Bob: LATEST NEWS ON FIRAMADA - SHAREHOLDERS UPDATED!!
The following letter has been mailed to all shareholders who have accounts under a "street name". In the past we have identifed these as 2404 shareholders; however, to be strictly correct it is to shareholders that hold 2,404 accounts under a "street name".
URGENT COMMUNICATION TO FIRAMADA SHAREHOLDERS MARCH 26, 1999
Dear Firamada, Inc. Shareholder,
The purpose of this letter is to:
1. Briefly summarize the performance of Arif Adam and/or his senior management team in delivering value to Firamada's shareholders.
2. Explain FSAAA's (Firamada Shareholders Against Arif Adam) goals and immediate plans to responsibly achieve those goals.
3. Update FAMH shareholders on the hearing to appoint a Receiver to take over control of your company (hearing currently scheduled for April 5,1999 in Harris County, Texas District Court at 1:00 p.m. CST).
4. Provide an update on the Annual Shareholders' Meeting (currently scheduled for April 7, 1999 in Long Beach, California at 9:30 a.m. PST).
5. Provide recommendations on how to vote your proxies in the event the April 7, 1999 Annual Shareholders' Meeting takes place.
6. Provide information on FSAAA and the tools you need to join.
_____________________________________________________________________
1. The Performance of Arif Adam and/or His Senior Management Team under the leadership of Arif Adam and other Firamada executives:
- The market cap of your company has been reduced by $50 million, a 95% reduction in 12 months! FAMH's stock price has dropped from a high of 70¢ per share to a low of 3.5¢ in less than a year.
- Many shareholders of record today have lost between 70% and 90% of their initial investment.
- Firamada has repeatedly failed to pay to the government payroll taxes withheld from employee paychecks apparently borrowing those funds for use in daily operations placing the Company's operating future in jeopardy.
- Virtually all shareholder equity has been consumed and, at last report, this was actually negative, thus making the Company insolvent.
- False or misleading information has repeatedly been disseminated to public investors in press releases and conference calls concerning the status of the Company.
- Production of timely, accurate financial reports so that shareholders and investors can be knowledgeable about the financial status of the company has been nonexistent.
- For further information, see the FSAAA Notice to Shareholders dated March 1,1999.
2. FSAAA's Goals and Plans to Achieve Those Goals.
FSAAA's goal is to financially rehabilitate your company and build shareholder value.
The short term plans to achieve this goal are:
- Petition the Texas District Court to appoint a Receiver to take control of your company. The Texas Business Corporation Act provides that a Judge may appoint a receiver if any one of several conditions exist within a company. We believe three are relevant in Firamada's case:
(1) The corporation is insolvent or in imminent danger of insolvency;
(2) Acts of the directors or those in control of the corporation are illegal, oppressive or fraudulent;
(3) Corporate assets are being misapplied or wasted.
The petition has already been filed by FSAAA shareholders.
- Effectively remove Arif Adam from any management or leadership role in the Company as soon as possible after the appointment of a Receiver by the Texas District Court.
- Install a fully competent management team at Firamada within ninety (90) days and charge them with the following:
- Renegotiate the Company's debts.
- Define and implement a plan to drive the Company to profitable growth.
- Define and implement an aggressive marketing and sales effort.
- Install accounting systems that will provide to management the financial reports it requires to effectively manage the business and provide shareholders the information they deserve, and are required to receive by law, in a timely manner.
- Review and revise all the Company bylaws, policies and procedures to serve business purposes.
- Identify and recover Company assets, if possible.
3. Hearing to Appoint a Receiver to Take Control of Firamada.
- FSAAA retained Cleve W. Powell of Ponca City, Oklahoma (www.seekjustice.com) to provide legal counsel. Mr. Powell has an impressive track record for upholding minority shareholder rights.
- Through the leadership and support of FSAAA and Mr. Powell, a Petition was filed in Harris County, Texas on February 17, 1999 by six (6) Plaintiffs requesting the appointment of a Receiver for Firamada, Inc.
- The Judge has scheduled a hearing for April 5, 1999 at 1:00 p.m. CST. (Note added: In the Harris County Court, Houston, TX)
4. Update on the Annual Shareholders' Meeting.
- The meeting has been scheduled for April 7, 1999 in Long Beach, California at 9:30 a.m. PST.
- The structure of the ballot allows you to vote only management's recommendations with no minority viewpoints.
- The Company's proposed changes to the Bylaws will greatly expand Arif Adam's control of the Company and diminish the rights of other shareholders. For example, future bylaws changes could be made by a majority of the Board, rather than the shareholders. Also, with the proposed issuance of preferred stock (with a yet-to-be-determined number of votes per share) to individuals determined by the Board of Directors and with the unique management options consisting of 15 million common shares (potentially after a reverse split) that may be issued at a rate of 5 million shares per year to any one management individual, Mr. Adam could further entrench his stranglehold on the Company.
- The proposed reverse stock split, if enacted, will likely completely devalue your shares by dilution through the potential distribution of over 850% additional shares (including the potential impact of the preferred stock proposed) and the lack of demonstrated operating profits to maintain a higher share price.
- FSAAA opposes all proposed resolutions (except one) and is providing recommendations on how to vote your proxies (in the event the meeting takes place). (See below.)
5. Processing Your Vote for the April 7, 1999 Annual Meeting Following FSAAA Recommendations.
To vote, you must have a LEGAL PROXY. If you have shares that are held in an account with a broker or bank (i.e., in "street name"), the proxy you receive from them is NOT a "legal proxy," but a "ballot" instead. If this is the case, go to Step 1a. If you have a "legal proxy" (a printed 4"x6" card), go to Step 2a.
1a. If you have already voted, CALL YOUR BROKER and cancel your vote and request a LEGAL PROXY. Be sure and specify that this is for the Firamada shareholder meeting scheduled for April 7, 1999, and that you intend to attend the meeting in person (whether or not you actually do).
1b. If you have not voted, look at the "ballot" sent to you by Firamada or your broker. Above the address, there is a box to check stating, "PLACE AN "X" HERE IF YOU PLAN TO ATTEND AND VOTE YOUR SHARES AT THE MEETING." Rather than sign and mail that ballot in the envelope provided (there is insufficient time), CALL YOUR BROKER IMMEDIATELY and request a LEGAL PROXY. Using PaineWebber as an example, they have an 800 number you call and the ordering of a LEGAL PROXY is accomplished very easily.
After you have the LEGAL PROXY in hand, follow the procedure described below:
2a. Fill out the SUBSTITUTE PROXY which is provided below. (Insert the number of shares you held as of 12/31/98, the date and your signature.)
2b. DO NOT FILL OUT OR SIGN THE LEGAL PROXY.
2c. IMMEDIATELY FAX COPIES OF THE SUBSTITUTE PROXY AND THE LEGAL PROXY (BOTH SIDES) to Richard K. Lee at (303) 660-4202. THE FAX MUST BE SENT NO LATER THAN 12:00 NOON ON APRIL 6, 1999.
2d. SEND, VIA OVERNIGHT MAIL, THE ORIGINALS OF BOTH THE SUBSTITUTE PROXY AND THE LEGAL PROXY to Richard K. Lee at 60 Indigo Way, Castle Rock, CO 80104.
Mr. Lee plans to vote as follows:
- Proposals 1, 2, 4 and 5: "NO"
- Proposal 6: "YES"
- He will NOT support Firamada's slate of Directors and will vote
"FOR" a number of Directors selected from the following list: Richard K. Lee (56), Earl Murphey (47), Daniel P. Provost (43), Terry E. Shapiro (52) and David W. Colvin (47). These gentlemen collectively own 650,000 Firamada shares and are all members of FSAAA.
(Note: If you don't vote, your broker will vote for you and vote "for" all the resolutions proposed by the board. If you vote "no", you have allowed Mr. Adam to install his own board of directors)
6. FSAAA: Who We Are and the Tools You Need to Join.
FSAAA was formed less than two months ago. Today, we have nearly 200 members representing over 25 U.S. states and 4 (it's now 5) countries. Collectively, we own many millions of Firamada shares. Our membership has grown, and continues to grow, dramatically since we first contacted Firamada shareholders by mail in early March who own accounts held under a "street name." Up until that time, we had only communicated to Firamada shareholders through use of the Internet.
If you are not a member of FSAAA, but are incensed about Mr. Adam's performance and the losses you have experienced in your investment in Firamada, please join today by filling out the FSAAA Membership Form and mailing it to Cleve Powell in Ponca City, Oklahoma. Use the investment table to determine your suggested contribution and enclose your check with the enrollment form.
For more information about FSAAA, contact Dick Lee at 303-688-4143 (RKLlee@aol.com) or Dan Provost at 214-351-1883 (dpp.dfw@worldnet.att.net). Together, we can make a difference and implement a plan to restore shareholder value and our faith in Firamada. Thank you for your support and we look forward to hearing from you within the next few days.
SUBSTITUTE PROXY
The Undersigned, being the beneficial owner of ____________ shares of Firamada, Inc. (FAMH) common stock as of December 31, 1998, hereby appoints Richard K. Lee as proxy with the power to appoint his substitute and authorize him to vote all of such shares of common stock at the April 7, 1999 annual meeting of the shareholders of Firamada, Inc., or any subsequent postponement or adjournment thereof, in the same manner and to the same extent as if the Undersigned were present at such meeting.
The Undersigned further revokes any prior proxy executed with respect to such meeting executed by the Undersigned or by any broker, financial institution, nominee or trustee on behalf of the Undersigned.
Dated: __________
By: __________________________________ Signature of Shareholder
__________________________________
Signature(s), If Held Jointly
THIS PROXY SHOULD BE SIGNED EXACTLY AS YOUR NAME(S) APPEARS ON THE ACCOUNT IN WHICH YOUR SHARES ARE HELD. JOINT OWNERS SHOULD BOTH SIGN. IF SIGNED BY EXECUTORS, ADMINISTRATORS, TRUSTEES AND OTHER PERSONS SIGNING IN REPRESENTATIVE CAPACITY, THEY SHOULD GIVE FULL TITLES.
_____________________________________________________________________
FSAAA MEMBERSHIP FORM
Name: _____________________________________
Address: ___________________________________
City, State, Postal Code: ________________________________
Country: ______________________
Telephone: _______________ Facsimile: _____________
E-mail: __________________________
Number of FAMH Shares You Own: ___________________
Exact Name in Which Your Shares Are Held: ________________________
Paper Loss If You Sold at $0.03/share: _____________________
Preferred Method of Receiving Correspondence (check one):
Letter E-mail Fax
Contribution Level Based on Shares You Own (check one):
0 to 5,000 shares $50
5,001 to 10,000 shares $100
10,001 to 20,000 shares $200
20,001 to 100,000 shares $500
100,001 to 300,000 shares $750
More than 300,000 shares $1,000
PLEASE MAIL THIS FORM, along with your check (payable to the "Cleve W. Powell Client Trust Account" with FAMH as the notation) to:
Law Offices of Cleve W. Powell
1223 E. Highland Ave., Ste. 311
Ponca City, OK 74601-4653
Telephone: (580) 762-3100
Facsimile: (580) 762-3169
E-mail: counsel@horizon.hit.net
_____________________________________________________________________
End of letter.
FSAAA preparation for the hearing in Houston on April 5, 1999 continues and we have a team ready to attend the annual shareholders' meeting in Long Beach, CA on April 7, 1999.
We recognize that attempting to defeat Arif Adam and his supporters in a vote is an extremely difficult task. AA has 14.5 million shares and WalterTx claims his group of 20 controls 10 million shares. This means we have to sign up 24.5 million shares just to match their fire power. According to ADP (as of 2/26/99), the number of accounts under held under a "street name" holding over 1,000,000 FAMH shares is 3 and they control 10,632,667 shares; and the number of shareholders between 500,000 and 999,999 is two and they control 1,156,000 shares. The numbers tell you it's a formidable task to outvote/outgun AA and his friends...but the minority shareholder has very significant rights when certain conditions exist within a company and we are about to find out how significant they are in Texas.
With best regards, LTBFV through FSAAA, Dick
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