SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
(Amendment No. )
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
YES CLOTHING CO.
(Name of Registrant As Specified In Charter)
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4)Proposed maximum aggregate value of transaction:
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5)Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
<PAGE>
1)Amount Previously Paid:
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2)Form, Schedule or Registration Statement No.:
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3)Filing Party:
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4)Date Filed:
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<PAGE>
INFORMATION STATEMENT
OF
YES CLOTHING CO.
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
(949) 833-2094
We Are Not Asking You For A Proxy And
You Are Requested Not To Send Us A Proxy.
August ___, 2000
_________________________________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held September 1, 2000
To Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Yes Clothing Co., a California corporation ("Yes") scheduled for September 1,
2000, at the offices of Weed & Co. L.P., located at 4695 MacArthur Court, Suite
530, Newport Beach, CA 92660 at 10:00 a.m. PDT.
Please review this Notice of Meeting and Information Statement, which
describe the matters to be acted upon at the meeting. No proxies are being
solicited for this meeting as the parties controlling over the majority of the
votes have indicated that they will vote their shares in favor of the persons
nominated to be directors of Yes, to ratify the appointment of McKennon, Wilson
& Morgan LLP as Yes' independent auditors for the fiscal year ended March 31,
2001, and to merge Yes with a Nevada corporation in order to effect a change in
domicile. This Information Statement does not relate to any other event or
issue.
Matters to be voted on:
* Election of Fred G. Luke and Jon L. Lawver as directors for one year
terms.
* Ratification of McKennon, Wilson & Morgan LLP as Yes' independent
auditors for the fiscal year ended March 31, 2001.
* To approve and adopt an Agreement of Merger with a newly formed Nevada
corporation, Yes Clothing Company, Inc. whereby Yes will merge with and
into this Nevada corporation for the purpose of reincorporating Yes in
the State of Nevada (the "Merger Proposal"). If the Merger Proposal is
approved, holders of common stock of Yes will receive one (1) share of
$.001 par value common stock in the Nevada corporation for every one
hundred (100) issued and outstanding shares of no par value common stock
held in the Yes. The purpose of this merger is to change Yes' domicile
from California to Nevada.
You have the right to receive this notice and vote at the Annual Meeting if
you were a shareholder of record at the close of business on the date of this
notice (the "Record Date"). Dissenting shareholders do not have a right of
appraisal under the California Corporations Code because Yes Common Stock is
listed on the OTC Bulletin Board under the symbol "YSCO".
/s/ Fred G. Luke
Fred G. Luke
Director
Newport Beach, California
August ___, 2000
<PAGE>
YES CLOTHING COMPANY, INC.
4695 MacArthur Blvd., Suite 530
Newport Beach, California 92660
(949) 833-2094
GENERAL INFORMATION
Information Statement
Management of Yes Clothing Co. ("Yes") is providing this information
statement to inform you about things to be voted on at the annual meeting of
shareholders scheduled for September 1, 2000. The matters to be voted upon are
the following: election of two directors for one-year terms, ratification of
independent auditors and to merge Yes Clothing Co. with a Nevada corporation in
order to effect a change in domicile. This Information Statement does not relate
to any other event or issue.
Costs Of Information Statement
Yes will pay the cost of preparing and sending out this information
statement. It will be sent to shareholders via regular mail.
Copies of this information statement and Yes' annual report to shareholders
on Form 10-KSB, are available to shareholders at no charge upon request directed
to:
Yes Clothing Co.
4695 MacArthur Ct., Suite 530
Newport Beach, CA 92660
<PAGE>
ELECTION OF DIRECTORS
(Proposal No. 1)
Nominees for Director
The nominees for director are listed below. Information about each nominee
is contained in the section entitled "Directors and Executive Officers".
Name Director Since
------------- --------------
Fred G. Luke December 1998
Jon L. Lawver December 1998
All directors stand for election annually. Officers are elected to a term
of one year or less, serve at the pleasure of the Board of Directors, and are
entitled only to such compensation as is fixed by the Board.
Voting Securities and Principal Shareholders Thereof
On August ___, 2000, there were 12,786,492 outstanding shares of common
stock of Yes. Each holder of common stock is entitled to one (1) vote per share.
On August ___, 2000, there were 1,277,005 shares of Series A Preferred Stock
("Series A") issued and outstanding. Each holder of Series A is entitled to the
same voting rights as holders of common stock on a two-for-one basis. Further,
each share of the Series A is convertible into thirty two and 65/100 shares of
Yes common stock, which at August ___, 2000 would be 41,694,213 shares of common
stock, no par value. Shareholders have the right to vote at the Annual Meeting
if they were a shareholder of record at the close of business on the date of
this notice (the "Record Date").
In order to transact business at the Annual Meeting, a quorum consisting of
a majority of all outstanding shares entitled to vote must be present. Once a
share is represented for any purpose at the Annual Meeting, it will be deemed
present for quorum purposes for the entirety of the meeting. Except as otherwise
provided, the affirmative vote of a majority of shares represented and voting at
this meeting at which a quorum is present, shall be the act of the shareholders
in the election of directors.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding ownership of
Yes' common stock as of August ___, 2000. The table includes (a) each person
known by Yes to be the beneficial owner of more than 5% of Yes' common stock,
(b) each director, (b) each director individually, (c) the named executive
officer, and (d) the directors and officers as a group. Unless otherwise
indicated, the persons named in the table possess sole voting and investment
power
<PAGE>
with respect to the shares listed (except to the extent such authority is
shared with spouses under applicable law).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Amount and
Nature of
Name and Address Beneficial Percent
Title of Class of Beneficial Owner Interest of Class(1)
No par value Georges Marciano Trust
Common Stock 9756 Wilshire Blvd.
Beverly Hills, CA 90212 2,700,000 21%
NewBridge Capital, Inc.
4695 MacArthur Court, Suite 530
Newport Beach, California 92660 3,514,693 27%
Cede & Co.
P.O. Box 20 Bowling Green
New York, NY 10004 6,303,244 49%
No par value NuVen Advisors L.P.
Series A 4695 MacArthur Court, Suite 530
Preferred Stock Newport Beach, California 92660 1,277,005(2) 100%
Directors and Officers
All Officers and Directors as a
Group - -
</TABLE>
(1) Based on 12,786,492 common shares and 1,277,005 preferred shares
outstanding, as appropriate.
(2) Convertible into 41,694,213 shares of common stock, no par value
Directors and Executive Officers
a) Identification of Directors and Executive Officers.
The following table sets forth certain information concerning Yes'
directors and executive officers:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Position Held with Date First
Name Age the Company Elected or Appointed
Fred G. Luke 53 President December 1998 to Present
Director December 1998 to Present
John L. Lawver 60 Secretary January 1998 to Present
Director March 1998 to Present
</TABLE>
All directors serve until Yes' next Annual Meeting of Shareholders and
until their successors are elected and qualified. Yes' officers serve at the
discretion of the board of
<PAGE>
directors. Yes' directors generally consider the status of the officers at the
meeting of Yes' directors following each annual meeting of shareholders.
(b) Business Experience
The following is a brief account of the business experience during the past
five years of each director and executive officer of Yes' company, including
principal occupations and employment during that period and the name and
principal business of any corporation or other organization in which such
occupation and employment were carried on.
Fred G. Luke. Mr. Luke has been Yes' President and CEO since December 1998.
Mr. Luke has more than twenty-nine (29) years of experience in domestic and
international financing and the management of privately and publicly held
companies. Since 1982, Mr. Luke has provided consulting services and has served
as Chief Executive Officer and/or Chairman of the Board of various publicly held
and privately held companies in conjunction with such financial and corporate
restructuring services. In addition to his position with the Company, Mr. Luke
currently serves as General Partner of NuVen Advisors L.P. ("NuVen") which
provides managerial, acquisition and administrative services to public and
private companies including Yes. Mr. Luke received a Bachelor of Arts Degree in
Mathematics from California State University, San Jose in 1969.
Jon L. Lawver. Mr. Jon L. Lawver has been Secretary and a Director of Yes
since January and March 1999, respectively. Mr. Lawver has 22 years of
experience in the area of bank financing where he has assisted medium size
companies ($5 million to $15 million) by providing expertise in documentation
preparation and locating financing for expansion requirements. Mr. Lawver was
with Bank of America from 1961 to 1970, ending his employment as Vice President
and Manager of one of its branches. From 1970 to present Mr. Lawver has served
as President and a Director of J.L. Lawver Corp., a financial consulting firm.
Since 1988, Mr. Lawver has served as President and a Director of Eurasia, a
private finance equipment leasing company specializing in oil and gas industry
equipment. Mr. Lawver also serves as a director of NetCommerce, Inc.
("NetCommerce"), NewBridge Capital, Inc. ("NewBridge"), Hart Industries, Inc.
("Hart") and NuVen.
(c) Identification of Certain Significant Employees.
None.
(d) Family relationships
None.
(e) Involvement in Certain Legal Proceedings.
During the past five years, no director or officer of Yes has:
<PAGE>
1. Filed or has had filed against him a petition under the federal
bankruptcy laws or any state insolvency law, nor has a receiver, agent or
similar officer been appointed by a court for the business or property of such
person, or any partnership in which he was a general partner, or any corporation
or business association of which he was an executive officer at or within two
years before such filings.
2. Been convicted in a criminal proceeding.
3. Been the subject of any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining such person from, or otherwise limiting his
involvement in any type of business, securities or banking activities.
4. Been found by a court of competent jurisdiction in a civil action, the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated any federal or state securities or commodities law, which
judgment has not been reversed, suspended, or vacated.
(f) Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires that Yes' directors and officers and persons who own more than ten
percent of Yes' equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Directors,
officers and greater than ten-percent shareholders are required by SEC
regulations to furnish Yes with copies of all Section 16(a) reports filed.
Based solely on its review of the copies of the reports it received from
persons required to file, Yes believes that during the period from April 1, 1998
through the present, all filing requirements applicable to its officers,
directors and greater than ten-percent shareholders were complied with.
Certain Relationships and Related Transactions
Effective January 21, 1998, Yes entered into an Advisory and Management
Agreement (the "Advisory Agreement") with NuVen, the predecessor of NuVen
Advisors Limited Partnership, for the engagement of NuVen to perform
professional and advisory services. Yes had approximately $103,000 due to NuVen
as of March 31, 1999.
As of this date, Yes does not have standing audit, nominating and
compensation committees of the board of directors, or committees performing
similar functions.
There were ______ total board meetings held during the last full fiscal
year. Both directors attended all meetings.
Compensation of Directors and Executive Officers
<PAGE>
(a) Summary Compensation Table.
The following summary compensation table sets forth in summary form the
compensation received during each of Yes' last two completed years by its
president and four most highly paid officers ("Named Executive Officers"). There
were no officers who earned in excess of $100,000 per annum:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Name and Principal Salary Other Annual Options
Position Year ($) (1) Compensation($) Granted(#)(2)
Fred G. Luke 2000 - N/A N/A
President and CEO 1999 - N/A N/A
(12-98 to Present) 1998 - N/A N/A
Guy Anthome 1998 - N/A N/A
Former Chairman and
CEO
(June 1996 to
December 1998)
Jon L. Lawver 2000 36,000 N/A N/A
Secretary 1999 15,000 N/A N/A
(1-98 to Present) 1998 12,000 N/A N/A
</TABLE>
(1) The accrued but unpaid value of base salary (cash and non-cash).
(2) Except for stock option plans, Yes does not have in effect any plan that is
intended to serve as incentive for performance to occur over a period longer
than one year. No stock options are currently outstanding.
(b) Stock Options
None.
(c) Long-Term Incentive Plans Table
There were no long-term incentive plans during the last two years.
Nuven, the holder of 1,277,005 shares of Series A, intends to vote its
shares in favor of the above listed directors and if necessary, convert its
Series A into the requisite shares of common stock necessary to elect these
directors. NewBridge, the holder of 3,514,693 shares of common stock intends to
vote its common stock in favor of the above listed directors. Prior to any
conversion of the Series A, NewBridge and Nuven hold 32% of the voting power and
after conversion of the Series A into common stock, the parties will hold 83% of
the voting power, which is a majority of the outstanding shares entitled to
vote.
RATIFICATION OF APPOINTMENT OF AUDITORS
(Proposal No. 2)
<PAGE>
Grobstein, Horwath & Company LLP previously issued an unqualified report
dual dated June 2 and June 5, 1997, for the year ended March 31, 1997 assuming
Yes will continue as a going concern, which did not contain any adverse opinion
or disclaimer of opinion, or any qualification as to uncertainty, audit scope or
accounting principles. There were no disagreements with Grobstein, Horwath &
Company LLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure. The auditing practice of
Grobstein, Horwath & Company LLP, resigned as Yes' independent accountants.
On July 6, 1999, the auditing practice of McKennon Wilson & Morgan, LLP was
engaged to perform an audit of Yes' financial statements as of March 31, 1999
and for the two years then ended, included in the Annual Report on Form 10-KSB
for the year ended March 31, 1999 and March 31, 2000.
The decision to change principal independent accountants was made by Yes'
Board of Directors.
Except as otherwise provided, the affirmative vote of a majority of shares
represented and voting at this meeting at which a quorum is present, shall be
the act of the shareholders in the ratification of independent auditors. Nuven,
the holder of 1,277,005 shares of Series A, intends to vote its shares in favor
of the appointment of McKennon, Wilson & Morgan as independent auditors to
examine the financial statements of Yes for the fiscal year ending March 31,
2001 and if necessary, convert its Series A into the requisite shares of common
stock necessary to appoint these auditors. NewBridge, the holder of 3,514,693
shares of common stock intends to vote its common stock in favor of the above
listed auditors. Prior to any conversion of the Series A, NewBridge and Nuven
hold 32% of the voting power and, after conversion of the Series A into common
stock, the parties will hold 83% of the voting power, which is a majority of the
outstanding shares entitled to vote. A representative of McKennon, Wilson &
Morgan will be present at the Annual Meeting, will have an opportunity to make a
statement if the representative desires to do so and will be available to
respond to appropriate questions.
MERGER WITH A NEVADA CORPORATION FOR THE PURPOSE OF
EFFECTING A CHANGE IN YES' CORPORATE DOMICILE
(Proposal No. 3)
The Board of Directors (the "Board") has approved an Agreement of Merger
("Merger") with Yes Clothing Company, Inc., a Nevada corporation ("YCCI") to
implement a reincorporation of Yes in the State of Nevada. YCCI was incorporated
by Yes specifically for the purpose of implementing the Merger. YCCI has no
assets or liabilities. Under the Merger Agreement, the name of Yes will become
Yes Clothing Company, Inc. and all the assets and liabilities of YCCI will
become the assets and liabilities of Yes. Nevada was chosen by the Board as the
new proposed state of incorporation due to Nevada's favorable corporate and
income tax laws. Nevada has no corporate income or franchise taxes on corporate
income.
<PAGE>
If this Proposal is adopted by the stockholders, one hundred (100) shares
of no par value common stock in Yes will be exchanged for one (1) share of
common stock in the Nevada corporation. New certificates for shares of common
stock in the Nevada corporation may be obtained by surrendering certificates
representing shares of presently outstanding common stock to Yes' transfer
agent, Chase Mellon Shareholder Services (the "Transfer Agent"), together with
any documentation required to permit the exchange. Holders of certificates of
presently outstanding common stock will be required to exchange their
certificates. The costs of issuing such replacement certificates will be paid by
Yes at an estimated cost of $11,000. It is anticipated that the Merger will be
effected upon the filing of Articles of Merger with the Secretaries of the State
of Nevada and California as soon as practicable following shareholder approval.
Holders of the common stock will not be required to recognize any gain or
loss as the result of the exchange of securities which occur in connection with
the share exchange in the Merger. The tax basis of the aggregate shares of
common stock received as a result of the Merger will be equal to the basis of
the aggregate shares of common stock surrendered in exchange for such common
stock. The holding period for shares of common stock received as a result of the
share exchange will include the holding period of common stock exchanged for the
new shares, for both tax and Rule 144 purposes. Under the California
Corporations Code 1201, the Merger requires the approval of the holders of a
majority of the outstanding shares of the outstanding capital stock. For the
reasons set forth above, the Board recommends approval by the shareholders of
the proposed re-incorporation in Nevada.
Nuven, the holder of 1,277,005 shares of Series A, intends to vote its
shares in favor of the Merger and if necessary, convert its Series A into the
requisite shares of common stock necessary to effect this Merger. NewBridge, the
holder of 3,514,693 shares of common stock intends to vote its common stock in
favor of the Merger. Prior to any conversion of the Series A, NewBridge and
Nuven hold 32% of the voting power and after conversion of the Series A into
common stock, the parties will hold 83% of the voting power, which is a majority
of the outstanding shares entitled to vote.
Yes Clothing Company, Inc., a Nevada Corporation ("YCCI")
Upon consummation of the Merger, the holders of issued and outstanding Yes
shares will receive YCCI shares. The rights of holders of YCCI shares are
governed by its Certificate of Incorporation, By-Laws and Nevada law, while the
rights of holders of Yes shares are governed by Yes' Articles of Incorporation,
By-Laws and California law. In some respects, the rights of holders of YCCI
shares and holders of Yes shares are similar. Although it is impractical to note
all of the differences between the provisions of YCCI's Certificate of
Incorporation, By-Laws, and Nevada law and the provisions of Yes' Articles of
Incorporation, By-Laws, and California law, the following is a summary of
material differences between the rights of holders of YCCI's shares compared
with those of holders of Yes' shares.
The following summary table is qualified by the discussion which follows the
table:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Yes YCCI
State of Incorporation California Nevada
Authorized Common 20,000,000 75,000,000
Authorized Preferred 2,000,000 25,000,000
Issued - Common 12,786,492 1
Issued - Preferred 1,277,005 0
Meeting Quorum
Requirements Majority Majority
Shareholder Action
w/o Meeting Majority Majority
Dividends When Declared When Declared
Votes One Vote Per Share One Vote Per Share
Cumulative Voting No No
Vote Required For:
1) Sale of Assets 1) Majority 1) Majority
2) Amendment of Articles 2) Majority 2) Majority
3) Director Removal 3) Majority 3) Two-Thirds
Preemptive Rights No No
Dissolution Rights Yes Yes
Limitation of Director Liability Yes Yes
Assessment No No
Redemption of Common No No
Rights to Inspect Records Yes Yes
Right to file Derivative Action Yes Yes
Shareholder Liability for Derivative
Actions Possibly Possibly
</TABLE>
Description of Shares
YCCI is authorized to issue 75,000,000 shares of YCCI $.001 par value
common stock and 25,000,000 shares of YCCI $.001 par value Preferred Stock
("YCCI Preferred"). There is one share of YCCI common stock issued and
outstanding. The YCCI Preferred shares may be issued into one or more series,
with the YCCI Board of Directors fixing the designation, preferences and
relative, participating, optional or other special rights, or qualification,
limitations or restrictions thereof of the shares of each series, including
dividend rate, whether dividends shall be cumulative, voting rights, conversion
rights, redemption rights, and liquidation or dissolution rights. No series of
YCCI Preferred shares is issued and outstanding. Yes is authorized to issue
20,000,000 shares of its no par value common stock of which 12,786,492 shares
were issued and outstanding as of the Record Date. Yes is authorized to issue
2,000,000 shares of Series A Convertible Preferred Stock (the "Series A"), of
which 1,277,005 shares are presently issued and outstanding. The Series A shall
is senior to the common stock and any other series or class of preferred stock
that Yes may create.
Dividend Rights
<PAGE>
Subject to the rights of holders of YCCI Preferred shares, if any, to
receive certain dividends prior to the declaration of dividends on YCCI or Yes'
shares, as the case may be, when and as dividends, payable in cash, stock or
other property, are declared by the Board of Directors of YCCI or Yes, as the
case may be, the holders of Yes shares or YCCI shares, respectively, are
entitled to share equally, share for share, in such dividends. Under Nevada law,
no dividends may be paid if, after giving effect to the dividend, the
corporation would not be able to pay its debts as they become due or the
corporation's total assets would be less than the sum of its total liabilities
plus the amount that would be needed, if the corporation were to be dissolved at
the time of distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution.
Under California law, no dividends may be given unless (1) the amount of
retained earnings of the corporation immediately prior thereto equals or exceeds
the amount of the proposed distribution, and (2) the sum of the assets of the
corporation would be equal to a least 1 1/4 times its liabilities and the
current assets would be at least equal to its current liabilities. Further,
under California law, no dividends may be given if the corporation, as a result
of the dividends, would be likely to be unable to meet its liabilities as they
mature, or if required, the corporation has not satisfied the preferential
rights of stockholders whose rights are superior to those receiving the
distribution.
In the event that Yes declares dividends, before distribution to any other
shareholders, holders of the Series A Preferred Stock, of which 1,277,005 shares
are issued and outstanding, are entitled to $.20 per share to be paid in cash or
in market value of Yes' common stock.
Voting Rights
Those who hold Yes shares on the date the Merger is consummated will be
entitled as a group to hold one-hundredth (1/100th) the number of YCCI common
shares. Holders of YCCI shares and Yes shares are entitled to one vote for each
share on all matters voted upon by shareholders of Yes or YCCI, respectively.
Holders of Yes' Series A are entitled to the same voting rights as the common
stock on a two-for-one basis. Two-thirds of the total outstanding Series A must
vote to approve this Merger.
Pursuant to YCCI's Articles of Incorporation, holders of a majority of the
outstanding shares entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. Pursuant to Yes' Articles of
Incorporation and By-Laws, at all meetings of shareholders, a majority of the
shares entitled to vote at such meeting, represented in person or by proxy,
shall constitute a quorum.
Pursuant to Nevada law, holders of YCCI's shares may take action without a
meeting, and without prior notice, upon the written consent of shareholders
holding at least a majority of the voting power, except that if a greater
proportion is required for the action to be taken at a meeting, then the greater
proportion of written consents is required.
<PAGE>
Pursuant to California law, holders of Yes shares may take action without a
meeting only upon written consent of the holders of outstanding shares having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Special Meetings of the Shareholders of Yes may be
called by the President, the Chairman of the Board, the Board of Directors or
shareholders holding not less than ten percent of the shares entitled to vote.
Special Meetings of the Shareholders of YCCI may be called by the President, the
majority of the Board of Directors, or shareholders holding a majority in amount
of the entire capital stock of the corporation issued and outstanding and
entitled to vote.
Yes' Articles of Incorporation require the approval of a majority of all
outstanding Yes shares entitled to vote for amendment of the Articles of
Incorporation and the approval of a majority of all of the outstanding Yes
shares for the merger, consolidation, sale, or disposition of all or
substantially all of Yes' assets and voluntary dissolution. The statutory
provisions applicable to (1) the amendment of the YCCI Certificate of
Incorporation, (2) the approval of merger, consolidation, or dissolution of
YCCI, and (3) the sale of substantially all of YCCI's assets are similar to
those applicable Yes actions. Nevada law and YCCI's Certificate of Incorporation
require the vote of a majority of YCCI shares to effect any of the actions
referenced in (1), (2), or (3) above.
Removal of a director under California law requires the affirmative vote of
a majority of the outstanding Yes shares. Removal of a director under Nevada law
requires the affirmative vote of not less than two-thirds of the outstanding
YCCI shares. YCCI's By-Laws were adopted by its Board of Directors and may be
amended or repealed by its Board of Directors or a majority vote of
stockholders. Yes' By-Laws may be amended or repealed by its Board of Directors
or holders of a majority of outstanding shares.
Preemptive Rights
Authorized YCCI shares and Yes shares may be issued at any time and from
time to time, in such amounts, and for such considerations as may be fixed by
the Board of Directors of YCCI and Yes, respectively. Yes is authorized to issue
2,000,000 shares of Series A Convertible Preferred Stock (the "Series A"), of
which 1,277,005 shares are presently issued and outstanding. The Series A shall
is senior to the common stock and any other series or class of preferred stock
that Yes may create. Each share of Series A is convertible at the option of the
holder, into thirty two and 65/100 shares of Yes' common stock. In the event of
Merger, holders of the Series A will be entitled to receive upon conversion of
the Series A, the number of shares of stock or other securities or property of
Yes, or of the successor company to which the holders of the Series A would have
been entitled to prior to such Merger.
Liability of Directors
As authorized by Nevada law, YCCI's Articles of Incorporation contains a
provision to the effect that no director of shall be personally liable to it or
any of its shareholders for damages
<PAGE>
for any breach of duty as a director except to the extent limited by law.
Yes' Articles of Incorporation contain a similar provision pursuant to a similar
provision of California law. Nevada and California law, and YCCI's By-Laws and
Yes' By-Laws, contain provisions providing for the indemnification of directors
and officers against certain liabilities. Article 10 of the Articles of
Incorporation of YCCI provides that to the fullest extent permitted by Nevada
Revised Statutes, an officer or director shall not be personally liable to the
corporation or its stockholders for monetary damages due to breach of fiduciary
duty as such officer or director. Nevada Revised Statute 78.037 and the Articles
restricts the exclusion of monetary damages for acts or omissions not in good
faith or which involve intentional misconduct, fraud or a knowing violation of
law or the willful or grossly negligent payment of dividends in violation of
Nevada law (excepting those directors who dissented to the unlawful
distribution).
In comparison to Nevada law, California law is more restrictive in the
circumstances under which the liability of a director may be limited or
eliminated. Article V of Yes' Articles of Incorporation provides that the
liability of a director shall be eliminated to the fullest extent permitted
under applicable California law. California Corporation Code sections 204 (10)
and 309(c) provide that the corporation may eliminate or limit the personal
liability of a director to the corporation to its shareholders for monetary
damages for breach of fiduciary duty as a director; except that the liability of
a director shall not be eliminated or limited for any breach of the director's
duty of loyalty to the corporation or to its shareholders, acts or omissions not
in good faith or which involve intentional misconduct, a knowing violation of
law, acts or omissions that show a reckless disregard for the director's duty to
the corporation or its shareholders, for acts or omissions that constitute an
unexcused pattern of inattentiveness that amounts to an abdication of the
director's duties, violation of sections 310 or 316 of the Code or any
transaction from which the director directly or indirectly derived an improper
benefit.
Liquidation Rights
In the event of any liquidation, dissolution, or winding up of Yes or YCCI,
whether voluntary or involuntary, the holders of Yes shares or YCCI shares,
respectively, are entitled to share, on a share-for-share basis, in any of the
assets or funds of YCCI or Yes, as the case may be, which are distributable to
its shareholders upon such liquidation, dissolution, or winding up. Such a
distribution would be subject to the prior rights of creditors of YCCI or Yes,
as the case may be, and, to the prior rights of the holders, if any, of YCCI
Preferred shares. In the event of any liquidation, dissolution or winding up of
Yes, whether voluntary or involuntary, the holders of the Series A then
outstanding shall be entitled to be paid out the assets of Yes, before
distribution to any other shareholders, an amount equal to Two Dollars ($2.00)
per share.
Dissenters Rights
Under Nevada law, a stockholder is entitled to dissent from, and obtain
payment of the fair value of his shares in the event of 1) consummation of a
plan of merger for which shareholder approval is required under Nevada law or if
the corporation is a subsidiary and is merged with its parent; 2) 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
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the plan; and 3) any corporate action taken pursuant to a vote of the
stockholders to the extent the Articles of Incorporation, Bylaws or a resolution
of the Board of Directors provides that stockholders are entitled to dissent and
obtain payment for their shares. There is no right of dissent with respect to a
plan of merger or exchange if at the record date fixed to determine stockholders
entitled to receive notice and to vote at the meeting at which the plan of
merger or exchange is to be acted upon the shares were listed on a national
securities exchange, designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. or held by at least 2,000 stockholders of record unless:
1. The Articles of Incorporation of the corporation issuing the shares provide
otherwise; or
2. The holders of the shares are required to accept for such shares anything
except (a) cash, shares (or combination thereof) or shares and cash in lieu of
fractional shares of the surviving or acquiring corporation or any other
corporation which, at the effective date of the plan of merger or exchange, were
either listed on a national securities exchange designated as a National Market
System security on an interdealer quotation system by the National Association
of Securities Dealers or held of record by at least 2,000 stockholders of
record.
Under California law, if the approval of outstanding shares of a
corporation is required for a reorganization, then each shareholder entitled to
vote on the transaction and each shareholder of a subsidiary in a short-form
merger is entitled to dissent. There is no right of dissent with respect to a
plan of merger or exchange if at the record date fixed to determine stockholders
entitled to receive notice and to vote at the meeting at which the plan of
merger or exchange is to be acted upon the shares were listed on a national
securities exchange, designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. or held by at least 2,000 stockholders of record.
Assessment and Redemption
YCCI shares to be issued upon consummation of the Merger will be fully paid
and non- assessable. Yes shares, for which full consideration has been paid, are
deemed to be fully paid and non-assessable. Neither YCCI nor Yes common shares
have any redemption provisions.
Transfer Agent
The transfer agent for Yes' shares is Chase Mellon Shareholder Services,
located at 400 S. Hope Street, 4th Street, Los Angeles, California 90071. If the
Merger is consummated, the transfer agent for YCCI shares will be Chase Mellon
Shareholder Services.
Inspection Rights
Under California law a shareholder may inspect and copy Yes' accounting
records and minutes of proceedings of the shareholders at any reasonable time
during usual business hours for a purpose reasonably related to such holder's
interests as a shareholder. Under Nevada law, a
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shareholder may inspect and copy YCCI's shareholder list if he has been a
shareholder for at least six months preceding his demand or is a shareholder, or
is authorized in writing by shareholders holding, at least 5% of all its
outstanding shares. Since both Yes' and YCCI's principal executive offices are
in California, California law permits a shareholder to inspect and copy the
shareholder list regardless of the amount of shares held upon written demand to
the corporation for a purpose reasonably related to such holder's interest as a
shareholder. Yes, YCCI, or the transfer agent may impose a reasonable fee to
cover the cost of production and copying the records.
Derivative Rights
Under both California and Nevada law, no derivative action may be brought
unless the plaintiff was a shareholder at the time of the transaction complained
of, or received shares by operation of law from such shareholder. In Nevada, the
complaint must be verified by oath and set forth with particularity the efforts
of plaintiff to secure proper action by the corporation or shareholders. Under
California law, in certain instances, the corporation or defendant may require
the shareholder to post a bond in the aggregate amount of $50,000 to secure the
reasonable expenses of the parties entitled to make such motion. Under Nevada
law, plaintiff in a shareholders' derivative action may be required to give
security for costs, including attorney fees, upon a finding that there is no
reasonable possibility that suit will benefit the corporation or that moving
party, if other than a corporation, did not participate in the transaction
complained of in any capacity.
Issuance of Additional Shares: Possible Dilution
Yes is authorized to issue 20,000,000 shares of no par value common stock.
There are 12,786,492 shares now issued and outstanding leaving only 7,213,508
shares available for issuance. If the Merger is consummated, upon the issuance
of new shares for whatever reason, whether upon acquisition of assets, exercise
of options, conversion of preferred stock or otherwise, existing shareholders
will suffer dilution. If the Merger is consummated, significant dilution of
current common stockholders is possible upon the issuance of more common shares.
FINANCIAL AND OTHER INFORMATION
Enclosed with this information statement is a copy of Yes' annual report to
the Securities and Exchange Commission on Form 10-KSB for the fiscal year ended
March 31, 2000.
By Order of the Board of Directors
/s/ Fred G. Luke
Fred G. Luke
President and CEO
