<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
</TABLE>
Celebrity, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
CELEBRITY, INC.
4520 OLD TROUP ROAD
TYLER, TEXAS
January ___, 1999
Dear Shareholder:
You are cordially invited to attend a Special Meeting (the "Meeting")
of shareholders of Celebrity, Inc. (the "Company") to be held at the offices of
Star Wholesale Florist, Inc., 8223 N. Stemmons Freeway, Dallas, Texas, on
Friday, February 26, 1999, at 8:30 a.m. local time. The attached Notice of
Special Meeting and Proxy Statement fully describe the formal business to be
transacted at the Meeting, which includes the approval of an amendment to the
Company's Restated Articles of Incorporation that would effect a four-to-one
reverse stock split. THE APPROVAL OF THIS AMENDMENT IS NECESSARY IF THE COMPANY
IS TO MAINTAIN THE LISTING OF ITS COMMON STOCK ON THE NASDAQ SMALLCAP MARKET.
THIS APPROVAL REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST
TWO-THIRDS OF THE OUTSTANDING SHARES OF COMMON STOCK ENTITLED TO VOTE ON THE
PROPOSAL, SO THE RETURN OF YOUR PROXY IS ESPECIALLY IMPORTANT FOR THIS MEETING.
The Company's Board of Directors believes that a vote for the approval
of the amendment to the Company's Restated Articles of Incorporation is in the
best interests of the Company and its shareholders and unanimously recommends a
vote "FOR" the amendment and the resulting four-to-one reverse stock split.
Accordingly, we urge you to review the accompanying material carefully and to
return the enclosed Proxy promptly, regardless of whether you plan to attend the
Meeting. If you attend the Meeting, you may vote in person even if you have
previously mailed a Proxy.
Certain officers of the Company will attend the meeting and will
respond to questions that are appropriate for discussion at the Meeting. I hope
you will be able to attend.
Sincerely,
Robert H. Patterson, Jr.
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
CELEBRITY, INC.
4520 OLD TROUP ROAD
TYLER, TEXAS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held February 26, 1999
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of Celebrity, Inc., a Texas corporation (the "Company" or
"Celebrity"), will be held at the offices of Star Wholesale Florist, Inc., 8223
N. Stemmons Freeway, Dallas, Texas, on Friday, February 26, 1999, at 8:30 a.m.
local time. A Proxy and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the following purposes:
(1) To approve amendments to the Company's Restated Articles of
Incorporation that would effect (i) a four-to-one reverse
stock split of the Company's issued and outstanding common
stock, par value $.01 per share (the "Common Stock"), in order
to maintain the listing of the Common Stock on the Nasdaq
SmallCap Market, and (ii) certain other technical changes; and
(2) To transact any other business that may properly come before
the Meeting and any adjournments thereof.
The close of business on January 25, 1999, has been fixed as the record
date for determining shareholders entitled to notice of and to vote at the
Meeting and any adjournments thereof. For a period of at least ten days prior to
the Meeting, a complete list of shareholders entitled to vote at the Meeting
will be open to the examination of any shareholder during ordinary business
hours at the offices of the Company at 4520 Old Troup Road, Tyler, Texas.
Information concerning the matters to be acted upon at the Meeting is
set forth in the accompanying Proxy Statement.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN PERSON
ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
Robert H. Patterson, Jr.
Chairman of the Board, President
and Chief Executive Officer
Tyler, Texas
January ___, 1999
<PAGE> 4
CELEBRITY, INC.
4520 OLD TROUP ROAD
TYLER, TEXAS
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 26, 1999
This Proxy Statement is being first mailed on January ___, 1999, to
shareholders of Celebrity, Inc., a Texas corporation (the "Company" or
"Celebrity"), by the Board of Directors to solicit proxies (the "Proxies") for
use at a Special Meeting of Shareholders (the "Meeting") of the Company to be
held at the offices of Star Wholesale Florist, Inc., 8223 N. Stemmons Freeway,
Dallas, Texas, on Friday, February 26, 1999, at 8:30 a.m., local time, and at
such other times and places to which the Meeting may be adjourned.
The purpose of the Meeting is to consider and act upon the following:
(1) the approval of amendments to the Company's Restated Articles
of Incorporation (the "Articles of Incorporation") that would
effect (i) a four-to-one reverse stock split of the Company's
issued common stock, par value $.01 per share (the "Common
Stock"), which reverse stock split is necessary in order to
maintain the listing of the Common Stock on the Nasdaq SmallCap
Market, and (ii) certain other technical changes (collectively,
the "Reverse Stock Split Amendment"); and
(2) such other matters as may properly come before the Meeting and
any adjournments thereof.
All shares represented by valid Proxies, unless the shareholder
otherwise specifies, will be voted as follows:
(1) FOR the Reverse Stock Split Amendment; and
(2) at the discretion of the proxyholders (the "Proxyholders")
with regard to any other matter that may properly come before
the Meeting and any adjournments thereof.
Any shareholder executing a Proxy retains the right to revoke it at any
time prior to exercise at the Meeting. A Proxy may be revoked by delivery of
written notice of revocation to the Secretary of the Company, by execution and
delivery of a later Proxy, or by voting in person at the Meeting. Unless
revoked, all shares represented by properly executed Proxies will be voted as
specified therein.
RECORD DATE AND VOTING SECURITIES
The record date for determining the shareholders of the Company
entitled to notice of and to vote at the Meeting and any adjournments thereof
was the close of business on January 25, 1999 (the "Record Date"), at which time
the Company had issued and outstanding approximately 6,176,655 shares of Common
Stock. The shares of Common Stock constitute the only outstanding voting
securities of the Company entitled to be voted at the Meeting.
QUORUM AND VOTING
The presence at the Meeting, in person or by proxy, of the holders of
one-third of the Common Stock issued and outstanding and entitled to vote
thereat is necessary to constitute a quorum to transact business. In deciding
all questions and other matters, a holder of Common Stock on the Record Date
will be entitled to cast one vote for each share of Common Stock then registered
in such holder's name.
<PAGE> 5
APPROVAL OF PROPOSAL NO. 1 REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS
OF AT LEAST TWO-THIRDS OF THE OUTSTANDING SHARES OF COMMON STOCK ENTITLED TO
VOTE ON THE PROPOSAL. ABSTENTIONS ON THE PROPOSAL MAY BE SPECIFIED AND WILL BE
COUNTED TOWARD A QUORUM. HOWEVER, IN TABULATING THE VOTE ON THE PROPOSAL,
ABSTENTIONS WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE PROPOSAL.
Shares referred to as "broker non-votes" (shares held by brokers or
nominees as to which they have no discretionary authority to vote on a
particular matter and have received no instructions from the beneficial owners
or persons entitled to vote thereon), if any, are counted as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. However, for purposes of determining the outcome of any matter requiring
discretionary authority to vote, broker non-votes will be treated as not voting
with respect to that matter (even though those shares are considered present for
quorum purposes and may be entitled to vote on other matters). BECAUSE BROKERS
OR NOMINEES DO NOT HAVE DISCRETIONARY AUTHORITY TO VOTE ON PROPOSAL NO. 1, THERE
WILL BE BROKER NON-VOTES ON THE PROPOSAL, WHICH WILL HAVE THE SAME EFFECT AS A
VOTE AGAINST THE PROPOSAL.
-2-
<PAGE> 6
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of Common Stock as of the Record Date by (i) each person known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each director of the Company, (iii) the Company's executive officers
and (iv) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL BENEFICIAL PERCENT
OWNER OR GROUP(1) OWNERSHIP(2) OF CLASS
------------------ ------------- --------
<S> <C> <C>
Robert H. Patterson, Jr. (3)(4).................................................. 3,235,000 52.2%
Richard Yuen (5)................................................................. 115,750 1.9%
B. D. Hunter..................................................................... 25,000 *
C. A. Langner.................................................................... 20,000 *
Valerie Anne Mars................................................................ 13,500 *
David J. Huffman................................................................. 56,000 *
Clifford C. Condict.............................................................. 71,187 1.1%
Roger D. Craft................................................................... 13,000 *
Lynn Skillen..................................................................... 85,000 1.4%
Directors and executive officers as a group (11 persons)(6)...................... 3,641,837 57.4%
</TABLE>
- ---------------
* Less than 1%
(1) "Beneficial owner" means generally any person who, directly or
indirectly, has or shares voting power or investment power with respect
to a security. All information with respect to the beneficial ownership
of any shareholder has been furnished by such shareholder and the
Company believes that, except as otherwise indicated, each shareholder
has sole voting and investment power with respect to shares listed as
beneficially owned by such shareholder.
(2) Includes shares of Common Stock issuable upon exercise of options that
are exercisable on the Record Date or within 60 days thereafter by
Patterson, Yuen, Hunter, Langner, Mars, Huffman, Condict, Craft and all
directors and executive officers as a group, with such shares numbering
24,000, 36,000, 15,000, 11,000, 11,000, 35,000, 23,000, 13,000 and
173,400, respectively.
(3) Includes 2,800,000 shares of Common Stock held by RHP Securities Ltd.,
a limited partnership controlled by Mr. Patterson.
(4) Includes, in the aggregate, 6,000 shares of Common Stock held by Mr.
Patterson's two sons and daughter. Mr. Patterson disclaims beneficial
ownership of such shares.
(5) Includes 79,750 shares of Common Stock held by Golden Pool Ltd., a
partnership controlled by Mr. Yuen.
(6) Includes 5,400 shares of Common Stock held by Laura Lockhart, of which
3,400 shares are issuable upon exercise of options that are exercisable
on the Record Date or within 60 days thereafter; and 2,000 shares held
by Sherri L. Goodman, all of which are issuable upon exercise of
options that are exercisable on the Record Date or within 60 days
thereafter.
-3-
<PAGE> 7
PROPOSAL NO. 1
REVERSE STOCK SPLIT
The Board of Directors has adopted, and proposes that the shareholders
of the Company approve, amendments to the Articles of Incorporation that would
effect (i) a four-to-one reverse split of the outstanding shares of Common
Stock, but would maintain the authorized number of shares of Common Stock at
25,000,000 shares and the par value at $.01 per share, and (ii) certain other
technical changes (collectively, the "Reverse Stock Split"). The authorized
number of shares (10,000,000) and par value ($.01 per share) of the Company's
Preferred Stock would remain unchanged.
REASONS FOR THE REVERSE STOCK SPLIT
Listing of the Company's Common Stock. The Common Stock is currently
--------------------------------------
listed on the Nasdaq SmallCap Market (R) (the "SmallCap"). On December 2, 1998,
the Company received a notice from the Nasdaq Stock Market (the "Nasdaq") that,
based on a review by Nasdaq's staff of the price data covering the 30 days prior
to the date of the notice, the Common Stock had failed to maintain a closing bid
price of at least $1.00 per share in accordance with Nasdaq's continued listing
requirements. Nasdaq notified the Company that if it were unable to demonstrate
compliance with the $1.00 minimum bid price requirement by March 2, 1999, the
Common Stock would be delisted from the SmallCap effective at the close of
business on that date. In such event, trading, if any, in the Common Stock would
thereafter be conducted in the over-the-counter market in the so-called "pink
sheets" or the NASD's Electronic Bulletin Board. Consequently, the liquidity of
the Common Stock could be severely adversely affected, not only in the number of
shares that could be bought and sold, but also through delays in the timing of
transactions, reduction in media coverage of the Company, and lower prices for
the Common Stock than might otherwise be attained.
The Company has not submitted a request to Nasdaq that a hearing be
held in connection with the notice described above. If the Reverse Stock Split
Amendment is not approved, the Company will immediately request such hearing and
it is anticipated that until such a hearing is held and a decision is reached,
the Common Stock would continue to be listed on the SmallCap.
In response to Nasdaq's notice, the Board of Directors evaluated the
Company's alternatives concerning the Common Stock's listing. After reviewing
the history of the price of the Common Stock, the Board determined that it was
very possible that the Common Stock would not be able, in the short term, to
maintain the minimum bid price required for its continued listing on the
SmallCap. The Company believes that after effecting the Reverse Stock Split, the
Common Stock is more likely to meet the minimum bid price per share listing
requirement, and to continue to meet all of the other listing requirements of
the SmallCap, all of which it currently meets. The Company believes the
completion of the Reverse Stock Split should cause the trading price of the
Common Stock to increase proportionately. There can be no assurance, however,
that the Reverse Stock Split will result in any change in the price of the
Common Stock or that, if the price of the Common Stock does increase as a result
of the Reverse Stock Split, such increase will be sufficient to allow the
Company to comply with the continued listing requirements of the SmallCap.
Further, there can be no assurance that the Company will comply with the other
continued listing requirements of the SmallCap following the Reverse Stock Split
or that the reduced number of shares outstanding after the Reverse Stock Split
will not adversely affect the liquidity of the Common Stock.
Marketability. The Company believes that the Reverse Stock Split may
--------------
result in a broader market for the Common Stock than currently exists due to the
increase of the per share price. The Company believes that the present level of
per share market prices of the Common Stock impairs the acceptability of the
stock to portions of the financial community and the investing public.
Theoretically, the price per share of stock should not, by itself, affect the
marketability of the stock, the type of investor who acquires the stock, or a
company's reputation in the financial community. However, in practice, the price
per share does affect the stock because many investors look upon low-priced
stocks as unduly speculative in nature, and, as a matter of policy, avoid
investment in such stocks. The increased price per share may encourage interest
and trading in the Common Stock and possibly promote greater liquidity for the
Company's shareholders, although such liquidity could be adversely affected by
the reduced number of shares outstanding after the Reverse Stock Split.
Nonetheless, there is no assurance that these effects will occur or that the per
share price level of the Common Stock immediately after the Reverse Stock Split
will be maintained for any period of time.
-4-
<PAGE> 8
Commissions. The Company believes that the Reverse Stock Split may
------------
improve the liquidity of the Common Stock in another manner. Frequently, brokers
charge trading commissions based upon the number of shares purchased. As a
result, this trading commission per share is currently relatively high as a
percentage of the value of the shares being traded. The Company believes that
the relatively high cost of trading in the Common Stock may adversely affect the
liquidity of the Common Stock by making it a less attractive investment than the
stock of other companies. If the Reverse Stock Split is effected and the price
of the Common Stock rises correspondingly, the cost of trading in the Common
Stock as a percentage of the value of the shares being traded would decrease in
certain circumstances.
Increase of Surplus. As a part of the Reverse Stock Split, the
--------------------
Company's surplus would be increased as a result of maintaining the par value of
the Common Stock at $.01 per share but decreasing the number of issued shares.
Under the Texas Business Corporation Act (the "TBCA"), a corporation is
permitted to purchase its own shares of capital stock or to declare dividends
only to the extent that the corporation has an amount of surplus equal to or
greater than the amount of the stock redemption or dividend and that the
redemption or dividend would not render the corporation insolvent. Under the
TBCA, the "surplus" of a corporation is defined as the excess of the net assets
of a corporation over its stated capital. The "stated capital" of a corporation
is equal to the number of issued shares of the corporation multiplied by the par
value per share of the shares. The "net assets" of a corporation is equal to the
assets of the corporation minus its liabilities. Because the number of issued
shares of Common Stock will decrease as a result of the Reverse Stock Split but
the par value per share will remain the same, the stated capital of the Company
will decrease. The amount by which the stated capital decreases will be
considered additional surplus of the Company. Despite the increase in the amount
of surplus that will be caused by the Reverse Stock Split, the Company has no
current plans to redeem any shares of Common Stock or make any distributions on
the Common Stock.
Effective Increase of Authorized Shares. The Company proposes to effect
----------------------------------------
the Reverse Stock Split while maintaining the authorized number of shares of
Common Stock at 25,000,000. This will have the same effect as increasing the
number of authorized shares of Common Stock. The Preferred Stock will not be
affected by the Reverse Stock Split. The Company has not issued any shares of
Preferred Stock to date. The Board of Directors believes the proposed amounts of
Common Stock and Preferred Stock authorized for issuance are adequate to meet
the Company's needs in the foreseeable future. If the Reverse Stock Split is
approved, no shareholder approval will be solicited for the issuance of all or
any portion of the Common Stock and Preferred Stock unless required by law or
any rules or regulations to which the Company may be subject.
EFFECT OF REVERSE STOCK SPLIT ON SHAREHOLDERS
The Reverse Stock Split will not affect any shareholder's proportionate
equity interest in the Company, except for those shareholders who would receive
one more or one less share of Common Stock in lieu of fractional shares. Holders
of Common Stock will continue to be entitled to receive such dividends as may be
declared by the Board of Directors. Outstanding stock options under the
Company's stock option plan will be adjusted to reflect the ratio of the Reverse
Stock Split if it is approved. The Company's reporting obligations under the
Securities Exchange Act of 1934, as amended, will not be affected by the Reverse
Stock Split.
EFFECT OF THE REVERSE STOCK SPLIT ON CAPITAL STOCK
The Company's Articles of Incorporation currently authorize the
issuance of 25,000,000 shares of Common Stock and 10,000,000 shares of Preferred
Stock. On the Record Date, the Company had outstanding 6,176,655 shares of
Common Stock, leaving 18,823,345 authorized but unissued shares of Common Stock
available for issuance. Following the Reverse Stock Split, the Company will have
1,544,164 shares of Common Stock outstanding, leaving 23,455,836 authorized but
unissued shares of Common Stock available for issuance. The par value of the
Common Stock will remain at $.01 per share. Because the number of issued shares
of Common Stock will decrease but the par value will remain the same after the
Reverse Stock Split, the Company's stated capital will decrease by approximately
$46,325, and the Company's surplus account will increase by a corresponding
amount. This change in the Company's capital accounts will be reflected in the
Company's financial statements, along with a notation of the change in
outstanding shares of Common Stock, as a result of the Reverse Stock Split.
-5-
<PAGE> 9
There were no shares of Preferred Stock issued or reserved for issuance
on the Record Date. The Preferred Stock will be unaffected by the Reverse Stock
Split.
If the Reverse Stock Split Amendment is approved by the shareholders,
the Company will file amended and Restated Articles of Incorporation (the
"Restated Articles"), in the form of Exhibit A attached to this Proxy Statement,
reflecting the Reverse Stock Split Amendment, with the Secretary of State of the
State of Texas promptly following the conclusion of the Meeting. The Reverse
Stock Split will become effective on the date of such filing (the "Effective
Date"). On the Effective Date, without further action of the Company or its
shareholders, (i) every four shares of Common Stock outstanding will
automatically be reverse split into one share outstanding, (ii) the number of
shares of authorized Common Stock will remain at 25,000,000, and (iii) the par
value of the Common Stock will remain at $.01 per share. Based on information as
of the Record Date, the Company anticipates that the number of outstanding
shares of Common Stock, after giving effect to the Reverse Stock Split, will be
1,544,164 shares. Upon filing the Restated Articles, the Company will notify the
shareholders that the Reverse Stock Split has been effected.
CERTAIN ANTI-TAKEOVER EFFECTS OF THE REVERSE STOCK SPLIT
As described above, approval of the Reverse Stock Split Amendment will
increase the number of authorized shares of Common Stock available for issuance.
Under certain circumstances, the Board of Directors could create impediments to,
or delay persons seeking to effect, a takeover or transfer of control of the
Company by causing such additional authorized shares to be issued to a holder or
holders who might side with the Board in opposing a takeover bid that the Board
of Directors determines is not in the best interests of the Company and its
shareholders. Such an issuance could diminish the voting power of existing
shareholders who favor a change in control, and the ability to issue the shares
could discourage an attempt to acquire control of the Company. While it may be
deemed to have potential anti-takeover effects, the Board is proposing the
Reverse Stock Split solely for the purpose of maintaining the Company's listing
on the SmallCap, and the proposed amendment is not prompted by any specific
effort or takeover threat currently perceived by management.
EXCHANGE OF CERTIFICATES; NO FRACTIONAL SHARES
After the Effective Date, the Company will issue certificates
representing one share of Common Stock in exchange for each four shares of
Common Stock presently outstanding upon surrender of an existing certificate
evidencing outstanding shares of Common Stock.
NO FRACTIONAL SHARES OF COMMON STOCK WILL BE ISSUED IN CONNECTION WITH THE
REVERSE STOCK SPLIT. ASSUMING THE APPROVAL OF THE REVERSE STOCK SPLIT
AMENDMENT, A SHAREHOLDER WHO WOULD OTHERWISE BE ENTITLED TO RECEIVE, IN THE
AGGREGATE, A NUMBER OF SHARES OF COMMON STOCK THAT INCLUDED A FRACTION OF A
SHARE EQUAL TO OR GREATER THAN ONE-HALF WILL RECEIVE, IN LIEU THEREOF, THAT
NUMBER OF SHARES ROUNDED UP TO THE NEXT HIGHEST WHOLE SHARE. A SHAREHOLDER WHO
WOULD OTHERWISE BE ENTITLED TO RECEIVE, IN THE AGGREGATE, A NUMBER OF SHARES
THAT INCLUDED A FRACTION LESS THAN ONE-HALF WILL NOT RECEIVE SUCH FRACTIONAL
SHARE AND WILL BE ENTITLED ONLY TO THAT NUMBER OF SHARES AGGREGATE, ROUNDED
DOWN TO THE NEXT LOWEST WHOLE SHARE.
The Company will appoint Harris Trust & Savings Bank as exchange agent
("Exchange Agent") in connection with the Reverse Stock Split. As soon as
practicable after the Effective Date, the holders of the Common Stock will be
notified that the Reverse Stock Split has been effected and will be asked to
surrender to the Exchange Agent any certificate(s) representing outstanding
shares of Common Stock in exchange for new certificate(s) representing the
reduced number of shares of Common Stock that will result from the Reverse Stock
Split. On the Effective Date, each certificate representing shares of Common
Stock will be deemed for all purposes to represent the reduced number of shares
of Common Stock that will result from the Reverse Stock Split, whether or not
the certificates representing outstanding Common Stock are surrendered for
exchange.
-6-
<PAGE> 10
NO DISSENTERS' RIGHTS
The TBCA does not vest shareholders of the Company with dissenters'
rights with respect to the Reverse Stock Split.
RESALES OF RESTRICTED SECURITIES
The proposed amendment will not affect the transferability of shares of
Common Stock or any present restriction on the sale thereof. Therefore, for
purposes of determining the relevant holding period as prescribed by Rule 144
under the Securities Act of 1933, as amended, the shares of Common Stock to be
issued to each shareholder after the Effective Date will be deemed to have been
acquired on the date on which the shareholder acquired the shares of Common
Stock held immediately prior to the Effective Date.
FEDERAL INCOME TAX CONSEQUENCES
A summary of the federal income tax consequences of the Reverse Stock
Split is set forth below. The discussion is based on present federal income tax
law. The discussion is not, and should not be relied on as, a comprehensive
analysis of the tax issues arising from or relating to the Reverse Stock Split.
This summary does not purport to deal with all aspects of federal income
taxation that may be relevant to a particular shareholder in light of such
shareholder's personal investment circumstances or to certain types of
shareholders subject to special treatment under the Internal Revenue Code of
1986, as amended (the "Code") (including, without limitation, financial
institutions, broker-dealers, regulated investment companies, life insurance
companies, tax-exempt organizations, foreign corporations and non-resident
aliens). Accordingly, shareholders are urged to consult their personal tax
advisors for an analysis of the effect of the Reverse Stock Split on their
respective tax situations, including consequences under applicable state, local
or foreign tax laws.
Pursuant to Section 368(a)(1)(E) of the Code, the Company believes the
Reverse Stock Split will qualify as a recapitalization to the extent that
outstanding shares of Common Stock are exchanged for a reduced number of shares
of Common Stock. Therefore, neither the Company nor its shareholders will
recognize any gain or loss for federal income tax purposes as a result thereof.
The shares of Common Stock to be issued to each shareholder to effect
the Reverse Stock Split will have an aggregate basis, for computing gain or
loss, equal to the aggregate basis of the shares of Common Stock held by such
shareholder immediately prior to the Effective Date. A shareholder's holding
period for the shares of Common Stock to be issued will include the holding
period for shares of Common Stock exchanged therefor, provided that such
outstanding shares of Common Stock were held by the shareholder as capital
assets on the Effective Date.
VOTE REQUIRED
Approval of the Reverse Stock Split Amendment requires the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Common Stock
entitled to vote on the proposal. If the Reverse Stock Split Amendment is
approved by the shareholders of the Company, the proper officers of the Company
will file a copy of the Restated Articles with the Secretary of State of the
State of Texas to effect the Reverse Stock Split as promptly as practicable.
Unless otherwise instructed or restricted, it is the intent of the persons
named in the Proxy to vote all Proxies "FOR" the adoption of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE REVERSE STOCK SPLIT AMENDMENT
SHAREHOLDER PROPOSALS
Shareholders of the Company may submit proposals on matters appropriate
for shareholder action at subsequent annual meetings of the Company consistent
with Rule 14a-8 promulgated under the Exchange Act. For such proposals to be
considered for inclusion in the Proxy Statement and Proxy relating to the 1999
Annual Meeting of Shareholders, such proposals must be received by the Company
not later than July 17, 1999. Such proposals should be directed to Celebrity,
Inc., P. O. Box 6666, Tyler, Texas 75711, Attention: Secretary.
-7-
<PAGE> 11
OTHER BUSINESS
The Board of Directors knows of no matter other than those described
in this Proxy Statement that will be presented for consideration at the Meeting.
However, should any other matters properly come before the Meeting and any
adjournments thereof, it is the intention of the persons named in the
accompanying Proxy to vote in accordance with their best judgment in the
interest of the Company.
MISCELLANEOUS
All costs incurred in the solicitation of Proxies will be borne by the
Company. In addition to the solicitation by mail, employees of the Company may
solicit Proxies by telephone, telegram or personally, without additional
compensation. The Company may also make arrangements with brokerage firms and
other custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of shares of Common Stock held of record by
such persons, and the Company may reimburse such brokerage firms and other
custodians, nominees and fiduciaries for their out-of-pocket expenses incurred
in connection therewith. The Company may retain Corporate Investor
Communications, Inc., an outside solicitation firm, in connection with the
solicitation of shareholders. Any fees and expenses incurred in connection with
the engagement of Corporate Investor Communications, Inc., which are not
expected to exceed $4,000, will be borne by the Company.
By Order of the Board of Directors
Lynn Skillen
Secretary
Tyler, Texas
January ___, 1999
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<PAGE> 12
EXHIBIT A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CELEBRITY, INC.
ARTICLE ONE
Celebrity, Inc., a Texas corporation (the "Corporation"), pursuant to
the provisions of Article 4.07 of the Texas Business Corporation Act, hereby
adopts the attached Amended and Restated Articles of Incorporation that
accurately copy the Articles of Incorporation of the Corporation and all
previous amendments thereto and further amend the Articles of Incorporation
as provided therein (these "Restated Articles"). These Restated Articles
contain no other change in any provision of the Articles of Incorporation.
ARTICLE TWO
The Articles of Incorporation of the Corporation are hereby amended by
these Restated Articles as follows:
(1) Article Four is amended to effect a four-to-one reverse stock
split of the issued common stock, par value $.01 per share
(the "Old Common Stock"), of the Corporation, while
maintaining the current number of authorized shares of each
class of capital stock and their respective par values.
Effective as of the close of business on the date of filing
these Restated Articles (the "Effective Time"), the filing of
these Restated Articles shall effect a reverse stock split
(the "Reverse Stock Split") pursuant to which each share of
Old Common Stock currently issued shall be reclassified and
converted into one-fourth of a share of common stock, par
value $.01 per share (the "New Common Stock"), of the
Corporation, thereby reducing the number of issued shares of
Common Stock from 6,176,655 to 1,544,164 (with any fractional
share equal to or greater than one-half being rounded up to
the nearest whole share and any fractional share less than
one-half being rounded down to the nearest whole share). Each
stock certificate that prior to the Effective Time represented
shares of Old Common Stock shall, following the Effective
Time, represent the number of shares of New Common Stock into
which such shares of Old Common Stock shall have been
converted.
(2) Article Six is amended to eliminate the name and address of
the sole member of the Board of Directors in place at the time
the Articles of Incorporation of the Corporation were
previously restated, and now reflects the names and addresses
of the current members of the Board of Directors of the
Corporation.
(3) Article Twelve is amended to affect certain technical
changes.
<PAGE> 13
ARTICLE THREE
Each amendment made by these Restated Articles has been effected in
conformity with the provisions of the Texas Business Corporation Act. The number
of shares of Common Stock outstanding at the time these Restated Articles were
adopted was 6,176,655, and the number of shares of such Common Stock entitled to
vote on the Restated Articles as so amended was 6,176,655. At a meeting held on
the date these Restated Articles were filed, the shareholders of the Corporation
voted for and against the Restated Articles as follows:
CLASS FOR AGAINST
Common Stock _______________ _________________
ARTICLE FOUR
These Restated Articles maintain the par value of the Common Stock at
$.01 per share and effect a reverse stock split of the Old Common Stock in the
ratio of four-to-one. Accordingly, the stated capital of the Corporation has
been decreased from $61,766.55 to $15,441.64, with $46,324.91 being transferred
to the Corporation's capital surplus.
ARTICLE FIVE
The Articles of Incorporation and all of the amendments and supplements
thereto are hereby superseded by the attached Amended and Restated Articles of
Incorporation, which accurately copy the entire text thereof, as amended as
above set forth.
EXECUTED as of the 26th day of February, 1999.
CELEBRITY, INC.
By
---------------------------------
Robert H. Patterson, Jr.,
President
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<PAGE> 14
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CELEBRITY, INC.
ARTICLE ONE
The name of the Corporation is Celebrity, Inc.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is the transaction
of any or all lawful business for which corporations may be incorporated under
the Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares of capital stock that the Corporation
will have authority to issue is 35,000,000, 25,000,000 of which will be shares
of Common Stock, having a par value of $.01 per share, and 10,000,000 of which
will be shares of preferred stock, having a par value of $.01 per share.
Preferred stock may be issued in one or more series as may be
determined from time to time by the Board of Directors. All shares of any one
series of preferred stock will be identical except as to the date of issue and
the dates from which dividends on shares of the series issued on different dates
will cumulate, if cumulative. Authority is hereby expressly granted to the Board
of Directors to authorize the issuance of one or more series of preferred stock,
and to fix by resolution or resolutions providing for the issue of each such
series the voting powers, designations, preferences, and relative,
participating, optional, redemption, conversion, exchange or other special
rights, qualifications, limitations or restrictions of such series, and the
number of shares in each series, to the full extent now or hereafter permitted
by law.
Effective as of the close of business on the date of filing these
Restated Articles (the "Effective Time"), the filing of these Restated Articles
shall effect a reverse stock split (the "Reverse Stock Split") pursuant to which
each share of common stock, par value $.01 per share (the "Old Common Stock"),
of the Corporation currently issued shall be reclassified and converted into
one-fourth of a share of common stock, par value $.01 per share (the "New Common
Stock"), of the Corporation, thereby reducing the number of issued shares of
Common Stock from 6,176,655 to 1,544,164 (with any fractional share equal to or
greater than one-half being rounded up to the nearest whole share and any
fractional share less than one-half being rounded down to the nearest whole
share). The number of authorized shares and the par value of the New Common
Stock as set forth in the first paragraph of this Article Four shall not be
affected by the
<PAGE> 15
Reverse Stock Split. Each stock certificate that prior to the Effective Time
represented shares of Old Common Stock shall, following the Effective Time,
represent the number of shares of New Common Stock into which such shares of Old
Common Stock shall have been converted.
ARTICLE FIVE
The post office address of the Corporation's registered office is 350
North St. Paul, Dallas, Texas 75201, and the name of its registered agent at
such address is CT Corporation.
ARTICLE SIX
The number of directors of the Corporation shall be specified or
determined in the manner provided in the Bylaws, and such number may from time
to time be increased or decreased in such manner as may be prescribed in the
Bylaws. The names and addresses of the current members of the Board of Directors
who will serve as such until the next annual meeting of shareholders or until
their respective successors are elected and qualified, are as follows:
NAME ADDRESS
Robert H. Patterson, Jr. 4520 Old Troup Road
Tyler, Texas 75707
Post Office address:
P.O. Box 6666
Tyler, Texas 75711
Richard Yuen 4520 Old Troup Road
Tyler, Texas 75707
Post Office address:
P.O. Box 6666
Tyler, Texas 75711
B. D. Hunter 4520 Old Troup Road
Tyler, Texas 75707
Post Office address:
P.O. Box 6666
Tyler, Texas 75711
-2-
<PAGE> 16
NAME ADDRESS
C. A. Langner 4520 Old Troup Road
Tyler, Texas 75707
Post Office address:
P.O. Box 6666
Tyler, Texas 75711
Valerie Anne Mars 4520 Old Troup Road
Tyler, Texas 75707
Post Office address:
P.O. Box 6666
Tyler, Texas 75711
ARTICLE SEVEN
No shareholder of the Corporation will, solely by reason of his holding
shares of any class, have any preemptive or preferential right to purchase or
subscribe for any shares of the Corporation, now or hereafter to be authorized,
or any notes, debentures, bonds or other securities convertible into or carrying
warrants, rights or options to purchase shares of any class, now or hereafter to
be authorized, whether or not the issuance of any such shares or such notes,
debentures, bonds or other securities would adversely affect the dividend,
voting or any other rights of such shareholder. The Board of Directors may
authorize the issuance of, and the Corporation may issue, shares of any class of
stock of the Corporation, or any notes, debentures, bonds or other securities
convertible into or carrying warrants, rights or options to purchase any such
shares, without offering any shares of any class to the existing holders of any
class of stock of the Corporation.
ARTICLE EIGHT
Shareholders of the Corporation will not have the right of cumulative
voting for the election of directors or for any other purpose.
ARTICLE NINE
The Board of Directors is expressly authorized to alter, amend or
repeal the Bylaws of the Corporation or to adopt new Bylaws.
-3-
<PAGE> 17
ARTICLE TEN
In addition to any other manner of calling a special meeting of
shareholders that may be set forth in the Bylaws of the Corporation, a special
meeting of shareholders may be called at the request of the holders of at least
50% of all shares issued, outstanding and entitled to vote.
ARTICLE ELEVEN
Any action required or permitted by law, these Articles of
Incorporation or the Bylaws of the Corporation to be taken at a meeting of the
shareholders of the Corporation may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall have been signed by the holder or holders of shares
having not less than the minimum number of votes that would be necessary to take
such action at a meeting at which the holders of all shares entitled to vote on
the action were present and voted.
Prompt notice of the taking of any action by shareholders without a
meeting by less than unanimous written consent shall be given to those
shareholders who did not consent in writing to the action.
ARTICLE TWELVE
(a) The Corporation will, to the fullest extent permitted by the Texas
Business Corporation Act, as the same exists or may hereafter be amended,
indemnify any and all persons it has power to indemnify under such Act from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by such Act. Such indemnification may be provided pursuant to any
Bylaw, agreement, vote of shareholders or disinterested directors or otherwise,
both as to action in a director or officer capacity and as to action in another
capacity while holding such office, will continue as to a person who has ceased
to be a director, officer, employee or agent, and will inure to the benefit of
the heirs, executors and administrators of such a person.
(b) If a claim under paragraph (a) of this Article is not paid in full
by the Corporation within 30 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant will be entitled to be paid also the expense of
prosecuting such claim. It will be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct that make it permissible under the laws of the
State of Texas for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense will be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its shareholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because the claimant has met the applicable standard
of conduct set forth in the laws of the State of Texas nor an actual
determination by the Corporation (including its Board of Directors, independent
legal
-4-
<PAGE> 18
counsel, or its shareholders) that the claimant has not met such applicable
standard of conduct, will be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
ARTICLE THIRTEEN
To the fullest extent permitted by the laws of the State of Texas as
the same exist or may hereafter be amended, a director of the Corporation will
not be liable to the Corporation or its shareholders for monetary damages for an
act or omission in the director's capacity as a director. Any repeal or
modification of this Article will not increase the personal liability of any
director of the Corporation for any act or occurrence taking place before such
repeal or modification, or adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
The provisions of this Article shall not be deemed to limit or preclude
indemnification of a director by the Corporation for any liability of a director
that has not been eliminated by the provisions of this Article.
ARTICLE FOURTEEN
With respect to any matter, a quorum will be present at a meeting of
shareholders if the holders of one-third of the shares entitled to vote on that
matter are represented at the meeting in person or by proxy.
EXECUTED as of the 26th day of February, 1999.
By
-------------------------------
Robert H. Patterson, Jr.,
President
-5-
<PAGE> 19
CELEBRITY, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR SPECIAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Robert H. Patterson, Jr. and Lynn Skillen, or
either of them, with full power of substitution, as Proxies to vote, as
designated below, all shares of Common Stock of Celebrity, Inc., a Texas
corporation (the "Company"), owned by the undersigned on January 25, 1999, at a
special meeting of shareholders to be held at 8223 N. Stemmons Freeway, Dallas,
Texas, on February 26, 1999, at 8:30 a.m., local time, and at any adjournments
thereof, upon such business as may properly come before the meeting, including
the following:
PLEASE MARK VOTE IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
1. Approval of amendments to the Company's Restated Articles of Incorporation
that would effect (i) a four-to-one reverse stock split of the Company's issued
and outstanding common stock, par value $.01 per share (the "Common Stock"), in
order to maintain the listing of the Common Stock on the Nasdaq SmallCap Market,
and (ii) certain other technical changes.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the Proxies are authorized to vote upon such other
business or matters as may properly come before the meeting and any adjournments
thereof.
(CONTINUED, AND TO BE SIGNED AND DATED, ON REVERSE SIDE)
- -------------------------------------------------------------------------------
CELEBRITY, INC.
THIS PROXY, WHEN DULY EXECUTED AND RETURNED, WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO SPECIFIC DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
THE APPROVAL OF PROPOSAL NO.1 AND IN THE DISCRETION OF THE PROXIES ON ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
Mark here for address
change and note below. [ ]
Dated: , 1999
--------------------------
---------------------------------------
Signature
---------------------------------------
(Signature if held jointly)
IMPORTANT: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS TO THE LEFT. WHEN SIGNING
ON BEHALF OF A CORPORATION, PARTNERSHIP,
ESTATE, TRUST OR IN OTHER REPRESENTATIVE
CAPACITY, PLEASE SIGN NAME AND TITLE. IF
EXECUTED BY A CORPORATION, THE PROXY
SHOULD BE SIGNED BY A DULY AUTHORIZED
OFFICER. IF EXECUTED BY A PARTNERSHIP,
PLEASE SIGN IN THE PARTNERSHIP'S NAME BY
AN AUTHORIZED PERSON. FOR JOINT
ACCOUNTS, EACH JOINT OWNER MUST SIGN.
THIS PROXY MAY BE REVOKED PRIOR TO THE
EXERCISE OF THE POWERS CONFERRED BY THE
PROXY.
