PROPOSED AMENDMENTSTO THE
ARTICLES OF INCORPORATION
The Board has unanimously approved and recommends to shareholders approval of antitakeover amendme nts to Article IX and a
new Article XII. The Board has also unanimously approved and recommends to the shareholders approval of amendments to Article V
of the Articles of Incorporation increasing the authorized number of capital shares to 55,000,000 t o allow an increase to 50,000,000
shares of common stock and for 5,000,000 shares of preferred stock.
These proposed amendments are being presented to shareholders of the Company for their approval as a single proposal. As more
fully discussed below, the Board believes the antitakeover amendments will effecti vely reduce the possibility that a third party could
effect a change in majority control of the Company's Board without the support of the incum bent Board. The increase in the
authorized shares of the Company is necessary to meet the requirements of a shareholders' right s agreement which has been recently
adopted.
Vote Required
In accordance with the provisions of the Colorado Corporation Code, the affirmative vote of the holders of two-thirds of the
shares entitled to vote thereon is required for adoption of the proposed amendments. No shares of the Company are entitled to vote as
a class on the proposed amendments.
Board Recommendation
The Board has considered the advantages and disadvantages described in this Proxy Statem ent and has determined that the
adoption of the proposed antitakeover amendments and the increase in authorized shares a re in the best interest of the Company and
its shareholders. The Board recommends that shareholders vote FOR the proposed amendments.
No Further Antitakeover Amendments The Board has no present intention to adopt, or to propose to shareholders for adoption, any other me asures which could be
viewed as having an antitakeover effect.
The full text of the proposed amendments is attached to this Proxy Statement as Exhibit A. The following description of
the amendments is qualified in its entirety by reference to Exhibit A.
Proposed Antitakeover Amendments
Introduction On November 25, 1988 TBG Investment Company, N.V., a Netherlands Antilles Corporation and Thyssen-Bornemisz a
Continuity Trust, a Bermuda Trust, (referred to together as "TBG") filed with the Sec urities and Exchange Commission ("SEC") a
Schedule 13D disclosing ownership of 202,942 shares of common stock of the Company constituting 5.012% of the issued and
outstanding shares. According to the Schedule 13D filed, the shares were purchased for investment purpose s. It was disclosed that
TBG may seek representation on the Company's Board or otherwise work with the Company's mana gement to improve the Company's
operating performance. TBG also disclosed that it may, as market conditions may wa rrant, from time to time acquire additional shares
through open market or privately negotiated transactions or otherwise. TBG may also dec ide to dispose of shares that it owns. TBG
stated that it does not have other plans for material changes in the Company's structure or operations. On May 8, 1989, TBG filed with
the SEC an amendment to its Schedule 13D disclosing that as of April 19, 1989, it had i ncreased its holding to 250,482 shares or 6.2%
of the shares outstanding as of the date of filing.
On November 30, 1988 the Company responded to the original TBG filing. Mr. Prince, Chairman and Chief Executive Officer of
the Company, acknowledged discussions with TBG concerning their investment in the Com pany but denied any discussions regarding
TBG's representation on the Company's Board or other involvement in management. The Company announced that management
believes its stock is undervalued at the current market price and was not seeking a purchaser for the Company. The Company
indicated that it would treat TBG as any other major investor that is interested in the future of the Company.
In January, 1989 the Company engaged Drexel Burnham Lambert Incorporated ("Drexel") as its financia l advisor in connection
with any takeover effort. Representatives of Drexel have had further discussions with TBG a t which TBG has disclosed an interest in
the Company's power utilities business which would complement the business of a TBG subsidiary. TBG has requested information,
to be received and held on a confidential basis, about various aspects of the Company's busi ness including the power utilities business.
The Company has declined to provide such information because of the competitive aspects of the information requeste d.
The Company is concerned that the stock acquisition by TBG and its announced interest in participating in management of the
Company may be an initial step towards an acquisition of a controlling block of the Company's stock with a view to eventually
absorbing the Company into other TBG holdings. The Company recognizes the possibility of a t akeover attempt by TBG or another
interested investor. The Company is concerned that takeover attempts may put exi sting shareholders in a position where they must
choose between selling their shares at a below value price or risk a future transac tion (such as merger) in which they may realize even
less on the shares they own. In an effort to protect the value of existing shareholders' stock, the Company proposes a number of
amendments to its Articles of Incorporation ("Articles") and has taken or will take othe r action designed to forestall changes in control
of the Company which are not the result of negotiated transactions with the parties dealing from equal positions.
Many takeover transactions and attempts in recent years have involved acquisition of l arge blocks of shares in open market or
private transactions followed by merger at a price lower than that paid for the acquisition of the control block. Another takeover
strategy has been to acquire control of the target company's board followed by a dismantli ng of the company through the sales of
various segments, divisions or product lines to other interested buyers. Because of the size of the block of shares controlled by Mr.
Prince (see discussion of Shareholders Agreement on page 4 of this Proxy Statement) and the appli cation of Colorado law to any
merger or asset sale proposals, it may be more difficult for an acquirer to effect any of these strategies in a takeover attempt of the
Company than has been the case in other situations. Nevertheless, management of the Company believes that it is in the best interests
of shareholders that procedures be put in place that would make it more difficult for an acquirer to obtain control of the Company and
exploit its products and assets for the benefit of the acquirer rather than the sharehol ders as a group, including minority shareholders.
Management believes that the implementation of these procedures will make it necessary for an acquirer to negotiate for control of the
Company rather than acquire that position through purchases at current prices. To that end m anagement seeks approval by the
shareholders of the Company of the proposals set forth later in this Proxy Statement.
Information with respect to the high and low prices of the Company's common stock on the NASDAQ Nat ional Market System,
as reported by NASDAQ, for the past three fiscal years is set forth below.
Price Range
Fiscal 1989High Low
Fourth Quarter $4.625 $3.50
Third Quarter 4.25 2.75
Second Quarter 4.25 1.875
First Quarter 2.75 1.875
Price Range
Fiscal 1988 High Low
Fourth Quarter $3.125 $1.875
Third Quarter 3.625 3.125
Second Quarter 7.875 2.75
First Quarter 9.00 7.25
Fiscal 1987 Fourth Quarter $7.25 $6.13
Third Quarter 7.00
4.13
Second Quarter 5.38 4.13
First Quarter 6.25 4.38
The historic highest closing quote (adjusted for stock splits and stock dividends) for the Company's common stock over the past
five years was $10.29 in the first quarter of fiscal 1986.
Management believes that one of the strengths of the Company is its diversified structure. Management has been working
towards achieving a variety of complementary product lines so low performance in one product line may be offset by high
performance in another product line, thus contributing to a stabilized performance in the face of marketing variation for the various
product lines. Management believes that any attempt to merge the Company's product lines into the same or related product lines of an
acquirer will benefit the acquirer but will be to the detriment of other investors i n the Company's shares. By the same token any
disposition of principal segments of the Company by asset sales would destroy the integrated ope ration and thus would weaken the
growth potential.
Shareholders should also know that directors of the Company, as a group, own (excludes stock options and shares held by the
Employees' Stock Ownership Plan and Trust) 1,547,547 shares or 37.0% of the Company's outstanding common stoc k at September 6,
1989. Of that amount Mr. Prince, Chairman and Chief Executive Officer, owns 870,966 shares or 20.8% ofthe total outstanding shares
(includes 43,200 shares held by the Prince Children's Trust, which shares are voted by Mr. Prince's spouse as trustee). Based on the
present outstanding shares of the Company, then, the Board has voting power adequate to defeat a ny attempted merger of the
Company with an affiliate of an acquirer, since under Colorado law a vote of twothirds of t he shares autborized to vote would be
required to approve a merger. If an acquirer should purchase as much as 5 1 % of the shares of the Company, however, management
would not be able, under the present Articles, to prevent election of a new Board of Direct ors of the Company and operation thereafter
by the acquirer. If an acquirer should obtain control of the Board it would be in a position to issue additional shares, thus diluting the
ownership and vote of shares held by the current Board members to a percentage of total issued and outstanding shares that would not
enable it to block any merger, sale of assets, or other integrating or breakup effort. If a n acquirer should obtain the power to elect all of
the directors under the current structure it would then be in a position to efflect a m erger with one of its own affiliates possibly for
consideration even less than had been paid in the market or in privately negotiat ed transactions for acquisition of the controlling block.
It would also be in a position to effectively sell the principal assets or product l ines of the Company in transactions that might not be
in the best interest of minority shareholders or of the Company as a continuing entity. Certainly, litigation is available as a means to
contest the merger or sale of assets, but litigation is expensive and minority sharehol ders are difficult to organize into an effective
litigating block so that litigation is not really an effective means whereby minority interests may seek to obtain the full potential of
their investment in the Company.
The proposed amendments to the Articles which are described hereinafter in greater de tail are designed to make it more
difficult for an acquirer to obtain control of the Board and encourages a negotiated ac quisition over an unfriendly tender offer.
The block of stock owned by Board members is sufficiently large that their economic i nterests lie much more in obtaining a fair
price for the Company than in preserving their position on the Board. Management believes t hat it is most likely that the best
opportunity to realize the full benefit of an investment in the Company is the conti nuation of the Company as it seeks to develop
product lines and a position in its various markets with a view to increasing the m arket price for Company shares. On the other
hand, management also recognizes that it is in the best interests of all sharehol ders (including management) to negotiate with
potential purchasers of the Company to determine whether they are willing to pay ful l value for the Company in recognition of
its long range potential. To this end, management is committed to negotiating in good faith with an acquirer whose interest is in
acquiring all of the Company upon the payment of a price that takes into considerati on not only the present operations of the
Company but its potential in view of its product lines and market opportunities. Manageme nt will also consider the impact of
any transaction on Company employees, suppliers, customers and the communities where the Company's facilities e xist.
Proposed Amendment to Article IX
General The Board has unanimously approved the following amendments to the Company's Articles and recommends that shareholders
approve such amendments. The proposed amendment to Article IX would (i) fix the size of the Board at between three and six
members; (ii) provide that directors shall be elected upon receiving the affirmat ive vote of the holders of two-thirds of the shares
entitled to vote thereon rather than a majority of a quorum as now provided; and (i ii) provide that directors may be removed by a vote
of two-thirds of the shares entitled to vote rather than a majority of such number as now provided.
The Board has also proposed adding a new Article XII which would reduce the vote of shareholders required to approve a
Business Combination which has been approved by two-thirds of the Continuing Directors from two-thirds to a majority of the
shareholders entitled to vote thereon rather than a majority of the quorum or some other figure.
Adoption of the proposed amendment to Article IX may have a significant affect on the ability of shareholders of the Company
to change the composition of the Board, but approval of the new Article XII will allow shareholders to more easily benefit from
certain Business Combinations which are approved by a two-thirds vote of the continuing Board. Acc ordingly, shareholders are urged
to read carefully the following sections of this Proxy Statement which describe the proposed amendments to the Articles and Exhibit
A hereto, which sets forth the full text of the proposed amendments to the Articles, before voting thereon.
Purposes and Effects of the Proposed Antitakeover AmendmentsThe Board is asking shareholders to consider and approve the proposed antitakeover amendments to the Articles in order to
discourage certain types of transactions, described below, which involve an actual or thre atened change of control of the Company.
The proposed amendments are designed to make it more difficult to change majority c ontrol of the Board. This will reduce the
vulnerability of the Company to an unsolicited offer to take over the Company, partic ularly an offer that does not involve negotiations
with the Board. For reasons expressed above the Board believes that such unsolicited offers are not in the best interests of the
Company and its shareholders.
The amendments, if they are approved, could also have the effect of discouraging a third part y from making a tender offer or
otherwise attempting to obtain control of the Company, even though such an attempt might prove to be beneficial to the Company and
its shareholders.
Reasons for the Proposed Amendment to Article IX
Any person who wants to obtain control of the Company without offering to purchase all of the share s might purchase only a
majority of the shares and then seek to exercise control by electing its own represent atives to the Board. It could then manage the
Company's operations in its own interests. It could also propose merger, sale of assets, etc. a nd would control the Company's proxy
solicitation efforts so that such proposals might be effected even though they might not be in the best interests of minority
shareholders.
The proposed amendments to Article IX of the Company's Articles will increase the vote required to elect dire ctors and make it more
difficult to remove directors. These proposed changes will make it more difficult to effect changes in managem ent even if it would be
in the best interests of shareholders to do so.
Number of Directors
The Articles presently provide for a Board consisting of from three to I I members. If approved, t he amendment to Article IX will
fix the number of directors between three and six. Another approving vote of two-thirds of the shares e ntitled to vote would be
required to increase or decrease the number of directors. This proposed amendment would make i t more difficult for an acquiring
person to obtain control of the Board.
Election of Directors
Currently directors are elected by a majority vote of shareholders. Under the proposed amendme nt directors will be elected upon
receiving the affirmative vote of two-thirds of the shares entitled to vote.
The effect of the proposed amendment is to significantly increase the vote required to elect directors. If two-thirds of the shares
entitled to vote on election of directors are not represented at a meeting, or e ven if two-thirds of the shares are present, directors not
receiving two-thirds of the required vote will not be elected. In that event the inc umbent Board of"Directors would carry over since
they serve until their successors are elected. This increased voting requirement will make it more difficult to change the composition
of the Board of Directors. If adopted, this provision would allow current directors, who control 37.0% of the voting power, to prevent
the election of any opposing nominee. It is possible that a majority of the shares would favor a change in the composition of the Board
of Directors but would be unable to cause that change because of the two-thirds vote requirement.
Removal of Directors
Currently the entire Board of Directors or any lesser number may be removed, with or without cause, by a vote of the holders of
a majority of the shares then entitled to vote at an election of directors. The proposed amendment will increase the vote required to
remove directors to two-thirds of the shares entitled to vote for election of directors. The effect of the amendment is to make it more
difficult for shareholders to remove directors then in office. If this provision is adopted, the current directors, which control 37.0% of
the voting power, could prevent the removal of any director. At the 1988, 1987 and 1986 Annual Meeti ng of Shareholders of the
Company, the percentage of outstanding shares represented by votes actually cast were 85.22%, 90.27% and 78.75%, respectively.
Proposed Addition of Article XII to Decrease the Affirmative Vote
of Shareholders Required to Approve a Business Combination That
Has Been Approved by the Continuing Directors
General Under present law any merger (and certain other Business Combinations) must be approved by two-t hirds of the shares entitled
to vote. The proposed new Article XII provides that if at least two-thirds of the Continui ng Directors (as defined) approve the
proposed Business Combination the approving vote of shareholders as required will be reduced to a majority of the shares entitled to
vote.
Reasons for the Proposed Amendment
The Board has unanimously proposed the adoption of the new Article XII to give greater assurance to the holders of the
Company's common stock that they will receive fair treatment in the event of propose d Business Combinations. A "Business
Combination" includes mergers, consolidations, sales of assets, share exchanges, recapitalizations and other simi lar transactions.
The Board believes that adoption of the proposed amendment would encourage any interested party to negotiate the terms of any
Business Combination with the Company in advance of acquiring a substantial amount of t he Company's shares. Prior negotiations
would provide adequate time and information -so that all relevant considerations may receive attention.
Certain Effects of the Proposed Amendment
It is anticipated that adoption of the proposed amendment will encourage negotiati on of any future Business Combinations with
the Board of Directors in advance. The Board believes that in the event of a proposed a cquisition of the Company, the interests of the
Company's shareholders will best be served by a transaction that results from negotiations based upon careful consideration of all
proposed terms, including the price to be paid to minority shareholders, the long-term potenti al of the Company, the tax effects of the
transaction and certain nonmonetary considerations. Although there can be no certainty as to the result of any particular negotiation,
the Board believes that the proposed amendment's effect of promoting negotiation of any proposed acquisition of the Company, with
bargaining power resting in the Board of Directors, will be in the best interests of the sha reholders. The present requirement of a two-
thirds shareholder vote to approve Business Combinations may well discourage tender offers and other t akeover proposals. The Board
believes the proposed amendment would relieve shareholder concern over the existing voting re quirement by providing a means
through negotiation whereby, with the approval of two-thirds of the Continuing Directors, the shareholder vote may be reduced to a
majority of the shareholders 'entitled to vote. The reduction of the voting threshold would ma ke it easier for the Board to gain approval
of any Business Combination if approved even if the Business Combination was not in the best interests of the affiliated sha reholders.
If the proposed amendment is approved by shareholders and becomes effective, a two-thirds approving vote would be required to
repeal or further amend the Article.
Amendment to Article V to Increase Authorized Shares
Introduction The Board of Directors adopted a Shareholders' Rights Agreement (the "Rights Plan") under which pre ferred stock purchase
rights were distributed as a dividend at the rate of one right for each share of common stoc k held by shareholders of record as of the
close of business on June 26, 1989. The Rights Plan is designed to deter coercive or unfair takeover tactics and to prevent an acquirer
from gaining control of the Company without offering a fair price to all of the Company's shareholders. Each right will initially entitle
holders of the Company's common stock to buy one one-hundredth of a newly issued share of Series A Junior Pa rticipating Preferred
Stock of the Company at an exercise price of $17.50. At the time of issuance these prefe rred stock purchase rights are not
economically feasible and are not expected to be exercised.
Under certain circumstances indicating that an acquiring person is or may be proposing to acquire a significant block of the
Company's common stock, the right to purchase preferred stock converts to a right to purchase com mon stock. Each holder of a right
will be able to purchase a determined number of shares of common stock having in the aggrega te a value equal to two times the
exercise price ($17.50) of the preferred stock right. In effect this allows holders of rights (other than the acquiring person) to purchase
a determinable number of shares of common stock at one-half market value. Because of the various contingencies it is impossible to
determine the number of authorized but unissued shares of common stock that may be required to be issued upon exercise of the
rights. Management believes, however, that it is reasonable to believe that if the authorized number of shares of common stock of the
Company is increased to 50,000,000 shares adequate provision will be made for exercise of rights. On the possibility that rights may
become exercisable and the Company does not have adequate shares to meet all e xercised rights the Company may issue cash,
property or other securities.
To accomplish such increase in the authorized shares of common stock of the Company the Board proposes an amendment of Article
V of the Articles of Incorporation to increase the number of authorized shares to 55,000,000 shares to be comprised of 5,000,000
shares of preferred stock (unchanged) (par value $1.00 per share) and 50,000,000 of common stock without par value. The proposed
amendment to Article V is included in its entirety in Exhibit A. The only change in the new Article V from t he existing Article V is in
the total number of authorized shares and the respective allocation of those shares to preferred stock and common stock. The full text
of Article V is included, however, so that shareholders may understand all the terms of the common stock and preferred stock.
Principal Features of the Shareholders' Rights Plan
On June 15, 1989, the Board of Directors of the Company declared a dividend distribution of one right for each outstanding share
of Company common stock to shareholders of record at the close of business on June 26, 1989. Each ri ght entitles the registered
holder to purchase from the Company a unit consisting of one one-hundredth of a share (a "Unit") of Serie s A Junior Participating
Preferred Stock, par value $1.00 per share at a purchase price of $17.50 per Unit, subject to adjust ment. The purchase price may be
paid, at the option of the holder, in cash or shares of common stock having a value at the time of exercise equal to the purchase price.
The description and terms of the rights are set forth in a Rights Agreement (the "R ights Agreement") between the Company and Bank
of America National Trust and Savings Association as Rights Agent.
Initially, the rights will be attached to all common stock certificates re presenting shares then outstanding, and no separate Rights
Certificates will be distributed. The rights will separate from the common stock a nd a distribution date will occur upon the earlier of
(i) 10 business days following a public announcement that a person or group of affiliated or associat ed persons (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial ownership of 20% or more of the outstanding shares of common
stock (the "Stock Acquisition Date"), or (ii) 10 business days following the commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 20% or more of such outstanding shares of common stock. Unt il the distribution
date, (i) the rights will be evidenced by the common stock certificates and wi ll be transferred with and only with such common stock
certificates, (ii) new common stock certificates issued after June 26, 1989 will c ontain a notation incorporating the Rights Agreement
by reference and (iii) the surrender or transfer of any certificate for common stock outstandi ng will also constitute the transfer of the
rights associated with the common stock represented by such certificate.
The rights are not exercisable until the distribution date and will expire at t he close of business on June 25, 1999, unless earlier
redeemed by the Company as described below.
As soon as practicable after the distribution date, Rights Certificates will be m ailed to holders of record of the common stock as
of the close of business on the distribution date and, thereafter, the separate Rights Cert ificates alone will represent the rights. Except
as otherwise provided in the Rights Agreement or determined by the Board of Directors, only share s of common stock issued prior to
the distribution date will be issued with rights.
In the event that a person becomes the beneficial owner of 20% or more of the then outsta nding shares of common stock, each
holder of a right will thereafter have the right to receive, upon exercise, common stoc k (or, in certain circumstances, cash, property or
other securities of the Company) having a value (based on the average market price over the preceding 30 trading days prior to such
purchase of 20%) equal to two times the exercise price of the right. Notwithstanding any of the foregoing, following the occurrence of
an event set forth in this paragraph, all rights that are, or (under certain circumstanc es specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void. However, rights are not exerc isable following the occurrence of an
event set forth above until such time as the rights are no longer redeemable by the Company as set forth below.
For example, at an exercise price or $17.50 per right, each right not owned by an Acquiring Person (or by certain related parties)
following an event set forth in the preceding paragraph would entitle its holder to purchase $35.00 worth of common stock (or other
consideration, as noted above) for $17.50. Assuming that the common stock had a per share value of $4.375 a t such time, the holder of
each valid right would be entitled to purchase eight shares of common stock for $17.50.
In the event that, at any time following the Stock Acquisition Date, (i) the C ompany is acquired in a merger or other business
combination transaction, or (ii) 50% or more of the Company's assets or earning power is sold or t ransferred to an Acquiring Person,
each holder of a right (except rights which previously have been voided as set forth above) shal l thereafter have the right to receive,
upon exercise, common stock of the acquiring company having a value equal to two ti mes the exercise price of the right. The events
set forth in this paragraph and in the second preceding paragraph are referred to as the "Triggering Events".
The purchase price payable, and the number of Units of preferred stock or other securities or propert y issuable, upon exercise of
the rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the preferred stock, (ii) if holders of the preferred stock are granted certain rights or warrants to
subscribe for preferred stock or convertible securities at less than the current market price of the preferred stock, or (iii) upon the
distribution to holders of the preferred stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the purchase price will be required until cumulative adjustments amount to at least 1%
of the purchase price. No fractional Units will be issued and, in lieu thereof, an adjust ment in cash will be made based on the market
price of the preferred stock on the last trading date prior to the date of exercise.
At any time until ten business days following the Stock Acquisition Date, the Company may redeem the rights in whole, but not
in part, at a price of S.001 per right. After the redemption period has expired, the Compa ny's right of redemption may be reinstated if
an Acquiring Person reduces his beneficial ownership to 10% or less of the outstanding shares of common stock in a transaction or
series of transactions not involving the Company. Immediately uthe action of the Board of Directors ordering redemption of the rights,
the rights will terminate and the only right of the holders of rights will be to receive the S.001 redemption price.
Until a right is exercised, the holder thereof, as such, will have no rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the distribution of the rights will not be taxable to shareholders or to the
Company, shareholders may, depending upon the circumstances, recognize taxable income in the event that the rights become
exercisable for common stock (or other consideration) of the Company or for common stock of the ac quiring company as set forth
above.
Other than those provisions relating to the principal economic terms of the rights, any of the provisions of the Rights Agreement
may be amended by the Board of Directors of the Company prior to the distribution date . After the distribution date, the provisions of
the Rights Agreement may be amended by the Board in order to cure any ambiguity, to make changes which do not adversely affect
the interests of holders of rights (excluding the interests of any Acquiring Person), or to shorten or l engthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time period governing redemption shall be made at such time
as the rights are not redeemable.
EXHIBIT A
TEXT OF PROPOSED AMENDMENTS
1. Article V of the Articles of Incorporation is amended in its entirety as follows: ARTICLE V
The corporation shall have the authority to issue 55,000,000 shares of capital stock, comprised of 5,000,000 sha res of Preferred
Stock, each of which shall have a par value of $1.00 per share, and 50.000,000 shares of Common Stock without par value.
The holders of the shares of capital stock shall not have any preemptive right to a cquire unissued or treasury shares of capital
stock or securities convertible into such shares or carrying a right to subscribe to or ac quire such shares. There shall be no cumulative
voting of any shares of capital stock with respect to the election of directors. The c orporation shall have the right to restrict the transfer
of any or all shares of capital stock at the time of issuance, or thereafter with the consent of the holder or holders of the shares to be
restricted, the terms of said restriction to be clearly legended on the certi ficate or certificates representing such shares and set forth in
the stock transfer records of the corporation.
A statement of the designations and the powers, preferences and rights, and the qualificat ions, limitations and restrictions granted
to or imposed upon the shares of each class of capital stock, except as the Board of Directors of the corporation is herein authorized to
determine by resolution, are as follows:
A. COMMON STOCK
1. Voting Rights. Except as expressly provided by law, or as otherwise provided in Part B below, or by resolution of the Board of
Directors pursuant to the authority granted under Part B below, all voting rights shall be vested in the holders of the Common Stock.
Each holder of Common Stock shall be entitled to one vote for each share held on each matter to be voted on by the shareholders of
the corporation, except as otherwise provided in these Articles or by law.
2. Dividends. After all accumulated and unpaid dividends required to be paid upon any shares of Preferred St ock for all previous
dividend periods shall have been paid, and sums sufficient for full payment of the dividends on a ll shares of Preferred Stock declared
for the then current dividend period have been set apart, and after or concurrently with the setting aside of any and all amounts then
required to be set aside for any sinking fund obligation or obligation of a similar nature in respect of any series of Preferred Stock,
then and not otherwise, and subject to any other applicable provisions of Part B hereof, divi dends may be declared upon and paid to
the holders of the Common Stock, to the exclusion of the holders of the Preferred Stock. No othe r restriction shall be applicable to
payment of dividends on the Common Stock of the corporation.
3. Rights Upon Liquidation. In the event of voluntary or involuntary liquidation or dissolution of the corporation, after payment
in full of all amounts required to be paid to the holders of the Preferred Stock, the holde rs of the Common Stock shall be entitled, to
the extent not otherwise limited by the terms of any series of Preferred Stock then out standing, to share ratably in all remaining assets
of the corporation.
B. PREFERRED STOCK
1. GeneraL The Board of Directors shall have authority, by resolution, to divide any or all of the share s of Preferred Stock into,
and to authorize the issuance of, one or more series and with respect to each such series to establish and, prior to issuance, to
determine and fix:
(a) a distinguishing designation for such series and the number of shares comprising such series, which number may be increased or
decreased from time to time (but not below the number of shares then outstanding) by action of the Board of Directors;
(b) the rate and times at which and the other conditions upon which dividends on the share s may be declared and paid or set aside
for payment, whether dividends shall be cumulative, and the date from which any dividends shall accrue;
(c) whether or not the shares shall be redeemable and, if so, the price and the terms and conditions of such redemption;
(d) the amounts payable by preference or otherwise upon shares in the event of voluntary or involuntary l iquidation, dissolution,
winding up or distribution of the assets of the corporation;
(e) whether any shares shall be redeemed through sinking fund payments and, if so, on what terms;(f) whether the shares shall be convertible or exchangeable, and, if so, the terms and conditions of such conversion or exchange;
(g) whether or not the shares shall have voting rights, including the right to vote as a class on designated matters such as, but not
by way of limitation, the merger, consolidation or sale of substantially all the corporation's assets, or the approval of designated action
by a greater than two-thirds affirmative vote, and, if so, the terms and conditions thereof and any limitations t hereon.
In the resolution establishing a new series of Preferred Stock, the Board of Directors may provi de for any other relative powers,
preferences, rights, qualifications, limitations and restrictions of such series as are consistent with the rights of all outstanding shares
of capital stock, with all other provisions of this Article V, and with Colorado law.
All shares of Preferred Stock of all series shall be identical except as to the a bove mentioned rights and preferences which the
Board of Directors is authorized as aforesaid to fix and determine. Except to the ext ent that the resolution of the Board of Directors
establishing a particular series shall otherwise provide, in the event amounts payable upon liquidation of all series are not paid in full,
all shares of Preferred Stock of all series having a liquidation preference shall parti cipate ratably in any distribution in accordance with
the sums which would be payable on such distribution if all sums payable thereon to hol ders of all shares of Preferred Stock were
discharged in full.
Shares of Preferred Stock of any series redeemed, purchased or otherwise acquired may be cancele d by the Board of Directors
and thereupon restored to the status of authorized but unissued shares of Preferred Stock undesignated as to series.
2. Article IX of the Articles of Incorporation is amended in its entirety to read as follows: ARTICLE IX
9.1 Number, Election and Terms. The business and affairs of the Corporation shall be managed by a Board of from three to six
directors.
9.2 Election of Directors. Directors to be elected shall be elected at the annual meeting of shareholders or an adjournment
thereof. Directors shall be elected upon receiving the affirmative vote of the holders of at least two-thirds of the shares of the
Corporation entitled to vote thereon. Each Director shall hold office for the term for which he is elected and until his successor has
been elected and qualified.
9.3 Removal. The entire Board of Directors or any lesser number may be removed, with or without cause, by a vote of at least
two-thirds of the shares then entitled to vote at an election of directors.
3. There is hereby added a new Article XII to read as follows:
ARTICLE XII
12.1 Vote Required for Certain Business Combinations. The affirmative vote of the holders of not less than two-thirds of the
shares entitled to vote thereon, unless any class of shares is entitled to vote the reon as a class, in which event the affirmative vote of
not less than two-thirds of the shares of each class of shares entitled to vote thereon as a class and of the total shares entitled to be
voted thereon shall be required for the approval or authorization of any "Business Combination" (as hereinafter defined) of the
Corporation; provided, however, that the two-thirds voting requirement shall not be applicable and the affirma tive vote of the holders
of not less than a majority of the shares entitled to vote thereon, unless any class of shares is entitled to vote thereon as a class, in
which event the affirmative vote of not less than a majority of the shares of each class of shares entitled to vote thereon as a class and
of the total shares entitled to be voted thereon shall be required if the "Continui ng Directors" (as hereinafter defined) of the
Corporation by at least a two-thirds vote have expressly approved such Business Combination.
12.2 Definition. Certain words and terms as used in this Article XII shall have the meanings given to them by the definitions and
descriptions in this Section.
(a) Business Combination. The term "Business Combination" in a situation requiring approval by a vote of shareholders of t his
Corporation shall mean (i) any merger or consolidation of the Corporation or a subsidiary of the C orporation with another party, (ii)
any sale, lease, exchange, transfer or other disposition, including without limitation, a mortgage or any other security device, of all or
any Substantial Part (as hereinafter defined) of the assets either of the Corporation (i ncluding without limitation, any voting securities
of a subsidiary of the Corporation) or of a subsidiary of the Corporation to another party, (iii) any sa le, lease, exchange, transfer or
other disposition, including without limitation, a mortgage or other security device, of al l or any Substantial Part of the assets of
another party to the Corporation or a subsidiary of the Corporation, (iv) the issuance or transfer by t he Corporation or any subsidiary
of the Corporation of any securities of the Corporation or a subsidiary of the Corporation to a nother party, (v) any reclassification of
securities, recapitalization or other comparable transaction involving the Corporation that would have the effect of increasing the
voting power of any other party with respect to Voting Stock of the Corporation, and (vi) any agreement, contract or other
arrangement providing for any of the transactions described in this definition of Business Combi nation. A Business Combination does
not include a distribution of property in kind (including securities of a subsidiary of the Corporation) pro rata to the Corporation's
shareholders.
(b) Voting Stock. The term "Voting Stock" shall mean all of the outstanding shares of Common Stock of the Corpora tion and any
outstanding shares of Preferred Stock entitled to vote on each matter on which the holders of record of Common Stock shall be
entitled to vote, and each reference to a proportion of shares of Voting Stock shall refer to such proportion of the votes entitled to be
cast by such shares.
(c) Continuing Director. The term "Continuing Director" shall mean a Director who was a member of the Board of Directors of
the Corporation immediately prior to the time that the Corporation became involved in a Business Combinat ion.
(d) Substantial Part. The term "Substantial Part" shall mean more than 20 percent of the fair market value as determined by two-
thirds of the Continuing Directors of the total consolidated assets of the Corporation and i ts subsidiaries taken as a whole as of the end
of its most recent fiscal year ended prior to the time the determination is being made. (e) Subsidiary. The term "Subsidiary" shall mean, with reference to any entity, any corporation of whi ch an amount of voting
securities sufficient to elect at least a majority of the directors of such c orporation is beneficially owned directly or indirectly, by such
entity, or otherwise controlled by such entity.
12.3 Determination by the Continuing Directors. In making any determinations, the Continuing Directors may engage such
persons, including investment banking firms and the independent accountants who have reported on the most recent financial
statements of the Corporation, and utilize employees and agents of the Corporation, who wi ll, in the judgment of the Continuing
Directors, be of assistance to the Continuing Directors. Any determinations made by the C ontinuing Directors, acting in good faith on
the basis of such information and assistance as was then reasonably available for such purposes, shall be conclusive and binding upon
the Corporation and its shareholders.
