SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
(RULE 14C-101)
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF
THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary Information Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-5(d) (1))
[X] Definitive Information Statement
ENTRUST FINANCIAL SERVICES, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
Fee previously paid with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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ENTRUST FINANCIAL SERVICES, INC.
47 SCHOOL AVENUE
CHATHAM, NEW JERSEY 07928
(973) 635-4047
December 19, 2006
Dear Shareholder:
This Information Statement is furnished to holders of shares of common stock,
par value $.0000001 per share ("Common Stock"), of ENTRUST FINANCIAL SERVICES,
INC. ("Entrust"). We are sending you this Information Statement to inform you
that on December 4, 2006, Entrust's Board of Directors (the "Board") unanimously
adopted resolutions, subject to shareholder approval, to reincorporate Entrust
in the State of Delaware by merger with and into a Delaware corporation with the
same name ("Entrust Delaware") which Entrust formed for such purpose (the
"Migratory Merger"). Effective as of December 4, 2006, pursuant to, the By-Laws
and Articles of Incorporation of the company and Colorado Business Corporation
Act ss.7-107-104, certain of our principal shareholders (identified in the
section entitled "Voting Securities and Principal Holders Thereof") holding
1,907,143 shares of Common Stock, representing approximately 92.7% of Entrust's
total issued and outstanding shares of Common Stock, adopted resolutions to
authorize the Migratory Merger. On the effective date of the Migratory Merger:
1) Entrust will adopt the capital structure of Entrust Delaware which includes
total authorized capital stock of 101,000,000 shares, of which 100,000,000
shares are common stock, with a par value of $.001 per share (the "Entrust
Delaware Common Stock") and 1,000,000 shares are blank check preferred stock,
with a par value of $.001 per share (the "Preferred Stock"). The Preferred Stock
may be issued from time to time in one or more series with such designations,
preferences and relative participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as shall be stated in the
resolutions adopted by Entrust Delaware's Board of Directors providing for the
issuance of such Preferred Stock or series thereof; and 2) the issued and
outstanding shares of Common Stock will automatically convert into the right to
receive shares of Entrust Delaware Common Stock at a ratio of one (1) share of
Common Stock for one (1) share of Entrust Delaware Common Stock (the "Conversion
Ratio"). In addition, notwithstanding approval of this proposal by the
shareholders, the Board may, in its sole discretion, determine not to effect,
and abandon, the Migratory Merger without further action by shareholders.
The Board believes that the proposed Migratory Merger will be beneficial to
Entrust and its shareholders because it will enhance Entrust's ability to
attract a transaction consistent with its current plan and purpose.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE NOT
REQUESTED TO SEND US A PROXY.
The enclosed Information Statement is being furnished to you to inform you that
the foregoing action has been approved by the holders of 92.7% of the
outstanding shares of Common Stock. The Migratory Merger will not become
effective before the date which is 20 days after this Information Statement is
first mailed to Entrust's shareholders. You are urged to read the Information
Statement in its entirety for a description of the action taken by the Board and
92.7% of the shareholders of Entrust.
This Information Statement is being mailed on or about December 20, 2006 to
shareholders of record on December 12, 2006 (the "Record Date").
/s/ Arnold Kling
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Arnold Kling, President
ENTRUST FINANCIAL SERVICES, INC.
47 SCHOOL AVENUE
CHATHAM, NEW JERSEY 07928
(973) 635-4047
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INFORMATION STATEMENT
PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14C-2 THEREUNDER
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NO VOTE OR OTHER ACTION OF ENTRUST'S SHAREHOLDERS IS REQUIRED IN
CONNECTION WITH THIS INFORMATION STATEMENT.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
Entrust Financial Services, Inc. ("Entrust") is distributing this Information
Statement to its shareholders in full satisfaction of any notice requirements it
may have under Securities and Exchange Act of 1934, as amended, and the Colorado
Business Corporation Act. No additional action will be undertaken by Entrust
with respect to the receipt of written consents, and no dissenters' rights with
respect to the receipt of the written consents, and no dissenters' rights under
Colorado Business Corporation Act are afforded to Entrust's shareholders as a
result of the adoption of the resolutions approving Entrust's migration from
Colorado to Delaware.
Expenses in connection with the distribution of this Information Statement,
which are anticipated to be less than $5,000.00, will be paid by Entrust.
BACKGROUND
Since Entrust's disposition of its Entrust Mortgage, Inc. subsidiary in August
2005, its plan has consisted of exploring potential targets for a business
combination with Entrust through a purchase of assets, share purchase or
exchange, merger or similar type of transaction. In order to facilitate such a
transaction, the Board believes that, among other things, Entrust should
reincorporate in the State of Delaware by merger with and into a Delaware
corporation with the same name ("Entrust Delaware") which Entrust formed for
such purpose (the "Migratory Merger"). The Board believes that the Migratory
Merger would make Entrust more attractive for a potential business combination
and therefore be in the best interest of Entrust's shareholders and Entrust. No
further action on the part of shareholders will be required to either implement
or abandon the Migratory Merger. The Migratory Merger will be effective upon the
filing of the Merger Certificates, as described below, or on such later date as
determined by the Board (the "Effective Date"). The Board will determine when to
file the Merger Certificates. The Board reserves the right to elect not to
proceed, and abandon, the Migratory Merger if it determines, in its sole
discretion, that this proposal is no longer in the best interests of Entrust's
shareholders.
CERTAIN RISK FACTORS ASSOCIATED WITH THE MIGRATORY MERGER
THERE CAN BE NO ASSURANCE THAT IF THE MIGRATORY MERGER IS EFFECTED, THE
RESULTING COMPANY WILL ATTRACT ANY, OR SATISFY POTENTIAL ACQUISITION, TARGETS
AND THERE IS NO GUARANTEE THAT ANY TRANSACTION WILL BE EFFECTED.
THE MARKET PRICE OF ENTRUST'S COMMON STOCK COULD DECLINE IF INVESTORS DISLIKE
THE MIGRATORY MERGER.
IMPACT OF THE MIGRATORY MERGER IF IMPLEMENTED
If effected, the Migratory Merger will affect all of Entrust's shareholders
uniformly and will not affect any shareholder's percentage ownership interests
in Entrust or proportionate voting power.
The principal effect of the Migratory Merger will be that:
o Subsequent to the Effective Date of the merger Entrust will be
domiciled in the State of Delaware;
o The issued and outstanding shares of Common Stock will automatically
convert into the right to receive shares of Entrust Delaware Common
Stock at a ratio of one (1) share of Common Stock for one (1) share of
Entrust Delaware Common Stock (the "Conversion Ratio");
o Following the Effective Date, any and all issued and outstanding
options, warrants or other rights to acquire any Common Stock will be
converted into an option, warrant or other right, as the case may be,
to purchase shares of Entrust Delaware Common Stock on the same terms,
at the same Conversion Ratio as Common Stock are converted into Entrust
Delaware Common Stock and at a price equal to the current exercise
price;
o Entrust will adopt the capital structure of Entrust Delaware which
includes total authorized capital stock of 101,000,000 shares, of which
100,000,000 shares are common stock, with a par value of $.001 per
share (the "Entrust Delaware Common Stock") and 1,000,000 shares are
blank check preferred stock, with a par value of $.001 per share (the
"Preferred Stock"). The Preferred Stock may be issued from time to time
in one or more series with such designations, preferences and relative
participating, optional or other special rights and qualifications,
limitations or restrictions thereof, as shall be stated in the
resolutions adopted by Entrust Delaware's Board of Directors providing
for the issuance of such Preferred Stock or series thereof; and
o Generally, after the Effective Date of the merger, shareholders will
have the same rights available to them under Entrust Delaware's
Certificate of Incorporation and Bylaws as currently available to them
under Entrust's Articles of Incorporation and Bylaws with the following
exceptions pursuant to the Bylaws of Entrust Delaware, generally: 1) a
Special Meeting of Shareholders called by shareholders will require the
request of holders in the aggregate of at least 50% of all shares
entitled to vote at such meeting; 2) written notice of a Special
Meeting of Shareholders must be given at least 20 days but no more than
60 days before the date fixed for such meeting. In addition, under
certain circumstances where multiple written notices have been returned
undeliverable notice need not be given to such shareholder until such
shareholder updates his address of record; and 3) the requisite quorum
to hold a meeting of shareholders requires the presence, in person or
by proxy, the holders of a majority of the shares issued and
outstanding and entitled to vote thereat. In comparison, under the
Bylaws of Entrust generally, 1) a Special Meeting of Shareholders can
be called by shareholders of record holding in the aggregate 20% of the
shares entitled to vote at such meeting; 2) written notice of such a
meeting must be given at least 10 days but no more than 50 days before
the date fixed for such meeting; and 3) the requisite quorum to hold a
meeting of shareholders requires the presence, in person or by proxy,
the holders of at least one-third of the shares issued and outstanding
and entitled to vote thereat; provided, however, a quorum may be
present to transact business at any adjourned meeting.
EFFECT ON REGISTERED AND BENEFICIAL SHAREHOLDERS
Upon effectuating the Migratory Merger, we intend to treat shareholders holding
Entrust Delaware Common Stock in "street name", through a bank, broker or other
nominee, in the same manner as registered shareholders whose shares are
registered in their names. If you hold your shares with a bank, broker or other
nominee and if you have any questions in this regard, we encourage you to
contact your nominee.
EFFECT ON REGISTERED CERTIFICATED SHARES
Some of our registered shareholders hold all their shares in certificate form.
If any of your shares are held in certificate form, you will receive a
transmittal letter from our transfer agent, Corporate Stock Transfer, Inc. as
soon as practicable after the Effective Date. The letter of transmittal will
contain instructions on how to surrender your certificate(s) representing the
shares of Common Stock owned by you to the transfer agent. Upon receipt of your
certificate, subject to the aforementioned Conversion Ratio, you will be issued
a new stock certificate for shares of Entrust Delaware Common Stock.
SHAREHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT
ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
POTENTIAL ANTI-TAKEOVER EFFECT
The Preferred Stock may be issued from time to time in one or more series with
such designations, preferences and relative participating, optional or other
special rights and qualifications, limitations or restrictions thereof, as shall
be stated in the resolutions adopted by Entrust Delaware's Board of Directors
providing for the issuance of such Preferred Stock or series thereof without the
need for shareholder approval. The authorization of the Preferred Stock, could
adversely affect the ability of third parties to takeover or effect a change in
control of Entrust Delaware by, for example, permitting issuances that would
dilute the stock ownership of a person seeking to effect a change in the
composition of the Entrust Delaware's Board or contemplating a tender offer or
other transaction for the combination of Entrust Delaware with another company.
Although the authorization of the Preferred Stock could, under certain
circumstances, have an anti-takeover effect, the authorization of the Preferred
Stock is not in response to any effort of which Entrust is aware to accumulate
its shares or shares of Entrust Delaware or obtain control of Entrust or Entrust
Delaware.
AUTHORIZED SHARES
On the Effective Date, Entrust will adopt the capital structure of Entrust
Delaware which includes total authorized capital stock of 101,000,000 shares, of
which 100,000,000 shares are Entrust Delaware Common Stock and 1,000,000 shares
of Preferred Stock which preferred stock may be issued from time to time in one
or more series with such designations, preferences and relative participating,
optional or other special rights and qualifications, limitations or restrictions
thereof, as shall be stated in the resolutions adopted by Entrust Delaware's
Board of Directors providing for the issuance of such Preferred Stock or series
thereof. A draft of the Certificate of Incorporation of Entrust Delaware is
attached as Exhibit A to this Information Statement. As of the Record Date,
Entrust had 100,000,000 shares of authorized Common Stock of which 2,057,582
shares are issued and outstanding. After the Effective Date, the number of
authorized shares that are issued and outstanding would remain unchanged.
Authorized but unissued shares of Entrust Delaware will be available for
issuance, and although Entrust presently has no specific plans to issue any
shares, Entrust Delaware may issue such shares in the future. If Entrust
Delaware issues additional shares, the ownership interest of Entrust Delaware's
shareholders will be diluted.
ACCOUNTING MATTERS
The Migratory Merger will increase the par value from $.0000001 to $.001 per
share and as a result the stated capital of the Common Stock will increase by
approximately $2,000.00 and the additional paid-in capital of the Common Stock
will decrease by the same amount. The per-share net income or loss and net book
value of Common Stock will be unchanged.
PROCEDURE FOR EFFECTING THE MIGRATORY MERGER
On or about the 20th day after this Information Statement is first mailed to
shareholders of record on the Record Date, Entrust will promptly cause Articles
of Merger to be filed with the Secretary of State of Colorado and a Certificate
of Merger to be filed with the Secretary of State of Delaware (collectively both
are the "Merger Certificates"). The Migratory Merger will become effective on
the date of filing of the Merger Certificates or on such later date as
determined by the Board, which is referred to as the "Effective Date." Beginning
on the Effective Date, each stock certificate representing Common Stock
pre-Migratory Merger, subject to the Conversion Ratio, will be deemed for all
corporate purposes to evidence ownership of Entrust Delaware Common Stock.
APPRAISAL RIGHTS
Shareholders who have not consented to and are not in favor of the Migratory
Merger may have the right to seek payment in cash of the fair value of their
Common Stock by complying with the requirements of Article 113 of the Colorado
Business Corporations Act. Entrust's shareholders have the right to dissent from
the Migratory Merger by filing with Entrust prior to the Effective Date a
written notice of the shareholder's intention to demand payment for the
shareholder's shares if the Board effects the Migratory Merger. Thereafter, the
dissenting shareholder may make a written demand on Entrust for payment of the
fair value of the shareholder's shares and deposit the shareholder's
certificates for certificated shares. Upon demand, Entrust will pay to the
shareholder the amount it estimates to be the fair value of the dissenter's
shares. If a dissenting shareholder believes that the amount paid by Entrust is
not the fair value of the dissenter's shares, the dissenter may demand
additional payment in an amount representing what the dissenter estimates is the
fair value of the shares and accrued interest. After receiving the dissenter's
demand, Entrust may choose either to accept the shareholder's estimate of the
fair value or to petition a court to determine the fair value of the shares and
accrued interest. This discussion is not a complete description of the
procedures that must be followed for a shareholder to perfect his dissenter's
rights. Failure of a shareholder to strictly adhere to the requirements of
Article 113 will result in the loss of the shareholder's dissenter's rights. A
copy of Article 113 is attached hereto as Exhibit B. Any shareholder who
anticipates dissenting from the action to be taken by the Board should consult
his or her own counsel to establish the requisite time requirements.
THE PROVISIONS OF ARTICLE 113 ARE COMPLEX AND TECHNICAL IN NATURE.
SHAREHOLDERS DESIRING TO EXERCISE DISSENTERS' RIGHTS MAY WISH TO CONSULT
COUNSEL, SINCE THE FAILURE TO COMPLY STRICTLY WITH THESE PROVISIONS WILL RESULT
IN THE LOSS OF THEIR DISSENTERS' RIGHTS.
FEDERAL INCOME TAX CONSEQUENCES OF THE MIGRATORY MERGER
The following is a summary of certain material United States federal income tax
consequences of the conversion of Common Stock at the Conversion Ratio, does not
purport to be a complete discussion of all of the possible federal income tax
consequences of such conversion and is included for general information only.
Further, it does not address any state, local or foreign income or other tax
consequences. Also, it does not address the tax consequences to holders that are
subject to special tax rules, such as banks, insurance companies, regulated
investment companies, personal holding companies, foreign entities, nonresident
alien individuals, broker-dealers and tax-exempt entities. The discussion is
based on the provisions of the United States federal income tax law as of the
date hereof, which is subject to change retroactively as well as prospectively.
This summary also assumes that the shares of Common Stock were, and the shares
of Entrust Delaware Common Stock will be, held as a "capital asset," as defined
in the Internal Revenue Code of 1986, as amended (i.e., generally, property held
for investment). The tax treatment of a shareholder may vary depending upon the
particular facts and circumstances of such shareholder. Each shareholder is
urged to consult with such shareholder's own tax advisor with respect to the tax
consequences of the conversion of Common Stock at the Conversion Ratio. As used
herein, the term United States holder means a shareholder
that is, for federal income tax purposes: a citizen or resident of the United
States; a corporation or other entity taxed as a corporation created or
organized in or under the laws of the United States, any State of the United
States or the District of Columbia; an estate the income of which is subject to
federal income tax regardless of its source; or a trust if a U.S. court is able
to exercise primary supervision over the administration of the trust and one or
more U.S. persons have the authority to control all substantial decisions of the
trust.
No gain or loss should be recognized by a shareholder upon the conversion of
Common Stock at the Conversion Ratio by such shareholder. The aggregate tax
basis of the shares of Entrust Delaware Common Stock received in such conversion
will be the same as the shareholder's aggregate tax basis in the shares of
Common Stock converted therefor. The shareholder's holding period for the shares
of Entrust Delaware Common Stock will include the period during which the
shareholder held the shares of Common Stock surrendered in such conversion.
Our view regarding the tax consequences of the Migratory Merger is not binding
on the Internal Revenue Service or the courts. ACCORDINGLY, EACH SHAREHOLDER
SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO ALL OF THE
POTENTIAL TAX CONSEQUENCES TO HIM OR HER OF THE CONVERSION OFCOMMON STOCK AT THE
CONVERSION RATIO.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table lists, as of December 4, 2006, the number of shares of
Common Stock beneficially owned by (i) each person or entity known to Entrust to
be the beneficial owner of more than 5% of the outstanding common stock; (ii)
each officer and director of Entrust; and (iii) all officers and directors as a
group. Information relating to beneficial ownership of Common Stock by our
principal shareholders and management is based upon information furnished by
each person using "beneficial ownership" concepts under the rules of the
Securities and Exchange Commission. Under these rules, a person is deemed to be
a beneficial owner of a security if that person has or shares voting power,
which includes the power to vote or direct the voting of the security, or
investment power, which includes the power to vote or direct the voting of the
security. The person is also deemed to be a beneficial owner of any security of
which that person has a right to acquire beneficial ownership within 60 days.
Under the Securities and Exchange Commission rules, more than one person may be
deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may not have
any pecuniary beneficial interest.
The percentages below are calculated based on 2,057,582 shares of Common Stock
issued and outstanding.
Percentage of
Name and Address of Number of Shares Shares
Beneficial Owner Beneficially Owned (1) Beneficially Owned
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R&R Biotech Partners, LLC
1270 Avenue of the Americas 16th Floor
New York, NY 10020
Attention: Thomas Pinou, CFO 1,414,286 68.7%
Moyo Partners, LLC (2)
c/o Arnold Kling, Esq.
712 Fifth Ave, 11th Floor
New York, NY 10019 353,571 17.2%
Arnold Kling(3)
712 Fifth Ave, 11th Floor
New York, NY 10019 69,643 3.4%
Kirk Warshaw(4)
47 School Avenue
Chatam, New Jersey 07928 69,643 3.4%
Officers and Directors as a 492,857 24.0%
group (2 persons)
(1) Unless otherwise indicated, Entrust believes that all persons named in
the table have sole voting and investment power with respect to all
shares of the Common Stock beneficially owned by them. A person is
deemed to be the beneficial owner of securities which may be acquired by
such person within 60 days from the date indicated above upon the
exercise of options, warrants or convertible securities. Each beneficial
owner's percentage ownership is determined by assuming that options,
warrants or convertible securities that are held by such person (but not
those held by any other person) and which are exercisable within 60 days
of the date indicated above, have been exercised.
(2) Arnold Kling controls Moyo Partners, LLC and therefore is the beneficial
owner of the shares held by this entity.
(3) Arnold Kling is the President and sole director of Entrust.
(4) Kirk Warshaw is the Chief Financial Officer and Secretary of Entrust.
INTEREST OF CERTAIN PERSONS IN OR IN OPPOSITION TO MATTERS TO BE ACTED UPON.
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, in the Migratory Merger proposal which is not
shared by all other holders of Common Stock. See "Voting Securities And
Principal Holders Thereof," above.
OTHER MATTERS
The Board knows of no other matters other than those described in this
Information Statement which have been approved or considered by the holders of a
majority of the shares of Entrust's voting stock.
IF YOU HAVE ANY QUESTIONS REGARDING THIS INFORMATION STATEMENT, PLEASE CONTACT:
Kirk Warshaw
47 School Avenue
Chatham, New Jersey 07928
(973) 635-4047
BY ORDER OF THE BOARD OF DIRECTORS OF ENTRUST FINANCIAL SERVICES, INC.
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
ENTRUST FINANCIAL SERVICES, INC.
The undersigned, being a natural person for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and known, identified and
referred to as the "Delaware General Corporation Law"), hereby certifies that:
FIRST: The name of this corporation is Entrust Financial Services, Inc.
(hereinafter called the "Corporation")
SECOND: The Corporation's Registered Office in the State of Delaware is
to be located at 160 Greentree Drive, Suite 101, in the City of Dover, County of
Kent, 19904. The Registered Agent in charge thereof is National Registered
Agents, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a Corporation may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares which the Corporation shall have the
authority to issue is 101,000,000 shares, of which 100,000,000 shares shall be
common stock, with a par value of $.001 per share (the "Common Stock") and
1,000,000 shares shall be preferred stock, with a par value of $.001 per share
(the "Preferred Stock").
The Preferred Stock may be issued from time to time in one or more
series with such designations, preferences and relative participating, optional
or other special rights and qualifications, limitations or restrictions thereof,
as shall be stated in the resolutions adopted by the Corporation's Board of
Directors (the "Board") providing for the issuance of such Preferred Stock or
series thereof; and the Board is hereby vested with authority to fix such
designations, preferences and relative participating, optional or other special
rights or qualifications, limitations, or restrictions for each series,
including, but not by way of limitation, the power to fix the redemption and
liquidation preferences, the rate of dividends payable and the time for and the
priority of payment thereof and to determine whether such dividends shall be
cumulative or not and to provide for and fix the terms of conversion of such
Preferred Stock or any series thereof into Common Stock of the Corporation and
fix the voting Power, if any, of shares of Preferred Stock or any series
thereof.
FIFTH: No holder of any of the shares of the Corporation shall, as such
holder, have any right to purchase or subscribe for any shares of any class
which the Corporation may issue or sell, whether or not such shares are
exchangeable for any shares of the Corporation of any other class or classes,
and whether such shares are issued out of the number of shares authorized by the
Certificate of Incorporation of the Corporation as originally filed, or by any
amendment thereof, or out of shares of the Corporation acquired by it after the
issue thereof; nor shall any holder of any of the shares of the Corporation, as
such holder, have any right to purchase or subscribe for any obligations which
the Corporation may issue or sell that shall be convertible into, or
exchangeable for, any shares of the Corporation of any class or classes, or to
which shall be attached or shall appertain to any warrant or warrants or other
instrument or instruments that shall confer upon the holder thereof the right to
subscribe for, or purchase from the Corporation any shares of any class or
classes.
SIXTH: The name and mailing address of the incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
John C. Hui c/o Morse, Zelnick, Rose & Lander LLP
405 Park Avenue, Suite 1401
New York, New York 10022
SEVENTH: The duration of the Corporation shall be perpetual.
EIGHTH: When a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them or between the Corporation
and its shareholders or any class of them, a court of equity jurisdiction within
the state, on application of the Corporation or of a creditor or shareholder
thereof, or on application of a receiver appointed for the Corporation pursuant
to the provisions of Section 291 of The Delaware General Corporation Law or on
application of trustees in dissolution or of any receiver or receivers appointed
for the Corporation pursuant to provisions of Section 279 of the Delaware
General Corporation Law may order a meeting of the creditors or class of
creditors or of the shareholders or class of shareholders to be affected by the
proposed compromise or arrangement or reorganization, to be summoned in such
manner as the court directs. If a majority in number representing 3/4 in value
of the creditors or class of creditors, or of the shareholders or class of
shareholders to be affected by the proposed compromise or arrangement or a
reorganization, agree to a compromise or arrangement or a reorganization of the
Corporation as a consequence of the compromise or arrangement, the compromise or
arrangement and the reorganization, if sanctioned by the court to which the
application has been made, shall be binding on all the creditors or class of
creditors, or on all the shareholders or class of shareholders and also on the
Corporation.
NINTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the
affairs of the Corporation shall be vested in the Board. The number of directors
which shall constitute the whole Board shall be fixed by, or in the manner
provided in, the By-Laws. The phrase "whole Board" and the phrase "total number
of directors" shall be deemed to have the same meaning, to wit, the total number
of directors that the Corporation would have if there were no vacancies. No
election of directors need be by written ballot.
2. After the original or other By-Laws of the Corporation have
been adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the Delaware General Corporation Law, and after the
Corporation has received any payment for any of its stock, the power to adopt,
amend, or repeal the By-Laws of the Corporation may be exercised by the Board;
provided, however, that any provision for the classification of directors of the
Corporation for staggered terms pursuant to the provisions of subsection (d) of
Section 141 of the Delaware General Corporation Law shall be set forth in an
initial By-Law or in a By-Law adopted by the stockholders entitled to vote of
the Corporation unless provisions for such classification shall be set forth in
this Certificate of Incorporation.
3. Whenever the Corporation shall be authorized to issue only
one class of stock each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever the
Corporation shall be authorized to issue more than one class of stock no
outstanding share of any class of stock which is denied voting power under the
provisions of this Certificate of Incorporation shall entitle the holder thereof
to the right to vote at any meeting of stockholders except as the provisions of
paragraph (c)(2) of Section 242 of the Delaware General Corporation Law shall
otherwise require; provided, that no share of any such class which is otherwise
denied voting power shall entitle the
holder thereof to vote upon the increase or decrease in the number of authorized
shares of said class.
TENTH: 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 an improper
personal benefit.
ELEVENTH: (a) Right to Indemnification. Each person who was or is made
a party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
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 or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators: provided, however, that, except
as provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board. The right to indemnification conferred in this Article
ELEVENTH shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition: provided, however, that, if the Delaware General
Corporation Law requires, the payment of such expenses incurred by a director or
officer (in his or her capacity as a director or officer and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Article ELEVENTH or otherwise. The Corporation may, by action of the Board,
provide indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under
paragraph (a) of this Article ELEVENTH is not paid in full by the Corporation
within thirty days after a written claim has been received by the Corporation,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including the Board, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including the Board, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard or
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article ELEVENTH shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, provision of this Certificate of Incorporation, by-law, agreement, vote
of stockholders or disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
TWELFTH: From time to time any of the provisions of this Certificate
of Incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article TWELFTH.
Dated on this 19th day of December, 2006.
/S/ JOHN HUI
------------------------------
John Hui, Incorporator
EXHIBIT B
DISSENTERS' RIGHTS UNDER THE COLORADO BUSINESS CORPORATION ACT
PART 1
RIGHT OF DISSENT -PAYMENT FOR SHARES
7-113-101. DEFINITIONS.
For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring domestic or foreign
corporation, by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 7-113-102 and who exercises that right at the
time and in the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at the legal rate as
specified in section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the shareholder as provided in section
7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial
shareholder.
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7-113-102. RIGHT TO DISSENT.
(1) A shareholder, whether or not entitled to vote, is entitled to dissent
and obtain payment of the fair value of the shareholder's shares in the event of
any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party
if:
(I) Approval by the shareholders of that corporation is required for the
merger by section 7-111-103 or 7-111-104 or by the articles of incorporation; or
(II) The corporation is a subsidiary that is merged with its parent
corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired;
(c) Consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of the corporation for which a shareholder
vote is required under section 7-112-102 (1); and
(d) Consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of an entity controlled by the corporation
if the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to section 7-112-102 (2).
(e) Consummation of a conversion in which the corporation is the converting
entity as provided in section 7-90-206 (2).
(1.3) A shareholder is not entitled to dissent and obtain payment, under
subsection (1) of this section, of the fair value of the shares of any class or
series of shares which either were listed on a national securities exchange
registered under the federal "Securities Exchange Act of 1934", as amended, or
on the national market system of the national association of securities dealers
automated quotation system, or were held of record by more than two thousand
shareholders, at the time of:
(a) The record date fixed under section 7-107-107 to determine the
shareholders entitled to receive notice of the shareholders' meeting at which
the corporate action is submitted to a vote;
(b) The record date fixed under section 7-107-104 to determine shareholders
entitled to sign writings consenting to the corporate action; or
(c) The effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(1.8) The limitation set forth in subsection (1.3) of this section shall
not apply if the shareholder will receive for the shareholder's shares, pursuant
to the corporate action, anything except:
(a) Shares of the corporation surviving the consummation of the plan of
merger or share exchange;
(b) Shares of any other corporation which at the effective date of the plan
of merger or share exchange either will be listed on a national securities
exchange registered under the federal "Securities Exchange Act of 1934", as
amended, or on the national market system of the national association of
securities dealers automated quotation system, or will be held of record by more
than two thousand shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or cash in lieu of
fractional shares.
(2) (Deleted by amendment, L. 96, p. 1321, ss. 30, effective June 1, 1996.)
(2.5) A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's shares in the
event of a reverse split that reduces the number of shares owned by the
shareholder to a fraction of a share or to scrip if the fractional share or
scrip so created is to be acquired for cash or the scrip is to be voided under
section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair
value of the shareholder's shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
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7-113-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(1) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to the shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares
beneficially owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents
with respect to the shares held by any one or more beneficial shareholders, each
such beneficial shareholder must certify to the corporation that the beneficial
shareholder and the record shareholder or record shareholders of all shares
owned beneficially by the beneficial shareholder have asserted, or will timely
assert, dissenters' rights as to all such shares as to which there is no
limitation on the ability to exercise dissenters' rights. Any such requirement
shall be stated in the dissenters' notice given pursuant to section 7-113-203.
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PART 2
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
7-113-201. NOTICE OF DISSENTERS' RIGHTS.
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is submitted to a vote at a shareholders' meeting, the notice
of the meeting shall be given to all shareholders, whether or not entitled to
vote. The notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by a copy of this
article and the materials, if any, that, under articles 101 to 117 of this
title, are required to be given to shareholders entitled to vote on the proposed
action at the meeting. Failure to give notice as provided by this subsection (1)
shall not affect any action taken at the shareholders' meeting for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202 (1).
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, any written or oral solicitation of a shareholder to execute
a writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection (2)
shall not affect any action taken pursuant to section 7-107-104 for which the
notice was to have been given, but any shareholder who was entitled to dissent
but who was not given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the shareholder's
failure to comply with the provisions of section 7-113-202 (2).
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7-113-202. NOTICE OF INTENT TO DEMAND PAYMENT.
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is submitted to a vote at a shareholders' meeting and if
notice of dissenters' rights has been given to such shareholder in connection
with the action pursuant to section 7-113-201 (1), a shareholder who wishes to
assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written
notice of the shareholder's intention to demand payment for the shareholder's
shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104 and if notice of dissenters' rights has been given to such
shareholder in connection with the action pursuant to section 7-113-201 (2), a
shareholder who wishes to assert dissenters' rights shall not execute a writing
consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection (1)
or (2) of this section is not entitled to demand payment for the shareholder's
shares under this article.
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7-113-203. DISSENTERS' NOTICE.
(1) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized, the corporation shall give a written
dissenters' notice to all shareholders who are entitled to demand payment for
their shares under this article.
(2) The dissenters' notice required by subsection (1) of this section shall
be given no later than ten days after the effective date of the corporate action
creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the effective
date or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment demands
and the address of a place where certificates for certificated shares must be
deposited;
(c) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a
dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment demand
and certificates for certificated shares, which date shall not be less than
thirty days after the date the notice required by subsection (1) of this section
is given;
(f) State the requirement contemplated in section 7-113-103 (3), if such
requirement is imposed; and
(g) Be accompanied by a copy of this article.
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7-113-204. PROCEDURE TO DEMAND PAYMENT.
(1) A shareholder who is given a dissenters' notice pursuant to section
7-113-203 and who wishes to assert dissenters' rights shall, in accordance with
the terms of the dissenters' notice:
(a) Cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in section 7-113-203 (2) (d), duly completed,
or may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated shares.
(2) A shareholder who demands payment in accordance with subsection (1) of
this section retains all rights of a shareholder, except the right to transfer
the shares, until the effective date of the proposed corporate action giving
rise to the shareholder's exercise of dissenters' rights and has only the right
to receive payment for the shares after the effective date of such corporate
action.
(3) Except as provided in section 7-113-207 or 7-113-209 (1) (b), the
demand for payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the shareholder's
share certificates as required by the date or dates set in the dissenters'
notice is not entitled to payment for the shares under this article.
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7-113-205. UNCERTIFICATED SHARES.
(1) Upon receipt of a demand for payment under section 7-113-204 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
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7-113-206. PAYMENT.
(1) Except as provided in section 7-113-208, upon the effective date of the
corporate action creating dissenters' rights under section 7-113-102 or upon
receipt of a payment demand pursuant to section 7-113-204, whichever is later,
the corporation shall pay each dissenter who complied with section 7-113-204, at
the address stated in the payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, the
amount the corporation estimates to be the fair value of the dissenter's shares,
plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall be
accompanied by:
(a) The corporation's balance sheet as of the end of its most recent fiscal
year or, if that is not available, the corporation's balance sheet as of the end
of a fiscal year ending not more than sixteen months before the date of payment,
an income statement for that year, and, if the corporation customarily provides
such statements to shareholders, a statement of changes in shareholders' equity
for that year and a statement of cash flow for that year, which balance sheet
and statements shall have been audited if the corporation customarily provides
audited financial statements to shareholders, as well as the latest available
financial statements, if any, for the interim or full-year period, which
financial statements need not be audited;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under section
7-113-209; and
(e) A copy of this article.
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7-113-207. FAILURE TO TAKE ACTION.
(1) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 does not occur within sixty days after the date
set by the corporation by which the corporation must receive the payment demand
as provided in section 7-113-203, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, then the corporation shall send a new dissenters'
notice, as provided in section 7-113-203, and the provisions of sections
7-113-204 to 7-113-209 shall again be applicable.
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7-113-208. SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER ANNOUNCEMENT OF
PROPOSED CORPORATE ACTION.
(1) The corporation may, in or with the dissenters' notice given pursuant
to section 7-113-203, state the date of the first announcement to news media or
to shareholders of the terms of the proposed corporate action creating
dissenters' rights under section 7-113-102 and state that the dissenter shall
certify in writing, in or with the dissenter's payment demand under section
7-113-204, whether or not the dissenter (or the person on whose behalf
dissenters' rights are asserted) acquired beneficial ownership of the shares
before that date. With respect to any dissenter who does not so certify in
writing, in or with the payment demand, that the dissenter or the person on
whose behalf the dissenter asserts dissenters' rights acquired beneficial
ownership of the shares before such date, the corporation may, in lieu of making
the payment provided in section 7-113-206, offer to make such payment if the
dissenter agrees to accept it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall
include or be accompanied by the information required by section 7-113-206 (2).
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7-113-209. PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT OR OFFER.
(1) A dissenter may give notice to the corporation in writing of the
dissenter's estimate of the fair value of the dissenter's shares and of the
amount of interest due and may demand payment of such estimate, less any payment
made under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section 7-113-206 or
offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206 within
sixty days after the date set by the corporation by which the corporation must
receive the payment demand; or
(c) The corporation does not return the deposited certificates or release
the transfer restrictions imposed on uncertificated shares as required by
section 7-113-207 (1).
(2) A dissenter waives the right to demand payment under this section
unless the dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the dissenter's shares.
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PART 3
JUDICIAL APPRAISAL OF SHARES
7-113-301. COURT ACTION.
(1) If a demand for payment under section 7-113-209 remains unresolved, the
corporation may, within sixty days after receiving the payment demand, commence
a proceeding and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the sixty-day period, it shall pay to each dissenter whose demand remains
unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in subsection
(1) of this section in the district court for the county in this state in which
the street address of the corporation's principal office is located, or, if the
corporation has no principal office in this state, in the district court for the
county in which the street address of its registered agent is located, or, if
the corporation has no registered agent, in the district court for the city and
county of Denver. If the corporation is a foreign corporation without a
registered agent, it shall commence the proceeding in the county in which the
domestic corporation merged into, or whose shares were acquired by, the foreign
corporation would have commenced the action if that corporation were subject to
the first sentence of this subsection (2).
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unresolved parties to the proceeding commenced
under subsection (2) of this section as in an action against their shares, and
all parties shall be served with a copy of the petition. Service on each
dissenter shall be by registered or certified mail, to the address stated in
such dissenter's payment demand, or if no such address is stated in the payment
demand, at the address shown on the corporation's current record of shareholders
for the record shareholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to such order. The parties to
the proceeding are entitled to the same discovery rights as parties in other
civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
subsection (2) of this section is entitled to judgment for the amount, if any,
by which the court finds the fair value of the dissenter's shares, plus
interest, exceeds the amount paid by the corporation, or for the fair value,
plus interest, of the dissenter's shares for which the corporation elected to
withhold payment under section 7-113-208.
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7-113-302. COURT COSTS AND COUNSEL FEES.
(1) The court in an appraisal proceeding commenced under section 7-113-301
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation; except that the
court may assess costs against all or some of the dissenters, in amounts the
court finds equitable, to the extent the court finds the dissenters acted
arbitrarily, vexatiously, or not in good faith in demanding payment under
section 7-113-209.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if the court
finds the corporation did not substantially comply with part 2 of this article;
or
(b) Against either the corporation or one or more dissenters, in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to said counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefited.
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