SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
[] Preliminary Information Statement
[] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
TOLLYCRAFT YACHT CORPORATION
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
[] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
................................................................
2) Aggregate number of securities to which transaction applies:
................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
................................................................
4) Proposed maximum aggregate value of transaction:
................................................................
5) Total fee paid:
................................................................
[] Fee paid previously with preliminary materials.
[] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
................................................................
2) Form, Schedule or Registration Statement No.:
................................................................
3) Filing Party:
................................................................
4) Date Filed:
................................................................
INFORMATION STATEMENT AND
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
November 13, 1996
To the Shareholders:
Notice Is Hereby Given that a Special Meeting of Shareholders of TOLLYCRAFT
YACHT CORPORATION, a Minnesota corporation (the "Company"), will be held on
December 9, 1996, at 10:00 a.m.,Pacific Standard Time, at the Company s
Headquarters at 2200 Clinton Avenue, Kelso, Washington 98626 for the following
purposes:
1. To ratify the appointment of Isler & Company as independent Auditor of
the Company for the fiscal year ending December 31, 1996.
2. To consider and vote upon a proposal for the Tollycraft Yacht
Corporation 1996 Employee Stock Option Plan in the form attached hereto as
Appendix A and the reservation of 15,000,000 shares of Common Stock for
issuance pursuant to option grants made under the 1996 Plan.
3. To approve the reincorporation of the Company from Minnesota to Nevada
(the "Proposed Reincorporation"). Approval of the Proposed Reincorporation by
the stockholders will constitute approval of the following by them as current
stockholders of the Company and as shareholders of the Company as
reincorporated in Nevada, immediately following the effective time of the
Proposed Reincorporation: (i) the Agreement and Plan of Merger, in the form
attached hereto as Appendix B (including the assumption by Tollycraft-Nevada
of the 1996 Employee Stock Option and other employee benefits plans and
obligations of Tollycraft-Minnesota under such plans as set forth therein);
and (ii) the Articles of Incorporation, attached hereto as Appendix B-2, which
provide for an authorized capital stock consisting of 50,000,000 common shares
and 5,000,000 preferred shares; and (iii) the Bylaws of the Company as
reincorporated in Nevada, attached hereto as Appendix B-3.
4. To ratify the past actions of the Board of Directors.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in other parts of
this Information Statement and Notice.
Only shareholders of record at the close of business on October 31, 1996,
are entitled to notice of and to vote at the meeting. A complete list of the
shareholders entitled to vote at the meeting will be open to the examination
of any shareholder, for any purpose germane to the meeting, during ordinary
business hours for the ten-day period ending immediately preceding the date of
the meeting, at the Company's headquarters at 2200 Clinton Avenue, Kelso,
Washington 98626.
Attendance at the Special Meeting will be limited to shareholders and
guests of the Company. Shareholders will be required to furnish proof of
ownership of the Company's Common Stock before being admitted to the meeting.
Shareholders holding shares in the name of a broker or other nominee are
requested to bring a statement from the broker or nominee confirming their
ownership in the Company's Stock. Directions to the meeting's location
accompany the Proxy Statement.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY
By Order of the Board of Directors
Kelso, Washington
November 13, 1996
VOTING
This Information Statement is being sent on or about November 15, 1996 to
stockholders entitled to vote at the Special Meeting.
As of October 20, 1996, the Company had outstanding 55,000,000 shares of
Common Stock which are entitled to vote at the Special Meeting, each share
being entitled to one vote. Only stockholders of record at the close of
business on October 31, 1996 will be entitled to vote at the meeting.
Officers, directors and certain related stockholders of the Company,
collectively owning approximately 59% of the outstanding shares of Common
Stock, have indicated their intention to vote in favor of each of the
proposals to be voted upon at the Special Meeting.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Special Meeting shall constitute a
quorum for the transaction of business at the Special Meeting. Shares of
Common Stock present in person or represented by proxy (including shares which
abstain or do not vote) will be counted for purposes of determining whether a
quorum exists at the Special Meeting.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required for the approval of any proposed actions.
Shares which abstain from voting on any action, and shares held in "street
name" by brokers or nominees who indicate on their proxies that they do not
have discretionary authority to vote such shares as to the proposed amendment,
will not be voted in favor of such action. Accordingly, abstentions and
"broker non-votes" will have the effect of a vote against such action.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock("Common Stock"), as of
October 20, 1996 by the Company's executive officers and directors and each
person known by the Company to be the beneficial owner of more than 5% of the
Company's Common Stock. Except as otherwise indicated, the persons named in
the table below have sole voting and investment power with respect to the
shares shown as beneficially owned by such persons, subject to applicable
community property laws. However, as indicated by the notes following the
table, certain shares are deemed to be beneficially owned by more than one
person or entity as a result of attribution of ownership among affiliated
persons and entities.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
BENEFICIALLY OF OUTSTANDING
OWNED SHARES
----------------- ---------------
<S> <C> <C>
D.R. Cooley, President (1) -0- -0-
2200 Clinton Avenue
Kelso, WA 48626
Peter Hobbs, Chairman (2) 36,210,782 66%
10650 Scripps Ranch Blvd. #220
San Diego, CA 92131
(1) Does not include unexercised options. See "Compensation" herein.
(2) All shares are beneficially owned pursuant to a Voting Trust dated October
14, 1996 whereby Mr. Hobbs is the Voting Trustee.
All current directors and executive
officers as a group (2 persons) 36,210,782 66%
</TABLE>
COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth for each of the fiscal years 1995 through
1996, the compensation awarded to, earned by or paid to the Company's Chief
Executive Officer, and the Company's other most highly compensated executive
officers, whose total annual salary and bonus exceeded $100,000 for services
rendered in all capacities to the Company during the fiscal year ended June
30, 1996 (collectively the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
<S> <C> <C> <C> <C>
D.R. Cooley
Chief Executive Officer 1995 $96,000 $-0- $8,400 (1)
</TABLE>
Notes:
(1) Consists of automobile allowance of $700 per month.
CONSULTING AGREEMENT
The Company, effective November 1, 1996, entered into a consulting agreement
with Kramfors Limited of Hong Kong whereby Kramfors will provide the Company
with advice, consultation and services with respect to corporate finance,
corporate reconstruction and capital raising. The compensation shall be via
an option agreement based on performance and to be executed by November 31,
1996.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company intends to enter into Indemnification Agreements with each
Director of the Company, in consideration for service as a member of the Board
of Directors. Generally, such an agreement will provide that the Company may
indemnify any person who was or is a party to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, except for an action by or in right of the Company, by
reason of the fact that he is or was a director, officer, employee or agent of
the Company. It must be shown that he acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of
the Company. Generally, no indemnification may be made where the person has
been determined to be negligent or guilty of misconduct in the performance of
his duty to the Company.
STOCK PERFORMANCE
The Company's common stock has been traded in the over-the-counter market
since 1993 and is currently listed on the NASDAQ Bulletin Board under the
symbol TLLY.
The following table sets forth the high and low bid prices for the Company's
common stock as reported by NASDAQ during the past two fiscal years and the
current year. The prices reflect inter-dealer quotations, without retail
mark-up, mark-down or commissions and may not represent actual transactions:
Low Bid High Bid
1994
December 31 1/16 1/4
1995
March 31 1/16 1/16
June 30 1/16 3/8
September 30 1/4 3/8
December 31 1/4 3/8
1996
March 31 3/8 1
June 30 3/8 7/8
September 30 3/16 7/8
STOCK OPTION GRANTS
The following table sets forth information regarding stock options
granted to the Company's Named Officers during the fiscal year ended December
31, 1995 and the potential value of such options at the end of their terms,
assuming certain levels of stock price appreciation:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED
------------------------------------------------- ANNUAL RATES
PERCENT OF OF STOCK PRICE
TOTAL APPRECIATION
SHARES OPTIONS FOR OPTION
UNDERLYING GRANTED TO TERM(1)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE DATE 5% 10%
---------- ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
None
(1) Dollar amounts represent the potential realizable value of each grant of
options assuming that the market price of the Common Stock appreciates in
value from the date of grant to the expiration date at 5% and 10% annual rates
of return. These calculations are not intended to forecast possible future
appreciation, if any, of the price of Common Stock.
STOCK OPTION EXERCISES AND HOLDINGS
The following table provides certain information concerning the
unexercised options to purchase shares of Common Stock held by the Company's
Named Officers as of October 20, 1996. No stock options were exercised by any
Named Officer of the Company during the fiscal year ended December 31, 1995.
</TABLE>
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT 10-30-96(#) 10-30-96 (1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
D.R. Cooley (2) 3,000,000 $-0- $25,000
D.R. Cooley (3) 1,000,000 $100,000 $-0-
</TABLE>
Notes
(1) Dollar values are calculated based on the difference between the option
exercise price and $0.47, the closing price of the Common Stock on October 31,
1996 as reported by Nasdaq.
(2) Granted in 1996. Exercisable at $.37 per share. Expires 24 months after
the debt owed by the Company to Vera Corporation is fully paid and no longer
outstanding or is bargained, sold, assigned, transferred or conveyed to a
third party, and written notice form the Company of such payoff or transfer is
given to the Optionee. The Vera debt is currently outstanding and option is
therefor unexercisable.
(3) Granted in 1996. Exercisable as follows: 1.1 Up to 250,000 shares at $.37
per share, which is the fair value at the time this option is granted, on or
before 12-31-96; 1.2 Any unexercised shares issuable pursuant to Section 1.1
herein and up to 250,000 additional shares, all at $.50 per share on or before
12-31-97; 1.3 Any unexercised shares issuable pursuant to Sections 1.1 and
1.2 herein and up to 250,000 additional shares, all at 50% of the bid price of
the stock as quoted at the time notice of exercise is given, on or before
12-31-98; 1.4 Any unexercised shares issuable pursuant to Sections 1.1, 1.2,
and 1.3 herein and up to 250,000 additional shares, all at 50% of the bid
price of the stock as quoted at the time notice of exercise is given, on or
before 12-31-99
Outside Directors are not currently receiving any compensation from the
Company. Officers and Directors may be reimbursed for expenses incurred in
attending board and shareholder meetings.
All future compensation, if any, to be paid to the Company's Officers or
Directors will be established by the Board of Directors.
The Company provides a medical and dental insurance plan at no cost to all
union and non-union employees. Company costs for the first year of operations
was $355,000. Projected costs for the second year of operations are $425,000.
A 401(k) plan exists for union and non-union employees. The Company
contributes $.05 per hour worked for union employees. First year costs were
$7,500. Projected second year costs are $8,500. There is currently no
contribution requirement to the non-union employees plan.
BUSINESS TO BE TRANSACTED
1. RATIFICATION OF INDEPENDENT AUDITORS
The Company is asking the stockholders to ratify the selection of Isler &
Co. as the Company's independent auditors for the year ending December 31,
1996. The affirmative vote of the holders of a majority of the shares
represented and voting at the Special Meeting will be required to ratify the
selection of Isler & Co.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified,
the Board of Directors, in its discretion, may direct the appointment of a
different independent auditing firm at any time during the year if the Board
of Directors feels that such a change would be in the Company's and its
stockholders' best interests.
2. TO CONSIDER AND VOTE UPON A PROPOSAL FOR THE TOLLYCRAFT YACHT CORPORATION
1996 EMPLOYEE STOCK OPTION PLAN AND THE RESERVATION OF 15,000,000 SHARES OF
COMMON STOCK FOR ISSUANCE PURSUANT TO OPTION GRANTS MADE UNDER THE 1996 PLAN.
The Board of Directors of the Company approved the adoption of the 1996
Stock Option Plan (the "Plan"), a copy of which is annexed hereto as Exhibit
A, subject to approval by the affirmative vote of a majority of the shares of
Common Stock represented at the Special Meeting.
GENERAL
Under the Plan, the Company will reserve an aggregate of 5,000,000 shares
of Common Stock for issuance, of which no options to acquire shares are
currently outstanding. The purpose of the Plan is to encourage stock ownership
by certain officers, non-employee directors and key personnel, including
consultants and advisors, of the Company and its wholly-owned subsidiaries, to
give such persons a greater personal interest in the success of the Company's
business, and to provide incentive to continue to advance and contribute to
the Company. The Plan is administered by those members of the Board of
Directors of the Company who are "disinterested persons" within the meaning of
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended,
if available, which committee selects the persons who will be granted options
under the Plan, prescribes the terms and provisions of each option granted
(which need not be identical), specifies the number of shares subject to each
option, sets the option price and determines the maximum period during which
options may be exercised.
Options granted under the Plan may either be options qualifying as
incentive stock options (the "Incentive Options") under Section 422(a) of the
Internal Revenue Code of 1986, as amended, or non-qualifying options
("Nonqualified Options"). Any Incentive Option granted under the Plan must
provide for an exercise price of not less than 100% of the fair market value
of the underlying shares on the date of such grant; provided, however, that
the exercise price of any Incentive Option granted to an eligible employee
owning more than 10% of the outstanding Common Stock of the Company must not
be less than 110% of such fair market value as determined on the date of the
grant. The term of each option and the manner in which it may be exercised is
determined by the Board of Directors, provided that no option may be
exercisable more than ten years after the date of its grant and, in the case
of an Incentive Option granted to an eligible employee owning more than 10% of
the Common Stock, no more than five years after the date of the grant.
The individuals eligible to receive options under the Plan are employees,
non-employee directors, advisors and consultants of the Company and its
subsidiaries. In the event that an outstanding option terminates for any
reason, the shares of Common Stock subject to the unexercised portion of such
option shall again be available for grants under the Plan.
Options granted under the Plan are nontransferable and nonassignable by
the optionee, other than by will or the laws of descent and distribution, and
are exercisable during his or her lifetime only by the optionee. No option may
be exercised after the expiration of its term. The Company receives no
proceeds upon the grant of options. Any proceeds received by the Company from
the sale of Common Stock on the exercise of options shall be used for general
corporate purposes.
Upon the occurrence of certain events involving a recapitalization or
reorganization of the Company, the committee will make appropriate adjustments
to the number of shares covered by each outstanding option and the per share
exercise price thereof, in its discretion, to prevent dilution or enlargement
of rights.
The Board of Directors of the Company may at any time suspend or
discontinue the Plan or revise or amend it in any respect whatsoever,
provided, however, that without approval of the stockholders, no revision or
amendment shall increase the number of shares of Common Stock that may be
issued under the Plan, materially increase the benefits accruing to
individuals holding options granted pursuant to the Plan or materially modify
the requirements as to eligibility for participation in the Plan.
FEDERAL INCOME TAX CONSEQUENCES
The grant of an Incentive Option or a Nonqualified Option would not
result in income for the grantee or in a deduction for the Company.
The exercise of a Nonqualified Option would result in ordinary income for
the optionee and a deduction for the Company measured by the difference
between the option price and the fair market value of the shares received at
the time of exercise. Income tax withholding would be required.
The exercise of an Incentive Option would not result in income for the
grantee if the grantee (i) does not dispose of the shares within two years
after the date of grant or one year after the transfer of shares upon exercise
and (ii) is an employee of the Company or a subsidiary of the Company from the
date of grant until three months before the exercise date. If these
requirements are met, the basis of the shares upon later disposition would be
the option price. Any gain will be taxed to the employee as long-term capital
gain and the Company would not be entitled to a deduction. The excess of the
market value on the exercise date over the option price is an item of tax
preference, potentially subject to the alternative minimum tax.
If the grantee disposes of the shares prior to the expiration of either
of the holding periods, the grantee would recognize ordinary income and the
Company would be entitled to a deduction equal to the lesser of the fair
market value of the shares on the exercise date minus the option price or the
amount realized on disposition minus the option price. Any gain in excess of
the ordinary income portion would be taxable as long-term or short-term
capital gain.
3. APPROVAL OF THE REINCORPORATION OF THE COMPANY FROM MINNESOTA TO NEVADA AND
EXCHANGE OF 25 SHARES OF MINNESOTA STOCK FOR 1 SHARE OF NEW NEVADA STOCK.
GENERAL
The Board of Directors has approved and, for the reasons described below,
recommends that the Company's stockholders approve a reorganization in which
the Company's state of incorporation would be changed from Minnesota to
Nevada. The Proposed Reincorporation would be accomplished by merging the
Company ("Tollycraft-Minnesota") into a wholly-owned Nevada subsidiary called
Tollycraft Corporation ("Tollycraft-Nevada"), newly formed for this purpose,
with each twenty five (25) outstanding share of Tollycraft-Minnesota's Common
Stock being exchanged for one (1) corresponding share of Common Stock of
Tollycraft-Nevada. Although no Preferred Stock of Tollycraft- Minnesota is
currently outstanding, the authorized number of shares of Preferred Stock of
Tollycraft-Nevada will remain at 5,000,000. The authorized number of shares
of Common Stock of Tollycraft-Nevada will be reduced from 100,000,000 to
10,000,000. The Proposed Reincorporation will be accomplished pursuant to the
terms of an Agreement and Plan of Merger between Tollycraft-Minnesota and
Tollycraft-Nevada, a copy of which is attached hereto as Appendix B-1. The
proposed Tollycraft-Nevada Articles of Incorporation and By-Laws are attached
hereto as Appendix B-2 and B-3 respectively.
THE PROPOSED REINCORPORATION, IF APPROVED AND EFFECTED, WILL EFFECT A
CHANGE IN THE LEGAL DOMICILE OF THE COMPANY, AND OTHER CHANGES OF A LEGAL
NATURE. THE PROPOSED REINCORPORATION WILL NOT RESULT IN ANY SIGNIFICANT CHANGE
IN THE COMPANY'S BUSINESS, MANAGEMENT, ASSETS, LIABILITIES, FISCAL YEAR,
LOCATION OF PRINCIPAL EXECUTIVE OFFICES OR NET WORTH.
At and after the effective date of the Proposed Reincorporation of
Tollycraft- Minnesota and Tollycraft-Nevada, each certificate that previously
represented 25 shares of Common Stock of Tollycraft-Minnesota will be deemed
to represent one share of Common Stock of Tollycraft-Nevada into which such
shares of Tollycraft-Minnesota are convertible pursuant to the Agreement and
Plan of Merger. IT WILL NOT BE NECESSARY FOR STOCKHOLDERS OF
TOLLYCRAFT-MINNESOTA TO CURRENTLY EXCHANGE THEIR EXISTING STOCK CERTIFICATES
FOR STOCK CERTIFICATES OF TOLLYCRAFT-NEVADA. However, the Company currently
plans to effect such exchange following the effectiveness of the Proposed
Reincorporation.
Assuming that the Proposed Reincorporation is approved, Tollycraft-
Minnesota's 1996 Stock Option Plan and the two option agreements to the Chief
Executive Officer (Stock Option and Incentive Stock Option Agreement) will be
assumed by Tollycraft-Nevada. Assuming approval by the Company's stockholders
of Proposal 2, a reserve of 9,000,000 Tollycraft- Minnesota shares of Common
Stock will be established for issuance pursuant to option grants made under
these plans. The Agreement and Plan of Merger provides that Tollycraft-Nevada
will assume all options outstanding under the 1996 Stock Option Plan and such
options will accordingly become exercisable for shares of Tollycraft-Nevada on
the 25 for 1 basis. Stockholders should note that approval of the Proposed
Reincorporation will constitute approval of the assumption by
Tollycraft-Nevada of said options and the outstanding options and shares
thereunder. In addition, all new option grants and share issuances under the
1996 Stock Option Plan will likewise relate to shares of Tollycraft-Nevada
Common Stock on a 25 for 1 basis.
The Company's 401(k) Plan and other employee benefits will remain in place.
It is anticipated that the Proposed Reincorporation will be consummated
immediately following receipt of the required shareholder and stockholder
approvals. HOWEVER, THE PROPOSED REINCORPORATION MAY BE ABANDONED, EITHER
BEFORE OR AFTER SHAREHOLDER APPROVAL, IF CIRCUMSTANCES ARISE WHICH, IN THE
OPINION OF THE BOARD OF DIRECTORS, MAKE IT INADVISABLE TO PROCEED.
DISSENTERS' RIGHTS
Shareholders of Tollycraft-Minnesota have the right to dissent from this
business combination and are entitled to exercise those dissenter's rights
pursuant to statutory provisions of the Minnesota Business Corporation Act.
Such dissent, if done strictly in conformance with the statutory requirements,
permits Tollycraft-Minnesota shareholders to be paid the "fair value" of their
common stock ownership of Tollycraft-Minnesota. Under these statutory
provisions, the term "fair value" means the value of shareholder's stock
immediately prior to the effectiveness of the business combination.
Tollycraft-Minnesota must notify its shareholders of this right to dissent,
which is hereby being accomplished through delivery of this Information
Statement to the shareholders of Tollycraft-Minnesota, and including herewith
a copy of the statutory text which is appended hereto and constitutes Sections
302A.471 and 302A.473 of Minnesota Statutes as Appendix B-4.
The following discussion is qualified in its entirety by the full text of
the actual statute which is included herewith. Most important, all
Tollycraft-Minnesota shareholders must realize that a failure to timely and
properly comply with the strict legal procedures set out in these statutes
will result in the loss of the shareholder's right to dissent from this
business combination under Minnesota law. Moreover, shareholders of
Tollycraft-Minnesota considering such a dissent should realize that the fair
value of their common stock as determined under these statutory procedures
could be more than, the same as, or less than the value of the securities they
will hold after the merger is consummated in the event they do not dissent
from it.
Shareholders of Tollycraft-Minnesota wishing to exercise these rights to
dissent and thereby demand the fair value of their common shares must first
file, before the vote of shareholders is taken at the Special Meeting on the
business combination, a written notice of their intent to demand the fair
value of the shares of Tollycraft-Minnesota owned by them, and must in
addition, not vote in favor of the merger. Their demand for fair value must
be executed by or for the shareholder of record as such shareholder's name
appears on his or her stock certificate, and it must be executed by all joint
owners if applicable. Beneficial owners who are not record owners, if any,
should instruct the record owner to comply with these Minnesota statutory
requirements if they desire to exercise these dissenters' rights. Written
election to so exercise this dissent by any Tollycraft-Minnesota shareholders
should be mailed to or delivered to: The Board of Directors, Tollycraft Yacht
Corporation, 2200 Clinton Avenue, Kelso, Washington 98626. This written
demand should specify the shareholder's name, the number of shares owned by
such shareholder, and simply state that the shareholder is dissenting and
demanding the fair value of his or her shares.
After the closing of the business combination between Tollycraft-Minnesota
and Tollycraft and the exchange of common shares involved therewith,
Tollycraft-Minnesota will cause to be mailed to each shareholder of
Tollycraft-Minnesota who has asserted such dissenters' rights properly a
notice that will contain (i) the address to which a demand for payment and
Tollycraft-Minnesota stock certificate must be sent in order to receive
payment and the date by which they must be received, (ii) a form to be used to
certify the date on which the Tollycraft-Minnesota shareholder acquired his or
her Tollycraft-Minnesota shares, and (iii) another copy of Sections 302A.471
and 302A.473 of Minnesota Statutes together with a brief description of these
statutes. To receive the fair value of his or her common stock, the
dissenting shareholder must demand payment and deposit his or her stock
certificates within 30 days after such notice is given. After this demand for
payment is received from any dissenting shareholder, Tollycraft-Minnesota will
then cause to be remitted to such shareholder the fair value of his or her
shares of Tollycraft-Minnesota along with interest as required by the statute,
and such remittance shall be accompanied by certain financial information, a
brief description of the method used to determine the fair value of the
shares, and another copy of Sections 302A.471 and 302A.473 of Minnesota
Statutes with a brief description of the procedures to be followed to demand
supplemental payment. If payment is not remitted within 60 days after
receiving shares from a dissenting shareholder, Tollycraft-Minnesota must
return all share certificates to such shareholder.
If a dissenting shareholder believes that the amount remitted by
Tollycraft-Minnesota is less than the fair value of his or her shares, plus
interest, such dissenting shareholder may give written notice to Tollycraft-
Minnesota of his or her own estimate of the fair value, and demand a
supplemental payment for the resulting difference. Any demand for such
supplemental payment must be made within 30 days after Tollycraft-Minnesota
has mailed its original remittance to the dissenting shareholder. Within 60
days after receipt of such demand for supplemental payment, Tollycraft-
Minnesota must either pay the supplemental amount to the dissenting
shareholder or file a court petition to judicially determine the fair value of
the shares, and such court determination is then binding on all shareholders
of Tollycraft-Minnesota who dissent, wherever located. A dissenting
shareholder is entitled to judgment for the amount by which the fair value as
determined by such court exceeds the amount, if any, already remitted to the
dissenting shareholder.
In the event such a court action to determine the fair value of Tollycraft-
Minnesota common shares occurs, the court shall determine the costs and
expenses and compensation of any appraisers appointed by the court and
attorneys fees, and may assess such costs, expenses and fees against
Tollycraft-Minnesota, excepting that the court may assess all or part of such
costs against a dissenter if the court finds the action of such dissenter in
demanding payment was arbitrary, vexatious, and not in good faith. The Court
also may, in its discretion, award fees and expenses to an attorney for
dissenting shareholders out of the amount awarded to the dissenting
shareholders.
PRINCIPAL REASONS FOR REINCORPORATION
The Company's business was originally in Minnesota but subsequent to the
acquisition of Tollycraft Acquisition Corporation the major manufacturing
activities of the Company are in the State of Washington and sales of boats
are throughout the United States. Nevada in recent years has followed a
policy of encouraging incorporation in that state, and, in furtherance of that
policy, has adopted comprehensive, modern and flexible corporate laws which
are periodically updated and revised to meet changing business needs. Because
of this policy the Board of Directors has recommended the Proposed
Reincorporation of the Company under Nevada Law.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of the
Proposed Reincorporation is based on the Internal Revenue Code of 1986, as
amended (the "Code"), the applicable Treasury Regulations promulgated
thereunder, judicial authority and current administrative rulings and
practices as in effect on the date of this Information Statement. The Company
has not requested or received any formal legal opinions, nor has it requested
or received any advance rulings from the Internal Revenue Service with respect
to the tax considerations discussed below. This discussion is for general
information only. Not all of the tax consequences that may be relevant to a
particular stockholder (such as non-resident aliens, foreign corporations or
broker/dealers) are discussed. Furthermore, the discussion which follows does
not consider the possible impact or consequences of any events other than
those specifically described herein. Finally, no foreign, state or local tax
consequences are discussed. Accordingly, stockholders are urged to consult
their own tax advisors and must rely on their own tax advisors as to the
specific federal, state, local or foreign tax consequences to them of the
Proposed Reincorporation.
The Proposed Reincorporation is intended to qualify as a reorganization
under the Internal Revenue Code. Accordingly, the Company expects that no gain
or loss will be recognized by the stockholders of Tollycraft-Minnesota, or by
either Tollycraft-Minnesota or Tollycraft-Nevada.
Each former holder of 25 shares of Tollycraft-Minnesota Common Stock will
have the same basis in one share of Tollycraft-Nevada Common Stock received by
such person pursuant to the Proposed Reincorporation as such person had in the
Tollycraft-Minnesota Stock held immediately prior to the consummation of the
Proposed Reincorporation. Each Tollycraft-Minnesota stockholder will have a
holding period with respect to the Tollycraft-Nevada Common Stock received in
the Proposed Reincorporation which will include the period during which such
person held the corresponding Tollycraft-Minnesota Stock provided that such
Tollycraft-Minnesota Stock was held as a capital asset at the effective time
of the Proposed Reincorporation.
4. TO RATIFY THE PAST ACTIONS OF THE BOARD OF DIRECTORS.
The Board of Directors serve the shareholders and as such will request that
the shareholders ratify all past actions which they have taken in the past.
FORM 10-SB, 10-QSB
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF THE
REGISTRATION STATEMENT ON FORM 10-SB, INCLUDING THE COMMENT LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION, AND THE MOST RECENT 10-QSB's. REQUESTS
SHOULD BE SENT TO INVESTOR RELATIONS.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC. Officers, directors and greater than 10%
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the Company,
the Company believes that, during the period from January 1996 through
November 31, 1996, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were satisfied.
STOCKHOLDERS' PROPOSALS
Proposals of stockholders to be presented at the annual meeting to be
held in 1997 must be received for inclusion in the Company's proxy statement
and form of proxy by February 28, 1997.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the Special Meeting.
Dated: November 13, 1996 By Order of the Board of Directors
APPENDIX A
TOLLYCRAFT YACHT CORPORATION
1996 EMPLOYEE STOCK OPTION PLAN
ARTICLE I
PURPOSE
The purpose of the Tollycraft Yacht Corporation ("Tollycraft" or the
"Company") 1996 Employee Stock Option Plan (hereinafter referred to as the
"Plan") is, through the opportunity for greater stock ownership, to
provide
officers, consultants, directors and other key employees (all such persons
hereinafter referred to as "Key Persons") of Tollycraft and its
subsidiaries with an additional incentive to continue and increase their
efforts with respect to Tollycraft and to develop a personal and active
interest in the broader growth and greater financial success of Tollycraft.
The
Plan may grant such Key Persons "Incentive" and "Nonqualified" options for
the
acquisition of common shares (the "Shares" or "Option Shares") of Tollycraft.
Options granted under the Plan may be either options which are
intended
to be incentive stock options within the meaning of Section 422 of the
Internal
Revenue Code of 1986, as amended (the "Code"), or any successor
provision
("Incentive Options") or options that do not qualify as incentive stock
options
under the Code ("Nonqualified Options"). The Company may provide for the
exercise
of options in installments or otherwise and for such periods from the date
of
grant as it may in its discretion determine; provided, however, that
any
incentive stock option granted under the Plan shall be exercisable for a
period
of not more than ten years from the date of grant.
In the event common shares of the Company are registered pursuant to
the
Securities Act 1933, as amended (the "Act"), Shares under the Plan may
be
unrestricted ("unrestricted shares"), alternatively, Shares under the Plan
may
be subject to restrictions imposed for common shares that have not
been
registered under the Act, ("restricted shares"). Grants under the Plan may
be
subject to such other terms and conditions, not inconsistent with the Plan,
as
may be determined by Tollycraft.
ARTICLE II
RESERVATION OF SHARES
a) The total number of Shares of the Company which may be issued
under
the Plan shall be 15,000,000 shares of the common stock of the Company. The
Shares to be optioned under the Plan may be unissued shares or treasury
shares.
Shares subject to an option which remain unpurchased at the expiration,
termination or cancellation of an option shall again be available for use
under
the Plan.
b) No Shares shall be issued until all of the terms and
conditions
pursuant to the option granting such Shares have been satisfied. A holder of
an
option shall have none of the rights of a shareholder of the Company until
the
Shares are issued to such person.
<PAGE>
ARTICLE III
ADMINISTRATION
a) The Plan shall be administered by the Board of Directors of
the
Company (the "Board") or a committee of directors of the Company
(the
"Committee") which shall be appointed by the Board and which shall consist
of
two or more disinterested directors. In the event two or more
disinterested
directors are not available to be elected to the Committee, the Board shall
act
in place of the Committee. Vacancies in the Committee shall be filled by
the
Board.
b) The Board or, to the extent authorized by the Board, the
Committee
shall, to the extent not inconsistent with the Plan, have the power to
select
Key Persons to whom options shall be granted; determine the number of
restricted
or unrestricted Shares to be granted; determine the other terms and
conditions,
if any, to which any grant of Shares or options shall be subject and to
amend,
modify or waive any terms or conditions of any such grant (provided,
however,
that no such amendment or modification shall impair any outstanding right of
any
participant without the consent of such participant, except to the
extent
permitted under the terms and conditions of such grant as then in effect);
and
authorize any action of or make any determination by the Company and
prescribe
such provisions and interpretations in connection with the Plan as the Board
or
the Committee shall deem necessary or advisable for carrying out the purposes
of
the Plan. Each member of the Board or Committee, and, to the extent provided
by
the Board or the Committee, any other person to whom duties or powers shall
be
delegated in connection with the Plan, shall incur no liability with respect
to
any action taken or omitted to be taken in connection with the Plan and shall
be
fully protected in relying in good faith upon the advice of counsel, to
the
fullest extent permitted under applicable law.
ARTICLE IV
ELIGIBILITY
An option may be granted to any officer or other Key Person,
provided
that any person to whom an option is granted shall be a Key Person to
the
Company at the time an option is granted. An Incentive Stock Option shall
be
granted only to an employee of the Company.
ARTICLE V
PRICE
a) The option exercise price per Share with respect to each option
shall
be based on the fair market value of such stock on the date an option to
purchase
the same is granted. In making such determination, the Board or
Committee
may rely on market quotations, if available, and upon independent appraisals
of
the stock or such other information deemed appropriate by the Board or
Committee.
b) Any Incentive Option granted under the Plan must provide for an
exercise price of not less than 100% of the fair market value of the
underlying
shares on the date of such grant; provided, however, that the exercise price
of
any Incentive Option granted to an eligible employee owning more than 10% of
the
outstanding Common Stock of the Company must not be less than 110% of such
fair
market value as determined on the date of the grant.
ARTICLE VI
CHANGES IN PRESENT STOCK
In the event the common shares of the Company are changed into
a
different number of securities by reason of stock dividends,
split-ups,
recapitalizations, mergers, consolidations, combinations or exchanges of
shares
and the like, the optionee of any option granted under the Plan shall
receive,
upon exercise of his option, the new number of securities recorded by
the
Company on account of any such change.
ARTICLE VII
EXERCISE OF OPTIONS
An optionee shall exercise an option by delivery of a signed,
written
notice to the Company, specifying the number of Shares to be acquired, the
date
the acquisition is to be consummated, together with payment of the full
purchase
price for the Shares. The Company may accept payment from a broker on behalf
of
the optionee any may, upon receipt of signed, written instructions from
the
optionee, deliver the Shares directly to the broker. The date of receipt by
the
Company of the final item required under this paragraph shall be the date
of
exercise of the option.
ARTICLE VIII
OPTION PROVISIONS
Each option granted under the Plan shall be in such form as the Board
or
Committee may from time to time approve. All options under the Plan are
intended
to be granted as "incentive" or "non-qualified" stock options. All
options
granted under the Plan shall be subject to the following terms and
conditions
unless otherwise varied by the Board or Committee.
a) DOLLAR LIMITATIONS. Each Incentive option grant shall constitute
an
"qualified" stock option eligible for favorable tax treatment under Section
422
of the Code, provided that no more than $100,000 of such options (based upon
the
fair market value of the underlying shares as of the date of grant) can
first
become exercisable for any employee in any calendar year. To the extent
any
option grant exceeds the $100,000 limitation, it shall constitute a
non-qualified stock option. Each stock option agreement shall specify to
which
it is an incentive and/or a non-qualified stock option. For purposes of
this
paragraph, options granted under all plans of the Company and affiliated
companies which are qualified under Section 422 of the Internal Revenue
Code
shall be included.
b) PAYMENT. The full purchase price of the Shares acquired upon the
exercise of any option shall be paid in cash, by certified or cashier's check,
by common stock of the Company, or by cancellation of indebtedness of the
Company.
c) EXERCISE PERIOD. The period for exercising an option shall
commence
not earlier than one (1) week from the date of grant and shall end no more
than
ten years from the date of grant, provided however, an Incentive Option
granted
to an eligible employee owning more than 10% of the Common Stock, shall end no
more than five years after the date of the grant. Outstanding options shall
become immediately exercisable in full in the event that the Company is
acquired by merger, purchase of all or substantially all of the Company's
assets, or purchase of a majority of the outstanding stock by a single party
or
group acting in concert.
d) RIGHTS OF OPTIONEE BEFORE EXERCISE. The holder of an option
shall
not have the right of a stockholder with respect to the Shares covered by his
or
her option until such Shares have been issued to him or her upon exercise of
an
option.
e) NO RIGHT TO CONTINUED EMPLOYMENT. Nothing herein shall be
construed
to confer upon any optionee any right to continue in the employ of the
Company
or to interfere in any way with the right of the Company as an employer
to
terminate his or her employment at any time, nor to derogate from the terms
of
any written employment agreement between the Company and the optionee.
f) NON-TRANSFERABILITY OF OPTION No option shall be transferable
by
the optionee otherwise than by will or by the laws of decent and
distribution,
and each option shall be exercisable during the optionee's lifetime only by
the
optionee.
g) DATE OF GRANT. The date on which the Board or Committee approves
the
granting of an option shall be considered the date on which such option
is
granted.
ARTICLE IX
RESTRICTIONS ON TRANSFER
During any period in which the offering of the Shares under the Plan
is
not registered under federal and state securities laws, the optionee shall
agree
in the Stock Option Agreements that they are acquiring the Shares under the
Plan
for investment purposes, and not for resale, and that the Shares cannot
be
resold or otherwise transferred except pursuant to registration or unless,
in
the opinion of counsel for the Company, registration is not required.
Any restrictions upon Shares acquired upon exercise of an
option
pursuant to the Plan and the Stock Option Agreement shall be binding upon
the
optionee and his or her heirs, executors, and administrators . Any
stock
certificate issued under the Plan which is subject to restrictions shall
be
endorsed so as to refer to the restrictions on transfer imposed by the Plan
and
by applicable securities laws.
ARTICLE X
RELATIONSHIP TO OTHER PLANS
Nothing in this Plan shall prevent the Company or any subsidiary
from
adopting or continuing other or additional compensation arrangements,
including
without limitation plans providing for the granting of restricted
or
unrestricted stock options and cash or common stock performance bonuses.
Grants
under the Plan may form a part of or otherwise be related to such other
or
additional compensation arrangements.
ARTICLE XI
AMENDMENT AND DISCONTINUANCE
The Board shall have the right at any time and from time to time
to
amend, modify, or discontinue the Plan, except that (a) no such
amendment,
modification, or discontinuance shall revoke or alter the terms of any
valid
option previously granted in accordance with the Plan, without the consent
of
the holder of the option, and (b) no action of the Board may, without
approval
by the affirmative vote of a majority of the vote of the stockholders cast at
a
meeting at which a quorum is present, (i) increase the maximum number of
shares
subject to the Plans, or (ii) materially increase the benefits accruing
to
participants under the Plan or materially modify the requirements
for
eligibility under the Plan.
ARTICLE XII
GOVERNMENT REGULATION
The Plan and the grant of options thereunder shall be subject to
all
applicable governmental rules and regulations; and, any other provisions of
this
Plan to the contrary notwithstanding, the Board may in its discretion
and
without any shareholder action, make such changes in the Plan as may
be
required, in its opinion, to conform the Plan to such rules and regulations.
ARTICLE XIII
EFFECTIVE DATE OF PLAN
The Plan shall become effective on such date as the Board
shall
determine, but subject to the approval by the affirmative vote of the holders
of
a majority of the shares of the Company. The Plan will terminate ten years
from
its effective date unless sooner terminated by the Board.
CERTIFICATE OF ADOPTION
The undersigned, duly appointed Secretary of Tollycraft, Inc., hereby
certifies that the Board of Directors and a majority of the shareholders of
the
Company adopted the foregoing Plan on ________________.
_______________________________________
<PAGE>
FORM OF
TOLLYCRAFT YACHT CORPORATION
STOCK OPTION AGREEMENT
FOR GOOD AND VALUABLE CONSIDERATION, Tollycraft Yacht Corporation, a
California corporation, hereby irrevocably grants to the Key Person named
below
a stock option (the "Option") to purchase any part or all of the specified
number
of shares of its Common Stock upon the terms and subject to the conditions set
forth in the Tollycraft Yacht Corporation 1996 Employee Stock Option Plan at
the
specified purchase price per share without commission or other charge.
Name of Key Person: __________________________________
Social Security Number: __________________________________
Number of Shares covered by Option
_______________________(__________)
(the "Option Shares"):
Purchase Price Per Option Share:
_______________________($_________)
Fair Market Value Per Option Share:
_______________________($_________)
[ ] Incentive Option [ ] Nonqualified Option
Minimum Number of Option Shares Per Partial
Exercise (unless Optionee exercises all of the
Option then exercisable): One hundred (100)
The period for exercising this option shall commence on __________________ and
end on ___________________. (Commence not earlier than one (1) week from the
date
of grant and shall end no more than ten years from the date of grant, provided
however, an Incentive Option granted to an eligible employee owning more than
10%
of the Common Stock, shall end no more than five years after the date of the
grant. Outstanding options shall become immediately exercisable in full
in
the event that the Company is acquired by merger, purchase of all or
substantially all of the Company's assets, or purchase of a majority of the
outstanding stock by a single party or group acting in concert.)
Date of this Agreement: _________________
TOLLYCRAFT YACHT CORPORATION
___________________________________
Key Person's Signature
By:_______________________________________ Residence Address:
___________________________________
___________________________________
<PAGE>
APPENDIX B
PROPOSED FORM OF AGREEMENT AND PLAN OF MERGER
OF TOLLYCRAFT CORPORATION A MINNESOTA CORPORATION
AND TOLLYCRAFT CORPORATION A NEVADA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of ___________________, 1996,
(the
"Agreement") is between Tollycraft Yacht Corporation, a Nevada corporation
("Tollycraft-Nevada") and Tollycraft Yacht Corporation, a Minnesota
corporation
("Tollycraft-Minnesota"). Tollycraft-Nevada and Tollycraft-Minnesota are
sometimes referred to herein as the "Constituent Corporations."
R E C I T A L S
A. Tollycraft-Nevada is a corporation duly organized and existing under the
laws of the State of Nevada and has an authorized capital stock of 5,000,000
shares of Preferred Stock and 50,000,000 shares of Common Stock, $.001 par
value
per share. As of ___________, 1996, 1,000 shares of Common Stock were issued
and
outstanding, all of which were held by Tollycraft-Minnesota. No shares of
Preferred Stock are outstanding.
B. Tollycraft-Minnesota is a corporation duly organized and existing under
the
laws of the State of Minnesota and has an authorized capital stock of
5,000,000
shares of Preferred Stock and 100,000,000 shares of Common Stock, no par value
per share. As of October 20, 1996, 55,000,000 shares of Common Stock were
issued
and outstanding. No shares of Preferred Stock are outstanding.
C. The Board of Directors of Tollycraft-Minnesota has determined that, for
the
purpose of effecting the reincorporation of Tollycraft-Minnesota in the State
of
Nevada, it is advisable and in the best interests of Tollycraft- Minnesota
that
Tollycraft-Minnesota merge with and into Tollycraft-Nevada upon the terms and
conditions herein provided.
D. The respective Boards of Directors of Tollycraft-Nevada and Tollycraft-
Minnesota have approved this Agreement and have directed that this Agreement
be
submitted to a vote of their respective stockholders and sole shareholder, and
executed by the undersigned officers.
E. Tollycraft-Nevada is a wholly-owned subsidiary of Tollycraft-Minnesota.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, Tollycraft-Nevada and Tollycraft-Minnesota hereby agree, subject
to the terms and conditions hereinafter set forth, as follows:
I. MERGER
1.1 MERGER. In accordance with the provisions of this Agreement, the
Minnesota
Business Corporation Act and the Nevada General Corporation Law,
Tollycraft-Minnesota shall be merged with and into Tollycraft-Nevada (the
Merger"), the separate existence of Tollycraft-Minnesota shall cease and
Tollycraft-Nevada shall be, and is herein sometimes referred to as, the
"Surviving Corporation," and the name of the Surviving Corporation shall be
Tollycraft Yacht Corporation.
1.2 FILING AND EFFECTIVENESS. The Merger shall become effective when the
following actions shall have been completed:
(a) This Agreement and the Merger shall have been adopted and approved by
the board of directors and/or the stockholders of each Constituent Corporation
in accordance with the requirements of the Minnesota Business Corporation Act
and
the Nevada General Corporation Law;
(b) All of the conditions precedent to the consummation of the Merger
specified in this Agreement shall have been satisfied or duly waived by the
party
entitled to satisfaction thereof; and
(c) An executed Certificate of Ownership and Merger or an executed
counterpart of this Agreement meeting the requirements of the Minnesota
Business
Corporation Act and Nevada General Corporation Law shall have been filed with
the
Secretary of State of the State of Minnesota, and the Secretary of State of
the
State of Nevada, respectively.
The date and time when the Merger shall become effective, as aforesaid,
is
herein called the "Effective Date of the Merger."
1.3 EFFECT OF THE MERGER. Upon the Effective Date of the Merger, the separate
existence of Tollycraft-Minnesota shall cease and Tollycraft-Nevada, as the
Surviving Corporation (i) shall continue to possess all of its assets, rights,
powers and property as constituted immediately prior to the Effective Date of
the
Merger, (ii) shall be subject to all actions previously taken by its and
Tollycraft-Minnesota's Board of Directors, (iii) shall succeed, without other
transfer or action on the part of any other party, to all of the assets,
rights,
powers and property of Tollycraft-Minnesota in the manner more fully set forth
in the Nevada General Corporation Law, (iv) shall continue to be subject to
all
of the debts, liabilities and obligations of Tollycraft-Nevada as constituted
immediately prior to the Effective Date of the Merger, and (v) shall succeed,
without other transfer or other action on the part of any other party, to all
of
the debts, liabilities and obligations of Tollycraft- Minnesota in the same
manner as if Tollycraft-Nevada had itself incurred them, all as more fully
provided under the applicable provisions of the Minnesota Business Corporation
Act and the Nevada General Corporations Law.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of Tollycraft-
Nevada as in effect immediately prior to the Effective Date of the Merger
shall
continue in full force and effect as the Articles of Incorporation of the
Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
2.2 BYLAWS. The Bylaws of Tollycraft-Nevada as in effect immediately prior to
the Effective Date of the Merger shall continue in full force and effect as
the
Bylaws of the Surviving Corporation until duly amended in accordance with the
provisions thereof and applicable law.
2.3 DIRECTORS AND OFFICERS. The directors and officers of Tollycraft-Nevada
immediately prior to the Effective Date of the Merger shall be the directors
and
officers of the Surviving Corporation until their successors shall have been
duly
elected and qualified or until as otherwise provided by law, the Articles of
Incorporation of the Surviving Corporation or the Bylaws of the Surviving
Corporation.
III. MANNER OF CONVERSION OF STOCK
3.1 TOLLYCRAFT-MINNESOTA COMMON STOCK. Upon the Effective Date of the Merger,
each twenty five (25) shares of Tollycraft-Minnesota Common Stock, par value
$.001 per share, issued and outstanding immediately prior thereto shall by
virtue
of the Merger and without any action by the Constituent Corporations, the
holder
of such shares or any other person, be converted into and exchanged for one
(1)
fully paid and nonassessable share of Common Stock, $.001 par value, of the
Surviving Corporation.
3.2 TOLLYCRAFT-MINNESOTA OPTIONS. Upon the Effective Date of the Merger, the
Surviving Corporation shall assume all of the rights and obligations of
Tollycraft-Minnesota under its an Incentive Stock Option, Stock Option, and,
if
adopted, the 1996 Stock Option Plan. Each outstanding and unexercised option
to
purchase Tollycraft-Minnesota Common Stock (an "Option") shall become, on the
basis of one (1) share of the Surviving Corporation's Common Stock for each
twenty five (25) shares of Tollycraft-Minnesota Common Stock issuable pursuant
to any such Option, an option to purchase the Surviving Corporation's Common
Stock on the same terms and conditions set forth in such option. As of October
31, 1996, options to purchase 4,000,000 shares of Tollycraft-Minnesota Common
Stock were outstanding and unexercised, with an additional 5,000,000 shares to
be reserved pursuant to the approval of the 1996 Employee Stock Option Plan.
3.3 TOLLYCRAFT-NEVADA COMMON STOCK. Upon the Effective Date of the Merger,
each
share of Common Stock, $.001 par value, of Tollycraft-Nevada issued and
outstanding immediately prior thereto shall, by virtue of the Merger and
without
any action by Tollycraft-Nevada, the holder of such shares or any other
person,
be cancelled and returned to the status of authorized but unissued shares.
3.4 EXCHANGE OF CERTIFICATES. After the Effective Date of the Merger, each
holder of an outstanding certificate representing shares of Tollycraft-
Minnesota
Common Stock may be asked to surrender the same for cancellation to an
exchange
agent, whose name will be delivered to holders prior to any requested exchange
(the "Exchange Agent"), and each such holder shall be entitled to receive in
exchange therefor a certificate or certificates representing the number of
shares
of the Surviving Corporation's Common Stock, into which the surrendered shares
were converted as herein provided. Until so surrendered, each outstanding
certificate theretofore representing shares of Tollycraft-Minnesota Common
Stock
shall be deemed for all purposes to represent the number of shares of the
Surviving Corporation's Common Stock, respectively, into which such shares of
Tollycraft-Minnesota Common Stock, as the case may be, were converted in the
Merger.
The registered owner on the books and records of the Surviving
Corporation
or the Exchange Agent of any such outstanding certificate shall, until such
certificate shall have been surrendered for transfer or conversion or
otherwise
accounted for to the Surviving Corporation or the Exchange Agent, have and be
entitled to exercise any voting and other rights with respect to and to
receive
dividends and other distributions upon the shares of Common Stock of the
Surviving Corporation represented by such outstanding certificate as provided
above. Each certificate representing Common Stock of the Surviving
Corporation
so issued in the Merger shall bear the same legends, if any, with respect to
the
restrictions on transferability as the certificates of Tollycraft-Minnesota so
converted and given in exchange therefore, unless otherwise determined by the
Board of Directors of the Surviving Corporation in compliance with applicable
laws, or other such additional legends as agreed upon by the holder and the
Surviving Corporation.
If any certificate for shares of the Surviving Corporation's stock is to
be
issued in a name other than that in which the certificate surrendered in
exchange
therefor is registered, it shall be a condition of issuance thereof that the
certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer, that such transfer otherwise be proper and comply with
applicable securities laws and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes payable by reason of issuance
of
such new certificate in a name other than that of the registered holder of the
certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not payable.
IV. GENERAL
4.1 COVENANTS OF TOLLYCRAFT-NEVADA. Tollycraft-Nevada covenants and agrees
that
it will, on or before the Effective Date of the Merger:
(a) File any and all documents with the Minnesota Franchise Tax Board
necessary for the assumption by Tollycraft-Nevada of all of the franchise tax
liabilities of Tollycraft-Minnesota.
(b) Take such other actions as may be required by the Nevada General
Corporation Law to effect the Merger.
(c) Take such other actions as may be required by the Minnesota Business
Corporation Act to effect the Merger.
4.2 FURTHER ASSURANCES. From time to time, as and when required by
Tollycraft-Nevada or by its successors or assigns, there shall be executed and
delivered on behalf of Tollycraft-Minnesota such deeds and other instruments,
and
there shall be taken or caused to be taken by it such further and other
actions
as shall be appropriate or necessary in order to vest or perfect in or conform
of record or otherwise by Tollycraft-Nevada the title to and possession of all
the property, interests, assets, rights, privileges, immunities, powers,
franchises and authority of Tollycraft-Minnesota and otherwise to carry out
the
purposes of this Agreement, and the officers and directors of
Tollycraft-Nevada
are fully authorized in the name and on behalf of Tollycraft-Minnesota or
otherwise to take any and all such action and to execute and deliver any and
all
such deeds and other instruments.
4.3 ABANDONMENT. At any time before the Effective Date of the Merger, this
Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either Tollycraft-Minnesota or of
Tollycraft-Nevada, or of both, notwithstanding the approval of this Agreement
by
the stockholders of Tollycraft-Minnesota or by the sole shareholder of
Tollycraft-Nevada, or by both.
4.4 AMENDMENT. The Boards of Directors of the Constituent Corporations may
amend
this Agreement at any time prior to the filing of this Agreement (or
certificate
in lieu thereof) with the Secretary of State of the State of Minnesota;
provided,
that an amendment made subsequent to the adoption of this Agreement by the
stockholders of either Constituent Corporation shall not: (1) alter or change
the
amount or kind of shares, securities, cash, property and/or rights to be
received
in exchange for or on conversion of all or any of the shares of any class or
series thereof of such Constituent Corporation, (2) alter or change any term
of
the Articles of Incorporation of the Surviving Corporation to be effected by
the
Merger, or (3) alter or change any of the terms and conditions of this
Agreement
if such alteration or change would adversely affect the holders of any class
or
series of capital stock of any Constituent Corporation.
4.5 AGREEMENT. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 2200 Clinton
Avenue,
Kelso, WA 48626 and copies thereof will be furnished to any shareholder of
either
Constituent Corporation, upon request and without cost.
4.6 GOVERNING LAW. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State
of Nevada and, so far as applicable, the merger provisions of the Minnesota
Business Corporation Act.
4.7 COUNTERPARTS. In order to facilitate the filing and recording of this
Agreement, the same may be executed in any number of counterparts, each of
which
shall be deemed to be an original and all of which together shall constitute
one
and the same instrument.
4.8 APPROVAL OF TOLLYCRAFT-MINNESOTA AS SOLE SHAREHOLDER OF TOLLYCRAFT-
NEVADA.
By its execution and delivery of this Agreement, Tollycraft-Minnesota, as sole
shareholder of Tollycraft-Nevada, consents to, approves and adopts this
Agreement
and approves the Merger. Tollycraft-Minnesota agrees to execute such further
instruments as may be necessary or desirable to evidence its approval and
adoption of this Agreement and the Merger as the sole shareholder of
Tollycraft-Nevada.
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions
of the Board of Directors of Tollycraft Corporation, a Minnesota Corporation,
and
Tollycraft Corporation, a Nevada Corporation is hereby executed on behalf of
each
of such two corporations and attested by their respective officers thereunto
duly
authorized.
TOLLYCRAFT YACHT CORPORATION TOLLYCRAFT YACHT CORPORATION
a Minnesota corporation a Nevada corporation
By: ______________________________ By: ________________________________
Title: ___________________________ Title: _____________________________
ATTEST:___________________________ ATTEST: ____________________________
Title: ___________________________ Title: _____________________________
APPENDIX B-2
PROPOSED
ARTICLES OF INCORPORATION OF
TOLLYCRAFT YACHT CORPORATION
ARTICLE I: The name of the corporation is TOLLYCRAFT YACHT
CORPORATION.
ARTICLE II: The principal office in the State of Nevada is located at
, Las Vegas,
County of Clark, State of Nevada. The name and address of the corporation's
resident
agent is: ________________________________ .
ARTICLE III: The purpose of this corporation is to engage in any
lawful activity
for which a corporation may be organized under the laws of Nevada other than
the
banking business, the trust company business or the practice of a profession.
ARTICLE IV: This corporation is authorized to issue up to an
aggregate of total of
55,000,000 shares of capital stock, consisting of:
a) 50,000,000 common shares, each having a par value of $0.001.
b) 5,000,000 preferred shares in whatever series and terms are deemed
proper form
time to time by the Board of Directors of the corporation at their discretion,
including different par or stated values for different series of preferred
shares.
There shall be no cumulative voting, and all pre-emptive rights are
denied. Each
share shall entitle the holder thereof to one vote.
ARTICLE V: The governing board shall be known as directors, the
number of directors
may from time to time be increased or decreased in such manner as shall be
provided by
the bylaws, provided that the number of directors shall not be reduced to less
than
three.
ARTICLE VI: The capital stock of the corporation, after the amount of
the
subscription price has been paid in money, property, or services, as the
directors
shall determine, shall not be subject to assessment to pay the debts of the
corporation, nor for any other purpose, and no stock issued as fully paid up
shall ever
be assessable or assessed, and the Articles of Incorporation shall not be
amended in
this particular.
ARTICLE VII: The name and post office address of the incorporator
signing the
Articles of Incorporation is as follows:
_____________________________________________
______________________________________________________________________________
______.
ARTICLE VIII: The corporation is to have perpetual existence.
THE UNDERSIGNED, being the incorporator hereinbefore named for the
purpose of
forming this corporation, does make and file these Articles of Incorporation,
hereby
declaring and certifying that the facts herein stated are true.
__________________________________
State of California
County of San Diego
On _____________________, personally appeared before me, a notary public,
_____________________________________________,who executed the above
instrument.
__________________________________
Signature of Notary
<PAGE>
APPENDIX B-3
PROPOSED
BY-LAWS
OF
TOLLYCRAFT YACHT CORPORATION
A Nevada Corporation
(Adopted ______________)
ARTICLE I
Shareholders
Section 1. Annual Meeting. The regular annual meeting of the
shareholders of the
Corporation shall be held at the office of the Corporation in Kelso,
Washington, or at
such other place as may be ordered by the Board of Directors, on May 15 each
year, if
it be not a legal holiday and if it be a legal holiday, then on the next
succeeding day
not a legal holiday; provided, however, that the Board of Directors may
postpone such
meeting for a period of time not in excess of 90 days upon appropriate
resolution. The
officers of the Corporation shall present their annual reports and the
Secretary shall
have on file for inspection and reference, an authentic list of the
shareholders,
giving the amount of shares held by each as shown by the share books of the
Corporation, 10 days before the annual meeting. If there is a failure to hold
the
annual meeting for a period of 90 days after the date designated therefor the
board of
directors shall order a meeting to be held upon the application of any
shareholder to
the Corporation.
Section 2. Special Meetings. Special meetings of the shareholders
may be called
by the Chairman of the Board of Directors, the President, a Vice President or
on call
signed by one or more shareholders holding an aggregate of not less than 20%
of the
outstanding shares entitled to vote at the meeting. The Board of Directors
may
designate any place as the place for any annual meeting or for any special
meeting
called by the Board of Directors. If a special meeting shall be called
otherwise than
by the Board of Directors, the place of meeting shall be in the city of the
principal
office of the Corporation. Calls for special meetings shall specify the time,
place
and object or objects thereof, and no other business than that specified in
the call
shall be considered in any such meeting.
Section 3. Notice of Meetings. Written notice stating the place,
date and hour
of the meeting, and, in case of a special meeting, the purpose for which the
meeting
is called, shall be delivered not less than 10 nor more than 50 days before
the date
of the meeting, either personally or by mail (postal, express or electronic),
by or at
the direction of the President or the Secretary, or the officer or person
calling the
meeting, to each shareholder of record entitled to vote at such meeting,
except that
if the authorized capital shares are to be increased, at least 20 days' notice
shall
be given. If requested by the person or persons lawfully calling such
meeting, the
Secretary shall give notice thereof, at corporate expense. Any shareholder
may waive
notice of any meeting. Notice to shareholders of record, if mailed, shall be
deemed
given as to any shareholder of record, when deposited in the mail (postal,
express or
electronic), addressed to the shareholder at his address as it appears on the
stock
transfer books of the Corporation, with postage thereon prepaid, but if three
successive letters mailed to the last-known address of any shareholder of
record are
returned or acknowledged as undeliverable, no further notices to such
shareholders
shall be necessary, until another address for such shareholder is made known
to the
Corporation.
Section 4. Action Without a Meeting. Except as may otherwise be
provided by the
Articles of Incorporation or By-Laws, any action required to be taken at any
annual or
special meeting of shareholders may be taken without a meeting and without
prior
notice, if a consent in writing, setting forth the action so taken, shall be
signed by
the holders of outstanding shares having not less than the minimum number of
votes that
would be necessary to authorize or take such action at a meeting at which all
shares
entitled to vote thereon were present and voted.
Section 5. Closing Transfer Books. For the purpose of determining
shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment
thereof, or shareholders entitled to receive payment of any dividend, or in
order to
make a determination of shareholders for any other purpose, the Board of
Directors may
provide that the share transfer books shall be closed for any stated period
not
exceeding 50 days. If the share transfer books shall be closed for the
purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders,
such date in any case to be not more than 50 days and, in case of a meeting of
shareholders, not less than 10 days prior to the date on which the particular
action
requiring such determination of shareholders is to be taken. If the share
transfer
books are not closed and no record date is fixed for the determination of
shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled
to receive payment of a dividend, the date on which notice of the meeting is
mailed or
the date on which the resolution of the Board of Directors declaring such
dividend is
adopted, as the case may be, shall be the record date for such determination
or
shareholders. When a determination of shareholders entitled to vote at any
meeting of
shareholders has been made as provided in this section, such a determination
shall
apply to any adjournment thereof. The officer or agent having charge of the
share
transfer books for shares of the Corporation shall make, at least 10 days
before each
meeting of shareholders, a complete record of the shareholders entitled to
vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address
of and the number of shares held by each, which record, for a period of ten
days before
each such meeting, shall be kept on file at the principal office of the
Corporation,
and shall be subject to inspection by any shareholder for any purpose germane
to the
meeting at any time during usual hours. Such record shall also be produced
and kept
open at the time and place of the meeting and shall be subject to the
inspection of any
shareholder for any purpose germane to the meeting during the whole time of
the
meeting. The original share transfer books shall be prima facie evidence as
to who are
the shareholders entitled to examine such record or transfer books or to vote
at any
meeting of shareholders.
Section 6. Election of Directors. Subject to Section 1 of Article
II of these By-
Laws and the Articles of Incorporation, at each annual meeting of the
shareholders of
the Corporation, a number of directors equal to the number whose terms are
expiring
shall be elected to serve until their successors are duly elected and
qualified, unless
they sooner resign. Election of directors shall be by such of the
shareholders as
attend for the purpose, either in person or by proxy, provided that if a
majority of
the outstanding shares entitled to vote is not represented, in person or by
proxy, such
meeting may be adjourned by the shareholders present for a period not
exceeding 50 days
at any one adjournment. At such election of directors, cumulative voting
shall not be
allowed.
<PAGE>
Section 7. Quorum. A majority of the outstanding shares entitled to
vote
exclusive of treasury shares, represented in person or by proxy, shall be
necessary to
constitute a quorum at meetings of the shareholders. If a quorum is present,
the
affirmative vote of the majority of the shares represented at the meeting and
entitled
to vote on the subject matter shall be the act of the shareholders, except in
those
cases where it is otherwise provided by law. In the absence of a quorum,
those present
in person or by proxy may adjourn the meeting from time to time without
further notice
but in no event for a period to exceed 50 days at any one adjournment. At
such
adjourned meeting at which a quorum shall be present or represented, any
business may
be transacted which might have been transacted at the meeting as originally
noticed.
The shareholders present at a duly organized meeting may continue to transact
business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less
than a quorum, if any action taken is approved by a majority of the
shareholders
required to initially constitute a quorum.
Section 8. Proxies. Any shareholder entitled to vote may be
represented at any
regular or special meeting of the shareholders by a duly executed proxy. The
proxy
shall be in writing and properly signed and filed with the Secretary before or
at the
time of the meeting. No proxy shall be valid after 11 months from the date of
its
execution, unless otherwise provided in the proxy.
Section 9. Order of Business. The order of business at the annual
meeting and so
far as is practicable at all other meetings of the shareholders, shall be as
follows:
(1) Calling of roll.
(2) Proof of due notice of meeting.
(3) Reading and disposal of any unapproved minutes.
(4) Annual reports of officers and committees.
(5) Election of directors.
(6) Unfinished business.
(7) New business.
(8) Adjournment.
ARTICLE II
Directors
Section 1. Number and Qualifications. The property interests,
business and
transactions of the Corporation shall be managed and conducted by a Board of
Directors
which, except as otherwise provided for in the Articles of Incorporation,
shall consist
of not less than 3 nor more than 11 persons (however, if there are less than 3
shareholders, the number of directors maybe less than 3 but not less than the
number
of shareholders), as shall be fixed from time to time by the Board of
Directors, as
hereinafter provided. The Board of Directors shall be elected annually by
ballot of
the holders of the shares of the Corporation entitled to vote thereon for the
term of
one year and shall serve until the election and qualification of their
successors,
unless they sooner resign. The number of directors may be increased at any
time by a
majority vote of the whole Board of Directors. The number of directors may be
decreased at any time by a majority vote of the whole Board of Directors,
except that
no decrease in the number of directors shall have the effect of shortening the
terms
of any incumbent director.
Section 2. Duties. The Board of Directors shall exercise a general
supervision
over the affairs of the Corporation, authorize the issuance and sale of shares
of the
Corporation, receive and pass upon the reports of the Secretary and Treasurer,
audit
all bills and accounts against the Corporation and fix or delegate authority
to fix the
compensation of officers and employees of the Corporation. The Board may
direct any
officer or officers of the Corporation to transact any particular branch of
business
which it may see fit to designate. The Board of Directors may, from time to
time,
employ such persons as the Board may deem necessary for the carrying on of the
business
of the Corporation, any of whom may also be officers or directors of the
Corporation.
Section 3. Committees. The Board of Directors by resolution passed
by a majority
of the whole Board of Directors may designate from among its members an
Executive
Committee, or one or more other committees each of which, to the extent
provided in the
resolution or in the Articles of Incorporation or the By-Laws of the
Corporation, shall
have all the authority of the Board of Directors, but no such committee shall
have the
authority of the Board of Directors in reference to amending the Articles of
Incorporation, adopting a plan of merger or consolidation, recommending to the
shareholders the sale, lease, exchange or other disposition of all or
substantially all
the property and assets of the Corporation otherwise than in the usual and
regular
course of its business, recommending to the shareholders a voluntary
dissolution of the
Corporation or a revocation thereof, or amending the By-Laws of the
Corporation. The
designation of such committees and the delegation thereto shall not operate to
relieve
the Board of Directors, or any member thereof, of any responsibility imposed
by law.
Section 4. Vacancies. Any director may resign at any time by giving
written
notice to the President or to the Secretary of the Corporation. Such
resignation shall
take effect at the time specified therein; and unless otherwise specified
therein, the
acceptance of such resignation shall not be necessary to make it effective.
Any
vacancy occurring in the Board of Directors may be filled by the affirmative
vote of
a majority of the remaining Directors through less than a quorum of the Board
of
Directors. A director elected to fill a vacancy shall be elected for the
unexpired
term of his predecessor in office. Any directorship to be filled by reason of
an
increase in the number of directors shall be filled by the affirmative vote of
a
majority of the directors then in office, or by an election at an annual
meeting or at
a special meeting of the shareholders called for that purpose. A director
chosen to
fill a position resulting from an increase in the number of directors shall
hold office
until the next annual meeting of shareholders and until his successor has been
elected
and qualified.
Section 5. Meetings. The annual meeting of the Board of Directors
shall be held
immediately following the annual shareholders' meeting. The Board of
Directors shall
meet at such other time or times as they may from time to time determine.
Special
meetings of the Board of Directors may likewise be held on the written call of
the
Chairman of the Board, the President or of any two members of the Board.
Section 6. Place of Meeting. The Board of Directors of any
committee designated
by such Board may hold its meetings at such place or places as the Board may
from time
to time determine, or, with respect to its meetings, as shall be specified or
fixed in
the respective notices or waivers of notice or such meetings.
Section 7. Conference Telephone. One or more directors may
participate in a
meeting of the Board, of a committee of the Board or of the stockholders, by
means of
conference telephone or similar communications equipment by means of which all
persons
participating in the meeting can hear each other. Participation in this
manner shall
constitute presence in person at such meeting.
<PAGE>
Section 8. Special Meetings; Notice. Special meetings of the Board
of Directors
or any committee designated by such Board, shall be held whenever called by
the
President or by two of the directors. Notice of each such meeting shall be
mailed to
each director, addressed to him at his address as it appears on the records of
the
Corporation, at least three days before the day on which the meeting is to be
held, or
shall be sent to him at such place by telegram, or be delivered personally,
not later
than one day before the day on which the meeting is to be held. The notice of
each
such special meeting shall indicate briefly the subjects thereof. No notice
of the
time, place or purpose of any meeting of the Board of Directors or any
committee
designated by such Board need be given to any director or committee person who
attends
in person or who, in writing executed and filed with the records of the
meeting, either
before or after the holding thereof, waives such notice. No notice need be
given of
any adjourned meeting of the Board of Directors.
As to any director who shall sign the minutes of any special or
regular directors'
meeting, such meeting shall be deemed to have been legally and duly called,
noticed,
held and construed as if all the directors were actually present at said
meeting, and
all who signed the minutes were duly noticed or waived notice, and the
signature of any
director to the minutes of a meeting shall for all purposes and as to all
persons be
held to be an approval of the action thereof.
Section 9. Action Without a Meeting. Except as may otherwise be
provided by the
Articles of Incorporation or By-Laws, members of the Board of Directors or any
committee designated by such Board may participate in a meeting of the Board
or
committee by means of conference, telephone, or similar communications
equipment by
which all persons participating in the meeting can contemporaneously
understand each
other. Such participation shall constitute presence in person at a meeting.
Any
action required to be taken by the Board of Directors, or a committee thereof,
or any
other action which requires director approval may be taken without a meeting
if a
consent in writing, setting forth the action so taken, shall be signed by all
of the
directors or all the committee members entitled to vote with respect to the
subject
matter thereof.
Section 10. Quorum and Manner of Acting. A majority of the number
of member of
the Board of Directors shall form a quorum for the transaction of business at
any
regular or special meeting of the Board of Directors. Except as otherwise
provided by
law, by the Articles of Incorporation, or by these By-Laws, the act of a
majority of
the directors present, provided the same constitute a quorum, shall be the act
of the
Board of Directors. In the absence of a quorum, a majority of the directors
present
may adjourn the meeting from time to time until a quorum be had. Each
director shall
have one vote.
Section 11. Election of Officers. At the first meeting of the Board
of Directors,
after the annual election, the Chairman of the Board and/or the President, the
Secretary, and the Treasurer/Chief Financial Officer shall be, and any Vice
President(s) may be, elected to serve for the ensuing year and until the
election of
their respective successors, and an Executive Committee may be elected.
Election shall
be by ballot and the majority of the votes cast shall be necessary to elect.
Any
vacancies that occur may be filled by the Board of Directors for the unexpired
term.
Section 12. Compensation of Directors. Unless otherwise restricted
by the
Articles of Incorporation, the Board of Directors shall have the authority to
fix the
compensation of directors. The directors may be paid their expenses, if any,
of
attendance at each meeting of the Board of Directors and may be paid a fixed
sum for
attendance at each meeting of the Board of Directors or a stated salary as
director.
No such payment shall preclude any director from serving the Corporation in
any other
capacity and receiving compensation therefor. Members of special or Executive
Committees may be allowed like compensation for attending committee meetings.
Section 13. Advisory Directors and Advisory Committee Members. The
Board of
Directors from time to time may appoint one or more persons to be Advisory
Directors
or Advisory Members of one or more committees who shall not by such
appointment be
members of the Board of Directors. Advisory Directors or Advisory Members
shall be
available from time to time to perform special assignments specified by the
President
or the Board of Directors, to attend meetings of the Board of Directors upon
invitation
and to furnish consultation to the Board. The period during which the title
shall be
held may be prescribed by the Board of Directors. If no period is prescribed,
the
title shall be held at the pleasure of the Board.
Section 14. Removal. Any director may be removed from office,
either with or
without cause, at any time and another person may be elected to his place, to
serve for
the remainder of his term, at any special meeting of shareholders called for
the
purpose, by vote of the holders of the majority of the shares then entitled to
vote at
an election of the directors. In case any vacancy so created shall not be
filled by
the shareholders at such meeting, such vacancy may be filled by the directors
as
provided hereinabove.
ARTICLE III
Officers
Section 1. Number. The officers of this Corporation shall be a
President, a
Secretary, and a Treasurer/Chief Financial Officer. The Corporation may also
have, at
the discretion of the Board of Directors, a Chairman of the Board, one or more
Vice
Presidents, and such other officers as may be appointed in accordance with the
provisions of this Article. One person may hold any two of said offices
(except the
same person shall not be both President and Vice President, or President and
Secretary), but no such officer shall execute, acknowledge or verify any
instrument in
more than one capacity if such instrument is required by law or by these
By-Laws or by
resolution of the Board of Directors to be executed, acknowledged or verified
by any
two or more officers. The officers of the Corporation shall be natural
persons of age
eighteen years or older.
Section 2. Appointment, Term of Office and Qualification. The
officers of this
Corporation shall be chosen annually by the Board of Directors. Each officer,
except
such officers as may be appointed in accordance with the provisions of this
Article,
shall hold his office until his successor shall have been duly chosen and
qualified,
or until his death, or until he shall resign or shall have been removed in the
manner
hereinafter provided.
Section 3. Salaries. Salaries of all officers and agents of the
Corporation shall
be fixed by the Board of Directors.
Section 4. Subordinate Officers, etc. The Board of Directors may
appoint such
other officers to hold office for such period, have such authority and perform
such
duties as the Board of Directors may delegate. The Board of Directors may
also
delegate to any officer the power to appoint any such subordinate officers.
Section 5. Removal. The officers may be removed either with or
without cause, by
the vote of a majority of the whole Board of Directors at a special meeting of
the
Board called for this purpose. The officers appointed in accordance with the
provisions of Section 4 of this Article may be removed, either with or without
cause,
by the Board of Directors, by a majority vote of the directors present at the
meeting
or by a superior officer upon whom such power of removal may be conferred by
the Board
of Directors.
Section 6. Resignations. Any officer may resign at any time by
giving written
notice to the Board of Directors or to the President or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein;
and, unless otherwise specified therein, the acceptance of such resignation
shall not
be necessary to make it effective.
Section 7. Vacancies. A vacancy in any office because of death,
resignation,
removal, disqualification or any other cause shall be filled for the unexpired
portion
of the term by the Board of Directors, but in the case of a vacancy occurring
in the
office filled in accordance with the provisions of Section 4 of this Article,
such
vacancy may be filled by any superior officer upon whom such power may be
conferred by
the Board of Directors.
Section 8. Chairman of the Board. The Chairman of the Board, if one
shall be
elected, shall preside at all meetings of the Board of Directors, and shall
appoint all
committees except such as are required by statute, these by-laws or a
resolution of the
Board of Directors or of the Executive Committee to be otherwise appointed and
shall
have such other duties as may be assigned to him from time to time by the
Board of
Directors. In recognition of notable and distinguished services to the
Corporation,
the Board of Directors may designate one of its members as honorary Chairman,
who shall
have such duties as the Board may, from time to time, assign to him by
appropriate
resolution, excluding, however, any authority or duty vested by law or these
By-Laws
in any other officer. The Chairman may also be designated as the Chief
Executive
Officer.
Section 9. The President. The President shall be the active
executive officer of
the Corporation and shall exercise detailed supervision over the business of
the
Corporation and over its several officers, subject, however, to the control of
the
Board of Directors. The President may also be designated as the Chief
Executive
Officer, unless that title is reserved for the Chairman, or the Chief
Operating
Officer. He shall preside at all meetings of the shareholders, and in
general, shall
perform all duties incident to the office of President and such other duties
as from
time to time may be assigned to him by the Board of Directors.
The President shall execute all deeds, conveyances, deeds of trust,
bonds and other
contracts requiring a seal, under the seal of the Corporation, except where
required
or permitted by law to be otherwise signed and executed and except where the
signing
and execution thereof shall be expressly delegated by the Board of Directors
to some
officer or agent of the Corporation.
Section 10. The Vice President. The Vice President, if any, shall
perform such
duties as are given to him by these By-Laws or assigned by the Board of
Directors. The
Vice President shall perform all the duties of the President, in case of the
disability
or absence of the President, and when so acting, shall have all the powers of,
and be
subject to all the restrictions upon, the President. The Board of Directors
may from
time to time appoint more than one Vice President, each of which shall perform
the
duties designated by the Board of Directors. In the absence of the President,
the Vice
President designated from time to time by the President shall perform the
duties of the
President.
Section 11. The Secretary. The Secretary shall:
(a) Keep the minutes of the meeting of the shareholders and of the
Board of
Directors in books provided for such purpose.
(b) See that all notices are duly given in accordance with the
provisions of these
By-Laws or as required by law.
(c) Be custodian of the records and of the seal of the Corporation
and see that
such seal is affixed to all share certificates prior to their issue and to all
documents, the execution of which on behalf of the Corporation under its seal,
is duly
authorized in accordance with the provisions of these By-Laws.
(d) Have charge of the share books of the Corporation and keep or
cause to be kept
the share and transfer books in such manner as to show at any time the amount
of the
shares of the Corporation issued and outstanding, the manner in which and the
time when
such shares were paid for, the names, alphabetically arranged and the
addresses of the
holders of record; and exhibit during the usual business hours of the
Corporation to
any director, upon application, the original or duplicate share ledger.
(e) Sign with the President or a Vice President certificates for
shares of the
Corporation.
(f) See that the books, reports, statements, certificates and all
other documents
and records of the Corporation required by law are properly kept and filed.
(g) In general, to perform all duties incident to the office of
Secretary and such
other duties as, from time to time, may be assigned to him by the Board of
Directors
or by the President.
(h) The Board of Directors may appoint an Assistant Secretary who
shall have such
powers and perform such duties as may be prescribed for them by the Secretary
of the
Corporation or by the Board of Directors.
Section 12. The Treasurer/Chief Financial Officer. The
Treasurer/Chief Financial
Officer shall:
(a) Have charge and custody of, and be responsible for, all funds
and securities
of the Corporation.
(b) Keep and maintain, or cause to be kept and maintained adequate
and correct
accounts of the properties and business transactions of the Corporation,
including
accounts of its assets, liabilities, receipts, disbursements, gains, losses,
capital,
earnings (or surplus) and shares.
(c) From time to time render a statement of the condition of the
finances of the
Corporation at the request of the Board of Directors.
(d) Receive and give receipts for monies due and payable to the
Corporation from
any source whatsoever.
(e) In general, perform all duties incident to the office of
Treasurer/Chief
Financial Officer, and such other duties as from time to time may be assigned
to him
by the Board of Directors or by the President. The Treasurer/Chief Financial
Officer
may be required to give a bond for the faithful performance of his duties in
such sum
and with such surety as may be determined by the Board of Directors. Any such
bond
shall be obtained at the Corporation's expense.
(f) The Board of directors may appoint an Assistant Treasurer who
shall have such
powers and perform such duties as may be prescribed for them by the Treasurer
of the
Corporation or by the Board of Directors, and the Board of Directors shall
require the
Assistant Treasurer to give a bond to the Corporation in such sum and with
such
security as it shall approve, as conditioned for the faithful performance of
their
duties as Assistant Treasurer, the expense of such bond to be borne by the
Corporation.
ARTICLE IV
Capital Stock
Section 1. Unissued Stock. Subject to such limitations as may be
contained in the
Articles of Incorporation of the Corporation, the Board of Directors shall
have the
authority to issue from time to time the whole or any part of any unissued
balance of
the authorized Capital Stock of the Corporation to such persons, for such
consideration, whether cash, property, services or expenses, and on such terms
as the
Directors may from time to time determine without first offering the same for
subscription to stockholders of the Corporation.
Section 2. Certificates. Each shareholder of the Corporation whose
shares of
Capital Stock have been paid for in full shall be entitled to a certificate
showing the
number of shares and the class or series of shares of the Corporation standing
on the
books in his name. Each certificate shall be numbered, bear the signature of
the
President, or in case of his inability to act, the signature of the Vice
President and
of the Secretary, and the seal of the Corporation, and be issued in numerical
order
from the respective share certificate book. Where a certificate is
countersigned by
a transfer agent or registrar other than the Corporation or its employee, the
signatures of such officers may be facsimiles. Every certificate for shares
of stock
which are subject to any restriction on transfer pursuant to the Articles of
Incorporation, the By-Laws or any agreement to which the Corporation is a
party, shall
have the restriction noted conspicuously on the certificate and shall also set
forth
on the face or back either the full text of the restriction or a statement of
the
existence of such restriction and a statement that the Corporation will
furnish a copy
to the holder of such certificate upon written request and without charge.
Every
certificate issued when the Corporation is authorized to issue more than one
class or
series of stock shall set forth on its face or back either the full text of
the
preferences, voting powers, qualifications and special and relative rights of
the
shares of each class and series authorized to be issued or a statement of the
existence
of such preferences, powers, qualifications and rights, and a statement that
the
Corporation will furnish a copy thereof to the holder of such certificate upon
written
request and without charge.
Section 3. Transfer. Transfers of all shares shall be made upon the
proper share
books of the Corporation upon presentation and surrender of the duly endorsed
certificates or certificates representing the transferred shares and payment
of all
applicable stock-transfer taxes. Surrendered certificates shall be canceled
and
attached to the corresponding stubs of the share certificate book and a new
certificate
issued to the parties entitled thereto.
Section 4. Lost Certificates. The Board of Directors may order a
new certificate
for shares to be issued in the place of any certificate of the Corporation
alleged to
have been lost, stolen, or destroyed, but in either such case, the owner of
the lost
certificate shall first cause to be given to the Corporation, an affidavit
that the
certificate(s) have been lost, stolen, or destroyed, and post a bond in such
sum not
less than the par value of such lost, stolen, or destroyed certificate for
shares, at
the election of said Board, as indemnity against any loss or claim that the
Corporation
may incur by reason of the issuance of such certificate, but the Board of
Directors
may, in its discretion, refuse to replace any lost certificate save upon the
order of
some court having jurisdiction in such matters.
Section 5. Share and Transfer Books. The share and transfer books
of the
Corporation shall be kept in its principal office and shall be open during
usual
business hours to the inspection for any proper purpose, of any shareholder of
the
Corporation upon written demand, under oath, stating the purpose thereof. A
proper
purpose shall mean a purpose reasonably related to such person's interest as a
stockholder. All other books and records and a copy of the share and transfer
books
of the Corporation shall be kept in such place as shall be designated by the
Board of
Directors and shall be subject to inspection only as provided by law.
Section 6. Issuance of Fractional Shares of Scrip. The Corporation
may issue
fractions of a share, arrange for the disposition of fractional interests by
those
entitled thereto, pay in cash the fair market value of fractions of a share as
of the
time when those entitled to receive such fractions are determined, or issue
script in
registered or bearer form which shall entitle the holder to receive a
certificate for
a full share upon the surrender of such scrip aggregating a full share. A
certificate
for a fractional share shall, but scrip shall not, unless otherwise provided
therein,
entitle the holder to exercise voting rights, to receive dividends thereon and
to
participate in any of the assets of the Corporation in the event of
liquidation. The
Board of Directors may cause such scrip to be issued subject to the condition
that it
shall become void if not exchanged for certificates representing full shares
before a
specified date, or subject to the condition that the shares for which the
script is
exchangeable may be sold by the Corporation and the proceeds thereof
distributed to the
holders of such scrip, or subject to any other conditions which the Board of
Directors
may deem advisable.
Section 7. Record Date. In order that the Corporation may determine
the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any
adjournment thereof, or to express consent to corporate action in writing
without a
meeting, or entitled to receive payment of any dividend or other distribution
or
allotment of any rights, or entitled to exercise any rights in respect of any
change,
conversion or exchange of stock or for the purpose of any other lawful action,
the
Board of Directors may fix, in advance, a record date, which shall not be more
than 50
nor less than 10 days before the date of such meeting, nor more than 10 days
prior to
any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to notice
of or to vote
at a meeting of stockholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of
business on the day next preceding the day on which the meeting is held.
(b) The record date for determining stockholders for any other
purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
(c) A determination of stockholders of record entitled to notice of
or to vote at
a meeting of stockholders shall apply to any adjournment of the meeting;
provided,
however, that the Board of Directors may fix a new record date for the
adjourned
meeting.
Section 8. Dividends. The Board of Directors may declare and pay
dividends upon
the outstanding shares of the Corporation from time to time and to such extent
as they
deem advisable in the manner and upon the terms and conditions provided by
statute and
the Articles of Incorporation.
ARTICLE V
Transactions With Related Parties
The Corporation may enter into contracts or transact business with
one or more of
its directors, officers, or shareholders or with any corporation, association,
trust
company, organization or other concern in which any one or more of its
directors,
officers or shareholders are directors, officers, trustees, shareholders,
beneficiaries
or otherwise interested, or with anyone in which any one or more of its
directors,
officers or shareholders is in any way interested, and in the absence of
fraud, no such
contract or transaction shall be invalidated or in any way affected by the
fact that
such directors, officers or shareholders of the Corporation have or may have
interests
which are or might be adverse to the interest of the Corporation even though
the vote
or action of the directors, officers or stockholders having such adverse
interests may
have been necessary to obligate the Corporation upon such contract or
transaction. At
any meeting of the Board of Directors of the Corporation, or any duly
authorized
committee thereof, which shall authorize or ratify any such contract or
transaction,
any such directors, may vote or act thereat with like force and effect as if
he had not
such interest, provided, in such case, the nature of such interest (though not
necessarily the extent or details thereof) shall be disclosed or shall have
been known
to the directors or a majority thereof. A general notice that a director or
officer
is interested in any corporation or other concern of any kind above referred
to shall
be sufficient disclosure as to such director or officer with respect to all
contracts
and transactions with such corporation or other concern. No director shall be
disqualified from holding office as director or officer of the Corporation by
reason
of any such adverse interests. In the absence of fraud, no director, officer
or
shareholder having such adverse interest shall be liable to the Corporation or
to any
shareholder or creditor thereof or to any other person for any loss incurred
by it
under or by reason of such contract or transaction, nor shall any such
director,
officer or shareholder be accountable for any gains or profits realized
thereon.
<PAGE>
ARTICLE VI
Corporate Opportunities Doctrine
The officers, directors and other members of management of this
Corporation shall
be subject to the doctrine of corporate opportunities only insofar as it
applies to
business opportunities in which this Corporation has expressed an interest as
determined from time to time by the Corporation's minutes. When such areas of
interest
are delineated, all such business opportunities within such areas of interest
which
come to the attention of the officers, directors and other members of
management of
this Corporation shall be disclosed promptly to the Corporation and made
available to
it. The Board of Directors may reject any business opportunity presented to
it and
thereafter any officer, director or other member of management may avail
himself of
such opportunity. Until such time as this Corporation, through its Board of
Directors,
has designated an area as one to which the doctrine of corporate opportunities
applies,
the officers, directors and other members of management of this Corporation
shall be
free to engage in such areas of interest on their own. The provisions hereof
shall not
limit the rights of any officer, director or other member of management of
this
Corporation to continue a business existing prior to the time that such area
of
interest is designated by this Corporation. This provision shall not be
construed to
release any employee of the Corporation (other than an officer, director or
member of
management) from any duties which he may have to the Corporation.
ARTICLE VII
Indemnification
The Corporation shall, to the extent legally permissible, indemnify any
director,
officer, agent or employee as to any liabilities and expenses in which they
may be
involved or may be threatened, while serving or thereafter, by reason of being
or
having been such a director, officer, agent or employee, except with respect
to any
matter as to which he shall have been adjudicated in any proceeding not to
have acted
in good faith in the reasonable belief that his action was in the best
interest of the
Corporation. Such indemnification shall not be deemed exclusive or deny any
other
rights to which those indemnified may be entitled.
ARTICLE VIII
Amendments
Any and all provisions of these By-Laws may be altered, amended,
repealed or added
to by the vote or written consent of the shareholders entitled to exercise a
majority
of the voting power of the Corporation, or, subject to the rights of the
shareholders,
by the Board of Directors.
ARTICLE IX
Miscellaneous Provisions
Section 1. Corporate Seal. The Corporate seal shall be circular in
form and shall
have inscribed thereon the name of the Corporation, the date and state of
incorporation, and the word "SEAL".
Section 2. Benefit Program. Directors shall have the power to
install and
authorize any pension, profit sharing, stock option, loan, guarantee,
insurance,
welfare, educational, bonus, health and accident or other benefit program
which the
Board deems to be in the best interest of the Corporation, at the expense of
the
Corporation, and to amend or revoke any plan so adopted.
Section 3. Disallowed Compensation. Any payments made to an officer
or employee
of the Corporation such as a salary, commission, bonus, interest, rent, travel
or
entertainment expense incurred by him, which shall be disallowed in whole or
in part
as a deductible expense by the Internal Revenue Service, shall be reimbursed
by such
officer or employee to the Corporation to the full extent of such
disallowance. It
shall be the duty of the directors, as a Board, to enforce payment of each
such amount
disallowed. In lieu of payment by the officer or employee, subject to the
determination of the directors, proportionate amounts may be withheld from his
future
compensation payments until the amount owed to the Corporation has been
recovered.
Section 4. Stock in Other Corporations. Except as the directors may
otherwise
designate, the President, or any other person designated in writing by the
President,
shall have full power and authority to vote, represent and exercise on behalf
of this
Corporation, any and all rights and powers incident to any securities of other
corporations or organizations which may be held by this Corporation.
Section 5. Fiscal Year. The fiscal year of the Corporation shall be
adopted by
resolution of the Board of Directors.
Adopted by resolution of the Incorporator on _______________
______________________________, Incorporator and sole Director
APPENDIX B-4
RIGHTS OF DISSENTING SHAREHOLDERS AND
PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS
Minnesota Statutes 1996, Table of Chapters
Table of contents for Chapter 302A
302A.471 Rights of dissenting shareholders.
Subdivision 1. Actions creating rights. A
shareholder of a corporation may dissent from, and obtain
payment for the fair value of the shareholder's shares in the
event of, any of the following corporate actions:
(a) An amendment of the articles that materially and
adversely affects the rights or preferences of the shares of the
dissenting shareholder in that it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the
redemption of the shares, including a provision respecting a
sinking fund for the redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of
the shares to acquire shares, securities other than shares, or
rights to purchase shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote
on a matter, or to cumulate votes, except as the right may be
excluded or limited through the authorization or issuance of
securities of an existing or new class or series with similar or
different voting rights; except that an amendment to the
articles of an issuing public corporation that provides that
section 302A.671 does not apply to a control share acquisition
does not give rise to the right to obtain payment under this
section;
(b) A sale, lease, transfer, or other disposition of all or
substantially all of the property and assets of the corporation,
but not including a transaction permitted without shareholder
approval in section 302A.661, subdivision 1, or a disposition in
dissolution described in section 302A.725, subdivision 2, or a
disposition pursuant to an order of a court, or a disposition
for cash on terms requiring that all or substantially all of the
net proceeds of disposition be distributed to the shareholders
in accordance with their respective interests within one year
after the date of disposition;
(c) A plan of merger, whether under this chapter or under
chapter 322B, to which the corporation is a party, except as
provided in subdivision 3;
(d) A plan of exchange, whether under this chapter or under
chapter 322B, to which the corporation is a party as the
corporation whose shares will be acquired by the acquiring
corporation, if the shares of the shareholder are entitled to be
voted on the plan; or
(e) Any other corporate action taken pursuant to a
shareholder vote with respect to which the articles, the bylaws,
or a resolution approved by the board directs that dissenting
shareholders may obtain payment for their shares.
Subd. 2. Beneficial owners. (a) A shareholder shall
not assert dissenters' rights as to less than all of the shares
registered in the name of the shareholder, unless the
shareholder dissents with respect to all the shares that are
beneficially owned by another person but registered in the name
of the shareholder and discloses the name and address of each
beneficial owner on whose behalf the shareholder dissents. In
that event, the rights of the dissenter shall be determined as
if the shares as to which the shareholder has dissented and the
other shares were registered in the names of different
shareholders.
(b) A beneficial owner of shares who is not the shareholder
may assert dissenters' rights with respect to shares held on
behalf of the beneficial owner, and shall be treated as a
dissenting shareholder under the terms of this section and
section 302A.473, if the beneficial owner submits to the
corporation at the time of or before the assertion of the rights
a written consent of the shareholder.
Subd. 3. Rights not to apply. Unless the articles,
the bylaws, or a resolution approved by the board otherwise
provide, the right to obtain payment under this section does not
apply to a shareholder of the surviving corporation in a merger,
if the shares of the shareholder are not entitled to be voted on
the merger.
Subd. 4. Other rights. The shareholders of a
corporation who have a right under this section to obtain
payment for their shares do not have a right at law or in equity
to have a corporate action described in subdivision 1 set aside
or rescinded, except when the corporate action is fraudulent
with regard to the complaining shareholder or the corporation.
HIST: 1981 c 270 s 80; 1987 c 203 s 2,3; 1988 c 692 s 10; 1991
c 49 s 16; 1992 c 517 art 1 s 15; 1993 c 17 s 40; 1994 c 417 s 5
Copyright 1996 by the Office of Revisor of Statutes, State of Minnesota.
<PAGE>
Minnesota Statutes 1996, Table of Chapters
Table of contents for Chapter 302A
302A.473 Procedures for asserting dissenters' rights.
Subdivision 1. Definitions. (a) For purposes of this
section, the terms defined in this subdivision have the meanings
given them.
(b) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action referred to in section
302A.471, subdivision 1 or the successor by merger of that
issuer.
(c) "Fair value of the shares" means the value of the
shares of a corporation immediately before the effective date of
the corporate action referred to in section 302A.471,
subdivision 1.
(d) "Interest" means interest commencing five days after
the effective date of the corporate action referred to in
section 302A.471, subdivision 1, up to and including the date of
payment, calculated at the rate provided in section 549.09 for
interest on verdicts and judgments.
Subd. 2. Notice of action. If a corporation calls a
shareholder meeting at which any action described in section
302A.471, subdivision 1 is to be voted upon, the notice of the
meeting shall inform each shareholder of the right to dissent
and shall include a copy of section 302A.471 and this section
and a brief description of the procedure to be followed under
these sections.
Subd. 3. Notice of dissent. If the proposed action
must be approved by the shareholders, a shareholder who wishes
to exercise dissenters' rights must file with the corporation
before the vote on the proposed action a written notice of
intent to demand the fair value of the shares owned by the
shareholder and must not vote the shares in favor of the
proposed action.
Subd. 4. Notice of procedure; deposit of shares. (a)
After the proposed action has been approved by the board and, if
necessary, the shareholders, the corporation shall send to all
shareholders who have complied with subdivision 3 and to all
shareholders entitled to dissent if no shareholder vote was
required, a notice that contains:
(1) The address to which a demand for payment and
certificates of certificated shares must be sent in order to
obtain payment and the date by which they must be received;
(2) Any restrictions on transfer of uncertificated shares
that will apply after the demand for payment is received;
(3) A form to be used to certify the date on which the
shareholder, or the beneficial owner on whose behalf the
shareholder dissents, acquired the shares or an interest in them
and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief
description of the procedures to be followed under these
sections.
(b) In order to receive the fair value of the shares, a
dissenting shareholder must demand payment and deposit
certificated shares or comply with any restrictions on transfer
of uncertificated shares within 30 days after the notice
required by paragraph (a) was given, but the dissenter retains
all other rights of a shareholder until the proposed action
takes effect.
Subd. 5. Payment; return of shares. (a) After the
corporate action takes effect, or after the corporation receives
a valid demand for payment, whichever is later, the corporation
shall remit to each dissenting shareholder who has complied with
subdivisions 3 and 4 the amount the corporation estimates to be
the fair value of the shares, plus interest, accompanied by:
(1) the corporation's closing balance sheet and statement
of income for a fiscal year ending not more than 16 months
before the effective date of the corporate action, together with
the latest available interim financial statements;
(2) an estimate by the corporation of the fair value of the
shares and a brief description of the method used to reach the
estimate; and
(3) a copy of section 302A.471 and this section, and a
brief description of the procedure to be followed in demanding
supplemental payment.
(b) The corporation may withhold the remittance described
in paragraph (a) from a person who was not a shareholder on the
date the action dissented from was first announced to the public
or who is dissenting on behalf of a person who was not a
beneficial owner on that date. If the dissenter has complied
with subdivisions 3 and 4, the corporation shall forward to the
dissenter the materials described in paragraph (a), a statement
of the reason for withholding the remittance, and an offer to
pay to the dissenter the amount listed in the materials if the
dissenter agrees to accept that amount in full satisfaction.
The dissenter may decline the offer and demand payment under
subdivision 6. Failure to do so entitles the dissenter only to
the amount offered. If the dissenter makes demand, subdivisions
7 and 8 apply.
(c) If the corporation fails to remit payment within 60
days of the deposit of certificates or the imposition of
transfer restrictions on uncertificated shares, it shall return
all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice
under subdivision 4 and require deposit or restrict transfer at
a later time.
Subd. 6. Supplemental payment; demand. If a
dissenter believes that the amount remitted under subdivision 5
is less than the fair value of the shares plus interest, the
dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus
interest, within 30 days after the corporation mails the
remittance under subdivision 5, and demand payment of the
difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.
Subd. 7. Petition; determination. If the corporation
receives a demand under subdivision 6, it shall, within 60 days
after receiving the demand, either pay to the dissenter the
amount demanded or agreed to by the dissenter after discussion
with the corporation or file in court a petition requesting that
the court determine the fair value of the shares, plus
interest. The petition shall be filed in the county in which
the registered office of the corporation is located, except that
a surviving foreign corporation that receives a demand relating
to the shares of a constituent domestic corporation shall file
the petition in the county in this state in which the last
registered office of the constituent corporation was located.
The petition shall name as parties all dissenters who have
demanded payment under subdivision 6 and who have not reached
agreement with the corporation. The corporation shall, after
filing the petition, serve all parties with a summons and copy
of the petition under the rules of civil procedure.
Nonresidents of this state may be served by registered or
certified mail or by publication as provided by law. Except as
otherwise provided, the rules of civil procedure apply to this
proceeding. The jurisdiction of the court is plenary and
exclusive. The court may appoint appraisers, with powers and
authorities the court deems proper, to receive evidence on and
recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in
question have fully complied with the requirements of this
section, and shall determine the fair value of the shares,
taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that
the court, in its discretion, sees fit to use, whether or not
used by the corporation or by a dissenter. The fair value of
the shares as determined by the court is binding on all
shareholders, wherever located. A dissenter is entitled to
judgment in cash for the amount by which the fair value of the
shares as determined by the court, plus interest, exceeds the
amount, if any, remitted under subdivision 5, but shall not be
liable to the corporation for the amount, if any, by which the
amount, if any, remitted to the dissenter under subdivision 5
exceeds the fair value of the shares as determined by the court,
plus interest.
Subd. 8. Costs; fees; expenses. (a) The court shall
determine the costs and expenses of a proceeding under
subdivision 7, including the reasonable expenses and
compensation of any appraisers appointed by the court, and shall
assess those costs and expenses against the corporation, except
that the court may assess part or all of those costs and
expenses against a dissenter whose action in demanding payment
under subdivision 6 is found to be arbitrary, vexatious, or not
in good faith.
(b) If the court finds that the corporation has failed to
comply substantially with this section, the court may assess all
fees and expenses of any experts or attorneys as the court deems
equitable. These fees and expenses may also be assessed against
a person who has acted arbitrarily, vexatiously, or not in good
faith in bringing the proceeding, and may be awarded to a party
injured by those actions.
(c) The court may award, in its discretion, fees and
expenses to an attorney for the dissenters out of the amount
awarded to the dissenters, if any.
HIST: 1981 c 270 s 81; 1987 c 104 s 30-33; 1993 c 17 s 41,42
Copyright 1996 by the Office of Revisor of Statutes, State of Minnesota.
