===============================================================================
As filed with the Securities and Exchange Commission on
June 21, 2002
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AMERICAN DIVERSIFIED GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
APPROXIMATE DATE OF DISTRIBUTION OF THE DEFINITIVE
PROXY MATERIAL TO THE REGISTRANT'S STOCKHOLDERS: JUNE 21, 2002
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $.001 per share ("ADGI Common")
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
498,026,445 shares of ADGI Common, as of June 14, 2002
-------------------------------------------------------------------------
(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): N/A
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: N/A
-------------------------------------------------------------------------
(5) Total fee paid: N/A
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
===============================================================================
American Diversified Group, Inc.
3768 Sarazen Court NE
Conover, NC 28613
June 21, 2002
Dear Fellow Stockholder:
The undersigned cordially invites you to a special meeting (the "Meeting")
of holders ("Stockholders") of the common stock, par value $.001 per share
("ADGI Common"), of American Diversified Group, Inc. ("ADGI"). The Meeting will
be held at 3768 Sarazen Court NE, Conover, NC on July 24, 2002, beginning at
10:00 a.m. local time. The purpose of the Meeting is to consider and approve
the following three items (the "Meeting Agenda Items"):
1. The Plan (described below) for the exchange ("Exchange") of shares of
ADGI Common for shares of a newly-formed Delaware subsidiary of ADGI called
GlobeTel Communications Corp. ("GlobeTel").
2. The authorization for issuance by GlobeTel of up to 1,500,000,000
shares of Common Stock, par value $0.00001 per share (the "GlobeTel Common
Stock Authorization").
3. The authorization for issuance by GlobeTel of up to 10,000,000 shares
of Preferred Stock, par value $0.001 per share (the "GlobeTel Preferred
Stock Authorization").
The terms of the Exchange are contained in an Agreement and Plan of Exchange
(the "Plan"), a copy of which is attached to the Proxy Statement that
accompanies this letter. Approval of the Meeting Agenda Items, followed by the
Exchange, will result in the reincorporation of ADGI as a Delaware corporation
(the "Reincorporation"). Approval of each of the Meeting Agenda Items will
require the affirmative votes of a majority of the shares of ADGI Common
outstanding as of the record date for the Meeting. If each of the Meeting
Agenda Items is approved (and the Plan is not later terminated as described in
the attached Proxy Statement), shares of ADGI Common will automatically,
without further action by stockholders, become exchangeable for the same number
of newly-issued shares of Common Stock of GlobeTel, par value $.00001 per share
("GlobeTel Common").
ADGI will not proceed with the Plan unless all three Meeting Agenda Items are
approved at the Meeting by the required vote.
Section 92A.190 of the Nevada Revised Statutes applies to the Plan. That
Section allows Stockholders who object to the Plan and do not wish to
participate in the Exchange to have their shares of ADGI Common appraised, and
to choose to be paid the appraised value of their ADGI Common in cash
("Appraisal Rights"). However, ADGI has reserved the right to terminate the
Plan if holders of more than 1,000,000 shares of the outstanding ADGI Common
exercise their Appraisal Rights.
If all the Meeting Agenda Items are approved at the Meeting and the Plan is
not terminated, each holder of a certificate of ADGI Common will be entitled,
at any time after the Plan is adopted, to surrender the certificate to GlobeTel
and receive from GlobeTel in the Exchange a certificate for an equal number of
shares of GlobeTel Common. Stockholders will be notified of the address to
which ADGI Common stock certificates should be delivered for the Exchange. ADGI
COMMON STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH YOUR PROXY.
ADGI Common is registered under the Securities Exchange Act of 1934, and is
quoted on the Over-the-Counter Bulletin Board system maintained by the National
Association of Securities Dealers, Inc. ADGI anticipates that upon approval of
the Plan and completion of the Exchange and the Reincorporation, shares of
GlobeTel Common will be registered and quoted in the same manner.
If completed, the Exchange will result in ADGI becoming a wholly-owned
subsidiary of GlobeTel. GlobeTel would then merge ADGI into itself and
terminate the separate corporate existence of ADGI. All former stockholders of
ADGI (other than any who elect to dissent from the Exchange and be paid in cash
for their ADGI shares) will be stockholders of GlobeTel, completing the
Reincorporation. Stockholder approval would not be
required or sought in connection with the merger of ADGI into GlobeTel.
The Board of Directors of ADGI (the "Board") believes the Plan is in the
best interests of the Stockholders and unanimously recommends that Stockholders
vote FOR the Plan, FOR the GlobeTel Common Stock Authorization and FOR the
GlobeTel Preferred Stock Authorization. As more fully described in the
accompanying Proxy Statement, approval of the Plan, followed by the Exchange
and the Reincorporation, will offer several advantages. First, after the
Reincorporation, Stockholders will hold shares in a Delaware, rather than a
Nevada, corporation. The Board believes that Stockholders and corporation alike
will benefit from this change, as the business community tends to regard
Delaware corporations as having more stability. Second, GlobeTel will have a
greater number of authorized shares of common stock than ADGI, and will also be
authorized to issue preferred stock, both of which will allow additional
flexibility in making future acquisitions (although the Company does not
currently have any plan to do so). Third, the Plan will result in current ADGI
stockholders becoming stockholders in GlobeTel, a Delaware company that, unlike
ADGI, does not require a 100% vote of stockholders to amend its certificate of
incorporation, a requirement that ADGI has failed to meet with respect to every
attempted amendment of its charter. Finally, the Board believes that the name
"GlobeTel" is better aligned with and better suited for the business conducted
by ADGI than "American Diversified Group."
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, IT IS VERY IMPORTANT THAT YOUR
SHARES BE REPRESENTED.
BECAUSE APPROVAL OF EACH OF THE MEETING AGENDA ITEMS REQUIRES THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF ADGI COMMON, ANY SHARES NOT
VOTED, OR ABSTAINING FROM VOTING, ON ONE OR MORE OF THE MEETING AGENDA ITEMS
WOULD EFFECTIVELY BE VOTED AGAINST THOSE ITEMS.
FOR THAT REASON, PLEASE RETURN YOUR SIGNED AND DATED PROXY PROMPTLY; USING THE
ENCLOSED POSTAGE PREPAID ENVELOPE. IF YOU LATER DECIDE TO ATTEND THE MEETING,
YOU MAY REVOKE YOUR PROXY AT THAT TIME BY VOTING IN PERSON.
If you have any questions regarding any of the Meeting Agenda Items, please
call Jerrold R. Hinton, President of ADGI, at (828) 459-0916, or our proxy
solicitors, Georgeson Shareholder, at (866) 283-1867.
Sincerely,
/s/ Jerrold R. Hinton
Jerrold R. Hinton
President
AMERICAN DIVERSIFIED GROUP, INC.
3768 SARAZEN COURT NE, CONOVER, NC 28613 (828) 459-0916
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD: JULY 24, 2002
To the Stockholders:
NOTICE is hereby given that a special meeting (the "Meeting") of holders
("Stockholders") of the common stock, par value $.001 per share ("ADGI
Common"), of American Diversified Group, Inc. ("ADGI") will be held at 3768
Sarazen Court NE, Conover, NC on July 24, 2002, beginning at 10:00 a.m. local
time, for the following purposes:
1. To consider and approve a plan for the exchange of all outstanding
shares of ADGI Common for an equal number of shares of common stock, par
value $.00001 per share ("GlobeTel Common"), of GlobeTel Communications
Corp. ("GlobeTel"), a newly-formed wholly-owned Delaware subsidiary of ADGI.
This exchange transaction is referred to as the "Exchange" in the Agreement
and Plan of Exchange (the "Plan") between ADGI and GlobeTel that is attached
to the Proxy Statement that accompanies this Notice;
2. To consider and approve the authorization for issuance by GlobeTel of
up to 1,500,000,000 shares of Common Stock, par value $0.00001 per share
(the "GlobeTel Common Stock Authorization");
3. To consider and approve the authorization for issuance by GlobeTel of
up to 10,000,000 shares of Preferred Stock, par value $0.001 per share (the
"GlobeTel Preferred Stock Authorization"); and
4. To consider and transact such other business as may properly come
before the Meeting or any adjournment thereof;
all as more fully described in the accompanying Proxy Statement.
At the Meeting you will be asked to consider and vote to approve the Plan as
adopted by the Board of Directors of ADGI (the "Board") on May 31, 2002, the
GlobeTel Common Stock Authorization and the GlobeTel Preferred Stock
Authorization. The Company will not proceed to implement the Plan unless all
three of these items (the "Meeting Agenda Items") are approved at the Meeting.
Approval of each of the Meeting Agenda Items requires the affirmative votes
of a majority of the shares of ADGI Common outstanding as of the record date
for the Meeting. If each of the Meeting Agenda Items is approved (and the Plan
is not later terminated as described in the attached Proxy Statement), shares
of ADGI Common will automatically, without further action by stockholders,
become exchangeable for newly-issued shares of GlobeTel Common.
Section 92A.190 of the Nevada Revised Statutes applies to the Plan. That
Section allows Stockholders who object to the Plan and do not wish to
participate in the Exchange to have their shares of ADGI Common appraised, and
to choose to be paid the appraised value of their ADGI Common in cash
("Appraisal Rights"). However, ADGI has reserved the right to terminate the
Plan if holders of more than 1,000,000 shares of the outstanding ADGI Common
exercise their Appraisal Rights. As required by Nevada law, attached to this
Notice is a copy of Sections 92A.300 through 92A.500 of the Nevada Revised
Statutes, dealing with Appraisal Rights.
ADGI Common is registered under the Securities Exchange Act of 1934, and is
quoted on the Over-the-Counter Bulletin Board system maintained by the National
Association of Securities Dealers, Inc. ADGI anticipates that upon approval of
the Plan and completion of the Exchange and the reincorporation of ADGI as a
Delaware corporation (the "Reincorporation"), shares of GlobeTel Common will be
registered and quoted in the same manner.
If completed, the Exchange will result in ADGI becoming a wholly-owned
subsidiary of GlobeTel. GlobeTel would then merge ADGI into itself and
terminate the separate corporate existence of ADGI. All former stockholders of
ADGI (other than any who elect to dissent from the Exchange and be paid in cash
for their ADGI shares) will be stockholders of GlobeTel, completing the
Reincorporation. Stockholder approval would not be
required or sought in connection with the merger of ADGI into GlobeTel.
Stockholders of record at the close of business on June 14, 2002, the record
date fixed by the Board, are entitled to notice of and to vote at the Meeting.
No business other than the proposals described in this Notice is expected to be
considered at the Meeting or any adjournment. The Board urges all stockholders
of record to exercise their right to vote at the Meeting personally or by proxy
FOR the Plan, FOR the GlobeTel Common Stock Authorization and FOR the GlobeTel
Preferred Stock Authorization and the other matters listed in this notice.
Accordingly, we are sending you the following Proxy Statement and the enclosed
proxy card.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, IT IS VERY IMPORTANT THAT YOUR
SHARES BE REPRESENTED.
BECAUSE APPROVAL OF EACH OF THE MEETING AGENDA ITEMS REQUIRES THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF ADGI COMMON, ANY SHARES NOT
VOTED, OR ABSTAINING FROM VOTING, ON ONE OR MORE OF THE MEETING AGENDA ITEMS
WOULD EFFECTIVELY BE VOTED AGAINST THOSE ITEMS.
FOR THAT REASON, PLEASE SPECIFY YOUR VOTE ON THE ACCOMPANYING PROXY CARD AND
SIGN, DATE AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED PRE-ADDRESSED,
POSTAGE-PAID ENVELOPE. IF YOU LATER DECIDE TO ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AT THAT TIME BY VOTING IN PERSON.
Your prompt response will be appreciated.
By Order of the Board
Thomas Craft, Jr., Secretary
Conover, North Carolina
AMERICAN DIVERSIFIED GROUP, INC.
PROXY STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS
OF AMERICAN DIVERSIFIED GROUP, INC.
TO BE HELD ON JULY 24, 2002
This Proxy Statement is being furnished to stockholders ("Stockholders") of
American Diversified Group, Inc., a Nevada corporation ("ADGI"), in connection
with the solicitation of proxies by ADGI's Board of Directors (the "Board") for
use at a Special Meeting of Stockholders (as defined herein the "Meeting"), at
the time and place, and for the purposes, specified in the accompanying Notice
of Meeting.
The purpose of the Meeting is to consider and approve the following (the
"Meeting Agenda Items"):
1. The Plan, referred to below, for the exchange of all outstanding
shares of Common Stock, par value $.001 per share, of ADGI for an equal
number of shares of common stock, par value $.00001 per share ("GlobeTel
Common"), of GlobeTel Communications Corp., a newly-formed wholly-owned
Delaware subsidiary of ADGI ("GlobeTel"). This exchange transaction is
referred to as the "Exchange" in the Agreement and Plan of Exchange (the
"Plan") between ADGI and GlobeTel that is attached to this Proxy Statement.
2. The authorization for issuance by GlobeTel of up to 1,500,000,000
shares of Common Stock, par value $0.00001 per share (the "GlobeTel Common
Stock Authorization").
3. The authorization for issuance by GlobeTel of up to 10,000,000 shares
of Preferred Stock, par value $0.001 per share (the "GlobeTel Preferred
Stock Authorization").
Approval of the Meeting Agenda Items, followed by the Exchange, will result
in the reincorporation of ADGI as a Delaware corporation (the
"Reincorporation").
At the Meeting you will be asked to consider and vote to approve the Plan as
it was adopted by the Board on May 31, 2002.
Approval of each of the Meeting Agenda Items requires the affirmative votes
of a majority of the shares of ADGI Common outstanding as of the record date
for the Meeting. If each of the Meeting Agenda Items is approved (and the Plan
is not later terminated as described in the attached Proxy Statement), shares
of ADGI Common will automatically, without further action by stockholders,
become exchangeable for the same number of newly-issued shares of GlobeTel
Common.
Section 92A.190 of the Nevada Revised Statutes applies to the Plan. That
Section allows Stockholders who object to the Plan and do not wish to
participate in the Exchange to have their shares of ADGI Common appraised, and
to choose to be paid the appraised value of their ADGI Common in cash
("Appraisal Rights"). However, ADGI has reserved the right to terminate the
Plan if holders of more than 1,000,000 shares of the outstanding ADGI Common
exercise their Appraisal Rights.
ADGI Common is registered under the Securities Exchange Act of 1934, and is
quoted on the Over-the-Counter Bulletin Board system maintained by the National
Association of Securities Dealers, Inc. ADGI anticipates that upon approval of
all of the Meeting Agenda Items and completion of the Exchange and the
Reincorporation, shares of GlobeTel Common will be registered and quoted in the
same manner.
If completed, the Exchange will result in ADGI becoming a wholly-owned
subsidiary of GlobeTel. GlobeTel would then merge ADGI into itself and
terminate the separate corporate existence of ADGI. All former stockholders of
ADGI (other than any who elect to dissent from the Exchange and be paid in cash
for their ADGI shares) will be stockholders of GlobeTel, completing the
reincorporation of ADGI as a Delaware corporation ("Reincorporation").
Stockholder approval would not be required or sought in connection with the
merger of ADGI into GlobeTel.
498,026,445 shares of ADGI Common were outstanding on June 14, 2002, the
record date for determining Stockholders entitled to vote at the Meeting (the
"Record Date"). An equal number of GlobeTel Common shares would be issued under
the Plan. The aggregate market value of the outstanding shares of ADGI Common
on the record date was approximately $ $20,419,000, based on the average of the
average daily high and low prices per share of ADGI Common as reported on the
OTCBB for the 30 consecutive trading days ending June 14, 2002.
The terms of the Plan and the GlobeTel Common shares proposed to be issued
in exchange for ADGI Common shares are described in this Proxy Statement.
This Proxy Statement and the related form of proxy are first being mailed to
Stockholders on or about June 21, 2002.
The Date of This Proxy Statement is June 21, 2002.
TABLE OF CONTENTS
PREFACE.................................................................. 1
FORWARD-LOOKING STATEMENTS............................................ 1
AVAILABLE INFORMATION................................................. 1
SUMMARY.................................................................. 3
ADGI.................................................................. 3
THE MEETING........................................................... 3
RECOMMENDATION OF ADGI BOARD OF DIRECTORS; REASONS FOR
REINCORPORATION..................................................... 3
VOTE REQUIRED......................................................... 4
SUMMARY RISK FACTORS.................................................. 4
ABOUT ADGI...............................................................
THE PLAN, EXCHANGE, AND MERGER........................................... 6
REASONS FOR THE REINCORPORATION.........................................
CORPORATE DOMICILE.................................................... 6
CORPORATE NAME........................................................ 6
DEFECTIVE SHARE AUTHORIZATION......................................... 6
BOARD REVIEW AND APPROVAL............................................. 9
OTHER MATTERS........................................................... 9
STOCK CERTIFICATES.................................................... 9
RIGHT OF BOARD TO WITHDRAW RECOMMENDATION AND/OR ABANDON THE PLAN..... 9
ACCOUNTING TREATMENT.................................................. 10
APPRAISAL RIGHTS OF APPRAISAL......................................... 10
COMPARISON OF STOCKHOLDER RIGHTS...................................... 10
INTERESTS OF ADGI DIRECTORS AND MANAGEMENT............................ 10
FEDERAL SECURITIES LAWS CONSEQUENCES.................................. 11
DIVIDENDS............................................................. 11
BUSINESS OF ADGI PENDING THE REINCORPORATION.......................... 11
CONDITIONS TO THE COMPLETION OF THE REINCORPORATION...................
FEDERAL TAX CONSEQUENCES................................................. 13
RISK FACTORS............................................................. 14
UNCERTAIN VALUE OF REINCORPORATION.................................... 14
UNCERTAIN VALUE OF CHANGE OF NAME..................................... 14
INTERESTS OF CERTAIN PERSONS IN THE REINCORPORATION................... 14
DIFFERENCES IN STOCKHOLDER RIGHTS..................................... 14
ABSENCE OF TAX RULING................................................. 15
CHANGE OF CONTROL..................................................... 15
LACK OF PROPER AUTHORIZATION.......................................... 15
COMPARISON OF FEATURES OF NEVADA AND DELAWARE LAW........................ 16
RIGHTS AND OBLIGATIONS OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS......... 16
BUSINESS COMBINATIONS INVOLVING INTERESTED STOCKHOLDERS AND
STOCKHOLDERS........................................................ 16
CONTROL SHARE ACQUISITIONS............................................ 17
INDEMNIFICATION AND LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS. 17
STANDARDS OF CONDUCT FOR DIRECTORS AND OFFICERS....................... 18
RIGHTS OF STOCKHOLDERS (OTHER THAN PRINCIPAL STOCKHOLDERS).............. 18
NUMBER, TERM AND ELECTION OF DIRECTORS................................ 18
REMOVAL OF DIRECTORS.................................................. 18
AMENDMENTS TO GOVERNING DOCUMENTS..................................... 18
APPRAISAL AND APPRAISAL RIGHTS........................................ 18
PREFERENCES AND OTHER SECURITIES...................................... 19
i
DIVIDENDS AND DISTRIBUTIONS.................. 19
STOCKHOLDER INSPECTION RIGHTS................ 19
CERTAIN EXTRAORDINARY TRANSACTIONS............. 20
THE MEETING AND VOTING.......................... 21
THE MEETING.................................... 21
REVOCATION OF PROXIES.......................... 21
VOTING......................................... 21
VOTE REQUIRED; RECOMMENDATION.................. 21
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 23
LEGAL OPINIONS................................. 23
OTHER MATTERS.................................. 23
ANNEX A......................................... A-1
ANNEX B......................................... B-1
FORM OF PROXY...................................
ii
PREFACE
FORWARD-LOOKING STATEMENTS
This Proxy Statement contains, and incorporates by reference, some
forward-looking statements about the financial condition, results of operation
and business of ADGI. These are not historical facts. They include expressions
about ADGI's
. confidence,
. strategies and expressions about earnings,
. new and existing programs and services,
. relationships,
. opportunities,
. technology, and
. market conditions.
You can identify these statements by looking for
. terms like "expect," believe" or "anticipate," or
. expressions of confidence like "strong" or "on-going," or
. similar expressions or statements that are variations of the above terms.
These forward-looking statements involve certain risks and uncertainties.
Actual results may differ materially from those predicted in the
forward-looking statements. This can happen because of uncertainties such as
. whether the transactions described in this Proxy Statement can be
completed as planned,
. whether ADGI's existing management will continue in place,
. future economic conditions, and
. other risks described in this Proxy Statement and in the annual,
quarterly and current reports of ADGI that are incorporated into it by
reference.
Stockholders are cautioned not to place too much reliance on forward-looking
statements. ADGI does not have any obligation to update any forward-looking
statements at any time.
AVAILABLE INFORMATION
ADGI is subject to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and to the regulations adopted by the Securities and Exchange
Commission (the "Commission") under the Exchange Act, dealing with disclosure
of information about ADGI. ADGI complies by filing reports, proxy and
information statements and other information with the Commission. Those
reports, proxy and information statements, and other information filed with the
Commission, can be inspected and copied at the public reference facilities
maintained by the Commission at:
. Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.,
20549, and the following Regional Offices:
. 233 Broadway, New York, N.Y. 10279, and
. Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois,
60661.
1
Copies of the above material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C., 20549 at prescribed rates. The Commission maintains a site on
the World Wide Web at http://www.sec.gov that contains reports, proxy
statements and information statements and other information regarding companies
like ADGI that make electronic filings with the Commission.
ADGI Common is quoted on the Over-the-Counter Bulletin Board ("OTCBB")
maintained by the National Association of Securities Dealers, Inc. ("NASD").
The NASD and/or certain of its affiliates or divisions (including the OTCBB)
may retain certain material related to ADGI. If the Exchange takes place as
planned, all later filings with the Commission will be made by GlobeTel as
successor to ADGI.
Statements contained in this Proxy Statement or in any document incorporated
into this Proxy Statement by reference, describing the contents of any contract
or other document, are not necessarily complete. For that reason, reference is
made to the copy of the contract or other document that is included as an
exhibit to a report or statement filed by ADGI with the Commission. All
descriptions of contracts or other documents are qualified by this reference to
the same document filed as an exhibit.
2
SUMMARY
The following is a summary of certain information contained in other places
in this Proxy Statement. In most cases the information in those other places is
more detailed than this summary, so the summary should be regarded as a
convenience only, and Stockholders should refer to the detailed information and
should not rely on this summary. Stockholders are urged to read this Proxy
Statement, and in particular the section entitled "Risk Factors," carefully and
in its entirety. Unless clearly indicated otherwise (i) references in this
Proxy Statement to corporations refer to those corporations and their direct
and indirect subsidiaries and (ii) the information in this Proxy Statement is
based on the assumption that the Plan will be approved at the Meeting.
ADGI
ADGI is a Nevada corporation engaged in the business of (i) sale of
telecommunication services primarily involving Internet telephony using Voice
over Internet Protocol ("VoIP"), and (ii) wide area network and local area
network services. ADGI's principal executive offices are, and following the
Exchange the principal executive offices of GlobeTel will be, located at 3768
Sarazen Court, NE, Conover, NC 28613. The telephone number is (828) 459-0916.
ADGI was incorporated under the laws of the State of Nevada as Terra West
Homes, Inc. on January 16, 1979. On March 15, 1995, its name was changed to
"American Diversified Group, Inc.". During the year ended December 31, 2001,
ADGI's business activities included (i) sale of telecommunication services
primarily involving Internet telephony using VoIP through its Global Transmedia
Telecommunications Corporation subsidiary ("Global"), and (ii) wide area
network and local area network services through its NCI Telecom, Inc.
subsidiary ("NCI"). The acquisition of Global was completed on February 19,
2000, and the acquisition of NCI was completed on June 29, 2000. The Company is
in the process of completing a merger of Global and NCI with and into ADGI,
with ADGI as the surviving corporation.
GLOBETEL
GlobeTel is presently inactive. It is a newly formed Delaware corporation
and a wholly-owned subsidiary of ADGI. As formed, it is authorized to issue up
to 1,500,000,000 shares of Common Stock, par value $0.00001 per share, and
10,000,000 shares of Preferred Stock. The Preferred Stock is a so-called "blank
check" preferred, meaning that its terms such as dividends, liquidation and
other preferences, are to be fixed by the Company's Board of Directors at the
time of issuance. Approval of these stock issuance authorizations is being
sought at the Meeting as though they were authorizations to amend ADGI's
Articles of Incorporation to increase the authorized number of shares of ADGI
Common and to create a "blank check" ADGI Preferred Stock. This means that the
vote required for approval in each case will be a majority of the shares of
ADGI Common outstanding and entitled to vote at the Meeting,
THE MEETING
ADGI will hold the Meeting at its principal executive offices at 3768
Sarazen Court, NE, Conover, NC 28613 on July 24, 2002, beginning at 10:00 a.m.
local time. Stockholders of record at the close of business on the Record Date
("Record Stockholders") are entitled to notice of and to vote at the Meeting.
At the Meeting, Record Stockholders will be asked to consider and vote upon the
Plan, the GlobeTel Common Stock Authorization and the GlobeTel Preferred Stock
Authorization, and such other business as may properly come before the Meeting.
RECOMMENDATION OF ADGI BOARD OF DIRECTORS; REASONS FOR REINCORPORATION
The Board believes the three Meeting Agenda Items, namely the Plan, the
GlobeTel Common Stock Authorization, and the GlobeTel Preferred Stock
Authorization, to be in the best interests of ADGI and Stockholders and
unanimously recommends that Stockholders vote FOR each of them. The Company
will not
3
proceed with the Plan unless all three Meeting Agenda Items are approved at the
Meeting. If all three are approved (and if the Plan is not later abandoned as
described below under "The Plan, Exchange and Merger--Conditions to Completion
of the Plan Transactions; Abandonment of the Plan" in this Proxy Statement),
shares of ADGI Common will automatically, without further action by
Stockholders, become exchangeable (the "Exchange") for the same number of
newly-issued shares of GlobeTel.
The Exchange will result in ADGI becoming a wholly-owned subsidiary of
GlobeTel. GlobeTel will then merge ADGI into itself and terminate the separate
corporate existence of ADGI (the "Merger"). GlobeTel will be the corporation
surviving the Merger, and all former stockholders of ADGI (other than any who
elect to dissent from the Exchange and be paid in cash for their ADGI shares)
will be stockholders of GlobeTel, completing the reincorporation of ADGI as a
Delaware corporation.
The Board believes that ADGI and Stockholders alike will benefit from this
change due to Delaware's well-established comprehensive and flexible corporate
laws that provide corporations with a greater measure of predictability.
GlobeTel will have a greater number of authorized shares of common stock than
ADGI, and will also be authorized to issue preferred stock, both of which will
allow additional flexibility in making future acquisitions. Also, as discussed
below under "The Plan--Reasons for the Exchange--Defective Share
Authorization," the Exchange will result in current ADGI stockholders becoming
stockholders in GlobeTel, which, unlike ADGI, does not require a 100% vote of
stockholders to amend its certificate of incorporation, a requirement that ADGI
has failed to meet with respect to every attempted amendment of its charter,
resulting in the lack of proper authorization for issuance of most outstanding
shares of ADGI Common. Finally, the Board believes that the name "GlobeTel
Communications Corp." is better aligned with and better suited for the business
conducted by ADGI than that of "American Diversified Group, Inc.".
VOTE REQUIRED
Approval of each of the three Meeting Agenda Items requires the affirmative
vote of a majority of the shares of ADGI Common outstanding as of the Record
Date. Members of ADGI's management, the Board, and certain Stockholders, who
own in the aggregate approximately 8.26% of the total number of shares of ADGI
Common outstanding, have indicated their intent to vote to approve each of
those items.
SUMMARY RISK FACTORS
In considering whether to approve or disapprove the Meeting Agenda Items,
Stockholders should consider the following:
Additional Share Authorization
If all three Meeting Agenda Items are approved, GlobeTel will be authorized
to issue 1,500,000,000 shares of Common Stock, of which fewer than 500,000,000
will have been issued in the Exchange, and 10,000,000 shares of Preferred
Stock, none of which will have been issued. While GlobeTel presently has no
commitments, understandings or agreements requiring the issuance of additional
shares of Common Stock or any shares of Preferred Stock, nor does it presently
contemplate any transaction that would involve such issuance, some or all of
the unissued shares could, under some circumstances, be issued without further
action by stockholders, diluting the holdings of existing stockholders
Frustration of the Objectives of the Reincorporation
Any advantages to GlobeTel arising from governance under the Delaware
General Corporation Law and other sections of Delaware law, as interpreted by
regulators and applied and interpreted by state and federal courts
(collectively, "Delaware Law"), could be reduced or eliminated at any time by
action of courts, legislators, and government officials. GlobeTel would not
have any influence or control over changes like these should they happen.
4
Any disadvantages to ADGI arising from governance under the Nevada General
Corporation Law and other sections of the Nevada law, as interpreted by
regulators and applied and interpreted by state and federal courts
(collectively, "Nevada Law") could be reduced or eliminated at any time by
action of courts, legislators, and government officials. Again, GlobeTel would
not have any influence or control over changes like this should they happen.
Frustration of the objectives of the name change
The value realized by ADGI (and, after the Exchange takes place, GlobeTel)
and Stockholders as a result of the change of name may be partially or
completely offset by the expense of changing the corporate name and the loss of
recognition that sometimes goes with a change of name or stock trading symbol.
ADGI has not engaged consultants or experts to select or give any opinion about
the new name.
Other risks associated with the Merger
Delaware law and the charter documents of GlobeTel may permit certain
principal stockholders, officers and directors of GlobeTel greater freedom, and
less liability to other stockholders, in their dealings with and on behalf of
the corporation than those same persons have in their dealings with ADGI under
Nevada law and ADGI's charter documents.
The regulatory or tax treatment of the Exchange and the merger of ADGI into
GlobeTel could be significantly different than that anticipated in the Plan.
The Exchange is anticipated to be tax-free to exchanging Stockholders, and
GlobeTel is anticipated to become a public company whose shares are quoted on
the OTCBB operated by the NASD. Different regulatory and/or tax treatment could
result in a substantial adverse effect on Stockholders.
The Exchange and Merger may be determined to be a change of control,
recapitalization, or other such material event which could restrict GlobeTel
from exercising rights of ADGI under certain contracts and agreements with
employees or third parties.
Although the main purpose of the Exchange is to address the lack of proper
authorization of ADGI with respect to the issuance of a significant portion of
the outstanding shares of ADGI Common, the approval of the Plan and the
consummation of the Exchange may not relieve ADGI and GlobeTel of the potential
claims that may be made, if any, related to the lack of proper authorization.
5
THE PLAN, EXCHANGE, AND MERGER
The Plan is the agreement of ADGI and GlobeTel to complete the Exchange if
Stockholders approve the Plan, and if certain conditions are met, most
importantly that the number of shares of ADGI Common Stock as to which
Appraisal Rights are asserted is not greater than 1,000,000.
The Exchange is the action by means of which all outstanding shares of ADGI
Common (except those as to which Appraisal Rights are elected) are converted
into shares of GlobeTel Common. The Exchange will happen automatically if the
Plan is approved by Stockholders and is not terminated by ADGI. After the
Exchange happens, Stockholders (other than any who elect Appraisal Rights) will
be able to deliver their ADGI Common stock certificates to GlobeTel and receive
GlobeTel stock certificates in exchange. The Exchange will result in ADGI
becoming a wholly-owned subsidiary of GlobeTel.
The Merger is the merger of ADGI with and into GlobeTel, which will
terminate ADGI's separate corporate existence. GlobeTel will cause the Merger
to take place after it becomes the sole stockholder of ADGI as a result of the
Exchange.
REASONS FOR THE EXCHANGE
Change of Corporate Domicile
For many years, Delaware has followed a policy of encouraging incorporation
in that state and has been a leader in adopting, construing and implementing
comprehensive, flexible, corporate laws that the ADGI Board and management
believe are responsive to the legal and business needs of corporations
organized under its laws. Further, Delaware has an established body of case law
construing Delaware corporate statutory law which provides businesses with a
greater measure of predictability than that which exists in any other
jurisdiction. As a result, Delaware affords corporations organized under its
laws well-established principles of corporate governance that may increase
ADGI's ability to attract quality officers and directors.
In addition, issues related to Delaware corporate law are generally
adjudicated by the Delaware Court of Chancery, which brings to its handling of
complex corporate issues a level of experience, a speed of decision and a
degree of sophistication and understanding that is not matched by any other
court in the country. As a result, Delaware corporate law is generally
acknowledged to be the most advanced and flexible set of corporate statutes in
the country.
Corporate Name
ADGI has become increasingly aware that the generic (non-specific) nature of
its name adversely affected its sales, marketing, and communication programs.
The Exchange, with its resulting change of name to "GlobeTel Communications
Corp.," will create a company whose name more accurately reflects the nature of
its business operations.
Defective Share Authorization
ADGI has been advised by its legal counsel that a problem exists with
respect to valid authorization of almost all of the outstanding shares of ADGI
Common.
The original Nevada Articles of Incorporation of ADGI (then known as Terra
West Homes, Inc.), adopted in December, 1978 and filed in January, 1979
(including amendments through the date of this Proxy Statement, the "ADGI
Articles"), contain a provision requiring the consent of all directors and of
holders of 100% of the outstanding shares of ADGI Common to any amendment of
the ADGI Articles. The original number of authorized shares of ADGI Common was
25,000. Article X of these original Articles provides that "The corporation
reserves the right to amend, alter, change or repeal any of the provisions
contained in these Articles
6
of Incorporation provided that unanimous consent is first given by both the
full Board of Directors then seated and the holders of shares (in good
standing) issued and outstanding of the corporation."
On December 3, 1991, Terra West Homes, Inc. filed an amendment to its
Articles of Incorporation. This amendment purported to (1) change the name of
the company to "Gerard Enterprises, Ltd.", (2) increase the authorized number
of shares from 25,000 to 25,000,000, and (3) split the 25,000 outstanding
shares of common stock 40-for-1 "as approved at a Special Meeting of
Shareholders held October 20, 1991". This amendment recites that "As of the
date of the Special Meeting the Company had issued and outstanding one million
(1,000,000) shares . . . all of which were entitled to vote on the proposed
amendments." It then states "At the . . . Meeting held October 20, 1991, seven
hundred seventy five thousand (775,000) voted in favor of the amendments and
none (0) voted against the amendments." This represented a 77.5% favorable
vote, substantially less than the 100% required by the Articles. This amendment
was invalid for want of the approval required by the original Articles.
On November 22, 1992, Gerard Enterprises, Ltd. filed a further amendment to
its Articles of Incorporation. This amendment purported to (1) change the name
of the company to "Tera West Homes, Inc." and (2) increase the authorized
shares from 25,000,000 to 50,000,000. The amendment contains this statement
". . . there being at the present time, 2,000,000 issued and outstanding
shares." It also contains this statement: "The number of shares of the
corporation outstanding and entitled to vote on amendment to the articles of
incorporation is 1,000,000, that the said change(s) and amendment have been
consented to and approved by a majority vote of the stockholders . . .". This
discrepancy between the 1 million and 2 million numbers may have resulted from
an assumption that doubling the authorized shares also doubled the outstanding
shares. In any event, the recital that the amendment was approved by a
"majority vote" falls short of the 100% approval required by the company's
original Articles. This amendment also was invalid for want of the 100%
approval required by the original Articles.
On April 8, 1993, Tera West Homes, Inc. filed a further amendment to its
Articles of Incorporation. This amendment purported to (1) change the company's
name to "Tera West Ventures, Inc." and (2) change the company's authorized
shares to be "50,000 shares of preferred shares Series A." This latter change,
had it been approved by the required 100% of outstanding shares, would have
eliminated all the common stock, because no mention was made of the common
stock in the amendment. However, like the first two amendments described above,
this amendment was invalid for want of the required 100% approval, because the
final paragraph of the amendment recites that "The number of shares of the
corporation outstanding and entitled to vote on an amendment . . . are
1,000,000, that the said change(s) and amendment has been consented to and
approved by a majority vote . . .".
On March 15, 1995, Tera West Ventures, Inc. filed a further amendment to its
Articles of Incorporation. This amendment purported only to change the name of
the corporation to "American Diversified Group, Inc." However, the final
paragraph of the amendment states "The number of shares of the corporation
outstanding and entitled to vote on an amendment to the Articles of
Incorporation is 14,000,001, that the said change(s) and amendment have
been . . . approved by a majority vote . . . ". There is no amendment between
April 8, 1993 and March 15, 1995 that accounts for the increase from 1,000,000
to 14,000,001 in the number of shares entitled to vote. In any event, as the
March 15, 1995 amendment, like the earlier ones, recites that only a majority,
not 100%, of the voting shares approved the amendment, it is also invalid.
On December 5, 1996, ADGI filed a further amendment to its Articles of
Incorporation. This amendment purported to (1) locate the company's principal
office at an address in West Palm Beach, Florida, (2) increase the "number of
authorized shares of common stock . . . from 50,000 par value $10 to
200,000,000, par value $.001" and (3) remove three directors and replace them
with Tom Craft Jr., Jerrold Hinton and another person. The last paragraph of
the amendment recites that "The number of shares of the corporation outstanding
and entitled to vote on an amendment . . . is 50,000, that the said change(s)
and amendment has been consented to and approved by a majority vote . . .".
There is no explanation of the discrepancy between the figure of 50,000 and the
7
14,000,001 shares-entitled-to-vote referred to in the 1995 amendment. One
possible explanation is that the amendment used the 50,000 figure from the 1993
amendment which purported to create 50,000 shares of preferred stock and to
eliminate the common stock.
On April 7, 1998, ADGI filed a further amendment. This amendment purported
to increase the company's authorized shares to 350,000,000. The final paragraph
recites that "The number of shares of the corporation outstanding and entitled
to vote on an amendment . . . is 197,512,520, that the said change(s) and
amendment has been consented to and approved by a majority vote . . .". This
amendment, like the earlier ones, was invalid for want of the 100% approval
required by ADGI's original Articles of Incorporation.
On August 15, 2001, ADGI filed a certificate with the Nevada Secretary of
State. This certificate recorded an increase in the number of authorized shares
from 350,000,000 to 700,000,000, which is the number currently reported by ADGI
in its financial statements. The certificate states that this was approved by
ADGI's Board of Directors on March 15, 2000. It further states that the change
was not approved by stockholders because "Stockholder approval was not required
pursuant to N[evada] R[evised] S[tatutes] 78.207".
NRS 78.207 permits the Board of Directors to increase the number of
authorized shares without stockholder approval "Unless otherwise provided in
the articles of incorporation" while at the same time "correspondingly
increasing . . . the number of issued and outstanding shares . . . held by each
stockholder". A change under NRS 78.207 is not effective until the company
files a certificate describing the change (which was the certificate filed on
August 15, 2001). When the certificate is filed, NRS 78.209 provides that
"[t]he provisions of the articles of incorporation . . . regarding the
authorized number . . . of the changed class . . . of shares shall be deemed
amended . . .".
The Board action of March 15, 2000 taken without unanimous stockholder
approval was invalid for two reasons. First, only the authorized shares, not
the outstanding shares, were increased. In the words of NRS 78.207, the number
of issued and outstanding shares was not "correspondingly increased".
Second, the procedure in NRS 78.207 may only be used if the articles of
incorporation do not "otherwise provide". As noted in the above discussion,
ADGI's original Articles of Incorporation require 100% stockholder approval "to
amend, alter, change or repeal" any provision of the Articles of Incorporation.
Because the filing of the NRS 78.207 certificate causes a "deemed amendment"
under NRS 78.209, ADGI's Articles of Incorporation must be viewed as "providing
otherwise," because the original Articles do not permit any amendment to a
provision of the Articles that is not approved by 100% of the stockholders.
ADGI has obtained an opinion of its Nevada counsel, Kummer Kaempfer Bonner &
Renshaw ("KKBR"), to the effect that (1) upon the affirmative vote of ADGI
stockholders holding a majority of the outstanding shares in favor of the Plan,
it will have been duly authorized by stockholders and will be ADGI's valid and
binding agreement, (2) completion of the Exchange as provided for in the Plan
will result in conversion of each share of ADGI Common into the right to
receive a share of GlobeTel Common, and (3) the consummation of the Exchange
will not violate Nevada law. While the defect in authorization of most of the
outstanding shares of ADGI Common cannot be completely addressed by the Plan
(barring a 100% favorable vote to approve the Plan), completion of the Exchange
as contemplated by the Plan will result in ADGI stockholders becoming
stockholders in GlobeTel, a Delaware company that, unlike ADGI, does not
require a 100% vote of stockholders to amend its certificate of incorporation.
The Board believes that the defect in authorization of ADGI Common must be
addressed, and that successful completion of the Exchange and the Merger that
are included in the Plan offer the only means of doing so, because it has been
advised by counsel that any other method would require amendment of ADGI's
Articles of Incorporation, which in turn would require 100% approval of ADGI
stockholders. As noted above under "Summary--Recommendation of ADGI Board Of
Directors; Reasons for Reincorporation", all shares of GlobeTel Common issued
in the Exchange will be properly authorized,
8
duly and validly issued, fully paid and non-assessable, and GlobeTel's
certificate of incorporation (the "GlobeTel Certificate") will not contain the
100% approval requirement.
Board Review and Approval
The Board unanimously approved the Plan on May 31, 2002, and recommended it
for adoption by Stockholders at the Meeting. The approval of the Plan by the
Board is based on a number of factors considered by the Board, including:
. Possible solutions of the problem presented by lack of valid
authorization of issuance of almost all outstanding shares of ADGI Common.
. The advantages of Delaware domicile, including substantive differences
between Delaware Law and Nevada Law, and perceived differences between
the same among vendors, customers, and investors.
. The advantages of the name "GlobeTel Communications Corp." including
promotion of ADGI's business and communication to vendors, customers, and
investors.
. The costs of changing the domicile to Delaware, higher costs of
maintaining Delaware domicile than maintaining Nevada domicile, direct
costs of changing ADGI's name, and indirect costs of the name change
including loss of the "brand equity" and recognition accrued by ADGI
under the name "American Diversified Group, Inc."
. The risks that the Exchange and the subsequent Merger might be treated,
either separately or collectively, as a federally-taxable event, or as a
change of control, recapitalization, or reorganization, or causing the
accounting or the auditor review thereof of GlobeTel to differ materially
from that of ADGI, and the costs that would be incurred in such events.
The Board did not seek, commission or receive, any reports, reviews, studies
or analyses of any business, financial, or other experts other than the
management of the Company, and did not seek, commission or receive any fairness
opinion from an investment bank or comfort letter from a certified public
accountant, regarding the Plan or the Exchange.
The Board assigned substantial weight to the solution of the problem
presented by lack of proper authorization of outstanding shares of ADGI Common,
but otherwise did not find it practicable to and did not quantify or otherwise
assign relative weights to the remaining factors or determine that any one of
them was of particular importance. Rather, the Board views its recommendation
as being based on the totality of the information presented and considered by
it, with particular emphasis on solving the defective share authorization
problem. The Board determined that the positive aspects of the foregoing
factors outweighed the negative ones and, based on such determination, approved
the Plan.
OTHER MATTERS
Stock Certificates
STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXIES. IF THE PLAN
IS APPROVED AND NOT TERMINATED BY ADGI, GLOBETEL WILL FURNISH INSTRUCTIONS
ABOUT HOW TO SUBMIT ADGI STOCK CERTIFICATES AND RECEIVE GLOBETEL CERTIFICATES
IN EXCHANGE.
Right of Board to Withdraw Recommendation and/or Abandon the Plan
The Board may withdraw its recommendation of the Plan prior to the Meeting,
and may abandon the Plan after its approval at the Meeting, if one or more of
the conditions to Plan has not been satisfied or if the Board determines that
the Exchange would no longer serve the interests of ADGI or the Stockholders.
The most
9
important condition is that the number of shares of ADGI Common held by persons
seeking Appraisal Rights not exceed 1,000,000. The reason for this condition is
that ADGI is unwilling to spend an excessive amount of cash in order to
complete the Exchange.
Accounting Treatment
It is intended that the Exchange will not cause the accounting practices of
GlobeTel or the audit review of such practices to differ materially from those
of ADGI.
Appraisal Rights
If the Plan is approved, Stockholders may be entitled to assert Appraisal
Rights under Nevada Revised Statutes ("NRS") 92A.300 to 92A.500, inclusive. A
copy of those sections of the NRS is attached as Annex B that accompanies this
Proxy Statement. A brief summary of Appraisal Rights is provided below. Any
Stockholder considering the use of Appraisal Rights should read that Supplement
carefully, and should not rely only on the following, which is only a partial
summary.
Any Stockholder wanting to exercise Appraisal Rights must deliver written
notice to ADGI, before the date of the Meeting, or at the Meeting before the
Plan is voted upon, stating that the Stockholder intends to demand payment for
his, her or its shares of ADGI Common if the Plan is approved (NRS
92A.420.1(a)), and must not vote his, her or its shares in favor of the Plan
(NRS 92A.420.1(b)). Notices transmitted before the meeting should be addressed
to American Diversified Group, Inc., Attention Jerrold Hinton, President, 3768
Sarazen Court NE, Conover, NC 28613. At the Meeting, notices may be handed to
Mr. Hinton. Stockholders who vote in favor of the Plan will be deemed to have
waived their Appraisal Rights.
A Stockholder whose shares of ADGI Common are held in "street name" or in
the name of anyone other than the Stockholder must obtain written consent from
the person or firm in whose name the shares are registered, allowing the
Stockholder to file the notice demanding payment for the shares in question,
and must deliver the consent to ADGI no later than the time that Appraisal
Rights are asserted (NRS 92A.400.2(a)). Also, the dissent must be asserted as
to all shares of ADGI Common that the Stockholder beneficially owns or has
power to vote at the Meeting (NRS 92A.400.2(b)).
Any Stockholder who does not complete the requirements of NRS 92A.400 and
92A.420.1(a) and (b) as described above is not entitled to payment for his, her
or its shares of ADGI Common (NRS 92A.420.2).
Comparison of Stockholder Rights
The statutory and common law rights of stockholders of Delaware corporations
differ in some respects from the statutory and common law rights of
stockholders of Nevada corporations. The GlobeTel Certificate will differ in
some respects from the ADGI Articles as to the rights of the Stockholders. See
"Comparisons of Features of Nevada and Delaware Law."
Interests of ADGI Directors and Management
In considering the recommendation of the Board, Stockholders should be aware
that members of ADGI's management and the Board have interests in the Plan that
are different from, or in addition to, the interests of Stockholders generally.
These differing interests arise principally from the fact that each of those
persons will have the same positions with GlobeTel as they have with ADGI, but
those positions, under Delaware Law, the GlobeTel Certificate, and the GlobeTel
By-Laws, will subject them to different and in some cases lesser
responsibilities and constraints, and greater rights, privileges, and ability
to act without the consent of the Stockholders, than are imposed or available
respectively under Nevada Law, the ADGI Articles, and the ADGI By-Laws.
10
Federal Securities Laws Consequences
Shares of GlobeTel Common issued in exchange for shares of ADGI Common will
not be subject to any restrictions on resale or transfer, other than any to
which the shares of ADGI Common for which they were exchanged were subject at
the time they were delivered.
Dividends
ADGI does not pay dividends and does not anticipate that it will pay
dividends in the foreseeable future. If the Exchange takes place, it is
anticipated that GlobeTel will adopt the same dividend policy.
Business of ADGI Pending the Reincorporation
Pendency of the Exchange is not expected to have any material effect on the
business of ADGI. ADGI continually reviews and modifies its business plans and
policies, and changes in its business may occur in connection with those
reviews.
CONDITIONS TO COMPLETION OF THE PLAN TRANSACTIONS; ABANDONMENT OF THE PLAN
The Exchange is expected to be completed within 30 days after the Meeting.
Before it can be completed the following events must occur:
(a) Each of the Meeting Agenda Items shall have been duly approved at the
Meeting by the requisite vote of Stockholders in accordance with Nevada
Law and the ADGI Articles and ADGI By-Laws; For these purposes the
GlobeTel Common Stock Authorization and the GlobeTel Preferred Stock
Authorization are being treated as though they were authorizations to
amend ADGI's Articles of Incorporation to authorize issuance by ADGI of
1,500,000,000 shares of ADGI Common and 10,000,000 shares of a new ADGI
"blank check" Preferred Stock, meaning that the vote required for their
approval will be a majority of all outstanding shares of ADGI Common
entitled to vote at the Meeting, the same as the vote required for
approval of the Plan.
(b) The number of shares of ADGI Common as to which Stockholders assert
Appraisal Rights does not exceed 1,000,000;
(c) All opinions of counsel and auditors required to be received shall have
been received;
(d) All consents, approvals, licenses, permits, orders or authorizations of,
and registrations, declarations or filings with, any governmental entity
required in connection with the Plan and the Exchange shall have been
obtained and made and shall be in full force and effect;
(e) No court or other governmental entity having jurisdiction over ADGI
shall have enacted, issued, promulgated, enforced or entered any law,
rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is then in effect
and has the effect of making the Exchange illegal;
(f) ADGI and GlobeTel shall have obtained the consent or approval of each
person (other than governmental entities) whose consent or approval is
required in connection with the Exchange, under any document to which
ADGI is a party (such as a loan or credit agreement, note, mortgage,
indenture, lease, or joint venture agreement.) This condition need not
be satisfied as to consents or approvals which, even if not obtained,
would not (in ADGI's reasonable opinion) have a material adverse effect
on GlobeTel or upon the completion of the Exchange;
(g) There shall not be pending or threatened any suit, action or proceeding
by any governmental entity or any other person, or before any court or
governmental authority, agency or tribunal, domestic or
11
foreign, that has a significant likelihood of success, challenging the
effectiveness of the Exchange, seeking to restrain or prohibit the
completion of the Exchange or seeking to obtain from ADGI any material
amount of damages; and
(h) The Board shall not have determined that completing the Exchange is no
longer in the best interest of ADGI and the Stockholders.
If any of the above conditions is not satisfied, ADGI's Board may determine
to abandon the Plan. The Plan will be abandoned if any one of the Meeting
Agenda Items is not approved at the Meeting.
12
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Katten Muchin Zavis Rosenman, counsel to ADGI, the
following summary correctly sets forth the material U.S. federal income tax
consequences of the Exchange and subsequent Merger (collectively, the "Reviewed
Transactions") to U.S. Holders (as defined below) of ADGI Common. This summary
does not purport to be a comprehensive description of all of the tax
considerations that may be relevant to a decision to approve the Exchange. In
particular, this summary deals only with U.S. Holders who hold ADGI Common as
capital assets, and does not address the tax treatment of the Reviewed
Transactions under applicable state or local tax laws or the laws of any
jurisdiction other than the United States. In addition, this summary does not
address all aspects of U.S. federal income taxation that may be applicable to
U.S. Holders in light of their particular circumstances, or to U.S. Holders
subject to special treatment under U.S. federal income tax law (such as holders
who are securities dealers, financial institutions, tax-exempt organizations or
insurance companies).
This discussion is based on the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all as in effect on the
date hereof and all of which are subject to change, possibly with retroactive
effect. No rulings have been or will be sought from the Internal Revenue
Service ("IRS") with respect to any of the U.S. federal income tax consequences
of the Reviewed Transactions. The conclusions set forth below are not binding
upon the IRS or the courts.
U.S. Holders should consult their own tax advisers as to the U.S. federal
income tax consequences of the Reviewed Transactions, as well as the tax
consequences under any applicable state or local tax laws or the laws of any
jurisdiction other than the United States.
As used herein, a "U.S. Holder" means a beneficial owner of ADGI Common who
is a citizen or resident of the United States, a corporation or partnership
created or organized in or under the laws of the United States or any state
thereof, an estate the income of which is subject to U.S. federal income tax
regardless of its source, or a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more U.S. persons have the authority to control all substantial
decisions of the trust.
The Reviewed Transactions will be treated for U.S. federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code.
ADGI and GlobeTel will each be "a party to a reorganization" within the meaning
of Section 368(b) of the Code. Accordingly, a U.S. Holder will not recognize
any income, gain or loss in connection with the Reviewed Transactions. A U.S.
Holder's tax basis and holding period with respect to GlobeTel Common received
in the Exchange will be the same as such U.S. Holder's tax basis and holding
period for the ADGI Common exchanged therefor. A U.S. Holder who receives
solely cash pursuant to the exercise of Appraisal Rights in the Exchange will
recognize capital gain or loss equal to the difference between the tax basis of
the ADGI Common surrendered and the amount of cash received therefor. Such
capital gain or loss will be treated as long-term capital gain or loss as to
ADGI Common held by the U.S. Holder for more than one year prior to the
effective date of the Merger, and otherwise as short-term capital gain or loss.
No gain or loss will be recognized by ADGI or GlobeTel in the Merger.
The conclusions set forth above are based on certain customary
representations made by ADGI and GlobeTel, the accuracy of which will be
confirmed as a condition to completion of the Exchange, and on the assumption
that the Reviewed Transactions will be effectuated in accordance with the Plan
and as described in this Proxy Statement. It is a condition to the completion
of the Reviewed Transactions that ADGI shall have received confirmation of the
opinion of Katten Muchin Zavis Rosenman that the Exchange will be treated for
U.S. federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code.
13
RISK FACTORS
The statements as to forward looking statements contained at page 1 of this
Proxy Statement are repeated with emphasis as to this "Risk Factors" section.
Possible Dilutive Effect of Additional Share Authorization
If all three Meeting Agenda Items are approved, GlobeTel will be authorized
to issue (i) 1,500,000,000 shares of GlobeTel Common, of which fewer than
500,000,000 will have been issued in the Exchange, leaving more than
1,000,000,000 shares of GlobeTel Common available for later issuance, and (ii)
10,000,000 shares of Preferred Stock, all of which will be available for later
issuance on terms to be fixed by GlobeTel's Board of Directors at the time of
issuance. While GlobeTel presently has no commitments, understandings or
agreements requiring the issuance of additional shares of Common Stock or any
shares of Preferred Stock, nor does it presently contemplate any transaction
that would involve such issuance, some or all of the unissued shares could,
under some circumstances, be issued without further action by stockholders,
diluting the holdings of existing stockholders. Also, issuance of additional
shares could under some circumstances make more difficult, or frustrate, a
hostile takeover of GlobeTel.
Uncertain Value of Reincorporation
The superiority of corporate governance under Delaware Law rather than
Nevada Law is a matter of some uncertainty and is in any event dependent upon
statutes and court interpretation. These are subject to change over time, and
changes would be outside the control of ADGI, GlobeTel or any Stockholder. The
perceived advantages of Delaware incorporation may therefore be reduced or
eliminated by changes of this nature as time passes.
The actual and perceived variances in value or convenience between Delaware
domicile and Nevada domicile, in corporate governance and in the opinion of
vendors, customers, employees, and investors, cannot be relied upon to exist
and are in any event subject to change.
Uncertain Value of Change of Name
The value realized by ADGI (and, after the Exchange is effective, GlobeTel)
and Stockholders as a result of the change of name may be partially or entirely
offset by the expense of changing the corporate name and the loss of
familiarity of the old name or stock trading symbol. ADGI has not engaged
consultants or experts to select or assess the new name.
Interests of Certain Persons in the Reincorporation
Stockholders may be adversely affected by the fact that the interest of
ADGI's management and the Board have interests in the Exchange that are
different from, or in addition to, the interests of Stockholders generally,
which may create potential conflicts of interest. This arises from the fact
that those individuals will occupy the same positions with GlobeTel as they now
occupy with ADGI. See "Comparisons--Rights and Obligations of Management and
Principal Stockholders."
Differences in Stockholder Rights
Stockholders may be adversely affected as a result of differences between
Delaware Law and Nevada Law as to the rights and remedies of stockholders
vis-a-vis the management of a domiciliary business corporation and vis-a-vis
third persons (including, for example, persons favored or disfavored by
management in corporate control contests). Stockholders may be adversely
affected by the differences between the GlobeTel Certificate and the ADGI
Articles, and the GlobeTel By-Laws and the ADGI By-Laws, in each both as to
their express terms and as to the permissible application thereof under the
relevant state law.
14
Absence of Tax Ruling
Neither ADGI nor GlobeTel will request a ruling from federal, state, or
local authorities as to the tax consequences of the Exchange. It is a condition
to the completion of the Exchange that Katten Muchin Zavis Rosenman, counsel to
ADGI, confirm its opinion that the Exchange will be treated for U.S. federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code. However, an opinion of counsel is not binding on any taxing authority
or court.
Change of Control
While management believes it unlikely, the Exchange may be determined to be
a change of control, reorganization, recapitalization, or other event which,
upon its occurrence, relieves parties who have material contracts or agreements
with ADGI from their obligation to perform those contract obligations for
GlobeTel as successor to ADGI. If GlobeTel wanted to have those obligations
performed, it might have to pay money to the other party or make some other
arrangement that was disadvantageous to itself.
Lack of Proper Authorization
Since the amendments to the original articles of incorporation of ADGI were
invalid due to the failure of ADGI to obtain the unanimous consent of
Stockholders, the shares of ADGI Stock issued may not have been issued by ADGI
with the appropriate authorization. Accordingly, despite the approval of the
Exchange by a majority of the outstanding shares of ADGI Stock and the
reincorporation of ADGI from Nevada to Delaware, GlobeTel may not be relieved
of the potential claims that may be made, if any, by Stockholders related to
the lack of proper authorization. The assertion of such claims will require
GlobeTel to expend its limited resources and, as a result, will adversely
affect its operating results.
15
COMPARISON OF FEATURES OF NEVADA AND DELAWARE LAW
ADGI is incorporated under the laws of Nevada and GlobeTel is incorporated
under the laws of Delaware. If the Exchange is consummated, the holders of ADGI
Common, whose rights are currently governed by Nevada Law, the ADGI Articles
and the ADGI By-Laws, will become holders of GlobeTel Common, whose rights are
governed by Delaware Law, the GlobeTel Certificate and the GlobeTel By-Laws.
The general corporation and merger laws of Nevada are codified in Chapter 78
and Chapter 92A of the NRS. Nevada Law differs from Delaware Law in many
respects. The following summary sets forth certain differences that should be
considered by ADGI stockholders. The following summary does not purport to be a
complete statement of the differences between Nevada Law and Delaware Law,
which are too numerous to list in their entirety.
RIGHTS AND OBLIGATIONS OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
Business Combinations Involving Interested Stockholders.
Nevada Law restricts the ability of a "resident domestic corporation"/1/ to
engage in any business combination transaction with an "interested
stockholder/2/." There is a "lockout" period of three years starting when the
interested stockholder acquires the shares that make him an interested
stockholder, unless he had advance approval of the board of directors of the
resident domestic corporation to acquire those shares. Without this approval,
even after the three-year "lockout" the interested stockholder cannot do a
business combination with the resident domestic corporation unless he gets the
approval of a majority of the disinterested shares, or the combination meets
certain fair price criteria. If the Corporation's original Articles of
Incorporation do not contain a provision that opts out of these provisions, a
resident domestic corporation can, however, "elect out" of the above protection
by adopting an amendment to its Articles of Incorporation by majority vote of
the disinterested shares, but the amendment cannot become effective for 18
months after its passage and would apply only to stock acquisitions occurring
after it becomes effective.
Delaware law contains a similar provision including the three-year
"lockout," except that (i) the "interested stockholder" threshold is 15% rather
than 10%; and (ii) transactions with interested stockholders who obtained 85%
or more of the voting stock of the corporation in the acquisition that caused
them to become "interested" are exempted. After the "lockout" expires, the
interested stockholder can do a business combination only with approval from
the board of directors plus two-thirds of the stock not owned by the interested
stockholder. As in Nevada, an "opt-out" charter amendment is allowed, and can
take effect 12, rather than 18, months after adoption, but will not apply to
anyone who became an interested stockholder after the amendment was adopted.
The Nevada provision is not applicable to resident domestic corporations
that have no securities registered under Section 12 of the Securities Exchange
Act of 1934. The Delaware provision is not applicable to Delaware corporations
that do not have any class of stock listed on a national securities exchange,
quoted on the NASDAQ Stock Market or held of record by more than 2,000
stockholders.
Neither the ADGI Articles or ADGI By-Laws, nor the GlobeTel Certificate or
the GlobeTel By-Laws, has made any election permitted under Nevada Law or
Delaware Law, respectively, regarding these provisions. Neither makes any other
provision for interested stockholder transactions.
- --------
/1/ "Resident domestic corporation" means a Nevada corporation that has 200 or
more stockholders of record.
/2/ "Interested stockholder" means any person, other than the resident
domestic corporation or its subsidiaries, who either (a) beneficially
owns, directly or indirectly, 10% or more of the voting power of the
outstanding voting shares of the resident domestic corporation or (b) is
an affiliate or associate of the resident domestic corporation and at any
time within three years before the transaction was the beneficial owner,
directly or indirectly, of 10% or more of the voting power of the
outstanding shares of the resident domestic corporation.
16
Control Share Acquisitions
Under Nevada Law, an "acquiring person/3/" who acquires a "controlling
interest/4/" in an "issuing corporation/5/" may not exercise voting rights on
any "control shares/6/" unless authorized to do so by a majority vote of the
disinterested stockholders of the issuing corporation at a special meeting held
upon the request and at the expense of the acquiring person. If voting rights
are authorized and the acquiring person has a majority of the voting power, any
stockholder, other than the acquiring person, who does not vote to authorize
voting rights for the control shares can demand payment for his shares from the
corporation. The above provisions do not apply if the articles of incorporation
or bylaws of the corporation, as in effect on the 10th day following the
acquisition of a controlling interest by an acquiring person, state that the
above provisions do not apply. The ADGI Articles and the ADGI By-Laws do not
contain such a provision.
There is no equivalent provision under Delaware Law.
Indemnification and Limitation of Liability of Directors and Officers
Nevada Law and Delaware Law have substantially similar provisions which:
(1) allow a corporation to limit or eliminate the personal liability of
directors and officers to the corporation and its stockholders for damages
for breach of fiduciary duty if that person acted in good faith and in a
manner which that person reasonably believed to be in (or not opposed to)
the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that person's
conduct was unlawful; and
(2) allow a corporation to indemnify each current and past director or
officer, and each other person who served at the corporation's request as
director, officer, employee, agent, partner or fiduciary of another entity,
against expenses, liabilities and losses (including attorneys' fees,
judgments, fines, taxes, penalties and amounts paid or to be paid in
settlement) in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (including any
action by or in the right of the corporation in a derivative action).
Although the ADGI Articles or ADGI By-Laws do not contain provisions
limiting or eliminating liability, or indemnifying any of its past or present
officers or directors, Nevada Law provides that a director or officer is not
individually liable for any damages as a result of any act or failure to act
unless it is proven that his act or failure to act constituted a breach of
fiduciary duty and such breach involved intentional misconduct, fraud or
knowing violation of law. GlobeTel's certificate of incorporation provides for
GlobeTel to limit the liability of and indemnify its officers, directors, and
other persons from and against such expenses, liabilities, and losses, to the
maximum extent permitted by Delaware Law.
- --------
/3/ "Acquiring person" means (subject to certain exceptions) any person who,
individually or in association with others, acquires or offers to acquire,
directly or indirectly, a controlling interest in an issuing corporation.
/4/ "Controlling interest" means the ownership of outstanding voting shares of
an issuing corporation sufficient to enable the acquiring person,
individually or in association with others, directly or indirectly, to
exercise (i) one-fifth or more but less than one-third, (ii) one-third or
more but less than a majority, (iii) a majority or more of the voting
power of the issuing corporation in the election of directors, where such
voting rights must be conferred by a majority of the disinterested
stockholders as each threshold is reached and/or exceeded.
/5/ "Issuing corporation" means a corporation organized in Nevada and having
200 or more stockholders of record, at least 100 of whom are residents of
Nevada, and doing business in Nevada directly or through an affiliated
corporation.
/6/ "Control Shares" means those outstanding voting shares of an issuing
corporation that an acquiring person acquires or offers to acquire in an
acquisition or within 90 days immediately preceding the date when the
acquiring person became an acquiring person.
17
Standards of Conduct for Directors and Officers
Nevada Law and Delaware Law are substantially similar in the standards of
conduct they impose upon directors and their duty to serve stockholder
interests. Delaware Law has a significantly larger body of case law relative to
standards of director and officer conduct.
RIGHTS OF STOCKHOLDERS (OTHER THAN PRINCIPAL STOCKHOLDERS)
Number, Term and Election of Directors
Nevada Law and Delaware Law are substantially similar as to the election of
directors. Both require the stockholders of a domestic corporation to elect at
least one director. The number of directors, the lengths of their terms, and
their manner of election is determined by the articles of incorporation (in
Nevada) or certificate of incorporation (in Delaware); if that document does
not make those determinations, the determination is to be made in the bylaws of
the corporation. Lacking such determination, directors are to be elected
at-large by the stockholders at a meeting, a plurality sufficing to elect each
director.
The ADGI Articles provide that not more than three directors shall be
elected, and the ADGI By-Laws provide that no more than two directors shall be
elected, at the annual meeting for a one year term. Neither the ADGI Articles
nor the ADGI By-Laws makes any provision for class vote, cumulative vote, or
staggered terms.
The GlobeTel By-Laws provide for the election of not more than twelve and
not fewer than three members of the GlobeTel Board of Directors (the "GlobeTel
Board"). All GlobeTel Board members' terms expire at the next annual meeting of
the Stockholders and the election and qualification of their respective
successors, with the GlobeTel Board having the right to appoint persons to fill
a new or vacated seat on the GlobeTel Board until the next annual meeting.
Removal of Directors
Under Nevada Law, directors may be removed from office by a two-thirds
stockholder vote, or by the vote of such larger percentage of shares as may be
provided in the articles of incorporation. Under Delaware Law, directors may be
removed from office by a majority stockholder vote, or by vote of such larger
percentage of shares as may be provided in the certificate of incorporation.
Neither the ADGI Articles nor the ADGI By-Laws makes any provision for
removal of directors. The GlobeTel Certificate does not increase the
stockholder vote required to remove a director; additionally the GlobeTel
By-Laws permit the GlobeTel Board to remove a GlobeTel director for good cause.
Amendments to Governing Documents
Any amendment to the ADGI Articles of Incorporation must first be adopted by
the Board and then, owing to a provision in the Articles themselves, approved
by a 100% affirmative vote of Stockholders. Delaware Law permits amendment of a
certificate of incorporation upon adoption by the Board of Directors and
approval by a majority of the outstanding shares. Optionally, a Delaware
corporation may adopt requirements in its certificate of incorporation for
greater majorities and class voting requirements. The GlobeTel Certificate
contains no such provisions.
The ADGI By-Laws may be amended by either a majority of the Stockholders, or
by the unanimous Board. The GlobeTel By-Laws may be amended only by the action
of a majority of the GlobeTel Board.
Appraisal Rights
Nevada Law and Delaware Law each grant substantial appraisal rights to
stockholders in corporations that neither trade on major exchanges or the
NASDAQ National Market nor have 2,000 or more beneficial
18
stockholders. For example, with respect to the Plan, the Stockholders are
entitled to assert Appraisal Rights under NRS 92A.300 to 92A.500, inclusive.
Neither the ADGI Articles nor the ADGI By-Laws makes any provision for
appraisal rights, nor do the GlobeTel Certificate or the GlobeTel By-Laws.
Preferences and Other Securities
Although Nevada Law permits the authorization of multiple classes or series
of stock, the ADGI Articles authorize only a single class of stock: common
stock par value $0.001 per share.
Delaware Law permits, and the GlobeTel Certificate incorporates, what is
commonly referred to a "blank check" preferred stock provision (in addition to
common stock). This provision allows the GlobeTel Board to issue shares of
preferred stock, in any number of series and for any consideration approved by
the GlobeTel Board, each series having whatever rights, preferences, and other
features the GlobeTel Board determines. GlobeTel preferred stock, if issued,
may have terms superior to those of the GlobeTel Common. Delaware Law affords
relatively wide discretion to boards of directors in designating such rights,
preferences and features of "blank check" preferred stock.
Dividends and Distributions
Each of Delaware Law and Nevada Law allows a board of directors to authorize
a domestic corporation to make distributions or pay dividends to stockholders,
unless otherwise provided in the articles of incorporation. Nevada Law bars
such payments if they would cause (i) the corporation to be unable to pay its
debts as they become due in the usual course of business or (ii) except as
otherwise specifically allowed by the articles of incorporation, the
corporation's total assets to be less than the sum of its total liabilities
plus the amount that would be needed, if the corporation were to be dissolved
at the time of the distribution, to satisfy the preferential rights upon
dissolution of stockholders whose preferential rights are superior to those
receiving the distribution. Delaware Law forbids the payment of dividends out
of funds other than (i) the capital surplus of the corporation or (ii) the
corporation's preceding year net profits.
The ADGI Articles and the GlobeTel Certificate contain no provisions as to
dividends and distributions.
Stockholder Inspection Rights
Nevada Law entitles any person who has been a stockholder of record of a
corporation for at least six months immediately preceding the demand, or any
person holding or representing at least 5% of its outstanding shares, upon at
least five days written demand, to inspect, in person or by an agent, during
usual business hours, the stock ledger of the corporation and to make extracts
therefrom. Persons who are stockholders of record and own or represent at least
15% of a corporation's issued and outstanding shares, or persons who have been
authorized in writing by such stockholders, have the right, upon five days
written demand, to inspect, in person or by an agent, during normal business
hours, the books of account and financial records of the corporation, to make
extracts therefrom and to conduct an audit of such records. These provisions do
not apply to any corporation that is listed and traded on any recognized stock
exchange, nor to any corporation that furnishes to its stockholders a detailed,
annual financial statement. ADGI is listed and traded on the OTCBB, and is
therefore not subject to such provisions.
The relevant provision of Delaware Law is significantly broader and is not
qualified by any holding period or minimum amount of stock held, nor is there
any exclusion for listed or reporting corporations. Any request made by a
record stockholder for a "proper purpose" must be granted within five days, or
the requesting stockholder may apply to the Delaware Court of Chancery for an
order of access to the books and records of the corporation.
Neither the ADGI Articles nor the GlobeTel Certificate has any provision for
stockholder inspections; the ADGI By-Laws and the GlobeTel By-Laws each provide
for limited advanced inspection rights of the stockholder register in
connection with the meetings of the stockholders. Stockholders should note that
19
provisions of the GlobeTel By-Laws are amendable by a majority of the GlobeTel
Board, whereas the ADGI By-Laws provisions require unanimity of the Board or
consent of a majority of the Stockholders for their amendment.
CERTAIN EXTRAORDINARY TRANSACTIONS
Nevada Law is generally held to require a merger, consolidation, or sale of
substantially all the assets of a Nevada corporation to be adopted by the
stockholders of such a corporation in the same manner, and with the same
majority or super-majority vote, required under the articles of incorporation
for an amendment to such articles. Because the ADGI Articles require unanimity
for an amendment, alteration, change or repeal of any provision of the ADGI
Articles, ADGI cannot, until and unless the Plan, the GlobeTel Common Stock
Authorization and the GlobeTel Preferred Stock Authorization are approved and
the Exchange is completed, engage in an extraordinary transaction that involves
such an amendment, alteration, change or repeal without the consent of all the
Stockholders.
Delaware Law permits, by default, approval of such transactions by an
absolute majority of shares entitled to vote. Although Delaware corporations
may vary this threshold upward by adoption of a suitable provision in their
certificate of incorporation, the GlobeTel Certificate makes no such variance.
20
THE MEETING AND VOTING
THE MEETING
ADGI will hold the Meeting at 3768 Sarazen Court NE, Conover, NC on July 24,
2002, beginning at 10:00 a.m. local time. Record Stockholders are entitled to
notice of and to vote at the Meeting. At the Meeting, Stockholders will be
asked to consider and vote upon (i) the Plan, (ii) the GlobeTel Common Stock
Authorization, (iii) GlobeTel Preferred Stock Authorization and (iv) such other
business as may properly come before the Meeting.
REVOCATION OF PROXIES
Any Stockholder giving a proxy may revoke it at any time prior to its
exercise at the Meeting by giving notice of such revocation either personally
or in writing to the Secretary of ADGI at ADGI's executive offices, by
subsequently executing and delivering another proxy or by voting in person at
the Meeting. Attendance at the Meeting will not, by itself, constitute
revocation of a proxy.
VOTING
Shares of ADGI Common represented by duly executed and unrevoked proxies on
the enclosed form of proxy received by ADGI will be voted at the Meeting in
accordance with the specifications made therein by the stockholders returning
such proxies, unless authority to do so is withheld. If no specification is
made, shares represented by duly executed and unrevoked proxies in the enclosed
form will be voted FOR the Plan, FOR the GlobeTel Common Stock Authorization,
FOR the GlobeTel Preferred Stock Authorization and in the discretion of the
persons voting the respective proxies with respect to any other matter that may
properly come before the meeting.
ADGI's directors, executive officers and selected other employees may
solicit proxies in person or by telephone or facsimile. None of them will be
specially compensated for such services. Brokerage houses, nominees,
fiduciaries and other custodians will be requested to forward soliciting
materials to beneficial owners and will be reimbursed for their reasonable
out-of-pocket expenses incurred in sending proxy materials to beneficial
owners. ADGI has engaged the services of Georgeson Shareholder to assist in the
solicitation of proxies. A toll-free number has been set up for shareholder
questions at (866) 283-1867.
Only Stockholders of record on the record date will be entitled to notice of
and to vote at the Meeting. On the Record Date, there were 498,026,445 shares
of ADGI Common outstanding. Because approval of each of the Meeting Agenda
Items requires the affirmative vote of a majority of the outstanding shares of
ADGI Common, any shares not voted, or abstaining from voting, on one or more of
the Meeting Agenda Items would effectively be voted against such items.
Members of ADGI's management, the Board, and certain Stockholders, who in
the aggregate own approximately 8.26% of the total outstanding shares of ADGI
Common, have indicated their intent to vote their shares in favor of all three
Meeting Agenda Items, namely, the Plan, the GlobeTel Common Stock Authorization
and the GlobeTel Preferred Stock Authorization.
VOTE REQUIRED; RECOMMENDATION
Approval of each of the Meeting Agenda Items requires the affirmative vote
of a majority of the votes cast, in person or by proxy, at the Meeting,
provided that a quorum is present in person or by proxy. Abstentions and broker
non-votes will be included in determining the presence of a quorum, but are not
counted as votes cast. Properly signed and dated proxies that do not indicate
how they are to be voted on any Meeting Agenda Item will be voted FOR approval
of that item.
21
The Board believes the Plan is in the best interests of ADGI and the
Stockholders and unanimously recommends that Stockholders vote FOR each of the
Meeting Agenda Items. If all three Meeting Agenda Items are approved, GlobeTel
will proceed with the Exchange. The Board believes that the Exchange will
eliminate the uncertainty arising from the defect in authorization of most of
the outstanding shares of ADGI Common, and will provide holders of ADGI Common
increased value through access to a more established body of governing
corporate law and through the perceived increased cachet of Delaware
incorporation.
22
LEGAL OPINIONS AND OTHER MATTERS
LEGAL OPINIONS
The Exchange will be passed upon, as to certain matters under the Code, by
Katten Muchin Zavis Rosenman and, as to certain matters under Nevada Law, by
Kummer Kaempfer Bonner & Renshaw.
OTHER MATTERS
The Board is not aware of any other matters to be presented at the Meeting.
If any other matters should properly come before the Meeting, the persons named
in the proxy will vote the proxies according to their best judgment. No matters
will be brought before the Meeting in connection with which disclosures (either
in this Proxy Statement or in any duly prepared and filed disclosure statements
and incorporated herein by reference) are required pursuant to Regulation 14A
promulgated under the Exchange Act, if such disclosures have not been made
herein or otherwise as required.
Any questions or request for assistance may be directed to the Information
Agent at the telephone number set forth below. Requests for additional proxy
cards or copies of this Proxy Statement may be directed to ADGI and such
additional materials will be provided promptly at ADGI's expense. Stockholders
may also contact their local broker, dealer, commercial bank or trust company
for assistance concerning the matters set forth herein.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed under the Exchange Act by ADGI
(Commission File No. 0-23532) with the Commission and are incorporated herein
by reference:
. The amended quarterly report on Form 10-QSB, filed on May 16, 2002.
. The amended annual report on Form 10-KSB, filed April 18, 2002, for the
calendar year 2001, delivered together with this Proxy Statement.
. The annual report on Form 10-KSB, filed April 20, 2001, for the calendar
year 2000.
. The current report on Form 8-K, filed January 10, 2001.
All documents filed by ADGI under Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act after the date of this Proxy Statement and before the date of the
Meeting shall be considered to be incorporated by reference into this Proxy
Statement and to be part of it from and after the date any such document is
filed.
Any information contained in a document incorporated (or considered to be
incorporated) by reference into this Proxy Statement shall be considered as
modified or superseded to the extent that a statement in this Proxy Statement
(or in any later-filed document also incorporated by reference) modifies or
supersedes that information. Any modified or superseded information shall be
considered as part of this Proxy Statement only in its modified or superseded
form. All information appearing in this Proxy Statement is entirely qualified
by the information and financial statements (including notes to financial
statements) that appear in the documents incorporated by reference, modified or
superseded as described in the immediately preceding statement.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED
IN THIS PROXY STATEMENT OR DELIVERED WITH IT. COPIES OF ANY DOCUMENTS RELATING
TO ADGI (EXCLUDING EXHIBITS TO THOSE DOCUMENTS THAT ARE NOT SPECIFICALLY
INCORPORATED INTO THOSE DOCUMENTS BY REFERENCE) WILL BE SENT WITHOUT CHARGE BY
FIRST CLASS MAIL TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS
PROXY STATEMENT IS DELIVERED WITHIN ONE BUSINESS DAY OF RECEIPT OF A WRITTEN OR
ORAL REQUEST TO 3768 SARAZEN COURT, NE, CONOVER, NC 28613 (TELEPHONE: (828)
459-0916). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BEFORE JULY 10, 2002.
23
ANNEX A: AGREEMENT AND PLAN OF EXCHANGE
THIS AGREEMENT AND PLAN OF EXCHANGE (the "Plan"), by and between American
Diversified Group, Inc., a Nevada corporation ("ADGI"), and GlobeTel
Communications Corp. ("GlobeTel") is entered into and proposed to the
stockholders of ADGI, pursuant to Section 92A.190 of the Nevada Revised
Statutes, as of the 31st day of May, 2002.
1. Description of the Exchange. If the Plan is approved by ADGI stockholders
at the Special Meeting called as contemplated by Section 3 of the Plan, and
is not terminated as provided below, each share of ADGI's common stock, par
value $0.001 per share (the "ADGI Stock"), shall automatically and without
further action by ADGI stockholders become exchangeable for one newly-issued
share of GlobeTel's common stock, par value $0.0001 per share (the "GlobeTel
Stock"). Any stockholder wishing to dissent from the Plan will be entitled
to statutory appraisal rights under Nevada law as described in Paragraph 4
of this Plan.
2. Prior Approvals. Each of ADGI and GlobeTel hereby represents and warrants
that this Plan has been duly approved by its respective Board of Directors
prior to its execution and delivery.
3. ADGI Adoption of the Plan. The Plan shall be submitted to a special meeting
of the holders of the ADGI Stock (the "Special Meeting"). ADGI shall cause
the Special Meeting to be held as soon as practicable, allowing for the
preparation and distribution of a proxy statement, and the return of
proxies, in compliance with applicable rules of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended. The Plan
will have been adopted if a majority of the then-outstanding shares of ADGI
Stock are voted in favor of it, and in favor of the authorization of the
issuance by GlobeTel of 1,500,000,000 shares of GlobeTel Stock and of
10,000,000 shares of Preferred Stock, in person or by proxy, at the Special
Meeting.
4. Rights of Dissenting Stockholders. Any stockholder of ADGI may object to
the Plan and demand payment for the fair value of his, her or its shares by
following the procedures set forth in Sections 92A.300 through 92A.500 of
the Nevada Revised Statutes.
5. After Adoption. After the Plan is adopted, if the number of shares of ADGI
Stock as to which Appraisal Rights have been demanded exceeds 1,000,000,
ADGI may determine in its sole discretion to abandon the Plan, provided such
determination is made not later than 5 p.m. Eastern Daylight Time on the
third day after the date of the Special Meeting. If ADGI determines to
abandon the Plan, the Plan shall be terminated and the Exchange shall not
occur, otherwise ADGI shall determine the date and procedures for the
surrender and exchange of certificates representing shares of ADGI Stock.
6. Termination. In addition to termination by ADGI as provided in paragraph 5
of this Plan, the Plan may be terminated, and the Exchange shall not
thereafter occur, by mutual agreement of the Boards of Directors of each of
GlobeTel and ADGI at any time, whether before or after adoption of the Plan
at the Special Meeting.
7. Conditions Precedent to the Exchange. The consummation of the exchange upon
its scheduled date is conditioned upon receiving all consents and approvals
required by law, and receipt by ADGI of opinions of counsel that the
exchange is valid and enforceable under Nevada law and that the exchange
will be tax-free to ADGI, GlobeTel, and all stockholders other than
dissenting stockholders, under the Internal Revenue Code of 1986, as amended.
8. Surrender and Exchange of Stock Certificates. From and after the date
determined by ADGI in accordance with Paragraph 5 of this Plan, all
conditions precedent having been satisfied, each certificate representing
shares of ADGI Stock as to which no Appraisal Rights have been exercised
shall be exchangeable, upon its surrender to GlobeTel, for one or more
certificates representing in the aggregate a like number of shares of
GlobeTel Stock, and each share of ADGI Stock as to which Appraisal Rights
have been exercised shall be cancelled and its fair value paid by ADGI to
the holder thereof. No tender or acceptance of tender, nor any surrender,
exchange, or reissue of certificates representing shares of stock owned
(other than by dissenting stockholders as permitted or required by Nevada
law), shall be required to
A-1
give effect to the Exchange. All certificates held by or on behalf of
non-dissenting stockholders evidencing ownership of ADGI Stock shall
thereafter until surrendered to GlobeTel evidence ownership of the same
number of shares of GlobeTel Stock.
9. Merger Following Exchange. As soon as practicable after the Exchange has
occurred, GlobeTel, as sole stockholder of ADGI, will cause ADGI to be
merged with and into GlobeTel, with GlobeTel being the corporation surviving
the merger. Shares of GlobeTel capital stock owned by ADGI shall be
cancelled in the merger.
10. Expenses of Transaction. ADGI shall bear the expenses of the Plan and the
Exchange, and shall be responsible for all payments to dissenting holders
of ADGI Stock.
11. Outstanding Stock of GlobeTel. Upon the consummation of the Exchange, the
shares of the GlobeTel Stock presently issued and outstanding in the name
of ADGI shall be canceled and retired and resume the status of authorized
and unissued shares of GlobeTel Stock, such that the shares of GlobeTel
Stock issued as part of the Exchange shall represent all of the issued and
outstanding shares of GlobeTel Stock.
12. Waiver and Amendment. At any time after the approval and adoption of this
Plan by the stockholders of ADGI and prior to the consummation of the
Exchange, this Plan may be amended in any manner as may be determined in
the judgment of the respective Boards of Directors of ADGI and GlobeTel to
be necessary, desirable or expedient in order to clarify the intention of
the parties hereto or to effect or facilitate the purposes and intent of
this Plan without action by the respective stockholders of the parties,
except that any amendments to Paragraph 8 or any amendments altering any
terms of this Plan, if such alteration would adversely affect ADGI
stockholders, must be approved by the holders of a majority of ADGI Stock.
IN WITNESS WHEREOF, ADGI and GlobeTel have caused this Agreement and Plan of
Exchange to be signed by their duly authorized officers on the day and year
first above written.
AMERICAN DIVERSIFIED GROUP, INC.
By: /s/ JERROLD R. HINTON
-----------------------------
Printed Name: Jerrold R.
Hinton
Its: President
GLOBETEL COMMUNICATIONS CORP.
By: /s/ ROBINSON MARKEL
-----------------------------
Printed Name: Robinson Markel
Its: Secretary
A-2
ANNEX B: NEVADA APPRAISAL RIGHTS STATUTES
NRS 92A.300 Definitions. As used in NRS 92A.300 to 92A.500, inclusive, unless
the context otherwise requires, the words and terms defined in NRS 92A.305 to
92A.335, inclusive, have the meanings ascribed to them in those sections.
(Added to NRS by 1995, 2086)
NRS 92A.305 "Beneficial stockholder" defined. "Beneficial stockholder"
means a person who is a beneficial owner of shares held in a voting trust or by
a nominee as the stockholder of record.
(Added to NRS by 1995, 2087)
NRS 92A.310 "Corporate action" defined. "Corporate action" means the action
of a domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.315 "Dissenter" defined. "Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.400 to
92A.480, inclusive.
(Added to NRS by 1995, 2087; A 1999, 1631)
NRS 92A.320 "Fair value" defined. "Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
(Added to NRS by 1995, 2087)
NRS 92A.325 "Stockholder" defined. "Stockholder" means a stockholder of
record or a beneficial stockholder of a domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.330 "Stockholder of record" defined. "Stockholder of record" means
the person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.335 "Subject corporation" defined. "Subject corporation" means the
domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective
or the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
(Added to NRS by 1995, 2087)
NRS 92A.340 Computation of interest. Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
action until the date of payment, at the average rate currently paid by the
entity on its principal bank loans or, if it has no bank loans, at a rate that
is fair and equitable under all of the circumstances.
(Added to NRS by 1995, 2087)
B-1
NRS 92A.350 Rights of dissenting partner of domestic limited partnership. A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with
any merger or exchange in which the domestic limited partnership is a
constituent entity.
(Added to NRS by 1995, 2088)
NRS 92A.360 Rights of dissenting member of domestic limited-liability
company. The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
(Added to NRS by 1995, 2088)
NRS 92A.370 Rights of dissenting member of domestic nonprofit corporation.
1. Except as otherwise provided in subsection 2, and unless otherwise
provided in the articles or bylaws, any member of any constituent domestic
nonprofit corporation who voted against the merger may, without prior notice,
but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his
resignation and is thereby entitled to those rights, if any, which would have
existed if there had been no merger and the membership had been terminated or
the member had been expelled.
2. Unless otherwise provided in its articles of incorporation or bylaws, no
member of a domestic nonprofit corporation, including, but not limited to, a
cooperative corporation, which supplies services described in chapter 704 of
NRS to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest in
real property, may resign and dissent pursuant to subsection 1.
(Added to NRS by 1995, 2088)
NRS 92A.380 Right of stockholder to dissent from certain corporate actions
and to obtain payment for shares.
1. Except as otherwise provided in NRS 92A.370 and 92A.390, a stockholder is
entitled to dissent from, and obtain payment of the fair value of his shares in
the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic corporation is a
constituent entity:
(1) If approval by the stockholders is required for the merger by NRS
92A.120 to 92A.160, inclusive, or the articles of incorporation, regardless
of whether the stockholder is entitled to vote on the plan of merger; or
(2) If the domestic corporation is a subsidiary and is merged with its
parent pursuant to NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic corporation is
a constituent entity as the corporation whose subject owner's interests will be
acquired, if his shares are to be acquired in the plan of exchange.
(c) Any corporate action taken pursuant to a vote of the stockholders to the
event that the articles of incorporation, bylaws or a resolution of the board
of directors provides that voting or nonvoting stockholders are entitled to
dissent and obtain payment for their shares.
B-2
2. A stockholder who is entitled to dissent and obtain payment pursuant to
NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
(Added to NRS by 1995, 2087; A 2001, 1414, 3199)
NRS 92A.390 Limitations on right of dissent: Stockholders of certain classes
or series; action of stockholders not required for plan of merger.
1. There is no right of dissent with respect to a plan of merger or exchange
in favor of stockholders of any class or series which, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at the
meeting at which the plan of merger or exchange is to be acted on, were either
listed on a national securities exchange, included in the national market
system by the National Association of Securities Dealers, Inc., or held by at
least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the shares
provide otherwise; or
(b) The holders of the class or series are required under the plan of merger
or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu of
fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan of
merger or exchange, were either listed on a national securities
exchange, included in the national market system by the National
Association of Securities Dealers, Inc., or held of record by a least
2,000 holders of owner's interests of record; or
(2) A combination of cash and owner's interests of the kind described in
sub-subparagraphs (I) and (II) of subparagraph (1) of paragraph (b).
2. There is no right of dissent for any holders of stock of the surviving
domestic corporation if the plan of merger does not require action of the
stockholders of the surviving domestic corporation under NRS 92A.130.
(Added to NRS by 1995, 2088)
NRS 92A.400 Limitations on right of dissent: Assertion as to portions only
to shares registered to stockholder; assertion by beneficial stockholder.
1. A stockholder of record may assert dissenter's rights as to fewer than
all of the shares registered in his name only if he dissents with respect to
all shares beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf
he asserts dissenter's rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he dissents and his
other shares were registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares held
on his behalf only if:
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the beneficial
stockholder or over which he has power to direct the vote.
(Added to NRS by 1995, 2089)
B-3
NRS 92A.410 Notification of stockholders regarding right of dissent.
1. If a proposed corporate action creating dissenters' rights is submitted
to a vote at a stockholders' meeting, the notice of the meeting must state that
stockholders are or may be entitled to assert dissenters' rights under NRS
92A.300 to 92A.500, inclusive, and be accompanied by a copy of those sections.
2. If the corporate action creating dissenters' rights is taken by written
consent of the stockholders or without a vote of the stockholders, the domestic
corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430.
(Added to NRS by 1995, 2089; A 1997, 730)
NRS 92A.420 Prerequisites to demand for payment for shares.
1. If a proposed corporate action creating dissenters' rights is submitted
to a vote at a stockholders' meeting, a stockholder who wishes to assert
dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1 and
NRS 92A.400 is not entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2089; 1999, 1631)
NRS 92A.430 Dissenter's notice: Delivery to stockholders entitled to assert
rights; contents.
1. If a proposed corporate action creating dissenters' rights is authorized
at a stockholders' meeting, the subject corporation shall deliver a written
dissenter's notice to all stockholders who satisfied the requirements to assert
those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to what
extent the transfer of the shares will be restricted after the demand for
payment is received;
(c) Supply a form for demanding payment that includes the date of the first
announcement to the news media or to the stockholders of the terms of the
proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the subject corporation must receive the demand for
payment, which may not be less than 30 nor more than 60 days after the date the
notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
(Added to NRS by 1995, 2089)
NRS 92A.440 Demand for payment and deposit of certificates; retention of
rights of stockholder.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
B-4
(b) Certify whether he acquired beneficial ownership of the shares before
the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of the
notice.
2. The stockholder who demands payment and deposits his certificates, if
any, before the proposed corporate action is taken retains all other rights of
a stockholder until those rights are canceled or modified by the taking of the
proposed corporate action.
3. The stockholder who does not demand payment or deposit his certificates
where required, each by the date set forth in the dissenter's notice, is not
entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2090; A 1997, 730)
NRS 92A.450 Uncertificated shares: Authority to restrict transfer after
demand for payment; retention of rights of stockholder.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
(Added to NRS by 1995, 2090)
NRS 92A.460 Payment for shares: General requirements.
1. Except as otherwise provided in NRS 92A.470, within 30 days after receipt
of a demand for payment, the subject corporation shall pay each dissenter who
complied with NRS 92A.440 the amount the subject corporation estimates to be
the fair value of his shares, plus accrued interest. The obligation of the
subject corporation under this subsection may be enforced by the district court:
(a) Of the county where the corporation's registered office is located; or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, a statement of
income for that year, a statement of changes in the stockholders' equity for
that year and the latest available interim financial statements, if any;
(b) A statement of the subject corporation's estimate of the fair value of
the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under NRS
92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
(Added to NRS by 1995, 2090)
NRS 92A.470 Payment for shares: Shares acquired on or after date of
dissenter's notice.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
B-5
2. To the extent the subject corporation elects to withhold payment, after
taking the proposed action, it shall estimate the fair value of the shares,
plus accrued interest, and shall offer to pay this amount to each dissenter who
agrees to accept it in full satisfaction of his demand. The subject corporation
shall send with its offer a statement of its estimate of the fair value of the
shares, an explanation of how the interest was calculated, and a statement of
the dissenters' right to demand payment pursuant to NRS 92A.480.
(Added to NRS by 1995, 2091)
NRS 92A.480 Dissenter's estimate of fair value: Notification of subject
corporation; demand for payment of estimate.
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value
of his shares and interest due, if he believes that the amount paid pursuant to
NRS 92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of
his shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this section
unless he notifies the subject corporation of his demand in writing within 30
days after the subject corporation made or offered payment for his shares.
(Added to NRS by 1995, 2091)
NRS 92A.490 Legal proceeding to determine fair value: Duties of subject
corporation; powers of court; rights of dissenter.
1. If a demand for payment remains unsettled, the subject corporation shall
commence a proceeding within 60 days after receiving the demand and petition
the court to determine the fair value of the shares and accrued interest. If
the subject corporation does not commence the proceeding within the 60-day
period, it shall pay each dissenter whose demand remains unsettled the amount
demanded.
2. A subject corporation shall commence the proceeding in the district court
of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced under
subsection 2 is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or any amendment thereto. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
B-6
5. Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) For the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the subject corporation; or
(b) For the fair value, plus accrued interest, of his after-acquired shares
for which the subject corporation elected to withhold payment pursuant to NRS
92A.470.
(Added to NRS by 1995, 2091)
NRS 92A.500 Legal proceeding to determine fair value: Assessment of costs
and fees.
1. The court in a proceeding to determine fair value shall determine all of
the costs of the proceeding, including the reasonable compensation and expenses
of any appraisers appointed by the court. The court shall assess the costs
against the subject corporation, except that the court may assess costs against
all or some of the dissenters, in amounts the court finds equitable, to the
extent the court finds the dissenters acted arbitrarily, vexatiously or not in
good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if the
court finds the subject corporation did not substantially comply with the
requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.
3. If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the subject corporation, the
court may award to those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may assess
the costs against the subject corporation, except that the court may assess
costs against all or some of the dissenters who are parties to the proceeding,
in amounts the court finds equitable, to the extent the court finds that such
parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
(Added to NRS by 1995, 2092)
B-7
AMERICAN DIVERSIFIED GROUP, INC.
PROXY
FOR THE SPECIAL MEETING OF STOCKHOLDERS
WEDNESDAY, JULY 24, 2002
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JERROLD HINTON and THOMAS CRAFT, JR., and each
of them, as Proxy, each with full power of substitution, to vote all stock of
AMERICAN DIVERSIFIED GROUP, INC. ("ADGI") at the Special Meeting of Stockholders
of AMERICAN DIVERSIFIED GROUP, INC., to be held at 3768 Sarazen Court NE,
Conover, NC on July 24, 2002, beginning at 10:00 a.m. and at any adjournment
thereof. The undersigned hereby revokes any and all proxies heretofore given
with respect to such meeting.
This proxy will be voted as specified on the reverse side. If no choice is
specified, the proxy will be voted FOR approval of the Reincorporation of ADGI
as a Delaware corporation by means of the Exchange of all outstanding shares of
ADGI for shares of its wholly-owned subsidiary GlobeTel Communications Corp.
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
(See Reverse side)
FP-1
THE SHARES REPRESENTED BY THIS PROXY SHALL BE VOTED AS INDICATED BELOW:
(1) Proposal to approve the Plan and Agreement of Exchange for the
Reincorporation of ADGI as a Delaware corporation by means of the Exchange of
all outstanding shares of ADGI for shares of its wholly-owned subsidiary
GlobeTel Communications Corp. ("Globetel").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) Proposal to approve the authorization for issuance by GlobeTel of up to
1,500,000,000 shares of Common Stock, par value $0.00001 per share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Proposal to approve the authorization for issuance by GlobeTel of up to
10,000,000 shares of Preferred Stock, par value $0.001 per share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IMPORTANT NOTE: The Plan will be abandoned, and the Reincorporation will not
take place, unless each of the above three proposals is approved at the Meeting
by vote of a majority of the outstanding shares of ADGI Common Stock.
(4) In their discretion, upon such other matters as may properly come before the
meeting.
UNLESS AUTHORITY TO VOTE THEREFORE IS WITHHELD IN THIS PROXY CARD, IT IS THE
INTENTION OF THE PROXIES TO VOTE FOR THE PROPOSALS. IF ANY OTHER BUSINESS IS
PRESENTED, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE AFOREMENTIONED PROXIES.
Signature Signature Date
- --------------------------------------------------------------------------------
Please sign exactly as your name appears on this proxy card. When signing as an
executor, administrator, guardian, trustee or attorney, please give your title
as such. If a corporation, please sign the full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person. If the shares are held in joint name, all joint owners should
sign.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR A SPECIAL MEETING - JULY 24, 2002.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE
PRE-PAID ENVELOPE.
FP-2