SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the Registrant n
Check the appropriate box:
X Preliminary Proxy Statement
n Definitive Proxy Statement
n Confidential for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2)
n Definitive Additional Materials
n Soliciting Material Pursuant to 14a-11(c) or Rule
14a-12
WEBCOR ELECTRONICS, INC.
(Name of Registrant as Specified in its Charter)
Capston Network, Co.
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
n $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1) or 14a-6(i)(2)
n $500 for each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3)
n Fee computed per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1)Title of each class of securities to which
transaction applies:
(2)Aggregate number of securities to which
transaction applies:
(3)Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was
determined:
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
n Fee paid previously with preliminary materials.
n Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identifying the filing for which the offsetting fee
was paid previously. Identify the previous filing by
registration statement number, or the Form or
Schedule and the date of its filing.
(1)Amount previously paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
Dear Fellow Stockholders;
You are cordially invited to attend a Special Meeting
of the Stockholders (the "Meeting") of WEBCOR ELECTRONICS,
INC., an inactive Delaware corporation ("Webcor" or the
"Company"). The Meeting will be held at 10:00 a.m. on
Tuesday, February 24, 1997, Gulfview in the Cardita Room of
the Sheraton at Sand Key Resort, 1160 Gulf Blvd., Clearwater
Beach, Florida.
Webcor has not engaged in any business activities since
filing a voluntary bankruptcy petition in February 1989. At
present, the Company has no assets, liabilities, management
or ongoing operations. As a result, your Webcor shares have
been worthless for several years. At the Meeting you will
be asked to approve a plan (the "Plan") proposed by Capston
Network Co. ("Capston"), a Stockholder of the Company
whereby the Company will be restructured as a "clean public
shell" for the purpose of effecting a business combination
transaction with a suitable privately-held company that has
both business history and operating assets. once
While the business combination transaction contemplated
by the Plan may be structured as a merger or consolidation,
Capston believes that the reverse takeover format will be
most attractive to potential acquisition targets.
Accordingly, Capston is seeking prior shareholder
authorization for a reverse takeover transaction that will
involve up to 4,500,000 shares of Common Stock. If the
proposed business combination will involve the issuance of
less than 4,500,000 shares to the owners of the privately-
held company, then Capston intends to seek shareholder
approval of the proposed transaction, without regard to
whether such shareholder approval might be required under
Delaware law.
If this Plan is successfully implemented, you may be
able to salvage some of the value that your Webcor shares
once represented. However, there can be no assurance the
Plan will be approved by shareholders or successfully
implemented. Moreover, even if the Plan is approved and
successfully implemented, there can be no assurance that the
value of your Webcor shares will increase. In any event,
Capston cannot go forward with the Plan without first
obtaining stockholder approval. Therefore it is critically
important that you read the enclosed Proxy Statement and
promptly mark your vote, sign and return your Proxy Card.
While the elements of the Plan will be presented to
Stockholders as separate proposals, the Plan is an
integrated whole and if all elements of the Plan are not
approved, Capston intends to abandon the Plan in its
entirety. The specific matters to be considered by the
Stockholders are:
1. To ratify the actions of Capston in (i) effecting a
renewal, revival and restoration of the Company's
Certificate of Incorporation; (ii) adopting amended by-
laws to govern the business affairs of the Company, and
(iii) filing the reports and other documents necessary
to bring the Company current with respect to its
reporting obligations under the Securities Exchange Act
of 1934;
2. To elect a person designated by Capston to serve as the
sole member of the Board of Directors until the 1998
annual Meeting of stockholders, or until her successor
is elected and qualified;
3. To consider and vote upon proposed an Amendment to the
Company's Certificate of Incorporation that will effect
a reverse split of all issued and outstanding shares of
Common Stock in the ratio of one (1) share of new Common
Stock for each 11.5879 shares presently outstanding so
that immediately thereafter the Company will have a
total of 300,000 shares issued and outstanding;
4. To consider and vote upon a proposal to issue 200,000
shares of Common Stock to persons designated by Capston
as compensation for services rendered in connection with
the implementation of the Plan;
5. To consider and vote upon a proposal which will give
the Board of Directors authority to pay an in-kind
Finder's Fee to unrelated third party finders. who
introduce the Company to a suitable acquisition
prospect.
6. Consider and vote upon a proposal that will give the
Board of Directors discretionary authority to (i) change
the Company's name and (ii) issue up to 4,500,000 shares
of Common Stock to unrelated third parties, all without
prior stockholder approval, in connection with a
business combination transaction of the type
contemplated by the Plan; and
7. To consider and vote upon a proposed Amendment to the
Company's Certificate of Incorporation that will
increase the authorized capital stock of the Company to
25,000,000 shares of $0.01 par value Common Stock and
5,000,000 shares of $0.01 par value Preferred Stock.
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING
IN PERSON. HOWEVER, WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING, YOU ARE URGED TO PROMPTLY MARK, SIGN, DATE, AND
RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED, SELF-
ADDRESSED, STAMPED ENVELOPE SO THAT THE PRESENCE OF A QUORUM
MAY BE ASSURED AND YOUR SHARES OF STOCK MAY BE REPRESENTED
AND VOTED IN ACCORDANCE WITH YOUR DESIRES. A STOCKHOLDER MAY
REVOKE A PROXY BY DELIVERING TO CAPSTON A WRITTEN NOTICE OF
REVOCATION, DELIVERING TO CAPSTON A SIGNED PROXY OF A LATER
DATE OR APPEARING AT THE SPECIAL MEETING AND VOTING IN
PERSON.
_______________________________
Capston Network Co.
Sally A. Fonner,
President
WEBCOR ELECTRONICS, INC.
1612 North Osceola Avenue
Clearwater, Florida 34615
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on February 24, 1997
Pursuant to 312(h) of the General Corporation Law of
Delaware, notice is hereby given that a Special Meeting of
the Stockholders of WEBCOR ELECTRONICS, INC., an inactive
Delaware corporation ("Webcor" or the "Company"), will be
held at 10:00 a.m. on Tuesday, February Gulfview 24, 1997,
in the Cardita Room of the Sheraton at Sand Key Resort, 1160
Gulf Blvd., Clearwater Beach, Florida, for the following
purposes:
1. To ratify the actions of Capston Network Co. ("Capston")
in (i) effecting a renewal, revival and restoration of
the Company's Certificate of Incorporation; (ii)
adopting amended by-laws to govern the business affairs
of the Company, and (iii) filing the reports and other
documents necessary to bring the Company current with
respect to its reporting obligations under the
Securities Exchange Act of 1934;
2. To elect a person designated by Capston to serve as the
sole member of the Board of Directors until the 1998
annual Meeting of stockholders, or until her successor
is elected and qualified;
3. To consider and vote upon proposed an Amendment to the
Company's Certificate of Incorporation that will effect
a reverse split of all issued and outstanding shares of
Common Stock in the ratio of one (1) share of new Common
Stock for each 11.5879 shares presently outstanding so
that immediately thereafter the Company will have a
total of 300,000 shares issued and outstanding;
4. To consider and vote upon a proposal to issue 200,000
shares of Common Stock to persons designated by Capston
as compensation for services rendered in connection with
the implementation of the Plan;
5. To consider and vote upon a proposal which will give
the Board of Directors authority to pay an in-kind
Finder's Fee to unrelated third party finders. who
introduce the Company to a suitable acquisition
prospect.
6. Consider and vote upon a proposal that will give the
Board of Directors discretionary authority to (i) change
the Company's name and (ii) issue up to 4,500,000 shares
of Common Stock to unrelated third parties, all without
prior stockholder approval, in connection with a
business combination transaction of the type
contemplated by the Plan; and
7. To consider and vote upon a proposed Amendment to the
Company's Certificate of Incorporation that will
increase the authorized capital stock of the Company to
25,000,000 shares of $0.01 par value Common Stock and
5,000,000 shares of $0.01 par value Preferred Stock.
A record of stockholders has been taken as of the close
of business on January 20, 1997, and only those stockholders
of record on that date will be entitled to notice of and to
vote at the Meeting. A stockholders' list will be available
commencing January 28, 1997, and may be inspected during
normal business hours prior to the Meeting at the offices of
the Company, 1612 North Osceola Avenue, Clearwater, Florida
34615.
If you do not expect to be present at the Meeting,
please sign and date the enclosed proxy and return it
promptly in the enclosed stamped envelope which has been
provided for your convenience. The prompt return of proxies
will ensure the presence of a quorum and save Capston the
expense of further solicitation.
By Order of Capston
Network Co.
Sally A. Fonner,
President
Clearwater, Florida
January 13, 1997
PROXY STATEMENT
This proxy statement is being mailed to all known
Stockholders of WEBCOR ELECTRONICS, INC. ("Webcor" or the
"Company") commencing on or about January 28, 1997, in
connection with the solicitation by Capston Network, Co.
("Capston") of proxies to be voted at a Special Meeting of
Stockholders(the "Meeting") to be held in Clearwater Beach,
Florida on Tuesday, February 24, 1997, and at any
adjournment thereof. The Meeting has been called by Capston
pursuant to 312(h) of the General Corporation Law of
Delaware for the purpose of considering a plan proposed by
Capston (the "Plan") whereby the Company will be
restructured as a "clean public shell" for the purpose of
effecting a business combination transaction with a suitable
privately-held company.
Proxies will be voted in accordance with the directions
specified thereon and do not confer discretionary authority
on any person. Any proxy on which no direction is specified
will be voted in favor of all proposals. A Stockholder may
revoke a proxy at any time prior to the meeting by
delivering to Capston written notice of revocation,
delivering to Capston a signed proxy of a later date or
appearing at the Meeting and voting in person.
As of December 31, 1996, there were issued, outstanding
and entitled to vote 3,476,370 shares of common stock of the
Company ("Common Stock"). Each share of Common Stock
entitles the holder to one vote on each matter presented for
consideration by the Stockholders. Under the Company's By-
laws, the presence, in person or by proxy, of shares
entitled to cast a combined total of 1,157,631 votes will
constitute a quorum. According to the Company's annual
report on Form 10-K for fiscal year ended March 31, 1988,
there are 779 stockholders entitled to vote. With the
exception of Capston Network Company, no stockholders has
indicated a pre-approval of the proposals described in this
proxy.
In connection with the reinstatement of the Company's
Charter, Capston adopted amended by-laws for the conduct of
the Company's business, subject to the approval and
ratification of the Stockholders. There are three material
changes in the amended by-laws. First, under the amended by-
laws adopted by Capston, the presence, in person or by
proxy, of one-third (1/3) of the total number of shares
entitled to vote at the Meeting will constitute a quorum
rather a majority of the total number of shares entitled to
vote at the meeting. The amendment, Article II, Section 5.
Quorum: Adjournment, reads as follows:
With respect to any matter, a quorum shall be present
at a meeting of stockholders if the holders of at
least on-third (1/3) of the shares entitled to vote on
that matter are represented at the meeting in person
or by proxy. If a quorum shall fail to attend any
meeting, the chairman of the meeting or the holders of
a majority of the shares of stock entitled to vote who
are present, in person or by proxy, may adjourn the
meeting to another place, date or time without notice
other than announcement at the meeting, until a quorum
shall be present or represented.
The second material change is the provision that permits
voting by implied consent under certain circumstances and
that amendment, Article II, Section 11. Method of Giving
Consent, Approval, etc., reads as follow:
Any vote, consent, approval, ratification or disapproval
required by these by-laws may be given as follows:
(a)by a written Consent executed by the consenting
Stockholder, provided that such Consent shall not have
been withdrawn by the Consenting Stockholder by
Notification to the Company at or prior to the time of
the doing of such act or thing; or
(b)by the affirmative vote by the Consenting
Stockholder to the doing of the act or thing for which
the Consent is solicited at any meeting called and held
pursuant to these by-laws to consider the doing of such
act or thing.
(c)by failing to respond, within the time set forth in
a Notice which specifies (i) the specific act or
proposal for which Consent is being requested by the
Company; (ii) that the Company intends to rely on the
provisions of this Section 11(c) in determining whether
the requisite percentage in interest of the
Stockholders has consented to the specific act or
proposal; and (iii) a Record Date not less than 20 days
after the date of the Notice on which the specific act
or proposal will be deemed approved unless at least 10%
in Interest of the Stockholders object in writing prior
to such Record Date.
.
The third material change is the addition of Article VIII,
Indemnification, which reads as follows:
Section 1. Mandatory Indemnification of Directors and
Officers. Each person who at any time is or was a
director or officer of the Corporation, and who was, is
or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or
investigative (a "Proceeding," which shall include any
appeal in such a Proceeding, and any inquiry or
investigation that could lead to such a Proceeding), by
reason of the fact that such person is or was a
director or officer of the Corporation, or is or was a
director or officer of the Corporation serving at the
request of the Corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent
or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other
enterprise shall be indemnified by the Corporation to
the fullest extent authorized by the General
Corporation Law of Delaware as the same exists or may
hereafter be amended from time to time (the "GCLD"), or
any other applicable law as may from time to time be in
effect (but, in the case of any such amendment or
enactment, only to the extent that such amendment or
law permits the Corporation to provide broader
indemnification rights than such law prior to such
amendment or enactment permitted the Corporation to
provide), against judgments, penalties (including
excise and similar taxes), fines, settlements and
reasonable expenses (including court costs and
attorneys' fees) actually incurred by such person in
connection with such Proceeding. The Corporation's
obligations under this Section include, but are not
limited to, the convening of any meeting, and the
consideration of any matter thereby, required by
statute in order to determine the eligibility of any
person for indemnification. Expenses incurred in
defending a Proceeding shall be paid by the Corporation
in advance of the final disposition of such Proceeding
to the fullest extent permitted, and only in compliance
with, the GCLD or any other applicable laws as may from
time to time be in effect. The Corporation's
obligation to indemnify or to prepay expenses under
this Section shall arise, and all rights granted
hereunder shall vest, at the time of the occurrence of
the transaction or event to which such proceeding
relates, or at the time that the action or conduct to
which such proceeding relates was first taken or
engaged in (or omitted to be taken or engaged in),
regardless of when such proceeding is first threatened,
commenced or completed. Notwithstanding any other
provision of the Articles of Incorporation or these
Bylaws, no action taken by the Corporation, either by
amendment of the Articles of Incorporation or these
Bylaws or otherwise, shall diminish or adversely affect
any rights to indemnification or prepayment of expenses
granted under this Section 1 which shall have become
vested as aforesaid prior to the date that such
amendment or other corporate action is taken.
Section 2. Permissive Indemnification of Employees and
Agents. The rights to indemnification and prepayment of
expenses which are conferred to the Corporation's
directors and officers by Section 1 of this Article
VIII may be conferred upon any employee or agent of the
Corporation if, and to the extent, authorized by its
Board of Directors.
Section 3. Indemnity Insurance. The Corporation shall
have power to purchase and maintain insurance on behalf
of any person who 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, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of
another corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, 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 the GCLD. Without
limiting the power of the Corporation to procure or
maintain any kind of insurance or other arrangement,
the Corporation may, for the benefit of persons
indemnified by the Corporation (1) create a trust fund,
(2) establish any form of self-insurance, (3) secure
its indemnity obligation by grant of a security
interest or other lien on the assets of the
Corporation, or (4) establish a letter of credit,
guaranty or surety arrangement.
Capston has engaged the public accounting firm of Want
& Ender, C.P.A,. of New York, New York to audit the
Company's financial statement for the period ending
November 13, 1996, and the years ending every year from
March 31,1989 to March 31,1996. Capston has also retained
the firm of Want & Ender as auditors of various other
companies, but has no other relationship with the firm. Ms.
Fonner has no relationship with the firm of Want & Ender. A
representative from the firm of Want & Ender will attend the
meeting and be available to answer questions stockholders.
Corporate Background Information
Webcor conducted an initial public offering of its
Common Stock in April of 1982 pursuant to a Form S-1
Registration Statement under the Securities Act of 1933 (the
"Securities Act") that was declared effective by order of
the Securities and Exchange Commission (the "SEC") on May 1,
1982. In connection with an application to list its Common
Stock on the AMS system, the Company also registered its
Common Stock pursuant to Section 12(g) of the Securities
Exchange Act of 1934 (the "Exchange Act"). The Company
remained current with respect to its reporting obligations
under the Exchange Act until 1989, when its last annual
report on Form 10-K was filed with the SEC.
After pursuing its business for several years, Webcor
filed a voluntary petition under Chapter 11 of the
Bankruptcy Act on February 1, 1989. This proceeding was
filed in with the U.S. Bankruptcy Court for the Eastern
District of New York and designated as Case # 89-10328. On
October 1, 1990, the Company's Chapter 11 case was
voluntarily converted to a case in Chapter 7 which resulted
in the orderly liquidation of all corporate assets and the
use of the proceeds to repay the Company's creditors. On
November 13, 1996 the Company's case under Chapter 7 was
closed by an order of the Court. As a result of the
Bankruptcy, the Company has no assets, liabilities,
management or ongoing operations and has not engaged in any
business activities since February 1989.
During the pendancy of the Bankruptcy, the Company did
not file franchise tax returns with and pay the required
franchise taxes to the State of Delaware. As a result, the
Company's corporate charter was revoked by order of the
Secretary of State of the State of Delaware on March 1,
1991. Similarly, the Company did not file with the SEC
either (a) the regular reports that are required of all
companies that have securities registered under the Exchange
Act, or (b) a certification on Form 15 terminating its
registration under the Exchange Act. As a result, the
Company remained a Registrant under the Exchange Act but was
seriously delinquent in its SEC reporting obligations.
According to the National Quotation Bureau, the last
published quotation for the Company's Common Stock was
posted by Carr Securities, Inc., one of the Company's market
makers, on October 15, 1996. At that time, the published
quote was $0.00 bid and $0.10 asked. There have been no
published quotations for the Company's Common Stock since
October 15, 1996.
Acting in its capacity as a Stockholder of the Company,
and without first receiving any consent, approval or
authorization of any officer, director or other Stockholder
of the Company, Capston effected a renewal, revival and
restoration of the Company's certificate of incorporation
pursuant to Section 312 of the General Corporation Law of
the State of Delaware. In general, Section 312 provides that
any corporation may "procure an extension, restoration,
renewal or revival of its certificate of incorporation,
together with all the rights, franchises, privileges and
immunities and subject to all of its duties, debts and
liabilities which had been secured or imposed by its
original certificate of incorporation" upon compliance with
certain procedural requirements.
After reviewing the applicable files, Capston
determined that the only debt of the Company that was
"secured or imposed by its original certificate" was the
obligation of Webcor to pay its Delaware taxes. Therefore,
Capston paid all past due franchise taxes on behalf of the
Company and then filed a Certificate of Renewal, Revival,
Extension and Restoration of the Company's Certificate of
Incorporation on behalf of the Company under the authority
granted by Section 312(h). The total out-of-pocket costs
paid by Capston incurred in connection with the restoration
of the Company's charter was $450. This Certificate was
filed in the office of the Secretary of State of the State
of Delaware on December 26, 1996 and at the date of this
Proxy Statement the Company is lawfully incorporated,
validly existing and in good standing under the laws of the
State of Delaware.
Proposed Operations
While the Company has no assets, liabilities,
management or ongoing operations and has not engaged in any
business activities since February 1989, Capston believes
that it may be possible to recover some value for the
Stockholders through the adoption and implementation of a
Plan whereby the Company will be restructured as a "clean
public shell" for the purpose of effecting a business
combination transaction with a suitable privately-held
company that has both business history and operating assets.
Capston believes the Company will offer owners of a
suitable privately-held company the opportunity to acquire a
controlling ownership interest in a public company at
substantially less cost than would otherwise be required to
conduct an initial public offering. Nevertheless, Capston is
not aware of any empirical statistical data that would
independently confirm or quantify Capston's beliefs
concerning the perceived value of a merger or acquisition
transaction for the owners of a suitable privately-held
company. The owners of any existing business selected for a
business combination with the Company will incur significant
costs and expenses, including the costs of preparing the
required business combination agreements and related
documents, the costs of preparing the a Current Report on
Form 8-K describing the business combination transaction and
the costs of preparing the documentation associated with any
future reporting under the Exchange Act and registrations
under the Securities Act.
If the Plan is approved by the Stockholders, the
Company will be fully reactivated and then used as a
corporate vehicle to seek, investigate and, if the results
of such investigation warrant, effect a business combination
with a suitable privately-held company or other business
opportunity presented to it by persons or firms that seek
the perceived advantages of a publicly held corporation. The
business operations proposed in the Plan are sometimes
referred to as a "blind pool" because Stockholders will not
ordinarily have an opportunity to analyze the various
business opportunities presented to the Company, or to
approve or disapprove the terms of any business combination
transaction that may be negotiated by Capston on behalf of
the Company. Consequently, the Company's potential success
will be heavily dependent on the efforts and abilities of
Capston and its officers, directors and consultants, who
will have virtually unlimited discretion in searching for,
negotiating and entering into a business combination
transaction. Capston and its officers, directors and
consultants have had limited experience in the proposed
business of the Company. Although Capston believes that the
Company will be able to enter into a business combination
transaction within 12 months after the approval of the Plan
by the Stockholders, there can be no assurance as to how
much time will elapse before a business combination is
effected, if ever. The Company will not restrict its search
to any specific business, industry or geographical location,
and the Company may participate in a business venture of
virtually any kind or nature.
Capston and its officers, directors and consultants
anticipate that the selection of a business opportunity for
the Company will be complex and extremely risky. Because of
general economic conditions, rapid technological advances
being made in some industries, and shortages of available
capital, Capston believes that there are numerous privately-
held companies seeking the perceived benefits of a publicly
traded corporation. Such perceived benefits may include
facilitating debt financing or improving the terms on which
additional equity or may be sought, providing liquidity for
the principals of the business, creating a means for
providing incentive stock options or similar benefits to key
employees, providing liquidity for all stockholders and
other factors.
Potential business opportunities may occur in many
different industries and at various stages of development,
all of which will make the task of comparative investigation
and analysis of such business opportunities extremely
difficult and complex. Capston anticipates that the Company
will be able to participate in only one business venture.
This lack of diversification should be considered a
substantial risk inherent in the Plan because it will not
permit the Company to offset potential losses from one
venture against gains from another. Moreover, due to the
Company's lack of any meaningful financial, managerial or
other resources, Capston believes the Company will not be
viewed as a suitable business combination partner for either
developing companies or established business that are in
need of substantial additional capital.
Acquisition of Opportunities
In implementing a particular business combination
transaction, the Company may become a party to a merger,
consolidation, reorganization, joint venture, franchise or
licensing agreement with another corporation or entity. It
may also purchase stock or assets of an existing business.
After the consummation of a business combination
transaction, it is likely that the present Stockholders of
the Company will only own a small minority interest in the
combined companies. In addition, as part of the terms of the
acquisition transaction, all of the Company's officers and
directors will ordinarily resign and be replaced by new
officers and directors without a vote of the Stockholders.
Capston does not intend to obtain the approval of the
Stockholders prior to consummating any acquisition other
than a statutory merger that requires a Stockholder vote.
Capston and its officers, directors and consultants do not
intend to sell any shares held by them in connection with a
business acquisition.
It is anticipated that any securities issued in a
business combination transaction will be issued in reliance
on exemptions from registration under applicable Federal and
state securities laws. In some circumstances, however, as a
negotiated element of a business combination, the Company
may agree to register such securities either at the time the
transaction is consummated or at some specified time
thereafter. The issuance of substantial additional
securities and their potential sale into any trading market
that may develop may have a depressive effect on such
market. While the actual terms of a transaction to which the
Company may be a party cannot be predicted, it may be
expected that the parties to the business transaction will
find it desirable to avoid the creation of a taxable event
and thereby structure the acquisition in a so called "tax
free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code of 1986, as amended (the "Code"). In
order to obtain tax free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80%
or more of the voting stock of the surviving entity. In such
event, the stockholders of the Company would retain less
than 20% of the issued and outstanding shares of the
combined companies, which could result in significant
dilution in the equity of such stockholders. The Company
intends to structure any business combination in such manner
as to minimize Federal and state tax consequences to the
Company and any target company.
As part of the Company's investigation of potential
business opportunities, Capston and its officers, directors
and consultants will ordinarily meet personally with
management and key personnel, may visit and inspect material
facilities, obtain independent analysis or verification of
certain information provided, check reference of management
and key personnel, and take other reasonable investigative
measures, to the extent of the Company's limited resources
and Capston's limited expertise. The manner in which the
Company participates in an opportunity will depend on the
nature of the opportunity, the respective needs and desires
of the Company and other parties and the relative
negotiating strength of the Company and such other
management.
With respect to any business combination negotiations,
Capston will ordinarily focus on the percentage of the
Company which target company stockholders would acquire in
exchange for their ownership interest in the target company.
Depending upon, among other things, the target company's
assets and liabilities, the Company's stockholders will in
all likelihood only own a small minority interest in the
combined companies upon completion of the business
combination transaction. Any business combination effected
by the Company can be expected to have a significant
dilutive effect on the percentage of shares held by the
Company's current Stockholders.
Upon completion of a business combination transaction,
there can be no assurance that the combined companies will
have sufficient funds to undertake any significant
development, marketing and manufacturing activities.
Accordingly, the combined companies may be required to
either seek additional debt or equity financing or obtain
funding from third parties, in exchange for which the
combined companies might be required to issue a substantial
equity position. There is no assurance that the combined
companies will be able to obtain additional financing on
terms acceptable to the combined companies.
It is anticipated that the investigation of specific
business opportunities and the negotiation, drafting and
execution of relevant agreements, disclosure documents and
other instruments will require substantial management time
and attention and substantial costs for accountants,
attorneys and others. If a decision is made not to
participate in a specific business opportunity the costs
incurred in the related investigation would not be
recoverable. Furthermore, even if an agreement is reached
for the participation in a specific business opportunity,
the failure to consummate that transaction may result in the
loss of the Company of the related costs incurred.
Exemption from Rule 419
As an existing Registrant under the Exchange Act, the
Company's proposed activities are not subject to SEC Rule
419 which was adopted to strengthen the regulation of "blind
pool" companies which Congress has found to have been common
vehicles for fraud and manipulation in the penny stock
market. The Company is not subject to Rule 419 because it is
not offering stock to the public in an offering registered
under the Securities Act. Accordingly, Stockholders are not
entitled to the substantive protection provided by Rule 419.
Fees to Capston and Others
Expense Reimbursement. No cash compensation has been
paid or accrued to Capston or any of its officers, director
or consultants to date. Under the Plan, Capston and its
officers, directors and consultants will be entitled to
reimbursement for the actual out-of-pocket expenses incurred
in connection with the reinstatement of the Company's
certificate of incorporation, the preparation and filing of
the Company's reports under the Exchange Act and the
negotiation of a business combination transaction, but they
will not be entitled to any cash compensation in connection
with services rendered prior to the closing of a business
combination. Moreover, any such reimbursement will be
subject to the express approval of the owners of the
business opportunity acquired by the Company.
Stock Issuance. Subject to Stockholder approval, the
Company intends file a Form S-8 Registration Statement under
the Securities Act to register 200,000 shares of Common
Stock that will be issuable to persons designated by Capston
as compensation for services rendered in connection with the
implementation of the Plan. Therefore, if Capston is
successful in arranging a business combination for the
Company, approximately forty percent (40%) of the net value
derived by the Company's Stockholders will vest in Capston
and its officers, directors and consultants and the
remaining sixty percent (60%) will inure to the benefit of
the existing Stockholders of the Company.
Finder's Fees. As is customary in the industry, the
Company may pay a finder's fees to unrelated third parties
who introduce the Company to a suitable acquisition
prospect. If any such fee is paid, it will be approved by
the Company's Board of Directors and will be in accordance
with the standards discussed below. Finder's fees are
customarily between 1% and 5% of the total transaction
value, based upon a sliding scale of the amount involved.
The traditional "Lehman Formula" for calculating finder's
fees is 5% of the first $1 million in transaction value,
plus 4% of the second $1 million, plus 3% of the third $1
million, plus 2% of the fourth $1 million plus 1% of any
transaction value in excess of $4 million. In Capston's
opinion, the traditional Lehman Formula finder's fee
minimizes the economic incentive of finder's who are
involved in larger transactions. Therefore, if the Plan is
approved by Stockholders, Capston intends to offer a
"reversed stretched Lehman fee" to unrelated third party
finders who introduce the Company to a suitable acquisition
prospect. Under the reversed stretched Lehman formula
proposed by Capston, the finder will receive 1% of the first
$2 million in transaction value, 2% of the second $2 million
in transaction value, 3% of the third $2 million in
transaction value, 4% of the fourth $2 million in
transaction value and 5% of any transaction value in excess
of $8 million. Since the Company does not have sufficient
financial resources to pay such a finder's fee in cash, it
is anticipated that any finder's fees will be paid with
shares of the Company's Common Stock which may be registered
under the Securities Act prior to issuance. Notwithstanding
the foregoing, no finder's fees will be paid to Capston or
any of its officers, directors, employees, agents or
affiliates without the prior consent of the Stockholders.
RISK FACTORS
The Plan proposed by Capston involves a high degree of
risk. Stockholders should carefully consider the following
factors, among others, before executing the form of Proxy
enclosed herewith.
No Recent Operating History. The Company has no assets,
liabilities, management or ongoing operations and has not
engaged in any business activities since February 1989. Even
if the Capston Plan is approved by the Stockholders, the
Company will be subject to all of the risks inherent in the
commencement of a new business enterprise with new
management. There can be no assurance that the Company will
be able to acquire an operating business or that such
business if acquired, will prove to be profitable. Although
Capston and its officers, directors and consultants have had
experience with respect to business acquisitions, the
Company has no recent operating history to aid stockholders
in making an informed judgment regarding the merits of the
Plan. As of the date of this Proxy Statement, Capston has
not entered into any arrangement for, nor is it presently
negotiating with respect to, an acquisition of any operating
business.
No Specific Acquisition Plans. The Company intends to
engage as soon as is reasonably possible, in the search for
and evaluation of potential acquisition opportunities, but
it will not engage in the business of investing,
reinvesting, owning, holding, or trading securities. Capston
has made no specific acquisition plans and no specific
industry or area of business has been selected for
investment. There is no assurance Capston and its officers,
directors and consultants will possess the experience and
skills necessary to make an informed judgment about any
business or industry that may be chosen. Accordingly, the
nature of the Plan involves an extremely high degree of risk
and the Common Stock is not a suitable investment for anyone
who cannot afford the loss of his entire investment.
Blind Pool. Inasmuch as Capston has not contemplated
the acquisition of any specific operating business, the
Company's proposed business will, in fact, be a Blind Pool
over which Stockholders will have no control. It is
anticipated that under most circumstances stockholders will
not be afforded the opportunity to pass upon the merits of
any business opportunity that the Company may ultimately
acquire and, therefore, Stockholders must rely upon the
abilities of Capston and its officers, directors and
consultants.
Limited Assets of the Company. As of the date of this
Proxy Statement, the Company has no substantial assets and
it is not anticipated that the Company will acquire any
substantial assets other than the assets of any business
opportunity it may acquire. Any business activity the
Company may eventually undertake will require substantial
capital. Since the Company does not know which type of
business it will acquire or the capital requirements for
such business, there can be no representations respecting
the future capital needs of the Company.
Potential Need for Additional Financing. Capston
intends to advance funds from time to time to help defray
the Company's operating costs, including the cost of
professionals retained by the Company, costs associated with
complying with filing requirements of the SEC and costs
associated with investigating and evaluating proposed
acquisitions. These advances will be recorded as liabilities
on the books of the Company and will be reimbursed to
Capston upon successful completion of a business combination
transaction. There is no assurance that Capston will have
sufficient resources to advance all required expenses and if
Capston's resources are insufficient, the Company may be
required to seek capital. No assurance can be given that the
Company will be able to obtain additional capital or, that
any funds will be available on terms acceptable to the
Company.
Intense Competition. The Company is and will continue
to be an insignificant participant in the business of
seeking business opportunities. A large number of
established and well-financed entities, including venture
capital firms, have recently increased their merger and
acquisition activities, especially among companies active in
high technology fields. Nearly all such entities have
significantly greater financial resources, technical
expertise and managerial capabilities than the Company and,
consequently, the Company will be at a competitive
disadvantage in identifying suitable acquisition candidates
and concluding a business combination transaction.
Dependence on Part-Time Management. The Company has no
employees as of the date hereof. Accordingly, the Company's
success will be largely dependent on the decisions made by
Capston and its officers, directors and consultants, none of
whom will devote their full time to the affairs of the
Company.
Experience of Capston. Although Capston and its
officers, directors and consultants have general business,
finance and acquisition experience, Stockholders should be
aware that Capston and its officers, directors and
consultants are not expected to have any significant
experience in operating such business as the Company might
choose to acquire. Accordingly, the Company will be required
to obtain outside professionals to assist them initially in
assessing the merits and risks of any proposed acquisition
and thereafter in operating any acquired business. No
assurance can be made that the Company will be able to
obtain such assistance on terms acceptable to the Company.
No Assurance of Acquisition of Operating Entity.
Although the Company proposes to combine with an existing,
privately held business which may or may not be profitable
but which is believed to have profitable growth potential
(irrespective of the industry in which such company engages)
and although Capston has received inquires from several
companies seeking to combine with publicly held "shells"
and/or blind pools, neither the Company nor Capston has
solicited any proposals regarding the Company's combination
with another business. There are no assurances that Capston
and its officers, directors and consultants will be able to
locate a suitable combination partner or that a combination
can be structured on terms acceptable to the Company.
Control of Combination Procedure by Capston. A
combination of the Company with another entity may be
structured as a merger or consolidation or involve the
direct issuance of the Company's Common Stock in exchange
for the other company's stock or assets. The General
Corporation Law of Delaware requires the affirmative vote of
the holders of at least a majority of the outstanding shares
of a Delaware corporation's capital stock to approve a
merger or consolidation, except in certain situations in
which no vote of the stockholders is necessary. Since
stockholder approval is not required in connection with the
issuance of stock in exchange for stock or assets and since
the Plan will specifically authorize the issuance of up to
4,500,000 shares of Common Stock, without prior Stockholder
approval, in connection with a business combination
transaction, it is anticipated that Capston will have
complete control over the Company's combination policies and
procedures.
Dilution Resulting from Combination. It is anticipated
that any entity which satisfies the Company's combination
suitability standards will possess assets and other indicia
of value substantially greater than those of the Company.
Consequently, any combination will almost certainly result
in a substantial dilution in the percentage of equity
ownership and voting power of holders of the Company's
Common Stock as stockholders of the combined enterprise. In
the aggregate, holders of the Company's Common Stock will
probably own a small minority percentage of the combined
enterprise's voting securities, with a concomitant reduction
in their power to elect directors and otherwise to influence
management policy.
Likely Change in Control. The successful completion of
a merger or acquisition will likely result in a change of
control resulting from the issuance of a large number of
shares of the Company's authorized and unissued Common
Stock. Any such change in control is also likely to result
in the resignation or removal of the Company's present
Officers and Directors. In such an event, no assurance can
be given as to the experience or qualification of such
persons either in the operation of the Company's activities
or in the operation of the business, assets or property
being acquired, although it is likely that successor
management will have greater experience in the business of
the combined companies than Capston and its advisors.
No Market Research. The Company has neither conducted
nor have others made available to it results of market
research concerning the availability of potential business
opportunities. Therefore, Capston and its advisors can offer
no assurances that market demand exists for an acquisition
or merger as contemplated by the Company. Capston and its
advisors have not identified any particular industry or
specific business within an industry for evaluation by the
Company. There is no assurance the Company will be able to
acquire a business opportunity on favorable terms
Lack of Diversification. In the event the Capston and
its advisors are successful in identifying and evaluating a
suitable business opportunity, the Company will in all
likelihood be required to issue its Common Stock in an
acquisition or merger transaction. Inasmuch as the Company's
cash is limited and the issuance of additional Common Stock
will result in a dilution of interest for present
stockholders, it is unlikely the Company will be capable of
negotiating more than one acquisition or merger.
Consequently, the Company's lack of diversification may
subject it to economic fluctuation within a particular
industry in which an acquired enterprise conducts business.
Potential Conflicts of Interest. Capston and its
advisors are all engaged full-time in other business
activities, some of which may be competitive with the
proposed business activities of the Company. In particular,
Capston's principal business involves the restructuring of
defunct public companies as clean public shells for the
purpose of effecting business combination with a suitable
operating companies. To the extent that Capston and its
advisors have fiduciary duties to such other business
activities, possible conflicts of interest may arise or may
appear to exist in respect to the possible diversion of
corporate opportunities to other entities with which they
are or may become associated. No assurance can be given that
any such potential conflicts of interest will not cause the
Company to lose potential opportunities.
No Market Maker. The Company's securities may be quoted
on NASD's Electronic Bulletin Board which reports quotations
by brokers or dealers making a market in particular
securities. The Company has no agreement with any broker or
dealer to act as a market maker for the Company's securities
and there is no assurance Capston and its advisors will be
successful in obtaining a market maker.
No Assurance of Public Market. Prior to this Proxy
Statement, there has been no public market for the Common
Stock and there is no assurance that a public market will
ever develop. If a trading market does in fact develop for
the Common Stock, there is a possibility that it will not be
sustained and Stockholders may have difficulty in selling
their Common Stock in the future at any price.
Possible Issuance of Additional Shares. If the Plan is
approved by the Stockholders, the Company's Certificate of
Incorporation will authorize the issuance of 25,000,000
shares of Common Stock and 5,000,000 shares of Preferred
Stock. Any Preferred Stock that is subsequently issued by
the Company may be subject to conversion into Common Stock
on terms approved by the Board of Directors. If the Plan is
approved by the Stockholders, approximately 98% of the
Company's authorized shares of Common Stock will remain
unissued. The Plan specifically contemplates the issuance of
up to 4,500,000 shares of Common Stock to unrelated third
parties in connection with a business combination
transaction. Moreover, after completion of a business
combination, the Board of Directors of the combined
companies will have the power to issue additional shares of
Common Stock without stockholder approval. Although the
Company currently has no commitments, contracts or
intentions to issue any additional shares, Stockholders
should be aware that any such issuance may result in a
reduction of the book value or market price, if any, of the
outstanding shares of Common Stock. If the Company issues
additional shares, such issuances will also cause a
reduction in the proportionate ownership and voting power of
all other Stockholders. Further, any new issuance of shares
of Common Stock may result in a change of control of the
Company. If any acquisition resulted in a change of control,
there can be no assurance as to the experience or
qualifications of those new persons involved in either the
management of the Company or of the business being acquired.
In that event, future operations of the Company and the
payment of dividends, if any, would be wholly dependent upon
such persons.
No Assurance of Dividends. The Company has not paid any
dividends upon its Common Stock, and by reason of its
present financial status and its contemplated financial
requirements, does not contemplate paying any dividends in
the foreseeable future.
RATIFICATION OF REINSTATEMENT, BY-LAWS AND SEC FILINGS
Acting in its capacity as a Stockholder of the Company,
and without first receiving any consent, approval or
authorization of any officer, director or other Stockholder
of the Company, Capston effected a renewal, revival and
restoration of the Company's certificate of incorporation
pursuant to Section 312 of the General Corporation Law of
the State of Delaware. In general, Section 312 provides that
any corporation may "procure an extension, restoration,
renewal or revival of its certificate of incorporation,
together with all the rights, franchises, privileges and
immunities and subject to all of its duties, debts and
liabilities which had been secured or imposed by its
original certificate of incorporation" upon compliance with
certain procedural requirements.
After reviewing the applicable files, Capston
determined that the only debt of the Company that was
"secured or imposed by its original certificate" was the
obligation of Webcor to pay its Delaware taxes. Therefore,
Capston paid all past due franchise taxes on behalf of the
Company and then filed a Certificate of Renewal, Revival,
Extension and Restoration of the Company's Certificate of
Incorporation on behalf of the Company. This Certificate was
filed in the office of the Secretary of State of the State
of Delaware on December 26, 1996 and at the date of this
Proxy Statement the Company is lawfully incorporated,
validly existing and in good standing under the laws of the
State of Delaware.
In connection with the reinstatement of the Company's
Charter, Capston adopted amended by-laws for the conduct of
the Company's business, subject to the approval and
ratification of the Stockholders. Under the amended by-laws
adopted by Capston, the presence, in person or by proxy, of
one-third (1/3) of the total number of shares entitled to
vote at the Meeting will constitute a quorum.
Acting in its capacity as a Stockholder of the Company,
and without first receiving any consent, approval or
authorization of any officer, director or other Stockholder
of the Company, Capston filed with the SEC an omnibus Annual
Report on Form 10-K for the fiscal years ended March 31,
1988. In connection therewith, Capston advanced all of the
costs and expenses associated with the preparation of
audited financial statements for the Company, together with
all of the filing fees due to the SEC. As a result of these
actions, the Company has been brought current with respect
to its reporting obligations under the Exchange Act and is
once again in compliance with applicable SEC regulations
respecting reporting.
Stockholders Entitled to Vote and Vote Required.
Reinstatement of Charter. Since the actions of Capston
in effecting a renewal, revival and restoration of the
Company's certificate of incorporation were not previously
authorized by the Company's Officers, Directors or
Stockholders, it is necessary for the Stockholders to ratify
and adopt such actions by a majority vote The affirmative
vote of the holders of a majority of all shares of Common
Stock entitled to vote and represented in person or by proxy
at the Meeting is required to ratify Capston's Reinstatement
of the Company's Charter. In conformity with Article II,
Section 11 of the Company's amended by-laws, the failure to
appear in person or by proxy and vote on matters presented
to the Meeting will be treated as a vote FOR all proposals
unless the holders of least 10% of the Company's outstanding
Common Stock appear in person or by proxy and vote AGAINST
the proposal. Executed proxies that are marked "Abstain" and
broker non-votes will be counted as votes against the
proposal.
Adoption of By-laws. Since the actions of Capston in
adopting new by-laws for the Company were not previously
authorized by the Company's Officers, Directors or
Stockholders, it is necessary for the Stockholders to ratify
and adopt such actions by a majority vote The affirmative
vote of the holders of a majority of all shares of Common
Stock entitled to vote and represented in person or by proxy
at the Meeting is required to ratify Capston's adoption of
new by-laws for the Company In conformity with Article II,
Section 11 of the Company's amended by-laws, the failure to
appear in person or by proxy and vote on matters presented
to the Meeting will be treated as a vote FOR all proposals
unless the holders of least 10% of the Company's outstanding
Common Stock appear in person or by proxy and vote AGAINST
the proposal. Executed proxies that are marked "Abstain" and
broker non-votes will be counted as votes against the
proposal.
Filing of SEC Reports. Since the actions of Capston in
preparing and filing an omnibus Annual Report on From 10-K
for the fiscal years ended March 31, 1988 were not
previously authorized by the Company's Board of Directors or
Stockholders, it is necessary for the Stockholders to ratify
and adopt such actions by a majority vote. The affirmative
vote of the holders of a majority of all shares of Common
Stock entitled to vote and represented in person or by proxy
at the Meeting is required to ratify Capston's filing of an
omnibus Annual Report on From 10-K for the fiscal years
ended March 31, 1988. In conformity with Article II, Section
11 of the Company's amended by-laws, the failure to appear
in person or by proxy and vote on matters presented to the
Meeting will be treated as a vote FOR all proposals unless
the holders of least 10% of the Company's outstanding Common
Stock appear in person or by proxy and vote AGAINST the
proposal. Executed proxies that are marked "Abstain" and
broker non-votes will be counted as votes against the
proposal.
CAPSTON ASKS ALL STOCKHOLDERS TO APPROVE EACH OF THE
FOREGOING PROPOSALS. THE PROXY ENCLOSED HEREWITH WILL BE
VOTED FOR EACH PROPOSAL UNLESS THE STOCKHOLDER SPECIFICALLY
VOTES AGAINST ONE OR MORE PROPOSAL OR EXPRESSLY ABSTAINS
FROM VOTING. SINCE CAPSTON HAS PROPOSED THE PLAN AS AN
INTEGRATED WHOLE, CAPSTON INTENDS TO ABANDON THE PLAN IN ITS
ENTIRETY IF ALL ELEMENTS OF THE PLAN ARE NOT APPROVED BY THE
STOCKHOLDERS.
ELECTION OF DIRECTORS
The by-laws of the Company provide that the Company
shall have not less than one (1) nor more than nine (9)
Directors, the exact number to be fixed by the Board of
Directors from time to time. Since Capston only effected a
renewal, revival and restoration of the Company's
certificate of incorporation in December of 1996, there are
presently no members of the Board of Directors and it will
be necessary to appoint at least one person to serve as a
director of the Company to serve, subject to the provisions
of the by-laws of the Company, until the 1998 annual Meeting
of the Stockholders, and until the election and
qualification of a successor board of directors. Capston's
sole nominee for membership on the Board of Directors is Ms.
Sally A. Fonner, the principal stockholder and president of
Capston. A brief account of Ms. Fonner's business experience
and education follows:
Ms. Sally A. Fonner, age 48, has been an independently
employed business consultant for most of the past fifteen
years. She graduated from Stephens University in 1969 with a
Bachelor of Arts Degree in Social Systems. After a stint in
the private sector, Ms. Fonner returned to further her
education and obtained her MBA Degree from the Executive
Program of the University of Illinois in 1979. In many of
her assignments as a business consultant, she is frequently
engaged in dealings which involve financiers and large
monetary transactions. Currently, Ms. Fonner has been
engaged for the last two years in the complex area of
financing rehabilitation providers.
Board and Committee Activity, Structure and
Compensation. As Capston's representative, Ms. Fonner will
receive no compensation for serving on the Board of
Directors, although she will likely be allocated a
substantial portion of the 200,000 compensation shares
provided for in the Plan. After the completion of a business
combination transaction, directors who are not a salaried
employees of the Company will likely receive a cash stipend
for attending Meetings of the Board, together with
reimbursement for expenses incurred in connection with
attending each such Meeting. The Company does not currently
have any standing committees; however, it is expected that
the Board will likely designate an Executive Committee, a
Compensation Committee and an Audit Committee after the
completion of a business combination transaction.
Stockholders Entitled to Vote and Vote Required.
Directors will be elected by a plurality of the votes
cast by the holders of all shares of Common Stock entitled
to vote at the Meeting. Abstentions and broker non-votes
will be disregarded in the tabulation of votes for the
election of Directors.
CAPSTON ASKS ALL STOCKHOLDERS TO VOTE FOR THE ELECTION OF
MS. FONNER TO SERVE AS THE SOLE DIRECTOR OF THE COMPANY
UNTIL THE 1998 ANNUAL MEETING OF STOCKHOLDERS. THE PROXY
ENCLOSED HEREWITH WILL BE VOTED FOR EACH PROPOSAL UNLESS THE
STOCKHOLDER SPECIFICALLY VOTES AGAINST ONE OR MORE PROPOSALS
OR EXPRESSLY ABSTAINS FROM VOTING. SINCE CAPSTON HAS
PROPOSED THE PLAN AS AN INTEGRATED WHOLE, CAPSTON INTENDS TO
ABANDON THE PLAN IN ITS ENTIRETY IF ALL ELEMENTS OF THE PLAN
ARE NOT APPROVED BY THE STOCKHOLDERS.
PROPOSED REVERSE SPLIT
At the date of this Proxy Statement, the Company has an
aggregate of 3,476,370 shares of Common Stock issued and
outstanding. Since (i) Capston believes that the owners of a
suitable target company will ordinarily want to control
between 80% and 90% of the Company's Common Stock upon the
completion of a business combination transaction, and (ii)
Capston believes an ultimate capitalization in the 2,500,000
to 5,000,000 share range is ideal for a small public
Company, Capston believes that it will be in the best
interest of the Company and its Stockholders to reduce the
number of outstanding shares to approximately 300,000 shares
by means of a reverse split. Capston believes such action
will optimize the number of shares issued and outstanding
after a business combination transaction, result in a higher
reported market price for the Common Stock of the combined
companies, and reduce the market volatility of the Common
Stock of the combined companies. These changes, in turn, are
expected to enhance the overall perception of the Common
Stock among institutional investors and larger brokerage
firms. These goals, if achieved, are expected to enhance the
Company's ability to raise additional equity capital, and
attract new market makers and institutional stockholders.
Capston believes that the proposed reverse split will
be beneficial to the Company by significantly reducing the
number of issued and outstanding shares of Common Stock,
reducing the expected level of price volatility, and
otherwise stabilizing the anticipated market price of the
Common Stock. Capston also believes the proposed reverse
split would increase the Company's posture and relative
worth of its shares in the eyes of the investment community,
although there is a risk that the market may not adjust the
price of the Company's Common Stock by the ratio of a
reverse split. Capston is aware of instances where only
modest price appreciation per share has resulted from a
reverse stock split. Trading in the Common Stock thereafter
will be at prices determined by supply and demand and
prevailing market conditions, which will not necessarily
result in the Common Stock of the Company maintaining a
market price in proportion to the reverse split effected.
The Common Stock is currently registered under Section
12(g) of the Exchange Act, and as a result, the Company is
subject to the periodic reporting and other requirements of
the Act. The proposed reverse split will not effect the
registration of the Common Stock under the Act, and the
Company has no present intention of terminating its
registration under the Act in order to become a "private"
company.
Other than the decrease in the total shares to be
outstanding, no substantive changes are being made in the
rights of Common Stock. Accordingly, upon the Effective Date
of a reverse split, each holder of record of new shares
would be entitled to one vote for each new share held at
each Meeting of the Stockholders in respect to any matter on
which Stockholders have the right to vote. Stockholders have
no cumulative voting rights, nor will they have the
preemptive right to purchase any additional shares of Common
Stock. Holders would be entitled to receive, when and as
declared by the Company's Board of Directors, out of
earnings and surplus legally available therefor, any
dividends payable either in cash, in property or in shares
of the capital stock of the Company.
No fractional new shares will be issued. Each holder of
less than 11.5879 shares, after exchange of all other old
shares held by the holder, will be issued one (1) new share
in exchange for such remaining old shares.
As soon as practical after the Effective Date of a
reverse split, the Company will mail letters of transmittal
to each holder of record of a stock certificate or
certificates which represents issued shares of Common Stock
outstanding on the Effective Date. The letter of transmittal
will contain instructions for the surrender of such
certificate or certificates to the Company's transfer agent
in exchange for the certificates representing the number of
whole shares of new Common Stock into which the shares of
Common Stock have been converted as a result of a reverse
split. No payment will be made or new certificate issued to
a stockholder until he has surrendered his outstanding
certificates together with the letter of transmittal to the
Company's transfer agent.
Stockholders Entitled to Vote and Vote Required.
The affirmative vote of the holders of a majority of
all shares of Common Stock entitled to vote and represented
in person or by proxy at the Meeting will be required to
approve the proposed reverse split. Stockholders have no
right under Delaware law or the Certificate of Incorporation
to dissent from a reverse split In conformity with Article
II, Section 11 of the Company's amended by-laws, the failure
to appear in person or by proxy and vote on matters
presented to the Meeting will be treated as a vote FOR all
proposals unless the holders of least 10% of the Company's
outstanding Common Stock appear in person or by proxy and
vote AGAINST the proposal. Executed proxies that are marked
"Abstain" and broker non-votes will be counted as votes
against the proposal.
CAPSTON ASKS ALL STOCKHOLDERS TO APPROVE THE PROPOSED
REVERSE SPLIT. THE PROXY ENCLOSED HEREWITH WILL BE VOTED IN
FAVOR OF THE PROPOSED REVERSE SPLIT UNLESS THE STOCKHOLDER
SPECIFICALLY VOTES AGAINST THE PROPOSAL OR EXPRESSLY
ABSTAINS FROM VOTING. SINCE CAPSTON HAS PROPOSED THE PLAN AS
AN INTEGRATED WHOLE, CAPSTON INTENDS TO ABANDON THE PLAN IN
ITS ENTIRETY IF ALL ELEMENTS OF THE PLAN ARE NOT APPROVED BY
THE STOCKHOLDERS.
ISSUANCE OF COMPENSATION SHARES
As part of the Plan, Capston proposes to issue a total
of 200,000 shares of Common Stock ("Compensation Shares") to
individuals designated by Capston as compensation for
services rendered in connection with the implementation of
the Plan. The purpose of this proposed grant of Compensation
Shares is to increase the personal stake of the Grantees in
the Company since the Company's long-term business
objectives will be dependent in large part upon their
efforts, expertise and abilities.
Subject to Stockholder approval, the Company intends
file a Form S-8 Registration Statement to register the
200,000 Compensation Shares under the Securities Act.
Thereafter, the Compensation Shares will be issued from time
to time to individuals designated by Capston who have
materially participated in the implementation of the Plan.
Such shares will not, however, be issued to finders or for
services rendered in a capital raising transaction. If
Capston is successful in arranging a business combination
for the Company, approximately forty percent (40%) of the
net value derived by the Company's Stockholders will vest in
Capston and its officers, directors and consultants and the
remaining sixty percent (60%) will inure to the benefit of
the existing Stockholders of the Company.
A Grantee will recognize income for federal tax
purposes at the time the Compensation Shares are issued. In
general, the amount of ordinary income recognized by a
Grantee will equal the fair market value of the Compensation
Shares on the date of grant. Gain or loss (if any) from a
disposition of Compensation Shares after the Grantee
recognizes ordinary income will generally constitute short
or long-term capital gain or loss. The Company will be
entitled to a tax deduction at the time the Grantee
recognizes ordinary income on the Compensation Shares.
Stockholders Entitled to Vote and Vote Required.
The affirmative vote of the holders of a majority of
all shares of Common Stock entitled to vote and represented
in person or by proxy at the Meeting will be required to
approve the proposed issuance of 200,000 Compensation Shares
to persons designated by Capston. In conformity with Article
II, Section 11 of the Company's amended by-laws, the failure
to appear in person or by proxy and vote on matters
presented to the Meeting will be treated as a vote FOR all
proposals unless the holders of least 10% of the Company's
outstanding Common Stock appear in person or by proxy and
vote AGAINST the proposal. Executed proxies that are marked
"Abstain" and broker non-votes will be counted as votes
against the proposal.
CAPSTON ASKS ALL STOCKHOLDERS TO APPROVE THE PROPOSED
ISSUANCE OF 200,000 COMPENSATION SHARES. THE PROXY ENCLOSED
HEREWITH WILL BE VOTED IN FAVOR OF THE PROPOSED ISSUANCE OF
COMPENSATION SHARES UNLESS THE STOCKHOLDER SPECIFICALLY
VOTES AGAINST THE PROPOSAL OR EXPRESSLY ABSTAINS FROM
VOTING. SINCE CAPSTON HAS PROPOSED THE PLAN AS AN INTEGRATED
WHOLE, CAPSTON INTENDS TO ABANDON THE PLAN IN ITS ENTIRETY
IF ALL ELEMENTS OF THE PLAN ARE NOT APPROVED BY THE
STOCKHOLDERS.
APPROVAL OF FINDER'S FEE FORMULA
As is customary in the industry, the Plan contemplates
the payment of finder's fees to unrelated third parties who
introduce the Company to a suitable acquisition prospect. If
any such fee is paid, it will be approved by the Company's
Board of Directors and will be in accordance with the
standards discussed below.
Finder's fees are customarily between 1% and 5% of the
total transaction value, based upon a sliding scale of the
amount involved. The traditional "Lehman Formula" for
calculating finder's fees is 5% of the first $1 million in
transaction value, plus 4% of the second $1 million, plus 3%
of the third $1 million, plus 2% of the fourth $1 million
plus 1% of any transaction value in excess of $4 million. In
Capston's opinion, however, the traditional Lehman Formula
finder's fee minimizes the economic incentive of finder's
who are involved in larger transactions.
In Capston's opinion, the Company and its Stockholders
will be better served by accepting a relatively small
percentage interest in a relatively large transaction, as
opposed to requiring a relatively large percentage interest
in a relatively small transaction. The reasons for this
belief are numerous. First, Capston believes that the
ongoing costs and expenses associated with reporting under
the Exchange Act can be a significant burden for a small
company. Second, Capston believes that relatively large
companies are more likely to thrive and prosper than smaller
companies. Third, Capston believes that relatively large
companies are better suited to shell transactions than small
companies. Finally, Capston believes that a relatively large
company will be required to satisfy the minimum entry
standards for the NASDAQ Stock Market and the Regional and
National Stock Exchanges. For example, the following table
outlines the newly-adopted Entry Standards for companies
that wish to have their securities listed in the NASDAQ
Small Cap Market:
NASDAQ Small Cap Market
Net Tangible Assets
(Total Asset less Total Liabilities and
Goodwill) $4,000,000, or
Market Capitalization
$50,000,000, or
Net Income (2 of last 3 years) $750,000
Total Assets N/A
Total Equity N/A
Public Float (Shares) 1,000,000
Market Value of Float $5,000,000
Bid Price $4.00
Market Makers 3
Stockholders 300
Operating History (years) 1 or
Market Capitalization $50,000,000
Similarly, the following table outlines the newly-adopted
Entry Standards for companies that wish to have their
securities listed in the NASDAQ National Market System:
NASDAQ National Market System
Net Tangible Assets $6,000,000 $18,000,000 N/A
Market Capitalization N/A N/A $75,000,000
Total Assets N/A N/A $75,000,000
Total Revenue N/A N/A $75,000,000
Pre-tax Earnings
(2 of last 3 years) $1,000,000 N/A N/A
Public Float (shares) 1,100,000 1,100,000 1,100,000
Market Value of Float $8,000,000 $18,000,000 $20,000,000
Bid Price $5.00 $5.00 $5.00
Market Makers 3 3 4
Stockholders 400 400 400
Operating History (years) N/A 2 N/A
Since the size of the business operation acquired by
the Company will, in large part, determine the market where
the securities of the combined companies will qualify for
listing, Capston intends to use all reasonable efforts to
identify and negotiate with the largest possible business
combination partners. In furtherance thereof, Capston
intends to offer a "reversed stretched Lehman fee" to
unrelated third party finders who introduce the Company to a
suitable acquisition prospect. Under the reversed stretched
Lehman formula proposed by Capston, the finder may receive
1% of the first $2 million in transaction value, 2% of the
second $2 million in transaction value, 3% of the third $2
million in transaction value, 4% of the fourth $2 million in
transaction value and 5% of any transaction value in excess
of $8 million. Since the Company does not have sufficient
financial resources to pay such a finder's fee in cash, it
is anticipated that any finder's fees will be paid with
shares of the Company's Common Stock which may be registered
under the Securities Act prior to issuance. Notwithstanding
the foregoing, no finder's fees will be paid to Capston or
any of its officers, directors, employees, agents or
affiliates without the prior consent of the Stockholders.
Stockholders Entitled to Vote and Vote Required.
The affirmative vote of the holders of a majority of
all shares of Common Stock entitled to vote and represented
in person or by proxy at the Meeting will be required to
approve the proposed finder's fee formula. In conformity
with Article II, Section 11 of the Company's amended by-
laws, the failure to appear in person or by proxy and vote
on matters presented to the Meeting will be treated as a
vote FOR all proposals unless the holders of least 10% of
the Company's outstanding Common Stock appear in person or
by proxy and vote AGAINST the proposal. Executed proxies
that are marked "Abstain" and broker non-votes will be
counted as votes against the proposal.
CAPSTON ASKS ALL STOCKHOLDERS TO APPROVE THE PROPOSED
FINDER'S FEE FORMULA. THE PROXY ENCLOSED HEREWITH WILL BE
VOTED IN FAVOR OF THE PROPOSED FINDER'S FEE FORMULA UNLESS
THE STOCKHOLDER SPECIFICALLY VOTES AGAINST THE PROPOSAL OR
EXPRESSLY ABSTAINS FROM VOTING. SINCE CAPSTON HAS PROPOSED
THE PLAN AS AN INTEGRATED WHOLE, CAPSTON INTENDS TO ABANDON
THE PLAN IN ITS ENTIRETY IF ALL ELEMENTS OF THE PLAN ARE NOT
APPROVED BY THE STOCKHOLDERS.
APPROVAL OF NAME CHANGE AND BUSINESS COMBINATION FORMAT
In general, a business combination may be structured in
the form of a merger, consolidation, reorganization, joint
venture, franchise, licensing agreement or purchase of the
stock or assets of an existing business. Certain business
combination transactions, such a statutory merger, are
complex to negotiate and implement and require stockholder
approval from both parties to the merger. On the other hand,
the simplest form of business combination is commonly known
as a reverse takeover. In a reverse takeover transaction,
the stockholders of the privately-held company exchange
their private company shares for newly issued stock of the
public company. As a result of the transaction, the
privately-held company becomes a wholly-owned subsidiary of
the Public Company and due to the large number of public
company shares that are customarily issued to stockholders
of the privately-held company, those stockholders end up
with a controlling interest in the public company and are
then free to appoint their own slate of officers and
directors.
By using an existing public company, a privately-held
concern that wants to establish a public market for its
stock can start with an existing stockholder base. In
addition, there are usually several brokers who will have an
interest in the newly reorganized company because they have
stock on their books.
There are several potential problems that arise in
connection with a reverse takeover. First, there may be
large blocks of stock in the hands of individuals who are
eager to sell at any price, thereby making it difficult to
support the market during the period immediately after the
reorganization. Second, in addition to inheriting the
stockholders and brokers associated with the public company,
the stockholders of the private company will also inherit
the business history of the public company. Accordingly, a
thorough due diligence investigation of the public company
and its principal stockholders is essential to ensure that
there are no unreported liabilities or other legal problems.
In general, reverse takeovers are viewed with some
skepticism by both the financial community and the
regulatory authorities until the reorganized company has
been active for a sufficient period of time to demonstrate
credible operating performance. Until this performance is
demonstrated, it can be difficult to raise additional money
for a company that went public through a reverse takeover
transaction. Therefore, the reverse takeover strategy is
most appropriate in cases where the purpose for establishing
a public trading market is not related to a perceived short-
term need for additional capital. If a privately-held
company believes that substantial additional capital will be
required within the next 6 to 12 months, a reverse takeover
transaction may not be the best alternative.
While the business combination transaction contemplated
by the Plan may be structured as a merger or consolidation,
Capston believes that the reverse takeover format will be
most attractive to potential acquisition targets.
Accordingly, Capston is seeking prior stockholder
authorization for a reverse takeover transaction that will
involve up to 4,500,000 shares of Common Stock. In the event
that a proposed business combination will involve the
issuance of less than 4,500,000 shares to the owners of the
privately-held company, then Capston will be authorized to
conclude the business combination without first seeking the
approval of the Stockholders. If, on the other hand, the
proposed business combination transaction will involve the
issuance of more than 4,500,000 shares to the owners of the
privately-held company, then Capston will seek prior
stockholder approval of the proposed transaction, without
regard to whether such stockholder approval might be
required under Delaware law.
In connection with a business combination transaction,
it is almost certain that management of the acquisition
target will require the Company to change its name to one
selected by the Board of Directors or stockholders of the
acquisition target. Since it is also almost certain that the
stockholders of the acquisition target will possess
sufficient voting power to cause the Company to change its
name after the acquisition, Capston is seeking prior
stockholder authorization for a change in the Company's name
that is (i) a negotiated element of a business combination
transaction of the type contemplated by the Plan, and (ii)
communicated to all Stockholders of the Company as soon as
possible following the consummation of the Plan.
Stockholders Entitled to Vote and Vote Required.
Authorization of Stock Issuance. The affirmative vote
of the holders of a majority of all shares of Common Stock
entitled to vote and represented in person or by proxy at
the Meeting is required to authorize the issuance of up to
4,500,000 shares of Common Stock to unrelated third in
connection with a business combination transaction of the
type contemplated by the Plan. In conformity with Article
II, Section 11 of the Company's amended by-laws, the failure
to appear in person or by proxy and vote on matters
presented to the Meeting will be treated as a vote FOR all
proposals unless the holders of least 10% of the Company's
outstanding Common Stock appear in person or by proxy and
vote AGAINST the proposal. Executed proxies that are marked
"Abstain" and broker non-votes will be counted as votes
against the proposal.
Authorization of Name Change. The affirmative vote of
the holders of a majority of all shares of Common Stock
entitled to vote and represented in person or by proxy at
the Meeting is required authorize an amendment to the
Company's Certificate of Incorporation to effect a Change in
the Company's name that is (i) a negotiated element of a
business combination transaction of the type contemplated by
the Plan, and (ii) communicated to all Stockholders of the
Company as soon as possible following the consummation of
the Plan. In conformity with Article II, Section 11 of the
Company's amended by-laws, the failure to appear in person
or by proxy and vote on matters presented to the Meeting
will be treated as a vote FOR all proposals unless the
holders of least 10% of the Company's outstanding Common
Stock appear in person or by proxy and vote AGAINST the
proposal. Executed proxies that are marked "Abstain" and
broker non-votes will be counted as votes against the
proposal.
CAPSTON ASKS ALL STOCKHOLDERS TO APPROVE EACH OF THE
FOREGOING PROPOSALS. THE PROXY ENCLOSED HEREWITH WILL BE
VOTED FOR EACH PROPOSAL UNLESS THE STOCKHOLDER SPECIFICALLY
VOTES AGAINST ONE OR MORE PROPOSAL OR EXPRESSLY ABSTAINS
FROM VOTING. SINCE CAPSTON HAS PROPOSED THE PLAN AS AN
INTEGRATED WHOLE, CAPSTON INTENDS TO ABANDON THE PLAN IN ITS
ENTIRETY IF ALL ELEMENTS OF THE PLAN ARE NOT APPROVED BY THE
STOCKHOLDERS.
Increase in Authorized Capitalization.
The authorized capitalization of the Company is
presently fixed at 20,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock. At March 31, 1988, the
Company had 3,476,370 shares of Common Stock issued and
outstanding. Thus, at March 31, 1988, there were
approximately 16,523,630 authorized shares of Common Stock
and 1,000,000 authorized shares of Preferred Stock that were
both unissued and not reserved for future issuance.
Since the Company's business plan contemplates the
issuance of up to 4,500,000 shares of Common Stock to the
current owners of an unidentified business or businesses,
and Capston believes that the Company is likely to need
substantial additional financing in the future, although the
amount and timing of the Company's future financing
requirements is not presently ascertainable, Capston
believes that an increase in the authorized capitalization
of the Company is desirable to facilitate the Company's
future financing activities. Accordingly, Capston proposes
to increase the authorized Preferred Stock of the Company
from 1,000,000 shares to 5,000,000 shares, and increase the
authorized Common Stock of the Company from 20,000,000
shares to 25,000,000 shares. Under this proposal, the
relative rights and limitations of the holders of Preferred
and Common Stock would remain unchanged.
The proposed increase in the authorized capitalization
of the Company has been recommended by Capston to assure
that an adequate supply of authorized and unissued shares is
available to finance the acquisition of suitable business
opportunities and the future growth of the Company. In
addition, the proposed new shares could also be used for
general corporate purposes, such as future stock dividends
or stock splits.
The issuance of additional shares of Common Stock may,
among other things, have a dilutive effect on earnings per
share and on the equity and voting power of existing holders
of Common Stock. Until the Board determines the specific
rights, preferences and limitations of any future series of
Preferred Stock, the actual effect on the holders of Common
Stock of the issuance of such shares cannot be ascertained.
However, such effects might include restrictions on
dividends on the Common Stock if dividends on the Preferred
Stock are in arrears, dilution of the voting power of the
holders of Common Stock to the extent that any series of
Preferred Stock has voting rights, and reduction of amounts
available on liquidation of the Company as a result of any
liquidation preference granted to the holders of any series
of Preferred Stock.
There are no current plans or arrangements relating to
the issuance of any additional shares of Common or Preferred
Stock proposed to be authorized. In addition, the Company
has no present intention to issue shares of Common or
Preferred Stock to any person in connection with any
acquisition of assets, merger, business combination,
exchange of securities or other similar transaction. The
terms of any future offering of Common or Preferred Stock
will be largely dependent on market conditions and other
factors existing at the time of issuance and sale.
If this proposal is approved by the stockholders, the
Board will be authorized to issue additional Common and/or
Preferred Stock, from time to time, within the limits
authorized by the proposal without further stockholder
action, except as may otherwise be provided by law or the
Articles of Incorporation as to holders of Preferred Stock.
Such additional shares may be issued for cash, property or
services, or any combination thereof, and at such price as
the Board deems reasonable under the circumstances. The
increase in authorized shares of Common Stock and Preferred
Stock has not been proposed for an anti-takeover-related
purpose and the Board and management have no knowledge of
any current efforts to obtain control of the Company or to
effect large accumulations of the Company's stock.
Nevertheless, the issuance of additional shares by the
Company may potentially have an anti-takeover effect by
making it more difficult to obtain stockholder approval of
various actions, such as a merger or removal of management.
Stockholders Entitled to Vote and Vote Required.
Increase in Common Stock. The affirmative vote of the
holders of a majority of all shares of Common Stock entitled
to vote and represented in person or by proxy at the Meeting
will be required to approve the proposed increase in the
Company's authorized Common Stock. In conformity with
Article II, Section 11 of the Company's amended by-laws, the
failure to appear in person or by proxy and vote on matters
presented to the Meeting will be treated as a vote FOR all
proposals unless the holders of least 10% of the Company's
outstanding Common Stock appear in person or by proxy and
vote AGAINST the proposal. Executed proxies that are marked
"Abstain" and broker non-votes will be counted as votes
against the proposal.
Increase in Preferred Stock. The affirmative vote of
the holders of a majority of all shares of Common Stock
entitled to vote and represented in person or by proxy at
the Meeting will be required to approve the proposed
increase in the Company's authorized Preferred Stock. In
conformity with Article II, Section 11 of the Company's
amended by-laws, the failure to appear in person or by proxy
and vote on matters presented to the Meeting will be treated
as a vote FOR all proposals unless the holders of least 10%
of the Company's outstanding Common Stock appear in person
or by proxy and vote AGAINST the proposal. Executed proxies
that are marked "Abstain" and broker non-votes will be
counted as votes against the proposal.
CAPSTON ASKS ALL STOCKHOLDERS TO APPROVE THE PROPOSED
INCREASES IN THE COMPANY'S AUTHORIZED COMMON AND PREFERRED
STOCK. THE PROXY ENCLOSED HEREWITH WILL BE VOTED IN FAVOR OF
BOTH PROPOSALS UNLESS THE STOCKHOLDER SPECIFICALLY VOTES
AGAINST THE PROPOSALS OR EXPRESSLY ABSTAINS FROM VOTING.
SINCE CAPSTON HAS PROPOSED THE PLAN AS AN INTEGRATED WHOLE,
CAPSTON INTENDS TO ABANDON THE PLAN IN ITS ENTIRETY IF ALL
ELEMENTS OF THE PLAN ARE NOT APPROVED BY THE STOCKHOLDERS.
ADDITIONAL INFORMATION
Additional materials enclosed herewith include copies
of the Company's Annual Report on Form 10-K for the year
ended March 31, 1996, as filed with the Securities and
Exchange Commission on December 31, 1996 "Exhibit A" and
the Company's Amended By-laws "Exhibit B." The Form 10-K
and By-laws incorporated herein by this reference and all
disclosures herein relating to the Company and its
management, business and financial condition are qualified
in their entirety by reference to the Form 10-k.
This solicitation is being conducted by Capston Network
Company on behalf of Webcor Electronics, Inc. The cost of
soliciting proxies in the accompanying form will be advanced
by Capston and reimbursed by the Company if, as and when a
suitable business combination transaction is effected. The
cost of solicitation including legal, accounting, printing,
mailing and other miscellaneous expenses are estimated at
$12,000. To date, Capston's out-of-pocket expenses have
been approximately $5,000. There is no known opposition to
the solicitation. In addition to solicitations by mail,
Directors, officers and regular employees of Capston may
solicit proxies by telephone, telegram, fax or personnel
solicitation. Brokers, nominees, fiduciaries and other
custodians will be instructed to forward soliciting material
to the beneficial owners of shares held of record by them,
and such custodians will be reimbursed for their expenses.
The persons designated as proxies to vote shares at the
Meeting intend to exercise their judgment in voting such
shares on other matters that may properly come before the
Meeting. Capston does not expect that any matters other
than those referred to in this proxy statement will be
presented for action at the Meeting.
PROXY WEBCOR ELECTRONICS, INC. PROXY
This Proxy is Solicited by Capston Network Co. for the
Special Meeting of Stockholders to be Held on February 24,
1997
The undersigned hereby appoints John L. Petersen and
Lisa Duncan, and each of them, either one of whom may act
without joinder of the other, each with full power of
substitution and ratification, attorneys and proxies of the
undersigned to vote all shares of common stock of WEBCOR
ELECTRONICS, INC. which the undersigned is entitled to vote
at a special meeting of Stockholders to be held at 10:00
a.m. on Tuesday, February 24, 1997, in the Cardita Room of
the Sheraton at Sand Key 430 S. Gulfview Resort, 1160 Gulf
Blvd., Clearwater Beach, Florida, and at any and all
adjournments thereof:
1. FOR the ratification of all actions of Capston
Network Co. ("Capston") in (i) effecting a renewal,
revival and restoration of the Company's Certificate
of Incorporation; (ii) adopting amended by-laws to
govern the business affairs of the Company, and
(iii) filing the reports and other documents
necessary to bring the Company current with respect
to its reporting obligations under the Securities
Exchange Act of 1934
nFOR nAGAINST nABSTAIN
2. FOR the election of Sally A. Fonner to serve as
the sole member of the Board of Directors until the
1998 annual Meeting of stockholders, or until her
successor is elected and qualified
nFOR nAGAINST nABSTAIN
3. PROPOSED AMENDMENTS TO ARTICLES OF
INCORPORATION.
(a) To effect a reverse split of all issued and
outstanding shares of Common Stock in the ratio of
one (1) share of new Common Stock for each 11.5879
shares presently outstanding so that immediately
thereafter the Company will have a total of
300,000 shares issued and outstanding
nFOR nAGAINST nABSTAIN
(b) To increase the authorized Common Stock of
the Company to 25,000,000 shares.
nFOR nAGAINST nABSTAIN
(c) To increase the authorized Preferred Stock of
the Company to 5,000,000 shares.
nFOR nAGAINST nABSTAIN
4. PROPOSED COMPENSATION SHARE ISSUANCE. To
approve the issuance of 200,000 shares of Common
Stock to persons designated by Capston as
compensation for services rendered in connection
with the implementation of the Plan
nFOR nAGAINST nABSTAIN
5. To consider and vote upon a proposal which will give
the Board of Directors authority to pay an in-kind
Finder's Fee to unrelated third party finders. who
introduce the Company to a suitable acquisition
prospect.
nFOR nAGAINST nABSTAIN
6. PROPOSED AUTHORIZATION OF STOCK ISSUANCE. To
authorize the Board of Directors to (i) change the
Company's name and (ii) issue up to 4,500,000 shares
of Common Stock to unrelated third parties, all
without prior stockholder approval, in connection
with a business combination transaction of the type
contemplated by the Plan.
nFOR nAGAINST nABSTAIN
7. In their discretion Upon such other matters
which may properly come before the meeting and any
adjournment thereof.
nFOR nAGAINST nABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN. UNLESS OTHERWISE SPECIFIED, THE
SHARES WILL BE VOTED FOR THE DIRECTOR NOMINEE AND FOR ALL
PROPOSALS.
he undersigned hereby revokes any Proxy previously
given in respect of the Annual Meeting.
Dated: _____________________, 1997
___________________________
_____________________________________________
Signature of
Stockholder(s)Note: Signature should agree with the
name on stock certificate as printed thereon.
Executors, administrators and
other fiduciaries should so indicate when signing.
n I Plan to personally attend the Special Meeting of the
Stockholders
PLEASE DATE, SIGN AND RETURN THIS PROXY TO CAPSTON
IN THE ENCLOSED ENVELOPE. THANK YOU.
WEBCOR ELECTRONICS, INC.
(hereinafter called the "Corporation")
AMENDED BY-LAWS
ARTICLE I
OFFICES
Section 1.Registered Office.The registered office of
the Corporation shall be in the State of Delaware.
Section 2.Other Offices.The Corporation may also have
offices at such other places both within and without the
State of Delaware as the Board of Directors may from time to
time determine.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1.Place of Meeting.Meetings of the stockholders
for the election of directors or for any other purpose shall
be held at such time and place, either within or without the
State of Delaware, as shall be designated from time to time
by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
Section 2.Annual Meetings.The Annual Meetings of
stockholders shall be held on such date and at such time as
shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect by a plurality vote a
Board of Directors, and transact such other business as may
properly be brought before the meeting. At any annual
meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the
meeting in accordance with the Articles of Incorporation.
Section 3.Special Meetings.Special Meetings of the
stockholders may be called by the Board of Directors, the
Chairman of the Board or the President. Upon request in
writing to the Secretary by any person entitled to call a
special meeting of the stockholders, the Secretary forthwith
shall cause notice to be given to the stockholders entitled
to vote that a meeting will be held at a time requested by
the person or persons calling the meeting. At any special
meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the
meeting in accordance with the Articles of Incorporation.
Section 4.Notice of Meetings.Written notice of the
place, date, and time of all meetings of the stockholders
shall be given, not less than ten (10) nor more than sixty
(60) days before the date on which the meeting is to be
held, to each stockholder entitled to vote at such meeting,
except as otherwise provided herein or as required from time
to time by the General Corporation Law of Delaware or the
Articles of Incorporation.
Section 5.Quorum: Adjournment.With respect to any
matter, a quorum shall be present at a meeting of
stockholders if the holders of at least on-third (1/3) of
the shares entitled to vote on that matter are represented
at the meeting in person or by proxy. If a quorum shall fail
to attend any meeting, the chairman of the meeting or the
holders of a majority of the shares of stock entitled to
vote who are present, in person or by proxy, may adjourn the
meeting to another place, date or time without notice other
than announcement at the meeting, until a quorum shall be
present or represented.
When a meeting is adjourned to another place, date or
time, written notice need not be given of the adjourned
meeting if the place, date and time thereof are announced at
the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more
than thirty (30) days after the date for which the meeting
was originally noticed, or if a new record date is fixed for
the adjourned meeting, written notice of the place, date and
time of the adjourned meeting shall be given in conformity
herewith. At any adjourned meeting, any business may be
transacted which might have been transacted at the original
meeting.
Section 6.Organization.At every meeting of the
stockholders, the chairman of the board, if there be one, or
in the case of a vacancy in the office or absence of the
chairman of the board, one of the following persons present
in the order stated shall act as chairman of the meeting:
the vice chairman of the board, if there be one, the
president, the vice presidents in their order of rank or
seniority, a chairman designated by the board of directors
or a chairman chosen by the stockholders in the manner
provided in Section 5 of this Article II. The secretary, or
in his absence, an assistant secretary, or in the absence of
the secretary and the assistant secretaries, a person
appointed by the chairman of the meeting, shall act as
secretary.
Section 7.Proxies and Voting.At any meeting of the
stockholders, every stockholder entitled to vote may vote in
person or by proxy authorized by an instrument in writing
filed in accordance with the procedure established for the
meeting.
Each stockholder shall have one vote for every share of
stock entitled to vote which is registered in his name on
the record date for the meeting, except as otherwise
provided herein or required by law or the Articles of
Incorporation.
All voting, including on the election of directors but
except where otherwise provided herein or required by law or
the Articles of Incorporation, may be by a voice vote;
provided, however, that upon demand therefor by a
stockholder entitled to vote or such stockholder's proxy, a
stock vote shall be taken. Every stock vote shall be taken
by ballots, each of which shall state the name of the
stockholder or proxy voting and such other information as
may be required under the procedure established for the
meeting.
All elections of directors shall be determined by a
plurality of the votes cast by the holders of shares
entitled to vote in the election of directors at a meeting
of stockholders at which a quorum is present. Except as
otherwise required by law or the Articles of Incorporation,
all matters other than the election of directors shall be
determined by the affirmative vote of the holders of a
majority of the shares entitled to vote on that matter and
represented in person or by proxy at a meeting of
stockholders at which a quorum is present.
Section 8.Stock List.A complete list of stockholders
entitled to vote at any meeting of stockholders, arranged in
alphabetical order for each class of stock and showing the
address of each such stockholder and the number of shares
registered in such stockholder's name, shall be open to the
examination of any such stockholder, for any purpose germane
to the meeting, during ordinary business hours for a period
of at least ten (10) days prior to the meeting, at the
registered office or principal place of business of the
Corporation.
The stock list shall also be kept at the place of the
meeting during the whole time thereof and shall be open to
the examination of any such stockholder who is present. This
list shall presumptively determine the identity of the
stockholder entitled to vote at the meeting and the number
of shares held by each of them.
Section 9.Inspectors of Election.In advance of any
meeting of stockholders, the Board of Directors may appoint
inspectors of election, who need not be stockholders, to act
at such meeting or any adjournment thereof. If inspectors of
election are not so appointed, the person presiding at any
such meeting may, and on the request of any stockholder
entitled to vote at the meeting and before voting begins
shall, appoint inspectors of election. The number of
inspectors shall be either one or three, as determined, in
the case of inspectors appointed upon demand of a
stockholder, by the stockholders in the manner provided in
Section 5 of this Article II, and otherwise by the Board of
Directors or person presiding at the meeting, as the case
may be. If any person who is appointed fails to appear or
act, the vacancy may be filled by appointment made by the
Board of Directors in advance of the meeting, or at the
meeting by the person presiding at the meeting. Each
inspector, before entering upon the discharge of his duties,
shall take an oath faithfully to execute the duties of
inspector at such meeting.
If inspectors of election are appointed as aforesaid,
they shall determine from the lists referred to in Section 8
of this Article II the number of shares outstanding, the
shares represented at the meeting, the existence of a quorum
and the voting power of shares represented at the meeting,
determine the authenticity, validity and effect of proxies,
receive votes or ballots, hear and determine all challenges
and questions in any way arising in connection with the
right to vote or the number of votes which may be cast,
count and tabulate all votes or ballots, determine the
results, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders entitled
to vote thereat. If there be three inspectors of election,
the decision, act or certificate of two shall be effective
in all respects as the decision, act or certificate of the
inspectors of election.
Unless waived by vote of the stockholders conducted in
the manner which is provided in Section 5 of this Article,
the inspectors shall make a report in writing of any
challenge or question matter which is determined by them,
and execute a sworn certificate of any facts found by them.
Section 10.Stockholder Actions by Written
Consent.Except as specifically provided for in a formal
certificate of rights, powers and designations relating to
the rights of the holders of one or more series of Preferred
Stock, or as otherwise provided in the Articles of
Incorporation, no action required to be taken or that may be
taken at any annual or special meeting of stockholders of
the Corporation may be taken without a meeting, and the
power of the stockholders of the Corporation to act by
written consent without a meeting is specifically denied.
Section 11.Method of Giving Consent, Approval, etc.Any
vote, consent, approval, ratification or disapproval
required by these by-laws may be given as follows:
(a)by a written Consent executed by the consenting
Stockholder, provided that such Consent shall not have
been withdrawn by the Consenting Stockholder by
Notification to the Company at or prior to the time of
the doing of such act or thing; or
(b)by the affirmative vote by the Consenting
Stockholder to the doing of the act or thing for which
the Consent is solicited at any meeting called and held
pursuant to these by-laws to consider the doing of such
act or thing.
(c)by failing to respond, within the time set forth
in a Notice which specifies (i) the specific act or
proposal for which Consent is being requested by the
Company; (ii) that the Company intends to rely on the
provisions of this Section 11(c) in determining whether
the requisite percentage in interest of the Stockholders
has consented to the specific act or proposal; and (iii)
a Record Date not less than 20 days after the date of
the Notice on which the specific act or proposal will be
deemed approved unless at least 10% in Interest of the
Stockholders object in writing prior to such Record
Date.
ARTICLE III
BOARD OF DIRECTORS
Section 1.Duties and powers.The business of the
Corporation shall be managed by or under the direction of
the Board of Directors which may exercise all such powers of
the Corporation and do all such lawful acts and things as
are not by law or by the Articles of Incorporation or by
these By-laws directed or required to be exercise or done by
the stockholders.
Section 2.Number and Term in Office.This Section 2 is
subject to the provisions in a formal certificate of rights,
powers and designations relating to the rights of the
holders of one or more series of Preferred Stock or other
provisions of the Corporation's Articles of Incorporation.
The authorized number of directors constituting the Board of
Directors until further changed shall not less than one (1)
nor more than nine (9) directors. The number of directors
may be changed from time to time by resolution duly adopted
by the Board of Directors or the stockholders, except as
provided in Section 3 of this Article III, directors shall
be elected by the holders of record of a plurality of the
votes cast at Annual Meetings of Stockholders, and each
director so elected shall hold office until the next Annual
Meeting and until his or her successor is duly elected and
qualified, or until his or her earlier resignation or
removal. Any director may resign at any time upon written
notice to the Corporation. Directors need not be
stockholders
Section 3.Vacancies.This Section 3 is subject to the
provisions of the Corporation's Articles of Incorporation.
Vacancies and newly created directorships resulting from any
increase in the authorized member of directors may be filled
only by action of a majority of the Board of Directors then
in office, even if less than a quorum, or by a sole
remaining director. Any director elected to fill a vacancy
not resulting from an increase in the number of directors
shall have the same remaining term as that of his
predecessor. Any director may resign at any time upon
written notice to the Corporation.
Section 4.Nominations of Directors; Election.This
Section 4 is subject to the provisions of the Corporation's
Articles of Incorporation. Nominations for the election of
directors may be made by the Board of Directors or a
committee appointed by the Board of Directors, or by any
stockholder entitled to vote generally in the election of
directors who complies with the procedures set forth in this
Section 4. Directors shall be at least 21 years of age and
need not be stockholders. Nominations, other than those made
by or at the direction of the Board of Directors, shall be
made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice
shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than
60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 70 days'
notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder
to be timely must be so received not later than the close of
business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public
disclosure was made. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a Director, (i) the
name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such
person, (iii) the number of shares of the Corporation which
are beneficially owned by such person, and (iv) any other
information relating to such person that is required to be
disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant
to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such persons'
written consent to being named in the proxy statement as a
nominee and to serving as a Director if elected); and (b) as
to the stockholder giving the notice (i) the name and
address, as they appear on the Corporation's books, of such
stockholder and (ii) the number of shares of the Corporation
which are beneficially owned by such stockholder. No person
shall be eligible for election as a Director of the
Corporation unless nominated in accordance with the
procedures set forth in this Article. The Chairman of the
meeting shall, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance
with the procedures prescribed herein, and if he should so
determine, he shall so declare to the meeting and the
defective nomination shall be disregarded.
Section 5.Meetings.The Board of Directors of the
Corporation may hold meetings, both regular and special,
either within or without the State of Delaware. The first
meeting of each newly-elected Board of Directors shall be
held immediately following the Annual Meeting of
Stockholders and no notice of such meeting shall be
necessary to be given the newly-elected directors in order
legally to constitute the meeting, provided a quorum shall
be present. Regular meetings of the Board of Directors may
be held without notice at such time and at such place as may
from time to time be determined by the Board of Directors.
Special meetings of the Board of Directors may be called by
the Chairman of the Board, the president or at least two of
the directors then in office. Notice thereof stating the
place, date and hour of the meetings shall be given to each
director by mail, telephone or telegram not less than
seventy-two (72) hours before the date of the meeting.
Meetings may be held at any time without notice if all the
directors are present or if all those not present waive such
notice in accordance with Section 2 of Article VI of these
By-laws.
Section 6.Quorum.Except as may be otherwise
specifically provided by law, the Articles of Incorporation
or these By-laws, at all meetings of the Board of Directors,
a majority of the directors then in office shall constitute
a quorum for the transaction of business. The act of a
majority of the directors present at any meeting at which
there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting
of the Board 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 7.Action of Board Without a Meeting.Unless
otherwise provided by the Articles of Incorporation or these
By-laws, any action required or permitted to be taken at any
meeting of the Board of Directors of any committee thereof
may be taken without a meeting if all members of the Board
of Directors or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or
committee.
Section 8.Resignations.Any director of the Corporation
may resign at any time by giving written notice to the
president or the secretary. Such resignation shall take
effect at the date of the receipt of such notice or at any
later time specified therein and, unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 9.Organization.At every meeting of the Board of
Directors, the Chairman of the Board, if there be one, or,
in the case of a vacancy in the office or absence of the
Chairman of the Board, one of the following officers present
in the order stated shall act as Chairman of the meeting:
the president, the vice presidents in their order of rank
and seniority, or a chairman chosen by a majority of the
directors present. The secretary, or, in his absence, an
assistant secretary, or in the absence of the secretary and
the assistant secretaries, any person appointed by the
Chairman of the meeting shall act as secretary.
Section 10.Committees.The Board of Directors may, by
resolution passed by a majority of the directors then in
office, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors
as alternate members of any committee, whom may replace any
absent or disqualified member at any meeting of any such
committee. In the absence or disqualification of a member of
a committee, and in the absence of a designation by the
Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof
present at any meeting and not disqualified from voting,
whether or not such members constitute a quorum, may
unanimously appoint another member of the Board of Directors
to act at the meeting in the place of any such absent or
disqualified member. Any committee, to the extent allowed by
law and provided in the By-laws or resolution establishing
such committee, shall have and may exercise all the powers
and authority of the Board of Directors in the management of
the business affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers
which may require it. Each committee shall keep regular
minutes and reports to the Board of Directors when required.
Section 11.Compensation.Unless otherwise restricted by
the Articles of Incorporation or these By-laws, the Board of
Directors shall have the authority to fix the compensation
of directors. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting
of the Board of Directors or a stated salary as director. No
such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Section 12.Removal.This Section 12 is subject to the
provisions of the Corporation's Articles of Incorporation.
Except for such directors, if any, as are elected by the
holders of any series of Preferred Stock separately as a
class as provided for or fixed pursuant to the provisions of
the Articles of Incorporation, any director of the
Corporation may be removed from office only for cause and
only by the affirmative vote of the holders of not less than
sixty-six percent (66%) of the votes which could be cast by
holders of all outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election
of directors, considered for this purpose as one class.
ARTICLE IV
OFFICERS
Section 1.General.The officers of the Corporation shall
be appointed by the Board of Directors and shall consist of
a Chairman of the Board or a President, or both, one or more
Vice Presidents, a Treasurer and a Secretary. The Board of
Directors may also choose one or more assistant secretaries
and assistant treasurers, and such other officers and agents
as the Board of Directors, in its sole and absolute
discretion shall deem necessary or appropriate as designated
by the Board of Directors from time to time. Any number of
offices may be held by the same person, unless the Articles
of Incorporation or these By-laws provide otherwise.
Section 2.Election; Term of Office.The Board of
Directors at its first meeting held after each Annual
Meeting of Stockholders shall elect a Chairman of the Board
or a President, or both, one or more Vice Presidents, a
Secretary and a Treasurer, and may also elect at that
meeting or any other meeting, such other officers and agents
as it shall deem necessary or appropriate. Each officer of
the Corporation shall exercise such powers and perform such
duties as shall be determined from time to time by the Board
of Directors together with the powers and duties which are
customarily exercised by such officer; and each officer of
the Corporation shall hold office until such officer's
successor is elected and qualified or until such officer's
earlier resignation or removal. Any officer may resign at
any time upon written notice to the Corporation. The Board
of Directors may at any time, with or without cause, by the
affirmative vote of a majority of directors then in office,
remove an officer.
Section 3.Chairman of the Board.The Chairman of the
Board shall preside at all meetings of the stockholders and
the Board of Directors and shall have such other duties and
powers as may be prescribed by the Board of Directors from
time to time.
Section 4.President.The President shall be the chief
executive officer of the Corporation, shall have general and
active management of the business of the Corporation and
shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall have
and exercise such further powers and duties as may be
specifically delegated to or vested in the President from
time to time by these By-laws or the Board of Directors. In
the absence of the Chairman of the Board or in the event of
his inability or refusal to act, or if the Board has not
designated a Chairman, the President shall perform the
duties of the Chairman of the Board, and when so acting,
shall have all the powers and be subject to all of the
restrictions upon the Chairman of the Board.
Section 5.Vice President.In the absence of the
President or in the event of his inability or refusal to
act, the Vice President (or in the event that there be more
than one vice president, the vice presidents in the order
designated by the Board of Directors, or in the absence of
any designation, then in the order of their election) shall
perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the
restrictions upon the President. The vice presidents shall
perform such other duties and have such other powers as the
Board of Directors or the President may from time to time
prescribe.
Section 6.Secretary.The Secretary shall attend all
meetings of the Board of Directors and all meetings of the
stockholders and record all the proceedings thereat in a
book or books to be kept for that purpose; the Secretary
shall also perform like duties for the standing committees
when required. The Secretary shall give, or cause to be
given notice of meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such
other duties as may be prescribed by the Board of Directors
or the President. If the Secretary shall be unable or shall
refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors,
and if there be no Assistant Secretary, then either the
Board of Directors or the President may choose another
officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the
Secretary or any Assistant Secretary, if there be one, shall
have authority to affix same to any instrument requiring it
and when so affixed, it may be attested to by the signature
of the Secretary or by the signature of any such Assistant
Secretary. The Board of Directors may give general authority
to any other officer to affix the seal of the Corporation
and to attest to the affixing by his or her signature. The
Secretary shall see that all books, reports, statements,
certificates and other documents and records required by law
to be kept or filed are properly kept or filed, as the case
may be.
Section 7.Treasurer.The Treasurer shall have the
custody of the corporate funds and securities and shall keep
complete and accurate accounts of all receipts and
disbursements of the Corporation, and shall deposit all
monies and other valuable effects of the Corporation in its
name and to its credit in such banks and other depositories
as may be designated from time to time by the Board of
Directors. The Treasurer shall disburse the funds of the
Corporation, taking proper vouchers and receipts for such
disbursements, and shall render to the Board of Directors,
at its regular meetings, or when the Board of Directors so
requires, an account of all his or her transactions as
Treasurer and of the financial condition of the Corporation.
The Treasurer shall, when and if required by the Board of
Directors, give and file with the Corporation a bond, in
such form and amount and with such surety or sureties as
shall be satisfactory to the Board of Directors, for the
faithful performance of his or her duties as Treasurer. The
Treasurer shall have such other powers and perform such
other duties as the Board of Directors or the President
shall from time to time prescribe.
Section 8.Other Officers.Such other officers as the
Board of Directors may choose shall perform such duties and
have such powers as from time to time may be assigned to
them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power
to choose such other officers and to prescribe their
respective duties and powers.
Section 9.Resignations.Any officer may resign at any
time by giving written notice to the Board of Directors, the
Chairman of the Board, the President or the Secretary shall
be deemed to constitute notice to the Corporation. Such
resignation shall take effect upon receipt of such notice or
at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
Section 10.Removal.Any officer or agent may be removed,
either with or without cause, at any time, by the Board of
Directors at any meeting called for that purpose; provided,
however, that the President may remove any agent appointed
by him.
Section 11.Vacancies.Any vacancy among the officers,
whether caused by death, resignation, removal or any other
cause, shall be filled in the manner which is prescribed for
election or appointment to such office.
ARTICLE V
STOCK
Section 1.Form of Certificates.Every holder of stock in
the Corporation shall be entitled to have a certificate
signed, in the name of the Corporation (i) by the Chairman
of the Board or the President or a Vice President and (ii)
by the Treasurer or Secretary of the Corporation, certifying
the number of shares owned by such holder in the
Corporation.
Section 2.Signatures.Any or all the signatures on the
certificate may be a facsimile. In case any officer,
transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same
effect as if such person were such officer, transfer agent
or registrar at the date of issue.
Section 3.Lost Certificates.The Board of Directors may
direct a new certificate to be issued in place of any
certificate theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming the
certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Board of
Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate, or such owner's legal
representative, to advertise the same in such manner as the
Board of Directors shall require and/or to give the
Corporation a bond in such sum 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,
stolen or destroyed.
Section 4.Transfers.Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-
laws. Transfers of stock shall be made on the books of the
Corporation only by the person named in the certificate or
by such person's attorney lawfully constituted in writing
and upon the surrender of the certificate therefor, which
shall be cancelled before a new certificate shall be issued.
Section 5.Record Date.In order that the Corporation may
determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof,
or entitled to receive a distribution or share dividend, or
in order to make a determination of stockholders for any
other proper purpose, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty
(60) days and, in the case of a meeting of stockholders, not
less than ten (10) days before the date of such meeting or
event. A determination of stockholders shall apply to any
adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the
adjourned meeting.
Section 6.Beneficial Owners.The Corporation shall be
entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as
the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as
otherwise provided by law.
Section 7.Voting Securities Owned by the
Corporation.Powers of attorney, proxies, waivers of notice
of meeting, consents and other instruments relating to
securities owned by the Corporation may be executed in the
name of and on behalf of the Corporation by the Chairman of
the Board, the President, any Vice President or the
Secretary and any such officer may, in the name of and on
behalf of the Corporation take all such action as any such
officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which
the Corporation may own securities and at any such meeting
shall possess and may exercise any and all rights and powers
incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and
possessed if present. The Board of Directors may, by
resolution, from time to time confer like powers upon any
other person or persons.
ARTICLE VI
NOTICES
Section 1.Notice.Whenever, under the provisions of the
laws of Delaware or the Articles of Incorporation or these
By-laws, any notice, request, demand or other communication
is required to be or may be given or made to any officer,
director, or registered stockholder, it shall not be
construed to mean that such notice, request, demand or other
communication must be given or made in person, but the same
may be given or made by mail, telegraph, cablegram, telex,
or telecopier to such officer, director or registered
stockholder. Any such notice, request, demand or other
communication shall be considered to have been properly
given or made, in the case of mail, telegraph or cable, when
deposited in the mail or delivered to the appropriated
office for telegraph or cable transmission, and in other
cases when transmitted by the party giving or making the
same, directed to the officer or director at his address as
it appears on the records of the Corporation or to a
registered stockholder at his address as it appears on the
record of stockholders, or, if the stockholder shall have
filed with the Secretary of the Corporation a written
request that notices to him be mailed to some other address,
then directed to the stockholder at such other address.
Notice to directors may also be given in accordance with
Section 5 of Article III hereof.
Whenever, under the provisions of the laws of this
state or the Articles of Incorporation or these these By-
laws, any notice, request, demand or other communication is
required to be or may be given or made to the Corporation,
it shall also not be construed to mean that such notice,
request, demand or other communication must be given or made
in person, but the same may be given or made to the
Corporation by mail, telegraph, cablegram, telex, or
telecopier. Any such notice, request, demand or other
communication shall be considered to have been properly
given or made, in the case of mail, telegram or cable, when
deposited in the mail or delivered to the appropriate office
for telegraph or cable transmission.
Section 2.Waivers of Notice.Whenever any written notice
is required to be given under the provisions of the Articles
of Incorporation, these By-laws or a statute, a waiver
thereof in writing, signed by the person or persons entitled
to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such
notice. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of
directors need be specified in any written waiver of notice
of such meeting.
Attendance of a person, either in person or by proxy at any
meeting, without protesting prior to the conclusion of the
meeting the lack of notice of such meeting, shall constitute
a waiver of notice of such meeting.
ARTICLE VII
GENERAL PROVISIONS
Section 1.Dividends.Dividends upon the capital stock of
the Corporation, subject to applicable law and the
provisions of the Articles of Incorporation, if any, may be
declared by the Board of Directors at any regular or special
meeting or by any Committee of the Board of Directors having
such authority at any meeting thereof, and may be paid in
cash, in property, in shares of the capital stock, or in any
combination thereof. Before payment of any dividend, there
may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion,
deems proper as a reserve or reserves to meet contingencies,
or for equalizing dividends, or for any proper purpose, and
the Board of Directors may modify or abolish any such
reserve.
Section 2.Disbursements.All notes, checks, drafts and
orders for the payment of money issued by the Corporation
shall be signed in the name of the Corporation by such
officers or such other persons as the Board of Directors may
from time to time designate.
Section 3.Corporation Seal.The corporate seal, if the
Corporation shall have a corporate seal, shall have
inscribed thereon the name of the Corporation, the year of
its organization and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
Section 1. Mandatory Indemnification of Directors and
Officers.Each person who at any time is or was a director or
officer of the Corporation, and who was, is or is threatened
to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (a
"Proceeding," which shall include any appeal in such a
Proceeding, and any inquiry or investigation that could lead
to such a Proceeding), by reason of the fact that such
person is or was a director or officer of the Corporation,
or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee,
agent or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other
enterprise shall be indemnified by the Corporation to the
fullest extent authorized by the General Corporation Law of
Delaware as the same exists or may hereafter be amended from
time to time (the "GCLD"), or any other applicable law as
may from time to time be in effect (but, in the case of any
such amendment or enactment, only to the extent that such
amendment or law permits the Corporation to provide broader
indemnification rights than such law prior to such amendment
or enactment permitted the Corporation to provide), against
judgments, penalties (including excise and similar taxes),
fines, settlements and reasonable expenses (including court
costs and attorneys' fees) actually incurred by such person
in connection with such Proceeding. The Corporation's
obligations under this Section include, but are not limited
to, the convening of any meeting, and the consideration of
any matter thereby, required by statute in order to
determine the eligibility of any person for indemnification.
Expenses incurred in defending a Proceeding shall be paid by
the Corporation in advance of the final disposition of such
Proceeding to the fullest extent permitted, and only in
compliance with, the GCLD or any other applicable laws as
may from time to time be in effect. The Corporation's
obligation to indemnify or to prepay expenses under this
Section1 shall arise, and all rights granted hereunder shall
vest, at the time of the occurrence of the transaction or
event to which such proceeding relates, or at the time that
the action or conduct to which such proceeding relates was
first taken or engaged in (or omitted to be taken or engaged
in), regardless of when such proceeding is first threatened,
commenced or completed. Notwithstanding any other provision
of the Articles of Incorporation or these Bylaws, no action
taken by the Corporation, either by amendment of the
Articles of Incorporation or these Bylaws or otherwise,
shall diminish or adversely affect any rights to
indemnification or prepayment of expenses granted under this
Section1 which shall have become vested as aforesaid prior
to the date that such amendment or other corporate action is
taken.
Section 2. Permissive Indemnification of Employees and
Agents.The rights to indemnification and prepayment of
expenses which are conferred to the Corporation's directors
and officers by Section1 of this Article VIII may be
conferred upon any employee or agent of the Corporation if,
and to the extent, authorized by its Board of Directors.
Section 3. Indemnity Insurance.The Corporation shall
have power to purchase and maintain insurance on behalf of
any person who 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, partner,
venturer, proprietor, trustee, employee, agent or similar
functionary of another corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan,
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 the GCLD. Without limiting the power of
the Corporation to procure or maintain any kind of insurance
or other arrangement, the Corporation may, for the benefit
of persons indemnified by the Corporation (1) create a trust
fund, (2) establish any form of self-insurance, (3) secure
its indemnity obligation by grant of a security interest or
other lien on the assets of the Corporation, or (4)
establish a letter of credit, guaranty or surety
arrangement.
ARTICLE IX
AMENDMENTS
Except as otherwise specifically stated within an
Article to be altered, amended or repealed these By-laws may
be altered, amended or repealed and new By-laws may be
adopted at any meeting of the Board of Directors or of the
stockholders, provided notice of the proposed change was
given in the notice of the meeting.
The undersigned, as Secretary of the Corporation,
hereby attests to the foregoing By-Laws as the By-Laws of
the Corporation as approved by the Board of Directors.
Sally Fonner, Acting
Secretary
