AMENDMENT NO. 1 TO THE
INFORMATION STATEMENT PURSUANT TO
SECTION 14(c) OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2)
[ ] Definitive Information Statement
INTERGOLD CORPORATION
----------------------------------------------
(Name of Registrant as Specified in its Charter)
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INTERGOLD CORPORATION
435 Martin Street, Suite 2000
Blaine, Washington 98230
INFORMATION STATEMENT
Dated
May 1, 2003
GENERAL
This Information Statement is being circulated to the shareholders of
Intergold Corporation, a Nevada corporation (the "Company"), in connection with
the taking of corporate action without a meeting upon the written consent (the
"Written Consent") of the holders of a majority of the outstanding shares of the
Company's $0.00025 par value common stock (the "Common Stock"). The names of the
shareholders who will be signing the Written Consent and their respective equity
ownership of the Company are as follows: (i) Sonanini Holdings Ltd. holding of
record 34,226,513 shares of Common Stock (21.89%); (ii) TriStar Financial
Services Inc. holding of record 31,957,630 shares of Common Stock (20.44%); and
(iii) Alexander Cox holding of record 22,912,400 shares of Common Stock
(14.66%).
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
As more completely described below, the matters upon which action is
proposed to be taken are: (i) to authorize the Board of Directors to effect a
reverse stock split of one-for-three hundred (the "Reverse Stock Split") of the
Company's outstanding Common Stock, depending upon a determination by the Board
of Directors that a Reverse Stock Split is in the best interests of the Company
and its shareholders; (ii) to approve the sale of the Company's subsidiary
pursuant to future possible restructuring initiatives which includes approval
and authorization of any sale and purchase agreement relating thereto (the
"Proposed Sale and Purchase"); (iii) to approve the election of one director to
serve as a director of the Company until the next annual meeting of the
shareholders or until his successor has been elected and qualified; (iv) to
approve a stock option plan for key personnel of the Company (the "Stock Option
Plan"); and (v) to ratify the selection of LaBonte & Co. as the Company's
independent public accountants for the fiscal year ending December 31, 2003.
The date, time and place at which action is to be taken by written consent
on the matters to be acted upon, and at which consents are to be submitted, is
July 23, 2003, at 10:00 a.m. (Pacific Time) at 435 Martin Street, Suite 2000,
Blaine, Washington 98230.
This information statement is being first sent or given to security holders
on approximately June 19, 2003.
VOTING SECURITIES AND VOTE REQUIRED
On March 15, 2003, the Board of Directors authorized and approved, subject
to shareholder approval, certain corporate actions, which the Board of Directors
deemed to be in the best interests of the Company and its shareholders. The
Board of Directors further authorized the preparation and circulation of this
information statement and a shareholders' consent to the holders of a majority
of the outstanding shares of the Company's Common Stock.
There are currently 156,328,943 shares of the Company's Common Stock
outstanding, and each share of Common Stock is entitled to one vote. The Written
Consent of ten (10) or less shareholders of the Company holding at least
78,164,472 shares of the Common Stock issued and outstanding is necessary to
approve the matters being considered. The record date for determining
shareholders entitled to vote or give Written Consent is May 30, 2003 (the
"Record Date"). Except for the Common Stock there is no other class of voting
securities outstanding at this date.
The matters upon which action is proposed to be taken are: (i) the approval
of the Reverse Stock Split; (ii) the approval of the Proposed Sale and Purchase;
(iii) the election of one director to serve on the board of directors of the
Company as follows: Grant R. Atkins; (iv) the approval of the adoption of the
Stock Option Plan for key personnel; and (v) the ratification of the selection
of LaBonte & Co. as the Company's independent public accountants for the fiscal
year ending December 31, 2003.
The cost of this Information Statement, consisting of printing, handling
and mailing of the Information Statement and related material, and the actual
expense incurred by brokerage houses, custodians, nominees and fiduciaries in
forwarding the Information Statement to the beneficial owners of the shares of
Common Stock, will be paid by the Company.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
CURRENT OFFICERS AND DIRECTORS
As of the date of this Information Statement, the director and executive
officer of the Company is as follows:
Name Age Position with the Company
- ---- --- ------------------
Grant Atkins 42 President/Secretary/Treasurer and
Director
As of the date of this Information Statement, the director and executive
officer of the Company's wholly-owned subsidiary, International Gold Corporation
("INGC") is as follows:
Name Age Position with INGC
- ---- --- ------------------
Grant Atkins 42 President/Secretary/Treasurer and
Director
GRANT ATKINS has been the President of the Company since 2001 and the
Secretary, Treasurer and a Director of the Company since September of 1998. Mr.
Atkins has also been the sole director and the President, Secretary and
Treasurer of International Gold Corporation since March of 1998. Mr. Atkins has
provided organization and controller duties in the Company since its formation.
For the past six years, Mr. Atkins has been self-employed and has acted as a
financial and project coordination consultant to clients in government and
private industry. He has extensive multi-industry experience in the fields of
finance, administration and business development. During 1998 through current
date, Mr. Atkins is a consultant through the private management companies of
TriStar Financial Services, Inc. and Investor Communications International, Inc.
Mr. Atkins is the director and president for Vega-Atlantic Corporation, a public
traded corporation engaged in the worldwide exploration and development of oil
and gas, gold and other minerals. Mr. Atkins is also a member of the board of
directors of Petrogen Corp., a publicly traded corporation engaged in the energy
industry and a member of the board of directors of GeneMax Corp., a publicly
traded biotechnology corporation specializing in the discovery and development
of immunotherapeutics aimed at the treatment and eradication of cancer and
therapies for infectious diseases, autoimmune disorders and transplant tissue
rejection.
For further information concerning the officers and directors of the
Company, please see "DIRECTORS OF THE COMPANY - Information Concerning
Nominees."
AUDIT COMMITTEE
As of the date of this Information Statement the Company has not appointed
members to an audit committee. As of the date of this Information Statement no
audit committee exists. Therefore, the role of an audit committee has been
conducted by the Board of Directors of the Company.
After the appointment of additional directors of the Company, the Company
intends to establish an audit committee. When established, the audit committee
will be comprised of at least two disinterested members. When established, the
audit committee's primary function will be to provide advice with respect to the
Company's financial matters and to assist the Board of Directors in fulfilling
its oversight responsibilities regarding finance, accounting, tax and legal
compliance. The audit committee's primary duties and responsibilities will be:
(i) to serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system; (ii) to review and
appraise the audit efforts of the Company's independent accountants; (iii) to
evaluate the Company's quarterly financial performance as well as its compliance
with laws and regulations; (iv) to oversee management's establishment and
enforcement of financial policies and business practices; and (v) to provide an
open avenue of communication among the independent accountants, management and
the Board of Directors.
The Board of Directors has considered whether the provision of such
non-audit services would be compatible with maintaining the principal
independent accountant's independence. The Board of Directors considered whether
the Company's principal independent accountant was independent, and concluded
that the auditor for the previous fiscal year ended December 31, 2002 was
independent.
AUDIT FEES
During fiscal year ended December 31, 2002, the Company incurred
approximately $5,000 in fees to its principal independent accountant for
professional services rendered in connection with audit of the Company's
financial statements for fiscal year ended December 31, 2002 and $5,000 for the
review of the Company's financial statements for the quarters ended March 31,
2002, June 30, 2002 and September 30, 2002.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
During fiscal year ended December 31, 2002, the Company did not incur any
fees for professional services rendered by its principal independent accountant
for certain information technology services which may include, but is not
limited to, operating or supervising or managing the Company's information or
local area network or designing or implementing a hardware or software system
that aggregate source data underlying the financial statements.
ALL OTHER FEES
During fiscal year ended December 31, 2002, the Company did not incur any
other fees for professional services rendered by its principal independent
accountant for all other non-audit services which may include, but is not
limited to, tax-related services, actuarial services or valuation services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as of the Record Date
concerning: (i) each person who is known by the Company to own beneficially more
than five percent (5%) of the Company's outstanding Common Stock; (ii) each of
the Company's executive officers, directors and key employees; and (iii) all
executive officers and directors as a group. Common Stock not outstanding but
deemed beneficially owned by virtue of the right of an individual to acquire
shares within 60 days is treated as outstanding only when determining the amount
and percentage of Common Stock owned by such individual. Except as noted, each
person or entity has sole voting and sole investment power with respect to the
shares shown.
CLASS OF STOCK NAME AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERSHIP OF OWNERSHIP
- -------------------------------------------------------------------------------
(2) (1)
Common Stock Sonanini Holdings Ltd. 34,226,513 21.89%
1006 - 100 Park Royal
Vancouver, British Columbia
Canada V7T 1A2
(3) (1)
Common Stock TriStar Financial 31,957,630 20.44%
Services Inc.
435 Martin Street, Suite 2000
Blaine, Washington 98270
(4) (1)
Common Stock Intergold Mining 17,424,300 11.15%
Corporation
3305 W. Spring Mountain Rd.
Suite 60
Las Vegas, Nevada 89102
(1)
Common Stock Alexander W. Cox 22,912,400 14.66%
428 - 755 Burrard Street
Vancouver, British Columbia
Canada V6Z 1X6
(5)
Common Stock All officers and directors 1,000,000 0.64%
as a group (1 person)
- --------------------------------------------------------------------------------
(1)
These are restricted shares of Common Stock.
(2)
The sole officer/shareholder of Sonanini Holdings Ltd. is Wolfgang Rauball
with a business address of Kartnerring 5-7, Top 3D A, 1010 Vienna, Austria. The
sole director of Sonanini Holdings Ltd. is Vojtech Agyagos with a business
address of 1006 - 100 Park Royal, West Vancouver, British Columbia, Canada V7T
1A2.
(3)
The sole officer/director of TriStar Financial Services, Inc. is Marcus
Johnson, a U.S. citizen, with a business address of 4507 Lakeway Drive,
Bellingham, Washington 98226. The sole shareholder of TriStar is Colonial
Financial Group, Inc., with a business address of Gubelstrasse 15, CH-6300, 2
u.g., Switzerland.
(4)
Pursuant to the terms of a stock-for-stock agreement dated July 23, 1997
between the Company and Intergold Mining Corporation, the Company: (i) issued
40,000,000 shares of its restricted Common Stock to Intergold Mining Corporation
in exchange for one share of INGC, which constituted all of the issued and
outstanding shares of INGC, held by Intergold Mining Corporation; and (ii)
acquired its subsidiary INGC and associated assets, which consisted primarily of
title to a block of 321 contiguous unpatented lode mining claims located in
Idaho (the :Blackhawk Property"). As of the date of this Information Statement,
Intergold Mining Corporation holds of record 17,424,300 shares of restricted
Common Stock.
(5)
Includes the assumption of the exercise of 1,000,000 options by the
officer/director as option holder pursuant to the terms of the Non-Qualified
Stock Option Plan to purchase 500,000 shares of restricted Common Stock at $0.50
per share and 500,000 shares of restricted Common Stock at $1.00 per share,
respectively.
EXECUTIVE COMPENSATION
As of the date of this Information Statement, all executive officers and
directors of the Company are reimbursed for any out-of-pocket expenses incurred
by them on behalf of the Company. Previously, all officers of the Company may be
paid up to $5,000 per month for their executive officer roles, however, no such
expenses were incurred during fiscal year ended December 31, 2002. As of fiscal
year ended December 31, 2001, the Company had accrued a total of approximately
$52,000 as officers and directors executive compensation, which was cancelled
effective December 31, 2001, resulting in a recovery of directors' fees for
fiscal year ended December 31, 2001. None of the Company's directors or officers
are party to employment agreements with the Company. The Company presently has
no pension, health, annuity, insurance, profit sharing or similar benefit plans.
However, Grant Atkins, a director and officer of the Company, indirectly
derives remuneration from the Company through Investor Communications
International, Inc. ("ICI"), which provides a wide range of management,
financial and administrative services to the Company. Mr. Atkins is employed by
ICI and part of the management team provided by ICI to the Company.
The Company and ICI entered into a two-year consulting services and
management agreement dated January 1, 1999 and the Company's subsidiary,
International Gold Corporation, and Amerocan entered into a similar agreement
dated January 1, 1999 whereby ICI and Amerocan perform a wide range of
management, administrative, financial, marketing and public company services
including, but not limited to, the following: (i) international business
relations and strategy development, (ii) investor relations and shareholder
liaison, (iii) corporate public relations, press release and public information
distribution, (iv) property exploration management, including administration of
metallurgical development, metallurgical liaison, BLM liaison, engineering
company liaison, drilling administration, geologist liaison, mapping, survey and
catalogue, geostatistical liaison, environmental research, geological reports
compilation and due diligence efforts, (v) administration, including auditor and
legal liaison, media liaison, corporate minutebook maintenance and record
keeping, corporate secretarial services, printing and production, office and
general duties, and (vi) financial and business planning services, including
capital and operating budgeting, banking, bookkeeping, documentation, database
records, preparation of financial statements and creation of annual reports. On
January 1, 2001, the Company and ICI and International Gold Corporation and
Amerocan, respectively, renewed its consulting services and management agreement
for an additional two-year period. Subsequent to January 1, 2003, the consulting
agreement with ICI has been extended on a month-to-month basis and the
consulting agreement with Amerocan has expired and will not be renewed.
During fiscal year ended December 31, 2002, $106,000 was incurred payable
to ICI for amounts due and owing for operational management, administrative,
financial and other services rendered. During fiscal year ended December 31,
2002, net cash advances of $11,950 were made by ICI to the Company. During
fiscal year ended December 31, 2002, the Company paid $-0- to ICI and Amerocan
towards an aggregate principal amount due of $872,803 and $151,000,
respectively, plus accrued interest.
During fiscal year ended December 31, 2002, Grant Atkins received
approximately $17,325 from ICI for services provided to the Company. See
"Summary Compensation Table" below.
Executive compensation is subject to change concurrent with the Company's
requirements. None of the officers and directors of the Company are officers or
directors of ICI, nor does the Company own of record capital stock of ICI.
SUMMARY COMPENSATION TABLE
Annual Compensation Awards Payouts
--------------------- -------- -------
$ $ $ $ # $
Name/Position Year Salary Bonus Other RSA Options LTIP Other
- ------------- ---- ------ ----- ----- --- ------- ------ -----
(1)
Gary Powers 2000 0 0 $33,000 0 100,000 0 0
Prior Pres./ 2001 0 0 0 0 0 0 0
Director 2002 0 0 0 0 0 0 0
(1)
Grant Atkins 2000 0 0 $57,500 0 1,000,000 0 0
Pres./Director 2001 0 0 $12,500 0 0 0 0
2002 0 0 $17,325 0 0 0 0
(1)
Harold Gooding 2000 0 0 $13,500 0 200,000 0 0
Prior Director 2001 0 0 0 0 0 0 0
2002 n/a
(1)
Received pursuant to respective contractual arrangements between the
Company and Guest Investments, Ltd., and/or Amerocan Marketing, Inc. and/or ICI.
NON-QUALIFIED STOCK OPTION PLAN
Pursuant to the terms and provisions of a non-qualified stock option plan
(the "Non-Qualified SOP"), during fiscal years ended 1999 and 2000, the Board of
Directors of the Company authorized the grant of stock options to certain
officers, directors and significant consultants. As of the date of this
Information Statement, there are 3,450,000 stock options granted and outstanding
which are exercisable into 3,450,000 shares of Common Stock. Stock options
granted to executive officers and directors of the Company are as reflected
below in the "Options/SAR Grants Table." As of the date of this Information
Statement, none of the officers, directors or significant consultants have
exercised such stock options.
Options/SAR Grants Table
- --------------------------------------------------------------------------------
Name Number of Percent of Total Exercise Price Date of
Securities Options Granted Expiration
Underlying
Options
- --------------------------------------------------------------------------------
Harold Gooding 100,000 2.89% $0.50 12/27/17
100,000 2.89% $1.00 12/27/17
Gary Powers 50,000 1.45% $0.50 12/27/17
50,000 1.45% $1.00 12/27/17
Grant Atkins 500,000 14.49% $0.50 12/27/17
500,000 14.49% $1.00 12/27/17
Total 1,300,000 37.68%
- -------------------------------------------------------------------------------
No share options under Non-Qualified SOP have been exercised as at the date
of this Information Statement.
CERTAIN TRANSACTIONS
With the exception of the current contractual relations between the Company
and ICI, and as of the date of this Information Statement, the Company has not
entered into any other contractual arrangements with related parties. With the
exception of the contractual relations with ICI, there is not any other
currently proposed transaction, or series of the same to which the Company is a
party, in which the amount involved exceeds $60,000 and in which, to the
knowledge of the Company, any director, executive officer five percent (5%)
shareholder or any member of the immediate family of the foregoing persons, have
or will have a direct or indirect material interest.
The officers and directors of the Company are engaged in other businesses,
either individually or through partnerships and corporations in which they may
have an interest, hold an office or serve on the boards of directors. The
directors of the Company may have other business interests to which they may
devote a major or significant portion of their time. Certain conflicts of
interest, therefore, may arise between the Company and its directors. Such
conflicts are intended to be resolved through the exercise by the directors of
judgment consistent with their fiduciary duties to the Company. The officers and
directors of the Company intend to resolve such conflicts in the best interests
of the Company. The officers and directors will devote their time to the affairs
of the Company as necessary.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and the persons who beneficially own more than ten percent (10%) of
the Common Stock of the Company, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Copies of all filed
reports are required to be furnished to the Company pursuant to Rule 16a-3
promulgated under the Exchange Act. Based solely on the reports received by the
Company and on the representations of the reporting persons, the Company
believes that these persons have complied with all applicable filing
requirements during the fiscal year ended December 31, 2002.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO
MATTERS TO BE ACTED UPON
With the exception of the current director of the Company, and as of the
date of this Information Statement, there are no persons identified by
management of the Company who have an interest in the matters to be acted upon
nor who are in opposition to the matters to be acted upon.
As of the date of this Information Statement there are no persons who have
been a director or officer of the Company since the beginning of the last fiscal
year, or are currently a director or officer of the Company, that oppose any
action to be taken by the Company.
AUTHORIZATION FOR THE BOARD OF DIRECTORS OF THE COMPANY TO
EFFECTUATE A REVERSE STOCK SPLIT OF ONE-FOR-THREE HUNDRED
OF THE COMPANY'S ISSUED AND OUTSTANDING
SHARES OF COMMON STOCK
REVERSE STOCK SPLIT
The Board of Directors of the Company, at a special meeting, authorized and
approved, subject to shareholder approval, a Reverse Stock Split of
one-for-three hundred (1 for 300) of the Company's issued and outstanding shares
of Common Stock. The Reverse Stock Split will be effected as soon as possible
upon completion of solicitation and execution of the Written Consent. The intent
of the Reverse Stock Split is to: (i) reduce the large and unwieldy number of
shares of Common Stock currently issued and outstanding to a reasonable number
in light of potential future business prospects and operations; (ii) enhance the
future attractiveness of the Company's overall corporate and capital structure;
and (iii) increase the marketability and liquidity of the Company's Common
Stock.
If the Reverse Stock Split is approved by the shareholders pursuant to the
execution of the Written Consent of shareholders, it will be effected as soon as
possible upon execution of the Written Consent and upon a determination by the
Board of Directors that the Reverse Stock Split is in the best interests of the
Company and the shareholders. In the Board's judgment the Reverse Stock Split
would result in the greatest marketability and liquidity of the Common Stock,
based upon prevailing market conditions, the likely effect on the market price
of the Common Stock and other relevant factors.
If approved by the shareholders pursuant to the Written Consent, the
Reverse Stock Split will become effective on any date (the "Effective Date")
selected by the Board of Directors on or about July 23, 2003, upon filing the
appropriate documentation with NASDAQ. If no Reverse Stock Split is effected by
July 31, 2003, the Board of Directors may take action to abandon the Reverse
Stock Split without further shareholder action. The procedures for consummation
of the Reverse Stock Split are attached hereto as Exhibit A.
Purposes And Effects Of The Reverse Stock Split
Consummation of the Reverse Stock Split will alter the number of issued and
outstanding shares of Common Stock, which will be reduced from 156,328,943
shares to approximately 521,097 shares (excluding any increases resulting from
rounding of fractional interests).
The Common Stock is listed for trading on the OTC Bulletin Board under the
symbol "IGCO". On the Record Date the reported closing price of the Common Stock
on the OTC Bulletin Board was $0.03 per share. The Company intends to use its
best efforts in the future to cause its shares of Common Stock to be approved
for trading on the NASDAQ SmallCap Market (the "SmallCap Market") or other more
senior exchange. The Company currently does not qualify for admission to the
SmallCap Market because its per-share price of $0.03 (as of the close of trading
on May 30, 2003) is below the $3.00 level required for admission to the SmallCap
Market. Further, the Company's net tangible assets and shareholders' equity are
below the minimum requirements of $4,000,000 and $2,000,000, respectively, for
inclusion on the SmallCap Market. The Board of Directors believes that a Reverse
Stock Split will help result in attaining its goal of increasing the
marketability and liquidity of the Company's Common Stock.
Additionally, the Board believes that the current per-share price of the
Common Stock has limited the effective marketability of the Common Stock because
of the reluctance of many brokerage firms and institutional investors to
recommend lower-priced stocks to their clients or to hold them in their own
portfolios. Certain policies and practices of the securities industry may tend
to discourage individual brokers within those firms from dealing in lower-priced
stocks. Some of those policies and practices involve time-consuming procedures
that make the handling of lower priced stocks economically unattractive. The
brokerage commission on a sale of lower-priced stock may also represent a higher
percentage of the sale price than the brokerage commission on a higher priced
issue. Any reduction in brokerage commissions resulting from the Reverse Stock
Split may be offset, however, in whole or in part, by increased brokerage
commissions required to be paid by stockholders selling "odd lots" created by
such Reverse Stock Split.
On the Record Date, the number of record holders of the Common Stock was
approximately 60 and the number of beneficial holders of Common Stock was
estimated to be approximately 900. The Company does not anticipate that any
Reverse Stock Split will result in a significant reduction in the number of such
holders, and does not currently intend to effect any Reverse Stock Split that
would result in a reduction in the number of holders large enough to jeopardize
listing of the Common Stock on the SmallCap Market or the Company's being
subject to the periodic reporting requirements of the Securities and Exchange
Commission.
The Reverse Stock Split would have the following effects upon the number of
shares of Common Stock outstanding (156,328,943 shares as of the Record Date)
and no effect upon the number of authorized and unissued shares of Common Stock
(assuming that no additional shares of Common Stock are issued by the Company
after the Record Date and that the Reverse Stock Split is effected and without
taking into account any increase in the number of outstanding shares resulting
from the exercise of outstanding options and warrants). The Common Stock will
continue to be $0.00025 par value Common Stock following any Reverse Stock
Split, and the number of shares of Common Stock outstanding will be reduced. The
following example is intended for illustrative purposes.
Reverse Stock Common Stock Authorized Common Stock
Split Outstanding
----- ----------- ---------------------
1 for 300 521,097 200,000,000
At the Effective Date each share of the Common Stock issued and outstanding
immediately prior thereto (the "Old Common Stock"), will be reclassified as and
changed into the appropriate whole share of the Company's Common Stock, $0.0025
par value per share (the "New Common Stock"), subject to the treatment of
fractional share interests as described below. Shortly after the Effective Date,
the Company will send transmittal forms to the holders of the Old Common Stock
to be used in forwarding their certificates formerly representing shares of Old
Common Stock for surrender and exchange for certificates representing whole
shares of New Common Stock. No certificates representing fractional share
interests in the New Common Stock will be issued, and no such fractional share
interest will entitle the holder thereof to vote or to any rights of a
shareholder of the Company. In lieu of any such fractional share interest each
holder of Old Common Stock who would otherwise be entitled to receive a
fractional share of New Common Stock will in lieu receive one full share upon
surrender of certificates formerly representing such fractional share interest
of Old Common Stock held by such holder.
Federal Income Tax Consequences of the Reverse Stock Split
The following is a summary of the material federal income tax consequences
of the proposed Reverse Stock Split. This summary does not purport to be
complete and does not address the tax consequences to holders that are subject
to special tax rules, such as banks, insurance companies, regulated investment
companies, personal holding companies, foreign entities, nonresident alien
individuals, broker-dealers and tax-exempt entities. This summary is based on
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations
and proposed regulations, court decisions and current administrative rulings and
pronouncements of the Internal Revenue Service ("IRS"), all of which are subject
to change, possibly with retroactive effect, and assumes that the New Common
Stock will be held as a "capital asset" (generally, property held for
investment) as defined in the Code. Holders of Old Common Stock are advised to
consult their own tax advisers regarding the federal income tax consequences of
the proposed Reverse Stock Split in light of their personal circumstances and
the consequences under state, local and foreign tax laws.
1. The Reverse Stock Split will qualify as a recapitalization described
in Section 368(a)(1)(E) of the Code.
2. No gain or loss will be recognized by the Company in connection with
the Reverse Stock Split.
3. No gain or loss will be recognized by a shareholder who exchanges all
of his shares of Old Common Stock solely for shares of New Common
Stock.
4. The aggregate basis of the shares of New Common Stock to be received
in the Reverse Stock Split (including any whole shares received in
lieu of fractional shares) will be the same as the aggregate basis of
the shares of Old Common Stock surrendered in exchange therefore.
5. The holding period of the shares of New Common Stock to be received in
the Reverse Stock Split (including any whole shares received in lieu
of fractional shares) will include the holding period of the shares of
Old Common Stock surrendered in exchange therefore.
EACH HOLDER OF COMMON STOCK OF THE COMPANY IS URGED TO CONSULT WITH HIS OWN TAX
ADVISER WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED REVERSE STOCK
SPLIT, INCLUDING THE APPLICATION AND EFFECT OF THE LAWS OF ANY STATE, MUNICIPAL,
FOREIGN OR OTHER TAXING JURISDICTION.
BOARD RECOMMENDATION
The Board recommends approval of the Reverse Stock Split, and each of the
resolutions with respect thereto set forth in Exhibit A hereto.
APPROVAL OF THE SALE OF THE COMPANY'S SUBSIDIARY PURSUANT TO
FUTURE POSSIBLE RESTRUCTURING INITIATIVES, WHICH INCLUDES
APPROVAL OF THE PROPOSED SALE AND PURCHASE
The Board of Directors of the Company, at a special meeting, authorized the
sale of the Company's wholly-owned subsidiary, International Gold Corporation
("INGC"), pursuant to future possible restructuring initiatives, and approved
the execution of any sale and purchase agreement (collectively, the "Proposed
Sale and Purchase"). The Proposed Sale and Purchase would provide for the sale
by the Company of up to all of the issued and outstanding shares of common stock
of INGC held by the Company.
PRIOR OPERATIONAL HISTORY
Blackhawk Property
The Company's prior operational business activities were in the business of
exploration of gold and precious metals in the United States. The Company's
prior operational business activities had been carried out through International
Gold Corporation ("INGC"), the private wholly-owned subsidiary of the Company.
INGC's primary assets previously consisted of title to a block of 321 contiguous
unpatented lode mining claims located in Lincoln County, south-central Idaho
(the "Blackhawk Property"). As of the date of this Information Statement, the
Company has ceased to hold title to all previously held unpatented lode mining
claims that comprised the Blackhawk Property. Such claims have not been held by
the Company since August 31, 2001.
The Company also previously owned forty-nine percent (49%) of a future
profit sharing interest in profits to be realized from the exploration of 439
unpatented lode mining claims located in an area adjacent to the Blackhawk
Property (the "Blackhawk II Property"). The Company and its prior joint venture
partner, Goldstate Corporation ("GDSA"), previously held joint title to the 439
unpatented lode mining claims on the Blackhawk II Property. As of the date of
this Information Statement, neither the Company nor GDSA hold title to such
mining claims on the Blackhawk II Property.
INGC, on behalf of the Company, and AuRIC Metallurgical Laboratories LLC
("AuRIC") had entered into an Agreement for Services dated March 18, 1999 (the
"Agreement for Services") whereby AuRIC agreed to perform certain services,
including the development of proprietary technology and know-how relating to
fire and chemical assay analysis techniques and metallurgical ore extraction
procedures developed specifically for the exploration of properties of the
Company.
INGC, on behalf of the Company, had also retained the services of Dames &
Moore, an internationally recognized engineering and consulting firm ("Dames &
Moore") to provide validation audits of each major step of the assay and
metallurgical recovery procedures conducted by AuRIC. In November of 1998,
according to independent testing conducted by Dames & Moore, Dames & Moore
validated AuRIC's fire assay and parallel chemical leach procedures as a method
to verify the existence of mineralization. The positive outcome of the testing
program conducted by Dames & Moore formed the subject of a November 30, 1998
report and three further subsequently dated reports regarding the Company's
properties. Dames & Moore verified the fire and chemical assay techniques and
procedures developed by AuRIC and their repeatability as well as metallurgical
recovery.
AuRIC and Geneva Resources, Inc., a Nevada corporation ("Geneva") entered
into a Technology License Agreement dated March 17, 1999 (the "License
Agreement") whereby AuRIC agreed to supply the proprietary technology to Geneva
and grant to Geneva the right to sub-license the proprietary technology to the
Company for use on the Blackhawk Property. The Company and Geneva entered into a
Technology Sub-License Agreement dated March 18, 1999 (the "Sub-License
Agreement") whereby the Company acquired from Geneva a sub-license to utilize
AuRIC's proprietary information and related precious metals recovery processes
to carry out assay testing and chemical leach analysis of core samples derived
from any subsequent drilling on the Blackhawk Property.
Pursuant to certain contractual terms and provisions, AuRIC and Dames &
Moore had not been successful in transferring the proprietary fire assay
technology to Geneva or to any independent third party assay laboratory. On
September 27, 1999, Geneva and INGC, on behalf of the Company, initiated legal
proceedings against AuRIC for multiple breaches of contract stemming from the
Agreement for Services and the License Agreement and against Dames & Moore in a
declaratory relief cause of action (the "Lawsuit").
The Company suspended further exploration of the Blackhawk Property
indefinitely due to (i) the independent assessment information which did not
support the claims of AuRIC and Dames & Moore; (ii) the existence of multiple
breaches of contract by AuRIC and Dames & Moore under the Agreement for Services
and the License Agreement; and (iii) the pending Lawsuit and further claims of
action against AuRIC and Dames & Moore. Moreover, the Company deemed the
probability of commercial grade gold or silver located in the Blackhawk Property
claims to be nil.
Litigation
On September 27, 1999, Geneva and INGC, on behalf of the Company, initiated
legal proceedings against AuRIC and Dames & Moore by filing its complaint in the
District Court of the Third Judicial District for Salt Lake City, State of Utah,
for: (i) multiple breaches of contract relating to the Agreement for Services
and the License Agreement, respectively, including, but not limited to,
establishment and facilitation of the proprietary technology and fire assay
procedures developed by AuRIC at an independent assay lab and failure to deliver
the proprietary technology and procedures to the Company and Geneva; (ii) breach
of the implied covenant of good faith and fair dealing; (iii) negligent
misrepresentation; (iv) specific performance, (v) non-disclosure injunction;
(vi) failure by AuRIC to repay advances, and (vii) quantum meruit/unjust
enrichment. INGC, on behalf of the Company, also named Dames & Moore in the
legal proceeding in a declaratory relief cause of action (collectively, the
"Lawsuit").
On October 8, 1999, Geneva and INGC, on behalf of the Company, amended its
complaint by naming as defendants AuRIC, Dames & Moore, Ahmet Altinay, General
Manager of AuRIC, and Richard Daniele, Chief Metallurgist for Dames & Moore and
specifying damages in excess of $10,000,000. The damages sought by Geneva and
INGC, on behalf of the Company, are based on the general claims and causes of
action set forth in the amended complaint relating to reliance on the assays and
representations made by AuRIC, the actions and engineering reports produced by
Dames & Moore and, specifically, the negligent misrepresentations and
inaccuracies contained within some or all of those Dames & Moore reports and
breaches of contract by AuRIC and Dames & Moore.
On or about November 17, 1999, AuRIC, Dames & Moore, Richard Daniele and
Ahmet Altinay filed separate answers to the amended complaint, along with
counterclaims and a third party complaint against Geneva, INCG, the Company and
Brent Pierce for breach of contract against Geneva, breach of contract against
INCG, breach of contract against Pierce, defamation against the Company, INCG,
Geneva and Pierce, injunctions against the Company, INCG, Geneva and Pierce,
amongst other claims. In their defamation claim against the Company, the
plaintiffs sought damages and punitive damages in an amount to be determined at
trial, as well as attorney's fees and costs. In connection with the cause of
action for preliminary and permanent injunctions against the Company, AuRIC and
Ahmet Altinay sought attorney's fees and costs.
On approximately June 14, 2000, Dames & Moore filed an action against the
Company, INGC and others in the District Court of the Fifth Judicial District of
the State of Idaho, in and for the County of Lincoln (the "Idaho Lawsuit"). In
the Idaho Lawsuit, Dames & Moore sought foreclosure of a lien against the
Company and/or INGC which purportedly arose in favor of Dames & Moore. INGC has
dropped the bulk of its mining claims, except for a small group related to this
litigation as the Company and INGC believed that the mining claims contain no
commercial quantities of gold or silver. Dames & Moore sought to have the mining
claims sold to compensate Dames & Moore for its services, materials and
equipment. Dames & Moore also sought its fees and costs incurred in enforcing
its claimed lien. The Company and INGC filed an answer on or about August 8,
2000.
On June 21, 2000, Geneva and INGC, on behalf of the Company, filed a second
amended complaint in the District Court of the Third Judicial District for Salt
Lake City, State of Utah. The second amended complaint increased detail
regarding the alleged breaches of contract and increased causes of action
against other parties involved by adding two new defendants, MBM Consulting,
Inc. and Dr. Michael B. Merhtens, who provided consulting services to the
Company. The amendment also added certain claims of other entities involved
through Geneva against the defendants. The proprietary technology formed the
basis of claims made by Geneva and INGC, on behalf of the Company, in the
complaints as filed with the District Court. Geneva and INGC, on behalf of the
Company, alleged that the proprietary technology does not exist and that Geneva
and INGC were fraudulently, recklessly and/or negligently deceived by AuRIC,
Dames & Moore, and other parties to the lawsuit.
Geneva and INGC subsequently obtained an order from the District Court to
grant its Motion to Compel. The Order required that AuRIC and Dames & Moore
produce the proprietary technology for Geneva's and INGC's restricted use by its
legal counsel and industry experts. Geneva and INGC, on behalf of the Company,
obtained an expert opinion as to the validity or ineffectiveness of the
proprietary technology.
On November 10, 2000, Geneva and INGC filed motions for partial summary
judgment against Dames & Moore and AuRIC. Subsequently, on March 19, 2001, the
motions for partial summary judgment were denied. The court, however, provided a
ninety-day period during which both parties were required to prepare for trial,
and after such period the court would set a date for trial. At a scheduling
conference held on July 31, 2001, the court set trial for a period of fifteen
days commencing October 16, 2001. The court date was subsequently changed to
October 26, 2001 pursuant to mutual consent of the parties in an attempt to
mediate the dispute. Such mediation was unsuccessful.
Agreements Relating to Litigation
The Company and Geneva entered into an assignment agreement dated May 9,
2000 (the "Assignment Agreement") that transferred and conveyed to Geneva the
potential claims and causes of action that the Company may have had under the
Sub-License Agreement with Geneva.
On June 22, 2001, the Company, INGC, Geneva, Brent Pierce, MBM Consultants,
Inc. and Michael B. Mehrtens entered into a settlement agreement (the "Mehrtens
Settlement Agreement"). Pursuant to the terms of the Mehrtens Settlement
Agreement, the parties agreed to treat the contents of the Settlement Agreement
as strictly confidential and to not disclose such terms and provisions to
anyone.
On June 28, 2001, Geneva, the Company, INGC, Tristar Financial Services,
Inc. ("Tristar") and Alexander Cox ("Cox") entered into a funds sharing
agreement (the "Funds Sharing Agreement"). Pursuant to the terms of the Funds
Sharing Agreement, (i) Tristar would fund the direct costs of the litigation on
a best efforts basis relating to the Lawsuit for the period from April 1, 2001
to the date that the Lawsuit was settled; (ii) as consideration therefore,
Tristar would receive thirty percent (30%) of the gross proceeds received by
Geneva, the Company and INGC from any and all settlements relating to the
Lawsuit, plus the repayment of all payments and advances made by Tristar (the
"Tristar Payment"); and (iii) the Tristar Payment would be shared with Cox in
proportion of (a) the funds advanced and paid by Cox to Tristar for the purpose
of funding the costs of the litigation, (b) divided by the total amount of funds
advanced by and paid by Tristar, (c) times the amount of the Tristar Payment.
Cox is a shareholder of the Company and as of the date of this Quarterly Report,
holds an approximate 17.12% equity interest.
On September 21, 2001, Geneva, the Company, INGC and other parties entered
into a settlement agreement with AuRIC and Ahmet Altinay (the "AuRIC Settlement
Agreement"). Pursuant to the terms of the AuRIC Settlement Agreement, the
parties agreed that: (i) significant additional expense and time would be
incurred to proceed with and resolve the Lawsuit and therefore desired to settle
the Lawsuit; (ii) AuRIC would pay $10,000.00; (iii) AuRIC would return three
promissory notes in the principal amounts of $250,000 marked cancelled payable
to AuRIC by the Company, Goldstate Corporation and Vega-Atlantic Corporation,
respectively; (iii) AuRIC would return certain stock certificates received from
the Company, Goldstate Corporation and Vega-Atlantic Corporation, respectively;
(iv) the parties would execute and jointly file a motion to dismiss the parties'
respective claims and counterclaims in the Lawsuit; (v) the parties would
release one another from any and all claims and liabilities, whether known or
unknown, arising from or based upon the Lawsuit; and (vi) the Agreement for
Services, the License Agreement and the related Sub-License Agreement would be
deemed null, void and without further force or effect.
On September 25, 2001, Geneva, the Company, INGC, and other parties entered
into a settlement agreement and release with Dames & Moore, et. al. (the "Dames
& Moore Settlement Agreement"). Pursuant to the terms of the Dames & Moore
Settlement Agreement, the parties agreed that: (i) solely to save the burden,
cost and expense of continued litigation, the Lawsuit and the Idaho Lawsuit
would be settled without any admission of liability by any party; (ii) the
parties would execute and jointly file a motion to dismiss the parties'
respective claims and counterclaims in the Lawsuit and the Idaho Lawsuit with
prejudice; (iii) the parties would release one another from any and all claims
and liabilities, whether known or unknown, arising from or based upon the
Lawsuit and the Idaho Lawsuit, including those arising from or related to the
Blackhawk projects, mining claims and property; (iv) each party would bear its
own respective attorneys' fees and costs incurred in connection with the
Lawsuit, the Idaho Lawsuit and the Dames & Moore Settlement Agreement; and (v)
Dames & Moore would pay $798,000.
Results of Settlement
Pursuant to the Assignment Agreement, the Company transferred and conveyed
to Geneva the potential claims and causes of action that the Company may have
had under the Sub-License Agreement with Geneva. The amount of damages to be
recovered by Geneva and INGC pursuant to the Dames & Moore Settlement Agreement
and the AuRIC Settlement Agreement were primarily used for payment of attorneys
fees, expert witness fees, and associated costs of litigation. The Company,
therefore, was not in a position to receive any portion of the cash settlement
damages.
The Company and INGC had paid an aggregate of $938,805 in cash to AuRIC and
Dames & Moore for services before the litigation commenced. The Company and INGC
also owed $219,469 to Dames & Moore for disputed but unpaid services. Prior to
the litigation, (i) AuRIC received 2,500,000 shares of Common Stock from the
Company and a promissory note in the principal amount of $250,000, and (ii)
Geneva received 1,500,000 shares of Common Stock from the Company and a
promissory note in the principal amount of $250,000.
As a result of the settlements, the Company received: (i) the share
certificate issued to AuRIC representing 2,500,000 shares of Common Stock, which
has been cancelled and the shares returned to treasury; (ii) the share
certificate issued to Geneva representing 1,500,000 shares of Common Stock,
which has been cancelled and the shares returned to treasury; (iii) the
promissory note in the principal amount of $250,000 payable by INGC to Geneva,
which has been cancelled; and (iv) the promissory note in the principal amount
of $250,000 payable by INGC to AuRIC, which has been cancelled. As a result of
the settlements, the financial statements for fiscal year ended December 31,
2001 reflect a write down of all amounts due to Dames & Moore in the amount of
$219,469 and a reversal of interest which had been previously booked relating to
the promissory notes.
Geneva, the Company, INGC and other parties received an aggregate of
$808,000 in settlement proceeds. An aggregate of approximately $1,600,000 was
incurred as legal fees and associated costs relating to the litigation. Of the
$808,000 in settlement proceeds, $345,000 was paid for outstanding amounts due
and owing to legal counsel relating to the litigation, $10,000 was paid to GDSA,
and the remaining $453,000 was paid to Tristar to provide a partial recovery of
approximately $800,000 paid by Tristar pursuant to the provisions of the Funds
Sharing Agreement.
At the time the respective settlement agreements were entered into,
management of the Company estimated that future additional costs to continue to
proceed with litigation through the trial stage could have been approximately
$1,000,000, with no guarantee of success. Management further believed that if
the litigation proceeded to trial, any positive future monetary award in favor
of the Company and INGC could have been subjected to a lengthy appeals process
and further legal costs. While Dames & Moore, then a subsidiary of URS
Corporation, had approximately $2 billion in annual revenues representing a
formidable resource for future legal expenses, the Company had not generated
revenues and had no liquid assets to commit to such significant estimated future
expenses associated with ongoing litigation. Management of the Company believes,
therefore, that settlement of the litigation and execution of the respective
settlement agreements was in the best interests of the Company and its
shareholders.
NEW BUSINESS ENDEAVORS
As of the date of this Information Statement, management of the Company is
undertaking research relating to prospective new business endeavors and possible
new acquisitions. This research may result in the Company entering into business
operations that are not in the minerals exploration field.
SALE OF THE COMPANY'S SUBSIDIARY
Proposed Sale and Purchase
As of the date of this Information Statement, the Company's wholly-owned
subsidiary, INGC, is deemed to be a defunct entity. INGC does not have any
assets and its net book value is $-0-. The Board of Directors of the Company has
determined that obtaining shareholder approval of the potential sale of the
Company's subsidiary, INGC, would be prudent based upon the following: (i) the
current existence of INGC is as an unproductive subsidiary of the Company with
no book value; (ii) the continued existence of INGC as the Company's subsidiary
presents no value but rather a liability in regards to potential future
operational business prospects and acquisitions; (iii) the current corporate
structure of the Company, which includes INGC, may present operational and
structural problems in regards to potential future operational business
prospects and acquisitions; and (iv) shareholder approval pursuant to execution
of the Written Consent would provide management with the future ability to
easily and quickly restructure the Company's corporate organization if deemed
necessary due to contractual provisions in regards to potential future
operational business prospects and acquisitions.
Although management believes that the sale of the Company's subsidiary
provides no monetary value to any prospective purchaser and may be difficult to
consummate, the Proposed Sale and Purchase is expected to provide for the sale
by the Company to an arm's length third party purchaser all of the issued and
outstanding shares of common stock of INGC held by the Company. The Proposed
Sale and Purchase may also provide that the proposed purchaser thereof (i) will
agree to recognize certain liabilities of INGC; and (ii) will assume all of
right, title and interest in and to any assets, if any, of INGC. It is also
expected that the Proposed Sale and Purchase will contain various customary
representations and warranties made by the Company and the proposed purchaser.
These are expected to include, among other things, representations and
warranties relating to (i) the execution and enforceability of any agreement
relating to the Proposed Sale and Purchase; (ii) the financial statements and
other financial and related information; (iii) the absence of certain
undisclosed liabilities; (iv) the absence of undisclosed material changes
relating to INGC; and (v) title to and absence of liens on any of the assets.
Effect of Sale of Subsidiary on the Company
Following the consummation of the Proposed Sale and Purchase, the Company
expects to have no substantial assets, after taking into account its fixed
assets and accounts receivable, if any, as the case may be. There can be no
assurance that any further assets will be realized. Following consummation of
the Proposed Sale and Purchase, the Company expects to have approximately
$1,238,000 in liabilities, after taking into account its accounts payable and
accrued liabilities. As the Proposed Sale and Purchase involves the sale of the
Subsidiary of the Company for cash, the shareholders of the Company will retain
their equity interests in the Company following consummation of the Proposed
Sale and Purchase.
Background of Sale of Subsidiary; Fairness of Transaction; Recommendation
of Board of Directors
The Board of Directors have agreed to enter into the Proposed Sale and
Purchase principally because of its analysis of the existing corporate structure
of the Company and its subsidiary. Management of the Company has determined that
the Company's financial condition was declining as a result of the prior
operational activities of its wholly-owned subsidiary, INGC, and the resulting
inability of the Company to borrow or raise funds for subsidiary operations that
would be required for its working capital and capital expenditures for the
remainder of 2003.
The Board of Directors thus determined that a Proposed Sale and Purchase
offered the best alternative for the Company. In reaching its determination, the
Board of Directors reviewed the proposed general and essential terms of the
Proposed Sale and Purchase and related matters, as well as the possible future
direction of the Company, including the proposed identification of prospective
new business endeavors and potential acquisition thereof. The Board of Directors
believes that the sale of its wholly-owned subsidiary, INGC, would allow the
Company to streamline existing operations, provide for any such potential
acquisitions. Management of the Company based its decision on certain factors
including, but not limited to: (i) an extensive investigation and analysis of
the assets of the Company and INGC; (ii) a determination of the required capital
for future operations; and (iii) levels of subsidiary debt.
The Board of Directors also took into account, among other factors, the
various other possible transactions, and the following additional factors:
1. The prior operational history of the Company and INGC, including the
suspension of any further exploration of the mining claims located on the
Blackhawk Property and the settlement of the lawsuit against AuRIC Metallurgical
Laboratories LLC and Dames and Moore.
2. The proposed terms of any agreement relating to the Proposed Sale and
Purchase, which may include payment of any of INGC's liabilities.
3. The financial risks of the Proposed Sale and Purchase not being
consummated and the risk that there would be no opportunity to successfully
raise additional capital either through private sales or from advances.
4. An analysis of the financial effects on the Company of the Proposed Sale
and Purchase being consummated. In this regard, the Board of Directors took into
account the Consolidated Financial Statements, included in this Information
Statement, which may reduce future net loss of the Company.
5. The recent market prices for the Common Stock of the Company.
6. The prior operating losses of the Company and the substantial legal,
accounting and other costs that would be incurred should the Company attempt to
continue its business operations in the exploration and development of gold and
precious metals.
Based on the foregoing, the Board of Directors believed that the sale of
the Company's subsidiary, INGC, through the Proposed Sale and Purchase at this
time would be fair to and in the best interests of the Company and its
shareholders. In view of the wide variety of factors considered in connection
with its evaluation of the Proposed Sale and Purchase, the Board of Directors
did not find it practicable to, and did not, quantify or otherwise attempt to
assign relative weights to the specific factors considered in reaching its
determination.
IF THIS PROPOSAL TO SELL THE COMPANY'S SUBSIDIARY IS APPROVED BY SHAREHOLDERS
PURSUANT TO THE WRITTEN CONSENT, SHAREHOLDERS OF THE COMPANY WILL NOT HAVE A
SECOND OPPORTUNITY TO VOTE ON AND APPROVE ANY SUBSEQUENT PROPOSED SALE OF THE
COMPANY'S SUBSIDIARY.
Federal Income Tax Consequence of the Proposed Sale and Purchase
Any Proposed Sale and Purchase transaction will be a taxable transaction to
the Company resulting in a net loss for tax purposes measured by the difference
between the amount realized on the sale of the assets and the Company's tax
basis in the assets. Shareholders of the Company will experience no direct
federal income tax consequences as a result of the consummation of the Proposed
Sale and Purchase. The foregoing constitutes only a general description of the
federal income tax consequences.
BOARD APPROVAL
Based upon review of a wide variety of factors considered in connection
with its evaluation of the Proposed Sale and Purchase, the Board of Directors of
the Company believes that it would be in the best interests of the Company and
its shareholders to consummate any proposed Sale and Purchase. The Board of
Directors recommends approval of the sale of the Company's subsidiary, INGC, and
any proposed Sale and Purchase, and each of the resolutions with respect thereto
set forth in Exhibit A hereto.
ELECTION OF ONE DIRECTOR
TO SERVE ON THE BOARD OF DIRECTORS OF THE COMPANY
The Company's directors are elected annually to serve until the next annual
meeting of shareholders or until their successors shall have been elected and
qualified. The Company's bylaws provide that the number of directors of the
Company shall consist of at least one (1) but no more than nine (9) persons. The
number of directors presently authorized by resolution of the Board of Directors
is one (1). The following individual is proposed for appointment as a director
of the Company.
GRANT ATKINS has been the President of the Company since 2001 and the
Secretary, Treasurer and a Director of the Company since September of 1998. Mr.
Atkins has also been the sole director and the President, Secretary and
Treasurer of International Gold Corporation since March of 1998. Mr. Atkins has
provided organization and controller duties in the Company since its formation.
For the past six years, Mr. Atkins has been self-employed and has acted as a
financial and project coordination consultant to clients in government and
private industry. He has extensive multi-industry experience in the fields of
finance, administration and business development. During 1998 through current
date, Mr. Atkins is a consultant through the private management companies of
TriStar Financial Services, Inc. and Investor Communications International, Inc.
Mr. Atkins is the director and president for Vega-Atlantic Corporation, a public
traded corporation engaged in the worldwide exploration and development of oil
and gas, gold and other minerals. Mr. Atkins is also a member of the board of
directors of Petrogen Corp., a publicly traded corporation engaged in the energy
industry and a member of the board of directors of GeneMax Corp., a publicly
traded corporation a publicly traded biotechnology corporation specializing in
the discovery and development of immunotherapeutics aimed at the treatment and
eradication of cancer and therapies for infectious diseases, autoimmune
disorders and transplant tissue rejection.
As of the date of this Information Statement, no director or executive
officer of the Company is or has been involved in any legal proceeding
concerning (i) any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time; (ii) any conviction in a
criminal proceeding or being subject to a pending criminal proceeding (excluding
traffic violations and other minor offenses) within the past five years; (iii)
being subject to any order, judgment or decree permanently or temporarily
enjoining, barring, suspending or otherwise limiting involvement in any type of
business, securities or banking activity; or (iv) being found by a court, the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law (and the
judgment has not been reversed, suspended or vacated).
APPROVAL OF THE STOCK OPTION PLAN FOR
KEY PERSONNEL OF THE COMPANY
On March 15, 2003, the Board of Directors of the Company unanimously
approved and adopted a stock option plan (the "Stock Option Plan"), which is
attached hereto as Exhibit B. The purpose of the Stock Option Plan is to advance
the interests of the Company and its shareholders by affording key personnel of
the Company an opportunity for investment in the Company and the incentive
advantages inherent in stock ownership in the Company. Pursuant to the
provisions of the Stock Option Plan, stock options (the "Stock Options") will be
granted only to key personnel of the Company, generally defined as a person
designated by the Board of Directors upon whose judgment, initiative and efforts
the Company may rely including any director, officer, employee or consultant of
the Company.
The Stock Option Plan is to be administered by the Board of Directors of
the Company, which shall determine (i) the persons to be granted Stock Options
under the Stock Option Plan; (ii) the number of shares subject to each option,
the exercise price of each Stock Option; and (iii) whether the Stock Option
shall be exercisable at any time during the option period of ten (10) years or
whether the Stock Option shall be exercisable in installments or by vesting
only. The Stock Option Plan provides authorization to the Board of Directors to
grant Stock Options to purchase a total number of shares of common stock of the
Company, not to exceed 3,500,000 post-Reverse Stock Split shares as at the date
of adoption by the Board of Directors of the Stock Option Plan. At the time a
Stock Option is granted under the Stock Option Plan the Board of Directors shall
fix and determine the exercise price at which shares of common stock of the
Company may be acquired; provided, however, that any such exercise price shall
not be less than that permitted under the rules and policies of any stock
exchange or over-the-counter market which is applicable to the Company.
In the event an optionee who is a director or officer of the Company ceases
to serve in that position, any Stock Option held by such optionee generally may
be exercisable within up to ninety (90) calendar days after the effective date
that his position ceases, and after such 90-day period any unexercised Stock
Option shall expire. In the event an optionee who is an employee or consultant
of the Company ceases to be employed by the Company, any Stock Option held by
such optionee generally may be exercisable within up to sixty (60) calendar days
(or up to thirty (30) calendar days where the optionee provided only investor
relations services to the Company) after the effective date that his employment
ceases, and after such 60- or 30-day period any unexercised Stock Option shall
expire.
No Stock Options granted under the Stock Option Plan will be transferable
by the optionee, and each Stock Option will be exercisable during the lifetime
of the optionee subject to the option period of ten (10) years or limitations
described above. Any Stock Option held by an optionee at the time of his death
may be exercised by his estate within one (1) year of his death or such longer
period as the Board of Directors may determine.
The exercise price of a Stock Option granted pursuant to the Stock Option
Plan shall be paid in cash or certified funds upon exercise of the option.
Incentive Stock Options
The Stock Option Plan further provides that, subject to the provisions of
the Stock Option Plan and prior shareholder approval, the Board of Directors may
grant to any key personnel of the Company who is an employee eligible to receive
options one or more incentive stock options to purchase the number of shares of
Common Stock allotted by the Board of Directors (the "Incentive Stock Options").
The option price per share of Common Stock deliverable upon the exercise of an
Incentive Stock Option shall be no less than fair market value of a share of
Common Stock on the date of grant of the Incentive Stock Option. In accordance
with the terms of the Stock Option Plan, "fair market value" of the Incentive
Stock Option as of any date shall not be less than the closing price for the
shares of Common Stock on the last trading day preceding the date of grant. The
option term of each Incentive Stock Option shall be determined by the Board of
Directors, which shall not commence sooner than from the date of grant and shall
terminate no later than ten (10) years from the date of grant of the Incentive
Stock Option, subject to possible early termination as described above.
As of the date of this Information Statement no Stock Options nor Incentive
Stock Options have been granted. The Company is expected to cause to be filed
with the Securities and Exchange Commission registration statements on "Form S-8
- - For Registration Under the Securities Act of 1933 of Securities to Be Offered
to Employees Pursuant to Employee Benefit Plans". It is intended that a S-8
registration statement will become effective registering Stock Options under the
Stock Option Plan in the amount of 3,500,000 shares at $0.50 per share. Upon
approval by the shareholders of the Stock Option Plan, the Board of Directors
will be authorized, without further shareholder approval, to grant such options
from time to time to acquire up to an aggregate of 3,500,000 shares of the
Company's restricted Common Stock.
BOARD APPROVAL
Based upon review of a wide variety of factors considered in connection
with its evaluation of the provisions and terms of the Stock Option Plan, the
Board of Directors of the Company believes that it would be in the best
interests of the Company and its shareholders to adopt the Stock Option Plan.
The Board of Directors recommends approval of the Stock Option Plan, the grant
of stock options under the Stock Option Plan Agreement, the grant of incentive
stock options under the Incentive Stock Option Plan Agreement and approval of
each of the resolutions with respect thereto set forth in Exhibit A hereto.
RATIFICATION OF SELECTION OF LABONTE & CO.
AS INDEPENDENT PUBLIC ACCOUNTANTS
OF THE COMPANY
Since January 1, 1997 to August 8, 2000, the Company had a former
accountant. Since August 9, 2000 and to date, the Company's current principal
independent accountants have not resigned or declined to stand for re-election
or were dismissed. The Company's former principal independent accountant,
Johnson, Holscher & Company, P.C., resigned because of a business decision made
by management of Johnson, Holscher & Company, P.C. to cease rendering services
for clients which involve services or representation under the Securities Act or
the Securities Exchange Act of 1934, as amended. Subsequently, management of the
Company determined that the accounting firm of Labonte & Co. be engaged to
provide services. Such decision to change accountants was approved by the Board
of Directors of the Company.
During the Company's two most recent fiscal years, there were no
disagreements with either Johnson, Holscher & Company, P.C. nor with LaBonte &
Co., whether or not resolved, on any matter concerning accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of either Johnson, Holscher &
Company, P.C. or LaBonte & Co., would have caused Johnson, Holscher & Company,
P.C. or LaBonte & Co. to make reference to the subject matter of the
disagreements in its respective reports.
Neither the Company's current principal independent accountants nor its
former principal independent accountant have provided an adverse opinion or
disclaimer of opinion to the Company's financial statements, nor modified their
respective opinion as to uncertainty, audit scope or accounting principles.
However, the auditor's report to the financial statements for fiscal years ended
December 31, 2001 and 2002 are qualified as to the Company's ability to continue
as a going concern.
The Company's principal independent accountant from August 9, 2000 to the
current date is Labonte & Co., 1205 - 1095 West Pender Street, Vancouver,
British Columbia, Canada V6E 2M6.
BOARD APPROVAL
The Board of Directors of the Company believes that it would be in the best
interests of the Company and its shareholders to ratify the selection of LaBonte
& Co. as independent public accountants of the Company. The Board of Directors
recommends ratification of LaBonte & Co. as independent public accountants of
the Company for fiscal year ending March 31, 2003 and approval of each of the
resolutions with respect thereto set forth in Exhibit A.
PROPOSALS BY SECURITY HOLDERS
The Board of Directors does not know of any matters that are to be
presented to the shareholders for their approval and consent pursuant to the
Written Consent of shareholders other than those referred to in this Information
Statement. If any shareholder of the Company entitled to vote by written
authorization or consent has submitted to the Company a reasonable time before
the Information Statement is to be transmitted to shareholders a proposal, other
than elections to offices, such proposal must be received at the Company's
offices, located at 435 Martin Street, Suite 2000, Blaine, Washington 98230,
Attention: President, not later than July 16, 2003.
DELIVERY OF DOCUMENTS TO SECURITY HOLDERS
SHARING AN ADDRESS
One Information Statement will be delivered to multiple shareholders
sharing an address unless the Company receives contrary instructions from one or
more of the shareholders. Upon receipt of such notice, the Company will
undertake to deliver promptly a separate copy of the Information Statement to
the shareholder at a shared address to which a single copy of the documents was
delivered and provide instructions as to how the shareholder can notify the
Company that the shareholder wishes to receive a separate copy of an annual
report of Information Statement. In the event a shareholder desires to provide
such notice to the Company, such notice may be given verbally by telephoning the
Company's offices at (360) 332-7734 or by mail to 435 Martin Street, Suite 2000,
Blaine, Washington 98230.
By Order of the Board of Directors
Grant Atkins, President
EXHIBIT A TO INFORMATION STATEMENT
WRITTEN CONSENT OF SHAREHOLDERS
Pursuant to Section 78.320 of the Nevada Revised Statutes, as amended,
which provides that any action required to be taken at a meeting of the
shareholders of a corporation may be taken without a meeting if, before or after
the action, a written consent setting forth the action so taken shall be signed
by the shareholders holding at least a majority of the voting power. The
undersigned, being ten (10) or less of the shareholders holding at least a
majority of the voting power of Intergold Corporation, a Nevada corporation (the
"Corporation"), do hereby take, consent, affirm and approve the following
actions.
WHEREAS the Board of Directors of the Corporation at a special meeting held
on March 15, 2003 (the "Special Meeting") authorized and approved, subject to
shareholder approval, certain corporate actions, which the Board of Directors
deemed to be in the best interests of the Corporation; and its shareholders;
WHEREAS the Board of Directors of the Corporation at the Special Meeting
further authorized and directed the submission to a limited number of
shareholders of the Corporation holding at least a majority of the voting power
the certain corporate actions to be approved and authorized by such shareholders
of the Corporation;
WHEREAS Section 78.320 of the Nevada Revised Statutes, as amended, provides
that any action required to be taken at a meeting of the shareholders of a
corporation may be taken without a meeting if, before or after the action, a
written consent setting forth the action so taken shall be signed by the
shareholders holding at least a majority of the voting power;
WHEREAS the shareholders who have signed this Written Consent of
shareholders dated to be effective as of July 23, 2003 are shareholders of
record as of May 30, 2003, and hold shares in excess of a majority of the
Corporation's issued and outstanding shares of Common Stock.
WHEREAS such shareholders have been fully apprised and informed of the
nature of the certain corporate actions and have concluded that approval and
authorization of such corporate actions would be beneficial to the Corporation
and in the best interests of its shareholders; therefore, be it
I
Authorization of the One-For-Three Hundred
Reverse Stock Split of the Company's
Issued and Outstanding shares of Common Stock
RESOLVED that the Board of Directors be, and it hereby is, authorized to
effect a Reverse Stock Split in accordance with the following resolutions if the
Board determines in the exercise of their discretion that a Reverse Stock Split
is in the best interests of the Company and the shareholders and that a Reverse
Stock Split is likely to result in an increase in the marketability and
liquidity of the Common Stock;
FURTHER RESOLVED, that, prior to July 30, 2003, the following provisions of
the Reverse Stock Split be and hereby are authorized:
"In accordance with the effective date of the Reverse Stock Split (the
"Effective Date"), each share of the Company's common stock, $0.00025 par value,
issued and outstanding immediately prior to the Effective Date (the "Old Common
Stock") shall automatically and without any action on the part of the holder
thereof be reclassified as and changed, pursuant to a reverse stock split, into
1/300 of a share of the Company's outstanding common stock, $0.00025 par value
(the "New Common Stock"), depending upon a determination by the Board that a
Reverse Stock Split is in the best interests of the Company and the
Shareholders, subject to the treatment of fractional share interests as
described below. Each holder of a certificate or certificates which immediately
prior to the Effective Date represented outstanding shares of Old Common Stock
(the "Old Certificates," whether one or more) shall be entitled to receive upon
surrender of such Old Certificates to the Company's Transfer Agent for
cancellation, a certificate or certificates (the "New Certificates," whether one
or more) representing the number of whole shares of the New Common Stock into
which and for which the shares of the Old Common Stock formerly represented by
such Old Certificates so surrendered, are reclassified under the terms hereof.
From and after the Effective Date, Old Certificates shall represent only the
right to receive New Certificates pursuant to the provisions hereof. No
certificates representing fractional share interests in New Common Stock will be
issued, and no such fractional share interest will entitle the holder thereof to
vote, or to any rights of a shareholder of the Company. Any fraction of a share
of New Common Stock to which the holder would otherwise be entitled will be
adjusted upward to the nearest whole share. If more than one Old Certificate
shall be surrendered at one time for the account of the same Shareholder, the
number of full shares of New Common Stock for which New Certificates shall be
issued shall be computed on the basis of the aggregate number of shares
represented by the Old Certificates so surrendered. In the event that the
Company's transfer agent determines that a holder of Old Certificates has not
tendered all his certificates for exchange, the transfer agent shall carry
forward any fractional share until all certificates of that holder have been
presented for exchange. All holders of such fractional shares, including holders
of less than a 0.5 fractional share, shall be entitled to one share of New
Common Stock. If any New Certificate is to be issued in a name other than that
in which the Old Certificates surrendered for exchange are issued, the Old
Certificates so surrendered shall be properly endorsed and otherwise in proper
form for transfer. From and after the Effective Date the amount of capital
represented by the shares of the New Common Stock into which and for which the
shares of the Old Common Stock are reclassified under the terms hereof shall be
the same as the amount of capital represented by the shares of Old Common Stock
so reclassified, until thereafter reduced or increased in accordance with
applicable law."
FURTHER RESOLVED, that notwithstanding authorization of the Reverse Stock
Split by the shareholders of the Company, the Board of Directors may abandon
such proposed Reverse Stock Split without further action by the Shareholders.
II
Approval of the Sale of the Company's Subsidiary Pursuant to Future
Possible Restructuring Initiatives,
Including the Proposed Sale and Purchase
RESOLVED that, subject to regulatory approval and in compliance with the
policies of the applicable stock exchange, the filing and form of which being at
the sole and absolute discretion of the Board of Directors of the Company, the
shareholders of the Company who have signed this Written Consent of Shareholders
approve the sale of the Company's subsidiary pursuant to future possible
restructuring initiatives, and approve the execution of any sale and purchase
agreement (collectively, the "Proposed Sale and Purchase"), including, but not
limited to, provisions for the sale by the Company of up to all of the issued
and outstanding shares of common stock of International Gold Corporation, the
Company's wholly-owned subsidiary ("IGNC");
FURTHER RESOLVED that the Board of Directors of the Company is authorized,
in its sole and absolute discretion, to abandon or alter any portion of the
Proposed Sale and Purchase at any time without the further approval of the
shareholders of the Company.
III
Election of One Director to
Serve on the Board of Directors of the Company
RESOLVED THAT the following person is hereby elected as a director to serve
on the Board of Directors of the Company, and who shall hold office for one year
or until his successor is duly elected and shall qualify: Grant R. Atkins.
IV
Approval of the Stock Option Plan for
Key Personnel of the Company
RESOLVED that, subject to regulatory approval and in compliance with the
policies of the applicable stock exchange, the filing and form of which is at
the sole and absolute discretion of the Board of Directors of the Company, the
shareholders of the Company who have signed this Written Consent of Shareholders
do hereby approve and ratify the adoption of a stock option plan (the "Stock
Option Plan") for the Company (a) to fix the maximum number of common shares for
which options may be granted under the Stock Option Plan not to 3,500,000 (post
Reverse Stock Split) shares as at the date of adoption of this Stock Option Plan
by the Board of Directors, (b) to specify that the exercise price for any option
granted under the Stock Option Plan may not be less than the fair market value
of the applicable common shares on the date of grant and (c) to specify that the
options issued pursuant to the Stock Option Plan are non-transferable; all on
the basis as set forth in the Stock Option Plan and related Stock Option Plan
Agreement and Incentive Stock Option Plan Agreement, copies of which are
attached to this Information Statement and are available for inspection by the
shareholders of the Company; and, furthermore, that the Board of Directors of
the Company is authorized, in its sole and absolute discretion, to abandon or
alter any portion of the proposed Stock Option Plan at any time without the
further approval of the shareholders of the Company;
FURTHER RESOLVED that, subject to regulatory approval and in compliance
with the policies of the applicable stock exchange, the filing and form of which
is at the sole and absolute discretion of the Board of Directors of the Company,
the shareholders of the Company who have signed this Written Consent of
shareholders do hereby approve the Company's grant of stock options and/or
incentive stock options (which options may have special rights attached to them)
to such key personnel of the Company during the ensuing year and at such prices
and in such amounts as may be determined by the Board of Directors of the
Company, in its sole and absolute discretion, and as are acceptable with the
appropriate regulatory authorities and, in addition, approve the exercise of any
such or outstanding stock options and/or incentive stock options by such key
personnel of the Company together with any amendment or amendments to any such
stock option plan agreement and incentive stock option plan agreement at such
prices and in such amounts as may be determined by the Board of Directors of the
Company, in its sole and absolute discretion, and as are acceptable with the
appropriate regulatory authorities (collectively, the "Stock Option Approvals");
and, furthermore, that the Board of Directors of the Company are authorized, in
its sole and absolute discretion, to abandon or alter any portion of the
proposed Stock Option Approvals at any time without the further approval of the
shareholders of the Company; and
FURTHER RESOLVED that, subject to subject to regulatory approval and in
compliance with the policies of the applicable stock exchange, the filing and
form of which is at the sole and absolute discretion of the Board of Directors
of the Company, the shareholders of the Company who have signed this Written
Consent of Shareholders, do hereby approve the preparation of and filing with
the Securities and Exchange Commission a "Form S-8 - For Registration Under the
Securities Act of 1933 of Securities to Be Offered to Employees Pursuant to
Employee Benefit Plans".
V
Ratification of LaBonte & Co. as Independent
Public Accountants of the Company
RESOLVED that, subject to regulatory approval and in compliance with the
policies of the applicable stock exchange, the filing and form of which is at
the sole and absolute discretion of the Board of Directors of the Company, the
shareholders of the Company who have signed this Written Consent of
Shareholders, do hereby approve and ratify the selection of LaBonte & Co. as the
independent public accountants for the Company for fiscal year ending March 31,
2003.
EXECUTED to be effective as of the 23rd day of July, 2003.
SHAREHOLDERS:
Date: July 23, 2003 SONANINI HOLDINGS LTD.
By:
-------------------------------
Title
-------------------------------
Print Name
-------------------------------
Signature (Title if Appropriate)
-------------------------------
Address
-------------------------------
Number of Shares Held of Record
Date: July 23, 2003 TRISTAR FINANCIAL SERVICES INC.
By: /s/ Marcus Johnson, President
---------------------------------
-------------------------------
Print Name
-------------------------------
Signature (Title if Appropriate)
-------------------------------
Address
-------------------------------
Number of Shares Held of Record
Date: July 23, 2003 /s/ Alexander Cox
-------------------------------
-------------------------------
Print Name
-------------------------------
Signature (Title if Appropriate)
-------------------------------
Address
-------------------------------
Number of Shares Held of Record
EXHIBIT B
STOCK OPTION PLAN
For:
INTERGOLD CORPORATION
Intergold Corporation
435 Martin Street, Suite 2000
Blaine, Washington, U.S.A., 98230
INTERGOLD CORPORATION
---------------------
STOCK OPTION PLAN
-----------------
This stock option plan (the "Plan") is adopted in consideration of services
rendered and to be rendered by key personnel to Intergold Corporation, its
subsidiaries and affiliates.
1. Definitions.
The terms used in this Plan shall, unless otherwise indicated or required
by the particular context, have the following meanings:
Board: The Board of Directors of Intergold Corporation.
Common Stock: The U.S. $0.00025 par value common stock of
Intergold Corporation.
Company: Intergold Corporation, a corporation incorporated
under the laws of the State of Nevada, U.S.A., and
any successors in interest by merger, operation of
law, assignment or purchase of all or substantially
all of the property, assets or business of the
Company.
Date of Grant: The date on which an Option (see hereinbelow) is
granted under the Plan.
Fair Market Value: The Fair Market Value of the Option Shares. Such
Fair Market Value as of any date shall be reasonably
determined by the Board; provided, however, that if
there is a public market for the Common Stock, the
Fair Market Value of the Option Shares as of any
date shall not be less than the closing price for
the Common Stock on the last trading day preceding
the date of grant; provided, further, that if the
Company's shares are not listed on any exchange the
Fair Market Value of such shares shall not be less
than the average of the means between the bid and
asked prices quoted on each such date by any two
independent persons or entities making a market for
the Common Stock, such persons or entities to be
selected by the Board. Fair Market Value shall be
determined without regard to any restriction other
than a restriction which, by its terms, will never
lapse.
Incentive Stock
Option: An Option as described in Section 9 hereinbelow
intended to qualify under section 422 of the United
States Internal Revenue Code of 1986, as amended.
Key Person: A person designated by the Board upon whose
judgment, initiative and efforts the Company or a
Related Company may rely, who shall include any
Director, Officer, employee or consultant of the
Company. A Key Person may include a corporation that
is wholly-owned and controlled by a Key Person who
is eligible for an Option grant, but in no other
case may the Company grant an option to a legal
entity other than an individual.
Option: The rights granted to a Key Person to purchase
Common Stock pursuant to the terms and conditions of
an Option Agreement (see hereinbelow).
Option Agreement: The written agreement (and any amendment or
supplement thereto) between the Company and a Key
Person designating the terms and conditions of an
Option.
Option Shares: The shares of Common Stock underlying an Option
granted to a Key Person.
Optionee: A Key Person who has been granted an Option.
Related Company: Any subsidiary or affiliate of the Company or of any
subsidiary of the Company. The determination of
whether a corporation is a Related Company shall be
made without regard to whether the entity or the
relationship between the entity and the Company now
exists or comes into existence hereafter.
2. Purpose and scope.
(a) The purpose of the Plan is to advance the interests of the Company and
its stockholders by affording Key Persons, upon whose judgment,
initiative and efforts the Company may rely for the successful conduct
of their businesses an opportunity for investment in the Company and
the incentive advantages inherent in stock ownership in the Company.
(b) This Plan authorizes the Board to grant Options to purchase shares of
Common Stock to Key Persons selected by the Board while considering
criteria such as employment position or other relationship with the
Company, duties and responsibilities, ability, productivity, length of
service or association, morale, interest in the Company,
recommendations by supervisors and other matters.
3. Administration of the Plan.
The Plan shall be administered by the Board. The Board shall have the
authority granted to it under this section and under each other section of the
Plan.
In accordance with and subject to the provisions of the Plan, the Board is
hereby authorized to provide for the granting, vesting, exercise and method of
exercise of any Options all on such terms (which may vary between Options and
Optionees granted from time to time) as the Board shall determine. In addition,
and without limiting the generality of the foregoing, the Board shall select the
Optionees and shall determine: (i) the number of shares of Common Stock to be
subject to each Option, however, in no event may the maximum number of shares
reserved for any one individual exceed 15% of the issued and outstanding share
capital of the Company; (ii) the time at which each Option is to be granted;
(iii) the purchase price for the Option Shares; (iv) the Option period; and (v)
the manner in which the Option becomes exercisable or terminated. In addition,
the Board shall fix such other terms of each Option as it may deem necessary or
desirable. The Board may determine the form of Option Agreement to evidence each
Option.
The Board from time to time may adopt such rules and regulations for
carrying out the purposes of the Plan as it may deem proper and in the best
interests of the Company subject to the rules and policies of any exchange or
over-the-counter market which is applicable to the Company.
The Board may from time to time make such changes in and additions to the
Plan as it may deem proper, subject to the prior approval of any exchange or
over-the-counter market which is applicable to the Company, and in the best
interests of the Company; provided, however, that no such change or addition
shall impair any Option previously granted under the Plan. If the shares are not
listed on any exchange, then such approval is not necessary.
Each determination, interpretation or other action made or taken by the
Board shall be final, conclusive and binding on all persons, including without
limitation, the Company, the stockholders, directors, officers and employees of
the Company and the Related Companies, and the Optionees and their respective
successors in interest.
4. The Common Stock.
Save and except as may be determined by the Board at a duly constituted
meeting of the Board as set forth hereinbelow, the Board is presently authorized
to appropriate, grant Options, issue and sell for the purposes of the Plan, a
total number of shares of the Company's Common Stock not to exceed 2,000,000, or
the number and kind of shares of Common Stock or other securities which in
accordance with Section 10 shall be substituted for the shares or into which
such shares shall be adjusted. Save and except as may otherwise be determined by
the disinterested approval of the shareholders of the Company at any duly called
meeting of the shareholders of the Company, at any duly constituted Board
meeting the Board may determine that the total number of shares of the Company's
Common Stock which may be reserved for issuance for Options granted and to be
granted under this Plan, from time to time, may be to the maximum extent of up
to 100% of the Company's issued and outstanding Common Stock as at the date of
any such meeting of the Board. In this regard, and subject to the prior
disinterested approval of the shareholders of the Company at any duly called
meeting of the shareholders of the Company, the total number of shares of the
Company's Common Stock which may be reserved for issuance for Options granted
and to be granted under this Plan, from time to time, may be increased to
greater than 100% of the Company's issued and outstanding Common Stock as at the
date of notice of any such meeting of the shareholders of the Company whereat
such disinterested shareholders' approval is sought and obtained by the Company.
All or any unissued shares subject to an Option that for any reason expires or
otherwise terminates may again be made subject to Options under the Plan.
5. Eligibility.
Options will be granted only to Key Persons. Key Persons may hold more than
one Option under the Plan and may hold Options under the Plan and options
granted pursuant to other plans or otherwise.
6. Option Price and number of Option Shares.
The Board shall, at the time an Option is granted under this Plan, fix and
determine the exercise price at which Option Shares may be acquired upon the
exercise of such Option; provided, however, that any such exercise price shall
not be less than that, from time to time, permitted under the rules and policies
of any exchange or over-the-counter market which is applicable to the Company.
The number of Option Shares that may be acquired under an Option granted to
an Optionee under this Plan shall be determined by the Board as at the time the
Option is granted; provided, however, that the aggregate number of Option Shares
reserved for issuance to any one Optionee under this Plan, or any other plan of
the Company, shall not exceed 15% of the total number of issued and outstanding
Common Stock of the Company.
7. Duration, vesting and exercise of Options.
(a) The option period shall commence on the Date of Grant and shall be up
to 10 years in length subject to the limitations in this Section 7 and
the Option Agreement.
(b) During the lifetime of the Optionee the Option shall be exercisable
only by the Optionee. Subject to the limitations in paragraph (a)
hereinabove, any Option held by an Optionee at the time of his death
may be exercised by his estate within one year of his death or such
longer period as the Board may determine.
(c) The Board may determine whether an Option shall be exercisable at any
time during the option period as provided in paragraph (a) of this
Section 7 or whether the Option shall be exercisable in installments
or by vesting only. If the Board determines the latter it shall
determine the number of installments or vesting provisions and the
percentage of the Option exercisable at each installment or vesting
date. In addition, all such installments or vesting shall be
cumulative. In this regard the Company will be subject, at all times,
to any rules and policies of any exchange or over-the-counter market
which is applicable to the Company and respecting any such required
installment or vesting provisions for certain or all Optionees.
(d) In the case of an Optionee who is a director or officer of the Company
or a Related Company, if, for any reason (other than death or removal
by the Company or a Related Company), the Optionee ceases to serve in
that position for either the Company or a Related Company, any option
held by the Optionee at the time such position ceases or terminates
may, at the sole discretion of the Board, be exercised within up to 90
calendar days after the effective date that his position ceases or
terminates (subject to the limitations at paragraph (a) hereinabove),
but only to the extent that the option was exercisable according to
its terms on the date the Optionee's position ceased or terminated.
After such 90-day period any unexercised portion of an Option shall
expire.
(e) In the case of an Optionee who is an employee or consultant of the
Company or a Related Company, if, for any reason (other than death or
termination for cause by the Company or a Related Company), the
Optionee ceases to be employed by either the Company or a Related
Company, any option held by the Optionee at the time his employment
ceases or terminates may, at the sole discretion of the Board, be
exercised within up to 60 calendar days (or up to 30 calendar days
where the Optionee provided only investor relations services to the
Company or a Related Company) after the effective date that his
employment ceased or terminated (that being up to 60 calendar days (or
up to 30 calendar days) from the date that, having previously provided
to or received from the Company a notice of such cessation or
termination, as the case may be, the cessation or termination becomes
effective; and subject to the limitations at paragraph (a)
hereinabove), but only to the extent that the option was exercisable
according to its terms on the date the Optionee's employment ceased or
terminated. After such 60-day (or 30-day) period any unexercised
portion of an Option shall expire.
(f) In the case of an Optionee who is an employee or consultant of the
Company or a Related Company, if the Optionee's employment by the
Company or a Related Company ceases due to the Company's termination
of such Optionee's employment for cause, any unexercised portion of
any Option held by the Optionee shall immediately expire. For this
purpose "cause" shall mean conviction of a felony or continued
failure, after notice, by the Optionee to perform fully and adequately
the Optionee's duties.
(g) Neither the selection of any Key Person as an Optionee nor the
granting of an Option to any Optionee under this Plan shall confer
upon the Optionee any right to continue as a director, officer,
employee or consultant of the Company or a Related Company, as the
case may be, or be construed as a guarantee that the Optionee will
continue as a director, officer, employee or consultant of the Company
or a Related Company, as the case may be.
(h) Each Option shall be exercised in whole or in part by delivering to
the office of the Treasurer of the Company written notice of the
number of shares with respect to which the Option is to be exercised
and by paying in full the purchase price for the Option Shares
purchased as set forth in Section 8.
8. Payment for Option Shares.
In the case of all Option exercises, the purchase price shall be paid in
cash or certified funds upon exercise of the Option.
9. Incentive stock Options.
(a) The Board may, from time to time, and subject to the provisions of
this Plan and such other terms and conditions as the Board may
prescribe, grant to any Key Person who is an employee eligible to
receive Options one or more Incentive Stock Options to purchase the
number of shares of Common Stock allotted by the Board.
(b) The Option price per share of Common Stock deliverable upon the
exercise of an Incentive Stock Option shall be no less than the Fair
Market Value of a share of Common Stock on the Date of Grant of the
Incentive Stock Option.
(c) The Option term of each Incentive Stock Option shall be determined by
the Board and shall be set forth in the Option Agreement, provided
that the Option term shall commence no sooner than from the Date of
Grant and shall terminate no later than 10 years from the Date of
Grant and shall be subject to possible early termination as set forth
in Section 7 hereinabove.
10. Changes in Common Stock, adjustments, etc.
In the event that each of the outstanding shares of Common Stock (other
than shares held by dissenting stockholders which are not changed or exchanged)
should be changed into, or exchanged for, a different number or kind of shares
of stock or other securities of the Company, or, if further changes or exchanges
of any stock or other securities into which the Common Stock shall have been
changed, or for which it shall have been exchanged, shall be made (whether by
reason of merger, consolidation, reorganization, recapitalization, stock
dividends, reclassification, split-up, combination of shares or otherwise), then
there shall be substituted for each share of Common Stock that is subject to the
Plan, the number and kind of shares of stock or other securities into which each
outstanding share of Common Stock (other than shares held by dissenting
stockholders which are not changed or exchanged) shall be so changed or for
which each outstanding share of Common Stock (other than shares held by
dissenting stockholders) shall be so changed or for which each such share shall
be exchanged. Any securities so substituted shall be subject to similar
successive adjustments.
In the event of any such changes or exchanges, the Board shall determine
whether, in order to prevent dilution or enlargement of rights, an adjustment
should be made in the number, kind, or option price of the shares or other
securities then subject to an Option or Options granted pursuant to the Plan and
the Board shall make any such adjustment, and such adjustments shall be made and
shall be effective and binding for all purposes of the Plan.
11. Relationship of employment.
Nothing contained in the Plan, or in any Option granted pursuant to the
Plan, shall confer upon any Optionee any right with respect to employment by the
Company, or interfere in any way with the right of the Company to terminate the
Optionee's employment or services at any time.
12. Non-transferability of Option.
No Option granted under the Plan shall be transferable by the Optionee,
either voluntarily or involuntarily, except by will or the laws of descent and
distribution, and any attempt to do so shall be null and void.
13. Rights as a stockholder.
No person shall have any rights as a stockholder with respect to any share
covered by an Option until that person shall become the holder of record of such
share and, except as provided in Section 10, no adjustments shall be made for
dividends or other distributions or other rights as to which there is an earlier
record date.
14. Securities laws requirements.
No Option Shares shall be issued unless and until, in the opinion of the
Company, any applicable registration requirements of the United States
Securities Act of 1933, as amended, any applicable listing requirements of any
securities exchange on which stock of the same class is then listed, and any
other requirements of law or of any regulatory bodies having jurisdiction over
such issuance and delivery, have been fully complied with. Each Option and each
Option Share certificate may be imprinted with legends reflecting federal and
state securities laws restrictions and conditions, and the Company may comply
therewith and issue "stop transfer" instructions to its transfer agent and
registrar in good faith without liability.
15. Disposition of Option Shares.
Each Optionee, as a condition of exercise, shall represent, warrant and
agree, in a form of written certificate approved by the Company, as follows: (i)
that all Option Shares are being acquired solely for his own account and not on
behalf of any other person or entity; (ii) that no Option Shares will be sold or
otherwise distributed in violation of the United States Securities Act of 1933,
as amended, or any other applicable federal or state securities laws; (iii) that
if he is subject to reporting requirements under Section 16(a) of the United
States Securities Exchange Act of 1934, as amended, he will (a) furnish the
Company with a copy of each Form 4 filed by him and (b) timely file all reports
required under the federal securities laws; and (iv) that he will report all
sales of Option Shares to the Company in writing on a form prescribed by the
Company.
16. Effective date of Plan; termination date of Plan.
The Plan shall be deemed effective as of July 23, 2003. The Plan shall
terminate at midnight on June 23, 2013 except as to Options previously granted
and outstanding under the Plan at the time. No Options shall be granted after
the date on which the Plan terminates. The Plan may be abandoned or terminated
at any earlier time by the Board, except with respect to any Options then
outstanding under the Plan.
17. Other provisions.
The following provisions are also in effect under the Plan:
(a) the use of a masculine gender in the Plan shall also include within
its meaning the feminine, and the singular may include the plural, and
the plural may include the singular, unless the context clearly
indicates to the contrary;
(b) any expenses of administering the Plan shall be borne by the Company;
(c) this Plan shall be construed to be in addition to any and all other
compensation plans or programs. The adoption of the Plan by the Board
shall not be construed as creating any limitations on the power or
authority of the Board to adopt such other additional incentive or
other compensation arrangements as the Board may deem necessary or
desirable; and
(d) the validity, construction, interpretation, administration and effect
of the Plan and of its rules and regulations, and the rights of any
and all personnel having or claiming to have an interest therein or
thereunder shall be governed by and determined exclusively and solely
in accordance with the laws of the State of Nevada, U.S.A.
This Plan is dated and made effective as approved by the shareholders of
the Company on this 23rd day of June, 2003.
BY ORDER OF THE BOARD OF DIRECTORS OF
INTERGOLD CORPORATION
Per:
"Grant Atkins"
Grant Atkins
President and a Director
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