SCHEDULE 14C
(Rule 14c-2)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
Rule 14c-5(d)(2))
[ X ] Definitive Information Statement
TRUE HEALTH, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (check the appropriate box):
[X] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g)
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 amount
on which filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction: 5) Total
fee paid:
[ ] 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 offering fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of the filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.: 3) Filing
Party: 4) Date Filed:
TRUE HEALTH, INC.
Kelsey House
77 High Street
Beckenham
Kent
BR3 1AN
United Kingdom
WRITTEN CONSENTS RELATING TO MERGER OF
TRUE HEALTH, INC.
(a Utah corporation)
INTO
MEDIQUIP HOLDINGS, INC.
(a Nevada corporation)
We are pleased to give you this notice that stockholders representing a
majority of our outstanding voting interests have consented in writing to the
reorganization of your company and changing its place of incorporation from Utah
to Nevada.
We believe this reorganization will facilitate the growth of your
company by enabling it to gain business, financial and strategic advantages that
are not available under our current corporate structure. The reorganization
should enhance our access to capital markets and our competitiveness regarding
corporate opportunities. We also believe the company should be a more attractive
investment alternative to a wider range of investors.
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WE ARE NOT ASKING YOU FOR A PROXY AND REQUEST THAT YOU NOT SEND US A PROXY.
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Our board of directors approved and adopted a Plan and Agreement of
Merger (the "Merger Plan") on March 27, 2006. Under the Merger Plan, True Health
approved the merger of True Health with and into MediQuip Holdings, Inc.
("MediQuip") and the exchange of each share of True Health for one (1) share of
MediQuip.
When the reorganization is completed, the shares you own of True
Health, Inc. (which we refer to as True Health) will automatically be converted
into the right to receive the same number and class of shares of MediQuip
Holdings, Inc., a Nevada corporation that we recently formed (which we refer to
as MediQuip). The number of MediQuip shares you will own will be the same as the
number of True Health shares you own immediately prior to the completion of the
reorganization, and your relative economic ownership in the company will remain
unchanged. After completion of the reorganization, MediQuip and its subsidiaries
will continue to conduct the business now conducted by True Health and its
subsidiaries.
True Health common stock is currently traded on the Over the Counter
Bulletin Board under the symbol "TRHE" and, immediately following the
reorganization, MediQuip common shares will be traded on the Over the Counter
Bulletin Board under a different symbol that has not yet been assigned.
As of the close of business on March 27, 2006, the record date for
shares entitled to notice of and to sign written consents in connection with the
reincorporation, there were 5,146,417 shares of our common stock outstanding and
4,196,777 shares of our preferred stock outstanding. Each share of our common
stock is entitled to one vote, 4,184,377 shares of our preferred stock are each
entitled to eight votes and the remaining 12,400 shares of our preferred stock
are not entitled to vote in connection with the reincorporation. Prior to the
mailing of this Information Statement, the board of directors signed a written
consent approving the reincorporation. As a result, the Merger Plan has been
approved and neither a meeting of our stockholders nor additional written
consents are necessary. This Information Statement will be mailed or provided to
the stockholders of True Health on or about April 10, 2006.
By Order of the Board of Directors,
David Francis
Chief Executive Officer
SUMMARY
------------------------------------- ---------------------------------------------------------------------
Transaction: Change of corporate domicile from Utah to Nevada by merger
with and into our wholly owned subsidiary, MediQuip.
Record Date: March 27, 2006
Effective Date: May 1, 2006
Purpose: The sole purpose of the transaction is to change our
domicile in order to adopt the benefits of Nevada corporate
law. See "Reincorporation in Nevada - Principal Reasons for
Reincorporation."
Method: Merger of True Health with and into our wholly owned Nevada
subsidiary, MediQuip. See "Reincorporation in Nevada -
Principal Features of the Reincorporation."
Exchange Ratios: As of the Effective Date, one share of MediQuip common
stock will be issued for each share of True Health common
stock, one share of MediQuip preferred stock will be issued
for each share of True Health preferred stock and one
MediQuip common stock purchase warrant will be issued for
each True Health common stock purchase warrant. See
"Reincorporation in Nevada - Principal Features of the
Reincorporation."
Name Change: Our corporate name will be changed from True Health, Inc.
to MediQuip Holdings, Inc. in connection with the
reincorporation. See "Comparison of
Rights of Stockholders - Significant
Changes in True Health's Charter and
By-Laws to be Implemented by the
Reincorporation - Corporate Name."
Capitalization Change Our authorized shares of common stock will be increased
from 100,000,000 to 490,000,000 and our authorized shares
of preferred stock will be increased from 5,000,000 to
10,000,000 in connection with the reincorporation. See
"Comparison of Rights of Stockholders - Significant Changes
in True Health's Charter and By-Laws to be Implemented by
the Reincorporation - Authorized Shares."
Additional Information More information is available about the Corporation free of
charge from us and from the Securities and Exchange
Commission. See "Additional Information."
Your Right to Dissent: You have the right
to dissent to the reincorporation and
be paid for your shares. See
"Dissenters' Rights" and the
provisions of Utah Law contained in
Exhibit C attached to this Information
Statement.
------------------------------------- ---------------------------------------------------------------------
Questions and Answers about the Reorganization
The following questions and answers are intended to respond to
frequently asked questions concerning the reincorporation of True Health in
Nevada. These questions do not, and are not intended to, address all the
questions that may be important to you. You should carefully read the entire
Information Statement, as well as its appendices and the documents incorporated
by reference in this Information Statement.
Q: Why was Nevada selected as the domicile of the new company?
A: Nevada corporate law is better developed and more widely respected than the
corporate laws of the State of Utah and we believe that becoming a Nevada
corporation will provide us with greater credibility and greater access to
capital markets that we have received as a Utah corporation. We also chose
Nevada because of our familiarity with Nevada and its corporate legal system
because of our experience with other companies which have been incorporated in
Nevada. Under current Nevada Law, a Nevada company is not required to pay taxes
in Nevada on either income or capital gains. In addition, despite certain
differences, the corporate legal system is such that your rights as a MediQuip
shareholder will be substantially unchanged from your rights as a stockholder in
True Health. We encourage you to read the section "Comparison of Rights of
Stockholders" beginning on page 8 for a more detailed description of the
differences between your rights under Delaware law and under Nevada Law. See
"Reincorporation in Nevada - Principal Reasons for Reincorporation."
Q: Why isn't True Health soliciting proxies relating to the Special Meeting?
A: We have received written consents from the holders of a majority of the
capital stock authorized to vote on the reincorporation. Under Utah Revised
Business Corporation Act ("Utah Law") and our Articles of Incorporation this
transaction may be approved by the written consent of a majority of the voting
interests entitled to vote on it at a meeting called for that purpose. Since we
have received the written consent of the necessary number of votes to approve
the reincorporation, conducting a meeting of the stockholders is not necessary
and represents a substantial and avoidable expense.
Q: How will the reorganization be accomplished?
A: True Health will merge with and into our wholly owned subsidiary, MediQuip,
created specifically for the reincorporation. One new share of MediQuip common
stock will be issued for each share of our common stock outstanding as of March
27, 2006, the Effective Date of the reincorporation and one share of MediQuip
preferred stock will be issued for each share of True Health preferred stock
outstanding as of May 1, 2006, the Effective Date of the reincorporation. The
sales of shares of True Health will cease to be reported on the Over The Counter
Bulletin Board and the sales of shares of MediQuip common stock will begin being
reported in their place beginning on the Effective Date of the reincorporation,
under a new CUSIP number and new trading symbol that have not yet been assigned.
Other securities of True Health, such as options, warrants, other rights to
purchase common stock, and securities exchangeable for or convertible into our
common stock will be exercisable or exchangeable for securities issued by
MediQuip. See "Reincorporation in Nevada - Principal Features of the
Reincorporation."
Q: How will the reincorporation affect your ownership interest of True Health?
A: After the Effective Date of the reincorporation, the rights of the
stockholders of MediQuip will be determined by Nevada Law instead of Utah Law.
Immediately prior to the reincorporation, there were 5,146,417 shares of common
stock outstanding and 4,196,777 shares of preferred stock outstanding. After the
Effective Date and the exchange of your stock, certificates there will continue
to be 5,146,417 shares of common stock outstanding and 4,184,377 shares of
preferred stock outstanding. See "Reincorporation in Nevada - Significant
Differences Between True Health and MediQuip" and "Interests of Management,
Certain Stockholders in the Reincorporation."
Q: What steps have been taken by the Board of Directors to insure that
the reincorporation is fair to the current holders of common stock?
A: The board of directors considered various transactions to generate
stockholder value, including restructuring True Health to permit continued
operation and growth. True Health is presently unable to raise capital to
adequately fund its operations and does not have adequate capital to actively
execute its business plan. The board of directors determined that the best
opportunity to generate value for the stockholders over the long term was the
adoption of a Merger Plan that provides for reincorporation of True Health in a
jurisdiction that provides greater operational flexibility for True Health. The
Merger Plan was adopted by the board of directors on March 27, 2006. See
"Reincorporation in Nevada - Exchange Ration of True Health Common Stock for
MediQuip Common Stock."
Q: How will the reincorporation affect the officers and directors of True
Health?
A: Our officers and directors hold the same positions with MediQuip. True
Health will cease to exist and MediQuip will undertake all of the operations,
assets and liabilities as of the Effective Date.
Q: How do I exchange certificates of True Health for certificates of MediQuip?
A: Enclosed with this Information Statement is a letter of transmittal and
instructions for surrendering certificates representing shares of True Health.
If you are a record stockholder, you should complete the letter of transmittal
and send it with certificates representing your shares of True Health to the
address set forth in the letter. Upon surrender of a certificate for
cancellation with a duly executed letter of transmittal, MediQuip will issue new
certificates representing the number of whole shares of MediQuip common stock as
soon as practical after the Effective Date. If you are not the record owner of
your True Health shares because they are held by a brokerage or investment
banker your shares of True Health will be exchanged by your broker. See
"Reincorporation in Nevada - How to Exchange True Health Certificates for
MediQuip Certificates."
Q: What if I lost my True Health certificates?
A: If you lost your True Health certificates, you should contact our transfer
agent as soon as possible to have a new certificate issued. You may be required
to post a bond or other security to reimburse us for any damages or costs if the
certificate is later delivered for conversion. Our transfer agent may be reached
at:
Cottonwood Stock Transfer Corporation
5899 South State Street
Salt Lake City, Utah 84107
Tel: 801-266-7151
Fax: 801-262-0907
Q: Can I require True Health to purchase my stock?
A: Yes. Under the Merger Plan, MediQuip has agreed to purchase all but not less
than all of the outstanding shares of True Health from any stockholder that
notifies True Health prior to the Effective Date that he or she dissents and
tenders certificates representing shares of True Health to MediQuip. The
purchase price will be determined by the board of directors based on the fair
market value of the shares immediately prior to the Effective Date. See
"Dissenters' Rights" and the provisions of Utah Law contained in Exhibit C
attached to the Information Statement.
Q: Who will pay the costs of reincorporation?
A: True Health will pay all of the costs of reincorporation in Nevada, including
distributing this Information Statement. We may also pay brokerage firms and
other custodians for their reasonable expenses for forwarding information
materials to the beneficial owners of our common stock. We do not anticipate
contracting for other services in connection with the reincorporation.
Q: Will I have to pay taxes as a result of the reorganization?
A: We believe that the reincorporation is not a taxable event and that
you will be entitled to the same aggregate basis in the shares of MediQuip that
you had in our common stock. EVERYONE'S TAX SITUATION IS DIFFERENT AND YOU
SHOULD CONSULT WITH YOUR PERSONAL TAX ADVISOR REGARDING THE TAX EFFECT OF THE
REINCORPORATION. See "Tax Matters."
Q: Will True Health be taxed as a result of the reorganization?
A: We do not believe that True Health should incur any U.S. federal tax
as a result of the reorganization. However, we have not sought or have we
received an opinion of counsel or other authoritative advice with respect to
the tax consequences of the reorganization
TRUE HEALTH, INC.
Kelsey House
77 High Street
Beckenham
Kent
BR3 1AN
United Kingdom
INFORMATION STATEMENT
Approximate Date Information Statement First Sent to Stockholders:
April 10, 2006
This Information Statement relates to action taken by the Stockholders
of True Health, Inc., a Utah corporation ("True Health") by written consent
dated as of March 27, 2006 (the "Consent"). The board of directors has prepared
and distributed this Information Statement. We are not soliciting proxies or
additional consents and request that you do not send proxies or consents to us
for use in connection with the Consent. All expenses incurred in this
Information Statement will be paid by True Health.
OUTSTANDING SHARES AND VOTING INTERESTS AND
VOTE REQUIRED FOR ADOPTION OF CERTAIN MATTERS
As of the close of business on March 27, 2006, the record date for
shares entitled to notice of and to sign written consents in connection with the
reincorporation, there were 5,146,417 shares of our common stock outstanding and
4,196,777 shares of our preferred stock outstanding. Each share of our common
stock is entitled to one vote, 4,184,377 shares of our preferred stock are each
entitled to eight votes and the remaining 12,400 shares of our preferred stock
are not entitled to vote in connection with the reincorporation. Prior to the
mailing of this Information Statement, David Francis, who owns a majority of the
shares of voting stock outstanding, signed written consent approving the
reincorporation. As a result, the Merger Plan has been approved and neither a
meeting of our stockholders nor additional written consents are necessary.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Corporation are as follows:
Name Age Position
--------------------------------------------------------------------------------------------------------------------
David Francis 40 Director and Chief Executive Officer
Ian G. Wylie 39 Director, Chief Financial Officer and Secretary
Nicola Rodker 39 Director
Steve O'Toole 33 Director
Robert Powell 54 Director
David Francis has served as a director since July 2003, having
previously been Managing Director and majority shareholder of Westmeria
Healthcare Limited before it merged with True Health.
Ian G Wylie, BA(Hons) FCA; joined True Health as a non-executive
director on 22 September 2003. He joined full-time as an executive director on 5
January 2004. Previosly Mr Wylie had served in Corporate Finance roles for Royal
Del Monte Foods International Ltd and Hambro Countrywide PLC, in addition to a
number of positions as Finance Director.
Nicola Rodker was appointed Finance Director in January 2006, having
previously held the role of Finance Manager for the past 5 years. Nicola is a
qualified accountant with 18 years' experience.
Steve O'Toole was appointed director on 1 February 2005, having
previously held the role of IT manager and subsequently, Head of Operations. He
has experience of systems and control processes, having implemented major IT
projects in the past.
Robert Powell was appointed Director on 1 January 2006, having
previously held the role of Distributor Network Manager and then National Sales
Manager. He has experience in sales and marketing through distributors but
specializing in the National Health Service Market Place.
VOTING SECURITIES AND OWNERSHIP
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists the beneficial ownership of shares of True
Health's common stock and by (i) all persons and groups known by True Health to
own beneficially more than 5% of the outstanding shares of True Health's common
stock, (ii) each director, (iii) each person who held the office of chief
executive officer during the last fiscal year, (iv) the four highest compensated
executive officers who were serving as executive officers on December 31, 2005
and received aggregate compensation during that year in excess of $100,000, and
(v) all directors and officers as a group. None of the directors or officers of
True Health owned any equity security issued by True Health's subsidiaries.
Information with respect to officers, directors and their families is as of
December 31, 2005 and is based on the books and records of True Health and
information obtained from each individual. Information with respect to other
stockholders is based upon the Schedule 13D or Schedule 13G filed by such
stockholders with the Securities and Exchange Commission. Unless otherwise
stated, the business address of each individual or group is the same as the
address of True Health's principal executive office.
Name and Address of Number and Class of Percent of Percent of
Beneficial Owner(1)(3) Stock Owned(2) Class Voting
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David Francis 3,918,906 93.85% 92.99%
Chief Executive Officer, Director
Nicola Rodker 34,688 .83% .82%
Director
Steve O'Toole 7,969 .19% .19%
Director
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3,961,563 94.87% 94.00%
All Directors and Officers as a Group
(3 Persons)
---------------------------
(1) The address of all named persons is Kelsy House, 77 High Street, Beckenham,
Kent, UK. BR3 1AN.
(2) All shares are Series A Preferred, each convertible on or after September
29, 2006 into eight (8) common shares and vote on an as converted basis of eight
votes per preferred share.
(3) As used in this table, "beneficial ownership" means the sole or shared power
to vote, or to direct the voting of, a security, or the sole or shared
investment power with respect to a security (i.e., the power to dispose of, or
to direct the disposition of, a security). Except as otherwise noted, it is
believed by True Health that all persons have full voting and investment power
with respect to the shares indicated. Under the rules of the Securities and
Exchange Commission, a person (or group of persons) is deemed to be a
"beneficial owner" of a security if he or she, directly or indirectly, has or
shares the power to vote or to direct the voting of such security, or the power
to dispose of or to direct the disposition of such security. Accordingly, more
than one person may be deemed to be a beneficial owner of the same security. A
person is also deemed to be a beneficial owner of any security which that person
has the right to acquire within 60 days, such as options or warrants to purchase
the common stock of True Health.
REINCORPORATION IN NEVADA
The following discussion summarizes certain aspects of our
reincorporation in Nevada. This summary does not include all of the provisions
of the Merger Plan between True Health and MediQuip, a copy of which is attached
hereto as Exhibit A, or the Articles of Incorporation of MediQuip, a copy of
which is attached hereto as Exhibit B. Copies of the by-laws of MediQuip are
available for inspection at our principal office and we will send copies to
stockholders without charge upon request.
Principal Reasons for Reincorporation
True Health believes that the reincorporation in Nevada will give us
more flexibility and simplicity in various corporate transactions. Nevada has
adopted Revised Statutes that includes by statute many concepts created by
judicial rulings in other jurisdictions and provides additional rights in
connection with the issuance and redemption of stock.
We believe our reincorporation in Nevada will save expenses for taxes
and fees because Nevada imposes no corporate income taxes on corporations that
are incorporated in Nevada.
Principal Features of the Reincorporation
The reincorporation will be effected by the merger of True Health with
and into our wholly owned subsidiary, MediQuip. MediQuip will be the surviving
entity.
On the Effective Date, (i) each of our stockholders will be entitled to
receive one fully paid and non-assessable share of MediQuip common stock for
each share of our common stock outstanding as of the Effective Date, (ii) each
of our stockholders will be entitled to receive one fully paid and
non-assessable preferred share of MediQuip for each share of our preferred stock
outstanding as of the Effective Date, and (iii) each of our warrant and option
holders will be entitled to receive one option or warrant of MediQuip for each
of our warrants or options outstanding as of the Effective Date, (iv) each share
of MediQuip common stock and preferred stock owned by True Health will be
canceled and resume the status of authorized and unissued MediQuip common stock,
and (v) True Health will cease its corporate existence in the State of Utah. We
anticipate that the shares of True Health will cease trading on the first
trading date following the Effective Date and shares of MediQuip will begin
trading in their place but under a new CUSIP number and symbol.
The Articles of Incorporation and by-laws of MediQuip are significantly
different from the Articles of Incorporation and by-laws of True Health. Because
of the differences between the Articles of Incorporation and by-laws of True
Health and the laws of the State of Utah, which govern True Health, and the
Articles of Incorporation and by-laws of MediQuip and the laws of the State of
Nevada, which govern MediQuip, your rights as stockholders will be affected by
the reincorporation. See the information under "Significant Differences between
True Health and MediQuip" for a summary of the differences between the Articles
of Incorporation and by-laws of True Health and the laws of the State of Utah
and the Articles of Incorporation and by-laws of MediQuip and the laws of the
State of Nevada.
The board of directors and officers of MediQuip consists of the same
persons that are currently our directors and officers. Our daily business
operations will continue at the principal executive offices at Kelsey House, 77
High Street, Beckenham, Kent BR3 1AN United Kingdom.
Reservation of Rights
Our board of directors reserves the right not to proceed, if, at any time
prior to filing the Certificate of Merger with the Secretary of State of the
State of Utah, our board of directors determines that the reincorporation is no
longer in our and our stockholders' best interests.
How to Exchange True Health Certificates for MediQuip Certificates
Enclosed are (i) a form letter of transmittal and (ii) instructions for
surrender of your certificates representing our common stock in exchange for
certificates representing shares of MediQuip common stock, preferred stock and
warrants or options. Upon surrender of a certificate representing our common
stock, preferred stock, warrants or options to MediQuip, together with a duly
executed letter of transmittal, MediQuip will issue, as soon as practicable, a
certificate representing the number of shares, options or warrants of MediQuip
you are entitled to receive.
If you own our shares through a nominee or in a brokerage account, you
do not have a certificate to submit for exchange. Usually, your nominee or
broker will submit certificates representing our shares for exchange on your
behalf. We recommend that you contact your nominee or broker and confirm that a
certificate is submitted for exchange.
Because of the reincorporation in Nevada, holders of our common stock,
preferred stock, warrants and options are not required to exchange their
certificates for MediQuip certificates. Dividends and other distributions
declared after the Effective Date with respect to common stock or preferred
stock of True Health and payable to holders of record thereof after the
Effective Date will be paid to the holder of any unsurrendered common stock or
preferred stock certificate of True Health, which by virtue of the
reincorporation are represented thereby and such holder will be entitled to
exercise any right as a shareholder of MediQuip, until such holder has
surrendered the certificate of True Health. Holders of warrants or options will
be entitled to exercise any right as a holder of MediQuip, until such holder has
surrendered the certificate of True Health.
Capitalization
Our authorized capital consists of 100,000,000 shares of common stock,
$.01 par value and 5,000,000 shares of preferred stock, $.01 par value. As of
March 27, 2006, the record date for those stockholders entitled to notice of the
reincorporation, there were 5,146,417 shares of our common stock outstanding and
4,196,777 shares of our preferred stock outstanding. The authorized capital of
MediQuip consists of 500,000,000 shares of capital stock divided into
490,000,000 shares of common stock, $.001 par value per share, and 10,000,000
shares of preferred stock, $.001 par value per share. As a result of the
reincorporation and exchange of the common stock and preferred stock, MediQuip
will have outstanding the same number of shares of common stock and the same
number of shares of preferred stock. The reincorporation will not affect our
total stockholder equity or total capitalization.
COMPARISON OF RIGHTS OF STOCKHOLDERS
True Health was incorporated under the laws of the State of Utah and
MediQuip is incorporated under the laws of the State of Nevada. On the Effective
Date of the Reincorporation stockholders of True Health will become stockholders
of MediQuip. Their rights as stockholders will be governed by Title 7, Chapter
78 of the Nevada Revised Statutes ("Nevada Law") and the Articles of
Incorporation and by-laws of MediQuip rather than the Utah Law and the True
Health Articles of Incorporation and by-laws.
Significant Changes in True Health's Charter and By-laws to be Implemented By
the Reincorporation
Corporate Name. The reincorporation will effect a change in True
Health's name to MediQuip Holdings, Inc.
Authorized Shares. The reincorporation will increase the number of
common shares we are authorized to issue from 100,000,000 shares to 490,000,000
and the number of preferred shares we are authorized to issue will increase from
5,000,000 shares to 10,000,000 shares. The increased number of common and
preferred shares will be available to raise capital or for compensation. We have
no present intention or binding commitments to issue any additional common
shares or preferred shares.
Limitation of Liability. The Nevada Articles of Incorporation contain a
provision limiting or eliminating, with certain exceptions, the liability of
directors to MediQuip and its shareholders for monetary damages for breach of
their fiduciary duties. The True Health Articles of Incorporation contains no
similar provision. The board of directors believes that such provision will
better enable MediQuip to attract and retain as directors responsible
individuals with the experience and background required to direct MediQuip's
business and affairs. It has become increasingly difficult for corporations to
obtain adequate liability insurance to protect directors from personal losses
resulting from suits or other proceedings involving them by reason of their
service as directors. Such insurance is considered a standard condition of
directors' engagement. However, coverage under such insurance is no longer
routinely offered by insurers and many traditional insurance carriers have
withdrawn from the market. To the extent such insurance is available, the scope
of coverage is often restricted, the dollar limits of coverage are substantially
reduced and the premiums have risen dramatically.
Indemnification. The Nevada Law authorizes broad indemnification rights
which corporations may provide to their directors, officers and other corporate
agents. The Nevada Articles of Incorporation reflect the provisions of Nevada
Law, as amended, and, as discussed below, provide broad rights to
indemnification.
The broad scope of indemnification now available under Nevada Law will
permit MediQuip to offer its directors and officers greater protection against
these risks. The board of directors believes that such protection is reasonable
and desirable in order to enhance MediQuip's ability to attract and retain
qualified directors as well as to encourage directors to continue to make good
faith decisions on behalf of MediQuip with regard to the best interests of
MediQuip and its stockholders.
Article VIII of the Nevada Articles of Incorporation are quite
different from the True Health Articles of Incorporation and require
indemnification of MediQuip's directors and officers to the fullest extent
permitted under applicable law as from time to time in affect, with respect to
expenses, liability or loss (including, without limitation, attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) actually and reasonably incurred by any person in connection with
any actual or threatened proceeding by reason of the fact that such person is or
was a director or officer of MediQuip or is or was serving at the request of
MediQuip as a director or officer of another corporation or of a partnership,
joint venture; trust, employee benefit plan or other enterprise at the request
of MediQuip. The right to indemnification includes the right to receive payment
of expenses in advance of the final disposition of such proceeding; consistent
with applicable law from time to time in effect; provided, however, that if the
Nevada Law requires the payment of such expenses in advance of the final
disposition of a proceeding, payment shall be made only if such person
undertakes to repay MediQuip if it is ultimately determined that he or she was
not entitled to indemnification.
Insofar as the Nevada Articles of Incorporation provide indemnification
to directors or officers for liabilities arising under the Securities Act of
1933, it is the position of the Securities and Exchange Commission that such
indemnification would be against public policy as expressed in such statute and,
therefore, unenforceable.
The board of directors recognizes that MediQuip may in the future be
obligated to incur substantial expense as a result of the indemnification rights
conferred under the Nevada Articles of Incorporation, which are intended to be
as broad as possible under applicable law. Because directors of MediQuip may
personally benefit from the indemnification provisions of the MediQuip Articles
of Incorporation, the members of the board of directors may be deemed to have a
personal interest in the effectuation of the reincorporation.
Significant Differences Between the Corporation Laws of Nevada and Utah
True Health is incorporated under the laws of the State of Utah and
MediQuip is incorporated under the laws of the State of Nevada. On the Effective
Date of the reincorporation, the stockholders of True Health, whose rights
currently are governed by Utah Law and the True Health Articles of Incorporation
and the True Health by-laws, which were created pursuant to Utah Law, will
become stockholders of a Nevada company, MediQuip, and their rights as
stockholders will then be governed by Nevada Law and the Nevada Articles of
Incorporation and the Nevada by-laws which were created under Nevada Law.
Although the corporate statutes of Utah and Nevada are similar, certain
differences exist. The most significant differences, in the judgment of the
management of True Health, are summarized below. This summary is not intended to
be complete, and stockholders should refer to the Nevada Law and the Utah Law to
understand how these laws apply to True Health and MediQuip.
Removal of Directors. Under Utah Law, members of a board of directors
may be removed with or without cause. Removal requires the vote of a majority of
the outstanding shares entitled to vote for the election of directors. Nevada
Law provides that any or all directors may be removed by the vote of two-thirds
of the voting interests entitled to vote for the election of directors. Nevada
does not distinguish between removal of directors with and without cause. The
reincorporation may make it more difficult for the stockholders of MediQuip to
remove a member of the board of directors because it increases the number of
shares that must be voted for removal.
Special Meetings of Stockholders. Utah Law permits special meetings of
stockholders to be called by the board of directors or by any other person
authorized in the Articles of Incorporation or by-laws to call a special
stockholder meeting or by the holders of shares representing at least ten
percent of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting. Nevada Law authorizes the entire
board of directors, any two directors or the president to call annual and
special meetings of the stockholders and directors. The Articles of
Incorporation and by-laws of MediQuip provide that special meetings of the
stockholders may be called only by the board of directors or a committee of the
board of directors that is delegated the power to call special meetings by the
board of directors. The authority of shareholders to call special meetings,
without petitioning a court, is eliminated as a result of the reincorporation.
Special Meetings Pursuant to Petition of Stockholders. Utah Law
provides that a director or a stockholder of a corporation may apply to the
district court of the State of Utah in the county of the corporation's
registered office if the corporation fails to hold an annual meeting for the
election of directors or there is no written consent to elect directors in lieu
of an annual meeting taken, in both cases for a period of thirty (30) days after
the date designated for the annual meeting or if there is no such date
designated, within 13 months after the last annual meeting. Nevada Law is more
restrictive. Under Nevada Law stockholders having not less than 15% of the
voting interest may petition the district court to order a meeting for the
election of directors if a corporation fails to call a meeting for that purpose
within 18 months after the last meeting at which directors were elected. The
reincorporation may make it more difficult for the stockholders of MediQuip to
require that an annual meeting be held without the consent of the board of
directors.
Cumulative Voting. Cumulative voting for directors entitles
stockholders to cast a number of votes that is equal to the number of voting
shares held multiplied by the number of directors to be elected. Stockholders
may cast all such votes either for one nominee or distribute such votes among up
to as many candidates as there are positions to be filled. Cumulative voting may
enable a minority stockholder or group of stockholders to elect at least one
representative to the board of directors where such stockholders would not
otherwise be able to elect any directors.
Utah Law permits cumulative voting unless otherwise provided for in the
articles of incorporation. Nevada Law permits cumulative voting only if provided
for in the articles of incorporation. The articles of incorporation of True
Health do not prohibit cumulative voting, therefore, cumulative voting is
permitted. The articles of incorporation of MediQuip do not permit cumulative
voting, therefore, cumulative voting is not permitted. The reincorporation
changes the fact that the stockholders presently have the right to cumulate
their votes and after the Effective Date of the reincorporation they will not
have that right.
Vacancies. Under Utah Law, vacancies on the board of directors may be
filled by the affirmative vote of a majority of the shareholders or the
remaining directors then in office, even if less than a quorum. Any director so
appointed will hold office for the remainder of the full term of the class of
directors in which the vacancy occurred. Similarly, Nevada Law provides that
vacancies may be filled by a majority of the remaining directors, though less
than a quorum. The by-laws of both True Health and MediQuip address the election
of persons to fill vacancies on the board of directors in substantially the same
manner.
Indemnification of Officers and Directors and Advancement of Expenses.
Utah and Nevada have substantially similar provisions regarding indemnification
by a corporation of its directors. Utah and Nevada Law differ in their
provisions for advancement of expenses incurred by an officer or director in
defending a civil or criminal action, suit or proceeding. Utah Law provides that
expenses incurred by an director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined that he or she is not
entitled to be indemnified by the corporation. A Utah corporation has the
discretion to decide whether or not to advance expenses, unless its Articles of
Incorporation or by-laws provides for mandatory advancement. Nevada Law differs
in two respects: First, Nevada Law applies to advance of expenses incurred by
both officers and directors. Second, under Nevada Law, the articles of
incorporation, by-laws or an agreement made by the corporation may provide that
the corporation must pay advancements of expenses in advance of the final
disposition of the action, suit or proceedings upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined that he or she is not entitled to be indemnified by the corporation.
There will be a significant difference in stockholders' rights with respect to
this issue because the by-laws of True Health do not provide for the mandatory
advancement of expenses of directors and officers and the Articles of MediQuip
do so provide.
Limitation on Personal Liability of Directors. Nevada Law provides that
unless the articles of incorporation provide for greater liability, a director
is not liable to a company and its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such liability does not arise
from certain proscribed conduct, including breach of the duty of loyalty, acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law or liability to the corporation based on unlawful
dividends or distributions or improper personal benefit. The Articles of
Incorporation of MediQuip exclude director liability to the maximum extent
allowed by Nevada Law. Nevada Law permits, and MediQuip has adopted, a broader
exclusion of liability of both officers and directors to the corporation and its
stockholders, providing for an exclusion of all monetary damages for breach of
fiduciary duty unless they arise from act or omissions which involve intentional
misconduct, fraud or a knowing violation of law or payments of dividends or
distributions in excess of the amount allowed.
Utah Law authorized the articles of incorporation, with specified
exceptions, to limit the liability of a director to the corporation or to its
shareholders for monetary damages for any action taken or any failure to take
any action as a director. The True Health articles do not contain any provision
to limit the liability of directors.
Therefore, the reincorporation will result in the elimination of any
present liability of an officer or director for a breach of the duty of loyalty
unless arising from intentional misconduct, fraud, or a knowing violation of
law.
Dividends. Utah Law is substantially the same as Nevada Law with
respect to when dividends may be paid or redemption of its shares. Under the
Utah Law, unless further restricted in the Articles of Incorporation, a
corporation may pay dividends redeem or repurchase its shares only if, after
giving it effect: (a) the corporation would not be able to pay its debts as they
become due in the usual course of business; or (b) the corporation's total
assets would be less than the sum of its total liabilities plus. Nevada Law
provides that no distribution (including dividends on, or redemption or
repurchases of, shares of capital stock) may be made if, after giving effect to
such distribution, the corporation would not be able to pay its debts as they
become due in the usual course of business, or, except as specifically permitted
by the articles of incorporation, the corporation's total assets would be less
than the sum of its total liabilities plus the amount that would be needed at
the time of a dissolution to satisfy the preferential rights of preferred
stockholders. The reincorporation does not significantly change the ability of
MediQuip to pay dividends or other distributions that would be payable under
Utah Law.
Restrictions on Business Combinations. Nevada Law contains provisions
restricting the ability of a corporation to engage in business combinations with
an interested stockholder. Under Nevada Law, a corporation is not permitted to
engage in a business combination with any interested stockholder for a
three-year period following the time such stockholder became an interested
stockholder, unless (i) the transaction is approved by the board of directors of
the resident domestic corporation before the date that the person first became
an interested stockholder; (ii) the transaction by which the person became an
interested stockholder was approved by the board of directors of the resident
domestic corporation before the person became an interested stockholder; or
(iii) the business combination is approved by the affirmative vote of the
holders of stock representing a majority of the outstanding voting power not
beneficially owned by the interested stockholder proposing the combination, or
any affiliate or associate of the interested stockholder proposing the
combination, at a meeting called for that purpose no earlier than 3 years after
the date that the person first became an interested stockholder.
Utah Law does not regulate business combinations.
MediQuip has opted out of the applicable Nevada statutes, therefore,
the more stringent requirements of Nevada Law do not apply to mergers and
combinations after the Effective Date of the reincorporation.
Amendment to Articles of Incorporation or By-Laws. Both Utah and Nevada
Law require the approval of the holders of a majority of all outstanding shares
entitled to vote to approve proposed amendments to a corporation's articles of
incorporation. Both Utah and Nevada Law also provide that in addition to the
vote of the stockholders, the vote of a majority of the outstanding shares of a
class may be required to amend the Articles of Incorporation or articles of
incorporation. Neither state requires stockholder approval for the board of
directors of a corporation to fix the voting powers, designation, preferences,
limitations, restrictions and rights of a class of stock provided that the
corporation's organizational documents grant such power to its board of
directors. Both Utah and Nevada Law permit the number of authorized shares of
any such class of stock to be increased or decreased (but not below the number
of shares then outstanding) by the board of directors unless otherwise provided
in the articles of incorporation or resolution adopted pursuant to the Articles
of Incorporation, respectively.
Actions by Written Consent of Stockholders. Both Utah and Nevada Law
provide that, unless the Articles of Incorporation provides otherwise, any
action required or permitted to be taken at a meeting of the stockholders may be
taken without a meeting if the holders of outstanding stock having at least the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote consents to the action in
writing. Utah Law requires the corporation to give prompt notice of the taking
of corporate action without a meeting by less than unanimous written consent to
those stockholders who did not consent in writing. Nevada Law does not require
notice to the stockholders of action taken by less than all of the stockholders.
Stockholder Vote for Mergers and Other Corporation Reorganizations.
Both jurisdictions require authorization by an absolute majority of the
outstanding voting rights, as well as approval by the board of directors, of the
terms of a merger or a sale of substantially all of the assets of the
corporation. Neither Utah nor Nevada Law require a stockholder vote of the
surviving corporation in a merger (unless the corporation provides otherwise in
its Articles of Incorporation) if: (a) the merger agreement does not amend the
existing Articles of Incorporation of the surviving corporation; (b) each share
of stock of the surviving corporation outstanding immediately before the
effective date of the merger is an identical outstanding share after the merger;
and (c) either no shares of common stock of the surviving corporation and no
shares, securities or obligations convertible into such stock are to be issued
or delivered under the plan of merger, or the authorized unissued shares or
shares of common stock of the surviving corporation to be issued or delivered
under the plan of merger plus those initially issuable upon conversion of any
other shares, securities or obligations to be issued or delivered under such
plan do not exceed twenty percent (20%) of the shares of common stock of such
constituent corporation outstanding immediately prior to the effective date of
the merger.
DEFENSES AGAINST HOSTILE TAKEOVERS
The following discussion summarizes the reasons for, and the operation
and effects of, certain provisions in the MediQuip Articles of Incorporation
which management has identified as potentially having an anti-takeover effect.
It is not intended to be a complete description of all potential anti-takeover
effects, and it is qualified in its entirety by reference to the MediQuip
Articles of Incorporation. Similar provisions are not contained in the True
Health Articles of Incorporation of Incorporation. The reincorporation provides
significant anti-takeover provisions.
The anti-takeover provisions of the MediQuip Articles of Incorporation
are designed to minimize the possibility of a sudden acquisition of control of
MediQuip which has not been negotiated with and approved by the MediQuip board
of directors. These provisions may tend to make it more difficult to remove the
incumbent members of the board of directors. The provisions would not prohibit
an acquisition of control of MediQuip or a tender offer for all of its capital
stock. However, to the extent these provisions successfully discourage the
acquisition of control of MediQuip or tender offers for all or part of its
capital stock without approval of the board of directors, they may have the
effect of preventing an acquisition or tender offer which might be viewed by
stockholders to be in their best interests.
Tender offers or other non-open market acquisitions of stock are
usually made at prices above the prevailing market price. In addition,
acquisitions of stock by persons attempting to acquire control through market
purchases may cause the market price of the stock to reach levels which are
higher than would otherwise be the case. Anti-takeover provisions may discourage
such purchases, particularly those of less than all of the outstanding capital
stock, and may thereby deprive stockholders of an opportunity to sell their
stock at a temporarily higher price. These provisions may therefore decrease the
likelihood that a tender offer will be made adversely affect those stockholders
who would desire to participate in a tender offer. These provisions may also
serve to insulate incumbent management from change and to discourage not only
sudden or hostile takeover attempts, but any attempts to acquire control which
are not approved by the board of directors, whether or not stockholders deem
such transactions to be in their best interests.
Authorized Shares of Capital Stock.
The MediQuip Articles of Incorporation authorizes the issuance of up to
10,000,000 shares of serial preferred stock, without any action on the part of
the stockholders. Shares of MediQuip's serial preferred stock with voting rights
could be issued and would then represent an additional class of stock required
to approve any proposed acquisition. This preferred stock, together with
authorized but unissued shares of common stock (the Articles of Incorporation
authorizes the issuance of up 490,000,000 shares of common stock), could
represent additional capital stock required to be purchased by an acquiror. If
the board of directors of MediQuip determined to issue an additional class of
voting preferred stock to a person opposed to a proposed acquisition, such
person might be able to prevent the acquisition single-handedly.
Stockholder Meetings.
Nevada Law provides that the annual stockholder meeting may be called
by a corporation's board of directors or by such person or persons as may be
authorized by a corporation's articles of incorporation or by-laws. The MediQuip
Articles of Incorporation provides that annual stockholder meetings may be
called only by the MediQuip board of directors or a duly designated committee of
the board. Although MediQuip believes that this provision will discourage
stockholder attempts to disrupt the business of MediQuip between annual
meetings, its effect may be to deter hostile takeovers by making it more
difficult for a person or entity to obtain immediate control of MediQuip
Maximum Number of Directors and Filling Vacancies on the Board of Directors.
Nevada Law requires that the board of directors of a corporation
consist of one or more members and that the number of directors shall be set by
or in the manner described in the corporation's articles of incorporation or
by-laws. MediQuip's Articles of Incorporation provides that the number of
directors (exclusive of directors, if any, to be elected by the holders of
preferred stock) shall not be less than one or more than 15, as shall be
provided from time to time in accordance with the by-laws. The power to
determine the number of directors within these numerical limitations is vested
in the board of directors. The effect of such provisions may be to prevent a
person or entity to quickly acquiring control of MediQuip through an increase in
the number of the directors and election of nominees to fill the newly created
vacancies.
DISSENTERS' RIGHTS
The following description of the dissenters' rights is qualified in its
entirety by reference to Utah Code Annotated ss.16-10a-1320, et seq., a copy of
which is set forth as Exhibit C to this Information Statement.
Stockholders of True Health on March 27, 2006, who dissent from the
merger of True Health into MediQuip by written notice prior to the Effective
Date of the merger, are entitled to receive the fair market value of their
shares immediately prior to the merger. A stockholder may not exercise his or
her right to dissent or require True Health to purchase less than all of the
shares as to which he or she has the right to vote.
Any stockholder intending to exercise his or her right to dissent must
provide True Health with written notice. The written notice must state that the
stockholder intends to dissent, the name and address of the stockholder, the
number and classes of shares as to which the stockholder dissents, and that the
stockholder demands payment of the fair market value of the shares if the merger
is approved. The written notice of dissent and certificates representing shares
of the common stock of True Health as to which payment is required must be
delivered to True Health at the following address before the Effective Date of
the merger:
True Health, Inc.
Attn: David Francis
Kelsey House, 77 High Street
Beckenham, Kent
BR3 1AN
United Kingdom
A form of written demand is attached as Exhibit D.
Within 10 days after the Effective Date of the merger True Health will
provide each dissenting stockholder with payment of the estimated fair value of
the tendered stock of True Health together with a copy of the latest available
interim financial statements. If the stockholder believes the amount paid by
True Health is less than the fair value of the True Health stock may notify True
Health of his own estimate of the fair value and demand payment of the
additional estimated amount plus interest. If the demand remains unresolved for
60 days, True Health may file a petition in the courts of Utah to determine the
fair value of the shares and the amount of interest.
Upon the Effective Date, all rights of a dissenting stockholder, except
the right to receive payment of the fair value as set forth above, shall cease.
A notice of dissent may be withdrawn within at any time prior to the Effective
Date but may not be withdrawn after acceptance of payment of the fair market
value of the shares.
ADDITIONAL INFORMATION
A copy of our annual report on Form 10-KSB for the fiscal year ended
January 31, 2005 and a copy of our quarter annual report on Form 10-QSB for the
fiscal quarter ended October 31, 2005 is available free of charge, by written
request to the corporate secretary at True Health's principal executive offices
set forth above. Copies can also be obtained, free of charge, from the Public
Reference Section of the Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, D.C. 20549, at prescribed rates. We file documents and reports
electronically through the Electronic Data Gathering, Analysis and Retrieval
System ("EDGAR") which is publicly available, at not charge, through the
Commission's Internet World Wide website, http://www.sec.gov.
TAX MATTERS
We have not sought or received an opinion from any person regarding the
effect of the reincorporation on True Health, MediQuip or our stockholders under
federal income tax laws.
We believe that for federal income tax purposes no gain or loss will be
recognized by MediQuip, True Health or the stockholders of True Health who
receive MediQuip stock for their True Health stock in connection with the
reincorporation. The adjusted tax basis of each whole share of MediQuip stock
received by a stockholder of True Health as a result of the reincorporation will
be the same as the stockholder's aggregate adjusted tax basis in the shares of
True Health stock that he receives as a result of the reincorporation and his
holding period for the True Health stock will be the same as the stockholder's
holding period for the shares of True Health stock that he receives as a result
of the reincorporation.
The foregoing does not address the effect of the Internal Revenue Code
on any person that is a bank, real estate trust, broker, dealer, investment
company or otherwise subject to special tax treatment; is a foreign person;
holds our stock as part of a "straddle," "synthetic security," or other security
hedge position; or whose functional currency is not the United States Dollar.
Because of the complexity of the capital gains and loss provisions of the
Internal Revenue Code of 1986 and because of the uniqueness of each individual's
capital gain or loss situation, stockholders contemplating exercising statutory
dissenters' rights should consult their own tax advisor regarding the federal
income tax consequences of exercising such rights. State, local or foreign
income tax consequences to stockholders may vary from the federal income tax
consequences described above, and STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISOR AS TO THE CONSEQUENCES TO THEM OF THE REINCORPORATION UNDER ALL
APPLICABLE TAX LAWS.
By Order of the Board of Directors,
David Francis
Chief Executive Officer
Dated: April 10, 2006
EXHIBIT A
PLAN AND AGREEMENT OF MERGER
OF
TRUE HEALTH, INC.
(a Utah corporation)
AND
MEDIQUIP HOLDINGS, INC.
(a Nevada corporation)
PLAN AND AGREEMENT OF MERGER entered into on March 27, 2006 by True
Health, Inc., a Utah corporation ("True Health"), and approved by resolution
adopted by its board of directors on said date, and entered into on March 27,
2006, by MediQuip Holdings, Inc., a Nevada corporation ("MediQuip"), and
approved by resolution adopted by its board of directors on said date.
WHEREAS, True Health is a business corporation of the State of Utah;
WHEREAS, MediQuip is a business corporation of the State of Nevada;
WHEREAS, the Utah Revised Business Corporation Act permits a merger of
a business corporation of the State of Utah with and into a business corporation
of another jurisdiction;
WHEREAS, True Health does not intend to carry on any business except
the business necessary to wind up and liquidate its business and affairs by
means of a merger with and into a business corporation of the State of Nevada;
and
WHEREAS, True Health and MediQuip and the respective Boards of
Directors thereof declare it advisable and to the advantage, welfare, and best
interests of said corporations and their respective stockholders to merge True
Health with and into MediQuip pursuant to the provisions of the Utah Revised
Business Corporation Act and pursuant to the provisions of the Nevada Revised
Statutes upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreement of the parties hereto, being thereunto duly entered into by True
Health and approved by a resolution adopted by its board of directors and being
thereunto duly entered into by MediQuip and approved by a resolution adopted by
its board of directors, the Merger and the terms and conditions thereof and the
mode of carrying the same into effect, are hereby determined and agreed upon as
hereinafter in this Plan and Agreement of Merger set forth.
1. True Health shall, pursuant to the provisions of the Utah
Revised Business Corporation Act and to the provisions of the
Nevada Revised Statutes, be merged with and into MediQuip,
which shall be the surviving corporation from and after the
effective time of the merger and which is sometimes
hereinafter referred to as the "surviving corporation", and
which shall continue to exist as said surviving corporation
under its present name pursuant to the provisions of the
Nevada Revised Statutes. The separate existence of True
Health, which is sometimes hereinafter referred to as the
"terminating corporation", shall cease at said effective time
in accordance with the provisions of the Utah Revised Business
Corporation Act.
2. The present Articles of Incorporation of MediQuip will be the
Articles of Incorporation of the surviving corporation and
will continue in full force and effect until changed, altered,
or amended as therein provided and in the manner prescribed by
the provisions of the Nevada Revised Statutes.
3. The present by-laws of MediQuip will be the by-laws of said
surviving corporation and will continue in full force and
effect until changed, altered, or amended as therein provided
and in the manner prescribed by the provisions of the Nevada
Revised Statutes.
4. The directors and officers in office of MediQuip at the
effective time of the merger shall be the members of the board
of directors and the officers of the surviving corporation,
all of whom shall hold their directorships and offices until
the election and qualification of their respective successors
or until their tenure is otherwise terminated in accordance
with the by-laws of the surviving corporation.
5. Each issued share of the common stock of the terminating
corporation shall, from and after the effective time of the
merger, be converted into one (1) share of the common stock of
the surviving corporation. Each issued share of the preferred
stock of the terminating corporation shall, from and after the
effective time of the merger, be converted into one-share of
the preferred stock of the surviving corporation. Each
outstanding warrant or option to purchase shares of the common
stock or preferred stock of the terminating corporation shall,
from and after the effective time of the merger, be converted
into warrants or options to purchase the same number of shares
of common stock or preferred stock of the surviving
corporation for the same price and upon the same terms as the
option or warrant of the terminating corporation. The
surviving corporation shall not issue any certificate or
script representing a fractional share of common stock but
shall instead issue one full share for any fractional interest
arising from the Merger. Pursuant to the laws of the State of
Nevada, each share of the terminating corporation may be
tendered to the surviving corporation for exchange into shares
of the surviving corporation at any time after the effective
time of the merger. Upon receipt of such shares of the
terminating corporation, the surviving corporation shall issue
a certificate for the whole shares of the surviving
corporation that are issuable in exchange for the shares of
the terminating corporation.
6. Stockholders of the terminating corporation shall have the
same rights to notices, distributions or voting with respect
to the surviving corporation until the certificates
representing shares of the terminating corporation are
tendered to the surviving corporation for exchange.
7. Except to the extent otherwise provided in the terms of
outstanding options, warrants or other rights to purchase, or
securities convertible into or exchangeable for common stock
of the terminating corporation (other than shares of the
preferred stock of the terminating corporation), each
outstanding option, warrant or other right to purchase, and
each outstanding security convertible into or exchangeable for
capital stock shall be converted into an option, warrant or
other right to purchase, or security convertible into or
exchangeable for capital stock of the surviving corporation on
the basis of one (1) share of the capital stock of the
surviving corporation for each share of capital stock of the
terminating corporation. The exercise price or conversion
ratio set forth in such option, warrant or other right to
purchase, or security convertible into or exchangeable for
capital stock of the surviving corporation shall be the same
as under the option, warrant, or other right to purchase, or
security convertible into or exchangeable for capital stock of
the terminating corporation.
8. In the event that this Plan and Agreement of Merger shall have
been fully approved and adopted upon behalf of the terminating
corporation in accordance with the provisions of the Utah
Revised Business Corporation Act and upon behalf of the
surviving corporation in accordance with the provisions of the
Nevada Revised Statutes, the said corporations agree that they
will cause to be executed and filed and recorded any document
or documents prescribed by the laws of the State of Utah and
by the laws of the State of Nevada, and that they will cause
to be performed all necessary acts within the State of Utah
and the State of Nevada and elsewhere to effectuate the merger
herein provided for.
9. The board of directors and the proper officers of the
terminating corporation and of the surviving corporation are
hereby authorized, empowered, and directed to do any and all
acts and things, and to make, execute, deliver, file, and
record any and all instruments, papers, and documents which
shall be or become necessary, proper, or convenient to carry
out or put into effect any of the provisions of this Plan and
Agreement of Merger or of the merger herein provided for.
10. The effective time of this Plan and Agreement of Merger, and
the time at which the merger herein agreed shall become
effective in the State of Utah and the State of Nevada, shall
be on the first to occur of:
(a) the date this Plan and Agreement of Merger, or a certificate
of merger meeting the requirements of the Nevada Revised
Statutes, is filed with the Secretary of State of the State of
Nevada; or
(b) the date this Plan and Agreement of Merger, or a certificate
of merger meeting the requirements of the Utah Revised
Statutes, is filed with the Secretary of State of the State of
Utah.
11. Notwithstanding the full approval and adoption of this Plan
and Agreement of Merger, the said Plan and Agreement of Merger
may be terminated at any time prior to the filing thereof with
the Secretary of State of the State of Nevada.
12. Notwithstanding the full approval and adoption of this Plan
and Agreement of Merger, the said Plan and Agreement of Merger
may be amended at any time and from time to time prior to the
filing thereof with the Secretary of State of the State of
Utah and at any time and from time to time prior to the filing
of any requisite merger documents with the Secretary of State
of the State of Nevada except that, without the approval of
the stockholders of True Health and the stockholders of
MediQuip, no such amendment may (a) change the rate of
exchange for any shares of True Health or the types or amounts
of consideration that will be distributed to the holders of
the shares of stock of True Health; (b) change any term of the
Articles of Incorporation of the surviving corporation; or (c)
adversely affect any of the rights of the stockholders of True
Health or MediQuip.
IN WITNESS WHEREOF, this Plan and Agreement of Merger is hereby
executed upon behalf of each of the constituent corporations parties thereto.
Dated: March 27, 2006 TRUE HEALTH, INC.
a Utah corporation
By: _______________________________
David Francis, President and
Chief Executive Officer
MEDIQUIP HOLDINGS, INC.
a Nevada corporation
By: _______________________________
David Francis, President and
Chief Executive Officer
EXHIBIT B
ARTICLES OF INCORPORATION
OF
MEDIQUIP HOLDINGS, INC.
(A NEVADA CORPORATION)
ARTICLE I
Name
The name of the Corporation is MediQuip Holdings, Inc. (herein the
"Corporation").
ARTICLE II
Registered Office and Agent
The address of the Corporation's registered office in the State of
Nevada is 613 Saddle River Court, Henderson, Nevada 89015. The name of the
Corporation's registered agent at such address is Inc.Plan of Nevada.
ARTICLE III
Powers
The purpose for which the Corporation is organized is to transact all
lawful business for which corporations may be incorporated pursuant to the laws
of the State of Nevada. The Corporation shall have all the powers of a
corporation organized under the Nevada Revised Statutes.
ARTICLE IV
Term
The Corporation is to have perpetual existence.
ARTICLE V
Capital Stock
A. Number and Designation. The total number of shares of all classes
that this Corporation shall have authority to issue shall be 500,000,000, of
which 490,000,000 shall be shares of common stock, par value $0.001 per share
("Common Stock"), and 10,000,000 shall be shares of preferred stock, par value
$0.001 per share ("Preferred Stock"). The shares may be issued by the
Corporation from time to time as approved by the board of directors of the
Corporation without the approval of the stockholders except as otherwise
provided in this Article V or the rules of a national securities exchange if
applicable. The consideration for subscriptions to, or the purchase of, the
capital stock to be issued by a corporation shall be paid in such form and in
such manner as the board of directors shall determine. The board of directors
may authorize capital stock to be issued for consideration consisting of cash,
any tangible or intangible property or any benefit to the corporation, or any
combination thereof. In the absence of actual fraud in the transaction, the
judgment of the directors as to the value of such consideration shall be
conclusive. The capital stock so issued shall be deemed to be fully paid and
nonassessable stock upon receipt by the corporation of such consideration. In
the case of a stock dividend, the part of the surplus of the Corporation which
is transferred to stated capital upon the issuance of shares as a stock dividend
shall be deemed to be the consideration for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock, and a statement of the relative powers,
designations, preferences and rights of the shares of each class and series (if
any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
B. Undesignated Common Stock. Shares of Common Stock not at the time
designated as shares of a particular series pursuant to this Article (V)(B) or
any other provision of these Articles of Incorporation may be issued from time
to time in one or more additional series or without any distinctive designation.
The board of directors may determine, in whole or in part, the preferences,
voting powers, qualifications and special or relative rights or privileges of
any such series before the issuance of any shares of that series. The board of
directors shall determine the number of shares constituting each series of
Common Stock and each series shall have a distinguishing designation.
C. Common Stock. Except as provided in these Articles or the
designation of any series or class of capital stock, the holders of the Common
Stock shall exclusively posses all voting power. Subject to the provisions of
these Articles, each holder of shares of Common Stock shall be entitled to one
vote for each share held by such holders.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class or series of
stock having preference over the Common Stock as to the payment of dividends,
the full amount of dividends and sinking fund or retirement fund or other
retirement payments, if any, to which such holders are respectively entitled in
preference to the Common Stock, then dividends may be paid on the Common Stock,
and on any class or series of stock entitled to participate therewith as to
dividends, out of any assets legally available for the payment of dividends, but
only when and as declared by the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class having preference
over the Common Stock in any such event, the full preferential amounts to which
they are respectively entitled, the holders of the Common Stock and of any class
or series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets shall be entitled, after payment or provision for payment
of all debts and liabilities of the Corporation, to receive the remaining assets
of the Corporation available for distribution, in cash or in kind.
Each share of Common Stock shall have the same relative powers,
preferences and rights as, and shall be identical in all respects with, all the
other shares of Common Stock of the Corporation.
D. Serial Preferred Stock. Shares of Preferred Stock not at the time
designated as shares of a particular series pursuant to this Article (V)(D) or
any other provision of these Articles of Incorporation may be issued from time
to time in one or more additional series. The board of directors may determine,
in whole or in part, the preferences, voting powers, qualifications and special
or relative rights or privileges of any such series before the issuance of any
shares of that series. The board of directors shall determine the number of
shares constituting each series of Preferred Stock and each series shall have a
distinguishing designation.
Each share of each series of serial preferred stock shall have the same
relative powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of the Corporation of the same series,
except the times from which dividends on shares which may be issued from time to
time of any such series may begin to accrue.
E. Series A Convertible Preferred Stock. There shall be a series of
Convertible Preferred Stock designated as "Series A Convertible Preferred
Stock." Such series is referred to herein as the "Series A Preferred Stock."
1. Amount. The number of shares constituting Series A
Preferred Stock shall be 4,500,000.
2. Stated Capital. The amount to be represented in stated
capital at all times for each share of Series A Preferred Stock shall
be $.001.
3. Rank. All shares of Series A Preferred Stock shall rank
prior to all of the Corporation's Common Stock, par value $.001 per
share (the "Common Stock"), now or hereafter issued, both as to payment
of dividends and as to distributions of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary.
4. Dividends. No dividends shall be payable to the holder of
shares of Series A Preferred Stock.
5. Liquidation Preference.
(a) The liquidation value of shares of this Series,
in case of the voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, shall be $.001
per share.
(b) In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation, the
holders of shares of this Series shall be entitled to receive
the liquidation value of such shares held by them until the
liquidation value of all shares of Series A Preferred Stock
shall have been paid in full. Upon payment in full of the
liquidation value to which the holders of shares of the shares
of Series A Preferred Stock are entitled, the holders of
shares of this Series will not be entitled to any further
participation in any distribution of assets by the
Corporation.
(c) Neither a consolidation or merger of the
Corporation with or into any other corporation, nor a merger
of any other corporation with or into the Corporation, nor a
sale or transfer of all or any part of the Corporation's
assets for cash or securities or other property shall be
considered a liquidation, dissolution or winding-up of the
Corporation within the meaning of this Paragraph 5.
6. Voting Rights. Except as otherwise required by law, each
share of outstanding Series A Preferred Stock shall entitle the holder
thereof to vote on each matter submitted to a vote of the stockholders
of the Corporation and to have the number of votes equal to the number
(including any fraction) of shares of Common Stock into which such
share of Series A Preferred Stock is then convertible pursuant to the
provisions hereof at the record date for the determination of
shareholders entitled to vote on such matters or, if no such record
date is established, at the date such vote is taken or any written
consent of stockholders becomes effective. Except as otherwise required
by law or by this Certificate, the holders of shares of Common Stock
and Series A Preferred Stock shall vote together and not as separate
classes.
7. No Redemption. The shares of Series A Preferred Stock are
not redeemable.
8. Conversion Provisions.
(a) Conversion at Option of the Holders. Provided
that, and only to the extent that, the Corporation has a
sufficient number of shares of authorized but unissued and
unreserved Common Stock available to issue upon conversion,
each share of Series A Preferred Stock shall be convertible,
at the option of the holder thereof, at any time on or after
September 29, 2006 into fully paid and nonassessable shares of
Common Stock and such other securities and property as
hereinafter provided, initially at the rate of 8 shares of
Common Stock for each full share of Series A Preferred Stock
("Conversion Ratio").
For the purpose of these Articles of Incorporation,
the term "Common Stock" shall initially mean the class
designated as Common Stock, par value $.001 per share, of the
Corporation as of March 1, 2006 subject to adjustment as
hereinafter provided.
(b) Mechanics of Conversion. Any holder of shares of
Series A Preferred Stock desiring to convert such shares into
Common Stock shall surrender the certificate or certificates
for such shares of Series A Preferred Stock at the office of
the transfer agent for the Series A Preferred Stock, which
certificate or certificates, if the Corporation shall so
require, shall be duly endorsed to the Corporation or in
blank, or accompanied by proper instruments of transfer to the
Corporation or in blank, accompanied by irrevocable written
notice to the Corporation that the holder elects so to convert
such shares of Series A Preferred Stock and specifying the
name or names (with address) in which a certificate or
certificates for Common Stock are to be issued.
(c) The Conversion Ratio shall be subject to
adjustment as follows:
(i) In case the Corporation shall (A) pay a
dividend or make a distribution in Common Stock, or
(B) subdivide or reclassify its outstanding shares of
Common Stock into a greater number (but not smaller
number) of shares, the Conversion Ratio in effect
immediately prior thereto shall be adjusted
retroactively as provided below so that the
Conversion Ratio thereafter shall be determined by
multiplying the Conversion Ratio at which such shares
of this Series were theretofore convertible by a
fraction of which the numerator shall be the number
of shares of Common Stock outstanding immediately
following such action and of which the denominator
shall be the number of shares of Common Stock
outstanding immediately prior thereto. Such
adjustment shall be made whenever any event listed
above shall occur and shall become effective
retroactively immediately after the record date in
the case of a dividend and shall become effective
immediately after the effective date in the case of a
subdivision or reclassification.
(ii) In case the Corporation shall issue
rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within 45 days
after the record date therefor) to subscribe for or
purchase shares of Common Stock at a price per share
less than the current market price per share of
Common Stock (as determined in accordance with the
provisions of subclause (iv) of this clause (d)) at
the record date therefor (the "Current Market
Price"), or in case the Corporation shall issue other
securities convertible into or exchangeable for
Common Stock for a consideration per share of Common
Stock deliverable upon conversion or exchange thereof
less than the Current Market Price; then the
Conversion Ratio in effect immediately prior thereto
shall be adjusted retroactively as provided below so
that the Conversion Ratio therefor shall be equal to
the price determined by multiplying the Conversion
Ratio at which shares of this Series were theretofore
convertible by a fraction of which the denominator
shall be the number of shares of Common Stock
outstanding on the date of issuance of such
convertible or exchangeable securities, rights or
warrants plus the number of additional shares of
Common Stock offered for subscription or purchase and
of which the numerator shall be the number of shares
of Common Stock outstanding on the date of issuance
of such shares, convertible or exchangeable
securities, rights or warrants plus the number of
additional shares of Common Stock which the aggregate
offering price of the number of shares of Common
Stock so offered would purchase at the Current Market
Price per share of Common Stock (as determined in
accordance with the provisions of subclause (iv) of
this clause (d). Such adjustment shall be made
whenever such convertible or exchangeable securities
rights or warrants are issued, and shall become
effective retroactively immediately after the record
date for the determination of stockholders entitled
to receive such securities. However upon the
expiration of any right or warrant to purchase Common
Stock the issuance of which resulted in an adjustment
in the Conversion Ratio pursuant to this subclause
(ii), if any such right or warrant shall expire and
shall not have been exercised, the Conversion Ratio
shall be recomputed immediately upon such expiration
and effective immediately upon such expiration shall
be increased to the price it would have been (but
reflecting any other adjustments to the Conversion
Ratio made pursuant to the provisions of this clause
(d) after the issuance of such rights or warrants)
had the adjustment of the Conversion Ratio made upon
the issuance of such rights or warrants been made on
the basis of offering for subscription or purchase
only that number of shares of Common Stock actually
purchased upon the exercise of such rights or
warrants actually exercised.
(iii) In case the Corporation shall
distribute to all holders of its Common Stock
(including any such distribution made in connection
with a consolidation or merger in which the
Corporation is the continuing corporation) shares of
capital stock (other than Common Stock), evidences of
its indebtedness or assets (excluding cash dividends)
or rights to subscribe (excluding those referred to
in subclause (ii) of this clause (d)), then in each
such case the number of shares of Common Stock into
which each share of this Series shall thereafter be
convertible shall be determined by multiplying the
number of shares of Common Stock into which such
share of this Series was theretofore convertible by a
fraction of which the numerator shall be the number
of outstanding shares of Common Stock multiplied by
the Current Market Price per share of Common Stock
(as determined in accordance with the provisions of
subclause (iv) of this clause (d)) on the date of
such distribution and of which the denominator shall
be the product of the number of outstanding shares of
Common Stock and the Current Market Price per share
of Common Stock, less the aggregate fair market value
(as determined by the board of directors of the
Corporation, whose determination shall be conclusive,
and described in a statement filed with the transfer
agent for the shares of this Series) of the capital
stock, assets or evidences of indebtedness so
distributed or of such subscription rights. Such
adjustment shall be made whenever any such
distribution is made, and shall become effective
retroactively immediately after the record date for
the determination of stockholders entitled to receive
such distribution.
(iv) For the purpose of any computation
under subclause (ii) and (iii) of this clause (d),
the Current Market Price per share of Common Stock at
any date shall be deemed to be the average Sale Price
for the thirty consecutive trading days commencing
forty-five trading days before the day in question.
As used herein, "Sale Price" means the closing sales
price of the Common Stock (or if no sale price is
reported, the average of the high and low bid prices)
as reported by the principal national or regional
stock exchange on which the Common Stock is listed
or, if the Common Stock is not listed on a national
or regional stock exchange, as reported by national
Association of Securities Dealers Automated Quotation
System and if not so reported then as reported by the
Electronic Bulletin Board or the National Quotation
Bureau Incorporated.
(v) No adjustment in the Conversion Ratio
shall be required (i) in the case of a combination or
reclassification of the Common Stock into a smaller
number of shares, or (ii) unless such adjustment
would require an increase or decrease of at least 1%
in the price then in effect; provided, however, that
any adjustments which by reason of this subclause (v)
are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.
All calculations under this paragraph 8 shall be made
to the nearest cent.
(vi) In the event that, at any time as a
result of an adjustment made pursuant to subclause
(i) or subclause (iii) of this clause (d), the holder
of any share of this Series thereafter surrendered
for conversion shall become entitled to receive any
shares of the Corporation other than shares of the
Common Stock, thereafter the number of such other
shares so receivable upon conversion of any share of
this Series shall be subject to adjustment from time
to time in a manner and on the terms as nearly
equivalent as practicable to the provisions with
respect to the Common Stock contained in subclauses
(i) through (v) of this clause (d), and the other
provisions of this clause (d) with respect to the
Common Stock shall apply on like terms to any such
other shares.
(vii) Whenever the conversion rate is
adjusted, as herein provided, the Corporation shall
promptly file with the transfer agent for this
Series, a certificate of an officer of the
Corporation setting forth the conversion rate after
such adjustment and setting forth a brief statement
of the facts requiring such adjustment and a
computation thereof. Such certificate shall be
conclusive evidence of the correctness of such
adjustment. The Corporation shall promptly cause a
notice of the adjusted conversion rate to be mailed
to each registered holder of shares of this Series.
(e) If any of the following events occur, namely (i)
any reclassification or change (other than a combination or
reclassification into a smaller number of shares) of
outstanding shares of Common Stock issuable upon conversion of
shares of this Series (other than a change in par value, or
from par value to no par value, or from no par value to par
value, or as a result of a subdivision) or (ii) any
consolidation or merger to which the Corporation is a party
(other than a consolidation or merger to which the Corporation
is the continuing corporation and which does not result in any
classification of, or change (other than a change in par
value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision) in, outstanding
shares of Common Stock); then the Corporation or such
successor, as the case may be, shall provide in its
Certificate of Incorporation that each share of this Series
shall be convertible into the kind and amount of shares of
stock and other securities or property receivable upon such
reclassification, change, consolidation or merger by a holder
of the number of shares of Common Stock issuable upon
conversion of each such share of this Series immediately prior
to such reclassification, change, consolidation or merger.
Such Certificate of Incorporation shall provide for
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in clause (d). The
Corporation shall cause notice of the execution of any such
event contemplated by this paragraph to be mailed to each
holder of shares of this Series As soon as practicable.
The above provisions of this clause (e) shall
similarly apply to successive reclassifications,
consolidations and mergers.
(f) By duly adopted resolution of its board of
directors, the Corporation at any time may increase the
Conversion Ratio, temporarily or otherwise, by any amount, but
in no event shall such Conversion Ratio require the issuance
of Common Stock for less than the par value of the Common
Stock at the time such reduction is made.
Whenever the Conversion Ratio is increased pursuant
to this subclause (f), the Corporation shall mail to the
holders a notice of the increased Conversion Ratio. The notice
shall state the increased Conversion Ratio and the period it
will be in effect.
An increase in the Conversion Ratio does not change
or adjust the Conversion Ratio otherwise in effect for
purposes of subclauses (d) and (e) of this paragraph 8.
9. Protective Provisions.
(a) Reservation of Shares; Transfer Taxes; Etc. The
Corporation shall at all times serve and keep available, out
of its authorized and unissued stock, solely for the purpose
of effecting the conversion of the Series A Preferred Stock,
such number of shares of its Common Stock free of preemptive
rights as shall from time to time be sufficient to effect the
conversion of all shares of Series A Preferred Stock from time
to time outstanding. The Corporation shall from time to time,
in accordance with the laws of the State of Delaware, increase
the authorized number of shares of Common Stock if at any time
the number of shares of Common Stock not outstanding shall not
be sufficient to permit the conversion of all the then
outstanding shares of Series A Preferred Stock.
If the Common Stock is listed on the New York Stock
Exchange or any other national securities exchange, the
Corporation will, if permitted by the rules of such exchange,
list and keep listed on such exchange, upon official notice of
issuance, all shares of Common Stock issuable upon conversion
of the Series A Preferred Stock.
The Corporation will pay any and all issue or other
taxes that may be payable in respect of any issue or delivery
of shares of Common Stock on conversion of the Series A
Preferred Stock. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any
transfer involved in the issue or delivery of Common Stock (or
other securities or assets) in a name other than that which
the shares of Series A Preferred Stock so converted were
registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the
Corporation the amount of such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(b) Class Voting Rights. So long as the Series A
Preferred Stock is outstanding, the Corporation shall not,
without the affirmative vote or consent of the holders of at
least a majority of all outstanding Series A Preferred Stock
voting separately as a class, (i) amend, alter or repeal (by
merger or otherwise) any provision of these Articles of
Incorporation or the by-laws of the Corporation, as amended,
so as adversely to affect the relative rights, preferences,
qualifications, limitations or restrictions of the Series A
Preferred Stock, (ii) authorize or issue, or increase the
authorized amount of, any additional class or series of stock,
or any security convertible into stock of such class or
series, ranking prior to the Series A Preferred Stock in
respect of the payment of dividends or upon liquidation,
dissolution or winding up of the Corporation or (iii) effect
any reclassification of the Series A Preferred Stock. A class
vote on the part of the Series A Preferred Stock shall,
without limitation, specifically not be deemed to be required
(except as otherwise required by law or resolution of the
Corporation's board of directors) in connection with: (a) the
authorization, issuance or increase in the authorized amount
of any shares of any other class or series of stock which
ranks junior to, or on a parity with, the Series A Preferred
Stock in respect of the payment of dividends and distributions
upon liquidation, dissolution or winding up of the
Corporation; or (b) the authorization, issuance or increase in
the amount of any bonds, mortgages, debentures or other
obligations of the Corporation.
The affirmative vote or consent of the holders of a
majority of the outstanding Series A Preferred Stock, voting
or consenting separately as a class, shall be required to (a)
authorize any sale, lease or conveyance of all or
substantially all of the assets of the Corporation, or (b)
approve any merger, consolidation or compulsory share exchange
of the Corporation with or into any other person unless (i)
the terms of such merger, consolidation or compulsory share
exchange do not provide for a change in the terms of the
Series A Preferred Stock and (ii) the Series A Preferred Stock
is, after such merger, consolidation or compulsory share
exchange on a parity with or prior to any other class or
series of capital stock authorized by the surviving
corporation as to dividends and upon liquidation, dissolution
or winding up other than any class or series of stock of the
Corporation prior to the Series A Preferred Stock as may have
been created with the affirmative vote or consent of the
holders of at least 66-2/3% of the Series A Preferred Stock
(or other than a class or series into which such prior stock
is converted as a result of such merger, consolidation or
share exchange).
10. Outstanding Shares. For purposes of these Articles of
Incorporation, all shares of Series A Preferred Stock shall be deemed
outstanding except (i) from the date of surrender of certificates
representing all shares of Series A Preferred Stock converted into
Common Stock; and (ii) from the date of registration of transfer, all
shares of Series A Preferred Stock held of record by the Corporation or
any subsidiary of the Corporation.
11. Certain Definitions. As used in these Articles, the
following terms shall have the following respective meanings:
"Affiliate" of any specified person means any other
person directly or indirectly controlling or controlled by or
under common control with such specified person. For purposes
of this definition, "control" when used with respect to any
person means the power to direct the management and policies
of such person, directly or indirectly, whether through the
ownership of voting securities or otherwise; and the term
"controlling" and "controlled" having meanings correlative to
the foregoing.
"Common Stock" shall mean any stock of the
Corporation which has no preference in respect of dividends or
of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the
Corporation and which is not subject to redemption by the
Corporation. However, Common Stock issuable upon conversion of
shares of this series shall include only shares of the class
designated as common Shares as of the original date of
issuance of shares of this Series, or shares f the Corporation
of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation and which are not subject to
redemption by the Corporation; provided that if at any time
there shall be more than one such resulting class, the shares
of each such class then so issuable shall be substantially in
the proportion which the total number of shares of such class
resulting from such reclassifications bears to the total
number of shares of all classes resulting from all such
reclassifications.
F. Series B Convertible Preferred Stock. There shall be a series of
Convertible Preferred Stock designated as "Series B Convertible Preferred
Stock." Such series is referred to herein as the "Series B Preferred Stock."
1. Amount. The number of shares constituting Series B
Preferred Stock shall be 22,000 and the amount to be represented in
stated capital at all times for each share of Series B Preferred Stock
shall be $.001.
2. Dividends
A. General. The holders of the Series B Preferred
Stock shall be entitled to receive cumulative dividends at 250
basis points (2.50%) above the prime rate published from time
to time by Citibank, N.A. of the Face Amount per annum (the
"Dividend"). Such cumulative Dividends shall be payable
quarterly in arrears within three Business Days of the last
day of each April, July, October and January, commencing April
22, 2006, in cash or additional Series B Preferred Shares, at
the Corporation's option. Dividends on the Series B Preferred
Stock shall accrue and be cumulative on a daily basis from the
date of issuance (with appropriate proration for any partial
dividend period), whether or not earned and whether or not in
any dividend period there shall be surplus or net profits of
the Corporation legally available for the payment of such
dividends.
B. Payment of Dividend in Series B Preferred Shares.
Should the Corporation elect to pay accrued but unpaid
Dividends in additional shares of Series B Preferred Stock,
the number of Series B Preferred Shares to which the Holder
shall be entitled will be equal to the aggregate cash value of
such unpaid Dividends, divided by the Face Amount.
3. Certain Definitions. For purposes of the designation of the Series B
Preferred Stock by these Articles of Incorporation, the following terms shall
have the following meanings:
A. "Business Day" means any day other than a Saturday, Sunday
or a day on which banks in New York are permitted or required by law to
be closed.
B. "Conversion Price" means $0.0625 per share.
C. "Holders" means the initial Holders of the Series B
Preferred Stock and their transferees.
D. "Material Adverse Change" means the occurrence of a
material adverse change or development in the business, properties,
operations, financial condition, results of operation or prospects of
the Corporation.
4. Conversion
A. Conversion at the Option of Holder. Two years from the date
of issue, each outstanding share of Series B Preferred Stock shall
automatically be converted, without cost, on the terms set forth in
this section 4 into a number of fully paid and nonassessable shares of
Common Stock determined by dividing the aggregate Face Amount of the
Series B Preferred Shares being converted by the Conversion Price. The
Conversion Price is subject to adjustment as provided in section 10.
B. Mechanics of Conversion. To convert the Series B Preferred
Shares, a Holder shall: (i) fax (or otherwise deliver by other means
resulting in notice) a copy of the fully executed Notice of Conversion
in the form of Exhibit A hereto to the Corporation and (ii) within
three (3) Business Days surrender or cause to be surrendered to the
Corporation (or satisfy the provisions of section 13(a), if applicable)
the certificates representing the Series B Preferred Stock being
converted (the "Series B Preferred Stock Certificates") accompanied by
duly executed stock powers and the original executed version of the
Notice of Conversion. The date of the Corporation's receipt of the
Notice of Conversion described in clause (i) shall be the "Conversion
Date."
C. Conversion Disputes. In the case of any dispute with
respect to a conversion, the Corporation shall promptly issue such
number of shares of Common Stock as are not disputed in accordance with
the other provisions of this section 4. If such dispute involves the
calculation of the Conversion Price, the Corporation shall submit the
disputed calculations to an independent accounting firm of national
standing, acceptable to Holder, via facsimile within two (2) Business
Days of receipt of the Notice of Conversion. The accounting firm shall
audit the calculations and notify the Corporation and the Holder of the
results no later than two (2) Business Days from the date it receives
the disputed calculations. The accounting firm's calculation shall be
deemed conclusive, absent manifest error. The Corporation shall then
issue the appropriate number of shares of Common Stock in accordance
with this section 4.
D. Timing of Conversion. No later than the third Business Day
following the Conversion Date (the "Delivery Period"), provided that
the Corporation has received prior to such date the Series B Preferred
Stock Certificates (or the Holder has satisfied the provisions of
section 13(a), if applicable), the Corporation shall deliver to the
Holder (or at its direction) (x) that number of shares of Common Stock
issuable upon conversion of the number of Series B Preferred Shares
being converted and (y) a certificate representing the number of Series
B Preferred Shares not being converted, if any. The person or persons
entitled to receive shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of
such shares at the close of business on the Conversion Date and such
shares shall be issued at such time, unless the Notice of Conversion is
revoked as provided in section 4(d). The Delivery Period shall be
extended until the Business Day following the date of delivery to the
Corporation of the Series B Preferred Stock Certificates to be
converted or satisfaction of the provisions of section 13(a), if
applicable.
E. Revocation of Notice of Conversion. In addition to any
other remedies which may be available to the Holder, in the event the
Corporation fails for any reason to effect delivery to the Holder of
certificates representing the shares of Common Stock receivable upon
conversion of the Series B Preferred Shares (or, solely as expressly
permitted pursuant to Sections V(B) and V(E), to effect a Cash
Conversion (as defined below)) by the Business Day following the
expiration of the Delivery Period (which certificates shall be
unlegended after the Conversion Date), the Holder may revoke the Notice
of Conversion by delivering a notice to such effect to the Corporation.
Upon receipt by the Corporation of such a revocation notice, the
Corporation shall immediately return the subject Series B Preferred
Stock certificates and other conversion documents, if any, delivered by
Holder, to the Holder, and the Corporation and the Holder shall each be
restored to their respective positions held immediately prior to
delivery of the Notice of Conversion; provided however, that the
Corporation shall remain liable for payment of the amounts determined
pursuant to Corporation(a) hereof for each day falling between the
trading day following the Delivery Period and the date of the
revocation notice is received by the Corporation, and shall also remain
liable for any damages suffered by Holder.
F. Stamp, Documentary and Other Similar Taxes. The Corporation
shall pay all stamp, documentary, issuance and other similar taxes
which may be imposed with respect to the issuance and delivery of the
shares of Common Stock pursuant to conversion of the Series B Preferred
Stock; provided that the Corporation will not be obligated to pay
stamp, transfer or other taxes resulting from the issuance of Common
Stock to any person other than the registered holder of the Series B
Preferred Stock.
G. No Fractional Shares. No fractional shares of Common Stock
are to be issued upon the conversion of Series B Preferred Stock, but
the Corporation shall pay a cash adjustment in respect of any
fractional share which would otherwise be issuable in an amount equal
to the same fraction of the Closing Bid Price on the Conversion Date of
a share of Common Stock; provided that in the event that sufficient
funds are not legally available for the payment of such cash adjustment
any fractional shares of Common Stock shall be rounded up to the next
whole number.
H. Electronic Transmission. In lieu of delivering physical
certificates representing the Common Stock issuable upon conversion,
provided the Corporation's transfer agent is participating in the
Depository Trust Corporation ("DTC") Fast Automated Securities Transfer
program (the "FAST Program"), upon request of a Holder who shall have
previously instructed such Holder's prime broker to confirm such
request to the Corporation's transfer agent and upon the Holder's
compliance with section 4(b), the Corporation shall use its
commercially reasonable efforts to cause its transfer agent to
electronically transmit the Common Stock issuable upon conversion to
the Holder by crediting the account of Holder's prime broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system.
Subject to the foregoing, the Corporation will use its commercially
reasonable efforts to maintain the eligibility of its Common Stock for
the FAST Program.
I. Five Percent Holdings. Notwithstanding anything to the
contrary contained herein, the Series B Preferred Stock shall not be
convertible by a Holder to the extent (but only to the extent) that, if
convertible by such Holder, such Holder, or any of its affiliates (as
defined under Rule 12b-2 of the Securities Exchange Act of 1934, as
amended), would beneficially own in excess of 4.9% of the shares of
Common Stock (the "4.9% Limitation"). To the extent the foregoing
limitation applies, the determination of whether Series B Preferred
Stock shall be convertible (vis-a-vis other securities owned by such
Holder) and of which Series B Preferred Stock shall be convertible (as
among shares of Series B Preferred Stock) shall be in the sole
discretion of the Holder and submission of the Series B Preferred Stock
for conversion shall be deemed to be the Holder's determination of
whether such Series B Preferred Stock is convertible (vis-a-vis other
securities owned by such Holder) and of which shares of Series B
Preferred Stock are convertible (as among shares of Series B Preferred
Stock), subject to such aggregate percentage limitation. No prior
inability to convert Series B Preferred Stock pursuant to this Section
shall have any effect on the applicability of the provisions of this
Section with respect to any subsequent determination of convertibility.
For the purposes of this Section, beneficial ownership and all
determinations and calculations, including without limitation, with
respect to calculations of percentage ownership, shall be made in
accordance with Section 13(d) of the Securities Exchange Act of 1934,
as amended, and regulation 13D and G thereunder. The provisions of this
Section may be implemented in a manner otherwise than in strict
conformity with the terms of this Section with the approval of the
board of directors of the Corporation and a Holder: (i) with respect to
any matter to cure any ambiguity herein, to correct this subsection (or
any portion thereof) which may be defective or inconsistent with the
intended 4.9% beneficial ownership limitation herein contained or to
make changes or supplements necessary or desirable to properly give
effect to such 4.9% limitation; and (ii) with respect to any other
matter, with the further consent of the holders of majority of then
outstanding shares of Common Stock. The Provisions of this Section may
be waived by a Holder upon ninety (90) days prior written notice from
such Holder to the Corporation, including, without limitation, a
limited waiver to increase the 4.9% limit herein contained to any other
percentage specified by Holder. The limitations contained in this
Section shall apply to a successor Holder of Series B Preferred Stock
if, and to the extent, elected by such successor Holder concurrently
with its acquisition of such Series B Preferred Stock, such election to
be promptly confirmed in writing to the Corporation (provided no
transfer or series of transfers to a successor Holder or Holders shall
be used by a Holder to evade the limitations contained herein).
5. Reservation of Authorized Shares of Common Stock; Limitation on
Number of Conversion Shares
A. Reservation of Common Stock. Subject to the provisions of
this Article V, the Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the Series B
Preferred Stock a sufficient number of shares of Common Stock to
provide for the conversion of all outstanding Series B Preferred Shares
upon issuance of shares of Common Stock (the "Reserved Amount"). The
Reserved Amount shall be allocated among the Holders as provided in
section 5(c). If the Reserved Amount for any three (3) consecutive
trading days (the last of such three (3) trading days being the
"Authorization Trigger Date") is less than one hundred percent (100%)
of the number of shares of Common Stock issuable on such trading days
upon conversion of the outstanding Series B Preferred Stock (without
giving effect to any limitation on conversion or exercise thereof) then
the Corporation shall immediately notify the Holders of such occurrence
and shall immediately take all necessary action (including stockholder
approval to authorize the issuance of additional shares of Common
Stock) to increase the Reserved Amount to one hundred percent (100%) of
the number of shares of Common Stock issuable upon conversion of the
outstanding Series B Preferred Stock and (without giving effect to any
limitation on conversion or exercise thereof).
B. Limitation on Number of Shares of Common Stock to be
Issued. (i) Unless the Stockholder Approval (as defined below) is
obtained, the Corporation shall not be obligated to issue, in the
aggregate, more than 9,000,000 shares of Common Stock upon conversion
of the Series B Preferred Shares (the "Common Share Limit"), such
amount to be proportionally and equitably adjusted from time to time in
the event of stock splits, stock dividends, combinations, reverse stock
splits, reclassifications, capital reorganizations and similar events
relating to the Common Stock). If the Stockholder Approval has not been
obtained at any time that the Common Share Limit with respect to any
Holder has been reached, Notices of Conversion by such Holder shall be
honored by payment to such Holder of cash in an amount equal to the
Conversion Price multiplied by the number of shares of Common Stock
which would be issuable in satisfaction of the applicable Notice of
Conversion (such payment being referred to herein as a "Cash
Conversion"). (ii) If the Stockholder Approval has been obtained at any
time, the Corporation shall have the right, subject to delivery of the
notice required by section 5(e) below, to honor any Notices of
Conversion for shares of Common Stock in excess of the Common Share
Limit by (a) delivery of shares of Common Stock or (b) by Cash
Conversion.
C. Allocation of Reserved Amount, Common Share Limit. The
Reserved Amount and the Common Share Limit shall be allocated among the
Initial Holders according to the number of Series B Preferred Shares
issued to each such Holder. Any shares of Common Stock which were
initially allocated to any Holder remaining after such Holder no longer
owns any Series B Preferred Shares shall be allocated among the
remaining Holders pro rata, based on the number of Series B Preferred
Shares then held by such Holders.
D. Share Authorization. The Corporation shall solicit by proxy
the authorization (the "Stockholder Approval") by the stockholders of
the Corporation of the issuance of shares of Common Stock upon
conversion of shares of Series B Preferred Stock pursuant to the terms
hereof in the aggregate in excess of twenty (20) percent of the
outstanding shares of Common Stock and to eliminate any prohibitions
under the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with
jurisdiction over the Corporation or any of its securities on the
Corporation's ability to issue shares of Common Stock in excess of the
Common Share Limit and use its commercially reasonable efforts to
obtain the Stockholder Approval no later than one hundred and twenty
(120) days following the date of the First Closing.
E. Obligation to Notify. If the Corporation has not received
the Stockholder Approval by the date that is one hundred and twenty
(120) days following the First Closing, the Corporation shall, on or
prior to such date, notify the Holders. The Corporation shall
immediately notify the Holders if, at any time, the Stockholder
Approval is obtained. Following receipt of Stockholder Approval, the
Corporation shall have the right, by notice to all of the Holders not
less than five (5) Business Days prior to the first day of any month,
to elect to honor all Notices of Conversion solely by Cash Conversion
(and not by delivery of Common Stock) during such month. Each such
notice (a "Notice of Cash Conversion") shall be effective only with
respect to the single month designated therein, and shall specify, as
of the date of delivery of such notice, the unissued portion of the
Common Share Limit of the Holder to whom such notice is being
delivered.
6. Failure to Convert
A. Conversion Defaults. If, at any time, (x) the Conversion
Date has occurred and the Corporation fails for any reason to deliver,
on or prior to the fifth Business Day following the expiration of the
Delivery Period for such conversion, such number of shares of Common
Stock to which such Holder is entitled upon such conversion, or (y) the
Corporation provides notice (including by way of public announcement)
to any Holder at any time of its intention not to issue shares of
Common Stock upon exercise by any Holder of its conversion rights in
accordance with the terms of these Articles of Incorporation (other
than because such issuance would exceed such Holder's allocated portion
of the Reserved Amount) (each of (x) and (y) being a "Conversion
Default"), then the Corporation shall pay to the affected Holder, in
the case of a Conversion Default described in clause (x) above, and to
all Holders, in the case of a Conversion Default described in clause
(y) above, an amount equal to 1% of the Face Amount of the Series B
Preferred Stock with respect to which the Conversion Default exists
(which amount shall be deemed to be the aggregate Face Amount of all
outstanding Series B Preferred Stock in the case of a Conversion
Default described in clause (y) above) for each five days thereafter
until the Cure Date. "Cure Date" means (i) with respect to a Conversion
Default described in clause (x) of its definition, the date the
Corporation effects the conversion of the portion of the Series B
Preferred Stock submitted for conversion and (ii) with respect to a
Conversion Default described in clause (y) of its definition, the date
the Corporation undertakes in writing to issue Common Stock in
satisfaction of all conversions of Series B Preferred Stock in
accordance with the terms of these Articles of Incorporation (provided
that the Corporation thereafter so performs such obligations). The
Corporation shall promptly provide each Holder with notice of the
occurrence of a Conversion Default with respect to any of the other
Holders. Notwithstanding anything in this section 6(a) or anywhere else
in this Agreement to the contrary, no Conversion Default shall be
deemed to occur if, prior to expiration of the Delivery Period, the
Corporation has made to the Holder the cash payment permitted to be
made pursuant to section 5(b) following issuance to such Holder of such
Holder's allocated portion of the Common Share Limit.
B. Conversion Default Payments. The payments to which a Holder
shall be entitled pursuant to section 6(a) are referred to herein as
"Conversion Default Payments." Conversion Default Payments shall be
paid in cash within two (2) Business Days of written demand from a
Holder. Such payment shall be made in accordance with and be subject to
the provisions of section 13(b).
7. Redemption Due to Certain Events
A. Redemption Events. A "Redemption Event" means any one of
the following: (i) the Common Stock (including any of the shares of
Common Stock issuable upon conversion of the Series B Preferred Stock
or required from time to time to be reserved pursuant to these Articles
of Incorporation) is suspended from trading on, or is not listed (and
authorized) for trading on, the Electronic Bulletin Board, Nasdaq, the
Nasdaq Small Cap Market, the American Stock Exchange, or the New York
Stock Exchange for an aggregate of ten (10) trading days in any twelve
(12) month period; (ii) the Corporation fails, and any such failure
continues uncured for seven (7) Business Days after the Corporation has
been notified thereof in writing by the Holder, to remove any
restrictive legend on any certificate for any shares of Common Stock
issued after the Conversion Date to the Holders upon conversion of the
Series B Preferred Stock as and when required by these Articles of
Incorporation; (ii) the Corporation breaches any material covenant or
other material term of these Articles of Incorporation, the breach of
which would have a material adverse effect on the Corporation or the
rights of the Holder with respect to its shares of Series B Preferred
Stock or the shares of Common Stock issuable upon conversion of the
Series B Preferred Stock, and such breach continues for a period of
five (5) Business Days after written notice thereof to the Corporation;
(iii) any representation or warranty of the Corporation made in any
agreement, statement or certificate given in writing in connection with
the issuance of the Series B Preferred Stock, shall be false or
misleading in any material respect when made and the breach of which
has had or could reasonably be expected to have a material adverse
effect on the Corporation or on the Holder with respect to its
investment in the shares of Series B Preferred Stock or the shares of
Common Stock issuable upon conversion of the Series B Preferred Stock;
or (iv) the Corporation fails to increase the Reserved Amount (A)
within ten (10) days following an Authorization Trigger Date if such
increase requires solely approval of the Corporation's board of
directors or (B) otherwise within sixty (60) days thereafter.
B. Redemption By Holder. Following the occurrence of a
Redemption Event, each Holder shall have the right to elect at any time
and from time to time by delivery of a Redemption Notice (as defined
herein) to the Corporation while such Redemption Event continues, to
require the Corporation to purchase for cash for an amount per share
equal to the Redemption Amount (as defined herein) any or all of then
outstanding shares of Series B Preferred Stock, together with accrued
and unpaid dividends thereon and any Conversion Default Payments
applicable thereto, held by such Holder. The "Redemption Amount" with
respect to a share of Series B Preferred Stock means an amount equal to
1.3 times the aggregate Face Amount of the Series B Preferred Shares
for which a demand is being made.
C. Optional Redemption by the Corporation. The Corporation may
not redeem or call the Series B Preferred Stock without the consent of
the Holder of the Series B Preferred Stock.
8. Rank; Participation
A. Rank. All shares of the Series B Preferred Stock shall rank
(i) prior to the Common Stock; (ii) prior to any class or series of
capital stock of the Corporation now outstanding or hereafter created
(unless, with the consent of a majority of the Holders obtained in
accordance with section 12 hereof, such hereafter created class or
series of capital stock specifically, by its terms, ranks senior to or
pari passu with the Series B Preferred Stock) (collectively, with the
Common Stock, "Junior Securities"); and (iii) pari passu with any class
or series of capital stock of the Corporation hereafter created (with
the consent of a majority of the Holders obtained in accordance with
section 12 hereof) specifically ranking, by its terms, on parity with
the Series B Preferred Stock (the "Pari Passu Securities"); and (iv)
junior to any class or series of capital stock of the Corporation
hereafter created (with the consent of a majority of the Holders
obtained in accordance with section 12 hereof) specifically ranking, by
its terms, senior to the Series B Preferred Stock (the "Senior
Securities"), in each case as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary.
B. Participation. Subject to the rights of the holders (if
any) of Pari Passu Securities and Senior Securities, the Holders shall,
as such Holders, be entitled to such dividends paid and distributions
made to the holders of Common Stock to the same extent as if such
Holders had converted their shares of Series B Preferred Stock into
Common Stock (without regard to any limitations on conversion herein or
elsewhere contained) and had been issued such Common Stock on the day
before the record date for said dividend or distribution. Payments
under the preceding sentence shall be made concurrently with the
dividend or distribution to the holders of Common Stock.
9. Liquidation Preference
A. Liquidation of the Corporation. If the Corporation shall
commence a voluntary case under the U.S. Federal bankruptcy laws or any
other applicable bankruptcy, insolvency or similar law, or consent to
the entry of an order for relief in an involuntary case under any law
or to the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or
of any substantial part of its property, or make an assignment for the
benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or if a decree or order for relief
in respect of the Corporation shall be entered by a court having
jurisdiction in the premises in an involuntary case under the U.S.
Federal bankruptcy laws or any other applicable bankruptcy, insolvency
or similar law resulting in the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official)
of the Corporation or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and any such
decree or order shall be unstayed and in effect for a period of sixty
(60) consecutive days and, on account of any such event, the
Corporation shall liquidate, dissolve or wind up, or if the Corporation
shall otherwise liquidate, dissolve or wind up (a "Liquidation Event"),
no distribution shall be made to the Holders of any shares of capital
stock of the Corporation (other than Senior Securities and, together
with the Holders of Series B Preferred Stock the Pari Passu Securities)
upon liquidation, dissolution or winding up unless prior thereto the
Holders shall have received the Liquidation Preference (as herein
defined) with respect to each share. If, upon the occurrence of a
Liquidation Event, the assets and funds available for distribution
among the Holders and holders of Pari Passu Securities shall be
insufficient to permit the payment to such Holders of the preferential
amounts payable thereon, then the entire assets and funds of the
Corporation legally available for distribution to the Series B
Preferred Stock and the Pari Passu Securities shall be distributed
ratably among such shares in proportion to the ratio that the
Liquidation Preference payable on each such share bears to the
aggregate Liquidation Preference payable on all such shares.
B. Certain Acts Not a Liquidation. The purchase or redemption
by the Corporation of stock of any class, in any manner permitted by
law, shall not, for the purposes hereof, be regarded as a liquidation,
dissolution or winding up of the Corporation. Neither the consolidation
or merger of the Corporation with or into any other entity nor the sale
or transfer by the Corporation of less than substantially all of its
assets shall, for the purposes hereof, be deemed to be a liquidation,
dissolution or winding up of the Corporation.
C. Definition of Liquidation Preference. The "Liquidation
Preference" with respect to a share of Series B Preferred Stock means
an amount equal to the Face Amount thereof plus any other amounts that
may be due from the Corporation with respect thereto pursuant to these
Articles of Incorporation through the date of final distribution. The
Liquidation Preference with respect to any Pari Passu Securities shall
be as set forth in the Designation filed in respect thereof.
10. Adjustments to the Conversion Price; Certain Protections. The
Conversion Price shall, in order to accomplish the results contemplated in these
Articles of Incorporation, be subject to adjustment from time to time as
follows:
A. Stock Splits, Stock Dividends, Etc. If at any time when
shares of Series B Preferred Stock are outstanding, the number of
outstanding shares of Common Stock is increased by a stock split, stock
dividend, combination, reclassification or other similar event, the
number of shares of Common Stock issuable upon conversion of the Series
B Preferred Stock shall be proportionately increased. In such event,
the Corporation shall notify the Corporation's transfer agent of such
change on or before the effective date thereof. However, if the number
of outstanding shares of Common Stock is decreased by a reverse stock
split, combination or reclassification of shares, or other similar
event, the number of shares of Common Stock issuable upon conversion of
the Series B Preferred Stock shall not be reduced.
B. Certain Public Announcements. In the event that (i) the
Corporation makes a public announcement that it intends to consolidate
or merge with any other entity (other than a merger in which the
Corporation is the surviving or continuing entity and its capital stock
is unchanged and there is no distribution thereof) or to sell or
transfer all or substantially all of the assets of the Corporation or
(ii) any person, group or entity (including the Corporation) publicly
announces a tender offer in connection with which such person, group or
entity seeks to purchase 50% or more of the Common Stock (the date of
the announcement referred to in clause (i) or (ii) of this paragraph is
hereinafter referred to as the "Announcement Date"), then the
Conversion Price shall, effective upon the Announcement Date and
continuing through the consummation of the proposed tender offer or
transaction or the Abandonment Date (as defined below), be equal to the
lesser of (x) the Conversion Price calculated as provided in section 4
the (y) the Conversion Price which would have been applicable for
Conversion occurring on the Announcement Date. From and after the
Abandonment Date, as the case may be, the Conversion Price shall be
determined as set forth in section 4. The "Abandonment Date" means with
respect to any proposed transaction or tender offer for which a public
announcement as contemplated by this paragraph has been made, the date
which is seven (7) trading days after the date upon which the
Corporation (in the case of clause (i) above) or the person, group or
entity (in the case of clause (ii) above) publicly announces the
termination or abandonment of the proposed transaction or tender offer
which causes this paragraph to become operative.
C. Major Transactions. If the Corporation shall consolidate
with or merge into any corporation or reclassify its outstanding shares
of Common Stock (other than by way of subdivision or reduction of such
shares) (each a "Major Transaction"), then each Holder shall thereafter
be entitled to receive consideration, in exchange for each share of
Series B Preferred Stock held by it, equal to the greater of, as
determined in the sole discretion of such Holder: (i) the number of
shares of stock or securities or property of the Corporation, or of the
entity resulting from such Major Transaction (the "Major Transaction
Consideration"), to which a Holder of the number of shares of Common
Stock delivered upon conversion of such shares of Series B Preferred
Stock would have been entitled upon such Major Transaction had the
Holder's Series B Preferred Shares been converted (without regard to
any limitations on conversion herein contained) on the trading date
immediately preceding the public announcement of the transaction
resulting in such Major Transaction and had such Common Stock been
issued and outstanding and had such Holder been the holder of record of
such Common Stock at the time of such Major Transaction, and the
Corporation shall make lawful provision therefore as a part of such
consolidation, merger or reclassification; and (ii) 125% of the Face
Amount of such shares of Series B Preferred Stock in cash. No sooner
than ten (10) days nor later than five (5) days prior to the
consummation of the Major Transaction, but not prior to the public
announcement of such Major Transaction, the Corporation shall deliver
written notice ("Notice of Major Transaction") to each Holder, which
Notice of Major Transaction shall be deemed to have been delivered one
(1) Business Day after the Corporation's sending such notice by
telecopy (provided that the Corporation sends a confirming copy of such
notice on the same day by overnight courier). Such Notice of Major
Transaction shall indicate the amount and type of the Major Transaction
Consideration which such Holder would receive under clause (i) of this
section 10(c). If the Major Transaction Consideration does not consist
entirely of United States dollars, such Holder may elect to receive
United States dollars in an amount equal to the value, determined by a
reputable accounting firm selected by the Corporation that is
reasonably acceptable to a majority of the Holders of the Major
Transaction Consideration in lieu of the Major Transaction
Consideration which does not consist entirely of United States Dollars,
by delivering notice of such election to the Corporation within five
(5) days of the Holder's receipt of the Notice of Major Transaction.
D. Issuance of Other Securities. If, at any time after the
First Closing the Corporation shall issue any securities which are
convertible into or exchangeable for Common Stock ("Convertible
Securities") either (i) at a conversion or exchange rate based on a
discount from the market price of the Common Stock at the time of
conversion or exercise or (ii) with a fixed conversion or exercise
price less than the Conversion Price, then, at the Holder's option: (x)
in the case of clause (i), the Conversion Price in respect of any
conversion of Series B Preferred Stock after such issuance shall be
calculated utilizing the greatest discount applicable to any such
Convertible Securities, to the extent such calculation would result in
a lower Conversion Price; and (y) in the case of clause (ii), the
Conversion Price will be reduced to such lesser conversion or exercise
price, to the extent that this would result in a lower Conversion
Price.
E. Adjustment Due to Distribution. If at any time, the
Corporation shall declare or make any distribution of its assets (or
rights to acquire its assets) to holders of Common Stock as a partial
liquidating dividend, by way of return of capital or otherwise
(including any dividend or distribution to the Corporation's
stockholders in cash or shares (or rights to acquire shares) of capital
stock of a subsidiary (i.e. a spin-off) (a "Distribution"), then the
Conversion Price shall be equitably adjusted to take account of such
distribution.
F. Purchase Rights. If at any time, the Corporation issues any
Convertible Securities or rights to purchase stock, warrants,
securities or other property (the "Purchase Rights") pro rata to the
record holders of any class of Common Stock, then the Holders will be
entitled to acquire, upon the terms applicable to such Purchase Rights,
the aggregate Purchase Rights which such Holder could have acquired if
such Holder had held the number of shares of Common Stock acquirable
upon complete conversion of the Series B Preferred Stock (without
regard to any limitations on conversion or exercise herein or elsewhere
contained) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
G. Notice of Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this
section 10, the Corporation, at its expense, shall promptly compute
such adjustment or readjustment and prepare and furnish to each Holder
a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of
any Holder, furnish to such Holder a like certificate setting forth (i)
such adjustment or readjustment, (ii) the Conversion Price at the time
in effect and (iii) the number of shares of Common Stock and the
amount, if any, of other securities or property which at the time would
be received upon conversion of a share of Series B Preferred Stock.
11. Voting Rights. No holder of the Series B Preferred Stock shall be
entitled to vote on any matter submitted to the shareholders of the Corporation
for their vote, waiver, release or other action, except as may be otherwise
expressly required by law.
12. Protective Provisions. So long as any Series B Preferred Shares are
outstanding, the Corporation shall not, without first obtaining the approval of
a majority of the Holders: (a) alter or change the rights, preferences or
privileges of the Series B Preferred Stock; (b) alter or change the rights,
preferences or privileges of any capital stock of the Corporation so as to
affect adversely the Series B Preferred Stock; (c) create any Senior Securities;
(d) create any Pari Passu Securities; (e) increase the authorized number of
shares of Series B Preferred Stock; (f) redeem or declare or pay any cash
dividend or distribution on any Junior Securities, or (g) do any act or thing
not authorized or contemplated by these Articles of Incorporation which would
result in any taxation with respect to the Series B Preferred Stock under
Section 305 of the Internal Revenue Code of 1986, as amended, or any comparable
provision of the Internal Revenue Code as hereafter from time to time amended,
(or otherwise suffer to exist any such taxation as a result thereof).
13. Miscellaneous Provisions
A. Lost or Stolen Certificates. Upon receipt by the
Corporation of (i) evidence of the loss, theft, destruction or
mutilation of any Series A or Series B Preferred Stock Certificate(s)
and (ii) (y) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to the Corporation, or (z) in the case of
mutilation, upon surrender and cancellation of the Series A or Series B
Preferred Stock Certificate(s), the Corporation shall execute and
deliver new Series A or Series B Preferred Stock Certificate(s) of like
tenor and date. However, the Corporation shall not be obligated to
reissue such lost, stolen, destroyed or mutilated Series A or Series B
Preferred Stock Certificate(s) if the Holder contemporaneously requests
the Corporation to convert such Series A or Series B Preferred Stock.
B. Statements of Available Shares. Upon request, the
Corporation shall deliver to each Holder a written report notifying the
Holders of any occurrence which prohibits the Corporation from issuing
Common Stock upon any such conversion. The report shall also specify
(i) the total number of shares of Series B Preferred Stock outstanding
as of the date of the request, (ii) the total number of shares of
Common Stock issued upon all conversions of Series A or Series B
Preferred Stock through the date of the request, (iii) the total number
of shares of Common Stock which are reserved for issuance upon
conversion of the Series B Preferred Stock as of the date of the
request, and (iv) the total number of shares of Common Stock which may
thereafter be issued by the Corporation upon conversion of the Series A
or Series B Preferred Stock before the Corporation would exceed the
Common Share Limit and Reserved Amount. The Corporation shall, within
five (5) days after delivery to the Corporation of a written request by
any Holder, provide all of the information enumerated in clauses (i)(v)
of this section 13(b) and, at the request of a Holder, make public
disclosure thereof.
C. Payment of Cash; Defaults. Whenever the Corporation is
required to make any cash payment to a Holder under these Articles of
Incorporation (as a Conversion Default Payment, Redemption Amount or
otherwise), such cash payment shall be made to the Holder by the method
(by certified or cashier's check or wire transfer of immediately
available funds) elected by such Holder. If such payment is not
delivered when due such Holder shall thereafter be entitled to interest
on the unpaid amount until such amount is paid in full to the Holder at
a per annum rate equal to the lower of (x) twelve percent (12%) and (y)
the highest interest rate permitted by applicable law.
D. Conversion of Default Amounts. In addition, and
notwithstanding anything to the contrary contained in these Articles, a
Holder may elect in writing to convert all or any portion of accrued
Default Amounts, at any time and from time to time, into Common Stock
at the lowest Conversion Price in effect during the period beginning on
the date of the default with respect thereto through the cure date for
such default. In the event that a Holder elects to convert all or any
portion of the Default Amounts into Common Stock, the Holder shall so
notify the Corporation on a Notice of Conversion of such portion of the
Default Amounts which such holder elects to so convert and such
conversion shall otherwise be effected in accordance with the
provisions of, and subject to limitations contained in, section 4.
E. Remedies, Characterizations, Other Obligations, Breaches
and Injunctive Relief. The remedies provided in these Articles of
Incorporation shall be cumulative and in addition to all other remedies
available under these Articles of Incorporation, at law or in equity
(including a decree of specific performance and/or other injunctive
relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing
herein shall limit a Holder's right to pursue actual damages for any
failure by the Corporation to comply with the terms of these Articles
of Incorporation (including, without limitation, damages incurred to
effect "cover" purchase of shares of Common Stock anticipated to be
received upon a conversion hereunder and not received in accordance
with the terms hereof). Corporation covenants to each Holder that there
shall be no characterization concerning this instrument other than as
expressly provided herein; provided, however, that the Corporation
shall be entitled to prepare summaries of these Articles of
Incorporation for purposes of complying with its disclosure obligations
and in connection with bona fide disputes as to the operations of the
provisions of these Articles of Incorporation. Amounts set forth or
provided for herein with respect to payments, conversion and the like
(and the computation thereof) shall be the amounts to be received by
the Holder hereof and shall not, except as expressly provided herein,
be subject to any other obligation of the Corporation (or the
performance thereof). The Corporation acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the holders
of Series B Preferred Stock and that the remedy at law for any such
breach may be inadequate. The Corporation therefore agrees that, in the
event of any such breach or threatened breach, the Holders shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss
and without any bond or other security being required.
F. Specific Shall Not Limit General; References to "Series A
Preferred Stock" or "Series B Preferred Stock." No specific provision
contained in these Articles of Incorporation shall limit or modify any
more general provision contained herein. These Articles of
Incorporation shall be deemed to be jointly drafted by the Corporation
and the Holders and shall not be construed against any person as the
drafter. Any reference herein to Series A or Series B Preferred Shares,
Series A or Series B Preferred Stock or an unspecified amount of Series
A or Series B Preferred Shares or Series B Preferred Stock shall be
deemed to include, without limitation, all shares of Series A or Series
B Preferred Stock issued or then issuable as a dividend or otherwise in
satisfaction of any obligation of the Corporation with respect to any
Series A or Series B Preferred Stock issued on the date hereof.
G. Failure or Indulgency Not Waiver. No failure or delay on
the part of a Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, not shall any single or
partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege.
ARTICLE VI
Preemptive Rights
No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series of
stock or of other securities of the Corporation shall have any preemptive right
to purchase or subscribe for any unissued stock of any class or series, or any
unissued bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock or carrying any right to purchase
stock that may be issued pursuant to resolution of the board of directors of the
Corporation to such persons, firms, corporations or associations, whether or not
holders thereof, upon such terms as may be deemed advisable by the board of
directors in the exercise of its sole discretion.
ARTICLE VII
Directors
The business and affairs of the Corporation shall be managed by or
under the direction of the board of directors, which shall consist of not fewer
than one (1) and nor more than nine (15) directors, the exact number to be
determined and increased or decreased from time to time by resolution adopted by
the board of directors, providing that the number of directors shall not be
reduced to less than one (1).
In furtherance, but not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to do the following:
(a) Designate one (1) or more committees, each committee to
consist of one or more of the directors of the Corporation and such
number of natural persons who are not directors as the board of
directors shall designate, which to the extent provided in the
Resolution, or in the by-laws of the Corporation, shall have and may
exercise the powers of the board of directors in the management of the
business and affairs of the Corporation.
(b) As provide by Nevada Revised Statutes 78.140, without
repeating the section in full here, the same is adopted and no contract
or other transaction between this Corporation and any of its officers,
agents or directors shall be deemed void or voidable solely for that
reason. The balance of the provisions of the code section cited, as it
now exists, allowing such transactions, is hereby incorporated into
this Article as though more fully set forth, and such Article shall be
read and interpreted to provide the greatest latitude in its
application.
(c) As provided by Nevada Revised Statutes 78.207, without
repeating the section in full here, the board of directors shall have
the authority to change the number of shares of any class or series, if
any, of authorized stock by increasing or decreasing the number of
authorized shares of the class or series and correspondingly increasing
or decreasing the number of issued and outstanding shares of the same
class or series held by each stockholder of record at the effective
date and time of the change by a resolution adopted by the board of
directors, without obtaining the approval of the stockholders.
(d) If a proposed increase or decrease in the number of issued
and outstanding shares of any class or series would adversely alter or
change any preference or any relative or other right given to any other
class or series of outstanding shares, then the decrease must be
approved by the vote, in addition to any vote required, of the holders
of shares representing a majority of the voting power of each class or
series whose preference or rights are adversely affected by the
increase or decrease, regardless of limitations or restrictions on the
voting power thereof. The increase or decrease does not have to be
approved by the vote of the holders of shares representing a majority
of the voting power in each class or series whose preference or rights
are not adversely affected by the increase or decrease.
(e) Special meetings of the stockholders may be called only by
the board of directors or a committee of the board of directors that is
delegated the power to call special meetings by the board of directors.
ARTICLE VIII
Indemnification
Any person who was or is a party or is or is threatened to be made a
party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (whether or not by or
in the right of the corporation) by reason of the fact that he is or was a
director, officer, incorporator, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer,
incorporator, employee, partner, trustee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise (including an employee
benefit plan), shall be entitled to be indemnified by the corporation to the
full extent then permitted by law against expenses (including counsel fees and
disbursements), judgments, fines (including excise taxes assessed on a person
with respect to an employee benefit plan), and amounts paid in settlement
incurred by him in connection with such action, suit, or proceeding. Such right
of indemnification shall inure whether or not the claim asserted is based on
matters which antedate the adoption of this Article VIII. Such right of
indemnification shall continue as to a person who has ceased to be a director,
officer, incorporator, employee, partner, trustee, or agent and shall inure to
the benefit of the heirs and personal representatives of such a person. The
indemnification provided by this Article VIII shall not be deemed exclusive of
any other rights which may be provided now or in the future under any provision
currently in effect or hereafter adopted of the by-laws, by any agreement, by
vote of stockholders, by resolution of disinterested directors, by provisions of
law, or otherwise.
The expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the corporation as they are
incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this Article VIII do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law
ARTICLE IX
Limitations on Directors' Liability
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for any damages as a result of any act or
failure to act in his capacity as a director or officer unless it is proven
that: (a) his act or failure to act constituted a breach of his fiduciary duties
as a director or officer, and (b) his breach of those duties involved
intentional misconduct, fraud or a knowing violation of law. If the Nevada
Revised Statutes are amended after the date of filing of these Articles to
further eliminate or limit the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Nevada Revised Statutes, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE X
Statutory Elections
A. Election not to be Governed by Nevada Revised Statutes 78.378 to
78.3793 Inclusive. The Corporation hereby elects not to be governed by, and to
otherwise opt out of, the provisions of Nevada Revised Statutes 78.378 to
78.3793, inclusive, relating to acquisition of a controlling interest in the
Corporation.
B. Election not to be Governed by Nevada Revised Statutes 78.411 to 78.
444 Inclusive. The Corporation hereby elects not to be governed by, and to
otherwise opt out of, the provisions of Nevada Revised Statutes 78.411 to
78.444, inclusive, relating to combinations with interested stockholders.
EXHIBIT C
BUSINESS CORPORATION LAW OF UTAH
Utah Annotated Code ss. 16-10a-1320 et seq.
16-10a-1320 Notice of dissenters' rights.
(1) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is submitted to a vote at a shareholders' meeting, the
meeting notice must be sent to all shareholders of the corporation as of the
applicable record date, whether or not they are entitled to vote at the meeting.
The notice shall state that shareholders are or may be entitled to asset
dissenters' rights under this part. The notice must be accompanied by a copy of
this part and the materials, if any, that under this chapter are required to be
given the shareholders entitled to vote on the proposed action at the meeting.
Failure to give notice as required by this subsection does not affect any action
taken at the shareholders' meeting for which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized without a meeting of shareholders pursuant to
Section 16-10a-704, any written or oral solicitation of a shareholder to execute
a written consent to the action contemplated by Section 16-10a-704 must be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to asset dissenters' rights under this part, by a copy of this part,
and by the materials, if any, that under this chapter would have been required
to be given to shareholders entitled to vote on the proposed action if the
proposed action were submitted to a vote at a shareholders' meeting. Failure to
give written notice as provided by this subsection does not affect any action
taken pursuant to Section 16-10a-704 for which the notice was to have been
given.
16-10a-1321 Demand for payment Eligibility and notice of intent.
(1) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(a) must cause the corporation to receive, before the vote is
taken, written notice of his intent to demand payment for shares if the
proposed action is effectuated; and
(b) may not vote any of his shares in favor of the proposed
action.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized without a meeting of shareholders pursuant to
Section 16-10a-704, a shareholder who wishes to asset dissenters' rights may not
execute a writing consenting to the proposed corporate action.
(3) In order to be entitled to payment for shares under this part,
unless otherwise provided in the articles of incorporation, by-laws, or a
resolution adopted by the board of directors, a shareholder must have been a
shareholder with respect to the shares for which payment is demanded as of the
date the proposed corporate action creating dissenters' rights under Section
16-10a-1302 is approved by the shareholders, if shareholder approval is
required, or as of the effective date of the corporate action if the corporate
action is authorized other than by a vote of shareholders.
(4) A shareholder who does not satisfy the requirements of Subsections
(1) through (3) is not entitled to payment for shares under this part.
16-10a-1322 Dissenters' notice.
(1) If proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized, the corporation shall give a written
dissenters' notice to al shareholders who are entitled to demand payment for
their shares under this part.
(2) The dissenters' notice required by Subsection (1) must be sent no
later than ten days after the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302, and shall:
(a) state that the corporate action was authorized and the
effective date or proposed effective date of the corporate action;
(b) state an address at which the corporation will receive
payment demands and an address at which certificates for certificated
shares must be deposited;
(c) inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand is
received;
(d) supply a form for demanding payment, which form requests a
dissenter to state an address to which payment is to be made;
(e) set a date by which the corporation must receive the
payment demand and by which certificates for certificated shares must
be deposited at the address indicated in the dissenters' notice, which
dates may not be fewer than 30 nor more than 70 days after the date the
dissenters' notice required by Subsection (1) is given;
(f) state the requirement contemplated by Subsection
16-10a-1303(3), if the requirement is imposed; and
(g) be accompanied by a copy of this part.
16-10a-1323 Procedure to demand payment.
(1) A shareholder who is given a dissenters' notice described in
Section 16-10a-1322, who meets the requirements of Section 16-10a-1321, and
wishes to asset dissenters' rights must, in accordance with the terms of the
dissenters' notice:
(a) cause the corporation to receive a payment demand, which
may be the payment demand form contemplated in Subsection
16-10a-1322(2)(d), duly completed, or may be stated in another writing;
(b) deposit certificates for his certificated shares in
accordance with the terms of the dissenters' notice; and
(c) if required by the corporation in the dissenters' notice
described in Section 16-10a-1322, as contemplated by Section 16-10a-1327,
certify in writing, in or with the payment demand, whether or not he or the
person on whose behalf he asserts dissenters' rights acquired beneficial
ownership of the shares before the date of the first announcement to news media
or to shareholders of the terms of the proposed corporate action creating
dissenters' rights under Section 16-10a-1302.
(2) A shareholder who demands payment in accordance with Subsection (1)
retains all rights of a shareholder except the right to transfer the shares
until the effective date of the proposed corporate action giving rise to the
exercise of dissenters' rights and has only the right to receive payment for the
shares after the effective date of the corporate action.
(3) A shareholder who does not demand payment and deposit share
certificates as required, by the date or dates set in the dissenters' notice, is
not entitled to payment for shares under this part.
EXHIBIT D
FORM OF DISSENT AND DEMAND FOR REDEMPTION OF
COMMON STOCK OF TRUE HEALTH, INC.
True Health, Inc.
Attn: David Francis
Kelsey House
77 High Street
Beckenham
Kent
BR3 1AN
United Kingdom
Re: Dissent and Redemption of Common Stock
Ladies and Gentlemen:
The undersigned hereby notifies you that he/she/it dissents from the
merger of True Health, Inc., a Utah corporation, with and into its wholly owned
subsidiary, MediQuip Holdings, Inc., a Nevada corporation and demands that you
redeem all share of stock of True Health, Inc. beneficially owned by me as
required by Utah Annotated Code ss.16-10a-1320 et seq. I have enclosed with this
demand a certificate representing all shares of True Health, Inc. held of record
by me. Payment for such shares shall be sent to the address set forth below my
signature.
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(Signature Exactly as it Appears on the Enclosed Certificate)
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(Printed Name)
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(Address)
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(City) (State) (Zip)