THIS
IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING WILL BE HELD TO CONSIDER THE MATTER DESCRIBED
HEREIN.
WE
ARE NOT ASKING YOU FOR A PROXY
AND
YOU ARE NOT REQUESTED TO SEND US A PROXY.
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By
order of the Board of Directors
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April
25, 2018
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/s/
Michael J. Mayell
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Michael
J. Mayell,
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Chief
Executive Officer
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TEXAS
SOUTH ENERGY, INC.
4550
Post Oak Place, Ste 300
Houston,
TX 77027
INFORMATION
STATEMENT
NOTICE
OF STOCKHOLDER ACTION BY WRITTEN CONSENT IN LIEU OF SHAREHOLDER MEETING
GENERAL
INFORMATION
THIS
IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING WILL BE HELD TO CONSIDER THE MATTER DESCRIBED
HEREIN. THE ACTION DESCRIBED IN THIS INFORMATION STATEMENT HAS BEEN APPROVED BY HOLDERS OF A MAJORITY OF THE VOTING POWER OF OUR
COMMON STOCK. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
THERE
ARE NO DISSENTERS RIGHTS OF APPRAISAL WITH RESPECT TO THE ACTION DESCRIBED IN THIS INFORMATION STATEMENT.
Under
the NRS and the Company’s Bylaws, any action that can be taken at an annual or special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if the holders of outstanding capital stock having not less than the
minimum number of votes that will be necessary to authorize or take such action consent to such action in writing. The approval
to amend the Company’s Articles of Incorporation to effectuate the increase in the authorized Common Stock requires the
affirmative vote or written consent of the majority of the issued and outstanding shares of Common Stock of the Company.
Each
share of Common Stock entitles the holder to one vote per share. On the Record Date, there were 867,440,670 shares of Common Stock
issued and outstanding. The Majority Shareholders consenting to this action own 439,892,858 shares of Common Stock as of the Record
Date, representing 50.7% of the voting power and issued and outstanding shares of the Company Common Stock. Accordingly, the Company
has obtained all necessary corporate approvals in connection with the adoption of the corporate action. The Company is not seeking
written consent from any other stockholders, and the other stockholders will not be given an opportunity to vote with respect
to the action described in this Information Statement. All necessary corporate approvals have been obtained.
We
are mailing this information statement to our stockholders of record on April 25, 2018.
What
is the Purpose of the Information Statement?
This
Information Statement is being furnished pursuant to Section 14 of the Exchange Act to notify the Company’s stockholders
as of the Record Date of a certain corporate action to be taken pursuant to the consent of the Majority Shareholders representing
a majority of the voting rights of the Company’s outstanding capital stock. The corporate action described herein will be
effective approximately 20 days after the mailing of this Information Statement.
What
action was taken by written consent?
On
April 5, 2018, we obtained consent from the Majority Shareholders to amend our Articles of Incorporation as follows:
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amend
and restate Section IV of the Company’s Articles of Incorporation to increase the
number of authorized shares of Company Common Stock from 950,000,000 shares to 1,350,000,000
shares.
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How
many shares of Common Stock were outstanding on the date of the consent?
On
the date of the written consent, which is the Record Date, there were issued and outstanding 867,440,670 shares of Common Stock.
What
vote was obtained to approve the amendment to the Articles of Incorporation described in this Information Statement?
We
obtained the written consent from the Majority Shareholders in lieu of a meeting of stockholders that in the aggregate own 439,892,858
shares of Common Stock, representing approximately 50.7% of the voting power and issued and outstanding shares of the Company
Common Stock. Under NRS 78.390, the holders of a majority of our issued and outstanding Common Stock constitute the requisite
percentage required to amend the Articles of Incorporation.
Who
are the consenting majority shareholders and what is their affiliation to the Company?
The
Majority Shareholders’ (consenting stockholders’) names, affiliation with the Company, and their holdings of record
are as follows:
Title of Class
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Affiliation
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Shares Held
of Record
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Percentage
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Michael J. Mayell
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Officer and Director
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101,000,000
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11.64
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%
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John B. Connally III
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Director
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61,000,000
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7.03
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%
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James M. Askew
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Shareholder
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101,000,000
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11.64
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%
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Desertaire Enterprises, LP
(1)
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Shareholder
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57,500,000
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6.63
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%
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Hi-View Investment Partners, LLC
(2)
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Shareholder
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20,000,000
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2.31
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%
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James Yan Liang
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Shareholder
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18,000,000
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2.08
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%
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Elefterios Aligizakis
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Shareholder
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13,000,000
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1.50
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%
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Don A. Sanders
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Shareholder
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21,071,429
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2.43
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%
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John Eddie Williams
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Shareholder
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11,000,000
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1.27
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%
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Don Wilson
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Shareholder
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10,250,000
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1.18
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%
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RM Investments, Inc.
(3)
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Shareholder
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10,000,000
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1.15
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%
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Don A. Sanders Children’s Trust
(4)
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Shareholder
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16,071,429
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1.85
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%
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(1)
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Voting
power held by Ronny Taylor.
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(2)
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Voting
power held by Thomas E. Kelly.
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(3)
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Voting
power held by R. Reed Morian.
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(4)
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Voting
power held by Don A. Sanders.
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Who
is Entitled to Notice?
Each
holder of an outstanding share of Common Stock, as of the Record Date, is entitled to notice of each matter voted upon.
Are
there appraisal right of approval?
No
dissenters’ or appraisal rights under the NRS are afforded to the Company’s stockholders as a result of the approval
of the action to amend the Articles of Incorporation.
Who
is bearing the cost of mailing this Information Statement?
The
entire cost of furnishing this Information Statement will be borne by the Company.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth the number and percentage of outstanding shares of Common Stock owned by: (a) each person who is known
by us to be the beneficial owner of more than 5% of our outstanding shares of Common Stock; (b) each of our directors; (c) the
named executive officers as defined in Item 402 of Regulation S-K (being only Michael J. Mayell); and (d) all current directors
and executive officers, as a group as of the date of this Information Statement. As of April 5, 2018, there were 867,440,670 shares
of Common Stock issued and outstanding.
Unless
otherwise stated, beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule,
certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote
or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has
the right to acquire shares (for example, upon conversion of convertible debt) or within 60 days of the date as of which the information
is provided. In computing the percentage ownership of any person or group of persons, the number of shares beneficially owned
by such person or group of persons is deemed to include the number of shares beneficially owned by such person or the members
of such group by reason of such acquisition rights, and the total number of shares outstanding is also deemed to include such
shares (but not shares subject to similar acquisition rights held by any other person or group) for purposes of that calculation.
As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the
person’s actual voting power at any particular date. To our knowledge, except as indicated in the footnotes to this table
and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them. The address for each of the beneficial owners is the
Company’s address, except for Desertaire Enterprises, LP, which is at 3 Strawberry Canyon, The Woodlands, TX 77382.
Name of Beneficial Owner
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Number of Shares of Common Stock Beneficially
Owned
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Percentage of Class
Beneficially Owned
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Named Executive Officers and Directors:
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Michael J. Mayell
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143,350,000
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(1)
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15.7
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%
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John B. Connally III
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61,000,000
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7.0
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%
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All directors & executive officers as a group (2 persons)
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204,350,000
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22.4
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%
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5% or Greater Shareholders
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Desertaire Enterprises, LP
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60,000,000
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(2)
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6.9
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%
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James M. Askew
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101,000,000
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11.6
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%
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(1)
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Comprised
of (i) 101,000,000 shares of Common Stock owned of record, (ii) 500,000 shares of common stock owned by an affiliate of Mr.
Mayell, and (iii) 41,850,000 shares of Common Stock issuable upon conversion of outstanding indebtedness held by Mr. Mayell
and an affiliate.
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(2)
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Comprised
of (i) 57,500,000 shares of Common Stock issued and outstanding and (ii) 2,500,000 shares of Common Stock issuable upon conversion
of outstanding indebtedness.
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AMENDMENT
TO ARTICLES OF INCORPORATION
Amendment
to Increase the Authorized Capital Stock
General
The
Majority Shareholders approved an action to amend and restate Article IV of the Company’s Articles of Incorporation to increase
the number of shares of Common Stock authorized for issuance from 950,000,000 shares to 1,350,000,000 shares. The text of the
amended and restated Article IV of the Articles of Incorporation with respect to the authorized shares of capital stock is set
forth in
Appendix A
.
The
terms of the additional shares of Common Stock authorized will be identical to those of the currently issued and outstanding shares
of Common Stock. However, because holders of Common Stock have no preemptive rights to purchase or subscribe for any unissued
Common Stock of the Company, the issuance of additional shares of Common Stock will reduce the current stockholders’ percentage
ownership interest in the total outstanding shares of Common Stock. This amendment to the Articles of Incorporation and the creation
of additional shares of authorized Common Stock will not alter the current number of issued and outstanding shares of Common Stock.
Reasons
for Amendment to Articles of Incorporation
Currently,
the Company’s Articles of Incorporation authorizes the issuance of 1,000,000,000 shares of capital stock, 950,000,000 of
which are designated as Common Stock and 50,000,000 of which are designated as preferred stock. The Company has not designated
or issued any preferred stock and is not increasing the number of authorized preferred stock. As of the Record Date,
there were 867,440,670 shares of Common Stock issued and outstanding and 44,350,000 shares of Common Stock underlying outstanding
derivative securities. As of the Record Date, not including the shares underlying the Company’s outstanding derivative
securities, we have 82,559,330 shares of Common Stock that are authorized to be issued and are unissued.
The
board of directors is considering, and will continue to consider, various financing options, including the issuance of Common
Stock or securities convertible into Common Stock, from time to time to raise additional capital necessary to support future growth
of the Company. As a result of the increase in authorized shares of Common Stock, the board of directors will have more flexibility
to pursue opportunities to engage in possible future capital market transactions involving Common Stock or other securities convertible
into Common Stock, including, without limitation, public offerings or private placements of Common Stock or securities convertible
into Common Stock.
In
addition, the Company’s growth strategy may include the pursuit of selective acquisitions to execute its business plan.
The Company could also use the additional capital stock for potential strategic transactions, including, among other things, acquisitions,
strategic partnerships, joint ventures, business combinations and investments.
We
do not presently have any agreements, commitments or arrangements regarding the 400,000,000 shares of our Common Stock that would
be newly authorized upon the increase to our authorized Common Stock. The Common Stock does not have any cumulative voting, preemptive,
subscription or conversion rights
The
Effects, if any, on the Increase in the Company’s authorized shares of Common Stock
The
amendment will not affect the relative voting power or equity interest of any shareholder. However, additional shares of Common
Stock would continue to be available for issuance from time to time in the future. The shares issued, pursuant to the
increase in the authorized shares, will dilute the percentage ownership interest of existing holders of our Common Stock and the
value of the shares held by such shareholders may be diluted.
The
Company’s Articles of Incorporation presently authorizes 950,000,000 shares of Common Stock and 50,000,000 shares of preferred
stock. The adoption of the amendment to the Company’s Articles of Incorporation will increase the authorized number of shares
of Common Stock from 950,000,000 to 1,350,000,000. Giving effect to this amendment, 867,440,670 shares of Common Stock
will be issued and outstanding (not giving effect to 44,350,000 shares of Common Stock underlying outstanding derivative securities)
and no shares of preferred stock will be issued and outstanding.
For
illustrative purposes only, the following table shows the effect on our authorized shares of Common Stock as a result of the amendment:
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On Record Date
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Adoption of Amendment
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Authorized Shares of Common Stock
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950,000,000
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1,350,000,000
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Issued and Outstanding Shares of Common Stock*
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867,440,670
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867,440,670
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Shares of Common Stock available for future issuance*
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82,559,330
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482,559,330
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* This
does not include 44,350,000 shares of Common Stock underlying outstanding derivative securities.
As
a result of the amendment, additional shares of Common Stock will be available from time to time in the future, for any proper
corporate purpose, including equity financings, stock splits, stock dividends, acquisitions, stock option plans and other employee
benefit plans, and for strategic transactions. We believe that the availability of the additional shares will provide us with
the flexibility to meet business needs as they arise, to take advantage of favorable opportunities and to respond to a changing
corporate environment. Common Stock does not have any cumulative voting, preemptive, subscription or conversion
rights.
The
increased proportion of unissued authorized shares to issued shares could also, under certain circumstances, have an anti-takeover
effect. For example, the issuance of a large block of Common Stock could dilute the ownership of a person seeking to
effect a change in the composition of our Board or contemplating a tender offer or other transaction. However, the
increase in authorized capital stock has not been authorized in response to any effort of which the Company is aware to accumulate
shares of our capital stock to obtain control of the Company. The Board is not aware of any attempt, or contemplated attempt,
to acquire control of the Company.
Our
Articles of Incorporation and Bylaws currently include certain other provisions that may have an anti-takeover effect, including
the Board of Directors right to issue preferred stock without obtaining additional approval of our stockholders. The
Board does not currently contemplate recommending the adoption of any other amendments to our Articles of Incorporation that could
be construed to reduce or interfere with the ability of third parties to take over or change the control of our Company. Additionally,
the Company has no current plans to use the newly authorized shares of Common Stock in connection with any merger, consolidation,
or other business combination transaction.
Interest
of the Directors, Officers and the Majority Shareholders in the Increase in Authorized Capital Stock
The
current officers, directors and Majority Shareholders (to our knowledge) of the Company do not have any substantial interest,
direct or indirect, in the amendment to our Articles of Incorporation.
DESCRIPTION
OF CAPITAL STOCK
Common
Stock
The
holders of Common Stock are entitled to one vote per share with respect to all matters required by law to be submitted to stockholders.
The holders of Common Stock have the sole right to vote. The Common Stock does not have any cumulative voting, preemptive, subscription
or conversion rights. Election of directors requires the affirmative vote of a plurality of shares represented at a meeting, and
other general stockholder action (other than an amendment to our amended and restated articles of incorporation) requires the
affirmative vote of a majority of shares represented at a meeting in which a quorum is represented. The outstanding shares of
Common Stock are validly issued, fully paid and non-assessable.
Subject
to the rights of any outstanding shares of preferred stock, the holders of Common Stock are entitled to receive dividends, if
declared by our board of directors, out of funds legally available. In the event of liquidation, dissolution or winding up of
the affairs of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining available for distribution
to them after payment or provision for all liabilities and any preferential liquidation rights of any preferred stock then outstanding.
The
authorized but unissued shares of our Common Stock are available for future issuance without stockholder approval. These additional
shares may be used for a variety of corporate purposes, including future offerings to raise additional capital, corporate acquisitions
and employee benefit plans. The existence of authorized but unissued shares of Common Stock may enable our Board to issue shares
of stock to persons friendly to existing management, which may deter or frustrate a takeover of the Company.
Preferred
Stock
We
are authorized to issue 50,000,000 shares of “blank check” preferred stock, none of which are issued and outstanding.
We have no present plans for the issuance thereof. Our board of directors has the authority, without action by our stockholders,
to designate and issue preferred stock in one or more series. Our board of directors may also designate the rights, preferences,
and privileges of each series of preferred stock, any or all of which may be greater than the rights of the Common Stock. It is
not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of the Common
Stock until the board of directors determines the specific rights of the holders of the preferred stock. However, these effects
might include:
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restricting
dividends on the Common Stock;
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diluting
the voting power of the Common Stock;
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impairing
the liquidation rights of the Common Stock; and
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delaying
or preventing a change in control without further action by the stockholders.
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Indemnification
of Directors and Officers
Section
718.7502 of the Nevada Revised Statutes (“NRS”) provides, in general, that a corporation incorporated under the laws
of the State of Nevada, as we are, may indemnify any person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than a derivative
action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action,
suit or proceeding if such person (a) is not liable pursuant to Section 73.138 of the NRS, and (b) acted in good faith and in
a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. In the case of
a derivative action, a Nevada corporation may indemnify any such person against expenses (including attorneys’ fees) actually
and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person (a)
is not liable pursuant to Section 73.138 of the NRS, and (b) acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation.
Our
amended and restated articles of incorporation and bylaws provide that we will indemnify our directors, officers, employees and
agents to the extent and in the manner permitted by the provisions of the NRS, as amended from time to time, subject to any permissible
expansion or limitation of such indemnification, as may be set forth in any stockholders’ or directors’ resolution
or by contract. In addition, our director and officer indemnification agreements with each of our directors and officers provide,
among other things, for the indemnification to the fullest extent permitted or required by Nevada law. Any repeal or modification
of these provisions approved by our stockholders will be prospective only and will not adversely affect any limitation on the
liability of any of our directors or officers existing as of the time of such repeal or modification. We are also permitted to
maintain insurance on behalf of any director, officer, employee or other agent for liability arising out of his actions, whether
or not the NRS would permit indemnification.
Anti-Takeover
Effect of Nevada Law
Business
Combinations
The
“business combination” provisions of Sections 78.411 to 78.444, inclusive, of the NRS prohibit a Nevada corporation
with at least 200 stockholders of record from engaging in various “combination” transactions with any interested stockholder:
for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the
transaction is approved by the board of directors prior to the date the interested stockholder obtained such status; or after
the expiration of the three-year period, unless:
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the
transaction is approved by the board of directors or a majority of the voting power held by disinterested stockholders, or
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the
consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share
paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination
or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of
Common Stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever
is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher.
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A
“combination” is defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer
or other disposition, in one transaction or a series of transactions, with an “interested stockholder” having: (a)
an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation, (b) an aggregate
market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation, or (c) 10% or more
of the earning power or net income of the corporation.
In
general, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three
years, did own) 10% or more of a corporation’s voting stock. The statute could prohibit or delay mergers or other takeover
or change in control attempts and, accordingly, may discourage attempts to acquire our company even though such a transaction
may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.
Control
Share Acquisitions
The
“control share” provisions of Sections 78.378 to 78.3793, inclusive, of the NRS, which apply only to Nevada corporations
with at least 200 stockholders of record, including at least 100 stockholders of record who are Nevada residents, and which conduct
business directly or indirectly in Nevada, prohibit an acquirer, under certain circumstances, from voting its shares of a target
corporation’s stock after crossing certain ownership threshold percentages, unless the acquirer obtains approval of the
target corporation’s disinterested stockholders. The statute specifies three thresholds: one-fifth or more but less than
one-third, one-third but less than a majority, and a majority or more, of the outstanding voting power. Once an acquirer crosses
one of the above thresholds, those shares in an offer or acquisition and acquired within 90 days thereof become “control
shares” and such control shares are deprived of the right to vote until disinterested stockholders restore the right. These
provisions also provide that if control shares are accorded full voting rights and the acquiring person has acquired a majority
or more of all voting power, all other stockholders who do not vote in favor of authorizing voting rights to the control shares
are entitled to demand payment for the fair value of their shares in accordance with statutory procedures established for dissenters’
rights.
Our
Articles of Incorporation state that we have elected not to be governed by the “control share” provisions, therefore,
they currently do not apply to us.
FORWARD-LOOKING
STATEMENTS AND INFORMATION
This
Information Statement includes forward-looking statements. You can identify the Company’s forward-looking statements by
the words “expects,” “projects,” “believes,” “anticipates,” “intends,”
“plans,” “predicts,” “estimates” and similar expressions.
The
forward-looking statements are based on management’s current expectations, estimates and projections about us. The Company
cautions you that these statements are not guarantees of future performance and involve risks, uncertainties and assumptions that
we cannot predict. In addition, the Company has based many of these forward-looking statements on assumptions about future events
that may prove to be inaccurate. Accordingly, actual outcomes and results may differ materially from what the Company has expressed
or forecasted in the forward-looking statements.
You
should rely only on the information the Company has provided in this Information Statement. The Company has not authorized any
person to provide information other than that provided herein. The Company has not authorized anyone to provide you with different
information. You should not assume that the information in this Information Statement is accurate as of any date other than the
date on the front of the document.
DIVIDEND
POLICY
Dividends,
if any, will be contingent upon our revenues and earnings, if any, capital requirements and financial conditions. The payment
of dividends, if any, will be within the discretion of our Board. We intend to retain earnings, if any, for use in its business
operations and, accordingly, the Board does not anticipate declaring any dividends in the foreseeable future.
ADDITIONAL
INFORMATION
Reports
and other information filed by the Company can be inspected and copied at the public reference facilities maintained at the Commission
at 100 F Street, N.E., Washington, DC 20549. Copies of such material can be obtained upon written request addressed to the Commission,
Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. The Commission maintains a web site
on the Internet (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers
that file electronically with the Commission through the Electronic Data Gathering, Analysis and Retrieval System.
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By
order of the Board of Directors
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|
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April
25, 2018
|
|
|
|
|
|
/s/
Michael J. Mayell
|
|
|
Michael
J. Mayell,
|
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Chief
Executive Officer
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|
Appendix
A
AMENDMENT
REGARDING INCREASE IN NUMBER OF
AUTHORIZED
SHARES OF COMMON STOCK
Article
IV shall be amended and restated in its entirety and replaced to read as follows:
ARTICLE
IV
Common
Capitalization
. The Corporation shall have the authority to issue 1,350,000,000 shares of common voting stock having a par
value of $0.001 per share. All common voting stock of the Corporation shall be of the same class and shall have the same rights
and preferences. Fully paid stock of the Corporation shall not be liable for further call or assessment. The authorized shares
shall be issued at the discretion of the Board of Directors of the Corporation.
Preferred
Capitalization
. The Corporation shall have the authority to issue 50,000,000 shares of blank check preferred stock par value
$0.001 per share (“Preferred Stock”). Shares of Preferred Stock of the Corporation may be issued from time to time
in one or more series, each of which shall have such distinctive designation or title as shall be determined by the Board of Directors
of the Corporation prior to the issuance of any shares thereof. Preferred Stock shall have such voting powers, full or limited,
or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class
or series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares
thereof.
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