SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(Amendment No. ___)
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Information Statement
Transform Pack International, Inc.
Commission File Number: 000-31727
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[X] No fee required
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1) Title of each class of securities to which transaction
applies:_________________________________
2) Aggregate number of securities to which transaction
applies:_____________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined) :
_______ 4) Proposed maximum aggregate value of transaction:_____ 5)
Total fee paid:_________________________________
[ ] Fee paid previously with preliminary materials.
[ ] 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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TRANSFORM PACK INTERNATIONAL, INC.
12230 Forest Hill Blvd., Suite 157
Wellington, FL 33414
SPECIAL MEETING OF STOCKHOLDERS
_____________, 2003
NOTICE OF MEETING AND INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
Notice is hereby given that a Special Meeting of the stockholders of
Transform Pack International, Inc. has been called by the Board of Directors and
will be held at 9:30 a.m. Eastern time on __________, 2003, at 12230 Forest Hill
Blvd., Suite 157, Wellington, Florida. The Special Meeting is called to obtain
stockholder approval of
(1) The change of the state of incorporation of Transform Pack from
Minnesota to Nevada through a merger with and into The Quantum Group,
Inc., a Nevada company formed for that purpose, and through the merger
effect a 1-for-3 reverse split in the outstanding common stock of
Transform Pack; and
(2) The 2003 Incentive Equity & Option Plan adopted by the Board of
Directors of Transform Pack on October 2, 2003.
This Information Statement is being disseminated to stockholders of Transform
Pack by authority of the Board of Directors on or about ___________, 2003.
OUTSTANDING SHARES AND VOTING RIGHTS
Record date. Stockholders of record at the close of business on
____________, 2003 are entitled to notice of and to vote at the Special Meeting
or any adjournment thereof.
Shares outstanding. As of _____________, 2003 a total of 32,460,957 shares
of our common stock were outstanding and entitled to vote at the Special
Meeting. The common stock is the only class of stock entitled to notice of and
to vote at the Special Meeting.
Voting rights and procedures. Each outstanding share of common stock is
entitled to one vote on all matters submitted to a vote of stockholders. The
stockholders of Transform Pack have the right to dissent to the proposed merger
of Transform Pack with Quantum HIPPA to effect a change in Transform Pack's
state of incorporation to Nevada, and demand payment of the fair value of their
shares, which is described in more detail below under the caption "Proposal 1.
Reincorporation in Nevada."
Our Bylaws and Minnesota law require the presence, in person or by proxy,
of a majority of the outstanding shares of Common Stock entitled to vote to
constitute a quorum to convene the Special Meeting. Our president, who holds a
majority of our outstanding shares of common stock, intends to attend the
meeting and vote for the proposal to change our state of incorporation to
Nevada.
PROPOSAL 1. REINCORPORATION IN NEVADA
The Board of Directors of Transform Pack has approved a proposal to change
Transform Pack's state of incorporation from Minnesota to Nevada. Transform Pack
was originally formed as a Minnesota corporation in February 1975 under the name
Automated Multiple Systems, Inc., subsequently changed its name to Stylus, Inc.,
and then changed its name to Cybernetics, Inc. in December 1997. Throughout the
early years of the corporation, its business and management were located in
Minnesota. However, since 2000 the business and management of Transform Pack
have been located in Moncton New Brunswick and now in Wellington, Florida. Since
Transform Pack no longer has any business or management connection with the
state of Minnesota, the Board of Directors determined that the corporation could
benefit from changing its domicile to a state such as Nevada.
The Board of Directors believes that Nevada encourages companies to
incorporate in that state by adopting comprehensive, modern, and flexible
corporate laws, which are periodically updated and revised to meet changing
business needs. As a result, many corporations have initially chosen Nevada for
their domicile or have subsequently reincorporated in Nevada in a manner similar
to that proposed by us. Consequently, we believe the corporate laws of Nevada
may be more familiar to persons that we deal with in pursuit of our business,
which could facilitate the development of our business.
The following discussion summarizes certain aspects of the proposed
reincorporation of Transform Pack in Nevada. Upon approval by the stockholders,
the proposed reincorporation would be effected by merging Transform Pack into
The Quantum Group, Inc., which we incorporated under the laws of Nevada for the
purpose of effecting the proposed merger. The merger will be accomplished
pursuant to the terms of the Plan of Merger between Transform Pack and Quantum
in substantially the form attached hereto as Appendix A. At the time the merger
is effective the corporation that was Transform Pack will become Quantum and
will be governed by the Nevada Revised Statutes and by the new Articles of
Incorporation attached hereto as Appendix B and the new Bylaws attached hereto
as Appendix C.
Upon effectiveness of the merger, each three shares of common stock of
Transform Pack outstanding will automatically be converted into one share of
common stock of Quantum and stockholders of Transform Pack will automatically
become stockholders of Quantum. Each certificate for the common stock of
Transform Pack outstanding prior to the merger will be deemed to represent
common stock of Quantum after the merger in an amount equal to one-third the
number of shares represented by the certificate prior to the merger. IT WILL NOT
BE NECESSARY FOR STOCKHOLDERS TO EXCHANGE THEIR TRANSFORM PACK STOCK
CERTIFICATES, ALTHOUGH STOCKHOLDERS MAY EXCHANGE THEIR CERTIFICATES IF THEY
WISH.
Under Minnesota law, the affirmative vote of a majority of the outstanding
shares is required for approval of the proposed merger and reincorporation. Noel
J. Guillama, our president, holds a majority of our outstanding common stock and
intends to vote for the merger and reincorporation, so its approval is assured.
We expect that the reincorporation will be completed as soon after the Special
Meeting as practicable. However, the proposed merger and reincorporation may be
abandoned or the Merger Agreement may be amended (with certain exceptions),
either before or after stockholder approval has been obtained, if in the opinion
of the Board of Directors, circumstances arise that make such action advisable.
Certain consequences of the merger
In connection with the merger, Transform Pack's corporate name will be
changed to The Quantum Group, Inc. The merger will not result in any other
change in the name, business, management, assets, liabilities or net worth of
Transform Pack. We will continue to maintain our executive offices in
Wellington, Florida. The consolidated financial condition and results of
operations of the Quantum immediately after consummation of the merger will be
the same as those of Transform Pack immediately prior to the consummation of the
merger. Through the merger each stockholder will receive one share of Quantum
for each three shares of Transform Pack now held. Fractional shares that would
be issued as a result of this exchange will be rounded up to the nearest whole
share. Consequently, the 32,460,957 shares of Transform Pack common stock issued
and outstanding prior to the merger will be exchanged for approximately
10,820,319 shares of Quantum common stock after the merger.
Consummation of the merger is subject to stockholder approval, which is
assured because, Noel J. Guillama, an officer, director, and
majority-controlling stockholder, intends to vote for the merger. Upon
satisfaction of that condition, the merger will be consummated as follows:
Effective Date. The merger will take effect at the later of the date on
which articles of merger are filed with the Secretary of State of Nevada and
Secretary of State of Minnesota, which we believe will be no later than five
business days following the date of the Special Meeting (the "Effective Date").
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On the Effective Date of the merger, the separate corporate existence of
Transform Pack will cease, and stockholders of Transform Pack will become
stockholders of the Quantum.
Management after the merger. Upon effectiveness of the merger, the Board of
Directors of Quantum will consist of those persons who are serving as directors
of Transform Pack immediately prior to the merger, which are the same persons.
Such persons and their respective terms of office are set forth below under the
caption "Management." The directors will continue to hold office as directors of
Quantum for the same term for which they would otherwise serve as directors of
Transform Pack. The individuals serving as executive officers of Transform Pack
immediately prior to the merger will serve as executive officers of Quantum upon
the effectiveness of the merger.
Capitalization of Quantum; stock certificates. The authorized number of
shares of common stock of Quantum will be 170,000,000, $0.001 par value, a
decrease in par value from the current $0.004 par value of Transform Pack's
40,000,000 authorized shares of common stock. Quantum will also have 30,000,000
shares, $0.001 par value, of authorized but unissued preferred stock, a decrease
in par value from the current $0.01 par value of Transform Pack's 5,000,000
authorized shares of preferred stock.
In the merger, the issued and outstanding shares of Transform Pack common
stock will be exchanged for Quantum common stock at the rate of three shares for
one share without any action on the part of the holder thereof. All shares of
Quantum common stock to be issued in the merger will be fully paid and
non-assessable. As holders of stock in a Nevada corporation, Quantum
stockholders will have the rights provided by the Nevada Revised Statutes
governing corporations in that state and the Articles of Incorporation and
Bylaws of Quantum.
Each outstanding certificate representing shares of Transform Pack common
stock will represent one-third the number of shares of Quantum common stock
until submitted for transfer to Quantum. IT WILL NOT BE NECESSARY FOR
STOCKHOLDERS TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK
CERTIFICATES OF QUANTUM.
Transform Pack Warrants. Transform Pack has outstanding warrants to
purchase shares of its common stock. Each warrant to purchase shares of common
stock outstanding immediately prior to the merger will be converted into a
warrant to purchase one-third the number of shares of Quantum at an exercise
price that is three times the original exercise price upon the same terms and
conditions as in effect immediately prior to merger.
Indebtedness of Transform Pack. All indebtedness of Transform Pack
outstanding on the Effective Date will be assumed by Quantum in connection with
the merger. To Transform Pack's knowledge, no indebtedness of Transform Pack
will be accelerated as a result of the proposed transaction.
Trading of Quantum common stock. It is anticipated that quotations for
Quantum common stock will be published on the OTC Bulletin Board without
interruption, and that the over-the-counter market will consider the delivery of
existing stock certificates of Transform Pack as constituting "good delivery" of
shares of Quantum in transactions subsequent to the merger.
Amendment, deferral or termination of the Merger Agreement. The Merger
Agreement provides that the Boards of Directors of Transform Pack may amend the
Merger Agreement prior to or after approval of the merger by the stockholders of
Transform Pack but not later than the Effective Date; provided that no such
amendment may be made that is not approved by such stockholders if it would
affect the principal terms of the Merger Agreement.
The Merger Agreement also provides that the Board of Directors of Transform
Pack may terminate and abandon the merger or defer its consummation for a
reasonable period, notwithstanding stockholder approval, if in the opinion of
the Board of Directors, such action would be in the best interests of Transform
Pack.
Federal income tax consequences. It is anticipated that the merger will be
treated as a tax-free reorganization under the Internal Revenue Code of 1986, as
amended. Accordingly, no gain or loss will be recognized by holders of Transform
Pack common stock or by Transform Pack or Quantum as a result of the
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consummation of the merger. Each holder of Transform Pack common stock will have
the same tax basis in Quantum common stock received pursuant to the merger as it
has in Transform Pack common stock held by it at the time of the consummation of
the merger. Each stockholder's holding period with respect to Quantum Common
Stock will include the period during which it held the corresponding Transform
Pack common stock, provided the latter is held as a capital asset at the time of
consummation of the merger. The foregoing is only a summary of the federal
income tax consequences and is not tax advice. No ruling from the Internal
Revenue Service and no opinion of counsel with respect to the tax consequences
of the merger have been or will be sought by Transform Pack.
Differences between the Articles of Transform Pack and Quantum
The legal effect of the provisions of Quantum's Articles of Incorporation
and Bylaws will not be materially different from the legal effect of the
provisions of Transform Pack's Articles of Incorporation and Bylaws, except for
the limited items discussed in the next paragraph. There are, however, certain
changes dictated by the application of the Nevada Revised Statutes that are
discussed below.
Application of business combination and control share acquisition
provisions
Both the Nevada and Minnesota corporate statutes contain provisions
restricting the ability of a corporation to engage in business combinations with
an interested stockholder. Under the Nevada GCL, except under certain
circumstances, a corporation is not permitted to engage in a business
combination with any interested stockholder following the date such stockholder
became an interested stockholder for a period of three years in Nevada and four
years in Minnesota. In both states an interested stockholder is a person who
owns ten percent or more of the outstanding shares of voting stock. Both the
Nevada and Minnesota corporate statutes disallow the exercise of voting rights
with respect to control shares of an issuing corporation held by an acquiring
person, unless such voting rights are conferred by a majority vote of the
disinterested stockholders. Control shares are the voting shares of an issuing
corporation acquired in connection with the acquisition of a controlling
interest, which is defined in terms of threshold levels of voting share
ownership. Both Nevada and Minnesota permit a corporation to opt out of the
application of these business combinations and control share acquisition
provisions by so providing in the articles of incorporation or bylaws.
In the view of the Board of directors, business combination and control
share acquisition restrictions have a chilling effect on potential take-overs or
acquisitions, whether friendly or unfriendly, which can impair the perceived
value of the corporation that could accrue to the benefit of the stockholders.
For this reason, the Articles of Incorporation for Quantum contain a provision
opting out of the application of the Nevada business combination and control
share acquisition provisions. The Articles of Incorporation of Transform Pack do
not contain a similar opt out provision with respect to Minnesota Law.
Removal of a director by the Board
The Articles of Incorporation of Quantum provide that a director may be
removed by the remaining directors for cause. There is no similar provision in
the Articles of Incorporation of Transform Pack. The Board of Directors believes
this provision will provide to it additional flexibility and authority to act
for the benefit of stockholders on matters involving director misconduct.
Differences between the corporation laws of Nevada and Minnesota
In many instances, the Nevada corporate statutes are similar to the
Minnesota statutes. Although it is impractical to note all of the remaining
differences between the corporation statutes of Nevada and Minnesota, the most
significant differences, in the judgment of management, are summarized below.
Removal of directors by stockholders. Under Nevada law any one or all of
the directors of a corporation may be removed with or without cause by the
holders of not less than two-thirds of the voting power of a corporation's
stock. Under Minnesota law any one or all of the directors of a corporation may
be removed with or without cause by the holders of a majority of shares then
entitled to vote in an election of directors.
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Indemnification of officers and directors and advancement of expenses.
Nevada and Minnesota have very similar provisions regarding indemnification by a
corporation of its officers, directors, employees and agents, except Minnesota
provides for an additional condition to indemnification that the person seeking
indemnification not have received any improper personal benefit.
Nevada and Minnesota law differ in their provisions for advancement of
expenses incurred by an officer or director in defending a civil or criminal
action, suit or proceeding. The Nevada statutes provide that expenses incurred
by an officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation in
advance of the final disposition of the action, suit or proceeding upon receipt
of an undertaking by or an behalf of the director or officer to repay the amount
if it is ultimately determined that he is not entitled to be indemnified by the
corporation. Thus, a corporation has the discretion to decide whether or not to
advance expenses. Under Minnesota law, a corporation must pay expenses in
advance of the final disposition of the action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined that he is not entitled to be indemnified by the
corporations and the corporation makes a specific determination that, under the
facts then known, indemnification would not be precluded under the statute.
Thus, a Minnesota corporation may have no discretion to decide whether or not to
advance expenses.
Limitation on personal liability of officers and directors. Nevada law
provides that an officer or director is not liable to a corporation or its
stockholders for damages for any act or failure to act unless it is proven the
officer or director breached a fiduciary duty and the breach involves
intentional misconduct fraud, or a knowing violation of law. Under Minnesota law
the limitation of this type of liability is extended to directors, not officers,
and is permissive rather than mandatory since it must be adopted in the articles
of incorporation. The Articles of Incorporation of Transform Pack do contain
this limitation of liability for directors.
Rights of Dissenting Stockholders
Stockholders who oppose the proposed merger will have the right to receive
payment for the fair value of their shares under Sections 301A.471 and 302A.473
of the Minnesota Business Corporation Act, which are attached under Appendix D
to this Information Statement. Under the Minnesota statutes such dissenters'
rights will be available only to stockholders of Transform Pack who refrain from
voting in favor of the merger and notify Transform Pack in writing prior to the
vote on the merger of their intention to demand payment for their shares if the
merger is effectuated (a negative vote will not itself constitute such notice).
Stockholders who hold their shares beneficially, and not of record, may assert
their dissenter's rights only by submitting with their written notice of dissent
the written consent of the stockholder of record for their shares, and must
exercise their dissenter's rights for all the shares of which they are
beneficial owners.
If the proposed merger is approved by the required vote at the Special
Meeting, Transform Pack is required to mail a notice to all stockholders who
gave due notice of their intention to demand payment and who refrained from
voting in favor of the proposed action. The notice shall state where and when a
demand for payment shall be sent and certificates shall be deposited in order to
obtain payment, include a form for demanding payment which includes a request
for certification of the date on which the stockholder or the person on whose
behalf the stockholder dissents acquired beneficial ownership of the shares, and
be accompanied by a copy of Sections 301A.471 and 302A.473 of the Minnesota
Business Corporation statutes. The dissenting stockholders must make the demand
for payment and deposit the shares to be exchanged for payment within 30 days
following the date of the notice from Transform Pack.
Within 30 days following the date on which demand for payment is received
from dissenting stockholders who have deposited their certificates with
Transform Pack, all in accordance with the notice of Transform Pack, Transform
Pack shall remit to the dissenting stockholders the amount which Transform Pack
estimates to be the fair value of the shares, with interest. The remittance
shall be accompanied by: (1) Transform Pack's closing balance sheet and
statements of income and stockholders' equity for a fiscal year ending not more
than 16 months before the date of remittance, together with the latest available
interim financial statements; (2) a statement of Transform Pack's estimate of
the fair value of the shares; (3) an explanation of how the interest was
calculated; (4) a statement of the dissenters' right to demand payment; and (5)
a copy of Sections 301A.471 and 302A.473 of the Minnesota statutes. Transform
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Pack may elect, however, to withhold remittance from any dissenter with respect
to shares of which the dissenter or the person on whose behalf the dissenter
acts was not the beneficial owner on the date of the first announcement to the
news media or to stockholders of the terms of the proposed merger.
If the dissenting stockholders believe that the amount remitted is less
than the fair value of their shares, they may, within 30 days after the date of
mailing of Transform Pack's remittance, mail to Transform Pack their own
estimate of the value of the deficiency. If a dissenting stockholder fails to do
so, he shall be entitled to no more than the amount remitted. If a demand for
payment remains unsettled for 60 days after such demand is made by a dissenting
stockholder, Transform Pack shall file in an appropriate court a petition
requesting that the fair value of the shares and interest thereon be determined
by the court. All dissenters are entitled to judgment for the amount by which
the fair value of their shares is found to exceed the amount previously
remitted, with interest. If Transform Pack fails to file a petition, each
dissenter who has made a demand and who has not already settled his claim
against Transform Pack shall be paid by Transform Pack the amount demanded by
him with interest and may sue thereafter in an appropriate court.
The Plan of Merger provides that the Board of Directors may, in its
discretion, terminate the merger notwithstanding stockholder approval. This
provision enables the Board to evaluate the potential burden to Transform Pack
arising from the exercise of dissenter's rights, and abandon the merger if the
burden to Transform Pack is too great in the opinion of the Board.
Vote and Recommendation
The affirmative vote of a majority of Transform Pack's issued and
outstanding common stock is required for approval of the merger and
reincorporation. A vote for approval of the reincorporation will constitute
specific approval of the Merger Agreement and all other transactions and
proceedings related to the reincorporation. The Board of Directors recommends
approval of the reincorporation. Noel J. Guillama, our president, holds a
majority of our outstanding common stock and intends to vote for the merger and
reincorporation, so its approval is assured.
The Board of Directors Recommends a Vote "For" the Reincorporation.
PROPOSAL 2. APPROVAL OF 2003 INCENTIVE EQUITY & OPTION PLAN
Our Board of Directors has adopted the 2003 Incentive Equity & Option Plan
(the "2003 Plan") subject to stockholder approval. The 2003 Plan is adopted by
Transform Pack and will automatically become the 2003 Plan for Quantum upon
reincorporation in Nevada. The 2003 Plan is not qualified under the provisions
of Section 401(a) of the Internal Revenue Code, nor is it subject to any of the
provisions of the Employee Retirement Income Security Act of 1974, as amended.
The 2003 Plan is attached hereto as Appendix E.
Plan Description
The purpose of the 2003 Plan is to advance Transform Pack's interests by
providing an additional incentive to attract and retain qualified and competent
persons as employees, upon whose efforts and judgment our success is largely
dependent, through the encouragement of stock ownership by these persons.
The 2003 Plan is effective as of October 2, 2003, and unless sooner
terminated by our Board of Directors in accordance with the terms of the 2003
Plan, will terminate on October 1, 2013. Employees, affiliates and/or
consultants of Transform Pack and its subsidiaries, who are selected by the
Stock Option committee, or if there is no Stock Option committee by the Board of
Directors, may participate in the 2003 Plan.
The 2003 Plan provides for the issuance of incentive stock options
("Incentive Stock Options"), nonqualified Stock Options ("Nonqualified Stock
Options") and restricted stock. An Incentive Stock Option is an option to
purchase common stock that meets the definition of "incentive stock option" set
forth in Section 422 of the Internal Revenue Code. A Nonqualified Stock Option
is an option to purchase common stock that meets certain requirements in the
Plan but does not meet the definition of an "incentive stock option."
Nonqualified Stock Options and Incentive Stock Options are sometimes referred to
herein as "Options."
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Up to 5,000,000 shares of common stock may be issued pursuant to Options or
restricted stock granted under the 2003 Plan. If any Option granted pursuant to
the 2003 Plan terminates, expires, or is canceled or surrendered, in whole or in
part, shares subject to the unexercised portion may again be issued pursuant to
the exercise of Options granted under the 2003 Plan.
The 2003 Plan is administered by a committee of two or more directors (the
"Committee") or, if a Committee is not designated by the Board of Directors, by
the Board of Directors as a whole. The Committee has the right to determine,
among other things, the persons to whom Options are granted, the number of
shares of common stock subject to Options, the exercise price of Options and the
term thereof.
All of our employees, including officers and directors and consultants, are
eligible to receive grants under the 2003 Plan; however, no Incentive Stock
Options may be granted to a consultant who is not also an employee of Transform
Pack or any of our subsidiaries. Upon receiving grants of Options, each holder
of the Options (the "Optionee") will enter into an option agreement that
contains the terms and conditions deemed necessary by the Committee.
Terms and Conditions Of Options
Option Price
For any Option granted under the 2003 Plan, the option price per share of
common stock may be any price not less than par value per share as determined by
the Committee; however, the option price per share of any Incentive Stock Option
may not be less than the Fair Market Value of the common stock on the date such
Incentive Stock Option is granted. Under the 2003 Plan, the "Fair Market Value"
is the closing price of shares on the business day immediately preceding the
date of grant; however, if the shares are not publicly traded, then the Fair
Market Value will be as the Committee will in its sole and absolute discretion
determine in a fair and uniform manner.
Exercise of Options
Each Option is exercisable in such amounts, at such intervals and upon such
terms as the Committee may determine. In no event may an Option be exercisable
after ten years from the date of grant. Unless otherwise provided in an Option,
each outstanding Option may, in the sole discretion of the Committee, become
immediately fully exercisable (i) if there occurs any transaction (which will
include a series of transactions occurring within 60 days or occurring pursuant
to a plan), that has the result that our shareholders immediately before such
transaction cease to own at least 51 percent of our voting stock or of any
entity that results from our participation in a reorganization, consolidation,
transaction, liquidation or any other form of corporate transaction; (ii) if our
shareholders approve a plan of consolidation, reorganization, liquidation or
dissolution in which we do not survive; or (iii) if our shareholders approve a
plan for the sale, lease, exchange or other disposition of all or substantially
all our property and assets. The Committee may in its sole discretion accelerate
the date on which any Option may be exercised and may accelerate the vesting of
any shares subject to any Option or previously acquired by the exercise of any
Option. Options granted to the officers and directors under the 2003 Plan cannot
be exercised unless otherwise expressly provided in any Option, until six months
following the date of grant and if and only if the Optionee is in the employ of
Transform Pack on such date.
Unless further limited by the Committee in any Option, shares of common
stock purchased upon the exercise of Options must be paid for in cash, by
certified or official bank check, by money order, with already owned shares of
common stock, or a combination of the above. The Committee, in its sole
discretion, may accept a personal check in full or partial payment.
Nontransferability
Options granted under the 2003 Plan are not transferable by an Optionee
other than to a family member or by will or the laws of descent and
distribution, and Options are exercisable during an Optionee's lifetime only by
the Optionee.
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Termination of Options
The expiration date of an Option is determined by the Committee at the time
of the grant and is set forth in the applicable Stock Option Agreement. In no
event may an Option be exercisable after ten years from the date it is granted.
The 2003 P1an provides that if an Optionee's employment is terminated for
any reason other than for cause, mental or physical disability or death, then
the unexercised portion of the Optionee's Options will terminate three months
after such termination. If an Optionee's employment is terminated for cause, the
unexercised portion of the Optionee's Options will terminate immediately upon
this termination. If an Optionee's employment is terminated by reason of the
Optionee's mental or physical disability, the unexercised portion of the
Optionee's Options will terminate 12 months after such termination. If an
Optionee's employment is terminated by reason of the Optionee's death, the
unexercised portion of the Optionee's Options will terminate 12 months after the
Optionee's death.
The Committee in its sole discretion may, by giving written notice, cancel
any Option that remains unexercised on the date of the consummation of certain
corporate transactions that would result in the Option becoming fully
exercisable. Such notice will be given a reasonable period of time prior to the
proposed date of such cancellation and may be given either before or after
shareholder approval of such corporate transaction.
Outstanding Options
As of the date of this Information Statement, no Options had been granted
pursuant to the 2003 Plan and the Board of Directors does not propose to issue
any Options at the present time.
Incentive Stock Options
Under the Internal Revenue Code an Optionee generally is not subject to
ordinary income tax upon the grant or exercise of an Incentive Stock Option.
However, an employee who exercises an Incentive Stock Option by delivering
shares of common stock previously acquired pursuant to the exercise of an
Incentive Stock Option is treated as making a Disqualifying Disposition (defined
below) of these shares if the employee delivers the shares before the expiration
of the holding period applicable to these shares. The applicable holding period
is the longer of two years from the date of grant or one year from the date of
exercise. The effect of this provision is to prevent "pyramiding" the exercise
of an Incentive Stock Option (i.e., the exercise of the Incentive Stock Option
for one share and the use of that share to make successive exercise of the
Incentive Stock Option until it is completely exercised) without the imposition
of current income tax.
The amount by which the fair market value of the shares acquired at the
time of exercise of an Incentive Stock Option exceeds the purchase price of the
shares under such Option will be treated as an adjustment to the Optionee's
alternative minimum taxable income for purposes of the alternative minimum tax.
If, however, there is a Disqualifying Disposition in the year in which the
Option is exercised, the maximum amount of the item of adjustment for such year
is the gain on the disposition of the shares. If there is Disqualifying
Disposition in a year other than the year of exercise, the dispositions will not
result in an adjustment for the other year.
If, subsequent to the exercise of an Incentive Stock Option (whether paid
for in cash or in shares), the Optionee holds the shares received upon exercise
for a period that exceeds (a) two years from the date such Incentive Stock
Option was granted or, if later, (b) one year from the date of exercise (the
"Required Holding Period"), the difference (if any) between the amount realized
from the sale of such shares and the Optionee's tax basis will be taxed as
long-term capital gain or loss. If the Optionee is subject to the alternative
minimum tax in the year of disposition, the tax basis in his or her shares will
be increased for purposes of determining his or her alternative minimum tax for
that year by the amount of the item of adjustment recognized with respect to
such shares in the year the Option was exercised.
In general, if, after exercising an Incentive Stock Option, the Optionee
disposes of the acquired shares before the end of the Required Holding Period (a
"Disqualifying Disposition"), an Optionee would be deemed to receive ordinary
8
income in the year of the Disqualifying Disposition in an amount equal to the
excess of the fair market value of the shares at the date the Incentive Stock
Option was exercised over the exercise price. If the Disqualifying Disposition
is a sale or exchange which would permit a loss to be recognized under the
Internal Revenue Code (were a loss in fact to be sustained), and the sales
proceeds are less than the fair market value of the shares on the date of
exercise, the Optionee's ordinary income would be limited to the gain (if any)
from the sale. If the amount realized upon disposition exceeds the fair market
value of the shares on the date of exercise, the excess would be treated as
short-term or long-term capital gain, depending on whether the holding period
for such shares exceeded one year.
Transform Pack is not allowed an income tax deduction for the grant or
exercise of an Incentive Stock Option or the disposition, after the Required
Holding Period, of shares acquired upon exercise. In the event of a
Disqualifying Disposition, we will be allowed to deduct an amount equal to the
ordinary income to be recognized by the Optionee, provided that such amount is
an ordinary and necessary business expense to us and is reasonable, and we
satisfy our withholding obligation for this income.
Nonqualified Stock Options
An Optionee granted a Nonqualified Stock Options under the 2003 Plan will
generally recognize, at the date of exercise of such Nonqualified Stock Options,
ordinary income equal to the difference between the exercise price and the fair
market value of the shares of common stock subject to the Nonqualified Stock
Options. This taxable ordinary income will be subject to Federal income tax
withholding. We will be allowed to deduct an amount equal to the ordinary income
to be recognized by the Optionee, provided that such amount is an ordinary and
necessary business expense to us and is reasonable, and we satisfy our
withholding obligation for this income.
Restricted Stock
Restricted stock may be granted to employees or consultants. The grant may
be subject to vesting or forfeiture conditions similar to the Options.
Additional restrictions on transfer may be imposed.
Vote and Recommendation
The affirmative vote of a majority of Transform Pack's issued and
outstanding common stock represented at the Special Meeting in person or by
proxy is required for approval of the 2003 Plan. The Board of Directors
recommends approval of the 2003 Plan. Noel J. Guillama, our president, holds a
majority of our outstanding common stock and intends to vote for approval of the
2003 Plan, so its approval is assured.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of ______________, 2003, the number and
percentage of the outstanding shares of common stock that, according to the
information supplied to Transform Pack, were beneficially owned by (i) each
person who is currently a director, (ii) each executive officer, (iii) all
current directors and executive officers as a group and (iv) each person who, to
the knowledge of Transform Pack, is the beneficial owner of more than five
percent of the outstanding common stock. The only persons who hold five percent
or more of the outstanding common stock are also officers and directors. Except
as otherwise indicated, the persons named in the table have sole voting and
dispositive power with respect to all shares beneficially owned, subject to
community property laws where applicable.
9
Common Percent
Name and Address Shares of Class (1)
---------------- ------ ------------
Noel J. Guillama (1) 27,000,000 83.2
12230 Forest Hill Blvd., Suite 157
Wellington, FL 33414
Susan D. Guillama (1) -0- -0-
12230 Forest Hill Blvd., Suite 157
Wellington, FL 33414
Marion D. Thorpe, Jr., M.D., M.P.H. -0- -0-
12230 Forest Hill Blvd., Suite 157
Wellington, FL 33414
Donald B. Cohen -0- -0-
12230 Forest Hill Blvd., Suite 157
Wellington, FL 33414
James D. Baker -0- -0-
12230 Forest Hill Blvd., Suite 157
Wellington, FL 33414
Mark Haggerty -0- -0-
12230 Forest Hill Blvd., Suite 157
Wellington, FL 33414
All Executive officers and 27,000,000 83.2
Directors as a Group (6 persons)
(1) Noel J. Guillama and Susan D. Guillama are husband and wife.
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Officers
The following table sets forth the names, ages, and positions with Buyers
United for each of the directors and officers.
Name Age Positions (1) Since
Noel J. Guillama Chairman, President, and 2003
Director
Susan D. Guillama Vice President, Secretary, and 2003
Director
Marion D. Thorpe, Jr., Vice Chairman and Director 2003
M.D., M.P.H.
Donald B. Cohen Vice President, Chief Financial 2003
Officer and Director
James D. Baker Director 2003
Mark Haggerty Director 2003
10
All directors hold office until the next annual meeting of stockholders and
until their successors are elected and qualify. Officers serve at the discretion
of our Board.
Noel J. Guillama, Chairman, President, and Director
Noel J. Guillama, has participated in 12 public companies as merchant
banker, principal shareholder, founder or strategic advisor, primarily in
healthcare, real estate and technology, collectively raising over $75 million of
capital. In addition to Quantum, Mr. Guillama is also currently a Director of
TargitInteractive, Inc (OTCBB:TGIT) of Portsmouth, New Hampshire, a leading
provider of an interactive marketing and manager of over 28 million opt-in email
addressed with $6 million in annual sales and 28 employees. Prior, Mr. Guillama
was Founder, Chairman, President and Chief Executive Officer of Metropolitan
Health Networks, Inc. of West Palm Beach, Florida, (NASDAQ:MDPA) from its
inception in January 16, 1996 to February 1, 2000. Metropolitan, at the time of
Mr. Guillama's departure, had experienced 400 percent-annualized compounded
growth, and reported revenues of $119 million with a $5 million profit in fiscal
2000. Metropolitan provides comprehensive care to over 40,000 patients on a
monthly basis and is one of the largest healthcare providers in Florida. Mr.
Guillama continues to be a material shareholder in MDPA. Mr. Guillama left
Metropolitan to develop Quantum. From 1994 to 1995, Mr. Guillama was Vice
President of Development for MedPartners, Inc. (NYSE:DRX), a Birmingham,
Alabama-based physician practice. From 1991 to 1994, he served as Director and
Vice President of Operations of Quality Care Networks, Inc., a South Florida
based comprehensive group practice with 36 physicians and seven offices. From
1980 to 1990, Mr. Guillama served as President and Chief Executive Officer of
Tektonica, Inc. At that time Tektonica was a diversified company with interests
in construction, real estate, mortgage financing, and trucking in South Florida.
Mr. Guillama remains Chairman of Tektonica to this date. Mr. Guillama holds
active licensure as a Building Contractor, Real Estate Broker, Mortgage Broker
and Insurance Broker in the State of Florida and held a NASD Series 7
registration from 1990-1995. Mr. Guillama is a member of the American College of
Health Care Executives, Medical Group Management Association. Mr. Guillama
serves a director of the Florida International University Foundation. FIU has
34,000 students, 1,100 full-time faculty, and 95,000 alumni, making it the
largest university in South Florida and placing it among the nation's 30 largest
colleges and universities.
Susan D. Guillama, Vice President, Secretary, and Director
Mrs. Guillama has over 18 years of experience in consulting, human
resources and facilities operations. Her extensive background encompasses a wide
range of businesses. Mrs. Guillama had been a consultant with Quantum from
September 2000 to April 2003, when she joined Quantum fulltime. Prior to joining
Quantum, she was with ALLTEL Information Services in early 2001 through April
2003 where she lead the human resources and training departments for a national
division focused on banking software solutions. Prior to this she had her own
consulting organization, Jacobs Consulting, which focused on employee
initiatives such as change management, outplacement and transition services,
customer service and career workshops, general employment consulting, and other
training initiatives. She consulted for such organizations as Hyatt Hotels,
NASA, Ball Metal Manufacturing, WellBro Construction, Interactive Marketing,
Coca-Cola and many others. For almost 10 years previous to this, she was the
Director for People with ServiceMaster, in which she lead human resource
departments for the HealthCare Services serving both hospitals and long-term
care facilities, and the Business & Industry Group, focused in support services
for the automotive and transportation, food processing, and manufacturing
industries. These divisions were nationwide in scope with a base of over 3,500
employees in both union and non-union environments. Mrs. Guillama is a certified
master trainer, recruiter and interviewer and holds certifications from Gallup,
London House, DDI, and is certified by the American Institute of Baking in Food
Processing, Sanitation & Hygiene. She is a member of the Greater Orlando Chamber
of Commerce, Workforce 2020 planning, the Society of Human Resource Management,
and the Palm Beach County HR Association. Mrs. Guillama earned her Bachelor's
degree in Communication from the University of South Florida, and an Associates
degree in Pre-Law. Additional professional training includes an extensive
three-year executive graduate program. Mrs. Guillama is the wife of Noel J.
Guillama.
Marion D. Thorpe, Jr., M.D., M.P.H., Vice-Chairman and Director
Dr. Thorpe has a Masters in Health Policy and Administration from Chapel
Hill School of Public Health. In addition, Dr. Thorpe received a Doctor of
11
Medicine from Chapel Hill School of Medicine. Prior to joining Quantum, Dr.
Thorpe was a founding member of the Florida Health Information Systems Council
from 1999-2002. Dr. Thorpe was also President & CEO of Medical-Net Information
Management Group (MNIMG.com). Dr. Thorpe is a legislative liaison for the
organization Kidz 2000 and Beyond and assists them in establishing state and
federal funding opportunities. Dr. Thorpe serves as an adjunct Professor for the
University of Miami School of Medicine Department of Epidemiology.
Donald B. Cohen, Vice President, Chief Financial Officer and Director
Mr. Cohen is a co-founder of Quantum. Prior to joining Quantum, he served
as Chief Financial Officer of I-Titan Communications Network, Inc. a technology
design and manufacturer from April 2001 through January 2002. He also served as
Chief Financial Officer and Director of Metropolitan Health Networks, Inc.
(NASDAQ:MDPA) from April 1996 to April 1999 and as a consultant through January
2000. Mr. Cohen was Vice President and CFO of ProSports Video Response, Inc.,
from 1989 to 1992, Vice President and CFO of BDS, Inc., from 1987 to 1989, and
Director of Finance of Tel-Plus Communication of Southern California from 1984
to 1986. From 1993 to 1995, Mr. Cohen worked for Ocwen Financial Corporation
designing and implementing a loan accounting system. Mr. Cohen has extensive
experience in information systems and start-up ventures. Mr. Cohen received a
Bachelor of Science degree from California State University in Northridge, and
was certified as a CPA in the State of California.
James D. Baker, Outside Director
Mr. Baker has many years of experience as CEO and Director of several
successful start-up companies. He has founded and operated several profitable
computer based high technology companies where he played a key role in their
launch and success. From the beginning of 2003 until the present time, Mr. Baker
has been a Director, President and CEO of Q-Net Technologies, Inc. (QNTI), a
public company created to introduce consumer technology and value added Internet
services into the Chinese market. From 2000 until 2002, Mr. Baker was the
President of TargitInteractive, Inc. a leading interactive marketing services
provider that delivers millions of e-mail messages on the Internet daily for
major clients such as General Motors, Mercedes, Warner Brothers, Kraft Foods,
Lexus, and many other advertisers. Mr. Baker currently serves as a Director of
the Company. In1997, Mr. Baker became the CEO of AegiSoft, Inc. and was
instrumental in both raising the capital and running the company from its
inception. AegiSoft was a digital rights management company that provided
software and digital content publishers the technology to rent their products,
such as software, music, movies and electronic books. In 2000, the Company was
sold to Real Networks, Inc., which was using the technology in their Music.net
initiative. In 1995, he founded RAPOR, Inc. and is currently on the Board of
Directors. RAPOR is a manufacturer of computer-controlled doors for the security
industry (www.rapor.com). RAPOR customers include IBM, Intel and the US Army.
From 1991 through 1995, he served as a founder, President and CEO of Datamed
Systems, Inc. a medical device EMG provider and rolled the company up into
Quality Care Networks, Inc. a physician practice management company. Mr. Baker
was employed from 1967 to 1981 by IBM in their MIS area and was a Project
Manager of Security Systems Development. He left IBM in 1981 to form his own
company, Computer Application Systems, Inc. (CASI), a Florida corporation that
commercialized computer-based security systems. CASI customers included IBM,
General Motors, Salomon Brothers, banks, hospitals and many Fortune 1000 firms.
CASI was number 50 in the INC. 500 list of fastest growing privately held
companies in the United States in 1987 and was then sold to Figgie International
Inc. in September 1987. Mr. Baker worked with Figgie as a Vice President of
Strategic Business Development through 1991. Mr. Baker obtained a Bachelor of
Science degree in industrial management from the University of Cincinnati and
pursued a master's degree in business administration at the University of
Michigan.
Mark Haggerty, JD, Outside Director
Mr. Haggerty is a graduate of the University of Minnesota Law School and
was in private practice as an employee, shareholder, director and youngest vice
president of the Minneapolis law firm of Smith, Juster, Feikema, Haskvitz and
Malmon from 1971 through 1985. During the early 70's he was a contract
prosecutor and then specialized in corporate, securities and medical law. From
1985 through 1987 he acted as senior vice president and counsel to the
350-person securities firm of Miller & Schroeder Financial, Inc. of Minneapolis.
From 1976 through 1987 Mr. Haggerty structured and closed over one billion
12
dollars in financings for numerous projects including medical clinics and
nursing homes through out the United States. From 1987 through 1993 Mr. Haggerty
became President of Haggerty & Associates, Inc. and consulted for private
companies and the US Agency for International Development in the US, Europe and
Africa. From 1993 to the present he has been the President of Voice & Wireless
Corporation, a fully SEC reporting public company. In 1996, Mr. Haggerty was a
co-founder of Metropolitan Health Networks, Inc. and acted as Chairman of its
advisory board. Mr. Haggerty is an elected county official having recently been
elected to his third term as Hennepin County Parks Commissioner and serves as
its Vice-Chairperson. He is a past president of the Minneapolis Chamber of
Commerce and the County Bar Association there. In addition to his being licensed
to practice law in the Minnesota and United States Supreme Courts, he also is
licensed as a series 7 and 63 securities representative from the NASD and the
SEC.
EXECUTIVE COMPENSATION
Noel J. Guillama, our sole executive officer, became an executive officer
at the end of May 2003 and has not received any direct or indirect compensation
for services rendered on behalf of Transform Pack the since that time. Transform
Pack has no agreement or understanding, express or implied, with any officer,
director, or principal stockholder, or their affiliates or associates, regarding
employment with Transform Pack or compensation for services.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 28, 2003, Transform Pack completed the acquisition of Quantum HIPAA
Consulting Group, Inc., a Florida Corporation based in Wellington, Florida.
Quantum HIPAA Consulting Group is in the business of advising the health care
industry on the implementation of regulations created to comply with the Health
Insurance Portability and Accountability Act of 1996 (HIPAA). Transform Pack
made the acquisition by issuing 27,000,000 shares of Common Stock ($0.004 par
value) to Noel J. Guillama, the sole stockholder of Quantum HIPAA Consulting
Group, in exchange for all the issued and outstanding shares of Quantum HIPAA
Consulting Group. As a result, Mr. Guillama is now the direct and beneficial
owner of approximately 83.2 percent of the issued and outstanding shares of
Transform Pack. Prior to the acquisition of Quantum HIPAA Consulting Group,
there was no affiliation or other relationship between Transform Pack and
Quantum HIPAA Consulting Group or Mr. Guillama.
OTHER MATTERS
As of the date of this Information Statement, the Board of Directors knows
of no other matters that may come before the Special Meeting.
13
Appendix A
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Merger Agreement") is made as of
October 10, 2003, by and between Transform Pack International, Inc., a Minnesota
corporation (the "Company"), and The Quantum Group, Inc., a Nevada corporation
("Quantum"). Quantum is hereinafter sometimes referred to as the "Surviving
Corporation," and together with the Company are referred to as the "Constituent
Corporations".
The authorized capital stock of the Company consists of 40,000,000 shares
of Common Stock, par value $0.004 ("Company Common Stock") of which 32,460,957
shares are issued and outstanding, and 5,000,000 shares of Preferred Stock,
$0.01 par value ("Company Preferred Stock") of which no shares are issued or
outstanding. The authorized capital stock of Quantum consists of 170,000,000
shares of Common Stock, $0.001 par value (the "Quantum Common Stock") of which
no shares are issued or outstanding, and 30,000,000 shares of Preferred Stock,
$0.001 par value (the "Quantum Preferred Stock") of which no shares are issued
or outstanding. The directors of the Constituent Corporations deem it advisable
and to the advantage of said corporations that the Company merge into Quantum
upon the terms and conditions provided herein.
NOW, THEREFORE, the parties hereby adopt the plan of reorganization
encompassed by this Merger Agreement and hereby agree that the Company shall
merge into Quantum on the following terms, conditions and other provisions:
1. Terms and Conditions.
1.1 Merger. The Company shall be merged with and into Quantum, which shall
be the surviving corporation effective at the earlier of the date when this
Merger Agreement is filed as part of the required Articles of Merger with the
Secretary of State of the States of Minnesota and Nevada (the "Effective Date").
1.2 Succession. On the Effective Date, Quantum shall succeed to all of the
rights, privileges, powers, immunities and franchises and all the property,
real, personal and mixed of the Company, without the necessity for any separate
transfer. Quantum shall thereafter be responsible and liable for all liabilities
and obligations of the Company, and neither the rights of creditors nor any
liens on the property of the Company shall be impaired by the merger.
1.3 Common Stock of the Company and Quantum. Upon the Effective Date, by
virtue of the merger and without any further action on the part of the
Constituent Corporations or their stockholders, each three shares of Company
Common Stock issued and outstanding immediately prior to the Effective Date
shall be changed and converted into and become one fully paid and non-assessable
share of Quantum Common Stock, and any fractional share resulting from such
conversion shall be rounded up to the nearest whole share.
1.4 Stock Certificates. On and after the Effective Date, all of the
outstanding certificates that prior to that time represented shares of Company
Common Stock shall be deemed for all purposes to evidence ownership of and to
represent the shares of Quantum Common Stock into which the shares of the
Company represented by such certificates have been converted as provided herein
and shall be so registered on the books and records of Quantum or its transfer
agent. The registered owner of any such outstanding stock certificate shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to Quantum or its transfer agents, have and be entitled
to exercise any voting and other rights with respect to and to receive any
dividend and other distributions upon the shares of Quantum evidenced by such
outstanding certificate as provided above.
1.5 Options and Warrants. On the Effective Date, Quantum will assume and
continue all stock option plans of the Company and any successor plan or plans,
and the unexercised portions of all warrants to buy Company Common Stock shall
become warrants for the purchase of shares of Quantum Common Stock equal to
one-third the number of shares of Company Common Stock (any right to purchase a
fractional share resulting from such conversion shall be rounded up to the
nearest whole share) and the exercise price per share of all warrants will be
increased to three times the original exercise price set forth in the warrants
to purchase Company Common Stock. There will be no other changes in the terms
14
and conditions of such warrants and effective upon the Effective Date Quantum
assumes the outstanding and unexercised portions of such warrants and the
obligations of the Company with respect thereto.
1.6 Acts, Plans, Policies, Agreements, Etc. All corporate acts, plans,
policies, agreements, arrangements, approvals and authorizations of the Company,
its stockholders, Board of Directors and committees thereof, officers and agents
which were valid and effective immediately prior to the Effective Date, shall be
taken for all purposes as the acts, plans, policies, agreements, arrangements,
approvals and authorizations of Quantum and shall be as effective and binding
thereon as the same were with respect to the Company.
2. Charter Documents, Directors and Officers
2.1 Articles of Incorporation and By-Laws. The Articles of Incorporation
and Bylaws of Quantum as in effect immediately prior to the Effective Date shall
remain the Articles of Incorporation and Bylaws of Quantum after the Effective
Date.
2.2 Directors and Officers. On the Effective Date, the Board of Directors
of Quantum will consist of the members of the Board of Directors of the Company
immediately prior to the Merger. The directors will continue to hold office as
directors of Quantum for the same term for which they would otherwise serve as
directors of the Company. The individuals serving as executive officers of the
Company immediately prior to the Merger will serve as executive officers of
Quantum upon the effectiveness of the Merger.
3. Miscellaneous
3.1 Further Assurances. From time to time, and when required by Quantum or
by its successors and assigns, there shall be executed and delivered on behalf
of the Company such deeds and other instruments, and there shall be taken or
caused to be taken by it such further and other action, as shall be appropriate
and necessary in order to vest or perfect, or to confirm of record or otherwise,
in Quantum the title to and possession of all the property, interests, assets,
rights, privileges, immunities, powers, franchises and authority of the Company
and otherwise to carry out the purposes of this Merger Agreement, and the
directors and officers of the Company are fully authorized in the name and on
behalf of the Company or otherwise to take any and all such action and to
execute and deliver any and all such deeds and other instruments.
3.2 Amendment. At any time before or after approval by the stockholders of
the Company, this Merger Agreement may be amended in any manner (except that any
of the principal terms may not be amended without the approval of the
stockholders of the Company) as may be determined in the judgment of the
respective Boards of Directors of the Company and Quantum to be necessary,
desirable or expedient in order to clarify the intention of the parties hereto
or to effect or facilitate the purpose and intent of this Merger Agreement.
3.3 Abandonment. At any time before the Effective Date, this Merger
Agreement may be terminated and the merger may be abandoned by the Board of
Directors of the Company, notwithstanding the approval of this Merger Agreement
by the stockholders of the Company, or the consummation of the merger may be
deferred for a reasonable period if, in the opinion of the Board of Directors of
the Company, such action would be in the best interests of the Constituent
Corporations.
3.4 Governing Law. This Merger Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada.
15
IN WITNESS WHEREOF, this agreement has been signed as of the date first
above written for and on behalf of the corporate parties hereto by the
undersigned thereunto duly authorized.
Transform Pack International, Inc. The Quantum Group, Inc.
By /s/ Noel J. Guillama, President By /s/ Noel J. Guillama, President
16
Appendix B
ARTICLES OF INCORPORATION
OF
THE QUANTUM GROUP, INC.
The undersigned incorporator being a natural person more than 18 years of
age acting as the sole incorporator of the above-named corporation (the
"Corporation") hereby adopts the following articles of incorporation for the
Corporation:
ARTICLE I
NAME
The name of the Corporation shall be: The Quantum Group, Inc.
ARTICLE II
PERIOD OF DURATION
The Corporation shall continue in existence perpetually unless sooner
dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
The purpose for which the Corporation is organized is to conduct any lawful
business for which a corporation may be organized under the laws of Nevada, the
laws of the United States, or the laws of any other state, country, territory,
nation or planet, which shall include, by way of illustration and not
limitation, the following purposes:
(a) To carry on any general mercantile or service business, and to
purchase, sell, and deal in such technologies, goods, supplies,
merchandise, equipment, or services as are necessary or desirable in
connection therewith; to render any lawful service; to own and operate any
lawful enterprise; and, to acquire, hold, and dispose of tangible or
intangible personal property;
(b) To acquire by purchase or otherwise, own, hold, lease, rent,
mortgage, develop, or otherwise, to trade with and deal in real estate,
lands, oil and gas leases and interests, and all other interests in lands,
and all other property of every kind and nature;
(c) To acquire, sell, and otherwise dispose of or deal in stock,
bonds, mortgages, securities, notes, and commercial paper for corporations
and individuals;
(d) To borrow money and to execute notes and obligations and security
contracts therefor, and to lend any of the monies or funds of the
Corporation and to take evidence of indebtedness therefor, and also to
negotiate loans;
(e) To guarantee the payment of dividends or interest on any other
contract or obligation of any corporation whenever proper or necessary for
the business of the Corporation in the judgment of its directors; and
(f) To do all and everything necessary, suitable, convenient, or
proper for the accomplishment of any of the purposes or the attainment of
any one or more of the objects herein enumerated, or incidental to the
powers therein named, or which shall at any time appear conducive or
expedient for the protection or benefit of the Corporation, with all the
powers hereafter conferred by the laws under which this Corporation is
organized.
17
ARTICLE IV
AUTHORIZED SHARES
The total number of shares of all classes of capital stock that the
corporation shall have authority to issue is 200,000,000 shares. Stockholders
shall not have any preemptive rights, nor shall stockholders have the right to
cumulative voting in the election of directors or for any other purpose. The
classes and the aggregate number of shares of stock of each class that the
corporation shall have authority to issue are as follows:
(a) 170,000,000 shares of common stock, $0.001 par value ("Common
Stock");
(b) 30,000,000 shares of preferred stock, $0.001 par value
("Preferred Stock").
The Common Stock as issued from time to time by the Corporation shall be
the class of stock required by paragraph 1 of Section 78.196 of the Nevada
Revised Statutes; provided, so long as shares of Common Stock that satisfy such
requirement are authorized and outstanding, additional shares of the Common
Stock may be issued from time to time in one or more series, with such
distinctive serial designations as may be stated or expressed in the resolution
or resolutions providing for the issue of such stock adopted from time to time
by the Board of Directors, that is non-voting Common Stock.
The Preferred Stock may be issued from time to time in one or more series,
with such distinctive serial designations as may be stated or expressed in the
resolution or resolutions providing for the issue of such stock adopted from
time to time by the Board of Directors; and in such resolution or resolutions
providing for the issuance of shares of each particular series, the Board of
Directors is also expressly authorized to fix: the right to vote, if any; the
consideration for which the shares of such series are to be issued; the number
of shares constituting such series, which number may be increased (except as
otherwise fixed by the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time by action of the
Board of Directors; the rate of dividends upon which and the times at which
dividends on shares of such series shall be payable and the preference, if any,
which such dividends shall have relative to dividends on shares of any other
class or classes or any other series of stock of the corporation; whether such
dividends shall be cumulative or noncumulative, and if cumulative, the date or
dates from which dividends on shares of such series shall be cumulative; the
rights, if any, which the holders of shares of such series shall have in the
event of any voluntary or involuntary liquidation, merger, consolidation,
distribution or sale of assets, dissolution or winding up of the affairs of the
corporation; the rights, if any, which the holders of shares of such series
shall have to convert such shares into or exchange such shares for shares of any
other class or classes or any other series of stock of the corporation or for
any debt securities of the corporation and the terms and conditions, including
price and rate of exchange, of such conversion or exchange; whether shares of
such series shall be subject to redemption, and the redemption price or prices
and other terms of redemption, if any, for shares of such series including,
without limitation, a redemption price or prices payable in shares of Common
Stock; the terms and amounts of any sinking fund for the purchase or redemption
of shares of such series; and any and all other designations, preferences, and
relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof pertaining to shares of such series'
permitted by law.
The Board of Directors of the Corporation may from time to time authorize
by resolution the issuance of any or all shares of the Common Stock and the
Preferred Stock herein authorized in accordance with the terms and conditions
set forth in these Articles of Incorporation for such purposes, in such amounts,
to such persons, corporations or entities, for such consideration, and in the
case of the Preferred Stock, in one or more series, all as the Board of
Directors in its discretion may determine and without any vote or other action
by the stockholders, except as otherwise required by law. The capital stock,
after the amount of the subscription price, or par value, has been paid in shall
not be subject to assessment to pay the debts of the corporation. Shares of
Common Stock and Preferred Stock (including any series of Preferred Stock) may,
without the approval or consent of the holders of shares of said class or
series, be issued as a share dividend in respect of shares of another class or
series, all as the Board of Directors in its discretion may determine.
The Corporation elects not to be governed by the terms and provisions of
Sections 78.378 through 78.3793, inclusive, and Sections 78.411 through 78.444,
inclusive, of the Nevada Revised Statutes, as the same may be amended,
superseded, or replaced by any successor section, statute, or provision. No
18
amendment to these Articles of Incorporation, directly or indirectly, by merger
or consolidation or otherwise, having the effect of amending or repealing any of
the provisions of this paragraph shall apply to or have any effect on any
transaction involving acquisition of control by any person or any transaction
with an interested stockholder occurring prior to such amendment or repeal.
ARTICLE V
LIMITATION ON LIABILITY
A director or officer of the Corporation shall have no personal liability
to the Corporation or its stockholders for damages for breach of fiduciary duty
as a director or officer, except for damages for breach of fiduciary duty
resulting from (a) acts or omissions which involve intentional misconduct,
fraud, or a knowing violation of law, or (b) the payment of dividends in
violation of section 78.300 of the Nevada Revised Statutes as it may from time
to time be amended or any successor provision thereto.
ARTICLE VI
PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the Corporation's registered office in the state of Nevada
is 202 North Curry Street, Suite 100, town of Carson City, state of Nevada
89703-4121. The name of its initial resident agent in the state of Nevada is
State Agent and Transfer Syndicate, Inc. Either the registered office or the
resident agent may be changed in the manner provided by law.
ARTICLE VII
AMENDMENTS
The Corporation reserves the right to amend, alter, change, or repeal all
or any portion of the provisions contained in these articles of incorporation
from time to time in accordance with the laws of the state of Nevada, and all
rights conferred on stockholders herein are granted subject to this reservation.
ARTICLE VIII
ADOPTION AND AMENDMENT OF BY-LAWS
The initial bylaws of the Corporation shall be adopted by the board of
directors. The power to alter, amend, or repeal the By-Laws or adopt new By-Laws
shall be vested in the board of directors, but the stockholders of the
Corporation may also alter, amend, or repeal the By-Laws or adopt new By-Laws.
The By-Laws may contain any provisions for the regulation or management of the
affairs of the Corporation not inconsistent with the laws of the state of Nevada
now or hereafter existing.
ARTICLE IX
DIRECTORS
The governing board of the Corporation shall be known as the board of
directors. The number of directors comprising the board of directors shall be
fixed and may be increased or decreased from time to time in the manner provided
in the By-Laws of the Corporation, except that at no time shall there be less
than one, nor more than eleven directors.
A majority of the Board may remove a director for cause, replace said
director or appoint new directors, to serve until the next annual shareholders
meeting. The management and control of the business and property of the
corporation is vested in the Board of Directors.
The initial board of directors shall consist of six persons who are as
follows:
Noel J. Guillama 12230 Forest Hill Boulevard, Suite 157
Wellington, Florida 33414
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Susan D. Guillama 12230 Forest Hill Boulevard, Suite 157
Wellington, Florida 33414
Marion D. Thorpe, Jr., M.D., M.P.H. 12230 Forest Hill Boulevard, Suite 157
Wellington, Florida 33414
Donald B. Cohen 12230 Forest Hill Boulevard, Suite 157
Wellington, Florida 33414
James D. Baker 12230 Forest Hill Boulevard, Suite 157
Wellington, Florida 33414
Mark Haggerty 12230 Forest Hill Boulevard, Suite 157
Wellington, Florida 33414
ARTICLE X
INCORPORATOR
The name and mailing address of the incorporator signing these articles of
incorporation is:
Name Address
Noel J. Guillama 11230 Forest Hill Boulevard, Suite 157
Wellington, FL 33414
The undersigned, being the incorporator of the Corporation herein before
named, hereby makes and files these articles of incorporation, declaring that
the facts herein stated are true.
DATED this 2nd day of October 2003.
/s/ Noel J. Guillama
------------------------------------
Noel J. Guillama
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Appendix C
BYLAWS
of
The Quantum Group, Inc.
ADOPTED
October 10, 2003
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TABLE OF CONTENTS
ARTICLE I. OFFICES
1.01 Principal and Business offices 4
1.02 Registered Office 4
ARTICLE II. SHAREHOLDERS
2.01 Annual Meeting 4
2.02 Special Meeting 4
2.03 Place of Meeting 4
2.04 Notice of Meeting 4
2.05 Closing of Transfer Books or Fixing of Record Date 5
2.06 Voting Records 5
2.07 Quorum 5
2.08 Conduct of Meetings 5
2.09 Proxies 6
2.10 Voting of Shares 6
2.11 Voting of Shares by Certain Holders 6
(a) Other Corporations 6
(b) Legal Representatives and Fiduciaries 6
(c) Receiver 6
(d) Pledges 6
(e) Subsidiaries 7
ARTICLE III. BOARD OF DIRECTORS
3.01 General Powers and Number 7
3.02 Tenure and Qualifications 7
3.03 Regular Meetings 7
3.04 Special Meetings 7
3.05 Notice of Meetings 7
3.06 Quorum 8
3.07 Manner of Acting 8
3.08 Conduct of Meetings 8
3.09 Vacancies 8
3.10 Compensation 8
3.11 Presumption of Assent 8
3.12 Committees 9
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ARTICLE IV. OFFICERS
4.01 Number 9
4.02 Election and Term of Office 9
4.03 Removal 9
4.04 Vacancies 9
4.05 President 9
4.06 Vice Presidents 10
4.07 Secretary 10
4.08 Treasurer 10
4.09 Assistant Secretaries and Assistant Treasurers 10
4.10 Other Assistants and Acting Officers 11
4.11 Salaries 11
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.01 Contracts 11
5.02 Loans 11
5.03 Checks, Drafts, etc. 11
5.04 Deposits 12
5.05 Voting of Securities owned by this Corporation 12
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01 Certificate for Shares 12
6.02 Facsimile signatures and Seal 12
6.03 Transfer of Shares 12
6.04 Restrictions on Transfer 13
6.05 Lost, Destroyed or Stolen Certificates 13
6.06 Consideration for Shares 13
6.07 Stock Regulations 13
ARTICLE VII. WAIVER OF NOTICE 13
ARTICLE VIII. UNANIMOUS CONSENT WITHOUT A MEETING 13
ARTICLE IX. INDEMNIFICATION 13
ARTICLE X. SEAL 14
ARTICLE XI. FISCAL YEAR 14
ARTICLE XII. AMENDMENTS
12.01 By Shareholders 14
12.02 By Directors 14
11.03 Implied Amendments 14
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ARTICLE I. OFFICES
1.01. Principal and Business Offices. The corporation may have such
principal and other business offices, in the State of Nevada, as the Board of
Directors may designate or as the business of the corporation may require from
time to time.
1.02. Registered Office. The registered office of the corporation required
by the Nevada State Statues must be maintained in the State of Nevada and need
not be identical with the principal office in the State of Nevada. The address
of the registered office may be changed from time to time by the Board of
Directors or, if within the county, by the registered agent. The business office
of the registered agent of the corporation shall be identical to such registered
office.
ARTICLE II. SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of the shareholders shall be held
on the first Wednesday of December in each year at 9:00 a.m., or at such other
time and date as may be fixed by or under the authority of the Board of
Directors, for the purpose of electing directors and for the transaction of such
other business that may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday in the State of Nevada, such meeting shall be
held on the next succeeding business day. If the election of directors shall not
be held on the day designated herein or fixed as herein provided, for any annual
meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as convenient.
2.02. Special Meeting. Special meetings of the shareholders for any purpose
or purposes, unless otherwise prescribed by statue, may be called by the
President or the Board of Directors or by the person designated in the written
request of the holders of not less than one-tenth of all shares of the
corporation entitled to vote at the meeting, or by ten percent of the
shareholders, or by any two directors or by any three officers of the
corporation who are also shareholders of the corporation.
2.03. Place of Meeting. The Board of Directors may designate any place
either within or outside the State of Nevada as the place of meeting for any
annual meeting or for any special meeting called by the Board of Directors. A
waiver of notice signed by shareholders controlling a minimum of 51% of the
shares entitled to vote at a meeting may designate any place, whether within or
outside the State of Nevada, as the place for the holding of such meeting. If no
designation is made or if a special meeting be otherwise called, the place of
meeting shall be the principal business office of the corporation in the State
of Nevada or such other suitable place in the county of such principal office as
may be designated by the person calling such meeting, but any meeting may be
adjourned to reconvene at any place designated by a vote of the majority of the
shares represented thereat.
2.04. Notice of Meeting. Written notice stating the place, day and hour of
the meeting and, in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten (10) days (unless a
longer period is required by law) nor more than forty-five (45) days before the
date of the meeting, either personally or by mail, by or at the direction of the
President, the Secretary, or the person(s) calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his or her address as it appears on the stock
record books of the corporation, with postage thereon prepaid. The Secretary is
to cooperate with any officer, director or shareholder(s) controlling 5% of the
voting stock, in the efforts to request a special shareholder meeting.
2.05. Closing of Transfer Books or Fixing of Record Date. For the purpose
of determining shareholders entitled to notice of or to vote at any meeting of
shareholders, or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors may provide that the stock
transfer books shall be closed for a stated period but not to exceed, in any
case, forty-five (45) days. If the stock transfer books shall be closed for the
purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than
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forty-five (45) days and, in case of a meeting of shareholders, not less than
ten (10) days prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the close of business on the date on
which notice of the meeting is mailed or on the date on which the resolution of
the Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this section, such determination shall be applied
to any adjournment thereof except where the determination has been made through
the closing of the stock transfer books and the stated period of closing has
expired.
2.06. Voting Records. In the event the corporation issues its stock to more
than six (6) shareholders, Nevada State Statues dealing with affiliated
transactions and control-share acquisitions shall apply.
2.07. Quorum. Except as otherwise provided in the articles of
incorporation, a majority of the shares entitled to vote, represented in person
or by proxy, shall constitute a quorum at a meeting of shareholders but in no
event shall a quorum consist of less than one-third of the shares entitled to
vote at the meeting. When a specified item of business is required to be voted
on by a class or series of stock, a majority of the shares of such class or
series shall constitute a quorum for the transaction of such item of business by
that class or series. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders unless the vote of a greater
number or voting by classes is required by the Nevada State Statues or the
articles of incorporation. If less than a quorum is represented at a meeting, a
majority of the shares so represented may adjourn the meeting from time to time
without further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
2.08. Conduct of Meetings. The Chairman or in his absence the President, or
in the President's absence, a Vice President in the order provided under Section
4.06, and in their absence, any person chosen by the shareholders present shall
call the meeting of the shareholders to order and shall act as chairman of the
meeting, and the Secretary shall act as secretary of all meetings of the
shareholders, but, in the absence of the Secretary, the presiding officer may
appoint any other person to act as secretary of the meeting.
2.09. Proxies. At all meetings of shareholders, a shareholder entitled to
vote may vote in person or by proxy appointed in writing by the shareholder or
by his duly authorized attorney-in-fact. Such proxy shall be filed with the
Secretary before or at the time of the meeting. Unless otherwise provided in the
proxy or Nevada State Statues, a proxy may be revoked at any time before it is
voted, either by written notice filed with the Secretary or the acting secretary
of the meeting or by oral notice given by the shareholder to the presiding
officer during the meeting. The presence of a shareholder who has filed a proxy
shall not of itself constitute a revocation. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy. The Board of Directors shall have the power and authority to make rules
as to the validity and sufficiency of proxies.
2.10. Voting of Shares. Each outstanding share shall be entitled to one
vote on each matter submitted to a vote at a meeting of shareholders, except to
the extent that the voting rights of the shares of any classes are enlarged,
limited or denied by the articles or incorporation. No cumulative voting is
permitted.
2.11. Voting of Shares by Certain Holders.
(a) Other Corporations. Shares standing in the name of another corporation,
domestic or foreign, may be voted either in person or by proxy, by the president
of such corporation or any other officer appointed by such president. A proxy
executed by any principal officer of such other corporation or assistant thereto
shall be conclusive evidence of the signer's authority to act, in the absence of
express notice to this corporation, given in writing to the Secretary of this
corporation, of the designation of some other person by the board of directors
or the bylaws of such other corporation.
(b) Legal Representatives and Fiduciaries. Shares held by an administrator,
executor, guardian, conservator, or assignee for creditors may be voted by such
person, either in person or by proxy. Shares standing in the name of a trustee
25
may be voted by him or her, either in person or by proxy, but no trustee shall
be entitled to vote shares held by him or her without a transfer of such shares
into his or her name. Shares standing in the name of a fiduciary may be voted by
him or her either in person or by proxy. A proxy executed by a fiduciary, shall
be conclusive evidence of the signer's authority to act, in the absence of
express notice, given in writing to the Secretary, that such manner of voting is
prohibited or otherwise directed by the document creating the fiduciary
relationship.
(c) Receiver. Shares standing in the name of a receiver may be voted by
such receiver, and shares held by or under the control of a receiver may be
voted by such receiver without the transfer thereof into his or her name if
authority to do so is contained in an appropriate court order pursuant to which
such receiver was appointed.
(d) Pledges. A shareholder whose shares are pledged shall be entitled to
vote such shares in person or by proxy, until the shares have been transferred
into the name of the pledgee, and thereafter the pledgee or his or her nominee
shall be entitled to vote the shares so transferred.
(e) Subsidiaries. Neither shares of the corporation's stock owned by
another corporation, the majority of the voting stock of which is owned or
controlled by it, nor shares of its own stock held by another corporation in a
fiduciary capacity shall be voted, directly or indirectly, at any meeting; and
such shares shall not be counted in determining the total number of outstanding
shares at any given time.
ARTICLE Ill. BOARD OF DIRECTORS
3.01. General Powers and Number. The business and affairs of the
corporation shall be managed by its Board of Directors. The number of directors
of the corporation initially shall be one (1) but may be increased to not more
than eleven (11) without amendment. The number of directors may be increased or
decreased from time to time by amendment to this Section adopted by the
shareholders or the Board of Directors but no decrease shall have the effect of
shortening the term of an incumbent director. By way of clarification and not as
a limitation, the Board of Directors may add directors without shareholder
approval when acquiring assets or revenues, for the company, even if it is only
under an exclusive management contract.
3.02. Tenure and Qualifications. Each director shall hold office until the
next annual meeting of shareholders and until the director's successor shall
have been elected, or until his or her prior death, resignation or removal. Any
director or the entire Board of Directors may be removed from office, with or
without cause, by affirmative vote of a majority of the outstanding shares
entitled to vote for the election of such director to the Board of Directors. A
director may resign at any time by filing a written resignation with the
Secretary of the corporation. Directors need not be residents of the State of
Nevada or shareholders of the corporation.
3.03. Regular Meetings. A regular meeting of the Board of Directors shall
be held, without other notice than this bylaw, immediately after the annual
meeting of shareholders, and each adjourned session thereof. The place of such
regular meeting shall be the same as the place of the meeting of shareholders
which precedes it, or such other suitable place as may be announced at such
meeting of shareholders. The Board of Directors may provide, by resolution, the
time and place, either within or without the State of Nevada, for the holding of
additional regular meetings without other notice than such resolution.
3.04. Special Meetings. Special meetings of the Board of Directors may be
called by or at the request of the Chairman, President or any two directors. The
persons calling any special meeting of the Board of Directors may fix any place,
either within or outside the State of Nevada, as the place for holding any
special meeting of the Board of Directors called by them, and if no other place
is fixed the place of meeting shall be the principal business office of the
corporation in the State of Nevada. Special meetings may be held by means of a
telephone conference circuit and connection to such circuit shall constitute
presence at such meeting.
3.05. Notice of Meetings. Notice of each meeting of the Board of Directors
(unless otherwise provided in or pursuant to Section 3.03) shall be given by
written notice delivered personally or mailed or given by telephone or telegram
to each director at his or her business or home address or at such other address
as such director shall have designated in writing filed with the Secretary, in
each case not less than 48 hours prior thereto. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail so addressed,
26
with postage thereon prepaid. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company; if by telephone, at the time the call is completed. The attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting and objects to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors need be specified in the notice or waiver of notice of
such meeting.
3.06. Quorum. A majority of the number of directors as provided in Section
3.01 shall constitute a quorum for the transaction of business at any meeting of
the Board of Directors, but a majority of the directors present (though less
than such quorum) may adjourn the meeting from time to time without further
notice.
3.07. Manner of Acting. The act of the majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors, unless the act of a greater number is required by the Nevada State
Statues, the corporation's articles of incorporation or these bylaws.
3.08. Conduct of Meetings. The Chairman or in his absence the President,
and in the President's absence, a Vice President in the order provided under
Section 4.06, and in their absence, any director chosen by the directors
present, shall call meetings of the Board of Directors to order and shall chair
the meeting. The Secretary of the corporation shall act as secretary of all
meetings of the Board of Directors, but in the absence of the Secretary, the
presiding officer may appoint any assistant secretary or any director or other
person present to act as secretary of the meeting. Members of the Board may
participate in Board or committee meetings by telephone or other electronic
means and such participation shall constitute presence in person.
3.09. Vacancies. Any vacancy occurring in the Board of Directors, including
a vacancy created by an increase in the number of directors, may be filled until
the next succeeding annual election by the affirmative vote of a majority of the
directors then in office, though less than a quorum of the Board of Directors,
provided, that in case of a vacancy created by removal of a director, the
shareholders shall have the right to fill such vacancy at the same meeting or
any adjournment thereof.
3.10. Compensation. The Board of Directors, by affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, may establish reasonable compensation of all
directors for services to the corporation as directors, officers or otherwise,
and the manner and time of payment thereof, or may delegate such authority to an
appropriate committee. The Board of Directors also shall have authority to
provide for or to delegate authority to an appropriate committee to provide for
reason able pensions, disability or death benefits, and other benefits or
payments to directors, officers and employees and to their estates, families,
dependents or beneficiaries on account of prior services rendered by such
directors, officers and employees to the corporation.
3.11. Presumption of Assent. A director who is present at a meeting of the
Board of Directors or a committee thereof of which he is a member at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
3.12. Committees. The Board of Directors, by resolution adopted by the
affirmative vote of a majority of the number of directors as provided in Section
3.01, may designate one or more committees, each committee to consist of three
or more directors elected by the Board of Directors, which to the extent
provided in said resolution as initially adopted, and as thereafter supplemented
or amended by further resolution adopted by a like vote, shall have and may
exercise, when the Board of Directors is not in session, the powers of the Board
of Directors in the management of the business and affairs of the corporation,
except action in respect to dividends to share holders, election of the
principal officers or the filling of vacancies in the Board of Directors or
committees created pursuant to this Section. The Board of Directors may elect
one or more of its members as alternate members of any such committee who may
take the place of any absent member or members at any meeting of such committee,
upon request by the President or upon request by the chairman of such meeting.
The Board of Directors may also establish an Advisory Board to advise it as to
policy and operations. Each such committee and Advisory Board shall fix its own
rules governing the conduct of its activities and shall make such reports to the
Board of Directors of its activities as the Board of Directors may request.
27
ARTICLE IV. OFFICERS
4.01. Number. The principal officers shall be a President and/or a CEO, one
or more vice Presidents (the number and designations to be determined by the
Board of Directors), a Secretary and a Treasurer aka CFO, each of whom shall be
elected by the Board of Directors; the Board of Directors may elect a Chairman
who if so elected shall be a principal officer. Any two or more offices may be
held by the same person. The Board of Directors may designate one of the Vice
Presidents as the Chief Operating Officer, Chief Operating Officer, Chief
Medical Officer and any other "Chief" Officer of the Corporation. Such other
officers and assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors or the President.
4.02. Election and Term of Office. The officers to be elected by the Board
of Directors shall be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as conveniently may be. Each
officer shall hold office until his successor has been duly elected or until his
prior death, resignation or removal.
4.03. Removal. Any officer or agent may be removed by the Board of
Directors whenever in its judgment the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment shall not of
itself create contract rights.
4.04. Vacancies. A vacancy in any principal office because of death,
resignation, removal, disqualification or otherwise, shall be filled by the
Board of Directors for the unexpired portion of the term.
4.05. President. The President shall be the principal executive officer
and, subject to the control of the Board of Directors, shall in general,
supervise and control all of the business and affairs of the corporation. He or
she shall preside at all meetings of the shareholders and of the Board of
Directors. The President shall have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such agents and employees of
the corporation as he or she shall deem necessary, to prescribe their powers,
duties and compensation, and to delegate authority to them. Such agents and
employees shall hold office at the discretion of the President. The President
shall have authority to sign, execute and acknowledge, on behalf of the
corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases,
reports and all other documents or instruments necessary or proper to be
executed in the course of the corporation's regular business, or which shall be
authorized by resolution of the Board of Directors; and, except as otherwise
provided by law or the Board of Directors, the President may authorize any Vice
President or other officer or agent of the corporation to sign, execute and
acknowledge such documents or instruments in his or her place and stead. In
general he shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Board of Directors from time to time.
4.06. Vice Presidents. In the absence of the President, or in the event of
the President's death, inability or refusal to act, or in the event for any
reason it shall be impractical for the President to act personally, the Vice
President (or in the event there be more than one Vice President, the Vice
Presidents in the order designated by the Board of Directors, or in the absence
of any designation, then in the order of their election) shall perform the
duties of the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. Any Vice President may sign,
with the Secretary or Assistant Secretary, certificates for shares of the
corporation; and shall perform such other duties and have such authority as from
time to time may be delegated or assigned to him or her by the President or the
Board of Directors. The execution of any instrument of the corporation by any
Vice President shall be conclusive evidence, as to third parties, of the Vice
President's authority to act in the stead of the President.
4.07. Secretary. The Secretary shall: (a) keep the minutes of the meetings
of the shareholders and of the Board of Directors in one or more books provided
for that purpose; (b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation, if any, and see that the
seal of the corporation, if any, is affixed to all documents which are
authorized to be executed on behalf of the corporation under its seal, (d) keep
or arrange for the keeping of a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder; (e)
sign with the President, or a Vice President, certificates for shares of the
corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock transfer books of
28
the corporation; and (g) in general perform all duties incident to the office of
Secretary and have such other duties and exercise such authority as from time to
time may be delegated or assigned to him or her by the President or by the Board
of Directors.
4.08. Treasurer. The Treasurer aka CFO shall: (a) have charge and custody
of and be responsible for all funds and securities of the corporation; (b)
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with the provisions of section 5.04; and (c) in general perform all
of the duties incident to the office of Treasurer and have such other duties and
exercise such other authority as from time to time may be delegated or assigned
to him or her by the President or by the Board of Directors.
4.09. Assistant Secretaries and Assistant Treasurers. There shall be such
number of Assistant Secretaries and Assistant Treasurers as the Board of
Directors or President from time to time authorizes. The Assistant Secretaries
may sign, with the President or a Vice President, the certificates for shares of
the corporation the issuance of which shall have been authorized by a resolution
of the Board of Directors. The Assistant Secretaries and Assistant Treasurers,
in general, shall perform such duties and have such authority as from time to
time shall be delegated or assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
4.10. Other Assistants and Acting Officers. The Board of Directors and the
President shall have the power to appoint any person to act as assistant to any
officer, or as agent for the corporation in the officer's stead, or to perform
the duties of such officer whenever for any reason it is impractical for such
officer to act personally, and such assistant or acting officer or other agent
so appointed by the Board of Directors or President shall have the power to
perform all the duties of the office to which that person is so appointed to be
assistant, or as to which he or she is so appointed to act, except as such power
may be otherwise defined or restricted by the Board of Directors or President.
4.11. Salaries. Salaries may be paid to the principal officers of the
corporation at the discretion of the Board of Directors, and if so paid, shall
be fixed from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such salary
by reason of the fact that such officer is also a director of the corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.01. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute or deliver any
instrument in the name of and on behalf of the corporation, and such
authorization may be general or confined to specific instances. No contract or
other transaction between the corporation and one or more of its directors or
any other corporation, firm, association, or entity in which one or more of its
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because such
director or directors are present at the meeting of the Board of Directors or a
committee thereof which authorizes, approves or ratifies such contract or
transaction or because the votes of the interested director(s) are counted for
such purpose, if (1) the fact of such relationship or interest is disclosed or
known to the Board of Directors or, committee which authorizes, approves or
ratifies the contract or transaction by a vote or consent sufficient for the
purpose without counting the votes or consents of such interested directors; or
(2) the fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or (3) the contract or
transaction is fair and reasonable to the corporation. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or a committee thereof which authorizes, approves or
ratifies such contract or transaction.
5.02. Loans. No indebtedness for borrowed money shall be contracted on
behalf of the corporation and no evidences of such indebtedness shall be issued
in its name unless authorized by or under the authority of a resolution of the
Board of Directors. Such authorization may be general or confined to specific
instances.
5.03. Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation, shall be signed by such officer(s), employee(s) or agents of
the corporation and in such manner as shall from time to time be determined by
or under the authority of a resolution of the Board of Directors.
29
5.04. Deposits. All funds of the corporation not otherwise employed shall
be deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositories as may be selected by or under the
authority of a resolution of the Board of Directors.
5.05. Voting of Securities Owned by this corporation. Subject always to the
specific directions of the Board of Directors, (a) any shares or other
securities issued by any other corporation and owned or controlled by this
corporation may be voted at any meeting of security holders of such other
corporation by the President of this corporation if he or she is present, or in
the President's absence, by any Vice President of this corporation who may be
present, and (b) whenever, in the judgment of the President, or in the
President's absence, of any Vice President, it is desirable for this corporation
to execute a proxy or written consent with respect to any shares or other
securities issued by any other corporation and owned by this corporation, such
proxy or consent shall be executed in the name of this corporation by the
President or one of the Vice Presidents of this corporation, without necessity
of any authorization by the Board of Directors, affixation of corporate seal or
countersignature or attestation by another officer. Any person or persons
designated in the manner above stated as the proxy or proxies of this
corporation shall have full right, power and authority to vote the shares or
other securities issued by such other corporation and owned by this corporation
the same as such shares or other securities might be voted by this corporation.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01. Certificate for Shares. Certificates representing shares of the
corporation shall be in such form, consistent with law, as shall be determined
by the Board of Directors. Such certificates shall be signed by the President or
a Vice President and by the Secretary or an Assistant Secretary. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered on the
stock transfer books of the corporation. All certificates surrendered to the
corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and canceled, except as provided in Section 6.05.
6.02. Facsimile Signatures and Seal. The seal of the corporation, if the
corporation has elected to have a seal, on any certificates for shares may be a
facsimile. The signatures of the President or a Vice President and the secretary
or Assistant Secretary upon a certificate may be facsimiles if the certificate
is manually signed on behalf of a transfer agent or a registrar, other than the
corporation itself or an employee of the corporation.
6.03. Transfer of Shares. Prior to due presentment of a certificate for
shares for registration of transfer, the corporation may treat the registered
owner of such shares as the person exclusively entitled to vote, to receive
notifications and otherwise to have and exercise all the rights and power of an
owner. Where a certificate for shares is presented to the corporation with a
request to register for transfer, the corporation shall not be liable to the
owner, or any other person suffering loss as a result of such registration of
transfer if (a) there were on or with the certificate the necessary
endorsements, and (b) the corporation had no duty to inquire into adverse claims
or has discharged any such duty. The corporation may require reasonable
assurance that said endorsements are genuine and effective and in compliance
with such other regulations as may be prescribed by or under the authority of
the Board of Directors. In the absence of the Board of Directors appointing an
outside Transfer Agent, the Corporate Secretary shall act as the transfer agent.
6.04. Restrictions on Transfer. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corporation upon the transfer of such shares.
6.05. Lost, Destroyed or Stolen Certificates. Where the owner claims that
his or her certificate for shares has been lost, destroyed or wrongfully taken,
a new certificate shall be issued in place thereof if the owner (a) so requests
before the corporation has notice that such shares have been acquired by a bona
fide purchaser, and (b) if required by the corporation, files with the
corporation a sufficient indemnity bond, and (c) satisfies such other reasonable
requirements as may be prescribed by or under the authority of the Board of
Directors.
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6.06. Consideration for Shares. The shares of the corporation may be issued
for such consideration as shall be fixed from time to time by the Board of
Directors, provided that any shares having a par value shall not be issued for a
consideration less than the par value thereof. The consideration to be paid for
shares may be paid in whole or in part, in money, in other property, tangible or
intangible, or in labor or services actually performed for the corporation. When
payment of the consideration for which shares are to be issued shall have been
received by the corporation, such shares shall be deemed to be fully paid and
nonassessable by the corporation. No certificate shall be issued for any share
until such share is fully paid.
6.07. Stock Regulations. The Board of Directors shall have the power and
authority to make all such rules and regulations not in violation of Nevada or
Federal law as it may deem expedient concerning the issue, transfer and
registration of certificates representing shares of the corporation.
ARTICLE VII. WAIVER OF NOTICE
Whenever any notice whatsoever is required to be given under the provisions
of the Nevada State Statues or under corresponding provisions of the
corporation's articles of incorporation or bylaws, a waiver thereof in writing,
signed at any time, whether, before or after the time of the meeting, by the
person or persons entitled to such notice, shall be deemed equivalent to the
giving of such notice. Such waiver by a shareholder in respect of any matter of
which notice is required under any provision of the Nevada State Statues shall
contain the same information as would have been required to be included in such
notice under any applicable provisions of said Law, except that the time and
place of meeting need not be stated.
ARTICLE VIII. UNANIMOUS CONSENT WITHOUT A MEETING
Any action required by the articles of incorporation or these bylaws or any
provision of the Nevada State Statues, to be taken at a meeting, or any other
action which may be taken at a meeting, may be taken without a meeting if a
consent in writing setting forth the action so taken shall be signed by the
requisite number of shareholders or directors under law or all of the members of
a committee thereof entitled to vote with respect to the subject matter thereof
and such consent shall have the same force and effect as a vote.
ARTICLE IX. INDEMNIFICATION
The corporation shall indemnify all directors and officers to the fullest
extent now or hereafter permitted by the Nevada Statutes. This bylaw shall not
limit the rights of such persons or other persons to indemnification as provided
or permitted as a matter of law, under the Nevada Statutes or otherwise.
ARTICLE X. SEAL
The corporation has no formal corporate seal under its Articles, but the
Board of Directors may provide a corporate seal which shall be circular in form
and shall have inscribed thereon the name of the corporation and the state of
incorporation and the words "Corporate Seal."
ARTICLE XI. FISCAL YEAR
Except as the Board of Directors may otherwise determine, the fiscal year
of the corporation shall be the year ending on the last day of December of each
year.
ARTICLE XII. AMENDMENTS
12.01. By Shareholders. These bylaws may be altered, amended or repealed
and new bylaws may be adopted by the shareholders by affirmative vote of not
less than a majority of the shares present or represented at an annual or
special meeting of the shareholders at which a quorum is in attendance.
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12.02. By Directors. These bylaws may also be altered, amended or repealed
and new bylaws may be adopted by the Board of Directors by affirmative vote of a
majority of the number of directors present at any meeting at which a quorum is
in attendance; but no bylaw adopted by the shareholders shall be amended or
repealed by the Board of Directors if the bylaw so adopted so provides.
12.03. Implied Amendments. Any action taken or authorized by the
shareholders or by the Board of Directors, which would be inconsistent with the
bylaws then in effect, but is taken or authorized by affirmative vote of not
less than the number of shares or the number of directors required to amend the
bylaws so that the bylaws would be consistent with such action, shall be given
the same effect as though the bylaws had been temporarily amended or suspended
so far, but only so far, as is necessary to permit the specific action so taken
or authorized.
CERTIFICATE
I hereby certify that the foregoing Bylaws, consisting of seventeen pages,
including this page, constitute the By laws of The Quantum Group, Inc., adopted
by the Board of Directors of the corporation as of October 10, 2003.
/s/ Susan D. Guillama 10/10/03
------------------------------------
Susan D. Guillama Date
Secretary
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Appendix D
Minnesota Statutes 2001, 302A.471
302A.471 Rights of dissenting shareholders.
Subdivision 1. Actions creating rights. A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's shares
in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting shareholder in that it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption of
the shares, including a provision respecting a sinking fund for the redemption
or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares to
acquire shares, securities other than shares, or rights to purchase shares or
securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter, or
to cumulate votes, except as the right may be excluded or limited through the
authorization or issuance of securities of an existing or new class or series
with similar or different voting rights; except that an amendment to the
articles of an issuing public corporation that provides that section 302A.671
does not apply to a control share acquisition does not give rise to the right to
obtain payment under this section;
(b) A sale, lease, transfer, or other disposition of all or substantially
all of the property and assets of the corporation, but not including a
transaction permitted without shareholder approval in section 302A.661,
subdivision 1, or a disposition in dissolution described in section 302A.725,
subdivision 2, or a disposition pursuant to an order of a court, or a
disposition for cash on terms requiring that all or substantially all of the net
proceeds of disposition be distributed to the shareholders in accordance with
their respective interests within one year after the date of disposition;
(c) A plan of merger, whether under this chapter or under chapter 322B, to
which the corporation is a constituent organization, except as provided in
subdivision 3;
(d) A plan of exchange, whether under this chapter or under chapter 322B,
to which the corporation is a party as the corporation whose shares will be
acquired by the acquiring corporation, except as provided in subdivision 3; or
(e) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles, the bylaws, or a resolution approved by the board
directs that dissenting shareholders may obtain payment for their shares.
Subd. 2. Beneficial owners. (a) A shareholder shall not assert dissenters'
rights as to less than all of the shares registered in the name of the
shareholder, unless the shareholder dissents with respect to all the shares that
are beneficially owned by another person but registered in the name of the
shareholder and discloses the name and address of each beneficial owner on whose
behalf the shareholder dissents. In that event, the rights of the dissenter
shall be determined as if the shares as to which the shareholder has dissented
and the other shares were registered in the names of different shareholders.
(b) A beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting shareholder under the terms of this
section and section 302A.473, if the beneficial owner submits to the corporation
at the time of or before the assertion of the rights a written consent of the
shareholder.
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Subd. 3. Rights not to apply. (a) Unless the articles, the bylaws, or a
resolution approved by the board otherwise provide, the right to obtain payment
under this section does not apply to a shareholder of (1) the surviving
corporation in a merger with respect to shares of the shareholder that are not
entitled to be voted on the merger and are not canceled or exchanged in the
merger or (2) the corporation whose shares will be acquired by the acquiring
corporation in a plan of exchange with respect to shares of the shareholder that
are not entitled to be voted on the plan of exchange and are not exchanged in
the plan of exchange.
(b) If a date is fixed according to section 302A.445, subdivision 1, for
the determination of shareholders entitled to receive notice of and to vote on
an action described in subdivision 1, only shareholders as of the date fixed,
and beneficial owners as of the date fixed who hold through shareholders, as
provided in subdivision 2, may exercise dissenters' rights.
Subd. 4. Other rights. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside or
rescinded, except when the corporate action is fraudulent with regard to the
complaining shareholder or the corporation.
Minnesota Statutes 2001, 302A.473
302A.473 Procedures for asserting dissenters' rights.
Subdivision 1. Definitions. (a) For purposes of this section, the terms
defined in this subdivision have the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action referred to in section 302A.471, subdivision 1 or the
successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a
corporation immediately before the effective date of the corporate action
referred to in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective date
of the corporate action referred to in section 302A.471, subdivision 1, up to
and including the date of payment, calculated at the rate provided in section
549.09 for interest on verdicts and judgments.
Subd. 2. Notice of action. If a corporation calls a shareholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
Subd. 3. Notice of dissent. If the proposed action must be approved by the
shareholders, a shareholder who is entitled to dissent under section 302A.471
and who wishes to exercise dissenters' rights must file with the corporation
before the vote on the proposed action a written notice of intent to demand the
fair value of the shares owned by the shareholder and must not vote the shares
in favor of the proposed action.
Subd. 4. Notice of procedure; deposit of shares. (a) After the proposed
action has been approved by the board and, if necessary, the shareholders, the
corporation shall send to all shareholders who have complied with subdivision 3
and to all shareholders entitled to dissent if no shareholder vote was required,
a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the date by
which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will apply
after the demand for payment is received;
(3) A form to be used to certify the date on which the shareholder, or the
beneficial owner on whose behalf the shareholder dissents, acquired the shares
or an interest in them and to demand payment; and
34
(4) A copy of section 302A.471 and this section and a brief description of
the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting
shareholder must demand payment and deposit certificated shares or comply with
any restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all other
rights of a shareholder until the proposed action takes effect.
Subd. 5. Payment; return of shares. (a) After the corporate action takes
effect, or after the corporation receives a valid demand for payment, whichever
is later, the corporation shall remit to each dissenting shareholder who has
complied with subdivisions 3 and 4 the amount the corporation estimates to be
the fair value of the shares, plus interest, accompanied by:
(1) the corporation's closing balance sheet and statement of income for a
fiscal year ending not more than 16 months before the effective date of the
corporate action, together with the latest available interim financial
statements;
(2) an estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and
(3) a copy of section 302A.471 and this section, and a brief description of
the procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph (a)
from a person who was not a shareholder on the date the action dissented from
was first announced to the public or who is dissenting on behalf of a person who
was not a beneficial owner on that date. If the dissenter has complied with
subdivisions 3 and 4, the corporation shall forward to the dissenter the
materials described in paragraph (a), a statement of the reason for withholding
the remittance, and an offer to pay to the dissenter the amount listed in the
materials if the dissenter agrees to accept that amount in full satisfaction.
The dissenter may decline the offer and demand payment under subdivision 6.
Failure to do so entitles the dissenter only to the amount offered. If the
dissenter makes demand, subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the deposit
of certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under subdivision 4
and require deposit or restrict transfer at a later time.
Subd. 6. Supplemental payment; demand. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.
Subd. 7. Petition; determination. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in court a petition requesting that the
court determine the fair value of the shares, plus interest. The petition shall
be filed in the county in which the registered office of the corporation is
located, except that a surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the county in this state in which the last registered office of the
constituent corporation was located. The petition shall name as parties all
dissenters who have demanded payment under subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
35
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedure apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that the court, in
its discretion, sees fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash
for the amount by which the fair value of the shares as determined by the court,
plus interest, exceeds the amount, if any, remitted under subdivision 5, but
shall not be liable to the corporation for the amount, if any, by which the
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair
value of the shares as determined by the court, plus interest.
Subd. 8. Costs; fees; expenses. (a) The court shall determine the costs and
expenses of a proceeding under subdivision 7, including the reasonable expenses
and compensation of any appraisers appointed by the court, and shall assess
those costs and expenses against the corporation, except that the court may
assess part or all of those costs and expenses against a dissenter whose action
in demanding payment under subdivision 6 is found to be arbitrary, vexatious, or
not in good faith.
(b) If the court finds that the corporation has failed to comply
substantially with this section, the court may assess all fees and expenses of
any experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party
injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an
attorney for the dissenters out of the amount awarded to the dissenters, if any.
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Appendix E
The Quantum Group, Inc.
2003 INCENTIVE EQUITY & OPTION PLAN
1. Purpose. The purpose of The Quantum Group, Inc. 2003 INCENTIVE EQUITY &
OPTION PLAN (the "Plan") is to advance the interests of The Quantum Group, Inc.,
a Nevada Corporation and its affiliates and subsidiaries (the "Company"), by
providing an additional incentive to attract, retain and motivate highly
qualified and competent persons who are key to the Company, and upon whose
efforts and judgment the success of the Company, its subsidiaries and
affiliates, is largely dependent, including key employees, consultants,
independent contractors, Board members, advisory board members, officers and
directors, by authorizing the grant of awards of Common Stock and options to
purchase Common Stock of the Company to persons who are eligible to participate
hereunder, thereby encouraging stock ownership in the Company by such persons,
all upon and subject to the terms and conditions of this Plan.
2. Definitions. As used herein, the following terms shall have the meanings
indicated:
(a) "Award" means any grant or sale pursuant to the Plan of Options,
Restricted Stock, or Stock Grants.
(b) "Award Agreement" means an agreement between the Company and the
recipient of an Award, setting forth the terms and conditions of the Award.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Cause" shall mean any of the following:
(i) a determination by the Company that there has been a willful,
reckless or grossly negligent failure by the Participant to perform his or
her duties as an employee of the Company;
(ii) a determination by the Company that there has been a willful
breach by the Optionee of any of the material terms or provisions of any
employment agreement between such Optionee and the Company;
(iii) any conduct by the Optionee that either results in his or her
conviction of a felony under the laws of the United States of America or
any state thereof;
(iv) a determination by the Company that the Optionee has committed an
act or acts involving fraud, embezzlement, misappropriation, theft, breach
of fiduciary duty or material dishonesty against the Company, its
properties or its personnel;
(v) a determination by the Company that there has been a willful,
reckless or grossly negligent failure by the Optionee to comply with any
rules, regulations, policies or procedures of the Company, or that the
Optionee has engaged in any act, behavior or conduct demonstrating a
deliberate and material violation or disregard of standards of behavior
that the Company has a right to expect of its employees; or
(vi) if the Optionee, while employed by the Company and for two years
thereafter (or such shorter period as may be stated in any employment,
confidentiality or noncompete agreement with the Optionee), violates a
confidentiality and/or noncompete agreement with the Company, or fails to
safeguard, divulges, communicates, uses to the detriment of the Company or
for the benefit of any person or persons, or misuses in any way, any
Confidential Information;
PROVIDED, HOWEVER, that, if the Optionee has entered into a written employment
Agreement with the Company which remains effective and which expressly provides
for a termination of such Optionee's employment for "cause," the term "Cause"
37
for purposes of this Plan shall have the meaning as set forth in the Optionee's
employment agreement in lieu of the definition of "Cause" set forth in this
Section 2(d).
(e) "Change of Control" shall mean the acquisition by any person or group
(as that term is defined in the Securities Exchange Act of 1934 (the "Exchange
Act"), and the rules promulgated pursuant to that act) in a single transaction
or a series of transactions of 40% or more in voting power of the outstanding
stock of the Company and a change of the composition of the Board of Directors
so that, within one year after the acquisition took place, a majority of the
members of the Board of Directors of the Company, or of any corporation with
which the Company may be consolidated or merged, are persons who were not
directors or officers of the Company or one of its Subsidiaries immediately
prior to the acquisition, or to the first of a series of transactions which
resulted in the acquisition of 40% or more in voting power of the outstanding
stock of the Company.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(g) "Committee" shall mean the stock option or compensation committee
appointed by the Board or, if not appointed, the Board.
(h) "Common Stock" shall mean the Company's Common Stock, par value $.001
per share.
(i) "Confidential Information" shall mean any and all information
pertaining to the Company's financial condition, clients, customers, prospects,
sources of prospects, customer lists, trademarks, trade names, service marks,
service names, "know-how," trade secrets, products, services, details of client
or consulting contracts, management agreements, pricing policies, operational
methods, site selection, results of operations, costs and methods of doing
business, owners and ownership structure, marketing practices, marketing plans
or strategies, product development techniques or plans, procurement and sales
activities, promotion and pricing techniques, credit and financial data
concerning customers and business acquisition plans, that is not generally
available to the public.
(j) "Director" shall mean a member of the Board.
(k) "Employee" shall mean any person, including Officers, Directors,
consultants and independent contractors, who is either employed or engaged by
the Company or any parent, affiliate or Subsidiary of the Company within the
meaning of Code Section 3401(c) or the regulations promulgated there under. For
purposes of any Non-Qualified Option only, any Officer or Director of the
Company shall be considered an Employee even if he or she is not an employee
with the meaning of the first sentence of this section.
(l) "Fair Market Value" of a Share on any date of reference shall be the
Closing Price of a share of Common Stock on the business day immediately
preceding such date, unless the Committee in its sole discretion shall determine
otherwise in a fair and uniform manner. For this purpose, the "Closing Price" of
the Common Stock on any business day shall be (i) if the Common Stock is listed
or admitted for trading on any United States national securities exchange, the
last reported sale price of the Common Stock on such exchange or reporting
system, as reported in any newspaper of general circulation, (ii) if the Common
Stock is quoted on Nasdaq or any similar system of automated dissemination of
quotations of securities prices in common use, the closing sales price or, if
not available the mean between the closing high bid and low asked quotations for
such day of the Common Stock on such system, or (iii) if neither clause (i) nor
(ii) is applicable, the mean between the high bid and low asked quotations for
the Common Stock as reported by the National Quotation Bureau, Incorporated if
at least two securities dealers have inserted both bid and asked quotations for
the Common Stock on at least five of the 10 preceding days. If the information
set forth in clauses (i) through (iii) above is unavailable or inapplicable to
the Company (E.G., if the Company's Common Stock is not then publicly traded or
quoted), then the "Fair Market Value" of a Share shall be the fair market value
(I.E., the price at which a willing seller would sell a Share to a willing buyer
when neither is acting under compulsion and when both have reasonable knowledge
of all relevant facts) of a share of the Common Stock on the business day
immediately preceding such date as the Committee in its sole and absolute
discretion shall determine in a fair and uniform manner.
(m) "Grant Date" means the date as of which an Option is granted, as
determined under Section 4(a)(i).
38
(n) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Code.
(o) "Non-Employee Directors" shall have the meaning set forth in Rule
16b-3(b)(3)(i) under the Securities Exchange Act of 1934, as amended.
(p) "Non-Statutory Stock Option" or "Nonqualified Stock Option" shall mean
an Option that is not an Incentive Stock Option.
(q) "Officer" shall mean the Company's chairman, chief executive officer,
president, principal financial officer, principal accounting officer (or, if
there is no such accounting officer, the controller), any vice-president of the
Company in charge of a principal business unit, division or function (such as
sales, administration or finance), any other officer who performs a
policy-making function, or any other person who performs similar policy-making
functions for the Company. Officers of Subsidiaries shall be deemed Officers of
the Company if they perform such policy-making functions for the Company. As
used in this paragraph, the phrase "policy-making function" does not include
policy-making functions that are not significant. Unless specified otherwise in
a resolution by the Board, an "executive officer" pursuant to Item 401(b) of
Regulation S-K (17 C.F.R. ss.229.401(b)) shall be only such person designated as
an "Officer" pursuant to the foregoing provisions of this paragraph.
(r) "Option" (when capitalized) shall mean any stock option granted under
this Plan.
(s) "Optionee" shall mean a Participant to whom an Option is granted under
this Plan or any person who succeeds to the rights of such person under this
Plan by reason of the death of such person.
(t) "Other Stock-Based Award" shall mean any award granted under Section II
of the Plan.
(u) "Participant" shall mean any Employee, non-employee Director, or
consultant who receives an Award under the Plan, and upon his or her death,
their successor, heirs, executors and administrators, as the case may be.
(v) "Performance Award" shall mean any right granted under the Plan.
(w) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.
(x) "Plan" shall mean this 2003 Equity Incentive Plan of the Company, which
Plan shall be effective upon approval by the Board, subject to approval, within
12 months of the date thereof by holders of a majority of the Company's issued
and outstanding Common Stock of the Company.
(y) "Restricted Stock" means a grant or sale of shares of Common Stock to
the Participant subject to a Risk of Forfeiture.
(z) "Restriction Period" means the period of time during which any grant of
Restricted Stock remains at Risk of Forfeiture as described in Section 4(d) and
the applicable Award Agreement.
(aa) "Risk of Forfeiture" means a limitation on the right of the
Participant to retain an Award of Restricted Stock, including a right in the
Company to reacquire the Shares at less than their then Fair Market Value,
arising because of the occurrence or non-occurrence of specified events or
conditions.
(bb) Stock Grant means the grant of shares of Common Stock not subject to
restrictions or other forfeiture conditions.
(cc) "Securities Act" shall mean the Securities Act of 1933, as amended.
(dd) "Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
39
(ee) "Share" or "Shares" shall mean a share or shares, as the case may be,
of the Common Stock, as adjusted in accordance with Section 10 of this Plan.
(ff) "Subsidiary" shall mean any corporation (other than the Company) in
any unbroken chain of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(gg) "Ten Percent Owner" means a person who owns, or is deemed within the
meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company.
Whether a person is a Ten Percent Owner shall be determined with respect to each
Option based on the facts existing immediately prior to the grant date of such
Option.
(hh) "Affiliate" shall mean any company, partnership limited partnership,
corporation, joint venture or other legal entity authorized to transact business
and which the Company owns 5% or more of the equity, debt, or has the right to
nominate 10% or more of the Directors or managing partners, or officers of such
legal entity.
3. Shares and Options. At no time shall the number of shares of Common Stock
issued pursuant to or subject to outstanding Awards granted under the Plan
exceed 5,000,000 shares of Common Stock subject, however, to the provisions of
Section 10 of the Plan. Shares of Common Stock issued pursuant to the Plan may
be either authorized but unissued shares or shares held by the Company in its
treasury. For purposes of applying the foregoing limitation, if any Option
expires, terminates, or is cancelled for any reason without having been
exercised in full, or any Award of Restricted Stock should be forfeited by the
recipient thereof, the shares not purchased by the Optionee or forfeited by such
a recipient shall again be available for Awards thereafter to be granted under
the Plan. If any Option granted under this Plan shall terminate, expire, or be
canceled, forfeited or surrendered as to any Shares, the Shares relating to such
lapsed Option shall be available for issuance pursuant to new Options
subsequently granted under this Plan. Upon the grant of any Option hereunder,
the authorized and unissued Shares to which such Option relates shall be
reserved for issuance to permit exercise under this Plan. An Option granted
hereunder shall be either an Incentive Stock Option or a Non-Statutory Stock
Option as determined by the Committee at the time of grant of such Option and
shall clearly state whether it is an Incentive Stock Option or Non-Statutory
Stock Option. All Incentive Stock Options shall be granted within 10 years from
the effective date of this Plan. Awards of Incentive Options granted prior to
shareholder approval of the Plan are hereby expressly conditioned upon such
approval, but in the event of the failure of the shareholders to approve the
Plan shall thereafter and for all purposes be deemed to constitute Non-Statutory
Options.
4. Specific Terms of Awards.
(a) Options.
(i) Date of Grant. The granting of an Option shall take place at the
time specified in the Award Agreement. Only if expressly so provided in the
applicable Award Agreement shall the Grant Date be the date on which the
Award Agreement shall have been duly executed and delivered by the Company
and the Optionee.
(ii) Exercise Price. The price at which shares may be acquired under
each Incentive Option shall be not less than 90% of the Fair Market Value
of Common Stock on the Grant Date, or not less than 110% of the Fair Market
Value of Common Stock on the Grant Date if the Optionee is a Ten Percent
Owner. The price at which shares may be acquired under each Non-Statutory
Option shall not be so limited solely by reason of this Section.
(iii) Option Period. No Incentive Option may be exercised on or after
the tenth anniversary of the Grant Date, or on or after the fifth
anniversary of the Grant Date if the Optionee is a Ten Percent Owner. The
Option period under each Non-Statutory Option shall not be so limited
solely by reason of this Section.
(iv) Exercisability. An Option may be immediately exercisable or
become exercisable in such installments, cumulative or non-cumulative, as
the Committee may determine. In the case of an Option not otherwise
immediately exercisable in full, the Committee may accelerate the
40
exercisability of such Option in whole or in part at any time, provided the
acceleration of the exercisability of any Incentive Option would not cause
the Option to fail to comply with the provisions of Section 422 of the
Code.
(v) Termination of Association with the Company. Unless the Committee
shall provide otherwise in the grant of a particular Option under the Plan,
if the Optionee's employment or other association with the Company and its
Affiliates is terminated, whether voluntarily or otherwise, any outstanding
Option of the Optionee shall cease to be exercisable in any respect not
later than ninety (90) days following such termination and, for the period
it remains exercisable following termination, shall be exercisable only to
the extent exercisable at the date of termination, provided that if the
termination is for Cause, then the Option shall terminate on the date of
termination. Military, sick or other bona fide leave shall not be deemed a
termination of employment or other association, provided that it does not
exceed the longer of ninety (90) days or the period during which the absent
Optionee's reemployment rights, if any, are guaranteed by statute or by
contract. The Committee in its sole discretion may, by giving written
notice ("cancellation notice"), cancel effective upon the date of the
consummation of any corporate transaction described in Subsection 5(c)
hereof, any Option that remains unexercised on such date. Such cancellation
notice shall be given a reasonable period of time prior to the proposed
date of such cancellation and may be given either before or after approval
of such corporate transaction.
(vi) Exercise of Option. An Option may be exercised by the Optionee
giving written notice, to the Company, specifying the number of shares with
respect to which the Option is then being exercised. The notice shall be
accompanied by payment in the form of cash, or certified or bank check
payable to the order of the Company in an amount equal to the exercise
price of the shares to be purchased or, if the Committee had so authorized
on the grant of any particular Option hereunder (and subject such
conditions, if any, as the Committee may deem necessary to avoid adverse
accounting effects to the Company) by delivery of shares of Common Stock
held at least six (6) months which have a Fair Market Value equal to the
exercise price of the shares to be purchased. Payment of any exercise price
may also be made through and under the terms and conditions of any formal
cashless exercise program maintained by the Company if the Stock becomes
traded on an established market. Receipt by the Company of such notice and
payment shall constitute the exercise of the Option. Within 30 days
thereafter but subject to the remaining provisions of the Plan, the Company
shall deliver or cause to be delivered to the Optionee or his agent a
certificate or certificates for the number of shares then being purchased.
Such shares shall be fully paid and nonassessable.
(vii) Limit on Incentive Option Characterization. An Incentive Option
shall be considered to be an Incentive Option only to the extent that the
number of shares of Common Stock for which the Option first becomes
exercisable in a calendar year does not have an aggregate Fair Market Value
(as of the date of the grant of the Option) in excess of the "current
limit". The current limit for any Optionee for any calendar year shall be
$100,000 minus the aggregate Fair Market Value at the date of grant of the
number of shares of Common Stock available for purchase for the first time
in the same year under each other Incentive Option previously granted to
the Optionee under the Plan, and under each other incentive stock option
previously granted to the Optionee under any other incentive stock option
plan of the Company and its Affiliates. Any shares of Common Stock which
would cause the foregoing limit to be violated shall be deemed to have been
granted under a separate Non-Statutory Option, otherwise identical in its
terms to those of the Incentive Option.
(viii) Notification of Disposition. Each person exercising any
Incentive Option granted under the Plan shall be deemed to have covenanted
with the Company to report to the Company any disposition of such shares
prior to the expiration of the holding periods specified by Section
422(a)(1) of the Code and, if and to the extent that the realization of
income in such a disposition imposes upon the Company federal, state, local
or other withholding tax requirements, or any such withholding is required
to secure for the Company an otherwise available tax deduction, to remit to
the Company an amount in cash sufficient to satisfy those requirements.
(ix) Other Conditions. In granting Options, the Committee shall take
into consideration the contribution the person has made, or is expected to
make, to the success of the Company or its Subsidiaries and such other
factors as the Committee shall determine. The Committee shall also have the
authority to consult with and receive recommendations from Officers and
other personnel of the Company and its Subsidiaries with regard to these
matters. The Committee may from time to time in granting Options under this
Plan prescribe such terms and conditions concerning such Options as it
deems appropriate, including, without limitation, (i) the exercise price or
41
prices of the Option or any installments thereof, (ii)prescribing the date
or dates on which the Option becomes and/or remains exercisable, (iii)
providing that the Option vests or becomes exercisable in installments over
a period of time, and/or upon the attainment of certain stated standards,
specifications or goals, (iv) relating an Option to the continued
employment of the Optionee for a specified period of time, or (v)
conditions or termination events with respect to the exercisability of any
Option, provided that such terms and conditions are not more favorable to
an Optionee than those expressly permitted herein; provided, however, that
to the extent not canceled pursuant to Section 4(a)(v) hereof, upon a
Change of Control, any Options that have not yet vested shall vest upon
such Change of Control. The Options granted to employees under this Plan
shall be in addition to regular salaries, pension, life insurance or other
benefits related to their employment with the Company or its Subsidiaries.
Neither this Plan nor any Option granted under this Plan shall confer upon
any person any right to employment or continuance of employment (or related
salary and benefits) by the Company or its Subsidiaries.
(b) Restricted Stock.
(i) Purchase Price. Shares of Restricted Stock shall be issued under
the Plan for such consideration, in cash, other property or services, as is
determined by the Committee.
(ii) Issuance of Certificates. Each Participant receiving a Restricted
Stock Award, subject to subsection (iii) below, shall be issued a stock
certificate in respect of such shares of Restricted Stock. Such certificate
shall be registered in the name of such Participant, and, if applicable,
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award substantially in the following form:
"The transferability of this certificate and the shares represented by this
certificate are subject to the terms and conditions of The Quantum Group, Inc.'s
2003 Incentive Equity & Option Plan and an Award Agreement entered into by the
registered owner and The Quantum Group, Inc. Copies of such Plan and Agreement
are on file in the offices of The Quantum Group, Inc."
(iii) Escrow of Shares. The Committee may require that the stock
certificates evidencing shares of Restricted Stock be held in custody by a
designated escrow agent (which may but need not be the Company) until the
restrictions thereon shall have lapsed, and that the Participant deliver a
stock power, endorsed in blank, relating to the Stock covered by such
Award.
(iv) Restrictions and Restriction Period. During the period
established by the Committee and set forth in the Award Agreement, i.e.,
the Restriction Period, Restricted Stock shall be subject to limitations on
transferability and a Risk of Forfeiture (which may take the form of a
right of the Company to repurchase the Restricted Stock for such
consideration, if any, as the Committee shall have determined at grant)
arising on the basis of such conditions, related to the performance of
services, Company or Affiliate performance or otherwise, as the Committee
may determine. Any such Risk of Forfeiture may be waived, or the
Restriction Period shortened, at any time by the Committee on such basis as
it deems appropriate.
(v) Rights Pending Lapse of Risk of Forfeiture or Forfeiture of Award.
Except as otherwise provided in the Plan, at all times prior to lapse of
any Risk of Forfeiture applicable to, or forfeiture of, an Award of
Restricted Stock, the Participant shall have all of the rights of a
stockholder of the Company, including the right to vote the shares, and the
right to receive any dividends with respect to the shares of Restricted
Stock. The Committee, as determined at the time of Award, may permit or
require the payment of cash dividends to be deferred and, if the Committee
so determines, reinvested in additional Restricted Stock to the extent
shares are available under Section 3.
(vi) Effect of Termination of Employment or Association. Unless
otherwise determined by the Committee at or after grant and subject to the
applicable provisions of the Award Agreement, upon termination of a
Participant's employment or other association with the Company and its
Affiliates for any reason during the Restriction Period, all shares of
Restricted Stock still subject to Risk of Forfeiture shall be forfeited or
subject to the Company's right of repurchase (as determined from the form
of the Risk of Forfeiture); provided, however, that military, sick or other
bona fide leave shall not be deemed a termination of employment or other
42
association, if it does not exceed the longer of ninety (90) days or the
period during which the absent Participant's reemployment rights, if any,
are guaranteed by statute or by contract.
(vii) Lapse of Restrictions. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock, the
certificates for such shares shall be delivered to the Participant promptly
if not theretofore so delivered.
(c) Stock Grants. Stock Grants shall be awarded solely in recognition of
significant contributions to the success of the Company or its Affiliates, in
lieu of compensation otherwise already due and in such other limited
circumstances as the Committee deems appropriate. Stock Grants shall be made
without forfeiture conditions of any kind.
(d) Cash Bonuses. The Committee may, in its absolute discretion, grant, in
connection with any grant of Restricted Stock or Stock Bonus or at any time
thereafter, a cash bonus, payable promptly after the date on which the
Participant is required to recognize income for federal income tax purposes in
connection with such Restricted Stock or Stock Bonus, in such amounts as the
Committee shall determine from time to time; provided however, that in no event
shall the amount of a Cash Bonus exceed the Fair Market Value of the related
shares of Restricted Stock or Stock Bonus on such date. A Cash Bonus shall be
subject to such conditions as the Committee shall determine at the time of the
grant of such Cash Bonus.
(e) Stock Bonuses. The Committee shall grant Stock Bonuses in such amounts
as it shall determine from time to time. A Stock Bonus shall be paid at such
time and subject to such conditions as the Committee shall determine at the time
of the grant of such Stock Bonus. Certificates for shares of Common Stock
granted as a Stock Bonus shall be issued in the name of the Participant to whom
such grant was made and delivered to such Participant as soon as practicable
after the date on which such Stock Bonus is required to be paid.
5. PERFORMANCE AWARDS.
(a) Grant. The Committee shall have sole and complete authority to
determine the Participants who shall receive a "Performance Award," which shall
consist of a right that is (i) denominated in cash or Shares, (ii) valued, as
determined by the Committee, in accordance with the achievement of such
performance goals during such performance periods as the Committee shall
establish, and (iii) payable at such time and in such form as the Committee
shall determine.
(b) Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the performance goals
to be achieved during any performance period, the length of any performance
period, the amount of any Performance Award and the amount and kind of any
payment or transfer to be made pursuant to any Performance Award.
(c) Payment of Performance Awards. Performance Awards may be paid in a lump
sum or in installments following the close of the performance period or, in
accordance with procedures established by the Committee, on a deferred basis.
6. OTHER STOCK-BASED AWARDS.
The Committee shall have authority to grant to Participants an "Other
Stock- Based Award," which shall consist of any right that is (i) not an Award
described in Sections 6 through 8 above and (ii) an Award of Shares or an Award
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as deemed by the Committee to be consistent
with the purposes of the Plan. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the terms and
conditions of any such Other Stock-Based Award.
7. NON-EMPLOYEE DIRECTOR AWARDS.
43
The Committee may provide that all or a portion of a Non-Employee
Director's annual retainer and/or meeting fees be payable (either automatically
or at the election of a Non-Employee Director) in the form of Nonqualified Stock
Options, Restricted Stock and/or Other Stock-Based Awards, including
unrestricted Shares. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of any such
Awards. In addition, the Committee may, in its sole discretion, grant awards of
Restricted Stock to Non-Employee Directors pursuant to such terms and
conditions, as it may deem advisable, so long as such terms and conditions are
not inconsistent with any other terms of the Plan.
8. PROVISIONS APPLICABLE TO COVERED OFFICERS AND PERFORMANCE-BASED AWARDS.
Notwithstanding anything in the Plan to the contrary, unless the Committee
determines otherwise, all performance-based Restricted Stock Awards, Restricted
Stock Units, Performance Awards, or other Stock-Based Awards shall be subject to
the terms and provisions of this Section 13.
(a) The Committee may grant Restricted Stock Awards, Restricted Stock
Units, Performance Awards and Other Stock-Based Awards to Covered Officers that
vest or become exercisable upon the attainment of performance targets related to
one or more performance goals selected by the Committee from among the goals
specified below. For the purposes of this Section 13, performance goals shall be
limited to one or more of the following Company, subsidiary, operating unit or
division financial performance measures:
(i) earnings before interest, taxes, depreciation and/or amortization
(ii) operating income or profit
(ii) return on equity, assets, capital, capital employed, or investment
(iv) after tax operating income
(v) net income
(vi) earnings or book value per share
(vii) cash flow(s)
(viii) Total sales or revenues or sales or revenues per employee
(ix) production (separate work units or SWUs)
(x) stock price or total shareholder return
(xi) dividends
(xi) strategic business objectives, consisting of one or more objectives
based on meeting specified cost targets, business expansion goals, and
goals relating to acquisitions or divestitures
(viii) except in the case of Section 162(m) awards to Covered Officers, any
other performance criteria established by the Committee or any combination
thereof. Each goal may be expressed on an absolute and/or elative basis,
may be based on or otherwise employ comparisons based on internal targets,
the past performance of the Company and/or the past or current performance
of other Companies, and in the case of earnings-based measures, may use or
employ comparisons relating to capital, shareholders' equity and/or shares
outstanding, or to assets or net assets.
(b) With respect to any Participant, the maximum annual number of shares in
respect of which Restricted Stock Awards, Performance Awards and Other
Stock-Based Awards may be granted under the Plan is 100,000 and the maximum
annual amount of any Award settled in cash is $1,000,000.
(c) To the extent necessary to comply with Section 162(m), with respect to
Restricted Stock Awards, Restricted Stock Units, Performance Awards and Other
Stock-Based Awards, no later than 90 days following the commencement of each
performance period (or such other time as may be required or permitted by
Section 162(m) of the Code), the Committee shall, in writing, (A) select the
performance goal or goals applicable to the performance period, (B) establish
the various targets and bonus amounts which may be earned for such performance
period and (C) specify the relationship between performance goals and targets
and the amounts to be earned by each Covered Officer for such performance
period. Following the completion of each performance period, the Committee shall
certify in writing whether the applicable performance targets have been achieved
and the amounts, if any, payable to Covered Officers for such performance
period. In determining the amount earned by a Covered Officer for a given
performance period, subject to any applicable Award Agreement, the Committee
shall have the right to reduce (but not increase) the amount payable at a given
44
level of performance to take into account additional factors that the Committee
may deem relevant to the assessment of individual or corporate performance for
the performance period.
9. ADJUSTMENT OF SHARES.
(a) Stock Dividend, Etc. In the event of any distribution on Stock payable
in Stock or any split-up or contraction in the number of shares of Stock after
the date of an Award Agreement evidencing an Award, the remaining number of
shares of Stock subject to such Award and the price to be paid for any share
subject to the Award, if any, shall be proportionately adjusted.
(b) Stock Reclassification. In the event of any reclassification or change
of outstanding shares of Stock, immediately thereafter (and subject to further
adjustment for subsequent events) any outstanding Award shall thereafter relate
to shares of stock or other securities equivalent in kind and value to those
shares which the Participant would have received if he or she had held of record
the full remaining number of shares of Stock subject to the Award immediately
prior to such reclassification or change.
(c) Consolidation or Merger. Subject to the remainder of this Section 5(c),
in the event of any consolidation or merger of the Company with or into another
company or in case of any sale or conveyance to another company or entity of the
property of the Company as a whole or substantially as a whole, immediately
thereafter (and subject to further adjustment for subsequent events) any
outstanding Award shall thereafter relate to shares of stock or other securities
equivalent in kind and value to those shares and other securities the
Participant would have received if he or she had held of record the full
remaining number of shares of Stock subject to the Award immediately prior to
such consolidation, merger, sale or conveyance. However, unless any Award
Agreement evidencing the grant of an Option shall provide different or
additional terms, in any such transaction the Committee, in its discretion, may
provide instead that any outstanding Option shall terminate, to the extent not
exercised by the Optionee prior to termination, either (a) at the close of a
period of not less than ten (10) days specified by the Committee and commencing
on the Committee's delivery of written notice to the Optionee of its decision to
terminate such Option without payment of consideration as provided in the
following clause or (b) as of the date of the transaction, in consideration of
the Company's payment to the Optionee of an amount of cash equal to difference
between the aggregate Fair Market Value of the shares of Stock for which the
Option is then exercisable and the aggregate exercise price for such shares
under the Option.
(d) Other. In the event of any corporate action not specifically covered by
the preceding Sections, including but not limited to an extraordinary cash
distribution on Stock, a corporate separation or other reorganization or
liquidation, the Committee may make such adjustment of outstanding Awards and
their terms, if any, as it, in its sole discretion, may deem equitable and
appropriate in the circumstances.
(e) Related Matters. Any adjustment in Awards made pursuant to this Section
5 shall be determined and made, if at all, by the Committee and shall include
any correlative modification of terms, including of option exercise prices,
Risks of Forfeiture and applicable repurchase prices for Restricted Stock, which
the Committee may deem necessary or appropriate so as to ensure the rights of
the Participants in their respective Awards are not substantially diminished nor
enlarged as a result of the adjustment and corporate action. No fraction of a
share shall be purchasable or deliverable upon exercise, but in the event any
adjustment hereunder of the number of shares covered by an Award shall cause
such number to include a fraction of a share, such number of shares shall be
adjusted to the nearest smaller whole number of shares. In the event of changes
in the outstanding Stock by reason of any stock dividend, split-up, contraction,
reclassification, or change of outstanding shares of Stock of the nature
contemplated by this Section 5, the number and kind of shares of Stock available
for the purposes of the Plan as stated in Section 3 shall be correspondingly
adjusted.
(f) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into or exchangeable for shares of its capital stock of any class, either in
connection with a direct or underwritten sale or upon the exercise of rights or
warrants to subscribe therefor or purchase such Shares, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of or exercise price of Shares then subject to
outstanding Options granted under this Plan.
45
(g) Without limiting the generality of the foregoing, the existence of
outstanding Awards granted under this Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, reclassifications, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business; (ii) any merger or
consolidation of the Company or to which the Company is a party; (iii) any
issuance by the Company of debt securities, or preferred or preference stock
that would rank senior to or above the Shares subject to outstanding Awards;
(iv) any purchase or issuance by the Company of Shares or other classes of
Common Stock or common equity securities; (v) the dissolution or liquidation of
the Company; (vi) any sale, transfer, encumbrance, pledge or assignment of all
or any part of the assets or business of the Company; or (vii) any other
corporate act or proceeding, whether of a similar character or otherwise.
(h) The Participant shall receive written notice within a reasonable time
prior to the consummation of such action advising the Participant of any of the
foregoing. The Committee may, in the exercise of its sole discretion, in such
instances declare that any Option shall terminate as of a date fixed by the
Board and give each Optionee the right to exercise his or her Option.
10. NON-TRANSFERABILITY OF AWARDS. Except as otherwise provided in this Section,
Awards shall not be transferable, and no Award or interest therein may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. All of a Participant's
rights in any Award may be exercised during the life of the Participant only by
the Participant or the Participant's legal representative. However, the
Committee may, at or after the grant of an Award of a Non-Statutory Option or
shares of Restricted Stock, provide that such Award may be transferred by the
recipient to an immediate family member; provided, however, that any such
transfer is without payment of any consideration whatsoever, that no transfer of
an Option shall be valid unless first approved by the Committee, acting in its
sole discretion, and that any Restricted Stock so transferred shall remain
subject to any applicable restriction on transfer and Risk of Forfeiture. For
this purpose, "immediate family member" means an individual's parents, siblings,
spouse and issue, spouses of such issue and any trust for the benefit of, or the
legal representative of, any of the preceding persons, or any partnership
substantially all of the partners of which are one or more of such persons or
the Participant.
11. ISSUANCE OF SHARES. As a condition of any sale or issuance of Shares upon
exercise of any Award, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following
(a) (i) a representation and warranty by the Participant to the Company, at
the time any Option is exercised or other Award granted, that he is acquiring
the Shares to be issued to him for investment and not with a view to, or for
sale in connection with, the distribution of any such Shares; and (ii) an
agreement and undertaking to comply with all of the terms, restrictions and
provisions set forth in any then applicable shareholders' or other agreement
relating to the Shares, including, without limitation, any restrictions on sale
or transferability, any rights of first refusal and any option of the Company to
"call" or purchase such Shares under then applicable agreements; and
(b) any restrictive legend or legends, to be embossed or imprinted on Share
certificates, that are, in the discretion of the Committee, necessary or
appropriate to comply with the provisions of any securities law or other
restriction applicable to the issuance of the Shares.
12. ADMINISTRATION OF THIS PLAN.
(a) This Plan shall be administered by a Committee which shall consist of
not less than two Directors. In the event the Common Stock is listed or admitted
for trading on any United States national securities exchange or as otherwise
required by or advisable under any applicable laws, rules or regulations, the
Plan shall be administered by a Committee consisting of not less than two
Non-Employee Directors. The Committee shall have all of the powers of the Board
with respect to this Plan. Any member of the Committee may be removed at any
time, with or without cause, by resolution of the Board and any vacancy
occurring in the membership of the Committee may be filled by appointment by the
Board. In making such determinations, the Committee may take into account the
nature of the services rendered by the respective employees, consultants, and
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directors, their present and potential contributions to the success of the
Company and its subsidiaries, and such other factors as the Committee in its
discretion shall deem relevant.
(b) Subject to the provisions of this Plan, the Committee shall have the
authority, in its sole discretion, to: (i) grant Awards, (ii) determine the
terms, conditions and provisions of each Award granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Award, (iii) determine the Participants to whom, and time or times at which,
Awards shall be granted, (iv) determine the number of Shares to be represented
by each Award, (v) defer (with the consent of the Optionee) or accelerate the
exercise date of any Option or vesting date of any Stock Grant, and (vi) make
all other determinations deemed necessary or advisable for the administration of
this Plan, including repricing, canceling and regranting Awards.
(c) The Committee, from time to time, may adopt rules and regulations for
carrying out the purposes of this Plan. The Committee's determinations and its
interpretation and construction of any provision of this Plan shall be final,
conclusive and binding upon all Participants and any holders of any Awards
granted under this Plan.
(d) Any and all decisions or determinations of the Committee shall be made
either (i) by a majority vote of the members of the Committee at a meeting of
the Committee or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
(e) No member of the Committee, or any Officer or Director of the Company
or its Subsidiaries, shall be personally liable for any act or omission made in
good faith in connection with this Plan.
13. INTERPRETATION.
(a) This Plan shall be administered and interpreted so that all Incentive
Stock Options granted under this Plan will qualify as Incentive Stock Options
under Section 422 of the Code. If any provision of this Plan should be held
invalid for the granting of Incentive Stock Options or illegal for any reason,
such determination shall not affect the remaining provisions hereof, and this
Plan shall be construed and enforced as if such provision had never been
included in this Plan.
(b) This Plan shall be governed by the laws of the State of Nevada.
(c) Headings contained in this Plan are for convenience only and shall in
no manner be construed as part of this Plan or affect the meaning or
interpretation of any part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall be a
reference to such other gender as is appropriate.
(e) Time shall be of the essence with respect to all time periods specified
for the giving of notices to the Company hereunder, as well as all time periods
for the expiration and termination of Options in accordance with Section 9
hereof (or as otherwise set forth in an option agreement).
(f) It is intended that this Plan shall be administered in accordance with
the disinterested administration requirements of Rule 16b-3 promulgated by the
Securities and Exchange Commission ("Rule 16b-3"), or any successor rule
thereto. To the extent any provision of this Plan or action by the Committee
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee. Notwithstanding the above, it shall
be the responsibility of each Optionee, not of the Company or the Committee, to
comply with the requirements of Section 16 of the Securities Exchange Act; and
neither the Company nor the Committee shall be liable if this Plan or any
transaction under this Plan fails to comply with the applicable conditions of
Rule 16b-3 or any successor rule thereto, or if any such person incurs any
liability under Section 16 of the Securities Exchange Act.
14. MARKET STANDOFF OR LOCK-UP AGREEMENTS. Each Participant, if so requested by
the Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act, shall not sell or otherwise transfer any shares of Common Stock
47
acquired pursuant to this Plan during the period as may be agreed to by the
Company and such underwriters (the "Lock-Up Period") following the effective
date of such registration. The Company may impose stop-transfer instructions
with respect to securities subject to the foregoing restriction until the end of
such Lock-Up Period.
15. AMENDMENT AND DISCONTINUATION OF THIS PLAN. Either the Board or the
Committee may from time to time amend this Plan or any Award without the consent
or approval of the shareholders of the Company; PROVIDED, however, that, except
to the extent provided in Section 9, no amendment or suspension of this Plan or
any Award issued hereunder shall substantially impair any Award previously
granted to any Participant without the consent of such Optionee.
16. TERMINATION DATE. This Plan shall terminate 10 years after the date of
adoption by the Board of Directors.
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