SCHEDULE 14a
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
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THE SECURITIES
EXCHANGE ACT OF 1934
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EMRISE CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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2
EMRISE CORPORATION
9485 HAVEN AVENUE, SUITE 100
RANCHO CUCAMONGA, CALIFORNIA 91730
March __, 2005
Dear Stockholders:
You are cordially invited to attend the Emrise Corporation special
meeting of stockholders that will be held on April 15, 2005, at 10:00 a.m.
local time, at our headquarters located at 9485 Haven Avenue, Suite 100,
Rancho Cucamonga, California 91730. All holders of our outstanding common
stock as of the close of business on March 7, 2005 are entitled to vote
at the special meeting.
Enclosed are a copy of the notice of special meeting of stockholders,
a proxy statement and a proxy card. We hope you will be able to attend the
special meeting. Whether or not you expect to attend, it is important that
you complete, sign, date and return the proxy card in the enclosed envelope
in order to make certain that your shares will be represented at the
special meeting.
Sincerely,
Randolph D. Foote,
Secretary
EMRISE CORPORATION
9485 HAVEN AVENUE, SUITE 100
RANCHO CUCAMONGA, CALIFORNIA 91730
----------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 15, 2005
----------------------
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of
Emrise Corporation, a Delaware corporation, will be held at our headquarters
located at 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California, on
April 15, 2005 at 10:00 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to amend our certificate
of incorporation in order to increase our authorized common
stock from 50,000,000 shares to 150,000,000 shares and make
clarifying changes.
2. To consider and vote upon a proposal to amend our certificate
of incorporation in order to clarify the mechanics of our
classified board.
3. To consider and vote upon a proposal to amend and restate our
certificate of incorporation in order to modernize and conform
our certificate of incorporation to current Delaware corporate
law and practices.
4. To transact such other business as may properly come before the
special meeting or any adjournments and postponements thereof.
Our board of directors has fixed the close of business on March 7, 2005
as the record date for determining those stockholders who will be entitled to
notice of and to vote at the special meeting. Only holders of our common stock
at the close of business on the record date are entitled to vote at the special
meeting. Stockholders whose shares are held in the name of a broker or other
nominee and who desire to vote in person at the special meeting should bring
with them a legal proxy.
By Order of the Board of Directors,
Randolph D. Foote, Secretary
Rancho Cucamonga, California
March __, 2005
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN AND
DATE THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. Returning a signed proxy card will help us secure a quorum and avoid
the expense of additional proxy solicitation. If you later desire to revoke your
proxy for any reason, you may do so in the manner described in the attached
proxy statement.
TABLE OF CONTENTS
Page
----
VOTING AND PROXY...............................................................1
PROPOSAL 1 - APPROVAL OF AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
IN ORDER TO INCREASE OUR AUTHORIZED COMMON STOCK FROM 50,000,000
SHARES TO 150,000,000 SHARES AND MAKE CLARIFYING CHANGES...................3
PROPOSAL 2 - APPROVAL OF AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
IN ORDER TO CLARIFY THE MECHANICS OF OUR CLASSIFIED BOARD..................5
PROPOSAL 3 - APPROVAL OF AMENDMENT AND RESTATEMENT OF CERTIFICATE OF
INCORPORATION IN ORDER TO MODERNIZE AND CONFORM OUR CERTIFICATE OF
INCORPORATION TO CURRENT DELAWARE CORPORATE LAW AND PRACTICES..............6
OTHER MATTERS..................................................................8
STOCKHOLDER PROPOSALS..........................................................8
AVAILABLE INFORMATION..........................................................8
APPENDIX A - SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION........A-1
APPENDIX B - ARTICLE FOURTH OF EXISTING CERTIFICATE OF INCORPORATION.........B-1
APPENDIX C - ARTICLE EIGHTH OF EXISTING CERTIFICATE OF INCORPORATION.........C-1
EMRISE CORPORATION
9485 HAVEN AVENUE, SUITE 100
RANCHO CUCAMONGA, CALIFORNIA 91730
------------------
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
APRIL 15, 2005
------------------
VOTING AND PROXY
We are furnishing this proxy statement in connection with the
solicitation of proxies by our board of directors for use at the special meeting
of stockholders to be held at 10:00 a.m. local time on April 15, 2005, at our
offices at 9485 Haven Avenue, Suite 100, Rancho Cucamonga, California 91730, and
at any and all adjournments and postponements of the meeting. This proxy
statement and the accompanying notice of special meeting and proxy card are
first being mailed to stockholders on or about March , 2005.
A proxy card is enclosed for your use. The shares represented by each
properly executed unrevoked proxy card will be voted as directed by the
stockholder with respect to the matters described in the proxy card. If no
direction is made, the shares represented by each properly executed proxy card
will be voted "for" each of the proposals listed on the proxy card. Any proxy
given may be revoked at any time prior to its exercise by filing with our
secretary an instrument revoking the proxy or by filing a duly executed proxy
card bearing a later date. Any stockholder present at the special meeting who
has given a proxy may withdraw it and vote his or her shares in person if he or
she so desires. However, a stockholder who holds shares through a broker or
other nominee must bring a legal proxy to the special meeting if that
stockholder desires to vote at the special meeting.
At the close of business on March 7, 2005, the record date for
determining the stockholders entitled to notice of and to vote at the special
meeting, we had issued and outstanding ______________ shares of common stock
held by ___ holders of record. Only holders of record of our common stock at the
close of business on the record date are entitled to notice of and to vote at
the special meeting or at any adjournments and postponements of the meeting.
Each share of our common stock issued and outstanding at the close of
business on the record date entitles the holder of that share to one vote at the
special meeting for all matters to be voted on at the special meeting. The
holders of a majority of our shares of common stock issued and outstanding and
entitled to vote at the special meeting, present in person or represented by
proxy, shall constitute a quorum for purposes of voting on the proposals. Shares
of our common stock represented in person or by proxy (regardless of whether the
proxy has authority to vote on all matters), as well as abstentions and broker
non-votes, will be counted for purposes of determining whether a quorum is
present at the meeting.
An "abstention" is the voluntary act of not voting by a stockholder who
is present at a meeting and entitled to vote. "Broker non-votes" are shares of
voting stock held in record name by brokers and nominees concerning which: (i)
instructions have not been received from the beneficial owners or persons
entitled to vote; (ii) the broker or nominee does not have discretionary voting
power under applicable rules or the instrument under which it serves in such
capacity; or (iii) the record holder has indicated on the proxy or has executed
a proxy and otherwise notified us that it does not have authority to vote such
shares on that matter.
Approval of proposal 1, the amendment and restatement of our
certificate of incorporation in order to increase our authorized common stock
from 50,000,000 shares to 150,000,000 shares and make clarifying changes,
requires the affirmative vote of the majority of our outstanding shares of
common stock as of the record date.
Approval of proposal 2, the amendment of our certificate of
incorporation in order to clarify the mechanics of our classified board,
requires the affirmative vote of holders of not less than 67% of the outstanding
shares of our common stock as of the record date.
Except as described in the discussion of proposal 3 below, approval of
proposal 3, the amendment and restatement of our certificate of incorporation in
order to modernize and conform our certificate of incorporation to current
Delaware corporate law and practices, requires the affirmative vote of holders
of a majority of outstanding shares of our common stock as of the close of
business on the record date.
Votes cast at the special meeting will be tabulated by the person or
persons appointed by us to act as inspectors of election for the special
meeting. For each of proposals 1, 2 and 3, the effect of an abstention or broker
non-vote will be the same as a vote "against" the proposal, because an absolute
number of affirmative votes is required, regardless of how many votes are cast,
and abstentions and broker non-votes are not affirmative votes.
For any other matter that may properly come before the meeting, unless
otherwise expressly provided by applicable statute or by our certificate of
incorporation or bylaws, the affirmative vote of the majority of shares present
in person or represented by proxy at the meeting and entitled to vote on the
proposal will constitute the act of the stockholders. In that case, abstentions,
but not broker non-votes, would be treated as shares present and entitled to
vote on the proposal. Applying that standard, an abstention would be counted as
a vote "against" the proposal, and a broker non-vote would reduce the absolute
number (although not the percentage) of the affirmative votes needed for
approval of the proposal.
We will pay the expenses of soliciting proxies for the special meeting,
including the cost of preparing, assembling and mailing the proxy solicitation
materials. Proxies may be solicited personally, by mail or by telephone, or by
our directors, officers and regular employees who will not be additionally
compensated. We have no present plans to hire special employees or paid
solicitors to assist in obtaining proxies, but we reserve the option to do so if
it appears that a quorum otherwise might not be obtained. The matters to be
considered and acted upon at the special meeting are referred to in the
preceding notice and are discussed below more fully.
2
PROPOSAL 1
APPROVAL OF AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
IN ORDER TO INCREASE OUR AUTHORIZED COMMON STOCK
FROM 50,000,000 SHARES TO 150,000,000 SHARES
AND MAKE CLARIFYING CHANGES
Our board of directors has adopted by unanimous written consent a
proposed amendment to our existing certificate of incorporation ("existing
certificate") that would increase our authorized capital and make certain other
clarifying changes by replacing Article Fourth of our existing certificate,
which article is attached to this proxy statement as APPENDIX B, with Article IV
that is contained in our proposed Second Amended and Restated Certificate of
Incorporation ("amended certificate") that is attached to this proxy statement
as APPENDIX A.
Article Fourth of our existing certificate provides for 50,000,000
shares of common stock, 1/3 cent par value per share, and 10,000,000 shares of
preferred stock, $0.01 par value per share. All 10,000,000 shares of authorized
preferred stock are undesignated preferred shares that may be issued in one or
more series as designated from time to time by our board of directors.
As of March __, 2005, we had outstanding ______________ shares of
common stock and had reserved for issuance an additional _____________ shares of
common stock to cover the exercise of options to purchase up to ____________
shares of common stock and warrants to purchase up to shares of common stock,
and we had no shares of preferred stock outstanding. Also as of that date, we
had available for issuance an additional ______________ shares of common stock
and 10,000,000 shares of undesignated preferred stock. The proposed amendment
would increase our authorized number of shares of common stock from 50,000,000
to 150,000,000. Accordingly, if this proposed amendment had been effective as of
March __, 2005, we would have had available for issuance ________________ shares
of common stock plus 10,000,000 shares of undesignated preferred stock.
The additional authorized shares of common stock that would become
available if this proposed amendment is approved by our stockholders and filed
with the Delaware Secretary of State may be issued from time to time as our
board of directors may determine, without prior notice to or further action of
our stockholders. The issuance of any or all of these additional authorized
shares of common stock from time to time would cause dilution to the voting
rights and earnings per share of our outstanding shares of common stock.
However, we believe that approval of the proposed increase is in the best
interests of our company and our stockholders because the increase would make
additional shares of common stock available for acquisitions or financings that
could be used to enhance our business and results of operations, and for other
corporate purposes.
Although we have no definitive plans to utilize such shares to entrench
present management, we may, in the future, be able to use the additional
authorized shares of common stock as a defensive tactic against hostile takeover
attempts by issuing additional shares under a stockholder rights plan, in a
private placement or other transaction that causes substantial dilution to a
person or group that attempts to acquire control of our company through a merger
or tender offer on terms or in a manner not approved by our board of directors,
whether or not our stockholders view the change in control, merger or tender
offer as favorable. The authorization of such additional shares of common stock
will have no current anti-takeover effect, because no hostile takeover attempts
are, to our management's knowledge, currently threatened.
We have a number of anti-takeover defenses. For example, we have a
classified board that consists of three classes with staggered three-year terms.
This arrangement is intended to slow a change in control of our board of
directors by limiting the number of directors that are elected annually. Also,
consistent with the Delaware General Corporation Law ("DGCL"), we do not have
cumulative voting provisions in either our bylaws or certificate of
incorporation.
Also, we have provisions in our bylaws and certificate of incorporation
that prohibit the removal of directors without cause. Our bylaws provide that a
removal may only be accomplished by the affirmative vote, at a special meeting
of stockholders called for that purpose, of the holders of at least a majority
of the outstanding shares entitled to vote at an election for directors. Under
our bylaws, special meetings of stockholders may be called by our board of
directors, chairman of the board, chief executive officer or president (in the
absence of a chief executive officer), and shall be called by our secretary at
the request in writing by holders of not less than 10% of the total voting power
of all of our outstanding securities then entitled to vote. Article Eighth of
our existing certificate and Article VIII of the amended
3
certificate both provide that any director, or the entire board of directors,
may be removed at any time, but only for cause, and that the provisions of
Article Eighth and Article VIII may not be repealed or amended in any respect,
unless the amendment or repeal is approved by the affirmative vote of the
holders of not less than 67% of the outstanding shares of our common stock.
This percentage vote requirement exceeds the general DGCL requirement that a
majority of the outstanding shares of our common stock must vote in favor of
an amendment to our certificate of incorporation, making it more difficult
for our stockholders to amend or repeal this provision.
In addition, our board of directors has the authority to issue up to
10,000,000 shares of preferred stock and to fix the rights, preferences,
privileges and restrictions, including voting rights of those shares, without
any further vote or action by our stockholders. The rights of the holders of our
common stock are subject to and may be adversely affected by the rights of the
holders of any preferred stock that we may issue in the future. The issuance of
preferred stock, while providing desired flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of our outstanding voting
stock, which would delay, defer or prevent a change in control of our company.
Furthermore, preferred stock may have other rights, including economic rights
senior to common stock.
Also, Section 203 of the DGCL prohibits us from engaging in business
combinations with interested stockholders, as defined by statute. These
provisions may have the effect of delaying or preventing a change in control of
our company without action by our stockholders, even if a change in control
would be beneficial to our stockholders.
Article IV of the amended certificate contains a description of the
attributes of our common stock. There is not a similar description in our
existing certificate. Stockholders do not currently possess, nor upon the
approval of the proposed amendment will they acquire, preemptive rights that
would entitle such persons, as a matter of right, to subscribe for the purchase
of any shares, rights, warrants or other securities or obligations convertible
into, or exchangeable for, securities of our company.
In light of the above, Article IV of the amended certificate provides
for authorized capital of 150,000,000 shares of common stock, $0.0033 par value
per share, and 10,000,000 shares of preferred stock, $0.01 par value per share,
that may be issued in one or more series as designated from time to time by our
board of directors. Article IV of the amended certificate reflects our desire to
express the par value of our common stock as a decimal rather than as a
fraction.
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Approval of this proposal requires the affirmative vote of the majority
of outstanding shares of our common stock as of the close of business on the
record date. If the required votes for this proposal and for proposal 3 are
obtained, then this proposal may be effected by filing the amended certificate
as described in proposal 3. If approval for this proposal is obtained but the
required vote for proposal 3 is not obtained, then our board of directors will
have the authority to authorize our management to file an amendment to our
existing certificate in order to substitute Article IV of the amended
certificate into our existing certificate in place of Article Fourth of our
existing certificate. However, our board of directors has reserved the right to
abandon this proposed amendment at any time prior to the effectiveness of the
filing of the amendment with the Delaware Secretary of State, notwithstanding
authorization of this proposed amendment by our stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
4
PROPOSAL 2
APPROVAL OF AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
IN ORDER TO CLARIFY THE MECHANICS OF OUR CLASSIFIED BOARD
Our board of directors has adopted by unanimous written consent a
proposed amendment to our existing certificate that would clarify the mechanics
of our classified board by replacing Article Eighth of our existing certificate,
which article is attached to this proxy statement as APPENDIX C, with Article
VIII, which is contained in our proposed amended certificate that is attached to
this proxy statement as APPENDIX A.
Both Article Eighth of our existing certificate and Article VIII of the
amended certificate provide for a classified board of directors that is divided
into three classes, with each class serving a staggered three-year term.
Consistent with our current practice, the amended certificate designates the
classes as Class I, Class II and Class III, and provides that the authorized
number of directors shall be set solely by resolution of the board of directors
and that directors shall be assigned to each class in accordance with
resolutions adopted by our board of directors.
Consistent with the DGCL, the amended certificate also provides that no
decrease in the number of directors constituting our board of directors will
shorten the term of any incumbent director and that the manner by which a
director may be removed from office shall be as provided in our bylaws.
Article Eighth of the existing certificate and Article VIII of the
amended certificate both provide that any director, or the entire board of
directors, may be removed at any time, but only for cause, and that the
provisions of Article Eighth and Article VIII may not be repealed or amended in
any respect, unless the amendment or repeal is approved by the affirmative vote
of the holders of not less than 67% of the outstanding shares of our common
stock.
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Approval of this proposal requires the affirmative vote of holders of
not less than 67% of the outstanding shares of our common stock as of the close
of business on the record date. If the required votes for this proposal and for
proposal 3 are obtained, then this proposal may be effected by filing the
amended certificate as described in proposal 3. If the required vote for this
proposal is obtained but the required vote for proposal 3 is not obtained, then
our board of directors will have the authority to authorize our management to
file an amendment to our existing certificate in order to substitute Article
VIII of the amended certificate into our existing certificate in place of
Article Eighth of our existing certificate. However, our board of directors has
reserved the right to abandon this proposed amendment at any time prior to the
effectiveness of the filing of the amendment with the Delaware Secretary of
State, notwithstanding authorization of this proposed amendment by our
stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
5
PROPOSAL 3
APPROVAL OF AMENDMENT AND RESTATEMENT OF CERTIFICATE OF INCORPORATION
IN ORDER TO MODERNIZE AND CONFORM OUR CERTIFICATE OF INCORPORATION
TO CURRENT DELAWARE CORPORATE LAW AND PRACTICES
Our board of directors has adopted by unanimous written consent the
amended certificate, which is designed to reflect our current corporate name and
registered office in the State of Delaware, to make various wording changes to
modernize the provisions of our existing certificate in accordance with current
Delaware corporate law and practices and, if proposals 1 and 2 are approved, to
effectuate those proposals. The amended certificate contains various substantive
differences described generally below. We encourage stockholders to review the
complete terms of the amended certificate, which is attached to this proxy
statement as APPENDIX C.
ADVANCE NOTICE OF NEW BUSINESS AND STOCKHOLDER NOMINATIONS. Article XII
of the amended certificate provides that advance notice of new business and
stockholder nominations for the election of directors shall be given in the
manner and to the extent provided in the bylaws of the corporation. The existing
certificate does not address these matters. We have addressed these matters in
our bylaws.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. Article VI of the amended
certificate provides that we shall indemnify, to the fullest extent permitted by
law, any person in connection with any action, suit or proceeding to which they
are made or are threatened to be made by reason of the fact that such person is
or was a director or officer of our company or is or was serving at our request
as a director or officer of another entity. There is no similar provision in the
existing certificate. However, this proposed provision is typical of Delaware
corporations that have modernized certificates of incorporation and is
consistent with powers granted to us under Section 145 of the DGCL and with
obligations imposed upon us by our bylaws.
PERSONAL LIABILITY OF DIRECTORS. Both the existing certificate and the
amended certificate provide for limitation of a director's personal liability to
us or our stockholders for monetary damages for breach of fiduciary duty, to the
fullest extent permitted by the DGCL from time to time. The amended certificate
adds a typical proviso indicating that in no event will the personal liability
of any of our directors for monetary damages be limited for any breach of
loyalty, for any acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, for any transaction from which the
director derived an improper personal benefit, or for unlawful payment of
dividends or unlawful stock purchase or redemption as provided in Section 174 of
the DGCL.
DURATION OF EXISTENCE AND LOCATION OF STOCKHOLDER MEETINGS AND
CORPORATE BOOKS. The amended certificate contains typical provisions that
provide that we have a perpetual existence, that meetings of our stockholders
may be held within or without the State of Delaware, as our bylaws may provide,
and that our books may be kept outside the State of Delaware at places
designated by our board of directors or bylaws. The existing certificate was
silent on these matters.
CLASSIFICATION OF OUR BOARD. As described in proposal 2 above, Article
VIII of the amended certificate clarifies the mechanics of our classified board.
If proposal 2 is not approved, then we would need to revise any amended
certificate that we file in Delaware to retain the provisions of Article Eighth
of the existing certificate.
AUTHORIZED CAPITAL. As described in proposal 1 above, Article IV of the
amended certificate increases and revises the terms of our authorized capital.
If proposal 1 is not approved, then we would need to revise any amended
certificate that we file in Delaware to retain the provisions of Article Fourth
of the existing certificate.
6
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Approval of this proposal requires the affirmative vote of the majority
of outstanding shares of our common stock as of the record date. If proposals 1,
2 and 3 are approved, then our board of directors will have the authority to
authorize the filing of the amended certificate in the form attached to this
proxy statement as APPENDIX A. If this proposal is approved but either proposal
1 or proposal 2 is not approved, then any amended certificate we file will need
to be revised to include the terms of Article Fourth and/or Article Eighth of
the existing certificate, as described above. Our board of directors has
reserved the right to abandon this proposed amendment and restatement at any
time prior to the effectiveness of the filing of the amended certificate with
the Delaware Secretary of State, notwithstanding authorization of this proposed
amendment and restatement by our stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
7
OTHER MATTERS
The board knows of no matter to come before the annual meeting other
than as specified in this proxy statement. If other business should, however, be
properly brought before the meeting, the persons voting the proxies will vote
them in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
proposals by stockholders that are intended for inclusion in our proxy statement
and proxy card and to be presented at our next annual meeting must be received
by us no later than May 19, 2005 in order to be considered for inclusion in our
proxy materials relating to the next annual meeting. Such proposals shall be
addressed to our secretary at our corporate headquarters and may be included in
our next annual meeting's proxy materials if they comply with rules and
regulations of the Securities and Exchange Commission governing stockholder
proposals.
Proposals by stockholders that are not intended for inclusion in our
proxy materials may be made by any stockholder who timely and completely
complies with the notice procedures contained in our bylaws, was a stockholder
of record at the time of giving of notice and is entitled to vote at the
meeting, so long as the proposal is a proper matter for stockholder action and
the stockholder otherwise complies with the provisions of our bylaws and
applicable law. However, stockholder nominations of persons for election to our
board of directors at a special meeting may only be made if our board of
directors has determined that directors are to be elected at the special
meeting. To be timely, a stockholder's notice regarding a proposal not intended
for inclusion in our proxy materials must be delivered to our secretary at our
corporate headquarters not later than:
o In the case of an annual meeting, the close of business on the
45th day before the first anniversary of the date on which we
first mailed our proxy materials for the prior year's annual
meeting of stockholders. However, if the date of the meeting
has changed more than 30 days from the date of the prior year's
meeting, then in order for the stockholder's notice to be timely
it must be delivered to our secretary a reasonable time before
we mail our proxy materials for the current year's meeting. For
purposes of the preceding sentence, a "reasonable time" coincides
with any adjusted deadline we publicly announce.
o In the case of a special meeting, the close of business on the
7th day following the day on which we first publicly announce the
date of the special meeting.
Except as otherwise provided by law, if the chairperson of the meeting
determines that a nomination or any business proposed to be brought before a
meeting was not made or proposed in accordance with the procedures set forth in
our bylaws and summarized above, the chairperson may prohibit the nomination or
proposal from being presented at the meeting.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Exchange Act.
In accordance with that act, we file reports, proxy statements and other
information with the Securities and Exchange Commission. These materials can be
inspected and copied at the Public Reference Room maintained by the Securities
and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the Securities and Exchange Commission at 1-800-SEC-0330. Copies of
these materials can also be obtained from the Securities and Exchange Commission
at prescribed rates by writing to the Public Reference Section of the Securities
and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Our
common stock trades on the OTC Bulletin Board under the symbol "EMRI."
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN PROMPTLY THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
8
APPENDIX A
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EMRISE CORPORATION
A DELAWARE CORPORATION
The undersigned, Randolph D. Foote, hereby certifies that:
ONE: He is the duly elected and acting Chief Financial Officer and
Secretary of EMRISE CORPORATION (hereinafter, the "corporation").
TWO: The corporation's present name is EMRISE CORPORATION. The
name under which the original certificate of incorporation of the corporation
was filed with the Secretary of State of Delaware on July 14, 1989 is CXR CORP.
THREE: This Second Amended and Restated Certificate of Incorporation
has been duly adopted in accordance with the provisions of Sections 245 and 242
of the General Corporation Law of the State of Delaware by the directors and
stockholders of the corporation.
FIVE: The certificate of incorporation of the corporation shall be
amended and restated to read in full as follows:
ARTICLE I
The name of the corporation is EMRISE CORPORATION.
ARTICLE II
The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by
the corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
ARTICLE IV
The corporation is authorized to issue one class of capital stock to be
designated "Common Stock" and another class of capital stock to be designated
"Preferred Stock." The total number of shares of Common Stock that the
corporation is authorized to issue is one hundred fifty million (150,000,000),
with a par value of $.0033 per share. The total number of shares of Preferred
Stock that the corporation is authorized to issue is ten million (10,000,000),
with a par value of $.01 per share.
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Except as otherwise provided by law, the shares of stock of the
corporation, regardless of class, may be issued by the corporation from time to
time in such amounts, for such consideration and for such corporate purposes as
the board of directors may from time to time determine. A description of the
different classes and series of the corporation's capital stock and a statement
of the designations and the relative rights, preferences and limitations of the
shares of each class and series of capital stock are as follows:
COMMON STOCK. Except as otherwise provided by the General Corporation
Law of the State of Delaware or in this Article IV (or in any certificate of
designation establishing a series of Preferred Stock), the holders of Common
Stock shall exclusively posses all voting power of the corporation. Each share
of Common Stock shall be equal in all respects to every other share of Common
Stock. Each holder of record of issued and outstanding Common Stock shall be
entitled to one (1) vote on all matters for each share so held. Subject to the
rights and preferences, if any, of the holders of Preferred Stock, each issued
and outstanding share of Common Stock shall entitle the record holder thereof to
receive dividends and distributions out of funds legally available therefor,
when, as and if declared by the board of directors, in such amounts and at such
times, if any, as the board of directors shall determine, ratably in proportion
to the number of shares of Common Stock held by each such record holder. Upon
any voluntary or involuntary liquidation, dissolution or winding up of the
corporation, after there shall have been paid to or set aside for the holders of
any class of capital stock having preference over the Common Stock in such
circumstances the full preferential amounts to which they are respectively
entitled, the holders of the Common Stock, and of any class or series of capital
stock entitled to participate in whole or in part therewith as to the
distribution of assets, shall be entitled, after payment or provision for the
payment of all debts and liabilities of the corporation, to receive the
remaining assets of the corporation available for distribution, in cash or in
kind, ratably in proportion to the number of shares of Common Stock held by each
such holder.
PREFERRED STOCK. The board of directors is authorized by resolution or
resolutions, from time to time adopted, to provide for the issuance of Preferred
Stock in one or more series and to fix and state the voting powers,
designations, preferences and relative participating, optional or other special
rights of the shares of each series and the qualifications, limitations and
restrictions thereof, including, but not limited to, determination of one or
more of the following:
(i) the distinctive designations of each such series and the number of
shares which shall constitute such series, which number may be increased (except
where otherwise provided by the board of directors in creating such series) or
decreased (but not below the number of shares thereof then outstanding) from
time to time by the board of directors;
(ii) the annual rate or amount of dividends payable on shares of such
series, whether such dividends shall be cumulative or non-cumulative, the
conditions upon which and the dates when such dividends shall be payable, the
date from which dividends on cumulative series shall accrue and be cumulative on
all shares of such series issued prior to the payment date for the first
dividend of such series, the relative rights of priority, if any, of payment of
dividends on the shares of that series, and the participating or other special
rights, if any, with respect to such dividends;
(iii) whether such series will have any voting rights in addition to
those prescribed by law and, if so, the terms and conditions of the exercise of
such voting rights;
(iv) whether the shares of such series will be redeemable or callable
and, if so, the prices at which, and the terms and conditions on which, such
shares may be redeemed or called, which prices may vary under different
conditions and at different redemption or call dates;
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(v) the amount or amounts payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of shares
of such series;
(vi) whether the shares of such series shall be entitled to the benefit
of a sinking or retirement fund to be applied to the purchase or redemption of
such shares, and if so entitled, the amount of such fund and the manner of its
application, including the price or prices at which such shares may be redeemed
or purchased through the application of such fund;
(vii) whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or of any other series of
the same or any other class or classes of capital stock of the corporation, and
if so convertible or exchangeable, the conversion price or prices, or the rate
or rates of exchange, and the adjustments thereof, if any, at which such
conversion or exchange may be made, and any other terms of such conversion or
exchange;
(viii) whether the shares of such series that are redeemed or converted
shall have the status of authorized but unissued shares of Preferred Stock and
whether such shares may be reissued as shares of the same or any other series of
stock;
(ix) the conditions and restrictions, if any, on the payment of
dividends or on the making of other distributions on, or the purchase,
redemption or other acquisition by the corporation, or any subsidiary thereof,
of, the Common Stock or any other class (or other series of the same class)
ranking junior to the shares of such series as to dividends or upon liquidation,
dissolution or winding up of the corporation; and
(x) the conditions and restrictions, if any, on the creation of
indebtedness of the corporation, or any subsidiary thereof, or on the issue of
any additional stock ranking on parity with or prior to the shares of such
series as to dividends or upon liquidation, dissolution or winding up of the
corporation.
All shares within each series of Preferred Stock shall be alike in
every particular, except with respect to the dates from which dividends, if any,
shall commence to accrue.
ARTICLE V
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, and to merge, sell
its assets and take other corporate action to the extent and in the manner now
or hereafter permitted or prescribed by law, and all rights conferred upon the
stockholders herein are granted pursuant to this reservation.
ARTICLE VI
The corporation shall, to the fullest extent to which it is empowered
to do so and under the circumstances permitted by the General Corporation Law of
the State of Delaware or any other applicable laws, as they may from time to
time be in effect, indemnify any person who was made or is threatened to be made
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or officer of the corporation, or is or was serving
at the specific request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise (including,
without limitation, any employee benefit plan), against all expenses (including
attorneys' fees), judgments, fines and amounts incurred by him or her in
connection with such action, suit or proceeding, and may take such steps as may
be deemed appropriate by the board of directors, including purchasing and
maintain insurance, entering into contracts (including, without limitation,
contracts of indemnification between the corporation and its directors and
officers), creating a trust fund, granting security interests or using other
means (including, without limitation, a letter of credit) to ensure the payment
of such amounts as may be necessary to effect such indemnification.
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ARTICLE VII
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or as it may hereafter by amended, a
director of the corporation shall not be personally liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director; provided, that in no event will the liability of any director of this
corporation be eliminated or otherwise limited (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the General Corporation Law
of the State of Delaware; or (iv) for any transaction from which the director
derived any improper personal benefit. If the General Corporation Law of the
State of Delaware is amended to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
Any repeal or modification of the foregoing paragraph, or the adoption
of any provision of this certificate of incorporation inconsistent with the
foregoing paragraph, shall not eliminate, reduce or otherwise adversely affect
any right or protection of a director of the corporation existing at the time of
such repeal or modification in respect of any matter occurring, or any cause of
action, suit or proceeding that, but for the foregoing paragraph, would accrue
or arise, prior to such repeal, modification or adoption of an inconsistent
provision.
ARTICLE VIII
The number of directors that constitute the whole board of directors
shall be fixed exclusively by one or more resolutions adopted from time to time
by the board of directors in accordance with the bylaws of the corporation. The
board of directors shall be divided into three classes designated as Class I,
Class II and Class III, respectively, which classes shall be as nearly equal in
number as the then total number of directors constituting the entire board of
directors permits. Directors shall be assigned to each class in accordance with
a resolution or resolutions adopted by the board of directors.
At the 2005 annual meeting of stockholders, the term of office of the
Class III directors shall expire and Class III directors shall be elected for a
full term of three years. At the 2006 annual meeting of stockholders, the term
of office of the Class I directors shall expire and Class I directors shall be
elected for a full term of three years. At the 2007 annual meeting of
stockholders, the term of office of the Class II directors shall expire and
Class II directors shall be elected for a full term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.
Except as otherwise required by the General Corporation Law of the
State of Delaware, (i) newly created directorships resulting from any increase
in the number of directors and any vacancies on the board of directors resulting
from death, resignation, disqualification, removal or other cause may be filled
only by the affirmative vote of a majority of the remaining directors then in
office, even though less than a quorum of the board of directors, or by a sole
remaining director; (ii) any director elected in accordance with the preceding
clause (i) shall hold office for the remainder of the full term of the class of
directors in which the new directorship was created or the vacancy occurred and
until such director's successor shall have been elected and qualified; and (iii)
no decrease in the number of directors constituting the board of directors shall
shorten the term of any incumbent director.
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The manner by which a director of the corporation may be removed from
office shall be as provided in the bylaws of the corporation. Notwithstanding
any other provisions of this certificate of incorporation or the bylaws of the
corporation (and notwithstanding the fact that some lesser percentage may be
specified by law, this certificate of incorporation or the bylaws of the
corporation), any director, or the entire board of directors of the corporation,
may be removed at any time, but only for cause.
The provisions set forth in this Article VIII may not be repealed or
amended in any respect, unless such action is approved by the affirmative vote
of the holders of not less than sixty-seven percent (67%) of the outstanding
shares of Common Stock of the corporation.
ARTICLE IX
Any action required or permitted to be taken by the stockholders of the
corporation must be effected at a duly called annual or special meeting of such
holders and may not be effected by a consent in writing by any such holders.
This Article IX may not be repealed or amended in any respect, unless such
action is approved by the affirmative vote of the holders of not less than
sixty-seven percent (67%) of the outstanding shares of Common Stock of the
corporation.
ARTICLE X
The corporation is to have perpetual existence.
ARTICLE XI
Meetings of the stockholders of the corporation may be held within or
without the State of Delaware, as the bylaws may provide. The books of the
corporation may be kept (subject to any provision contained in the bylaws)
outside the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the bylaws of the corporation.
ARTICLE XII
In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter, amend or
repeal the bylaws of the corporation unless and to the extent the General
Corporation Law of the State of Delaware shall provide otherwise.
Advance notice of new business and stockholder nominations for the
election of directors shall be given in the manner and to the extent provided in
the bylaws of the corporation. Elections of directors need not be by written
ballot unless the bylaws of the corporation shall so provide.
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IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Certificate of Incorporation on this _____ day of April, 2005.
EMRISE CORPORATION
By:
------------------------------------------
Randolph D. Foote, Chief Financial Officer
and Secretary
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APPENDIX E
ARTICLE FOURTH OF EXISTING CERTIFICATE OF INCORPORATION
FOURTH: The aggregate number of shares of all classes of capital
stock which the Company has the authority to issue is sixty million
(60,000,000), which is divided into two classes as follows:
Fifty Million (50,000,000) shares of Common Stock ("Common
Stock") with a par value of 1/3 cent per share, and
Ten Million (10,000,000) shares of Preferred Stock
("Preferred Stock") with a par value of $.01 per share.
The designations, voting powers, preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions of the Preferred Stock
is as follows:
(1) Issuance in Series.
Shares of Preferred Stock may be issued in one or more
series at such time or times, and for such considerations as the
Board of Directors may determine. All shares of any one series of
Preferred Stock will be identical with each other in all
respects, except that shares of one series issued at different
times may differ as to dates from which dividends thereon may be
cumulative. All series will rank equally and be identical in all
respects, except as permitted by the following provisions of
paragraph 2 of this Article FOURTH.
(2) Authority of the Board with Respect to Series.
The Board of Directors is authorized, at any time and from
time to time, to provide for the issuance of the shares of
Preferred Stock in one or more series with such designations,
preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions thereof as
are stated and expressed in the resolution or resolutions providing
for the issue thereof adopted by the Board of Directors, and as are
not stated and expressed in this Certificate of Incorporation or
any amendment hereto including, but not limited to, determination
of any of the following:
(i) The number of shares constituting that series
and the distinctive designation of that series;
(ii) The dividend rate or rates on the shares of that
series, whether dividends shall be cumulative, and, if so, from
which date or dates, the payment date or dates for dividends and
the relative rights of priority, if any, of payment of dividends on
shares of that series;
(iii) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the
terms of such voting rights;
(iv) Whether that series shall have conversion
privileges and, if so, the terms and conditions of such conversion,
including provision for adjustment of the conversion rate in such
events as the Board of Directors shall determine;
(v) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including the date or date upon or after which they
shall be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and at
different redemption dates;
(vi) Whether that series shall have a sinking or
retirement fund for the redemption or purchase of shares of that
series, and, if so, the terms and amount of such sinking or
retirement fund;
(vii) The rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution or
winding up of the Company, and the relative rights of priority, if
any, of payment of shares of that series;
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(viii) Any other preferences, privileges and powers, and
relative participating, optional or other special rights,
and qualifications, limitations or restrictions of a series, as the
Board of Directors may deem advisable and are not inconsistent with
the provisions of this Certificate of Incorporation.
(3) Dividends.
Dividends on outstanding shares of Preferred Stock shall be
paid or declared and set apart for payment in accordance with their
respective preferential and relative rights before any dividends
shall be paid or declared and set apart for payment on the
outstanding shares of Common Stock with respect to the same
dividend period.
(4) Liquidation.
If upon any voluntary or involuntary liquidation, dissolution
or winding up of the Company, the assets available for distribution
to holders of shares of Preferred Stock of all series shall be
insufficient to pay such holders the full preferential amount to
which they are entitled, then such assets shall be distributed
ratably among the shares of all series of Preferred Stock in
accordance with the respective preferential and relative amounts
(including unpaid cumulative dividends, if any) payable with
respect thereto.
(5) Reacquired Shares.
Shares of Preferred Stock which have been issued and
reacquired in any manner by the Company (excluding, until the
Company elects to retire them, shares which are held as treasury
shares but including shares redeemed, shares purchased and retired,
and shares which have been converted into shares of Common Stock)
will have the status of authorized and unissued shares of Preferred
Stock and may be reissued.
(6) Voting Rights.
Shares of Preferred Stock shall each have the number of votes
provided in the resolution or resolutions of the Board of Directors
creating any series of Preferred Stock, or as otherwise required by
law. Unless and except to the extent otherwise required by law or
provided in the resolution or resolutions of the Board of Directors
creating any series of Preferred Stock, the holders of the
Preferred Stock shall have no voting power with respect to any
matter whatsoever.
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APPENDIX C
ARTICLE EIGHTH OF EXISTING CERTIFICATE OF INCORPORATION
EIGHTH: (a) Classification of Board of Directors. The Board of
Directors shall be divided into three classes, as nearly equal in number as the
then total number of directors constituting the entire Board of Directors
permits with the term of office of one class expiring each year. At the annual
meeting of stockholders in 1990 directors of the first class shall elected to
hold office for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall be
elected to hold office for a term expiring at the third succeeding annual
meeting. Any vacancies in the Board of Directors for any reason, and any
directorships resulting from any increase in the number of directors, may be
filled only by the Board of Directors, acting by a majority of the directors
then in office, although less than a quorum, and any directors so chosen shall
hold office until the next election of the class for which such directors shall
have been chosen and until their successors shall be elected and qualified.
(b) Removal for Cause. Notwithstanding any other provisions of this
Certificate of Incorporation or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law,
this Certificate of Incorporation or the Bylaws of the Corporation), any
director, or the entire Board of Directors of the Corporation may be removed at
any time, but only for cause.
(c) Amendment or Repeal. The provisions set forth in this Article
Eighth may not be repealed or amended in any respect, unless such action is
approved by the affirmative vote of the holders of not less than 67 percent of
the outstanding shares of Common Stock of the Corporation.
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APPENDIX D
PROXY - EMRISE CORPORATION
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 15, 2005
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Carmine T. Oliva and Randolph D. Foote,
or either of them individually, as the attorney, agent and proxy holder of the
undersigned, with the power to appoint his substitute, to represent and vote, as
designated below, all shares of common stock of Emrise Corporation, a Delaware
corporation (the "Company"), held of record by the undersigned at the close of
business on March 7, 2005, at the special meeting of stockholders to be held at
the Company's headquarters located at 9485 Haven Avenue, Suite 100, Rancho
Cucamonga, California 91730 on April 15, 2005, at 10:00 a.m. local time, and
at any and all adjournments and postponements thereof. The Company's board of
directors recommends a vote FOR each of the proposals indicated herein.
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
CARD WILL BE VOTED FOR THE PROPOSALS INDICATED AND IN ACCORDANCE WITH THE
DISCRETION OF THE PROXY HOLDER ON ANY OTHER BUSINESS. ALL OTHER PROXIES
HERETOFORE GIVEN BY THE UNDERSIGNED IN CONNECTION WITH THE ACTIONS PROPOSED ON
THIS PROXY CARD ARE HEREBY EXPRESSLY REVOKED. THIS PROXY CARD MAY BE REVOKED AT
ANY TIME BEFORE IT IS VOTED BY WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY,
BY ISSUANCE OF A SUBSEQUENT PROXY CARD OR BY VOTING AT THE SPECIAL MEETING IN
PERSON. HOWEVER, A STOCKHOLDER WHO HOLDS SHARES THROUGH A BROKER OR OTHER
NOMINEE MUST BRING A LEGAL PROXY TO THE SPECIAL MEETING IF THAT STOCKHOLDER
DESIRES TO VOTE AT THE SPECIAL MEETING.
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SPECIAL MEETING PROXY CARD
A. Proposals
The Board of Directors recommends a vote FOR the following proposals.
1. To consider and vote upon a proposal to amend the Company's
certificate of incorporation in order to increase the Company's
authorized common stock from 50,000,000 shares to 150,000,000
shares and make clarifying changes.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To consider and vote upon a proposal to amend the Company's
certificate of incorporation in order to clarify the mechanics of
the Company's classified board.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To consider and vote upon a proposal to amend and restate the
Company's certificate of incorporation in order to modernize and
conform the Company's certificate of incorporation to current
Delaware corporate law and practices.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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B. AUTHORIZED SIGNATURES - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
Please mark, date, sign and return this proxy card promptly in the enclosed
envelope. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Signature 1 - Please keep signature Signature 2 - Please keep signature
within the box within the box
[____________________________________] [_____________________________________]
Date (mm/dd/yyyy):___/____/_______
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