UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended: June 30, 1995
Commission File Number: 0-18050
EAGLE PACIFIC INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Minnesota 41-1642846
(State of Incorporation) (IRS Employer ID No.)
2430 Metropolitan Centre
333 S. Seventh Street
Minneapolis, Minnesota 55402
(Address of principal executive offices)
Registrant's telephone number, including area code:
(612) 371-9650
BLACK HAWK HOLDINGS, INC.
(Former name or former address, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 4,080,440 shares of Common
Stock, $.01 par value per share, outstanding at August 8, 1995.
Transitional Small Business Disclosure Format (check one): Yes No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Consolidated Condensed Balance Sheets - June 30, 1995
and December 31, 1994 (Unaudited)
Consolidated Condensed Statements of Operations - Three
and Six Months Ended June 30, 1995 and 1994 (Unaudited)
Consolidated Condensed Statements of Cash Flows - Six
Months Ended June 30, 1995 and 1994 (Unaudited)
Notes to Consolidated Condensed Financial Statements (Unaudited)
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
Item 6 - Exhibits and Reports on Form 8-K
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
JUNE 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<S> <C> <C>
1995 1994
ASSETS
CURRENT ASSETS:
Restricted cash $ 500,000 $ 500,000
Accounts receivable 6,076,754 4,018,700
Inventories 4,683,567 3,834,246
Other 63,187 43,167
------------- -------------
Total current assets 11,323,508 8,396,113
PROPERTY AND EQUIPMENT, net 6,426,685 6,616,910
OTHER ASSETS:
Prepaid interest 3,204,580 --
Goodwill, net 3,252,389 3,287,000
Deferred financng costs, net 535,913 592,877
Cash value of life insurance 207,463 188,272
Other 100,000 100,000
------------- -------------
7,300,345 4,168,149
------------- -------------
$ 25,050,538 $ 19,181,172
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 5,717,430 $ 916,985
Accounts payable 2,811,815 2,038,490
Accrued liabilities 445,183 554,607
Current maturities of long-term debt 910,478 910,478
------------- -------------
Total current liabilities 9,884,906 4,420,560
LONG-TERM DEBT, net of current
maturities 3,693,286 3,273,710
SUBORDINATED DEBT 6,269,750 6,152,750
MINORITY INTEREST 486,859 497,074
OTHER LONG-TERM LIABILITIES 220,251 806,705
STOCKHOLDERS' EQUITY:
Series A preferred stock, 7% cumulative
dividend; convertible; $2 liquidation
preference, no par value; authorized
2,000,000 shares; issued and
outstanding 1,383,500 2,767,000 2,767,000
Undesignated stock, $.01 par value
18,000,000 shares authorized;
none issued and outstanding
Common stock, par value $.01;
authorized 30,000,000 shares;
issued and outstanding 3,818,230
and 3,583,230 shares, respectively 38,182 35,832
Additional paid-in capital 31,951,979 31,261,979
Unearned compensation on stock options (255,290) (306,348)
Accumulated deficit (30,006,385) (29,728,090)
------------- -------------
Total stockholders' equity 4,495,486 4,030,373
------------- -------------
$ 25,050,538 $ 19,181,172
============= =============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<S> <C> <C>
1995 1994
NET SALES $ 9,165,018 $ 9,006,642
COST OF GOODS SOLD 7,028,435 6,355,706
------------ ------------
Gross profit 2,136,583 2,650,936
OPERATING EXPENSES:
Selling expenses 1,005,759 1,015,394
General and administrative expenses 498,082 417,908
------------ ------------
1,503,841 1,433,302
------------ ------------
OPERATING INCOME 632,742 1,217,634
OTHER INCOME (EXPENSE):
Interest expense (695,430) (588,665)
Minority interest in loss (income) 2,772 (38,498)
Other 18,733 5,334
------------ ------------
(673,925) (621,829)
------------ ------------
(LOSS) INCOME BEFORE TAXES (41,183) 595,805
INCOME TAX BENEFIT (PROVISION) 2,600 (32,000)
------------ ------------
NET (LOSS) INCOME (38,583) 563,805
PREFERRED STOCK DIVIDENDS (48,422) (48,423)
------------ ------------
NET (LOSS) INCOME APPLICABLE TO COMMON STOCK $ (87,005) $ 515,382
============ ============
NET (LOSS) INCOME PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary $ (.02) $ .12
============ ============
Fully diluted $ (.02) $ .10
============ ============
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING:
Primary 3,818,230 4,337,241
============ ============
Fully diluted 3,818,230 5,869,131
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<S> <C> <C>
1995 1994
NET SALES $18,276,738 $ 16,801,587
COST OF GOODS SOLD 14,160,663 12,037,507
------------ -------------
Gross profit 4,116,075 4,764,080
OPERATING EXPENSES
Selling expenses 1,996,881 1,895,109
General and administrative
expenses 1,060,196 796,149
------------- -------------
3,057,077 2,691,258
------------- -------------
OPERATING INCOME 1,058,998 2,072,822
OTHER INCOME (EXPENSE):
Interest expense (1,281,996) (1,052,784)
Minority interest in loss
(income) 10,215 (66,999)
Other 18,733 9,071
------------- -------------
(1,253,048) (1,110,712)
------------- -------------
(LOSS) INCOME BEFORE TAXES (194,050) 962,110
INCOME TAX BENEFIT (PROVISION) 12,600 (46,000)
------------- -------------
NET (LOSS) INCOME (181,450) 916,110
PREFERRED STOCK DIVIDENDS (96,845) (96,444)
------------- -------------
NET (LOSS) INCOME APPLICABLE TO COMMON STOCK $ (278,295) $ 819,666
============= =============
NET (LOSS) INCOME PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary $ (.07) $ .19
============= =============
Fully diluted $ (.07) $ .16
============= =============
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING:
Primary 3,726,987 4,284,267
============= =============
Fully diluted 3,726,987 5,869,131
============= =============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<S> <C> <C>
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (181,450) $ 916,110
Adjustments necessary to
reconcile net (loss) income
to net cash used in operating
activities:
Gain on sale of property and equipment -- (394)
Depreciation and amortization 1,004,070 553,340
Minority interest (10,215) 66,999
Change in operating assets and
liabilities (3,744,339) (2,277,652)
Net cash used in operating activities (2,931,934) (741,597)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (190,356) (186,348)
Principal collections on loans receivable -- 25,000
Net cash used in investing activities (190,356) (161,348)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of preferred stock -- 25,000
Issuance of common stock 43,750 --
Payment of preferred stock dividend (96,845) (96,444)
Payments on long-term debt (444,568) (392,903)
Borrowing under line of credit 3,619,953 1,046,000
Net cash provided by financing
activities 3,122,290 581,653
NET DECREASE IN CASH AND CASH EQUIVALENTS -- (321,292)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD -- 414,704
------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD -- $ 93,412
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (Unaudited)
1. PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of
only normal recurring accruals) necessary to present fairly the
financial position of Eagle Pacific Industries, Inc. and subsidiaries
at June 30, 1995 and the results of its operations for the three and
six-month periods ended June 30, 1995 and 1994 and its cash flows for
the six-month periods ended June 30, 1995 and 1994. Certain information
and footnote disclosures normally included in consolidated financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. Although the
Company's management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these
consolidated condensed financial statements be read in conjunction with
the consolidated financial statements of the Company included with its
annual report on Form 10-K for the year ended December 31, 1994.
On July 11, 1995, the Company's shareholders approved the change in the
Company's name from Black Hawk Holdings, Inc. to Eagle Pacific
Industries, Inc.
2. INVENTORY
Inventory consists of the following:
June 30, December 31,
1995 1994
Raw materials $ 879,602 $ 978,660
Finished goods 3,803,965 2,855,586
---------- ----------
$4,683,567 $3,834,246
========== ==========
3. INCOME TAXES
As of June 30, 1995, the Company had incurred net operating loss
carryforwards for federal tax purposes of approximately $44,000,000.
These carryforwards expire in varying amounts between 1996 and 2008 and
the utilization of these carryforwards may be limited by applicable tax
regulations; in particular, Section 382 of the Internal Revenue Code.
4. PREPAID INTEREST
In March 1995, the Company entered into an agreement extinguishing the
contingent interest agreement in exchange for $1,500,000 in cash, a
$1,200,000 noninterest bearing note due September 1, 1995, a $970,000
noninterest bearing note due September 1, 1996, the issuance of 210,000
shares of the Company's common stock and the issuance of a three year
warrant to purchase 100,000 shares of the Company's common stock. The
present value of the total consideration, $4,134,000, is being
amortized over the period the Subordinated Note is outstanding using
the interest method.
<PAGE>
5. STOCKHOLDER'S EQUITY
During the first quarter of fiscal 1995, warrants for the purchase of
25,000 shares of the Company's common stock were exercised at $1.75 per
share.
In connection with the agreement extinguishing the contingent interest
entered into in March 1995, the Company issued 210,000 shares of common
stock and warrants to purchase 100,000 shares of the Company's common
stock at $3.00 per share. The warrants are currently exercisable and
expire in 1998. A value of $642,600 and $6,000 has been assigned to the
common stock and warrants, respectively.
6. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NONCASH
FINANCING ACTIVITIES
A summary of supplemental cash flow information and noncash financing
activities for the six months ended June 30, is as follows:
1995 1994
Cash paid for interest $ 2,243,288 $ 717,906
Issuance of notes payable in connection
with the agreement extinguishing the
contingent interest 1,985,325 --
Issuance of common stock in connection
with the agreement extinguishing the
contingent interest 642,600 --
Value of warrants issued in connection
with the agreement extinguishing the
contingent interest 6,000 --
7. SUBSEQUENT EVENT
On July 10, 1995, the Company acquired all of the outstanding common
stock of Pacific Plastics, Inc. (Pacific). Pacific and its wholly-owned
subsidiary, Arrow Pacific Plastics, Inc., extrude polyvinyl chloride
pipe and polyethylene tubing products which are marketed primarily in
the Northwestern United States. The purchase price of Pacific was
$6,750,000 consisting of $4,350,000 in cash, $1,700,000 in the form of
a note to the previous owners of Pacific (Sellers), and 262,210 shares
of the Company's common stock valued at $700,000. In addition, the
Company paid $750,000 in cash to two of the Sellers in exchange for
their agreement not to compete with the Company for five years.
The Company financed the cash portion of the purchase and
noncompetition agreements from borrowings on a new revolving credit
line (Revolver) and term loan (Term Loan) of $3,184,000 and $1,916,000,
respectively. Additional proceeds from the Revolver were used to repay
Pacific's existing line of credit. The Revolver requires interest to be
paid monthly at the bank's reference rate, as defined, plus .5%. The
revolver expires December 31, 1996. The Term Loan is due on June 1,
2000, with interest payable monthly at the bank's reference rate, as
defined, plus .75%. Principal payments on the Term Loan are due
quarterly in the amount of $87,500 for the first 12 quarters starting
September 1, 1995, and $212,500 for 8 quarters starting September 1,
1998. Both the Revolver and the Term Loan are subject to a loan
agreement containing standard covenants, representations and
warranties, are secured by all of the assets of Pacific and its
subsidiary, except real property, and are guaranteed by the Company.
The $1,700,000 note payable to the Sellers requires the Company to make
36 monthly payments of principal and interest at a fixed rate of 9% per
annum or aggregate payments of $54,059 per month. The Sellers' note is
an obligation of Pacific, secured by the stock of Pacific acquired by
the Company and is guaranteed by the Company.
<PAGE>
The Company also entered into a three year and a two year employment
contract with two of the Sellers whom the Company entered into
noncompetition agreements. Such contracts provide for base salary and
standard benefits. In consideration for entering into such employment
contracts, the Company granted each seller stock options to purchase
100,000 shares of Company's common stock at $3.125 per share.
This acquisition will be accounted for under the purchase method of
accounting. The Company will include the results of operations of
Pacific beginning July 1, 1995. Management currently estimates that no
significant amount of goodwill will be recorded as a result of the
acquisition. For the year ended June 30, 1995, Pacific and its
wholly-owned subsidiary reported revenues of $33,000,000.
Item 2 - Management's Discussion and Analysis
RESULTS OF OPERATIONS:
Net Sales - Net sales for the three months ended June 30, 1995 were $9,165,000,
an increase of $158,000 over net sales of $9,007,000 for the three months ended
June 30, 1994. Net sales for the six months ended June 30, 1995 were
$18,277,000, an increase of $1,475,000 over net sales of $16,802,000 for the six
months ended June 30, 1994. The increase in sales was almost exclusively
attributable to increases in selling prices as total pounds sold on a
comparative basis have decreased slightly.
Gross Profit - Gross profit as a percentage of net sales was 23.3% and 22.5% for
the three and six months ended June 30, 1995, respectively, compared to 29.4%
and 28.4% for the three and six months ended June 30, 1994, respectively. The
primary reason for the decline was the price for polyvinyl chloride (PVC) and
polyethylene (PE) raw materials were higher in 1995 than 1994. The Company was
able to offset part of the negative effect of rising prices of PVC and PE
through some price increases, but was unable to offset the entire effect.
Selling Expenses - Selling expenses for the three and six months ended June 30,
1995 decreased $10,000 and increased $102,000, respectively, when compared to
the same periods in 1994. The six months increase in selling expenses is
primarily due to the increase in net sales described above. The primary selling
expenses, shipping and commissions, are based on a percentage of gross sales.
General and Administrative Expenses - General and administrative expenses
increased by $80,000 and $264,000 during the three and six months ended June 30,
1995, respectively, when compared to the same periods in 1994. The increase in
general and administrative expenses is primarily due to higher expenses relating
to professional and consulting services and employee compensation.
Interest Expense - Interest expense increased by $107,000 and $229,000 during
the three and six months ended June 30, 1995, respectively, when compared to the
same periods in 1994. The increase in interest expense is primarily due to
higher levels of borrowings under the Company's line of credit and increases in
the prime rate. In addition, as a result of the agreement to fix the amount of
contingent interest payable under the terms of the subordinated debt, the amount
of contingent interest expensed in the three and six months ended June 30, 1995
increased by $53,000 and $144,000, respectively, over the amount expensed in the
comparable 1994 periods.
Income Taxes - The income tax benefit (provision) for the three and six months
ended June 30, 1995 and 1994 was calculated based upon management's estimate of
the annual effective rates. The effective income tax rates for fiscal 1995 and
1994 are lower than the statutory rate as a result of the Company having federal
net operating loss carryforwards available to offset current federal taxable
income.
Net (Loss) Income - The Company's net loss for the three and six months ended
June 30, 1995 compared to the net income for the same period in 1994 was
primarily due to lower gross profit margins and increases in general and
administrative and interest expenses.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
Working capital at June 30, 1995 was $1,439,000, a decrease of $2,537,000 from
working capital of $3,976,000 at December 31, 1994. The decrease in working
capital is primarily a result of the Company paying $1,500,000 in cash and
entering into a $1,200,000 noninterest bearing note due September 1, 1995 in
connection with an agreement to fix the amount of the contingent interest due
under the subordinated debt agreement. The agreement also required the Company
to enter into a $970,000 noninterest bearing note due September 1, 1996, issue
210,000 shares of the Company's common stock, and issue warrants to purchase
100,000 shares of the Company's common stock at $3.00 per share.
Net cash flows used in operating activities increased from $742,000 for the six
months ended June 30, 1994 to $2,932,000 for the six months ended June 30, 1995.
The increase is due to the Company having a net loss of $181,000 for the six
months ended June 30, 1995 compared to the Company having net income of $916,000
during the same period in 1994, increases in accounts receivable, inventory, and
prepaid interest related to the subordinated debt, which were partially offset
by an increase in accounts payable.
Net cash flows used in investing activities totaled $190,000 and $161,000 for
the six months ended June 30, 1995 and 1994, respectively. The increase is
primarily due to the collection of a loan by the Company in 1994.
Net cash flows provided by financing activities total $3,122,000 and $582,000
for the six months ended June 30, 1995 and 1994, respectively. The primary
sources of cash were additional borrowings on the Company's line of credit.
On July 10, 1995, the Company acquired all of the outstanding common stock of
Pacific Plastics, Inc. (Pacific). Pacific, and its wholly-owned subsidiary,
Arrow Pacific Plastics, Inc., extrude polyvinyl chloride pipe and polyethylene
tubing products which are marketed primarily in the Northwestern United States.
The purchase price of Pacific was $6,750,000 consisting of $4,350,000 in cash,
$1,700,000 in the form of a note to the previous owners of Pacific (Sellers),
and 262,210 shares of the Company's common stock valued at $700,000. In
addition, the Company paid $750,000 in cash to two of the Sellers in exchange
for their agreement not to compete with the Company for five years.
The Company financed the cash portion of the purchase and noncompetition
agreements from borrowings on a new revolving credit line (Revolver) and term
loan (Term Loan) of $3,184,000 and $1,916,000, respectively. Additional proceeds
from the Revolver were used to repay Pacific's existing line of credit. The
Revolver requires interest to be paid monthly at the bank's reference rate, as
defined, plus .5%. The revolver expires December 31, 1996. The Term Loan is due
on June 1, 2000, with interest payable monthly at the bank's reference rate, as
defined, plus .75%. Principal payments on the Term Loan are due quarterly in the
amount of $87,500 for the first 12 quarters starting September 1, 1995, and
$212,500 for 8 quarters starting September 1, 1998. Both the Revolver and the
Term Loan are subject to a loan agreement containing standard covenants,
representations and warranties, are secured by all of the assets of Pacific and
its subsidiary, except real property, and are guaranteed by the Company.
The $1,700,000 note payable to the Sellers requires the Company to make 36
monthly payments of principal and interest at a fixed rate of 9% per annum or
aggregate payments of approximately $54,059 per month. The Sellers' note is an
obligation of Pacific, is secured by the stock of Pacific acquired by the
Company and is guaranteed by the Company.
The Company also entered into a three year and a two year employment contract
with two of the Sellers whom the Company entered into noncompetition agreements.
Such contracts provide for base salary and standard benefits. In consideration
for entering into such employment contracts, the Company granted each stock
options to purchase 100,000 shares of Company's common stock at $3.125 per
share.
It is anticipated that cash flow from Pacific will be sufficient to service the
Revolver and Term Loan. However, the Company is attempting to secure equity
financing of approximately $5,000,000. If such equity financing is obtained a
portion would be invested in Pacific to pay down the Revolver and a portion
would be used to fund an expansion of the Eagle Plastics plant. The planned
expansion of the Eagle Plastics plant will cost approximately $1,700,000 and
will be completed near the end of the first quarter of fiscal 1996.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
None
ITEM 2 - Changes in Securities
None
ITEM 3 - Defaults Upon Senior Securities
None
ITEM 4 - Submission of Matters to a Vote of Security Holders
a) The Annual Meeting of the Registrant's shareholders was held on
Tuesday, July 11, 1995
b) Proxies for the Annual Meeting were solicited pursuant to Regulation
14A under the Securities Exchange Act of 1934. The following persons were
elected Class II directors of the Registrant to serve until the 1998 annual
meeting of shareholders and until their successors shall have been duly elected
and qualified:
Nominees Number of Votes For Number of Votes Withheld
-------- ------------------- ------------------------
William H. Spell 3,901,439 19,236
Bruce A. Richard 3,901,911 18,764
c)At the Annual Meeting the following matters were voted upon:
<TABLE>
<S> <C> <C> <C> <C>
Number of Number of Number of Number of
Proposal Votes For Votes Against Abstentions Broker Nonvotes
-------- --------- ------------- ----------- ---------------
Set the number of
directors at seven 3,885,758 24,082 10,835 -0-
Amend Articles of
Incorporation to change
corporate name from Black
Hawk Holdings, Inc. to
Eagle Pacific Industies, Inc. 3,876,359 28,296 16,020 -0-
Approve appointment of
Deloitte & Touche LLP as
independent auditors for
current fiscal year 3,885,065 17,164 18,446 -0-
</TABLE>
ITEM 5 - Other Information
None
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits - See Exhibit Index on page following signatures.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter ended June 30, 1995. A report on Form 8-K, dated July 10, 1995, was
filed on July 24, 1995 in connection with the acquisition of Pacific Plastics,
Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
EAGLE PACIFIC INDUSTRIES, INC.
By /s/ William H. Spell
William H. Spell
President
By /s/ Bruce A. Richard
Bruce A. Richard
Chief Financial Officer
Dated: August 11, 1995
<PAGE>
EAGLE PACIFIC INDUSTRIES, INC.
EXHIBIT INDEX TO FORM 10-QSB
FOR QUARTER ENDED JUNE 30, 1995
EXHIBIT NO. DESCRIPTION
3 Articles of Incorporation, as amended to date
27 Financial Data Schedule (filed in electronic format only).
<PAGE>
ARTICLES OF INCORPORATION
OF
BHH, INC.
The undersigned individual, being of full age, for the purpose of
forming a corporation under and pursuant to Chapter 302A of the Minnesota
Statutes, as amended, hereby adopts the following Articles of Incorporation.
ARTICLE 1 - NAME
1.1) The name of the corporation shall be BHH, Inc.
ARTICLE 2 - REGISTERED OFFICE
2.1) The registered office of the corporation is located at 1010 First
Bank Place West, 120 South Sixth Street, Minneapolis, Minnesota 55402.
ARTICLE 3 - CAPITAL STOCK
3.1) Authorized Shares; Establishment of Classes and Series. The
aggregate number of shares the corporation has authority to issue shall be
50,000,000 shares, which shall have a par value of $.01 per share solely for the
purpose of a statute or regulation imposing a tax or fee based upon the
capitalization of the corporation, and which shall consist of 30,000,000 common
shares and 20,000,000 undesignated shares. The Board of Directors of the
corporation is authorized to establish from the undesignated shares, by
resolution adopted and filed in the manner provided by law, one or more classes
or series of shares, to designate each such class or series (which may include
but is not limited to designation as additional common shares), and to fix the
relative rights and preferences of each such class or series.
3.2) Issuance of Shares. The Board of Directors of the corporation is
authorized from time to time to accept subscriptions for, issue, sell and
deliver shares of any class or series of the corporation to such persons, at
such times and upon such terms and conditions as the Board shall determine,
valuing all nonmonetary consideration and establishing a price in money or other
consideration, or a minimum price, or a general formula or method by which the
price will be determined.
3.3) Issuance of Rights to Purchase Shares. The Board of Directors is
further authorized from time to time to grant and issue rights to subscribe for,
purchase, exchange securities for, or convert securities into, shares of the
corporation of any class or series, and to fix the terms, provisions and
conditions of such rights, including the exchange or conversion basis or the
price at which such shares may be purchased or subscribed for.
<PAGE>
3.4) Issuance of Shares to Holders of Another Class or Series. The
Board is further authorized to issue shares of one class or series to holders of
that class or series or to holders of another class or series to effectuate
share dividends or splits.
ARTICLE 4 - RIGHTS OF SHAREHOLDERS
4.1) No Preemptive Rights. No shares of any class or series of the
corporation shall entitle the holders to any preemptive rights to subscribe for
or purchase additional shares of that class or series or any other class or
series of the corporation now or hereafter authorized or issued.
4.2) No Cumulative Voting Rights. There shall be no cumulative voting by
the shareholders of the corporation.
ARTICLE 5 - DIRECTORS
5.1) Written Action by Directors. Any action required or permitted to be
taken at a Board meeting may be taken by written action signed by all of the
directors.
ARTICLE 6 - MERGER, EXCHANGE, SALE OF ASSETS AND DISSOLUTION
6.1) Where approval of shareholders is required by law, the affirmative
vote of the holders of at least a majority of the voting power of all shares
entitled to vote shall be required to authorize the corporation (i) to merge
into or with one or more other corporations, (ii) to exchange its shares for
shares of one or more other corporations, (iii) to sell, lease, transfer or
otherwise dispose of all or substantially all of its property and assets,
including its good will, or (iv) to commence voluntary dissolution.
ARTICLE 7 - AMENDMENT OF ARTICLES OF INCORPORATION
7.1) After the issuance of shares by the corporation, any provision
contained in these Articles of Incorporation may be amended, altered, changed or
repealed by the affirmative vote of the holders of at least a majority of the
voting power of the shares present and entitled to vote at a duly held meeting
or such greater percentage as may be otherwise prescribed by the laws of the
State of Minnesota.
<PAGE>
ARTICLE 8 - LIMITATION OF DIRECTOR LIABILITY
8.1) To the fullest extent permitted by Chapter 302A, Minnesota
Statutes, as the same exists or may hereafter be amended, a director of this
corporation shall not be personally liable to the corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director.
ARTICLE 9 - INCORPORATOR
9.1) The name and mailing address of the incorporator are as follows:
Dobson West
1100 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55042
IN WITNESS WHEREOF, the undersigned incorporator has hereunto set his
hand this 23rd day of June, 1989.
/s/ Dobson West
Dobson West
<PAGE>
ARTICLES OF MERGER
OF
BLACK HAWK HOLDINGS, INC.
(an Iowa corporation)
and
LIBERTY CAPITAL CORP.
(an Iowa corporation)
INTO
BHH, INC.
(a Minnesota corporation)
Pursuant to the provisions of Sections 302A.601-302A.651, Minnesota
Statutes, and Sections 496A.68-496A.74 of the Iowa Business Corporation Act, the
following Articles of Merger are executed on the date hereinafter set forth:
FIRST: The names of the corporations which are parties to the merger
are Black Hawk Holdings, Inc., an Iowa corporation ("Black Hawk"), Liberty
Capital Corp., an Iowa corporation ("LCC"), and BHH, Inc., a Minnesota
corporation and the surviving corporation ("BHH").
SECOND: Black Hawk has 8,543,095 outstanding common shares, 5,959,550
of which were voted in favor of the Plan of Merger attached hereto as Exhibit A
(the "Plan of Merger") and 7,470 of which were voted against the Plan of Merger.
THIRD: LCC has 4,000 outstanding Class A common shares, all of which
were voted in favor of the Plan of Merger; and LCC has 888.4 outstanding Class B
common shares, 804.7 of which were voted in favor of the Plan of Merger and none
of which were voted against the Plan of Merger.
FOURTH: BHH has 100 outstanding common shares, all of which were voted in
favor of the Plan of Merger.
FIFTH: The merger shall be effective at the time at which these Articles of
Merger are filed with the Secretary of State of the State of Minnesota.
The undersigned swear that the foregoing is true and accurate and that
they have the authority to sign these Articles of Merger on behalf of Black
Hawk, LCC and BHH.
Dated: October 6, 1989.
<PAGE>
BLACK HAWK HOLDINGS, INC.
By /s/ Dobson West
Dobson West, President
And /s/ David L. Schinke
David L. Schinke, Secretary
LIBERTY CAPITAL CORP.
By /s/ Dobson West
Dobson West, President
And /s/ David L. Schinke
David L. Schinke, Secretary
BHH, INC.
By /s/ Dobson West
Dobson West, President
and Secretary
<PAGE>
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
On this 6th day of October, 1989, before me a Notary Public, personally
appeared Dobson West and David L. Schinke, known to me to be the President and
Secretary, respectively, of Black Hawk Holdings, Inc., an Iowa corporation, and
acknowledged to me that they executed the same on behalf of said corporation.
(Notarial Seal) /s/ Robert K. Ranum
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
On this 6th day of October, 1989, before me a Notary Public, personally
appeared Dobson West and David L. Schinke, known to me to be the President and
Secretary, respectively, of Liberty Capital Corp., an Iowa corporation, and
acknowledged to me that they executed the same on behalf of said corporation.
(Notarial Seal) /s/ Robert K. Ranum
Notary Public
STATE OF MINNESOTA )
) SS.
COUNTY OF HENNEPIN )
On this 6th day of October, 1989, before me, a Notary Public,
personally appeared Dobson West, known to me to be the President and Secretary
of BHH, Inc., a Minnesota corporation, and acknowledged to me that he executed
the same on behalf of said corporation.
(Notarial Seal) /s/ Robert K. Ranum
Notary Public
<PAGE>
EXHIBIT A
PLAN OF MERGER
OF
BLACK HAWK HOLDINGS, INC.
(an Iowa corporation)
AND
LIBERTY CAPITAL CORP.
(an Iowa corporation)
INTO
BHH, INC.
(a Minnesota corporation)
ARTICLE I
NAMES OF CONSTITUENT CORPORATIONS
AND SURVIVING CORPORATION
The names of the corporations involved in this merger are Black Hawk
Holdings, Inc., an Iowa corporation ("Black Hawk"), Liberty Capital Corp., an
Iowa corporation ("LCC") and BHH, Inc., a Minnesota corporation ("BHH"). Black
Hawk, LCC and BHH together may be referred to herein as the "Constituent
Corporations." The Constituent Corporations shall be combined by the merger of
Black Hawk and LCC into BHH, as the Surviving Corporation, pursuant to the
provisions of Minnesota Statutes, Sections 302A.601- 302A.651 and Iowa Statutes,
Sections 496A.68-496A.74. The Surviving Corporation shall continue under the
name Black Hawk Holdings, Inc.
ARTICLE II
TERMS AND CONDITIONS
1. The merger shall be effective on the filing of Articles of Merger
with the Secretary of State of the State of Minnesota (the "Effective Time"). At
the Effective Time, the separate existence of Black Hawk and LCC shall cease and
BHH shall alone continue in existence as the Surviving Corporation. All
transactions on and after the Effective Time shall be deemed transactions of and
for the account of BHH as the Surviving Corporation.
2. As of the Effective Time, BHH, as the Surviving Corporation, shall
succeed to and possess all the rights, privileges, powers, immunities,
franchises, concessions, certificates and authority, of a public as well as a
private nature, of each of the Constituent Corporations; and all property, real,
personal and mixed, and every interest therein, and all other choses in action
of or belonging to any of the Constituent Corporations on whatever account shall
be vested in BHH, as the Surviving Corporation, without any further act or deed;
and all property, assets, rights, privileges, powers, immunities, franchises,
concessions, certificates and authority shall be thereafter as effectively the
property of BHH, as the Surviving Corporation, as they were or would be of the
Constituent Corporations or any of them; and title to any real estate or any
interest therein vested by deed or otherwise in any of the Constituent
Corporations shall not revert or be in any way impaired by reason of this
merger.
3. BHH, as the Surviving Corporation, shall be responsible and liable
for all the debts, liabilities, duties and obligations of each of the
Constituent Corporations, and as of the Effective Time all such debts,
liabilities, duties and obligations shall attach to BHH, as the Surviving
Corporation, and may be enforced against it to the same extent as if such debts,
liabilities, duties and obligations had been originally incurred or contracted
by it; and any claim existing or action or proceeding pending by or against any
of the Constituent Corporations may be prosecuted to judgment as if the merger
had not taken place; or BHH, as the Surviving Corporation, may be substituted in
its place; and neither the rights of creditors nor any liens upon property of
any of the Constituent Corporations shall be impaired by the merger.
4. If at any time after the Effective Time the Surviving Corporation
shall consider or be advised that any instruments of further assurance are
desirable in order to evidence the vesting in it of the title of any of the
Constituent Corporations to any of the property rights of the Constituent
Corporations, the appropriate officers or directors of Black Hawk, LCC or BHH
are hereby authorized to execute, acknowledge and deliver all such instruments
of further assurance and to do all acts or things, in the name of Black Hawk,
LCC or BHH, as may be requisite or desirable to carry out the provisions of this
Plan of Merger.
5. The Board of Directors of the Surviving Corporation shall consist of
the persons serving as directors of Black Hawk immediately prior to the
Effective Time. Such directors shall hold office, subject to the applicable
provisions of the Bylaws of the Surviving Corporation, until the expiration of
the term for which such director was elected and until such director's successor
shall have been duly elected and qualified.
6. The officers of Black Hawk immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until their respective
successors shall have been duly elected and qualified.
7. The Articles of Incorporation and Bylaws of BHH in effect at the
Effective Time shall constitute the Articles of Incorporation and Bylaws of the
Surviving Corporation, except that Section 1.1 shall be amended in its entirety
to read as follows:
"1.1) The name of the corporation shall be Black Hawk Holdings, Inc."
ARTICLE III
MANNER AND BASIS OF CONVERTING STOCK
1. Each share of Common Stock of Black Hawk outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into One (1) share of
Common Stock of BHH.
<PAGE>
2. Each share of Class A Common Stock of LCC outstanding immediately
prior to the Effective Time (other than shares owned of record by Black Hawk)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into One Hundred Fifty (150) shares of Common Stock of
BHH. The shares of Class A Common Stock of LCC outstanding immediately prior to
the Effective Time which are owned of record by Black Hawk shall not be
converted into shares of BHH but shall, as of the Effective Time, be cancelled,
extinguished and cease to exist without the payment of any cash or the delivery
of any other consideration.
3. Each share of Class B Common Stock of LCC outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into One Hundred Fifty
(150) shares of Common Stock of BHH.
4. The shares of Common Stock of BHH outstanding immediately prior to
the Effective Time shall, as of the Effective Time, be cancelled, extinguished
and cease to exist and the holder of such shares shall receive One Hundred
Dollars ($100) for such shares.
<PAGE>
STATEMENT OF DESIGNATION OF SHARES
OF
BLACK HAWK HOLDINGS, INC.
The undersigned hereby certifies that the resolutions set forth on
Exhibit A attached hereto were adopted by unanimous written action of the Board
of Directors of Black Hawk Holdings, Inc. effective as of September 23, 1993.
I certify that I am authorized to execute this Statement and I further
certify that I understand that by signing this Statement I am subject to the
penalties of perjury as set forth in Minnesota Statutes, Section 609.48 as if I
had signed this Amendment under oath.
/s/ William H. Spell
William H. Spell, President
<PAGE>
WRITTEN ACTION IN LIEU OF MEETING OF BOARD OF DIRECTORS
OF
BLACK HAWK HOLDINGS, INC.
The undersigned, being all the members of the Board of Directors of
Black Hawk Holdings, Inc., a Minnesota corporation, acting pursuant to the
provisions of Minnesota Statutes, Section 302A.239, does hereby consent to the
adoption of and does hereby adopt the following resolutions, as of September 23,
1993:
Designation of Class of Preferred Stock
WHEREAS, Article 3.1 of the Articles of Incorporation of this
corporation authorizes issuance of 20,000,000 shares of undesignated stock.
WHEREAS, the Board of Directors of the corporation is authorized to
establish from the undesignated shares by resolution adopted and filed in the
manner provided by law, one or more classes or series of shares, to designate
each such class or series (which may include, but is not limited to, designation
as additional common shares), and to fix the relative rights and preferences of
each such class or series.
NOW, THEREFORE, RESOLVED, that 2,000,000 shares of the corporation's
undesignated shares shall be designated as Series A 7% Convertible Preferred
Stock.
FURTHER RESOLVED, that the rights and preferences of the Series A 7%
Convertible Preferred Stock (the "Series A Shares") shall be as follows:
(a) Dividends. The holders of the Series A Shares shall be
entitled to receive out of any funds at any time legally available for
the declaration of dividends, when and as declared by the Board of
Directors, cash dividends at the rate of 7% of the liquidation payment
provided in subparagraph (c) hereof per annum per share, such dividends
to be payable quarterly each March 31, June 30, September 30 and
December 31, provided that the first dividend shall not be payable
until March 31, 1994. Dividends on shares of the Series A Shares shall
on the date they are issued be cumulative, whether or not earned. In no
event shall any dividend be paid or declared, nor shall any
distribution be made on the corporation's Common Stock, nor shall any
Common Stock be purchased, redeemed or otherwise acquired by the
corporation for value, unless all dividends on the Series A Shares for
all past periods shall have been paid or declared and a sum sufficient
for the payment thereof set apart for payment.
(b) Voting. Each holder of Series A Shares will have the right
to vote for all shareholder purposes the number of votes that is equal
to the number of shares of Common Stock into which such holder's Series
A Shares are then convertible, as hereinafter provided. Except as
otherwise required by law, the holders of Series A Shares shall vote
together with the holders of Common Stock as though the Series A Shares
and Common Stock were a single class.
<PAGE>
(c) Liquidation. In the event of any liquidation, dissolution
or winding-up of the corporation, whether voluntary or involuntary,
before any other distribution or payment is made to the holders of the
Common Stock, the holders of Series A Shares will be entitled to
receive, out of the assets of the corporation legally available
therefor, a liquidation payment in cash per Series A Share equal to
$2.00 (subject to equitable adjustment in the event of any stock
dividend, split, distribution or combination with respect to Series A
Shares). In addition to such amount, a further amount equal to the
dividends accumulated and unpaid thereon to the date of such
liquidation payment will also be paid. At any time prior to the making
of a liquidation payment, a holder of the Series A Shares may convert,
at the holder's option, the holder's Series A shares into shares of
Common Stock in accordance with the provisions set forth below. If upon
any liquidation or dissolution of the corporation, the assets available
for distribution are insufficient to pay the holders of all outstanding
Series A Shares such amount per Series A Share, the holders of Series A
Shares will share pro rata in any such distribution of assets.
(d) Redemption. Neither the holders of Series A Shares nor the
corporation will have the right to require the redemption of all or
any part of the outstanding Series A Shares.
(e) Conversion Right. At the option of the holder thereof,
each Series A Share will be convertible into a number of fully paid and
nonassessable shares (calculated as to each conversion to the nearest
1/100th of a share) of Common Stock of the corporation equal to the
number obtained by dividing $2.00 by the Conversion Price (determined
as hereinafter provided) in effect at the time of conversion. The
initial price at which shares of Common Stock will be delivered upon
conversion of a Series A Share (the "Conversion Price") will be $2.00
per share of Common Stock and, accordingly, the initial conversion rate
shall be one share of Common Stock for each Series A Share. The initial
Conversion Price will be subject to adjustment from time to time in
certain instances as hereinafter provided. The following provisions
will govern such right of conversion:
(1) Certificates. In order to convert Series A Shares
into shares of Common Stock of the corporation, the holder
thereof will surrender at the office of the corporation (or at
such other office or offices, if any, as the Board of
Directors may designate), the certificate or certificates
therefor, duly endorsed to the corporation or in blank.
Further, the holder will give written notice to the
corporation at such office that such holder elects to convert
such shares. Series A Shares will be deemed to have been
converted immediately prior to the close of business on the
day of the surrender of such shares for conversion as herein
provided. The person entitled to receive the shares of Common
Stock of the corporation issuable upon such conversion will be
treated for all purposes as the record holder of such shares
of Common Stock at such time. As promptly as practicable on or
after the conversion date, the corporation will issue and
deliver, or cause to be issued and delivered, at such office a
certificate or certificates for the number of shares of Common
Stock of the corporation issuable upon such conversion.
<PAGE>
(2) Adjustment to Conversion Price. The Conversion
Price will be subject to adjustment from time to time as
hereinafter provided. Upon each adjustment of the Conversion
Price each holder of Series A Shares will thereafter be
entitled to receive the number of shares of Common Stock of
the corporation obtained by dividing $2.00 by the Conversion
Price after the adjustment.
(3) Subdivision of Shares. In case the corporation at
any time subdivides its outstanding shares of Common Stock
into a greater number of shares, whether by stock split, stock
dividend or otherwise, the Conversion Price in effect
immediately prior to such Subdivision will be proportionately
reduced. Conversely, in case the outstanding shares of Common
Stock of the corporation are combined into a smaller number of
shares, whether by reverse stock split or otherwise, the
Conversion Price in effect immediately prior to such
combination will be proportionately increased.
(4) Reorganizations; Mergers; Etc. If any capital
reorganization or reclassification of the capital stock of the
corporation, or consolidation or merger of the corporation
with another corporation, or the sale of all or substantially
all of its assets to another corporation is effected in such a
way that holders of Common Stock are entitled to receive
stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and
adequate provision will be made whereby the holders of Series
A Shares will thereafter have the right to receive (upon the
basis and the terms and conditions specified herein) upon the
conversion of Series A Shares, such shares of stock,
securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such
Common Stock equal to the number of shares of such stock
immediately theretofore receivable upon the conversion of the
Series A Shares had such reorganization, reclassification,
consolidation, merger or sale not taken place. In any such
case, appropriate provision will be made with respect to the
rights and interests of the holders of Series A Shares to the
end that the provisions hereof (including, without limitation,
provisions for adjustments of the Conversion Price and of the
number of shares receivable upon the conversion of Series A
Shares) are thereafter applicable, as nearly as may be in
relation to any shares of stock, securities or assets
thereafter receivable upon the conversion of Series A Shares.
The corporation will not effect any such consolidation, merger
or sale, unless prior to the consummation thereof the
successor corporation (if other than the corporation)
resulting from such consolidation or merger, or the
corporation purchasing such assets, assumes by written
instrument executed and mailed to the holders of Series A
Shares, at the last addresses of such holders appearing on the
books of the corporation, the obligation to deliver to such
holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be
entitled to receive.
<PAGE>
(5) Adjustment Notices. Upon any adjustment of the
Conversion Price, then and in each case the corporation will
give written notice thereof, by first class mail, postage
prepaid, addressed to the holders of Series A Shares at the
addresses of such holders as shown on the books of the
corporation. Such notice will state the Conversion Price
resulting from such adjustment and the increase or decrease,
if any, in the number of shares receivable at such price upon
the conversion of Series A Shares. Such notice will set forth
in reasonable detail the method of calculation and the facts
upon which such calculation is based.
(6) Prior Notices of Certain Events. In case at any
time:
(A) the corporation shall pay any dividends payable in
stock upon its shares of Common Stock, or makes any
distribution other than cash distributions to the holders of
its shares of Common Stock;
(B) the corporation offers for subscription pro rata to
the holders of its Common Stock any additional shares of
stock of any class or other rights;
(C) there is any capital reorganization, or
reclassification of the capital stock of the corporation, or
consolidation or merger of the corporation with, or sale of
all or substantially all of its assets to, another
corporation; or
(D) there is a voluntary or involuntary dissolution,
liquidation or winding up of the corporation;
then, in any one or more of such cases, the corporation will
give written notice, by first class mail, postage prepaid,
addressed to the holders of Series A Shares at the addresses
of such holders as shown on the books of the corporation, of
the date on which (i) the books of the corporation will close
or a record will be taken for such dividend, distribution or
subscription rights, or (ii) such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up will take place, as the case may be.
Such notice will also specify the date as of which the holders
of Common Stock of record will participate in such dividend,
distribution or subscription rights, or will be entitled to
exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or
winding up, as the case may be. Such written notice will be
given at least 20 days prior to the action in question and not
less than 20 days prior to the record date or the date on
which the corporation's transfer books are closed in respect
thereto. At any time prior to such date the holders of the
Series A Shares, at their option, may convert their Series A
Shares into shares of Common Stock in accordance with the
terms hereof.
<PAGE>
(7) Common Stock. As used in this Section 3.4(e), the
term "Common Stock" means and includes the corporation's
presently authorized shares of Common Stock. The term "Common
Stock" also includes any capital stock of any class of the
corporation hereafter authorized which is not limited to a
fixed amount or percentage in respect of the rights of the
holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the corporation;
provided that the shares receivable pursuant to conversion of
Series A Shares will include shares designated as Common Stock
of the corporation as of the date of issuance of such Series A
Shares.
(8) Fractional Shares. The corporation shall not be
required to issue fractional shares of Common Stock upon
conversion of the Series A Shares. If the corporation does not
issue fractional shares, the corporation will pay a cash
adjustment in respect of such fraction that would otherwise be
issuable in an amount equal to the same fraction of the Market
Price per share of Common Stock as of the close of business on
the day of conversion. As used in this Section (e), "Market
Price" means the average of the high and low prices of the
Common Stock sales on all exchanges on which the Common Stock
may at the time be listed. If there will have been no sales on
any such exchange on any such day, the Market Price means the
average of the bid and asked prices at the end of such day. If
the Common Stock is not so listed, the Market Price means the
average of the bid and asked prices at the end of the day in
the over-the-counter market, in each case averaged over a
period of 20 consecutive business days prior to the date as of
which Market Price is being determined. If at any time the
Common Stock is not listed on any exchange or quoted in the
over-the-counter market, the Market Price will be deemed to be
the higher of (i) the book value thereof as determined by any
firm of independent public accountants of recognized standing
selected by the Board of Directors of the corporation as of
the last day of any month ending within 60 days preceding the
date as of which the determination is to be made, or (ii) the
fair value thereof determined in good faith by the Board of
Directors of the corporation as of a date which is within 15
days of the date as of which the determination is to be made.
(f) Mandatory Conversion. The Series A Shares may be converted
into shares of Common Stock of the corporation upon five days notice by
the Board of Directors of the corporation to the holders of the Series
A Shares at any time after the Common Stock of the corporation trades
in a public market for 20 consecutive trading days at an average of the
bid and asked prices greater than $4.00 per share. Each holder of the
former Series A Shares so converted will be entitled to receive the
full number of shares of Common Stock into which such Series A Shares
held by such holder would have been converted if such holder had
exercised such holder's conversion prior to the conversion and the
corporation shall forthwith issue and deliver to such holder the
certificate(s) therefor. Upon such conversion, each holder of Series A
Shares shall forthwith surrender such holder's certificate(s) for such
former Series A Shares.
<PAGE>
/s/ William H. Spell
William H. Spell
/s/ Harry W. Spell
Harry W. Spell
/s/ George R. Long
George R. Long
/s/ Lyle D. Taylor
Lyle D. Taylor
/s/ David L. Owen
David L. Owen
/s/ Richard W. Perkins
Richard W. Perkins
/s/ Edward E. Strickland
Edward E. Strickland
/s/ Bruce A. Richard
Bruce A. Richard
<PAGE>
AMENDMENT OF ARTICLES OF INCORPORATION
OF
BLACK HAWK HOLDINGS, INC.
Article l of the Articles of Incorporation of the above corporation has
been amended to read as follows:
"ARTICLE 1 - NAME
1.1) The name of the corporation shall be Eagle Pacific Industries, Inc."
The foregoing amendment has been approved pursuant to Chapter 302A,
Minnesota Statutes.
I certify that I am authorized to execute this Amendment and I further
certify that I understand that by signing this Amendment I am subject to the
penalties of perjury as set forth in Minnesota Statutes, Section 609.48, as if I
had signed this Amendment under oath.
/s/ William H. Spell
William H. Spell, President
<PAGE>
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<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
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2,767,000
0
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