SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT X FILED BY A PARTY OTHER THAN THE REGISTRANT
Check the appropriate box:
Preliminary Proxy Statement
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Under Rule 14a-12
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
FTS APPAREL, INC.
(Name of Registrant as Specified In Its Charter)
FTS APPAREL, INC.
(Name of Person(s) Filing Proxy Statement)
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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
Fee paid previously 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:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
FTS APPAREL, INC.
1049C OXFORD VALLEY ROAD
LEVITTOWN, PENNSYLVANIA 19057
January 7, 2003
Dear Fellow Stockholders:
You are cordially invited to attend the 2004 Annual Meeting of Stockholders of
FTS Apparel, Inc. on Monday, January 26, 2004 at 10:30 a.m. at the T and R Club
at 939 Boylston St., Boston, MA 02115.
At this year's Annual Meeting you will be asked to elect the nominee directors
recommended by FTS Apparel, Inc.'s Board of Directors, to approve an increase in
our authorized common shares from 25 million to 150 million, to approve a change
in our name from "FTS Apparel, Inc." to "FTS Group, Inc." and to approve our
reincorporation from Colorado to Nevada. Such other business will be transacted
as may properly come before the Annual Meeting.
Whether or not you plan to attend the Annual Meeting in person, it is important
that your shares be represented and voted. After reading the enclosed Notice of
Annual Meeting and Proxy Statement, please complete, sign, date, and return your
proxy card promptly in the envelope provided. This will ensure your proper
representation at the Annual Meeting. If the address on the accompanying
material is incorrect, please advise our Transfer Agent, Securities Transfer
Corporation, 2591 Dallas Parkway Suite 102, Frisco, Texas 75034.
Your vote is important. We appreciate a prompt return of your signed proxy card
and hope to see you at the meeting.
Cordially,
/s/ Scott Gallagher
- -------------------------------
Scott Gallagher
Chief Executive Officer
FTS APPAREL, INC.
1049C OXFORD VALLEY ROAD
LEVITTOWN, PENNSYLVANIA 19057
(215) 943-9979
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 26, 2004
TO THE STOCKHOLDERS OF FTS APPAREL, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of FTS Apparel,
Inc., a Colorado corporation (the "Company"), will be held on Monday, January
26, 2004, at 10:30 a.m., local time, at the T and R Club, 939 Boylston St.,
Boston, MA 02115 for the following purposes:
1. To elect three Directors to the Board of Directors with terms expiring at the
2005 Annual Meeting of Stockholders and until their successors are duly elected
and qualified.
2. To increase our authorized shares of common stock from 25 million to 150
million.
3. To change our name from "FTS Apparel, Incorporated" to "FTS Group,
Incorporated."
4. To change our state of incorporation from Colorado to Nevada.
5. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on December 23, 2003 as
the record date for determination of Stockholders entitled to notice of and to
vote at the Annual Meeting. Our stock transfer books will remain open.
All stockholders are cordially invited to attend the meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE URGE YOU TO MARK, SIGN
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Scott Gallagher
------------------
Scott Gallagher
Secretary
Levittown, PA
January 7, 2003
FTS APPAREL, INC.
1049C OXFORD VALLEY ROAD
LEVITTOWN, PENNSYLVANIA 19057
(215) 943-9979
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 7, 2003
PROXY SOLICITATION INFORMATION
GENERAL
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of FTS Apparel, Inc. for use at the Annual Meeting of
Stockholders to be held on Monday, January 26, 2004, at 10:30 a.m., local time,
at the T and R Club, 939 Boylston St., Boston, MA 02115 and at any adjournments
thereof (the "Meeting").
COST OF SOLICITATION
The cost of this solicitation, including expenses in connection with preparing
and mailing this Proxy Statement, will be borne by us. In addition, we will
reimburse brokerage firms and other persons representing beneficial owners of
our Common Stock for their expenses in forwarding proxy material to such
beneficial owners. In addition to solicitation by mail, our officers, directors
and employees, who will receive no extra compensation for their services, may
solicit proxies personally or by telephone or facsimile.
MAILING OF PROXY STATEMENT, PROXY AND FORM 10-K ANNUAL REPORT
This Proxy Statement and the accompanying Proxy will be mailed on or about
January 7, 2003, to all Stockholders entitled to notice of and to vote at the
Meeting.
WE WILL PROVIDE, WITHOUT CHARGE, A COPY OF THE OUR ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 AND RELATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES TO EACH STOCKHOLDER ENTITLED TO VOTE AT THE
MEETING, WHO REQUESTS A COPY OF SUCH IN WRITING OR BY PHONE. REQUESTS SHOULD BE
SENT TO FTS APPAREL, INC., 1049C OXFORD VALLEY RD., LEVITTOWN, PA 19057. OUR
TELEPHONE NUMBER IS (215) 943-9979.
QUORUM, VOTES REQUIRED AND TABULATION OF VOTES
STOCKHOLDERS ENTITLED TO VOTE
The close of business on December 23, 2003 has been fixed as the record date for
determining the Stockholders entitled to notice of and to vote at the Meeting.
As of the close of business on December 23, 2003, there were 17,700,240 shares
of Common Stock outstanding and entitled to vote. With respect to all matters
that will come before the Meeting, each stockholder may cast one vote for each
share registered in his or her name on the record date.
QUORUM
The presence, in person or by proxy, of the holders of a majority of the shares
of Common Stock issued, outstanding, and entitled to vote must be present to
hold the Meeting. This is referred to as a quorum. Proxies received that
withhold authority to vote for a nominee for election as a director and those
that are marked as abstentions and broker non-votes will be counted for the
purpose of determining whether a quorum is present.
VOTES REQUIRED FOR ELECTION OF DIRECTORS
The affirmative vote of the holders of a plurality of the votes cast by the
stockholders entitled to vote at the Meeting is required for the election of
directors. This means that the three nominees receiving the highest number of
"For" votes will be elected as directors. A properly executed proxy marked
"Withhold" or "For All Except" with respect to the election of one or more
nominees will not be counted as a vote "cast" or have any effect on the election
of such nominee or nominees.
Vote Required to Amend our Articles of Incorporation and our Reincorporation
from Colorado to Nevada
The affirmative vote of the holders of a majority of the votes cast by the
stockholders present or represented by proxy and entitled to vote at the Meeting
is required to approve an increase in our authorized common shares from 25
million to 150 million, to approve a change in our name from "FTS Apparel, Inc."
to "FTS Group, Inc." and to approve our reincorporation from Colorado to Nevada.
A properly executed proxy marked "Abstain" with respect to this proposal will be
treated as shares present or represented and entitled to vote on such proposal
and will have the same effect as a vote against the proposal.
RETURNED PROXY CARDS WHICH DO NOT PROVIDE VOTING INSTRUCTIONS
Proxies that are signed and returned will be voted in the manner instructed by a
stockholder. If you sign and return your proxy card with no instructions, the
proxy will be voted "For All Nominees" with respect to the election of all
nominees for director named in this Proxy Statement and "For" the items set
forth in Proposals 2, 3 and 4.
BROKER NON-VOTES
If you hold your shares of Common Stock in "street name" (that is, through a
broker, bank or other representative), you are considered the beneficial owner
of the shares held in street name. As the beneficial owner, you have the right
to direct your broker how to vote. Brokers who have not received instructions
from beneficial owners generally have the authority to vote on certain "routine"
matters, including the election of directors. With respect to a non-routine
matter, a broker is not permitted to vote such shares on your behalf as to such
matter. Shares representing such "broker non-votes" with respect to a
non-routine matter will not be voted in favor of such matter and will also not
be counted as votes cast on such matter. Accordingly, "broker non-votes" will
have no effect on the outcome of the vote.
CHANGING YOUR VOTE
You may revoke your proxy at any time before the proxy is voted at the Meeting.
In order to do this, you must:
- - send us written notice, stating your desire to revoke your proxy, or
- - send us a signed proxy that bears a later date than the one you intend to
revoke, or
- - attend the Meeting and vote in person. In this case, you must notify the
Inspector of Elections that you intend to vote in person.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, to our knowledge, certain information concerning
the beneficial ownership of our common stock as of December 20, 2003 by each
stockholder known by us to be (i) the beneficial owner of more than 5% of the
outstanding shares of common stock, (ii) each current director, (iii) each of
the executive officers named in the Summary Compensation Table who were serving
as executive officers at the end of the 2002 fiscal year and (iv) all of our
directors and current executive officers as a group:
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP OF CLASS(2)
James H. Gilligan 200,000 1.1%
W. Scott McBride 500,000 2.9%
David R. Rasmussen 75,000 *
Scott Gallagher 4,302,451 24.7%
Linda Ehlen 222,916 1.3%
Dutchess Advisors 6,600,000 (3) 29.4%
312 Stuart St., 3rd Floor
Boston, MA 02116
LeRoy Landhuis 6,793,471 (4) 36.8%
212 N. Wahsatch Avenue,
Suite 301
Colorado Springs, CO 80903
All directors and current executive
officers as a group (5 persons) 5,300,367 30.4%
<FN>
* Less than 1% of outstanding shares of Common Stock.
(1) The address of all individual directors and executive officers is
c/o FTS Apparel, Inc., 1049C Oxford Valley Rd., Levittown, PA 19057.
(2) The number of shares of common stock issued and outstanding as of
December 23, 2003 was 17,700,240 shares. The calculation of percentage
ownership for each listed beneficial owner is based upon the number of shares
of common stock issued and outstanding on as of December 23, 2003, plus
shares of common stock subject to options and warrants held by such
person on December 23, 2003 and exercisable within 60 days thereafter. The
persons and entities named in the table have sole voting and
investment power with respect to all shares shown as beneficially owned by
them, except as noted below.
(3) This information is based on a 13G filed on April 16, 2003.
Includes 600,000 shares owned by Dutchess Advisors and 1,000,000 shares
owned by Michael Novielli, a principal of Dutchess Advisors.
Additionally, this amount includes 5,000,000 shares that Dutchess may acquire
upon conversion of debentures. The amount of shares we actually issue will
depend upon our share price and the time of conversion and the length of time
Dutchess holds the debentures.
(4) Includes warrants for 1,036,000 shares of common stock,
exercisable immediately for an exercise price of $1.50 per share, and
expiring on April 19, 2010.
PROPOSAL TO ELECT DIRECTORS TO THE BOARD OF DIRECTORS
(PROPOSAL ONE)
Our Directors are elected annually. At each Annual Meeting of Stockholders, our
directors are elected for a term of one year or until the directors' successors
are duly elected and qualified. The Directors elected at this Meeting will be
elected to serve until the 2005 Annual Meeting of Stockholders. The Board of
Directors has designated as director nominees Scott Gallagher, David Rasmussen
and James Gilligan. Each of nominees is currently a Director of the Company.
The persons named in the proxy will vote to elect Scott Gallagher, David
Rasmussen and James Gilligan as Directors, unless authority to vote for the
election is withheld by marking the proxy to that effect, or the proxy is marked
with the names of Directors as to whom authority to vote is withheld. In the
event that any nominee shall become unable or unwilling to serve, the persons
acting under the proxy may vote the proxy for the election of a substitute. The
Board of Directors has no reason to believe that any nominee will be unable or
unwilling to serve. A plurality of the shares voted affirmatively at the Meeting
is required to elect each nominee as a director.
BIOGRAPHIES OF OFFICERS AND DIRECTORS
Set forth below is a brief description of the background of our directors based
on information provided by them to us.
SCOTT GALLAGHER has served as our Chairman, President and Chief Executive
Officer since January 11, 2002. Prior to joining us, and since 1999, Mr.
Gallagher had served as the president of About-Face Communications, LLC, a
privately held business consulting firm located in Yardley, Pennsylvania. Prior
to founding About-Face Communications, LLC, Mr. Gallagher was the chief
investment officer and a general partner with the Avalon Stock Fund, a private
hedge fund based in New York City. Prior to co-founding Avalon Stock Fund, from
1995 to 1999, Mr. Gallagher was a branch manager and founder of the Langhorne,
Pennsylvania office for Scottsdale Securities, Inc., a national brokerage firm
based in St. Louis, Missouri.
DAVID R. RASMUSSEN has served on our board of directors since February 10, 2002.
He has been in the information technology field since 1992. Since 2000, Mr.
Rasmussen has served as a Project leader for ERC, Inc., a subsidiary of General
Electric. In his current position he provides IT solutions that enable business
to drive core processes and grow profitable relationships. From 1997 through
2000 Mr. Rasmussen worked as a program analyst for National Association of
Insurance Commissions. Mr. Rasmussen received a Bachelor's degree in Computer
Technology from Rockhurst University in Kansas City Missouri. Mr. Rasmussen is a
six sigma certified Green belt.
JAMES H. GILLIGAN has served on our board of directors since February 10, 2002.
Currently Mr. Gilligan is a marine fuels broker/trader for World Fuel Services,
Corp. In September 2001, Mr. Gilligan served as an independent sales consultant
for Digital Descriptor Systems, Inc., a security/biometric company. From 1996 to
2001, Mr. Gilligan worked at Kristensons-Petroleum, Inc. as a broker/trader.
Kristensons-Petroleum services ship owners, marine fuel suppliers and a network
of independent brokers and traders around the world. Mr. Gilligan earned his BA
in Liberal Arts from West Virginia University in Morgantown, West Virginia and
his Associates in Liberal Arts from Brookdale Community College, in Lincroft,
New Jersey.
BOARD COMMITTEES
We do not have a separate Audit, Compensation or Nominating Committee. The full
board performs the functions generally designated to such committees.
BOARD MEETINGS
During the year ending December 31, 2002, the Board of Directors held 18
meetings. No director attended less than 75% of the Board meetings.
EXECUTIVE COMPENSATION
The following table presents a summary of the compensation paid to our Chief
Executive Officer during the last three fiscal years. Except as listed below,
there are no bonuses, other annual compensation, restricted stock awards or
stock options/SARs. No other executive officer earned more than $100,000 in the
last three fiscal years.
Annual Compensation
Name And. Year Salary Bonus Other Long Term
Principal Annual Compensation
Position Compensation Awards
Securities All
Underlying Other
Options Compensation
Scott
Gallagher
Chief
Executive
Officer. 2002 $ 201,000 (1) $25,000 0 0 0
LeRoy
Landhuis 2002 $19,750 $117,844 (2) 0 0
2001 0 $226,672 (3) 0 0
2000
<FN>
Mr. Landbuis is no longer our Chairman and Chief Executive Officer. Mr. Gallagher became
our Chairman and Chief Executive Officer on January 11, 2002.
(1) In 2002, we did not pay Mr. Gallagher in cash. Instead, we paid him
1,200,000 shares of stock valued at $120,000 pursuant to his employment
contract. In addition, we paid him 1,145,833 shares that were converted into
$75,000 and applied to his salary and 75,000 shares as board compensation valued
at $6,000. At the end of the year Mr. Gallagher had $45,000 in unpaid accrued
salary and bonuses.
(2) Represents compensation for services pursuant to a consulting
agreement which was paid in the form of 315,201 shares of common stock
valued at $.373869 per share.
(3) Includes 782,222 shares of common stock valued at $220,000 pursuant to a
consulting agreement with the named executive officer and 142,500 shares
of common stock valued at $6,672 issued pursuant to a registration rights
agreement with the named executive officer.
COMPENSATION AGREEMENTS
On January 11, 2002, we entered into an executive employment agreement with Mr.
Gallagher pursuant to which he was appointed our Chairman of the Board and Chief
Executive Officer. The agreement provides him a base salary of $100,000 per
year, the opportunity for bonuses based on our financial performance, 1,200,000
shares of our common stock and the right to participate in benefit programs
maintained for our other employees. The agreement covers the period through the
end of 2004, subject to earlier termination. The agreement provides that we may
terminate his employment with "cause," as defined therein. In the event that his
employment is terminated without cause, we must pay him for the balance of the
original term.
DIRECTORS COMPENSATION
We compensate our directors at a quarterly rate of $2,000 payable in stock or
cash at our discretion. Additionally, each director is entitled to be reimbursed
for reasonable and necessary expenses incurred on our behalf.
STOCK OPTION PLAN
We have adopted a Non-Qualified Stock Option and Stock Grant Plan (the "Plan")
for the benefit of key personnel and others providing significant services to
us. An aggregate of 2,500,000 shares of our common stock have been reserved for
issuance under the Plan, as amended.
The Plan is administered by our Board of Directors, which selects recipients of
any stock options or grants, the number of shares and the terms and conditions
of any options or grants to key persons defined in the Plan. In determining the
value of services rendered to us for purposes of awards under the Plan, the
Board considers, among other things, such person's employment position and
relationship with us, his duties and responsibilities, ability, productivity,
length of service or association, morale, interest in our company,
recommendation by supervisors and the value of comparable services rendered by
others in the community. All options granted pursuant to the Plan are
exercisable at a price not less than the fair market value of the shares of
common stock on the date of grant.
In 2001 and 2002 no options were granted under the Plan. We have options
outstanding to purchase a total of 598,000 shares of our common stock at
exercise prices ranging from $.81 per share to $2.75 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
None of our directors or executive officer serves as a member of the Board of
Directors or Compensation Committee of any entity that has one or more executive
officers serving as a member of our Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF SCOTT GALLAGHER, DAVID
RASMUSSEN AND JAMES GILLIGAN AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD
WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE IN
THE PROXY.
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK
(PROPOSAL TWO)
Our Articles of Incorporation currently authorize us to issue 25,000,000 shares
of common stock and 5,000,000 shares of preferred stock, par value $.01 per
share. As of December 22, 2003, we had issued and outstanding 17,700,240 shares
of common stock, leaving us, in the opinion of our Board of Directors, with an
insufficient number of shares of common stock available for issuance necessary
for us to efficiently continue and grow our operations. Accordingly, the Board
of Directors recommends an increase the number of shares of common stock we are
authorized to issue from 25,000,000 shares to 150,000,000 shares.
The additional shares of common stock to be authorized for issuance upon the
adoption of such amendment would possess rights identical to the currently
authorized common stock. The stockholders of common stock are entitled to one
vote for each share held of record on all matters to be voted on by the
stockholders. All voting is on a non-cumulative basis. The stockholders of
common stock do not have any preemptive rights, conversion rights, or applicable
redemption or sinking fund provisions. The amendment to authorize the issuance
of additional shares of common stock will not have any effect on the par value
of the common stock. Nevertheless, the issuance of such additionally authorized
shares of common stock would affect the voting rights of our current
stockholders because there would be an increase in the number of outstanding
shares entitled to vote on corporate matters, including the election of
directors, if and when any such shares of common stock are issued in the future.
If the Board of Directors determines that an issuance of shares of our common
stock is in our best interest and our stockholders' best interest, the issuance
of additional shares would have the effect of diluting the earnings per share or
book value per share of the outstanding shares of common stock or the stock
ownership or voting rights of a stockholder.
An increase in the number of authorized shares of Common Stock will enable us to
take advantage of various potential business opportunities through the issuance
of our securities, including, without limitation, issuing stock dividends to
existing stockholders, providing equity incentives to employees, officers or
directors, establishing certain strategic relationships with other companies and
expanding our business through acquisitions. We have no present agreements to
acquire any such businesses.
POTENTIAL ANTI-TAKEOVER EFFECTS OF THE AMENDMENT
The increase in the number of authorized shares of common stock and the
subsequent issuance of all or a portion of those shares could have the effect of
delaying or preventing a change of control without further action by the
stockholders. Subject to applicable law and stock exchange requirements, we
could issue shares of authorized and unissued common stock in one or more
transactions that would make a change of control more difficult and therefore
less likely. Any issuancee of additional shares could have the effect of
diluting the earnings per share and book value per share of the outstanding
shares of common stock or the stock ownership and voting rights of a person
seeking to obtain control of our company.
The increase in authorized shares is reflected in our proposed Articles of
Incorporation included with this proxy as Attachment B. However, this proposal
is not dependent on shareholders approving our reincorporation, described in
Proposal Four below. If this Proposal Two is approved by shareholders, but our
reincorporation to Nevada is not approved by shareholders, we intend to amend
our current Articles of Incorporation to reflect the increase in authorized
shares.
THE BOARD OF DIRECTORS RECOMMENDS AN INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK,AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF
UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE IN THE PROXY.
PROPOSAL TO CHANGE OUR NAME FROM "FTS APPAREL, INC." TO "FTS GROUP, INC."
(PROPOSAL THREE)
Our Board of Directors recommends changing our name from FTS Apparel, Inc. to
FTS Group, Inc. in order to better reflect our current and planned future
operations. Additionally, we have disposed of all businesses related to the
apparel industry.
The currently outstanding stock certificates evidencing shares of our common
stock bearing the name "FTS Apparel, Inc." will continue to be valid and
represent shares of our common stock following the name change. In the future,
new certificates will be issued bearing our new name, but this will in no way
affect the validity of your current stock certificates.
The change in our name is reflected in our proposed Articles of Incorporation
included with this proxy as Attachment B. However, this proposal is not
dependent on shareholders approving our reincorporation, described in Proposal
Four below. If this Proposal Three is approved by shareholders, but our
reincorporation to Nevada is not approved by shareholders, we intend to amend
our current Articles of Incorporation filed in Colorado to reflect the change in
our corporate name.
THE BOARD OF DIRECTORS RECOMMENDS A CHANGE IN OUR COMPANY NAME, AND PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS
INDICATED OTHERWISE IN THE PROXY.
PROPOSAL TO CHANGE OUR STATE OF INCORPORATION
FROM COLORADO TO NEVADA
(PROPOSAL FOUR)
We propose to reincorporate from the State of Colorado to the State of Nevada.
The reincorporation will be effected pursuant to an Agreement and Plan of
Merger, dated as of December 23, 2003 (the "Merger Agreement"), by and between
us and FTS Group, Inc. a Nevada corporation of the same name and our wholly
owned subsidiary. On December 20, 2003, the boards of directors of each of the
companies unanimously approved the merger agreement, and subsequently we, as the
sole stockholder of FTS Nevada, adopted the merger agreement. The merger
agreement is included as Attachment A to this proxy statement.
NO CHANGE IN BUSINESS, JOBS, PHYSICAL LOCATION, ETC.
The reincorporation merger will effect a change in our legal domicile, However,
the reincorporation merger will not result in any change in headquarters,
business, jobs, management, location of any of our offices or facilities, number
of employees, assets, liabilities or net worth (other than as a result of the
costs incident to the reincorporation merger, which are immaterial). Our
management, including all directors and officers, will remain the same in
connection with the reincorporation merger and will assume identical positions
with FTS Nevada. There will be no new employment agreements for executive
officers or other direct or indirect interest of the current directors or
executive officers in the reincorporation merger as a result of the
reincorporation. Upon the effective time of the reincorporation merger, your
shares of common stock will be converted into an equivalent number of shares of
common stock of FTS Nevada and such shares will continue to trade on the Over
the Counter Bulletin Board under the symbol "FLIP."
REASONS FOR THE REINCORPORATION
Nevada is a nationally recognized leader in adopting and implementing
comprehensive and flexible corporate laws. The General Corporation Law of the
State of Nevada is frequently revised and updated to accommodate changing legal
and business needs. With our growth and changes in the composition of our
management and board of directors in the recent year, we think it will be
beneficial to us and our shareholders to obtain the benefits of Nevada corporate
law.
Nevada courts have developed considerable expertise in dealing with corporate
legal issues and produced a substantial body of case law construing Nevada
corporate laws, with multiple cases concerning areas that no Colorado court has
considered. Because our judicial system is based largely on legal precedents,
the abundance of Nevada case law should serve to enhance the relative clarity
and predictability of many areas of corporate law, which should offer added
advantages by allowing our board of directors and management to make corporate
decisions and take corporate actions with greater assurance as to the validity
and consequences of those decisions and actions.
Reincorporation from Colorado to Nevada also may make it easier to attract
future candidates willing to serve on our board of directors, because many of
such candidates already will be familiar with Nevada corporate law, including
provisions relating to director indemnification, from their past business
experience.
COMPARISON OF SHAREHOLDER RIGHTS BEFORE AND AFTER THE REINCORPORATON
We have drafted our By-laws and Articles of Incorporation so that the impact on
shareholder rights will be minimal. Other than the proposals presented in this
proxy to increase our authorized shares, there will be no material changes in
shareholder rights. As a result, the par value of our common and preferred
shares, voting rights, votes required for the election of directors and other
matters, removal of directors, indemnification provisions, procedures for
amending our Articles of Incorporation and By-laws, procedures for the removal
of directors, dividend and liquidation rights, examination of books and records
and procedures for setting a record date will not change in any material way.
FTS NEVADA
FTS Nevada, our wholly owned subsidiary, was incorporated on January 6, 2004
under the name "FTS Group, Incorporated" exclusively for the purpose of merging
with us. The address and phone number of FTS Nevada's principal office are the
same as currently exist. Prior to the reincorporation merger, FTS Nevada will
have no material assets or liabilities and will not have carried on any
business.
Upon completion of the reincorporation merger, the rights of the stockholders of
FTS Nevada will be governed by Nevada corporate law and the Articles of
Incorporation and the By-laws of FTS Nevada. The Nevada Articles of
Incorporation and the Nevada By-laws are attached to this proxy statement as
Attachments B and C, respectively.
THE MERGER AGREEMENT
The merger agreement provides that we will merge with and into FTS Nevada, with
FTS Nevada being the surviving corporation. Pursuant to the merger agreement,
FTS Nevada will assume all of our assets and liabilities, including obligations
under our outstanding indebtedness and contracts. Our existing board of
directors and officers will become the board of directors and officers of FTS
Nevada for identical terms of office. Our subsidiary will become a subsidiary of
FTS Nevada.
At the effective time of the reincorporation merger, each outstanding share of
Colorado common stock, automatically will be converted into one share of common
stock of FTS Nevada. You will not have to exchange your existing stock
certificates for stock certificates of FTS Nevada. However, after consummation
of the reincorporation merger, any stockholder desiring a new form of stock
certificate may submit the existing stock certificate to FTS Nevada's transfer
agent for cancellation, and obtain a new Nevada form of certificate. The merger
agreement was unanimously approved by our Board of Directors and the Board of
Directors of FTS Nevada and subsequently was adopted by us, as the sole
stockholder of FTS Nevada. Approval of the reincorporation proposal (which
constitutes approval of the merger agreement) requires the affirmative vote of
the holders of a majority of our common stock.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF REINCORPORATION
We intend the reincorporation to be a tax-free reorganization under the Internal
Revenue Code (the "Code"). Assuming the reincorporation qualifies as a
reorganization, the holders of our common stock will not recognize any gain or
loss under the Federal tax laws as a result of the occurrence of the
reincorporation, and neither will FTS Apparel, Inc. or FTS Group, Inc. Each
holder will have the same basis in our common stock received as a result of the
reincorporation as that holder has in the corresponding FTS Group common stock
held at the time the reincorporation occurs.
We have discussed solely U.S. federal income tax consequences and have done so
only for general information. We did not address all of the federal income tax
consequences that may be relevant to particular shareholders based upon
individual circumstances or to shareholders who are subject to special rules
(e.g., financial institutions, tax-exempt organizations, insurance companies,
dealers in securities, foreign holders or holders who acquired their shares as
compensation, whether through employee stock options or otherwise). We did not
address the tax consequences under state, local or foreign laws.
We based our discussion on the Code, laws, regulations, rulings and decisions in
effect as of the date of this proxy statement, all of which are subject to
differing interpretations and change, possibly with retroactive effect. We have
neither requested nor received a tax opinion from legal counsel or rulings from
the Internal Revenue Service regarding the consequences of reincorporation.
There can be no assurance that future legislation, regulations, administrative
rulings or court decisions would not alter the consequences we discussed above.
You should consult your own tax advisor to determine the particular tax
consequences to you of the reincorporation, including the applicability and
effect of federal, state, local, foreign and other tax laws.
EFFECTIVE TIME
If approved by the requisite vote of the holders of shares of our common stock,
it is anticipated that the reincorporation merger, and consequently the
reincorporation, will become effective as soon as practicable after the Annual
Meeting.
EFFECT OF NOT OBTAINING THE REQUIRED VOTE FOR APPROVAL
If the reincorporation proposal fails to obtain the requisite vote for approval,
the reincorporation merger will not be consummated and we will continue to be
incorporated in Colorado.
THE BOARD OF DIRECTORS RECOMMENDS A CHANGE IN THE STATE OF INCORPORATION FROM
COLORADO TO NEVADA, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR
THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE IN THE PROXY.
AUDIT FEES
Stark Winter Schenkein & Co., LLP were our auditors for the fiscal years ended
December 31, 2002 and 2003. Additionally, we have selected Stark Winter
Schenkein & Co., LLP to be our auditors for the fiscal year ended December 31,
2004. We do not expect members of Stark Winter Schenkein & Co., LLP to be
present at our annual meeting.
AUDIT FEES
For their audit of our annual financial statements and for their review of our
Quarterly Reports on Form 10-Q, Stark Winter Schenkein & Co., LLP billed us a
total of $5,589 for the fiscal year ended December 31, 2002 and $13,225 for the
fiscal year ended December 31, 2003.
TAX FEES
For their review of tax matters, Stark Winter Schenkein & Co., LLP billed us a
total of $1,250 in 2002 and $1,250 in 2003.
ALL OTHER FEES
Stark Winter Schenkein & Co., LLP billed us $1,220 related to a registration
statement on Form SB-2 and $720 for review of a contract in the fiscal year
ended December 31, 2002. Stark Winter Schenkein & Co., LLP billed us $8235
related to a registration statement on Form SB-2 and $865 related to a proposed
merger in the fiscal year ended December 31, 2003.
The Board has considered whether the provision of the services described above
under the caption "All Other Fees" is compatible with maintaining Stark Winter
Schenkein & Co., LLP's independence.
ATTACHMENT A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 23, 2003 ("Agreement"),
between FTS Apparel, Inc., a Colorado corporation, and FTS Group, Inc., a Nevada
corporation.
RECITALS
The Board of Directors of FTS Apparel has approved a change of legal domicile to
the State of Nevada and a simultaneous change of name as being in the best
interests of the corporation and its shareholders. The change of legal domicile
and change of name through the merger ("Merger") with FTS Group will take place
under the terms and conditions set forth in this Agreement.
In consideration of the respective representations, warranties, covenants and
agreements contained in this Agreement, FTS Apparel and FTS Group hereby agree
as follows:
ARTICLE I
THE MERGER
1.01 THE MERGER. Upon the terms and subject to the conditions of this Agreement,
and in accordance with the relevant provisions of the Colorado Business
Corporation Act ("Colorado Statute") and the Nevada Business Corporation Act
("Nevada Statute"), respectively, FTS Apparel will be merged with and into FTS
Group as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Article IV of this Agreement.
Following the Merger, FTS Group will continue as the surviving corporation and
will continue its existence under the laws of the State of Nevada, and the
separate corporate existence of FTS Apparel will cease.
1.02 EFFECTIVE DATE. As soon as practicable following the satisfaction or
waiver, if permissible, of the conditions set forth in Article IV of this
Agreement, the Merger will be consummated by filing with the Secretaries of
State of the States of Colorado and Nevada, respectively, Articles of Merger,
and any other appropriate documents ("Articles of Merger") in accordance with
the Colorado Statute and the Nevada Statute, respectively. The Merger will
become effective at such time as the Articles of Merger are duly filed, or at
such later time as specified in the Articles of Merger (the time the Merger
becomes effective being the "Effective Date").
1.03 EFFECTS OF THE MERGER. The Merger will have the effects specified in the
Colorado Statute and the Nevada Statute, respectively.
1.04 DIRECTORS AND OFFICERS OF FTS GROUP. After the Effective Date, the initial
directors and officers of FTS Group, as the surviving corporation, will be the
following person:
Scott Gallagher, President, Secretary, Director David Rasmussen, Director James
Gilligan, Director
Such person will serve until his successors will have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with FTS Group's Certificate of Incorporation and by laws.
ARTICLE II
EXCHANGE OF SHARES
2.01 SHARE EXCHANGE. On the Effective Date by virtue of the Merger, each share
of common stock of FTS Apparel held by the shareholders of FTS Apparel will
exchanged for one share of the common stock of FTS Group. Promptly after the
Effective Date, FTS Group will issue to each shareholder of FTS Apparel a
certificate representing the common stock to be issued to each shareholder and
simultaneously each shareholder of FTS Apparel will exchange and surrender the
certificate representing all of such shareholder's shares in FTS Apparel. At the
close of business on the day of the Effective date, the stock ledger of FTS
Apparel will be closed.
ARTICLE III
COVENANTS
3.01 FURTHER ACTION. The parties will, subject to the fulfillment at or before
the Effective Date of each of the conditions of performance set forth in Section
IV herein, perform such further acts and execute such documents as may be
reasonably required to effect the Merger.
3.02 MEETING OF BREAKTHROUGH SHAREHOLDERS. FTS Apparel will submit the Merger to
its shareholders for their consideration and consent in accordance with the
Colorado Statute and other provisions of applicable law. FTS Apparel will notify
FTS Group that the consent of the shareholders has been obtained.
3.03 BEST EFFORTS TO CLOSE. The parties hereto agree to use their best efforts
to close the transactions contemplated hereby as soon as practicable after the
execution of this Agreement.
ARTICLE IV
CONDITIONS TO CONSUMMATION
OF THE MERGER
4.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective
obligations of each party to effect the Merger are subject to the satisfaction
or waiver, where permissible, prior to the Effective Date, of the following
conditions:
(a) This Agreement will have been approved by the affirmative vote of the
shareholders of FTS Apparel by the requisite vote in accordance with applicable
law;
(b) No statute, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent), will have been enacted,
entered, promulgated or enforced by any court or governmental authority which is
in effect and has the effect of prohibiting the consummation of the Merger;
provided, however, that each of the parties will have used its best efforts to
prevent the entry of any injunction or other order and to appeal as promptly as
possible any injunction or other order that may be entered.
ARTICLE V
MISCELLANEOUS
5.01 ASSIGNMENT, BINDING EFFECT; BENEFIT; ENTIRE AGREEMENT. Neither this
Agreement nor any of the rights, interests or obligations hereunder will be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon and will inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assign any rights, remedies, obligations or liabilities under or by reason of
this Agreement. This Agreement and any documents delivered by the parties in
connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings (oral and written) among the parties with respect thereto. No
addition to or modification of any provision of this Agreement will be binding
upon any party hereto unless made in writing and signed by all parties hereto.
5.02 SEVERABILITY. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement in any
other jurisdiction. If any provision, clause, section or part of this Agreement
is so broad as to be unenforceable, the provision, clause, section or part will
be interpreted to be only so broad as is enforceable, and all other provisions,
clauses, sections or parts of this Agreement which can be effective without such
unenforceable provision, clause, section or part will, nevertheless, remain in
full force and effect.
5.03 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Nevada without regard to its rules of
conflict of laws.
5.04 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
5.05 COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered will be an
original, but all such counterparts will together constitute one and the same
instrument. Each counterpart may consist of a number of copies of this Agreement
each of which may be signed by less than all of the parties hereto, but together
all such copies will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its respective officers hereunto duly authorized, all as of the
day and year first above written.
FTS APPAREL, INC.
By:_/s/ Scott Gallagher
- ----------------------------
Scott Gallagher, President
FTS GROUP, INC.
By:_/s/ Scott Gallagher
- ----------------------------
Scott Gallagher, President
2004. EDGAR Online, Inc.
- ---------------------------
ATTACHMENT B
ARTICLES OF INCORPORATION
OF
FTS GROUP, INC.
I
The name of the corporation is FTS GROUP, INC.
II
The name of the registered agent and registered office is:
Scott Gallagher 1049c Oxford Valley Road Levittown, Pennsylvania 19057
III
The purpose of the corporation shall be to engage in any lawful activity and any
activities necessary, convenient or desirable to accomplish such purposes, not
forbidden by law or these articles of incorporation.
IV
The total authorized capital of the corporation shall be 155,000,000 shares
consisting of 150,000,000 shares of common stock, par value $0.001 per share and
5,000,000 shares of preferred stock, par value $0.01 per share. The board of
directors shall have the authority, without any further approval of the
shareholders, to establish the relative rights, preferences and limitations of
any class of common or preferred stock. The consideration for the issuance of
any shares of capital stock may be paid, in whole or in part, in money, services
or other thing of value. The judgment of the directors as to the value of the
consideration for the shares shall be conclusive. When the payment of the
consideration for the shares has been received by the corporation, such shares
shall be deemed fully paid and nonassessable.
V
The initial board of directors shall consist of three (3) members whose name and
address are as follows:
SCOTT GALLAGHER, DAVID RASMUSSEN AND JAMES GILLIGAN
1049c Oxford Valley Road
Levittown, Pennsylvania 19057
In accordance with the By-laws of the Corporation, the Board of Directors may be
divided into classes, each class to be as nearly equal in number as possible,
with the term of office of directors of the first class to expire at the first
annual meeting of shareholders after their election, and the terms of the
successive classes expiring at successive annual meetings of shareholders
thereafter. At each annual meeting following such classification and division of
the members of the Board of Directors, a number of directors equal to the number
of directorships in the class whose term expires at the time of such meeting
shall be elected to hold office for a term of years equal to the number of
classes, and such term shall expire at the annual meeting held during the final
year of the term.
VI
The incorporator of the corporation is:
Scott Gallagher
1049c Oxford Valley Road
Levittown, Pennsylvania 19057
VII
The corporation shall indemnify to the fullest extent not prohibited by law any
person who was or is a party or is threatened to be made a party to any legal
proceeding against all expenses (including attorney's fees), judgments, fines,
and amounts paid in settlement actually and reasonably incurred by the person in
connection with such proceeding. Any repeal or modification of this Article by
the stockholders of the corporation shall be prospective only and shall not
adversely affect any limitation on the personal liability of a director or
officer of the corporation for acts of omissions prior to such repeal or
modification.
VII
1. The rights of holders of Common Shares to receive dividends or share in the
distribution of assets in the event of liquidation, dissolution or winding up of
the affairs of the Corporation shall be subject to the preferences, limitations
and relative rights of the Preferred Shares fixed in the resolution or
resolutions which may be adopted from time to time by the Board of Directors of
the Corporation providing for the issuance of one or more series of the
Preferred Shares.
2. The holders of the Common Shares shall be entitled to one vote for each
Common Share held by them of record at the time for determining the holders
thereof entitled to vote.
IX
1. The shares of Series A Convertible Preferred Stock shall consist of a maximum
of 150,000 shares, which shall be issued at such times and for such
consideration as the Board of Directors shall determine in its discretion,
subject to these Articles of Amendment. Prior to any conversion of the Series A
Convertible Preferred Stock into shares of the Common Stock as described in
paragraph 6 below, the holders (or any subsequent holders) may only transfer the
Series A Convertible Preferred Stock in a transaction involving the transfer of
all unconverted shares of the Series A Convertible Preferred Stock to the
subsequent holder.
2. The issue price of the Series A Convertible Preferred Stock shall be $1.00
per share.
3. The holders of the Series A Convertible Preferred Stock shall be entitled to
receive, out of any assets of the Corporation lawfully available for dividends
pursuant to the laws of the State of Nevada, preferential fixed dividends at the
rate of 10% per annum ($.10 per year) pro rated to the date of issuance, for a
period of 24 months after issuance, payable annually on or before December 31 of
each such calendar year before any dividend shall be declared or paid upon or
set apart for the Common Stock. Beginning on the first day of the 25th month and
continuing until the expiration of 60 months from the date of issuance, unless
sooner converted, the dividend shall be calculated as
3.75% of the "net profits" of the Corporation and payable annually on or before
90 days from the closing of the Corporation's fiscal year. Payment of dividends
for any portion of a fiscal year shall be prorated. For purposes of this
paragraph 3, net profits shall be calculated after taxes and determined with
reference to the financial statements of the Company, prepared in accordance
with generally accepted accounting principles and filed with the United States
Securities and Exchange Commission. If for any reason such financial statements
are not filed with the Commission, such determination shall none the less be
made with reference to the financial statements prepared in accordance with
generally accepted accounting principles. Such dividends upon the Series A
Convertible Preferred Stock shall be cumulative from the date of issue so that
if dividends for any past dividend period shall not have been paid thereon the
deficiency shall be fully paid (but without interest), before any dividend shall
be paid upon or set apart for the Common Stock or any other series of Preferred
Stock. If shares of the Series A Convertible Preferred Stock are converted
during any calendar year pursuant to paragraph 6 below, then the preferential
dividend provided for in this paragraph 3 with respect to such converted shares
shall be pro-rated for the applicable period of such year prior to conversion
and shall be payable 90 days after completion of the fiscal year.
4. No new series of Preferred Stock shall be granted senior dividend preferences
over the preferential dividend rights of Series A Convertible Preferred Stock.
5. In the event of any liquidation, dissolution or winding up of the affairs of
the Corporation, whether voluntary or involuntary, the holder of the Series A
Convertible Preferred Stock shall be entitled, before any assets of the
Corporation shall be distributed among or paid over to the holders of the Common
Stock or any other Preferred Stock, to be paid $1.00 per share of Series A
Convertible Preferred Stock together with a sum of money equivalent to
preferential dividends to which shares of Series A Convertible Preferred Stock
may be entitled, if any, from the date which preferential dividends on such
Series A Convertible Preferred Stock became cumulative to the date of payment
thereof, less the amount of preferential dividends theretofore paid thereon. In
the event of any authorization of a new series of Preferred Stock having
liquidation preferences, the shares having liquidation preferences shall be
subordinate to and not be entitled to liquidation preferences senior to or equal
to the Series A Convertible Preferred Stock. After the making of full payment of
liquidation preferences to the holders of the Series A Convertible Preferred
Stock, the remaining assets of the Corporation shall be distributed ratably to
any other Preferred Stock having liquidation preferences in accordance with
their priorities and then ratably among the holders of the Common Stock and any
other series of Preferred Stock without liquidation preferences.
6. (a) The holder of the shares of the Series A Convertible Preferred Stock
shall have the right, at its option, at any time and from the time to time on
any business day, up to and including the close of business on April 13, 2003
(or if such day shall not be a business day the immediately preceding business
day), to convert, subject to the terms of this section (including adjustment),
all of the shares of the Series A Convertible Preferred Stock into shares of
Common Stock on a one for one basis. On April 14, 2003, any shares of Series A
Convertible Preferred Stock which have not been converted shall be automatically
converted with no further action by the holder. The holder of the shares of
Series A Convertible Preferred Stock shall be entitled to exercise the foregoing
conversion rights in minimum increments of 10,000 shares of Series A Convertible
Preferred Stock; provided, that the final increment to be converted may be less
than 10,000 shares of Series A Convertible Preferred Stock. Only whole shares of
Series A Convertible Preferred Stock may be converted and only whole shares of
Common Stock may be issued as a result of conversion.
(b) In order to convert shares of the Series A Convertible Preferred Stock into
Common Stock, the holder thereof shall deliver the stock certificates
representing the shares to be converted to the Corporation at its then principal
office, accompanied by written notice ("Conversion Notice") that it elects to
convert the shares represented thereby into shares of Common Stock in accordance
with the provisions of this paragraph 6. Said Conversion Notice shall specify
the number of shares of Series A Preferred Stock to be converted.
(c) As promptly as practicable after the surrender as hereinabove provided of
stock certificates representing the shares to be converted into Common Stock,
accompanied by a duly completed and executed Conversion Notice, the Corporation
shall deliver or cause to be delivered to the holder, certificates representing
the whole number of fully paid and non-assessable shares of Common Stock of the
Corporation into which said shares are being converted, and, if less than all of
the shares represented by the surrendered stock certificates are converted, new
stock certificates for the whole shares not so converted. Such conversion shall
be deemed to have been made immediately following the close of business on the
date that such shares, accompanied by duly completed and executed Conversion
Notice, shall have been duly surrendered for conversion as herein provided, so
that the holder entitled to receive the shares of Common Stock upon conversion
of the Series A Convertible Preferred Stock shall at such time be treated for
all purposes as having become the record holder of such shares of Common Stock
immediately following the close of business on such date and the rights of the
holder of such converted shares, as such holder, shall cease at such time. The
issuance of certificates for shares of Common Stock upon the conversion shall be
made without charge to the holder of the converted shares for any stock transfer
or issue tax in respect of the surrender of shares for conversion, or the
issuance of such certificates for the shares receivable on conversion. Converted
shares shall be canceled and shall not be reissued. The Corporation shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock a sufficient number of shares for the purpose of effecting the
conversion or exchange for the Series A Convertible Preferred Stock then
deliverable upon the conversion or exchange of the entire Series A Convertible
Preferred Stock at the time outstanding.
(d) The Conversion Rate shall be subject to adjustment from time to time as
follows:
(i) If at any time or times after the date hereof the Corporation shall effect a
reorganization, shall merge with or consolidate into another Corporation, or
shall sell, transfer or otherwise dispose of all or substantially all of its
property, assets or business and, pursuant to the terms of such reorganization,
merger, consolidation or disposition of assets, shares of stock or other
securities, property or assets of the Corporation (or the successor, transferee
or affiliate of the Corporation) or cash are to be received by or distributed to
the holders of Common Stock, then the holders of the Series A Convertible
Preferred Stock shall have the right thereafter to receive, upon conversion
thereof, the number of shares of stock or other securities, property or assets
of the Corporation (or the successor, transferee or affiliate of the
Corporation), or cash receivable upon or as a result of such reorganization,
merger, consolidation or disposition of assets by holder of the number of shares
of Common Stock into which such Series A Convertible Preferred stock was
convertible immediately prior to such event and the Corporation shall make
lawful provision therefor as part of such transaction. The provisions of this
subdivision (i) shall similarly apply to successive reorganizations, mergers,
consolidations or dispositions of assets.
(ii) Whenever the Conversion Rate shall be adjusted pursuant to this paragraph
5(d), the Corporation shall forthwith obtain, and cause to be delivered to the
holders of the Series A Convertible Preferred Stock, a certificate signed by the
President, Vice President or Treasurer of the Corporation, setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated and specifying the new Conversion Rate. In the
case referred to in subdivision (i), such a certificate shall be issued
describing the amount and kind of stock, securities, property of assets or cash
which shall be receivable upon conversion of the Series A Convertible Preferred
Stock after giving effect to the provisions of such subdivision (i).
(e) In case at any time the Corporation shall offer for subscription pro rata to
the holders of its Common Stock any additional shares of stock of any class or
other rights, or there shall be any capital reorganization of the Corporation,
any reclassification or recapitalization of the capital stock of the Corporation
(other than a change in par value or from par value to no par value or from no
par value to par value) or any transfer of all or substantially all of the
assets of the Corporation to or consolidation or merger of the Corporation with
or into any other person, or any voluntary of involuntary dissolution,
liquidation or winding-up of the Corporation; then, and in each event, the
Corporation will mail or cause to be mailed to the holder of Series A
Convertible Preferred Stock a notice specifying (x) the date on which any such
record is to be taken for the purpose of distribution of such subscription
right, and stating the amount and character of such subscription right, and (y)
the date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up is to
take place, and the time, if any, as of which the holders of record of Common
Stock shall be entitled to exchange their shares of deliverable upon such
reorganization, reclassification, liquidation or winding-up. Such notice shall
be mailed at least twenty (20) days prior to the date therein specified if
lawful and practicable.
7. The Series A Convertible Preferred Stock and the shares of Common Stock
issuable on conversion thereof may not be transferred without prior compliance
with the Securities Act of 1933 and restrictive legends to such effect may be
placed upon and stop transfer orders issued with respect to the stock
certificates representing such shares.
8. The holder of the Series A Convertible Preferred Stock shall be entitled to
one vote for each share held of record so long as the Preferred Stock is
outstanding. Holders of the Series A Convertible Preferred Stock shall vote as a
single class with holders of the Common Stock, except as otherwise provided by
applicable law.
9. The Series A Convertible Preferred Stock may be redeemed on or after April
13, 1999 in cash, at any time or from time to time, in whole or in part at the
option of the Corporation at the redemption price of $1.00 per share plus
accrued but unpaid dividends. Notice of the proposed redemption shall be sent by
or on behalf of the Corporation, by certified mail, postage prepaid to the
holders of record of the Series A Convertible Preferred Stock at their
respective addresses as the same shall appear on the records of the Corporation,
not less than thirty days prior to the date fixed for redemption notifying the
holder of the election of the Corporation to redeem the share and the date of
redemption, stating the date on which the shares shall cease to be convertible
and stating the place or places at which the shares called for redemption shall
be redeemed in the name and address of the redemption agent. When notice of
redemption shall have been given as hereinabove provided, and the Corporation
shall not default in the payment of the redemption price, then the holders of
the shares called for redemption shall be entitled to all the preferences and
rights afforded by this resolution until and including the date immediately
prior to the redemption date, except that the conversion rights shall terminate
as provided in the notice, which shall not be less than 25 days from the date of
notice. If the Corporation shall fail to make payment or delivery on the
redemption date, then the holder shall be entitled to all such preferences and
rights until the date prior to the date when the Corporation actually makes
payment. From and after that time, the shares called for redemption shall no
longer be deemed outstanding.
IN WITNESS WHEREOF, I have executed these Articles of Incorporation this 23rd
day of December, 2003.
/s/ SCOTT GALLAGHER
- ---------------------------------
Scott Gallagher, Incorporator
ATTACHMENT C
BY-LAWS
OF
FTS GROUP, INC.
ARTICLE I
---------
SHAREHOLDERS: MEETING AND VOTING
--------------------------------
1.1 PLACE OF MEETINGS.
Meetings of the shareholders shall be held at the corporation's principal
office, or at such other location as shall be designated in the notice of
meeting.
1.2 ANNUAL MEETINGS.
The annual meeting of the shareholders shall be held beginning with the year
2004. The time and date of such meeting may be established by the Board of
Directors provided that notice of the date and time of the annual meeting is
given in accordance with these By-Laws. At the annual meeting, the shareholders
shall elect by vote a Board of Directors, consider reports of the affairs of the
corporation, and transact such other business as may properly be brought before
the meeting.
1.3 SPECIAL MEETINGS.
Special meetings of the shareholders may be called at any time by the President,
the Board of Directors, by the holders of not less than one-tenth (1/10th) of
all the shares entitled to vote at such meeting, and as otherwise provided in
the Nevada Business Corporation Act, as amended (the "Act").
1.4 NOTICE OF MEETINGS.
1.4.1 Written or printed notice, in a comprehensible form, stating the date,
time and place of the meeting, and in case of a special meeting, a description
of the purpose or purposes for which the meeting is called, shall be delivered
not earlier than sixty (60) nor less than ten (10) days before the meeting date,
in person, telegraph, teletype, or other form of wire or wireless communication,
by mail or private carrier, by or at the direction of the President, Secretary,
other officer or persons calling the meeting. If mailed, the notice is effective
when deposited postpaid in the United States mail, correctly addressed to the
shareholder's address shown on the Corporation's current record of shareholders.
In all other cases, the notice shall be effective when received by the
shareholders.
1.4.2 If a shareholders' meeting is adjourned to a different date, time or
place, notice need not be given of the new date, time or place, if the new date,
time or place is announced at the meeting before adjournment, unless a new
record date for the adjourned meeting is or must be fixed under the Act, in
which event notice of the adjourned meeting must be given to the persons who are
shareholders as of the new record date.
1.5 VOTING ENTITLEMENT OF SHARES.
Unless the Articles of Incorporation provide otherwise, or except as provided by
the Act, each outstanding share, regard-less of class, is entitled to one vote
on each matter voted on at a shareholders' meeting. Only shares are entitled to
vote.
1.6 QUORUM AND VOTING.
1.6.1 Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with respect to that
matter. Unless the Articles of Incorporation or the Act provides otherwise, a
majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
1.6.2 Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting, unless a new record date is or must be set for that
adjourned meeting.
1.6.3 If a quorum exists, action on a matter, other than the election of
directors, by a voting group, is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
Articles of Incorporation or the Act requires a greater number of affirmative
votes.
1.6.4 Unless otherwise provided in the Articles of Incorporation, Directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present.
1.6.5 If the Articles of Incorporation or the Act provides for voting by a
single group on a matter, action on that matter is taken when voted upon by that
voting group in accordance with these By-Laws.
1.6.6 If the Articles of Incorporation or the Act provides for voting for two or
more voting groups on a matter, action on that matter is taken only when voted
upon by each of those voting groups counted separately as provided by these
By-Laws.
1.7 PROXIES.
A shareholder may vote shares in person or by written proxy signed by the
shareholder or the shareholder's attorney in fact and delivered to the secretary
or other officer or agent of the Corporation authorized to tabulate votes.
1.8 RECORD DATE.
The record date for determining the shareholders entitled to notice of a
shareholders' meeting, to demand a special meeting, to vote or to take other
action, shall, unless otherwise determined by the Board of Directors in advance
of such action, be the date of such notice, demand, vote, or other action.
1.9 SHAREHOLDERS' LIST FOR MEETING.
After fixing a record date for a meeting, the corporation shall prepare an
alphabetical list of the names of all of its shareholders who are entitled to
notice of a shareholders' meeting. The list must be arranged by voting group,
and within each voting group by class or series of shares, and show the address
of and number of shares held by each shareholder. The shareholders' list must be
available for inspection by any shareholder, beginning two business days after
notice of the meeting is given for which the list was prepared and continuing
through the meeting, at the corporation's principal office or at a place
identified in the meeting notice in the city where the meeting is to take place.
The corporation shall make the shareholders' list available at the meeting, and
any shareholder, the shareholder's agent, or attorney is entitled to inspect the
list at any time during the meeting or any adjournment thereof. Failure to
prepare or make available the list of stockholders shall not effect the validity
of actions taken at the meeting.
ARTICLE II
----------
DIRECTORS
---------
2.1 POWERS.
The business and affairs of the corporation shall be managed by a Board of
Directors which shall exercise or direct the exercise of all corporate powers
except to the extent shareholder authorization is required by the Act, the
Articles of Incorporation, or these By-Laws.
2.2 NUMBER.
The number of the members of the Board of Directors shall be not less than one,
nor more than seven.
2.3 ELECTION AND TERM OF OFFICE.
Except as provided in the Articles of Incorporation, the directors shall be
elected at the annual meeting of the share-holders. The terms of office of the
directors shall begin immediately after election and shall expire at the next
annual shareholders' meeting following their election and when their successors
are duly elected and qualified. The directors need not be residents of this
state, or shareholders of the corporation.
2.4 VACANCIES.
2.4.1 A vacancy on the Board of Directors shall exist upon the death,
resignation, or removal of any director, in the event an amendment of the
By-Laws is adopted increasing the number of directors, or in the event that the
directors determine that it is desirable to elect one or more additional
directors within the variable-range of the number of directors established by
these By-Laws.
2.4.2 Unless the Articles of Incorporation provide otherwise, a vacancy may be
filled by the shareholders, the Board of Directors, or if the Directors
remaining in office constitute fewer than a quorum of the Board, they may fill
the vacancy by an affirmative vote of a majority of all of the Directors
remaining in office.
2.4.3 The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected, and when his/her successor
has been duly elected and qualified.
2.4.4 A vacancy that will occur at a specific later date, by reason of a
resignation submitted in accordance with the Act, may be filled before the
vacancy occurs, but the new director may not take office until the vacancy
occurs.
2.4.5 Except as provided by the Articles of Incorporation or the Act, during the
existence of any vacancy, the remaining directors shall possess and may exercise
all powers vested in the Board of Directors, notwithstanding lack of a quorum of
the board.
2.4.6 The shareholders may remove one or more directors with or without cause at
a special meeting of share-holders called for that purpose pursuant to a meeting
notice indicating removal as one of the purposes. If a director is elected by a
voting group of shareholders, only the shareholders of that voting group may
participate in the vote to remove the director. A director may be removed only
if the number of votes cast to remove the director exceeds the number of votes
cast not to remove the director.
2.5 MEETINGS.
2.5.1 The annual meeting of the Board of Directors of this corporation shall be
held immediately following the annual meeting of the shareholders, which meeting
shall be considered a regular meeting as to which no notice is required.
2.5.2 Regular meetings of the Board of Directors may be held without notice of
the date, time, place or purpose of the meeting.
2.5.3 Special meetings of the Board of Directors for any purpose or purposes may
be called by an officer or director of the corporation in accordance with the
notice provisions of Section 2.6 of these By-Laws.
2.6 NOTICE OF SPECIAL MEETINGS.
Special meetings of the Board of Directors must be preceded by at least two
(2) days' notice of the date, time and place of the meeting. The notice need not
describe the purpose of such meetings. Notice of special meetings of the Board
of Directors may be in writing or oral, and may be communicated in person, by
telephone, telegraph, teletype, or other form of wire or wireless communication,
by mail or by private carrier. Written notice, if in comprehensible form, is
effective at the earliest of the following: (a) when received; (b) five (5) days
after its deposit in the U.S. Mail, as evidenced by the postmark, if mailed
postpaid and correctly addressed; or (c) on the date shown on the return
receipt, if sent by registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf of the addressee. Oral notice is effective
when communicated, if communicated in a comprehensible manner.
2.7 MANNER OF CONDUCTING MEETINGS.
The Board of Directors may permit any or all directors to participate in a
regular or special meeting by, or conduct the meeting through, use of any means
of communication by which all directors participating may simultaneously hear
each other during the meeting. A director participating in a meeting by this
means is deemed to be present in person at the meeting.
2.8 QUORUM.
Unless the Articles of Incorporation or these By-Laws provide otherwise, a
quorum of the Board of Directors consists of a majority of the number in office
immediately before the meeting begins.
2.9 COMPENSATION.
Unless the Articles of Incorporation provide otherwise, the Board of Directors
may fix the compensation of directors, and authorize the corporation to
reimburse the directors for their reasonable expenses incurred while attending
meetings of the Board and while engaged in other activities on behalf of the
corporation.
ARTICLE III
-----------
OFFICERS
--------
3.1 DESIGNATION, ELECTION AND QUALIFICATIONS.
The officers shall include a President, and a Secretary. The officers may
include Vice-President(s), Treasurer, Assistant Secretary, or Assistant
Treasurer as the Board of Directors shall, from time to time, appoint. Officers
need not be members of the Board of Directors. The officers shall be elected by,
and hold office at the pleasure of the Board of Directors. Any two offices may
be held by the same person.
3.2 COMPENSATION AND TERM OF OFFICE.
3.2.1 The compensation and term of office of the officers of the corporation
shall be fixed by the Board of Directors. Any officer may be removed either with
or without cause, by action of the Board of Directors.
3.2.2 An officer may resign at any time by delivering notice to the corporation.
A resignation is effective when the notice is effective under the Act, unless
the notice specifies a later effective date. If a resignation is made effective
at a later date and the corporation accepts the future effective date, Board of
Directors may fill the pending vacancy before the effective date provided that
the successor does not take office until the effective date.
3.3 PRESIDENT.
The President shall be the chief executive officer of the corporation and shall,
subject to the control of the Board of Directors, have general supervision,
direction and control of the business affairs of the corporation. He shall, when
present, preside at all meetings of the share-holders and of the Board of
Directors. He shall be an ex-officio member of all committees, if any, shall
have the general powers and duties of management usually vested in the office of
President of a corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or the By-Laws. He may sign, with the
Secretary or any other proper officer of the corporation authorized by the Board
of Directors, certificates for shares of the corporation, deeds, mortgages,
bonds, contracts, or other instruments which the Board of Directors authorizes
to be executed, except in cases where the signing and execution thereof shall be
expressly delegated by the directors or by these By-Laws to some other officer
or agent of the corporation, or shall be required by law to be otherwise signed
or executed.
3.4 VICE-PRESIDENT.
The Vice-President(s), if any, shall perform such duties as may be assigned to
him/her by the President or the Board of Directors. In the event of the death,
disability, inability or refusal to act of the President, the Vice-President
shall perform the duties and exercise the powers of the President unless
otherwise designated by the Board of Directors. In the event the corporation has
more than one Vice-President, the Executive Vice-President or, if none, the
Vice-President in charge of administration, shall be the officer acting in the
stead of the President as provided in this section.
3.5 SECRETARY.
3.5.1 The Secretary shall keep or cause to be kept at the principal office of
the corporation or such other place as the Board of Directors may order, a book
of minutes of all meetings of directors and shareholders showing the time and
place of the meeting, whether it was required by the By-Laws of the corporation,
how authorized, the notice given, the names of those present at directors'
meetings, the number of shares present or represented at shareholders' meetings
and the proceedings of each meeting.
3.5.2 The Secretary shall keep or cause to be kept at the principal office or at
the office of the corporation's transfer agent, a share register or duplicate
share register, showing the names of the shareholders and their addresses, the
number of shares of each class held by each, and the number and date of
cancellation of each certificate surrendered for cancellation.
3.5.3 The Secretary shall give or cause to be given such notice of the meetings
of the shareholders and of the Board of Directors as is required by the By-Laws.
He/she shall keep the seal of the corporation, if any, and affix it to all
documents requiring a seal, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or By-Laws.
3.6 TREASURER.
The Treasurer, if any, shall be responsible for the funds of the corporation,
receive and give receipts for monies due and payable to the corporation from any
source whatsoever, deposit all such monies in the name of the corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with these By-Laws, shall pay the funds of the corporation out only
on the checks of the corporation signed in the manner authorized by the Board of
Directors, and, in general, perform all of the duties incident to the office of
Treasurer and such other duties as, from time to time, may be assigned to
him/her by the President or the Board of Directors.
3.7 ASSISTANTS.
The Board of Directors may appoint or authorize the appointment of assistants to
any officer. Such assistants may exercise the power of such officer and shall
perform such duties as are prescribed by the Board of Directors.
ARTICLE IV
----------
COMMITTEES
----------
The Board of Directors may appoint from among its members one or more committees
of two (2) or more members, in accordance with and subject to the restrictions
of the Act.
ARTICLE V
---------
CONTRACTS, CHECKS AND DEPOSITS
------------------------------
5.1 CHECKS, DRAFTS, ETC.
All checks, drafts, or other orders for the payment of money, notes or other
evidence of indebtedness, issued in the name of or payable to the corporation,
shall be signed by such person or persons and in the manner as shall be
determined from time to time by resolution of the Board of Directors.
5.2 DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited, from
time to time, to the credit of the corporation in such banks, trust companies,
or other depositories as the Board of Directors may select.
5.3 CONTRACTS, INSTRUMENTS.
The Board of Directors may, except as otherwise provided in the By-Laws,
authorize any officer or agent to enter into any contract or execute any
instrument in the name of and on behalf of the corporation. Such authority may
be general or confined to specific instances. Unless so authorized by the Board
of Directors, no officer, agent, or employee shall have any power or authority
to bind the corporation by any contract or engagement or to pledge its credits,
or to render it liable for any purpose or for any amount.
ARTICLE VI
----------
CERTIFICATES AND TRANSFER OF SHARES
-----------------------------------
6.1 CERTIFICATES FOR SHARES.
6.1.1 Certificates for shares shall be in such form as the Board of Directors
may designate and shall indicate the state law under which the corporation is
organized. The certificates shall state the name of the record holder of the
shares represented thereby, the number of the certificate, the date of issuance
and the number of shares for which it is issued, the par value of such shares,
if any, or that such shares are without par value, and the series and class of
such shares. If the corporation is authorized to issue different classes of
shares or different series of shares within a class, the designations, relative
rights, preferences and limitations of each class, the variations in rights,
preferences and limitations determined for each series, and the authority of the
Board of Directors to determine variations for future series shall be summarized
on the front or back of each certificate, or, each certificate may state
conspicuously on its front or back that the corporation will furnish the
shareholder with this information on request in writing, and without charge.
Each certificate shall state or make reference on its front or back to any
liens, purchase options or restrictions on transfer.
6.1.2 Each share certificate must be signed, either manually or in facsimile, by
the President or a Vice-President and the Secretary or an Assistant Secretary.
6.2 TRANSFER ON THE BOOKS.
Upon surrender to the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, the corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its books.
6.3 LOST, STOLEN, OR DESTROYED CERTIFICATES. If a certificate is represented as
being lost, stolen, or destroyed, a new certificate shall be issued in its place
upon such proof of the loss, theft, or destruction and upon the giving of such
bond or other security as may be required by the Board of Directors.
6.4 TRANSFER AGENTS AND REGISTRARS.
The Board of Directors may from time to time appoint one or more specific
transfer agents and one or more registrars for the shares of the corporation who
shall have such powers and duties as the Board of Directors may specify.
ARTICLE VII
-----------
INDEMNIFICATION AND LIABILITY
-----------------------------
7.1 INDEMNIFICATION.
The corporation shall indemnify to the fullest extent not prohibited by law any
person who was or is a party or is threatened to be made a party to any
proceeding (as hereinafter defined) against all expenses (including attorney's
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by the person in connection with such proceeding.
7.2 ADVANCEMENT OF EXPENSES.
Expenses incurred by a director or officer in defending a proceeding shall, in
all cases, be paid by the corporation in advance of the final disposition of
such proceeding at the written request of such person, if the person:
7.2.1 Furnishes the corporation a written affirmation of the person's good faith
belief that such person is entitled to be indemnified by the corporation under
this article or under any other indemnification rights granted by the
corporation to such person; and
7.2.2 Furnishes the corporation a written undertaking to repay such advance to
the extent it is ultimately determined by a court that such person is not
entitled to be indemnified by the corporation under this article or under any
other indemnification rights granted by the corporation to such person. Such
advances shall be made without regard to the person's ultimate entitlement to
indemnification under this article or otherwise.
7.3 DEFINITION OF PROCEEDINGS.
The term "Proceeding" shall include any threatened, pending or completed action,
suit or proceeding, whether brought in the right of the corporation or otherwise
and whether of a civil, criminal, administrative or investigative nature, in
which a person may be or may have been involved as a party or otherwise by
reason of the fact that the person is or was a director or officer of the
corporation or a fiduciary within the meaning of the Employee Retirement Income
Security Act of 1974 with respect to any employee benefit plan of the
corporation, or is or was serving at the request of the corporation as a
director, officer or fiduciary of an employee benefit plan of another
corporation, partnership, joint venture, trust or other enterprise, whether or
not serving in such capacity at the time any liability or expense is incurred
for which indemnification or advancement of expenses can be provided under this
article.
7.4 NON-EXCLUSIVITY AND CONTINUITY OF RIGHTS.
The indemnification and entitlement to advancement of expenses provided by this
article shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under the articles of incorporation or any statute,
agreement, general or specific action of the board of directors, vote of stock
holders or otherwise, shall continue as to a person who has ceased to be a
director or officer, shall inure to the benefit of the heirs, executors, and
administrators of such a person and shall extend to all claims for
indemnification of advancement of expenses after the adoption of this article.
7.5 AMENDMENTS.
Any repeal of this article shall only be prospective and no repeal or
modification hereof shall adversely affect the rights under this article in
effect at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding.
7.6 DIRECTOR LIABILITY.
No director of the corporation shall be personally liable to the corporation or
its shareholders for monetary damages for conduct as a director; provided that
this section 7.6 shall not eliminate the liability of a director for any act or
omission for which sum elimination of liability is not permitted under the
Nevada Business Corporation Act. No amendment to the Nevada Business Corporation
Act that further limits the acts or omissions for which elimination of liability
is permitted shall affect the liability of a director for any act or omission
which occurs prior to the effective date of such amendment.
ARTICLE VIII
------------
GENERAL PROVISIONS
------------------
8.1 AMENDMENT OF BY-LAWS.
Except as otherwise provided by the Act or the Articles of Incorporation, the
By-Laws may be amended by the Board of Directors or the shareholders. When-ever
amendments or new By-Laws are adopted, they shall be placed in the minute book
with the original By-Laws in the appropriate place. If any By-Law is repealed,
the fact of repeal and the date on which the repeal occurred shall be stated in
such book and place.
8.2 DIVIDENDS.
Except as provided by the Act or the Articles of Incorporation, the directors
may, from time to time, declare and the corporation may pay, dividends on its
outstanding shares in the manner and upon the terms and conditions provided by
law.
8.3 SEAL.
The directors may provide a corporate seal which shall be circular in form and
shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words "corporate seal".
8.4 ACTION WITHOUT MEETING.
Any action which the Act, the Articles of Incorporation or by the By-Laws
require or permit the shareholders or directors to take at a meeting may be
taken without a meeting if the action is taken by all of the shareholders or
directors entitled to vote on the matter, evidenced by one or more written
consents describing the action taken, signed by each shareholder or director, as
the case may be, and included in the minutes or filed with the corporate records
reflecting the action taken.
8.5 WAIVER OF NOTICE.
A shareholder or director may, at any time, waive any notice required by the
Act, the Articles of Incorporation or the By-Laws. Any such waiver shall be in
writing, signed by the shareholder or director entitled to the notice and shall
be delivered to the corporation for inclusion in the minutes or corporate
records.
ATTACHMENT D
PROXY CARD
FTS APPAREL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - JANUARY 26, 2003
The undersigned stockholder of FTS Apparel, Inc. (the "Company") hereby appoints
Scott Gallagher and David R. Rasmussen (each with power to act without the
others and with power of substitution) proxies to represent the undersigned at
the Annual Meeting of Stockholders of the Company to be held on January 26,
2003, and at any adjournment thereof, with all the power the undersigned would
possess if personally present, and to vote, as designated on the reverse side of
this card, all shares of Common Stock of the Company which the undersigned may
be entitled to vote at said Meeting, hereby revoking any proxy heretofore given.
Each of the matters referred to on the reverse side of this card is more fully
described in the Notice of and Proxy Statement for the Meeting, receipt of which
is hereby acknowledged. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
ITEMS 1, 2, 3 AND 4 AND THAT YOU GRANT THE PROXIES DISCRETIONARY AUTHORITY TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS
GIVEN BY THE UNDERSIGNED STOCKHOLDER ON THE REVERSE SIDE. IF THE PROXY IS SIGNED
AND RETURNED WITH NO INSTRUCTIONS, THE PROXY WILL BE VOTED "FOR ALL NOMINEES"
WITH RESPECT TO ITEM 1 AND "FOR" THE PROPOSALS IN ITEMS 2, 3 AND 4.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
1. Election of Directors:
(01) Scott Gallagher
(02) JAMES H. GILLIGAN
(03) DAVID R. RASMUSSEN
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED ABOVE.)
2. Proposal to increase our authorized shares of common stock from 25 million to
150 million.
FOR AGAINST ABSTAIN
3. Proposal to change our name from "FTS Apparel, Incorporated" to "FTS Group,
Incorporated."
For Against Abstain
4. Proposal to change our state of incorporation from Colorado to Nevada.
FOR AGAINST ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or at any adjournment thereof. Mark box
at right if an address change or comment has been noted on the reverse side of
this card.
Please be sure to sign and date this Proxy.
Stockholder sign here: _________________ Date: _________ Co-owner sign here:
_________________ Date: _________
END O