<PAGE>
ADDvantage Media Group, Inc.
808 N. 16th Street
Broken Arrow, Oklahoma 74012
Disclosure Statement
Pursuant to Section 14(f) of the Securities Exchange Act of 1934
and Rule 14f-1 Thereunder
October 1, 1999
CHANGE IN CONTROL
This Disclosure Statement is being furnished by ADDvantage Media Group,
Inc., an Oklahoma corporation (the "Company"), to its shareholders in connection
with the planned appointment of new directors of the Company upon consummation
of the transactions contemplated by the Securities Exchange Agreement (the
"Agreement") dated September 16, 1999, between the Company and David E. Chymiak,
Kenneth A. Chymiak, as Trustee of the Ken Chymiak Revocable Trust Dated March 4,
1992 and Susan C. Chymiak, as Trustee of the Susan Chymiak Revocable Trust Dated
March 4, 1992 (the " New Shareholders"). This Disclosure Statement is first
being sent to shareholders of the Company on October 4, 1999.
Pursuant to the Agreement, the New Shareholders have assigned their shares
of the common stock of DRK Enterprises, Inc., doing business as "TULSAT"
(hereafter referred to as "TULSAT") to the Company in exchange for 8,000,000
shares of the common stock of the Company, 200,000 shares of the Company's newly
authorized Series A Cumulative Convertible Preferred Stock ("Series A Preferred
Stock") and 50,000 shares of the Company's newly authorized Series B Cumulative
Preferred Stock ("Series B Preferred Stock"). The New Shareholders have also
exchanged demand notes of TULSAT in the aggregate principal amount of
$10,000,000 for an additional 250,000 shares of Series B Preferred Stock.
The shares of Preferred Stock are non-voting, but the shares of the
Company's common stock received by the New Shareholders represent approximately
82% of the outstanding common stock. At the closing called for by the
Agreement, the officers and directors of the Company other than Gary W. Young
tendered their resignations. As soon as is reasonably practicable, Mr. Young, as
the sole remaining director, has appointed four new directors to the board of
directors. These persons will take office on October 14, 1999, but in no event
less than ten days from the date that this Disclosure Statement is first sent to
the shareholders of the Company.
The address of the Company will change to 808 N. 16th Street, Broken Arrow,
Oklahoma 74012, and its telephone number will be (918) 251-9121.
The persons who will serve as the new directors and executive officers are
described below.
This disclosure statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. You are urged to read this Disclosure Statement carefully. You are
not, however, required to take any action.
<PAGE>
BOARD OF DIRECTORS
General
The common stock of the Company is the only class of voting securities of
the Company. Each share of common stock entitles the holder thereof to one vote
per share. There is no cumulative voting with respect to election of directors.
As of September 30, 1999, there were 9,712,345 shares of common stock
outstanding, including the 8,000,000 shares issued to the New Shareholders. The
Company had six directors, five of whom tendered their resignations at the time
of the closing of the issuance of the Company's securities pursuant to the
Agreement. Gary W. Young is the only current director who remains.
Each director holds office until such director's successor is elected and
qualified or until such director's earlier resignation or removal. The
Company's by-laws provide that the board of directors shall consist of not less
than one nor more than nine directors, as determined from time to time by
resolution of the board of directors. The number of directors has been reduced
to five, leaving a total of four vacancies. Vacancies in the board of directors
may be filled by the remaining members of the board. It is anticipated that
Gary W. Young, as the sole remaining director, will appoint the four persons
named below to fill the four vacancies. Any director chosen to fill a vacancy
will hold office until the next election of directors, which is expected to
occur at the 2000 Annual Meeting of Shareholders.
Directors
The directors serving the Company immediately prior to the closing are as
follows:
J Larre Barrett, age 60, was elected a director of the Company in January
1992. Mr. Barrett served as a sales representative of the Company from April 1,
1997 until earlier this year. From January 1997 until April 1997, Mr. Barrett
was self- employed as a corporate media consultant. From December 1994 through
December 1996, he served as Vice President of Decker Communications, Inc., a
consulting firm dealing with communication and skills building. From March 1993
to December 1994, Mr. Barrett served as Vice President of Sales for Dorna USA.
From 1989 to February 1993, he served as Vice President--Olympic Marketing Sales
of CBS, Inc. Prior to that position, Mr. Barrett spent 24 years with the ABC
Television Network, most recently serving as its Vice President of Sports Sales
and Vice President of Olympic Marketing and Sales. Mr. Barrett received
Bachelor of Journalism and Master of Arts in Radio/Television Sales & Management
degrees from the University of Missouri.
John W. Condon, age 63, was elected a director of the Company in 1989. He
has been employed by United Graphics, Inc., a Company specializing in pre-
printing negatives and color separation, since 1964 and has served as its
Executive Vice President since that time. Mr. Condon received a Bachelor of
Science degree in Commerce with a major in Marketing from the University of
Notre Dame.
Steven C. Oden, age 47, was elected a director of the Company in April
1998. Since April 1998, Mr. Oden has served as Vice President, Marketing and
Sales for Tulsa Winch, Inc., a Manufacturing Company. From April 1996 to April
1998, he served as Vice President, Sales and Marketing of the Company. From May
1988 to April 1996, he served as Vice President, Sales for Lowrance Electronics,
a manufacturer of sonar and navigational equipment sold to retailers in the
marine, sporting goods and avionics markets. From June 1983 to May 1988, he
served as Sales Manager for Ramsey Industries, a manufacturer of winches, speed
reducers, and transmissions sold to various commercial users and other winches
and accessories sold to recreational markets. From 1974 to 1983, Mr. Oden
served in various positions, including Sales Manager and International Sales
Manager, with the Auto Crane Company, a manufacturer of electric and hydraulic
cranes. Mr. Oden received Bachelor of Arts degrees in Business Administration
and psychology from Westminster College.
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Stephen G. Smith, age 51, was elected a director of the Company in March
1998. Since 1996, Mr. Smith has served as President of Sales Insights, Dallas,
Texas, a consulting firm for the consumer packaged goods industry. He was
employed from 1991 to 1996 at Helene Curtis USA, serving as Director of Customer
Business from 1994 to 1996 and Director of Business Planning from 1991 to 1994.
From 1989 to 1990, Mr. Smith served as National Sales Manager of the Toiletries
Division of Alberto-Culver Company. He was employed by Procter & Gamble
Distributing Company from 1970 through 1989, last serving as Group Marketing
Manager--Wal-Mart Customer Team. Mr. Smith received a Bachelor of Science degree
in Business from Iowa State University.
Charles H. Hood, age 61, has served as Chairman, President and a director
of the Company since its formation in September 1989. From 1987 to June 1990,
he served as Chairman of the Board of Directors of Ackerman, Hood & McQueen,
Inc., an advertising agency headquartered in Oklahoma, with offices located in
Tulsa and Oklahoma City, Oklahoma, Dallas, Texas, Washington, D. C., Cleveland,
Ohio and Fort Smith, Arkansas. From 1970 to 1987, Mr. Hood served as Chairman of
the Board of Directors of Hood, Hope and Associates, Inc., an advertising agency
he co-founded in 1970. Mr. Hood received a Bachelor of Journalism degree from
the University of Missouri.
Gary W. Young, age 58, joined the Company in December 1990 as Executive
Vice President - Finance and Administration and a director. Mr. Young is also
the owner and President of Young Ideas Inc., a Financial Consulting and
Investment Company he founded in 1987. From 1980 to 1986, he served as
Executive Vice President and a Director of Geodyne Resources, Inc., an oil and
gas acquisition and exploration company headquartered in Tulsa, Oklahoma. From
1970 to 1980, Mr. Young was Senior Vice President of Finance and Administration
and a Director of Cotton Petroleum Corporation, a Tulsa, Oklahoma, based oil and
gas exploration company. From 1963 to 1970, he was employed by Arthur Young &
Company (now Ernst & Young), a national accounting firm. Mr. Young received a
Bachelor of Science degree from Kansas State University and is a Certified
Public Accountant.
Compensation of Directors
Beginning in 1998, the Company began paying the outside directors at a rate
of $12,000 annually, commencing at the beginning of the second quarter for their
services on the board of directors. During 1998, payments totaling $15,000 for
the second and third quarters were paid. Fees for the fourth quarter of 1998
totaling $12,000 were accrued, but not paid in cash. The directors were issued
common stock of the Corporation in respect of these amounts in September, 1999.
See "Certain Relationships and Related Transactions." Directors who were
employees of the Company received no additional compensation for their services
on the board of directors. All directors are reimbursed by the Company for out-
of-pocket expenses incurred by them in connection with their service on the
board of directors and any committee thereof. During 1998, Stephen G. Smith was
granted a stock option to purchase 12,500 shares of common stock at $9.00 per
share and was subsequently re-priced to $0.875 per share, the fair market value
of the Company's common stock on the re-pricing date. During 1998, stock
options for J. Larre Barrett (15,000 shares), John W. Condon (8,750 shares) and
Steven C. Oden (10,000 shares) were re-priced from $8.00 per share on 31,250
shares and $5.00 on 2,500 shares to $0.875 per share, the fair market value of
the Company's common stock on the re-pricing date. See "Compensation of New
Directors" below for a description of the compensation to be paid to the
directors in the future.
Meetings and Committees of the Board of Directors
During 1998, the board of directors held one meeting (all other action
being taken by unanimous consent). Each director attended all meetings of the
board and of the committees on which he served during 1998. The board of
directors has a standing Audit Committee and Compensation Committee.
The Audit Committee was composed of Messrs. Condon and Smith, both of whom
tendered their resignations at the closing of the issuance of the Company's
securities. After the appointment of the new directors
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of the Company, the Audit Committee will be composed of Messrs. Gibson, Tyde and
Kenneth A. Chymiak. The Audit Committee annually considers the qualifications of
the independent auditors of the Company and makes recommendations to the board
of directors on the engagement of the independent auditors. The Audit Committee
also reviews with the independent auditors the scope and results of the
Company's audits, compliance with any of the Company's written policies and
procedures, the adequacy of the Company's system of internal accounting and
controls and the professional services furnished by the independent auditors to
the Company. The Audit Committee met once during 1998.
The Compensation Committee was composed of Messrs. Hood, Barrett and
Condon, all of whom tendered their resignations at the closing of the issuance
of the Company's securities. After the appointment of the new directors of the
Company, the Compensation Committee will be composed of Messrs. Gibson and Tyde.
The Compensation Committee reviews and monitors performance of the officers of
the Company and takes final action for and on behalf of the board of directors
with respect to compensation and benefit provisions for the officers of the
Company. The Compensation Committee met once during 1998.
The Company does not have a standing nominating committee. Nominations of
candidates for election as directors of the Company may be made at a meeting of
shareholders by or at the direction of the board of directors or by any
shareholder entitled to vote at such meeting.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and person who own more than ten percent of
the Company's common stock, to report their initial ownership of the Company's
common stock and any subsequent changes that ownership to the Securities and
Exchange Commission ("SEC") and to furnish the Company with a copy of each such
report. SEC regulations impose specific due dates for such reports, and the
Company is required to disclose in this Disclosure Statement any failure to file
by these dates during and for fiscal 1998.
To the Company's knowledge, based solely on the review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during and with respect to fiscal 1998, all Section 16(a)
filing requirements applicable to its executive officers, directors and more
than ten percent stockholders were complied with, except as follows: (a) Steven
C. Oden filed late an initial ownership report upon becoming an executive
officer of the Company, and (b) John W. Condon filed late two reports, one
report with respect to three transactions each involving the sale of shares of
Common Stock and one report with respect to one transaction involving the sale
of shares of Common Stock.
New Directors
The persons who will be appointed as directors to serve until the next
annual meeting of the Company's shareholders are as follows:
David E. Chymiak, age 54, is the President and a Director of TULSAT and
owns 50% of the outstanding capital stock of that company. Mr. Chymiak acquired
a cable television franchise and built a system in Steelville, Missouri in 1973.
After he sold the system, he relocated to Tulsa and in 1984, he became the
technical service manager for TULSAT and in 1985 he and Kenneth A. Chymiak
acquired TULSAT. Mr. Chymiak attended the University of Missouri-Rolla and
Lawerence Technical. Mr. Chymiak also engages in certain real estate
investments through Chymiak Investments, L.L.C. and certain other entities. He
is the brother of Kenneth A. Chymiak.
Kenneth A. Chymiak, age 52, is the Vice President and a Director of TULSAT
and, together with his wife, is the beneficial owner of 50% of the outstanding
capital stock of that company. In 1985, Mr. Chymiak acquired
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TULSAT along with his brother David E. Chymiak. Prior to that time Mr. Chymiak
owned several automobile dealerships and also was an independent securities
broker. Mr. Chymiak also engages in certain real estate investments through
Chymiak Investments, L.L.C., Chymiak Investments, Inc. and certain other
entities.
Stephen J. Tyde, age 52, is the owner, President and Chief Executive
Officer of The Pump & Motor Works, Inc. located in Tulsa, Oklahoma, an electric
motor and turbo machinery manufacturing company which he founded in 1991. From
1989 to 1990, he was Vice President of Marketing of Mid Americas Process
Services, Inc., in Tulsa, Oklahoma, a remanufacturer of electric motors, turbo
equipment, electrical controls and transformers. Mr. Tyde was Facility Manager
from 1988 to 1989 and Marketing Manager from 1985 to 1989 of Goulds Pumps,
Inc.--Pump Repair and Overhaul Shop, in Tulsa, Oklahoma. Mr. Tyde received a
Bachelor of Science degree in Operations Research from Ohio State University in
Columbus, Ohio and a Master of Science in Business Administration from George
Washington University, in Washington, D.C. He also completed courses in the
University of Pittsburgh's Master of Science in Industrial Engineering program
in Pittsburgh, Pennsylvania.
Freddie H. Gibson, age 51, has been the President and Chairman of the Board
of Directors of Heat Transfer Equipment Company located in Tulsa, Oklahoma, a
manufacturer of shell and turbo heat exchangers for oil and petroleum
industries, since 1992. He served as the Chief Executive Officer of Heat
Transfer Equipment Company from 1988 to 1992. Mr. Gibson also currently serves
on the board of directors of Industrial Structures, Inc., a manufacturer of
railroad work cars. From 1980 to 1988, Mr. Gibson was the President of
Interactive Computer Systems located in Tulsa, Oklahoma, a company he founded in
1980. He was the Controller and Data Processing Manager of Cooper Manufacturing
in Tulsa, Oklahoma from 1977 to 1980 and of Lowrance Electronics in Tulsa,
Oklahoma from 1973 to 1976. Mr. Gibson received his Bachelor of Science degree
in Business Administration from Oklahoma State University in Stillwater,
Oklahoma.
Compensation of New Directors
After the appointment of the new board of directors, it is anticipated that
the Company will pay each director $500 for each board meeting and $250 for each
committee meeting that director attends. In addition, directors will be
eligible to receive awards of stock options to purchase 1,000 shares of the
Company's common stock per year. All directors are reimbursed by the Company
for out-of-pocket expenses incurred by them in connection with their service on
the board of directors and any committee thereof.
EXECUTIVE OFFICERS
The following were executive officers of the Company prior to the
consummation of the transactions contemplated by the Agreement. Mr. Hood has
resigned.
Person Office
Charles H. Hood President, Chairman of the Board of Directors
Gary W. Young Executive Vice President - Finance and Administration
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The following persons will be appointed to the offices indicated:
New Officers
Person Office
David A. Chymiak Chairman of the Board of Directors
Kenneth A. Chymiak President and Chief Executive Officer
Lynnwood R. Moore, Jr. Secretary
Mr. Young will remain as Executive Vice President-Finance and Administration.
Executive Compensation
The following table sets forth certain information for each of the fiscal
years ended December 31, 1998, 1997 and 1996, with respect to the compensation
paid for services rendered in all capacities to the Company by the Company's
Chief Executive Officer and each executive officer whose total compensation
reached $100,000 during fiscal 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation (2)
----------------------------- ----------------------------------------
Number
Other of
Annual Restricted Shares Long-Term
Compen- Stock Underlying Incentive
Name and Salary Bonus sation Awards Options Payouts
Principal Position Year ($) ($) ($) (1) ($) Granted ($)
- ------------------ ---- --- --- ------- --- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles H. Hood, 1998 175,000 -0- 5,964 -0- 57,500 -0-
President and 1997 150,000 150,000 6,688 -0- -0- -0-
Chairman 1996 125,000 125,000 4,500 -0- 45,000 -0-
Gary W. Young, 1998 175,000 -0- 5,626 -0- 70,000 -0-
Executive Vice 1997 150,000 150,000 6,684 -0- -0- -0-
President 1996 106,750 125,000 4,500 -0- 45,000 -0-
</TABLE>
_____________________
(1) Other annual compensation represents, in 1998, in 1997, and 1996, Company
contributions on behalf of each of the individuals to the Company's 401(k)
Plan and payments of non-accountable expense allowances. Amounts do not
include the value of perquisites or other personal benefits because the
amount of such compensation, if any, does not exceed the lesser of $50,000
or 10% of the total amount of annual salary and bonus.
(2) In 1998, the Company paid an aggregate of $173,784 in premiums on a life
insurance policy. Under an amendment to the Supplemental Executive
Retirement Plan of the Company adopted in 1998, Gary W. Young and Charles
H. Hood, upon retirement with the company or termination of employment, had
the right to receive the cash surrender value of such policy. If either of
them should die prior to termination of
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employment, their beneficiary would receive the death benefit under the
policy. The Company has not made any premium payments on the policy since
October, 1998. Both Mr. Hood and Mr. Young are waiving and releasing the
Company from any obligation under the Supplemental Executive Retirement
Plan of the Company in consideration for the issuance of options to
purchase up to 25,000 shares of the Company's common stock. See "Certain
Relationships and Related Transactions" below.
Option Grants in Last Fiscal Year
The following table sets forth information with respect to stock options
granted by the Company to each of the named executive officers during the year
ended December 31, 1998.
<TABLE>
<CAPTION>
Percent of Total
Number of Shares Options Granted to
Underlying Options Employees Exercise Price Expiration
Name Granted in 1998 Per Share ($) Date
---- ------- ------- ------------- ----
<S> <C> <C> <C> <C>
Charles H. Hood 23,750 14.8 .875 (1) 5/10/2003
11,250 7.0 .875 (2) 7/09/2006
22,500 14.1 .875 (3) 1/14/2008
Gary W. Young 36,250 22.6 .875 (1) 5/10/2003
11,250 7.0 .875 (2) 7/09/2006
22,500 14.1 .875 (3) 1/14/2008
</TABLE>
_______________________
(1) This stock option was granted prior to 1998 and was re-priced from an
exercise price of $1.50 to $0.875 per share.
(2) This stock option was granted prior to 1998 and was re-priced from an
exercise price of $5.00 to $0.875 per share.
(3) This stock option was granted during 1998 at an exercise price of $8.00 per
share and was subsequently re-priced to $0.875 per share.
Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
There were no stock options exercised by the named executive officers
during the year ended December 31, 1998. The following table sets forth
information regarding the value of unexercised stock options held by each of the
named executive officers as of the year ended December 31, 1998.
<TABLE>
<CAPTION>
Number of Shares of Common Stock Value of Unexercised
Underlying Unexercised Option at In-The-Money Options at
December 31, 1998 (#) December 31, 1998 ($) (1)
--------------------- -------------------------
Name Exerciseable Unexerciseable Exerciseable Unexerciseable
- ---- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Charles H. Hood 70,000 -0- $18,437 $-0-
Gary W. Young 82,500 -0- $21,562 $-0-
</TABLE>
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_______________________
(1) Calculated by determining the difference between the fair market value of
the Company's Common Stock as of December 31, 1998 ($2.0625 per share based
on the last sales price on such date), and the exercise price of the
underlying options.
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of September 30, 1999 the number and
percentage of shares of common stock and preferred stock of the Company owned
beneficially, by class and on a combined basis, by (i) each current director and
nominee for director of the Company, (ii) each executive officer of the Company,
(ii) all executive officers and directors as a group, and (iv) each person who
is known by the Company to own beneficially more than 5% of the common stock or
preferred stock. Except as otherwise indicated, the beneficial owners listed in
the table have sole voting and investment powers with respect to the shares.
<TABLE>
<CAPTION>
Number of Number of
Number of Shares of Shares of
Shares of Series A Series B
Common Preferred Preferred
Stock Percent Stock Percent Stock Percent
Name and Address of Beneficially of Class Beneficially of Beneficially of
Beneficial Owner Owned (1) (1) Owned Class(1) Owned Class(1)
---------------- --------- --- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Hood 196,300 (2) 2.0 % -0- -0- -0- -0-
Gary W. Young 163,708 (3) 1.7 % -0- -0- -0- -0-
J Larre Barrett 32,420 * -0- -0- -0- -0-
John W. Condon 33,020 * -0- -0- -0- -0-
Steven C. Oden 10,750 * -0- -0- -0- -0-
Stephen G. Smith 12,500 * -0- -0- -0- -0-
Kenneth A. Chymiak (5) 4,000,000 41.2 % 150,000 50 % 100,000 50%
David E. Chymiak 4,059,000 41.8 % 150,000 50 % 100,000 50%
Stephen J. Tyde 5,000 * -0- -0- -0- -0-
Freddie H. Gibson -0- -0- -0- -0- -0- -0-
All Executive Officers and 8,227,708 (4) 84.7 % 300,000 100% 200,000 100%
Directors as a group (5
persons)
</TABLE>
_____________________________
* Less than one percent.
(1) Shares which an individual has the right to acquire within 60 days pursuant
to the exercise of options are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual, but
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are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person shown in the table or the
percentage ownership of all Officers and Directors as a group.
(2) Includes 25,000 shares subject to stock options which the Company has
agreed to issue and which will be fully exercisable when issued.
(3) Includes 25,000 shares subject to stock options which the Company has
agreed to issue and which will be fully exercisable when issued.
(4) Includes an aggregate 50,000 shares subject to stock options which the
Company has agreed to grant and which, when granted, will be exercisable in
full immediately.
(5) All of the shares beneficially owned by Mr. Chymiak are held of record 50%
by him as trustee of the Ken Chymiak Revocable Trust Dated March 4, 1992
and 50% by his wife as trustee of the Susan Chymiak Revocable Trust Dated
March 4, 1992.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the closing of the transactions contemplated by the Agreement, the
executive officers and directors exercised their outstanding options by
canceling indebtedness owed to them by the Company for unpaid salary or fees in
amounts equal to the purchase price payable upon exercise of the options. Except
as noted in the table below, any remaining amounts due to them were satisfied by
issuing shares of the Company's common stock to them at a price of $1.25 per
share, the approximate trading price of the stock at the date the Agreement was
signed. Below is a table reflecting the amounts owed such officers and directors
and the shares issued in satisfaction of that indebtedness.
<TABLE>
<CAPTION>
Accrued Option Shares Total
Accrued Directors Exercise Net Issued Option Shares
Name Payroll Fees Total Cost(1) Liability(2) @ $1.25 Shares(1) Issued
---- -------- --------- -------- -------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles H. Hood $ 79,500 $ -0- $ 79,500 $ 60,313 $19,187 15,350 70,000 85,350
Gary W. Young 79,500 -0- 79,500 71,251 8,249 6,600 82,500 89,100
J. Larre Barrett -0- 12,000 12,000 13,126 -0- -0- 15,000 15,000
John W. Condon -0- 12,000 12,000 7,657 4,343 -0- 8,750 8,750
Steven C. Oden -0- 12,000 12,000 8,751 3,249 -0- 10,000 10,000
Stephen G. Smith -0- 12,000 12,000 10,938 1,062 -0- 12,500 12,500
-------- ------- -------- -------- ------- ------ ------- -------
Total $159,000 $48,000 $207,000 $172,036 $36,090 21,950 198,750 220,700
</TABLE>
_______________
(1)- Represents number of shares and aggregate exercise price for currently
outstanding options to be exercised in prior to closing. The outstanding options
are summarized below:
<TABLE>
<CAPTION>
1991 Plan 1998 Plan Options Outside Plans Total
------------------ ----------------- ----------------------- -----------------
Name Shares Cost Shares Cost Shares Cost Shares Cost
- ------------------ ------- -------- ------ --------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles H. Hood 47,500 $ 40,625 22,500 $19,688 -0- $ -0- 70,000 $ 60,313
Gary W. Young 60,000 51,563 22,500 19,688 -0- -0- 82,500 71,251
J. Larre Barrett -0- -0- -0- -0- 15,000 13,126 15,000 13,126
John W. Condon -0- -0- -0- -0- 8,750 7,657 8,750 7,657
Steven C. Oden 10,000 8,751 -0- -0- -0- -0- 10,000 8,751
Stephen G. Smith -0- -0- -0- -0- 12,500 10,938 12,500 10,938
------- -------- ------ ------- ------ ------- ------- --------
Total 117,500 $100,939 45,000 $39,376 36,250 $31,721 198,750 $172,036
</TABLE>
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<PAGE>
(2)- Amount of indebtedness remaining after option exercise.
(3)- Net liability to be paid in cash.
Messrs. Charles H. Hood and Gary W. Young have waived and released the
obligations of the Company to them under the Supplemental Executive Retirement
Plan. As part of the consideration for this action, Messrs. Hood and Young will
receive options to purchase 25,000 shares of the Company's common stock at a
price of $4.00 per share. When issued, these options will be exercisable in full
immediately and will expire, if not previously exercised, at the end of ten
years from the date of grant.
Chymiak Investments, L.L.C., which is owned by David E. Chymiak and
Kenneth A. Chymiak, purchased from TULSAT on September 30, 1999 the real estate
and improvements comprising the headquarters and a substantial portion of the
other office and warehouse space of TULSAT for a price of $1,286,000. The price
represents the appraised value of the property less the sales commission and
other sales expenses that would have been incurred by TULSAT if it had sold the
property to a third party in an arm's length transaction. TULSAT has entered
into a five-year lease commencing October 1, 1999 with Chymiak Investments,
L.L.C. covering the property under which the annual rental due to Chymiak
Investments, L.L.C. is $180,000. TULSAT is leasing other property from Chymiak
Investments, L.L.C. and paid that company $54,300 in 1998 as rental under those
leases. The future annual rentals due under those leases (not including the
lease of the recently purchased headquarters building discussed above) are
$92,900 for 1999, $72,000 for each of 2000, 2001 and 2002 and $30,500 in 2003.
Chymiak Investments, Inc., which is owned by Kenneth A. Chymiak and
his wife, Susan C. Chymiak, recently constructed three other properties which
have been leased to TULSAT for five year terms (all ending in 2003) at rentals
of $3,000 per month each (aggregate rentals per year of $108,000 for all three
buildings).
PROPOSALS OF SHAREHOLDERS
The Company has changed its fiscal year end to September 30, beginning
with September 30, 1999. Thus, its next Annual Meeting of Shareholders is
expected to be held in February or March of 2000. Therefore, proposals of
shareholders intended to be presented at the Company's 2000 Annual Meeting of
Shareholders should be received at the principal executive offices of the
Company, 808 N. 16th Street, Broken Arrow, Oklahoma 74012, on or before October
31, 1999 to be considered for inclusion in the Company's proxy statement and
accompanying proxy for that meeting. Any shareholder who intends to present a
proposal at the 2000 Annual Meeting and has not sought inclusion of the proposal
in the Company's proxy materials pursuant to Rule 14a-8 should provide notice of
such proposal to the Company no later than December 31, 1999.
By Order of the Board of Directors.
/s/ Lynnwood R. Moore, Jr.
Lynnwood R. Moore, Jr., Secretary
October 1, 1999
Tulsa, Oklahoma
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