Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXYCONSENT SOLICITATION STATEMENT
SCHEDULE 14A INFORMATION
Proxy StatementConsent solicitation statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]|X|
Filed by a Party other than the Registrant [_]|_|
Check the appropriate box:
[_]|_| Preliminary Proxy Statement [_]Consent solicitation statement
|X| Definitive Consent solicitation statement
|_| Definitive Additional Materials
|_| Soliciting Material Under Rule 14a-12
|_| Confidential, For Use of the Commission
Only (as [x] Definitive Proxy Statement permitted by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
SALES ONLINE DIRECT, INC.
(Name of Registrant As Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement,Consent solicitation statement, if Other Than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[x]|X| No fee required.
[_]|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth in the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_]|_| 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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SALES ONLINE DIRECT, Inc.
4 Brussels Street
Worcester, Massachusetts 01610
SOLICITATION OF CONSENTS
TO THE STOCKHOLDERS OF SALES ONLINE DIRECT, INC.:
The Board of Directors of Sales Online Direct, Inc. (the "Company")
requests your consent in writing, without a meeting, to the following proposals:
1. To consider and approve an amendment to the Company's Certificate of
Incorporation as amended, to increasechange the numbername of authorizedthe Company to Paid, Inc.;
2. To consider and approve an amendment to the Company's Certificate of
Incorporation to effect a reverse stock split of all of the
outstanding shares of commoncapital stock from 100,000,000of the Company at a ratio of
one-for-six, to 350,000,000 (the "Charter
Amendment").
The attachedbe effective at any time prior to 12 months after
the date of stockholder approval, in the discretion of the Board of
Directors; and
3. To consider and approve the Company's 2002 Stock Option Plan.
No meeting of stockholders will be held in connection with this Consent
Solicitation Statement describes the matter being
presented to the stockholders inbecause this consent solicitation. Because this
solicitation of written consentsConsent Solicitation is in lieu of a special meeting
of stockholders there
will be no meeting of stockholders held in connection with this consent
solicitation.stockholders. The attached Consent Solicitation Statement is provided to you
pursuant to Rule 14a-3 under the Securities Exchange Act of 1934. We encourage
you toPlease read
the Consent Solicitation Statement thoroughly. YOUR BOARD OF DIRECTORS HAS
UNANIMOUSLY APPROVED EACH OF THE CHARTER AMENDMENTPROPOSALS AND UNANIMOUSLY RECOMMENDS THAT YOU
CONSENT TO THE INCREASE IN THE AUTHORIZED NUMBER
OF SHARES OF COMMON STOCK.EACH PROPOSAL.
Only holders of record of common stock of the Company as of the close of
business on November 6, 2001August 28, 2003 (the "Record Date") are entitled to receive the
accompanying Consent Solicitation Statement and consentConsent and to consent to each
of the Charter Amendment.proposals. Each stockholder is urged to sign, date, and mail the
accompanying consentConsent as promptly as possible in the enclosed self-addressed
stamped
envelope.
BY ORDER OF THE BOARD OF DIRECTORS,
Gregory Rotman
President
November 19, 2001September 5, 2003
Worcester, Massachusetts
YOUR CONSENT IS IMPORTANT TO US
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU OWN. TO ENSURE YOUR CONSENT BEING COUNTED, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED CONSENT AS PROMPTLY AS POSSIBLE AND MAIL IT
IN THE ENCLOSED ENVELOPE. ANY CONSENT GIVEN MAY BE REVOKED BY YOU IN WRITING AT
ANY TIME PRIOR TO THE RECEIPT BY THE COMPANY OF UNREVOKED CONSENTS FROM THE
HOLDERS OF A MAJORITY OF THE COMPANY'S COMMON STOCK. IF YOU HAVE ANY QUESTIONS
ABOUT THIS CONSENT SOLICITATION OR ABOUT PROVIDING YOUR CONSENT, PLEASE CONTACT
GREGORY ROTMAN, PRESIDENT, ATYour Consent is Important to Us
It is important that all of your shares are represented. To ensure that your
consent is counted, please complete, sign and date the enclosed consent as
promptly as possible and mail it in the enclosed envelope. You may revoke in
writing any consent that you give at any time before the consent is used by the
Company. If you have any questions, please contact Gregory Rotman, President, at
(508) 791-6710.
THIS CONSENT SOLICITATION STATEMENT IS BEING PROVIDED TO YOU BY THE
MANAGEMENT OF THE COMPANY
SALES ONLINE DIRECT, Inc.
4 Brussels Street
Worcester, Massachusetts 01610
CONSENT SOLICITATION STATEMENT
The Board of Directors of Sales Online Direct, Inc. (the "Company") hereby
requests consent from the holders of the Company's common stock. Please indicate
your consent by SIGNING, DATING and MAILING the enclosed consent ("Consent")
using the enclosed envelope.
This Consent Solicitation Statement and the accompanying form of Consent
are first being mailed on or about November 19, 2001September 5, 2003 to holders of record of
common stock as of the close of business on November 6, 2001August 28, 2003 (the "Record Date").
Requests for information regarding this Consent Solicitation Statement may
be directed to the attention of Gregory Rotman, President, at (508) 791-6710 or
delivered in writing to the Company at its principal executive office located at
4 Brussels Street, Worcester, MA 01610.
TheAs part of this Consent Solicitation Statement, the Board of Directors of
the Company has proposedasks the holders of record to (1) consider and approve an amendment
to Article
FOURTH of the Company's Certificate of Incorporation as amendedto change the name of the Company
to Paid, Inc. ("Proposal 1"); (2) consider and approve an amendment to the
Company's Certificate of Incorporation"),Incorporation to increaseeffect a reverse stock split of all of
the authorized commonoutstanding shares of capital stock of the Company from
100,000,000 to 350,000,000 shares (the "Charter Amendment"at a ratio of one-for-six
("Proposal 2"); and (3) consider and approve the Company's 2002 Stock Option
Plan ("Proposal 3"). See "Amendment to
Certificate of Incorporation to Increase Authorized Common Stock."
The Delaware General Corporation Law ("DGCL") requires that amendments to a
corporation's certificate of incorporationTo be approved, by stockholders entitled
to vote thereon, as well as by the Board of Directors. Accordingly, the Company
is hereby soliciting consent from the holders of its common stock to the Charter
Amendment. The Charter Amendment requiresProposals 1 and 2 require the consent of
persons holding not less than a majority of the issued and outstanding common
stock on the Record Date.Date, and Proposal 3 requires the consent of persons holding
a majority of shares voting in which a has voted.
SOLICITATION, VOTING AND REVOCABILITY OF CONSENTS
As of the Record Date, 75,074,117the Company had 152,890,371 shares of common stock were
issued and outstanding. Only holders of record of common stock as of the close
of business on the Record Date are entitled to consent to each of the Charter Amendment.proposals.
Each share of common stock is entitled to one vote. The shares of common stock
for which properly executed Consents in the accompanying form are received will,
if no contrary instruction is received, be deemed submitted FOR each of the
Charter Amendment.proposals.
SECTION 228(c) OF THE DGCLDELAWARE GENERAL CORPORATION LAW ("DGCL") REQUIRES
THAT EACH CONSENT HAVE A DATED SIGNATURE OF EACH STOCKHOLDER WHO SIGNS THE
CONSENT. AN UNDATED CONSENT CANNOT BE USED.COUNTED. In addition, under DGCL Section
228(c), none of the Consents will be effective to approve any of the Charter Amendmentproposals
unless Consents from holders of record on the Record Date owning the minimum
number of shares required to approve such proposal have been received within the
60-day period following the first dated Consent which is received with respect
to such proposal (the "Consent Solicitation Period"). The Consent provided may
be executed by the record holder or pursuant to authority given by the written
proxy of any record holder.
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Any Consent given pursuant to this solicitation is considered revocable by
the person giving it at any time before it is used by the Company. If, prior to
the earlier of the date on which the Company has received Consents from persons
holding the minimum number of shares of common stock required to approve any of
the Charter Amendmentproposals or the end of the Consent Solicitation Period, the Company
receives a written notice of revocation of a Consent or receives a duly executed
Consent bearing a later date, any earlier dated consent will be revoked. If theUpon
approval by holders of a majority of the outstanding common stock as of the
Record Date, approve the Charter Amendment, the Company intends to promptly amend the
Certificate of Incorporation in conformity thereto and file a certificate of
amendment ("Certificate of Amendment") with the Delaware Secretary of State. The
Company shall also promptly notify the stockholders who have not
consented to the action taken as required byin accordance with Delaware law.
The Company will bear the cost of the solicitation of Consents by the
Board of Directors. The Company may use the services of its executive officers
and directors to solicit consents from stockholders in person and by mail,
telephone and facsimile. Arrangements may also be made with brokers,
fiduciaries, custodians and nominees to send Consents, Consent Solicitation
Statements and other material to the beneficial owners of the Company's common
stock held of record by such persons, and the Company may reimburse them for
reasonable out-of-pocket expenses incurred by them in so doing.
AMENDMENT TO CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCKCHANGE THE COMPANY'S NAME (Proposal 1)
The Company is currently authorizedproposes to issue 100,000,000 sharesamend the Company's Certificate of Common
Stock, of which 75,074,117 shares are issued and outstanding asIncorporation
to change the name of the Record
Date.Company from Sales Online Direct, Inc. to Paid, Inc.
The Board of Directors believes that it isconsiders the proposed change of the Company's name to be
in the best interests of the Company and its stockholdersstockholders. The Board of
Directors believes that the change will result in a more recognizable corporate
identity, better reflecting the Company's future plans. If permitted, the new
name will also match the Company's "PAID" stock symbol. The new name will also
match an existing registered domain name and website of the Company. The Board
also believes that the name change will enhance marketing capabilities and will
reflect the Company's expanded direction, such as with respect to increasesales of
online management tools to other online sellers, including a shipping
calculator. If approved, the authorized Common Stocknew name will become effective upon the Company's
filing of the Certificate of Amendment with the Secretary of State of the State
of Delaware. The change in corporate name will be accomplished by amending the
first paragraph of the Company's Certificate of Incorporation to 350,000,000 shares. This Charter Amendmentread:
"FIRST: The name of the corporation is Paid, Inc."
The Board of Directors has been unanimously approved by the Board of Directors. Neither the par value of the Common Stock nor any rights
presently accruing to holders of Common Stock will be affected by this increase.proposed charter
amendment. The Board of Directors reserves the right, notwithstanding
stockholder approval and without further action by the stockholders, not to
proceed with the increase
of the authorized capital stockchange in name of the Company if, at any time prior to filing
the amendment with the Secretary of State of Delaware, the Board of Directors,
in its sole discretion, determines that the increasechange in the authorized capital
stockname of the Company is no
longer in the best interests of the Company and its stockholders.
Vote Required; Manner of Approval; Appraisal Rights
Approval to increaseamend the authorized capital stockCertificate of Incorporation to change the Company's
name under the DGCL requires the affirmative vote of the holders of a majority
of the outstanding shares of voting stock of the Company. The Company has no
class of voting stock outstanding other than the Common Stock.common stock.
Section 228 of the DGCL provides generally that, unless the Company's
Certificate of Incorporation provides otherwise, stockholders may take action
without a meeting of stockholders and without prior notice if a consent or
consents, setting forth in writing the action so taken, is signed by the holders
of outstanding voting stock holding not less than the minimum number of votes
that would be necessary to approve such action at a meeting of stockholders.
Under the applicable provisions of the
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DGCL, the proposed charter amendment is authorized when written consents from
holders of record of a majority of the outstanding shares of voting stock on the
Record Date are signed and delivered to the Company. Withholding of consents,
abstentions, and broker non-votes all have the effect of a vote against the
proposed charter amendment.
The charter amendment will become effective upon its filing with the
Secretary of State of Delaware. The proposed form to amend the Company's
Certificate of Incorporation to change the Company's name is attached as
Appendix A and is incorporated by reference in this Consent Solicitation, which
form is, however, subject to change as may be necessary or required by the
Delaware Secretary of State.
Under DGCL Section 262, stockholders are not entitled to appraisal rights,
whether or not stockholders consent to the proposed charter amendment. There may
exist other rights or actions under state law for stockholders.
The Board of Directors recommends a vote for the proposal to amend to the
Company's Certificate of Incorporation to change the name of the Company to
Paid, Inc.
AMENDMENT TO CERTIFICATE OF INCORPORATION TO
EFFECT A REVERSE STOCK SPLIT (Proposal 2)
The Company also proposes to authorize the Company's Board of Directors to
effect a reverse split of all outstanding shares of the Company's common stock
by an amendment to the Company's Certificate of Incorporation. The amendment
would effect a one-for-six reverse stock split. The Board of Directors would
have the sole discretion to elect, as it determines to be in the best interests
of the Company and its stockholders, whether or not to amend the Company's
Certificate of Incorporation to effect a reverse stock split, at any time prior
to 12 months from the date of stockholder approval. If the reverse stock split
authorized by the stockholders is not implemented within 12 months after the
date of stockholder approval, the amendment will be deemed abandoned, without
any further effect. In that case the Board of Directors may again seek
stockholder approval at a future date for a reverse stock split if it deems a
reverse split to be advisable at that time. The Board of Directors believes that
approval of a proposal granting this discretion to the board, rather than
approval of an immediate reverse stock split, provides the board with maximum
flexibility to react to current market conditions and to therefore act in the
best interests of the Company and its stockholders.
If the Board of Directors elects to implement the reverse stock split, the
number of issued and outstanding shares of common stock would automatically be
changed into one-sixth of a share of common stock. The par value of the common
stock would remain unchanged at $0.001 per share, and the number of authorized
shares of common stock would remain unchanged. The reverse stock split would
become effective upon filing the amendment to the Company's Certificate of
Incorporation with the Delaware Secretary of State.
Reasons for the Reverse Stock Split
The Board of Directors believes that the current per-share price of the
common stock has limited the effective marketability of the common stock because
of the reluctance of many brokerage firms and institutional investors to
recommend lower-priced stocks to their clients or to hold them in their own
portfolios. Further, analysts at many brokerage firms do not monitor the trading
activity or otherwise provide research coverage of lower priced or penny stocks.
Certain policies and practices of the securities industry may tend to discourage
individual brokers within those firms from dealing in lower-priced stocks. Some
of these policies and practices involve time-consuming procedures that make the
4
handling of lower priced stocks economically unattractive. The brokerage
commission on a sale of lower priced stock also may represent a higher
percentage of the sale price than the brokerage commission on a higher priced
issue. Any reduction in brokerage commissions resulting from a reverse stock
split may be offset, however, by increased brokerage commissions required to be
paid by stockholders selling "odd lots" created by the reverse stock split.
In addition, the Company's common stock is listed for trading on the OTC
Bulletin Board under the symbol "PAID". On the Record Date the reported closing
price of the common stock on the OTC Bulletin Board was $.109 per share. The
Board of Directors desires to have the Company's common stock eventually listed
with Nasdaq if possible. The Company currently does not qualify for admission to
either the Nasdaq National Market or the Nasdaq SmallCap Market. To qualify in
part for listing, the market price of the Company's common stock must increase
substantially. The Board of Directors hopes that the reverse stock split will
result in fewer shares at a higher price. Even after the reverse split, the
Company anticipates that its per share price of its common stock would be below
the $4.00 level required for admission to the Nasdaq SmallCap Market ($1.00 for
continued listing) or the $5.00 level required for the Nasdaq National Market
($1.00 to $3.00 for continued listing). Currently, the Company also falls below
additional Nasdaq SmallCap Market listing requirements, including the
requirement to have either $5,000,000 in stockholders' equity, $50,000,000 in
market value of listed securities, or $750,000 in net income for two of the last
three fiscal years.
In evaluating the reverse stock split, the Company's Board of Directors
took into consideration negative factors associated with reverse stock splits.
These factors include the negative perception of reverse stock spits held by
many investors, analysts and other stock market participants, as well as the
fact that the stock price of some companies that have effected reverse stock
splits has subsequently declined back to pre-reverse stock split levels. The
Board of Directors, however, determined that these negative factors were
outweighed by the potential benefits.
Potential Effects of the Reverse Stock Split
The immediate effect of a one-for-six reverse stock split would be to
reduce the number of shares of common stock outstanding, and to increase the
trading price of the Company's common stock. However, the effect of any reverse
stock split upon the market price of the Company's common stock cannot be
predicted, and the history of reverse stock splits for companies in similar
circumstances is varied. The Company cannot assure you that the trading price of
the Company's common stock after the reverse stock split will rise in exact
proportion to the reduction in the number of shares of the Company's common
stock outstanding as a result of the reverse stock split. Also, as stated above,
the Company cannot assure you that a reverse stock split would lead to a
sustained increase in the trading price of the Company's common stock, or that
the trading price would reach any of the thresholds required by the Nasdaq
markets. The trading price of the Company's common stock may change due to a
variety of other factors, including the Company's operating results, other
factors related to the Company's business, and general market conditions.
Based on 152,890,371 shares of common stock outstanding as of the Record
Date, the number of shares following the reverse stock split will be 25,481,729,
subject to rounding of fractional shares.
The resulting decrease in the number of shares of the Company's common
stock outstanding could potentially impact the liquidity of the Company's common
stock on the OTC Bulletin Board, especially in the case of larger block trades.
5
Effects on Ownership by Individual Stockholders
If the Company implements the one-for-six reverse stock split, the number
of shares of common stock held by each stockholder would be reduced by dividing
the number of shares held immediately before the reverse stock split by six, and
then rounding up to the nearest whole share. The reverse stock split would
affect the Company's common stock uniformly and would not affect any
stockholder's percentage ownership interests in the Company or proportionate
voting power, except to the extent that whole shares will be exchanged in lieu
of fractional shares.
Effect on Options, Warrants and Other Securities
All outstanding shares of options, warrants, notes, debentures and other
securities entitling their holders to purchase shares of the Company's common
stock would be adjusted as a result of the reverse stock split, as required by
the terms of these securities. In particular, the conversion ratio for each
instrument would be reduced, and the exercise price, if applicable, would be
increased, in accordance with the terms of each instrument and based on the
one-for-six exchange ratio. Also, the number of shares reserved for issuance
under the Company's existing stock option plans would be reduced proportionally
based on the one-for-six exchange ratio. None of the rights currently accruing
to holders of the common stock, options, warrants, notes, debentures or other
securities convertible into common stock, would be affected by the reverse stock
split.
Other Effects on Outstanding Shares
If a reverse stock split were implemented, the rights and preferences of
the outstanding shares of common stock would remain the same after the reverse
stock split. Each share of common stock issued pursuant to the reverse stock
split would be fully paid and nonassessable.
The reverse stock split would result in some stockholders owning
"odd-lots" of less than 100 shares of common stock. Brokerage commissions and
other costs of transactions in odd-lots are generally higher than the costs of
transactions in "round-lots" of even multiples of 100 shares.
The common stock is currently registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended. As a result, the Company is subject
to the periodic reporting and other requirements of the Securities Exchange Act.
The proposed reverse stock split would not affect the registration of the common
stock under the Securities Exchange Act.
Authorized Shares of Common Stock
The reverse stock split, if implemented, would not change the number of
authorized shares of the Company's common stock as designated by the Company's
Certificate of Incorporation. Currently, 350,000,000 shares are authorized.
Therefore, because the number of issued and outstanding shares of common stock
would decrease, the number of shares remaining available for issuance of the
Company's common stock would increase.
Procedure for Effecting the Reverse Stock Split and Exchange of Stock
Certificates
If the Company's stockholders approve the proposed amendment to the
Company's Certificate of Incorporation to effect the reverse stock split, the
Board of Directors may elect whether or not to declare a reverse stock split at
any time prior to 12 months from the date of stockholder approval. The reverse
stock split would be implemented by filing the appropriate amendment to the
Company's Certificate of
6
Incorporation with the Delaware Secretary of State, and the reverse stock split
would become effective on the date of the filing.
As of the effective date of the reverse stock split, each certificate
representing shares of incorporationthe Company's common stock before the reverse stock split
would be deemed, for all corporate purposes, to evidence ownership of the
reduced number of shares of common stock resulting from the reverse stock split.
All options, warrants, convertible debt instruments and other securities would
also be automatically adjusted on the effective date.
The Company anticipates that its transfer agent will act as the exchange
agent for purposes of implementing the exchange of stock certificates. As soon
as practicable after the effective date, stockholders and holders of securities
convertible into the Company's common stock would be notified of the
effectiveness of the reverse split. Stockholders of record would receive a
letter of transmittal requesting them to surrender their stock certificates for
stock certificates reflecting the adjusted number of shares as a result of the
reverse stock split. Persons who hold their shares in brokerage accounts or
"street name" would not be required to take any further actions to effect the
exchange of their certificates. Instead, the holder of the certificate will be
contacted. However, the Company will require that each new certificate
representing shares of common stock of the Company specify and include the name
of the beneficial owner of such shares.
No new certificates would be issued to a stockholder until the stockholder
has surrendered the stockholder's outstanding certificate(s) together with the
properly completed and executed letter of transmittal to the exchange agent.
Until surrender, each certificate representing shares before the reverse stock
split would continue to be valid and would represent the adjusted number of
shares based on the one-for-six exchange ratio of the reverse stock split,
rounded down to the nearest whole share. Stockholders should not destroy any
stock certificate and should not submit any certificates until they receive a
letter of transmittal.
Fractional Shares
The Company will not issue fractional shares in connection with any
reverse stock split. Instead, any fractional share resulting from the reverse
stock split would be rounded up to the nearest whole share.
Accounting Consequences
The par value of the Company's common stock would remain unchanged at
$0.001 per share after the reverse stock split. Also, the capital account of the
Company would remain unchanged, and the Company does not anticipate that any
other accounting consequences would arise as a result of the reverse stock
split.
Federal Income Tax Consequences
The following is a summary of material federal income tax consequences of
the reverse stock split and does not purport to be complete. It does not discuss
any state, local, foreign or minimum income or other tax consequences. Also, it
does not address the tax consequences to holders that are subject to special tax
rules, including banks, insurance companies, regulated investment companies,
personal holding companies, foreign entities, nonresident alien individuals,
broker-dealers and tax-exempt entities. The discussion is based on the
provisions of the United States federal income tax law as of the date hereof,
which is subject to change retroactively as well prospectively. This summary
also assumes that the shares are held as a "capital asset," as defined in the
Internal Revenue Code of 1986, as amended
7
(generally, property held for investment). The tax treatment of a stockholder
may vary depending upon the particular facts and circumstances of the
stockholder. Each stockholder is urged to consult with the stockholder's own tax
advisor with respect to the consequences of the reverse stock split.
No gain or loss should be recognized by a stockholder upon the
stockholder's exchange of shares pursuant to the reverse stock split. The
aggregate tax basis of the shares received in the reverse stock split would be
the same as the stockholder's aggregate tax basis in the shares exchanged. The
stockholder's holding period for the shares would include the period during
which the stockholder held the pre-split shares surrendered in the reverse stock
split.
The Company's beliefs regarding the tax consequence of the reverse stock
split are not binding upon the Internal Revenue Service or the courts, and there
can be no assurance that the Internal Revenue Service or the courts will accept
the positions expressed above. The state and local tax consequences of the
reverse stock split may vary significantly as to each stockholder, depending
upon the state in which he or she resides.
Vote Required; Manner Of Approval; Appraisal Rights
Approval to amend the Certificate of Incorporation to effect a reverse
stock split requires, under the DGCL, the affirmative vote of the holders of a
majority of the outstanding shares of voting stock of the Company. The Company
has no class of voting stock outstanding other than the common stock.
Section 228 of the DGCL provides generally that, unless the Company's
Certificate of Incorporation provides otherwise, stockholders may take action
without a meeting of stockholders and without prior notice if a consent or
consents, setting forth in writing the action so taken, is signed by the holders
of outstanding voting stock holding not less than the minimum number of votes
that would be necessary to approve such action at a meeting of stockholders.
Under the applicable provisions of the DGCL, this actionthe proposed amendment is
effectiveauthorized when written consents from holders of record of a majority of the
outstanding shares of voting stock on the Record Date are signed and delivered
to the Company. Withholding of consent, abstentions, and broker non-votes all
have the effect of a vote against the Charter Amendment.proposed charter amendment.
The Charter Amendmentcharter amendment will become effective upon its filing with the
Secretary of State of Delaware. The form to amend the Company's Certificate of
Charter AmendmentIncorporation to effect the reverse stock split is attached as Appendix A heretoB and is
incorporated by 2
reference herein,in this Consent Solicitation, which form is, however,
subject to change as may be necessary or required by the Delaware Secretary of
State. If Proposals 1 and 2 are approved, the form of amendment is Appendix A
and Appendix B may be combined into one form in the event that the Board of
Directors desires to have both amendments effective at the same time.
Under DGCL Section 262, stockholders are not entitled to appraisal rights,
whether or not stockholders consent to the Charter Amendment.
Reasonsproposed charter amendment. There may
exist other rights or actions under state law for Increase in Authorized Capital Stockstockholders.
The Board of Directors considersrecommends a vote for the proposed increaseamendment to bethe
Company's Certificate of Incorporation to effect the one-for-six reverse stock
split.
8
APPROVAL OF 2002 STOCK OPTION PLAN (Proposal 3)
The Company's Board adopted the 2002 Stock Option Plan (the "Stock Option
Plan") on October 11, 2002, which authorizes the grant of stock options to
officers, directors, employees and consultants of the Company. The grant of
incentive stock options under the Stock Option Plan is contingent upon approval
by the stockholders within 12 months of the date of adoption. Unless extended or
earlier terminated by the Board, the Plan will continue in effect until, and
will terminate on, October 11, 2012. The purpose of the best
interestsStock Option Plan is to
provide incentives for directors, executive officers and key employees of the
Company and its stockholders. The proposed increase ensures
thatsubsidiary and to provide an additional means of attracting and
retaining competent personnel. This Proposal 3 must be approved by an
affirmative vote of a sufficient number of shares of common stock will be available for future
transactions, including acquisitions, stock splits, stock dividends, employee
benefit plans, stock bonus and award plans, satisfaction of debt, and other
general corporate purposes. Asmajority of the Record Date,votes cast by the Company has 75,074,117
sharesholders of common stock issued and outstanding, and approximately 20,000,000
shares reserved for issuance, for approximately 95,074,117 shares of common
stock either issued and outstanding or reserved for issuance. Therefore,
relatively few of the 100,000,000 shares of
Common Stock are available for new
issuances.
The Company has three debt obligationspresent voting in which a quorum has voted. For purposes of this
proposal, abstentions and broker non-votes do not affect the issuancemajority vote.
Administration of the Stock Option Plan
The Stock Option Plan is administered by the Company's Board of Directors
(the "Board"). The Board is authorized to determine and designate from time to
time those individuals to whom options are granted. The granting of an option
takes place when a written and executed option agreement containing the terms
and conditions of the option is delivered to the option holder. Unless an
earlier expiration is specified by the Board in the option agreement, each
option granted under the Stock Option Plan will expire generally on the 10th
anniversary of the date the option was granted. With respect to any stockholder
who prior to the grant holds ten percent or more of the outstanding shares of
the Company prior to the grant, the option will expire on the 5th anniversary of
the date the option was granted.
In the event of termination of employment for cause by any optionee who is
employed by the Company, all unexercised options of the optionee immediately
terminate. In the event of termination of employment of an optionee other than
for cause, all unexercised options will terminate, provided that the optionee,
within 3 months after the termination of employment, may exercise the option to
purchase that number of shares that were purchasable by the optionee at the time
of his or her termination. In the event of the death of an optionee or
termination of employment due to permanent or total disability, the option may
be exercised by the personal representative, administrator, or bequestee, or by
the disabled optionee, as the case may be, within 1 year after the death or
termination of employment, to purchase that number of shares that were
purchasable by the optionee at the time of his or her death or disability.
The Stock Option Plan provides for the reservation of additional30,000,000 shares of
common stock will be necessary. On March 23, 2000,Common Stock of the Company for issuance upon the exercise of options granted
under the Stock Option Plan. This amount represents, in newly issued an 8% convertible note to Augustine Fund, L.P., inshares,
approximately 20% of the principal
amounttotal number of $3,000,000 pursuant to a Securities Purchase Agreement. On November 7,
2001,issued and outstanding shares of the
Company issued a second 8% convertible note to Augustine Fund, L.P.,
in the principal amount of $1,000,000 pursuant to a Loan Agreement. Also on
November 7, 2001, the Company issued a 6% convertible note in the principal
amount of $1,000,000 to Leslie Rotman, the sole stockholder of Rotman
Collectibles, Inc., pursuant to the merger of Rotman Collectibles into a Company
subsidiary. Rotman Collectibles is in the business of buying and selling movie
poster memorabilia.
The Augustine Fund notes are convertible into common stock at a conversion
price equal to 73%as of the average of the closing bid price of the common stock
for five days immediately preceding the conversion date. The Rotman note is
convertible into common stock at a conversion price equal to 80% of the average
of the closing bid price of the common stock for five days immediately preceding
the conversion date.Record Date. The number of shares received upon conversion may be
adjustedreserved for the grant of
options and the number of shares which are subject to outstanding options under
the Stock Option Plan are subject to adjustment in the event of aany stock split,
stock dividend reorganization, merger,
consolidation, or saleother relevant changes in the capitalization of the Company's assets and other similar transactions.
For eachCompany.
Terms of Options
The exercise price for shares being purchased upon the exercise of options
may be paid (i) in cash or by check; (ii) with shares of the three notes,Company, to the
Company has agreed to file withextent the Securities and Exchange Commission a registration statement forfair market value of such shares on the resaledate of exercise equals the
exercise price of the shares issuable upon conversionbeing purchased, (iii) by surrender to the Company
of options to purchase shares, to the extent of the convertible notesdifference between the
exercise price of such options and the paymentfair market value of interestthe shares subject
to such options on the convertible notes.date of such surrender, or (iv) a combination of (i),
(ii) or (iii) above. The Company has already registered 19,692,792
shares of common stock with respectthe right, and the optionee may require the
Company, to the first Augustine Fund note. An
additional registration statement with respect to the first Augustine Fund note,withhold and with respect to the other two notes, will be required. The Company's failure
to register the shares in the time specified in agreements with the respective
note holders would result in a further discount in the conversion price of the
common stock under the notes, to as low as 50% for the second Augustine Fund
note, and 70% for the Rotman note, each based on the average of the closing bid
price of the common stock for five days immediately preceding the conversion
date.
The convertible notes include a restriction that they are convertible by
any holder only to the extent thatdeduct from the number of shares issuable, together withdeliverable upon the
exercise of any options
9
under the Stock Option Plan a number of shares having an aggregate fair market
value equal to the amount of common stock ownedany taxes and other charges that the Company is
obligated to withhold or deduct from amounts payable to the optionee.
No option may be transferred by such holder, butan optionee other than by will and the
laws of descent and distribution, or pursuant to a qualified domestic relations
order. Options are exercisable only by the optionee during his or her lifetime
and only as described in the Stock Option Plan. Options may not including
unconverted portionsbe assigned,
pledged or hypothecated, and are not subject to execution, attachment or similar
process. Upon any attempt to transfer an option, or to assign, pledge,
hypothecate or otherwise dispose of an option in violation of the convertible noteStock Option
Plan, or unexercisableupon the levy of any attachment or warrants, would
not exceed 4.99%similar process upon such option or
such rights, the option immediately becomes null and void.
Exercise Periods
Unless otherwise authorized by the Board, 20% of the then outstandingshares subject to the
option will become exercisable on each anniversary date of the grant of the
option, so that the option will become fully exercisable on the fifth
anniversary of the date the option was granted. However, upon the occurrence of
certain "Extraordinary Events," all options granted under the Stock Option Plan
will become fully exercisable for the full number of shares subject to any such
option. An "Extraordinary Event" is defined as the commencement of a tender
offer (other than by the Company) for any shares of the Company, or a sale or
transfer, in 1 or a series of transactions, of assets having a fair market value
of 50% or more of the fair market value of all assets of the Company, or a
merger, consolidation or share exchange pursuant to which the shares of the
Company are or may be exchanged for or converted into cash, property or
securities of another issuer, or the liquidation of the Company. If an optionee
fails to exercise his or her option upon an Extraordinary Event, or if there is
a capital reorganization or reclassification of the shares, the Company must
take action as may be necessary to enable each optionee to receive upon any
subsequent exercise of his or her options, in lieu of shares, securities or
other assets as were issuable or payable upon the Extraordinary Event in respect
of, or in exchange for, such shares.
New Plan Benefits
During 2002, options to purchase an aggregate of 25,000,000 shares of the
Company's common stock as
determined in accordance with Section 13(d)have been granted to officers and directors of the
Securities Exchange Act of
1934. This 4.99% limit may not prevent
3
any holder from converting all of the convertible note, because the holder can
convert the convertible note into 4.99% of the Company's outstanding common
stock, thenCompany as compensation for their continued services to the extent it liquidates some or allCompany, at an
exercise price of these shares,$.041, which was the holder
can convert additional amountsclosing price of the convertible note. As a result, the 4.99%
limit does not prevent a selling stockholder from selling more than 4.99% of the
Company's common stock, while never holding more than 4.99% at any one time.
The number of shares of common
stock that may ultimately be issued upon
conversion of the three notes presently cannot be determined and could
fluctuate.Company as of the immediately preceding day before the options were
granted. The Company currently does not have enough shares authorized in its
Certificate of Incorporation to satisfyoptions granted under the 2002 Stock Option Plan expire on October
11, 2012. The following table provides information regarding these contractual obligations.
In addition,options:
10
2002 Stock Option Plan
Name and Position Dollar Value ($)(1) Number of Units
Gregory Rotman $ 680,000 10,000,000 (2)
President
Richard Rotman $ 680,000 10,000,000 (2)
Vice President, CFO
Andrew Pilaro $ 136,000 2,000,000 (3)
Director
Executive Group $1,360,000 20,000,000
Non-Executive Director Group $ 136,000 2,000,000
Non-Executive Officer
Employee Group $ 204,000 3,000,000 (4)
(1) Dollar value is based on the Company's current cash position,closing price per share as reported on
the OTCBB as of the Record Date ($.109) less the exercise price of $.041, which
equals $.068.
(2) The Company will
likely need infusions of additional capitalgranted these options pursuant to fund anticipated marketing costs
and operating expenses in the next year, and the Company may seek additional
opportunitiesfollowing vesting
schedule: options to purchase additional inventory with common stock. The Company
does not intend to issue its common stock except on terms that the Company deems
to be in the best interests of the Company and its stockholders.
Under the Company's Certificate of Incorporation, the Company's
stockholders do not have preemptive rights with respect to the common stock.
Thus, should the board of directors issue additional4,000,000 shares of common stock existing stockholders would not have any preferential rightsvest on April 11,
2003; options to purchase shares.
Effect of Issuance of Additional Shares on Common Stock
If the Board of Directors elects to issue additional3,000,000 shares of common stock vest on October 11,
2003, and options to purchase 3,000,000 shares vest on October 11, 2004, subject
to termination, accelerated vesting upon change in control, and other
restrictions.
(3) The Company granted these options pursuant to the issuance could have a dilutive effect on the earnings per share, book
value per share, voting power and shareholdings of current stockholders. The
number offollowing vesting
schedule: options to purchase 800,000 shares of common stock issuable upon conversion of the convertible
notes could have the effect of reducing the Company's stock price, because the
conversion will be inversely proportionalvest October 11,
2002, options to the market price of the common
stock at the dates upon which the holder of the convertible note converts the
convertible note. In addition, to the extent that any holder of the convertible
notes converts and then sells common stock in accordance with the 4.99%
limitation, the common stock price may decrease due to the additional shares in
the market, possibly allowing the holder to convert the convertible note into
greater amounts of common stock, further depressing the stock price.
The additional shares issued upon conversion of the convertible notes would
also dilute the percentage interest of the Company's existing common
stockholders, and this dilution would increase as morepurchase 600,000 shares of common stock are issued duevest October 11, 2003,
and options to purchase 600,000 shares of common stock vest on October 11, 2004,
subject to termination, accelerated vesting upon change in control, and other
restrictions.
(4) The Company granted these options to one other employee pursuant to
the impactfollowing vesting schedule: options to purchase 750,000 shares of common
stock vest October 11, 2002, options to purchase 750,000 shares vest on January
1, 2003, options to purchase 750,000 shares vest on April 1, 2003, and options
to purchase 750,000 shares vest on July 1, 2003, subject to termination,
accelerated vesting upon change in control, and other restrictions.
Tax Consequences
Options granted under the Stock Option Plan may be either incentive stock
options within the meaning of Section 422(b) of the variable conversion price. Each additional
issuanceInternal Revenue Code of
1986, as amended (qualified options), or nonqualified options. The price at
which shares may be purchased upon exercise of an option will be equal to the
fair market value of the shares on the date the option is granted. An employee
realizes no income upon the grant of an incentive stock option. An employee who
holds his or her shares for 2 years after the grant of the option and for 1 year
after he or she receives the shares upon conversion would increaseits exercise generally will not incur
any federal income tax liability upon receipt of the supplyshares pursuant to the
exercise. However, the spread between the exercise price and the fair market
value of the shares at the time of exercise will be included in alternative
minimum taxable income for the year of exercise. After satisfying such holding
periods, upon a disposition of the shares at a price greater than the option
exercise price, the employee will realize taxable long-term capital gain. The
Company will not be allowed a deduction for federal income tax purposes in
connection with the grant or exercise of a qualified option; however, if the
employee does not comply with the holding periods, he or she will
11
realize ordinary income in the year of sale equal to the difference between the
exercise price and the value of the underlying shares on the date of exercise
(or the sale price if lower where the sale is to an unrelated party). Where the
sale price is lower than the fair market value of the shares on the date of
exercise and the sale is to an unrelated party, and the exercise and sale occur
within the same taxable year, the amount included in alternative minimum taxable
income will be the amount of the sale price. In such a case, the Company would
be entitled to a deduction in an amount equal to the ordinary income realized by
the employee.
Optionees will realize no income upon the grant of a nonqualified option.
Generally, however, the holder of a nonqualified option will realize taxable
ordinary income at the time of the exercise of his or her option in an amount
equal to the excess of the fair market value of the shares acquired at the time
of exercise over the exercise price of the option, and the Company will be
entitled to a deduction for the amount included in the optionee's income. Upon
the sale of the shares, the optionee will realize capital gain or capital loss.
Whether such capital gain or capital loss is long-term or short-term will depend
upon the period of time the optionee holds the shares once they are acquired.
Interest of Executive Officers in Approval of the Stock Option Plan
Executive officers, and directors, of the Company will be eligible to
participate in the Stock Option Plan and, therefore, have an interest in the
approval of the plan because they could receive a financial benefit under the
plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE STOCK
OPTION PLAN.
EXECUTIVE COMPENSATION
The following table sets forth the compensation of the Company's chief
executive officer, the chief financial officer, and each officer whose total
cash compensation exceeded $100,000, for the last three fiscal years ended
December 31, 2002, 2001 and 2000.
Summary Compensation Table
----------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
---------------------------
Awards
----------------------------------------------------------------------------------------------------------------
Name and Fiscal Securities Underlying
Principal Position(1) Year (1) Salary Options
(#)
----------------------------------------------------------------------------------------------------------------
Gregory Rotman 2002 $ 83,464 (1)
President and Chief Executive 2001 $ 74,704 0
Officer 2000 $ 98,928 0
----------------------------------------------------------------------------------------------------------------
Richard Rotman 2002 $ 83,464 (1)
Chief Financial Officer and Vice 2001 $ 75,667 0
President and Secretary 2000 $ 98,771 0
----------------------------------------------------------------------------------------------------------------
(1) On October 11, 2002, both Gregory Rotman and Richard Rotman were
granted options to purchase 10,000,000 shares of common stock at an exercise
price of $.041, under the Company's 2002 Stock Option Plan, pursuant to the
following vesting schedule: options to purchase 4,000,000 shares of common stock
vest on April 11,
12
2003; options to purchase 3,000,000 shares of common stock vest on October 11,
2003, and options to purchase 3,000,000 shares vest on October 11, 2004, subject
to termination, change in control and other restrictions.
The following table sets forth certain information related to options
granted to the named executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
(Individual Grants)
----------------------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options/
Underlying SARs Granted
Options/ to Employees Exercise or Base Expiration
Name SARs Granted (#) in Fiscal Year Price ($/Sh) Date
----------------------------------------------------------------------------------------------------------------
Gregory Rotman, President and CEO 10,000,000 37.88% $.041 October 11,
2012
----------------------------------------------------------------------------------------------------------------
Richard Rotman, Vice President, CFO and 10,000,000 37.88% $.041 October 11,
Secretary 2012
----------------------------------------------------------------------------------------------------------------
The following table sets forth certain information related to the number
of options exercised and the number and value of exercisable and unexercisable
options of the named executive officers as of December 31, 2002:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
----------------------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs at Options/SARs at
Shares Value FY-End (#) FY-End ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
----------------------------------------------------------------------------------------------------------------
Gregory Rotman, President and CEO 0 $0 0/10,000,000 $0/$130,000
----------------------------------------------------------------------------------------------------------------
Richard Rotman, Vice President, CFO and 0 $0 0/10,000,000 $0/$130,000
Secretary
----------------------------------------------------------------------------------------------------------------
(1) Based on closing price of $.054 on December 31, 2002 as reported by the OTC
Bulletin Board.
None of the Company's directors receives any compensation from the Company
for serving as directors. However, on October 11, 2002, Andrew Pilaro received
options to purchase 2,000,000 shares of common stock at an exercise price of
$.041, pursuant to the 2002 Stock Option Plan, subject to the following vesting
schedule: options to purchase 800,000 shares of common stock vest immediately;
options to purchase 600,000 shares of common stock vest October 11, 2003, and
options to purchase 600,000 shares of common stock vest on October 11, 2004.
Based on a result, may cause the marketclosing price of the Company's common stock to decline. The effect of this increased supply of common stock leading to
a lower market price may be magnified if there are sequential conversions of the
convertible notes into shares of common stock. A holder of a convertible note
could convert a portion of the convertible note and then sell the common stock
issued upon conversion, which could result in a drop in the Company's stock
price. If the stock price were to decrease, then a holder could convert the
convertible note at a lower conversion price, and be issued a greater number of
shares of common stock due to the lower conversion price. The increase in the
aggregate number of shares of common stock issued upon conversion of the
convertible note above what it would otherwise be could place significant
downward pressureas report on the Company's stock price. This downward pressure on the
Company's stock price might encourage market participants to sell the Company's
stock short, which would put further downward pressure on the Company's stock
price. In issuing the additional shares, however, the Company would avoid
repaying in cash the aggregate principal amount of $5,000,000 for the three
notes.
4
Potential Anti-Takeover Effect
Although the Company'sOTC
Bulletin Board of Directors believes that the proposed change
to the present Certificate$.054 as of Incorporation is beneficial to stockholders, the
provisions mayDecember 31, 2002, Mr. Pilaro's exercisable
options have the effecta value of rendering the Company less attractive to
potential hostile acquirors. Therefore, the action may$10,400, and Mr. Pilaro's unexercisable options have the effecta
value of discouraging future takeover attempts from which stockholders may, or may not,
obtain a premium for their shares over current market prices. The provisions
could also render the removal of the incumbent Board of Directors more
difficult. The Board of Directors believes, however, that the potential benefits
outweigh these possible disadvantages.$15,600.
13
INTEREST OF CERTAIN PERSONS IN OR IN
OPPOSITION TO MATTERS TO BE ACTED UPON MATTERS
No director, executive officer, associate of any director or executive
officer, or any other person has any substantial interest, direct or indirect,
by security holdings or otherwise, in any of the proposed Charter Amendment whichproposals that is not shared by
all other stockholders, except that,as otherwise described under the holderheading
"Interest of Executive Officers in Approval of the Rotman note
is Leslie Rotman, who is the mother of Gregory Rotman, the Company's President
and CEO, and a director of the Company, and Richard Rotman, the Company's
Executive Vice President and CFO, and a director of the Company. The Company
believes that the merger transaction related to the issuance of the Rotman note
was on terms that were fair and reasonable to the Company and no less favorable
than could have been obtained by an unaffiliated party.Stock Option Plan".
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the knowledge of the Company's management, the following table sets
forth the beneficial ownership of Common Stock as of the Record Date of each of
the Company's directors and executive officers, and all of the Company's
directors and executive officers as a group. The address of each person named
below is the address of the Company.
Name and Address of Number of Shares % of
Beneficial Owner Beneficially Owned Class
---------------- ------------------ -----
Gregory Rotman 8,309,005 11.06%
Richard Rotman 10,155,451 13.52%
John Martin 1,788,702(1) 2.38%
Andrew Pilaro 51,500 .06%
All directors and executive 20,304,658 27.04%
Name and Address of Number of Shares % of
Beneficial Owner Beneficially Owned Class
---------------- ------------------ -----
Gregory Rotman 15,309,005 (1) 9.1%
Richard Rotman 17,155,451 (1) 10.2%
Andrew Pilaro 1,468,700 (2) .01%
All directors and executive 33,933,156 20.16%
officers as a group
- ----------
(1) Includes 294,7504,000,000 currently exercisable options to purchase shares of
Common
Stock.common stock at an exercise price of $.041, and options for an additional
3,000,000 shares exercisable within 60 days at $.041 per share.
(2) Includes 800,000 currently exercisable options to purchase shares of common
stock at an exercise price of $.041, and options for an additional 600,000
shares exercisable within 60 days at $.041 per share.
To the knowledge of the Company's management, as of the Record Date, there
are no persons and/or companies who or which beneficially own, directly or
indirectly, shares carrying more than 5% of the voting rights attached to all
outstanding shares of the Company, other than Gregory Rotman and Richard Rotman,
as set forth above, and the following persons:
5
Name and Address of Number of Shares % of
Beneficial Owner Beneficially Owned Class
---------------- ------------------ -----
Marc Stengel 8,994,119(1) 11.98%
3743 Birch Lane
Owings Mills, MD 21117
Hannah Kramer 5,139,337 6.84%
673 Korisa Drive
Huntingdon Valley, PA 19006
- ----------
(1) Based solely upon the Form 4 filed with the Securities and Exchange
Commission on November 9, 2001.above.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
The Company has not scheduled an annual meeting for 2003, and will
announce the date of meeting promptly after the Company's board of directors
determines to schedule a meeting. In order for a proposal by a stockholder of
the Company to be included in the Company's proxy statement for the 2002an annual
meeting, shareholder proposals for inclusion in the Company's proxy statement
and form of stockholders,proxy, the proposal must be received by the Company no later than January 23, 2002.within a
reasonable time before the Company begins to print and mail its proxy statement
and form of proxy. Stockholders who intend to present a proposal at the 2002next
annual meeting of stockholders, but who do not wish to have such proposal
included in the Company's Proxy Statementproxy statement for such meeting, must provide notice
of such proposal to the Company's Secretary at the Company's executive offices
not later than
April 8, 2002.within a reasonable time before the Company mails its proxy statement for the
annual meeting.
14
OTHER MATTERS
The Board of Directors knows of no other matters other than those
described in this Consent Solicitation Statement which must be approved or
considered by the holders of the Company's voting stock.
IF YOU HAVE ANY QUESTIONS REGARDING THIS CONSENT SOLICITATION STATEMENT
AND/OR ANY OF THE CHARTER AMENDMENT,PROPOSALS, PLEASE CONTACT:
Sales Online Direct, Inc.
4 Brussels Street
Worcester, Massachusetts 01610
(508) 791-6710
BY ORDER OF THE BOARD OF DIRECTORS
Gregory Rotman
President
615
APPENDIX A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SALES ONLINE DIRECT, INC.
Sales Online Direct, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by unanimous
written consent of its members pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware, filed with the minutes of the Board of
Directors, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation.
RESOLVED, that the Certificate of Incorporation of Sales
Online Direct, Inc. be amended by changing the FOURTHFIRST Article thereof so that, as
amended, said Article shall be and read in its entirety as follows:
"FOURTH:"FIRST: The amount of total authorized capital stockname of the corporation shall be divided into 350,000,000 shares of common stock
having a par value of $.001 each.is Paid, Inc."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders holding a majority of the outstanding shares of stock entitled to
vote on the amendment have given written consent to said amendment in accordance
with the provisions of Section 228 of the General Corporation Law of the State
of Delaware and written notice of the adoption of the amendment has been given
as provided in Section 228 of the General Corporation Law of the State of
Delaware to every stockholder entitled to such notice.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of section 242 and Section 228 of the General
Corporation Law of the State of Delaware.
FOURTH: That this CertificationCertificate of Amendment of the Certificate of
Incorporation shall be effective on the date of filing.
IN WITNESS WHEREOF, said Sales Online Direct, Inc., has caused this
Certificate to be executed, acknowledged and filed by its President this ____
day of ________,___________, 200_.
SALES ONLINE DIRECT, INC.
By:
---------------------------------------------------------------
Gregory Rotman, President
APPENDIX B
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SALES ONLINE DIRECT, INC.
Sales Online Direct, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by unanimous
written consent of its members pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware, filed with the minutes of the Board of
Directors, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said corporation.
RESOLVED, that the Certificate of Incorporation of Sales Online
Direct, Inc. be amended, by changing the Fourth Article thereof so that,
as amended, said Article shall be and read in its entirety as follows:
"FOURTH: The amount of total authorized capital stock of the
corporation shall be divided into 350,000,000 shares of common stock
having a par value of $.001 each. Upon this Certificate of Amendment
to the Certificate of Incorporation of the corporation becoming
effective in accordance with the General Corporation Law of the
State of Delaware (the "Effective Time"), each six (6) shares of
common stock, par value $.001 per share ("Old Common Stock"), of the
corporation issued and outstanding immediately prior to the
Effective Time shall be, without any action of the holder thereof,
automatically reclassified as and converted into one (1) share of
common stock, par value $.001 per share ("New Common Stock"), of the
corporation. The capital account of the corporation shall not be
increased or decreased by such changes, reclassification and
conversion, and such changes, reclassification and conversion shall
also apply to all capital stock to be issued in connection with the
exercise of any of the corporation's outstanding options or warrants
without any further action by the holders thereof or the corporation
or the stockholders of the corporation.
Notwithstanding the immediately preceding paragraph, no fractional
shares of New Common Stock shall be issued to the holders of record
of Old Common Stock in connection with the foregoing
reclassification of shares of Old Common Stock. In lieu thereof, the
corporation shall round each fractional share up to the nearest
whole share.
Each stock certificate that, immediately prior to the Effective
Time, represented shares of Old Common Stock shall, from and after
the Effective Time, automatically and without the necessity of
presenting the same for exchange, represent that number of whole
shares of New Common Stock into which the shares of Old Common Stock
represented by such certificate shall have been reclassified (as
well as the right to
receive one whole share in lieu of any fractional share of New
Common Stock). Each holder of record of a certificate that
represented shares of Old Common Stock shall receive, upon surrender
of such certificate, a new certificate representing the number of
whole shares of New Common Stock into which the shares of Old Common
Stock represented by such certificate shall have been reclassified,
as well as one whole share in lieu of any fractional share of New
Common Stock to which such holder may be entitled pursuant to the
immediately preceding paragraph."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders holding a majority of the outstanding shares of stock entitled to
vote on the amendment have given written consent to said amendment in accordance
with the provisions of Section 228 of the General Corporation Law of the State
of Delaware and written notice of the adoption of the amendment has been given
as provided in Section 228 of the General Corporation Law of the State of
Delaware to every stockholder entitled to such notice.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of section 242 and Section 228 of the General
Corporation Law of the State of Delaware.
FOURTH: That this Certificate of Amendment of the Certificate of
Incorporation shall be effective on the date of filing.
IN WITNESS WHEREOF, said Sales Online Direct, Inc., has caused this
Certificate to be executed, acknowledged and filed by its President this ____
day of ___________, 200_.
SALES ONLINE DIRECT, INC.
By:
-------------------------
Gregory Rotman, President
SALES ONLINE DIRECT, INC.
4 Brussels Street
Worcester, Massachusetts 01610
CONSENT
THIS CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF DIRCTORS OF
SALES ONLINE DIRECT, INC.
The undersigned stockholder of Sales Online Direct, Inc. (the "Company")
as of November 6, 2001,August 28, 2003, hereby consents, pursuant to Section 228 of the Delaware
General Corporation Law, with respect to all shares of common stock, par value
$.001 per share, of the Company held by the undersigned, to the following action
without a meeting, without prior notice and without a vote.
Proposal (1): To approve an amendment to the Company's Certificate of
Incorporation, as amended, to increasechange the numbername of authorized shares of Common
Stock, $.001 par value,the Company from 100,000,000Sales Online
Direct, Inc. to 350,000,000 shares.Paid, Inc.
CONSENT _________ CONSENT WITHHELD _________ ABSTAIN _________
Proposal (2): To approve an amendment to the Company's Certificate of
Incorporation, as amended, to effect a reverse split of the Company's
outstanding common stock at a ratio of one-for-six, to be effective at any time
prior to 12 months after the date of stockholder approval, in the discretion of
the Board of Directors.
CONSENT ____ CONSENT WITHHELD ____ ABSTAIN ____
Proposal (3): To approve the 2002 Stock Option Plan.
CONSENT ____ CONSENT WITHHELD ____ ABSTAIN ____
If no space is marked above with respect to the Charter Amendment,Proposal 1, 2 or 3, the undersigned
will be deemed to consent to such amendment.proposal.
PLEASE SIGN, DATE AND RETURN THIS CONSENT PROMPTLY, USING THE ENCLOSED
ENVELOPE. JOINT OWNERS SHOULD EACH SIGN PERSONALLY. IF SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE INCLUDE YOUR FULL TITLE.
CORPORATE PROXIES SHOULDMUST BE SIGNED BY AN AUTHORIZED OFFICER.
Date: _______________________________, 2001___________________________________, 2003
(Date is Mandatory for all Consents)
- -------------------------------------------___________________________________________
(Printed Name of Stockholder)
- -------------------------------------------___________________________________________
(Signature of Stockholder)
- -------------------------------------------___________________________________________
(Signature of Stockholder, if held jointly)