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As filed with the Securities and Exchange Commission on September 26, 2000
Registration No. 333-_______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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BETHURUM LABORATORIES, INC.
(Exact name of Registrant as specified in charter)
Utah 76-0050046
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
6371 Richmond, #200
Houston, TX 77057
(713) 266-8005
(Address and telephone number of principal executive office)
William A. Silvey, Jr., President
6371 Richmond, # 200
Houston, TX 77057
(713) 266-8005
(Name, address and telephone number of agent for service)
with copies to:
A.O. Headman, Jr., Esq.
Cohne, Rappaport & Segal
525 East 100 South, Fifth Floor
Salt Lake City, Utah 84102
(801) 532-2666
Approximate date of commencement of proposed sale to the public: From time to
time after the Effective Date of this Registration Statement.
If the securities being registered on this Form are to be offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
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CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Each Amount Offering Aggregate Amount of
Class of Securities Being Price Per Offering Registration
Being Registered Registered Unit Price Fee
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Common Stock, $.001 3,300,750 $.875 (2) $2,888,156.25 $762.47
Par Value Shares (1)
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Total $2,888,156.25 $762.47
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Bethurum Laboratories, Inc., a Utah corporation is proposing to change
its domicile to the British Virgin Islands. The reincorporation merger, will,
subject to shareholder approval, be effected by Bethurum Laboratories, Inc.
merging into its wholly-owned subsidiary, Bethurum Laboratories, Ltd., a British
Virgin Islands corporation which has been formed for the sole purpose of
effecting the change of domicile. Rule 145, as promulgated under the Securities
Act of 1933, as amended, provides for an exemption from registration for change
of domicile mergers if the domicile of a U.S. corporation is being changed to a
state within the United States. Inasmuch as the change of domicile of Bethurum
Laboratories, Inc. will be to jurisdiction which is not a state within the
United States, Bethurum Laboratories, Inc. and its wholly-owned subsidiary,
Bethurum Laboratories, LTD., a British Virgin island corporation, jointly file
this registration statement on Form S-4 to register the shares of the Bethurum
Laboratories, Ltd. to be issued to the shareholders of Bethurum Laboratories,
Inc. in the reincorporation merger. The officers and directors of the Utah
corporation will continue to be the officers and directors of the British Virgin
Islands corporation after the reincorporation merger. The Articles of
Association and Memorandum of Association of the British Virgin Island
corporation will be substantially similar to the Articles of Incorporation and
Bylaws of the Utah corporation taking into effect the laws of the State of Utah
and the British Virgin Islands.
Each share of the Utah corporation will be converted into one share of
the British Virgin Island corporation in the reincorporation merger. Therefore,
each shareholder will own the same number of shares and the same percentage
ownership in the British Virgin Island corporation that they did in the Utah
corporation. No person will be issued shares in the reincorporation merger
accept for persons who are shareholders of the Utah corporation prior to the
effective date of the reincorporation merger.
(1) Represents shares of Common Stock of Bethurum Laboratories, Ltd., a
British Virgin Islands corporation, which is a wholly-owned subsidiary of that
will be issued upon the conversion of shares of Bethurum Laboratories, Inc. a
Utah corporation, pursuant to the reincorporation merger described in this
Registration Statement.
(2) The price of $.875 per share was the closing price of the
Registrant's common stock on the NASDAQ OTC Electronic Bulletin Board on August
18, 2000, is set forth solely for the purposes of calculating the registration
fee in accordance with Rule 457(f)(1) of the Securities Act of 1933, as amended.
There is no active market for the Registrant's securities. The last trade known
by the Registrant, as reported on the NASDAQ OTC Electronic Bulletin Board was
$.875.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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Subject to Completion September 26, 2000
JOINT PROXY STATEMENT AND PROSPECTUS OF
BETHURUM LABORATORIES, INC.
and
BETHURUM LABORATORIES BVI
6371 Richmond, #200
Houston, TX 77057
(713) 266-8005
To Our Shareholders:
Your are cordially invited to a Special Meeting of Shareholders of Bethurum
Laboratories, Inc., which will be held at the Sheraton City Centre Hotel, 150
West 500 South, Salt Lake City, UT, November 10, 2000 at 10:00 a.m. At the
Special Meeting, shareholders will vote on changes to our corporate structure
which will result in changing our corporate domicile, or place of incorporation,
from the State of Utah to the British Virgin Islands. We are proposing a change
in our place of incorporation in order to facilitate our plans to look for
acquisitions in the telecommunications industry in developing foreign markets
and pursuant to an agreement between us and an investor. The change of our
domicile from the State of Utah to the British Virgin Islands will, subject to
shareholder approval, be accomplished by us forming a wholly-owned subsidiary
under the laws of the British Virgin Islands and then completing a merger
whereby Bethurum Laboratories, Inc. merges into our British Virgin Islands
subsidiary.
During the Special Meeting, we will discuss each item of business described
in the Notice of Special Meeting of Shareholders and Proxy Statement/Prospectus
and give a current report on our plan of operation. There also will be time for
questions. This booklet includes the Notice of Special Meeting as well as Proxy
Statement/Prospectus, which provides information about the change of our
domicile from Utah to the British Virgin Islands in addition to describing the
business we will conduct at the meeting.
WE HOPE YOU WILL BE ABLE TO ATTEND THE SPECIAL MEETING. WHETHER OR NOT YOU
EXPECT TO ATTEND, PLEASE SIGN AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE
SO YOUR SHARES WILL BE VOTED AT THE SPECIAL MEETING.
Sincerely,
/s/ William A. Silvey, Jr.
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President
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS RELATING TO THE
REINCORPORATION PROPOSAL, THE RELATED TRANSACTIONS AND OUR BUSINESS. SEE "RISK
FACTORS" BEGINNING ON PAGE 13.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR HAS DETERMINED IF
THIS PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is ________, 2000.
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TABLE OF CONTENTS
Item Page
About this Proxy Statement/Prospectus........................................5
Special Note Regarding Forward-Looking Statements............................5
Notice of Special Meeting of Shareholders....................................6
Questions and Answers About the Reincorporation Proposal.....................7
Summary.....................................................................12
Risk Factors................................................................15
Certain Information Concerning Bethurum.....................................22
The Special Meeting.........................................................24
Proposal 1 - Reincorporation Proposal.......................................26
Rights of Dissenting Shareholders...........................................39
Management..................................................................42
Principal Shareholders and Stock Ownership of Management and Others.........43
Transactions with Management and Others.....................................44
Legal Matters...............................................................44
Experts.....................................................................45
Shareholder Proposals.......................................................45
Other Matters...............................................................45
Where You Can Find More Information.........................................45
Incorporation of Certain Documents by Reference.............................46
Appendix A - Memorandum of Association
Appendix B - Articles of Association
Appendix C - Reincorporation Merger Agreement
Appendix D - Utah Dissenters' Rights Statutes
Form of Proxy
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ABOUT THIS PROXY STATEMENT/PROSPECTUS
This Proxy Statement/Prospectus is part of a registration statement we have
filed with the Securities and Exchange Commission. You should read this Proxy
Statement/Prospectus with the additional information described under the heading
"Where You Can Find More Information." We are proposing a change of our domicile
or place of incorporation from the State of Utah to the British Virgin Islands.
In transactions in which a U.S. corporation changes its domicile from one U.S.
state to another U.S. state, through a reincorporation merger, no registration
of the shares to be issued in the reincorporation merger is required under Rule
145 as promulgated under the Securities Act of 1933, as amended. However, we are
proposing that our domicile be changed to the British Virgin Islands and
therefore, registration of the shares of Bethurum BVI must be registered.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement/Prospectus contains forward-looking statements that
involve substantial risks and uncertainties. You can identify these statements
by forward-looking words such as "may," "will," "expect," "anticipate,"
"believe," "estimate," "plan," "intend," "continue" or similar words. You should
read statements that contain these words carefully because they discuss our
future expectations, contain projections of our future results of operations or
of our financial condition or state other "forward-looking" information.
The sections captioned "Risk Factors" as well as any cautionary language in
this Proxy Statement/ Prospectus, provide examples of risks, uncertainties, and
events that may cause our actual results to differ materially from the
expectations. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. We qualify any forward-looking
statements entirely by these cautionary factors.
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BETHURUM LABORATORIES, INC.
6371 Richmond, #200
Houston, TX 77057
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
To Be Held November 10, 2000
TO THE SHAREHOLDERS OF BETHURUM LABORATORIES, INC.
A Special Meeting of the Shareholders of Bethurum Laboratories, Inc. will
be held at the Sheraton City Centre Hotel, 150 West 500 South, Salt Lake City,
UT, on November 10, 2000, at 10:00 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal to reincorporate Bethurum
Laboratories, Inc. in the British Virgin Islands.
2 To transact any such other business as may come before the Special Meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on October 19, 2000
as the record date for the determination of shareholders entitled to notice of
and to vote at the Special Meeting and any adjournments thereof. Consequently,
only holders of common stock of record on the transfer books of Bethurum
Laboratories, Inc. at the close of business on October 19, 2000 will be entitled
to notice of, and to vote, at the Special Meeting.
By Order of the Board of Directors
Houston, TX
Date: October 19, 2000
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All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign and
return the enclosed proxy as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any shareholder attending the meeting may
vote in person even if he or she returned a proxy.
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BETHURUM LABORATORIES, INC.
PROXY STATEMENT AND PROSPECTUS
For the Special Meeting of Shareholders
To Be Held On November 10, 2000
This Proxy Statement is dated October 19, 2000, and is first being mailed
to Bethurum Shareholders on or about October 19, 2000.
QUESTIONS AND ANSWERS ABOUT THE REINCORPORATION PROPOSAL
Q. WHY AM I RECEIVING THIS PROXY STATEMENT/PROSPECTUS?
A. We are sending this Proxy Statement/Prospectus to you in connection with a
proposal by our Board of Directors that we reincorporate in the British
Virgin Islands ("Reincorporation Proposal"). Bethurum Laboratories, Inc.
("Bethurum", "Bethurum Utah","we", "our" or "us") was incorporated in, and
is currently governed by, the laws of the State of Utah. Our Board of
Directors is seeking your vote at the Special Meeting of Shareholders
("Special Meeting") in favor of the Reincorporation Proposal.
Q. IF APPROVED BY THE SHAREHOLDERS, HOW WILL THE REINCORPORATION
PROPOSAL BE EFFECTED?
A. We have formed a new subsidiary corporation under the laws of the British
Virgin Islands. The name of the British Virgin Islands corporation is
currently Bethurum Laboratories Ltd. ("Bethurum BVI"). In order to complete
the reincorporation, Bethurum Utah will merge into Bethururm BVI
("Reincorporation Merger"). Bethurum BVI will be the surviving company of
the Reincorporation Merger and as a result of the Reincorporation Merger,
Bethurum Utah will no longer exist. The name of Bethurum BVI may be changed
subsequent to the Reincorporation Proposal, by the authority of the Board
of Directors without shareholder approval.
Q. WHAT WILL HAPPEN TO THE ASSETS, LIABILITIES AND CONTRACTS OF
BETHURUM UTAH IN THE MERGER?
A. All of the assets, liabilities and contracts of Bethurum Utah will, through
the Reincorporation Merger with Bethurum BVI, become the assets,
liabilities and contracts of Bethurum BVI.
Q: WHAT WILL HAPPEN TO MY SHARES OF BETHURUM UTAH?
A: Unless you exercise your dissenter's rights (See page 38 of this Proxy
Statement/Prospectus) all of your shares of Bethurum Utah will be converted
into the same number of shares of Bethurum BVI. For example, if you own
10,000 shares of Bethurum Utah common stock, you will be issued 10,000
shares of Bethurum BVI common stock. Pursuant to the Reincorporation
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Merger, you will no longer own any shares of Bethurum Utah. As a result of
the Reincorporation Merger, all of the shareholders of Bethurum Utah will
become shareholders of Bethurum BVI and Bethurum Utah will no longer exist.
Q. WILL THE REINCORPORATION PROPOSAL RESULT IN A CHANGE OF
SHAREHOLDER CONTROL?
A. No, the Reincorporation Proposal will not, on its own, result in a change
of control. There are currently, 3,300,750 shares of Bethurum Utah issued
to our shareholders. As a result of our Reincorporation Merger into
Bethurum BVI, all of these shares will be converted into 3,300,750 shares
of Bethurum BVI. No person, except for the shareholders of Bethurum Utah,
will be issued shares of Bethurum BVI as part of the Reincorporation
Proposal. If you own 1% of Bethurum Utah before the Reincorporation Merger,
you will own 1% of Bethurum BVI immediately following the Reincorporation
Merger.
We are currently an inactive company. On June 15, 2000, our Board of
Directors adopted a business plan providing for Bethurum to develop and
market wireless telecommunications networks in the developing markets in
third world countries and to raise the necessary capital to engage in this
industry.
We may attempt to commence active business operations in the
telecommunications industry by acquiring an operating company or by
acquiring assets or other rights which may result in us commencing business
operations. We anticipate that such an acquisition will be effected by us
issuing new shares of our stock to the persons who own the operating
company, assets or rights that we may ultimately acquire. We anticipate
that the number of shares issued in such an acquisition will give the
owners of such operating company, assets or other rights, control of
Bethurum BVI. We have not yet entered into any binding or non-binding
agreement, letter of intent, understanding or other commitment to acquire
any specific operating company, assets or rights and there can be no
assurance we will do so in the foreseeable future.
Q. WHY ARE WE CHANGING OUR PLACE OF INCORPORATION?
A As part of our business plan, we intend to look for telecommunication
industry related acquisitions in developing foreign markets. We believe
that because of this plan, it is in the best interests of us and our
shareholders to change our domicile to the BVI. We believe this will give
us an appearance of a more localized business if we seek acquisitions in
the Carribean, South America or Central America than if we remained a Utah
corporation. Furthermore, if we are successful in completing one or more
acquisitions in developing third world markets, of which there can be no
assurance, we believe that the investment and brokerage community will have
greater interest in becoming involved with us if we are incorporated in the
British Virgin Islands rather than Utah.
We have entered into an agreement with one of our investors that requires
us to change our domicile to the British Virgin Islands.
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Q: WHAT EFFECT WILL THE CHANGE IN PLACE OF INCORPORATION HAVE ON
BETHURUM?
A: Bethurum will be subject to the laws of the BVI instead of the laws of the
State of Utah. However, Bethurum will not be relieved of any obligations or
liabilities incurred before changing its place of incorporation.
Q. WHAT EFFECT WILL BETHURUM'S CHANGE OF PLACE OF INCORPORATION
HAVE ON ME AS A SHAREHOLDER?
A. Your rights as a Bethurum shareholder will be governed by the laws of the
British Virgin Islands and Bethurum BVI's Memorandum of Association and
Articles of Association in the form attached as Appendices A and B to this
Proxy Statement/Prospectus, as opposed to the laws of the Utah and our
existing Articles of Incorporation and Bylaws. We have prepared and
included summaries of Bethurum's Memorandum of Association and Articles of
Association (which will be in effect following Bethurum's change in place
of incorporation) on pages 24 through 32 and a comparison of the corporate
laws of the Utah and the British Virgin Islands for your review.
Q: WHEN DO YOU EXPECT THE REINCORPORATION TO BE COMPLETED?
A: We are working to complete the reincorporation during the month of November
2000. However, we cannot assure you as to when reincorporation will occur.
Q: WHAT ARE THE TAX CONSEQUENCES OF CHANGING BETHURUM'S PLACE OF
INCORPORATION?
A: Bethurum believes that, under current regulations, neither Bethurum nor
Bethurum's shareholders will be taxed as a result of changing Bethurum's
place of incorporation from Utah to BVI. To review a brief summary of the
tax consequences to you in greater detail, see pages 35 through 37 of this
Proxy Statement/Prospectus.
Q: WHAT DO I NEED TO DO NOW?
A: Simply indicate on your proxy card how you want to vote, then sign, date
and mail it in the enclosed envelope as soon as possible, so that your
shares will be represented at the Special Meeting. Approval of the
Reincorporation Proposal requires the affirmative vote of the holders of a
majority of the outstanding shares of Bethurum common stock entitled to
vote on the Reincorporation Proposal. Our management and our largest
shareholder, who together own more than 66% of our shares, have indicated
they will vote in favor of the Reincorporation Proposal. Accordingly, no
additional votes will be necessary to approve the Reincorporation Proposal.
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Q: WHAT HAPPENS IF I DON'T RETURN A PROXY CARD?
A: The failure to return your proxy card will have the same effect as voting
against the Reincorporation Proposal.
Q: WHAT OTHER MATTERS WILL BE VOTED ON AT THE SPECIAL MEETING?
A: We do not expect that any other matters will be voted upon at the Special
Meeting.
Q: MAY I VOTE IN PERSON?
A: Yes. You may attend the Special Meeting and vote your shares in person,
rather than signing and mailing your proxy card.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. You may change your vote at any time before your proxy is voted at the
special meeting by following the instructions as detailed in "Voting and
Revocation of Proxies" on page 24. Before your proxy is voted, you may
submit a new proxy or you may attend the Special Meeting and vote in
person.
Q: WHAT ARE MY RIGHTS IF I DISSENT FROM THE REINCORPORATION PROPOSAL?
A: Dissenting shareholders are entitled to appraisal rights under Utah
corporate law requiring Bethurum to purchase the shares of dissenting
shareholders for their appraised value as determined under Section
16-10a-1302 of the Revised Business Corporation Act of Utah. See "Rights of
Dissenting Shareholders" on Pages 38 through 40 of this Proxy Statement/
Prospectus.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY
BROKER VOTE MY SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how
to vote. You should instruct your broker how to vote your shares, following
the directions your broker provides. If you do not provide instructions to
your broker, your shares will not be voted and they will be counted as
votes against the Reincorporation Proposal.
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Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the reincorporation is completed you will be sent written
instructions for exchanging your Bethurum Utah shares for Bethurum BVI
shares. Until you exchange your shares, your stock certificates for
Bethurum Utah shares will represent your shares of Bethururm BVI after the
change in our place of incorporation.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have additional questions about the Reincorporation Proposal, you
should contact:
William A. Silvey, Jr., President
Bethurum Laboratories, Inc.
6371 Richmond, #200
Houston, TX 77057
(713) 266-8005
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SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND MAY NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. FOR A MORE COMPLETE
UNDERSTANDING OF THE REINCORPORATION PROPOSAL AND FOR A MORE COMPLETE
DESCRIPTION OF THE REINCORPORATION PROPOSAL, YOU SHOULD CAREFULLY READ THIS
ENTIRE DOCUMENT, THE OTHER AVAILABLE INFORMATION REFERRED TO IN "WHERE YOU CAN
FIND MORE INFORMATION" ON PAGE 44 AND THE DOCUMENTS ATTACHED AS APPENDIXES TO
THIS PROXY STATEMENT/PROSPECTUS.
Overview
Bethurum is furnishing this Proxy Statement/Prospectus to allow its
shareholders to consider and vote on the Reincorporation Proposal. The
Reincorporation Proposal is a proposal by our Board of Directors which, if
approved by our shareholders and effected, would result in the change of
Bethurum's domicile from the State of Utah to the British Virgin Islands.
The Company (see page 20)
Bethurum Laboratories, Inc.
6371 Richmond, #200
Houston, TX 77057
(713) 266-8005
Bethurum Utah has recently adopted a business plan to attempt to commence
operations in the wireless telecommunications networks in developing markets in
third world countries and to raise the necessary capital to engage in this
industry. We anticipate that we will commence operation in the
telecommunications business by the acquisition of one or more companies
currently engaged in the telecommunications business. We also anticipate that
future acquisitions will be authorized solely by approval of our Board of
Directors without seeking shareholder approval, unless shareholder approval is
required under the laws of the British Virgin Islands.
The Special Meeting (see page 22)
The Special Meeting will be held on November 10, 2000, at 10:00 a.m.,
local time, at the Sheraton City Centre Hotel, 150 West 500 South, Salt Lake
City, UT. At the Special Meeting, you will be asked to consider and vote upon
the Reincorporation Proposal. The reincorporation of Bethurum in the British
Virgin Islands will occur only if the holders of a majority of the outstanding
shares of Bethurum Utah approve the Reincorporation Proposal. Our management and
our largest shareholder, who together own more than 68% of our shares, have
indicated they will vote in favor of the Reincorporation Proposal. Accordingly,
no additional votes will be necessary to approve the Reincorporation Proposal.
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Record Date (see page 22)
Holders of record of Bethurum Utah common stock at the close of business on
October 19, 2000 are entitled to notice of, and to vote at, the Special Meeting.
As of that date, there were 3,300,750 shares of Bethurum Utah common stock
issued and outstanding held by approximately 198 holders of record. If you held
Bethurum Utah common stock on the record date, you are entitled to one vote per
share on any matter that may properly come before the Special Meeting.
Voting Procedures (see page 23)
Approval of the Reincorporation Proposal by the Bethurum Utah shareholders
will require the affirmative vote of the holders of a majority of the
outstanding shares of Bethurum Utah common stock. You can vote your shares by
attending the Special Meeting and voting in person or by mailing the enclosed
proxy card.
Recommendations (see page 37)
The Board of Directors has unanimously determined that the terms of the
Reincorporation Proposal are advisable and fair to you and in your best
interest. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE REINCORPORATION PROPOSAL.
Terms of the Reincorporation Merger Agreement (see page 35)
The Reincorporation Merger Agreement is attached to this Proxy Statement as
Appendix C. You should read the Reincorporation Merger Agreement in its
entirety. It is the legal document that governs the Reincorporation Merger. The
Reincorporation Merger Agreement provides that Bethurum Utah will be merged with
and into Bethurum BVI, with Bethurum BVI being the surviving corporation. As a
Bethurum Utah shareholder, each of your shares of Bethurum Utah common stock
will automatically be converted into the same number of shares of Bethururm BVI,
unless you exercise your dissenting shareholder rights. You will be sent written
instructions for surrendering your certificates after we have completed the
Reincorporation.
Comparison of Corporate Law
The corporate governing documents of Bethurum BVI and the corporate laws of
the British Virgin Islands are similar to, but not identical with the corporate
governing documents of Bethurum Utah and the corporate laws of Utah. A more
detailed description of the comparison of corporate governing documents and
corporate laws are set forth on pages 25 to 34 of this Proxy
Statement/Prospectus.
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Tax Treatment
Bethurum believes that, under current regulations and for United States
federal income tax purposes, neither Bethurum nor Bethurum's shareholders will
be taxed on the exchange of shares of Bethurum Utah common stock for shares of
Bethurum BVI pursuant to the Reincorporation Merger Agreement. To review the
federal income tax consequences in greater detail, see "Tax Consequences" on
pages 35 through 37 of this Proxy Statement/Prospectus. You should consult your
own tax advisor for a full understanding of the tax consequences of the
Reincorporation Merger that are particular to you.
Governmental Filings
Bethurum Utah and Bethurum BVI are required to file Articles of Merger
with the State of Utah, Division of Corporations and the Registrar of
Corporations of the British Virgin Islands in connection with the
Reincorporation Merger.
Dissenters' Appraisal Rights (see page 38)
If you do not vote in favor of the proposal to approve and adopt the
Reincorporation Proposal and you comply strictly with the applicable provisions
of Sections 16-10a-1301 through 1331 of the Utah Revised Business Corporations
Act, you have the right to dissent and be paid cash for the "fair value" of your
shares of Bethurum Utah common stock, exclusive of any element of value arising
from the accomplishment or expectation of the Reincorporation Merger. To perfect
these appraisal rights with respect to the Reincorporation Merger, you must
follow the required procedures precisely. A copy of Sections 16-10a -1301
through 1331of the Utah Revised Business Corporations Act is attached to this
Proxy Statement/Prospectus as Appendix D.
Historical Market Information
There has been no "public market" for shares of Bethurum Utah's common
stock during the past five years. On or about December 13, 1999, we obtained a
listing on the OTC Bulletin Board of the NASD under the trading symbol "BTRU".
There can be no assurance that a public market for the Company's securities will
develop. There are no outstanding options, warrants or calls to purchase any of
the authorized securities of the Company. No assurance can be given that any
"public market" will develop in the common stock of the Company, or if any such
"public market" does develop, that it will continue or be sustained for any
period of time.
The number of record holders of Bethurum's common stock as of September 22,
2000, was approximately 198. Bethurum has not declared any cash dividends with
respect to its common stock, and does not intend to declare dividends in the
foreseeable future. The present intention of management is to utilize all
available funds for the development of our business, once commenced. There are
no material restrictions limiting, or that are likely to limit, Bethurum's
ability to pay dividends on its common stock.
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RISK FACTORS
BEFORE YOU APPROVE THE REINCORPORATION PROPOSAL, YOU SHOULD UNDERSTAND THE RISKS
INVOLVED. YOU SHOULD CAREFULLY CONSIDER THESE RISK FACTORS, AS WELL AS ALL OF
THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY. IF
ANY OF THE RISKS DISCUSSED IN THIS PROXY STATEMENT/PROSPECTUS ACTUALLY OCCUR,
OUR BUSINESS, FINANCIAL CONDITION AND OPERATING RESULTS COULD BE ADVERSELY
AFFECTED. AS A RESULT, THE VALUE OF OUR COMMON STOCK COULD DECLINE AND YOU MAY
LOSE ALL OR PART OF YOUR INVESTMENT.
General Risks
Extremely Limited Assets; No Source of Revenue. Bethurum has a limited
amount of cash and no other assets. We have generated no revenues for more than
five years and we do not expect to generate revenue until and unless we complete
an acquisition, of which there can be no assurance. There can be no assurance
that we will ever operate on a profitable basis. Our business plan calls for us
to attempt to commence operations in the telecommunications industry. We
anticipate that in order to commence operations in the telecommunications
industry or any other industry, we will be required to acquire a company which
is operating in the telecommunications industry or some other industry. Although
we have had discussions with potential acquisition targets, we have not yet
entered into any binding or non-binding agreements to acquire any other company.
We anticipate any acquisition will involve the issuance of our common stock.
Auditor's 'Going Concern' Opinion. The Independent Auditor's Report issued
in connection with our audited financial statements for the calendar years ended
December 31, 1999, 1998, and 1997, expresses "substantial doubt about its
ability to continue as a going concern," due to the Company's status as a
development stage company and its lack of significant operations. Subsequent to
the date of the Auditor's Report issued in connection with the financial
statements for the year ended December 31, 1999, we sold 2,950,000 shares of our
common stock for $212,500 in cash and a $100,000 promissory note. These funds
will be used for professional fees and general and administrative expenses
relating to the change of domicile, SEC filings and future acquisitions.
State Restrictions on "Blank Check" Companies. Although Bethurum has
adopted a business plan to engage in the telecommunications industry, we may be
considered a "blank check" company because we have no current operations. A
total of 36 states prohibit or substantially restrict the registration and sale
of "blank check" companies within their borders. Additionally, 36 states use
"merit review powers" to exclude securities offerings from their borders in an
effort to screen out offerings of highly dubious quality. See paragraph 8221,
NASAA Reports, CCH Topical Law Reports, 1990. We intend to comply fully with all
state securities laws, and plan to take the steps necessary to ensure that any
future offering of its securities is limited to those states in which such
offerings are allowed. However, while we have no substantive business operations
and may be deemed to be a "blank check" company, these legal restrictions may
have a material adverse impact on our ability to raise capital because potential
purchasers of our securities must be residents of
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states that permit the purchase of such securities. These restrictions may also
limit or prohibit shareholders from reselling shares of our common stock within
the borders of regulating states.
By regulation or policy statement, eight states (Idaho, Maryland, Missouri,
BVI, New Mexico, Pennsylvania, Utah and Washington), some of which are included
in the group of 36 states mentioned above, place various restrictions on the
sale or resale of equity securities of "blank check" or "blind pool" companies.
These restrictions include, but are not limited to, heightened disclosure
requirements, exclusion from "manual listing" registration exemptions for
secondary trading privileges and outright prohibition of public offerings of
such companies. Because we do not intend to make any offering of our securities
in the foreseeable future, management does not believe that any state
restriction on "blank check" offerings will have a significant impact on future
operations.
In most jurisdictions, "blank check" and "blind pool" companies are not
eligible for participation in the Small Corporate Offering Registration ("SCOR")
program, which permits an issuer to notify the Securities and Exchange
Commission of certain offerings registered in such states by filing a Form D
under Regulation D of the Securities and Exchange Commission. All states (with
the exception of Alabama, Utah, Florida, Hawaii, Minnesota, Nebraska and New
York) have adopted some form of SCOR. States participating in the SCOR program
also allow applications for registration of securities by qualification by
filing a Form U-7 with the states' securities commissions. Nevertheless, we do
not anticipate making any SCOR offering or other public offering in the
foreseeable future, even in any jurisdiction where it may be eligible for
participation in SCOR, despite its status as a "blank check" or "blind pool"
company.
The net effect of the above-referenced laws, rules and regulations will be
to place significant restrictions on our ability to register, offer and sell
and/or to develop a secondary market for shares of our common stock in virtually
every jurisdiction in the United States. These restrictions should cease once,
and if, we commence active business operations.
Management to Devote Insignificant Time to Activities of the Company.
Members of the our management do not devote their full time to our affairs.
No Market for Common Stock; No Market for Shares. Although our common stock
is quoted on the OTC Bulletin Board, there is no active market for our common
stock. If a market does develop for our shares it is expected that any market
price for our shares of common stock will likely be very volatile. In addition,
stock markets generally have experienced, and continue to experience, extreme
price and volume fluctuations which have affected the market price of many small
capital companies and which have often been unrelated to the operating
performance of these companies. These broad market fluctuations, as well as
general economic and political conditions, may adversely affect the market price
of our common stock in any market that may develop. Sales of "restricted
securities" under Rule 144 may also have an adverse effect on any market that
may develop.
Shares Eligible for Future Sale. Currently there are 3,300,750 shares of
our common stock issued and outstanding of which approximately 3,195,750 were
restricted securities prior to the
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effective date of this Proxy Statement/Prospectus. As a result of registering
all of the shares to be issued in the Reincorporation Merger, these shares will
no longer be restricted. However, all shares of Bethurum BVI issued to officers,
directors and 10% or greater shareholders of Bethurum Utah, as well as shares
issued to any other person who may be deemed to be an "affiliate" of Bethurum
Utah, will have certain resale restrictions. These resale restrictions are set
forth in Rule 145 promulgated under the Securities Act of 1933, as amended. All
affiliates of Bethurum Utah who are issued shares of Bethurum BVI in the
Reincorporation Merger are deemed to be "underwriters under Rule 145 (c) and
therefore, may not freely resale such shares. Notwithstanding underwriter
status, the affiliates of Bethurum Utah may resale their shares of Bethurum BVI
pursuant to the provisions of Rule 145 (d) which are as follows:
(1) such securities are sold by such person or party in accordance with
the provisions of paragraphs (c), (e), (f) and (g) of Rule 144;
(2) such person or party is not an affiliate of the issuer and a period
of at least one year, as determined in accordance with paragraph
(d) of Rule 144, has elapsed since the date the securities were
acquired from the issuer in such transaction, and the issuer meets
the requirements of paragraph (c) of Rule 144; or
(3) such person or party is not, and has not been for at least three
months, an affiliate of the issuer, and a period of at least two
years, as determined in accordance with paragraph (d) of Rule 144,
has elapsed since the date the securities were acquired from the
issuer in such transaction.
Accordingly, immediately following the Reincorporation Merger, Rule 145
will allow affiliates of Bethurum Utah to sell in the open market within any
three month period a number of shares that does not exceed the greater of
(4) 1% of the outstanding shares of the same class or
(5) if the common stock is quoted on NASDAQ, the average weekly trading
volume during the four calendar weeks preceding the filing of the
required notice of sale.
Despite there resale limitations, following the Reincorporation Merger,
there is a possibility that substantial amounts of common stock may be sold in
the public market by affiliate. This may adversely affect future market prices
for the common stock of Bethurum BVI and could impair the Bethurum BVI's ability
to raise capital through the sale of its equity securities.
Risks of "Penny Stock." Our common stock may be deemed to be "penny stock"
as that term is defined in Reg. Section 240.3a51-1 of the Securities and
Exchange Commission. Penny stocks are stocks (i) with a price of less than five
dollars per share; (ii) that are not traded on a "recognized" national exchange;
(iii) whose prices are not quoted on the NASDAQ automated quotation system
(NASDAQ-listed stocks must still meet requirement (i) above); or (iv) in issuers
with net tangible
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assets less than $2,000,000 (if the issuer has been in continuous operation for
at least three years) or $5,000,000 (if in continuous operation for less than
three years), or with average revenues of less than $6,000,000 for the last
three years. There has been no "established public market" for our common stock
during the last five years.
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Reg.
Section 240.15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in a
penny stock for the investor's account. Potential investors in our common stock
are urged to obtain and read such disclosure carefully before purchasing any
shares that are deemed to be "penny stock."
Moreover, Reg. Section 240.15g-9 of the Securities and Exchange Commission
requires broker-dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker-dealer made
the determination in (ii) above; and (iv) receive a signed and dated copy of
such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
our common stock to resell their shares to third parties or to otherwise dispose
of them.
Amendments to Governing Documents
Under British Virgin Island law and under the Memorandum of Association of
Bethurum BVI, the Articles of Association and Memorandum of Association of
Bethurum BVI may be amended by the resolution of the Board of Directors without
shareholder approval. Such amendments may include, but are not limited to,
amendments to change our authorized capital, including authorizing a class of
preferred stock, and amendments to change our name. Under Utah law, amendments
to our Articles of Incorporation require shareholder approval.
Telecommunications Industry Risks
We intend to commence operations in the telecommunications industry,
primarily in developing markets. It is anticipated that in order to commence
operations in the telecommunications industry, we will be required to acquire
one or more companies in reverse merger transactions. If we do complete an
acquisition and commence operations in the telecommunications industry, of which
there can be no assurance, we will be subject to risks which are unique to the
telecommunications industry. Shareholders must be aware that although we have
described telecommunications industry risks below, there can be no assurance
that we will ever engage in the telecommunications industry or in any industry.
If we are able to commence
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telecommunications industry operations through acquiring a company which is
currently operating, some of these risks set forth below may be marginally
reduced. Some of the telecommunications industry risks include, but are not
limited to the following:
The Telecommunications Market in Which We May Operate Is Highly
Competitive, and We May Not Be Able to Compete Effectively Against Companies
That Have Significantly Greater Resources than We Do, Which Could Cause Us to
Lose Customers and Impede Our Ability to Attract New Customers. The
telecommunications industry is highly competitive and is affected by the
introduction of new services by, and the market activities of, major industry
participants. If we commence operations in the telecommunications business, we
anticipate that most of our competitors will be substantially larger and have
greater financial, technical and marketing resources than we do. We anticipate
that many of our competitors have the following advantages over us:
o long-standing relationships and brand recognition with customers;
o financial, technical, marketing, personnel and other resources
substantially greater than ours;
o more funds to deploy telecommunications services;
o potential to lower prices of competitive telecommunications services that
compete with ours;
o fully deployed and operational networks; and
o benefits from existing regulations that favor the incumbent telephone
companies.
Resistance by Potential Customers to Enter into Service Arrangements with
Us May Reduce Our Ability to Increase Our Revenue. The success of any
telecommunications service we ultimately offer will be dependent upon, among
other things, the willingness of customers to accept us as a provider of voice
and data services. We anticipate that many potential customers have entered into
term contracts with incumbent telephone services providers that have penalties
for early termination, which our potential customers may not want to incur. In
addition, potential customers may not want to change their existing service
providers for a variety of reasons such as:
o longstanding service relationships with existing providers;
o potential service interruptions in switching to a new provider; and
o existing providers having financial, technical, marketing and other
resources that are substantially greater than ours.
We cannot assure you that we will be successful in overcoming the
resistance of customers to change their current integrated communications
providers, particularly those that purchase services
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from incumbent telephone companies. The lack of such success would reduce
our ability to generate revenue.
If Our Back Office and Customer Service Systems Are Unable to Meet Our
Needs, We May Not Be Able to Bill Our Customers Efficiently or Provide an
Adequate Level of Customer Service. If we commence operations in the
telecommunications industry, sophisticated back office processes and information
management systems will be vital to our growth and our ability to bill customers
accurately, initiate service for customers, achieve operating efficiencies and
improve our operating margins. Back office processes and services may be done on
an in-house basis or by a third party vendor. We anticipate that some of the
risks associated with a back office and customer service systems include:
o the failure by third-party vendors to deliver their products and services
in a timely and effective manner and at acceptable costs;
o our failure to identify key information and processing needs;
o our failure to integrate our various information management systems
effectively;
o our failure to maintain and upgrade systems as necessary; and
o our failure to attract and retain qualified systems support personnel.
Development and Expansion Risk and Possible Inability to Manage Growth. Our
success will depend, among other things, on acquiring a customer base, on our
ability to engage in business in foreign markets, on obtaining governmental
permits, and on subsequent developments in foreign, state and federal
regulations. In addition, the expansion of our business will involve
acquisitions, which could divert resources and management time and require
integration with our then existing operations. There can be no assurance that
any acquired business will be successfully integrated into our operations or
that any such acquisition will meet our expectations. Our future performance
will depend, in part, upon our ability to manage our growth effectively, which
will require us to implement and improve our operating, financial and accounting
systems, to expand, train and manage our employee base and to effectively manage
the integration of acquired businesses. These factors and others could adversely
affect the expansion of our customer base and service offerings. Our inability
either to expand in accordance with our plans or to manage our growth could have
a material adverse effect on our business, financial condition and results of
operations.
Declining Prices for Telecommunications Services Could Reduce Our Revenue
and Profitability. The telecommunications business is extremely competitive.
Long distance prices and cellular service prices have decreased substantially in
recent years and are expected to continue to decline in the future.
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Our Failure to Integrate Successfully Other Businesses We Acquire May Raise
Our Costs and Reduce Our Revenue. As part of our business strategy, we seek to
expand through investments in, or the acquisition of, other businesses that we
believe are complementary to our business. Although we regularly engage in
discussions relating to potential acquisitions, we are unable to predict whether
any acquisitions will actually occur. If we acquire companies, networks or other
complementary assets as part of our business plan, we will be subject to the
risks generally associated with acquisitions. Our ability to complete
acquisitions will depend, in part, on our ability to finance the acquisitions
(including the costs of acquisition and integration). Our ability may be
constrained by our cash flow, the level of our indebtedness at the time,
restrictive covenants in the agreements governing our indebtedness, conditions
in the securities markets and other factors, some of which are not within our
control. If we proceed with one or more acquisitions in which the consideration
consists of cash, we may use a substantial portion of our available cash to
complete the acquisitions. If we finance one or more acquisitions with the
proceeds of indebtedness, our interest expense and debt service requirements
could increase materially. Furthermore, if we use our common stock as
consideration for acquisitions, our shareholders would experience dilution of
their ownership interests represented by their shares of common stock. The
financial impact of acquisitions could materially affect our business and could
cause substantial fluctuations in our quarterly and yearly operating results.
The Telecommunications Industry Is Undergoing Rapid Technological Changes,
and New Technologies May Be Superior to the Technologies We Use. Our Failure to
Keep up with Such Changes Could Adversely Affect Our Business. The
telecommunications industry is subject to rapid and significant changes in
technology and in customer requirements and preferences. Technological
developments may reduce the competitiveness of any company we acquire and
require expensive unbudgeted upgrades or additional telecommunications products
that could be time consuming to integrate into our business, and could cause us
to lose customers and impede our ability to attract new customers. We may be
required to select one technology over another at a time when it might be
impossible to predict with any certainty which technology will prove to be more
economic, efficient or capable of attracting customers. In addition, even if we
acquire new technologies, we may not be able to implement them as effectively as
other companies with more experience with those new technologies.
Marketing Risks. Although we expect to market a variety of
telecommunications services to customers and prospective customers, there can be
no assurance that we will be able to attract and retain new customers or retain
and sell additional services to existing customers.
Government Regulation. The telecommunication business is subject to
significant regulation at the federal, state and local levels as well as by
foreign governments.
Foreign Currency Market Risk. We intend to conduct operations in foreign
markets. We will therefore be subject to foreign currency exchange rate risk
from the effects that exchange rate movements of foreign currencies would have
on our future costs or on future cash flows it would receive.
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CERTAIN INFORMATION CONCERNING BETHURUM
History
Bethurum has been an inactive company since at least 1985 but has recently
adopted a business plan to attempt to commence operations in the
telecommunications industry. The following information is a summary of the
history of Bethurum:
(1) Bethurum Utah was organized under the laws of the State of Utah on April
22, 1983, under the name "Lion Resources, Inc."
(2) Commencing July 7, 1983, Bethurum sold shares of its common stock in a
public offering. The offer and sale of the shares sold were registered with
the Utah Securities Division pursuant to Section 61-1-10 of the Utah
Uniform Securities Act. These shares were exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended, under
Section 3(b) thereof and Rule 504 promulgated by the Securities and
Exchange Commission as a part of Regulation D.
(3) On October 24, 1983, we acquired Bethurum Laboratories, Inc., a Texas
corporation ("BLI"), pursuant to an Agreement and Plan of Reorganization
(the "Bethurum Plan") in a stock-for- stock exchange.
(4) On October 27, 1983, our Articles of Incorporation were amended to change
our name to "Bethurum Laboratories, Inc."
(5) In January, 1985, the Bethurum Plan was rescinded, due to non-performance of
BLI.
(6) From 1985 to early 2000, Bethurum was inactive.
(7) On August 14, 2000, we effected a 1-for-10 reverse stock split.
Adoption of Business Plan
On June 15, 2000, our Board of Directors adopted a business plan which
calls for us to develop and market wireless telecommunications networks in
developing markets in third world countries. We anticipate that in order to
commence operations in the telecommunications industry, we will be required to
acquire one or more other companies which are currently operating in the
telecommunications industry. One of our shareholders, Benchmark Merchant
Partners, may assist us in our attempt to acquire an operating
telecommunications company. As of the date of this Proxy Statement/Prospectus,
we have not entered into any binding or non-binding agreement to acquire a
specific telecommunications company and there can be no assurance that we will
ever be able to commence operations in the telecommunications business. We have
had informal discussions with companies involved in the telecommunications
industry but have not entered into any formal informal agreements to acquire any
company. It is likely that any acquisition will be authorized by
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Board of Director approval only without seeking shareholder approval of such
acquisition unless shareholder approval is required under the laws of the
British Virgin Islands.
Benchmark Merchant Partners Agreement
On July 19, 2000 we entered into a Securities Purchase Agreement (the
Benchmark Agreement") with Benchmark Merchant Partners, LLC ("Benchmark").
Pursuant to the Benchmark Agreement, we sold Benchmark and others an aggregate
of 2,950,000 shares of our common stock (calculated after a 1-for-10 reverse
split) for an aggregate of $312,500, $100,000 of which was represented by a
promissory note. The Benchmark Agreement provided that:
(i) 1,700,000 shares issued to Benchmark would be pledged to secure
payment of the $100,000 promissory note of Benchmark that was executed and
delivered to Bethurum as partial payment of the purchase price of the
1,700,000 shares, and which promissory note is due and payable on the
earlier of the completion of an Agreement and Plan of Reorganization (the
"Acquisition Agreement") with a wireless telecommunications network company
serving developing foreign markets that has:
(8) annual revenues of not less than $50,000,000;
(9) earnings before interest, taxes, depreciation and amortization of
no less than $12,500,000; and
(10) shareholders' equity of not less than $10,000,000.
(ii) if the Acquisition Agreement executed is not completed by December
31, 2000, then, at the option of Bethurum or Benchmark, the 1,700,000
shares issued to Benchmark will be canceled by Bethurum treasury, the
promissory note will be canceled and Bethurum will pay Benchmark the sum of
$75,000, retaining the $125,000 balance of the purchase price of the
1,700,000 shares as liquidated damages;
(iii) all 2,950,000 shares issued were accorded "registration rights"
providing for the filing of a registration statement covering such
securities; and
(vi) we will change our domicile to the British Virgin Islands.
Bethurum has no written agreement or other understanding or arrangement
with any potential acquisition target. No assurance can be given that any
Acquisition Agreement or other agreement with an acquisition target will be
completed.
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THE SPECIAL MEETING
Date, Time and Place of the Special Meeting
The Special Meeting will be held on November 10, 2000 at 10:00 a.m., local
time at the Sheraton City Centre Hotel, 150 West 500 South, Salt Lake City Utah.
Matters to Be Considered at the Special Meeting
The purpose of the Annual Meeting is for the shareholders of Bethurum to:
1. Consider and vote upon a proposal to reincorporate Bethurum in the British
Virgin Islands.
2. Transact any such other business as may come before the meeting or any
adjournment or adjournments thereof.
The Board has determined that the Reincorporation Proposal is advisable and
is fair to, and in the best interests of, Bethurum and the shareholders of
Bethurum and has unanimously approved and adopted the Reincorporation Proposal.
The Board of Directors unanimously recommends that the shareholders of Bethurum
vote FOR approval and adoption of the Reincorporation.
Proxy Solicitation
The Board of Directors is soliciting your proxy pursuant to this Proxy
Statement/Prospectus. The entire cost of soliciting management proxies will be
borne by Bethurum. Benchmark Merchant Partners, the largest shareholder of
Bethurum, has agreed to pay up to $40,000 of the cost of preparing this Proxy
Statement/Prospectus and effecting the change of domicile. Our officers and
directors may solicit proxies in person or by telephone. They will receive no
additional compensation for their services. We have requested brokers and
nominees who hold stock in Bethurum in their names to furnish this Proxy
Statement/Prospectus to their customers and we will reimburse these brokers and
nominees for their related out-of-pocket expenses.
Record Date and Quorum Requirement
The Bethurum common stock is the only outstanding voting security of
Bethurum. The Board of Directors has fixed the close of business on October 19,
2000 as the record date for the determination of shareholders entitled to notice
of, and to vote at, the Special Meeting and any adjournments or postponements of
the Special Meeting. If you hold Bethurum common stock at the close of business
on the record date, you will be entitled to one vote for each share you hold on
each matter submitted to a vote of shareholders. At the close of business on the
record date, there were 3,300,750 shares of Bethurum common stock issued and
outstanding held by approximately 198 holders of record.
The holders of a majority of the outstanding shares entitled to vote at the
Special Meeting must be present in person or represented by proxy to constitute
a quorum for the transaction of business. Abstentions are counted as present for
purposes of determining the presence or absence of a quorum for the transaction
of business.
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All proxies received pursuant to this solicitation will be voted at the
Special Meeting and at any adjournments thereof as indicated in the Proxy. If no
instructions are given, all shares represented by valid proxies received
pursuant to this solicitation (and not revoked before they are exercised) will
be voted FOR the Reincorporation Proposal.
Voting Procedures
Approval of the Reincorporation Proposal will require the affirmative
vote of the holders of a majority of the outstanding shares of Bethurum common
stock entitled to vote at the Special Meeting. If you fail to vote, or vote to
abstain, it will have the same legal effect as a vote cast against approval of
the Reincorporation Proposal. Your broker and, in many cases, your nominee, will
not have discretionary power to vote on the Reincorporation Proposal to be voted
upon at the Special Meeting. Accordingly, you should instruct your broker or
nominee how to vote. A broker non-vote will have the same effect as a vote
against the Reincorporation Proposal.
If there are insufficient votes to approve the Reincorporation Proposal at
the Special Meeting, your proxy may be voted to adjourn the Special Meeting in
order to solicit additional proxies in favor of approval of the Reincorporation
Proposal if you voted in favor of the Reincorporation Proposal or gave no voting
instructions. We anticipate that there will be sufficient votes to approve the
Reincorporation Proposal because our management and largest shareholder have
indicated they will vote in favor of the Reincorporation Proposal. However, if
the Special Meeting is adjourned or postponed for any purpose, at any subsequent
reconvening of the Special Meeting, your proxy will be voted in the same manner
as it would have been voted at the original convening of the Special Meeting
unless you withdraw or revoke your proxy. Your proxy may be voted this way even
though it may have been voted on the same or any other matter at a previous
Special Meeting.
Under Utah law, if you do not vote in favor of the Reincorporation Proposal
and comply with certain notice requirements and other procedures, you will have
the right to dissent and to be paid cash for the "fair value" of your shares as
finally determined under such procedures, which will exclude any element of
value arising from the accomplishment or expectation of the Merger. This payment
may be more than, the same as, or less than the consideration to be received by
other shareholders of Bethurum under the terms of the Reincorporation Proposal.
If you fail to follow such procedures precisely, you may lose your appraisal
rights. See "Rights of Dissenting Shareholders" on Page 38 of this Proxy
Statement.
Voting and Revocation of Proxies
You may revoke your proxy at any time before it is exercised by (i) filing
with the Secretary of Bethurum an instrument revoking it, (ii) submitting a
properly executed proxy bearing a later date or (iii) voting in person at the
Special Meeting. Subject to such revocation, all of your shares represented by a
properly executed proxy received by the Secretary of Bethurum will be voted in
accordance with your instructions, and if no instructions are indicated, will be
voted to approve and adopt the Reincorporation Proposal and in such manner as
the persons named on the enclosed proxy card in their discretion determine upon
such other business as may properly come before the Special Meeting or any
adjournment or postponement of the Special Meeting.
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Your shares will be voted by proxy at the Special Meeting if your proxy
card is properly signed, dated and received by the Secretary of Bethurum prior
to the Special Meeting.
Effective Time of the Reincorporation Merger
The effective time of the Reincorporation Merger will be the date and time
of filing of the Articles of Merger with the State of Utah and with the British
Virgin Islands. This is currently expected to occur as soon as practicable after
the Special Meeting, subject to approval and adoption of the Reincorporation
Proposal at the Special Meeting. Detailed instructions with regard to the
surrender of Bethurum common stock certificates, together with a letter of
transmittal, will be forwarded to you by our transfer agent promptly after the
effective time. You should not submit your certificates to our transfer agent
until you have received these materials. The transfer agent will send you
certificates for shares of Bethurum BVI as promptly as practicable following
receipt by the transfer agent of your certificates and other required documents.
PROPOSAL 1
REINCORPORATION PROPOSAL
You are being asked to consider and approve the Reincorporation Proposal.
Our Board of Directors has unanimously approved and, for the reasons described
below, unanimously recommends that our shareholders approve a proposal which
provides, among other things, for the change of our domicile from the State of
Utah to the British Virgin Islands (the "Reincorporation Proposal"). In order to
change our domicile to the British Virgin Islands, we have formed a wholly-owned
subsidiary corporation in the British Virgin Islands. In this Proxy
Statement/Prospectus, we refer to this subsidiary as "Bethurum BVI." If our
shareholders approve the Reincorporation Proposal, Bethururm Utah will merge
into Bethurum BVI and Bethurum BVI will be the surviving company.
As the result of the Reincorporation Merger, we will be a British Virgin
Islands corporation. If the Reincorporation Proposal is approved and the
Reincorporation completed, your rights as a shareholder will cease to be
governed by Utah law and you will be governed by British Virgin Islands law (the
International Business Companies Ordinance of 1984).
If the Reincorporation is completed, instead of our current Articles of
Incorporation and Bylaws, we will be governed by a Memorandum of Association and
by Articles of Association. Both of these documents have been filed with the
corporation authorities in the British Virgin Islands. See Appendix A and
Appendix B attached to this Proxy Statement/Prospectus.
If the Reincorporation Proposal is approved by our shareholders, we intend
to file Articles of Merger with the Utah Division of Corporations and the
Registrar of Corporations in the British Virgin Islands as soon as practical.
When these Articles of Merger are filed, the Reincorporation shall be effective.
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Purposes of the Reincorporation Proposal- Change of Domicile
There are three primary reasons that our Board of Directors has recommended
that our shareholders approve the Reincorporation Proposal. These reasons
include the following:
(11) We have entered into a Security Purchase Agreement with Benchmark
Merchant Partners, LLC ("Benchmark") in which we agreed to change
our domicile to the British Virgin Islands;
(12) As part of our business plan, we intend to look for
telecommunication industry related acquisitions in developing
foreign markets including but not limited to the Carribean, South
America or Central America. We believe that because of this
business plan, it is in the best interests of Bethurum and our
shareholders to change our domicile to the British Virgin Islands.
We believe this will give us an appearance of a more localized
business if we seek acquisitions in the Carribean, South America or
Central America than if we remained a Utah corporation.
Furthermore, if we are successful in completing one or more
acquisitions in the Carribean, South America or Central America, or
any other foreign countries, of which there can be no assurance, we
believe that the investment and brokerage community will have
greater interest in becoming involved with us if we are not
incorporated in Utah; and
(13) If we our domiciled outside of the United States and if all of our
operations are outside of the United States, we anticipate that we
will not incur any state franchise tax or income tax liability in
Utah or in any other state. We also anticipate that there will be
no income taxes payable to the government of the British Virgin
Islands unless we actually conduct active business operations in
the British Virgin Islands.
For the foregoing reasons, our Board of Directors believes that the
activities of Bethurum can be carried on to better advantage if Bethurum is able
to operate under the laws of the British Virgin Islands.
The following discussion summarizes important aspects of the
Reincorporation Proposal demonstrating that there is no substantial negative
impact on share rights from the change. This summary does not purport to be a
complete description of the Reincorporation Proposal or of Utah or British
Virgin Islands corporate law. Copies of the existing Articles of Incorporation
and Bylaws of Bethurum Utah are available for inspection at our offices and
copies will be sent to shareholders on request. A copy of the Memorandum of
Association and Articles of Association of Bethurum BVI are attached to this
Proxy Statement/Prospectus as Appendix A and Appendix B. All shareholders are
urged to read such documents in their entirety.
The Reincorporation Merger
At the time of the Reincorporation Merger, Bethurum BVI will be a
wholly-owned subsidiary of Bethurum Utah. It was organized for the sole purpose
of effecting the reincorporation of Bethurum Utah in the British Virgin Islands.
The Reincorporation will involve the merger of Bethurum Utah with and into
Bethurum BVI We formed Bethurum BVI under the name of
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Bethurum Laboratories, Ltd., however, we anticipate that in the future, the name
of Bethurum will be changed, either prior to or in connection with, the
acquisition of an operating company. Under British Virgin Islands law and under
the Articles of Association of Bethurum BVI, the Board of Directors of Bethurum
BVI may, with, or without shareholder approval, amend Bethurum BVI's Articles of
Association and Memorandum of Association to change the company's name or for
any other purpose.
Existing stock certificates will remain valid and there is no need for
shareholders to exchange existing stock certificates for new ones; provided,
however, we will encourage shareholders to exchange certificates to give effect
to the Reincorporation. At the effective time of the Reincorporation, the
separate existence of Bethurum Utah will cease and Bethurum BVI will succeed, to
the extent permitted by law, to all the business, properties, assets and
liabilities of the Company.
There are currently, 3,300,750 shares of Bethurum Utah issued to our
shareholders. As a result of the Reincorporation Merger, all of these shares
will be automatically converted into 3,300,750 shares of Bethurum BVI. Each
share of Bethurum Utah that you own will be converted into one share of Bethurum
BVI in the Reincorporation Merger. No person, except for the shareholders of
Bethurum Utah, will be issued shares of Bethurum BVI as part of the
Reincorporation Proposal. Therefore, if you own 1% of Bethurum Utah before the
Reincorporation Merger, you will own 1% of Bethurum BVI immediately following
the Reincorporation Merger.
Approval of the Reincorporation Proposal by our shareholders will also
constitute approval of the Bethurum BVI Articles of Association and Memorandum
of Association which will be our governing corporate documents in place of our
current Articles of Incorporation and Bylaws. In addition, as shareholders of a
BVI corporation, the rights of shareholders of Bethurum BVI will be governed by
British Virgin Islands corporate law rather than Utah law.
Effect of Changing Bethurum's Place of Incorporation
By changing our place of incorporation, Bethurum Utah will experience
changes in governing corporate law and our governing documents. Bethurum Utah
and certain of its stockholders could also experience certain tax consequences.
As a result of changing our place of incorporation, Bethurum will be
incorporated in the British Virgin Islands and will no longer be incorporated in
the State of Utah. On the date we change our place of incorporation we will be
subject to the laws of the British Virgin Islands. We will not, however, be
relieved of any obligations or liabilities we incurred before changing our place
of incorporation because our existence as a corporation will be deemed to have
commenced on the date we were incorporated in the State of Utah.
The following description of certain differences between British Virgin
Islands corporate law and Utah corporate law is only a summary and does not
purport to be complete or to address every applicable aspect of such laws. The
following description is qualified in its entirety by references to (I) British
Virgin Islands law; (ii) Utah law, (iii) the Bethurum Utah Articles of
Incorporation and Bylaws; and (iv) the Bethurum BVI Articles of Association and
Memorandum of Association.
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Capital Structure and Voting
Bethurum Utah. Bethurum Utah has, as its authorized capital, 100,000,000
shares of common stock, $.001 par value. There are currently 3,300,750 shares of
Bethurum Utah issued and outstanding. Fractional shares may not be issued. The
shares do not carry cumulative voting rights or pre-emptive rights. Under Utah
law, shares may be issued for any consideration deemed appropriate by the Board
of Directors.
The owners of a Utah corporation's shares are referred to as
"shareholders." Each shareholder of record is entitled to vote the shares
registered in his name. However, shares of public companies are frequently held
in nominee names, including clearing agencies, broker-dealers or banks, and
voted through a series of proxies.
Under Utah law, increases in a Utah corporation's authorized capital
requires shareholder and director approval of an amendment to the corporation's
Articles of Incorporation.
Bethurum BVI. Bethurum BVI will have, as its authorized capital,100,000,000
shares of common stock, of no par value. In the British Virgin Islands, the
lowest permissible par value is $.01. We have elected to utilize no par value
rather than change our par value from $.001 to $.01. After the reincorporation
is effective, there will be 3,300,750 shares of Bethurum BVI issued and
outstanding. Fractional shares may be issued under British Virgin Islands law.
The shares of Bethurum BVI do not carry cumulative voting rights or
pre-emptive rights. Under British Virgin Islands law, shares may be issued for
such amount as may be determined by the Board of Directors except in the case of
shares with par value the consideration shall not be less than par value.
The owners of a British Virgin Islands company's shares are referred to
under British Virgin Islands law as "members" but for purposes of this Proxy
Statement/Prospectus, we have continued to refer to the share owners as
"shareholders." Under the Memorandum of Association of Bethurum BVI, and under
British Virgin Islands law, shares of a Bethurum BVI may be issued as registered
shares or as "bearer shares." Bearer shares are similar to shares held in
nominee name, however, the person physically possessing the bearer shares is
considered to be the member of the company and is entitled to vote the shares at
meetings of members (which we shall refer to for the purposes of this Proxy
Statement/Prospectus as a "shareholder meeting" or a "meeting of shareholders").
Under British Virgin Islands law and the Memorandum of Association of
Bethurum BVI, changes to the corporation's authorized capital, including the
authorization of a class of preferred stock, as well as other capital changes,
may be made through amendments to the Memorandum of Association approved only by
the directors and shareholder approval is not required. However, an amendment to
the Memorandum and Articles of Association is not effective until it is filed at
the Companies Registry in the British Virgin Islands. Under Utah law,
shareholder approval is required in order to amend the Articles of
Incorporation.
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Directors and Officers
Under Utah law, the number of directors of a Utah corporation and the
designation of officers is determined in accordance with the corporation's
Bylaws (unless designated in the Articles of Incorporation). Directors will be
elected, at any shareholder meeting duly called and held for such purpose at
which a quorum is present, by a plurality of the voting power of the shares
present in person or represented by proxy at the meeting and entitled to vote.
Vacancies on the Bethurum Utah board are filled by the majority vote of the
remaining directors, although less than a quorum, or by a sole remaining
director or by unanimous written consent of the directors. Officers are
appointed by directors.
Under the Memorandum of Association of Bethurum BVI, the minimum number of
directors is one and the maximum is seven. Directors will be elected, at any
shareholder meeting duly called and held for such purpose at which a quorum is
present, by a majority of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote or by a written
resolution consented to by the holders of a majority of the shares entitled to
vote thereon. Vacancies on the Bethurum BVI board will be filled by the majority
vote of the remaining directors, although less than a quorum, or by a sole
remaining director or by unanimous written consent of the directors. Officers
are appointed by directors. A majority of the total number of Bethurum board
members will constitute a quorum. Officers are appointed by directors
Removal of Directors
Under Utah law, directors may be removed, with or without cause, by the
holders of a majority of the shares entitled to vote. Directors may also be
removed by a judicial proceeding brought by the corporation or by the owners of
10% or more the corporations's common stock if the court finds that (a) the
director engaged in fraudulent or dishonest conduct or gross abuse of authority
or discretion with respect to the corporation, and (b) removal is in the best
interest of the corporation.
Under British Virgin Islands law and subject to the organizational
documents of Bethurum BVI, directors may be removed by a resolution of directors
or by a resolution of shareholders. The organizational documents of Bethurum BVI
permit the removal of directors by resolution of other directors only with
cause. Such removal requires a resolution of directors (approved by a simple
majority of directors present at a duly convened and constituted meeting who
voted and did not abstain or by all directors in writing). Directors may be
removed, with or without cause, by the holders of a majority of the shares
entitled to vote.
Actions by Written Consent of Shareholders
Under Utah law, shareholders may act by written consent without a meeting.
Under the Utah Revised Business Corporations Act effective July 1, 1992, in
connection with Utah corporations formed prior to July 1, 1992, the required
written consent of shareholders must be unanimous unless a resolution providing
otherwise is approved either: (a) by a consent in writing, setting forth the
proposed resolution, signed by all of the shareholders entitled to vote with
respect to the subject matter of the resolution; or (b) at a duly convened
meeting of shareholders, by the vote of the same percentage of shareholders of
each voting group as would be required to include the resolution in an amendment
to the corporation's articles of incorporation. Bethurum Utah has not adopted
such a resolution, and therefore, a shareholder vote by written consent must be
signed by all Bethurum Utah shareholders.
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Under British Virgin Islands law and subject to the organizational
documents of Bethurum BVI, shareholders may act by written consent of a majority
of the shareholders without holding a meeting.
Control Shares Act
The Utah Control Shares Acquisitions Act (the "CAA") provides that a person
who makes a control share acquisition will not be permitted to vote those shares
unless approved in accordance with the statute. "Control shares" means shares of
an issuing public corporation, such as Bethurum Utah, that would entitle the
person to exercise or direct the exercise of the voting power of the corporation
in the election of directors within any of the following ranges of voting power:
(14) 1/5 or more but less than 1/3 of all voting power; (15) 1/3 or more
but less than a majority of all voting power; or (16) a majority or more of
all voting power.
A control share acquisition does not include the acquisition of voting
power pursuant to a revocable proxy if the revocable proxy is solicited by the
issuing public corporation or its board of directors in connection with
shareholders' meetings or actions of the issuing public corporation.
The CAA requires a person who makes or proposes to make a control share
acquisition to deliver an "acquiring person" statement to the issuing public
corporation. Together with that statement, the acquiring person may request a
special meeting of shareholders of the issuing public corporation if the
acquiring person undertakes to pay the expenses of the special meeting. After
receiving the request, the issuing public corporation must call a special
meeting of shareholders for the purpose of considering the voting rights to be
accorded the shares acquired or to be acquired in the control share acquisition.
The CAA provides that control shares acquired in a control share acquisition
will have the same voting rights as were accorded the shares before the control
share acquisition only to the extent granted by resolution approved by the
shareholders of the issuing corporation by each voting group entitled to vote
separately on the proposal by a majority of all votes entitled to be cast by
that group, excluding all interested shares. The CAA defines "interested shares"
as shares in respect of which any of the following persons may exercise or
direct the exercise of the corporation's voting power:
(17) an acquiring person with respect to a control share acquisition; (18)
any officer of the issuing public corporation; or (19) any employee of the
issuing public corporation who is also a director of the
corporation.
Under certain circumstances, the CAA makes it more difficult for an
interested shareholder to effect a change in control of a corporation, although
the shareholders may, by adopting an
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amendment to the corporation's charter or bylaws, elect not to be governed by
this section, if the amendment is effective prior to the control share
acquisition. Bethurum Utah has not made this election.
Neither corporate law of the British Virgin Islands nor the proposed
Articles of Association nor Memorandum of Association have similar restrictions
for "control share acquisitions".
Mergers, Consolidations and Sales of Assets
Under Utah law, with certain exceptions, any merger, consolidation or sale
of all or substantially all of the corporation's assets must be approved by the
board and a majority of the outstanding shares entitled to vote.
Under British Virgin Islands law and subject to the organizational
documents of Bethurum BVI, a merger, consolidation or substantial sale of assets
must be approved by the board and the shareholders.
Rights of Dissenting Shareholders
Generally, shareholders of a Utah corporation who dissent from a merger or
consolidation for which a shareholders' vote is required are entitled to
appraisal rights that require the surviving corporation to purchase the
dissenting shares at fair value, as determined in a judicial proceeding. There
are, however, generally no statutory rights of appraisal with respect to
shareholders of a Utah corporation whose shares of stock are of any class or
series of shares which either were listed on a national securities exchange
registered under the federal Securities Exchange Act of 1934, as amended, or on
the National Market System of the National Association of Securities Dealers
Automated Quotation System, or were held of record by more than 2,000
shareholders, at the time of:
(a) the record date fixed under Section 16-10a-707 to determine the
shareholders entitled to receive notice of the shareholders' meeting at
which the corporate action is submitted to a vote;
(b) the record date fixed under Section 16-10a-704 to determine
shareholders entitled to sign writings consenting to the proposed corporate
action; or
(c) the effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
The limitation set forth above does not apply if the shareholder will
receive for his shares, pursuant to the corporate action, anything except:
(a) shares of the corporation surviving the consummation of the plan of
merger or share exchange;
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(b) shares of a corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities
exchange registered under the federal Securities Exchange Act of 1934, as
amended, or on the National Market System of the National Association of
Securities Dealers Automated Quotation System, or will be held of record by
more than 2,000 shareholders; or
(c) cash in lieu of fractional shares.
British Virgin Islands law provides for compulsory appraisal of the
interests of a shareholder (and payment of the fair market value of his or her
shares) who dissents from a merger of a corporation (except where such
corporation is the surviving corporation and the shareholder continues to hold
the same or similar shares), a consolidation, sale or other disposition of more
than 50% of the corporation's assets not made in the usual or regular course of
the corporation's business, or a redemption.
Dissolution
Under Utah law, a corporation may voluntarily dissolve if a majority of the
board adopts a resolution to that effect and the holders of a majority of
outstanding stock entitled to vote thereon vote for such dissolution or all
shareholders entitled to vote thereon consent in writing to such dissolution.
Under British Virgin Islands law, and subject to the organizational
documents of Bethurum BVI, the corporation may dissolve voluntarily by a
resolution of directors or by a resolution of shareholders.
Inspection of Shareholder List and Books and Records
Utah law allows any shareholder to inspect the shareholder list and the
corporation's books and records for a purpose reasonably related to such
person's interests as a shareholder.
British Virgin Islands law provides that a shareholder may, for a proper
purpose, request to inspect the share register books, records, minutes and
consents kept by a corporation and make extracts or copies thereof. However,
British Virgin Islands law also provides that a corporation such as Bethurum BVI
may refuse such a request if determined by a resolution of directors that it is
not in the best interests of the corporation or its shareholders to comply with
such request. Upon the corporation's refusal of a request, the shareholder may,
before the expiration of a 90-day period after receiving notice of the refusal,
apply to a court for an order to allow inspection.
Amendment of Memorandum of Association/Certificate of Incorporation
Under Utah law, an amendment to a corporation's certificate of
incorporation requires (1) adoption of a resolution by the board and (2) the
affirmative vote of a majority of the outstanding stock entitled to vote
thereon.
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Under British Virgin Islands law, a corporation may amend its Memorandum of
Association by a resolution of shareholders or, if permitted by its
organizational documents, by a resolution of directors. The organizational
documents of Bethurum BVI generally permit the corporation to amend its
Memorandum of Association by a resolution of shareholders (approved by a simple
majority of the votes of the shares present at a duly convened and constituted
meeting and entitled to vote and that voted and did not abstain) or by a
resolution of directors (approved by all directors present at a duly convened
and constituted meeting who voted and did not abstain or by all directors in
writing).
Amendment of Articles of Association/Bylaws
The Articles of Incorporation of Bethurum Utah grants to the Board of
Directors the exclusive right authority to adopt, amend or repeal Bethurum
Utah's bylaws, but such action must be approved by all of the directors.
Under British Virgin Islands law, a corporation may amend its Articles of
Association by a resolution of shareholders or, if permitted by its
organizational documents, by a resolution of directors. The organizational
documents of Bethurum BVI permit the corporation to amend its articles of
association by a resolution of shareholders (approved by a simple majority of
the votes of the shares present at a duly convened and constituted meeting and
entitled to vote and that voted and did not abstain) or by a resolution of
directors (approved by a simple majority of directors present at a duly convened
and constituted meeting who voted and did not abstain or by all directors in
writing).
Transactions Involving Directors or Officers
A Utah corporation may lend money to, or guarantee any obligation incurred
by, its directors or officers if in the judgment of the board such loan or
guarantee may reasonably be expected to benefit the corporation. With respect to
any other contract or transaction between the corporation and one or more of its
directors or officers, such transactions are neither void nor voidable solely
for this reason if either (1) the director's or officer's interest is made known
to the disinterested directors or the shareholders of the corporation, who
thereafter approve the transaction in good faith, or (2) the contract or
transaction is fair to the corporation as of the time it is approved or ratified
by either the board, a committee thereof or the shareholders.
British Virgin Islands law and the organizational documents of Bethurum BVI
provide that no agreement or transaction between the corporation and one or more
of its directors or any entity in which any director has a financial interest is
void or voidable, just because:
(20) the director is present at the meeting of directors, or at the
meeting of the committee of directors, that approves the agreement
or transaction; or
(21) the vote or consent of the director is counted at such vote if:
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(22) the material facts of the interest of such interested director are
disclosed in good faith or are known by the other directors; and
(23) all disinterested directors, who are not of a number sufficient to
approve a resolution, approve such transaction.
Alternatively, the interest in the transaction may be disclosed or known to
or ratified by the shareholders. In addition, a director who has an interest in
any particular business to be considered at a meeting of directors or
shareholders may be counted for purposes of determining whether the meeting is
duly constituted.
Limitation of Liability of Directors
Under Utah law, a corporation may include in its Articles of Incorporation
a provision which would, subject to the limitations described below, eliminate
or limit director liability for monetary damages for breaches of their fiduciary
duty of care. Under Utah law, a director's liability cannot be eliminated or
limited for (1) breaches of the duty of loyalty, (2) acts or omissions not in
good faith or that involve intentional misconduct or a knowing violation of law,
(3) the payment of unlawful dividends or expenditure of funds for unlawful stock
purchases or redemptions, or (4) transactions from which such director derived
an improper personal benefit. The organizational documents of Bethurum Utah do
not presently limit a director's liability to the fullest extent permitted by
Utah law.
Under British Virgin Islands law, liability of a corporate director to the
corporation is limited to cases where the director has not acted honestly and in
good faith and with a view to the best interests of the corporation or to cases
where the director has not exercised the care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances. Under the
organizational documents of Bethurum BVI, the corporation is authorized to
indemnify any person who is made or threatened to be made a party to a legal or
administrative proceeding by virtue of being a director, officer or liquidator
of the corporation, provided such person acted honestly and in good faith and
with a view to the best interests of the corporation and, in the case of a
criminal proceeding, such person had no reasonable cause to believe that his or
her conduct was unlawful. The organizational documents of Bethurum BVI also
obligate the corporation to indemnify any director, officer or liquidator of the
corporation who was successful in any of the aforementioned proceedings against
expenses and judgments, fines and amounts paid in settlement and reasonably
incurred in connection with the proceedings, regardless of whether such person
met the standard of conduct described in the preceding sentence.
While British Virgin Islands law does permit a shareholder of a British
Virgin Islands corporation to sue its directors derivatively (i.e., in the name
of and for the benefit of the corporation) and to sue the corporation and its
directors for the shareholder's benefit and for the benefit of others similarly
situated, the circumstances in which any such action may be brought, and the
procedures and defenses that may be available in respect of any such action, may
result in the rights of shareholders of a British Virgin Islands corporation
being more limited than those of shareholders of a corporation organized in
Utah.
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Shareholder Derivative Suits
Under Utah law a shareholder may only bring a derivative action on behalf
of the corporation if the shareholder was a shareholder of the corporation at
the time of the transaction in question or his or her stock thereafter devolved
upon him or her by operation of law.
While British Virgin Islands law does permit a shareholder of a British
Virgin Islands corporation to sue its directors derivatively (i.e., in the name
of and for the benefit of the corporation) and to sue the corporation and its
directors for the shareholder's benefit and for the benefit of others similarly
situated, the circumstances in which any such action may be brought, and the
procedures and defenses that may be available in respect of any such action, may
result in the rights of shareholders of a British Virgin Islands corporation
being more limited than those of shareholders of a corporation organized in
Utah.
Fiscal Year
Bethurum BVI's fiscal year will end on December 31, the same as BVI Utah.
Terms of Reincorporation Merger Agreement
The description of the Reincorporation Merger Agreement set forth below
describes the material terms, but does not purport to describe all of the terms,
of the Reincorporation Merger Agreement. The full text of the Reincorporation
Merger Agreement, as amended, is attached as Appendix "C" to this document and
is incorporated by reference herein. All shareholders are urged to read the
Reincorporation Merger Agreement in its entirety.
Structure of the Merger. At the time the Reincorporation Merger becomes
effective, Bethurum Utah will merge with and into its wholly-owned subsidiary,
Bethurum BVI as the surviving corporation.
Merger ConsiderationEach share of Bethurum Utah will be converted into one
share of Bethurum BVI.
Completion of the Merger. The Reincorporation Merger will become effective
when we file Articles of Merger with the Division of Corporations of the State
of Utah and the Registrar of Corporations in the British Virgin Islands.
Exchange Agent; Procedures for Exchange of Certificates. After the
completion of the merger, Bethurum BVI will appoint American Registrar &
Transfer to serve as exchange agent and will deliver to the exchange agent
certificates representing the number of shares of Bethurum BVI common stock to
be issued in the merger. The exchange agent will, according to irrevocable
instructions, deliver to Bethurum Utah shareholders shares of Bethurum BVI
common stock.
The exchange agent will mail to each Bethurum Utah shareholder a letter of
transmittal and instructions to surrender his or her certificates representing
Bethurum Utah common stock in exchange for certificates representing shares of
Bethurum BVI common stock and cash in lieu of
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fractional shares. After a Bethurum Utah shareholder surrenders his or her
Bethurum Utah common stock certificate along with a duly executed and properly
completed letter of transmittal and other required documents, the exchange agent
will deliver to such shareholder a certificate representing the number of whole
shares of Bethurum BVI common stock to which such shareholder is entitled.
Bethurum Utah shareholders should not forward their Bethurum Utah common
stock certificates with the enclosed proxy card, nor should they forward their
Bethurum Utah common stock certificates to the exchange agent until they have
received the packet of information, including a letter of transmittal, described
above.
Tax Consequences
The following discussion summarizes the material United States federal
income tax consequences of the change in Bethurum Utah's place of incorporation.
This discussion is based upon the Code, the Treasury regulations promulgated
thereunder and administrative rulings and court decisions in effect as of the
date hereof, all of which are subject to change, possibly with retroactive
effect. This discussion does not address all aspects of United States federal
income taxation that may be relevant to a shareholder in light of the
shareholder's particular circumstances or to those shareholders subject to
special rules, such as shareholders who are financial institutions, tax-exempt
organizations, insurance companies or dealers in securities, shareholders who
acquired their stock pursuant to the exercise of options or similar derivative
securities or otherwise as compensation or shareholders who hold their stock as
part of a straddle or conversion transaction, nor does it address any
consequences arising under the laws of any local, state or foreign jurisdiction.
This discussion assumes that shareholders hold their respective shares of stock
as capital assets within the meaning of Section 1221 of the Code. All
shareholders are urged to consult their own tax advisors as to the particular
tax consequences to them of the change in Bethurum Utah's place of
incorporation.
Bethurum Utah has not applied for a tax ruling with respect to the
Reincorporation Proposal, nor have we obtained an opinion of counsel with
respect to the Reincorporation Proposal. Therefore, no assurances can be given
that the expected tax result will be achieved in the proposed transaction.
Bethurum believes that for U.S. income tax purposes, the Reincorporation
Merger will constitute a reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, and consequently, that neither Bethurum Utah
or the holders of the Bethurum Utah common stock will recognize any gain or loss
as a result of the Reincorporation Merger. We anticipate that for U.S. income
tax purposes, each shareholder of Bethurum Utah will retain the same tax basis
in his or her Bethurum BVI Common Stock as he or she had in the Bethurum Utah
common stock held immediately prior to the effective time of the Reincorporation
Merger, and the holding period of the Bethurum BVI common stock will include the
period during which such shareholder held the corresponding Bethurum Utah common
stock.
Although it is not anticipated that state or local income tax consequences
to shareholders will vary from the federal income tax consequences described
above, holders should consult their own
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tax advisors as to the effect of the reorganization under state, local or
foreign income tax laws. The Company believes that it will not recognize any
gain, loss or income for federal income tax purposes as a result of the
Reincorporation Merger, and that Bethurum BVI will succeed, without adjustment,
to the tax attributes of Bethurum Utah.
Our business plan is for us to acquire one or more operating companies
which are engaged in the telecommunications business. Our management has had
discussions with several different telecommunications companies but as of the
date hereof, no formal or informal agreements or letters of intent relating to
an acquisition have been entered into. We intend to attempt to acquire one or
more telecommunications companies which are operating in foreign countries. If
so, it is likely that the owners of such companies will be foreign persons. We
anticipate that any acquisition we complete will be effected through the
issuance of shares of Bethurum's common stock to the owners of the acquired
companies. If so, it is likely that the shareholders of such acquired company
would own a majority of Bethurum BVI shares issued and outstanding following
such acquisition.
Companies which are organized under the laws of foreign countries
(including Bethurum BVI) are either foreign controlled corporations ("CFC") or
they are not CFC's. A summary of the differences are as follows:
CFC. A foreign company is a CFC if it is a foreign corporation and if more
than 50% of (1) the total combined voting power of all classes of stock of
such corporation entitled to vote, or (2) the total value of the stock of
such corporation, is owned, or is considered as owned, by United States
persons that own, or are considered as owning such foreign corporation's
voting stock on any day during the taxable year of such foreign
corporation. If a corporation is a CFC, then each of its U.S. shareholders
who own less than 10% of the CFC's stock should not be taxed except to the
extent they receive distributions from the company. U.S. shareholders who
own more than 10% of a CFC must include in their gross income the sum of
their pro rata share of the corporation's Subpart F income for such year
even if such income was not distributed to shareholders. Subpart F income
usually includes profits from sales of products made in one non-U.S.
country and sold in another non-U.S. country. A detailed discussion of what
constitutes Subpart F income is beyond the scope of this Proxy
Statement/Prospectus. It is likely that any telecommunications industry
company acquired by Bethurum in the near future will include Subpart F
income. Any such shareholder must include in its gross income its pro rata
share of a portion of the earnings and profits of such CFC (a "Deemed
Dividend") to the extent that the fair market value of such shareholder's
common stock exceeds its adjusted basis. Non U.S. shareholders should not
incur U.S. tax liability for the earnings of a CFC.
Non CFC. If a majority of the stock of a foreign corporation is not owned
by U.S. shareholders, then it is likely that the foreign corporation is not
a CFC. As non-United States persons, the non CFC and its foreign
subsidiaries are generally not subject to tax in the United States on their
income derived from sources outside the United States. In such event, U.S.
shareholders shall not be taxed on the earnings of the non CFC nor should
non U.S.
shareholders.
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Initially, Bethurum BVI will probably be deemed to be a CFC. After any
major acquisition, however, Bethurum may or may not be a CFC. Should we pursue
and consummate an acquisition after this reincorporation, we will examine the
CFC issue and inform any 10% shareholders if they might have a U.S. CFC tax
question.
The Board's Recommendation
The full Board of Directors of Bethurum Utah reviewed and evaluated the
Reincorporation Proposal, approved the Reincorporation Merger Agreement and
unanimously recommends that the shareholders of Bethurum approve the
Reincorporation Proposal.
Vote Required
Approval of the Reincorporation Proposal requires the affirmative vote of a
majority of the outstanding shares of common stock. Bethurum's management and
majority shareholders have indicated that they intend to vote in favor of the
Reincorporation Proposal. In such event, no additional votes will be required.
RIGHTS OF DISSENTING SHAREHOLDERS
You are entitled to dissenters' rights under Sections 16-10a-1301 through
16-10a-1331 of the Utah Revised Business Corporations Act (the "URBCA"). A copy
of these Sections are reprinted in their entirety as Appendix D to this Proxy
Statement/Prospectus. All references in the URBCA and in this summary to a
"shareholder" are to the record holder or beneficial owner of shares of Bethurum
Utah common stock as to which dissenters' rights are asserted. If you have a
beneficial interest in shares of Bethurum common stock that are held of record
in the name of another person, such as a broker or nominee, you must act
promptly to cause the record holder to properly follow the steps summarized
below in a timely manner to perfect whatever appraisal rights you may have.
The following discussion is not a complete statement of the law relating to
appraisal rights and is qualified in its entirety by reference to Appendix D. If
you wish to exercise statutory dissenting rights or preserve your right to do
so, you should review this discussion and Appendix D carefully to comply
strictly with the procedures set forth herein and therein, or you may lose your
appraisal rights.
Section 16-10a-1302
Shareholders of a Utah corporation have the right to dissent from certain
corporate actions in certain circumstances. According to URBCA Section
16-10a-1302, these circumstances include consummation of a merger requiring
approval of the corporation's shareholders. The Reincorporation of Bethurum will
be effected through the Reincorporation Merger. Shareholders who are entitled to
dissent are also entitled to demand payment in the amount of the fair value of
their shares.
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Section 16-10a-1321
According to URBCA Sec. 16-10a-1321, shareholders of Bethurum who wish to
assert dissenters' rights:
(24) must deliver to Bethurum BEFORE the vote is taken at the Special
Meeting, written notice of their intent to demand payment for their
Bethurum common stock if the Reincorporation Merger is completed,
and
(25) must not vote their shares in favor of the Reincorporation Proposal.
Shareholders failing to satisfy these requirements will not be entitled to
dissenters' rights under the URBCA.
Section 16-10a-1322
A written dissenter's notice (a "Dissenter's Notice") will thereafter be
sent by Bethurum to all shareholders of Bethurum who satisfied these two
requirements (written notice of intent to demand payment and not voting in favor
of the Reincorporation Merger). The written Dissenters' Notice is required to be
sent within 10 days after we complete the Reincorporation Merger. The
Dissenter's Notice to be sent by Bethurum must:
(26) state that the corporate action was authorized and the effective
date or proposed effective date of the corporate action;
(27) state an address at which the corporation will receive payment
demands and an address at which certificates for certificated
shares must be deposited;
(28) inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(29) supply a form for demanding payment, which form requests a
dissenter to state an address to which payment is to be made;
(30) set a date by which the corporation must receive the payment demand
and by which certificates for certificated shares must be deposited
at the address indicated in the dissenters' notice, which dates may
not be fewer than 30 nor more than 70 days after the date the
dissenters' notice is given;
(31) state the requirement contemplated by Subsection 16-10a-1303(3), if
the requirement is imposed; and be accompanied by a copy of the
Appendix D.
Section 16-10a-1323
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A shareholder who is given a dissenters' notice described above, who has
given his own notice of dissent and who did not vote for the Reincorporation
Merger, and wishes to assert dissenters' rights must, in accordance with the
terms of the dissenters' notice:
(32) cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in Subsection 16-10a-1322(2)(d),
duly completed, or may be stated in another writing;
(33) deposit certificates for his certificated shares in accordance with
the terms of the dissenters' notice; and
(34) if required by the corporation in the dissenters' notice described
in Section 16-10a-1322, as contemplated by Section 16-10a-1327,
certify in writing, in or with the payment demand, whether or not
he or the person on whose behalf he asserts dissenters' rights
acquired beneficial ownership of the shares before the date of the
first announcement to news media or to shareholders of the terms of
the proposed corporate action creating dissenters' rights under
Section 16-10a-1302.
The URBCA provides that shareholders of Bethurum who fail to demand
payment or deposit their certificates where required by the dates set forth in
the Dissenters' Notice will not be entitled to payment for the shares as
provided under Utah law. A shareholder who desires to exercise dissenters'
rights but who fails to follow the foregoing procedures will not be entitled to
demand payment of and receive the fair value of his shares of Bethurum pursuant
to the Dissenters' Rights Statute included herewith as Appendix D. Instead, that
shareholder would receive the same merger consideration per share that
shareholders of Bethurum who do not exercise dissenters' rights will receive.
Section 16-10a-1325
Bethurum will be required to pay each dissenter who complied with Section
16-10a-1321 (demand for payment; certification that he acquired the shares
before October 19, 2000 Announcement Date; and deposit of share certificates)
the amount Bethurum estimates to be the fair value of the dissenter's shares of
Bethurum common stock, plus accrued interest. The payment must be made by
Bethurum within 30 days after Bethurum receives the dissenter's demand for
payment.
The payment must be accompanied by:
(35) the corporation's balance sheet as of the end of its most recent
fiscal year, or if not available, a fiscal year ending not more
than 16 months before the date of payment;
(36) an income statement for that year;
(37) a statement of changes in shareholders' equity for that year and a
statement of cash flow for that year, if the corporation
customarily provides such statements to shareholders; and
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<PAGE>
(38) the latest available interim financial statements, if any;
(39) a statement of the corporation's estimate of the fair value of the
shares and the amount of interest payable with respect to the
shares;
(40) a statement of the dissenter's right to demand payment under
Section 16-10a-1328; and
(41) a copy of Appendix D.
Section 16-10a-1328
A dissenter who believes that the amount paid is less than the full value
of his shares of Bethurum common stock or that the interest due is incorrectly
calculated, may, within 30 days after Bethurum made for the shares, notify
Bethurum in writing of his own estimate of the fair value of the shares of
Bethurum common stock and the amount of interest due and demand payment of this
estimate and demand payment of the fair value of his shares and interest due.
Section 16-10a-1330 and 16-10a-1331
If a demand for payment remains unsettled, Bethurum must commence a court
proceeding within 60 days after receiving a demand, petitioning the court to
determine the fair value of the shares of Bethurum common stock and accrued
interest. All dissenters whose demands remain unsettled would be made a party to
such proceeding, which would be conducted in the state district court of Salt
Lake County, Utah. The purpose of this court proceeding is to determine the fair
value of the stock held by the dissenting shareholders plus interest thereon.
The district court would assess the costs of the proceedings against Bethurum,
unless the court finds that all or some of the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment. The court may also assess
against Bethurum or the dissenters the fees and expenses of counsel and experts
for the respective parties, in the amount the court finds equitable.
THE REQUIRED DISSENTERS RIGHTS' PROCEDURE MUST BE FOLLOWED EXACTLY OR ANY
DISSENTERS' RIGHTS MAY BE LOST.
MANAGEMENT
The following table sets forth the names of all current directors and
executive officers of Bethurum Utah. These persons will serve until the next
annual meeting of the shareholders or until their successors are elected or
appointed and qualified, or their prior resignation or termination.
Name Age Position
-------------------------------------------------------------------------------
William A. Silvey, Jr. 67 President/ Director
W. Scott Thompson 51 Sec/Tres, Director
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W. A. Silvey, Jr. Mr. Silvey has over 35 years experience as an
officer and director of operating companies, venture capitalist, financial
consultant and business consultant. He was one of the founders of Intermedics,
Inc. which grew to be one of the largest medical products companies in the
world. Mr. Silvey has founded and operated more than fifteen companies during
his business career. Since April 1993, he has been an associate of Eurotrade
Financial, Inc., a Houston based financial consulting firm. Mr. Silvey is a
graduate of California Institute of Technology with a Bachelors Degree in
Mechanical Engineering. He also holds a Masters in Business Administration from
Stanford University.
W. Scott Thompson. Mr. Thompson has over 20 years experience as a venture
capitalist and financial consultant. Since April 1993, Mr. Thompson has served
as the President of Eurotrade Financial, Inc., a Houston based financial
consulting firm. Prior to his tenure with Eurotrade, Mr. Thompson was employed
by Harris-Forbes, Inc. (a Houston based financial and venture capital firm),
from October 1983 to March 1993. Mr. Thompson still serves as an officer,
director and consultant to Harris-Forbes. He is a graduate from the University
of Texas with a Bachelors Degree in Business Administration and attended two
years of graduate school of business working toward a double masters in business
and accounting.
PRINCIPAL SHAREHOLDERS AND STOCK OWNERSHIP OF
MANAGEMENT AND OTHERS
The following table sets forth information regarding shares of Bethurum's
common stock beneficially owned as of October 19, 2000 by: (i) each officer and
director of Bethurum; (ii) all officers and directors as a group; and (iii) each
person known by Bethurum to beneficially own 5 percent or more of the
outstanding shares of Bethurum's common stock.
Name Amount
and Address and Nature Percent
of Beneficial of Beneficial of Class (1)
Owner Ownership Ownership
-------------------------------------------------------------------------------
William A. Silvey, Jr 281,800 (1) 9%
5227 Cripple Creek Court
Houston, Texas 77017
W. Scott Thompson 220,400 (2) 7%
6371 Richmond, #200
Houston, Texas 77057
Benchmark Merchant Partners 1,700,000 52%
700 Gemini
Houston, TX 77058
All Officers and Directors 502,200 16%
as a Group (2 Persons)
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Unless otherwise indicated in the footnotes below, Bethurum has been
advised that each person above has sole voting power over the shares indicated
above. All of the individuals listed above are officers or directors of
Bethurum, or are companies or persons beneficially owning or controlling 5
percent or more of Bethurum's outstanding shares of common stock. As of October
19, 2000, there were 3,300,750 shares of Bethurum's common stock issued and
outstanding.
(1) These shares are held in the name of Mr. Silvey's wife, Helen Silvey.
Due to their marital relationship, Ms. Silvey may be deemed to be the beneficial
owner of all shares held in Mr. Silvey's name.
(2) Includes shares held as custodian for Traci L. Thompson, his daughter
and shares held bu other family members
TRANSACTIONS WITH MANAGEMENT AND OTHERS.
On November 11, 1998, Bethurum issued shares of its common stock to three
persons including two directors, for services rendered. The services were not
related to capital raising matters. The shares were valued at $.01 per share
when they were issued. As a result of a 1-for-10 reverse stock split effected
August 14, 2000, the effective price of these shares was $.10 per share. The
shares (calculated after the 1-for-10 reverse stock split) were issued to the
following persons: William A. Silvey, Jr - 18,300 shares; W. Scott Thompson -
18,300 shares; and Leonard Burningham, Esq. - 9,150 shares.
On July 19, 2000, Bethurum issued shares of its common stock to 1,250,000
to certain persons at $.01 per share (calculated after the 1-for-10 reverse
stock split effected August 14, 2000). The services were not related to capital
raising matters. The shares (calculated after the 1-for-10 reverse stock split)
carried registration rights. Bethurum issued these shares to 18 persons. A total
of 250,000 of these shares were issued to William A, Silvery, Bethurum's
president and his wife, and 200,000 of these shares were issued to W. Scott
Thompson, Bethurum's secretary, and his family members. A total of 108,000 of
these shares were issued to Leonard Burningham and 54,000 of these shares were
issued to Branden Burningham, attorney's for Bethurum.
On July 19, 2000, Bethurum issued 1,700,000 shares of its common stock
shares (calculated after the 1-for-10 reverse stock split) for an aggregate
price of $300,000 (see page 21).
LEGAL MATTERS
The legality of the shares of Bethurum Laboratories, Ltd, (referred to in
this Proxy Statement/Prospectus as "Bethurum BVI") to be issued in the
Reincorporation Merger, will be passed upon by Harney, Westwood & Reiley,
British Virgin Islands. Certain legal matters in connection with this Proxy
Statement/Prospectus will be passed upon for us by Cohne, Rappaport & Segal,
Salt Lake City, UT 84102 and Leonard W. Burningham, Esq., Salt Lake City, UT
84111. Mr. Burningham is a shareholder of Bethurum Utah.
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EXPERTS
The consolidated balance sheets of Bethurum as of December 31, 1999 and
December 31, 1998, and the related consolidated statements of operation,
shareholders' equity and cash flows for each of the two years in the period
ended December 31, 1999, incorporated by reference in this proxy statement have
been audited by Jones, Jensen & Company, independent auditors, as stated in
their report. It is not expected that a representative of Jones, Jensen &
Company will be at the Special Meeting.
SHAREHOLDER PROPOSALS
We anticipate that Bethurum will hold its next annual meeting of
shareholders in April, 2001. All proposals that shareholders desire to submit
for consideration by the shareholders and for inclusion in Bethurum's Proxy
Statement for presentation at the next Annual Meeting must be received by
Bethurum before December 15, 2000. In addition shareholders desiring to submit
matters for inclusion in the Company's Proxy Statement for the next Annual
Meeting must comply with those procedures set forth in the Securities Exchange
Act of 1934, as amended.
OTHER MATTERS
As of the date of this Proxy Statement/Prospectus, the Board knows of no
other business to be presented at the special meeting. If other matters do
properly come before the meeting, or any adjournments or postponements thereof,
it is the intention of the persons named in the proxy to vote on such matters in
their sole discretion.
WHERE YOU CAN FIND MORE INFORMATION
Bethurum files annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements or
other information that Bethurum files at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms.
Bethurum public filings are also available to the public from commercial
document retrieval services and at the Internet World Wide Web site maintained
by the SEC at http://www.sec.gov.
The SEC allows Bethurum to "incorporate by reference" information into this
document, which means that Bethurum can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be a part of this document, except for
any information superseded by information contained directly in this document.
This document incorporates by reference certain documents that Bethurum has
previously filed with the SEC. These documents contain important business
information about Bethurum and its financial condition.
Bethurum may have sent you some of the documents incorporated by reference,
but you can obtain any of them through Bethurum, the SEC or the SEC's Internet
World Wide Web site described above. Documents incorporated by reference are
available from Bethurum without
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charge, excluding exhibits unless specifically incorporated by reference as an
Appendix to this document. Shareholders may obtain documents incorporated by
reference in this document by requesting them in writing or by telephone at the
following address and telephone number:
William A. Silvey, Jr., President
Bethurum Laboratories, Inc.
6371 Richmond, #200
Houston, TX 77057
(713) 266-8005
Statements contained in this Proxy Statement/Prospectus or in any document
incorporated herein by reference as to the contents of any contract or other
document referred to herein or therein are not necessarily complete and in each
instance reference is made to such contract or other document filed as an
exhibit to such other document, and each such statement shall be deemed
qualified in its entirety by such reference. If you would like to request
documents from Bethurum, please do so at least five business days before the
date of the Special Meeting in order to receive timely delivery of such
documents prior to the Special Meeting.
You should rely only on the information contained or incorporated by
reference in this document to vote your shares at the Special Meeting. Bethurum
has not authorized anyone to provide you with information that is different from
what is contained in this document. This document is dated September 25, 2000.
You should not assume that the information contained in this document is
accurate as of any date other than that date, and the mailing of this document
to shareholders does not create any implication to the contrary. This Proxy
Statement/Prospectus does not constitute a solicitation of a proxy in any
jurisdiction where, or to or from any person to whom, it is unlawful to make
such proxy solicitation in such jurisdiction.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the SEC by Bethurum are
incorporated by reference in this Proxy Statement/Prospectus:
(42) Bethurum's Annual Report on Form 10-KSB and 10-KSB/A for the fiscal
year ended December 31, 1999;
(43) Bethurum's Current Report on Form 8-K filed on August 7, 2000;
(44) Bethurum's Quarterly Report on Form 10- QSB for the quarter ended
March 31, 2000; and
(45) Bethurum's Quarterly Report on Form 10- QSB for the quarter ended
June 30, 2000; and
(46) All documents filed by Bethurum with the SEC pursuant to
Sections13(a), 13(c) and 14 of the Securities Exchange Act of 1934
after the date hereof and prior to the
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date of the Special Meeting shall be deemed to be incorporated by
reference herein and shall be a part hereof from the date of filing
of such documents.
Any statements contained in a document incorporated by reference herein or
contained in this Proxy Statement/Prospectus shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
(or in any other subsequently filed document which also is incorporated by
reference herein) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed to constitute a part hereof except as
so modified or superseded.
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APPENDIX "A"
TERRITORY OF THE BRITISH VIRGIN ISLANDS
THE INTERNATIONAL BUSINESS COMPANIES ACT
(CAP 291)
MEMORANDUM OF ASSOCIATION
OF
Bethurum Laboratories, Ltd.
NAME
1. The name of the Company is Bethurum Laboratories, Ltd.
REGISTERED OFFICE
2. The Registered Office of the Company will be at Craigmuir Chambers, P.O.
Box 71, Road Town, Tortola, British Virgin Islands.
REGISTERED AGENT
3. The Registered Agent of the Company will be HWR Services Limited of
Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, British Virgin
Islands.
GENERAL OBJECTS AND POWERS
4. (1) The object of the Company is to engage in any act or activity that is
not prohibited under any law for the time being in force in the British
Virgin Islands;
(2) The Company may not
(a) carry on business with persons resident in the British
Virgin Islands;
(b) own an interest in real property situate in the British
Virgin Islands, other than a lease referred to in paragraph
(e) of subclause (3);
(c) carry on banking or trust business, unless it is licensed
to do so under the Banks and Trust Companies Act, 1990;
(d) carry on business as an insurance or reinsurance company,
insurance agent or insurance broker, unless it is licensed
under an enactment authorizing it to carry on that business;
(e) carry on the business of company management, unless it is
licensed under the Company Management Act, 1990; or
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(f) carry on the business of providing the registered office
or the registered agent for companies incorporated in the
British Virgin Islands.
(3) For purposes of paragraph (a) of subclause (2), the Company
shall not be treated as carrying on business with persons resident
in the British Virgin Islands if
(a) it makes or maintains deposits with a person carrying on
banking business within the British Virgin Islands;
(b) it makes or maintains professional contact
with solicitors, barristers, accountants, bookkeepers, trust
companies, administration companies, investment advisers or
other similar persons carrying on business within the British
Virgin Islands;
(c) it prepares or maintains books and records within the
British Virgin Islands;
(d) it holds, within the British Virgin Islands, meetings of
its directors or members;
(e) it holds a lease of property for use as an office
from which to communicate with members or where books
and records of the Company are prepared or maintained;
(f) it holds shares, debt obligations or other securities
in a company incorporated under the International Business
Companies Act or under the Companies Act; or
(g) shares, debt obligations or other securities
in the Company are owned by any person resident in the British
Virgin Islands or by any company incorporated under the
International Business Companies Act or under the Companies
Act.
(4) The Company shall have all such powers as are permitted by law
for the time being in force in the British Virgin Islands,
irrespective of corporate benefit, to perform all acts and engage in
all activities necessary or conducive to the conduct, promotion or
attainment of the object of the Company.
CURRENCY
5. Shares in the Company shall be issued in the currency of the United
States of America.
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AUTHORIZED CAPITAL
6. The Company shall have no authorized capital.
CLASSES, NUMBER AND PAR VALUE OF SHARES
7. The authorized capital is made up of one class and one series of
shares divided into 100,000,000 shares of no par value (the "Common
Stock").
DESIGNATIONS, POWERS, PREFERENCES, ETC. OF SHARES
8. All shares shall
(a) have one vote each;
(b) be subject to redemption, purchase or acquisition by the Company for
fair value; and
(c) have the same rights with regard to dividends and distributions
upon liquidation of the Company.
VARIATION OF CLASS RIGHTS
9. If at any time the authorized capital is divided into different
classes or series of shares, the rights attached to any class or
series (unless otherwise provided by the terms of issue of the shares
of that class or series) may, whether or not the Company is being
wound up, be varied with the consent in writing of the holders of not
less than three-fourths of the issued shares of that class or series
and of the holders of not less than three-fourths of the issued shares
of any other class or series of shares which may be affected by such
variation.
RIGHTS NOT VARIED BY THE ISSUE OF SHARES PARI PASSU
10. The rights conferred upon the holders of the shares of same class
shall not be deemed to be varied by the creation or issue of further
shares ranking pari passu therewith.
REGISTERED SHARES AND BEARER SHARES
11. Shares may be issued as registered shares or to bearer as may be
determined by a resolution of directors.
EXCHANGE OF REGISTERED SHARES AND BEARER SHARES
12. Registered shares may be exchanged for bearer shares and bearer shares
may be exchanged for registered shares.
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TRANSFER OF REGISTERED SHARES
13. Subject to the provisions relating to the transfer of shares set forth
in the Articles of Association annexed hereto (the "Articles of
Association") registered shares in the Company may be transferred
subject to the prior or subsequent approval of the Company as
evidenced by a resolution of directors or by a resolution of members.
SERVICE OF NOTICE ON HOLDERS OF BEARER SHARES
14. Where shares are issued to bearer, the bearer, identified for this
purpose by the number of the share certificate, shall be requested to
provide the Company with the name and address of an agent for service
of any notice, information or written statement required to be given
to members, and service upon such agent shall constitute service upon
the bearer of such shares until such time as a new name and address
for service is provided to the Company. In the absence of such name
and address being provided it shall be sufficient for the purposes of
service for the Company to publish the notice, information or written
statement or a summary thereof in one or more newspapers published or
circulated in the British Virgin Islands and in such other place, if
any, as the Company shall from time to time by a resolution of
directors or a resolution of members determine. The directors of the
Company must give sufficient notice of meetings to members holding
shares issued to bearer to allow a reasonable opportunity for them to
secure or exercise the right or privilege that is the subject of the
notice other than the right or privilege to vote, as to which the
period of notice shall be governed by the Articles of Association.
What amounts to sufficient notice is a matter of fact to be determined
after having regard to all the circumstances.
AMENDMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION
15. The Company may amend its Memorandum of Association and Articles of
Association by a resolution of members or directors.
DEFINITIONS
16. The meanings of words in this Memorandum of Association are as defined
in the Articles of Association.
We, HWR SERVICES LIMITED, of Craigmuir Chambers, Road Town, Tortola,
British Virgin Islands for the purpose of incorporating an International
Business Company under the laws of the British Virgin Islands hereby subscribe
our name to this Memorandum of Association the day of , 2000 in the presence of:
Witness Subscriber
Craigmuir Chambers Authorized Signatory
Road Town, Tortola HWR Services Limited
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APPENDIX "B"
TERRITORY OF THE BRITISH VIRGIN ISLANDS
THE INTERNATIONAL BUSINESS COMPANIES ACT
(CAP 291)
ARTICLES OF ASSOCIATION
OF
Bethurum Laboratories, Ltd.
PRELIMINARY
1. In these Articles, if not inconsistent with the subject or context, the
words and expressions standing in the first column of the following table shall
bear the meanings set opposite them respectively in the second column thereof.
-------------------------------------------------------------------------------
Word - Capital
Meaning:
The sum of the aggregate par value of all outstanding shares with par value
of the Company and shares with par value held by the Company as treasury shares
plus
(a) the aggregate of the amounts designated as capital of all outstanding
shares without par value of the Company and shares without par value held by the
Company as treasury shares, and
(b) the amounts as are from time to time transferred from surplus to
capital by a resolution of directors.
-------------------------------------------------------------------------------
Word - Member
Meaning:
A person who holds shares in the Company.
-------------------------------------------------------------------------------
Word - Person
Meaning:
An individual, a corporation, a trust, the estate of a deceased individual,
a partnership or an unincorporated association of persons.
-------------------------------------------------------------------------------
Word - Resolution of Directors
Meaning:
(a) A resolution approved at a duly convened directors and constituted
meeting of directors of the Company or of a committee of directors of the
Company by the affirmative vote of a majority the directors present at the
meeting who voted and did not abstain; or
(b) a resolution consented to in writing by all directors or of all members
of the committee, as the case may be;
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except that where a director is given more than one vote, he shall be
counted by the number of votes he casts for the purpose of establishing a
majority.
-------------------------------------------------------------------------------
Word - Resolution of Members
(a) A resolution approved at a duly convened members and constituted
meeting of the members of the Company by the affirmative vote of
(i) a simple majority of the votes of the shares entitled to vote thereon
which were present at the meeting and were voted and not abstained, or
(ii) a simple majority of the votes of each class or series of shares which
were present at the meeting and entitled to vote thereon as a class or series
and were voted and not abstained and of a simple majority of the votes of the
remaining shares entitled to vote thereon which were present at the meeting and
were voted and not abstained; or
(b) a resolution consented to in writing by
(i) an absolute majority of the votes of\ shares entitled to vote thereon,
or
(ii) an absolute majority of the votes of each class or series of shares
entitled to vote thereon as a class or series and of an absolute majority of the
votes of the remaining shares entitled to vote thereon;
-------------------------------------------------------------------------------
Word - Securities
Meaning:
Shares and debt obligations of every kind, and options, warrants and rights
to acquire shares, or debt obligations.
-------------------------------------------------------------------------------
Word: Surplus
Meaning:
The excess, if any, at the time of the determination of the total assets of
the Company over the aggregate of its total liabilities, as shown in its books
of account, plus the Company's capital.
-------------------------------------------------------------------------------
Word: the Act
Meaning:
The International Business Companies Act (No. 8 of 1984) including any
modification, extension, re- enactment or renewal thereof and any regulations
made thereunder.
-------------------------------------------------------------------------------
Word: the Memorandum
Meaning:
The Memorandum of Association of the Company as originally framed or as
from time to time amended.
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-------------------------------------------------------------------------------
Word: the Seal
Meaning:
Any Seal which has been duly adopted as the Seal of the Company.
-------------------------------------------------------------------------------
Word: these Articles
Meaning:
These Articles of Association as originally framed or as from time to time
amended.
-------------------------------------------------------------------------------
Word: treasury shares
Meaning:
Shares in the Company that were previously issued but were repurchased,
redeemed or otherwise acquired by the Company and not cancelled.
-------------------------------------------------------------------------------
2. "Written" or any term of like import includes words typewritten,
printed, painted, engraved, lithographed, photographed or represented or
reproduced by any mode of reproducing words in a visible form, including telex,
facsimile, telegram, cable or other form of writing produced by electronic
communication.
3. Save as aforesaid any words or expressions defined in the Act shall bear
the same meaning in these Articles.
4. Whenever the singular or plural number, or the masculine, feminine or
neuter gender is used in these Articles, it shall equally, where the context
admits, include the others.
5. A reference in these Articles to voting in relation to shares shall be
construed as a reference to voting by members holding the shares except that it
is the votes allocated to the shares that shall be counted and not the number of
members who actually voted and a reference to shares being present at a meeting
shall be given a corresponding construction.
6. A reference to money in these Articles is, unless otherwise stated, a
reference to the currency in which shares in the Company shall be issued
according to the provisions of the Memorandum.
REGISTERED SHARES
7. Every member holding registered shares in the Company shall be entitled
to a certificate signed by a director or officer of the Company and under the
Seal specifying the share or shares held by him and the signature of the
director or officer and the Seal may be facsimiles.
8. Any member receiving a share certificate for registered shares shall
indemnify and hold the Company and its directors and officers harmless from any
loss or liability which it or they may incur by reason of any wrongful or
fraudulent use or representation made by any person by virtue of the possession
thereof. If a share certificate for registered shares is worn out or lost it may
be renewed on production of the worn out certificate or on satisfactory proof of
its loss together with such indemnity as may be required by a resolution of
directors.
9. If several persons are registered as joint holders of any shares, any
one of such persons may give an effectual receipt for any dividend payable in
respect of such shares.
BEARER SHARES
10. Subject to a request for the issue of bearer shares and to the payment
of the appropriate consideration for the shares to be issued, the Company may,
to the extent authorized by the Memorandum, issue bearer shares to, and at the
expense of, such person as shall be
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<PAGE>
specified in the request. Bearer shares may not be issued for debt
obligations, promissory notes or other obligations to contribute money or
property and registered shares issued for debt obligations, promissory notes or
other obligations to contribute money or property shall not be exchanged for
bearer shares unless such debt obligations, promissory notes or other
obligations to contribute money or property have been satisfied. The Company may
also upon receiving a request in writing accompanied by the share certificate
for the shares in question, exchange registered shares for bearer shares or may
exchange bearer shares for registered shares. Such request served on the Company
by the holder of bearer shares shall specify the name and address of the person
to be registered and unless the request is delivered in person by the bearer
shall be authenticated as hereinafter provided. Such request served on the
Company by the holder of bearer shares shall also be accompanied by any coupons
or talons which at the date of such delivery have not become due for payment of
dividends or any other distribution by the Company to the holders of such
shares. Following such exchange the share certificate relating to the exchanged
shares shall be delivered as directed by the member requesting the exchange.
11. Bearer share certificates shall be under the Seal and shall state that
the bearer is entitled to the shares therein specified, and may provide by
coupons, talons or otherwise for the payment of dividends or other moneys on the
shares included therein.
12. Subject to the provisions of the Act and of these Articles, the bearer
of a bearer share certificate shall be deemed to be a member of the Company and
shall be entitled to the same rights and privileges as he would have had if his
name had been included in the share register of the Company as the holder of the
shares.
13. Subject to any specific provisions in these Articles, in order to
exercise his rights as a member of the Company, the bearer of a bearer share
certificate shall produce the bearer share certificate as evidence of his
membership of the Company. Without prejudice to the generality of the foregoing,
the following rights may be exercised in the following manner:
(a) for the purpose of exercising his voting rights at a meeting, the
bearer of a bearer share certificate shall produce such certificate to the
chairman of the meeting;
(b) for the purpose of exercising his vote on a resolution in writing, the
bearer of a bearer share certificate shall cause his signature to any such
resolution to be authenticated as hereinafter set forth;
(c) for the purpose of requisitioning a meeting of members, the bearer of a
bearer share certificate shall address his requisition to the directors and his
signature thereon shall be duly authenticated as hereinafter provided; and
(d) for the purpose of receiving dividends, the bearer of a bearer share
certificate shall present at such places as may be designated by the directors
any coupons or talons issued for such purpose, or shall present the bearer share
certificate to any paying agent authorized to pay dividends.
14. The signature of the bearer of a bearer share certificate shall be
deemed to be duly authenticated if the bearer of the bearer share certificate
shall produce such certificate to a notary public or a bank manager or a
director or officer of the Company (herein referred to as an "authorized
person") and the authorized person endorses the document bearing such signature
with a statement:
55
<PAGE>
(a) identifying the bearer share certificate produced to him by number and
date and specifying the number of shares and the class of shares (if
appropriate) comprised therein;
(b) confirming that the signature of the bearer of the bearer share
certificate was subscribed in his presence and that if the bearer is
representing a body corporate he has so acknowledged and has produced
satisfactory evidence thereof; and
(c) specifying the capacity in which he is qualified as an authorized
person and, if a notary public, affixing his seal thereto or, if a bank manager,
attaching an identifying stamp of the bank of which he is a manager.
15. Notwithstanding any other provisions of these Articles, at any time,
the bearer of a bearer share certificate may deliver the certificate for such
shares into the custody of the Company at its registered office, whereupon the
Company shall issue a receipt therefor under the Seal signed by a director or
officer identifying by name and address the person delivering such certificate
and specifying the date and number of the bearer share certificate so deposited
and the number of shares comprised therein. Any such receipt may be used by the
person named therein for the purpose of exercising the rights vested in the
shares represented by the bearer share certificate so deposited including the
right to appoint a proxy. Any bearer share certificate so deposited shall be
returned to the person named in the receipt or his personal representative if
such person be dead and thereupon the receipt issued therefor shall be of no
further effect whatsoever and shall be returned to the Company for cancellation
or, if it has been lost or mislaid, such indemnity as may be required by
resolution of directors shall be given to the Company.
16. The bearer of a bearer share certificate shall for all purposes be
deemed to be the owner of the shares comprised in such certificate and in no
circumstances shall the Company or the chairman of any meeting of members or the
Company's registrars or any director or officer of the Company or any authorized
person be obliged to inquire into the circumstances whereby a bearer share
certificate came into the hands of the bearer thereof, or to question the
validity or authenticity of any action taken by the bearer of a bearer share
certificate whose signature has been authenticated as provided herein.
17. If the bearer of a bearer share certificate shall be a corporation,
then all the rights exercisable by virtue of such shareholding may be exercised
by an individual duly authorized to represent the corporation but unless such
individual shall acknowledge that he is representing a corporation and shall
produce upon request satisfactory evidence that he is duly authorized to
represent the corporation, the individual shall for all purposes hereof be
regarded as the holder of the shares in any bearer share certificate held by
him.
18. The directors may provide for payment of dividends to the holders of
bearer shares by coupons or talons and in such event the coupons or talons shall
be in such form and payable at such time and in such place or places as the
directors shall resolve. The Company shall be entitled to recognize the absolute
right of the bearer of any coupon or talon issued as aforesaid to payment of the
dividend to which it relates and delivery of the coupon or talon to the Company
or its agents shall constitute in all respects a good discharge of the Company
in respect of such dividend.
19. If any bearer share certificate, coupon or talon be worn out or
defaced, the directors may, upon the surrender thereof for cancellation, issue a
new one in its stead, and if any bearer share certificate, coupon or talon be
lost or destroyed, the directors may upon the loss or destruction being
established to their satisfaction, and upon such indemnity being given
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<PAGE>
to the Company as it shall by resolution of directors determine, issue a
new bearer share certificate in its stead, and in either case on payment of such
sum as the Company may from time to time by resolution of directors require. In
case of loss or destruction the person to whom such new bearer share
certificate, coupon or talon is issued shall also bear and pay to the Company
all expenses incidental to the investigation by the Company of the evidence of
such loss or destruction and to such indemnity.
SHARES, AUTHORIZED CAPITAL, CAPITAL AND SURPLUS
20. Subject to the provisions of these Articles and any resolution of
members, the unissued shares of the Company shall be at the disposal of the
directors who may, without limiting or affecting any rights previously conferred
on the holders of any existing shares or class or series of shares, offer,
allot, grant options over or otherwise dispose of shares to such persons, at
such times and upon such terms and conditions as the Company may by resolution
of directors determine.
21. No share in the Company may be issued until the consideration in
respect thereof is fully paid, and when issued the share is for all purposes
fully paid and non-assessable save that a share issued for a promissory note or
other written obligation for payment of a debt may be issued subject to
forfeiture in the manner prescribed in these Articles.
22. Shares in the Company may be issued for money, a promissory note or
other written obligation to contribute money or property as shall be determined
by a resolution of directors. Shares may only be issued for services rendered,
personal property or an estate in real property or any combination of the
foregoing as shall be determined by a resolution of directors with the unanimous
consent of all members.
23. Shares in the Company may be issued for such amount of consideration as
the directors may from time to time by resolution of directors determine, except
that in the case of shares with par value, the amount shall not be less than the
par value, and in the absence of fraud the decision of the directors as to the
value of the consideration received by the Company in respect of the issue is
conclusive unless a question of law is involved. The consideration in respect of
the shares constitutes capital to the extent of the par value and the excess
constitutes surplus.
24. A share issued by the Company upon conversion of, or in exchange for,
another share or a debt obligation or other security in the Company, shall be
treated for all purposes as having been issued for money equal to the
consideration received or deemed to have been received by the Company in respect
of the other share, debt obligation or security.
25. Treasury shares may be disposed of by the Company on such terms and
conditions (not otherwise inconsistent with these Articles) as the Company may
by resolution of directors determine.
26. The Company may issue fractions of a share and a fractional share shall
have the same corresponding fractional liabilities, limitations, preferences,
privileges, qualifications, restrictions, rights and other attributes of a whole
share of the same class or series of shares.
27. Upon the issue by the Company of a share without par value, if an
amount is stated in the Memorandum to be authorized capital represented by such
shares then each share shall be issued for no less than the appropriate
proportion of such amount which shall constitute capital, otherwise the
consideration in respect of the share constitutes capital to the extent
designated by the directors and the excess constitutes surplus, except that the
directors
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<PAGE>
must designate as capital an amount of the consideration that is at least
equal to the amount that the share is entitled to as a preference, if any, in
the assets of the Company upon liquidation of the Company.
28. The Company may purchase, redeem or otherwise acquire and hold its own
shares but only out of surplus or in exchange for newly issued shares of equal
value.
29. Subject to provisions to the contrary in
(a) the Memorandum or these Articles;
(b) the designations, powers, preferences, rights, qualifications,
limitations and restrictions with which the shares were issued; or
(c) the subscription agreement for the issue of the shares,
the Company may not purchase, redeem or otherwise acquire its own shares
without the consent of members whose shares are to be purchased, redeemed or
otherwise acquired.
30. No purchase, redemption or other acquisition of shares shall be made
unless the directors determine that immediately after the purchase, redemption
or other acquisition the Company will be able to satisfy its liabilities as they
become due in the ordinary course of its business and the realizable value of
the assets of the Company will not be less than the sum of its total
liabilities, other than deferred taxes, as shown in the books of account, and
its capital and, in the absence of fraud, the decision of the directors as to
the realizable value of the assets of the Company is conclusive, unless a
question of law is involved.
31. A determination by the directors under the preceding Regulation is not
required where shares are purchased, redeemed or otherwise acquired
(a) pursuant to a right of a member to have his shares redeemed or to have
his shares exchanged for money or other property of the Company;
(b) by virtue of a transfer of capital pursuant to Regulation 59;
(c) by virtue of the provisions of Section 83 of the Act; or
(d) pursuant to an order of the Court.
32. Shares that the Company purchases, redeems or otherwise acquires
pursuant to the preceding Regulation may be cancelled or held as treasury shares
except to the extent that such shares are in excess of 80 percent of the issued
shares of the Company in which case they shall be cancelled but they shall be
available for reissue.
33. Where shares in the Company are held by the Company as treasury shares
or are held by another company of which the Company holds, directly or
indirectly, shares having more than 50 percent of the votes in the election of
directors of the other company, such shares of the Company are not entitled to
vote or to have dividends paid thereon and shall not be treated as outstanding
for any purpose except for purposes of determining the capital of the Company.
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34. The Company may purchase, redeem or otherwise acquire its shares at a
price lower than the fair value if permitted by, and then only in accordance
with, the terms of
(a) the Memorandum or these Articles; or
(b) a written agreement for the subscription for the shares to be
purchased, redeemed or otherwise acquired.
35. The Company may by a resolution of directors include in the computation
of surplus for any purpose the unrealized appreciation of the assets of the
Company, and, in the absence of fraud, the decision of the directors as to the
value of the assets is conclusive, unless a question of law is involved.
MORTGAGES AND CHARGES OF REGISTERED SHARES
36. Members may mortgage or charge their registered shares in the Company
and upon satisfactory evidence thereof the Company shall give effect to the
terms of any valid mortgage or charge except insofar as it may conflict with any
requirements herein contained for consent to the transfer of shares.
37. In the case of the mortgage or charge of registered shares there may be
entered in the share register of the Company at the request of the registered
holder of such shares
(a) a statement that the shares are mortgaged or charged;
(b) the name of the mortgagee or chargee; and
(c) the date on which the aforesaid particulars are entered in the share
register.
38. Where particulars of a mortgage or charge are registered, such
particulars shall be cancelled
(a) with the consent of the named mortgagee or chargee or anyone authorized
to act on his behalf; or
(b) upon evidence satisfactory to the directors of the discharge of the
liability secured by the mortgage or charge and the issue of such indemnities as
the directors shall consider necessary or desirable.
39. Whilst particulars of a mortgage or charge are registered, no transfer
of any share comprised therein shall be effected without the written consent of
the named mortgagee or chargee or anyone authorized to act on his behalf.
FORFEITURE
40. When shares issued for a promissory note or other written obligation
for payment of a debt have been issued subject to forfeiture, the following
provisions shall apply.
41. Written notice specifying a date for payment to be made and the shares
in respect of which payment is to be made shall be served on the member who
defaults in making payment pursuant to a promissory note or other written
obligations to pay a debt.
42. The written notice specifying a date for payment shall
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(a) name a further date not earlier than the expiration of 14 days from the
date of service of the notice on or before which payment required by the notice
is to be made; and
(b) contain a statement that in the event of non-payment at or before the
time named in the notice the shares, or any of them, in respect of which payment
is not made will be liable to be forfeited.
43. Where a written notice has been issued and the requirements have not
been complied with within the prescribed time, the directors may at any time
before tender of payment forfeit and cancel the shares to which the notice
relates.
44. The Company is under no obligation to refund any moneys to the member
whose shares have been forfeited and cancelled pursuant to these provisions.
Upon forfeiture and cancellation of the shares the member is discharged from any
further obligation to the Company with respect to the shares forfeited and
cancelled.
LIEN
45. The Company shall have a first and paramount lien on every share issued
for a promissory note or for any other binding obligation to contribute money or
property or any combination thereof to the Company, and the Company shall also
have a first and paramount lien on every share standing registered in the name
of a member, whether singly or jointly with any other person or persons, for all
the debts and liabilities of such member or his estate to the Company, whether
the same shall have been incurred before or after notice to the Company of any
interest of any person other than such member, and whether the time for the
payment or discharge of the same shall have actually arrived or not, and
notwithstanding that the same are joint debts or liabilities of such member or
his estate and any other person, whether a member of the Company or not. The
Company's lien on a share shall extend to all dividends payable thereon. The
directors may at any time either generally, or in any particular case, waive any
lien that has arisen or declare any share to be wholly or in part exempt from
the provisions of this Regulation.
46. In the absence of express provisions regarding sale in the promissory
note or other binding obligation to contribute money or property, the Company
may sell, in such manner as the directors may by resolution of directors
determine, any share on which the Company has a lien, but no sale shall be made
unless some sum in respect of which the lien exists is presently payable nor
until the expiration of twenty-one days after a notice in writing, stating and
demanding payment of the sum presently payable and giving notice of the
intention to sell in default of such payment, has been served on the holder for
the time being of the share.
47. The net proceeds of the sale by the Company of any shares on which it
has a lien shall be applied in or towards payment of discharge of the promissory
note or other binding obligation to contribute money or property or any
combination thereof in respect of which the lien exists so far as the same is
presently payable and any residue shall (subject to a like lien for debts or
liabilities not presently payable as existed upon the share prior to the sale)
be paid to the holder of the share immediately before such sale. For giving
effect to any such sale the directors may authorize some person to transfer the
share sold to the purchaser thereof. The purchaser shall be registered as the
holder of the share and he shall not be bound to see to the application of the
purchase money, nor shall his title to the share be affected by any irregularity
or invalidity in the proceedings in reference to the sale.
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TRANSFER OF SHARES
48. Subject to any limitations in the Memorandum, registered shares in the
Company may be transferred by a written instrument of transfer signed by the
transferor and containing the name and address of the transferee, but in the
absence of such written instrument of transfer the directors may accept such
evidence of a transfer of shares as they consider appropriate.
49. The Company shall not be required to treat a transferee of a registered
share in the Company as a member until the transferee's name has been entered in
the share register.
50. Subject to any limitations in the Memorandum, the Company must on the
application of the transferor or transferee of a registered share in the Company
enter in the share register the name of the transferee of the share save that
the registration of transfers may be suspended and the share register closed at
such times and for such periods as the Company may from time to time by
resolution of directors determine provided always that such registration shall
not be suspended and the share register closed for more than 60 days in any
period of 12 months.
TRANSMISSION OF SHARES
5l. The executor or administrator of a deceased member, the guardian of an
incompetent member or the trustee of a bankrupt member shall be the only person
recognized by the Company as having any title to his share but they shall not be
entitled to exercise any rights as a member of the Company until they have
proceeded as set forth in the next following three Regulations.
52. The production to the Company of any document which is evidence of
probate of the will, or letters of administration of the estate, or confirmation
as executor, of a deceased member or of the appointment of a guardian of an
incompetent member or the trustee of a bankrupt member shall be accepted by the
Company even if the deceased, incompetent or bankrupt member is domiciled
outside the British Virgin Islands if the document evidencing the grant of
probate or letters of administration, confirmation as executor, appointment as
guardian or trustee in bankruptcy is issued by a foreign court which had
competent jurisdiction in the matter. For the purpose of establishing whether or
not a foreign court had competent jurisdiction in such a matter the directors
may obtain appropriate legal advice. The directors may also require an indemnity
to be given by the executor, administrator, guardian or trustee in bankruptcy.
53. Any person becoming entitled by operation of law or otherwise to a
share or shares in consequence of the death, incompetence or bankruptcy of any
member may be registered as a member upon such evidence being produced as may
reasonably be required by the directors. An application by any such person to be
registered as a member shall for all purposes be deemed to be a transfer of
shares of the deceased, incompetent or bankrupt member and the directors shall
treat it as such.
54. Any person who has become entitled to a share or shares in consequence
of the death, incompetence or bankruptcy of any member may, instead of being
registered himself, request in writing that some person to be named by him be
registered as the transferee of such share or shares and such request shall
likewise be treated as if it were a transfer.
55. What amounts to incompetence on the part of a person is a matter to be
determined by the court having regard to all the relevant evidence and the
circumstances of the case.
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REDUCTION OR INCREASE IN AUTHORIZED CAPITAL OR CAPITAL
56. The Company may by a resolution of directors amend the Memorandum to
increase or reduce its authorized capital and in connection therewith the
Company may in respect of any unissued shares increase or reduce the number of
such shares, increase or reduce the par value of any such shares or effect any
combination of the foregoing.
57. The Company may amend the Memorandum to
(a) divide the shares, including issued shares, of a class or series into a
larger number of shares of the same class or series; or
(b) combine the shares, including issued shares, of a class or series into
a smaller number of shares of the same class or series,
provided, however, that where shares are divided or combined under (a) or
(b) of this Regulation, the aggregate par value of the new shares must be equal
to the aggregate par value of the original shares.
58. The capital of the Company may by a resolution of directors be
increased by transferring an amount of the surplus of the Company to capital.
59. Subject to the provisions of the two next succeeding Regulations, the
capital of the Company may by resolution of directors be reduced by transferring
an amount of the capital of the Company to surplus.
60. No reduction of capital shall be effected that reduces the capital of
the Company to an amount that immediately after the reduction is less than the
aggregate par value of all outstanding shares with par value and all shares with
par value held by the Company as treasury shares and the aggregate of the
amounts designated as capital of all outstanding shares without par value and
all shares without par value held by the Company as treasury shares that are
entitled to a preference, if any, in the assets of the Company upon liquidation
of the Company.
61. No reduction of capital shall be effected unless the directors
determine that immediately after the reduction the Company will be able to
satisfy its liabilities as they become due in the ordinary course of its
business and that the realizable assets of the Company will not be less than its
total liabilities, other than deferred taxes, as shown in the books of the
Company and its remaining capital, and, in the absence of fraud, the decision of
the directors as to the realizable value of the assets of the Company is
conclusive, unless a question of law is involved.
MEETINGS AND CONSENTS OF MEMBERS
62. The directors of the Company may convene meetings of the members of the
Company at such times and in such manner and places within or outside the
British Virgin Islands as the directors consider necessary or desirable.
63. Upon the written request of members holding 10 percent or more of the
outstanding voting shares in the Company the directors shall convene a meeting
of members.
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64. The directors shall give not less than 7 days notice of meetings of
members to those persons whose names on the date the notice is given appear as
members in the share register of the Company and are entitled to vote at the
meeting.
65. The directors may fix the date notice is given of a meeting of members
as the record date for determining those shares that are entitled to vote at the
meeting.
66. A meeting of members may be called on short notice:
(a) if members holding not less than 90 percent of the total number of
shares entitled to vote on all matters to be considered at the meeting, or 90
percent of the votes of each class or series of shares where members are
entitled to vote thereon as a class or series together with not less than a 90
percent majority of the remaining votes, have agreed to short notice of the
meeting, or
(b) if all members holding shares entitled to vote on all or any matters to
be considered at the meeting have waived notice of the meeting and for this
purpose presence at the meeting shall be deemed to constitute waiver.
67. The inadvertent failure of the directors to give notice of a meeting to
a member, or the fact that a member has not received notice, does not invalidate
the meeting.
68. A member may be represented at a meeting of members by a proxy who may
speak and vote on behalf of the member.
69. The instrument appointing a proxy shall be produced at the place
appointed for the meeting before the time for holding the meeting at which the
person named in such instrument proposes to vote.
70. An instrument appointing a proxy shall be in substantially the
following form or such other form as the Chairman of the meeting shall accept as
properly evidencing the wishes of the member appointing the proxy.
(Name of Company)
I/We being a member of the above Company with shares
HEREBY APPOINT of or failing him
of to be my/our proxy to vote for me/us at
the meeting of members to be held on the day of and
at any adjournment thereof.
(Any restrictions on voting to be inserted here.)
Signed this day of
____________________________________
Member
7l. The following shall apply in respect of joint ownership of shares:
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(a) if two or more persons hold shares jointly each of them may be present
in person or by proxy at a meeting of members and may speak as a member;
(b) if only one of the joint owners is present in person or by proxy he may
vote on behalf of all joint owners, and
(c) if two or more of the joint owners are present in person or by proxy
they must vote as one.
72. A member shall be deemed to be present at a meeting of members if he
participates by telephone or other electronic means and all members
participating in the meeting are able to hear each other.
73. A meeting of members is duly constituted if, at the commencement of the
meeting, there are present in person or by proxy not less than 50 percent of the
votes of the shares or class or series of shares entitled to vote on resolutions
of members to be considered at the meeting. If a quorum be present,
notwithstanding the fact that such quorum may be represented by only one person
then such person may resolve any matter and a certificate signed by such person
accompanied where such person be a proxy by a copy of the proxy form shall
constitute a valid resolution of members.
74. If within two hours from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of members, shall be
dissolved; in any other case it shall stand adjourned to the next business day
at the same time and place or to such other time and place as the directors may
determine, and if at the adjourned meeting there are present within one hour
from the time appointed for the meeting in person or by proxy not less than one
third of the votes of the shares or each class or series of shares entitled to
vote on the resolutions to be considered by the meeting, those present shall
constitute a quorum but otherwise the meeting shall be dissolved.
75. At every meeting of members, the Chairman of the Board of Directors
shall preside as chairman of the meeting. If there is no Chairman of the Board
of Directors or if the Chairman of the Board of Directors is not present at the
meeting, the members present shall choose some one of their number to be the
chairman. If the members are unable to choose a chairman for any reason, then
the person representing the greatest number of voting shares present in person
or by prescribed form of proxy at the meeting shall preside as chairman failing
which the oldest individual member or representative of a member present shall
take the chair.
76. The chairman may, with the consent of the meeting, adjourn any meeting
from time to time, and from place to place, but no business shall be transacted
at any adjourned meeting other than the business left unfinished at the meeting
from which the adjournment took place.
77. At any meeting of the members the chairman shall be responsible for
deciding in such manner as he shall consider appropriate whether any resolution
has been carried or not and the result of his decision shall be announced to the
meeting and recorded in the minutes thereof. If the chairman shall have any
doubt as to the outcome of any resolution put to the vote, he shall cause a poll
to be taken of all votes cast upon such resolution, but if the chairman shall
fail to take a poll then any member present in person or by proxy who disputes
the announcement by the chairman of the result of any vote may immediately
following such announcement demand that a poll be taken and the chairman shall
thereupon cause a poll to be taken. If a poll is taken at any meeting, the
result thereof shall be duly recorded in the minutes of that meeting by the
chairman.
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78. Any person other than an individual shall be regarded as one member and
subject to the specific provisions hereinafter contained for the appointment of
representatives of such persons the right of any individual to speak for or
represent such member shall be determined by the law of the jurisdiction where,
and by the documents by which, the person is constituted or derives its
existence. In case of doubt, the directors may in good faith seek legal advice
from any qualified person and unless and until a court of competent jurisdiction
shall otherwise rule, the directors may rely and act upon such advice without
incurring any liability to any member.
79. Any person other than an individual which is a member of the Company
may by resolution of its directors or other governing body authorize such person
as it thinks fit to act as its representative at any meeting of the Company or
of any class of members of the Company, and the person so authorized shall be
entitled to exercise the same powers on behalf of the person which he represents
as that person could exercise if it were an individual member of the Company.
80. The chairman of any meeting at which a vote is cast by proxy or on
behalf of any person other than an individual may call for a notarially
certified copy of such proxy or authority which shall be produced within 7 days
of being so requested or the votes cast by such proxy or on behalf of such
person shall be disregarded.
81. Directors of the Company may attend and speak at any meeting of members
of the Company and at any separate meeting of the holders of any class or series
of shares in the Company.
82. An action that may be taken by the members at a meeting may also be
taken by a resolution of members consented to in writing or by telex, telegram,
cable, facsimile or other written electronic communication, without the need for
any notice, but if any resolution of members is adopted otherwise than by the
unanimous written consent of all members, a copy of such resolution shall
forthwith be sent to all members not consenting to such resolution. The consent
may be in the form of counterparts, each counterpart being signed by one or more
members.
DIRECTORS
83. The first directors of the Company shall be appointed by the
subscribers to the Memorandum; and thereafter, the directors shall be elected by
the members for such term as the members determine.
84. The minimum number of directors shall be one and the maximum number
shall be 7.
85. Each director shall hold office for the term, if any, fixed by
resolution of members or until his earlier death, resignation or removal.
86. A director may be removed from office, with or without cause, by a
resolution of members or, with cause, by a resolution of directors.
87. A director may resign his office by giving written notice of his
resignation to the Company and the resignation shall have effect from the date
the notice is received by the Company or from such later date as may be
specified in the notice.
88. The directors may at any time appoint any person to be a director
either to fill a vacancy or as an addition to the existing directors. A vacancy
occurs through the death, resignation or removal of a director, but a vacancy or
vacancies shall not be deemed to exist where one or more directors shall resign
after having appointed his or their successor or successors.
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89. The Company may determine by resolution of directors to keep a register
of directors containing
(a) the names and addresses of the persons who are directors of the
Company;
(b) the date on which each person whose name is entered in the register was
appointed as a director of the Company; and
(c) the date on which each person named as a director ceased to be a
director of the Company.
90. If the directors determine to maintain a register of directors, a copy
thereof shall be kept at the registered office of the Company and the Company
may determine by resolution of directors to register a copy of the register with
the Registrar of Companies.
9l. With the prior or subsequent approval by a resolution of members, the
directors may, by a resolution of directors, fix the emoluments of directors
with respect to services to be rendered in any capacity to the Company.
92. A director shall not require a share qualification and may be an
individual or a company.
POWERS OF DIRECTORS
93. The business and affairs of the Company shall be managed by the
directors who may pay all expenses incurred preliminary to and in connection
with the formation and registration of the Company and may exercise all such
powers of the Company as are not by the Act or by the Memorandum or these
Articles required to be exercised by the members of the Company, subject to any
delegation of such powers as may be authorized by these Articles and to such
requirements as may be prescribed by a resolution of members; but no requirement
made by a resolution of members shall prevail if it be inconsistent with these
Articles nor shall such requirement invalidate any prior act of the directors
which would have been valid if such requirement had not been made.
94. The directors may, by a resolution of directors, appoint any person,
including a person who is a director, to be an officer or agent of the Company.
The resolution of directors appointing an agent may authorize the agent to
appoint one or more substitutes or delegates to exercise some or all of the
powers conferred on the agent by the Company.
95. Every officer or agent of the Company has such powers and authority of
the directors, including the power and authority to affix the Seal, as are set
forth in these Articles or in the resolution of directors appointing the officer
or agent, except that no officer or agent has any power or authority with
respect to the matters requiring a resolution of directors under the Act.
96. Any director which is a body corporate may appoint any person its duly
authorized representative for the purpose of representing it at meetings of the
Board of Directors or with respect to unanimous written consents.
97. The continuing directors may act notwithstanding any vacancy in their
body, save that if their number is reduced to their knowledge below the number
fixed by or pursuant to
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these Articles as the necessary quorum for a meeting of directors, the
continuing directors or director may act only for the purpose of appointing
directors to fill any vacancy that has arisen or for summoning a meeting of
members.
98. The directors may by resolution of directors exercise all the powers of
the Company to borrow money and to mortgage or charge its undertakings and
property or any part thereof, to issue debentures, debenture stock and other
securities whenever money is borrowed or as security for any debt, liability or
obligation of the Company or of any third party.
99. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for moneys paid to the Company, shall be
signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in
such manner as shall from time to time be determined by resolution of directors.
l00. The Company may determine by resolution of directors to maintain at
its registered office a register of mortgages, charges and other encumbrances in
which there shall be entered the following particulars regarding each mortgage,
charge and other encumbrance:
(a) the sum secured;
(b) the assets secured;
(c) the name and address of the mortgagee, chargee or other encumbrancer;
(d) the date of creation of the mortgage, charge or other encumbrance; and
(e) the date on which the particulars specified above in respect of the
mortgage, charge or other encumbrance are entered in the register.
l0l. The Company may further determine by a resolution of directors to
register a copy of the register of mortgages, charges or other encumbrances with
the Registrar of Companies.
PROCEEDINGS OF DIRECTORS
102. The directors of the Company or any committee thereof may meet at such
times and in such manner and places within or outside the British Virgin Islands
as the directors may determine to be necessary or desirable.
103. A director shall be deemed to be present at a meeting of directors if
he participates by telephone or other electronic means and all directors
participating in the meeting are able to hear each other.
104. A director shall be given not less than 3 days notice of meetings of
directors, but a meeting of directors held without 3 days notice having been
given to all directors shall be valid if all the directors entitled to vote at
the meeting who do not attend, waive notice of the meeting and for this purpose,
the presence of a director at a meeting shall constitute waiver on his part. The
inadvertent failure to give notice of a meeting to a director, or the fact that
a director has not received the notice, does not invalidate the meeting.
105. A director may by a written instrument appoint an alternate who need
not be a director and an alternate is entitled to attend meetings in the absence
of the director who appointed him and to vote or consent in place of the
director.
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106. A meeting of directors is duly constituted for all purposes if at the
commencement of the meeting there are present in person or by alternate not less
than one-half of the total number of directors, unless there are only 2
directors in which case the quorum shall be 2.
107. If the Company shall have only one director the provisions herein
contained for meetings of the directors shall not apply but such sole director
shall have full power to represent and act for the Company in all matters as are
not by the Act or the Memorandum or these Articles required to be exercised by
the members of the Company and in lieu of minutes of a meeting shall record in
writing and sign a note or memorandum of all matters requiring a resolution of
directors. Such a note or memorandum shall constitute sufficient evidence of
such resolution for all purposes.
108. At every meeting of the directors the Chairman of the Board of
Directors shall preside as chairman of the meeting. If there is no Chairman of
the Board of Directors or if the Chairman of the Board of Directors is not
present at the meeting the Vice-Chairman of the Board of Directors shall
preside. If there is no Vice-Chairman of the Board of Directors or if the
Vice-Chairman of the Board of Directors is not present at the meeting the
directors present shall choose some one of their number to be chairman of the
meeting.
109. An action that may be taken by the directors or a committee of
directors at a meeting may also be taken by a resolution of directors or a
committee of directors consented to in writing or by telex, telegram, cable,
facsimile or other written electronic communication by all directors or all
members of the committee as the case may be, without the need for any notice.
The consent may be in the form of counterparts, each counterpart being signed by
one or more directors.
110. The directors shall cause the following corporate records to be kept:
(a) minutes of all meetings of directors, members, committees of directors,
committees of officers and committees of members;
(b) copies of all resolutions consented to by directors, members,
committees of directors, committees of officers and committees of members; and
(c) such other accounts and records as the directors by resolution of
directors consider necessary or desirable in order to reflect the financial
position of the Company.
111. The books, records and minutes shall be kept at the registered office
of the Company, its principal place of business or at such other place as the
directors determine.
112. The directors may, by resolution of directors, designate one or more
committees, each consisting of one or more directors.
113. Each committee of directors has such powers and authorities of the
directors, including the power and authority to affix the Seal, as are set forth
in the resolution of directors establishing the committee, except that no
committee has any power or authority to amend the Memorandum or these Articles,
to appoint directors or fix their emoluments, or to appoint officers or agents
of the Company.
114. The meetings and proceedings of each committee of directors consisting
of 2 or more directors shall be governed mutatis mutandis by the provisions of
these Articles regulating the proceedings of directors so far as the same are
not superseded by any provisions in the resolution establishing the committee.
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OFFICERS
115. The Company may by resolution of directors appoint officers of the
Company at such times as shall be considered necessary or expedient. Such
officers may consist of a Chairman of the Board of Directors, a Vice-Chairman of
the Board of Directors, a President and one or more Vice-Presidents, Secretaries
and Treasurers and such other officers as may from time to time be deemed
desirable. Any number of offices may be held by the same person.
116. The officers shall perform such duties as shall be prescribed at the
time of their appointment subject to any modification in such duties as may be
prescribed thereafter by resolution of directors or resolution of members, but
in the absence of any specific allocation of duties it shall be the
responsibility of the Chairman of the Board of Directors to preside at meetings
of directors and members, the Vice-Chairman to act in the absence of the
Chairman, the President to manage the day to day affairs of the Company, the
Vice-Presidents to act in order of seniority in the absence of the President but
otherwise to perform such duties as may be delegated to them by the President,
the Secretaries to maintain the share register, minute books and records (other
than financial records) of the Company and to ensure compliance with all
procedural requirements imposed on the Company by applicable law, and the
Treasurer to be responsible for the financial affairs of the Company.
117. The emoluments of all officers shall be fixed by resolution of
directors.
118. The officers of the Company shall hold office until their successors
are duly elected and qualified, but any officer elected or appointed by the
directors may be removed at any time, with or without cause, by resolution of
directors. Any vacancy occurring in any office of the Company may be filled by
resolution of directors.
CONFLICT OF INTERESTS
119. No agreement or transaction between the Company and one or more of its
directors or any person in which any director has a financial interest or to
whom any director is related, including as a director of that other person, is
void or voidable for this reason only or by reason only that the director is
present at the meeting of directors or at the meeting of the committee of
directors that approves the agreement or transaction or that the vote or consent
of the director is counted for that purpose if the material facts of the
interest of each director in the agreement or transaction and his interest in or
relationship to any other party to the agreement or transaction are disclosed in
good faith or are known by the other directors.
l20. A director who has an interest in any particular business to be
considered at a meeting of directors or members may be counted for purposes of
determining whether the meeting is duly constituted.
INDEMNIFICATION
l2l. Subject to the limitations hereinafter provided the Company may
indemnify against all expenses, including legal fees, and against all judgments,
fines and amounts paid in settlement and reasonably incurred in connection with
legal, administrative or investigative proceedings any person who
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(a) is or was a party or is threatened to be made a party to any
threatened, pending or completed proceedings, whether civil, criminal,
administrative or investigative, by reason of the fact that the person is or was
a director, an officer or a liquidator of the Company; or
(b) is or was, at the request of the Company, serving as a director,
officer or liquidator of, or in any other capacity is or was acting for, another
company or a partnership, joint venture, trust or other enterprise.
122. The Company may only indemnify a person if the person acted honestly
and in good faith with a view to the best interests of the Company and, in the
case of criminal proceedings, the person had no reasonable cause to believe that
his conduct was unlawful.
123. The decision of the directors as to whether the person acted honestly
and in good faith and with a view to the best interests of the Company and as to
whether the person had no reasonable cause to believe that his conduct was
unlawful is, in the absence of fraud, sufficient for the purposes of these
Articles, unless a question of law is involved.
124. The termination of any proceedings by any judgment, order, settlement,
conviction or the entering of a nolle prosequi does not, by itself, create a
presumption that the person did not act honestly and in good faith and with a
view to the best interests of the Company or that the person had reasonable
cause to believe that his conduct was unlawful.
125. If a person to be indemnified has been successful in defence of any
proceedings referred to above the person is entitled to be indemnified against
all expenses, including legal fees, and against all judgments, fines and amounts
paid in settlement and reasonably incurred by the person in connection with the
proceedings.
126. The Company may purchase and maintain insurance in relation to any
person who is or was a director, an officer or a liquidator of the Company, or
who at the request of the Company is or was serving as a director, an officer or
a liquidator of, or in any other capacity is or was acting for, another company
or a partnership, joint venture, trust or other enterprise, against any
liability asserted against the person and incurred by the person in that
capacity, whether or not the Company has or would have had the power to
indemnify the person against the liability as provided in these Articles.
SEAL
127. The Company may have more than one Seal and references herein to the
Seal shall be references to every Seal which shall have been duly adopted by
resolution of directors. The directors shall provide for the safe custody of the
Seal and for an imprint thereof to be kept at the Registered Office. Except as
otherwise expressly provided herein the Seal when affixed to any written
instrument shall be witnessed and attested to by the signature of a director or
any other person so authorized from time to time by resolution of directors.
Such authorization may be before or after the Seal is affixed, may be general or
specific and may refer to any number of sealings. The Directors may provide for
a facsimile of the Seal and of the signature of any director or authorized
person which may be reproduced by printing or other means on any instrument and
it shall have the same force and validity as if the Seal had been affixed to
such instrument and the same had been signed as hereinbefore described.
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DIVIDENDS
128. The Company may by a resolution of directors declare and pay dividends
in money, shares, or other property, but dividends shall only be declared and
paid out of surplus. In the event that dividends are paid in specie the
directors shall have responsibility for establishing and recording in the
resolution of directors authorizing the dividends, a fair and proper value for
the assets to be so distributed.
129. The directors may from time to time pay to the members such interim
dividends as appear to the directors to be justified by the profits of the
Company.
130. The directors may, before declaring any dividend, set aside out of the
profits of the Company such sum as they think proper as a reserve fund, and may
invest the sum so set aside as a reserve fund upon such securities as they may
select.
131. No dividend shall be declared and paid unless the directors determine
that immediately after the payment of the dividend the Company will be able to
satisfy its liabilities as they become due in the ordinary course of its
business and the realizable value of the assets of the Company will not be less
than the sum of its total liabilities, other than deferred taxes, as shown in
its books of account, and its capital. In the absence of fraud, the decision of
the directors as to the realizable value of the assets of the Company is
conclusive, unless a question of law is involved.
132. Notice of any dividend that may have been declared shall be given to
each member in manner hereinafter mentioned and all dividends unclaimed for 3
years after having been declared may be forfeited by resolution of directors for
the benefit of the Company.
133. No dividend shall bear interest as against the Company and no dividend
shall be paid on treasury shares or shares held by another company of which the
Company holds, directly or indirectly, shares having more than 50 percent of the
vote in electing directors.
134. A share issued as a dividend by the Company shall be treated for all
purposes as having been issued for money equal to the surplus that is
transferred to capital upon the issue of the share.
135. In the case of a dividend of authorized but unissued shares with par
value, an amount equal to the aggregate par value of the shares shall be
transferred from surplus to capital at the time of the distribution.
136. In the case of a dividend of authorized but unissued shares without
par value, the amount designated by the directors shall be transferred from
surplus to capital at the time of the distribution, except that the directors
must designate as capital an amount that is at least equal to the amount that
the shares are entitled to as a preference, if any, in the assets of the Company
upon liquidation of the Company.
137. A division of the issued and outstanding shares of a class or series
of shares into a larger number of shares of the same class or series having a
proportionately smaller par value does not constitute a dividend of shares.
ACCOUNTS AND AUDIT
138. The Company may by resolution of members call for the directors to
prepare periodically a profit and loss account and a balance sheet. The profit
and loss account and balance sheet shall be drawn up so as to give respectively
a true and fair view of the profit and loss of the Company for the financial
period and a true and fair view of the state of affairs of the Company as at the
end of the financial period.
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139. The Company may by resolution of members call for the accounts to be
examined by auditors.
140. The first auditors shall be appointed by resolution of directors;
subsequent auditors shall be appointed by a resolution of members.
141. The auditors may be members of the Company but no director or other
officer shall be eligible to be an auditor of the Company during his continuance
in office.
142. The remuneration of the auditors of the Company
(a) in the case of auditors appointed by the directors, may be fixed by
resolution of directors; and
(b) subject to the foregoing, shall be fixed by resolution of members or in
such manner as the Company may by resolution of members determine.
143. The auditors shall examine each profit and loss account and balance
sheet required to be served on every member of the Company or laid before a
meeting of the members of the Company and shall state in a written report
whether or not
(a) in their opinion the profit and loss account and balance sheet give a
true and fair view respectively of the profit and loss for the period covered by
the accounts, and of the state of affairs of the Company at the end of that
period; and
(b) all the information and explanations required by the auditors have been
obtained.
144. The report of the auditors shall be annexed to the accounts and shall
be read at the meeting of members at which the accounts are laid before the
Company or shall be served on the members.
145. Every auditor of the Company shall have a right of access at all times
to the books of account and vouchers of the Company, and shall be entitled to
require from the directors and officers of the Company such information and
explanations as he thinks necessary for the performance of the duties of the
auditors.
146. The auditors of the Company shall be entitled to receive notice of,
and to attend any meetings of members of the Company at which the Company's
profit and loss account and balance sheet are to be presented.
NOTICES
147. Any notice, information or written statement to be given by the
Company to members may be served in the case of members holding registered
shares in any way by which it can reasonably be expected to reach each member or
by mail addressed to each member at the address shown in the share register and
in the case of members holding shares issued to bearer, in the manner provided
in the Memorandum.
148. Any summons, notice, order, document, process, information or written
statement to be served on the Company may be served by leaving it, or by sending
it by registered mail addressed to the Company, at its registered office, or by
leaving it with, or by sending it by registered mail to, the registered agent of
the Company.
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149. Service of any summons, notice, order, document, process, information
or written statement to be served on the Company may be proved by showing that
the summons, notice, order, document, process, information or written statement
was delivered to the registered office or the registered agent of the Company or
that it was mailed in such time as to admit to its being delivered to the
registered office or the registered agent of the Company in the normal course of
delivery within the period prescribed for service and was correctly addressed
and the postage was prepaid.
PENSION AND SUPERANNUATION FUNDS
150. The directors may establish and maintain or procure the establishment
and maintenance of any non-contributory or contributory pension or
superannuation funds for the benefit of, and give or procure the giving of
donations, gratuities, pensions, allowances or emoluments to, any persons who
are or were at any time in the employment or service of the Company or any
company which is a subsidiary of the Company or is allied to or associated with
the Company or with any such subsidiary, or who are or were at any time
directors or officers of the Company or of any such other company as aforesaid
or who hold or held any salaried employment or office in the Company or such
other company, or any persons in whose welfare the Company or any such other
company as aforesaid is or has been at any time interested, and to the wives,
widows, families and dependents of any such person, and may make payments for or
towards the insurance of any such persons as aforesaid, and may do any of the
matters aforesaid either alone or in conjunction with any such other company as
aforesaid. Subject always to the proposal being approved by resolution of
members, a director holding any such employment or office shall be entitled to
participate in and retain for his own benefit any such donation, gratuity,
pension allowance or emolument.
VOLUNTARY WINDING UP AND DISSOLUTION
151. The Company may voluntarily commence to wind up and dissolve by a
resolution of members but if the Company has never issued shares it may
voluntarily commence to wind up and dissolve by resolution of director.
CONTINUATION
152. The Company may by resolution of members or by a resolution passed
unanimously by all directors of the Company continue as a company incorporated
under the laws of a jurisdiction outside the British Virgin Islands in the
manner provided under those laws.
We, HWR SERVICES LIMITED, of Craigmuir Chambers, Road Town, Tortola,
British Virgin Islands for the purpose of incorporating an International
Business Company under the laws of the British Virgin Islands hereby subscribe
our name to these Articles of Association the ____day of _____________in the
presence of:
Witness Subscriber
......................... ............................
Craigmuir Chambers Authorized Signatory
Road Town, Tortola HWR Services Limited
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APPENDIX "C"
AGREEMENT AND PLAN OF MERGER
BETWEEN
BETHURUM LABORATORIES LTD.
(a British Virgin Islands corporation)
and
BETHURUM LABORATORIES, INC.
(a Utah corporation)
This Agreement and Plan of Merger made and entered into this ____ day of
September 2000, by and between Bethurum Laboratories Ltd. , a British Virgin
Islands corporation (herein sometimes referred to as the "British Virgin Islands
Corporation" or "Surviving Corporation"), and Bethurum Laboratories, Inc., a
Utah corporation (herein sometimes referred to as the "Utah Corporation"), said
corporations hereinafter sometimes referred to jointly as the "Constituent
Corporations."
W I T N E S S E T H
WHEREAS, the British Virgin Islands Corporation is a corporation organized
and existing under the laws of the British Virgin Islands, its Articles of
Association and Memorandum of Association having been filed with the Companies
Registry in the British Virgin Islands on or about September 22, 2000; and
WHEREAS, the total number of shares of common stock which the British
Virgin Islands Corporation has authority to issue is 100,000,000, of which 100
shares are now issued and outstanding, all of which are owned by the Utah
Corporation; and
WHEREAS, the sole purpose of the merger agreed to herein is to change the
domicile of the Utah Corporation to the State of British Virgin Islands; and
WHEREAS, the Utah Corporation is a corporation organized and existing
under the laws of the State of Utah, its Articles of Incorporation having been
filed in the office of the Lieutenant Governor of the State of Utah on the 22nd
day of April, 1983, and Articles of Incorporation having been issued by said
Lieutenant Governor on that date; and
WHEREAS, the aggregate number of shares of common stock which the Utah
Corporation has authority to issue is 100,000,000 of which 3,300,750 shares are
presently issued and outstanding and entitled to vote on the Agreement and Plan
of Merger; and
WHEREAS, the Board of Directors of each of the Constituent Corporations
deems it advisable that the Utah Corporation be merged into the British Virgin
Islands Corporation on the terms and conditions hereinafter set forth, in
accordance with the applicable provisions of the statutes of the State of Utah
and the British Virgin Islands respectively, which permit such merger;
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NOW THEREFORE, in consideration of the premises and of the agreements,
covenants and provisions hereinafter contained, the British Virgin Islands
Corporation and the Utah Corporation, by their respective Boards of Directors
have agreed and do hereby agree as follows:
ARTICLE I
The Utah Corporation and the British Virgin Islands Corporation shall be
merged into a single corporation, in accordance with applicable provisions of
the laws of the State of Utah and of the State of British Virgin Islands, by the
Utah Corporation merging into the British Virgin Islands Corporation, which
shall be the Surviving Corporation. Such merger shall be effective when Articles
of Merger are filed with the Companies Registry in the British Virgin Islands
and with the Department of Commerce, Division of Corporations of the State of
Utah.
ARTICLE II
Upon the merger becoming effective as provided by the applicable laws of
the State of Utah and the British Virgin Islands (the time when the merger shall
so become effective being sometimes herein referred to as the "Effective Date of
the merger") the following shall occur:
1. The two Constituent Corporations shall be a single corporation, which
shall be the British Virgin Islands Corporation as the surviving corporation,
and the separate existence of the Utah Corporation shall cease except to the
extent provided by the laws of the State of Utah applicable to a corporation
after its merger into another corporation.
2. The British Virgin Islands Corporation shall thereupon and thereafter
possess all the rights, privileges, immunities and franchises, of a public or a
private nature, of each of the Constituent Corporations. All property, real or
personal, and all debts due on whatever account, including subscriptions to
shares, and all other choses in action, and all and every other interest of, or
belonging to, or due to each of the Constituent Corporations, shall be taken and
deemed to be vested in the Surviving Corporation without further act or deed;
and the title to all real estate, or any interest therein, vested in either of
the Constituent Corporations shall not revert or be in any way impaired by
reason of the merger.
3. The British Virgin Islands Corporation shall thenceforth be responsible
and liable for all of the liabilities and obligations of each of the Constituent
Corporations. Any claim existing or action or proceeding pending by or against
either of the Constituent Corporations may be prosecuted to judgment as if the
merger had not taken place, or the Surviving Corporation may be substituted in
its place, and neither the rights of creditors nor any liens upon the property
of either of the Constituent Corporations shall be impaired by the merger.
4. The aggregate amount of the net assets of the Constituent Corporations
which was available for the payment of dividends immediately prior to the
merger, to the extent that the value thereof is not transferred to stated
capital by the issuance of shares or otherwise, shall continue to be available
for the payment of dividends by the Surviving Corporation.
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5. The directors and officers of the Surviving Corporation shall, at the
effective date of the merger be as follows:
William A. Silvey, Jr. Chairman/CEO/President/Director
W. Scott Thompson SecretaryDirector
ARTICLE III
The Articles of Association and Memorandum of Association of the British
Virgin Islands Corporation, as filed with the Companies Registry in the British
Virgin Islands, shall constitute the Articles of Association and Memorandum of
Association of the Surviving Corporation, until further amended in the manner
provided by law.
ARTICLE IV
The manner and basis of converting the shares of each of the Constituent
Corporations into shares of the Surviving Corporation is as follows:
1. The 100 shares of stock of the British Virgin Islands Corporation now
owned and held by the Utah Corporation shall be canceled and no shares of stock
of the British Virgin Islands Corporation shall be issued in respect thereto,
and the capital of the British Virgin Islands Corporation shall be deemed to be
reduced by the amount of One Hundred Dollars ($100) the amount represented by
said 100 shares of stock.
2. Each share of the Utah Corporation shall be converted into one fully
paid and non-assessable share of capital stock of the British Virgin Islands
Corporation.
After the effective date of the merger, each owner of an outstanding
certificate or certificates theretofore representing shares of the Utah
Corporation shall be entitled, upon surrendering such certificate or
certificates to the Surviving Corporation, to receive in exchange therefor a
certificate or certificates representing the number of shares of stock of the
Surviving Corporation into which the shares of the Utah Corporation theretofore
represented by the surrendered certificate or certificates shall have been
converted as hereinbefore provided. Until so surrendered, each outstanding
certificate which, prior to the effective date of the merger, represented shares
of the Utah Corporation shall be deemed, for all corporate purposes, to
represent the ownership of the common stock of the Surviving Corporation on the
basis hereinbefore provided. The shareholders of the Utah Corporation shall be
entitled to such dissenting shareholder rights as are provided by the
corporation law of the State of Utah.
ARTICLE V
The Utah Corporation shall pay all expenses of carrying this Agreement and
Plan of Merger into effect and accomplishing the merger herein provided for.
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ARTICLE VI
If at any time the Surviving Corporation shall consider or be advised that
any further assignment or assurance in law is necessary or desirable to vest in
the Surviving Corporation the title to any property or rights of the Utah
Corporation, the proper officers and directors of the Utah Corporation shall,
and will execute and make all such proper assignments and assurances in law and
do all things necessary or proper to thus vest such property or rights in the
Surviving Corporation, and otherwise to carry out the purposes of this Agreement
and Plan of Merger.
ARTICLE VII
This Agreement and Plan and of Merger has been submitted to and approved
by the shareholders of each of the Constituent Corporations, as provided by law,
and shall take effect upon the filing of Articles of Merger with the office of
the Companies Registry in the British Virgin Islands of British Virgin Islands
and with the Department of Commerce, Division of Corporations of the State of
Utah. Anything herein or elsewhere to the contrary notwithstanding, this
Agreement and Plan of Merger may be abandoned by either of the Constituent
Corporations by an appropriate resolution of its board of directors at any time
prior to its approval or adoption by the shareholders and stockholders thereof,
or by the mutual consent of the Constituent Corporations evidenced by
appropriate resolutions of their respective boards of directors, at any time
prior to the effective date of the merger.
IN WITNESS WHEREOF, the British Virgin Islands Corporation and the Utah
Corporation, pursuant to the approval and authority duly given by resolutions
adopted by their respective boards of directors and shareholders have caused
this Plan and Agreement of Merger to be executed by the President of each party
hereto.
Bethurum Laboratories, Inc. Bethurum Laboratories, Ltd.
a Utah corporation a British Virgin Islands corporation
By: /s/ William A. Silvey, Jr. By: /s/ William A. Silvey, Jr.
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William A. Silvey, Jr., President William A. Silvey, Jr., President
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APPENDIX "D"
16-10a-1301. Definitions. For purposes of Part 13:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action, or the surviving or acquiring corporation by merger or share
exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under Section 16-10a-1302 and who exercises that right when and in the
manner required by Sections 16-10a-1320 through 16-10a-1328.
(4) "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 the
dissenter objects, excluding any appreciation or depreciation in anticipation of
the corporate action.
(5) "Interest" means interest from the effective date of the corporate action
until the date of payment, at the statutory rate set forth in Section 15-1-1,
compounded annually.
(6) "Record shareholder" means the person in whose name shares are registered in
the records of a corporation or the beneficial owner of shares that are
registered in the name of a nominee to the extent the beneficial owner is
recognized by the corporation as the shareholder as provided in Section
16-10a-723.
(7) "Shareholder" means the record shareholder or the beneficial shareholder.
16-10a-1302. Right to dissent.
(1) A shareholder, whether or not entitled to vote, is entitled to dissent from,
and obtain payment of the fair value of shares held by him in the event of, any
of the following corporate actions:
(a) consummation of a plan of merger to which the corporation is a party
if:
(i) shareholder approval is required for the merger by Section
16-10a-1103 or the articles of incorporation; or
(ii) the corporation is a subsidiary that is merged with its parent
under Section 16-10a-1104;
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(b) consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired;
(c) consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of the corporation for which a shareholder
vote is required under Subsection 16-10a-1202(1), but not including a sale for
cash pursuant to a plan by which all or substantially all of the net proceeds of
the sale will be distributed to the shareholders within one year after the date
of sale; and
(d) consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of an entity controlled by the corporation
if the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to Subsection 16-10a-1202(2).
(2) A shareholder is entitled to dissent and obtain payment of the fair value of
his shares in the event of any other corporate action to the extent the articles
of incorporation, bylaws, or a resolution of the board of directors so provides.
(3) Notwithstanding the other provisions of this part, except to the extent
otherwise provided in the articles of incorporation, bylaws, or a resolution of
the board of directors, and subject to the limitations set forth in Subsection
(4), a shareholder is not entitled to dissent and obtain payment under
Subsection (1) of the fair value of the shares of any class or series of shares
which either were listed on a national securities exchange registered under the
federal Securities Exchange Act of 1934, as amended, or on the National Market
System of the National Association of Securities Dealers Automated Quotation
System, or were held of record by more than 2,000 shareholders, at the time of:
(a) the record date fixed under Section 16-10a-707 to determine the
shareholders entitled to receive notice of the shareholders' meeting at which
the corporate action is submitted to a vote;
(b) the record date fixed under Section 16-10a-704 to determine
shareholders entitled to sign writings consenting to the proposed corporate
action; or
(c) the effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(4) The limitation set forth in Subsection (3) does not apply if the shareholder
will receive for his shares, pursuant to the corporate action, anything except:
(a) shares of the corporation surviving the consummation of the plan of
merger or share exchange;
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(b) shares of a corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities exchange
registered under the federal Securities Exchange Act of 1934, as amended, or on
the National Market System of the National Association of Securities Dealers
Automated Quotation System, or will be held of record by more than 2,000
shareholders;
(c) cash in lieu of fractional shares; or
(d) any combination of the shares described in Subsection (4), or cash in
lieu of fractional shares.
(5) A shareholder entitled to dissent and obtain payment for his shares under
this part may not challenge the corporate action creating the entitlement unless
the action is unlawful or fraudulent with respect to him or to the corporation.
16-10a-1303. Dissent by nominees and beneficial owners.
(1) A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if the shareholder dissents with respect to
all shares beneficially owned by any one person and causes the corporation to
receive written notice which states the dissent and the name and address of each
person on whose behalf dissenters' rights are being asserted. The rights of a
partial dissenter under this subsection are determined as if the shares as to
which the shareholder dissents and the other shares held of record by him were
registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares held on
his behalf only if:
(a) the beneficial shareholder causes the corporation to receive the
record shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) the beneficial shareholder dissents with respect to all shares of
which he is the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents with
respect to the shares held by any one or more beneficial shareholders, each
beneficial shareholder must certify to the corporation that both he and the
record shareholders of all shares owned beneficially by him have asserted, or
will timely assert, dissenters' rights as to all the shares unlimited on the
ability to exercise dissenters' rights. The certification requirement must be
stated in the dissenters' notice given pursuant to Section 16-10a-1322.
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16-10a-1320. Notice of dissenters' rights.
(1) If a proposed corporate action creating dissenters' rights under Section
16-10a-1302 is submitted to a vote at a shareholders' meeting, the meeting
notice must be sent to all shareholders of the corporation as of the applicable
record date, whether or not they are entitled to vote at the meeting. The notice
shall state that shareholders are or may be entitled to assert dissenters'
rights under this part. The notice must be accompanied by a copy of this part
and the materials, if any, that under this chapter are required to be given the
shareholders entitled to vote on the proposed action at the meeting. Failure to
give notice as required by this subsection does not affect any action taken at
the shareholders' meeting for which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights under Section
16-10a-1302 is authorized without a meeting of shareholders pursuant to Section
16-10a-704, any written or oral solicitation of a shareholder to execute a
written consent to the action contemplated by Section 16-10a-704 must be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this part, by a copy of this
part, and by the materials, if any, that under this chapter would have been
required to be given to shareholders entitled to vote on the proposed action if
the proposed action were submitted to a vote at a shareholders' meeting. Failure
to give written notice as provided by this subsection does not affect any action
taken pursuant to Section 16-10a-704 for which the notice was to have been
given.
16-10a-1321. Demand for payment -- Eligibility and notice of intent.
(1) If a proposed corporate action creating dissenters' rights under Section
16-10a-1302 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights:
(a) must cause the corporation to receive, before the vote is taken,
written notice of his intent to demand payment for shares if the proposed action
is effectuated; and
(b) may not vote any of his shares in favor of the proposed action.
(2) If a proposed corporate action creating dissenters' rights under Section
16-10a-1302 is authorized without a meeting of shareholders pursuant to Section
16-10a-704, a shareholder who wishes to assert dissenters' rights may not
execute a writing consenting to the proposed corporate action.
(3) In order to be entitled to payment for shares under this part, unless
otherwise provided in the articles of incorporation, bylaws, or a resolution
adopted by the board of directors, a shareholder must have been a shareholder
with respect to the shares for which payment is demanded as of the date the
proposed corporate action creating dissenters' rights under Section 16-10a-1302
is approved by the shareholders, if shareholder approval is required, or as of
the effective date of the corporate action if the corporate action is authorized
other than by a vote of shareholders.
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(4) A shareholder who does not satisfy the requirements of Subsections (1)
through (3) is not entitled to payment for shares under this part.
16-10a-1322. Dissenters' notice.
(1) If proposed corporate action creating dissenters' rights under Section
16-10a-1302 is authorized, the corporation shall give a written dissenters'
notice to all shareholders who are entitled to demand payment for their shares
under this part.
(2) The dissenters' notice required by Subsection (1) must be sent no later than
ten days after the effective date of the corporate action creating dissenters'
rights under Section 16-10a-1302, and shall:
(a) state that the corporate action was authorized and the effective date
or proposed effective date of the corporate action;
(b) state an address at which the corporation will receive payment demands
and an address at which certificates for certificated shares must be deposited;
(c) inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) supply a form for demanding payment, which form requests a dissenter
to state an address to which payment is to be made;
(e) set a date by which the corporation must receive the payment demand
and by which certificates for certificated shares must be deposited at the
address indicated in the dissenters' notice, which dates may not be fewer than
30 nor more than 70 days after the date the dissenters' notice required by
Subsection (1) is given;
(f) state the requirement contemplated by Subsection 16-10a-1303(3), if
the requirement is imposed; and
(g) be accompanied by a copy of this part.
16-10a-1323. Procedure to demand payment.
(1) A shareholder who is given a dissenters' notice described in Section
16-10a-1322, who meets the requirements of Section 16-10a-1321, and wishes to
assert dissenters' rights must, in accordance
with the terms of the dissenters' notice:
(a) cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in Subsection 16-10a-1322(2)(d), duly
completed, or may be stated in another writing;
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(b) deposit certificates for his certificated shares in accordance with
the terms of the dissenters' notice; and
(c) if required by the corporation in the dissenters' notice described in
Section 16-10a-1322, as contemplated by Section 16-10a-1327, certify in writing,
in or with the payment demand, whether or not he or the person on whose behalf
he asserts dissenters' rights acquired beneficial ownership of the shares before
the date of the first announcement to news media or to shareholders of the terms
of the proposed corporate action creating dissenters' rights under Section
16-10a-1302.
(2) A shareholder who demands payment in accordance with Subsection (1) retains
all rights of a shareholder except the right to transfer the shares until the
effective date of the proposed corporate action giving rise to the exercise of
dissenters' rights and has only the right to receive payment for the shares
after the effective date of the corporate action.
(3) A shareholder who does not demand payment and deposit share certificates as
required, by the date or dates set in the dissenters' notice, is not entitled to
payment for shares under this part.
16-10a-1324. Uncertificated shares.
(1) Upon receipt of a demand for payment under Section 16-10a-1323 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
of the shares until the proposed corporate action is taken or the restrictions
are released under Section 16-10a-1326.
(2) In all other respects, the provisions of Section 16-10a-1323 apply to
shareholders who own uncertificated shares.
16-10a-1325. Payment.
(1) Except as provided in Section 16-10a-1327, upon the later of the effective
date of thecorporate action creating dissenters' rights under Section
16-10a-1302, and receipt by the corporation of each payment demand pursuant to
Section 16-10a-1323, the corporation shall pay the amount the corporation
estimates to be the fair value of the dissenter's shares, plus interest to each
dissenter who has complied with Section 16-10a-1323, and who meets the
requirements of Section 16-10a-1321, and who has not yet received payment.
(2) Each payment made pursuant to Subsection (1) must be accompanied by:
(a) (i) (A) the corporation's balance sheet as of the end of its most
recent fiscal year, or if not available, a fiscal year ending not more than 16
months before the date of payment; (B) an income statement for that year; (C) a
statement of changes in shareholders' equity for that year and a statement of
cash flow for that year, if the corporation customarily provides such statements
to shareholders; and (D) the latest available interim financial statements, if
any; (ii) the balance sheet and statements referred to in Subsection (i) must be
audited if the corporation customarily provides audited financial statements to
shareholders;
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(b) a statement of the corporation's estimate of the fair value of the
shares and the amount of interest payable with respect to the shares;
(c) a statement of the dissenter's right to demand payment under Section
16-10a-1328; and
(d) a copy of this part.
16-10a-1326. Failure to take action.
(1) If the effective date of the corporate action creating dissenters' rights
under Section 16-10a-1302 does not occur within 60 days after the date set by
the corporation as the date by which the corporation must receive payment
demands as provided in Section 16-10a-1322, the corporation shall return all
deposited certificates and release the transfer restrictions imposed on
uncertificated shares, and all shareholders who submitted a demand for payment
pursuant to Section 16-10a-1323 shall thereafter have all rights of a
shareholder as if no demand for payment had been made.
(2) If the effective date of the corporate action creating dissenters' rights
under Section 16-10a-1302 occurs more than 60 days after the date set by the
corporation as the date by which the corporation must receive payment demands as
provided in Section 16-10a-1322, then the corporation shall send a new
dissenters' notice, as provided in Section 16-10a-1322, and the provisions of
Sections 16-10a-1323 through 16-10a-1328 shall again be applicable.
16-10a-1327. Special provisions relating to shares acquired after announcement
of proposed corporate action.
(1) A corporation may, with the dissenters' notice given pursuant to Section
16-10a-1322, state the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action creating dissenters'
rights under Section 16-10a-1302 and state that a shareholder who asserts
dissenters' rights must certify in writing, in or with the payment demand,
whether or not he or the person on whose behalf he asserts dissenters' rights
acquired beneficial ownership of the shares before that date. With respect to
any dissenter who does not certify in writing, in or with the payment demand
that he or the person on whose behalf the dissenters' rights are being asserted,
acquired beneficial ownership of the shares before that date, the corporation
may, in lieu of making the payment provided in Section 16-10a-1325, offer to
make payment if the dissenter agrees to accept it in full satisfaction of his
demand.
(2) An offer to make payment under Subsection (1) shall include or be
accompanied by the information required by Subsection 16-10a-1325(2).
16-10a-1328. Procedure for shareholder dissatisfied with payment or offer.
(1) A dissenter who has not accepted an offer made by a corporation under
Section 16-10a-1327 may notify the corporation in writing of his own estimate of
the fair value of his shares and
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demand payment of the estimated amount, plus interest, less any payment made
under Section 16-10a-1325, if:
(a) the dissenter believes that the amount paid under Section 16-10a-1325
or offered under Section 16-10a-1327 is less than the fair value of the shares;
(b) the corporation fails to make payment under Section 16-10a-1325 within
60 days after the date set by the corporation as the date by which it must
receive the payment demand; or
(c) the corporation, having failed to take the proposed corporate action
creating dissenters' rights, does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares as required
by Section 16-10a-1326.
(2) A dissenter waives the right to demand payment under this section unless he
causes the corporation to receive the notice required by Subsection (1) within
30 days after the corporation made or offered payment for his shares.
16-10a-1330. Judicial appraisal of shares -- Court action.
(1) If a demand for payment under Section 16-10a-1328 remains unresolved, the
corporation shall commence a proceeding within 60 days after receiving the
payment demand contemplated by Section 16-10a-1328, and petition the court to
determine the fair value of the shares and the amount of interest. If the
corporation does not commence the proceeding within the 60-day period, it shall
pay each dissenter whose demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in Subsection (1) in
the district court of the county in this state where the corporation's principal
office, or if it has no principal office in this state, the county where its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with, or whose shares were acquired by, the foreign corporation was
located.
(3) The corporation shall make all dissenters who have satisfied the
requirements of Sections 16-10a-1321, 16-10a-1323, and 16-10a-1328, whether or
not they are residents of this state whose demands remain unresolved, parties to
the proceeding commenced under Subsection (2) as an action against their shares.
All such dissenters who are named as parties must be served with a copy of the
petition. Service on each dissenter may be by registered or certified mail to
the address stated in his payment demand made pursuant to Section 16-10a-1328.
If no address is stated in the payment demand, service may be made at the
address stated in the payment demand given pursuant to Section 16-10a-1323. If
no address is stated in the payment demand, service may be made at the address
shown on the corporation's current record of shareholders for the record
shareholder holding the dissenter's shares. Service may also be made otherwise
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
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evidence and recommend decision on the question of fair value. The appraisers
have the powers described in the order appointing them, or in any amendment to
it. The dissenters are entitled to the same discovery rights as parties in other
civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under Subsection (2)
is entitled to judgment:
(a) for the amount, if any, by which the court finds that the fair value
of his shares, plus interest, exceeds the amount paid by the corporation
pursuant to Section 16-10a-1325; or
(b) for the fair value, plus interest, of the dissenter's after-acquired
shares for which the corporation elected to withhold payment under Section
16-10a-1327.
16-10a-1331. Court costs and counsel fees.
(1) The court in an appraisal proceeding commenced under Section 16-10a-1330
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the 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 that the dissenters acted arbitrarily, vexatiously,
or not in good faith in demanding payment under Section 16-10a-1328.
(2) The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable:
(a) against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the requirements
of Sections 16-10a-1320 through 16-10a-1328; or
(b) against either the corporation or one or more dissenters, 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 this part.
(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 corporation, the court may
award to those counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefitted.
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Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Utah Law
As permitted by sections 841 of the Revised Business Corporations Act of
the State of Utah, the Registrant's Articles of Incorporation eliminate a
director's personal liability for monetary damages to the Registrant and its
shareholders arising from a breach of alleged breach of a director's fiduciary
duty except for (i) liability under section 842 of the Revised Business
Corporation Act; (ii) liability for the amount of a financial benefit received
by a director to which he is not entitled; (iii) liability for any intentional
infliction of harm on the corporation or the shareholders; and (iv) liability
for an intentional violation of criminal law. The effect of this provision in
the Articles of Incorporation is to eliminate the rights of the Registrant and
its shareholders (through shareholders' derivative suits on behalf of the
Registrant) to recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting from negligent or
grossly negligent behavior) except in the situation described above.
The Registrant's Articles of Incorporation and Bylaws provide for
indemnification of officers, directors and employees, and the Registrant has
entered into an indemnification agreement with each officer and director of the
Registrant (an "Indemnitee"). Under the Bylaws and such indemnification
agreements, the Registrant must indemnify an Indemnitee to the fullest extent
permitted by Utah law for losses and expenses incurred in connection with
actions in which the Indemnitee is involved by reason of having been a director
or employee of the Registrant. The Registrant is also obligated to advance
expenses an Indemnitee may incur in connection with such actions before any
resolution of the action, and the Indemnitee may sue to enforce his or her right
to indemnification or advancement of expenses.
There is no litigation pending, and neither the Registrant nor any of its
directors know of any threatened litigation, which might result in a claim for
indemnification by any director or officer.
British Virgin Island Law
Subject to any limitations in a corporation's Memorandum of Association or
Articles of Association, British Virgin Islands law allows a corporation to
indemnify, against all expenses, judgments, fines and amounts paid in settlement
and reasonably incurred, any person who (1) is or was a party or is threatened
to be made a party to any threatened, pending or completed proceedings by reason
of the fact that the person is or was a director, officer or liquidator of the
company or (2) is or was, at the company's request, serving as a director,
officer or liquidator of, or in any other capacity is or was acting for, another
entity; provided, however, that such person acted honestly and in good faith
with a view to the best interests of the company and, in the case
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of criminal proceedings, had no reasonable cause to believe that his or her
conduct was unlawful. Bethurum BVI's Articles of Association provide that the
company may indemnify any person referred to in the preceding sentence if such
person has been successful in defending any proceeding of the type described in
the preceding sentence, regardless of whether such person acted honestly and in
good faith with a view to the best interests of the company and, in the case of
criminal proceedings, had reasonable cause to believe that his or her conduct
was unlawful.
Item 21. Exhibits and Financial Statement Schedules.
Exhibit
Number Description of Exhibit
2.1 Agreement and Plan of Merger (included as Appendix "C" to Proxy
Statement/ Prospectus)
3.1 Memorandum of Association Bethurum BVI (included as Appendix "A"
to Proxy Statement/ Prospectus)
3.2 Articles of Association Bethurum BVI (included as Appendix "B" to
Proxy Statement/ Prospectus)
5.1 Opinion of Harney, Westwood & Riegels
23.1 Consent of Jones, Jensen & Company, independent auditors
23.2 Consent of Harney, Westwood & Riegels (included in Exhibit 5.1
hereof)
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Item 21. Undertakings.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) (1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
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(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed after the effective date of the registration statement through the date of
responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on the 26th day of September, 2000.
By: /s/ William A. Silvey, Jr.
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Chief Executive Officer
By: /s/ W. Scott Thompson
----------------------------------
W. Scott Thompson
Chief Financial Officer
Pursuant to requirements of the Securities Act of 1933, this Registration
Statement was signed by the following persons in the capacities and on the dates
stated.
Date: Title: Signature:
September 26, 2000 CEO/President and /s/ William A. Silvey, Jr.
Director William A. Silvey, Jr.
September 26, 2000 Secretary/Director /s/ W. Scott Thompson
W. Scott Thompson
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