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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
COLLEGIATE PACIFIC INC.
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(Name of Registrant as Specified In Its Charter)
BOARD OF DIRECTORS OF COLLEGIATE PACIFIC INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No:
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(3) Filing Party:
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(4) Date Filed:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
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COLLEGIATE PACIFIC INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 4, 1998
As a stockholder of Collegiate Pacific Inc. (the "Company"), you are
hereby given notice of and invited to attend in person or by proxy the Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held at the
offices of Collegiate Pacific Inc., 13950 Senlac, Suite 200, Farmers Branch,
Texas 75235, on Friday, December 4, 1998, at 10:00 a.m., local time, for the
following purposes:
1. To elect six directors for one-year terms;
2. To approve the 1998 Collegiate Pacific Inc. Stock Option Plan;
3. To reincorporate the Company under the laws of Delaware;
4. To transact such other business as may properly come before the
Annual Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on ________ __,
1998 as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting and any adjournment thereof. Only
stockholders of record at the close of business on the record date are entitled
to notice of and to vote at the Annual Meeting. The transfer books of the
Company will not be closed.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. HOWEVER,
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, MANAGEMENT DESIRES TO
HAVE THE MAXIMUM REPRESENTATION AT THE ANNUAL MEETING AND RESPECTFULLY REQUESTS
THAT YOU DATE, EXECUTE AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ENCLOSED
STAMPED ENVELOPE FOR WHICH NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. A proxy may be revoked by a stockholder any time prior to its
use as specified in the enclosed proxy statement.
By Order of the Board of Directors
MICHAEL J. BLUMENFELD,
President and Chief
Executive Officer
Farmers Branch, Texas
________ __, 1998
YOUR VOTE IS IMPORTANT.
PLEASE EXECUTE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE POSTAGE PAID ENVELOPE PROVIDED HEREIN.
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COLLEGIATE PACIFIC INC.
13950 Senlac
Suite 200
Farmers Branch, Texas 75235
_____________
PROXY STATEMENT
_____________
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 4, 1998
_____________
TO OUR STOCKHOLDERS:
This Proxy Statement is furnished to stockholders of Collegiate Pacific
Inc. (the "Company") for use at the Annual Meeting of Stockholders to be held
at the offices of Collegiate Pacific Inc., 13950 Senlac, Suite 200, Farmers
Branch, Texas 75235, on Friday, December 4, 1998, at 10:00 a.m., local time, or
at any adjournment or adjournments thereof (the "Annual Meeting"). The
enclosed proxy is being solicited by the Board of Directors of the Company (the
"Board") and is subject to revocation at any time prior to the voting of the
proxy. Unless a different choice is indicated, all duly executed proxies
received by the Company will be voted in accordance with the instructions set
forth on the back side of the proxy card. The record of stockholders entitled
to vote at the Annual Meeting was taken at the close of business on ________
__, 1998 (the "Record Date"). This Proxy Statement and the enclosed proxy card
are being sent or given to stockholders on or about ________ __, 1998.
VOTING PROCEDURES AND REVOCABILITY OF PROXIES
The accompanying proxy card is designed to permit each stockholder of
record at the close of business on the Record Date to vote with respect to the
election of directors, the adoption of the 1998 Collegiate Pacific Inc. Stock
Option Plan, the reincorporation of the Company under Delaware law, and on any
other proposal properly brought before the Annual Meeting. The proxy card
provides space for a stockholder to (a) vote in favor of or to withhold voting
for each nominee for the Board, (b) vote for or against each proposal to be
considered at the Annual Meeting, or (c) abstain from voting on any proposal
other than the election of directors. The election of the directors will be
decided by a plurality of the votes cast at the Annual Meeting by the holders
of the Common Stock. For all matters, the affirmative vote of a majority of
the votes present or represented by proxy and entitled to be cast at the Annual
Meeting by holders of the Common Stock is required to take stockholder action.
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the votes entitled to be cast by all holders of the
Common Stock will constitute a quorum for the transaction of business at the
Annual Meeting. If a quorum is not present, in person or by proxy, the Annual
Meeting may be adjourned from time to time until a quorum is obtained. In the
case of any meeting called for the election of directors, those who attend the
second such adjourned meetings, although less than a majority, shall constitute
a quorum for the purpose of electing directors. Shares as to which authority
to vote has been withheld with respect to any matter brought to a vote before
the stockholders will not be counted as a vote in favor of such matter.
Abstentions and broker nonvotes will be counted for purposes of determining
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the presence or absence of a quorum for the transaction of business. With
respect to all matters other than the election of directors, an abstention will
have the same effect as a vote against any specified proposal. Stockholders
are urged to sign the accompanying proxy card and return it promptly.
When a signed proxy card is returned with choices specified with respect
to voting matters, the shares represented will be voted by the proxies
designated on the proxy card in accordance with the stockholder's instructions.
The proxies for the stockholders are [______________________________]. A
stockholder wishing to name another person as his or her proxy may do so by
crossing out the names of the designated proxies and inserting the name of such
other person to act as his or her proxy. In that case, it will be necessary
for the stockholder to sign the proxy card and deliver it to the person named
as his or her proxy and for the person so named to be present and vote at the
Annual Meeting. Proxy cards so marked should not be mailed to the Company.
If a signed proxy card is returned and the stockholder has made no
specifications with respect to voting matters, the shares will be voted (a) for
the election of the nominees for director, (b) for adopting the stock option
plan, (c) for the reincorporation of the Company under Delaware law, and (d) at
the discretion of the proxies on any other matter that may properly come before
the Annual Meeting or any adjournment of the Annual Meeting. Valid proxies
will be voted at the Annual Meeting and at any adjournment of the Annual
Meeting in the manner specified.
Any stockholder giving a proxy has the unconditional right to revoke it
at any time before it is voted by any act inconsistent with the proxy,
including notifying the Secretary of the Company in writing, executing a
subsequent proxy or personally appearing at the Annual Meeting and casting a
contrary vote. However, no revocation will be effective unless notice of such
revocation has been received by the Company at or prior to the Annual Meeting.
Michael J. Blumenfeld, President and Chief Executive Officer, intends to
vote in favor of all proposals and owns sufficient shares to pass all proposals
without the votes of any other shareholders.
The total issued and outstanding shares of common stock, $.01 par value
per share (the "Common Stock"), as of September 24, 1998 consisted of
17,016,833 shares.
MATTERS TO BE BROUGHT BEFORE THE MEETING
PROPOSAL ONE - ELECTION OF DIRECTORS
Six persons, Michael J. Blumenfeld, Arthur J. Coerver, Jeff Davidowitz,
Robert W. Philip, William A. Watkins, Jr., and Harvey Rothenberg are nominated
to be elected as directors at the Annual Meeting. Messrs. Blumenfeld, Coerver,
Davidowitz, Philip and Watkins are currently directors. If elected, each of
these directors will hold office until the next annual meeting of stockholders
or until his successor is duly elected and qualified. The election of
directors will be decided by a plurality of the votes entitled to be cast at
the meeting by holders of the Common Stock. The nominees have consented to
serve if elected, but, if the nominees become unable to serve, the persons
named as proxies may exercise their discretion to vote for a substitute
nominee. Management has no reason to believe that any nominee will be unable
to serve.
Other nominations for election to the Board may be made by the Board, or
by any stockholder or shareholder representing at least ten percent of the
votes which all shareholders of the corporation are entitled to cast. For
information regarding each of the nominees for director, see "Management".
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THE BOARD URGES STOCKHOLDERS TO VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE
PROPOSAL TWO - APPROVAL OF 1998 COLLEGIATE PACIFIC INC. STOCK OPTION PLAN
STOCK OPTION PLAN
The Company's success is largely dependent upon the efforts of its key
employees as well as its directors and consultants. In order to continue
to attract, motivate and retain outstanding key employees, the Board of
Directors believes it is essential to provide compensation incentives that are
competitive with those provided by other companies. In addition, the Board of
Directors believes it is important to further the identity of interests of key
employees with those of the stockholders by encouraging ownership of the
Company's Common Stock. Accordingly, the Board of Directors has adopted the
1998 Collegiate Pacific Inc. Stock Option Plan, as amended (the "Option Plan"),
which is attached as Exhibit A.
The Drug Screening Systems, Inc. Stock Option Plan of 1994 (the "1994
Plan") presently states that up to a maximum of 500,000 shares of Common Stock
are available for awards of incentive stock options to key employees and
nonqualified stock options to key employees and directors of, and consultants
to, the Company. As of November 2, 1998, options to purchase 320,000 shares of
Common Stock had been granted pursuant to the 1994 Plan and had not expired.
No further grants of options will be made under the 1994 Plan, and the 1994
Plan will be terminated upon adoption of the Option Plan.
The Option Plan that will enable the Company to deduct compensation paid
to certain employees to the extent the compensation exceeds $1 million if, and
only if, the stockholders approve the Option Plan. This requirement is in
response to Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). Section 162(m) of the Code generally provides that a publicly
held corporation's deduction for compensation paid to its chief executive
officer or one of its next four highest compensated officers (these five
individuals are defined in Section 162(m) of the Code as "covered employees")
is limited to $1 million per year, subject to certain exceptions. One of these
exceptions is for "performance-based" compensation, which includes compensation
under stock options plans if certain requirements are met. In order for the
Option Plan to qualify under the "performance-based" compensation exception to
the deductibility limits of Section 162(m) of the Code in the future, the
stockholders must approve the Option Plan.
The following is a summary of certain major provisions of the Option
Plan:
General
Under the Option Plan, options covering shares of Common Stock are
granted to key employees and directors of, and consultants to, the Company.
The options are intended to qualify either as incentive stock options ("ISOs")
pursuant to Section 422 of the Code, or will constitute nonqualified stock
options ("NQSOs"). Options may be granted at any time prior to December 31,
2005. Provided the stockholders approve the Option Plan, a maximum of
2,000,000 shares of Common Stock (subject to adjustment to prevent dilution)
would be available for issuance under the Option Plan.
Administration
The Option Plan will be administered by the Stock Option Committee,
comprised of two non-employee directors (the "Stock Option Committee"). The
Option Plan provides that the Stock Option Committee has full and final
authority to select the key employees, directors and consultants to whom
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awards are granted, the number of shares of Common Stock with respect to each
option awarded, the exercise price or prices of each option, the vesting and
exercise periods of each option, whether an option may be exercised as to less
than all of the Common Stock subject to the option, and such other terms and
conditions of each option, if any, that are not inconsistent with the
provisions of the Option Plan. In addition, subject to certain conditions, the
Stock Option Committee is authorized to cancel outstanding options that were
previously issued and reissue new options at a lower exercise price if the fair
market value per share of Common Stock at any time prior to the date of
exercise falls below the exercise price of options granted pursuant to the
Option Plan. In general, the Stock Option Committee is authorized to construe,
interpret and administer the Option Plan and the provisions of the options
granted thereunder, prescribe and amend rules for the operation of the Option
Plan and make all other determinations necessary or advisable for its
implementation and administration.
Eligibility
Eligibility to participate in the Option Plan is limited to key
employees and directors of, and consultants to, the Company and its
subsidiaries as determined by the Stock Option Committee. Non-employee
directors are automatically granted NQSOs to purchase 2,500 shares of Common
Stock on an annual basis. Because of the discretion possessed by the Stock
Option Committee with respect to key employees, directors and consultants, it
is not possible to indicate the number of persons who may be selected to
participate in the Option Plan, the number of options that may be granted to
them or the number of shares of Common Stock subject to each option.
Notwithstanding the foregoing, the number of shares of Common Stock that can be
granted to any individual (including, without limitation, a "Covered Employee")
may not exceed the aggregate number of shares of Common Stock reserved for
issuance under the Option Plan, as such number may be amended from time to
time.
Terms of Options and Limitations on Right to Exercise
Under the Option Plan, the exercise price of options will not be less
than the fair market value of the Common Stock on the date of grant (and not
less than 110% of the fair market value in the case of an incentive stock
option granted to an optionee owning 10% or more of the Common Stock of the
Company). Options granted to employees, directors or consultants shall not be
exercisable after the expiration of ten years from the date of grant (or five
years in the case of incentive stock options granted to an optionee owning 10%
or more of the Common Stock of the Company) or such earlier date determined by
the Board of Directors or Stock Option Committee. The fixed annual grants of
NQSOs granted to non-employee directors shall be exercisable for ten years,
except that in the event of death, termination or resignation of such member as
a director of the Company or a subsidiary, such NQSOs shall only be exercisable
for one year following such member's death or termination or resignation (or,
if shorter, the remaining term of the option).
The Option Plan permits the exercise of options by payment of the
exercise price in cash or by an exchange of shares of Common Stock of the
Company previously owned by the optionee, or a combination of both, in an
amount equal to the aggregate exercise price for the shares subject to the
option or portion thereof being exercised. The optionee is entitled to elect
to pay all or a portion of the aggregate exercise price by having shares of
Common Stock having a fair market value on the date of exercise equal to the
aggregate exercise price withheld by the Company or sold by a broker-dealer
under certain circumstances. In addition, upon the exercise of any option
granted under the Option Plan, the Company may make financing available to the
optionee for the purchase of shares of Common Stock subject to the option on
such terms as the Stock Option Committee shall approve.
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All or a portion of NQSOs granted to an optionee may, in the discretion
of the Stock Option Committee, be transferred to another person or entity
deemed appropriate by the Stock Option Committee so long as the stock option
agreement governing such options is approved by the Stock Option Committee and
expressly provides for such transfer. Neither the optionee nor the optionee's
legal representatives, legatees, transferees or distributees will be deemed to
be a holder of any shares of Common Stock subject to an option until the option
has been validly exercised and the purchase price of the shares paid. An
option may not be exercised except (i) by the optionee, (ii) by a person who
has obtained the optionee's rights under the option by will or under the laws
of descent and distribution, (iii) by a permitted transferee as contemplated by
the Option Plan, or (iv) by a spouse incident to a divorce.
Termination of Employment
The Stock Option Committee determines at the time each option is granted
the conditions that will apply to the exercise of such option in the event the
holder of an option ceases to be an employee or director of, or consultant to,
the Company or any of its subsidiaries for any reason. In the event of death
of an optionee while in the employ or while serving as a director of or
consultant to the Company or any of its subsidiaries, such option will be
exercisable in full within the year next succeeding the date of death or such
other period as may be specified in the option agreement, but in no case later
than the expiration date of such option.
Dilution or Other Adjustments
Under certain circumstances, the Stock Option Committee will make
adjustments with respect to the options, or any provisions of the Option Plan,
as it deems appropriate to prevent dilution or enlargement of option rights.
Amendment and Termination
The Board of Directors may amend, abandon, suspend or terminate the
Option Plan or any portion thereof at any time; provided, however, no amendment
that requires stockholder approval in order for the Option Plan to continue to
comply with Section 162(m) of the Code or any other applicable law, rule or
regulation (including, without limitation, the Code, the Exchange Act or any
self-regulatory organization such as a national securities exchange) will be
made unless such amendment has received the requisite approval of stockholders.
In addition, no amendment may be made that adversely affects any of the rights
of an Optionee under any option theretofore granted, without such Optionee's
consent. The Option Plan is scheduled to expire on December 31, 2005.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Under the Option Plan, the Company may grant options which, for federal
income tax purposes, (a) are treated as "incentive stock options" within the
meaning of Section 422 of the Code or (b) are treated as nonqualified options
subject to Section 83 of the Code. The federal income tax consequences of each
type of option are different for the participants and for the Company.
Incentive Stock Options
For an option granted pursuant to the Option Plan that qualifies as an
incentive stock option, present law provides: (a) the participant will not
realize taxable income upon either the receipt or the exercise of the option;
provided, however, that in connection with the computation of the alternative
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minimum tax, the amount by which the fair market value of the Common Stock at
the time of exercise exceeds the exercise price generally will constitute an
adjustment item; (b) any gain or loss upon a disposition constituting a
qualifying disposition of shares acquired pursuant to the exercise of the
option will be treated as capital gain or loss (assuming that such shares are a
capital asset in the hands of the participant); and (c) no deduction will be
allowed at any time to the Company or any parent or subsidiary of the Company
for federal income tax purposes in connection with the grant or exercise of the
option or a disposition constituting a qualifying disposition of shares
acquired pursuant to the exercise of the option. A disposition of shares
acquired upon exercise of an incentive stock option will constitute a
qualifying disposition if it does not occur within two years of the granting of
the option or within one year after the transfer of substantially all of the
incidents of ownership in the shares to the participant, and the participant is
an employee of the Company (or defined affiliates) at all times from the grant
of the option until three months prior to exercise. A disposition not
satisfying such holding period requirements results in a disqualifying
disposition. If Common Stock acquired upon exercise of an incentive stock
option is disposed of by the participant in a disqualifying disposition, the
participant will be treated as receiving ordinary income equal to the
difference between the fair market value of the transferred shares on the date
of exercise and the exercise price of such shares, less in most cases any
decline in value of the shares from the date of exercise to the date of sale.
In the event the sales price received in a disqualifying disposition of such
Common Stock exceeds the value of the Common Stock on the date of exercise, the
disqualifying disposition also will result in capital gain to the extent of
such excess (assuming that such Common Stock is a capital asset in the hands of
the participant). The amount treated as ordinary income to the participant
because of the disqualifying disposition will normally be allowed as a federal
income tax deduction of the Company (or any parent or subsidiary of the
Company) for compensation expense.
For purposes of computing a participant's capital gain or loss on the
sale of shares that were acquired under the Option Plan pursuant to the
exercise of an incentive stock option, the participant's basis in such shares
generally will be equal to any amount paid by the participant to the Company
for the shares plus the amount, if any, recognized as ordinary income to the
participant with respect to the shares due to a disqualifying disposition. The
participant's holding period for such shares generally should begin at the time
of the participant's exercise of an option.
The Company and any parent or subsidiary of the Company will not be
liable to any participant or other person if it is determined for any reason by
the Internal Revenue Service or any court having jurisdiction that any option
granted pursuant to the Option Plan does not qualify for tax treatment as an
incentive stock option under Section 422 of the Code.
Nonqualified Options
For an option granted pursuant to the Option Plan that does not qualify
as an incentive stock option, no taxable income will be realized by the
participant upon the grant of such a nonqualified option. A participant
generally will recognize ordinary taxable income (compensation), subject to
withholding, upon exercise of a nonqualified option in an amount equal to the
excess of the fair market value of the Common Stock on the date of exercise
over the option price paid.
For purposes of determining gain or loss upon a subsequent disposition
of Common Stock acquired upon the exercise of a nonqualified option, the
participant's basis in such shares will generally be equal to the purchase
price paid to the Company for the Common Stock increased by the amount, if any,
includable in the participant's taxable income with respect to the Common
Stock. The participant's holding period for determining whether gain or loss
on such subsequent disposition is short-term or long-term begins on the
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date on which the participant's rights in the stock are transferable or are not
subject to a substantial risk of forfeiture, whichever occurs earlier.
The foregoing is intended as a summary of the effect of certain federal
income tax consequences associated with the Option Plan and does not purport to
be complete. It is recommended that participants consult their own tax
advisors for counseling. The tax treatment under foreign, state or local law is
not covered in this summary.
STOCKHOLDER APPROVAL
The affirmative vote of holders of a majority of the shares of Common
Stock, represented in person or by proxy and entitled to vote, at the Annual
Meeting is required to approve the Option Plan. The Board of Directors
believes the proposed Option Plan is in the best interest of the Company and
its stockholders and is important in order to help assure the ability of the
Company to continue to recruit and retain highly qualified key employees and
directors.
THE BOARD RECOMMENDS A VOTE "FOR" THE COMPANY'S OPTION PLAN
PROPOSAL THREE - REINCORPORATION UNDER THE LAWS OF DELAWARE.
The following discussion summarizes certain aspects of the proposed
reincorporation of the Company from the Commonwealth of Pennsylvania to the
State of Delaware (the "Reincorporation") pursuant to the Agreement and Plan of
Merger (the "Merger Agreement") between the Company and CP Delaware. This
summary is not intended to be complete and is subject to, and qualified in its
entirety by, reference to the Merger Agreement, a copy of which is attached to
this Proxy Statement as Exhibit B, the Certificate of Incorporation of CP
Delaware (the "Delaware Certificate"), a copy of which is attached to this
Proxy Statement as Exhibit C, and the By-laws of CP Delaware (the "Delaware By-
laws"), a copy of which is attached to this Proxy Statement as Exhibit D,
although this summary does describe all the material terms contained in such
documents. Copies of the Articles of Incorporation and the By-laws of the
Company (the "Pennsylvania Articles" and the "Pennsylvania By-laws,"
respectively) are available for inspection at the principal executive office of
the Company and copies will be sent to shareholders upon request. In this
discussion of the Reincorporation, the term "CP Pennsylvania" refers to the
existing Pennsylvania corporation, the term "CP Delaware" refers to the new
Delaware corporation which is the proposed successor to CP Pennsylvania, and
the term "Company" may refer to either or both of CP Pennsylvania or CP
Delaware, as the context requires.
The Board of Directors has unanimously approved the Reincorporation, and
unanimously recommends a vote "FOR" the proposal to approve and adopt the
Merger Agreement and the Reincorporation.
PRINCIPAL FEATURES OF THE REINCORPORATION
The Reincorporation will be effected by the merger (the "Merger") of CP
Pennsylvania with and into CP Delaware, a wholly owned subsidiary of CP
Pennsylvania which was recently incorporated under the General Corporation Law
of the State of Delaware ("Delaware Law") for the purposes of the Merger. CP
Delaware will be the surviving corporation in the Merger and will continue
under the name "Collegiate Pacific Inc." CP Pennsylvania will cease to exist
as a result of the Merger.
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The Merger will not become effective until shareholder approval of the
Reincorporation is obtained and the Merger Agreement is filed with the
Secretary of State of Delaware.
At the effective time of the Merger, the Company will be governed by the
Delaware Certificate, the Delaware By-laws and Delaware Law, which include a
number of provisions which differ from those set forth in the current
Pennsylvania Articles, Pennsylvania By-laws and Pennsylvania Business
Corporation Law of 1988 ("Pennsylvania Law"). See "Principal Reasons For the
Reincorporation," "Changes in the Company's Charter Documents to Be Effected By
the Reincorporation" and "Certain Differences Between the Corporate Laws of
Pennsylvania and Delaware."
At the effective time of the Merger, each outstanding share of CP
Pennsylvania Common Stock will automatically be converted into one share of
common stock, par value $.01 per share, of CP Delaware (the "CP Delaware Common
Stock"). Each outstanding certificate representing shares of CP Pennsylvania
Common Stock prior to the Merger will continue to represent the same number of
shares of CP Delaware Common Stock after the Merger. THUS, IT WILL NOT BE
NECESSARY FOR SHAREHOLDERS OF THE COMPANY TO EXCHANGE THEIR EXISTING STOCK
CERTIFICATES FOR STOCK CERTIFICATES OF CP DELAWARE.
The Reincorporation will not result in any change to the daily business
operations of the Company or the present location of the principal executive
offices of the Company in Farmers Branch, Texas. The consolidated financial
condition and results of operations of CP Delaware immediately after the
consummation of the Reincorporation will be substantially identical to that of
CP Pennsylvania immediately prior to the consummation of the Reincorporation.
In addition, at the effective time of the Merger, the Board of Directors of CP
Delaware will consist of those persons who currently are directors of the
Company, all of whom are nominees for election at the Annual Meeting. If the
shareholders approve the Reincorporation and elect all the directors of the
Company, upon the Reincorporation, the following directors of CP Pennsylvania
will be designated directors of CP Delaware for the terms indicated: Messrs.
Blumenfeld, Davidowitz, Coerver, Philip, Watkins, and Rothenberg, and their
terms will expire at the annual meeting in 1999. Certain information regarding
each nominee for election as a director is set forth under the caption
"Election of Directors." In addition, the individuals serving as executive
officers of CP Pennsylvania immediately prior the Merger will serve as
executive officers of CP Delaware upon the effectiveness of the Merger.
Pursuant to the Merger Agreement, each option or right to purchase a
share of CP Pennsylvania Common Stock outstanding immediately prior to the
effective time of the Merger under the Company's Option Plan and under any
other employee benefit plan in effect at the effective time of the Merger will
become an option or right to purchase a share of CP Delaware Common Stock upon
the same terms and conditions as existed immediately prior to the effective
time of the Merger. Future options granted under those plans will be for
shares of CP Delaware Common Stock. The terms of these above-referenced stock
option plans and agreements, the number of shares of CP Pennsylvania Common
Stock subject to outstanding options and the number of shares of CP
Pennsylvania Common Stock which are available for grant are set forth under the
caption "Executive Compensation and Other Information." The Company is
soliciting the consent of optionees, where appropriate, to the receipt of CP
Delaware Common Stock upon exercise of the options under the Option Plan. In
addition, each outstanding warrant to purchase a share of CP Pennsylvania
Common Stock outstanding immediately prior to the effective time of the Merger
will become a warrant to purchase a share of CP Delaware Common Stock upon the
same terms and conditions as existed immediately prior to the effective time of
the Merger.
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A vote for approval and adoption of the Merger Agreement and the
Reincorporation will also constitute specific approval of the Delaware
Certificate, the Delaware By-laws and all other transactions and proceedings
contemplated thereby including, but not limited to, the appointment of the
directors elected at the Annual Meeting. In addition, a vote for approval and
adoption of the Merger Agreement and the Reincorporation will constitute
approval of the assumption by CP Delaware of the above-referenced employee
benefit plans and agreements of CP Pennsylvania and the substitution of shares
of CP Delaware Common Stock for shares of CP Pennsylvania Common Stock as the
security to be received upon exercise of options granted under the above-
referenced employee benefit plans of CP Pennsylvania from and after the
effective time of the Merger.
Approval and adoption of the Merger Agreement and the Reincorporation
will significantly affect certain rights of shareholders. Accordingly,
shareholders are urged to read carefully this entire Proxy Statement and the
Exhibits to the Proxy Statement before voting.
DISSENTERS RIGHTS OF APPRAISAL
Dissenters Rights Under Pennsylvania Law
The following is a brief summary of Subchapter D of Chapter 15 of the
Pennsylvania Business Corporation Law (the "BCL" or "Pennsylvania Law") which
sets forth the procedure by which a shareholder of the Company may dissent from
the Reincorporation and demand statutory rights to obtain payment for the fair
value of his or her shares. The dissenter's rights pursuant to Pennsylvania
law will govern this transaction. This summary is qualified in its entirety by
reference to Subchapter D of Chapter 15 of the BCL, a copy of which is attached
hereto as Exhibit E, and shareholders are urged to read Subchapter D in its
entirety. This notice is intended to comply with Section 1575 of the BCL and
to constitute notice to the Company's shareholders of their right to dissent
and to obtain payment for the fair value of their shares. Any shareholder who
wishes to dissent must send a demand for payment and deposit the certificates
representing his or her shares to the Secretary of the Company at 13950 Senlac,
Suite 200, Farmer's Branch, Texas 75235 by not later than [January 4], 1999.
Upon the deposit of certificates representing shares by holders attempting to
assert their dissenters' rights, such shares shall be held by the Corporation
and shall not be transferable. A form for demanding payment is included as
Exhibit F attached hereto. A shareholder who fails to deposit the
certificate(s) representing the shares for which he or she wishes to exercise
dissenters' rights by [January 4], 1999 shall not have any right under
Subchapter D of Chapter 15 to receive payment for the fair value of his or her
shares.
Under Pennsylvania Law, any shareholder who objects to any proposed plan
of action is entitled to the rights and remedies of a dissenting shareholder if
the statutory provision authorizing the action so provides. Some of the events
giving rise to dissenters' rights in a publicly held corporation include: (a)
an amendment or plan classifying shareholders of a class or series into separate
groups and providing for mandatory treatment for shares of the class or series
that differs materially from the treatment accorded other shareholders holding
the shares of the same class or series; (b) the approval of a plan of merger or
consolidation, other than a short form merger; (c) the acquisition of all the
outstanding shares of one or more classes or series of shares by converting
those shares into the shares or other securities of the acquiring person; (d) a
sale, lease, exchange, or other disposition of all, or substantially all, the
property and assets of a business corporation which is either not made in the
usual and regular course of its business, not for the purpose of relocating the
business of the corporation, or not in connection with the corporation's
dissolution for liquidation; (e) a division of a corporation into two or more
corporations; and (f) conversion of a business corporation into a nonprofit
corporation.
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The shareholder is limited to obtaining payment of the fair value of the
shares. Absent fraud or fundamental unfairness, a shareholder cannot obtain an
injunction against any proposed plan or amendment of the articles of
incorporation, or claim the right to valuation and payment for the shares,
except to the extend provided under Pennsylvania Law. Generally, the holders
of the shares of any class or series of shares that are either (a) listed on a
national securities exchange; or (b) held of record by more than 2,000
shareholders; shall not be entitled to dissenter's rights.
If a proposed corporate action would give rise to dissenters rights is
submitted to a vote at a meeting of shareholders, the corporation shall include
in the notice of meeting: (a) a statement of the proposed action and a
statement that the shareholders have a right to dissent and obtain payment of
the fair value of their shares; and (b) a copy of the Business Corporation Law
provisions relating to dissenters rights.
A shareholder who desires to exercise dissenting shareholder rights
must: (a) file with the corporation, prior to the vote, a written notice of
intention to demand that he be paid the fair value for his shares if the
proposed action is carried out; (b) must effect no change in the beneficial
ownership of his shares from the date of such filing continuously through the
effective date of the proposed action; and (c) must refrain from voting his
shares in approval of such action. Neither a proxy nor a vote against the plan
is sufficient to constitute a written objection.
If the proposed action is approved by the shareholders, the corporation
must mail a notice to all shareholders who (a) gave notice of their dissent;
and (b) refrained from voting in favor of the action. If the proposed
corporate action is to be taken without a vote of shareholders, the corporation
shall send to all shareholders who are entitled to dissent and to demand
payment of the fair value of their shares a notice of the adoption of the
corporate action. In either case, the notice shall: (a) state where and
when, not less than 30 days from the mailing of the notice, a demand for
payment must be sent and certificates for certificated shares must be deposited
in order to obtain payment; (b) inform holders of uncertificated shares to what
extent transfer of shares will be restricted from the time that demand for
payment is received; (c) supply a form for demanding payment that includes a
request for certification of the date on which the shareholder, or the person
on whose behalf the shareholder dissents, acquired beneficial ownership of the
shares; and (d) a copy of the a copy of the Business Corporation Law provisions
relating to dissenters rights.
A shareholder who fails to timely demand payment, or fails to timely
deposit the certificated shares, shall not have any right to receive payment of
the fair value of the shares. In the case of uncertificated shares, the
corporation may restrict their transfer from the time of receipt of demand for
payment until the proposed corporate action has occurred or the release of any
transfer restrictions imposed by reason of demand for payment.
Upon timely receipt of demand for payment, the corporation shall either
remit to the dissenters who have made a demand and deposited their certificates
the amount that the corporation estimates to be the fair market value of the
shares or provide written notice that no remittance will be made. Such
remittance or notice shall be accompanied by: (a) a closing balance sheet and
statement of income for a fiscal year not more than 16 months before the date
of remittance or notice as well as the latest available interim financial
statements; (b) a statement of the estimated fair market value of the shares;
(c) a notice of the right of the dissenter to demand payment or supplemental
payment; and (d) a copy of the a copy of the Business Corporation Law
provisions relating to dissenters rights.
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If the corporation does not then remit the amount of its estimate of the
fair market value of the shares, it shall (a) release any uncertificated shares
from any transfer restrictions imposed by reason of the demand for payment; or
(b) return all certificates that have been deposited with a notation on such
certificate that the demand has been made. Shares with respect to which such
notation has been made may be transferred so long as each new certificate
issued therefore shall bear a similar notation together with the name of the
original dissenting holder or owner of such shares. A transferee of such
shares shall not acquire by such transfer any rights of the corporation other
than those that the original dissenter had after making demand for payment.
If the corporation gives notice of its estimate of the fair value
without remitting such amount or remits payment of its estimate and the
dissenter believes that the amount stated or remitted is less than fair market
value of the shares, the shareholder may send to the corporation his or her own
estimate of the fair value which shall be deemed a demand for payment of the
amount of the deficiency. If the dissenter does not file his or her own
estimate within 30 days after the mailing by the corporation of its remittance
or notice, the dissenter shall be entitled to no more than the amount stated in
the notice or remitted to him or her by the corporation.
Within 60 days after the latest of (a) the effectuation of the proposed
corporate action; (b) the timely receipt of any demands for payment, or (c) the
timely receipt of any estimates of the dissenter's fair market value differing
from the corporation's estimate, if any demands for payment remain unsettled,
the corporation may file in the a court an application for relief requesting
that the fair market value be determined by the court. If the corporation
fails to file an application to the court, any dissenter who made demands and
who has not already settled his claim against the corporation may do so in the
name of the corporation at any time within 30 days after the expiration of such
60-day period. If a dissenter does not file an application within such 30-day
period, each dissenter entitled to file an application shall be paid the
corporation's estimate and no more and may bring an action to recover any
amount not previously remitted.
The cost and expense of any proceeding relating to valuation, including
the reasonable compensation and expenses of an appraiser appointed by the
court, shall be determined by the court and assessed against the corporation,
except that any part of the costs and expenses may be apportioned and assessed
by the court as the court deems appropriate against all or some of the
dissenters who are parties and whose action in demanding the supplemental
payment the court finds to be dilatory, obdurate, arbitrary, vexatious or in
bad faith. Fees and expenses of counsel and experts for the respective parties
may be assessed as the court deems appropriate against the corporation and in
favor of any and all dissenters if the corporation failed to comply
substantially with the requirements of Pennsylvania Law and may be assessed
against either the corporation or a dissenter, in favor of the other party, if
the court finds that the party against whom the fees and expenses are assessed
acted in bad faith or in an obdurate, arbitrary or vexatious manner.
Appraisal Rights Under Delaware Law
The rights of shareholders to demand payment in cash by a corporation of
the fair value of their shares under certain circumstances are called
dissenter's rights under Pennsylvania Law and appraisal rights under Delaware
Law.
Section 262 of the Delaware General Corporation Law (the "DGCL" or
"Delaware Law") permits, under certain circumstances, shareholders to seek the
appraisal of the fair value of their shares in a special proceeding in the
chancery court. Delaware Law does not afford appraisal rights to the holders
of shares (a) listed on a national securities exchange; or (b) held as of
record by more than 2,000 shareholders, unless
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a plan of merger or consolidation coverts such shares into anything other than
stock of the surviving corporation or stock of another corporation which is
either listed on a national securities exchange or held of record by more than
2,000 shareholders. Delaware Law is substantially the same as the Pennsylvania
Law regarding dissenter's rights in the event of a merger or consolidation;
however, Delaware Law does not provide for appraisal rights in connection with
sales of substantially all the assets of a corporation, reclassification of
stock, or other amendments to a certificate of incorporation which adversely
affect a class of stock. The right is generally available to any shareholder
of a corporation that: (a) holds stock and makes a demand at the time required
by the DGCL; (b) continuously holds such shares through the effective date of
the merger; and (c) that has not voted in favor of or consented to the merger.
Although registration of stock in a "street name" is a common practice,
Delaware Law has been construed to permit an appraisal demand only by a
shareholder of record, and not by a beneficial owner.
However, the statute provides that such rights will not be available if
the shareholders have a so-called "market-out." That market-out is considered
to be available if the following two conditions are met: (a) the shares of
such class or series (or depository receipts representing such shares) are, as
of the record date for the meeting at which the agreement of merger is voted
on, listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc., or held of record by more than 2,000 shareholders;
and (b) the holders of stock of such class or series are not required to accept
anything in consideration for such shares other than shares of stock (or
depository receipts representing such shares) of the surviving corporation or
of any other corporation, which at the effective date of the merger will be
listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000 shareholders;
and/or cash in lieu of fractional shares.
The above requirements dealing with the market-out are conjunctive; both
tests must be met in order for appraisal rights not to apply.
In addition, where the shareholders of a corporation are not entitled to
vote on a merger pursuant to Delaware Law, such shareholders are not entitled
to appraisal rights.
Appraisal has many of the characteristics of a class action. However,
the class is limited to those shareholders who have demanded appraisal, and
while the court may charge the expenses of the dissenters, including counsel
fees, pro rata against all shares being appraised, there is no provision
authorizing a shifting of those fees to the corporation.
When appraisal rights are available, the corporation is required to send
out a notice as to such rights not less than 20 days prior to the meeting of
shareholders to consider the proposed merger or consolidation. In addition,
the Delaware Law requires that a copy of the DGCL provisions relating to
appraisal rights be contained in the notice. Each shareholder electing to
demand the appraisal of its shares shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written demand for
appraisal of the shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. Within 10 days after the effective date of
the merger or consolidation, the surviving or resulting corporation shall
notify each shareholder of each constituent corporation who (a) has complied
with DGCL provisions relating to appraisal rights and (b) has not voted in
favor of or consented to the merger or consolidation of the date that there
merger or consolidation has become effective.
With respect to mergers approved by written consent or where no approval
is required under Delaware Law (i.e., a short-form merger), the corporation
must, either before the effective date of the
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merger or within 10 days thereafter, give notice of appraisal rights to
shareholders. Shareholders have 20 days from the date of the mailing of such
notice to demand appraisal. If the notice did not contain notice of the
effective date of the merger, the corporation is required to send a second
notice that states such effective date.
Within 60 days after the effective date of the merger, any shareholder
may withdraw its demand for appraisal and accept the terms offered. Within 120
days after the effective date, either a shareholder who has perfected appraisal
rights or the corporation may file a petition demanding a determination of the
value of the stock in question. The statute provides that if (a) no petition
for appraisal is filed within the 120-day period; or (b) the shareholder
delivers a written withdrawal of his or her demand either within the 60-day
period or thereafter with the written approval of the corporation, then the
right to shall cease. Nevertheless, the DGCL provides that no appraisal
proceeding shall be dismissed to any shareholder without the approval of the
court.
The statute provides that, after determining the shareholders who are,
in fact, entitled to an appraisal, the court shall appraise the shares,
determining their fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation.
CONDITIONS TO THE REINCORPORATION
The Reincorporation is subject to the following conditions: (a)
approval and adoption of the Merger Agreement by the affirmative vote of the
holders of a majority of the votes cast by holders of all shares of CP
Pennsylvania Common Stock, and (b) approval and adoption of the Merger
Agreement by CP Pennsylvania as the holder of all the outstanding shares of CP
Delaware Common Stock.
The Merger Agreement may be terminated at any time prior to the
effective date of the Reincorporation, either before or after shareholder
approval, by the Board of Directors of CP Pennsylvania if it determines such
action to be in the best interests of CP Pennsylvania and its shareholders. In
addition, the terms of the Merger Agreement may be amended prior to the
effective date, provided that the Merger Agreement may not be amended after it
has been approved by CP Pennsylvania's shareholders if, in the judgment of CP
Pennsylvania's Board of Directors, such amendment would have a material adverse
effect on the rights of shareholders.
PRINCIPAL REASONS FOR THE REINCORPORATION
For many years the State of Delaware has followed a policy of
encouraging incorporation in that state and, in furtherance of that policy, has
adopted comprehensive, modern and flexible corporate laws which are
periodically updated and revised to meet changing business needs. As a result,
many corporations have been initially incorporated in Delaware or have
subsequently reincorporated in Delaware in a manner similar to that proposed by
the Company. Because of Delaware's prominence as a state of incorporation for
many corporations, the Delaware courts have developed considerable expertise in
dealing with corporate issues and a substantial body of case law has developed
construing Delaware Law and establishing public policies with respect to
corporations incorporated in Delaware. As a result, Delaware corporate law is
comparatively well known and understood. Consequently, reincorporation in
Delaware should provide greater predictability with respect to the Company's
corporate legal affairs.
CP Delaware will be governed by Section 203 of Delaware Law ("Section
203"), as it may be amended from time to time. Section 203 regulates certain
transactions between a corporation and a person that owns 15% or more of a
corporation's shares. Pennsylvania Law includes a provision, to which the
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Company is presently subject, which is generally comparable to Section 203.
See "Changes in the Company's Charter Documents to be Effected by the
Reincorporation" and "Certain Differences Between the Corporate Laws of
Pennsylvania and Delaware." However, there is a more established body of law
in Delaware dealing with the rights and obligations of directors in takeover
situations.
Despite the belief of the Board of Directors that the Reincorporation is
in the best interests of CP Pennsylvania and its shareholders, shareholders
should be aware that Delaware Law has been publicly criticized on the grounds
that it does not afford minority shareholders the same substantive rights and
protections as are available under the laws of some other states. For a
comparison of shareholders' rights and the powers of management under Delaware
Law and Pennsylvania Law and a discussion relating to changes in the
Pennsylvania Articles and Pennsylvania By-Laws resulting from the
Reincorporation which may reduce shareholder participation in important
corporate decisions, see "Changes in the Company's Charter Documents to be
Effected by the Reincorporation" and "Certain Differences Between the Corporate
Laws of Pennsylvania and Delaware." The Reincorporation also has certain anti-
takeover implications which are discussed below.
POSSIBLE NEGATIVE CONSIDERATIONS
As a result of the Reincorporation, the Company will become subject to
an annual franchise tax in Delaware, in lieu of the Pennsylvania state income
taxation to which it is already subject. See "Federal Income Tax Consequences
of the Merger." Shareholders should be aware that Delaware Law has been
publicly criticized on the grounds that it does not afford minority
shareholders the same substantive rights and protections as are available under
the laws of some other states. See "Principal Reasons for the
Reincorporation," "Changes in the Company's Charter Documents to be Effected by
the Reincorporation," and "Certain Differences Between the Corporate Laws of
Pennsylvania and Delaware."
The Board of Directors has weighed the potential disadvantages and has
unanimously concluded that the potential benefits of the Reincorporation
outweigh the possible disadvantages.
CHANGES IN THE COMPANY'S CHARTER DOCUMENTS TO BE EFFECTED BY THE
REINCORPORATION
The following discussion summarizes certain differences between the
Delaware Certificate and the Delaware By-laws on the one hand, and the
Pennsylvania Articles and Pennsylvania By-laws on the other. The shareholders
of CP Pennsylvania would become subject to the provisions of the Delaware
Certificate and the Delaware By-laws upon the effectiveness of the proposed
Reincorporation. Shareholders are encouraged to read the Delaware Certificate
and the Delaware By-laws which are attached as Exhibits C and D, respectively,
to this Proxy Statement.
Increase in Authorized Capital Stock
Under the Pennsylvania Articles, the authorized capital stock of CP
Pennsylvania presently consists of 20,000,000 shares of CP Pennsylvania Common
Stock, par value $.01 per share. On September 24, 1998, 17,016,833 shares of
CP Pennsylvania Common Stock were outstanding, no shares were held in the
treasury of CP Pennsylvania and no shares of CP Pennsylvania Common Stock were
reserved for issuance, leaving 2,983,167 authorized and unreserved shares of CP
Pennsylvania Common Stock available for issuance.
The Delaware Certificate provides that the aggregate number of
authorized shares of capital stock of CP Delaware is 1,000,000 shares of CP
Delaware Preferred Stock, par value $.01 per share, and
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50,000,000 shares of CP Delaware Common Stock, par value $.01 per share. The
Pennsylvania Articles and Delaware Certificate each provide that the Board of
Directors of CP Delaware may issue shares of the Preferred Stock in one or more
series and may fix the rights, preferences, privileges and restrictions thereof
without any vote or action on the part of the shareholders of the Company. The
issuance by CP Delaware of shares of Preferred Stock with voting and conversion
rights may adversely affect the voting power of the holders of CP Delaware
Common Stock and could have the effect of delaying, deferring or preventing a
change in control of CP Delaware.
Amendment of Certificate and By-laws
Under Pennsylvania Law, amendments to the Pennsylvania Articles
generally require the approval of the holders of a majority of shares actually
voting thereon and, where their rights are affected, of a majority of all
shares actually voting of each class or series entitled to vote thereon as a
class. Under Delaware Law, amendments of the Delaware Certificate generally
require the approval of the holders of a majority of the outstanding stock
entitled to vote thereon and of a majority of the outstanding stock of each
class or series entitled to vote thereon as a class, including the holders of
any class or series of stock whose rights are adversely affected.
Currently, the Pennsylvania By-laws may be amended by the Board of
Directors, subject to the power of the shareholders to change or repeal the By-
laws, at an annual or special meeting if approved by a majority of the votes
cast. Under Pennsylvania Law, the Board of Directors may not adopt or change
certain By-laws expressly committed to the shareholders. Under Delaware Law
and the Delaware By-laws, shareholders may adopt, alter, amend or repeal
provisions of the Delaware By-laws, including any new By-law provision adopted
by the Board in the future, by the affirmative vote of the holders of a
majority of the shares entitled to vote at such meeting and present or
represented thereat. The Board of Directors has the power to effect amendments
to the Delaware By-laws by a majority vote of the whole Board.
Stockholder Proposals
Under the Delaware By-Laws, stockholders wanting to present proper
proposals for action at an annual meeting will be required to give written
notice by certified mail, in accordance with Article II, Section 14 of the
Bylaws, to the Secretary of the (a) not less than 120 days nor more than 150
days before the first anniversary date of the Corporation's proxy statement in
connection with the previous annual meeting of stockholders or (b) with respect
to a special meeting of stockholders, not later than the seventh day following
the day on which notice of a special meeting was first mailed or otherwise
given to stockholders. In accordance with the Delaware Bylaws, any such notice
must include the name and address of the shareholder, the class and number of
shares held by the shareholder, a representation that the shareholder intends
to appear at the meeting in person or by proxy to submit the proposal, a
disclosure of any material interest that the shareholder has in the proposal,
and a brief description of the proposal. The Company may in its sole
discretion refuse to allow any proposal to be presented which the Company would
not be required to include in a proxy statement pursuant to any rule
promulgated by the Securities and Exchange Commission.
CERTAIN DIFFERENCES BETWEEN THE CORPORATE LAWS OF PENNSYLVANIA AND DELAWARE
In addition to differences in the provisions of Pennsylvania Law and
Delaware Law discussed in the immediately preceding section, certain
differences between the rights of shareholders under Pennsylvania Law and under
Delaware Law are summarized below. This summary is not intended to be
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relied upon as an exhaustive list or a detailed description of the provisions
discussed and is qualified in its entirety by reference to Pennsylvania Law and
Delaware Law.
General
Voting Rights. Pennsylvania Law generally requires approval of any
merger, consolidation or sale of substantially all the assets of a corporation
by a vote of a majority of the votes cast by all shareholders entitled to vote
thereon, and a majority of the votes cast in any required class vote. Such
matters require the approval of a majority of the outstanding shares entitled
to vote under Delaware Law unless otherwise expressly provided in the
certificate of incorporation. Under Pennsylvania Law, shareholder approval is
not required (whether or not the corporation is the survivor) (a) for a merger
if the survivor is a Pennsylvania corporation, the outstanding shares are
unaffected and have majority voting power with respect to the election of
directors and no changes are made to the articles except those which the board
would be permitted to make on its own initiatives by amending the articles, or
(b) for the merger of a Pennsylvania corporation with another corporation that
owns at least 80% of its outstanding shares. Delaware Law permits the merger
of a Delaware corporation into a corporation that holds at least 90% of each
class of stock of such corporation without shareholder approval. Delaware Law
also permits a merger of a corporation without approval of the shareholders of
the surviving corporation if the merger results in no more than a 20% increase
in its outstanding common stock and certain conditions are met.
Special Treatment. Under Pennsylvania Law, an amendment of articles of
incorporation or a plan of reclassification, merger, consolidation, exchange,
asset transfer, division or conversion that provides mandatory special
treatment for the shares of a class held by particular shareholders or groups
of shareholders that differs materially from the treatment accorded other
shareholders or groups of shareholders holding shares of the same class or
series must be approved by each group of the holders of any outstanding shares
of a class who are to receive the same special treatment under the amendment or
plan, voting as a special class in respect to the plan, regardless of any
limitations stated in the articles of incorporation or by-laws on the voting
rights of any class. At the option of the corporation's board of directors, the
approval of such special treatment by any such affected group may be omitted,
but in such event the holders of any outstanding shares of the special class so
denied voting rights are entitled to dissenters' rights (i.e., the right to
demand payment in cash by the corporation of the fair value of one's shares).
There is no comparable provision under Delaware Law.
Dividends. Delaware Law generally permits dividends to be paid out of
any surplus, defined as the excess of the net assets of the corporation over
the amount determined to be the capital of the corporation by the board of
directors (which amount cannot be less than the aggregate par value of all the
issued shares of capital stock). Delaware Law also permits a dividend to be
paid out of the net profits of the current or the preceding fiscal year, or
both, unless net assets are less than the aggregate amount of the capital of
any outstanding preferred stock. Under Pennsylvania Law, a corporation may
make distributions of cash or property unless, after giving effect thereto, (i)
the corporation would be unable to pay its debts as they become due in the
usual course of its business, or (ii) the total assets of the corporation would
be less than the sum of its total liabilities plus the amount that would be
needed upon the dissolution of the corporation to satisfy the preferential
rights, if any, of shareholders having superior preferential rights to those
shareholders receiving the distribution. Total assets and liabilities for this
purpose are to be determined by the board of directors, which may base its
determination on such factors as it considers relevant, including the book
value of the assets and liabilities of the corporation and unrealized
appreciation and depreciation of the assets of the corporation.
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Directors' Duties and Liabilities. Both Delaware and Pennsylvania Law
provide that the board of directors has the ultimate responsibility for
managing the business and affairs of a corporation and that, in discharging
this function, directors have fiduciary duties of care and loyalty to the
corporation and its shareholders. In 1990, Pennsylvania Law was amended to
state explicitly that in determining whether an action is in the best interest
of the corporation, the directors may consider the effects of any action upon
employees, suppliers and customers of the corporation, upon communities in
which offices or other establishments of the corporation are located, and all
other pertinent factors, without regarding any one interest as controlling.
Indemnification of Directors and Officers. Both Delaware and
Pennsylvania Law permit a corporation to indemnify its directors and officers
against expenses, judgments, fines and amounts paid in settlement incurred by
them in connection with any pending, threatened or completed action or
proceeding (other than an action or proceeding by or in the right of the
corporation (a "derivative action")), and permit such indemnification against
expenses incurred in connection with any pending, threatened or completed
derivative action, if, with respect to any such action or proceeding, the
director or officer has acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful. Furthermore, both states'
laws provide that expenses incurred in defending any action or proceeding may
be paid by the corporation in advance of the final disposition upon receipt of
an undertaking by or on behalf of the director or officer to repay the mount if
it is ultimately determined that the director or officer is not entitled to be
indemnified by the corporation.
The Pennsylvania By-laws currently provide for indemnification of
officers and directors to the maximum extent permitted by Pennsylvania Law.
Similarly, the Delaware Certificate provides for indemnification of officers
and directors to the fullest extent permitted by Delaware Law.
Appraisal or Dissenters Rights. See "Dissenters Rights of Appraisal"
Statutory Regulation of Corporate Takeovers
Business Combination Statutes. Both Delaware and Pennsylvania have
adopted a "business combination" type of takeover statute with an interested
shareholder" of the target corporation for a set period of time following the
date on which the interested shareholder became such. An interested
shareholder is typically defined as the direct or indirect beneficial owner of
a specified percentage of the target corporation's outstanding shares.
Business combination statutes are intended primarily to prevent highly
leveraged takeover bids in which the target's assets are to be used as
collateral for the interested shareholder's debt financing of the takeover.
Such takeover bids usually depend on the prompt consummation of a merger or
business combination or the prompt sale of corporate assets, after the
acquisition of control of the target corporation.
The Delaware Certificate provides that CP Delaware will be governed by
Section 203 of Delaware Law ("Section 203"), as it may be amended from time to
time. Section 203 provides that any person who acquires 15% of the outstanding
voting stock of a Delaware corporation becomes an "interested stockholder," and
the corporation may not effect mergers or other "business combinations" with
the interested stockholder for a period of three years unless (a) prior to the
date the acquiror becomes an interested stockholder, the board of directors
approves either the business combination or the transaction which results in
the stockholder becoming an interested stockholder, or (b) the interested
stockholder is able, by means of the tender offer or other transaction by which
the acquiror becomes an interested stockholder, to acquire ownership of at
least 85% of the outstanding voting stock of the corporation
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(excluding in that calculation shares owned by directors of the corporation who
are also officers and shares owned by certain employee stock plans), or (c) the
interested stockholder obtains control of the board of directors, which then
approves a business combination which is authorized by vote of the holders of
two-thirds of the outstanding stock not held by the interested stockholder.
The definition of interested stockholder does not include (a) persons who owned
15% of the voting stock before December 23, 1987, (b) persons who received more
than 15% of the voting stock as a gift or bequest of the person who owned it
before that date, or (c) persons whose ownership of the voting stock rises over
the 15% threshold as a result of action taken by the corporation unless that
person thereafter acquires additional shares.
A "business combination" is defined broadly in the Delaware statute to
include any merger or consolidation caused by the interested stockholder in
which the surviving corporation will not be subject to Delaware Law, and the
sale, lease, exchange, mortgage, pledge, transfer or other disposition to the
interested stockholder of any assets of a corporation having a market value
equal to or greater than 10% of the aggregate market value of the assets of the
corporation. "Business combination" is also defined to include transfers of
stock of the corporation or a subsidiary to the interested stockholder (except
for transfers in a conversion, exchange or pro rata distribution which does not
increase the interested stockholder's proportionate ownership of a class or
series), or any receipt by the interested stockholder (except proportionately
as a stockholder) of any loans, advances, guarantees, pledges or other
financial benefits.
The business combination provisions of the Pennsylvania statute are
similar to the foregoing, except that (a) an "interested shareholder" under
Pennsylvania Law is the direct or indirect beneficial owner of shares entitled
to cast at least 20% of the votes entitled to be cast or the election of
directors, not counting shares which have been held continuously by a natural
person since January 1, 1983, or which were transferred thereafter by such a
person by gift, inheritance, bequest, devise or other testamentary distribution
to another natural person or a trust, estate, foundation or similar entity, and
(b) the corporation may not engage in a business combination (the definition of
which is comparable to that under Delaware Law) with an interested shareholder
for a period of five years (rather than three as in Delaware), unless (i) the
business combination or the purchase of stock by means of which the interested
shareholder becomes such is approved by the corporation's board of directors in
advance of such stock purchase, (ii) the business combination is approved by
the affirmative vote of all the holders of all the outstanding common shares of
the corporation or (iii) the interested shareholder is the beneficial owner of
a least 80% of the voting stock of the corporation (including, in contrast to
Delaware, the stock owned by management and employee plans), and the business
combination is approved by the affirmative vote of a majority of the shares
other than those beneficially owned by the interested shareholder and his
affiliates and associates. In the case of a business combination with such an
80% shareholder, the value of the consideration to be paid by the interested
shareholder in connection with the business combination must satisfy certain
"fair price" formulae specified in the statute, and the interested shareholder,
after becoming such, must not have acquired any additional voting shares of the
corporation except as provided in the statute.
After the five-year restricted period, an interested shareholder of a
Pennsylvania corporation may engage in a business combination with the
corporation if the business combination is approved by the affirmative vote of
a majority of the shares other than those beneficially owned by the interested
shareholder and its affiliates and associates, or if the business combination
is approved at a shareholders' meeting called for such purpose and the
conditions set forth in the immediately preceding sentence are satisfied.
The Delaware and Pennsylvania business combination statutes provide only
limited regulation of certain self-dealing transactions between a corporation
and certain large shareholders. Moreover, wholly
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<PAGE> 21
apart from the exceptions mentioned above, there are a number of additional
methods whereby even an interested shareholder can benefit from a merger or
sale of a corporation's assets during the first three years (Delaware) or five
years (Pennsylvania) after becoming an interested shareholder. For example,
Delaware Law provides that if after an interested stockholder becomes such, an
acquisition is proposed by a third party and is approved or not opposed by a
majority of the board of directors who were directors before the interested
stockholder became such, the interested stockholder is no longer subject to the
three year restriction and is given at least 20 days in which to develop a
competing proposal.
It should be noted that the Pennsylvania and Delaware business corporate
statutes (a) do not prohibit tender offers or purport to regulate when, how, at
what price or by whom they may be made, (b) do not interfere with the right of
a shareholder, whether "interested" or not, to mount a proxy contest to remove
incumbent management, (c) do not prevent a shareholder from buying sufficient
stock to replace existing management immediately, and (d) do not eliminate or
delay a shareholder's right to vote on the election of directors or on any
other corporate matters except certain defined self-dealing transactions.
Control Share Acquisition Statute. In addition to the business
combination statute, Pennsylvania Law includes a "cash-out" type of takeover
statute which requires an acquiror of more than 20% of a target corporation's
stock, upon demand by any target shareholder, to purchase the shares of such
shareholder at a price which reflects the highest premium paid by the acquiror
in accumulating the target's stock. Such statutes are intended to limit the
perceived coercive effect of two-tier and partial tender offers and so-called
"creeping tender offers," in which large blocks of shares are purchased on the
open market, and to assure that all shareholders share in any control premium
paid by the acquiror. Delaware Law does not include a comparable provision.
In 1990, Pennsylvania Law was amended to add a second type of control
share acquisition statute which provides that, before an acquiror (which may be
either a person or a group of persons acting in concert) of 20%, 33-1/3% or 50%
of the voting power of a "registered corporation" (generally, a corporation
registered under the Securities Exchange Act of 1934) may exercise voting power
with respect to "control shares" (a term defined to include shares above the
applicable threshold, shares acquired within 180 days of the control-share
acquisition and any shares acquired with the intention of making a control-
share acquisition), the shareholders of the corporation must have approved such
exercise by a vote of (i) a majority of all outstanding shares having voting
power, and (ii) a majority of outstanding "disinterested shares."
Disgorgement Statute. The 1990 Pennsylvania legislation also amended
the Pennsylvania corporation law by adding a provision requiring disgorgement
of profits by a "controlling person" (a term defined generally to mean a person
or group seeking a 20% voting interest or making a bid for control). Any
profit made by such person on a trade in shares of the corporation during the
18 months following acquisition of "controlling person" status would belong to
and be recoverable by the corporation, unless the shares involved were
purchased more than 24 months before the acquisition of such status. The
profit recovery may be enforced by the corporation or by a shareholder if the
corporation fails to prosecute the action seeking such recovery in the
prescribed manner.
Tender Offer Statutes. Pennsylvania has adopted a takeover statute (the
"Takeover Disclosure Law") requiring a tender offeror to file a registration
statement with the Pennsylvania Securities Commission (the "Pennsylvania
Commission"), deliver a copy to the target corporation and publicly disclose
the material terms of the proposed offer. A takeover offer automatically
becomes effective 20 days after the date of filing of the registration
statement with the Pennsylvania Commission, unless delayed by order of the
Pennsylvania Commission or by a hearing. Any hearing scheduled by the
Pennsylvania
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<PAGE> 22
Commission must be held within 30 days of the date of filing of the
registration statement, and any determination made following the hearing must
be made within 30 days after such hearing has been closed, unless extended by
order of the Pennsylvania Commission. The Pennsylvania Commission may deny
registration of the offer if, after a hearing, it finds that the takeover offer
fails to provide full and fair disclosure to the offerees of all material
information concerning the offer, or otherwise violates he Takeover Disclosure
Law or the Pennsylvania Securities Act of 1972.
The Pennsylvania Takeover Disclosure Law applies to takeover offers
directed at Pennsylvania-domiciled corporations, as well as to corporations
having their principal places of business and substantial assets in
Pennsylvania.
The Federal law which comprehensively regulates tender offers (known as
the "Williams Act") will continue to apply whether or not the Reincorporation
occurs.
Other
Other Statutory Differences. Shareholders should be aware that there
are other differences between Pennsylvania and Delaware Law. In addition,
changes could be made in the laws of either jurisdiction or in their
interpretation which could affect the rights of shareholders.
AMENDMENT, DEFERRAL OR TERMINATION OF THE MERGER AGREEMENT
If approved by the shareholders at the Annual Meeting, it is anticipated
that the Reincorporation will become effective at the earliest practicable
date. However, the Merger Agreement provides that the Merger Agreement may be
amended, modified or supplemented before or after approval by the shareholders
of the Company; but no such amendment, modification or supplement may be made
if it would have a material adverse effect upon the rights of the Company's
shareholders unless it has been approved by the shareholders. The Merger
Agreement also provides that the Company may terminate and abandon the Merger
or defer its consummation for a reasonable period, notwithstanding shareholder
approval, if in the opinion of the Board of Directors or, in the case of
deferral, of an authorized officer, such action would be in the best interests
of the Company and its shareholders. The Merger Agreement provides that the
consummation of the Merger is subject to certain conditions, including the
obtaining of all necessary or desirable regulatory approvals, the absence of
pending or threatened litigation regarding the Reincorporation, and the
approval, if necessary, of the CP Delaware Common Stock for listing on the OTC
Bulletin Board upon official notice of issuance.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The Company believes that, for federal income tax purposes, no gain or
loss will be recognized by the holders of CP Pennsylvania Common Stock or
options to purchase CP Pennsylvania Common Stock as a result of the
consummation of the Reincorporation and no gain or loss will be recognized by
CP Pennsylvania or CP Delaware. Each holder of CP Pennsylvania Common Stock
will have the same basis in the CP Delaware Common Stock received pursuant to
the Reincorporation as he or she has in the CP Pennsylvania Common Stock held
immediately prior to the Reincorporation, and his or her holding period with
respect to the CP Delaware Common Stock will include the period during which he
or she held the corresponding CP Pennsylvania Common Stock, so long as the CP
Pennsylvania Common Stock was held as a capital asset at the time of
consummation of the Reincorporation.
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<PAGE> 23
ALTHOUGH IT IS NOT ANTICIPATED THAT STATE OR LOCAL INCOME TAX
CONSEQUENCES TO SHAREHOLDERS WILL VARY FROM THE FEDERAL INCOME TAX CONSEQUENCES
DESCRIBED ABOVE, SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
EFFECT OF THE REINCORPORATION UNDER STATE, LOCAL OR FOREIGN INCOME TAX LAWS, AS
WELL AS THE EFFECT OF THE REINCORPORATION UNDER FEDERAL INCOME TAX LAWS.
CP Pennsylvania will not recognize gain or loss for federal income tax
purposes as a result of the Merger and CP Delaware will succeed without
adjustment to the tax attributes of CP Pennsylvania. CP Pennsylvania is
currently subject to state income taxation in Pennsylvania. If the
Reincorporation is approved, CP Delaware will be obligated to pay an annual
franchise tax in Delaware.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the votes cast by
holders of all shares of CP Pennsylvania Common Stock entitled to vote thereon
is required to approve and adopt the Merger Agreement and the Reincorporation.
The Board of Directors unanimously recommends a vote "FOR" the proposal
to approve and adopt the Merger Agreement and the Reincorporation. Unless a
contrary specification is indicated, the enclosed Proxy will be voted "FOR" the
proposal to approve and adopt the Merger Agreement and the Reincorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE REINCORPORATION OF THE COMPANY UNDER
THE LAWS OF DELAWARE
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<PAGE> 24
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information
known to the Company with respect to the beneficial ownership of the Company's
Common Stock as of September 24, 1998 by (a) the "Named Executive Officers"
identified under the caption "Executive Compensation and Other Information,"
(b) each director of the Company, (c) each person known by the Company to be
the beneficial owner of more than 5% of the Company's Common Stock, and (d) all
executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNERSHIP SHARES
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Michael J. Blumenfeld . . . . . . . . . . . . . . 9,691,411 57.0%
Arthur J. Coerver . . . . . . . . . . . . . . . 113,000 *
Jeff Davidowitz (2) . . . . . . . . . . . . . . . 610,000 3.6%
Robert W. Philip . . . . . . . . . . . . . . . 67,500 *
William A. Watkins, Jr. . . . . . . . . . . . . 67,500 *
All executive officers and directors as a group 62.0%
(5 persons) . . . . . . . . . . . . . . . 10,649,411
</TABLE>
- ------------
* Less than one percent
(1) The address for each person listed is 13950 Senlac, Suite 200, Farmers
Branch, Texas 75235.
(2) Includes 25,000 shares issuable upon exercise of an option expiring
August 9, 1999.
(3) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Percentages for each person are
based on the 17,016,833 shares outstanding at September 24, 1998, plus
the total number of outstanding options or warrants held by such person
that are exercisable within 60 days of such date. Shares issuable upon
exercise of outstanding options and warrants, however, are not deemed
outstanding for purposes of computing the percentage ownership of any
other person. Except as indicated in the footnotes to this table and
pursuant to applicable community property laws, each stockholder named
in the table has sole voting and investment power with respect to the
shares set forth opposite such stockholder's name.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's executive officers and directors and persons who
own more than ten percent of a registered class of the Company's equity
securities (collectively, the "Reporting Persons") to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and to
furnish the Company with copies of these reports. The Company believes that
all filings required to be made by the Reporting Persons during the fiscal year
ended June 30, 1998 were made on a timely basis.
-22-
<PAGE> 25
MANAGEMENT
The following table sets forth the names, ages and positions of the
executive officers and directors of the Company as of September 24, 1998.
Their respective backgrounds are described following the table:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- --------------------------- ------ --------------------------------------------------------------
<S> <C> <C>
Michael J. Blumenfeld 52 Chairman of the Board, President, and Chief Executive Officer
Arthur J. Coerver 55 Chief Operating Officer and Director
Jeff Davidowitz 41 Director
Robert W. Philip 62 Director
William A. Watkins, Jr. 55 Director
</TABLE>
- -------------------------
Michael J. Blumenfeld has served as Chairman of the Board, President,
and Chief Executive Officer of the Company since February 1998. From July 1997
until February 1998, Mr. Blumenfeld served as President and Chief Executive
Officer of Collegiate Pacific, Inc., a Texas corporation that sold all of its
assets to the Company in February 1998. From 1992 until November 1996, Mr.
Blumenfeld served as Chairman of the Board and Chief Executive Officer of Sport
Supply Group, Inc., a public company engaged in the direct mail marketing of
sports related equipment.
Arthur J. Coerver joined the Company in February 1998 as Chief Operating
Officer and a director. From 1991 through 1997, Mr. Coerver was Vice
President, Sales and Marketing, of Sport Supply Group, Inc., a public company
engaged in the direct mail marketing of sports related equipment.
Jeff Davidowitz has served as a director of the Company since June 1994.
Mr. Davidowitz also serves as President of Penn Footwear, a private company
that manufactures shoes, since January 1, 1991. Prior to that, Mr. Davidowitz
was Vice President of Penn Footwear.
Robert W. Philip has served as a director of the Company since February
1998. Mr. Philip served as Executive in Residence and Lecturer in the
Department of Accounting of the College of Business Administration at the
University of North Texas in Denton, Texas from September 1989 until May 1994.
Prior to that time, Mr. Philip served as an audit partner with Arthur Andersen,
S.C. for approximately 18 years. Mr. Philip is also a director of Medical
Control, Inc. (Nasdaq: MDCL), a health care cost management company. Mr.
Philip is currently retired from the University of North Texas and Arthur
Andersen, S.C.
William A. Watkins, Jr. has served as a director since February 1998.
Mr. Watkins has been a partner of Watkins, Watkins and Keenan, a certified
public accounting firm, since December 1971.
MEETING ATTENDANCE AND COMMITTEES OF THE BOARD
The business of the Company is managed under the direction of the Board.
The Board meets during the Company's fiscal year to review significant
developments affecting the Company and to act on matters requiring Board
approval. The Board held 1 formal meeting and acted by unanimous written
consent 2 times during the fiscal year ended June 30, 1998. All of the
directors attended at least 100% of the Board meetings.
-23-
<PAGE> 26
The Board of Directors has established an Audit Committee to devote
attention to specific subjects and to assist the Board in the discharge of its
responsibilities. The functions of these committees and their current members
are described below.
Audit Committee. During the fiscal year, the Audit Committee was
comprised of Messrs. Philip and Watkins. The Audit Committee reviews, acts on
and reports to the Board of Directors with respect to various auditing and
accounting matters, including the selection of the Company's independent
accountants, the scope of the annual audits, fees to be paid to the independent
accountants and the accounting practices of the Company. The Audit Committee
held no formal meetings during the last fiscal year.
Stock Option Committee. The Board of Directors will establish a Stock
Option Committee to administer the 1998 Collegiate Pacific Inc. Stock Option
Plan upon approval by the shareholders. The committee will be comprised of at
least two non-employee directors.
The Board of Directors does not have a standing nominating committee,
compensation committee, or any other committee performing similar functions.
The functions customarily attributable to a nominating committee or a
compensation committee are performed by the Board of Directors as a whole.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the
compensation paid by the Company to its chief executive officer and to each
other executive officer of the Company who received at least $100,000 in salary
and bonus during 1998 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION (1) AWARDS
---------------------------- -------------
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
- ----------------------------- ------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Michael J. Blumenfeld, 1998 $77,000.00 -- -- --
Chairman, President
& Chief Executive
Officer (2)
</TABLE>
- ---------------
(1) In each case, the aggregate value of other annual compensation,
including perquisites and other personal benefits, does not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus reported
for the Named Executive Officer.
(2) Mr. Blumenfeld became Chairman, President and Chief Executive Officer on
February 17, 1998.
During 1998, no options to purchase shares of Common Stock were granted
under the Company's stock options plans.
-24-
<PAGE> 27
DIRECTOR COMPENSATION
The Company does not pay cash compensation to its directors, but does
reimburse directors for expenses incurred in attending board and committee
meetings. Upon approval of the 1998 Collegiate Pacific Inc. Stock Option Plan,
non-employee directors will annually be granted nonqualified options to
purchase 2,500 shares of Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 17, 1998, the Company sold 10,000,000 shares of Common Stock
to Michael J. Blumenfeld (9,800,000 shares) and Adam Blumenfeld (200,000
shares) for $0.20 per share, or an aggregate purchase price of $2,000,000, in
cash pursuant to the terms and subject to the conditions of that certain Stock
Purchase Agreement dated August 18, 1997 by and between the Company and Michael
and Adam Blumenfeld. Adam Blumenfeld is the son of Mr. Blumenfeld. Mr.
Blumenfeld was not an officer or director of the Company at the time of the
execution of the Stock Purchase Agreement. The consideration paid by Mr.
Blumenfeld for the Common Stock was based on the average of the high and low
bid price of the Common Stock as reported by the NASD on August 18, 1997, the
date of the Stock Purchase Agreement.
On February 17, 1998, in connection with the Stock Purchase Agreement
set forth above, the Company sold (i) 100,000 shares of Common Stock to Arthur
J. Coerver, who became a director of the Company upon consummation of the Stock
Purchase Agreement, at $.20 per share, (ii) 70,000 shares of Common Stock to
Robert W. Philip, who became a director of the Company upon consummation of the
Stock Purchase Agreement, at $.20 per share, and (iii) 70,000 shares of Common
Stock to William A. Watkins, Jr., who became a director of the Company upon
consummation of the Stock Purchase Agreement, at $.20 per share.
Since April 14, 1997, Michael J. Blumenfeld has made loans, net of
repayments, to the Company in an aggregate amount approximating $755,000, which
are payable on demand and bear interest at the rate of 12% per annum. As of
June 30, 1998, the aggregate amount outstanding for such loans (including
accrued interest) was $899,836.
STOCKHOLDER PROPOSALS
A proper proposal submitted by a stockholder in accordance with
applicable rules and regulations for presentation at the Company's next annual
meeting that is received at the Company's principal executive office between
July 7, 1999 and August 6, 1999 will be included in the Company's proxy
statement and form of proxy for that meeting.
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited on behalf of the Board of Directors of
the Company. The cost of soliciting proxies in the accompanying form will be
paid by the Company. Officers of the Company may solicit proxies by mail,
telephone or telegraph. Upon request, the Company will reimburse brokers,
dealers, banks and trustees, or their nominees, for reasonable expenses
incurred by them in forwarding proxy material to beneficial owners of shares of
the Common Stock.
-25-
<PAGE> 28
INDEPENDENT PUBLIC ACCOUNTANTS
Sutton Frost LLP, independent certified public accountants, has been
selected by the Board of Directors as the Company's independent auditor for the
current year. A representative of Sutton Frost LLP is expected to be present
at the Annual Meeting, will have an opportunity to make a statement if he or
she desires to do so and is expected to be available to respond to appropriate
questions.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters set forth herein. Should any
other matter requiring a vote of stockholders arise, the proxies in the
enclosed form confer upon the person or persons entitled to vote the shares
represented by such proxies discretionary authority to vote the same in
accordance with their best judgment in the interest of the Company.
FINANCIAL STATEMENTS
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM A COPY
OF THIS PROXY STATEMENT IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON AND BY FIRST CLASS MAIL OR OTHER EQUALLY PROMPT MEANS WITHIN ONE
BUSINESS DAY OF RECEIPT OF SUCH REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-KSB. REQUESTS SHOULD BE DIRECTED TO THE ATTENTION OF [ARTHUR J.
COERVER], COLLEGIATE PACIFIC INC., 13950 SENLAC, SUITE 200, FARMERS BRANCH,
TEXAS 75235..
By Order of the Board of Directors,
MICHAEL J. BLUMENFELD,
President and Chief
Executive Officer
________ __, 1998
-26-
<PAGE> 29
EXHIBIT A
1998 COLLEGIATE PACIFIC, INC.
STOCK OPTION PLAN
1. PURPOSE
The purpose of the 1998 Collegiate Pacific, Inc. Stock Option Plan
(hereinafter called the "Plan") is to advance the interests of Collegiate
Pacific, Inc. (hereinafter called the "Company") by strengthening the ability
of the Company to attract and retain key personnel of high caliber through
encouraging a sense of proprietorship by means of stock ownership.
Certain options granted under this Plan are intended to qualify as
"incentive stock options" pursuant to Section 422 of the Internal Revenue Code
of 1986 (the "Code"), while certain other options granted under the Plan will
constitute nonqualified options.
2. DEFINITIONS
As used in this Plan, and in any Option Agreement, as hereinafter
defined, the following terms shall have the following meanings, unless the
context otherwise requires:
(a) "Common Stock" shall mean the Common Stock of the Company, par
value $.01 per share.
(b) "Date of Grant" shall mean the date on which a stock option is
granted pursuant to this Plan.
(c) "Non-Employee Director" shall mean an individual who is a "non-
employee director" within the meaning set forth therefor in Rule 16b-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and also
an "outside director" within the meaning of Treasury Regulation Section 1.162-
27(e)(3).
(d) "Fair Market Value" shall mean the closing sale price (or average
of the quoted closing bid and asked prices if there is no closing sale price
reported) of the Common Stock on the date specified as reported by NASDAQ or by
the principal national stock exchange on which the Common Stock is then listed.
If there is no reported price information for such date, the Fair Market Value
will be determined by the reported price information for Common Stock on the
day nearest preceding such date.
(e) "Optionee" shall mean the person to whom an option is granted
under the Plan or who has obtained the right to exercise an option in
accordance with the provisions of the Plan.
(f) "Subsidiary" shall mean any now existing or hereinafter organized
or acquired corporation of which more than fifty percent (50%) of the issued
and outstanding voting stock is owned or controlled directly or indirectly by
the Company or through one or more Subsidiaries of the Company.
A-1
<PAGE> 30
3. SHARES SUBJECT TO THE PLAN
Subject to the provisions of Section 9 of this Plan, the aggregate
amount of Common Stock for which options may be granted under this Plan shall
not exceed 2,000,000 shares of Common Stock. The number of shares of Common
Stock subject to awards granted to any single Optionee shall not exceed to
number set forth in the immediately preceding sentence, as it may be amended
from time to time. Such shares may be authorized and previously unissued
shares or previously issued shares that have been reacquired by the Company.
Any shares subject to unexercised portions of options granted under this Plan
which shall have terminated, been canceled, or expired may again be subject to
options under this Plan.
4. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors or, at
the option of the Board of Directors, a committee of two or more Non-Employee
Directors appointed by the Board of Directors of the Company (the group
responsible for administering the Plan is referred to herein as the
"Committee"). Options may be granted under this Section 4(a) only (i) by the
unanimous agreement of the members of the Committee; (ii) by resolution of the
Board of Directors, duly adopted; or (iii) in compliance with Section 14 of the
Exchange Act, by affirmative vote of a majority of the shareholders of the
Company, present or represented, and duly entitled to vote on such matters at
meetings held in accordance with the laws of the State of Texas, either in
advance of the grant or no later than the next annual meeting of shareholders.
The Committee may create a subcommittee for purposes of making grants to
officers and directors if the Committee would otherwise not qualify for making
such grants under Rule 16b-3 or Section 162(m) of the I.R.C. References herein
to the "Committee" shall include any such subcommittee. Stock option
agreements ("Option Agreements"), in the forms as approved by the Committee,
and containing such terms and conditions not inconsistent with the provisions
of this Plan as shall have been determined by the Committee, may be executed on
behalf of the Company by the Chairman of the Board, the President or any Vice
President of the Company. Except with respect to Section 4(b) of this Plan, the
Committee shall have complete authority to construe, interpret and administer
the provisions of the Plan and the provisions of the Option Agreements granted
hereunder; to prescribe, amend and rescind rules and regulations pertaining to
the Plan; and to make all other determinations necessary or deemed advisable in
the administration of the Plan. The determinations, interpretations and
constructions made by the Committee shall be final and conclusive.
(b) Members of the Committee shall be specified by the Board of
Directors, and shall consist solely of Non-Employee Directors. On the date Non-
Employee Directors are specified as Committee members by the Board of Directors
and on each subsequent anniversary of such date that a Non-Employee Director
serves as a Committee member, such Non-Employee Director shall automatically be
granted nonqualified options to purchase 2,500 shares of Common Stock. The
purchase price or prices for Common Stock subject to an option granted under
this Section 4(b) shall be 100% of the Fair Market Value of the Common Stock on
the Date of Grant. This Section 4(b) shall not be amended more than once every
six months, other than to comport with changes in the Code or the rules
promulgated thereunder.
5. ELIGIBILITY
Incentive stock options to purchase Common Stock may be granted under
Section 4(a) of the Plan to such key employees of the Company or its
Subsidiaries (including any director who is also a key employee of the Company
or one of its Subsidiaries) as shall be determined by the Committee.
Nonqualified stock options to purchase Common Stock may be granted under
Section 4(a) of the Plan to such key employees or directors of the Company or
its Subsidiaries as shall be determined by the
A-2
<PAGE> 31
Committee. Which persons are to be granted options under Section 4(a) of the
Plan, the number of options, the number of shares subject to each option, the
exercise price or prices of each option, the vesting and exercise period of
each option, whether an option may be exercised as to less than all of the
Common Stock subject thereto, and such other terms and conditions of each
option, if any, as are not inconsistent with the provisions of this Plan shall
be determined on the Date of Grant in accordance with Section 4(a) of this
Plan. Notwithstanding any provision of this Plan to the contrary, unless the
shareholders of the Company approve the Plan at the December 4, 1998
shareholders' meeting: (a) no incentive stock option or nonqualified stock
option may be granted to a "covered employee" (within the meaning of Section
162(m)(3) of the Code) on or after December 4, 1998, and (b) no incentive stock
option or nonqualified stock option granted on or after December 4, 1998 may be
exercised during any year in which the Optionee is a "covered employee." In
addition, the Committee may, in its sole discretion, provide for vesting of
stock options to accelerate upon a change in control of the Company and enable
an employee to "put" the excess of the fair market value over the exercise
price of the options to the Company in the event of a change in control. In
connection with the granting of incentive stock options, the aggregate Fair
Market Value (determined at the Date of Grant of an incentive stock option) of
the shares with respect to which incentive stock options are exercisable for
the first time by an Optionee during any calendar year (under all such plans of
the Optionee's employer corporation and its parent and subsidiary corporations
as defined in Section 424 of the Code) shall not exceed $100,000 or such other
amount as from time to time provided in Section 422(d) of the Code or any
successor provision.
6. EXERCISE PRICE
The purchase price or prices for Common Stock subject to an option (the
"Exercise Price") granted pursuant to Section 4(a) of the Plan shall be
determined at the Date of Grant; provided, however, that (a) the Exercise Price
for any option shall not be less than 100% of the Fair Market Value of the
Common Stock at the Date of Grant, and (b) if the Optionee owns more than 10-
Percent of the total combined voting power of all classes of stock of the
Company or its parent or any of its subsidiaries, as more fully described in
Section 422(b)(6) of the Code or any successor provision (such stockholder is
referred to herein as a "10-Percent Stockholder"), the Exercise Price for any
incentive stock option granted to such Optionee shall not be less than 110% of
the Fair Market Value of the Common Stock at the Date of Grant.
7. TERM OF STOCK OPTIONS AND LIMITATIONS ON RIGHT TO EXERCISE
No incentive stock option granted pursuant to Section 4(a) of this Plan
shall be exercisable (a) more than five years after the Date of Grant with
respect to a 10-Percent Stockholder, and (b) more than ten years after the Date
of Grant with respect to all persons other than 10-Percent Stockholders. No
nonqualified stock option granted pursuant to Section 4(a) of this Plan shall
be exercisable more than ten years after the Date of Grant. Nonqualified stock
options granted to members of the Committee pursuant to Section 4(b) of this
Plan shall be exercisable for ten years, except that in the event of death or
termination of such member as a director of the Company or a Subsidiary, such
nonqualified stock options shall only be exercisable for one year following the
date of such member's death or termination (or if shorter, the remaining term
of the option). The Company shall not be required to issue any fractional
shares upon the exercise of any options granted under this Plan. No Optionee
nor his legal representatives, legatees or distributees, as the case may be,
will be, or will be deemed to be, a holder of any shares subject to an option
unless and until said option has been exercised and the purchase price of the
shares in respect of which the option has been exercised has been paid. An
option shall not be exercisable except by the Optionee or by a person who has
obtained the Optionee's rights under the option by will or under the laws of
descent and distribution.
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8. TERMINATION OF EMPLOYMENT
The conditions that shall apply to the exercise of an option granted
under Section 4(a) in the event an Optionee shall cease to be employed by the
Company or a Subsidiary for any reason shall be determined at the Date of
Grant. In the event of the death of an Optionee while in the employ or while
serving as a director of the Company or a Subsidiary, the option theretofore
granted to him shall be exercisable by the executor or administrator of the
Optionee's estate, or if the Optionee's estate is not in administration, by the
person or persons to whom the Optionee's right shall have passed under the
Optionee's will or under the laws of descent and distribution, within the year
next succeeding the date of death or such other period as may be specified in
the Option Agreement, but in no case later than the expiration date of such
option, and then only to the extent that the Optionee was entitled to exercise
such option at the date of his death. Neither this Plan nor any option granted
hereunder is intended to confer upon any Optionee any rights with respect to
continuance of employment or other utilization of his services by the Company
or by a Subsidiary, nor to interfere in any way with his right or that of his
employer to terminate his employment or other services at any time (subject to
the terms of any applicable contract).
9. DILUTION OR OTHER ADJUSTMENTS
In the event that there is any change in the Common Stock subject to
this Plan or subject to options granted hereunder as the result of any stock
dividend on, dividend of or stock split or stock combination of, or any like
change in, stock of the same class or in the event of any change in the capital
structure of the Company, the Board of Directors or the Committee shall make
such adjustments with respect to options, or any provisions of the Plan, as it
deems appropriate to prevent dilution or enlargement of option rights.
10. EXPIRATION AND TERMINATION OF THE PLAN
Options may be granted at any time under Section 4(a) of the Plan and as
specified under Section 4(b) of the Plan prior to December 31, 2005, as long as
the total number of shares which may be issued pursuant to options granted
under this Plan does not (except as provided in Section 9 above) exceed the
limitations of Section 3 above. This Plan may be abandoned, suspended or
terminated at any time by the Board of Directors of the Company except with
respect to any options then outstanding under the Plan.
11. RESTRICTIONS ON ISSUANCE OF SHARES
(a) The Company shall not be obligated to sell or issue any shares
upon the exercise of any option granted under this Plan unless:
(i) the shares with respect to which such option is being
exercised have been registered under applicable federal securities laws
or are exempt from such registration;
(ii) the prior approval of such sale or issuance has been
obtained from any state regulatory body having jurisdiction; and
(iii) in the event the Common Stock has been listed on any
exchange, the shares with respect to which such option is being
exercised have been duly listed on such exchange in accordance with the
procedure specified therefor.
If the shares to be issued upon the exercise of any option granted under the
Plan are intended to be issued by the Company in reliance upon the exemptions
from the registration requirements of applicable federal
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securities laws, the Optionee, if so requested by the Company, shall furnish to
the Company such evidence and representations, including an opinion of counsel,
satisfactory to it, as the Company may reasonably request.
(b) All or a portion of the nonqualified options to be granted to an
optionee may, in the discretion of the Committee (or the Board of Directors, as
the case may be), be on terms which permit transfer by such Optionee to (i) the
spouse, children or grandchildren of the Optionee ("Immediate Family Members"),
(ii) a trust or trusts for the exclusive benefit of such Immediate Family
Members, or (iii) a partnership or other entity in which such Immediate Family
Members are the only partners, provided that (x) the stock option agreement
pursuant to which such nonqualified options are granted must be approved by the
Committee, and must expressly provide for transferability in a manner
consistent with this Section, and (y) subsequent transfers of transferred
options shall be prohibited except by will or the laws of descent and
distribution. Following transfer, any such options shall continue to be
subject to the same terms and conditions as were applicable immediately prior
to transfer, provided that for purposes of each Option Agreement and Sections
7, 11(a) and (c) and 14(ii) hereof the term "Optionee" shall be deemed to refer
to the transferee. The events of termination of employment of Section 8 hereof
shall continue to be applied with respect to the original Optionee, following
which the options shall be exercisable by the transferee only to the extent,
and for the periods specified herein and in the Stock Option Agreement.
(c) Except as set forth in (b) above, no option granted pursuant to
the Plan shall be transferable by the Optionee other than by will or the laws
of descent and distribution or between spouses or incident to divorce within
the meaning of Section 1041 of the Code or any successor provision.
(d) Any Common Stock issued to an officer or director of the Company
pursuant to the exercise of an option granted pursuant to the Plan shall not be
transferred until at least 6 months have elapsed from the date of grant of such
option to the date of disposition of the Common Stock underlying such option.
(e) The Board of Directors or Committee may impose such other
restrictions on the ownership and transfer of shares issued pursuant to this
Plan as it deems desirable; any such restrictions shall be set forth in any
Option Agreement entered into hereunder.
12. PROCEEDS
The proceeds to be received by the Company upon exercise of any option
granted under this Plan may be used for any proper purposes.
13. AMENDMENT OF THE PLAN
Except as provided in Section 4(b) of the Plan, the Board of Directors
may amend the Plan from time to time in such respects as it may deem advisable
in its sole discretion or in order that the options granted hereunder shall
conform to any change in applicable laws, including tax laws, or in regulations
or rulings of administrative agencies or in order that options granted or stock
acquired upon exercise of such options may qualify for simplified registration
under applicable securities or other laws; provided, however, that no amendment
may be made without the consent of stockholders which would materially (a)
increase the benefits accruing to participants under the Plan, (b) increase the
number of securities which may be issued under the Plan, other than in
accordance with Section 9 hereof, or (c) modify the requirements as to
eligibility for participation in the Plan.
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14. PAYMENT UPON EXERCISE; WITHHOLDING
(i) Shares of Common Stock shall be issued to the Optionee
upon payment in full either in cash or by an exchange of shares of
Common Stock of the Company previously owned by the Optionee, or a
combination of both, in an amount or having a combined value equal to
the aggregate Exercise Price for the shares subject to the option or
portion thereof being exercised. The value of the previously owned
shares of Common Stock exchanged in full or partial payment for the
shares purchased upon the exercise of an option shall be equal to the
Fair Market Value of such shares on the date of the exercise of such
Option. The Optionee shall be entitled to elect to pay all or a portion
of the aggregate purchase price by having shares of Common Stock having
a Fair Market Value on the date of exercise equal to the aggregate
Exercise Price withheld by the Company or sold by a broker-dealer under
circumstances meeting the requirements of 12 C.F.R. Part 220. In
addition, upon the exercise of any option granted under the Plan, the
Company may make financing available to the Optionee for the purchase of
the Common Stock that may be acquired pursuant to the exercise of such
option on such terms as the Committee shall specify.
(ii) The Company may defer making payment or delivery of any
benefits under the Plan until satisfactory arrangements have been made
for the payment of any tax attributable to any amounts payable on shares
deliverable under the Plan. The Optionee shall be entitled to elect to
pay all or a portion of all taxes arising in connection with the
exercise of any option by paying cash or electing to (1) have the
Company withhold shares of Common Stock that were to be issued to the
Optionee upon such exercise, or (2) deliver other shares of Common Stock
previously owned by the Optionee having a Fair Market Value equal to the
amount to be withheld; provided, however, that the amount to be withheld
shall not exceed the Optionee's estimated total federal (including
FICA), state and local tax obligations associated with the transaction.
The Fair Market Value of fractional shares remaining after payment of
the withholding taxes shall be paid to the Optionee in cash.
15. STOCKHOLDER'S APPROVAL
The Plan was approved by the stockholders of the Company on December 4,
1998.
16. LIABILITY OF THE COMPANY
Neither the Company, its directors, officers or employees, nor any of
the Company's Subsidiaries which are in existence or hereafter come into
existence, shall be liable to any Optionee or other person if it is determined
for any reason by the Internal Revenue Service or any court having jurisdiction
that any incentive stock options granted hereunder do not qualify for tax
treatment as incentive stock options under Section 422 of the Code.
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EXHIBIT B
AGREEMENT AND PLAN OF MERGER
This Agreement Plan of Merger (the "Plan") is made and entered into as
of the _____ day of ________, 1998 by and among Collegiate Pacific Inc., a
Pennsylvania corporation ("CP Pennsylvania"), and CP Delaware, a Delaware
corporation ("CP Delaware").
WHEREAS, the parties hereto desire to merge CP Pennsylvania with and
into CP Delaware; and
WHEREAS, the Agreement and the transactions contemplated thereby will
qualify as a reorganization under Section 368(a)(1)(F) of the Internal Revenue
Code of 1986, as amended;
NOW, THEREFORE, the parties to this Plan, in consideration of the mutual
covenants, agreements and provisions hereinafter contained, do hereby prescribe
the terms and conditions of this merger and the mode of carrying the same into
effect as follows:
FIRST: CP Pennsylvania (sometimes hereinafter referred to as the
"Merged Corporation") shall merge with and into CP Delaware (sometimes
hereinafter referred to as the "Surviving Corporation") and CP Delaware shall
be the surviving corporation after this merger (the "Merger").
SECOND: The Articles of Incorporation of CP Delaware, as in effect at
the Effective Time (as defined below), shall continue in full force and effect
as the Articles of Incorporation of the Surviving Corporation.
THIRD: The manner of converting the shares of CP Pennsylvania into
shares of the Surviving Corporation shall be as follows: each share of common
stock of CP Pennsylvania which shall be issued and outstanding immediately
prior to the Effective Time of the Merger shall, by virtue of the Merger,
automatically be converted into one fully paid and non-assessable share of
common stock of the Surviving Corporation, which shall constitute all of the
issued and outstanding shares of common stock of the Surviving Corporation
immediately after the Effective Time of the Merger.
FOURTH: The further terms and conditions of the Merger are as follows:
(a) The Bylaws of CP Delaware, as in effect at the Effective Time,
shall be and remain the Bylaws of the Surviving Corporation until the same
shall be altered, amended or repealed as therein provided.
(b) The Board of Directors of CP Delaware, as of the Effective Time,
shall consist of the persons who are listed on Schedule 1.3 attached hereto and
incorporated herein by this reference, until the next annual meeting of
stockholders and until their successors shall have been duly elected and
qualified.
(c) The officers of CP Delaware, as of the Effective Time, shall
continue in office as the officers of the Surviving Corporation until the next
annual meeting of stockholders and until their successors shall have been duly
elected and qualified.
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(d) At the Effective Time, the employees, if any, of CP Pennsylvania
immediately prior to the Effective Time shall become employees of the Surviving
Corporation, and shall continue to be entitled to rights and benefits
substantially equivalent to those which they enjoyed as employees of CP
Pennsylvania.
(e) The Merger shall be effective as of 12:01 a.m. on ________ ___,
1998 (the "Effective Time").
(e) At the Effective Time, all the property, subsidiaries, rights,
privileges, franchises, patents, trademarks, licenses, registrations and all
other assets of every kind and description of the Merged Corporation shall be
transferred to, vested in and devolve upon the Surviving Corporation without
further act or deed and all property, rights and every other interest of the
Surviving Corporation and the Merged Corporation shall be as effectively the
property of the Surviving Corporation as they were of the Surviving Corporation
and the Merged Corporation, respectively. The Merged Corporation hereby agrees
from time to time, as and when requested by the Surviving Corporation or by its
successors or assigns, to execute and deliver or cause to be executed and
delivered all such deeds and instruments and to take or cause to be taken such
further or other actions as the Surviving Corporation may deem necessary or
desirable in order to vest or perfect in or confirm to the Surviving
Corporation title to and possession of any and all property, rights,
privileges, immunities, powers, franchises and interests of the Merged
Corporation acquired or to be acquired by reason of or as a result of the
Merger, and otherwise to carry out the intent and purposes hereof, and the
proper officers and directors of the Merged Corporation and the proper officers
and directors of the Surviving Corporation are fully authorized in the name of
the Merged Corporation or otherwise to take any and all such action.
(f) The Surviving Corporation shall assume all of the obligations and
liabilities of the Merged Corporation. The assets, liabilities, reserves and
accounts of CP Pennsylvania shall be taken up on the books of the Surviving
Corporation at the amounts at which they are then carried on the books of CP
Pennsylvania, subject to such adjustments or eliminations of intercompany items
as may be appropriate in giving effect to the Merger.
(g) The Surviving Corporation hereby (i) agrees that it may be served
with process in the State of Delaware in any proceeding for the enforcement of
any obligation of the Merged Corporation; (ii) irrevocably appoints the
Secretary of State of Delaware as its agent to accept service of process in any
such proceeding; and (iii) agrees that it will promptly pay to any dissenting
shareholder of the Merged Corporation the amount, if any, to which they shall
be entitled pursuant to the laws of the State of Delaware.
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IN WITNESS WHEREOF, this Plan is executed on the date first written
above.
COLLEGIATE PACIFIC INC.,
a Pennsylvania corporation
By:
----------------------------------------
Michael J. Blumenfeld
President and Chief Executive Officer
CP DELAWARE,
a Delaware corporation
By:
-----------------------------------------
Name: Michael J. Blumenfeld
Title: President and Chief Executive Officer
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EXHIBIT C
CERTIFICATE OF INCORPORATION OF CP DELAWARE
ARTICLE I
The name of the Corporation is Collegiate Pacific Inc.
ARTICLE II
The name of the Corporation's registered agent and the address of its
registered office in the State of Delaware is Corporation Service Company, 1013
Centre Road, Wilmington, New Castle County, Delaware 19805-1297.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
A. The total number of shares of capital stock which the Corporation
shall have the authority to issue is 51,000,000 shares consisting of (a)
1,000,000 shares of Preferred Stock, $.01 par value per share, and (b)
50,000,000 shares of Common Stock, $.01 par value.
B. Designations of Preferred Stock
1. Shares of Preferred Stock may be issued from time to time
in one or more series, each such series to have distinctive serial
designations, as shall hereafter be determined in the resolution or resolutions
providing for the issue of such series from time to time adopted by the Board
of Directors pursuant to the authority which is hereby vested in the Board of
Directors.
2. Each series of Preferred Stock
(i) may have such number of shares;
(ii) may have such voting power, full or limited, or may
be without voting power;
(iii) may be subject to redemption at such time or times
and at such prices;
(iv) may be entitled to receive dividends (which may be
cumulative or noncumulative), payable in cash, securities or property,
at such rate or rates, on such conditions, and at such times, and
payable in preference to, or in such relation to, the dividends payable
in any other class or classes or series of stock;
(v) may be made convertible into, or exchangeable for,
shares of any other class or classes or of any other series of the same
or any other class or classes of stock of the Corporation at such price
or prices or at such rates of exchange, and with such adjustments;
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(vi) may be entitled to the benefit of a sinking fund or
purchase fund to be applied to the purchase or redemption of shares of
such series in such amount or amounts;
(vii) may be entitled to the benefit of conditions and
restrictions upon the creation of indebtedness of the Corporation or any
subsidiary, upon the issue of any additional stock (including additional
shares of such series or of any other series) and upon payment of
dividends or the making of other distributions on, and the purchase,
redemption, or other acquisition by the Corporation or any subsidiary,
of any outstanding stock of the Corporation, or of other affirmative or
negative covenants;
(viii) may have certain rights in the event of voluntary
or involuntary liquidation, dissolution, or winding up of the
Corporation, and relative rights of priority of payment of shares of
that series; and
(ix) may have such other relative, participating,
optional or other special rights and qualifications, limitations or
restrictions thereof;
all as shall be stated in a resolution or resolutions providing for the issue
of such Preferred Stock. Except where otherwise set forth in the resolution or
resolutions adopted by the Board of Directors providing for the issue of any
series of Preferred Stock, the number of shares comprising such series may be
increased or decreased (but not below the number of shares then outstanding)
from time to time by action of the Board of Directors.
ARTICLE V
In furtherance and not limitation of the powers conferred by the laws of
the State of Delaware, the Board of Directors is expressly authorized to alter,
amend or repeal the bylaws of the Corporation or to adopt new bylaws.
ARTICLE VI
The incorporator is Michael S. J. Lozich, whose mailing address is 1717
Main Street, Suite 2800, Dallas, Texas 75201.
ARTICLE VII
The number of directors constituting the initial Board of Directors is
six, and the name and address of the persons who are to serve as directors
until the first annual meeting of the stockholders or until their respective
successors are elected and qualified are:
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<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Michael J. Blumenfeld 13950 Senlac, Suite 200
Farmers Branch, Texas 75235
Jeff Davidowitz 13950 Senlac, Suite 200
Farmers Branch, Texas 75235
Arthur Coerver 13950 Senlac, Suite 200
Farmers Branch, Texas 75235
Robert W. Philip 13950 Senlac, Suite 200
Farmers Branch, Texas 75235
William A. Watkins, Jr. 13950 Senlac, Suite 200
Farmers Branch, Texas 75235
Harvey Rothenberg 13950 Senlac, Suite 200
Farmers Branch, Texas 75235
</TABLE>
ARTICLE VIII
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit. If the Delaware General Corporation Law is
amended after the filing of this Certificate of Incorporation to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE IX
A. Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director or officer of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an employee
benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director or officer
or in any other capacity while serving as a director or officer, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than permitted prior thereto), against all expense,
liability and loss (including, without limitation, attorneys' fees, judgments,
fines, excise taxes or penalties and amounts paid or to be paid in settlement)
incurred or suffered by such indemnitee in connection therewith and such
indemnification
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shall continue with respect to an indemnitee who has ceased to be a director or
officer and shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided in paragraph (B)
hereof with respect to proceedings to enforce rights to indemnification, the
Corporation shall indemnify any such indemnitee in connection with a proceeding
initiated by such indemnitee only if such proceeding was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred
in this Article IX shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition (hereinafter an "advancement of expenses");
provided, however, that, if the Delaware General Corporation Law requires, an
advancement of expenses incurred by an indemnitee shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"),
by or on behalf of such indemnitee, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Article or otherwise.
B. Right of Indemnitee to Bring Suit. If a claim under paragraph
(A) of this Article is not paid in full by the Corporation within sixty days
after a written claim has been received by the Corporation (except in the case
of a claim for an advancement of expenses, in which case the applicable period
shall be twenty days), the indemnitee may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, the indemnitee shall also be
entitled to be paid the expense of prosecuting or defending such suit. In (i)
any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit by
the Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the Corporation shall be entitled to recover such expenses upon
a final adjudication that, the indemnitee has not met the applicable standard
of conduct set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by
the indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled under this Article or otherwise to be indemnified,
or to such advancement of expenses, shall be on the Corporation.
C. Non-Exclusivity of Rights. The rights to indemnification and to
the advancement of expenses conferred in this Article IX shall not be exclusive
of any other right which any person may have or hereafter acquire under this
Certificate of Incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
D. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any indemnitee against any expense, liability or
loss, whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the Delaware General
Corporation Law.
E. Indemnity of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article IX or
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as otherwise permitted under the Delaware General Corporation Law with respect
to the indemnification and advancement of expenses of directors and officers of
the Corporation.
ARTICLE X
No stockholder of the Corporation shall by reason of his holding shares
of any class of its capital stock have any preemptive or preferential right to
purchase or subscribe for any shares of any class of the Corporation, now or
hereafter to be authorized, or any notes, debentures, bonds or other securities
convertible into or carrying warrants, rights or options to purchase shares of
any class or any other security, now or hereafter to be authorized, whether or
not the issuance of any such shares or such notes, debentures, bonds or other
securities would adversely affect the dividend, voting or any other rights of
such stockholder; and the Board of Directors may issue shares of any class of
the Corporation, or any notes, debentures, bonds or other securities
convertible into or carrying warrants, rights or options to purchase shares of
any class, without offering any such shares of any class, either in whole or in
part, to the existing holders of any class of stock of the Corporation.
ARTICLE XI
Cumulative voting for the election of Directors shall not be permitted.
IN WITNESS WHEREOF, the undersigned incorporator of the Corporation
hereby certifies that the facts herein stated are true, and accordingly has
signed this instrument this ____ day of _____, 1998.
--------------------------------
MICHAEL S. J. LOZICH
Incorporator
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EXHIBIT D
BY-LAWS OF CP DELAWARE
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation
shall be in the City of Wilmington, County of New Castle, 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 or as the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of stockholders may be held at
such time and place, within or without the State of Delaware, as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual Meetings. An annual meeting of stockholders shall be
held on such day in each fiscal year of the corporation and at such time and
place as may be fixed by the Board of Directors, at which meeting the
stockholders shall elect a Board of Directors and transact such other business
as may properly be brought before the meeting.
Section 3. Notice of Annual Meeting. Written or printed notice of the
annual meeting, stating the place, day and hour thereof, shall be given to each
stockholder entitled to vote thereat at such address as appears on the books of
the corporation, not less than ten days nor more than sixty days before the
date of the meeting.
Section 4. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or the
certificate of incorporation, may be called by the President, and shall be
called by the President or the Secretary at the request in writing of a
majority of the Board of Directors, or at the request in writing of
stockholders of record owning at least one-tenth (1/10) of all shares issued
and outstanding and entitled to vote at such meeting. Such request shall state
the purpose or purposes of the proposed meeting.
Section 5. Notice of Special Meetings. Written or printed notice of a
special meeting of stockholders, stating the place, day and hour and purpose or
purposes thereof, shall be given to each stockholder entitled to vote thereat
at such address as appears on the books of the corporation, not less than ten
days nor more than sixty days before the date of the meeting.
Section 6. Business at Special Meetings. Business transacted at all
special meetings of stockholders shall be confined to the purpose or purposes
stated in the notice thereof.
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Section 7. Stockholder List. At least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of voting shares held by each, shall be prepared by
the Secretary. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for
such ten day period, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any stockholder during the meeting.
Section 8. Quorum. The holders of a majority of the votes attributed
to the shares of capital stock issued and outstanding and entitled to vote
thereat, represented in person or by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business except as
otherwise provided by statute, the certificate of incorporation or these
bylaws. The stockholders present may adjourn the meeting despite the absence
of a quorum. When a meeting is adjourned for less than thirty days in any one
adjournment and a new record date is not fixed for the adjourned meeting, it
shall not be necessary to give any notice of the adjourned meeting if the time
and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken, and at the adjourned meeting any business may
be transacted that might have been transacted on the original date of the
meeting. When a meeting is adjourned for thirty days or more, or when after
the adjournment a new record date is fixed for the adjourned meeting, notice of
the adjourned meeting shall be given as in the case of an original meeting.
Section 9. Majority Vote. When a quorum is present at any meeting, the
vote of the holders of a majority of the shares having voting power represented
in person or by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of statute, the
certificate of incorporation or these bylaws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question.
Section 10. Proxies. (a) Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
him by proxy, but no such proxy shall be voted or acted upon after three years
from its date, unless the proxy provides for a longer period.
(b) Without limiting the manner in which a stockholder may
authorize another person or persons to act for him as proxy pursuant to
subsection (a) of this Section, the following shall constitute a valid means by
which a stockholder may grant such authority:
(i) A stockholder may execute a writing authorizing
another person or persons to act for him as proxy. Execution may be
accomplished by the stockholder or his authorized officer, director, employee
or agent signing such writing or causing his or her signature to be affixed to
such writing by any reasonable means including, but not limited to, by
facsimile signature.
(ii) A stockholder may authorize another person or
persons to act for him as proxy by transmitting or authorizing the transmission
of a telegram, cablegram, or other means of electronic transmission to the
person who will be the holder of the proxy or to a proxy solicitation firm,
proxy support service organization or like agent duly authorized by the person
who will be the holder of the proxy to receive such transmission, provided that
any such telegram, cablegram or other means of electronic transmission must
either set forth or be submitted with information from which it can be
determined that the telegram, cablegram or other electronic transmission was
authorized by the stockholder. If it is determined that such telegrams,
cablegrams or other electronic transmissions are valid, the
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inspectors or, if there are no inspectors, such other persons making that
determination shall specify the information upon which they relied.
(c) Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to subsection (b)
of this Section may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission.
(d) Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to subsection (b)
of this Section may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission.
Section 11. Voting. Unless otherwise provided by statute or the
certificate of incorporation, each stockholder shall have one vote for each
share of stock having voting power, registered in his name on the books of the
corporation.
Section 12. Consent of Stockholders in Lieu of Meeting. Any action
required to be taken at any annual or special meeting of stockholders, or any
action which may be taken at any annual or special meeting of stockholders, may
be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
such consent or consents are delivered to the corporation. Every written
consent shall bear the date of signatures of each stockholder and no written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent, written consents
signed by a sufficient number of holders to take action are delivered to the
corporation. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 13. Inspectors. (a) The corporation shall, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the meeting
and make a written report thereof. The corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If
no inspector or alternate is able to act at a meeting of stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the shares represented
at a meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors, and
(v) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint
or retain other persons or entities to assist the inspectors in the performance
of the duties of the inspectors.
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(c) The date and time of the opening and the closing of the
polls for each matter upon which the stockholders will vote at a meeting shall
be announced at the meeting. No ballot, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the inspectors after the
closing of the polls unless the Delaware Court of Chancery, upon application by
a stockholder, shall determine otherwise.
(d) In determining the validity and counting of proxies and
ballots, the inspectors shall be limited to an examination of the proxies, any
envelopes submitted with those proxies, any information provided in accordance
with Article II, Section 10(b)(ii), ballots and the regular books and records
of the corporation, except that the inspectors may consider other reliable
information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons
that represent more votes than the holder of a proxy is authorized by the
record owner to cast, or more votes than the stockholder holds of record. If
the inspectors consider other reliable information for the limited purpose
permitted herein, the inspectors at the time they make their certification
pursuant to subsection (b)(v) of this Section shall specify the precise
information considered by them including the person or persons from whom they
obtained the information, when the information was obtained, the means by which
the information was obtained and the basis for the inspector's belief that such
information is accurate and reliable.
Section 14. Advance Notice of Shareholder Proposals. (a) In order to
properly submit any business to an annual meeting of shareholders, a
shareholder must give timely notice in writing to the Secretary of the
corporation. To be considered timely, a shareholder's notice must be delivered
either personally or by certified mail, postage prepaid, and received at the
principal or registered office of the corporation (i) not less than 120 days
nor more than 150 days before the first anniversary date of the corporation's
proxy statement in connection with the last annual meeting of shareholders or
(ii) if no annual meeting has been called after the expiration of more than 30
days from the date for such meeting contemplated at the time of the previous
year's proxy statement, not less than a reasonable time, as determined by the
Board of Directors, prior to the date of the applicable annual meeting.
(b) Nomination of persons for election to the board of
directors may be made by the Board of Directors or any committee designated by
the Board of Directors or by any shareholder entitled to vote for the election
of directors at the applicable meeting of shareholders. However, nominations
other than those made by the Board of Directors or its designated committee
must comply with the procedures set forth in this Section 14, and no person
shall be eligible for election as a director unless nominated in accordance
with the terms of this Section 14. A shareholder may nominate a person or
persons for election to the Board of Directors by giving written notice to the
Secretary of the corporation in accordance with the procedures set forth above.
In addition to the timeliness requirements set forth above for notice to the
corporation by a shareholder of business to be submitted at an annual meeting
of shareholders, with respect to any special meeting of shareholders called for
the election of directors, written notice must be delivered in the manner
specified above and not later than the close of business on the seventh day
following the date on which notice of such meeting is first given to
shareholders.
(c) The Secretary of the corporation shall deliver any
shareholder proposals and nominations received in a timely manner for review by
the Board of Directors or a committee designated by the Board of Directors.
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(d) A shareholder's notice to submit business to an annual
meeting of shareholders shall set forth (i) the name and address of the
shareholder, (ii) the class and number of shares of stock beneficially owned by
such shareholder, (iii) the name in which such shares are registered on the
stock transfer books of the corporation, (iv) a representation that the
shareholder intends to appear at the meeting in person or by proxy to submit
the business specified in such notice, (v) any material interest of the
shareholder in the business to be submitted, and (vi) a brief description of
the business desired to be submitted to the annual meeting, including the
complete text of any resolutions to be presented at the annual meeting, and the
reasons for conducting such business at the annual meeting. In addition, the
shareholder making such proposal shall promptly provide any other information
reasonably requested by the corporation.
(e) In addition to the information required above to be given
by a shareholder who intends to submit business to a meeting of shareholders,
if the business to be submitted is the nomination of a person or persons for
election to the Board of Directors then such shareholder's notice must also set
forth, as to each person whom the shareholder proposes to nominate for election
as a director, (i) the name, age, business address and, if known, residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of stock of the Corporation which
are beneficially owned by such person, (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 by the rules and regulations of
the Securities and Exchange Commission promulgated under the Securities
Exchange Act of 1934, as amended, (v) the written consent of such person to be
named in the proxy statement as a nominee to serve as a director if elected,
and (vi) a description of all arrangements or understandings between such
shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by such shareholder.
(f) Any person nominated for election as director by the Board
of Directors or any committee designated by the Board of Directors shall, upon
the request of the Board of Directors or such committee, furnish to the
Secretary of the Corporation all such information pertaining to such person
that is required to be set forth in a shareholder's notice of nomination.
(g) Notwithstanding the foregoing provisions of this Section
14, a shareholder who seeks to have any proposal included in the corporation's
proxy statement shall comply with the requirements of Regulation 14A under the
Securities Exchange Act of 1934, as amended."
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the corporation shall
be managed by a Board of Directors. The Board may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute,
by the certificate of incorporation or these bylaws directed or required to be
exercised or done by the stockholders.
Section 2. Number of Directors. The number of directors which shall
constitute the whole Board shall be fixed from time to time by resolution of
the Board of Directors, provided that such number shall not be less than three
(3) nor more than nine (9).
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Section 3. Election and Term. Except as provided in Section 4 of this
Article III, directors shall be elected at the annual meeting of the
stockholders, and each director shall be elected to serve until the next annual
meeting and until his successor shall have been elected and shall qualify, or
until his death, resignation or removal from office. Directors need not be
stockholders of the corporation.
Section 4. Vacancies and Newly Created Directorships. If the office of
any director or directors becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office, or otherwise, or the number
of directors constituting the whole Board shall be increased, a majority of the
remaining or existing directors, though less than a quorum, may choose a
successor or successors, or the director or directors to fill the new
directorship or directorships, who shall hold office for the unexpired term in
respect to which such vacancy occurred or, in the case of a new directorship
or directorships, until the next annual meeting of the stockholders.
Section 5. Removal. The stockholders may remove a director either for
or without cause at any meeting of stockholders, provided notice of the
intention to act upon such matter shall have been given in the notice calling
such meeting.
ARTICLE IV
MEETINGS OF THE BOARD
Section 1. First Meeting. The first meeting of each newly elected
Board of Directors shall be held at the location of and immediately following
the annual meeting of stockholders, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present; or the Board may meet at such
place and time as shall be fixed by the consent in writing of all the
directors. All meetings of the Board of Directors may be held at such place,
either within or without the State of Delaware, as from time to time shall be
determined by the Board of Directors.
Section 2. Regular Meetings. Regular meetings of the Board may be held
at such time and place and on such notice, if any, as shall be determined from
time to time by the Board.
Section 3. Special Meetings. Special meetings of the Board may be
called by the President or the Chairman of the Board on twenty-four hours'
notice to each director, delivered either personally or by mail or by telegram
or telecopier. Special meetings shall be called by the President or the
Secretary in like manner and on like notice on the written request of one
director.
Section 4. Quorum and Voting. At all meetings of the Board, a majority
of the directors at the time in office shall be necessary and sufficient to
constitute a quorum for the transaction of business; and the act of a majority
of the directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors, except as may be otherwise specifically provided
by statute, the certificate of incorporation or these bylaws. If a quorum
shall not be present at any meeting of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 5. Telephone Meetings. Directors may attend any meeting of the
Board or any committee thereof by conference telephone, radio, television or
similar means of communication by means of which all persons participating in
the meeting can hear each other, and all members so attending shall be deemed
present at the meeting for all purposes including the determination of whether
a quorum is present.
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Section 6. Action by Written Consent. Any action required or permitted
to be taken by the Board or any committee thereof, under the applicable
provisions of any statute, the certificate of incorporation, or these bylaws,
may be taken without a meeting if a consent in writing, setting forth the
action so taken, is signed by all the members of the Board or committee, as the
case may be.
ARTICLE V
COMMITTEES
Section 1. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the whole Board, may designate one or more directors
to constitute an Executive Committee, which Committee, to the extent provided
in such resolution, shall have and may exercise all of the authority of the
Board of Directors in the business and affairs of the corporation except where
action by the Board of Directors is expressly required by statute. The
Executive Committee shall keep regular minutes of its proceedings and report
the same to the Board when required.
Section 2. Other Committees. The Board of Directors may similarly
create other committees for such terms and with such powers and duties as the
Board deems appropriate.
Section 3. Committee Rules; Quorum. Each committee may adopt rules
governing the method of calling and time and place of holding its meetings.
Unless otherwise provided by the Board of Directors, a majority of any
committee shall constitute a quorum for the transaction of business, and the
act of a majority of the members of such committee present at a meeting at
which a quorum is present shall be the act of such committee.
ARTICLE VI
COMPENSATION OF DIRECTORS
The Board of Directors shall have authority to determine, from time to
time, the amount of compensation, if any, which shall be paid to its members
for their services as directors and as members of committees. The Board shall
also have power in its discretion to provide for and to pay to directors
rendering services to the corporation not ordinarily rendered by directors as
such, special compensation appropriate to the value of such services as
determined by the Board from time to time. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
ARTICLE VII
NOTICES
Section 1. Methods of Notice. Whenever any notice is required to be
given to any stockholder, director or committee member under the provisions of
any statute, the certificate of incorporation or these bylaws, such notice
shall be delivered personally or shall be given in writing by mail addressed to
such stockholder, director or committee member at such address as appears on
the books of the corporation, and such notice shall be deemed to be given at
the time when the same shall be deposited in the United States mail with
postage thereon prepaid. Notice to directors and committee members may also be
given by telegram, which notice shall be deemed to be given at the time it is
delivered to the telegraph office, or by
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telecopy, which notice shall be deemed to be given at the time it is
transmitted or in person, which notice shall be deemed to be given when
received.
Section 2. Waiver of Notice. Whenever any notice is required to be
given to any stockholder, director or committee member under the provisions of
any statute, the certificate of incorporation or these bylaws, a waiver thereof
in writing signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Attendance at any meeting shall constitute a waiver of
notice thereof except as otherwise provided by statute.
ARTICLE VIII
OFFICERS
Section 1. Executive Officers. The executive officers of the
corporation shall consist of at least a President and a Secretary, each of whom
shall be elected by the Board of Directors. The Board of Directors may also
elect as officers of the corporation a Chairman of the Board, one or more Vice
Presidents, one or more of whom may be designated Executive or Senior Vice
Presidents and may also have such descriptive titles as the Board shall deem
appropriate, and a Treasurer. Any two or more offices may be held by the same
person.
Section 2. Election and Qualification. The Board of Directors at its
first meeting after each annual meeting of stockholders shall elect the
officers of the corporation.
Section 3. Other Officers and Agents. The Board may elect or appoint
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, and
such other officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such duties
as shall be determined from time to time by the Board of Directors.
Section 4. Salaries. The salaries of all officers of the corporation
shall be fixed by the Board of Directors except as otherwise directed by the
Board.
Section 5. Term, Removal and Vacancies. The officers of the
corporation shall hold office until their successors are chosen and qualify.
Any officer or agent of the corporation may be removed at any time by the
affirmative vote of a majority of the Board of Directors, or by the President.
Any vacancy occurring in any office of the corporation may be filled by the
Board of Directors or otherwise as provided in this Article.
Section 6. Execution of Instruments. The Chairman of the Board and the
President (and such other officers as are authorized thereunto by resolution of
the Board of Directors) may execute in the name of the corporation bonds,
notes, debentures and other evidences of indebtedness, stock certificates,
deeds, mortgages, deeds of trust, indentures, contracts, leases, agreements and
other instruments, requiring a seal under the seal of the corporation, and may
execute such documents where not requiring a seal, except where such documents
are required by law to be otherwise signed and executed, and except where the
signing and execution thereof shall be exclusively delegated to some other
officer or agent of the corporation.
Section 7. Duties of Officers. The duties and powers of the officers
of the corporation shall be as provided in these bylaws, or as provided for
pursuant to these bylaws, or (except to the extent inconsistent
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with these bylaws or with any provision made pursuant hereto) shall be those
customarily exercised by corporate officers holding such offices.
Section 8. Chairman of the Board. The Chairman of the Board shall
preside when present at all meetings of the Board of Directors. He shall
advise and counsel the other officers of the corporation and shall exercise
such powers and perform such duties as shall be assigned to or required of him
from time to time by the Board of Directors. The Chairman of the Board may, if
so designated by the Board of Directors, be the Chief Executive Officer of the
corporation; in such event he shall have all of the powers granted by the
bylaws to the President and from time to time may delegate all, or any, of his
powers and duties to the President.
Section 9. President. The President shall preside at all meetings of
the stockholders and shall be ex-officio a member of all standing committees,
have general powers of oversight, supervision and management of the business
and affairs of the corporation, and see that all orders and resolutions of the
Board of Directors are carried into effect.
In the event another executive officer has been designated Chief
Executive Officer of the corporation by the Board of Directors, then (i) such
other executive officer shall have all of the powers granted by the bylaws to
the President; and (ii) the President shall, subject to the powers of
supervision and control thereby conferred upon the Chief Executive Officer, be
the chief operating officer of the corporation and shall have all necessary
powers to discharge such responsibility including general supervision of the
affairs of the corporation and general and active control of all of its
business.
The President shall perform all the duties and have all the powers of
the Chairman of the Board in the absence of the Chairman of the Board.
Section 10. Vice Presidents. The Vice Presidents in the order
determined by the Board of Directors shall, in the absence or disability of the
President, perform the duties and exercise the powers of the President, and
shall perform such other duties as the Board of Directors, the Chairman of the
Board and the President may prescribe.
Section 11. Secretary. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all votes
and the minutes of all proceedings in a book to be kept for that purpose and
shall perform like duties for the committees of the Board of Directors when
required. Except as may be otherwise provided in these bylaws, he shall give,
or cause to be given, notice of all 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 and the President. He shall keep in
safe custody the seal of the corporation, if any, and shall have authority to
affix the same to any instrument requiring it, and when so affixed it may be
attested by his signature. The Board of Directors may give general authority
to any other officer to affix the seal of the corporation and to attest the
affixing by his signature. In the absence of the Treasurer and all Assistant
Treasurers, the Secretary shall perform all the duties and have all the powers
of the Treasurer.
Section 12. Assistant Secretaries. The Assistant Secretaries in the
order determined by the Board of Directors shall, in the absence or disability
of the Secretary, perform the duties and exercise the powers of the Secretary
and shall perform such other duties as the Board of Directors, the Chairman of
the Board and President may prescribe. Assistant secretaries may be appointed
by the president without prior approval of the board of directors.
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Section 13. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the Board, taking proper vouchers for such disbursements, and shall render to
the Board of Directors, the Chairman of the Board and the President, whenever
they may require it, an account of all of his transactions as Treasurer and of
the financial condition of the corporation.
Section 14. Assistant Treasurers. The Assistant Treasurers in the
order determined by the Board of Directors shall, in the absence or disability
of the Treasurer, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties as the Board of Directors, the Chairman of
the Board and the President may prescribe.
ARTICLE IX
SHARES AND STOCKHOLDERS
Section 1. Certificates Representing Shares. Every holder of stock in
the corporation shall be entitled to have a certificate, signed by, or in the
name of the corporation by, the Chairman or Vice Chairman of the Board of
Directors, or the President or a Vice President and the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
corporation, certifying the number of shares owned by him in the corporation.
The signature of any such officer may be facsimile. In case any officer who
has signed or whose facsimile signature has been placed upon such certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the corporation with the same effect as if he were such officer at
the date of its issuance. If the corporation shall be authorized to issue more
than one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the General Corporation
Law of the State of Delaware, in lieu of the foregoing requirements, there may
be set forth on the face or back of the certificate which the corporation
shall issue to represent such class or series of stock a statement that the
corporation will furnish without charge to each stockholder who so requests the
designations, preferences and relative, participating, optional or other
special rights of each class or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 2. Transfer of Shares. Subject to valid transfer restrictions
and to stop-transfer orders directed in good faith by the corporation to any
transfer agent to prevent possible violations of federal or state securities
laws, rules or regulations, or for any other lawful purpose, upon surrender to
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 3. Fixing Record Date.
(a) 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, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted by
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the Board of Directors, and which record date shall not be more than sixty nor
less than ten days before the date of such meeting. If no record date is fixed
by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the date on which notice is given,
or, if notice is waived, at the close of business on the date next preceding
the day on which the meeting is held. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the Board
of Directors, and which date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by this Section, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be taken
is delivered to the corporation by delivery to its registered office in the
State of Delaware, its principal place of business, or an officer or agent of
the corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by statute, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to receive any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 4. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of any share or shares to receive dividends, and to vote as such owner,
and for all other purposes as such owner; and the corporation shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Delaware.
Section 5. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates 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 or certificates, 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
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or 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.
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ARTICLE X
INDEMNIFICATION
(a) The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b), or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered
by a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit, or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
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(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this Article X. Such expenses incurred by
other employees or agents may be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this Article X shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Certificate of Incorporation,
any agreement or vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office.
(g) The corporation shall have the 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, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article X.
(h) For purposes of this Article X, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article X with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this Article X, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan;
and references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
Article X.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article X shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
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ARTICLE XI
GENERAL
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, or of the resolutions, if any, providing for any series of stock, may be
declared by the Board of Directors at any meeting thereof, or by the Executive
Committee at any meeting thereof. Dividends may be paid in cash, in property
or in shares of the capital stock of the corporation, subject to the provisions
of the certificate of incorporation or of the resolutions, if any, providing
for any series of stock.
Section 2. Reserves. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, deem
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such other
purpose or purposes as the directors shall think conducive to the interests of
the corporation, and the directors may modify or abolish any such reserve in
the manner in which it was created.
Section 3. Shares of Other Corporations. The Chairman of the Board,
the President and any Vice President is authorized to vote, represent and
exercise on behalf of the corporation all rights incident to any and all shares
of any other corporation or other entity standing in the name of the
corporation. The authority herein granted to said officer may be exercised
either by said officer in person or by any person authorized so to do by proxy
or power of attorney duly executed by said officer. Notwithstanding the above,
however, the Board of Directors, in its discretion, may designate by resolution
any additional person to vote or represent said shares of other corporations
and other entities.
Section 4. Checks. All checks, drafts, bills of exchange or demands
for money of the corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from time to time
designate.
Section 5. Corporate Records. The corporation shall keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its stockholders giving the names and
addresses of all stockholders and the number and class and series, if any, of
shares held by each. All other books and records of the corporation may be
kept at such place or places within or without the State of Delaware as the
Board of Directors may from time to time determine.
Section 6. Fiscal Year. The fiscal year of the corporation shall be
fixed by the Board of Directors; if not so fixed, it shall be the calendar
year.
ARTICLE XII
AMENDMENTS
These bylaws may be altered, amended or repealed or new bylaws may be
adopted at any annual meeting of the stockholders or at any special meeting of
the stockholders at which a quorum is present or represented, by the
affirmative vote of the holders of a majority of the shares entitled to vote at
such meeting and present or represented thereat, or by the affirmative vote of
a majority of the whole Board of Directors at any regular meeting of the Board
or at any special meeting of the Board, provided notice of the proposed
alteration, amendment or repeal or the adoption of new bylaws is set forth in
the notice of such meeting.
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EXHIBIT E
SUBCHAPTER D
PENNSYLVANIA BUSINESS CORPORATION LAW
DISSENTERS RIGHTS
SECTION 1571. APPLICATION AND EFFECT OF SUBCHAPTER.
(a) GENERAL RULE. -- Except as otherwise provided in subsection (b),
any shareholder of a business corporation shall have the right to
dissent from, and to obtain payment of the fair value of his
shares in the event of, any corporate action, or to otherwise
obtain fair value for his shares, where this part expressly
provides that a shareholder shall have the rights and remedies
provided in this subchapter. See:
Section 1906(c) (relating to dissenters rights upon
special treatment).
Section 1930 (relating to dissenters rights).
Section 1931(d) (relating to dissenters rights in share
exchanges).
Section 1932(c) (relating to dissenters rights in asset
transfers).
Section 1952(d) (relating to dissenters rights in
division).
Section 1962(c) (relating to dissenters rights in
conversion).
Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a
restriction or transfer of a security is held
invalid).
Section 2325(b) (relating to minimum vote requirement).
Section 2704(c) (relating to dissenters rights upon
election).
Section 2705(d) (relating to dissenters rights upon
renewal of election).
Section 2907(a) (relating to proceedings to terminate
breach of qualifying conditions).
Section 7104(b)(3) (relating to procedure).
(b) EXCEPTIONS. --
(1) Except as otherwise provided in paragraph (2), the holders
of the shares of any class or series of shares that, at
the record date fixed to determine the shareholders
entitled to notice of and to vote at the meeting at which
a plan specified in any of section 1930, 1931(d), 1932(c)
or 1952(d) is to be voted on, are either:
(i) listed on a national securities exchange; or
(ii) held of record by more than 2,000 shareholders;
shall not have the right to obtain payment of
the fair value of any such shares under this
subchapter.
(2) Paragraph (1) shall not apply to and dissenters rights
shall be available without regard to the exception
provided in that paragraph in the case of:
(i) Shares converted by a plan if the shares are not
converted solely into shares of the acquiring,
surviving, new or other corporation or solely into
such shares and money in lieu of fractional shares.
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(ii) Shares of any preferred or special class unless the
articles, the plan or the terms of the transaction
entitle all shareholders of the class to vote
thereon and require for the adoption of the plan or
the effectuation of the transaction of affirmative
vote of a majority of the votes cast by all
shareholders of the class.
(iii) Shares entitled to dissenters rights under section
1906(c) (relating to dissenters rights upon special
treatment).
(3) The shareholders of a corporation that acquires by
purchase, lease, exchange or other disposition all or
substantially all of the shares, property or assets of
another corporation by the issuance of shares, obligations
or otherwise, with or without assuming the liabilities of
the other corporation and with or without the intervention
of another corporation or other person, shall not be
entitled to the rights and remedies of dissenting
shareholders provided in this subchapter regardless of the
fact, if it be the case, that the acquisition was
accomplished by the issuance of voting shares of the
corporation to be outstanding immediately after the
acquisition sufficient to elect a majority or more of the
directors of the corporation.
(c) GRANT OF OPTIONAL DISSENTERS RIGHTS. -- The bylaws or a
resolution of the board of directors may direct that all or a
part of the shareholders shall have dissenters rights in
connection with any corporate action or other transaction that
would otherwise not entitle such shareholders to dissenters
rights.
(d) NOTICE OF DISSENTERS RIGHTS. -- Unless otherwise provided by
statute, if a proposed corporate action that would give rise to
dissenters rights under this subpart is submitted to a vote at a
meeting of shareholders, there shall be included in or enclosed
with the notice of meeting:
(1) a statement of the proposed action and a statement that
the shareholders have a right to dissent and obtain
payment of the fair value of their shares by complying
with the terms of the subchapter; and
(2) a copy of this subchapter.
(e) OTHER STATUTES. -- The procedures of this subchapter shall also
be applicable to any transaction described in any statute other
than this part that makes reference to this subchapter for the
purpose of granting dissenters rights.
(f) CERTAIN PROVISIONS OF ARTICLES INEFFECTIVE. -- This subchapter
may not be relaxed by any provision of the articles.
(g) CROSS REFERENCES. -- See sections 1105 (relating to restriction
on equitable relief), 1904 (relating to de facto transaction
doctrine abolished) and 2512 (relating to dissenters rights
procedure).
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SECTION 1572. DEFINITIONS.
The following words and phrases when used in this subchapter shall have the
meanings given to them in this section unless the context clearly indicates
otherwise:
"CORPORATION." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation,
division, conversion or otherwise of that issuer. A plan of division may
designate which of the resulting corporations is the successor corporation for
the purposes of this subchapter. The successor corporation in a division shall
have sole responsibility for payments to dissenters and other liabilities under
this subchapter except as otherwise provided in the plan of division.
"DISSENTER." A shareholder or beneficial owner who is entitled to and
does assert dissenters rights under this subchapter and who has performed every
act required up to the time involved for the assertion of those rights.
"FAIR VALUE." The fair value of shares immediately before the
effectuation of the corporate action to which the dissenter objects, taking
into account all relevant factors, but excluding any appreciation or
depreciation in anticipation of the corporate action.
"INTEREST". Interest from the effective date of the corporate action
until the date of payment at such rate as is fair and equitable under all the
circumstances, taking into account all relevant factors, including the average
rate currently paid by the corporation on its principal bank loans.
SECTION 1573. RECORD AND BENEFICIAL HOLDERS AND OWNERS.
(a) RECORD HOLDERS OF SHARES. -- A record holder of shares of a
business corporation may assert dissenters rights as to fewer
than all of the shares registered in his name only if he dissents
with respect to all the shares of the same class or series
beneficially owned by any one person and discloses the name and
address of the person or persons on whose behalf he dissents. In
that event, his rights shall be determined as if the shares as to
which he has dissented and his other shares were registered in
the names of different shareholders.
(b) BENEFICIAL OWNERS OF SHARES. -- A beneficial owner of shares of a
business corporation who is not the record holder may assert
dissenters rights with respect to shares held on his behalf and
shall be treated as a dissenting shareholder under the terms of
this subchapter if he submits to the corporation not later than
the time of the assertion of dissenters rights a written consent
of the record holder. A beneficial owner may not dissent with
respect to some but less than all shares of the same class or
series owned by the owner, whether or not the shares so owned by
him are registered in his name.
SECTION 1574. NOTICE OF INTENTION TO DISSENT.
If the proposed corporate action is submitted to a vote at a meeting of
shareholders of a business corporation, any person who wishes to dissent and
obtain payment of the fair value of his shares must file with the corporation,
prior to the vote, a written notice of intention to demand that he be paid the
fair value for his shares if the proposed action is effectuated, must effect no
change in the beneficial ownership of his shares from the date of such filing
continuously through the effective date of the proposed action and must refrain
from voting his shares in approval of such action. A dissenter who fails in
any respect shall not
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acquire any right to payment of the fair value of his shares under this
subchapter. Neither a proxy nor a vote against the proposed corporate action
shall constitute the written notice required by this section.
SECTION 1575. NOTICE TO DEMAND PAYMENT.
(a) GENERAL RULE. -- If the proposed corporate action is approved by
the required vote at a meeting of shareholders of a business
corporation, the corporation shall mail a further notice to all
dissenters who gave due notice of intention to demand payment of
the fair value of their shares and who refrained from voting in
favor of the proposed action. If the proposed corporate action
is to be taken without a vote of shareholders, the corporation
shall send to all shareholders who are entitled to dissent and
demand payment of the fair value of their shares a notice of the
adoption of the plan or other corporate action. In either case,
the notice shall:
(1) State where and when a demand for payment must be sent and
certificates for certificated shares must be deposited in
order to obtain payment.
(2) Inform holders of uncertificated shares to what extent
transfer of shares will be restricted from the time that
demand for payment is received.
(3) Supply a form for demanding payment that includes a
request for certification of the date on which the
shareholder, or the person on whose behalf the shareholder
dissents, acquired beneficial ownership of the shares.
(4) Be accompanied by a copy of this subchapter.
(b) TIME FOR RECEIPT OF DEMAND FOR PAYMENT. -- The time set for
receipt of the demand and deposit of certificated shares shall be
not less than 30 days from the mailing of the notice.
SECTION 1576. FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC.
(a) EFFECT OF FAILURE OF SHAREHOLDER TO ACT. -- A shareholder who
fails to timely demand payment, or fails (in the case of
certificated shares) to timely deposit certificates, as required
by a notice pursuant to section 1575 (relating to notice to
demand payment) shall not have any right under this subchapter to
receive payment of the fair value of his shares.
(b) RESTRICTION ON UNCERTIFICATED SHARES. -- If the shares are not
represented by certificates, the business corporation may
restrict their transfer from the time of receipt of demand for
payment until effectuation of the proposed corporate action or
the release of restrictions under the terms of section 1577(a)
(relating to failure to effectuate corporate action).
(c) RIGHTS RETAINED BY SHAREHOLDER. -- The dissenter shall retain all
other rights of a shareholder until those rights are modified by
effectuation of the proposed corporate action.
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SECTION 1577. RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES.
(a) FAILURE TO EFFECTUATE CORPORATE ACTION. -- Within 60 days after
the date set for demanding payment and depositing certificates,
if the business corporation has not effectuated the proposed
corporate action, it shall return any certificates that have been
deposited and release uncertificated shares from any transfer
restrictions imposed by reason of the demand for payment.
(b) RENEWAL OF NOTICE TO DEMAND PAYMENT. -- When uncertificated
shares have been released from transfer restrictions and
deposited certificates have been returned, the corporation may at
any later time send a new notice conforming to the requirements
of section 1575 (relating to notice to demand payment), with like
effect.
(c) PAYMENT OF FAIR VALUE OF SHARES. -- Promptly after effectuation
of the proposed corporate action, or upon timely receipt of
demand for payment if the corporate action has already been
effectuated, the corporation shall either remit to dissenters who
have made demand and (if their shares are certificated) have
deposited their certificates the amount that the corporation
estimates to be the fair value of the shares, or give written
notice that no remittance under this section will be made. The
remittance or notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the
issuer of the shares held or owned by the dissenter for a
fiscal year ending not more than 16 months before the date
of remittance or notice together with the latest available
interim financial statements.
(2) A statement of the corporation's estimate of the fair
value of the shares.
(3) A notice of the right of the dissenter to demand payment
or supplemental payment, as the case may be, accompanied
by a copy of this subchapter.
(d) FAILURE TO MAKE PAYMENT. -- If the corporation does not remit the
amount of its estimate of the fair value of the shares as
provided by subsection (c), it shall return any certificates that
have been deposited and release uncertificated shares from any
transfer restrictions imposed by reason of the demand for
payment. The corporation may make a notation on any such
certificate or on the records of the corporation relating to any
such uncertificated shares that such demand has been made. If
shares with respect to which notation has been so made shall be
transferred, each new certificate issued therefor or the records
relating to any transferred uncertificated shares shall bear a
similar notation, together with the name of the original
dissenting holder or owner of such shares. A transferee of such
shares shall not acquire by such transfer any rights in the
corporation other than those that the original dissenter had
after making demand for payment of their fair value.
SECTION 1578. ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES.
(a) GENERAL RULE. -- If the business corporation gives notice of its
estimate of the fair value of the shares, without remitting such
amount, or remits payment of its estimate of the fair value of a
dissenter's shares as permitted by section 1577(c) (relating to
payment of
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fair value of shares) and the dissenter believes that the amount
stated or remitted is less than the fair value of his shares, he
may send to the corporation his own estimate of the fair value of
the shares, which shall be deemed a demand for payment of the
amount or the deficiency.
(B) EFFECT OF FAILURE TO FILE ESTIMATE. -- Where the dissenter does
not file his own estimate under subsection (a) within 30 days
after the mailing by the corporation of its remittance or notice,
the dissenter shall be entitled to no more than the amount stated
in the notice or remitted to him by the corporation.
SECTION 1579. VALUATION PROCEEDINGS GENERALLY.
(a) GENERAL RULE. -- Within 60 days after the latest of:
(1) effectuation of the proposed corporate action;
(2) timely receipt of any demands for payment under section
1575 (relating to notice to demand payment); or
(3) timely receipt of any estimates pursuant to section 1578
(relating to estimate by dissenter of fair value of
shares); if any demands for payment remain unsettled, the
business corporation may file in court an application for
relief requesting that the fair value of the shares be
determined by the court.
(b) MANDATORY JOINDER OF DISSENTERS. -- All dissenters, wherever
residing, whose demands have not been settled shall be made
parties to the proceeding as in an action against their shares.
A copy of the application shall be served on each such dissenter.
If a dissenter is a nonresident, the copy may be served on him in
the manner provided or prescribed by or pursuant to 42 Pa.C.S.
Ch. 53 (relating to bases of jurisdiction and interstate and
international procedure).
(c) JURISDICTION OF THE COURT. -- The jurisdiction of the court shall
be plenary and exclusive. The court may appoint an appraiser to
receive evidence and recommend a decision on the issue of fair
value. The appraiser shall have such power and authority as may
be specified in the order of appointment or in any amendment
thereof.
(d) MEASURE OF RECOVER. -- Each dissenter who is made a party shall
be entitled to recover the amount by which the fair value of his
shares is found to exceed the amount, if any, previously
remitted, plus interest.
(e) EFFECT OF CORPORATION'S FAILURE TO FILE APPLICATION. -- If the
corporation fails to file an application as provided in
subsection (a), any dissenter who made a demand and who has not
already settled his claim against the corporation may do so in
the name of the corporation at any time within 30 days after the
expiration of the 60-day period. If a dissenter does not file an
application within the 30-day period, each dissenter entitled to
file an application shall be paid the corporation's estimate of
the fair value of the shares and no more, and may bring an action
to recover any amount not previously remitted.
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SECTION 1580. COSTS AND EXPENSES OF VALUATION PROCEEDINGS.
(a) GENERAL RULE. -- The costs and expenses of any proceeding under
section 1579 (relating to valuation proceedings generally),
including the reasonable compensation and expenses of the
appraiser appointed by the court, shall be determined by the
court and assessed against the business corporation except that
any part of the costs and expenses may be apportioned and
assessed as the court deems appropriate against all or some of
the dissenters who are parties and whose action in demanding
supplemental payment under section 1578 (relating to estimate by
dissenter of fair value of shares) the court find to be dilatory,
obdurate, arbitrary, vexatious or in bad faith.
(b) ASSESSMENT OF COUNSEL FEES AND EXPERT FEES WHERE LACK OF GOOD
FAITH APPEARS. -- Fees and expenses of counsel and of experts for
the respective parties may be assessed as the court deems
appropriate against the corporation and in favor of any or all
dissenters if the corporation failed to comply substantially with
the requirements of this subchapter and may be assessed against
either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees
and expenses are assessed acted in bad faith or in a dilatory,
obdurate, arbitrary or vexatious manner in respect to the rights
provided by this subchapter.
(c) AWARD OF FEES FOR BENEFITS TO OTHER DISSENTERS. -- If the court
finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and
should not be assessed against the corporation, it may award to
those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
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EXHIBIT F
SHAREHOLDER'S NOTICE OF EXERCISE OF DISSENTERS RIGHTS
THIS FORM IS TO BE USED ONLY BY COLLEGIATE PACIFIC INC. SHAREHOLDERS WHO WANT
TO EXERCISE THEIR DISSENTERS RIGHTS. SHAREHOLDERS WHO WANT TO SURRENDER THEIR
CERTIFICATES FOR SHARES OF COLLEGIATE PACIFIC INC., A PENNSYLVANIA CORPORATION,
FOR CERTIFICATES REPRESENTING AN EQUAL NUMBER OF SHARES OF COLLEGIATE PACIFIC
INC., A DELAWARE CORPORATION, AS PROVIDED IN THE MERGER AGREEMENT DESCRIBED IN
THE ACCOMPANYING PROXY STATEMENT SHOULD NOT COMPLETE THIS FORM.
To: Collegiate Pacific Inc.
13950 Senlac
Suite 200
Farmers Branch, Texas 75235
ATTN: Corporate Secretary
The undersigned hereby demands payment, pursuant to Chapter 15,
Subchapter D (Dissenters Rights) of the Pennsylvania Business Corporation Law
of 1988, with respect to the number of shares of stock of Collegiate Pacific
Inc. ( the "Shares") described below:
<TABLE>
<CAPTION>
Total Number of Shares Date of Acquisition of
Certificate Represented by Shares Represented by
Number(s) Certificate(s) Certificate(s)
<S> <C> <C>
------------- ---------------------- ----------------------
</TABLE>
The undersigned dissenting shareholder hereby certifies that the date(s)
on which the undersigned dissenting shareholder, or the person on whose behalf
the undersigned dissenting shareholder dissents, acquired beneficial ownership
of the Shares described above, correspond(s) with the date(s) appearing under
"Date of Acquisition of Shares Represented by Certificate(s)." The undersigned
dissenting shareholder understands that in order to exercise dissenters rights,
certificates representing the Shares must be deposited with Collegiate Pacific
Inc. at the above address, on or before [January 4], 1998.
--------------------------------------
Signature of Dissenting Shareholder
Dated: Name:
-------------------- ---------------------------------------
Address:
------------------------------------
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F-1
<PAGE> 65
EXHIBIT G
[FRONT OF PROXY CARD]
COLLEGIATE PACIFIC INC.
BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS AT
10:00 A.M., FRIDAY, DECEMBER 4, 1998
The undersigned stockholder of Collegiate Pacific Inc. (the "Company")
hereby appoints [______________________________], or any of them, as proxies,
each with full powers of substitution, to vote the shares of the undersigned at
the above-stated Annual Meeting and at any adjournment(s) thereof:
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS:
[ ] FOR the nominee listed below [ ] WITHHOLD AUTHORITY
(except as provided to the contrary below) to vote for the nominee listed below
Michael J. Blumenfeld
Arthur J. Coerver
Jeff Davidowitz
Robert W. Philip
Harvey Rothenberg
William A. Watkins, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee(s), write that nominee's name on the space
provided below):
----------------------------------------------------------------------------------------------------------------------
(2) Approval of the 1998 Collegiate Pacific Inc. Stock Option Plan:
FOR [ ]AGAINST [ ]ABSTAIN [ ]
(3) Approval of the merger agreement and reincorporating the Company under the laws of Delaware:
FOR [ ]AGAINST [ ]ABSTAIN [ ]
(4) On any other business that may properly come before the meeting; hereby revoking any proxy or proxies heretofore
given by the undersigned.
(Please sign on the reverse side)
- ------------------------------------------------------------------------------------------------------------------------------------
[BACK OF PROXY CARD]
--------------------
(Continued from reverse side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON
THE REVERSE SIDE. IF A CHOICE IS NOT INDICATED WITH RESPECT TO ITEMS (1), (2) AND (3), THIS PROXY WILL BE VOTED "FOR" SUCH ITEMS.
THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN ITEM (4). THIS PROXY IS REVOCABLE AT ANY TIME
BEFORE IT IS EXERCISED.
Receipt herewith of the Company's Annual Report and Notice of Meeting and Proxy
Statement, dated ________ __, 1998, is hereby acknowledged.
Dated: , 1998.
------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
(Signature of Stockholder(s))
(Joint owners must EACH sign. Please sign EXACTLY as your
name(s) appear(s) on this card. When signing as attorney,
trustee, executor, administrator, guardian or corporate officer,
please give your FULL title.)
PLEASE SIGN, DATE AND MAIL TODAY.
</TABLE>
F-2
