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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement [ ] Confidential, for Use of the
[ ] Definitive Information Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14c-5(d)(2)
United Petroleum Corporation
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii) or 14c-5(g).
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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UNITED PETROLEUM CORPORATION
4867 North Broadway
Knoxville, Tennessee 37928
INFORMATION STATEMENT
This Information Statement is being mailed to stockholders of United
Petroleum Corporation, a Delaware corporation (the "Company"), on or about
January 25, 1997, in connection with the authorization, by a majority of the
Company's stockholders as of December 3, 1996, of the following corporate
actions by written consent without a meeting:
(1) The amendment of the Company's Certificate of Incorporation (the
"Certificate") to authorize the creation of a new class of 10 million
shares of preferred stock issuable by the Board of Directors in classes
or series;
(2) The amendment of the Certificate to provide for a classified Board of
Directors and related matters, including:
(a) classify the Board of Directors into three classes, as nearly equal
in number as possible;
(b) provide that directors may be removed only for cause with the
approval of the holders of at least 75% of the voting power of the
Company entitled to vote generally in the election of the
directors;
(c) provide that any vacancy on the Board shall be filled by a majority
of the directors then in office, although less than a quorum;
(d) require that a special meeting of stockholders can only be called
by the chairman, the Board of Directors or at the request of the
holders of at least 35% of the shares entitled to vote at the
special meeting;
(e) require advance notice of stockholder introduction of business at
stockholder meetings; and
(f) increase the stockholder vote required to alter, amend or repeal
the foregoing amendments to the Certificate from a majority to 75%
of the voting power of the Company.
(3) The classification of the directors (subject to the adoption of
Proposal 2(a) above); and
(4) The amendment of the Certificate to clarify that the Company is
authorized to engage in any activity allowed by law.
(5) To increase the size of the Board from five (5) to seven (7) members.
We Are Not Asking You for a Proxy, and You are Requested Not to Send Us a Proxy.
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The purpose of proposal 1 (authorization of a new class of 10 million
shares of Preferred Stock) is to enhance the flexibility of the Company's
capital structure by giving the Company the ability to issue senior securities
from time to time with differing terms, determined by the Board of Directors at
the time of issuance, in response to specifically negotiated transactions.
The purpose of proposals 2 (a)-(f) (to provide for a classified Board of
Directors and related matters such as increasing the size of the Board to seven
members) and proposal 3 (to classify directors) is to enhance the likelihood of
continuity and stability of the Company's policies in the future, since a
majority of the directors at any given time will have prior experience as
directors. In addition, the Board believes these proposed amendments will permit
it to represent more effectively the interests of all stockholders in a variety
of situations, including response to circumstances created by demands or actions
by a substantial stockholder or stockholder group.
The purpose of proposal 4 (business purposes) is to modernize the
Certificate, which presently provides that the Company business shall be energy
development and related services, to cover the various activities in which the
Company presently is engaged and to give the Company the flexibility, should the
Board of Directors so elect, to broaden the Company's business, consistent with
the broad powers granted to most modern corporations.
The purpose of proposal 5 is to increase the size of the Board from five
(5) to seven (7) members such that the Company will have better representation
on the Board in the various areas in which the Company conducts business.
All five proposals were approved unanimously by the Board of Directors on
September 18, 1996. The Board unanimously recommended approval of the proposals
by stockholders. On December 3, 1996, shareholders beneficially owning 4,263,621
shares representing approximately 55% of the Company's outstanding Common
Stock, signed a written consent approving the proposals. Under Delaware law,
such written consent is sufficient to constitute the required stockholder
approval of the proposals. This Information Statement is being sent to
stockholders in connection with such approval, in compliance with applicable
requirements of Delaware law and rules and regulations of the Securities and
Exchange Commission. It is anticipated that a certificate of amendment
implementing the proposed amendments to the Company's Certificate set forth in
proposals 1, 2 and 4 will be filed with the Delaware Department of State on or
about February 15, 1997, whereupon such amendments will take effect.
VOTING SECURITIES
The record of stockholders entitled to act by written consent was taken at
the close of business on December 3, 1996 (the "Record Date"). At such date, the
Company had outstanding and entitled to vote 7,628,975 shares of Common Stock,
$0.01 par value (the "Common Stock"). Each share of Common Stock entitles the
holder to one vote.
The following table sets forth information, to the best of the Company's
knowledge, relating to the beneficial ownership of Common Stock as of the Record
Date of (i) each person known to the Company to be the beneficial owner of more
than 5% of the Common Stock, (ii) each director and executive officer, and (iii)
all directors and executive officers as a group. Except as otherwise indicated,
the persons shown exercise sole voting and investment power over the shares.
Where indicated in footnotes to the table, share ownership includes shares
subject to options that are presently exercisable or will become exercisable
within 60 days of the date of this Information Statement.
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Shares of Common Stock Percentage
Name of Beneficial Owner Beneficially Owned of Class
- ------------------------ ---------------------- ----------
Strategic Holdings Corp. [2,154,407] 28.2%
Michael F. Thomas [3,297,548](1) 43.2%
Dwight S. Thomas [83,334](2) *
Walter L. Helton [90,000](3) 1.2%
Donald D. Patton [150,000](4) 1.9%
Neal S. Melnick [50,000](5) *
Arthur H. VanBuren [50,000](6) *
L. Douglas Keene. Jr. [271,870](7) 3.6%
All Directors and Officers [3,992,752](8) 52.3%
as a Group (7 persons)
- ---------------
* Less than 1%.
Footnotes:
(1) Consists of 2,114,214 shares held directly and options to purchase
1,183,334 shares.
(2) Consists of options to purchase shares. Dwight Thomas is a cousin of Michael
F. Thomas.
(3) Consists of 40,000 shares held directly and options to purchase 50,000
shares.
(4) Consists of options to purchase shares.
(5) Consists of options to purchase shares.
(6) Consists of options to purchase shares.
(7) Consists of 21,870 shares held directly and options to purchase
250,000 shares.
(8) Consists of 2,176,084 shares held directly and options to purchase
1,816,668 shares.
PROPOSAL 1:
AMENDMENT OF COMPANY'S CERTIFICATE TO AUTHORIZE
10 MILLION SHARES OF PREFERRED STOCK
General
The proposed amendment to Article 4 of the Certificate would authorize the
Company to issue Preferred Stock, $0.01 par value, consisting of 10 million
shares, issuable by action of the Board of Directors in classes or series.
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The Common Stock is the Company's only class of capital stock which is
currently authorized. As of the Record Date, 50 million shares of Common Stock
were authorized, of which 7,628,975 shares were issued and outstanding. The
proposed Preferred Stock could be issued by the Board of Directors from time to
time, in one or more classes or series, with such designations, voting powers,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations and restrictions thereof as the Board of Directors
may determine. Terms of each series would include (a) the distinctive
designation of each series and the number of shares that will constitute such
series; (b) the dividend rate for such series; (c) the price at which, and the
terms and conditions on which, the shares of such series may be redeemed, if
such shares are redeemable; (d) the purchase or sinking fund provisions, if any,
for the purchase or redemption of shares of such series; (e) any preferential
amount payable upon each share of such series in the event of the liquidation,
dissolution or winding up of the Company; (f) the voting rights, if any, of
shares of such series; (g) the terms and conditions, if any, upon which shares
of such series may be converted into shares of other classes or series of shares
of the Company or other securities; and (h) the relative rights of priority of
each series of Preferred Stock as to dividends and assets. Holders of Preferred
Stock will not be entitled, as a matter right, to preemptive rights or rights to
subscribe for any other securities of the Company, except as may be specifically
provided by the Board in designating a class or series of Preferred Stock. Prior
to the issuance of any shares of any class or series of Preferred Stock,
resolutions of the Board of Directors establishing the class or series and
determining its relative rights and preferences must be filed with the Delaware
Department of State as part of a certificate of designations.
The full text of the proposed amendment to Article 4 of the Certificate is
attached to this Information Statement as Exhibit A, which stockholders are
urged to read carefully.
Purposes and Effects of the Amendment
At the date of this Information Statement, the Company has no agreements or
commitments with respect to the sale or issuance of the additional shares of
Preferred Stock. The Board believes that it is desirable to have authorized
shares of Preferred Stock available for possible future financing and
acquisition transactions and other corporate purposes. Having such authorized
shares available for issuance in the future would give the Company greater
flexibility by allowing shares of Preferred Stock to be issued without the
expense and delay of a special stockholders' meeting, with specific rights and
preferences tailored to the circumstances applicable at the time. For example,
the Board could tailor dividend and redemption rights in response to specific
terms negotiated by investors. Shares of Preferred Stock would be available for
issuance without further action by the stockholders, unless such action is
required by applicable law or the rules of any stock exchange on which the
Company's securities may be listed.
Classes or series of Preferred Stock may have priority over the Common
Stock in the payment of dividends and/or liquidating distributions, to the
extent determined by the Board of Directors in designating such classes or
series. Holders of Common Stock also could experience dilution through the
conversion into Common Stock of any class or series of Preferred Stock that is
convertible into Common Stock.
The authorized but unissued shares of Preferred Stock which could be used
to facilitate the conversion of certain debt of the Company into equity which
would be in the best interest of the Company. Said shares could also be used to
make more difficult a change in control of the Company. Under certain
circumstances such shares could be used to create voting impediments or to
frustrate persons seeking to effect a hostile takeover or otherwise gain control
of the Company.
Certain companies have issued preferred stock or warrants or other rights
to acquire preferred stock or common stock to the holders of their common stock
pursuant to rights plans having terms designed to protect against the adverse
consequences to stockholders of partial takeovers and front-end loaded two-step
takeovers and freezeouts. The purpose of such a rights plan is to ensure that
stockholders receive a fair price for their shares in the event of a takeover,
by requiring any person who seeks to acquire a significant block of the
Company's stock to obtain a waiver of the rights plan from the board of the
directors. The Company's Board of Directors is considering adopting
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a rights plan for the Company, and assuming that such a plan is adopted, the
authorized and unissued Preferred Stock would be available for issuance pursuant
thereto.
Assuming that the proposed amendments to the Certificate discussed in
proposal 2 under the caption "Amendments to Certificate to Provide for a
Classified Board of Directors and Related Matters" are adopted, any proposal to
remove directors opposed by the incumbent Board, or any alteration, amendment or
repeal of the provisions that will be added to the Certificate by the proposed
amendments will require the affirmative vote of the holders of 75% of the voting
power of the capital stock of the Company which is entitled to vote generally in
the election of directors. Although the Board presently has no intention of
doing so, shares of authorized but unissued Preferred Stock could (within the
limits imposed by applicable law and the rules of any stock exchange on which
the Company's securities may be listed) be issued to a holder that would thereby
have sufficient voting power to assure that any such proposal would not receive
the 75% stockholder vote required therefor by the proposed amendments. For
information with respect to the ownership of shares (including shares issuable
upon exercise of stock options) of the Common Stock by directors and executive
officers and the Company's principal stockholders, see "Voting Securities."
PROPOSAL 2:
AMENDMENTS TO CERTIFICATE TO PROVIDE FOR
A CLASSIFIED BOARD OF DIRECTORS AND RELATED MATTERS
General
Additional proposed amendments to the Company's Certificate would (a)
classify the Board of Directors into three classes, as nearly equal in number as
possible, each of which, after an interim arrangement, will serve for three
years, with one class being elected each year; (b) provide that directors may be
removed only with the approval of the holders of at least 75% of the voting
power of the Company entitled to vote generally in the election of directors;
(c) provide that any vacancy on the Board shall be filled by the majority of the
directors then in office, though less than a quorum; (d) require that special
meetings of stockholders can only be called by the Chairman of the Board, the
Board of Directors or upon the request of the holders of at least 35% of the
shares entitled to vote at the meeting; (e) require advance notice of
stockholder introduction of business at stockholder meetings; and (f) increase
the stockholder vote required to alter, amend or repeal the foregoing amendments
or related amendments to the By-Laws from a majority to 75% of the voting power
of the Company entitled to vote generally for the election of directors.
As more fully discussed below, the Board of Directors believes the proposed
amendments, taken together, would enhance the likelihood of continuity and
stability in the composition of the Company's Board of Directors and in the
policies formulated by the Board, and, at the same time, effectively reduce the
possibility that a third party could effect a sudden or surprise change in
majority control of the Company's Board of Directors without the support of the
incumbent Board. The Board of Directors believes that the proposed amendments
would promote fair treatment of the Company's stockholders in takeover
situations and reduce operational disruptions from such events. However,
adoption of the proposed amendments may have significant effects on the ability
of stockholders of the Company to change the composition of the incumbent Board
of Directors and to benefit from certain transactions which are opposed by the
incumbent Board. Accordingly, stockholders are urged to read carefully the
following sections of this Information Statement, which describe the amendments
and their purposes and effects, and Exhibit A hereto, which sets forth the full
text of the proposed amendments to the Certificate.
The proposed amendments are not being adopted in direct response to any
specific effort of which the Company is aware to obtain control of the Company.
The Certificate and the By-Laws do not now contain any provision intended by the
Company to have or, to the knowledge of the Board of Directors having, an
anti-takeover effect.
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Item 2(a) - Amendment of Certificate to Provide for Classification of the
Board of Directors. The By-Laws now provide that all directors are to be elected
to the Company's Board of Directors annually for a term of one year. The By-Laws
authorize the number of directors to be increased or decreased from time to time
to a number between three and eight. The proposed new Article 6 of the
Certificate (as set forth in Exhibit A) provides that the Board shall be divided
into three classes of directors, each class to be as nearly equal in number of
directors as possible. If Proposal 2(a) is adopted, the Company's directors will
be divided into three classes, and two director will serve for a term expiring
at the 1997 annual meeting of stockholders, two directors will serve for a term
expiring at the 1998 annual meeting of stockholders and the remaining three
directors will serve for a term expiring at the 1999 annual meeting of
stockholders (in each case, until their respective successors are duly elected
and qualified). If the proposed amendment is adopted, the By-Laws will be
amended to be consistent with the proposed Certificate amendment relating to
classification of the Board.
The Certificate does not permit cumulative voting in the election of
directors. Accordingly, the holders of a majority of the voting power of the
outstanding shares of Common Stock could now elect all of the directors being
elected at any annual or special meeting of the Company's stockholders. However,
the classification of the Board pursuant to the proposed amendments will apply
to every election of directors, whether or not a change in control of the
Company has occurred or the holders of a majority of the voting power of the
Company desire to change the Board. The classification of directors will have
the effect of making it more difficult to change the composition of the Board of
Directors. At least two stockholder meetings, instead of one, will be required
to effect a change in the control of the Board. The Board believes that the
longer time required to elect a majority of a classified Board will help to
assure the continuity and stability of the Company's management and policies in
the future, since a majority of the directors at any given time will have prior
experience as directors of the Company. It should also be noted that the
classification provision will apply to every election of directors, whether or
not a change in the Board would be beneficial to the Company and its
stockholders and whether or not a majority of the Company's stockholders
believes that such a change would be desirable.
Item 2(b) - Removal of Directors and Filling Vacancies on the Board.
Proposed Article 6 of the Certificate provides, in part, that a director, or the
entire Board of Directors, may be removed, with or without cause, by the
affirmative vote of the holders of at least 75% of the voting power of the
shares entitled to vote generally in the election of directors. Currently, the
vote required is the minimum vote required under the Delaware General
Corporation Law, i.e., a majority of the outstanding shares of the Company's
stock entitled to vote generally in the election of directors. At the last three
annual meetings of the stockholders of the Company, stockholders holding
approximately 90%, 80% and 82%, respectively, of the voting power of the
Company's voting stock were represented in person.
Currently, one or more vacancies on the Board of Directors may be filled by
majority vote of the stockholders or by the remaining directors, although less
than a quorum. Proposed Article 6 of the Certificate provides that a vacancy on
the Board occurring during the course of the year, including a vacancy created
by an increase in the number of directors, may be filled only by the remaining
directors, and thus does not permit stockholders to fill Board vacancies,
including vacancies resulting from the removal of directors. In addition,
proposed Article 6 provides that any new director elected to fill a vacancy on
the Board will serve for the remainder of the full term of the class in which
the vacancy occurred rather than (as is presently the case) until the next
annual meeting of stockholders. It also provides that no decrease in the number
of directors shall shorten the term of any incumbent. Assuming that the proposed
amendment is adopted, the By-Laws will be amended to be consistent with the
proposed Certificate amendment relating to Board vacancies.
The provisions of the proposed amendment relating to the removal of
directors and the filling of vacancies on the Board will promote continuity and
stability in the Company's management, business and policies by precluding a
third party from removing incumbent directors and simultaneously gaining control
of the Board by filling the vacancies with its own nominees unless such third
party controls 75% of the voting power of the Company's stock. Moreover, the
provision that newly created directorships are to be filled by the Board would
prevent a third party seeking majority representation on the Board of Directors
from obtaining such representation simply by enlarging the Board and filling the
new directorships with its own nominees.
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Item 2(c) - Nominations of Director Candidates. Proposed Article 9 of the
Certificate provides that nominations for the election of directors may be made
by the Board of Directors or by any stockholder entitled to vote in the election
of directors generally. However, stockholders intending to nominate candidates
for election must deliver written notice thereof to the Secretary of the Company
not later than the date previously disclosed by the Company as the deadline for
receipt of stockholder proposals for the meeting (if it will be an annual
meeting), or, in the case of a special meeting, or if there has been no such
prior disclosure, not less than 60 nor more than 90 days prior to the meeting
(or by the close of business on the tenth day following the day on which the
Company gives notice or makes a public disclosure of the date of a meeting where
such notice or disclosure is less than 70 days prior to the date of the meeting
("Stockholder Notice Deadline")). The proposed amendment further provides that
the notice shall set forth certain information concerning such nominee(s),
including the name and business and residence address of each nominee, the
principal occupation or employment of each such nominee, the number of shares of
capital stock of the Company beneficially owned by each nominee and such other
information as would be required to be included in a proxy statement soliciting
proxies for the election of the nominee(s), together with the consent of each
nominee to serve as a director of the Company if so elected. Under the proposed
amendment, if the Chairman of the meeting determines that a nomination of any
person was not made in compliance with the foregoing procedure, such nomination
shall be void.
The advance notice requirement, by regulating stockholder nominations at
any meeting of stockholders, will afford the Board of Directors the opportunity
to consider the qualifications of the proposed nominees and, to the extent
deemed necessary or desirable by the Board, inform stockholders about such
qualifications. Although the proposed amendment does not give the Board of
Directors any power to approve or disapprove of stockholder nominations for the
election of directors, it may have the effect of precluding a contest for the
election of directors if the procedures established by it are not followed and
may discourage or deter a third party from conducting a solicitation of proxies
to elect its own slate of directors, without regard to whether this might be
harmful or beneficial to the Company and its stockholders.
Item 2(d) - Introduction of Business at Stockholders' Meeting. Proposed
Article 8 of the Certificate provides that for business to be properly brought
before an annual meeting, such business must be specified in a notice of meeting
given by the Board or otherwise properly proposed by the Board, or be brought by
a stockholder by giving notice thereof no later than the Stockholder Notice
Deadline. The proposed Article also provides that a stockholder proposal must
contain a brief description of the business and reasons for conducting the
business at an annual meeting, the name and address of the stockholder making
the proposal, the class and number of shares beneficially owned by such
stockholder and any material interest of the stockholder in the business. The
proposed amendment also provides that the Chairman of the meeting may determine
that a stockholder proposal was not properly brought and therefore will not be
placed before the meeting.
This advance notice requirement will enable the Board of Directors to
consider the merits of stockholder proposals and, if deemed necessary or
desirable by the Board, to inform stockholders as to its position on any such
proposals. Although the amendment does not enable the Board to prevent the
introduction of business, it may have the effect of precluding the introduction
of a stockholder proposal if the procedures are not followed or it may
discourage a stockholder from introducing a proposal, without regard to whether
this might be harmful or beneficial to the Company and its stockholders.
Item 2(e) - Calling of Special Stockholder Meetings. Proposed Article 7 of
the Certificate would require that stockholder action be taken at an annual
meeting of stockholders or at a special meeting of stockholders called by the
Chairman of the Board of Directors, pursuant to a resolution adopted by a
majority of the entire Board, or upon the application of stockholders owning at
least thirty-five percent (35%) of the stock entitled to vote at the special
meeting. Under current By-Law Section 4, which will be deleted if the proposed
amendment is adopted, the President or the Board of Directors can call a special
meeting of the stockholders, and the Company is required to call such a special
meeting upon the application of stockholders owning one-fifth of the stock
entitled to vote.
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Assuming that the proposed amendment is adopted, stockholders owning less
than 35% of the vote could not force stockholder consideration of a proposal
over the opposition of the Board of Directors by calling a special meeting of
stockholders prior to such time as the Board believed such consideration to be
appropriate. Such a limitation will avoid the time and expense of requiring the
Company to hold special meetings of stockholders on the application of a small
minority of stockholders.
Item 2(f) - Increased Stockholder Vote for Alteration, Amendment or Repeal
of Proposed Amendments. Under the Delaware General Corporation Law, amendments
to the Certificate 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 entitled to vote thereon as a class. The Delaware General
Corporation Law also permits provisions in the Certificate which require a
greater vote than the vote otherwise required by law for any corporate action.
With respect to such super-majority provisions, the Delaware General Corporation
Law requires that any alteration, amendment or repeal thereof be approved by an
equally large stockholder vote. As permitted by these provisions of Delaware
law, the proposed Articles 6, 7, 8 and 9 discussed above (see Items 2(a) - (e))
would require the concurrence of the holders of at least 75% of the voting power
of the Company entitled to vote generally in the election of directors in order
to alter, amend or repeal any of such Articles.
The requirement of an increased stockholder vote is designed to prevent a
stockholder with a majority of the voting power of the Company from avoiding the
requirements of the proposed amendments by simply repealing them.
Purpose and Effects of the Proposed Amendments (Items 2(a) - 2(f))
The purpose of the proposed amendments to the Certificate (Items 2(a) -
2(f)) and the related matters discussed above is to discourage certain types of
transactions, described below, which involve an actual or threatened change of
control of the Company. They are designed to make it more difficult and
time-consuming to change majority control of the Board and thus to reduce the
vulnerability of the Company to an unsolicited proposal for the takeover of the
Company or an unsolicited proposal for the restructuring or sale of all or part
of the Company. As more fully described below, the Board believes that, as a
general rule, such unsolicited proposals are not in the best interests of the
Company and its stockholders.
There has been a trend towards the accumulation of substantial stock
positions in public companies by third parties as a prelude to proposing a
takeover or a restructuring or sale of all or part of the company or other
similar extraordinary corporate action. Such actions are often undertaken by the
third party without advance notice to or consultation with management of the
company. In many cases, the purchaser seeks representation on the company's
board of directors in order to increase the likelihood that its proposal will be
implemented by the company. If the company resists the efforts of the purchaser
to obtain representation on the company's board, the purchaser may commence a
proxy contest to have its nominees elected to the board in place of certain
directors or the entire board. In some cases, the purchaser may not truly be
interested in taking over the company, but uses the threat of a proxy fight
and/or a takeover bid as a means of forcing the company to repurchase the
holder's equity position at a substantial premium over market price.
The Board of Directors of the Company believes that the imminent threat of
removal of the Company's management in such situations would severely curtail
management's ability to negotiate effectively with such purchasers. Management
would be deprived of the time and information necessary to evaluate the takeover
proposal, to study alternative proposals and to help ensure that the best price
is obtained in any transaction involving the Company which may ultimately be
undertaken. If the real purpose of a takeover bid were to force the Company to
repurchase an accumulated stock interest at a premium price, management would
face the risk that if it did not repurchase the purchaser's stock, the Company's
business and management would be disrupted, perhaps irreparably.
Takeovers or changes in management of the Company which are proposed and
effected without prior consultation and negotiation with the Company's
management are not necessarily detrimental to the Company and its stockholders.
However, the Board believes that the benefits of seeking to protect its ability
to negotiate with the
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proponent of an unfriendly or unsolicited proposal to take over or restructure
the Company outweigh the disadvantages of discouraging such proposals.
The proposed amendments will make more difficult or discourage a proxy
contest or the assumption of control by a holder of a substantial block of the
Company's stock or the removal of the incumbent Board and could thus increase
the likelihood that incumbent directors will retain their positions. However,
the proposed amendments will help ensure that the Board, if confronted by a
surprise proposal from a third party which has acquired a block of the Company's
stock, will have sufficient time to review the proposal and alternatives thereto
and, if deemed appropriate, to seek a premium price for the stockholders. As of
the Record Date, directors and executive officers beneficially owned
approximately 28.9% of the Common Stock outstanding as of that date
(approximately 40.8% on a fully diluted basis assuming the exercise of all
outstanding options and warrants and the conversion of all outstanding
convertible securities). See "Voting Securities."
The proposed amendments are intended to encourage persons seeking to
acquire control of the Company to initiate such an acquisition through arm's
length negotiations with the Company's management and Board of Directors.
However, the amendments could also have the effect of discouraging a third party
from making a tender offer or otherwise attempting to obtain control of the
Company, even though such an attempt might be beneficial to the Company and its
stockholders. In addition, since the amendments are designed to discourage
accumulations of large blocks of the Company's stock by purchasers whose
objective is to have such stock repurchased by the Company at a premium,
adoption of the amendments could tend to reduce any temporary fluctuations in
the market price of the Company's stock which are caused by accumulations of
large blocks of the Company's stock. Accordingly, stockholders could be deprived
of certain opportunities to sell their stock at a temporarily higher market
price.
PROPOSAL 3:
CLASSIFICATION OF DIRECTORS
Assuming that the proposed amendment to the Certificate concerning
classification of the Board into three groups (Item 2(a) above) is adopted,
proposal 3 provides that the term of two of the present directors, Arthur H.
VanBuren and Walter L. Helton, will expire at the 1997 annual meeting of
stockholders, when the terms of all the present directors currently expire; one
present director, Donald D. Patton, shall serve for the term expiring at the
1998 annual meeting of stockholders; and the three remaining directors, Dwight
S. Thomas, Neal S. Melnick and Michael F. Thomas, shall serve for a term
expiring at the 1999 annual meeting of stockholders (or, in all cases, until
their respective successors are elected and qualified). Biographical sketches of
the directors appear below. Assuming that the proposed amendment to the
Certificate of Incorporation concerning classification of the Board (Item 2(a)
above) is adopted, in the event of the death or disqualification or inability to
serve of any of the directors listed above, the vacancy so arising will be
filled by the Board of Directors. Each of the Company's directors was elected at
the 1994 annual meeting of stockholders and has continued to serve since that
time, there having been no annual meetings since that time. Assuming the
proposed amendment in Item 2(a) above is adopted, it is expected that the
director whose term will expire at the 1997 annual meeting will be nominated for
election to a three year term at that time.
Information concerning each of the Company's directors and executive
officers is set forth below.
Michael F. Thomas, age [44], is Chairman of the Board and President of the
Company. Mr. Thomas founded Calibur Car Wash Systems, a predecessor of Calibur
Systems, in 1977; he operated Calibur Car Wash Systems as a sole proprietorship
until organizing Calibur Systems in October 1992. In 1984, Mr. Thomas also
formed TCS, which designs, manufactures and sells car wash equipment and related
supplies. Mr. Thomas received a B.A. Degree in Accounting in 1975 from Tennessee
Technological University in Cookeville, Tennessee.
9
<PAGE>
Dwight S. Thomas, age [44], is Secretary and Treasurer of the Company. From
June 1981 until March 1987, he was location manager for Calibur Car Wash
Systems, responsible for approximately twenty hourly employees, hiring,
dismissals, training, labor, inventory controls, daily reports, bank deposits,
customer relations and quality control. From 1987 until the present, he has been
the District Manager for Calibur Car Wash Systems, responsible for fifteen
salaried managers, hiring and training managers and communicating daily with the
Company's locations. Mr. Thomas was also responsible for implementing training
programs for all phases of operations, setting goal incentives for management
programs and organizing and implementing testing for OSHA guidelines. Mr. Thomas
received an A.S. Degree in Criminology in 1975 and a B.S. Degree in Sociology in
1977 from Tennessee Technological University in Cookeville, Tennessee. Dwight S.
Thomas is a cousin of Michael F. Thomas.
Donald D. Patton, age [42], is an Executive Vice President of the Company
for the oil and gas division. Mr. Patton has over nineteen years experience in
the energy field with industry leading companies and has been involved in a
number of significant acquisitions, mergers and joint ventures. He has a B.S.
from Lincoln Memorial University in Harrogate, Tennessee and an M.B.A. from the
University of St. Thomas in Houston, Texas and for the past five years has been
with Ashland Exploration, Inc., involved primarily in the areas of acquisition
and development. His experience includes: the Appalachian and Michigan Basins,
Gulf Coast, the Rocky Mountain Region, Texas, Canada and Offshore.
Neal S. Melnick, age [50], is an attorney in private practice in knoxville,
Tennessee, practicing in the areas of Business and Commercial Law. He holds a JD
degree from the University of Baltimore (1971). He was admitted to practice in
Maryland in 1971; District of Columbia, 1978; and Tennessee, 1989; and is
admitted to practice before the 4th, 6th, 11th and District of Columbia Circuit
Courts of Appeal and the U.S. Supreme Court. From 1978 to 1989 he was a member
of the firm of Weinstock, Steven & Harris, P.A., Baltimore, Maryland; from 1989
to 1995 he was the senior partner in the firm of Melnick & Moore, Knoxville,
Tennessee. He has served on the Board of Governors of the American Bankruptcy
and Insolvency Section Council. In 1983, he was selected to represent the
Bankruptcy Trustee in the C.H. Butcher, Jr. case, involving the failure of
numerous banks and savings and loan associations in Tennessee. He has served on
the Board of Directors of Union County Bank and C & C Life Insurance Company. He
represents the Company in Tennessee regarding issues other than securities.
Arthur H. VanBuren, age [31], is a Certified Public Accountant with
VanBuren & Company headquartered in Cookeville, Tennessee. He was formerly in
the tax department of Ernst & Young in Tampa, Florida. Mr. VanBuren represents
the Company in their tax matters, including preparation of the federal and state
income tax returns. In 1987 received a B.S. degree in Business Administration
from the University of Tennessee located in Knoxville, Tennessee and later
received a Master of Accountancy degree in 1988. He serves on the Board of
Directors of Short Bark Industries, L.L.C.
Walter L. Helton, age [63], is the founder of the geology department at
Tennessee Tech University in Cookeville, Tennessee and has been a member of the
faculty since 1966. He earned a Doctorate in Geology from the University of
Tennessee in 1967. He has formerly served as consultant to other public
companies such as Marathon Oil and as consultant to numerous private energy
companies including B. Ray Thompson Coal Company. Among his other
accomplishments he is widely published in the energy field and has authored many
university level
10
<PAGE>
text books as well as been contracted to perform mapping services for both the
States of Tennessee and Kentucky Geological Departments.
Board of Directors. Regular meetings of the Board of Directors are held in
person or via teleconference as needed. The Board held seventeen meetings during
the year ended December 31, 1995. All directors attended at least 75% of all
meetings of the Board and Board committees on which they served during 1995.
During a meeting of the Board on September 18, 1996 the following committees
were established: (1.) Executive Committee consisting of Michael F. Thomas and
Neal S. Melnick; (2.) Compensation Committee consisting of Neal S. Melnick and
Arthur H. VanBuren, (3.) Audit Committee consisting of Neal S. Melnick and
Arthur H. VanBuren.
Changes In Members of the Board. The Company accepted the resignation of
James R. Fitzgerald effective November 25, 1996. The resignation was tendered
such that the Company could pursue a lending relationship with the firm in which
Mr. Fitzgerald is an officer. The Board seat vacated by Mr. Fitzgerald has been
filled by Neal S. Melnick of Knoxville, Tennessee who is an attorney that often
acts as counsel to the Company. Mr. Melnick will serve on the Audit Committee
and the Compensation Committee of the Company.
The Company has also accepted the resignation of James F. Rose effective
December 15, 1996. The resignation was tendered due to the fact that Mr. Rose no
longer has the time to be an active member of the Board. The Board seat vacated
by Mr. Rose has been filled by Arthur H. VanBuren of Cookeville, Tennessee who
is a practicing C.P.A. Mr. VanBuren will serve on the Audit Committee and the
Compensation Committee of the Company.
Donald D. Patton, who is an Executive Vice President of the Company, has
been added to the Board effective December 3, 1996. Formerly employed by Ashland
Exploration of Houston, Texas his primariary responsibilities are related to the
energy subsidiary of the Company.
Walter L. Helton, who is a professor of Geology at Tennessee Tech
University in Cookeville, Tennessee will be added to the Board effective January
10, 1997.
Michael F. Thomas has withdrawn from both the Audit and Compensation
Committee in order to allow additional outside directors to serve on those
committees.
Compensation of Directors. During year ended December 31, 1994, all
directors of the Company were granted an option to purchase 33,334 shares of
Common Stock of the Company for a five-year term at an exercise price of $3.36
per share, the fair market value at the time of grant (as adjusted for a
one-for-three (1:3) reverse stock split effected in June 1995). In March 1995
replacement options were granted with a lower exercise price of $2.04 per share,
the fair market value at the time of the new grant (as adjusted for the
one-for-three (1:3) reverse stock split effected in June 1995). The term of the
replacement option remained the same as the option which it replaced. The
replacement options were granted in order to provide incentive for increased
service to the Company by the option holders, which was negated by the decline
in the market price of the Common Stock since that date of grant of the original
options. Directors receive no other compensation for their services on the Board
of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16 of the Securities Exchange Act of 1934, officers,
directors and beneficial owners of more than 10% of the Company's Common Stock
are required to file reports with the Securities and Exchange Commission on
Forms 3, 4 and 5 with respect to their ownership of Common Stock and
acquisitions and depositions thereof. Based on a review of Forms 3, 4 and 5
submitted to the Company for the year ended December 31, 1995, the Company has
ascertained that the following persons made late filings: (i) Michael F. Thomas,
the Company's Chairman, President and Chief Executive Officer, noted on his Form
5 filing, which was not timely filed, that he failed to file Form 4s reporting
eight transactions during 1995; (ii) William Ted Phillips, Jr., a director of
the Company, noted on his Form 5 filing, which was not timely filed, that he
failed to file Form 4s reporting three transactions during 1995; and (iii) L.
Douglas Keene, Jr., the Company's Executive Vice President and Chief Financial
Officer, noted on his Form 5 filing, which was not timely filed, that he failed
to file a Form 4 reporting one transaction during 1995.
11
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the three years ended December 31, 1995 to
the Company's Chief Executive Officer. No other executive officers had total
salary and bonus that exceeded $100,000 during the year ended December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------------------------------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Position Year Salary(1) Bonus(1) Compensation(2) Award(s) Options/SARs Payouts Compensation
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael F. Thomas, 1995 $300,000 -0- -0- -0- 33,334(1) -0- -0-
Chief Executive Officer 1994 $300,000 -0- -0- -0- 33,334 -0- -0-
1993 $300,000 -0- -0- -0- -0- -0- -0-
</TABLE>
- ---------------
(1) Replacement option with a lower exercise price for option granted in 1994.
The term of the replacement option is the same as the option which it
replaced.
Options. The following table sets forth certain information with respect to
options granted during the year ended December 31, 1995 to the Company's Chief
Executive Officer.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
- --------------------------------------------------------------------------------
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted Fiscal Year ($/Sh) Date
- --------------------------------------------------------------------------------
Michael F. Thomas 33,334 50% $2.04 9/7/99
(1) Replacement option with a lower exercise price for option granted in 1994.
The term of the replacement option is the same as the option which it
replaced. The number of shares has been adjusted to reflect a one-for-three
(1:3) reverse stock split effected in June 1995. The options are
[immediately exercisable in full].
The following table sets forth certain information with respect to options
by the Company's Chief Executive Officer at the end of fiscal 1995. Such person
did not exercise any options during 1995.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
12
<PAGE>
<TABLE>
<CAPTION>
Value of Unexercised In-
Number of Unexercised the-Money Options/SARs
Options/SARs at FY-End (#) at FY-End ($)(1)
Shares Acquired Value -------------------------- --------------------------
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Thomas -0- -0- 33,334 -0- $15,333 -0-
</TABLE>
- ---------------
(1) Total value of unexercised options is based upon the trading price of the
Common Stock ($2.50) on December 31, 1995, as reported by The Nasdaq Stock
Market.
OPTION REPRICINGS DURING FISCAL YEAR ENDED DECEMBER 31, 1995(1)
<TABLE>
<CAPTION>
Length of
Number of Original
Securities Market Price Exercise Option Term
Underlying of Stock at Price at Time Remaining at
Options Time of of Repricing New Date of
Repriced or Repricing or or Exercise Repricing or
Name Date Amended (#) Amendment ($) Amendment ($) Price ($) Amendment
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Thomas 3/23/95 33,334 $2.04 $3.36 $2.04 9/7/99
Dwight S. Thomas 3/23/95 33,334 $2.04 $3.36 $2.04 9/7/99
</TABLE>
- ---------------
(1) As adjusted to give effect to the one for three (1:3) reverse stock split
effected in June 1995. The replacement options were granted in order to
provide the incentive for increased service to the Company by the option
holders, which was negated by the decline in the market price of the Common
Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following related party transactions were not negotiated or consummated
at arms' length, but management believes that such transactions were no less
favorable to the Company than those available from unrelated parties.
Leases
The Company leases three of its retail car wash locations from Michael F.
Thomas, the Company's Chairman of the Board, President, Chief Executive Officer.
For years ended December 31, 1995 and 1994, Mr. Thomas was paid the sums of
$324,000 and $356,000, respectively, which approximate the debt service for the
leases of such retail locations.
In addition, the Company rents certain vehicles from Mr. Thomas, under
month-to-month operating leases. Approximately $30,000 and $33,024 was paid to
Mr. Thomas under these leases during the year ended December 31, 1995 and 1994,
respectively.
The Company issued 16,667 shares of its Common Stock in 1995 as partial
consideration for the sale to the Company of certain oil and gas lease rights by
Circle R Company. The three general partners of the seller are Gary Reece, A.
Douglas Reece and James L. Rose. James L. Rose is the father of a director of
the Company, James R. Rose.
Acquisition of Retail Location and Equipment and Construction Activities
13
<PAGE>
During year ended December 31, 1995, the Company acquired an existing
self-service car wash facility from Mr. Thomas. Financing for the $200,000
purchase price was in the form of a loan assumption in the amount of
approximately $131,000 with the remaining balance of approximately $69,000
carried as a payable by the Company as of December 31, 1995. The remaining
balance was paid to Mr. Thomas in 1996.
Also during the year ended December 31, 1995, the Company paid to the
corporation controlled by Mr. Thomas the sums of $175,437 and $115,084 relating
to equipment sales and construction activities, respectively, for Company retail
locations. In 1994, there were no construction or equipment sales transactions
between the controlled corporation and the Company.
Miscellaneous
The Company sponsors an NHRA racing team headed by Mr. Thomas. Advertising
costs associated with the sponsorship of the racing team were $60,000 and
$54,493 during the years ended December 31, 1995 and 1994, respectively.
Management believes that the advertising associated with the racing team has
provided benefits to the Company, i.e., that it facilitated the Company's
Pennzoil distributorship as well as the raising of private placement equity for
the Company.
PROPOSAL 4:
AMENDMENT OF CERTIFICATE TO MODERNIZE
BUSINESS PURPOSES SECTION
Article 3 of the Certificate presently provides that the Company's business
is "the field of energy development and related services, namely oil and gas
exploration and production." Prior to a business combination in 1982, the
certificate of incorporation of the Company's predecessor corporation (also
named United Petroleum Corp.) provided that the corporation's purpose was to
engage in any lawful activity for which corporations may be organized under the
General Corporation Law of Delaware. In view of the Company's retail car wash
and related automotive services business, the Board of Directors believes that
it is appropriate to clarify that the Company's business purpose is the same as
its predecessor, i.e., any lawful activity permitted for a Delaware corporation.
The Board of Directors has no present plans or proposals for the Company to
expand into new lines of business. Nevertheless, the Board believes that it is
appropriate for the Company to have the same type of broad business purpose
section in its Certificate as appears in the charters of most modern
corporations. The Board believes that it is desirable to clarify that the
Company has the flexibility to engage in any lawful business, including those
presently engaged in by the Company apart outside oil and gas exploration and
production. Such flexibility may prove important in the future as economic and
market conditions change. However, such flexibility also would give the Company
the ability to enter totally unrelated businesses and to leave the energy
development business, even though such a course of action is not presently
contemplated.
The full text of the proposed amendment to Article 3 of the Certificate is
attached as part of Exhibit A, and should be read carefully in full.
REQUIRED VOTE
The written consent of the holders of the majority of the shares
outstanding at the close of business on the Record Date is required for the
adoption of each proposal by written consent of stockholders without a meeting.
On December 3, 1996, beneficial owners owning 4,263,621shares as of the Record
Date which represents approximately 55% of the Company's outstanding Common
Stock, signed a written consent approving the proposals, thereby assuring
stockholder approval of the proposals.
14
<PAGE>
ANNUAL REPORT
A copy of the Company's annual report for the year ended December 31, 1995
was previously mailed to all stockholders. Additional copies may be obtained by
writing to L. Douglas Keene, Jr., Vice President and Chief Financial Officer, at
4867 North Broadway, Knoxville, Tennessee 37928.
15
<PAGE>
EXHIBIT A
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
AMENDMENTS OF EXISTING PROVISIONS
[Proposal 1]:
Article 4 is amended to read as follows:
ARTICLE 4
(A) The maximum number of shares of all classes of stock which the
corporation is authorized to have outstanding at any one time is 60,000,000
shares, of which 10,000,000 shares shall be preferred stock, par value
$0.01 per share, issuable in one or more classes or series (the "Preferred
Stock"), and 50,000,000 shares shall be Common Stock, par value $0.01 per
share (the "Common Stock"). All or any part of the Common Stock and
Preferred Stock may be issued by the corporation from time to time and for
such consideration as the Board of Directors may determine. All of such
shares, if and when issued, and upon receipt of such consideration by the
corporation, shall be fully paid and non-assessable.
(B) The Board of Directors is authorized to adopt resolutions at any
time and from time to time dividing the Preferred Stock into one or more
classes or series, which classes or series may have such voting powers,
full or limited, or no voting powers, and such designations, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions as the Board may specify in
such resolutions and as may now or hereafter be permitted by Delaware law.
(C) Except as otherwise required by law, each holder of Common Stock
shall be entitled to one vote for each share standing in such person's name
on the books of the corporation. Subject to the rights of any outstanding
shares of Preferred Stock having preferential dividend rights, holders of
Common Stock are entitled to such dividends as may be declared by the Board
of Directors out of funds lawfully available therefor. Upon any
liquidation, dissolution or winding up of the affairs of the corporation,
holders of Common Stock are entitled to receive pro rata the remaining
assets of the corporation, after the holders of outstanding shares of
Preferred Stock having preferential rights to such assets have received in
full the distributions to which they are entitled.
ADDITIONS
New Articles 6, 7, 8 and 9 of the Certificate are adopted as follows:
ARTICLE 6
[Proposal 2(a)]:
A-1
<PAGE>
(A) Number, election and terms of Directors. Except as otherwise fixed by
or pursuant to the provisions of Article 4 hereof relating to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation to elect additional directors under
specified circumstances, the number of the Directors of the corporation shall be
fixed from time to time by or pursuant to the By-Laws of the corporation. The
Directors, other than those who may be elected by the holders of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation, shall be classified, with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible, as shall be provided in the manner specified in the By-Laws of the
corporation, one class to be originally classified for a term expiring at the
annual meeting of stockholders to be held in 1997, another class to be
originally classified for a term expiring at the annual meeting of stockholders
to be held in 1998, and another class to be originally classified for a term
expiring at the annual meeting of stockholders to be held in 1999, with each
director to hold office until his or her successor shall have been duly elected
and qualified. At each meeting of the stockholders of the corporation, the
successors of the class of Directors whose term expires at that meeting shall be
elected to hold office for a term expiring at the annual meeting of stockholders
held in the third year following the year of their election or until his or her
successor shall have been duly elected and qualified.
[Proposal 2(b)]:
(B) Newly created directorships and vacancies. Except as otherwise provided
for or fixed by or pursuant to the provisions of Article 4 hereof relating to
the rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation to elect additional
directors under specified circumstances, newly created directorships resulting
from any increase in the number of Directors and any vacancies on the Board of
Directors resulting from death, resignation, disqualification, removal or other
cause shall be filled only by the affirmative vote of a majority of the
remaining Directors then in office, even though less than a quorum of the Board
of Directors. Any Director elected in accordance with the preceding sentence
shall hold office for the remainder of the full term of the class of Directors
in which the new directorship was created or the vacancy occurred and until such
Director's successor shall have been duly elected and qualified. No decrease in
the number of Directors constituting the Board of Directors shall shorten the
term of any incumbent Director.
[Proposal 2(b)]:
(C) Removal. Subject to the rights of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
directors under specified circumstances, any Director may be removed from
office, with or without cause, only by the affirmative vote of the holders of
75% of the voting power of all shares of the corporation entitled to vote
generally in the election of directors, voting together as a single class.
[Proposal 2(f)]:
(D) Amendment, repeal, or alteration. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 75% of the voting power of all shares of the corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to alter, amend or repeal this Article 6.
ARTICLE 7
[Proposal 2(e)]:
(A) Calling of Special Stockholders Meetings. Subject to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, special meetings of stockholders of
the corporation may be called only by the Chairman of the Board, by the Board of
Directors pursuant to a resolution approved by a majority of the entire Board of
Directors or by written requests signed, dated and
A-2
<PAGE>
delivered to the Secretary of the corporation by the holders of record of at
least 35% of all the votes entitled to be cast on the issues proposed to be
considered at the meeting and describing the purposes for which it is to be
held.
[Proposal 2(f)]:
(B) Amendment, repeal, or alteration. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 75% of the voting power of all shares of the corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to alter, amend or repeal this Article 7.
ARTICLE 8
[Proposal 2(d)]:
(A) Notice of Stockholder Business. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or (c) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation, no later than the date designated for receipt of stockholders'
proposals in a prior public disclosure made by the corporation. If there has
been no such prior public disclosure, then to be timely, a stockholder's notice
must be delivered to or mailed and received at the principal business office of
the corporation not less than sixty (60) days nor more than ninety (90) days
prior to the annual meeting of stockholders; provided, however, that in the
event that less than seventy (70) days' notice of the date of the meeting is
given to stockholders by notice or prior public disclosure, notice by a
stockholder, to be timely, must be received by the corporation not later than
the close of business on the tenth day following the day on which the
corporation gave notice or made a public disclosure of the date of the annual
meeting of the stockholders. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (b) the name and address, as they appear on the corporation's books, of
the stockholder proposing such business, (c) the class and number of shares of
the corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding anything
in this Certificate to the contrary, no business shall be conducted at an annual
meeting except in accordance with the procedures set forth in this Article 8.
The Chairman of an annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
and in accordance with the provisions of this Article 8 and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
[Proposal 2(f)]:
(B) Amendment, repeal, or alteration. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 75% of the voting power of all shares of the corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to alter, amend or repeal this Article 8.
ARTICLE 9
[Proposal 2(c)]:
A-3
<PAGE>
(A) Eligibility to Make Nominations. Nominations of candidates for election
as directors of the corporation at any meeting of stockholders called for
election of directors, in whole or in part (an "Election Meeting"), may be made
by the Board of Directors ("Board") or by any stockholder entitled to vote
generally in the election of directors at such Election Meeting.
(B) Procedure for Nominations by the Board of Directors. Nominations made
by the Board shall be made as provided in the By-Laws.
(C) Procedure for Nominations by Stockholders. Any stockholder who intends
to make a nomination at the Election Meeting shall deliver a timely notice to
the Secretary of the corporation by the deadline set forth below setting forth
(i) the name, age, business address and residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of each
such nominee, (iii) the number of shares of capital stock of the corporation
which are beneficially owned by each such nominee and (iv) such other
information concerning each such nominee as would be required, under the rules
of the Securities and Exchange Commission, in a proxy statement soliciting
proxies for the election of such nominees. Such notice shall include a signed
consent to serve as a director of the corporation, if elected, of each such
nominee. To be timely, a stockholder's notice for an Election Meeting that also
will be an annual meeting shall be received at the principal business office of
the corporation no later than the date designated for receipt of stockholders'
proposals in a prior public disclosure made by the corporation. If there has
been no such prior public disclosure, or if the Election Meeting will be a
special meeting of stockholders, then to be timely, a stockholder's notice must
be delivered to or mailed and received at the principal business office of the
corporation not less than sixty (60) days nor more than ninety (90) days prior
to the meeting; provided, however, that in the event that less than seventy (70)
days' notice of the date of the meeting is given to stockholders by notice or
prior public disclosure, notice by a stockholder to be timely must be so
received not later than the close of business on the tenth day following the
date on which the corporation gave notice or made a public disclosure of the
date of the meeting.
(D) Substitution of Nominees. In the event that a person is validly
designated as a nominee in accordance with this Article 9 and shall thereafter
become unable or unwilling to stand for election to the Board, the Board or the
stockholder who proposed such nominee, as the case may be, may designate a
substitute nominee.
(E) Determination of Compliance with Procedures. If the Chairman of the
Election Meeting determines that a nomination was not made in accordance with
the foregoing procedures, such nomination shall be void.
[Proposal 2(f)]:
(F) Amendment, repeal, or alteration. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 75% of the voting power of all shares of the corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to alter, amend or repeal this Article 9.
[Proposal 4]:
Article 3 is hereby amended to read in full as follows:
ARTICLE 3
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware now or hereafter
permitted by law.
A-4
