SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
BANKENGINE TECHNOLOGIES, INC.
--------------------------------------------------
(Name of Registrant as specified in its charter)
--------------------------------------------------
(Name of Person(s) Filing Proxy Statement), if other than Registrant
-
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $500 per each party to the controversy pursuant
to Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to
which transaction applies:
(2) Aggregate number of securities to whic
transaction applies:
(3) Per unit price or other underlying
value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing
fee is calculated and how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------
(3) Filing Party:
----------------------------------------------
(4) Date Filed:
------------------------------------------------
BANKENGINE TECHNOLOGIES, INC.
725 Port St. Lucie Blvd., Suite 201
Port St. Lucie, FL, 34984
-------------
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY ___, 2002
TO THE SHAREHOLDERS OF BANKENGINE TECHNOLOGIES, INC.:
NOTICE IS HEREBY GIVEN, that the Annual Meeting of the shareholders
(the "Meeting") of BankEngine Technologies, Inc., a corporation formed under the
laws of the State of Florida (the "Company") will be held at 2:00 P.M. on May
__, 2002 at the offices of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, at
101 East 52nd Street, New York, NY, 10022 for the following purpose:
1. To consider and vote upon a proposal to approve the Agreement
and Plan of Merger and all transactions and developments
contemplated thereby, the purpose of which is to change the
state of incorporation of the Company from Florida to Delaware
(the "Reincorporation").
2. To approve the nominations of Joseph Alves, Mahmoud Hashmi and
Sandra Hrab to the Company's Board of Directors;
3. To ratify the appointment of Kaufman, Rossin & Co. as the
Company's Independent Certified Public Accountants for the
ensuing year;
4. To approve the adoption of the Company's 2002 Stock Option
Plan;
5. To act upon such other business as may properly come before
the Meeting or any adjournment thereof.
The purpose of the Merger is to reincorporate the Company in the State
of Delaware. If the Merger is approved, the Company will be merged with and into
a newly formed Delaware company that will have been incorporated for no other
purpose. The Merger will effect no change but the state of incorporation and the
authorization of shares of preferred stock. Shareholders will not receive any
cash, stock or other property in connection with, or as a result of, the Merger.
Shareholders of record at the close of business on April __, 2002 are
entitled to notice of and to vote at the Meeting or any adjournment or
postponement thereof. Whether you expect to attend the Meeting in person or not,
please sign, fill out, date and return the enclosed proxy in the self-addressed,
postage-paid envelope also enclosed. If you attend the Meeting and prefer to
vote in person, you can revoke your proxy.
PLEASE NOTE THAT MR. JOSEPH ALVES, THE COMPANY'S CONTROLLING SHAREHOLDER, HAS
INFORMED THE COMPANY THAT HE WILL BE VOTING "FOR" PROPOSALS 1, 2, 3 & 4 ABOVE.
THE NUMBER OF VOTES HELD BY THE CONTROLLING SHAREHOLDER IS SUFFICIENT TO SATISFY
THE SHAREHOLDER VOTE REQUIREMENT FOR EACH OF THE PROPOSALS AND NO ADDITIONAL
VOTES WILL CONSEQUENTLY BE NEEDED TO APPROVE ANY OF THE PROPOSALS.
By Order of the Board of Directors,
Joseph Alves
President, CEO and Chairman
April __, 2002
BANKENGINE TECHNOLOGIES, INC.
725 Port St. Lucie Blvd., Suite 201
Port St. Lucie, FL, 34984
-------------------------------
PRELIMINARY PROXY STATEMENT
-------------------------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY __, 2002
This Proxy Statement is being furnished in connection with the
solicitation by the board of directors of BankEngine Technologies, Inc. (the
"Company"), for use at the Annual Meeting (the "Meeting") of shareholders (the
"Shareholders") of the Company to be held on May ___, 2002 at 2:00 P.M. at the
offices of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, at 101 East 52nd
Street, New York, NY, 10022 and at any adjournment or postponement thereof.
Only Shareholders of record at the close of business on April __, 2002
(the "Record Date") are entitled to vote at the Meeting. As of the Record Date,
there were issued and outstanding 19,015,893 shares of the Company's common
stock (the "Common Shares"). Each outstanding Common Share is entitled to one
vote on all matters properly coming before the Meeting. All properly executed,
unrevoked proxies on the enclosed form of proxy that are received in time will
be voted in accordance with the Shareholder's directions and, unless contrary
directions are given, will be voted for the proposals (the "Proposals")
described below. Anyone giving a proxy may revoke it at any time before it is
exercised by giving the board of directors of the Company written notice of the
revocation, by submitting a proxy bearing a later date or by attending the
Meeting and voting in person.
The presence in person or by properly executed proxy of holders
representing a majority of the issued and outstanding shares of the Company's
Common Stock entitled to vote is necessary to constitute a quorum for the
transaction of business at the Meeting. Votes cast by proxy or in person at the
Meeting will be tabulated by the inspector of elections appointed for the
Meeting, who will determine whether or not a quorum is present. Shares of Common
Stock represented by proxies that are marked "abstain" will be included in the
determination of the number of shares present and voting for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions are not counted as voted either for or against a Proposal. Brokers
holding Common Shares for beneficial owners in "street name" must vote those
shares according to specific instructions they receive from the owners. However,
brokers have discretionary authority to vote on "routine" matters. Absent
specific instructions from the beneficial owners in the case of "non-routine"
matters, the brokers may not vote the shares. "Broker non-votes" result when
brokers are precluded from exercising their discretion on certain types of
proposals. Shares that are voted by brokers on some but not all of the matters
will be treated as shares present for purposes of determining the presence of a
quorum on all matters, but will not be treated as shares entitled to vote at the
Meeting on those matters as to which instructions to vote are not provided by
the owner.
The Board of Directors of the Company has adopted and approved each of
the Proposals set forth herein and recommends that the Company's Shareholders
vote "FOR" each of the Proposals.
Approval of Proposal 1 requires the affirmative vote of a majority of
the Company's outstanding Common Shares. Approval of each of Proposals 2, 3 & 4
requires the affirmative vote of a majority of the votes cast at the Meeting.
PLEASE NOTE THAT MR. ALVES, THE COMPANY'S CONTROLLING SHAREHOLDER, HAS
INFORMED THE COMPANY THAT HE WILL BE VOTING "FOR" ALL OF THE PROPOSALS SET FORTH
HEREIN. THE NUMBER OF VOTES HELD BY THE CONTROLLING SHAREHOLDER IS SUFFICIENT TO
SATISFY THE SHAREHOLDER VOTE REQUIREMENT FOR EACH OF THE PROPOSALS AND NO
ADDITIONAL VOTES WILL CONSEQUENTLY BE NEEDED TO APPROVE ANY OF THE PROPOSALS.
This Proxy Statement, the accompanying Notice of Meeting and the form
of proxy have been first sent to the Shareholders on or about April __, 2002.
The date of this Proxy Statement is April __, 2002
TABLE OF CONTENTS
Page
SUMMARY.....................................................................1
QUESTIONS AND ANSWERS ABOUT THE MEETING.....................................2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS...........................4
PROPOSAL 1: APPROVAL OF THE MERGER.........................................5
Description of the Merger..........................................5
Summary Term Sheet........................................5
Material Terms of the Merger..............................9
Terms of the Merger Agreement.............................9
Certain United States Federal Income Tax Consequences....10
Accounting Treatment of the Merger.......................10
Appraisal Rights.........................................10
Interest of Certain Persons in the Merger................10
Security Ownership of Certain Beneficial Owners and Management....11
Description of Securities.........................................12
Comparison of Rights of Security-holders..........................13
Shareholder Vote Required.........................................22
PROPOSAL 2: APPROVAL OF NOMINEES TO THE BOARD OF DIRECTORS................23
General...........................................................23
Management........................................................23
Legal Proceedings.................................................24
Certain Relationships and Related Transactions....................24
Compliance with 16(a) of the Exchange Act.........................25
Executive Compensation............................................25
Shareholder Vote Required.........................................25
PROPOSAL 3: APPROVAL OF THE APPOINTMENT OF KAUFMAN ROSSIN & CO............26
General...........................................................26
Shareholder Vote Required.........................................26
PROPOSAL 4: APPROVAL OF THE 2002 STOCK OPTION PLAN........................27
General...........................................................27
Description of the 2002 Plan......................................27
Shareholder Vote Required.........................................29
STATEMENT OF ADDITIONAL INFORMATION........................................30
GENERAL AND OTHER MATTERS..................................................30
SOLICITATION OF PROXIES....................................................30
SHAREHOLDER PROPOSALS......................................................30
EXHIBIT A - Merger Agreement.........................................
EXHIBIT B - Certificate of Incorporation of NewCo....................
EXHIBIT C - Bylaws of NewCo..........................................
EXHIBIT D - Option Plan..............................................
SUMMARY
The following is a summary of the terms of the Proposals. This summary
is qualified by the more detailed description appearing elsewhere in this proxy
statement. Unless otherwise indicated, all references to "we", "us", and "our"
refer to BankEngine Technologies, Inc., a corporation formed under the laws of
the State of Florida. We urge you to carefully read this Proxy Statement, and
the exhibits hereto, in their entirety because the information in this summary
is not complete.
o The first item to be voted on at this meeting of our shareholders is
the proposal to approve the Agreement and Plan of Merger whereby we
will merge with and into BankEngine Technologies, Inc., a corporation
formed under the laws of the State of Delaware and to which we
sometimes refer as BankEngine-DE. See "Proposal 1: Approval of the
Merger - Material Terms of the Merger."
o The Agreement and Plan of Merger provides that each issued and
outstanding share of our common stock shall be converted into one share
of common stock of BankEngine-DE. As a result of the merger
transaction, we shall cease to exist and all of our rights, assets,
liabilities and obligations shall become the rights, assets,
liabilities and obligations of BankEngine-DE. See "Proposal 1: Approval
of the Merger - Material Terms of the Merger."
o The sole purpose of the Agreement and Plan of Merger is to
reincorporate our company in the State of Delaware. The certificate of
incorporation of BankEngine-DE is substantially similar to our articles
of incorporation, with the exception that it authorizes BankEngine-DE
to issue shares of preferred stock. We do not have a present intention
to issue any shares of preferred stock but believe that it is in our
company's interest to have the ability to do so. See "Proposal 1:
Approval of the Merger - Comparison of Rights of Securityholders" for
a discussion of differences in our charter documents and state law.
o It will not be necessary for our shareholders, a term we use to
distinguish the security-holders of our company from the future
security-holders of BankEngine-DE (to whom we refer as "stockholders"),
to send us their certificates for shares of our common stock. See
Section "Proposal 1: Approval of the Merger - Description of the
Merger."
o We are also seeking approval for certain ordinary matters not related
to the merger transaction, including the election of directors,
ratification of our independent auditors and adoption of our option
plan, which is intended to provide additional incentive to our
directors, officers, employees and consultants by granting them options
to purchase shares of our common stock. See "Proposal 2: Approval of
Nominees to the Board of Directors," "Proposal 3 - Approval of the
Appointment of Kaufman Rossin & Co." and "Proposal 4 - Approval of the
2002 Stock Option Plan."
o Shareholder approval of Proposal 1 requires the affirmative vote of a
majority of our outstanding shares of common stock. According to
Florida law, Shareholder approval of Proposal 2 in this Proxy Statement
requires the affirmative vote of a plurality of the votes cast at the
meeting. However, our bylaws stipulate that the election of directors
shall require a majority of the votes cast. Shareholder approval of
each of Proposal 3 and Proposal 4 in this Proxy Statement requires the
affirmative vote of a majority of the votes cast. Our controlling
shareholder has already informed us that he will be voting in favor of
all of the proposals set forth herein. The number of votes held by our
controlling shareholder is sufficient to satisfy the shareholder vote
requirement for each of the proposals. Therefore, no additional votes
will be needed to approve any of the proposals. See "Questions and
Answers About the Meeting."
QUESTION AND ANSWER SUMMARY: ABOUT THE MEETING
What is being voted on at the Meeting?
Our board of directors is asking shareholders to consider four items at
this Annual Meeting of Shareholders:
To approve the Agreement and plan of Merger attached hereto as Exhibit
A as executed by and between the our company and BankEngine Technologies, Inc.,
a Delaware corporation to which we sometimes refer as BankEngine- DE, on April
1, 2002 and all transactions and developments contemplated thereby
(collectively, the "Merger");
To elect Joseph J. Alves, Mahmoud Hashmi and Sandra Hrab to our board
of directors to serve until the next annual meeting of our shareholders, and;
To ratify the appointment of Kaufman Rossin & Co. as our independent
auditors for the ensuing year, and;
To approve our option plan, which we refer to as the 2002 Plan.
What are the main terms of the Merger with BankEngine-DE?
We are currently governed by Florida law. We are proposing the merger
with BankEngine-DE solely to reincorporate under Delaware law. We need at least
a majority of the votes entitled to be cast to approve the merger for it to be
adopted. If the merger agreement is adopted:
We will merge with and into BankEngine-DE, a Delaware corporation.
BankEngine-DE will be the surviving corporation in the merger.
We will do business under our current name of "BankEngine Technologies,
Inc."
Our business, directors, management, fiscal year, assets or liabilities
and the location of our principal executive offices will remain unchanged by the
merger.
We will be governed by Delaware law and by the certificate of
incorporation and bylaws of BankEngine-DE, which are substantially similar to
our articles of incorporation and bylaws and are attached to this proxy
statement as Exhibit B and Exhibit C, respectively, with the exception that we
will be authorized to issue 2,000,000 shares of preferred stock.
What rights do I have if I am opposed to the Merger?
Under Florida law, we are not required to provide dissenting
shareholders with a right of appraisal in any matter to be voted upon at the
meeting and shareholders are accordingly not granted this right. Shares of our
common stock will automatically be converted into shares of common stock of
BankEngine-DE with no action required on your part.
Who can vote at the Meeting?
Our board of directors has set April __, 2002 as the record date for
the Meeting. Only persons holding shares of our common stock of record at the
close of business on the record date will be entitled to receive notice of and
to vote at the Meeting. Each share of our common stock will be entitled to one
vote per share on each matter properly submitted for vote to our shareholders at
the Meeting. On the record date there were 19,015,893 shares of our common stock
outstanding held by a total of ___ shareholders of record.
What constitutes a quorum for the Meeting?
To have a quorum, we need one-third of the votes entitled to be cast to
be present, in person or by proxy, including votes as to which authority to vote
on any proposal is withheld, shares of stock abstaining as to any proposal, and
broker non-votes (where a broker submits a proxy but does not have authority to
vote a customer's shares of stock on one or more matters) on any proposal, will
be considered present at the Meeting for purposes of establishing a
2
quorum for the transaction of business at the Meeting. Each will be tabulated
separately. The shares held by Joseph Alves, our controlling shareholder,
suffice for a quorum to be met, and we have been informed by Mr. Alves that he
will be present at the Meeting.
How do I vote?
If you complete and properly sign the accompanying proxy card and
return it to us, it will be voted as you direct, unless you later revoke the
proxy. Unless instructions to the contrary are marked, or if no instructions are
specified, shares of stock represented by a proxy will be voted for the
proposals set forth on the proxy, and in the discretion of the persons named as
proxies on such other matters as may properly come before the Meeting. If you
are a registered shareholder, that is, if you hold your shares of stock in
certificate form, and you attend the Meeting, you may deliver your completed
proxy card in person. If you hold your shares of stock in "street name," that
is, if you hold your shares of stock through a broker or other nominee, and you
wish to vote in person at the Meeting, you will need to obtain a proxy form from
the institution that holds your shares of stock.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change your vote
at any time before the proxy is exercised by filing with our Secretary, at the
address indicated above, either a written notice of revocation, a duly executed
proxy bearing a later date, or if you vote in person at the Meeting. The powers
of the proxy holders will be suspended if you attend the Meeting in person and
so request. However, attendance at the Meeting will not by itself revoke a
previously granted proxy.
Any written notice of revocation sent to us must include the
shareholder's name and must be received prior to the Meeting to be effective.
What vote is required to approve each item?
The Merger.
----------
The approval of the merger with and into BankEngine-DE requires the
affirmative vote of a majority of our outstanding votes that are entitled to be
cast at the Meeting. The shares of stock held by Mr. Alves represent enough
votes to approve this proposal and he has informed us that he intends to approve
the merger with and into BankEngine- DE.
Election of Nominees to the Board of Directors
Pursuant to our bylaws, the affirmative vote of a majority of the votes
cast at the Meeting is required for the election of the individuals nominated to
serve on our board of directors. The shares of stock held by Mr. Alves represent
enough votes to approve this proposal and he has informed us that he intends to
approve proposal to elect our nominees to our board of directors.
Ratification of Independent Auditors.
------------------------------------
An affirmative vote of a majority of the votes cast at the Meeting is
required for ratification of the appointment of Kaufman Rossin & Co. as our
independent auditors. The shares of stock held by Mr. Alves represent enough
votes to approve this proposal and he has informed us that he intends to approve
the appointment of Kaufman Rossin & Co. as our independent auditors.
Approval of the Option Plan.
---------------------------
The adoption of the option plan requires the affirmative vote of a
majority of the votes cast at the Meeting with respect thereto. The shares of
stock held by Mr. Alves represent enough votes to approve this proposal and he
has informed us that he intends to approve the proposal to adopt the option
plan.
Other Matters.
-------------
If you hold your shares of stock in "street name," your broker or
nominee may not be permitted to exercise voting discretion with respect to some
of the matters to be acted upon. Thus, if you do not give your broker or nominee
3
specific instructions, your shares of stock may not be voted on those matters
and will not be counted in determining the number of shares of stock necessary
for approval. Shares of stock represented by such "broker non-votes" will,
however, be counted in determining whether there is a quorum.
Votes cast by proxy will be tabulated by an automated system
administered by Interwest Transfer Co., Inc., our transfer agent. Votes cast by
proxy or in person at the Meeting will be counted by the independent person that
we will appoint to act as election inspector for the Meeting.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information included in this Proxy Statement may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). This information may involve known and unknown
risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from our future results,
performance or achievements expressed or implied by any forward-looking
statements. Forward-looking statements, which involve assumptions and describe
the our future plans, strategies and expectations, are generally identifiable by
use of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend" or "project" or the negative of these words or other
variations on these words or comparable terminology. These forward-looking
statements are based on assumptions that may be incorrect, and there can be no
assurance that these projections included in these forward-looking statements
will come to pass. Our actual results could differ materially from those
expressed or implied by the forward-looking statements as a result of various
factors. We undertake no obligation to update publicly any forward-looking
statements for any reason, even if new information becomes available or other
events occur in the future.
4
PROPOSAL 1
APPROVAL OF THE MERGER
DESCRIPTION OF THE MERGER
On April 1, 2002, an Agreement and Plan of Merger was signed by and
between our company and BankEngine Technologies, Inc., a corporation
incorporated in the State of Delaware ("BankEngine-DE"). The Agreement and Plan
of Merger is referred to in this Proxy Statement as the Merger Agreement.
The Merger Agreement provides for a tax-free reorganization pursuant to
the provisions of Section 368 of the Internal Revenue Code, whereby we will be
merged with and into BankEngine-DE, our separate corporate existence shall
cease, and BankEngine-DE shall continue as the surviving corporation of the
merger (the "Merger"). In the Merger, each issued and outstanding share of our
common stock shall be converted into one share of common stock of BankEngine-DE
with no action required on the part our shareholders.
Our board has recommended that our state of incorporation be changed
from Florida to Delaware. Reincorporation in Delaware will not result in any
change in our business, management, assets, liabilities or net worth.
Reincorporation in Delaware will allow us to take advantage of certain
provisions of the corporate laws of Delaware.
The following are answers to some of the questions about the Merger
that you, as one of our shareholders, may have. We urge you to read this Proxy
Statement, including the Merger Agreement, carefully because the information in
this section is not complete.
Summary Term Sheet
Who are we Merging with?
We are merging with BankEngine Technologies, Inc., Delaware corporation
to which we refer as BankEngine- DE.
Has the Board of Directors approved the Merger?
Yes. The Merger Agreement was executed on April 1, 2002. Our board of
directors approved the Merger Agreement, and all transactions and developments
contemplated thereby and resolved to seek approval of our shareholders therefor
on April 1, 2002.
How will the Merger work?
The Merger will be a very simple, straight-forward transaction. We will
merge with and into BankEngine-DE and cease to exist as a separate entity.
BankEngine-DE will be the surviving corporation. Our name will not change.
Do I have the right to vote on the Merger?
Yes, you do. That is the main purpose of this Proxy Statement. We are
soliciting your vote in favor of the Merger.
Is your financial condition relevant to my decision whether to vote for the
Merger?
No, we do not believe that it is. The business of our company will not
change, nor will any of our officers or directors. In addition, no securities
are being issued as a result of the Merger, whether to a third party or
otherwise. We are not paying any finders' fees, brokers' fees or any other such
fees nor have we engaged the services of an investment bank or other entity to
advise us.
How do I exchange my shares of common stock?
You do not. Your shares will automatically be converted into shares of
common stock of BankEngine-DE. You have the right to vote on the Merger, but
there is no step that you are required to take.
5
How many shares will I have after the Merger?
The number of shares you own will remain the same.
What is the conversion ratio?
The ratio is one-for-one.
What are the benefits of the reincorporation?
The purpose of the reincorporation is to change the state of our
incorporation of from Florida to Delaware. The reincorporation is intended to
permit us to be governed by the Delaware General Corporation Law (which we refer
to as the "DGCL") rather than by the Florida Business Corporation Act (which we
refer to as the "FBCA").
The principal reasons that led our board of directors to determine
that reincorporation in Delaware is in the best interests of our shareholders
are outlined below:
(i) The State of Delaware has long been the leader in adopting,
construing and implementing comprehensive, flexible
corporation laws that are conducive to the operational needs
and independence of corporations domiciled in that State;
(ii) The corporation law of Delaware is widely regarded as the most
extensive and well-defined body of corporate law in the United
States;
(iii) Both the legislature and the courts in Delaware have
demonstrated an ability and a willingness to act quickly and
effectively to meet changing business needs, and
(iv) The Delaware judiciary has acquired considerable expertise in
dealing with complex corporate issues. Moreover, the Delaware
courts have repeatedly shown their willingness to accelerate
the resolution of complex corporate issues to meet the needs
of parties engaged in corporate litigation.
We anticipate that the DGCL will continue to be interpreted and
construed in significant court decisions, thus lending greater predictability
and guidance in managing and structuring the internal affairs of our company and
its relationships and contacts with others. In addition, see "Comparison of
Rights of Security-holders" below.
What are the disadvantages of the reincorporation?
Despite the belief of our board that the reincorporation is in the best
interests of our company and that of our shareholders, the FBCA and the DGCL
differ in some respects. The DGCL may not afford stockholders the same rights as
the FBCA. On balance, however, we believe it is favorable for us to
reincorporate in Delaware.
Our shareholders are reminded that we divested ourselves of our
telecommunications business in January of 2001 (see "Certain Relationships and
Related Transactions" below). Our telecommunications operations were located in
Florida, whereas our current operations are not. We do not, therefore, believe
that there are compelling reasons to remain governed by the provisions of
Florida law.
What is the effect of the reincorporation on our company?
The reincorporation has been unanimously approved by our board of
directors, based on the Merger Agreement attached hereto as Exhibit A. If we
receive approval for the proposal to adopt the Merger Agreement, the Merger will
become effective when a certificate of merger and articles of merger are filed
with the Secretary of State of Delaware and the Secretary of State of Florida,
respectively. This filing is anticipated to be made as soon as possible after
the Meeting. At the effective time of the Merger:
We will merge with and into BankEngine-DE, with BankEngine-DE being the
surviving corporation;
6
Our board of directors will not change;
We will cease to be governed by the FBCA and will be governed by the
DGCL; and
BankEngine-DE will be governed by its certificate of incorporation and
bylaws, which we have attached as Exhibit B and Exhibit C to this proxy
statement.
The reincorporation is subject to conditions, including approval by a
majority of the votes entitled to be cast at the meeting of our shareholders to
which this Proxy Statement relates.
What is the effect of the reincorporation on the holders of our securities?
The reincorporation will have minimal effect on our existing security
holders. At the effective time of the Merger, all our securities will be
converted into securities of BankEngine-DE. At the effective time of the Merger,
the conversion will occur as follows:
All of our common stock will be converted into shares of common stock,
$.001 par value, of BankEngine-DE;
Each share certificate that represented a share of our common stock
immediately prior to the effective time of the Merger will thereafter be deemed
to represent one share of BankEngine-DE's common stock without any action on the
part of the holder;
Each of our warrants and any other of our outstanding securities
immediately prior to the effective time of the Merger will thereafter be deemed
to represent like securities of BankEngine-DE, with like exercise or conversion
rights into shares of common stock of BankEngine-DE without any action on the
part of the holder.
Will our business change after the reincorporation?
No. The reincorporation will not result in any change in our business,
directors, management, fiscal year, assets or liabilities or the location of its
principal executive offices. BankEngine-DE will also have its principal office
located at 725 Port St. Lucie Blvd., Suite 201, Port St. Lucie, FL 34984.
BankEngine-DE has no current business operations, as it was incorporated for the
sole purpose of effecting the Merger with us. Upon the Merger of our company
into BankEngine-DE , BankEngine-DE will conduct the business that we are
currently conducting.
Each share of BankEngine-DE's common stock outstanding after the
effective time of the Merger will entitle the holder thereof to voting rights,
dividend rights and liquidation rights equivalent to the rights of holders of
our common stock prior to the effective time of the Merger (except as provided
below - see "Comparison of Rights of Security-holders"). Shares of our common
stock are currently traded on the over-the-counter market and are quoted on the
OTC Bulletin Board under the symbol "BKET." Following the effective date of the
Merger, shares of common stock of BankEngine-DE will be traded on the
over-the-counter market and under our current symbol.
If the reincorporation is approved and the Merger is completed, we will
take action as necessary to provide that all rights of participants in our
current stock option plan to receive stock options will become substantially
identical rights to receive grants of stock options with respect to
BankEngine-DE's common stock. These new rights will be on substantially
identical terms and conditions as set forth in our current stock option plan.
Will the charter documents be amended in the Merger?
BankEngine-DE's certificate of incorporation will not be materially
different from that of our articles of incorporation with the exception that the
certificate of incorporation of BankEngine-DE will provide for the authorization
of preferred shares and permit its board of directors of BankEngine-DE to issue
such shares. We have no present intention to issue preferred shares.
How do the rights of shareholders compare before and after the reincorporation?
We are organized as a corporation under the laws of Florida. If the
reincorporation is approved, we will merge
7
with BankEngine-DE and will then be a corporation incorporated under the laws of
Delaware following the Merger. As a Florida corporation, we are governed by; the
FBCA, our articles of incorporation and our bylaws. As a Delaware corporation we
will be governed by; the DGCL, BankEngine-DE's certificate of incorporation,
attached to this proxy statement as Exhibit B, as may be further amended from
time to time and BankEngine-DE's bylaws, attached to this proxy statement as
Exhibit C, as may be further amended from time to time.
Certain material differences between the applicable Florida and
Delaware law and among these documents are summarized below. The comparison of
certain rights of our shareholders before and after the reincorporation set
forth below is not complete and is subject to and qualified in its entirety by
reference to Florida law, Delaware law, BankEngine-DE's certificate of
incorporation, BankEngine-DE's bylaws, and our articles of incorporation and our
bylaws, copies of which may be obtained from us by writing us at 30 St. Patrick
St., 4th Floor, Toronto, Ontario, M5H 4E7, attention Secretary.
Will the shares to be issued in the Merger be freely trading?
The shares that are not currently freely trading will remain
restricted. No shares will be "issued" as that term is typically understood.
Rather, currently outstanding shares will be converted into shares of
BankEngine-DE. We do not anticipate that the Merger will in any way affect the
status of our shares that are currently freely trading.
When do you expect the Merger to be completed?
We hope to complete the Merger as soon as possible, assuming that all
the conditions to the closing of the Merger as set forth in the Merger Agreement
are completed to the satisfaction of the parties.
What are the tax consequences of the Merger?
The Merger is intended to qualify as a tax-free reorganization for
United States federal income tax purposes. If the Merger does so qualify, no
gain or loss would generally be recognized by our U.S. shareholders upon
conversion of their shares of common stock in our company into shares of common
stock in BankEngine-DE pursuant to the Merger. We believe, but cannot assure
you, that there will no tax consequences for holders of our shares. You are
urged to consult your own tax advisor for tax implications related to your
particular situation.
What remedy do I have if I did not vote for the Merger?
Florida law does not require the provision of appraisal rights in this
situation and we will not provide such rights.
What do I need to do in order to vote?
After reading this document, you will need to execute the Proxy Card
provided you herewith, and any other documents applicable to you that are
included in this packet. Alternatively, you may appear at the Meeting and vote
in person.
Who can help answer my questions?
If you have more questions about the Merger you should contact Arthur
S. Marcus, Esq., at:
Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP
101 East 52nd Street, 9th Floor
New York, NY 10022
Telephone No.: (212) 752-9700
Facsimile No.: (212) 980-5192
If you have questions about our business, you should contact Joseph J. Alves,
CEO, at:
BankEngine Technologies, Inc.
30 St. Patrick St., 4th Floor
8
Toronto, Ontario, M5H 4E7
Telephone No.: (416) 860-9378
Facsimile No.: (416) 860-9380
Material Terms of the Merger
In order to effect the reincorporation (the "Reincorporation") of
BankEngine Technologies, Inc. (the "Company") in Delaware, the Company will be
merged with and into BankEngine Technologies, Inc., a newly formed company
incorporated in Delaware ("New Co"). Prior to the merger (the "Merger"), NewCo
will not have engaged in any activities except in connection with the proposed
transaction. The mailing address and telephone number of NewCo and its telephone
number are the same as those of the Company. As part of its approval and
recommendations of the Company's reincorporation in Delaware, the board of
directors of the Company (the "Board") has approved, and recommends to its
shareholders (the "Shareholders") for their adoption and approval, an Agreement
and Plan of Merger (the "Merger Agreement") pursuant to which the Company will
be merged with and into NewCo. The full texts of the Merger Agreement, the
certificate of incorporation (the "Certificate") and bylaws (the "Bylaws") of
the successor Delaware corporation under which the Company's business will be
conducted after the Merger are attached hereto as Exhibit A, Exhibit B and
Exhibit C respectively. The discussion contained in this Proxy Statement is
qualified in its entirety by reference to such Exhibits.
According to the terms of the Merger Agreement by and between the
Company on the one side and NewCo on the other side, the Company and NewCo have
determined that the Merger between the Company and NewCo is in the best
interests of the Shareholders. The Merger is to be effected through a conversion
of the shares of common stock currently issued and outstanding (the "Common
Shares) into shares of common stock of NewCo (the "Common Stock")
The Certificate provides for so-called "blank check" preferred stock
(the "Blank Check Preferred Stock"). The Board believes that it is advisable and
in the best interests of NewCo and its stockholders (the "Stockholders") to have
available for issuance such shares in order to provide NewCo with greater
flexibility in financing its continued operations and undertaking capital
restructuring, financing and future acquisitions. The Board believes that Blank
Check Preferred Stock will provide NewCo with a capital structure better suited
to meet its short and long term capital needs. Having the Blank Check Preferred
Stock will permit NewCo to negotiate the precise terms of an equity instrument
by simply creating a new series of preferred stock without incurring the cost
and delay in obtaining stockholder approval. This will, in the anticipation of
the Board, allow NewCo to more effectively negotiate with, and satisfy the
precise financial criteria of, any investor or transaction in a timely manner.
Consequently, once authorized, the dividend or interest rates,
conversion rates, voting rights, redemption prices, maturity dates and similar
characteristics of such preferred stock will be determined by NewCo's board of
directors (the "New Board"), without the necessity of obtaining approval of the
Stockholders.
The terms of the Merger Agreement are more fully described below.
Terms of the Merger Agreement
The following discussion summarizes the material terms of the Merger
Agreement but does not purport to be a complete statement of all provisions of
the Merger Agreement and is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached to this Proxy Statement as Exhibit A.
Shareholders are urged to read the Merger Agreement carefully as it is the legal
document that governs the Merger.
The Merger. Subject to the terms and conditions of the Merger
Agreement, the Company shall be merged with and into NewCo, the Company's
separate legal existence shall cease and NewCo shall continue as the surviving
corporation.
Effect of the Merger. The presently issued and outstanding Common
Shares shall be converted on a one-for-one
9
basis into shares of Common Stock. Presently issued and outstanding derivatives
to purchase Common Shares shall evidence a derivative to purchase a like number
of shares of the Common Stock on the same terms and conditions as stated in the
respective derivative agreement currently applicable to the Common Shares.
NewCo, as the surviving corporation, shall continue unaffected and unimpaired by
the Merger with all of its purposes and powers. NewCo shall be governed by the
DGCL and succeed to all rights, assets, liabilities and obligations of the
Company in accordance with the DGCL.
Articles of Incorporation and Bylaws of NewCo Following the Merger. The
Merger Agreement provides that the Certificate of Incorporation and Bylaws of
NewCo, as in effect at the Effective Time, will be the Certificate of
Incorporation and Bylaws, respectively, of the surviving corporation following
the Merger.
Directors and Officers of NewCo Following the Merger. The Merger
Agreement provides that the directors and officers of the Company as of the
Effective Time shall be the directors and officers of NewCo, who shall serve as
directors and officers of NewCo until their respective successors are duly
elected or appointed and qualified.
Conditions to the Merger. The obligations of the Company and NewCo to
effect the Merger are subject to the satisfaction or waiver on or prior to the
Effective Time of the approval of the Shareholders of the Merger Agreement. In
addition, both the Company and NewCo shall have taken all necessary action to
authorize the execution, delivery and performance of the Merger Agreement.
Certain United States Federal Income Tax Consequences
The Merger will qualify for federal income tax purposes as a
"reorganization" within the meaning of Section 368(a)(1)(F) of the Code. In
general, no gain or loss will be recognized for federal income tax purposes by
holders of Common Shares with respect thereto on the conversion of their Common
Shares into shares of Common Stock and no gain or loss will be recognized for
federal income tax purposes by the Company or NewCo.
Accounting Treatment of the Merger
The transaction is expected to be accounted for as a reverse
acquisition in which the Company is the accounting acquiror and NewCo is the
legal acquiror. The management of the Company will be the management of NewCo.
Since the Merger is expected to be accounted for as a reverse acquisition and
not a business combination, no goodwill is expected to be recorded in connection
therewith and the costs incurred in connection with the Merger are expected to
be accounted for as a reduction of additional paid-in capital.
Appraisal Rights
Under Florida law, the state in which the Company is incorporated, the
Company is not required to provide dissenting Shareholders with a right of
appraisal in any matter to be voted upon in connection herewith and Shareholders
are accordingly not provided with such right.
Interests of Certain Persons in the Merger
No director, executive officer, associate of any director or executive
officer, or any other person has any substantial interest, direct or indirect,
by security holdings or otherwise, resulting from the Proposals set forth
herein, which is not shared by all other Shareholders pro rata, and in
accordance with their respective interests.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of April __, 2002, the Company's authorized capitalization consisted
of 50,000,000 Common Shares, par value $.001 per share. As of April __, 2002,
there were 19,015,893 Common Shares outstanding, all of which were fully paid,
non-assessable and entitled to vote. Each Common Share entitles its holder to
one vote on each matter submitted to the Shareholder.
The following table sets forth, as of April __, 2002, the number of
Common Shares of the Company owned by (i) each person who is known by the
Company to own of record or beneficially five percent (5%) or more of the
Company's outstanding shares, (ii) each director of the Company, (iii) each of
the executive officers, and (iv) all directors and executive officers of the
Company as a group. Unless otherwise indicated, each of the persons listed below
has sole voting and investment power with respect to the shares beneficially
owned.
Number of Common Shares Percentage of Common
Name and Address of Beneficial Owner(1) Beneficially Owned(2) Shares Beneficially Owned
--------------------------------------- --------------------- -------------------------
International Enterprise Solutions Ltd.(3) 2,400,000 12.6%
Ion Technologies Ltd.(3) 2,400,000 12.6%
Hypernet Research Inc.(3) 2,400,000 12.6%
Net Technology Group Ltd.(3) 2,400,000 12.6%
Conrati Resources Ltd.(4) 950,000 5%
Cablerise Limited(4) 950,000 5%
Joseph Alves(5) 9,615,000 50.6%
Mahmoud Hashmi(6) 1,900,000 10%
Zeeshan Saeed 1,800,000 9.5%
All Directors and Officers as a group
(2 persons) 11,515,000 60.6%
---------
*less than one percent
(1) Unless otherwise indicated, the address of each person listed below is
c/o BankEngine Technologies, Inc., at 725 Port St. Lucie Blvd., Suite
201, Port St. Lucie, FL, 34984.
(2) Pursuant to the rules and regulations of the Securities and Exchange
Commission, shares of common stock that an individual or group has a
right to acquire within 60 days pursuant to the exercise of options or
warrants are deemed to be outstanding for the purposes of computing the
percentage ownership of such individual or group, but are not deemed to
be outstanding for the purposes of computing the percentage ownership
of any other person shown in the table.
(3) The entity is wholly owned and controlled by Mr. Joseph Alves.
(4) The entity is wholly owned and controlled by Mr. Mahmoud Hashmi.
(5) Joseph J. Alves, the Company's CEO, President and Chairman of the
Board, is the sole owner of International Enterprise Solutions Ltd.,
Ion Technologies Ltd., Hypernet Research Inc. and Net Technology Group
Ltd. The number and percentage of Common Shares shown as held by Mr.
Alves include the shares held by the foregoing entities.
(6) Mahmoud Hashmi, the Company's COO, Principal Accounting Officer and a
Director, is the sole owner of Conrati Resources Ltd. and Cablerise
Limited. The number and percentage of Common Shares shown as held by
Mr. Hashmi include the shares held by the foregoing entities.
11
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 50,000,000 shares of common stock,
par value $0.001 per share (the "Common Shares"), of which as of the date hereof
19,015,893 Common Shares are outstanding. All outstanding Common Shares are
validly authorized and issued, fully paid, and non-assessable.
The holders of the Common Shares are entitled to one vote for each
share held of record on all matters submitted to a vote of Shareholders. Holders
of the Common Shares are entitled to receive ratably dividends as may be
declared by the Board out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of the Common
Shares are entitled to share ratably in all assets remaining, if any, after
payment of liabilities. Holders of the Common Shares have no preemptive rights
and have no rights to convert their Common Shares into any other securities.
Preferred Stock
The Company is not authorized to issue shares of preferred stock.
NewCo, however, is authorized to issue 2,000,000 shares of "blank check"
preferred stock, par value $.001 per share ("Blank Check Preferred Stock"), none
of which is issued or currently contemplated to be issued. The New Board is
vested with authority to divide the shares of Blank Check Preferred Stock into
series and to fix and determine the relative rights and preferences of the
shares of any such series.
NewCo was incorporated with the ability to issue shares of Blank Check
Preferred Stock and provisions authorizing the New Board to designate and issue
such shares because the Board believes that it is advisable and in the best
interests of the surviving corporation to have available shares of preferred
stock to provide it with greater flexibility in financing its operations and
undertaking capital restructuring, financing and future acquisitions. The Board
believes that the Blank Check Preferred Stock will provide NewCo with a capital
structure better suited to meet its short and long term capital needs. Having
Blank Check Preferred Stock will permit the New Board to negotiate the precise
terms of an equity instrument by simply creating a new series of preferred stock
without incurring the cost and delay in obtaining stockholder approval. The
Board believes that this will allow NewCo to more effectively negotiate with,
and satisfy the precise financial criteria of, any investor or transaction in a
timely manner.
Consequently, once authorized, the dividend or interest rates,
conversion rates, voting rights, redemption prices, maturity dates and similar
characteristics of such preferred stock will be determined by the New Board,
without the necessity of obtaining approval of the Stockholders. Please see the
Certificate attached as Exhibit B hereto for the provision authorizing the Blank
Check Preferred Stock.
Warrants
There are outstanding warrants (the "Warrants") to purchase an
aggregate of ten million (10,000,000) Common Shares, all of which are
exercisable at any time and in any amount until February 19, 2003, at a purchase
price of $0.30 per Common Share. The Warrants are not callable nor do they
provide for registration rights, whether of the Warrants themselves or the
Common Shares underlying them.
The Warrants do not entitle their holders to receive dividends or to
vote at or receive notice of any meeting of shareholders or to exercise any
other rights whatsoever as shareholders. Upon receipt of duly executed Warrants
and payment of the exercise price, the Company shall within thirty (30) days
issue and cause to be delivered to the holder of the Warrants certificates
representing the number of Common Shares so purchased.
Transfer Agent
The transfer agent of the Common Shares is Interwest Transfer Co.,
Inc., located at 1981 E. 4800 Street, Suite 100, Salt Lake City, Utah, 84117.
12
COMPARISON OF THE RIGHTS OF SECURITY-HOLDERS
General
The Board has recommended that the Company's state of incorporation be
changed from Florida to Delaware. Reincorporation in Delaware will not result in
any change in the business, management, assets, liabilities or net worth of the
Company. Reincorporation in Delaware will allow the Company to take advantage of
certain provisions of the corporate laws of Delaware. The purposes and effects
of the proposed change are summarized below.
Assuming Shareholder approval of the Reincorporation and upon
acceptance for filing of the appropriate certificates of merger by the Secretary
of State of Delaware and the Secretary of State of Florida, the Company will be
merged with and into NewCo pursuant to the Merger Agreement, resulting in a
change in the Company's state of incorporation. The Company will then be subject
to the Delaware General Corporation Law (the "DGCL") and the Certificate of
Incorporation and Bylaws set forth in Exhibit B and Exhibit C, respectively.
Upon the effective time of the Reincorporation, each outstanding share of stock
of the Company will automatically be converted into one share of the
corresponding class of stock of NewCo. Outstanding derivatives to purchase
Common Shares will be converted into derivatives to purchase the same number of
shares of the Common Stock.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF NEWCO. OUTSTANDING STOCK
CERTIFICATES OF THE COMPANY SHOULD NOT BE DESTROYED OR SENT TO THE COMPANY.
The Board believes that the Reincorporation will provide greater
flexibility for both the management and business of the Company.
Delaware is a favorable legal and regulatory environment in which to
operate. For many years, Delaware has followed a policy of encouraging
incorporation in that state and, in furtherance of that policy, has adopted
comprehensive, modern and flexible corporate laws which are periodically updated
and revised to meet changing business needs. As a result, many major
corporations have initially chosen Delaware for their domicile or have
subsequently reincorporated in Delaware. The Delaware courts have developed
considerable expertise in dealing with corporate issues, and a substantial body
of case law has developed construing Delaware law and establishing public
policies with respect to Delaware corporations thereby providing greater
predictability with respect to corporate legal affairs. In addition, many
investors and securities professionals are more familiar and comfortable with
Delaware corporations than corporations governed by the laws of other
jurisdictions, even where the laws are similar.
The Company is a Florida corporation and the Florida Business
Corporation Act (the "FBCA") and the Articles of Incorporation and the Bylaws of
the Company govern the rights of its shareholders. NewCo is a Delaware
corporation and the rights of it shareholders are governed by the DGCL and the
Certificate of Incorporation and Bylaws of NewCo.
Significant Differences Between the Corporation Laws of Florida and
Delaware
Differences Related Primarily to Charter Documents
Authorized Capital
The Company. The authorized capital stock of the Company consists of 50,000,000
shares of $0.001 par value Class A Common Stock (the "Common Shares"). There are
19,015,893 such Common Shares issued and outstanding as of the date hereof.
NewCo. The authorized capital stock of NewCo consists of 50,000,000 shares of
common stock, par value $0.001 per share (the "Common Stock"), and 2,000,000
shares of blank check preferred stock, par value $0.001 per share (the
13
"Blank Check Preferred Stock"). As of the date of the Merger Agreement, the
Company's issued and outstanding share capital consisted of one share of Common
Stock. NewCo's certificate of incorporation (the "Certificate") authorizes its
board of directors to issue shares of Blank Check Preferred Stock in one or more
series and to fix the designations, preferences, powers and rights of the shares
to be included in each series (see "Proposal 1: Approval of the Merger --
Description of Securities").
Voting Power of Common Stock
The Company. Each holder of Common Shares has the right to cast one vote for
each such Common Share held of record on all matters voted on by the
Shareholders, including the election of directors. Shareholders have no
cumulative voting rights
NewCo. Each holder of shares of Common Stock has the right to cast one vote for
each share of Common Stock held of record on all matters voted on by the
Stockholders, including the election of directors. Stockholders have no
cumulative voting rights.
Board of Directors
The Company. The Company's bylaws do not require that a specific number of
directors shall serve on its board. The Company's board presently consists of
two (2) directors. Directors are elected at the annual meeting of shareholders,
and at each annual meeting thereafter. Directors are elected by a majority of
the votes cast at a meeting of shareholders by such shareholders as are entitled
to vote on the election of directors.
NewCo. NewCo's bylaws do not require that a specific number of directors shall
serve on its board. NewCo's board presently consists of three (3) directors.
Directors are elected at the annual meeting of stockholder, and at each annual
meeting thereafter. Directors are elected by a majority of the votes cast at a
meeting of stockholders by such stockholders as are entitled to vote on the
election of directors.
Differences Related Primarily to State Law
Removal of Directors
Florida. The FBCA entitles shareholders of Florida corporations to remove
directors either for cause or without cause, unless the articles of
incorporation provide that removal may be only for cause. Directors elected by a
particular voting group may only be removed by the shareholders of that voting
group. The Company's bylaws do not require that a director may be removed only
for cause.
Delaware. Under the DGCL, the affirmative vote of a majority of the shares
entitled to vote for the election of directors is required to remove directors,
with or without cause, subject to specified exceptions relating to directors
elected by the holders of a class or series, and corporations that have a
classified board of directors. NewCo's bylaws provide that any director or the
entire board of directors may be removed with or without cause by the vote of a
majority of the voting power of the shares of stock issued and outstanding of
the class or classes that elected such director or directors.
Interested Director
Florida. The FBCA provides that a contract or other transaction between a
Florida corporation and any of its directors or any entity in which one of its
directors or officers holds a position of office or a financial interest will
not be void because of such relationship or interest or because that director
was present at the meeting of directors which authorized that transaction if:
14
the fact of the relationship or interest is disclosed or known to the
board which authorizes the contract or transaction by a sufficient
number of votes, which votes will not include the vote of that
director;
the fact of the relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize that contract or
transaction; or
the contract or transaction is fair and reasonable to the corporation.
Delaware. Under the DGCL, specified contracts or transactions in which one or
more of a corporation's directors has an interest are not void or voidable
solely because of such interest if such contract or transaction (1) is ratified
by the corporation's stockholders or a majority of disinterested members of the
board of directors or a committee thereof if the material facts of the contract
or transaction are disclosed or known or (2) was fair to the corporation at the
time it was approved. Any ratification of such a contract or transaction by the
stockholders must be made by a majority of all stockholders in good faith.
Action by Written Consent
Florida. Except as otherwise provided in a corporation's articles of
incorporation, the FBCA generally provides that action of shareholders may be
taken without a meeting if signed written consents are obtained by the holders
of not less than a minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. The Articles do not provide otherwise.
Delaware. Under the DGCL, unless otherwise provided in the certificate of
incorporation, actions may be taken by the stockholders of a Delaware
corporation by written consent, provided that the written consent is signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take the action at a meeting at
which all shares entitled to vote on the matter were present and voted. The
Certificate does not provide otherwise.
Amendment of Articles of Incorporation And Certificate of Incorporation
Florida. The FBCA generally requires approval by a majority of directors and by
holders of a majority of the shares entitled to vote on any amendment to a
Florida corporation's articles of incorporation. In addition, the amendment must
be approved by a majority of the votes entitled to be cast on the amendment by
any class or series of shares with respect to which the amendment would create
dissenters' rights. The board of directors must recommend the amendment to the
shareholders, unless the board of directors determines that because of conflict
of interest or other special circumstances it should make no recommendation and
communicates the basis for its determination to the shareholders with the
amendment.
Delaware. The DGCL provides that the certificate of incorporation of a Delaware
corporation may be amended upon adoption by the board of directors of a
resolution setting forth the proposed amendment and declaring its advisability,
followed by the affirmative vote of a majority of the outstanding shares
entitled to vote. It also provides that a certificate of incorporation may
provide for a greater or lesser vote than would otherwise be required by the
DGCL. NewCo's Certificate of Incorporation does not so provide.
Amendment of Bylaws
Florida. The Company's bylaws state that the bylaws may be altered, amended or
repealed by either the board of directors or the Shareholders. However, bylaws
made by the board may be altered, amended or repealed by the Shareholders.
Delaware. Under the DGCL, stockholders have the authority to make, alter, amend
or repeal the bylaws of a corporation and such power may be delegated to the
board of directors. NewCo's bylaws provide that the directors may amend the
bylaws, but this power does not alter the power of the Stockholders to also
amend the bylaws.
15
Shareholder Action
Florida. A majority of the shares entitled to vote, represented in person or by
proxy shall constitute a quorum of a meeting of shareholders. Generally, and
except for specified fundamental actions, the affirmative vote of a majority of
the shares represented at the meeting and entitled to vote on the subject matter
thereof constitutes the act of the shareholders.
Delaware. When a quorum is present, the vote of the holders of a majority of
each class of the shares of stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of the DGCL or of
the certificate of incorporation, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
Consideration For Issuance of Shares
Florida
Shares may be issued for consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash, promissory
notes, services performed, promises to perform services evidenced by a written
contract, or other securities of the corporation.
Before the corporation issues shares, the board of directors must
determine that the consideration received or to be received for shares to be
issued is adequate. That determination by the board of directors is conclusive
insofar as the adequacy of consideration for the issuance of shares relates to
whether the shares are validly issued, fully paid, and non-assessable.
Delaware
Shares may be issued for consideration consisting of tangible or
intangible property or benefit to the corporation, including cash, promissory
notes, services performed and other securities of the corporation.
In the absence of "actual fraud," in the transaction, the judgment of
the board as to the value of the consideration shall be conclusive.
No provisions restrict the ability of the board to authorize the
issuance of stock for a promissory note of any type, including an unsecured or
nonrecourse note or a note secured only by the shares.
Shares with par value cannot be issued for consideration with a value
that is less than the par value. Shares without par value can be issued for any
consideration determined to be valid by the board.
Loans to Directors
Florida and Delaware
Any Florida and Delaware corporation may lend money to, guarantee any obligation
of, or otherwise assist any officer, director, or employee of the corporation or
of a subsidiary, whenever, in the judgment of the board of directors, such loan,
guaranty, or assistance may reasonably be expected to benefit the corporation.
The loan, guaranty, or other assistance may be with or without interest and may
be unsecured or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the corporation.
In Florida, such loans, guarantees and other types of assistance are subject to
the provisions outlined in "Interested Director" above.
Special Meetings
Florida. According to the Company's bylaws, special meetings of shareholders are
to be held when directed by the board of directors or the president or when a
signed and dated written demand is delivered to the president of the Company by
the holders of not less than 10% of all votes entitled to be cast on any issue
to be considered at the proposed special meeting.
16
Delaware. The DGCL provides that special meetings of the stockholders of a
corporation may be called by the corporation's board of directors or by such
other persons as may be authorized in the corporation's certificate of
incorporation or bylaws. Neither the Certificate nor the Bylaws amend or
supplement the foregoing.
Standard of Conduct For Directors
Florida. Under the FBCA, directors also have a fiduciary relationship to their
corporation and its shareholders and, as such, are required to discharge their
duties as a director in good faith with the care an ordinarily prudent person in
a like position would exercise under similar circumstances and in a manner they
reasonably believe to be in the best interests of the corporation. In
discharging his or her duties, a director may consider such factors as the
director deems relevant, including the long-term prospects and interests of the
corporation and its shareholders, and the social, economic, legal, or other
effects of any action on the employees, suppliers, customers of the corporation
or its subsidiaries, the communities and society in which the corporation or its
subsidiaries operate, and the economy of the state and the nation.
Delaware. Under the DGCL, the standards of conduct for directors have developed
through written opinions of the Delaware courts. Generally, directors of
Delaware corporations are subject to a duty of loyalty and a duty of care. The
duty of loyalty has been said to require directors to refrain from self-dealing
and the duty of care requires directors managing the corporate affairs to use
that amount of care which ordinarily careful and prudent persons would use in
similar circumstances. In general, gross negligence has been established as the
test for breach of the standard for the duty of care in the process of
decision-making by directors of Delaware corporations. When directors act
consistently with their duties of loyalty and care, their decisions generally
are presumed to be valid under the business judgment rule.
Indemnification of Directors And Officers
Florida. The FBCA permits a corporation to indemnify officers, directors,
employees and agents against liability for actions taken in good faith and in a
manner they reasonably believed to be in, or not opposed to, the best interests
of the corporation, and with respect to any criminal action, which they had no
reasonable cause to believe was unlawful. The FBCA provides that a corporation
may advance reasonable expenses of defense (a) to a director or officer upon
receipt of an undertaking to reimburse the corporation if indemnification is
ultimately determined not to be appropriate and (b) to other employees and
agents upon such terms and conditions as the board deems appropriate. The
corporation must reimburse a successful defendant for expenses, including
attorneys' fees, actually and reasonably incurred.
Delaware. Under the DGCL, a Delaware corporation may include in its certificate
of incorporation, a provision that eliminates or limits a director's personal
liability for monetary damages for breach of his or her fiduciary duty, subject
to specified limitations. The Certificate includes such a provision. The DGCL
also generally permits indemnification of a person who acted in good faith and
in a manner that he reasonably believed to be in or not opposed to the best
interests of the corporation. NewCo's bylaws do not depart from this standard.
In general, the indemnification provided for by the DGCL is not deemed to be
exclusive of any non-statutory indemnification rights provided to directors,
officers and employees under any by-law, agreement or vote of stockholders or
disinterested directors.
Limitation of Liability
Florida. The FBCA provides that a director is not personally liable for monetary
damages to the corporation or any other person for any statement, vote,
decision, or failure to act, regarding corporate management or policy unless the
director breached or failed to perform his duties as a director and such breach
or failure constitutes (a) a violation of criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful, (b) a transaction from which the director
derived an improper personal benefit, (c) a circumstance for which a director is
liable for an unlawful distribution, (d) in a derivative action or an action by
a shareholder, constitutes conscious disregard for the best interests of the
corporation or willful misconduct or (e) in a proceeding other than a derivative
action or an action by a shareholder, constitutes recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety or
property.
17
Delaware. The DGCL permits a corporation to include in its certificate of
incorporation a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for beach
of fiduciary duty as a director, except that such provision shall not limit the
liability of a director for (a) any breach of the director's duty of loyalty to
the corporation or its stockholders, (b) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c)
liability under the DGCL for unlawful payment of dividends or stock purchases or
redemptions, or (d) any transaction from which the director derived an improper
personal benefit. NewCo's Certificate contains such a provision limiting the
liability of the its directors.
Dividends
Florida. The FBCA permits a corporation's board of directors to make
distributions to its shareholders unless, after giving effect to such
distribution, the corporation would be unable to pay its debts as they become
due in the usual course of business, or would be left with total assets that are
less than the sum of its total liabilities plus its obligations upon dissolution
to satisfy preferred shareholders whose preferential rights are superior to
those receiving the distribution. Under the FBCA, a corporation's redemption of
its own common stock is deemed a distribution.
Delaware. The DGCL permits a corporation to declare and pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or for the preceding fiscal year as long as
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon the
distribution of assets. In addition, the DGCL generally provides that a
corporation may redeem or repurchase its shares only if the capital of the
corporation is not impaired and such redemption or repurchase would not impair
the capital of the corporation.
Vote on Certain Fundamental Issues
Florida. Under the FBCA, and subject to the exceptions discussed below, the
approval of a merger, plan of liquidation or sale of all or substantially all of
a corporation's assets other than in the regular course of business generally
requires the recommendation of the corporation's board of directors and an
affirmative vote of holders of a majority of the corporation's outstanding
shares. Unless required by the articles of incorporation, however, the vote of
the shareholders of a corporation surviving a merger is not required if:
the articles of incorporation of the surviving corporation will not
substantially differ from its articles of incorporation before the
merger;
each shareholder of the surviving corporation immediately prior to the
effective date will hold the same number of shares, with identical
designations, preferences, limitations and relative rights immediately
after the merger; and
the number of voting shares outstanding immediately after the merger
plus the number of voting shares issuable as a result of the merger
will not exceed by more than 20% the total number of voting shares of
the surviving corporation immediately prior to the merger.
This transaction does not fall within any of the aforementioned
exceptions, and therefore adoption by the board of directors and approval by a
majority vote of the Shareholders is required.
Delaware. The DGCL generally provides that, unless otherwise specified in a
corporation's certificate of incorporation or unless the provisions of the DGCL
relating to business combinations are applicable, a sale or other disposition of
all or substantially all of the corporation's assets, a merger or consolidation
of the corporation with another corporation or a dissolution of the corporation
requires the affirmative vote of the board of directors plus the affirmative
vote of a majority of the outstanding stock entitled to vote thereon. However,
under the DGCL, unless required by its certificate of incorporation, no vote of
18
the stockholders of a constituent corporation surviving a merger is necessary to
authorize such merger if:
the agreement of merger does not amend the certificate of incorporation
of such constituent corporation;
each share of stock of such constituent corporation outstanding prior
to such merger is to be an identical outstanding or treasury share of
the surviving corporation after such merger;
either no shares of common stock of the surviving corporation and no
shares, securities or obligations convertible into such common stock
are to be issued under such agreement of merger, or the number of
shares of common stock issued or so issuable does not exceed 20% of the
number thereof outstanding immediately prior to such merger; and
other specified conditions are satisfied.
In addition, the DGCL provides that a parent corporation that is the
record holder of at least 90% of the outstanding shares of each class of stock
of a subsidiary may merge such subsidiary into such parent corporation without
the approval of such subsidiary's stockholders or board of directors. Neither
NewCo's certificate of incorporation nor its bylaws alter this stockholder
approval requirement.
Business Combination Restrictions
Florida. Section 607.0901 of the FBCA, informally known as the "fair price
statute," provides that the approval of the holders of two-thirds of the voting
shares of a corporation, other than the shares beneficially owned by an
interested shareholder (as defined below), would be required to effectuate
specified transactions, including a merger, consolidation, specified sales of
assets, specified sales of shares, liquidation or dissolution of the corporation
and reclassification of securities involving a Florida corporation and an
interested shareholder, referred to as an "affiliated transaction." An
"interested shareholder" is defined as the beneficial owner of more than 10% of
the outstanding voting shares of the corporation. The foregoing special voting
requirement is in addition to the vote required by any other provision of the
FBCA or by a corporation's articles of incorporation.
The special voting requirement does not apply in any of the following
circumstances:
the affiliated transaction is approved by a majority of the
corporation's disinterested directors;
the corporation has not had more than 300 shareholders of record at any
time during the three years preceding the announcement of the
affiliated transaction;
the interested shareholder has beneficially owned at least 80% of the
corporation's voting stock for five years preceding the date on which
the affiliated transaction is first publicly announced or communicated
generally to the corporation's shareholders;
the interested shareholder beneficially owns at least 90% of the
corporation's voting shares;
the corporation is an investment company registered under the
Investment Company Act of 1940; or
in the affiliated transaction, consideration shall be paid to the
holders of each class or series of voting shares and all of the
following conditions are met:
the cash and fair value of other consideration to be paid per
share to all holders of voting shares equals the highest per
share price paid by the interested shareholder, or specified
alternative benchmarks, if higher;
the consideration to be paid in the affiliated transaction is
in cash or in the same form as previously paid by the
interested shareholder or if multiple forms, then in cash or
the form used to acquire the largest number of shares;
19
during the portion of the three years preceding the
announcement of the affiliated transaction that the interested
shareholder has been an interested shareholder, except as
approved by a majority of the disinterested directors, there
shall have been no failure to declare and pay at the regular
date any full periodic dividends, no decrease in stock
dividends, and no increase in the voting shares owned by the
interested shareholder;
during such portion of the three-year period, except as
approved by a majority of the disinterested directors, there
has been no benefit to the interested shareholder in the form
of loans, guaranties or other financial assistance or tax
advantages provided by the corporation; and
unless approved by a majority of the disinterested directors,
a proxy or information statement describing the affiliated
transaction shall have been mailed to holders of voting shares
at least 25 days prior to the consummation of the affiliated
transaction.
Section 607.0902 of the FBCA, informally known as the "control-share
acquisition statute," provides that any acquisition by a person, either directly
or indirectly, of ownership of, or the power to direct the voting power with
respect to, issued and outstanding control shares (as defined below) is a
"control-share acquisition." "Control shares" are shares that, but for this
section of the FBCA, would have voting power with respect to the shares of a
Florida corporation that, when added to all other shares owned by such person,
would entitle that person to exercise or direct the exercise of the voting power
of the corporation in the election of directors within any of the following
ranges of voting power:
one-fifth or more but less than one-third of all voting power;
one-third or more but less than a majority of all voting power; or
a majority or more of all voting power.
A control-share acquisition must be approved by a majority of each
class of outstanding voting securities of such corporation, excluding the shares
held or controlled by the person seeking approval, before the control shares may
be voted. A special meeting of shareholders must be held by the corporation to
approve a control-share acquisition within 50 days after a request for such
meeting is submitted by the person seeking to acquire control. The acquisition
of shares of the corporation does not constitute a control-share acquisition if,
among other circumstances, the acquisition has been approved by the board of
directors of the corporation before the acquisition or a merger is effected in
compliance with the applicable provisions of the FBCA, if the corporation is a
party to the agreement of merger. If the control shares are accorded full voting
rights and the acquiring person has acquired control shares with a majority or
more of the voting power of the corporation, all shareholders shall have
dissenter's rights as provided by the FBCA.
Delaware. Section 203 of the DGCL limits specified business combinations of
Delaware corporations with interested stockholders. Under the DGCL, an
interested stockholder (a stockholder whose beneficial ownership in the
corporation is at least 15% of the outstanding voting securities) cannot enter
specified business combinations with the corporation for a period of three years
following the time that such stockholder became an interested stockholder
unless:
prior to such time, the corporation's board of directors approved
either the business combination or the transaction in which the
stockholder became an interested stockholder;
upon consummation of the transaction in which any person becomes an
interested stockholder, such interested stockholder owned at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding shares owned by specified employee
stock ownership plans and persons who are both directors and officers
of the corporation; or
at or subsequent to such time, the business combination is both
approved by the board of directors and authorized at an annual or
special meeting of stockholder, not by written consent, by the
affirmative vote of at least two-thirds of the outstanding voting stock
not owned by the interested stockholder.
20
Cumulative Voting
Florida. Under the FBCA, shareholders do not have a right to cumulate their
votes for directors unless the articles of incorporation so provide. The
Company's articles of incorporation contain no such provision. The FBCA provides
that directors are elected by a plurality of votes cast by the shares entitled
to vote in the election at a meeting at which a quorum is present, except that
the Company's by-laws require that a majority of such votes shall be required.
Delaware. The DGCL provides that the certificate of incorporation of any
corporation may grant stockholders the right to cumulate their votes. The
Certificate does not provide Stockholders the right to cumulate votes in the
election of directors. The DGCL provides that directors are elected by a
plurality of votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. However, the Bylaws require that a
majority of such votes shall be required.
Dissenters' Rights of Appraisal
Florida. Under the FBCA, any shareholder of a corporation has the right to
dissent from, and obtain fair value of his or her shares in the event of, a
number of corporate actions including but not limited to: (i) a plan of merger
to which the corporation is a party if the shareholder is entitled to vote on
the merger, or if the shareholder is a shareholder of a subsidiary that is
merged with its parent in accordance with the provisions of the FBCA relating to
the merger of subsidiaries; (ii) consummation of a sale or exchange of all, or
substantially all, of the property of the corporation, other than in the usual
and regular course of business, if the shareholder is entitled to vote on the
sale or exchange; (iii) consummation of a plan of share exchange to which the
corporation is a party as the corporation the shares of which will be acquired,
if the shareholder is entitled to vote on the plan, and (iv) any corporate
action taken, to the extent the articles of incorporation provide that a voting
or nonvoting shareholder is entitled to dissent and obtain payment for his or
her shares. Unless the articles of incorporation of a corporation otherwise
provide, dissenters' rights will not be available to the holders of any shares
of any class or series which, on the applicable record date, were either
registered on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc., or held of record by not fewer than 2,000
shareholders. Neither the Company's articles of incorporation nor its bylaws
contain any provisions granting additional appraisal rights.
Delaware. Under the DGCL, appraisal rights may be available in connection with a
statutory merger or consolidation in specified situations. Appraisal rights are
not available under the DGCL when a corporation is to be the surviving
corporation and no vote of its stockholders is required to approve the merger or
consolidation. In addition, no appraisal rights are available to holders of
shares of any class of stock which is either: (i) listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc., or; (ii) held of record by more than 2,000 stockholders, unless such
stockholders are required by the terms of the merger or consolidation to accept
anything other than: (a) shares of the surviving corporation; (b) shares of
stock that are listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or held of record by more than
2,000 stockholders; (c) cash in lieu of fractional shares, or (d) any
combination of the foregoing.
Stockholders who perfect their appraisal rights are entitled to receive
cash from the corporation equal to the value of their shares as established by
judicial appraisal. Corporations may enlarge these statutory rights by including
in their certificate of incorporation a provision allowing the appraisal rights
in any merger or consolidation in which the corporation is a constituent
corporation. NewCo's Certificate does not contain a provision enlarging such
appraisal rights.
-------------------------------------------------
21
Shareholder Vote Required
Approval of the Merger Agreement will, pursuant to Section 607.1103(5)
of the Florida Business Corporation Act, require the affirmative vote of a
majority of the shares entitled to be cast therefor. PLEASE NOTE THAT THE
COMPANY'S CONTROLLING SHAREHOLDER HAS ALREADY INFORMED THE COMPANY THAT HE WILL
BE VOTING "FOR" THIS PROPOSAL 1. THE NUMBER OF VOTES HELD BY THE CONTROLLING
SHAREHOLDER IS SUFFICIENT TO SATISFY THE SHAREHOLDER VOTE REQUIREMENT FOR THIS
PROPOSAL 1 AND, THEREFORE, NO ADDITIONAL VOTES WILL BE NEEDED TO APPROVE THIS
PROPOSAL 1.
The Board of Directors recommends that the Shareholders vote "FOR" this
Proposal 1 to approve the Merger Agreement and all transactions and developments
contemplated thereby.
22
PROPOSAL 2
APPROVAL OF NOMINEES TO THE BOARD OF DIRECTORS
General
A board of three directors is to be elected at the Meeting to hold
office until the next annual meeting or until their successors are elected.
Unless individual Shareholders specify otherwise, each returned proxy will be
voted for the election of the three nominees who are listed herein. The
following schedule sets forth certain information concerning the nominees for
election as directors.
Name Age First year elected director
---- --- ---------------------------
Joseph J. Alves 35 2001
Mahmoud Hashmi 51 2001
Sandra Hrab (nominee) 25 2002
Board Meetings and Committees. The Company's Board of Directors held no meetings
during the fiscal year ended August 31, 2001, preferring to act by written
consent. The Board acted nine (9) times by unanimous written consent.
The Company does not have a standing Compensation, Audit, or Nominating
Committee or any other Committee performing corresponding functions. Such
matters are considered by the full Board of Directors. NewCo may, subject to
approval of Proposal 4, appoint a committee to administrate the 2002 Plan (see
"Proposal 4: Approval of the 2002 Stock Option Plan").
Directors Compensation. Directors are reimbursed for their out-of-pocket
expenses incurred in attending meetings of the Board of Directors. In addition,
NewCo may compensate its directors through the 2002 Plan, but has not yet
implemented a mechanism for doing so.
Management
The officers and directors of the Company, and further information
concerning them, are as follows:
Name Age Position
Joseph J. Alves 35 Chairman, Chief Executive Officer and President
Mahmoud Hashmi 51 Director, Chief Operating Officer and Principal
Accounting Officer
Sandra Hrab 25 Secretary and Director Nominee
Joseph J. Alves has since 1996 assisted with the development of numerous
software applications including sophisticated online databases, robust security
systems, online banking applications, ultra-secure encryption systems, and was
co- founder and joint developer of the BankEngine Suite of ultra secure
transaction systems. Between 1993 and 1996 he worked as a network engineer for
IBM, SHL SystemsHouse and Computer Systems Centre. Mr. Alves has founded and
co-founded various technology related enterprises since 1996. Mr. Alves has
extensive international banking knowledge and has developed business
relationships that span five continents. He has served as a consultant to many
technology based start-ups and public companies including Millennium
Communications, DreamPlay Research Inc., and Noble House Communications Ltd. Mr.
Alves has a BA (1990) from York University, and an MA (1993) from Wilfrid
Laurier University in Waterloo, Ontario.
23
Mahmoud Hashmi was the CEO of Callmate Telecom International, the Company's
predecessor, from 1998 until his replacement in this capacity by Mr. Alves. Mr.
Hashmi was instrumental in the ongoing business development and expansion of
Callmate into Europe and Pakistan. Specifically, he aided Callmate in the
building of its own international network in Pakistan while utilizing the
network of other quality carriers in Europe. Mr. Hashmi's organizational and
people management skills have been developed over the past two decades. Prior to
joining Callmate, he was a commodity trader for Arcadia Foods based in England.
Mr. Hashmi has over 25 years of international experience in finance and global
trading. Mr. Hashmi was educated at Carlton Grammar School, England and went on
to Huddersfield College to study for a BA in business management.
Sandra Hrab has extensive corporate administrative experience that will serve
the Company well as it increases its activities and diversifies its business.
She served as Treasurer and Secretary of WebEngine Corporation, a Canadian
public company, between 1999 and 2001. Ms. Hrab has acquired extensive personal
experience in the management of the day to day affairs of the Company over the
last two years. Ms. Hrab is currently a director of Critical Commerce Inc., a
wholly owned subsidiary of the public company, as well as an officer of
CyberStation Inc. and serves those companies in a variety of capacities. Ms.
Hrab graduated from Sheridan College in Toronto, Ontario in 1999.
Except as set forth herein, no officer or director of the Company has,
during the last five years: (i) been convicted in or is currently subject to a
pending a criminal proceeding; (ii) been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to any
Federal or state securities or banking laws including, without limitation, in
any way limiting involvement in any business activity, or finding any violation
with respect to such law, nor (iii) has any bankruptcy petition been filed by or
against the business of which such person was an executive officer or a general
partner, whether at the time of the bankruptcy of for the two years prior
thereto.
Legal Proceedings
The Company is considering pursuing litigation against Global Voice
Data Communications, S.A. ("GVDC"), the principals of which are Shahal Mahid
Khan and Said Kiwan. Pursuant to a Heads of Terms dated July 14, 2000 (the "GVDC
Agreement") the Company loaned money to GVDC which was to be repaid unless the
Company and the parties to the GVDC Agreement subsequently executed a binding
agreement. No binding agreement was executed, and the Company has sought to
reclaim its funds in an amicable fashion but has been led to believe that it has
no viable option but to pursue litigation.
Other than the above the Company is not subject to nor aware of any
pending or threatened material legal proceedings.
Certain Relationships and Related Transactions
On November 23, 2000, Callmate entered into a Share Purchase Agreement
(the "SPA") with WebEngine Technologies International, Inc. ("WebEngine"),
pursuant to which Callmate acquired all twelve million (12,000,000) share of
common stock issued and outstanding of WebEngine (the "WebEngine Shares") in a
share exchange on a one- for-one basis. WebEngine was wholly owned by
International Enterprise Solutions Ltd., Ion Technologies Ltd., Hypernet
Research Inc., Net Technology Group Ltd. and International Marketing Solutions
Ltd. Each of these entities owned two million, four hundred thousand (2,400,000)
WebEngine Shares and each was wholly owned by Mr. Franz Kozich. The SPA was
effective January 5, 2001. While Callmate was the legal acquiror, the
transaction was treated as a reverse acquisition for accounting purposes. The
transaction was reported on Form 8-K filed with the Securities and Exchange
Commission (the "Commission") on January 16, 2001.
On January 19, 2001, the Company and Mr. Mohammed Gohir executed a
Common Stock Purchase Agreement (the "CSPA") pursuant to which Mr. Gohir
returned for cancellation a certificate for nine million, two hundred thousand
(9,200,000) Common Shares to Callmate, in consideration for which the Company
transferred all rights, title and interest in shares of certain of its
subsidiaries (collectively, "Callmate Telecom Ltd."). Accordingly, the Company
divested itself of all its operations related to telecommunications.
24
The cancellation of the 9,200,000 Common Shares previously held by Mr.
Gohir represented a change in control of the Company. Mr. Franz Kozich, the
beneficial owner of the Common Shares through five of his wholly owned and
operated corporations, became the Company's majority Shareholder by virtue of
his beneficial ownership of the 12,000,000 Common Shares he acquired pursuant to
the SPA.
On June 7, 2001, Mr. Kozich transferred ownership of International
Enterprise Solutions Ltd., Ion Technologies Ltd., Hypernet Research Inc. and Net
Technology Group Ltd. to the name of Mr. Joseph Alves, the Company's Chairman of
the Board and Chief Executive Officer. In addition, Mr. Kozich caused
International Marketing Solutions Ltd. to transfer nine hundred and fifty
thousand (950,000) Common Shares to each of Conrati Resources Ltd. ("Conrati")
and Cable rise Limited("Cablerise") on June 7, 2001. Conrati and Cablerise are
both wholly owned by Mr. Mahmoud Hashmi, the Company's Chief Operating Officer
and a director. International Marketing Solutions Ltd., which remains wholly
owned by Mr. Kozich, retains five hundred thousand (500,000) Common Shares.
Compliance with Section 16(a) of the Exchange Act
Under the securities laws of the United States, the Company's
directors, its executive (and certain other) officers, and any persons holding
ten percent or more of the Common Stock must report on their ownership of the
Common Stock and any changes in that ownership to the Commission. Specific due
dates for these reports have been established. During the fiscal year ended
August 31, 2001, the Company does not believe that all reports required to be
filed by Section 16(a) were filed on a timely basis.
Executive Compensation
During the Company's last three fiscal years, no compensation has been
paid to any of its directors or executive officers, nor has any executive
officer entered into an employment agreement with the Company.
---------------------------------------------
Shareholder Vote Required
Approval of the proposal to elect the director nominees will, pursuant
to the Company's bylaws, require the affirmative vote of the holders of a
majority of the Common Shares present in person or represented by proxy at the
Meeting. PLEASE NOTE THAT THE COMPANY'S CONTROLLING SHAREHOLDER HAS ALREADY
INFORMED THE COMPANY THAT HE WILL BE VOTING "FOR" THIS PROPOSAL 2. THE NUMBER OF
VOTES HELD BY THE CONTROLLING SHAREHOLDER IS SUFFICIENT TO SATISFY THE
SHAREHOLDER VOTE REQUIREMENT FOR THIS PROPOSAL 2 AND, THEREFORE, NO ADDITIONAL
VOTES WILL BE NEEDED TO APPROVE THIS PROPOSAL 2.
The Board of Directors recommends that the Shareholders vote "FOR" this
Proposal 2 to elect the nominees to the Board of Directors.
25
PROPOSAL 3
APPROVAL OF THE APPOINTMENT OF KAUFMAN ROSSIN & CO.
General
Schwartz, Levitsky Feldman was the independent auditor for the Company
("SLF") until its dismissal on March 19, 2002. Kaufman Rossin & Co. ("KRC") was
appointed as the Company's independent auditor on March 26, 2002. The Company
had no disagreements with SLF in the fiscal year ended August 31, 2001 on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. SLF's report on the Company's financial statements
for the fiscal year ended August 31, 2001 did not contain an adverse opinion or
disclaimer of opinion, nor was it modified as to uncertainty, audit scope or
accounting principles. The Company has not consulted KRC regarding the
application of accounting principles to a specific completed or contemplated
transaction or the type of audit opinion that might be rendered on the Company's
financial statements.
No representative of KRC is expected to be present at the Meeting. In
the event any such representative does attend the Meeting, such representative
will have an opportunity to make a statement should such representative desire
to do so, and would be expected to be available to respond to appropriate
questions.
Audit Fees
SLF billed the Company an aggregate of approximately US$38,000 for the
audit of the Company's annual financial statements for the fiscal year ended
August 31, 2001 included in the Company's annual report on Form 10- KSB and for
the review of the Company's interim financial statements included in the
Company's quarterly reports on Form 10-QSB for the periods ended February 28,
2001 and May 31, 2001.
Financial Information Systems Design and Implementation Fees
SLF did not render any professional services related to financial
information systems design and implementation for the fiscal year ended August
31, 2001.
All Other Fees
SLF did not render any other professional services, other than those
discussed above, for the fiscal year ended August 31, 2001.
Since SLF did not receive fees from the Company other than audit fees,
the Board has considered and believes that SLF has maintained its independence
from the Company.
---------------------------------------------
Shareholder Vote Required
The ratification of the appointment of KRC as the Company's independent
auditor for the fiscal year ended August 31, 2002, requires the affirmative vote
of a majority of the shares of voting stock present in person or represented by
proxy at the Meeting. PLEASE NOTE THAT THE COMPANY'S CONTROLLING SHAREHOLDER HAS
ALREADY INFORMED THE COMPANY THAT HE WILL BE VOTING "FOR" THIS PROPOSAL 3. THE
NUMBER OF VOTES HELD BY THE CONTROLLING SHAREHOLDER IS SUFFICIENT TO SATISFY THE
SHAREHOLDER VOTE REQUIREMENT FOR THIS PROPOSAL 3 AND, THEREFORE, NO ADDITIONAL
VOTES WILL BE NEEDED FOR ITS APPROVAL.
The Board of Directors recommends that the Shareholders vote "FOR" this
Proposal 3 to ratify the appointment of Kaufman Rossin & Co. as its independent
auditor for the fiscal year ending August 31, 2002.
26
PROPOSAL 4
APPROVAL OF THE 2002 STOCK OPTION PLAN
General
At the Special Meeting a vote will be taken on a Proposal to ratify the
adoption of the Company's 2002 Stock Option Plan (the "2002 Plan"), under which
2,000,000 Common Shares underlying stock options are available for grant. The
2002 Plan was adopted by the Board of Directors on April 1, 2002. A copy of the
2002 Plan is attached hereto as Exhibit C. As of the date of this Proxy, no
options to purchase shares of Common Stock has been granted to any person under
the 2002 Plan.
Description of the 2002 Plan
The Purpose of the 2002 Plan. The purpose of the 2002 Plan is to
provide additional incentive to the Directors, officers, employees and
consultants of the Company who are primarily responsible for the management and
growth of the Company. Each option shall be designated at the time of grant as
either an incentive stock option (an "ISO") or as a non-qualified stock option
(a "NQSO").
The purpose of the 2002 Plan is to provide additional incentives to the
directors, officers, employees and consultants of the Company who are primarily
responsible for the management and growth of the Company. Each option shall be
designated at the time of grant as either an incentive stock option (an "ISO")
or a non-qualified stock option (a "NQSO"). The Board of Directors believes that
the ability to grant stock options to employees which qualify for ISO treatment
provides an additional material incentive to certain key employees. The Internal
Revenue Code requires that ISOs be granted pursuant to an option plan that
receives shareholder approval within one year of its adoption. The Company
adopted the 2002 Plan in order to comply with this statutory requirement and
preserve its ability to grant ISOs.
The benefits to be derived from the 2002 Plan, if any, are not
quantifiable or determinable.
Administration of the Plan. The 2002 Plan shall be administered by the
Board of Directors of the Company, or by any committee that the Company may in
the future form and to which the Board of Directors may delegate the authority
to perform such functions (in either case, the "Administrator"). The Board of
Directors shall appoint and remove members of the committee in its discretion in
accordance with applicable laws. In the event that the Company establishes such
a committee and is required to comply with Rule 16b-3 under the Exchange Act and
Section 162(m) of the Internal Revenue Code (the "Code"), the committee shall,
in the Board of Director's discretion, be comprised solely of "non-employee
directors" within the meaning of said Rule 16b-3 and "outside directors" within
the meaning of Section 162(m) of the Code. Notwithstanding the foregoing, the
Administrator may delegate non-discretionary administrative duties to such
employees of the Company as it deems proper and the Board of Directors, in its
absolute discretion, may at any time and from time to time exercise any and all
rights and duties of the Administrator under the 2002 Plan.
Subject to the other provisions of the 2002 Plan, the Administrator
shall have the authority, in its discretion: (i) to grant options; (ii) to
determine the fair market value of the Common Stock subject to options; (iii) to
determine the exercise price of options granted; (iv) to determine the persons
to whom, and the time or times at which, options shall be granted, and the
number of shares subject to each option; (v) to interpret the 2002 Plan; (vi) to
prescribe, amend, and rescind rules and regulations relating to the 2002 Plan;
(vii) to determine the terms and provisions of each option granted (which need
not be identical), including but not limited to, the time or times at which
options shall be exercisable; (viii) with the consent of the optionee, to modify
or amend any option; (ix) to defer (with the consent of the optionee) the
exercise date of any option; (x) to authorize any person to execute on behalf of
the Company any instrument evidencing the grant of an option; and (xi) to make
all other determinations deemed necessary or advisable for the administration of
the 2002 Plan. The Administrator may delegate non-discretionary administrative
duties to such employees of the Company as it deems proper.
27
Shares of Stock Subject to the 2002 Plan. Subject to the conditions
outlined below, the total number of shares of stock which may be issued under
options granted pursuant to the 2002 Plan shall not exceed 2,000,000 shares of
Common Stock, $.001 par value per share.
The number of shares of Common Stock subject to options granted
pursuant to the 2002 Plan may be adjusted under certain conditions. If the stock
of the Company is changed by reason of a stock split, reverse stock split, stock
dividend, recapitalization, combination or reclassification, appropriate
adjustments shall be made by the Board of Directors in (i) the number and class
of shares of stock subject to the 2002 Plan, and (ii) the exercise price of each
outstanding option; provided, however, that the Company shall not be required to
issue fractional shares as a result of any such adjustments. Each such
adjustment shall be subject to approval by the Board of Directors in its sole
discretion.
In the event of the proposed dissolution or liquidation of the Company,
the Administrator shall notify each optionee at least thirty days prior to such
proposed action. To the extent not previously exercised, all options will
terminate immediately prior to the consummation of such proposed action;
provided, however, that the Administrator, in the exercise of its sole
discretion, may permit exercise of any options prior to their termination, even
if such options were not otherwise exercisable. In the event of a merger or
consolidation of the Company with or into another corporation or entity in which
the Company does not survive, or in the event of a sale of all or substantially
all of the assets of the Company in which the Shareholders of the Company
receive securities of the acquiring entity or an affiliate thereof, all options
shall be assumed or equivalent options shall be substituted by the successor
corporation (or other entity) or a parent or subsidiary of such successor
corporation (or other entity); provided, however, that if such successor does
not agree to assume the options or to substitute equivalent options therefor,
the Administrator, in the exercise of its sole discretion, may permit the
exercise of any of the options prior to consummation of such event, even if such
options were not otherwise exercisable.
Participation. Every person who at the date of grant of an option is an
employee of the Company or of any Affiliate (as defined below) of the Company is
eligible to receive NQSOs or ISOs under the 2002 Plan. Every person who at the
date of grant is a consultant to, or non-employee director of, the Company or
any Affiliate (as defined below) of the Company is eligible to receive NQSOs
under the 2002 Plan. The term "Affiliate" as used in the 2002 Plan means a
parent or subsidiary corporation as defined in the applicable provisions
(currently Sections 424(e) and (f), respectively) of the Code. The term
"employee" includes an officer or director who is an employee of the Company.
The term "consultant" includes persons employed by, or otherwise affiliated
with, a consultant.
Option Price. The exercise price of a NQSO shall be not less than 85%
of the fair market value of the stock subject to the option on the date of
grant. To the extent required by applicable laws, rules and regulations, the
exercise price of a NQSO granted to any person who owns, directly or by
attribution under the Code (currently Section 424(d)), stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of any Affiliate (a "10% Shareholder") shall in no event be less than
110% of the fair market value of the stock covered by the option at the time the
option is granted. The exercise price of an ISO shall be determined in
accordance with the applicable provisions of the Code and shall in no event be
less than the fair market value of the stock covered by the option at the time
the option is granted. The exercise price of an ISO granted to any 10% Percent
Shareholder shall in no event be less than 110% of the fair market value of the
stock covered by the Option at the time the Option is granted.
Term of the Options. The Administrator, in its sole discretion, shall
fix the term of each option, provided that the maximum term of an option shall
be ten years. ISOs granted to a 10% Shareholder shall expire not more than five
years after the date of grant. The 2002 Plan provides for the earlier expiration
of options in the event of certain terminations of employment of the holder.
Restrictions on Grant and Exercise. Except with the express written
approval of the Administrator which approval the Administrator is authorized to
give only with respect to NQSOs, no option granted under the 2002 Plan shall be
assignable or otherwise transferable by the optionee except by will or by
operation of law. During the life of the optionee, an option shall be
exercisable only by the optionee.
28
Termination of the 2002 Plan. The 2002 Plan shall become effective upon
adoption by the Board or Directors; provided, however, that no option shall be
exercisable unless and until written consent of the Shareholders of the Company,
or approval of Shareholders of the Company voting at a validly called
Shareholders' meeting, is obtained within twelve months after adoption by the
Board of Directors. If such Shareholder approval is not obtained within such
time, options granted pursuant to the 2002 Plan shall be of the same force and
effect as if such approval was obtained except that all ISOs granted pursuant to
the 2002 Plan shall be treated as NQSOs. Options may be granted and exercised
under the 2002 Plan only after there has been compliance with all applicable
federal and state securities laws. The 2002 Plan shall terminate within ten
years from the date of its adoption by the Board of Directors.
Termination of Employment. If for any reason other than death or
permanent and total disability, an optionee ceases to be employed by the Company
or any of its Affiliates (such event being called a "Termination"), options held
at the date of Termination (to the extent then exercisable) may be exercised in
whole or in part at any time within three months of the date of such
Termination, or such other period of not less than thirty days after the date of
such Termination as is specified in the Option Agreement or by amendment thereof
(but in no event after the expiration date of the option (the "Expiration
Date")); provided, however, that if such exercise of the option would result in
liability for the optionee under Section 16(b) of the Exchange Act, then such
three-month period automatically shall be extended until the tenth day following
the last date upon which optionee has any liability under Section 16(b) (but in
no event after the Expiration Date). If an optionee dies or becomes permanently
and totally disabled (within the meaning of Section 22(e)(3) of the Code) while
employed by the Company or an Affiliate or within the period that the option
remains exercisable after Termination, options then held (to the extent then
exercisable) may be exercised, in whole or in part, by the optionee, by the
optionee's personal representative or by the person to whom the option is
transferred by devise or the laws of descent and distribution, at any time
within twelve months after the death or twelve months after the permanent and
total disability of the optionee or any longer period specified in the Option
Agreement or by amendment thereof (but in no event after the Expiration Date).
"Employment" includes service as a director or as a consultant. For purposes of
the 2002 Plan, an optionee's employment shall not be deemed to terminate by
reason of sick leave, military leave or other leave of absence approved by the
Administrator, if the period of any such leave does not exceed 90 days or, if
longer, if the optionee's right to reemployment by the Company or any Affiliate
is guaranteed either contractually or by statute.
Amendments to the Plan. The Board of Directors may at any time amend,
alter, suspend or discontinue the 2002 Plan. Without the consent of an optionee,
no amendment, alteration, suspension or discontinuance may adversely affect
outstanding options except to conform the 2002 Plan and ISOs granted under the
2002 Plan to the requirements of federal or other tax laws relating to ISOs. No
amendment, alteration, suspension or discontinuance shall require Shareholder
approval unless (i) shareholder approval is required to preserve incentive stock
option treatment for federal income tax purposes or (ii) the Board of Directors
otherwise concludes that shareholder approval is advisable.
Tax Treatment of the Options. Under the Code, neither the grant nor the
exercise of an ISO is a taxable event to the optionee (except to the extent an
optionee may be subject to alternative minimum tax); rather, the optionee is
subject to tax only upon the sale of the Common Stock acquired upon exercise of
the ISO. Upon such a sale, the entire difference between the amount realized
upon the sale and the exercise price of the option will be taxable to the
optionee. Subject to certain holding period requirements, such difference will
be taxed as a capital gain rather than as ordinary income. Optionees who receive
NQSOs will be subject to taxation upon exercise of such options on the spread
between the fair market value of the Common Stock on the date of exercise and
the exercise price of such options. This spread is treated as ordinary income to
the optionee, and the Company is permitted to deduct as an employee expense a
corresponding amount. NQSOs do not give rise to a tax preference item subject to
the alternative minimum tax.
The Board has unanimously approved and unanimously recommends that the
shareholders ratify the adoption of the 2002 Plan.
----------------------------------------------
29
Shareholder Vote Required
Approval of the Company's 2002 Plan requires the affirmative vote of
the holders of a majority of the Common Shares present in person or represented
by proxy at the Special Meeting of Shareholders.
The Board of Directors recommends a vote FOR the ratification of the
2002 Plan.
30
STATEMENT OF ADDITIONAL INFORMATION
The Company will furnish, to any Shareholder making such request, a
copy of its Annual Report within one business day of receiving such request. The
Annual Report will be sent by first class mail at no charge to such Shareholder.
A copy of the Annual Report can be requested by writing to the Company at 725
Port St. Lucie Blvd., Suite 201, Port St. Lucie, FL, 34984, attention Secretary,
or by calling the Company at (888) 672-5935.
GENERAL AND OTHER MATTERS
Management knows of no matters other than the matters described above
that will be presented to the Meeting. However, if any other matters properly
come before the Meeting, or any of its postponements or adjournments, the person
or persons voting the proxies will vote them in accordance with his or their
best judgment on such matters.
SOLICITATION OF PROXIES
The Company is making the solicitation of proxies and will bear the
costs associated therewith. Solicitations will be made by mail only. The Company
will reimburse banks, brokerage firms, other custodians, nominees and
fiduciaries for reasonable expenses incurred in sending proxy material to
beneficial owners of the Company's Common Stock.
SHAREHOLDER PROPOSALS
The Board of Directors has not yet determined the date on which the
next annual meeting of Stockholders of the Company will be held. Any proposal by
a Stockholder intended to be presented at the Company's next annual meeting of
Stockholders must be received at the offices of the Company a reasonable amount
of time prior to the date on which the information or proxy statement for that
meeting are mailed to Stockholders in order to be included in the Company's
information or proxy statement relating to that meeting.
By Order of the Board of Directors,
--------------------------------
Joseph Alves,
CEO and Chairman of the Board
April __, 2002
31
Exhibit A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made and
entered into on April 1, 2002, pursuant to Section 607.1107 of the Florida
Business Corporation Act (the "FBCA") and Section 252 of the General Corporation
Law of the State of Delaware (the "DGCL") by and between BankEngine
Technologies, Inc., a Florida corporation (the "Florida Corporation"), and,
BankEngine Technologies, Inc., a Delaware corporation (the "Delaware
Corporation"), being sometimes referred to herein individually as a "Constituent
Corporation" and collectively as the "Constituent Corporations."
W I T N E S S E T H:
WHEREAS, the Florida Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida
with an authorized capital stock consisting of 50,000,000 shares of common
stock, $.001 par value per share (the "Common Shares"), 18,915,893 of which are
issued and outstanding on the date hereof;
WHEREAS, there are issued and outstanding no options to purchase Common
Shares (the "Florida Options") and warrants to purchase 10,000,000 Common Shares
at $0.30 per such share (the "Florida Warrants");
WHEREAS, the Delaware Corporation is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
with an authorized capital stock consisting of 50,000,000 shares of common
stock, $.001 par value per share (the "Common Stock"), one share of which is
issued and outstanding on the date hereof and held by Joseph Alves, the
President of the Delaware Corporation, and 2,000,000 shares of preferred stock,
$.001 par value per share (the "Preferred Stock"), none of which is issued and
outstanding;
WHEREAS, the Delaware Corporation has no options (the "Delaware
Options") or warrants (the "Delaware Warrants") issued and outstanding;
WHEREAS, the respective Boards of Directors of the Constituent
Corporations have authorized and approved the merger of the Florida Corporation
with and into the Delaware Corporation subject to and upon the terms and
conditions of this Merger Agreement (the "Merger") and Section 607.1107 of the
FBCA and Section 252 of the DGCL, and have approved this Merger Agreement and
directed that it be executed by the undersigned officers and that it be
submitted to the shareholders of each of the Constituent Corporations for their
approval; and
WHEREAS, it is the intention of the Constituent Corporations that the
Merger shall be a tax-free reorganization within the meaning of Section 368
(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE in consideration of the premises, which are hereby
incorporated into the terms hereof, and the mutual covenants and agreements
herein contained, and for the purpose of stating the terms and conditions of the
merger, the mode of effectuating the same, and other details and provisions that
are deemed desirable, the parties have agreed and do hereby agree, subject to
the terms and conditions set forth as follows:
ARTICLE I
TERMS OF MERGER
1.1 MERGER. On the Effective Date of the Merger (as hereinafter
defined), in accordance with the provisions of the FBCA and the DGCL, the
Florida Corporation shall be merged with and into the Delaware Corporation (at
times referred to herein as the "Surviving Corporation") upon the terms and
conditions set forth in the subsequent provisions of this Merger Agreement.
1.2 APPROVAL OF SHAREHOLDERS. This Merger Agreement shall be submitted
as promptly as practicable to the respective shareholders of the Florida
Corporation and the Delaware Corporation as provided by the FBCA and the DGCL.
After adoption and approval of this Merger Agreement and all the transactions
and developments contemplated hereby by the respective shareholders of the
Florida Corporation and the Delaware Corporation, and provided this Merger
Agreement is not terminated and abandoned pursuant to the provisions hereof,
Articles of Merger shall be filed in accordance with the applicable provisions
of the FBCA and a Certificate of Merger shall be filed in accordance with the
applicable provisions of the DGCL.
1.3 FILINGS AND EFFECTIVENESS. As soon as practicable following the
date of execution hereof, the Florida Corporation and the Delaware Corporation
will, subject to the approval by the shareholders of each of the Constituent
Corporations, cause (i) the Articles of Merger along with any other required
document to be filed with the Secretary of State of the State of Florida
pursuant to Sections 607.1105 and 607.1107 of the FBCA, and (ii) the Certificate
of Merger along with any other required document to be filed with the Office of
the Secretary of the State of Delaware pursuant to Section 252 of the DGCL. The
Merger shall become effective upon the occurrence of each of the following
actions:
(a) All of the conditions precedent to the consummation of the Merger
specified in this Merger Agreement shall have been satisfied or duly waived;
(b) An executed Articles of Merger meeting the requirements of the FBCA
shall have been filed with the Secretary of State of the State of Florida and
said Secretary of State shall have accepted such Articles of Merger, and the
surviving corporation shall have performed all other requirements of Sections
607.1107 and 607.1107 of the FBCA; and
(c) An executed Certificate of Merger meeting the requirements of the
DGCL shall have been accepted by the Secretary of the State of Delaware and said
Secretary of State shall have issued a Certificate of Merger.
The date and time when the Merger shall become effective, as aforesaid,
is herein called the "Effective Date" and "Effective Time," respectively.
1.4 EFFECT OF MERGER - SECURITIES.
As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of Common Shares or holders of
Florida Warrants:
(a) Conversion of Common Shares. The presently issued and outstanding
Common Shares shall be converted on a one-for-one basis into shares of Common
Stock.
(b) Conversion of Florida Warrants. The number of shares underlying the
Florida Warrants as well as the exercise price, date of grant, vesting,
exercisability and expiration date thereof are set forth in the respective
warrant agreement applicable thereto. All rights under the Florida Warrants
shall be treated as provided herein, and to the extent the terms of any such
warrant agreement is inconsistent with the treatment to be accorded to the
Florida Warrants as provided herein, then the Florida Corporation shall cause
the such warrant agreements to be amended, and all required third party,
governmental and regulatory body consents or approvals to such amendments to be
procured, such that all such inconsistencies shall be eliminated by the
Effective Time.
At the Effective Time, notwithstanding any contrary provision of the
warrant agreements, the Florida Warrants shall, at and after the Effective Time,
evidence warrants (the "Delaware Warrants") to purchase a like number of shares
of Common Stock on the same terms and conditions as stated in the respective
warrant agreement.
2
1.5 EFFECT OF MERGER - GENERAL
At and after the Effective Time, the Merger shall be effective as
provided in the applicable provisions of the DGCL and the FBCA. The corporate
existence of the Delaware Corporation, as the Surviving Corporation, with all
of its purposes and powers, shall continue unaffected and unimpaired by the
Merger, and, as the Surviving Corporation, it shall be governed by the DGCL and
succeed to all rights, assets, liabilities and obligations of the Florida
Corporation in accordance with the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all the property, rights, privileges, powers and franchises of
the Delaware Corporation and the Florida Corporation shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Delaware Corporation
and the Florida Corporation shall become the debts, liabilities and duties of
the Surviving Corporation. The separate existence and corporate organization of
the Florida Corporation shall cease at the Effective Time, with the Delaware
Corporation continuing as the Surviving Corporation of the Merger.
1.6 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION. The
Certificate of Incorporation of the Delaware Corporation as in effect
immediately prior to the Effective Date of the Merger shall continue in full
force and effect as the Certificate of Incorporation of the Surviving
Corporation until duly amended in accordance with the provisions thereof and
applicable law.
1.7 BY-LAWS OF SURVIVING CORPORATION. The By-Laws of the Delaware
Corporation as in effect immediately prior to the Effective Date of the Merger
shall continue in full force and effect as the By-Laws of the Surviving
Corporation until altered, amended or repealed as provided in the By-Laws or as
provided by applicable law.
1.8 DIRECTORS OF SURVIVING CORPORATION. The directors of the Florida
Corporation as of the Effective Date of the Merger shall be and become the
directors of the Surviving Corporation.
1.9 OFFICERS OF SURVIVING COMPANY. The officers of the Florida
Corporation as of the Effective Date of the Merger shall be and become the
officers of the Surviving Corporation.
ARTICLE II
CONDITIONS TO MERGER
The obligations of the Constituent Corporations to consummate the
Merger are subject to satisfaction of the following conditions:
2.1 AUTHORIZATION. The holders of at least a majority of the
outstanding Common Shares shall have approved this Merger Agreement and the
Merger. All necessary action shall have been taken to authorize the execution,
delivery and performance of this Merger Agreement by each of the Constituent
Corporations.
ARTICLE III
GENERAL PROVISIONS
3.1 BINDING AGREEMENT. This Merger Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns; provided, however, that this Merger Agreement may not be assigned by
any party without the written consent of the other party.
3.2 AMENDMENTS. The Boards of Directors of the Florida Corporation and
the Delaware Corporation may amend this Merger Agreement at any time prior to
the filing of this Merger Agreement (or a certificate in lieu thereof) with the
Secretary of State of Delaware, provided that an amendment made subsequent to
the adoption of this Merger Agreement by the shareholders of either the Florida
Corporation or the Delaware Corporation shall not: (i) alter or change the
amount or kind of shares, securities, cash, property and/or rights to be
received in exchange for or on conversion of all or any of the shares of any
class or series thereof of the Florida Corporation or the Delaware Corporation,
(ii) alter or change any term of the Certificate of Incorporation of the
Surviving Corporation, or (iii) alter or change any of the terms and conditions
of this Merger Agreement if such alteration or change would adversely affect the
holders of any class or series of capital stock of either the Florida
Corporation or the Delaware Corporation.
3
3.3 FURTHER ASSURANCES. From time to time, as and when required by the
Delaware Corporation or by its successors or assigns, there shall be executed
and delivered on behalf of the Florida Corporation such deeds and other
instruments, and there shall be taken or caused to be taken by the Florida
Corporation such further and other actions as shall be appropriate or necessary
in order to vest or perfect in or confirm of record or otherwise by the Delaware
Corporation the title to and possession of all the property, rights, privileges,
powers, franchises, assets, immunities and authority of the Florida Corporation
and otherwise to carry out the purposes of this Merger Agreement. The officers
and directors of the Delaware Corporation are fully authorized in the name and
on behalf of the Florida Corporation or otherwise to take any and all such
action and to execute and deliver any and all such deeds or other instruments.
3.4 ABANDONMENT. At any time before the Effective Date of the Merger,
this Merger Agreement may be terminated and the Merger may be abandoned for any
reason whatsoever by the Board of Directors of either the Florida Corporation or
the Delaware Corporation, or by both, by the adoption of appropriate resolutions
and written notification thereof to the other party to the Merger,
notwithstanding the approval of this Merger Agreement by the shareholders of the
Florida Corporation or the Delaware Corporation, or by both. In the event of the
termination of this Merger Agreement and the abandonment of the Merger pursuant
to the provisions of this section, this Merger Agreement shall become void and
have no effect, without any liability on the part of either of the Constituent
Corporations or their respective officers, directors or shareholders in respect
thereof.
3.5 GOVERNING LAW. This Merger Agreement shall be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the FBCA.
[Signatures on following page]
4
IN WITNESS WHEREOF, each of the undersigned corporations has caused
this Merger Agreement to be signed in its corporate name by its duly authorized
officer as of the date first written above.
BANKENGINE TECHNOLOGIES, INC.
a Florida corporation
By: /s/ Joseph J. Alves
-------------------------------
Joseph Alves,
President
BANKENGINE TECHNOLOGIES, INC.
a Delaware corporation
By: /s/ Joseph J. Alves
-----------------------
Joseph Alves,
President
5
Exhibit B
CERTIFICATE OF INCORPORATION
OF
BANKENGINE TECHNOLOGIES, INC.
* * * *
FIRST: The name of the corporation is BankEngine Technologies, Inc.
(the "Corporation").
SECOND: The address of its registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose or purposes of the Corporation shall be to engage
in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The aggregate number of shares which the Corporation is
authorized to issue is fifty-two million (52,000,000),
divided into classes as follows:
A. Fifty million (50,000,000) shares of common stock,
$.001 par value per share (hereinafter called the
"Common Stock"), divided into two classes as follows;
B. Two million (2,000,000) shares of preferred stock,
$.001 par value per share, to be issued in series
(the "Preferred Stock").
The following is a statement of the designations,
powers, preferences and rights, and the
qualifications, limitations or restrictions with
respect to the Preferred Stock of the Corporation:
The shares of Preferred Stock may be issued in one or
more series, and each series shall be so designated
as to distinguish the shares thereof from the shares
of all other series. Authority is hereby expressly
granted to the Board of Directors of the Corporation
to fix, subject to the provisions herein set forth,
before the issuance of any shares of a particular
series, the number, designations and relative rights,
preferences, and limitations of the shares of such
series including (1) voting rights, if any, which may
include the right to vote together as a single class
with the Common Stock and any other series of the
Preferred Stock with the number of votes per share
accorded to shares of such series being the same as
or different from that accorded to such other shares,
(2) the dividend rate per annum, if any, and the
terms and conditions pertaining to dividends and
whether such dividends shall be cumulative, (3) the
amount or amounts payable upon such voluntary or
involuntary liquidation, (4) the redemption price or
prices, if any, and the terms and conditions of the
redemption, (5) sinking fund provisions, if any, for
the redemption or purchase of such shares, (6) the
terms and conditions on which such shares are
convertible, in the event the shares are to have
conversion rights, and (7) any other rights,
preferences and limitations pertaining to such series
which may be fixed by the Board of Directors pursuant
to the Delaware General Corporation Law.
FIFTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to
make, alter or repeal the by-laws of the Corporation.
SIXTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director except for
liability (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived any improper
personal benefit.
SEVENTH: The name and address of the sole incorporator is: Henry
Nisser, c/o Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP,
101 East 52nd Street, New York, New York 10022.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate, hereby
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hands this 15th day of
February, 2002.
---------------------------------------
Henry Nisser, Law Clerk
Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP
101 East 52nd Street
New York, New York 10022
Exhibit C
BYLAWS OF
BANKENGINE TECHNOLOGIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
ARTICLE I
OFFICES AND RECORDS
Section 1.1. DELAWARE OFFICE. The principal office of BankEngine
Technologies, Inc. (the "Corporation") in the State of Delaware shall be located
in the City of Wilmington, County of New Castle, and the name and address of its
registered agent is The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware.
Section 1.2. OTHER OFFICES. The Corporation may have such other
offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time to
time require.
Section 1.3. BOOKS AND RECORDS. The books and records of the
Corporation may be kept at the Corporation's headquarters or at such other
locations outside the State of Delaware as may from time to time be designated
by the Board of Directors.
ARTICLE II
STOCKHOLDERS
Section 2.1. ANNUAL MEETINGS. An annual meeting of stockholders shall
be held for the election of directors at such date, time and place, either
within or without the State of Delaware, as may be designated by resolution of
the Board of Directors from time to time. Any other proper business may be
transacted at the annual meeting.
Section 2.2. SPECIAL MEETINGS. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board or a
majority of the members of the Board of Directors.
Section 2.3. NOTICE OF MEETINGS. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given that shall state the place, date and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the Certificate of Incorporation or
these Bylaws, the written notice of any meeting shall be given not less than ten
or more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his or her address as it appears on the records of the
Corporation.
Section 2.4. ADJOURNMENTS. Any meeting of stockholders, annual or
special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof is announced at the meeting at which the adjournment is taken.
At the adjourned meeting the Corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 2.5. QUORUM. Except as otherwise provided by law, the
Certificate of Incorporation or these Bylaws, at each meeting of stockholders
the presence in person or by proxy of the holders of shares of stock having a
majority of the votes which could be cast by the holders of all outstanding
shares of stock entitled to vote at the meeting shall be necessary and
sufficient to constitute a quorum. In the absence of a quorum, the stockholders
so present may, by majority vote, adjourn the meeting from time to time in the
manner provided in Section 2.4 of these Bylaws until a quorum shall attend.
Shares of its own stock belonging to the Corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the Corporation,
shall neither be entitled to vote nor be counted for quorum purposes; provided,
however, that the foregoing shall not limit the right of the Corporation to vote
stock, including but not limited to its own stock, held by it in a fiduciary
capacity.
Section 2.6. ORGANIZATION. Meetings of stockholders shall be presided
over by the Chairman of the Board, or in his or her absence by the President, or
in the absence of the foregoing persons by a chairman designated by the Board of
Directors, or in the absence of such designation by a chairman chosen at the
meeting. The Secretary shall act as secretary of the meeting, but in his or her
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 2.7. VOTING.
(a) Except as otherwise provided by law, the Certificate of
Incorporation, or these Bylaws, any corporate action, other than the election of
Directors, the affirmative vote of the majority of shares entitled to vote on
that matter and represented either in person or by proxy at a meeting of
stockholders at which a quorum is present shall be the act of the stockholders
of the Corporation.
(b) Unless otherwise provided for in the Certificate of
Incorporation of the Corporation, Directors will be elected by a majority of the
votes cast by the shares, present in person or by proxy, entitled to vote in the
election at a meeting at which a quorum is present and each stockholder entitled
to vote has the right to vote the number of shares owned by him or her for as
many persons as there are Directors to be elected. The Board of Directors may at
any time amend this provision to reduce the number of votes cast for the
election of a director to a plurality of the votes cast in the manner provided
immediately above.
(c) Except as otherwise provided by statute, the Certificate
of Incorporation, or these Bylaws, at each meeting of stockholders, each
stockholder of the Corporation entitled to vote thereat, shall be entitled to
one vote for each share registered in his or her name on the books of the
Corporation.
Section 2.8 PROXIES. Each stockholder entitled to vote or to express
consent or dissent without a meeting, may do so either in person or by proxy, so
long as such proxy is executed in writing by the stockholder himself or herself,
or by his or her attorney-in-fact thereunto duly authorized in writing. Every
proxy shall be revocable at will unless the proxy conspicuously states that it
is irrevocable and the proxy is coupled with an interest. A telegram, telex,
cablegram, or similar transmission by the stockholder, or as a photographic,
photostatic, facsimile, shall be treated as a valid proxy, and treated as a
substitution of the original proxy, so long as such transmission is a complete
reproduction executed by the stockholder. No proxy shall be valid after the
expiration of three years from the date of its execution, unless otherwise
provided in the proxy. Such instrument shall be exhibited to the Secretary at
the meeting and shall be filed with the records of the Corporation.
Section 2.9 ACTION WITHOUT A MEETING. Unless otherwise provided for in
the Certificate of Incorporation of the Corporation, any action to be taken at
any annual or special stockholders' meeting, may be taken without a meeting,
without prior notice and without a vote if a written consent or consents is/are
signed by the stockholders of the Corporation having not less than the minimum
number of votes necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereat were present and voted is delivered by hand
or by certified or registered mail, return receipt requested, to the Corporation
to its principal place of business or an officer or agent of the Corporation
having custody of the books in which proceedings of stockholders' meetings are
recorded.
Section 2.10. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD.
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors and which record date: (i) in the case of determination
of stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty nor
less than ten days before the date of such meeting and (ii) in the case of any
other action, shall not be more than sixty days prior to such other action. If
no record date is fixed: (i) 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 and (ii) the record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 2.11. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The Secretary
shall prepare and make, at least ten days before every meeting of stockholders,
a complete list of the stockholders entitled to vote at the meeting, 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 the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the 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. The 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. The stock ledger
shall be the only evidence as to which stockholders are entitled to examine the
stock ledger, the list of stockholders or the books of the Corporation, or to
vote in person or by proxy at any meeting of stockholders.
Section 2.12. CONDUCT OF MEETINGS. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of stockholders shall have the right and
authority to prescribe such rules, regulations and procedures and to do all such
acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) rules and procedures for maintaining
order at the meeting and the safety of those present; (iii) limitations on
attendance at or participation in the meeting to stockholders of record of the
Corporation, their duly authorized and constituted proxies or such other persons
as the chairman of the meeting shall determine; (iv) restrictions on entry to
the meeting after the time fixed for the commencement thereof; and (v)
limitations on the time allotted to questions or comments by participants.
Unless and to the extent determined by the Board of Directors or the chairman of
the meeting, meetings of stockholders shall not be required to be held in
accordance with the rules of parliamentary procedure.
Section 2.13. INSPECTORS OF ELECTIONS; OPENING AND CLOSING THE POLLS.
The Board of Directors by resolution may appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate has been
appointed to act, or if all inspectors or alternates who have been appointed are
unable to act, at a meeting of stockholders, the chairman of the meeting shall
appoint one or more inspectors to act at the meeting. Each inspector, before
discharging his or her duties, shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality and according to the best of
his or her ability. The inspectors shall have the duties prescribed by the
General Corporation Law of the State of Delaware. The chairman of the meeting
shall fix and announce at the meeting the date and time of the opening and the
closing of the polls for each matter upon which the stockholders will vote at a
meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of its Board of
Directors. In addition to the powers and authorities by these Bylaws expressly
conferred upon them, the Board of Directors may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by law, by the
Certificate of Incorporation or by these Bylaws required to be exercised or done
by the stockholders.
Section 3.2. NUMBER; QUALIFICATIONS. The Board of Directors need not be
composed of a particular number of members nor must such number be within any
particular range, unless the Certificate of Incorporation, an amendment to these
Bylaws or the Board of Directors shall otherwise provide. The number of
Directors shall until such time, if ever, be determined from time to time by
resolution of the Board of Directors. Directors need not be stockholders or
residents of the State of Delaware.
Section 3.3. ELECTION, RESIGNATION. The first Board of Directors shall
hold office until the first annual meeting of stockholders and until their
successors have been duly elected and qualified or until there is a decrease in
the number of Directors. Thereafter, each Director will be elected at the annual
meeting of stockholders and shall hold office until the annual meeting of the
stockholders next succeeding his or her election, or until his or her prior
death, resignation or removal. Any Director may resign at any time upon written
notice to the Board of Directors, the President or the Secretary of the
Corporation. Such resignation shall be effective upon receipt unless the notice
specifies a later time for that resignation to become effective.
Section 3.4. VACANCIES. Any newly created directorship resulting from
an increase in the authorized number of Directors or any vacancy occurring in
the Board of Directors by reason of death, resignation, retirement,
disqualification, removal from office or any other cause may be filled by the
affirmative vote of the remaining members of the Board of Directors, though less
than a quorum of the Board of Directors, and each Director so elected shall hold
office until the expiration of the term of office of the Director whom he or she
has replaced or until his or her successor is elected and qualified. If there
are no Directors in office, then an election of Directors may be held in the
manner provided by statute. No decrease in the number of Directors constituting
the whole Board shall shorten the term of any incumbent Director.
Section 3.5. REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such places within or without the State of Delaware and
at such times as the Board of Directors may from time to time determine, and if
so determined notices thereof need not be given.
Section 3.6. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any time or place within or without the State of
Delaware whenever called by the Chairman of the Board, the President, the
Secretary, or by any two members of the Board of Directors. Notice of the date,
time and place of a special meeting of the Board of Directors shall be delivered
by the person or persons calling the meeting personally, by facsimile or by
telephone to each Director or sent by first-class mail or telegram, charges
prepaid, addressed to each Director at that Directors' address as it is shown on
the records of the Corporation. If the notice is mailed, it shall be deposited
in the United States mail at least four days before the time of the holding of
the meeting. If the notice is delivered personally or by telephone or telegraph,
it shall be delivered at least forty-eight hours before the time of the holding
of the special meeting. If by facsimile transmission, such notice shall be
transmitted at least twenty-four hours before the time of holding of the special
meeting. Any oral notice given personally or by telephone may be communicated
either to the Director or to a person at the office of the Director who the
person giving the notice has reason to believe will promptly communicate it to
the Director. The notice need not specify the purpose or purposes of the special
meeting or the place of the special meeting, if the meeting is to be held at the
principal office of the Corporation.
Section 3.7. TELEPHONIC MEETINGS PERMITTED. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting thereof by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Bylaw shall constitute presence in person at such meeting.
Section 3.8. QUORUM; VOTE REQUIRED FOR ACTION; ADJOURNMENT. At all
meetings of the Board of Directors a majority of the whole Board of Directors
shall constitute a quorum for the transaction of business. Except in cases in
which the Certificate of Incorporation or these Bylaws otherwise provide, the
vote of a majority of the Directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. A majority of the Directors
present, whether or not a quorum, may adjourn any meeting to another time and
place. Notice of the time and place of holding an adjourned meeting need not be
given unless the meeting is adjourned for more than twenty-four hours. If the
meeting is adjourned for more than twenty-four hours, then notice of the time
and place of the adjourned meeting shall be given to the Directors who were not
present at the time of the adjournment in the manner specified in Section 3.6.
Section 3.9. ORGANIZATION. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, or in his or her absence by a
chairman chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his or her absence the chairman of the meeting may appoint any
person to act as secretary of the meeting.
Section 3.10. INFORMAL ACTION BY DIRECTORS. Unless otherwise restricted
by the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board of
Directors or such committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or such committee.
Section 3.11. FEES AND COMPENSATION OF DIRECTORS. Directors and members
of committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Board of Directors. This Section 3.11 shall not be construed to preclude any
Director from serving the Corporation in any other capacity as an officer,
agent, employee or otherwise and receiving compensation for those services.
Section 3.12 REMOVAL. One or more or all the Directors of the
Corporation may be removed for cause at any time by the stockholders, at a
special meeting of the stockholders called for that purpose, provided however,
such Director shall not be removed if the Certificate of Incorporation or Bylaws
provides that its Directors shall be elected by cumulative voting and there are
a sufficient number of shares cast against his or her removal, which if
cumulatively voted at an election of Directors would be sufficient to elect him
or her.
ARTICLE IV
COMMITTEES
Section 4.1. COMMITTEES. The Board of Directors may designate from
among its members one or more standing or special committees, each committee to
consist of one or more of the Directors of the Corporation. The Board of
Directors may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of the committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or she or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in place
of any such absent or disqualified member. Any such committee, to the extent
permitted by law and to the extent provided in the resolution of the Board of
Directors, shall have and may exercise all the powers and authority of the Board
of Directors 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.
Section 4.2. COMMITTEE RULES. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may make, alter
and repeal rules for the conduct of its business. In the absence of such rules
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article III of these Bylaws.
Section 4.3. MINUTES OF MEETINGS. All committees appointed in
accordance with Section 4.1 shall keep regular minutes of their meetings and
shall cause them to be recorded in books kept for that purpose in the office of
the Corporation.
ARTICLE V
OFFICERS
Section 5.1. DESIGNATIONS. The officers of the Corporation shall be a
Chairman of the Board, a President, a Secretary, Chief Financial Officer and, at
the discretion of the Board of Directors, one or more Directors and one or more
Vice-Presidents (one or more of whom may be Executive Vice-Presidents). The
Board of Directors shall appoint all officers. Any two or more offices may be
held by the same individual.
Section 5.2. APPOINTMENT AND TERM OF OFFICE. The officers of the
Corporation shall be appointed annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of the
stockholders. Each officer shall hold office until a successor shall have been
appointed and qualified, or until such officer's earlier death, resignation or
removal.
Section 5.3. POWERS AND DUTIES. If the Board appoints persons to fill
the following positions, such officers shall have the power and duties set forth
below:
(a) THE CHAIRMAN: The Chairman shall have general control and
management of the Board of Directors and may also be the President of the
Corporation. He or she shall preside at all meetings of the Board of Directors
at which he or she is present. He or she shall have such other powers and
perform such other duties as from time to time may be conferred or imposed upon
him or her by the Board of Directors.
(b) THE PRESIDENT: The President of the Corporation shall be
generally responsible for the proper conduct and the day to day operations of
the business of the Corporation. He or she shall possess power to sign all
certificates, contracts and other instruments of the Corporation. In the absence
of the Chairman, he or she shall preside at all meetings of the stockholders. He
or she shall perform all such other duties as are incident to his or her office
or are properly required of him or her by the Board of Directors.
(c) CHIEF FINANCIAL OFFICER: The Chief Financial Officer shall
keep or cause to be kept adequate and correct books and records of accounts of
the properties and business transactions of the Corporation, including accounts
of its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any Director. The Chief Financial Officer shall
(1) deposit corporate funds and other valuables in the Corporation's name and to
its credit with depositories designated by the Board of Directors; (2) make
disbursements of corporate funds as authorized by the Board of Directors; (3)
render a statement of the corporation's financial condition and an account of
all transactions conducted as chief financial officer whenever requested by the
President or the Board of Directors; and (4) have other powers and perform other
duties as prescribed by the President or the Board of Directors or the Bylaws.
Unless the board of directors has elected a separate Treasurer, the Chief
Financial Officer shall be deemed to be the treasurer for purposes of giving any
reports or executing any certificates or other documents.
(d) VICE PRESIDENT: Each Vice-President shall have such
powers and discharge such duties as may be assigned to him or her from time to
time by the President or the Board of Directors.
(e) SECRETARY AND ASSISTANT SECRETARIES: The Secretary shall
issue notices for all meetings, shall keep minutes of all meetings, shall have
charge of the seal and the corporate books, and shall make such reports and
perform such other duties as are incident to his or her office, or are properly
required of him or her by the Board of Directors. The Assistant Secretary, if
any, or Assistant Secretaries in order designated by the Board of Directors,
shall perform all of the duties of the Secretary during the absence or
disability of the Secretary, and at other times may perform such duties as are
directed by the President or the Board of Directors.
Section 5.4. DELEGATION. In the case of the absence or inability to act
of any officer of the Corporation and of any person herein authorized to act in
such officer's place, the Board of Directors may from time to time delegate the
powers or duties of such officer to any other officer or any Director or other
person whom it may in its sole discretion select.
Section 5.5. VACANCIES. Vacancies in any office arising from any cause
may be filled by the Board of Directors at any regular or special meeting of the
Board. The appointee shall hold office for the unexpired term and until his or
her successor is duly elected and qualified.
Section 5.6. OTHER OFFICERS. The Board of Directors, or a duly
appointed officer to whom such authority has been delegated by Board resolution,
may appoint such other officers and agents as it shall deem necessary or
expedient, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors.
Section 5.7. RESIGNATION. An officer may resign at any time by
delivering notice to the Corporation. Such notice shall be effective when
delivered unless the notice specifies a later effective date. Any such
resignation shall not affect the Corporation's contract rights, if any, with the
officer.
Section 5.8. REMOVAL. Any officer elected or appointed by the Board of
Directors may be removed at any time, with or without cause, by the affirmative
vote of a majority of the whole Board of Directors, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Section 5.9. BONDS. The Board of Directors may, by resolution, require
any and all of the officers to give bonds to the Corporation, with sufficient
surety or sureties, conditioned for the faithful performance of the duties of
their respective offices, and to comply with such other conditions as may from
time to time be required by the Board of Directors.
ARTICLE VI
STOCK
Section 6.1. ISSUANCE OF SHARES. No shares of the Corporation shall be
issued unless authorized by the Board of Directors or a duly constituted
committee thereof. Such authorization shall include the number of shares to be
issued, the consideration to be received and a statement regarding the adequacy
of the consideration.
Section 6.2. CERTIFICATES. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the Corporation by the Chairman
of the Board of Directors, if any, or the President or a Vice President, and the
Secretary or an Assistant Secretary, of the Corporation certifying the number of
shares owned by him or her in the Corporation. Any of or all the signatures on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
Section 6.3. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE
OF NEW CERTIFICATES. The Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or his or her legal representative, to give the
Corporation indemnification or a bond sufficient to indemnify it against any
claim that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate.
Section 6.4. TRANSFERS OF STOCK.
(a) Transfers of stock shall be made only upon the stock
transfer records of the Corporation, which records shall be kept at the
registered office of the Corporation or at its principal place of business, or
at the office of its transfer agent or registrar. The Board of Directors may, by
resolution, open a share register in any state of the United States, and may
employ an agent or agents to keep such register and to record transfers of
shares therein.
(b) Shares of certificated stock shall be transferred by
delivery of the certificates therefor, accompanied either by an assignment in
writing on the back of the certificates or an assignment separate from the
certificate, or by a written power of attorney to sell, assign and transfer the
same, signed by the holder of said certificate. No shares of certificated stock
shall be transferred on the records of the Corporation until the outstanding
certificates therefor have been surrendered to the Corporation or to its
transfer agent or registrar.
Section 6.5. SHARES OF ANOTHER CORPORATION. Shares owned by the
Corporation in another corporation, domestic or foreign, may be voted by such
officer, agent or proxy as the Board of Directors may determine or, in the
absence of such determination, by the President of the Corporation.
ARTICLE VII
INDEMNIFICATION
Section 7.1. RIGHT TO INDEMNIFICATION. The Corporation shall indemnify
and hold harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was or is made or
is threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he or she, or a person for whom he or
she is the legal representative, is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses (including attorneys' fees) reasonably incurred by such
person. Notwithstanding the preceding sentence, the Corporation shall be
required to indemnify a person in connection with a proceeding (or part thereof)
initiated by such person only if the proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
Section 7.2. PREPAYMENT OF EXPENSES. The Corporation shall pay the
expenses (including attorneys' fees) incurred in defending any proceeding in
advance of its final disposition; provided, however, that the payment of
expenses incurred by a Director or officer in advance of the final disposition
of the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified under
this Article VII or otherwise.
Section 7.3. CLAIMS. If a claim for indemnification or payment of
expenses under this Article VII is not paid in full within sixty days after a
written claim therefor has been received by the Corporation, the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification or payment of
expenses under applicable law.
Section 7.4. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Article VII shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, these Bylaws, agreement, vote of stockholders or
Directors or otherwise.
Section 7.5. OTHER INDEMNIFICATION. The Corporation's obligation, if
any, to indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any amount such person
may collect as indemnification from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit enterprise.
Section 7.6. AMENDMENT OR REPEAL. Any repeal or modification of the
foregoing provisions of this Article VII shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. FISCAL YEAR. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
Section 8.2. SEAL. The corporate seal shall have the name of the
Corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
Section 8.3. WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS, DIRECTORS
AND COMMITTEES. Any written waiver of notice, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully called or
convened. Neither the business to be transacted at nor the purpose of any
regular or special meeting of the stockholders, Directors or members of a
committee of Directors need be specified in any written waiver of notice.
Section 8.4. INTERESTED DIRECTORS; QUORUM. No contract or transaction
between the Corporation and one or more of its Directors or officers, or between
the Corporation and any other corporation, partnership, association or other
organization in which one or more of its Directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the Director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or her or their
votes are counted for such purpose, if: (i) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or her relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of Directors,
a committee thereof, or the stockholders. Common or interested Directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
Section 8.5. BOOKS AND RECORDS. The Corporation shall maintain
appropriate accounting records and shall keep as permanent records minutes of
all meetings of its stockholders and Board of Directors, a record of all actions
taken by the Board of Directors without a meeting and a record of all actions
taken by a committee of the Board of Directors. In addition, the Corporation
shall keep at its registered office or principal place of business, or at the
office of its transfer agent or registrar, a record of its stockholders, giving
the names and addresses of all stockholders in alphabetical order by class of
shares showing the number and class of the shares held by each. Any books,
records and minutes may be in written form or any other form capable of being
converted into written form within a reasonable time.
Section 8.6. AMENDMENT OF BYLAWS. In furtherance and not in limitation
of the powers conferred upon it by law, the Board of Directors is expressly
authorized to adopt, repeal or amend the Bylaws of the Corporation by the vote
of a majority of the entire Board of Directors. The Bylaws of the Corporation
shall be subject to alteration or repeal, and new Bylaws may be made, by a
majority vote of the stockholders at the time entitled to vote in the election
of Directors even though these Bylaws may also be altered, amended or repealed
by the Board of Directors.
Exhibit D
2002 STOCK OPTION PLAN
OF
BANKENGINE TECHNOLOGIES, INC.
1. PURPOSES OF THE PLAN
The purposes of the 2002 Stock Option Plan (the "Plan") of BankEngine
Technologies, Inc., a Florida corporation (the "Company"), are to:
(a) Encourage selected employees, directors and consultants to improve
operations and increase profits of the Company;
(b) Encourage selected employees, directors and consultants to accept
or continue employment or association with the Company or its Affiliates; and
(c) Increase the interest of selected employees, directors and
consultants in the Company's welfare through participation in the growth in
value of the common stock of the Company (the "Shares").
Options granted under this Plan ("Options") may be "incentive stock
options" ("ISOs") intended to satisfy the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder (the
"Code"), or "non-qualified stock options" ("NQSOs").
2. ELIGIBLE PERSONS
Every person who at the date of grant of an Option is an employee of
the Company or of any Affiliate (as defined below) of the Company is eligible to
receive NQSOs or ISOs under this Plan. Every person who at the date of grant is
a consultant to, or non-employee director of, the Company or any Affiliate (as
defined below) of the Company is eligible to receive NQSOs under this Plan. The
term "Affiliate" as used in the Plan means a parent or subsidiary corporation as
defined in the applicable provisions (currently Sections 424(e) and (f),
respectively) of the Code. The term "employee" includes an officer or director
who is an employee of the Company. The term "consultant" includes persons
employed by, or otherwise affiliated with, a consultant.
3. STOCK SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF GRANTS
Subject to the provisions of Section 6.1.1 of the Plan, the total
number of Shares which may be issued under Options granted pursuant to this Plan
shall not exceed One million six hundred thousand (1,600,000) Shares. The Shares
covered by the portion of any grant under the Plan which expires unexercised
shall become available again for grants under the Plan.
4. ADMINISTRATION
(a) The Plan shall be administered by either the Board of Directors of
the Company (the "Board") or by a committee (the "Committee") to which
administration of the Plan, or of part of the Plan, may be delegated by the
Board (in either case, the "Administrator"). The Board shall appoint and remove
members of such Committee, if any, in its discretion in accordance with
applicable laws. If necessary in order to comply with Rule 16b-3 under the
Exchange Act and Section 162(m) of the Code, the Committee shall, in the Board's
discretion, be comprised solely of "non-employee directors" within the meaning
of said Rule 16b-3 and "outside directors" within the meaning of Section 162(m)
of the Code. The foregoing notwithstanding, the Administrator may delegate
nondiscretionary administrative duties to such employees of the Company as it
deems proper and the Board, in its absolute discretion, may at any time and from
time to time exercise any and all rights and duties of the Administrator under
the Plan.
(b) Subject to the other provisions of this Plan, the Administrator
shall have the authority, in its discretion: (i) to grant Options; (ii) to
determine the fair market value of the Shares subject to Options; (iii) to
determine the exercise price of Options granted; (iv) to determine the persons
to whom, and the time or times at which, Options shall be granted, and the
number of shares subject to each Option; (v) to interpret this Plan; (vi) to
prescribe, amend, and rescind rules and regulations relating to this Plan; (vii)
to determine the terms and provisions of each Option granted (which need not be
identical), including but not limited to, the time or times at which Options
shall be exercisable; (viii) with the consent of the optionee, to modify or
amend any Option; (ix) to defer (with the consent of the optionee) the exercise
date of any Option; (x) to authorize any person to execute on behalf of the
Company any instrument evidencing the grant of an Option; and (xi) to make all
other determinations deemed necessary or advisable for the administration of
this Plan. The Administrator may delegate nondiscretionary administrative duties
to such employees of the Company as it deems proper.
(c) All questions of interpretation, implementation, and application of
this Plan shall be determined by the Administrator. Such determinations shall be
final and binding on all persons.
5. GRANTING OF OPTIONS; OPTION AGREEMENT
(a) No Options shall be granted under this Plan after 10 years from the
date of adoption of this Plan by the Board.
(b) Each Option shall be evidenced by a written stock option agreement,
in form satisfactory to the Administrator, executed by the Company and the
person to whom such Option is granted.
(c) The stock option agreement shall specify whether each Option it
evidences is an NQSO or an ISO.
(d) Subject to Section 6.3.3 with respect to ISOs, the Administrator
may approve the grant of Options under this Plan to persons who are expected to
become employees, directors or consultants of the Company, but are not
employees, directors or consultants at the date of approval, and the date of
approval shall be deemed to be the date of grant unless otherwise specified by
the Administrator.
6. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under this Plan shall be subject to the terms and
conditions set forth in Section 6.1. NQSOs shall also be subject to the terms
and conditions set forth in Section 6.2, but not those set forth in Section 6.3.
ISOs shall also be subject to the terms and conditions set forth in Section 6.3,
but not those set forth in Section 6.2.
6.1 Terms and Conditions to Which All Options Are Subject. All Options
granted under this Plan shall be subject to the following terms and conditions:
6.1.1 Changes in Capital Structure. Subject to Section 6.1.2,
if the stock of the Company is changed by reason of a stock split, reverse stock
split, stock dividend, or recapitalization, combination or reclassification,
appropriate adjustments shall be made by the Board in (a) the number and class
of shares of stock subject to this Plan and each Option outstanding under this
Plan, and (b) the exercise price of each outstanding Option; provided, however,
that the Company shall not be required to issue fractional shares as a result of
any such adjustments. Each such adjustment shall be subject to approval by the
Board in its sole discretion.
6.1.2 Corporate Transactions. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
optionee at least 30 days prior to such proposed action. To the extent not
previously exercised, all Options will terminate immediately prior to the
consummation of such proposed action; provided, however, that the Administrator,
in the exercise of its sole discretion, may permit exercise of any Options prior
to their termination, even if such Options were not otherwise exercisable. In
the event of a merger or consolidation of the Company with or into another
corporation or entity in which the Company does not survive, or in the event of
a sale of all or substantially all of the assets of the Company in which the
shareholders of the Company receive securities of the acquiring entity or an
affiliate thereof, all Options shall be assumed or equivalent options shall be
substituted by the successor corporation (or other entity) or a parent or
subsidiary of such successor corporation (or other entity); provided, however,
that if such successor does not agree to assume the Options or to substitute
equivalent options therefor, the Administrator, in the exercise of its sole
discretion, may permit the exercise of any of the Options prior to consummation
of such event, even if such Options were not otherwise exercisable.
-2-
6.1.3 Time of Option Exercise. Subject to Section 5 and
Section 6.3.4, Options granted under this Plan shall be exercisable (a)
immediately as of the effective date of the stock option agreement granting the
Option, or (b) in accordance with a schedule as may be set by the Administrator
(each such date on such schedule, the "Vesting Base Date") and specified in the
written stock option agreement relating to such Option. In any case, no Option
shall be exercisable until a written stock option agreement in form satisfactory
to the Company is executed by the Company and the optionee.
6.1.4 Option Grant Date. The date of grant of an Option under
this Plan shall be the date as of which the Administrator approves the grant.
6.1.5 Nontransferability of Option Rights. Except with the
express written approval of the Administrator which approval the Administrator
is authorized to give only with respect to NQSOs, no Option granted under this
Plan shall be assignable or otherwise transferable by the optionee except by
will, by the laws of descent and distribution or pursuant to a qualified
domestic relations order. During the life of the optionee, an Option shall be
exercisable only by the optionee.
6.1.6 Payment. Except as provided below, payment in full, in
cash, shall be made for all stock purchased at the time written notice of
exercise of an Option is given to the Company, and proceeds of any payment shall
constitute general funds of the Company. The Administrator, in the exercise of
its absolute discretion, may authorize any one or more of the following
additional methods of payment:
(a) Subject to the discretion of the
Administrator and the terms of the stock option agreement granting the Option,
delivery by the optionee of Shares already owned by the optionee for all or part
of the Option price, provided the fair market value (determined as set forth in
Section 6.1.10) of such Shares being delivered is equal on the date of exercise
to the Option price, or such portion thereof as the optionee is authorized to
pay by delivery of such stock; and
(b) Subject to the discretion of the
Administrator, through the surrender of Shares then issuable upon exercise of
the Option, provided the fair market value (determined as set forth in Section
6.1.10) of such Shares is equal on the date of exercise to the Option price, or
such portion thereof as the optionee is authorized to pay by surrender of such
stock.
6.1.7 Termination of Employment. If for any reason other than
death or permanent and total disability, an optionee ceases to be employed by
the Company or any of its Affiliates (such event being called a "Termination"),
Options held at the date of Termination (to the extent then exercisable) may be
exercised in whole or in part at any time within three months of the date of
such Termination, or such other period of not less than 30 days after the date
of such Termination as is specified in the Option Agreement or by amendment
thereof (but in no event after the Expiration Date); provided, however, that if
such exercise of the Option would result in liability for the optionee under
Section 16(b) of the Exchange Act, then such three-month period automatically
shall be extended until the tenth day following the last date upon which
optionee has any liability under Section 16(b) (but in no event after the
Expiration Date). If an optionee dies or becomes permanently and totally
disabled (within the meaning of Section 22(e)(3) of the Code) while employed by
the Company or an Affiliate or within the period that the Option remains
exercisable after Termination, Options then held (to the extent then
exercisable) may be exercised, in whole or in part, by the optionee, by the
optionee's personal representative or by the person to whom the Option is
transferred by devise or the laws of descent and distribution, at any time
within twelve months after the death or twelve months after the permanent and
total disability of the optionee or any longer period specified in the Option
Agreement or by amendment thereof (but in no event after the Expiration Date).
For purposes of this Section 6.1.7, "employment" includes service as a director
or as a consultant. For purposes of this Section 6.1.7, an optionee's employment
shall not be deemed to terminate by reason of sick leave, military leave or
other leave of absence approved by the Administrator, if the period of any such
leave does not exceed 90 days or, if longer, if the optionee's right to
reemployment by the Company or any Affiliate is guaranteed either contractually
or by statute.
-3-
6.1.8 Withholding and Employment Taxes. At the time of
exercise of an Option and as a condition thereto, or at such other time as the
amount of such obligations becomes determinable (the "Tax Date"), the optionee
shall remit to the Company in cash all applicable federal and state withholding
and employment taxes. Such obligation to remit may be satisfied, if authorized
by the Administrator in its sole discretion, after considering any tax,
accounting and financial consequences, by the optionee's (i) delivery of a
promissory note in the required amount on such terms as the Administrator deems
appropriate, (ii) tendering to the Company previously owned Shares or other
securities of the Company with a fair market value equal to the required amount,
or (iii) agreeing to have Shares (with a fair market value equal to the required
amount) which are acquired upon exercise of the Option withheld by the Company.
6.1.9 Other Provisions. Each Option granted under this Plan
may contain such other terms, provisions, and conditions not inconsistent with
this Plan as may be determined by the Administrator, and each ISO granted under
this Plan shall include such provisions and conditions as are necessary to
qualify the Option as an "incentive stock option" within the meaning of Section
422 of the Code.
6.1.10 Determination of Value. For purposes of the Plan, the
fair market value of Shares or other securities of the Company shall be
determined as follows:
(a) Fair market value shall be the closing
price of such stock on the date before the date the value is to be determined on
the principal recognized securities exchange or recognized securities market on
which such stock is reported, but if selling prices are not reported, its fair
market value shall be the mean between the high bid and low asked prices for
such stock on the date before the date the value is to be determined (or if
there are no quoted prices for such date, then for the last preceding business
day on which there were quoted prices).
(b) In the absence of an established market
for the stock, the fair market value thereof shall be determined in good faith
by the Administrator, with reference to the Company's net worth, prospective
earning power, dividend-paying capacity, and other relevant factors, including
the goodwill of the Company, the economic outlook in the Company's industry, the
Company's position in the industry, the Company's management, and the values of
stock of other corporations in the same or similar line of business.
6.1.11 Option Term. Subject to Section 6.3.4, no Option shall
be exercisable more than 10 years after the date of grant, or such lesser period
of time as is set forth in the stock option agreement (the end of the maximum
exercise period stated in the stock option agreement is referred to in this Plan
as the "Expiration Date").
6.2 Terms and Conditions to Which Only NQSOs Are Subject. Options
granted under this Plan which are designated as NQSOs shall be subject to the
following terms and conditions:
6.2.1 Exercise Price.
(a) Except as set forth in Section 6.2.1(b),
the exercise price of an NQSO shall be not less than 85% of the fair market
value (determined in accordance with Section 6.1.10) of the stock subject to the
Option on the date of grant.
(b) To the extent required by applicable laws,
rules and regulations, the exercise price of a NQSO granted to any person who
owns, directly or by attribution under the Code (currently Section 424(d)),
stock possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or of any Affiliate (a "Ten Percent
Shareholder") shall in no event be less than 110% of the fair market value
(determined in accordance with Section 6.1.10) of the stock covered by the
Option at the time the Option is granted.
6.3 Terms and Conditions to Which Only ISOs Are Subject. Options
granted under this Plan which are designated as ISOs shall be subject to the
following terms and conditions:
-4-
6.3.1 Exercise Price.
(a) Except as set forth in Section 6.3.1(b),
the exercise price of an ISO shall be determined in accordance with the
applicable provisions of the Code and shall in no event be less than the fair
market value (determined in accordance with Section 6.1.10) of the stock covered
by the Option at the time the Option is granted.
(b) The exercise price of an ISO granted to
any Ten Percent Shareholder shall in no event be less than 110% of the fair
market value (determined in accordance with Section 6.1.10) of the stock covered
by the Option at the time the Option is granted.
6.3.2 Disqualifying Dispositions. If stock acquired by
exercise of an ISO granted pursuant to this Plan is disposed of in a
"disqualifying disposition" within the meaning of Section 422 of the Code (a
disposition within two years from the date of grant of the Option or within one
year after the transfer such stock on exercise of the Option), the holder of the
stock immediately before the disposition shall promptly notify the Company in
writing of the date and terms of the disposition and shall provide such other
information regarding the Option as the Company may reasonably require.
6.3.3 Grant Date. If an ISO is granted in anticipation of
employment as provided in Section 5(d), the Option shall be deemed granted,
without further approval, on the date the grantee assumes the employment
relationship forming the basis for such grant, and, in addition, satisfies all
requirements of this Plan for Options granted on that date.
6.3.4 Term. Notwithstanding Section 6.1.11, no ISO granted to
any Ten Percent Shareholder shall be exercisable more than five years after the
date of grant.
7. MANNER OF EXERCISE
(a) An optionee wishing to exercise an Option shall give written notice
to the Company at its principal executive office, to the attention of the
officer of the Company designated by the Administrator, accompanied by payment
of the exercise price and withholding taxes as provided in Sections 6.1.6 and
6.1.8. The date the Company receives written notice of an exercise hereunder
accompanied by payment of the exercise price will be considered as the date such
Option was exercised.
(b) Promptly after receipt of written notice of exercise of an Option
and the payments called for by Section 7(a), the Company shall, without stock
issue or transfer taxes to the optionee or other person entitled to exercise the
Option, deliver to the optionee or such other person a certificate or
certificates for the requisite number of shares of stock. An optionee or
permitted transferee of the Option shall not have any privileges as a
shareholder with respect to any shares of stock covered by the Option until the
date of issuance (as evidenced by the appropriate entry on the books of the
Company or a duly authorized transfer agent) of such shares.
8. EMPLOYMENT OR CONSULTING RELATIONSHIP
Nothing in this Plan or any Option granted hereunder shall interfere
with or limit in any way the right of the Company or of any of its Affiliates to
terminate any optionee's employment or consulting at any time, nor confer upon
any optionee any right to continue in the employ of, or consult with, the
Company or any of its Affiliates.
9. CONDITIONS UPON ISSUANCE OF SHARES
Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended (the "Securities
Act").
-5-
10. NON-EXCLUSIVITY OF THE PLAN
The adoption of the Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options other than under the Plan.
11. AMENDMENTS TO PLAN
The Board may at any time amend, alter, suspend or discontinue this
Plan. Without the consent of an optionee, no amendment, alteration, suspension
or discontinuance may adversely affect outstanding Options except to conform
this Plan and ISOs granted under this Plan to the requirements of federal or
other tax laws relating to incentive stock options. No amendment, alteration,
suspension or discontinuance shall require shareholder approval unless (a)
shareholder approval is required to preserve incentive stock option treatment
for federal income tax purposes or (b) the Board otherwise concludes that
shareholder approval is advisable.
12. EFFECTIVE DATE OF PLAN; TERMINATION
This Plan shall become effective upon adoption by the Board; provided,
however, that no Option shall be exercisable unless and until written consent of
the shareholders of the Company, or approval of shareholders of the Company
voting at a validly called shareholders' meeting, is obtained within twelve
months after adoption by the Board. If such shareholder approval is not obtained
within such time, Options granted hereunder shall be of the same force and
effect as if such approval was obtained except that all ISOs granted hereunder
shall be treated as NQSOs. Options may be granted and exercised under this Plan
only after there has been compliance with all applicable federal and state
securities laws. This Plan shall terminate within ten years from the date of its
adoption by the Board.
-6-
PRELIMINARY COPIES
GENERAL PROXY - SPECIAL MEETING OF SHAREHOLDERS OF BANKENGINE TECHNOLOGIES, INC.
The undersigned hereby appoints Joseph J. Alves, with full power of
substitution, proxy to vote all of the shares of common stock of BankEngine
Technologies, Inc., a Florida corporation (the "Company") held by the
undersigned and with all of the powers the undersigned would possess if
personally present at the Annual Meeting of shareholders of the Company to be
held at the offices of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, 101 East
52nd Street, New York, NY, 10022 on May ___, 2002 at 2:00 P.M. local time and at
all adjournments thereof, upon the matters specified below, all as more fully
described in the Proxy Statement dated April ___, 2002 and with the
discretionary powers upon all other matters which come before the meeting or any
adjournment thereof.
This Proxy is solicited on behalf of the Company's Board of Directors.
1. To approve the Merger Agreement attached as Exhibit A to the Proxy
Statement as executed by and between the Company and BankEngine
Technologies, Inc., a Delaware corporation, as of April 1, 2002 and all
transactions and developments contemplated thereby.
/ / FOR / / AGAINST / / ABSTAIN
2. To approve the nominations of Joseph Alves, Mahmoud Hashmi and Sandra
Hrab to the Company's Board of Directors
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the appointment of Kaufman, Rossin & Co. as the Company's
Independent Certified Public Accountants for the ensuing year;
/ / FOR / / AGAINST / / ABSTAIN
4. To approve the 2002 Stock Option Plan attached as Exhibit D to the
Proxy Statement.
/ / FOR / / AGAINST / / ABSTAIN
5. To act upon such other business as may properly come before the Meeting
or any adjournment thereof.
Every properly signed proxy will be voted in accordance with the
specifications made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5.
The undersigned hereby acknowledges receipt of a copy of the
accompanying Notice of Meeting and Proxy Statement and hereby revokes any proxy
or proxies heretofore given.
Please mark, date, sign and mail your proxy promptly in the envelope
provided.
Date: May ___, 2002
---------------------------------------------------
(Print name of Shareholder)
---------------------------------------------------
(Print name of Shareholder)
---------------------------------------------------
Signature
---------------------------------------------------
Signature
Number of Shares
--------------------------------
Note: Please sign exactly as name appears in the
Company's records. Joint owners should each sign.
When signing as attorney, executor or trustee,
please give title as such.