Miller Diversified Corporation
23360 Weld County Road 35
LaSalle, Colorado 80645
---------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
---------------------------------------------------------
A Special Meeting of Shareholders of Miller Diversified Corporation (the
"Company") will be held at _________________, Mountain Daylight Time, on
________________, 1998, at _____________, for the following purposes:
1. To consider and vote upon an Agreement and Plan of Exchange under
which the Company would acquire, by way of exchange, all of the issued
and outstanding common stock of Miller Feed Lots, Inc., for common
stock of the Company.
2. To transact such other business as may properly come before the
Special Meeting and any adjournment thereof to the extent that the
Company was not aware of the intended presentation of such business on
or prior to the date of the proxy statement.
The Board of Directors has fixed ____________________, 1998, as the record
date for determining the shareholders of the Company entitled to notice of and
to vote at the meeting and any adjournment of the meeting. The transfer books of
the Company will not be closed, but only shareholders of the Company of record
on such date will be entitled to notice of and to vote at the meeting or
adjournment.
Shareholders are cordially invited to attend the meeting in person. Whether
or not you plan to attend the meeting in person, please sign and date the
accompanying proxy and return it promptly in the enclosed envelope. No
additional postage is required if the envelope is mailed in the United States.
The giving of a proxy will not affect your right to vote in person if you attend
the meeting and will assure that your shares are voted if you are unable to
attend.
BY ORDER OF THE BOARD OF DIRECTORS
Stephen R. Story
Secretary
_____________________, 1998
LaSalle, Colorado
<PAGE>
MILLER DIVERSIFIED CORPORATION
23360 Weld County Road #35
LaSalle, Colorado 80645
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
_____________________, 1998
Proxy Solicitation
The enclosed Proxy is solicited by and on behalf of the Board of Directors
of Miller Diversified Corporation, a Nevada corporation (the "Company"), to be
voted at a Special Meeting of Shareholders to be held at____________________ ,
Mountain Daylight Time, on __________________ , ________________________ 1998 at
__________________ , and at any and all adjournments of the meeting. The
enclosed materials are first being sent to Shareholders on or about
_______________ , 1998.
The cost of soliciting proxies will be borne by the Company and will
consist of printing, postage and handling, including the expenses of brokerage
house custodians, nominees and fiduciaries in forwarding documents to beneficial
owners. Solicitation may also be made by the Company's office, directors and
regular employees personally or by telephone.
The matters listed below will be considered and acted upon at the meeting:
1. The adoption and approval of an Agreement and Plan of Merger (the
"Plan") under which the Company would, by way of exchange, acquire all of the
issued and outstanding shares of common stock of Miller Feed Lots, Inc., a
Colorado corporation, for 15,000,000 shares of common stock of the Company.
2. Such other business as may properly come before the Special Meeting and
any adjournment of the meeting to the extent that the Company was not aware of
the intended presentation of such business on or prior to the date of this proxy
statement.
Voting At The Meeting
The total number of outstanding shares of the Company's $.0001 par value
Common Stock entitled to vote at the meeting, based upon the shares of record as
of , 1998 (the "Record Date"), is 6,364,640. As of the Record Date, the only
outstanding voting securities of the _______________ Company were shares of
Common Stock, each of which is entitled to one vote on each matter to come
before the meeting.
<PAGE>
The presence, in person or by properly executed proxy, of holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
Meeting is necessary to constitute a quorum at the Meeting. The affirmative vote
by the holders of a majority of the shares issued and outstanding is required to
approve and adopt the Agreement and Plan of Exchange (Item 1).
Shares of Common Stock represented by a properly signed, dated and returned
proxy will be treated as present at the Meeting for purposes of determining a
quorum, without regard to whether the proxy is marked as casting a vote or
abstaining. The aggregate number of votes cast by all stockholders present in
person or by proxy at the Meeting will be used to determine whether a motion
will carry. Accordingly, an abstention from voting on the proposal to approve
and adopt the Agreement and Plan of Exchange (Item 1), by a stockholder present
in person or by proxy at the Meeting has the same effect as a vote against such
item. In addition, although broker "non-votes" will be counted for purposes of
attaining a quorum, they will not be treated as shares having voted at the
Meeting and, accordingly, will have the same effect as a vote against Item 1.
Proxies may be revoked by the person executing the proxy at any time before
the authority thereby granted is exercised, upon written notice to such effect
received by the Secretary of the Company prior to the Meeting. Attendance at the
Meeting will not in and of itself constitute revocation of a proxy, although
proxies may be revoked at the Meeting by written notice delivered to the
Secretary, in which case the shares represented thereby may be voted in person.
Proxies may also be revoked by the submission of subsequently dated proxies.
Shares represented by a valid unrevoked proxy will be voted at the Meeting or
any adjournment thereof as specified therein by the person giving the proxy. If
no specification is made the shares represented by such proxy will be voted: (i)
FOR approval and adoption of the Agreement and Plan of Exchange.
Stockholders are entitled to appraisal rights in respect of the Agreement
and Plan of Exchange. See "Dissenter's Rights."
Conflicts of Interest
James E. Miller is the President and Chief Executive Officer of the
Company. Norman M. Dean is the Chairman of the Board of Directors of the
Company. These two individuals also own all of the issued and outstanding common
shares of Miller Feed Lots, Inc. ("MFL"). The Company proposes to acquire MFL
pursuant to the Agreement and Plan of Exchange. Mr. Miller and Mr. Dean are the
beneficial owners of 2,014,492 shares of the Company's Common Stock (31.65% of
the Common Stock). The 15,000,000 shares of Common Stock issuable pursuant to
the Plan to Mr. Miller and Mr. Dean will represent 70.21% of the Common Stock,
2
<PAGE>
and, together with the shares of Common Stock currently beneficially owned by
Mr. Miller and Mr. Dean, will represent approximately 79.64% of the outstanding
Common Stock of the Company. Given the fact that shareholders of the Company are
not entitled to cumulative voting rights with respect to the election of
directors, such ownership would vest in Mr. Miller and Mr. Dean the voting power
to elect all of the directors of the Company (See "The Plan of Exchange -
Background of and Reasons for the Plan" below). On June 19, 1998, the business
day prior to the date on which the Agreement was approved by the Board of
Directors of the Company, the closing price of the Common Stock was $.11.
As the Chairman of the Board and Chief Executive Officer of the Company, as
well as principal shareholders of the Company, Mr. Dean and Mr. Miller had a
conflict of interest in connection with the negotiations between the Company and
MFL concerning the Plan. Accordingly, although Mr. Miller and Mr. Dean
participated in meetings of the Board of Directors of the Company held to
discuss and consider the Plan, at such Board meetings, they abstained from
voting on the proposal to approve and adopt the Plan.
The 2,014,492 shares of Common Stock directly owned by Mr. Miller and Mr.
Dean will be counted as present at the Meeting for purposes of determining a
quorum. Mr. Dean and Mr. Miller intend to vote the shares owned directly by them
at the meeting in favor of the proposal to approve and adopt the Agreement and
Plan of Exchange (Item 1).
Dilution of Common Stock
- ------------------------
As described in "Conflicts of Interest" above, Mr. James E. Miller and Mr.
Norman M. Dean, either directly or indirectly, own 31.65% of the Company's
Common Stock. The 15,000,000 shares of Common Stock issuable upon consummation
of the Plan of Exchange will represent, when issued, 70.21% of the Common Stock
of the Company issued and outstanding. Together with the shares of Common Stock
beneficially owned by Mr. Miller and Mr. Dean, such individuals, after
completion of the Plan of Exchange, would own approximately 17,014,492 shares of
Common Stock, or 79.64% of the Common Stock.
The following table sets forth as of the Record Date information regarding
the beneficial ownership of the Common Stock and the potential dilution to
existing shareholders in connection with the Plan of Exchange.
3
<PAGE>
Shares Percentage
Shares Percentage Beneficially Total After
Beneficially of Owned After Plan of
Owned Total Plan of Exchange Exchange
----- ----- ---------------- --------
James E. Miller 994,706(1) 15.63% 8,494,706 39.76%
Norman M. Dean 1,019,786(2) 16.02% 8,519,783 39.88%
All other
shareholders 4,350,148 68.35% 4,350,148 20.36%
(1) Includes 45,906 shares owned by Mr. Miller's wife.
(2) Includes 45,905 shares owned by Mr. Dean's wife.
THE PLAN OF EXCHANGE
(Item 1)
General
- -------
To the extent that the following discussion describes the Exchange
Agreement and Plan of Exchange, it is qualified by the more detailed information
appearing in this Proxy Statement under the caption "The Exchange Agreement and
Plan of Exchange" and in the Exchange Agreement and Plan of Exchange attached as
Annex I and Annex II to this Proxy Statement, respectively, and which
constitutes part hereof.
At the meeting, the only item stockholders will be asked to consider and
vote upon is a proposal to approve and adopt the Exchange Agreement and Plan of
Exchange (the "Plan"), dated June 22 1998, copies of which are attached hereto
as Annex I and Annex II and which constitutes a part hereof.
The Plan provides, among other things, that on or before July 31, 1998,
subject to shareholder approval, the Company will issue 15,000,000 shares of its
Common Stock to the two shareholders of MFL in exchange for all of the issued
and outstanding common stock of MFL. The parties subsequently agreed to extend
this termination date to October 31, 1998. Thereafter, MFL would be operated as
a wholly owned subsidiary of the Company. The two shareholders of MFL are James
E. Miller and Norman M. Dean, who are the President and Chief Executive Officer
of the Company and Chairman of the Board of Directors of the Company,
respectively. See "Conflicts of Interest." Upon completion of the Plan, Mr.
Miller and Mr. Dean together would own 17,014,492 or approximately 79.64% of the
Common Stock outstanding. The exchange rate of 14,763.78 shares of Common Stock
for each share of common stock of MFL was a negotiated exchange rate between the
Company and MFL. The closing price of the Common Stock, as quoted on the OTC
Bulletinboard on July 2, 1998 was $.11. The closing price on August , 1998,
three business days prior to the first mailing of this Proxy Statement, was $ .
4
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Miller Feed Lots, Inc.
- ----------------------
Feedlot Operations
- ------------------
Miller Feed Lots, Inc. ("MFL"), a Colorado corporation, was incorporated in
April 1966. MFL owns a 20,000 head feedlot in LaSalle, Weld County, Colorado
that is currently being leased to the Company under a long term lease. The
feedlot facility includes approximately 165 acres. The following assets are also
included as part of the feedlot operations owned by MFL:
* Fences, feed tanks and waterers that comprise the "pens"
* Small office building with truck scale
* Mill facility for mixing ingredients into rations, which includes the
mill building, hopper (clam) and scale, storage tanks, overhead bins,
grain rollers, conveyor boxes, 3 8,000 bushel grain storage tanks, 2
1,000 bushel supplement storage tanks and 2 liquid supplement storage
tanks and associated delivery systems.
* Loading/unloading chute with holding pens and ground scale
* Employee break room/storage building
* Cattle processing area with squeeze chute and crowding pens
* 3 bay shop building for maintenance of MFL equipment
* Hospital area with enclosed working area with crowding alley and
squeeze chute for treating and segregating sick cattle
* Storage shed for MFL's trucks and loaders
* Separate storage shed for MFL's semi-tractors
* Wash building and associated equipment for maintaining MFL equipment
* Dirt roads and alleys for the movement of equipment and livestock
* 3 water wells which are used primarily for irrigation and dust
control. Water for consumption by livestock is purchased from a local
water company due to high nitrate levels in the water from the MFL
water
MFL also owns numerous pieces of equipment that are necessary for the
feedlot operations. MFL owns 3 semi-tractors and 8 trailers which are used for
transporting grain, feed supplements and livestock. MFL provides trucking
services for the Company, the feedlot customers of the Company and other outside
parties. MFL derives 25-30% of its gross revenues from its trucking operations.
MFL also owns a house and adjacent horse corrals and outbuildings that are
located approximately 3 miles from the main feedlot facility. An employee of the
Company lives in the house and the Company pays a month rental of $750 to MFL.
5
<PAGE>
Subsidiary Operations
- ---------------------
D and M Feeders, Inc., a Colorado corporation, is a wholly owned subsidiary of
MFL. It has been used in the past by MFL as its cattle feeding enterprise and
for speculative commodity trading. It currently is not active in either cattle
feeding or commodity trading.
LaSalle Commodity and Cattle Services Co., ("LaSalle") a Colorado corporation,
is a wholly owned subsidiary of MFL. It performs commodity trading services for
commercial clients under the rules of the National Futures Association and the
Commodity Futures Traders Association. Its business is regulated by the
Commodity Futures Trading Commission and, to the extent it executes commodity
trades, may come under the jurisdiction of the Chicago Board of Trade on grain
transactions and the Chicago Mercantile Exchange on livestock transactions.
LaSalle provides hedging assistance and expertise for feedlot customers of the
Company as well as outside agriculture based clients. In the past, LaSalle has
also provided cattle buying and selling services to outside parties, but
currently does not have the personnel to provide such services. LaSalle's
offices are located in LaSalle, Colorado. LaSalle is an introducing broker for
RB&H Financial Services.
Miller Trading Co., a Colorado corporation, provides retail commodity trading
services. It is regulated by the same entities that regulate LaSalle and it is
also an introducing broker for RB&H Financial Services. It provides assistance
and expertise in speculative commodity trading to a variety of retail customers
nationwide and in Canada. Its offices are also located in LaSalle, Colorado.
Background Of And Reasons For The Plan
- --------------------------------------
For several years, the management of the Company has sought, thus far
unsuccessfully, to expand the business of the Company, to increase its
profitability and to enhance shareholder value. However, management has
increasingly become aware that its efforts to expand the business of the Company
have been hampered by a lack of assets and volume that, if acquired, could
enhance the Company's ability to expand and also make future acquisitions more
attractive. In addition, the Company has had a long standing and intertwined
relationship with MFL, which owns many of the hard assets that the Company uses
in its operations. Both enterprises have common management in James E. Miller,
Norman M. Dean and Stephen R. Story. Management now believes that future growth
and the ability to attract a wide variety of potential business combinations and
opportunities would be enhanced if all of the business activities and assets of
the two entities would be folded under the Company's publically owned umbrella.
6
<PAGE>
Management has identified several specific advantages to combining the
operations of the Company and MFL. First and foremost, the Company is currently
paying a minimum of $129,000 per year to MFL for use of the feedlot facilities
owned by MFL. These payments are made under a long-term lease that does not
expire until February 1, 2016. In addition, the Company makes equipment lease
payments of $96,000 per year and payments involving commodity trading operations
of $20,000 per year. Approval of the Plan by the shareholders and the subsequent
operation of MFL as a wholly owned subsidiary of the Company would eliminate
this outflow of cash that could otherwise be utilized by the Company to expand
its operations. However, this reduction in outgoing cash flow would be offset
somewhat by the fact that the Company would become responsible for MFL's
operating expenses. The resulting additional income and reduced expenses would
provide the Company with the means to better utilize its net tax operating loss
carry forward. Management also believes that the elimination of "duel control"
of the feedlot facilities will eliminate a major stumbling block with creditors
and eliminate confusion. In addition, financial reporting will be simplified
since related party disclosure and analysis including the Company and MFL will
be eliminated. Another important factor, in management's opinion, would be the
elimination of the possible appearance of any conflict of interest between the
Company and MFL relating to the actions of directors common to the board of
directors of both companies. Finally, management believes that the acquisition
of MFL would expand and diversify the Company's business and operations.
Lack of Fairness Opinion
- ------------------------
Because of the expense involved, the Board of Directors has not obtained an
opinion from any investment banking or other similar firm as to the fairness,
from a financial point of view, of the proposed exchange to the shareholders of
the Company. However, as part of the valuation and due diligence process, the
Company obtained an appraisal on MFL as a going concern from Gary Wieck, C.P.A.
Mr. Wieck has been President of Countryman Associates, P.C. of Grand Island,
Nebraska since 1981. Mr. Wieck specializes in the valuation and appraisal of
feedlot operations. He has been a Certified Public Accountant since 1967 and a
Certified Valuation Analyst since 1995. He is past president of the Nebraska
Society of CPA's, past member of the Council of the American Institute of CPA's
and past Chairman of the Board of Accounting Firms Associated. He provides
services in business planning, tax preparation and planning, business valuation
7
<PAGE>
and litigation support. He received a BA degree from Hastings College in 1963
and an MBA degree from the University of Nebraska - Kearney in 1982. He has no
affiliation or material relationship with the Company, MFL or Mr. Dean or Mr.
Miller nor has he had such an affiliation or material relationship within the
past two years. He was chosen because of his long standing expertise in feedlot
operations and his professional reputation. In conducting the valuation, he
considered various factors enumerated in IRS Revenue Ruling 59-60 for the
valuation of a closely held business interest. These factors include:
* The nature of the business and its history from its inception;
* The economic outlook in general and the condition outlook of the
specific industry in particular;
* The book value of the stock and the financial condition of the
business;
* The earning capacity of the company;
* The dividend-paying capacity;
* Whether the enterprise has goodwill or other intangible value;
* Sales of the stock and the size of the block of stock to be valued;
* The market value of stock corporations engaged in a manner or similar
line of business having their stocks actively traded in a free and
open market, either on an exchange or over-the-counter.
Mr. Wieck also reviewed, analyzed and interpreted a variety of external and
internal factors which might influence the fair value of MFL. Internal factors
included MFL's financial position, results of operations and the size and
marketability of the interest being valued. External factors included, among
other things, the status of the cattle feeding industry and the position of MFL
relative to the industry.
Based upon the various factors analyzed in the appraisal by Mr. Wieck, he
arrived at a fair value for MFL of $1,549,172. Shareholders are cautioned that
while Mr. Wieck is an experienced and certified appraiser who is familiar with
cattle feeding operations in general and the operations of MFL in particular,
other, more knowledgeable or sophisticated appraisers might arrive at a
different and perhaps lower estimate of the fair value of MFL. The Company
determined that 15,000,000 shares of Common Stock was an appropriate number of
shares to issue to acquire MFL. This determination was based, in large part,
upon the appraisal of Mr. Wieck. The complete appraisal of Mr. Wieck is
available for inspection and copying at the principal executive offices of the
Company during its regular business hours by any interested shareholder or his
representative who has been so designated in writing. A copy of such appraisal
will also be transmitted by the Company to any interested shareholder or his
representative who has been so designated in writing upon written request and at
the expense of the requesting shareholder.
8
<PAGE>
Board Recommendation
- --------------------
The Board recommends that the stockholders vote for approval and adoption
of the Plan as the Board believes the proposed acquisition of MFL is in the best
interests of the Company and its public shareholders. The Board (certain members
of which [Mr. James E. Miller and Mr. Norman M. Dean] are subject to certain
conflicts of interest with respect to the proposal to acquire MFL [see
"Conflicts of Interest"]) considered the following material factors in making
its recommendation, all of which were deemed relevant to such recommendations as
they bear on the ability of the Company's stockholders to determine the effect
of approval of the Plan on their investment:
(i) Elimination of long-term lease payments. The Company is currently
paying to MFL lease payments in the minimum annual amount of $129,000 for use of
the feedlot. This lease obligation does not expire until February 1, 2016. In
addition, the Company makes equipment lease and rental payments to MFL of
$96,000 per year, as well as certain other payments to MFL which, when combined
with the above described feedlot lease and equipment lease payments, total
approximately $245,000 per year. Although the Company would become responsible
for the payment of MFL's operating expenses, the acquisition of MFL would
significantly reduce this outflow of funds and allow the Company to use the
resulting savings of cash for more productive and growth oriented purposes.
(ii) Elimination of related party transactions and conflicts of interest.
The Company, as tenant and MFL as landlord, are both managed by the same
management team. This relationship necessarily involves conflicts of interest,
particularly for James E. Miller as President and Chief Executive Officer of the
Company and Norman M. Dean as Chairman of the Board of Directors. See "Conflicts
of Interest." The acquisition of MFL by the Company would significantly reduce
actual or potential conflicts of interest and allow Mr. Miller and Mr. Dean to
devote all of their efforts on behalf of the Company, rather then splitting
their efforts between the Company & MFL.
(iii) Expand the size and scope of the Company's business. The Company, by
acquiring MFL and its subsidiaries, would significantly expand its asset base
and diversify its business. Management believes the resulting increased size of
the Company would make it easier to grow the Company and put the Company in the
position to entertain more attractive business opportunities.
9
<PAGE>
(iv) Other considerations. The Board also considered the following factors:
(a) the current business, property and prospects of the Company and its
subsidiaries, the financial and operation condition of the Company and its
subsidiaries and the long term strategy of the Company; (b) exchange rate of the
Company's Common Stock in light of the market price of the Common Stock (taking
into consideration with respect thereto the restrictions on public sale placed
upon Common Shares to be issued by Mr. Miller and Mr. Dean upon consummation of
the Plan); (c) the terms of the Exchange Agreement and Plan of Exchange; and (d)
the effects of the Plan as described above.
To support its recommendations that the stockholders vote FOR approval and
adoption of the Exchange Agreement and Plan, the Board relied upon the factors
described above.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect
to the acquisition by the Company of all of the outstanding shares of MFL stock
pursuant to the Exchange Agreement and Plan of Exchange and are based on the
estimates and assumptions set forth herein and in the notes to such statements.
This pro forma information has been prepared utilizing the historical
consolidated financial statements. The pro forma financial data is provided for
comparative purposes only and does not purport to be indicative of the results
which actually would have been obtained if the exchange had been effected on the
date indicated or of those results which may be obtained in the future.
The pro forma financial information is based on the pooling of interests
method of accounting for the proposed exchange. The pro forma adjustments are
described in the accompanying Note to Unaudited Pro Forma Combined Financial
Statements. The unaudited pro forma combined income statements assume that the
acquisition of MFL had occurred on September 1, 1996 (combining the results for
the year ended August 31, 1997 for the Company and MFL, and the nine months
ended May 31, 1998, for the Company and MFL).
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<PAGE>
<TABLE>
<CAPTION>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
- ---------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
---------------------------- --------------------------------
Miller Miller
Diversified Feed
Corporation Lots, Inc.
May 31, 1998 Consolidated Consolidated Adjustments Combined
- ---------------------------------------------------------------------------------------------------------------------
ASSETS
- ------
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 68,009 $ 29,491 $ -- $ 97,500
Trade accounts receivable 886,939 43,813 -- 930,752
Receivable from officers/directors -- 274,442 -- 274,442
Accounts receivable - related parties 80,470 -- (80,470)(C) --
Current portion of note receivable 50,000 -- -- 50,000
Income tax refunds receivable -- 24,545 -- 24,545
Inventories 1,230,730 -- -- 1,230,730
Prepaid expenses 14,325 4,238 -- 18,563
- ---------------------------------------------------------------------------------------------------------------------
Total Current Assets 2,330,473 376,529 (80,470) 2,626,532
- ---------------------------------------------------------------------------------------------------------------------
Property and Equipment:
Land -- 56,924 -- 56,924
Buildings and improvements -- 243,137 -- 243,137
Feedlot facilities under capital lease -
related party 1,497,840 -- (1,497,840)(C)
Equipment 77,454 672,168 -- 749,622
Equipment under capital lease -- 4,547 -- 4,547
Equipment under capital lease - related party 30,649 -- (30,649)(C)
Leasehold improvements 92,335 -- -- 92,335
-------------------------------------------------------------------
1,698,278 976,776 (1,528,489) 1,146,565
Less: Accumulated depreciation and
amortization 559,248 505,080 (457,371)(C) 606,957
- ---------------------------------------------------------------------------------------------------------------------
Total Property and Equipment 1,139,030 471,696 (1,071,118) 539,608
- ---------------------------------------------------------------------------------------------------------------------
Other Assets:
Net investment in sales type leases -- 14,572 (14,572)(C) --
Securities available for sale 16,382 -- -- 16,382
Other investments 118,418 82,566 -- 200,984
Notes receivable:
Miscellaneous 15,000 12,000 -- 27,000
Related party 300,000 -- (300,000)(C) --
Deferred income taxes 176,962 51,016 -- 227,978
Deposits and other 15,886 17,511 (17,112)(C) 16,285
- ---------------------------------------------------------------------------------------------------------------------
Total Other Assets 642,648 177,665 (331,684) 488,629
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 4,112,151 $ 1,025,890 $(1,483,272) $ 3,654,769
=====================================================================================================================
Continued on next page.
11
<PAGE>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
- ----------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
----------------------------- -----------------------------------
Miller Miller
Diversified Feed
Corporation Lots, Inc.
May 31, 1998 Consolidated Consolidated Adjustments Combined
- ----------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------
Current Liabilities:
Bank overdraft $ 2,757 $ -- $ -- $ 2,757
Notes payable 474,024 40,481 -- 514,505
Notes payable - officers/directors -- 13,000 -- 13,000
Trade accounts payable 604,551 20,315 -- 624,866
Accounts payable - related parties -- 80,470 (80,470)(C) --
Accrued expenses 28,432 14,029 -- 42,461
Income taxes payable 6,195 -- -- 6,195
Customer advance feed contracts 52,906 -- -- 52,906
Current portion:
Capital lease obligations - related party 24,284 -- (24,284)(C) --
Notes payable -- 158,906 -- 158,906
- ----------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 1,193,149 327,201 (104,754) 1,415,596
Long-Term Notes Payable -- 498,072 -- 498,072
Long-Term Notes Payable - related party -- 300,000 (300,000)(C) --
Capital Lease Obligations - related party 993,565 -- (993,565)(C) --
- ----------------------------------------------------------------------------------------------------------------------
Total Liabilities 2,186,714 1,125,273 (1,398,319) 1,913,668
- ----------------------------------------------------------------------------------------------------------------------
Commitments
- ----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
- --------------------
Preferred Stock -- -- -- --
Common Stock 636 101,600 (100,100)(A) 2,136
Additional Paid-In Capital 1,351,693 11,860 (112,743)(A)(B) 1,250,810
Unrealized Loss - Securities Available
for Sale (3,718) -- -- (3,718)
Retained Earnings 576,826 (212,843) 127,890(B)(C) 491,873
- ----------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 1,925,437 (99,383) (84,953) 1,741,101
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,112,151 $ 1,025,890 $(1,483,272) $ 3,654,769
======================================================================================================================
See Accompanying Note to Unaudited
Pro Forma Combined Financial Statements.
12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
- ------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
------------------------------ --------------------------------
Miller Miller
Diversified Feed
For the Nine Months Corporation Lots, Inc.
Ended May 31, 1998 Consolidated Consolidated Adjustments Combined
- -------------------------------------------------------------------------------------------------------------------
Revenue:
<S> <C> <C> <C> <C>
Feed and other sales $ 7,417,840 $ -- $ -- $ 7,417,840
Feedlot services 1,235,426 -- -- 1,235,426
Freight services income -- 247,255 -- 247,255
Rent and lease income -- 188,309 (188,309)(C) --
Commodity sales commissions -- 351,943 -- 351,943
Interest income 21,775 847 -- 22,622
Interest income - related party 19,750 -- (19,750)(C) --
Other 24,742 -- (1,350)(C) 23,392
- -------------------------------------------------------------------------------------------------------------------
Total Revenue 8,719,533 788,354 (209,409) 9,298,478
- -------------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of:
Feed and other sales 6,844,964 -- -- 6,844,964
Feedlot services 1,091,950 -- (140,573)(C) 951,377
Freight services -- 176,442 -- 176,442
Rent and lease income -- 62,012 -- 62,012
Speculative trading losses -- 44,080 -- 44,080
Selling, general, and administrative 649,746 453,227 (2,311)(C) 1,100,662
Interest 17,688 57,064 -- 74,752
Interest - related party 85,064 19,750 (104,814)(C) --
- -------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 8,689,412 812,575 (247,698) 9,254,289
- -------------------------------------------------------------------------------------------------------------------
Earnings Before Taxes 30,121 (24,221) 38,289 44,189
Income Tax Expense (Benefit) 6,195 (15,286) -- (9,091)
- -------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 23,926 $ (8,935) $ 38,289 $ 53,280
===================================================================================================================
See Accompanying Note to Unaudited
Pro Forma Combined Financial Statement.
13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MILLER DIVERSIFIED CORPORATION AND SUBSIDIARY
AND MILLER FEED LOTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
- ---------------------------------------------------------------------------------------------------------------------
Historical Pro Forma
-------------------------------- ----------------------------------
Miller Miller
Diversified Feed
For the Year Ended Corporation Lots, Inc.
August 31, 1997 Consolidated Consolidated Adjustments Combined
- ----------------------------------------------------------------------------------------------------------------------
Revenue:
<S> <C> <C> <C> <C>
Feed and other sales $ 9,215,851 $ -- $ -- $ 9,215,851
Feedlot services 2,040,105 -- -- 2,040,105
Freight services income -- 314,548 -- 314,548
Rent and lease income -- 219,276 (219,276)(C) --
Speculative trading gains -- 24,004 -- 24,004
Commodity sales commissions -- 555,757 -- 555,757
Interest income 23,561 -- -- 23,561
Interest income - related party 18,000 -- (18,000)(C) --
Other 80,052 -- (1,800)(C) 78,252
- ----------------------------------------------------------------------------------------------------------------------
Total Revenue 11,377,569 1,113,585 (239,076) 12,252,078
- ----------------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of:
Feed and other sales 8,483,551 -- -- 8,483,551
Feedlot services 1,844,037 -- (179,840)(C) 1,664,197
Freight services -- 252,371 -- 252,371
Rent and lease income -- 59,853 -- 59,853
Selling, general, and administrative 704,296 626,857 (10,342)(C) 1,320,811
Loss of sale of land and water rights 178,452 -- -- 178,452
Interest 12,146 96,754 -- 108,900
Interest - related party 117,130 18,000 (135,130)(C) --
- ----------------------------------------------------------------------------------------------------------------------
Total Costs and Expenses 11,339,612 1,053,835 (325,312) 12,068,135
- ----------------------------------------------------------------------------------------------------------------------
Earnings Before Taxes 37,957 59,750 86,236 183,943
Income Tax Expense (Benefit) (141,284) 24,018 -- (117,266)
- ----------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 179,241 $ 35,732 $ 86,236 $ 301,209
======================================================================================================================
See Accompanying Note to Unaudited
Pro Forma Combined Financial Statement.
14
</TABLE>
<PAGE>
NOTE TO UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
The following note is included to assist the reader in understanding the
adjustment needed to illustrate the business combination of the Company and MFL.
(a) To record issuance of 15,000,000 of the Company's Common Stock to acquire
all outstanding shares of MFL.
(b) To eliminate MFL retained earnings.
(c) To eliminate intercompany transactions.
THE EXCHANGE AGREEMENT AND PLAN OF EXCHANGE
The following description of the Exchange Agreement and Plan of Exchange is
qualified in its entirety by reference to the full text of these documents,
copies of which are attached as Annex I and Annex II, respectively, to this
Proxy Statement and constitute a part hereof.
Summary of the Agreement
- ------------------------
Upon consummation of the Exchange, 14,763.78 shares of the Company's common
stock will be issued in exchange for each share of MFL common stock currently
outstanding. In the aggregate, 15,000,000 shares of the Company's common stock
will be issued in exchange for the 1,016 shares of MFL common stock issued and
outstanding. The exchange ratio of the common stock was based upon several
factors, including the net asset value of MFL, its value as a going concern, the
fair market value of MFL assets as determined by appraisal and the market price
of the Company's common stock. The Boards of Directors of the Company and MFL
mutually determined the exchange ratio, although both boards, for the most part,
are made up of the same individuals. See "Conflicts of Interest."
Until surrendered, all certificates representing ownership of MFL common
stock will be deemed to be exchanged and the holders thereof will be entitled
only to the shares of the Company common stock for which they have been
exchanged. Mr. James Miller and Mr. Norman Dean are the only two shareholders of
MFL. By executing the Exchange Agreement, they specifically agreed to the
transaction contemplated therein and will not invoke their dissenter's rights,
whether as shareholders of MFL or the Company.
15
<PAGE>
If adopted by the requisite stockholder's vote of the Company and unless
terminated as provided in the Exchange Agreement, the Exchange will become
effective when a certificate of exchange is issued by the Secretary of the State
of Colorado.
The Exchange Agreement contains representations of the Company and MFL.
These include, among others, representations concerning the financial condition
of MFL and the accuracy of its financial statements, representations and
warranties with respect to information contained in their Proxy Statement and
the corporate power of the Company and MFL to enter into the Exchange Agreement
and perform their obligations thereunder.
The Company and MFL have agreed that prior to consummation of the Exchange,
each will continue to conduct their respective businesses in conformity with
established industry practice in a diligent manner.
The Exchange Agreement provides that it will terminate automatically if the
Effective Time does not occur by October 31, 1998, unless otherwise extended by
mutual agreement pending a shareholder vote by the Company's shareholders. The
Company may terminate the Exchange Agreement if holders of more than 10% of the
Company's issued and outstanding common stock of the Company give notice of
their intention to demand payment for their shares. See "Dissenter's Rights." If
any condition precedent, as set forth in the Exchange Agreement, to the
obligation of either the Company or MFL is not met by October 31, 1998, that
party may terminate the Exchange Agreement or waive the condition. The
conditions precedent include the requirements that all representations and
warranties set forth in the Exchange Agreement shall be true and correct in all
material respects as of the Effective Time and that the covenants and actions of
each party required to be fulfilled before that date have been fulfilled.
Dissenter's Rights
- ------------------
Stockholders of the Company's Common Stock have a right to dissent and
obtain payment in cash for their shares by complying with the terms of Sections
78.491 to 78.494 of the Nevada General Corporation Law. Such sections are each
reprinted in their entirety as Annex III to this Proxy Statement. A person who
desires to dissent and who has a beneficial interest in shares of the Company's
Common Stock that are held of record in the name of another person, such as a
broker or nominee, should act promptly to cause the record holder timely and
properly to follow those steps summarized below to perfect whatever right to
payment such beneficial owner may have. Alternatively, a beneficial owner of
shares of the Company's Common Stock may assert his or her own right to dissent
and obtain payment with respect to shares held on his or her behalf by
submitting a written consent of the record holder to the Company prior to
assertion of such right and by then following the steps summarized below to
perfect whatever right to payment such beneficial owner may have.
16
<PAGE>
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW RELATING TO
THE RIGHT TO DISSENT AND OBTAIN PAYMENT AND IS QUALIFIED IN ITS ENTIRETY BY
ANNEX III. THIS DISCUSSION AND ANNEX III SHOULD BE REVIEWED CAREFULLY BY ANY
STOCKHOLDER WHO WISHES TO EXERCISE THE STATUTORY RIGHT TO DISSENT AND OBTAIN
PAYMENT FOR SHARES SINCE FAILURE TO COMPLY WITH THE PROCEDURES SET FORTH WILL
RESULT IN THE LOSS OF SUCH RIGHT.
Pursuant to Sections 78.481 and 78.482 of the Nevada General Corporation
Law, holders of the Company's Common Stock may obtain payment for their shares
if such holders do not approve the Exchange. The Exchange Agreement provides
that it may be terminated by the Company if holders of more than 10% of the
Company's Common Stock have acted to perfect such right to obtain payment. In
order to perfect the right to obtain payment for shares, a stockholder must
satisfy each of the conditions of Sections 78.491 and 78.494 of the Nevada
General Corporation Law as summarized below.
First, prior to the vote on the Plan of Merger, a stockholder who desires
to dissent and obtain payment for shares must file with the Company a written
notice of intention to demand payment (the "Notice of Intention") if the
proposed action is effectuated for the stockholder's shares of the Company's
Common Stock. (It is recommended that the Notice of Intention be addressed to
Stephen R. Story, Secretary, Miller Diversified Corporation, 23360 Weld County
Rd. 35, P.O. Box 937, LaSalle, Colorado 80645.) In addition, such stockholder
must not vote in favor of or otherwise consent to adoption of the Plan of
Exchange (a failure to vote will satisfy the condition that the stockholder not
vote in favor of the adoption of the Plan of Exchange.) Voting in favor of the
Plan of Exchange, delivering a signed unmarked proxy or delivering a proxy in
favor of the Plan of Exchange will constitute a waiver of the stockholder's
right to obtain payment and will nullify any previous Notice of Intention
submitted by the stockholder.
If the proposed Plan of Exchange is approved by the shareholders of the
Company at the meeting called for that purpose, the Company shall deliver a
written dissenter's notice to all stockholders who sent written notice to the
Company of intent to demand payment as above described. The dissenter's notice
will be sent within 10 days of the shareholder meeting approving the Plan of
Exchange and will state where the demand for payment must be sent and where and
when the Company's stock certificates must be deposited. Such notice will also
include a form for demanding payment that includes that date of the first
announcement to the news media or to the stockholders of the Company of the
terms of the Plan of Exchange and requiring that the shareholder asserting
dissenter's rights certify whether or not he or she acquired beneficial
ownership of the Company's shares prior to such date. Finally, the dissenter's
notice shall set a date by which the Company must receive the demand for
payment, which shall be not less than 30 or more than 60 days after the date the
notice is delivered.
17
<PAGE>
A stockholder who receives a dissenter's notice must (1) demand payment of
the Company; (2) certify whether he or she acquired beneficial ownership of the
Company's shares before the date required to be set forth in the dissenter's
notice for this certification; and (3) deposit his or her stock certificate in
accordance with the terms of the notice. The dissenting stockholder who demands
payment and deposits his or her certificate retains all other rights as a
shareholder of the Company until the rights are canceled or modified by the Plan
of Exchange. Stockholders who do not comply with the above stated requirements
are not entitled to payment for their shares.
Within 30 days after the Demand for Payment or upon the Effective Time of
the Exchange, whichever is later, the Company shall pay to the dissenting
stockholder the Fair Cash Value of his or her shares as of the day before the
stockholder vote on the Exchange exclusive of any element of value arising from
the expectation or accomplishment of the Exchange. The term "Fair Cash Value"
means the intrinsic value of the dissenting stockholder's interest determined
from the assets and liabilities of the Company considered in the light of every
factor bearing on value.
If there is a dispute between the Company and the dissenting shareholder as
to the Fair Cash Value of the dissenting shareholder's stock, Nevada statutes
provide that the Company shall commence a judicial proceeding within 60 days
after receiving the demand from the dissenting shareholder to petition the Court
to determine the fair value of the shares and accrued interest. Failure of the
Company to commence such a proceeding within 60 days shall result in the Company
paying the amount demanded. In such event the dissenting shareholder shall be
deemed to be a judgment creditor to the Company for the amount demanded. See
Annex III.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with MFL
- ---------------------
The Company is affiliated through partial common ownership with MFL. James
E. Miller, a Director and President of the Company, and Norman M. Dean, a
Director and Chairman of the Board of Directors of the Company, together
beneficially own 31.6% of the Company's stock. Together, Mr. Dean and Mr. Miller
own all of the outstanding stock of MFL. The Company leases its feedlot
facilities and most of its equipment, rents some equipment on a month to month
basis and purchases some of its transportation services from MFL. Mr. Miller
manages the operations of MFL as well as the feedlot operations of the Company.
18
<PAGE>
On February 1, 1991, the Company executed a 25-year capital lease of its
facilities (see Part I, Item 2, Properties) from MFL. As they negotiated for a
long-term lease, the Company's Board of Directors undertook considerable
analyses and comparisons to insure the lease was consistent with the Company's
objectives and that the terms were fair and reasonable. The lease was
unanimously approved by the Board of Directors, including all disinterested
directors. From February 1, 1987 through January 31, 1991, the Company leased
the Facilities from MFL under a short-term operating lease, and amendments and
extensions thereof. The monthly rent under the short-term operating leases was
the same as it was under the long-term lease, and the Company was responsible
for the same property expenses as under the new long-term lease. Effective
August 1, 1992, the Company amended its lease with MFL to lease only one of the
two feedlots initially leased. The feedlot being leased after the amendment has
a capacity of 20,000 head of cattle. As a result of the amendment, the Company
reduced its capital lease asset, net of accumulated amortization, and its
long-term capital lease obligation by $629,421. The Company has continued to
lease one feedlot for the remainder of the 25-year lease term at the same rent
of 2 1/34 per head per day, but with a minimum of $10,750 and maximum of $13,300
per month. The Company has an option to purchase the feedlot it leases for
$1,300,000.
The above-described transactions were entered into on terms the Company
believes were at least as favorable as would have been available from
unaffiliated third parties.
On May 31, 1993 the Company loaned $250,000 to MFL pursuant to a note that
matured May 31, 1998. The note was unsecured and bore interest at 6% per annum,
payable monthly. MFL used the proceeds from the loan to acquire feeder cattle to
place in the Company's feedlot. The note was subordinated to MFL's mortgagor.
This note was paid in full in January, 1998. On May 31, 1997 the Company loaned
an additional $300,000 to MFL pursuant to a note that matures May 31, 2002. The
note is unsecured and bears interest at 6% per annum, payable monthly. MFL used
the proceeds from the loan to acquire additional feeder cattle to place in the
Company's feedlot. The note is subordinated to MFL's mortgagor. $50,000 of this
note was also paid in January, 1998.
BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK
The table set forth below shows, as of the Record Date, the shares of
Common Stock beneficially owned by each director of the Company, by all
directors and officers of the Company as a group, and by each person who was
known to the Company to own beneficially more than five percent of the Common
Stock.
19
<PAGE>
Amount and Nature Percent
Name of Beneficial Owner of Beneficial Ownership of Class(1)
- ------------------------ ----------------------- -----------
James E. Miller 994,706(2) 15.63%
23402 Weld County Road #35
LaSalle, CO 80645
Norman M. Dean 1,019,786(3) 16.02%
P.O. Box 1406
Greeley, CO 80631
Alan D. Gorden -0- 0%
4570 Old Ranch Road
Colorado Springs, CO 80908
Stephen R. Story 1,810 0.03%
2322 45th Avenue
Greeley, CO 80634
All Directors and Executive
Officers as a Group (4 persons) 2,016,302 31.68%
- ----------
(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Unless otherwise stated below, each such person has sole voting and
investment power with respect to all such shares. Under Rule 13d-3(d),
shares not outstanding which are subject to options, warrants, rights or
conversion privileges exercisable within 60 days are deemed outstanding for
the purpose of calculating the number and percentage owned by such person,
but are not deemed outstanding for the purpose of calculating the
percentage owned by each other person listed.
(2) Includes 45,906 shares owned by Mr. Miller's wife.
(3) Includes 45,905 shares owned by Mr. Dean's wife.
MARKET INFORMATION AND RELATED MATTERS
The Company's Common Stock is listed on the OTC Electronic Bulletin Board
under the symbol MILR. The following table sets forth the high and low bid
prices for the Common Stock as reported by the National Quotation Bureau, LLC
for the quarters indicated.
1996 High Low
---- ---
First Quarter.......................... $.05 $.02
Second Quarter......................... .04 .02
Third Quarter.......................... .10 .02
Fourth Quarter......................... .10 .05
1997
First Quarter.......................... .1875 .09
Second Quarter......................... .20 .13
Third Quarter.......................... .15 .12
Fourth Quarter......................... .12 .11
1998
First Quarter.......................... .12 .09
Second Quarter......................... .10 .10
Third Quarter.......................... .11 .10
20
<PAGE>
On the Record Date, there were approximately 1475 record owners of Common
Stock. The reported high bid, low bid and last sales price of the Common Stock
on July 2, 1998, the day prior to the public announcement of the proposed
Transaction, was .11 per share. The reported closing sale price on August ____ ,
1998, three business days prior to the first mailing of this Proxy Statement,
was ____ per share.
The Company has not paid any dividends on its Common Stock since
organization, and it is not contemplated that it will pay any dividends on the
Common Stock in the foreseeable future. No leasing, financing, or similar
arrangements to which the Company is a party preclude or limit in any manner the
payment of any dividend.
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table sets forth information concerning the compensation of
the Chief Executive Officer of the Company for the three year period ended
August 31, 1997. There were no other executive officers of the Company whose
salary and bonuses for the year ended August 31, 1997 exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
--------------------- -----------------------------------------------
Awards Payouts
--------------------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Restricted Other All
Name and Year Ended Annual Compen- Stock Options/ LTIP Compen-
Principal Position August 31 Salary($) Bonus($) sation($) Awards($) SARs(#) Payouts($) sation($)
- ------------------ --------- --------- -------- --------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James E. Miller 1997 $72,000 $ - $ - $ - -(300,000) $ - $ -
Chief Executive 1996 72,000 10,000 - - 300,000 - -
Officer
1995 72,000 - - - - - -
21
</TABLE>
<PAGE>
In January 1997, the Board of Directors rescinded the following options,
which had been granted in the year ended August 31, 1996:
James E. Miller 300,000 shares of common stock at .0605/share
Norman M. Dean 300,000 shares of common stock at .0605/share
Alan D. Gorden 100,000 shares of common stock at .0605/share
The Board rescinded the options when it was discovered that the stock
option plan under which they had been granted had expired.
- --------------------------------------------------------------------------------
OPTIONS/SAR GRANTS IN YEAR ENDED AUGUST 31, 1997
- --------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
of Total
Options/SARs
Name and Granted to Exercise or
Principal Options/SARs Employees in Base Price Expiration
Position Granted (#) Fiscal Year ($/Share) Date
- --------------------------------------------------------------------------------
James E. Miller -0- .0% .0000
President
Norman M. Dean -0- .0% .0000
Chairman of the Board
Alan D. Gorden -0- .0% .0000
- --------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN YEAR ENDED AUGUST 31, 1997
AND OPTION/SAR VALUE AS OF AUGUST 31, 1997
- --------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($) Unexercisable Unexercisable
- --------------------------------------------------------------------------------
James E. Miller 0 $0 0/0 $0/$0
Norman M. Dean 0 $0 0/0 $0/$0
Alan D. Gorden 0 $0 0/0 $0/$0
Compensation of Directors
- -------------------------
The Directors of the Company are entitled to receive fees of $500 per
quarter for meeting attended, and reimbursement for travel expenses. During the
fiscal year ended August 31, 1997, each Director received a total of $1,500 in
director fees. These fees may be increased or decreased from time-to-time by a
majority vote of the Board of Directors. Norman M. Dean is a part-time employee
of the Company at a salary of $3,000 per month.
22
<PAGE>
Termination of Employment and Change of Control Arrangement
- -----------------------------------------------------------
The Company has no compensation plan or arrangement with any of its current
or former Officers or Directors which results or will result from the
resignation, retirement, or any other termination of such individual of
employment with the Company.
AUDITORS
It is anticipated that a representative of the Company's independent
accountant. Anderson & Whitney, P.C., will be present at the Meeting to answer
questions and make a statement if such representative so desires.
INCORPORATION OF DOCUMENTS BY REFERENCE
This Proxy Statement incorporates by reference the financial statements,
supplemental financial information and management's discussion and analysis of
the financial condition and results of operations regarding the Company included
in the Company's Annual Report on Form 10-KSB for the year ended August 31,
1997, and its Quarterly Reports on Form 10-QSB for the quarters ended November
30, 1997, February 28, 1998 and May 31, 1998.
The statements contained in a document incorporated by reference in this
Proxy Statement will be deemed to be modified or superseded for purposes of this
Proxy Statement to the extent that a statement contained in this Proxy Statement
or in any other subsequently filed document which is also incorporated by
reference in this Proxy Statement modifies or supersedes such statement. Any
statement so modified or superseded will not be deemed, except as modified or
superseded, to constitute a part of this Proxy Statement.
The Company will provide, without charge, to each person to whom this Proxy
Statement is delivered, upon written or verbal request of such person, by first
class mail or other equally prompt means within one business day of receipt of
such request, a copy of any and all information that has been incorporated by
reference in the Proxy Statement (not including the exhibits to the information
that is incorporated by reference unless such exhibits are specifically
incorporated by reference to the information that this Proxy Statement
incorporates). Written requests should be addressed to:
Corporate Secretary
Miller Diversified Corporation
23360 Weld County Road 35
P.O. Box 937
LaSalle, Colorado 80645
23
<PAGE>
OTHER MATTERS
Management does not know of any other matters that will be presented at the
Meeting other than matters incident to the conduct thereof. However, if any
matters properly come before the Meeting or any adjounrnments, the holders of
the proxies named in the accompanying form of proxy have discretionary authority
to vote on such matters to the extent that the Company did not know that such
matters would be presented at the Meeting a reasonable time prior to the date of
this Proxy Statement.
24
<PAGE>
Miller Diversified Corporation
23360 Weld County Road 35
LaSalle, Colorado 80645
---------------------------------------------------------
THIS PROXY IS SOLICITED BT THE BOARD OF DIRECTORS
OF MILLER DIVERSIFIED CORPORATION
---------------------------------------------------------
The undersigned having received the Notice of Special Meeting of
Stockholders and Proxy Statement dated ___________, 1998, hereby appoints Norman
Dean or his designee with full power of substitution and revocation to present
the undersigned and to vote all the shares of the common stock of Miller
Diversified Corporation (the "Company") which the undersigned is entitled to
vote at the Special Meeting of the Shareholders of the Company to be held on
____________, 1998 and any postponement or adjournment thereof.
(1) PROPOSAL TO ADOPT AN AGREEMENT AND PLAN OF EXCHANGE TO ACQUIRE ALL OF
THE OUTSTANDING COMMON STOCK OF MILLER FEED LOTS, INC.
(2) IN HIS DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
FOR__________ AGAINST___________ ABSTAIN___________
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned Shareholder. If no direction is made, this Proxy will
be voted for proposals 1 and 2.
The undersigned hereby revokes any proxies as to said shares heretofore
given by the undersigned, and ratifies and confirms all that said attorneys and
proxies may lawfully do by virtue hereof.
THIS PROXY CONFERS DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN
OR DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF THE SPECIAL MEETING OF
SHAREHOLDERS TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders and Proxy Statement furnished therewith.
Dated________________
- ------------------------------
Number of Shares -----------------------------------
Signature(s) of Shareholder(s)
Signature(s) should agree with the
name(s) appearing hereon.
Executors, administrators,
trustees, guardians and attorneys
should indicate when signing.
Attorneys should submit powers of
attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MILLER
DIVERSIFIED CORPORATION. PLEASE SIGN AND RETURN THIS PROXY TO MILLER DIVERSIFIED
CORPORATION, 23360 WELD COUNTY ROAD 35, LASALLE, COLORADO 80645. THE GIVING OF A
PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THIS MEETING.
EXCHANGE AGREEMENT ANNEX I
THIS AGREEMENT OF EXCHANGE (the "Agreement"), is dated as of June 20, 1998,
and entered into by and between Miller Diversified Corporation, a Nevada
corporation ("Miller"), and Miller Feed Lots, Inc. ("MFL").
RECITALS
The Boards of Directors of Miller and MFL have adopted resolutions
approving the exchange pursuant to Section 78.450 of the Nevada General
Corporation Law and Section 7-111-102 of the Colorado Business Corporation Act
(the "Exchange") of the issued and outstanding capital stock of MFL, consisting
solely of 1,000 shares of common stock, for 15,000,000 shares of Miller common
stock in accordance with this Agreement and the Plan of Exchange (the "Plan") in
the form of Exhibit "A" attached hereto and by this reference made a part
hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the agreements, provisions and
covenants herein contained, Miller and MFL hereby agree as follows:
ARTICLE I
---------
THE EXCHANGE
------------
1.1 Filing of the Plan and Articles of Exchange. Subject to the conditions
contained in Article V of this Agreement, executed articles of exchange,
including the Plan, shall be delivered to the Secretary of State of Colorado for
filing as soon as practicable following the time when the last of such
conditions shall have been fulfilled (or waived in writing in accordance with
Section 8.1 hereof) or such earlier or later date as may be mutually agreed to
in writing by Miller and MFL.
1.2 Time of Filing and Effective Time. The time of delivery to the
Secretary of State of Colorado pursuant to the preceding section is herein
referred to as the "Time of Filing". The "Effective Time of the Exchange" shall
be when a certificate of exchange is issued by the Secretary of State of
Colorado.
1.3 The Exchange. At the Effective Time of the Exchange each outstanding
share of MFL shall be deemed to be owned and held by Miller, and each holder of
then outstanding MFL share certificates shall be entitled to receive the Miller
common stock specified in the Plan, subject to the conditions contained therein.
<PAGE>
ARTICLE II
----------
REPRESENTATIONS AND WARRANTIES OF MFL
-------------------------------------
MFL represents and warrants as follows:
2.1 No Breaches of Statute or Contract; Required Consents. Neither the
execution and delivery of this Agreement or the related articles of exchange by
MFL, nor compliance by MFL with the terms and provisions thereof and of the Plan
will: (i) conflict with or result in a breach of any of the provisions of the
articles of incorporation, bylaws or other governing instruments of MFL, or any
judgment, order, decree, or ruling to which MFL is a party, or any injunction to
which it is subject, of any court of governmental authority or of any agreement,
contract or commitment to which it is a party and which is material to the
financial condition of MFL considered as a whole, or (ii) require the
affirmative consent or approval of any non-governmental third party (apart from
stockholder approval referred to elsewhere herein).
2.2 Authorization of Agreement. MFL has the corporate power to enter into
this Agreement and to perform its obligations hereunder; the execution, delivery
and, subject to requisite stockholder approval, the performance of this
Agreement by MFL has been duly and validly authorized by the board of directors
of MFL, and MFL has taken, or will use its best efforts to take prior to the
Time of Filing, all action required by law, its articles of incorporation and
bylaws to authorize the execution, delivery and performance of this Agreement,
the Plan, and related articles of exchange.
2.3 Further Representations.
(a) MFL is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Colorado; has full corporate power to
carry on its business as it is now being conducted, and to own and operate the
properties and assets it now owns or operates; and is duly qualified to do
business and is in good standing in each jurisdiction where the conduct of its
business or the ownership of its properties require such qualification.
(b) Pursuant to its Articles of Incorporation, MFL is authorized to
issue 2,500 shares of common stock with $100.00 par value, of which a total of
1,000 shares are each validly issued, fully paid and nonassessable. MFL has no
other class of stock or convertible securities outstanding. There are no
existing options, warrants, calls, commitments or rights of any character to
purchase or otherwise acquire from MFL shares of capital stock of any class, no
outstanding securities of MFL that are convertible into shares of capital stock
of MFL of any class, and no options, warrants or rights to purchase from MFL any
such convertible securities.
2
<PAGE>
(c) MFL has delivered to Miller the following documents, all of which
have been signed for identification by the President of MFL and are dated as of
the date hereof. (i) a list of all the liabilities and obligations of MFL as of
February 28, 1998 (Exhibit "B"); and (ii) all property and all other assets of
MFL as of February 28, 1998 (Exhibit "C"). MFL has good and marketable title to
all properties and assets, real and personal, described in Exhibit "C". All of
the properties and assets listed on Exhibit "C" are free and clear of all
mortgages, ledges, liens, charges, security interests or other encumbrances of
any nature whatsoever, except for mortgages, pledges, liens, charges, security
interests or other encumbrances as set forth in Exhibit "B", liens for current
taxes not yet due and payable, and imperfections of title, easements and
encumbrances, if any, that are not substantial in character, amount or extent
and do not materially detract from the value, or interfere with the present or
proposed use, of the property subject thereto or affected thereby, or otherwise
materially impair business operations. All leases pursuant to which MFL leases
any substantial amount of real or personal property are in good standing, valid
and effective in accordance with their respective terms, and under none of these
leases is there any existing fault, event of default or event that with notice
or the lapse of time, or both, would constitute a default and in respect of
which MFL has not taken adequate steps to prevent a default from occurring.
(d) Between February 28, 1998 and the date of this Agreement there has
not been any material adverse change in the financial condition or in the
operations, business or property of MFL.
(e) The structures, equipment, machinery, vehicles and other physical
assets of MFL that are necessary to the operation of the business being
conducted by it are in good operating condition and repair, subject only to the
ordinary wear and tear of the business.
(f) Neither MFL nor, to the knowledge of its shareholders, any other
party breached any material provision of, or defaulted in any material respect
of the terms of any contract, or agreement to which MFL is a party which would
have a materially adverse effect upon the business or financial condition of
MFL.
(g) MFL has delivered to Miller written information in the form of
Exhibit "D" attached to this Agreement as of the date hereof respecting the
following:
All real property owned or leased by MFL with the amount of any
mortgages encumbering any such real property; all personal property used in the
trade business of MFL with the amount of any liens encumbering any such personal
property.
3
<PAGE>
(h) MFL will deliver such other lists, descriptions, information,
schedules, documents and reports as may reasonably be requested by Miller.
(i) To the best knowledge of its shareholders, there is no default or
claim, purported or alleged default, or statement of facts under which lack of
notice or the lapse of time, or both, would constitute a default, on any
obligation to be performed by MFL under any material lease, contract, plan or
other arrangement.
(j) To the best knowledge of its shareholders, no suit, action or
legal, administrative or arbitration proceeding, which might materially and
adversely affect the overall financial condition, business or property of MFL,
is pending or, to the knowledge of its shareholders threatened.
(k) Its shareholders have no knowledge of any tax liability or claim
by any taxing authority for due but unpaid taxes, interest or penalties, nor has
MFL been advised of any request or demand for audit by any taxing authority.
(l) The representations and warranties of its shareholders and MFL
shall be as of the date of this Agreement and as of the date of the Closing. Any
such representation made as of such dates shall survive the Closing. All
representations and warranties of MFL are based upon knowledge only of its
officers and directors and no one else.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF MILLER
----------------------------------------
Miller represents and warrants as follows:
3.1 Accuracy of Proxy Statement and Exchange Act Filings. The information
concerning Miller contained, or incorporated by reference, in the proxy
solicitation material soliciting approval of the Exchange and the Exchange Act
filings which have been provided to MFL are responsive in all material respects
to the requirements of the appropriate forms and related rules and regulations,
and do not contain any untrue statement of a material fact or omit to state a
material fact necessary to make such information not misleading; provided,
however, that as to information supplied to Miller by MFL which is included in
the proxy solicitation material, Miller represents only that it has no knowledge
of any such untrue statement or misleading omission.
3.2 Status of Miller Common Stock. The shares of Miller Common Stock to be
issued to the stockholders of MFL pursuant to this Agreement and Plan, when so
issued, will be duly and validly authorized and issued, fully paid and
nonassessable.
4
<PAGE>
3.3 No Breach of Contract; Required Consents. Neither the execution and
delivery of this Agreement nor compliance by Miller with the terms of provisions
thereof and of the Plan will: (i) conflict with or result in a breach of any of
the provisions of the articles of incorporation or bylaws or other governing
instruments of Miller, or any judgment, order, decree, or ruling to which Miller
is a party, or any injunction to which it is subject, of any court or government
authority, or of any agreement, contract or commitment to which Miller is a
party and which is material to the financial condition or results of operations
or conduct of the business of Miller considered as a whole, or (ii) require the
affirmative consent or approval of any nongovernmental third party.
3.4 Authorization of Agreement. Miller has the corporate power to enter
into this Agreement and to perform its obligations hereunder; the execution,
delivery and performance of this Agreement by Miller have been duly and validly
authorized and approved by the board of directors of Miller; and Miller has
taken, or will use its best efforts to take prior to the Time of Filing, all
action required by law, its articles of incorporation or bylaws to authorize the
execution, delivery and performance of this Agreement and the Plan.
ARTICLE IV
----------
CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME OF EXCHANGE
------------------------------------------------------------
4.1 Access; Operation of Business between the date of this Agreement and
the Effective Time of the Exchange.
(a) Access. MFL and Miller each agrees to furnish the other with such
financial and operating data and other information with respect to the business
and properties of it as the other shall from time to time reasonably request in
furtherance of consummating the Exchange; provided, however, that any such
investigation shall not affect any of the representations and warranties
hereunder. In the event of termination of this Agreement, MFL and Miller will
each return to the other all documents and other material obtained from the
other in connection with the transactions contemplated hereby, and each shall
maintain the confidentiality of such materials.
(b) Conduct of Business. MFL and Miller shall continue to conduct
their business in conformity with established industry practice in a diligent
manner.
4.2 Preparation of Proxy Statement. Both MFL and Miller acknowledge
participation in the preparation of the proxy solicitation material to be filed
with the SEC relating to a special meeting of stockholders of Miller to vote on
the Exchange, and agree to cooperate in the preparation of final proxy
solicitation material relating to such meeting (the "Proxy Statement").
5
<PAGE>
4.3 Stockholder Approval of MFL. MFL agrees that the execution of this
Agreement by James E. Miller and Norman M. Dean shall constitute all necessary
shareholders approval as is necessary under Colorado law.
James E. Miller and Norman M. Dean further acknowledge and agree that
the shares of Miller they or their assigns may acquire as a result of the
Exchange contemplated herein are being acquired for investment purposes only and
not with a view toward their redistribution or reoffering. All stock
certificates representing Miller Common Shares issued to the shareholders of MFL
shall be endorsed with the following restrictive legend:
No sale, offer of sell, or transfer of the shares
represented by this certificate shall be made unless a
registration statement under the Federal Securities Act of
1933, as amended, with respect to such shares is then in
effect or an exemption from the registration requirements is
then in fact applicable to said shares.
4.4 Stockholder Approval of Miller. Miller agrees to submit the Plan of
Exchange to its stockholders for approval, as provided by law, at a meeting
which shall be held as soon as practicable, following clearance of the Proxy
Statement by the SEC.
ARTICLE V
---------
CONDITIONS; ABANDONMENT OF EXCHANGE
-----------------------------------
5.1 General Conditions. The obligations of the parties hereto to effect the
Exchange shall be subject to the following conditions:
(a) No Governmental Proceedings. No governmental action or proceeding
shall have been instituted or be threatened at the Time of Filing by or before a
court or other governmental body, agency or authority to restrain or prohibit
the transactions contemplated by this Agreement.
(b) No Litigation. There shall be no litigation pending at the Time of
Filing challenging the authority of either MFL or Miller or the officers or
directors of either to enter into this Agreement or seeking to restrain or
prohibit the transactions contemplated hereby, which the board of directors of
either MFL or Miller shall reasonably believe to present a substantial risk
either of restraining or prohibiting such transactions or of resulting in the
award of material damages or other relief.
6
<PAGE>
(c) Statutory Requirements and Approvals. All statutory requirements
for the valid consummation by MFL and Miller of the transactions contemplated by
this Agreement and the Plan shall have been fulfilled; no approvals of the
transactions contemplated by this Agreement shall be required from any federal
or state governmental agency or authorities.
5.2 Conditions of Obligation of Miller. The obligation of Miller to effect
the Exchange shall be subject to the following conditions:
(a) Representations and Warranties of MFL to be True. The
representations and warranties of MFL herein contained shall be true in all
material respects at the Effective Time of the Exchange with the same effect as
though made at such time, except to the extent waived hereunder or affected by
the transactions contemplated herein; MFL shall have performed all obligations
and complied with all covenants and conditions required by this Agreement to be
performed or complied with by it at or prior to the Time of Filing; and MFL
shall have delivered to Miller a certificate of MFL in form and substance
satisfactory to Miller, dated the Time of Filing and signed by its President or
Vice President to all such effects.
(b) Exercise of Dissenter's Rights. Holders of no more than 10% of the
issued and outstanding shares of Miller shall have given notice of their
intention to receive payment in cash pursuant to their dissenter's rights. In
the event that more than 10% of the issued and outstanding shares give such
notice Miller may waive the condition and proceed with the Exchange.
5.3 Conditions of Obligation of MFL. The obligations of MFL to effect the
Exchange shall be subject to the following conditions:
(a) Representations and Warranties of Miller to be True. The
representations and warranties of Miller herein contained, shall be true in all
material respects at the Time of Filing with the same effect as though made at
such time, except to the extent waived hereunder or affected by the transactions
contemplated herein; Miller shall have performed all obligations and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by it prior to the Time of Filing; and Miller shall have delivered
to MFL a certificate of Miller in form and substance satisfactory to MFL, dated
the Time of Filing and signed by its President and its principal financial
officer, to all such effects.
5.4 Abandonment. The Exchange may be abandoned before the Effective Time of
the Exchange without liability on the part of any party hereto exercising such
right of abandonment or restriction on the future activities of either party
hereto:
7
<PAGE>
(a) Mutual Consent. By the mutual consent of the Boards of Directors
of Miller and MFL evidenced by a writing executed by Miller and MFL or;
(b) Lapse of Time. By the Board of Directors of Miller or MFL if the
Effective Time of the Exchange has not occurred on or prior to July 31, 1998.
The power of abandonment provided for by this Section 5.4 may be
exercised by Miller or MFL only by their respective Boards of Directors and will
be effective only after written notice thereof, signed on behalf of the party
for which it is given by its Chairman of the Board or President, shall have been
given to the other. If the Exchange shall be abandoned, no articles of exchange
or certificates relating to the Exchange shall be filed by the officers of any
such party in the State of Colorado. Abandonment shall not effect any rights
theretofore accruing hereunder.
ARTICLE VI
----------
INDEMNIFICATION
---------------
6.1. Continuation of Representations and Warranties. Miller and MFL agree
that the representations, warranties and covenants of Miller and MFL contained
herein or in any instrument or certificate delivered hereunder shall survive the
Effective Time of the Exchange, regardless of any investigation or inquiry by or
on behalf of Miller and MFL.
6.2. Indemnification by MFL. MFL agrees to indemnify and hold harmless
Miller and each person, if any, who controls Miller within the meaning of
Section 15 of the 1933 Act:
(a) against any and all losses, liabilities, claims, damages and
expenses (including interest, expenses of litigation and attorney's fees)
arising out of or as a result of any inaccuracy or breach of any of the
representations, warranties and covenants of MFL contained in this Agreement and
contained in any instrument or certificate delivered to Miller pursuant to this
Agreement, or the defense or settlement of any claim asserted against Miller
challenging any such representation, warranty and covenant, or the failure or
default of MFL to perform or observe any covenant or condition under this
Agreement.
6.3 Indemnification by Miller. Miller agrees to indemnify and hold harmless
MFL and each person, if any, who controls MFL:
(a) against any and all losses, liabilities, claims, damages and
expenses (including interest, expenses of litigation and attorneys' fees)
arising out of or as a result of any inaccuracy or breach of any of the
representations, warranties and covenants of Miller contained in this Agreement
and contained in any instrument or certificate, delivered to MFL pursuant to
this Agreement, or the defense or settlement of any claim asserted against MFL
challenging any such representation, warranty and covenant, or the failure or
default of Miller to perform or observe any covenant or condition under this
Agreement.
8
<PAGE>
6.4 Notice. Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this Agreement. An indemnifying party may participate at its own
expense in the defense of such action. In no event shall the indemnifying
parties be liable for the fees and expenses of more than one counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
ARTICLE VII
-----------
ADDITIONAL MATTERS
------------------
7.1 Management. The parties agree that MFL shall continue to have the same
management after the contemplated Exchange that it had prior to the Exchange.
7.2 Closing. The Closing of the Exchange contemplated by this Agreement
shall take place at the offices of Miller at such time as may be convenient to
all the parties but in no event later than July 31, 1998. At the Closing MFL
shall deliver share certificates in amounts representing all of the issued and
outstanding common shares of MFL to Miller and Miller shall deliver 15,000,000
of its common shares to James E. Miller and Norman M. Dean or to their assigns
as Miller is directed at Closing.
ARTICLE VIII
------------
GENERAL
-------
8.1 Waivers. Each of Miller and MFL may, pursuant to action by its
respective Board of Directors, by an instrument in writing, extend the time for
or waive the performance of any of the obligations of the other or waive
compliance by the other with any of the covenants or conditions contained
herein; provided, however, that no such waiver or extension shall affect the
rights of the stockholders of Miller or MFL in a manner which is materially
adverse to such stockholders.
9
<PAGE>
8.2 Notices. All notices, requests, demands and other communications which
are required of permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally or when mailed by registered or
certified mail, postage pre-paid, as follows:
If to Miller to:
P.O. Box 937
23360 Weld CO. Rd. #35
LaSalle, Colorado 80645
If to MFL to:
P.O. Box 937
23360 Weld CO. Rd. #35
LaSalle, Colorado 80645
8.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
8.4 Entire Agreement. This Agreement supersedes any and all oral or written
agreements heretofore made relating to the subject matter hereof and constitutes
the entire agreement of the parties relation to the subject matter hereof.
8.5 No Implied Rights or Remedies. Except as otherwise expressly provided
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or to give any person, firm or corporation, other than Miller and
MFL and their stockholders, any rights or remedies under or by reason of this
Agreement.
8.6 Headings. The headings in this Agreement are inserted for convenience
of reference only and shall not be part of, or control or affect the meaning of,
this Agreement.
8.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf and attested by its officers there unto duly
authorized, all as of the day and year first above written.
Miller Diversified Corporation
By: /s/ James E. Miller
----------------------------------
James E. Miller
President
10
<PAGE>
ATTESTED BY:
/s/ Norman M. Dean
- -------------------------------
Norman M. Dean Miller Feed Lots, Inc.
BY: /s/ James E. Miller
---------------------------------
James E. Miller
President
ATTESTED BY:
/s/ Norman M. Dean
- --------------------------------
Norman M. Dean
Shareholders of Miller Feed
Lots, Inc.
/s/ James E. Miller
------------------------------------
James E. Miller
/s/ Norman M. Dean
------------------------------------
Norman M. Dean
11
ANNEX II
PLAN OF EXCHANGE
OF
MILLER DIVERSIFIED CORPORATION
AND
MILLER FEED LOTS, INC.
A. The parties to the exchange are Miller Diversified Corporation, a Nevada
corporation ("Miller"), and Miller Feed Lots, Inc., a Colorado corporation
("MFL"). Miller is the acquiring corporation.
B. When the exchange becomes effective:
(i) Each outstanding share of MFL stock shall by operation of law be
exchanged for 15,000 shares of previously unissued common stock of Miller.
(ii) Miller shall become the owner and holder of all of the
outstanding stock of MFL.
C. After the exchange becomes effective:
(a) Until surrendered, each outstanding certificate which prior to the
exchange represented shares of MFL stock shall be deemed for all corporate
purposes to evidence the number of shares of Miller common stock for which such
MFL stock shall have been exchanged. There shall be no further registry of
shares on the records of MFL of MFL stock, and, if certificates representing
such shares are presented to MFL, they shall be cancelled and the holder thereof
shall receive the common stock of Miller for which the shares represented were
exchanged. Unless waived by Miller, no voting rights shall vest and no dividends
or distributions will be paid to persons entitled to receive certificates for
shares of Miller common stock until such persons shall have surrendered their
MFL stock certificates; provided, however, that when such certificates shall
have been so surrendered in exchange for certificates representing Miller common
stock, there shall be paid to the holders thereof, but without interest thereon,
all dividends and other distributions payable subsequent to and in respect to
any record date after the effective date of the exchange on the shares of Miller
common stock that have not been paid as a result of the foregoing.
1. (b) If any certificate of Miller is to be issued in a name other
than that in which the certificate for MFL stock surrendered for exchange
is registered, it shall be a condition of such exchange that the
certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange shall
pay to the transfer agent any transfer or other taxes required by reason of
the issuance of such Miller common stock in any name other than that of the
registered holder of the certificate surrendered, or establish to the
satisfaction of the transfer agent that such tax has been paid or is not
applicable.
12
<PAGE>
4. This exchange may be terminated at any time before the filing of
Articles of Exchange, whether before or after approval of this plan by the
stockholders of MFL and Miller in the manner specified in the Agreement of
Exchange Agreement by and between Miller and MFL dated June 20, 1998.
5. The date of this Plan of Exchange shall be June 20, 1998.
13
DISSENTERS' RIGHTS - MILLER ANNEX III
11-12-91
NEVADA General Corporation Law Corp.-73
78.480 DOMESTIC AND FOREIGN CORPORATIONS: AGREEMENT FOR MERGER OR
CONSOLIDATION.-(Repealed by Ch. 442, L.'91, eff. 10-1-91.)
Prior to its repeal by Ch. 442. L. '91. eff. 10-1-91, this section read as
follows: "1. All the constituent corporations must enter into an agreement in
writing which must prescribe:
(a) The terms and conditions of the merger or consolidation.
(b) The mode of carrying the merger or consolidation into effect.
(c) The manner of converting the shares of each of the constituent
corporations into shares or other securities of the corporation surviving or
resulting from the merger or consolidation and the other consideration which the
holders of shares in the constituent corporations may receive in exchange for,
or upon the conversion of, those shares, or the certificates evidencing them
which may be in addition to or in lieu of shares or other securities of the
surviving or consolidated corporation.
(d) Such other details and provisions as are deemed necessary or proper,
including, without limitation, any of the provisions permitted by NRS 78.455.
78.460 and 78.465.
2. The agreement must also set forth such other facts as are required in
certificates of incorporation by the laws of the state or foreign country, which
are stated in the agreement to be the laws that govern the surviving or
consolidated corporation and that can be stated in the case of a consolidation
or merger.
3. If the agreement is for a merger and the surviving corporation is a
corporation organized under the laws of this state. the agreement must state any
matters with respect to which the certificate or articles of incorporation of
the surviving corporation are to be amended, and the certificate or articles of
incorporation shall be deemed to be amended accordingly upon the effective date
of the merger.
4. If the agreement is for a consolidation and the consolidated corporation
is to be governed by the laws of this state, the agreement must state the
matters required or permitted by NRS 78.035 to be set forth in a certificate or
articles of incorporation, and such statements shall be deemed to be the
certificate or articles of incorporation of the consolidated corporation upon
the effective date of the consolidation."
[Dissenters' Rights]
78.481 [STOCKHOLDER'S RIGHT TO DISSENT AND OBTAIN PAYMENT: CONDITIONS;
CHALLENGE OF ACTION].-1. Except as otherwise provided in NRS 78.482, a
stockholder is entitled to dissent from, and obtain payment of the fair value of
his shares in the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
(1) If approval by the stockholders is required for the merger by section
11 of this act or the articles of incorporation and the stockholder is entitled
to vote on the merger; or
(2) If the corporation is a subsidiary and is merged with its parent under
NRS 78.457.
(b) Consummation of a plan of exchange to which the corporation is a party
as the corporation whose shares will be acquired, if the stockholder is entitled
to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the stockholders to
the extent that the articles of incorporation, bylaws or a resolution of the
board of directors provides that voting or nonvoting stockholders are entitled
to dissent and obtain payment for their shares.
<PAGE>
74-Corp. NEVADA General Corporation Law 11-12-91
2. A stockholder who is entitled to dissent and obtain payment under NRS
78.471 to 78.502 may not challenge the corporate action creating his entitlement
unless the action is unlawful or fraudulent with respect to the stockholder or
the corporation. (Added by Ch. 442, L. '91, eff. 10-1-91.)
78.4,92 [RIGHT TO DISSENT WITH RESPECT TO PLAN OF MERGER OR SHARE
EXCHANGE].-There is no right of dissent with respect to a plan of merger or
exchange in favor of holders of shares of any class or series which, at the
record date fixed to determine the stockholders entitled to receive notice of
and to vote at the meeting at which the plan of merger or exchange is to be
acted on, were either listed on a national securities exchange or held by at
least 2,000 stockholders of record, unless in either case:
1. The articles of incorporation of the corporation issuing the shares
provide otherwise; or
2. The holders of the class or series are required under the plan of merger
or exchange to accept for such shares anything except:
(a) Cash, shares or shares and cash in lieu of fractional shares of:
(1) The surviving or acquiring corporation; or
(2) Any other corporation which, at the effective date of the plan of
merger or exchange. were either listed on a national securities exchange or held
of record by at least 2,000 stockholders of record; or
(b) A combination of cash and shares of the kind described in subparagraphs
(1) and (2) of paragraph (a). (Added by Ch.442, L.'91, eff. 10-1-91.)
78.483 [ASSERTING DISSENTER'S RIGHTS].-1. A stockholder of record may
assert dissenter's rights as to fewer than all of the shares registered in his
name only if he dissents with respect to all shares beneficially owned by any
one person and notifies the corporation in writing of the name and address of
each person on whose behalf he asserts dissenter's rights. The rights of a
partial dissenter under this subsection are determined as if the shares as to
which he dissents and his other shares were registered in the names of different
stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares held
on his behalf only if:
(a) He submits to the corporation the written consent of the stockholder of
record to the dissent not later than the time the beneficial stockholder asserts
dissenter's rights; and
(b) He does so with respect to all shares of which he is the beneficial
stockholder or over which he has power to direct the vote. (Added by Ch.442.
L.'91, eff.10-1-91.)
78.485 DOMESTIC AND FOREIGN CORPORATIONS: APPROVAL OF AGREEMENT.-Repealed
by Ch. 442, L.'91, eff. 10-1-91.)
- ---
Prior to its repeal by Ch. 442. L. 91. eff. 10-1-91, this section read as
follows: "1. The agreement must be authorized, adopted, approved, signed and
acknowledged by each of the constituent corporations in accordance with the laws
under which it is formed, and, in the case of a corporation organized under the
laws of this state, in the manner provided in NRS 78.455, 78.46O, 78.465 and
78.470.
<PAGE>
11-12-91 NEVADA General Corporation Law Corp.-75
2. The agreement so authorized, adopted, approved, signed and acknowledged
must be filed in the office of the secretary of state and shall be deemed to be
the agreement and act or merger or consolidation of the constituent corporations
for all purposes of the laws of this state. Unless a later effective date is
specified in the agreement, the merger or consolidation shall be deemed to be
effective when the agreement is filed. The effective date must be more than 90
days after the agreement is filed.
3. A certified copy of the agreement is prima facie evidence of the
performance of all conditions precedent to the merger or consolidation, and of
the continued existence of the surviving corporation or of the creation and
existence of the consolidated corporation."
78.486 DOMESTIC AND FOREIGN CORPORATIONS: SIMPLIFIED MERGER; OWNERSHIP OF
90 PERCENT OF OUTSTANDING STOCK BY PARENT CORPORATION.-Repealed by Ch.442.
L.'91, eff. 10-1-91.)
- ---
Prior to its repeal by Ch. 442, L. '91, eff. 10-1-91, this section read as
follows: "1. If at least 90 percent of the outstanding shares of each class of
the stock of a corporation or corporations is owned by another corporation, and
one of the corporations is a corporation of this state and the other or others
are corporations of this state or are organized under the laws of a jurisdiction
whose laws permit such a merger, whether or not the jurisdiction is one of the
United States, the corporation having such stock ownership may either merge the
other corporation or corporations into itself and assume all of its or their
obligations, or merge itself, or itself and one or more of the other
corporations, into one of the other corporations by filing with the secretary of
state a certificate of such ownership and merger, setting forth a copy of the
resolution of its board of directors to merge and the date of the adoption
thereof. Unless a later effective date is specified in the certificate, the
merger or consolidation shall be deemed to be effective when the certificate is
filed. The effective date must not be more than 90 days after the certificate is
filed. The certificate must be signed by its president or a vice-president and
its secretary or treasurer, and acknowledged in the manner prescribed by NRS
111.270.
2. If any of the corporation is organized under the laws of a jurisdiction
other than one of the United States or the District of Columbia, it is a further
condition of merger under this section that the surviving corporation be a
corporation of this state.
3. If the parent corporation does not own all the outstanding stock of all
the subsidiary corporations which are parties to a merger pursuant to this
section, the resolution of the board of directors of the parent corporation must
state the terms and conditions of the merger, including the securities, cash or
other property to be issued, paid or delivered by the surviving corporation upon
surrender of each share of the subsidiary corporation or corporations not owned
by the parent corporation.
4. If the parent corporation is not the surviving corporation, the
resolution must include provisions for the pro rata issuance of stock of the
surviving corporation to the holders of the stock of the parent corporation or
surrender of any certificates therefor, and the certificate of ownership and
merger must state that the proposed merger has been approved by the holders of a
majority of the stock of the parent corporation at a meeting of its stockholders
called and held after 20 days' notice of the purpose of the meeting mailed to
each of its stockholders at his address as it appears on the records of the
corporation.
78-487 DOMESTIC AND FOREIGN CORPORATIONS: SIMPLIFIED MERGER; POWERS OF
SURVIVING NEVADA CORPORATION.-(Repealed by Ch. 442, L. '91, eff. 10-1-91.)
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Prior to its repeal by Ch. 442. L.'91. eff. 10-1-91, this section read as
follows: "If the surviving corporation is a Nevada corporation:
1. It may change its corporate name by the inclusion of a provision to that
effect in the resolution of merger adopted by the directors of the parent
corporation and set forth in the certificate of ownership and merger. and upon
the effective date of the merger, the name of the corporation shall be so
changed.
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Corp.-76 NEVADA General Corporation Law 11-12-91
2. The certificate of incorporation of the surviving corporate . on shall
automatically be amended to the extent, if any, that changes in its certificate
of incorporation are set forth in the certificate of ownership and merger."
78.488 DOMESTIC AND FOREIGN CORPORATIONS: SIMPLIFIED MERGER; APPROVAL OF
PUBLIC SERVICE COMMISSION OF NEVADA.-(Repealed by Ch. 442, L. '91, eff.
10-1-91.)
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Prior to its repeal by Ch. 442, L.'91. eff. 10.1-91, this section read as
follows: "If the parent corporation is subject to the jurisdiction of the public
service commission of Nevada, the approval of the merger by the commission shall
be endorsed on or annexed to the certificate of ownership and merger before
filing."
78.490 DOMESTIC AND FOREIGN CORPORATIONS: SERVICE OF PROCESS IN NEVADA IN
CERTAIN PROCEEDINGS.-(Repealed by Ch. 442, L.'91, eff. 10-1-91.)
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Prior to its repeal by Ch. 442, L.'91. eff. 10-1-91, this section read as
follows: "1. If the surviving or consolidated corporation will be governed by
the laws of a state other than this state or by the laws of a foreign country,
it must agree that it may be served with process in this state in any proceeding
for enforcement of any obligation of any constituent corporation organized and
existing, before the merger or consolidation, under the laws of this state,
including any amount fixed by appraisers or the district court pursuant to the
provisions of NRS 78.510, and must irrevocably appoint the secretary of state as
its agent to accept service of process in an action for the enforcement of
payment of any such obligation or any amount fixed by the appraisers, and must
specify the address to which a copy of the process may be mailed by the
secretary of state.
2. Service of such process must be made by personally delivering to and
leaving with the secretary of state duplicate copies of such process and the
payment of a fee of $1O for accepting and transmitting the process. The
secretary of state shall forthwith send by registered mail one of the copies to
the surviving or consolidated corporation at its specified address, unless the
surviving or consolidated corporation has designated in writing to the secretary
of state a different address for that purpose, in which case it must be mailed
to the last address so designated."
Decision Under Prior Law
.1 Registered mail.-Where federal statute required giving of notice by
registered mail and notice was given by ordinary mail, notice was sufficient;
statute "was intended to be highly remedial," hence was "to be construed
liberally." Fleisher Eng & Const Co v US, 311 US 15 (1940).
78.491 [DISSENTERS' RIGHTS: NOTICE OF STOCKHOLDERS' MEETING; PROPOSED
CORPORATE ACTION TO CREATE RIGHTS].-1.If the proposed corporate action creating
dissenters' rights is submitted to a vote at a stockholders' meeting, the notice
of the meeting must state that stockholders are or may be entitled assert
dissenters' rights under NRS 78.471 to 78.502, inclusive, and be accompanied by
a copy of those sections.
2. If the corporate action creating dissenters' rights is taken without a
vote of the stockholders, the corporation shall notify in writing all
stockholders entitled to assert dissenters' rights that the action was taken and
send them the dissenter's notice described in NRS 78.4%)3. (Added by Ch. 442, L.
'91. eff. 10-1-91.)
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11-12-91 NEVADA General Corporation Law Corp.-77
78.492 [DISSENTERS' RIGHTS: NOTICE OF STOCKHOLDER'S MEETING; WRITTEN NOTICE
OF INTENT TO DEMAND PAYMENT OF SHARES].-1. If the proposed corporate action
creating dissenters' rights is submitted to a vote at a stockholders' meeting, a
stockholder who wishes to asset dissenter's rights;
(a) Must deliver to the corporation, before the vote is taken, written
notice of his intention to demand payment for his shares if the proposed action
if effectuated;
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1 is
not entitled to payment for his shares under this chapter. (Added by Ch. 442, L.
'91, eff. 10-1-91.)
78.493 [DISSENTERS' NOTICE: STOCKHOLDERS WHO SATISFIED REQUIREMENTS TO
ASSERT RIGHTS].-1. If the proposed corporate action creating dissenter=s rights
is authorized at a stockholder's meeting, the corporation shall deliver a
written dissenter's notice to all stockholders who satisfied the requirements to
assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates for certificated shares must be deposited;
(b) Inform the holders of uncertificated shares as to what extent the
transfer of the shares will be restricted after the demand for payment is
received;
(c) Supply a form for demanding payment that includes the date of the first
announcement to the news media or to the stockholders of the terms of the
proposed corporate action requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the corporation must receive the demand for
payment, which may not be less than 30 nor more than 60 days after the date the
notice is delivered; and
(e) Be accompanied by a copy of NRS 78.471 to 78.502, inclusive. (Added by
Ch. 442, L. '91, eff. 10-1-91.)
78.494 [DISSENTERS' NOTICE: DEMAND PAYMENT; DEPOSIT OF DISSENTER'S
CERTIFICATES].-1. A stockholder to whom a dissenter's notice was sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares before
the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates in accordance with the terms of the notice.
2. The stockholder who demands payment and deposits his certificates where
required, each by the date set forth in the dissenter's notice, is not entitled
to payment for his shares under NRS 78.471 to 78.502, inclusive. (Added by Ch.
442, L. '91, eff. 10-1-91.)
78.495 STATUS, RIGHTS, LIABILITIES AND PRIVILEGES OF SURVIVING OR
CONSOLIDATED CORPORATIONS FOLLOWING MERGER OR CONSOLIDATION.-(Repealed by Ch.
442, L. '91, eff. 10-1-91.)
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11-12-91 NEVADA General Corporation Law Corp.-77
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Prior to its repeal by Ch. 442, L. '91, eff. 10-1-91, this section read as
follows: "1. When an agreement of merger or consolidation, or a certificate of
ownership and merger, has been signed, acknowledged and filed, as required by
this chapter, and the merger or consolidation has become effective, for all
purposes of the laws of this state the separate existence of all the constituent
corporations, except that of the surviving corporation in case of merger,
ceases, and the constituent corporations thereupon merge into the surviving
corporation, in case of merger, ceases, and the constituent corporations
thereupon merge into the surviving corporation, in the case of merger, or become
the consolidated corporation, in the case of consolidation, and possess all the
rights, privileges, powers and franchises as well of a public as of a private
nature, and are subject to all the restrictions, disabilities and duties of each
of the constituent corporations so merged or consolidated, and all and singular,
the rights, privileges, powers and franchise of each of the constituent
corporations, and all property, real, personal and mixed, and all debts due to
any of the constituent corporations on whatever account, as well for stock
subscriptions as all other things or belongings to each of the constituent
corporations, are vested in the surviving or consolidated corporation.
2. All property, rights, privileges, powers and franchises, and every other
interest is thereafter as effectually the property of the surviving or
consolidated corporation as they were of the several and respective constituent
corporations, and the title to any real or personal property, whether by deed or
otherwise, vested in any of the respective constituent corporations, and the
title to any real or personal property, whether by deed or otherwise, vested in
any of the constituent corporations, does not revert or is in any way impaired
by reason of the merger or consolidation, except:
(a) That all rights of creditors and all liens upon any property of any of
the constituent corporations are preserved unimpaired, limited in lien to the
property affected by such liens immediately before the time of the merger or
consolidation, and all debts, liabilities and duties of the respective
constituent corporations thenceforth attach by the surviving or consolidated
corporation and may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it; and
(b) That the directors of any or all of the constituent corporations may,
in their discretion, abandon the merger or consolidation subject to the right of
third parties under any contracts relating thereto, without further action or
approval by the stockholders of their respective corporation or corporations, at
anytime before the merger or consolidation becomes effective as provided by the
laws of the states governing the respective constituent corporations and the
surviving or consolidated corporations."
Decision Under Prior Law
.1 Debts of selling corporation.-Corporation buying assets of another
corporation is not liable for debts of seller, when (1) purchaser does not
expressly or impliedly agree to assume such debts; (2) transaction is not
consolidation or merger; (3)purchasing corporation is not continuation of
selling corporation; and (4) transaction is not fraudulently made to escape
liability for such debts. Lamp v Leroy Corp, 454 P2d 24 (1969).
78.496 [RESTRICTION ON TRANSFER OF UNCERTIFICATED SHARES].-1. The
corporation may restrict the transfer of uncertificated shares from the date the
demand for their payment is received.
2. The person for whom dissenter's rights are asserted as to uncertificated
rights retains all other rights of a stockholder until those rights are canceled
or modified by the taking of the proposed corporate action. (Added by Ch. 442,
L. '91, eff. 10-1-91.)
78.497 [PAYMENT TO DISSENTER AFTER RECEIPT OF DEMAND FOR PAYMENT OF AMOUNT
ESTIMATED TO BE FAIR VALUE OF SHARES].-1. Except as otherwise provided in NRS
78.498, within 30 days after receipt of a demand for payment, the corporation
shall pay each dissenter who complied with NRS 78.494 the amount the corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the corporation under this subsection may be enforced by the
district court;
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Corp.-78 NEVADA General Corporation Law 11-12-91
(a) Of the county where the corporation's registered office is located; or
(b) At the election of any dissenter residing or having its registered
office in Nevada, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year ending
not more than 16 months before the date of payment, a statement of income for
that year, a statement of changes in the stockholders' equity for that year, and
the latest available interim financial statements, if any;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter=s rights to demand payment under NRS
78.499; and
(e) A copy of NRS 78.471 to 78.502, inclusive. (Added by Ch. 442, L. '91,
eff. 10-1-91.)
78.498 [ELECTION BY CORPORATION TO WITHHOLD PAYMENT FROM A DISSENTER].-1. A
corporation may elect to withhold payment from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenter=s
notice as the date of the first announcement to the news media or to the
stockholders of the terms of the proposed corporate action.
2. To the extent the corporation elects to withhold payment, after taking
the proposed corporate action, it shall estimate the fair value of the shares,
plus accrued interest, and shall offer to pay this amount to each dissenter who
agrees to accept it in full satisfaction of his demand. The corporation shall
send with its offer a statement of its estimate of the fair value of the stares,
an explanation of how the interest was calculated, and a statement of the
dissenters' right to demand payment pursuant to NRS 78.499. (Added by Ch. 442,
L. '91, eff. 10-1-91.)
78.499 [WRITTEN NOTIFICATION OF DISSENTER TO CORPORATION OF DISSENTER'S
ESTIMATE OF FAIR VALUE OF HIS SHARES; WAIVER OF RIGHT TO DEMAND PAYMENT].-1. A
dissenter may notify the corporation in writing of his own estimate of the fair
value of his shares and the amount of interest due, and demand payment of his
estimate, less any payment pursuant to NRS 78.497, or reject the corporation's
offer pursuant to NRS 78.498 and demand payment of the fair value of his shares
and interest due, if he believes that the amount paid pursuant to NRS 78.497 or
offered pursuant to NRS 78.498 is less than the fair value of his shares or that
the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this section
unless he notifies the corporation of his demand in writing within 30 days after
the corporation made or offered payments for his shares. (Added by Ch. 442, L.
'91, eff. 10-1-91.)
78.500 POWER OF DIRECTORS AND OFFICERS OF CONSTITUENT CORPORATIONS TO
EXECUTE NECESSARY INSTRUMENTS OF TITLE AFTER MERGER OR CONSOLIDATION.-(Repealed
by Ch. 442, L. '91, eff. 10-1-91.)
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Prior to its repeal by Ch. 442, L. '91, eff. 10-1-91, this section read as
follows: AIf at any time the surviving or consolidated corporation shall deem or
be advised that any further grants, assignments, confirmations or assurance are
necessary or desirable to vest or to perfect or confirm of record or otherwise
in such surviving or consolidated corporation the title to any property of any
constituent corporation, the officers or any of them and directors of such
constituent corporation may execute and deliver any and all such deeds,
assignments, confirmations and assurances and do all things necessary or proper
so as to best prove, confirm and ratify title to such property in the surviving
or consolidated corporation or to otherwise carry out the purposes of the merger
or consolidation and the terms of the agreement of merger or consolidation or
both. The surviving or consolidated corporation shall have the same power and
authority to act in respect to any debts, liabilities and duties of the
constituent corporations as the constituent corporations would have had, had
they continued in existence."
78.501 [DEMAND FOR PAYMENT; PROCEEDING; VENUE; PARTIES TO PROCEEDING;
JUDGMENT].-1. If a demand for payment remains unsettled, the corporation shall
commence a proceeding within 60 days after receiving the demand and petition the
court to determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the 60 day-day period, it
shall pay each dissenter whose demand remains unsettled the amount demanded.
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11-12-91 NEVADA General Corporation Law Corp.-79
2. A corporation shall commence the proceeding in the district court of the
county where a corporation's registered office is located. If the corporation is
a foreign corporation without a resident agent in the state, it shall commence
the proceeding in the county where the registered office of the domestic
corporation merged with or whose shares were acquired by the foreign corporation
was located.
3. The corporation shall make all dissenters, whether or not residents of
Nevada, whose demands remain unsettled, parties to the proceeding as in an
action against their shares. All parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced under
subsection 2 is plenary and exclusive. The court may appoint one or more persons
as appraisers to receive evidence and recommend a decision on the question of
fair value. The appraisers have the powers described in the order appointing
them, or any amendment thereto. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) For the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation; or
(b) For the fair value, plus accrued interest, of his after-acquired shares
for which the corporation elected to withhold payment pursuant to NRS 78.498.
(Added by Ch.442, L. '91, eff. 10-1-91.)
78.502 [PROCEEDING TO DETERMINE FAIR VALUE; ASSESSMENT OF COSTS, FEES AND
EXPENSES: EXCEPTIONS].-1. The court in a proceeding to determine fair value
shall determine all of the costs of the proceeding, including the reasonable
compensation and expenses of any appraisers appointed by the court. The court
shall assess the costs against the corporation, except that the court may assess
costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of all dissenters if the court
finds the corporation did not substantially comply with the requirements of NRS
78.491 to 78.499, inclusive: or
(b) Against either the corporation or a dissenter in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously or not in good faith with respect to the
rights provided by NRS 78.471 to 78.502, inclusive.
3. If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated. and that the fees
for those services should not be assessed against the corporation, the court may
award to those counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefited.
4. In a proceeding commenced pursuant to subsection I of NRS 78.497, the
court may assess the costs against the corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 78.501 or subsection I of NRS 78.497 from applying the
provisions of N.R.C.P. 68 or NRS 17.115. (Added by Ch.442, L.'91 eff. 10-1-91.)
