SeaCrest Industries Corporation
- - -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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<PAGE>
SEACREST INDUSTRIES CORPORATION
2510 N. GRAND AVE.
SUITE 104
SANTA ANA, CA 92701
This Information Statement is furnished to the holders of the common stock,
par value $0.01 per share (the "Common Stock"), of SeaCrest Industries
Corporation (the "Company") to inform them as to actions to be taken by the
Company with the written consent of certain holders of the Company's Common
stock (the "Consenting Stockholders"). The Consenting Stockholders are the
record holders of, in the aggregate, _______________ shares of Common Stock
(representing __._% of the 12,484,798 shares outstanding as of December __,
1997.
The Board of Directors of the Company has approved the merger of the Company
into SeaCrest Industries Corporation, Nevada corporation ("SeaCrest Nevada"). In
May of 1997 SeaCrest Nevada acquired all of the issued and outstanding shares of
Infrared Systems International, a Nevada corporation ("ISI"). Under Delaware law
and the
<PAGE>
Company's Articles of Incorporation, the affirmative vote of a majority of the
outstanding stock entitled to vote thereon is required to approve the merger.
The Consenting Stockholders gave their written consent to the merger on December
__, 1997. Since the Consenting Stockholders own more than the majority of the
outstanding shares of Common stock entitled to vote thereon, the reorganization
has been approved by the necessary vote of stockholders and the ratification of
the merger was approved. Accordingly, the Company is not seeking written
consents from any of its other stockholders.
WE ARE NOT ASKING YOU FOR A CONSENT OR PROXY AND YOU ARE
REQUESTED NOT TO SEND US A CONSENT OR PROXY
This Information Statement is being mailed on or about January __, 1998, to
stockholders of record on January __, 1998. The Company intends to take all
necessary action to approve the reorganization on or after January __, 1998 (20
days from the date of the mailing of this Information Statement) (the "Effective
Date").
The Company's Common Stock is not presently traded in an active market.
VOTING SECURITIES
The close of business on January __, 1998, has been fixed by the Board of
Directors as the record date for determination of stockholders entitled to
execute written consents to authorize the reorganization. The securities
entitled to consent to the reorganization consist of shares of Common stock.
Each share of Common Stock entitles its owner to one vote. Common Stock is the
only outstanding class of voting securities authorized by the Company's Articles
of Incorporation.
As of January ____, 1998, the only stockholder of record owning more than
5% of the Company's issued and outstanding shares was Gary V. Sutley and an
affiliate of Mr. Sutley's, Timespell, Inc. Mr. Sutley and Timespell, Inc. owne
an aggregate of 2,450,000 shares of Common Stock. Mr. Sutley's address is 1824
West 15th Street, new Port Beach, CA 92663. Gary E. Ball and Wendy S. Ball,
directors of the Company, own 18,480,000 shares of SeaCrest Nevada Common Stock.
Equishare Financial, Inc., an entity affiliated with Mr. C. M. Ball, a former
director of the Company, owns 1,624,000 shares of Common Stock of SeaCrest
Nevada.
SeaCrest Nevada is authorized to issue 75,000,000 shares of Common Stock,
$0.001 par value per share. After the merger, the issued and outstanding shares
of SeaCrest Nevada will consist of 56,446,501 shares. The holders of SeaCrest
Nevada's Common Stock are entitled to share notably in any dividends paid on
such Common Stock when, as and if declared by the Board of Directors out of fund
legally available. Each holder of SeaCrest Nevada Common Stock is entitled to
one vote for each share held of record. Such Common Stock is not entitled to
cumulative voting and is not subject to redemption. Upon liquidation,
dissolution or winding up of the Company, the holders of such Common Stock are
entitled to share notably in the net assets legally available for distribution.
All such outstanding shares of Common Stock are fully paid and non-assessable.
General
The Board of Directors of the Company has approved; (i) The reincorporation
of the Company as a Nevada corporation through the merger of the Company into
SeaCrest Nevada and (ii) ratified the acquisition of all of the issued and
outstanding shares of ISI. A copy of the Agreement and Plan of Reorganization is
attached as Exhibit A (the "Merger Agreement"). The Consenting Stockholders have
approved these transactions which are planned to become effective on the
Effective Date.
The reincorporation will be effected through the Merger Agreement pursuant
to which the Company will be merged into SeaCrest Nevada. SeaCrest Nevada will
be the surviving corporation. The Company will thereby acquire operations.
The Reorganization
As of the date hereof, the Company has 12,500,000 shares authorized and
12,484,798 issued and outstanding. Pursuant to the terms of the merger, SeaCrest
Nevada will issue one share for each of two shares of the Company. SeaCrest
Nevada, which has 50,204,102 shares issued and outstanding, will upon the
Effective Date acquire all of the issued and outstanding shares of the Company.
Accordingly, there will be a total of 56,446,501 shares of SeaCrest
<PAGE>
Nevada issued and outstanding following the reorganization. There will be
75,000,000 shares authorized par value $0.001 per share.
Until his resignation in June of 1997, C. M. Ball had been the Company's
sole director and officer since 1983 after the Company had ceased all operations
in 1979. In June of 1997, Mr. C. M. Ball resigned his position with the Company
after the Company entered into an agreement to reorganize the Company into a
Nevada corporation, SeaCrest Nevada, and acquire all of the issued and
outstanding shares of ISI.
Following the reorganization, the Company will have operations and be a
Nevada corporation.
The reincorporation will be effected by the Merger Agreement pursuant to
which the Corporation will be merged with into SeaCrest Nevada which was
recently formed for the purpose of effecting the reincorporation of SeaCrest
Nevada. Each holder of two shares of the Company's sock will receive one share
of SeaCrest Nevada shares of Common Stock.
IT WILL NOT BE NECESSARY FOR STOCKHOLDERS OF THE COMPANY TO EXCHANGE THEIR
CERTIFICATES REPRESENTING SHARES OF COMPANIES COMMON STOCK FOR CERTIFICATES
REPRESENTING SHARE OF SEACREST NEVADA COMMON STOCK. HOWEVER, STOCKHOLDERS MAY
EXCHANGE THEIR CERTIFICATES IF THEY SO CHOOSE.
Nevada Corporate Law
The Company's existing stockholders, principally Mr. C. M. Ball, as well as
those of ISI are most familiar with the laws of the State of Nevada. Although
the Company's board of directors believes that the reincorporation is in the
best interest of the Company, stockholders should know that Nevada law has been
criticized on the grounds that it does not afford stockholders the same
substantive rights and protection as are available in a number of other states.
While there are no material differences between Nevada law and Delaware law with
respect to a number of matters, including, but not limited to, inspection of
books, records and stockholder lists, appraisal rights, dividends and proxies,
certain differences may affect the Company's stockholders.
However, pursuant to sections 78.378 to 78.3793 of the Nevada Revised
Statutes of a purchase were to acquire SeaCrest Nevada's shares, it could be
argued that such transaction would be an "acquisition of controlling
interest."As defined a person that acquires as little as 20% of the outstanding
voting shares of SeaCrest Nevada could be unable to vote those shares unless
consent to vote those shares is obtained from the non-controlling stockholders.
The failure to approve voting rights of shares acquired by an "acquiring person"
would require that SeaCrest Nevada redeem such shares. This provision can be
removed by amending SeaCrest Nevada's articles of incorporation or bylaws.
In addition Section 78.411 to 78.444 of the Nevada revised statutes prohibit
"combinations" with "interested stockholders" in certain circumstances. An
"interested stockholder" is the beneficial owner, directly or indirectly, of 10%
or more of the voting power of the outstanding voting shares or an affiliate or
associate of a Nevada corporation with 200 or more stock holders. Any one who
was an affiliate or associate of such Nevada corporation within the last three
years is deemed to be an "interested stockholder."
Unless approved by stockholders other than "interested stockholders", a
merger or consolidation with a resident domestic corporation or any other
corporation which after the merger or consolidation would be a "interested
stockholder." The statute also prohibits the sale, lease, exchange mortgage,
pledge, transfer or other disposition of assets (i) having an aggregate market
value equal to 5% or more of the aggregate market value of all assets of the
resident domestic corporation; or (ii) having an aggregate market value equal to
5% of all the outstanding shares of the resident domestic corporation; or (iii)
representing 10% or more of the resident domestic corporation's earning power.
The statute also similarly limits, in certain circumstances, the sale of
subsidiaries, and the adoption of a plan of liquidation or dissolution,
including certain reorganizations. Such transactions can be made three years
after one becomes an "interested stockholder" or, prior to that time, with the
approval of the corporation's board of directors and stockholders.
The effect of these sections in the Nevada Revised Statutes could be to
reduce the opportunity for a third party to acquire a controlling interest or to
inhibit purchase of the Company's stock in the stock trading markets.
DISSENTERS' RIGHTS
The following is a brief summary of the Delaware Corporation Law Subchapter
IX Section 262 which sets forth the procedure by which a stockholder of the
Company may dissent from the Reincorporation and demand statutory rights
<PAGE>
to obtain payment for the fair value of his or her shares. The dissenter's
rights pursuant to Delaware law will govern this transaction. This summary is
qualified in its entirety by reference to the Subchapter IX of the Delaware
General Corporation Law and Section 262 thereof. A copy of such section is
attached hereto as Exhibit B, and stockholders are urged to read it in its
entirety. This notice is intended to comply with Section 265 of the Delaware
Corporation Law and to constitute notice to the Company's stockholders of their
right to dissent and to obtain payment for the fair value of their shares. Any
stockholder who wishes to dissent must send a demand for payment and
representing his or her shares to the Secretary of the Company at 2510 N. Grand
Ave., Suite 104, Santa Ana, California, 92701 by not later than January __,
1998. Such demand must identify the stockholder and contain a written demand for
appraisal. Unless such demand is withdrawn, from and after the effective date of
the merger or consolidation, not stockholder who has demanded his or her
appraisal rights shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation).
A stockholder who fails to make demand for an appraisal by January __, 1998,
shall not have any right under Section 262 of the Delaware General Corporation
Law to receive payment for the fair value of his or her shares. Within 120 days
after the effective date of the merger, a person making demand for appraisal
rights is entitled to receive a written statement setting forth the aggregate
number of shares not voted in favor of the merger and with respect to which
demands for appraisal have been received and the aggregate number of holders of
such shares. Within 120 days after the effective date of the merger, any
stockholder who has complied with the requirements of Section 262 or is
otherwise entitled to appraisal rights, may file a petition in the Chancery
Court for the State of Delaware demanding a determination of the value of the
stock of all such stockholders. At such hearing the Court shall determine the
stockholders who have complied with Section 262 and who have become entitle to
appraisal rights, and the Court may require the stockholders who have demanded
an appraisal for their shares to submit their certificates of stock to the
Register in Chancery for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such direction, the
Court may dismiss the proceedings as to such stockholder.
The Court shall appraise the shares, determining their fair value exclusive
of any element of value arising from the accomplishment or expectation of the
merger, together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value.
The cost of the proceeding may be determined by the Court and taxed upon the
parties as the deems equitable in the circumstances. Upon application of a
stockholder, the Court may order all or a portion of the expenses incurred by
any stockholder in connection with the appraisal proceeding, including, without
limitation, reasonable attorney's fees and the fees and expenses of experts., to
be charged prorata against the value of all the shares entitled to an appraisal.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
Set forth below is a summary of certain Federal Income tax consequences to
the Company's stockholders who become holder of SeaCrest Nevada Common Stock in
exchange for the Company's Common Stock as a result of the Reincorporation. This
summary does not discuss all aspects of Federal taxation that may be relevant to
particular stockholders, such as dealers in securities and certain holders of
stock options or shares acquired upon exercise of stock options. In view of the
individual nature of tax consequences, stockholders are urged to consult their
own tax advisors as to the specific tax consequences to them of the
Reincorporation, including the applicability of federal, state, local and
foreign tax laws.
The Corporation has not requested a ruling from the Internal Revenue Service
with respect to the Federal income tax consequences of the Reincorporation under
the Internal Revenue Code of 1986, as amended (the "Code"). Nor will the Company
receive an opinion of counsel to the effect that: (i) the Reincorporation will
constitute a tax-free reorganization under Section 368(a)(1)(F) of the Code;
(ii) no gain or loss will be recognized by holders of capital stock of the
Corporation upon receipt of capital stock of SeaCrest Nevada pursuant to the
Reincorporation; (iii) the aggregate tax basis of the capital stock of SeaCrest
Nevada received by such stockholder will be the same as the aggregate tax basis
of the capital stock of the Corporation held by such stockholder at the time of
the Reincorporation, and (iv) the holding period of the capital stock of
SeaCrest Nevada received by each stockholder of the Corporation will include the
period for which such stockholder held the capital stock of the Corporation
surrendered in exchange therefor, provided that such capital stock of the
Corporation was held by such stockholder as a capital asset at the time of the
Reincorporation. Although such an opinion is not a condition to the
Reincorporation, the Corporation will receive such opinion before the effective
time of the Reincorporation.
<PAGE>
ALTHOUGH IT IS NOT ANTICIPATED THAT STATE OR LOCAL INCOME TAX CONSEQUENCES
TO STOCKHOLDERS WILL VARY FROM THE FEDERAL INCOME TAX CONSEQUENCES DESCRIBED
ABOVE, STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE EFFECT
OF THE REINCORPORATION UNDER STATE, LOCAL OR FOREIGN INCOME TAX LAWS.
The Corporation will not recognize gain or loss for Federal income tax
purposes as a result of the Reincorporation. SeaCrest Nevada will succeed,
without adjustment, to the Federal income tax attributes of the Corporation. The
Corporation is currently subject to Nevada state income taxes and capital stock
taxes. Upon the Reincorporation, SeaCrest Nevada will be subject to Nevada state
income taxes and will be obligated to pay annual franchise tax in Nevada.
Approval of Acquisition
The Board of Directors of the Company have approved the Agreement to merge
into SeaCrest Nevada and has approved the acquisition of ISI by SeaCrest Nevada.
Although not required by Nevada or federal laws, the Board of Directors of the
company has sought the ratification and approval of its stockholders to the
acquisition due to materiality of the transaction contemplated thereby, which
ratification and approval has been received. The agreement to acquire ISI is
described below.
Description of Business
SeaCrest Industries Corporation, a Delaware corporation (the "Company"), was
formed in 1959. From 1974 through 1979 the Company engaged in land sales in
Texas and Idaho as well as insurance operations in Hawaii. In 1977, the
insurance operations ceased and by 1979 the Company's last land operations had
either been sold or foreclosed upon.
At that time the Company ceased operations.
In 1983, C. M. Ball was elected president of the Company. The Company then
had 12,484,798 shares issued and outstanding and began to look for acquisitions
such that the Company would have operations.
In May of 1997, the Company entered into an agreement whereby the Company
agreed to reorganize as a Nevada corporation, effecting a one for two reverse
split and to issue 50,204,102 shares to acquire Infrared Systems International,
a Nevada corporation ("ISI"), the licensee of certain technology relating to
infrared sensing for use in Enhanced Vision Systems ("EVS").
Gary E. Ball, the brother of C. M. Ball, formed ISI in 1992. In June of
1992, Gary E. Ball was employed as the program manager of EVS at Hughes Aircraft
where he developed the technology, including the principal patent, licensed to
the Company. In October of 1995, in connection with certain strategic business
decisions being made by Hughes Aircraft, Hughes Aircraft offered Mr. Gary E.
Ball a license of the EVS technology. The license included the patent submitted
by Mr. Gary E. Ball and others, together with proprietary data related to the
technology, proprietary business agreements, and unrestricted use of the
licensed information and EVS knowledge acquired while Mr. Gary E. Ball was at
Hughes Aircraft.
The license agreement with Hughes required a prepayment and a royalty on
each licensed product sold. The license is exclusive and limited to use of the
technology relating to commercial aircraft licensed to operate by the United
States Federal Aviation Administration or equivalent regulatory agency
elsewhere. The agreement requires the consent of Hughes Aircraft to sublicense
the technology, which consent will not be unreasonably withheld.
ISI initially reached an agreement with Loral Fairchild Corporation wherein
that entity would acquire ISI. That agreement did not close and is now the
subject of litigation. See "Legal Proceedings."
In May of 1997, ISI entered into a license agreement with Kollsman, Inc.
which contemplates the payment of a royalty based upon the number of licensed
products sold by Kollsman and requires the personal consulting services of Mr.
Gary E. Ball for which the Company will receive compensation. This agreement
entitles ISI to an advanced royalty of $5,000 per month plus time and expenses
for consulting services as well as an initial $20,000 advance. The royalty,
based upon sales, decreases as the number of systems sold increases. While there
can be no assurance of the ultimate amount of royalties generated over the term
of the agreement, management of ISI estimates that there will be approximately
$33,000,000 in royalties.
Kollsman, Inc. is a commercial avionics and electronics company that
designs, develops and manufactures flight instruments. It is a leading developer
of Forward Looking Infrared Systems. These systems have primarily been utilized
<PAGE>
in military applications.
The system designed by Kollsman that utilizes the Company's technology is
based upon an infrared sensor unit placed in the nose of the aircraft. Output
from the sensor unit is transmitted through a video interface and onto a heads
up display located in an aircraft's cockpit. The image displayed approaches the
quality of a black and white television image. The result is that night vision
is enhanced and a pilot has the ability to see through fog, smoke, haze, rain
and snow. In addition to improved situational awareness of the airport, traffic
and surrounding terrain, the takeoff and landing minima resulting in fewer
diversions, cancellations and delays.
In October of 1997, Gulfstream, a manufacturer of large business aircraft,
and Kollsman announced the execution of a memorandum of understanding to utilize
the Company's technology on Gulfstream IV-SP and Gulfstream V aircraft.
Gulfstream announced it is preparing for pre-prototype flight tests whose goal
is to utilize the technology where the visual ceiling is no more than 50 feet
and the runway visual range is no more than 700 feet.
While the Company's primary efforts are directed toward supporting the
Kollsman license, the Company is pursuing other areas of development for the
Enhanced Vision Systems Technology. Not only can the technology can be used in a
variety of cameras to reveal images through clouds or smoke but also to reveal
critical characteristics that would otherwise not be seen such as
characteristics of paintings and cattle. There are a multitude of medical
applications, applications for preventative maintenance, uses in underwater
imaging systems and emergency vehicle warning systems.
Plan of Operation
The Company's primary focus over the next several months will be to support
the Kollsman licensing contract. While supporting this agreement, the Company
plans to develop other commercial applications of the technology.
Proprietary Technology
The Company's technology rests upon the license of the patent and
proprietary information licensed from Hughes Aircraft. Hughes Aircraft has
determined to not pursue the technology's development at this time. Hughes
Aircraft, however, could license the technology to others or determine to
develop the technology itself.
Notwithstanding the foregoing, the technology, including the patent, was
developed by ISI's president, Mr. Gary E. Ball and he is continuing to develop
and refine the technology.
Competition
ISI's technology competes with a number of vision enhancing devices. These
devices include systems based not only on infrared technology but also on radar
based technology. There are numerous entities possessing or developing radar and
infrared vision enhancing technologies or other technologies. Many of these
entities are quite large, possess significantly greater financial, technical and
managerial resources, among other resources, than resources possessed by the
Company or ISI.
ISI believes, however, that its technology is a cost effective, real-time
solution to vision enhancing. It is ISI's plan to exploit this technology.
Employees
The Company's only employee is Mr. Gary E. Ball.
Properties
The Company leases 500 square feet of office space in Santa Ana, California,
for which it pays $1,000 per month. Until ISI develops additional applications
or enters into a more rigorous engineering effort, ISI does not plan to expand
its present office space.
Litigation
On October 7, 1997, ISI filed a lawsuit in the Superior Court of Orange
County, California, against Loral Fairchild Corporation, a subsidiary of Loral
Corporation for breach of contract or fraud seeking in excess of $20,000,000 in
damages. The suit is based upon a contract under which Loral Fairchild was to
acquire ISI. Lockheed Martin Corporation now owns Loral Corporation and has
filed a counterclaim against ISI asserting various claims for alleged
on-disclosure by ISI. The management of ISI believes that the counter claims are
without merit and perhaps frivolous.
<PAGE>
ISI plans to pursue aggressively the litigation.
Market for Common Equity and Related Stockholder Matters
The Company's Common Stock is not traded. As of September 30, 1997 there
were 901 stockholders of record.
Management's Discussion and Analysis or Plan of Operation
The Company's liquidity is provided through its agreement with Kollsman. Its
revenues are derived from the license fees as well as the consulting fees
provided to Mr. Gary E. Ball. The Company's only expenses are limited to
payments to Mr. Gary E. Ball. For the nine months ended September 30, 1997, the
Company's revenues were $77,184 compared to revenues for the twelve months ended
December 31, 1996, of $51,503. The increase in revenues reflects the additional
consulting fees derived from the arrangement with Kollsman.
For the fiscal year ended September 30, 1997, the Company indicated in its
Form 10-KSB that it had engaged John Semmens, P.C. as the Company's independent
accountants.
Effectiveness
In accordance with Delaware and Nevada law and notwithstanding approval of
the amendment by Consenting Stockholders, at any time prior to the filing of the
Certificate of Merger, the Board of Directors may, in its sole discretion,
abandon the merger without any further action by the stockholders.
<PAGE>
SeaCrest Industries Corporation
CONTENTS Page
Report of Independent Certified Public Accountant 3
Balance Sheet as of September 30, 1997 4
Statement of Operations
January 1, 1996 to December 31, 1996 5
January 1, 1997 to September 30, 1997 6
Statement of Changes in Stockholder's
Equity for period January 1, 1996
to September 30, 1997 7
Statement of Cash Flows
January 1, 1996 to December 31, 1996 8
January 1, 1997 to September 30, 1997 9
Notes to Financial Statements 10
<PAGE>
John P. Semmens CPA, A Professional Corporation
24501 Del Prado Suite A, Dana Point, CA 92629
(TEL) 714-496-8800 (FAX) 714-443-0642
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
Board of Directors and Shareholders
SeaCrest Industries Corporation
I have audited the accompanying balance sheet of SeaCrest Industries
Corporation (a Nevada corporation) as of September 30, 1997 and the related
statements of operations, changes in stockholders' equity and cash flows for the
periods January 1, 1997 to September 30, 1997. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management , as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion the financial statements referred to above present fairly in
all material respects, the financial position of SeaCrest Industries Corporation
as of September 30, 1997 and the results of its operations and its cash flows
for the periods January 1, 1996 to September 30, 1997, in conformity with
generally accepted accounting principles.
John P. Semmens CPA
A Professional Corporation
Dana Point, California
October 21, 1997
[3]
<PAGE>
<TABLE>
<CAPTION>
SEACREST INDUSTRIES CORPORATION
BALANCE SHEET
September 30, 1997
Infrared SeaCrest
Systems Industries Combined
ASSETS International (Delaware) Proforma
<S> <C> <C> <C>
Current Assets
Cash in bank $ 281 $ 0 $ 281
Prepaid licence agreement (Note 1) 25,000 0 25,000
Prepaid automobile lease 17,439 0 17,439
-------- --------------- ---------
Total current assets 42,720 0 42,720
Other Assets
Organization costs 0 17,432 17,432
---------- --------- ---------
Total Assets $ 42,720 $ 17,432 $ 60,152
========== ========== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accrued legal $10,000 $ 0 $ 10,000
Note payable - Equishare Financial
Inc. (Note 2) 0 17,432 17,432
Advanced royalties 25,000 0 25,000
------ ---------- ------
Total current liabilities 35,000 17,432 52,432
Stockholders' Equity
Common Stock - $0.001 par value,
75,000,000 shares authorized,
56,446,501 issued and outstanding 7,720 0 7,720
-------- ---------- -------
Total Liabilities & Stockholders' Equity $42,720 $17,432 $60,152
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements
[4]
<PAGE>
<TABLE>
<CAPTION>
SEACREST INDUSTRIES CORPORATION
STATEMENT OF OPERATIONS
For the period January 1, 1996 to December 31, 1996
Infrared SeaCrest
Systems Industries Combined
International (Delaware) Proforma
<S> <C> <C> <C>
Revenues $51,503 $ 0 $56,503
Expenses 47,053 0 47,053
-------- ------------- --------
Net Income $ 4,450 $ 0 $ 4,450
======= ============ =======
Net income per weighted-average share
of common stock outstanding $0.00008
Weighted-average number of shares
of common stock outstanding (after merger) 56,446,501
==========
</TABLE>
The accompanying notes are an integral part of these financial statements
[5]
<PAGE>
<TABLE>
<CAPTION>
SEACREST INDUSTRIES CORPORATION
STATEMENT OF OPERATIONS
For the period January 1, 1997 to September 30, 1997
Infrared SeaCrest
Systems Industries Combined
International (Delaware) Proforma
<S> <C> <C> <C>
Revenues $77,184 $ 0 $77,184
Expenses 92,336 0 92,336
------- ------------- -------
Net Income $ (15,152) $ 0 $ (15,152)
========== ============ ==========
Net income per weighted-average share
of common stock outstanding $(0.00027)
Weighted-average number of shares
of common stock outstanding (after merger) 56,446,501
==========
The accompanying notes are an integral part of these financial statements
[6]
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
SEACREST INDUSTRIES CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the period January 1, 1997 to September 30, 1997
Common Stock
Combined Infrared SeaCrest
Proforma Systems Industries Combined
Shares International (Delaware) Proforma
Issuance of stock at initiation of operations:
<S> <C> <C> <C> <C>
SeaCrest Industries Corporation
(A Delaware Corporation) 12,484,798 $ - $ - $ -
Infrared Systems International, Inc.
(A Nevada Corporation) 16,501,465 7,720 - 7,720
Stock transactions subsequent to initiation of operations:
Reverse stock split SeaCrest
Industries Corporation
(A Delaware Corporation) (6,242,399) - - -
Redistribution of shares of
Infrared Systems International
Inc. (ISI) (A Nevada Corporation) 29,702,637 - - -
Additional shares issued subsequent
to merger SeaCrest Industries
Corporation (A Nevada
Corporation) 4,000,000 - - -
--------- ----------- ----------- ----------
Balance September 30, 1997 56,446,501 $7,720 $ - $7,720
========== ====== =========== ======
</TABLE>
The accompanying notes are an integral part of these financial statements
[7]
<PAGE>
<TABLE>
<CAPTION>
SEACREST INDUSTRIES CORPORATION
STATEMENT OF CASH FLOWS
For the period January 1, 1996 to December 31, 1996
Infrared SeaCrest
Systems Industries Combined
International (Delaware) Proforma
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income for the period $ 4,450 $ - $ 4,450
------- ------------- -------
Net Cash provided by operating activities 4,450 $ - $ 4,450
------- ------------- -------
CASH FLOWS USED IN INVESTING ACTIVITIES
Patent licensing agreement 5,000 - 5,000
------- ----------- -------
Net Cash used by investing activities (5,000) - (5,000)
-------- ----------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Advanced Royalties 5,000 - 5,000
------- ----------- -------
Net Cash used by Financing activities 5,000 - 5,000
------- ----------- -------
Cash at beginning of period 983 - 983
------- ----------- -------
Cash at end of period $5,433 - $5,433
====== =========== ======
</TABLE>
The accompanying notes are an integral part of these financial statements
[8]
<PAGE>
<TABLE>
<CAPTION>
SEACREST INDUSTRIES CORPORATION
STATEMENT OF CASH FLOWS
For the period January 1, 1997 to September 30, 1997
Infrared SeaCrest
Systems Industries Combined
International (Delaware) Proforma
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income for the period $ (15,152) $ - $ (15,152)
10,000 - 10,000
--------- --------------------
Net Cash provided by operating activities (5,152) - (5,152)
--------- ------------- ---------
CASH FLOWS USED IN INVESTING ACTIVITIES
Patent licensing agreement 20,000 - 20,000
------- ----------- -------
Net Cash used by investing activities 20,000 - 20,000
------ ----------- -------
CASH FLOWS (USED) FINANCING ACTIVITIES
Advanced Royalties (20,000) - (20,000)
-------- ----------- --------
Net Cash used by Financing activities (20,000) - (20,000)
-------- ----------- --------
Cash at beginning of period 5,433 - 5,433
------- ----------- -------
Cash at end of period $ 281 - $ 281
======= =========== =======
</TABLE>
The accompanying notes are an integral part of these financial statements
[9]
<PAGE>
SEACREST INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND DESCRIPTION OF BUSINESS
SeaCrest Industries Corporation, (A Nevada Corporation) was Incorporated on
June 2, 1997 under the laws of the state of Nevada. The Company was capitalized
by a merger agreement dated May 12, 1997 between SeaCrest Industries
Corporation, (A Delaware Corporation) and Infrared Systems International, Inc.,
(A Nevada Corporation). The stockholders of SeaCrest Industries Corporation, (A
Delaware Corporation) traded their stock 2 shares for 1 share of the newly
formed corporation. The stockholders of Infrared Systems International, Inc., (A
Nevada Corporation) traded their stock 1 for 2.8 shares of the newly formed
corporation.
Infrared Systems International has been operating under a consulting
agreement with Kollsman. The business purpose of the company is to full utilized
its licensing agreement for infrared enhanced vision sensor systems under U.S.
Patent No 5,534,694 held by Hughes Aircraft Company.
The preparation of financial statements, in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash and cash equivalents
The company considers all cash on hand and in banks, including accounts in
book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be cash
and cash equivalents.
2. Income per share
Income per share is computed by dividing the net income by the weighted
average number of shares of common stock and common stock equivalents, if any,
outstanding during the year/period.
Note 1 - PREPAID LICENSE AGREEMENT
Infrared Systems International, Inc. Has entered into a licensing agreement
(D-71-091094.5) for Infrared Aircraft Landing System with Hughes Aircraft
Company, dated October 1995. Infrared Systems International, Inc. paid $25,000
for this agreement. Hughes Aircraft Company is to receive $1000 per unit
additional royalty as units are sold. $20,000 of this prepayment will be applied
to royalty as units are sold. This prepayment grants Infrared Systems
International, Inc. exclusive right to licensing.
The accompanying notes are an integral part of these financial statements
[10]
<PAGE>
SEACREST INDUSTRIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
(continued)
Note 2 - NOTE PAYABLE
The Company is indebted to Equishare Financial Inc., a wholly owned
corporation of Mr. C.M. Ball. This note is payable upon demand and accrues
interest at the rate of 5%.
Note 3 - LICENSING ROYALTY AGREEMENT
Infrared Systems International, Inc. has entered into a licensing royalty
agreement with Kollsman, Inc. for marketing and distribution of Infrared
Aircraft Landing Systems. This agreement has been assigned to SeaCrest
Industries Corporation as part of the merger agreement. This agreement entitles
SeaCrest to an advanced royalty of $5,000 per month plus time and expenses and
an initial $20,000 advance. Management discussions with Kollsman have estimated
that this agreement will generate approximately $33,000,000 in royalties over
the duration of the agreement.
Note 4 - SIGNIFICANT STOCKHOLDER
Gary and Wendy Ball are greater than 10% shareholders of SeaCrest Industries
Corporation, (A Nevada Corporation) holding 18,480,000 shares.
The accompanying notes are an integral part of these financial statements
[11]
<PAGE>
EXHIBIT A
CERTIFICATE AND AGREEMENT OF MERGER
SEACREST INDUSTRIES CORPORATION
WHEREAS A Delaware Corporation
pursuant to the General Corporation
of the State of Delaware
INTO
SEACREST INDUSTRIES CORPORATION
A Nevada Corporation
as the surviving corporation, pursuant to Section 450 et.seq.
Nevada Revised Statutes
AGREEMENT OF MERGER, dated this ___ day of _________________________, 1997
between SeaCrest Industries Corporation (SEA) a Delaware Corporation and all of
the directors thereof, and SeaCrest Industries Corporation (SEA), a Nevada
corporation, and all of the Directors thereof, the two corporations being
hereinafter sometimes called the Constituent Corporations.
WHEREAS the Board of Directors of each of the Constituent Corporations deem
it advisable for the welfare of the Constituent Corporations that these
corporations merge under the terms and conditions hereinafter set forth, such
merger to be effected pursuant to the statutes of the State of Delaware and the
statues of the State of Nevada, and they have duly approved and authorized the
terms of agreement of merger.
WHEREAS (SEA) is a corporation duly organized under the laws of the State of
Delaware having been incorporated on November 17, 1959 with authorized capital
stock consisting of 12,500,000 shares all of which are of one class with a par
value of $.001 per share of which 12,484,689 shares are issued and outstanding;
AND WHEREAS, SEA is a corporation duly organized under he laws of the State
of Nevada having been incorporated on June 2, 1997 with authorized capital stock
consisting of 75,000,000 shares of (.001) par value of which 2,000,000 are
issued and outstanding.
AND WHEREAS, the laws of the States of SEA and Nevada permit such a merger,
and the Constituent Corporations desire to merge under and pursuant to the
provisions of the laws of their respective states;
NOW THEREFORE, in consideration of the premises and of the mutual agreements
and covenants herein contained, it is agreed that SEA of Delaware shall be
merged into SEA of Nevada, which shall be the surviving corporation, and the
terms and conditions of such merger and the mode of carrying it into effect are
and shall be as follows:
1. NAME OF SURVIVING CORPORATION: The name of the corporation, which is
sometimes hereinafter referred to as the Surviving Corporation, shall, and, from
and after the effective date of the merger, be SEA. The separate existence of
SEA of Delaware shall cease at the effective time of the merger, except insofar
as it may be continued by law or in order to carry out the purposes of the
Agreement of Merger and except as continued in the Surviving Corporation.
18
<PAGE>
2. ARTICLES OF INCORPORATION OF SURVIVING CORPORATION: The Articles of
Incorporation of the Surviving Corporation shall be the Articles of
Incorporation of SEA of Nevada, a copy of which is annexed as Exhibit 1,
hereto.
3. BYLAWS: The bylaws of SEA of Nevada at the effective time of the merger
shall be the bylaws of the Surviving Corporation until altered or replaced as
provided therein.
4. BOARD OF DIRECTORS AND OFFICERS: The members of the Board of Directors
and the officers of the Surviving Corporation immediately after the effective
time of the merger shall be those persons who were the members of the Board of
Directors and the officers, respectively, of SEA of Nevada immediately prior to
the effective time of the merger, and such persons shall serve in such offices,
respectively, for the terms provided by laws or in the Bylaws, or until their
respective successors are elected and qualified.
5. AUTHORITY TO CONDUCT BUSINESS: SEA of Nevada represents that the
corporation has not filed an application for authority to do business in
Delaware. The Surviving Corporation will conduct no such business in Delaware
without first filing and having such application approved.
6. CONVERSION OF SHARES: The manner of converting the shares of the
Constituent Corporations into the shares of the Surviving Corporation shall be
set forth in this paragraph, as follows: immediately upon the effective date of
the merger, each share of stock of SEA of Delaware outstanding in the hands of
the public being all of the shares of SEA of Delaware outstanding without any
action on the part of the holder thereof, shall automatically become and be
converted into common stock of the Surviving Corporation at the rate of one (1)
share of stock of the Surviving Corporation for two (2) shares of the common
stock of SEA of Delaware and each outstanding certificate representing shares of
SEA of Delaware shall thereupon be deemed for all corporate purposes (other than
the payment of dividends) to evidence the ownership of the number of fully paid,
nonassessable shares of common stock of the Surviving Corporation into which
such shares of common stock of SEA of Delaware shall have been so converted.
7. RIGHTS OF SHAREHOLDERS: After the effective time of the merger, each
holder of a certificate which theretofore represented shares of common stock of
SEA of Delaware shall cease to have any rights as a shareholder of SEA of
Delaware, except such as are expressly reserved to such stockholders by statute.
After the effective time of the merger, any holder of a certificate or
certificates which theretofore represented shares of the common stock of SEA of
Delaware may, but shall not be required to, surrender the same to the Transfer
Agent of the Surviving Corporation, Pacific Stock Transfer Company, P.O. Box
93385, Las Vegas, Nevada 89193 and shall thereupon be entitled to receive in
exchange therefore a certificate or certificates representing the number of
shares of common stock of the Surviving Corporation into which the shares of
common stock of SEA of Delaware theretofore represented by each certificate or
certificates shall have been converted.
8. EFFECTIVE DATE OF MERGER:
(a) For all purposes of the laws of the State of Delaware, this
Agreement of Merger and the merger herein provided for shall become effective
and the separate existence of SEA, a Delaware corporation, except insofar as it
may be continued by statute, shall cease as soon as this Agreement of Merger
shall have been adopted, approved, signed and acknowledged in accordance with
the laws of the State of Delaware and certificates of its adoption and approval
shall have been executed in accordance with such laws, and this Certificate and
Agreement of Merger shall have been filed in the office of the Department of
State of the State of Delaware.
(b) For all purposes of the laws of the State of Nevada, this Agreement
of Merger and the merger herein provided for shall become effective and the
separate existence of SEA of Delaware, except insofar as it may be continued by
statute, shall cease as soon as this Agreement shall have been adopted,
approved, signed and acknowledged in accordance with the laws of the State of
Nevada and certificates of its adoption and approval shall have been executed in
accordance with such laws; and this Certificate of Merger shall have been filed
in the Secretary of State of the State of Nevada.
(c) The corporation identity, existence, purposes, powers, objects,
franchises, rights and immunities of SEA of Nevada shall continue unaffected and
unimpaired by the merger hereby provided for, and the corporate identities,
existences, purposes, powers, objects, franchises, rights and immunities of SEA
of Delaware shall be continued in and merged into SEA of Nevada and SEA of
Nevada shall be fully vested therewith.
19
<PAGE>
(d) The date upon which this Agreement is filed in the offices
mentioned above and upon which the Constituent Corporations shall so become a
single corporation is the effective date of the merger.
9. AUTHORIZATION: The parties hereto acknowledge and respectively represent
that this Merger Agreement is authorized by the laws of the respective
jurisdictions of the Constituent Corporations and that the matter was approved
at a special shareholders meeting of the respective corporations at which the
shareholders voted as follows:
<TABLE>
<CAPTION>
SHARES VOTED VOTED
CORPORATION OUTSTANDING FOR AGAINST
<S> <C> <C> <C>
SeaCrest Industries Corporation 2,000,000 2,000, 0
(a Nevada Corporation)
SeaCrest Industries Corporation 1,2484,689 7,900, 0
(a Delaware Corporation)
</TABLE>
10. FURTHER ASSURANCES OF TITLE: As and when requested by the Surviving
Corporation or by its successors or assigns, SEA of Delaware will execute and
deliver or cause to be executed and delivered all such deeds and instruments and
will take or cause to be taken all such further action as the Surviving
Corporation may deem necessary or desirable in order to vest in and confirm to
the Surviving Corporation may deem necessary or desirable in order to vest in
and confirm to the Surviving Corporation title to and possession of any property
of any of the Constituent Corporations acquired by the Surviving Corporation by
reason or as a result of the merger herein proved for an otherwise to carry out
the intent and purposes hereof, and the officers and directors of SEA of
Delaware and the officers and directors of the Surviving Corporation are fully
authorized in the name of the respective Constituent Corporation or otherwise to
take any and all such action.
11. SERVICE OF PROCESS OF SURVIVING CORPORATION: The Surviving Corporation
agrees that it may be served with process in the State of Delaware in any
proceedings for enforcement of any obligation of SEA of Delaware as well as for
the enforcement of any obligation of the Surviving Corporation arising from the
merger, including any suit or other proceedings to enforce the right of any
shareholder as determined in appraisal proceedings pursuant to the provisions of
the General Corporation Law of Delaware and hereby irrevocable appoints the
Secretary of State of Delaware as its agent to accept service of process in any
suit or other proceedings. Copies of such process shall be mailed to Pacific
Stock Transfer Company, P.O. Box 93385, Las Vegas, Nevada 90193, until further
notice.
12. SHAREHOLDERS RIGHT TO PAYMENT: The Surviving Corporation agrees that
subject to the provisions of the General Corporation Law of the State of
Delaware, it will pay to the shareholders of SEA of Delaware the amounts, if
any, to which such shareholders may be entitled under the provisions of the
above statutes of the laws of Delaware as the case may be.
13. ABANDONMENT: This Agreement of Merger may be abandoned (a) by either
Constituent Corporation, acting by its Board of Directors, at any time prior to
its adoption by the shareholders of both of the Constituent Corporation as
provided by law, or (b) by the mutual consent of the Constituent Corporation
acting each by its Board of Directors, at any time after such adoption by such
shareholders and pr to the effective time of the merger. In the event of the
abandonment of this Agreement of Merger pursuant to (a) above, notice thereof
shall be given by the Board of Directors, at any time after such adoption by
such shareholders and prior to the effective time of the merger. In the event of
the abandonment of this Agreement of Merger pursuant to (a) above, notice
thereof shall be given by the Board of Directors of the Constituent Corporation
and thereupon, or abandonment pursuant to (b) above, this Agreement of Merger
shall become wholly void and of no effect and there shall be no further
liability or obligation hereunder on the part of either of the Constituent
Corporations or of its Board of Directors or shareholders.
20
<PAGE>
IN WITNESS WHEREOF each of the Constituent Corporations, pursuant to
authority granted by its Board of Directors, has caused this Agreement of Merger
to be executed by a majority of its Board of Directors and by its President and
Secretary.
The respective Directors and Officers of the Constituent Corporations do
hereby certify that the above Merger Agreement was adopted as set forth in the
above Agreement and that said resolutions have not been revoked or rescinded.
SEACREST INDUSTRIES CORPORATION
A Delaware Corporation
--------------------------
C. M. Ball
President and Director
--------------------------
Gary E. Ball
President and Director
21
<PAGE>
APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to P. 228 of
this tittle shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership of membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt of other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to P. 251(g) of this title), P. 252, P. 254, P. 257, P. 258,
P. 263, or P. 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or
series of stock, which stock, or depository receipts in
respect thereof, at the record date fixed to determine the
stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities
exchange or designated as a national market system security on
an interdealer quotation system by the National Association of
Securities Dealers, Inc. or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights
shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of P. 251 of this
title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent
corporation if the holders hereof are required by the terms of
an agreement of merger or consolidation pursuant to P. P. 251,
252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation
surviving or resulting from such merger or
cosolidation or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares
of stock or depository receipts at the effective date
of the merger or consolidation will be either listed
on a national securities exchange or designated as a
national market system security on an interdealer
quotation system by the National Association of
Securities Dealers, inc. or held of record by more
than 2,000 holders;
c. Cash in lieu of fractional shares or
fractional depository receipts described in the
foregoing subparagraphs a. and b. of this paragraph;
or
d. Any combination of the shares of stock,
depository receipts and cash in lieu of fractional
shares or fractional depository receipts described
in the foregoing subparagraphs a., b. and c. of
this paragraph.
(d) Appraisal rights shall be perfected as follows:
(2) If the merger or consolidation was approved pursuant to P.
228 or P. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation
22
<PAGE>
to all such holders of any class or series of stock of a constituent corporation
that are entitled to appraisal rights. Such notice may, and, if given on or
after the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonable informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within 10
days after such effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent corporation may
fix, in advance, a record date that shall be not more than 10 days prior to the
date the notice is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the day next
preceding the day on which notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with who agreements as to the value of their shares have not been reached by the
surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation,
23
<PAGE>
together with a fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. In determining such fair value, the Court shall
take into account all relevant factors. In determining the fair rate of
interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (j)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
24
<PAGE>
