SCHEDULE
14C
(RULE
14C-101)
Information
Statement Pursuant to Section 14(c) of the Securities Exchange Act of
1934
Check
the
appropriate box:
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x
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Preliminary
Information Statement
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Definitive
Information Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule 14c-5(d)
(2))
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TWL
Corporation
(Name
of
Registrant As Specified In Its Charter)
Payment
of Filing Fee (Check the Appropriate Box):
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Fee
computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which the transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is
calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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Fee
paid previously with preliminary
materials
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¨ check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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(1)
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Amount
previously paid
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(2)
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Form,
Schedule or Registration Statement
No.:
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TWL
CORPORATION
4101
International Parkway, Carrollton, Texas75007
INFORMATION
STATEMENT
PURSUANT
TO SECTION 14
OF
THE SECURITIES EXCHANGE ACT OF 1934
AND
REGULATION 14C AND SCHEDULE 14C THEREUNDER
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE NOT REQUESTED TO SEND US A
PROXY
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Carrollton,
Texas
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October
*, 2007
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This
information statement has been mailed on or about *, 2007 to the stockholders
of
record on *, 2007 (the “Record Date”) of TWL Corporation, a Utah corporation
(the "Company"), in connection with certain actions to be taken by the written
consent by the stockholders holding a majority of the capital stock of the
Company, dated as of October *, 2007. The actions to be taken
pursuant to the written consent shall be taken on or about *, 2007, 20 days
after the mailing of this information statement.
THIS
IS
NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO STOCKHOLDER MEETING
WILL BE HELD TO CONSIDER ANY MATTER WHICH WILL BE DESCRIBED HEREIN.
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By
Order of the Board of Directors,
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/s/
Dennis Cagan
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Dennis
Cagan
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President
and Chief Executive Officer
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NOTICE
OF ACTION TO BE TAKEN PURSUANT TO THE WRITTEN CONSENT OF STOCKHOLDERS HOLDING
A
MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY IN LIEU
OF A
SPECIAL MEETING OF THE STOCKHOLDERS, DATED *, 2007
To
Our
Stockholders:
NOTICE
IS HEREBY GIVEN that the
following actions will be taken pursuant to the written consent of stockholders
holding a majority of the outstanding shares of common stock dated October
*,
2007, in lieu of a special meeting of the stockholders. Such action
will be taken on or about *, 2007:
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1.
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An
amendment to our Certificate of Incorporation to effect a 1-for-20
reverse
stock split of TWL Corporation’s outstanding common
stock
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2.
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A
change of the Company’s domicile from Utah to
Nevada.
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OUTSTANDING
SHARES AND VOTING RIGHTS
As
of the Record Date, the Company's
authorized capitalization consisted of 750,000,000 shares of Common
Stock and 10,000,000 shares of preferred stock, of which 188,878,008 shares
of
Common Stock and 4,300,00 shares of Preferred Stock were issued and outstanding
as of the Record Date. Holders of Common Stock of the Company have no
preemptive rights to acquire or subscribe to any of the additional shares
of
Common Stock.
Each
share of Common Stock entitles its
holder to one vote on each matter submitted to the
stockholders. However, because stockholders holding at least a
majority of the voting rights of all outstanding shares of capital stock
as at
the Record Date have voted in favor of the foregoing proposals by resolution
dated October 18, 2007; and having sufficient voting power to approve such
proposals through their ownership of capital stock, no other stockholder
consents will be solicited in connection with this Information
Statement.
Pursuant
to Rule 14c-2 under the
Securities Exchange Act of 1934, as amended, the proposals will not be adopted
until a date at least 20 days after the date on which this Information Statement
has been mailed to the stockholders. The Company anticipates that the
actions contemplated herein will be effected on or about the close of business
on *, 2007.
The
Company has asked brokers and other
custodians, nominees and fiduciaries to forward this Information Statement
to
the beneficial owners of the Common Stock held of record by such persons
and
will reimburse such persons for out-of-pocket expenses incurred in forwarding
such material.
This
Information Statement will serve
as written notice to stockholders pursuant to.
ONE
FOR TWENTY REVERSE SPLIT
On
October 18, 2007, the majority stockholders of the Company authorized a reverse
stock split pursuant to which 188,878,008 currently outstanding
shares of Common Stock (the "Old Shares") would be automatically converted
into
9,443,900 shares of common stock (the "New Shares"). The reason for the reverse
stock split is to increase the per share stock price. The Company believes
that
if it is successful in maintaining a higher stock price, the stock will generate
greater interest among professional investors and institutions. If the Company
is successful in generating interest among such entities, it is anticipated
that
the shares of its common stock would have greater liquidity and a stronger
investor base. No assurance can be given, however, that the market price
of the
New Shares will rise in proportion to the reduction in the number of outstanding
shares resulting from the reverse stock split. The New Shares issued pursuant
to
the reverse stock split will be fully paid and non-assessable. All New Shares
will have the same par value, voting rights and other rights as Old Shares.
Stockholders of the Company do not have preemptive rights to acquire additional
shares of common stock, which may be issued.
The
one
for twenty reverse stock split is being effectuated by reducing the number
of
issued and outstanding shares at the ratio of 20 for 1. The authorized number
of
shares of common stock shall not be impacted by the reverse stock split.
Accordingly, as a result of the reverse stock split, the Company will have
740,584,225 authorized unissued shares, which shares may be issued in connection
with acquisitions or subsequent financings. There can be no assurance that
the
Company will be successful in making any such acquisitions or obtaining any
such
financings. In addition, the reverse stock split has potentially dilutive
effects on each of the shareholders. Each of the shareholders may be diluted
to
the extent that any of the authorized but unissued shares are subsequently
issued.
The
reverse stock split will not alter any shareholder's percentage interest
in the
Company's equity, except to the extent that the reverse stock split results
in
any of the Company's shareholders owning a fractional share. No fractional
shares shall be issued. Any shareholder who beneficially owns a fractional
share
of the Company's common stock after the reverse stock split, will receive
a cash
payment in lieu of such fractional share. The principal effects of the reverse
stock split will be that the number of shares of Common Stock issued and
outstanding will be reduced from 188,878,008 to approximately
9,443,900.
In
addition, commencing with the effective date of the reverse stock split,
all
outstanding options entitling the holders thereof to purchase shares of the
Company's common stock will entitle such holders to receive, upon exercise
of
their options, one-twentieth of the number of shares of the Company's common
stock which such holders may purchase upon exercise of their options. In
addition, commencing on the effective date of the reverse stock split, the
exercise price of all outstanding options will be increased by 20.
Under
the
Utah Law, the state in which the Company is incorporated, the reverse stock
split does not require the Company to provide dissenting shareholders with
a
right of appraisal and the Company will not provide shareholders with such
right.
The
Company believes that the Federal income tax consequences of the reverse
stock
split to holders of common stock will be as follows:
(i)
Except as explained in (v) below, no income gain or loss will be recognized
by a
shareholder on the surrender of the current shares or receipt of the certificate
representing new post-split shares.
(ii)
Except as explained in (v) below, the tax basis of the New Shares will equal
the
tax basis of the Old Shares exchanged therefor.
(iii)
Except as explained in (v) below, the holding period of the New Shares will
include the holding period of the Old Shares if such Old Shares were held
as
capital assets.
(iv)The
conversion of the Old Shares into the new shares will produce no taxable
income
or gain or loss to the Company.
(v)
The
Federal income tax treatment of the receipt of the additional fractional
interest by a shareholder is not clear and may result in tax liability not
material in amount in view of the low value of such fractional
interest.
The
Company's opinion is not binding upon the Internal Revenue Service or the
courts, and there can be no assurance that the Internal Revenue Service or
the
courts will accept the positions expressed above.
THE
ABOVE
REFERENCED IS A BRIEF SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON
THE
PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE STOCK SPLIT. THIS SUMMARY
DOES
NOT PURPORT TO BE COMPLETE AND DOES NOT ADDRESS THE FEDERAL INCOME TAX
CONSEQUENCES TO TAXPAYERS WITH SPECIAL TAX STATUS. IN ADDITION, THIS SUMMARY
DOES NOT DISCUSS THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY,
STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE, AND DOES NOT
DISCUSS ESTATE, GIFT OR OTHER TAX CONSEQUENCES OTHER THAN INCOME TAX
CONSEQUENCES. THE COMPANY ADVISES EACH PARTICIPANT TO CONSULT HIS OR HER
OWN TAX
ADVISOR REGARDING THE TAX CONSEQUENCES OF THE STOCK SPLIT AND FOR REFERENCE
TO
APPLICABLE PROVISIONS OF THE CODE.
PROPOSAL
2
MERGER
OF TWL CORPORATION, A UTAH CORPORATION,
WITH
AND INTO
TWL
CORPORATION , A NEVADA CORPORATION
On
August 23, 2007, the Company’s board of directors voted unanimously to approve
the Migratory Merger and recommended the Migratory Merger to its stockholders
for their approval. On October 18, 2007, the holders of 57% of the
Common Stock consented in writing to approve the Migratory
Merger. The Migratory Merger will be consummated pursuant to an
agreement and plan of merger between the TWL Corporation (“New Company”), a copy
of which is contained in Exhibit A (the “Agreement and Plan of
Merger”). Copies of the certificate of incorporation (“Nevada
Certificate”) and bylaws (“Nevada Bylaws”), which will serve as New Company’s
certificate of incorporation and bylaws following the Migratory Merger are
attached to the Agreement and Plan of Merger. The Agreement and Plan
of Merger provides that the Company will merge with and into New
Company.
The
proposed Migratory Merger will
effect a change in the legal domicile of the Company and other changes of
a
legal nature, the most significant of which are described below. However,
the
Migratory Merger will not result in any change in the Company’s business,
management, location of its principal executive offices, assets, liabilities
or
net worth (other than as a result of the costs incident to the Migratory
Merger,
which are immaterial). The Company’s Common Stock will continue to trade without
interruption on the Over the Counter Bulletin Board.
TWL
Corporation (name of New Company)
New
Company, which will be the surviving corporation, was incorporated under
the
Nevada General Corporation Law (the “NGCL”) on *, exclusively for the purpose of
merging with the Company.
New
Company is a newly formed corporation with one share of common stock issued
and
outstanding held by the Company, with only minimal capital. The terms of
the
Migratory Merger provide that the currently issued one share of common stock
of
New Company held by the Company will be cancelled. As a result, following
the
Migratory Merger, the Company’s current stockholders will be the only
stockholders of the newly merged corporation.
The
articles of incorporation and bylaws of the Company and the certificate of
incorporation and bylaws of New Company, a Nevada company, are available
for
inspection by our stockholders at the Company’s principal offices located
at 4101 International Parkway, Carrollton, Texas 75007, telephone (972)
309-4000.
The
Agreement and Plan of Merger
The
Agreement and Plan of Merger provides that the Company will merge with and
into
New Company, with New Company being the surviving corporation. New Company
will
assume all assets and liabilities of the Company.
Filing
of the Articles of Merger
The
Company intends to file the Certificate of Merger and Articles of Merger
with
the Secretaries of State of Nevada and Utah, respectively, when the actions
taken by the Company’s board of directors and the consenting stockholders become
effective which will be on or about *, 2007, which is at least 20 days from
the
mailing of this Information Statement to the stockholders of record on the
Record Date.
Effect
of Migratory Merger
Under
the
Utah Business Corporation Act (“UBCA”), when the Migratory Merger takes
effect:
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Every
other corporation party to the merger (in this case, the Company,
a Utah
Company) merges into the surviving corporate (New Company) and
the
separate existence of every corporation except the surviving corporation
ceases;
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The
title to all real estate and other property owned by each corporation
party to the merger is transferred to and vested in the surviving
corporation without reversion or
impairment;
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The
surviving corporation has all of the liabilities of each corporation
party
to the merger;
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A
proceeding pending against any corporation party to the merger
may be
continued as if the Migratory Merger did not occur, or the surviving
corporation may be substituted in the proceeding for the corporation
whose
existence has ceased;
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The
articles of incorporation of the surviving corporation are amended
to the
extend provided in the plan of
merger;
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The
shares of each corporation party to the merger, which are to be
converted
into shares, obligations, or other securities of the surviving
or any
other corporation or into money or other property, are converted,
and the
former holders of the shares are entitled only to the rights provided
in
the articles of merger or to their rights under UBCA Part
13.
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On
the
effective date of the Migratory Merger, the Company will be deemed incorporated
under the NGCL. Consequently, the Company will be governed by the Nevada
Certificate and Nevada Bylaws filed with the Agreement and Plan of
Merger.
Dissent
Rights of the Company’s Stockholders
Any
Company stockholder is entitled to be paid the fair value of its shares in
accordance with Section 16-10a-1302 of the UBCA if the stockholder dissents
to
the Migratory Merger. A brief summary of the provisions of UBCA Section
16-10a-1302 is set forth below and the complete text of said Sections is
set
forth in Exhibit B.
Because
the Migratory Merger has been approved by the required vote of the Company's
stockholders and will become effective twenty days from the mailing of this
Information Statement, each holder of shares of the Company’s Common Stock who
asserts dissenters' rights and who follows the procedures set forth in Section
16-10a-1323 of UBCA, will be entitled to have his or her shares of the Company’s
Common Stock purchased by the Company for cash at their fair market value.
The
fair market value of shares of the Company’s Common Stock will be determined as
of the day before the first approval of the Migratory Merger by the holders
of
57% of the Common Stock of the Company, excluding any appreciation or
depreciation in consequence of the Migratory Merger.
A
holder
who wishes to exercise dissenters' rights should demand payment and deposit
share certificates by the date or dates set in the dissenters’ notice, as
required in Section 16-10a-1323 of UBCA. Any stockholder who does not follow
the
foregoing is not entitled to payment for his or her shares under
UBCA.
In
accordance with the regulations promulgated under the Exchange Act, the
authorization of the Migratory Merger will not become effective until twenty
days after the Company has mailed this Information Statement to the stockholders
of the Company. Therefore, within ten days of the effective date of such
approval, the Company must mail a written dissenter's notice of such approval
(the "Dissenter's Notice") to all stockholders who asserted their dissenters'
rights against the Migratory Merger.
The
foregoing summary does not purport to provide comprehensive statements of
the
procedures to be followed by a dissenting stockholder who seeks payment of
the
fair value of his shares of the Company’s Common Stock. UBCA establishes the
procedures to be followed and failure to do so may result in the loss of
all
dissenters' rights. Accordingly, each stockholder who might desire to exercise
dissenters' rights should carefully consider and comply with the provisions
of
these sections and consult his legal advisor.
The
discussion contained herein is qualified in its entirety by and should be
read
in conjunction with the Agreement and Plan of Merger and the Certificate
of
Incorporation.
Upon
filing a notice of election to dissent a dissenting shareholder will cease
to
have any of the rights of a shareholder except the right to be paid the fair
value of his Company stock pursuant to the UBCA. If a shareholder loses his
dissenters' rights, either by withdrawal of his demand or otherwise, he will
not
have the right to receive a cash payment for his Company stock and will be
reinstated to all of his rights as a shareholder as they existed at the time
of
the filing of his demand.
THE
PROVISIONS OF UBCA SECTIONS 16-10A-1302 to 16-10A-1323 ARE TECHNICAL AND
COMPLEX. IT IS SUGGESTED THAT ANY SHAREHOLDER WHO DESIRES TO EXERCISE RIGHTS
TO
DISSENT CONSULT LEGAL COUNSEL, AS FAILURE TO COMPLY STRICTLY WITH SUCH
PROVISIONS MAY LEAD TO A LOSS OF DISSENTERS' RIGHTS.
Principal
Reasons for the Change of Domicile
The
Company’s board of directors believes that the change of domicile will give the
Company a greater measure of flexibility and simplicity in corporate governance
than is available under Utah law and will increase the marketability of the
Company's securities.
The
State
of Nevada is recognized for adopting comprehensive modern and flexible corporate
laws which are periodically revised to respond to the changing legal and
business needs of corporations. For this reason, many major corporations
have
initially incorporated in Nevada or have changed their corporate domiciles
to
Nevada in a manner similar to that proposed by the
Company. Consequently, the Nevada judiciary has become particularly
familiar with corporate law matters and a substantial body of court decisions
has developed construing Nevada law. Nevada corporate law, accordingly, has
been, and is likely to continue to be, interpreted in many significant judicial
decisions, a fact which may provide greater clarity and predictability with
respect to the Company's corporate legal affairs. For these reasons,
the Company’s board of directors believes that the Company's business and
affairs can be conducted to better advantage if the Company is able to operate
under Nevada law. See "Significant Differences between the Corporation Laws
of
Nevada and Utah."
Principal
Features of the Change of Domicile
The
change of domicile will be effected by the merger of the Company, a
Utah corporation, with and into, New Company, a newly
formed wholly-owned subsidiary of the Company that was incorporated on *,
2007
under the NGCL for the purpose of effecting the change of domicile. The change
of domicile will become effective upon the filing of the requisite merger
documents in Nevada and Utah, which filings will occur on the effective date
of
the Migratory Merger. Following the Migratory Merger, New Company will be
the
surviving corporation and will operate under the name “TWL
Corporation.”
On
the
effective date of the Migratory Merger, (i) each issued and outstanding share
of
Common Stock of the Company, with no par value, shall be converted into one
share of common stock of New Company, with no par value (“New Company Common
Stock”), and (ii) each outstanding share of New Company Common Stock held by the
Company shall be retired and canceled and shall resume the status of authorized
and unissued New Company Common Stock.
No
certificates or scrip representing fractional shares of New Company Common
Stock
will be issued upon the surrender for exchange of Common Stock and no dividend
or distribution of New Company shall relate to any fractional share, and
no
fractional New Company Common Stock interest will entitle the owner thereof
to
vote or to any right of a stockholder of New Company.
At
the
effective date of the Migratory Merger, New Company will be governed by the
Nevada Certificate, the Nevada Bylaws and the NGCL, which include a number
of
provisions that are not present in the Company Articles, the Company Bylaws
or
the UBCA. Accordingly, as described below, a number of significant changes
in
shareholders' rights will be affected in connection with the change in domicile,
some of which may be viewed as limiting the rights of shareholders.
Upon
consummation of the Migratory Merger, the daily business operations of New
Company will continue as they are presently conducted by the Company, at
the
Company's principal executive offices at 4101 International Parkway, Carrolton,
Texas 75007. The authorized capital stock of New Company will consist
of 750,000,000 shares of common stock, no par value ("Nevada Common Stock")
and
10,000,000 shares of preferred stock, with no par value ("Nevada Preferred
Stock"). The Nevada Preferred Stock will be issuable in series by action
of the
New Company board of directors. The New Company board of directors will be
authorized, without further action by the stockholders, to fix the designations,
powers, preferences and other rights and the qualifications, limitations
or
restrictions of the unissued Nevada Preferred Stock including shares of Nevada
Preferred Stock having preferences and other terms that might discourage
takeover attempts by third parties.
The
New
Company board of directors will consist of those persons presently serving
on
the board of directors of the Company. The individuals who will serve
as executive officers of New Company are those who currently serve as executive
officers of the Company. Such persons and their respective terms of office
are
set forth below under the caption "Management."
Pursuant
to the terms of the Agreement and Plan of Merger, the Migratory Merger may
be
abandoned by the board of directors of the Company and New Company at any
time
prior to the effective date of the Migratory Merger. In addition, the board
of
directors of the Company may amend the Agreement and Plan of Merger at any
time
prior to the effective date of the Migratory Merger provided that any amendment
made may not, without approval by the stockholders of the Company who have
consented in writing to approve the Migratory Merger, alter or change the
amount
or kind of New Company Common Stock to be received in exchange for or on
conversion of all or any of the Common Stock, alter or change any term of
the
Nevada Certificate or alter or change any of the terms and conditions of
the
Agreement and Plan of Merger if such alteration or change would adversely
affect
the holders of Common Stock.
Exchange
of Share Certificates.
As
soon
as practicable on or after the change of domicile, the Company’s stockholders of
record immediately prior to the change of domicile will be sent detailed
instructions concerning the procedures to be followed for submission of
certificates representing Common Stock to the Company’s transfer agent, together
with a form of transmittal letter to be sent to the transfer agent at the
time
such certificates are submitted.
After
the
change of domicile, the transfer agent will deliver to any holder who has
previously submitted a duly completed and executed transmittal letter and
a
certificate representing the Common Stock, a certificate issued by the Company
representing an equal number of shares of Common Stock into which such shares
of
the Common Stock were converted.
After
the
change of domicile but before a certificate representing Common Stock is
surrendered, certificates representing New Company Common Stock will represent
the number of shares of Common Stock as a Nevada corporation into which such
Common Stock was converted pursuant to the terms of the change of domicile.
The
Company’s transfer agent will deliver certificates representing the appropriate
amount and type of our capital stock in accordance with the stockholder’s
instructions for transfer or exchange.
Failure
by a stockholder to return appropriate transmittal letters or to surrender
certificates representing Common Stock will not affect such person’s rights as a
stockholder, as such stockholder’s certificates representing Common
Stock following the change of domicile will represent the number of shares
of
New Company Common Stock as a Nevada corporation into which such Common Stock
was converted pursuant to the terms of the change of domicile, and will present
no material consequences to the Company.
Capitalization
The
authorized capital of the Company, on the Record Date, consisted of 750,000,000
shares of Common Stock, with no par value, and 10,000,000 shares of Preferred
Stock, with no par value, 188,878,008 shares of Common Stock and
4,300,000 shares of Preferred Stock were outstanding. The authorized capital
of
New Company, which will be the authorized capital of the Company after the
change in domicile, consists of 750,000,000 shares of Nevada Common Stock
and
10,000,000 shares of Nevada Preferred Stock. After the Migratory Merger and
the
resulting automatic conversion of the Series A Convertible Preferred Stock,
New
Company will have outstanding approximately 9,443,900 shares of Nevada Common
Stock and zero shares of Nevada Preferred Stock. The change of domicile will
not
affect total stockholder equity or total capitalization of the
Company.
The
New
Company board of directors may in the future authorize, without further
stockholder approval, the issuance of such shares of Nevada Common Stock
or
Nevada Preferred Stock to such persons and for such consideration upon such
terms as the New Company board of directors determines. Such issuance could
result in a significant dilution of the voting rights and, possibly, the
stockholders' equity, of then existing stockholders.
There
are
no present plans, understandings or agreements, and the Company is not engaged
in any negotiations that will involve the issuance of the Nevada Preferred
Stock
to be authorized. However, the New Company board of directors believes it
prudent to have shares of Nevada Preferred Stock available for such corporate
purposes as the New Company board of directors may from time to time deem
necessary and advisable including, without limitation, acquisitions, the
raising
of additional capital and assurance of flexibility of action in the
future.
Significant
Differences between the Corporation Laws of Nevada and
Utah
The
Company is incorporated under the laws of the State of Utah and New Company
is
incorporated under the laws of the State of Nevada. Upon consummation of
the
Migratory Merger, the stockholders of the Company, whose rights currently
are
governed by Utah law and the Company Articles and the Company Bylaws, which
were
created pursuant to Utah law, will become stockholders of a Nevada company,
New
Company, and their rights as stockholders will then be governed by Nevada
law
and the Nevada Certificate and the Nevada Bylaws which were created under
Nevada
law.
Certain
differences exist between the corporate statutes of Nevada and Utah. The
most
significant differences, in the judgment of the management of the Company,
are
summarized below. This summary is not intended to be complete, and stockholders
should refer to the NGCL and the Utah Business Corporation Act to understand
how
these laws apply to the Company and New Company.
Number
of Directors.
Nevada.
Nevada Law provides that a corporation must have at least one director, and
may
provide in its articles of incorporation or in its bylaws for a fixed number
of
directors or a viable number of directors.
Utah.
Utah Law provides that a corporation must have a minimum of three directors.
Before any shares are issues, a board may consist of one or more individuals.
After the shares are issued and for as long as a corporation has fewer than
three shareholders entitled to vote for the election of directors, its board
of
directors may consist of a number of individuals equal or greater than the
number of those shareholders.
Required
Officers
Nevada.
Nevada Law provides that every corporation must have a president, a secretary
and a treasure.
Utah.
Utah Law provides that a corporation shall have the officers designated in
its
bylaws or by the board of directors in a manner no inconsistent with the
bylaws.
Proxies
Nevada.
Under Nevada Law, proxies are valid for six months unless otherwise provided
in
the proxy.
Utah.
Utah Law provides that proxies may not be valid for longer than 11 months
unless
otherwise provided in the proxy.
Shareholders’
Appraisal Rights
Nevada.
Under Nevada law, shareholders of a corporation have appraisal rights in
cases
of merger or consolidations which require the vote of shareholders; provided,
that no appraisal rights are available to holders of a class or series of
stock
that is listed on a national securities exchange or that is held of record
by
more than 2,000 shareholders. Nevada Law does not
provide such rights with respect to a sale of all or substantially all of
the
assets of a corporation.
Utah.
Under Utah Law, shareholders of a corporation have the right of appraisal
in
cases of mergers, consolidations, and the sale or mortgage of all or
substantially all of the assets of the corporation other than in the ordinary
course of business, provided, that no appraisal rights are available to holders
of a class or series of stock that is listed on a national securities exchange
or that is held of record by more than 2,000 shareholders.
Shareholders’
Approval of Mortgage
In
Utah, shareholder approval is required prior to the mortgage of all
or
substantially all of the assets of a corporation, but such approval is not
required in Nevada.
Shareholders’
Vote for an Acquisition by a Merger
Nevada
law permits acquisitions by a merger without shareholder vote where the Nevada
corporation survives, does not change its charter, and does not issue an
amount
of stock greater than the number of shares equal to 20% of the series of
shares
outstanding before the merger. Under Utah law, a shareholder vote is
required in such cases.
Limitation
to Directors’ Liability
Nevada.
Nevada law authorizes corporations to adopt provisions in their certificate
of
incorporation to limit the liability of a director for damages for breach
of his
or her fiduciary duty, except for breaches for acts or omissions involving
intentional misconduct, knowing violations of law or fraud or for the payment
of
unlawful dividends.
Utah.
Utah Law has a similar statute which permits the limitation of money
damages for breach of a director's fiduciary duty, except for breaches involving
transaction from which the director derived an improper personal benefit
or for
intentional infliction of harm on the Company or for improper payment of
dividends.
Other
than the above summarized items, the change of domicile would not have an
effect
on shareholder rights or privileges, but would be accomplished through a
share
for share exchange, replacing each share of issued and outstanding stock
in the
Utah corporation with a share of stock in the Nevada corporation. The number
of
shares of the new Nevada corporation issued and outstanding following the
change
of domicile would be the same as the number of shares of the Company issued
and outstanding immediately prior to the change of domicile.
Officers
and Directors
Upon
the
effective date of the Migratory Merger, the present officers and directors
of
the Company will continue to be the officers and directors of New
Company.
Federal
Tax Consequences
The
following is a discussion of certain federal income tax considerations that
may
be relevant to holders of Common Stock who receive New Company Common Stock
as a
result of the proposed change of domicile. No state, local, or foreign tax
consequences are addressed herein.
This
discussion does not address the state, local, federal or foreign income tax
consequences of the change of domicile that may be relevant to particular
stockholders, such as dealers in securities, or Company stockholders who
exercise dissenters’ rights. In view of the varying nature of such tax
considerations, each stockholder is urged to consult his own tax adviser
as to
the specific tax consequences of the proposed change of domicile , including
the
applicability of federal, state, local, or foreign tax laws. Subject to the
limitations, qualifications and exceptions described herein, and assuming
the
change of domicile qualifies as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), the
following federal income tax consequences generally should result:
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o
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No
gain or loss should be recognized by the stockholders of the Company
upon
conversion of their Common Stock into Nevada Common Stock
pursuant to the change of domicile;
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o
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The
aggregate tax basis of the Nevada Common Stock received by each
stockholder of the Company in the change of domicile should be
equal to
the aggregate tax basis of Common Stock converted in exchange
therefor;
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o
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The
holding period of Nevada Common Stock received by each stockholder
of the
Company in the change of domicile should include the period during
which
the stockholder held his Common Stock converted therefor, provided
such
Common Stock is held by the stockholder as a capital asset on the
effective date of the change of domicile;
and
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o
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The
Company should not recognize gain or loss for federal income tax
purposes
as a result of the change of
domicile.
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The
Company has not requested a ruling from the Internal Revenue Service or an
opinion of counsel with respect to the federal income tax consequences of
the
change of domicile under the Code. The Company believes the change of
domicile will constitute a tax-free reorganization under Section 368(a) of
the
Code, inasmuch as Section 368(a)(1)(F) of the Code defines a reorganization
as a
mere change in identity, form, or place of organization of the
Company.
The
Company will provide upon request
and without charge to each stockholder receiving this Information Statement
a
copy of the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2006, including the financial statements and financial statement
schedule information included therein, as filed with the SEC. The
Annual Report is incorporated in this Information Statement. You are encouraged
to review the Annual Report together with subsequent information filed by
the
Company with the SEC and other publicly available information.
EXHIBIT
INDEX
Exhibit
A Agreement
and Plan of Merger
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By
Order of the Board of Directors
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/s/ Doug
Cole
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Doug
Cole
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Secretary
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Dated:
*, 2007
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