ALANCO ENVIRONMENTAL RESOURCES CORPORATION
4110 North Scottsdale Road, Suite 200
Scottsdale, Arizona 85251
(602) 874-0448
PROXY STATEMENT
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held January 13, 1997
TO THE SHAREHOLDERS OF ALANCO ENVIRONMENTAL RESOURCES CORPORATION
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of Alanco
Environmental Resources Corporation, an Arizona corporation (the "Company"),
will be held at The Holiday Inn, 7353 East Indian School Road, Scottsdale,
Arizona on January 13, 1997 at 10:00 a.m., Mountain Standard Time, and at any
and all adjournments thereof, for the purpose of considering and acting upon
the following Proposals:
Proposal No. 1. ADOPTION OF RESTATED AND AMENDED ARTICLES OF INCORPORATION
Proposal No. 2. MANAGEMENT'S NOMINEES FOR ELECTION AS DIRECTORS
Proposal No. 3. CONFIRMATION OF SINGER, LEWAK, GREENBAUM & GOLDSTEIN LLP,
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, AS AUDITORS OF
THE COMPANY'S FINANCIAL STATEMENTS
This Annual Meeting is called as provided for by Arizona law and the Company's
By-Laws.
Only holders of the outstanding Common Stock and Class A Preferred Stock of the
Company of record at the close of business on December 11, 1996 will be
entitled to notice of and to vote at the Meeting or at any adjournment or
adjournments thereof.
All shareholders, whether or not they expect to attend the Annual Meeting of
Shareholders in person, are urged to sign and date the enclosed Proxy and
return it promptly in the enclosed postage-paid envelope which requires no
additional postage if mailed in the United States. The giving of a proxy will
not affect your right to vote in person if you attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS.
CYNTHIA L. CASTELLANO
SECRETARY
Scottsdale, Arizona
December 12, 1996<PAGE>
Alanco Environmental Resources Corporation
4110 North Scottsdale Road, Suite 200
Scottsdale, Arizona 85251
(602) 874-0448
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 13, 1997
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of Directors of
Alanco Environmental Resources Corporation, an Arizona corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders to be held
at The Holiday Inn, 7353 East Indian School Road, Scottsdale, Arizona, on the
13th day of January, 1997 at 10:00 a.m., Mountain Standard Time, and at any
adjournment thereof. It is anticipated that this Proxy Statement and the
accompanying Proxy will be mailed to the Company's shareholders on or before
December 13, 1996.
Any person signing and returning the enclosed Proxy may revoke it at any time
before it is voted by giving written notice of such revocation to the Company,
or by voting in person at the Meeting. The expense of soliciting proxies,
including the cost of preparing, assembling and mailing this proxy material to
shareholders, will be borne by the Company. It is anticipated that
solicitations of proxies for the Meeting will be made only by use of the mails;
however, the Company may use the services of its Directors, Officers and
employees to solicit proxies personally or by telephone without additional
salary or compensation to them. Brokerage houses, custodians, nominees and
fiduciaries will be requested to forward the proxy soliciting materials to the
beneficial owners of the Company's shares held of record by such persons, and
the Company will reimburse such persons for their reasonable out-of-pocket
expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance therewith
at the Meeting. Shares not voting as a result of a proxy marked to abstain
will be counted as part of total shares voting in order to determine whether or
not a quorum has been achieved at the Meeting. Shares registered in the name
of a broker-dealer or similar institution for beneficial owners to whom the
broker-dealer distributed notice of the Annual Meeting and proxy information
and which such beneficial owners have not returned proxies or otherwise
instructed the broker-dealer as to voting of their shares, will be counted as
part of the total shares voting in order to determine whether or not a quorum
has been achieved at the Meeting. Abstaining proxies and broker-dealer non-
votes will not be counted as part of the vote on any business at the Meeting on
which the shareholder has abstained.
The Company's Annual Report to Shareholders for the fiscal year ended June 30,
1996 has been previously mailed or is being mailed simultaneously to the
Company's shareholders, but does not constitute part of these proxy soliciting
materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's Common
Stock and Class A Preferred Stock, voting as a single group with each common or
preferred share entitled to one vote. Only shareholders of record at the close
of business on December 11, 1996 are entitled to notice of and to vote at the
1<PAGE>
Meeting or any adjournment thereof. On December 11, 1996, the Company had
33,882,708 shares of its Common Stock, 26 shares of its Class A Series 1
Preferred Stock, 85,000 shares of its Class A Series 2 Preferred Stock and
25,000 shares of its Class A Series 3 Preferred Stock outstanding, each of
which is entitled to one vote on all matters to be voted upon at the Meeting,
including the election of Directors. No fractional shares are presently
outstanding. A majority of the Company's outstanding voting stock represented
in person or by proxy shall constitute a quorum at the Meeting. The
affirmative vote of a majority of the votes cast, providing a quorum is
present, is necessary to pass a Proposal. Cumulative voting in the election of
Directors is required. At the meeting five directors are to be elected to
serve for a term of one year or until their successors are elected and
qualified. Each shareholder present at the meeting, either in person or by
proxy, will have an aggregate number of votes in the election of directors equal
to the number of Directors (5) multiplied by the number of shares of Common
Stock and Class A Preferred Stock held by such shareholder on the record date.
The resulting number of votes may be cast by the shareholder for the election
of any single Director nominee, or the shareholder may distribute such votes
among any number or all of the nominees. The five nominees receiving the
highest number of votes will be elected to the Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND OF MANAGEMENT
The following table sets forth persons known to the Company as
beneficially owning more than five percent (5%) of the outstanding shares of
the Registrant as of November 22, 1996.
% of Shares
Name and Address Shares Outstanding
Harbinger Capital Partners, L.P.
4365 Executive Drive, Suite 740
San Diego, CA 92121 7,453,720 22.00%
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned as of November 22, 1996, by individual
directors and executive officers and by all directors and executive officers of
the Company as a group.
% of Shares
Name and Address Shares Outstanding
- -------------------------- -------------- -------------------
Dennis Schlegel 204,445 (1) 0.60%
Harold S. Carpenter 652,086 (2) 1.92%
Norman E. Meyer 105,526 (3) 0.31%
Dean A. Douglas 50,550 0.15%
John E. Haggar 50,000 0.15%
Charles Clay Miller 12,000 0.04%
John Lowell Gilchrist 77,481 (4) 0.23%
Officers and Directors as a
Group (7 individuals) 1,152,088 3.40%
2<PAGE>
(1) Includes 153,440 shares indirect ownership
(2) Includes 256,606 shares indirect ownership
(3) Includes 26 preferred shares indirect ownership
(4) Includes 2,481 shares indirect ownership
PROPOSAL NO. 1. ADOPTION OF RESTATED AND AMENDED ARTICLES OF INCORPORATION
The Company's Articles of Incorporation have been amended several times over
the past fifteen years and as a result presently exist in the form of a series
of amendments. In addition, the State of Arizona adopted a revised Business
Corporation Act which permits greater indemnification of officers and directors
than was previously permitted. Therefore, the Board of Directors have proposed
the adoption of Restated and Amended Articles of Incorporation so that the
Company's Articles can be clearly and concisely stated in a single document.
The proposed Restated and Amended Articles of Incorporation eliminate several
obsolete provisions such as the original incorporators, update the description
of the Corporation's business, reduce the minimum number of directors from
five to three and incorporate indemnification provisions consistent with the
Arizona Business Corporation Act. The Restated and Amended Articles of
Incorporation are given in Exhibit A to this Proxy Statement and a detailed
description of the changes follows. A favorable vote of a majority of those
shares voting, in person or by proxy, is required to adopt the Restated and
Amended Articles of Incorporation.
AMENDMENT AND RESTATEMENT OF THE ARTICLES OF INCORPORATION
The Arizona Business Corporation Act, A.R.S. 10-120 et seq. was
substantially amended effective January 1, 1996. These amendments affected,
among other things, the requirements for the Articles of Incorporation for
Arizona corporations. The proposed amendments to the Articles of Incorporation
are designed to update the Articles and bring them into compliance with the new
Arizona Business Corporation Act. In addition, it is proposed that the
Articles be restated in order to reflect these amendments as well as several
prior amendments made to the Articles since the founding of the Company in
1969. A description of each proposed amendment follows:
ARTICLE I
Delete Article I of the Articles of Incorporation. The Company's current
Articles include a list of the names, residences and post office addresses of
the incorporators of the Company from 1969. The Arizona Corporation Commission
no longer requires the identity of the incorporators in restated Articles of an
existing corporation. Because the Company was initially incorporated in June
1969, it is proposed that the identities of the incorporators, which remain in
the records of both the Arizona Corporation Commission and the Company, be
deleted from the Articles. The remaining Articles of the Amended and Restated
Articles of Incorporation will be renumbered as a result of this change.
3<PAGE>
ARTICLE III
The language of former Article III (which as a result of the deletion of
Article I will become Article II) shall be deleted and replaced with the
following language:
The known place of business of the corporation shall be at 15900 North
78th Street, Scottsdale, Arizona 85260.
The Arizona Business Corporation Act, at A.R.S. 10-202(A)(6) now requires
a simple statement of the street address of the known place of business of the
corporation. This amendment is designed to comply with this change in Arizona
law.
ARTICLE IV
Delete Article IV in its entirety and replace with the following language
(which will become a new Article III as a result of the deletion of Article I):
The corporation initially intends to engage in the business of
researching, designing, manufacturing, marketing and selling environmental
technology and related equipment, and to perform any and all things
related to said business.
Arizona law no longer requires a detailed description of the business of
the Company or the authorized actions of the Company. Under the new Arizona
Business Corporation Act, the Articles need only contain a brief description of
the initial business of the Company. A.R.S. 10-202(A)(3). This statement does
not constitute a limitation on the character of the business that the Company
ultimately may conduct. Under current Arizona law, a corporation may have the
purpose of engaging in and may engage in any lawful business activity unless
the Articles of Incorporation or applicable law provide otherwise. A.R.S. 10-
301. In addition, every corporation has the same powers as an individual to do
all things necessary or convenient to carry out its business and affairs,
unless the Articles of Incorporation provide otherwise. A.R.S. 10-301. Indeed
a detailed description of the purposes of the corporation and its powers might
be read as intending to limit the purpose and powers of the corporation.
ARTICLE VI
Delete Article VI in its entirety.
Article VI of the Articles of Incorporation as they currently exist is no
longer necessary because, under the Arizona Business Corporation Act, every
corporation has perpetual duration unless the Articles of Incorporation provide
otherwise.
ARTICLE VII
The second paragraph of Article VII (which will become a new Article V
because of the deletion of Articles I and VI) shall be amended by deleting the
language "at Phoenix, Arizona, on the second Monday of January of each year."
4<PAGE>
The Arizona Business Corporation Act, as now amended, provides that the
annual meeting of shareholders shall be held each year at a time stated in or
fixed in accordance with the By-Laws. A.R.S. 10-701(A). Consequently, it is
not necessary to state the date of the annual meeting in the Articles.
Furthermore, A.R.S. 701(B) provides that the meeting shall be held at the place
stated in or fixed in accordance with the By-Laws. Consequently, it is no
longer necessary to name the place of the annual meeting in the Articles of
Incorporation.
This change will also give the Board of Directors flexibility in setting
the date of the annual meeting, permitting the Board to set a date for the
annual meeting that is closer to the end of the Company's fiscal year and the
publication of the Company's annual report.
ARTICLE VIII
Delete Article VIII in its entirety.
Article VIII is no longer necessary. A.R.S. 10-173, which was the basis
for Article VIII, has been repealed.
ARTICLE IX
Delete the language "With the consent or ratification in writing, or" at the
beginning of Article IX (which now becomes Article VI due to the deletion of
previous articles). Because of the amendments to the Arizona Business
Corporation Act, the language proposed to be deleted is no longer necessary.
A.R.S. 10-704 permits action by shareholders through unanimous written consent
for any action required or permitted by the Arizona Business Corporation Act to
be taken at a shareholders' meeting.
ARTICLE X
Delete Article X and replace it with the following language (which will
become Article VII due to the deletion of previous articles):
No director of the Corporation shall be liable to the Corporation or its
shareholders for money damages for the breach of fiduciary duty as a
director, except for liability for any of the following: (i) the amount of
a financial benefit received by a director to which such director is not
entitled; (ii) an intentional infliction of harm on the Corporation or its
shareholders; (iii) a violation of A.R.S. 10-833; or (iv) an intentional
violation of criminal law. The directors of the Corporation shall be
indemnified for liability, as defined in A.R.S. 10-850, to any person for
any action taken, or any failure to take any action as a director, except
liability for any of the exceptions described in the prior sentence and
except in connection with any matter for which indemnification is
prohibited under A.R.S. 10-851(D), to the fullest extent permitted by the
Arizona Business Corporation Act, A.R.S. 10-101 et seq. The officers of
the Corporation shall be indemnified to the same extent as directors of
the Corporation; and any officer who is not also a director or who is a
5<PAGE>
party to a proceeding on the basis of an act or omission solely as an
officer shall further be indemnified against liability for any of the
exceptions described in the first sentence of this Article VII, except
that an officer who is not also a director shall not be indemnified for
(a) liability in connection with a proceeding by or in the right of the
Corporation other than for reasonable expenses incurred in connection with
the proceeding; or (b) liability arising out of conduct that constitutes:
(i) receipt by the officer of a financial benefit to which the officer is
not entitled; (ii) an intentional infliction of harm on the Corporation or
the shareholders; or (iii) an intentional violation of criminal law. If
the Arizona Business Corporation Act is amended to authorize corporate
actions further eliminating or limiting the personal liability of officers
or directors, or to expand the matters for which indemnification is
permissible, then the liability of an officer or director of the
Corporation shall be automatically eliminated or limited and the
indemnification of the officers and directors shall be automatically
expanded, to the fullest extent permitted by the Arizona Business
Corporation Act, as so amended, without any further corporate or
shareholder action being required. Any repeal or modification of this
Article VII by the shareholders of the Corporation shall not adversely
affect any right or protection of an officer or director of the
Corporation existing at the time of such repeal or modification.
This new language reflects the new provisions of the Arizona Business
Corporation Act with regard to the limitation of liability and indemnification
of officers and directors.
ARTICLE XI
Delete Article XI in its entirety. The procedure for approval of
transactions in which directors have a possible conflict of interest is covered
in A.R.S. 10-860 through 10-863. These provisions of Arizona law are mandatory
for all Arizona corporations and are not required in the Articles of
Incorporation.
ARTICLE XIII
Article XIII (which will be renumbered as Article IX due to the deletion
of previous articles) should be deleted in its entirety and replaced with the
following language:
The name and address of the statutory agent of the corporation are: Dean
A. Douglas, 15900 North 78th Street, Scottsdale, Arizona 85260. The
statutory agent may be changed by the corporation at any time by the
filing of an appointment of its successor statutory agent.
The Arizona Business Corporation Act, at A.R.S. 10-202(A)(5), requires
only a simple statement of the name and street address of the corporation's
statutory agent. The proposed amendment simplifies the language of the
Articles of Incorporation concerning the statutory agent and updates the
Articles to reflect the current statutory agent.
6<PAGE>
ARTICLE XIV
Delete Article XIV in its entirety. The provisions of the former Article
XIV of the Articles of Incorporation are now covered by the provisions of the
new Article X (which has been renumbered as Article VII due to the deletion of
prior articles) to reflect current Arizona law.
Required Vote
Approval of the Amendment and Restatement of the Articles of Incorporation
requires that a greater number of votes be cast in favor of the proposal than
the number of votes cast against the proposal, whether in person or by proxy.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE AMENDMENT AND RESTATEMENT OF
ARTICLES OF INCORPORATION.
PROPOSAL NO. 2. MANAGEMENT'S NOMINEES FOR ELECTION AS DIRECTORS
The By-Laws presently provide for a Board of Directors of not less than five
(5) nor more than nine (9) members. The number of Directors of the Company has
been fixed at five (5) by the Company's Board of Directors. The Company's
Board of Directors recommends the election of the five (5) Director nominees
listed below to hold office until the next Annual Meeting of Shareholders and
until their successors are elected and qualified or until their earlier death,
resignation or removal. The persons named as "proxies" in the enclosed form of
Proxy, who have been designated by Management, intend to vote for the five (5)
nominees for election as Directors unless otherwise instructed in such proxy.
If at the time of the Meeting, any of the nominees named below should be unable
to serve, which event is not expected to occur, the discretionary authority
provided in the Proxy will be exercised to vote for such substitute nominee and
nominees, if any, as shall be designated by the Board of Directors.
7<PAGE>
Nominees
The following table sets forth the name and age of each nominee for Director,
indicating all positions and offices with the Company presently held by him,
the period during which he has served as such, and the class and term for which
he has been nominated:
Year
Name Age Position First Director
- ---------------------- ------- ------------------------ --------------
Harold S. Carpenter 62 Director 1995
Norman E. Meyer 52 Director/President/C.E.O. 1994
Dennis Schlegel 46 Director/Chairman 1995
Charles C. Miller 56 Director 1996
John Lowell Gilchrist 68 Director 1996
Business Experience of Nominees
Harold S. Carpenter: Mr. Carpenter is presently the President of Superiorgas
Co. , Des Moines, Iowa which is engaged in the business of trading and
brokering bulk refined petroleum products with gross sales of approximately
$500 million per year. He is also the General Partner of Superiorgas L.P., an
investment company affiliated with Superiorgas Co. Mr. Carpenter founded these
companies in 1984 and 1980 respectively. Mr. Carpenter is also the President
of Carpenter Investment Company, Des Moines, Iowa which is a real estate
investment company holding properties primarily in central Iowa. From 1970
until 1994, Mr. Carpenter was the Chairman of the George A. Rolfes Company of
Boone, Iowa which manufactured air pollution control equipment. Mr. Carpenter
is currently a member of the board of directors of the Allied Group, Inc., a
publicly owned insurance company headquartered in Des Moines, Iowa. Mr.
Carpenter graduated from the University of Iowa in 1958 with a Bachelors of
Science and Commerce degree.
Norman E. Meyer: Mr. Meyer joined the Company's Board of Directors in
December, 1994, was appointed President and Chief Executive Officer of the
Company in April, 1995, and was elected Chairman of the Board in December,
1995. Mr. Meyer has over twenty-eight years of experience in the insurance
industry and for the last fifteen years he has held executive positions of
increasing operational responsibility. From December, 1994, to November, 1995,
Mr. Meyer served as Chief Executive Officer and a Director of Phoenix Medical
Management, Inc., a Phoenix based out-patient, rehabilitation/surgical
facility. Beginning in 1984 and until December 1994, Mr. Meyer served in
various positions including Chief Operating Officer, Director and Chairman of
the Board of Realistic Adjustment Company, Inc., a Phoenix, Arizona based
8<PAGE>
insurance claims adjusting company. From January, 1995 to May, 1995 Mr. Meyer
also served as Vice President of Operations, and remains a Director and
Chairman of the Board of Travel Services of America, a Branson, Missouri travel
agency. From 1992 to 1994, Mr. Meyer served as consultant to the United Labor
Council Local 615 Welfare Fund wherein Mr. Meyer advised the Council on claims
processing. The Union, the Welfare Fund Trustees, the Welfare Fund Insurance
Underwriters and Mr. Meyer were named as Defendants in a 1992 civil action
filed by the U.S. Department of Labor which alleged breach of fiduciary duty by
the Defendants in the operation of the Welfare Fund under the Employee
Retirement Income Security Act of 1974(ERISA). Mr. Meyer filed an Answer
denying all allegations based upon the fact that Mr. Meyer did not control or
serve in the operation of the Welfare Fund and that the Department of Labor's
extension of the definition of a "fiduciary" under ERISA to include non-
controlling consultants is unwarranted. Mr. Meyer believes there is a high
probability of dismissal of the action against him if the matter goes to trial.
Dennis Schlegel. Since 1987, Mr. Schlegel has been an independent investor in
small and start-up companies as well as a consultant to small and start-up
businesses in the areas of corporate management and financing. Prior to this
Mr. Schlegel owned and operated Schlegel Investment Co., in Des Moines, Iowa and
Schlegel Ranch Company, in Ione, Washington, both of which were engaged in land
development. Mr. Schlegel attended one year at Drake University until he
withdrew to devote his full time to business pursuits.
Charles Clay Miller. Charles Clay Miller, an environmental engineer, has a
professional background of more than 25 years of management, operations,
research, design, and construction in the environmental industry, in both
government and private industry, as well as first hand experience in the
development and implementation of environmental standards in regulatory
environments. Most recently, Miller was Director of the Escambia County,
Florida, Solid Waste Department, with management of a $9 million annual budget.
Miller also served as Director of the Air and Land Quality Division of the Iowa
Department of Environmental Quality. During this period Iowa became one of the
first states in the nation to obtain federal approval for its primary and
secondary Air Quality State Implementation Plans according to the Clean Air Act
Amendments of 1977. Mr. Miller holds B.S. Degrees in Mathematics and
Mechanical Engineering, as well as a Master of Science Degree in Environmental
Engineering and Planning. He has completed course work for a Ph. D. in Civil
Engineering at the University of Missouri, Rolla. Mr. Miller was named to the
Board on September 9, 1996. He also serves as Vice President of Technology for
the Company.
John Lowell Gilchrist. John L. Gilchrist has been an entrepreneur and business
executive for more than forty years. He holds a Business and Accounting degree
from the American Institute of Business and from 1968 until 1990 he was the
owner and chief executive officer of Dean Studios, Inc., a photo finishing
laboratory in Des Moines, Iowa. Mr. Gilchrist developed the operations to
include photo finishing innovations and the business was expanded from one to
three locations which had twenty six employees. Mr. Gilchrist has also been a
successful, self directed investor for many years. Mr. Gilchrist was nominated
for election to the Company's Board of Directors in November, 1996.
9<PAGE>
Committees: Meetings of the Board
The Company has a Compensation/Administration Committee and an Audit Committee.
The Compensation/Administration Committee and the Audit Committee were formed
in 1995. Messrs. Carpenter and Meyer comprise the Compensation/Administration
Committee and Messrs. Carpenter and Schlegel are the Audit Committee. The
Compensation/Administration Committee recommends to the Board the compensation
of executive officers and will serve as the Administrative Committee for the
Company's Stock Option Plan. The Audit Committee serves as a liaison between
the Board and the Company's auditor. The Compensation/Administration Committee
met three (3) times during the fiscal year ended June 30, 1996 and the Audit
Committee met once during the fiscal year ended June 30, 1996.
The Company's Board of Directors held twelve (12) meetings during the fiscal
year ended June 30, 1996, at which time all the then Directors were present or
consented in writing to the action taken at such meetings. No incumbent
Director attended fewer than 100% of said meetings.
Compliance with Section 16(a) of Securities Exchange Act of 1934
To the Company's knowledge, during the fiscal year ended June 30, 1996 the
Company's Officers and Directors complied with all applicable Section 16(a)
filing requirements. This statement is based solely on a review of the copies
of such reports furnished to the Company by its Officers and Directors and
their written representations that such reports accurately reflect all
reportable transactions.
Family Relationships
There is no family relationship between any director, executive or person
nominated or chosen by the Company to become a director or executive officer.
10<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows for the fiscal year ending June 30, 1996, the
compensation awarded or paid by the Company to its Chief Executive Officer and
any of the executive officers of the Company whose total salary and bonus
exceeded $100,000 during such year (The "Named Executive Officers"):
Long Term Compensation
Awards
Restricted Securities
Name and Stock Underlying All Other
Principal Fiscal Annual Compensation Awards Options Compen-
Position Year Salary Bonus ($) (#shares) sation
- ------------------ ---- -------- ----------- ------------ ---------- ---------
Norman E. Meyer 1995 $ 0 - - - -
President, Chief 1996 $ 81,250 - $209,000 150,000 -
Executive Officer
No other executive officer earned more than $100,000 during the current
fiscal year.
Option Grants in Last Fiscal Year
The following table sets forth each grant of stock options made during the
fiscal year ended June 30, 1996, to each of the Named Executive Officers. No
stock appreciation rights ("SARs") have been granted by the Company.
Individual Grants
Percent of
Number of Total Potential Realizable
Securities Options Exer- Assumed Annual Rates
Underlying Granted to cise of Stock Price
Options Employees Price Appreciation for
Granted(1) in Fiscal ($/Sh) Expir Option Term (4)
Name (#) Year (2) (3) Date 5% 10% 0%
- ------------ ----------- ---------- ----- ---------- ------- ------- --------
Norman Meyer 100,000 10.39 $0.10 5/27/1996 - - $209,000
Norman Meyer 50,000 5.19 $1.89 12/16/2000 $26,100 $57,700 -
Dean Douglas 50,000 5.19 $0.10 5/27/1996 - - $89,500
Dean Douglas 50,000 5.19 $1.89 12/16/2000 $26,100 $57,700 -
John Haggar 50,000 5.19 $0.10 5/27/1996 - - $89,500
John Haggar 50,000 5.19 $1.89 12/16/2000 $26,100 $57,700 -
Cynthia Caste- 12,500 1.30 $2.09 12/16/2000 $7,200 $15,900 -
llano
(1) Options for common shares only, granted through 1995 Incentive Stock
Option Plan and the 1995 Directors and Officers Stock Option Plan.
(2) Options to purchase 737,500 shares and 225,000 shares were granted to
employees under the Company's 1995 Incentive Stock Option Plan and the
1995 Directors and Officers Stock Option Plan.
(3) Exercise price for Directors and Officers Stock Options was $0.10 per
restricted share for fiscal year ending 1996 and $1.89 or $2.09 per share
11<PAGE>
for the Incentive Stock Option Plan, which shares when acquired were not
restricted.
(4) Calculated based on given interest rate for the five year life of the
option. The column headed 0% shows the potential gain (assuming no
restrictions) upon exercise of Directors and Officers Options at market
price on the date of grant.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End
Option/Values
The following table sets forth the number and value of the unexercised
options held by each of the Named Executive Officers at June 30, 1996. All of
the Named Executive Officers who hold unexercised options exercised options in
the fiscal year ended June 30, 1996.
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares Acquired Value FY-End (#) FY-End ($)
Name On Exercise (#) Realized ($) Exercisable Exercisable
- ----------------- --------------- ------------ ------------ ------------
Norman Meyer 20,000 $60,400 50,000 (1) $22,500 (1)
20,000 (2)
20,000 (3)
20,000 (4)
20,000 (5)
Dean Douglas 10,000 $20,000 50,000 (1) $22,500 (1)
10,000 (6)
10,000 (7)
10,000 (8)
10,000 (9)
John Haggar 10,000 $22,100 50,000 (1) $22,500 (1)
10,000 (10)
10,000 (11)
10,000 (12)
10,000 (13)
Cynthia Castellano 5,000 $ 9,550 7,500 (1) $ 3,375 (1)
(1) as of 6/30/96
(2) vests on 4/24/97
(3) vests on 4/24/98
(4) vests on 4/24/99
(5) vests on 4/24/2000
(6) vests on 3/14/97
(7) vests on 3/14/98
(8) vests on 3/14/99
(9) vests on 3/14/2000
(10) vests on 1/29/97
(11) vests on 1/29/98
(12) vests on 1/29/99
(13) vests on 1/29/2000
12<PAGE>
Incentive Stock Option Plan
On December 16, 1995, the Shareholders approved the Company's 1995
Incentive Stock Option Plan (the Plan). The purpose of the Plan is to advance
the business and development of the Company and its shareholders by affording
to the key employees of the Company the opportunity to acquire a propriety
interest in the Company by the grant of Options to acquire shares of the
Company's common stock. The Options granted are "Incentive Stock Options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, for certain key employees. The Plan is administered by an
Administrative Committee whom shall serve a one year term. Until February 17,
1996, the Administrative Committee was composed of James Ricketts, Kevin Jones
and Peter Van Oosterhout, who were the Board's Employment Compensation
Committee. The Plan was approved by the Board of Directors on September 28,
1995, subject to Shareholder approval, and shall terminate on September 28,
2005. Subject to anti-dilution provisions, the Plan may issue Options to
acquire up to 1,000,000 shares to Key Employees. The maximum number of shares
subject to Options granted to any one Key Employee shall not exceed 100,000
shares. The exercise price for Options shall be set by the Administrative
Committee but shall not be for less than the fair market value of the shares on
the date the Option is granted. The period in which Options can be exercised
shall be set by the Administrative Committee not to exceed five years from the
date of Grant. The Plan may be terminated, modified or amended by the Board of
Directors upon the recommendation of the Administrative Committee. The
issuance of options pursuant to this Plan is not expected to be a taxable event
for recipient until such time that the recipient elects to exercise the option
whereupon the recipient is expected to recognize income to the extent the
market price of the shares exceeds the exercise price of the option on the date
of exercise. All Key Employees of the Company and its subsidiaries are
eligible to participate in the Incentive Stock Options. A Key Employee is
defined in the Plan as a Company employee who in the judgement of the
Administrative Committee has the ability to positively affect the profitability
and economic well-being of the Company. Part time employees, independent
contractors, consultants and advisors performing bona fide services to the
Company shall be considered employees for purposes of participation in the
Plan.
Employment Agreements and Executive Compensation
Mr. Meyer, President and Chief Executive Officer, serves without an
employment contract. Mr. Douglas, the Company's Executive Vice President and
Chief Operating Officer, has an employment agreement with the Company whereby
he receives $8,000 per month in regular compensation and a $400 per month car
allowance under the terms of an agreement effective until April 24, 1998. Mr.
Haggar, the Company's Chief Financial Officer, receives $8,000 per month in
compensation under the terms of an employment agreement valid through April 24,
1998.
13<PAGE>
Terrence D. Montford also has an employment agreement with the Company's
subsidiary, Fry Guy Inc., as its Executive Vice President. Under the terms of
this agreement, Mr. Montford receives $8,000 per month in regular compensation,
the use of a Company automobile, and options to purchase 60,000 shares of the
Company stock at $2.00 per share. As part of his compensation, Mr. Montford
also receives a sum equal to 2 percent of the net income before taxes earned by
Fry Guy Inc., during any fiscal year for the term of the agreement. Mr.
Montford's employment agreement with the Company expires on January 24, 1999.
Compensation of Directors
Directors are entitled to receive reimbursement for all out-of-pocket
expenses incurred for attendance at Board of Directors meetings. In addition,
all Directors not otherwise employed or compensated by the Company are entitled
to receive $500 in cash, in common stock at the market price per share, or in
health insurance benefits. Pursuant to these director fees, Mr. Bradley
Gordon, a former director, was issued 858 shares of common stock, and Mr.
Steven Davis, a former director, was issued 746 shares of common stock. In
addition, from August 1995 through December 1995, Dr. James Ricketts received a
fee of $3,000 per month for being Chairman of the Board. On October 12, 1995,
Mr. Meyer was awarded options to acquire 100,000 shares of stock; and on
September 27, 1995, Mr. Larry Nelson, a former director, was awarded options to
acquire 25,000 shares of stock, both pursuant to the Company's Directors and
Officers Stock Option Plan at an exercise price of $0.10 per share. Messrs.
Meyer and Nelson in their capacities as Key Employees were also granted options
to acquire an additional 50,000 shares each under the Company's Incentive Stock
Option Plan. On September 10, 1996, Dennis Schlegel, the Chairman of the Board
and Harold Carpenter, a Director were each awarded, under the Company's
Director and Officer Stock Option Plan, five-year, non-transferable options to
acquire 100,000 shares of stock at an exercise price of $0.90 per share. The
stock issuable upon exercise shall be "Restricted Securities" as defined by
Rule 144.
Other Arrangements
There are no other arrangements pursuant to which the Company's Directors
receive compensation from the Company for services as Directors.
Termination of Employment and Change of Control Arrangement
There is no compensatory plan or arrangement with respect to any individual
named above which results or will result from the resignation, retirement or
any other termination of employment with the Company, or from a change in the
control of the Company.
Transactions with Management
The Company has not entered into any transactions with entities in which
certain of the Company's officers or directors had a direct or indirect
interest.
14<PAGE>
PROPOSAL NO. 3: - CONFIRMATION OF SINGER, LEWAK, GREENBAUM & GOLDSTEIN LLP,
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, AS AUDITORS OF
THE COMPANY'S FINANCIAL STATEMENTS
The Board of Directors recommends that the shareholders of
the Company vote for the confirmation of Singer, Lewak, Greenbaum & Goldstein
LLP, Certified Public Accountants, as independent auditors to examine the
financial statements of the Company for the fiscal year ending June 30, 1997.
This firm served as independent auditor of the Company for the fiscal year
ended June 30, 1996. A representative of Singer, Lewak, Greenbaum & Goldstein,
will be at the annual meeting, will have an opportunity to make a statement if
the representative so desires and will be available to respond to appropriate
questions during the meeting. A favorable vote of a majority of those shares
voting, in person or by proxy, is required for confirmation of the selection of
the independent auditors.
On April 16, 1996, Billie J. Allred, the Company's Certifying Accountant
for the past two fiscal years, declined to stand for re-election as auditor.
Singer, Lewak, Greenbaum & Goldstein LLP, Certified Public Accountants, were
engaged to serve as the Company's new auditors. The selection of Singer, Lewak,
Greenbaum & Goldstein LLP, was approved by the Audit Committee of the Company's
Board of Directors.
Mr. Allred's report on the financial statements for the fiscal years ended
June 30, 1995 and 1994 contained a qualification based upon the Company's
ability to continue as a going concern. Except for this qualification, Mr.
Allred's reports have not contained an adverse opinion or a disclaimer of
opinion, or was qualified or modified as to uncertainty, audit scope, or
accounting principles. Nor has there been any disagreement with Mr. Allred on
any matter of principles or practices, financial statement disclosure or
auditing scope or procedure.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Any proposal by a shareholder to be presented at the Company's 1998 Annual
Meeting, including nominations for election as directors must be received at
the offices of the Company, 15900 North 78th Street, Scottsdale, Arizona
85260, no later than July 31, 1997.
CYNTHIA L. CASTELLANO
SECRETARY
Scottsdale, Arizona
December 12, 1996
15<PAGE>
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
ALANCO ENVIRONMENTAL RESOURCES CORPORATION
The undersigned appoints Norman E. Meyer, (and Dean A. Douglas, if Mr. Meyer is
unable to serve), as the undersigned's lawful attorney and proxy, with full
power of substitution and appointment, to act for and vote all of the
undersigned's shares of the Common Stock and/or Class A Preferred Stock of
Alanco Environmental Resources Corporation, an Arizona corporation, at the
Annual Meeting of Shareholders to be held at the Holiday Inn, 7353 East Indian
School Road, Scottsdale, Arizona, at 10:00 a.m. Mountain Standard Time, on
January 13, 1997, and any and all adjournments thereof, for the following
purposes:
A SHAREHOLDER MAY USE CUMULATIVE VOTING FOR THE NOMINEES OF THAT PROPOSAL BY
VOTING THE NUMBER OF THE SHARES HELD TIMES THE NUMBER OF DIRECTORS BEING
ELECTED ON A SINGLE OR GROUP OF CANDIDATES. SHAREHOLDERS MAY ALSO WITHHOLD
AUTHORITY TO VOTE FOR A NOMINEE(S) BY DRAWING A LINE THROUGH THE NOMINEE'S
NAME(S). FOR EXAMPLE, A SHAREHOLDER WITH 1,000 SHARES MAY CAST A TOTAL OF
5,000 VOTES (# OF SHARES X 5 DIRECTORS) FOR ALL, ONE OR A SELECT NUMBER OF
CANDIDATES.
PROPOSAL NO. 1 ADOPTION OF RESTATED AND AMENDED ARTICLES OF INCORPORATION
____ FOR adoption of the Restated and Amended Articles of Incorporation
____ AGAINST adoption of the Restated and Amended Articles of
Incorporation
PROPOSAL NO. 2. MANAGEMENT'S NOMINEES FOR THE BOARD OF DIRECTORS
___ FOR Management nominees listed below equally among all the nominees
OR VOTED AS FOLLOWS:
Harold S. Carpenter: ____ Shares John L. Gilchrist: ____ Shares
Norman E. Meyer: ____ Shares Charles C. Miller: ____ Shares
Dennis Schlegel: ____ Shares
___ FOR Other nominees listed below
___________________: ____ Shares _________________: ____ Shares
___________________: ____ Shares _________________: ____ Shares
PROPOSAL NO. 3. CONFIRMATION OF SINGER, LEWAK, GREENBAUM & GOLDSTEIN LLP,
AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
____ FOR confirmation of Singer, Lewak, Greenbaum & Goldstein LLP, as the
Company's Independent Certified Public Accountants.
____ AGAINST confirmation of Singer, Lewak, Greenbaum & Goldstein LLP as the
Company's Independent Certified Public Accountants.
IF THE SHAREHOLDER DOES NOT INDICATE A PREFERENCE ON A PROPOSAL, MANAGEMENT
INTENDS TO VOTE IN FAVOR OF ALL OF THE ABOVE THREE PROPOSALS. <PAGE>
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE SHAREHOLDER'S SPECIFICATION ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS FOR WHICH THE SHAREHOLDER HAS NOT INDICATED A
PREFERENCE OR IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED
AS WELL AS DISCRETIONARY AUTHORITY IN RESPECT TO ALL MATTERS ARISING AT THE
ANNUAL MEETING OF SHAREHOLDERS.
The undersigned revokes any proxies heretofore given by the undersigned and
acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy
Statement furnished herewith and the Annual Report to Shareholders previously
provided.
Dated:________________, 199__ ___________________________
___________________________
Signature(s) should agree with the name(s) hereon. Executors, administrators,
trustees, guardians and attorneys should indicate when signing. Attorneys
should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ALANCO
ENVIRONMENTAL RESOURCES CORPORATION. PLEASE SIGN AND RETURN THIS PROXY TO
ALANCO ENVIRONMENTAL RESOURCES CORPORATION , IN CARE OF AMERICAN SECURITIES
TRANSFER AND TRUST, INC., 938 QUAIL STREET, LAKEWOOD, COLORADO 80215 OR TO THE
COMPANY AT 15900 N. 78TH STREET, SCOTTSDALE, AZ 85260. THE GIVING OF A PROXY
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
17<PAGE>
Exhibit A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ALANCO ENVIRONMENTAL RESOURCES CORPORATION
ARTICLE I
The name of the Corporation shall be ALANCO ENVIRONMENTAL RESOURCES
CORPORATION.
ARTICLE II
The known place of business of the Corporation shall be 15900 North 78th
Street, Scottsdale, Arizona 85260.
ARTICLE III
The Corporation initially intends to engage in the business of
researching, designing, manufacturing and selling environmental technology and
related equipment, to engage in the business of mining, and to perform any and
all things related to said business.
ARTICLE IV
The capital stock of the Corporation shall consist of the following:
1) One Hundred Million (100,000,000) shares of no par value Common
Stock;
2) Five Million (5,000,000) shares of Class A Cumulative Convertible
Preferred Shares;
3) Twenty Million (20,000,000) shares of Class B Cumulative Preferred
Shares.
All such stock shall be paid in from time to time upon such conditions as
may be determined by the Board of Directors. The stock may be issued in
payment for real or personal property, services, or any other right or things
of value for the use and purpose of the Corporation, and all such stock, when
so issued, shall become and be fully paid as though paid for in cash, the Board
of Directors to be the sole judges, in the absence of fraud, of the value of
any property or rights acquired in exchange for capital stock, and all such
stock when issued shall be deemed fully paid and non-assessable.
18<PAGE>
All of the above stock shall be entitled to one vote per share, provided,
however, that in the case of the election of directors of the Corporation,
every shareholder shall be entitled to cumulate their votes and give one (1)
candidate for election as a director a number of votes equal to the number of
directors to be elected, multiplied by the number of votes to which their
shares are entitled, or distribute their votes on the same principle among as
many candidates as said shareholder deems fit.
Subject to the terms and provisions of this Article, the Board of
Directors is authorized to provide from time to time for the issuance of shares
of any class of Preferred Stock in series and to fix from time to time before
issuance or if after issuance upon the mutual written consent of all the
designated series shareholders of the series for which said amended
designation, preferences and/or privileges is sought, the designation,
preferences and privileges of the shares of each series of Preferred Stock and
the restrictions or qualifications thereof, including, without limiting the
generality of the foregoing, the following:
(a) The series designation and authorized number of shares;
(b) The dividend rate, the date or dates on which such dividends will be
payable, and the extent to which such dividends may be cumulative;
(c) The amount or amounts to be received by the holders in the event of
voluntary or involuntary dissolution or liquidation of the Corporation;
(d) The price or prices at which shares may be redeemed and any terms,
conditions and limitations upon such redemption;
(e) Any sinking fund provisions for redemption or purchase of shares of
each series; and
(f) The terms and conditions, if any, on which shares may be converted at
the election of the holders thereof into shares of other capital stock, or of
other series of Preferred Stock, or other debt securities of the Corporation.
Each series of Preferred Stock, in preference to the Common Stock, will be
entitled to dividends, from funds or other assets legally available therefor,
at such rates, payable at such time and cumulative to such extent as may be
fixed by the Board of Directors pursuant to the authority herein conferred
upon it. In the event of dissolution or liquidation of the Corporation,
voluntary or involuntary, the holders of the Preferred Stock, in preference to
the Common Stock, will be entitled to receive such amount or amounts as may be
fixed by the Board of Directors pursuant to the authority, herein conferred
upon it.
Each series of Preferred Stock may be subject to redemption in whole or in
part at such price or prices and on such terms, conditions and limitations, as
may be fixed by the Board of Directors pursuant to the authority herein
conferred upon it, of such series. If less than all of the shares of any
series of the Preferred Stock are to be redeemed, they will be selected in such
manner as the Board of Directors shall then determine. Nothing herein
19<PAGE>
contained is to limit any right of the Corporation to purchase or otherwise
acquire any shares of any series of the Preferred Stock. Any shares of the
Preferred Stock redeemed or otherwise acquired by the Corporation and which
revert to the status of authorized and unissued shares shall be undesignated as
to series, and may thereafter, in the discretion of the Board of Directors and
to the extent permitted by law, be sold or reissued from time to time as part
of another series or (unless prohibited by the terms of such series as fixed by
the Board of Directors) of the same series, subject to the terms and conditions
therein set forth.
Notice of the intention of the Corporation to redeem shares of any series
of the Preferred Stock shall be mailed at least thirty (30) days before the
date of redemption to each holder of record of shares to be redeemed at his or
her last known post office address as shown by the records of the Corporation.
At any time after such notice has been mailed as aforesaid, the Corporation may
deposit (separately as to the series) the aggregate redemption price payable
with respect to the shares to be redeemed (or the portion thereof not already
paid in the redemption of such shares) with any bank or trust company in the
United States named in the notice of redemption. Such deposits are to be
payable in amounts as aforesaid to the respective orders of the holders of
record of the shares to be redeemed on endorsement (if required) and surrender
of their certificates, thereupon such holders will cease to be shareholders
with respect to said shares and, from and after the making of such deposit,
such holders will have no interest or claim against the Corporation with
respect to said shares, but will be entitled only to receive from such bank or
trust company, without interest, the moneys so deposited with it.
Dividends may be paid upon the Common Stock only when dividends have been
paid, or funds have been set apart for the payment of dividends, on the
Preferred Stock from the date after which dividends on the Preferred Stock
became cumulative to the beginning of the then current dividend period, but
whenever there shall have been paid, or funds shall have been set apart for the
payment of, all such dividends upon the Preferred Stock, then dividends upon
the Common Stock may be declared for payment then or thereafter out of
remaining funds or other assets legally available for such payments. After the
payment of the designated dividends, and amounts payable upon dissolution or
liquidation, if any, to which the shares of the Preferred Stock are expressly
entitled in preference to the Common Stock in accordance with the provisions
herein set forth, the Common Stock is to receive all further such dividends and
amounts.
Neither a consolidation, merger or amalgamation of this Corporation with
or into any other corporation or corporations, nor the sale, lease or
conveyance of all or part of its assets shall be deemed a liquidation,
dissolution or winding up of the affairs of the Corporation within the meaning
of any provision herein.
ARTICLE V
The business and affairs of this Corporation shall be conducted by a Board
of Directors of not less than three (3) and no more than nine (9) members. The
directors need not be shareholders. The Board of Directors shall have the
20<PAGE>
power to increase or decrease the Board within the limits above provided. The
Board of Directors may also fill any vacancies which may occur in the Board of
Directors resulting from an increase in the Board of Directors or otherwise,
pending the next annual meeting of the stockholders.
The Board of Directors shall be elected at the regular annual meetings of
the stockholders.
The Directors shall each year upon their election organize into a Board of
Directors and elect a President and/or Chief Executive Officer, one or more
Vice Presidents, a Secretary and a Treasurer, any two (2) of which offices,
except the offices of the President and/or Chief Executive Officer and Vice
President, or President and/or Chief Executive Officer and Secretary, may be
held by the same persons. All officers shall serve for one (1) year or until
their successors are elected and qualified.
The Board of Directors of this Corporation shall have power without any
action on the part of the stockholders to make, alter, amend or repeal By-Laws
of the Corporation.
ARTICLE VI
Pursuant to the vote of the holders of a majority in interest of the
capital stock issued and outstanding, the Board of Directors shall have the
power and authority to lease, sell, assign, transfer, convey or otherwise
dispose of the entire property of the Corporation, irrespective of the effect
thereof upon the continuance of the business of the Corporation and the
exercise of its franchise; but the Corporation shall not be dissolved, except
as provided by the laws of the State of Arizona.
ARTICLE VII
No director of the Corporation shall be liable to the Corporation or its
shareholders for money damages for the breach of fiduciary duty as a director,
except for liability for any of the following: (i) the amount of a financial
benefit received by a director to which such director is not entitled; (ii) an
intentional infliction of harm on the Corporation or its shareholders; (iii) a
violation of A.R.S. 10-833; or (iv) an intentional violation of criminal law.
The directors of the Corporation shall be indemnified for liability, as defined
in A.R.S. 10-850, to any person for any action taken, or any failure to take
any action as a director, except liability for any of the exceptions described
in the prior sentence and except in connection with any matter for which
indemnification is prohibited under A.R.S. 10-851(D), to the fullest extent
permitted by the Arizona Business Corporation Act, A.R.S. 10-101 et seq. The
officers of the Corporation shall be indemnified to the same extent as
directors of the Corporation; and any officer who is not also a director or who
is a party to a proceeding on the basis of an act or omission solely as an
officer shall further be indemnified against liability for any of the
exceptions described in the first sentence of this Article VII, except that an
officer who is not also a director shall not be indemnified for (a) liability
in connection with a proceeding by or in the right of the Corporation other
than for reasonable expenses incurred in connection with the proceeding; or (b)
21<PAGE>
liability arising out of conduct that constitutes: (i) receipt by the officer
of a financial benefit to which the officer is not entitled; (ii) an
intentional infliction of harm on the Corporation or the shareholders; or (iii)
an intentional violation of criminal law. If the Arizona Business Corporation
Act is amended to authorize corporate actions further eliminating or limiting
the personal liability of officers or directors, or to expand the matters for
which indemnification is permissible, then the liability of an officer or
director of the Corporation shall be automatically eliminated or limited and
the indemnification of the officers and directors shall be automatically
expanded, to the fullest extent permitted by the Arizona Business Corporation
Act, as so amended, without any further corporate or shareholder action being
required. Any repeal or modification of this Article VII by the shareholders
of the Corporation shall not adversely affect any right or protection of an
officer or director of the Corporation existing at the time of such repeal or
modification.
ARTICLE VIII
The private property of the officers, directors and stockholders of the
Corporation shall be exempt from all corporate debts of any kind whatsoever.
ARTICLE IX
The name and address of the statutory agent of the Corporation are: Dean
A. Douglas, 15900 North 78th Street, Scottsdale, Arizona 85260. The statutory
agent may be changed by the Corporation at any time by the filing of an
appointment of a successor statutory agent.
22<PAGE>
