<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
/X/ Definitive Proxy Statement Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Megacards, Inc.
---------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
---------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which
the filing fee is calculated and state how it was determined.)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
June 4, 1996
DEAR FELLOW SHAREHOLDERS:
Our Annual Meeting of Shareholders will be held at the offices
of Thompson Coburn, One Mercantile Center, St. Louis, Missouri 63101, at
10:00 a.m., local time, on June 21, 1996. The Notice of Annual Meeting,
Proxy Statement and Proxy which accompany this letter outline fully matters
on which action is expected to be taken at the meeting.
We hope you will attend the meeting in person. Whether or not
you presently contemplate attending, however, we would appreciate your
dating, signing and mailing the enclosed Proxy as promptly as possible. A
return envelope is enclosed for your convenience. If you attend the
meeting, you may revoke your Proxy and vote your shares in person.
Sincerely,
/s/ Lloyd R. Abrams
LLOYD R. ABRAMS
President and Chief Executive Officer
<PAGE> 3
June 3, 1996
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 21, 1996
The Annual Meeting of Shareholders of Megacards, Inc. (the
"Company") will be held on Friday, June 21, 1996, at 10:00 a.m., local time,
at the offices of Thompson Coburn, One Mercantile Center, St. Louis,
Missouri 63101. The items of business are:
1. The election of three (3) directors for a term of
one year.
2. To consider and vote upon a proposal to amend the
Restated Articles of Incorporation of the Company to
change the corporate name to "Bentley International,
Inc."
3. To consider and vote upon a proposal to amend the
Restated Articles of Incorporation of the Company to:
(i) effect a one-for-six reverse stock split of all of
the authorized shares of the Company's Common Stock;
and (ii) increase the par value of the Company's Common
Stock from, $.03 to $.18 per share.
4. Such other matters as may properly come before the
meeting.
These items are more fully described in the following Proxy
Statement, which is hereby made a part of this Notice. Only shareholders of
record at the close of business May 16, 1996, are entitled to notice of and
to vote at the meeting.
By order of the Board of Directors,
/s/ Lloyd R. Abrams
LLOYD R. ABRAMS
President and Chief Executive Officer
<PAGE> 4
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 21, 1996
------------------
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of
Megacards, Inc. (the "Company") in connection with the solicitation of
proxies by the Company's Board of Directors to be used at the 1996 Annual
Meeting of Shareholders (the "Annual Meeting") to be held on Friday, June
21, 1996, for the purposes set forth in the accompanying Notice of Annual
Meeting. Any shareholder giving a Proxy may revoke it any time prior to its
use. Unless so revoked, all shares represented by proxies in the enclosed
form that are properly executed and received in time for the meeting will be
voted.
The complete mailing address of the Company's principal
executive offices is 1353 North Warson Road, St. Louis, Missouri 63132. The
approximate date on which this Proxy Statement and form of Proxy for the
Annual Meeting are first being sent or given to shareholders is June 3,
1996.
The Company will bear the entire cost of soliciting proxies in
the enclosed form. Solicitation will be by mail, and directors and officers
of the Company may solicit proxies personally or by telephone or telegraph,
but such persons will not be specially compensated therefor. Certain
holders of record, such as brokers, custodians and nominees are being
requested to distribute proxy materials to beneficial owners and will be
reimbursed by the Company for their reasonable expenses incurred in
distributing proxy materials to beneficial owners.
Only shareholders of record at the close of business on May 16,
1996, are entitled to notice of and to vote at the Annual Meeting. As of
May 16, 1996, there were 3,375,741 shares of Common Stock, $.03 par value
("Common Stock"), of the Company outstanding, and each share is entitled to
one vote on each matter submitted to the shareholders. Shares subject to
abstentions will be treated as shares that are present at the Annual Meeting
for purposes of determining the presence of a quorum but as unvoted for
purposes of determining the base number of shares voting on a particular
proposal. If a broker or other nominee holder indicates on the Proxy that
it does not have discretionary authority to vote the shares it holds of
record on a proposal, those shares will not be considered voted for purposes
of determining the approval of the shareholders on a particular proposal.
- 1 -
<PAGE> 5
ITEM 1. ELECTION OF DIRECTORS
One of the purposes of the meeting is to elect three individuals
as directors of the Company for one year terms. The Company's Board of
Directors has nominated Lloyd R. Abrams, Janet L. Salk and Robert L. Wolfson
to be elected as directors. Messrs. Abrams and Wolfson and Ms. Salk
currently are serving as directors.
The persons named in the enclosed Proxy intend to vote, except
as directed otherwise in any Proxy, for the election to the Board of
Directors of Messrs. Abrams and Wolfson and Ms. Salk. The three nominees
receiving the vote of the holders of a majority of the shares entitled to
vote and represented in person or by Proxy at the Annual Meeting will be
elected. Cumulative voting does not apply in the election of directors.
Votes will be counted by inspectors appointed by the Company, who may be
employees of the Company. The Board of Directors recommends a vote "FOR" the
election of Lloyd R. Abrams, Robert L. Wolfson and Janet L. Salk as directors.
INFORMATION ABOUT DIRECTORS
The name, age and principal occupation or position with respect
to each person who is a director or nominee for director is set forth below:
Lloyd R. Abrams, age 41, has served as President, Chief
Executive Officer and director of the Company since July 1995 and as Chief
Financial Officer of the Company since January 1996. Since November 1993
and December 1994 he has served as President of Janco Designs, Inc.
("Janco") and Windsor Art, Inc. ("Windsor"), respectively. For more than
three years prior to joining Janco, he was President of Abrams, Rothman &
Company, a real estate development firm.
Janet L. Salk, age 38, has served as a director of the Company
since July 1995. Ms. Salk principally has engaged in family, civic and
charitable activities for more than the past five years. Ms. Salk is the
spouse of Lloyd R. Abrams.
Robert L. Wolfson, age 77, has served as Chairman of the Board
of the Company since October 1991 and prior to such time he served as an
unpaid consultant to the Company. Mr. Wolfson has been President of Wolfson
Capital Ventures, Ltd., a private investment firm, for more than the past
five years.
CHANGES IN CONTROL OF THE COMPANY
Pursuant to an Agreement (the "Agreement"), dated July 17, 1995,
the Company issued 2,541,000 shares of its Common Stock registered in the
name of Lloyd R. Abrams as Voting Trustee (the "Voting Trustee") under that
certain Voting Trust Agreement (the "Voting Trust Agreement"), dated July
17, 1995, in exchange for all of the outstanding capital stock of Windsor
Art, Inc. ("Windsor") and Janco Designs, Inc. ("Janco"). In connection with
the execution of the Agreement, M. Erwin Bry III, Edward H. Strellow and
Andrew S. Wolfson resigned as directors of the Company. Lloyd R. Abrams and
Janet L. Salk were appointed to fill the vacancies created by these
resignations. Under the Voting Trust Agreement, Lloyd R. Abrams retains
voting control over 2,541,000 shares of the Company's Common Stock,
representing approximately 74.9% of the Company's outstanding Common Stock.
- 2 -
<PAGE> 6
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth the beneficial ownership of
shares of the Company's Common Stock as of May 16, 1996 held by: (i) each
person who is known to the Company to beneficially own more than 5% of the
outstanding shares of the Company's Common Stock; (ii) each person who is a
director or nominee for director; and (iii) all the Company's directors and
officers as a group. Unless otherwise indicated, all shares are held with
sole voting and investment power.
<TABLE>
<CAPTION>
Name and Address Shares Owned<F1> Percent of Class<F1>
---------------- ---------------- --------------------
<S> <C> <C>
Group comprised of Lloyd R.
Abrams, Richard B. Rothman
and Leo M. Rodgers (the "Voting Trust Group")
1353 North Warson Road
St. Louis, Missouri 63132 2,541,000<F2> 74.9%
Lloyd R. Abrams as Voting Trustee
of the Voting Trust, dated July 17, 1995
1353 North Warson Road
St. Louis, Missouri 63132 2,541,000<F2><F3> 74.9
Lloyd R. Abrams
1353 North Warson Road
St. Louis, Missouri 63132 1,524,600<F2><F3> 44.9
Richard B. Rothman
1353 North Warson Road
St. Louis, Missouri 63132 508,200<F4> 15.0
Leo M. Rodgers
7167 Westmoreland Drive
St. Louis, Missouri 63130 508,700<F4> 15.1
Robert L. Wolfson
14 South Bemiston
Clayton, Missouri 63105 88,166<F5> 2.6
Janet L. Salk
1353 North Warson Road
St. Louis, Missouri 63132 0 0
All directors and officers as a group
(3 persons) 2,634,166<F5> 77.9
<FN>
- ------------------------
<F1> Each beneficial owner's percentage ownership is based upon 3,375,741
shares of the Company's Common Stock issued and outstanding as
of May 16, 1996, and is determined by assuming options or
warrants that are held by such person (but not those held by
any other person) and which are exercisable within 60 days of
May 16, 1996 have been exercised.
- 3 -
<PAGE> 7
<F2> In a Statement on Schedule 13D (the "Schedule 13D") filed with the
Securities and Exchange Commission (the "SEC") by the Voting
Trust Group and its members, the Voting Trust Group has
reported that 2,541,000 shares of the Company's Common Stock
were issued to the Voting Trustee under the Voting Trust
Agreement. Under the Voting Trust Agreement, Mr. Abrams
retains voting power over shares of the Company's Common Stock
deposited therein.
<F3> In the Schedule 13D, Mr. Abrams reported that, shares of the Company's
Common Stock attributed to Mr. Abrams are beneficially owned by
Mr. Abrams as trustee of each of The Abrams Family Trust, The
Stacey Kevin and Meredith Trust dated 12/1/91 and The Janet L.
Salk Children's Trust in the amounts of 1,016,400 shares,
254,100 shares and 254,100 shares, respectively. Mr. Abrams
has sole investment power over all such shares of the Company's
Common Stock.
<F4> In the Voting Trust Schedule 13D, Mr. Rothman and Mr. Rodgers have
reported that, shares of the Company's Common Stock issued
pursuant to the Agreement that are attributable to Mr. Rothman
and Mr. Rodgers were issued in the name of the Voting Trustee.
Under the Voting Trust Agreement, the Voting Trustee retains
voting power of shares of the Company's Common Stock deposited
therein. Mr. Rothman and Mr. Rodgers retain investment power
with regard to the number of shares of the Company's Common
Stock attributed to each of them.
<F5> Includes 40,000 shares of the Company's Common Stock issuable upon
exercise of stock options.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
During 1995, there were five meetings of the Board of Directors. No
director attended fewer than 75% of the aggregate of: (i) the total number
of 1995 board meetings; and (ii) the total number of meetings held by all
committees of the board on which he or she served.
No standing committees of the Board of Directors have been constituted
by the Board. The Company expects that Audit and Stock Option Committees
will be constituted at an appropriate time in the future.
DIRECTORS' FEES
Directors who also are officers or consultants of the Company are not
specifically compensated for their service as directors.
The Company entered into a Consulting Agreement (the "Consulting
Agreement") with Robert L. Wolfson, Chairman of the Board of the Company,
pursuant to which Robert L. Wolfson has agreed to furnish financial and
business consulting services to the Company. Under the Consulting
Agreement, Mr. Wolfson originally was entitled to receive $4,500 per month
during the term of the Consulting Agreement. Effective as of November 1,
1992, such amount was reduced to $4,050 per month by mutual agreement
between Mr. Wolfson and the Company. The Consulting Agreement was
terminated in July 1995. Mr. Wolfson also has been granted a non-incentive
stock option to purchase 40,000 shares of Common Stock under the Plan at a
price of $1.00 per share exercisable during a ten-year period.
- 4 -
<PAGE> 8
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Company's executive compensation program is administered under the
direction of the Board of Directors. Mr. Abrams is a member of the Board of
Directors and serves as an executive officer of the Company.
Until April 1996, the Company had leased its Erie, Pennsylvania
production facility pursuant to a Project Sublease, dated as of February 4,
1991 (the "Sublease"), with Alnick Realty Co. ("Alnick"). Mr. Wolfson was a
principal shareholder of Alnick. The Sublease was for a minimum term
expiring January 2006. The Sublease originally provided for a base
rental of $375,000 per year, subject to increase under certain circumstances
based upon the minimum employment level requirements specified in Alnick's
industrial development loan. The Company also was obligated under the
Sublease to pay Alnick additional rent equal to the amount of ad valorem
taxes which would be payable on the property if it were subject to such
taxes and to pay all real estate taxes and insurance on the property.
Subsequent to the Business Combination, Alnick agreed to reduce the rent
payments payable under the Sublease to an amount equal to the sum of: (i)
the debt payments to be made by Alnick on the underlying debt attributable
to the property; and (ii) all out-of-pocket tax liability, incurred by the
Alnick shareholders as a result of rent payments by the Company in view of
Alnick's status as an S Corporation for income tax purposes. Additionally,
Alnick agreed to waive all accrued but unpaid rents (aggregating $250,000)
which accrued prior to July 17, 1995. On April 29, 1996, the Company
purchased the outstanding shares of Alnick's capital stock for $85,000, sold
Alnick's and its interest in the Erie, Pennsylvania production facility and
terminated its obligations under the Sublease.
During 1995, the Company paid $142,844 in exchange for consulting and
management services from entities which are owned or partially owned by
Messrs. Abrams and Rothman. The Company and its subsidiaries have
entered into agreements to borrow money from certain principal shareholders
subject to notes in the aggregate amount of $1,350,000 which bear interest
at prime plus 2% (10.5% at December 31, 1995) with principal due on July 17,
1997. Interest expense on these secured notes was $143,861 in 1995.
- 5 -
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the named
executives of the Company for each of the last three years:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
------------ ------------ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY $ OPTIONS/SARS COMPENSATION<F2>
- --------------------------- ---- -------- ------------ ----------------
<S> <C> <C> <C> <C>
Lloyd R. Abrams, <F1> 1995 $ 85,095 0/0 $ 0
President and Chief Executive 1994 0 0/0 0
Officer 1993 0 0/0 0
Stephan R. Juskewycz, <F3> 1995 157,644 0/0 50
President and Chief Executive 1994 180,000 0/0 482
Officer 1993 180,051 0/0 482
<FN>
- ---------------------
<F1> Mr. Abrams became an executive officer of the Company in July 1995.
<F2> The totals set forth in this column represent premiums paid by the
Company on life insurance policies for the named executive
officer.
<F3> In July 1995, Mr. Abrams replaced Mr. Juskewycz as President and Chief
Executive Officer of the Company. Mr. Juskewycz's employment
with the Company terminated as of September 1995.
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers, and persons who own more
than ten percent of the Company's Common Stock, to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. To the Company's knowledge, based
solely on review of the copies of such reports furnished to the Company
during the year, all Section 16(a) filings applicable to its officers,
directors and greater than ten percent beneficial owners relating to changes
in ownership of Common Stock in 1995 were met.
- 6 -
<PAGE> 10
ITEM 2. PROPOSAL TO AMEND RESTATED ARTICLES OF INCORPORATION
TO CHANGE CORPORATE NAME TO "BENTLEY INTERNATIONAL, INC."
The Board of Directors of Megacards, Inc. has approved the
following resolution, subject to the approval of the shareholders of the
Company by the requisite vote at the 1996 Annual Meeting:
RESOLVED, Article One of the Restated Articles of
Incorporation of Megacards, Inc. (the "Corporation") be amended
in its entirety to read as follows:
ARTICLE ONE
-----------
The name of the Corporation is Bentley International, Inc.
FURTHER RESOLVED, that the appropriate officers of the
Corporation shall be authorized to execute the Certificate of
Amendment to the Corporation's Restated Articles of Incorporation
setting forth the amendment authorized in the preceding resolution
and to file the same with the Secretary of State of the State of
Missouri.
The Board of Directors believes that the change of the corporate
name will better reflect the recent broadening of the scope of businesses of
the Company, pursuant to the July 1995 acquisition of Windsor and Janco.
The Board feels that the change of the corporate name to "Bentley
International, Inc." signals the intention to reduce its reliance on sports
picture cards and manage its businesses so that it becomes a leading
manufacturer and importer of home furnishings. Moreover, the Board
anticipates that it may continue to expand the Company's businesses through
strategic combinations with other participants in the home furnishing
business.
If the proposed amendment to the Company's Restated Articles of
Incorporation is approved by the requisite vote of shareholders at the 1996
Annual Meeting, such amendment will become effective when the Certificate of
Amendment to the Company's Restated Articles of Incorporation is filed with
the Secretary of State of the State of Missouri (which is expected to occur
promptly after the Annual Meeting).
The Board of Directors has unanimously approved the proposed
amendment to the Company's Restated Articles of Incorporation to change the
corporate name. The affirmative vote of holders of a majority of the
outstanding shares of the Company's Common Stock will be necessary for the
approval of the proposal. Mr. Abrams has advised the Company's Board of
Directors of his intention to vote all of the shares of the Company's Common
Stock controlled by him FOR the proposed amendment, which vote would result
in the approval of the proposal. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" THE PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES
OF INCORPORATION TO CHANGE THE CORPORATE NAME TO "BENTLEY
INTERNATIONAL, INC."
- 7 -
<PAGE> 11
ITEM 3. PROPOSAL TO APPROVE AN AMENDMENT TO THE RESTATED ARTICLES
OF INCORPORATION OF THE COMPANY EFFECTING A REVERSE STOCK SPLIT AND
AN INCREASE IN PAR VALUE OF COMMON STOCK
SUMMARY OF THE REVERSE STOCK SPLIT
The Board of Directors of the Company has unanimously adopted
resolutions to approve, and submit to the shareholders of the Company for
approval, proposed amendments to the Company's Restated Articles of
Incorporation (the "Amendment") to: (i) effect a one-for-six reverse stock
split of the presently issued and outstanding shares of the Company's Common
Stock and (ii) increase the par value of the Company's Common Stock from
$.03 to $.18 per share (the reverse stock split and the increase in par
value are hereinafter referred to collectively as the "Reverse Stock
Split"). The principal effect of the Reverse Stock Split will be to reduce
the number of issued and outstanding shares of Common Stock from 3,375,741
to approximately 562,624. The Reverse Stock Split will not change the
number of authorized shares of Common Stock or change the number of
authorized shares or par value of the Company's preferred stock, $.01 par
value (the "Preferred Stock"), of which no shares have been issued.
If the Reverse Stock Split is approved by the affirmative vote
of the holders of a majority of the Company's Common Stock, upon filing of
the Amendment with the Missouri Secretary of State the Reverse Stock Split
will be effective, shares of Common Stock owned by a shareholder immediately
prior to the Reverse Split (the "Old Shares") will be deemed to be
automatically converted without any action on the part of the shareholder
into the number of shares of Common Stock equal to the number of Old Shares
divided by six (the "New Shares"); provided, however, that no fractional New
Shares will be issued as a result of the Reverse Split. In lieu thereof,
each shareholder whose Old Shares are not evenly divisible by six will
receive one additional New Share for the fractional New Share that such
shareholder would be otherwise entitled to receive as a result of the
Reverse Stock Split; provided, however, that if the market value of
the fractional shares to be exchanged by a holder thereof for a New
Share is less than the par value of a New Share ($.18) then the holder
of such fractional shares shall receive a payment in the amount of
the market value of such fractional shares in lieu of a New Share.
The complete text of the Amendment effecting the Reverse Stock
Split is set forth as Appendix A to this Proxy Statement. For approval, the
Amendment must receive the affirmative vote of the holders of a majority of
the outstanding shares of the Company's Common Stock. The members of the
Company's Board of Directors, who hold in the aggregate approximately 77.9%
of the Company's Common Stock, have advised the Company that they intend to
vote to approve the Reverse Stock Split. Accordingly, the Company
anticipates that the Reverse Stock Split will be approved.
REASONS FOR THE REVERSE STOCK SPLIT
The Board of Directors, after considering the effects of the
relatively low current price per share of the Company's Common Stock,
believes that the Reverse Stock Split is advisable and in the best interests
of the Company and its shareholders. The reduction in the number of issued
and outstanding shares of the Common Stock caused by the Reverse Stock Split
is expected to increase the market price of the Common Stock, thereby
reducing the negative attributes traditionally associated with a low per
share market price. The Board of Directors anticipates that the higher
share price expected to result from the Reverse Stock Split will enhance the
Company's ability to comply with the maintenance criteria established by the
National Association of Securities Dealers, Inc. for continued listing of
the Common Stock on the Nasdaq SmallCap Market.
A low per share market price often adversely effects the
marketability of a stock. Certain institutional investors have internal
policies preventing the purchase of low-priced stocks, and many
- 8 -
<PAGE> 12
brokerage houses do not permit low-priced stocks to be used as collateral for
margin accounts or to be purchased on margin. Further, certain brokerage
houses have adopted time-consuming practices and procedures which act to
discourage individual brokers from dealing in low-priced stocks because such
practices and procedures make the handling of low-priced stocks economically
unattractive. A low stock price also has the effect of increasing the
amount and percentage of transaction costs paid by individual investors.
Because brokers' commissions on low-priced stocks generally represent a
higher percentage of the stock price than commissions on higher priced
stocks, a low stock price can result in individual shareholders paying
transaction costs (commissions, markups or markdowns) which are a higher
percentage of their total share value than would be the case with stock with
a higher share price. The Board of Directors believes that the expected
increase in share price of the Common Stock resulting from the Reverse Stock
Split should reduce the effect of these negative attributes traditionally
associated with a low per share price, thereby enhancing the acceptability
of the Common Stock with the financial community and investing public and
resulting in a broader market for the Common Stock than currently exists.
There can be no assurance that the Reverse Stock Split will
increase the current market price per share, or that any increase in market
price of the Common Stock after the Reverse Stock Split can be maintained.
The Reverse Stock Split could result in an increase in market price for
Common Stock which is proportionately less than the decrease in the number
of shares outstanding. Additionally, there can no assurances that any of
the effects described above will be achieved.
CERTAIN EFFECTS OF THE REVERSE STOCK SPLIT
The Reverse Stock Split will be effected by means of filing the
Amendment with the Missouri Secretary of State. If the Amendment is
approved by the requisite vote of the shareholders, upon the filing of the
Amendment with the Missouri Secretary of State each certificate representing
Old Shares will be deemed automatically without any action on part of the
shareholders to represent the number of New Shares into which such Old
Shares have been reclassified and changed pursuant to the Reverse Stock
Split.
The principal effects of the Amendment are to reduce the number
of issued and outstanding shares of Common Stock and to increase the par
value of the Common Stock from $.03 to $.18 per share. The Company has
authorized capital stock of 10,000,000 shares of Common Stock and 1,000,000
shares of Preferred Stock. The number of shares of authorized capital stock
will not be changed by reason of the Reverse Stock Split. As of May 16,
1996, the number of issued and outstanding Old Shares was 3,375,741 shares
and there were no shares of Preferred Stock issued and outstanding. Based
upon the Company's best estimates, the aggregate number of New Shares that
will be issued and outstanding following the Reverse Stock Split will be
approximately 565,000.
As of May 16, 1996, under the Megacards, Inc. Stock Option Plan
(the "Plan") there were outstanding options to purchase an aggregate of
55,917 shares of Common Stock at an exercise price of $2.00 per share and
options to purchase 40,000 shares at $1.00 per share. In addition, an
aggregate of 20,750 shares remain available for grant pursuant to the Plan.
The Plan provides that in the event of a change in capitalization, such as a
reverse stock split, the number of shares covered by each outstanding option
and the purchase price under each option shall be adjusted so as to maintain
the optionee's proportionate interest as before the Reverse Stock Split.
Additionally, the Plan provides that the total shares subject to options to
be issued under the Plan will be appropriately adjusted. If the Reverse
Stock Split is approved, the number of shares of Common Stock issuable upon
the exercise of outstanding options and the number of shares available for
grant under the Plan will be adjusted to 15,986
- 9 -
<PAGE> 13
and 3,459, respectively, and the exercise prices of outstanding options will be
adjusted to $12.00 per share or $6.00 per share, as the case may be.
In connection with its October 1991 initial public offering, the
Company issued to the underwriter a Warrant to purchase 27,333 shares of
Common Stock at an exercise price of $18.75. Pursuant to a letter agreement
dated July 17, 1995, the Company reduced the exercise price such Warrant to
$2.00 per share. As a result of the Reverse Stock Split, the number of
shares issuable upon exercise of such Warrant and the exercise price per
share will be adjusted to 4,556 and $12.00, respectively.
The following table sets forth the effects of the Reverse Split
on the Company's Common Stock and certain financial data:
<TABLE>
<CAPTION>
March 31, 1996
--------------
As Adjusted for
Actual Reverse Stock Split<F*>
------ -----------------------
<S> <C> <C>
Common Stock:
Authorized 10,000,000 10,000,000
Issued and outstanding 3,375,741 562,624
Available for issuance 6,624,259 9,437,376
Par value per common share $.03 $.18
Other Effects of
the Reverse Stock Split:
Stated capital $ 101,272 $ 101,272
Additional paid-in capital 1,905,297 1,905,297
Accumulated deficit (1,644,288) (1,644,288)
Total shareholders' equity 362,281 362,281
Net loss per common share
(for the three months ended March 31, 1996) ($0.24) ($1.44)
<FN>
- ----------
<F*> Subject to further adjustments due to the settlement of fractional
shares, which adjustments are not expected to be material.
</TABLE>
If approved, the Reverse Stock Split will result in some
shareholders owning "odd-lots" of less than 100 shares of Common Stock.
Brokerage commissions and other costs of transactions in odd-lots are
generally higher than the costs of transactions in "round-lots" of even
multiples of 100 shares.
Shareholders have no right under Missouri law or the Company's
Restated Articles of Incorporation or By-Laws to dissent from the Reverse
Stock Split.
The Common Stock is currently registered under Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as
a result the Company is subject to the periodic reporting and other
requirements of the Exchange Act. The Company expects that the proposed
Reverse Stock Split will not affect the registration of the Common Stock
under the Exchange Act.
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<PAGE> 14
EXCHANGE OF STOCK CERTIFICATES
If shareholders of the Company approve the Reverse Stock Split,
upon the filing of the Amendment each certificate representing Old Shares
will be deemed automatically without any action on part of the shareholders
to represent the number of New Shares into which such Old Shares have been
reclassified and changed pursuant to the Reverse Stock Split. In order to
receive stock certificates representing New Shares, shareholders will be
required to submit their stock certificates representing Old Shares to North
American Transfer Co., 147 West Merrick Road, Freeport, New York 11520, the
Company's exchange agent for the Reverse Stock Split (the "Exchange Agent").
As soon as is practicable after the effective date of the Reverse Stock
Split, the Company will forward a letter of transmittal to each holder of
record of Old Shares outstanding on the effective date of the Reverse Stock
Split. The letter of transmittal will contain instructions for the
surrender of certificates representing Old Shares to the Exchange Agent.
Upon proper completion and execution of the letter of transmittal and return
thereof to the Exchange Agent, together with the certificate(s) representing
Old Shares, a shareholder will be entitled to receive a certificate
representing the number of New Shares of Common Stock into which his Old
Shares have been reclassified and changed as a result of the Reverse Stock
Split.
Shareholders should not submit any certificates until requested
to do so. No certificate(s) for New Shares will be issued to a shareholder
until he has surrendered to the Exchange Agent his outstanding
certificate(s) for Old Shares together with a properly completed and
executed letter of transmittal.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The Company has not sought and will not seek an opinion of
counsel or a ruling from the Internal Revenue Service regarding the federal
income tax consequences of the Reverse Stock Split. The following
description of federal income tax consequences is based upon the Internal
Revenue Code of 1986, as amended, the applicable Treasury Regulations
promulgated thereunder, judicial authority and current administrative
rulings and practices as in effect on the date hereof. This discussion is
for general information only and does not discuss consequences which may
apply to special classes of taxpayers (e.g., non-resident aliens, broker-
dealers or insurance companies). Shareholders are urged to consult their
own tax advisors to determine the particular consequences to them.
The receipt of New Shares for Old Shares will not result in
recognition of gain or loss by a shareholder. The holding period of the New
Shares will include a shareholder's holding period for the Old Shares in
respect of which the New Shares are received, provided that the Old Shares
were held as a capital asset. The adjusted basis of the New Shares will be
the same as the adjusted basis of the Old Shares in respect of which the New
Shares are received. The Company will not recognize any gain or loss as a
result of the Reverse Stock Split.
RECOMMENDATION AND VOTE
The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock present in person or by proxy and
entitled to vote at the Special Meeting is required to approve the
Amendment. The members of the Board of Directors, who have the right to vote
in the aggregate approximately 77.9% of the outstanding shares of Common
Stock, have advised the Company that they intend to vote "FOR" the proposal
and, as a result of which, it is anticipated that the Amendment and the
Reverse Stock Split will be approved at the Special Meeting. The Board of
Directors of the Company has carefully considered the Reverse Stock Split and
recommends a vote "FOR" the proposal to approve the Reverse Stock Split which
is included as Item 3 on the accompanying proxy card. Unless directed
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<PAGE> 15
otherwise, the persons named in the accompanying proxy will vote the shares
represented thereby "FOR" the proposal to approve the Reverse Stock Split
APPOINTMENT OF AUDITORS
Deloitte & Touche, L.L.P. served as the Company's independent
public accountants for 1995 and has been selected by the Board of Directors
to continue in such capacity during 1996. The Board of Directors
anticipates that representatives of Deloitte & Touche, L.L.P. will be
present at the Annual Meeting with the opportunity to make a statement if
they desire to do so. Representatives of such firm also will be available
to respond to appropriate questions from shareholders.
The appointment of auditors is approved annually by the Board of
Directors. The decision of the Board of Directors is based on the
recommendation of the Audit Committee, which reviews and approves in advance
the audit scope, the type of non-audit services, if any, and estimated fees.
SHAREHOLDER PROPOSALS
All proposals of shareholders, including nominations of
directors, intended to be presented at the 1996 Annual Meeting of
Shareholders, must be received at Megacards, Inc., 1353 North Warson Road,
St. Louis, Missouri 63132 by February 21, 1996, in order to be eligible for
inclusion in the Company's Proxy Statement and Proxy for the 1997 Annual
Meeting of Shareholders.
DISCRETIONARY AUTHORITY
The Board of Directors does not intend to present at the Annual
Meeting any business other than that referred to in the accompanying Notice
of Annual Meeting. It was not aware, a reasonable time before this
solicitation of proxies, of any matters which may be properly presented for
action at the meeting. If any other matters should properly come before the
meeting the persons named in the enclosed form of Proxy will have
discretionary authority to vote the proxies in accordance with their
discretion and judgment in the best interests of the Company.
Although the Board of Directors does not contemplate that any
nominee for director named above will be unavailable for election, in the
event a vacancy in the slate of nominees is occasioned by death or some
other unexpected occurrence, it is intended that shares represented by
proxies in the enclosed form will be voted for the election of a nominee
selected by the Board of Directors.
LLOYD R. ABRAMS
President and Chief Executive Officer
June 4, 1996
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<PAGE> 16
[Form of Proxy]
[Front]
MEGACARDS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lloyd R. Abrams and [Kathy
Siegel], and either of them, with or without the other, proxies, with full
power of substitution to vote, as designated below, all shares of stock that
the signatory hereof is entitled to vote at the 1996 Annual Meeting of
Shareholders of Megacards, Inc. to be held at the offices of Thompson
Coburn, One Mercantile Center, St. Louis, Missouri 63101, on Friday, June
21, 1996, at 10:00 A.M. local time, and all adjournments thereof, all in
accordance with and as more fully described in the Notice and accompanying
Proxy Statement for such meeting, receipt of which is hereby acknowledged.
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as written to the contrary to vote for nominees as
below) listed below
LLOYD R. ABRAMS, ROBERT L. WOLFSON
and JANET L. SALK
(INSTRUCTION: To withhold authority to vote for any individual nominee
write that nominee's name in the space provided below.)
- -------------------------------------------------------------------------------
[Reverse]
2. TO AMEND THE RESTATED ARTICLES OF INCORPORATION OF THE COMPANY TO CHANGE
THE CORPORATE NAME TO "BENTLEY INTERNATIONAL, INC."
/ / FOR / / WITHHOLD AUTHORITY / / ABSTAIN
3. TO AMEND THE RESTATED ARTICLES OF INCORPORATION OF THE COMPANY TO: (I)
EFFECT A ONE-FOR-SIX REVERSE STOCK SPLIT OF ALL OF THE AUTHORIZED
SHARES OF THE COMPANY'S COMMON STOCK; AND (II) INCREASE THE PAR VALUE
OF THE COMPANY'S COMMON STOCK FROM $.03 TO $.18 PER SHARE.
/ / FOR / / WITHHOLD AUTHORITY / / ABSTAIN
4. IN THEIR DISCRETION UPON ANY BUSINESS WHICH MAY PROPERLY COME BEFORE THE
MEETING.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1, 2 AND 3.
Dated this ----- day of ----------------------------, 1996.
PLEASE DATE, SIGN AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
----------------------------------------
----------------------------------------
Signature
Please date and sign in the exact name
in which you own the Company's Common
Stock. Executors, administrators,
trustees and others acting in a
representative or fiduciary capacity
should so indicate when signing.
