<PAGE>
As filed with the Securities and Exchange Commission on October 28, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
MAI SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
------------------------------------
Delaware 22-2554549
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 9600 Jeronimo Road Identification Number)
Irvine, California 92718
(714) 580-0700
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
------------------------------------
Stanley P. Witkow
Vice President, Corporate and Legal Affairs
9600 Jeronimo Road
Irvine, California 92718
(714) 580-0700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------------------------
Copies to:
Frank H. Golay, Jr.
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
(213) 955-8000
------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: After
the effective date of this Registration Statement, as determined by market
conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. /_/
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. /_/
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /_/
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /_/
------------------------------------
CALCULATION OF REGISTRATION FEE
================================================================================
AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES PROPOSED MAXIMUM REGISTRATION
TO BE REGISTERED AGGREGATE OFFERING PRICE(1) FEE
- --------------------------------------------------------------------------------
Common Stock $5,965,000 $1,808
================================================================================
(1) Estimated solely for the purpose of calculating the registration fee based
on the trading prices for the Common Stock on October __, 1996 pursuant to
Rule 457(o).
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE OR UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED OCTOBER 28, 1996
MAI SYSTEMS CORPORATION
COMMON STOCK
--------------------------------------------
This Prospectus relates to 635,900 shares of Common Stock being offered
by the Selling Stockholders. Also, MAI Systems Corporation ("MAI" or the
"Company") will issue additional shares for offering by the Selling Stockholders
in order that they receive net proceeds of $5,965,000 from this offering. This
adjustment in the number of shares is required by the agreements for the HIS
Acquisition, as described herein. It is currently estimated that 165,800
additional shares will be offered by the Selling Stockholders as a result of
such adjustment, resulting in an estimated total offering of 801,700 shares. See
"Prospectus Summary -- The Offering," "The Company -- Acquisition of HIS" and
"Principal and Selling Stockholders." The Company will not receive any of the
proceeds from the sale of shares of Common Stock by the Selling Stockholders.
The sale or distribution of the offered shares may be effected directly
to purchasers by the Selling Stockholders as principals or through one or more
underwriters, brokers, dealers or agents from time to time in one or more
transactions. See "Plan of Distribution."
To the extent required, the number and the offering price of the shares
in respect of which this Prospectus is being delivered ("Offered Shares") are
set forth in an accompanying Prospectus Supplement ("Prospectus Supplement"). To
the extent required, the Prospectus Supplement also sets forth the names of any
agents, dealers or underwriters acting in connection with the sale of the
Offered Shares, the compensation of such agents, dealers and underwriters and
the other terms of offering of the Offered Shares. The Company estimates that
the expenses of the offering to be borne by it will be approximately $300,000.
The Company's Common Stock is traded on the American Stock Exchange under
the symbol "NOW."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
--------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _______ __, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirement of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549; and at the Commission's regional offices in Chicago (Citicorp Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661), and in New York
(7 World Trade Center, 13th Floor, New York, New York 10048). Copies of such
material may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Securities and Exchange Commission maintains a website that contains reports,
proxy and information statements and other information regarding registrants
that file electronically. The address of the website is http:\\www.sec.gov.
The Company has filed with the Commission a Registration Statement (as
amended, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement. The
Common Stock of the Company is traded on the American Stock Exchange. Reports,
proxy statements and other information concerning the Company may be inspected
at the American Stock Exchange, 86 Trinity Place, New York, New York 10006-1881.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1995, Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and
June 30, 1996 (as amended by Form 10-Q/A dated October 23, 1996), and its
Current Report on Form 8-K filed July 23, 1996, which are on file with the
Commission, are incorporated in this Prospectus by reference and made a part
hereof. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Common Stock to which this Prospectus
relates shall be deemed to be incorporated by reference into this Prospectus.
Any statements contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or replaced for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or replaces such statement. Any such statement so
modified or replaced shall not be deemed, except as so modified or replaced, to
constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of the documents incorporated by reference
herein, other than exhibits to such documents not specifically incorporated by
reference. Such requests should be directed to MAI Systems Corporation, 9600
Jeronimo Road, Irvine, California 92718, (714) 580-0700, Attention: Mr. Stanley
P. Witkow.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS, IF ANY, MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE,
IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and consolidated financial statements, including the notes
thereto, appearing elsewhere or incorporated by reference in this Prospectus.
All share information in this Prospectus has been restated to reflect a stock
split effected by means of a 25% stock dividend paid to holders of the Company's
common stock, $0.01 par value per share (the "Common Stock"), on August 24,
1995. References to MAI or the Company include its consolidated subsidiaries
unless the context otherwise requires. Share information herein pertaining to
the Selling Stockholders, including information regarding the additional shares
to be issued by the Company for sale by the Selling Stockholders, represent
estimates based on certain assumptions. See "The Company -- Acquisition of HIS."
THE COMPANY
MAI provides software applications, professional services and
networked client/server computer equipment for the hotel, resort and gaming
industries and to mid-sized manufacturers. In addition, the Company provides a
variety of products and services for its installed base of legacy customers.
MAI's Hotel CompuSystem II and Paragon products, the Lodging
Touch International ("LTI") products and the Gaming Systems International
("GSI") products for the hospitality and gaming industry and the Company's
MANBASE products for the manufacturing industry enable MAI's customers to
operate more efficiently their businesses. More hotel and resort rooms are
managed by MAI's hospitality products, installed at more than 3,500 hotels and
resorts worldwide, than any other front desk and back office software product in
the hospitality and resort industry. The GSI suite of products provide complete
slot accounting and player tracking functionality and are installed in
approximately 10,000 slot machines around the world. The MANBASE products are a
suite of robust, full-featured products for discrete and compound manufacturers.
In addition, MAI is a reseller of third-party networking and applications
products, including Microsoft Windows 95/NT, Novell Netware, the Solomon suite
of financial management products, Optika imaging systems and Visual HR for human
resource management. The Company also sells various UNIX-based operating systems
in conjunction with its computer equipment sales.
MAI's professional services include state-of-the-art software
applications support for all the applications it offers to its customers,
software training, custom programming, project management, information systems
and telecommunications consulting, network design, remote network management and
various outsourcing offerings.
The Company has improved and intends to improve its strategic
positioning through acquisitions and product licensing. The Company recently
acquired Hotel Information Systems and the LTI products to complete its
offerings to the hospitality industry. It reacquired the distribution rights to
the advanced MANBASE products.
MAI also sells, configures and installs for its customers a broad
array of network and other client/server equipment produced by industry leaders
such as IBM, Cisco Systems, Compaq Computer and Bay Networks.
In addition to offering total information system solutions for
the hotel, resort and gaming industries and mid-sized manufacturers, MAI offers
products and services to maintain, upgrade and otherwise extend the useful life
of the mid-range MAI-Basic Four computer systems that were manufactured by the
Company and its predecessors in the 1970's and 1980's.
On August 9, 1996, MAI acquired (the "HIS Acquisition")
substantially all the assets and certain of the liabilities of Hotel Information
Systems, Inc. ("HIS"). The assets acquired from HIS are used in the business of
software design, engineering and service relating to hotel information systems
and included the subsidiaries of HIS in Singapore, Hong Kong and Australia. In
connection with the HIS Acquisition, MAI issued 1,307,302 shares of its Common
Stock. The Selling Stockholders acquired their
<PAGE>
shares of Common Stock in the HIS Acquisition. See "The Company --
Acquisition of HIS" and "Principal and Selling Stockholders."
THE OFFERING
Common Stock offered by the Selling
Stockholders.................................801,700 shares(1)
Common Stock issued and issuable after
the offering.................................8,991,393 shares(2)
Use of Proceeds .............................The Company will not receive any
proceeds from the sale of shares of
Common Stock by the Selling
Stockholders
AMEX symbol .................................NOW
- ---------------
(1) The number of shares to be sold by the Selling Stockholders will be equal
to the number necessary in order for the Selling Stockholders to receive
net proceeds of $5,965,000, after deducting any discounts or commissions.
Such number is estimated at 801,700 shares, based on an assumed public
offering price of $8.00 per share and assumed discounts or commissions. See
"The Company -- Acquisition of HIS" and "Principal and Selling
Stockholders."
(2) Information as to issued and issuable shares is as of September 30, 1996.
The Company has issued and outstanding 8,176,579 shares of Common Stock and
has estimated that an additional 649,014 shares are issuable pursuant to
the Plan of Reorganization in settlement of creditor claims. Therefore the
Company has 8,825,593 shares of Common Stock issued and issuable before the
offering. This total does not include 957,712 shares issuable upon the
exercise of outstanding options under the Company's stock option plans and
649,750 shares issuable upon the exercise of outstanding warrants. As a
result of this offering, the Company expects that it will issue 165,800
additional shares for offering by the Selling Stockholders as a result of
adjustments required pursuant to the agreements for the HIS Acquisition.
See "The Company-- Acquisition of HIS". Such additional shares are not
included in share numbers before the offering but are included in share
numbers after giving effect to the offering.
<PAGE>
RISK FACTORS
An investment in the shares of Common Stock offered hereby
involves a high degree of risk. Prospective investors should carefully consider
the following risk factors, in addition to other information contained in or
incorporated by reference in this Prospectus.
COMPETITION
Competition is vigorous in all sectors of the market for
computer-based solutions and support and maintenance services which the Company
offers. The Company has numerous competitors in each of its business lines,
which vary widely in their size, capabilities, market segments and geographical
areas, many of which are larger and have financial resources far greater than
the Company. Within its markets, competition comes primarily from competing
software applications vendors, principally with regard to the Company's
hospitality, gaming and manufacturing products, and from local VARs and ISVs,
who usually resell hardware or networking products of larger original equipment
manufacturers. There is also competition, to a lesser extent, from independent
service organizations ("ISOs"), which provide service to end users of the
Company's software products, and third-party maintenance organizations, which
provide service to users of the Company's hardware products. Many of the
Company's services are also provided by in-house MIS departments. There can be
no assurance that the Company can effectively compete with any or all of its
competitors in any of its business lines. See "Business--Competition."
PRODUCTION AND PROCUREMENT
The networking products and services implemented, maintained and
supported by the Company utilize hardware and software products from multiple
technology vendors. Accordingly, the Company is and will remain dependent on the
demand for products from such vendors. In addition, delay or failure in the
delivery of products or components purchased from third parties could adversely
affect shipments by the Company and its ability to conclude sales. The Company
has purchased many products and components from single sources of supply.
Because the Company's current products are industry standard, management
believes that alternative sources of supply of similar products would be
available to the Company in the event of any interruption of delivery of a
single source supplier. However, there can be no assurance that any such
products will be available or be accepted by the Company's customers.
EMERGENCE FROM CHAPTER 11 BANKRUPTCY PROCEEDINGS
On November 18, 1993, the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") entered an order confirming the
Plan of Reorganization of the Company, Brooke Acquisition Corp. ("BAC") and CLS
Software, Inc. ("CSI") (collectively, the "Debtors"). The Company had been
operating under the protection of Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") since April 12, 1993. On January 27, 1994, the
Bankruptcy Court entered an order which among other things fixed January 27,
1994 as the effective date of the Plan of Reorganization (the "Effective Date").
The following summary of some of the features of the Plan of Reorganization is
qualified in its entirety by reference to the Plan of Reorganization, which is
an exhibit to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, and by the more detailed description of the Plan of
Reorganization that is contained in the 1995 Form 10-K.
The Plan of Reorganization provides for, among other things, (i)
the satisfaction of substantially all of the Debtors' unsecured (non-priority)
indebtedness through the issuance of Common Stock, and (ii) the cancellation of
existing equity interests in the Debtors. The Plan of Reorganization also
provides for the substantive consolidation and merger of the Debtors and the
corresponding extinguishment of intercompany liabilities and intercompany
contracts among the Debtors.
Under the Plan of Reorganization, (i) holders of approximately
$1,300,000 aggregate amount of administrative claims and approximately $100,000
aggregate amount of priority claims received cash distributions and (ii) holders
of approximately $3,019,000 aggregate amount of tax claims receive deferred cash
payments over periods up to six years. At June 30, 1996, the aggregate amount of
tax claims had been reduced to $711,697 and the Company continues to dispute
certain tax claims.
<PAGE>
The Company commenced distribution of Common Stock to holders of
unsecured claims on April 14, 1994. The settlement of certain claims is subject
to approval by the Bankruptcy Court. The Common Stock is being issued pursuant
to Section 1145 of the Bankruptcy Code, which contains an exemption from
registration under the Securities Act. Through October 15, 1996, the Company had
distributed 6,705,233 shares of Common Stock to its former creditors. The Plan
of Reorganization provided holders of unsecured claims the right to elect a
limited cash recovery, and through June 30, 1996, $74,570 in cash had been
distributed pursuant to such provision.
Under the Plan of Reorganization, there is no recovery for
holders of the Company's $0.01 par value Common Stock, and all classes of
Preferred Stock outstanding prior to the Effective Date. See "Chapter 11
Bankruptcy Proceedings."
LIMITED HISTORY OF PROFITABILITY
The Company has had positive operating income for nine of the
last ten quarterly periods since it emerged from bankruptcy in 1994. Prior to
the bankruptcy, the Company incurred significant operating losses. There can be
no assurance that the Company will be able to achieve or maintain profitability
or avoid losses on a quarterly or annual basis in the future.
FLUCTUATIONS IN OPERATING RESULTS
A variety of factors may cause period-to-period fluctuations in
the Company's operating results, including the timing of significant orders, the
timing of product enhancements and new product introductions by the Company, its
technology vendors and its competitors, the pricing of the Company's products
and services, competitive conditions and general economic conditions. Typically,
orders received in one quarter are delivered and installed by the following
quarter. However, many of the Company's systems sales involve lengthy sales
cycles and installations. Consequently, it is not possible to predict with any
reliability the periods within which a sale may close or revenue will be
recognized. As a result, the operating results of the Company may be materially
skewed if a single transaction is completed earlier or later than expected. The
Company has experienced fluctuations in its operating results and expects to
continue to experience such fluctuations. Additionally, as the Company's network
systems business has increased, it is increasingly finding that it must order
and pay for equipment utilized in a network installation in advance of the date
it is able to invoice or collect from its customer for the equipment. See
"Business--Order, Shipment and Backlog." Fluctuations in operating results may
also result in volatility in the market price of the Common Stock.
VOLATILITY IN CERTAIN MARKETS
Certain of the markets in which the Company competes are cyclical
and are subject to volatility. The Company believes that the decline in its
gaming solutions business during the current year is attributable to the decline
in the number of new gaming facilities outside of established gaming
jurisdictions, such as Nevada and Atlantic City, which the Company believes is
directly attributable to increased opposition to gaming in certain jurisdictions
and the negative impact the failure of certain gaming operations in Louisiana
has had on the entire industry. The Company cannot predict the duration of this
negative environment for new gaming installations. Conversely, the Company
believes that the growth of its hospitality information systems business is
attributable in part to the current health of the hospitality industry, compared
to the condition of that industry in the early 1990's. The Company cannot
predict the duration of the current favorable climate in the hospitality
industry.
LIQUIDITY; VOLATILITY OF STOCK PRICE
Since its emergence from bankruptcy, trading volume of the Common
Stock has been small, and the market for the Company's Common Stock has been
less liquid than that of many other publicly traded companies. In August 1995,
however, the Company's Common Stock became listed on the AMEX under the symbol
"NOW." During the nine months ended September 30, 1996, the average daily
trading volume has been
<PAGE>
approximately 28,000 shares. There can be no assurance that a stockholder who
desires to sell shares of Common Stock can sell all of the shares that the
stockholder desires to sell, either at all or at the desired times or prices. In
addition, sales of shares of Common Stock after this offering could reduce the
market price of the Common Stock to a greater extent than shares of other
companies with higher trading volumes. Like the stock of other technology
companies, the market price of the Common Stock has been and may continue to be
volatile. Factors such as quarterly fluctuations in the Company's results of
operations, trading volume, the announcement of technological innovations or new
products by the Company or its competitors, general conditions in the computer
hardware and software industries, economic conditions generally, the Company's
ability successfully to increase its market share with its existing products
while expanding its product base into other markets, the strength of the
Company's distribution channels, variances between actual results of operations
and the results expected by securities analysts and the factors mentioned under
"--Fluctuations in Operating Results," among other factors, may have a
significant impact on the market price of the Common Stock.
RISKS OF CONTRACT SERVICES BUSINESS
The Company is subject to the risks associated with a contract
services business, including dependence on reputation with existing customers,
volatility of workload and dependence on ability to retain qualified technical
personnel. Also, a substantial portion of the Company's contract services
revenue may be derived from the performance of services under fixed-price
contracts. There can be no assurance that the Company can consistently perform
in a profitable manner under these contracts, especially in the field of
software development, where cost overruns are common-place. See
"Business--Products and Services."
RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS AND MARKETS
The Company expects that the market for hospitality, gaming and
manufacturing information management systems and network hardware and software
products will continue to be subject to frequent and rapid changes in technology
and customer preferences. Customers may delay purchases in anticipation of
technological changes. In addition, the Company's ability to develop and market
information management and network systems and other new products is dependent
upon its ability to attract and retain qualified employees. Any failure by the
Company to anticipate or respond adequately to the changes in technology and
customer preferences, or to develop and introduce new products in a timely
fashion, could materially adversely affect the Company's business and operating
results. See "Business--Research and Development."
DEPENDENCE ON PROPRIETARY TECHNOLOGY
The Company's success depends in part upon its proprietary
application software and its licensing rights to the principal application
software products marketed by it. The Company relies on a combination of
contractual rights, trademarks, copyrights and other property rights to
establish or protect its proprietary rights in its products. There can be no
assurance that the steps taken by the Company in this regard will be adequate to
deter misappropriation of its proprietary rights or independent third party
development of functionally equivalent technology. Although the Company does not
believe that it is materially infringing on the intellectual property rights of
others, there can be no assurance that such a claim will not be asserted against
the Company in the future or that any attempt to protect its technology will not
be challenged. See "Business--Trademarks, Copyrights and Licenses."
DEPENDENCE ON KEY PERSONNEL
Competition for qualified personnel in the software industry is
intense and there can be no assurance that the Company will be able to attract
and retain a sufficient number of qualified employees. As the business of the
Company grows, it may become increasingly difficult for it to hire, train and
assimilate the new employees needed. The Company's success depends to a
significant degree upon the continued contributions of its key management,
marketing, product development and operational
<PAGE>
personnel, including Richard S. Ressler and George G. Bayz. The Company does not
maintain key man insurance for any of such officers.
The services of Richard S. Ressler, Chairman of the Board, Chief
Executive Officer and Director of the Company, are provided on a non-exclusive
basis pursuant to an agreement which expires in August 1997. There can be no
assurance that Mr. Ressler will continue with the Company after such date or
that the Company will be able to find a replacement in the event that either the
Company or Mr. Ressler determines not to continue their relationship. See
"Principal and Selling Stockholders."
RISK OF FOREIGN OPERATIONS
The financial performance of the Company is affected to some
extent by the fluctuation in value of the US dollar in relation to the local
currencies of the countries in which the Company does business. In addition, the
Company's foreign operations are subject to the usual risks that may affect such
operations, including import and export restrictions, possible expropriation or
other governmental actions, taxes and political changes. Most of the Company's
foreign operations are located in Singapore, Hong Kong and Canada.
SHARES AVAILABLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock after this offering
could have a material adverse effect on the Common Stock. Upon completion of
this offering, the Company will have outstanding and issuable 8,991,393 shares
of Common Stock. All of the outstanding shares (other than 671,400 shares that
will be subject to the Escrow Agreement (as defined herein) following this
offering) are, and all of the issuable shares will be, freely tradeable;
provided that shares held by affiliates of the Company may be subject to
limitations on disposition pursuant to Rule 144 under the Securities Act of
1933.
<PAGE>
THE COMPANY
GENERAL
MAI provides software applications, professional services and
networked client/server computer equipment for the hotel, resort and gaming
industries and to mid-sized manufacturers. In addition, the Company provides a
variety of products and services to its installed base of legacy customers.
MAI's Hotel CompuSystem II and Paragon products, the Lodging
Touch International ("LTI") products and the Gaming Systems International
("GSI") products for the hospitality and gaming industry and the Company's
MANBASE products for the manufacturing industry enable MAI's customers to
operate more efficiently their businesses. More hotel and resort rooms are
managed by MAI's hospitality products, installed at more than 3,500 hotels and
resorts worldwide, than any other front desk and back office software product in
the hospitality and resort industry. The GSI suite of products provide complete
slot accounting and player tracking functionality and are installed in
approximately 10,000 slot machines around the world. The MANBASE products are a
suite of robust, full-featured products for discrete and compound manufacturers.
In addition, MAI is a reseller of third-party networking and applications
products, including Microsoft Windows 95/NT, Novell Netware, the Solomon suite
of financial management products, Optika imaging systems and Visual HR for human
resource management. The Company also sells various UNIX-based operating systems
in conjunction with its computer equipment sales.
MAI's professional services include state-of-the-art software
applications support for all the applications it offers to its customers,
software training, custom programming, project management, information systems
and telecommunications consulting, network design, remote network management,
and various outsourcing offerings.
The Company has improved and intends to improve its strategic
positioning through acquisitions and product licensing. The Company recently
acquired Hotel Information Systems and the LTI products to complete its
offerings to the hospitality industry. It reacquired the distribution rights to
the advanced MANBASE products.
MAI also sells, configures and installs for its customers a broad
array of network and other client/server equipment produced by industry leaders
such as IBM, Cisco Systems, Compaq Computer and Bay Networks.
In addition to offering total information systems solutions for
the hotel, resort and gaming industries and mid-sized manufacturers, MAI offers
products and services to maintain, upgrade and otherwise extend the useful life
of the mid-range MAI-Basic Four computer systems that were manufactured by the
Company and its predecessors in the 1970's and 1980's.
The Company operated under the protection of Chapter 11 of the
Bankruptcy Code from April 12, 1993 to January 27, 1994. See "Risk
Factors--Emergence from Chapter 11 Bankruptcy Proceedings" and "Chapter 11
Bankruptcy Proceedings."
MAI Systems Corporation was incorporated under the laws of the
State of Delaware on September 6, 1984. The Company commenced operations on
January 29, 1985. The Company's name was changed from MAI Basic Four, Inc. to
MAI Systems Corporation on November 6, 1990. The Company's principal executive
offices are presently located at 9600 Jeronimo Road, Irvine, California 92718,
(714) 580-0700.
<PAGE>
ACQUISITION OF HIS
On August 9, 1996, MAI acquired substantially all the assets and
assumed certain of the liabilities of HIS. The assets acquired from HIS are used
in the business of software design, engineering and service relating to hotel
information systems and included the subsidiaries of HIS in Singapore, Hong Kong
and Australia.
As consideration for the HIS Acquisition, MAI issued 1,184,383
shares of Common Stock to HIS and assumed net liabilities of approximately $6.3
million. At closing of the HIS Acquisition, MAI paid approximately $1.1 million
of such liabilities owed to Computer Systems Advisors (Private) Limited
(together with its affiliates, "CSA") through the issuance of 122,919 shares of
Common Stock to CSA and paid approximately $1.7 million of such liabilities in
cash. The pro forma financial information herein is presented as if such
transactions were part of the HIS Acquisition. See "Pro Forma Financial
Information."
Of the 1,307,302 shares (the "Consideration Shares") issued in
the HIS Acquisition, 497,298 shares are Ordinary Consideration Shares and
810,004 shares are Put/Call Consideration Shares. The Consideration Shares had a
value of approximately $12.1 million based on the Per Share Price. The "Per
Share Price" initially was $9.25 and increases periodically following the
closing of the HIS Acquisition based on the yield of US government securities.
The actual number of Consideration Shares to be issued is subject to change
based on certain purchase price adjustments.
The Consideration Shares were delivered to an escrow agent
pursuant to an Escrow Agreement (the "Escrow Agreement"), among MAI, HIS and
City National Bank, which is acting as the escrow agent, to be held in escrow
pending (i) in the case of all Consideration Shares, resolution of purchase
price adjustments following the closing of the HIS Acquisition, (ii) in the case
of Ordinary Consideration Shares, resolution of disputes prior to the first
anniversary of the closing of the HIS Acquisition, or (iii) in the case of
Put/Call Consideration Shares, sale of such shares pursuant to a registration
statement or any put or call of such shares as described below. Share
information herein does not reflect any possible adjustments on account of
purchase price adjustments or adjustments based on resolution of disputes, with
respect to the HIS Acquisition.
All of the Consideration Shares are entitled to certain demand
and piggyback registration rights contained in the Put/Call and Registration
Rights Agreement (the "Put/Call and Registration Rights Agreement"), between MAI
and HIS. Any of the 810,004 Put/Call Consideration Shares may be called at the
Per Share Price upon exercise of the registration rights applicable to such
shares pursuant to the Put/Call and Registration Rights Agreement. MAI may not
exercise such call right directly but may transfer such right to a third party
(the "Caller"). If such call right is not exercised by a Caller and the Put/Call
Consideration Shares are sold pursuant to a registration statement during the
period ending August 8, 2001, the amount of Put/Call Consideration Shares may
increase or decrease depending on whether the price at which such shares are
sold is below or above the Per Share Price. After August 8, 2001, the Put/Call
Consideration Shares not previously disposed of may be called by MAI or may be
put to MAI at the Per Share Price. The 801,700 shares of Common Stock being sold
by the Selling Stockholders are all Put/Call Consideration Shares and are being
sold pursuant to the terms of the Escrow Agreement and the Put/Call Registration
Rights Agreement. See "Principal and Selling Stockholders."
For example, assuming the Common Stock is sold at the assumed
public offering price of $8.00 per share on or before November 30, 1996, the
Company will be required to increase the number (635,900 shares) of the Put/Call
Consideration Shares owned by the Selling Stockholders that are included in this
offering, by issuing an additional number (165,800 shares) of its Common Stock
to the Selling Stockholders, for sale by them, in order that the Selling
Stockholders receive aggregate net proceeds of $5,965,000 as a result of this
offering. The actual adjustment will be based on the public offering price
determined at the time this offering is consummated. Such 165,800 additional
shares are included in the information herein as to shares to be outstanding
after the offering, but are not included in the number of issued and issuable
shares prior to the offering on a pro forma basis to reflect the HIS
Acquisition. See "Prospectus Summary -- The Offering."
<PAGE>
Following August 9, 1997 (the first anniversary of the closing of
the HIS Acquisition), the Selling Stockholders are expected to be able to sell
an additional 174,100 Put/Call Consideration Shares pursuant to their
registration rights. Any such sale will also be subject to adjustment of the
number of shares to be sold to reflect any difference, positive or negative,
between the Per Share Price and the net per share price realized by the Selling
Stockholders in such offering. The Company would therefore either issue
additional Put/Call Consideration Shares or be entitled to the return of certain
of such shares, depending on the nature and extent of the adjustment. For
purposes of the information herein, the Company has not adjusted the number of
issued and issuable shares to take account of any such future change in the
number of Put/Call Consideration Shares. Any such future registration may also
include some or all of the 497,298 Ordinary Consideration Shares.
In connection with the HIS Acquisition, the Company has prepared
unaudited pro forma financial information that includes adjustments to the
historical financial statements of the Company to give effect to the HIS
Acquisition. The pro forma balance sheet at June 30, 1996 gives effect to the
HIS Acquisition as if it had been consummated on such date. The pro forma
statements of operations for the six months ended June 30, 1996 and the year
ended December 31, 1995 give effect to the HIS Acquisition as if it had been
consummated on January 1, 1995. Such pro forma financial information, and the
historical financial statements of HIS, are included in the Company's Form
10-Q/A dated October 23, 1996 that is incorporated by reference herein.
Such pro forma financial information is not necessarily
indicative of the financial position or results of operations had the HIS
Acquisition been consummated on the assumed dates. The unaudited pro forma
financial information should be read in conjunction with the notes to pro forma
financial information and the financial statements of the Company and HIS
incorporated by reference in this Prospectus.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of shares
of Common Stock by the Selling Stockholders.
<PAGE>
BUSINESS
THE COMPANY
MAI provides software applications, professional services and
networked client/server computer equipment for the hotel, resort and gaming
industries and to mid-sized manufacturers. In addition, the Company provides a
variety of products and services to its installed base of legacy customers.
MAI's Hotel CompuSystem II and Paragon products, the Lodging
Touch International ("LTI") products and the Gaming Systems International
("GSI") products for the hospitality and gaming industry and the Company's
MANBASE products for the manufacturing industry enable MAI's customers to
operate more efficiently their businesses. More hotel and resort rooms are
managed by MAI's hospitality products, installed at more than 3,500 hotels and
resorts worldwide, than any other front desk and back office software product in
the hospitality and resort industry. The GSI suite of products provide complete
slot accounting and player tracking functionality and are installed in
approximately 10,000 slot machines around the world. The MANBASE products are a
suite of robust, full-featured products for discrete and compound manufacturers.
In addition, MAI is a reseller of third-party networking and applications
products, including Microsoft Windows 95/NT, Novell Netware, the Solomon suite
of financial management products, Optika imaging systems and Visual HR for human
resource management. The Company also sells various UNIX-based operating systems
in conjunction with its computer equipment sales.
MAI's professional services include state of the art software
applications support for all the applications it offers to its customers,
software training, custom programming, project management, information systems
and telecommunications consulting, network design, remote network management and
various outsourcing offerings.
The Company has improved and intends to improve its strategic
positioning through acquisitions and product licensing. The Company recently
acquired Hotel Information Systems and the LTI products to complete its
offerings to the hospitality industry. It reacquired the distribution rights to
the advanced MANBASE products.
MAI also sells, configures and installs for its customers a broad
array of network and other client/server equipment produced by industry leaders
such as IBM, Cisco Systems, Compaq Computer and Bay Networks.
In addition to offering total information system solutions for
the hotel, resort and gaming industries and mid-sized manufacturers, MAI offers
products and services to maintain, upgrade and otherwise extend the useful life
of the mid-range MAI-Basic Four computer systems that were manufactured by the
Company and its predecessors in the 1970's and 1980's.
MARKET OVERVIEW
Until the mid-1980's most mid-sized companies (which comprised
the majority of MAI's customers) generally utilized host-based computer systems
that were based on proprietary hardware and software. The systems usually
consisted of a central processing unit located somewhere in a facility and
terminals and printers located throughout the enterprise. Data was input at the
terminals and was extracted through the use of programs that were created by the
central MIS department. Reports were printed at printers located throughout the
facility or distributed by the MIS department. The advantage that these systems
offered was that all of the components, the central processing unit, the
operating system, the application software, the printers and other peripheral
devices were closely integrated and worked together seamlessly. Among the
disadvantages of these systems were that they could only run applications that
were specially written to run on them, the actual users of the enterprise's
information
<PAGE>
were limited to reports that were available in the existing programs and new
technologies were often not compatible with the system were not available.
Additionally, the host-based computing model required a staff of dedicated
information system professionals to run it.
By the mid-1980's, the personal computer had become powerful
enough, and enough application software had been written, to enable it to
perform most of the tasks that were being performed by the older host-based
systems. The advantage of this new technology was immediately apparent: users of
the data could create their own reports to analyze data in new and creative ways
and were no longer limited to the forms of data inquiry that had been created by
the centralized information services department. A wide range of applications
and peripheral products from a variety of manufacturers was available to fill
virtually all of the needs of an end user. The equipment was inexpensive and
easy to maintain. The need for large information management staffs was
curtailed. With the further development of high speed computer networks,
client/server computing emerged. Businesses found that they could centrally
maintain key data which could be accessed by end users throughout the
enterprise. The end users could then manipulate the data and create their own
reports without dependence on the centralized information management department.
By the end of the decade, to a very large extent corporate America had begun the
migration from host-based, proprietary computing to open-system, client/server
computing.
Since the array of products used in an open-system environment
often do not operate in the seamless fashion of a proprietary system, many
smaller businesses are faced with the difficult situation of maintaining and
integrating these diverse products. In many cases, mid-size companies now
out-source their information management needs including the design,
implementation and maintenance of their networks, maintenance of their hardware
and support of their software. Companies like MAI have emerged to provide total
information solutions to these customers. These businesses design, integrate and
maintain systems comprised of industry-standard components from a wide variety
of developers and manufacturers. They provide on-site equipment maintenance,
telephonic software support and remote management of networks.
STRATEGY
MAI's strategy is to focus on delivering total information
solutions to customers in the hospitality and gaming industries and to mid-size
manufacturers, and to enable its host-based systems customers to maximize the
value of their legacy systems and establish a migration path to open systems
client/server computing.
The Company offers industry-leading applications products,
including Hotel CompuSystem II, Paragon and Lodging Touch International front
desk, back office and central reservation system products for the hospitality
industry, the Gaming Systems International products for the gaming industry, and
the MANBASE line of products for compound and discrete manufacturers. The
Company's strategy is to develop total information systems around these
applications to enable customers to maximize the strategic value of their
information resources. This will be done through the design, implementation and
support of information systems which allow data to be input, output and
exchanged throughout the network. The Company matches its specific industry
expertise with its experience in designing, installing, integrating, maintaining
and supporting enterprise-wide information systems.
For its legacy system customers, the Company offers products and
services which extend the useful life of the legacy system while linking it with
the state-of-the-art computing technology and enabling the system to utilize the
latest telecommunications technology. The Company assists these customers to
prepare for the time when it is appropriate for them to transition from the
proprietary system/host-based computer to the open system/client/server model.
Studies indicate that sixty percent of companies similar to the
Company's legacy customers intend to establish WANs and LANs before the turn of
the century. As its customers transition to network computing, the Company is
well positioned to help them make the transition. It is a reseller of
<PAGE>
popular and reliable computing technology, including products manufactured by
Cisco Systems, Compaq Computer, Inc., Hewlett Packard, IBM Corporation and Sun
Microsystems. It is a Microsoft Solutions provider and has achieved
certification to provide support for Windows NT, the advanced operating system
from Microsoft Corporation. The Company believes that it can demonstrate to its
current customer base and to new customers that it is best suited to move them
forward to networked computing because of its familiarity with their information
system needs, the Company's expertise in complex WANs and LANs, its wide array
of products and services and its unique ability to provide reliable service and
support around the clock across the nation.
Because mid-sized-companies generally do not maintain large
information system staffs, these companies may rely on third parties like the
Company to help them design and maintain their information systems. MAI is well
positioned to provide the services that the customers will require and that it
has the knowledge base that will make it the preferred provider of these
products and services.
By successfully executing on these strategies, MAI believes that
it can become its customer's partner maximizing the utilization of its critical
resource: its information.
GENERAL
MAI provides software applications, professional services and
networked client/server computer equipment for the hotel, resort and gaming
industries and to mid-sized manufacturers. In addition, the Company provides a
variety of products and services for its installed base of legacy customers. The
Company markets its proprietary software products and is the reseller of a
variety of third-party application products. It also designs, installs,
integrates, maintains and supports complex WANs and LANs which feature open
system components from well-known technology companies, such as IBM, Cisco
Systems, Compaq Computer and Bay Networks. MAI also provides on-site equipment
throughout North America and around-the-clock telephonic support and remote
network management.
The Company's software products operate on IBM RISC and Intel
Corporation-based microcomputer systems. The Company's OpenBASIC application
environment runs under various UNIX-based operating systems and enables
licensees of the Company's proprietary, BusinessBASIC-based applications to run
on open systems equipment. These products provide cost effective multi-user
solutions for customers whose needs range from entry-level systems to mid-size,
multiprocessor systems that support up to 500 users.
In 1995, the Company's revenue was derived from the following
sources:
PERCENTAGE OF
TOTAL REVENUE
------------------------------------
Network products and services .......... 29%
Non-network products and services ...... 69
Third-party support services ........... 2
------------------------------------
Total ............................ 100%
====================================
PRODUCTS AND SERVICES
Software, Networks and Professional Services
MAI provides total information systems to its customers featuring
software applications for the hospitality, gaming and manufacturing industries.
These products, Hotel CompuSystem II, Paragon and the Lodging Touch
International ("LTI") products for the hospitality industry, the GSI products
for gaming and the MANBASE products for mid-size manufacturers, are installed in
conjunction with complex WANs and LANs which feature hardware and software from
leading manufacturers and
<PAGE>
developers, such as IBM, Cisco Systems, Compaq Computer, Bay Networks, Microsoft
Corporation and Novell, Inc. Additionally, the Company resells other leading
third-party software applications products, such as the Solomon software for
financial management.
The Company's approach is to analyze a customer's information
system requirements, propose a solution, then design, integrate, install,
maintain and support the system. The Company is committed to enabling its
customers to utilize data across their entire enterprise, so that information
that was once limited to one area of a business is now available to other areas
where it can be utilized for new purposes. Once a system is on-line, the Company
typically continues its relationship with the customer by providing
around-the-clock on-site maintenance and telephonic support.
The Company's hospitality software offerings are Hotel
CompuSystem II, Paragon and the LTI product line. Hotel CompuSystem II, which
operates under UNIX-based systems, was designed for hotels and resorts from 300
to 1200 rooms. It is distinguished from competing systems by its complete range
of features and functionality and the number of third-party products with which
it interfaces. Paragon, the Company's product for larger properties, runs on IBM
System/36 and AS/400 computer systems, and is a feature-rich product designed to
provide all of the features and functions required for front desk, back office
and other property management functions for hotels and resorts. Recently, the
Company acquired exclusive distribution rights to the LTI property management
system products. The Lodging Touch products are available on a wide variety of
database platforms such as SQL Server, Informix, Oracle, DB/2 and are engineered
to run under multiple platforms such as Unix, AS/400, Windows 95 and Windows NT.
The LTI products are the Company's first fully graphical user interface
hospitality products. The Company believes it has a competitive advantage
because it has product offerings which are suitable for all sizes of hotels and
resorts, from small and budget properties, such as Motel 6, to major luxury
resort hotels, such as Disneyland Paris, and installation and support facilities
around the world.
The GSI product is an on-line slot accounting and player tracking
product. The offering is comprised of a proprietary circuit board which is
installed inside electronic slot machines, and database software which gathers
and maintains the data collected by the circuit boards. The Company utilizes
Novell-based LANs to link the slot machines with the central processing unit.
The GSI system monitors the activity in the individual gaming machines in real
time, providing information on the activity of each machine, the amount of money
in the machine, whether or not the machine is operating properly and alerting
the casino management if a machine has been tampered with. The software modules
include stand-alone player tracking; cage/pit management; table games
accounting; slot maintenance; employee time and attendance; and numerous other
functions.
The Company's MANBASE system is an enterprise-wide solution
exclusively for formula or recipe-based manufacturers. MANBASE offers a fully
integrated, modular ERP system for complete support of process manufacturing,
planning and tracking. Designed for open systems, client/server architecture,
the system is based on a 4GL and the Sybase RDBMS, and runs on multiple UNIX and
Windows NT servers and Microsoft Windows clients.
The Company also offers a wide array of communication and
networking products that permit interactive local and wide area networking for
the Company's products. These products include Novell NetWare and LAN WorkPlace
for DOS, which facilitate inter-networking of personal computers and the
Company's and other vendors' UNIX-based systems; Sun Microsystems' NFS, which
allows transparent file sharing between UNIX systems; MAI MAGNET and OpenBASIC
NetServer, which allow the Company's older proprietary systems to communicate
with new UNIX-based systems.
Finally, the Company offers a complete array of professional
services for the design and support of WANs and LANs. This includes the design
of the network, selection of the appropriate components, configuration of the
various components at MAI's configuration laboratories, installation of the
system and telephonic support and remote network management.
<PAGE>
Legacy System Products and Services
The Company continues to provide products and services to its
installed base of customers. These products and services are designed to enable
customers to benefit from their investment in the Company's host-based
information systems. The Company's OpenBASIC application environment permits
customers using application software written in the Business BASIC programming
language to continue to use such application software on selected hardware
platforms designed for the UNIX, MS-DOS and Novell environments. Optional
OpenBASIC modules permit developers to enhance their Business BASIC applications
by integrating them with popular UNIX and MS-DOS/Microsoft Windows software.
The Company offers nationwide on-site repair and warranty service
and around-the-clock telephonic support to its legacy customers. The Company
also provides a range of customer education, training and consulting services
for its application software packages and hardware and horizontal software
products. These services are offered to the Company's customers as part of the
Company's strategy of supplying the total information solution to its customers.
The Company markets a family of upgradeable, industry-standard
platforms based upon IBM RISC and Intel Corporation microcomputer technology and
featuring the Company's OpenBASIC application environment running under various
UNIX-based operating systems. These products provide cost-effective, multi-user
solutions for customers whose needs range from entry-level systems to mid-size,
multiprocessor systems that support up to 500 users.
In addition to providing on-site service for products which it
sells, the Company has also entered into agreements with a number of third
parties to provide field warranty service, and remanufacturing and depot
services. The Company has an agreement with Remanco Corporation, a leading
provider of point-of-sale systems for the fine dining industry, to provide
maintenance, remanufacturing, depot and support throughout the United States.
The Company also provides these services with several manufacturers or
distributors of Intel-based microcomputers.
MARKETING AND SALES
In the United States, the Company's systems are marketed by a
direct sales and marketing organization, which included, as of October 15, 1996,
79 sales, support, administrative and marketing personnel located in nine
offices and the corporate headquarters, and indirectly by independent VARs. In
addition, the Company markets its systems internationally through its
subsidiaries, which operate in Hong Kong, Singapore, Australia, Canada, Puerto
Rico, Venezuela and the Netherlands and through seven distributors that are
exclusive in their jurisdiction. The Company's international subsidiaries
employed, as of October 15, 1996, 37 sales, sales support, administrative and
marketing personnel who are engaged in the marketing of MAI products from six
sales locations in Canada and seven other sales locations abroad. Additionally,
the Company also sells its products through indirect channels outside the United
States. These indirect channels include independent VARs, distributors, ISVs and
local sales agents.
During 1995, the Company's aggregate revenue was derived from
geographic areas as follows:
PERCENTAGE OF
TRADE REVENUE
------------------------------------
United States ................ 85.1%
Canada ....................... 11.3
Other areas .................. 3.6
------------------------------------
Total ......... 100.0%
====================================
<PAGE>
The financial performance of the Company is affected by the
fluctuation in value of the U.S. dollar in relation to the local currencies of
the countries in which the Company does business. However, certain international
contracts are priced in U.S. dollars. In addition, the Company's foreign
operations are subject to the usual risks that may affect such operations,
including import and export restrictions, possible expropriation or other
governmental actions, taxes and political changes.
MAINTENANCE AND SUPPORT SERVICE
Remote network management, software support and on-site equipment
maintenance are key components of the Company's business strategy. The Company
operates around-the-clock redundant remote network management and software
support centers. In the event that power or communications are shut down at any
facility, through advanced telecommunication systems, calls are automatically
rerouted to remote support facilities. Trained personnel respond to customer
requests for application product support and provide remote network management
to anticipate and correct potential problems on customers' LANs and WANs.
The Company also provides on-site equipment maintenance,
preventive maintenance and reconditioning services for substantially all of the
systems marketed by the Company. These services are available throughout the
United States, Canada, Puerto Rico and Venezuela. As of October 15, 1996, the
Company employed approximately 212 trained service technicians at 21 service
locations in the United States, Canada, Puerto Rico and Venezuela.
The Company's support and maintenance services are generally
provided pursuant to individual contracts with customers, although time and
material services are provided in some areas. Such agreements are of varying
duration, provide annual cancellation rights and frequently require advance
payment of fees to the Company. Substantially all of the revenue earned by
support and maintenance operations is invoiced to customers in advance.
PRODUCTION AND PROCUREMENT
In response to market demand for standardized hardware and
software products, all of the Company's current systems offerings utilize an
open systems architecture, which means that they will operate on a wide variety
of third-party hardware equipment. At present, the Company has relationships
with a number of suppliers of such systems, including Cisco Systems, Compaq
Computer, Hewlett Packard, IBM Corporation and Sun Microsystems and distributors
such as MicroAge and Ingram Micro. Management believes that these relationships
have enabled the Company to reduce product costs, permit earlier availability of
new technology and offer customers products with superior performance at
competitive prices. The Company no longer manufactures proprietary hardware
products but does refurbish for resale previously owned MAI equipment.
Delay or failure in the delivery of products or components
purchased from third parties could adversely affect shipments by the Company and
its ability to conclude sales. The Company has purchased many products and
components from single sources of supply. Because the Company's current products
are industry standard, management believes that alternative sources of supply of
similar products would be available to the Company in the event of any
interruption of delivery of a single source supplier.
ORDER, SHIPMENT AND BACKLOG
The Company generally records and enters into backlog a purchase
order for equipment and software when it receives a customer's written order
requesting delivery within six months, once systems configuration and contract
provisions are verified. In the United States and in some areas outside the
United States, a deposit is also required from a customer before the order is
recorded and entered into backlog. Orders that are canceled by the customer and
orders that are not shipped within one year are removed from backlog. Orders
that are removed from backlog for non-shipment are restored if they are
reinstated by the customer.
<PAGE>
Set forth below is certain information concerning orders,
shipments and backlog for 1995:
1995
(dollars in thousands)
Orders received (net of cancellations).................. $22,848
Shipments (net of equipment returns).................... 24,898
Backlog (at period end)................................. 3,002
The Company's backlog is not necessarily indicative of future
revenues.
RESEARCH AND DEVELOPMENT
The Company's research and development activities are focused on
the development of products for hospitality, gaming and manufacturing
information management systems and on extending and enhancing OpenBASIC. The
Company's use of OpenBASIC application environments and its system integration
capability permits it to have substantial independence from individual hardware
manufacturers and minimized the need for hardware research and development.
As of October 15, 1996, the Company employed 41 engineers,
programmers and other technical personnel in research and development
activities. In the six months ended June 30, 1996, the Company expensed $989,000
for research and development. The Company's research and development
expenditures in 1995 related primarily to support and enhancement of existing
software products. In the years ended December 31, 1995, 1994 and 1993, the
Company expensed $2,667,000, $2,698,000 and $2,901,000, respectively, for
research and development. These amounts reflect engineering labor, material and
engineering overhead.
CUSTOMERS
The Company's customers are generally small and medium-sized
businesses, with fifty to 500 employees. During 1995 and the first six months of
1996, no single customer accounted for 10% or more of the Company's revenues.
COMPETITION
Competition is vigorous in all sectors of the worldwide market
for computer-based applications systems such as those which the Company offers.
The Company has numerous competitors varying widely in their size, capabilities,
market segment and geographical area, many of which are larger and have
financial resources far greater than the Company.
Within its targeted application markets, the Company has
positioned itself to sell complete solutions to the hospitality and gaming
industries and to mid-sized manufacturing businesses. Regarding the hospitality,
gaming and manufacturing application software and system markets, the Company
competes with several applications software providers, local VARs and ISVs who
usually resell hardware, software and networking products of larger original
equipment manufacturers, and internal information management departments with
significant application development resources. In marketing its products and
services to mid-sized manufacturers, the Company competes with many software
applications vendors, none of which individually commands significant market
share, and local VARs and ISVs, who usually resell hardware or networking
products of larger original equipment manufacturers. The VARs and ISVs with
which the Company often competes are typically smaller organizations that are
usually dependent on one or two specialized software application products
targeted for specific industry market segments. Although certain of these
suppliers have national (or international) capability, most are regional and
unable to provide the full range of technical support and maintenance services
offered by the Company.
<PAGE>
The Company also competes with independent service organizations
("ISOs"), which provide service to end users of the Company's software products,
and third-party maintenance organizations ("TPMs"), which provide service to
users of the Company's hardware products. In addition to competing with these
companies on the basis of price and quality of service and support, the Company
has also sought to enforce its copyrights when these organizations infringe upon
its rights. For example, the Company's application software licenses prohibit
end users or their agents from porting its software to different hardware
platforms, an act which is sometimes performed by ISOs. The Company has
prevailed in litigation against TPMs who have utilized its proprietary
diagnostic software to provide maintenance services to customers of the
Company's hardware products. See "--Legal Proceedings." Many of the Company's
services are also provided by in-house MIS departments.
TRADEMARKS, COPYRIGHTS AND LICENSES
The Company is the owner of certain trademarks, copyrights and
other property rights associated with its businesses, including rights
associated with its proprietary application software. The Company owns or has
licensing rights, generally with terms of three years (except for the Lodging
Touch products, where the license is perpetual), to the principal application
software products marketed by the Company. Such licensing rights generally are
renewable. Although there is some risk that the independent vendors who own such
products may elect not to renew their licensing agreements with the Company and
enter into exclusive arrangements with, or elect to install their software on
systems sold by competitors of the Company, such vendors generally tend to
continue to support the Company's marketing efforts so long as the Company's
systems provide a good opportunity for them to market their products.
The Company is party to license agreements with IBM relating to a
variety of patents, with Novell, Inc. relating to UNIX and with a number of
other suppliers of software products. These licenses are terminable at the
Company's option and certain of the licenses require the Company to make royalty
payments.
OpenBASIC and certain other intellectual property formerly owned
by the Company is currently owned by Triple P Management BV ("Triple P"), a
corporation organized under the laws of the Netherlands, which acquired the
rights from Application Systems, Inc. ("ASI"), a Delaware corporation controlled
by the Company's former bank lenders (the "Banks"), which holds the stock of
certain of the Company's former European subsidiaries, which stock was acquired
by the Banks in connection with the foreclosure described under "Chapter 11
Bankruptcy Proceedings." MAI retained an exclusive license to use the
intellectual property in the western hemisphere. The license is perpetual and
royalty free, but subject to termination under certain circumstances.
LEGAL PROCEEDINGS
The Company has filed and will continue to file objections to
claims asserted in its Chapter 11 bankruptcy proceedings. The majority of these
claims would, if upheld, give rise to allowed unsecured claims entitling the
respective claimants to distributions of new Common Stock. A number of filed
objections in respect of secured claims, administrative claims, priority claims,
tax claims, convenience claims and cure claims were still outstanding at October
15, 1996. To the extent the Company's objections to such claims are not
sustained, the Company will be obligated to pay such claims in a lump sum in the
case of convenience claims and administrative claims and, in the case of secured
claims, priority claims, tax claims and cure claims, on a deferred basis over
six to seven years, depending on the type of claim, at an interest rate of 6% in
accordance with the Plan of Reorganization. The Company does not believe the
outcome of these objections to be material.
The Company is also involved in various other legal proceedings
which are incident to its business. Management believes the ultimate outcome of
these matters will not have a material adverse effect on the consolidated
financial position or results of operations of the Company. See "--Competition."
<PAGE>
EMPLOYEES
As of October 15, 1996, the Company had 771 employees, of which
545 were employed in the United States, 8 in Australia, 64 in Canada, 8 in the
Netherlands, 11 in Puerto Rico, 57 in Venezuela and 78 in Asia (Hong Kong,
People's Republic of China, Indonesia, Malaysia and Singapore). In March 1995, a
petition for election of a collective bargaining representative was filed with
regard to field service technicians at the Company's Chicago, Illinois office,
but the petition was withdrawn prior to the election. The Company has not
experienced any work stoppages and considers its relationship with its employees
to be good.
CHAPTER 11 BANKRUPTCY PROCEEDINGS
Prior to its Chapter 11 Bankruptcy proceedings, the Company had
followed certain business strategies that eventually led to its defaulting on
its and its Canadian subsidiary's U.S. and Canadian Credit Agreements (the
"Credit Agreements"). Thereafter, shortly before the Company filed for
bankruptcy protection, the bank lenders (the "Banks"), parties to the Credit
Agreements, foreclosed on all of the outstanding capital stock of certain of the
Company's former European subsidiaries, on certain intellectual property of the
Company and on amounts due to the Company from the European subsidiaries in
satisfaction of all amounts due under the Credit Agreements which, at such time,
amounted to approximately $84,500,000.
On November 18, 1993, the United States Bankruptcy Court for the
District of Delaware entered an order confirming the Plan of Reorganization. The
Company had been operating under Chapter 11 of the Bankruptcy Code since April
12, 1993. The order was not appealed and became final and nonappealable on
November 29, 1993. On January 27, 1994, the Bankruptcy Court entered an order
which fixed January 27, 1994 as the effective date of the Plan of
Reorganization. The 1995 Form 10-K which is incorporated by reference herein
contains a summary of the material features of the Plan of Reorganization. Such
summary is qualified in its entirety by reference to the Plan of Reorganization
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
The Plan of Reorganization provided for, among other things, (i)
the satisfaction of substantially all of the Debtors' unsecured (non-priority)
indebtedness through the issuance of the Company's Common Stock and (ii) the
cancellation of existing equity interests in the Debtors. The Plan of
Reorganization also provided for the substantive consolidation and merger of the
Debtors and the corresponding extinguishment of intercompany liabilities and
contracts among the Debtors. At June 30, 1996, the aggregate amount of tax
claims had been reduced to $711,697 and the Company continues to dispute certain
tax claims.
The Company commenced distribution of Common Stock to holders of
unsecured claims on April 14, 1994. The Common Stock is issued pursuant to
section 1145 of the Bankruptcy Code, which contains an exemption from
registration under the Securities Act of 1933, as amended. Through October 15,
1996, the Company had distributed 6,705,233 shares of Common Stock to its former
creditors, and the Company has estimated that an additional 649,014 shares are
issuable in settlement of other creditor claims. The Plan of Reorganization
provided holders of unsecured claims the right to elect a limited cash recovery,
and through June 30, 1996, $74,570 in cash had been distributed pursuant to such
provision.
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth (i) certain information regarding
beneficial ownership of the Company's Common Stock as of September 30, 1996 by
(1) each person who is known by the Company to own beneficially more than 5% of
the outstanding shares of Common Stock, which includes CSA and Montreux Equity
Partners III, L.P. (the "Selling Stockholders"), (2) each director and executive
officer of the Company, (3) all directors and executive officers of the Company
as a group and (ii) the information set forth in (i) as adjusted to reflect the
sale of the shares offered hereby (based on an assumed public offering price of
$8.00 per share). Unless otherwise indicated below, to the knowledge of the
Company, all persons listed below have sole voting and investment power with
respect to the shares of Common Stock, except to the extent authority is shared
by spouses under applicable law.
BENEFICIAL
BENEFICIAL OWNERSHIP OWNERSHIP AFTER
PRIOR TO OFFERING(1) OFFERING(1)
-------------------- -------------------
NUMBER
NUMBER OF OF SHARES NUMBER
NAME SHARES PERCENT TO BE SOLD OF SHARES PERCENT
- ------------------------------ ------- ------- ---------- --------- --------
CSA(2)(3).................... 523,325 6.4% 652,215 6,006 *%
Montreux Equity
Partners III, L.P.(3)........ 118,569 1.5 149,485 -- --
Bennett S. LeBow(4).......... 581,233 7.1 -- 581,233 7.1
LeBow Family Partnership 1993,
Ltd.(4)(5)................... 581, 233 7.1 -- 581,233 7.1
Richard S. Ressler(6)........ 1,364,791 16.7 -- 1,364,791 16.7
CPI Securities LP group(7)... 555,000 6.8 -- 555,000 6.8
George G. Bayz(8)(9)......... 34,250 * -- 34,250 *
W. Brian Kretzmer(8)(9)...... 20,833 * -- 20,833 *
Stanley P. Witkow(8)(9)...... 22,833 * -- 22,833 *
Alan A. Gleicher............. 12,500 * -- 12,500 *
Morton O. Schapiro........... 12,500 * -- 12,500 *
All directors and executive
officers as
a group (6 persons).......... 1,467,707 17.9 -- 1,467,707 17.9
- ---------------
* Less than 1%.
(1) The number of shares beneficially owned by each beneficial owner listed
above is based upon the numbers reported by such owner in documents
publicly filed with the Securities and Exchange Commission (the "SEC"),
publicly available information or information available to the Company. The
percentage of each class is calculated based on the total number of shares
of each class actually outstanding at September 30, 1996. Such number (i.e.
8,176,579 shares) differs from the total of shares issued and issuable as
of such date. The foregoing table includes shares with respect to which
such beneficial owner has the right to acquire beneficial ownership as
specified in Rule 13d- 3(d)(1) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(2) The shares are held by Computer Systems Advisors (Private) Limited and CSA
Pte Ltd. CSA's address is 221 Henderson Road, 08-01, Henderson Building,
Singapore 0315. See "The Company--Acquisition of HIS."
<PAGE>
(3) The shares being sold by the Selling Stockholders are being sold pursuant
to the Put/Call and Registration Rights Agreement and the Escrow Agreement
entered into in connection with the HIS Acquisition. The number of shares
actually sold will be that number necessary in order for the Selling
Stockholders to receive aggregate net proceeds of $5,965,000, after
deducting any discounts or commissions. Assuming the Common Stock is sold
at the assumed public offering price of $8.00 per share on or before
November 30, 1996, it is estimated that an aggregate of 801,700 shares
would be sold by the Selling Stockholders. This compares to the 635,900
shares beneficially owned by the Selling Stockholders that are included in
this offering. The difference, i.e. 165,800 shares, are additional shares
that the Company will issue to the Selling Stockholders, for sale by them,
as a result of adjustments required pursuant to the agreements for the HIS
Acquisition. See "The Company -- Acquisition of HIS". These additional
shares are not included in the column entitled Beneficial Ownership Prior
to Offering, but they are included in the column entitled Number of Shares
to be Sold.
(4) Mr. LeBow may be deemed to have beneficial ownership of the shares held
by the LeBow Family Partnership 1993, Ltd. Mr. LeBow's address is c/o
Brooke Group, Ltd., 100 S.E. Second Street, 32nd Floor, Miami, Florida
33131.
(5) LeBow Family Partnership 1993, Ltd. is a Florida limited partnership, of
which Bennett S. LeBow is the general partner with a 10% interest and a
trust, for the benefit of Mr. LeBow and certain family members, holds the
remaining interest. The address of the LeBow Family Partnership 1993, Ltd.
is c/o Brooke Group, Ltd., 100 S.E. Second Street, 32nd Floor, Miami,
Florida 33131.
(6) Includes a warrant to purchase 625,000 shares of Common Stock, which is
currently exercisable. Mr. Ressler's address is c/o MAI Systems
Corporation, 9600 Jeronimo Road, Irvine, California 92718.
(7) CPI Securities LP, Canpartners Incorporated, Value Realization Fund LP,
Value Realization Fund (Caymen) Ltd., GRS Partners II, Mitchell S. Julis,
Joshua S. Friedman, R. Christian B. Evensen, K. Robert Turner, Patrick
Dooley, Scott Imbach, Monica Young, Douglas Claman and Michael McCarthy, as
a group, hold 555,000 shares. Their address is 9665 Wilshire Boulevard,
Suite 200, Beverly Hills, California 90212.
(8) Includes shares subject to options that are currently exercisable. For Mr.
Bayz (31,250 shares), Mr. Kretzmer (20,833 shares), Mr. Witkow (20,833
shares), Mr. Gleicher (12,500 shares) and Mr. Schapiro (12,500 shares).
(9) Excludes shares subject to options granted during 1995 and 1996 and that
become exercisable incrementally with full vesting occurring three years
following the date of grant. For Mr. Bayz (172,500 shares), Mr. Kretzmer
(77,500 shares) and Mr. Witkow (77,500 shares).
Mr. LeBow was a director of the Company from inception until October 1995,
and was Chairman of the Board of Directors from November 1990 until May 1995. He
was Chief Executive Officer from November 1990 to April 1993.
The services of Richard S. Ressler, Chairman of the Board, Chief Executive
Officer and Director of the Company, are provided pursuant to an agreement
entered into in August 1994 with Orchard Capital Corp. ("Orchard"), which is his
employer. Pursuant to that agreement, Orchard agreed to provide Mr. Ressler's
services on a non-exclusive basis for two years, which expired in August 1996.
In October 1996, the agreement was retroactively renewed for one additional
year. Orchard is paid $24,000 per month during the term of the agreement
($20,000 per month during the original term) and was awarded a bonus of
$1,187,500 in January 1996. Additionally, Orchard was granted a warrant to
purchase up to 625,000 shares of the Company's Common Stock at $1.90 per share,
which is currently exercisable; Mr. Ressler currently holds such warrant
directly. The warrant expires August 14, 1999.
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of
25,000,000 shares of Common Stock, par value $0.01 per share (the "Common
Stock"). At September 30, 1996, there were 8,825,593 shares of Common Stock
issued and issuable. This total does not include 957,712 shares issuable upon
the exercise of outstanding options under the Company's stock option plans and
649,750 shares issuable upon the exercise of outstanding warrants. Most of such
warrants are held by Mr. Richard S. Ressler. See "Principal and Selling
Stockholders."
Shares of Common Stock have been and are being issued as
described above under "Chapter 11 Bankruptcy Proceedings" and will also be
issued to optionees under the Company's 1993 Stock Option Plan and the 1995
Non-Employee Directors Stock Option Plan. At September 30, 1996, the number of
shares of Common Stock reserved for issuance upon exercise of options (both
granted and available for grant) equals 1,061,421. The information in the
preceding paragraph reflects options granted. The Company's stock option plans
will permit additional options to be granted in the future.
All outstanding shares of Common Stock are, and the shares to be
issued as contemplated herein will be, validly authorized, fully paid and
nonassessable. All holders of Common Stock have full voting rights and are
entitled to one vote for each share held of record on all matters submitted to a
vote of the stockholders. Votes may not be cumulated in the election of
directors. Stockholders have no preemptive or subscription rights. The Common
Stock is neither redeemable nor convertible, and there are no sinking funds
provisions. Holders of Common Stock are entitled to dividends when and as
declared by the Board of Directors from funds legally available therefore and
are entitled in the event of liquidation, to share ratably in all assets
remaining after payment of liabilities. The rights of holders of Common Stock
will be subject to any preferential rights of any Preferred Stock which may be
issued in the future.
The Company's Amended Certificate of Incorporation does not
presently authorize any Preferred Stock.
CERTAIN CHARTER AND BY-LAWS PROVISIONS
Certain provisions of the Company's restated certificate of
incorporation and by-laws could have anti-takeover effects and may delay, defer
or prevent a takeover attempt that a stockholder might consider in its best
interest. These provisions are intended to enhance the likelihood of continuity
and stability in the composition of the policies formulated by the board of
directors. In addition, these provisions are also intended to ensure that the
board of directors will have sufficient time to act in what the board of
directors believes to be the best interests of the Company and its stockholders.
The Company's restated certificate of incorporation and by-laws
require that special meetings of the stockholders of the Company may be called
only by the board of directors, the Chairman of the Board, or the President, and
shall be called by the Secretary upon the request in writing of a stockholder or
stockholders holding of record at least 51% of the voting power of the issued
and outstanding shares of stock.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
The Company is subject to Section 203 of the Delaware General
Corporation Law which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in a business combination (as defined therein) with an
"interested stockholder" (defined generally as any person who beneficially owns
15% or more of the outstanding voting stock of the Company or any person
affiliated with such person) for a period of three years following the date that
such stockholder became an interested stockholder, unless (i) prior to such date
the board of directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested stockholder; (ii) upon consummation of the transaction that resulted
in the stockholder becoming an interested
<PAGE>
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation at the time the transaction commenced (excluding for purposes
of determining the number of shares outstanding those shares owned (x) by
directors who are also officers of the corporation and (y) by employee stock
plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer); or (iii) on or subsequent to such date the business
combination is approved by the board of directors of the corporation and
authorized at a meeting of stockholders by the affirmative vote of at least 66
2/3% of the outstanding voting stock of the corporation not owned by the
interested stockholder.
LIMITATION ON DIRECTORS' AND OFFICERS' LIABILITY
The Company's certificate of incorporation limits the liability
of directors to the fullest extent permitted by the Delaware General Corporation
Law. In addition, the Company's by-laws provide that the Company shall indemnify
directors and officers of the Company as permitted by such law.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is Wells
Fargo Bank, N.A.
PLAN OF DISTRIBUTION
The sale or distribution of the Offered Shares may be effected directly to
purchasers by the Selling Stockholders as principals or through one or more
underwriters, brokers, dealers or agents from time to time in one or more
transactions (which may involve crosses or block transactions) (i) on any stock
exchange or in the over-the-counter market, (ii) in transactions otherwise than
on any stock exchange or in the over-the-counter market or (iii) through the
writing of options (whether such options are listed on an options exchange or
otherwise) on, or settlement of short sales of, the Offered Shares. Any of such
transactions may be effected at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at varying prices determined at
the time of sale or at negotiated or fixed prices, in each case as determined by
the Selling Stockholder or by agreement between the Selling Stockholder and
underwriters, brokers, dealers or agents, or purchasers. If the Selling
Stockholders effect such transactions by selling Offered Shares to or through
underwriters, brokers, dealers or agents, such underwriters, brokers, dealers or
agents may receive compensation in the form of discounts, concessions or
commissions from the selling Stockholders or commissions from purchasers of
Offered Shares for whom they may act as agent (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be in
excess of those customary in the types of transactions involved). The Selling
Stockholders and any brokers, dealers or agents that participate in the
distribution of the Offered Shares may be deemed to be underwriters, and any
profit on the sale of Offered Shares by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
Under the Securities laws of certain states, the Offered Shares
may be sold in such states only through registered or licensed brokers or
dealers. In addition, in certain states the Offered Shares may not be sold
unless an exemption from registration or qualification is available and is
complied with.
The Company will pay all of the expenses incident to the
registration, offering and sale of the Offered Shares to the public hereunder
other than commissions, fees and discounts of underwriters, brokers, dealers and
agents. The Company has agreed to indemnify the Selling Stockholders and their
agents and controlling persons and any underwriters against certain liabilities,
including liabilities under the Securities Act. The Company estimates that the
expenses of the offering to be borne by it will be approximately $300,000.
VALIDITY OF COMMON STOCK
<PAGE>
The validity of the shares of Common Stock offered hereby is
being passed upon for the Company by Sullivan & Cromwell, Los Angeles,
California. Alison S. Ressler, the wife of Richard S. Ressler, is a partner of
Sullivan & Cromwell. See "Principal and Selling Stockholders."
EXPERTS
The consolidated financial statements and schedule of MAI Systems
Corporation at December 31, 1995 and 1994, and for each of the years in the
three year period ended December 31, 1995, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent auditors, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Hotel Information
Systems, Inc. at December 31, 1995 and 1994, and for each of the three years in
the period ended December 31, 1995, incorporated by reference in this Prospectus
and the Registration Statement have been audited by Ernst & Young, LLP,
independent auditors, as set forth in their reports thereon incorporated by
reference herein and in the Registration Statement, and are included in reliance
upon such reports given upon the authority of such firm as experts in accounting
and auditing.
<PAGE>
- ---------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED IN
CONNECTION WITH THIS OFFERING TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OTHER PERSON. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT
IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------------
TABLE OF CONTENTS
Page
Available Information..........................................................3
Incorporation of Certain Documents
by Reference................................................................3
Prospectus Summary.............................................................3
Risk Factors ..................................................................5
The Company....................................................................9
Use of Proceeds...............................................................11
Business......................................................................12
Chapter 11 Bankruptcy Proceedings.............................................20
Principal and Selling Stockholders............................................22
Description of Capital Stock..................................................24
Plan of Distribution..........................................................25
Validity of Common Stock......................................................26
Experts.......................................................................26
MAI SYSTEMS
CORPORATION
Common Stock
-------------
PROSPECTUS
-------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the securities
being registered, other than underwriting discounts and commissions, are
estimated as follows:
Securities and Exchange Commission Registration Fee... $ 1,808
Blue Sky Qualification Fees and Expenses* ............ 5,000
Transfer Agent and Registrar Fees* ................... 5,000
Legal Fees and Expenses* ............................. 100,000
Accounting Fees and Expenses* ........................ 50,000
Printing Expenses* ................................... 100,000
Miscellaneous* ....................................... 38,192
--------
Total ................................................ $300,000
========
* Estimated
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law grants to
the Company the power to indemnify the officers and directors of the Company,
under certain circumstances and subject to certain conditions and limitations as
stated therein, against all expenses and liabilities incurred by or imposed upon
them as a result of suits brought against them as such officers and directors if
they act in good faith and in a manner they reasonably believe to be in or not
opposed to the best interests of the Company and, with respect to any criminal
action or proceeding, have no reasonable cause to believe their conduct was
unlawful. The Company's Certificate of Incorporation provides for
indemnification of officers and directors to the fullest extent permitted by
law.
Item 16. Exhibits.
2.1 First Amended Joint Chapter 11 Plan of Reorganization of MAI
Systems Corporation, Brooke Acquisition Corp. and CLS Software,
Inc., as confirmed by the United States Bankruptcy Court for the
District of Delaware on November 13, 1993 (incorporated by
reference to Exhibit 2.1 to the Registrant's Current Report on
Form 8-K dated January 15, 1994).
2.2 Consent Order Modifying Confirmed Plan of Reorganization and
Fixing Effective Date, as entered by the United States Bankruptcy
Court for the District of Delaware on January 27, 1994
(incorporated by reference to Exhibit 2.2 to the Registrant's
Current Report on Form 8-K dated February 9, 1994).
3.1 Amended and Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3.2 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994 as amended (the
"1994 Form 10-K")).
3.2 Bylaws.
5.1 Opinion of Sullivan & Cromwell as to legality of Common Stock.*
10.1 Asset Purchase Agreement, dated as of June 30, 1996, between MAI
Systems Corporation and Hotel Information Systems, Inc.
(incorporated by reference to Exhibit 1 to the Registrant's Form
8-K filed on July 23, 1996 (the "July 8-K")).
10.2 Amendment No. 1 to Asset Purchase Agreement dated July 10, 1996
(incorporated by reference to Exhibit 2 to the July 8-K).
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Ernst & Young, LLP.*
<PAGE>
23.3 Consent of Sullivan & Cromwell (included in the opinion filed as
Exhibit 5.1 to this Registration Statement).
24.1 Power of Attorney (included on page II-4).
- ---------------------------------
* To be filed by amendment.
Item 17. Undertakings
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 (the "Securities
Act"), each filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described in
Item 15 above, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim of indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in a successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
<PAGE>
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Irvine, California, on the 25th day of October, 1996.
MAI SYSTEMS CORPORATION
(Registrant)
By:/s/ Richard S. Ressler
Richard S. Ressler
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Stanley P. Witkow and Richard S. Ressler,
his true and lawful attorneys-in-fact and agents, with full power or
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments, including post-effective
amendments, to this Registration Statement and any related R le 462(b)
registration statement or amendment thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he might or could do in
person hereby ratifying and confirming all that said attorneys-in-fact and
agents, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated and on October 25, 1996.
/s/ Richard S. Ressler Chairman of the Board, Chief Executive Officer and
Richard S. Ressler Director
/s/ W. Brian Kretzmer Vice President, Chief Financial Officer, and
William Brian Kretzmer Treasurer (Chief Accounting Officer)
/s/ George G. Bayz Director
George G. Bayz
/s/ Alan A. Gleicher Director
Alan A. Gleicher
/s/ Morton O. Schapiro Director
Morton O. Schapiro
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
2.1 First Amended Joint Chapter 11 Plan of Reorganization of MAI Systems
Corporation, Brooke Acquisition Corp. and CLS Software, Inc., as confirmed
by the United States Bankruptcy Court for the District of Delaware on
November 13, 1993 (incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K dated January 15, 1994).
2.2 Consent Order Modifying Confirmed Plan of Reorganization and Fixing
Effective Date, as entered by the United States Bankruptcy Court for the
District of Delaware on January 27, 1994 (incorporated by reference to
Exhibit 2.2 to the Registrant's Current Report on Form 8-K dated February
9, 1994).
3.1 Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3.2 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1994 as amended (the "1994 Form 10-K")).
3.2 Bylaws.
5.1 Opinion of Sullivan & Cromwell as to legality of Common Stock.*
10.1 Asset Purchase Agreement, dated as of June 30, 1996, between MAI Systems
Corporation and Hotel Information Systems, Inc. (incorporated by reference
to Exhibit 1 to the Registrant's Form 8-K filed on July 23, 1996 (the "July
8-K")).
10.2 Amendment No. 1 to Asset Purchase Agreement dated July 10, 1996
(incorporated by reference to Exhibit 2 to the July 8-K).
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Ernst & Young, LLP.*
23.3 Consent of Sullivan & Cromwell (included in the opinion filed as Exhibit
5.1 to this Registration Statement).
24.1 Power of Attorney (included on page II-4).
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* To be filed by amendment.
<PAGE>
BY-LAWS OF
MAI SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The Registered office of the Corporation
within the State of Delaware shall be in the City of Wilmington, County of New
Castle, and the name of the registered agent in charge thereof is the
Corporation Trust Company.
SECTION 2. OTHER OFFICES. The Corporation may also have an office or
offices other than said registered office at such place or places, either within
or without the State of Delaware, as the Board of Directors shall from time to
time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders for the
election of directors or for any other purpose shall be held at any such place,
either within or without the State of Delaware, as shall be designated from time
to time by the Board of Directors and stated in the notice of meeting or in a
duly executed waiver thereof.
SECTION 2. ANNUAL MEETING. The annual meeting of stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of meeting or in a duly executed
waiver thereof. At such annual meeting, the stockholders shall elect, by a
plurality vote, a Board of Directors and transact such other business as may
properly be brought before the meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of stockholders, unless
otherwise prescribed by statute or in the Certificate of Incorporation, may be
called at any time by the Board of Directors or the Chairman of the Board, if
one shall have been elected, or the President and shall be called by the
Secretary upon the request in writing of a stockholder or stockholders holding
of record at least 51 percent of the voting power of the issued and outstanding
shares of stock of the Corporation entitled to vote at such meeting. Such
request shall state the purpose or purposes of the special meeting and shall be
filed with the office of the Secretary.
SECTION 4. NOTICE OF MEETING. Except as otherwise expressly required by
statute, written notice of each annual and special meeting of stockholders
stating the date, place and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be given
to each stockholder of record entitled to vote thereat not less than ten nor
more than sixty days before the date of the meeting. Business transacted at any
special meeting of stockholders shall be limited to the purpose stated in the
notice. Notice shall be given personally or by mail and, if by mail, shall be
sent in a postage prepaid envelope, addressed to the stockholder at
<PAGE>
his or her address as it appears on the records of the Corporation. Notice by
mail shall be deemed given at the time when the same shall be deposited in the
United States mail, postage prepaid. Notice of any meeting shall not be required
to be given to any person who attends such meeting, except when such person
attends the meeting in person or by proxy for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened, or who, either before or after the
meeting, shall submit a signed written waiver of notice, in person or by proxy.
Neither the business to be transacted at, nor the purpose of, an annual or
special meeting of stockholders need be specified in any written waiver of
notice.
SECTION 5. LIST OF STOCKHOLDERS. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days before
each meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, showing the address of and
the number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city, town or village where the
meeting is to be held, which place shall be specified in the notice of meeting,
or, if not specified in such notice, at the place where the meeting is to be
held. The list shall be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list of stockholders
referred to above or the books of the Corporation, or to vote in person or by
proxy at any meeting of stockholders.
SECTION 6. QUORUM, ADJOURNMENTS. The holders of a majority of the
voting power of the issued and outstanding stock of the Corporation entitled to
vote thereat, present in person or represented by proxy, shall constitute a
quorum for the transaction of business at all meetings of stockholders, except
as otherwise provided by statute or by the Certificate of Incorporation. If,
however, such quorum shall not be present or represented by proxy at any meeting
of stockholders, the chairman of the meeting or the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have the power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented by proxy. At such
adjournment meeting at which a quorum shall be present or represented by proxy,
any business may be transacted which might have been transacted at the meeting
as originally called. If the adjournment is for more than thirty days, or, if
after adjournment a new record date is set, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
The stockholders present or represented at any duly called and held meeting at
which a quorum is present or represented may continue to do business until
adjournment, notwithstanding the withdrawal of such number as to leave less than
a quorum.
SECTION 7. ORGANIZATION. At each meeting of stockholders, the Chairman
of the Board, if one shall have been elected, or, in the Chairman's absence or
if one shall not have been elected, the President shall act as chairman of the
meeting, or, in the absence of the President, by any other person selected to
preside by vote of the holders of a majority of the outstanding stock present in
person or by proxy and entitled to vote at the meeting. The Secretary or, in the
Secretary's absence or inability to act, the person whom the chairman of the
meeting shall appoint secretary of the meeting shall act as secretary of the
meeting and keep the minutes thereof.
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SECTION 8. ORDER OF BUSINESS. The order of business at all meetings of
the stockholders shall be determined by the chairman of the meeting.
SECTION 9. VOTING. Except as otherwise provided by statute or the
Certificate of Incorporation, each stockholder of the Corporation shall be
entitled at each meeting of stockholders to one vote for each share of capital
stock of the Corporation standing in his or her name on the record of
stockholders of the Corporation:
(a) on the date fixed pursuant to the provisions of Section 7 of
Article V of these By-Laws as the record date for the determination of the
stockholders who shall be entitled to notice of and to vote at such meeting; or
(b) if no such record date shall have been so fixed, then at the close
of business on the day next preceding the day on which notice thereof shall be
given, or, if notice is waived, at the close of business on the date next
preceding the day on which the meeting is held.
Each stockholder entitled to vote at any meeting of stockholders may authorize
another person or persons to act for him or her by a proxy signed by such
stockholder or such stockholder's attorney-in-fact, but no proxy shall be voted
after three years from its date, unless the proxy provides for a longer period.
Any such proxy shall be delivered to the secretary of the meeting at or prior to
the time designated in the order of business for so delivering such proxies.
When a quorum is present at any meeting, the vote of the holders of a majority
of the voting power of the issued and outstanding stock of the Corporation
entitled to vote thereon, present in person or represented by proxy, shall
decide any question brought before such meeting, unless the question is one upon
which by express provision of statute or of the Certificate of Incorporation or
of these By-Laws, a different vote is required, in which case such express
provision shall govern and control the decision of such question. Unless
required by statute, or determined by the chairman of the meeting to be
advisable, the vote on any question need not be by ballot. On a vote by ballot,
each ballot shall be signed by the stockholder voting, or by the stockholder's
proxy, if there be such proxy, and shall state the number of shares voted.
SECTION 10. INSPECTORS. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail to
appear or act, the chairman of the meeting shall, or if inspectors shall not
have been appointed, the chairman of the meeting may, appoint one or more
inspectors. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his or her ability. The inspectors shall determine the number of shares of
capital stock of the Corporation outstanding and the voting power of each, the
number of shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
results, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting, the
inspectors shall make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact found by them. No
director or candidate for the office of director shall act as an inspector of an
election of directors. Inspectors need not be stockholders.
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SECTION 11. ACTION BY CONSENT. Whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection with
any corporate action, by any provision of statute or of the Certificate of
Incorporation or of these By-Laws, the meeting, prior notice and vote of
stockholders may be dispensed with, and the action taken without such meeting,
prior notice and vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares of stock of the Corporation entitled to
vote thereon were present and voted. Evidence of such consent in writing shall
be delivered to the Secretary of the Corporation for filing with the minutes of
proceedings of stockholders of the Corporation. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors. The Board
of Directors may exercise all such authority and powers of the Corporation and
do all such lawful acts and things as are not by statute or the Certificate of
Incorporation directed or required to be exercised or done by the stockholders.
SECTION 2. NUMBER, QUALIFICATIONS, ELECTION AND TERM OF OFFICE. The
number of directors constituting the Board of Directors shall be no less than
three (3) nor more than nine (9). As of the adoption of these By-Laws, the
number of directors constituting the initial Board of Directors shall be three
(3). Thereafter, the number of directors may be fixed, from time to time, by the
affirmative vote of a majority of the entire Board of Directors or by action of
the stockholders of the Corporation. Any decrease in the number of directors
shall be effective at the time of the next succeeding annual meeting of
stockholders unless there shall be vacancies in the Board of Directors, in which
case such decrease may become effective at any time prior to the next succeeding
annual meeting to the extent of the number of such vacancies. Directors need not
be stockholders. Except as otherwise provided by statute or these By-Laws, the
directors (other than members of the initial Board of Directors) shall be
elected at the annual meeting of stockholders. Each director shall hold office
until his or her successor shall have been elected and qualified, or until his
or her death, or until he or she shall have resigned, or have been removed, as
hereinafter provided in these By-Laws.
SECTION 3. PLACE OF MEETINGS. Meetings of the Board of Directors shall
be held at such place or places, within or without the State of Delaware, as the
Board of Directors may from time to time determine or as shall be specified in
the notice of any such meeting.
SECTION 4. ANNUAL MEETING. The Board of Directors shall meet for the
purpose of organization, the election of officers and the transaction of other
business, as soon as practicable after each annual meeting of stockholders, on
the same day and at the same place where such annual meeting shall be held.
Notice of such meeting need not be given. In the event such annual meeting is
not so held, the annual meeting of the Board of Directors may be held at such
other time or place (within or without the State of Delaware) as shall be
specified in a notice thereof given as hereinafter provided in Section 7 of this
Article III.
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SECTION 5. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such time and place as the Board of Directors may fix. If any
day fixed for a regular meeting shall be a legal holiday at the place where the
meeting is to be held, then the meeting which would otherwise be held on that
day shall be held at the same hour on the next succeeding business day. Notice
of regular meetings of the Board of Directors need not be given (any practice or
custom to the contrary notwithstanding) except as otherwise required by statute
or these By-Laws.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board, if one shall have been elected, or
by two or more directors of the Corporation or by the President. Each special
meeting of the Board shall be held at such time and place, either within or
outside of the State of Delaware, as shall be designated in the notice of such
meeting.
SECTION 7. NOTICE OF MEETINGS. Notice of each special meeting of the
Board of Directors (and of each regular meeting for which notice shall be
required) shall be given by the Secretary as hereinafter provided in this
Section 7, in which notice shall be stated the time and place of the meeting.
Except as otherwise required by these By-Laws, such notice need not state the
purposes of such meeting. Notice of each such meeting shall be mailed, postage
prepaid to each director, addressed to him or her at his or her residence, usual
place of business or to such other address specified by a director, by first
class mail, at least two days before the day on which such meeting is to be
held, or shall be sent addressed to him or her at such place by telegraph,
cable, telex, telecopier or other similar means, or be delivered to him or her
personally or be given to him or her by telephone or other similar means, at
least twenty-four hours before the time at which such meeting is to be held
unless, in case of exigency, the Chairman, or in the Chairman's absence the
Secretary, shall prescribe a shorter notice to each director at his or her
residence, business address or such other address specified by a director.
Except as otherwise required by statute or these Bylaws, no notice or waiver of
notice of a special meeting of the Board need state the purpose or purposes of
such meeting and any business may be transacted thereat, any practice or custom
to the contrary notwithstanding. Notice of any such meeting need not be given to
any director who shall, either before or after the meeting, submit a signed
waiver of notice or who shall attend such meeting, except when he or she shall
attend for the express purpose of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting is not lawfully called or
convened.
SECTION 8. QUORUM AND MANNER OF ACTING. A majority of the entire Board
of Directors shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, and, except as otherwise expressly required
by statute or the Certificate of Incorporation or these By-Laws, the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. The directors present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
In the absence of a quorum at any meeting of the Board of Directors, a majority
of the directors present thereat may adjourn such meeting to another time and
place. Notice of the time and place of any such adjourned meeting shall be given
to all of the directors unless such time and place were announced at the meeting
at which the adjournment was taken, in which case such notice shall only be
given to the directors who were not present thereat. At any adjourned meeting at
which a quorum is present, any business may be transacted which might have been
transacted at the meeting as originally called. The directors shall act only as
a Board and the individual directors shall have no power as such.
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SECTION 9. ORGANIZATION. At each meeting of the Board of Directors, the
Chairman of the Board, if one shall have been elected, or, in the absence of the
Chairman of the Board or if one shall not have been elected, the President (or,
in the President's absence, another director chosen by a majority of the
directors present) shall act as chairman of the meeting and preside thereat. The
Secretary or, in the Secretary's absence, any person appointed by the chairman
shall act as secretary of the meeting and keep the minutes thereof.
SECTION 10. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice of his or her resignation to the Corporation
and any member of any committee may resign at any time by giving notice either
as aforesaid or to the committee of which he or she is a member or to the
chairman thereof. Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, immediately upon its receipt. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 11. VACANCIES. Any vacancy in the Board of Directors, whether
arising from death, resignation, removal (with or without cause), an increase in
the number of directors or any other cause, may be filled by the vote of a
majority of the directors then in office, though less than a quorum, or by the
sole remaining director or by the stockholders at the next annual meeting
thereof or at a special meeting thereof. Each director so elected shall hold
office until his or her successor shall have been elected and qualified.
SECTION 12. REMOVAL OF DIRECTORS. Any director may be removed, either
with or without cause, at any time, by the holders of a majority of the voting
power of the issued and outstanding capital stock of the Corporation entitled to
vote at an election of directors.
SECTION 13. COMPENSATION. The Board of Directors shall have authority
to fix the compensation, including fees and reimbursement of expenses, of
directors for services to the Corporation in any capacity.
SECTION 14. COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate one or more
committees, including an executive committee, each committee to consist of one
or more of the directors of the Corporation. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. In
addition, in the case of absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or she or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absent or disqualified member.
Any such committee, to the extent provided in said resolution or
resolutions, shall have and may exercise the powers and authority of the Board
in the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the By-Laws of the Corporation. Unless expressly
authorized by resolution
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<PAGE>
or resolutions adopted by a majority of the whole Board, no such committee shall
have the power or authority to declare a dividend or to authorize the issuance
of stock. Unless otherwise determined by the Board of Directors of the
Corporation, a majority of the members of a committee shall constitute a quorum,
and the act of a majority of the members of a committee present at any meeting
of such committee at which a quorum is present shall be the act of the
committee. Each committee shall keep regular minutes of its meetings and report
the same to the Board of Directors.
SECTION 15. ACTION BY CONSENT. Unless restricted by the Certificate of
Incorporation, any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all members
of the Board of Directors or such committee, as the case may be, consent thereto
in writing, and the writing or writings are filed with the minutes of the
proceedings of the Board of Directors or such committee, as the case may be.
SECTION 16. TELEPHONIC MEETING. Unless restricted by the Certificate of
Incorporation, any one or more members of the Board of Directors or any
committee thereof may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other.
Participation by such means shall constitute presence in person at a meeting.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER AND QUALIFICATIONS. The officers of the Corporation
shall be elected by the Board of Directors and shall include the President, one
or more Vice Presidents, the Secretary and the Treasurer. If the Board of
Directors wish, it may also elect as an officer of the Corporation a Chairman of
the Board and may elect other officers (including one or more Assistant
Treasurers and one or more Assistant Secretaries) as may be necessary or
desirable for the business of the Corporation. The Board of Directors may also
appoint such other officers, agents and attorneys-in-fact as it may deem
necessary for the transaction of the business of the Corporation. Such officers,
agents and attorneys-in-fact shall hold office for such period, have such
authority and perform such duties as shall be determined from time to time by
the Board. One of the officers shall have the duty to record the proceedings of
the meetings of the stockholders and directors in a book to be kept for that
purpose. Any two or more offices may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument in more than one capacity,
and no officer except the Chairman of the Board need be a director. Each officer
shall hold office until his or her successor shall have been duly elected and
shall have qualified, or until his or her death, or until he or she shall have
resigned or have been removed, as hereinafter provided in these By-Laws.
SECTION 2. RESIGNATIONS. Any officer of the Corporation may, subject to
contrary provision in any applicable contract, resign at any time by giving
written notice of his or her resignation to the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon
receipt. Unless otherwise specified therein, the acceptance of any such
resignation shall not be necessary to make it effective.
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<PAGE>
SECTION 3. REMOVAL. Any officer of the Corporation may be removed,
either with or without cause, at any time, by the Board of Directors at any
meeting thereof.
SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board, if one
shall have been elected, shall be a member of the Board and, if present, shall
preside at each meeting of the Board of Directors or the stockholders. The
Chairman shall advise and counsel with the President and with other executives
of the Corporation and shall perform such other duties as may from time to time
be assigned to him or her by the Board of Directors.
SECTION 5. VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board,
if one shall have been elected, shall be a member of the Board, an officer of
the Corporation and, if present and in the absence of the Chairman of the Board,
shall preside at each meeting of the Board of Directors or the stockholders. The
Vice Chairman shall, alone or together with the Chairman of the Board, advise
and counsel with the President and with other executives of the Corporation,
shall, at the request of the Chairman of the Board or in his or her absence or
in the extent of his or her inability or refusal to act, perform the duties of
the Chairman of the Board and shall perform such other duties as may from time
to time be assigned to him or her by the Chairman of the Board or the Board of
Directors.
SECTION 6. PRESIDENT. The President shall, in the absence of the
Chairman and Vice Chairman of the Board or if a Chairman and a Vice Chairman of
the Board shall not have been elected, preside at each meeting of the Board of
Directors or the stockholders. The President shall perform all duties incident
to the office of the President and such other duties as may from time to time be
assigned to him or her by the Board of Directors or the Chairman or the Vice
Chairman of the Board of Directors.
SECTION 7. VICE-PRESIDENT. Each Vice-President shall perform all such
duties as from time to time may be assigned to him or her by the Board of
Directors or the President. At the request of the President or in his or her
absence or in the event of his or her inability or refusal to act, the
Vice-President, or if there shall be more than one, the Vice-Presidents in the
order determined by the Board of Directors (or if there be no such
determination, the Vice-Presidents in the order of their election), shall
perform the duties of the President and when so acting, shall have the powers of
and be subject to the restrictions placed upon the President in respect of the
performance of such duties.
SECTION 8. TREASURER. The Treasurer shall:
(a) have charge and custody of, and be responsible for, all the funds
and securities of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation;
(c) deposit all moneys and other valuables to the credit of the
Corporation in such depositaries as may be designated by the Board of Directors
or pursuant to its direction;
(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever;
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(e) disburse the funds of the Corporation and supervise the investments
of its funds, taking proper vouchers therefor;
(f) render to the Board of Directors, whenever the Board of Directors
may require, an account of the financial condition of the Corporation; and
(g) in general, perform all duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him or her by the
Boards of Directors.
SECTION 9. SECRETARY. The Secretary shall:
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the committees
of the Board of Directors and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all certificates for shares of the Corporation
(unless the seal of the Corporation on such certificates shall be a facsimile,
as hereinafter provided) and affix and attest the seal to all other documents to
be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept and
filed; and
(e) in general, perform all duties incident to the office of Secretary
and such other duties as from time to time may be assigned to him or her by the
Board of Directors.
SECTION 10. ASSISTANT TREASURER. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the Treasurer or in the event of his
or her inability or refusal to act, perform the duties and exercise the powers
of the Treasurer and shall perform such other duties as from time to time may be
assigned by the Board of Directors.
SECTION 11. ASSISTANT SECRETARY. The Assistant Secretary, or if there
be more than one, the Assistant Secretaries in the order determined by the Board
of Directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the Secretary or in the event of his or her
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties as from time to time may be
assigned by the Board of Directors.
SECTION 12. OFFICERS' BONDS OR OTHER SECURITY. If required by the Board
of Directors, any officer of the Corporation shall give a bond or other security
for the faithful performance of his or her duties, in such amount and with such
surety as the Board of Directors may require.
SECTION 13. COMPENSATION. The compensation of all officers, agents and
employees of the Corporation shall be fixed from time to time by the Board of
Directors, or pursuant to authority
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of general or special resolutions of the Board. An officer of the Corporation
shall not be prevented from receiving compensation by reason of the fact that he
or she is also a director of the Corporation.
SECTION 14. VACANCIES. If the Office of the President, any Vice
President, the Secretary or the Treasurer, or of any other officer or agent
becomes vacant at any time by reason of death, resignation, retirement,
disqualification, removal from office, or otherwise, such vacancy or vacancies
shall be filled by the Board of Directors or as authorized by it.
ARTICLE V
STOCK CERTIFICATES AND THEIR TRANSFER
SECTION 1. STOCK CERTIFICATES. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by, or in the name of, the
Corporation by, the Chairman of the Board or the President or a Vice-President
and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation, certifying the number of shares owned by him or
her in the Corporation. If the Corporation shall be authorized to issue more
than one class of stock or more than one series of any class, the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restriction of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of the State of
Delaware, in lieu of the foregoing requirements, there may be set forth on the
face or back of the certificate which the Corporation shall issue to represent
such class or series of stock, a statement that the Corporation will furnish
without charge to each stockholder who so requests the designations, preferences
and relative, participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences and/or rights.
SECTION 2. FACSIMILE SIGNATURES. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue unless determined otherwise by the Board generally or in particular
instances.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen, or destroyed, upon satisfactory proof of that fact by the person
claiming the certificate or certificates for shares to be lost, stolen, or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen, or destroyed
certificate or certificates, or his or her legal representative, to publicize
the same in such manner as it shall require and/or to give the Corporation a
bond in such sum as it may direct sufficient to indemnify it against any claim
that may be made against the Corporation on account of the alleged loss, theft
or destruction of any such certificate or the issuance of such new certificate.
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SECTION 4. TRANSFERS OF STOCK. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its records; provided, however, that the Corporation shall be
entitled to recognize and enforce any lawful restriction on transfer. Whenever
any transfer of stock shall be made for collateral security, and not absolutely,
it shall be so expressed in the entry of transfer if, when the certificates are
presented to the Corporation for transfer, both the transferor and the
transferee request the Corporation to do so.
SECTION 5. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
appoint, one or more transfer agents and one or more registrars.
SECTION 6. REGULATIONS. The Board of Directors may make such additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of stock of the Corporation.
SECTION 7. FIXING THE RECORD DATE. In order that the Corporation may
determine the stockholders entitled (i) to notice of or to vote at any meeting
of stockholders or any adjournment thereof, (ii) to express consent to corporate
action in writing without a meeting or (iii) to receive payment of any dividend
or other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which (a) shall not precede the date upon which the resolution
fixing the record date is adopted and (b) with respect to (i) above shall not be
more than sixty nor less than ten days before the date of such meeting or (c)
with respect to (ii) above shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of Directors
or (d) with respect to (iii) above shall not be more than sixty days prior to
any such action. Only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting and any adjournment thereof, or to receive payment of such dividend or
other distribution, or to receive such allotment of rights, or to exercise such
rights in respect of any such change, conversion or exchange of stock, or to
participate in such other action, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid. If no record date is fixed by the Board
of Directors, the record date shall be determined as provided by the laws of the
State of Delaware. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 8. REGISTERED STOCKHOLDERS. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its records
as the owner of shares of stock to receive dividends and to vote as such owner,
shall be entitled to hold liable for calls and assessments a person registered
on its records as the owner of shares of stock, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares of
stock on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Delaware.
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ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. INDEMNIFICATION. (a) Any person made a party or threatened
to be made a party to a threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
by an action or suit by or in the right of the Corporation to procure a judgment
in its favor) by reason of the fact that he or she is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified by the Corporation against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or her in connection with such action, suit or proceeding if he or she
acted in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption hereunder that the
person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the Corporation, or,
with respect to any criminal action or proceeding, that the person had
reasonable cause to believe that his or her conduct was unlawful.
(b) Any person made a party or threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, shall be indemnified by the Corporation against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection with the defense or settlement of such action or suit if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Corporation, except that no
indemnification shall be made hereunder in respect of any claim, issue or matter
as to which the person shall be adjudged liable to the Corporation for
negligence or misconduct in the performance of his or her duty to the
Corporation unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability, but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which said Court of Chancery or such
other court shall deem proper.
(c) To the extent that any person referred to above has been successful
on the merits or otherwise in defense of any action, suit or proceeding referred
to in paragraphs (a) and (b) above, or in defense of any claim, issue or matter
therein, he or she shall be indemnified by the Corporation against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith.
(d) Any indemnification under subsections (a) and (b) above (unless
ordered by a court) shall be made only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he or she has met the applicable standard
of conduct set forth in subsections (a) and (b) of this section. Such
determination
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shall be made (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders entitled to vote at any meeting by
majority vote of the quorum present.
(e) Expenses incurred in defending any civil, criminal, administrative
or investigative action, suit or proceeding by a person who may be entitled to
indemnity under the above provisions may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding if authorized by a
majority vote of a quorum of the Board of Directors of the Corporation who are
not parties to such action, suit or proceeding upon receipt of an understanding
by or on behalf of the person to whom payment is to be made that he or she will
repay the amounts advanced unless it shall ultimately be determined that he or
she is entitled to be indemnified by the Corporation in accordance with the
above provisions.
(f) The indemnification and advancement of expenses hereinabove
provided shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
provision of the Certificate of Incorporation, these By-Laws, agreement, vote of
stockholders or disinterested directors, insurance agreement, or otherwise, both
as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to hold the relationship to the Corporation referred to above and shall
inure to the benefit of the heirs, executors and administrators of any such
person.
SECTION 2. INSURANCE. The Board of Directors of the Corporation may, in
its discretion, authorize the Corporation to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of Section 1 of
this ARTICLE VI.
SECTION 3. DEFINITION OF CORPORATION. For the purpose of this ARTICLE
VI, references to the "Corporation" include all constituent corporations
absorbed in a consolidation or merger as well as the resulting or surviving
corporation so that any person who is or was a director, officer, employee or
agent of such a constituent corporation or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise shall
stand in the same position under the provisions of this ARTICLE VI with respect
to the resulting or surviving corporation as he or she would if he or she had
served the resulting or surviving corporation in the same capacity.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Subject to the provisions of the statue and the
Certificate of Incorporation, dividends upon the shares of capital stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting. Dividends may be paid in cash, in property or
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in shares of stock of the Corporation, unless otherwise provided by statute or
the Certificate of Incorporation.
SECTION 2. RESERVES. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors may, from time to time, in its absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation or for such other purpose as the Board of Directors may determine is
in the best interests of the Corporation. The Board of Directors may modify or
abolish any such reserve in the manner in which it was created.
SECTION 3. SEAL. The seal of the Corporation shall be in such form as
shall be approved by the Board of Directors.
SECTION 4. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed, and once fixed, may thereafter be changed, by resolution of the Board of
Directors.
SECTION 5. CHECKS, NOTES, DRAFTS, ETC. All checks, notes, drafts or
other orders for the payment of money of the Corporation shall be signed,
endorsed or accepted in the name of the Corporation by such officer, officers,
person or persons as from time to time may be designated by the Board of
Directors or by an officer or officers authorized by the Board of Directors to
make such designation.
SECTION 6. EXECUTION OF CONTRACTS, DEEDS, ETC. The Board of Directors
may authorize any officer or officers, agent or agents, in the name and on
behalf of the Corporation to enter into or execute and deliver any and all
deeds, bonds, mortgages, contracts and other obligations or instruments, and
such authority may be general or confined to specific instances.
SECTION 7. VOTING OF STOCK IN OTHER CORPORATIONS. Unless otherwise
provided by resolution of the Board of Directors, the Chairman of the Board or
the President, from time to time, may (or may appoint one or more attorneys or
agents to) cast the votes which the Corporation may be entitled to cast as a
shareholder or otherwise in any other corporation, any of whose shares or
securities may be held by the Corporation, at meetings of the holders of the
shares or other securities of such other corporation. In the event one or more
attorneys or agents are appointed, the Chairman of the Board or the President
may instruct the person or persons so appointed as to the manner of casting such
votes or giving such consent. The Chairman of the Board or the President may, or
may instruct the attorneys or agents appointed to, execute or cause to be
executed in the name and on behalf of the Corporation and under its seal or
otherwise, such written proxies, consents, waivers or other instruments as may
be necessary or proper in the circumstances.
ARTICLE VIII
AMENDMENTS
These By-Laws may be amended or repealed or new By-Laws adopted (a) by
action of the stockholders entitled to vote thereon at any annual or special
meeting of stockholders or (b) if the Certificate of Incorporation so provides,
by action of the Board of Directors at a regular or special
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meeting thereof. Any By-Law made by the Board of Directors may be amended or
repealed by action of the stockholders at any annual or special meeting of
stockholders.
**************
Dated:
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CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
MAI Systems Corporation:
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of MAI Systems Corporation of our report dated February 9, 1996,
relating to the consolidated balance sheets of MAI Systems Corporation as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, stockholders' equity and cash flows and related schedule for each of
the years in the three-year period ended December 31, 1995, which report appears
in the December 31, 1995 Annual Report on Form 10-K of MAI Systems Corporation.
We also consent to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG Peat Marwick LLP
Orange County, California
October 28, 1996
