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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934
and Rule 13e-3 (Section 240.13e-3) thereunder)
UTAH RESOURCES INTERNATIONAL, INC.
(Name of the Issuer)
UTAH RESOURCES INTERNATIONAL, INC.
(Name of Person Filing Statement)
Common Stock $.10 par value 917518102-2,522,808
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(Title of Class of Securities) (CUSIP Number of Class of Securities)
Alan B. Roth
Wildman, Harrold, Allen & Dixon
225 West Wacker Drive
Chicago, Illinois 60606
(312) 201-2000
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(Name, Address, and Telephone Number of Persons Authorized to Receive Notice
and Communications on Behalf of Persons Filing Statement)
This statement is filed in connection with (check the appropriate
box):
a. [X] The filing of solicitation materials or an
information statement subject to Regulation 14A,
Regulation 14C or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the
Securities Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [X]
Calculation of Filing Fee
Transaction valuation $________ Amount of filing fee $________
*Based on the cash value of the fractional shares expected to be created by the
Rule 13e-3 transaction.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1
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Amount Previously Paid: ________________________
Form or Registration No: ________________________
Filing Party: ________________________
Date Filed: ________________________
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INTRODUCTION
This Rule 13e-3 Transaction Statement ("Statement") relates to a
solicitation of proxies by Utah Resources International, Inc. (the "Company") to
be used at an annual meeting ("Annual Meeting") of shareholders of the Company
to consider and vote upon a proposal to amend the Company's Articles of
Incorporation ("Amendment"), to effect a reverse split of the Company's issued
and outstanding common stock as of 4:30 p.m., M.D.S.T., on the date of filing of
the Amendment on the basis that each 1,000 shares of common stock then
outstanding will be converted into one share, at $3.35 per share
pre-reverse-split price, with fractional shareholders given the option to either
receive cash in lieu of their resulting fractional share or purchase additional
fractional shares to round up to one whole share following the reverse split
(the "Transaction").
Simultaneously with the filing of this Statement, the Company is filing
a Preliminary Proxy Statement ("Preliminary Proxy Statement") and Schedule 14A,
with exhibits with the Securities and Exchange Commission. The Preliminary
Proxy Statement describes and requires a vote on the Transaction, election of
directors, an amendment to the by-laws of the Company changing its annual
meeting date, certain proposals submitted by Mark G. Jones on behalf of Mark
Technologies Corporation, which proposals are not supported by a majority of
the Board of Directors of the Company and the majority shareholder of the
Company, and other matters. Directors Mark G. Jones and Jenny Morgan support
the proposals of Mark Technologies Corporation. The cross reference sheet
herein is being supplied pursuant to General Instruction F to Schedule 13E-3
and shows the location in the Preliminary Proxy Statement of the information
required to be included in response to the items of this Statement. The
information in the Preliminary Proxy Statement is hereby expressly incorporated
herein by reference and the responses to each item are qualified in their
entirety by the contents thereof.
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CROSS REFERENCE SHEET
Pursuant to General Instruction F of Schedule 13E-3, the following table
sets forth the location in the Preliminary Proxy Statement of the registrant
dated ____________ __, 1997 (which has been filed in preliminary form with the
Securities and Exchange Commission and is attached hereto as Exhibit 1), of the
information required by Schedule 13E-3 which is incorporated herein from such
Preliminary Proxy Statement.
Location in
Schedule 13E-3 Item and Caption Preliminary Proxy Statement
- ------------------------------- ---------------------------
Item 1. Issuer and Class of Security
Subject to the Transaction.
(a)-(b) PROCEDURAL MATTERS
(c) PROPOSED REVERSE SPLIT/
Market Price
(d) SPECIAL FACTORS/Reasons for
the Proposed Reverse Split
(e) Not applicable
(f) PROPOSED REVERSE SPLIT/
Market Price
Item 2. Identity and Background. This Preliminary Proxy
Statement is being filed by
the issuers of the class of
equity securities which is
the subject of this Rule
13e-3 transaction.
(a)-(g) Not applicable
Item 3. Past Contacts, Transactions
or Negotiations. Not applicable
Item 4. Terms of the Transaction. PROCEDURAL MATTERS,
PROPOSED REVERSE
SPLIT/Summary of the Proposed
Reverse Split, Option to
Round Up Stock Holdings, Cash
Payment in Lieu of Fractional
Shares, Market Price,
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Amendment to Articles of Incorporation,
Exercise of Round Up Option and
Exchange of Stock Certificates, Voting
Requirements, Dissenters' Rights,
Regulatory Requirements and Purchase of
Returned Shares, SPECIAL FACTORS/Effect
of the Proposed Reverse Split, Reasons
for the Proposed Reverse Split and
Recommendation of the Board of
Directors
Item 5. Plans or Proposals of the
Issuer or Affiliate.
(a)-(b) Not applicable
(c) PROCEDURAL MATTERS and AMENDMENT TO
BY-LAWS
(d)-(e) Not applicable
(f)-(g) PROCEDURAL MATTERS, PROPOSED REVERSE
SPLIT/Summary of the Proposed Reverse
Split, SPECIAL FACTORS/Effect of the
Proposed Reverse Split, Background of
the Proposed Reverse Split, Reasons
for the Proposed Reverse Split,
Recommendation of the Board of
Directors and Conduct of the
Company's Business after
the Proposed Reverse Split
Item 6. Source and Amount of Funds
or Other Consideration.
(a)-(c) SPECIAL FACTORS/Financing
the Proposed Reverse Split
(d) Not applicable
Item 7. Purpose(s), Alternatives,
Reasons and Effects.
(a) PROCEDURAL MATTERS, PROPOSED REVERSE
SPLIT/Summary of the Proposed
Reverse Split, SPECIAL FACTORS/
Effect of the Proposed Reverse Split,
Background of the Proposed Reverse
Split, IMCC Transaction and Settlement
Agreements, Reasons for the Proposed
Reverse Split, Recommendation of the
Board of Directors and Conduct of the
Company's Business After the Proposed
Reverse Split
(b) SPECIAL FACTORS/Recommendation of
the Board of Directors
(c) SPECIAL FACTORS/Background
of the Proposed Reverse
Split, IMCC Transaction and
Settlement Agreements,
Reasons for the
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Proposed Reverse Split and
Recommendation of the Board of
Directors
(d) SPECIAL FACTORS/Effect of the
Proposed Reverse Split and FINANCIAL
MATTERS/Federal Income Tax
Consequences
Item 8. Fairness of the Transaction.
(a) SPECIAL FACTORS/Effect of the
Proposed Reverse Split and
Recommendation of the Board of
Directors
(b) SPECIAL FACTORS/Background of the
Proposed Reverse Split, IMCC
Transaction and Settlement
Agreements, Reasons for the Proposed
Reverse Split, Recommendation of the
Board of Directors and Conduct of the
Company's Business After the Proposed
Reverse Split
(c) PROPOSED REVERSE SPLIT/Voting
Requirements and SPECIAL FACTORS/
Recommendation of the Board of
Directors
(d) SPECIAL FACTORS/Background of the
Proposed Reverse Split and
Recommendation of the Board of
Directors
(e) SPECIAL FACTORS/Recommendation of the
Board of Directors
(f) Not applicable
Item 9. Reports, Opinions, Appraisals No report, opinion or appraisal
and Certain Negotiations. materially related to this Rule 13e-3
transaction has been received by the
Issuer
Item 10. Interest in Securities of
the Issuer.
(a) VOTING SECURITIES AND PRINCIPAL
HOLDERS THEREOF
(b) Not applicable
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Item 11. Contracts, Arrangements or SPECIAL FACTORS/Background
Understandings with Respect of the Proposed Reverse
to the Issuer's Securities. Split and Reasons for the
Proposed Reverse Split
Item 12. Present Intention and Recommen- SPECIAL FACTORS/Reasons
dation of Certain Persons with for the Proposed Reverse
Regard to the Transaction. Split and Recommendation
of the Board of Directors
Item 13. Other Provisions of the
Transaction.
(a) PROPOSED REVERSE SPLIT/
Dissenters' Rights
(b)-(c) Not applicable
Item 14. Financial Information. FINANCIAL MATTERS/Financial
Statements
Item 15. Persons and Assets Employed, SPECIAL FACTORS/Persons and
Retained or Utilized. Assets Employed, Retained or
Utilized
Item 16. Additional Information. Not applicable
Item 17. Material to be Filed as Exhibit Index attached hereto
Exhibits.
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Item 1. Issuer and Class of Security Subject to the Transaction.
(a) Information in response to these sub-items is incorporated
herein by reference to "PROCEDURAL MATTERS" on the cover page of registrant's
Proxy Statement dated June 16, 1997 which has been filed in preliminary form
with the Securities and Exchange Commission ("SEC") (referred to herein as the
"Preliminary Proxy Statement").
(b) Information in response to this sub-item is incorporated
herein by reference to "PROCEDURAL MATTERS" in the Preliminary Proxy Statement.
(c) Information in response to this sub-item is incorporated
herein by reference to "PROPOSED REVERSE SPLIT/Market Price" in the Preliminary
Proxy Statement.
(d) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Reasons for the Proposed Reverse Split"
in the Preliminary Proxy Statement.
(e) Not applicable.
(f) Information in response to this sub-item is incorporated
herein by reference to "PROPOSED REVERSE SPLIT/Market Price" in the Preliminary
Proxy Statement.
Item 2. Identity and Background.
This Proxy Statement is being filed by the Issuer of the class of
equity security which is the subject of this Rule 13e-3 transaction.
(a)-(d) Not applicable.
(e) No executive officer, director, control person, or executive
officer or director of any corporation ultimately in control of the registrant
has been convicted during the last five years in a criminal proceeding
(excluding traffic violations and similar misdemeanors).
(f) No executive officer, director, control person, or executive
officer or director of any corporation ultimately in control of the registrant
during the past five years has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
further violations of, or prohibiting activities subject to, federal or state
securities laws or a finding of any violation of such laws.
(g) Not applicable.
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Item 3. Past Contacts, Transactions or Negotiations.
Not applicable.
Item 4. Terms of the Transaction.
Information in response to this sub-item is incorporated herein by
reference to "PROCEDURAL MATTERS" and "PROPOSED REVERSE SPLIT/Summary of the
Proposed Reverse Split, Option to Round Up Stock Holdings, Cash Payment in
Lieu of Fractional Shares, Market Price, Amendments to Articles of
Incorporation, Exercise of Round Up Option and Exchange of Stock Certificates,
Voting Requirements, Dissenters' Rights, Regulatory Requirements and Purchase
of Returned Shares" and "SPECIAL FACTORS/Effect of the Proposed Reverse
Split, Reasons for the Proposed Reverse Split and Recommendation of the Board
of Directors" in the Preliminary Proxy Statement.
Item 5. Plans or Proposals of the Issuer or Affiliate.
(a)-(b) Not applicable.
(c) Information in response to this sub-item is incorporated
herein by reference to "PROCEDURAL MATTERS" and "AMENDMENT
TO BY-LAWS" in the Preliminary Proxy Statement.
(d)-(e) Not applicable.
(f)-(g) Information in response to these sub-items is incorporated
herein by reference to "PROCEDURAL MATTERS", "PROPOSED REVERSE SPLIT/Summary of
the Proposed Reverse Split", "SPECIAL FACTORS/Effect of the Proposed Reverse
Split, Background of the Proposed Reverse Split, Reasons for the Proposed
Reverse Split, Recommendation of the Board of Directors and Conduct of the
Company's Business After the Proposed Reverse Split" in the Preliminary Proxy
Statement.
Item 6. Source and Amounts of Funds or Other Consideration.
(a)-(c) Information in response to these sub-items is incorporated
herein by reference to "SPECIAL FACTORS/Financing the Proposed Reverse Split" in
the Preliminary Proxy Statement.
(d) Not applicable.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
(a) Information in response to this sub-item is incorporated
herein by reference to "PROCEDURAL MATTERS", "PROPOSED REVERSE SPLIT/Summary of
the Proposed Reverse Split", "SPECIAL FACTORS/Effect of the Proposed Reverse
Split and Reasons for the Proposed Reverse Split, Recommendation of the Board of
Directors, and Conduct of the Company's Business After the Proposed Reverse
Split" in the Preliminary Proxy Statement.
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(b) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Recommendation of the Board of
Directors" in the Preliminary Proxy Statement.
(c) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Background of the Proposed Reverse
Split, IMCC Transaction and Settlement Agreements, Reasons for the Proposed
Reverse Split and Recommendation of the Board of Directors" in the Preliminary
Proxy Statement.
(d) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Effect of the Proposed Reverse Split and
FINANCIAL MATTERS/Federal Income Tax Consequences" in the Preliminary Proxy
Statement.
Item 8. Fairness of the Transaction.
(a) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Effect of the Proposed Reverse Split
and Recommendation of the Board of Directors" in the Preliminary Proxy
Statement.
(b) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Background of the Proposed Reverse
Split, IMCC Transaction and Settlement Agreements, Reasons for the Proposed
Reverse Split, Recommendation of the Board of Directors and Conduct of the
Company's Business After the Proposed Reverse Split" in the Preliminary Proxy
Statement.
(c) Information in response to this sub-item is incorporated
herein by reference to "PROPOSED REVERSE SPLIT/Voting Requirements" and
"SPECIAL FACTORS/Recommendation of the Board of Directors" in the
Preliminary Proxy Statement.
(d) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Background of the Proposed Reverse
Split and Recommendation of the Board of Directors" in the Preliminary Proxy
Statement.
(e) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Recommendation of the Board of
Directors" in the Preliminary Proxy Statement.
(f) Not applicable.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
No report, opinion or appraisal materially related to this Rule 13e-3
transaction has been received by the Issuer.
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Item 10. Interest in Securities of the Issuer.
(a) Information in response to this sub-item is incorporated
herein by reference to "VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF" in the
Preliminary Proxy Statement.
(b) Not applicable.
Item 11. Contracts, Arrangements or Understandings with Respect to the
Issuer's Securities.
Information in response to this item is incorporated herein by
reference to "SPECIAL FACTORS/Background of the Proposed Reverse Split and
Reasons for the Proposed Reverse Split" in the Preliminary Proxy Statement.
Item 12. Present Intention and Recommendation of Certain Persons with
Regard to the Transaction.
Information in response to this item is incorporated herein by
reference to "SPECIAL FACTORS/Reasons for the Proposed Reverse Split and
Recommendation of the Board of Directors" in the Preliminary Proxy Statement.
Item 13. Other Provisions of the Transaction.
(a) Information in response to this sub-item is incorporated
herein by reference to "PROPOSED REVERSE SPLIT/Dissenters' Rights" in the
Preliminary Proxy Statement.
(b)-(c) Not applicable.
Item 14. Financial Information.
Information in response to this item is incorporated herein by
reference to "FINANCIAL MATTERS/Financial Statements" in the Preliminary Proxy
Statement.
Item 15. Persons and Assets Employed, Retained or Utilized.
Information in response to this item is incorporated herein by
reference to "SPECIAL FACTORS/Persons or Assets Employed, Retained or Utilized"
in the Preliminary Proxy Statement.
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Item 16. Additional Information.
Not applicable.
Item 17. Material to be Filed as Exhibits.
See the Exhibit Index attached hereto.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
UTAH RESOURCES INTERNATIONAL, INC.
Date: June 16, 1997 By:______________________________
John Fife, Director, Chairman of
the Board, CEO and President
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EXHIBIT INDEX
TO
RULE 13E-3 TRANSACTION STATEMENT
UTAH RESOURCES INTERNATIONAL, INC.
SEQUENTIALLY
NUMBERED
PAGE *
------------
99.1. Preliminary copy of Transmittal Letter to Shareholders
of Utah Resources International, Inc. regarding Annual
Meeting of Shareholders.
99.2. Preliminary copy of Notice of Annual Meeting of
Shareholders of Utah Resources International, Inc.
99.3. Preliminary copy of Proxy Statement of Utah Resources
International, Inc. filed with the Securities and Exchange
Commission on June 16, 1997.
99.4. Preliminary copy of Shareholder Proxy.
* INCLUDED ONLY ON ORIGINAL SCHEDULE 13E-3 FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 1
EXHIBIT 1
<PAGE> 2
PRELIMINARY COPY DATED JUNE 16, 1997
FOR REVIEW ONLY
UTAH RESOURCES INTERNATIONAL, INC.
297 West Hilton Drive
Suite #4
St. George, Utah 84770
________________, 1997
Dear Shareholder:
You are cordially invited to attend an Annual Meeting of Shareholders of
Utah Resources International, Inc. (the "Company"), to be held in the
___________________________________ on ____________, ______________, 1997 at
_______________.
The Company was organized in Utah in 1966 as Utah Industrial, Inc. It was
renamed Utah Resources International, Inc. in 1969. In 1981, the Company became
a "reporting company" requiring it to file various reports with the Securities
and Exchange Commission. On July 3, 1996, the Company consummated a transaction
with Inter-Mountain Capital Corporation ("IMCC"), whereby common stock
representing 50.5% of the outstanding stock of the Company was transferred to
IMCC for $3.35 per share, payable in accordance with the terms of the Stock
Purchase Agreement by and between the Company and IMCC (the "Stock Purchase
Agreement"). The transfer of such shares to IMCC was the product of the
consummation of a Letter of Intent dated April 5, 1996, as amended (the "Letter
of Intent"), the Stock Purchase Agreement, a settlement agreement by and among
the Company, R. Dee Erickson, E. Jay Sheen, Lyle D. Hurd, Mark G. Jones, Mark
Technologies Corporation, Anne Morgan, Victoria Morgan, IMCC, John Fife and
Robinson & Sheen, L.L.C. (the "1996 Settlement Agreement") and a settlement
agreement, by and among the Company, John H. Morgan, Jr., Daisy R. Morgan, IMCC,
John Fife, Robinson & Sheen, L.L.C., R. Dee Erickson, Lyle D. Hurd, Jr. and E.
Jay Sheen (the "Morgan Settlement Agreement") (the Letter of Intent, Stock
Purchase Agreement, 1996 Settlement Agreement and Morgan Settlement Agreement
together are the "Transaction Agreements").
On the basis that: (i) the Company is contractually required to cause a
reverse stock split to occur pursuant to the terms of the Transaction
Agreements; (ii) the belief of a majority of the Board of Directors that the
cost of being a "reporting company" is not economically justified as the
Company's Common Stock is thinly traded; and (iii) the Company does not
presently anticipate raising capital through a public offering, the Board of
Directors is presenting this transaction for a vote of the shareholders. Among
other things, the Transaction Agreements required the Company to cause a
reverse stock split to occur on the terms as provided therein and herein. In
addition to the contractual requirement that a reverse stock split occur as
required by the Transaction Agreements, the Company's senior management and its
Board of Directors have assessed the advantages and disadvantages of the Company
being a "reporting company" under the Securities and Exchange Act of 1934, as
amended. First, such reporting is very costly. Furthermore, a majority of the
Board of Directors does not believe that being a "reporting company" has given
the Company any significant advantage the Company would not have had as a
"non-SEC reporting company." The Company's registration with the SEC has not
improved flexibility for current or future financing of corporate expansion
through the building of a broader equity base, nor has it made the valuation of
shares of the common stock
<PAGE> 3
Letter to Shareholders of
Utah Resources International, Inc.
____________________, 1997
Page 2
significantly easier (since no active market exists for the sale of stock which
is reflective of the Company's operations and earnings potential). Finally,
such registration has not resulted in the development of an active public
market for the common stock and thus has not provided substantially increased
liquidity for shareholders who desire to sell their common stock. Of the
approximate 558 shareholders, approximately 479 shareholders of record own
fewer than 1,000 shares. These same shareholders have received only a $.10
dividend per share over the entire history of the Company.
A company with assets of over $10 million becomes a "reporting company"
when its shareholders number 500 or more. To thereafter be allowed to become a
"non-SEC reporting company" and cease reporting to the Securities and Exchange
Commission, the number of shareholders must decline to less than 300. The
proposed transaction is designed to result in reducing the number of the
Company's shareholders to less than 300, so that the Company will no longer be
required to be a reporting company. After considering the transaction, a
majority of the Board of Directors voted in favor of the transaction, and
believe that the $3.35 per share price to be paid to participating shareholders
is fair to both the recipients of cash and the remaining shareholders. A
majority of the Board of Directors recommends your affirmative vote. However,
the shareholders should note that with respect to the $3.35 per share reverse
split, the Company did not consider any independent proposals, reports or
opinions.
The accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement describe the formal matters to be acted upon at the meeting. Prior to
any vote to be taken at the meeting, an opportunity will be provided for
questions and discussion by the shareholders. At the meeting, shareholders will
be asked to consider and vote upon a proposal to amend the Company's Articles of
Incorporation to effect a reverse split of the Company's issued and outstanding
common stock as of ________, M.D.S.T., on ______________, 1997 on the basis that
each 1,000 shares of common, $.10 par value per share stock then outstanding
("Common Stock") will be converted into one share of common $100.00 par value
per share stock (the "New Stock"), with shareholders holding less than 1,000
shares or any increment thereof (after being given an opportunity to purchase
additional shares as needed to "round up" to the equivalent of 1,000 shares at
a purchase price of $3.35 per share) being paid cash in exchange for their
fractional shares at a pre-reverse-split price of $3.35 per share for each share
outstanding as of __________ __, 1997 (the "Record Date"). The shareholders
will also be asked to elect a new Board of Directors for the coming year, to
vote upon a proposal to amend the Company's by-laws to provide for an annual
meeting date to be held on the third Monday in July of each year beginning with
the year 1997, and to vote on three proposals submitted by Mark Technologies
Corporation. The first Mark Technologies Corporation proposal requires that the
Company appoint a special shareholders
<PAGE> 4
Letter to Shareholders of
Utah Resources International, Inc.
____________________, 1997
Page 3
Legal Affairs Committee, the second proposal requires that the Company offer to
purchase from all of its shareholders, at a purchase price of $4.00 per share,
shares of the Company's Common Stock and the third proposal requires that the
Company appoint a special shareholders Fiduciary Duty Committee. IMCC, the
holder of 50.5% of the Company's Common Stock, will vote in favor of the
proposal to amend the Company's Articles of Incorporation, the slate of
directors recommended in the Proxy Statement and the proposed amendment to the
Company's by-laws. IMCC has indicated that it will vote against all of the
Mark Technologies Corporation proposals.
If the reverse stock split is approved, any shareholder of the Company
holding fewer than 1,000 shares of Common Stock or any increment thereof, may
(i) purchase additional shares in order to "round up" to the equivalent of 1,000
shares at a purchase price of $3.35 per share or (ii) sell such shares to the
Company based upon a pre-reverse-split price of $3.35 per share.
Also, as indicated above, a shareholder holding 1,000 shares or more (a
"Non-Exercising Shareholder") will have such shares converted into one share of
New Stock of the Company for each 1,000 shares of the Company's Common Stock
owned, with Non-Exercising Shareholders given the option to (i) purchase
additional shares in order to round-up to the next increment of 1,000 shares at
a purchase price of $3.35 per share or (ii) sell such fractional shares to the
Company based upon a pre-reverse-split price of $3.35 per share.
In addition, any shareholder holding fewer than 1,000 shares or any
increment thereof that does not approve the reverse stock split transaction and
believes that such shares have a value in excess of $3.35 per share may, upon
following the procedures outlined in the Proxy and Part 13 of the Utah Business
Corporation Act, demand payment for the value of the shares believed by such
shareholders to be the fair value of such shares.
As required by the terms of the Transaction Agreements, subsequent to the
proposed reverse split, and subject to applicable state and federal securities
and state corporate law, any Common Stock redeemed through the reverse split
(the "Returned Shares") may be acquired by the remaining shareholders of the
Company, other than IMCC, in increments of 1,000 shares (the "Returned Share
Option"), at a purchase price equal to the pre-reverse-split price of $3.35 per
share (the "Returned Share Purchase Price"). Only those shares for which the
Company has received a fully and properly executed letter of transmittal
accompanied by the required documents will qualify as Returned Shares for
purposes of this Returned Share Option. Such Common Stock shall be purchased in
blocks of 1,000 shares of Common Stock such that each purchase of a 1,000 share
block of Common Stock shall be converted into 1 share of New Stock. In the
event the Returned Share Option is over-subscribed, then each of the exercising
shareholders may purchase the Returned Shares on a pro-rata basis (as determined
by the number of shares held by each of the exercising shareholders as of the
Record Date less those shares
<PAGE> 5
Letter to Shareholders of
Utah Resources International, Inc.
____________________, 1997
Page 4
held by IMCC) in blocks of not less than 1,000 shares. In the event of such
over-subscription, each qualified shareholder could elect to purchase that
percentage of Returned Shares equal to
x
-------
(y - z)
where "x" equals the number of New Stock shares owned by the qualified
shareholder wishing to purchase the Returned Shares, "y" equals the total
number of issued shares of New Stock, and "z" equals the number of New Stock
shares owned by IMCC. Twenty-five percent (25%) of the Returned Share Purchase
Price shall be payable in cash upon exercise, with the remaining balance of
$2.51 per share being evidenced by a promissory note, payable in three years
(the "Returned Share Note"). Subject to applicable Internal Revenue Service
rules, the Returned Share Note shall bear simple interest at the short term
applicable federal rate as stated in June 1996, which interest shall be payable
annually in arrears. Payment of the Returned Share Note will be secured by a
pledge of the Returned Shares purchased, as converted into share(s) of New
Stock, pursuant to a stock pledge agreement to be provided by the Company.
Exercising shareholders purchasing Returned Shares shall be required to apply
any dividends, distributions or other payments made to the shareholder of the
Company on the Returned Shares/New Stock to payment of the unpaid balance of
the Returned Share Note. Returned Shares purchased by an exercising
shareholder shall be fully votable in accordance with the terms of the
Company's organizational documents and other agreements binding the Company for
so long as the exercising shareholder is not in default under the pledge
agreement or the Returned Share Note.
Set forth in the table below is an illustration of the results of this
proposal for hypothetical shareholders owning, immediately prior to the
effective date of the transaction, the following numbers of shares of Common
Stock: (i) 10,001 shares (assuming no round up), (ii) 10,001 shares (assuming
round up), (iii) 1,000 shares, (iv) 300 shares (assuming no round up), and (v)
300 shares (assuming round up):
<PAGE> 6
Letter to Shareholders of
Utah Resources International, Inc.
____________________, 1997
Page 5
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
SHARES OWNED BEFORE STOCK SPLITS
10,001 SHARES 10,001 SHARES 300 SHARES 300 SHARES
RESULTS OF (ELECTS NOT TO (ELECT TO ROUND (ELECTS NOT TO (ELECTS TO
STOCK SPLIT ROUND UP) UP) 1,000 SHARES ROUND UP) ROUND UP)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Number of shares held 10 Shares 11 Share 1 Share 0 Shares Shareholder
immediately following purchases
Reverse Stock Split at 1 fractional share
for 1,000 needed to round-
up holdings to 1
whole share
- ------------------------------------------------------------------------------------------------------------------------
Cash to be paid as a $3.35 cash to $3,346.65 cash No cash paid to $1,005 cash to $2,345 cash to be
result of completed be paid by the to be paid by shareholder, as be paid by the paid by
transaction Company to shareholder to no fractional Company to shareholder to the
shareholder in the Company in shares resulted shareholder Company in order to
lieu of order to round in lieu of round up to
fractional share up to the next fractional 1,000 shares
increment of shares
1,000 shares
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The foregoing information is qualified in its entirety by the contents
of the Notice of Annual Meeting of Shareholders and the Proxy Statement
which are enclosed with this letter. If you have any questions regarding
the proposed transactions, you may contact Alan B. Roth at (312) 201-2000,
Ladd Eldredge at (801) 628-8080, or the undersigned at (312) 565-1569.
It is important that your shares be represented at the meeting
regardless of the number of shares you hold. Please take a moment to
review the Proxy Statement and complete, sign, and mail the enclosed proxy
card in the accompanying return envelope promptly, regardless of whether
you intend to be present at the meeting. Your proxy is revocable at any
time prior to its use. If you have multiple accounts and receive more than
one set of these, please be sure to vote each proxy received.
WE LOOK FORWARD TO SEEING YOU AT THE MEETING.
Sincerely,
UTAH RESOURCES INTERNATIONAL, INC.
JOHN FIFE,
Director, Chairman of the Board, CEO
and President
<PAGE> 1
EXHIBIT 2
<PAGE> 2
PRELIMINARY COPY
JUNE 16, 1997
FOR REVIEW ONLY
UTAH RESOURCES INTERNATIONAL, INC.
297 West Hilton Drive, Suite #4
St. George, Utah 84770
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON _______________, 1997
To the Shareholders of Utah Resources International, Inc.
NOTICE IS HEREBY GIVEN that an Annual Meeting of Shareholders ("Annual
Meeting") of Utah Resources International, Inc., a Utah corporation (the
"Company"), will be held at _____________________________ on
_________________________, 1997 at ____________, M.D.S.T., for the following
purposes:
1. To consider and vote upon a proposal to amend the Company's
Articles of Incorporation to effect a reverse split of the Company's issued and
outstanding common, $.10 par value per share stock (the "Common Stock"), as of
____________ p.m., M.D.S.T., on __________________, 1997 on the basis that each
1,000 shares of Common Stock then outstanding will be converted into 1 share of
common, $100.00 par value per share stock (the "New Stock"), with shareholders
holding less than 1,000 shares of Common Stock or any increment thereof (after
being given an option to purchase additional shares as needed to "round up" to
the equivalent of 1,000 shares at a purchase price of $3.35 per share) being
paid cash in exchange for their fractional shares at a price of $3.35 per share
for each share outstanding immediately prior to such reverse split (the
"Reverse Split").
2. To elect five (5) directors to hold office until the next
annual meeting of shareholders or until their successors have been elected and
qualified.
3. To consider and vote upon a proposal to amend Article II,
section 1 of the Company's By-laws to provide for an annual meeting date to be
held on the third Monday in July of each year, beginning with the year 1997.
4. To consider and vote upon three proposals submitted by Mark G.
Jones, a director of the Company on behalf of Mark Technologies Corporation,
which proposals are: (i) to appoint a special shareholders' Legal Affairs
Committee, the sole purpose of which is to select and engage new general
counsel, make a binding determination regarding the settlement, continued
prosecution or other disposition of pending litigation to which the Company is
a party and to make binding determinations regarding counsel selection in the
future and future litigation in which the Company may be a party; (ii) to cause
the Company to offer to purchase from all of its shareholders, at a purchase
price of $4.00 per share, shares of the Company's Common
<PAGE> 3
Stock, where acceptance of the Company's offer shall be voluntary and the offer
shall not be designed to require acceptance by any shareholder; and (iii) to
appoint a special shareholders Fiduciary Duty Committee, the sole purpose of
which shall be to make a binding determination, upon consultation with the
Company's new general counsel, regarding the activities of the Company's Board
of Directors, Officers and counsel to consider whether actions, complaints or
other redress, if any, should be taken by the Company against such individuals.
A majority of the Board of Directors does not recommend approval of these
proposals. IMCC, the Company's majority shareholder, has indicated that it
will not vote in favor of these proposals.
5. To transact such other business as may properly come before
the meeting and any adjournment thereof.
Additional information relating to these matters is set forth in the
attached proxy statement. The Board of Directors has fixed the close of
business on __________________, 1997, as the record date (the "Record Date")
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof. Only shareholders of record at the
close of business on the Record Date are entitled to notice of and to vote at
the Annual Meeting. A list of shareholders entitled to vote at the Annual
Meeting will be available for examination at the offices of the Company for at
least 10 days prior to the Annual Meeting.
Pursuant to a resolution approved by the Board of Directors, the
Company has agreed to provide dissenters' rights to those shareholders holding
less than 1,000 shares or any increment thereof that do not approve the Reverse
Split, and believe that such shares have a value in excess of $3.35 per share,
for those fractional shares only, pursuant to the terms of Part 13 of the Utah
Business Corporation Act. Any holder of less than 1,000 shares or any
increment thereof of the Company's Common Stock who is a shareholder of the
Company as of the Record Date and does not assent to the Reverse Split and who
believes that such shares have a value in excess of $3.35 per share will have
the right, upon compliance with specific procedures, to demand from the Company
payment of the fair value of such shareholder's fractional shares only. Such
shareholder must, among other things, not vote for the approval of the Reverse
Split, and believe that such shares have a value in excess of $3.35 per share
(which approval would include submitting a signed proxy form without voting
instructions), timely deliver to the Company a written demand for appraisal of
their shares prior to the Annual Meeting and strictly comply with certain other
requirements. For a more complete description of such rights, reference is
made to "Dissenters' Rights" in the Proxy Statement and to Part 13 of the Utah
Business Corporation Act, a copy of which is attached to the Proxy Statement as
Exhibit B.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. HOWEVER,
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED
TO PROMPTLY MARK, SIGN, DATE AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED, SELF-ADDRESSED, STAMPED ENVELOPE SO THAT YOUR SHARES OF STOCK MAY BE
REPRESENTED AND VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED AT THE MEETING. YOUR PROXY
-2-
<PAGE> 4
WILL BE RETURNED TO YOU IF YOU SHOULD BE PRESENT AT THE ANNUAL MEETING AND
SHOULD REQUEST SUCH RETURN OR IF YOU SHOULD REQUEST SUCH RETURN IN THE MANNER
PROVIDED FOR REVOCATION OF PROXIES ON THE INITIAL PAGES OF THE ENCLOSED PROXY
STATEMENT. PROMPT RESPONSE BY OUR SHAREHOLDERS WILL REDUCE THE TIME AND
EXPENSE OF SOLICITATION.
_____________________, 1997 BY ORDER OF THE BOARD OF DIRECTORS
JOHN FIFE
Director, Chairman of the Board,
CEO and President
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
-3-
<PAGE> 1
EXHIBIT 3
<PAGE> 2
TABLE OF CONTENTS
PAGE
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PROCEDURAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PROPOSED REVERSE SPLIT . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Summary of the Proposed Reverse Split . . . . . . . . . . . . . . 3
Option to Round Up Stock Holdings . . . . . . . . . . . . . . . . 5
Cash Payment in Lieu of Fractional Shares . . . . . . . . . . . . 5
Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Amendment to Articles of Incorporation . . . . . . . . . . . . . . 7
Exercise of Round Up Option and Exchange of Stock Certificates . . 7
Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . 8
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Requirements . . . . . . . . . . . . . . . . . . . . . 10
Purchase of Returned Shares . . . . . . . . . . . . . . . . . . . 10
SPECIAL FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Effect of the Proposed Reverse Split . . . . . . . . . . . . . . . 11
Background of the Proposed Reverse Split . . . . . . . . . . . . . 12
IMCC Transaction and Settlement Agreements . . . . . . . . . . . . 14
Reasons for the Proposed Reverse Split . . . . . . . . . . . . . . 18
Recommendation of the Board of Directors . . . . . . . . . . . . . 19
Interests of Certain Persons and Potential Conflicts of Interest . 21
Conduct of the Company's Business After the Proposed Reverse
Split . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Persons and Assets Employed, Retained or Utilized . . . . . . . . 22
Financing the Proposed Reverse Split . . . . . . . . . . . . . . . 23
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF . . . . . . . . . . . . . . 23
Security Ownership of Certain Beneficial Owners . . . . . . . . . 23
Security Ownership of Management . . . . . . . . . . . . . . . . . 24
FINANCIAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . 26
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . 26
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 27
-i-
<PAGE> 3
PAGE
ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Election of Board of Directors . . . . . . . . . . . . . . . . . . 27
Current Directors and Nominees For Director . . . . . . . . . . . 28
Meetings And Committees Of The Board Of Directors . . . . . . . . 31
Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . 31
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 31
Compensation Of Directors . . . . . . . . . . . . . . . . . . . . 36
Employment Contracts And Termination Of Employment And
Change-in-Control Arrangements. . . . . . . . . . . . . . . 36
Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Stock Ownership Of Management . . . . . . . . . . . . . . . . . . 37
Principal Stockholders . . . . . . . . . . . . . . . . . . . . . . 38
AMENDMENT TO BY-LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
MARK TECHNOLOGIES CORPORATION PROPOSALS . . . . . . . . . . . . . . . . . . 45
MATERIAL PROCEEDINGS AND TRANSACTIONS . . . . . . . . . . . . . . . . . . . 46
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE . . . . . . . . . . 50
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS. . . . . . . . . . . . . . 50
ANNUAL REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
EXHIBITS
Exhibit A - Amendment to Articles of Incorporation
Exhibit B - Part 13 of the Utah Business Corporation Act
-ii-
<PAGE> 4
PRELIMINARY COPY DATED JUNE 16, 1997
FOR REVIEW ONLY
UTAH RESOURCES INTERNATIONAL, INC.
297 West Hilton Drive, Suite #4
St. George, Utah 84770
PROXY STATEMENT
Annual Meeting of the Shareholders to be
Held on _______________, 1997
INTRODUCTION
This Proxy Statement is furnished to the shareholders of Utah
Resources International, Inc. (the "Company") in connection with the
solicitation by the Board of Directors of the Company of proxies to be used at
the Annual Meeting of the Shareholders of the Company (the "Annual Meeting").
The Annual Meeting will be held on ___________________, 1997, at ___________
p.m., M.D.S.T., at _____________________________________________ for the
purposes specified in the accompanying Notice of Annual Meeting of
Shareholders. This Proxy Statement and enclosed form of proxy ("Proxy") were
first sent to shareholders on or about ____________________, 1997.
PROCEDURAL MATTERS
The Board of Directors of the Company is soliciting proxies from the
shareholders of the Company in connection with the Annual Meeting. The
enclosed Proxy enables shareholders to vote on all matters scheduled to come
before the Annual Meeting. The matters scheduled to come before the Annual
Meeting include: (i) considering and voting upon a proposal to amend the
Company's Articles of Incorporation to effect a reverse split of the Company's
issued and outstanding common, $.10 par value per share stock (the "Common
Stock"), as of __:__ p.m., M.D.S.T., on _______________________ __, 1997 on the
basis that each 1,000 shares of Common Stock then outstanding will be converted
into 1 share of common, $100.00 par value per share stock (the "New Stock"),
with shareholders holding less than 1,000 shares of Common Stock or any
increment thereof (after being given an option to purchase additional shares as
needed to "round up" to the equivalent of 1,000 shares at a purchase price of
$3.35 per share) being paid cash in exchange for their fractional shares at a
price of $3.35 per share for each share outstanding on ________ __, 1997 (the
"Record Date"); (ii) electing five directors to hold office until the next
annual meeting of shareholders or until their successors have been elected and
qualified; (iii) considering and voting upon a proposal to amend Article III,
Section 1 of the Company's by-laws to provide for an annual meeting date to be
held on the third Monday in July of each year, beginning with the year 1997;
(iv) the following three proposals by Mark Technologies Corporation: (A)
appointment of a special shareholders Legal Affairs Committee, the sole purpose
of which is to select and engage new general counsel, make a binding
determination regarding the
<PAGE> 5
settlement, continued prosecution or other disposition of pending litigation to
which the Company is a party and to make binding determinations regarding
counsel selection in the future and future litigation in which the Company may
be a party, (B) to cause the Company to offer to purchase from all of its
shareholders, at a purchase price of $4.00 per share, shares of the Company's
Common Stock, where acceptance of the Company's offer shall be voluntary and
the offer shall not be designed to require acceptance by any shareholders, and
(C) appointment of a special shareholders Fiduciary Duty Committee, the sole
purpose of which shall be to make a binding determination, upon consultation
with the Company's new general counsel, regarding the activities of the
Company's Board of Directors, officers and counsel to consider whether actions,
complaints or other redress, if any, should be taken by the Company against
such individuals; and (v) transacting such other business as may properly come
before the meeting and any adjournment thereof, as more fully described below:
1. PROPOSAL - EFFECT THE REVERSE SPLIT
Proposal
To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to effect a reverse split of the Company's issued and outstanding
common, $.10 par value per share stock (the "Common Stock"), as of p.m.,
M.D.S.T., on 1997 on the basis that each 1,000 shares of Common Stock then
outstanding will be converted into 1 share of common, $100.00 par value per
share stock (the "New Stock"), with shareholders holding less than 1,000 shares
of Common Stock or any increment thereof (after being given an option to
purchase additional shares as needed to "round up" to the equivalent of 1,000
shares at a purchase price of $3.35 per share) being paid in cash in exchange
for their fractional shares at a price of $3.35 per share for each share
outstanding immediately prior to such reverse split (the "Reverse Split"). As
a result of the Reverse Split, the Company is expected to become a non-SEC
reporting Company. For a more detailed description of the actions the Company
plans to take following the Reverse Split, see the Section entitled "SPECIAL
FACTORS/Conduct of the Company's Business After the Proposed Reverse Split."
Advantages
The advantages of the Company effecting the Reverse Split are as follows:
1. The Company is contractually obligated to cause the Reverse Split.
Such obligation arose in connection with IMCC's acquisition of 50.5% of the
outstanding shares of the Company's Common Stock and the settlement of
protracted and expensive litigation. For a more detailed description of the
litigation which led to the settlement agreement, see the Section entitled
"MATERIAL PROCEEDINGS AND TRANSACTIONS." For a more detailed description of
the history of the contractual obligation, see the Section entitled "SPECIAL
FACTORS/Reasons for the Proposed Split."
2. A majority of the Board of Directors believes that the financial
terms of the Reverse Split are fair both to shareholders who will receive
shares of New Stock and to shareholders who will receive the $3.35 per share,
because:
(a) IMCC paid $3.35 per share with respect to its
acquisition of a 50.5% interest in the Company on
July 3, 1996:
(b) The Company redeemed on July 3, 1996 Anne Morgan
and Victoria Morgan's shares for $3.35 per share,
pursuant to the settlement agreement by and among
the Company, R. Dee Erickson, E. Jay Sheen, Lyle
D. Hurd, Mark G. Jones, Mark Technologies
Corporation, Anne Morgan, Victoria Morgan, IMCC,
John Fife and Robinson & Sheen, L.L.C. (the "1996
Settlement Agreement"). The court in the Second
State Action reviewed and considered the 1996
Settlement Agreement, the Stock Purchase Agreement
and the 1993 Settlement Agreement as those terms
are defined herein, the written memoranda submitted
by various parties and other comments and
objections and ordered that: (1) the notice given
pursuant to Rule 23.1 of the applicable rules of
civil procedure for the State of Utah was adequate,
fair and proper; (2) the procedural and substantive
objections of Jenny T. Morgan (a director and
shareholder of the Company), Gerard E. Morgan, John
C. Morgan and Karen J. Morgan be overruled; (3) the
1996 Settlement Agreement was fair, adequate and
reasonable; (4) the Petition to Terminate the 1993
Settlement Agreement was fair, adequate and
reasonable; and (5) the 1996 Settlement Agreement
and Petition to Terminate the 1993 Settlement
Agreement was approved. For a more detailed
description of the litigation which led to the 1996
Settlement Agreement, see the Section entitled
"MATERIAL PROCEEDINGS AND TRANSACTIONS." For a
more detailed description of the contractual
obligation for the $3.35 per share Reverse Split
price, see the Section entitled "SPECIAL
FACTORS/Reasons for the Proposed Reverse Split":
(c) The market price of the Company's Common Stock for
the fourth quarter of 1996 was $.875, which is far
below the $3.35 per share purchase price being
offered by the Company:
(d) The Reverse Split provides fractional shareholders
with the opportunity to liquidate their holdings at
a price substantially above market trades and
without incurring brokerage costs, particularly
given the absence of an active market for the
Common Stock reflective of the Company's operations
and earning potential: and
(e) The Reverse Split provides fractional shareholders
who wish to continue to be shareholders of the
Company the option to exercise the round-up
option at a purchase price of $3.35 per share.
3. The Company will realize cost savings in its cessation as a
reporting company under the Exchange Act.
For a more detailed description of the proposed Reverse Split and its
advantages, see the Sections entitled "PROPOSED REVERSE SPLIT/Summary of the
Proposed Reverse Split," and "SPECIAL FACTORS/Effect of the Proposed Reverse
Split, Reasons for the Proposed Reverse Split and Recommendation of the Board
of Directors."
Disadvantages and Risks
The disadvantages and risks to the Company and its shareholders associated
with the Company effecting the Reverse Split are as follows:
1. Deregistration eliminates the Company's obligation to provide
detailed information to the Company's shareholders concerning the Company's
principal shareholders, directors and executive officers, compensation paid the
Company's executives, audited financial statements and certain relationships in
related transactions between the Company's insiders and the Company, which
under certain circumstances could better enable the Company's shareholders to
assess the financial operations and policies of a corporation.
2. There may be a loss of prestige that being a reporting company
provides.
3. The potential loss of ease of valuation of stock where there is
active trading of such shares on an established securities exchange
(shareholders should note, however, that there has been no such active trading
with the Company's Common Stock).
4. There may be decreased liquidity to the remaining shareholders due
to the fact that there is a less public market for the Company's stock.
5. When the Reverse Split is effected and the Company elects to cease
to be an SEC reporting company, the Company will lose the potential flexibility
for current or future financing of corporate expansion through the building of a
more broad equity base through publicly offered sales of securities.
6. With respect to the $3.35 per share Reverse Split, the Company did
not consider any independent proposals, reports or opinions.
For a more detailed description of the disadvantages of the proposed
Reverse Split, see the Sections entitled "PROPOSED REVERSE SPLIT/Summary of the
Proposed Reverse Split", and "SPECIAL FACTORS/Effect of the Proposed Reverse
Split, Reasons for the Proposed Reverse Split, Recommendation of the Board of
Directors, and Conduct of the Company's Business After the Proposed Reverse
Split."
Vote Required
In order for the Reverse Split to become effective, a majority of the
shareholders must vote in favor of the Reverse Split.
Board of Directors Recommendation
A majority of the Board of Directors recommends voting "FOR" this
Proposal.
2. PROPOSAL - ELECTION OF DIRECTORS
Proposal
A Board of five (5) directors is to be elected at the Annual Meeting to
serve until the next annual meeting. The nominees include: John Fife, David
Fife, Lyle Hurd, Mark G. Jones and Stuart B. Peterson. For a description of
the nominees, see the Section entitled "ELECTION OF DIRECTORS/Current Directors
and Nominees For Director."
Ms. Morgan is the only director who is not standing for re-election. Ms.
Morgan was appointed pursuant to a certain settlement agreement, which was
entered into to settle a shareholders derivative action captioned as Ernest
Muth, et al. v. John H. Morgan, Jr., et al., which was filed as Civil Number
C-82-1632 in the Third Judicial District Court of Salt Lake County, Utah (the
"First State Action") (the "1993 Settlement Agreement"). The 1993 Settlement
Agreement has been terminated by the 1996 Settlement Agreement. IMCC, a 50.5%
shareholder of the Company, has informed the Company that it will not support
the nomination of Ms. Jenny Morgan as director of the Company. Ms. Morgan is
not nominated as a director of the Company.
Vote Required
Directors are elected by a plurality of votes cast at the Annual Meeting.
Unless otherwise specified, all properly executed proxies received by the
Company will be voted for the election of Messrs. John Fife, David Fife, Lyle
Hurd, Mark G. Jones and Stuart B. Peterson.
Board of Directors Recommendation
A majority of the Board of Directors recommends voting "FOR" the nominees.
3. PROPOSAL - BY-LAWS AMENDMENT
Proposal
Amend Article II, section 1 of the Company's By-laws to provide for an
annual meeting date to be held on the third Monday in July of each year,
beginning with the year 1997.
Directors of the Company were appointed pursuant to the 1993 Settlement
Agreement. The 1993 Settlement Agreement was terminated by the 1996 Settlement
Agreement. Among other things, the 1996 Settlement Agreement provided that the
parties to that agreement will take all actions necessary to maintain Mark G.
Jones as a director of the Company for a period of one year from the date of
closing of the Stock Purchase Agreement between IMCC and the Company, or July
3, 1997. The Company plans to hold an annual meeting to provide for the
election of a director to fill Mr. Jones' seat. IMCC, a 50.5% shareholder of
the Company, has informed the Company that it will not support the nomination of
Mark G. Jones as a director at the next annual meeting of the Company.
Vote Required
The by-laws of the Company may be amended by the Board of Directors at any
regular or special meeting of the Board of Directors. Unless otherwise
specified, all properly executed proxies received by the Company will be voted
in favor of the By-laws Amendment.
Board of Directors Recommendation
A majority of the Board of Directors recommends voting "FOR" the By-laws
Amendment.
4. PROPOSAL - MARK TECHNOLOGIES CORPORATION PROPOSALS
(a) Proposal - Legal Affairs Committee
This proposal proposes the appointment of a special shareholders' Legal
Affairs Committee, the sole purpose of which is to select and engage new
general counsel for the Company, make a binding determination regarding the
settlement, continued prosecution or other disposition of pending litigation to
which the Company is a party and to make binding determinations regarding
counsel selection in the future and future litigation in which the Company may
be a party. For a more detailed description of this proposal, see the Section
entitled "MARK TECHNOLOGIES CORPORATION PROPOSALS/Special Shareholders' Legal
Affairs Committee."
The Utah Business Corporation Act provides, in part, that one of the
powers of the corporation is, "to sue and be sued, complain and defend in its
corporate name," see Section 16-10a-302 General Powers/Utah Business
Corporation Act. the Utah Business Corporation Act also provides, in part,
that all corporate powers shall be exercised "by or under authority of, and the
business and affairs of the corporation managed under the direction of its
board of directors," see Section 16-10a-801(2) of the Utah Business Corporation
Act. In order for the Company's Board of Directors to carry out its
obligations under the Utah Business Corporation Act, it must make decisions as
to whether to pursue litigation and if so, in what manner. These decisions
would include, among other things, the decision as to who would represent the
Company and the course of the litigation. These Utah Business Corporation Act
provisions firmly place these litigation-based decisions and obligations within
the Board's responsibility and consequently they may not be delegated to the
Company's shareholders. On this basis, a majority of the Board does not
recommend approval of this proposal. IMCC, the Company's majority shareholder,
has indicated it will not vote in favor of this proposal.
Vote Required
This proposal requires the affirmative vote by the holders of a
majority of the Common Stock of the Company. IMCC the Company's majority
shareholder, has indicated it will not vote in favor of this proposal. Unless
otherwise specified all properly executed proxies received by the Company will
be voted against this proposal.
Board of Directors Recommendation
A majority of the Board of Directors recommends voting "AGAINST" the
proposal to establish a Legal Affairs Committee.
(b) Proposal - Tender Offer.
This proposal proposes that the Company offer to purchase from certain
of its shareholders, at a purchase price of $4.00 per share, shares of the
Company's Common Stock where acceptance of the Company's offer shall be
voluntary and the offer shall not be designed to require acceptance by any
shareholder.
The Company was immersed in protracted and costly litigation, which
culminated in the execution of a 1996 Settlement Agreement. The parties to the
1996 Settlement Agreement, including Mark G. Jones and Mark Technologies
Corporation, agreed to effect a $3.35 per share reverse stock split. The Court
in the Second State Action held that the 1996 Settlement Agreement was
substantively and procedurally fair. This proposal is inconsistent with and
contrary to the contractually required $3.35 per share reverse stock split
price. Furthermore, a majority of the Board of Directors believes that a $4.00
per share tender offer would force the Company to liquidate in order to meet its
obligations pursuant to such tender offer. Two members of the Board of
Directors, Jenny Morgan and Mark G. Jones, believe that to be untrue and that
the Company, which has no debt, would be able to fund the $4.00 tender offer
through bank loans, venture capitalists or private sources without incurring a
high debt to equity ratio.
Vote Required
This proposal requires an affirmative vote by the holders of a majority
of the Common Stock of the Company. IMCC, the Company's majority shareholder,
has indicated it will not vote in favor of this proposal. Unless otherwise
specified, all properly executed proxies received by the Company will be
voted against this proposal.
Board of Directors Recommendation
A majority of the Board of Directors recommends voting "AGAINST" this
$4.00 tender offer proposal.
(c) Proposal - Fiduciary Duty Committee
This proposal proposes the appointment of a special shareholders'
Fiduciary Duty Committee, the sole purpose of which shall be to make a binding
determination, upon consultation with the Company's new general counsel,
regarding the activities of the Company's Board of Directors, Officers and
counsel to consider whether actions, complaints or other redress, if any, should
be taken by the Company against such individuals.
Vote Required
This proposal requires an affirmative vote by the holders of a majority
of the Common Stock of the Company. IMCC, the Company's majority shareholder,
has indicated it will not vote in favor of this proposal. Unless otherwise
specified, all properly executed proxies received by the Company will be voted
against this proposal.
Board of Directors Recommendation
A majority of the Board of Directors recommends voting "AGAINST" the
proposal to establish a Fiduciary Duty Committee.
The proposals require the affirmative vote by the holders of a majority
of the Common Stock of the Company. Proxies marked "abstain" and broker
non-votes will be considered present at the meeting for quorum purposes, but
will not be counted for the purpose of determining the number of votes cast with
respect to any matter. However, abstentions and broker non-votes will have the
effect of a "no" vote if the vote required is a majority of the shares
outstanding and entitled to be voted. Notwithstanding anything to the contrary
contained herein, the directors will be elected by a favorable vote of a
plurality of the shares of Common Stock present and entitled to vote, in person
or by proxy at the meeting. The Company's By-laws provide that there is no
right of cumulative voting in the election of directors.
Jenny Morgan, a director of the Company, opposes the proposals to amend the
Company's Articles of Incorporation to effect a reverse split of the Company's
Common Stock, as more fully described herein, and to amend the by-laws of the
Company. Jenny Morgan and Mark G. Jones, support the Mark Technologies
Corporation proposals. Inter-Mountain Capital Corporation ("IMCC"), the holder
of 50.5% of the Company's Common Stock, will vote in favor of the proposal (i)
to amend the Company's Articles of Incorporation to effect a reverse split of
the Company's Common Stock as discussed above; and (ii) to amend the by-laws of
the Company. IMCC opposes and will vote against the proposals made by Mark
Technologies Corporation. When Proxies are returned properly executed, the
shares represented thereby will be voted by the persons named in the Proxy in
accordance with the shareholder's directions. Shareholders are urged to
specify their choices by marking the enclosed Proxy; if no choice has been
specified, the shares will be voted "for" the proposals set forth as items 1-3
and "against" items 4(a)-(c), in the Notice of Annual Meeting and further
described in this Proxy Statement. The Company encourages the personal
attendance of its shareholders at the Annual Meeting. Execution of the
accompanying Proxy may be revoked at any time before it is voted. Revocation
may be effected by (i) a subsequently dated Proxy, (ii) written notice to the
Company at its principal offices at 297 West Hilton Drive, Suite #4, St.
George, Utah 84770, Attention: Gerry Brown, or (iii) by attending the Annual
Meeting and voting your shares in person. No such notice of revocation of
Proxy or later dated Proxy shall be effective, however, until and unless such
notice or subsequent Proxy has been received by the secretary of the Company at
or prior to the Annual Meeting. A revocation will not affect a vote on any
matters taken prior to the receipt of such revocation. Your attendance at the
Annual Meeting will not of itself revoke a Proxy.
The Board of Directors of the Company has fixed ____________________,
1997, as the record date (the "Record Date") for the determination of
shareholders entitled to notice of and vote at the Annual Meeting. At the
close of business on the Record Date, 2,522,808 shares of the Company's common
stock, par value $.10 per share (the "Common Stock") were issued and
outstanding, and are, therefore, entitled to vote at the Annual Meeting. Such
shares are held by approximately 558 shareholders of record. Approximately 479
shareholders hold less than 1,000 shares of the Company's Common Stock. Common
Stock constitutes the only class of voting securities entitled to vote at the
Annual Meeting. Holders of record of Common Stock on the Record Date are
entitled to one vote per share, exercisable by Proxy or at the Annual Meeting.
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<PAGE> 6
The Company is a Utah corporation and directly owns approximately 408
acres of undeveloped land in St. George, Utah, approximately 362 acres of which
are developable, on which it conducts its real property development business,
primarily through its wholly owned subsidiary, Tonaquint, Inc. ("Tonaquint").
The principal executive offices of the Company are located at 297 West Hilton
Drive, Suite #4, St. George, Utah 84770; the Company's telephone number at such
office is (801) 628-8080.
PROPOSED REVERSE SPLIT
SUMMARY OF THE PROPOSED REVERSE SPLIT
The Company was organized in Utah in 1966 as Utah Industrial, Inc. It was
renamed Utah Resources International, Inc. in 1969. In 1981, the Company became
a "reporting company" requiring it to file various reports with the Securities
and Exchange Commission. On July 3, 1996, the Company consummated a transaction
with Inter-Mountain Capital Corporation ("IMCC"), whereby common stock
representing 50.5% of the outstanding stock of the Company was transferred to
IMCC for $3.35 per share, payable in accordance with the terms of the Stock
Purchase Agreement by and between the Company and IMCC (the "Stock Purchase
Agreement"). The transfer of such shares to IMCC was the product of the
consummation of a Letter of Intent dated April 5, 1996, as amended (the "Letter
of Intent"), the Stock Purchase Agreement, a settlement agreement by and among
the Company, John H. Morgan, Jr., Daisy R. Morgan, IMCC, John Fife, Robinson &
Sheen, L.L.C., R. Dee Erickson, Lyle D. Hurd, Jr. and E. Jay Sheen (the "Morgan
Settlement Agreement") and a second settlement agreement by and among the
Company, R. Dee Erickson, E. Jay Sheen, Lyle D. Hurd, Mark G. Jones, Mark
Technologies Corporation. Anne Morgan, Victoria Morgan, IMCC, John Fife and
Robinson & Sheen, L.L.C. (the "1996 Settlement Agreement") (the Letter of
Intent, the Stock Purchase Agreement, the 1996 Settlement Agreement and the
Morgan Settlement Agreement together are the "Transaction Agreements"). On the
basis that: (i) the Company is contractually required to cause a reverse stock
split to occur pursuant to the terms of the Transaction Agreements: (ii) the
belief of a majority of the Board of Directors that the cost of being a
"reporting company" is not economically justified as the Company's Common
Stock is thinly traded; and (iii) the Company does not presently anticipate
raising capital through a public offering, the Board of Directors is presenting
this transaction for a vote of the shareholders.
A majority of the Board of Directors has adopted a resolution which
sets forth a single proposal to amend (the "Amendment") the Articles of
Incorporation (the "Articles of Incorporation") of the Company to (i) effect a
reverse stock split (the "Reverse Split") of the Company's outstanding Common
Stock as of _______ p.m., M.D.S.T., on ______________, 1997 (the "Effective
Date") on the basis that each 1,000 shares of Common Stock then outstanding
will be converted into one share of common $100.00 par value stock of the
Company (the "New Stock"), with fractional shareholders given the option to (A)
receive cash in the amount of $3.35 per share of Common Stock in lieu of
fractional shares of stock, or (B) purchase from the Company at a purchase price
of $3.35 per share of Common Stock that portion of fractional shares of Common
Stock needed to increase their share holdings to the next one whole share of
New Stock; each shareholder holding less than one whole share of New Stock as
of the Effective Date shall be eliminated as a shareholder by receiving $3.35
per share in cash in lieu of such fractional shares of stock.
The Company believes the Reverse Split, if effected, may cause the
following disadvantages and risks to the Company and its shareholders:
1. Deregistration eliminates the Company's obligation to provide
detailed information to the Company's shareholders concerning the
Company's principal shareholders, directors and executive
officers, compensation paid the Company's executives, audited
financial statements and certain relationships in related
transactions between the Company's insiders and the Company,
which under certain circumstances could better enable the
Company's shareholders to assess the financial operations and
policies of a corporation.
2. There may be a loss of prestige that being a reporting company
provides.
3. The potential loss of ease of valuation of stock where there is
active trading of such shares on an established securities
exchange (shareholders should note, however, that there has been
no such active trading with the Company's stock).
4. There may be decreased liquidity to the remaining shareholders
due to the fact that there is a less public market for the
Company's stock.
5. When the Reverse Split is effected and the Company elects to
cease to be an SEC reporting company, the Company will lose the
potential flexibility for current or future financing of
corporate expansion through the building of a more broad equity
base through publicly offered sales of securities.
6. With respect to the $3.35 per share Reverse Split, the Company
did not consider any independent proposals, reports or opinions.
For a more detailed description of the disadvantages of the proposed
Reverse Split, see the Section entitled "PROCEDURAL MATTERS," "SPECIAL
FACTORS/Effect of the Proposed Reverse Split, Reasons for the Proposed Reverse
Split, Recommendation of the Board of Directors, and Conduct of the Company's
Business After the Proposed Reverse Split."
The Company believes the Reverse Split, if effected will provide the
following advantages to the Company;
1. The Company is contractually obligated to cause the Reverse Split.
Such obligation arose in connection with IMCC's acquisition of
50.5% of the outstanding shares of the Company's Common
Stock and the settlement of protracted and expensive litigation.
For a more detailed description of the litigation which led to
the settlement agreements, see the Section entitled "MATERIAL
PROCEEDINGS AND TRANSACTIONS." For a more detailed description
of the history of the contractual obligation, see the Sections
entitled "PROCEDURAL MATTERS," "SPECIAL FACTORS/ Effect of the
Proposed Reverse Split, Reasons for the Proposed Reverse Split
and Recommendation of the Board of Directors.
2. A majority of the Board of Directors believes that the financial
terms of the Reverse Split are fair both to shareholders who will
receive shares of New Stock and to shareholders who will receive
the $3.35 per share because:
(a) IMCC paid $3.35 per share with respect to its acquisition
of a 50.5% interest in the Company on July 3, 1996:
(b) The Company redeemed on July 3, 1996 Anne Morgan and
Victoria Morgan's shares for $3.35, pursuant to the
Settlement Agreement by and among the Company, R. Dee
Erickson, E. Jay Sheen, Lyle D. Hurd, Mark G. Jones, Mark
Technologies Corporation, Anne Morgan, Victoria Morgan,
IMCC, John Fife and Robinson & Sheen, L.L.C. (the "1996
Settlement Agreement"). The court in the Second State
Action reviewed and considered the 1996 Settlement
Agreement, the Stock Purchase Agreement and the 1993
Settlement Agreement, written memoranda submitted by
various parties and other comments and objections and
ordered that: (1) the notice given pursuant to Rule 23.1
of the applicable rules of civil procedure for the State
of Utah was adequate, fair and proper; (2) the procedural
and substantive objections of Jenny T. Morgan (a director
and shareholder of the Company), Gerard E. Morgan, John C.
Morgan and Karen J. Morgan be overruled; (3) the 1996
Settlement Agreement was fair, adequate and reasonable;
(4) the Petition to Terminate the 1993 Settlement
Agreement was fair, adequate and reasonable; and (5) the
1996 Settlement Agreement and Petition to Terminate the
1993 Settlement Agreement was approved. For a more
detailed description of the litigation which led to the
1996 Settlement Agreement, see the Section entitled
"MATERIAL PROCEEDINGS AND TRANSACTIONS." For a more
detailed description of the contractual obligation for the
$3.35 per share Reverse Split price, see the Section
entitled "SPECIAL FACTORS/Reasons for the Proposed Reverse
Split";
(c) The market price of the Company's Common Stock for the
fourth quarter of 1996 was $.875, which is far below the
$3.35 per share purchase price being offered by the
Company:
(d) The Reverse Split provides fractional shareholders with the
opportunity to liquidate their holdings at a price
substantially above market trades and without incurring
brokerage costs, particularly given the absence of an active
market for the Common Stock reflective of the Company's
operations and earning potential; and
(e) The Reverse Split provides fractional shareholders who wish
to continue to be shareholders of the Company the option
to elect to exercise the round-up option at a purchase
price of $3.35 per share.
3. The Company will realize cost savings in its cessation as a reporting
company under the Exchange Act.
For a more detailed description of the proposed Reverse Split and its
advantages see the Sections entitled "PROCEDURAL MATTERS", "SPECIAL
FACTORS/Effect of the Proposed Reverse Split, Reasons for the Proposed Reverse
Split and Recommendation of the Board of Directors."
Subsequent to the Reverse Split and after compliance with all
applicable federal and state securities and state corporate laws, the Company
will permit any Common Stock redeemed through the Reverse Split (the "Returned
Shares") to be acquired by the remaining shareholders of the Company, other
than IMCC or its affiliates in 1,000 share increments (the "Returned Share
Option"), at a purchase price equal to the pre- Reverse Split price of $3.35
per share (the "Returned Share Purchase Price"). Pursuant to the Stock
Purchase Agreement, IMCC was granted a ten year option to purchase 150,000 or
more additional shares of stock at a price equal to $3.35 per share and on the
same terms and conditions as those provided under the Stock Purchase Agreement,
so that after the Reverse Split IMCC may maintain its 50.5% interest in the
Company. Only those shares for which the Company has received a fully and
properly executed letter of transmittal accompanied by the required documents
will qualify as Returned Shares for purposes of this Returned Share Option.
Such Common Stock shall be purchased in blocks of 1,000 shares of Common Stock
such that for each purchase of a 1,000 share block of Common Stock shall be
converted into 1 share of New Stock. In the event the Returned Share Option is
over-subscribed, then each of the exercising shareholders may purchase the
Returned Shares on a pro-rata basis (as determined by the number of shares held
by each of the exercising shareholders as of the Record Date less those shares
held by IMCC), but in no circumstances in less than 1,000 share blocks. In the
event of such over-subscription, each qualified shareholder could elect to
purchase that percentage of Returned Shares equal to
x
-------
(y - z)
where "x" equals the number of New Stock shares owned by the qualified
shareholder wishing to purchase the Returned Shares, "y" equals the total
number of issued shares of New Stock, and
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<PAGE> 7
"z" equals the number of issued shares of New Stock Shares owned by IMCC.
ive percent (25%) of the Returned Share Purchase Price shall be payable in cash
upon exercise, with the remaining balance of $2.51 per share being evidenced by
a promissory note, payable in three years (the "Returned Share Note"). Subject
to applicable Internal Revenue Service rules, the Returned Share Note shall
bear simple interest at the short term applicable federal rate as stated in
June 1996, which interest shall be payable annually in arrears. Payment of the
Returned Share Note will be secured by a pledge of the Returned Shares
purchased, as converted into share(s) of New Stock, pursuant to a stock pledge
agreement to be provided by the Company. Exercising shareholders purchasing
Returned Shares shall be required to apply any dividends, distributions or
other payments made to the shareholder of the Company on the Returned
Shares/New Stock to payment of the unpaid balance of the Returned Share Note.
Returned Shares, as converted into New Stock, purchased by an exercising
shareholder shall be fully votable in accordance with the terms of the
Company's organizational documents and other agreements binding the Company for
so long as the exercising shareholder is not in default under the pledge
agreement or the Returned Share Note.
The Reverse Split would be effected by the filing of the Amendment
with the Utah Division of Corporations and Commercial Code and the occurrence
of the Effective Date. The form of the Amendment is set forth in full on
Exhibit A to this Proxy Statement. The Reverse Split will increase and
decrease, respectively, the existing par value per share of the Company's stock
and the total shares outstanding of such stock.
The effect of the Reverse Split on the holders of Common Stock will be
as follows:
1. Fractional Shareholders who DO NOT elect to "round up" their
holdings at least ten days prior to the Effective Date will
have their fractional shares automatically converted into the
right to receive cash in lieu of the fractional shares of New
Stock otherwise issuable to such holder in the amount set
forth herein. Shareholders who hold fewer than 1,000 shares of
Common Stock who do not elect to "round up" their holdings at
least ten days prior to the Effective Date will on the Effective
Date be eliminated as shareholders of the Company. (See
"PROSPOSED REVERSE SPLIT/Option to Round Up Stock Holdings and
Cash Payment in Lieu of Fractional Shares").
2. Fractional Shareholders who DO elect to "round up" their
holdings to aggregate one whole share of New Stock at least
ten days prior to the Effective Date will, on the Effective
Date, have their (then) whole shares of Common Stock
automatically converted into shares of New Stock. (See
"PROPOSED REVERSE SPLIT/Option to Round Up Stock Holdings").
3. Holders of record of 1,000 or more shares of Common Stock on
the _________ __, 1997 (the "Record Date") will have their
shares automatically converted after the Reverse Split into
the number of whole and fractional shares of New Stock equal
to the number of shares of Common Stock outstanding and
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<PAGE> 8
held by them immediately prior to the Effective Date divided
by 1,000. Such shareholders may also elect no later than ten days
prior to the Effective Date to have their fractional shares of
Common Stock "rounded up" to aggregate one whole share of New
Stock. (See "PROPOSED REVERSE SPLIT/Option to Round Up Stock
Holdings and Cash Payment in Lieu of Fractional Shares").
OPTION TO ROUND UP STOCK HOLDINGS
The Board of Directors of the Company determined that it would be
appropriate to give each existing shareholder of the Company the opportunity to
remain as a shareholder of the Company. Without this opportunity, all holders
of less than 1,000 shares of Common Stock (the "Small-Lot Shareholders") would,
as a result of the Reverse Split, receive cash in exchange for their shares of
Common Stock and would cease to be shareholders of the Company. To allow any
Small-Lot Shareholder to avoid that result, the Company is offering Small-Lot
Shareholders and fractional shareholders the option to "round up" their
holdings of shares of stock in the Company to aggregate one whole share of New
Stock after completion of the Reverse Split by purchasing additional fractional
shares of Common Stock in full and in cash (at $3.35 per share, which price is
equivalent to the per share price the Company will pay to shareholders electing
to "cash out" their fractional share holdings) necessary to round-up to
aggregate one whole share of New Stock.
A Small-Lot Shareholder and fractional shareholder will, as a result
of the Reverse Split, have such fractional shares automatically converted into
the right to receive ONLY cash (the "Cash Consideration") IF THE SMALL-LOT
SHAREHOLDER OR FRACTIONAL SHAREHOLDER DOES NOT TIMELY EXERCISE THE FOLLOWING
OPTION TO ROUND UP THE SMALL-LOT SHAREHOLDER'S OR FRACTIONAL SHAREHOLDER'S
HOLDINGS OF STOCK OF THE COMPANY. In order to round up (and forego the Cash
Consideration), within 30 days after the Effective Date each Small-Lot
Shareholder and fractional shareholder must elect to round up by paying $3.35
in full and in cash for each 1/1000th share needed to round up the Small-Lot
Shareholder's holdings and the fractional shareholder's holdings to equal an
aggregate of one whole share of New Stock (the "Round Up Option"). In other
words, a holder of less than 1,000 shares or any increment thereof of Common
Stock before the Reverse Split would be required to purchase in full and in
cash the fractional shares of Common Stock needed to increase his or her
holdings to the equivalent of 1,000 shares or the next increment of 1,000
shares of Common Stock before the Reverse Split. The amount of cash required
to "round up" will be equal to the product of 1,000 minus the number of shares
initially owned or that number of shares in excess of a multiple of 1,000
shares multiplied by $3.35 (For example, if a shareholder currently owns 500,
1,500, or 2,500 shares, the cost to "round up" would be $1,675 (500 x $3.35 =
$1,675)). A Small-Lot Shareholder or fractional shareholder desiring to take
advantage of the Round Up Option must exercise the Round Up Option within 30
days after the Effective Date. (See "SPECIAL FACTORS/Exercise of Round Up
Option and Exchange of Stock Certificates"). After expiration of such 30 day
period, each Small-Lot Shareholder who has not exercised the Round Up Option
will be eliminated as a shareholder of the Company and shall only be entitled
to receive the Cash Consideration. After expiration of such 30-day period,
each fractional shareholder who has not exercised the Round Up Option shall
remain as a
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<PAGE> 9
shareholder of the Company and shall be entitled to receive Cash Consideration
for such fractional shares.
CASH PAYMENT IN LIEU OF FRACTIONAL SHARES
In lieu of issuing fractional shares of Common Stock resulting from
the Reverse Split, the Company will pay Cash Consideration to Small-Lot
Shareholders and fractional shareholders who fail to timely exercise the Round
Up Option based upon a value per outstanding share of Common Stock immediately
prior to the Effective Date of $3.35 per share. (For a discussion of the
fairness of the price of $3.35 per share for the Common Stock, see "SPECIAL
FACTORS/Recommendation of the Board of Directors").
In the event the Reverse Split is adopted, shareholders will receive a
letter of transmittal regarding surrender of certificates formerly representing
Common Stock of the Company for certificates evidencing shares of New Stock,
cash in lieu of fractional shares and exercise of the Round Up Option. (See
"PROPOSED REVERSE SPLIT/Exercise of Round Up Option and Exchange of Stock
Certificates").
MARKET PRICE
In lieu of issuing fractional shares resulting from the Reverse Split,
the Company will pay cash to certain shareholders based upon a value per
outstanding share of Common Stock held immediately prior to the Effective Date
of $3.35 per share. The Company's Common Stock is listed on the National
Association of Securities Dealers bulletin board system and is traded in the
over-the-counter securities through the Automated Quotation System, under the
NASDAQ symbol "UTRS." The following table sets forth the quarterly high and low
bid prices for 1995 and the closing bid prices for 1996 and thereafter for the
Company's Common Stock during the last two fiscal years, and the first quarter
of 1997 as reported by National Quotation Bureau, Inc. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and do not
represent actual transactions and have not been adjusted for stock dividends or
splits.
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<PAGE> 10
1997 1996 1995
---- ---- ----
Period High Low High Low High Low
- ------ ---- --- ---- --- ---- ---
First Quarter .875 .875 $1.00 $.625 $4.00 $1.25
Second Quarter N/A N/A $1.50 $.75 $2.00 $1.00
Third Quarter N/A N/A $1.00 $.875 $1.75 $1.00
Fourth Quarter N/A N/A $.875 $.875 $1.00 $ .50
Except for certain transactions including: (i) the Split-Off Agreement
by and between MidWest Railroad Construction and Maintenance Corporation
("Midwest") and the Company (the "Split-Off Agreement"), wherein the Company
returned its Midwest shares to Robert D. Wolff and Judith J. Wolff (together
the "Wolffs") in exchange for the 590,000 shares of the Company's stock held by
the Wolffs, (ii) the 1996 Settlement Agreement, by and among the Company, R.
Dee Erickson, E. Jay Sheen, Lyle D. Hurd, Mark G. Jones, Mark Technologies
Corporation, Anne Morgan, Victoria Morgan, IMCC, John Fife and Robinson &
Sheen, L.L.C. (the "1996 Settlement Agreement"), wherein the Company redeemed
22,950 shares of Anne Morgan's URI stock and 17,602 shares of Victoria Morgan's
URI stock, in cash, at $3.35 per share, and (iii) the conclusion of the
exchange of 10.6 acres of land and 34,150 shares of C.E.C. Industries
Corporation stock for 103,488 shares of the Company's stock; the Company has
made no repurchases of its stock during the Company's second full fiscal year
preceding this Proxy Statement. (See "SPECIAL FACTORS/IMCC Transaction and
Settlement Agreements"). The Company did declare a $.10 cash dividend which
was paid January 26, 1995, to shareholders of record January 12, 1995. A
decision to pay dividends in the future will depend upon the Company's
profitability, need for liquidity and other financial considerations. There
are approximately 558 shareholders of the 2,522,808 outstanding shares of the
Company's Common Stock. Approximately 479 shareholders hold less than
1,000 shares of the Company's Common Stock.
With respect to the Reverse Split, in the event all of the fractional
shareholders elect to round up to the next whole share, then a maximum of
429,192 shares would be issued, which figure does not include the shares of the
Company's Common Stock held by brokerage firms or other third party nominees.
With respect to the mechanism whereby the shareholders may purchase the
returned shares, if the Company redeems all of the fractional shares in the
Reverse Split, then a maximum of 103,808 shares would be available for the pool,
which figure does not include the shares held by brokerage firms or other third
party nominees.
AMENDMENT TO ARTICLES OF INCORPORATION
Assuming approval of the Reverse Split by the shareholders at the
Annual Meeting, the Amendment to the Articles of Incorporation in the form of
Exhibit A attached hereto will be filed with the Utah Division of Corporations
and Commercial Code and will become effective on the Effective Date thereof.
Under the Amendment, without any further action on the part of the
shareholders, shares of issued and outstanding Common Stock immediately prior
to the Effective Date, will be converted into the right to receive the number
of shares of New Stock equal to the number of shares of Common Stock held of
record by a shareholder, divided by 1,000 or, in the case of Small-Lot
Shareholders and shareholders of fractional shares who do not exercise the
Round Up Option on or before 30 days following the Effective Date, the right to
receive the Cash Consideration, for such fractional shares
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<PAGE> 11
as of 6:00 a.m., M.D.S.T. on the Effective Date.
The Amendment will, by its terms, decrease the number of shares of the
Company's authorized Common Stock from 5,000,000 shares at $.10 par value
per share to 5,000 shares of $100.00 par value per share to effectuate
the Reverse Split.
EXERCISE OF ROUND UP OPTION AND EXCHANGE OF STOCK CERTIFICATES
After the approval of the Reverse Split, each shareholder will be
mailed a notice of filing ("Notice of Filing") and a letter of transmittal
("Letter of Transmittal"). The Notice of Filing will indicate that the
Amendment was filed and the Effective Date thereof. The Letter of Transmittal,
and instructions relating thereto, will set forth the procedures by which
shareholders will (i) if such shareholder is a Small-Lot Shareholder or a
fractional shareholder, elect to exercise the Round Up Option (or forego the
Round Up Option and elect to receive only the Cash Consideration of a Small-Lot
Shareholder or fractional shareholder for such shares in excess of multiples of
1,000 shares), and (ii) tender their Common Stock stock certificates in
exchange for the Cash Consideration or New Stock stock certificates (and, if
applicable, cash in lieu of fractional shares). A shareholder will be able to
receive his New Stock and/or cash only by transmitting to the Company (A) a
properly executed and completed Letter of Transmittal, (B) stock certificate(s)
for Common Stock and such evidence of ownership of such shares as the Company
may require, and (C) cash payment necessary for exercise of a Small-Lot
Shareholder's or fractional shareholder's Round Up Option, if applicable.
Payments of cash by the Company to the shareholders will be made only upon
delivery of the relevant items which will be more specifically described in the
Letter of Transmittal sent to each shareholder after approval of the Reverse
Split. Similarly, shareholders who will remain such after the Effective Date
will not receive certificates for New Stock unless and until the certificates
representing their Common Stock are surrendered or such evidence of ownership
of such shares as the Company may require is provided.
THE NOTICE OF FILING AND THE LETTER OF TRANSMITTAL WILL BE TRANSMITTED
BY THE COMPANY TO SHAREHOLDERS ON OR AFTER THE EFFECTIVE DATE. SHAREHOLDERS
SHOULD NOT SEND IN THEIR CERTIFICATES OR PAYMENT FOR ADDITIONAL SHARES UNTIL
THE NOTICE OF FILING AND LETTER OF TRANSMITTAL ARE RECEIVED AND SHOULD
SURRENDER THEIR CERTIFICATES AND, IF APPLICABLE, PAYMENT FOR EXERCISE OF THE
ROUND UP OPTION ONLY WITH SUCH LETTER OF TRANSMITTAL.
There will be no direct service charges or sales commissions payable
by the remaining shareholders in connection with the exchange of their
certificates or by holders of fractional shares in connection with the payment
of cash in lieu of the issuance of fractional Common Stock or fractional New
Stock. These costs will be borne by the Company.
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<PAGE> 12
VOTING REQUIREMENTS
Only holders of record of shares of Common Stock at the close of
business on the Record Date will be entitled to notice of and vote at the
Annual Meeting. On the Record Date there were approximately 2,522,808 shares
of Common Stock outstanding. Each such share will be entitled to one vote on
each matter considered at the Annual Meeting. Under Utah law the affirmative
vote of a majority of all shares of Common Stock entitled to vote thereon is
required to approve the Reverse Split. By virtue of a Board of Directors'
resolution, the Board has agreed to make dissenter's rights available, as more
fully described in Part 13 to the Utah Business Corporation Act, to those
shareholders who: (i) possess fractional shares which are eligible to be
purchased by the Company pursuant to the Reverse Split, (ii) do not approve the
Reverse Split and believe that such fractional shares being purchased by the
Company pursuant to the Reverse Split have a value in excess of $3.35 per
share, and (iii) follow the guidelines outlined in Part 13 to the Utah Business
Corporation Act. At the Record Date, the Company's executive officers,
directors, and affiliates in the aggregate held with the power to vote
approximately 1,613,745 shares of Common Stock, constituting approximately 64%
of the shares of Common Stock entitled to vote at the Annual Meeting see the
Section entitled "VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF." IMCC, the
holder of 50.5% of the shares of Common Stock, will vote in favor of the
Reverse Split.
The cost of soliciting Proxies will be borne by the Company. In
addition to the use of the mails, Proxies may be solicited by the directors,
officers, and employees of the Company, without additional compensation, by
personal interview, telephone, telegram or otherwise.
DISSENTERS' RIGHTS
Assuming that the Reverse Split is approved by the shareholders, by
virtue of the Board of Directors passing a resolution to the effect, the Board
has agreed to make dissenter's rights available, as more fully described in
Part 13 to the Utah Business Corporation Act (the "Utah Business Act"), to
those shareholders who: (i) possess fractional shares which are eligible to be
purchased by the Company pursuant to the Reverse Split, (ii) do not approve the
Reverse Split and believe that such fractional shares being purchased by the
Company pursuant to the Reverse Split have a value in excess of $3.35 per
share, and (iii) follow the guidelines outlined in Part 13 to the Utah Business
Act. Any holders of less than 1,000 shares or any increment thereof of Common
Stock who is a shareholder of the Company as of the Record Date and does not
assent to the Reverse Split and believes that his or her shares have a value
greater than $3.35 per share will have the right upon compliance with specific
procedures, to demand from the Company payment of the fair value of such
shareholder's fractional shares. A majority of the Board of Directors believes
that $3.35 per share is the fair value of the shares of the Company. For a
detailed discussion of the fairness of the $3.35 per share purchase price, see
the Secton entitled "SPECIAL FACTORS/Recommendation of the Board of Directors."
Assuming that the Reverse Split is approved by the shareholders, a
holder of less than 1,000 shares or any increment thereof of Common Stock who
objects to the Reverse Split and who believes that such fractional shares being
purchased by the Company pursuant to the Reverse Split have a value in excess
of $3.35 per share, will have appraisal rights, only for those fractional
shares, if he or she complies with all of the provisions of Part 13 of the Utah
Business Act. Shareholders who follow the procedures ("Dissenting
Shareholders") may receive
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<PAGE> 13
a cash payment equal to the fair value of their shares (to the extent such fair
value exceeds $3.35 per share), determined exclusive of any element of value
arising from accomplishment or expectation of the Reverse Split. In order for a
Dissenting Shareholder to pursue a fair value cash payment for such fractional
shares, the Reverse Split must be approved and the Dissenting Shareholder (a)
must cause the Company to receive, 10 days before the Annual Meeting date,
written notice of his/her/its intent to demand payment for shares if the
proposed action is effected; (b) must not vote any of his/her/its shares in
favor of the proposed action; (c) must have been a shareholder with respect to
the Common Stock for which payment is demanded as of the Annual Meeting date;
(d) must cause the Company to receive a payment demand within (a time to be set
by the President, but no fewer than 30 and no more than 70 days following the
shareholders receipt of the dissenter's notice) days following the receipt by
the shareholders of the dissenter's notice from the Company; (e) must deposit
certificates for his/her/its certificated shares within (a time to be set by the
President, but no fewer than 30 and no more than 70 days following the
shareholders receipt of the dissenter's notice) days following the receipt by
the shareholders of the dissenter's notice from the Company; (f) must certify in
writing, in or with the payment demand, whether or not he/she/it 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; and (g) otherwise follow the procedures as set forth in Part 13 of the
Utah Business Act, which is reproduced in full as Exhibit B to this Proxy
Statement. A shareholder who does not demand payment and deposit share
certificates as required is not entitled to payment for shares. This outline is
intended to act as a brief description of what procedures shareholders must
follow in order to be entitled to receive dissenters' rights. A return of an
executed proxy card without any specification as to the way the shares are to be
voted will be treated as a vote in favor of the Reverse Split and will
constitute a waiver of his/her/its demand rights under Part 13 of the Utah
Business Act. Furthermore, a proxy card with a vote against the Reverse Split,
alone, will not serve as a written demand for payment. Written demands must be
filed with Bekky LeVanger, Utah Resources International, Inc., 297 West Hilton
Drive, Suite #4, St. George, Utah 84770 no later than 10 days prior to the
Annual Meeting date. The written demand must reasonably inform the Company of
the shareholder's identity and of the intention to demand payment of
his/her/its shares thereby. Within 10 days after the Effective Date of the
Reverse Split, the Company is required to give notice that the Reverse Split
has become effective to shareholders who have made written demands.
Shareholders who hold more than 1,000 shares of Common Stock may exercise
appraisal rights for only the fractional shares held by such shareholder. For
example, if a shareholder owns 1,500 shares of Common Stock, such shareholder
may only exercise his/her/its appraisal rights with respect to 500 shares of
Common Stock. Such shareholder's remaining 1,000 shares of Common Stock will
be converted into 1 share of New Stock.
If a demand for payment remains unresolved, the Company shall commence
a proceeding within 60 days after receiving a payment demand from a
dissatisfied shareholder as provided under Section 16-10a-1328 of the Utah
Business Act, in the district court of county, and petition the court
to determine the fair value of the shares and the amount of interest.
The shares of any Dissenting Shareholder who subsequently withdraws or
loses these rights of appraisal with respect to the fractional shares will be
converted into cash pursuant to the terms of the Reverse Split on the same
basis as if they had made no demands for payment.
A shareholder's failure to vote on the Reverse Split will constitute a
waiver of his/her/its demand rights under Part 13 of the Utah Business Act. A
vote against the Reverse Split will not satisfy the requirements with respect
to a written demand for payment referred to above or the other actions
specified in Part 13 of the Utah Business Act to perfect such payment rights,
and such written demand for payment must be in addition to and separate from
any proxy or vote against the Reverse Split.
Only holders of record of less than 1,000 shares or any increment
thereof of Common Stock are entitled to demand rights for those fractional
shares as described above, and the procedures to perfect such rights must be
carried out by and in the name of holders of record. Persons who are
beneficial but not record owners of less than 1,000 shares or any increment
thereof and who wish to exercise payment rights with respect to these
fractional shares and the Reverse Split should consult promptly with the record
holders of their shares as to the exercise of such rights.
The foregoing does not purport to be a complete statement of the
provisions of Part 13 of the Utah Business Act and is qualified in its entirety
by reference to that Part, which is reproduced in full as Exhibit B to this
Proxy Statement.
Exchange of Stock Certificates for Cash
No later than 10 days after the Effective Date of the proposed Reverse
Split, each of the shareholders of the Company entitled to demand payment for
their shares shall be sent a written dissenters' notice for use in his/her/its
use in surrendering the fractional stock certificates to the Company, c/o
Bekky LeVanger, Utah Resources International, Inc., 297 West Hilton Drive,
Suite #4, St. George, Utah 84770. Upon such surrender, each holder will be
entitled to receive $3.35 in cash for each share represented by the surrendered
certificates. Until so surrendered, each outstanding certificate, which prior
to the Effective Date of the proposed Reverse Split shall be deemed for all
purposes to represent only the right $3.35 in cash per share.
After the Effective Date of the Reverse Split, payment for the
Company's fractional shares will be made by the Company as soon as practicable
upon surrender to it of certificates representing such fractional shares.
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<PAGE> 14
REGULATORY REQUIREMENTS
The Company has concluded that the Reverse Split will not require the
approval of any government agency.
PURCHASE OF RETURNED SHARES
Subsequent to the Reverse Split and upon compliance with all applicable
federal and state securities and state corporate laws, the Company will permit
any Common Stock redeemed through the Reverse Split (the "Returned Shares") to
be acquired by the remaining shareholders of the Company, other than IMCC or
its affiliates, in increments of 1,000 shares (the "Returned Shares Option"),
at a purchase price per share equal to the pre-Reverse Split share price of
$3.35 per share (the "Returned Share Purchase Price"). Only those shares for
which the Company has received a fully and properly executed Letter of
Transmittal accompanied by the required documents will qualify as Returned
Shares for purposes of this Returned Share Option. Such Common Stock shall be
purchased in blocks of 1,000 shares of Common Stock such that each shareholder
purchase of a 1,000 share block of Common Stock shall be converted into 1 share
of New Stock. In the event the Returned Share Option is over- subscribed, then
each of the exercising shareholders may purchase the Returned Shares on a pro
rata basis (as determined by the number of shares held by each of the
exercising shareholders as of the Record Date less those shares held by IMCC)
but in no circumstances in less than 1,000 share blocks. In the event of such
over-subscription, each qualified shareholder could elect to purchase that
percentage of Returned Shares equal to:
x
-------
(y - z)
where "x" equals the number of New Stock shares owned by the qualified
shareholder wishing to purchase the Returned Shares, "y" equals the total
number of issued shares of New Stock, and "z" equals the number of issued
shares of New Stock owned by IMCC. Twenty-Five percent (25%) of the Returned
Share Purchase Price shall be payable immediately in cash upon exercise of the
Returned Share Option with the remaining balance of $2.51 per share being
evidenced by a promissory note, payable in three years (the "Returned Share
Note"). Subject to applicable Internal Revenue Service rules, the Returned
Share Note will bear simple interest at the short term applicable federal rate
as stated in June 1996, which interest shall be payable annually in arrears.
Payment of the Returned Share Note will be secured by a pledge of the Returned
Shares purchased as converted into share(s) of New Stock pursuant to a stock
pledge agreement to be provided by the Company. Exercising shareholders
purchasing Returned Shares shall be required to apply any dividends,
distributions or other payments made to the shareholder of the Company on the
Returned Shares/New Stock to payment of the unpaid balance of the Returned
Share Note. Returned Shares, as converted into New Stock purchased by an
exercising shareholder, shall be fully votable in accordance with the terms of
the Company's organizational documents and other agreements binding the
Company, for so long as the exercising shareholder is not in default under the
pledge agreement or the Returned Share Note.
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<PAGE> 15
SPECIAL FACTORS
EFFECT OF THE PROPOSED REVERSE SPLIT
The Board of Directors has requested that the shareholders consider and
vote upon a proposal to amend the Company's Articles of Incorporation to effect
a reverse split of the Company's issued and outstanding common, $.10 par value
per share stock (the "Common Stock"), as of p.m., M.D.S.T., on ,
1997 on the basis that each 1,000 shares of Common Stock then outstanding will
be converted into 1 share of common, $100.00 par value per share stock (the "New
Stock"), with shareholders holding less than 1,000 shares of Common Stock or any
increment thereof (after being given an option to purchase additional shares as
needed to "round up" to the equivalent of 1,000 shares at a price of $3.35 per
share) being paid in cash in exchange for their fractional shares at a price of
$3.35 per share for each share outstanding immediately prior to such reverse
split (the "Reverse Split"). As a result of the Reverse Split, the Company is
expected to become a non-SEC reporting Company. See the Section entitled
"SPECIAL FACTORS/Conduct of the Company's Business After the Proposed Reverse
Split."
Disadvantages and Risks
The disadvantages and risks to the Company and its shareholders associated
with the Company effecting the Reverse Split are as follows:
1. Deregistration eliminates the Company's obligation to provide
detailed information to the Company's shareholders concerning
the Company's principal shareholders, directors and executive
officers, compensation paid the Company's executives, audited
financial statements and certain relationships in related
transactions between the Company's insiders and the Company,
which under certain circumstances could better enable the
Company's shareholders to assess the financial operations and
policies of a corporation.
2. There may be a loss of prestige that being a reporting company
provides.
3. The potential loss of ease of valuation of stock where there is
active trading of such shares on an established securities
exchange (shareholders should note, however, that there has
been no such active trading with the Company's stock).
4. There may be decreased liquidity to the remaining shareholders
due to the fact that there is a less public market for the
corporation's stock.
5. When the Reverse Split is effected and the Company elects to
cease to be an SEC reporting company, the Company will lose the
potential flexibility for current or future financing of
corporate expansion through the building of a more broad equity
base through publicly offered sales of securities.
6. With respect to the $3.35 per share Reverse Split, the Company
did not consider any independent proposals, reports or opinions.
For a more detailed description of the disadvantages of the proposed
Reverse Split, see the Sections entitled "PROCEDURAL MATTERS," "PROPOSED
REVERSE SPLIT/Summary of the Proposed Reverse Split", and "SPECIAL
FACTORS/Reasons for the Proposed Reverse Split, Recommendation of the Board of
Directors, and Conduct of the Company's Business After the Proposed Reverse
Split."
Advantages
The advantages of the Company effecting the Reverse Split are as follows:
1. The Company is contractually obligated to cause the Reverse
Split. Such obligation arose in connection with IMCC's
acquisition of 50.5% of the outstanding shares of the Company's
Common Stock and the settlement of protracted and expensive
litigation. For a more detailed description of the litigation
which led to the settlement agreement, see the Section entitled
"MATERIAL PROCEEDINGS AND TRANSACTIONS." For a more detailed
description of the history of the contractual obligation, see
the Section entitled "SPECIAL FACTORS/Reasons for the Proposed
Reverse Split."
2. A majority of the Board of Directors believes that the
financial terms of the Reverse Split are fair both to
shareholders who will receive shares of New Stock and to
shareholders who will receive the $3.35 per share because:
(a) IMCC paid $3.35 per share with respect to its
acquisition of a 50.5% interest in the Company on July
3, 1996;
(b) The Company redeemed on July 3, 1996 Anne Morgan and
Victoria Morgan's shares for $3.35 per share, pursuant
to the Settlement Agreement by and among the Company,
R. Dee Erickson, E. Jay Sheen, Lyle D. Hurd, Mark G.
Jones, Mark Technologies Corporation, Anne Morgan,
Victoria Morgan, IMCC, John Fife and Robinson & Sheen,
L.L.C. (the "1996 Settlement Agreement"). The court in
the Second State Action reviewed and considered the
1996 Settlement Agreement, the Stock Purchase Agreement
and the 1993 Settlement Agreement, written memoranda
submitted by various parties and other comments and
objections and ordered that: (1) the notice given
pursuant to Rule 23.1 of the applicable rules of civil
procedure for the State of Utah was adequate, fair and
proper; (2) the procedural and substantive objections
of Jenny T. Morgan (a director and shareholder of the
Company), Gerard E. Morgan, John C. Morgan and Karen
J. Morgan be overruled; (3) the 1996 Settlement
Agreement was fair, adequate and reasonable; (4) the
Petition to Terminate the 1993 Settlement Agreement was
fair, adequate and reasonable; and (5) the 1996
Settlement Agreement and Petition to Terminate the 1993
Settlement Agreement was approved. For a more detailed
description of the litigation which led to the 1996
Settlement Agreement, see the Section entitled
"MATERIAL PROCEEDINGS AND TRANSACTIONS." For a more
detailed description of the contractual obligation for
the $3.35 per share Reverse Split price, see the
Section entitled "SPECIAL FACTORS/Reasons for the
Proposed Reverse Split,"
(c) The market price of the Company's Common Stock for the
fourth quarter of 1996 was $.875, which is far below
the $3.35 per share purchase price being offered by
the Company;
(d) The Reverse Split provides fractional shareholders with
the opportunity to liquidate their holdings at a price
substantially above market trades and without incurring
brokerage costs, particularly given the absence of an
active market for the Common Stock reflective of the
Company's operations and earning potential; and
(e) The Reverse Split provides fractional shareholders who
wish to continue to be shareholders of the Company to
elect to exercise the round-up option at a purchase
price of $3.35 per share.
3. The Company will realize cost savings in its cessation as a
reporting company under the Exchange Act.
For a more detailed description of the proposed Reverse Split and its
advantages see the Sections entitled "PROPOSED REVERSE SPLIT/Summary of the
Proposed Reverse Split", and "SPECIAL FACTORS/Reasons for the Proposed Reverse
Split and Recommendation of the Board of Directors."
The Reverse Split will be effected by means of the filing of the
Amendment and the occurrence of the Effective Date. Both affiliated and
non-affiliated shareholders will be given the option to either (a) round-up
their fractional shares to the next whole share at a purchase price of $3.35
per share, or (b) have their fractional shares redeemed by the Company at a
purchase price of $3.35 per share. Over the past ten years, the Company's
shareholders have received only $.10 in dividends. Furthermore, the Company's
stock is traded sporadically within a narrow range on the market. The Reverse
Split and round up option provide the Company's shareholders with the option to
either (1) exit the Company and receive fair value for their shares; or (2)
continue their ownership in the Company with the hope of receiving a return on
their investment in the future. Following the Effective Date, the Common Stock
owned by each Small-Lot Shareholder who does not exercise the Round Up Option
will represent solely the right to receive the Cash Consideration for such
fractional shares. The interest of each such Small-Lot Shareholder in the
Company will thereby be terminated, and such Small-Lot Shareholder will no
longer have any right to vote as a shareholder and will no longer share in the
assets or any future earnings of the Company. Each holder of 1,000 or more
shares of Common Stock before the Reverse Split that does not exercise the
Round Up Option will continue to be a shareholder of the Company with rights to
vote as a shareholder and rights to share in the assets and any future earnings
of the Company and will receive the Cash Consideration for such fractional
shares.
On the Effective Date, each shareholder of record who owns one or more
whole shares of New Stock (including holders of 1,000 or more shares of Common
Stock before the Reverse Split AND Small-Lot Shareholders who timely exercise
the Round Up Option) will continue as a shareholder of the Company with respect
to the share or shares of New Stock resulting from the Reverse Split.
The Company has authorized capital stock of 5,000,000 shares of $.10
par value per share common stock. The number of shares of authorized common
stock will, as a result of the Amendment, be decreased to 5,000 shares of
$100.00 par value per share common stock. (See "PROPOSED REVERSE
SPLIT/Amendment to Articles of Incorporation"). As of October 8, 1996, the
number of issued and outstanding shares of Common Stock was 2,522,808. Based
upon the Company's best estimates (assuming no Small-Lot Shareholders and no
fractional shareholders exercise pre- split the Round Up Option and no
shareholders elect to purchase the Returned Shares), the number of issued and
outstanding shares of Common Stock will be reduced as a result of the Reverse
Split from 2,522,808 to approximately 2,419,000, and the number of shareholders
of record will be reduced from approximately 558 to approximately 79. There
will be approximately 5,000 authorized, and 2,419 issued shares of New Stock
following the Reverse Split.
The Common Stock is currently registered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and as a result, the Company is
subject to the periodic reporting and other requirements of the Exchange Act.
Upon consummation of the Reverse Split, if the total number of shareholders is
reduced to below 300, the Company will file a Form 15 with the Securities and
Exchange Commission ("SEC") to deregister as a reporting company under the
Exchange Act. Deregistration of the Company under the Exchange Act will
significantly reduce the cost of legal and accounting services, in addition to
the administrative burden of compliance with the filing and other requirements
of registration under the Exchange Act. (See "SPECIAL FACTORS/Reasons for the
Proposed Reverse Split").
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<PAGE> 16
BACKGROUND OF THE PROPOSED REVERSE SPLIT
The Company was organized in Utah in 1966, as Utah Industrial Inc. It
was renamed Utah Resources International, Inc. in 1969. In 1981, the Company
became a "reporting company" requiring it to file various reports with the SEC.
The Company directly owns approximately 408 acres of undeveloped land in St.
George, Utah, approximately 362 acres of which are developable, on which it
conducts its real property development business through its wholly owned
subsidiary, Tonaquint, Inc.
As a "reporting company," the Company and its "insiders" (generally
defined to include the Company's directors, executive officers and 10% or more
shareholders) have reported to the SEC (pursuant to the Exchange Act) since it
became a public company. In general, under Section 12(g) of the Exchange Act,
a corporation and its insiders are required to file certain periodic and annual
reports with the SEC once the corporation acquires over 500 shareholders (and
maintains over $10 million in assets). The Company currently files various
periodic and annual reports with the SEC, as mandated by Section 12(g) of the
Exchange Act, although in recent years some reports required to be filed by the
Company have been filed late or not at all. The Company's periodic and annual
filings include, but are not limited to, Form 10-KSB, Form 10- QSB, Form 8-K,
Proxy Statement and Annual Reports to shareholders. In addition, the Company's
insiders are also required to file certain periodic and annual reports with the
SEC. The Company's insider reporting requirements include, but are not limited
to, Schedule 13D, Schedule 13G, Form 3, Form 4 and Form 5 filings. Finally,
the Company and its insiders may be subject to potential civil and criminal
liability if actions on behalf of the Company were found to violate the
provisions of the Exchange Act and the numerous regulations adopted thereunder.
There are certain advantages to being a "reporting company" under the
Exchange Act. The primary advantage is the potential flexibility for current
or future financing of corporate expansion through the building of a more broad
equity base through publicly offered sales of securities. Furthermore,
registration may provide greater prestige because of the "public" nature of the
corporation. In addition, the valuation of shares of a corporation's stock may
be made easier if there is active trading of such shares on an established
securities exchange.
Registration as a reporting company may also engender a more public
market for a corporation's stock, due to active trading, thus providing
increased liquidity for shareholders who desire to sell the corporation's
stock. Finally, a corporation reporting to the SEC under the Exchange Act must
provide detailed information to its shareholders concerning a corporation's
principal shareholders, directors and executive officers, compensation paid a
corporation's executives, audited financial statements and certain
relationships in related transactions between a corporation's insiders and the
corporation. Under certain circumstances, this could better enable a
corporation's shareholders to assess the financial operations and policies of a
corporation.
On July 3, 1996, the Company consummated a transaction with IMCC,
whereby Common Stock, representing 50.5% of the outstanding stock of the
Company, was transferred to IMCC at a price of $3.35 per share and payable in
accordance with the terms set forth in the
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<PAGE> 17
Stock Purchase Agreement by and between IMCC and the Company (the "Stock
Purchase Agreement"). The transfer of such shares to IMCC was made pursuant to
the transactions contemplated by a Letter of Intent dated April 5, 1996, as
amended, by and between IMCC and the Company, (the "Letter of Intent"), and a
settlement agreement by and among the Company, R. Dee Erickson, E. Jay Sheen,
Lyle D. Hurd, Mark G. Jones, Mark Technologies Corporation, Anne
Morgan, Victoria Morgan, IMCC, John Fife and Robinson & Sheen L.L.C. (the "1996
Settlement Agreement"), a settlement agreement by and among the Company, John
H. Morgan, Jr., Daisy R. Morgan, IMCC, John Fife, Robinson & Sheen, L.L.C., R.
Dee Erickson, Lyle D. Hurd, and E. Jay Sheen (the "Morgan Settlement
Agreement") (collectively, the "Transaction Agreements"). (See "SPECIAL
FACTORS/IMCC Transaction and Settlement Agreements"). Among other things,
pursuant to IMCC's Stock Purchase Agreement, IMCC agreed to cause the Company
to effect the Reverse Split. In addition to the requirements of the IMCC Stock
Purchase Agreement, the Company's senior management and its Board of Directors
have assessed the advantages and disadvantages of the Company being a reporting
company under the Exchange Act. Of the approximate 558 Shareholders, it was
noted that approximately 479 Shareholders of record own fewer than 1,000
shares. In addition, senior management and a majority of the Board of
Directors of the Company noted that there was little or no pubic market for the
Company's Common Stock. Upon consummation of the Reverse Split, the Company
will most likely be permitted to deregister as a reporting company under the
Exchange Act. Deregistration will significantly reduce the cost of the
Company's legal and accounting services by eliminating the requirements that
the Company make periodic and annual filings with the SEC. Deregistration
would also reduce or eliminate the potential exposure of the Company and its
insiders for possible failure to comply with Exchange Act requirements. See
"SPECIAL FACTORS/Reasons for the Proposed Reverse Split".
In considering an ownership restructuring transaction, the Board of
Directors also considered the possible detrimental effects of such a
transaction. An ownership restructuring transaction might reduce the potential
flexibility for current or future financing of the Company's expansion through
the building of a more broad equity base. In addition, a public company
reporting under the Exchange Act must provide detailed information to its
shareholders concerning its principal shareholders, directors, and executive
officers, compensation paid to its executives, audited financial statements and
certain relationships and related transactions between the company's insiders
and the company. Upon consummation of the proposed ownership restructuring
transaction, the Company will cease reporting under the Exchange Act; and
therefore, less financial and other information will be available to the
shareholders with respect to the Company, and its officers, directors and
principal shareholders. This might limit a shareholder's ability to assess the
financial operations and policies of the Company. Notwithstanding such
potential detrimental effects, a majority of the Board of Directors concluded
that in light of the contractual requirements of the Transaction Agreements and
the belief of a majority of the Board of Directors that continuing as a
"reporting company" was too costly, a majority of the Board of Directors
determined that an ownership restructuring, designed to deregister the Company,
was the most appropriate course of action. See "SPECIAL
FACTORS/Recommendation of the Board of Directors".
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<PAGE> 18
On January 22, 1997, a majority of the Board of Directors voted that a
restructuring of the stock ownership be accomplished through a reverse stock
split and approved the Reverse Split in the form discussed in this Proxy
Statement and directed that a proposal for the Reverse Split be submitted to a
vote of the shareholders. On January 22, 1997, the President (by
authority of the Board of Directors) set the Record Date of the Annual Meeting
as _________, and set ________, 1997 as the date of the Annual Meeting.
IMCC TRANSACTION AND SETTLEMENT AGREEMENTS
Over the past nine years, the Company has been involved in various disputes
and controversies involving its ownership, operation and management. A
shareholders derivative action captioned as Ernest Muth, et al. v. John H.
Morgan, Jr., et al., was filed as Civil Number C-87-1632 in the Third Judicial
District Court of Salt Lake County, Utah (the "First State Action"), alleging
among other things that the officers and directors of the Company committed
various breaches of their fiduciary duties to the Company. A settlement
agreement was entered into in the First State Action on April 6, 1993 (the "1993
Settlement Agreement"), wherein, among other things, parties to the lawsuit
agreed to the manner in which directors of the Company would be selected until
such time as the 1993 Settlement Agreement was terminated. On or about July 21,
1995, attorneys for the Company on behalf of the Company filed an action against
John H. Morgan, Jr. and Daisy R. Morgan, (John H. Morgan, Jr. and Daisy R.
Morgan were shareholders and directors of the Company at this time), to enforce
the 1993 Settlement Agreement in the First State Action which resulted in
certain findings of fact and conclusions of law that John H. Morgan, Jr. and
Daisy R. Morgan had violated the 1993 Settlement Agreement. On October 4,
1995, the Honorable Michael R. Murphy ruled that John H. Morgan, Jr. and Daisy
R. Morgan had violated the 1993 Settlement Agreement and entered an order
enforcing the 1993 Settlement Agreement (the "Murphy Order"). The Murphy Order
was appealed by John H. Morgan, Jr. and Daisy R. Morgan and cross-appealed by
the Company. An Order to Show Cause was subsequently filed in the First State
Action on behalf of the Company by attorneys for the Company against John H.
Morgan, Jr. and Daisy R. Morgan and others (the "Order to Show Cause").
On or about June 13, 1995, pursuant to a Plan of Share Exchange Agreement
dated as of February 16, 1995 by and among the Company, Midwest Railroad
Construction and Maintenance Corporation of Wyoming, a Wyoming corporation
("Midwest"), Robert D. Wolff ("RD Wolff") and Judith J. Wolff ("JJ Wolff") (the
"Share Exchange Agreement"), the Company acquired all of the outstanding shares
of Midwest from RD Wolff and JJ Wolff in exchange for 590,000 restricted shares
of authorized but unissued shares of the Company. Pursuant to the Share Exchange
Agreement, RD Wolff became the President of the Company. For a more detailed
description of the Share Exchange Agreement, see Form 8-K filed July 20, 1995.
A shareholders derivative action captioned as Anne Morgan et al. v. R. Dee
Erickson, et al., was filed as Case Number 2:95CV-0661C in the United States
District Court for the District of Utah, Central Division (the "First Federal
Action"), alleging among other things that the defendants had, among other
things, violated proxy solicitation rules, violated disclosure rules under the
Securities and Exchange Act of 1934, breached their fiduciary duties to the
Company's shareholders, breached professional duties, committed fraud, wasted
and looted the Company's assets, converted Company property, engaged in
self-dealing, mismanaged the corporation and breached the duty of loyalty. The
complaint sought among other things, the rescission of the Share Exchange
Agreement. In April 1996, the Company, Midwest, RD Wolff
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<PAGE> 19
and JJ Wolff entered into a Split-Off Agreement whereby, among other things,
the Share Exchange Agreement was rescinded (the "Recision Agreement") and the
shares of Midwest acquired by the Company were returned to RD Wolff and JJ
Wolff.
On April 5, 1996, the Company entered into a letter of intent ("Letter
of Intent") with IMCC to sell a controlling interest in the Company to IMCC, at
a purchase price equal to $3.35 per share. On May 17, 1996, a shareholders
derivative suit captioned as Mark Technologies Corp. et al. v. Utah Resources
International, Inc., et al., was filed as Civil No. 96-090-3332CV in the Third
Judicial Court of Salt Lake County, Utah (the "Second State Action"). Mark G.
Jones, a director of the Company, is the controlling shareholder of Mark
Technologies Corporation and a shareholder of the Company. The Second State
Action included, among other things, a request for the issuance of a temporary
restraining order and injunction against the transactions contemplated in the
Letter of Intent. On June 26, 1996, the Company entered into two settlement
agreements. The first settlement agreement was by and among the Company, John
H. Morgan, Jr., Daisy R. Morgan, IMCC, John Fife, Robinson & Sheen, L.L.C., R.
Dee Erickson, Lyle D. Hurd, and E. Jay Sheen (the "Morgan Settlement
Agreement"), whereby certain disputes among the parties were resolved and
settled and the parties agreed to use their best efforts to terminate the 1993
Settlement Agreement. In particular, the parties to the Morgan Settlement
Agreement executed full mutual releases, thereby releasing the claims that
they had asserted in the Order to Show Cause, the First State Action and the
First Federal Action and a release of approximately $89,229.81 to John H.
Morgan, Jr. previously collected from him pursuant to paragraph 8 of the Murphy
Order and other amounts covered by the Order staying the execution of the Murphy
Order to John H. Morgan, Jr. The second settlement agreement was by and among
the Company, R. Dee Erickson, E. Jay Sheen, Lyle D. Hurd, Mark G. Jones, Mark
Technologies Corporation, Anne Morgan, Victoria Morgan, IMCC, John Fife and
Robinson & Sheen, L.L.C. (the "1996 Settlement Agreement"), whereby the parties
agreed, among other things, to dismiss the First Federal Action, the Order to
Show Cause, the Second State Action and to use their best efforts to terminate
the 1993 Settlement Agreement. On July 19, 1996, the notice of hearing on
proposed settlement of the Second State Action, the First State Action and the
First Federal Action and the notice of hearing on petition to terminate the
1993 Settlement Agreement was mailed to all the Company's shareholders of
record as of June 24, 1996. Among other things, the notice provided that the
1996 Settlement Agreement and the Morgan Settlement Agreement (together the
"Settlement Agreements") were to be considered approved by the court on August
12, 1996, and that all objections to the Settlement Agreements had to be
presented at that time. On August 9, 1996, shareholders Jenny T. Morgan, (who
is also a director of the Company), Gerard E. Morgan, John C. Morgan and Karen
J. Morgan (together the "Objectors") filed an objection to the hearing and
requested that the court continue the settlement approval hearing until after a
Company shareholders' vote on the Settlement Agreements and the IMCC Stock
Purchase Agreement. In their objections and request for continuance of
hearing, the Objectors, among other things, claimed that they had insufficient
information with which to evaluate the Stock Purchase Agreement between IMCC
and the Company; that they objected to the "no-shop" provision contained in the
Letter of Intent; that they had insufficient information regarding John Fife,
the sole shareholder of IMCC, and that they needed additional time and
information to evaluate the fairness of the Stock Purchase Agreement, and to
have the opportunity to solicit other competitive bids to sell the Company.
Further, the Objectors alleged that the Company had failed to provide
documentation relating to the Stock Purchase Agreement to them. After
considering the Objectors' and the parties' initial arguments, the court
granted both the parties and the Objectors an additional seven days, through
August 19, 1996, to submit written memoranda in support of their positions.
Both the Objectors and the parties submitted written memoranda supporting their
positions in regard to the Settlement Agreements and the Stock Purchase
Agreement. On or about August 23, 1996, the court in the Second State Action
reviewed and considered the 1996 Settlement Agreement, the Stock Purchase
Agreement and the 1993 Settlement Agreement, written memoranda submitted by
various parties and other comments and objections and ordered that: (1) the
notice given pursuant to Rule 23.1 of the applicable rules of civil procedure
for the State of Utah was adequate, fair and proper; (2) the procedural and
substantive objections of Jenny T. Morgan (a director and shareholder of the
Company), Gerald E. Morgan, John C. Morgan and Karen J. Morgan be overruled;
(3) the 1996 Settlement Agreement was fair, adequate and reasonable; (4) the
Petition to Terminate the 1993 Settlement Agreement was fair, adequate and
reasonable; and (5) the 1996 Settlement Agreement and Petition to Terminate the
1993 Settlement Agreement was approved.
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As required by the Transaction Agreements, as defined below, the 1996
Settlement Agreement and the Morgan Settlement Agreement were approved by the
Third Judicial District Court of Salt Lake County, West Valley Department Utah,
on or about August 28, 1996. The Order to Show Cause was dismissed with
prejudice and the 1993 Settlement Agreement was terminated on August 29, 1996.
On July 3, 1996, following the execution of the Letter of Intent and
the execution of the Morgan Settlement Agreement and the 1996 Settlement
Agreement, the Company and IMCC entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement") (the Letter of Intent, the Morgan Settlement
Agreement, the 1996 Settlement Agreement and the Stock Purchase Agreement are
hereinafter referred to as the "Transaction Agreements") whereby the Company
issued and sold 1,275,912 shares (the "Purchased Shares") of common, $.10 par
value per share stock (the "Common Stock") to IMCC, which is wholly owned by
John Fife (who, after the acquisition became a director of the Company and
currently serves as a director of the Company), so that IMCC owned a 50.5%
interest in the Company. IMCC acquired the Purchased Shares at a price equal
to $3.35 per share for an aggregate purchase price of $4,274,305.20 (the
"Purchase Price"), of which $641,145.78 was paid in cash by IMCC to the Company
at the closing. The remaining $3,633,159.42 was evidenced by IMCC's promissory
note (the "Note"). The Note bears interest at a rate equal to the short-term
applicable federal rate published by the Internal Revenue Service in effect at
the time of closing, and is adjusted on each anniversary of the Note to the
applicable short-term federal rate in effect on such anniversary date.
Interest on the Note is paid currently in arrears on each anniversary of the
Note. At the closing, IMCC paid $197,872.52 to the Company which amount
represented the present value first year of interest due under the Note. The
principal and any unpaid interest accrued under the Note is due and payable
August 1, 2001. The Note is secured by the Purchased Shares as evidenced by a
stock pledge agreement, dated as of July 3, 1996, by and between IMCC and the
Company (the "Stock Pledge Agreement"). Pursuant to a separate written
guaranty agreement, John Fife personally guaranteed payment of 25% of all
amounts due under the Note. For a more detailed description of the Stock
Purchase Agreement, see Form 8-K filed by the Company on July 19, 1996, and to
review a copy of the Stock Purchase Agreement, see Schedule 13D-A filed by IMCC
on September 9, 1996.
As required by the Stock Purchase Agreement, E. Jay Sheen and R. Dee
Erickson submitted their resignations as directors of the Company, effective
July 13, 1996. As further required by the Stock Purchase Agreement, John Fife
was appointed a director of the Company. David Fife, the brother of John Fife,
was also appointed as director of the Company. John Fife and David Fife were
appointed as directors of the Company by the Muth Group pursuant to the 1993
Settlement Agreement, effective July 13, 1996. As required by the Stock
Purchase Agreement, John Fife was elected President and Chief Executive Officer
of the Company in July, 1996, pursuant to a 3-0 vote of the Board (Mark G. Jones
and Jenny Morgan were not present for the vote). John Fife also serves as
Chairman of the Board of the Company pursuant to a 3-2 vote of the Board.
The Letter of Intent and the Transaction Agreements, including the Stock
Purchase Agreement, contemplated that, subject to applicable state and federal
securities and state
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<PAGE> 21
corporate law, the Company would cause a 1,000 to 1 share reverse split of the
Company's Common Stock to the shareholders of record at $3.35 per share (the
"Reverse Split"), with fractional shareholders given the option to either
purchase additional fractional shares to round up to one whole share following
the reverse split or sell their fractional shares for cash to the Company.
IMCC was granted a ten year option to purchase 150,000 or more additional
shares of stock at a price equal to $3.35 per share and on the same terms and
conditions as those provided under the Stock Purchase Agreement, so that after
the Reverse Split IMCC may maintain its 50.5% interest in the Company.
Subsequent to the Reverse Split and subject to applicable state and federal
securities and state corporate law, any Company shares redeemed by the Company
pursuant to the Reverse Split (the "Returned Shares") may be acquired by the
remaining shareholders, other than IMCC or its affiliates, in increments of
1,000 shares (the "Returned Share Option") at a purchase price equal to the
pre-Reverse-Split price of $3.35 per share (the "Returned Share Purchase
Price"). Only those shares for which the Company has received a fully and
properly executed Letter of Transmittal, accompanied by the required documents,
will qualify as Returned Shares for the purposes of this Returned Share Option.
Such Common Stock shall be purchased in blocks of 1,000 shares of Common Stock
such that each purchase of a 1,000 share block of Common Stock shall be
converted into 1 share of common, $100.00 par value per share stock of the
Company (the "New Stock"). In the event the Returned Share Option is over-
subscribed, then each of the exercising shareholders may purchase the Returned
Shares on a pro-rata basis as more fully described herein. See "PROPOSED
REVERSE SPLIT/Purchase of Returned Shares." Twenty-five percent (25%) of the
Returned Share Purchase Price will be payable in cash upon exercise, with the
remaining balance of $2.51 per share being evidenced by the Returned Share Note
on the terms and conditions as more fully described herein. See "PROPOSED
REVERSE SPLIT/Purchase of Returned Shares".
In December, 1995, Mark Technologies Corporation received 201,210 shares of
the Company's Common Stock from Morgan Gas & Oil Co., as partial payment of a
promissory note. The promissory note was given in consideration of the sale to
Morgan Gas & Oil Co. from Mark Technologies Corporation of a limited
partnership interest in Alta Mesa Wind Partners, a California limited
partnership in the wind-generated power business. The Company is a shareholder
of Morgan Gas & Oil Co. The Company brought a shareholders derivative action
in the United States District Court for the District of Utah, Central Division,
against Morgan Gas & Oil Co. and its directors and against Mark G. Jones, Mark
Technologies Corporation, Alta Mesa Wind Partners, John H. Morgan, Jr., Daisy
R. Morgan, Sylvia Wunderly, John Wunderly, and Melbourne Romney, III, alleging,
among other things, that in connection with the sale of Alta Mesa Wind Partners
limited partnership interest to Morgan Gas & Oil Co., Mark G. Jones, Mark
Technologies Corporation, and Alta Mesa Wind Partners concealed and
misrepresented material information to be provided to Morgan Gas & Oil Co.
directors and that the Morgan Gas & Oil Co. directors (including John H.
Morgan, Jr., Daisy R. Morgan, Sylvia Wunderly, John Wunderly and Melbourne
Romney, III) committed a breach of fiduciary duty and a wasting of corporate
assets (the "MG0 Action"). The Company sought recission of the sale. Legal
counsel advised the Company that due to the releases contained in the 1996
Settlement Agreement, the Company should not continue to pursue the MGO Action
against Mark G. Jones, a shareholder and director of the Company and signatory
to the 1996 Settlement Agreement and Mark Technologies Corporation, a
shareholder of the Company and signatory to the 1996 Settlement Agreement. A
majority of the Board of Directors of the Company voted to have the suit
dismissed without prejudice. Directors Jenny Morgan and Mark G. Jones
objected to the dismissal without prejudice and proposed that the MG0 Action be
dismissed with prejudice. The suit has been dismissed without prejudice, so
that other shareholders of Morgan Gas & Oil Co. will not be precluded from
seeking relief based upon the same cause of action.
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<PAGE> 22
The table below summarizes the litigation and accompanying transactions
discussed above:
DATE THE EVENT OCCURRED EVENT
March 5, 1987 First State Action is filed
April 6, 1993 First State Action is settled pursuant
to the 1993 Settlement Agreement
February 16, 1995 Company executes the Share Exchange
Agreement
June 13, 1995 Company consummates the Share Exchange
Agreement with Midwest, RD Wolff
and JJ Wolf
July 18, 1995 The First Federal Action is filed,
seeking among other things to rescind
the Share Exchange Agreement
July 21, 1995 Company files suit to enforce the 1993
Settlement Agreement
October 4, 1995 Hon. Judge Michael R. Murphy enters
an order enforcing the 1993 Settlement
Agreement (the "Murphy Order")
October 13, 1995 John H. Morgan, Jr. and Daisy Morgan
appeal the Murphy Order
January 23, 1996 Company seeks Order to Show Cause
against John H. Morgan, Jr., Daisy
Morgan, Mark G. Jones, Mark
Technologies Corporation, Anne Morgan
and Victoria Morgan for violation of
the Murphy Order
DATE THE EVENT OCCURRED EVENT
April 5, 1996 Company enters into the Letter of
Intent with IMCC
April 22, 1996 Company, Midwest, and the Wolffs
execute the Split-Off Agreement
rescinding the Share Exchange Agreement
May 10, 1996 Company files the MGO Action
May 17, 1996 The Second State Action is filed
seeking to enjoin performance of the
Letter of Intent and for damages
arising out of the execution of the
split-off Agreement
June 26, 1996 The Morgan Settlement Agreement and
the 1996 Settlement Agreement are
executed
July 3, 1996 Company and IMCC execute the Stock
Purchase Agreement and sale of stock to
IMCC is completed
July 3, 1996 Directors E. Jay Sheen and R. Dee
Erickson tender their resignations
July 13, 1996 The resignations of directors E. Jay
Sheen and R. Dee Erickson become
effective
July 19, 1996 Notices of Hearing regarding the
proposed settlement of the Second State
Action, the First State Action and the
First Federal Action are sent to the
Company's shareholders
August 9, 1996 Objectors file an objection to the
settlement of the Second State Action
August 23, 1996 The settlement of the Second State
Action is approved by the court
August 28, 1996 The order to Show Cause is dismissed
with prejudice
August 29, 1996 Termination of 1993 Settlement
Agreement
October 31, 1996 MGO Action is dismissed without
prejudice
REASONS FOR THE PROPOSED REVERSE SPLIT
The Company was organized in Utah in 1966 as Utah Industrial, Inc. It was
renamed Utah Resources International, Inc. in 1969. In 1981, the Company
became a "reporting company" requiring it to file various reports with the SEC.
In late 1995 and early 1996, the Board of Directors began investigating
potential buyers and soliciting offers to purchase a controlling interest
in the Company. The Board of Directors wished to: (i) spin off the Midwest
Railroad Construction and Maintenance Corporation of Wyoming, and replace
Robert D. Wolff as CEO of the Company (for a more detailed description of the
Share Exchange Agreement, the subsequent litigation and the Split-Off
Agreement, see the Sections entitled "SPECIAL FACTORS/IMCC Transaction and
Settlement Agreements", and "MATERIAL PROCEEDINGS AND TRANSACTIONS"; (ii)
infuse capital into the Company; and (iii) provide a mechanism whereby the
minority shareholders would have the opportunity to receive fair value for
their shares. With respect to the Board's third goal, the Company's history of
sporadic public trading in a narrow margin rendered the shares virtually
illiquid and the protracted and costly litigation engulfing the Company
consumed corporate assets and the time and attention of the Board of Directors
and management thereby significantly reducing the Company's profits and
distributions. In a ten year period ending January 1995, the Company made only
one $.10 distribution to the shareholders which occurred in January 1995.
In addition to pursuing outside buyers for the Company, the Company was
also actively pursuing a settlement of all litigation affecting the Company.
In February and March of 1996, the Company had discussions with John Fife,
the President and sole shareholder of IMCC regarding a transaction or
transactions between the Company and IMCC. During the course of these
discussions, the Company communicated its goals to John Fife. Prior to
entering into the Letter of Intent (as hereinafter defined), John Fife entered
into a letter agreement by and among John Fife, Earnest Muth, a party to the
1993 Settlement Agreement ("Muth"), Thomas Ralphs, a party to the 1993
Settlement Agreement ("Ralphs") and Precious Metals, Inc. dated as of March 30,
1996 (the "Letter Agreement"), which Letter Agreement was assigned to IMCC.
Under the terms of the Letter Agreement, John Fife had the option to purchase
all, but not less than all, of the shares of stock of the Company held by or
beneficially owned or controlled by Muth and Ralphs (approximately 90,000
shares), at an option exercise price of $4.00 per share. John Fife paid Muth
and Ralphs an aggregate of $15,000, which amount is a non-refundable option
payment to be applied to the ultimate purchase price. During the option, which
expired 60 days after March 30, 1996, John Fife was granted a proxy to vote the
shares held by Muth and Ralphs. In addition, the Letter Agreement provided
that upon the exercise of the option to purchase the shares of the Company,
Muth and Ralphs would assign their rights and obligations under the 1993
Settlement Agreement to John Fife. IMCC submitted its letter of
intent to the Board of Directors of the Company, dated as of April 5, 1996 (the
"Letter of Intent"). The Letter of Intent provided that: (1) the Company
would issue and IMCC would purchase shares which would represent a 51%
ownership interest in the Company; (2) IMCC would pay the Company $3.35 per
share for the stock: (3) IMCC would pay 10% of the purchase price in cash at
the closing with the balance due pursuant to a five year promissory note; (4)
the note would be secured with the stock purchased by IMCC; (5) would have a
ten year option to purchase 150,000 or more additional shares of stock in order
to maintain its 51% ownership interest in the Company; (6) following the
closing of the purchase of stock, IMCC would cause the Company to undertake a
12,500 to 1 reverse stock split at $3.35 per share with fractional shareholders
being given the option to purchase additional shares to round up to the next
whole share, or a tender offer; (7) the Company agreed to indemnify IMCC
and its shareholders and directors from and against any liability to the
Company's shareholders, officers and/or directors arising out of IMCC's
negotiation, execution and/or consummation of the Letter of Intent, the Stock
Purchase Agreement and the transactions contemplated by the Letter of Intent;
and (8) IMCC agreed to take all actions necessary to cause the Company to honor
the Company's obligations to indemnify its officers and directors to the fullest
extent permitted by law, including, but not limited to, the advancement of
their legal fees and costs in connection with all present and future litigation
involving them in their capacities as officers and directors of the Company.
In addition to reviewing the IMCC offer, the Company entertained other written
offers including one from Mark G. Jones, a director and shareholder of the
Company. The Company entered into the Letter of Intent on April 5, 1996. On
April 16, 1996 IMCC filed its Schedule 13D informing the Company's
shareholders of its intent to engage in the two step transaction consisting of
the acquisition of a majority interest and conducting a reverse stock split or
a tender offer. It also gave notice of IMCC's intent to cause a class of
securities of the Company to be delisted from a national securities exchange or
cause a class of securities to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association,
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934.
On April 5, 1996, the Company entered into the Letter of Intent with IMCC,
over the objections of Directors Mark G. Jones and Jenny Morgan. Thereafter,
the Company and IMCC began negotiating the terms of the stock purchase
agreement and IMCC began its due diligence investigation of the Company. On,
May 17, 1996, Mark G. Jones, a shareholder and director of the Company and
controlling shareholder of Mark Technologies Corporation, brought a
shareholders derivative suit against the Company, E. Jay Sheen, R. Dee Erickson
and Lyle Hurd, directors of the Company and IMCC, captioned as Mark
Technologies Corp., et al. v. Utah Resources International, Inc. et al., which
was filed as Civil No. 96-090-3332CV in the Third Judicial Court of Salt Lake
County (the "Second State Action"), seeking a temporary restraining order and
injunction. For a more detailed description of the Second State Action
litigation, see the Section entitled "MATERIAL PROCEEDINGS AND TRANSACTIONS."
During late May and early June of 1996, the Company and IMCC: (1)
prepared for trial in the Second State Action, which included the conduct of
extensive discovery, and (2) continued to negotiate the terms of the stock
purchase agreement. Ongoing negotiations between the Company and IMCC resulted
in an amendment to the Letter of Intent, dated as of May 31, 1996. The parties
agreed to increase the percentage of the purchase price to be paid at closing
from 10% to 15%. In addition to the stock pledge agreement which secured the
five year note, John Fife agreed to personally guarantee 25% of the outstanding
balance due the Company under the IMCC note. Ongoing negotiations among the
parties to the Second State Action led to the settlement of the Second State
Action the morning of the hearing, June 26, 1996. The Company entered into two
settlement agreements. The first settlement agreement was by and among the
Company, John H. Morgan, Jr., Daisy R. Morgan, IMCC, John Fife, Robinson &
Sheen, L.L.C., R. Dee Erickson, Lyle D. Hurd, and E. Jay Sheen (the "Morgan
Settlement Agreement"), whereby certain disputes among the parties were
resolved and settled and the parties agreed to use their best efforts to
terminate the 1993 Settlement Agreement. The second settlement agreement was
by and among the Company, R. Dee Erickson, E. Jay Sheen, Lyle D. Hurd, Mark G.
Jones, Mark Technologies Corporation, Anne Morgan, Victoria Morgan, IMCC, John
Fife and Robinson & Sheen, L.L.C. (the "1996 Settlement Agreement"), wherein
the parties, among other things, agreed to terms regarding IMCC's purchase of
50.5% of the Company's outstanding stock, agreed to dismiss the First Federal
Action, the Order to Show Cause and the Second State Action, and agreed to use
their best efforts to terminate the 1993 Settlement Agreement. For a more
detailed description of the litigation and the settlement of the litigation,
see the Section entitled "MATERIAL PROCEEDINGS AND TRANSACTIONS." Pursuant to
the 1996 Settlement Agreement, the terms of the Stock Purchase Agreement by and
between the Company and IMCC were to include, among other things, the following
provisions: (1) IMCC would purchase a 50.5% interest in the Company at a
purchase price of $3.35 per share; (2) IMCC would pay 15% of the purchase price
at closing with the balance due pursuant to a five year promissory note,
secured by a pledge of the Company's stock purchased by IMCC and a personal
guaranty by John Fife of 25% of the remaining balance due under the note; (3)
the Company would conduct a 1,000 to 1 reverse stock split at $3.35 per share
with fractional shareholders being given the option to purchase additional
shares at $3.35 per share to round up to the next whole share, IMCC intends to
exercise the round-up option; (4) that any shares redeemed by the Company
pursuant to the reverse stock split would be made available for purchase by the
remaining shareholders, other than IMCC. Mark G. Jones has communicated to the
Company that Mark Technologies Corporation intends to exercise its right to
purchase as many additional shares pursuant to this pool as possible; (5) IMCC
would have a ten year option to purchase 150,000 or more additional shares of
stock to maintain its 50.5% interest in the Company; (6) that E. Jay Sheen and
R. Dee Erickson would resign as directors of the Company immediately; (7) that
Mark G. Jones would be guaranteed a postion as director of the Company for a
period of one year from the closing of the IMCC stock purchase; (8) that the
Company and John Fife would enter into an employment agreement which would pay
to Mr. Fife compensation not to exceed $200,000 per year; and (9) any
distributions and other payments otherwise payable to IMCC on its Company stock
would be applied to reduce the outstanding principal balance of the IMCC note.
For a more detailed description of the terms of the Stock Purchase Agreement,
see the Section entitled "SPECIAL FACTORS/IMCC Transaction and Settlement
Agreements." On July 3, 1996, the Company and IMCC entered into the Stock
Purchase Agreement.
On July 19, 1996, the notice of hearing on proposed settlement of the
Second State Action, the First State Action and the First Federal Action and
the notice of hearing on petition to terminate the 1993 Settlement Agreement
was mailed to all the Company's shareholders of record as of June 24, 1996. For
a more detailed description of the notice procedure for the settlement of the
actions and subsequent objections see the Section entitled, "MATERIAL
PROCEEDINGS AND TRANSACTIONS." The court in Second State Action having
reviewed and considered the 1996 Settlement Agreement, the Stock Purchase
Agreement and the 1993 Settlement Agreement, written memoranda submitted by
various parties and other comments and objections and ordered that: (1) the
notice given pursuant to Rule 23.1 of the applicable rules of civil procedure
for the State of Utah was adequate, fair and proper; (2) the procedural and
substantive objections of Jenny T. Morgan (a director and shareholder of the
Company), Gerard E. Morgan, John C. Morgan and Karen J. Morgan be overruled;
(3) the 1996 Settlement Agreement was fair, adequate and reasonable; (4) the
Petition to Terminate the 1993 Settlement Agreement was fair, adequate and
reasonable; and (5) the 1996 Settlement Agreement and Petition to Terminate
the 1993 Settlement Agreement was approved.
The Majority of the Board of Directors recommends voting in favor of the
Reverse Split. In addition to the contractual requirement that a reverse stock
split occur as required by the Transaction Agreements, the Company's senior
management and its Board of Directors have assessed the advantages and
disadvantages of the Company's status as a "reporting company" under the
Exchange Act. First, it is the belief of the Board of Directors that such
reporting is very costly. Furthermore, a majority of the Board of Directors
does not believe that being a "reporting company" has given the Company any
significant advantage the Company would not have had as a "non-SEC reporting
company." The Company's registration with the SEC has not improved flexibility
for current or future financing of corporate expansion through the building of
a broader equity base, nor has it made the valuation of shares of the Common
Stock significantly easier (since no active market exists for the sale of stock
which is reflective of the Company's operations and earnings potential).
Finally, such registration has not resulted in the development of an active
public market for the Common Stock and thus has not provided substantially
increased liquidity for shareholders who desire to sell their Common Stock.
Even if the market provided liquidity for the shareholders' shares, the $3.35
per share purchase price is far above the fourth quarter 1996 market trading
price of $.875. Of the approximate 558 shareholders, approximately 479
shareholders of record own fewer than 1,000 shares. These same shareholders
have received only a $.10 dividend over the entire history of the Company.
The Board also considered the disadvantages and risks to the Company
and its shareholders associated with the Company being a non-SEC reporting
company. By ceasing to be a reporting company, the Company loses the potential
flexibility for current or future financing of corporate expansion through the
building of a more broad equity base through publicly offered sales of
securities. Deregistration eliminates the Company's obligation to provide
detailed information to the Company's shareholders concerning the Company's
principal shareholders, directors and executive officers, compensation paid the
Company's executives, audited financial statements and certain relationships in
related transactions between the Company's insiders and the Company, which
under certain circumstances could better enable the Company's shareholders to
assess the financial operations and policies of the Company. There may be a
loss of prestige that being a reporting company provides. By ceasing to be a
reporting company the Company incurs the potential loss of ease of valuation of
stock where there is active trading of such shares on an established securities
exchange (shareholders should note, however, that there has been no such active
trading with the Company's Common Stock). There may be decreased liquidity due
to the fact that there is a less public market for the Company's Common Stock.
For a more detailed description of the disadvantages of the proposed Reverse
Split, see the Section entitled "SPECIAL FACTORS/Conduct of the Company's
Business After the Proposed Reverse Split."
The Company is not likely to make use of any advantage (for example, being
in a better position to sell securities through a public offering) that the
Company's status as a reporting company may offer. Over the past ten years,
the Company's shareholders have received only $.10 in dividends. Furthermore,
the Company's stock is thinly traded. The Reverse Split and round up option
provide the Company's shareholders with the option to either (1) exit the
Company and receive fair value for their shares; or (2) continue their
ownership in the Company with the hope of a return on their investment in the
future. In addition, the Company incurs significant direct and indirect costs
associated with compliance with SEC filing and reporting requirements imposed
on reporting companies. Although it is not possible to place an annual
economic cost on the potential liability of the Company and its insiders for
inadvertent violations of certain provisions of the Exchange Act, these burdens
are substantial, given current civil and criminal liability for violations of
SEC Regulations. A majority of the Board of Directors believes that, for the
reasons set forth above, elimination of these direct and indirect costs and
other burdens are justified and in the best interests of the Company. For a
more detailed description of alternatives to the Reverse Split, see the
Sections entitled "SPECIAL FACTORS/ Recommendation of the Board of Directors."
On the basis that: (i) the Company is contractually required to cause a
reverse stock split to occur pursuant to the terms of the Transaction Agreements
(ii) the belief of a majority of the Board of Directors that the cost of
being a "reporting company" is
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<PAGE> 23
not economically justified as the Company's Common Stock is thinly traded; and
(iii) the Company does not presently anticipate raising capital through a
public offering. The Board of Directors is presenting this transaction for a
vote of the shareholders. A company with assets of over $10 million becomes a
"reporting company" when its shareholders number 500 or more. To thereafter be
allowed to become a "non-SEC reporting company" and cease reporting to the SEC,
the number of shareholders must decline to less than 300. The proposed
transaction is designed to result in the reduction of the number of the
Company's shareholders to less than 300, so that the Company will no longer be
required to be a reporting company. A majority of the Board of Directors voted
in favor of the Reverse Split, and believes that the $3.35 per share price to
be paid to participating shareholders is fair to both the recipients of cash
and the remaining shareholders who will receive shares of New Stock or exercise
the Round Up Option. The Board has thus determined that the Reverse Split is
the most expeditious method of changing the Company's status from that of a
reporting company to that of a non-SEC reporting company. See "SPECIAL
FACTORS/Recommendation of the Board of Directors" and "Conduct of Company's
Business After the Proposed Reverse Split."
RECOMMENDATION OF THE BOARD OF DIRECTORS
After careful consideration of the Transaction Agreements and the
background of the Company's reporting status and the advantages and
disadvantages of deregistration and the terms of the Reverse Split, a majority
of the Board of Directors believes that the Reverse Split, is fair to, and in
the best interests of, the shareholders of the Company who will receive the Cash
Consideration as well as those who will receive shares of New Stock or exercise
the Round Up Option. A majority of the Board of Directors recommends that the
shareholders vote FOR approval and adoption of the Reverse Split as embodied in
the Amendment. A majority of the Board of Directors and each executive officer
of the Company who owns shares of Common Stock has advised the Company that he
or she intends to vote his or her shares in favor of the Reverse Split. The
only director who voted against the Reverse Split is Jenny Morgan. Mark G.
Jones abstained from voting. Ms. Morgan believes it would best serve the
Company and its shareholders to retain the option to remain an SEC-reporting
company in order to have the viable option to raise capital through sales
of equity securities in a future public offering. Ms. Morgan is also of the
opinion that remaining as an SEC reporting company better enables its
shareholders to have a voice in the management of the Company.
In reaching their determination that the Reverse Split is fair to, and
in the best interests of, the shareholders and in reaching the recommendation
that the shareholders vote for approval and adoption of the Reverse Split, the
Board of Directors considered the following:
(i) the contractual obligations of the Company set forth in the
Transaction Agreements which require that the Company execute
a 1,000 to 1 reverse stock split at a purchase price of $3.35
per share. The court in the Second State Action reviewed and
considered the 1996 Settlement Agreement, the Stock Purchase
Agreement and the 1993 Settlement Agreement, written memoranda
submitted by various parties and other comments and objections and
ordered that: (1) the notice given pursuant to Rule 23.1 of the
applicable rules of civil procedure for the State of Utah was
adequate, fair and proper; (2) the procedural and substantive
objections of Jenny T. Morgan (a director and shareholder of the
Company), Gerard E. Morgan, John C. Morgan and Karen J. Morgan
be overruled; (3) the 1996 Settlement Agreement was fair,
adequate and reasonable; (4) the Petition to Terminate the
1993 Settlement Agreement was fair, adequate and reasonable; and
(5) the 1996 Settlement Agreement and Petition to Terminate the
1993 Settlement Agreement was approved;
(ii) the purchase price of $3.35 per share paid by IMCC with
respect to its acquisition of a 50.5% interest in the Company
on July 3, 1996 which $3.35 per share purchase price was offered
by IMCC in its Letter of Intent to the Company, and accepted by the
Board of Directors through arms-length negotiations. For a more
detailed description of the history of the $3.35 purchase price
and its approval see the Section entitled "SPECIAL FACTORS/Reasons
for the Proposed Reverse Split;"
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<PAGE> 24
(iii) the purchase price of $3.35 per share paid by the Company in
the redemption of Anne Morgan and Victoria Morgan's shares,
pursuant to the 1996 Settlement Agreement on July 3, 1996,
which $3.35 per share purchase price was offered by the
Company in the 1996 Settlement Agreement and accepted by the
parties thereto through arms-length negotiations. The court
in the Second State Action reviewed and considered the
1996 Settlement Agreement, the Stock Purchase Agreement and the
1993 Settlement Agreement, written memoranda submitted by
various parties and other comments and objections and
ordered that: (1) the notice given pursuant to Rule 23.1 of
the applicable rules of civil procedure for the State of
Utah was adequate, fair and proper; (2) the procedural
and substantive objections of Jenny T. Morgan (a director
and shareholder of the Company), Gerard E. Morgan, John C.
Morgan and Karen J. Morgan be overruled; (3) the 1996
Settlement Agreement was fair, adequate and reasonable; (4)
the Petition to Terminate the 1993 Settlement Agreement was
fair, adequate and reasonable; and (5) the 1996 Settlement
Agreement and Petition to Terminate the 1993 Settlement
Agreement was approved.
(iv) each of the directors' knowledge of and familiarity with the
Company's business prospects, financial condition and current
business strategy;
(v) the information with respect to the financial condition,
results of operations, assets, liabilities, business and
prospects of the Company and current real estate industry
economic and market conditions;
(vi) the opportunity presented by the Reverse Split for Small-Lot
Shareholders to liquidate their holdings at a price
substantially above market trades and without incurring
brokerage costs, particularly given the absence of an active
market for the Common Stock reflective of the Company's
operations and earnings potential;
(vii) the opportunity for Small-Lot Shareholders who wished to
continue to be shareholders of the Company to elect to
exercise the Round Up Option at a purchase price of $3.35 per
share, which offer was also made available to fractional
shareholders; and
(viii) the future cost savings that will inure to the benefit of the
Company and its continuing shareholders as a result of the
Company deregistering its stock under the Exchange Act.
Furthermore, the Board of Directors considered the Company's business,
its current business strategy and prospects and current real estate industry
economic and market conditions. The Board of Directors has discussed the
saturation of the St. George, Utah real estate market. The time required to
develop and sell the Company's real estate assets and turn a non-liquid asset
into a liquid one could be substantial. There have been limited opportunities
for the Company shareholders to receive dividends or fair value for their
shares on the market. The Reverse Split provides the Company's minority
shareholders (both affiliated and non-affiliated) with the option to either (a)
liquidate their fractional shares at a price substantially above the market
trade and without incurring brokerage costs, or (b) continue as shareholders of
the Company by electing to exercise the round-up option at a purchase price of
$3.35 per share. A majority of the Board believes that the financial terms of
the Reverse Split are fair both to shareholders who will receive shares of New
Stock and to shareholders who will receive the Cash Consideration because: (i)
the price to be paid to certain shareholders who will receive the Cash
Consideration is fair, and (ii) the Company will realize cost-savings in its
cessation as a reporting company under the Exchange Act. (See "SPECIAL
FACTORS/Reasons for the Proposed Reverse Split.")
The Company is contractually required to carry out the Reverse Split at
$3.35 per share. The 1996 Settlement Agreement which required the Reverse
Split was reviewed by the court in the Second State Action. For a more detailed
description of the history of the Reverse Split, see the Section entitled
"SPECIAL FACTORS/Reasons for the Proposed Reverse Split." Therefore, the
Company has not engaged in a formal valuation of the $3.35 purchase price in
conjunction with the Reverse Split. However, the $3.35 per share purchase
price exceeds the fourth quarter of 1996 market trading price of $.875 per
share. In fact the $3.35 per share purchase price is higher than any price at
which the stock was traded over the past three years, except for a $4.00 market
trading price in the first quarter of 1995. Subsequent to final court approval
of the Transaction Agreements, the Company did not consider the Company's net
book value, going concern value or liquidation value for the reasons stated
above. IMCC acquired 50.5% of the Company's Common Stock at $3.35 per share, on
July 3, 1996, which is equal to the purchase price being offered in the Reverse
Split. Furthermore, the Company, pursuant to the 1996 Settlement Agreement,
purchased Anne and Victoria Morgan's shares at $3.35 per share on July 3, 1996,
which purchase price is equal to the one being offered in the Reverse Split.
The Company did not consider any proposals, reports or opinions. The Reverse
Split requires the approval of a majority of the Common Stock of the Company.
IMCC holds 50.5% of the Company's common stock and it has indicated that it
intends to vote in favor of the Reverse Split. Directors Mark G. Jones and
Jenny Morgan have requested that the Company undertake to hire independent
experts to evaluate the fairness of the transaction, and separate legal counsel
to represent the unaffiliated shareholders. The majority of the Board of
Directors has determined not to do this. The directors have not retained an
unaffiliated representative to act solely on behalf of unaffiliated security
holders for the purpose of negotiating the Reverse Split and preparing a report
concerning the fairness of such a transaction. Non-employee directors David
Fife and Lyle Hurd voted in favor of the Reverse Split. Non-employee Director
Jenny Morgan voted against the Reverse Split and non-employee Director Mark G.
Jones abstained from such vote.
A majority of the Board determined that the terms of the Reverse Split
are procedurally and substantively fair to shareholders because: (i) the
transaction has been structured as a result of arms-length negotiations as
embodied in the Transaction Agreements, (ii) the court in the Second State
Action reviewed and considered the 1996 Settlement Agreement, the Stock
Purchase Agreement and the 1993 Settlement Agreement, written memoranda
submitted by various parties and other comments and objections and ordered
that: (1) the notice given pursuant to Rule 23.1 of the applicable rules of
civil procedure for the State of Utah was adequate, fair and proper; (2) the
procedural and substantive objections of Jenny T. Morgan (a director and
shareholder of the Company), Gerard E. Morgan, John C. Morgan and Karen J.
Morgan be overruled; (3) the 1996 Settlement Agreement was fair, adequate and
reasonable; (4) the Petition to Terminate the 1993 Settlement Agreement was
fair, adequate and reasonable; and (5) the 1996 Settlement Agreement and
Petition to Terminate the 1993 Settlement Agreement was approved, and (iii) the
requirement that the holders of at least a majority of the shares entitled to
vote on the Reverse Split must approve the transaction. IMCC a majority
shareholder of the Company has indicated to the Board that it intends to
approve the transaction. The transaction is also structured so that each of
the Small-Lot Shareholders may elect to remain a shareholder by purchasing from
the Company the additional shares of Common Stock necessary to increase the
shareholder's holdings to the equivalent of 1,000 shares of Common Stock such
that any Small-Lot Shareholder would not be "cashed out" as a result of the
Reverse Split. Furthermore, by Board resolution, the Company has granted
Small-Lot Shareholders and fractional shareholders the right to exercise
dissenters rights as set forth in Part 13 of the Utah Business Act for said
fractional shares.
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<PAGE> 25
In view of the circumstances and the wide variety of factors
considered in connection with its evaluation of the fairness of the Reverse
Split, the Board did not find it practicable to assign relative weights to the
factors considered in reaching its determination that the Reverse Split was
fair to, and in the best interests of, the shareholders. The Company's Board
of Directors considered and voted upon the Reverse Split as a group. No
special committees were formed. The Reverse Split has been approved by a
majority vote of the Company's Board of Directors. Jenny Morgan did not vote
in favor of the Reverse Split. Mark G. Jones abstained from voting on the
Reverse Split. For a description of insider ownership following the Reverse
Split, see the table on page 40 of the Proxy Statement.
INTERESTS OF CERTAIN PERSONS AND POTENTIAL CONFLICTS OF INTEREST
In considering the recommendation of the Board of Directors with
respect to the Reverse Split, shareholders should be aware that the Company's
directors and executive officers have interests which may present them with
conflicts of interest in connection with the Reverse Split. Specifically, a
majority of the directors and executive officers of the Company own Common
Stock and, after the Reverse Split, all will exchange such shares for shares of
New Stock if the Reverse Split is approved by the shareholders. In addition,
the equity percentage ownership of all shareholders remaining after the Reverse
Split will most likely be increased. Thus, directors and executive officers,
in addition to all other shareholders who remain shareholders after the Reverse
Split, may realize an increase in their relative equity ownership of the
Company. (See "VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF").
Furthermore, these remaining shareholders, except for IMCC, shall have the
opportunity to increase their shareholdings by participating in the Returned
Shares Option. (See "PROPOSED REVERSE SPLIT/Summary of Proposed Reverse Split
and Purchase of Returned Shares"). Finally IMCC possesses a ten year option
which enables it to maintain its 50.5% ownership interest in the Company
following the Reverse Split. (See "SPECIAL FACTORS/IMCC Transaction and
Settlement Agreements"). Other than the stock ownership the directors and
executives officers have in the Company, there are no special relationships or
transactions between the Company and any of its officers or directors with
respect to the Reverse Split. For a description of insider ownership following
the Reverse Split, see the table on page 40.
CONDUCT OF THE COMPANY'S BUSINESS AFTER THE PROPOSED REVERSE SPLIT
After the Reverse Split, the Company expects to conduct its business
and operations in the same manner as is currently being conducted by the
Company. If the Reverse Split is consummated, Small-Lot Shareholders who do
not exercise the Round Up Option will no longer have any interest in, and will
not be shareholders of the Company.
As a result of the Reverse Split, the Company is expected to become a
non-SEC reporting company. In that case, the registration of New Stock under
the Exchange Act will then be terminated. In addition, because the New Stock
would not be registered, the Company would be relieved of the obligation to
comply with the proxy rules of Regulation 14A under Section 14 of the Exchange
Act, and its executive officers, directors and shareholders owning more than
10% of New Stock would be relieved of the reporting requirements and "short
swing" trading restrictions under Section 16 of the Exchange Act. Short swing
profits are profits made by an insider through a prohibited sale or other
disposition of corporate stock within six months after purchase. Furthermore,
the Company would no longer be subject to the periodic reporting requirements
of the Exchange Act and would cease filing
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<PAGE> 26
information with the SEC. Among other things, the effect of this change would
be a direct and indirect cost savings to the Company in not having to comply
with the requirements of the Exchange Act. However, this change would also
mean that less information would be publicly available concerning the Company
and its executive officers, directors and five percent (5%) or more
shareholders.
If the Reverse Split is effected (and no Small-Lot Shareholders and no
fractional shareholders Round Up) and no remaining shareholders purchase
Returned Shares, the executive officers and directors of the Company will
beneficially own approximately 66% of the Company's outstanding New Stock. As
of ____________, __, 1997, such individuals beneficially owned approximately
64%. See "VOTING REQUIREMENTS AND PRINCIPAL HOLDERS THEREOF/Security
Ownership of Management."
PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED
The Company has employed Beky LeVanger as an employee of the Company for
the sole purpose of providing basic clerical and ministerial services
associated with Proxy and Rule 13e-3 transactions. Ms. LeVanger's compensation
will be $30 per hour and will have no correlation to either the size, volume
or success of the transaction. In addition, Ms. LeVanger will not maintain
control of shareholder funds or securities during any stage of the transaction.
Her activities will be limited to distributing the Proxy and 13e-3 transaction
materials, as well as monitoring the Reverse Split and the resultant
distribution of payments and stock certificates to shareholders. Ms.
Levanger's engagement will continue only for such period of time as is
necessary to fulfill her specific clerical and ministerial duties associated
with the transaction.
FINANCING THE PROPOSED REVERSE SPLIT
The Company has incurred or estimates the incurrence of the following
expenses in connection with the Reverse Split:
Filing fees $ 500
Accounting fees 15,000
Legal fees
Solicitation and
printing fees [400]
Miscellaneous and
administrative expenses 20,000
Total estimated fees
and expenses $_______
The Company has paid/or will be responsible for paying all of these
expenses with its working capital.
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<PAGE> 27
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of December 31, 1996, the following shareholders were the only
beneficial owners, known to management of the Company, of more than five
percent (5%) of the Company's outstanding Common Stock:
- -----------------------------------------------------------------------------
UTAH RESOURCES INTERNATIONAL, INC.
5% OR GREATER BENEFICIAL OWNERS
AS OF DECEMBER 31, 1996
- -----------------------------------------------------------------------------
NUMBER OF SHARES AND
NAME AND ADDRESS OF NATURE OF PERCENT OF COMPANY
BENEFICIAL OWNER BENEFICIAL OWNER SHARES OUTSTANDING
- -----------------------------------------------------------------------------
Inter-Mountain Capital 1,275,912 50.5%
Corporation(1)
Mark Technologies 326,310 13%
Corporation(2)
=============================================================================
(1) John Fife, Director, President, CEO and Chairman of the Board of the
Company, is the sole shareholder of Inter-Mountain Capital
Corporation.
(2) Mark G. Jones, Director of the Company, holds 100 shares individually
and an additional 326,210 in his capacity as the controlling
shareholder of Mark Technologies Corporation.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of December 31, 1996, the shares of
Common Stock beneficially owned by (i) each director of the Company, (ii) the
Company's Chief Executive Officers and the Company's other executive officer
and executive officers as a group. This information is based on public filings
made with the Securities and Exchange Commission through December 31, 1996 and
certain information supplied to the Company by the persons listed below. The
persons named below have sole voting and investment power with respect to all
shares owned, unless otherwise noted.
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<PAGE> 28
UTAH RESOURCES INTERNATIONAL, INC.
COMMON STOCK OWNERSHIP BY DIRECTORS AND NAMED EXECUTIVE OFFICERS
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
============================================================================================================
BEFORE STOCK SPLIT AFTER STOCK SPLIT*
- ------------------------------------------------------------------------------------------------------------
PERCENT OF PERCENT OF
NUMBER OF OUTSTANDING NUMBER OF OUTSTANDING
NAME OF BENEFICIAL POSITION SHARES SHARES SHARES SHARES
OWNER
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David Fife Director 0 0% 0 0%
- ------------------------------------------------------------------------------------------------------------
John Fife, as the sole Director, 1,275,912(1) 50.5% 1276** 52%
shareholder of IMCC Chief
Executive
Officer,
President and
Chairman of
the Board
- ------------------------------------------------------------------------------------------------------------
Lyle Hurd Director 2,000(2) .08% 2(3) .08%
- ------------------------------------------------------------------------------------------------------------
Mark Jones Director 326,210 13% 327**(3) 13%
- ------------------------------------------------------------------------------------------------------------
Jenny Morgan Director 9,523 .38% 10**(3) .41%
- ------------------------------------------------------------------------------------------------------------
Gerry Brown Vice President 2,000(2) .08% 2(3) .08%
- ------------------------------------------------------------------------------------------------------------
Ladd Worth Eldredge CFO, 0 0% 0 0%
Secretary
(and Treasurer)
- ------------------------------------------------------------------------------------------------------------
DIRECTORS AND Directors & 1,613,645 64% 1,617 66%
OFFICERS AS A Officers
GROUP (7 persons)
- ------------------------------------------------------------------------------------------------------------
SEE FOLLOWING PAGE FOR NOTES
- ------------------------------------------------------------------------------------------------------------
* Assumes No Small-Lot Shareholder exercises the Round Up Option, and no
remaining shareholder elects to purchase the Returned Shares.
** Assumes that Round Up Option is exercised by fractional shareholder.
(1) IMCC also holds a ten year option to purchase 150,000 or more additional
shares of stock, so as to maintain its 50.5% interest in the Company
(2) Lyle Hurd and Gerry Brown each contend that he was granted an option for
25,000 shares pursuant to the Share Exchange Agreement. There is a dispute as
to whether the option was granted. This issue will be resolved following an
investigation in the coming year.
(3) In the event the proposed reverse split is effected, each of these
individuals will be granted an option to purchase additional shares of the
Company's stock pursuant to the terms of the Returned Shares Option. For a
more detailed description of the Returned Shares Option, See "PROPOSED REVERSE
SPLIT/Summary of Proposed Reverse Split and Purchase of Returned Shares."
============================================================================================================
</TABLE>
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<PAGE> 29
FINANCIAL MATTERS
ACCOUNTING TREATMENT
In connection with the Reverse Split, the payment of cash to Small-Lot
Shareholders (and holders of fractional shares of New Stock receiving cash in
lieu of fractional shares) will be treated as a repurchase of outstanding stock
of the Company. The repurchased stock will be recorded as treasury stock which
will result in a reduction of stockholders' equity. In addition, the Amendment
will result in the par value per share of the Company's common stock increasing
from $.10 to $100.00 and a reduction in the number of authorized shares of such
stock from 5,000,000 to 5,000.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based
on the Internal Revenue Code of 1986, as amended (the "Code"), the applicable
treasury regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. The federal income tax consequences to any particular shareholder
may be affected by matters not discussed below. There also may be state, local
or foreign tax considerations applicable to each shareholder.
THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH SHAREHOLDER IS URGED TO CONSULT HIS OWN TAX ADVISOR AS TO THE
MATTERS DISCUSSED HEREIN AND ANY ADDITIONAL FEDERAL AND ALL STATE, LOCAL OR
FOREIGN TAX CONSEQUENCES THAT COULD RESULT FROM THE SUBJECT TRANSACTION.
(i) The Reverse Split will constitute a reorganization within the
meaning of Section 368(a)(1)(E) of the Code and the Company
will not recognize gain or loss as a result of the Reverse
Split.
(ii) A shareholder who receives cash in lieu of fractional shares
of Common Stock will be treated as if the Company had issued
fractional shares to him and then immediately redeemed such
shares for cash. Such shareholder should recognize gain or
loss, as the case may be, measured by the difference between
the amount of cash received and the adjusted basis of his
stock allocable to such redeemed shares. Such gain or loss
will generally be capital gain or loss if such shareholder's
stock was held as a capital asset, and any such capital gain
or loss will generally be long-term capital gain or loss to
the extent such shareholder's holding period for his stock
exceeds twelve months.
(iii) A shareholder who owns more than 1,000 shares in the aggregate
immediately before the Reverse Split will not recognize a gain
or loss in respect of the exchange of shares of Common Stock
for shares of New Stock. In the aggregate, the shareholder's
basis in the shares of New Stock will equal the holder's
adjusted
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<PAGE> 30
basis in the shares of Common Stock, less the portion of the
adjusted basis attributable to any fractional shares for which
the shareholder received cash from the Company.
(iv) Any shareholder who purchases fractional shares of Common
Stock pursuant to the Round Up Option will not recognize a
gain or loss on the acquisition of such shares. The amount
paid for such shares will be the holder's initial cost basis
in the fractional shares purchased.
Notwithstanding the foregoing, the federal tax laws significantly
limit the deductibility of capital losses. For corporate taxpayers, capital
losses can be deducted only to the extent of capital gains. For individual
taxpayers, capital losses are similarly deductible up to the extent of the
capital gains, but may further be deductible up to a maximum of $3,000 in any
one taxable year. Carryovers and carrybacks of unused capital losses to other
taxable years may be permitted in certain limited circumstances. Additionally,
the ultimate tax consequences to a shareholder may be effected by the
provisions regarding taxes resulting from alternative minimum taxable income.
FINANCIAL STATEMENTS
See Pages F-1 to F-17 for the Company's audited consolidated balance
sheets as of December 31, 1995, and related consolidated statements of
operations, stockholders' equity, and cash flows for each of the years in the
two year period ended December 31, 1996.
See Pages Q-1 to Q-7 for the Company's unaudited consolidated balance
sheets as of December 31, 1996 and comparative year-to-date statements of
operations, stockholders' equity, and cash flows for the twelve months ended
December 31, 1996.
See Page S-1 for the Company's book value per share as of December 31,
1995 and September 30, 1996.
ELECTION OF DIRECTORS
ELECTION OF BOARD OF DIRECTORS
A Board of five (5) directors are to be elected at the Annual Meeting
to serve until the next annual meeting, or until their successors are elected
and shall have qualified. All of such directors shall be elected by the
holders of Common Stock. The Company recommends voting for the election of
each of the nominees for director listed below. The persons named as proxy
holders in the accompanying Proxy intend to vote each properly signed and
submitted Proxy for the election as a director of each of the persons named as
a nominee below under "Nominees for Director" unless authority to vote in the
election of directors is withheld on such proxy. If, for any reason, at the
time of the election, one or more of such nominees should be unable to
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<PAGE> 31
serve, the proxy will be voted for a substitute nominee or nominees selected by
the Board of Directors. Directors are elected by a plurality of votes cast at
the Annual Meeting.
Unless otherwise specified, all properly executed proxies received by
the Company will be voted for the election of Messrs. John Fife, David Fife,
Lyle Hurd, Mark G. Jones, and Stuart B. Peterson to hold office until the next
annual meeting of shareholders or until each of their respective successors is
elected and qualified.
THE COMPANY RECOMMENDS VOTING "FOR" THE NOMINEES.
CURRENT DIRECTORS AND NOMINEES FOR DIRECTOR
The following tables set forth the name, age and occupation of each
director currently holding office and the proposed nominees for director to
hold office until the next annual meeting of shareholders, his/her principal
position with the Company and the year he/she became a director of the Company.
-28-
<PAGE> 32
CURRENT DIRECTORS
NAME, AGE AND PRINCIPAL OCCUPATION DIRECTOR SINCE
John Fife, 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . July, 1996
Mr. Fife was appointed as director of the Company effective July 13, 1996
by the Muth Group pursuant to the 1993 Settlement Agreement. Mr. Fife was
appointed President and Chief Executive Officer of the Company in July,
1996. He was named Chairman of the Board of the Company on October 10,
1996. He is an investor and venture capitalist and has pursued this course
since July 10, 1990. Mr. Fife has been the President and sole shareholder
of J.F. Venture, Inc. since 1993 and IMCC since 1996, both of which are
investment companies. IMCC acquired a 50.5% (majority interest) in the
Company on July 3, 1996. For a more detailed description of IMCC's
acquisition of a majority interest in the Company, see "SPECIAL
FACTORS/Background of the Proposed Reverse Split." He has also served as
President of Property Tax Assessor Records Corp., a Chicago-based real
estate tax consulting company since 1993. Mr. Fife has also served as
director of Hyatt Research Corporation, a magazine publisher in Middlebury,
Vermont since 1995 and as a Manager of Trans-Wasatch Company, L.L.C. from
1993 to 1996, which was a land development company in Park City, Utah. From
1990 through 1992, Mr. Fife held the position of Assistant Vice President
of Continental Equity Capital Corp. ("CECC"), a subsidiary of Continental
Bank. At CECC, he negotiated, structured and financed LBO's and later
stage venture capital investments in the Mortgage Banking, Retail, Cable
and Cellular Telephone industries. In 1989, Mr. Fife worked as a financial
analyst in the commercial real estate department of Trammell Crow Company.
Mr. Fife earned his M.B.A. degree from Harvard University in 1990 and his
B.S. in statistics and computer science from Brigham Young University in
1986. John Fife and David Fife are brothers.
David Fife, 34 . . . . . . . . . . . . . . . . . . . . . . . . . . July, 1996
David Fife was appointed a director of the Company on July 3,
1996 by the Muth group pursuant to the terms of the 1993 Settlement
Agreement. Mr. Fife has served as the President and sole beneficial owner
of Home Equity Lending L.L.C. a mortgage origination and finance company
located in Salt Lake City, Utah from 1996 to the present. From 1990 to
1993, Mr. Fife was the President of Property Tax Assessor Records Corp.
from 1993 to 1995, Mr. Fife provided consulting services for Property Tax
Assessor Records Corp. From 1993 to 1995, Mr. Fife provided consulting
services for Property Tax Assessor Records Corp., a Chicago based real
estate tax consulting company. David Fife and John Fife are brothers.
Lyle Hurd, 60 . . . . . . . . . . . . . . . . . . . . . . . . . . . May, 1993
Mr. Hurd is a director of the Company and has performed services as
Marketing/Consultant Assistant to the President. He is President of Hurd
Owens Hafen, Inc., a publisher of magazines and periodicals located in St.
George, Utah, since December of 1990. Hurd Owens Hafen Inc. is the
publisher of the St. George Magazine and various other magazines and
periodicals. For approximately 16 years prior to December, 1990, Mr. Hurd
provided marketing consulting services to magazine publishers through Hurd
& Associates, Inc., a privately owned consulting firm. Mr. Hurd was
appointed as an independent director of the Company in May, 1993, pursuant
to the terms of the 1993 Settlement Agreement.
-29-
<PAGE> 33
Mark G. Jones, 43 . . . . . . . . . . . . . . . . . . . . . . . .January, 1996
Mr. Jones is a director of the Company and was designated as such in
January, 1996 by the Morgan Group pursuant to the 1993 Settlement
Agreement. The Company is obligated to retain Mr. Jones as a director of
the Company through July 3, 1997 pursuant to the terms of the 1996
Settlement Agreement. Mr. Jones is President of Mark Technologies
Corporation in San Francisco, California, a real estate and alternative
energy development firm and has held that position for 16 years.
Jenny Tate Morgan, 41 . . . . . . . . . . . . . . . . . . . . . .January, 1996
Ms. Morgan was appointed as a director of the Company, effective January,
1996, by John H. Morgan, Jr., her relative, pursuant to the terms of the
1993 Settlement Agreement. From 1992 to the present, Ms. Morgan, through JT
Morgan Financial Consulting Services, has provided financial consulting
services to clients in the areas of investments, liquidity management,
financial strategy, tactical asset allocation, plan design, re-engineering
an entire retirement plan structure, analysis of securities portfolio,
strategic analysis and workouts. From 1993 to 1996, she served as Vice
President/Institutional Trust Services for First Interstate Bank of
California. Before that, Ms. Morgan worked for one year as a Financial
Services/Account Executive for Citibank, F.S.B. From July, 1982 to April,
1992, Ms. Morgan was the Director of Sales and Marketing for Purcell
International, Inc. Ms. Morgan earned her M.B.A. from the University of
Southern California, Los Angeles in 1995, where her course-work included
providing consulting services to Munchkin Bottling Company, Inc. and
Reebok, International. Ms. Morgan earned her B.S. from the University of
Arizona, in 1978. Ms. Morgan is a licensed California Life and Disability
Agent and has published articles addressing 401(K) Plans in the Los Angeles
Business Journal. Ms. Morgan is not being submitted as a nominee for
director.
NOMINEES FOR DIRECTOR
John Fife
David Fife
Lyle Hurd
Mark G. Jones
Stuart B. Peterson
Stuart B. Peterson, 35 . . . . . . . . . . . . . . . . . . . . Not Applicable
Mr. Peterson has served as a director for C.R. England, Inc., a Two
Hundred Million Dollar, privately owned trucking company based in Salt Lake
City, where he sets the prices for customer contracts and is responsible
for the profitable execution of sales and operating activities from 1995
to the present. Mr. Peterson worked for Powder River, Inc. from 1993
through 1994, where he directed sales, marketing and distributions. Mr.
Peterson's background includes real estate investment banking experience
with Trammell Crow Company, where he participated in the securitization and
sales of extensive commercial real estate properties held by Trammell Crow
partnerships throughout the United States. After completing the sale of a
One Hundred Sixty Million Dollar commercial real estate portfolio, Mr.
Peterson supervised the properties, and issued the quarterly financial
reports to investors. Mr. Peterson has also performed the valuation and
marketing of a Four Million Dollar manufacturing company based in
California, cumulating in a leveraged acquisition in 1994.
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<PAGE> 34
Mr. Peterson received his M.B.A. degree from Harvard University in 1990 and
his A.B. in government from Harvard in 1986.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company does not have a standing audit, nominating or compensation
committee. During the Company's last fiscal year, the Board of Directors held
fourteen meetings. All directors attended at least 75% of the meetings of the
Board of Directors and the committees on which they served in fiscal 1996.
EXECUTIVE OFFICERS
NAME POSITION AGE
John Fife Chairman of the Board, 36
President and Director
Robert D. Wolff Former CEO 56
E. Jay Sheen Former Recorder of Minutes 42
and Former Director
R. Dee Erickson Former Chairman of the Board 53
and Former Director
Lyle Hurd Former Director of Marketing 60
and Former Director
Ladd Worth Eldredge CFO, Secretary and Treasurer 44
Gerry T. Brown Former President and current 56
Vice President
EXECUTIVE COMPENSATION
The following table summarizes the compensation for John Fife as the CEO of
the Company in 1996 and Robert D. Wolff as the CEO of the Company in 1995, E.
Jay Sheen, R. Dee Erickson, Lyle Hurd, Ladd Worth Eldredge and Gerry T. Brown.
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<PAGE> 35
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION AWARDS
------------------- ------
NAME AND SHARES
PRINCIPAL FISCAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------- ------ ------ ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
John Fife, CEO, 1996 $200,000(1) -- -- $ 1,200 (1a)
President, 1995 -- -- -- --
Chairman of the 1994 -- -- -- --
Board and
Director
Robert D. Wolff, June 1995 - $125,000(2a)$25,000(2b)/ --
quarter
Former CEO(2) April 1996 -- -- -- --
April 1996 1994 -- -- -- --
1994
E. Jay Sheen, 1996 -- -- 8,000 $230,065 (3)
Former Recorder 1995 $ 6,000 -- 8,000 $298,066 (4)(4a)
of Minutes 1994 $ 6,000 -- 9,000 $101,704 (5)
R. Dee Erickson, 1996 -- -- 8,000 --
Former 1995 $ 6,000 -- 8,000 $106,600 (6)(6a)
Chairman of the 1994 -- -- 9,000 $ 12,400 (7)
Board and
Former Director
Lyle Hurd, 1996 -- -- 8,000 $ 2,932 (8)
Former Director 1995 $ 30,000 -- 8,000 $ 24,615 (9)
of Marketing and 1994 -- -- 9,000 $ 18,340 (10)
Director
Ladd Worth 1996 $ 52,403 -- -- --
Eldredge, CFO, 1995 $ 34,583 -- -- --
Secretary and 1994 $ 12,550 $500 -- --
Treasurer
Gerry T. Brown, 1996 $ 70,720 -- 8,000 $ 4,321 (11)
Former President 1995 $ 70,000 -- 8,000 $ 8,237 (12)
and Vice 1994 $ 70,000 $1,000 9,000 $ 14,412 (13)
President
</TABLE>
(1) Pursuant to the terms of the Stock Purchase Agreement, the Company
and Mr. Fife agreed to enter into an employment agreement to provide for, among
other things, (i) the employment of Mr. Fife as President, Chief Executive
Officer, and Chairman of the Board of the Company, and (ii) compensation to
be paid to Mr. Fife of no more than $200,000 for any year during the employment
period. A proposed employment agreement was prepared by Mark G. Jones and
submitted to John Fife and the remaining members of the Board of Directors. At
this time no employment agreement has been entered into with Mr. Fife. The
Company's Board in a 3-2 vote, decided that the negotiation of the terms of the
John Fife
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<PAGE> 36
employment agreement would take place following the shareholders' vote on the
proposed reverse stock split. To date, John Fife has received no compensation
from the Company for his services as President
(1a) Mr. Fife received $1,200 in directors fees.
(2) Mr. Wolff served as the CEO of the Company during the term that the
Share Exchange Agreement was in place, July 1, 1995 through April 25, 1996.
(2a) Mr. Wolff actually received approximately $57,292 as his pro-rated
portion for 1995.
(2b) Mr. Wolff actually received approximately $45,833 as his pro-rated
portion for 1996.
(3) Mr. Sheen's law firm served as legal counsel to the Company for
which his law firm was paid $230,065 in 1996.
(4) Mr. Sheen, in addition to providing services as a recorder of the
minutes, served as a director of the Company, for which he received fees in the
amount of $2,600; and his law firms served as legal counsel for the Company, for
which his respective law firms were paid approximately $191,466. Mr. Sheen also
received 38,000 shares of the Company's stock and $104,000 for services
performed with respect to the Share Exchange Agreement.
(4a) The market value of the 38,000 shares of the Company's stock
received by Mr. Sheen in 1995 is not included in this column.
(5) Mr. Sheen received fees as director of the Company in the amount of
$2,400. Mr. Sheen's law firm also served as legal counsel for the Company for
which his law firm was paid approximately $99,304.
(6) Mr. Erickson received $2,600 in directors fees and 38,000 shares of
the Company's stock and $104,000 for services performed with respect to the
Share Exchange Agreement.
(6a) The market value of the 38,000 shares of the Company's stock
received by Mr. Sheen in 1995 is not included in this column.
(7) Mr. Erickson received $2,400 in directors fees and $10,000 for
consulting services rendered.
(8) Mr. Hurd received $2,200 in directors fees and $732 in insurance
reimbursements.
(9) In 1995, Mr. Hurd received $2,600 in directors fees, $13,750 in
consulting fees and an additional $8,265 was paid by the Company to St. George
Magazine for advertising. Mr. Hurd is an owner of Hurd Owens Hafen Inc., which
publishes St. George Magazine.
(10) In 1996, Mr. Hurd received $2,600 in directors fees, $12,500 in
consulting fees and $3,440 was paid to St. George Magazine for advertising. Mr.
Hurd is an owner of Hurd Owens Hafen, Inc., which publishes St. George Magazine.
(11) Mr. Brown received $5,321 in commissions from sales of real estate.
(12) Mr. Brown received $8,237 in commissions from sales of real
estate.
(13) Mr. Brown received $14,412 in commissions from sales of real
estate.
The following table shows the total number of options granted to each of
the named persons during 1996 (both as the number of shares of Common Stock
subject to such options and
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<PAGE> 37
as a percentage of all options granted to employees during 1996) and, for each
of these grants, the exercise price per share of Common Stock and option
expiration date.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/Sh) DATE
- ---- ------------ ------------ ------------ -----------
IMCC(1) 150,000 or (3) $3.35 2006
more (50.5%
interest)(2)
Robert D.
Wolff - - - -
R. Dee
Erickson 8,000(4) 16.7% $2.50 4/2004
Lyle Hurd 8,000(4) 16.7% $2.50 4/2004
Ladd Worth
Eldredge - - - -
Gerry Brown 8,000(4) 16.7% $2.50 4/2004
E. Jay Sheen 8,000(4) 16.7% $2.50 4/2004
- --------------
(1) John Fife, CEO of the Company is the sole shareholder of IMCC.
(2) For a more detailed description of the IMCC Option, see the Section
entitled "SPECIAL FACTORS, IMCC Transaction and Settlement Agreements."
(3) This option was not granted as a part of John Fife's employment.
(4) The option granted was made pursuant to the Company's 1994 Stock
Option Plan, described below. The plan was approved by the
shareholders in January 1995. None of these options were exercised
during 1995 or 1996. All of these presently exercisable options are
above the market price of the underlying Common Stock.
No SARs were outstanding in 1995 and 1996.
The Company has no long-term incentive compensation plans other than
the 1994 Stock Option Plan described herein. Gerry Brown, as the former
President of the Company, is a participant in the Company's 1994 Stock Option
Plan. Under the Plan, each of the six individuals were granted options for
25,000 shares of the Company's Common Stock, pursuant to the terms of a
Non-Qualified Stock Option Agreement between each person and the Company, dated
April 7, 1994. The option exercise price is $2.50 per share, the market price
of the stock
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<PAGE> 38
on the date of grant. Each of the granted options vested as follows: (a) 9,000
shares on the date of the Option Agreement; and (b) 8,000 shares on each of the
next two anniversary dates of the Agreement (April 7, 1995, and April 7, 1996).
URI and its subsidiary currently employ Gerry Brown on a full time
basis, to act as the Vice President of the Company where he provides real
estate planning, development and sales services for the Company. Tonaquint,
Inc., the Company's wholly-owned subsidiary, and various affiliated
partnerships, Mr. Brown is currently the President of Tonaquint, Inc., where he
assists in land use planning, negotiating sales and financing arrangements,
obtaining government approvals, arranging for construction contracts, and
supervising the performance of engineering services as have been required. The
Company executed and presented Mr. Brown with a three-year employment agreement
on June 28, 1995, which employment agreement remains unexecuted by Mr. Brown.
Mr. Brown received compensation from the Company during the years 1994, 1995
and 1996, as set forth on the Summary Compensation Table on page 35.
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<PAGE> 39
COMPENSATION OF DIRECTORS
Each director receives $200 per director's meeting. Also, directors
who travel out of town to attend the meetings are, upon Board approval,
reimbursed for their travel, lodging and meals. During 1993 through August 29,
1996, the directors served pursuant to the 1993 Settlement Agreement. The 1993
Settlement Agreement was terminated on August 29, 1996.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Pursuant to the Stock Purchase Agreement, the Company and John Fife
have agreed to enter into an employment agreement which would provide for,
among other things, (i) the employment of Mr. Fife as President, CEO, and
Chairman of the Board of the Company, and (ii) an annual compensation to be
paid to Mr. Fife of no more than $200,000 for any year during the employment
period. A proposed employment agreement was prepared by Mark G. Jones and was
submitted to John Fife and the remaining members of the Board of Directors.
At this time no employment agreement has been entered into with Mr. Fife. The
Company's Board, in a 3-2 vote, decided that the negotiation of the terms of
the John Fife employment agreement would take place following the shareholders'
vote on the proposed reverse stock split. To date, John Fife has received no
compensation from the Company for his services as President. URI and its
subsidiary currently employ Gerry Brown on a full-time basis, to act as the
Vice President of the Company, where he provides real estate planning,
development and sales services for the Company, Tonaquint, Inc., the Company's
wholly-owned subsidiary and various affiliated partnerships. Mr. Brown is
currently the President of Tonaquint, Inc., where he assists in land
planning, negotiating sales and financing arrangements, obtaining government
approvals, arranging for construction contracts, and supervising the
performance of engineering services as have been required. The Company
executed and presented Mr. Brown with a three-year employment agreement on
June 28, 1995 which employment agreement remains unexecuted by Mr. Brown.
Mr. Brown received compensation from the Company during the years 1994, 1995
and 1996, as set forth on the Summary Compensation Table on page 35.
Ladd Worth Eldredge is employed by the Company as its Secretary, Treasurer,
CFO and office manager. No employees are party to a collective bargaining
agreement with URI.
STOCK PLANS
The Company has no long-term incentive compensation plans other than
the 1994 stock Option Plan. Gerry Brown and each of the five directors are
participating in the Company's 1994 Stock Option Plan. Under the Plan, each of
the six individuals were granted options for 25,000 shares of the Company's
Common Stock, pursuant to the terms of a Non-Qualified Stock Option Agreement
between each person and the Company, dated April 7, 1994. The option exercise
price is $2.50 per share, the market price of the stock on the date of grant.
Each of the granted options vested as follows: (a) 9,000 shares on the date of
the Option Agreement; and (b) 8,000 shares on each of the next two anniversary
dates of the Agreement (April 7, 1995 and April 7, 1996).
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<PAGE> 40
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information as of December 31, 1996
regarding the beneficial ownership of shares of the Common Stock of the Company
by each nominee and by all directors and officers as a group.
<TABLE>
<Caption
- ---------------------------------------------------------------------------------------------------------------------------
UTAH RESOURCES INTERNATIONAL, INC.
COMMON STOCK OWNERSHIP BY DIRECTORS AND NAMED EXECUTIVE OFFICERS
AS OF DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------
BEFORE STOCK SPLIT AFTER STOCK SPLIT*
- ---------------------------------------------------------------------------------------------------------------------------
PERCENT OF PERCENT OF
NAME OF BENEFICIAL NUMBER OF OUTSTANDING NUMBER OF OUTSTANDING
OWNER POSITION SHARES SHARES SHARES SHARES
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David Fife Director 0 0% 0 0%
- ---------------------------------------------------------------------------------------------------------------------------
John Fife, as the sole Director, 1,275,912(1) 50.5% 1276** 52%
shareholder of IMCC Chief
Executive
Officer,
President, and
Chairman of
the Board
- ---------------------------------------------------------------------------------------------------------------------------
Lyle Hurd Director 2,000(2) .08% 2(3) .08%
- ---------------------------------------------------------------------------------------------------------------------------
Mark Jones Director 326,210 13% 327**(3) 13%
- ---------------------------------------------------------------------------------------------------------------------------
Jenny Morgan Director 9,523 .38% 10**(3) .41%
- ---------------------------------------------------------------------------------------------------------------------------
Stuart B. Peterson Nominee for 0 0% 0 0%
Director
- ---------------------------------------------------------------------------------------------------------------------------
Gerry Brown Vice
President 2,000(2) 08% 2(3) .08%
- ---------------------------------------------------------------------------------------------------------------------------
Ladd Worth Eldredge CFO, 0 0% 0 0%
Secretary,
Treasurer
- ---------------------------------------------------------------------------------------------------------------------------
DIRECTORS AND Directors & 1,613,645 64% 1,617 66%
OFFICERS AS A GROUP Officers
(8 persons)
- ---------------------------------------------------------------------------------------------------------------------------
SEE FOLLOWING PAGE FOR NOTES
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 41
UTAH RESOURCES INTERNATIONAL, INC.
COMMON STOCK OWNERSHIP BY DIRECTORS AND NAMED EXECUTIVE OFFICERS
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
BEFORE STOCK SPLIT AFTER STOCK SPLIT*
PERCENT OF PERCENT OF
NUMBER OF OUTSTANDING NUMBER OF OUTSTANDING
NAME OF BENEFICIAL POSITION SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C> <C>
</TABLE>
* Assumes No Small-Lot Shareholder exercises the Round Up Option, and no
remaining shareholder elects to purchase the Returned Shares. ** Assumes that
Round Up Option is exercised by fractional shareholder. (1) IMCC also holds a
ten year option to purchase 150,000 or more additional shares of stock, so as
to maintain its 50.5% interest in URI. (2) Lyle Hurd and Gerry Brown each
contend that he was granted an option for 25,000 shares pursuant to the Share
Exchange Agreement. There is a dispute as to whether the option was granted.
This issue will be resolved following an investigation in the coming year. (3)
In the event the proposed reverse split is affected, each of these individuals
will be granted an option to purchase additional shares of URI's stock pursuant
to the terms of the Returned Shares Option. For a more detailed description of
this Returned Shares Option, see "PROPOSED REVERSE SPLIT/Summary of the
Proposed Reverse Split and Purchase of Returned Shares." (4) Mark G. Jones,
director of the Company, holds 100 shares individually and an additional
326,210 shares in his capacity as the controlling shareholder of Mark
Technologies Corporation.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of December 31, 1996
regarding each person other than directors of the Company who were known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock. Each person named has sole voting and investment power with respect to
the shares beneficially owned by such person.
Utah Resources International, Inc.
5% or Greater Beneficial Owners
As of December 31, 1996
Number of Shares and
Name and Address of Nature of Percent of Company
Beneficial Owner Beneficial Owner Shares Outstanding
Inter-Mountain Capital 1,275,912 50.5%
Corporation(1)
Mark Technologies 326,310 13%
Corporation(2)
(1) John Fife, Director, President, CEO, and Chairman of the Board of the
Company, is the sole shareholder of Inter-Mountain Capital
Corporation.
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<PAGE> 42
(2) Mark G. Jones, Director of the Company, holds 100 shares individually and
an additional 326,210 in his capacity as the controlling shareholder
of Mark Technologies Corporation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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<PAGE> 43
-40-
<PAGE> 44
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<PAGE> 45
JOHN FIFE TRANSACTION
John Fife, as the sole shareholder of IMCC, acquired a 50.5% interest in
the Company on July 3, 1996. For a more detailed description of this
acquisition see the Sections entitled "MATERIAL PROCEEDINGS AND TRANSACTIONS"
and "SPECIAL FACTORS/IMCC Transaction and Settlement Agreements."
SHARE EXCHANGE AGREEMENT TRANSACTION
On June 13, 1995 the Company consummated the exchange of 590,000
shares of its common stock in exchange for the receipt of all issued and
outstanding stock of Midwest (the "Share Exchange Agreement"). Midwest was
wholly owned by Robert D. Wolff, subsequent CEO of the Company, and Judith J.
Wolff. Among other things, the Share Exchange Agreement provided for the
payment of compensation, for services rendered, by the Company to R. Dee
Erickson and E. Jay Sheen (both directors of the Company) in the amount of
38,000 shares each of the Company's Common Stock and $104,000 each. For a more
detailed description of the Share Exchange Agreement, see the section entitled
"MATERIAL PROCEEDINGS AND TRANSACTIONS."
1996 SETTLEMENT AGREEMENT TRANSACTION AND RELATED TRANSACTIONS
The following amounts were paid through December 31, 1996 by the Company
in connection with the 1996 Settlement Agreement, the Morgan Settlement
Agreement and the IMCC Stock Purchase Agreement:
Hunter & Brown, approximately $34,843.08, as legal counsel for Mark G.
Jones, Director of the Company;
Campbell, Maack & Sessions, approximately $167,987.68, as legal
counsel, as follows, $81,000 for legal services performed for Anne and Victoria
Morgan, daughters of John H. Morgan, Jr. and Daisy R. Morgan, both directors of
the Company in 1995, pursuant to the 1996 Settlement Agreement with the balance
of $86,987.68 for services performed as legal counsel for Mark Technologies
Corporation, a corporation controlled by Mark G. Jones, director of the Company;
Dorton, Jones, Nicolatus & Stuart Inc., approximately $4,225, as
experts for Mark Technologies Corporation, a corporation controlled by Mark
Jones;
Mark Technologies Corporation, approximately $10,090.03, a corporation
controlled by Mark G. Jones, a director of the Company, for a retainer paid to
Dorton, Jones, Nicolatus & Stuart, Inc. and for certain out-of-pocket expenses;
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<PAGE> 46
Victoria Morgan, daughter of John H. Morgan, Jr. and Daisy R. Morgan,
in the amount of $58,966.70 for repurchase of all shares owned in the Company
by Ms. Morgan;
Anne Morgan, daughter of John H. Morgan, Jr. and Daisy R. Morgan, in
the amount of $76,882.50 for a repurchase of all shares owned in the Company by
Ms. Morgan;
John H. Morgan, Jr., in the amount of $89,229.81, representing the
total monetary judgment collected from him by the Company pursuant to the
Murphy Order and all amounts covered by the Order regarding Stay of Execution
and Acceptance of Undertaking under the Murphy Order;
Robinson & Sheen, L.L.C. $100,486.88, as counsel for the Company;
Jardine, Linebaugh & Dunn, approximately $26,696.86, as counsel for the
Company;
Wildman, Harrold, Allen & Dixon, approximately $218,427.50, as counsel
for IMCC, a company wholly owned by John Fife, director, CEO, President and
Chairman of the Board of the Company;
Giauque, Crockett, Bendinger & Peterson, $25,946.53, as local Utah
counsel for IMCC, a company wholly owned by John Fife, director, CEO,
President and Chairman of the Board of the Company;
IMCC, a company wholly owned by John Fife, director, CEO, President
and Chairman of the Board of the Company, approximately $5,014.79 for
reimbursement of the retainer to Giauque, Crockett, Bendinger & Peterson; and
Brown Wright & Associates, approximately $19,937.45 as experts for the
Company.
Jenny Tate Morgan, approximately $2,041.23, for expenses related to a
deposition for litigation.
Kelly Drye & Warren, L.L.P. approximately $2,458.41 for a deposition as
counsel for Jenny Tate Morgan.
LEGAL REPRESENTATION OF THE COMPANY
From 1994 through 1996, the law firms of Moyle Draper and Robinson &
Sheen, L.L.C. provided legal representation to the Company. E. Jay Sheen, a
former director of the Company, was a partner at Moyle Draper and currently is
a partner at Robinson & Sheen. During 1994, Moyle Draper received
approximately $99,304 in legal fees. During 1995, Robinson & Sheen received
approximately $144,800.29 in legal fees and Moyle Draper received approximately
$46,666 in legal fees. In 1996, Robinson & Sheen received approximately
$230,065 in legal fees.
COMMISSION AND CONSULTING FEES
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<PAGE> 47
1995
During 1995, Lyle Hurd, a director of the Company and Director of
Marketing, received $13,750 in consulting fees. An additional $8,265 was paid
by the Company to St. George Magazine for advertising. Mr. Hurd, who also
served as Director of Marketing of the Company, is an owner of Hurd Owens
Hafen, Inc., which publishes St. George Magazine, among others. In 1995, Gerry
Brown, the President of the Company, received $8,327 in commissions.
1996
During 1996, Gerry Brown, the Vice President of the Company, received
$5,321 in commissions.
AMENDMENT TO BY-LAWS
A majority of the Board of Directors has adopted a resolution which
sets forth a single proposal to amend Article II, Section 1. of the Company's
By-laws (the "By-Laws Amendment"), by deleting Article II, Section 1. in its
entirety and replacing it with the following:
The annual meeting of the Shareholders shall be held on the
third Monday in the month of July in each year, beginning with the
year 1997 at an hour designated by the President in the notice of
annual meeting, for the purpose of electing directors and for the
transaction of such other business as may come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday in the
State of Utah, such meeting shall be held on the next succeeding
business day.
The Company recommends voting for the By-Laws Amendment. John H. Morgan,
Jr. and Daisy R. Morgan resigned as directors of the Company in December 1995.
Pursuant to the terms of the 1993 Settlement Agreement, John H. Morgan, Jr. and
Daisy R. Morgan exercised their powers of appointment and appointed Jenny T.
Morgan and Mark G. Jones, respectively, to serve as directors in their place.
John H. Morgan, Jr. and Daisy R. Morgan were parties to the 1993 Settlement
Agreement. The remaining members of the Board of Directors demanded that both
Jenny T. Morgan and Mark G. Jones, agree, in writing, to be bound by the terms
of the 1993 Settlement Agreement as though they had been made parties to the
1993 Settlement Agreement before commencing their responsibilities as directors
of the Company. Mark G. Jones and Jenny T. Morgan refused to enter into that
written agreement until April 1996, at which time they executed a written
commitment to be bound by the terms of the 1993 Settlement Agreement and were
seated as directors of the Company. The 1993 Settlement Agreement was terminated
by the 1996 Settlement Agreement. Among other things, the terms of the 1996
Settlement Agreement provided that the parties to that agreement would take all
actions necessary to maintain Mark G. Jones as a director of the Company for a
period of one year from the date of the closing of the Stock Purchase Agreement
between IMCC and the Company, or July 3, 1997. For a more detailed description
of the terms of the 1996 Settlement Agreement, see the Section entitled "SPECIAL
FACTORS/Reasons for the Proposed Reverse Split." The Company plans to hold an
annual meeting to provide for the election of a director to fill Mr. Jones seat.
IMCC has informed the Company that it will not support the nomination of Mark G.
Jones as a director at the next annual meeting of the shareholders of the
Company, to be held on the third Monday of July, 1997, as set forth in the
amendment to the by-laws. The persons named as proxy holders in the
accompanying Proxy intend to vote each properly signed and submitted Proxy for
the By-Laws Amendment, unless authority to vote is withheld on such Proxy.
By-laws may be amended by the Board of Directors at any regular or special
meeting of the Board of Directors. Unless otherwise specified, all properly
executed proxies received by the Company will be voted in favor of the By-Laws
Amendment.
THE COMPANY RECOMMENDS VOTING "FOR" THE BY-LAWS AMENDMENT.
44
<PAGE> 48
MARK TECHNOLOGIES CORPORATION PROPOSALS
SPECIAL SHAREHOLDERS' LEGAL AFFAIRS COMMITTEE
Mark G. Jones, a director of the Company, on behalf of Mark
Technologies Corporation, proposes to appoint a special shareholders' Legal
Affairs Committee, the sole purpose of which is to select and engage new
general counsel, make a binding determination regarding the settlement,
continued prosecution or other disposition of pending litigation to which the
Company is a party and to make a binding determination regarding counsel
selection in the future and future litigation in which the Company may be a
party. This proposal requires an affirmative vote by the holders of a majority
of the Common Stock of the Company. The Company does NOT recommend a vote in
favor of this proposal. IMCC, the Company's majority shareholder, has
indicated it will not vote in favor of this proposal. The Utah Business
Corporation Act provides, in part, that one of the powers of the corporation
is, "to sue and be sued, complain and defend in its corporate name," see
Section 16-10a-302 General Powers/Utah Business Corporation Act. The Utah
Business Corporation Act also provides, in part, that all corporate powers
shall be exercised "by or under the authority of, and the business and affairs
of the corporation managed under the direction of, its board of directors," see
Section 16-10a-801(2) of the Utah Business Corporation Act. In order for the
Company's Board of Directors to carry out its obligations under the Utah
Business Corporation Act, it must make decisions as to whether to pursue
litigation and if so, in what manner. These decisions would include, among
other things, the decision as to who would represent the Company and the course
of litigation. These Utah Business Corporation Act provisions firmly place
these litigation-based decisions and obligations within the Board's
responsibility. A majority of the Board does not recommend its approval.
IMCC, the Company's majority shareholder, has indicated it will NOT vote in
favor of this proposal.
TENDER OFFER
Mark G. Jones, a director of the Company, on behalf of Mark
Technologies Corporation, proposes to cause the Company to offer to purchase
from all of its shareholders, at a purchase price of $4.00 per share, shares of
the Company's Common Stock, where acceptance of the Company's offer shall be
voluntary and the offer shall not be designed to require acceptance by any
shareholder. This proposal requires an affirmative vote by the holders of a
majority of the Common Stock of the Company. A majority of the Board of
Directors does not recommend a vote in favor of this proposal. IMCC, the
Company's majority shareholder, has indicated it will not vote in favor of this
proposal. The Company and IMCC entered into the Stock Purchase Agreement and
two settlement agreements which contractually require the Company to undertake
a 1,000 share to 1 share reverse stock split at $3.35 per share. The Mark
Technologies Corporation proposal is inconsistent with and contrary to the
required $3.35 per share reverse stock split. In addition, a majority of the
Board of Directors believes that a $4.00 per share tender offer, if approved by
the shareholders of the Company, would force the Company to liquidate in order
to meet its obligations pursuant to such tender offer. Two members of the
Board of Directors, Jenny Morgan and Mark G. Jones, believe that to be untrue
and that the Company, which has no debt, would be able to fund the $4.00 tender
offer through bank loans, venture capitalists or private sources without
incurring a high debt to equity ratio. The Company does not recommend its
approval. IMCC, the Company's majority shareholder, has indicated it will not
vote in favor of this proposal.
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<PAGE> 49
SPECIAL SHAREHOLDERS FIDUCIARY DUTY COMMITTEE
Mark G. Jones, a director of the Company, on behalf of Mark
Technologies Corporation, proposes to cause the Company to appoint a special
shareholders' Fiduciary Duty Committee, the sole purpose of which shall be to
make a binding determination, upon consultation with the Company's new general
counsel, regarding the activities of the Company's Board of Directors, officers
and counsel to consider whether actions, complaints or other redress, if any,
should be taken by the Company against such individuals. This proposal
requires an affirmative vote by the holders of a majority of the Common Stock
of the Company. A majority of the Board of Directors does not recommend its
approval. IMCC, the Company's majority shareholder, has indicated it will NOT
vote in favor of this proposal.
Unless otherwise specified, all properly executed proxies received by
the Company will be voted AGAINST the three Mark Technologies Corporation
proposals.
THE COMPANY RECOMMENDS VOTING "AGAINST" THE MARK TECHNOLOGIES,
CORPORATION PROPOSALS.
MATERIAL PROCEEDINGS AND TRANSACTIONS
Over the past nine years, the Company has been involved in various
disputes and controversies involving its ownership, operation and management.
A shareholders derivative action captioned as Ernest Muth, et al. v. John H.
Morgan, Jr., et al., was filed as Civil Number C-87-1632 in the Third Judicial
District Court of Salt Lake County, Utah (the "First State Action"), alleging
among other things that the officers and directors of the Company committed
various breaches of their fiduciary duties to the Company. A settlement
agreement was entered into in the First State Action on April 6, 1993 (the
"1993 Settlement Agreement"), wherein, among other things, parties to the
lawsuit agreed to the manner in which directors of the Company would be
selected until such time as the 1993 Settlement Agreement was terminated. On
or about July 21, 1995, attorneys for the Company, on behalf of the Company
filed an action against John H. Morgan, Jr. and Daisy R. Morgan to enforce the
1993 Settlement Agreement in the First State Action which resulted in certain
findings of fact and conclusions of law and an order enforcing the 1993
Settlement Agreement, entered by Judge Michael R. Murphy on October 4, 1995
(the "Murphy Order"). The Murphy Order was appealed by John H. Morgan, Jr. and
Daisy R. Morgan and cross-appealed by the Company. An Order to Show Cause was
subsequently filed in the First State Action on behalf of the Company by
attorneys for the Company against John H. Morgan, Jr. and Daisy R. Morgan (the
"Order to Show Cause").
On or about February 16, 1995, pursuant to a Plan of Share Exchange
Agreement by and among the Company, Midwest Railroad Construction and
Maintenance Corporation of Wyoming, a Wyoming corporation ("Midwest"), Robert
D. Wolff ("RD Wolff") and Judith J. Wolff ("JJ Wolff") (the "Share Exchange
Agreement"), the Company acquired all of the outstanding shares of Midwest from
RD Wolff and JJ Wolff in exchange for 590,000 restricted shares of authorized
but unissued shares of the Company (the "Share Exchange Agreement"). Pursuant
to the Share Exchange Agreement, RD Wolff became the President of the Company.
For a more detailed
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description of the Share Exchange Agreement see Form 8-K filed July 20, 1995.
A shareholders derivative action captioned as Anne Morgan et al. v. R. Dee
Erickson, et al., was filed as Case Number 2:95CV-0661C in the United States
District Court for the District of Utah, Central Division (the "First Federal
Action"), alleging that the defendants had, among other things, violated proxy
solicitation rules, violated disclosure rules under the Exchange Act of 1934,
breached their fiduciary duties to the Company's shareholders, breached
professional duties, committed fraud, wasted and looted the Company's assets,
converted Company property, engaged in self-dealing, mismanaged the corporation
and breached the duty of loyalty. The complaint sought, among other things,
rescission of the Share Exchange Agreement. In April 1996, the Company,
Midwest, RD Wolff and JJ Wolff entered into a Split-Off Agreement whereby,
among other things, the Share Exchange Agreement was rescinded (the "Rescission
Agreement") and the shares of Midwest acquired by the Company were returned to
RD Wolff and JJ Wolff.
On April 5, 1996, the Company entered into a letter of intent ("Letter
of Intent") with IMCC to sell a controlling interest in the Company to IMCC, at
a purchase price equal to $3.35 per share. On May 17, 1996, Mark G. Jones, a
shareholder and director of the Company and controlling shareholder of Mark
Technologies Corporation, brought a shareholders derivative suit captioned as
Mark Technologies Corp. et al. v. Utah Resources International, Inc., et al.,
which was filed as Civil No. 96-090-3332CV in the Third Judicial Court of Salt
Lake County, Utah (the "Second State Action") against the Company, E. Jay
Sheen, R. Dee Erickson and Lyle Hurd, directors of the Company, and IMCC. The
Second State Action included, among other things, a request for the issuance of
a temporary restraining order and injunction against the transactions
contemplated in the Letter of Intent. On June 26, 1996, the Company entered
into two settlement agreements. The first settlement agreement was by and
among the Company, John H. Morgan, Jr., Daisy R. Morgan, IMCC, John Fife,
Robinson & Sheen, L.L.C., R. Dee Erickson, Lyle D. Hurd, and E. Jay Sheen
("Morgan Settlement Agreement"), whereby certain disputes among the parties
were resolved and settled and the parties agreed to use their best efforts to
terminate the 1993 Settlement Agreement. The second settlement agreement was
by and among the Company, R. Dee Erickson, E. Jay Sheen, Lyle D. Hurd, Mark G.
Jones, Mark Technologies Corporation, Anne Morgan, Victoria Morgan, IMCC, John
Fife and Robinson & Sheen, L.L.C. (the "1996 Settlement Agreement") where the
parties, among other things, agreed to dismiss the First Federal Action, the
Order to Show Cause, the Second State Action and to use their best efforts to
terminate the 1993 Settlement Agreement. On July 19, 1996, the notice of
hearing on proposed settlement of the Second State Action, the First State
Action and the First Federal Action and the notice of hearing on petition to
terminate the 1993 Settlement Agreement was mailed to all the Company's
shareholders of record as of June 24, 1996. Among other things, the notice
provided that the 1996 Settlement Agreement and the Morgan Settlement Agreement
(together the "Settlement Agreements") were to be considered approved by the
court on August 12, 1996, and that all objections to the Settlement Agreements
had to be presented at that time. On August 9, 1996, shareholders Jenny T.
Morgan (a shareholder and director of the Company), Gerard E. Morgan, John C.
Morgan and Karen J. Morgan ("Objectors") filed an objection to the hearing and
requested that the court continue the settlement approval hearing until after
the Company's shareholders vote on the Settlement Agreements and the IMCC
Stock Purchase Agreement. In their objections and request for continuance of
hearing, the Objectors, among other things, claimed that they had insufficient
information with which to evaluate the Stock Purchase Agreement between IMCC
and the Company; that
47
<PAGE> 51
they had insufficient information regarding John Fife, the sole shareholder of
IMCC, and that they needed additional time and information to evaluate the
fairness of the Stock Purchase Agreement, and to have the opportunity to
solicit other competitive bids to sell the Company. Further, the Objectors
alleged that the Company had failed to provide documentation relating to the
Stock Purchase Agreement to them. After considering the Objectors' and the
parties' initial arguments, the court granted both the parties and the
Objectors an additional seven days, through August 19, 1996, to submit
written memoranda in support of their positions. Both the Objectors and
the parties submitted written memoranda supporting their positions in regard to
the Settlement Agreements and the Stock Purchase Agreement. On or about August
23, 1996 the court in the Second State Action reviewed and considered the 1996
Settlement Agreement, the Stock Purchase Agreement and the 1993 Settlement
Agreement, written memoranda submitted by various parties and other comments
and objections and ordered that: (1) the notice given pursuant to Rule 23.1 of
the applicable rules of civil procedure for the State of Utah was adequate,
fair and proper; (2) the procedural and substantive objections of Jenny T.
Morgan (a director and shareholder of the Company), Gerald E. Morgan, John C.
Morgan and Karen J. Morgan be overruled; (3) the 1996 Settlement Agreement was
fair, adequate and reasonable; (4) the Petition to Terminate the 1993
Settlement Agreement was fair, adequate and reasonable; and (5) the 1996
Settlement Agreement and Petition to Terminate the 1993 Settlement Agreement
was approved. As required by the Transaction Agreements, as defined below,
the 1996 Settlement Agreement and the Morgan Settlement Agreement were approved
by the Third Judicial District Court of Salt Lake County, West Valley
Department, Utah, on or about August 28, 1996. The Order to Show Cause was
dismissed with prejudice and the 1993 Settlement Agreement was terminated on
August 29, 1996.
On July 3, 1996, following the execution of the Letter of Intent, the
Morgan Settlement Agreement and the 1996 Settlement Agreement, the Company and
IMCC entered into a Stock Purchase Agreement (the "Stock Purchase Agreement")
(the Letter of Intent, the Morgan Settlement Agreement, the 1996 Settlement
Agreement and the Stock Purchase Agreement are hereinafter referred to as the
"Transaction Agreements") whereby the Company issued and sold 1,275,912 shares
(the "Purchased Shares") of common, $.10 par value per share stock (the "Common
Stock") to IMCC, which is wholly owned by John Fife, so that IMCC owned a 50.5%
interest in the Company. IMCC acquired the Purchased Shares at a price equal
to $3.35 per share for an aggregate purchase price of $4,274,305.20 (the
"Purchase Price"), of which $641,145.78 was paid in cash by IMCC to the Company
at the closing. The remaining $3,633,159.42 was evidenced by IMCC's promissory
note (the "Note"). The Note bears interest at a rate equal to the short-term
applicable federal rate published by the Internal Revenue Service in effect at
the time of closing, and is adjusted on each anniversary of the Note to the
applicable short-term federal rate in effect on such anniversary date.
Interest on the Note is paid currently in arrears on each anniversary of the
Note. At the closing, IMCC paid $197,872.52 to the Company which amount
represented the present value first year of interest due under the Note. The
principal and any unpaid interest accrued under the Note is due and payable
August 1, 2001. The Note is secured by the Purchased Shares as evidenced by a
stock pledge agreement, dated as of July 3, 1996, by and between IMCC and the
Company (the "Stock Pledge Agreement"). Pursuant to a separate written
guaranty agreement, John Fife personally guaranteed payment of 25% of all
amounts due under the Note. For a more detailed description of the Stock
Purchase Agreement, see Form 8-K filed by the Company on July 19, 1996, and to
review a copy of the Stock Purchase Agreement, see Schedule 13D-A filed by IMCC
on September 9, 1996.
As required by the Stock Purchase Agreement, E. Jay Sheen and R. Dee
Erickson submitted their resignations as directors of the Company, effective
July 13, 1996. As further required by the Stock Purchase Agreement, John Fife
was appointed a director of the Company. David Fife, the brother of John Fife,
was also appointed a director of the Company. John Fife
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<PAGE> 52
and David Fife were appointed as directors of the Company by the Muth Group
pursuant to the 1993 Settlement Agreement, effective July 13, 1996. As
required by the Stock Purchase Agreement, John Fife was elected President and
Chief Executive Officer of the Company in July 1996, pursuant to a 3-0 vote of
the Board (Mark G. Jones and Jenny Morgan were not present for the vote). John
Fife also serves as Chairman of the Board of the Company pursuant to a 3-2 vote
of the Board.
The Letter of Intent and the Transaction Agreements, including the
Stock Purchase Agreement contemplated that subject to applicable state and
federal securities and state corporate law, the Company would cause a 1,000 to
1 share reverse split of the Company's stock to the shareholders of record at
$3.35 per share (the "Reverse Split"), with fractional shareholders given the
option to either purchase additional fractional shares to round up to one whole
share following the Reverse Split or sell their fractional shares for cash to
the Company. IMCC was granted a ten year option to purchase 150,000 or more
additional shares of stock at a purchase price equal to $3.35 per share and on
the same terms and conditions as those provided under the Stock Purchase
Agreement so that after the Reverse Split IMCC may maintain its 50.5% majority
interest in the Company. Subsequent to the Reverse Split and subject to
applicable state and federal securities and state corporate law, any Company
shares redeemed by the Company pursuant to the Reverse Split (the "Returned
Shares") may be acquired by the remaining shareholders, other than IMCC or its
affiliates, in increments of 1,000 shares (the "Returned Share Option") at a
purchase price equal to the pre-reverse- split price of $3.35 per share (the
"Returned Share Purchase Price") as more fully described herein.
Only those shares for which the Company has received a fully and
properly executed letter of transmittal, accompanied by the required documents,
will qualify as Returned Shares for purposes of this Returned Share Option.
Such Common Stock shall be purchased in blocks of 1,000 shares of Common Stock
such that each purchase of a 1,000 share block of Common Stock shall be
converted into 1 share of common, $100.00 par value per share stock of the
Company (the "New Stock"). In the event the Returned Share Option is
over-subscribed, then each of the exercising shareholders may purchase the
Returned Shares on a pro rata basis. Twenty-five percent (25%) of the Returned
Share Purchase Price will be payable in cash upon exercise, with the remaining
balance of $2.51 per share being evidenced by the Returned Share Note.
In December, 1995 Mark Technologies Corporation received 201,210
shares of the Company's Common Stock from Morgan Gas & Oil Co., as partial
payment of a promissory note. The promissory note was in consideration of the
sale to Morgan Gas & Oil Co. from Mark Technologies Corporation of a limited
partnership interest in Alta Mesa Wind Partners, a California limited
partnership in the wind-generated power business. The Company is a shareholder
of Morgan Gas & Oil Co. The Company brought a Shareholders derivative action
against Morgan Gas & Oil Co. and its directors and against Mark G. Jones, Mark
Technologies Corporation, Alta Mesa Wind Partners, John H. Morgan, Jr., Daisy
R. Morgan, Sylvia Wunderly, John Wunderly, and Melbourne Romney, III, alleging,
among other things, that in connection with the sale of Alta Mesa Wind Partners
limited partnership interest to Morgan Gas & Oil Co., Mark G. Jones, Mark
Technologies Corporation and Alta Mesa Wind Partners concealed and
misrepresented material information to be provided to Morgan Gas & Oil Co.
directors and that the Morgan Gas & Oil Co.
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<PAGE> 53
directors committed a breach of fiduciary duty and a wasting of corporate
assets. The suit was dismissed without prejudice.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, the
Company's officers, directors and greater than ten percent beneficial owners
complied with all applicable Section 16(a) filing requirements, except for the
following individuals with respect to the following forms:
R. Dee Erickson, Form 4
Robert D. Wolff, Form 4
John Fife, Form 4
IMCC, Form 4
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for the fiscal year ended
December 31, 1996 and for the current year are Tanner + Co. A representative
of Tanner + Co. is expected to be present at the meeting, with the opportunity
to make a statement if he desires to do so, and he is expected to be available
to respond to appropriate questions from stockholders.
ANNUAL REPORT
The Company's Annual Report to Stockholders the fiscal year ended
December 31, 1996, including financial statements, accompanies this Proxy
Statement. However, no action is proposed to be taken at the meeting with
respect to the Annual Report, and it is not to be considered as constituting
any part of the proxy soliciting material.
SHAREHOLDER PROPOSALS
From time to time shareholders may present proposals which may be
proper subjects for inclusion in the proxy statement and for consideration at
the annual meeting. To be considered, proposals must be submitted on a timely
basis. Proposals for the 1998 shareholders' meeting, if applicable, must be
received by the Company no later than March 24, 1998. Any such proposals, as
well as any questions related thereto, should be directed to the Secretary of
the Company.
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OTHER MATTERS
Management knows of no other business likely to be brought before the
meeting. If other matters do come before the meeting, the persons named in the
form of proxy or their substitute will vote said proxy according to their best
judgment.
The Company shall provide, without charge, to each person to whom a
proxy statement is delivered, upon written or oral request of such person and
by first class mail or other equally prompt means within one business day of
receipt of such requests, a copy of any and all of the information that has
been incorporated by reference in this proxy statement. Please contact Bekky
LeVanger at (801) 628-8080 or Ladd Eldredge at (801) 628-8080 with any oral
requests and at Utah Resources International, Inc.,
297 West Hilton Drive, Suite #4, St. George, Utah 84770 with any written
requests.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1996 is available without charge to shareholders upon
written request to Bekky LeVanger at the address provided above.
By order of the Board of Directors
John Fife
Director, Chairman of the Board and President
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<PAGE> 55
EXHIBITS
Exhibit A: Amendment to Articles of Incorporation
Exhibit B: Part 13 of the Utah Business Corporation Act
<PAGE> 56
EXHIBIT A
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
UTAH RESOURCES INTERNATIONAL, INC.
To the Secretary of State:
Pursuant to the provisions of the Utah Business Corporation Act,
Section 16-10a-1003, the undersigned corporation hereby amends its Articles of
Incorporation, and for that purpose submits the following statement:
(1) The name of the corporation is: Utah Resources International,
Inc.;
(2) The text of each amendment adopted is:
The Articles of Incorporation of Utah Resources International, Inc.
(the "Company"), are hereby amended as follows. Article Fourth of the
Company's Articles of Incorporation is hereby deleted and replaced with the
following:
FOURTH. THAT THE TOTAL AUTHORIZED CAPITAL STOCK OF THIS
CORPORATION IS FIVE HUNDRED THOUSAND DOLLARS ($500,000)
DIVIDED INTO 5,000 SHARES OF THE COMMON CAPITAL STOCK WITH A
PAR VALUE OF ONE HUNDRED DOLLARS ($100) PER SHARE.
SHAREHOLDERS SHALL HAVE NO PREEMPTIVE RIGHTS TO ACQUIRE
ADDITIONAL SHARES OF THIS CORPORATION.
The manner (if not set forth in the amendment) of implementation of
any exchange, reclassification, or cancellation of issued shares
is as follows:
Immediately prior to the filing of the Articles of Amendment, the
total number of shares of all classes of stock which the Company has
authority to issue is 5,000,000 shares of common, $.10 par value per share
stock (the "Common Stock"). As of _____ p.m., on the date of the filing of
this Amendment with the Secretary of State of Utah (the "Filing Date"), and
subject to majority approval by the Company's shareholders, each 1,000 shares
of common, $.10 par value per share stock then outstanding shall be converted
into one share of common $100.00 par value per share stock of the Company
(the "New Stock"), with shareholders holding fewer than 1,000 shares or any
increment thereof (the "Fractional Shareholders") being given the option to
either (A) receive cash in lieu of fractional shares of stock, or (B)
purchase from the Company that portion of fractional shares of the Common
Stock needed to increase their share holdings to the next one whole share of
New Stock (the "Reverse Split"). The Company will then have 5,000 authorized
shares of common, $100.00 par value per share stock. The Reverse Split is
designed to result in reducing the number of the Company's shareholders to
less than 300, so that the Company will no longer be required to be an
SEC-reporting company. These Articles of Amendment will not effect a change
in the amount of stated capital in the Company.
<PAGE> 57
Fractional Shareholders who do not elect to round up their holdings at
least ten days prior to ______________ __, 1997 (the "Annual Meeting Date")
will have their fractional shares automatically converted into the right to
receive cash in lieu of the fractional shares of New Stock otherwise issuable
to such holder at $3.35 per share.
Fractional shareholders who do elect to round up their holdings to
aggregate one whole share of New Stock at least ten days prior to the Annual
Meeting Date will, on the Annual Meeting Date, have their then whole shares
of Common Stock automatically converted into shares of New Stock.
Holders of record of 1,000 or more shares of Common Stock on _________
__, 1997 (the "Record Date") will have their shares automatically converted
after the Reverse Split into the number of whole and fractional shares of New
Stock equal to the number of shares of Common Stock outstanding and held by
them on the Record Date, prior to the Effective Date divided by 1,000.
Amendment's Adoption:
The Company's Board approved the Amendment on January 22, 1997, and
the Shareholders approved the Amendment at their Annual Meeting on
______________ __, 1997, to be effective immediately.
There are approximately 2,522,808 issued shares of the Company's
stock. Of this, at least 1,275,912 or 50.5% was voted in favor of the
Amendment, which was sufficient for its approval.
Dated as of______________
UTAH RESOURCES INTERNATIONAL, INC.
________________________________________
John Fife, President and CEO
<PAGE> 58
EXHIBIT B
PART 13.DISSENTERS' RIGHTS
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
anions:
(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;
(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
<PAGE> 59
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; (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.
-56-
<PAGE> 60
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.
(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 a 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;
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(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 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;
(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 use
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 the corporate 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 dissenters'
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
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(ii) the balance sheet and statements referred to in Subsection (i)
must be audited if the corporation customarily provides audited financial
statements to shareholders;
(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 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-1302, 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 the 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 IF 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 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.
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16-10a-1330 JUDICIAL APPRAISAL OF SHARES--COURT ACTION.--(1) If
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 dissented who are named as parties just 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 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,
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the court may award to those counsel reasonable fees to be paid out of the
amounts awarded the dissenters who were benefited.
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EXHIBIT 4
PRELIMINARY COPY DATED ___________ ____, 1997
FOR REVIEW ONLY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
OF
UTAH RESOURCES INTERNATIONAL, INC.
The undersigned, revoking any proxy heretofore given, hereby appoints
John Fife, who holds the power to appoint a substitute, proxy of the
undersigned, with full power of substitution, with respect to all of the shares
of common stock of Utah Resources International, Inc. in which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of Utah Resources,
International, Inc., to be held on _____________ ___, 1997, and any adjournment
thereof.
In his discretion, the proxy is authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
1 PROPOSAL: APPROVAL OF AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO EFFECT THE
REVERSE SPLIT
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
THE MATTER SPECIFICALLY REFERRED TO ABOVE.
2 PROPOSAL: ELECTION OF FIVE DIRECTORS TO HOLD OFFICE UNTIL
THE NEXT ANNUAL MEETING
<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except as marked [ ] WITHHOLD AUTHORITY to
to the contrary below) vote for all nominees listed below)
</TABLE>
John Fife, David Fife, Lyle Hurd, Mark G. Jones and Stuart B. Peterson
(Instruction: To withhold authority to vote for any individual nominee write
that nominee's name on the line provided below)
________________________________________________________________________________
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<PAGE> 2
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
ALL THE NOMINEES LISTED ABOVE.
3 PROPOSAL: AMEND ARTICLE II, SECTION 1 OF THE COMPANY'S BY-LAWS
REGARDING ANNUAL MEETING DATE
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
THE MATTER SPECIFICALLY REFERRED TO ABOVE.
4 PROPOSAL: MARK TECHNOLOGIES CORPORATION PROPOSALS
A) APPOINT A SPECIAL SHAREHOLDERS LEGAL AFFAIRS
COMMITTEE
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED
AGAINST THE MATTER SPECIFICALLY REFERRED TO ABOVE.
B) CAUSE THE COMPANY TO EFFECT A $4.00 PER SHARE
TENDER OFFER
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED
AGAINST THE MATTER SPECIFICALLY REFERRED TO ABOVE.
C) APPOINT A SPECIAL SHAREHOLDERS FIDUCIARY DUTY COMMITTEE
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED AGAINST
THE MATTER SPECIFICALLY REFERRED TO ABOVE.
Dated ____________ ____, 1997
___________________________ ___________________________
Print Name Signature
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____________________________ ____________________________
Print Name Signature
____________________________ ____________________________
(Number of Shares Title
Held of Record)
Please sign as name appears to the left. If stock is registered in
the name of two or more persons, each should sign. Executors, attorneys,
corporate officers, administrators and trustees should add their titles.
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