INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
[ X ] Filed by Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14c-5(d)(2))
[ X ] Definitive Information Statement
MB SOFTWARE CORPORATION
(Name of Registrant as Specified In Its Charter)
MB SOFTWARE CORPORATION
(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 14c-5(9) 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 computer
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identifying 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:
<PAGE>
MB Software Corporation
2225 E. Randol Mill Road, Suite 305
Arlington, Texas 76011-6306
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 12, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of MB Software Corporation, a Colorado corporation (the "Company"),
will be held at the offices of the Company at 2225 E. Randol Mill Road, Suite
305, Arlington, Texas, on November 12, 1998, at 10:00 a.m., local time, or at
such other times and places to which the Meeting may be adjourned. An
Information Statement for the Meeting is enclosed.
The Meeting is for the following purposes:
(1) To elect six members of the Board of Directors for the term of
office stated in the Information Statement.
(2) To amend the Articles of Incorporation as described in the
Information Statement.
(3) To consider and ratify the selection of the Company's independent
public accountants.
(4) To transact any other business that may properly come before the
Meeting or any adjournments thereof.
The close of business on October 5, 1998, has been fixed as the record
date for determining shareholders entitled to notice of and to vote at the
Meeting or any adjournments thereof. For a period of at least 10 days prior to
the Meeting, a complete list of shareholders entitled to vote at the Meeting
will be open to the examination of any shareholder during ordinary business
hours at the offices of the Company at 2225 E. Randol Mill Road, Suite 305,
Arlington, Texas.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
Information concerning the matters to be acted upon at the Meeting is
set forth in the accompanying Information Statement.
By Order of the Board of Directors
Lucy J. Singleton
Secretary
Arlington, Texas
October 12, 1998
<PAGE>
MB Software Corporation
2225 E. Randol Mill Road, Suite 305
Arlington, Texas 76011-6306
INFORMATION STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 12, 1998
This Information Statement is being first mailed on October 12, 1998,
to shareholders of MB Software Corporation, a Colorado corporation (the
"Company"), by the Board of Directors in connection with the Annual Meeting of
Shareholders (the "Meeting") to be held at the offices of the Company at 2225 E.
Randol Mill Road, Suite 305, Arlington, Texas, on November 12, 1998, at 10:00
a.m., local time, or at such other times and places to which the Meeting may be
adjourned.
The purpose of the Meeting is to consider and act upon: (i) the
election of six directors for terms expiring in 1999; (ii) the amendment of the
Articles of Incorporation of the Company; (iii) the ratification of the
selection of Killman, Murrell & Company as the Company's independent public
accountants; and (iv) such other matters as may properly come before the Meeting
or any adjournments thereof.
RECORD DATE AND VOTING SECURITIES
The record date for determining the shareholders entitled to vote at
the Meeting was the close of business on October 5, 1998 (the "Record Date"), at
which time the Company had issued and outstanding 69,099,970 shares of Common
Stock, par value $.001 per share ("Common Stock"). The shares of Common Stock
constitute the only outstanding voting securities of the Company entitled to be
voted at the Meeting.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY. THE COMPANY HAS BEEN ADVISED THAT SHAREHOLDERS OWNING AN AGGREGATE OF
AT LEAST 46,911,322 SHARES OF COMMON STOCK (CONSTITUTING APPROXIMATELY 68% OF
THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY AS OF OCTOBER
5, 1998) INTEND TO VOTE IN FAVOR OF ALL MATTERS TO BE ACTED UPON AT THE MEETING,
THEREBY ASSURING THEIR ADOPTION.
QUORUM AND VOTING
In an election of directors, that number of candidates equaling the
number of directors to be elected having the highest number of votes cast in
favor of their election, are elected to the Board of Directors of the Company
(the "Board of Directors"), provided a quorum is present. Votes may be cast or
withheld with respect to the proposal to elect six members of the Board of
Directors for terms expiring at the Company's Annual Meeting of Shareholders in
1999. Votes that are withheld will be counted toward a quorum, but will be
excluded entirely from the tabulation for such proposal and, therefore, will not
affect the outcome of the vote on such proposal.
Approval of the amendment of the Articles of Incorporation of the
Company requires the affirmative vote of two-thirds (2/3) of the outstanding
shares. Abstentions will count as a vote against such proposal.
Approval of the proposal to ratify the selection of Killman, Murrell &
Company as the Company's independent public accountants requires the affirmative
vote of a majority of the shares present at the meeting and entitled to vote
<PAGE>
on such proposal, provided a quorum is present. Abstentions will be counted
toward a quorum, but will count as a vote against such proposal.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The current Board of Directors has fixed the number of authorized
directors at six. Thus, there are six directors to be elected for terms expiring
at the Company's Annual Meeting of Shareholders in 1999 or until their
successors have been elected and qualified. It is intended that the names of the
persons indicated in the following table will be placed in nomination. Each of
the nominees has indicated his willingness to serve as a member of the Board of
Directors if elected; however, if any nominee becomes unavailable for election
to the Board of Directors for any reason not presently known or contemplated, a
substitute may be nominated and elected.
The nominees are as follows:
Name Age Position
---- --- --------
Scott A. Haire 33 Chairman of the Board, Chief
Executive Officer and President
Gilbert A. Valdez 55 Chief Operating Officer and Director
Robert E. Gross 51 Director
Araldo A. Cossutta 73 Director
Steven W. Evans 45 Director
Thomas J. Kirchhofer 55 Director
- -----------------
The Company has been advised that shareholders owning an aggregate of
46,911,322 shares of Common Stock intend to vote in favor of the election as
directors of the six nominees listed above, thereby assuring their election to
the Board of Directors.
Scott A. Haire is Chairman of the Board, Chief Executive Officer and President
of the Company. Prior to founding MedBanc Data Corporation, he was an employee
of the Company from November 1993 to June 1994. Previously, Mr. Haire was
president of Preferred Payment Systems, a company specializing in electronic
claims and insurance system related projects.
Gilbert A. Valdez is Chief Operating Officer of the Company and past President
and CEO of four major financial and healthcare corporations. Most recently, he
served as CEO of Hospital Billing and Collection Services, Inc., a $550 million
healthcare receivables financing entity located in Wilmington, Delaware; Datix
Corporation, an Atlanta-based corporate divestiture from Harris-Lanier; Medaphis
Corporation, an interstate, multi-dimensional healthcare service agency based in
Atlanta; and NEIC, a national consortium of 40 major insurance companies formed
for development of electronic claim billing standards. Mr. Valdez has 28 years
of senior healthcare receivables financing experience.
Robert E. Gross is President of R. E. Gross & Associates, providing consulting
and systems projects for clients in the multi-location service, banking and
healthcare industries. From 1987 to 1990, he was vice president -- technical
operations for Medaphis Physicians Service Corp., Atlanta, Georgia. Prior to
that, he held executive positions with Chi- Chi's, Inc., Royal Crown and
TigerAir. He also spent 13 years as an engineer with IBM.
Araldo A. Cossutta is President of Cossutta and Associates, an architectural
firm based in New York City, with major projects throughout the world.
Previously, he was a partner with I.M. Pei and is a graduate of the Harvard
Graduate School of Design and the Ecole des Beaux Arts in Paris. Mr. Cossutta
was a significant shareholder in Personal Computer Card Corporation ("PC3") and
was chairman of PC3 at the time of its acquisition by the Company in November
1993. He is also a director of Computer Integration Corporation of Boca Raton,
Florida.
2
<PAGE>
Steven W. Evans is a Certified Public Accountant and President of Evans Phillips
& Co., PSC, an accounting firm which he established in 1976 in Barbourville and
Middlesboro, Kentucky. He is also a founder and active in PTRL, which operates
contract research laboratories located in Kentucky, North Carolina, California
and Germany. He is also a founder and active in the management of environmental,
financial and hotel corporations in Kentucky and Tennessee.
Thomas J. Kirchhofer is president of Synergy Wellness Centers of Georgia, Inc.
He is past president of the Georgia Chiropractic Association.
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information as of July 31, 1998,
regarding the beneficial ownership of capital stock of the Company by: (i) each
person known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock; (ii) each director of the Company and person to be
elected as a director; (iii) the Company's Chief Executive Officer; and (iv) the
directors and executive officers of the Company as a group. The persons named in
the table have sole voting and investment power with respect to all shares of
capital stock owned by them, unless otherwise noted.
Amount and Nature
Name of Beneficial of Beneficial Percent
Owner or Group(1) Ownership of Class
- -------------------- ----------------- --------
Scott A. Haire 29,121,297 (2) 41.1%
Araldo A. Cossutta 2,982,025 4.4%
Steven W. Evans 2,000,000 (3) 2.9%
Thomas J. Kirchhofer 150,000 (4) *
Gilbert A. Valdez 600,000 (5) *
Robert E. Gross 200,000 (6) *
Robert Shaw 11,000,000 16.1%
All Directors and Executive Officers as a group 35,303,322 48.64%
(seven in number)
- -----------
* Less than 1%.
(1) The address for each person or entity listed is 2225 E. Randol Mill Road,
Suite 305, Arlington, Texas, 76011.
(2) Includes 1,800,000 shares and 600,000 shares subject to options and a
warrant, respectively, that are presently exercisable.
(3) Includes 500,000 shares subject to a warrant that is presently exercisable
by Mr. Evans.
(4) Consists of shares subject to options that are presently exercisable by Mr.
Kirchhofer.
(5) Consists of shares subject to options that are presently exercisable by Mr.
Valdez.
(6) Consists of shares subject to options that are presently exercisable by Mr.
Gross.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board
of Directors. The Board of Directors meets on a regularly scheduled basis to
review significant developments affecting the Company and to act on matters
requiring Board approval. It also holds special meetings or acts by unanimous
written consent when an important matter requires Board action between scheduled
meetings. The Board of Directors or its authorized committees met three times
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<PAGE>
and acted by unanimous consent three times during 1997. During 1997, each member
of the Board of Directors participated in 100% of all Board and applicable
committee meetings held during the period for which he was a director.
The Company does not have any written employment agreements with any of
its officers or directors.
The Board of Directors does not have an audit, compensation or
nominating committee. The functions customarily attributable to those committees
are performed by the Board of Directors as a whole.
There are no standard compensation arrangements for directors.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's Chief Executive Officer. No other executive officer's total annual
salary and bonus exceeded $100,000, based on salary and bonus earned during
1997.
<TABLE>
Long-Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------------------- ---------------- -------
<S> <C> <C> <C> <C>
Securities
Restricted Underlying
Name and Principal Fiscal Other Annual Stock Options LTIP All Other
Position Year Salary Bonus Compensation Award(s) /SARs Payouts Compensation
- --------------------------- ------ ------ ----- ------------ -------- ---- ------- ------------
Scott A. Haire 1997 120,000
Chairman of the Board, 1996 120,000 -- -- -- -1,800,000 -- --
Chief Executive Officer and 1995 -- (1) -- -- -- -- --
President
</TABLE>
- -------------
(1) Mr. Haire elected not to receive salary from July 1994 through December
1995.
OPTION GRANTS DURING FISCAL 1997
The Company did not grant any options to the named executive officer
during fiscal 1997.
4
<PAGE>
OPTION EXERCISES DURING FISCAL 1997
AND FISCAL YEAR END OPTION VALUES
The following table provides information related to options exercised
by the named executive officer during fiscal 1998 and the number and value of
options held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Number of Options/SARs at Options/SARs
Shares Fiscal Year End at Fiscal Year End (1)
Acquired Value ------------------------------- ------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Scott A. Haire . . . . . -0- N/A 1,800,000 -- $558,000 --
</TABLE>
(1) The closing price for the Company's Common Stock based upon the
NASDAQ-OTC Bulletin Board on December 31, 1997, was $.34.
SECTION 16 REQUIREMENTS
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC").
Directors, officers and greater than 10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it
with respect to 1997, or written representations from certain reporting persons,
the Company believes that all filing requirements applicable to its directors,
officers and greater than 10% beneficial owners have been complied with.
PROPOSAL NO. 2
AMENDMENT OF ARTICLES OF INCORPORATION
The Company proposes to amend its Articles of Incorporation to (i) add
a class of preferred stock to its authorized capital, (ii) adopt a series of
preferred stock and (iii) increase the number of authorized shares of Common
Stock of the Company. The Board of Directors of the Company has unanimously
approved the proposed amendment.
A copy of the proposed amendment is attached hereto as Exhibit A.
BACKGROUND
On August 5, 1997, the Company and Imagine Investments, Inc.
("Imagine") announced that they had formed Healthcare Innovations, LLC ("HI")
for the purpose of acquiring and operating healthcare businesses. Imagine is a
subsidiary of Stone Investments, Inc., which in turn is a subsidiary of Stone
Capital, Inc., a corporation with over $3 billion in assets. The Company owns a
51% common ownership interest in HI and Imagine owns a 49% common ownership
interest. In addition, each of the Company and Imagine owns preferred interests
in HI designed to return their respective investments, plus a 10% return, over a
three year period.
5
<PAGE>
For its interest, the Company contributed to HI its then existing
healthcare businesses, consisting of two rehabilitation clinics in Jacksonville,
Florida and a Utah-based nurse practitioner business. Since formation, HI has
also acquired two chiropractic clinics located in Arlington, Texas and Las
Vegas, Nevada. Imagine contributed an aggregate of $2,000,000, consisting of
cash and notes owed to it. The Company serves as operator of HI, for which it
receives a management fee.
Also in connection with the formation of HI, Imagine loaned the Company
$500,000 for use with its medical software business. The loan bears interest at
a rate of 10% and is due on August 1, 2000. The Company pledged all of the stock
of its medical software subsidiary as security for the loan. Imagine also loaned
the Company $300,000 pursuant to a promissory note dated January 15, 1998, at an
interest rate of prime plus 1%. The maturity date of that note was October 1,
1998, and has been extended by agreement of the parties. Imagine has also
advanced $1,400,000 to the Company pursuant to a promissory note dated April 1,
1998, which bears interest at an annual rate of 10%. As contemplated in the
$1,400,000 note, Imagine will convert the $1,400,000 note and its interest in HI
into the preferred stock described below. The other $800,000 of promissory notes
will remain outstanding.
PREFERRED STOCK
The amendment to the Articles of Incorporation will add one million
shares of preferred stock, par value $10 per share ("Preferred Stock"), to the
authorized capital of the Company. Other than the Series A Senior Cumulative
Convertible Participating Preferred Stock par value $10 per share (the "Series A
Preferred Stock") to be issued to Imagine, described below, the Company has no
plans to issue any Preferred Stock, and the Preferred Stock to be issued to
Imagine will prohibit issuance of any class of stock that is senior or equal to
the Preferred Stock of Imagine with respect to dividend rights, redemption
rights or liquidation preference without the consent of the holders of a
majority of the outstanding Series A Preferred Stock. Subject to that
limitation, the Board of Directors will have authority, without further
shareholder action, to issue Preferred Stock in one or more series and may
designate the dividend rate, voting rights and other rights, preferences and
restrictions of each series.
It is not possible to state the actual effect of the issuance of
Preferred Stock (other than the Series A Preferred Stock, which is described
below) upon the rights of holders of Common Stock until the Board of Directors
of the Company determines the specific rights of the holders of such Preferred
Stock. However, such effects might include, among other things, restricting
dividends on the Common Stock, diluting the voting power of the Common Stock,
impairing the liquidation rights of the holders of Common Stock and delaying or
preventing a change in control of the Company without further action by the
shareholders.
Pursuant to its agreement with Imagine, the Company will issue to
Imagine 340,000 duly authorized, validly issued, fully paid and nonassessable
shares of Series A Preferred Stock. Set forth below is a summary of the material
terms of the Series A Preferred Stock. The summary is not intended to be
complete and is qualified in its entirety by the amendment to the Articles of
Incorporation, as set forth in Exhibit A hereto, which contains all of the terms
of the Series A Preferred Stock.
The Series A Preferred Stock will be senior to all other shares of
capital stock of the Company with respect to payment of dividends, redemption
and (except as described below) liquidation preference. Cumulative dividends
will be paid on the Series A Preferred Stock at a rate of $1 per share per year.
Dividends are payable quarterly on the last day of March, June, September and
December of each year. Upon a liquidation of the Company, holders of the Series
A Preferred Stock are entitled to receive the sum of (i) $10 per share, plus
accrued and unpaid dividends, plus (ii) after $20 million has been paid to
holders of Common Stock of the Company in the aggregate, an amount equal to the
amount paid under (i) above plus a percentage of all liquidation proceeds
remaining after the foregoing payments equal to the percentage of Common Stock
the holders of Series A Preferred Stock would have received if they had
converted their Series A Preferred Stock into Common Stock.
6
<PAGE>
The Series A Preferred Stock is redeemable at the option of the holder
at any time after October 1, 2000 at a redemption price of $10 per share plus
accrued but unpaid dividends. If the Company, for any reason, is unable to
redeem the Series A Preferred Stock at the time of the proposed redemption, the
holders of the Series A Preferred Stock will have the right to elect a majority
of the Board of Directors of the Company. Holders of Series A Preferred Stock
will not have any other voting rights except (a) to the extent provided by law,
(b) the right to vote with the Common Stock with respect to corporate actions
that give rise to the right of the holders of Series A Preferred Stock to
convert their shares into Common Stock, as described below, and (c) the right to
approve certain corporate actions, including amendment of the Articles of
Incorporation, incurrence of indebtedness for borrowed money and/or capital
leases in excess of $500,000, and transactions between the Company and officers,
directors and holders of over 10% of the outstanding Common Stock.
The Series A Preferred Stock is convertible into Common Stock upon the
earlier to occur of (i) October 1, 2000, (ii) the sale of all or substantially
all of the assets of the Company, (iii) a change in control of the Company and
(iv) the voluntary or involuntary dissolution of the Company. If the event
triggering the conversion right is October 1, 2000, the Preferred Stock will be
convertible into shares of Common Stock that equal 30% of the total outstanding
Common Stock on a fully diluted basis. That conversion percentage is subject to
downward adjustment with respect to the other three triggering events, depending
on the future value of the Company.
The Company has agreed to grant Imagine registration rights with
respect to sales of Common Stock acquired upon conversion of the Series A
Preferred Stock. Additionally, Mr. Scott A. Haire, President and Chairman of the
Board of the Company, has agreed to enter into an agreement with Imagine that
will allow Imagine to participate in any sale by Mr. Haire of all or
substantially all of his shares of Common Stock of the Company. Those agreements
are expected to be finalized sometime before the Annual Meeting.
COMMON STOCK
The amendment of the Articles of Incorporation will also increase the
number of authorized shares of Common Stock of the Company from 100,000,000 to
150,000,000 shares. This will enable the Company to reserve a sufficient number
of shares of Common Stock to meet its obligations with respect to conversion of
Series A Preferred Stock, as well as give the Company sufficient shares for
issuance in the future.
The Company believes that this amendment would benefit the Company by
providing greater flexibility to the Board of Directors to issue additional
equity securities, for example, to raise additional capital, to facilitate
possible future acquisitions, to provide stock-related employee benefits and to
effect any stock split of the outstanding Common Stock. If the increase is
approved at the Meeting, generally, no shareholder approval would be necessary
for the issuance of all or any portion of the additional shares of Common Stock
unless required by law or any rules or regulations to which the Company is
subject.
Although the Company considers from time to time mergers, acquisitions
and other transactions that may involve the issuance of additional shares of
Common Stock (any one or more of which may be under consideration or acted upon
at any time), the Company is not a party to any agreements with respect to any
such transactions, nor does it have any agreements, commitments or
understandings with respect to such transactions or that would involve the
issuance of additional shares of Common Stock in amounts that would exceed the
number of currently authorized and unissued shares, other than currently
outstanding options and warrants to purchase Common Stock.
Depending upon the consideration per share received by the Company for
any subsequent issuance of Common Stock, such issuance could have a dilutive
effect on those shareholders who paid a higher consideration per share for their
stock. Also, future issuances will increase the number of outstanding shares of
Common Stock, thereby decreasing the percentage ownership in the Company (for
voting, distributions and all other purposes) represented by existing shares of
Common Stock. The availability for issuance of the additional shares of Common
Stock and any issuance thereof, or both, may be viewed as having the effect of
discouraging an unsolicited attempt by another person or entity to acquire
7
<PAGE>
control of the Company. Although the Board of Directors has no present intention
of doing so, the Company's authorized but unissued Common Stock could be issued
in one or more transactions that would make a takeover of the Company more
difficult or costly, and therefore less likely. The Company is not aware of any
person or entity who is seeking to acquire control of the Company. Holders of
Common Stock do not have any preemptive rights to acquire an additional
securities issued by the Company.
The Company has been advised that shareholders owning an aggregate of
46,911,322 shares of Common Stock intend to vote in favor of the amendment to
the Articles of Incorporation, thereby assuring that the amendment will be
adopted.
PROPOSAL NO. 3
INDEPENDENT PUBLIC ACCOUNTANTS
Subject to ratification by the shareholders at the Meeting, the Board
of Directors has selected Killman, Murrell & Company to audit the consolidated
financial statements of the Company and its subsidiaries for the fiscal year
ending December 31, 1998. Killman, Murrell & Company has served the Company in
this capacity since March 1, 1998. Representatives of Killman, Murrell & Company
are expected to be present at the Meeting, will have the opportunity to make a
statement, if they desire to do so, and will be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for
shareholder action at subsequent annual meetings of the Company consistent with
Rule 14a-8 promulgated under the Exchange Act. For such proposals to be
considered for inclusion in the Proxy Statement and Proxy relating to the 1999
Annual Meeting of Shareholders, such proposals must be received by the Company
not later than June 14, 1999. Such proposals should be directed to MB Software
Corporation, 2225 E. Randol Mill Road, Suite 305, Arlington, Texas, 76011-6306,
Attention: Secretary.
OTHER BUSINESS
The Board of Directors knows of no matter other than those described
herein that will be presented for consideration at the Meeting. However, should
any other matters properly come before the Meeting or any adjournments thereof,
it is the intention of the persons named in the accompanying Proxy to vote in
accordance with their best judgment in the interest of the Company.
MISCELLANEOUS
All costs incurred in the mailing of this Information Statement will be
borne by the Company. The Company may make arrangements with brokerage houses
and other custodians, nominees and fiduciaries for the forwarding of information
materials to the beneficial owners of shares of Common Stock held of record by
such persons, and the Company may reimburse such brokerage houses and other
custodians, nominees and fiduciaries for their out-of-pocket expenses incurred
in connection therewith.
8
<PAGE>
Accompanying this Information Statement is a copy of the Company's
Annual Report for the fiscal year ended December 31, 1997.
By Order of the Board of Directors
Lucy J. Singleton
Secretary
Arlington, Texas
October 12, 1998
9
<PAGE>
EXHIBIT "A"
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION OF
MB SOFTWARE CORPORATION
Pursuant to the provisions of Article 110-106 of the Colorado Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation.
FIRST: The name of the corporation is MB Software Corporation (the
"Corporation").
SECOND: The following amendment was adopted by the shareholders of
the Corporation on the ___ day of November, 1998.
The amendment alters the Fourth Article of the Amended and Restated
Articles of Incorporation to read in its entirety as follows:
"FOURTH:
(a) The aggregate number of shares which the Corporation shall have the
authority to issue is one hundred and fifty-one million (151,000,000), one
hundred fifty million (150,000,000) of which will be shares of Common Stock
("Common Stock"), having a par value of $.001, and one million (1,000,000) of
which will be shares of Preferred Stock ("Preferred Stock"), having a par value
of $10 per share.
(b) Preferred Stock may be issued in one or more series as may be
determined from time to time by the Board of Directors. All shares of any one
series of Preferred Stock will be identical except as to the date of issue and
the dates from which dividends on shares of the series issued on different dates
will cumulate, if cumulative. Authority is hereby expressly granted to the Board
of Directors to authorize the issuance of one or more series of Preferred Stock,
and to fix by resolution or resolutions providing for the issue of each such
series the voting powers, designations, preferences, and relative participating,
optional, redemption, conversion, exchange or other special rights,
qualifications, limitations or restrictions of such series, and the number of
shares in each series to the full extent now or hereafter permitted by law.
(c) A first series of the class of Preferred Stock, par value $10,
authorized by these Articles of Incorporation is hereby created and issuance is
hereby authorized. The designation, amount thereof, voting powers, preferences
and relative rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are hereby set as follows:
1
<PAGE>
1. Designation of Series. The designation of the series of Preferred
Stock shall be "Series A Senior Cumulative Convertible Participating Preferred
Stock" (the "Series A Preferred Stock").
2. Par Value. The Series A Preferred Stock shall have a par value of
$10 per share.
3. Number of Shares. The number of shares of Series A Preferred Stock
shall be three hundred forty thousand (340,000).
4. Dividends of Series A Preferred Stock. The holders of record of the
Series A Preferred Stock (each, a "Holder") shall be entitled to receive
dividends at the rate of $1 per share of Series A Preferred Stock, per annum,
out of any assets at the time legally available therefor and subject to the
further limitations set out herein. Such dividends shall begin to accrue upon
the issuance of the Series A Preferred Stock, and shall be payable in quarterly
installments in arrears as of the last day of each of March, June, September and
December of each year (each such quarter being herein referred to as a "Dividend
Period"), the first dividend being payable on or before December 31, 1998;
provided however, if such date on which a dividend is payable is a Saturday,
Sunday or legal holiday, such dividend shall be payable on the next following
business day to the Holder. Dividends on the Series A Preferred Stock shall be
paid only out of those assets of the Corporation legally available therefor. All
dividends paid pursuant to this paragraph shall be in the form of cash.
Dividends on the Series A Preferred Stock shall accrue and be cumulative,
whether or not in any Dividend Period or Periods there shall be assets of the
Corporation legally available for the payment of such dividends. Accrued but
unpaid dividends shall not be deemed to earn interest, except as contemplated in
paragraph 5. For so long as any shares of Series A Preferred Stock shall remain
outstanding, no dividend or distribution in cash or other property shall be
declared, set aside or paid on or in respect of the Common Stock of the
Corporation or on any other series of stock issued by the Corporation.
5. Redemption Rights. If the Series A Preferred Stock is not converted
into Common Stock as provided herein, it shall be redeemable, in whole or in
part, at the option of the Holder thereof any time and from time to time after
October 1, 2000, at a redemption price equal to $10 per share, plus accrued but
unpaid dividends thereon through the Holder Redemption Date (as defined below)
(the "Redemption Price"). In the event any Holder of Series A Preferred Stock
wishes to exercise the redemption option set forth above, the Holder shall give
the Corporation written notice of a redemption, which notice must be given not
less than 15 days prior to the date the shares are to be redeemed (the "Holder
Redemption Date") and shall specify: (i) the Holder Redemption Date; (ii) the
number of shares of Series A Preferred Stock held by such Holder to be redeemed
on such date; and (iii) that the certificate or certificates evidencing
ownership of Series A Preferred Stock to be redeemed will be surrendered at a
place to be designated by the Corporation. Within five days of its receipt of a
redemption notice, the Corporation shall deliver a copy thereof to every other
holder of record of Series A Preferred Stock. Each holder of Series A Preferred
Stock that gives a redemption notice to the Corporation within five days after
its receipt of such copy (a "Subsequent Notice") shall be deemed to have given
such Subsequent Notice on the same date as the original redemption notice.
However, no Subsequent Notice shall serve as the basis for any redemption
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notice given within five days after its delivery being deemed to have been given
as of any date other than the actual date on which it is given. Upon receipt of
any redemption notice, the Corporation shall be obligated to redeem for cash the
shares to be redeemed within 60 days after the Corporation's receipt of such
redemption notice; provided, however, that if the Corporation does not have
sufficient funds that are legally available for such redemption, (i) the
Corporation shall redeem so many of the shares to be redeemed as may lawfully
redeem, (ii) if the Corporation cannot redeem all of the shares to be redeemed,
the Corporation shall redeem the shares to be redeemed in the chronological
order in which the redemption notices related thereto were given and shall
redeem the shares to be redeemed subject to redemption notices given or deemed
given on the same date pro rata, (iii) the Corporation shall promptly take such
action as is lawful and possible for it to cause sufficient funds to become
legally available to redeem all shares to be redeemed, (iv) shares to be
redeemed and not redeemed shall remain outstanding shares for all purposes until
redeemed and paid for in full, and (v) a holder of shares to be redeemed may, by
written notice to the Corporation given at any time after the 60th day after
giving a redemption notice but prior to the time payment in full is made to such
holder, revoke such redemption notice with respect to any or all shares to be
redeemed that have not then been redeemed. The fact that an Event of Default
ceases to exist after a redemption notice has been given but before the
redemption of the shares to be redeemed does not negate the obligation of the
Corporation to redeem such shares. On and after the Holder Redemption Date, the
Holder of Series A Preferred Stock giving notice for redemption as aforesaid,
upon presentation and surrender at the place designated by the Corporation (such
place, as is reasonably accessible to the Holder, to be designated by the
Corporation by giving written notice of such designation to the Holder no less
than 10 days prior to the Holder Redemption Date) of the certificate or
certificates representing such shares of Series A Preferred Stock that are being
redeemed held by it, duly endorsed in blank for transfer or accompanied by a
written instrument of transfer duly executed by such Holder or its attorney duly
authorized in writing, shall be entitled to receive the Redemption Price. After
the Holder Redemption Date specified in such notice (unless default shall be
made by the Corporation in the payment of the Redemption Price), all dividends
on the Series A Preferred Stock so redeemed shall cease to accrue and all rights
of the Holders of the Series A Preferred Stock so redeemed as shareholders of
the Corporation, excepting only the right to receive the Redemption Price on and
after the Holder Redemption Date without interest thereon (except as
contemplated below), shall cease and terminate. Should the Corporation fail to
redeem any shares of Series A Preferred Stock following receipt from a Holder of
written notice of redemption, (i) the Holders of the Series A Preferred Stock
shall have the right to elect a majority of the Corporation's board of directors
as provided below, and (ii) the Corporation shall pay interest on the Redemption
Price with respect to the shares of Series A Preferred Stock that were called
for redemption but not redeemed at the Holder Redemption Date at an interest
rate equal to the lesser of the prime rate of interest stated by The Wall Street
Journal on the proposed Holder Redemption Date, plus 5%, or the highest rate
allowed by law from the proposed Holder Redemption Date through the date the
shares are actually redeemed. The Series A Preferred Stock shall not be entitled
to the benefits of any sinking or similar fund.
6. Voting Rights.
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(i) Except as provided herein or by applicable law, the
Series A Preferred Stock shall have no right to vote
with respect to matters requiring the vote of the
holders of the Corporation's capital stock.
(ii) Holders of Series A Preferred Stock shall have the
right to vote with holders of Common Stock, on an
as-converted basis, on any matter submitted to a vote
of holders of Common Stock that constitutes either a
Sale Triggering Event, a Change in Control Triggering
Event or a Dissolution Triggering Event (as such terms
are defined below), with the Conversion Percentage of
the Series A Preferred Stock being calculated based
upon the Triggering Event being voted upon.
(iii)In the event the Corporation shall, for any reason,
(a) fail to redeem shares of Series A Preferred Stock
following receipt of written notice of redemption from
the Holder as provided above, or (b) default with
respect to any of its other obligations under this
Article Fourth with respect to the Series A Preferred
Stock, which default shall remain uncured for a period
of 30 days if such default is curable, otherwise the
rights set forth below shall be activated immediately
upon default, the number of directors constituting the
whole Board of Directors of the Corporation (the
"Board") shall, without further action by the
shareholders or the Board, be increased by the number
of directors then constituting the entire Board, plus
one, and the Holders of Series A Preferred Stock shall
have the exclusive and special right, voting separately
and as a single class, to vote for and elect such
additional directors, and the remaining number of
directors of the Corporation shall be elected by the
shareholders generally entitled to vote in the election
of directors. Directors elected by Holders of Series A
Preferred Stock may only be removed by Holders of
Series A Preferred Stock and no increase or decrease in
the size of the Board shall be permitted during the
pendency of such right except as expressly contemplated
in this paragraph 6. The right of the Holders of Series
A Preferred Stock to elect additional directors shall
cease, the term of the additional directors elected by
the Holders of the Series A Preferred Stock voting as a
separate class pursuant to this paragraph shall
terminate forthwith and the number of directors of the
Corporation shall be reduced by such number whenever
the Series A Preferred Stock with respect to which the
Corporation defaulted on its obligation to redeem shall
have been redeemed, the default creating the election
right shall have been cured or all the Series A
Preferred Stock shall have been redeemed, as the case
may be.
(iv) Whenever such voting right shall have vested, such
right may be exercised initially either at a special
meeting of the Holders of the Series A Preferred Stock
having such voting right, called as hereinafter
provided, or at any annual meeting of shareholders held
for the purpose of electing directors, and thereafter
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at such annual meetings or by the written consent of
the Holders of the Series A Preferred Stock entitled to
vote thereon.
(v) At any time when such voting right shall have vested in
the Holders of the Series A Preferred Stock, and if
such right shall not already have been initially
exercised, a proper officer of the Corporation shall,
upon the written request of any Holder of Series A
Preferred Stock having such voting right then
outstanding, addressed to the Secretary of the
Corporation, call a special meeting of the Holders of
the Series A Preferred Stock having such voting right
for the purpose of electing directors. Such meeting
shall be held at the earliest practicable date upon the
notice required for special meetings of shareholders at
the place where the last annual meeting of shareholders
of the Corporation was held or the Corporation's chief
executive office. If such meeting shall not be called
by the proper officers of the Corporation within 10
days after the delivery of notice of such written
request to the Secretary of the Corporation, or within
10 days after mailing the same within the United
States, by registered mail, addressed to the Secretary
of the Corporation at its principal office (such
mailing to be evidenced by the registry receipt issued
by the postal authorities), then the Holders of 10% or
more of the shares of the Series A Preferred Stock then
outstanding which would be entitled to vote at such
meeting may designate in writing a Holder of Series A
Preferred Stock to call such meeting at the expense of
the Corporation, and such meeting may be called by such
person so designated upon the notice required for
special meetings of shareholders and shall be held at
the same place as is elsewhere provided in this
paragraph. Any Holder of the Series A Preferred Stock
which would be entitled to vote at such meeting shall
have access to the stock books of the Corporation for
the purpose of causing a meeting of shareholders to be
called pursuant to the provisions of this paragraph.
Notwithstanding the provisions of this paragraph,
however, no such special meeting shall be called during
a period within 30 days immediately preceding the date
fixed for the next annual meeting of shareholders.
(vi) At any meeting held for the purpose of electing
directors at which the holders of Series A Preferred
Stock shall have the right to elect directors as
provided herein, the presence in person or by proxy of
the holders of 33-1/3% or more of the then outstanding
shares of Series A Preferred Stock having such right
shall be required and be sufficient to constitute a
quorum of such series for the election of directors by
such series. At any such meeting or adjournment thereof
(a) the absence of a quorum of the Holders of the
Series A Preferred Stock having such right shall not
prevent the election of directors other than those to
be elected by the Holders of stock of such series and
the absence of a quorum or quorums of the holders of
capital stock entitled to elect such other directors
shall not prevent the election of directors to be
elected by the Holders of the Series A Preferred Stock
entitled to elect such directors and
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(b)in the absence of a quorum of the holders of any
class or series of stock entitled to vote for the
election of directors, a majority of the holders
present in person or by proxy of such class or series
shall have the power to adjourn the meeting for the
election of directors which the holders of such class
or series are entitled to elect, from time to time,
without notice other than announcement at the meeting,
until a quorum shall be present.
(vii)The term of office of all directors elected by the
Holders of the Series A Preferred Stock in office at
any time when the aforesaid voting rights are vested in
the Holders of the Series A Preferred Stock having such
voting rights shall terminate upon the election of
their successors at any meeting of shareholders for the
purpose of electing directors. Upon any termination of
the aforesaid voting rights as set forth above the term
of office of all directors elected by the Holders of
the Series A Preferred Stock then in office shall
thereupon terminate and upon such termination the
number of directors constituting the Board of Directors
shall, without further action, be reduced by the amount
of increase, subject always to the increase of the
number of directors in case of the future right of the
Holders of the Series A Preferred Stock to elect
directors.
(viii) So long as any shares of Series A Preferred Stock
remain outstanding, the Corporation will not, either
directly or indirectly or through merger or
consolidation with any other corporation, without the
affirmative vote at a meeting or the written consent
with or without a meeting of the Holders of at least a
majority in number of shares of the Series A Preferred
Stock, (x) create any class or series of stock ranking
equal or prior to the Series A Preferred Stock, either
as to dividends or upon liquidation or increase the
authorized number of shares of any class or series of
stock ranking equal or prior to the Series A Preferred
Stock either as to dividends or upon liquidation, (y)
amend, alter or repeal (whether by merger,
consolidation or otherwise) any of the provisions of
the Articles of Incorporation of the Corporation so as
to affect adversely the preferences, special rights or
powers of the Series A Preferred Stock or (z) authorize
any reclassification of the Series A Preferred Stock.
(ix) Holders of Series A Preferred Stock shall be sent
notice of any meeting of shareholders, regardless of
whether they are entitled to vote or consent at such
meeting, together with copies of all other
correspondence sent to shareholders by the Corporation.
The Corporation will give Holders of Series A Preferred
Stock at least twenty days' advance notice of the
fixing of any record date with respect to holders of
the Common Stock.
7. Priority. The Series A Preferred Stock shall be senior to all other
capital stock of the Corporation as to payment of dividends, redemption and
(except with respect to Common Stock as described under the heading "Priority of
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the Series A Preferred Stock in the Event of Liquidation") liquidation
preference.
8. Priority of the Series A Preferred Stock in the Event of
Liquidation. In the event of a voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the Holders of Series A Preferred Stock shall
be entitled to receive the sum of (i) $100 per share plus accrued and unpaid
dividends through the date of the liquidating distribution, plus (ii) after
$20,000,000 has been paid to holders of Common Stock in the aggregate, an amount
equal to the amount paid under subsection (i), plus (iii) that percentage of all
liquidation proceeds remaining after the foregoing payments equal to the
Conversion Percentage (as defined below) calculated for a Dissolution Triggering
Event (as defined below) pursuant to paragraph 11 below. If upon any
liquidation, dissolution or winding up of the Corporation, the amounts payable
with respect to the Series A Preferred Stock are not paid in full, the Holders
of the Series A Preferred Stock will share ratably in any such distribution of
assets in proportion to the full respective preferential amounts to which they
are entitled. The merger or consolidation of the Corporation with any other
entity shall not be deemed to be a liquidation, dissolution or winding up of the
Corporation for the purpose of this paragraph.
9. Conversion. If a Triggering Event (as defined below) occurs, the
Series A Preferred Stock will be convertible, at the option of the Holders, into
that number of shares of Common Stock representing the Conversion Percentage (as
defined below) of the Common Stock of the Corporation outstanding after such
conversion.
10. Triggering Events. A Triggering Event shall be the first to occur
of any one of: (i) the sale of all or substantially all of the assets of the
Corporation (the "Sale Triggering Event"); (ii) a Change in Control (as defined
below) of the Corporation (the "Change in Control Triggering Event"); (iii) the
voluntary or involuntary dissolution of the Corporation (the "Dissolution
Triggering Event"); or (iv) October 1, 2000 (the "Year 2000 Triggering Event").
11. Conversion Percentage. The "Conversion Percentage" will be (i) 30%
in the case of the Year 2000 Triggering Event, or (ii) 30% adjusted pursuant to
the following calculations, in the case of any other Triggering Event:
(a) Determine the Future Corporation Value (as defined
below) at the time of the Triggering Event;
(b) subtract the Redemption Price at the date of the
Triggering Event from $6 million (the result being
called the "Excess Preferred Value");
(c) if the Excess Preferred Value is zero or less, the
Conversion Percentage is 30% and no further
calculations are necessary; if the Excess Preferred
Value is positive, divide the Excess Preferred Value by
the Future Corporation Value (the result being called
the "Conversion Adjustment");
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(d) subtract the Conversion Adjustment from 30% and the
result is the Conversion Percentage.
In either instance, if a portion of the Series A Preferred Stock has
been redeemed or converted into Common Stock as provided in paragraph 5 or
paragraph 9 hereof, the Conversion Percentage shall be reduced proportionately.
12. Future Corporation Value. The "Future Corporation Value" is defined
as, with respect to (i) a Sale Triggering Event, all amounts received or to be
received by the Corporation as a result of such transaction (including the
amount of obligations of the Corporation assumed by the buyer); plus, to the
extent not transferred in such transaction, the fair value of all remaining
assets of the Corporation; plus, all amounts to be received from the buyer or
its affiliates by officers, directors and shareholders of the Corporation or
their affiliates pursuant to agreements entered into in connection with or in
anticipation of such sale, regardless of whether characterized as being for
services, non-competition covenants, or otherwise, to the extent the
consideration therefor exceeds the fair value thereof; (ii) a Change in Control
Triggering Event, the sum of (1) the product of the highest per share
consideration received by a holder of Common Stock in such transaction
multiplied by the number of shares (on a fully diluted basis, assuming that the
Series A Preferred Stock is converted into Common Stock as a Year 2000
Triggering Event) of Common Stock outstanding at the date of such Triggering
Event; plus, (2) all amounts to be received from the buyer or its affiliates by
officers, directors, and shareholders of the Corporation or their affiliates
pursuant to agreements entered into in connection with or in anticipation of
such Change in Control, regardless of whether characterized as being for
services, non-competition covenants, or otherwise, to the extent the
consideration therefor exceeds the fair value thereof; and (iii) a Dissolution
Triggering Event, all amounts available for distribution to shareholders (after
paying all bona fide debts and obligations of the Corporation other than amounts
payable to the Holders of Preferred Stock).
13. Change in Control. Each of the following events shall be considered
a "Change in Control": (i) a merger or consolidation of the Corporation with any
other entity as a result of which the holders of Common Stock immediately prior
to the merger or consolidation do not own (on a fully diluted basis) a majority
of the outstanding capital stock or other equity interests of the surviving
entity; (ii) any event or series of events that causes any person, group or
entity, together with its affiliates
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<PAGE>
and associates, to be the beneficial owner of a majority of the outstanding
securities of the Corporation that have the right to vote generally in the
election of the directors of the Corporation (for the purposes of this
paragraph, "Voting Securities"), or that results in any person or entity that
currently owns a majority of the outstanding voting securities of Maker
increasing its ownership percentage by 5% or more; provided, however, that
neither the issuance of Series A Preferred Stock nor the issuance of Common
Stock upon conversion of Series A Preferred Stock shall be an issuance or
transfer of Voting Securities or securities convertible into Voting Securities
for purposes of this clause; (iii) any reclassification of securities of the
Corporation or any recapitalization of the Corporation that, in either case, has
the effect of increasing the percentage of the outstanding Voting Securities of
the Corporation that are beneficially owned by any shareholder of the
Corporation by 5% or more; or (iv) any acquisition (pursuant to a tender offer
or otherwise) of securities of the Corporation that results in any person, group
or entity, together with its affiliates and associates, being the beneficial
owner of a majority of the then outstanding Voting Securities of the Corporation
or that results in any person or entity that currently owns a majority of the
outstanding Voting Securities of the Corporation increasing its percentage of
outstanding Voting Securities by 5% or more. For purposes of this paragraph, the
term "beneficial owner" means, with respect to any security, a person or entity
who has an economic interest in such security, has the right to acquire such
security (including by virtue of owning convertible securities, rights, options
or warrants, whether such right is immediately exercisable or subject to certain
conditions, including lapse of time, with any securities not outstanding that
are subject to such convertible securities, rights, options or warrants being
deemed to be outstanding for the purpose of computing the percentage of
outstanding securities of a class owned by a person but not being deemed to be
outstanding for the purpose of computing the percentage of the class by any
other person), has the right to vote or direct the voting of such security, or
has the right to dispose or direct the disposition of such security; the term
"outstanding" includes securities that, pursuant to the foregoing definition,
are deemed beneficially owned, regardless of whether actually issued and
outstanding; and the terms "associate" and "affiliate" have the meaning given
them in regulations promulgated by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended.
14. Certain Restrictions on the Corporation. As long as any shares of
Series A Preferred Stock shall be outstanding, the Corporation shall not,
without the consent of the holders of a majority of the outstanding shares of
Series A Preferred Stock, (i) issue any capital stock that is equal with or
senior to the Series A Preferred Stock with respect to dividends, redemption, or
(except with respect to Common Stock as described in the section "Priority of
the Series A Preferred Stock in the Event of Liquidation") liquidation
preference; (ii) fail to have reserved sufficient shares of Common Stock to
permit full conversion of the Series A Preferred Stock as provided herein; (iii)
issue any capital stock that would cause there to be insufficient shares of
Common Stock to permit full conversion of the Series A Preferred Stock as
provided herein; (iv) amend the Articles of Incorporation of the Corporation;
(v) incur any indebtedness for borrowed money and/or capital leases, in a single
transaction or series of related transactions, in excess of $500,000; (vi) enter
into any transaction or series of related transactions with any director,
officer or holder of over 10% of the outstanding shares of Common Stock or any
affiliates of any such person, other than a wholly owned subsidiary of the
Corporation involving over $50,000 (other than employment arrangements existing
on June 30, 1998); or (vii) increase the annual compensation of any employee by
$50,000 or more. Any action taken hereunder by the Corporation without such
consent shall be void.
15. Reservation of Shares. The Corporation shall at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock and issued Common Stock held in its
treasury, solely for the purpose of effecting the conversion of the shares of
Series A Preferred Stock as provided herein, the full number of shares of Common
Stock then issuable upon the conversion of all outstanding shares of Series A
Preferred Stock. For the purpose of this paragraph, the full number of Common
Stock issuable upon the conversion of all outstanding shares of Series A
Preferred Stock shall be computed as if at the time of computation of such
number of Common Stock all outstanding shares of Series A Preferred Stock were
held by a single Holder. The Corporation shall from time to time, in accordance
with the laws of the State of Colorado, increase the number of shares of its
Common Stock if at any time the aggregate of the authorized number of shares of
its Common Shares remaining unissued and its issued Common Stock held in its
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treasury (other than any such shares reserved for issuance in any other matter)
shall not be sufficient to permit the conversion of all shares of Series A
Preferred Stock at the time outstanding.
16. Taxes. The Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the issue or
delivery of Common Stock on conversion of shares of Series A Preferred Stock
pursuant hereto. The Corporation shall not, however, be required to pay any such
tax which may be payable in respect of any transfer involved in the issue or
transfer and delivery of Common Stock in a name other than that in which the
shares of Series A Preferred Stock so converted were registered, and no such
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of any such tax or has established
to the satisfaction of the Corporation that such tax has been paid.
17. Waiver. Notwithstanding anything to the contrary herein, any
condition, requirement, or covenant contained in this Article may be waived in
writing by the person(s) for whose benefit such condition, requirement, or
covenant is made.
18. Notice. The Corporation will give Holders of Series A Preferred
Stock at least twenty days' advance written notice of any Sale Triggering Event
or Change in Control Triggering Event, any record date relating to such
Triggering Event, and, to the extent possible, at least twenty days' advance
written notice of any event that could give rise to either such Triggering Event
or any event that could lead to a liquidation of the Corporation. Any notices
required to be given hereunder shall be in writing and, unless otherwise
provided herein, shall be deemed validly delivered if delivered personally or
sent by certified mail postage prepaid to the Corporation at its address set
forth on the first page of its most recent filing with the Securities and
Exchange Commission or, if no longer registered, its registered office, and to
Holders of Series A Preferred Stock at the address listed in the stock records
of the Corporation. Notice given by mail as set out above shall be deemed
delivered three days from the date of mailing.
(d) Each holder of Common Stock shall have one vote for each share
outstanding in his or her name on the books of the Corporation and entitled to
vote, except that in the election of directors he or she shall have the right to
vote such number of shares for as many persons as there are directors to be
elected and for whose election the shareholder has a right to vote. Cumulative
voting shall not be allowed in the election of directors or for any other
purpose.
(e) No shareholder of the Corporation shall have any preemptive or
similar right to acquire any additional unissued or treasury shares of stock or
for other securities of any class, or for rights, warrants or options to
purchase stock or for scrip, or for securities of any kind convertible into
stock or carrying stock purchase warrants or privileges.
(f) The board of directors may from time to time distribute to the
shareholders in partial liquidation, out of stated capital or capital surplus of
the Corporation, a portion of its assets, in cash or property, subject to the
limitations contained in the statutes of Colorado and elsewhere in these
Articles of Incorporation."
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