As filed with the Securities and Exchange Commission on
June 4, 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:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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 17, 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)(1) 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:
471,176,445 shares of ADGI Common, as of May 31, 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 17, 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 17, 2002, beginning at 10:00 a.m.
local time. The purpose of the Meeting is to consider and approve a plan for the
exchange ("Exchange") of shares of ADGI Common for shares of a newly-formed
Delaware subsidiary of ADGI called GlobeTel Communications Corp. ("GlobeTel").
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 Plan, followed by the Exchange, will
result in the reincorporation of ADGI as a Delaware corporation (the
"Reincorporation").
Approval of the Plan requires the affirmative votes of a majority of the shares
of ADGI Common outstanding as of the record date for the Meeting. IF THE PLAN IS
APPROVED (and 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").
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 the Plan is approved at the Meeting and 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. 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.
THIRD, THE PLAN WILL CURE A PROBLEM REGARDING ADGI COMMON THAT ARISES FROM LACK
OF PROPER AUTHORIZATION AT THE TIME THE SHARES WERE issued. 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 THE PLAN REQUIRES THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF ADGI COMMON, ANY SHARES NOT
VOTED WOULD EFFECTIVELY BE VOTED AGAINST THE PLAN. 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 the Plan, please call Jerrold R. Hinton,
President of ADGI, at (828) 322-2044.
Sincerely,
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 17, 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 17, 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; and.
2. 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.
Approval of the Plan requires the affirmative votes of a majority of the shares
of ADGI Common outstanding as of the record date for the Meeting. IF THE PLAN IS
APPROVED (and 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 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 THE PLAN REQUIRES THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF ADGI COMMON, ANY SHARES NOT
VOTED WOULD EFFECTIVELY BE VOTED AGAINST THE PLAN. 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
[ADGI LOGO]
AMERICAN DIVERSIFIED GROUP, INC.
PROXY STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS
OF AMERICAN DIVERSIFIED GROUP, INC.
TO BE HELD ON JULY 17, 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 a plan 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.
Approval of the Plan, 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 the Plan requires the affirmative votes of a majority of the shares
of ADGI Common outstanding as of the record date for the Meeting. IF THE PLAN IS
APPROVED (and 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
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 of
ADGI as a Delaware corporation ("Reincorporation"). Stockholder approval would
not be required or sought in connection with the merger of ADGI into GlobeTel.
[471,176,445] 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 $22,000,000, 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 May 31, 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 17, 2002.
THE DATE OF THIS PROXY STATEMENT IS JUNE 17, 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................................................................ 3
SUMMARY RISK FACTORS......................................................... 3
ABOUT ADGI...................................................................... 5
THE PLAN, EXCHANGE, AND MERGER.................................................. 6
REASONS FOR THE REINCORPORATION.............................................. 6
CORPORATE DOMICILE......................................................... 6
CORPORATE NAME............................................................. 6
DEFECTIVE SHARE AUTHORIZATION.............................................. 6
BOARD REVIEW AND APPROVAL.................................................. 8
OTHER MATTERS................................................................ 8
STOCK CERTIFICATES......................................................... 8
RIGHT OF BOARD TO WITHDRAW RECOMMENDATION AND/OR ABANDON THE PLAN.......... 8
ACCOUNTING TREATMENT....................................................... 9
APPRAISAL RIGHTS OF APPRAISAL.............................................. 9
COMPARISON OF STOCKHOLDER RIGHTS........................................... 9
INTERESTS OF ADGI DIRECTORS AND MANAGEMENT................................. 9
FEDERAL SECURITIES LAWS CONSEQUENCES....................................... 9
DIVIDENDS.................................................................. 9
BUSINESS OF ADGI PENDING THE REINCORPORATION............................... 9
CONDITIONS TO THE COMPLETION OF THE REINCORPORATION..........................10
FEDERAL TAX CONSEQUENCES........................................................11
RISK FACTORS....................................................................12
UNCERTAIN VALUE OF REINCORPORATION.........................................12
UNCERTAIN VALUE OF CHANGE OF NAME..........................................12
INTERESTS OF CERTAIN PERSONS IN THE REINCORPORATION........................12
DIFFERENCES IN STOCKHOLDER RIGHTS..........................................12
ABSENCE OF TAX RULING......................................................12
CHANGE OF CONTROL..........................................................12
LACK OF PROPER AUTHORIZATION...............................................12
COMPARISON OF FEATURES OF NEVADA AND DELAWARE LAW...............................13
RIGHTS AND OBLIGATIONS OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS..............13
BUSINESS COMBINATIONS INVOLVING INTERESTED STOCKHOLDERS AND STOCKHOLDERS...13
CONTROL SHARE ACQUISITIONS.................................................13
INDEMNIFICATION AND LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS......14
STANDARDS OF CONDUCT FOR DIRECTORS AND OFFICERS............................14
RIGHTS OF STOCKHOLDERS (OTHER THAN PRINCIPAL STOCKHOLDERS)...................14
NUMBER, TERM AND ELECTION OF DIRECTORS.....................................14
REMOVAL OF DIRECTORS.......................................................15
AMENDMENTS TO GOVERNING DOCUMENTS..........................................15
APPRAISAL AND APPRAISAL RIGHTS.............................................15
PREFERENCES AND OTHER SECURITIES...........................................15
DIVIDENDS AND DISTRIBUTIONS................................................15
STOCKHOLDER INSPECTION RIGHTS..............................................16
CERTAIN EXTRAORDINARY TRANSACTIONS...........................................16
THE MEETING AND VOTING..........................................................17
THE MEETING..................................................................17
REVOCATION OF PROXIES........................................................17
VOTING.......................................................................17
VOTE REQUIRED; RECOMMENDATION................................................17
LEGAL OPINIONS AND OTHER MATTERS................................................18
LEGAL OPINIONS...............................................................18
OTHER MATTERS................................................................18
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................18
ANNEX A........................................................................A-1
ANNEX B........................................................................B-1
FORM OF PROXY.................................................................FP-1
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
o confidence,
o strategies and expressions about earnings,
o new and existing programs and services,
o relationships,
o opportunities,
o technology, and
o market conditions.
You can identify these statements by looking for
o terms like "expect," believe" or "anticipate," or
o expressions of confidence like "strong" or "on-going," or
o 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
o whether the transactions described in this Proxy Statement can be
completed as planned,
o whether ADGI's existing management will continue in place,
o future economic conditions, and
o 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:
o Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.,
20549, and the following Regional Offices:
o 233 Broadway, New York, N.Y. 10279, and
o Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois, 60661.
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.
1
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.
THE MEETING
ADGI will hold the Meeting at its principal executive offices at 3768 Sarazen
Court, NE, Conover, NC 28613 on July 17, 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 and such other business as may properly come before the Meeting.
RECOMMENDATION OF ADGI BOARD OF DIRECTORS; REASONS FOR REINCORPORATION
The Board believes the Plan to be in the best interests of ADGI and Stockholders
and unanimously recommends that Stockholders vote FOR the Plan. IF THE PLAN IS
APPROVED (and 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 FOR
THE SAME NUMBER OF NEWLY-ISSUED SHARES OF GLOBETEL, PRESENTLY A WHOLLY-OWNED
SUBSIDIARY OF ADGI. 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,"
A VOTE IN FAVOR OF THE EXCHANGE WILL ALSO ACT AS A VOTE TO CURE A PROBLEM
REGARDING ADGI COMMON THAT ARISES FROM LACK OF PROPER AUTHORIZATION AT THE TIME
MOST OF THE SHARES WERE ISSUED. 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 the Plan 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 the Plan.
SUMMARY RISK FACTORS
In considering whether to approve or disapprove the Plan, Stockholders should
consider the following:
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.
3
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
consumation 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.
4
ABOUT ADGI
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.
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 increasingly 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 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
6
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 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
7
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 the defect in authorization of ADGI Common
may be addressed by successful completion of the Exchange and the Merger that
are included in the Plan, because all shares of GlobeTel Common issued in the
Exchange, and those received by Stockholders as a result of the Merger, will be
properly authorized, 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:
o Possible solutions of the problem presented by lack of valid
authorization of issuance of almost all outstanding shares of ADGI
Common.
o 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.
o The advantages of the name "GlobeTel Communications Corp." including
promotion of ADGI's business and communication to vendors, customers,
and investors.
o 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."
o 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 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
8
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.
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.
9
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) The Plan 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;
(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 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.
10
FEDERAL TAX CONSEQUENCES
In the opinion of Katten Muchin Zavis Rosenman, special tax 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.
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.
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
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 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, the accuracy of which will be confirmed as a condition to
completion of the Exchange, and on the assumption that the Exchange will be
effectuated in accordance with the Plan and the Merger completed 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.
11
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.
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.
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.
12
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.
CONTROL SHARE ACQUISITIONS
Under Nevada Law, an "acquiring person"(3) who acquires a "controlling
interest"(4) in an "issuing corporation"(5) may not
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(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.
(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.
13
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.
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.
- --------
(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.
14
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 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.
15
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 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 is approved and 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.
16
THE MEETING AND VOTING
THE MEETING
ADGI will hold the Meeting at 3768 Sarazen Court NE, Conover, NC on July 17,
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 and (ii) 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 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.
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 471,176,445 shares of
ADGI Common outstanding.
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 the Plan.
VOTE REQUIRED; RECOMMENDATION
Approval of this proposal 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.
UNLESS OTHERWISE INDICATED, THE ACCOMPANYING FORM OF PROXY WILL BE VOTED FOR
ADOPTION OF THIS PROPOSAL.
The Board believes the Plan is in the best interests of ADGI and the
Stockholders and unanimously recommends that Stockholders vote FOR the Plan. If
the Plan is approved, GlobeTel will proceed with the Exchange. The Exchange will
eliminate the uncertainty arising from the defect in authorization of most of
the outstanding shares of ADGI Common. The Board believes that the Exchange
would 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.
17
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:
o The amended quarterly report on Form 10-QSB, filed on May 16, 2002
o The amended annual report on Form 10-KSB, filed April 18, 2002, for
the calendar year 2001, delivered together with this Proxy Statement.
o The annual report on Form 10-KSB, filed April 20, 2001, for the
calendar year 2000.
o 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 JUNE 21, 2002.
18
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, 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 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.
A-1
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)
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
B-1
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.
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
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(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)
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.
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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) 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-4
(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.
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.
B-5
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.
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-6
AMERICAN DIVERSIFIED GROUP, INC.
PROXY
FOR THE SPECIAL MEETING OF STOCKHOLDERS
17TH DAY, JULY 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 Wednesday July 17, 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)
THE SHARES REPRESENTED BY THIS PROXY SHALL BE VOTED AS INDICATED BELOW:
(1) 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.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) 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.
DATE
SIGNATURE
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 17, 2002.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE
PRE-PAID ENVELOPE.
END OF FILING
FP-1