COAC OS: 7,705,296 Float: 1,467,072 Moves on AIR - TRUE Low FLOATER
Almost 6% of the FLOAT taken out today IMO!
6,238,224 tightly held per DEF 14C filing.
Posted by: slow_feet
In reply to: None
Date:1/6/2006 5:20:56 PM
Post #of 227
OT: COAC .015 x .02
Bought some COAC today.
PRE 14C 1/6/06
Frequently Asked Questions Regarding Reincorporation in the State of Nevada
The following questions and answers are intended to respond to frequently asked questions concerning the reincorporation of Communitronics Utah in Nevada. These questions do not, and are not intended to, address all the questions that may be important to you. You should carefully read the entire Information Statement, as well as its appendices and the documents incorporated by reference in this Information Statement.
Q: Why is Communitronics Utah reincorporating in Nevada?
A: Nevada corporate law is better developed and more widely respected than the corporate laws of the State of Utah and we believe that becoming a Nevada corporation will provide us with greater credibility and greater access to capital markets that we have received as a Utah corporation. In addition, the reincorporation will increase the number of shares of common stock that may be issued to raise capital or for compensation. See "Reincorporation in Nevada - Principal Reasons for Reincorporation."
Q: Why isn't Communitronics Utah soliciting proxies relating to the Special Meeting?
A: We have received written consents from the holders of a majority of the capital stock authorized to vote on the reincorporation. Under Utah Revised Business Corporation Act ("Utah law") and our Articles of Incorporation this transaction may be approved by the written consent of a majority of the voting interests entitled to vote on it at a meeting called for that purpose. Since we have received the written consent of the necessary number of votes to approve the reincorporation, conducting a meeting of the stockholders is not necessary and represents a substantial and avoidable expense.
Q: What are the principal features of the reincorporation?
A: The reincorporation will be accomplished by a merger of Communitronics Utah with and into our wholly owned subsidiary, Communitronics Nevada, created specifically for the reincorporation. One new share of Communitronics Nevada common stock will be issued for each share of our common stock outstanding as of January ___, 2006, the Effective Date of the reincorporation and one share of Communitronics Nevada preferred stock will be issued for each ten (10) shares of Communitronics Utah preferred stock outstanding as of January ___, 2006, the Effective Date of the reincorporation. The sales of shares of Communitronics Utah will cease to be reported on the Pink Sheets, LLC and the sales of shares of Communitronics Nevada common stock will begin being reported in their place beginning on January ___, 2006, under a new CUSIP number and new trading symbol that have not yet been assigned. Other securities of Communitronics Utah, such as options, warrants, other rights to purchase common stock, and securities exchangeable for or convertible into our common stock will be exercisable or exchangeable for securities issued by Communitronics Nevada. See "Reincorporation in Nevada - Principal Features of the Reincorporation."
Q: How will the reincorporation affect the owners of Communitronics Utah?
A: After the reincorporation, the rights of the stockholders of Communitronics Nevada will be determined by Nevada law instead of Utah law. Immediately prior to the reincorporation, there were 7,705,296 shares of common stock outstanding and 10,000,000 shares of preferred stock outstanding. After the Effective Date and the exchange of your stock, certificates there will continue to be 7,705,296 shares of common stock outstanding and 1,000,000 shares of preferred stock outstanding. See "Reincorporation in Nevada - Significant Differences Between Communitronics Utah and Communitronics Nevada" and "Interests of Management, Certain Stockholders in the Reincorporation."
Q: What steps have been taken by the Board of Directors to insure that the reincorporation is fair to the current holders of common stock?
A: The board of directors considered various transactions to generate stockholder value, including restructuring Communitronics Utah to permit continued operation and growth. Communitronics Utah is presently unable to raise capital to undertake operations and does not have adequate assets to actively execute its business plan. The board of directors determined that the best opportunity to generate value for the stockholders over the long term was the adoption of a Merger Plan that provides for reincorporation of Communitronics Utah in a jurisdiction that provides greater operational flexibility for Communitronics Utah. The Merger Plan was adopted by the board of directors on January 4, 2006. See "Reincorporation in Nevada - Exchange Ration of Communitronics Utah Common Stock for Communitronics Nevada Common Stock."
Q: How will the reincorporation affect the officers and directors of Communitronics Utah?
A: Our officers and directors hold the same positions with Communitronics Nevada. Communitronics Utah will cease to exist and Communitronics Nevada will undertake all of the operations, assets and liabilities as of the Effective Date.
Q: How do I exchange certificates of Communitronics Utah for certificates of Communitronics Nevada?
A: Enclosed with this Information Statement is a letter of transmittal and instructions for surrendering certificates representing shares of Communitronics Utah. If you are a record stockholder, you should complete the letter of transmittal and send it with certificates representing your shares of Communitronics Utah to the address set forth in the letter. Upon surrender of a certificate for cancellation with a duly executed letter of transmittal, Communitronics Nevada will issue new certificates representing the number of whole shares of Communitronics Nevada common stock as soon as practical after the Effective Date. IF YOU ARE NOT THE RECORD OWNER OF YOUR COMMUNITRONICS UTAH SHARES BECAUSE THEY ARE HELD BY A BROKERAGE OR INVESTMENT BANKER, WE RECOMMEND THAT YOU IMMEDIATELY REQUEST THE ISSUANCE TO YOU IN YOUR NAME OF A CERTIFICATE REPRESENTING YOUR SHARES OF COMMUNITRONICS NEVADA TO MAKE SURE THAT THE CERTIFICATES OF COMMUNITRONICS UTAH HAVE BEEN EXCHANGED BY YOUR BROKER. See "Reincorporation in Nevada - How to Exchange Communitronics Utah Certificates for Communitronics Nevada Certificates."
Q: What if I lost my Communitronics Utah certificates?
A: If you lost your Communitronics Utah certificates, you should contact our transfer agent as soon as possible to have a new certificate issued. You may be required to post a bond or other security to reimburse us for any damages or costs if the certificate is later delivered for conversion. Our transfer agent may be reached at:
Fidelity Transfer Company 1800 S. West Temple, Suite 301 Salt Lake City, Utah 84115 Tel: (801) 484-7222
Q: Can I require Communitronics Utah to purchase my stock?
A: Yes. Under the Merger Plan, Communitronics Nevada has agreed to purchase all but not less than all of the outstanding shares of Communitronics Utah from any stockholder that notifies Communitronics Utah prior to the Effective Date that he or she dissents and tenders certificates representing shares of Communitronics Utah to Communitronics Nevada. The purchase price will be determined by the board of directors based on the fair market value of the shares immediately prior to the Effective Date. See "Dissenters' Rights" and the provisions of Utah law contained in Exhibit C attached to the Information Statement.
Q: Who will pay the costs of reincorporation?
A: Communitronics Utah will pay all of the costs of reincorporation in Nevada, including distributing this Information Statement. We may also pay brokerage firms and other custodians for their reasonable expenses for forwarding information materials to the beneficial owners of our common stock. We do not anticipate contracting for other services in connection with the reincorporation.
Q: Will I have to pay taxes on the new certificates?
A: We believe that the reincorporation is not a taxable event and that you will be entitled to the same aggregate basis in the shares of Communitronics Nevada that you had in our common stock. EVERYONE'S TAX SITUATION IS DIFFERENT AND YOU SHOULD CONSULT WITH YOUR PERSONAL TAX ADVISOR REGARDING THE TAX EFFECT OF THE REINCORPORATION. See "Tax Matters."
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COMMUNITRONICS OF AMERICA, INC.
27955 Highway 98, Suite WW
Daphne, Alabama 36526
INFORMATION STATEMENT FOR CONSENT OF STOCKHOLDERS
January ___, 2006
Approximate Date Information Statement First Sent to Stockholders:
January ___, 2006
This Information Statement relates to action taken by the Stockholders of Communitronics of America, Inc., a Utah corporation ("Communitronics Utah") by written consent dated as of January 4, 2006 (the "Consent"). The board of directors has prepared and distributed this Information Statement. We are not soliciting proxies or additional consents and request that you do not send proxies or consents to us for use in connection with the Consent. All expenses incurred in this Information Statement will be paid by Communitronics Utah.
OUTSTANDING SHARES AND VOTING INTERSTS AND
VOTE REQUIRED FOR ADOPTION OF CERTAIN MATTERS
As of the close of business on December 31, 2005, the record date for shares entitled to notice of and to sign written consents in connection with the reincorporation, there were 7,705,296 shares of our common stock outstanding and 10,000,000 shares of our preferred stock outstanding. Each share of our common stock is entitled to one vote and each share of our preferred stock is entitled to 100 votes in connection with the reincorporation. Prior to the mailing of this Information Statement, Mr. Pressler, who owns all of the preferred stock outstanding, signed written consent approving the reincorporation. As a result, the Merger Plan has been approved and neither a meeting of our stockholders nor additional written consents are necessary...
REINCORPORATION IN NEVADA
The following discussion summarizes certain aspects of our reincorporation in Nevada. This summary does not include all of the provisions of the Merger Plan between Communitronics Utah and Communitronics Nevada, a copy of which is attached hereto as Exhibit A, or the Articles of Incorporation of Communitronics Nevada, a copy of which is attached hereto as Exhibit B. Copies of the bylaws of Communitronics Nevada are available for inspection at our principal office and we will send copies to stockholders upon request.
Principal Reasons for Reincorporation
Communitronics Utah believes that the Reincorporation in Nevada will give us more flexibility and simplicity in various corporate transactions. Nevada has adopted a Revised Statute that includes by statute many concepts created by judicial rulings in other jurisdictions and provides additional rights in connection with the issuance and redemption of stock.
In addition, it is possible that a substantial number of our shares will be sold "short" without the delivery of certificates representing the shares sold. This is known as a "naked short" and, if it occurred, will result in significant downward pressure on the value of our common stock. Nevada law permits us to require the delivery of certificates representing our shares when there is a change in our capital structure and, thereby, reduce the number of "naked short" positions affecting the price of our common stock.
We believe our reincorporation in Nevada will save expenses for taxes and fees when we reach profitable operation because Nevada imposes no corporate income taxes on corporations that are incorporated in Nevada.
Principal Features of the Reincorporation
The reincorporation will be effected by the merger of Communitronics Utah with and into our wholly owned subsidiary, Communitronics Nevada. Communitronics Nevada will be the surviving entity.
On the Effective Date, (i) each of our stockholders will be entitled to receive one fully paid and non-assessable share of Communitronics Nevada for each share of our common stock outstanding as of the Effective Date, (ii) each of our stockholders will be entitled to receive one fully paid and non-assessable share of Communitronics Nevada for ten (10) shares of our common stock outstanding as of the Effective Date, (iii) each share of Communitronics Nevada common stock and preferred stock owned by Communitronics Utah will be canceled and resume the status of authorized and unissued Communitronics Nevada common stock, and (iv) Communitronics Utah will cease its corporate existence in the State of Utah. We anticipate that the shares of Communitronics Utah will cease trading on the first trading date following the Effective Date and shares of Communitronics Nevada will begin trading in their place but under a new CUSIP number and symbol.
The Articles of Incorporation and bylaws of Communitronics Nevada are significantly different from the Articles of Incorporation and bylaws of Communitronics Utah. Because of the differences between the Articles of Incorporation and bylaws of Communitronics Utah and the laws of the State of Utah, which govern Communitronics Utah, and the Articles of Incorporation and bylaws of Communitronics Nevada and the laws of the State of Nevada, which govern Communitronics Nevada, your rights as stockholders will be affected by the reincorporation. See the information under "Significant Differences between Communitronics Utah and Communitronics Nevada" for a summary of the differences between the Articles of Incorporation and bylaws of Communitronics Utah and the laws of the State of Utah and the Articles of Incorporation and bylaws of Communitronics Nevada and the laws of the State of Nevada.
The board of directors and officers of Communitronics Nevada consists of the same persons that are currently our directors and officers. Our daily business operations will continue at the principal executive offices at 27955 Highway 98, Suite WW, Daphne, Alabama 36526.
Reservation of Rights
Our Board of Directors reserves the right not to proceed, if, at any time prior to filing the Certificate of Merger with the Secretary of State of the State of Utah, our Board of Directors determines that the Reincorporation is no longer in our and our stockholders' best interests.
How to Exchange Communitronics Utah Certificates for Communitronics Nevada Certificates
Enclosed are (i) a form letter of transmittal and (ii) instructions for surrender of your certificates representing our common stock in exchange for certificates representing shares of Communitronics Nevada common stock and preferred stock. Upon surrender of a certificate representing our common stock or preferred stock to Communitronics Nevada, together with a duly executed letter of transmittal, Communitronics Nevada will issue, as soon as practicable, a certificate representing the number of shares of Communitronics Nevada you are entitled to receive.
If you own our shares through a nominee or in a brokerage account, you do not have a certificate to submit for exchange. Usually, your nominee or broker will submit certificates representing our shares for exchange on your behalf. We recommend that you contact your nominee or broker and request that a certificate be issued to you so that you may submit it for exchange with the enclosed letter of transmittal. This will ensure that there are actually shares of Communitronics Nevada in your name on the books and records of Communitronics Nevada.
Because of the Reincorporation in Nevada, holders of our common stock and preferred stock are not required to exchange their certificates for Communitronics Nevada certificates. Dividends and other distributions declared after the Effective Date with respect to common stock or preferred stock of Communitronics Utah and payable to holders of record thereof after the Effective Date will be paid to the holder of any unsurrendered common stock or preferred stock certificate of Communitronics Utah, which by virtue of the Reincorporation are represented thereby and such holder will be entitled to exercise any right as a shareholder of Communitronics Nevada, until such holder has surrendered the certificate of Communitronics Utah.
Capitalization
Our authorized capital consists of 50,000,000 shares of common stock, $.01 par value and 10,000,000 shares of preferred stock, $.01 par value. As of December 31, 2005, the record date for those stockholders entitled to notice of the reincorporation, there were 7,705,296 shares of our common stock outstanding and 10,000,000 shares of our preferred stock outstanding. The authorized capital of Communitronics Nevada consists of 500,000,000 shares of capital stock divided into 490,000,000 shares of common stock, $.001 par value per share, and 1,000,000 shares of preferred stock, $.001 par value per share. As a result of the reincorporation and mandatory exchange of the common stock and preferred stock, Communitronics Nevada will have outstanding 7,705,296 shares of common stock and 1,000,000 shares of preferred stock. The reincorporation will not affect our total stockholder equity or total capitalization.
SIGNIFICANT DIFFERENCES BETWEEN
COMMUNITRONICS UTAH AND COMMUNITRONICS NEVADA
Communitronics Utah was incorporated under the laws of the State of Utah and Communitronics Nevada is incorporated under the laws of the State of Nevada. Those stockholders that tender their certificates representing the shares of our common stock and preferred stock for exchange will become stockholders of Communitronics Nevada. Their rights as stockholders will be governed by Title 7, Chapter 78 of the Nevada Revised Statutes ("Nevada law") and the Articles of Incorporation and bylaws of Communitronics Nevada rather than the Utah law and the Communitronics Utah Articles of Incorporation and bylaws.
Significant Changes In Communitronics Utah's Charter and By-laws To Be Implemented By the Reincorporation
Corporate Name. The Reincorporation will not effect a change in Communitronics Utah's name.
Limitation of Liability. The Nevada Articles of Incorporation contain a provision limiting or eliminating, with certain exceptions, the liability of directors to Communitronics Nevada and its shareholders for monetary damages for breach of their fiduciary duties. The Communitronics Utah Articles of Incorporation contains no similar provision. The Board of Directors believes that such provision will better enable Communitronics Nevada to attract and retain as directors responsible individuals with the experience and background required to direct Communitronics Nevada's business and affairs. It has become increasingly difficult for corporations to obtain adequate liability insurance to protect directors from personal losses resulting from suits or other proceedings involving them by reason of their service as directors. Such insurance is considered a standard condition of directors' engagement. However, coverage under such insurance is no longer routinely offered by insurers and many traditional insurance carriers have withdrawn from the market. To the extent such insurance is available, the scope of coverage is often restricted, the dollar limits of coverage are substantially reduced and the premiums have risen dramatically.
At the same time directors have been subject to substantial monetary damage awards in recent years. Traditionally, courts have not held directors to be insurers against losses a corporation may suffer as a consequence of directors' good faith exercise of business judgment, even if, in retrospect the directors' decision was an unfortunate one. In the past, directors have had broad discretion to make decisions on behalf of the corporation under the "business judgment rule." The business judgment rule offers protection to directors who, after reasonable investigation, adopt a course of action that they reasonably and in good faith believe will benefit the corporation, but which ultimately proves to be disadvantageous. Under those circumstances, courts have typically been reluctant to subject directors' business judgments to further scrutiny. Some recent court cases have, however, imposed significant personal liability on directors for failure to exercise an informed business judgment with the result that the potential exposure of directors to monetary damages has increased. Consequently legal proceedings against directors relating to decisions made by directors on behalf of corporations have significantly increased in number, cost of defense and level of damages claimed. Whether or not such an action is meritorious, the cost of defense can be well beyond the personal resources of a director.
The Nevada legislature considered such developments a threat to the quality and stability of the governance of Nevada corporations because of the unwillingness of directors, in many instances, to serve without the protection which insurance traditionally has provided and because of the deterrent effect on entrepreneurial decision making by directors who do serve without the protection of traditional insurance coverage. In response, in 1987 the Nevada legislature adopted amendments to the Nevada law which permit a corporation to include in its charter a provision to limit or eliminate, with certain exceptions, the personal liability of Directors to a corporation and its shareholders for monetary damages for breach of their fiduciary duties and to purchase insurance to provide protection to Directors. Similar charter provisions limiting a director's liability are permitted under Utah Law, however, the Communitronics Articles contain no such provision.
The Board of Directors believes that the limitation on directors' liability permitted under Nevada law will assist Communitronics Nevada in attracting and retaining qualified directors by limiting directors' exposure to liability. The Reincorporation proposal will implement this limitation on liability of the directors of Communitronics Nevada, inasmuch as Article IX of the Nevada Articles of Incorporation provides that to the fullest extent that the Nevada law now or hereafter permits the limitation or elimination of the liability of directors, no director will be liable to Communitronics Nevada or its stockholders for monetary damages for breach of fiduciary duty. Under such provision, Communitronics Nevada's directors will not be liable for monetary damages for acts or omissions occurring on or after the Effective Date of the Reincorporation, even if they should fail through negligence or gross negligence, to satisfy their duty of care (which requires directors to exercise informed business judgment in discharging their duties). Article IX would not limit or eliminate any liability of directors for acts or omissions occurring prior to the Effective Date. As provided under Nevada law, Article IX cannot eliminate or limit the liability of directors for breaches of their duty of loyalty to Communitronics Nevada; acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law, paying a dividend or effecting a stock repurchase or redemption which is illegal under the Nevada law, or transactions from which a director derived an improper personal benefit. Further, Article IX would not affect the availability of equitable remedies, such as an action to enjoin or rescind a transaction involving a breach of a director's duty of care. Article IX pertains to breaches of duty by directors acting as directors and not to breaches of duty by directors acting as officers (even if the individual in question is also a director). In addition, Article IX would not affect a director's liability to third parties or under the federal securities laws.
Article IX is worded to incorporate any future statutory revisions limiting directors' liability. It provides, however, that no amendment or repeal of its provision will apply to the liability of a director for any acts or omissions occurring prior to such amendment or repeal, unless such amendment has the affect of further limiting or eliminating such liability.
Communitronics Utah has not received notice of any lawsuit or other proceeding to which Article IX might apply. In addition, Article IX is not being included in the Nevada Articles of Incorporation in response to any director's resignation or any notice of an intention to resign. Accordingly, Communitronics Nevada is not aware of any existing circumstances to which Article IX might apply. The Board of Directors recognizes that Article IX may have the effect of reducing the likelihood of derivative litigation against directors, and may discourage or deter stockholders from instituting litigation against directors for breach of their duty of care, even though such an action, if successful, might benefit Communitronics Nevada and its shareholders. However, given the difficult environment and potential for incurring liabilities currently facing directors of publicly held corporations, the Board of Directors believes that Article IX is in the best interests of Communitronics Nevada and its stockholders, since it should enhance Communitronics Nevada's ability to retain highly qualified directors and reduce a possible deterrent to entrepreneurial decision making. In addition, the Board of Directors believes that Article IX may have a favorable impact over the long term on the availability, cost, amount and scope of coverage of directors' liability insurance, although there can be no assurance of such an effect.
Article IX may be viewed as limiting the rights of stockholders, and the broad scope of the indemnification provisions of Communitronics Nevada's could result in increased expense to Communitronics Nevada. Communitronics Nevada believes, however, that these provisions will provide a better balancing of the legal obligations of, and protections for, directors and will contribute to the quality and stability of Communitronics Nevada's governance. The Board of Directors has concluded that the benefit to stockholders of improved corporate governance outweighs any possible adverse effects on stockholders of reducing the exposure of directors to liability and broadening indemnification rights. Because Article IX deals with the potential liability of directors, the members of the Board of Directors may be deemed to have a personal interest in effecting the Reincorporation.
Indemnification. The Nevada law authorizes broad indemnification rights which corporations may provide to their directors, officers and other corporate agents. The Nevada Articles of Incorporation reflect the provisions of Nevada law, as amended, and, as discussed below, provide broad rights to indemnification.
In recent years, investigations, actions, suits and proceedings, including actions, suits and proceedings by or in the right of a corporation to procure a judgment in its favor (referred to together as "proceedings"), seeking to impose liability on, or involving as witnesses, directors and officers of publicly-held corporations have become increasingly common. Such proceedings are typically very expensive, whatever their eventual outcome. In view of the costs and uncertainties of litigation in general it is often prudent to settle proceedings in which claims against a director or officer are made. Settlement amounts, even if material to the corporation involved and minor compared to the enormous amounts frequently claimed, often exceed the financial resources of most individual defendants. Even in proceedings in which a director or officer is not named as a defendant he may incur substantial expenses and attorneys' fees if he is called as a witness or otherwise becomes involved in the proceeding. Although Communitronics Utah's directors and officers have not incurred any liability or significant expense as a result of any proceeding to date the potential for substantial loss does exist. As a result, an individual may conclude that the potential exposure to the costs and risks of proceedings in which he may become involved may exceed any benefit to him from serving as a director or officer of a public corporation. This is particularly true for directors who are not also officers of the corporation. The increasing difficulty and expense of obtaining directors' and officers' liability insurance discussed above has compounded the problem.
The broad scope of indemnification now available under Nevada law will permit Communitronics Nevada to offer its directors and officers greater protection against these risks. The Board of Directors believes that such protection is reasonable and desirable in order to enhance Communitronics Nevada's ability to attract and retain qualified directors as well as to encourage directors to continue to make good faith decisions on behalf of Communitronics Nevada with regard to the best interests of Communitronics Nevada and its stockholders.
The Nevada Articles of Incorporation are quite different from the Communitronics Utah Articles of Incorporation and require indemnification of Communitronics Nevada's directors and officers to the fullest extent permitted under applicable law as from time to time in affect, with respect to expenses, liability or loss (including, without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred by any person in connection with any actual or threatened proceeding by reason of the fact that such person is or was a director or officer of Communitronics Nevada or is or was serving at the request of Communitronics Nevada as a director or officer of another corporation or of a partnership, joint venture; trust, employee benefit plan or other enterprise at the request of Communitronics Nevada. The right to indemnification includes the right to receive payment of expenses in advance of the final disposition of such proceeding; consistent with applicable law from time to time in effect; provided, however, that if the Nevada law requires the payment of such expenses in advance of the final disposition of a proceeding, payment shall be made only if such person undertakes to repay Communitronics Nevada if it is ultimately determined that he or she was not entitled to indemnification. Directors and officers would not be indemnified for lose, liability or expenses incurred in connection with proceedings brought against such persons otherwise than in the capacities in which they serve Communitronics Nevada. Under the Nevada law Communitronics Nevada may, although it has no present intention to do so, by action of the Board of Directors, provide the same indemnification to its employees, agents, attorneys and representatives as it provides to its directors and officers. The Nevada Articles of Incorporation provide that such practices are not exclusive of any other rights to which persons seeking indemnification may otherwise be entitled under any agreement or otherwise.
The Nevada Articles of Incorporation specify that the right to indemnification is a contract right. The Nevada Articles of Incorporation also provides that a person seeking indemnification from Communitronics Nevada may bring suit against Communitronics Nevada to recover any and all amounts entitled to such person provided that such person has filed a written claim with Communitronics Nevada has failed to pay such claim within thirty days of receipt thereof. In addition, the Communitronics Nevada Articles of Incorporation authorize Communitronics Nevada to purchase and maintain indemnity insurance, if it so chooses to guard against future expense.
The Nevada Articles of Incorporation provide for payment of all expenses incurred, including those incurred to defend against a threatened proceeding. Additionally, the Nevada Articles of Incorporation provides that indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. The Nevada Articles of Incorporation also provide that to the extent any director or officer who is, by reason of such a position, a witness in any proceeding, he or she shall be indemnified for all reasonable expenses incurred in connection therewith.
Under Utah law, as with Nevada law, rights to indemnification and expenses need not be limited to those provided by statute. As a result, under Nevada law and the Nevada Articles of Incorporation, Communitronics Nevada will be permitted to indemnity its directors and officers, within the limits established by law and public policy, pursuant to an express contract, a by-law provision, a stockholder vote or otherwise, any or all of which could provide indemnification rights broader than those currently available under the Communitronics Utah Articles of Incorporation or expressly provided for under Nevada or Utah law.
Insofar as the Nevada Articles of Incorporation provide indemnification to directors or officers for liabilities arising under the Securities Act of 1933, it is the position of the Securities and Exchange Commission that such indemnification would be against public policy as expressed in such statute and, therefore, unenforceable.
The Board of Directors recognizes that Communitronics Nevada may in the future be obligated to incur substantial expense as a result of the indemnification rights conferred under the Nevada Articles of Incorporation, which are intended to be as broad as possible under applicable law. Because directors of Communitronics Nevada may personally benefit from the indemnification provisions of the Communitronics Nevada Articles of Incorporation, the members of the Board of Directors may be deemed to have a personal interest in the effectuation of the Reincorporation...
________________________________
There's a little black spot on the sun today
Name of Number and Class of Stock Percent of Percent of
Individual or Group Owned(2) Class Voting
------------------------------------------------------------------------------------------------
David R. Pressler 5,240,500 Common(3) 68% 0.53%
Chief Executive Officer 10,000,000 Preferred(1) 100% 99.23%
Director
Cede & Co. Common Stock(4) 997,724 Common 12.7%
P.O. Box 222
Bowling Green Station
New York, New York 10274
All Directors and Officers as a Group 5,240,500 Common 68% 0.53%
(1 Person) 10,000,000 Preferred 100% 99.23%
(1) Each share of preferred stock is entitled to 100 votes.
(2) Except as otherwise noted, it is believed by Communitronics Utah that all persons have full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security which that person has the right to acquire within 60 days, such as options or warrants to purchase the common stock of Communitronics Utah.
(3) Includes 500,000 shares of common stock of Communitronics Utah held by his wife and his sons.
(4) Cede & Co. is a nominee holder of shares of common stock of Communitronics Utah as a depository for brokerage firms and others.
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