SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by party other than the Registrant [ ]
Check the appropriate box:
[X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
------------------------
SUNBURST ACQUISITIONS II, INC.
(Name of Registrant as Specified In Its Charter)
------------------------
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1 Title of each class of securities to which transaction applies:
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2 Aggregate number of securities to which transaction applies:
-----------------------------------
3 Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-----------------------------------
4 Proposed maximum aggregate value of transaction:
-----------------------------------
5 Total fee paid:
-----------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1 Amount Previously Paid:
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2 Form, Schedule or Registration Statement No.:
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3 Filing Party:
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4 Date Filed:
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<PAGE>
SUNBURST ACQUISITIONS II, INC.
June 8, 1998
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend a
Special Meeting of Shareholders of Sunburst Acquisitions II, Inc. (the
"Company") to be held at 10:30 a.m. local time on June 19, 1998 at the Company's
new principal place of business, 5599 San Felipe, Suite 620, Houston, Texas
77056.
At the Special Meeting you are being asked to consider and vote upon a
change in the Company's state of incorporation from Colorado to Texas by means
of a merger of the Company into Vector Energy Corporation, a newly organized
Texas corporation wholly owned by the Company, whereby Vector Energy Corporation
will be the surviving corporation.
You are urged to vote your proxy even if you currently plan to attend the
Special Meeting. Please remember to sign and date the proxy card; otherwise, it
is invalid. Returning your proxy will not prevent you from voting in person but
will assure that your vote is counted if you are unable to attend the meeting.
Please return your proxy as soon as possible.
Sincerely,
/s/ Stephen Noser
-------------------------------------
Stephen Noser, President
<PAGE>
SUNBURST ACQUISITIONS II, INC.
5599 SAN FELIPE, SUITE 620
HOUSTON, TEXAS 77056
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held June 19, 1998
TO THE SHAREHOLDERS OF SUNBURST ACQUISITIONS II, INC.:
NOTICE IS HEREBY GIVEN that the Special Meeting of the Shareholders (the
"Meeting") of Sunburst Acquisitions II, Inc. (the "Company") will be held at its
new principal place of business, 5599 San Felipe, Suite 620, Houston, Texas,
77056, at the hour of 10:30 a.m. local time, for the following purpose:
1. To consider and vote upon a change in the Company's state of
incorporation from Colorado to Texas by means of a merger of the Company into
Vector Energy Corporation, a newly organized Texas corporation wholly owned by
the Company ("VEC"), whereby VEC will be the surviving corporation ("Migratory
Merger").
2. In conjunction with the approval of the proposed Migratory Merger,
to consider and vote upon an exchange of shares of the Company for shares of VEC
whereby the holders of common stock in the Company will receive one share of
common stock in VEC for every 3.3333 shares of common stock in the Company and
whereby the holders of preferred stock in the Company will receive one share of
preferred stock in VEC for every one share of preferred stock in the Company.
3. To transact such other business as may properly come before the
Meeting and at any and all adjournments, postponements or continuations
thereof.
Only shareholders of record at the close of business on May 22, 1998, are
entitled to notice of and to vote at the Meeting or any adjournments,
postponements or continuations thereof.
You are cordially invited and urged to attend the Meeting. All
shareholders, whether or not they expect to attend the Meeting in person, are
requested to complete, date and sign the enclosed form of proxy and return it as
soon as possible in the postage paid, return-addressed envelope provided for
that purpose. Shareholders who attend the Meeting may revoke a prior proxy and
vote their proxy in person as set forth in the Proxy Statement.
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
PROPOSAL. YOUR VOTE IS IMPORTANT.
By Order of the Board of Directors
/s/ Samuel M. Skipper
-------------------------------------
Samuel M. Skipper, Chairman of the
Board
Houston, Texas
Dated: June 8, 1998
<PAGE>
SUNBURST ACQUISITIONS II, INC.
5599 San Felipe, Suite 620
Houston, Texas 77056
(713) 850-9993
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
To be held June 19, 1998
-----------------------------------------------------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors (the "Board") of Sunburst
Acquisitions II, Inc. (the "Company"), for use at the Special Meeting of
Shareholders of the Company to be held at the Company new principal place of
business, 5599 San Felipe, Suite 620, Houston, Texas, 77056, at 10:30 a.m. local
time, and at any and all postponements, continuations or adjournments thereof
(collectively, the "Meeting"). This Proxy Statement, the accompanying form of
proxy (the "Proxy") and the Notice of Special Meeting will be first mailed or
given to the Company's shareholders on or about June 8, 1998.
All shares of the Company's common stock, no par value per share ("Common
Stock"), represented by properly executed and valid Proxies received in time for
the Meeting will be voted at the Meeting in accordance with the instructions
marked thereon or otherwise as provided therein, unless such Proxies have
previously been revoked. Owners of the Company's Class AA 6% Cumulative
Convertible Preferred Stock ("Class AA Preferred Stock") and Class B Preferred
Stock ("Class B Preferred Stock; sometimes hereafter the Class AA Preferred
Stock and the Class B Preferred Stock will be referred to collectively as the
"Preferred Stock") are entitled to vote at the Meeting and will receive this
Notice and Proxy materials. Unless instructions to the contrary are marked, or
if no instructions are specified, Shares represented by the Proxies will be
voted "FOR" the proposals set forth on the Proxy, and in the discretion of the
persons named as proxies, on such other matters as may properly come before the
Meeting. Any Proxy may be revoked at any time prior to the exercise thereof by
submitting another Proxy bearing a later date and depositing it with the
Secretary of the Company or by giving written notice of revocation to the
Company at the address indicated above or by voting in person at the Meeting.
Any notice of revocation sent to the Company must include the shareholder's name
and must be received prior to the Meeting to be effective.
VOTING
Only holders of record of Shares, as hereinafter defined, at the close of
business on May 22, 1998 (the "Record Date") will be entitled to receive notice
of and to vote at the Meeting. On the Record Date there were 11,833,733 shares
of Common Stock outstanding, each of which will be entitled to one vote on each
matter properly submitted for vote to the Company's shareholders at the Meeting.
On the Record date, there were additionally 530,000 shares of Preferred Stock
outstanding, which will have a combined vote of 59,999,900 votes. The presence,
in person or by proxy, of holders of one third of the Shares entitled to vote at
the Meeting (as used hereafter, the term "Shares" shall include all votes of the
Company, both Common Stock and Preferred Stock) shall constitute a quorum for
the transaction of business at the Meeting. The Company anticipates that a
quorum will be present at the meeting.
The directors and officers (and their affiliates) of the Company held
voting power, as of the Record Date, with respect to an aggregate of
57,600,000.5 votes (approximately 80.2% of the outstanding votes).
The affirmative vote of a majority of Shares issued and outstanding is
required to approve the proposal to consummate the merger resulting in the
change in the domicile and the state of incorporation of the Company to Texas.
The Company anticipates that the proposal will be affirmed by the requisite
vote.
Votes cast by proxy will be tabulated by Stephen Noser, Secretary of the
Company, or by a duly appointed assistant secretary. Votes cast by proxy or in
person at the Meeting will be counted by the persons appointed by the Company to
act as the judge of election for the Meeting. Abstentions, broker non-votes and
Shares to which authority to vote on any proposal is withheld, are each included
in the determination of the number of Shares present and voting at the Meeting
for purposes of obtaining a quorum. Each will be tabulated separately.
Abstentions will be counted in tabulations of the votes cast on proposals
presented to shareholders, whereas broker non-votes are not counted for
purposes of determining whether a proposal has been approved.
PROPOSAL I
General
At present, the Company is a Colorado corporation with substantially all of
its business operations being conducted in Texas. The Company is authorized to
do business as a foreign corporation in the State of Texas.
At present, the Company's principal place of business and operations are
situated in Texas, including much of it oil and gas interests. The Company has
no operations in or any other business contacts with the State of Colorado.
Compliance with both Colorado and Texas laws needlessly increases the Company's
overhead,. including a potential increase in the amount of taxes paid by the
Company.
In order to reduce overhead and make its operations more efficient, the
Company has incorporated Vector Energy Corporation, a newly formed Texas
corporation wholly owned by the Company ("VEC") and intends to merge VEC with
the Company, with VEC being the surviving entity (the "Migratory Merger"). The
Board has approved the Migratory Merger and unanimously recommends its approval
by the Company's shareholders. The Company's officers and directors, who
together hold approximately 80% of the Shares, have indicated that they intend
to vote "FOR" the Migratory Merger.
If approved, the Migratory Merger, will result in a change in the
Company's state of incorporation from Colorado to Texas pursuant to an Agreement
and Plan of Merger (the "Merger Agreement"). The Merger Agreement provides for
the merger of the Company, a Colorado corporation, with and into VEC, a Texas
corporation. VEC was organized to facilitate the Migratory Merger and currently
does not conduct any business. VEC's principal executive offices will be
located at 5599 San Felipe, Suite 620, Houston, Texas, 77056.
In addition, after the effective date of the Migratory Merger, the Company
will continue its operations under the name of "Vector Energy Corporation."
If the shareholders approve the Migratory Merger, VEC will be the surviving
corporation in the merger. The principal effect of the Migratory Merger will be
to change the law applicable to the Company's corporate affairs from the
Colorado Business Corporation Act ("Colorado Law") to the Texas Business
Corporation Act ("Texas Law"). All Common Stock shareholders of the Company
will receive one share of common stock, no par value, in the new entity ("VEC
Common") for every 3.3333 shares of Common Stock presently held. All Preferred
Stock shareholders in the Company will receive one share of preferred stock, no
par value, in the new entity ("VEC Preferred") for every one share of Preferred
Stock presently held. The rights and privileges attributable to the Common
Stock and the Preferred Stock will be identical to the rights and privileges of
the VEC Common and VEC Preferred; provided however, that the voting percentages
of the VEC Common and the Class AA Preferred Stock of VEC with respect to 100%
of the votes of VEC will be reduced (see Proposal II below for a discussion of
this reduction in the percentage of votes). The approval of the Migratory
Merger will not result in any change in the business, management, location of
principal executive offices, assets, liabilities or net worth of the Company.
By operation of law, at the effective date of the Migratory Merger, all assets,
property, rights, liabilities and obligations of the Company will be transferred
to and assumed by VEC.
Management believes that there will be no adverse tax consequences to
shareholders of the Company as a result of this transaction. The Company will
continue to be listed on the Over The Counter Bulletin Board, and will change
its symbol to reflect its new name under which it will be traded. The Company
will promptly notify its shareholders of the new symbol under which the Company
will be traded.
The following discussion summarizes certain aspects of the Migratory
Merger, including certain material differences between Texas Law and Colorado
Law. This summary does not purport to be a complete description of the
Migratory Merger or the differences between shareholders' rights under Texas
Law and Colorado Law and is qualified by reference to (a) the Merger Agreement
between the Company and VEC attached hereto as Appendix A; (b) the Articles of
Incorporation of VEC (the "New Articles") plus the certificate of designation of
rights and preferences of new preferred stock attached hereto as Appendix B; and
(c) the Bylaws of VEC (the "New Bylaws") attached hereto as Appendix C. Copies
of the Company's current Articles of Incorporation, as amended (the "Present
Articles") and current Bylaws (the "Present Bylaws") are available for
inspection at the Company's executive office and copies will be sent to
shareholders, without charge, upon request.
Approval of the Migratory Merger by the Company's shareholders will
constitute approval of the Merger, the Merger Agreement, the New Articles and
the New Bylaws, the amendment to the New Articles changing the name of the
Company to "Vector Energy Corporation" as well as other matters included in the
Migratory Merger and described in this Proxy Statement. In accordance with the
terms of the Merger Agreement, the New Articles and the New Bylaws will replace
the Present Articles and Present Bylaws as the charter documents affecting
corporate governance and shareholders' rights.
There are certain material differences between Texas Law and Colorado Law,
including certain differences in shareholders' rights. Accordingly,
shareholders are urged to read carefully this Proxy Statement and the appendices
hereto. Shareholders of the Company whose shares are not voted in favor of the
Migratory Merger will be eligible to take additional steps to obtain statutory
dissenter's rights. See "Rights of Dissenting Shareholders" and "Appendix D."
Comparison of Texas Law and Colorado Law
It is impractical to summarize all of the differences between Texas Law and
Colorado Law in this Proxy Statement; however, all differences between Texas Law
and Colorado Law that could materially affect the rights of the Company's
shareholders, not elsewhere discussed, are discussed below:
Shareholder Vote for Mergers and Other Corporate Matters. Colorado Law
------------------------------------------------------------
differs from Texas Law in a number of material respects in regard to mergers and
other corporate reorganizations. Under Colorado Law, holders of a majority of
all outstanding shares entitled to vote must approve an amendment to a company's
articles of incorporation, a merger or disposition of all or substantially all
assets. However, Texas Law requires that a plan of merger, share exchange or
disposition of all or substantially all assets not in the usual or regular
course of business, and an amendment to a company's articles of incorporation
be approved by the holders of two-thirds of all outstanding shares entitled to
vote.
Because of the increase in the vote required to approve such transactions,
the power of the Company's current shareholders to defeat a proposal they deem
unfavorable may be heightened.
Voting Groups. Colorado Law allows a corporation to decrease the number of
-------------
votes required for a quorum at a shareholders meeting from a majority to
one-third of the votes entitled to be cast by a voting group (as defined below).
Texas Law also allows a corporation to decrease the requisite percentage to
one-third. The term "voting group" is a term of art not used as such under
Texas Law, which generally means all shares which are entitled to vote and be
counted collectively with respect to a matter. For example, under the Present
Articles and Present Bylaws, a "voting group" would constitute the holders of
the Shares. A voting group is thus the basic units of collective voting at a
shareholders' meeting, and voting by voting groups may provide essential
protection to one or more classes or series of shares against actions that are
detrimental to such interests or class (for example, the decrease in a preferred
dividend to holders of preferred shares in the event VEC issued such shares in
the future). The determination of which shares form part of a single group, in
general, must be defined by the articles of incorporation. Under Texas Law, the
New Articles contain no designation of a voting group as the Present Bylaws so
provide. Management believes that this lack of designation of voting group will
have no effect on the voting ability of present shareholders.
Action by Written Consent. Under Texas Law, the articles of
------------------------------------
incorporation may provide that any action taken without a meeting may be taken
-----
by a written consent signed by the holders of shares having not less than the
minimum number of votes that would be necessary to take such action at that
meeting.
Under Colorado Law, all action taken by the shareholders by written consent
must be signed unanimously by all shareholders entitled to vote on the action.
Therefore, in Texas, if the articles of incorporation so provide, action by
written consent can be taken if the written consent is executed by holders of a
majority of the shares of the corporation while in Colorado the same action by
written consent would have to be signed by all shareholders.
Inspection of Corporate Records. With respect to the inspection of the
----------------------------------
Company's books and records, including shareholder's lists, Texas Law provides a
right of inspection to any person who shall have been a shareholder for at least
six months immediately preceding his or her demand or any person holding at
least 5% of a class of outstanding shares on written demand at any reasonable
time for any proper purpose. Under Texas Law, a corporation has certain rights
calculated to assure itself that the demand for inspection is not for a purpose
or interest other than that of the corporation.
Colorado Law provides a right of inspection to any person who shall have
been a shareholder for at least three months immediately preceding the demand
or any person holding at least 5% of a class of outstanding shares for a purpose
reasonably related to such person's interest as a shareholder and provides at
least 5 days prior written notice.
Payment of Dividends. Under Texas Law dividends may be declared and
------------------------
distributions may be made generally only if (i) after giving effect to the
distribution the corporation is not insolvent or (ii) the distribution does not
exceed the surplus of the corporation.
Under Colorado Law all distributions of funds with respect to a
corporation's shares, whether as dividends, redemptions, repurchase of shares or
otherwise, may be made if, after such distribution, (i) the corporation can pay
its debts as they presently become due in the usual course of business and (ii)
the corporation's total assets are not less than the sum of its total
liabilities, plus (unless the articles of incorporation permit otherwise) the
amount that would be needed, if the corporation were to be dissolved at the time
of the distribution, to satisfy the preferential rights, on dissolution, of
shareholders whose preferential rights are senior to those receiving the
distribution.
Management believes that the Texas Law provides additional protection to
the shareholders investment by restricting the type of distributions that can be
made by the Company.
Indemnification. Both Texas Law and Colorado Law authorize a corporation
---------------
to indemnify a director, officer, employee, or any person acting on behalf of
the corporation if the person acted in good faith and acted in the best interest
of the corporation. Under both Texas Law and Colorado Law, the corporation must
make a determination that indemnification is available to the person seeking
indemnification by either (i) a majority vote of the non-interested directors,
(ii) by appointment of special legal counsel, or (iii) by vote of the
shareholders. In both cases, any advancement of expenses must be notified to
the shareholders previous to the next shareholders' meeting or the next action
taken by the shareholder by written consent.
One material difference between Texas Law and Colorado Law with respect to
indemnification is that if the person seeking indemnification is found liable to
the corporation itself or is found to have derived a personal benefit from his
or her actions, in Colorado the person is entitled to no indemnification and in
Texas the person is limited to indemnification for his or her actual expenses
incurred unless the person has been found liable for willful or intentional
misconduct in his or her actions, which would result in no indemnification.
Another material difference is that under Texas Law a determination by the
shareholders that indemnification is available must be made by the shares not
owned or controlled by the person claiming indemnification. Under Colorado Law,
the determination is made by the shareholders in the same manner that
shareholder vote is made.
Texas Business Combination Law. Under a new Texas Business Combination
---------------------------------
Law, a public corporation cannot enter into a direct or indirect business
combination with a shareholder who owns 20% or more of the corporation's votes
or has owned 20% or more of the corporation's votes during the previous three
years prior to the proposed business combination unless the business combination
was approved by the board of directors prior the shareholder's becoming a 20% or
more owner or unless the shareholders approve the business combination by a vote
of two-third or more of the outstanding votes of the corporation not including
the shareholder who is a party to the business combination.
Colorado does not have any such business combination law.
Transfer Agent and Registrar. Corporate Stock Transfer, Inc., located at
------------------------------
370 Seventeenth Street, Denver, Colorado, 80202-4614, (303) 595-3300, is the
transfer agent and registrar for the Common Stock of the Company and will
continue to be the transfer agent after the consummation of the Migratory
Merger.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL I TO
APPROVE THE CHANGE IN THE STATE OF THE COMPANY'S INCORPORATION TO TEXAS.
PROPOSAL II
As indicated above, all Common Stock shareholders of the Company will
receive one share of VEC Common for every 3.3333 shares of Common Stock
presently held. All Preferred Stock shareholders in the Company will receive
one share of VEC Preferred for every one share of Preferred Stock presently
held. The rights and privileges attributable to the Common Stock and the
Preferred Stock will be identical to the rights and privileges of the VEC Common
and the VEC Preferred; provided however, that the voting percentages of the VEC
Common and the Class AA Preferred Stock of VEC with respect to 100% of the votes
of VEC will be reduced.
If the Migratory Merger is approved, then the voting rights of the holders
of Common Stock and Class AA Preferred Stock of the Company will be decreased
with respect to the overall voting rights of the Company. This result stems
from the fact that the holders of Class B Preferred Stock of the Company will
continue to have the same number of total votes after receiving the identical
Class B Preferred Stock from VEC upon the exchange pursuant to the Migratory
Merger. In contrast, the holders of VEC Common will hold a number of shares that
has been reduced by a ratio of one share of VEC Common for every 3.3333 shares
of Common Stock, and the holders of VEC's Class AA Preferred Stock.will hold a
reduced number of votes because the voting rights of VEC's Class AA Preferred
Stock is based on its conversion ratio into VEC Common which will have been
reduced by the same ratio of one share of VEC Common for every 3.3333 shares of
Common Stock.
Previous to the Migratory Merger, the holders of outstanding Common Stock
held 16.5% of the total vote in the Company. If the Migratory Merger is
approved, the holders of outstanding Common Stock will hold approximately 6.3%
of the total vote of the Company. The table below indicates the changes in
voting percentages before and after the Migratory Merger.
<TABLE>
<CAPTION>
Before Migratory Merger After Migratory Merger
Votes Outstanding Number Percentage Number Percentage
<S> <C> <C> <C> <C>
Common Stock 11,833,733 16.5% 3,550,155 6.3%
Class AA Preferred Stock 9,999,900 13.9% 3,000,000 5.3%
Class B Preferred Stock 50,000,000 69.6% 50,000,000 88.4%
TOTALS 71,833,633 100% 56,550,155 100%
======================== ========== =========== ========== ===========
</TABLE>
The holders of Preferred Stock effectively control the majority of votes of
the Company presently and will continue to control the majority of votes of the
Company after approval of the Migratory Merger.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL II TO
APPROVE THE EXCHANGE OF COMMON STOCK AND PREFERRED IN THE MANNER DESCRIBED
HEREIN AND IN THE AGREEMENT AND PLAN OF MERGER ATTACHED HERETO AS APPENDIX A.
Rights of Dissenting Shareholders
Under Colorado Law, dissenting shareholders of the Company will be entitled
to dissenters' rights if the Migratory Merger is consummated. Any shareholder
who desires to exercise such dissenters' rights must strictly comply with the
requirements of Article 113 of the Colorado Business Corporation Act; failure to
so comply may result in the loss of such dissenters'' rights. A copy of Article
113 is attached hereto as Appendix D, and shareholders are referred to Appendix
D for a full statement of its provisions.
In general, Article 113 requires a shareholder seeking to enforce
dissenter's rights to:
(a) file with the Company, prior to the vote, a written statement that
the shareholder intends to demand payment for his or her shares if the
Migratory merger is effectuated;
(b) not vote in favor of the Migratory Merger; and
(c) file with the Company, within 30 days after receipt of a notice
from the Company stating that the Migratory Merger was approved by the
Company's shareholders, a written notice to demand payment in compliance with
Article 113 and to deposit with the Company the shareholder's certificate(s)
representing shareholder's shares. After filing the demand payment notice, the
shareholder will retain all the rights of a shareholder, except for the ability
to transfer Shares, until the effective date of the Migratory Merger, upon which
date all shareholder's rights as a shareholder shall terminate except only to
receive the fair value of the shares.
Upon receipt of the shareholder's notice, in the event that the Company and
the shareholder do not agree on the fair market value of such shareholder's
Common Stock, the Company or the Shareholder may institute a special court
proceeding to determine the rights of the dissenting shareholder and to fix the
fair value of shareholder's shares of the Common Stock.
A vote against the Migratory Merger will not satisfy the notice requirement
under Colorado Law. Any shareholder wishing to enforce his rights under Article
113 must file a separate notice of election to exercise dissenter's rights, in
the manner and within the time frames, specified in Article 113. All such
notices may be sent to the Company at 5599 San Felipe, Suite 620, Houston,
Texas, 77056, or faxed at (713) 850-1974.
FAILURE TO COMPLY WITH ANY OF THE PROCEDURAL REQUIREMENTS OF ARTICLE
113 MAY RESULT IN A TERMINATION OR WAIVER OF DISSENTERS' RIGHTS UNDER ARTICLE
113.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of outstanding Shares as of the Record Date, by (i) each person who is
known by the Company to own beneficially five percent or more of the outstanding
Shares, (ii) the Company's directors, CEO, and other executive named officers,
and (iii) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount
and Nature of
Name and Address Beneficial Percent
of Beneficial Owner Title of Class Position or Title Ownership of Class
- ----------------------------------- ----------------------- ------------------------ -------------- ---------
<S> <C> <C> <C> <C>
Samuel M. Skipper,
5599 San Felipe, Director,
Suite 620, Chairman of the Board,
Houston, Texas, 77056 Common Stock Chief Executive Officer 5,433,334 45.9%
- ----------------------------------- ----------------------- ------------------------ -------------- ---------
Class B
Preferred Stock 250,000 50%
- ----------------------------------- ----------------------- ------------------------ -------------- ---------
Stephen Noser,
5599 San Felipe, Director,
Suite 620, President, Secretary,
Houston, Texas, 77056 Common Stock and Assistant Treasurer 1,166,666.5(1) 9.9%
- ----------------------------------- ----------------------- ------------------------ -------------- ---------
Class B
Preferred Stock 250,000 50%
- ----------------------------------- ----------------------- ------------------------ -------------- ---------
Gary Countryman,
5599 San Felipe, Chief Operating Officer,
Suite 620, Vice President,
Houston, Texas, 77056 Common Stock and Assistant Secretary 1,000,000 8.5%
- ----------------------------------- ----------------------- ------------------------ -------------- ---------
Randal McDonald,
5599 San Felipe, Chief Financial Officer,
Suite 620, Treasurer,
Houston, Texas, 77056 Common Stock and Assistant Secretary -0- -0-
- ----------------------------------- ----------------------- ------------------------ -------------- ---------
Lisbon Development Company, L.L.C.,
1330 Post Oak Class AA 6%
Blvd., Suite 2222, Cumulative Convertible
Houston, Texas, 77056 Preferred Stock N/A 29,400 98%
----------------------- ------------------------ -------------- ---------
All Officers and directors Common Stock N/A 7,600,000.5(1) 64.3%
- ----------------------------------- ----------------------- ------------------------ -------------- ---------
Class B
Preferred Stock N/A 500,000 100%
- ----------------------------------- ----------------------- ------------------------ -------------- ---------
Class AA 6%
Cumulative Convertible
Preferred Stock N/A -0- -0-
======================= ======================== ============== =========
<FN>
(1) Includes 166,666.5 shares of common stock indirectly owned by Mr. Noser because of his 50% ownership in
Old Vector Corporation, which owns 333,333 shares of Common Stock.
</TABLE>
Management
SAM SKIPPER, 39, CEO/CHAIRMAN. Since 1990, Mr. Skipper has assisted in the
consolidation of private and public companies and the entry of such companies
into the public markets. From 1996 until the present, Mr. Skipper has been
Managing Director of Metropolitan Capital, a boutique investment banking firm
specializing in the marketing and financing of small public companies. From
1995 to 1996, Mr. Skipper served as CEO/President of Basic Natural Resources, an
oil and gas company which later merged into Synaptix. In 1992, he was the
founder, CEO, President and Chairman of ImageTrust, Inc., a public company which
was in the diagnostic health care business. In 1990, he served as Founder and
Vice President of Corporate Development of Diagnostic Health Corporation (DHC)
where he assisted the company in the identification and closing of several
acquisitions until DHL's acquisition by HealthSouth Corporation in 1994.
STEPHEN NOSER, 52, PRESIDENT. Mr. Noser has been President or Managing
Director of Vector Energy since 1991. Prior to that time, he served in various
management and legal capacities within the oil and gas industry. He was Vice
President and General Counsel of MCO Resources, Inc. from 1987 to 1998. He was
Associate General Counsel and then General Counsel of Inexco Oil Company from
1983 to 1986. He also served o Inexco's Board of Directors and as a member of
the company's operating committee. Both at Inexco and MCO, Mr. Noser had
primary responsibility for all SEC reporting requirements and preparation of all
registration statements. From 1977 to 1983, he served in various legal
capacities within the American Natural Resources System. From 1974 to 1977, he
served as an attorney for Mitchell Energy & Development Corp. Mr. Noser holds a
B.A. from the University of St. Thomas and a J.D. degree from the University of
Houston. He is a member of the Texas and Houston Bar Associations.
RANDAL MCDONALD, 40, CHIEF FINANCIAL OFFICER. Mr. McDonald has nineteen
years experience in the field of public accounting. Since 1993, he has provided
general financial consulting and litigation support services to a variety of
companies. Such services have included preparation and review of public and
private offering documents, preparation of pro forma financial statements
utilized in raising capital, and services as interim chief financial officer.
From 1979 to 1985, he was with KPMG Peat Marwick's Houston office, specializing
in public oil and gas companies. During 1986, he served a one year rotational
assignment in KPMG Peat Marwick's world headquarters developing their audit
software. During 1987, he served as Chief Financial Officer for IBS
Technologies, Ltd., a publicly traded computer software company. From 1988 to
1992, he was with Arthur Andersen's Denver office, specializing in public oil
and gas companies. Mr. McDonald holds a B.B.A. in accounting from the
University of Texas at Austin and is a licensed CPA in Texas and Colorado.
GARY COUNTRYMAN, 60 VICE PRESIDENT-CHIEF OPERATING OFFICER. Mr. Countryman
has been a consulting petroleum engineer since 1987. Since 1996, he has devoted
substantial time to the activities of Vector Energy. Prior to 1987, Mr.
Countryman served in a variety of capacities for Conoco, Inc. From 1984 to
1986, he was the Managing Director in charge of Conoco's operations in Egypt
where he managed a $200 million annual budget and set the organization in place
to develop one billion barrels of reserves. From 1980 to 1984, he was Manager
of Operations. From 1978 to 1980, he served as Manager of Conoco's operations
in Dubai. From 1975 to 1977, he served as Division Manager in Midland, Texas.
From 1971 to 1976, he served as assistant division manager in Oklahoma City.
From 1961 to 1976, he served in Conoco's research and development department
with special emphasis on water flood operations. Mr. Countryman holds an M.S.
in Engineering from the University of California at Berkeley. He is a member of
Phi Beta Kappa, the American Petroleum Institute and the society of Petroleum
Engineers.
<PAGE>
CHANGE OF CONTROL
On May 8, 1998, the Company entered into an asset acquisition transaction
with Old Vector Corporation, a Texas corporation ("Old Vector," formerly known
as Vector Energy Corporation), in which Stephen Noser, a 50% owner of Vector,
and Samuel Skipper acquired 78.8% of the voting rights of the Company and in the
process became the sole two directors of the Company. In addition, Mr. Noser
became the President, Secretary, and Assistant Treasurer of the Company, and Mr.
Skipper became the Chairman of the Board and Chief Executive Officer of the
Company. Previous to the transaction, Michael R. Quinn and Jay Lutsky
controlled 74.37% of the votes of the Company and acted the Company's directors
and executive officers.
In the transaction, Mr. Noser subscribed for 1,000,000 shares of Common
Stock for a total consideration of $1,000 and received 250,000 shares of Class B
Preferred Stock upon becoming a director. The Class B Preferred Stock is not
convertible but has 100 votes for every share of Class B Preferred Stock.
Pursuant to his ownership of Vector, Mr. Noser indirectly received 166,666.5
Shares (half of the 333,333 shares of Common Stock Old Vector received in
exchange for assets that Old Vector transferred to the Company). Mr. Noser owns
36.4% of the total votes of the Company.
Also in the transaction, Mr. Skipper subscribed for 5,433,334 shares of
Common Stock for a total consideration of $1,000 and received 250,000 shares of
Class B Preferred Stock upon becoming a director. Mr. Skipper owns 42.4% of the
total votes of Registrant.
SOLICITATION OF PROXIES
This solicitation is being made by mail on behalf of the Board, but may
also be made without additional remuneration by officers or employees of the
Company by telephone, telegraph, facsimile transmission or personal interview.
The expense of the preparation, printing and mailing of this Proxy Statement and
the enclosed form of Proxy and Notice of Special Meeting, and any additional
material relating to the Meeting which may be furnished to shareholders by the
Board subsequent to the furnishing of this Proxy Statement, has been or will be
borne by the Company. The Company will reimburse banks and brokers who hold
Shares in their name or custody, or in the name of nominees for others, for
their out-of-pocket expenses incurred in forwarding copies of the proxy
materials to those persons for whom they hold such Shares. It is anticipated
that the cost of such supplementary solicitations, if any, will not be material.
OTHER MATTERS
The Company is not aware of any business to be presented for consideration
at the Meeting, other than that specified in the Notice of Annual Meeting. If
any other matters are properly presented at the Meeting, it is the intention of
the persons named in the enclosed Proxy to vote in accordance with their best
judgment.
SHAREHOLDER PROPOSALS
Any shareholder who intends to submit a proposal at the next annual meeting
of Shareholders and who wishes to have the proposal considered for inclusion in
the proxy statement and form of proxy for that meeting must, in addition to
complying with the applicable laws and regulations governing submission of such
proposals, deliver the proposal to the Company for consideration no later than
August 1, 1998, Such proposals should be sent to the Corporate Secretary of the
Company at 5599 San Felipe, Suite 620, Houston, Texas, 77056.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial owners
of the Shares for which proxies are being solicited from you, and, if so, the
number of copies of this Proxy Statement and other soliciting materials you
wish to receive in order to supply copies to the beneficial owners of the
Shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS, WHETHER OR NOT
THEY EXPECT TO ATTEND THE MEETING IN PERSON, ARE REQUESTED TO COMPLETE, DATE AND
SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED
FOR THAT PURPOSE. BY RETURNING YOUR PROXY PROMPTLY YOU CAN HELP THE COMPANY
AVOID THE EXPENSE OF FOLLOW-UP MAILINGS TO ENSURE A QUORUM SO THAT THE MEETING
CAN BE HELD. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE A PRIOR PROXY AND
VOTE THEIR PROXY IN PERSON AS SET FORTH IN THIS PROXY STATEMENT.
By Order of the Board of Directors
/s/ Samuel M. Skipper
-------------------------------------------
Samuel M. Skipper, Chairman of the Board
Houston, Texas
June 8, 1998
<PAGE>
APPENDIX A
FORM OF AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement") dated as of
______________, 1998, by and between Sunburst Acquisitions II, Inc., a Colorado
corporation ("Sunburst"), and Vector Energy Corporation, a Texas corporation
and a wholly owned subsidiary of Sunburst ("VEC").
W I T N E S S E T H:
WHEREAS, Sunburst has an authorized capitalization of (a) 100,000,000
shares of common stock, no par value per share ("Sunburst Common"), of which
11,833,733 shares are issued and outstanding on the date hereof and (b)
20,000,000 shares of preferred stock ("Sunburst Preferred Stock"), of which
30,000 shares of Class AA 6% Cumulative Convertible Preferred Stock ("Sunburst
Class AA Preferred") and 250,000 shares of Class B Preferred Stock ("Sunburst
Class B Preferred") are issued and outstanding as of the date hereof.
WHEREAS, VEC has an authorized capitalization of (a) 100,000,000 shares of
common stock, no par value per share ("VEC Common"), of which 1,000 shares are
issued and outstanding as of the date hereof and all of such shares are held by
Sunburst, and (b) 20,000,000 shares preferred stock ("VEC Preferred Stock"),
which are divided in two classes, Class AA 6% Cumulative Convertible Preferred
Stock ("VEC Class AA Preferred") and Class B Preferred Stock ("VEC Class B
Preferred"), none of which is issued and outstanding.
WHEREAS, the respective Boards of Directors of Sunburst and VEC deem it
advisable and in the best interest of the corporations and their shareholders
that Sunburst reincorporate in Texas by means of a merger into VEC, as herein
contemplated, and in accordance therewith that Sunburst be merged with and into
VEC in the manner contemplated herein (the "Merger"), with VEC being the
surviving corporation, and that the Sunburst Common and Sunburst Preferred be
exchanged for VEC Common and VEC Preferred, on the basis of one share of VEC
Common for every 3.3333 shares of Sunburst Common and one share of VEC Preferred
for every one share of Sunburst Preferred with the result that the holders of
Sunburst Common and Sunburst Preferred will become the holders of all of the VEC
Common and VEC Preferred upon consummation of the transactions provided for
herein, and that such Merger be submitted to and approved and adopted by the
holders of Sunburst Common and voting Sunburst Preferred and by Sunburst as sole
shareholder of VEC;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and subject to the conditions herein set forth
and for the purpose of stating the terms and conditions of the Merger, the mode
of effecting the same, the manner of converting the shares of Sunburst Common
and Sunburst Preferred issued and outstanding immediately prior to the filing of
the Articles of Merger with the Secretary of State of the State of Colorado and
with the Secretary of State of the State of Texas (the date and time of the last
to occur of such filings being herein called the "Effective Date"), into shares
of VEC Common and VEC Preferred, the manner of exchanging the shares of Sunburst
Common and Sunburst Preferred issued and outstanding immediately prior to the
Effective Date for shares of VEC Common and VEC Preferred, and such other
details and provisions as are deemed desirable, the parties hereto have agreed,
subject to the terms and conditions hereinafter set forth and in accordance with
the terms and provisions of the Colorado Business Corporation Act (the "Colorado
Law") and the Texas Business Corporation Act (the "Texas Law"), as follows:
ARTICLE I
MERGER OF SUNBURST AND VEC
Section 1.01. Merger by Operation of Law. On the Effective Date hereof,
-------------
pursuant to the provisions of the Colorado Law and the Texas Law, Sunburst and
VEC shall be merged into a single corporation by Sunburst merging with and into
VEC, with VEC being the surviving corporation (hereinafter sometimes referred to
as the "Surviving Corporation"). Upon consummation of the Merger, the
separate corporate existence of Sunburst shall cease and the Surviving
Corporation shall become the owner, without transfer by operation of law, of all
rights, powers, assets, qualifications and property of Sunburst, and the
Surviving Corporation shall become subject to all debts and liabilities of
Sunburst in the same manner as if the Surviving Corporation had itself incurred
them.
Section 1.02. Name of Surviving Corporation. The name of the Surviving
-------------
Corporation shall be "Vector Energy Corporation." The purposes of the
corporation, the county where the principal office for the transaction of
business shall be located, the number and classification of directors, and the
capital stock of the Surviving Corporation shall be as appears in the Articles
of Incorporation of VEC and as hereinafter set forth.
Section 1.03. Charter and Bylaws of VEC. From and after the Effective
-------------
Date and until thereafter duly amended as provided by law, the Articles in
Incorporation of VEC and the Bylaws of VEC, in each case as in effect at the
Effective Date, shall become the Articles of Incorporation and Bylaws of the
Surviving Corporation.
Section 1.04. Directors and Officers of VEC.
-------------
(a) The number of directors of VEC immediately prior to the Effective
Date shall be the number of directors of the Surviving Corporation, and the
directors of VEC immediately prior to the Effective Date shall be the directors
of the Surviving Corporation, to hold office in the same position as in effect
immediately prior to the Effective Date, in accordance with the Bylaws of the
Surviving Corporation, until their respective successors are duly appointed or
elected and qualified, or their prior death, resignation or removal.
(b) The officers of Sunburst immediately prior to the Effective Date
shall be the officers of the Surviving Corporation until their respective
successors are duly elected and qualified, or their prior resignation, removal
or death.
ARTICLE II
EXCHANGE AND ISSUANCE OF STOCK
Section 2.01. The Merger. The manner of effecting the Merger contemplated
-------------
herein, including the conversion of the shares of Sunburst Common and Sunburst
Preferred issued and outstanding immediately prior to the Effective Date into
shares of VEC Common and VEC Preferred shall be as follows:
(a) At the Effective Date each of the following transactions shall be
deemed to occur simultaneously:
(i) Shares of Sunburst Common issued and outstanding immediately
prior to the Effective Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, automatically be cancelled and
converted into the right to receive one fully paid and non-assessable share of
VEC Common for every 3.3333 shares of Sunburst Common held of record.
(ii) Shares of Sunburst Preferred issued and outstanding
immediately prior to the Effective Date shall, by virtue of the Merger and
without any action on the part of the holder thereof, automatically be cancelled
and converted into the right to receive one fully paid and non-assessable share
of VEC Preferred, having the same rights and preferences as the Sunburst
Preferred share exchanged, for every one share of Sunburst Common held of
record; provided however, that the VEC Class AA Preferred's conversion ratio to
VEC Common as compared to Sunburst Class AA Preferred's conversion ratio to
Sunburst Common has been reduced by the ratio of one share of VEC Common to
every 3.3333 shares of Sunburst Common which reduces the number of votes that
VEC Class AA Preferred shareholders have in VEC.
(iii) All shares of Sunburst Common and Sunburst Preferred which
shall then be held in Sunburst's treasury, if any, shall cease to exist, and
all certificates representing such shares shall be cancelled by virtue of the
Merger.
(iv) Each share of VEC Common presently issued in the name of
Sunburst shall be cancelled and retired and shall resume the status of
authorized and unissued shares of VEC Common and no shares of VEC Common or
other securities of VEC shall be issued in respect thereof.
(b) At or after the Effective Date:
(i) Each certificate or certificates representing issued and
outstanding shares of Sunburst Common and Sunburst Preferred (a "Former Holder")
shall be deemed cancelled and of no further force in effect. Concurrently, VEC
will direct Corporate Stock Transfer, Inc., or such other agent or agents as may
be appointed by VEC (the "Exchange Agent") to issue holders of Sunburst Common,
or transferee, a certificate or certificates representing one share of VEC
Common for every 3.3333 shares of Sunburst Common previously represented by the
stock certificates upon the due presentment of the Sunburst Common certificate
to the Exchange Agent. Further, the Exchange Agent or VEC will issue to the
holders of Sunburst Preferred, or transferee, a certificate or certificates
representing one share of VEC Preferred for every one share of Sunburst
Preferred previously represented by the stock certificates upon due presentment
of the Sunburst Preferred certificate to the Exchange Agent or to VEC. The
stock transfer books for Sunburst Common and Sunburst Preferred shall be deemed
to be closed at the Effective Date with respect to each such share of Sunburst
Common and Sunburst Preferred, and no transfer of such shares shall thereafter
be made on such books.
(ii) If any certificate for VEC Common or VEC Preferred is to be
issued in a name other than that in which the certificate for Sunburst Common or
Sunburst Preferred is registered, it shall be a condition of such exchange that
the certificate be surrendered to VEC and be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange shall pay
to the Exchange Agent any transfer or other taxes required by reason of the
issuance of such VEC Common or VEC Preferred in any name other than that of the
registered holder of the certificate surrendered, or established to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Further, the holder of Sunburst Common or Sunburst Preferred
requesting such an exchange shall provide VEC with an opinion of counsel
acceptable to VEC that such issuance is proper and conforms with the Securities
Act of 1933, as amended, and with any applicable state securities laws.
Section 2.02. Dissenting Shareholders. Notwithstanding the provisions of
-------------
Section 2.01, any outstanding shares of Sunburst Common or Sunburst Preferred
held by shareholders who shall have elected to dissent from the Merger and who
shall have exercised and perfected dissenters' rights with respect to such
shares in accordance with Article 113 of the Colorado Law ("Dissenting
Shareholders") shall not be converted into shares of VEC Common or VEC Preferred
but shall be entitled to receive only such consideration as shall be provided in
said Article 113, except that Sunburst Common or Sunburst Preferred outstanding
on the Effective Date and held by a Dissenting Shareholder who shall thereafter
withdraw his or her election to dissent from the Merger or lose his or her right
to dissent from the Merger as provided in said Article 113, shall be deemed
converted, as the Effective Date, into such number of shares of VEC Common or
VEC Preferred as such holder otherwise would have been entitled to receive as a
result of the Merger.
ARTICLE III
SHAREHOLDER APPROVAL
Section 3.01. Approval by Shareholders of Sunburst. Sunburst shall duly
-------------
convene the Special Meeting of Shareholders of Sunburst (the "Special Meeting")
in connection with which, among other things, the approval by such shareholders
of this Merger Agreement, and the transactions contemplated hereby, shall be
solicited. Sunburst shall use its reasonable best efforts to obtain such
approval.
Section 3.02. Approval by Sole Shareholder of VEC. Sunburst, as sole
-------------
shareholder of VEC, shall consent in writing to the execution of this Merger
Agreement prior to the Effective Date.
ARTICLE IV
CLOSING CONDITIONS; CLOSING
Section 4.01. Closing Conditions. The consummation of the Merger and the
------------
transactions set forth in this Merger Agreement are subject to the
satisfaction on or prior to the Effective Date of the following conditions:
(a) The transactions contemplated by this Merger Agreement shall have
received the approval by affirmative vote of the holders of a majority of the
shares of Sunburst entitled to vote at the record date of the Special Meeting.
(b) The absence of any material pending or threatened
litigation concerning the Merger or any other transaction contemplated by the
Merger Agreement (unless such condition shall be waived by the Board of
Directors of Sunburst).
Section 4.02. Closing. The closing under this Merger Agreement shall
-------------
occur on the Effective Date at a place mutually convenient to all the parties
hereto.
ARTICLE V
TERMINATION OR ABANDONMENT OF MERGER
This Merger Agreement may be terminated and the Merger abandoned at any
time prior to the Effective Date by the Board of Directors of Sunburst, if the
Board of Directors of Sunburst shall determine for any reason that the
consummation of the transaction contemplated hereby would be inadvisable or not
in the best interests of Sunburst and its shareholders.
ARTICLE VI
AMENDMENTS
At any time prior to the Effective Date, the parties hereto may by written
agreement amend, modify or supplement any provision of this Merger Agreement,
provided that no such amendment, modification or supplement may be made if, in
the sole judgment of the Board of Directors of Sunburst, it will materially and
adversely affect the rights and interests of Sunburst's shareholders.
ARTICLE VII
GOVERNING LAW
This Merger Agreement has been delivered in, and shall be construed under
and in accordance with the laws of the State of Texas except to the extent the
laws of Colorado shall apply to the Merger.
ARTICLE VIII
HEADINGS
The headings set forth herein are for convenience only and shall not be
used in interpreting the text of the section in which they appear.
ARTICLE IX
SUCCESSORS AND ASSIGNS
This Merger Agreement may not be assigned by either party without the
consent of the other party hereto, and this Merger Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
parties hereto.
ARTICLE X
COUNTERPARTS
For the convenience of the parties hereto, this Merger Agreement may be
executed in separate counterparts, each of which, when so executed, shall be
deemed to be an original, and such counterparts when taken together shall
constitute but one and the same instrument.
ARTICLE XI
EXTENSIONS OF TIME; WAIVERS
Any time prior to the Effective Date the parties hereto may, by written
agreement (a) extend time for the performance of any of the obligations or other
acts of the parties hereto, (b) waive any breach or inaccuracy in the
representations and warranties contained in this Merger Agreement or in any
document delivered pursuant hereto, or (c) waive compliance with any of the
covenants, conditions or agreements contained in this Merger Agreement, except
as set forth in Section 4.01 hereof.
<PAGE>
IN WITNESS WHEREOF, Sunburst and VEC, pursuant to the approval and
authority duly given by resolutions adopted by their respective Boards of
Directors, each have caused this Merger Agreement to be executed by a duly
authorized officer thereof, each of whom affirms the statements made herein by
his or her respective company under penalty of perjury, and has further caused
its respective corporate seal to be hereunto affixed, as of the date first above
written.
VECTOR ENERGY CORPORATION, a Texas
corporation
By_______________________________________________
Name:____________________________________________
Title:___________________________________________
SUNBURST ACQUISITIONS II, INC., a Colorado
corporation
By_______________________________________________
Name:____________________________________________
Title:___________________________________________
<PAGE>
APPENDIX B-1
ARTICLES OF INCORPORATION
OF
VECTOR ENERGY CORPORATION
The undersigned natural person of the age of eighteen years or more, acting
as incorporator of a corporation under the Texas Business Corporation Act,
hereby adopts the following Articles of Incorporation for such corporation:
ARTICLE I
The name of the corporation is Vector Energy Corporation.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are:
In general, to transact any or all lawful business for which
corporations may be organized under the Texas Business Corporation Act.
ARTICLE IV
The aggregate number of shares which the corporation shall have authority
to issue is ONE-HUNDRED TWENTY MILLION (120,000,000), consisting of ONE-HUNDRED
MILLION (100,000,000) shares of no-par value Common Stock and TWENTY MILLION
(20,000,000) shares of Preferred Stock, par-value as set by the Board of
Directors.
The preferences, rights, qualifications, limitations and restrictions of
said classes of stock are as follows:
1. The shares of preferred stock may be issued from time to time by the
Board of Directors of the Corporation as shares of one or more series of
preferred stock, and the Board of Directors is expressly authorized, prior to
issuance, in the resolution or resolutions providing for the issuance of shares
of each particular series, to fix the designations, rights, qualifications,
limitations and restrictions of each such series, including but not limited to,
the following:
(a) the distinctive serial designation of such series which shall
distinguish it from other series;
(b) the number or shares included in such series, which number may
be increased or decreased from time to time unless otherwise provided by the
Board of Directors in creating the series;
(c) the annual dividend rate (or method of determining such rate)
for shares of such series and the date or dates upon which (or method of
determining such date or dates) such dividends shall be payable;
(d) whether dividends on the shares of such series shall be
cumulative, and, in the case of shares of any series having cumulative dividend
rights, the date or dates or method of determining the date or dates from which
dividends on the shares of such series shall be cumulative;
(e) the amount or amounts which shall be paid out of the assets of
the Corporation to the holders of the shares of such series upon voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
(f) the price or prices at which, the period or periods within
which and the terms and conditions upon which the shares of such series may be
redeemed, in whole or in part, at the option of the Corporation;
(g) the obligation, if any, of the Corporation to purchase or
redeem shares of such series pursuant to a sinking fund or otherwise and the
price or prices at which, the period or periods within which and the terms and
conditions upon which the shares of such series shall be redeemed, in whole or
in part, pursuant to such obligation;
(h) the period or periods within which and the terms and
conditions, if any, including the price or prices or the rate or rates of
conversion and the terms and conditions of any adjustments thereof, upon which
the shares of such series shall be convertible at the option of the holder into
shares of any class of stock or into shares of any other series of preferred
stock of the Corporation;
(i) the voting rights, if any, of the shares of such series in
addition to those required by law, including the number of votes per share and
any requirement for the approval by the holders of preferred stock, or of the
shares of one or more series thereof, or of both, as a condition to specified
corporate action or amendments to the articles of incorporation of the
Corporation;
(j) the ranking of the shares of the series as compared with
shares of other series of the preferred stock in respect to the right to receive
dividends and the right to receive payments out of the assets of the Corporation
upon voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; and
(k) any other relative rights, prefer-ences or limitations of the
shares of the series not inconsistent herewith or with applicable law.
2. All shares of preferred stock shall rank senior to the shares of
common stock in respect of the right to receive dividends and the right to
receive payments out of the assets of the Corporation upon voluntary or
involuntary liquidation, dissolution or winding up of the Corporation. All
shares of preferred stock redeemed, purchased or otherwise acquired by the
Corporation (including shares surrendered for conversion) shall be cancelled and
thereupon restored to the status of authorized but unissued shares of preferred
stock undesignated as to series.
3. No holder of shares of common stock or preferred stock shall be
entitled as a matter of right to subscribe for or purchase, or have any
preemptive right with respect to, any part of any new or additional issue of
stock of any class whatsoever, or of securities convertible into any stock of
any class whatsoever, whether now or hereafter authorized and whether issued for
cash or other consideration or by way of dividend.
4. Except as otherwise provided by the Board of Directors in accordance
with paragraph 1 above in respect of any series of the preferred stock, all
voting rights of the Corporation shall be vested exclusively in the holders of
the common stock who shall be entitled to one vote per share and no shareholder
of the corporation shall have the right of cumulative voting at any election of
directors or upon any other matter.
ARTICLE V
If, with respect to any action taken by the shareholders of the
corporation, any provision of the Texas Business Corporation Act would, but for
this Article V, require the vote or concurrence of the holders of shares having
more than a majority of the votes entitled to be cast thereon, or of any class
or series thereof, the vote or concurrence of the holders of shares having only
a majority of the votes entitled to be cast thereon, or of any class or series
thereof, shall be required with respect to any such action.
ARTICLE VI
Any action which the Texas Business Corporation Act permits or requires to
be taken at an annual or special meeting of shareholders may be taken without a
meeting, without prior notice, and without a vote, if the consent or consents in
writing, setting forth the action so taken, shall be signed and dated by the
holder or holders of shares having not less than the minimum number of votes
necessary to take such action if a meeting had been held.
ARTICLE VII
The corporation will not commence business until it has received for the
issuance of its shares consideration of the value of not less than One Thousand
Dollars ($1000.00), consisting of money, labor done or property actually
received.
ARTICLE VIII
The post office address of the corporation's initial registered office is
5599 San Felipe, Suite 620, Houston, Texas, 77056, and the name of its initial
registered agent is Stephen Noser.
ARTICLE IX
The number of directors constituting the initial board of directors is two
(2), and the names and addresses of the persons who are to serve as directors
until the first annual meeting of the shareholders or until their successors are
elected and qualified are:
Name Address
---- -------
Stephen Noser 5599 San Felipe, Suite 620
Houston, Texas 77056
Samuel M. Skipper 5599 San Felipe, Suite 620
Houston, Texas 77056
ARTICLE X
The name and address of the incorporator is:
Name Address
---- -------
Stephen Noser 5599 San Felipe, Suite 620
Houston, Texas 77056
ARTICLE XI
To the fullest extent permitted by Texas statutes, as the same exist or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits broader limitations than permitted prior to such
amendment), a director of this corporation shall not be liable to the
corporation or its share-holders for monetary damages for an act or omis-sion in
the director's capacity as a director. Any repeal or amendment of this Article
by the shareholders of the corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
corpora-tion existing at the time of such repeal or amend-ment.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of May, 1998.
-----------------------------
Stephen Noser
<PAGE>
APPENDIX B-2
<PAGE>
CERTIFICATE OF DESIGNATION, PREFERENCES,
RIGHTS AND LIMITATIONS
OF
CLASS AA 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
AND
CLASS B PREFERRED STOCK
OF
VECTOR ENERGY CORPORATION
Vector Energy Corporation hereinafter called the "Corporation," a
corporation organized and existing under the laws of the State of Texas.
DOES HEREBY CERTIFY:
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation, there is hereby authorized and
created out of the Corporation's 20,000,000 authorized shares of preferred stock
(the "Preferred Stock") a class of up to 30,000 shares of Preferred Stock
designated as Class AA Cumulative Convertible Preferred Stock, par value $100.00
per share (the "6% Preferred Stock"), which shall have the voting powers,
preferences, and relative, participating, optional, and other special rights,
and the qualifications, limitations or restrictions as set forth below.
A. Class AA 6% Cumulative Convertible Preferred Stock.
--------------------------------------------------------
1. Priority. The 6% Preferred Stock shall, with respect to the payment
---------
of dividends and upon redemption, liquidation, the dissolution, winding up, rank
senior and prior to any and all capital stock issued by the Corporation,
including, without limitation, the Common Stock as defined below, the Series A
Preferred Stock and the Class B Preferred Stock.
2. Cash Dividends on 6% Preferred Stock.
-----------------------------------------
(a) The holders of the 6% Preferred Stock shall be entitled to
receive, out of the funds of the Corporation legally available therefor,
cumulative cash dividends at the annual rate of Six and No/100 Dollars ($6.00)
per share, payable quarterly in arrears in equal installments of One and 50/100
Dollars ($1.50) on the last day of January, March, June, and September (unless
such day is a non-business day, in which event on the next business day) in each
year, commencing on the last day of March 1999, which shall be the dividend
payment dates. Dividends on each share of 6% Preferred Stock shall begin to
accrue and shall cumulate from the date of original issue of such share ("Issue
Date"), whether or not declared, and shall be payable to the holder of such
share on the record date (as defined in Section I (c) below). Dividends on
account of arrears for any past dividend periods may be declared and paid at any
time, without reference to any regular dividend payment date, to holders of
record on a record date fixed for such payment by the Board of Directors of the
Corporation or by a committee of such Board duly authorized to fix such date by
resolution designating such committee.
(b) The Corporation shall not permit any Subsidiary (as defined
below) to purchase, redeem, retire or otherwise acquire for consideration any
shares of capital stock of the Corporation unless the Corporation could,
pursuant to Section 1(a) hereof purchase, redeem, retire or otherwise acquire
such shares of capital stock at such time and in such manner. As used herein,
the term "Subsidiary" shall mean a corporation, a majority of the outstanding
voting securities of which is owned, directly or indirectly, by the Corporation.
(c) Dividends on the 6% Preferred Stock shall be payable to
holders of record as they appear on the books of the Corporation as of the close
of business on any record date for payment of dividends. The record dates for
payment of dividends shall be the last day of December, February, May, and
August in each year which immediately precedes each respective dividend payment
date.
(d) Dividends payable on the date of any conversion or redemption
of the 6% Preferred Stock not occurring on a regular dividend payment date shall
be calculated on the basis of the actual number of days elapsed (including the
date of conversion or redemption) over a 365-day year.
(e) No dividends shall be declared or paid or set apart for
payment on, and no payment shall be made on account of the purchase, redemption
or retirement of, any other series of capital stock of the Corporation, for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid (or declared and a sum sufficient for the payment thereof set
apart for such payment) on the 6% Preferred Stock for all dividend payment
periods terminating on or prior to the date of payment of dividends on such
stock or other payment date resulting from the repurchase or retirement of such
stock. Accumulations of dividends on the 6% Preferred Stock shall not bear
interest.
(f) If the Corporation calls for redemption the 6% Preferred
Stock, the Corporation shall reserve sufficient shares of Common Stock for the
purpose of issuing such shares of Common Stock to holders of 6% Preferred Stock
that determine to convert such shares of 6% Preferred Stock into Common Stock
prior to the close of business on the business day prior to the date of
redemption. Prior to providing notice for redemption, the Corporation will (i)
provide a prospectus in meeting the requirements of Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act"), relating to the issuance of
Common Stock (hereinafter defined) upon conversion of the 6% Preferred Stock and
will maintain such prospectus through the redemption date; and (ii) obtain an
approval for listing the Common Stock on any national securities exchange, on
the National Association of Securities Dealers Automated Quotation System, or in
the over-the-counter market on which the 6% Preferred Stock is trading on the
date notice of redemption is provided.
3. Redemption of 6% Preferred Stock at Option of Corporation.
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(a) Subject to the provisions of this Section 2, the 6% Preferred
Stock shall be redeemable in whole, but not in part, at the option of the
Corporation by unanimous resolution of its Board of Directors at any time after
December 31, 1998, at One Hundred and No/100 Dollars ($100.00) per share, plus
all dividends accrued and unpaid on such 6% Preferred Stock up to the date fixed
for redemption upon giving the notice hereinafter provided.
(b) Not less than thirty nor more than sixty days prior to the
date fixed for redemption of the 6% Preferred Stock, a notice in writing shall
be given by mail to the holders of record of 6% Preferred Stock at their
respective addresses as the same shall appear on the stock books of the
Corporation. Such notice shall state: (i) the redemption date; (ii) the
redemption price and the amount of dividends on the 6% Preferred Stock that will
be accrued and unpaid to the date fixed for redemption; (iii) the place or
places where certificates for shares are to be surrendered for payment of the
redemption price; (iv) that the dividends on shares to be redeemed will cease to
accrue on such redemption dates; (v) the conversion rights of the shares to be
redeemed; (vi) the period within which the conversion rights may be exercised;
and (vii) the Conversion Price and the number of shares of the Common Stock
issuable upon conversion of a share of 6% Preferred Stock at the time.
(c) After giving notice of redemption and prior to the close of
business on the business day prior to the redemption date, the holders of 6%
Preferred Stock so called for redemption may convert such stock into Common
Stock in accordance with the conversion privileges set forth in Section 3
hereof. Unless (i) the holder of shares of 6% Preferred Stock to whom notice
has been duly given shall have exercised its rights to convert in accordance
with Section 3 hereof; or (ii) the Corporation shall default in the payment of
the redemption price as set forth in such notice, upon such redemption date such
holder shall no longer have any voting or other rights with respect to such
shares, except the right to receive the moneys payable upon such redemption from
the Corporation, without interest thereon, upon surrender (and endorsement, if
required by the Corporation) of the certificates, and the shares represented
thereby shall no longer be deemed to be outstanding as of the redemption date.
In the event a holder of 6% Preferred Stock provides the Corporation with notice
of conversion of all or a portion of such 6% Preferred Stock into shares of
Common Stock on or after any notice of redemption is provided, the holder shall
have been deemed to convert as of the redemption date provided, however, that in
the event the Corporation shall default in the payment of the redemption price
as set forth in such redemption notice, the conversion shall not be effective
unless the holder of 6% Preferred Stock electing to convert provides written
notice to the Corporation within 20 days of the purported redemption date of
this desire to effect such conversion.
(d) The 6% Preferred Stock may not be redeemed and the Corporation
may not purchase or otherwise acquire any shares of 6% Preferred Stock unless
full cumulative dividends on all outstanding shares of 6% Preferred Stock shall
have been paid in full or contemporaneously are declared and paid in full for
all past dividend periods.
(e) All shares of 6% Preferred Stock so redeemed shall have the
status of authorized but unissued preferred stock, but such shares so redeemed
shall not be reissued as shares of the series of 6% Preferred Stock created
hereby.
(f) No holder of shares of 6% Preferred Stock shall have the right
to require the Corporation to redeem all or any portion of such shares.
4. Conversion of 6% Preferred Stock into Common Stock.
----------------------------------------------------------
(a) At any time on or after December 31, 1998, each holder of
shares of 6% Preferred Stock may, at such holder's option, convert any or all
such shares, plus all dividends accrued and unpaid on such 6% Preferred Stock up
to the conversion date, on the terms and conditions set forth in this Section 3,
into three hundred thirty three (333) fully paid and non-assessable shares of
the Corporation's common stock, no par value per share ("Common -Stock"), except
that with respect to any shares of 6% Preferred Stock called for redemption, the
conversion right shall terminate at the close of business on the business day
prior to the date of redemption, unless default is made in the payment of the
redemption price. The number of shares of Common Stock into which each share of
6% Preferred Stock may be converted shall be determined by dividing $4.00 by the
Conversion Price (as defined herein) in effect at the time of conversion. The
"Conversion Price" per share at which shares of Common Stock shall be initially
issuable upon conversion of any shares of 6% Preferred Stock shall be $4.00,
subject to adjustment provided below.
(b) To exercise such holder's conversion privilege, the holder of
any shares of 6% Preferred Stock shall surrender to the Corporation during
regular business hours at the principal executive offices of the Corporation or
the offices of the transfer agent for the 6% Preferred Stock or at such other
place as may be designated by the Corporation, the certificate or certificates
for the shares to be converted, duly endorsed for transfer to the Corporation
(if required by it), accompanied by written notice stating that the holder
irrevocably elects to convert such shares. Conversion shall be deemed to have
been effected on the date when such delivery is made, and such date is referred
to herein as the "Conversion Date." Within three (3) business days after the
date on which such delivery is made, the Corporation shall issue and send (with
receipt to be acknowledged) to the holder thereof or the holder's designee, at
the address designated by such holder, a certificate or certificates for the
number of full shares of Common Stock to which the holder is entitled as a
result of such conversion, and cash with respect to any fractional interest of a
share of Common Stock as provided in paragraph (c) of this Section 3. The
holder shall be deemed to have become a stockholder of record of the number of
shares of Common Stock into which the shares of 6% Preferred Stock have been
converted on the applicable Conversion Date unless the transfer books of the
Corporation are closed on that date, in which event he shall be deemed to have
become a stockholder of record of such shares on the next succeeding date on
which the transfer books are open, but the Conversion Price shall be that in
effect on the Conversion Date. Upon conversion of only a portion of the number
of shares of 6% Preferred Stock represented by a certificate or certificates
surrendered for conversion, the Corporation shall within three (3) business days
after the date on which such delivery is made, issue and send (with receipt to
be acknowledged) to the holder thereof or the holder's designee, at the address
designated by such holder, a new certificate covering the number of shares of 6%
Preferred Stock representing the unconverted portion of the certificate or
certificates so surrendered.
(c) No fractional shares of Common Stock or scrip shall be issued
upon conversion of shares of 6% Preferred Stock. If more than one share of 6%
Preferred Stock shall be surrendered for conversion at any one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of 6%
Preferred Stock so surrendered. Instead of any fractional shares of Common
Stock which would otherwise be issuable upon conversion of any shares of 6%
Preferred Stock, the Corporation shall make an adjustment in respect of such
fractional interest equal to the fair market value of such fractional interest,
to the nearest 1/100th of a share of Common Stock ' in cash at the Current
Market Price (as defined below) on the business day preceding the effective date
of the conversion. The "Current Market Price" of publicly traded shares of
Common Stock or any other class of Common Stock or other security of the
Corporation or any other issuer for any day shall be deemed to be the average of
the daily "Closing Prices" for the ten (10) consecutive trading days preceding
the Conversion Date. The "Current Market Price" of the Common Stock or any
other class of capital stock or securities of the Corporation or any other
issuer which is not publicly traded shall mean the fair value thereof as
determined by an independent investment banking or appraisal firm experienced in
the valuation of such securities or properties selected in good faith by the
Board of Directors of the Corporation or a committee thereof or, if no such
investment banking or appraisal firm is, in the good faith judgment of the Board
of Directors of the Corporation or such committee, available to make such
determination, as determined in good faith judgment of the Board of Directors of
the Corporation or such committee. The "Closing Price" shall mean the last
reported sales price on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on the National Association of
Securities Dealers Automated Quotations System, or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted on
the National Association of Securities Dealers Automated Quotations System, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to time
by the Corporation for that purpose.
(d) The Corporation shall pay any and all issue and other taxes
that may be payable in respect of any issue or delivery of shares of Common
Stock on conversion of 6% Preferred Stock pursuant hereto. The Corporation
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of shares of Common Stock in
a name other than that in which the 6% Preferred Stock so converted were
registered, and no such issue and delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax, or has established, to the satisfaction of the Corporation, that such tax
has been paid.
(e) The Corporation shall at all times reserve for issuance and
maintain available, out of its authorized but unissued Common Stock, solely for
the purpose of effecting the conversion of the 6% Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all 6%
Preferred Stock from time to time outstanding. The Corporation shall from time
to time (subject to obtaining necessary director and stockholder action), in
accordance with the laws of the State of Texas, increase the authorized number
of shares of Corporation's Common Stock if at any time the authorized number of
shares of its Common Stock remaining unissued shall not be sufficient to permit
the conversion of all of the shares of 6% Preferred Stock at the time
outstanding.
(f) If any shares of Common Stock to be reserved for the purpose
of conversion of shares of 6% Preferred Stock require registration or listing
with, or approval of, any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or otherwise,
including registration under the Act, and appropriate state securities laws,
before such shares may be validly issued or delivered upon conversion, the
Corporation will in good faith and as expeditiously as possible meet such
registration, listing or approval, as the case may be.
(g) All shares of Common Stock which may be issued upon conversion
of the shares of 6% Preferred Stock will upon issuance by the Corporation be
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges with respect to the issuance thereof.
(h) The Conversion Price in effect shall be subject to adjustment
from time to time as follows:
(i) Stock Splits, Dividends and Combinations. In the event
that the Corporation shall at any time subdivide the outstanding shares of
Common Stock, or shall pay or make a dividend or distribution on any class of
capital stock of the Corporation in Common Stock, the Conversion Price in effect
immediately prior to such subdivision or the issuance of such dividend shall be
proportionately decreased, and in case the Corporation shall at any time combine
the outstanding shares of Common Stock, the Conversion Price in effect
immediately prior to such combination shall be proportionately increased,
effective at the close of business on the date of such subdivision, dividend or
combination, as the case may be.
(ii) Non-Cash Dividends, Stock Purchase Rights, Capital
Reorganization and Dissolutions. In the event:
(A) that the Corporation shall take a record of the
holders of the Corporation's Common Stock for the purpose of entitling such
holders to receive a dividend, or any other distribution, payable otherwise than
in cash; or
(B) that the Corporation shall take a record of the
holders of Corporation Common Stock for the purpose of entitling such holders to
subscribe for or purchase any shares of stock of any class or other securities,
or to receive any other rights; or
(C) of any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation (other than a
subdivision or combination of the Corporation's outstanding shares of Common
Stock), consolidation or merger of the Corporation with or into another
corporation, share exchange for all outstanding shares of Common Stock under a
plan of exchange to which the Corporation is a party, or conveyance of all or
substantially all of the assets of the Corporation to another corporation; or
(D) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed
to the holders of record of the outstanding 6% Preferred Stock, at least ten
(10) days prior to the date hereinafter specified, a notice stating the date on
which (x) a record is to be taken for the purpose of such dividend, distribution
or rights, or (y) such reclassification, reorganization, consolidation, merger,
share exchange, conveyance, dissolution, liquidation or winding up is to take
place and the date, if any is to be fixed, as of which holders of Corporation
securities of record shall be entitled to exchange their shares of Corporation
securities for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, share exchange,
conveyance, dissolution, liquidation or winding up.
5. Voting.
------
(a) Except as otherwise required by law or set forth herein, the
shares of 6% Preferred Stock shall be entitled to vote, together with the shares
of the Corporation's Common Stock, on all matters presented at any annual or
special meeting of stockholders of the Corporation, or may act by written
consent in the same manner as the holders of the Corporation's Common Stock,
upon the following basis: each holder of 6% Preferred Stock shall be entitled to
cast such number of votes for each share of 6% Preferred Stock held by him on
the record date fixed for such meeting, or on the effective date of such written
consent, as shall be equal to the number of shares of the Corporation's Common
Stock into which each of such holder's shares of 6% Preferred Stock is
convertible immediately after the close of business on the record date fixed for
such meeting or the effective date of such written consent. The 6% Preferred
Stock and any other stock having voting rights shall vote together as one class,
except as provided by law and in paragraph 6 hereof.
(b) Without limiting the foregoing, if at any time an amount equal
to six quarterly dividend payments in respect of the 6% Preferred Stock shall be
in arrears then (i) the number of members of the Board of Directors shall be
increased by one and (ii) the holders of the 6% Preferred Stock, voting
separately as a class, shall be entitled to elect such additional director at
any meeting of the stockholders of the Corporation at which directors are to be
elected, or held, as the case may be, at any time during the period such
dividend remain in arrears. The right of the holders of the 6% Preferred Stock
to elect such additional director shall cease when all accrued and unpaid
dividends on the 6% Preferred Stock have been paid, but subject always to the
same provisions for the vesting of such voting rights in the case of any such
future dividend default or defaults. At any time after such voting power shall
have so vested in the holders of the 6% Preferred Stock, upon the written
request of the holders of record of ten percent or more of the shares of the 6%
Preferred Stock then outstanding, addressed to the Secretary of the Corporation
at the principal office of the Corporation, the Secretary shall call a special
meeting of the holders of the 6% Preferred Stock for the election of the
director to be elected by them as hereinafter provided, such meeting to be held
within thirty (30) days after delivery of such request at the place and upon the
notice provided by law and in the Bylaws for the holding of meetings of
stockholders; provided, however, that the Secretary shall not be required to
call such special meeting in the case of any such request received less than
ninety days before the date fixed for the next ensuing annual meeting of the
stockholders. If at any such annual or special meeting or any adjournment
thereof the holders of a least a majority of the shares of the 6% Preferred
Stock then outstanding shall be present or represented by proxy, then by vote of
the holders of at least a majority of the shares of the 6% Preferred Stock
present or so represented at such meeting, the then authorized number of
directors of the Corporation shall be increased by one, and the holders of the
6% Preferred Stock shall be entitled to elect the additional director
authorized. The director so elected shall serve until the next annual meeting
of stockholders or until such director's respective successor shall be elected
and qualified; provided, however, that whenever the holders of the 6% Preferred
Stock shall be divested of voting power as above provided, the term of office of
the person elected as a director by the holders of the 6% Preferred Stock as a
class shall forthwith terminate, and the authorized number of directors shall be
reduced accordingly.
(c) If, at any time during the period in which the holders of the
6% Preferred Stock shall be entitled to elect one director, the director who has
been elected by the holders of the 6% Preferred Stock shall cease to be a
director, by reason of resignation, death or removal, the Secretary of the
Corporation shall call a special meeting of the holders of the 6% Preferred
Stock and such vacancy shall be filled by a vote of the holders of the 6%
Preferred Stock at such special meeting.
(d) The holders of the 6% Preferred Stock voting as a class will
have the right to remove without cause at any time and replace any director such
holders have elected pursuant to this Section 4.
6. Liquidation Rights.
-------------------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of 6%
Preferred Stock then outstanding shall be entitled or receive out of assets of
the Corporation available for distribution to stockholders, before any
distribution of assets is made to holders of any other class of capital stock of
the Corporation, an amount equal to $ 100.00 per share, plus accumulated and
unpaid dividends thereon to the date fixed for distribution. If upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the amounts payable with respect to the 6% Preferred Stock and any
other shares of stock of the Corporation ranking as to any such distribution on
a parity with the 6% Preferred Stock are not paid in full, the holders of the 6%
Preferred Stock and of such other shares shall share ratably in any such
distribution of assets of the Corporation in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of shares of 6% Preferred Stock shall not be entitled to any further
participation in any distribution of assets by the Corporation.
(b) Neither the consolidation of nor merging of the Corporation
with or into any other corporation or corporations, nor the sale or lease of all
or substantially all of the assets of the Corporation shall be deemed to be a
liquidation, dissolution or a winding up of the Corporation within the meaning
of any of the provisions of this Section 5.
(c) In the event of a voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, the Corporation shall, within ten
(10) days after the date the Board of Directors approves such action, or within
twenty (20) days prior to any stockholders' meeting called to approve such
action, or within twenty (20) days after the commencement of any involuntary
proceeding, whichever is earlier, give each holder of shares of 6% Preferred
Stock initial written notice of the proposed action. Such initial written
notice shall describe the material terms and conditions of such proposed action,
including a description of the stock, cash, and property to be received by the
holders of shares of 6% Preferred Stock upon consummation of the proposed action
and the date of delivery thereof. If any material change in the facts set forth
in the initial notice shall occur, the Corporation shall promptly give written
notice to each holder of shares of 6% Preferred Stock of such material change.
The Corporation shall not consummate any voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation before the expiration of 30 days
after the mailing of the initial notice or 10 days after the mailing of any
subsequent written notice, whichever is later; provided that any such 30-day or
10-day period may be shortened upon the written consent of the holders of all of
the outstanding shares of 6% Preferred Stock.
(d) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation which will involves the
distribution of assets other than cash, the Corporation shall promptly engage
competent independent appraisers to determine the value of the assets to be
distributed to the holders of shares of 6% Preferred Stock and the holders of
shares of Common Stock. The Corporation shall, upon receipt of such appraiser's
valuation, give prompt written notice to each holder of shares of 6% Preferred
Stock of the appraiser's valuation.
7. Limitations.
-----------
(a) So long as any shares of 6% Preferred Stock are outstanding,
the Corporation shall not, without the affirmative vote or the written consent
of the holders of at least 66-2/3% of the outstanding shares of 6% Preferred
Stock, voting separately as a class:
(i) Create, authorize or issue shares of any class or series
of stock, or any security convertible into such class or series ranking prior to
or in parity with the 6% Preferred Stock either as to payment of dividends or as
distributions in the event of a liquidation, dissolution or winding up of the
Corporation; or
(ii) Amend, alter or repeal any provision of the
Certification of Incorporation or Bylaws of the Corporation so as to affect
adversely the relative rights, preferences, qualifications, limitations or
restrictions of the 6% Preferred Stock.
(b) The provisions of this paragraph 6 shall not in any way limit
the right and power of the Corporation to:
(i) Increase the total number of authorized shares of Common
Stock; or
(ii) Issue bonds, notes, mortgages, debentures, preferred
stock ranking junior to the terms of the 6% Preferred Stock and other
obligations, and to incur indebtedness to banks and to other lenders.
B. Class B Preferred Stock.
--------------------------
RESOLVED, that pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation, there is hereby created out of
the Corporation's 20,000,000 authorized shares of Preferred Stock a class of
Preferred Stock up to 500,000 shares designated Class B Preferred Stock, par
value $1.00 per share (the "Class B Preferred Stock"), which shall have the
voting powers, preferences, and relative, participating, optional, and other
special rights, and the qualifications, limitations, or restriction as set forth
below.
1. Priority. The Class B Preferred Stock shall, with respect to the
--------
payment of dividends and upon redemption, liquidation, the solution, winding up,
rank (i) senior and prior to any and all capital stock issued by the
Corporation, including, without limitation, the Common Stock and the Series A
Preferred Stock; and (ii) junior to the 6% Preferred Stock.
2. Cash Dividends on Class B Preferred Stock. The holders of the Class
------------------------------------------
B Preferred Stock shall not be entitled to receive any dividends.
3. Redemption of Class B Preferred Stock at Option of Corporation.
--------------------------------------------------------------
(a) Subject to the provisions of this Section 2, the Class B
Preferred Stock shall be redeemable in whole, but not in part, at the option of
the Corporation by resolution of the Corporation's Board of Directors at anytime
at One and No/100 Dollars ($1.00) per share.
(b) Not less than thirty nor more than sixty days prior to the
date fixed for redemption of the Class B Preferred Stock, a notice in writing
shall be given by mail to the holders of record of Class B Preferred Stock at
their respective addresses as the same shall appear on the stock books of the
Corporation. Such notice shall state: (i) the redemption date; (ii) the place
or places where certificates for shares are to be surrendered for payment of the
redemption price; (iii) the conversion rights of the shares to be redeemed; and
(vi) the period within which the conversion rights may be exercised.
(c) All shares of Class B Preferred Stock so redeemed shall have
the status of authorized but unissued preferred stock, but such shares so
redeemed shall not be reissued as shares of the series of Class B Preferred
Stock created hereby.
(d) No holder of shares of Class B Preferred Stock shall have the
right to require the Corporation to redeem all or any portion of such shares.
4. Conversion of Class B Preferred Stock into Common Stock.Each holder
---------------------------------------------------------
of shares of Class B Preferred Stock may not convert any such shares into any
shares of the Corporation's Common Stock.
5. Voting.
------
(a) Except as otherwise required by law or set forth herein, the
shares of Class B Preferred Stock shall be entitled to vote, together with the
shares of the Corporation's Common Stock, on all matters presented at any annual
or special meeting of stockholders of the Corporation, or may act by written
consent in the same manner as the holders of the Corporation's Common Stock,
upon the following basis: each holder of Class B Preferred Stock shall be
entitled to cast one hundred (100) votes for each share of Class B Preferred
Stock held by such holder on the record date fixed for such meeting, or on the
effective date of such written consent, as shall be equal to one (1) share of
the Corporation's Common Stock as shall be issued and outstanding on the record
dated fixed for such meeting, or on the effective date of such written consent.
The Class B Preferred Stock and any other stock having voting rights shall vote
together as one class, except as provided by law and in paragraph 7 hereof.
(b) The holders of the Class B Preferred Stock shall be entitled
to elect at least two directors to the Board of Directors of the Corporation.
If any of the directors who have been elected by the holders of the Class B
Preferred Stock shall cease to be directors, by reason of resignation, death or
removal, the Secretary of the Corporation shall call a special meeting of the
holders of the Class B Preferred Stock and such vacancy shall be filled by a
vote of the holders of the Class B Preferred Stock at such special meeting.
(c) The holders of the Class B Preferred Stock voting as a class
will have the right to remove without cause at any time and replace any director
such holders have elected pursuant to this Section 4.
6. Liquidation Rights.
-------------------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Class B
Preferred Stock then outstanding shall be entitled or receive out of assets of
the Corporation available for distribution to stockholders., before any
distribution of assets is made to holders of any other class of capital stock of
the Corporation, an amount equal to $1.00 per share. If upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
amounts payable with respect to the Class B Preferred Stock and any other shares
of capital stock of the Corporation ranking as to any such distribution on a
parity with the Class B Preferred Stock are not paid in full, the holders of the
Class B Preferred Stock and of such other shares shall share ratably in any such
distribution of assets of the Corporation in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of shares of Class B Preferred Stock shall not be entitled to any further
participation in any distribution of assets by the Corporation.
(b) Neither the consolidation of nor merging of the Corporation
with or into any other corporation or corporations, nor the sale or lease of all
or substantially all of the assets of the Corporation shall be deemed to be a
liquidation, dissolution or a winding up of the Corporation within the meaning
of any of the provisions of this paragraph 6.
(c) In the event of a voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, the Corporation shall, within ten
(10) days after the date the Board of Directors approves such action, or within
twenty (20) days prior to any stockholders' meeting called to approve such
action, or within twenty (20) days after the commencement of any involuntary
proceeding, whichever is earlier, give each holder of shares of Class B
Preferred Stock initial written notice of the proposed action. Such initial
written notice shall describe the material terms and conditions of such proposed
action, including a description of the stock, cash, and property to be received
by the holders of shares of Class B Preferred Stock upon consummation of the
proposed action and the date of delivery thereof. If any material change in the
facts set forth in the initial notice shall occur, the Corporation shall
promptly give written notice to each holder of shares of Class B Preferred Stock
of such material change. The Corporation shall not consummate any voluntary or
involuntary liquidation, dissolution, or winding up of the Corporation before
the expiration of 30 days after the mailing of the initial notice or 10 days
after the mailing of any subsequent written notice, whichever is later; provided
that any such 30-day or 10-day period may be shortened upon the written consent
of the holders of all of the outstanding shares of Class B Preferred Stock.
(d) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation which will involves the
distribution of assets other than cash, the Corporation shall promptly engage
competent independent appraisers to determine the value of the assets to be
distributed to the holders of shares of Class B Preferred Stock and the holders
of shares of Common Stock. The Corporation shall, upon receipt of such
appraiser's valuation, give prompt written notice to each holder of shares of
Class B Preferred Stock of the appraiser's valuation.
7. Limitations.
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(a) So long as any shares of Class B Preferred Stock are
outstanding, the Corporation shall not, without the affirmative vote or the
prior written consent of the holders of at least a majority of the outstanding
shares of the Corporation's 6% Preferred Stock, voting separately as a class:
(i) Create, authorize or issue shares of any class or series
of stock, or any security convertible into such class or series ranking prior to
or in parity with the Class B Preferred Stock; or
(ii) Amend, alter or repeal any provision of the
Certification of Incorporation or Bylaws of the Corporation so as to affect
adversely the relative rights, preferences, qualifications, limitations or
restrictions of the Class B Preferred Stock.
(b) The provisions of this paragraph 6 shall not in any way limit
the right and power of the Corporation to:
(iii) Increase the total number of authorized shares of
Common Stock; or
(iv) Issue bonds, notes, mortgages, debentures, preferred
stock ranking junior to the terms of the Class B Preferred Stock and other
obligations, and to incur indebtedness to banks and to other lenders.
IN WITNESS WHEREOF, Sunburst Acquisitions II, Inc. has caused its corporate
seal to be hereunto affixed and this certificate to be signed by
________________, its President, and attested by _____________________, its
Secretary, this ____ day of May, 1998.
VECTOR ENERGY CORPORATION
By: _____________________________________
____________________________President
ATTEST:
By: __________________________________
_________________________Secretary
STATE OF TEXAS ?
?
COUNTY OF HARRIS ?
BE IT REMEMBERED that on this _____ day of May 1998, personally came before
me, a Notary Public in and for the County and State aforesaid,
______________________, President of Vector Exploration Corporation, a Texas
corporation, and he duly executed said certificate before me and acknowledged
the said certificate to be his act and deed and the act and deed of said
Corporation and the facts stated therein are true; and that the seal affixed to
said certificate and attested by the Secretary of said corporation is the
corporate seal of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the day
and year aforesaid.
___________________________________
NOTARY PUBLIC, IN AND FOR
THE STATE OF TEXAS
<PAGE>
APPENDIX C
VECTOR ENERGY CORPORATION
BYLAWS
ARTICLE I
OFFICES
1.1 The principal office of the corporation shall be located in
---
Houston, Texas.
1.2 The corporation may also have offices at such other places both
---
within and without the State of Texas as the board of directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 Meetings of shareholders for any purpose may be held at such time
---
and place within or without the State of Texas as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
2.2 The annual meeting of shareholders shall be held annually at such
---
date and time as shall be designated from time to time by the board of directors
and stated in the notice of meeting.
2.3 Special meetings of the shareholders for any purpose or purposes
---
may be called by the president and shall be called by the president or secretary
at the request in writing of a majority of the board of directors, or at the
request in writing of shareholders owning ten percent (10%) of all the shares
entitled to vote at the meetings. A request for a special meeting shall state
the purpose or purposes of the proposed meeting, and business transacted at any
special meeting of shareholders shall be limited to the purposes stated in the
notice.
2.4 Written notice stating the place, day and hour of the meeting
---
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) nor more than sixty
(60) days before the date of the meeting, either personally or by mail, by or at
the direction of the president, the secretary or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such meeting.
2.5 With respect to any matter, the holders of a majority of the
---
shares issued and outstanding and entitled to vote thereon, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
statute or by the articles of incorporation. If, however, a quorum shall not be
present or represented at any meeting of the shareholders, the shareholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting until such time and to such place as may be
determined by a vote of the holders of a majority of the shares at that meeting,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting, provided a quorum shall be
present or represented thereat, any business may be transacted which might have
been transacted if the meeting had been held in accordance with the original
notice thereof.
2.6 If a quorum is present at any meeting, the vote of the holders of
---
a majority of the shares entitled to vote, present in person or represented by
proxy, shall decide any question brought before such meeting, unless the
question is one upon which a different vote is required by law or by the
articles of incorporation.
2.7 Each outstanding share having voting power shall be entitled to
---
one vote on each matter submitted to a vote at a meeting of shareholders. A
shareholder may vote either in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney-in-fact.
2.8 Any action required or which may be taken at a meeting of the
---
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all or less than all, if the
articles of incorporation so provide, the shareholders entitled to vote with
respect to the subject matter thereof. Whenever action by shareholders is
proposed to be taken by consent in writing without a meeting of the
shareholders, the board of directors may fix a record date for the purpose of
determining shareholders entitled to consent to that action, which record date
shall not precede, and shall not be more than ten (10) days after, the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors and the
prior action of the board of directors is not required by the Texas Business
Corporation Act, the record date for determining shareholders entitled to
consent to action in writing without a meeting shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the corporation by delivery to its registered office, its
principal place of business, or an officer or agent of the corporation having
custody of the books in which proceedings of the meetings of shareholders are
recorded. Delivery shall be by hand or by certified or registered mail, return
receipt requested. Delivery to the corporation's principal place of business
shall be addressed to the president or the principal executive officer of the
corporation. If no record date shall have been fixed by the board of directors
and prior action of the board of directors is required by the Texas Business
Corporation Act, the record date for determining shareholders entitled to
consent to action in writing without a meeting shall be at the close of business
on the date on which the board of directors adopts a resolution taking the prior
action.
ARTICLE III
DIRECTORS
3.1 The number of directors which shall constitute the whole board of
---
directors shall be not less than one. Such number of directors shall from time
to time be fixed and determined by the directors and shall be set forth in the
notice of any meeting of shareholders held for the purpose of electing
directors. The director(s) shall be elected at the annual meeting of
shareholders, except as provided in Section 3.2 or 3.3, and each director
elected shall hold office until his successor shall be elected and qualify.
Directors need not be residents of Texas or shareholders of the corporation.
3.2 Any vacancy occurring in the board of directors may be filled by
---
a majority of the remaining directors, if any, though less than a quorum of the
board of directors. If a vacancy occurs in the board of directors and no other
directors exist to elect someone to fill such vacancy, such vacancy shall be
filled by election at a special meeting of shareholders. A director elected to
fill a vacancy shall be elected for the unexpired term of his predecessor in
office.
3.3 The number of directors may be increased or decreased from time
---
to time by amendment to these bylaws but no decrease shall have the effect of
shortening the term of any incumbent director. Any directorship to be filled by
reason of an increase in the number of directors may be filled by the board of
directors for a term of office continuing only until the next election of one or
more directors by the shareholders; provided that the board of directors may not
fill more than two such directorships during the period between any two
successive annual meetings of shareholders.
3.4 Any director may be removed either for or without cause at any
---
special meeting of shareholders duly called and held for such purpose.
MEETINGS OF THE BOARD OF DIRECTORS
3.5 Meetings of the board of directors, regular or special, may be
---
held either within or without the State of Texas.
3.6 The first meeting of each newly elected board of directors shall
---
be held at such time and place as shall be fixed by the vote of the shareholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event that the shareholders fail to fix the
time and place of such first meeting, it shall be held without notice
immediately following the annual meeting of shareholders, and at the same place,
unless by the unanimous consent of the directors then elected and serving such
time or place shall be changed.
3.7 Regular meetings of the board of directors may be held upon such
---
notice, or without notice, and at such time and at such place as shall from time
to time be determined by the board.
3.8 Special meetings of the board of directors may be called by the
---
chairman of the board of directors or the president and shall be called by the
secretary on the written request of two directors. Notice of each special
meeting of the board of directors shall be given to each director at least two
days before the date of the meeting.
3.9 Attendance of a director at any meeting shall constitute a waiver
---
of notice of such meeting, except where a director attends for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened. Except as may be otherwise provided
by law or by the articles of incorporation or by these bylaws, neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the board of directors need be specified in the notice or waiver of notice of
such meeting.
3.10 At all meetings of the board of directors a majority of the
----
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, unless otherwise specifically
provided by law, the articles of incorporation or these bylaws. If a quorum
shall not be present thereat the directors may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
3.11 The board of directors, by resolution passed by a majority of
----
the full board, may from time to time designate a member or members of the board
of directors to constitute committees, including an executive committee, which
shall in each case consist of one or more directors and shall have and may
exercise such powers, as the board of directors may determine and specify in the
respective resolutions appointing them. A majority of all the members of any
such committee may determine its action and fix the time and place of its
meetings, unless the board of directors shall otherwise provide. The board of
directors shall have power at any time to change the number, subject as
aforesaid, and members of any such committee, to fill vacancies and to discharge
any such committee.
3.12 Any action required or permitted to be taken at a meeting of the
----
board of directors or any committee may be taken without a meeting if a consent
in writing, setting forth the action so taken, is signed by all the members of
the board of directors or committee, as the case may be.
3.13 By resolution of the board 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.
ARTICLE IV
NOTICES
4.1 Any notice to directors or shareholders shall be in writing and
---
shall be delivered personally or mailed to the directors or shareholders at
their respective addresses appearing on the records of the corporation. Notice
by mail shall be deemed to be given at the time when the same shall be deposited
in the United States mail, postage prepaid. Notice to directors may also be
given by telegram, telecopy or fax.
4.2 Whenever any notice is required to be given under the provisions
---
of the statutes or of the articles of incorporation or of these bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
<PAGE>
ARTICLE V
OFFICERS
5.1 The officers of the corporation shall be elected by the board of
---
directors and shall consist of a president and a secretary. The board of
directors may also establish the positions of chairman of the board, treasurer,
vice president, an assistant president, assistant vice presidents, and one or
more assistant secretaries and assistant treasurers. Two or more offices may be
held by the same person.
5.2 The board of directors shall elect officers of the corporation,
---
none of whom need be a member of the board of directors. The board of directors
shall have the power to enter into contracts for the employment and compensation
of officers for such terms as the board of directors deems advisable.
5.3 The board of directors may appoint such other officers and
---
assistant officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall have such authority and exercise such powers
and perform such duties as shall be determined from time to time by the board of
directors by resolution not inconsistent with these bylaws.
5.4 The salaries of all officers and agents of the corporation shall
---
be fixed by the board of directors.
5.5 The officers of the corporation shall hold office until their
---
successors are elected or appointed and qualify, or until their death or until
their resignation or removal from office. Any officer elected or appointed by
the board of directors may be removed at any time by the board of directors, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise shall be filled by the
board of directors.
THE CHAIRMAN OF THE BOARD OF DIRECTORS
5.6 The chairman of the board of directors, if one be elected, shall
---
preside at all meetings of the board of directors and shall have such other
powers and duties as may from time to time be prescribed by the board of
directors, upon written directions given to him pursuant to resolutions duly
adopted by the board of directors.
THE PRESIDENT
5.7 The president shall be the chief executive officer of the
---
corporation, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect. He shall preside at all meetings of the
shareholders.
<PAGE>
THE VICE PRESIDENTS
5.8 The vice presidents in the order of their seniority, unless
---
otherwise determined by the board of directors, shall, in the absence or
disability of the president, perform the duties and have the authority and
exercise the powers of the president. They shall perform such other duties and
have such other authority and powers as the board of directors may from time to
time prescribe or as the president may from time to time delegate.
THE SECRETARY AND ASSISTANT SECRETARIES
5.9 The secretary shall attend all meetings of the board of directors
---
and all meetings of shareholders and record all of the proceedings of the
meetings of the board of directors and of the shareholders in a minute book to
be kept for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or president, under whose supervision he shall act. He shall keep in safe
custody the seal of the corporation and, when authorized by the board of
directors, shall affix the seal to any instrument requiring it and, when so
affixed, it shall be attested by his signature or by the signature of an
assistant secretary or of the treasurer.
5.10 The assistant secretaries in the order of their seniority,
----
unless otherwise determined by the board of directors, shall, in the absence or
disability of the secretary, perform the duties and exercise the powers of the
secretary. They shall perform such other duties and have such other powers as
the board of directors may from time to time prescribe or as the president may
from time to time delegate.
THE TREASURER AND ASSISTANT TREASURERS
5.11 The treasurer shall have custody of the corporate funds and
----
securities and shall keep full and accurate accounts and records of receipts,
disbursements and other transactions in books belonging to the corporation, and
shall deposit all moneys and other valuable effects in the name and to the
credit of the corporation in such depositories as may be designated by the board
of directors.
5.12 The treasurer shall disburse the funds of the corporation as may
----
be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render the president and the board of directors, at its
regular meetings, or when the president or board of directors so requires, an
account of all his transactions as treasurer and of the financial condition of
the corporation.
5.13 If required by the board of directors, the treasurer shall give
----
the corporation a bond of such type, character and amount as the board of
directors may require.
<PAGE>
5.14 The assistant treasurers in the order of their seniority, unless
----
otherwise determined by the board of directors, shall, in the absence or
disability of the treasurer, perform the duties and exercise the powers of the
treasurer. They shall perform such other duties and have such other powers as
the board of directors may from time to time prescribe or the president may from
time to time delegate.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
6.1 The shares of the corporation shall be represented by
---
certificates signed by the president and may be sealed with the seal of the
-
corporation or a facsimile thereof.
6.2 The signature of the president upon a certificate may be a
---
facsimile if the certificate is countersigned by a transfer agent, or registered
by a registrar, other than the corporation itself or an employee of the
corporation. In case the president who has signed or whose facsimile signature
has been placed upon such certificate shall have ceased to be president before
such certificate is issued, it may be issued by the corporation at the date of
its issue.
LOST CERTIFICATES
6.3 The board of directors may direct a new certificate to be issued
---
in place of any certificate theretofore issued by the corporation alleged to
have been lost or destroyed. When authorizing such issue of a new certificate,
the board of directors, in its discretion and as a condition precedent to the
issuance thereof, may prescribe such terms and conditions as it deems expedient
and may require such indemnities as it deems adequate to protect the corporation
from any claim that may be made against it with respect to any such certificate
alleged to have been lost or destroyed.
6.4 Upon surrender to the corporation or the transfer agent of the
---
corporation of a certificate representing shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, a new
certificate shall be issued to the person entitled thereto and the old
certificate cancelled and the transaction recorded upon the share transfer
records of the corporation.
CLOSING OF SHARE TRANSFER RECORDS
6.5 For the purpose of determining shareholders entitled to notice of
---
or to vote at any meeting of shareholders, or any adjournment thereof, or
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, other than determining
shareholders entitled to consent to action by shareholders proposed to be taken
without a meeting under section 2.8, the board of directors may provide that the
share transfer records shall be closed for a stated period but not to exceed, in
any case, sixty (60) days. If the share transfer records shall be closed for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such records shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of closing the share transfer
records, the board of directors may fix in advance a date as the record date for
any such determination of shareholders, such date in any case to be not more
than sixty (60) days and, in case of a meeting of shareholders, not less than
ten (10) days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the share transfer records
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 of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall be applied to any adjournment thereof
except where the determination has been made through the closing of the share
transfer records and the stated period of closing has expired.
REGISTERED SHAREHOLDERS
6.6 The corporation shall be entitled to recognize the exclusive
---
right of a person registered on its records as the owner of shares to receive
dividends, and to vote as such owner, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Texas.
LIST OF SHAREHOLDERS
6.7 The officer or agent having charge of the share transfer records
---
shall make, at least ten (10) days before each meeting of shareholders, a
complete list of the shareholders entitled to vote at such meeting, arranged in
alphabetical order, with the address of each and the number of shares held by
each, which list, for a period of ten (10) days prior to such meeting, shall be
kept on file at the registered office or principal place of business of the
corporation and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list 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 during the whole time of the meeting. The original share ledger or
transfer record, or a duplicate thereof, shall be prima facie evidence as to who
are the shareholders entitled to examine such list or share ledger or transfer
record or to vote at any meeting of share-holders.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
7.1 Subject to the provisions of the articles of incorporation
---
relating thereto, if any, dividends may be declared by the board of directors,
in its discretion, at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property or in the corporation's own shares,
subject to any provisions of the articles of incorporation.
7.2 Before payment of any dividend, there may be set aside out of any
---
funds of the corporation available for dividends such sum or sums as the
directors, from time to time in their absolute discretion, think proper as a
reserve fund for meeting contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
7.3 All checks or demands for money and notes of the corporation
---
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
7.4 The fiscal year of the corporation shall be fixed by resolution
---
of the board of directors.
SEAL
7.5 The corporate seal shall be in such form as may be prescribed by
---
the board of directors. The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in any manner reproduced.
BOOKS AND RECORDS
7.6 The corporation shall keep correct and complete books and records
---
of account and shall keep minutes of the proceedings of its shareholders and
board of directors, and shall keep at its registered office or principal place
of business, or at the office of its transfer agent or registrar, a record of
its shareholders, giving the names and addresses of all shareholders and the
number and class of the shares held by each.
ARTICLE VIII
AMENDMENTS
8.1 The bylaws may be altered, amended, or repealed or new bylaws may
---
be adopted by a majority of the whole board of directors at any regular or
special meeting.
<PAGE>
ARTICLE IX
INDEMNIFICATION OF DIRECTORS
OFFICERS, EMPLOYEES AND AGENTS
9.1 The corporation shall indemnify directors, officers,
---
em-ployees, and agents of the corporation to the fullest extent required by
Article 2.02-1 of the Texas Business Corporation Act and may indemnify such
persons to the fullest extent permitted by Article 2.02-1 of the Texas Business
Corporation Act, subject in each case to restrictions, if any, in the Articles
of Incorpora-tion. The corporation shall have the power to purchase and
main-tain at its cost and expense insurance on behalf of such persons to the
fullest extent permitted by Article 2.02-1 of the Texas Business Corporation
Act.
9.2 Advance Payment. The right to indemnification conferred in
--- ----------------
this Article IX shall include the right to be paid or reimbursed by the
corporation for the reasonable expenses incurred by a person of the type
entitled to be indemnified under Section 9.1 who was, is or is threatened to be
made a named defendant or respondent in a proceeding in advance of the final
disposition of the proceeding and without any determination as to the person's
ultimate entitlement to indemnification; provided, however, that the payment of
-------- -------
such expenses incurred by any such person in advance of the final disposition of
a proceeding, shall be made only upon delivery to the corporation of a written
affirmation by such director or officer of his or her good faith belief that he
or she has met the standard of conduct necessary for indemnification under this
Article IX and a written undertaking, by or on behalf of such person, to repay
all amounts so advanced if it shall ultimately be determined that such
indemnified person is not entitled to be indemnified under this Article IX or
otherwise.
9.3 Indemnification of Employees and Agents. The corporation, by
--- ----------------------------------------
adoption of a resolution of the board of directors, may indemnify and advance
expenses to an employee or agent of the corporation to the same extent and
subject to the same conditions under which it may indemnify and advance expenses
to directors and officers under this Article IX; and, the corporation may
indemnify and advance expenses to persons who are not or were not directors,
officers, employees or agents of the corporation while serving at the request of
the corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise against any liability asserted against him and
incurred by him in such a capacity or arising out of his status as such a person
to the same extent that it may indemnify and advance expenses to directors under
this Article IX.
9.4 Appearance as a Witness. Notwithstanding any other provision
--- ------------------------
of this Article IX, the corporation may pay or reimburse expenses incurred by a
director or officer in connection with his or her appearance as a witness or
other participation in a proceeding at a time when he or she is not a named
defendant or respondent in the proceeding.
9.5 Nonexclusivity of Rights. The right to indemnification and
--- --------------------------
the advancement and payment of expenses conferred in this Article IX shall not
be exclusive of any other right which a director or officer or other person
indemnified pursuant to Section 9.3 of this Article IX may have or hereafter
acquire under any law (common or statutory), provision of the articles of
incorporation of the corporation or these bylaws, agreement, vote of
shareholders or disinterested directors or otherwise.
9.6 Insurance. The corporation may purchase and maintain
--- ---------
insurance, at its expense, to protect itself and any person who is or was
serving as a director, officer, employee or agent of the corporation or is or
was serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic corporation, partnership, joint venture, proprietorship,
employee benefit plan, trust or other enterprise against any expense, liability
or loss, whether or not the corporation would have the power to indemnify such
person against such expense, liability or loss under this Article IX.
9.7 Shareholder Notification. To the extent required by law, any
--- -------------------------
indemnification of or advance of expenses to a director or officer in accordance
with this Article IX shall be reported in writing to the shareholders with or
before the notice or waiver of notice of the next shareholders' meeting or with
or before the next submission to shareholders of a consent to action without a
meeting and, in any case, within the 12-month period immediately following the
date of the indemnification or advance.
9.8 Savings Clause. If this Article IX or any portion hereof
--- ---------------
shall be invalidated on any ground by any court of competent jurisdiction, then
the corporation shall nevertheless indemnify and hold harmless each director,
officer or any other person indemnified pursuant to this Article IX as to costs,
charges and expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement with respect to any action, suit or proceeding, whether
civil, criminal, administrative or investigative, to the full extent permitted
by any applicable portion of this Article IX that shall not have been
invalidated and to the fullest extent permitted by applicable law.
IN WITNESS WHEREOF, the undersigned hereby certifies that these Bylaws
were adopted by the Board of Directors of the corporation by resolution dated
May _____, 1998.
____________________________________
Stephen Noser, Secretary
<PAGE>
APPENDIX D
ARTICLE 113
DISSENTERS' RIGHTS
PART 1
RIGHT OF DISSENT -- PAYMENT FOR SHARES
7-113-101 DEFINITIONS. -- For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held
in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring domestic or foreign
corporation, by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 7-113-102 and who exercises that right at the
time and in the manner required by part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares, means the value
of the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at the legal rate as
specified in section 5-12-101, C.R.S.
(6) "Record Shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the shareholder as provided in section
7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial
shareholder.
7-113-102 RIGHT TO DISSENT.--(1) A shareholder, whether or not entitled
to vote, is entitled to dissent and obtain payment of the fair market value of
his or her shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party if:
(I) Approval by the shareholders of that corporation is required for
the merger by section 7-111-103 or 7-111-104 or by the articles of
incorporation, or
(II) The corporation is a subsidiary that is merged with its parent
corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired;
(c) Consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of the corporation for which a
shareholder vote is required under section 7-112-102(1); and
(d) Consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of an entity controlled by the
corporation if the shareholders of the corporation were entitled to vote upon
the consent of the corporation to the disposition pursuant to section
7-112-102(2).
(2) A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's shares in the
event of:
(a) An amendment to the articles of incorporation that materially and
adversely affects rights in respect of the shares because it:
(I) Alters or abolishes a preferential right of the shares; or
(II) Creates, alters, or abolishes a right in respect of redemption of
the shares, including a provision respecting a sinking fund for their redemption
or repurchase; or
(b) An amendment to the articles of incorporation that affects rights
in respect of the shares because it:
(I) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through issuance of
shares or other securities with similar voting rights; or
(II) Reduces the number of shares owned by the shareholder to a
fraction of a share or to scrip if the fractional share or scrip so created is
to be acquired for cash or the scrip is to be voted under Section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair
value of the shareholder's shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
7-113-103 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.-- (1) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in the record shareholder's name only if the record shareholder
dissents with respect to all shares beneficially owned by any one person and
causes the corporation to receive written notice which states such dissent and
the name, address, and federal taxpayer identification number, if any, of each
person on whose behalf the record shareholder asserts dissenters' rights. The
rights of a record shareholder under this subsection (1) are determined as if
the share as to which the record shareholder dissents and the other shares of
the record shareholder were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to the
shares held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder causes the corporation to receive the
record shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all shares
beneficially owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder
dissents with respect to the shares held by any one or more beneficial
shareholders, each such beneficial shareholder must certify to the corporation
that the beneficial shareholder and the record shareholder or record
shareholders of all shares owned beneficially by the beneficial shareholder have
asserted, or will timely assert, dissenters' rights as to all such shares as to
which there is no limitation on the ability to exercise dissenters' rights. Any
such requirement shall be stated in the dissenters' notice given pursuant to
section 7-113-203.
PART 2
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
7-113-201 NOTICE OF DISSENTERS' RIGHTS.--(1) If a proposed corporate
action creating dissenters' rights under section 7-113-102 is submitted to a
vote at a shareholders' meeting, the notice of the meeting shall be given to all
shareholders, whether or not entitled to vote. The notice shall state that
shareholders are or may be entitled to assert dissenters' rights under this
article and shall be accompanied by a copy of this article and the materials, if
any, that, under articles 101 to 117 of this title, are required to be given to
shareholders entitled to vote on the proposed action at the meeting. Failure to
give notice as provided by this subsection (1) to shareholders not entitled to
vote shall not affect any action taken at the shareholders' meeting for which
the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, any written or oral solicitation of a shareholder to execute
a writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection
(1) to shareholders not entitled to vote shall not affect any action taken
pursuant to section 7-107-104 for which the notice was to have been given.
7-113-202 NOTICE OF INTENT TO DEMAND PAYMENT.--(1) If a proposed
corporate action creating dissenters' rights under section 7-113-102 is
submitted to a vote at a shareholders' meeting, a shareholder who wishes to
assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is taken, written
notice of the shareholder's intention to demand payment for the shareholder's
shares if the proposed corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate action.
(2) If a proposed corporate action creating dissenters' rights under
section 7-113-102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, a shareholder who wishes to assert dissenters' rights shall
not execute a writing consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection
(1) or (2) of this section is not entitled to demand payment for the
shareholder's shares under this article.
7-113-203 DISSENTERS' NOTICE--(1) If a proposed corporate action
creating dissenters' rights under section 7-113-102 is authorized, the
corporation shall give a written dissenters' notice to all shareholders who are
entitled to demand payment for their shares under this article.
(2) The dissenters' notice required by subsection (1) of this section
shall be given no later than ten days after the effective date of the corporate
action creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state the
effective date or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive payment
demands and the address of a place where certificates for certified shares must
be deposited;
(c) Inform holders of uncertified shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) Supply a form for demanding payment, which form shall request a
dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the payment
demand and certificates for certified shares, which date shall not be less than
thirty days after the date the notice required by subsection (1) of this section
is given;
(f) State the requirement contemplated in section 7-113-103 (3), if
such requirement is imposed; and
(g) Be accompanied by a copy of this article.
7-113-204 PROCEDURE TO DEMAND PAYMENT.--(1) A shareholder who is given
a dissenters' notice pursuant to section 7-113-203 and who wishes to assert
dissenters' rights shall, in accordance with the terms of the dissenters'
notice:
(a) Cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in section 7-113-203 (2) (d), duly completed,
or may be stated in another writing; and
(b) Deposit the shareholder's certificates for certified shares.
(2) A shareholder who demands payment in accordance with subsection (1)
of this section retains all rights of a shareholder, except the right to
transfer the shares, until the effective date of the proposed corporate action
giving rise to the shareholder's exercise of dissenters' rights and has only the
right to receive payment for the shares after the effective date of such
corporate action.
(3) Except as provided in section 7-113-207 or 7-113-209 (1) (b), the
demand for payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the
shareholder's share certificates as required by the date or dates set in the
dissenters' notice is not entitled to payment for the shares under this article.
7-113-205 UNCERTIFICATED SHARES.--(1) Upon receipt of a demand for
payment under Section 7-113-204 from a shareholder holding uncertified shares,
and in lieu of the deposit of certificates representing the shares, the
corporation may restrict the transfer thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
7-113-206 PAYMENT.--(1) Except as provided in section 7-113-208, upon
the effective date of the corporate action creating dissenters' rights under
section 7-113-102 or upon receipt of a payment demand pursuant to section
7-113-204, whichever is later, the corporation shall pay each dissenter who
complied with section 7-113-204, at the address stated in the payment demand, or
if no such address is stated in the payment demand, at the address shown on the
corporation's current record of shareholders for the record shareholder holding
the dissenter's shares, the amount the corporation estimates to be the fair
value of the dissenter's shares, plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall
be accompanied by:
(a) The corporation's balance sheet as of the end of its most recent
fiscal year or, if that is not available, the corporation's balance sheet as of
the end of a fiscal year ending not more than sixteen months before the date of
payment, an income statement for that year, and, if the corporation customarily
provides such statements to shareholders, a statement of changes in
shareholders' equity for that year and a statement of cash flow for that year,
which balance sheet and statements shall have been audited if the corporation
customarily provides audited financial statements to shareholders, as well as
the latest available financial statements, if any, for the interim or full-year
period, which financial statements need not be audited:
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under
section 7-113-209; and
(e) A copy of this article.
7-113-207 FAILURE TO TAKE ACTION.-- (1) If the effective date of the
corporate action creating dissenters' rights under section 7-113-102 does not
occur within sixty days after the date set by the corporation by which the
corporation must receive the payment demand as provided in section 7-113-203,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertified shares.
(2) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, then the corporation shall send a new dissenters'
notice, as provided in section 7-113-203, and the provisions of section
7-113-204 to 7-113-209 shall again be applicable.
7-113-208 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER
ANNOUNCEMENT OF PROPOSED CORPORATE ACTION.--(1) The corporation may, in or with
the dissenters' notice given pursuant to section 7-113-203, state the date of
the first announcement to news media or to shareholders of the terms of the
proposed corporate action creating dissenters' rights under section 7-113-102
and state that the dissenter shall certify in writing, in or with the
dissenter's payment demand under section 7-113-204, whether or not the dissenter
(or the person on whose behalf dissenters' rights are asserted) acquired
beneficial ownership of the shares before that date. With respect to any
dissenter who does not so certify in writing, in or with the payment demand,
that the dissenter or the person on whose behalf the dissenter asserts
dissenters' rights acquired beneficial ownership of the shares before such date,
the corporation may, in lieu of making the payment provided in section
7-113-206, offer to make such payment if the dissenter agrees to accept it in
full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall
include or be accompanied by the information required by section 7-113-206 (2).
7-113-209 PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT OR
OFFER.--(1) A dissenter may give notice to the corporation in writing of the
dissenter's estimate of the fair value of the dissenter's shares and of the
amount of interest due and may demand payment of such estimate, less any payment
made under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section 7-113-206
or offered under section 7-113-208 is less than the fair value of the shares or
that the interest due was incorrectly calculated;
(b) The corporation fails to make payment under section 7-113-206
within sixty days after the date set by the corporation by which the corporation
must receive the payment demand; or
(c) The corporation does not return the deposited certificates or
release the transfer restrictions imposed on uncertified shares as required by
section 7-113-207 (1).
(2) A dissenter waives the right to demand payment under this section
unless the dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the dissenter's shares.
PART 3
JUDICIAL APPRAISAL OF SHARES
7-113-301 COURT ACTION.--(1) If a demand for payment under section
7-113-209 remains unsolved, the corporation may, within sixty days after
receiving the payment demand, commence a proceeding and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not commence the proceeding within the sixty-day period, it shall pay to
each dissenter whose demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in
subsection (1) of this section in the district court of the county in this state
where the corporation's principal office is located or, if it has no principal
office in this state, in the district court of the county in which its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged into, or whose shares were acquired by, the foreign corporation was
located.
(3) The corporation shall make all dissenters, whether or not residents
of this state, whose demands remain unresolved parties to the proceeding
commenced under subsection (2) of this section as in an action against their
shares, and all parties shall be served with a copy of the petition. Service on
each dissenter shall be by registered or certified mail, to the address stated
in such dissenter's payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record
shareholders for the record shareholder holding the dissenter's shares, or as
provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers
described in the order appointing them, or in any amendment to such order. The
parties to the proceeding are entitled to the same discovery rights as parties
in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
subsection (2) of this section is entitled to judgment for the amount, if any,
by which the court finds the fair value of the dissenter's shares, plus
interest, exceeds the amount paid by the corporation, or for the fair value,
plus interest, of the dissenter's shares for which the corporation elected to
withhold payment under section 7-113-208.
7-113-302 COURT COSTS AND COUNSEL FEES.--(1) The court in an appraisal
proceeding commenced under section 7-113-301 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation; except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under section 7-113-209.
(2) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if the court
finds the corporation did not substantially comply with the requirements of part
2 of this article; or
(b) Against either the corporation or one or more dissenters, in favor
of any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to said counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefitted.
<PAGE>
PROXY
SUNBURST ACQUISITIONS II, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SUNBURST ACQUISITIONS II, INC.
The undersigned hereby appoints Stephen Noser, or failing him, Samuel M.
Skipper, as proxy for the undersigned, with full power to appoint his
substitute, and hereby authorizes him to represent and to vote, as designated
below, all shares of the no par value common stock of Sunburst Acquisitions II,
Inc. (the "Company") which the undersigned is entitled to vote at the Special
Meeting of the Shareholders of the Company to be held on June 19, 1998 (the
"Meeting"), or at any and all postponements, continuations or
adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned Shareholder. If no direction is made, this proxy will
be voted FOR each of the proposals.
The Board of Directors recommends a vote FOR each item.
1. Proposal to approve a change in the Company's state of incorporation from
Colorado to Texas by means of a merger of the Company into Vector Exploration
Corporation, a newly organized Texas corporation wholly owned by the Company
("VEC"), whereby VEC will be the surviving corporation.
FOR |_| AGAINST |_| ABSTAIN |_|
2. In connection with merger into VEC, proposal to consider and vote upon an
exchange of shares of the Company for shares of VEC whereby the holders of
common stock in the Company will receive one share of common stock in VEC for
every 3.3333 shares of common stock in the Company and whereby the holders of
preferred stock in the Company will receive one share of preferred stock in VEC
for every one share of preferred stock in the Company.
FOR |_| AGAINST |_| ABSTAIN |_|
3. To conduct such other business as may properly come before the Meeting
and at any and all postponements, continuations or adjournments thereof.
|_| Mark here for address change and note below.
PLEASE READ INSTRUCTIONS ON THE REVERSE SIDE AND EXECUTE
<PAGE>
IMPORTANT: before returning the Proxy, please sign your name or names on the
line(s) below exactly as shown hereon. Executors, administrators, trustees,
guardians or corporate officers should indicate their full titles when signing.
When shares are registered in the name of joint tenants or trustees, each
joint tenant or trustee should sign.
Dated___________________, 1998
________________________________________
Authorized Signature
________________________________________
Title
________________________________________
Authorized Signature
________________________________________
Title
Please mark boxes /X/ in ink. Sign, date and return this Proxy Card promptly
using the enclosed envelope.
Change of Address:
______________________________
______________________________
______________________________
