SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Confidential for Use of the Commission Only (as
permitted by Rule 14a-6(a)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to ss.240.14a-11(c) or
ss.240.14a-12
UNIVERSAL MONEY CENTERS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing party:
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4) Date filed:
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PRELIMINARY COPY
[NAME AND LOGO]
6800 Squibb Road
Mission, Kansas 66202
(913) 831-2055
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 26, 2000
The annual meeting of the shareholders of Universal Money Centers, Inc., a
Missouri corporation (the "Annual Meeting"), will be held at The Holiday
Inn-Mission, 7240 Shawnee Mission Parkway, Overland Park, Kansas 66202, on
Friday, May 26, 2000 at 10:00 A.M., CDT, for the following purposes:
1. To consider and act upon a proposal to amend the corporation's Articles
of Incorporation to effect a 1-for-20 reverse stock split of the
corporation's outstanding common stock.
2. To consider and act upon a proposal to amend the corporation's Articles
of Incorporation to increase the number of authorized shares of common
stock of the corporation from 40,000,000 to 200,000,000 shares, if the
1-for-20 reverse stock split in Proposal 1 is not approved by the
shareholders.
3. To consider and act upon a proposal to elect three directors of the
corporation as set forth in the accompanying Proxy Statement.
4. To consider and act upon a proposal to ratify the selection of Baird,
Kurtz & Dobson as independent auditors for the corporation and its
subsidiaries for the present fiscal year.
5. To consider and transact such other business as may properly come
before the Annual Meeting.
Shareholders of record at the close of business on April 7, 2000 are
entitled to vote at the Annual Meeting.
TO INSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE URGED TO
DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE AS SOON AS
POSSIBLE. Sending in your Proxy now will not interfere with your rights to
attend the Annual Meeting or to vote your shares personally at the Annual
Meeting if you wish to do so.
You are cordially invited to attend the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
David S. Bonsal
Chairman of the Board
and Chief Executive Officer
DATE: April 14, 2000
Mission, Kansas
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YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. PLEASE FILL IN, SIGN
AND RETURN THE ENLOSED PROXY CARD IN ORDER THAT THE NECESSARY QUORUM MAY BE
REPRESENTED AT THE MEETING. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
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UNIVERSAL MONEY CENTERS, INC.
6800 Squibb Road,
Mission, Kansas 66202
(913) 831-2055
April 14, 2000
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Universal Money Centers, Inc. (the
"Company"), for the annual meeting of shareholders to be held on May 26, 2000 at
10:00 a.m. at The Holiday Inn-Mission, 7240 Shawnee Mission Parkway, Overland
Park, Kansas 66202, or any postponements or adjournments thereof (the "Annual
Meeting"). These proxy solicitation materials were mailed on or about April 14,
2000 to all shareholders entitled to vote at the Annual Meeting.
A copy of the Company's annual report for the fiscal year ended January
31, 2000 is enclosed herewith. Such report is not incorporated in this Proxy
Statement and is not to be deemed a part of the proxy soliciting material.
VOTING AND PROXIES
Only shareholders of record at the close of business on April 7, 2000 are
entitled to receive notice of and to vote at the Annual Meeting. The outstanding
voting securities of the Company as of such date consisted of _____________
shares of common stock, $.01 par value ("Common Stock").
If the accompanying Proxy is signed and returned the shares represented by
the Proxy will be voted in accordance with the specifications thereon. If the
manner of voting such shares is not indicated on the Proxy, they will be voted
for (a) approval of the amendment of the Company's Articles of Incorporation to
effect a 1-for-20 reverse stock split of the Company's outstanding Common Stock,
(b) approval of the amendment of the Company's Articles of Incorporation to
increase the number of authorized shares of Common Stock of the Company from
40,000,000 to 200,000,000 shares, (c) the nominees for directors named herein
and (d) the ratification of the selection of the independent auditors.
Shareholders are entitled to one vote per share on all matters, except the
election of directors, as to which cumulative voting applies. Under cumulative
voting, each shareholder is entitled to cast as many votes as shall equal the
number of shares held by the shareholder multiplied by the number of directors
to be elected, and such votes may all be cast for a single director or may be
distributed among the directors to be elected as the shareholder wishes. If a
shareholder desires to cumulate his or her votes, the accompanying Proxy should
be marked to indicate clearly that the shareholder desires to exercise the right
to cumulate votes and to specify how the votes are to be allocated among the
nominees for directors. For example, a shareholder may write "cumulate" on the
Proxy and write below the name of the nominee or nominees for whom the
shareholder desires to cast votes the number of votes to be cast for such
nominee or nominees. Alternatively, without exercising his or her right to vote
cumulatively, a shareholder may instruct the proxy holders not to vote for one
or more of the nominees by lining through the name(s) of such nominee or
nominees on the Proxy. If the Proxy is not marked with respect to the election
of directors, authority will be granted to the persons named in the Proxy to
cumulate votes if they so choose and to allocate votes among the nominees in
such a manner as they determine is necessary in order to elect all or as many of
the nominees as possible.
A shareholder may revoke his or her Proxy at any time before it is voted
by giving to the Secretary of the Company written notice of revocation bearing a
later date than the Proxy, by submission of a later-dated Proxy, or by revoking
the Proxy and voting in person at the Annual Meeting. Attendance at the Annual
Meeting will not in and of itself constitute a revocation of a Proxy. Any
written notice
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revoking a Proxy should be sent to Ms. Pamela A. Glenn, Secretary, Universal
Money Centers, Inc., 6800 Squibb Road, Mission, Kansas 66202.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock will constitute a quorum for the transaction
of business at the Annual Meeting. If a quorum is not obtained at the Annual
Meeting, the meeting may be adjourned until such time as a quorum is obtained.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. In tabulating
the votes cast on proposals other than the election of directors, abstentions
are counted and broker non-votes are not counted for purposes of determining
whether a proposal has been approved. In tabulating the votes cast on the
election of directors, votes withheld and broker non-votes are not counted for
purposes of determining the directors who have been elected.
PROPOSAL 1
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
TO EFFECT A 1-FOR-20 REVERSE STOCK SPLIT
OF THE OUTSTANDING COMMON STOCK
General
The Board of Directors of the Company has unanimously adopted and directed
to be submitted to a vote of the shareholders a proposal to amend Article III of
the Company's Articles of Incorporation to effect a 1-for-20 reverse stock split
of the outstanding Common Stock of the Company (the "Reverse Stock Split").
Under the proposal, each twenty (20) shares of Common Stock ("Existing Common
Stock") outstanding as of the close of business on the effective date of the
amendment (the "Effective Date") will be automatically reclassified and
converted into one (1) share of Common Stock ("New Common Stock"). The amendment
will not change the number of authorized shares of Common Stock or the par value
of the shares of Common Stock. The proposed amendment to Article III of the
Articles of Incorporation to effect the Reverse Stock Split is set forth in
Appendix A to this Proxy Statement and is incorporated herein by reference.
No fractions of shares of New Common Stock will be issued in connection
with the Reverse Stock Split. In lieu thereof, each shareholder of record
otherwise entitled to fractions of shares of New Common Stock will receive one
whole share of New Common Stock.
If approved by the shareholders, the Reverse Stock Split will be
accomplished by the filing of a Certificate of Amendment to the Company's
Articles of Incorporation with the Missouri Secretary of State. The Company
plans to file the Certificate of Amendment as soon as practicable if the
proposed amendment is approved at the Annual Meeting or at any adjournment.
Under the Missouri General and Business Corporation Law, the amendment to the
Articles of Incorporation will become effective on the date of filing, unless
the Company specifies otherwise. The Board of Directors reserves the right to
abandon the Reverse Stock Split before or after the Annual Meeting and prior to
the close of business on the Effective Date if for any reason the Board of
Directors deems it advisable to do so.
Purposes of the Proposed Reverse Stock Split
The Board of Directors believes that the proposed Reverse Stock Split is
advisable and in the best interests of the Company and its shareholders in order
to
o increase the price per share at which the outstanding Common Stock
would trade, and
o provide additional authorized shares of Common Stock for issuance from
to time to time by the Board of Directors of the Company, including in
connection with the proposed Rights Offering (as described under
Proposal 2 hereof).
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Increase in Price Per Share of Common Stock. The Company believes that an
increase in the price level of the Common Stock as a result of the Reverse Stock
Split could improve the marketability and liquidity of the Common Stock and
could encourage greater interest and trading in the Common Stock. The Common
Stock is currently eligible to be traded in the over-the-counter market, both on
the OTC Bulletin Board and in the "pink sheets". The Common Stock is not
currently eligible to be traded on the Nasdaq SmallCap Market or the American
Stock Exchange, and will not be eligible upon consummation of the Reverse Stock
Split.
As of the date of this Proxy Statement, the Company is not aware of
any public trading in the Common Stock for several years. Based upon the
Company's size and earnings per share, the Company believes that the trading
price of the Common Stock would be low. The low market price per share of the
Common Stock would make trading in the Common Stock subject to certain rules
promulgated under the Securities Exchange Act of 1934, as amended, which require
additional disclosure by broker-dealers in trades involving "penny stocks".
These additional burdens may discourage certain broker-dealers from effecting
transactions in the Common Stock. In addition, many broker-dealers and
institutional investors have internal policies and practices that either
prohibit them from investing in low-priced stocks or tend to discourage
individual brokers from recommending low-priced stocks to their customers. Also,
brokerage commissions on the sale of lower priced stock often represents a
higher percentage of the sales price than the commissions on relatively higher
priced stock. The Company believes that the increase in the price per share
could reduce these burdens on the marketability and liquidity of the Common
Stock. However, there can be no assurance that the Reverse Stock Split would
cause the market price at which the Common Stock would trade to increase by
twenty (20) times or that any increase in such price would substantially
increase the marketability or liquidity of the Common Stock.
The Reverse Stock Split may also have negative effects on liquidity.
It is possible that the reduced number of shares outstanding as a result of the
Reverse Stock Split could adversely affect the liquidity of the shares. In
addition, certain shareholders who own fewer than one hundred shares of Common
Stock as a result of the Reverse Stock Split may be required to pay brokerage
commissions upon sale that are proportionately higher than the commissions paid
by holders of one hundred or more shares of Common Stock. Given the large number
of shares outstanding relative to the size of the Company, the Company believes
that the possible positive effects of the increase in price as a result of the
Reverse Stock Split should outweigh the possible negative consequences of the
reduction in the number of shares outstanding.
Increase in Number of Shares Available for Issuance. The Company's
Articles of Incorporation authorize the issuance of 40,000,000 shares of Common
Stock. As of February 15, 2000, there were 39,293,069 shares of Common Stock
issued and outstanding. Based upon the Company's best estimates, the number of
outstanding shares of Common Stock would be reduced as a result of the proposed
Reverse Stock Split to approximately 1,964,809 shares. The number of authorized
shares would not be changed in the Reverse Stock Split. As a result,
approximately 37,328,260 additional shares of Common Stock would be available
for issuance from time to time as the Board of Directors may deem advisable.
Increasing the number of shares of Common Stock available for issuance would
give the Company greater flexibility to issue stock for any proper purpose as
determined from time to time by the Board of Directors. If the Reverse Stock
Split is effected, the Board of Directors intends to authorize the issuance of a
sufficient number of shares to conduct the proposed Rights Offering, which is
described in Proposal 2. The Board of Directors does not currently have any
other plans, understandings, agreements or arrangements concerning the issuance
of additional shares of Common Stock of the Company. For a description of the
effects of an increase in shares available for issuance and a description of the
proposed Rights Offering, see Proposal 2.
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Effects of the Proposed Reverse Stock Split
Effect on Shareholders. Each holder of record of shares of Existing Common
Stock as of the close of business on the Effective Date will receive one (1)
share of New Common Stock for each twenty (20) shares of Existing Common Stock.
No fractions of shares of New Common Stock will be issued in connection with the
Reverse Stock Split. In lieu thereof, each shareholder of record otherwise
entitled to fractions of shares of New Common Stock will receive one whole share
of New Common Stock. Each shareholder of the Company will continue as a
shareholder after the proposed Reverse Stock Split. The proportionate voting
power and other rights of shareholders will not be affected by the Reverse Stock
Split, except to the extent that fractions of shares are rounded up in the
Reverse Stock Split. The Company estimates that the number of new shares issued
to round up fractions of shares will be less than one one-hundredth of one
percent of currently outstanding shares. Consequently, the amount of the
dilution of any shareholder caused by the rounding up of fractions of shares
will be very small. However, as described below, the Reverse Stock Split will
increase the number of shares available for issuance in the future, which may
result in dilution of the interests of existing shareholders. The Reverse Stock
Split will also result in some shareholders owning "odd lots" of less than 100
shares of New Common Stock. Brokerage commissions and other costs of
transactions in odd lots may be higher, particularly on a per-share basis, than
the cost of transactions in even multiples of 100 shares.
Effect on Authorized Stock and Outstanding Common Stock. Article III of
the Company's Articles of Incorporation currently authorizes the issuance of
40,000,000 shares of Common Stock. The authorized capital stock of the Company
will not be changed by reason of the proposed Reverse Stock Split. Based upon
the Company's best estimates, the number of outstanding shares of Common Stock
would be reduced as a result of the proposed Reverse Stock Split from 39,293,069
shares to approximately 1,964,809 shares, resulting in approximately 37,328,260
additional shares of Common Stock becoming available for issuance from time to
time upon such terms and for such purposes as the Board of Directors may deem
advisable. The Board of Directors does not intend to seek the approval of the
shareholders for any future issuance, unless such approval is required by law or
the rules of any quotation system or exchange on which the Common Stock is then
traded. Any future issuance of Common Stock may, depending upon the
circumstances, dilute the earnings per share, liquidation value, voting power
and other rights and interests of the existing shareholders. If the Reverse
Stock Split is effected, the Board of Directors intends to authorize the
issuance of a sufficient number of shares to conduct the Rights Offering, which
is described in Proposal 2. The Board of Directors does not currently have any
other plans, understandings, agreements or arrangements concerning the issuance
of additional shares of Common Stock of the Company. For a description of the
effects of an increase in the shares of Common Stock available for issuance and
of the proposed Rights Offering, see Proposal 2.
Anti-Takeover Effect. Although not a factor in the decision of the Board
of Directors to propose the Reverse Stock Split, the proposed Reverse Stock
Split could have an anti-takeover effect by reducing the number of outstanding
shares of Common Stock and thereby increasing the number of shares of Common
Stock available for issuance by the Board of Directors. There are currently no
plans, understandings, agreements or arrangements concerning the issuance of
additional shares of Common Stock of the Company, other than shares to be issued
in the proposed Rights Offering. However, the increase in the number of shares
of Common Stock available for issuance could enable the Board of Directors to
render more difficult or discourage a hostile transaction to take control of the
Company, by issuing additional shares to increase the voting power of parties
friendly to the Board of Directors or to dilute the voting power and other
rights of a proposed acquirer. The availability of this defensive strategy to
the Company could discourage unsolicited takeover attempts, thereby limiting the
opportunity for the Company's shareholders to realize a higher price for their
shares than would be generally available in the public markets. In addition, if
the directors and executive officers of the Company are able to purchase more
than their pro rata share of the Common Stock to be offered in the Rights
Offering, the increase in their percentage ownership of Common Stock may prevent
or discourage unsolicited takeover attempts. See Proposal 2. The Board of
Directors is not aware of any attempt, or contemplated attempt, to acquire
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control of the Company, and this proposal is not being presented with the intent
that it be utilized as a type of anti-takeover device.
Exchange of Stock Certificates
All shareholders of record of the Company will be required to surrender
their certificates representing shares of Existing Common Stock (the "Old
Certificates") to the Company's designated exchange agent (the "Exchange
Agent"). As soon as practicable after the Effective Date, the Company will mail
a transmittal form to each shareholder of record as of the Effective Date for
use in transmitting Old Certificates to the Exchange Agent. Upon proper
completion of the transmittal form and delivery of the transmittal form with the
holder's Old Certificates to the Exchange Agent, each holder of record of shares
of Existing Common Stock will receive new certificates representing the number
of shares of New Common Stock to which the holder is entitled.
The Reverse Stock Split will occur at the close of business on the
Effective Date without regard to when the Old Certificates are physically
surrendered. After the Effective Date, each Old Certificate, until surrendered
and exchanged as described above, will be deemed for all corporate purposes to
evidence ownership of the resulting number of shares of New Common Stock.
Until shareholders have surrendered their Old Certificates, such holders
will not be entitled to receive (i) dividends, if any, declared or payable to
holders of record of New Common Stock or (ii) certificates representing the
shares of New Common Stock to which such shareholders are entitled. Such
amounts, if any, will be remitted to the shareholders entitled thereto, without
interest, at the time such Old Certificates are surrendered for exchange.
HOLDERS SHOULD SUBMIT THEIR OLD CERTIFICATES ONLY AFTER THEY
RECEIVE TRANSMITTAL FORMS.
Federal Income Tax Consequences
THE FOLLOWING DISCUSSION SUMMARIZES CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE PROPOSED REVERSE STOCK SPLIT TO SHAREHOLDERS WHO ARE
CITIZENS OR RESIDENTS OF THE UNITED STATES. THIS DISCUSSION IS INCLUDED FOR
GENERAL INFORMATION ONLY. NO OPINION OF COUNSEL OR RULING FROM THE INTERNAL
REVENUE SERVICE HAS BEEN SOUGHT OR OBTAINED WITH RESPECT TO THE FEDERAL, STATE
OR LOCAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT. BECAUSE OF THE
COMPLEXITY OF THE INTERNAL REVENUE CODE AND BECAUSE TAX CONSEQUENCES MAY VARY
DEPENDING ON THE PARTICULAR FACTS RELATING TO EACH SHAREHOLDER, SHAREHOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX EFFECTS OF THE REVERSE STOCK SPLIT IN LIGHT OF THEIR INDIVIDUAL
CIRCUMSTANCES.
The Company believes that the proposed Reverse Stock Split will not be a
taxable transaction to the Company as the transaction qualifies for
non-recognition treatment under the Internal Revenue Code of 1986, as amended.
The Company believes that shareholders will not recognize gain or loss as a
result of the Reverse Stock Split. In the aggregate, each shareholder's basis in
the New Common Stock will equal the shareholder's basis in the Existing Common
Stock. A shareholder's holding period for shares of New Common Stock will be the
same as the holding period of the shares of Existing Common Stock exchanged
therefor.
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Appraisal Rights
No appraisal rights are available under the Missouri General and Business
Corporation Law to any shareholder who dissents from the proposal to approve the
Reverse Stock Split.
Recommendation and Vote
The proposed Reverse Stock Split must be approved by the holders of a
majority of the outstanding shares of Common Stock entitled to vote thereon. Any
abstention or broker non-vote will have the effect of a vote against the
proposed Reverse Stock Split.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
PROPOSAL 1 CONCERNING THE AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION
TO EFFECT A 1-FOR-20 REVERSE STOCK SPLIT OF THE OUTSTANDING COMMON STOCK.
PROPOSAL 2
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK
General.
The Board of Directors of the Company has unanimously adopted and directed
to be submitted to a vote of the shareholders a proposal to amend Article III of
the Company's Articles of Incorporation to increase the authorized shares of
Common Stock from 40,000,000 shares to 200,000,000 shares (the "Amendment"). The
proposed Amendment is set forth in Appendix B to this Proxy Statement and is
incorporated herein by reference.
If approved by the shareholders, the proposed Amendment will be effected
only if the 1-for-20 reverse stock split in Proposal 1 is not approved by the
shareholders. The Amendment will be accomplished by the filing of a Certificate
of Amendment to the Company's Articles of Incorporation with the Missouri
Secretary of State. Under the Missouri General and Business Corporation Law, the
proposed Amendment will become effective on the date of filing, unless the
Company specifies otherwise. The Board of Directors reserves the right to
abandon the proposed Amendment before or after the Annual Meeting and before the
proposed Amendment becomes effective if for any reason the Board of Directors
deems it advisable to do so.
Purpose of the Proposed Amendment
The Board of Directors believes that the proposed Amendment is advisable
and in the best interests of the Company and its shareholders in order to
increase the number of shares of Common Stock available for issuance by the
Company. The Company's Articles of Incorporation currently authorize the
issuance of 40,000,000 shares of Common Stock. As of February 15, 2000, there
were 39,293,069 shares of Common Stock issued and outstanding.
If the proposed Amendment is effected, the Board of Directors intends to
authorize the issuance of a sufficient number of shares of Common Stock to
conduct the proposed Rights Offering, which is described below under "Rights
Offering". Although the Company has considered, and continues to consider from
time to time, other opportunities that may involve the issuance of Common Stock,
there are currently no plans, arrangements, agreements or understandings for the
issuance or use of the additional
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shares of authorized Common Stock, other than the proposed Rights Offering.
Increasing the number of shares of authorized Common Stock would give the
Company greater flexibility to issue stock:
o to acquire other businesses or in connection with corporate
partnering arrangements;
o to provide incentives to employees, consultants and
contractors;
o to raise capital; and
o for other general corporate purposes.
The authorized but unissued shares of Common Stock would be available for
issuance from time to time for any proper purpose approved by the Board of
Directors. The Board of Directors does not presently intend to seek further
shareholder approval of any particular issuance of shares, unless such approval
is required by law or the rules of any quotation system or exchange on which the
Common Stock is then traded.
Effects of the Proposed Amendment
If the proposed Amendment is implemented, the additional authorized shares
of Common Stock would be available for issuance from time to time upon such
terms and for such purposes as the Board may deem advisable, generally without
further action by the shareholders of the Company. Except in connection with the
proposed Rights Offering, shareholders would not have any preemptive or similar
rights to subscribe for or purchase any additional shares of Common Stock that
may be issued in the future. Any future issuance of Common Stock may, depending
upon the circumstances, dilute the earnings per share, liquidation value, voting
power and other rights and interests of the existing shareholders.
The proposed Amendment would not effect any change in the Company's
currently outstanding Common Stock. The additional authorized shares of Common
Stock would have the same rights and privileges as the shares of Common Stock
presently outstanding.
Although not a factor in the decision of the Board of Directors to propose
the Amendment, the proposed Amendment could have an anti-takeover effect by
increasing the number of shares of Common Stock available for issuance by the
Board of Directors. The increase in the number of shares of Common Stock
available for issuance could enable the Board of Directors to render more
difficult or discourage a hostile transaction to take control of the Company. In
the course of exercising its fiduciary responsibilities to shareholders, the
Board of Directors could issue additional shares without shareholder approval in
order to increase the voting power of parties friendly to the Board of Directors
or to dilute the voting power and other rights of a potential acquirer. The
availability of this defensive strategy to the Company could discourage
unsolicited takeover attempts, thereby limiting the opportunity for the
Company's shareholders to realize a higher price for their shares than would be
generally available in the public markets. In addition, to the extent that
directors and executive officers are able to purchase more than their pro rata
share of the Common Stock to be offered in the Rights Offering, the increase in
their percentage ownership of Common Stock may prevent or discourage unsolicited
takeover attempts. See "Rights Offering". The Board of Directors is not aware of
any attempt, or contemplated attempt, to acquire control of the Company, and
this proposal is not being presented with the intent that it be utilized as a
type of anti-takeover device.
In August 1999, an attorney representing Dave A. Windhorst, a former
President of the Company, sent a letter to the Company claiming that the Company
was required to issue 2,000,000 shares of Common Stock to Mr. Windhorst in
connection with his prior employment by the Company. Mr. Windhorst resigned as
President of the Company in June 1999. In the letter, the attorney claimed that
the Board of Directors had approved the issuance to Mr. Windhorst of 2,000,000
shares of Common Stock in exchange for past services by him. The attorney
threatened litigation if the Company did not comply with
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his demand. The Company rejected the claim. As of the date of this Proxy
Statement, Mr. Windhorst has not made any further claims or commenced litigation
against the Company. Mr. Windhorst's claim is based upon resolutions adopted by
the Board of Directors in 1998 approving the issuance of certain shares, subject
to the conditions that the issuance receive professional legal approval and that
the number of authorized shares of Common Stock be increased. The proposed
issuance did not receive professional legal approval. Approval by the
shareholders of the proposed Amendment to increase the number of authorized
shares may increase the likelihood that Mr. Windhorst will renew his claim
against the Company or commence litigation against the Company. Even if the
number of authorized shares of Common Stock is increased, the Company believes
that it has meritorious defenses to Mr. Windhorst's claim.
Rights Offering
If Proposal 1 or Proposal 2 are approved by the shareholders at the Annual
Meeting, the Company currently intends to commence an offering of shares of
Common Stock to shareholders of the Company (the "Rights Offering") as soon as
practicable following the Annual Meeting. The Company currently expects to issue
to each record holder of Common Stock a dividend of one non-transferable
subscription right for each share of Common Stock held on the record date for
the Rights Offering. Each subscription right would entitle the holder thereof to
subscribe for and purchase one share of Common Stock (the "Basic Subscription
Privilege"). The Board of Directors will determine the subscription price for
the shares of Common Stock upon exercise of the subscription rights immediately
prior to commencement of the Rights Offering. The Board of Directors currently
expects that the subscription price will be between $0.40 - $0.80 per share if
the Reverse Stock Split is implemented, or $0.02 to $0.04 per share if the
Reverse Stock Split is not implemented. However, the actual subscription price
may be higher or lower than these prices, as determined by the Board of
Directors immediately prior to the commencement of the Rights Offering. The
Company currently expects that if all of the shares of Common Stock offered
pursuant to the Basic Subscription Privilege are not purchased, each holder
purchasing all of the shares of Common Stock available to it pursuant to the
Basic Subscription Privilege would have an Over-Subscription Privilege. Pursuant
to the Over-Subscription Privilege, each such holder would have the right to
purchase the shares that were not purchased by other shareholders pursuant to
the Basic Subscription Privilege, subject to proration based upon the number of
shares of Common Stock owned by each shareholder exercising ther Over-
Subscription Privilege. All subscription rights would cease to be exercisable 30
days after the commencement of the Rights Offering, unless extended by the
Company. All of the terms and conditions of the Rights Offering will be
determined by the Board of Directors immediately prior to the commencement of
the Rights Offering, and may be different than those described above. The Board
of Directors reserves the right not to commence the Rights Offering until such
time as it is in the best interests of the Company and the shareholders.
Based on the current range of subscription prices currently being
considered by the Board of Directors, if the Rights Offering is fully
subscribed, the Company would raise approximately $750,000 to $1,500,000. The
proceeds would be used to provide needed working capital for general corporate
purposes. These general corporate purposes include funding the continued
operation and expansion of the Company's ATM network and improving the Company's
ability to access credit for future working capital needs.
David S. Bonsal, Chairman of the Board of Directors and Chief Executive
Officer of the Company and the beneficial owner of 12,424,150 shares, or 31.6%,
of the outstanding Common Stock, has informed the Board of Directors that he
currently intends to exercise his Basic Subscription Privilege in full and
currently intends to exercise his Over-Subscription Privilege, to the extent
available, to acquire in the aggregate up to one-half of the shares offered in
the Rights Offering. John L. Settles, President of the Company and the
beneficial owner of 888,800 shares, or 2.3%, of the outstanding Common Stock,
has informed the Board of Directors that he currently intends to exercise his
Basic Subscription Privilege in full and currently intends to exercise his
Over-Subscription Privilege, to the extent available, to acquire in the
aggregate up to ten percent of the shares offered in the Rights Offering. The
remaining directors and
-8-
executive officers who collectively own 647,753 shares, or 1.6%, of the
outstanding Common Stock currently intend to exercise their Basic Subscription
Privilege. All of the directors and executive officers reserve the right to
subscribe for more or less than such number of shares of Common Stock.
If the directors and executive officers are able to acquire and do acquire
all of the shares of Common Stock that they intend to acquire in the Rights
Offering as described above, and all of the remaining shares of Common Stock
offered in the Rights Offering are sold to other shareholders, the percentage
ownership of the Common Stock by the directors and executive officers would
increase from 35.5% to 46.2%. If all of the directors and executive officers are
able to acquire and do acquire all of the shares of Common Stock that they
intend to acquire in the Rights Offering as described above, and no other shares
are acquired by other shareholders in the Rights Offering, the percentage
ownership of the Common Stock by the directors and executive officers would
increase from 35.5% to 59.1%.
To the extent that the voting power of the directors and executive
officers of the Company increases as a result of the Rights Offering, it will be
more difficult for the remaining shareholders to replace or remove the directors
and executive officers. Any increase in the voting power of the directors and
executive officers of the Company may also discourage or prevent unsolicited
takeover attempts. The Rights Offering may also have the effect of making a
business combination approved by the directors and executive officers of the
Company easier to accomplish. The Board of Directors is not aware of any
attempt, or contemplated attempt, to acquire control of the Company, and the
Rights Offering would not be conducted to deter or prevent takeovers.
Shareholders of the Company will not vote on the Rights Offering. However,
the Company's ability to consummate the Rights Offering is dependent upon
shareholder approval of Proposal 1 or this Proposal 2.
THIS PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY COMMON STOCK. ANY OFFER SHALL BE
MADE ONLY THROUGH A SEPARATE PROSPECTUS.
THE BOARD OF DIRECTORS MAKES NO RECOMMENDATION AS TO WHETHER
SHAREHOLDERS SHOULD EXERCISE ANY SUBSCRIPTION RIGHTS THAT MAY BE
ISSUED TO THEM.
Recommendation and Vote
The proposed Amendment must be approved by the holders of a majority of
the outstanding shares of Common Stock entitled to vote thereon. Any abstention
or broker non-vote will have the effect of a vote against the proposed
Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
PROPOSAL 2 CONCERNING THE AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK.
-9-
PROPOSAL 3
ELECTION OF DIRECTORS
The Board of Directors presently consists of three directors, whose terms
of office will expire upon the election of their successors at the Annual
Meeting. The Company's Board of Directors has nominated each of the current
directors of the Company for re-election at the Annual Meeting. The shareholders
will be asked to elect each of the nominees listed below as a director for a
term of one year and until his successor is elected and qualified, or until his
earlier resignation or removal. Management expects all of such nominees to be
available for election, but in the event that any of them should become
unavailable, the persons named in the accompanying Proxy will vote for a
substitute nominee or nominees if so designated by the Board of Directors. The
three nominees receiving the greatest number of votes will be elected directors
at the Annual Meeting.
Nominees for Election as Directors
A Director
of the Principal
Name Age Company Since Occupation
- - ---- --- ------------- ----------
David S. Bonsal 60 1987 Chairman of the Board and
Chief Executive Officer of
the Company
Jeffrey M. Sperry 56 1982 President, CB Richard Ellis,
Albany, New York, real estate
company
Arthur M. Moglowsky 63 1981 Attorney and Shareholder,
Bass & Moglowsky, S.C.,
Milwaukee, Wisconsin
Unless otherwise indicated, each director has had the same principal
occupation during the last five years.
Mr. Bonsal is a principal shareholder of Universal Funding Corporation.
See "Certain Relationships and Related Transactions." Mr. Bonsal also serves on
the Board of Directors and the Audit Committee of Ferrite Components.
Prior to 1999, Mr. Sperry served as Executive Vice President of Robert Cohn
Associates, Inc., Albany, New York, a real estate company.
Meetings of the Board of Directors and Committees
There were three meetings of the Board of Directors during the last fiscal
year. The Board of Directors has established an Audit Committee. The committee
members are Jeffrey M. Sperry and Arthur M. Moglowsky. See "--Nominees for
Election as Directors." The Audit Committee assists the Board of Directors in
satisfying the accounting and financial reporting responsibilities of the
Company, reviewing and implementing internal controls and reviewing and
assessing the scope and expense of the annual audit and related services
provided by the Company's independent accountants. The Audit Committee met one
time during the last fiscal year. Each director attended all meetings of the
Board and of any committee of which the director was a member during the last
fiscal year. The Company does not have standing compensation or nominating
committees, or committees performing similar functions.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who beneficially own more
than ten percent of a registered class of the Company's equity securities
("Insiders"), to file reports of ownership and changes in ownership with the
Securities
-10-
and Exchange Commission (the "SEC"). Insiders are required by SEC regulation to
furnish the Company with copies of all reports they file. To the Company's
knowledge, prior to April 29, 1999, no such reports had been filed for many
years as a result of the de-listing of the Company's Common Stock and the
Company's discontinuance of filing periodic reports with the SEC. The Company
recommenced filing periodic reports with the SEC on April 29, 1999. On such
date, each of the Insiders filed beneficial ownership reports with the SEC. Each
of the Insiders filed a late Form 3 on such date and each of the following
Insiders filed a Form 5 on such date reporting late the following number of
transactions: David S. Bonsal - nine transactions; Pamela A. Glenn - one
transaction; Arthur M. Moglowsky - six transactions; Jeffrey M. Sperry - seven
transactions; and Dave A. Windhorst, former President - three transactions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE
NOMINEES FOR DIRECTOR PRESENTED IN PROPOSAL 3.
PROPOSAL 4
SELECTION OF AUDITORS
The Board of Directors has selected Baird, Kurtz & Dobson to examine the
accounts of the Company and its subsidiaries for the current fiscal year. Unless
otherwise directed, the proxies will be voted to ratify such selection.
Representatives of Baird, Kurtz & Dobson are expected to be present at the
Annual Meeting to make any statement they may desire and to respond to
appropriate questions concerning the audit report.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
PROPOSAL 4 CONCERNING THE RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT
PUBLIC ACCOUNTANTS.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
Name Age Position
---- --- --------
David S. Bonsal 60 Chairman of the
Board of Directors
and Chief Executive
Officer
John L. Settles 57 President
Pamela A. Glenn 38 Vice President and
Corporate Secretary
Executive officers serve at the pleasure of the Board of Directors. Unless
otherwise indicated, each executive officer has had the same principal
occupation during the last five years.
David S. Bonsal has served as the Chairman and Chief Executive Officer of
the Company since 1988. Mr. Bonsal is also a principal shareholder of Universal
Funding Corporation. See "Certain Relationships and Related Transactions."
John L. Settles has served as President of the Company since June 1999.
From 1998 until he joined the Company, Mr. Settles served as Vice President
Business Development of DataLink Systems
-11-
Corporation, San Jose, California, a wireless information services firm with $6
million in annual revenue, where he was responsible for developing its sales
channels. From 1996 to 1998, Mr. Settles was employed by Science Applications
International Corp. where he help to create and manage its joint venture with
the Venezuelan national oil company, Petroleos del Venezuela, S.A., a provider
of Information Technology services with annual sales of $230 million. From 1994
to 1996, Mr. Settles served as the Vice President, Systems and Client Services
Group of Information Network Corp., Phoenix, Arizona, a healthcare information
systems firm with annual revenues of $10 million. Mr. Settles was the President
of the Company from April 1989 through October 1990 and is a principal
shareholder of Universal Funding Corporation. See "Certain Relationships and
Related Transactions."
Pamela A. Glenn has served as Vice President since May 1995 and Corporate
Secretary since September 1995. Ms. Glenn served as a Sales Representative and
Account Manager of the Company from 1991 to May 1995 and held various positions
with the Company from 1982 to 1991.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid and awarded for the years indicated to the Company's Chief
Executive Officer and to each executive officer of the Company who received
compensation in excess of $100,000 for services rendered in all capacities to
the Company and its subsidiaries during the Company's fiscal year ended January
31, 2000.
Summary Compensation Table
Annual Compensation
-------------------
Name and
Principal
Position Year Salary($) Bonus($)(1) Compensation($)(2)
--------- ---- --------- ----------- ------------------
David S. Bonsal, 2000 $124,500 $1,500 $4,314
Chief Executive 1999 125,000 2,500 4,620
Officer 1998 125,000 1,000 474
------------------------
(1) Includes bonuses received in the reported year. The payment of bonuses is
at the discretion of the Board of Directors.
(2) The amounts shown in this column for 2000 consist of (a) contributions by
the Company under its SIMPLE IRA Plan in the amount of $3,750 to the
account of Mr. Bonsal and (b) insurance premium payments by the Company
with respect to group term life insurance in the amount of $564 for the
benefit of Mr. Bonsal.
Director Compensation
The Company currently pays each non-employee director a cash fee of $750
for each Board meeting attended in person and a cash fee of $250 for each Board
meeting attended by telephone. Directors are reimbursed for certain reasonable
expenses incurred in attending meetings. Officers of the Company do not receive
any additional compensation for serving as members of the Board of Directors.
The Company currently does not pay committee members fees for attending
committee meetings. Committee members are reimbursed for certain reasonable
expenses incurred in attending meetings.
-12-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 3, 2000,
with respect to the beneficial ownership of the Common Stock by (a) each
beneficial owner of more than 5% of the outstanding shares thereof, (b) each
director and each nominee to become a director, (c) each executive officer named
in the Summary Compensation Table and (d) all executive officers, directors and
nominees to become directors of the Company as a group.
Percent of
Number of Shares Common Stock
Name of Beneficial Owner Beneficially Owned Outstanding(1)
- - ------------------------ ------------------ --------------
David S. Bonsal (2) 12,424,150 31.6%
Jeffrey M. Sperry 249,550 *
Arthur M. Moglowsky 297,753 *
Directors and executive officers 13,960,703 35.5%
as a group (5 persons)
- - -------------------
* Represents beneficial ownership of less than one percent.
(1) Percentages are determined in accordance with Rule 13d-3 under the
Exchange Act.
(2) The address of Mr. Bonsal is c/o Universal Money Centers, Inc., 6800
Squibb Road, Mission, Kansas 66202.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Universal Funding Corporation
The Company has maintained a business relationship with Universal Funding
Corporation, a Missouri corporation ("Funding"), since August 1989. The
relationship began in 1989 as a result of the Company's severe financial
problems. The operation of the Company's ATM network generally requires that the
Company supply vault cash to ATMs owned by the Company to fund cash withdrawals.
As a result of the Company's financial problems, lenders were generally
unwilling to extend loans, partly because of the concern that the Company's
creditors would assert claims against cash physically located in ATMs owned by
the Company. The Company did not have sufficient cash to supply the vault cash
for these ATMs. In order to resolve this problem and to permit the Company to
continue to operate certain ATMs, Funding was formed in 1989 by David S. Bonsal,
the Chairman of the Company's Board of Directors, John L. Settles, the President
of the Company, and William Smithson, a shareholder of the Company. Each of
these individuals has a one-third ownership interest in Funding.
In 1989, the Company sold approximately 60 ATMs to Funding for which
Funding had agreed to provide vault cash. Funding requested the sale of the ATMs
to Funding as a condition to providing vault cash, in order to provide
additional protection against seizure of Funding's vault cash by the Company's
creditors. The Company and Funding also entered into a Management Agreement in
1989. The Management Agreement was designed to provide the Company with the
economic benefits of ownership and operation of the ATMs sold to Funding, while
providing to shareholders and lenders of Funding the protection from the
Company's creditors and the investment return necessary to attract their
investment.
In the Management Agreement, Funding agreed to enter into contracts with
site owners for the placement of the ATMs acquired from the Company, to provide
vault cash necessary for the operation of
-13-
the ATMs and to contract for an armored security service for deliveries of cash
to ATMs. In exchange for these services, Funding received all interchange fees
for transactions processed on the ATMs for which it provided vault cash. Under
the Management Agreement, the Company agreed to "drive" the ATMs sold to Funding
and to provide accounting, maintenance and communication services. In exchange
for these services, Funding agreed to pay the Company a management fee equal to
Funding's "net income". Funding's "net income" is defined in the Management
Agreement as revenues from interchange fees, less armored security charges,
interest expense on funds borrowed to provide vault cash, ATM location expenses,
debt service related to the purchase of the ATMs, taxes or insurance on ATMs,
and a monthly payment to each of Funding's shareholders representing a return on
their equity investment in Funding. The amount of the monthly payment to the
shareholders is based upon the amount of their equity investment in Funding and
is paid on the equity investment at a rate of 18% per annum, or a total of
$24,894 per year. The management fee is to be paid to the Company on a monthly
basis after Funding has met all of its other cash expenses, including the
payment of interest on outstanding borrowings and the monthly payment to
Funding's shareholders. In addition, in the Management Agreement, the
shareholders of Funding grant the Company an option to purchase all of the
outstanding stock of Funding at any time for an amount equal to 110% of the
capital contributed by the shareholders to Funding plus any arrearages in the
payment of expenses due under the Management Agreement. Management believes that
the amount of the exercise price would have been $165,000 as of January 31,
2000. The Management Agreement extends for successive twelve (12) month terms,
unless either party provides written notice of termination to the other party at
least thirty (30) days prior to the end of a twelve (12) month term.
Since 1989, the relationship between the Company and Funding has expanded
to cover additional ATMs, as a result of the loss of other sources of financing
and in order for the Company to take advantage of opportunities to place
additional ATMs. Funding currently supplies vault cash for a majority of the
ATMs owned by Funding and the Company. Funding currently owns two ATMs in the
Company's ATM network. The Company-owned ATMs for which Funding provides vault
cash are leased to Funding for rent of $10.00 per month. Funding requested the
leasing arrangement for the Company-owned ATMs in order to provide protection
against seizure of its vault cash. Funding does not provide vault cash for ATMs
in the Company's network which are owned by banks or by third party vendors. At
January 31, 2000 and 1999, Funding had vault cash of approximately $3,640,000
and $2,200,000, respectively, located in approximately 250 and 242 ATMs,
respectively, owned by Funding and the Company.
The Company earned management fees from Funding of $14,820 and $541,380
in fiscal years 2000 and 1999, respectively. At January 31, 2000 and 1999, the
Company had a receivable for accrued and unpaid management fees of $39,872
and $35,064, respectively. Pursuant to the Management Agreement, the Company
assumes the risk of theft or other shortages of cash from the ATMs for which
Funding supplies vault cash. The Company incurred losses of $19,890 and $10,075
from vault cash shortages in fiscal 2000 and 1999, respectively.
Funding borrows the funds that are used to supply vault cash principally
from (i) Electronic Funds Transfer, Inc., a wholly owned subsidiary of the
Company ("EFT"), (ii) David S. Bonsal, Chairman and Chief Executive Officer of
the Company, and a limited partnership in which Mr. Bonsal is the general
partner, (iii) employees of the Company, and (iv) other lenders. The loans
generally have a term of 30 days and typically are rolled over at maturity. As
of January 31, 2000, Funding paid interest on loans at rates ranging from 12 -
18% per annum. At January 31, 2000, the aggregate outstanding amount of the
loans was approximately $3,579,000, of which $650,300 was owed to EFT,
approximately $1,975,500 was owed to Mr. Bonsal and the related limited
partnership, approximately $155,450 was owed to John L. Settles, President of
the Company, approximately $24,300 was owed to other employees of the Company
and approximately $773,000 was owed to other lenders. The maximum outstanding
balances of the loans made by EFT to Funding in fiscal 2000 and 1999 were
$815,300 and $489,000, respectively. The total interest earned by
-14-
the Company on loans from EFT to Funding in fiscal 2000 and 1999 was $72,325 and
$34,338, respectively.
The interest rate on loans from David S. Bonsal and the related limited
partnership that were outstanding during fiscal 2000 and 1999 and at January 31,
2000 was 15% per annum. The total interest paid by Funding to David S. Bonsal
and the related limited partnership for loans to Funding was $259,117 in fiscal
2000 and $156,864 in fiscal 1999. The interest rates on loans from John L.
Settles, President of the Company, that were outstanding during fiscal 2000 and
at January 31, 2000 were 15 - 18% per annum. The total interest paid by Funding
to John L. Settles for loans to Funding was $16,830 in fiscal 2000.
As noted above, the shareholders of Funding receive a return on their
equity investment in Funding each month before Funding pays the management fee
to the Company. The amount of the monthly payment to the shareholders is based
upon the amount of their equity investment in Funding and is paid on the equity
investment at a rate of 18% per annum. For each of fiscal 2000 and 1999, the
amount paid by Funding to the shareholders of Funding as a return on equity
investment was approximately $24,894. Each of David S. Bonsal and John L.
Settles, as the owner of 1/3 of the outstanding shares of Funding, has received
1/3 of the amount paid each year to the shareholders of Funding.
The Company has obtained access to additional sources of vault cash in
recent years as a result of the improvement in its financial condition. The
Company entered into an agreement with Pinnacle Systems, L.L.C. ("Pinnacle") in
August 1997 pursuant to which Pinnacle provided funds for vault cash for a
service fee equal to the amount of vault cash provided multiplied by the prime
rate published from time to time by the Wall Street Journal, plus a specified
percentage. In addition to the payment of this service fee, the agreement
required the Company to pay monthly "bank" fees and insurance charges to
Pinnacle. As of January 31, 1999, Pinnacle provided vault cash of approximately
$600,000 for approximately 40 ATMs. The agreement was terminated by Pinnacle in
March 1999. Pinnacle informed the Company that Pinnacle's lender would no longer
permit Pinnacle to provide vault cash to ATM companies because of losses
suffered by the lender due to problems monitoring vault cash transfers through
certain ATM networks (not including the Company's ATM network). In June 1999,
the Company entered into a vault cash arrangement with Tehama Bank under which
the Company could obtain up to $3 million in vault cash. As of January 31, 2000,
the Company was renting approximately $2 million under the Tehama Bank
arrangement. In October 1999, the Company entered into an arrangement with
Charter Bank allowing the Company to obtain up to $5 million in vault cash, of
which $3.6 million was outstanding as of January 31, 2000. In November 1999, the
Company entered into a vault cash arrangement with Humboldt Bank under which the
Company could obtain up to $1 million in vault cash. The Company had not
obtained funds under the arrangement with Humboldt Bank as of January 31, 2000.
Under each arrangement, the Company is required to pay a monthly service fee on
the outstanding amount equal to the prime rate of interest, plus a specified
percentage, and must pay monthly "bank" and insurance fees.
Deferred Compensation
The Company has a liability of approximately $140,000 due to David S.
Bonsal, Chairman and Chief Executive Officer of the Company, representing
compensation informally deferred during fiscal years 1994 through 1996 in an
attempt to improve the Company's cash flow during those years. The Company has
agreed to pay interest on the deferred compensation at a rate of 5% per annum.
-15-
Personal Guarantees of Company Obligations
As a result of the Company's financial problems, certain lenders required
the personal guarantee of David S. Bonsal, Chairman and Chief Executive Officer
of the Company, as a condition to loaning funds to the Company to finance the
purchase of new and replacement ATMs. The Company's payment of the following
obligations of the Company has been personally guaranteed by Mr. Bonsal:
1. Capital Lease dated December 30, 1996, between the Company and
Newcourt Communications Finance Corporation (formerly AT&T Credit
Corporation), in the principal amount of $440,365. The lease requires
monthly payments by the Company through November 2000.
2. Capital Lease dated October 30, 1996, between the Company and
Newcourt Communications Finance Corporation (formerly AT&T Credit
Corporation), in the principal amount of $66,427. The lease requires
monthly payments by the Company through September 2000.
3. Capital Lease dated February 28, 1997, between the Company and
Newcourt Communications Finance Corporation (formerly AT&T Credit
Corporation), in the principal amount of $119,594. The lease requires
monthly payments by the Company through January 2001.
4. A promissory note dated June 3, 1996, issued by the Company to Bank
21 (formerly The Farmers Bank) in the principal amount of $57,570.
The note is due on demand, and if no demand is made, the note is due
in installments through January 2001.
5. A promissory note dated August 20, 1996, issued by the Company to
Bank 21 (formerly The Farmers Bank) in the principal amount of
$222,200. The note is due on demand, and if no demand is made, the
note is due in installments through November 2001.
Under the terms of each of the capital leases described in Items 1 - 3 above,
Mr. Bonsal's personal guarantee is to be released under each lease if the
Company complies with its obligations under the respective lease for twenty-four
(24) months after the date of such lease and is not in default under the
respective lease at the end of the twenty-four (24) month period. Mr. Bonsal's
personal guarantee of these leases was released in April 1999.
FUTURE SHAREHOLDER PROPOSALS
Any proposal that a shareholder desires to have included in the Company's
proxy materials for the Company's 2001 annual meeting of shareholders ("2001
Annual Meeting") must be received by the Secretary of the Company at the
Company's principal executive offices no later than December 16, 2000, in order
to be considered for possible inclusion in the proxy materials. Any such
proposal must comply with the applicable rules of the Securities and Exchange
Commission.
In addition to the requirements set forth above, the Company's By-laws
contain advance notice provisions governing certain matters, including
shareholder proposals and shareholder nominations of candidates for the election
to the Board of Directors of the Company. Under the Company's By-laws, notice of
any such proposal or nomination must be in writing and must be delivered to the
Secretary of the Company at the Company's principal executive offices (a) no
less than sixty (60) days prior to the scheduled date of an annual shareholders'
meeting, or (b) if the notice to shareholders or the public announcement of the
scheduled date of the annual shareholders' meeting is not given or made at least
seventy (70) days prior to the scheduled date of the meeting, not more than ten
(10) days following the day on which the Company mails notice or makes a public
announcement of the scheduled date of the
-16-
meeting. Any such shareholder proposal or nomination for election to the Board
of Directors must also comply with the other applicable provisions of the
advance notice provisions in the Company's By-laws.
The Company currently anticipates that the 2001 Annual Meeting will be
held on June 15, 2001. Assuming that the date of the meeting is not changed,
notice of any shareholder proposal or nomination to be considered at the 2000
Annual Meeting must be received by the Secretary no later than April 16, 2001 in
order to be timely under the advance notice provisions of the Company's By-laws.
No shareholder proposal or nomination will be considered at the 2001
Annual Meeting of Shareholders unless it is presented in accordance with the
foregoing requirements. A copy of the Company's By-laws containing the advance
notice provisions can be obtained by any shareholder by written request to the
Secretary of the Company at the Company's principal executive offices.
GENERAL
Other Matters
As described above under "Future Shareholder Proposals," the By-laws of
the Company require that prior written notice of any business to be brought
before an annual shareholders' meeting be given to the Company a specified
period of time prior to the meeting. Because no such notice has been received in
a timely manner, the only business that may be properly brought before the
Annual Meeting are the matters set forth herein or those brought before the
Annual Meeting by or at the direction of the Board of Directors. The Board of
Directors does not intend to present any matter for action at the Annual Meeting
other than the matters described herein. If any other matters do properly come
before the meeting, proxies in the accompanying form confer upon the persons
named in such proxies discretionary authority to vote upon such matters, to the
extent permitted under the applicable rules of the Securities and Exchange
Commission.
Solicitation of Proxies
In addition to the solicitation of proxies from shareholders by use of the
mails, it is expected that a limited number of employees of the Company, without
additional compensation, may solicit proxies from shareholders by telephone,
telegraph and personal visits. It is expected that banks, brokerage houses and
others will be requested to forward the soliciting material to their principals
and obtain authorization for the execution of proxies. All costs of
solicitation, including the costs of preparing, assembling and mailing this
Proxy Statement and all papers which now accompany or may hereafter supplement
the same, as well as the reasonable out-of-pocket expenses incurred by the
above-mentioned banks, brokerage houses and others, will be borne by the
Company.
BY ORDER OF THE BOARD OF DIRECTORS
David S. Bonsal
Chairman of the Board
and Chief Executive Officer
DATE: April 14, 2000
-17-
APPENDIX A
PROPOSED AMENDMENT TO ARTICLE III OF
THE COMPANY'S ARTICLES OF INCORPORATION
TO EFFECT THE PROPOSED REVERSE STOCK SPLIT
RESOLVED, that Article III of the Company's Articles of Incorporation is
hereby amended by adding at the end of Article III the following provisions:
Reverse Stock Split
At 6:00 p.m. (Eastern time) on the effective date of the amendment
adding this paragraph to Article III ("Effective Date"), each twenty (20)
outstanding shares of the Corporation's Common Stock, $.01 par value per
share, held of record as of 6:00 p.m. (Eastern time) on the Effective Date
shall be and hereby are automatically reclassified and converted, without
further action, into one (1) share of the Corporation's Common Stock, $.01
par value per share. No scrip or fractions of shares shall be issued as a
result of this amendment to Article III. In lieu of receiving fractions of
shares, each shareholder of record otherwise entitled to receive fractions
of shares of Common Stock as a result of this amendment to Article III
shall be entitled to receive one whole share of Common Stock. This
amendment to Article III shall not affect the number of authorized shares
of Common Stock or the par value per share of the Common Stock.
-18-
APPENDIX B
PROPOSED AMENDMENT TO ARTICLE III OF
THE COMPANY'S ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
RESOLVED, that Article III of the Company's Articles of Incorporation is
hereby amended by deleting Article III as the same now appears and substituting
therefor the following:
ARTICLE III
The aggregate number of shares which the Corporation shall have authority
to issue shall be Two Hundred Million (200,000,000) shares of Common Stock, par
value one cent ($0.01) per share.
-19-
Please Complete, Sign, Date and Return
this Proxy in the Enclosed Envelope.
PROXY
Universal Money Centers, Inc.
6800 Squibb Road
Mission, Kansas 66202
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints David S. Bonsal, John L. Settles and Pamela
A. Glenn, and each of them, jointly and severally, with full power of
substitution, as proxies for the undersigned at the Annual Meeting of
Shareholders of Universal Money Centers, Inc., to be held at The Holiday Inn -
Mission, 7240 Shawnee Mission Parkway, Overland Park, Kansas 66202 on May 26,
2000, at 10:00 a.m. CDT, and at any adjournment, to vote the shares of common
stock the undersigned would be entitled to vote, if personally present, upon the
election of directors, the proposals stated on this Proxy and any other matter
properly brought before the meeting, all as set forth in the April 14, 2000
Proxy Statement.
Unless otherwise marked, this Proxy will be deemed marked "For" on
Proposals 1, 2 and 4 and marked "Granted" on Proposal 3, and voted accordingly.
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[Place shareholder label here]
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- - --------------------------------------------------------------------------------
[ X ] Please mark your
votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" ON PROPOSALS 1, 2 AND 4 AND "GRANTED" ON PROPOSAL 3
FOR AGAINST ABSTAIN
1. Approval of the proposed amendment to the |_| |_| |_|
Articles of Incorporation to effect a
1-for-20 reverse stock split of the
outstanding common stock.
FOR AGAINST ABSTAIN
2. Approval of the proposed amendment to the |_| |_| |_|
Articles of Incorporation to increase the
authorized shares of common stock from
40,000,000 shares to 200,000,000 shares.
3. Authority granted to or withheld from the Authority Authority
proxies to vote for the following GRANTED to vote WITHHELD to
nominees as Directors (or substitute for all nominees Vote for all
nominee(s) designated by the Board of nominees
Directors if any of them becomes |_| |_|
unavailable): David S. Bonsal,
Jeffrey M. Sperry and Arthur M. Moglowsky.
(INSTRUCTIONS: To withhold authority to
vote for any individual nominee, line
through that nominee's name in the list
above.)
FOR AGAINST ABSTAIN
4. Ratification of the appointment of Baird, |_| |_| |_|
Kurtz & Dobson as independent auditors
for Universal Money Centers, Inc.
This Proxy confers discretionary authority to vote upon certain matters, as
described in the accompanying Proxy Statement.
SIGNATURE__________ DATE:_____, 2000 SIGNATURE ______________DATE:_______, 2000
(Note: Please sign exactly as name appears on this Proxy. Executors,
administrators, trustees, etc., should so indicate when signing,
giving their full title as such. If a signer is a corporation or other
entity, execute in full corporation or entity name by authorized
officer. If shares are held in the name of two or more persons, all
should sign.)