SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(Amendment No. ______)
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
American Financial Holding, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction
applies:
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 by written 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:
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
AMERICAN FINANCIAL HOLDING, INC.
940 Rio Virgin Drive
St. George, Utah 84790
Telephone: (435) 674-1181
Telecopy: (435) 674-1183
To the Stockholders of American Financial Holding, Inc.:
On [consent date], 2001, the holders of a majority of our outstanding
common stock approved the following actions:
(1) effect a 21.4-to-1 reverse split of the issued and
outstanding common stock, without any change to the 50,000,000 shares
of common stock, par value $0.001, authorized;
(2) authorize a new class of preferred stock consisting of
5,000,000 shares, par value $0.001 per share, with such designations,
rights, privileges and preferences as the board of directors may from
time to time deem appropriate in accordance with the Delaware General
Corporation Law; and
(3) elect Michael Avignon, Michael Macaluso and Frank M.
DeLape as directors, each to serve until the next annual meeting of
directors and until each's successor is elected and qualified.
Our board of directors had previously unanimously approved the above
actions and fixed the close of business on [record date], 2001 (the "Record
Date"), for the determination of stockholders entitled to vote respecting the
above action. The consenting stockholders, whose 15,000,000 shares represented
approximately 77.8% of our outstanding voting common stock on [consent date],
2001, have consented to the above actions. Therefore, no special meeting or 2001
annual meeting of stockholders will be held.
We Are Not Asking for a Proxy and You Are Requested Not to Send Us a
Proxy.
This information statement is being mailed on or about [mailing date],
2001, to all stockholders of record as of the Record Date, and is accompanied by
a copy of our annual report on Form 10-KSB for the year ended December 31, 2000,
which includes our audited financial statements. Your attention is directed to
the enclosed information statement.
By order of the board of directors:
Kenton L. Stanger, President
St. George, Utah
[mailing date], 2001
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
AMERICAN FINANCIAL HOLDING, INC.
940 Rio Virgin Drive
St. George, Utah 84790
Telephone: (435) 674-1181
Telecopy: (435) 674-1183
INFORMATION STATEMENT
We Are Not Asking for a Proxy and You Are Requested Not to Send Us a
Proxy.
Introduction
This information statement is furnished by our board of directors in
connection with actions outlined above that our board of directors and
stockholders have approved in accordance with the terms of our agreement to sell
$300,000 in securities.
Pursuant to our January 22, 2001 agreement, we agreed to sell to three
previously unrelated purchasers an aggregate of $300,000 in securities,
consisting of (a) 15,000,000 shares of common stock at a price of $0.01 per
share, or an aggregate of $150,000; and (b) an aggregate of $150,000 in
principal amount of promissory notes convertible into an aggregate of 49,200,000
shares of common stock, subject to recapitalization of the company by effecting
a 21.4-to-1 reverse stock split of the issued and outstanding shares, without
any reduction to the 50,000,000 shares of common stock authorized. On the
effectiveness of the reverse stock split, the $150,000 in promissory notes will
automatically be converted into common stock. As a result of the foregoing, a
total of 64,200,000 shares of common stock issuable under the purchase agreement
will be consolidated into 3,000,000 shares of common stock after giving effect
to the required 21.4-to-1 reverse stock split. As a result of the reverse stock
split, the 4,279,449 shares of common stock issued and outstanding immediately
prior to the sale of $300,000 in securities, will be reverse split into
approximately 199,974 post-split shares of common stock. In addition, we have
agreed to issue to a third party an aggregate of 400,000 post-split shares for
services. Accordingly, after giving effect to the foregoing, we will have
approximately 3,600,000 shares issued and outstanding.
In connection with the foregoing transaction, we also agreed to
authorize a class of preferred stock and to elect designees of the new investors
as directors. Accordingly, the board of directors and stockholders have approved
an amendment to the certificate of incorporation to authorize a class of
5,000,000 shares of preferred stock, par value $0.005, having such rights,
designations and preferences as the board of directors may designate in
accordance with Delaware law, and have elected an entirely new board of
directors consisting of Michael Avignon, Michael Macaluso, and Frank M. DeLape
as directors, each to serve until his successor is elected and qualified.
The foregoing actions will become effective on [effective date], 2001,
which is at least 20 days after the enclosed statement is first sent to the
stockholders on [mailing date], 2001.
1
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
Background and History
Until late 1997, our operations consisted primarily of marketing
annuity and life insurance products through our wholly-owned subsidiary, Income
Builders, Inc., while we continued to seek funding for acquiring and operating
an insurance company to reinsure and coinsure a portion of the products marketed
by Income Builders. In late 1997, we agreed to transfer all of the stock of
Income Builders, which markets life insurance and annuity products underwritten
by other insurance providers, to Tambora Financial Corporation in exchange for
$500,000 in cash and approximately 4.9 million shares of Tambora common stock.
The exchange was completed on October 24, 2000. Since its inception in September
1997, Tambora has been funded through the sale of common stock, including shares
sold to our officers and directors. As of December 31, 2000, we owned
approximately 32.5% of the issued and outstanding Tambora stock.
Because of our common controlling officers, directors and stockholders,
the transactions between Tambora and us have not been and are not the result of
arm's-length negotiations and are subject to substantial conflicts of interest.
Upon entering into the 1997 agreement to transfer Income Builders to
Tambora, the operations of Income Builders were considered discontinued as to
us. We now plan to distribute the approximately 4.9 million shares of Tambora
stock we own to our stockholders and others, subject to satisfying applicable
regulatory requirements. Therefore, since October 24, 2000, our investment in
Tambora is considered temporary, and we have not recognized any of our portion
of the losses from Tambora, have carried the investment in Tambora at a cost of
zero, and have not recognized any participation in Income Builders' business.
Tambora, through Income Builders, acts as an independent field
marketing organization for LifeUSA Holding, Inc. Income Builders has been a
leading national producer for LifeUSA for combined annuity and life premium
sales in recent years. Tambora seeks to become a financial services holding
company with broad-based marketing of life insurance and annuities, including
the products of other insurance companies, and ultimately its own products. The
implementation of this plan will require substantial amounts of additional
capital.
In connection with our acquisition of Income Builders as a wholly owned
subsidiary in 1989, we agreed to use our best efforts to seek additional equity
financing to fund the expansion of Income Builders. We now propose to implement
this goal through the plan outlined below in which Tambora will seek funding to
purchase an insurance company, and we will distribute our Tambora stock to our
stockholders and others.
In January 2001, we assigned an aggregate of $3,045,887, subject to
$168,000 in offsets, to Debt Reduction Trust. The amounts assigned included
receivables of principal and accrued interest of $1,586,777 from Kenton L.
Stanger and $1,354,227 from Raymond L. Punta, both executive officers and
directors, and $104,883 from others. In consideration of such assignment, Debt
Reduction Trust agreed to assume any and all liabilities for withholding taxes
or other payroll burdens due federal or state authorities relating to the
characterization of any of the amounts paid to the obligors as compensation and
such trust's agreement to indemnify us and hold us harmless from and against any
related loss. Debt Reduction Trust is an irrevocable trust created by Kenton L.
Stanger. The sole trustee of Debt Reduction Trust is currently Chelton Feeny, a
2
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
director, and the beneficiaries are Mr. Stanger's wife or estate. Other than the
obligations assigned to Debt Reduction Trust as noted above, the trust's only
assets are 25,000 shares of our common stock.
Subsequent to December 31, 2000, we sold for $300,000 a total of 15.0
million shares of common stock (700,935 shares on a pro forma basis giving
effect to the 21.4-to-1 reverse stock split) for an aggregate of $150,000, and
$150,000 in principal amount of promissory notes, automatically convertible into
an aggregate of 49.2 million shares of common stock (2,229,000 shares on a pro
forma basis giving effect to the 21.4-to-1 reverse split), as noted above. The
persons making the $300,000 investment have executed a majority written consent
approving the reverse stock split, the appointment of their designees to the
board of directors, and the authorization of a class of preferred stock as
discussed in this information statement. On the effectiveness of the reverse
stock split and related matters, we will issue 400,000 shares of
post-reverse-split common stock to a third party for services. The securities
sold by us and the consideration we received are being held pending our
distribution of this information statement to our stockholders. After giving
effect to the foregoing, we will have an aggregate of approximately 3.6 million
shares of post-split common stock issued and outstanding. The persons making the
recent $300,000 investment will not participate in the distribution of
approximately 4.9 million shares of Tambora stock to our stockholders and
others.
Under the agreement with the investors, proceeds from the sale of the
$300,000 in securities will be applied toward certain accrued obligations. As of
December 31, 2000, these past due accrued obligations included approximately
$253,000 due third parties for professional fees, $19,000 due Kenton L. Stanger
for cash advances, and approximately $210,000 due Tambora for cash advances. In
addition, we are a defendant with Kenton L. Stanger and Raymond L. Punta in a
lawsuit initiated by a third party. We also have recorded a liability of
$364,000 to investors in our former subsidiary, Triad Financial Systems, Inc.,
that we intend to satisfy by distributing to such investors a portion of the
approximately 4.9 million shares of Tambora stock that we own. Following the
distribution of this information statement and as a further condition to
releasing the $300,000 in proceeds from our sale of securities, we are required
to obtain releases from liabilities from the foregoing creditors with liquidated
amounts and to make arrangements satisfactory to the investors respecting the
defense of the pending lawsuit. We have reached agreements acceptable to us with
all third parties providing professional services under which we will settle the
amounts for a partial cash payment. We have reached similar arrangements with
Mr. Stanger and Tambora, to the extent that funds may be available. Thus, after
these agreed disbursals, we will have no assets and no liabilities.
Our board of directors believes the transaction for the sale of
$300,000 in securities is fair to the stockholders from a financial point of
view. This transaction was the result of arm's length negotiations in which each
party was represented by independent legal counsel. After giving effect to the
transactions described above, we had no assets except for the approximately 4.9
million shares of Tambora stock we intend to distribute to our stockholders in
order to provide them with a long-term opportunity to participate in Tambora's
business. But we also had liabilities totaling approximately $846,000 at
December 31, 2000, with no financial resources. Therefore, the creditors were in
a position to assert claims against the approximately 4.9 million Tambora shares
that we own, taking an important asset we intend to distribute to our
stockholders. By agreeing to sell the $300,000 in securities, we are generating
the cash required to reach agreements with our principal creditors, which in
turn, enables us to proceed with our planned distribution of the approximately
4.9 million shares of Tambora stock to our stockholders and others.
3
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
Current Status
As a result of the transaction described above, we currently have no
active operations or majority-owned subsidiaries. Our assets consist of
approximately 4.9 million shares of common stock of Tambora that we intend to
distribute to our stockholders and others, subject to satisfying applicable
regulatory requirements, as discussed above, and we will have no liabilities.
The approximately 4.9 million shares of Tambora common stock to be distributed
to our stockholders and others will be voted by the board of directors of
Tambora until the distribution is completed.
Outstanding Securities and Voting Rights
As of the Record Date, we had issued and outstanding a total of
19,279,449 shares of common stock. The stockholders who have executed a majority
written consent to approve the action described above own an aggregate of
15,000,000 shares of our common stock, or approximately 77.8% of our issued and
outstanding common stock.
Each holder of common stock is entitled to one vote in person or by
proxy for each share of common stock in his or her name on our stock transfer
books as of the Record Date on any matter submitted to a vote of the
stockholders; however, under Section 228 of the Delaware General Corporation
Law, any action that may be taken at any stockholders' meeting may be taken by
written consent by the requisite number of stockholders required to take such
action. The election of directors and the approval of the amendments to our
certificate of incorporation to reverse split the issued and outstanding stock
and authorize a class of preferred stock requires the affirmative vote or
written consent of the holders of a majority of our issued and outstanding
stock. On [consent date], 2001, the consenting stockholders owning approximately
77.8% of our outstanding voting common stock consented to the foregoing matters.
Therefore, we are not submitting such matters to a vote of the stockholders, we
are not soliciting proxies, and we will not hold a meeting on these matters.
Information Concerning Nominees
Our bylaws currently fix the number of directors at five. The board of
directors has adopted a resolution to reduce the size of the board to three
persons, effective on the effective time of the stockholders' consent. Each of
the three nominees to serve as directors was designated by the principal
stockholders. Each director will be elected to hold office until the next annual
meeting of stockholders and until his successor has been elected and qualified.
Business Experience During Past
Name Age Five Years and Other Information
------------------------- ------ ----------------------------------------------
Michael Macaluso....... 49 Various senior executive positions with Page
International, a Houston, Texas, high-end
printing company.
Frank M. DeLape........ 47 Since 1994, the Chief Executive Officer of
Benchmark Equity Group, Inc., a Houston,
Texas, venture capital firm.
Michael Avignon........ 47 Chief Executive Officer of Axces, a Houston,
Texas telecommunications firm, and an officer
and director of MTM Holdings, Inc. of Houston,
Texas, which is an investing and consulting
firm, and a manager of Capali, LLC, also of
Houston, Texas, which is an investing and
consultant firm.
4
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
Each of the nominees has consented to be named in this information
statement and has consented to serve as a director. However, should any nominee
become unable or unwilling to accept election, the remaining directors may
nominate a replacement. We do not believe that any substantive nominee will be
required.
Current Directors and Executive Officers
Our current directors and executive officers are as follows:
Name Age Office
----------------------- ------- --------------------------------------------
Kenton L. Stanger...... 67 Chief Executive Officer, President, Director
Raymond L. Punta....... 51 Executive Vice President, Director
Chelton S. Feeny....... 77 Director
Ray P. Brown........... 56 Executive Vice President-Marketing, Director
Tim L. Hansen.......... 51 Executive Vice President-Marketing, Director
Directors are elected at our annual stockholders' meeting to serve for
a period of one year and until their successors are elected and qualified.
Officers serve at the pleasure of the board of directors.
Kenton L. Stanger has served as our Chairman of the Board, President
and Chief Executive Officer since 1988 and Chairman of the Board and Chief
Executive Officer of Tambora since 1997. From 1986 to 1988, he was President of
American Financial Marketing, Inc., which was acquired by us in 1988. From 1969
to 1986, Mr. Stanger was Chairman, President and Chief Executive Officer of
Balanced Security Corporation, a financial services holding company that owned
its own life insurance and annuity marketing company, and an insurance-related
audio/visual production company. During 1985, he also served as a director for
Service Life Insurance Company. From 1965 to 1969, he was President and Chief
Executive Officer of Sentinel's Southern Agency Corporation. Mr. Stanger was the
District Sales Manager for Country Mutual Life and Farm Bureau Insurance
Companies from 1958 to 1965. Mr. Stanger is the father-in-law of Raymond L.
Punta.
Raymond L. Punta has served as our Executive Vice President and a
director from 1989 through the present and President and a director of Tambora
since 1997. From 1988 through 1989, Mr. Punta was a co-owner of American Safety
Products, an entity that marketed Halon fire extinguishers, door entry systems
5
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
and other commercial and residential safety products. Mr. Punta was a national
sales trainer for Novar Corporation, Barberton, Ohio, from 1984 to 1988. From
1973 to 1984, Mr. Punta served as a law enforcement officer with the San Joaquin
County Sheriff's Department and the Lodi Police Department, both in California.
Mr. Punta is the son-in-law of Mr. Stanger.
Chelton S. Feeny has served as a director from 1988 through the present
and a director of Tambora since 1997. Dr. Feeny was engaged in the practice of
medicine between 1959 and 1988 in Ogden, Utah. From 1989 until 1995, he was
employed by the Veterans Administration Regional Office in Anchorage, Alaska. He
retired in 1995 and currently serves as a member of the Finance Committee of the
Ogden Surgical Society.
Ray P. Brown has served as our Executive Vice President-Marketing and a
director since 1989 and a director and Executive Vice President of Tambora since
1997. In 1987, Mr. Brown, in conjunction with Mr. Hansen, formed Income
Builders, Inc., a field marketing organization to sell life insurance and
annuity products offered by LifeUSA. In 1989, Messrs. Brown and Hansen exchanged
their shares of Income Builders for our shares, and Income Builders became our
wholly-owned subsidiary. Mr. Brown has been active in the insurance industry
since 1972.
Tim L. Hansen has served as our Executive Vice President-Marketing and
a director since 1989 and a director and Executive Vice President of Tambora
since 1997. In 1987, Mr. Hansen, in conjunction with Mr. Brown, formed Income
Builders, Inc., a field marketing organization to sell life insurance and
annuity products offered by LifeUSA. In 1989, Messrs. Hansen and Brown exchanged
their shares of Income Builders for our shares, and Income Builders became our
wholly-owned subsidiary. Mr. Hansen has been active in the insurance industry
since 1973.
Board Meetings and Committees
Members of the board of directors discussed various business matters
informally on numerous occasions throughout the year. No formal actions were
taken by vote in board meetings that occurred throughout the year or by
unanimous consent during 2000. Directors who are our employees did not receive
compensation for services as directors.
The board of directors has no standing audit or compensation
committees.
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to us during or respecting our last fiscal year ended December 31,
2000, and any written representation referred to in paragraph (b)(2)(i) of Item
405 of Regulation S-B, no person who, at any time during the most recent fiscal
year, was a director, officer, beneficial owner of more than 10% of any class of
our equity securities or any other person known to be subject to Section 16 of
the Exchange Act failed to file, on a timely basis, reports required by Section
16(a) of the Exchange Act during the most recently-completed, full fiscal year
or prior fiscal year, except as noted in previous reports on Form 10-KSB.
6
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
EXECUTIVE COMPENSATION
The following table sets forth, for each of the last three fiscal years
in the period ending December 31, 2000, cash compensation received from us by
any person serving as our chief executive officer during the last preceding
fiscal year and any of the three remaining most highly-compensated, other
executive officers whose salary and bonus for all services in all capacities
exceeded $100,000 for the most recent fiscal year:
Summary Compensation Table
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------------------ ------------------------ -----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Annual Restricted Underlying Other
Compen- Stock Options/ LTIP Compen-
Name and sation Award(s) SARs Payouts sation
Principal Position Year Salary ($) Bonus ($) ($)(1) ($) (#)(2) ($) ($)(2)
------------------------------ ------------ ----------- ----------- ------------ ----------- ----------- ------------
Kenton L. Stanger 2000 -- -- $ 89,684 -- -- -- --
CEO, President, 1999 -- -- 82,675 -- -- -- $ 4,613
Director 1998 -- -- 67,398 -- -- -- 6,934
--------------------------
(1) Consists of interest accrued during the year on the unpaid balance of
amounts previously outstanding on personal loans to such officer. Such
amount is treated as compensation for purposes of this table, but is
considered an obligation payable by such persons. Effective December 31,
2000, all amounts payable by such officer to us were assigned to East Bay
Trust. See "Certain Relationships and Related Transactions."
(2) Consists of personal use of automobile and related insurance and other
expense.
No options and SARs were granted or exercised during the last completed
fiscal year by any executive officer named in the Summary Compensation Table
above.
Employee Agreements and Benefits
During 2000, Kenton L. Stanger did not receive compensation from us,
but received compensation from Tambora that is not reflected in the above table.
We reimburse our directors for costs of attending meetings of the board
of directors but do not otherwise compensate our directors.
7
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information as to each person who owned of
record or was known by us to own beneficially more than 5% of the 19,279,449
shares (900,909 shares on a pro forma basis giving effect to a 21.4-to-1 reverse
stock split) of issued and outstanding common stock as of December 31, 2000, and
information as to the ownership of our common stock by each of its directors and
by its officers and directors as a group. Except as otherwise indicated, all
shares are owned directly, and the persons named in the table have sole voting
and investment power with respect to shares shown as beneficially owned by them:
Nature of Number of
Beneficial Owners Ownership Shares Owned Percent
----------------------------------------------- ---------------- ------------------- ------------
Principal Stockholders:
Alyda Macaluso.............................. Direct 5,000,000 25.9%
1221 Danberry Indirect(1) 16,400,000 21.3
Houston, TX 77055 ----------
21,400,000 27.8
Laura Avignon............................... Direct 5,000,000 25.9
2500 Wilcrest, Suite 540 Indirect(1) 16,400,000 21.3
Houston, TX 77042 ----------
21,400,000 27.8
Lighthouse Capital Insurance Co............. Direct 5,000,000 25.9
c/o MeesPierson (Cayman) Ltd. Indirect(1) 16,400,000 21.3
P.O. Box 2003 GT ----------
Grand Pavillon Comm. Centre 21,400,000 27.8
Bougainvillea Way
802 West Bay Road
Grand Cayman, BVI
Nominees:
Michael Avignon...................... See Laura Avignon above(2)
Michael Macaluso..................... See Alyda Macaluso above(3)
Frank M. DeLape...................... -- --
All Nominees, as a Group (3 Persons): Direct 10,000,000 51.8
Indirect(1) 32,800,000 42.6
----------
42,800,000 55.6
Directors:
Kenton L. Stanger Indirect(4) 242,118 1.3
Tim L. Hansen.......................... Direct 191,826 0.9
Indirect(5) 50,272 0.3
--------
Total 242,098 1.3
Ray P. Brown........................... Direct 174,824 0.9
Indirect(5) 67,002 0.3
--------
Total 241,826 1.3
Raymond L. Punta....................... Direct 125,000 0.6
Indirect(6) 59,994 0.3
--------
Total 184,994 1.0
Chelton S. Feeny....................... Direct 98,500 0.5
Indirect(7) 107,522 0.6
-------
Total 206,022 1.1
8
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
All Directors and Executive Officers, as a Direct 590,150 3.1
Group (5 Persons):....................... Indirect 526,908 2.7
------------
Total 16,117,058 5.8
--------------------
(1) Shares issuable on the automatic conversion of convertible debenture to
common stock on the effectiveness of the 21.4-to-1 reverse stock split.
(2) Michael and Laura Avignon are husband and wife so each may be deemed the
beneficial owner of shares owned by either..
(3) Michael and Alyda Macaluso are husband and wife so each may be deemed the
beneficial owner of shares owned by either.
(4) Mr. Stanger is deemed to share voting and dispositive power over 175,000
shares owned by San Joaquin Trust, 25,000 shares owned by Debt Reduction
Trust and 42,118 shares owned by his wife. The 25,000 shares held by Debt
Reduction Trust have been pledged to secure our loans made to certain
officers and directors. (See "Certain Relationships and Related
Transactions.")
(5) Represents shares held by self-directed retirement account.
(6) Consists of 59,994 shares owned by Mr. Punta's wife.
(7) Represents shares held by his trust.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Officer Loans
In January 2001, we assigned all of the amounts receivable with
aggregate principal and accrued interest of $1,586,777 from Kenton L. Stanger,
$1,354,227 from Raymond L. Punta, and $104,883 from others, for an aggregate of
$3,045,887, subject to $168,000 in offsets, to Debt Reduction Trust in
consideration of such trust's assumption of any and all liabilities for
withholding taxes or other payroll burdens due federal or state authorities
relating to the characterization of any of the amounts paid to the obligors as
compensation and such trust's agreement to indemnify us and hold us harmless
from and against any related loss. Debt Reduction Trust is an irrevocable trust
created by Kenton L. Stanger. The sole trustee of Debt Reduction Trust is
currently Chelton Feeny, a director, and the beneficiaries are Mr. Stanger's
wife or estate. Other than the obligations assigned to Debt Reduction Trust as
noted above, the trust's only assets are 25,000 shares of our common stock.
Tambora Financial Corporation
Payments of Stock Subscriptions
During 2000, our officers and directors paid an aggregate of $23,000 on
previous subscriptions for the purchase of Tambora common stock at an average
price of $0.05 per share. Shares were issued as the subscriptions were paid.
Sale of Income Builders to Tambora
Following the organization of Tambora in September 1997, we agreed to
sell Income Builders to Tambora in consideration of $500,000 in cash and the
issuance to us of an aggregate of 4,899,533 shares of Tambora common stock as
follows:
(a) 4,279,449 shares to be distributed to our stockholders at
the rate of one share of Tambora stock for each share of our stock
held;
(b) 320,000 shares to satisfy our antidilution obligation to
East Bay Trust in connection with funding provided by it prior to
December 31, 1997; and
9
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
(c) 300,084 shares in order for us to offer shares in Tambora
to certain unaffiliated persons who had invested $300,084 in preferred
stock of Triad Financial Systems, Inc., previously our subsidiary.
Triad Financial Systems, Inc. was unsuccessful in obtaining the capital
required to implement its business plan and has been dissolved. Such
300,084 shares will be distributed to such former investors in Triad
Financial Systems, Inc. in satisfaction of their right to convert Triad
Financial Systems, Inc. preferred stock into our common stock.
Subject to satisfying applicable regulatory requirements, we intend to
distribute all of the shares of Tambora stock to the above groups in the amounts
indicated. We propose to file a registration statement under the Securities Act
of 1933 covering the foregoing transactions.
Sale of Common Stock
During 2000, Tambora received subscriptions for 615,648 shares for an
aggregate of $638,722, for an average price of $1.04. Tambora also issued shares
for services between inception and December 31, 2000. Tambora is currently
seeking additional private equity through the sale of common stock. Tambora
stock was issued to subscribers as their subscriptions were paid.
The following table shows the stock ownership of our officers and
directors in us and Tambora as of December 31, 2000, and the anticipated
ownership of officers and directors in Tambora after giving effect to the
proposed distribution of Tambora stock to our stockholders. The table does not
include 15,000,000 common shares owned by Alyda Macaluso, Laura Avignon and
Lighthouse Capital Insurance Company, who, upon completion of the stock purchase
agreement, have the right to appoint themselves or their designees as our
officers and directors:
Tambora
American Financial Holding Tambora (after distribution)
---------------------------- -------------------------- ---------------------------
Name Number Percentage Number Percentage Number Percentage
---------------------------- -------------- ------------- ------------ ------------- ---------------------------
Kenton L. Stanger.......... 242,098 5.7% 1,100,000 7.3% 1,342,098 8.9%
Raymond L. Punta........... 184,994 4.3 619,833 4.1 804,827 5.3
Tim L. Hansen.............. 242,098 5.7 845,000 5.6 1,087,098 7.2
Ray P. Brown............... 241,826 5.7 845,000 5.6 1,086,826 7.2
Chelton S. Feeny........... 206,022 4.8 1,253,938 8.3 1,459,960 9.7
-------------- ------------ -------------
Officers and Directors,
as a Group............... 1,117,038 26.1% 4,663,771 30.9 5,780,809 38.3%
============== ============ =============
Total Outstanding...... 4,279,449 15,104,285 15,104,285
============== ============ =============
(1) Includes shares to be distributed, subject to satisfying certain regulatory
requirements.
(2) Does not reflect the extent to which the "other stockholders" may own stock
of both American Financial Holding and Tambora.
Director Loan
We owe Kenton L. Stanger, an officer and director, $18,865 for a cash
loan to us during 1999.
10
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
Tambora Advances to Us
In addition to Tambora's payment of $500,000 to us as partial
consideration of the purchase of Income Builders, as of December 31, 2000,
Tambora had outstanding advances of principal and accrued interest of $210,635
to us for payment of general and administrative expenses, including amounts paid
to executive officers and directors. Such amount is repayable by us to Tambora
under the terms of a promissory note bearing interest at 18% and due and payable
out of the first net proceeds received by us from the sale of common stock, but
in any event on or before December 31, 2002.
Income Builders Officers and Directors
Income Builders owed Tim L. Hansen and Ray P. Brown, officers of Income
Builders, $340,204 at December 31, 1999, payable on demand. Of the $340,204
payable, $240,194 bears an interest rate of 50% and $100,010 is a bonus payable.
Management of Income Builders intends to accrue interest on the $240,194 payable
at 50% and offset this accrued interest against the $1,074,219 stockholders'
receivable, until the receivable is reduced to $240,194, at which time this
payable will be used to offset the receivable from the officers of Income
Builders. These loans were included in the assets and liabilities of Income
Builders when it was sold to Tambora.
Sale of $300,000 in Securities
Subsequent to December 31, 2000, we sold for $300,000 a total of 15.0
million shares of common stock (700,935 shares of common stock giving effect to
the 21.4-to-1 reverse stock split) for an aggregate of $150,000, and $150,000 in
principal amount of promissory notes, automatically convertible into an
aggregate of 49.2 million shares of common stock (2,299,000 shares giving effect
to the 21.4-to-1 reverse split). The persons making the $300,000 investment have
agreed to execute a majority written consent approving the proposed reverse
stock split, the appointment of their designees to the board of directors, and
the authorization of a class of preferred stock. On the effectiveness of the
reverse stock split and related matters, we will issue 400,000 shares of
post-reverse-split common stock to a third party for services. The securities
sold by us and the consideration therefore are being held pending our
distribution of this information statement to our stockholders relating to the
matters to be approved by the majority written consent of its stockholders and
certain other conditions. After giving effect to the foregoing, we will have an
aggregate of 3.6 million shares of common stock issued and outstanding.
Conflicts of Interest
We and Tambora have been and will continue to be subject to significant
conflicts of interest as a result of their common controlling stockholders,
executive officers and directors. Notwithstanding these conflicts of interest,
such persons, acting both for themselves and as executive officers, directors
and stockholders of us or Tambora, have determined:
o the terms of their compensation from us, including the amount
and manner of payment;
o the terms on which such persons purchased stock from Tambora
upon its organization;
o the terms on which Tambora sold stock to other investors;
o the terms on which we sold Income Builders to Tambora; and
o the terms on which we are required to repay loans to Tambora.
11
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
There can be no assurance that any conflict of interest will be
resolved in favor of us or our stockholders. We have not adopted any policies
respecting the resolution of conflicts of interest that may arise.
REVERSE STOCK SPLIT
In accordance with our agreement relating to the recent $300,000 cash
investment, the board of directors has adopted and a majority of the
stockholders have approved by their written consent adoption a 21.4-to-1 reverse
stock split of our issued and outstanding common stock, without reducing the
50,000,000 shares of authorized common stock.
We believe it would be in the best interests of American Financial
Holding and its stockholders to adopt an amendment to our certificate of
incorporation that will effect a 21.4-to-1 reverse stock split. The amendment
that will effect the reverse split will be, by its terms, effective as of
[effective date], 2001. Its full text is set forth in the proposed Certificate
of Amendment to the Certificate of Incorporation attached to this information
statement as Appendix A.
Purpose and Background of the Reverse Split
We have approved the reverse stock split in accordance with our
contractual obligations under which we recently obtained $300,000 in new cash
investment. We are not aware of any present efforts by anyone to accumulate our
common stock, and the proposed reverse split is not intended to be an
anti-takeover device.
Effect on Market for Common Stock
Currently our common stock is not actively quoted or traded on any
recognized quotation medium that we know of. Decreasing the number of shares
outstanding without altering the aggregate economic interest represented by the
shares may result in an increase in the price for our stock if a market were to
develop. However, we cannot assure that such an increase will occur, even if a
market existed for our stock. There also can be no assurance that any price per
share of our common stock immediately after the reverse split will increase
proportionately with the reverse split, or that any increase will be sustained
for any period of time.
Effects of Reverse Split on Common Stock; No Fractional Shares
The principal effect of the reverse split will be to decrease the
number of issued and outstanding shares of our common stock to approximately 3.6
million shares, based on the number of shares outstanding on the Record Date for
the stockholder meeting, followed by the automatic conversion of $150,000 in
convertible notes to shares of common stock and the issuance of an additional
400,000 shares for services. The total number of shares of common stock each of
stockholder holds will be reclassified automatically into the number of shares
equal to the number of shares such stockholder held immediately before the
reverse split divided by 21.4. If the number of shares a individual stockholder
of record holds is not evenly divisible by 21.4, such stockholder will receive
scrip for the fractional share.
As of the Record Date for the stockholder consent, we had approximately
628 common stockholders of record (although we had significantly more beneficial
holders). We do not expect the reverse split to result in a significant
reduction in the number of record holders. We do not intend to seek any change
12
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
in our status as a reporting company for federal securities law purposes, either
before or after the reverse split.
Exchange of Stock Certificates
Stockholders will not be required to submit their stock certificates
for conversion into the post-reverse-split number of shares.
However, on or after the effective date of the reverse split, we will
mail a letter of transmittal to our stockholders. Stockholders will be able to
obtain a certificate evidencing post-reverse-split shares only by sending our
transfer agent, Fidelity Stock Transfer, 1800 South West Temple, Salt Lake City,
Utah, 84115, his or her old stock certificate(s), together with the properly
executed and completed letter of transmittal and payment of the required
transfer fee of $19.00 per new certificate. Stockholders will not receive
certificates for post-reverse-split shares unless and until their old
certificates are surrendered. Stockholders should not forward their certificates
to our transfer agent until they receive the letter of transmittal, and
stockholders should only send in their certificates with the letter of
transmittal. The transfer agent will send the stockholder's new stock
certificate promptly after receipt of his or her properly completed letter of
transmittal, the old stock certificate(s), and required fee.
As noted above, no fractional share of post-reverse-split common stock
will be issued. Instead, we will issue scrip in registered form, not represented
by a certificate, that shall entitle the holder to receive a full share upon the
surrender of such scrip evidencing a whole share. Upon the surrender of scrip
evidencing a whole share, we will issue to the holder thereof a certificate
evidencing such whole share. Holders of scrip will not be entitled to exercise
voting rights, to receive dividends thereon, or to participate in any of our
assets in the event of liquidation. Such scrip shall be void if not exchanged
for certificates representing full shares of uncertificated full shares before
12:00 midnight on the 120th day following the effective date of the amendment to
the certificate of incorporation.
AUTHORIZE PREFERRED STOCK
The board of directors has adopted and a majority of the stockholders
has approved by its written consent adoption of an amendment to our Certificate
of Incorporation to authorize a class of preferred stock. A copy of the revised
article to authorize 5,000,000 shares of preferred stock, par value $0.001, and
to coordinate the provisions of the newly authorized preferred stock with the
common stock is included in the proposed Certificate of Amendment to the
Certificate of Incorporation attached as Appendix A. You are urged to review the
appendix carefully. The general summary and discussion in the information
statement is qualified in its entirety by the specific language of such proposed
amendment attached.
Under the amendment to authorize a class of preferred stock, our board
of directors is authorized, without stockholder action, to issue preferred stock
in one or more series and to fix the number of shares and rights, preferences
and limitations of each series. Among the specific matters that may be
determined by the board of directors are the dividend rate, any redemption
price, any conversion rights, the amount payable in the event of any voluntary
liquidation or dissolution of our company, and any voting rights. Specifically,
the board of directors has the power to specify:
(i) the distinctive designation of and the number of
shares of Preferred Stock which shall constitute each series,
which number may be increased (except as otherwise fixed by
13
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
the board of directors) or decreased (but not below the number
of shares thereof outstanding) from time to time by action of
the board of directors;
(ii) the rate and times at which, and the terms and
conditions on which, dividends, if any, on the shares of the
series shall be paid; the extent of preferences or relation,
if any, of such dividends to the dividends payable on any
other class or classes of stock of this Corporation or on any
series of Preferred Stock; and whether such dividends shall be
cumulative or noncumulative;
(iii) the right, if any, of the holders of the shares
of the same series to convert the same into, or exchange the
same for, any other class or classes of stock of this
Corporation and the terms and conditions of such conversion or
exchange;
(iv) whether shares of the series shall be subject to
redemption and the redemption price or prices, including,
without limitation, a redemption price or prices payable in
shares of any other class or classes of stock of the
Corporation, cash or other property and the time or times at
which, and the terms and conditions on which, shares of the
series may be redeemed;
(v) the rights, if any, of the holders of shares of
the series on voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding up of this Corporation;
(vi) the terms of the sinking fund or redemption or
purchase account, if any, to be provided for shares of the
series; and
(vii) the voting powers, if any, of the holders of
shares of the series which may, without limiting the
generality of the foregoing, include (A) the right to more or
less than one vote per share on any or all matters voted on by
the stockholders, and (B) the right to vote as a series by
itself or together with other series of Preferred Stock or
together with all series of Preferred Stock as a class, on
such matters, under such circumstances, and on such conditions
as the board of directors may fix, including, without
limitation, the right, voting as a series by itself or
together with other series of Preferred Stock or together with
all series of Preferred Stock as a class, to elect one or more
directors of this Corporation in the event there shall have
been a default in the payment of dividends on any one or more
series of Preferred Stock or under such other circumstances
and upon such conditions as the board of directors may
determine.
The board of directors has authority to authorize the offer and sale of
preferred stock without the vote of or notice to existing stockholders. The
issuance of preferred stock could dilute the percentage interest and per share
book value of existing stockholders. We have no plans to issue any shares of
preferred stock.
14
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
INDEPENDENT PUBLIC ACCOUNTANTS
The selection of our auditors will not be submitted to the stockholders
for their approval in the absence of a requirement to do so.
Change of Accountants
On April 27, 2000, our board of directors determined not to engage
Jones Jensen & Co., Salt Lake City, Utah, as our principal accountant to audit
and report on our financial statements for the years ended December 31, 1998 and
1999 due to its inability to meet our scheduling requirements.
Our financial statements for the calendar year ended December 31, 1997,
have not been audited, and Jones Jensen was not retained by us to audit the 1998
and 1999 financial statements.
The report of Jones Jensen on our financial statements consisting of
consolidated balance sheets as of December 31, 1996, and the related
consolidated statements of income, stockholders' equity and cash flows for the
years ended December 31, 1996 and 1995, did not contain an adverse opinion or
disclaimer of opinion and was not qualified or modified as to audit scope or
accounting principles; however, the accountant's report for the December 31,
1996 and 1995, financial statements did contain an explanatory paragraph that
indicates there is doubt as to our ability to continue as a going concern.
In connection with our two most recent fiscal year audits and any
subsequent interim period preceding the dismissal of Jones Jensen, there were no
disagreements with Jones Jensen or reportable events on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreement, if not resolved to the satisfaction of the former
accountant, would have caused it to make reference to the subject matter of the
disagreement in connection with its report. In connection with its audit of our
1996 financial statements, Jones Jensen noted no matters involving the internal
control structure and its operations that it considered to be material
weaknesses.
Jones Jensen has provided a letter to the Securities and Exchange
Commission indicating that it did not disagree with the above statements.
On April 27, 2000, our board of directors approved the engagement of
Robison, Hill & Co., Salt Lake City, Utah, as independent accountants and
auditors to report on our financial statements for the years ended December 31,
1998 and 1999.
No consultations occurred between us and Robison, Hill during the two
most recent fiscal years and any subsequent interim period prior to Robison,
Hill's appointment regarding either (a) the application of accounting principles
to a specific completed or contemplated transaction, the type of audit opinion
that might be rendered on our financial statements or other information provided
that was considered by us in reaching a decision as to an accounting, auditing
or financial reporting issue, or (b) any matter that was the subject of
disagreement or a reportable event requiring disclosure.
Fees to Robison, Hill
Audit Fees
The aggregate fees billed by Robison, Hill for professional services
rendered for the audit of our annual financial statements for the fiscal year
ended December 31, 2000, and for the reviews of the financial statements
included in our quarterly reports on Form 10-QSB for that fiscal year were
$5,950.
15
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
Financial Information Systems Design and Implementation Fees
Robison, Hill billed no fees for professional services rendered for
information technology services relating to financial information systems design
and implementation for the fiscal year ended December 31, 2000.
All Other Fees
No fees were billed by Robison, Hill for services rendered to us, other
than the services described above under "Audit Fees" and "Financial Information
Systems Design and Implementation Fees" for the fiscal year ended December 31,
2000.
STOCKHOLDER PROPOSALS
It is anticipated that the next annual meeting of stockholders will be
held on approximately May 15, 2002. Stockholders may present proposals for
inclusion in the information or proxy statement to be mailed in connection with
the 2002 annual meeting of stockholders of the company, provided such proposals
are received by the company no later than January 15, 2002, and are otherwise in
compliance with applicable laws and regulations and the governing provisions of
the certificate of incorporation and bylaws of the company.
By order of the board of directors:
AMERICAN FINANCIAL HOLDING, INC.
Raymond L. Punta, Secretary
16
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
Appendix A
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION OF
AMERICAN FINANCIAL HOLDING, INC.
A DELAWARE CORPORATION
American Financial Holding, Inc., a corporation organized and existing
under the laws of the state of Delaware (the "Company"), does hereby certify as
follows:
FIRST: That at a meeting of the board of directors of the Company,
resolutions were duly adopted setting forth the proposed amendment of the
Certificate of Incorporation of the Company, declaring the amendment to be
advisable and calling a meeting of the stockholders of the Company for
consideration thereof.
SECOND: By executing this Certificate of Amendment of the Certificate
of Incorporation, the president and secretary of the Company do hereby certify
that effective [ ], 2001, the foregoing amendment to the Certificate of
Incorporation of American Financial Holding, Inc. was authorized and approved
pursuant to Section 242 of the General Corporation Law of the state of Delaware
by the written consent of a majority of the issued and outstanding shares of the
Company's common stock. No other class of shares was entitled to vote thereon as
a class.
THIRD: That the Certificate of Incorporation of the Company is hereby
amended as follows:
A. Article IV is hereby amended by striking the existing article in its
entirety and inserting in lieu thereof the following:
Article IV
Capitalization
The Company shall have authority to issue an aggregate of
55,000,000 shares, of which 5,000,000 shares shall be preferred stock,
$0.001 par value (hereinafter the "Preferred Stock"), and 50,000,000
shares shall be common stock, par value $0.001 (hereinafter the "Common
Stock"). The powers, preferences and rights, and the qualifications,
limitations or restrictions thereof, of the shares of stock of each
class and series which the Company shall be authorized to issue, are as
follows:
(a) Preferred Stock. Shares of Preferred Stock may be
issued from time to time in one or more series as may from
time to time be determined by the board of directors. Each
series shall be distinctly designated. All shares of any one
series of the Preferred Stock shall be alike in every
particular, except that there may be different dates from
which dividends thereon, if any, shall be cumulative, if made
cumulative. The powers, preferences, participating, optional
and other rights of each such series and qualifications,
limitations or restrictions thereof, if any, may differ from
those of any and all other series at any time outstanding.
Except as hereinafter provided, the board of directors of this
Company is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of each particular series of Preferred Stock, the
designation, powers, preferences and relative participating,
optional and other rights and the qualifications, limitations
and restrictions thereof, if any, of such series, including,
without limiting the generality of the foregoing, the
following:
A-1
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
(i) the distinctive designation of and the
number of shares of Preferred Stock that shall
constitute each series, which number may be increased
(except as otherwise fixed by the board of directors)
or decreased (but not below the number of shares
thereof outstanding) from time to time by action of
the board of directors;
(ii) the rate and times at which, and the
terms and conditions on which, dividends, if any, on
the shares of the series shall be paid; the extent of
preferences or relation, if any, of such dividends to
the dividends payable on any other class or classes
of stock of this Company or on any series of
Preferred Stock; and whether such dividends shall be
cumulative or noncumulative;
(iii) the right, if any, of the holders of
the shares of the same series to convert the same
into, or exchange the same for, any other class or
classes of stock of this Company and the terms and
conditions of such conversion or exchange;
(iv) whether shares of the series shall be
subject to redemption and the redemption price or
prices, including, without limitation, a redemption
price or prices payable in shares of any other class
or classes of stock of the Company, cash or other
property and the time or times at which, and the
terms and conditions on which, shares of the series
may be redeemed;
(v) the rights, if any, of the holders of
shares of the series on voluntary or involuntary
liquidation, merger, consolidation, distribution or
sale of assets, dissolution or winding up of this
Company;
(vi) the terms of the sinking fund or
redemption or purchase account, if any, to be
provided for shares of the series; and
(vii) the voting powers, if any, of the
holders of shares of the series which may, without
limiting the generality of the foregoing, include (1)
the right to more or less than one vote per share on
any or all matters voted on by the stockholders, and
(2) the right to vote as a series by itself or
together with other series of Preferred Stock or
together with all series of Preferred Stock as a
class, on such matters, under such circumstances, and
on such conditions as the board of directors may fix,
including, without limitation, the right, voting as a
series by itself or together with other series of
Preferred Stock or together with all series of
Preferred Stock as a class, to elect one or more
directors of this Company in the event there shall
have been a default in the payment of dividends on
any one or more series of Preferred Stock or under
such other circumstances and upon such conditions as
the board of directors may determine.
(b) Common Stock. The Common Stock shall have the
following powers, preferences, rights, qualifications,
limitations and restrictions:
(i) After the requirements with respect to
preferential dividends of Preferred Stock, if any,
shall have been met and after this Company shall
comply with all the requirements, if any, with
respect to the setting aside of funds as sinking
funds or redemption or purchase accounts, and subject
further to any other conditions that may be required
by the Delaware General Corporation Law, then, but
not otherwise, the holders of Common Stock shall be
A-2
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
entitled to receive such dividends, if any, as may be
declared from time to time by the board of directors
without distinction to series;
(ii) After distribution in full of any
preferential amount to be distributed to the holders
of Preferred Stock, if any, in the event of a
voluntary or involuntary liquidation, distribution or
sale of assets, dissolution or winding up of this
Company, the holders of the Common Stock shall be
entitled to receive all of the remaining assets of
the Company, tangible and intangible, of whatever
kind available for distribution to stockholders,
ratably in proportion to the number of shares of
Common Stock held by each without distinction as to
series; and
(iii) Except as may otherwise be required by
law or this Certificate of Incorporation, in all
matters as to which the vote or consent of
stockholders of the Company shall be required or be
taken, including, any vote to amend this Certificate
of Incorporation, to increase or decrease the par
value of any class of stock, effect a stock split or
combination of shares, or alter or change the powers,
preferences or special rights of any class or series
of stock, the holders of the Common Stock shall have
one vote per share of Common Stock on all such
matters and shall not have the right to cumulate
their votes for any purpose.
(c) Other Provisions:
(i) The board of directors of the Company
shall have authority to authorize the issuance, from
time to time without any vote or other action by the
stockholders, of any or all shares of the Company of
any class at any time authorized, and any securities
convertible into or exchangeable for such shares, in
each case to such persons and for such consideration
and on such terms as the board of directors from time
to time in its discretion lawfully may determine;
provided, however, that the consideration for the
issuance of shares of stock of the Company having par
value shall not be less than such par value. Shares
so issued, for which the full consideration
determined by the board of directors has been paid to
the Company, shall be fully paid stock, and the
holders of such stock shall not be liable for any
further call or assessment thereon.
(ii) Unless otherwise provided in the
resolution of the board of directors providing for
the issue of any series of Preferred Stock, no holder
of shares of any class of the Company or of any
security of obligation convertible into, or of any
warrant, option or right to purchase, subscribe for
or otherwise acquire, shares of any class of the
Company, whether now or hereafter authorized, shall,
as such holder, have any preemptive right whatsoever
to purchase, subscribe for or otherwise acquire
shares of any class of the Company, whether now or
hereafter authorized.
(iii) Anything herein contained to the
contrary notwithstanding, any and all right, title,
interest and claim in and to any dividends declared
or other distributions made by the Company, whether
in cash, stock or otherwise, that are unclaimed by
the stockholder entitled thereto for a period of six
years after the close of business on the payment
date, shall be and be deemed to be extinguished and
abandoned; and such unclaimed dividends or other
distributions in the possession of the Company, its
transfer agents or other agents or depositories shall
at such time become the absolute property of the
Company, free and clear of any and all claims of any
person whatsoever.
A-3
Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
B. The shares of Common Stock of the Company issued and outstanding as
of the Effective Date shall be reverse-split or consolidated, without any change
in the authorized number of shares of Common Stock or the par value thereof, to
become effective on the date this Certificate of Amendment is duly filed in the
office of the Secretary of State of the State of Delaware (the "Effective Date")
as follows:
(a) Each 21.4 shares of Common Stock issued and outstanding
immediately prior to the Effective Date shall be converted into the
right to receive one share of post-reverse-split common stock ("New
Common Stock").
(b) No fractional shares of New Common Stock shall be issued
in connection with the foregoing, and in lieu thereof, the Company
shall issue scrip in registered form, not represented by a certificate,
that shall entitle the holder to receive a full share upon the
surrender of such scrip evidencing a whole share. Upon the surrender of
scrip evidencing a whole share, the Company shall issue to the holder
thereof a certificate evidencing such whole share. Holders of scrip
shall not be entitled to exercise voting rights, to receive dividends
thereon, or to participate in any of the assets of the Company in the
event of liquidation. Such scrip shall be void if not exchanged for
certificates representing full shares of uncertificated full shares
before 12:00 midnight on the 120th day following the Effective Date.
(c) As soon as reasonably practicable after the Effective
Date, the Company shall cause its registrar and transfer agent, acting
as exchange agent (the "Exchange Agent"), to mail to each holder of
record of shares of Common Stock immediately prior to the Effective
Date (the "Pre-Reverse-Split Common Stock"), a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss
and title to the Pre-Reverse-Split Common Stocks shall pass, only upon
delivery of a certificate representing such Pre-Reverse-Split Common
Stock to the Exchange Agent, which shall be in such form and have such
other provisions as the Company may reasonably specify, and which shall
specify the fee payable in order to effectuate such exchange) and
instructions for use in effecting the surrender of certificates
representing Pre-Reverse-Split Common Stock in exchange for
certificates representing shares of New Common Stock issuable pursuant
hereto. Upon surrender of a certificate representing Pre-Reverse-Split
Common Stock for cancellation to the Exchange Agent, together with such
duly executed letter of transmittal and the payment of the prescribed
fee, the holder of such certificate representing Pre-Reverse-Split
Common Stock shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of New Common
Stock that such holder has the right to receive in exchange for the
Pre-Reverse-Split Common Stock surrendered pursuant to the provisions
hereof (after taking into account all Pre-Reverse-Split Common Stock
then held by such holder), and the Pre-Reverse-Split Common Stock so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Pre-Reverse-Split Common Stock that is not registered in
the transfer records of the Company, a certificate representing the
proper number of shares of New Common Stock may be issued to a
transferee if the certificate representing such Pre-Reverse-Split
Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence
that any applicable stock transfer taxes and other transfer fees have
been paid. Holders of certificates representing Pre-Reverse-Split
Common Stock shall not be required to convert their certificates into
certificates representing New Common Stock. Until surrendered as
contemplated hereby, each certificate representing Pre-Reverse-Split
Common Stock shall be deemed at any time after the Effective Date to
represent only the New Common Stock into which such certificate
representing Pre-Reverse-Split Common Stock is convertible as provided
herein and the right to receive, upon such surrender prior to the
expiration date of scrip as provided above, scrip in lieu of any
fractional shares of New Common Stock as provided above.
(d) After the Effective Date, there shall be no further
registration of transfers of certificates representing
Pre-Reverse-Split Common Stock. If, after the Effective Date,
certificates representing shares of Pre-Reverse-Split Common Stock are
presented to the Company or the Exchange Agent for registration of
transfer, such certificates shall be canceled and exchanged for
certificates representing New Common Stock and scrip in accordance with
the procedures set forth herein.
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Preliminary Information Statement
Pursuant to Section 14 of the Securities Exchange
Act and Regulation 14C and Schedule 14C thereunder
DATED this ___ day of __________________, 2001
ATTEST: AMERICAN FINANCIAL HOLDING, INC.
By:
--------------------------- -----------------------------
Raymond L. Punta, Secretary Kenton L. Stanger, President
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