
OR LIQUIDATION OF THE COMPANY.
|
Upon
the
dissolution or liquidation of the Company, all Options granted
under this Plan
which as of such date shall not have been exercised and all
Stock Grants and
Stock-Based Awards which have not been accepted will terminate
and become null
and void; provided, however, that if the rights of a Participant
or a
Participant’s Survivors have not otherwise terminated and expired, the
Participant or the Participant’s Survivors will have the right immediately prior
to such dissolution or liquidation to exercise or accept any
Stock Right to the
extent that the Stock Right is exercisable or subject to acceptance
as of the
date immediately prior to such dissolution or liquidation.
Upon the dissolution
or liquidation of the Company, any outstanding Stock-Based
Awards shall
immediately terminate unless otherwise determined by the Administrator
or
specifically provided in the applicable Agreement.
Upon
the
occurrence of any of the following events, a Participant’s rights with respect
to any Stock Right granted to him or her hereunder shall be
adjusted as
hereinafter provided, unless otherwise specifically provided
in a Participant’s
Agreement:
a. Stock
Dividends and Stock Splits.
If
(i) the shares of Common Stock shall be subdivided or combined
into a
greater or smaller number of shares or if the Company shall
issue any shares of
Common Stock as a stock dividend on its outstanding Common
Stock, or
(ii) additional shares or new or different shares or other securities
of
the Company or other non-cash assets are distributed with respect
to such shares
of Common Stock, the number of shares of Common Stock deliverable
upon the
exercise of an Option or acceptance of a Stock Grant shall
be appropriately
increased or decreased proportionately, and appropriate adjustments
shall be
made including, in the purchase price per share, to reflect
such events. The
number of Shares subject to the limitations in Paragraph 3(a) and
4(c) shall
also be proportionately adjusted upon the occurrence of such
events.
b. Corporate
Transactions.
If the
Company is to be consolidated with or acquired by another entity
in a merger,
consolidation, or sale of all or substantially all of the Company’s assets other
than a transaction to merely change the state of incorporation
(a “Corporate
Transaction”), the Administrator or the board of directors of any entity
assuming the obligations of the Company hereunder (the “Successor Board”),
shall, as to outstanding Options, either (i) make appropriate
provision for the
continuation of such Options by substituting on an equitable
basis for the
Shares then subject to such Options either the consideration
payable with
respect to the outstanding shares of Common Stock in connection
with the
Corporate Transaction or securities of any successor or acquiring
entity; or
(ii) upon written notice to the Participants, provide that
such Options must be
exercised (either (A) to the extent then exercisable or, (B)
at the discretion
of the Administrator, any such Options being made fully exercisable
for purposes
of this Subparagraph), within a specified number of days of
the date of such
notice, at the end of which period such Options shall terminate;
or (iii)
terminate such Options in exchange for a cash payment equal
to the excess of the
Fair Market Value of the Shares subject to such Options (either
(A) to the
extent then exercisable or, (B) at the discretion of the Administrator,
any such
Options being made fully exercisable for purposes of this Subparagraph)
over the
exercise price thereof.
With
respect to outstanding Stock Grants, the Administrator or the
Successor Board,
shall either (i) make appropriate provisions for the continuation
of such Stock
Grants on the same terms and conditions by substituting on
an equitable basis
for the Shares then subject to such Stock Grants either the
consideration
payable with respect to the outstanding Shares of Common Stock
in connection
with the Corporate Transaction or securities of any successor
or acquiring
entity; or (ii) terminate such Stock Grants in exchange for
a cash payment equal
to the excess of the Fair Market Value of the Shares subject
to such Stock
Grants over the purchase price thereof, if any. In addition,
in the event of a
Corporate Transaction, the Administrator may waive any or all
Company forfeiture
or repurchase rights with respect to outstanding Stock Grants.
c. Recapitalization
or Reorganization.
In the
event of a recapitalization or reorganization of the Company
other than a
Corporate Transaction pursuant to which securities of the Company
or of another
corporation are issued with respect to the outstanding shares
of Common Stock, a
Participant upon exercising an Option or accepting a Stock
Grant after the
recapitalization or reorganization shall be entitled to receive
for the purchase
price paid upon such exercise or acceptance of the number of
replacement
securities which would have been received if such Option had
been exercised or
Stock Grant accepted prior to such recapitalization or
reorganization.
d. Adjustments
to Stock-Based Awards.
Upon
the happening of any of the events described in Subparagraphs
a, b or c above,
any outstanding Stock-Based Award shall be appropriately adjusted
to reflect the
events described in such Subparagraphs. The Administrator or
the Successor Board
shall determine the specific adjustments to be made under this
Paragraph 24,
including, but not limited to the effect if any, of a Change
of Control and,
subject to Paragraph 4, its determination shall be conclusive.
e. Modification
of Options.
Notwithstanding the foregoing, any adjustments made pursuant
to Subparagraph a,
b or c above with respect to Options shall be made only after
the Administrator
determines whether such adjustments would constitute a “modification” of any ISO
(as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such Options, including,
but not
limited to, pursuant to Section 409A of the Code. If the Administrator
determines that such adjustments made with respect to Options
would constitute a
modification or other adverse tax consequence, it may refrain
from making such
adjustments, unless the holder of an Option specifically agrees
in writing that
such adjustment be made and such writing indicates that the
holder has full
knowledge of the consequences of such “modification” on his or her income tax
treatment with respect to the Option. This paragraph shall
not apply to the
acceleration of the vesting of any ISO that would cause any
portion of the ISO
to violate the annual vesting limitation contained in Section
422(d) of the
Code, as described in Paragraph 6b(iv).
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25.
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ISSUANCES
OF SECURITIES.
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Except
as
expressly provided herein, no issuance by the Company of shares
of stock of any
class, or securities convertible into shares of stock of any
class, shall
affect, and no adjustment by reason thereof shall be made with
respect to, the
number or price of shares subject to Stock Rights. Except as
expressly provided
herein, no adjustments shall be made for dividends paid in
cash or in property
(including without limitation, securities) of the Company prior
to any issuance
of Shares pursuant to a Stock Right.
No
fractional shares shall be issued under the Plan and the person
exercising a
Stock Right shall receive from the Company cash in lieu of
such fractional
shares equal to the Fair Market Value thereof.
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27.
|
CONVERSION
OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF
ISOs.
|
The
Administrator, at the written request of any Participant, may
in its discretion
take such actions as may be necessary to convert such Participant’s ISOs (or any
portions thereof) that have not been exercised on the date
of conversion into
Non-Qualified Options at any time prior to the expiration of
such ISOs,
regardless of whether the Participant is an employee of the
Company or an
Affiliate at the time of such conversion. At the time of such
conversion, the
Administrator (with the consent of the Participant) may impose
such conditions
on the exercise of the resulting Non-Qualified Options as the
Administrator in
its discretion may determine, provided that such conditions
shall not be
inconsistent with this Plan. Nothing in the Plan shall be deemed
to give any
Participant the right to have such Participant’s ISOs converted into
Non-Qualified Options, and no such conversion shall occur until
and unless the
Administrator takes appropriate action. The Administrator,
with the consent of
the Participant, may also terminate any portion of any ISO
that has not been
exercised at the time of such conversion.
In
the
event that any federal, state, or local income taxes, employment
taxes, Federal
Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are
required by applicable law or governmental regulation to be
withheld from the
Participant’s salary, wages or other remuneration in connection with the
exercise or acceptance of a Stock Right or in connection with
a Disqualifying
Disposition (as defined in Paragraph 29) or upon the lapsing
of any forfeiture
provision or right of repurchase or for any other reason required
by law, the
Company may withhold from the Participant’s compensation, if any, or may require
that the Participant advance in cash to the Company, or to
any Affiliate of the
Company which employs or employed the Participant, the statutory
minimum amount
of such withholdings unless a different withholding arrangement,
including the
use of shares of the Company’s Common Stock or a promissory note, is authorized
by the Administrator (and permitted by law). For purposes hereof,
the fair
market value of the shares withheld for purposes of payroll
withholding shall be
determined in the manner set forth under the definition of
Fair Market Value
provided in Paragraph 1 above, as of the most recent practicable
date prior to
the date of exercise. If the fair market value of the shares
withheld is less
than the amount of payroll withholdings required, the Participant
may be
required to advance the difference in cash to the Company or
the Affiliate
employer. The Administrator in its discretion may condition
the exercise of an
Option for less than the then Fair Market Value on the Participant’s payment of
such additional withholding.
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29.
|
NOTICE
TO COMPANY OF DISQUALIFYING DISPOSITION.
|
Each
Employee who receives an ISO must agree to notify the Company
in writing
immediately after the Employee makes a Disqualifying Disposition
of any shares
acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is
defined in Section 424(c) of the Code and includes any disposition
(including
any sale or gift) of such shares before the later of (a) two
years after the
date the Employee was granted the ISO, or (b) one year after
the date the
Employee acquired Shares by exercising the ISO, except as otherwise
provided in
Section 424(c) of the Code. If the Employee has died before
such stock is sold,
these holding period requirements do not apply and no Disqualifying
Disposition
can occur thereafter.
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30.
|
TERMINATION
OF THE PLAN.
|
The
Plan
will terminate on September 27, 2017, the date which is ten
years from the
earlier
of the
date of its adoption by the Board of Directors and the date
of its approval by
the shareholders of the Company. The Plan may be terminated
at an earlier date
by vote of the shareholders or the Board of Directors of the
Company; provided,
however, that any such earlier termination shall not affect
any Agreements
executed prior to the effective date of such termination.
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31.
|
AMENDMENT
OF THE PLAN AND AGREEMENTS.
|
The
Plan
may be amended by the shareholders of the Company. The Plan
may also be amended
by the Administrator, including, without limitation, to the
extent necessary to
qualify any or all outstanding Stock Rights granted under the
Plan or Stock
Rights to be granted under the Plan for favorable federal income
tax treatment
as may be afforded incentive stock options under Section 422
of the Code
(including deferral of taxation upon exercise), and to the
extent necessary to
qualify the shares issuable upon exercise or acceptance of
any outstanding Stock
Rights granted, or Stock Rights to be granted, under the Plan
for listing on any
national securities exchange or quotation in any national automated
quotation
system of securities dealers. Any amendment approved by the
Administrator which
the Administrator determines is of a scope that requires shareholder
approval
shall be subject to obtaining such shareholder approval. Any
modification or
amendment of the Plan shall not, without the consent of a Participant,
adversely
affect his or her rights under a Stock Right previously granted
to him or her.
With the consent of the Participant affected, the Administrator
may amend
outstanding Agreements in a manner which may be adverse to
the Participant but
which is not inconsistent with the Plan. In the discretion
of the Administrator,
outstanding Agreements may be amended by the Administrator
in a manner which is
not adverse to the Participant.
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32.
|
EMPLOYMENT
OR OTHER RELATIONSHIP.
|
Nothing
in this Plan or any Agreement shall be deemed to prevent the
Company or an
Affiliate from terminating the employment, consultancy or director
status of a
Participant, nor to prevent a Participant from terminating
his or her own
employment, consultancy or director status or to give any Participant
a right to
be retained in employment or other service by the Company or
any Affiliate for
any period of time.
This
Plan
shall be construed and enforced in accordance with the law
of New
Jersey.