Monaco Finance Inc. Definitive Proxy Statement DE-F14A

EXHIBIT B
AMENDMENT TO RESTATED ARTICLES OF INCORPORATION

RESOLVED, the Restated Articles of Incorporation of are amended by inserting an Article V so that after Article IV, there appears the following text:

ARTICLE V

On the effective date of this amendment to the Restated Articles of Incorporation (the “Effective Date”), the Common Stock of the Corporation will be reverse split on a one-for-five basis so that each share of Common Stock issued and outstanding immediately prior to the Effective Date shall automatically be converted into and reconstituted as one-fifth of a share of Common Stock (the “Reverse Split”). No fractional shares will be issued by the Corporation as a result of the Reverse Split. In lieu thereof, each Shareholder whose shares of Common Stock are not evenly divisible by five will receiver one additional share of Common Stock for the fractional share that such Shareholder would otherwise be entitled to as a result of the Reverse Split.

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§3.407 To amend the Articles of Incorporation to effect a 1-for-100 reverse stock split immediately followed by a nine-for-one forward stock split (in the form of a stock dividend) of the whole shares of Common Stock remaining after the reverse split (and cash payment for fractional interests) without changing the par value of the stock. The purpose of this reverse and forward stock split is to reduce the number of small stockholders and the cost of administering to their accounts (with copies of the Amendments).

Proposal No. 2

Proposal to Amend the Company’s Amended and Restated Articles of Incorporation
to Effect a Reverse Stock Split of the Common Stock and to
Authorize a Share Dividend on the Common Stock

Summary and Purpose of the Proposal

Summary. The Board of Directors has approved, and has directed that the same be presented to shareholders for their approval, a proposal to (i) amend the Company’s Amended and Restated Articles of Incorporation (the “Reclassification Amendment”) to (a) effect a 100 to one reverse stock split (the “Reverse Stock Split”) of the Company’s Common Stock, through a reclassification of the Common Stock pursuant to which each 100 shares of Common Stock outstanding as of the close of business on the effective date of the amendment would be reclassified into one new share of Common Stock, par value, and (b) fix the number of authorized shares of the Company’s Common Stock, par value, after the reclassification at and (ii) authorize a forward split of the new Common Stock in the form of a stock dividend (the “Share Dividend”) to be effective as of the opening of business on the first business day immediately following the Reverse Stock Split pursuant to which each holder of record of the reclassified Common Stock at such time would receive nine shares of reclassified Common Stock for each one share of reclassified Common Stock held as of such time. No fractional shares would be issued pursuant to the reclassification and holders who would otherwise be entitled to receive a fractional share will receive cash in lieu of their fractional share interests. The Reverse Stock Split and the Share Dividend are herein referred to collectively as the “Reclassification Proposal”.

The text of the proposed amendment to the Company's Amended and Restated Articles of Incorporation and the resolutions relating to the Reclassification Proposal to be adopted by shareholders are set forth in Exhibit A to this Proxy Statement and are hereby incorporated herein by reference.

Purpose of the Proposed Reverse Stock Split and Share Dividend. As of the Record Date, the Company estimates that approximately record holders, or approximately % of the record holders of Common Stock, owned fewer than 100 shares of Common Stock. Of these record holders, the Company estimates that more than % held ten or fewer shares of Common Stock as of the Record Date. The small holdings of such shareholders with fewer than 100 shares, however, represented, in the aggregate, less than % of the Company's outstanding Common Stock.

The Company anticipates that the Reclassification Proposal will reduce the number of shareholders of the Company by , to approximately . It is anticipated that the cost of administering shareholder accounts will be reduced by up to $ per year as a result of the Reclassification Proposal. Based on the aggregate number of shares owned by record holders with fewer than 100 shares, and the recent market price of the Common Stock, the Company estimates that payments for fractional shares resulting from the Reverse Stock Split will aggregate approximately $ . The Company intends to use its existing cash, including a portion of the proceeds from prior issuances of Common Stock, for such purpose.

Based upon the closing sale price of the Common Stock on the American Stock Exchange, Inc. (the “AMEX”) on the Record Date of $ , the market value of shares of Common Stock was $ .

The Company is proposing the reclassification in lieu of a tender offer for shares held by holders with fewer than 100 shares because of the large number of shareholders with small holdings and as a means of reducing the administrative and transactional cost that would be involved for the Company to acquire such shares through a self tender offer or a Company sponsored odd-lot shareholder program.

The nine for one share dividend following the reclassification is intended to permit the Company to maintain a sufficient number of issued and outstanding shares of its Common Stock so as not to affect the availability of trading on the AMEX and to return the market price of the Common Stock after the reclassification to a level that would be more attractive to a broader range of investors. The Reverse Stock Split will reduce the number of issued and outstanding shares of the Common Stock to approximately . The Company estimates that the number of issued and outstanding shares of Common Stock after giving effect to the Share Dividend will be approximately .

By effecting the Share Dividend on the basis of nine new shares for each share outstanding, as opposed to a share dividend on the basis of new shares for each share outstanding, the Board of Directors is also seeking to enhance and improve the market for the Common Stock.

Purpose of the Proposed Increase in the Number of Authorized Shares of Common Stock. The Reclassification Amendment would fix the number of authorized shares of Common Stock after the reclassification at .

The Company also requires additional shares of Common Stock with respect to the options to be granted under its Employee Stock Option Plan being presented to shareholders for approval at the Annual Meeting.

The increase in the authorized number of shares of Common Stock after giving effect to the Reclassification Proposal will also permit the Company to comply with its contractual obligation to with respect to the sale of shares of Common Stock ( shares after giving effect to the Reclassification Proposal).

Description and Effect of the Proposal. The Company's Amended and Restated Articles of Incorporation currently authorize the issuance of shares of capital stock, consisting of shares of Common Stock, $.01 par value, and shares of Preferred Stock, $.01 par value, of which shares have been designated Senior Preferred Stock, shares have been designated Series A Preferred Stock and shares are available for future designations (“Serial Preferred Stock”).

Under the proposal, (i) one new share of Common Stock, $.01 par value, would be exchanged for every 100 shares of Common Stock, $.01 par value, outstanding as of the close of business on the date on which the amendment to the Company's Amended and Restated Articles of Incorporation is filed with the Secretary of State of the State of (the “Effective Date”), (ii) the number of authorized shares of Common Stock would be fixed at and (iii) each holder of shares of the reclassified Common Stock would receive nine shares of reclassified Common Stock for each whole share of reclassified Common Stock held as the opening of business on the first business day immediately following the Effective Date.

If the Reclassification Proposal is approved, the Company will notify holders of the Common Stock of the filing of the Articles of Amendment with the Secretary of State of the State of and will furnish holders of record of the Common Stock as of the close of business on the Effective Date with a letter of transmittal for use in exchanging certificates.

It is not anticipated that the Reclassification Proposal will affect the listing of the Common Stock on the AMEX or the registration of such stock under the Securities Exchange Act of 1934 (the “Exchange Act”).

Shareholders of the Company will have no appraisal rights with respect to the Reclassification Amendment under law or the Company's Amended and Restated Articles of Incorporation and no such rights will be afforded to such shareholders by the Company.

In addition, , an affiliate of the Company, will directly benefit from the approval of the Reclassification Amendment in that the Reclassification Amendment will permit the Company to issue to shares of Common Stock at $ per share ( shares at $ on a reclassification basis) pursuant to an existing agreement with the Company.

I/we vote FOR the approval of this proposal.

I/we vote AGAINST the approval of this proposal.

I/we ABSTAIN from voting with regard to the approval of this proposal.

Additional Comments