TRAVIS INDUSTRIES, INC. (OTC:TVSI)
725 So. Broadway, Suite 30
Denver, Colorado 80209
TRAVIS INDUSTRIES, INC. (OTC:TVSI) ANNOUNCES SWEEPING CHANGES
Company Releases Material Terms of Agreement Effective May 1, 1998
For Immediate Release
Tuesday, May 19, 1998
Contact: Thomas P. Raabe, Chief Executive Officer, c/o Rhonda Medina
Temporary No. (303) 777-5936
Denver, Colorado - Travis Industries, Inc.'s new Chairman and CEO, Thomas
P. Raabe, announced today sweeping changes in the company designed to end
operating losses and begin to enhance shareholder value.
Effective May 1, 1998, Thomas P. Raabe and Fred Boethling became
executive officers and directors of Travis. Raabe and Boethling have
substantial transactional and operational experience. Raabe has over 14
years experience as a transactional attorney specializing in corporate
and securities law, and most recently has served as a senior corporate
executive in several turn-arounds, reorganizations and recapitalizations
of private and public companies. Over the past 4 years, Raabe advised
prior management in corporate and securities law as special counsel on
specific matters. Boethling has substantial experience in the areas of
strategic planning, finance, turnarounds and acquisitions. He has over
20 years of management experience in a wide range of industries.
The prior management of Travis, Messrs. Stephen E. Cayou and Jeffrey R.
Skinner, took the Company through a bankruptcy reorganization during 1995
and 1996, but experienced difficulty in completing the financial turn-
around and had little success in attracting acquisition candidates.
Raabe and Boethling are being compensated in large part on a successful
efforts basis thereby properly aligning their interest with those of the
shareholders.
In general, the present plan is to:
- Install New Management Team. Replace management with Raabe and
Boethling, a team of professional managers with substantial transactional
and operational experience and immediately expand the board of directors
by recruiting independent outside and industry related directors;
- - End Operating Losses. Reduce operational overhead, update and
optimize operational and financial reporting systems, and increase
revenue through focused marketing efforts thereby making the company's
current operations profitable;
- - Bring in New Capital in Staged Investments. Raise new equity for
capital improvement, working capital and acquisition related due
diligence and securities compliance expenses;
- - Change Company Structure to Pursue Acquisitions through Subsidiary
Companies. Restructure the company in a holding company format by
placing the company's printing/direct mail advertising business into a
newly formed, wholly owned subsidiary and create a second new subsidiary
to pursue acquisitions and ventures in the outdoor extreme and adrenaline
sports industry, which is Raabe's and Boethling's industry focus.
Despite the previous professional relationship between outgoing
management and Raabe, the management change was negotiated at arm's
length in which each side had certain demands and requirements.
Outgoing Management's Arrangement. As outgoing management, Cayou and
Skinner required:
- - Severance packages consisting of three month's salary each ($15,000)
paid in the form of registered common stock;
- - Indemnification agreements including the company's agreement to
undertake legal defense and/or advance legal fees and expenses for
certain pending or possible matters;
- - Ongoing representation of one seat on the expanded board of directors
through an independent nominee and nomination of their nominee in the
upcoming shareholder's meeting for election to the board of directors;
- - The company honor their agreement with Peter N. Hobbs, the operations
manager for the Council Bluffs operations, to issue him 10 Million Shares
of Common Stock. Additionally, Raabe and Boethling required that Hobbs
remain employed with the company with substantially the same job duties
as he has currently for at least six months to keep 1/2 of these shares
or at least twelve months from the effective date of the management
change to keep all of such shares. Hobbs has been sole executive
operations manager in Council Bluffs since before the Chapter 11 case was
filed and the bankruptcy reorganization completed, and yet until now had
no equity interest in the Company.
Incoming Management's Arrangement. As incoming management, Raabe and
Boethling required:
- - That Cayou and Skinner relinquish all management authority, end all
cash
compensation and salaries and terminate regular communications with
shareholders
and brokers.
- - An aggregate six-month management fee of $60,000 which was paid in the
form of 2,352,941 shares of registered common stock. The management
agreement renews in six months unless renegotiated for an additional
$60,000 in shares. Raabe and Boethling will be reimbursed for their out
of pocket expenses and there will be paid a $1,500 per month office
allowance to operate corporate headquarters.
- - Certain assurances and protections in the face of recent dissident
shareholder activity, extreme market volatility and the possibility of
regulatory enforcement action, and the existence of outstanding unpaid
employee taxes. These assurances have taken the form of indemnification
and an undertaking to advance legal defense costs, should they be
necessary, issuance of a block of 20 Million shares of Common Stock as
incentive for assuming management control, and a break-up fee of $500,000
in the event that they are removed before having an opportunity to
establish and implement a strategic plan. The obligation of the company
to pay the break-up fee and to indemnify Raabe and Boethling from tax
liability for outstanding employee taxes is secured by the unencumbered
assets of the company.
- - Raabe and Boethling will be paid a successful transaction fee for
acquisitions and financings based on a Lehman formula against the gross
value of any transaction or financing.
- - The 20 Million shares were issued subject to the agreement that all or
a portion of the shares would be returned for cancellation upon the
expiration of six months from the May 1, 1998 Effective Date, if one or
more of the following benchmarks were not achieved by such time:
- One-third of such shares will be returned for cancellation unless
new management completes a strategic and business plan for Travis'
overall corporate direction;
- One-third of such shares will be returned for cancellation unless
new management establishes a wholly owned subsidiary of Travis and
transfers all operating assets of the direct mail advertising business to
such subsidiary, together with a written strategic operating and business
plan for such business and bringing such business to the break-even point
for at least one continuous month; and
- One-third of such shares will be returned for cancellation unless
new
management introduces at least one acquisition candidate to the Company
or
either of its subsidiaries consistent with the strategic plan to be
developed
immediately.
- - A Voting Trust Agreement into which the restricted shares held by Cayou
and Skinner, the Shares issued to Raabe and Boethling and those issued to
Hobbs will be contributed for a period of one year. These shares will be
voted by a board of three trustees, one selected by Cayou and Skinner,
one selected by Raabe and Boethling, and the third selected by mutual
agreement of both groups. This will constitute a voting block of
approximately 50 million shares or one-fourth of the total issued and
outstanding common shares of the Company.
Formation of Aggression Sports, Inc. In order to capitalize on the
opportunities developed by Raabe and Boethling, the parties also
restructured and re-initiated the concept of acquisitions in the extreme
and adrenaline outdoor sports industry by the formation of a new Colorado
corporation entitled Aggression Sports, Inc. This included the
capitalization of the new company with 30 Million shares of Travis common
stock for use as acquisition currency, issuance of 1 Million shares of
Aggression Sports, Inc. to Travis, the undertaking by Travis to infuse at
least $100,000 in cash into Aggression Sports, Inc. within the next six
months in exchange for an additional 500,000 shares of Aggression Sports,
Inc. and issuance of 1,250,000 shares of Aggression Sports, Inc. to
Boulder Sports, LLC, a Colorado Limited Liability Company controlled
substantially by Raabe and Boethling.
The agreement substantially protects the contacts and proprietary
knowledge of Raabe and Boethling in this industry for a period of one
year, and enforces representations made by Cayou and Skinner that Travis
will attract investment capital. However, Travis can acquire a majority
interest in Aggression Sports, Inc. (55%) through infusion of $100,000
in cash. The transaction can be unwound in the event that Raabe and
Boethling are terminated without their consent before one year from the
Effective Date of the change in management. The unwind provisions apply
only to shares of Aggression Sports, Inc. issued at the first instance in
exchange for shares of Travis and not to shares issued in exchange for
cash or tangible assets.
To insure the transaction is ultimately fair to Travis' shareholders, the
agreement contains a one-time 'look-back' provision in which the value of
the Travis and Aggression Sports, Inc. shares is to be compared on a date
six months out from the Effective Date, one time only, on a net tangible
book value per share basis and adjusted, if necessary if the difference
between the value exceeds 25% of the greater number. This adjustment may
only be made if at such time, shares of Travis have been trading at
$0.0833 per share average bid for a period of sixty days prior to the
evaluation date. Such evaluation will be made by the auditors of Travis
or an independent CPA selected mutually.
Also, the parties will execute a buy-sell agreement incorporating all
protective shareholder agreements as well as a provision allowing Boulder
Sports, LLC to purchase shares of Aggression Sports, Inc. held by Travis
or Travis to purchase all shares of Aggression Sports, Inc. held by
Boulder Sports, LLC, in the event that Raabe and Boethling are terminated
as officers and directors of Travis after the expiration of one year from
the Effective Date.
In the event that Aggression Sports, Inc. has not initiated at least one
acquisition or business development project within six months from the
Effective Date and shall not have closed one acquisition or launched one
business development project within twelve months, the stock exchange
will be unwound unless these periods are extended or the contingencies
forgiven under circumstances of substantial compliance such as pending
financings or acquisition agreements.
Additional provisions of the various agreements are personal to the
Parties and will remain for the time being confidential. Other aspects
of the overall agreement are being finalized and/or are being circulated
for signature.
In summary, new management will focus its energy during the near term on
the following elements:
- - First and foremost, to stop operating losses and install management
information systems to monitor the financial condition of the Company;
and
- - To develop and implement an acquisition based strategic growth plan
including locating and evaluating opportunities and obtaining the
financing to implement the plan.
While Raabe stated that the challenges faced by the company are
substantial, he was confident that the new management team and the plans
and strategies being developed will result in substantial enhancement of
shareholder value.
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