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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
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 Rule 14a-11(c) or Rule 14a-12
The Encore Group, Inc.
- - - -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration No.:
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3) Filing Party:
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4) Date Filed:
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THE ENCORE GROUP, INC.
4800 SW Macadam Avenue, Suite 100
Portland, OR 97201
--------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ________________________,1995
--------------------------------------------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of The Encore Group, Inc. (the "Company") will be held at 2:00 p.m.
on _______, 1995 at _______________________________________ for the following
purposes, each of which is more fully described in the accompanying proxy
statement:
1. To elect Directors of the Company for the ensuing year and until the
next annual meeting of shareholders or until their successors are duly elected
and qualified;
2. To consider and vote on a proposed amendment to the Company's Restated
Articles of Incorporation to effect a 1-for-500 reverse split of the Common
Stock and to reduce the number of authorized shares of Common Stock from
10,000,000 to 50,000 and the number of shares of Preferred Stock from 500,000 to
5,000. Under Oregon law (ORS 60.551 - 60.594, a copy of which is attached to
this Notice), certain shareholders may be entitled to assert dissenters' rights
in connection with the proposed amendment;
3. To consider and act upon such other matters as may properly come
before the Meeting and any adjournments thereof.
Only holders of Common Stock of record at the close of business on
__________, 1995 (the "Record Date") will be entitled to notice of and to vote
at the Meeting or any adjournment thereof.
You are cordially invited to attend the Meeting. If you are unable to
attend and wish your stock to be voted, it is important to complete, sign, date
and promptly return the accompanying Proxy in the enclosed return envelope. You
may revoke a proxy by submitting, at or prior to the Meeting, a proxy with a
later date, or other written instrument formally revoking the proxy, or by
notice at the Meeting.
Shareholders planning to attend the Meeting in person are encouraged to
arrive shortly after 1:30 p.m. to allow sufficient time for registration and
admittance prior to the Meeting which will begin promptly at 2:00 p.m.
By Order of the Board of Directors
Teri E. Engel, Secretary
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE MARK, DATE, SIGN AND
RETURN YOUR PROXY PROMPTLY TO ENSURE THAT YOUR VOTE IS COUNTED.
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
of
THE ENCORE GROUP, INC.
1800 SW Macadam Avenue, Suite 100
Portland, OR 97201
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Encore Group, Inc. (the "Company"), an
Oregon corporation, for use at the Special Meeting of Shareholders (the
"Meeting") to be held at 2:00 p.m. on _______________, 1995, at _______________
_________________, and any adjournment or postponement thereof, for the purposes
set forth in the accompanying Notice of Special Meeting of Shareholders. The
approximate date of mailing of this Proxy Statement is __________,1995.
Only holders of shares of the Company's Common Stock as shown on the
Company's records as of the close of business on __________, 1995 (the "Record
Date"), are entitled to notice of, and to vote at, the Meeting. A quorum for
the purpose of transacting business requires the presence, in person or by
proxy, of the holders of a majority of the outstanding shares. As of the Record
Date, there were 6,112,848 shares of common stock outstanding, of which
6,052,848 shares are entitled to vote at the Meeting.
The Board of Directors is soliciting proxies for use at the Meeting. If a
proxy in the enclosed form is executed and returned, the shares represented will
be voted according to your instructions at the Meeting. If no instructions are
given, the proxy will be voted FOR the election of the nominees for Directors,
FOR the adoption of the amendment to the Restated Articles of Incorporation to
effect the reverse stock split and reduce the authorized capital, and in the
proxy holder's discretion on any other matters that may properly come before the
shareholders at the Meeting.
Any proxy may be revoked at any time prior to its exercise by presentation
of a proxy bearing a later date, by filing a written instrument of revocation
(personally or by mail) with the Secretary of the Company prior to the meeting,
or by oral request if the shareholder is present at the Meeting. Attendance at
the Meeting will not, of itself, revoke a proxy previously submitted.
Mr. Wright and Mr. Kupel, the named proxies, are Directors of the Company.
If a shareholder wishes to designate a person or persons other than the officers
named on the proxy to vote the shareholder's shares, the shareholder may do so
by striking out the names appearing on the enclosed proxy and inserting the name
of another person or persons. The properly signed proxy in such instances must
be presented at the Meeting by the person or persons designated by the
shareholder in order for the shares to be voted.
Solicitation of proxies will be primarily by mail. Directors, officers and
employees of the Company, without compensation, may also solicit proxies by
telephone, telex, mail, and in person. The expense of such solicitation,
including the cost of preparing and mailing this Proxy Statement and enclosures,
will be paid by the Company. Such cost will include reimbursement to brokerage
firms and others for their reasonable expenses in forwarding material to
beneficial owners of stock.
Copies of the Company's 1994 Annual Report on Form 10-K and 1995 Third
Quarter Report on Form 10-Q accompany these proxy materials and are incorporated
herein by reference.
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ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation provide for a Board of
Directors consisting of not less than three nor more than seven persons, with
the exact number within this range to be determined from time to time by the
Board of Directors. The current number of Directors is set at five.
The Board of Directors is proposing a slate of five nominees for election
at the Meeting, each to hold office until the 1996 Annual Meeting of
Shareholders and until their successors are duly elected and qualified. If any
of the nominees are unavailable for election, votes may be cast, pursuant to the
authority granted by the enclosed proxy, for such other persons as may be
designated by the Board of Directors. The Board is not aware of any reason why
the nominees would be unavailable for election.
The table below sets forth the names of, and certain information with
respect to, the persons nominated by the Board of Directors for election as
Directors:
Director Principal Occupation
Name and Position with Company Age Since for past five years
- - - ------------------------------ --- -------- -----------------------------
Bruce L. Engel, President, Chief 54 1988 President and Chief Executive
Executive Officer and Chairman Officer of WTD Industries
of the Board (1)
Teri E. Engel, Director and 45 1989 Officer and Director,
Secretary (1) WTD Industries until 1994.
Robert G. Fligg, Director (2) 46 1988 Chief Financial Officer,
Dee Forest Products, Inc.
Fred J. Kupel, Director 66 1995 Management Consultant
Kenneth L. Wright, Director 46 1995 Director and Officer of
and Executive Vice President the Company
- - - --------------------
(1) Bruce L. Engel and Teri E. Engel are husband and wife.
(2) Mr. Fligg's spouse is a niece of Bruce L. Engel.
The Board of Directors recommends that the Board, as presently constituted,
remain the same. All of the nominees are current members of the Board of
Directors whose terms of office will expire at the Meeting, and who have each
consented to serve as a Director if re-elected.
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MANAGEMENT
BRUCE L. ENGEL, 54, is President and Chief Executive Officer of the Company
and Chairman of the Board of Directors. He also has served more than five years
as President and Chief Executive Officer of WTD Industries, Inc., Portland,
Oregon, a manufacturer of lumber whose common stock is traded on the NASDAQ
National Market System. Mr. Engel is also a Director of WTD. On January 30,
1991, WTD Industries filed a voluntary petition in the United States Bankruptcy
court seeking to reorganize under Chapter 11 of the Federal Bankruptcy Code. On
November 23, 1992, a plan of reorganization was confirmed. Mr. Engel is the
husband of Teri Engel, who is a Director and the Company's secretary.
TERI E. ENGEL, 45, has been a Director and Secretary of the Company since
1989. She also served as an officer and a Director of WTD Industries, Inc. from
1989 to 1994. Mrs. Engel is the wife of Bruce L. Engel who is a Director and
the Company's President and Chief Executive Officer. On January 30, 1991, WTD
Industries filed a voluntary petition in the United States Bankruptcy court
seeking to reorganize under Chapter 11 of the Federal Bankruptcy Code. On
November 23, 1992, a plan of reorganization was confirmed.
ROBERT G. FLIGG, 46, has been employed since March of 1991 as Chief
Financial Officer of Dee Forest Products, Inc., a Hood River, Oregon
manufacturer of hardboard. Prior to that time, he served as Vice President and
Treasurer of the Company until his resignation on March 22, 1991,
FRED J. KUPEL, 66, has been an independent management consultant for over
five years. Prior to 1989 he served as Chief Financial Officer and Corporate
Development Officer for various public and private corporations. He has served
the Company as a consultant since 1993.
KENNETH L. WRIGHT, 46, has served as the Company's Executive Vice President
since March, 1991. Prior to that date he was an independent management
consultant. From 1982 to 1987, he served as Chief Operating Officer for
Industrial Leasing Corporation, Portland, Oregon, a lessor of industrial
equipment.
PHILLIP MCREYNOLDS, 48, has served since 1985 as Vice President and General
Manager of VDO-Pak, Inc., the Company's only operating subsidiary.
EXECUTIVE COMPENSATION
The following table sets forth all remuneration paid during 1994 to the
Company's Chief Executive Officer. Directors received no compensation for their
services during 1994.
Capacities in which
Name Remuneration Received Compensation
---- --------------------- ------------
Bruce L. Engel President and Chief Executive Officer None
No executive officer received cash compensation in 1994 in excess of
$100,000.
The Company has a cash bonus plan for officers and other key employees and
for managers and employees of its subsidiaries. Under the terms of the plan,
the President receives a quarterly bonus of 5% of pre-tax profits earned by the
Company and/or each of its subsidiaries; other officers and key employees share
ratably on the basis of their base pay in a quarterly bonus of 15% of
consolidated pre-tax profits of the Company. Payments under this plan made to
officers or other key employees of the Company totalled $24,000 in 1994. Cash
bonuses to subsidiary managers and employees is based on a percentage of
subsidiary pre-tax profits and is distributed ratably each month. Payments under
this plan made to subsidiary managers and employees totaled $33,000 in 1994.
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STOCK OPTION PLAN
The Company has a stock option plan for key employees and Directors that
provides for the granting of incentive stock options (within the meaning of
Section 422A of the Internal Revenue Code) or non-qualified stock options, to
purchase shares of the Company's common stock at 100% of the fair market value
at the date of the grant. The plan is administered by a committee of three or
more disinterested persons designated by the Board of Directors, and it
terminates on the earlier of January 8, 1999 or the issuance of the full number
of shares allocated. The aggregate number of shares for which options may be
granted under the plan is 700,000, subject to such adjustments as may be
necessary or appropriate upon the issuance of stock dividends or by a stock
split or reverse stock split. Option shares are made available from the
authorized but unissued shares of the Company's common stock. The plan includes
restrictions as to annual carryover limits on the fair market value of incentive
stock options, as well as provisions with respect to expiration, cancellation
and the tender of any for exercisable options. All options granted under the
plan have a maximum duration of ten years, and are exercisable cumulatively, in
annual increments of 20%, commencing six months after the date of the grant. As
of _______________, 1995, the Record Date, there were no options outstanding.
PENSION PLAN
The Company has a defined benefit retirement plan (the "Plan") in which
participation has been frozen since 1990. Until 1990, Employees of the Company
were automatically covered by the Plan provided they met certain criteria.
Normal retirement under the Plan is the first day of the month following the
employee's 65th birthday. An employee's retirement benefit is determined
according to his final average yearly pay over a five-year base period, years of
service and covered compensation. An employee could elect to retire as early as
age 55, but retirement benefits would be reduced. All contributions to provide
benefits under the Plan and all expenses are paid entirely by the Company. A
trust fund has been established to receive and hold all Plan contributions,
interest and other income to pay the benefits provided by the Plan. There were
no contributions made to the Plan in 1994 and 1993 for the Executive Officers
named above. As of December 31, 1994, the Company had cumulative unfunded
pension liability of $176,000.
Below is a table demonstrating the general method of calculation of
benefits upon retirement using the average of the highest compensation paid for
five years, exclusive of a portion of the lesser of the highest average
compensation or covered compensation.
YEARS OF SERVICES
-----------------
REMUNERATION 15 20 25 30 35
- - - ------------ -- -- -- -- --
$ 25,000 $ 7,500 $ 8,750 $10,000 $11,250 $11,250
50,000 15,000 17,500 20,000 22,500 22,500
75,000 22,500 26,500 30,000 33,750 33,750
100,000 30,000 35,000 40,000 45,000 45,000
150,000 45,000 52,500 60,000 67,500 67,500
200,000 60,000 70,000 80,000 90,000 90,000
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SECURITIES OWNERSHIP OF OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned on the record date by (i) persons known to the Company to own
more than five percent (5%) of the Company's Common Stock, (ii) each of the
Directors and nominees, and (iii) all Directors and officers as a group. Except
as otherwise indicated by footnote, the owner has sole voting and investment
power with respect to such shares.
Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership (1) Shares Outstanding
- - - ---------------- ------------------------ ------------------
Bruce L. Engel 2,139,938 (2) 35.00%
Teri E. Engel 2,139,938 (2) 35.00
Robert G. Fligg 1,000 0.02
Fred J. Kupel 20,000 0.33
Kenneth L. Wright 280,655 (3) 4.59
All Directors and officers as
a group (5 persons) 2,441,593 39.94
- - - --------------------
1. Beneficial Ownership includes sole voting and investment power as to the
shares unless otherwise indicated.
2. Includes shares held individually by Mr. Engel and shares held jointly with
spouse. Includes 60,000 shares which are not entitled to be voted at the
Meeting.
3. Includes shares held jointly with spouse.
OTHER INFORMATION AS TO DIRECTORS AND OFFICERS
Officers are elected annually by the Board of Directors and serve at the
pleasure of the Board until their successors have been elected. During 1994
there was one meeting of the Board of Directors. All members were present at
the meeting. The Board of Directors does not presently have standing audit,
nominating and compensation committees or separate committees performing similar
functions; the full Board performs these functions.
LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS
The Articles of Incorporation of the Company provide, among other things,
for the elimination of liability of Directors for monetary damages arising out
of the Director's breach of his or her fiduciary duty of care, except to the
extent that Oregon law does not permit exemption from such liabilities.
A Director remains potentially liable for monetary damages for (a) any
breach of the Director's duty of loyalty to the corporation or its shareholders,
(b) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (c) an improper distribution under Oregon law, or
(d) any transaction from which the Director derived an improper personal
benefit.
The Articles of Incorporation of the Company also provide that the
corporation will indemnify such Directors or officers if the Director or officer
has been successful on the merits, or otherwise, in the defense of any action,
suit or proceeding to which he or she is a party by reason of the fact that he
or she was a Director or officer of the Company.
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AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
BACKGROUND
The Board of Directors, at its meeting on __________, 1995, adopted a
resolution to amend Article V of the Company's Restated Articles of
Incorporation (the "Articles") to effect a 1-for-500 reverse split of the
Company's common stock (the "Reverse Split"), subject to approval by the
shareholders (the "Amendment"). The Amendment would also reduce the Company's
authorized shares of common stock from 10,000,000 to 50,000, and the authorized
shares of preferred stock from 500,000 to 5,000. A copy of the proposed
Amendment is attached as EXHIBIT A to this Proxy Statement. The shareholders
are being asked to approve Amendment to effect the Reverse Split, as more fully
described below.
The Articles currently authorize 10 million (10,000,000) shares of common
stock, of which 6,112,848 shares are issued and outstanding. The Company
currently has approximately 3,607 shareholders. Based upon recent market prices
of the stock of approximately $0.05 per share, the entire market value of the
Company is just over $300,000. The Company's market value is a reflection of
the Company's history of losses as shown in the following table:
(Dollars in thousands, except for share prices.)
Income/ Shareholders Stock Prices
Year Revenues (Loss) Equity Hi Low
- - - ---- -------- ------- ------------ -- ---
1980 4,982 3,562 25,662 13.50 7.13
1981 3,815 2,423 27,133 16.75 7.00
1982 3,459 120 26,155 7.25 4.00
1983 3,367 (26,188) 1,195 5.88 3.13
1984 569 6,724 7,919 3.75 0.75
1985 693 (3,068) 4,851 1.19 0.50
1986 588 (1,060) 3,791 1.13 0.56
1987 0 (571) 3,079 1.06 0.63
1988 0 (2,383) 825 1.44 0.50
1989 3,625 (34) 1,599 1.97 0.38
1990 5,767 (1,317) 282 1.31 0.13
1991 4,213 (642) (432) 0.12 0.03
1992 3,590 134 (298) 0.03 0.03
1993 2,919 (193) (491) 0.03 0.03
1994 3,113 55 (467) 0.06 0.03
Nine Months Ended 9/30/95:
1,335 (196) (663) 0.10 0.03
Due to the high cost of materials, preparation, postage, and meeting
facilities relative to the Company's total market capitalization, the Company
has not held an Annual Meeting of shareholders since July 16, 1990. The
requisite Securities and Exchange Commission reports have been filed. However,
these reports have not been sent to shareholders. The Board of Directors has
determined that it is in the best interests of the Company and its shareholders
to reduce the costs involved in shareholder communications by reducing the
number of shareholders commensurate with the size of the Company's operations.
The Board of Directors designated the 1:500 ratio after considering a
number of factors, including the Company's asset base, revenues and net income,
the current market price of the stock, the number of shareholders holding small
numbers of shares, and the overall cost of the transaction. Not counting small
holdings that might be included in nominee accounts registered by brokers and
others, there are 349,690
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shares held in individual accounts ranging in size from one to 499 shares. The
total market value of these holdings, at $0.05 per share, is $17,485. The
number of shareholders owning these shares is 2,978.
There has been very little trading activity in the Common Stock during 1994
and 1995. The range of bid and ask prices is $0.03 to $0.06. Accordingly, the
Company retained Columbia Financial Advisors, Inc., an independent financial
consultant, to conduct an evaluation of the fair value of the Company in view of
its current financial condition and future prospects. Columbia Financial
Advisors, Inc. has concluded that the fair market value of the Company is
approximately $0.10 per share. A copy of their opinion is attached as
EXHIBIT B.
THE REVERSE SPLIT
Adoption of the proposed amendment would effect a 1-for-500 reverse split
of the common stock whereby shareholders would receive one share of new common
stock ("New Shares") for each 500 shares of existing stock ("Old Shares"). Cash
would be paid at the rate of $0.10 per share in lieu of issuing fractional New
Shares to shareholders holding less than 500 Old Shares as of __________, 1995,
the Record Date.
Shareholders holding 500 Old Shares or more as of the Record Date would
tender their shares to the Company for cancellation and receive one New Share
for each 500 Old Shares held of record as of the Record Date, with any resulting
fractional New Share being rounded up to the next whole share. Shareholders may
combine or aggregate Old Shares, for a period of 90 days (which may be extended
by the Board of Directors in its discretion) following the effective date of the
Reverse Split such that the total is sufficient to be exchanged for whole New
Shares (i.e. at least 500 Old Shares). After the Record Date, shareholders may
not divide their share holdings so as to avail themselves of the cash offer.
Where shares are held of record by a brokerage firm or other nominee, the true
beneficial owners of such shares shall, for purposes of this transaction, be
deemed to be the record owners.
As of the effective date of the Reverse Split, all outstanding Old Shares
will be canceled. Certificates representing Old Shares held of record as of the
Record Date by or in the name of any shareholder in amounts up to, but not
exceeding, 499 shares, must be surrendered for cash payment within 60 days
(which may be extended by the Board of Directors in its discretion) following
the effective date of the Reverse Split. Certificates representing Old Shares
held by any two or more shareholders, each of which held their respective shares
as of the Record Date in an amount up to, but not exceeding, 499 shares, which
have been combined or aggregated so as to exceed 500 shares, must be tendered
for cancellation and exchange for New Shares within 90 days following the
effective date of the Reverse Split, which time may be extended by the Board of
Directors in its discretion. After 90 days following the effective date of the
Reverse Split, subject to any extension by the Board of Directors, shareholders
holding fewer than 500 shares as of the Record Date will no longer have any
rights whatsoever as to those shares, including rights as to voting, dividends
or assets of the Company upon liquidation, or any right of exchange under the
terms of the Reverse Split.
After 90 days following the effective date of the Reverse Split, only
shareholders holding 500 or more shares as of the Record Date will be entitled
to exchange such shares for the applicable number of New Shares, with any
resulting fractional New Shares being rounded up to the nearest whole share.
Until certificates representing such Old Shares are surrendered for exchange for
certificates representing the applicable number of New Shares, no dividends
which are declared and become payable with respect to such New Shares will be
paid. Upon exchange, any dividends which were declared and became payable with
respect to such New Shares will be paid to the holder, without interest.
If the proposed Amendment is approved and adopted, shareholders holding up
to 499 shares as of the Record Date would receive cash of $0.10 per share, and
shareholders holding 500 shares or more would receive one full New Share for
each 500 Old Shares, rounded up to the nearest full New Share. The following
examples illustrate the effect of the Reverse Split:
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If you owned 398 shares, you would receive $39.80 (398 x $0.10) in cash, if
tendered for exchange within 60 days following the effective date of the Reverse
Split.
If you owned 12,500 shares, you would receive 25 New Shares (12,500 DIVIDED
BY 500).
If you owned 7,216 shares you would receive 15 New Shares (7,000 DIVIDED BY
500 = 14, plus 1 New Share for the remaining 216 shares which would otherwise be
a fractional New Share if so issued).
DISSENTERS' RIGHTS
Under Oregon law, any shareholder who dissents from the adoption of an
amendment to the articles of incorporation which has the effect of reducing the
shareholder's shares to a fraction of a share, which fraction is to be purchased
for cash, is entitled to be paid the fair value of the shareholder's shares in
cash ("Dissenter's Rights"). Accordingly, only those shareholders holding no
more than 499 Old Shares of record as of the Record Date would be entitled to
exercise Dissenters' Rights. To perfect the right receive payment under the
Oregon statute, a copy of which is attached as EXHIBIT C, the shareholder must,
prior to the shareholder vote on the matter, give written notice of the intent
to demand payment for his or her shares if the proposed action is taken, and
must not vote in favor of the proposal. A shareholder who returns an executed
but unmarked proxy will be deemed to have voted in favor of the adoption of the
amendment and will therefore not be entitled to exercise Dissenters' Rights. A
shareholder who abstains, either by not returning a proxy or by marking
"Abstain" on the proxy, will preserve his or her Dissenters' Rights, if written
notice of intent to demand payment is properly given prior to the shareholder
vote on the proposal. A shareholder may not dissent as to less than all shares
held by such shareholder. Within ten days following consummation of the
transaction, the Company will notify each Dissenter who has properly perfected
his or her right to payment as to where demand for payment is to be sent, and
where certificates representing dissenting shares are to be delivered. The
dissenting shareholder will, within 60 days following receipt by the Company of
a demand for payment, receive payment in cash in the amount of the Company's
estimate of the fair value of the shares. This amount may be less than or equal
to the value as determined by Columbia Financial Advisors, Inc., and in any
event is not expected to exceed that amount. If the dissenting shareholder is
dissatisfied with the amount as determined by the Company, an appraisal process
will be commenced. IF THE PROCEDURES ESTABLISHED BY OREGON LAW ARE NOT
PRECISELY FOLLOWED, A SHAREHOLDER MAY LOSE THE RIGHT TO DISSENT.
It should be noted that voting against the adoption of the amendment at the
Special Shareholders' Meeting will not, of itself, entitle a shareholder to
demand payment for his or her shares. Shareholders are urged to review the
requirements for perfecting Dissenters' Rights as set forth in the statutes
attached as EXHIBIT C, and to read the discussion below under "VOTING AT THE
MEETING - Rights of Dissenting Shareholders."
IT IS NOT NECESSARY FOR SHAREHOLDERS HOLDING UP TO 499 OLD SHARES TO
DISSENT FROM THE PROPOSED AMENDMENT IN ORDER TO RECEIVE $0.10 PER SHARE IN CASH.
To receive the cash payment of $0.10 per share, shareholders with up to 499
shares must simply follow the instructions on the notice which will be sent by
the Company following adoption of the Amendment.
INTEREST OF CERTAIN OFFICERS AND DIRECTORS IN THE TRANSACTION
Oregon law prohibits a corporation from making any cash distribution to its
shareholders if the corporation's liabilities exceed its assets. As of March
31, 1995, the Company's total liabilities exceeded its total assets by
approximately $550,000. Accordingly, in order to provide for cash payments to
shareholders holding fewer than 500 Old Shares as of the Record Date, the
Company has entered into an agreement with Bruce Engel, President of the
Company, pursuant to which Mr. Engel has agreed to purchase, for cash at $0.10
per share, all Old Shares held in amounts less than 500 shares which are
tendered to him during the
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60 days following the effective date of the Reverse Split. A copy of that
agreement is attached to this Proxy Statement as EXHIBIT D.
The statutory prohibition on cash distributions when the Company's
liabilities exceed its assets also applies to payments made to dissenting
shareholders in accordance with the provisions of the Dissenters' Rights
statutes. Therefore, to fulfill the Company's obligation to pay cash pursuant
to statutory Dissenters' Rights, the agreement with Mr. Engel also provides that
Mr. Engel will assume the Company's obligation to pay the fair value in cash for
shares of shareholders who have properly perfected their rights to dissent. As
noted above, cash payments for dissenting shares will be at the price determined
by the Company to be the fair value of the shares. In view of the current
market price of the shares, the Company's determination, or the fair value as
determined by the statutory appraisal process may be less favorable than that of
Columbia Financial Advisors, Inc. Moreover, Dissenters' Rights apply only to
those shareholders holding up to 499 Old Shares as of the Record Date who are
otherwise being offered $0.10 per share in cash.
Mr. Engel intends to combine or aggregate shares purchased pursuant to the
agreement and tender such shares, together with shares which he currently owns
or controls, to be exchanged for whole New Shares on the same terms as
applicable to all other shareholders. Old Shares, the certificates of which
have been surrendered by those shareholders properly asserting Dissenters'
Rights, and which shares are to be purchased by Mr. Engel for their fair value,
which value has not been determined by the 90th day following the effective date
of the split, may be aggregated by Mr. Engel and submitted to the Company for
exchange for the applicable number of New Shares, notwithstanding the expiration
of the 90-day period for such aggregation and exchange. However, certificates
representing such New Shares will not be issued, and voting and all other rights
shall not attach to such New Shares, until the fair value of the dissenting
shares has been paid in full to those dissenting shareholders in accordance with
their rights under Oregon law.
Mr. Engel currently owns or controls 2,139,938 shares, or 35.0% of the
outstanding shares of common stock. Assuming that, pursuant to the agreement
with the Company, Mr. Engel purchased all 349,690 shares held as of the Record
Date in accounts smaller than 500 shares (which does not include additional
small accounts which may be held by nominees such as broker/dealer firms), Mr.
Engel would own or control 2,489,628 shares or 40.73% of the outstanding Old
Shares. Upon tendering those shares to the Company for exchange pursuant to the
Reverse Split, he would receive 4,980 New Shares.
INSTRUCTIONS FOR TENDERING SHARES FOR EXCHANGE OR PAYMENT
Following approval of the proposed amendment by the shareholders, and the
filing of the amendment with the Oregon Secretary of State, which filing date
will be the effective date of the Reverse Split, the Company will provide each
shareholder with instructions for tendering certificates representing Old Shares
in exchange for certificates representing New Shares, or cash payment, as the
case may be. Old Shares held as of the Record Date by any shareholder in
amounts less than 500 shares must be tendered for cash payment within 60 days
(which may be extended by the Board of Directors) following the effective date
of the Reverse Split, or within 90 days thereof (also subject to extension by
the Board of Directors) if aggregated and being tendered for exchange for New
Shares.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has carefully considered the strategic alternatives
for the Company with respect to its future viability as a going concern, and has
determined that approval of the Reverse Split and the adoption of the proposed
amendment are necessary to reduce administrative costs and further the Company's
efforts to return to profitability. The Board therefore recommends a vote FOR
approval of the proposed Reverse Split and the adoption of the amendment to the
Restated Articles of Incorporation.
9
<PAGE>
INDEPENDENT ACCOUNTANTS
Moss Adams has audited the Company's annual financial statements for fiscal
year 1994, and has served as the Company's independent public accountant for the
past ______________________ years.
It is expected that the Board of Directors will select Moss Adams to
continue to serve as the Company's independent public accountants for fiscal
year 1995.
OTHER MATTERS
The Board of Directors of the Company knows of no other matter to be
brought before the Meeting other than as set forth in the accompanying Notice of
Special Meeting of Shareholders and in this Proxy Statement. If any other
matters requiring a vote of the shareholders is presented, the persons named in
the enclosed proxy, or their substitutes, will, to the extent permitted by law,
vote the shares they represent in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal for consideration at the
Company's next annual meeting must be the beneficial owner of at least 1% or
$1,000 in market value of common stock, and have held the stock for at least one
year, and must submit the proposal within a reasonable time prior to the mailing
to shareholders of the notice of the annual meeting. A shareholder submitting a
proposal for consideration must provide the Company with his or her name,
address and the number of shares held of record or beneficially, the dates upon
which such shares were acquired and documentary evidence of such ownership. The
shareholder, or a representative of the shareholder, must present the proposal
for action at the meeting. At the shareholder's request, the Company will
include with the proposal in the proxy statement mailed to shareholders in
connection with the meeting, a statement of the shareholder in support of the
proposal, which together with the proposal does not exceed 500 words. The Proxy
Statement shall include the name, address and number of shares held of record or
beneficially by the shareholder making the proposal. The Company may, under
certain circumstances, omit from the proxy statement proposals and supporting
statements.
10
<PAGE>
VOTING AT THE MEETING
GENERAL
Each copy of this Proxy Statement sent to the Company's shareholders is
accompanied by a proxy solicited by the Board of Directors of the Company for
use at the Special Meeting of Shareholders and any adjournments thereof. Only
holders of record of Company common stock at the close of business on
__________, 1995, are entitled to notice of, and to vote at, the Meeting. At
the Meeting, the Company's shareholders will vote on the election of Directors;
on a proposed 1-for-500 reverse split of the Company's common stock, and in
connection therewith, the adoption of an amendment to the Company's Restated
Articles of Incorporation; and on such other matters as may properly come before
the Meeting. Shares represented by properly executed proxies will be voted at
the Meeting in accordance with the instructions on the proxy. If no
instructions are given, the shares represented thereby will be voted in favor of
the persons nominated by the Board of Directors to serve as Directors, in favor
of the proposed reverse split and adoption of the amendment to the Articles, and
in the discretion of the proxy holders on such other matters that may be
considered at the Meeting.
A proxy may be revoked prior to its exercise at the Meeting by presentation
of a proxy bearing a later date, by filing an instrument of revocation
(personally or by mail) with the Secretary of the Company prior to the meeting,
or by oral request if the shareholder is present at the meeting. Attendance at
the meeting will not, of itself, revoke a proxy.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY TO THE COMPANY IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE, EVEN IF THEY ARE PLANNING TO ATTEND THE COMPANY'S MEETING.
VOTE REQUIRED
The authorized capital stock of the Company consists of ten million
(10,000,000) shares of Common Stock and five hundred thousand (500,000) shares
of Preferred Stock. As of __________, 1995, the Record Date, there were
6,112,848 shares of Common Stock issued and outstanding, of which 6,052,848
shares are entitled to vote. As of the Record Date, there were no shares of
Preferred Stock outstanding.
A majority of the outstanding shares of Common Stock must be represented at
the Meeting, in person or by proxy, to constitute a quorum for the transaction
of business. The affirmative vote of the holders of a majority of the
outstanding shares of Company common stock is required for approval of the
amendment to the Articles. Directors are elected by a plurality of the votes;
Directors receiving the most votes will be elected. Each such share is entitled
to one vote. Shareholders do not have the right to accumulate votes for
Directors. As of the Record Date, there were 3607 shareholders of record. As
of the Record Date, officers, Directors, and principal shareholders of the
Company, together with their affiliates, had beneficial ownership of 2,441,593
shares, of which 2,381,593 shares are entitled to vote. The shares held by
officers, Directors and principal shareholders, which are entitled to be voted
at the Meeting constitute 38.96 percent of the total outstanding shares, and
39.35% of the shares entitled to be voted at the Meeting.
11
<PAGE>
RIGHTS OF DISSENTING SHAREHOLDERS
As provided by Oregon Revised Statutes, Sections 60.551 through 60.594, a
copy of which is attached as EXHIBIT C, certain shareholders of the Company have
the right to dissent from the adoption of the proposed amendment to the Restated
Articles of Incorporation and receive the fair value of their shares in lieu of
the consideration otherwise issuable to them pursuant to the proposed Reverse
Split, which value may be more or less than, or equal to, that received by
non-dissenting shareholders. Any shareholder intending to exercise dissenters'
rights is urged to review these provisions carefully so as to be in strict
compliance with the requirements of state law. Only shareholders holding fewer
than 500 shares as of the Record Date are entitled to dissent.
EACH OF THE STEPS PRESCRIBED BY OREGON LAW MUST BE TAKEN AS SPECIFIED OR
DISSENTERS' RIGHTS MAY BE LOST. FAILURE TO CONFORM EXPRESSLY TO ALL CONDITIONS
MAY RESULT IN LOSS OF RIGHTS.
The following is only a summary of dissenting shareholders' rights:
Any of the Company's shareholders desiring to dissent and receive payment
for shares must: (i) deliver to the Company, prior to or at the Meeting before
the vote is taken, written notice of intent to demand payment for shares if the
transaction is consummated; (ii) not vote in favor of the resolution approving
the Reverse Split and adoption of the Amendment to the Articles; and (iii) make
proper written demand to the Company for payment within the time specified by
the Company in its Notice to Dissenters following the vote on the proposed
amendment to the Articles. The demand must be accompanied by the tender of
share certificates properly endorsed. MERELY VOTING AGAINST THE RESOLUTION
APPROVING THE REVERSE SPLIT AND ADOPTING THE RELATED AMENDMENT OF THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION IS NOT SUFFICIENT STATUTORY NOTICE OF A
SHAREHOLDER'S DESIRE TO DISSENT TO MEET THIS DEMAND REQUIREMENT.
A shareholder who returns an executed but unmarked proxy will be deemed
to have voted in favor of the proposal and will therefore not be entitled to
exercise Dissenters' Rights. A shareholder who abstains either by not returning
a proxy or by marking "Abstain" on the proxy will preserve his or her
Dissenters' Rights, if the other statutory procedures are followed.
Following the effective date of the Reverse Split, or upon the making of a
proper payment demand in accordance with the instructions in the Dissenters'
Notice, dissenting shareholders who have complied with the conditions and
procedures for dissenting from the proposed amendment to the Articles will
receive in cash an amount equal to the Company's estimate of the fair value of
each such dissenting shareholder's shares, plus any applicable accrued interest
from the effective date of the Reverse Split. That amount may be more than,
equal to, or less than the amount of consideration received by other
shareholders in accordance with the proposed Reverse Split. Within 30 days of
that payment or payment offer, a dissenting shareholder may notify the Company
in writing of that shareholder's estimate of the fair value of that
shareholder's shares and interest due, and demand payment of that amount less
any previous payment by the Company, if (i) the shareholder believes that the
Company's payment offer is less than the fair market value of shares or that the
interest is not properly calculated; (ii) the Company has not made payment
within 60 days of the date set for demanding payment; or (iii) the Company has
failed to complete the transaction and has not returned the dissenting
shareholder's stock certificates within 60 days of the date set for demanding
payment.
If the Company and a dissenting shareholder do not agree on the amount to
be paid for that shareholder's shares, the Company will commence a court
proceeding within 60 days of that shareholder's most recent demand described
above. The court may appoint one or more appraisers to recommend a decision.
All dissenting shareholders whose demands for payment remain unsettled shall be
made parties to this proceeding. The court will assess costs of the proceeding
against the Company except for costs that may
12
<PAGE>
be assessed against dissenting shareholders who acted arbitrarily or not in good
faith. The court may also award attorneys' and experts' fees in a manner it
finds equitable.
A shareholder may not dissent as to less than all of the shares registered
in the shareholder's name; except a shareholder holding as a fiduciary shares
registered in his or her name for the benefit of more than one beneficiary may
dissent as to less than all of the shares registered in his or her name,
provided that any dissent made as to a particular beneficiary is as to all of
the shares held for that beneficiary by the fiduciary.
Receipt of cash by dissenting shareholders for their shares will be
treated, for federal income tax purposes, as a redemption of shares under
Section 302 of the Internal Revenue Code, and may be a taxable transaction. Any
shareholder contemplating a demand for payment pursuant to statutory dissenters'
rights is urged to consult with a competent tax advisor.
FINANCIAL AND OTHER INFORMATION
Enclosed with this Proxy Statement, and incorporated herein by reference
thereto, are copies of the Company's annual report to the Securities and
Exchange Commission on Form 10-K for the fiscal year ended December 31, 1994,
and the quarterly report on Form 10-Q for the nine months ended September 30,
1995. Additional copies of these reports can be obtained upon request to Teri
E. Engel, Secretary, The Encore Group, Inc., 4800 SW Macadam Avenue, Suite 100,
Portland, OR 97201.
Portland, Oregon
_______________, 1995 By Order of the Board of Directors
Teri E. Engel, Corporate Secretary
13
<PAGE>
EXHIBIT INDEX
EXHIBIT
A Proposed Amendment to the Restated Articles of Incorporation.
B Opinion of Columbia Financial Advisors, Inc.
C Oregon Revised Statutes 60.551 - 60.594
D Agreement between Encore Group, Inc. and Bruce L. Engel.
14
<PAGE>
PROPOSED AMENDMENT EXHIBIT A
As proposed, Article V, Section (a) of the Company's Restated Articles
would be amended to read in its entirety as follows:
"(a) The aggregate number of shares which the corporation
shall have the authority to issue is Fifty Five Thousand (55,000)
shares divided into Fifty Thousand (50,000) shares of common stock and
Five Thousand (5,000) shares of preferred stock.
Except as provided herein, upon the filing of these Articles of
Amendment, shares of common stock of the corporation then outstanding
shall be canceled and converted into the right to receive in exchange
therefor cash or new shares of common stock of the corporation as
follows:
(i) In the case of shares held of record as of __________, 1995,
by any shareholder of record in an amount equal to or exceeding 500
shares, such shares shall be converted into the right to receive that
number of new shares of common stock calculated by dividing the number
of shares tendered for exchange by 500, with any fractional result
rounded up to the next whole number.
(ii) In the case of shares held of record as of __________,
1995, by any shareholder of record in an amount up to but not
exceeding 499 shares, such shares shall be converted into and
exchanged for the right to receive in exchange therefor, for a period
not exceeding 60 days following the date of the filing of these
Articles of Amendment (or such later date as determined by the Board
of Directors at its sole discretion), cash in the amount of $0.10 per
share.
(iii) Notwithstanding the right to receive cash is provided by
subsection (a) (ii) above, in the case of shares held of record as of
___________, 1995, by any shareholder of record in an amount up to but
not exceeding 499 shares, such shares may be aggregated or combined
with other shares to create a number of shares equal to or exceeding
500, and be tendered for exchange, for a period not exceeding 90 days
following the date of the filing of these Articles of Amendment (or
such later date as determined by the Board of Directors at its sole
discretion), for such number of new shares of common stock calculated
by dividing the number of shares tendered for exchange by 500, with
any fractional result rounded up to the nearest whole number.
For purposes of this exchange, shares held of record as of
____________________, 1995, in the name of a broker/dealer or other
nominee, shall be deemed to be held of record by the true beneficial
owners of such shares.
As of the date of the filing of these Articles of Amendment,
unless and until tendered in exchange for new shares of common stock
or cash, as the case may be, in accordance with this section (a),
previously outstanding shares of common stock of the corporation shall
have only the rights of exchange as set forth herein, and shall have
no voting or other rights for any corporate purpose whatsoever.
Unless and until certificates representing ownership of shares
entitled to be exchanged for new shares of common stock in accordance
with this section (a) are surrendered, no dividends or other
distributions shall be paid with respect to such new shares. Upon
exchange for certificates representing new shares, any dividends or
other distributions which are declared and became payable with respect
to such new shares shall be paid to the holder, without interest."
<PAGE>
OPINION OF COLUMBIA FINANCIAL ADVISORS, INC. EXHIBIT B
Columbia Financial Advisors, Inc. (CFAI) was retained by The Encore Group,
Inc. (Encore) to appraise the fair market value of the common stock of Encore
for the purpose of Encore repurchasing its common stock as a result of a reverse
stock split. CFAI is an independent business valuation and advisory firm. Its
principal business is the valuation of businesses and business interests,
including both privately held and publicly traded companies, for many different
purposes, including mergers and acquisitions, gift and estate taxes, employee
stock ownership plans, issuance of stock options, going public or private,
corporate and partnership dissolutions, and other objectives. In arriving at
its opinion, CFAI took into consideration the nature of the business and history
of Encore, the economic outlook in general, the outlook for the battery and
accessories industry in particular, Encore's earnings and cash flow for the past
five years, the outlook for future earnings, the book value of the company, the
company's financial condition, its dividend paying capacity, the existence of
Encore's net operating loss carryforward, the historical trading prices of
encore's stock, and prices at which public companies in related lines of
business are selling. It is CFAI's opinion, that the fair market value of the
common stock of Encore as of May 1995, was $.10 per share.
/S/ Mary McCarter, ASA,CFA
Principal
<PAGE>
DISSENTERS' RIGHTS EXHIBIT C
(Right to Dissent and Obtain Payment for Shares)
60.551 DEFINITIONS FOR 60.551 TO 60.594. AS USED IN ORS 60.551 TO 60.594:
(1) "Beneficial shareholder" means the person who is a 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 corporation by merger
or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under ORS 60.554 and who exercises that right when and in the
manner required by ORS 60.561 to 60.587.
(4) "Fair value," with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless 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 rate that is fair
and equitable under all the circumstances.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(7) "Shareholder" means the record shareholder or the beneficial share-
holder. [1987 c.52 Section 124; 1989 c.1040 Section 30]
60.554 RIGHT TO DISSENT. (1) Subject to subsection (2) of this section, a
shareholder is entitled to dissent from, and obtain payment of the fair value of
the shareholder's shares in the event of, any of the following corporate acts:
(a) Consummation of a plan of merger to which the corporation is a
party if shareholder approval is required for the merger by ORS 60.487 or the
articles of incorporation and the shareholder is entitled to vote on the merger
or if the corporation is a subsidiary that is merged with its parent under ORS
60.491;
(b) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all or substantially all of
the property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
year after the date of sale;
(d) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preemptive right of the holder of the shares
to acquire shares or other securities; or
(B) Reduces the number of shares owned by the shareholder to a fraction
of a share if the fractional share so created is to be acquired for cash under
ORS 60.141; or
<PAGE>
(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws or a resolution of the board of
Directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under ORS 60.551 to 60.594 may not challenge the corporate
action creating the shareholder's entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
(3) Dissenters' rights shall not apply to the holders of shares of any
class or series if the shares of the class or series were registered on a
national securities exchange or quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System as a National Market System issue on
the record date for the meeting of share holders at which the corporate action
described in subsection (1) of this section is to be approved or on the date a
copy or summary of the plan of merger is mailed to shareholders under ORS
60.491, unless the articles of incorporation otherwise provide. [1987 c.52
Section 125; 1989 C.1040 Section 31; 1993 c.403 Section 91]
60.557 DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (1) A record shareholder
may assert dissenters' rights as to fewer than all the shares registered in the
shareholder's name only if the shareholder dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf the shareholder asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares regarding which the shareholder dissents and the
shareholder's other shares were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder submits to the corporation 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 does so with respect to all shares of
which such shareholder is the beneficial shareholder or over which such share-
holder has power to direct the vote. [1987 c.52 Section 126]
(PROCEDURE FOR EXERCISE OF RIGHTS)
60.561 NOTICE OF DISSENTERS' RIGHTS. (1) If proposed corporate action
creating dissenters' rights under ORS 60.554 is submitted to a vote at a
shareholders' meeting, the meeting notice must state that shareholders are or
may be entitled to assert dissenters' rights under ORS 60.551 to 60.594 and be
accompanied by a copy of ORS 60.551 to 60.594.
(2) If corporate action creating dissenters' rights under ORS 60.554 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send the shareholders entitled to assert dissenters' rights the dissenters'
notice described in ORS 60.567. [1987 c.52 Section 127]
60.564 NOTICE OF INTENT TO DEMAND PAYMENT. (1) If proposed corporate
action creating dissenters' rights under ORS 60.554 is submitted to a vote at a
shareholders' meeting, a shareholder who wishes to assert dissenters' rights
shall deliver to the corporation before the vote is taken written notice of the
shareholder's intent to demand payment for the shareholder's shares if the
proposed action is effectuated and shall not vote such shares in favor of the
proposed action.
(2) A shareholder who does not satisfy the requirements of subsection
(1) of this section is not entitled to payment for the shareholder's shares
under this chapter. [1987 c.52 Section 128]
60.567 DISSENTERS' NOTICE. (1) If proposed corporate action creating
dissenters' rights under ORS 60.554 is authorized at a shareholders' meeting,
the corporation shall deliver a written dissenters' notice to all shareholders
who satisfied the requirements of ORS 60.564.
(2) The dissenters' notice shall be sent no later than 10 days after
the corporate action was taken, and shall:
<PAGE>
(a) State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement of the terms of the proposed corporate action to news media
or to shareholders and requires that the person asserting dissenters' rights
certify whether or not the person acquired beneficial ownership of the shares
before that date;
(d) Set a date by which the corporation must receive the payment
demand. This date may not be fewer than 30 nor more than 60 days after the date
the subsection (1) of this section notice is delivered; and
(e) Be accompanied by a copy of ORS 60.551 to 60.594. [1987 c.52
Section 129]
60.571 DUTY TO DEMAND PAYMENT. (1) A shareholder sent a dissenters'
notice described in ORS 60.567 must demand payment, certify whether the share-
holder acquired beneficial ownership of the shares before the date required to
be set forth in the dissenters' notice pursuant to ORS 60.567 (2)(c), and
deposit the shareholder's certificates in accordance with the terms of the
notice.
(2) The shareholder who demands payment and deposits the shareholder's
shares under subsection (1) of this section retains all other rights of a
shareholder until these rights are canceled or modified by the taking of the
proposed corporate action.
(3) A shareholder who does not demand payment or deposit the
shareholder's share certificates where required, each by the date set in the
dissenters' notice, is not entitled to payment for the shareholder's shares
under this chapter. [1987 c.52 Section 130]
60.574 SHARE RESTRICTIONS. (1) The corporation may restrict the transfer
of uncertificated shares from the date the demand for their payment is received
until the proposed corporate action is taken or the restrictions released under
ORS 60.581.
(2) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
[1987 c.52 Section 131]
60.577 PAYMENT. (1) Except as provided in ORS 60.584, as soon as the
proposed corporate action is taken, or upon receipt of a payment demand, the
corporation shall pay each dissenter who complied with ORS 60.571, the amount
the corporation estimates to be the fair value of the shareholder's shares, plus
accrued interest.
(2) The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income statement
for that year and the latest available interim financial statements, if any;
(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 ORS
60.587; and
(e) A copy of ORS 60.551 to 60.594. [1987 c.52 Section 132; 1987 c.579
Section 4]
<PAGE>
60.581 FAILURE TO TAKE ACTION. (1) If the corporation does not take the
proposed action within 60 days after the date set for demanding payment and
depositing share certificates, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under ORS 60.567 and repeat the payment demand procedure.
[1987 c.52 Section 133]
60.584 AFTER-ACQUIRED SHARES. (1) A corporation may elect to withhold
payment required by ORS 60.577 from a dissenter unless the dissenter was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action.
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares plus accrued interest and shall pay
this amount to each dissenter who agrees to accept it in full satisfaction of
such demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares an explanation of how the interest was
calculated and a statement of the dissenter's right to demand payment under ORS
60.587. [1987 c.52 Section 134]
60.587 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER. (1) A
dissenter may notify the corporation in writing of the dissenter's own estimate
of the fair value of the dissenter's shares and amount of interest due, and
demand payment of the dissenter's estimate, less any payment under ORS 60.577 or
reject the corporation's offer under ORS 60.584 and demand payment of the
dissenter's estimate of the fair value of the dissenter's shares and interest
due, if.
(a) The dissenter believes that the amount paid under ORS 60.577 or
offered under ORS 60.584 is less than the fair value of the dissenter's shares
or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under ORS 60.577 within 60
days after the date set for demanding payment; or
(c) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for demanding
payment.
(2) A dissenter waives the right to demand payment under this section
unless the dissenter notifies the corporation of the dissenter's demand in
writing under subsection (1) of this section within 30 days after the corpora-
tion made or offered payment for the dissenter's shares. [1987 c.52 Section 135]
(JUDICIAL APPRAISAL OF SHARES)
60.591 COURT ACTION. (1) If a demand for payment under ORS 60.587 remains
unsettled, the corporation shall commence a proceeding within 60 days after
receiving the payment demand under ORS 60.587 and petition the court under
subsection (2) of this section to determine the fair value of the shares and
accrued interest. If the corporation does not commence the proceeding within
the 60-day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(2) The corporation shall commence the proceeding in the circuit court
of the count where a corporation's Principal office is located, or if the
principal office is not in this state, where the corporation's 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 with 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 unsettled parties to the proceeding as in an
action against their shares. All parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
<PAGE>
(4) The jurisdiction of the circuit 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 decision on the question of fair value. The appraisers have the
powers described in the court order appointing them, or in any amendment to the
order. The dissenters are entitled to the same discovery rights as parties in
other civil proceedings.
(5) Each dissenter made a party to the proceeding is entitled to
judgment for:
(a) 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
(b) The fair value, plus accrued interest, of the dissenter's after-
acquired shares for which the corporation elected to withhold payment under ORS
60.584. [1987 c.52 Section 136]
60.594 COURT COSTS AND COUNSEL FEES. (1) The court in an appraisal
proceeding commenced under ORS 60.591 shall determine all costs of the proceed-
ing, 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
ORS 60.587.
(2) The court may also assess the fees and expenses of counsel and
experts of the respective parties in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of ORS 60.561 to 60.587; or
(b) Against either the corporation or a dissenter, 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 chapter.
(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 counsel reasonable fees to be paid out of the amount awarded
the dissenters who were benefitted. [1987 c.52 Section 137]
<PAGE>
STOCK PURCHASE AGREEMENT EXHIBIT D
This agreement (the "Agreement") is entered into as of _______________,
1995, by and between The Encore Group, Inc. (the "Company") and Bruce L. Engel
("Engel").
WHEREAS, the Company desires to effect a 1-for-500 reverse split of its
common stock (the "Reverse Split") for the purpose of reducing the administra-
tive costs related to shareholder matters;
WHEREAS, the Company has proposed, as part of the Reverse Split, to pay
shareholders holding up to 499 shares of record as of _______________, 1995,
(the "Record Date") cash for their shares at the rate of $0.10 per share;
WHEREAS, under Oregon law, the Reverse Split and resulting cash purchase of
shares from shareholders holding fewer than 499 shares as of the record date
gives rise to dissenters' rights under ORS 60.551 - 60.594 ("Dissenters'
Rights"), pursuant to which the Company may be obligated to pay the fair value
in cash to certain shareholders who perfect such Dissenters' Rights;
WHEREAS, the Company's financial statements reflect total liabilities
exceeding total assets, under which circumstance the distribution of cash to
shareholders, either in accordance with the proposed Reverse Split or pursuant
to Dissenters' Rights would be unlawful; and
WHEREAS, Engel desires to accommodate the Company in completing the Reverse
Split, and is willing to increase his share ownership of the Company.
NOW THEREFORE, for good and valuable consideration, the adequacy of which
is hereby acknowledged, and in consideration of the mutual covenants set forth
herein, the parties agree as follows:
AGREEMENT
1. PURCHASE OF SHARES. Engel agrees to purchase from each shareholder
of the Company who, as of the Record Date is the owner of less than 500 shares,
all shares of the Company's common stock held by such shareholder as of the
Record Date which are tendered in accordance with the terms of the Reverse Split
within 60 days (or such longer period as may be permitted by the Board of
Directors of the Company) following the date on which the Articles of Amendment
setting forth the terms of the Reverse Split are filed in the office of the
Oregon Secretary of State (the "Effective Date"). Such shares shall be
purchased at a price of $0.10 per share, payable within 90 days following the
Effective Date.
2. OBLIGATION TO DISSENTING SHAREHOLDERS. The Company hereby assigns,
and Engel hereby assumes, the Company's rights and obligations to pay in cash
the fair value of shares of the Company's common stock held of record as of the
Record Date by shareholders who dissent from the adoption of the Articles of
Amendment to effect the Reverse Split, who have properly perfected their right
to such payment for their shares in accordance with ORS 60.551 - 60.594 ("Dis-
senters"), and who have surrendered certificates representing such shares
("Dissenting Shares") in accordance with ORS 60.571 and the instructions given
in the notice to Dissenters pursuant to ORS 60.567. "Fair Value" as used herein
is the value of the Dissenting Shares as determined by the Company, or by
judicial appraisal, as the case may be, in accordance with ORS 60.551 - 60.594.
The Company's obligation assigned and assumed under this Section 2, to pay the
Fair Value of dissenting shares, is exclusive; the Company does not assign, and
Engel does not assume, any other liability or obligation of the Company which
may arise in connection with the effectuation of the Reverse Split or the
exercise of Dissenters' Rights related thereto.
3. EXCHANGE OF PURCHASED SHARES. All shares purchased or deemed pur-
chased by Engel pursuant to Sections 1 and 2 may be aggregated and combined by
Engel, together or with such other shares as Engel may own as of the Record
Date, and be tendered to the Company for exchange for new shares of common stock
in accordance with the terms of the Reverse Split, provided that in the event
more than 90 days has elapsed following the Effective Date, the Company shall
grant Engel such additional time as is reasonably necessary to aggregate and
combine shares acquired or deemed acquired in accordance with Section 2 and to
tender such shares to the Company in exchange for new shares.
<PAGE>
4. INDEMNIFICATION. Except as provided in Sections 1 and 2, the
Company shall indemnify and hold Engel harmless for any liability arising from
this Agreement and the effectuation of the Reverse Split, including, without
limitation, costs and expenses in connection with the exercise of Dissenters'
Rights, notices to shareholders, appraisal expenses, and legal fees.
5. GENERAL PROVISIONS.
a. ASSIGNMENT. This Agreement may not be assigned by either
party without the prior written consent of the other party. Subject to the
foregoing, this Agreement will bind and inure to the benefit of and be
enforceable by the parties hereto, their respective successors and assigns.
b. CAPTIONS. The headings to the various divisions of this
Agreement are for reference purposes only and shall not be construed as
affecting the meaning or interpretation of this Agreement.
c. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon applicable to
contracts made and to be performed in Oregon, without regard to conflicts
of law principles thereunder.
d. FINAL AND COMPLETE EXPRESSION. This Agreement and the
various other documents executed in connection with it constitute the final
and complete expression of the parties with respect to the transactions
contemplated herein and replaces and supersedes any prior agreements,
representations or understandings, whether written or oral. This Agreement
may not be modified, altered, amended or superseded except by an agreement
in writing signed by the party against whom such change is to be enforced.
e. WAIVER. No waiver of any of the terms of this Agreement
shall be effective unless acknowledged in writing by the party granting
such waiver. No waiver of any of the provisions of this Agreement shall be
deemed to be or shall constitute a waiver of any other provision hereof,
whether or not similar, nor shall any such waiver constitute a continuing
waiver.
THE ENCORE GROUP
By:_________________________________ _______________________________________
Bruce L. Engel
_______________________________
<PAGE>
REVOCABLE PROXY
ENCORE GROUP, INC.
SPECIAL MEETING OF SHAREHOLDERS
____________, 1995
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Kenneth L. Wright and Fred J. Kupel, and
each of them, proxies with power of substitution to vote on behalf of the
undersigned all shares of common stock of Encore Group, Inc. (the "Company") at
the Special Meeting of shareholders to be held on ___________________, 1995, and
any adjournments thereof, with all powers the undersigned would possess if
personally present, with respect to the following:
1. ELECTION OF DIRECTORS. [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed below (except to vote for all nominees
as marked to the listed below
contrary below)
(INSTRUCTION: To withhold authority to vote for any individual, strike a line
through the nominee's name below.)
Bruce L. Engel, Teri E. Engel, Robert G. Fligg,
Fred J. Kupel, Kenneth L. Wright
2. AMENDMENT OF RESTATED ARTICLES OF INCORPORATION.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. OTHER MATTERS. At the discretion of the proxy holders on such other
business as may properly come before the meeting and any adjournments thereof.
A majority of the proxy holders present at the Annual Meeting may exercise all
powers granted hereby.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE, BUT IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
AND FOR ALL PROPOSALS LISTED ABOVE. The proxy holders may vote in their
discretion as to other matters which may come before the meeting.
Dated:________________________, 1995 _______________________________________
[Attach Label Here] _______________________________________
PLEASE DATE AND SIGN EXACTLY AS NAME IS
IMPRINTED HEREON, INCLUDING DESIGNATION
AS EXECUTOR, TRUSTEE, ETC., IF APPLICA-
BLE. A CORPORATION MUST SIGN ITS NAME BY
THE PRESIDENT OR OTHER AUTHORIZED OFFI-
CER. ALL CO-OWNERS MUST SIGN.
