DESCRIPTION OF CAPITAL STOCK
The following describes the common stock and certain provisions of the Articles of Incorporation, as amended (the “Articles”), and Amended and Restated By-laws (the “By-laws”) of Torotel, Inc. (the “Company”), and certain related rights. This description is only a summary and is qualified in its entirety by reference to the Articles and the By-laws, each of which have been filed with the Securities and Exchange Commission.
Description of Common Stock
The authorized capital stock of the Company consists of 6,000,000 shares of common stock, par value $0.01 per share (“common stock”). The common stock is traded on the OTC Market Group’s OTC Pink platform under the symbol “TTLO.”
Each outstanding share of common stock entitles the holder thereof to one vote on each matter submitted for approval to the shareholders at a meeting or by written consent, including the election of directors.
In all elections for directors, every shareholder shall have the right to vote, in person or by proxy, the number of shares owned by such shareholder, for as many persons as there are directors to be elected, or to cumulate said shares, and give one candidate as many votes as the number of directors to be elected multiplied by the number of such shareholder’s shares shall equal, or distribute them on the same principal among as many candidates as such shareholder shall see fit.
Classification of the Board of Directors
The Company’s board of directors (the “Board of Directors”) is divided into three classes designated as Class I, Class II and Class III, respectively, as nearly equal in number as possible. One class of directors is elected for a three-year term at each annual meeting of shareholders. A full term for a director shall consist of three full years.
Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefor.
No Preemptive or Similar Rights
Holders of common stock have no conversion, redemption or preemptive rights to subscribe to any securities of the Company. All outstanding shares of common stock are fully paid and nonassessable.
In the event of any liquidation, dissolution or winding-up of the affairs of the Company, holders of common stock will be entitled to share ratably in the assets of the Company remaining after provision for payment of liabilities to creditors.
Certain Articles and By-laws Provisions
Number of Directors. The Articles provide that the Board of Directors shall consist of not less than three and not more than seven members, with the exact number of directors to be determined by affirmative vote of a majority of the Board of Directors.