SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement/prospectus
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive proxy statement/prospectus
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) orss.240.14a-12
Endless Youth Products, Inc.
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14(a)-6(i)(1) and
0-11.
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: $
5) Total fee paid: $
[ ] Fee paid previously with preliminary materials.
[X] 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: $54.52
2) Form, Schedule or Registration Statement No.: Form
S-4
3) Filing Party: Endless Youth Products, Ltd., a Bermuda
company
4) Date Filed: November 22, 2000
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED NOVEMBER ___, 2000
[Endless Youth Products, Inc. Letterhead]
, 2000
Dear Stockholder:
I am pleased to invite you to the annual meeting of the stockholders of Endless
Youth Products, Inc.("EYPI-Nevada") on December 22, 2000, at 11:00 a.m. (local
time), at the offices of Sommer & Schneider LLP, 595 Stewart Avenue, Suite 710,
Garden City, New York 11530. At this important meeting you will be asked to
approve a proposal for a reorganization that will result in a newly formed
Bermuda company ("EYPI-Bermuda") becoming the parent company of EYPI-Nevada.
EYPI-Bermuda will carry on the holding company functions currently conducted by
EYPI-Nevada.
The establishment of a Bermuda holding company for EYPI-Nevada should allow us
to benefit from more favorable business, tax, regulatory and financing
environments. After the reorganization, we will be taxed in the United States
only on that portion of our worldwide income that is attributable to the United
States or our U. S. subsidiaries, and we will not be taxed on capital gains on
U.S. investments or, except for applicable withholding taxes, on interest or
dividends from U.S. sources. In addition, the reorganization will offer us
greater flexibility in structuring international business activities. If the
reorganization is approved and consummated, your shares of common stock in
EYPI-Nevada will automatically become the same number of common shares of
EYPI-Bermuda without any further action by you. The reorganization may be a
taxable transaction to you, depending on the tax basis in your shares of
EYPI-Nevada. We expect the common shares of EYPI-Bermuda to continue to be
quoted on the Nasdaq Bulletin Board under the same symbol as EYPI-Nevada (EYPI).
At the annual meeting you will also be asked to re-elect three directors to our
board of directors and to approve the selection of our independent accountants.
This proxy statement (which includes a prospectus relating to the issuance to
you in the reorganization of the common shares in EYPI-Bermuda) provides you
with detailed information regarding the reorganization. Along with the benefits
mentioned above, the reorganization will result in important changes to your
rights as a shareholder and entails risks, and we encourage you to read this
entire document carefully.
Our board of directors has unanimously approved the reorganization and
recommends that you vote for the reorganization and the other proposals.
Your vote is very important. Whether or not you plan to attend the meeting,
please sign the enclosed proxy card and mail it promptly in the enclosed
envelope. We urge you to join us in supporting this important opportunity.
Sincerely,
Edward Shah
Chairman of the Board
You should carefully consider the risk factors beginning on page 4. Neither the
Securities and Exchange Commission nor any state securities regulator has
approved or disapproved of the securities to be issued under this proxy
statement/prospectus or determined if this proxy statement/prospectus is
accurate or adequate. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated __________, 2000 and is first being
mailed to stockholders on or about December 1, 2000.
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ENDLESS YOUTH PRODUCTS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Time: 11:00 a.m. (local time)
Date: December 22, 2000
Place: Sommer & Schneider LLP
595 Stewart Avenue, Suite 710
Garden City, New York 11530
Purpose:
To consider and vote on the following proposals:
o To approve and adopt the agreement and plan of merger, dated as of
_________________ , 2000, among Endless Youth Products, Inc., a Nevada
corporation ("EYPI-Nevada"), Endless Youth Products, Ltd., a Bermuda
company ("EYPI-Bermuda"), and EYPI Merger Corp., pursuant to which
EYPI-Bermuda will become the parent holding company of EYPI-Nevada, and
to approve the transactions contemplated thereby.
o To re-elect three directors to serve for a term of up to three years or
until their respective successors are elected and qualified.
o To ratify the selection of Beckman, Kirkland & Whitney as independent
accountants for the fiscal year ending June 30, 2001.
To conduct other business if properly raised.
Only stockholders of record as of the close of business on November 27, 2000 may
vote at the meeting.
Your vote is very important. Please complete, sign, date and return your proxy
card in the enclosed envelope promptly.
Edward Shah
Chairman
Stamford, New York
, 2000
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TABLE OF CONTENTS
Page
SUMMARY TERM SHEET...................................................... 1
RISK FACTORS............................................................ 4
THE ANNUAL MEETING...................................................... 9
Time and Place.......................................................... 9
Proposals............................................................... 9
Record Date; Voting at the Annual Meeting............................... 9
Quorum; Votes Required for Approval..................................... 9
Voting and Revocation of Proxies........................................ 9
Solicitation of Proxies.................................................10
Other Matters...........................................................10
THE REORGANIZATION......................................................11
General.................................................................11
Background and Reasons for the Reorganization...........................11
The Merger Agreement....................................................12
Amendment or Termination................................................13
Conditions to Consummation of the Reorganization........................13
Effective Time..........................................................13
Regulatory Approvals....................................................13
Rights of Dissenting Stockholders.......................................13
Exchange of Share Certificates..........................................14
Stock-Based Compensation Plans..........................................14
Nasdaq OTC Bulletin Board Trading.......................................15
Accounting Treatment....................................................15
DESCRIPTION OF AUTHORIZED SHARES OF EYPI-BERMUDA........................16
Share Capital...........................................................16
Shareholders Meetings...................................................16
Voting Limitation.......................................................16
Shareholder Proposals...................................................17
Board of Directors......................................................17
Dividends...............................................................17
Repurchases of Shares...................................................18
Interested Shareholder Provisions.......................................18
Additional Voting Restrictions..........................................19
Anti-Takeover Effects...................................................19
Voting Limitation..................................................19
Limitation on Shareholder Proposals and Calling of Special
Shareholders Meetings............................................19
Action by Written Consent..........................................19
Classified Board of Directors......................................19
Power to Issue Shares..............................................20
Interested Shareholder Provisions..................................20
COMPARISON OF RIGHTS OF SHAREHOLDERS....................................21
MATERIAL TAX CONSIDERATIONS.............................................26
United States Federal Income Tax Consequences...........................26
Bermuda Tax Consequences................................................29
BERMUDA REGULATORY MATTERS..............................................30
ELECTION OF DIRECTORS...................................................31
Nominees................................................................31
Board of Directors' Meetings and Committees.............................31
EXECUTIVE COMPENSATION..................................................32
Summary Compensation Table..............................................32
Employment Contract.....................................................32
1996 Stock Option Plan..................................................32
Option Grants and Exercises.............................................32
Director Compensation...................................................33
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..........33
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................33
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS...............33
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS.......................33
LEGAL MATTERS...........................................................34
EXPERTS.................................................................34
WHERE YOU CAN FIND MORE INFORMATION.....................................34
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING.......................35
ANNEX A -- Agreement and Plan of Merger
ANNEX B -- Memorandum of Association of EYPI-Bermuda
ANNEX C -- Bye-Laws of EYPI-Bermuda
ANNEX D -- Dissenter's Rights
ANNEX E -- Audit Committee Charter
ii
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SUMMARY TERM SHEET
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
reorganization more fully and for a more complete description of its legal
terms, you should read carefully this entire document, including the merger
agreement and the memorandum of association and bye-laws of EYPI-Bermuda, which
are included in this proxy statement/prospectus as annexes.
In this document, "we," "us," "our" and "our company" refer to
EYPI-Nevada and its subsidiaries or EYPI-Bermuda and its subsidiaries, as the
context requires, and "you" refers to the stockholders of EYPI-Nevada or the
shareholders of EYPI-Bermuda, as the context requires.
The Annual Meeting
(see pages 9 to 10)
Time and Place The annual meeting will be held at 11:00 a.m. (local
time) on December 22, 2000 at the offices of Sommer &
Schneider LLP, 595 Stewart Avenue, Suite 710, Garden
City, New York 11530.
Proposals At the meeting, you will consider and vote on the
following proposals:
o To approve and adopt the agreement and plan
of merger, dated as of,
____________________, 2000, among Endless
Youth Products, Inc., a Nevada corporation
("EYPI-Nevada"), Endless Youth Products,
Ltd., a Bermuda company ("EYPI-Bermuda"),
and EYPI Merger Corp., pursuant to which
EYPI-Bermuda will become the parent holding
company of EYPI-Nevada, and to approve the
transactions contemplated thereby.
o To re-elect three directors to serve for a
term of three years or until their
respective successors are elected and
qualified.
o To ratify the selection of Beckman Kirkland
& Whitney as independent accountants for the
fiscal year ending June 30, 2001.
Voting and Revocation All stockholders of record as of November 27, 2000
of Proxies are entitled to vote at the meeting. The affirmative
vote of a majority of our outstanding shares is
necessary to approve the reorganization. The election
of directors will be determined by a plurality of the
votes cast. The affirmative vote of a majority of the
shares represented at the annual meeting will be
required for the ratification of the selection of
Beckman Kirkland & Whitney as our independent
accountants.
Even if you plan to attend the meeting, please sign
and return your proxy card. Any proxy may be revoked
by the person giving it at any time before it is
voted. Proxies may be revoked by either filing with
us a written notice of revocation bearing a later
date than the date of the proxy or a later-dated
proxy relating to the same shares, or attending the
annual meeting and voting in person. See "The Annual
Meeting--Voting and Revocation of Proxies."
Your vote is very important. Please sign, date and
return the proxy card as soon as possible.
The Reorganization
(see pages 11 - 15)
General Before June 5, 2000 we were engaged in the
development, marketing and distribution of
proprietary vitamins, nutritional skin care, personal
care and other anti-aging products under the "Endless
Youth" trade name. In June, 2000 our then sole
officer and director, Neal Wallach, together with EYP
International LLC transferred a controlling interest
in the company to the Sababurg Foundation and several
other parties. The historic business has been
abandoned and ,at present, management is evaluating
possible future operating activities including
selling computer software systems, system financing
and advisory services with special considerations to
Internet technology. The company has had limited
revenue from operations since June 30, 2000. Our
current business plan also includes serving as a
vehicle to effect business combinations with one or
more operating companies, whether in whole or in
part.
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In November, 2000, we formed EYPI-Bermuda and EYPI
Merger Corp. to accomplish the proposed
reorganization. Neither company has any significant
assets or capitalization or has engaged in any
business or activities other than in connection with
the reorganization.
Pursuant to the merger agreement, we will become a
wholly-owned subsidiary of EYPI-Bermuda and our
stockholders will become shareholders of and own all
of the outstanding share capital of EYPI-Bermuda.
After the reorganization, EYPI-Bermuda will carry on
the holding company functions currently conducted by
EYPI-Nevada.
Reasons for the The establishment of a Bermuda holding company for
Reorganization EYPI-Nevada should allow us to benefit from more
favorable business, tax, regulatory and financing
environments. Our current corporate structure is such
that our worldwide income is subject, either
immediately or eventually, to U.S. taxation. After
the reorganization, we will be taxed in the United
States only on that portion of our worldwide income
that is attributable to the United States or our
United States subsidiaries, and we will not be taxed
on capital gains on U.S. investments or, except for
applicable withholding taxes, on interest or
dividends from U.S. sources. In addition, this
reorganization will offer us greater flexibility in
structuring international business activities.
Costs and Risks You may be required to pay U.S. federal income tax as
a result of the reorganization. In addition, there
will be differences in U.S. income tax consequences
arising out of your ownership or disposition of
EYPI-Bermuda common shares as compared to ownership
or disposition of EYPI-Nevada common stock. See
"--Material Tax Considerations" below.
There are differences between Nevada and Bermuda
corporate law which will affect your rights as a
shareholder. In addition, there are differences
between EYPI-Nevada's certificate of incorporation
and by-laws and EYPI-Bermuda's memorandum of
association and bye-laws.
Please read the section entitled "Risk Factors"
carefully for a description of the material costs and
risks of the reorganization.
Board Recommendation Our board of directors recommends that
you vote FOR the reorganization and the other
proposals.
Trading (see page 15) EYPI-Nevada common stock is currently traded on the
Nasdaq OTC Bulletin Board under the symbol "EYPI." We
expect that, following the reorganization,
EYPI-Bermuda common shares will be traded on the
Nasdaq Bulletin Board under the same symbol. The
reorganization will not affect your right to trade
your shares, either before or after it is completed.
Material Tax
Considerations
(see pages 26 -29)
Taxation of Stockholders The reorganization will cause you to recognize gains
(but not losses) on your shares equal to the excess,
if any, of the market value of those shares on the
date the reorganization is consummated over your tax
basis in those shares. Your tax basis in the shares
will be stepped up accordingly.
After the reorganization, if EYPI-Bermuda is or
becomes a passive foreign investment company
("PFIC"), then, unless the shareholder makes either a
"qualified electing fund" election ("QEF election")
or a "mark-to-market" election, the shareholder
generally will be subject to tax upon the disposition
of appreciated EYPI-Bermuda shares or upon certain
distributions as if the gain or distribution were
ordinary income earned ratably and subject to tax at
the highest rate applicable to the U.S. holder over
the period during which the EYPI-Bermuda common
shares were held, including any periods in which
EYPI-Bermuda was not a PFIC, and will be subject to
an interest charge on the deferred tax. Neither the
QEF election nor the mark-to-market election is
permitted with respect to warrants or options held by
U.S. holders, but they may be able to mitigate the
adverse tax consequences of PFIC status by means of a
"purge" election.
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Dividends paid by EYPI-Bermuda will not qualify for
the dividends received deduction otherwise generally
available to corporate shareholders with respect to
dividends from U.S. corporations.
We urge you to consult your own tax advisor regarding
your particular tax consequences.
Taxation of EYPI-Bermuda After the reorganization, EYPI-Bermuda will be
subject to U.S. federal income tax only to the extent
that it derives U.S. source income that is subject to
U.S. withholding tax or income that is effectively
connected with the conduct of a trade or business
within the United States and is not exempt from U.S.
tax under an applicable income tax treaty with the
United States. Our U.S. subsidiaries will continue to
be subject to U.S. tax on their worldwide income.
As a Bermuda holding company which will directly own
U.S. investments, we will not be subject to U.S.
income tax on capital gains, interest income or
dividend income. We will be subject to a withholding
tax on dividends from U.S. investments and interest
from certain U.S. payers.
Rights of Dissenting Dissenting shareholders will, subject to the
Shareholders provisions of Nevada law, have the right
to appraisal (see page 13) for their shares.
Accounting Treatment The reorganization will be accounted for in a manner
similar to a pooling of interests among companies
within common control and, therefore, there will be
no change in accounting as a result of the
reorganization.
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RISK FACTORS
In deciding whether to approve the reorganization, you should consider the
following risk factors carefully as well as the other information in this
document.
Cautionary Note Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. All statements other than statements of
historical fact included in or incorporated by reference in this proxy
statement/prospectus are forward-looking statements. Forward-looking statements
can generally be identified by the use of forward-looking terminology such as
"may," "will," "expect," "intend," "estimate," "anticipate," "believe" or
"continue" or their negative or variations or similar terminology.
Forward-looking statements involve our current assessment of risks and
uncertainties. Actual events and results may differ materially from those
expressed or implied in these statements. Important factors relating to our
existing business that could cause actual events or results to differ materially
from those indicated in such statements are discussed below and elsewhere in
this proxy statement/prospectus and include:
o ineffectiveness or obsolescence of our business strategy,
including the planned reorganization, due to changes in
current or future economic or market conditions or changes in
U.S. tax or other law, rule, regulation or policy or the
interpretation or enforcement thereof, including those
resulting from changes in the U.S.-Bermuda tax treaty, changes
in OECD policy or changes in the political climate of Bermuda;
and
o developments in the world's financial and capital markets
which, among other things, adversely affect the performance of
our operating subsidiaries or investments or the availability,
on terms deemed attractive to our company, of new investments
or acquisitions.
All subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by these
cautionary statements. We undertake no obligation to publicly update or revise
any forward-looking statement, whether as a result of new information, future
events or otherwise.
Risks Relating to the Reorganization
We May Choose to Defer or Abandon the Reorganization.
The merger may be terminated, and the reorganization abandoned, at any time, by
action of the board of directors of EYPI-Nevada, whether before or after the
annual meeting. While we currently expect the reorganization to take place soon
after the annual meeting, the board of directors of EYPI-Nevada may defer the
reorganization for a significant time or may abandon the reorganization after,
as well as before, the annual meeting for economic, strategic or other reasons.
We Will Become Subject to Changes in Bermuda Law or Political Circumstances.
Under current Bermuda law, we are not subject to tax on income or capital gains.
Furthermore, we expect to obtain from the Minister of Finance of Bermuda under
the Exempted Undertakings Tax Protection Act, 1966, an undertaking that, in the
event that Bermuda enacts legislation imposing tax computed on profits, income,
any capital asset, gain or appreciation, or any tax in the nature of estate duty
or inheritance tax, then the imposition of the tax will not be applicable to us
or our operations until March 28, 2016. We could be subject to taxes in Bermuda
after that date. This undertaking does not, however, prevent the imposition of
taxes on any person ordinarily resident in Bermuda or any company in respect of
its ownership of real property or leasehold interests in Bermuda.
Bermuda's political structure is based upon a parliamentary system with two
major parties, the United Bermuda Party and the Progressive Labour Party. In the
most recent election, the Progressive Labour Party gained control of the
legislative branch for the first time over the incumbent United Bermuda Party.
To date, the government's financial and regulatory policies have not been
changed in ways that we believe would materially affect us or our shareholders.
Some of Your Rights as a Shareholder Will Change as a Result of the
Reorganization.
Because of differences in Nevada law and Bermuda law and differences in the
governing documents of EYPI-Nevada and EYPI-Bermuda, your rights as a
shareholder will change if we complete the reorganization. The most significant
differences are:
o Subject to certain exceptions, the voting rights of any U.S.
person that owns (directly, indirectly or constructively)
shares that confer more than 9.9% of the total voting power of
the voting shares of EYPI-Bermuda will be limited to 9.9% of
such total voting power. This provision is intended to prevent
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our company from being characterized as a controlled foreign
corporation under the U.S. Internal Revenue Code, which could
cause U.S. persons owning 10% or more of our shares to suffer
adverse U.S. tax consequences.
o Subject to certain exceptions, the voting rights of any group
(defined as two or more persons acting as a partnership,
syndicate or other group for the purpose of acquiring, holding
or disposing of the relevant securities) that owns (directly,
indirectly or constructively) shares that confer more than
9.9% of the total voting power of the voting shares of
EYPI-Bermuda will be limited to 9.9% of such total voting
power.
o The authorized share capital of EYPI-Bermuda consists of
500,000,000 common shares and 50,000,000 preference shares,
whereas the authorized share capital of EYPI-Nevada consists
of 10,000,000 shares of common stock and 1,000,000 shares of
preferred stock.
o Shareholders' rights to bring derivative suits will be more
limited than under Nevada law.
See the section of this proxy statement/prospectus entitled "Comparison of
Rights of Shareholders" for a description of these and other differences. See
also the section entitled "Description of Authorized Shares of EYPI-Bermuda" for
a description of these and other provisions in the bye-laws of EYPI-Bermuda and
under Bermuda law that could have anti-takeover effects. Such provisions could
discourage unsolicited takeover bids from third parties or the removal of
incumbent management. As a result, it may be less likely that you will receive
premium prices for your shares in an unsolicited takeover of our company by
another party.
We May Become Subject to U.S. Corporate Income Taxes.
EYPI-Bermuda and its non-U.S. subsidiaries intend to operate their business in a
manner that will not cause them to be treated as engaged in a trade or business
in the United States and, thus, will not be required to pay U.S. federal
corporate income taxes (other than withholding taxes on certain U.S. source
investment income). However, because there is uncertainty as to the activities
which constitute being engaged in a trade or business within the United States,
there can be no assurances that the U.S. Internal Revenue Service will not
contend successfully that EYPI-Bermuda or a non-U.S. subsidiary is engaged in a
trade or business in the United States. If EYPI-Bermuda or any of its non-U.S.
subsidiaries were subject to U.S. income tax, EYPI-Bermuda's shareholders'
equity and earnings could be materially adversely affected. See "Material Tax
Considerations--United States Federal Income Tax Consequences."
You May Suffer Adverse Tax Consequences if We Are Classified as a Passive
Foreign Investment Company.
In connection with our current business plan, we intend to acquire all or a
portion of one or more operating companies. If we own less than 25% of the
equity of one of these investee companies, then the value of our investment in
the investee company will be characterized as passive assets and the income from
the investee company will be characterized as passive income. If 50% or more of
our total assets or 75% or more of our total gross income is characterized as
passive, we will be deemed to be a passive foreign investment company ("PFIC")
under the Internal Revenue Code. Conversely, under a look-through rule, our
equity ownership of 25% or more of our investee companies would result in a
proportionate share of the investee company's assets (as long as the investee
company is involved in an active business) being treated as active assets of
ours. Under an exception for start-up companies, EYPI-Bermuda should not be a
PFIC for its first taxable year if it is not a PFIC in its second and third
years.
If we were to be classified as a PFIC, then capital gains of any of our United
States shareholders allocable to the period of time following the reorganization
would be considered ordinary income for tax purposes, even if we are not deemed
to be a PFIC for that entire period. In addition, a U.S. shareholder would owe
interest on the tax on that gain as if it had realized the capital gain in equal
annual installments over the period it held our shares. Shareholders could avoid
the PFIC interest charge if they mark their shares to market each year and pay
ordinary income tax on that gain. A U.S. shareholder may avoid some of the
adverse tax consequences of owning shares in a PFIC by making a qualified
electing fund ("QEF") election. A QEF election is revocable only with the
consent of the Internal Revenue Service and has the following consequences to a
shareholder:
o For any year in which the company is not a PFIC, no income tax
consequences would result.
o For any year in which the company is a PFIC, the shareholder
would include in its taxable income a proportionate share of
the company's net ordinary income and net capital gains.
Neither the QEF election nor the mark-to-market election is permitted with
respect to warrants or options held by U.S. holders, but they may be able to
mitigate the adverse tax consequences of PFIC status by means of a "purge"
election.
Our current intention is to ensure that more than 50% of our investments are in
operating companies in which we own an equity interest of 25% or more and to
take such other steps as are necessary so as not to be classified as a PFIC.
While we believe that we will take adequate measures to avoid being
characterized as a PFIC, we cannot assure you that we will be successful in
doing so. In addition, we may incur significant costs to avoid being
characterized as a PFIC, including through the disposition of securities in
investee companies at depressed prices or at otherwise unfavorable times.
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See "Material Tax considerations--United States Federal Income Tax
Consequences--Taxation of Endless Youth Products, Inc. Shareholders--After the
Reorganization--Passive Foreign Investment Company Rules."
We May Incur Significant Costs to Avoid Investment Company Status and May Suffer
Other Material Adverse Consequences if Deemed to Be an Investment Company.
We may incur significant costs to avoid investment company status and may suffer
other material adverse consequences if deemed to be an investment company under
the Investment Company Act of 1940. Some equity investments in other businesses
made by us in the future constitute or may constitute investment securities
under the Investment Company Act. A company may be deemed to be an investment
company if it owns investment securities with a value exceeding 40% of its total
assets, subject to certain exclusions. Investment companies are subject to
registration under, and compliance with, the Investment Company Act unless an
exclusion applies. However, there is no provision (except by special SEC order)
for a non-U.S. company to register as an investment company under the Investment
Company Act. If we were deemed to be an investment company and could not rely on
an exclusion, we would be prohibited from engaging in business or issuing
securities in the United States and might be subject to civil and criminal
penalties for noncompliance. In addition, in such case, certain of our contracts
might be voidable, and a court-appointed receiver could take control of us and
liquidate our business.
Our investment securities currently do not comprise more than 40% of our assets.
If at any time investment securities comprised more than 40% of our assets and
we could not rely on an exclusion, we would attempt to reduce our investment
securities as a percentage of our total assets. This reduction can be attempted
in a number of ways, including the disposition of investment securities and the
acquisition of assets that do not constitute investment securities. These sales
may be at depressed prices and we may never realize the anticipated benefits
from, or may incur losses on, these investments. We may not be able to sell some
investments because of contractual or legal restrictions or our inability to
locate a buyer. Moreover, we may incur tax liabilities when we sell assets. We
may also be unable to purchase additional investment securities that may be
important to our future operating strategy. We may not be able to identify and
acquire suitable assets that do not constitute investment securities on
acceptable terms.
The Reorganization May Cause Us to Forfeit Certain Tax Benefits.
As of September 30, 2000, our company had approximately $1.7 million of net
operating losses. If we had sufficient current taxable income to offset these
net operating losses, we would save, on a present value basis, approximately
$600,000 in tax payments. The present value of the tax savings would continue to
diminish so long as we do not have sufficient taxable income to use the net
operating losses.
Since EYPI-Bermuda is a Bermuda holding company not subject to U.S. tax, it will
not be able to utilize the net operating losses. Our U.S. subsidiary and its
consolidated U.S. group consisting of its U.S. parent and prospective sister
companies and subsidiaries will continue to be able to use the net operating
losses, subject to all of the applicable limitations under the Internal Revenue
Code. It is likely therefore that most of the net operating losses will not be
usable unless the U.S group acquires income producing businesses.
The Public Market for EYPI-Bermuda Common Shares May Be Limited.
There can be no assurance that an active trading market for EYPI-Bermuda common
shares will develop or be maintained. The EYPI-Bermuda common shares may be less
attractive than EYPI-Nevada common stock to investors who invest primarily in
U.S. companies. In addition, historically, the market prices for securities of
companies with limited operations of seeking mergers and acquisitions have been
highly volatile. The market price of our common shares could be subject to
significant fluctuations in response to various factors and events, including
the liquidity of the market for our common shares, announcements of potential
business combinations and changes in the industry or industries which we may
enter, as well as general economic and market conditions. We anticipate that
EYPI-Bermuda common shares will be quoted on the Nasdaq OTC Bulletin Board
following the reorganization. We expect to continue to file and be current in
our Securities Exchange Act reports as we pursue our business objectives.
Penny Stock Regulation
Penny stocks generally are equity securities with a price of less than $5.00 per
share other than securities registered on certain national securities exchanges
or quoted on the Nasdaq Stock Market, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system. Our securities may be subject to "penny stock rules" that
impose additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock rules"
require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock rules" may restrict the ability of broker-dealers to sell our securities.
The
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foregoing required penny stock restrictions will not apply to our securities if
such securities maintain a market price of $5.00 or greater. There can be no
assurance that the price of our securities will reach or maintain such a level.
The Enforcement of Civil Liabilities Against Us May Be More Difficult.
If the reorganization is consummated, we will be a Bermuda company and in the
future some of our officers and directors may be residents of various
jurisdictions outside the United States. All or a substantial portion of the
assets of EYPI-Bermuda and of those persons may be located outside the United
States. As a result, it may be difficult for investors to effect service of
process within the United States upon those persons or to enforce in United
States courts judgments obtained against those persons. EYPI-Bermuda will
irrevocably agree that it may be served with process with respect to actions
based on offers and sales of securities made in the United States by having The
Corporation Trust Company, Wilmington, Nevada 19801, be its United States agent
appointed for that purpose.
EYPI-Bermuda has been advised by its Bermuda counsel, M.L.H. Quin & Co., that
the United States and Bermuda do not currently have a treaty providing for
reciprocal recognition and enforcement of judgments of U.S. courts in civil and
commercial matters and that a final judgment for the payment of money rendered
by a court in the United States based on civil liability, whether or not
predicated solely upon the U.S. federal securities laws, would, therefore, not
be automatically enforceable in Bermuda. EYPI-Bermuda also has been advised by
M.L.H. Quin & Co. that a final and conclusive judgment obtained in a court in
the United States under which a sum of money is payable as compensatory damages
(i.e., not being a sum claimed by a revenue authority for taxes or other charges
of a similar nature by a governmental authority, or in respect of a fine or
penalty or multiple or punitive damages) may be the subject of an action on a
debt in the Supreme Court of Bermuda under the common law doctrine of
obligation. Such an action should be successful upon proof that the sum of money
is due and payable, and without having to prove the facts supporting the
underlying judgment, as long as: (1) the court that gave the judgment was
competent to hear the action in accordance with private international law
principles as applied by the courts in Bermuda; and (2) the judgment is not
contrary to public policy in Bermuda, was not obtained by fraud or in
proceedings contrary to natural justice of Bermuda and is not based on an error
in Bermuda law. A Bermuda court may impose civil liability on EYPI-Bermuda or
its directors or officers in a suit brought in the Supreme Court of Bermuda
against EYPI-Bermuda or such persons with respect to a violation of U.S. federal
securities laws, provided that the facts surrounding such violation would
constitute or give rise to a cause of action under Bermuda law.
Other Risks of the Company
We May Have No Operating History in Our New Line of Business.
The company's current objective is to serve as a computer and software
consultant and as a vehicle to effect business combinations and ventures,
whether by acquiring all or a portion of companies, merger, exchange of stock or
otherwise, with one or more operating companies that the board believes will
have potential to increase stockholder value. These business combinations and
ventures may be with companies that are not in the computer business. The
company may cease to pursue this business objective at any time and may also
consider alternatives. We may have had no operating history in our new line of
business, although members of our board of directors have broad business
experience. Accordingly, there can be no assurance that our future operations
will generate cash flows or operating or net income, and our prospects must
therefore be considered in light of the risks, expenses, problems and delays
inherent in acquiring and/or establishing a new business. We and our
stockholders may suffer a substantial loss should the new business plan prove to
be unsuccessful.
Our success will depend to a large extent on the operations, financial condition
and management of the companies in which we may acquire interests or with which
we may merge. Further, these ventures may involve financial and operational
risks. Financial risks include the possible incurrence of indebtedness by us in
order to effect the acquisitions and the consequent need to service that
indebtedness. Operational risks include the possibility that a venture does not
ultimately provide the benefits we had originally anticipated while we continue
to incur operating and other expenses. In addition, if we make a strategic
investment by acquiring a minority interest in a company, we may lack elements
of control over the operations and strategy of the business in which we
invested. Furthermore, we may attempt to invest in highly leveraged operating
companies. Investing in highly leveraged companies entails many risks, including
the risks that the investee companies may be subject to restrictive operating
and financing covenants which could reduce their flexibility and the increased
likelihood that the investee companies may enter bankruptcy if they cannot meet
their obligations when due. We cannot assure you that we will be successful in
identifying new operating businesses, completing and financing business
combination or venture transactions on favorable terms, or operating our new
business successfully. In implementing our strategy, we will attempt to minimize
the risk of unexpected liabilities and contingencies associated with our new
operating businesses through planning, investigation and negotiation, but
unexpected liabilities and contingencies may nevertheless accompany such
transactions.
We Cannot Specify the Exact Nature of the Business Risks We May Encounter in the
Future.
We have not identified the business opportunities and businesses in which we
will attempt to obtain an interest. We therefore cannot describe the specific
risks presented by such businesses. To the extent that we effect a business
combination with or invest in a financially unstable company or an entity in its
early stage of development or growth (including entities without established
records of revenues or income), we will become subject to numerous risks
inherent in the business and operations of financially unstable and early stage
or potential emerging growth companies. In addition, to the extent that we
effect a business combination
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with an entity in an industry characterized by a high level of risk, we will
become subject to the unascertainable risks of that industry. An extremely high
level of risk frequently characterizes industries which experience rapid growth.
Although we will endeavor to evaluate the risks inherent in a particular new
operating business or industry, we cannot assure you that we will properly
ascertain or assess all such risks. Such new operating business may involve an
unproven product, technology or marketing strategy, the ultimate success of
which cannot be assured. The new operating businesses may be in competition with
larger, more established firms that have competitive advantages over us. Our
investment in a business opportunity may be highly illiquid and could result in
a total loss to us if the opportunity is unsuccessful.
We May Need to Secure Additional Financing to Carry Out Our Business Plan.
We may be required to raise cash to consummate a business combination, to
provide funds for an additional infusion of capital into a new operating
business or to fund any share repurchases we may make. The amount and nature of
any borrowings by us will depend on numerous considerations, including our
capital requirements, our perceived ability to meet debt service on any such
borrowings and the then prevailing conditions in the financial markets, as well
as general economic conditions. If we are able to raise additional funds through
the incurrence of debt, and we do so, we would likely become subject to
restrictive financial covenants. Additionally, to the extent that debt financing
ultimately proves to be available, any borrowings may subject us to various
risks and restrictions traditionally associated with indebtedness, including the
risks of interest rate fluctuations and insufficiency of cash flow to service
that indebtedness. If additional funds are raised through the issuance of equity
securities, the percentage ownership of our then current shareholders would be
diluted, our earnings and book value per share could be diluted and, if such
equity securities take the form of preferred stock, the holders of such
preferred stock may have rights, preferences or privileges senior to those of
holders of common stock. We are not currently in discussions, nor have we had
any discussions, with respect to obtaining any debt or equity financing. We
cannot assure you that we will be able to raise equity capital, obtain capital
lease or bank financing or incur other indebtedness to fund any business
combination or the working capital and other capital requirements of a new
operating business on terms deemed by us to be commercially acceptable and in
our best interests.
Our Ability to Attract and Retain Key Personnel May Be Limited.
Our future success depends on our ability to attract and retain key management
and other personnel with expertise required in connection with the acquisition
and/or growth and development of a new business. We cannot assure you that we
will be successful in attracting and retaining such executives and personnel.
Inability to attract and retain qualified personnel and the loss of services of
key personnel could have a material adverse effect on our ability to acquire
and/or enter new businesses and on our results of operations.
We Will Face Intense Competition as We Seek to Complete Acquisitions and Other
Business Combinations.
We will be a small participant in the market of seeking mergers with and
acquisitions of all or a portion of other entities. We expect to encounter
intense competition from other entities having business objectives similar to
ours. Many of these entities are well-established and have extensive experience
in identifying and effecting business combinations directly or through
affiliates. Many of these competitors possess greater financial, technical,
human and other resources than ours and we cannot assure you that we will have
the ability to compete successfully. Our financial resources will be limited in
comparison to those of many of our competitors. We cannot assure you that we
will be able to achieve our stated business objectives.
We May Issue New Equity in Order to Help Attain Our New Business Plan.
Generally, the board of directors has the power to issue new equity (to the
extent of authorized shares) without stockholder approval, except that
stockholder approval may be required under applicable law or rules of exchange
upon which our shares may be traded for certain transactions. We may issue new
equity to raise additional capital in connection with a business combination or
venture transaction with an operating business. Any additional issuance by us
would have the effect of diluting the percentage ownership of our stockholders,
could have the effect of diluting our earnings and our book value per share,
could result in stockholders of another company obtaining a controlling interest
in us, and could result in the adverse tax consequences described above. We have
no current arrangement, agreement or understanding with respect to the sale or
issuance of any new equity.
We Currently Do Not Anticipate Paying Dividends.
EYPI-Bermuda will be a holding company with no operations or significant assets
other than by reason of its ownership of the capital stock of its subsidiaries.
Future dividends and other permitted payments from such subsidiaries are
expected to be EYPI-Bermuda's principal source of funds to pay expenses and any
dividends. EYPI-Bermuda's subsidiaries' ability to pay dividends, as well as
EYPI-Bermuda's ability to pay dividends, is, and is expected to be, subject to
regulatory, contractual and other constraints.
Any determination to pay dividends in the future will be at the discretion of
our board of directors and will be dependent upon such constraints, as well as
our results of operations, financial condition and other factors deemed relevant
by our board of directors. Our board of directors currently does not intend to
declare dividends or make any other distributions.
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THE ANNUAL MEETING
We are furnishing this proxy statement/prospectus to holders of our common stock
in connection with the solicitation of proxies by our board of directors at the
annual meeting, and at any adjournments and postponements of the meeting.
Time and Place
The annual meeting will be held at 11:00 a.m. (local time) on December 22, 2000
at the offices of Sommer & Schneider LLP, located at 595 Stewart Avenue, Garden
City, New York 11530.
Proposals
At the annual meeting, our stockholders will consider and vote on the following
proposals:
o To approve and adopt the agreement and plan of merger, dated
as of, _________2000, among EYPI-Nevada, EYPI-Bermuda and EYPI
Merger Corp., pursuant to which EYPI-Bermuda will become the
parent holding company of EYPI-Nevada, and to approve the
transactions contemplated thereby.
o To re-elect three directors to serve for a term of up to three
years or until their respective successors are elected and
qualified.
o To ratify the selection of Beckman Kirkland & Whitney as
independent accountants for the fiscal year ending June 30,
2001.
Record Date; Voting at the Annual Meeting
The board of directors has fixed the close of business on November 27, 2000 as
the record date for determination of the stockholders entitled to notice of and
to vote at the annual meeting and any and all postponements or adjournments of
the meeting. On the record date, there were approximately shares of common stock
outstanding and entitled to vote, which were held by holders of record and
approximately beneficial holders. Each holder of record of common stock on the
record date is entitled to cast one vote per share. A stockholder may vote in
person or by a properly executed proxy on each proposal put forth at the annual
meeting.
Quorum; Votes Required for Approval
The presence in person or by properly executed proxy of a majority of our common
stock outstanding and entitled to vote at the annual meeting is necessary to
constitute a quorum. If a quorum is not present, the annual meeting may be
adjourned from time to time until a quorum is obtained.
The affirmative vote of a majority of our outstanding shares is necessary to
approve the reorganization. Therefore, a failure to send in a signed proxy card
or vote in person at the meeting will have the effect of a vote against the
reorganization. The election of directors will be determined by a plurality of
the votes cast. The affirmative vote of a majority of the shares represented at
the annual meeting will be required for the ratification of the selection of
Beckman, Kirkland & Whitney as independent accountants for the fiscal year
ending June 30, 2001.
At least one of our officers and directors will be present at the annual meeting
and available to respond to questions.
An automated system administered by our transfer agent will tabulate votes cast
by proxy at the annual meeting, and inspectors of election will be appointed at
the meeting to tabulate votes cast in person.
Voting and Revocation of Proxies
All stockholders should complete, sign and return the enclosed proxy card. All
shares of common stock represented at the annual meeting by properly executed
proxies received before or at the annual meeting, unless those proxies have been
revoked, will be voted at the annual meeting, including any postponement or
adjournment of the annual meeting. If no instructions are indicated on a
properly executed proxy, the proxies will be deemed to be FOR approval of the
reorganization, the nominees to the board of directors and the selection of
Beckman Kirkland & Whitney as independent accountants for the fiscal year ending
June 30, 2001.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by either:
o filing, including by facsimile, with the Secretary of
EYPI-Nevada, before the vote at the annual meeting is taken, a
written notice of revocation bearing a later date than the
date of the proxy or a later-dated proxy relating to the same
shares, or
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o attending the annual meeting and voting in person.
In order to vote in person at the annual meeting, stockholders must attend the
annual meeting and cast their vote in accordance with the voting procedures
established for the annual meeting. Attendance at a annual meeting will not in
and of itself constitute a revocation of a proxy. Any written notice of
revocation or subsequent proxy must be sent so as to be delivered at or before
the taking of the vote at the annual meeting to Endless Youth Products, Inc.,
Stamford Financial Building, Stamford, New York 12167, Facsimile: (607)
652-6301, Attention: Secretary.
Solicitation of Proxies
Proxies are being solicited by and on behalf of the board of directors.
Brokerage houses, nominees, fiduciaries and other custodians will be requested
to forward solicitation materials to beneficial owners and will be reimbursed
for their reasonable expenses incurred in so doing. We may request by telephone,
facsimile, mail, electronic mail or other means of communication the return of
the proxy cards.
Other Matters
As of the date of this proxy statement/prospectus, our board of directors knows
of no matters that will be presented for consideration at the annual meeting,
other than as described in this proxy statement/prospectus. If any other matters
shall properly come before the annual meeting or any adjournments or
postponements of the annual meeting and shall be voted on, the enclosed proxies
will be deemed to confer discretionary authority on the individuals named as
proxies therein to vote the shares represented by such proxies as to any of
those matters. The persons named as proxies intend to vote or not vote in
accordance with the recommendation of our board of directors and management.
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THE REORGANIZATION
General
The board of directors of EYPI-Nevada has unanimously approved and declared
advisable, and recommends that the stockholders of EYPI-Nevada approve and
adopt, the merger agreement pursuant to which EYPI-Bermuda will become the
parent holding company of EYPI-Nevada. After the consummation of the
reorganization, EYPI-Bermuda will carry on the holding company functions
currently conducted by EYPI-Nevada. The actual terms of the reorganization are
contained in the merger agreement and memorandum of association. The merger
agreement is included in this proxy statement/prospectus as annex A. The
memorandum of association and bye-laws of EYPI-Bermuda are included in this
document as annex B and annex C. We encourage you to read these documents
carefully.
Background and Reasons for the Reorganization
The board of directors has been considering the future business and operations
of the company. On November 2, 2000, the board of directors approved a plan to
redomesticate the company to Bermuda pursuant to the reorganization described in
this proxy statement/prospectus. Among the positive factors considered by the
board in making that determination were:
o The establishment of a Bermuda holding company for EYPI-Nevada
should allow us to benefit from more favorable business, tax,
regulatory and financing environments.
o Our current corporate structure is such that our worldwide
income is subject, either immediately or eventually, to U.S.
taxation. After the reorganization, we will be taxable in the
United States only on that portion of our worldwide income
that is attributable to the United States or our United States
subsidiaries. As a Bermuda holding company which will directly
own U.S. investments, we will not be subject to U.S. income
tax on capital gains, interest income or dividend income. We
will be subject to a withholding tax on dividends from U.S.
investments and interest from certain U.S. payers.
o We are presently able to redomesticate to Bermuda with minimal
or no corporate tax cost because we have negative earnings and
profits both for the current year and for the period since our
inception on a cumulative basis.
o If, in the future, we decide to establish a Bermuda
subsidiary, that subsidiary would be entitled to the benefits
of the U.S./Bermuda tax treaty, which would exempt that
subsidiary from U.S. income taxes unless it had a "permanent
establishment" in the United States.
o The reorganization will offer us greater flexibility in
structuring international business activities. For example,
our ability to pursue business combinations with non-U.S.
entities, including Bermuda companies, may be enhanced.
o Our shares may become more attractive to non-U.S. investors,
and our visibility among the investment banking community may
increase due to the perception of our enhanced tax and
corporate structure.
The board also took into account the following negative aspects of the
reorganization:
o The reorganization will cause shareholders to recognize
capital gains (but not capital losses) on their shares equal
to the excess, if any, of the market value of those shares on
the date the reorganization is consummated over their tax
basis in those shares.
o We will be subject to changes in political circumstances or
laws that may diminish or take away entirely the anticipated
business, tax, financial and regulatory benefits of the
reorganization.
o Any of our income that is or may become attributable to the
U.S. or U.S. subsidiaries will still be subject to U.S.
taxation.
o We may be subject to taxation in jurisdictions other than the
U.S.
o Dividends paid by EYPI-Bermuda will not qualify for the
dividends received deduction otherwise generally available to
corporate shareholders.
o After the reorganization, if EYPI-Bermuda is or becomes a
PFIC, then, unless a U.S. shareholder makes either a QEF
election or a "mark-to-market" election, the shareholder
generally will be subject to tax upon the disposition of
appreciated EYPI-Bermuda shares or upon certain distributions
as if the gain or distribution were ordinary income earned
ratably and subject to tax at the highest rate applicable to
the U.S. holder over the period during which the EYPI-Bermuda
common shares were held, including any periods in which
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EYPI-Bermuda was not a PFIC, and will be subject to an
interest charge on the deferred tax. U.S. holders of warrants
or options to acquire EYPI-Bermuda shares will be unable to
make either of the foregoing elections and will be subject to
PFIC taxation if EYPI-Bermuda is or becomes a PFIC, but they
may be able to mitigate the adverse tax consequences of PFIC
status by means of a "purge" election.
o We will be further restricted in our ability to utilize the
net operating losses of our reinsurance subsidiary and may
need to record additional valuation allowances for the
deferred tax asset on our balance sheet.
o Our shares may become less attractive to investors who are
seeking to invest in U.S. companies or who are subject to
legal or internal restrictions on their ability to invest in
non-U.S. companies.
o Our activities in the United States will be restricted in
order for us to avoid being deemed to be engaged in a U.S.
trade or business, in which case we would become subject to
U.S. corporate income and branch profits taxes on our
effectively connected income.
o We may become less attractive as a potential merger partner
for a U.S. company, and the ability of U.S. companies to
effect tax-free combinations with us will be more restricted.
As a shareholder, you will be subject to some additional risks if the
reorganization is completed, including:
o There are differences between your rights as a shareholder of
a corporation organized under Nevada law and your rights as a
shareholder of a company organized under Bermuda law.
o Our new governing documents will contain additional provisions
that may discourage takeovers in which a third party might buy
your shares from you at an acquisition premium.
o The enforcement of civil liabilities against us may become
more difficult.
See "Risk Factors" for a more extensive discussion of the risks that you and the
company will face in connection with the reorganization.
The board of directors of EYPI-Nevada has unanimously approved and declared
advisable the merger agreement and the transactions contemplated thereby and
recommends that you vote in favor of the adoption and approval of the merger
agreement and approval of the transactions contemplated thereby.
The Merger Agreement
Pursuant to the merger agreement:
o EYPI Merger Corp. will be merged with and into EYPI-Nevada,
with EYPI-Nevada being the surviving corporation.
o Each outstanding share of EYPI Merger Corp. common stock will
be automatically converted into one share of EYPI-Nevada
common stock.
o Each outstanding share of EYPI-Nevada common stock (other than
treasury shares) will be automatically converted into one
EYPI-Bermuda common share.
o The EYPI-Bermuda common shares outstanding prior to the
effectiveness of the merger will be repurchased by
EYPI-Bermuda for $1.00 per share, or $12,000 in the aggregate,
and will be canceled. Treasury shares of EYPI-Nevada common
stock will be canceled.
As a result of the transactions described above, upon the effectiveness of the
merger, EYPI-Nevada, as the surviving corporation in the merger, will become a
subsidiary of EYPI-Bermuda, and all the common shares of EYPI-Bermuda
outstanding immediately after the merger will be owned by former common
stockholders of EYPI-Nevada.
The members of the board of directors of EYPI-Nevada immediately prior to the
reorganization will constitute the members of the board of directors of
EYPI-Bermuda immediately after the reorganization. The officers of EYPI-Nevada
immediately prior to the reorganization will be the officers of EYPI-Bermuda,
with the same or corresponding titles.
EYPI-Nevada will be renamed Endless Youth Products (U.S.) Inc.
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Amendment or Termination
Our board of directors may amend, modify or terminate the merger agreement at
any time before or after you approve it. After you approve the merger agreement,
no amendment, modification or supplement may be made or effected that by law
requires further approval by you without your approval.
Conditions to Consummation of the Reorganization
The reorganization will not be consummated unless the merger agreement is
adopted by the majority of the holders of the outstanding shares of EYPI-Nevada
and the government and regulatory approvals referred to in this proxy
statement/prospectus are obtained. We cannot predict whether such approvals or
consents will be obtained in a timely manner or, if obtained, whether the
consent will include conditions that would be onerous or detrimental to us.
Effective Time
If you approve the merger agreement and it is not terminated by our board of
directors, the reorganization will become effective at the close of business on
the date that the certificate of merger is filed with the Nevada Secretary of
State, or at such later time as may be specified in the certificate of merger.
We anticipate that the reorganization will become effective promptly following
the conditions to the reorganization are satisfied.
Regulatory Approvals
We are not aware of any regulatory approvals necessary to consummate the
reorganization.
Rights of Dissenting Stockholders
The following is a brief summary of the rights of holders of EYPI-Nevada common
stock to dissent from the merger and receive cash equal to the fair value of
their EYPI-Nevada common stock instead of receiving shares of EYPI-Bermuda
common stock. This summary is not exhaustive, and you should read the applicable
sections of chapter 92A of the Nevada Revised Statutes, which are attached to
this proxy statement/prospectus as Annex D.
IF YOU ARE CONTEMPLATING THE POSSIBILITY OF DISSENTING FROM THE MERGER, YOU
SHOULD CAREFULLY REVIEW THE TEXT OF ANNEX D, PARTICULARLY THE PROCEDURAL STEPS
REQUIRED TO PERFECT DISSENTERS' RIGHTS, WHICH ARE COMPLEX. YOU SHOULD ALSO
CONSULT YOUR LEGAL COUNSEL. IF YOU DO NOT FULLY AND PRECISELY SATISFY THE
PROCEDURAL REQUIREMENTS OF THE NEVADA REVISED STATUTES, YOU WILL LOSE YOUR
DISSENTERS' RIGHTS.
Under the Nevada Revised Statutes, the holders of EYPI-Nevada common stock are
entitled to certain dissenters' rights with respect to the merger. The following
is a summary of the rights of EYPI-Nevada stockholders who dissent from the
merger. It does not purport to be complete and is qualified in its entirety by
reference to Sections 92A.300 through 92A.500 of the Nevada Revised Statutes
(the Dissenters' Rights Statute, a copy of which is attached as Annex E to this
proxy statement/prospectus).
Any EYPI-Nevada shareholder may, as an alternative to receiving a consideration
specified in the merger agreement, dissent from the merger and obtain payment of
the fair value of such shareholder's EYPI-Nevada common stock pursuant to the
Dissenters' Rights Statute. EYPI-Nevada stockholders will be bound by the terms
of the merger unless they dissent by complying with all the requirements of the
Dissenters' Rights Statute. Any EYPI-Nevada shareholder contemplating exercising
the right to demand such payment should carefully review the Dissenters' Rights
Statute, a copy of which is included as Annex to this proxy statement/prospectus
and in particular the required procedural steps. A EYPI-NEVADA SHAREHOLDER WHO
FAILS TO COMPLY WITH THESE PROCEDURAL REQUIREMENTS MAY LOSE THE RIGHT TO
DISSENT.
Set forth below, to be read in conjunction with the full text of the Dissenters'
Rights Statute, is a summary of the procedures relating to the exercise of
dissenters' rights by EYPI-Nevada stockholders.
Any EYPI-Nevada shareholder who wishes to dissent must deliver to EYPI-Nevada,
prior to the vote on the merger agreement, a written notice of intent to demand
payment for such shareholder's shares if the merger is effectuated. In addition,
such shareholder must not vote their shares of EYPI-Nevada common stock in favor
of the merger agreement. A EYPI-Nevada shareholder who fails to deliver the
notice on time or who votes in favor of the merger agreement will not have any
dissenters' rights. If a EYPI-Nevada shareholder returns a signed proxy but does
not specify a vote AGAINST approval of the merger agreement or a direction to
abstain, the proxy will be voted for approval of the merger agreement, which
will have the effect of waiving such shareholder's dissenters' rights.
If the merger agreement is approved by EYPI-Nevada stockholders, EYPI-Nevada is
required to deliver a written dissenters' notice to all EYPI-Nevada stockholders
who gave a timely notice of intent to demand payment and who did not vote in
favor of the merger agreement. The notice must be sent no later than ten days
after the merger agreement is approved and must (a) state where the payment
demand must be sent and where and when certificates for certificated shares must
be deposited, (b) inform
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stockholders of uncertificated shares to what extent transfer of the shares will
be restricted after the payment is received, (c) supply a form for demanding
payment that includes the date of the first announcement to the news media or to
stockholders of the terms of the proposed corporate action and that requires the
person asserting dissenters' rights to certify whether or not such shareholder
acquired beneficial ownership of the shares before that date, (d) set a date by
which EYPI-Nevada must receive the payment demand, which may not be fewer than
30 or more than 60 days after the date the required dissenters' notice is
delivered, and (e) be accompanied by a copy of the Dissenters' Rights Statute.
A shareholder who is sent the dissenters' notice described above must (i) demand
payment, (ii) certify whether the shareholder acquired beneficial ownership of
the shares before the date required to be set forth in the dissenters' notice,
and (iii) deposit such shareholder's certificates in accordance with the terms
of the notice. A shareholder who demands payment and deposits the shareholder's
certificates of EYPI-Nevada common stock as requested by the dissenters' notice
retains all other rights of a EYPI-Nevada shareholder until such rights are
canceled by the consummation of the merger. A shareholder who does not demand
payment or deposit the shareholder's certificates of EYPI-Nevada common stock
where required, each by the date set forth in the dissenters' notice, is not
entitled to payment. EYPI-Nevada may restrict the transfer of uncertificated
shares from the date of the demand for payment until the merger is consummated;
however, the holder of uncertificated shares retains all other rights of a
shareholder until those rights are canceled by the consummation of the merger.
Except for shares of EYPI-Nevada common stock acquired by a dissenter after the
date set forth in the dissenters' notice as the date of first announcement to
stockholders or the news media of the terms of the merger, as soon as the merger
is effectuated or upon receipt of the payment demand, EYPI-Nevada must pay each
dissenter who complied with the foregoing requirements the amount EYPI-Nevada
estimates to be the fair value of the dissenters' share of EYPI-Nevada common
stock plus accrued interest. The payment must be accompanied by certain
financial information concerning EYPI-Nevada, a statement of EYPI-Nevada's
estimate of the fair value of the shares, an explanation of how the interest was
calculated, a statement of the dissenter's right to demand payment if the
dissenter is dissatisfied with the payment offer, and a copy of the Dissenters'
Rights Statute.
A dissenter may notify EYPI-Nevada in writing of the dissenter's own estimate of
the fair value of the dissenter's shares and the amount of interest due with
respect thereto and may demand payment of the dissenter's estimate, by following
the procedures set forth in the Dissenters' Rights Statute.
EYPI-Nevada stockholders considering exercising dissenters' rights should bear
in mind that the fair value of their EYPI-Nevada common stock determined under
the Dissenters' Rights Statute could be more than, the same as or less than the
value of the consideration they will receive pursuant to the merger agreement if
they do not exercise dissenters' rights.
Any EYPI-Nevada shareholder contemplating the exercise of dissenters' rights is
urged to review the full text of the Dissenters' Rights Statute.
Exchange of Share Certificates
As of the effective time of the reorganization, the holders of EYPI-Nevada
common stock prior to the effective time will automatically become the owners of
EYPI-Bermuda common shares, and, as of the effective time, will cease to be
owners of EYPI-Nevada common stock. Stock certificates representing EYPI-Nevada
common stock will, at the effective time, automatically represent EYPI-Bermuda
common shares. Holders of EYPI-Nevada common stock will not be required to
exchange their stock certificates as a result of the reorganization. Should you
desire to sell some or all of your EYPI-Bermuda common stock after the effective
time, delivery of the stock certificate or certificates which previously
represented shares of EYPI-Nevada common stock will be sufficient. The proposed
reorganization will not affect your right to sell shares of EYPI-Nevada before
the effective time.
Following the reorganization, certificates bearing the name of EYPI-Bermuda will
be issued in the normal course upon surrender of certificates bearing the name
of EYPI-Nevada for exchange or transfer. If you surrender a share certificate,
and you request the new certificate to be issued in a name other than the one
appearing on the surrendered certificate, you must endorse the share certificate
or otherwise prepare it to be in proper form for transfer. You will be further
required to pay EYPI-Bermuda or its agents any transfer taxes or other
governmental charges required by reason of the issuance of a certificate
registered in a name other than that appearing on the surrendered certificate
and establish to the satisfaction of EYPI-Bermuda or its agents that those taxes
or other governmental charges have been paid.
Stock-Based Compensation Plans
The merger agreement provides that (1) upon consummation of the reorganization,
EYPI-Bermuda will assume the stock-based compensation plans of EYPI-Nevada and
(2) following the reorganization, EYPI-Bermuda will issue its common shares
under those plans. We will revise or amend our stock-based compensation plans
and other employee benefit plans, as necessary.
Your approval of the reorganization will also constitute approval of amendments
to our stock-based compensation plans and other employee benefit plans providing
for future use of EYPI-Bermuda common shares in lieu of EYPI-Nevada common stock
after the reorganization.
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Nasdaq OTC Bulletin Board Trading
Our common stock is currently listed on the Nasdaq OTC Bulletin Board under the
symbol "EYPI." On November 17, 2000 the last reported sale price on the Nasdaq
OTC Bulletin Board of the EYPI-Nevada common stock was $.0625 per share.
We expect that immediately following the reorganization, the common shares of
EYPI-Bermuda will trade on the Nasdaq OTC Bulletin Board under the same symbol.
At the time of commencement of this trading, the EYPI-Nevada common stock will
be delisted and the common stock of EYPI-Bermuda will become so registered.
The reorganization will not affect your right to trade your shares, either
before or after it is completed.
Accounting Treatment
The reorganization will be accounted for in a manner similar to a pooling of
interests among companies within common control and, therefore, there will be no
change in accounting as a result of the reorganization.
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DESCRIPTION OF AUTHORIZED SHARES OF
EYPI-BERMUDA
The following is a summary of the authorized capital of EYPI-Bermuda. This
summary is subject to the complete text of EYPI-Bermuda's memorandum of
association and bye-laws, which are included as annexes B and C of this proxy
statement/prospectus, and the relevant provisions of the Bermuda Companies Act
1981. See also the section of this proxy statement/prospectus entitled
"Comparison of Rights of Shareholders" for a description of the material changes
in your rights as a shareholder as a result of the reorganization.
Share Capital
The authorized share capital of EYPI-Bermuda consists of 500,000,000 common
shares, par value U.S. $0.005 per share, and 50,000,000 preference shares, par
value U.S. $0.005 per share. (The authorized share capital of EYPI-Nevada
consists of 10,000,000 shares of common stock, par value U.S. $0.001 per share,
and 1,000,000 shares of preferred stock, par value U.S. $0.001 per share). After
the consummation of the reorganization, we expect that 3,304,078 common shares
and no preference shares will be outstanding.
Common Shares
Holders of the common shares have no preemptive, redemption, conversion or
sinking fund rights. Subject to the voting restrictions described below, holders
of common shares are entitled to one vote per share on all matters submitted to
a vote of holders of common shares and do not have any cumulative voting rights.
In the event of a liquidation, dissolution, or winding up of EYPI-Bermuda, the
holders of common shares are entitled to share equally and ratably in the assets
of EYPI-Bermuda, if any, remaining after the payment of all debts and
liabilities of EYPI-Bermuda and the liquidation preference of any outstanding
preference shares. Upon completion of the reorganization, all outstanding common
shares will be fully paid and non-assessable. The board will be permitted to
authorize the issuance of additional common shares.
Following the reorganization, Stock Trans, Inc., 44 W. Lancaster Avenue,
Ardmore, Pennsylvania 19003, will be the transfer agent and registrar of our
common shares.
Preference Shares
Like the certificate of incorporation of EYPI-Nevada, the bye-laws of
EYPI-Bermuda allow the board to authorize the issuance of preference shares in
one or more series, and may fix the rights and preferences of those shares,
including as to dividends, voting (which shall be subject to the limitations
described below under "--Voting Limitation"), redemption, conversion rights and
otherwise.
Issuances of preference shares would be subject to the applicable rules of the
Nasdaq National Market or other organizations on whose systems the stock of the
company may then be quoted or listed. Depending upon the terms of preference
shares established by the company's board of directors, any or all series of
preference shares could have preferences over the common shares with respect to
dividends and other distributions and upon liquidation of the company. Issuance
of any such shares with voting powers, or issuance of additional shares of
common shares, would dilute the voting power of the outstanding common shares.
The company has no present plans to issue any preference shares.
Shareholders Meetings
Under Bermuda law, an annual shareholders meeting must be convened at least once
in every calendar year. The bye-laws of EYPI-Bermuda provide that a special
shareholders meeting of shareholders may be convened by the chairman of the
board of directors, the president or a majority of the directors in office at
any time. In addition, under Bermuda law, subject to specified conditions, a
special shareholders meeting must be convened upon the request of shareholders
holding at least 10% of the paid-up capital of the company carrying the right to
vote at shareholders' meetings.
The bye-laws of EYPI-Bermuda provide that the presence of two or more persons
representing, in person or by proxy, not less than a majority of the voting
power represented by shares issued and entitled to vote shall constitute a
quorum at all meetings of the shareholders for the transaction of business
except as otherwise provided by Bermuda law.
Voting Limitation
The bye-laws of EYPI-Bermuda contain a provision limiting the voting rights of
any U.S. person who owns (directly, indirectly or constructively under the
United States Internal Revenue Code) shares with more than 9.9% of the total
voting power of all shares entitled to vote generally at an election of
directors to 9.9% of such voting power. This provision will not restrict the
ability of any person holding shares of EYPI-Bermuda that were either (1)
converted from shares of EYPI-Nevada owned on November 27, 2000 or (2) issued
upon exercise of warrants owned by such person on November 27, 2000 which were
assumed by EYPI-Bermuda, from voting such shares except with respect to the
election of directors. This provision is intended to prevent EYPI-Bermuda from
being characterized as a controlled foreign corporation which could cause U.S.
persons owning 10% or more of our shares to suffer adverse U.S. tax
consequences.
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The bye-laws of EYPI-Bermuda also contain a provision limiting the rights of any
group (within the meaning of the United States Securities Exchange Act of 1934)
that owns shares with more than 9.9% of the total voting power of all shares
entitled to vote generally at an election of directors to 9.9% of such voting
power. This provision will not restrict (a) the ability of any such group
holding shares of EYPI-Bermuda that were converted from shares of EYPI-Nevada
owned on November 27, 2000 or acquired upon exercise of warrants owned by such
person on November 27, 2000 which were assumed by EYPI-Bermuda or (b) any person
or group that the board of directors, by the affirmation vote of at least 75% of
the existing board, may exempt from this provision, from voting such shares.
Shareholder Proposals
The bye-laws establish an advance notice procedure for shareholder proposals to
be brought before an annual shareholders meeting of shareholders of the company
and for nominations by shareholders of candidates for election as directors at
an annual shareholders meeting or a special shareholders meeting at which
directors are to be elected. Subject to any other applicable requirements,
including rule 14a-8 under the U.S. Securities Exchange Act of 1934, only such
business may be conducted at an annual meeting of shareholders as has been
brought before the meeting by, or at the direction of, the company's board of
directors, or by a shareholder who has given to the secretary of the company
timely written notice, in proper form, of the shareholder's intention to bring
that business before the meeting. The presiding officer at such meeting has the
authority to make such determinations. Only persons who are nominated by, or at
the direction of, the company's board of directors, or who are nominated by a
shareholder who has given timely written notice, in proper form, to the
secretary prior to a meeting at which directors are to be elected will be
eligible for election as director of the company. Subject to Bermuda law as
described below, shareholders will not be entitled to raise proposals at special
shareholders meetings.
To be timely, notice of nominations or other business to be brought before an
annual shareholders meeting must be received by the secretary of the company at
the principal executive office of the company no later than 50 days prior to the
date of such annual shareholders meeting (or if less than 55 days' notice of the
meeting is given, not later than the close of business on the seventh day
following the day notice of the meeting is first given to shareholders).
Similarly, notice of nominations to be brought before a special shareholders
meeting at which directors are to be elected must be delivered to the secretary
at the principal executive office of the company no later than the close of
business on the seventh day following the day on which notice of the date of a
special shareholders meeting of shareholders was given.
The shareholder's notice to nominate a director must set forth the identity of
the nominee, any arrangements or understandings the shareholder has the nominee
and any other information as would be required under the proxy rules of the
Securities and Exchange Commission if that person were in fact to appear as a
nominee in our proxy statement.
Bermuda law provides that shareholders totaling at least 100 shareholders or
holding at least 5% of the total voting rights can, at their own expense,
require the company to, subject to the provisions of Bermuda law:
o give notice of any resolution which those shareholders can
properly propose and intend to propose at the next annual
shareholders meeting of the company; or
o circulate a statement prepared by those shareholders in
respect of any matter referred to in a proposed resolution or
any business to be dealt with at a shareholders meeting.
Board of Directors
The bye-laws provide that the number of directors will not be less than three
nor more than eighteen and will be determined from time to time by a vote of a
majority of the company's board of directors then in office. Unlike the
certificate of incorporation of EYPI-Nevada, the bye-laws of EYPI-Bermuda
provide that the board will be divided into three classes. Each class will
consist, as nearly as may be possible, of one-third of the total number of
directors constituting the entire board. At each annual meeting of shareholders,
directors will be elected to succeed those directors whose terms have expired,
and each newly elected director will serve for a three-year term.
Like the certificate of incorporation of EYPI-Nevada, the bye-laws of
EYPI-Bermuda provide that directors may be removed only for cause, and cause for
removal shall be deemed to exist only if the director whose removal is proposed
has been convicted of a felony or been found by a court to be liable for gross
negligence or misconduct in the performance of his or her duties. The bye-laws
also provide that the company's board of directors have the right to fill
vacancies, including vacancies created by expansion of the company's board of
directors.
Dividends
Under Bermuda law and the bye-laws, the board of directors of EYPI-Bermuda may
declare dividends, or make distributions out of contributed surplus, as long as
there are no reasonable grounds for believing that EYPI-Bermuda is, or after the
dividend or distribution would be, unable to pay its liabilities as they became
due or that the realizable value of EYPI-Bermuda's assets would
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thereby be less than the aggregate of its liabilities and its issued share
capital and share premium accounts. See "Risk Factors -- Other Risks of the
Company -- We Currently Do Not Anticipate Paying Dividends."
Repurchases of Shares
Under Bermuda law and the bye-laws, EYPI-Bermuda can repurchase its own shares
so long as it is solvent and certain other conditions are met.
Interested Shareholder Provisions
Section 203 of the Delaware General Corporation Law
The bye-laws of EYPI-Bermuda incorporate the provisions of Section 203 of the
Delaware General Corporation Law (the "Section 203 provisions"), which is
similar in effect to Sections 78.378 to 78.3793 of the Nevada Revised Statues to
which EYPI-Nevada is currently subject. The Section 203 provisions prohibit
interested shareholders from engaging in a business combination with it for a
period of three years from the time of becoming an interested shareholder. An
interested shareholder is defined as a person that owns 15% or more of the
voting power of EYPI-Bermuda or any person that owned 15% or more of the voting
power of EYPI-Bermuda at any time within three years of the date that person's
status as an interested shareholder is determined. Business combinations
include:
o mergers, amalgamations or similar transactions,
o the sale of assets of our company having an aggregate market
value equal to 10% or more of either the aggregate market
value of all the assets of our company determined on a
consolidated basis or the aggregate market value of all
outstanding shares of our company;
o any transaction that results in the issuance or transfer by
our company of any stock of our company to the interested
shareholder, except if the issuance is part of a proportionate
distribution to all shareholders or due to the conversion of
securities exercisable or exchangeable for shares in our
company;
o any transaction involving our company or one of our
subsidiaries that results in the interested shareholder's
percentage ownership in our company increasing; and
o any receipt by the interested shareholder of the benefit of
any loan, guarantee or other financial benefit provided by or
through our corporation.
EYPI-Bermuda is not bound by the Section 203 provisions that restrict the
activities of it with respect to an interested shareholder if:
o upon consummation of the transaction that resulted in the
interested shareholder becoming an interested shareholder,
that interested shareholder owned at least 85% of the voting
power of our company's shares outstanding at the time the
transaction commenced;
o the board approved the transaction in which the interested
shareholder became an interested shareholder before that
transaction was completed; or
o the business combination is approved at a meeting by the vote
of 66 2/3% of the outstanding voting shares not owned by the
interested shareholder.
The restrictions of the Section 203 provisions do not restrict the activities of
an interested shareholder with respect to business combinations in the event
that any of the following transactions:
o a merger or consolidation of the company;
o a sale of the company's assets having an aggregate market
value equal to 50% or more of the aggregate value of all the
company's assets; or
o a tender offer for 50% or more of the voting stock of the
company,
is approved or not opposed by a majority of the board of directors of the
company then in office, so long as those directors were in office (or were
nominated or elected by directors who were in office) prior to the time the
interested shareholder became an interested shareholder, and a business
combination is proposed by an interested shareholder before the company
consummates or abandons, and after the company either announces publicly, or
gives notice (which it is required to do in the case of an asset sale or merger)
to all interested shareholders of, one of the specified transactions.
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The provisions of the bye-laws restricting business combinations with interested
shareholders can be repealed only with (1) the affirmative vote of 66-2/3% of
the outstanding shares or (2) the affirmative vote of a majority of the
outstanding shares and the affirmative vote of 75% of the entire board (and that
75% threshold must be met without the votes of directors who are affiliates of
the interested shareholder).
Additional Voting Restrictions
Unlike the certificate of incorporation of EYPI-Nevada, the bye-laws of
EYPI-Bermuda provide that the affirmative vote of 80% of the outstanding shares
of the company (including a majority of the outstanding shares held by
shareholders other than holders (and such holders' affiliates) of 10% or more
("10% holders") of the outstanding shares) shall be required (the "extraordinary
vote") for the following corporate actions:
o merger or consolidation of the company into a 10% holder;
o sale or any or all of the assets of the company to a 10%
holder;
o the issuance of voting securities of the company to a 10%
holder; or
o amendment of these provisions.
The extraordinary vote will not apply to any transaction approved by the board,
so long as a majority of those board members voting in favor of the transaction
were duly elected and acting members of the board prior to the time the 10%
holder became a 10% holder.
Anti-Takeover Effects
Certain of the provisions described above in the bye-laws of EYPI-Bermuda could
have the effect of discouraging unsolicited takeover bids from third parties or
the removal of incumbent management. As a result, it may be less likely that you
will receive premium prices for your shares in an unsolicited takeover of our
company by another party. These provisions may encourage companies interested in
acquiring the company to negotiate in advance with our board of directors, since
the board has the authority to overrule the operation of several of the
limitations.
The bye-laws of EYPI-Bermuda provide that certain provisions which may have
anti-takeover effects may be repealed or altered only with prior board approval
and upon the affirmative vote of holders of shares representing at least 65% of
the total voting power of the shares of the company entitled generally to vote
at an election of directors (80% in the case of the provisions described under
"-- Interested Shareholder Provisions -- Additional Voting Restrictions").
Voting Limitation
The provisions described above under "-- Voting Limitation" may deter any
unsolicited or unnegotiated bids for the company since, subject to the
exceptions described above, no shareholder or (without approval of 75% of the
directors then in office) group will be able to vote shares representing more
than 9.9% of the voting power of the company's voting shares.
Limitation on Shareholder Proposals and Calling of Special Shareholders Meetings
The provisions limiting shareholders' right to call special shareholders
meetings and to raise proposals or nominate directors at shareholders meetings
may have anti-takeover effects, although under Bermuda law, subject to specified
conditions, any 10% shareholder can call a special shareholders meeting and any
5% shareholder can raise a proposal at a shareholders meeting.
Action by Written Consent
Under Bermuda law, shareholders may act by written consent only if such consent
is unanimous among all shareholders. This limitation, together with the
limitation on shareholder proposals and calling of special shareholders
meetings, could make an unsolicited or unnegotiated bid more difficult.
Classified Board of Directors
The classified board provision could increase the likelihood that, in the event
of a takeover of our company, incumbent directors will retain their positions.
In conjunction with the provision of the bye-laws authorizing the company's
board of directors to fill vacant directorships, the classified board provision
could prevent shareholders from removing incumbent directors without cause (as
defined in our bye-laws) and filling the resulting vacancies with their own
nominees. We believe that the provision will help assure that the board, if
confronted with an unsolicited proposal from a third party that has acquired a
block of our voting shares, will have sufficient time to review the proposal and
appropriate alternatives and to seek the best available result for all
shareholders. We also believe that a classified board helps assure the
continuity and stability of the board and our business strategy and policies.
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Power to Issue Shares
Authorized preference shares, as well as authorized but unissued common shares,
will be available for issuance by the board, without further action by the
company's shareholders, unless shareholder action is required by applicable law
or the rules of any stock exchange on which any series of the company's capital
stock may then be listed. EYPI-Bermuda is authorized to have issued and
outstanding 500,000,000 common shares and 50,000,000 preference shares, as
contrasted with EYPI-Nevada, which is authorized to have issued and outstanding
10,000,000 shares of common stock and 1,000,000 shares of preferred stock. The
company believes that the availability of preference shares and additional
common shares could facilitate certain financings and acquisitions and provide a
means for meeting other corporate needs which might arise. These provisions give
the company's board of directors the power to approve the issuance of preference
shares or common shares that could, depending on its terms, either impede or
facilitate the completion of a merger, tender offer or other takeover attempt.
For example, the issuance of preference shares might impede a business
combination if the terms of those shares include voting rights which would
enable a holder to block business combinations.
Interested Shareholder Provisions
Any interested shareholder or 10% holder, each as defined above under
"--Interested Shareholder Provisions," cannot effect certain transactions with
the company unless it complies with the provisions described in that section or
the board of directors by requisite vote (or in the case of the Section 203
provisions, the shareholders by requisite vote) approve the transaction. These
provisions may encourage potential acquirers to negotiate with the board and
deter any bids not approved by the board.
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COMPARISON OF RIGHTS OF SHAREHOLDERS
The following discussion is a summary of material changes in your rights as a
shareholder following the reorganization. This summary is subject to the
complete text of the relevant provisions of the Bermuda Companies Act 1981, the
Nevada General Corporation Law, EYPI-Nevada's certificate of incorporation and
by-laws and EYPI-Bermuda's memorandum of association and bye-laws.
Your rights as a stockholder of EYPI-Nevada are governed by Nevada law and
EYPI-Nevada's certificate of incorporation and by-laws. After the
reorganization, you will become a shareholder of EYPI-Bermuda and your rights
will be governed by Bermuda law and EYPI-Bermuda's memorandum of association and
bye-laws.
There are differences between your rights under Nevada law and Bermuda law,
which is based on English legal principles. In addition, there are differences
between EYPI-Nevada's certificate of incorporation and by-laws and
EYPI-Bermuda's memorandum of association and bye-laws. These differences are
discussed below. See the section of this proxy statement/prospectus entitled
"Description of Authorized Shares of EYPI-Bermuda" for a more detailed
description of some of these provisions.
Authorized Share Capital
EYPI-Nevada EYPI-Bermuda
The authorized share capital of EYPI The authorized share capital of
-Nevada consists of 10,000,000 shares EYPI-Bermuda consists of 500,000,000
of common stock and 1,000,000 shares common shares and 50,000,000
of preferred stock. preference shares. See "Description of
Authorized Shares of EYPI-Bermuda --
Anti-Takeover Effects -- Power to
Issue Shares."
Quorum; Meetings of Shareholders
EYPI-Nevada EYPI-Bermuda
Under Nevada law, shareholder meetings Under Bermuda law, an annual
for the election of directors shareholders meeting must be convened
generally must be held every eighteen at least once in every calendar year.
months and a special meeting of A special shareholders meeting of
stockholders may be called by the shareholders may be convened by the
President, board of directors or by directors at any time and must be
the vote of, or by an instrument convened upon the request of
signed by the holders of a majority of shareholders holding at least 10% of
issued and outstanding capital stock. the paid-up capital of the company
carrying the right to vote at
shareholders' meetings. The bye-laws
also provide that the chairman of the
board of directors, the president or a
majority of the entire board of
directors may call a special
shareholders meeting of shareholders.
The certificate of incorporation and The bye-laws of EYPI-Bermuda provide
by-laws of EYPI-Nevada provide that a that the presence of two or more
majority of shares entitled to vote, persons representing, in person or by
present in person or represented by proxy, not less than a majority of the
proxy, shall constitute a quorum at a voting power represented by shares
meeting of stockholders. issued and entitled to vote shall
constitute a quorum at all meetings of
the shareholders for the transaction
of business except as otherwise
provided by Bermuda law.
Voting of Shareholders
EYPI-Nevada EYPI-Bermuda
Under Nevada law, unless otherwise The bye-laws contain a provision
provided in the certificate of limiting the voting rights of any
incorporation, each stockholder is [U.S.] person or group who owns
entitled to one vote for each share of (directly, indirectly or
capital stock held by that constructively) more than 9.9% of the
stockholder. shares of EYPI-Bermuda to 9.9%,
subject to certain exceptions. See
"Description of Authorized Shares of
EYPI-Bermuda--Voting Limitation" for a
description of this provision.
Action by Written Consent
EYPI-Nevada EYPI-Bermuda
Under Nevada law, stockholders holding Under Bermuda law, shareholders may
a majority of the voting power may act act by written consent only if such
by written consent as if such action consent is unanimous among all
were taken at a stockholders ' shareholders.
meeting, unless the certificate of
incorporation prohibits action by
written onsent. The certificate of
EYPI-Nevada does not contain such a
prohibition.
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Advance Notice Requirements for Shareholder Proposals and Director Nominations
EYPI-Nevada EYPI-Bermuda
There is no limitation in the The bye-laws of EYPI-Bermuda contain
certificate of incorporation or procedures for shareholders to
by-laws on the ability of stockholders nominate directors at the annual
to nominate directors or raise other shareholders meeting or any special
proposals at general or special shareholders meeting at which
meetings. directors are elected or to raise
proposals at the annual shareholders
meeting. The bye-laws prohibit
shareholders from raising proposals at
special shareholders meetings, subject
to Bermuda law. Bermuda law provides
that shareholders totaling at least
100 shareholders or holding at least
5% of the total voting rights can, at
their own expense, require the company
to, subject to specified conditions:
- give notice of any resolution which
those shareholders can properly
propose and intend to propose at the
next annual shareholders meeting of
the company; or
- circulate a statement prepared by
those shareholders in respect of any
matter referred to in a proposed
resolution or any business to be
dealt with at any shareholders
meeting.
Distributions and Dividends; Share Repurchases
EYPI-Nevada EYPI-Bermuda
Under Nevada law, a corporation may Under Bermuda law and the bye-laws,
pay dividends out of surplus unless the board of directors of EYPI-Bermuda
the net assets of the corporation are may declare dividends, or make
less than the capital represented by distributions out of contributed
issued and outstanding stock having a surplus, as long as there are no
preference on asset distributions and reasonable grounds for believing that
unless such distribution would render EYPI-Bermuda is, or after the dividend
the corporation unable to pay its or distribution would be, unable to
debts as they become due in the pay its liabilities as they became due
ordinary course of its business. or that the realizable value of
Surplus is defined under Nevada law as EYPI-Bermuda's assets would thereby be
the excess of the net assets over less than the aggregate of its
capital, as such capital may be liabilities and its issued share
adjusted by the board of directors. capital and share premium accounts.
A Nevada corporation may purchase Under Bermuda law and the bye-laws,
shares of any class except when its EYPI -Bermuda can repurchase its own
capital is impaired or would be shares so long as it is solvent and
impaired by such purchase. A certain other conditions are met.
corporation may, however, purchase out
of capital shares that are entitled
upon any distribution of its assets to
a preference over another class or
series of its stock (or, if no shares
entitled to such a preference are out-
standing, any of its shares, if these
shares are to be retired upon their
acquisition and the capital reduced).
Shareholder Approval of Business Combinations
EYPI-Nevada EYPI-Bermuda
Except under certain circumstances, Bermuda law permits an amalgamation
Nevada law prohibits a "business between two or more Bermuda companies,
combination" between the corporation or between one or more Bermuda
and an "interested shareholder", exempted companies and one or more
however, the Nevada Articles expressly foreign corporations, subject, unless
elect not to be governed by these the bye-laws otherwise provide, to
provisions as contained in NES 87.411 obtaining a majority vote of
to 78.444 inclusive. To the extent three-fourths of the shareholders of
permissible under the applicable law each of the companies and each class
of any jurisdiction to which the of shares present and voting in person
corporation may become subject by or by proxy at a meeting called for
reason of the conduct of business, the that purpose. Unless the bye-laws
ownership of assets, the residence of otherwise provide, Bermuda law also
shareholders, the location of offices requires that the quorum at the
or facilities, or any other item, the meeting be more than one-third of the
company has elected not to be governed issued shares of the company or the
by the provisions of any stature that class. Each share carries the right to
(i) limits, restricts, modified, vote in respect of an amalgamation,
suspends, terminates, or otherwise whether or not it otherwise carries
affects the rights of any shareholder the right to vote.
to cast one vote for each share of
common stock registered in the name of Except as set forth in the last
such shareholder on the books of the paragraph of this section, the
corpor- ation, without regard to bye-laws of EYPI-Bermuda, provide that
whether such shares were acquired any amalgamation approved by
without regard to whether such two-thirds of the board of directors
shareholder has the power to exercise of EYPI-Bermuda shall require approval
or direct the exercise of voting power only by a majority of the voting power
over any specific fraction of the held by shareholders, if the holders
shares of common stock of the company of a majority (ii) grants to any
of the shares issued and entitled to shareholder vote are present.
issued and outstanding or the right to
have his or her stock redeemed or
purchased
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by the corporation or any other Bermuda law also provides that where
shareholder on the acquisition by any an offer is made for shares in a
person or group of persons of shares company by another company and, within
of the company. In particular, to the four months of the offer, the holders
extent permitted under the laws of the of at least 90% in value of the shares
state of Nevada, the company elects which are the subject of the offer
not to be governed by any such (other than shares already held by or
provision, including the provisions of on behalf of the offeror) accept, the
the Nevada Control Share Acquisitions offeror may by notice, given within
Act, Sections 78.378 to 78.3793, two months after the expiration of the
inclusive, of the Nevada Revised said four months, require any
Statutes, or any statue of similar dissenting shareholders to transfer
effect or tenor. their shares on the terms of the
offer. Dissenting shareholders may
apply to a court within one month of
notice objecting to the transfer and
the court may make any order it thinks
fit.
Appraisal Rights
EYPI-Nevada EYPI-Bermuda
Shareholders are entitled to demand Under Bermuda law, a dissenting
appraisal of their shares in the case shareholder of a company participating
of mergers or consolidations, except in an amalgamation, other than an
where: (i) they are shareholders of amalgamation between a company and its
the surviving corpor- ation and the wholly owned subsidiary or between two
merger did not require their approval or more wholly owned subsidiaries of
under the Nevada Revised Statues the same holding company, may apply to
(NRS); (ii) the corporation's shares Bermuda's Supreme Court to appraise
are either listed on a national the fair value of his or her shares.
securities exchange or designated as a
national market system security on an
interdealer quotation system by the
National Association of Securities
Deals, Inc; or (iii) the corporation's
shares are held of record by more than
2,000 shareholders. Appraisal rights
are available in either (i), (ii) or
(iii) above, however, if the
shareholders are required by the terms
of the merger or consolidation to
accept any consideration other than
(a) stock of the corporation surviving
or resulting from the merger or
consolidation, (*b) shares of stock of
another corporation which are either
listed on a national securities
exchange or designated as a national
market system security on an
interdealer quotation system by the
National Association of Securities
Dealers, Inc. or held of record by
more than 2,000 shareholders, (c) cash
in lieu of fractional shares, or (d)
any combination of the foregoing
appraisal rights are not available in
the case of a sale, lease, exchange or
other disposition by a corporation of
all or substantially all of its
property and assets.
Inspection of Books and Records
EYPI-Nevada EYPI-Bermuda
Under Nevada law, any person who has Bermuda law provides the general
been a stockholder of record of any inspection of a Bermuda company's
corporation and owns not less than 15 public documents at the office of the
percent of all of the issued and Registrar of Companies in Bermuda, and
outstanding shares of the stock of provides a Bermuda company's
such corporation or has been shareholders with a right of
authorized in writing by the holders inspection of the company's bye-laws,
of at least 12.5 percent of all it's minutes of general shareholders'
issued and outstanding shares, upon at meetings and audited financial
least 5 days written demand, is statements. The register of
entitled to inspect in person or by shareholders is also open to
agent or attorney, during normal inspection by shareholders free of
business hours, the books of account charge and, upon payment of a small
and all financial records of the fee, by any other person.
corporation, to make extracts
therefrom, and to conduct an audit of A Bermuda company is required to
such records of such records at their maintain its share register in Bermuda
expense. but may establish a branch register
outside of Bermuda if its shares are
traded on an appointed stock exchange
or its shares have been offered to the
public pursuant to a prospectus filed
in accordance with Bermuda law. A
Bermuda company is required to keep at
its registered office a register of
its directors and officers which is
open for inspection by members of the
public without charge.
Indemnification of Directors and Officers
EYPI-Nevada EYPI-Bermuda
Nevada law generally permits a Under Bermuda law, a company is
corporation to provide permitted to indemnify any officer or
indemnification and advancement of director, out of the funds of the
expenses, by by-law provision, company, against:
agreement or otherwise, against
judgments, fines, expenses and amounts - any liability he or she incurs in
paid in settlement actually and defending any proceedings, whether
reasonably incurred by the person in civil or criminal, in which (1)
connection with a proceeding if the judgment is given in his or her
person acted in good faith and in a favor, or (2) he or she is
manner he or she reasonably believed acquitted, or (3) he or she is
to be in or not opposed to the best granted relief from liability by the
interests of the corporation. court in connection with any
application under relevant Bermuda
legislation; and
23
<PAGE>
- any loss or liability resulting from
negligence, default, breach of duty
or breach of trust, except for his
or her fraud or dishonesty.
The certificate of incorporation and Pursuant to its bye-laws, EYPI-Bermuda
bye-laws of EYPI-Nevada provide for will indemnify its officers and
indemnification on the part of directors as well as their heirs,
EYPI-Nevada to the fullest extent executors and administra- tors to the
permitted by law. fullest extent permitted by law.
permitted by law. Bermuda law does not
permit indemnification of a person who
is or may be found guilty of fraud or
dishonesty.
EYPI-Bermuda will advance all
reasonable expenses incurred by or on
behalf of the indemnitee in connection
with any related proceeding.
Limited Liability of Directors
EYPI-Nevada EYPI-Bermuda
Nevada law permits the adoption of a Under Bermuda law, a director must
certificate of incorporation provision observe the statutory duty of care
limiting or eliminating the monetary which requires a director to act
liability of a director to a honestly and in good faith with a view
corporation or its stockholders by to the best interests of the company
reason of a director's breach of the and exercise the care, diligence and
fiduciary duty of care. However, skill that a reasonably prudent person
Nevada law does not permit any would exercise in comparable
limitation of the liability of a circumstances.
director for:
Bermuda law renders void any provision
- breaching the duty of loyalty to the in the bye-laws or any contract
corporation or its stockholders; between a company and any director
exempting him or her from, or
- failing to act in good faith; indemnifying him or her against, any
liability in respect of any fraud or
- engaging in intentional misconduct dishonesty of which he or she may be
or a known violation of law; guilty in relation to the company.
- obtaining an improper personal The EYPI-Bermuda bye-laws provide that
benefit from the corporation; or no officer or director of EYPI-Bermuda
will be personally liable to
- paying a dividend or approving a EYPI-Bermuda or its shareholders for
stock repurchase under Nevada law in monetary damages for any breach of
violation of such law. fiduciary duty, except where the
person is or may be found to be guilty
The certificate of incorporation of of fraud or dishonesty. A director who
EYPI Nevada eliminates the monetary has an interest in any material
liability of a director to the fullest contract or proposed material contract
extent permitted by Nevada law. or in any person that is a party to
such a contract with the company or
any of its subsidiaries and fails to
disclose the interest at the first
opportunity at a meeting of the
directors or by writing to the
directors is deemed not to be acting
honestly or in good faith.
Interested Director Transactions
EYPI-Nevada EYPI-Bermuda
Under Nevada law, no contract or Under Bermuda law, without the consent
transaction between a corporation and of the holders of shares carrying at
one or more of its directors or least nine-tenths of the total voting
officers, or between a corporation or rights or in other limited instances,
another entity in which one or more of a company may not make a loan to or
its directors or officers have a enter into any guarantee or provide
financial interest, shall be void or security in respect of any loan made
voidable solely for that reason or to any person who is a director of
solely because the director or officer that company or of its holding
is present at or participates in that company. Exceptions to this provision
meeting which authorizes the contract are:
or solely because those directors'
votes are counted for that purpose if: - loans or guarantees by the company
in the ordinary course of its
- the material facts of the business, if the business includes
relationship or interest are known lending money or giving guarantees;
to the board of directors and the or
board of directors in good faith
authorizes the contract by the - loans for the purposes of the
affirmative vote of the disin- company or to enable its directors
terested directors; to perform their duties, given with
prior approval at a shareholders
- the material facts of the meeting where the purposes of the
relationship or interest are known loan are disclosed; or if not given
to the stockholders and the contract at the meeting, the loan is repaid
is specifically approved in good or discharged within six months from
faith by the stockholders; or the conclusion of the next following
annual shareholders meeting.
- the contract is fair to the
corporation at the time it is This provision does not preclude the
authorized. reimbursement of expenses or loans to
directors who are or were employees of
the company to enable them to acquire
shares or stock options.
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<PAGE>
Interested directors may be counted in
determining the presence of a quorum
at a meeting which authorizes the
contract or the transaction.
Shareholders' Suits
EYPI-Nevada EYPI-Bermuda
Nevada law requires only that the The Bermuda courts ordinarily would be
stockholder bringing a derivative suit expected to follow English precedent,
must have been a stockholder at the which would permit a shareholder to
time of the wrong complained of or commence a derivative action in the
that the stockholder acquired their name of the company devolved to him or
stock by operation of law from a to remedy a wrong done to the company
person who was a stockholder in that only:
situation.
- where the act complained of is
alleged to be beyond the corporate
power of the company or illegal;
- where the act complained of is
alleged to constitute a fraud
against the minority shareholders by
those controlling the company;
provided that the majority
shareholders have used their
controlling position to prevent the
company from taking action against
the wrongdoers;
- where an act requires approval by a
greater percentage of the company's
shareholders than actually approved
it; or
- where a derivative action is
necessary to avoid a violation of
the company's memorandum of
association or bye-laws.
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MATERIAL TAX CONSIDERATIONS
We urge you to consult your own tax advisor regarding your particular tax
consequences.
United States Federal Income Tax Consequences
The following discussion sets forth the material U.S. federal income tax
consequences to U.S. holders (as defined below) of EYPI-Nevada common stock as a
result of the reorganization, as well as the ownership and disposition of
EYPI-Bermuda common shares. We have not sought an opinion of U.S. tax counsel,
but base the discussion on publicly available documents discussing the subject.
This discussion does not purport to be a comprehensive description of all of the
tax considerations that may be relevant to a decision to approve the
reorganization or to own or dispose of EYPI-Bermuda common shares. In
particular, this discussion deals only with persons that hold EYPI-Nevada common
stock, and will hold EYPI-Bermuda common shares, as capital assets. This
discussion does not address the tax treatment of the reorganization or of the
ownership and disposition of the EYPI-Bermuda common shares under applicable
state or local tax laws or the laws of any jurisdiction other than the United
States.
In addition, this summary does not address federal alternative minimum tax
consequences and does not address all aspects of U.S. federal income taxation
that may be applicable to holders in light of their particular circumstances, or
to holders, including the following, subject to special treatment under U.S.
federal income tax law:
o securities dealers, financial institutions, mutual funds,
insurance companies, or tax-exempt organizations;
o holders who are holding shares as part of a hedging or larger
integrated financial or conversion transaction;
o holders whose functional currency is a currency other than the
U.S. dollar; and
o holders who are holding shares pursuant to selected retirement
plans, pursuant to the exercise of employee stock options or
otherwise as compensation.
This discussion is based on current provisions of the U.S. Internal Revenue Code
(the "Code"), current and proposed U.S. Treasury regulations, and administrative
and judicial interpretations of the Code and the regulations as of the date of
this proxy statement/prospectus, all of which are subject to change or
reinterpretation by the Treasury or courts, possibly on a retroactive basis.
Holders of Endless Youth Products, Inc. should note that no rulings have been or
are expected to be sought from the IRS with respect to any of the U.S. federal
income tax consequences of the reorganization.
"U.S. holder" means a beneficial owner of EYPI-Nevada common stock or
EYPI-Bermuda common shares that is:
o a citizen or resident of the United States,
o a corporation or partnership created or organized in or under
the laws of the United States or any State thereof, unless, in
the case of a partnership, future Treasury regulations
presently authorized under the Internal Revenue Code otherwise
provide,
o an estate, the income of which is subject to U.S. federal
income tax regardless of its source, or
o a trust, if a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust.
All holders of EYPI-Nevada common stock and EYPI-Bermuda common shares are
advised to consult their own tax advisers with respect to their particular
circumstances and with respect to the effects of U.S. federal, state, local or
other laws to which they may be subject.
Taxation of Endless Youth Products, Inc.
The Reorganization
Under current U.S. federal income tax law, no income, capital gains or
withholding tax will be payable by EYPI-Bermuda, EYPI-Nevada or their respective
direct or indirect subsidiaries as a consequence of the reorganization. However,
if EYPI-Nevada's investment portfolio appreciates significantly prior to being
distributed to EYPI-Bermuda, EYPI-Nevada may be subject to U.S. withholding tax
on a portion of the distribution.
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<PAGE>
After the Reorganization
After the reorganization, EYPI-Bermuda will be subject to U.S. federal income
tax only to the extent that it derives U.S. source income that is subject to
U.S. withholding tax or income that is effectively connected with the conduct of
a trade or business within the United States and is not exempt from U.S. tax
under an applicable U.S. income tax treaty. EYPI-Bermuda's U.S. subsidiaries
will continue to be subject to U.S. tax on their worldwide income.
EYPI-Bermuda may be subject to selected withholding taxes on dividends, interest
or other distributions it receives from its U.S. subsidiaries or investments of
up to 30%, depending upon the jurisdiction of the entity that holds the
investments and the terms of any applicable income tax treaty.
Taxation of Endless Youth Products, Inc. Shareholders
The Reorganization
It is likely that the reorganization will constitute a "reorganization" within
the meaning of Section 368(a) of the Code. If the reorganization is so treated,
U.S. holders will recognize gain, if any (but not loss), on the conversion of
their EYPI-Nevada common stock into EYPI-Bermuda common shares pursuant to
Section 367(a) of the Code and U.S. Treasury regulations. In general, for U.S.
federal income tax purposes, a U.S. holder will recognize gain, if any, equal to
the excess of the fair market value of its EYPI-Bermuda common shares as of the
date of the reorganization over the U.S. holder's adjusted basis in the
EYPI-Nevada common stock converted pursuant to the reorganization. Any such gain
will be capital gain and will be long-term if, as of the date of the
reorganization, the shares of EYPI-Nevada common stock were held for more than
one year. A U.S. holder that recognizes gain on the conversion of its
EYPI-Nevada common stock for EYPI-Bermuda common shares will have a basis in its
EYPI-Bermuda common shares equal to their fair market value on the date of the
reorganization, and the holding period of the EYPI-Bermuda common shares will
commence on the day after the date of the reorganization. A U.S. holder that
does not recognize gain on the conversion will not be required to pay any taxes
in connection with the reorganization. There will be no recognition of loss as a
result of the reorganization. A U.S. holder that does not recognize a gain will
have a basis in its EYPI-Bermuda common shares equal to the basis it had in the
EYPI-Nevada common stock, and the holding period of its EYPI-Bermuda common
shares will include the period the U.S. holder held its EYPI-Nevada common
stock. If a U.S. holder owns blocks of EYPI-Nevada common stock that have
different tax bases or holding periods, each block will be subject separately to
the tax treatment described in this paragraph (for example, a loss on one block,
not recognized under the rules described above, cannot be used to offset a
recognized gain of the same U.S. holder on another block).
Pursuant to Section 6038B of the Code, a U.S. holder that realizes loss on the
reorganization or that does not properly report taxable gain from the
reorganization on its timely filed federal income tax return for the year that
includes the reorganization is required to file an information return on IRS
Form 926 reporting the reorganization along with specific additional information
that is required to be attached to the form. Form 926 and its required
attachments must be filed with the holder's U.S. federal income tax return for
the taxable year that includes the reorganization. The information that must be
included with Form 926 is described in applicable regulations. We will provide
that information to its U.S. holders to enable each U.S. holder to file its Form
926 on a timely basis. A U.S. holder's failure to provide the information
required by Section 6038B of the Code may result in, among other things, the
holder becoming subject to a penalty equal to 10% of the fair market value of
the U.S. holder's EYPI-Nevada common stock exchanged in the reorganization. The
amount of any such penalty is limited to $100,000, unless the failure to provide
the required information is due to intentional disregard of the rules. The
penalty will not apply if the failure to provide the required information is due
to reasonable cause and not to willful neglect.
After the Reorganization
Taxation of Dividends
Dividends paid by EYPI-Bermuda will not qualify for the dividends received
deduction otherwise generally available to corporate shareholders.
Passive Foreign Investment Company Rules
A foreign corporation will constitute a "passive foreign investment company"
with respect to a taxable year if 75% or more of its gross income for that
taxable year consists of passive income, or 50% or more of its average assets,
measured by value held during that taxable year consists of passive assets. For
purposes of this test, the foreign corporation's stock ownership in 25% or more
(by value) owned companies is ignored and a proportionate share of the investee
company's assets and income is treated as assets and income of the foreign
corporation. A U.S. holder treated as owning PFIC stock is subject to special
rules that are generally intended to reduce or eliminate any benefits from the
deferral of U.S. federal income tax that the holder could derive from investing
in a foreign investment company that does not distribute all of its earnings on
a current basis. If EYPI-Bermuda is a PFIC, then unless the U.S. holder makes
either a "qualified electing fund" election ("QEF election") or a
"mark-to-market" election, the U.S. holder generally will be subject to tax upon
the disposition of appreciated EYPI-Bermuda shares or upon certain distributions
as if the gain or distribution were ordinary income earned ratably and subject
to tax at the highest rate applicable to the U.S. holder over the period during
which the EYPI-Bermuda common shares were held, including any periods in which
EYPI-Bermuda ceased to be a PFIC, and will be subject to an interest charge on
the deferred tax. Under an exception
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<PAGE>
for start-up companies, EYPI-Bermuda should not be a PFIC for its first taxable
year if it is not a PFIC in its second and third years.
The QEF election is made on a shareholder by shareholder basis. Each U.S. holder
makes the QEF election by attaching to its timely-filed (including extensions)
federal income tax return for the tax year to which the election relates a
completed IRS Form 8621. Form 8621 must also be completed each year following
the year of election. Once made, the QEF election may be revoked only with IRS
consent. Pursuant to the QEF election, for any year in which EYPI-Bermuda is a
PFIC, each U.S. holder would include in taxable income a pro rata share of
EYPI-Bermuda's net ordinary income and net capital gain (but not losses) in a
manner similar to being a partner in a partnership. For any year in which
EYPI-Bermuda is not a PFIC, the QEF election would result in no income tax
consequences. Should EYPI-Bermuda determine that it is a PFIC in any taxable
year, it intends to provide U.S. holders with all information for such holders
to make a timely QEF election for that taxable year. Subject to the availability
of funds and other relevant circumstances existing at the time, EYPI-Bermuda
intends to make cash distributions sufficient to cover the U.S. federal income
taxes attributable to the QEF election and payable by an individual shareholder.
U.S. persons that hold warrants or options, however, will not be able to avoid
adverse consequences in the same manner as shareholders if EYPI-Bermuda is a
PFIC because the QEF election is not available for warrants or options. However,
such persons may be able to make a so-called "purge" election to treat the
warrants or options as having been sold for their fair market value on the last
day of the last taxable year for which EYPI-Bermuda is a PFIC. Thereafter, the
warrants or options will not be subject to PFIC taint. U.S. holders should
consult their own tax advisors to determine their ability to make the purge
election and the consequences resulting therefrom. The "purge" election is also
available to U.S. holders of shares of EYPI-Bermuda.
The mark-to-market election is also made on a shareholder by shareholder basis.
If this election is made, the electing U.S. holder will not be subject to the
PFIC rules described above. Instead, the U.S. holder generally will include in
each year as ordinary income the excess, if any, of the fair market value of the
common shares at the end of the taxable year over the U.S. holder's adjusted
basis in the shares, and will be permitted an ordinary loss in respect of the
excess, if any, of the U.S. holder's adjusted basis in the common shares over
their fair market value at the end of the taxable year (but only to the extent
of the net amount previously included in income as a result of the
mark-to-market election). holder electing to mark shares to market increases its
basis in the shares by the amount included in income under the mark-to-market
rule and decreases its basis by the amount of deductions allowed under the
mark-to-market rule. The market-to-market election will be available to U.S.
holders as long as the shares of EYPI-Bermuda are traded on the Nasdaq National
Market or other national securities exchange.
Controlled Foreign Corporation Rules
Special U.S. federal income tax rules apply to certain holders in a foreign
corporation classified as a "controlled foreign corporation" or "CFC." A foreign
corporation will not constitute a CFC unless U.S. shareholders owning 10% or
more of its voting power ("10% Voting U.S. Shareholders") collectively own more
than 50% (more than 25% in the case of an insurance company) of the total
combined voting power or total value of the corporation's stock. Any U.S. person
owning, directly or indirectly through foreign persons, or is considered to own
(by application of certain constructive ownership rules) 10% or more of the
total combined voting power of all classes of stock of a foreign corporation
will be considered to be a 10% Voting U.S. Shareholder. Based on the company's
current ownership and the bye-law provisions limiting voting rights as set forth
in "Description of Authorized Shares of EYPI-Bermuda -- Voting Limitation," the
company believes that EYPI-Bermuda should not be a CFC.
Foreign Personal Holding Company and Personal Holding Company Rules
Special U.S. federal income tax rules apply to a holder in a "foreign personal
holding company" (or "FPHC") and to the U.S. source income of a foreign
corporation that is a "personal holding company" (or "PHC"). A foreign
corporation will not constitute a FPHC unless five or fewer individuals who are
U.S. citizens or residents own more than 50% of the voting power or the value of
its shares. A corporation will not constitute a PHC unless five or fewer
individuals own more than 50% of the value of its shares. Based upon the
company's current ownership, the company believes EYPI-Bermuda will not be a
FPHC or PHC.
Foreign Investment Company Rules
Special rules also characterize as ordinary income any gain realized on the sale
of shares of a "foreign investment company." The company believes EYPI-Bermuda
will conduct its business and obtain controlling interests in subsidiaries so as
not to be a FIC.
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U.S. Backup Withholding Tax and Information Reporting
Generally, 31% "backup" withholding tax and information reporting requirements
will apply to dividends paid on EYPI-Bermuda common shares to a non-corporate
U.S. holder, if that holder fails to provide a correct taxpayer identification
number and other information or fails to comply with certain other requirements.
The proceeds from the sale of EYPI-Bermuda common shares by a U.S. holder will
be subject to U.S. backup withholding tax and information reporting, unless the
holder has provided the required certification or has otherwise established an
exemption.
A U.S. holder can establish an exemption from the imposition of backup
withholding tax by providing a duly completed IRS Form W-9 to the holder's
broker or paying agent, reporting the holder's taxpayer identification number,
which for an individual will be his or her social security number, or by
otherwise establishing its corporate or exempt status.
Any amounts withheld under the backup withholding tax rules from a payment to a
holder will be allowed as a refund or a credit against that holder's U.S.
federal income tax, provided that the required information is furnished to the
IRS.
Bermuda Tax Consequences
In the opinion of M.L.H. Quin & Co., special Bermuda tax counsel to the company,
the following discussion sets forth the material Bermuda tax consequences to
U.S. holders of the reorganization and the ownership and disposition of
EYPI-Bermuda common shares.
At the present time, there is no Bermuda income or profits tax, withholding tax,
capital gains tax, capital transfer tax, estate duty or inheritance tax payable
by a Bermuda exempted company or its shareholders, other than shareholders
ordinarily resident in Bermuda.
EYPI-Bermuda will apply for and expects to obtain a written assurance from the
Minister of Finance under the Exempted Undertakings Tax Protection Act 1966
that, in the event that any legislation is enacted in Bermuda imposing any tax
computed on profits or income, or computed on gain or appreciation on any
capital asset, or any tax in the nature of estate duty or inheritance tax, that
tax shall not be applicable until March 28, 2016 to EYPI-Bermuda or to any of
its operations or to the shares or its other obligations except insofar as the
tax applies to persons ordinarily resident in Bermuda and holding those shares
or its other obligations or any land leased or let to it. Therefore, there will
be no Bermuda tax consequences, including any taxes imposed by way of
withholding, with respect to the sale or exchange of the EYPI-Bermuda common
shares or with respect to distributions in respect of the EYPI-Bermuda common
shares. As an exempted company, EYPI-Bermuda will be liable to pay in Bermuda an
annual government fee based upon its authorized share capital and the premium on
its issued shares.
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BERMUDA REGULATORY MATTERS
EYPI-Bermuda has been designated as a non-resident for exchange control purposes
by the Bermuda Monetary Authority whose permission for the issue of EYPI-Bermuda
shares up to the amount of its authorized capital from time to time has been
obtained.
In granting such permission, the Bermuda Monetary Authority accepts no
responsibility for the financial soundness of any schemes or for the correctness
of any of the statements made or opinions expressed with regard to them.
The transfer of EYPI-Bermuda shares between persons regarded as non-resident in
Bermuda for exchange control purposes and the issue of shares after the
completion of the reorganization to such persons may be effected without
specific consent under the Exchange Control Act of 1972 and regulations
thereunder. Issues and transfers of shares to any person regarded as resident in
Bermuda for exchange control purposes require specific prior approval under the
Exchange Control Act of 1972.
There are no limitations on the rights of persons regarded as non-resident of
Bermuda for exchange control purposes owning EYPI-Bermuda common shares to hold
or vote their EYPI-Bermuda common shares, subject to the provisions of
EYPI-Bermuda's bye-laws. Because EYPI-Bermuda has been designated as a
non-resident for Bermuda exchange control purposes, there are no restrictions on
its ability to transfer funds in and out of Bermuda or to pay dividends to U.S.
residents who are holders of EYPI-Bermuda common shares, other than in respect
of local Bermuda currency.
In accordance with Bermuda law, shares certificates are issued only in the names
of corporations or individuals. In the case of an applicant acting in a special
capacity (for example, as an executor or trustee), certificates may, at the
request of the applicant, record the capacity in which the applicant is acting.
Notwithstanding the recording of any such special capacity, EYPI-Bermuda is not
bound to investigate or incur any responsibility in respect of the proper
administration of any such estate or trust.
EYPI-Bermuda will take no notice of any trust applicable to any of its common
shares whether or not it had notice of such trust.
As an "exempted company," EYPI-Bermuda is exempt from Bermuda laws restricting
the percentage of share capital that may be held by non-Bermudans, but as an
exempted company EYPI-Bermuda may not participate in certain business
transactions, including:
o the acquisition or holding of land in Bermuda (except that
required for its business and held by way of lease or tenancy
for terms of not more than 50 years) without the express
authorization of the Bermuda legislature;
o the taking of mortgages on land in Bermuda to secure an amount
in excess of $50,000 without the consent of the Minister of
Finance of Bermuda;
o the acquisition of securities created or issued by, or any
interest in, any local company or business, other than certain
types of Bermuda government securities or securities of
another "exempted" company, partnership or other corporation
resident in Bermuda but incorporated abroad; or
o the carrying on of business of any kind in Bermuda, except in
furtherance of the business of EYPI-Bermuda carried on outside
Bermuda or under a license granted by the Minister of Finance
of Bermuda.
The Bermuda government actively encourages foreign investment in "exempted"
entities like EYPI-Bermuda that are based in Bermuda but do not operate in
competition with local business. In addition to having no restrictions on the
degree of foreign ownership, EYPI-Bermuda is subject neither to taxes on its
income or dividends nor to any foreign exchange controls in Bermuda. In
addition, there is no capital gains tax in Bermuda, and profits can be
accumulated by EYPI-Bermuda, as required without limitation.
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ELECTION OF DIRECTORS
The board of directors of EYPI-Nevada is currently comprised of three members.
The bye-laws of EYPI-Bermuda provides for the board to be comprised of three
members, divided into three classes serving staggered three-year terms. The
board of directors intends to present for action at the annual meeting the
re-election of David Caney, Edward Shah and Jacqueline Antin, as Class I, II and
III Directors, respectively. Mr. Caney, Mr. Shah and Mrs. Antin will serve as
Directors for a period of three, two and one year, respectively, or until their
successors are duly elected and qualified.
Unless authority to vote for these nominees is withheld, the enclosed proxy will
be voted for these nominees, except that the persons designated as proxies
reserve discretion to cast their votes for other persons in the unanticipated
event that any of these nominees is unable or declines to serve.
Nominees
Set forth below is information regarding the nominees for election:
Name Age Position
Edward Shah............. 32 Chairman and Class II Director
David B. Caney.......... 46 President, Chief Executive Officer and Class
I Director
Jacqueline Antin........ 53 Chief Financial Officer, Secretary and Class
III Director
Edward Shah assumed the role of President, Treasurer, Secretary and sole
director following the resignation of Neal Wallach, the company's founder, on
June 1, 2000. Mr. Shan, a citizen of the United Kingdom, has, since 1985, been
principally engaged as an accountant throughout Europe and the Middle East with
Shah and Associates. Mr. Shah attended Bilborough College, Trinity, and London
School of Economics. Mr. Shah will serve as a Class II director until the second
annual meeting of stockholders following the meeting described in this proxy
statement and until his successor is elected at the next annual meeting of
shareholders.
David B. Caney was appointed as a director, President and Chief Executive
Officer on November 2, 2000 by Mr. Shah, who was the sole director. Mr. Caney's
experience includes a long history of management of international trade and
shipping companies including Humatech Ltd. for which he has served as a major
director since 1998. Humatech Ltd. is the European distributor for Humatech,
Inc., a U.S. based distributor of organic based fee and agricultural products.
From 1992 to 1997, he served as a managing director or Crusader Navigation Ltd.
(Tunbridge Wells), a British, American and Italian owned operator and manager of
commercial ships ranging from 35,000 to 150,000 tons operating in the United
Kingdom, the United States, Western Europe, Australia, Asia, the Middle East and
South Africa. In such a capacity, he was estimating and budgeting, contract
negotiation, customer relations, marketing, development strategy, chartering,
administration and day-to-day management. The company carried an average of
about 4 million tons of cargo per annum (the lowest being 1997 at 1.3 million
and highest being just over 8 million in 1993/4) mostly under long-term
contract, on vessels under long term charter. At the peak in 1993/4/5 the
company had between 16 and 20 ships in their fleet. Mr. Caney left the
partnership in 1997. Prior to joining Crusader Navigation Ltd. in 1992, Mr.
Caney co-founded and organized NS Lemos & Co. (London) in 1983, a ship owner at
which he was responsible for the company's entry into the market, the purchase
and sale of ships and all aspects of ship chartering and fleet marketing, cost
estimation and future business development. Concurrent from 1989 to 1992 he also
served as director of The Baltic Exchange (London), an international shipping
exchange and future market where he served as a member of the finance committee.
Mr. Caney will serve as a Class I Director until the third annual meeting of
shareholders following the meeting described in this proxy statement and until
his successor is elected and qualified.
Jacqueline Antin was appointed as a director, Chief Financial Officer and
Secretary on November 2, 2000 by Mr. Shah who was the sole director. Mrs. Antin
served as a bank officer for NatWest Bank PLC from 1977 to 2000, her most recent
title being Senior Manager. At NatWest Bank PLC Mrs. Antin operated in various
capacities including lending, securities settlement, investment, mortgages and
account management. She offers the company extensive financial and banking
experience secured during a career of more than 30 years. Mrs. Antin will serve
as a Class III director until the annual meeting next following the meeting
described in this proxy statement and until her successor is elected and
qualified.
The board of directors recommends that you vote "FOR" the election of all
nominees to the board of directors.
Board of Directors' Meetings and Committees
During the fiscal year ended June 30, 2000, the company had only one director,
who took corporate action by written consent.
The board of directors adopted a formal audit committee charter in November
2000. A copy of such charter is annexed hereto as Annex E. As originally
constituted, the sole member of the audit committee is Mr. Shah, who is
independent. The committee will consist of two or more members, each of whom
will be independent, as additional independent board members are appointed. The
primary purposes of the audit committee will be (i) to review the scope of the
audit to be performed; (ii) to meet with the company's independent certified
public accountants to review the results of the audit; (iii) to review with the
company's independent certified public accountants the company's internal
auditing proceedings and controls; (iv) to make
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<PAGE>
recommendations regarding the selection of the company's independent certified
public accountants; and (v) to review the company's quarterly financial
statements prior to public issuance. In the absence of a compensation, stock
option or special committee comprised of a majority of independent directors,
the audit committee will review any transaction of the company in which a
director or officer has a material interest.
The board of directors expects to organize a compensation and such other special
committees as necessary to properly conduct the company's business.
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid to our
executive officers for services rendered during fiscal years 1998, 1999 and
2000.
<TABLE>
<CAPTION>
Summary Compensation Table
ANNUAL COMPENSATION ALL OTHER
NAME AND PRINCIPAL AWARDS OF COMMON UNDERLYING
POSITION YEAR SALARY (2) BONUSES STOCK OPTIONS COMPENSATION(2)
-------- ---- ---------- ------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Neal K. Wallach,
Chairman and Chief
Executive Officer (1) 1998 $ 96,000 -0- 200,000(3) $11,500
1999 $120,000 -0- 200,000(3) $17,500
2000 $125,000 -0- -0- $18,139
Edward Shah,
Chairman and Chief
Executive Officer (4) 2000 $ -0- -0- -0- $ -0-
---------
</TABLE>
(1) Resigned June 1, 2000.
(2) Includes stock received in lieu of salary.
(3) Represents car allowance and medical insurance premiums paid by the
company.
(4) Assumed office June 1, 2000.
No other annual compensation, stock appreciation rights, long-term
restricted stock awards, or long-term incentive plan payouts were awarded to,
earned by or paid to the named executive officers during any of the company's
last three fiscal years.
Employment Contract
In July 1996 the company entered into an employment agreement with Neal
K. Wallach which was terminated on June 1, 2000.
1996 Stock Option Plan
In July 1996 the company adopted the 1996 Stock Option Plan to provide
for the grant of incentive and non-qualified stock options to selected
employees, officers and directors. The Plan was amended as of June 2, 1999 to
increase the number of shares available thereunder. The Plan currently allows
for the issuance of options to purchase up to 1,250,000 shares of common stock.
The vesting schedule of the Plan allows for the exercise of a portion of the
options granted beginning after one year with full exercisability of all options
granted not more then ten years after the date of grant. As of June 30, 2000,
options to purchase 240,000 shares of common stock had been exercised, and
options to purchase 470,000 shares of common stock were outstanding at an
average exercise price of $1.11 per share. As of June 30, 2000, 940,000 shares
of common stock were available for future grants under the Plan.
Option Grants and Exercises
During the year ended June 30, 2000, there were no options granted or
exercised under the 1996 Stock Option Plan.
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Director Compensation
Directors are not paid any cash compensation for serving on the board.
Directors who are not officers or employees of the company are eligible to
receive grants of non-qualified options under the company's 1996 Stock Option
Plan. No such grants were made during the fiscal year ended June 30, 2000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information with respect to the outstanding shares of the
company's common stock beneficially owned by (i) each director of the company,
(ii) the chief executive officer, (iii) all beneficial owners of more than five
percent of common stock known to the company and (iv) the directors and
executive officers as a group, is furnished as of November 17, 2000, except as
otherwise indicated.
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS (1)
The Sababerg Foundation 1,041,270 32%
c/o Joel Schonfeld
Schonfeld & Weinstein LLP
63 Wall Street, Suite 180
New York, NY 10005
Edward Shah -0- --
Endless Youth Products, Inc.
Stamford Financial Building
Stamford, NY 12167
All Officers and Directors
as a Group (one person) -0- --
------------
(1) Unless otherwise indicated below, each director, executive officer and
five percent shareholder has sole voting and investment power with
respect to all shares beneficially owned.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 30, 1996, Neal K. Wallach entered into a license agreement with the
company pursuant to which he licensed to the company the rights to the
trademarks "Endless Youth," "Power Certified," "Anti-Aging Formulations" and
"Life is SupHerb." The license was terminated in June 2000. Mr. Wallach receives
a royalty equal to three percent of the company's gross sales, with a guaranteed
annual minimum of $50,000. Mr. Wallach is also entitled to receive 40 percent of
the gross revenues of any sublicense by the company. During the fiscal year
ended June 30, 2000 Mr. Wallach received $365,772 on account of the license of
which $29,000 was a license fee earned in April 1999 which was unpaid at June
30, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than 10% of our common stock, to
file with the SEC initial reports of beneficial ownership and reports of changes
in beneficial ownership of our common stock. Such persons are also required by
SEC regulation to furnish us with copies of all Section 16(a) reports they file.
To our knowledge, based solely on a review of the copies of such reports
furnished to us and representations that no other reports were required, we
believe that all persons subject to the reporting requirements of Section 16(a)
filed the required reports on a timely basis during the year ended June 30,
2000.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The board of directors proposes and recommends that the stockholders ratify the
selection of the firm of Beckman Kirkland & Whitney to serve as independent
accountants of the company for the year ending June 30, 2001. Beckman Kirkland &
Whitney served as the company's independent accountants from the company's
inception to the present. Unless otherwise directed by the stockholders, proxies
will be voted for approval of the selection of Beckman Kirkland & Whitney to
audit the company's consolidated financial statements for fiscal year 2001.
The board of directors recommends that you vote "FOR" the ratification of the
selection of Beckman Kirkland & Whitney as the company's independent accountants
for fiscal year 2001.
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<PAGE>
LEGAL MATTERS
M.L.H. Quin & Co., Bermuda, as Bermuda counsel, has passed upon certain legal
matters in connection with EYPI-Bermuda common shares. M.L.H. Quin & Co. has
also rendered an opinion regarding Bermuda tax consequences of the
reorganization referred to in "Material Tax Considerations." Sommer & Schneider
LLP, Garden City, New York, has rendered an opinion regarding the United States
federal income tax consequences of the reorganization referred to in "Material
Tax Considerations."
EXPERTS
Our consolidated financial statements as of June 30, 2000 and 1999 and for each
of the two years in the period ended June 30, 2000 included in our annual report
on Form 10-KSB for the year ended June 30, 2000, incorporated by reference
herein, have been audited by Beckman Kirkland & Whitney, independent
accountants, as stated in their report appearing in such annual report.
WHERE YOU CAN FIND MORE INFORMATION
As required by law, we file reports, proxy statements and other information with
the SEC (SEC file number: 000-26611). These reports, proxy statements and other
information contain additional information about us. You can inspect and copy
these materials at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. You can obtain information about the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet website that contains reports, proxy and information statements and
other information regarding companies that file electronically with the SEC. The
SEC's Internet address is http://www.sec.gov.
The SEC allows us to "incorporate by reference" information into this proxy
statement/prospectus, which means that we can disclose important information by
referring you to another document filed separately with the SEC. Information
incorporated by reference is considered part of this proxy statement/prospectus,
except to the extent that the information is superseded by information in this
proxy statement/prospectus. This proxy statement/prospectus incorporates by
reference the following:
o annual report on Form 10-KSB and Form 10-KSB/A for the year
ended June 30, 2000;
o quarterly reports on Form 10-QSB for the quarter ended
September 30, 2000.
We also incorporate by reference the information contained in all other
documents that we file with the SEC after the date of this proxy
statement/prospectus and before the annual meeting. The information contained in
any of these documents will be considered part of this proxy
statement/prospectus from the date these documents are filed.
Any statement contained in this proxy statement/prospectus or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this proxy statement/prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this proxy statement/prospectus.
If you are one of our stockholders and would like to receive a copy of any
document incorporated by reference into this proxy statement/prospectus (which
will not include any of the exhibits to the document other than those exhibits
that are themselves specifically incorporated by reference into this proxy
statement/prospectus), you should call or write to Endless Youth Products, Inc.,
Stamford Financial Building, Stamford, New York 12167, Attention: Secretary
(telephone (607) 652-3311). We will provide these documents to our stockholders,
without charge, by first class mail within one business day of the day we
receive a request.
No dealer, salesman or other person has been authorized to give any information
or to make any representation not contained or incorporated by reference in this
proxy statement/prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized. This proxy
statement/prospectus does not constitute an offer to sell or a solicitation of
any offer to buy any of the securities offered hereby in any jurisdiction in
which it is unlawful to make such an offer or solicitation. EYPI-Bermuda is
prohibited from making any invitation to the public in Bermuda to subscribe for
any of its shares.
Neither delivery of this proxy statement/prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in our affairs since the date of this proxy statement/prospectus.
You should rely only on the information contained in (or incorporated by
reference into) this proxy statement/prospectus. We have not authorized anyone
to give any information different from the information contained in (or
incorporated by reference into) this proxy statement/prospectus. This proxy
statement/prospectus is dated ___________ , 2000. You should not assume that the
information contained in this proxy statement/prospectus is accurate as of any
later date, and the mailing of this proxy statement/prospectus to stockholders
shall not mean otherwise.
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<PAGE>
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
In accordance with the rules established by the SEC, shareholder proposals to be
included in the company's proxy statement with respect to the 2001 annual
meeting of shareholders must be received by the company at its executive offices
no later than ___________________, 2000.
In connection with the company's 2001 annual meeting of shareholders, if the
proponent fails to notify the company of such a proposal on or before August 2,
2001, then management proxies would be allowed to use their discretionary voting
authority when such proposal is raised at the 2001 annual meeting. In addition,
the company's bye-laws provide that any shareholder desiring to nominate a
director at an annual meeting must provide written notice of such nomination to
the secretary of the company at least 55 days prior to the date of the meeting
at which such nomination is proposed to be voted upon (or, if less than 50 days'
notice of an annual meeting is given, stockholder proposals and nominations must
be delivered no later than the close of business of the seventh day following
the day notice was mailed). Notices of shareholder nominations must set forth
certain information with respect to each nominee who is not an incumbent
director.
By Order of the Board of Directors,
Jacqueline Antin, Secretary
35
<PAGE>
Annex A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of __________________, 2000 among Endless
Youth Products, Inc., a Nevada corporation ("EYPI-Nevada"), Endless Youth
Products, Ltd.., a Bermuda company ("EYPI-Bermuda") and wholly owned by EYPI
Purpose Trust, a purpose trust established under the laws of Bermuda ("EYPI
Trust"), and EYPI Merger Corp., a Nevada corporation ("Sub") and a newly formed,
indirect wholly-owned subsidiary of EYPI-Bermuda.
WHEREAS, the respective Boards of Directors of EYPI-Nevada, EYPI-Bermuda and Sub
deem it advisable and in the best interests of their respective stockholders to
reorganize (the "Reorganization") so that EYPI-Bermuda becomes the parent
holding company for EYPI-Nevada;
WHEREAS, the respective Boards of Directors of EYPI-Nevada, Sub and EYPI-Bermuda
have approved the merger of Sub with and into EYPI-Nevada (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement, whereby
each outstanding share of common stock, par value $.001 per share ("EYPI-Nevada
Common Stock"), of EYPI-Nevada (other than those shares held by EYPI-Nevada or
any direct or indirect wholly-owned subsidiary of EYPI-Nevada), will be
automatically converted into one common share, par value U.S. $0.005 per share
("EYPI-Bermuda Common Share"), of EYPI-Bermuda and each outstanding share of
common stock, par value $.001 per share ("Sub Common Stock"), of Sub, will be
automatically converted into one share of EYPI-Nevada Common Stock;
WHEREAS, EYPI-Bermuda has, as sole stockholder of Sub, approved the Merger and
EYPI Trust has, as sole stockholder of EYPI-Bermuda, approved the Merger; and
WHEREAS, the Merger requires the approval of the holders of a majority of the
outstanding shares of EYPI-Nevada Common Stock entitled to vote thereon at the
meeting of holders of EYPI-Nevada Common Stock to be called therefor (the
"EYPI-Nevada Stockholder Approval");
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
MERGER
1.1 MERGER
Upon the terms and subject to the conditions set forth in this Agreement, and in
accordance with chapter 92A of the Nevada Revised Statutes (the "NRS"), Sub
shall be merged with and into EYPI-Nevada at the Effective Time of the Merger
(as defined in Section 1.2). Following the Effective Time of the Merger, the
separate corporate existence of Sub shall cease and EYPI-Nevada shall continue
as the surviving corporation (the "Surviving Corporation") and shall succeed to
and assume all the rights and obligations of Sub in accordance with the NRS.
1.2 EFFECTIVE TIME
Subject to the provisions of this Agreement, as soon as practicable following
the satisfaction or waiver of the conditions set forth in Section 5.1, the
parties shall file a certificate of merger or other appropriate documents (in
any case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the NRS and shall make all other filings or recordings required
under the NRS. The Merger shall become effective at the close of business on the
date that an appropriate Certificate of Merger is duly filed with the Secretary
of State of the State of Nevada, or at such later time as Sub and EYPI-Nevada
shall
A-1
<PAGE>
agree should be specified in the Certificate of Merger (the time the Merger
becomes effective being hereinafter referred to as the "Effective Time of the
Merger").
1.3 EFFECTS OF THE MERGER
The Merger shall have the effects set forth in Section 92A.250 of the NRS.
ARTICLE II
NAME, CERTIFICATE OF INCORPORATION, BY-LAWS, DIRECTORS
AND OFFICERS OF THE SURVIVING CORPORATION
2.1 NAME OF SURVIVING CORPORATION
The name of the surviving corporation shall be "EYPI (U.S.) Inc."
2.2 ARTICLES OF INCORPORATION
The Articles of Incorporation of EYPI-Nevada (the "EYPI Charter"), as in effect
immediately prior to the Effective Time of the Merger, shall, from and after the
Effective Time of the Merger, be the certificate of incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law.
2.3 BY-LAWS
The by-laws of EYPI-Nevada (the "EYPI By-laws") as in effect immediately prior
to the Effective Time of the Merger shall, from and after the Effective Time of
the Merger, be the by-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
2.4 DIRECTORS
The directors of EYPI-Nevada immediately prior to the Effective Time of the
Merger shall be the directors of the Surviving Corporation, until the earlier of
their death, resignation or removal in accordance with the EYPI Charter and the
EYPI By-laws, or as otherwise provided by applicable law.
2.5 OFFICERS
The officers of EYPI-Nevada immediately prior to the Effective Time of the
Merger shall be the officers of the Surviving Corporation, until the earlier of
their death, resignation or removal in accordance with the EYPI Charter and the
EYPI By-laws, or as otherwise provided by applicable law.
A-2
<PAGE>
ARTICLE III
CONVERSION AND EXCHANGE OF STOCK
3.1 CONVERSION
At the Effective Time of the Merger, by virtue of the Merger and without any
action on the part of the holder of any shares:
(a) Sub Common Stock. Each issued and outstanding share of Sub
Common Stock shall be converted into and become one fully paid
and non-assessable share of EYPI-Nevada Common Stock.
(b) Cancellation of EYPI Trust and EYPI-Nevada-Owned Stock. Each
outstanding EYPI-Bermuda Common Share that is owned by EYPI
Trust prior to the Effective Time of the Merger shall
immediately after the Effective Time of the Merger be
repurchased by EYPI-Bermuda for $1.00 per share, or $12,000 in
the aggregate, and shall upon such repurchase be canceled and
retired and shall cease to exist. Each outstanding share of
EYPI-Nevada Common Stock that is owned by EYPI-Nevada or by
any direct or indirect wholly-owned subsidiary of EYPI-Nevada
prior to the Effective Time of the Merger shall automatically
be canceled and retired and shall cease to exist, and no
EYPI-Bermuda Common Shares or other consideration shall be
delivered or deliverable in exchange for such shares of
EYPI-Nevada Common Stock.
(c) Conversion of EYPI-Nevada Common Stock. Each issued and
outstanding share of EYPI-Nevada Common Stock (other than
shares to be canceled in accordance with Section 3.1(b)) shall
be automatically converted into and shall become one validly
issued, fully paid and non-assessable EYPI-Bermuda Common
Share.
3.2 EXCHANGE OF STOCK
(a) Exchange Procedures. Following the Effective Time of the
Merger, each holder of an outstanding certificate or
certificates theretofore representing shares of EYPI-Nevada
Common Stock may, but shall not be required to, surrender the
same to EYPI-Bermuda for cancellation or transfer, and each
such holder or transferee will be entitled to receive
certificates representing the same number of EYPI-Bermuda
Common Shares as the shares of EYPI-Nevada Common Stock
previously represented by the stock certificates surrendered.
If any certificate representing EYPI-Bermuda Common Shares is
to be issued in a name other than that in which the
certificate theretofore representing EYPI-Nevada Common Stock
surrendered is registered, it shall be a condition to such
issuance that the certificate surrendered shall be properly
endorsed and otherwise in proper form for transfer and that
the person requesting such issuance shall either: (i) pay
EYPI-Bermuda or its agents any taxes or other governmental
charges required by reason of the issuance of certificates
representing EYPI-Bermuda Common Shares in a name other than
that of the registered holder of the certificate so
surrendered; or (ii) establish to the satisfaction of
EYPI-Bermuda or its agents that such taxes or governmental
charges have been paid. Until so surrendered or presented for
transfer each outstanding certificate which, prior to the
Effective Time of the Merger, represented EYPI-Nevada Common
Stock shall be deemed and treated for all corporate purposes
to represent the ownership of the same number of EYPI-Bermuda
Common Shares as though such surrender or transfer and
exchange had taken place.
A-3
<PAGE>
(b) No Further Ownership Rights in EYPI-Nevada Common Stock. All
EYPI-Bermuda Common Shares issued upon the surrender for
exchange of certificates in accordance with the terms of this
Article III shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to the shares of
EYPI-Nevada Common Stock theretofore represented by such
certificates, subject, however, to the Surviving Corporation's
obligation (if any) to pay any dividends or make any other
distributions with a record date prior to the Effective Time
of the Merger which may have been declared or made by
EYPI-Nevada on such shares of EYPI-Nevada Common Stock in
accordance with the terms of this Agreement or prior to the
date of this Agreement and which remain unpaid at the
Effective Time of the Merger, and there shall be no further
registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of EYPI-Nevada Common
Stock which were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of
the Merger, certificates are presented to the Surviving
Corporation they shall be canceled and exchanged as provided
in this Article III, except as otherwise provided by law.
ARTICLE IV
STOCK OPTIONS; EMPLOYEE BENEFIT AND COMPENSATION PLANS
(a) EYPI-Bermuda shall assume all the rights and obligations of
EYPI-Nevada under [list plans], as each such plan has been or
may be amended to the Effective Time of the Merger
(collectively, the "Plans").
(b) The outstanding options assumed by EYPI-Bermuda shall be
exercisable upon the same terms and conditions as under the
Plans and the agreements relating thereto immediately prior to
the Effective Time of the Merger, except that upon the
exercise of such options EYPI-Bermuda Common Shares shall be
issuable in lieu of shares of EYPI-Nevada Common Stock. The
number of EYPI-Bermuda Common Shares issuable upon the
exercise of an option immediately after the Effective Time of
the Merger and the option price of each such option shall be
the number of shares and option price in effect immediately
prior to the Effective Time of the Merger. All options issued
pursuant to the Plans after the Effective Time of the Merger
shall entitle the holder thereof to purchase EYPI-Bermuda
Common Shares in accordance with the terms of the Plans.
(c) To the extent any Plan of EYPI-Nevada provides for the
issuance or purchase of, or otherwise relates to, EYPI-Nevada
Common Stock, after the Effective Time of the Merger, such
Plan shall be deemed to provide for the issuance or purchase
of, or otherwise relate to, EYPI-Bermuda Common Shares.
ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver of the following conditions:
A-4
<PAGE>
(a) Stockholder Approval. The EYPI-Nevada Stockholder Approval
shall have been obtained.
(b) Form S-4. The registration statement on Form S-4 filed with
the United States Securities and Exchange Commission by
EYPI-Bermuda inconnection with the issuance of the
EYPI-Bermuda Common Shares in the Merger shall have become
effective under the United States Securities Act of 1933, as
amended, and shall not be the subject of any stop order or
proceedings seeking a stop order.
(c) Governmental, Regulatory and Other Consents. All filings
required to be made prior to the Effective Time of the Merger
with, and all consents, approvals, permits and authorizations
required to be obtained prior to the Effective Time of the
Merger from, any court or governmental or regulatory authority
or agency, domestic or foreign, or other person, in connection
with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will have
been made or obtained (as the case may be).
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Merger or
any of the other transactions contemplated hereby shall be in
effect.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 TERMINATION
This Agreement may be terminated at any time prior to the Effective Time of the
Merger, whether before or after approval by the stockholders of EYPI-Nevada of
matters presented in connection with the Merger, by action of the Board of
Directors of EYPI-Nevada or of EYPI-Bermuda.
6.2 EFFECT OF TERMINATION
In the event of termination of this Agreement as provided in Section 6.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of EYPI-Nevada, Sub or EYPI-Bermuda, other than the
provisions of this Article VI and Article VII.
6.3 AMENDMENT
This Agreement may be amended by the parties at any time before or after any
required approval of matters presented in connection with the Merger by the
stockholders of EYPI-Nevada provided, however, that after any such approval,
there shall be made no amendment that by law requires further approval by such
stockholders without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties.
6.4 WAIVER
At any time prior to the Effective Time of the Merger, the parties may waive
compliance by the other parties with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
A-5
<PAGE>
6.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER.
A termination of this Agreement pursuant to Section 6.1, an amendment of this
Agreement pursuant to Section 6.3 or a waiver pursuant to Section 6.4 shall, in
order to be effective, require in the case of EYPI-Nevada, Sub or EYPI-Bermuda,
action by its Board of Directors.
ARTICLE VII
GENERAL PROVISIONS
7.1 NOTICES
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to EYPI-Nevada:
Endless Youth Products, Inc.
Stamford Financial Building
Stamford, NY 12167
Attention: General Counsel
(b) if to EYPI-Bermuda:
Endless Youth Products,Ltd.
c/o M.L.H. Quin & Co.
Bermuda Commercial Bank Building
44 Church Street
Hamilton HM 12 Bermuda
(c) if to Sub:
EYPI Merger Corp.
Stamford Financial Building
Stamford, NY 12167
Attention: General Counsel
7.2 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES
This Agreement (including the documents and instruments referred to herein) (a)
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and (b) except for the provisions of Articles
III and IV, are not intended to confer upon any person other than the parties
any rights or remedies.
7.3 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of Nevada, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
IN WITNESS WHEREOF, EYPI-Nevada and Sub have caused this Agreement to
be signed in Stamford, New York, and EYPI-Bermuda has caused this Agreement to
be signed in Hamilton, Bermuda, by their respective officers thereunto duly
authorized, all as of the date first written above.
A-6
ENDLESS YOUTH PRODUCTS, INC.,
a Nevada Corporation
By:
----------------------------------
Name:
Title:
EYPI MERGER CORP.,
a Nevada Corporation
By:
----------------------------------
Name:
Title:
ENDLESS YOUTH PRODUCTS, LTD.,
a Bermuda company
By:
----------------------------------
Name:
Title:
A-7
<PAGE>
Annex B
[BERMUDA COAT OF ARMS]
THE COMPANIES ACT 1981
MEMORANDUM OF ASSOCIATION OF COMPANY LIMITED BY SHARES
Section 7(1) and (2)
MEMORANDUM OF ASSOCIATION
Of
Endless Youth Products Ltd.
(hereinafter referred to as "the Company")
1. The liability of the members of the Company is limited to the amount
(if any) for the time being unpaid on the shares respectively held by
them.
2. We, the undersigned, namely:
Bermuda Status Number of Shares
Name and Address (Yes or No) Nationality Subscribed
---------------- ----------- ----------- ----------
Roderick M. Forrest No British 1
Ian P. Pilgrim No British 1
Patricia Colmet Yes British 1
All of: Bermuda Commercial Bank Building
44 Church Street
Hamilton HM12, Bermuda
do hereby respectively agree to take such number of shares of the Company as may
be allotted to us respectively by the provisional directors of the Company, not
exceeding the number of shares for which we have respectively subscribed, and to
satisfy such calls as may be made by the directors, provisional directors or
promoters of the Company in respect of the shares allotted to us respectively.
3. The Company is to be an exempted Company as defined by the Companies
Act 1981.
4. The Company, with the consent of the Minister of Finance, has power to
hold land situate in Bermuda not exceeding _____ in all, including the
following parcels: N/A
B-1
<PAGE>
5. The authorised share capital of the Company is US$12,000 divided into
shares of US$1.00 each. The minimum subscribed share capital of the
Company is US$12,000.
6. The objects for which the Company is formed and incorporated are as set
forth in paragraphs (b) to (n) and (p) to (u) inclusive of the Second
Schedule to the Companies Act 1981.
7. The Company has the powers set out in the First Schedule to the
Companies Act 1981 and the additional powers as set out in the
Appendix, copies of which are annexed hereto.
Signed by each subscriber in the presence of a least one witness attesting the
signature thereof:
--------------------------- ------------------------------
Roderick M. Forrest
--------------------------- ------------------------------
Ian P. Pilgrim
--------------------------- ------------------------------
Patricia Colmet
(Subscribers) (Witness)
Subscribed this 21 day of November, 2000.
B-2
<PAGE>
Annex C
BYE-LAWS
of
ENDLESS YOUTH PRODUCTS, LTD.,
a Bermuda company
<PAGE>
TABLE OF CONTENTS
Bye-law Page
1. Interpretation..........................................................C-5
2. Management of the Company...............................................C-7
3. Power to appoint managing director or chief executive officer...........C-7
4. Power to appoint manager................................................C-7
5. Power to authorize specific actions.....................................C-7
6. Power to appoint attorney...............................................C-7
7. Power to delegate to a committee........................................C-8
8. Power to appoint and dismiss employees..................................C-8
9. Power to borrow and charge property.....................................C-8
10. Exercise of power to purchase shares of or discontinue the Company.....C-8
11. Election of Directors..................................................C-8
12. Defects in appointment of Directors....................................C-9
13. Notification of nominations............................................C-9
14. Alternate Directors....................................................C-10
15. Vacancies on the Board; Removal of Directors, Etc......................C-10
16. Notice of meetings of the Board; Adjournment...........................C-10
17. Quorum at meetings of the Board........................................C-10
18. Meetings of the Board..................................................C-11
19. Regular Board meetings.................................................C-11
20. Special Board meetings.................................................C-11
21. Chairman of meetings...................................................C-11
22. Unanimous written resolutions..........................................C-11
23. Contracts and disclosure of Directors' interests.......................C-11
24. Remuneration of Directors..............................................C-12
25. Register of Directors and Officers.....................................C-12
C-2
<PAGE>
26. Principal Officers.....................................................C-12
27. Other Officers.........................................................C-12
28. Remuneration of Officers...............................................C-12
29. Duties of Officers.....................................................C-12
30. Obligations of Board to keep minutes...................................C-13
31. Right to indemnification...............................................C-13
32. Waiver of claims.......................................................C-14
33. Indemnification of employees...........................................C-14
34. Place of meeting.......................................................C-14
35. Annual meeting.........................................................C-14
36. Special general meeting................................................C-14
37. Accidental omission of notice of general meeting.......................C-15
38. Business to be conducted at meetings...................................C-15
39. Notice of general meeting..............................................C-16
40. Postponement of meetings...............................................C-16
41. Quorum for general meeting.............................................C-16
42. Adjournment of meetings................................................C-16
43. Written resolutions....................................................C-16
44. Attendance of Directors................................................C-16
45. Limitation on voting rights of Controlled Shares.......................C-17
46. Voting at meetings.....................................................C-18
47. Presiding Officer......................................................C-18
48. Conduct of meeting; Decision of chairman...............................C-19
49. Seniority of joint holders voting......................................C-19
50. Proxies................................................................C-19
51. Representation of corporations at meetings.............................C-19
52. Rights of shares.......................................................C-19
C-3
<PAGE>
53. Power to issue shares..................................................C-21
54. Variation of rights, alteration of share capital and purchase of
shares of the Company...............................................C-21
55. Registered holder of shares............................................C-22
56. Death of a joint holder................................................C-22
57. Share certificates.....................................................C-22
58. Determination of record dates..........................................C-23
59. Instrument of transfer.................................................C-23
60. Restriction on transfer................................................C-23
61. Transfers by joint holders.............................................C-23
62. Representative of deceased Member......................................C-23
63. Registration on death or bankruptcy....................................C-24
64. Declaration of dividends by the Board..................................C-24
65. Unclaimed dividends....................................................C-24
66. Undelivered payments...................................................C-24
67. Interest on dividends..................................................C-24
68. Issue of bonus shares..................................................C-24
69. Financial year end.....................................................C-25
70. Appointment of Auditor.................................................C-25
71. Remuneration of Auditor................................................C-25
72. Notices to Members of the Company......................................C-25
73. Notices to joint Members...............................................C-25
74. Service and delivery of notice.........................................C-25
75. Certain Subsidiaries...................................................C-25
76. The seal...............................................................C-26
77. Winding-up/distribution by liquidator..................................C-26
78. Business Combinations..................................................C-26
79. Alterations of Bye-laws, etc...........................................C-31
C-4
<PAGE>
1. Interpretation
(1) In these Bye-laws the following words and expressions shall,
where not inconsistent with the context, have the following
meanings respectively:
"Act" means the Bermuda Companies Act 1981 as amended from time to
time.
"Alternate Director" means an alternate Director appointed in
accordance with these Bye-laws and the Act.
"Auditor" includes any individual or partnership.
"Board" means the board of Directors appointed or elected pursuant to
these Bye-laws and acting by resolution in accordance with the Act and
these Bye-laws or the Directors present at a meeting of Directors at
which there is a quorum.
"Company" means the company for which these Bye-laws are approved and
confirmed.
"Controlled Shares" has the meaning set forth in Bye-law 45.
"Director" means a director of the Company and shall include an
Alternate Director.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder.
"Fair Market Value" means, with respect to a repurchase of any shares
of any class or series of the Company in accordance with Bye-law 10:
(i) if shares of such class or series are listed on a securities
exchange (or quoted in a securities quotation system), the
average closing sale price of such shares on such exchange (or
in such quotation system), or, if shares of such class or
series are listed on (or quoted in) more than one exchange (or
quotation system), the average closing sale price of such
shares on the principal securities exchange (or quotation
system) on which such shares are then traded, or, if shares of
such class or series are not then listed on a securities
exchange (or quotation system) but are traded in the
over-the-counter market, the average of the latest bid and
asked quotations for such shares in such market, in each case
for the last five trading days immediately preceding the day
on which notice of the repurchase of such shares is sent
pursuant to these Bye-laws, or
(ii) if no such closing sales prices or quotations are available
because shares of such class or series are not publicly traded
or otherwise, the fair value of such shares as determined by
one independent internationally recognized investment banking
firm chosen in good faith by the Board, provided that the
calculation of the Fair Market Value of the shares made by
such appointed investment banking firm (x) shall not include
any discount relating to the absence of a public trading
market for, or any transfer restrictions on, such shares, and
(y) such calculation shall be final and the fees and expenses
stemming from such calculation shall be borne by the Company
or its assignee, as the case may be.
"general meeting" means either an annual general meeting or a special
general meeting of the Members.
C-5
<PAGE>
"Member" means the person registered in the Register of Members as the
holder of shares in the Company and, when two or more persons are so
registered as joint holders of shares, means the person whose name
stands first in the Register of Members as one of such joint holders or
all of such persons as the context so requires.
"notice" means written notice as further defined in these Bye-laws
unless otherwise specifically stated.
"Officer" means any person appointed by the Board to hold an office in
the Company.
"person" means any individual, partnership, limited liability company,
joint venture, firm, corporation, association, trust, fund or other
enterprise.
"Register of Directors and Officers" means the Register of Directors
and Officers referred to in these Bye-laws.
"Register of Members" means the Register of Members referred to in
these Bye-laws.
"Resident Representative" means any person appointed to act as resident
representative and includes any deputy or assistant resident
representative.
"Secretary" means the person appointed to perform any or all the duties
of secretary of the Company and includes any deputy or assistant
secretary.
"U.S. Person" means a person who is deemed to be subject to U.S. Income
taxation as a U.S. resident or U.S. domiciliary.
(2) In these Bye-laws, where not inconsistent with the context:
(a) words denoting the plural number include the singular
number and vice versa;
(b) words denoting the masculine gender include the
feminine gender;
(c) words importing persons include companies,
associations or bodies of persons whether corporate
or not;
(d) the word:
(i) "may" shall be construed as permissive;
(ii) "shall" shall be construed as imperative;
and
(e) unless otherwise provided herein words or expressions
defined in the Act shall bear the same meaning in
these Bye-laws.
(3) Expressions referring to writing or written shall, unless the
contrary intention appears, include facsimile, printing,
lithography, photography, e-mail and other modes of
representing words in a visible form.
(4) Headings used in these Bye-laws are for convenience only and
are not to be used or relied upon in the construction hereof.
C-6
<PAGE>
BOARD OF DIRECTORS
2. Management of the Company
(1) The business of the Company shall be managed and conducted by
the Board. In managing the business of the Company, the Board
may exercise all corporate and other powers of the Company as
are not, by statute or by these Bye-laws, required to be
exercised by the Company in general meeting, and the business
and affairs of the Company shall be so controlled by the
Board. The Board may also present any petition and make any
application in connection with the liquidation or
reorganization of the Company.
(2) No regulation or alteration to these Bye-laws made by the
Company in general meeting shall invalidate any prior act of
the Board.
(3) The Board may procure that the Company pays all expenses
incurred in promoting and incorporating the Company.
3. Power to appoint managing director or chief executive officer
The Board may from time to time appoint one or more persons to the
office of managing director or chief executive officer of the Company who shall,
subject to the control of the Board, supervise and administer all of the general
business and affairs of the Company.
4. Power to appoint manager
The Board may appoint a person to act as manager of the Company's day
to day business and may entrust to and confer upon such manager such powers and
duties as it deems appropriate for the transaction or conduct of such business.
5. Power to authorize specific actions
The Board may from time to time and at any time authorize any person to
act on behalf of the Company for any specific purpose and in connection
therewith to execute any agreement, document or instrument on behalf of the
Company.
6. Power to appoint attorney
The Board may from time to time and at any time by power of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Board, to be an attorney of the Company for such purposes
and with such powers, authorities and discretions (not exceeding those vested in
or exercisable by the Board) and for such period and subject to such conditions
as it may think fit and any such power of attorney may contain such provisions
for the protection and convenience of persons dealing with any such attorney as
the Board may think fit and may also authorize any such attorney to sub-delegate
all or any of the powers, authorities and discretions so vested in the attorney.
Such attorney may, if so authorized under the seal of the Company, execute any
deed or instrument under such attorney's personal seal with the same effect as
the affixation of the seal of the Company.
C-7
<PAGE>
7. Power to delegate to a committee
(1) The Board may appoint Board Committees from among its members
to consist of not less than one (1) Director for each Board
Committee. The Board may designate one or more Directors as
alternate members of any Board Committee, who may replace any
absent or disqualified members at a meeting of such Board
Committee. The Board Committees shall have such of the powers
and authority of the Board in the management of the business
and affairs of the Company as shall, from time to time, so be
delegated to them by the Board.
(2) The Board may appoint other committees to consist of such
number of members as may be fixed by the Board, none of whom
need be a member of the Board, and may prescribe the powers
and authority of such committees.
(3) Meetings and actions of Board Committees and other committees
of the Company shall be governed by, held and taken in
accordance with these Bye-laws, with such changes in the
context of those Bye-laws as are necessary to substitute the
committee and its members for the Board and its members,
except that the time of regular meetings of committees may
also be determined by resolution of the Board and notice of
special meetings of committees shall also be given to all
alternate members, who shall have the right to attend all
meetings of the committee. Further, the Board or the committee
may adopt rules for the governance of any committee not
inconsistent with the provisions of these Bye-laws.
8. Power to appoint and dismiss employees
The Board may appoint, suspend or remove any manager, secretary, clerk,
agent or employee of the Company and may fix their remuneration and determine
their duties.
9. Power to borrow and charge property
The Board may exercise all the powers of the Company to borrow money
and to mortgage or charge its undertaking, property and uncalled capital, or any
part thereof, and may issue debentures, debenture stock and other securities
whether outright or as security for any debt, liability or obligation of the
Company or any third party.
10. Exercise of power to purchase shares of or discontinue the Company
(1) The Board may exercise all the powers of the Company to
purchase all or any part of its own shares pursuant to Section
42A of the Act.
(2) The Board may exercise all the powers of the Company to
discontinue the Company to a named country or jurisdiction
outside Bermuda pursuant to Section 132G of the Act.
11. Election of Directors
(1) The Board shall consist of not less than three Directors nor
more than eighteen Directors with the exact number of
Directors to be determined from time to time by resolution
adopted by the affirmative vote of a majority of the Board.
(2) The Directors shall be divided into three classes designated
Class I, Class II and Class III. Each class shall consist, as
nearly as may be possible, of one-third of the total number of
Directors constituting the entire Board. At the date these
Bye-laws become effective, (i) the Class I director, with a
term ending in 2003, is David B. Caney , (ii) the Class II
C-8
<PAGE>
director, with a term ending in 2002, Jacqueline Antin and
(iii) the Class III director, with a term ending in 2001, is
Edward Shah. At each succeeding annual general meeting
beginning in 2001, successors to the class of directors whose
term expires at that annual general meeting shall be elected
for a three-year term. If the number of Directors is changed,
any increase or decrease shall be apportioned among the
classes so as to maintain the number of Directors in each
class as nearly equal as possible, and any additional Director
of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case
will a decrease in the number of Directors shorten the term of
any incumbent Director. A Director shall hold office until the
annual general meeting for the year in which his term expires
and until his successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement,
disqualification or removal from office.
(3) Notwithstanding the foregoing, whenever the holders of any one
or more classes or series of Preference Shares issued by the
Company shall have the right, voting separately by class or
series, to elect Directors at an annual or special general
meeting, the election, term of office, filling of vacancies
and other features of such directorships shall be governed by
the terms of the Board resolution creating such classes or
series of Preference Shares, and such directors so elected
shall not be divided into classes pursuant to this Bye-law 11
unless expressly provided by such terms.
12. Defects in appointment of Directors
All acts done bona fide by any meeting of the Board or by a committee
of the Board or by any person acting as a Director shall, notwithstanding that
it be afterwards discovered that there was some defect in the appointment of any
Director or person acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
was qualified to be a Director.
13. Notification of nominations
Subject to the rights of the holders of any class or series of
Preference Shares, nominations for the election of Directors may be made by the
Board or by any Member entitled to vote for the election of Directors. Any
Member entitled to vote for the election of Directors may nominate persons for
election as Directors only if written notice of such Member's intent to make
such nomination is delivered to the Secretary of the Company not later than (i)
with respect to an election to be held at an annual general meeting, 50 days
prior to the date of the meeting at which such nominations are proposed to be
voted upon (or if less than 55 days' notice of the meeting is given, not later
than the close of business on the seventh day following the day notice of the
meeting is first given to Members) and (ii) with respect to an election to be
held at a special general meeting for the election of Directors, the close of
business on the seventh day following the date on which notice of such meeting
is first given to Members. Each such notice shall set forth: (a) the name and
address of the Member who intends to make the nomination and of the person or
persons to be nominated; (b) a representation that the Member is a holder of
record of shares of the Company entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or understandings
between the Member and each such nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations are to
be made by the Member; (d) such other information regarding each nominee
proposed by such Member as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the United States Securities and
Exchange Commission had each such nominee been nominated, or intended to be
nominated, by the Board; and (e) the consent of each such nominee to serve as a
director of the Company if so elected. The Chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
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14. Alternate Directors
An individual may be appointed an Alternate Director by or in
accordance with a resolution of the members. Unless otherwise determined by the
Board (and subject to such limitations as may be set by the Board), no Director
shall have the right to appoint another person to act as his Alternate Director.
15. Vacancies on the Board; Removal of Directors, Etc.
(1) Except in the case of vacancies on the Board that under
applicable law must be filled by the Members, any vacancy on
the Board that results from an increase in the number of
directors shall be filled by a majority of the Directors then
in office, provided that a quorum is present, and any other
vacancy occurring in the Board shall be filled by a majority
of the Directors then in office, even if less than a quorum,
or a sole remaining director and the Board shall have the
power to appoint an Alternate Director for any Director
appointed to fill a vacancy. Any Director elected to fill a
vacancy not resulting from an increase in the number of
directors shall have the same remaining term as that of his
predecessor. If the number of Directors is changed, any
increase or decrease shall be apportioned among the three
classes so as to make all classes as nearly equal in number as
possible. No decrease in the number of Directors shall shorten
the term of any incumbent Director.
(2) A Director may be removed only for cause as determined by the
affirmative vote of the holders of at least a majority of the
shares then entitled to vote generally in an election of
Directors, which vote may only be taken at a special general
meeting of the Members called expressly for that purpose.
Cause for removal shall be deemed to exist only if the
Director whose removal is proposed has been convicted of a
felony by a court of competent jurisdiction or has been
adjudged by a court of competent jurisdiction to be liable for
gross negligence or misconduct in the performance of such
Director's duty to the Company and such adjudication is no
longer subject to direct appeal.
16. Notice of meetings of the Board; Adjournment
(1) Notice of the time and place of each meeting of the Board
shall be served upon or telephoned or telegraphed or
transmitted by facsimile or e-mail to each Director at his
residence or usual place of business, at least two (2)
business days before the time fixed for the meeting, or so
mailed at least five (5) business days before the time fixed
for the meeting.
(2) A majority of the Directors present, whether or not a quorum
is present, may adjourn any Directors meeting to another time
and place. Notice of the time and place of holding an
adjourned meeting need not be given to absent Directors if the
time and place be fixed at the meeting adjourned.
(3) Notice of any meeting or any irregularity in any notice may be
waived by any Director before the meeting is held. Attendance
of a Director at a meeting shall constitute a waiver of notice
of such meeting by such Director.
17. Quorum at meetings of the Board
At all meetings of the Board, one half (1/2) of the Directors then in
office (but not less than two (2) Directors) if present in person at such
meeting shall be sufficient to constitute a quorum a meeting of Directors.
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18. Meetings of the Board
(1) All meetings of the Directors shall be held at the registered
office of the Company or at such other place either within or
without Bermuda as shall be designated by the Board.
(2) The Board may meet for the transaction of business, adjourn
and otherwise regulate its meetings as it sees fit.
(3) Directors may participate in a meeting of the Board through
use of conference telephone or similar communications
equipment, so long as all Directors participating in such
meeting can hear one another. Participation in a meeting of
the Board by this means constitutes presence in person at such
meeting.
(4) Unless a greater number is otherwise expressly required by
statute or these Bye-laws, every act or decision done or made
by a majority of the Directors present at a meeting duly held,
at which a quorum is present, shall be regarded as the act of
the Board.
19. Regular Board meetings
The next meeting of the Board subsequent to the annual general meeting
shall be held for the purpose of organizing the Board, electing officers and
transacting such other business as may come before the meeting. Thereafter
regular meetings of the Board shall be held at such time as may be designated by
the Board. If the day fixed for any regular meeting shall fall on a holiday, the
meeting shall take place on the next business day, unless otherwise determined
by the Board.
20. Special Board meetings
Special meetings of the Board may be called by the Chairman of the
Board, or by the President, or by a majority of the total number of Directors,
upon the notice specified in Bye-law 16(1).
21. Chairman of meetings
The Chairman of the Board, or in the Chairman's absence, any Director
selected by the Directors present, shall preside as chairman at meetings of the
Board.
22. Unanimous written resolutions
Any action required or permitted to be taken by the Board may be taken
without a meeting if all members of the Board shall consent thereto in writing.
Such written consent or consents shall be filed with the minutes of the
proceedings of the Board. For the purposes of this Bye-law, "Director" shall not
include an Alternate Director.
23. Contracts and disclosure of Directors' interests
(1) Any Director, or any Director's firm, partner or any company
with whom any Director is associated, may act in a
professional capacity for the Company and such Director or
such Director's firm, partner or such company shall be
entitled to remuneration for professional services as if such
Director were not a Director.
(2) A Director who is directly or indirectly interested in a
contract or proposed contract or arrangement with the Company
shall declare the nature of such interest.
(3) Following a declaration being made pursuant to this Bye-law,
and unless disqualified by the chairman of the relevant Board
meeting, a Director may vote in respect of any
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contract or proposed contract or arrangement in which such
Director is interested and may be counted in the quorum at
such meeting.
24. Remuneration of Directors
(1) The remuneration (if any) of the Directors shall be as
determined by the Directors and shall be deemed to accrue from
day to day. The Directors shall also be paid all travel, hotel
and other expenses properly incurred by them in attending and
returning from meetings of the Board, any committee appointed
by the Board, general meetings of the Company, or in
connection with the business of the Company or their duties as
Directors generally.
(2) The Directors may by resolution award special remuneration to
any Director of the Company undertaking any special work or
services for, or undertaking any special mission on behalf of,
the Company other than his ordinary routine work as a
Director. Any fees paid to a Director who is also counsel or
solicitor to the Company, or otherwise serves it in a
professional capacity, shall be in addition to his
remuneration as a Director.
25. Register of Directors and Officers
The Board shall cause to be kept in one or more books at the registered
office of the Company a Register of Directors and Officers and shall enter
therein the particulars required by the Act.
OFFICERS
26. Principal Officers
The principal Officers of the Company shall be a President, one or more
Vice Presidents, a Secretary and such officers as the Board may determine. Any
two or more of such offices, except those of President and Secretary, may be
held by the same person except as prohibited by the Act. The Chairman of the
Board need not be an executive officer of the Company.
27. Other Officers
The Board, the Chairman of the Board or the President may appoint such
other Officers as the conduct of the business of the Company may require, each
of whom shall hold office for such period as the Board, the Chairman of the
Board or the President may from time to time determine.
28. Remuneration of Officers
The Officers shall receive such remuneration as the Board may from time
to time determine.
29. Duties of Officers
Each Officer shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to him by
the Board, or, if such Officer was appointed by the Chairman of the Board or the
President, as may be delegated to him by either such person, from time to time.
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MINUTES
30. Obligations of Board to keep minutes
(1) The Board shall cause minutes to be duly entered in books
provided for the purpose:
(a) of all elections and appointments of Officers;
(b) of the names of the Directors present at each meeting
of the Board and of any committee appointed by the
Board; and
(c) of all resolutions and proceedings of general
meetings of the Members, meetings of the Board and
meetings of committees appointed by the Board.
(2) Minutes prepared in accordance with the Act and these Bye-laws
shall be kept by the Secretary at the registered office of the
Company.
INDEMNITY
31. Right to indemnification
(1) The Company shall indemnify its officers and directors to the
fullest extent possible except as prohibited by the Act.
Without limiting the foregoing, the Directors, Secretary and
other Officers (such term to include, for the purposes of this
Bye-law, any Alternate Director or any person appointed to any
committee by the Board or any person who is or was serving at
the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture,
trust or other enterprise (including, without limitation, any
employee benefit plan)) and every one of them, and their
heirs, executors and administrators, shall be indemnified and
secured harmless out of the assets of the Company from and
against all actions, costs, charges, losses, damages and
expenses which they or any of them, their heirs, executors or
administrators, shall or may incur or sustain by or by reason
of any act done, concurred in or omitted (actual or alleged)
in or about the execution of their duty, or supposed duty, or
in their respective offices or trusts, and none of them shall
be answerable for the acts, receipts, neglects or defaults of
the others of them or for joining in any receipts for the sake
of conformity, or for any bankers or other persons with whom
any moneys or effects belonging to the Company shall or may be
lodged or deposited for safe custody, or for insufficiency or
deficiency of any security upon which any moneys of or
belonging to the Company shall be placed out on or invested,
or for any other loss, misfortune or damage which may happen
in the execution of their respective offices or trusts, or in
relation thereto, provided that this indemnity shall not
extend to any matter in respect of which such person is, or
may be, found guilty of fraud or dishonesty.
(2) The Company may purchase and maintain insurance to protect
itself and any Director, Officer or other person entitled to
indemnification pursuant to this Bye-law to the fullest extent
permitted by law.
(3) All reasonable expenses incurred by or on behalf of any person
entitled to indemnification pursuant to Bye-law 31(1) in
connection with any proceeding shall be advanced to such
person by the Company within twenty (20) business days after
the receipt by the Company of a statement or statements from
such person requesting such advance or advances from time to
time, whether prior to or after final disposition of such
proceeding. Such statement or statements shall reasonably
evidence the expenses incurred by such person and, if required
by law or requested by the Company at the time
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of such advance, shall include or be accompanied by an
undertaking by or on behalf of such person to repay the
amounts advanced if it should ultimately be determined that
such person is not entitled to be indemnified against such
expenses pursuant to this Bye-law.
(4) The right of indemnification and advancement of expenses
provided in this Bye-law shall not be exclusive of any other
rights to which those seeking indemnification may otherwise be
entitled, and the provisions of this Bye-law shall inure to
the benefit of the heirs and legal representatives of any
person entitled to indemnity under this Bye-law and shall be
applicable to proceedings commenced or continuing after the
adoption of this Bye-law, whether arising from acts or
omissions occurring before or after such adoption. Any repeal
or modification of the foregoing provisions of this section
shall not adversely affect any right or protection existing at
the time of such repeal or modification.
32. Waiver of claims
The Company and each Member agrees to waive any claim or right of
action it might have, whether individually or by or in the right of the Company,
against any Director or Officer, and no Director or Officer shall have any
liability for monetary damages, on account of any action taken by such Director
or Officer, or the failure of such Director or Officer to take any action in the
performance of his duties with or for the Company, provided that such waiver
shall not extend to any matter in respect of which such person is, or may be,
found guilty of fraud or dishonesty.
33. Indemnification of employees
The Board may provide indemnification and advancement of expenses to
the employees of the Company for their acts or omissions as the Board may, from
time to time, determine.
MEMBERS MEETINGS
34. Place of meeting
All meetings of Members shall be held either at the registered office
of the Company or at any other place within or without Bermuda as may be
designated by the Board.
35. Annual meeting
The annual general meeting shall be held on such date, at such time and
at such place as shall be designated by the Board and any annual general meeting
may be adjourned as provided by law or pursuant to these Bye-laws. At each
annual general meeting there shall be elected Directors to serve for the
designated term, and such other business shall be transacted as shall properly
come before the meeting.
36. Special general meeting
(1) Special general meetings for any purpose or purposes may be
called only (i) by the Chairman of the Board; (ii) by the
President; (iii) by a majority of the Directors in office or
(iv) as required by the Act.
(2) Only such business as is specified in the notice of any
special general meeting shall come before such meeting.
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37. Accidental omission of notice of general meeting
The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a general meeting by, any person entitled to receive
notice shall not invalidate the proceedings at that meeting.
38. Business to be conducted at meetings
(1) At any general meeting, only such business shall be conducted
as shall have been properly brought before such meeting.
(2) To be properly brought before an annual general meeting,
business must be (1) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the
Board, (2) otherwise properly brought before the meeting by or
at the direction of the Board or (3) otherwise properly
brought before the meeting by a Member. For business to be
properly brought before an annual general meeting by a Member,
the Member must have given timely notice thereof in writing to
the Secretary of the Company. To be timely, a Member's notice
must be received not later than 50 days prior to the date of
the meeting (or if less than 55 days' notice of the meeting is
given, not later than the close of business on the seventh day
following the day notice of the meeting is first given to
Members).
(3) To be properly brought before a special general meeting,
business must be (i) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the
person or persons calling such meeting in accordance with
Bye-law 36 or (ii) otherwise properly brought before the
meeting by or at the direction of such person or persons.
Members may not bring matters before a special general meeting
except as specified under the Act. To the extent any Member or
Members are specifically permitted under the Act to bring
matters before a special meeting, such Member or Members must
give timely notice thereof in writing to the Secretary of the
Company to properly bring business before a special general
meeting and satisfy applicable requirements of the Act. To be
timely, a Member's notice must be received no later than the
close of business on the seventh day following the date notice
of the meeting is first given to Members.
(4) Each such notice shall set forth as to each matter the Member
proposes to bring before the meeting: (a) a brief description
of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (b)
the name and address, as they appear on the Company's books,
of the Member proposing such business, (c) a representation
that the Member is a holder of record of stock of the Company
entitled to vote at the meeting and intends to appear in
person or by proxy at the meeting to bring such business
before the meeting, (d) the class, series and number of shares
of the Company which are beneficially owned by the Member, (e)
any material interest of the Member in such business, and (f)
such other information regarding the business to be brought
before the meeting by such Member as would be required to be
included in a proxy statement filed pursuant to the proxy
rules of the United States Securities and Exchange Commission.
(5) No business shall be conducted at any meeting of the Members
except in accordance with the procedures set forth in the
preceding paragraph. The chairman of the meeting shall, if the
facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting and in
accordance with the provisions of these Bye-laws and
applicable law, and if he or she should so determine, any such
business not properly brought before the meeting shall not be
transacted.
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39. Notice of general meeting
Notice of each general meeting, whether annual or special, shall be
given in writing to the Members entitled to vote thereat, not less than then
(10) nor more than sixty (60) days before such meeting. Notice of any meeting of
Members shall specify the place, the day, and the hour of the meeting, as well
as the general nature of the business to be transacted. A notice may be given by
the Company to any Member either personally or by mail or other means of written
communication addressed to the Member at his address appearing on the Register
of Members.
40. Postponement of meetings
The Secretary may postpone any general meeting called in accordance
with the provisions of these Bye-laws (other than a meeting requisitioned under
these Bye-laws) provided that notice of postponement is given to each Member
before the time for such meeting. Fresh notice of the date, time and place for
the postponed meeting shall be given to each Member in accordance with the
provisions of these Bye-laws.
41. Quorum for general meeting
The presence of two or more persons representing, in person or by
proxy, not less than a majority of the voting power represented by the shares
entitled to vote thereat shall constitute a quorum for the transaction of
business at any general meeting.
42. Adjournment of meetings
(1) Any general meeting, annual or special, whether or not a
quorum is present, may be adjourned from time to time by the
vote of the majority of the voting power represented by the
shares represented at the meeting, either in person or by
proxy, but in the absence of a quorum no other business may be
transacted at that meeting.
(2) When any general meeting, either annual or special, is
adjourned to another time or place, notice need not be given
of the adjourned meeting if the date, time and place are
announced at a meeting at which the adjournment occurs, unless
a new record date for the adjourned meeting is fixed, or
unless the adjournment is for more than thirty (30) days from
the date set for the original meeting, in which case the Board
shall set a new record date. Notice of any such adjourned
meeting, if required, shall be given to each Member of record
entitled to vote at the adjourned meeting in accordance with
the provisions of Bye-law 37. At any adjourned meeting the
Company may transact any business that might have been
transacted at the original meeting.
43. Written resolutions
Subject to applicable law, the Members shall have the power to consent
in writing, without a meeting, to the taking of any action.
44. Attendance of Directors
The Directors of the Company shall be entitled to receive notice of and
to attend and be heard at any general meeting.
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45. Limitation on voting rights of Controlled Shares
(1) Except as provided in the other paragraphs of this Bye-law 45,
every Member of record owning shares conferring the right to
vote present in person or by proxy shall have one vote, or
such other number of votes as may be specified in the terms of
the issue and rights and privileges attaching to such shares
or in these Bye-laws, for each such share registered in such
Member's name.
(2) If, as a result of giving effect to the forgoing provisions of
Bye-law 45 or otherwise, the votes conferred by the Controlled
Shares of any U.S. Person would otherwise represent more than
9.9% of the voting power of all shares entitled to vote
generally at an election of Directors, the votes conferred by
the Controlled Shares of such U.S. Person shall be reduced by
whatever amount is necessary so that after any such reduction
the votes conferred by the Controlled Shares of such U.S.
Person shall constitute 9.9% of the total voting power of all
shares of the Company entitled to vote generally at any
election of Directors.
(3) "Controlled Shares" in reference to any person means:
(i) all shares of the Company directly, indirectly or
constructively owned by such person within the
meaning of Section 958 of the Internal Revenue Code
of 1986, as amended, of the United States of America;
and
(ii) all shares of the Company directly, indirectly or
constructively owned by such U.S. Person or any other
U.S. person of which such first person is part of a
"group" within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, of the
United States of America and the rules and
regulations promulgated thereunder; provided that
this clause (ii) shall not (1) restrict the ability
of any U.S. person to vote any shares that were (x)
converted from shares of Endless Youth Products,
Inc., a Nevada corporation, owned by such person on
November 27, 2000 as described in any Schedule 13G or
13D filed with the United States Securities and
Exchange Commission prior to such date or (y) issued
upon exercise of warrants owned by such person on
November 27, 2000 as described in any Schedule 13G or
13D filed with the United States Securities and
Exchange Commission prior to such date, which
warrants were assumed by the Company upon
consummation of the reorganization, provided that the
voting power conferred by the Controlled Shares of
such person shall not in any event exceed the greater
of (a) the voting power of such Controlled Shares
after giving effect to the reduction required by
paragraph (2) of this Bye-law 45 and (b) the voting
power of the Controlled Shares so converted without
giving effect to such reduction, or (2) apply to any
person or group that the Board, by the affirmative
vote of at least seventy-five percent (75%) of the
entire Board, may exempt from the provisions of this
clause (ii).
The limitations contained in this Bye-law 45(1) shall not
restrict the ability of any person to vote with respect to any
matter other than the election of Directors any shares that
were (x) converted from shares of Endless Youth Products,
Inc., a Nevada corporation, owned by such person on November
27, 2000 as described in any Schedule 13G or 13D filed with
the United States Securities and Exchange Commission prior to
such date or (y) issued upon exercise of warrants owned by
such person on September 8, 2000 as described in any Schedule
13G or 13D filed with the United States Securities and
Exchange Commission prior to such date, which warrants were
assumed by EYPI-Bermuda upon consummation of the
reorganization, provided that the voting power conferred by
the Controlled Shares of such person shall not in any event
exceed the
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greater of (a) the voting power of such Controlled Shares
after giving effect to the reduction required by paragraph (2)
of this Bye-law 45 and (b) the voting power of the Controlled
Shares so converted without giving effect to such reduction.
(4) Upon written notification by a Member to the Board, the number
of votes conferred by the total number of shares held by such
Member shall be reduced to that percentage of the total voting
power of the Company, as so designated by such Member (subject
to acceptance of such reduction by the Board in its sole
discretion) so that (and to the extent that) such Member may
meet any applicable insurance or other regulatory requirement
or voting threshold or limitation that may be applicable to
such Member or to evidence that such person's voting power is
no greater than such threshold.
(5) Notwithstanding the foregoing provisions of this Bye-law 45,
after having applied such provisions as best as they consider
reasonably practicable, the Board may make such final
adjustments to the aggregate number of votes conferred by the
Controlled Shares of any person that they consider fair and
reasonable in all the circumstances to ensure that such votes
represent 9.9% (or the percentage designated by a Member
pursuant to paragraph (4) of this Bye-law 45) of the aggregate
voting power of the votes conferred by all the shares of the
Company entitled to vote generally at any election of
Directors.
46. Voting at meetings
(1) Unless a different number is otherwise expressly required by
statute (without modification of these Bye-laws) or these
Bye-laws, every act or decision (including any act or
resolution regarding any amalgamation, scheme of arrangement,
merger, consolidation or sale or transfer of assets that has
been approved by the affirmative vote of at least two-thirds
of the Directors in office) done or made by a majority of the
voting power held by the Members present in person or by proxy
at a meeting duly held, at which a quorum is present, shall be
regarded as the act or resolution of the Members. At any
election of Directors, nominees shall be elected by a
plurality of the votes cast.
(2) No Member shall be entitled to vote at any general meeting
unless he or she is a Member on the record date for such
meeting.
(3) No objection shall be raised to the qualification of any voter
except at the general meeting or adjourned general meeting at
which the vote objected to is given or tendered and every vote
not disallowed at such general meeting shall be valid for all
purposes. Any such objection made in due time shall be
referred to the Chairman of the general meeting whose
decisions shall be final and conclusive. Notwithstanding,
however, the foregoing or any other provision in these
Bye-laws, the Chairman of the general meeting may, in his
discretion, whether or not an objection has been raised, and
if the Chairman considers that such action is necessary to
determine accurately the vote count, defer until after the
conclusion of the general meeting a decision as to the proper
application of Bye-law 45 to any vote at such meeting. If the
decision has been so deferred, then the Chairman of the
general meeting or, failing such decision within ninety (90)
days of the general meeting, the Board, shall make such
decision and such decision shall be final and conclusive.
47. Presiding Officer
The Chairman of the Board, the President, or another person selected by
the Board shall act as chairman of general meetings. The Secretary of the
Company, or, in the Secretary's absence, an Assistant Secretary of the Company,
shall act as secretary of every meeting, but if neither the Secretary nor an
Assistant Secretary is present, the Board shall choose any person present to act
as secretary of the meeting.
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48. Conduct of meeting; Decision of chairman
(1) The chairman shall conduct each general meeting in a manner
consistent with the Act and these Bye-laws, but shall not be
obligated to follow any technical, formal or parliamentary
rules or principles of procedure. Except as otherwise provided
by law, the chairman's rulings on procedural matters shall be
conclusive and binding on all Members.
(2) At any general meeting if an amendment shall be proposed to
any resolution under consideration but shall be ruled out of
order by the chairman of the meeting the proceedings on the
substantive resolution shall not be invalidated by any error
in such ruling.
(3) At any general meeting a declaration by the chairman of the
meeting that a question proposed for consideration has, on a
show of hands, been carried, or carried unanimously, or by a
particular majority, or lost, and an entry to that effect in a
book containing the minutes of the proceedings of the Company
shall, subject to the provisions of these Bye-laws, be
conclusive evidence of that fact.
49. Seniority of joint holders voting
In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders, and for this purpose seniority shall be determined
by the order in which the names stand in the Register of Members.
50. Proxies
Every person entitled to vote shares has the right to do so either in
person or by one or more persons authorized by a written proxy executed by such
Member and filed with the Secretary. Any proxy duly executed shall continue in
full force and effect unless revoked by the person executing it by a writing
delivered to the Company stating that the proxy is revoked or by a subsequent
proxy executed by such Member presented to the meeting or by attendance at a
meeting and voting in person by such Member. However, no proxy shall be valid
after the expiration of eleven (11) months from the date of its execution unless
otherwise provided in the proxy. The decision of the chairman of any general
meeting as to the validity of any instrument of proxy shall be final.
51. Representation of corporations at meetings
A corporation which is a Member may, by written instrument, authorize
such person as it thinks fit to act as its representative at any general meeting
and the person so authorized shall be entitled to exercise the same powers on
behalf of the corporation which such person represents as that corporation could
exercise if it were an individual Member. Notwithstanding the foregoing, the
chairman of the meeting may accept such assurances as he or she thinks fit as to
the right of any person to attend and vote at general meetings on behalf of a
corporation which is a Member.
SHARE CAPITAL AND SHARES
52. Rights of shares
(1) At the date these Bye-laws become effective, the total number
of authorized common shares is five hundred million
(500,000,000) common shares having a par value of U.S. $0.005
per share (the "Common Shares"), and the total number of
authorized preference shares is fifty million (50,000,000)
preference shares having a par value of U.S. $0.005 per share
(the "Preference Shares").
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(2) The holders of Common Shares shall, subject to the provisions
of these Bye-laws:
(a) be entitled (subject to Bye-law 45) to one vote per
share;
(b) be entitled to such dividends as the Board may from
time to time declare;
(c) in the event of a winding-up or dissolution of the
Company, whether voluntary or involuntary or for the
purpose of a reorganisation or otherwise or upon any
distribution of capital, be entitled to the surplus
assets of the Company; and
(d) generally be entitled to enjoy all of the rights
attaching to shares.
(3) The Board shall have the full power to issue any unissued
shares of the Company on such terms and conditions as it may,
in its absolute discretion, determine. The Board is authorized
to provide for the issuance of the Preference Shares in one or
more series, and to establish from time to time the number of
shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of
each such series and the qualifications, limitations or
restrictions thereof.
The authority of the Board with respect to each series shall
include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so,
from which date or dates, and the relative rights of
priority, if any, of payment of dividends on shares
of that series;
(c) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and,
if so, the terms of such voting rights;
(d) Whether that series shall have conversion or exchange
privileges (including, without limitation, conversion
into Common Shares), and, if so, the terms and
conditions of such conversion or exchange, including
provision for adjustment of the conversion or
exchange rate in such events as the Board shall
determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of
such redemption, including the manner of selecting
shares for redemption if less than all shares are to
be redeemed, the date or dates upon or after which
they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary
under different conditions and at different
redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and,
if so, the terms and amount of such sinking fund;
(g) The right of the shares of that series to the benefit
of conditions and restrictions upon the creation of
indebtedness of the Company or any subsidiary, upon
the issue of any additional shares (including
additional shares of such series or any other series)
and upon the payment of dividends or the making of
other distributions on, and the purchase, redemption
or other acquisition by the Company or any subsidiary
of any outstanding shares of the Company;
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(h) The rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution
or winding up of the Company, and the relative rights
of priority, if any, of payment of shares of that
series; and
(i) Any other relative participating, optional or other
special rights, qualifications, limitations or
restrictions of that series.
53. Power to issue shares
(1) The issuance of any authorized Common Shares or Preference
Shares and any other actions permitted to be taken by the
Board pursuant to Bye-law 52 must be authorized by the Board.
(2) Any Preference Shares of any series which have been redeemed
(whether through the operation of a sinking fund or otherwise)
or which, if convertible or exchangeable, have been converted
into or exchanged for shares of any other class or classes
shall have the status of authorized and unissued Preference
Shares of the same series and may be reissued as a part of the
series of which they were originally a part or may be
reclassified and reissued as part of a new series of
Preference Shares to be created by resolution or resolutions
of the Board or as part of any other series of Preference
Shares, all subject to the conditions and the restrictions on
issuance set forth in the resolution or resolutions adopted by
the Board providing for the issue of any series of Preference
Shares.
(3) At the discretion of the Board, whether or not in connection
with the issuance and sale of any of its shares or other
securities, the Company may issue securities, contracts,
warrants or other instruments evidencing any shares, option
rights, securities having conversion or option rights, or
obligations on such terms, conditions and other provisions as
are fixed by the Board, including, without limiting the
generality of this authority, conditions that preclude or
limit any person or persons owning or offering to acquire a
specified number or percentage of the outstanding Common
Shares, other shares, option rights, securities having
conversion or option rights, or obligations of the company or
transferee of the person or persons from exercising,
converting, transferring or receiving the shares, option
rights, securities having conversion or option rights, or
obligations.
54. Variation of rights, alteration of share capital and purchase of shares
of the Company
(1) If at any time the share capital is divided into different
classes of shares, the rights attached to any class (unless
otherwise provided by the terms of issue of the shares of that
class) may, whether or not the Company is being wound-up, be
varied with the consent in writing of the holders of a
majority of the voting power represented by the issued shares
of that class or with the sanction of a resolution passed by a
majority of the voting power represented by the votes cast at
a separate general meeting of the holders of the shares of the
class in accordance with Section 47(7) of the Act. The rights
conferred upon the holders of the shares of any class issued
with preferred or other rights shall not, unless otherwise
expressly provided by the terms of issue of the shares of that
class, be deemed to be varied by the creation or issue of
further shares ranking pari passu therewith.
(2) The Company may from time to time if authorized by resolution
of the Members change the currency denomination of, increase,
alter or reduce its share capital in accordance with the
provisions of Sections 45 and 46 of the Act. Where, on any
alteration of share capital, fractions of shares or some other
difficulty would arise, the Board may deal with or resolve the
same in such manner as it thinks fit including, without
limiting the generality of the foregoing, the issue to
Members, as appropriate, of fractions of shares and/or
arranging for the sale or transfer of the fractions of shares
of Members.
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(3) The Company may from time to time, acting through the Board,
purchase its own shares in accordance with the provisions of
Section 42A of the Act.
55. Registered holder of shares
(1) The Company shall be entitled to treat the registered holder
of any share as the absolute owner thereof and accordingly
shall not be bound to recognise any equitable or other claim
to, or interest in, such share on the part of any other
person.
(2) Any dividend, interest or other moneys payable in cash in
respect of shares may be paid by cheque or draft sent through
the post directed to the Member at such Member's address in
the Register of Members or, in the case of joint holders, to
such address of the holder first named in the Register of
Members, or to such person and to such address as the holder
or joint holders may in writing direct. If two or more persons
are registered as joint holders of any shares any one can give
an effectual receipt for any dividend paid in respect of such
shares.
56. Death of a joint holder
Where two or more persons are registered as joint holders of a share or
shares then in the event of the death of any joint holder or holders the
remaining joint holder or holders shall be absolutely entitled to the said share
or shares and the Company shall recognise no claim in respect of the estate of
any joint holder except in the case of the last survivor of such joint holders.
57. Share certificates
(1) Share certificates shall be in such form as shall be required
by law and as shall be approved by the Board. Each certificate
shall have the corporate seal affixed thereto by impression or
in facsimile and shall be signed by the Chairman of the Board,
the President, or any Vice President, and countersigned by the
Secretary or any Assistant Secretary; provided that
certificates may be signed, countersigned or authenticated by
facsimile signatures as provided by law.
(2) Except as provided in this Bye-law 57, new certificates for
shares shall not be issued to replace an old certificate
unless the latter is surrendered to the Company and cancelled
at the same time. The Board may, in case any share certificate
or certificate for any other security is lost, stolen, or
destroyed, authorize the issuance of a replacement certificate
on such terms and conditions as the Board may require,
including provision for indemnification of the Company secured
by a bond or other adequate security which the Board deems
sufficient to protect the Company against any claim that may
be made against it, including any expense or liability, on
account of the alleged loss, theft, or destruction of the
certificate or the issuance of the replacement certificate.
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RECORD DATES
58. Determination of record dates
Notwithstanding any other provision of these Bye-laws, the Board may
fix any date as the record date for:
(a) determining the Members entitled to receive any dividend; and
(b) determining the Members entitled to receive notice of and to
vote at any general meeting of the Company.
TRANSFER OF SHARES
59. Instrument of transfer
(1) An instrument of transfer shall be in such common form as the
Board may accept. Such instrument of transfer shall be signed
by or on behalf of the transferor. The transferor shall be
deemed to remain the holder of such share until the same has
been transferred to the transferee in the Register of Members.
(2) The Board may refuse to recognize any instrument of transfer
unless it is accompanied by the certificate in respect of the
shares to which it relates and by such other evidence as the
Board may reasonably require to show the right of the
transferor to make the transfer.
60. Restriction on transfer
(1) The Board shall refuse to register a transfer unless all
applicable consents, authorisations and permissions of any
governmental body or agency in Bermuda have been obtained.
(2) If the Board refuses to register a transfer of any share the
Secretary shall, within three months after the date on which
the transfer was lodged with the Company, send to the
transferor and transferee notice of the refusal.
61. Transfers by joint holders
The joint holders of any share or shares may transfer such share or
shares to one or more of such joint holders, and the surviving holder or holders
of any share or shares previously held by them jointly with a deceased Member
may transfer any such share to the executors or administrators of such deceased
Member.
TRANSMISSION OF SHARES
62. Representative of deceased Member
In the case of the death of a Member, the survivor or survivors where
the deceased Member was a joint holder, and the legal personal representatives
of the deceased Member where the deceased Member was a sole holder, shall be the
only persons recognized by the Company as having any title to the deceased
Member's interest in the shares. Nothing herein contained shall release the
estate of a deceased joint holder from any liability in respect of any share
which had been jointly held by such deceased Member with other persons. Subject
to the provisions of Section 52 of the Act, for the purpose of this Bye-law,
legal personal representative means the executor or administrator of a deceased
Member or such other person as the Board may in its absolute discretion decide
as being properly authorized to deal with the shares of a deceased Member.
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63. Registration on death or bankruptcy
Any person becoming entitled to a share in consequence of the death or
bankruptcy of any Member may be registered as a Member upon such evidence as the
Board may deem sufficient or may elect to nominate some person to be registered
as a transferee of such share, and in such case the person becoming entitled
shall execute in favour of such nominee an instrument of transfer satisfactory
to the Board. On the presentation thereof to the Board, accompanied by such
evidence as the Board may require to prove the title of the transferor, the
transferee shall be registered as a Member but the Board shall, in either case,
have the same right to decline or suspend registration as it would have had in
the case of a transfer of the share by that Member before such Member's death or
bankruptcy, as the case may be.
DIVIDENDS AND OTHER DISTRIBUTIONS
64. Declaration of dividends by the Board
The Board may declare and make such dividends or other distributions
(in each case in cash or in specie, as valued by the Board, or a combination
thereof) to the Members as may be lawfully made out of the assets of the
Company.
65. Unclaimed dividends
Any dividend or other monies payable in respect of a share which has
remained unclaimed for 5 years from the date when it became due for payment
shall, if the Board so resolves, be forfeited and cease to remain owing by the
Company. The payment of any unclaimed dividend or other moneys payable in
respect of a share may (but need not) be paid by the Company into an account
separate from the Company's own account. Such payment shall not constitute the
Company a trustee in respect thereof.
66. Undelivered payments
The Company shall be entitled to cease sending dividend payments and
cheques by post or otherwise to a Member if those instruments have been returned
undelivered to, or left uncashed by, that Member on at least two consecutive
occasions, or, following one such occasion, reasonable enquiries have failed to
establish the Member's new address. The entitlement conferred on the Company by
this Bye-law in respect of any Member shall cease if the Member claims a
dividend or cashes a dividend warrant or cheque.
67. Interest on dividends
No dividend or distribution shall bear interest against the Company.
CAPITALIZATION
68. Issue of bonus shares
The Board may resolve to capitalize any part of the amount for the time
being standing to the credit of any of the Company's share premium or other
reserve accounts or to the credit of the profit and loss account or otherwise
available for distribution by applying such sum in paying up unissued shares to
be allotted as fully paid bonus shares to the Members.
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FISCAL YEAR
69. Financial year end
The financial year end of the Company may be determined by resolution
of the Board and failing such resolution shall be 30th June in each year.
AUDIT
70. Appointment of Auditor
Subject to Section 88 of the Act, at the annual general meeting or at a
subsequent special general meeting in each year, an independent representative
of the Members shall be appointed by them as Auditor of the accounts of the
Company.
71. Remuneration of Auditor
The Board may fix the remuneration of the Auditor as it may determine.
NOTICES
72. Notices to Members of the Company
A notice may be given by the Company to any Member either by delivering
it to such Member in person or by sending it to such Member's address in the
Register of Members or to such other address given for the purpose. For the
purposes of this Bye-law, a notice may be sent by mail, courier service, cable,
telex, telecopier, facsimile, e-mail or other mode of representing words in a
legible and non-transitory form.
73. Notices to joint Members
Any notice required to be given to a Member shall, with respect to any
shares held jointly by two or more persons, be given to whichever of such
persons is named first in the Register of Members and notice so given shall be
sufficient notice to all the holders of such shares.
74. Service and delivery of notice
Any notice shall be deemed to have been served at the time when the
same would be delivered in the ordinary course of transmission and, in proving
such service, it shall be sufficient to prove that the notice was properly
addressed and prepaid, if posted, and the time when it was posted, delivered to
the courier or to the cable company or transmitted by telex, facsimile or other
method as the case may be.
CERTAIN SUBSIDIARIES
75. Certain Subsidiaries
With respect to any company incorporated under the laws of Bermuda all
of the voting shares of which are owned by the Company, and any other subsidiary
of the Company designated by the Board of the Company (together, the "Designated
Companies"), the board of directors of each such Designated Company shall
consist of the persons who have been elected by the Members as Alternate
Directors of the Company in accordance with Bye-law 14 or as Designated Company
Directors. Notwithstanding the general authority set out in Bye-law 2(1), the
Board shall vote all shares owned by the Company in each Designated Company to
ensure the constitutional documents of such Designated Company require such
Alternate Directors of the Company or Designated Company Directors to be elected
as the directors of
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such Designated Company, and to elect such Alternate Directors or Designated
Company Directors, as the case may be, as the directors of such Designated
Company. The Company shall enter into agreements with each such Designated
Company to effectuate or implement this Bye-law.
SEAL OF THE COMPANY
76. The seal
The seal of the Company shall be in such form as the Board may from
time to time determine. The Board may adopt one or more duplicate seals for use
outside Bermuda.
WINDING-UP
77. Winding-up/distribution by liquidator
If the Company shall be wound up the liquidator may, with the sanction
of a resolution of the Members, divide amongst the Members in specie or in kind
the whole or any part of the assets of the Company (whether they shall consist
of property of the same kind or not) and may, for such purpose, set such value
as he or she deems fair upon any property to be divided as aforesaid and may
determine how such division shall be carried out as between the Members or
different classes of Members. The liquidator may, with the like sanction, vest
the whole or any part of such assets in trustees upon such trusts for the
benefit of the Members as the liquidator shall think fit, but so that no Member
shall be compelled to accept any shares or other securities or assets whereon
there is any liability.
BUSINESS COMBINATIONS
78. Business Combinations
(1) The Company shall not engage in any business combination with
any Interested Member for a period of three years following
the time that such Member became an Interested Member, unless:
(a) prior to such time the Board approved either the
business combination or the transaction which
resulted in the Member becoming an Interested Member,
or
(b) upon consummation of the transaction which resulted
in the Member becoming an Interested Member, the
Interested Member owned at least 85% of the voting
shares of the Company outstanding at the time the
transaction commenced, excluding for purposes of
determining the number of shares outstanding those
shares owned (i) by persons who are Directors and
also officers and (ii) employee share plans in which
employee participants do not have the right to
determine confidentially whether shares held subject
to the plan will be tendered in a tender or exchange
offer, or
(c) at or subsequent to such time the business
combination is approved by the Board and authorized
at an annual or special general meeting, and not by
written consent, by the affirmative vote of holders
of shares representing at least 662/3% of the
outstanding voting power of the shares of the Company
entitled to vote generally at an election of
Directors (excluding shares owned by the Interested
Member).
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(2) The restrictions contained in this Bye-law shall not apply if:
(a) a Member becomes an Interested Member inadvertently
and (i) as soon as practicable divests itself of
ownership of sufficient shares so that the Member
ceases to be an Interested Member and (ii) would not,
at any time within the 3 year period immediately
prior to a business combination between the Company
and such Member, have been an Interested Member but
for the inadvertent acquisition of ownership; or
(b) the business combination is proposed prior to the
consummation or abandonment of and subsequent to the
earlier of the public announcement or the notice
required hereunder of a proposed transaction which
(i) constitutes one of the transactions described in
the second sentence of this paragraph; (ii) is with
or by a person who either was not an Interested
Member during the previous 3 years or who became an
Interested Member with the approval of the Board; and
(iii) is approved or not opposed by a majority of the
members of the Board then in office (but not less
than 1) who were Directors prior to any person
becoming an Interested Member during the previous 3
years or were recommended for election or elected to
succeed such Directors by a majority of such
Directors. The proposed transactions referred to in
the preceding sentence are limited to (x) an
amalgamation, scheme of arrangement, merger,
consolidation or similar transaction involving the
Company (except for any such transaction in respect
of which no vote of the Members of the Company is
required); (y) a sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one
transaction or a series of transactions), whether as
part of a dissolution or otherwise, of assets of the
Company or of any direct or indirect subsidiary of
the Company (other than to any direct or indirect
wholly-owned subsidiary of the Company or to the
Company) having an aggregate market value equal to
50% or more of either that aggregate market value of
all of the assets of the Company determined on a
consolidated basis or the aggregate market value of
all the outstanding shares of the Company; or (z) a
proposed tender or exchange offer for 50% or more of
the outstanding voting shares of the Company. The
Company shall give not less than 20 days notice to
all Interested Members prior to the consummation of
any of the transactions described in clauses (x) or
(y) of the second sentence of this paragraph.
(3) As used in this Bye-law only, the term:
(a) "affiliate" means a person that directly, or
indirectly through one or more intermediaries,
controls, or is controlled by, or is under common
control with, another person.
(b) "associate," when used to indicate a relationship
with any person, means (i) any corporation,
partnership, unincorporated association or other
entity of which such person is a director, officer or
partner or is, directly or indirectly, the owner of
20% or more of any class of voting shares, (ii) any
trust or other estate in which such person has at
least a 20% beneficial interest or as to which such
person serves as trustee or in a similar fiduciary
capacity, and (iii) any relative or spouse of such
person, or any relative of such spouse, who has the
same residence as such person.
(c) "business combination," when used in reference to the
Company and any Interested Member of the Company,
means:
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(i) any amalgamation, scheme of arrangement,
merger, consolidation or similar transaction
involving the Company or any direct or
indirect subsidiary of the Company with (A)
the Interested Member, or (B) with any other
corporation, partnership, unincorporated
association or other entity if such
transaction is caused by the Interested
Member and as a result of such transaction
subsection (a) of this section is not
applicable to the surviving entity;
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one
transaction or a series of transactions),
except proportionately as a Member of such
Company, to or with the Interested Member,
whether as part of a dissolution or
otherwise, of assets of the Company or of
any direct or indirect subsidiary of the
Company which assets have an aggregate
market value equal to 10% or more of either
the aggregate market value of all the assets
of the Company determined on a consolidated
basis or the aggregate market value of all
the outstanding shares of the Company;
(iii) any transaction which results in the
issuance or transfer by the Company or by
any direct or indirect subsidiary of the
Company of any shares of the Company or of
such subsidiary to the Interested Member,
except (A) pursuant to the exercise,
exchange or conversion of securities
exercisable for, exchangeable for or
convertible into shares of the Company or
any such subsidiary which securities were
outstanding prior to the time that the
Interested Member became such, (B) pursuant
to a Subsidiary Amalgamation; (C) pursuant
to a dividend or distribution paid or made,
or the exercise, exchange or conversion of
securities exercisable for, exchangeable for
or convertible into shares of the Company or
any such subsidiary which security is
distributed, pro rata to all holders of a
class or series of shares of the Company
subsequent to the time the Interested Member
became such, (D) pursuant to an exchange
offer by the Company to purchase shares made
on the same terms to all holders of said
shares, or (E) any issuance or transfer of
shares by the Company, provided however,
that in no case under (C)-(E) above shall
there be an increase in the Interested
Member's proportionate share of the shares
of any class or series of the Company or of
the voting shares of the Company;
(iv) any transaction involving the Company or any
direct or indirect subsidiary of the Company
which has the effect, directly or
indirectly, of increasing the proportionate
share of the shares of any class or series,
or securities convertible into the shares of
any class or series, of the Company or of
any such subsidiary which is owned by the
Interested Member, except as a result of
immaterial changes due to fractional share
adjustments or as a result of any purchase
or redemption of any shares of stock not
caused, directly or indirectly, by the
Interested Member; or
(v) any receipt by the Interested Member of the
benefit, directly or indirectly (except
proportionately as a Member of the Company)
of any loans, advances, guarantees, pledges,
or other financial benefits (other than
those expressly permitted in subparagraphs
(i)-(iv) above) provided by or through the
Company or any direct or indirect
subsidiary.
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(d) "control," including the term "controlling,"
"controlled by" and "under common control with,"
means the possession, directly or indirectly, of the
power to direct or cause the direction of the
management and policies of a person, whether through
the ownership of voting stock, by contract, or
otherwise. A person who is the owner of 20% or more
of the outstanding voting stock of any corporation,
partnership, unincorporated association or other
entity shall be presumed to have control of such
entity, in the absence of proof by a preponderance of
the evidence to the contrary. Notwithstanding the
foregoing, a presumption of control shall not apply
where such person holds voting stock, in good faith
and not for the purpose of circumventing this
Bye-law, as an agent, bank, broker, nominee,
custodian or trustee for one or more owners who do
not individually or as a group have control of such
entity.
(e) "Interested Member" means any person (other than the
Company and any direct or indirect subsidiary of the
Company) that (i) is the owner of 15% or more of the
outstanding voting shares of the Company, or (ii) is
an affiliate or associate of the Company and was the
owner of 15% or more of the outstanding voting shares
of the Company at any time within the 3-year period
immediately prior to the date on which it is sought
to be determined whether such person is an Interested
Member, and the affiliates and associates of such
person; provided, however, that the term "Interested
Member" shall not include any person whose ownership
of shares in excess of the 15% limitation set forth
herein is the result of action taken solely by the
Company provided that such person shall be an
Interested Member if thereafter such person acquires
additional shares of voting shares of the Company,
except as a result of further corporate action not
caused, directly or indirectly, by such person. For
the purpose of determining whether a person is an
Interested Member, the voting shares of the Company
deemed to be outstanding shall include shares deemed
to be owned by the person through application of
Paragraph (h) of this subsection but shall not
include any other unissued shares of such Company
which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
(f) "stock" means, with respect to any corporation,
capital stock and, with respect to any other entity,
any equity interest.
(g) "voting stock" means, with respect to any
corporation, stock of any class or series entitled to
vote generally in the election of directors and, with
respect to any entity that is not a corporation, any
equity interest entitled to vote generally in the
election of the governing body of such entity.
(h) "owner" including the terms "own" and "owned" when
used with respect to any stock means a person that
individually or with or through any of its affiliates
or associates:
(i) beneficially owns such stock, directly or
indirectly; or
(ii) has (A) the right to acquire such stock
(whether such right is exercisable
immediately or only after the passage of
time) pursuant to any agreement, arrangement
or understanding, or upon the exercise of
conversion rights, exchange rights, warrants
or options, or otherwise; provided, however,
that a person shall not be deemed the owner
of stock tendered pursuant to a tender or
exchange offer made by such person or any of
such person's affiliates or associates until
such tendered stock is
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accepted for purchase or exchange; or (B)
the right to vote such stock pursuant to any
agreement, arrangement or understanding;
provided, however, that a person shall not
be deemed the owner of any stock because of
such person's right to vote such stock if
the agreement, arrangement or understanding
to vote such stock arises solely from a
revocable proxy or consent given in response
to a proxy or consent solicitation made to
10 or more persons; or
(iii) has any arrangement or understanding for the
purpose of acquiring, holding, voting
(except voting pursuant to a revocable proxy
or consent as described in item (B) of
clause (ii) of this paragraph), or disposing
of such stock with any other person that
beneficially owns, or whose affiliates or
associates beneficially own, directly or
indirectly, such stock.
(i) "Subsidiary Amalgamation" means an amalgamation,
scheme of arrangement, merger, consolidation or
similar transaction with or into a single direct or
indirect wholly-owned subsidiary of the Company if:
(1) the Company and the direct or indirect
wholly-owned subsidiary of the Company are the only
constituent companies to such transaction; (2) each
share or fraction of a share of the Company
outstanding immediately prior to the effective time
of such transaction is converted in such transaction
into a share or equal fraction of a share of shares
of a holding company having the same designations,
rights, powers and preferences, and the
qualifications, limitations and restrictions thereof,
as the share of the constituent company being
converted in such transaction; (3) the holding
company and each of the constituent companies to such
transaction are companies incorporated in Bermuda;
(4) the memorandum of association and bye-laws of the
holding company immediately following the effective
time of such transaction contain provisions identical
to the memorandum of continuance and bye-laws of the
Company immediately prior to the effective time of
such transaction (other than provisions, if any,
regarding the incorporator or incorporators, the
corporate name, the registered office and agent, the
initial board of directors and the initial
subscribers for shares and such provisions contained
in any amendment to the charter documents as were
necessary to effect a change, exchange,
reclassification or cancellation of shares, if such
change, exchange, reclassification or cancellation
has become effective); (5) as a result of such
transaction the Company or its successor or
continuing company becomes or remains a direct or
indirect wholly-owned subsidiary of the holding
company; (6) the directors of the Company become or
remain the directors of the holding company upon the
effective time of such transaction; (7) the
memorandum of association and bye-laws of the
surviving or continuing company immediately following
the effective time of such transaction are identical
to the memorandum of association and bye-laws of the
Company immediately prior to the effective time of
such transaction (other than provisions, if any,
regarding the incorporator or incorporators, the
corporate name, the registered office and agent, the
initial board of directors and the initial
subscribers for shares and such provisions contained
in any amendment to the charter documents as were
necessary to effect a change, exchange,
reclassification or cancellation of shares, if such
change, exchange, reclassification or cancellation
has become effective); provided, however, that (i)
the memorandum of association and bye-laws of the
surviving or continuing company shall be amended in
such transaction to contain a provision requiring
that any act or transaction by or involving the
surviving or continuing company that requires for its
adoption under the Act or its bye-laws the approval
of the Members of the surviving or continuing company
shall, by specific reference to this subsection,
require, in addition, the approval of the
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Members of the holding company (or any successor), by
the same vote as is required by the Act and/or by its
bye-laws of the surviving or continuing company, and
(ii) the bye-laws of the surviving or continuing
company may be amended in such transaction to reduce
the number of classes and shares of capital stock
that the surviving or continuing company is
authorized to issue; and (8) the Members of the
Company do not recognize gain or loss for United
States federal income tax purposes as determined by
the board of directors of the constituent company.
(4) Notwithstanding any other provisions of these Bye-laws (and
notwithstanding the fact that a lesser percentage or separate
class vote may be specified by law or these Bye-laws), the
affirmative vote of the holders of shares representing not
less than sixty-six and two-thirds percent (66-2/3%) of the
voting power of all the then outstanding voting shares voting
together as a single class, excluding voting shares
beneficially owned by any Interested Member, shall be required
to amend, alter, change, or repeal, or adopt any provision as
part of these Bye-laws inconsistent with the purpose and
intent of, this Bye-law 76; provided, however, that this
Bye-law 78(4) shall not apply to, and such sixty-six and
two-thirds percent (66-2/3%) vote shall not be required for,
any such amendment, repeal or adoption recommended by the
affirmative vote of at least seventy-five percent (75%) of the
Directors in office (not including Directors who are
affiliates of any Interested Member).
ALTERATION OF BYE-LAWS, ETC.
79. Alteration of Bye-laws, Etc.
(1) No Bye-law shall be rescinded, altered or amended and no new
Bye-law shall be made until the same has been approved both by
a resolution of the Board and by a resolution of the Members.
(2) Notwithstanding any other provisions of these Bye-laws:
(a) the affirmative vote of the holders of at least
sixty-five percent (65%) of the voting power of the
shares entitled to vote generally at an election of
directors shall be required to amend, alter, change
or repeal, or adopt any provision inconsistent with
the purpose or intent of, Bye-laws 10(2), 11, 15, 31,
32, 33, 39, 45, 46(3), 52, 53, 79(1) and 79(2); and
(b) the affirmative vote set forth in Bye-law 78(4) shall
be required to amend, alter, change or repeal, or
adopt any provision inconsistent with the purpose or
intent of, Bye-law 78.
(3) In addition to any affirmative vote required by law, by these
Bye-laws or otherwise, and except as otherwise expressly
provided by the last sentence of this Bye-law 79:
(i) the adoption of any agreement for, or the
approval of, any amalgamation, merger or
consolidation of the Company or any
subsidiary with or into any person or group
that is the beneficial owner of 10% or more
of the then outstanding shares of voting
stock of the Company ("Non-exempted
Beneficial Owner") or any affiliate thereof;
(ii) the sale, lease, transfer or other
disposition of all or any portion of the
assets of the Company or any subsidiary
(other than in the ordinary
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course of business) to any Non-exempted
Beneficial Owner or its affiliates;
(iii) the issuance or transfer by the Company or
any subsidiary of voting securities of the
Company or any subsidiary to a Non-exempted
Beneficial Owner or any affiliate thereof;
or
(iv) any amendment of this Bye-law 79(3).
shall require the affirmative vote of the holders of at least
80% of the voting power of the shares of the Company entitled
to vote generally at an election of Directors (including a
majority of the voting power of such shares held by Members
other than Non-exempted Beneficial Owners).
The requirements of Bye-law 79(3) shall not apply to any
transaction which is approved by the Board; provided, however,
that a majority of the Directors voting in favor thereof were
duly elected and acting members of the Board prior to the time
such person or group or affiliate thereof became a
Non-exempted Beneficial Owner.
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Annex D
DISSENTER'S RIGHTS
SECTION 92A.300. DEFINITIONS.
As used in NRS 92A.300 to 92A.500, inclusive, unless the context otherwise
requires, the words and terms defined in NRS 92A.305 to 92A.335, inclusive, have
the meanings ascribed to them in those sections.
SECTION 92A.305. "BENEFICIAL STOCKHOLDER" DEFINED.
"Beneficial stockholder" means a person who is a beneficial owner of shares held
in a voting trust or by a nominee as the stockholder of record.
SECTION 92A.310. "CORPORATE ACTION" DEFINED.
"Corporate action" means the action of a domestic corporation.
SECTION 92A.315. "DISSENTER" DEFINED.
"Dissenter" means a stockholder who is entitled to dissent from a domestic
corporation's action under NRS 92A.380 and who exercises that right when and in
the manner required by NRS 92A.400 to 92A.480, inclusive.
SECTION 92A.320. "FAIR VALUE" DEFINED.
"Fair value," with respect to a dissenter's shares, means the value of the
shares immediately before the effectuation of the corporate action to which he
objects, excluding any appreciation or depreciation in anticipation of the
corporate action unless exclusion would be inequitable.
SECTION 92A.325. "STOCKHOLDER" DEFINED.
"Stockholder" means a stockholder of record or a beneficial stockholder of a
domestic corporation.
SECTION 92A.330. "STOCKHOLDER OF RECORD" DEFINED.
"Stockholder of record" means the person in whose name shares are registered in
the records of a domestic corporation or the beneficial owner of shares to the
extent of the rights granted by a nominee's certificate on file with the
domestic corporation.
SECTION 92A.335. "SUBJECT CORPORATION" DEFINED.
"Subject corporation" means the domestic corporation which is the issuer of the
shares held by a dissenter before the corporate action creating the dissenter's
rights becomes effective or the surviving or acquiring entity of that issuer
after the corporate action becomes effective.
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SECTION 92A.340. COMPUTATION OF INTEREST.
Interest payable pursuant to NRS 92A.300 to 92A.500, inclusive, must be computed
from the effective date of the action until the date of payment, at the average
rate currently paid by the entity on its principal bank loans or, if it has no
bank loans, at a rate that is fair and equitable under all of the circumstances.
SECTION 92A.350. RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED PARTNERSHIP.
A partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
SECTION 92A.360. RIGHTS OF DISSENTING MEMBER OF DOMESTIC LIMITED-LIABILITY
COMPANY.
The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
SECTION 92A.370. RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT CORPORATION.
1. Except as otherwise provided in subsection 2 and unless otherwise
provided in the articles or bylaws, any member of any constituent domestic
nonprofit corporation who voted against the merger may, without prior notice,
but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his resignation
and is thereby entitled to those rights, if any, which would have existed if
there had been no merger and the membership had been terminated or the member
had been expelled.
2. Unless otherwise provided in its articles of incorporation or
bylaws, no member of a domestic nonprofit corporation, including, but not
limited to, a cooperative corporation, which supplies services described in
chapter 704 of NRS to its members only, and no person who is a member of a
domestic nonprofit corporation as a condition of or by reason of the ownership
of an interest in real property, may resign and dissent pursuant to subsection
1.
SECTION 92A.380. RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPOR ATE ACTIONS
AND TO OBTAIN PAYMENT FOR SHARES.
1. Except as otherwise provided in NRS 92A.370 to 92A.390, a
stockholder is entitled to dissent from, and obtain payment of the fair value of
his shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic
corporation is a party:
(1) If approval by the stockholders is required
for the merger by NRS 92A.120 to 92A.160,
inclusive, or the articles of incorporation
and he is entitled to vote on the merger; or
(2) If the domestic corporation is a subsidiary
and is merged with its parent under NRS
92A.180.
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(b) Consummation of a plan of exchange to which the domestic
corporation is a party as the corporation whose subject owner's
interests will be acquired, if he is entitled to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the
stockholders to the event that the articles of incorporation, bylaws or
a resolution of the board of directors provides that voting or
nonvoting stockholders are entitled to dissent and obtain payment for
their shares.
2. A stockholder who is entitled to dissent and obtain payment under
NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
SECTION 92A.390. LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF CERTAIN
CLASSES OR SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF MERGER.
1. There is no right of dissent with respect to a plan of merger or
exchange in favor of stockholders of any class or series which, at the record
date fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting at which the plan of merger or exchange is to be acted on,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or held
by at least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing
the shares provide otherwise; or
(b) The holders of the class or series are required under the
plan of merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests
and cash in lieu of fractional owner's
interests of:
(I) The surviving or acquiring entity;
or
(II) Any other entity which, at the
effective date of the plan of
merger or exchange, were either
listed on a national securities
exchange, included in the national
market system by the National
Association of Securities Dealers,
Inc., or held of record by a least
2,000 holders of owner's interests
of record; or
(2) A combination of cash and owner's interests
of the kind described in sub-subparagraphs
(I) and (II) of subparagraph (1) of
paragraph (b).
2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require action of
the stockholders of the surviving domestic corporation under NRS 92A.130.
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SECTION 92A.400. LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO PORTIONS ONLY
TO SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL STOCKHOLDER.
1. A stockholder of record may assert dissenter's rights as to fewer
than all of the shares registered in his name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf he
asserts dissenter's rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he dissents and his other
shares were registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares
held on his behalf only if:
(a) He submits to the subject corporation the written consent
of the stockholder of record to the dissent not later than the time the
beneficial stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the
beneficial stockholder or over which he has power to direct the vote.
SECTION 92A.410. NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF DISSENT.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those
sections.
2. If the corporate action creating dissenters' rights is taken by
written consent of the stockholders or without a vote of the stockholders, the
domestic corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430.
SECTION 92A.420. PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to
assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote
is taken, written notice of his intent to demand payment for his shares
if the proposed action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1
and NRS 92A.400 is not entitled to payment for his shares under this chapter.
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SECTION 92A.430. DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED TO ASSERT
RIGHTS; CONTENTS.
1. If a proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, the subject corporation shall deliver a
written dissenter's notice to all stockholders who satisfied the requirements to
assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where
and when certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by
certificates to what extent the transfer of the shares will be
restricted after the demand for payment is received;
(c) Supply a form for demanding payment that includes the date
of the first announcement to the news media or to the stockholders of
the terms of the proposed action and requires that the person asserting
dissenter's rights certify whether or not he acquired beneficial
ownership of the shares before that date;
(d) Set a date by which the subject corporation must receive
the demand for payment, which may not be less than 30 nor more than 60
days after the date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500,
inclusive.
SECTION 92A.440. DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES; RETENTION OF
RIGHTS OF STOCKHOLDER.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the
shares before the date required to be set forth in the dissenter's
notice for this certification; and
(c) Deposit his certificates, if any, in accordance with the
terms of the notice.
2. The stockholder who demands payment and deposits his certificates,
if any, before the proposed corporate action is taken retains all other rights
of a stockholder until those rights are canceled or modified by the taking of
the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under this chapter.
SECTION 92A.450. UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER AFTER
DEMAND FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
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2. he person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
SECTION 92A.460. PAYMENT FOR SHARES: GENERAL REQUIREMENTS.
1. Except as otherwise provided in NRS 92A.470, within 30 days after
receipt of a demand for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount the subject corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the subject corporation under this subsection may be enforced by
the district court:
(a) Of the county where the corporation's registered office is
located; or
(b) At the election of any dissenter residing or having its
registered office in this state, of the county where the dissenter
resides or has its registered office. The court shall dispose of the
complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of payment,
a statement of income for that year, a statement of changes in the
stockholders' equity for that year and the latest available interim
financial statements, if any;
(b) A statement of the subject corporation's estimate of the
fair value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment
under NRS 92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
SECTION 92A.470. PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE OF
DISSENTER'S NOTICE.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment,
after taking the proposed action, it shall estimate the fair value of the
shares, plus accrued interest, and shall offer to pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
subject corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated, and
a statement of the dissenters' right to demand payment pursuant to NRS 92A.480.
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SECTION 92A.480. DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF SUBJECT
CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE.
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of
his shares and interest due, if he believes that the amount paid pursuant to NRS
92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of his
shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing
within 30 days after the subject corporation made or offered payment for his
shares.
SECTION 92A.490. LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF SUBJECT
CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER.
1. If a demand for payment remains unsettled, the subject corporation
shall commence a proceeding within 60 days after receiving the demand and
petition the court to determine the fair value of the shares and accrued
interest. If the subject corporation does not commence the proceeding within the
60-day period, it shall pay each dissenter whose demand remains unsettled the
amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced
under subsection 2 is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or any amendment thereto. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to
a judgment:
(a) For the amount, if any, by which the court finds the fair
value of his shares, plus interest, exceeds the amount paid by the
subject corporation; or
(b) For the fair value, plus accrued interest, of his
after-acquired shares for which the subject corporation elected to
withhold payment pursuant to NRS 92A.470.
SECTION 92A.500. LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT OF COSTS
AND FEES.
1. The court in a proceeding to determine fair value shall determine
all of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess
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the costs against the subject corporation, except that the court may assess
costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all
dissenters if the court finds the subject corporation did not
substantially comply with the requirements of NRS 92A.300 to 92A.500,
inclusive; or
(b) Against either the subject corporation or a dissenter in
favor of any other party, if the court finds that the party against
whom the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by NRS 92A.300
to 92A.500, inclusive.
3. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the subject corporation,
the court may award to those counsel reasonable fees to be paid out of the
amounts awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may
assess the costs against the subject corporation, except that the court may
assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
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Annex E
ENDLESS YOUTH PRODUCTS, INC.
AUDIT COMMITTEE CHARTER
General
The Audit Committee of the Board of Directors of Endless Youth
Products, Inc. shall consist of at least three independent directors, however,
it may consist of two independent directors and one member of management until
June 13, 2001. Members of the Committee shall be considered independent if they
have no relationship to the Company that could interfere with the exercise of
their independence from management and the Company. As determined by the Board
of Directors, the Members of the Committee will be financially literate with at
least one having accounting or related financial management expertise. Company
management, internal and independent auditors and the Company's General Counsel
may attend each meeting or portions thereof as required by the Committee. The
Committee will have four meetings each year on a regular basis and will have
special meetings if and when required.
Responsibilities
The Audit Committee's role is one of oversight whereas the Company's
management is responsible for preparing the Company's financial statements and
the independent auditors are responsible for auditing those financial
statements. The Audit Committee is not providing any expert or special assurance
as to the Company's financial statements or any professional certification as to
the independent auditor's work. The following functions shall be the key
responsibilities of the Audit Committee in carrying out its oversight function.
1. Provide an open avenue of communications between the independent
auditors and the Board of Directors, including private sessions with the
independent auditors, as the Committee may deem appropriate.
2. Receive and review reports from Company management relating to the
Company's financial reporting process, published financial statements and/or
major disclosures and the adequacy of the company's system of internal controls.
3. Receive and review reports from Company management and General
Counsel relating to legal and regulatory matters that may have a material impact
on the Company's financial statements and Company compliance policies.
4. Inquire of company management and independent auditors regarding the
appropriateness of accounting principles followed by the Company, changes in
accounting principles and their impact on the financial statements.
5. Review the internal audit program in terms of scope of audits
conducted or scheduled to be conducted.
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6. The Committee and Board shall be ultimately responsible for the
selection, evaluation, and replacement of the independent auditors. The
Committee will:
o recommend annually the appointment of the independent auditors
to the Board for its approval and subsequent submission to the
stockholders for ratification, based upon an annual
performance evaluation and a determination of the auditors'
independence;
o determine the independence of the independent auditors by
obtaining a formal written statement delineating all
relationships between the independent auditors and the
Company, including all non-audit services and fees;
o discuss with the independent auditors if any disclosed
relationship or service could impact the auditors' objectivity
and independence; and
o recommend that the Board take appropriate action in response
to the auditors' statement to ensure the independence of the
independent auditors.
7. Meet with independent auditors and review their report to the
Committee including comments relating to the system of internal controls,
published financial statements and related disclosures, the adequacy of the
financial reporting process and the scope of the independent audit. The
independent auditors are ultimately accountable to the Board and the Committee
on all such matters.
8. Receive and review reports from the independent auditors relating to
plans for the audit of the Company's information technology procedures and
controls.
9. Review with the independent auditors the coordination of their
respective audit activities.
10. Prepare a Report, for inclusion in the Company's proxy statement,
disclosing that the Committee reviewed and discussed the audited financial
statements with management and discussed certain other matters with the
independent auditors. Based upon these discussions, state in the Report whether
the Committee recommended to the Board that the audited financial statements be
included in the Annual Report.
11. Review and reassess the adequacy of the Audit Committee's charter
annually. If any revisions therein are deemed necessary or appropriate, submit
the same to the Board for its consideration and approval.
12. In the absence of a compensation, stock option or special committee
comprised of a majority of independent directors, review and approve any
transaction of the Company in which a director or officer of the Company has a
material interest.
13. The committee will perform such other functions as assigned by law,
the Company's charter or bylaws, or the Board of Directors.
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Quorum
For the transaction of business at any meeting of the Audit Committee,
two members shall constitute a quorum.
Approved as revised:
Board of Directors of Endless Youth Products, Inc.
November 2, 2000
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Proxy Card
ENDLESS YOUTH PRODUCTS, INC.
PROXY CARD FOR ANNUAL MEETING OF STOCKHOLDERS ON DECEMBER 22, 2000
This proxy is solicited by the board of directors of Endless Youth Products,
Inc. (the "Company"). The undersigned hereby appoints David B. Caney and
Jacqueline Antin as proxies, each with full power of substitution, to represent
the undersigned and to vote all shares of common stock of the Company held of
record by the undersigned on November 27, 2000, or which the undersigned would
otherwise be entitled to vote at the annual meeting to be held on December 22,
2000 and any adjournment thereof, upon all matters that may properly come before
the annual meeting. All shares votable by the undersigned will be voted by the
proxies named above in the manner specified on the reverse side of this card,
and such proxies are authorized to vote in their discretion on such other
matters as may properly come before the annual meeting.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. Please sign this proxy exactly as your name(s) appear(s) on
the books of the Company. Joint owners should each sign personally. Trustees and
other fiduciaries should indicate the capacity in which they sign, and where
more than one name appears, a majority must sign. If a corporation, this
signature should be that of an authorized officer who should state his or her
title.
HAS YOUR ADDRESS CHANGED?
---------------------------------
---------------------------------
---------------------------------
PLEASE MARK VOTES AS IN THIS EXAMPLE [X]
ENDLESS YOUTH PRODUCTS, INC.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder(s). If no direction is made, this proxy will be
voted FOR the proposals set forth on the reverse of this card.
The undersigned hereby acknowledges receipt of the proxy statement/prospectus
and the Company's Annual Report on Form 10-KSB for the fiscal year ended June
30, 2000 and the amendment thereto, and hereby revokes all previously granted
proxies.
RECORD DATE SHARES:
Proposals by the Company:
1. To approve and adopt the agreement and plan of FOR AGAINST ABSTAIN
merger, dated as of_________, 2000, among [ ] [ ] [ ]
Endless Youth Products, Inc., a Nevada
corporation ("EYPI- Delaware"), Endless Youth
Products, Ltd., a Bermuda company
("EYPI-Bermuda"), and EYPI Merger Corp.,
pursuant to which EYPI-Bermuda will become the
parent holding company of EYPI-Nevada, and to
approve the transactions contemplated thereby.
2. To elect the following nominees as Directors
of the company for a term of up to three
years:
David B. Caney FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Jacqueline Antin FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Edward Shah FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To ratify the selection of Beckman Kirkland & FOR AGAINST ABSTAIN
Whitney as the company's independent [ ] [ ] [ ]
accountants for the fiscal year ending June
30, 2001.
Please be sure to sign and date this proxy: Date _________________, 2000
Stockholder sign here ____________________ Co-owner sign here __________________
Mark box at right if an address change or comment has been noted on the
reverse side of this card. [ ]
.............DETACH CARD..............................DETACH CARD...............
ENDLESS YOUTH PRODUCTS, INC.
Dear Stockholder,
Please take note of the important information enclosed with this proxy. The
proposals to reorganize the company as a Bermuda company, elect directors and
select our independent accountants require your immediate attention and
approval. This proposal is discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will
be voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the annual meeting on December 22,
2000.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Jacqueline Antin
Chief Financial Officer
and Secretary
