As filed with the Securities and Exchange Commission on May 27, 1996
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
American Teletronics Holding, Inc.
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(Exact name of registrant as specified in its charter)
Texas
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(State or other jurisdiction of incorporation or organization)
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(Primary Standard Industrial Classification Code Number)
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(I.R.S. Employer Identification No.)
15400 Knoll Trail, Suite 205, Dallas, Texas 75248 (214) 361-5363
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(Address, including Zip Code, and telephone number, including area code, of
registrant's principal executive offices)
Harry K. Myers, Jr., 15400 Knoll Trail, Suite 205, Dallas, Texas 75248
(214) 361-5363
Name, address, including Zip Code, and telephone number, including area
code, of agent for service)
Approximate date of commencement of proposed sale of the securities to the
public: Approximately 45 days after the effective date.
If the securities bering registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. ____
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
CALCULATION OF REGISTRATION FEE
Title of each | | Proposed | Proposed |
class of | | maximum | maximum | Amount of
securities to | Amount to be | offering price | aggregate | registration
be registered | registered | per unit |offering price | fee
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Common Stock | 53,389,060 | $0.3125 | $16,684,081 | $5,753.13
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Total | 53,389,060 | $0.3125 | $16,684,081 | $5,753.13
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<PAGE>
American Teletronics, Inc.
Cross-Reference Sheet
Showing location in the Prospectus of
Information Required by Items of Form S-4
Form S-4 Item Number and Caption Location In Prospectus
- -------------------------------- -------------------------
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus. . . . . . . . . . . . Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus Inside Front Cover Page
Outside Back Cover Page
3. Risk Factors, Ration of Earnings to Fixed
Charges and Other Information Changes in Rights
of Security
Holders; Federal
Income Tax Consequences
4. Terms of the Transaction. . . . . . . . . . . . The Proposed
Reorganization
5. Proforma Financial Information. . . . . . . . . *
6. Material Contracts of the Company being
Acquired. . . . . . . . . . . . . . . . . . . . . . . Introduction
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to Be Underwriters . . *
8. Interests of Named Experts and Counsel. . . . . Legal Opinion
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities. . . . *
10. Information with Respect to S-3 Registrants. . . *
11. Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . . . . . .*
12 Information with Respect to S-2 or
S-3 registrants. . . . . . . . . . . . . . . . . . . .*
13 Incorporation of Certain Information
by Reference . . . . . . . . . . . . . . . . . . . . .Incorporation of
Information by
Reference
14. Information with Respect to registrants
Other Than S-3 or S-2 Registrants. . . . . . . . . . .Incorporation of
Information by
Reference
15. Information with Respect to S-3 Companies . . . .*
16. Information with Respect to S-2 or
S-3 Companies. . . . . . . . . . . . . . . . . . . . .*
17. Information with Respect to Companies
Other Than S-3 or S-2 Companies. . . . . . . . . . . .Incorporation of
Certain Material by
Reference
18. Information if Proxies, consents or
Authorizations are to be Solicited. . . . . . . . . . Matters to be
Considered at the
Special Meeting;
Rights of
Dissenting
Shareholders;
Directors of the
Holding Company;
Beneficial Ownership of
Corporation Common
Stock
19. Information if Proxies Consents or
Authorizations are not to be Solicited or in
an Exchange Offer . . . . . . . . . . . . . . . . . . *
*Not applicable
Subject to Completion, Dated May 27, 1996
PROXY STATEMENT FOR SPECIAL MEETING OF
SHAREHOLDERS OF AMERICAN TELETRONICS, INC.
TO VOTE
ON PROPOSED REINCORPORATION AND APPROVAL OF
MANAGEMENT AGREEMENT
AMERICAN TELETRONICS, INC.
The Board of Directors 15400 Knoll Trail, Ste. 205
American Teletronics, Inc. Dallas, Texas 75248
Dear Fellow Shareholders:
The Board of Directors is pleased to invite you to the American Teletronics.,
Inc, ("ATI") Special Meeting of Shareholders to be held _________________,
1996 at ____ A.M. ________________________________ Dallas, Texas.
This Special Meeting is being held to seek your approval of the Corporation's
plan to reorganize its corporate structure by establishing a Texas holding
company that will own ATI. In connection with the reorganization, existing
stockholders of ATI will receive one share of Holding Company Common Stock for
each share of ATI Common Stock presently owned. This Special Meeting will
also vote upon a management agreement between the holding company and Messrs.
Harry K. Myers, Jr. and John N. Stogner. Under the proposed reorganization,
which has been approved by your Board of Directors, American Teletronics, Inc.
will become a wholly owned subsidiary of American Teletronics Holding, Inc. a
new holding company incorporated in Texas (the "Holding Company"). If the
reorganization is approved, you will have the same relative ownership interest
in the Holding Company as you presently have in the Corporation; and the stock
certificates you presently hold will automatically represent shares of Common
Stock of the Holding Company, except with respect to those holders of shares
who exercise dissenters' rights.
After the reorganization, ATI will continue to be incorporated in Colorado.
Your Board of Directors strongly believes that your investment in the
Corporation will best be served by the planned reorganization. Among other
things, by establishing a Texas incorporated holding company, we will have
greater flexibility in such areas as financing and in formulating our
acquisition strategies as well as the ability to attract and keep directors.
The reorganization is consistent with other actions we have taken in the
recent past in terms of restructuring our company to enhance its value to
shareholders. As you know, ATI acquired operating assets in December of 1994
and January of 1995 from an entity headquartered in Dallas, Texas. The
Company's Board of Directors believes that its operations will be enhanced,
particularly with a more flexible corporate structure, and that incorporating
in Texas will enable the Holding Company to attract and retain competent
executives and directors, particularly as the enterprise expands. As a result
of these actions, we believe that the Corporation is in a better position to
generate a consistently strong performance over the long term and increased
following in the stock market. The Board of Directors is already beginning to
see positive results from our efforts. The proposal you are being asked to
approve will enable us to continue to maximize value for our shareholders and
to protect your investment.
The reorganization will, among other things, result in greater protection for
directors. We urge you to read the attached Proxy Statement carefully, which
explains the proposal and sets forth, beginning on page __, the reasons why
your Board of Directors believes approval of the reorganization is in the best
interests of the Corporation and its shareholders.
Messrs. Myers and Stogner have greatly benefited the Company. Messrs. Myers
and Stogner have led in identifying and completing the principal acquisition
that resulted in operating assets being acquired by the Company and have
successfully managed those assets. The management agreement is not effective
until ratified by the shareholders of the Company. Messrs. Myers and Stogner
have abstained from voting in meetings of the Board of Directors on motions
recommending ratification of the management agreement.
The Board recommends a vote "FOR" the proposal to reorganize ATI and also
recommends a vote "FOR" the proposed contract between the Holding Company and
Messrs. Myers and Stogner.
To adopt the holding company structure and to ratify the agreement between
the Holding Company and Messrs. Myers and Stogner, the proposals must be
approved by the holders of a majority of the outstanding shares. Accordingly,
your vote is very important. To ensure that your shares are represented, I
urge you to vote, date, sign and mail the enclosed white proxy in the envelope
provided, whether or not you expect to be present at the Special Meeting.
We have enclosed a copy of ATI's Form 10-K for the year ended December 31,
1995, which ATI used as its annual report to security holders for the 1995.
If, after reading the attached Proxy Statement, you have any questions
regarding the reorganization, please call any of the numbers set forth in the
Introduction to the Proxy Statement which the Corporation has established for
this purpose.
The Board of Directors of American Teletronics, Inc.
Harry K. Myers, Jr. Dal McKinney
John N. Stogner D. D. Luckie
Ronald H. Cheldelin
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of Shareholders of American Teletronics, Inc. will be held
on _________________, ________________ _, 1996 at ____ A.M., ______________,
Dallas, Texas, for the purpose of considering and acting upon the following
matter, as described in the accompanying Proxy Statement/Prospectus, and such
other matters as may properly come before the Special Meeting or any
adjournment thereof:
To adopt and approve an Agreement of Reorganization, dated as of
____________________ __, 1996, by and among the Corporation and American
Teletronics, Inc. a Texas corporation (the "Holding Company") pursuant to
which the Corporation would become a wholly-owned subsidiary of the
Holding Company; the holders of Common Stock of the Corporation would
become shareholders of the Holding Company, with each share of Common
Stock of the Corporation becoming one share of Holding Company Common
Stock; and the internal affairs of the Holding Company would be governed
by a new Certificate of Incorporation and By-Laws and by Texas law which
differ in certain respects from the Amended and Restated Articles of
Incorporation and By-Laws of the Corporation and from Colorado law which
currently govern the internal affairs of the Corporation. Shareholders
may be entitled to assert dissenters' rights under Article XIII of the
Colorado Business Corporation Act.
To adopt and approve a Management Agreement between the Holding Company
and Messrs. Myers and Stogner.
Shareholders of record at the close of business on ______________________ __,
1996, have the right to receive notice of and to vote at the Special Meeting
and any adjournment thereof.
By order of the Board of Directors.
Secretary
Dallas, Texas
______________ __, 1996
<PAGE>
AMERICAN TELETRONICS, INC.
15400 Knoll Trail, Suite 205
Dallas, Texas 75248
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PROXY STATEMENT/PROSPECTUS
---------------------------------------
INTRODUCTION
This Proxy Statement/Prospectus is being mailed or otherwise furnished to
shareholders on or about _____________________ __, 1996 in connection with the
solicitation by the Board of Directors of American Teletronics, Inc, a
Colorado Corporation (the "Corporation"), of proxies to be voted at a Special
Meeting of Shareholders of the Corporation, to be held
________________________ Dallas, Texas at ____ A.M. on ______,
_________________________ __, 1996 and at any adjournment thereof (the
"Special Meeting").
American Teletronics Holding, Inc. a Texas corporation (the "Holding
Company"), has filed a Registration Statement with the Securities and Exchange
Commission (the "Commission") covering ________ shares of Common stock, par
value $0.01 per share, of the Holding Company ("Holding Company Common
Stock"). This registration statement covers the shares that may be issued in
connection with the reorganization. This Proxy Statement also constitutes a
Prospectus of the Holding Company and was filed as a part of such Registration
Statement. The address of the Corporation and the Holding Company is 15400
Knoll Trail, Suite 205, Dallas, Texas 75248, and the telephone number for each
is (214) 361-5363.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, the Corporation's shareholders will consider and vote
upon the adoption and approval of the Agreement of Reorganization, dated as of
____________ __, 1996 (the "Agreement of Reorganization"), a copy of which is
attached as Annex A to this Proxy Statement/Prospectus, pursuant to which the
Corporation would become a wholly-owned subsidiary of the Holding Company
through a transaction in which holders of Common Stock, no par value of the
Corporation ("Corporation Common Stock") would become shareholders of the
Holding Company, with each one share of Corporation Common Stock becoming one
share of Holding Company Common Stock. The internal affairs of the Holding
Company would be governed by a new Certificate of Incorporation and By-Laws
and by Texas law. These differ in certain respects from the Amended and
Restated Articles of Incorporation and By-Laws of the Corporation and from
Colorado law which currently govern the internal affairs of the Corporation.
See "The Proposed Reorganization-Changes in the Rights of Shareholders".
At a meeting on ____________ __, 1996, the __ members of the Board of
Directors of the Corporation present at such meeting unanimously approved the
Agreement of Reorganization and recommended that the shareholders of the
Corporation vote in favor of its adoption and approval at the Special Meeting.
At the Special Meeting, the Corporation's shareholders will consider and vote
upon the adoption and approval of the Management Agreement, dated as of
____________ __, 1996 (the "Management Agreement") a copy of which is attached
as Annex __ to this Proxy Statement/Prospectus, pursuant to which the
Corporation will enter into a management agreement with Messrs. Myers and
Stogner. See "Proposed Ratification of Management Agreement."
At a meeting on ____________ __, 1996, the __ members of the Board of
Directors of the Corporation present at such meeting unanimously approved the
Management Agreement and recommended that the shareholders of the Corporation
vote in favor of its adoption and approval at the Special Meeting.
THE SHARES OF COMMON STOCK OF AMERICAN TELETRONICS HOLDING, INC. OFFERED
PURSUANT TO THE AGREEMENT OF REORGANIZATION HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS, ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_____________________________________________________________________
The date of this Proxy Statement/Prospectus is _______________ __, 1996
<PAGE>
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the following Regional Offices of the Commission: New York Regional Office,
Room 1100, Federal Building, 26 Federal Plaza, new York, new York 10007; Los
Angeles Regional Office, Suite 1710, Tishman Building, 10960 Wilshire
Boulevard, Los Angeles, California 90024; and Chicago Regional Office, Room
1228, Everett McKinley Dirksen Building, 219 South Dearborn Street, Chicago,
Illinois 60604. Copies of such material can also be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Securities of the Corporation are listed on the
New York and Midwest Stock Exchanges. Such reports, proxy statements and
other information can also be inspected at the respective offices of these
Exchanges at 20 Broad Street, New York, New York 10005, and at 120 South
LaSalle Street, Chicago, Illinois 60603. It is expected that the Holding
Company will be subject to the same informational requirements following the
Reorganization. This Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement and exhibits thereto which
the Holding Company has filed with the Commission under the Securities Act of
1933 and to which reference is hereby made.
Incorporation of Information by Reference
The Corporations annual report on Form 10-K for the year ended December 31,
1995 is hereby incorporated by reference.
___________________________
TABLE OF CONTENTS
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Matters to be Considered at the Special Meeting. . . . . . . . . . . . 1
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . 2
Proxy Statement/Prospectus Summary . . . . . . . . . . . . . . . . . . 4
The Proposed Reorganization. . . . . . . . . . . . . . . . . . . . . . 7
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Summary Description of the Reorganization . . . . . . . . . . . . 7
Principal Reasons for and Effects of the Reorganization . . . . . 8
Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Management after the Reorganization . . . . . . . . . . . . . . . 8
Capitalization of the Holding Company; Stock Certificates . . . . 9
Holding Company Common Stock to be Issued in the Reorganization . 9
The Preferred Stock of the Holding Company. . . . . . . . . . . . 9
Corporation Employee Benefit Plans. . . . . . . . . . . . . . . .10
Indebtedness of the Corporation . . . . . . . . . . . . . . . . .10
Trading of Holding Company Common Stock . . . . . . . . . . . . .10
Amendments, Deferral or Termination of the Agreement
of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Changes in the Rights of Shareholders . . . . . . . . . . . . . .10
Rights of Dissenting Shareholders . . . . . . . . . . . . . . . .12
Federal Income Tax Consequences . . . . . . . . . . . . . . . . .14
Adoption and Approval of the Agreement of Reorganization. . . . .14
Ratification of Management Agreement . . . . . . . . . . . . . . . . .15
Directors of the Holding Company . . . . . . . . . . . . . . . . . . .16
Certain Relationships and Related Transactions. . . . . . . . . .18
Committees of the Board. . . . . . . . . . . . . . . . . . . . . . . .19
Beneficial Ownership of Corporation Common Stock . . . . . . . . . . .19
Directors and Officers. . . . . . . . . . . . . . . . . . . . . .21
Remuneration of Directors and Officers . . . . . . . . . . . . . . . .21
Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Proxy Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . .21
Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
<PAGE>
PROXY STATEMENT/PROSPECTUS SUMMARY
The following Summary is qualified in its entirety by the detailed
information appearing elsewhere in this Proxy Statement/Prospectus and Annexes
hereto.
The Corporation is a Colorado corporation that changed its name from Laz
Financial Corporation in 1994. The Corporation was originally formed in 1979
for the purpose of acquiring oil and gas properties. The Corporation became
insolvent and emerged from protection under Chapter 11 of the United States
Bankruptcy Code in November of 1990. The Company had negligible operations
until December of 1994 and January of 1995 when it acquired an employee
leasing company, a mortgage loan origination, processing and brokering,
company.
The employee leasing business consists of contracts to which the Corporation
and a client company agree that the Corporation will become the employer of
record for the client company's employees. As the employer of record, the
Corporation assumes all payroll obligations and certain employee benefits
administration for the client such as payroll preparation, payment of payroll
taxes, maintaining employee health insurance and related benefits (for
example, life insurance programs and pension plans) and workers' compensation
reporting, while allowing the client to retain management control of the
employees, including supervision, terminating of employment and hiring, job
description and salary determinations. The Corporation also provides safety
and risk management services to the client company.
The Corporation's mortgage operations consist of originating conventional
mortgage loans as well as mortgage loans insured by FHA and VA. Conventional
mortgage loans, that is mortgage loans not insured by the FHA or VA are
structured to qualify for Fannie Mae or Freddie Mac sale. The Corporation is
not qualified as a mortgage servicer under a number of Federal programs.
Shares Entitled to Vote
Shareholders of record at the close of business on _________ __, 1996
(the "Record Date") are entitled to notice of and to vote at the Special
Meeting and any adjournment thereof.
Description of the Reorganization
American Teletronics Holding, Inc., a Texas corporation (the "Holding
Company"), has been organized to become the parent of American
Teletronics, Inc., a Colorado corporation (the "Corporation"). In the
proposed reorganization, the Common Stock no par value of the Corporation
("Corporation Common Stock") will be exchanged on a one for one basis
into Common stock, par value $0.01 per share, of the Holding Company
("Holding Company Common Stock"). Consequently, the shareholders of the
Corporation will become shareholders of the Holding Company, which in
turn will own all of the outstanding shares of Corporation Common Stock
(the "Reorganization").
It will not be necessary for holders of Corporation Common Stock to
exchange their existing stock certificates for stock certificates
representing Holding Company Common stock. Stock certificates previously
representing Corporation Common Stock will automatically represent shares
of Holding Company Common Stock upon consummation of the Reorganization.
The Holding Company is making arrangements for the stock to be listed on
the Bulletin Board of NASDAQ. The Company plans to pursue listing the
Holding Company Common Stock on the NASDAQ Small Cap market as soon as
all requirements are met.
The Reorganization will be effected on __________ __, 1996 or as soon
thereafter as practicable, subject to the right of the Corporation to
abandon the Reorganization or defer its effectiveness should the Board of
Directors or, in the case of deferral, an authorized officer deem such
action to be in the best interests of the Corporation and its
Shareholders.
The Board of Directors of the Corporation recommends a vote FOR the adoption
and approval of the Reorganization.
Principal Reasons for and Effects of the Reorganization
The Board of Directors of the Corporation believes that the formation of
a new holding company structure will provide organizational flexibility.
The Texas Business Corporation Act, which will govern the internal
affairs of the Holding Company, provides a comprehensive and flexible
body of corporate law suited for publicly-held corporations, with a body
of corporate legal decisions that is more protective of directors than
exists in other states.
Changes in the Rights of Shareholders
Differences between the corporation laws of Texas and Colorado and the
charter documents of the Corporation and the Holding Company will result
in several changes in the rights of stockholders.
Vote Required
The affirmative vote of the holders of a majority of the outstanding
shares of Corporation Common Stock is required to adopt and approve the
Reorganization. At the Record Date, there were __________ shares of
Corporation Common Stock issued and outstanding.
Federal Income Tax Consequences
The Reorganization is conditioned upon receipt of an opinion of counsel
to the effect that, for federal income tax purposed, the Reorganization
will be tax free to the Corporation, shareholders of the Corporation and
the Holding Company; that the basis of Holding Company Common Stock
received by a shareholder in the Reorganization will be the same as the
basis of Corporation Common Stock held by such shareholder prior to the
Reorganization; and that, for a shareholder whose Corporation Common
Stock is a capital asset, the holding period of Holding Company Common
Stock received by such shareholder will be the same as the holding period
of the Corporation Common Stock held by such shareholder prior to the
Reorganization.
Management after the Reorganization
Those persons who currently serve as directors of the Corporation will
serve as the directors of the Holding Company until the first annual
meeting of the Holding Company shareholders, which is presently
contemplated to be held in May or June, 1996.
Capitalization of the Holding Company
The Holding Company has a capital structure which is the same as the
Corporation's consisting of 100,000,000 shares of Common Stock and
50,000,000 shares of Preferred Stock. For further information with
respect to the shares of capital stock, see "Holding Company Common
Stock" and "The Preferred Stock of the Holding Company".
Rights of Dissenting Shareholders
The Agreement of Reorganization provides that a shareholder of the
Corporation who objects to the Agreement of Reorganization may demand
that the Corporation pay to him the fair value of his shares of
Corporation Common Stock. To effectively make such demand, such a
shareholder must (i) deliver a written objection to the Agreement of
Reorganization to the Corporation before the taking of the vote with
respect to the Agreement of Reorganization, (ii) not vote in favor of
adoption and approval of the Agreement of Reorganization, (iii) within
ten days after the date on which the vote adopting and approving the
Agreement of Reorganization is taken, the Corporation shall give notice
to those that have indicated an intent to dissent prior to the vote
together with the completed form to be submitted to the Corporation
demanding payment of the fair value of the shares and (iv) within the
time specified in the notice to dissenting shareholders, submit the
certificate or certificates representing such shares to the Corporation
with the completed form demanding payment. Upon making the written
demand as provide above, a dissenting shareholder will not be entitled to
vote or to exercise any other rights of a shareholder,
including the right to receive dividends. Once made, a written demand
may not be withdrawn without the consent of the Corporation. If the
Corporation and the dissenting shareholder do not agree on the fair value
of the shares, such fair value will be determined in court proceedings.
A shareholder may not dissent as to some but less than all of the shares
beneficially owned by him.
Description of Management Agreement
The Management Agreement grants Messrs. Myers and Stogner full authority
normally and customarily granted to the Chairman of the Board and the
President of a company. The Management Agreement requires that each of
Messrs. Myers and Stogner devote at least 50% of their time for the
benefit of the Corporation. They will be compensated an aggregate of 20%
of the pretax profits of Crest Outsourcing, Inc., a Nevada corporation
that is a wholly owned subsidiary of the Corporation's which conducts all
of the Corporation's staff leasing services. The Management Agreement is
for a term of five years commencing December 31, 1994, and may be renewed
annually thereafter with the consent of the parties thereto.
VOTING AND PROXIES
Only shareholders of record at the close of business on ___________ __, 1996
(the "Record Date") have the right to receive notice of and to vote at the
Special Meeting and any adjournment thereof. As of that date,
_________________ shares of Corporation Common Stock were issued and
outstanding. Each shareholder of record is entitled to one vote for each
share held.
If a proxy in the enclosed form is duly executed and returned, the shares of
Corporation Common Stock represented thereby will be voted in accordance with
the specification made by the shareholder. If no such specification is made,
proxies will be voted for adoption and approval of the Agreement of
Reorganization and for ratification of the Management Agreement, and will be
voted in the discretion of management on such other business as may properly
come before the Special Meeting or any adjournment thereof. Proxies are
revocable until exercised, but under Colorado law revocation is not effective
until notice thereof has been given to the Secretary of the Corporation. A
subsequently dated proxy, when filed with the Secretary of the Corporation,
will constitute revocation.
The affirmative vote of the holders of a majority of the outstanding shares
of Corporation Common Stock is necessary to adopt and approve the Agreement of
Reorganization and the ratification of the Management Agreement.
Information with respect to the beneficial ownership of Corporation Common
Stock by directors and officers of the Corporation and by certain other
persons is set forth herein under the caption "Beneficial Ownership of
Corporation Common Stock."
At a meeting on ______________ __, 1996, the _____ members of the Board of
Directors of the Corporation present at such meeting unanimously approved the
Agreement of Reorganization and ratification of the Management Agreement and
recommended that the shareholders of the Corporation vote in favor of its
adoption and approval at the Special Meeting. Messrs. Myers and Stogner
abstained from voting on the Management Agreement.
THE PROPOSED REORGANIZATION
Introduction
If the Agreement of Reorganization is approved by shareholders, the
Corporation, a Colorado corporation, will become a wholly-owned subsidiary of
the Holding Company, a Texas corporation; each present shareholder of the
Corporation will automatically become a shareholder of the Holding Company;
and, as a result thereof, the Holding Company, instead of the Corporation,
will be a publicly-held company (the "Reorganization"). The daily business
operations of the Corporation will continue to be conducted as at present,
with its principal executive offices at the same location in Dallas, Texas.
The consolidated financial condition and results of operations of the Holding
Company immediately after consummation of the Reorganization will be
substantially identical to those of the Corporation immediately prior to the
consummation of the Reorganization.
Adoption and approval of the Agreement of Reorganization will affect certain
rights of shareholders. Accordingly, shareholders are urged to read carefully
the following sections of the Proxy Statement/Prospectus and the Annexes
hereto before voting.
Summary Description of the Reorganization
To accomplish the Reorganization, the Board of Directors of the Corporation
has approved an Agreement of Reorganization, dated as of __________ __, 1996
(referred to herein as the "Agreement of Reorganization"), by and among the
Corporation and the Holding Company.
If the Agreement of Reorganization is adopted and approved at the Special
Meeting, it will be implemented as follows:
1. One share of the Corporation's Common Stock will be exchanged for one
share of the Holding Company's Common Stock. As a result of the
reorganization, the Corporation will become a subsidiary of the Holding
Company.
2. All issued and outstanding shares of Corporation Common Stock
(excluding shares the holders of which duly exercise dissenters' rights under
Colorado law) will be converted automatically into and become shares of
Holding Company Common Stock at the Effective Time of the reorganization (as
hereinafter defined). IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE
CORPORATION TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK
CERTIFICATES OF THE HOLDING COMPANY. Shares of Corporation Common Stock held
in treasury will be cancelled in the reorganization.
3. At the Effective Time, the Holding Company plans to have its Common
Stock quoted on NASDAQ's Bulletin Board and plans to apply for listing on the
NASDAQ Small Cap Exchange.
4. Each right to purchase one share of Corporation Common Stock
outstanding immediately prior to the Effective Time pursuant to the
Corporation's stock option and other employee benefit plans will be converted
into the right to purchase a share of Holding Company Common Stock upon the
same terms and conditions as existed immediately prior to the Effective Time.
If the shareholders adopt and approve the Agreement of Reorganization, the
Reorganization will be consummated on ___________, 1996, or as soon as
practicable thereafter. The Reorganization may be deferred for a reasonable
time or abandoned, notwithstanding a favorable shareholder vote, if in the
opinion of the Board of Directors or, in the case of deferral, of an
authorized officer of the Corporation, such action would be in the best
interests of the Corporation and its shareholders. See "Amendments, Deferral
or Termination of the Agreement of Reorganization." The Agreement of
Reorganization describe the Reorganization in detail and is attached as Annex
A to this Proxy Statement/Prospectus. Statements made in this Proxy
Statement/Prospectus are qualified by and made subject to the more complete
information set forth in the Agreement of Reorganization.
At the Effective Time, shareholders of the Corporation will become
shareholders of the Holding Company, which is governed by Texas law, by a
different charter and by different by-laws than are presently in effect for
the Corporation, thereby resulting in changes in the rights of shareholders of
the Corporation. The significant changes will include, among others,
eliminating cumulative voting in the election of directors, eliminating the
right of shareholders to call special shareholders; meetings and limiting the
availability of appraisal rights. For additional information and details
relating to these and other changes in the rights of shareholders as a result
of the Reorganization, see "Principal Reasons for and Effects of the
Reorganization" and
"Changes in the Rights of Shareholders".
Shareholders who dissent from the Reorganization will have dissenters'
rights, provided certain procedures are followed. See " Rights of Dissenting
Shareholders".
Principal Reasons for and Effects of the Reorganization
A holding company structure has been adopted by a number of large industrial
and financial corporations. This type of corporate structure broadens the
range of options for the Corporation in financing future operations. In
addition, it may facilitate acquisitions, especially should the Holding
Company decide at some future date to establish operations in any regulated
industries. The holding company structure could facilitate segmenting present
and future businesses, the management of which might better be accomplished in
a separate management structure. The Corporation will explore these
possibilities if the Reorganization is effected. There are no plans,
agreements or understanding with respect to the issuance of any shares of
Holding Company stock other than in the Reorganization and pursuant to the
Corporation's existing stock option and other employee benefit plans.
Management and your Board of Directors chose Texas as the state of
incorporation for the Holding Company for several reasons. For many years
Texas has followed a policy of encouraging incorporation in that state, and in
furtherance of that policy, has adopted comprehensive, modern and flexible
corporate laws which are periodically updated and revised to meet changing
business needs, particularly as those needs relate to the formation of
business and capital. The Texas courts have developed considerable expertise
in dealing with corporate issues, and a substantial body of case law has
developed construing Texas law and establishing public policies with respect
to Texas corporations, thereby providing predictability with respect to
corporate legal affairs. In addition, Texas has developed policies that
protect directors and officers in making decisions about the Corporation's
business. Management of the Company believes that these policies represent a
return to more traditional corporate law and reduce the distractions of
litigation much of which, in management's opinion, is arbitrary and a
distraction to corporate purposes.
Certain provisions in the Corporation's Articles, which will be continued in
the Holding Company's Certificate of Incorporation, authorize 50,000,000
shares of preferred stock and permit the Board to establish the rights of, and
to issue, such stock, without the need for shareholder approval.
Effective Time
The Reorganization shall be effective (the "Effective Time") upon approval
of the Agreement of Reorganization by the shareholders of the Corporation,
subject to the terms and conditions of the Agreement of Reorganization. See
"Amendments, Deferral or Termination of the Reorganization".
Management after the Reorganization
At the Effective Time, the Board of Directors of the Holding Company will be
comprised of the persons currently holding office as directors of the
Corporation, who will hold office until the first annual meeting of the
Holding Company shareholders, which it is presently contemplated will be held
in May or June, 1996. Such persons are set forth in the table under the
caption "Directors of the Holding Company".
The persons who currently are serving as executive officers of the
Corporation will serve as executive officers of the Holding Company after the
Effective Time.
Capitalization of the Holding Company; Stock Certificates
The Holding Company has a capital structure the same as the Corporation's
consisting of 100,000,000 shares of Common Stock, par value 0.01 per share and
50,000,000 shares of preferred stock, par value $2.50 per share. For further
information with respect to the share of capital stock, see "Holding Company
Common Stock to be Issued in the Reorganization" and "The Preferred Stock of
the Holding Company".
IT WILL NOT BE NECESSARY FOR HOLDERS OF CORPORATION COMMON STOCK TO SURRENDER
THEIR CERTIFICATES FOR NEW CERTIFICATES REPRESENTING HOLDING COMPANY COMMON
STOCK.
After the Effective Time, certificates which previously represented shares
of Corporation Common Stock will be deemed to represent an equal number of
shares of Holding Company Common Stock will be replaced by certificates
representing Holding Company Common Stock only when submitted to the Transfer
Agent with a request that they be so replaced or when they are presented for
transfer.
Holding Company Common Stock to be Issued in the Reorganization
Corporation Common Stock will be converted in the Reorganization, without any
action on the part of the holder thereof, on a one for one share basis into
Holding Company Common Stock. Holding Company Common Stock, like Corporation
Common Stock, will not have preemptive or conversion rights and will not be
subject to assessment or call. All shares of Holding Company Common Stock to
be issued in the Reorganization will be fully paid and nonassessable. As
holders of common stock in a Texas corporation, the Holding Company
shareholders will have the rights provided by the Texas Business Corporation
Act. See "Changes in the Rights of Shareholders". Holders of Holding Company
Common Stock will be entitled to one vote for each share held and will be
entitled to receive such dividends as may be declared by the Board of
Directors of the Holding Company.
Of course, the amount and timing of dividends paid by the Holding Company will
depend upon its earnings, business outlook and financial condition as well as
other factors not presently determinable. For further information with
respect to dividends, see "Market Prices of and Dividends on Corporation
Common Stock".
In the event of dissolution, liquidation or winding up of the Holding
Company, holders of Holding Company Common Stock will be entitled to share
ratably in all assets of the Holding Company available for distribution to
holders of Holding Company Common Stock.
General Stock Transfer Company (which is the transfer agent for Corporation
Common Stock) will act as transfer agents for Holding Company Common Stock.
The Preferred Stock of the Holding Company
Although no Holding Company Preferred Stock will be issued in connection with
the Reorganization, the Certificate of Incorporation of the Holding Company
authorizes its Board to issue the same number of shares of Preferred Stock as
are authorized to be issued under the Corporation's Articles. If issued, the
Preferred Stock of the Holding Company will be issuable in series by action of
the Board of Directors of the Holding Company, which may fix the voting
powers, designations, preferences and relative, participating, optional, or
other special rights, and qualifications, limitations or restrictions thereof
in substantially the manner as currently provided with respect to Preferred
Stock of the Corporation.
Corporation Employee Benefit Plans
Except as set forth below, the Corporation's pension plans and all other
employee benefit plans will not be changed by the Reorganization, although
such plans may be expanded to include employees of the Holding Company and
some or all of its other subsidiaries. The options and rights to acquire
Corporation Common Stock under the Corporation's Incentive Stock Option Plan
and Outside Directors Stock Option Plan will be converted into options or
rights to purchase the same number of shares of Holding Company Common Stock
on the same terms and conditions as in effect immediately prior to the
Reorganization, and future options and rights granted under such Plans will be
for shares of Holding Company Common stock. Each share of Corporation Common
Stock currently held under the Corporation's Incentive Stock Option Plan and
Outside Director Stock Option Plan will be converted into one share of Holding
Company Common Stock, and thereafter all purchases and sales for such Plans
will be of Holding Company Common Stock. All shares of Holding Company Common
Stock required in the future for purposes of the foregoing Plans will be
acquired by the Corporation either on the market or directly from the Holding
Company and the Holding Company will assume the obligation to provide such
shares. Adoption and approval of the Agreement of Reorganization will
constitute approval of such assumption by the Holding Company.
Indebtedness of the Corporation
All indebtedness of the Corporation outstanding immediately prior to the
Effective Time will remain the indebtedness of the Corporation is not being
assumed or guaranteed by the Holding Company in connection with the
Reorganization.
Trading of Holding Company Common Stock
At the Effective Time, all Corporation Common Stock will be converted by
operation of law (and without the necessity of the physical exchange of
certificates) into Holding Company Common Stock. The Holding Company will
arrange for trading to continue in the Holding Company Stock or it is
conducted presently. It is anticipated that a holder of shares of Holding
Company Common Stock will be able to trade such shares in the same manner in
which shares of Corporation Common Stock are traded. It is a condition of the
Reorganization that Holding Company Common Stock to be issued in the
Reorganization to have trading on the NASDAQ Bulletin Board.
Amendments, Deferral or Termination of the Agreement of Reorganization
The Agreement of Reorganization provides that the Boards of Directors of the
Corporation and the Holding Company may amend, modify or supplement the
Agreement of Reorganization, before or after approval by the shareholders of
the Corporation; provided, however, that no such amendment, modification or
supplement may be made which is not approved by such shareholders if, in the
judgment of the Corporation's Board of Directors, it would have a materially
adverse effect upon the rights of such shareholders.
The Agreement of Reorganization also provides that the Corporation may
terminate and abandon the Reorganization or defer its consummation for a
reasonable period, notwithstanding shareholder approval, if in the opinion of
the Board of Directors or, in the case of deferral, of an authorized officer,
such action would be in the best interests of the Corporation and its
shareholders. The Board, in making such determination, will consider, among
other things, the number of shares with respect to which dissenters; rights
have been asserted.
Changes in the Rights of Shareholders
Upon consummation of the Reorganization, the shareholders of the Corporation,
a Colorado corporation, will become shareholders of the Holding Company, a
Texas corporation. The Corporation will remain a Colorado corporation and
become a wholly-owned subsidiary of the Holding Company.
Differences between the corporation laws of Texas and Colorado and the
charter documents of the Corporation and the Holding Company will result in
several changes in the rights of shareholders. It is not practical to
summarize all such changes here. Reference is made to the Amended and
Restated Articles of Incorporation of the Corporation attached to this Proxy
Statement/Prospectus as Annex B, and the Certificate of Incorporation of the
Holding Company attached to this Proxy Statement/Prospectus as Annex C. All
summaries of said Annexes contained herein are qualified in their entirety by
reference to the full text thereof. The Holding Company has also filed a copy
of its By-Laws and the By-Laws of the Corporation as exhibits to the
Registration Statement. For further information as to where these and other
exhibits to the Registration Statement may be obtained, see "Available
Information". The significant changes resulting from the Reorganization are
as follows:
1. Director Liability. Directors of a Texas corporation are protected from
liability for decisions made by them when exercising their business judgment.
Generally the business judgment rule in Texas has been stated to mean that a
disinterested director will not be liable for an action taken as a director
unless the action is tainted by fraud or is ultra vires, that is, the action
was illegal or otherwise beyond the power of the corporation to act. There is
some precedent that grossly negligent acts of a director would make a director
so acting liable for the act. However, gross negligence is an act taken with
a total or entire want of care. This standard is believed by management to
protect directors of Texas corporations more than directors of corporations
organized under laws of other states, including Colorado. In other
jurisdictions a director is sometimes required, particularly in take over
situations, to inform himself of all material information reasonably available
to the director under the circumstances.
2. Appraisal Rights. Colorado law also grants appraisal rights to
shareholders in the case of a merger or a sale or transfer by a corporation of
all or substantially all of its assets, except that, unless the corporation's
board of directors provides otherwise, the holders of shares listed on the
NYSE or held of record by more than 2,500 shareholders do not have appraisal
rights in a transaction in which such shares are converted into the stock of
any corporation. Also, listed shares of a preferred or special class have
appraisal rights unless such class is given a class vote on the plan. In
addition, Colorado law grants appraisal rights to shareholders of an acquiring
corporation where such corporation acquires substantially all the property of
another corporation and the number of shares to be issued in such acquisition
is sufficient to elect a majority of the directors of the acquiring
corporation.
Texas law grants appraisal rights only in the case of a merger and not in the
case of a sale or transfer of assets or a purchase of assets for stock,
regardless of the number of shares of stock being issued. Even in a merger,
however, Texas law denies such rights to holders of shares listed on a
national securities exchange or held of record by more than 2,000
shareholders, unless the plan of merger converts such shares into anything
other than stock of the surviving corporation or stock of another corporation
which is either listed on a national securities exchange or held of record by
more than 2,000 shareholders.
The availability of appraisal rights to shareholders of the Corporation who
dissent from the Reorganization is discussed under "Rights of Dissenting
Shareholders" below.
3. Dividends. Under Colorado law no dividend can be paid which would reduce
the remaining net assets below the aggregate liquidation preferences of
preferred stock. However, dividends can be paid if there is a fair valuation
that is reasonable under the circumstances that would modify otherwise
historical accounting values. Texas law permits dividends without shareholder
consent out of any surplus, as defined.
4. Shareholder Consent to Action Without Meeting. Colorado law provides
that any action by the shareholders without a meeting may be taken only with
the written consent of all shareholders who would be entitled to vote at a
meeting held for such purpose unless the articles of incorporation permit a
lower vote. The Certificate of Incorporation of the Holding Company contains a
provision permitting any action that could be taken at an annual or special
meeting of shareholders could be taken without prior notice and without a vote
if a consent
in writing setting forth the action so taken is signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
5. Charter Amendments. Under Colorado law amendments to the articles of
incorporation may be proposed by either the board of directors or by
shareholders entitled to cast at least ten per cent of the votes which all
shareholders are entitled to cast thereon. Under Texas law amendments may
only be proposed by the board of directors.
6. Mergers Without Shareholder Approval. Under Texas law no vote of
shareholders of a corporation surviving a merger is required ( and no
appraisal rights are available to such shareholders) if the number of shares
of common stock of such corporation to be issued or issuable in the merger
does not exceed 20% of the number of such shares outstanding immediately prior
to the effective date and if certain other conditions are met. The comparable
Colorado provision is applicable only if the number of common shares issued or
issuable does not exceed 15% of the number previously outstanding.
7. Asset Purchases. Texas law requires no shareholder approval for an
acquisition of assets for voting stock, regardless of the number of shares to
be
issued. Colorado law provides that where a corporation acquires substantially
all of the property of another corporation and the number of shares to be
issued
in such acquisition is sufficient to elect a majority of the directors of the
acquiring corporation, the transaction must be approved by a majority vote of
shareholders of the acquiring corporation.
Rights of Dissenting Shareholders
The Agreement of Reorganization and the resolution of the Board of Directors
of the Corporation submitting the Agreement of Reorganization to a shareholder
vote provide that a registered owner of Corporation Common stock has the
rights
of a dissenting shareholder under Article XIII of the Colorado Business
Corporation Act to object to the Agreement of Reorganization and demand in
writing that the Corporation pay in cash the fair value of his shares. The
following summary does not purport to be a complete statement of the
provisions
of Article XIII and is qualified in its entirety by reference to said sections
which are set forth in full as Annex D to this Proxy Statement/Prospectus.
Article XIII provides that any shareholder who desires to object to, or to
dissent from, a proposed plan such as the Agreement of Reorganization (a
"Dissenting Shareholder") shall be limited to the rights and remedies
prescribed in Article XIII and that the rights and remedies prescribed by
Article XIII shall be exclusive, unless the action is unlawful or fraudulent
with respect to the Corporation or shareholder. A person who is a beneficial
owner, but not a registered owner, of Corporation Common stock and who desires
to exercise rights of a Dissenting Shareholder cannot do so in his own name
but must cause the registered owner thereof to take all required action.
Section 101 of the Colorado Business Corporation Act defines "shareholder", as
a "record shareholder or beneficial shareholder". The same section defines a
"record shareholder", in relevant part, as "the person in whose name shares
are registered in the records of a corporation", and a "beneficial
shareholder" as "the beneficial owner of shares held in a voting trust or by a
nominee as a record holder".
In the event a registered owner of Corporation Common stock elects to
exercise his right to dissent, he must satisfy all the following conditions to
perfect his rights as a Dissenting Shareholder:
(1) He must, before commencement of voting upon an adoption and approval of
the Agreement of Reorganization at the Special Meeting, file a written
objection to the Agreement of Reorganization with the Corporation. Such a
written objection must be made in addition to, and separate from, any proxy or
vote against adoption and approval of the Agreement of Reorganization; neither
a proxy nor a vote against, nor a failure to vote for, nor abstaining from
voting on, adoption and approval of the Agreement of Reorganization shall
constitute such a written objection.
(2) He must not vote by proxy or in person in favor of adoption and approval
of the Agreement of Reorganization. A shareholder who executes and returns an
unmarked proxy will have his shares of Corporation Common stock voted in favor
of adoption and approval of the Agreement of Reorganization and as a
consequence thereof will be foreclosed from exercising rights as a Dissenting
Shareholder.
(3) Within ten days of the effective date of the Agreement of
Reorganization, the Corporation shall give a written notice to all
shareholders who are entitled to demand payment for their shares. The notice
shall state that the acts contemplated in the Agreement of Reorganization were
effected and state the effective date; state the address at which the
Corporation will receive payment demands and the address of a place where
certificates cannot be deposited; provide a form for demanding payment, which
form shall request a dissenter to state an address to which payment is to be
made; indicate the date, which shall not be less than 30 days of the date of
the notice, by which the Corporation must receive payment demand and
certificates for certificated shares.
(4) He must, no later than the date set forth in the notice described in
the immediately preceding paragraph, submit the certificate or certificates
representing such shares to the Corporation together with the form or request
demanding payment. Unless the action giving rise to dissenters' rights is not
complete or the dissenter is dissatisfied with the Corporation's offer, the
demand for payment and deposit of certificates is irrevocable. Neither a
proxy nor a vote against adoption and approval of the Agreement of
Reorganization shall constitute such a written demand. A shareholder may not
dissent with respect to some but less than all shares of Corporation Common
stock of which he is the beneficial owner whether or not the shares so owned
by him are registered in his name. A shareholder may dissent as to all or
less than all of the shares registered in his name of which he is not the
beneficial owner.
The failure of a shareholder of the Corporation to vote with respect to
adoption and approval of the Agreement of Reorganization will not constitute a
waiver of his rights as a Dissenting Shareholder. Unless a shareholder of the
Corporation both files the written objection and makes the written demand for
the fair value of his shares as provided above, he will be conclusively
presumed to have consented to the Agreement or Reorganization and will be
bound by the terms thereof. Also, failure by a shareholder of the Corporation
to submit certificates representing his shares to the Corporation as provided
above will terminate his rights as a Dissenting Shareholder unless a court of
competent jurisdiction, for good and sufficient cause shown, otherwise
directs. Upon making the written demand as provided above, a Dissenting
Shareholder will be entitled only to payment in cash of the fair value of his
shares as provided in Article XIII and will not be entitled to vote or to
exercise any other rights of a shareholder as to the shares with respect to
which he has dissented, including the right to receive dividends. Once made,
a written demand may not be withdrawn without the consent of the Corporation.
To each Dissenting Shareholder who has made written demand as provided above,
the Corporation will pay for such shares at a specified price deemed by the
Corporation, as the surviving corporation, to be the fair value thereof as
well as the method of calculation. Such payment will be accompanied by a
balance sheet of the Corporation as the end of the most recent fiscal year.
If that is not available as of the fiscal year ending not more than sixteen
months before the date of payment, an income statement for that year, a
statement of changes in shareholders' equity for that year and a statement of
cash flow for that year, as well as for any interim period. Except for
interim period, these financial statements shall be audited.
If such Dissenting Shareholder disagrees with the Corporation as to the fair
value of such shares, he may at any time within 30 days after the payment
demand payment of the Dissenter's estimate of the fair value of the shares.
Within 30 days after receipt of any such written demand, the Corporation must
either file a petition in the court to secure a determination of the fair
value of such shares or pay the amount demanded. The Corporation does not
know at this time whether it would exercise such election. All Dissenting
Shareholders whose claims have not been resolved will be made parties to the
proceeding by the Corporation. The Court may, if it elects, appoint one or
more appraisers to receive evidence and recommend a decision on the question
of fair value. Upon the Corporation's payment of the judgment of the Court as
to fair value, the Dissenting Shareholder shall cease to have any interest in
such shares.
All Dissenting Shareholders who are parties to the proceeding shall be
entitled to a judgment against the Corporation for the amount of the fair
value of their shares of Corporation Common Stock as of the day prior to the
date on which the vote on adoption and approval of the Agreement of
Reorganization was taken without regard to any depreciation or appreciation in
Corporation Common Stock in consequence of the Reorganization. The judgment
shall make due allowance for any distribution to shareholders of the
Corporation between the day before the date of the vote upon adoption and
approval of the Agreement of Reorganization and the date of their demand for
the fair value of their shares and for such interest as the Court may find to
be fair and equitable in all the circumstances.
For information with respect to the assessment of the costs and expenses of
the proceeding to determine the fair value of shares of Corporation Common
Stock and the treatment of the fees and expenses of counsel for and the
experts employed by any Dissenting Shareholder and the Corporation in such
proceeding, see Article XIII.
Federal Income Tax Consequences
It is a condition to the consummation of the Reorganization that the
Corporation receive an opinion of Bruce Hart, Esq. satisfactory to the
Corporation and substantially to the effect that, on the basis of facts and
assumptions set forth in such opinion, for federal income tax purposes.
1. No gain or loss will be recognized by the Corporation, the Holding
Company or shareholders of the Corporation who receive Holding Company Common
Stock for their Corporation Common Stock by reason of the consummation of the
Reorganization;
2. The basis of Holding Company Common Stock received by a shareholder of
the Corporation in the Reorganization will be the same as the basis of the
Corporation Common Stock converted into such Holding Company Common stock; and
3. A shareholder who holds Corporation Common Stock as a capital asset will
include in his holding period for the Holding Company Common Stock which he
receives in the Reorganization his holding period for the Corporation Common
stock converted into such Holding Company Common Stock.
The receipt of cash pursuant to the exercise of dissenters' rights as the
fair value for shares of Corporation Common Stock will be taxable transaction
for federal income tax purposes to shareholders receiving such cash. A
dissenting shareholder who owns no shares of Holding Company Common Stock
after the Effective Time (either directly or constructively pursuant to
Section 318 of the Internal Revenue Code) will recognize gain or loss measured
by the difference between the cash so received and such shareholder's adjusted
tax basis in the shares of Corporation Common Stock exchanged therefor. Such
gain or loss will be treated as a capital gain or loss is the shares of
Corporation Common Stock are capital assets in the hands of such shareholder,
and will be long-term capital gain or loss if such shareholder's holding
period is more than twelve months.
Except as set forth below, no information is provided herein as to the state,
local or foreign tax consequences of the Reorganization. The federal income
tax discussion set forth above is for general information only. Each
shareholder is urged to consult his own tax advisor as to these and any other
federal income tax consequences to him of the Reorganization.
Adoption and Approval of the Agreement of Reorganization
The Agreement of Reorganization has been approved by the Boards of Directors
of the Corporation and the Holding Company .
THE BOARD OF DIRECTORS BELIEVES THAT THE REORGANIZATION IS IN THE BEST
INTERESTS OF THE CORPORATION AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE FOR
ITS APPROVAL.
RATIFICATION OF THE MANAGEMENT AGREEMENT
The Management Agreement requires engages Messrs. Myers and Stogner to have
the full authority normally and customarily granted to the Chairman of the
Board and the President of a company. The Management Agreement requires that
each of Messrs. Myers and Stogner devote at least 50% of their time for the
benefit of the Corporation. They will be compensated an aggregate of 20% of
the pretax profits of Crest Outsourcing, Inc., a Nevada corporation that is a
wholly owned subsidiary of the Corporation's which conducts all of the
Corporation's staff leasing services. The Management Agreement is for a term
of five years commencing December 31, 1994, and may be renewed annually
thereafter with the consent of the parties thereto.
Messrs. Myers and Stogner have led in the Corporation's revitalization,
leading in putting assets into the Corporation, financing the Corporation, and
turning the employee leasing company into a profitable enterprise. The Board
of Directors of the Corporation believes that the services of Messrs. Stogner
and Myers are critical to the Corporation's vitality and should be compensated
therefor.
THE BOARD OF DIRECTORS BELIEVES THAT THE REORGANIZATION IS IN THE BEST
INTERESTS OF THE CORPORATION AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE FOR
ITS APPROVAL.
The following table sets forth certain financial data for, and as of the
end of, each of the last five fiscal years, as derived from consolidated
financial statement of the Company which have been audited by independent
certified public accountants.
Income Statement 1995 1994 1993 1992* 1991*
Information
Revenues $43,763,533 $5,536,299 $1,079,912 $898,600 $24,305
Net Income (loss) from
continuing operations $(803,348) $(709,557) $(28,118) $155,475 $10,142
Net earnings (loss)
per share $(0.02) $(0.07) - 0.07 -
Balance Sheet
Information
Total assets $5,278,533 $5,523,761 $961,919 $658,479 $65,158
Total liabilities $3,545,947 $3,105,553 $123,654 $204,450 $2,100
Dividends - - - - -
*Represents discontinued operations.
DIRECTORS OF THE HOLDING COMPANY
The names, ages and positions held of the Company's directors and
Executive Officers are as follows:
Name Age Position
- ------------------ --- ------------------------------
Harry K. Myers, Jr. 55 Director/Chairman of the Board
John N. Stogner 52 Director/President, Treasurer, and Chief
Financial Officer
Ron Cheldelin 51 Director/Vice President
Dal McKinney 45 Director/Vice President
D. D. Luckie 64 Director/Secretary
Harry K. Myers, Jr. became a director of the company in December of 1994
and is an attorney practicing law in Rockwall, Texas. Mr. Myers was licensed
as a certified public accountant in Oklahoma in 1967 and currently maintains
his license in Texas, but does not hold himself out to practice publicly. Mr.
Myers commenced practicing law in 1986 after graduating from Southern
Methodist University. In 1981, Mr. Myers, with others, formed Franklin
National Bank of Mount Vernon, Texas, and Mr. Myers presently serves on the
board of directors of that bank. From 1975 through November of 1989, Mr. Myers
was President of Tawakoni Water Utility Corporation, formerly East Texas
Management Corporation in Quinlan, Texas, a small town in rural east Texas. In
1989, as part of a rate adequacy dispute with the Texas Water Commission,
Tawakoni Water Utility Corporation filed for protection under Chapter 11 of
the United States Bankruptcy Code. The bankruptcy court dismissed the filing
as a regulatory matter. Subsequent to that dismissal the state appointed a
receiver which operated the system until it was sold as part of an agreed
settlement. Tawakoni Water Utility Corporation was released from receivership
and returned to Mr. Myers in December of 1993. During those proceedings and
until the present, Mr. Myers has maintained his consulting and law practice.
In September of 1990 a trust that an affiliate of Mr. Myers was the
trustee of invested in and loaned money to the parent of a Small Business
Investment Company ("SBIC"). For legal services Mr. Myers also obtained an
equity interest in the SBIC. To protect that investment Mr. Myers and his
affiliate assumed executive positions in the parent and the SBIC. In October
of 1990 the Small Business Administration promulgated rules increasing the
capital requirements of SBICs. These rules were not finalized until August of
1993. The SBIC in which Mr. Myers and his affilaite held executive positions
did not meet the new capital requirement. For the investment in the SBIC to
be rescinded requires a statutory liquidation through receivership of the
SBIC. In June of 1995 the Small Business Administration put the SBIC into
receivership.
John N. Stogner. In December of 1994, Mr. Stogner became President of
the Company. Mr. Stogner was a director of FoxMeyer Corporation and
affiliated corporations from 1975 to 1984. While with FoxMeyer he held a
variety of executive operating and financial positions and was its Executive
Vice President when he resigned from FoxMeyer Corporation. Since 1984 Mr.
Stogner has been a private investor, owner of DLS, Inc., an equipment leasing
company, and a consultant with Equity Partners, Inc. In March, 1994, Mr.
Stogner became President of the Bent Tree Group, Inc. Mr. Stogner is also a
Certified Public Accountant but is not engaged in public practice.
Ron Cheldelin is a Vice President of the Company and is responsible for
the Company's marketing, a responsibility he assumed with Bent Tree
Residential Lending, Inc. in March of 1994. Mr. Cheldelin was employed by the
Eastman Kodak Company from 1965 until his retirement in October of 1992. At
Eastman Kodak, he served for several years as a Regional Sales Manager and
with Eastman Kodak Credit Corporation he served as a Regional Manager. From
December of 1992 to March of 1994, Mr. Cheldelin sold homes for David Weekly
Homes in the Dallas, Texas area.
Dal McKinney is a President of Bent Tree Residential Lending, Inc. He had
been the General Manager or Vice President of Bent Tree Residential Lending,
Inc. since August of 1990 when the company was formed as Bent Tree Marketing,
Inc., producing in excess of $15,000,000 in residential mortgages while
managing BTRL. From June of 1989 to August of 1990, Mr. McKinney served as a
loan originator of Stratford Mortgage, producing more than $18,000,000 in
residential mortgages. From December of 1982 to June of 1989, Mr. McKinney
served as Loan Officer or General Manager or both of West America Mortgage,
Fidelity Mutual Mortgage and Hartford Mortgage Corporation, originating at
least $12,000,000 in annual mortgage loan production. Mr. McKinney filed for
personal bankruptcy in 1990 because of the bankruptcy of partners in real
estate ventures, causing banks to refuse to extend the time for payment on
loans which Mr. McKinney was personally obligated. Mr. McKinney has been
employed in the mortgage lending industry for more than 20 years.
D.D. Luckie is Secretary of the Company and is President and Chief
Executive Officer of Arden International, Inc., an international venture
capital firm with fifteen years experience with Mexican business ventures and
operations. Presently Arden International is co-developing a residential
project of 1,400 units in Reynosa, Mexico. His investments include a financial
services company,
oil and gas, commercial real estate, banking and the largest rice elevator
serving the international market on the Gulf Coast. Mr. Luckie was a founder
of and has served on the board of directors of several U.S. banks. Mr. Luckie
is a Charter Member and serves on the Board of Directors and the Executive
Committee of the U.S. - Mexico Chamber of Commerce which was organized in
Dallas in 1987.
Certain Relationships and Related Transactions
The Company acquired its operating assets from Bent Tree Holding Company
in three transactions whereby the Company issued an aggregate of 46,297,478
shares Common Stock. The principals of BTHC formed that corporation on June
1, 1994 by acquiring BTRL and BTFS. Of the seven directors of the Company for
the next year, six were founders of BTHC, including Messrs. Myers and Stogner.
The initial transaction whereby the Company issued stock to BTHC involved the
issuance of 31,297,478 shares of Common Stock. Letters of intent executed
prior to the initial agreement to acquire stock contemplated the issuance of
an additional 15,000,000 shares of Common Stock for the acquisition of BTRL
and the operating assets of BTFS, entities owned by BTHC, and which were
acquired subsequent to the acquisition of assets of the employee leasing
company.
Prior to the Company's relationship with BTHC, to provide operating
capital to BTHC and its subsidiaries as well as capitalize BTHC, Harry K.
Myers, Jr. and a former director, or affiliates of each or jointly affiliated
entities, entered into several transactions whereby real and personal property
was transferred to the Company in exchange for equity securities of BTHC or
subsidiaries. The building and land values were determined by independent
appraisals. The carrying value of such real property is $756,955. In
addition the BTHC acquired in exchange for equity from a trust affiliated with
a former director Non-voting Preferred Stock in an insurance company that is
carried at face value.
In 1995 several of the Company's directors engaged in numerous
transactions with the Company to provide liquidity. Harry K. Myers, Jr.
acquired, at book value, notes receivable and a mortgage loan, plus accrued
interest, owned by the Company totaling $169,754. In addition Mr. Myers
advanced to the Company a total of $378,436 to provide liquidity at various
times, and the Company paid to Mr. Myers a total of $446,468, including salary
and interest. Mr. Myers has deferred $90,000 of his salary, and the Company
is indebted to Mr. Myers at December 31, 1995 in the amount of approximately
$22,000 in addition to the $25,000 bonus owed to Messrs Myers and Stogner
jointly. During 1995 Messrs. Lamb and Luckie advanced to the Company $25,000
each and such amount has been repaid together with interest paid to each.
Mr. Myers controls three companies, Bent Tree Group, Inc ("Group")., Bent
Tree Holding Company, Inc. ("BTHC") and Execu-Staff International, Limited, a
New Mexico corporation ("ESIL"). At December 31, 1995, Group and BTHC owed
the Company $160,634 and $236,529, respectively. ESIL in turn was owed
$282,381 by the Company. These obligations arose in connection with the
liquidation of assets transferred by these entities simultaneously conveyed
with the transfer of operating assets to the Company.
In 1995 the Company paid or accrued to the law firm of Lamb, Metzger,
Lines and Dahl, P.A. and to Harry K. Myers $100,100 and $11,190, respectively,
for legal services rendered to the Company. Larry L. Lamb is a principal in
the law firm of Lamb, Metzger, Lines and Dahl, P.A.
In August of 1995, CNA, who underwrites the Company's workers'
compensation policy, refunded $420,000 of an insurance deposit. This refund
was subject to the Company providing a one year letter of credit. In
connection therewith, the Company obtained a $500,000 line of credit through a
bank which then issued the appropriate letter of credit.
To issue the letters of credit, the bank required the line of credit to
be collateralized by $500,000 in principal amount of certificates of deposit.
In addition the Lindana Amthor Bolinos Texas Trust, whose trustee is a former
director, pledged a $250,000 certificate of deposit against the line of
credit. This trust was issued 625,000 of the Company's Common Stock in
consideration of the pledge. Another individual pledged a certificate of
deposit to collateralize the balance of the line of credit and was similarly
issued 625,000 shares of theCompany's Common Stock. This individual agreed to
transfer 208,000 shares of such stock to Mr. D. D. Luckie. An affiliate of
Mr. Myers also pledged to the individual providing one of the certificates of
deposit 3,200,000 shares of the Company's Common Stock. During the second
quarter of 1995 the Company agreed to cease providing Farmers Home Loan
Administration (FmHA) loan programs directly to borrowers because of
the operation's overhead and uncertain timing required to close the
transactions. The operation was conveyed to a prior agent. However, the
Company has continued and is continuing to provide secondary marketing and
funding support to the program because the program provides liquidity to the
Company during this early period of operations. The Company can participate in
these programs because of Mr. Myers' exclusive arrangement, which predates the
Company's operations, with the eligible FmHA lender.
In 1995 the Company, through two of its directors, assisted in gaining
conditional commitments from the FmHA on five loans which total $15,585,000.
The guaranteed portion of these loans, which equals $12,748,000, has been
contracted to be sold at a premium which will generate $1,296,733. The
Company's portion of this premium is recorded at $320,000 as a receivable and
as deferred income. In March, 1996, the first loan funded in the amount of
$5,000,000 and the Company earned approximately $119,500 of the deferred
income. Subsequent to year end the Company received notice of two additional
letters of commitment from the FmHA for loans in the amount of an additional
$9,500,000 which will cause $6,900,000 of guarantees to be available for sale
upon funding.
In connection with one of these loans recognized as deferred income in
1995, Mr. Luckie will be paid a $35,000 fee for providing the funding and his
personal guarantee on said funding. For similar services, Mr.. Myers and a
former director will be compensated in stock options or warrants depending
upon the amount earned by the Company in these transactions.
Effective December 31, 1995, an entity controlled by a former director
acquired 53 acres of land from the Company in exchange for 360,764 shares of
Common Stock, approximately the $90,191 value of the land.
At December 31, 1995, the Company owed a trust whose trustee is a former
director $15,301 for taxes paid on an office building owned by the Company.
As part of the acquisition of assets from BTHC, the Company required an
agreement with Messrs. Myers and Stogner whereby the Company, in exchange for
the creation of a management team developed by Messrs. Myers and Stogner, will
pay to said management team 20% of the pretax profits from the employee
leasing operation. The contract is for a period of five years and can be
extended annually thereafter. Messrs. Myers and Stogner require this
agreement be subject to ratification by the Company's stockholders before it
becomes effective.
As part of the acquisition of assets from BTHC, the Company required an
agreement with Messrs. Myers and Stogner whereby the Company, in exchange the
creation of a management team developed by Messrs. Myers and Stogner, will pay
to said management team 20% of the pretax profits from the employee leasing
operation. The contract is for a period of five years and can be extended
annually thereafter. Messrs. Myers and Stogner require this agreement be
subject to ratification by the Company's shareholders before it becomes
effective.
COMMITTEES OF THE BOARD
The By-Laws of the Holding Company provide for the appointment of
standing Committees by the Board of Director of the Holding Company. The
duties of the Holding Company's Committees are the same as the present duties
of the corresponding Committees of the Corporation. Upon consummation of the
Reorganization, the same individuals as presently serve on the Committees of
the Corporation will serve on the corresponding Committees of the Holding
Company.
:
BENEFICIAL OWNERSHIP OF CORPORATION COMMON STOCK
Under the proxy rules of the Commission, a person who directly or
indirectly has or shares voting power and/or investment power with respect to
a security is considered a beneficial owner of the security. Shares as to
which voting power and/or investment power may be acquired within 60 days are
also considered as beneficially owned under these proxy rules.
The following table sets forth certain information regarding the
beneficial ownsership of the Common Stock of the Company as of March 29, 1996,
by (i) each person known by the Company to be a beneficial owner of more than
5% of the outstanding shares of common Stock, (ii) each director of the
Company, and (iii) all directors and executive officers of the Company as a
group. Unless otherwise noted, each beneficial owner named below has sole
investment and voting power with respect to the Common Stock shown below as
beneficially owned by him.
Name Number of Shares Percent
- ------------------- ---------------- -------
Harry K. Myers, Jr. (1)(2) 17,481,619 33.5
John N. Stogner (3) 2,400,000 4.6
Ronald H. Cheldelin 4,090,000 7.8
Dal McKinney 3,149,744 6.0
Gino T. D'Amalfi (2)(5) 9,888,940 19.0
D. D. Luckie(6) 1,825,475 3.5
All executive directors and
officers as a group (five people) 40,394,978 77.5
(1) Includes 100,000 shares owned by the minor child of Mr. Myers, and
14,246,819 sharers owned by entities that Mr. Myers controls. Excludes
240,000 shares owned by the spouse of Mr. Myers as to which he disclaims
beneficial interest.
(2) Includes 320,800 shares owned by an entity jointly controlled by Messrs.
Myers and D'Amalfi.
(3) Includes 500,000 shares owned by an entity controlled by Mr. Stogner and
50,000 shares owned by a trust in which Mr. Stogner has the power to vote
and to dispose of assets. Excludes 40,000 shares owned by the spouse of
Mr. Stogner as to which Mr. Stogner disclaims beneficial interest.
(4) Excludes 277,000 shares owned by the spouse of Mr. Cheldelin and 15,000
shares owned by the children of Mr. Cheldelin as to which Mr. Cheldelin
disclaims beneficial interest.
(5) Includes 4,724,250 shares owned by a trust that Mr. D'Amalfi has the
power
to vote and to dispose of the assets. Also includes 2,475,000 shares
owned by an entity controlled by Mr. D'Amalfi.
(6) Includes 765,475 shares owned by entities controlled by Mr. Luckie.
The address of Messrs. Myers, Stogner, Cheldelin, McKinney, D'Amalfi,
And Luckie is 15400 Knoll Trail, Suite 205, Dallas, TX 75248.
The following table sets forth information regarding the total cash
compensation, including bonuses, received from the Registrant during the
fiscal year ended December 31, 1994, for service in all capacities by (i) the
principal executive officer, regardless of amount of compensation, and (ii)
the four most highly paid senior executive officers other than the principal
executive officer who earn more than $100,000 per year.
Annual Compensation Long Term Compensation
------------------- ----------------------
Year Ending Salary Bonus Restricted Payout
----------- ------ ----- Option ------
----------
Harry K .Myers, 12/31/95 $120,000(1) $25,000(1)
Jr., Chairman of
the Board
John N. Stogner, 12/31/95 $120,000(1) $25,000(1)
President and 12/31/94 51,400
Treasurer
Ronald N. 12/31/95 $80,572(2)
Cheldelin, Vice
President
Dal McKinney, Vice 12/31/95 $88,578(2)
President
(1) Commencing January 1, 1995, Messrs. Myers and Stogner are paid $10,000
per month. Messrs. Myers and Stogner have agreed to defer cash
compensation depending on the Company's cash requirements. Such
compensation is in addition to any compensation that will be paid
pursuant to the agreement referenced in the immediately preceding
paragraph. As of December 31, 1995 Messrs. Myers and Stogner have
deferred compensation of $90,000 and $28,000, respectively. The bonus
is paid to Messrs. Myers and Stogner jointly. Such amount has also
been deferred.
(2) Includes commissions of $8,572 and $10,360 paid to Messrs. Cheldelin
and McKinney, respectively.
The Company has entered into an agreement with Messrs. Myers and Stogner,
Chairman of the Board and President of the Company, respectively, whereby the
Company will pay to a management team formed by them a total of 20% of the
employee leasing company's pretax profits in exchange for a commitment to
create and maintain a management team for the employee leasing operation. The
term of the contract is for a period of five years, expiring at the end of
calendar year 1999. The agreement can be renewed annually thereafter. Prior
to the agreement to date the leasing company has not had profits. Messrs.
Myers and Stogner have determined to have the agreement ratified by the
Company's shareholders prior to the agreement becoming effective. Messrs
Myers and Stogner have abstained form voting on the directors recommendation
to adopt the management agreement made to the Board of Directors and the
Corporations shareholders.
Commencing January 1, 1995, Messrs. Myers and Stogner are each to be paid
$10,000 per month. Messrs. Myers and Stogner have agreed to defer cash
compensation depending on the Company's cash requirements. Such compensation
is in addition to any compensation that will be paid pursuant to the agreement
referenced in the immediately preceding paragraph.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $0.01 per share and 50,000,000 shares of preferred
stock. The Company's Board of Directors has reserved the right to define the
relative rights power and privileges of the preferred stock. As of September
30, 1995 the Company's Board of Directors had not designated any class of
preferred stock and, accordingly, none had been issued. The following summary
of certain provisions of the Company's capital stock does not purport to be
complete and is subject to and qualified in its entirety by, the Articles of
Incorporation and the Bylaws of the Company and by the provisions of
applicable law.
Common Stock
At March 31, 1996, there were 52,139,056 shares of Common stock outstanding.
In addition, 2,000,000 shares of Common Stock were reserved for issuance upon
exercise of stock options.
Holders of Common Stock are entitled to one vote per share on any matter
submitted to the vote of shareholders. Cumulative voting is prohibited in the
election of directors. The holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds, legally available therefor. The Common Stocks
not redeemable, does not have any conversion rights, and is not subject to
call. Holders of shares of Common Stock have no pre-emptive rights to maintain
their respective percentage of ownership in future Offerings or sales of stock
by the Company. The shares of Common Stock presently outstanding are, and the
shares of Common Stock offered hereby when issued will be, fully paid and non
assessable.
LEGAL OPINION
Certain legal matters relating to Holding Company Common Stock to be issued
in the Reorganization will be passed upon for the Holding Company by Robert A.
Forrester. Mr. Forrester owns 40,000 shares of the Corporation's Common
Stock.
PROXY SOLICITATION
The cost of solicitation of proxies is to be borne by the Corporation. In
addition to solicitation by mail, directors, officers and regular employees of
the Corporation may solicit proxies from shareholder by telephone, telegram,
personal interview, newspaper advertisement or other means of communication.
Such individuals may be reimbursed for reasonable out-of-pocket expenses
incurred in connection with such solicitation. Arrangements will be made by
the Corporation with brokers and other custodians, nominees and fiduciaries to
forward solicitation material to the beneficial owners of the shares held of
record, and the Corporation will reimburse these persons for reasonable
out-of-pocket expenses incurred.
<PAGE>
OTHER BUSINESS
As far as is known or has been determined, no business other than the matter
referred to herein will come before the Special Meeting. However, it is
intended that the proxy solicited herein will be voted on any other matters
that may properly come before the Special Meeting or any adjournment thereof
in the discretion of the person or persons voting such proxy.
By order of the Board of Directors.
Secretary
Dallas, Texas
_____________ __, 1996
PART II
Item 20. Indemnification of Officers and Directors.
Pursuant to Section 2.02-1 of the Texas Business Corporation Act, a
corporation may indemnify an individual made a party to a proceeding because
the individual is or was a director against liability incurred in his official
capacity with the corporation, including expenses and attorney fees.
Article THIRTEEN of the Articles of Incorporation provides as follows:
'The corporation shall indemnify any and all persons whom it has the
power to indemnify under the Texas Business Corporation act against any
and all expenses, judgments, fines, amounts paid in settlement, and any
other liabilities to the fullest extent permitted by such Law and may, at
the discretion of the Board of Directors, purchase and maintain
insurance, at its expense, and to indemnify him against any judgment,
fine, amount paid in settlement or other liability, whether or not the
corporation would have the power to so indemnify such person under the
Texas Business Corporation Act.
'A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 2.02-1 of
the Texas Business Corporation Act, as the same exists or hereafter may
be amended, or (iv) for any transaction from which the director derived
an improper personal benefit. Any repeal or modification of this
paragraph by the stockholders of the corporation shall be prospective
only, and shall not adversely affect any limitation on the personal
liability of a director of the corporation existing at the time of such
repeal or modification.
'The corporation, to the maximum extent permitted by the Texas
Business Corporation Act (or any other applicable law, rule or
regulation), shall indemnify and hold harmless each person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he, or a
person of whom he is the legal representative, is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit or proceeding. Expenses incurred by any such person in defending a
civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding, to the maximum extent permitted by law. Notwithstanding any
subsequent alteration, amendment or repeal of this ARTICLE THIRTEEN, the
right to indemnification and to advance payments created by this ARTICLE
THIRTEEN shall apply to (a) any claims made or asserted at any time while
this ARTICLE THIRTEEN is in effect and (b) any claims based on or arising
from any act, omission or event occurring at any time while this ARTICLE
THIRTEEN in in effect.'
Item 21. Exhibits.
Exhibit No.
Exhibit 2.1 Plan of Reorganization(2)
Exhibit 3.1 Articles of Incorporation of American Teletronics, Inc.(2)
Exhibit 3.2 Bylaws of American Teletronics, Inc.(2)
Exhibit 5.1 Opinion of Robert A. Forrester(3)
Exhibit 6.1 Opinion of Bruce Hart(3)
Exhibit 10.1 Management Agreemnent with Harry K. Myers, Jr. and John N.
Stogner(2)
Exhibit 13.1 Annual Report on Form 10-K for the year ended Deember 31, 1995
of American Teletronics, Inc.(1)
Exhibit 13.2 Quarterly Report on Form 10-Q for the quarter ended March 31,
1996 of American Teletronics, Inc.(1)
Exhibit 23.1 Consent of Robert A. Forrester (Contained in Exhibit 5.1)
Exhibit 23.2 Consent of Bruce Hart (Contained in Exhibit 8.1)
Exhibit 23.3 Consent of Certified Public Accountants(2)
(1) Previously filed
(2) Filed herewith
(3) To be filed
Item 22. Undertakings.
The undersigned registrant hereby undertakes as follows:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items of the
applicable form.
(2) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (h)(1) immediately preceding or , (ii) that
purports to meet the requirements of section 10(a)(3) of the Act and
is used in connection with an offering of securities subject to Rule
415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the
Securities Act of 1933, each such post- effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The registrant further undertakes to:
(1) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form,
within one business day of receipt of such request and to send the
incorporated documents by first class mail or other equally promptly
means. This includes information contained in documents filed
subsequent to the effective date of the registration statement
throughout the date of responding to the request.
The registrant further undertakes to:
(1) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the
subject of and included in the registration statement when it became
effective.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas,
on June 1, 1996.
American Teletronics Holding, Inc.
By: /s/ Harry K. Myers, Jr. Chairman
of the Board
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on
the dates indicated.
Signature Title Date
- --------- ----- ----
By: /s/ Harry K. Myers,Jr. Chairman of the Board June 1, 1996
Harry K. Myers, Jr.
Chairman of the Board
By: /s/ John N. Stogner President and Principal June 1, 1996
John N. Stogner Financial Officer
By: /s/ Ronald H. Cheldelin Director June 1, 1996
Ronald H. Cheldelin
By: /s/ Dal McKinney Director June 1, 1996
Dal McKinney
By:/s/ D.D. Luckie Director June 1, 1996
D. D. Luckie
ANNEX A
AGREEMENT OF REORGANIZATION BETWEEN
AMERICAN TELETRONICS, INC. AND AMERICAN TELETRONICS HOLDING, INC.
AGREEMENT OF REORGANIZATION dated as of ____, 1996 by and among American
Teletronics, Inc., a Colorado Corporation (hereinafter called "Teletronics"),
and American Teletronics Holding, Inc., a Texas Corporation (hereinafter
called "ATH"),
WITNESSETH:
WHEREAS, Teletronics is a Corporation duly organized and existing under
the laws of the State of Colorado; and
WHEREAS, ATH is a corporation duly organized and existing under the laws
of the State of Texas; and
WHEREAS, the authorized shares of Teletronics consist of 100,000,000
shares of Common Stock, no par value, of which 53,139,056 shares are now
issued and outstanding, and 50,000,000 shares of Preferred Stock, par value
$ 2.50, none of which are outstanding; and
WHEREAS, the authorized shares of ATH consist of 100,000,000 shares of
Common stock, 0.01 par value, none of which are now issued and outstanding and
50,000,000 shares of Preferred Stock, par value $2.50 none of which are issued
or outstanding; and
WHEREAS, the Boards of Directors of Teletronics and ATH deem it advisable
for the mutual benefit of Teletronics and ATH and the shareholders of
Teletronics that ATH acquire all of the issued and outstanding stock of
Teletronics on the terms and conditions hereinafter set forth and in
accordance with the applicable laws of the State of Texas and of the State of
Colorado and have approved of this Agreement of Reorganization (the
"Agreement").
<PAGE>
ARTICLE I
STATUS AND CONVERSION OF SHARES AND
OPTIONS
The mode of carrying into effect the reorganization provided for in this
Agreement (the "Reorganization"), the manner and basis of converting the
shares of Teletronics into shares of ATH and the consideration to be paid and
delivered for the exchange of the outstanding shares of Teletronics are as
follows:
1. This Agreement shall be submitted to a vote of the shareholders of
Teletronics. The effective time of the Reorganization (the "Reorganization")
shall be the time immediately following ratification of this Agreement by
Teletronics shareholders and declared effective by the Board of Directors of
Teletronics.
2. Each share of Common Stock, no par value, of Teletronics issued and
outstanding immediately prior to the effective time of the Reorganization
shall, by virtue of the Reorganization and without any action on the part of
the holder thereof, automatically be converted into one share of Common Stock
of ATH. After the reorganization becomes effective, each outstanding
certificate which represented shares of Teletronics shall be deemed by ATH for
all corporate purposes to evidence ownership of the number of shares of ATH
Common Stock, to which the holder thereof is entitled as aforesaid; the holder
thereof shall have the rights, privileges and participation of a record holder
of such number of shares of ATH Common Stock; delivery of a Teletronics
certificate shall constitute delivery of shares of Common Stock of ATH
represented thereby. Notwithstanding the foregoing provisions of this
Paragraph 2 of Article I, Teletronics shares held by an Teletronics
shareholder who shall have filed a written notice of election to dissent under
Section 7-113-202 of the Colorado Business Corporation Law and who at the
effective time of the reorganization shall not have withdrawn such notice
(with the consent of Teletronics if required, under such Section 7-113-202)
shall not be deemed to represent shares of ATH Common Stock and shall not be
entitled to the rights, privileges or participation thereof or of ATH shares
or until such time as such holder shall withdraw such notice (with consent of
Teletronics, if required under said Section 7-113-202), at which time such
shares shall be reinstated to all the rights, privileges and participations
thereof as of the date of the filing of such notice of election including
becoming ATH Common Stock as of the effective time of the Reorganization.
3. ATH shall assume, effective as of the effective time of the
Reorganization, Teletronic's obligations under each then existing plan,
substitute, restricted, qualified, and non-qualified stock option plan to
purchase shares of Teletronics Common Stock (such option existing immediately
prior to the effective time of the Reorganization being called an "Existing
Option" and each option so assumed by ATH being called an "Assumed Option") by
which assumption the Optionee shall be entitled for the price per share of
Teletronics Common Stock specified in his Existing Option and under the terms
of said Existing Option to purchase one share of ATH Common Stock in lieu of
shares of Teletronics Common Stock with respect to which such Existing Option
remains unexercised immediately prior to the effective time of the
Reorganization.
Each Assumed Option shall constitute a continuation of the Existing
Option, substituting ATH for Teletronics, and employment by ATH or any of its
subsidiaries for employment by Teletronics, or its subsidiaries, effective at
the effective time of the reorganization. Otherwise all of the terms and
provisions of each Assumed Option shall be the same as and shall continue all
of the terms and provisions of the Existing Option, including but not limited
to the times when the Assumed Option may be exercised in relation to the date
of the granting of the Existing Option, it being the intent of this paragraph
that each Assumed Option shall continue as a substitute, restricted, qualified
or nonqualified stock option as the case may be, under the provisions of the
Internal Revenue Code, as amended. ATH will issue to each holder of an
Existing Option a written instrument evidencing ATH's assumption of such
Existing Option.
ARTICLE II
EFFECT OF REORGANIZATION
At the effective time of the Reorganization, the ATH shall retain or
succeed to, without other transfer, and shall possess all the rights,
privileges, immunities, powers, purposes and franchises both of a public and
private nature, and be subject to all the restrictions, disabilities and
duties of Teletronics; and all property, real, personal and mixed, and all
debts due to either of Teletronics on whatever account, for stock
subscriptions as well as for all other things in action or belonging to
Teletronics, shall remain, or be, vested in ATH; and all property, rights,
privileges, immunities, powers, purposes and franchises and all and every
other interest shall be thereafter as effectually the property of ATH as they
were of Teletronics, and the title to any real estate vested by deed or
otherwise in Teletronics shall not be in any way impaired by reason of
the Reorganization; provided, however, that all rights of creditors and all
liens upon any property of Teletroncis shall be preserved unimpaired, limited
in lien to the property affected by such liens at the effective time of the
Reorganization, and all debts, liabilities and duties, except as provided in
Article I hereof, of Teletroncis shall remain enforceable against Teletronics.
ARTICLE III
DIRECTORS AND OFFICERS
The Directors and Officers of Teletronics, at the effective time of the
reorganization shall be the Directors and Officers of Teletroncis.
ARTICLE IV
VOTING RIGHTS
In accordance with the provisions of the Business Corporation Law of the
State of Colorado and the Texas Business Corporation Act, as amended, the
holder of each share of the common stock of Teletronics is entitled to vote
upon the adoption of this Agreement of Reorganization, each share being
entitled to one vote. The approval of the holders of at least a majority of
the outstanding Common Stock of Teletronics is required. The number of its
authorized and issued shares will not be changed by ATH prior to the effective
time of the reorganization.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Teletronics and ATH represent, warrant to and with each other as follows:
1. Teletronics and ATH are each corporations duly organized, validly
existing and in good standing under the Laws of the State of Colorado and
Texas respectively, and each has the corporate power to own its property and
carry on its business as now being conducted by it.
2. As of the date hereof, each of them had the authorized Common Stock
and issued and outstanding shares set forth herein. All of the issued and
outstanding shares of Common Stock of each of them are validly issued, fully
paid and nonassessable.
3. Between the date hereof and the effective time of the
Reorganization, Teletronics will not sub-divide or otherwise change,
authorize, issue or re-issue, or agree to subdivide any shares of its Common
Stock except as set forth on Exhibit A hereto.
4. There is no action, suit or proceeding pending or, to the knowledge
of Teletronics or ATH, threatened against or affecting ATH and Teletronics or
any of its subsidiaries, before any Court, agency or governmental body which
would prevent the consummation of the transactions contemplated or have a
material adverse effect on the business, operations, prospects, properties,
assets or condition, financial or otherwise, of any of them.
5. Since its incorporation, ATH has conducted no business and will
conduct no business except as necessary to consummate the Reorganization. It
has no contingent or other liabilities except organization expenses and
expenses which may be incurred pursuant to this Agreement. Its capitalization
will not change between the date hereof and the effective time of the
Reorganization.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
ATH represents and warrants as follows:
1. It is a Corporation duly organized, validly existing and in good
standing under the Laws of the State of Texas and has the corporate power to
enter into this Agreement and Reorganization. There are no outstanding
options, warrants, or rights to purchase from ATH any of its authorized or
issued Common Stock or any calls on or commitments of ATH relating thereto
except as set forth in this Agreement.
2. ATH has only nominal assets and has not actively commenced business
of any kind other than to take such steps as may be required to consummate
this Agreement.
3. There is no action, suit or proceeding pending, or to the knowledge
of ATH threatened against ATH, before any Court, Agency, or governmental body
which would prevent the consummation of the transactions contemplated by this
Agreement or have a material adverse effect on the business, obligations,
prospects, properties, assets or condition, financial or otherwise, of ATH.
ARTICLE VII
CONDITIONS
A. The obligations of Teletronics to consummate the Reorganization is
subject to the satisfaction on or prior to the Closing Date of the following
conditions:
1. The representations and warranties of ATH herein contained
shall be true as of and at the Closing Date with the same effect as though
made on such date; all obligations and covenants required by this Agreement to
be performed or complied with by ATH, prior to the effective time of the
Reorganization, shall have been duly performed or complied with.
2. An opinion shall have been received from the law firm of Bruce
Hart, Esq. in form and substance satisfactory to the General Counsel of
Teletronics to the effect, among other things, that under the applicable
provisions of the Internal Revenue Code, as amended, no gain or loss will be
recognized to Teletronics or to the holders of Teletronics shares for Federal
income tax purposes by reason of the Reorganization or the conversion of
Teletronics shares into shares of ATH.
3. The number of Teletronics shares in respect of which elections
to dissent have been filed with Teletronics in accordance with Section
7-113-202 of the Colorado Business Corporation Law shall not make consummation
of the transactions contemplated hereby unwise in the opinion of the Board of
Directors of Teletronics.
4. All actions, consents, approvals, governmental or otherwise,
which are or may be necessary to carry out the transactions contemplated
hereby and which are, in the judgment of the Board of Directors of Teletronics
necessary or desirable to permit or enable Teletronics, upon and after the
Reorganization, to conduct all or any part of the business and activities of
Teletronics, substantially in the manner in which such activiites and business
are presently conducted, shall have been obtained and remain in effect.
B. The obligation of ATH to consummate the Reorganization is subject to
the satisfaction on or prior to the Closing Date of the following conditions:
1. The representations and warranties of Teletronics herein
contained shall be true as of and at the Closing Date with the same effect as
though made on such date; Teletronics shall have performed all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it prior to the effective time of the Reorganization.
2. The Reorganization shall have been approved by the holders of
a majority of the Teletronics shares.
C. Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated and abandoned at any time before the effective
time of the Reorganization, whether before or after adoption or approval of
this Agreement by the shareholders of the Constituent Corporations.
1. By the mutual consent of the Boards of Directors of the
Teletronics and ATH;
2. By Teletronics if, prior to the effective time of the
reorganization, the conditions set forth in subparagraphs 1 through 4 of
Section A of this Article VII shall not have been met;
3. By ATH if, prior to the effective time of the Reorganization,
the conditions set forth in subparagraphs 1 through 2 of Section B of this
Article X shall not have been met.
ARTICLE VIII
COVENANTS
1. ATH covenants as follows:
a. ATH will give its written consent to the adoption of the
Agreement.
b. ATH will, at the effective time of the Reorganization, deem all
of the Teletronics shares outstanding immediately prior to the effective time
of the Reorganization, to be issued and outstanding shares of ATH. ATH will
assume at the effective time of the Reorganization, all of the then existing
substitute, restricted, qualified or nonqualified stock options to purchase
shares of Common Stock of Teletronics and will, upon exercise of each such
option, issue an equivalent number of shares of Common Stock of ATH. The
purchase price per share, upon exercise of each such Assumed Option, shall be
the same as the purchase price per share of the Common Stock of Teletronics
provided in the option assumed by ATH. ATH will at all times reserve for
issuance and will issue such number of shares of its Common Stock as are
issuable upon exercise of Teletronics Common Stock Purchase Warrants and upon
exercise of the Assumed Options.
c. ATH also agrees that subject to the provisions of the
Agreement, it will duly take or cause to be taken all such action as is
required to be taken by it for consummation of the transactions contemplated
in the Agreement.
ARTICLE IX
PROHIBITED ACTION
From the date hereof to the effective time of the Reorganization unless
Teletronics shall otherwise consent in writing:
1. ATH will not declare or pay any dividend or make any other
distribution of or with respect to its Common Stock, redeem, purchase or
otherwise acquire any of its outstanding stock, split, combine or reclassify
its Common Stock or agree to take any such action.
2. ATH will maintain its corporate existence and will not amend its
Certificate of Incorporation, a copy of which has been furnished to
Teletronics.
ARTICLE X
BOARD RECOMMENDATION; AMENDMENT;
WAIVER; FURTHER ACTION, ETC.
1. The Board of Directors of Teletronics will recommend to its
shareholders that they consider and approve the terms of this Agreement and
authorize the transactions contemplated hereby. This Agreement shall be
submitted to the shareholders of Teletronics as provided by law and its
Certificate of Incorporation at a Special Meeting to be held as soon as
practicable.
2. Subject to applicable law, this Agreement may be amended upon
authorization by the Boards of Directors of Teletronics and ATH, before or
after the meetings of shareholders, referred to in Section 1 of this Article X
at any time prior to the effective time of the Reorganization with respect to
any of the terms contained herein.
3. Any of the terms or conditions of this Agreement except the opinion
of Bruce Hart, Esq. required by Paragraph A2 of Article VII and except the
terms and conditions imposed by the Business Corporation Law of the State of
Colorado and the Texas Business Corporations Act, may be waived at any time
prior to the effective time of the Reorganization by the Constituent
Corporation which is, or whose shareholders are, entitled to the benefit
thereof, by action taken by its Board of Directors, its Chairman of the Board,
its Chief Executive Officer, if any, its President or Secretary, whether
before or after the meetings of shareholders referred to in Section 1 of this
Article X, provided, however, that such action shall be taken only if in the
judgment of the Board or Officer taking such action, such waiver will not have
a material adverse effect on the benefits intended hereunder for the
shareholders of its or his corporation. Such action shall be evidenced by
written instrument signed on behalf of Teletronics by its Chairman of the
Board, Chief Executive Officer, if any, its President or its Secretary.
4. Teletronics and ATH agree that from time to time, as and when
requested, it will execute and deliver, or cause to be executed and delivered,
all such deeds and other instruments, and will take or cause to be taken such
further action as ATH may deem necessary or desirable in order more fully to
vest or perfect in or confirm of record to ATH title to and possession of all
property, rights, privileges, powers and franchises of the Constituent
Corporations and otherwise to carry out the intent and purpose of this
Agreement.
5. The respective representations and warranties of ATH contained
herein shall expire and be terminated and extinguished upon the consummation
of the Reorganization.
6. This Agreement shall be construed under and in accordance with and
be governed by the laws of the States of Colorado and Texas.
7. All notices or communications required by this Agreement or by law,
or deemed by the parties hereto to be necessary or desirable in connection
with the transactions contemplated herein, shall be in writing and shall be
delivered personally, addressed if to Teletronics, to American Teletronics,
Inc., 154300 Knoll Trail, Suite 205, Dallas, TX 75248; if to ATH, to American
Teletronics, Inc., 15400 Knoll Trail, Suite 205, Dallas, TX 75248.
8. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
9. This Agreement may be executed in one or more counterparts all of
which shall be considered one and the same original agreement and shall become
effective when one or more counterparts have been signed by each of the
parties hereto and delivered to the other party hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement and
Plan of Reorganization, to be executed on its behalf and its corporate
seal to be hereunto affixed and attested by its officers thereunto duly
authorized, all as of the day and year first above written.
(CORPORATE SEAL)
ATTEST
, Secretary AMERICAN TELETRONICS, INC.
By
__________________________
Harry K. Myers, Jr.
Chairman of the Board
(CORPORATE SEAL)
ATTEST AMERICAN TELETRONICS HOLDING,
INC.
By
__________________________
John N. Stogner, Agent
ANNEX B
ARTICLES OF INCORPORATION
OF
AMERICAN TELETRONICS, INC.
ARTICLE I
Name
The name of the Corporation shall be: American Teletronics, Inc.
ARTICLE II
Period of Duration
The corporation shall exist in perpetuity, from and after the date of
filing these Articles of Incorporation with the Secretary of State of the
State of Colorado unless dissolved according to law.
ARTICLE III
Purposes and Powers
1. Purposes. Except as restricted by the Articles of Incorporation,
the corporation is organized for the purpose of transacting all lawful
business for which corporations may be incorporated pursuant to the Colorado
Corporation Code.
2. General Powers. Except as restricted by the Articles of
Incorporation, the corporation may exercise all powers which a corporation may
exercise legally pursuant to the Colorado Corporation Code.
3. Partial Liquidations. The board of directors of the corporation
may distribute, from time to time, to its shareholders in partial liquidation,
out of stated capital or capital surplus of the corporation, a portion of its
assets in cash or property.
4. Issuance of Shares. The board of directors of the corporation may
divide and issue any class of stock of the corporation in series pursuant to a
resolution properly filed with the Secretary of State of the State of
Colorado.
<PAGE>
ARTICLE IV
Capital Stock
The aggregate number of shares which this corporation shall have
authority to issue is one hundred fifty million (150,000,000) shares of which
100,000,000 (one hundred million) shares are no par value, which shares shall
be designated "Common Stock" and 50,000,000 (fifty million) shares are no par
value, which shares shall be designated "Preferred Stock."
1. Dividends. Dividends in cash, property or shares of the
corporation may be paid upon the Common Stock, as and when declared by the
board of directors, out of funds of the corporation to the extent and in the
manner permitted by law.
2. Distribution in Liquidation. Upon liquidation, dissolution or
winding up of the corporation, and after paying or adequately providing for
the payment of all its obligations, the remainder of the assets of the
corporation shall be distributed, either in cash or in kind, pro rata to the
holders of the Common Stock.
3. Voting Rights; Cumulative Voting. Each outstanding share of
Common Stock shall be entitled to one vote and each fractional share of Common
Stock shall be entitled to a corresponding fractional vote on each matter
submitted to a vote of shareholders. Cumulative voting shall not be allowed
in the election of directors of the corporation.
4. Denial of Preemptive Rights. No holder of any shares of the
corporation, whether now or hereafter authorized, shall have any preemptive or
preferential right to acquire any shares or securities of the Corporation,
including shares or securities held in the treasury of the corporation.
ARTICLE V
Right of Directors to Contract with Corporation
No contract or other transaction between the corporation and one or more
of its directors or any other corporation, firm, association, or entity in
which one or more of its directors are directors or officers or are
financially interested shall be either void or voidable solely because of such
relationship or interest or solely because such directors are present at the
meeting of the board of directors or a committee thereof which authorizes,
approves, or ratifies such contract or transaction or solely because their
votes are counted for such purpose if:
(a) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves, or ratifies
the contract or transaction by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested directors; or
(b) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent; or
(c) The contract or transaction is fair and reasonable to the
corporation.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves, or ratifies such contract or transaction.
ARTICLE VI
Corporate Opportunity
The officers, directors and other members of management of this
corporation shall be subject to the doctrine of "corporate opportunities" only
insofar as it applies to business opportunities in which this corporation has
expressed an interest as determined from time to time by this corporation's
board of directors as evidenced by resolutions appearing in the corporation's
minutes. Once such areas of interest are delineated, all such business
opportunities within such areas of interest which come to the attention of the
officers, directors, and other members of management of this corporation shall
be disclosed promptly to this corporation and made available to it. The board
of directors may reject any business opportunity presented to it and
thereafter any officer, director or other member of management may avail
himself of such opportunity. Until such time as this corporation, through its
board of directors, has designated an area of interest, the officers,
directors and other members of management of this corporation shall be free to
engage in such areas of interest on their own and this doctrine shall not
limit the rights of any officer, director or other member of management of
this corporation to continue a business existing prior to the time that such
area of interest is designated by the corporation. This provision shall not
be construed to release any employee of this corporation (other than an
officer, director or member of management) from any duties which he may have
to this corporation.
ARTICLE VII
Indemnification
Directors and Others
1. The corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right corporation), by reason
of the fact that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise, against expenses (including
attorney's fees), judgments, fines, and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in the best interests of the corporation and, with respect to any criminal
action or proceeding had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, or conviction or upon a plea of nolo contendere or its
equivalent shall not of itself create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in the
best interests of the corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
2. The corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in the best
interests of the corporation; but no indemnification shall be made in respect
of any claim, issue, or matter as to which such person has been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the court in which such action
or suit was brought determines upon application that, despite the adjudication
of liability, but in view of all circumstances of the case, such person is
fairly and reasonably entitled to indemnification for such expenses which such
court deems proper.
3. To the extent that a director, officer, employee, or agent of the
corporation has been successful on the merits in defense of any action, suit
or proceeding referred to in this article or in defense of any claim, issue,
or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
4. Any indemnification under paragraph 1 or 2 of this article (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in said paragraphs 1 or 2. Such
determination shall be made by the board of directors by a majority vote of a
quorum consisting of directors who were not parties to such action, suit, or
proceeding, or, if such a quorum is not obtainable or even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in
a written opinion, or by the shareholders.
5. Expenses (including attorneys' fees) incurred in defending a civil
or criminal action, suit, or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit, or proceeding as
authorized in paragraph 4 of this article upon receipt of an undertaking by or
on behalf of the director, officer, employee, or agent to repay such amount
unless it is ultimately determined that he is entitled to be indemnified by
the corporation as authorized in this article.
6. The indemnification provided by this article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
the Articles of Incorporation, any bylaw, agreement, vote of shareholders or
disinterested directors, or otherwise, and any procedure provided for by any
of the foregoing, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as to a
person who has ceased to be a directors, officer, employee, or agent and shall
inure to the benefit of heirs, executors, and administrators of such a person.
7. The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the
corporation or who is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this article.
8. A unanimous vote of each class of shares entitled to vote shall be
required to amend this article.
ARTICLE VIII
Shareholder Voting
A majority of the shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders.
When, with respect to any action to be taken by shareholders of this
Corporation, the laws of Colorado require the vote or concurrence of the
holders of two-thirds of the outstanding shares, of the shares entitled to
vote thereon, or of any class or series, such action may be taken by the vote
or concurrence of a majority of such shares or class or series thereof.
<PAGE>
ARTICLE IX
Adoption and Amendment of Bylaws
The initial Bylaws of the corporation shall be adopted by its board of
directors. The power to alter or amend or repeal the Bylaws or adopt new
Bylaws shall be vested in the board of directors, but the holders of common
stock may also alter, amend or repeal the Bylaws or adopt new Bylaws. The
Bylaws may contain any provisions for the regulation and management of the
affairs of the corporation not inconsistent with law or these Articles of
Incorporation.
ARTICLE X
Registered Office and Registered Agent
The address of the initial registered office of the corporation is 2600
Energy Center One, 717 Seventeenth Street, Denver, Colorado 80202, and the
name of the initial registered agent at such address is John B. Wills. Either
the registered office or the registered agent may be changed in the manner
permitted by law.
ARTICLE XI
Initial Board of Directors
The number of directors of the corporation shall be fixed by the Bylaws
of the corporation, except the initial board of directors of the corporation
shall consist of three directors. The names and addresses of the persons who
shall serve as directors until the first annual meeting of shareholders and
until their successors are elected and shall qualify are as follows:
NAME ADDRESS
Larry A. Stapp Suite 355
One Marienfeld Place
Midland, TX 79701
Charles F. Boscker Suite 355
One Marienfeld Place
Midland, TX 79701
Dedric B. Baxter Suite 395
One Marienfeld Place
Midland, TX 79701
ARTICLE XII
Incorporator
The name and address of the incorporator is a follows:
NAME ADDRESS
Jon D. Sawyer 2600 Energy Center One
717 Seventeen Street
Denver, Colorado 80202
IN WITNESS WHEREOF, the above-named incorporator has signed these
Articles of Incorporation this 7th day of November, 1979.
_____________________
Jon D. Sawyer
ANNEX C
ARTICLES OF INCORPORATION
OF
AMERICAN TELETRONICS HOLDING, INC.
ARTICLE ONE
The name of the Corporation is AMERICAN TELETRONICS HOLDING, INC.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is to transact any and
all lawful business for which corporations may be incorporated under the Texas
Business Corporation Act.
ARTICLE FOUR
The corporation shall have authority to issue two classes of shares, to
be designated, respectively, "preferred" and "common." The total number of
shares which the corporation is authorized to issue is 150,000,000 shares.
The number of preferred shares authorized is 50,000,000 shares and the par
value of each such share is $2.50 (two dollars and fifty cents). The number
of common shares authorized is 100,000,000 shares, and the par value of each
such share is $0.01 (one cent)
The preferred shares authorized by these Articles of Incorporation may be
issued from time to time in one or more series. The Board of Directors is
hereby authorized to fix or alter the dividend rates, conversion rights, right
and terms of redemption, including sinking fund provisions, the redemption
price or prices, and the liquidation preferences of any wholly unissued series
of preferred shares, and the number of shares constituting any such series and
the designations thereof, or any of them.
ARTICLE FIVE
The Board of Directors may issue shares of any class of stock of the
Corporation, or any notes, debentures, bonds or other securities convertible
into or carrying rights, options or warrants to purchase shares of any class.
No shareholder of the Corporation shall by reason of his holding shares of any
class of stock of the Corporation have any preemptive or preferential right to
purchase or subscribe to any shares of any class of the Corporation, now or
hereafter to be authorized, or to any notes, debentures, bonds or other
securities convertible into or carrying rights, options or warrants to
purchase shares of any class, now or hereafter to be authorized whether or not
the issuance of any such shares, notes, debentures, bonds or other securities
would adversely affect the dividend or voting rights of such shareholder. The
Board of Directors, however, may, in its discretion, and at such price as it
may fix, grant such rights to shareholders of the Corporation.
ARTICLE SIX
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000.00), consisting of money, labor done or property actually
received.
ARTICLE SEVEN
In all elections for directors, each shareholder shall have the right to
vote, in person or by proxy, the number of shares owned by him, for as many
persons as there are directors to be elected, and for whose election he has
the right to vote. It is expressly prohibited for any shareholder to cumulate
his votes in any election of directors.
ARTICLE EIGHT
The Board of Directors shall adopt the initial Bylaws. The power to
alter, amend or repeal the Bylaws of the Corporation, or to adopt new Bylaws,
is hereby delegated to the Board of Directors, except that such power is
subject to ultimate control of the shareholders.
ARTICLE NINE
The post office address of its initial registered office is 15400 Knoll
Trail, Ste. 200, Dallas, Texas 75248 and the name of its initial registered
agent at such address is Harry K. Myers, Jr.
ARTICLE TEN
The number of directors constituting the initial Board of Directors shall
be one (1) and the number and address of those persons to serve as directors
until the first annual meeting of shareholders, or until their successors be
elected and qualified is:
Robert A. Forrester
1215 Executive Dr. W.
Suite 102
Richardson, Texas 75081
ARTICLE ELEVEN
The corporation shall indemnify any and all persons whom it has the
power to indemnify under the Texas Business Corporation act against any
and all expenses, judgments, fines, amounts paid in settlement, and any
other liabilities to the fullest extent permitted by such Law and may, at
the discretion of the Board of Directors, purchase and maintain
insurance, at its expense, and to indemnify him against any judgment,
fine, amount paid in settlement or other liability, whether or not the
corporation would have the power to so indemnify such person under the
Texas Business Corporation Act.
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 2.02-1 of
the Texas Business Corporation Act, as the same exists or hereafter may
be amended, or (iv) for any transaction from which the director derived
an improper personal benefit. Any repeal or modification of this
paragraph by the stockholders of the corporation shall be prospective
only, and shall not adversely affect any limitation on the personal
liability of a director of the corporation existing at the time of such
repeal or modification.
The corporation, to the maximum extent permitted by the Texas
Business Corporation Act (or any other applicable law, rule or
regulation), shall indemnify and hold harmless each person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he, or a
person of whom he is the legal representative, is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit or proceeding. Expenses incurred by any such person in defending a
civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding, to the maximum extent permitted by law. Notwithstanding any
subsequent alteration, amendment or repeal of this ARTICLE ELEVEN, the
right to indemnification and to advance payments created by this ARTICLE
ELEVEN shall apply to (a) any claims made or asserted at any time while
this ARTICLE ELEVEN is in effect and (b) any claims based on or arising
from any act, omission or event occurring at any time while this ARTICLE
ELEVEN in in effect.
ARTICLE TWELVE
The Articles may be altered, amended or repealed or new Articles may be
adopted by the shareholders by the affirmative vote of a majority of the
shares of Capital Stock of the Corporation entitled to vote thereon. The
shareholders of this Corporation may (i) adopt a plan of merger or
consolidation and/or (ii) authorize a sale, lease, exchange or other
disposition of all or substantially all of the property and assets of the
Corporation by the affirmative vote of a majority of the shares of Capital
Stock of the Corporation entitled to vote thereon.
ARTICLE THIRTEEN
Any action required by the Texas Business Corporation to be taken at any
annual or special meeting of shareholders, or any action which may be taken at
any annual or special meeting of shareholders, may be taken without a meeting,
without prior notice, and without a vote, if a 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 that would
be necessary to take such action at a meeting at which the holders of shares
entitled to vote on the action were present and voted.
ARTICLE FOURTEEN
The name and address of the incorporator, who is more than 18 years of
age,
is:
Robert A. Forrester
1215 Executive Dr. W.
Suite 102
Richardson, Texas 75081
/s/ Robert A. Forretser
Incorporator
COUNTY OF DALLAS
Before me, a notary public, on this day personally appeared , known to
me to be the person whose name is subscribed to the foregoing document and,
being by me first duly sworn, declared that the statements therein contained
are true and correct.
Given under my hand and seal of office this 28th day of February, 1996.
(Notarial Seal) ______________________________
(Printed or stamped name)
Notary Public, State of Texas
My Commission expires:
ANNEX D
PART I
RIGHT OF DISSENT - PAYMENT FOR SHARES
Section 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.
Section 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 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 voided under section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair value
of the shareholders 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.
Section 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 shares 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.
Section 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 shareholder's 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 (2) 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.
Section 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 dissenter's 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.
Section 7-113-203. Dissenters' notice
(1) If a proposed corporate action creating dissenter's 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 certificated shares
must be deposited;
(c) Inform holders of uncertificated 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 certificated 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 certificated 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 uncertificated 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
eceipt 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 statement, 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 uncertificated
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
sections 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.
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 uncertificated 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 unresolved, 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
of 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 person 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.
ANNEX E
MANAGEMENT AGREEMENT
THIS AGREEMENT IS SUBJECT TO ARBITRATION
UNDER THE TEXAS GENERAL ARBITRATION ACT
AGREEMENT made this 30th day of December, 1994, between Execu-Staff
International Limited, a New Mexico corporation, hereinafter referred to as
the Corporation, and Harry K. Myers and John N. Stogner, hereinafter referred
to as the Management Team and American Teletronics, Inc., the acquiring
Company.
In consideration of the mutual promises herein contained, the parties
hereto agree as follows:
Recitals
It is the desire of American Teletronics, Inc., as a condition of the
acquisition of the assets of Execu-Staff International Limited, for Execu-
taff International Limited to have in place a management contract with an
experienced management team including at least one senior corporate officer
with public company experience.
Accordingly, it is the desire of the Corporation to engage the services
of the Management Team, as the Chairman of the Board and the President of the
Corporation, to be responsible for managing all business activities for the
Corporation (including but not limited to financing, accounting, marketing,
sales, operations, planning, budgeting, personnel and purchasing) at all the
Corporation's locations.
Accordingly, it is the desire of the Management Team to manage the
Corporation and to be officers and directors of the Corporation.
AGREEMENT
Term
1. The respective duties and obligations of the parties hereto shall be for
a period of five years commencing on December 1, 1994, and renewing annually
at the anniversary date of this agreement for additional one year periods
unless written notice to the contrary is delivered by one of the parties to
the others not later than thirty (30) days prior to the anniversary date of
December 1 of each year.
Availability
2. The Management Team shall make themselves available to the Corporation a
minimum of fifty (50%) percent of the time or not less than 1,000 hours per
annum for each Management Team member.
Authority of the Management Team
3. The Management Team shall have the full authority normally and
customarily granted to the Chairman of the Board and the President of a
company, which is listed on any public stock exchange and shall be subject to
the By-Laws of ATI and the direction of the Board of Directors.
Limited Liability
4. With regard to the services to be performed by the Management Team
pursuant to the terms of this agreement, the Management Team shall not be
liable to the Corporation, or to anyone who may claim any right due to his
relationship with the Corporation, for any acts or omissions in the
performance of said services on the part of the Management Team, except when
said acts or omissions of the Management Team are due to their willful
misconduct or culpable negligence. The Corporation shall hold the Management
Team free and harmless from any obligations, costs, claims, judgments,
attorneys' fees, and attachments arising from or growing out of the services
rendered to the Corporation pursuant to the terms of this agreement or in any
way connected with the rendering of said services, except when the same shall
arise due to the willful misconduct or culpable negligence of the Management
Team, and the Management Team are adjudged to be guilty of willful misconduct
or culpable negligence by a court of competent jurisdiction.
Compensation
5. It is recognized and admitted that none of the entities that are being
combined into ATI have made a profit within the last three years. It is
further recognized that in order to attract capital from conventional sources
and capital markets that it is necessary to have a competent and committed
Management Team in place. It is further, recognized and admitted that the
current members of the Management Team are giving up other more lucrative
compensation opportunities to commit to the term of this agreement.
Accordingly, the Management Team shall receive an annual compensation from the
Corporation a sum for the performance of the management services to be
rendered to the Corporation pursuant to the terms of this agreement which
shall be equal to twenty (20%) percent of the pretax profits of the
Corporation. The Pretax Profit of the Corporation shall be defined as all
revenues of the Corporation minus all normal expenses of the Corporation,
including interest on the debt incurred to acquire the Corporation and
amortization of goodwill created by the acquisition of the Corporation. For
purposes of this calculation corporate allocations shall not be deducted from
revenues. Such amount shall be paid quarterly and adjusted annually by an
audit of outside independent auditors.
<PAGE>
The Corporation acknowledges that the Management Team currently receives
compensation from another related company and that this compensation is in
addition to that compensation.
The Management Team may at its option take whatever amount of compensation it
earns in the form of whatever consideration it determines provided that the
medium chosen does not adversely effect ESI or ATI.
Arbitration
6. As concluded by the parties hereto upon the advice of counsel, and as
evidenced by the signatures of the parties hereto, any controversy between the
parties hereto involving the construction or application of any of the terms,
covenants, or conditions of this agreement, shall on the written request of
one party served upon the other, be submitted to arbitration, and such
arbitration shall comply with and be governed by the provisions of the Texas
General Arbitration Act, Articles 224 through 238-6 of the Revised Civil
Statutes of Texas.
Failure to Act by One Member of the Management Team
7. It is understood and agreed that any management service performed by
either member of the Management Team, pursuant to the provisions of this
agreement, shall constitute the performance of management service of both
members of the Management Team. If, for any reason, one or the other of the
Management Team is unable or unwilling to act or perform pursuant to the terms
of this agreement, such event shall not void this agreement or diminish its
effect, and the performance on the part of the other Management Team shall
constitute full and complete performance of this agreement on the part of the
Management Team.
Remedies
8. If any action at law or equity is necessary to enforce or interpret the
terms of this agreement, the prevailing party shall be entitled to reasonable
attorney's fees, costs, and necessary disbursements in addition to any other
relief to which he may be entitled.
Texas Law to Apply
9. This agreement shall be construed under and in accordance with the laws
of the State of Texas, and all obligations of the parties created hereunder
are performable in Dallas County, Texas.
Parties Bound
10. This agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors, and assigns where permitted by this agreement.
Legal Construction
11. In case any one or more of the provisions contained in this agreement
shall for any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision thereof, and this agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein.
Prior Agreements Superseded
12. This agreement constitutes the sole and only agreement of the parties
hereto and supersedes any prior understandings or written or oral agreements
between the parties respecting the within subject matter.
Executed at Dallas, Texas, on the day and year first above mentioned.
Execu-Staff International, Limited
By__________________
Its _________________
______________________
Harry K. Myers, Individually
_____________________________
John N. Stogner, Individually
American Teletronics, Inc.
By ___________________________
James L. Hawley, II
Its Chairman of the Board
ANNEX A
AGREEMENT OF REORGANIZATION BETWEEN
AMERICAN TELETRONICS, INC. AND AMERICAN TELETRONICS HOLDING, INC.
AGREEMENT OF REORGANIZATION dated as of ____, 1996 by and among American
Teletronics, Inc., a Colorado Corporation (hereinafter called "Teletronics"),
and American Teletronics Holding, Inc., a Texas Corporation (hereinafter
called "ATH"),
WITNESSETH:
WHEREAS, Teletronics is a Corporation duly organized and existing under
the laws of the State of Colorado; and
WHEREAS, ATH is a corporation duly organized and existing under the laws
of the State of Texas; and
WHEREAS, the authorized shares of Teletronics consist of 100,000,000
shares of Common Stock, no par value, of which 53,139,056 shares are now
issued and outstanding, and 50,000,000 shares of Preferred Stock, par value
$ 2.50, none of which are outstanding; and
WHEREAS, the authorized shares of ATH consist of 100,000,000 shares of
Common stock, 0.01 par value, none of which are now issued and outstanding and
50,000,000 shares of Preferred Stock, par value $2.50 none of which are issued
or outstanding; and
WHEREAS, the Boards of Directors of Teletronics and ATH deem it advisable
for the mutual benefit of Teletronics and ATH and the shareholders of
Teletronics that ATH acquire all of the issued and outstanding stock of
Teletronics on the terms and conditions hereinafter set forth and in
accordance with the applicable laws of the State of Texas and of the State of
Colorado and have approved of this Agreement of Reorganization (the
"Agreement").
<PAGE>
ARTICLE I
STATUS AND CONVERSION OF SHARES AND
OPTIONS
The mode of carrying into effect the reorganization provided for in this
Agreement (the "Reorganization"), the manner and basis of converting the
shares of Teletronics into shares of ATH and the consideration to be paid and
delivered for the exchange of the outstanding shares of Teletronics are as
follows:
1. This Agreement shall be submitted to a vote of the shareholders of
Teletronics. The effective time of the Reorganization (the "Reorganization")
shall be the time immediately following ratification of this Agreement by
Teletronics shareholders and declared effective by the Board of Directors of
Teletronics.
2. Each share of Common Stock, no par value, of Teletronics issued and
outstanding immediately prior to the effective time of the Reorganization
shall, by virtue of the Reorganization and without any action on the part of
the holder thereof, automatically be converted into one share of Common Stock
of ATH. After the reorganization becomes effective, each outstanding
certificate which represented shares of Teletronics shall be deemed by ATH for
all corporate purposes to evidence ownership of the number of shares of ATH
Common Stock, to which the holder thereof is entitled as aforesaid; the holder
thereof shall have the rights, privileges and participation of a record holder
of such number of shares of ATH Common Stock; delivery of a Teletronics
certificate shall constitute delivery of shares of Common Stock of ATH
represented thereby. Notwithstanding the foregoing provisions of this
Paragraph 2 of Article I, Teletronics shares held by an Teletronics
shareholder who shall have filed a written notice of election to dissent under
Section 7-113-202 of the Colorado Business Corporation Law and who at the
effective time of the reorganization shall not have withdrawn such notice
(with the consent of Teletronics if required, under such Section 7-113-202)
shall not be deemed to represent shares of ATH Common Stock and shall not be
entitled to the rights, privileges or participation thereof or of ATH shares
or until such time as such holder shall withdraw such notice (with consent of
Teletronics, if required under said Section 7-113-202), at which time such
shares shall be reinstated to all the rights, privileges and participations
thereof as of the date of the filing of such notice of election including
becoming ATH Common Stock as of the effective time of the Reorganization.
3. ATH shall assume, effective as of the effective time of the
Reorganization, Teletronic's obligations under each then existing plan,
substitute, restricted, qualified, and non-qualified stock option plan to
purchase shares of Teletronics Common Stock (such option existing immediately
prior to the effective time of the Reorganization being called an "Existing
Option" and each option so assumed by ATH being called an "Assumed Option") by
which assumption the Optionee shall be entitled for the price per share of
Teletronics Common Stock specified in his Existing Option and under the terms
of said Existing Option to purchase one share of ATH Common Stock in lieu of
shares of Teletronics Common Stock with respect to which such Existing Option
remains unexercised immediately prior to the effective time of the
Reorganization.
Each Assumed Option shall constitute a continuation of the Existing
Option, substituting ATH for Teletronics, and employment by ATH or any of its
subsidiaries for employment by Teletronics, or its subsidiaries, effective at
the effective time of the reorganization. Otherwise all of the terms and
provisions of each Assumed Option shall be the same as and shall continue all
of the terms and provisions of the Existing Option, including but not limited
to the times when the Assumed Option may be exercised in relation to the date
of the granting of the Existing Option, it being the intent of this paragraph
that each Assumed Option shall continue as a substitute, restricted, qualified
or nonqualified stock option as the case may be, under the provisions of the
Internal Revenue Code, as amended. ATH will issue to each holder of an
Existing Option a written instrument evidencing ATH's assumption of such
Existing Option.
ARTICLE II
EFFECT OF REORGANIZATION
At the effective time of the Reorganization, the ATH shall retain or
succeed to, without other transfer, and shall possess all the rights,
privileges, immunities, powers, purposes and franchises both of a public and
private nature, and be subject to all the restrictions, disabilities and
duties of Teletronics; and all property, real, personal and mixed, and all
debts due to either of Teletronics on whatever account, for stock
subscriptions as well as for all other things in action or belonging to
Teletronics, shall remain, or be, vested in ATH; and all property, rights,
privileges, immunities, powers, purposes and franchises and all and every
other interest shall be thereafter as effectually the property of ATH as they
were of Teletronics, and the title to any real estate vested by deed or
otherwise in Teletronics shall not be in any way impaired by reason of
the Reorganization; provided, however, that all rights of creditors and all
liens upon any property of Teletroncis shall be preserved unimpaired, limited
in lien to the property affected by such liens at the effective time of the
Reorganization, and all debts, liabilities and duties, except as provided in
Article I hereof, of Teletroncis shall remain enforceable against Teletronics.
ARTICLE III
DIRECTORS AND OFFICERS
The Directors and Officers of Teletronics, at the effective time of the
reorganization shall be the Directors and Officers of Teletroncis.
ARTICLE IV
VOTING RIGHTS
In accordance with the provisions of the Business Corporation Law of the
State of Colorado and the Texas Business Corporation Act, as amended, the
holder of each share of the common stock of Teletronics is entitled to vote
upon the adoption of this Agreement of Reorganization, each share being
entitled to one vote. The approval of the holders of at least a majority of
the outstanding Common Stock of Teletronics is required. The number of its
authorized and issued shares will not be changed by ATH prior to the effective
time of the reorganization.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Teletronics and ATH represent, warrant to and with each other as follows:
1. Teletronics and ATH are each corporations duly organized, validly
existing and in good standing under the Laws of the State of Colorado and
Texas respectively, and each has the corporate power to own its property and
carry on its business as now being conducted by it.
2. As of the date hereof, each of them had the authorized Common Stock
and issued and outstanding shares set forth herein. All of the issued and
outstanding shares of Common Stock of each of them are validly issued, fully
paid and nonassessable.
3. Between the date hereof and the effective time of the
Reorganization, Teletronics will not sub-divide or otherwise change,
authorize, issue or re-issue, or agree to subdivide any shares of its Common
Stock except as set forth on Exhibit A hereto.
4. There is no action, suit or proceeding pending or, to the knowledge
of Teletronics or ATH, threatened against or affecting ATH and Teletronics or
any of its subsidiaries, before any Court, agency or governmental body which
would prevent the consummation of the transactions contemplated or have a
material adverse effect on the business, operations, prospects, properties,
assets or condition, financial or otherwise, of any of them.
5. Since its incorporation, ATH has conducted no business and will
conduct no business except as necessary to consummate the Reorganization. It
has no contingent or other liabilities except organization expenses and
expenses which may be incurred pursuant to this Agreement. Its capitalization
will not change between the date hereof and the effective time of the
Reorganization.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
ATH represents and warrants as follows:
1. It is a Corporation duly organized, validly existing and in good
standing under the Laws of the State of Texas and has the corporate power to
enter into this Agreement and Reorganization. There are no outstanding
options, warrants, or rights to purchase from ATH any of its authorized or
issued Common Stock or any calls on or commitments of ATH relating thereto
except as set forth in this Agreement.
2. ATH has only nominal assets and has not actively commenced business
of any kind other than to take such steps as may be required to consummate
this Agreement.
3. There is no action, suit or proceeding pending, or to the knowledge
of ATH threatened against ATH, before any Court, Agency, or governmental body
which would prevent the consummation of the transactions contemplated by this
Agreement or have a material adverse effect on the business, obligations,
prospects, properties, assets or condition, financial or otherwise, of ATH.
ARTICLE VII
CONDITIONS
A. The obligations of Teletronics to consummate the Reorganization is
subject to the satisfaction on or prior to the Closing Date of the following
conditions:
1. The representations and warranties of ATH herein contained
shall be true as of and at the Closing Date with the same effect as though
made on such date; all obligations and covenants required by this Agreement to
be performed or complied with by ATH, prior to the effective time of the
Reorganization, shall have been duly performed or complied with.
2. An opinion shall have been received from the law firm of Bruce
Hart, Esq. in form and substance satisfactory to the General Counsel of
Teletronics to the effect, among other things, that under the applicable
provisions of the Internal Revenue Code, as amended, no gain or loss will be
recognized to Teletronics or to the holders of Teletronics shares for Federal
income tax purposes by reason of the Reorganization or the conversion of
Teletronics shares into shares of ATH.
3. The number of Teletronics shares in respect of which elections
to dissent have been filed with Teletronics in accordance with Section
7-113-202 of the Colorado Business Corporation Law shall not make consummation
of the transactions contemplated hereby unwise in the opinion of the Board of
Directors of Teletronics.
4. All actions, consents, approvals, governmental or otherwise,
which are or may be necessary to carry out the transactions contemplated
hereby and which are, in the judgment of the Board of Directors of Teletronics
necessary or desirable to permit or enable Teletronics, upon and after the
Reorganization, to conduct all or any part of the business and activities of
Teletronics, substantially in the manner in which such activiites and business
are presently conducted, shall have been obtained and remain in effect.
B. The obligation of ATH to consummate the Reorganization is subject to
the satisfaction on or prior to the Closing Date of the following conditions:
1. The representations and warranties of Teletronics herein
contained shall be true as of and at the Closing Date with the same effect as
though made on such date; Teletronics shall have performed all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it prior to the effective time of the Reorganization.
2. The Reorganization shall have been approved by the holders of
a majority of the Teletronics shares.
C. Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated and abandoned at any time before the effective
time of the Reorganization, whether before or after adoption or approval of
this Agreement by the shareholders of the Constituent Corporations.
1. By the mutual consent of the Boards of Directors of the
Teletronics and ATH;
2. By Teletronics if, prior to the effective time of the
reorganization, the conditions set forth in subparagraphs 1 through 4 of
Section A of this Article VII shall not have been met;
3. By ATH if, prior to the effective time of the Reorganization,
the conditions set forth in subparagraphs 1 through 2 of Section B of this
Article X shall not have been met.
ARTICLE VIII
COVENANTS
1. ATH covenants as follows:
a. ATH will give its written consent to the adoption of the
Agreement.
b. ATH will, at the effective time of the Reorganization, deem all
of the Teletronics shares outstanding immediately prior to the effective time
of the Reorganization, to be issued and outstanding shares of ATH. ATH will
assume at the effective time of the Reorganization, all of the then existing
substitute, restricted, qualified or nonqualified stock options to purchase
shares of Common Stock of Teletronics and will, upon exercise of each such
option, issue an equivalent number of shares of Common Stock of ATH. The
purchase price per share, upon exercise of each such Assumed Option, shall be
the same as the purchase price per share of the Common Stock of Teletronics
provided in the option assumed by ATH. ATH will at all times reserve for
issuance and will issue such number of shares of its Common Stock as are
issuable upon exercise of Teletronics Common Stock Purchase Warrants and upon
exercise of the Assumed Options.
c. ATH also agrees that subject to the provisions of the
Agreement, it will duly take or cause to be taken all such action as is
required to be taken by it for consummation of the transactions contemplated
in the Agreement.
ARTICLE IX
PROHIBITED ACTION
From the date hereof to the effective time of the Reorganization unless
Teletronics shall otherwise consent in writing:
1. ATH will not declare or pay any dividend or make any other
distribution of or with respect to its Common Stock, redeem, purchase or
otherwise acquire any of its outstanding stock, split, combine or reclassify
its Common Stock or agree to take any such action.
2. ATH will maintain its corporate existence and will not amend its
Certificate of Incorporation, a copy of which has been furnished to
Teletronics.
ARTICLE X
BOARD RECOMMENDATION; AMENDMENT;
WAIVER; FURTHER ACTION, ETC.
1. The Board of Directors of Teletronics will recommend to its
shareholders that they consider and approve the terms of this Agreement and
authorize the transactions contemplated hereby. This Agreement shall be
submitted to the shareholders of Teletronics as provided by law and its
Certificate of Incorporation at a Special Meeting to be held as soon as
practicable.
2. Subject to applicable law, this Agreement may be amended upon
authorization by the Boards of Directors of Teletronics and ATH, before or
after the meetings of shareholders, referred to in Section 1 of this Article X
at any time prior to the effective time of the Reorganization with respect to
any of the terms contained herein.
3. Any of the terms or conditions of this Agreement except the opinion
of Bruce Hart, Esq. required by Paragraph A2 of Article VII and except the
terms and conditions imposed by the Business Corporation Law of the State of
Colorado and the Texas Business Corporations Act, may be waived at any time
prior to the effective time of the Reorganization by the Constituent
Corporation which is, or whose shareholders are, entitled to the benefit
thereof, by action taken by its Board of Directors, its Chairman of the Board,
its Chief Executive Officer, if any, its President or Secretary, whether
before or after the meetings of shareholders referred to in Section 1 of this
Article X, provided, however, that such action shall be taken only if in the
judgment of the Board or Officer taking such action, such waiver will not have
a material adverse effect on the benefits intended hereunder for the
shareholders of its or his corporation. Such action shall be evidenced by
written instrument signed on behalf of Teletronics by its Chairman of the
Board, Chief Executive Officer, if any, its President or its Secretary.
4. Teletronics and ATH agree that from time to time, as and when
requested, it will execute and deliver, or cause to be executed and delivered,
all such deeds and other instruments, and will take or cause to be taken such
further action as ATH may deem necessary or desirable in order more fully to
vest or perfect in or confirm of record to ATH title to and possession of all
property, rights, privileges, powers and franchises of the Constituent
Corporations and otherwise to carry out the intent and purpose of this
Agreement.
5. The respective representations and warranties of ATH contained
herein shall expire and be terminated and extinguished upon the consummation
of the Reorganization.
6. This Agreement shall be construed under and in accordance with and
be governed by the laws of the States of Colorado and Texas.
7. All notices or communications required by this Agreement or by law,
or deemed by the parties hereto to be necessary or desirable in connection
with the transactions contemplated herein, shall be in writing and shall be
delivered personally, addressed if to Teletronics, to American Teletronics,
Inc., 154300 Knoll Trail, Suite 205, Dallas, TX 75248; if to ATH, to American
Teletronics, Inc., 15400 Knoll Trail, Suite 205, Dallas, TX 75248.
8. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
9. This Agreement may be executed in one or more counterparts all of
which shall be considered one and the same original agreement and shall become
effective when one or more counterparts have been signed by each of the
parties hereto and delivered to the other party hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
and Plan of Reorganization, to be executed on its behalf and its corporate
seal to be hereunto affixed and attested by its officers thereunto duly
authorized, all as of the day and year first above written.
(CORPORATE SEAL)
ATTEST
, Secretary AMERICAN TELETRONICS, INC.
By
__________________________
Harry K. Myers, Jr.
Chairman of the Board
(CORPORATE SEAL)
ATTEST AMERICAN TELETRONICS HOLDING,
INC.
By
__________________________
John N. Stogner, Agent
ANNEX C
ARTICLES OF INCORPORATION
OF
AMERICAN TELETRONICS HOLDING, INC.
ARTICLE ONE
The name of the Corporation is AMERICAN TELETRONICS HOLDING, INC.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is to transact any and
all lawful business for which corporations may be incorporated under the Texas
Business Corporation Act.
ARTICLE FOUR
The corporation shall have authority to issue two classes of shares, to
be designated, respectively, "preferred" and "common." The total number of
shares which the corporation is authorized to issue is 150,000,000 shares.
The number of preferred shares authorized is 50,000,000 shares and the par
value of each such share is $2.50 (two dollars and fifty cents). The number
of common shares authorized is 100,000,000 shares, and the par value of each
such share is $0.01 (one cent)
The preferred shares authorized by these Articles of Incorporation may be
issued from time to time in one or more series. The Board of Directors is
hereby authorized to fix or alter the dividend rates, conversion rights, right
and terms of redemption, including sinking fund provisions, the redemption
price or prices, and the liquidation preferences of any wholly unissued series
of preferred shares, and the number of shares constituting any such series and
the designations thereof, or any of them.
ARTICLE FIVE
The Board of Directors may issue shares of any class of stock of the
Corporation, or any notes, debentures, bonds or other securities convertible
into or carrying rights, options or warrants to purchase shares of any class.
No shareholder of the Corporation shall by reason of his holding shares of any
class of stock of the Corporation have any preemptive or preferential right to
purchase or subscribe to any shares of any class of the Corporation, now or
hereafter to be authorized, or to any notes, debentures, bonds or other
securities convertible into or carrying rights, options or warrants to
purchase shares of any class, now or hereafter to be authorized whether or not
the issuance of any such shares, notes, debentures, bonds or other securities
would adversely affect the dividend or voting rights of such shareholder. The
Board of Directors, however, may, in its discretion, and at such price as it
may fix, grant such rights to shareholders of the Corporation.
ARTICLE SIX
The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least One Thousand
Dollars ($1,000.00), consisting of money, labor done or property actually
received.
ARTICLE SEVEN
In all elections for directors, each shareholder shall have the right to
vote, in person or by proxy, the number of shares owned by him, for as many
persons as there are directors to be elected, and for whose election he has
the right to vote. It is expressly prohibited for any shareholder to cumulate
his votes in any election of directors.
ARTICLE EIGHT
The Board of Directors shall adopt the initial Bylaws. The power to
alter, amend or repeal the Bylaws of the Corporation, or to adopt new Bylaws,
is hereby delegated to the Board of Directors, except that such power is
subject to ultimate control of the shareholders.
ARTICLE NINE
The post office address of its initial registered office is 15400 Knoll
Trail, Ste. 200, Dallas, Texas 75248 and the name of its initial registered
agent at such address is Harry K. Myers, Jr.
ARTICLE TEN
The number of directors constituting the initial Board of Directors shall
be one (1) and the number and address of those persons to serve as directors
until the first annual meeting of shareholders, or until their successors be
elected and qualified is:
Robert A. Forrester
1215 Executive Dr. W.
Suite 102
Richardson, Texas 75081
ARTICLE ELEVEN
The corporation shall indemnify any and all persons whom it has the
power to indemnify under the Texas Business Corporation act against any
and all expenses, judgments, fines, amounts paid in settlement, and any
other liabilities to the fullest extent permitted by such Law and may, at
the discretion of the Board of Directors, purchase and maintain
insurance, at its expense, and to indemnify him against any judgment,
fine, amount paid in settlement or other liability, whether or not the
corporation would have the power to so indemnify such person under the
Texas Business Corporation Act.
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 2.02-1 of
the Texas Business Corporation Act, as the same exists or hereafter may
be amended, or (iv) for any transaction from which the director derived
an improper personal benefit. Any repeal or modification of this
paragraph by the stockholders of the corporation shall be prospective
only, and shall not adversely affect any limitation on the personal
liability of a director of the corporation existing at the time of such
repeal or modification.
The corporation, to the maximum extent permitted by the Texas
Business Corporation Act (or any other applicable law, rule or
regulation), shall indemnify and hold harmless each person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he, or a
person of whom he is the legal representative, is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit or proceeding. Expenses incurred by any such person in defending a
civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding, to the maximum extent permitted by law. Notwithstanding any
subsequent alteration, amendment or repeal of this ARTICLE ELEVEN, the
right to indemnification and to advance payments created by this ARTICLE
ELEVEN shall apply to (a) any claims made or asserted at any time while
this ARTICLE ELEVEN is in effect and (b) any claims based on or arising
from any act, omission or event occurring at any time while this ARTICLE
ELEVEN in in effect.
ARTICLE TWELVE
The Articles may be altered, amended or repealed or new Articles may be
adopted by the shareholders by the affirmative vote of a majority of the
shares of Capital Stock of the Corporation entitled to vote thereon. The
shareholders of this Corporation may (i) adopt a plan of merger or
consolidation and/or (ii) authorize a sale, lease, exchange or other
disposition of all or substantially all of the property and assets of the
Corporation by the affirmative vote of a majority of the shares of Capital
Stock of the Corporation entitled to vote thereon.
ARTICLE THIRTEEN
Any action required by the Texas Business Corporation to be taken at any
annual or special meeting of shareholders, or any action which may be taken at
any annual or special meeting of shareholders, may be taken without a meeting,
without prior notice, and without a vote, if a 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 that would
be necessary to take such action at a meeting at which the holders of shares
entitled to vote on the action were present and voted.
ARTICLE FOURTEEN
The name and address of the incorporator, who is more than 18 years of
age,
is:
Robert A. Forrester
1215 Executive Dr. W.
Suite 102
Richardson, Texas 75081
/s/ Robert A. Forretser
Incorporator
COUNTY OF DALLAS
Before me, a notary public, on this day personally appeared , known to
me to be the person whose name is subscribed to the foregoing document and,
being by me first duly sworn, declared that the statements therein contained
are true and correct.
Given under my hand and seal of office this 28th day of February, 1996.
(Notarial Seal) ______________________________
(Printed or stamped name)
Notary Public, State of Texas
My Commission expires:
BYLAWS
OF
AMERICAN TELETRONICS HOLDINGS,
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the Corporation
shall be at 15400 Knoll Trail, Suite 205, Dallas, Texas 75248.
Section 2. Other Offices. The Corporation shall 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
SHAREHOLDERS
Section 1. Time and Place of Meeting. All meetings of the shareholders
shall be held at such time and at such place within or without the State of
Texas as shall be determined by the Board of Directors.
Section 2. Annual Meeting. Annual meetings of shareholders shall be
held on the third Monday of June, if not a legal holiday, and if a legal
holiday then on the next business day following, or at such other date and
time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. At such annual meeting the shareholders
shall elect by a plurality vote a Board of Directors and transact such other
business as may be properly brought before the meeting.
Section 3. Special Meetings. Special meetings of the shareholders may
be called by the President, any Vice-President or the Board of Directors and
shall be called by the President, any Vice-President or the Secretary at the
request in writing of the holders of at least 10% of the shares issued,
outstanding and entitled to vote at the meeting. Such request shall state the
purpose or purposes of the proposed meeting. Business transacted at special
meetings shall be confined to the purposes stated in the notice of the
meeting.
Section 4. Notice. Written or printed notice stating the place, day and
hour of any shareholder's 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 10 nor more than 50 days before the date of the meeting, either
personally or by mail, by or at the direction of the President, any
Vice-President, Secretary or the officer or person calling the meeting, to
each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail, postage prepaid and addressed to the shareholder at his address as it
appears on the stock transfer books of the Corporation.
Section 5. Record Date. For the purpose of determining shareholders
entitled to receive notice of or to vote at a meeting of shareholders, the
Board of Directors may fix in advance a record date to be not less than 10
days nor more than 50 days prior to such meeting, or the Board of Directors
may close the stock transfer books for a period of not less than 10 days nor
more than 50 days prior to such meeting. In the absence of any action by the
Board of Directors, the date upon which the notice of the meeting is mailed
shall be the record date.
Section 6. List of Shareholders. At least 10 days before each meeting
of the shareholders, the officer or agent of the Corporation having charge of
the stock transfer books for shares of the Corporation shall make a complete
list, arranged in alphabetical order, of the shareholders entitled to vote at
such meeting or any adjournment thereof, including the address of and the
number of voting shares held by each. Such list shall be kept on file at the
registered office of the Corporation for a period of 10 days prior to such
meeting and shall be subject to inspection by any shareholder at any time
during the 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 inspection
by any shareholder during the meeting. The original stock transfer books
shall be prima facie evidence as to which shareholders may examine such list
of transfer books or vote at any meetings of shareholders.
Section 7. Quorum. The holders of a majority of the issued and
outstanding shares entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum for the transaction of business at all
meetings of the shareholders, except as otherwise provided by the texas
Business Corporation Act (hereinafter called the "Act"). If a quorum is not
present or represented at any meeting of the shareholders, the shareholders
entitled to vote, present in person or represented by proxy, shall have the
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented,
at which time any business which might have been transacted at the meeting as
originally notified may then be transacted. One a quorum is constituted, the
shareholders present or represented by proxy at a meeting may continue to
transact business until adjournment, notwithstanding the subsequent withdrawal
therefrom of such number of shareholders as to leave less than a quorum.
Section 8. Voting. When a quorum is present at any meeting of
shareholders, the vote of the holders of majority of the shares present or
represented by proxy at such meeting and entitled to vote shall be the act of
the shareholders, unless the vote of a different number is required by the
Act, the Articles of Incorporation or these Bylaws.
Each shareholder shall at every meeting of the shareholders be entitled
to one vote in person or by proxy for each share having voting power held by
such shareholder. Every proxy must be executed in writing by the shareholder
or by his duly authorized attorney=in-fact and shall be filed with the
Secretary of the Corporation prior to or at the time of the meeting. Each
proxy shall be revocable unless expressly provided therein to be irrevocable,
and in no event shall it remain irrevocable for a period of more than 11
months.
Section 9. Action by Unanimous Consent. Any action required to 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, is signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
Such consent shall have the same force and effect as a unanimous vote of the
shareholders.
Section 10. Telephone and Similar Meetings. Shareholders, directors and
committee members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at the meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business of the Corporation shall be
managed by its Board of Directors, which may exercise all powers of the
Corporation and do all such lawful acts and things as are not otherwise the
responsibility of the shareholders under the terms of the Act, the Articles of
Incorporation or these Bylaws.
Section 2. Number of Directors. The number of directors shall be not
less than one nor more than nine. At the time these Bylaws are adopted, the
number of directors shall be one. The number of directors may be increased or
decreased from time to time within these maximum and minimum numbers, but no
decrease shall have the effect of reducing the term of any incumbent
directors. Directors shall be elected at the annual meeting of shareholders,
except as provided in Section 3 of this Article, and each director shall hold
office until his successor is elected and qualified. Directors need not be
residents of the State of Texas nor shareholders of the Corporation.
Section 3. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining
directors, though the remaining directors may constitute less than a quorum of
the Board of Directors as fixed by Section 8 of this Article. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office. At any annual meeting of shareholders or any special
meeting called for such purpose, any director may be removed from office, for
or without cause, though his term may not have expired.
Section 4. Place of Meeting. The directors of this Corporation may hold
their meetings, both regular and special, either within or without the State
of Texas.
Section 5. Annual Meetings. The first meeting of each newly elected
Board of Directors shall be held without further notice immediately following
the annual meeting of the shareholders at the same place, unless, by unanimous
consent of the directors then elected and serving, such time or place shall be
changed.
Section 6. Regular Meeting. Regular meetings of the Board of Directors
may be held without notice at such time and place as shall from time to time
be determined by the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of Directors
may be called by the President, any Vice-President or the Secretary on one's
notice to each director, either personally (including telephone notice) or by
mail, telegram or other similar method of communication. Special meetings
shall be called by the President, any Vice-President or the Secretary in a
like manner and on like notice on the written request of at least 50% of the
directors.
Section 8. Quorum and Voting. At all meetings of the Board of Directors
the presence of a majority of the number of directors at the time in office
shall be necessary and sufficient to constitute a quorum for the transaction
of business, and the affirmative vote of at least a majority of the directors
present at any meeting at which there is a quorum shall be the act of the
Board of Directors, except as may be otherwise specifically provided by the
Act, the Articles of Incorporation or these Bylaws. If a quorum is not
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 9. Committees. The Board of Directors may, by resolution passed
by a majority of the entire Board of Directors, designate an Executive
Committee, to consist of two or more directors, one of whom shall be
designated as Chairman and shall preside at all meetings of such Committee.
The Executive Committee shall have and may exercise all of the authority of
the Board of Directors in the management of the business and affairs of the
Corporation, including authority over the Corporate Seal, except as the Act or
the Articles of Incorporation require action by the Board of Directors. Any
member of the Executive Committee may be removed, for or without cause, by the
affirmative vote of a majority of the entire Board of Directors. Any vacancy
or vacancies in the Executive Committee shall be filled by the affirmative
vote of a majority of the entire Board of Directors.
The Board of Directors may, by resolution passed by entire board of
Directors, designate other committees, each to consist of two or more
directors, which shall have such power and authority and shall perform such
functions as may be provided in such resolution. Such committee or committees
shall have such name or names as may be designated by the Board of Directors.
The Executive Committee and all other such shall keep regular minutes of
their proceedings and report the same to the Board of Directors when required.
Section 10. Compensation of Directors. Directors, as such, shall not
receive any stated salary for their services as directors. However, the Board
of Directors may, by resolution, allow a fixed sum and expenses of attendance,
if any, for attendance at each regular or special meeting of the Board of
Directors. Nothing herein shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of the Executive Committee may, by resolution of the Board
of Directors, be allowed compensation for attending Executive Committee
meetings.
Section 11. Action by Unanimous Consent. Any action required or
permitted to be taken at any meeting of the Board of Directors or of the
Executive Committee may be taken without a meeting if a written consent,
setting forth the actio so taken, is signed by all members of the Board of
Directors or the Executive Committee, as the case may be. Such consent shall
have the same force and effect as an unanimous vote at a meeting.
Section 12. Telephone and Similar Meetings. Shareholders, directors and
committee members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at the meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE IV
NOTICES
Section 1. Form of Notice. Whenever under the provisions of the Act,
the Articles of Incorporation or these Bylaws, notice is required to be given
to any director or shareholder, and no provision is made as to how such notice
shall be given, notice may be personal notice (including telephone notice) or
written notice mail, telegram or other similar method of communication,
addressed to such director or shareholder at such address as appears on the
books of the Corporation. Any notice required or permitted to be given by
mail shall be deemed to be delivered when deposited in the United States mail,
postage prepaid.
Section 2. Waiver. Whenever any notice is required to be given to any
director or shareholder of the Corporation under the provisions of the Act,
the Articles of Incorporation or these Bylaws, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or
after the time stated in such notice, shall be deemed equivalent to the giving
of such notice.
ARTICLE V
OFFICERS AND AGENTS
Section 1. General. The officers of the Corporation shall be elected by
the Board of Directors and shall include a Chairman of the Board, a President,
a Vice-President, a Secretary and a Treasurer. The Board of Directors may, in
its discretion, elect additional Vice-Presidents, one or more Assistant
Secretaries and one or more Assistant Treasurers, all of whom shall also be
officers. Two or more offices may be held by the same person, except the
office of President and Secretary shall not be held by the same person.
Section 2. Election. The Board of Directors, at its first meeting after
each annual meeting of the shareholders, shall elect a President, who shall be
a member of the Board of Directors, and the other officers, who need not be
members of the Board of Directors. The Board of Directors may appoint such
other officers and agents as it shall deem necessary and may determine the
salaries of all officers and agents from time to time. The officers shall
hold office until their respective successors are chosen and qualified. Any
officer elected or appointed by the Board of Directors may be removed, for or
without cause, at any time by a majority vote of the entire Board of Directors
then in office. Election or appointment of an officer or agent shall not of
itself create contract rights.
Section 3. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of shareholders and the Board of Directors.
Section 4. President. The President shall have the 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. The
President and such other officers as the Board of Directors may determine
shall execute all contracts requiring a seal and shall also execute any
mortgages, conveyances or other legal instruments to be made in the name of
and one behalf of the Corporation. Nothing herein shall prohibit the
delegation of such powers by the Board of Directors to some other agent or
attorney-in-fact of the Corporation.
Section 5. Vice President. The Vice President or, if there be more than
one, the Vice Presidents in the order of their seniority or in any other order
determined by the Board of Directors shall, in the absence or disability of
the President, perform all duties and exercise the powers of the President.
The Vice President or Vice Presidents shall generally assist the President and
perform such other duties as the Board of Directors shall prescribe.
Section 6. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the shareholders and record all votes
and the minutes of all proceedings in a book to be kept for that purpose and
shall perform like duties for the Executive Committee and any other committees
of the Board of Directors when required. The Secretary shall give or cause to
be given, notice of meetings of the shareholders and special meetings of the
Board of Directors and shall perform such other duties as may be prescribed by
the President or the Board of Directors. He or she shall keep in safe custody
the seal of the Corporation.
Section 7. Assistant Secretaries. Any Assistant Secretary shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such other duties as may be
prescribed by the President or the Board of Directors.
Section 8. Treasurer. The Treasurer shall have the custody of all
corporate funds and securities; shall keep full and accurate accounts of
receipts and disbursements of 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. He shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements; shall render to the
President and the Board of Directors, at the regular meetings of the Board of
Directors or whenever the Board of Directors may require it, an account of all
his transactions as Treasurer and of the financial condition of the
Corporation; and shall perform such other duties as may be prescribed by the
President or the Board of Directors.
Section 9. Assistant Treasurers. Any Assistant Treasurer shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties as may be
prescribed by the President or the Board of Directors.
Section 10. Bonding. If required by the Board of Directors, all or
certain of the officers shall give the Corporation a bond in such form, in
such sum and with such surety or sureties as shall be satisfactory to the
Board of Directors, for the faithful performance of the duties of their office
and for the restoration to the Corporation, in case of their death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in their possession or
under their control belonging to the Corporation.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
Section 1. Form of Certificates. The Corporation shall deliver
certificates representing all shares to which shareholders are entitled.
Certificates representing shares of the Corporation shall be in such form as
shall be determined by the Board of Directors and shall be numbered
consecutively and entered in the books of the Corporation as they are issued.
Each certificate shall state on the face thereof the holder's name, the
number, class, and par value (or a statement that the shares are without par
value) of the shares. They shall be signed by the President or any Vice
President and the Secretary or any Assistant Secretary, and may be sealed with
the seal of the Corporation or a facsimile thereof. If any certificate is
countersigned by a transfer agent or registered by a registrar, either of
which is other than the Corporation or an employee of the Corporation, the
signatures of the Corporation's officers may be facsimiles. In case any
office or officers who have been signed, or whose facsimile signature or
signatures have been used on such certificate or certificates, shall cease to
be such officer or officers of the Corporation, whether because of death,
resignation or otherwise, before such certificate of certificates have been
delivered by the Corporation or its agents, such certificate or certificates
may nevertheless be adopted by the Corporation and be issued and delivered as
though the person or persons who signed the certificate or certificates or
whose facsimile signature or signatures have been used thereon had not ceased
to be such officer or officers of the Corporation.
Should the Corporation be authorized to issue shares of more than one
class, each certificate shall set forth upon the face or back of such
certificate a statement of the designations, preferences, limitations and
relative rights of the shares of each class authorized to be issued, as
required by the Act.
Section 2. Lost Certificates. The Board of Directors may direct that a
new certificate be issued in place of any certificate theretofore issued by
the Corporation and alleged to have been lost or destroyed upon the making of
an affidavit of that fact by the person claiming the certificate to be lost or
destroyed. When authorizing the issue of a new certificate, the Board of
Directors may, in its discretion as a condition precedent to the issuance
thereof, require the owner of the lost or destroyed certificate, or his legal
representative, to advertise the same in such manner as it shall require
and/or to give the Corporation a bond in such form, in such sum, and with such
surety or sureties as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost or destroyed.
Section 3. Transfer of Shares. The shares of Common Stock of the
Corporation shall be transferable only on the books of the Corporation by the
holder thereof in person or by his duly authorized attorney. Upon surrender
to the Corporation or to 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, it shall be the
duty of the Corporation or the transfer agent of the Corporation to issue a
new certificate to the person entitled thereto, to cancel the old certificate
and to record the transaction upon its books.
Section 4. Registered Shareholder. The Corporation shall be entitled to
recognize the holder of record of any share or shares of stock as the holder
in fact thereof and, accordingly, 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 the Corporation shall have express or other
notice thereof, except as otherwise provided by law.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of the Act, the
Articles of Incorporation and any agreements or obligation of the Corporation,
if any, dividends upon the outstanding shares of the Corporation may be
declared by the Board of Directors at any regular or special meeting.
Dividends may be declared and paid in cash, in property, or in shares of the
Corporation, provided that all such declarations and payments of dividends
shall be in strict compliance with al applicable laws and the Articles of
Incorporation. The Board of Directors may fix in advance a record date for
the purposes of determining shareholders entitled to receive payment of any
dividend, such record date to be not more than 50 days prior to the payment
date of such dividend, or the Board of Directors may close the stock transfer
books for such purpose for a period of not more than 50 days prior to the
payment date of such dividend. In the absence of any action by the Board of
Directors, the date upon which the Board of Directors adopts the
resolution declaring such dividend shall be the record date.
Section 2. Reserves. The Board of Directors may, by resolution, create
out of the earned surplus of the Corporation such reserve or reserves as the
Board of Directors from time to time, in its discretion shall deem proper to
provide for contingencies, or to equalize dividends, or to repair or maintain
any property of the Corporation or for such other purpose as the Board of
Directors may deem beneficial to the Corporation. The Board of Directors may,
by resolution, modify or abolish any reserve so created.
Section 3. Fiscal Year. The fiscal year shall be fixed by resolution of
the Board of Directors.
Section 4. Seal. The Corporation may have a seal which may be used by
causing it or a facsimile thereof to be impressed, affixed or in any manner
reproduced. Any officer of the Corporation shall have the authority to affix
the seal to any document requiring it.
Section 5. Annual Statement. The Board of Directors shall present at
each annual meeting and when called for by vote of the shareholders at any
special meeting of the shareholders, a full and clear statement of the
business and condition of the Corporation.
ARTICLE VIII
INDEMNITY
The Corporation may indemnify any person (and the heirs, executor and
administrators of such person) who is or was a director, officer or employee
of the Corporation, or of any other corporation of which the Corporation is
directly or indirectly a shareholder or creditor or in which it is in any way
interested, and for which he served in the capacity of director, officer or
employee at the request of the Corporation against any and all liability and
reasonable expense that may be incurred by him in connection with or resulting
from any civil or criminal claim, action, suit or proceeding (whether brought
by or in the right of the Corporation or otherwise) or in connection with an
appeal relating thereto in which he may have become involved as a party or
otherwise by reason of being such director, officer or employee. The rights
of indemnification provided for in this Article shall be in addition to any
right to which any such director, officer or employee may be entitled under
any agreement, vote of shareholders, Articles of Incorporation or as a matter
of law or otherwise.
ARTICLE IX
AMENDMENTS TO BYLAWS
Section 1. Amendment by Board of Directors. These Bylaws may be
altered, amended or repealed, except for this provision, at any meeting of the
Board of Directors at which a quorum is present, by the affirmative vote of a
majority of the directors present at such meeting, provided notice of the
proposed alteration, amendment or repeal is contained in the notice of the
meeting.
Section 2. Amendment by Shareholders. These Bylaws may also be altered,
amended, or repealed, including this provision, at any meeting of the
shareholders at which a quorum is present or represented, by the affirmative
vote of the holders of a majority of the share present or represented at the
meeting and entitled to vote thereat, provided notice of the proposed
alteration, amendment or repeal is contained in the notice of the meeting.
The foregoing Bylaws were duly adopted as the Bylaws of the Corporation
as of _____________________ ___, 1996.
________________________________
FORMS:Bylaws
ANNEX E
MANAGEMENT AGREEMENT
THIS AGREEMENT IS SUBJECT TO ARBITRATION
UNDER THE TEXAS GENERAL ARBITRATION ACT
AGREEMENT made this 30th day of December, 1994, between Execu-Staff
International Limited, a New Mexico corporation, hereinafter referred to as
the Corporation, and Harry K. Myers and John N. Stogner, hereinafter referred
to as the Management Team and American Teletronics, Inc., the acquiring
Company.
In consideration of the mutual promises herein contained, the parties
hereto agree as follows:
Recitals
It is the desire of American Teletronics, Inc., as a condition of the
acquisition of the assets of Execu-Staff International Limited, for Execu-
taff International Limited to have in place a management contract with an
experienced management team including at least one senior corporate officer
with public company experience.
Accordingly, it is the desire of the Corporation to engage the services
of the Management Team, as the Chairman of the Board and the President of the
Corporation, to be responsible for managing all business activities for the
Corporation (including but not limited to financing, accounting, marketing,
sales, operations, planning, budgeting, personnel and purchasing) at all the
Corporation's locations.
Accordingly, it is the desire of the Management Team to manage the
Corporation and to be officers and directors of the Corporation.
AGREEMENT
Term
1. The respective duties and obligations of the parties hereto shall be for
a period of five years commencing on December 1, 1994, and renewing annually
at the anniversary date of this agreement for additional one year periods
unless written notice to the contrary is delivered by one of the parties to
the others not later than thirty (30) days prior to the anniversary date of
December 1 of each year.
Availability
2. The Management Team shall make themselves available to the Corporation a
minimum of fifty (50%) percent of the time or not less than 1,000 hours per
annum for each Management Team member.
Authority of the Management Team
3. The Management Team shall have the full authority normally and
customarily granted to the Chairman of the Board and the President of a
company, which is listed on any public stock exchange and shall be subject to
the By-Laws of ATI and the direction of the Board of Directors.
Limited Liability
4. With regard to the services to be performed by the Management Team
pursuant to the terms of this agreement, the Management Team shall not be
liable to the Corporation, or to anyone who may claim any right due to his
relationship with the Corporation, for any acts or omissions in the
performance of said services on the part of the Management Team, except when
said acts or omissions of the Management Team are due to their willful
misconduct or culpable negligence. The Corporation shall hold the Management
Team free and harmless from any obligations, costs, claims, judgments,
attorneys' fees, and attachments arising from or growing out of the services
rendered to the Corporation pursuant to the terms of this agreement or in any
way connected with the rendering of said services, except when the same shall
arise due to the willful misconduct or culpable negligence of the Management
Team, and the Management Team are adjudged to be guilty of willful misconduct
or culpable negligence by a court of competent jurisdiction.
Compensation
5. It is recognized and admitted that none of the entities that are being
combined into ATI have made a profit within the last three years. It is
further recognized that in order to attract capital from conventional sources
and capital markets that it is necessary to have a competent and committed
Management Team in place. It is further, recognized and admitted that the
current members of the Management Team are giving up other more lucrative
compensation opportunities to commit to the term of this agreement.
Accordingly, the Management Team shall receive an annual compensation from the
Corporation a sum for the performance of the management services to be
rendered to the Corporation pursuant to the terms of this agreement which
shall be equal to twenty (20%) percent of the pretax profits of the
Corporation. The Pretax Profit of the Corporation shall be defined as all
revenues of the Corporation minus all normal expenses of the Corporation,
including interest on the debt incurred to acquire the Corporation and
amortization of goodwill created by the acquisition of the Corporation. For
purposes of this calculation corporate allocations shall not be deducted from
revenues. Such amount shall be paid quarterly and adjusted annually by an
audit of outside independent auditors.
<PAGE>
The Corporation acknowledges that the Management Team currently receives
compensation from another related company and that this compensation is in
addition to that compensation.
The Management Team may at its option take whatever amount of compensation it
earns in the form of whatever consideration it determines provided that the
medium chosen does not adversely effect ESI or ATI.
Arbitration
6. As concluded by the parties hereto upon the advice of counsel, and as
evidenced by the signatures of the parties hereto, any controversy between the
parties hereto involving the construction or application of any of the terms,
covenants, or conditions of this agreement, shall on the written request of
one party served upon the other, be submitted to arbitration, and such
arbitration shall comply with and be governed by the provisions of the Texas
General Arbitration Act, Articles 224 through 238-6 of the Revised Civil
Statutes of Texas.
Failure to Act by One Member of the Management Team
7. It is understood and agreed that any management service performed by
either member of the Management Team, pursuant to the provisions of this
agreement, shall constitute the performance of management service of both
members of the Management Team. If, for any reason, one or the other of the
Management Team is unable or unwilling to act or perform pursuant to the terms
of this agreement, such event shall not void this agreement or diminish its
effect, and the performance on the part of the other Management Team shall
constitute full and complete performance of this agreement on the part of the
Management Team.
Remedies
8. If any action at law or equity is necessary to enforce or interpret the
terms of this agreement, the prevailing party shall be entitled to reasonable
attorney's fees, costs, and necessary disbursements in addition to any other
relief to which he may be entitled.
Texas Law to Apply
9. This agreement shall be construed under and in accordance with the laws
of the State of Texas, and all obligations of the parties created hereunder
are performable in Dallas County, Texas.
Parties Bound
10. This agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors, and assigns where permitted by this agreement.
Legal Construction
11. In case any one or more of the provisions contained in this agreement
shall for any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provision thereof, and this agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein.
Prior Agreements Superseded
12. This agreement constitutes the sole and only agreement of the parties
hereto and supersedes any prior understandings or written or oral agreements
between the parties respecting the within subject matter.
Executed at Dallas, Texas, on the day and year first above mentioned.
Execu-Staff International, Limited
By__________________
Its _________________
______________________
Harry K. Myers, Individually
_____________________________
John N. Stogner, Individually
American Teletronics, Inc.
By ___________________________
James L. Hawley, II
Its Chairman of the Board
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
American Teletronics, Inc.:
We hereby consent to the use in Form S-4 of our audit dated March 25, 1996,
relating to the consolidated financial statements of American Teletronics,
Inc. And Subsidiaries and contained in Form 10-K, incorporated by reference
in said Form S-4 for the three year period ended December 31, 1995.
Killman, Murrell & Company, P.C.
Dallas, Texas
June 13, 1996
