UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec.240.14a-12
AURORA GOLD CORPORATION
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(Name of Registrant as Specified In Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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1
Definitive Proxy Statement
AURORA GOLD CORPORATION
1 Edith Place
Coolum Beach, Queensland, 4573 Australia
NOTICE AND PROXY STATEMENT FOR
Annual Meeting of Stockholders to be held July 27, 2007
To the Shareholders of Aurora Gold Corporation:
NOTICE IS HEREBY GIVEN that the 2007 Annual Meeting of Shareholders (the
"Annual Meeting") of Aurora Gold Corporation, a Delaware corporation (the
"Company"), will be held at the Blue Horizon Hotel, 1225 Robson Street,
Vancouver, BC, Canada V6E 1C3 on Friday July 27, 2007 at 8:30 a.m. for the
following purposes:
1. To elect three (3) directors to the Board of Directors;
2. To ratify the appointment of Peterson Sullivan PLLC as independent
accountants for the Company for the year ending December 31, 2007;
3. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation to increase the authorized number of
shares of the Company's common stock;
4. To consider and vote upon a proposal to ratify and approve the
Company's 2007 Incentive Plan;
5. To transact such other business as may properly come before the
meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on June 22, 2007 as
the record date (the "RECORD DATE") for the determination of shareholders
entitled to notice of and to vote at such meeting or any adjournment(s) thereof.
Only shareholders of our Common Stock of record at the close of business on the
Record Date are entitled to notice of and to vote at the Annual Meeting. Shares
can be voted at the Annual Meeting only if the holder is present or represented
by proxy. A copy of our 2006 Annual Report to Shareholders, which includes
audited financial statements, is enclosed. A list of shareholders entitled to
vote at the Annual Meeting will be available for examination at our offices for
ten (10) days prior to the Annual Meeting. This Notice and Proxy Statement is
being mailed to our shareholders on or about June 29, 2007.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING; WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, HOWEVER, YOU ARE URGED TO MARK, SIGN,
DATE, AND MAIL THE ENCLOSED FORM OF PROXY PROMPTLY WHICH IS BEING SOLICITED BY
THE BOARD OF DIRECTORS SO THAT YOUR SHARES OF STOCK MAY BE REPRESENTED AND VOTED
IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE
ASSURED AT THE MEETING.
Your proxy will be returned to you if you should be present at the Annual
Meeting and should request its return in the manner provided for revocation of
proxies on the initial page of the enclosed proxy statement. All proxies that
are properly executed and received prior to the meeting will be voted at the
meeting. If a stockholder specifies how the proxy is to be voted on any
business to come before the meeting it will be voted in accordance with such
specification. IF A STOCKHOLDER DOES NOT SPECIFY HOW TO VOTE THE PROXY IT WILL
BE VOTED FOR EACH MATTER SCHEDULED TO COME BEFORE THE MEETING AND IN THE PROXY
HOLDERS' DISCRETION ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING. ANY PROXY MAY BE REVOKED BY A STOCKHOLDER AT ANY TIME BEFORE IT IS
ACTUALLY VOTED AT THE MEETING BY DELIVERING WRITTEN NOTICE TO THE SECRETARY OR
ACTING SECRETARY OF THE MEETING, BY DELIVERING ANOTHER VALID PROXY BEARING A
LATER DATE OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
By Order of the Board of Directors
/s/ Lars Pearl
- --------------
Lars Pearl
President and Director
June 20, 2007
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Definitive Proxy Statement
AURORA GOLD CORPORATION
1 Edith Place
Coolum Beach, Queensland, 4573 Australia
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 27, 2007
--------------------------------------------------
SOLICATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors on behalf of
Aurora Gold Corporation, a Delaware corporation (the "Company"), to be voted at
our 2006 Annual Meeting of Shareholders (the "Annual Meeting") to be held on
July 27, 2007 at the time and place and for the purposes set forth in the
accompanying Notice of Annual Shareholders (the "Notice") and at any
adjournment(s) thereof. This proxy statement (the "Proxy Statement") and
accompanying proxy are being mailed to stockholders on or about June 29, 2007.
Our Annual Report on Form 10-KSB (the "2006 Form 10-KSB"), serves as the Annual
Report to Shareholders, covering our fiscal year ended December 31, 2006, is
enclosed herewith, and certain parts thereof are incorporated herein by
reference. See "Incorporation by Reference."
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed the close of business on June 22, 2007 as
the Record Date (herein so called) for determining the holders of the Company's
Common Stock, $.001 par value per share ("Common Stock"), entitled to notice of
and to vote, either in person or by proxy, at the Annual Meeting. As of the
Record Date 2007 the Company had 45,968,522 shares of common stock issued and
outstanding.
When proxies in the accompanying form are properly executed and received,
the shares of our Common Stock, par value of $0.001 per share (the "Common
Stock"), represented thereby will be voted at the Annual Meeting in accordance
with the directions noted thereon; if no direction is indicated, such shares
will be voted for the election of directors and in favor of the other proposals
set forth in the Notice.
The cost of preparing, printing, assembling, and mailing the Annual Report,
the Notice, this Proxy Statement, and the enclosed form of proxy, as well as the
cost of forwarding solicitation materials to the beneficial owners of shares of
Common Stock and other costs of solicitation, are to be borne by us. In addition
to the solicitation of proxies by use of the mail, our officers and regular
employees may solicit the return of proxies, either by mail, telephone,
telegraph or through personal contact. Such officers and employees will not be
additionally compensated but will be reimbursed for out-of-pocket expenses.
Brokerage houses and other custodians, nominees, and fiduciaries will, in
connection with shares of our common stock, $0.001 par value per share (the
"Common Stock"), registered in their names, be requested to forward solicitation
material to the beneficial owners of such shares of Common Stock. We may
reimburse brokers, banks, custodians, nominees and fiduciaries holding stock in
their names or in the names of their nominees for their reasonable charges and
expenses in forwarding proxies and proxy material to the beneficial owners of
such stock.
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REVOCATION OF PROXY
Any shareholder of the Company giving a proxy has the unconditional right
to revoke his proxy at any time prior to the voting thereof either in person at
the Annual Meeting, by delivering a duly executed proxy bearing a later date or
by giving written notice of revocation to us addressed to Cameron Richardson,
Aurora Gold Corporation, 1 Edith Place, Coolum Beach, Queensland, 4573,
Australia. No such revocation shall be effective, however, until such notice of
revocation has been received by us at or prior to the Annual Meeting. Any
stockholder attending the meeting in person may withdraw his or her proxy and
vote his or her shares.
INCORPORATION BY REFERENCE
Our Annual Report on Form 10-KSB for the fiscal year ended December 31,
2006 and 2005 has been included with the proxy statement. We currently have six
full time and five part time employees. The section entitled "Business",
together with the consolidated financial statements for the fiscal years ended
December 31, 2006 and 2005 provide additional information concerning our
business. The information set forth in the Annual Report is important for every
Shareholder to review. The Annual Report also contains a description of real
property owned by us. The Sections of the Annual Report entitled "Description of
Business" and "Description of Property" on pages 2 to 14 of the Annual Report
are incorporated herein by reference. The consolidated financial statements on
pages F-1 through F-19 also are incorporated by reference
QUORUM AND VOTING
The record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting was the close of business on June 22, 2007
(the "Record Date"). On the Record Date, there were 45,968,522 shares of Common
Stock issued and outstanding, the holders of which are entitled to one vote per
share on each matter to come before the meeting. Only stockholders of record at
the close of business on June 22, 2007 will be entitled to vote at the Annual
Meeting of Stockholders.
Each shareholder of Common Stock is entitled to one vote on all matters to
be acted upon at the Annual Meeting and neither our Certificate of Incorporation
(the "Certificate of Incorporation") nor its Bylaws (the "Bylaws") allow for
cumulative voting rights. The presence, in person or by proxy, of the holders of
thirty-three and one third percent (33 1/3%) of the issued and outstanding
Common Stock entitled to vote at the meeting is necessary to constitute a quorum
to transact business. Abstentions and broker non-votes will be counted for
purposes of determining a quorum, but will not be counted as voting for purposes
of determining whether a proposal has received the necessary number of votes for
approval of the proposal. If a quorum is not present or represented at the
Annual Meeting, the shareholders entitled to vote thereat, present in person or
by proxy, may adjourn the Annual Meeting from time to time without notice or
other announcement until a quorum is present or represented. Assuming the
presence of a quorum, the affirmative vote of the holders of a plurality of the
shares of Common Stock voting at the meeting is required for the election of
each of the nominees for director, and the affirmative vote of the holders of a
majority of the shares of Common Stock voting at the meeting is required for
approval of the increase in the total Common Stock.
Directors are elected by plurality vote. The ratification of the
appointment of Peterson Sullivan PLLC will require the affirmative vote of a
majority of the Common Stock represented at the meeting and entitled to vote on
the proposal. Abstentions and broker non-votes will not be counted in the
election of directors or in determining whether such ratification has been
given.
Under applicable provisions of the Delaware General Corporation Law,
shareholders are not entitled
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to dissenters' rights or appraisal rights with respect to the matters to be
considered and voted upon at the Annual Meeting of Stockholders.
BOARD OF DIRECTORS RECOMMENDATIONS
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS VOTE
FOR:
PROPOSAL 1: ELECTION OF DIRECTORS;
PROPOSAL 2: THE RATIFICATION OF THE APPOINTMENT OF APPOINTMENT OF
PETERSON SULLIVAN PLLC AS THE COMPANY'S THE INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2007;
PROPOSAL 3: THE PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON
STOCK FROM 50,000,000 TO 100,000,000;
PROPOSAL 4: THE PROPOSAL TO RATIFY AND APPROVE THE COMPANY'S 2007
INCENTIVE STOCK OPTION PLAN.
MANAGEMENT DOES NOT INTEND TO PRESENT ANY BUSINESS AT THE ANNUAL MEETING
FOR A VOTE OTHER THAN THE MATTERS SET FORTH IN THE NOTICE AND HAS NO INFORMATION
THAT OTHERS WILL DO SO. IF OTHER MATTERS REQUIRING A VOTE OF THE SHAREHOLDERS
PROPERLY COME BEFORE THE ANNUAL MEETING, IT IS THE INTENTION OF THE PERSONS
NAMED IN THE ACCOMPANYING FORM OF PROXY TO VOTE THE SHARES REPRESENTED BY THE
PROXIES HELD BY THEM IN ACCORDANCE WITH THEIR JUDGMENT ON SUCH MATTERS.
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PROPOSAL 1. ELECTION OF THREE (3) DIRECTORS TO THE BOARD OF DIRECTORS
At the Annual Meeting of Stockholders, the entire Board of Directors,
consisting of three members, is to be elected. In the absence of instructions to
the contrary, the shares of Common Stock represented by a proxy delivered to the
Board of Directors will be voted FOR the three nominees named below. All of the
nominees named below are presently serving as our Directors and each is
anticipated to be available for election and able to serve. However, if any such
nominee should decline or become unable to serve as a Director for any reason,
votes will be cast instead for a substitute nominee designated by the Board of
Directors or, if none is so designated, will be cast according to the judgment
in such matters of the person or persons voting the proxy.
THE NOMINEES FOR ELECTION AS DIRECTORS ARE:
NAME, AGE (AS OF JUNE 22, 2007) AND BUSINESS EXPERIENCE
LARS PEARL, 45, serves as the Company's President and Director. Mr, Pearl
is a geologist and has served as a geological consultant to various companies
since 1994. Since March 15, 2004, he has also served as the President and as a
Director of Cigma Metals Corporation. Mr. Pearl was appointed to the Board on
April 27, 2007 to fill the vacancy created by the resignation of Klaus Eckhof,
our former president and director.
CAMERON RICHARDSON, 54, has served as the Chief Financial Officer of Aurora
Gold Corporation since April 1998 Chief Accounting Officer since June 1997 and,
Secretary since April 1998. He had served as our president from May 4, 2001 to
February 27, 2006. Mr. Richardson also serves as a Director, Secretary and Chief
Financial Officer of Aurora Metals (BVI) Limited; as the Secretary of Eurasia
Gold Fields, Inc,; as a Director of La Plata Gold Corporation; as the Secretary
of Soil Biogenics, Inc.; Mr. Richardson has held accounting positions with, and
has been a consultant to various Canadian resource companies from 1981 to 1997.
MICHAEL MONTGOMERY, 42, has been the Senior Geologist with Kalgoorlie
Consolidated Gold Mines from February 2006 to present; was the Senior Mine
Geologist with Gold Fields Australia Ltd. from July 2004 to February 2006;
Contract Senior Geologist with Haoma Mining (April to July 2004); Senior Mine
Geologist with Mount Gibson Mining (October 2003 to April 2004); Senior Mine
Geologist with Consolidated Minerals (May 2001 to October 2004). Mr. Montgomery
has been a geological consultant to various resource companies from 1989 to
2001. Mr. Montgomery was appointed to the Board on April 27, 2007 in order to
fill the vacancy created by the resignation of Antonino Cacace as a director.
The tables below and the paragraphs that follow present certain information
concerning the nominees for our Director and the executive officers. Each
elected Director will serve until next annual meeting of stockholders and until
his successor has been elected and qualified. Officers are elected by and serve
at the discretion of the Board of Directors. None of our Directors or executive
officers has any family relationship with any other Director or executive
officer.
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Name Age Positions Executive Shares of Common Percent of
With Company Officer/ Stock Beneficially Class
Director Owned as of May 21 ,
Since 2007 (1) (2)
Nominees for Directors:
Lars Pearl 45 Director 04/07 200,000 * %
Michael Montgomery 42 Director 04/07 0 * %
Cameron Richardson 54 Director 05/01 0 * %
Executive Officers:
Lars Pearl 45 President 04/07 200,000 * %
Cameron Richardson 54 CFO and Secretary 04/98 0 * %
All Directors and executive
officers as a group 200,000 * %
* Less than 1%
(1) The persons named below have sole voting and investment power with respect
to the shares.
(2) No securities were authorized for issuance under equity compensation plans.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
Our board of directors has primary responsibility for directing the
management of our business and affairs. There were four regularly scheduled
Board meetings during the fiscal year ended December 31, 2006. All Directors
were in attendance, either in person or by phone, at all Board meetings and
Committee meetings. Our board consists of three members.
COMMITTEES
The duties of the Committees are as follows:
Executive Committee (Lars Pearl, Michael Montgomery & Cameron Richardson)
The Executive Committee has the full authority of the Board of Directors to
take action upon such matters as may be referred to the Committee by the Board
of Directors.
Audit Committee (Lars Pearl, Michael Montgomery & Cameron Richardson)
The Audit Committee meets with the independent public accountants at least
annually to review the scope of the independent audit, the appropriateness of
the accounting policies, the adequacy of internal controls and address issues
relevant to our operation. The Board of Directors has not adopted a written
charter for the audit committee. Michael Montgomery is the independent member of
the committee.
Compensation and Benefits Committee (Lars Pearl, Michael Montgomery &
Cameron Richardson)
The Compensation and Benefits Committee receives and considers
recommendations from the chief executive officer for salaries and other forms of
compensation for the executive officers and makes recommendations to the Board
of Directors on these matters. Michael Montgomery is the independent members of
the committee.
Nominating and Corporate Governance Committee (Lars Pearl, Michael
Montgomery & Cameron Richardson)
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The responsibilities of the Nominating and Corporate Governance Committee
include: nominates individuals to stand for election as directors, considers
recommendations by our stockholders of potential nominees for election as
directors, initial review of policy issues regarding the size and composition of
the Board of Directors, and makes recommendations to our board concerning the
structure of our board and corporate governance matters. The nominating
committee does not have a charter. Michael Montgomery is the independent members
of the committee.
During the fiscal year ended December 31, 2006 and the subsequent period
ended June 22, 2007 the entire board of directors acted as our Audit Committee,
Compensation Committee, Nominating and Corporate Governance Committees. During
fiscal 2006 and the period ended April 30, 2007, the Compensation and Benefits
Committee held one meeting by telephone conference call and the audit committee
held five meetings by telephone conference call. During fiscal 2006 and the
period ended April 30, 2007 the audit committee reviewed the fiscal 2006 interim
unaudited financial statements, the December 31, 2006 yearend audited financial
statements and the first quarter of 2007 interim unaudited financial statements.
INTERNAL CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our Securities Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to our management, including our President and Chief Executive
Officer (Principal Executive Officer) and Chief Financial Officer (Principal
Financial Officer), as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, as ours are designed to do, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
As of December 31, 2006, we carried out an evaluation, under the
supervision and with the participation of our management, including our
President and Chief Executive Officer (Principal Executive Officer) and Chief
Financial Officer (Principal Financial Officer) of the effectiveness of the
design and operation of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based
upon that evaluation, our President and Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer)
concluded that, as of December 31, 2006, our disclosure controls and procedures
were ineffective in alerting them in a timely manner to material information
relating to the Company and its subsidiary that is required to be included in
the reports that we file or submit under the Securities Exchange Act of 1934
related to the use of the cash versus accrual method of accounting by our
wholly-owned Brazilian subsidiary, Aurora Gold Mineracao Ltda, which commenced
operations during the 2006 fiscal year. We now have initiated procedures to
ensure conformity in the use of the accrual method of accounting by such
subsidiary as is already used by us and all of our operating subsidiaries.
Except as set forth above, there have been no changes in our internal
control over financial reporting that occurred during the period covered by this
Report that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is composed of three
directors. Michael Montgomery is the independent Director and financial expert
serving on the audit committee and replaces Antonino Cacace who resigned on
April 20, 2007. The Board of Directors has not adopted a written charter for the
Audit Committee.
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The responsibilities of the Audit Committee include recommending to the
Board of Directors an accounting firm to be engaged as our independent
accountants. Management is responsible for our financial statements and the
financial reporting process, including the system of internal controls. The
independent accountants are responsible for expressing an opinion on the
conformity of those audited financial statements with accounting principles
generally accepted in the United States. The Audit Committee's responsibility is
to oversee these processes and the activities of our internal audit department.
In this context, the Audit Committee has met and held discussions with
management and the independent accountants. Management represented to the Audit
Committee that our financial statements were prepared in accordance with
generally accepted accounting principles, and the Audit Committee has reviewed
and discussed the financial statements with management and the independent
accountants. The Audit Committee has received and reviewed the written
disclosures and letter from the independent auditors required by Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees", as amended and have discussed with the independence auditors their
independence from us and management. The Audit Committee has also discussed with
the independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61, "Communication with Audit Committees", as amended.
In addition, the Audit Committee discussed with the independent auditors
the overall scope and plans for the audit. The Audit Committee met jointly with
the independent auditors and management to discuss the results of the auditors'
examination, the auditors' understanding and evaluation of our internal controls
which the auditors considered necessary to support their opinion on the
financial statements for the year 2006, and various factors affecting the
overall quality of accounting principles as applied in our financial reporting.
The independent auditors also met with the committee without management being
present to discuss these matters. The Audit Committee also considered the
compatibilities of non-audit services with the accountants' independence.
In fulfilling its oversight responsibilities, the Audit Committee has
reviewed and discussed with management and the independent auditors our audited
financial statements contained in our Annual Report on Form 10-KSB for the year
ended December 31, 2006. The Audit Committee recommended that the Board of
Directors include the audited financial statements in our Annual Report on Form
10-KSB for the year ended December 31, 2006, as filed with the Securities and
Exchange Commission.
This report is submitted by the Audit Committee. As of April 27, 2007 its
members were:
Lars Pearl
Michael Montgomery
Cameron Richardson
Prior to April 27, 2007 the members of the Audit committee were:
Antonino Cacace
Klaus Eckhof
Cameron Richardson
CERTAIN RELATIONSHIPS
Our proposed business raises potential conflicts of interests between
certain of our officers and directors and us. Certain of our directors are
directors of other mineral resource companies and, to the extent that such other
companies may participate in ventures in which we may participate, our directors
may have a conflict of interest in negotiating and concluding terms regarding
the extent of such
9
participation. In the event that such a conflict of interest arises at a meeting
of our directors, a director who has such a conflict will abstain from voting
for or against the approval of such participation or such terms. In appropriate
cases, we will establish a special committee of independent directors to review
a matter in which several directors, or management, may have a conflict. From
time to time, several companies may participate in the acquisition, exploration
and development of natural resource properties thereby allowing for their
participation in larger programs, involvement in a greater number of programs
and reduction of the financial exposure with respect to any one program. It may
also occur that a particular company will assign all or a portion of its
interest in a particular program to another of these companies due to the
financial position of the company making the assignment.
In determining whether we will participate in a particular program and the
interest therein to be acquired by it, the directors will primarily consider the
potential benefits to us, the degree of risk to which we may be exposed and its
financial position at that time. Other than as indicated, we have no other
procedures or mechanisms to deal with conflicts of interest. We are not aware of
the existence of any conflict of interest as described herein.
TRANSACTIONS WITH RELATED PERSONS
Other than as disclosed below, during the fiscal year ended December 31,
2006, none of our current directors, officers or principal shareholders, nor any
family member of the foregoing, nor, to the best of our information and belief,
any of our former directors, senior officers or principal shareholders, nor any
family member of such former directors, officers or principal shareholders, has
or had any material interest, direct or indirect, in any transaction, or in any
proposed transaction which has materially affected or will materially affect us.
There have been no transactions or proposed transactions with officers and
directors during the last two years to which we are a party except as follows:
In June 2005, 3,684,091 common shares were issued at $0.04 per share to
settle debts of $161,000 and pay $1,500 in consulting fees. The shares were
issued to David Jenkins, a former director who resides outside the United States
of America (in accordance with the exemption from registration requirements
afforded by Regulation S as promulgated thereunder).
In July 2005, Klaus P. Eckhof, one of our directors, purchased 3,500,000
shares in a private placement effected pursuant to Regulation S. Mr. Eckhof
purchased the shares on the same terms and conditions as all the other
purchasers in the offering. These shares are registered for resale pursuant to a
registration statement declared effective as of February 28, 2006.
COMPENSATION OF DIRECTORS
During the fiscal year 2006, consulting fees of $36,002 (Fiscal 2005 -
$10,410; Fiscal 2004 - $0) were paid to directors of the Company. We do not pay
a fee to our outside, non-officer directors. During the year ended December 31,
2006, 2005 and 2004 non-officer directors did not receive any consulting fees.
We reimburse our directors for reasonable expenses incurred by them in attending
meetings of the Board of Directors.
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EXECUTIVE COMPENSATION
- ------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
- ------------------- ----- ---------------------------- --------------------------------------------
Awards Payments
- ------------------- ----- ------- -------- --------- ------------------------ ------------------
Securities
Other Under- All
Annual Restricted Lying other
Compen- Stock Options/ LTIP Compen-
Name And Year Salary Bonuses sation Award(s) SARs Payouts sation
Principal Position ($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------- ----- ------- -------- --------- ----------- ----------- -------- --------
Klaus P. Eckhof 2006 22,937 -0- -0- None None None -0-
President, CEO and ----- ------- -------- --------- ----------- ----------- -------- --------
Director 2005 7,682 -0- -0- None None None -0-
----- ------- -------- --------- ----------- ----------- -------- --------
2004 -0- -0- -0- None None None -0-
----- ------- -------- --------- ----------- ----------- -------- --------
2003 -0- -0- -0- None None None -0-
- ------------------- ----- ------- -------- --------- ----------- ----------- -------- --------
- ------------------- ----- ------- -------- --------- ----------- ----------- -------- --------
Cameron Richardson 2006 13,065 -0- -0- None None None -0-
Secretary, CFO and ----- ------- -------- --------- ----------- ----------- -------- --------
Director 2005 2,728 -0- -0- None None None -0-
----- ------- -------- --------- ----------- ----------- -------- --------
2004 -0- -0- -0- None None None -0-
----- ------- -------- --------- ----------- ----------- -------- --------
2003 -0- -0- -0- None None None -0-
- ------------------- ----- ------- -------- --------- ----------- ----------- -------- --------
None of our officers or directors is a party to an employment agreement
with us. During the years ended December 31, 2006, 2005 and 2004 the entire
board of directors acted as our compensation committee and audit committee.
OPTIONS/SAR GRANTS TABLE
The following information sets forth information concerning individual
grants of stock options (whether or not in tandem with stock appreciation rights
("SARs") and freestanding SARs made during the last completed fiscal year to
each of the named executive officers.
We awarded no stock purchase options, or any other rights, to any of our
directors or officers in Fiscal 2006 or Fiscal 2005
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
We have no options issued or outstanding.
None of our officers or directors was party to an employment agreement with
us. At no time during the last completed fiscal year did we, while a reporting
company pursuant to Section 13(a) of 15(d) of the Exchange Act, adjust or amend
the exercise price of the stock options or SARs previously awarded to any of the
named executive officers, whether through amendment, cancellation or replacement
grants, or any other means.
CORPORATE GOVERNANCE
The Board of Directors has determined that to be considered independent, an
outside director may not have a direct or indirect material relationship with
the
11
impairs or inhibits -- or has the potential to impair or inhibit--a director's
exercise of critical and disinterested judgment on behalf of the Company and its
stockholders. In determining whether a material relationship exists, the Board
consults with the Company's counsel to ensure that the Board's determinations
are consistent with all relevant securities and other laws, recent relevant
cases and regulations regarding the definition of "independent director,"
including those set forth in NASDAQ Marketplace Rule 4200(a)(15)as in effect
from time to time. Consistent with these considerations, the Board affirmatively
has determined that as of June 22, 2007 only Michael Montgomery is an
independent director.
COMPLIANCE WITH SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE, OF THE
EXCHANGE ACT OF 1934
Based on information provided to the Company, it is believed that all of
the Company's directors, executive officers and persons who own more than 10% of
the Company's common stock were in compliance with Section 16(a) of the Exchange
Act of 1934 during the last fiscal year. During the year ended December 31,
2006, all of the Company's directors, executive officers and Company's common
stock were in compliance with section 16(a) of the Exchange Act of 1934.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
No securities were authorized for issuance under equity compensation plans.
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of May 24, 2007 by (i) each person who is known
by us to own beneficially more than five percent (5%) of our outstanding common
stock; (ii) each of the our directors and officers; and (iii) all of our
directors and officers as a group. As at May 24, 2007 there were 45,968,522
shares of common stock issued and outstanding.
- -----------------------------------------------------------------------------------
Name and Address of Amount and Nature Percentage of
Beneficial Owner of Beneficial Owner Class
- ---------------------------------------------- ------------------- --------------
Officers and Directors
- ---------------------------------------------- ------------------- --------------
Lars Pearl 200,000 *%
1 Edith Place
Coolum Beach, Queensland, 4573, Australia
- ---------------------------------------------- ------------------- --------------
Michael Montgomery 0 *
100 Lewis Street
Kalgoorlie, Western Australia, 6430 Australia
- ---------------------------------------------- ------------------- --------------
Cameron Richardson 0 *
2 - 238 West 4th Street,
North Vancouver, B.C., Canada V6E 4K2
- ---------------------------------------------- ------------------- --------------
Officers and Directors (3 persons) 200,000 * %
- ---------------------------------------------- ------------------- --------------
* Less than 1%.
CHANGES IN CONTROL
There were no arrangements during the last completed fiscal year or
subsequent period through May 24, 2007 which would result in a change in
control. We do not believe that the offer and sale by us of an aggregate of
8,000,000 shares in February 2006, to thirty seven unrelated investors resulted
in a change of control.
No securities were authorized for issuance under equity compensation plans.
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of The Company served as a member of the Board of
Directors or compensation or similar board committee of any entity that has one
or more executive officers serving on The Company's Board of Directors or
Compensation Committee. During 2006, no executive officer or former executive
officer of The Company voted on any decision relating to compensation matters of
the Company.
VOTE REQUIRED TO BE ELECTED AS A DIRECTOR
To be elected a director, each nominee must receive the affirmative vote of
a majority of the votes duly cast at the Annual Meeting. Abstentions and broker
non-votes will have no effect on the election of nominees to the Board of
Directors.
PROPOSAL 2. THE RATIFICATION OF THE APPOINTMENT OF APPOINTMENT OF
PETERSON SULLIVAN PLLC AS THE COMPANY'S THE INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2007
The Board of Directors recommends the ratification by the stockholders of
the appointment of Peterson Sullivan PLLC as our independent accountants for the
fiscal year ending December 31, 2007. Peterson Sullivan PLLC has been our
accountant since February 7, 2006. Moore Stephens Ellis Foster Ltd. were our
accountants prior to February 7, 2006.
Effective January 7, 2006, we dismissed our prior independent public
accountant, Moore Stephens Ellis Foster Ltd. and retained as our new independent
public accountant Peterson Sullivan PLLC. Moore Stephens Ellis Foster Ltd.'s
report on our financial statements during the most recent fiscal year contained
no adverse opinion or disclaimer of opinion, nor was it qualified or modified as
to uncertainty, audit scope or accounting principles, except that the report was
qualified as to the Company's ability to continue as a going concern.
During the last two fiscal years and the subsequent interim period through
February 7, 2006, there were no disagreements between the Company and Moore
Stephens Ellis Foster Ltd. on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Moore Stephens Ellis
Foster Ltd., would have caused it to make a reference to the subject matter of
disagreements in connection with its report. There were no "reportable events"
as that term is described in Item 304(a)(1)(v) of Regulation S-B within the last
fiscal year and through February 7, 2006.
Effective February 7, 2006, the Company engaged Peterson Sullivan PLLC as
our new independent registered public accountants to audit our financial
statements. The appointment of Peterson Sullivan PLLC was recommended and
approved by our board of directors. During our last two most recent fiscal years
and the subsequent interim period to date hereof, we have not consulted Peterson
Sullivan PLLC regarding either: (1) the application of accounting principles to
a specified transaction, either complete or proposed, or the type of audit
opinion that might be rendered on our financial statements, or (2) any matter
that was either the subject matter of a disagreement as defined in Item
304(a)(1)(iv) of Regulation S-B or a reportable event as described in Item
304(a)(1)(v) of Regulation S-B.
In the absence of instructions to the contrary, the shares of Common Stock
represented by a proxy delivered to the Board of Directors will be voted FOR the
ratification of the appointment of Peterson
13
Sullivan PLLC. A representative of Peterson Sullivan PLLC is not expected to be
present.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES:
The aggregate fees billed for professional services by Peterson Sullivan
PLLC for the audit of our annual financial statements and review of financial
statements included in our Form 10-QSB (17 CFR 249.308b) or services that were
normally provided by the accountant in connection with statutory and regulatory
filings or engagements during the 2006 fiscal year were $32,405.
The aggregate fees billed for professional services by Moore Stephens Ellis
Foster Ltd. for the audit of our annual financial statements and review of
financial statements included in our Form 10-QSB (17 CFR 249.308b) or services
that were normally provided by the accountant in connection with statutory and
regulatory filings or engagements during the 2005 fiscal year were $10,234.
AUDIT-RELATED FEES:
The aggregate fees billed to us for assurance and related services by
Peterson Sullivan PLLC that are reasonably related to the performance of the
audit or review of our financial statements and are not reported under audit
fees for fiscal 2006 were $0.
The aggregate fees billed to us for assurance and related services by Moore
Stephens Ellis Foster Ltd. that are reasonably related to the performance of the
audit or review of our financial statements and are not reported under audit
fees for fiscal 2005 were $0.
TAX FEES:
The aggregate fees billed to us for professional services by Peterson
Sullivan PLLC for tax compliance, tax advice and tax planning for fiscal 2006
were $1,530.
The aggregate fees billed to us for professional services by Moore Stephens
Ellis Foster Ltd. for tax compliance, tax advice and tax planning for fiscal
2005 were $0.
ALL OTHER FEES:
The aggregate fees billed to us for products and services provided by
Peterson Sullivan PLLC, other than reported under Audit Fees, Audit-Related Fees
and Tax Fees for fiscal 2006 were $0.
The aggregate fees billed to us for products and services provided by Moore
Stephens Ellis Foster Ltd., other than reported under Audit Fees, Audit-Related
Fees and Tax Fees for fiscal 2005 were $0.
The Audit Committee feels that the services rendered by Peterson Sullivan
PLLC were compatible with maintaining the principal accountant's independence.
The Audit Committee feels that the services rendered by Moore Stephens
Ellis Foster Ltd. were compatible with maintaining the principal accountant's
independence.
VOTE REQUIRED FOR THE RATIFICATION OF THE APPOINTMENT OF APPOINTMENT OF PETERSON
SULLIVAN PLLC AS THE COMPANY'S THE INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR
ENDING DECEMBER 31, 2007
14
The ratification of the appointment of the auditors for the year ending
December 31, 2007 requires the affirmative vote of a majority of the votes cast
on the proposal at the Annual Meeting.
PROPOSAL 3. TO APPROVE THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FROM 50 MILLION TO 100 MILLION
The Board of Directors has adopted a resolution declaring it advisable and
in the best interests of the Company and its shareholders that the Company's
Articles of Incorporation be amended to provide for an increase in the
authorized number of the Company's shares of common stock from 50 million shares
to 100 million shares of stock. Such resolution also recommends that such
amendment be approved and adopted by the Company's shareholders and directs that
such proposal be submitted to the Company's shareholders at its annual meeting.
The Company's Certificate of Incorporation currently authorize issuance of
a maximum of 50 million shares of common stock. If the Board of Directors'
proposal is approved by the Company's shareholders, the Board of Directors would
have authority to issue up to 100 million shares of common stock to such
persons, and for such consideration as the Board of Directors may determine
without further action by the shareholders except as may be required by law.
As of May 24, 2007, there were 45,968,522 shares of common stock issued and
outstanding.
The Board of Directors has proposed the increase in the authorized capital
stock to provide shares which could be used for a variety of corporate purposes,
including mergers, acquisitions, the raising of additional capital, and
implementation of incentive and other option plans. While the Board of Directors
believes it important that the Company has the flexibility that would be
provided by having additional authorized capital stock available, the Company
does not have any plans, agreements or arrangements that would require the
issuance of such stock. The Board of Directors believes it would be in the
Company's best interest, however, to have such additional shares of authorized
stock available to enable it to take advantage of opportunities for possible
future acquisitions, raising capital for future development and operations and
the establishment of equity compensation plans, including the plans proposed to
be adopted in Proposal 4 below. It is also possible that additional capital
stock that would be authorized by the proposed amendment could be issued in a
transaction that might discourage offers by takeover bidders or make such offers
more difficult or expensive to accomplish, although the Board of Directors has
no current plans for any such use of the capital stock.
The amendment to the Certificate of Incorporation will become effective
upon approval by a majority of the shares voting on the proposal and the filing
of the amendment to the Certificate of Incorporation with the Secretary of State
of Delaware. Such Certificate of Amendment would amend Article Fourth of the
Company's Certificate of Incorporation to read as follows:
"The authorized capital stock of this corporation shall consist of 100
Million (100,000,000) shares of common stock with a par value of $0.001 per
share."
If this proposal is approved by the Company's stockholders, the Company
will as soon as practicable following the Annual Meeting, file with the
Secretary of State of the State of Delaware the Certificate of Amendment
substantially in the form attached to this proxy statement as APPENDIX A.
If approved by the shareholders, The Company anticipates that such
amendment to the Certificate of Incorporation will be filed as soon as
practicable.
15
VOTE REQUIRED TO APPROVE THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCRESE THE NUMBER OF AUTHORIZED SHARES FROM 50,000,000 TO
100,000,000
The approval of the vote required to approve the amendment to the company's
certificate of incorporation to increase the number of authorized shares from
50,000,000 to 100,000,000 requires the affirmative vote of a majority of the
votes cast on the proposal at the Annual Meeting.
PROPOSAL 4. TO RATIFY AND APPROVE THE COMPANY'S 2007 INCENTIVE
STOCK OPTION PLAN
The Board has adopted a resolution to submit to a vote of the Company's
stockholders a proposal to approve the Company's 2007 Incentive Stock Option
Plan (the "PLAN"), set forth in APPENDIX B to this Proxy Statement. The Board
believes that the Plan is necessary in order to provide an effective method of
recognizing employee contributions to the future advancement of the Company. The
Company also believes that its ability to grant stock options under the Plan is
critical to its success in attracting and retaining experienced and qualified
employees and remaining competitive in compensation packages compared to
surrounding companies.
The following is a summary description of the Plan, and is qualified by
reference to the full text of the Plan, which is attached as APPENDIX B to this
Proxy Statement.
General. The purpose of the Plan is (a) to promote the identity of
interests between stockholders, employees, directors and consultants of the
Company by encouraging and creating significant ownership of Common Stock of the
Company by such officers, employees, directors and consultants of the Company
and its subsidiaries; (b) to enable the Company to attract and retain qualified
officers, employees, directors and consultants who contribute to the Company's
success by their ability, ingenuity and industry; (c) to provide meaningful
motivation and incentive for officers, employees, directors and consultants who
are responsible for the success of the Company and who are in a position to make
significant contributions toward its objectives; and (d) to provide a means to
compensate officers, employees and directors of the Company as well as to
compensate consultants, advisors, and other third parties who provide valuable
services for the Company.
Administration. The Plan shall be administered by the entire Board or a
committee designated by the Board to administer the Plan; provided, however,
that such committee shall consist of two or more directors each of whom is a
"disinterested person" within the meaning of the applicable provisions of Rule
16b-3 under the Securities Exchange Act of 1934. The Board may increase the size
of the committee and appoint and remove members thereof. As used herein, the
term "Committee" refers to the Board or the appropriate committee appointed by
the Board to administer the Plan.
Eligibility. Awards of stock options may be granted to individuals who are
officers, employees (including employees who are also directors), directors and
consultants of the Company or a subsidiary of the Company.
Shares Reserved for Awards; Award Limits. The Plan provides for the
reservation for awards of an aggregate of 10% of the total shares of Common
Stock outstanding from time to time, less the number of shares underlying
unexercised options as of the date the Plan is approved by the Company's
stockholders, if approved. As of June 22, 2007, shares of the Company's Common
Stock reserved under the amended and restated Plan would have been 4,596,852,
calculated as 10% of the 45,968,522 shares of our Common Stock outstanding as of
May 24, 2007. No Plan participant may receive stock options
16
exercisable for more than 1,000,000 shares of Common Stock in any one calendar
year.
Shares of Common Stock subject to option awards under the Plan that expire
or are forfeited, cancelled or settled in cash will again become available for
awards under the Plan. The Committee will make appropriate adjustments to the
number of shares available under the Plan, the number of shares covered by an
option award and the maximum number of options that may be issued to any single
participant to reflect any stock split, reverse stock split, stock dividend,
combination or reclassification of stock or other similar event. In the event of
a proposed merger, sale of assets, dissolution or liquidation of the Company,
the Board may terminate outstanding options and provide for substitution,
assumption or other payment or settlement of such options as the Board may deem
appropriate.
Awards of Stock Options. Stock options may be in the form of non-qualified
stock options and tax-qualified stock options. Awards of non-qualified stock
options may be granted to employees, officers, directors and consultants of the
Company and the Company's subsidiaries. Awards of tax-qualified stock options
may be granted only to employees of the company and the Company's subsidiaries,
and any awards of tax-qualified stock options must be made pursuant to the terms
applicable to such options under the Internal Revenue Code.
The Committee shall determine the specific terms of stock option awards,
which shall be consistent with the terms of the Plan and shall be recorded in a
written option award agreement. The exercise price for any option may not be
less than the fair market value of the Common Stock on the date of grant. The
term of a non-qualified option may not exceed ten years. The term of a
tax-qualified option may not exceed five years, and the value of shares for
which a tax-qualified option may be exercised in any one calendar year may not
exceed $100,000.
Change of Control or Corporate Transaction. The Committee may provide in an
award agreement for the acceleration of an award upon the occurrence of a Change
of Control or Corporate Transaction. Under the Plan, a Change of Control occurs
if a person or group of persons acquires shares possessing more than 50% of the
total combined voting power of the Company's securities or there is a change in
the composition of a majority of the Board over a 24-month period. Corporate
Transaction is defined in the Plan as (i) a merger or consolidation in which the
Company is not the surviving entity; (ii) the sale, transfer or other
disposition of all or substantially all of the Company's assets; or (iii) a
reverse merger of the Company in which the Company survives but securities
possessing more than 50% of the total combined voting power of the Company's
outstanding securities are transferred to a different person or persons
previously holding such securities.
Transferability of Awards. Generally, no option may be assigned,
transferred or otherwise encumbered by a participant other than by will or the
laws of descent and distribution or a qualified domestic relations order, and
during the lifetime of a participant, any option shall be exercisable only by
the participant. Nevertheless, subject to the approval by the Committee in its
sole discretion, all or a portion of a stock option granted to a participant
under the Plan may be transferable by the participant, to the extent and only to
the extent specified in such approval, to (i) the children or grandchildren of
the participant ("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of such Immediate Family Members or (iii) a partnership or
partnerships in which such Immediate Family Members have at least 99% of the
equity, profit and loss interests.
Terminations of Service. The Committee may act to accelerate vesting and
exercisability of awards under the Plan, or take other action it deems
reasonable, as a result of a participant's termination of service or other
special circumstances.
Changes to the Plan. The Board, in its sole discretion, may amend, alter,
suspend, discontinue or terminate the Plan without the consent of stockholders
or participants, except that any such amendment, alteration, suspension,
discontinuation, or termination shall not affect outstanding awards unless
17
mutually agreed in writing between the Company and the affected participant.
Section 409A. Section 409A of the Internal Revenue Code ("Section 409A")
places significant restrictions on deferred compensation and imposes an
additional tax on participants if such restrictions are not satisfied. The
Company expects to tailor awards under the Plan in a manner that complies with
Section 409A. However, if an award under the Plan or a provision of the Plan
would result in the imposition of an additional tax under Section 409A, the
award or Plan provision will be reformed to comply with Section 409A and such
reformation will not be deemed to adversely affect the participant's right to
the award.
Effective Date and Term. Subject to stockholder approval at the Annual
Meeting, the Plan is effective as of June 1, 2007. The Plan has a ten-year term
and will terminate upon the earlier of May 31, 2017 or the date on which no
shares remain for the grant of options and all outstanding options have been
exercised.
Federal Income Tax Consequences
The Internal Revenue Code provides that a participant receiving a
nonqualified option ordinarily does not realize taxable income upon the grant of
the option. A participant does, however, realize compensation income taxed at
ordinary income tax rates upon the exercise of a nonqualified option to the
extent that the fair market value of the common stock on the date of exercise
exceeds the option price. Subject to the discussion under "Certain Tax Code
Limitations on Deductibility" below, the Company is entitled to a federal income
tax deduction for compensation in an amount equal to the ordinary income so
realized by the participant. When the participant sells the shares acquired
pursuant to a nonqualified option, any gain or loss will be capital gain or
loss. This assumes that the shares represent a capital asset in the
participant's hands, although there will be no tax consequences for the Company.
The grant of a tax-qualified stock option does not result in taxable income
to a participant. The exercise of a tax-qualified stock option also does not
result in taxable income, provided that the circumstances satisfy the employment
requirements in the Internal Revenue Code. However, the exercise of a
tax-qualified stock option may give rise to alternative minimum tax liability
for the participant. In addition, if the participant does not dispose of the
common stock acquired upon exercise of a tax-qualified stock option during the
statutory holding period, then any gain or loss upon subsequent sale of the
common stock will be a long-term capital gain or loss. This assumes that the
shares represent a capital asset in the participant's hands.
The statutory holding period lasts until the later of (i) two years from
the date the option is granted or (ii) one year from the date the common stock
is transferred to the participant pursuant to the exercise of the option. If the
employment and statutory holding period requirements are satisfied, the Company
may not claim any federal income tax deduction upon either the exercise of the
tax-qualified stock option or the subsequent sale of the common stock received
upon exercise.
If these requirements are not satisfied (a "disqualifying disposition"),
the amount of ordinary income taxable to the participant is the lesser of (a)
the fair market value of the common stock on the date of exercise minus the
option price or (b) the amount realized on disposition minus the option price.
Any excess is long-term or short-term capital gain or loss, assuming the shares
represent a capital asset in the participant's hands. Subject to the discussion
under "Certain Tax Code Limitations on Deductibility" below, in the case of a
disqualifying disposition, the Company is entitled to a federal income tax
deduction in an amount equal to the ordinary income realized by the participant.
18
Certain Tax Code Limitations on Deductibility
Section 162(m) of the Internal Revenue Code generally disallows a federal
income tax deduction to any publicly held corporation for compensation paid in
excess of $1.0 million in any taxable year to the chief executive officer or any
of the four other most highly compensated executive officers who are employed by
the corporation on the last day of the taxable year. However, Section 162(m) of
the Internal Revenue Code does allow a deduction for performance-based
compensation, the material terms of which are disclosed to and approved by
stockholders. The Company has structured and intends to implement the Plan so
that resulting compensation would be performance-based compensation. To allow
the Company to qualify the compensation as performance-based, the Company is
seeking stockholder approval of the Plan and the material terms of the related
performance objectives. However, the Company may, in our sole discretion,
determine that in one or more cases it is in our best interests not to satisfy
the requirements for the performance-based exception.
THE ABOVE SUMMARY OF THE EXPECTED EFFECT OF THE FEDERAL INCOME TAX UPON
PARTICIPANTS IN THE PLAN IS NOT COMPLETE, AND IT IS RECOMMENDED THAT THE
PARTICIPANTS CONSULT THEIR OWN TAX ADVISORS FOR COUNSELING. MOREOVER, THE ABOVE
SUMMARY IS BASED UPON CURRENT FEDERAL INCOME TAX LAWS, WHICH ARE SUBJECT TO
CHANGE. THE TAX TREATMENT UNDER FOREIGN, STATE OR LOCAL LAW IS NOT COVERED IN
THE ABOVE SUMMARY.
VOTE REQUIRED TO THE PROPOSAL TO RATIFY AND APPROVE
THE COMPANY'S 2007 INCENTIVE STOCK OPTION PLAN
The approval of the amendment to the Plan requires the affirmative vote of
a majority of the votes cast on the proposal at the Annual Meeting.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINEES FOR 2007 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 2008 Annual
Meeting of Shareholders should be submitted by certified mail, return receipt
requested and must be received by us at our headquarters in Coolum Beach,
Queensland, Australia on or before January 11, 2008 to be eligible for inclusion
in our proxy statements and form of proxy card relating to that meeting.
Shareholder proposals should be submitted to the Secretary of Aurora Gold
Corporation, 1 Edith Place, Coolum Beach, Queensland 4573, Australia. Any such
proposal should comply with the Securities and Exchange Commission rules
governing shareholder proposals submitted for inclusion in proxy materials.
ADDITIONAL INFORMATION
We are subject to the information requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed with the Commission can be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of this material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
450 Fifth Street, N.W. Washington, D.C. 20549. Our Common Stock is traded on the
NASD OTC Bulletin Board under the symbol "ARXG".
All reports and documents filed by us pursuant to Section 13, 14 or 15(d)
of the Exchange Act, after the date of this Proxy Statement, shall be deemed to
be incorporated by reference herein and to be a
19
part hereof from the respective date of filing such documents. We are current
in its filings. Any statement incorporated by reference herein shall be deemed
to be modified or superceded for purposes of this Proxy Statement to the extent
that a statement contained herein or in any other subsequently filed document,
which also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute part of this Proxy
Statement.
Our Annual Report on Form 10-KSB for the fiscal year ended December 31,
2006 and 2005, including financial statements, is being mailed together with
this Proxy Statement to our stockholders of record at the close of business on
June 22, 2007. We will provide without charge to each person whose proxy is
solicited by this proxy statement, a copy of our annual report on Form 10-KSB
for the year ended December 31, 2006, filed with the Securities and Exchange
Commission. A Written request for a copy of such annual report on Form 10-KSB
should be directed to Aurora Gold Corporation, 1 Edith Place, Coolum Beach,
Queensland 4573, Australia, Attention: Cameron Richardson.
OTHER BUSINESS
The Board of Directors does not know of any other business to be presented
to the meeting and does not intend to bring any other matters before the
meeting. However, if any other matters properly come before the meeting or any
adjournments thereof, it is intended that the persons named in the accompanying
proxy will vote thereon according to their best judgment in the interests of us.
By Order of the Board of Directors
/s/ Lars Pearl
- --------------
Lars Pearl
President
June 20, 2007
STOCKHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT.
YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION WILL BE APPRECIATED.
20
Definitive Proxy Statement
AURORA GOLD CORPORATION
1 Edith Place
Coolum Beach, Queensland, 4573 Australia
PROXY
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS ON
JULY 27, 2007
The undersigned hereby appoints Lars Pearl and Cameron Richardson or any of
them, with full power of substitution, as proxies and hereby authorizes them to
represent and to vote, as designated below, all shares of Common Stock of Aurora
Gold Corporation held of record by the undersigned at the close of business on
June 22, 2007 at the Annual Meeting of Stockholders to be held on July 27, 2007
and any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3, 4 and 5.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR SHAREHOLDERS VOTE FOR
EACH OF THE PROPOSALS BELOW.
PROPOSAL 1: ELECTION OF THREE (3) DIRECTORS TO THE BOARD OF DIRECTORS.
/ / FOR all nominees listed (except / / WITHHOLD AUTHORITY to
as marked to the contrary below) vote for all nominees listed below
LARS PEARL, CAMERON RICHARDSON, MICHAEL MONTGOMERY
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF PETERSON SULLIVAN PLLC AS
INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR THE YEAR ENDED
DECEMBER 31, 2007.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 3: TO APPROVE THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FROM 50 MILLION TO 100,000,000 MILLION.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 4: TO RATIFY AND APPROVE THE COMPANY'S 2007 INCENTIVE
STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 5: IN THEIR DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON ANY
OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING AND
ANY ADJOURNMENTS THEREOF.
/ / FOR / / AGAINST / / ABSTAIN
21
PLEASE DATE AND SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY. WHEN SHARES
ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
IF A COMPANY, PLEASE SIGN IN FULL CORPORATE NAME BY THE PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AN
AUTHORIZED PERSON.
PLEASE RETURN IN THE ENCLOSED ENVELOPE.
Dated:
------------------------------------
- --------------------------------------------------
Signature
- --------------------------------------------------
Signature if held jointly
- --------------------------------------------------
Please print name(s)
22
APPENDIX A
TO THE
PRELIMINARY PROXY STATEMENT
CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF
AURORA GOLD CORPORATION
UNDER SECTION 242 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned Lars Pearl, the President of Aurora Gold Corporation (the
"Corporation") hereby certifies that:
1. The corporation's Certificate of Incorporation was filed with the
Office of the Secretary of State of the State of Delaware on October 10, 1995
and was amended by Certificate of Amendment filed with the office of the
Secretary of State on August 20, 1996 (as amended, the "Certificate of
Incorporation").
2. The Certificate of Incorporation of the corporation is hereby
amended by substituting the following in lieu of Article Fourth thereof, so as
to increase the number of authorized shares from 50,000,000 shares of common
stock, par value $0.001 per share to 100,000,000 shares common stock, par value
$0.001 per share, as follows:
"FOURTH: The authorized capital stock of this Corporation shall
consist of 100 Million (100,000,000) shares of common stock with a par value of
$0.001 per share."
3. The amendment of the Certificate of Incorporation herein certified
was authorized by the unanimous written consent of the Board of Directors dated
May <>, 2007 and was approved by the affirmative vote of the majority of all of
the shares voting at a meeting of the shareholders of the Corporation held on
July 29, 2007, at which a quorum was present, in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being an authorized officer of the
corporation, has hereunto signed his name and affirms that the statements made
herein are true under the penalties of perjury, this <> day of July, 2007.
AURORA GOLD CORPORATION
BY: _________________________
LARS PEARL, PRESIDENT
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APPENDIX B
TO THE
PRELIMINARY PROXY STATEMENT
AURORA GOLD CORPORATION
2007 INCENTIVE STOCK OPTION PLAN
1. PURPOSES OF THE PLAN.
The purposes of the Aurora Gold Corporation 2007 Incentive Stock Option
Plan (the "Plan) are to (i) attract and retain the best available personnel for
positions of responsibility within Aurora Gold Corporation (the "COMPANY"), (ii)
provide incentives, in the form of Options (as hereinafter defined) to ADVISORS,
DIRECTORS, EMPLOYEES, and CONSULTANTS (as each such term is hereinafter defined)
of the Company, (iii) provide Advisors, Directors, Employees, and Consultants of
the Company with an opportunity to acquire a proprietary interest in the Company
to encourage their continued provision of services to the Company, and to
provide such persons with incentives and rewards for superior performance more
directly linked to the profitability of the Company's business and increases in
stockholder value, and (iv) generally to promote the success of the Company's
business and the interests of the Company and all of its stockholders, through
the grant of such Options.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
"BOARD" shall mean the Board of Directors of the Company.
"CHANGE OF CONTROL" means a change in ownership or control of the Company
effected through any of the following transactions:
(a) the direct or indirect acquisition by any person or related
group of persons (other than by the Company or a person that directly
or indirectly controls, is controlled by, or is under common control
with, the Company) of beneficial ownership (within the meaning of Rule
13d-3 of the Exchange Act) of securities possessing more than 50% of
the total combined voting power of the Company's outstanding
securities pursuant to a tender or exchange offer made directly to the
Company's stockholders, or other transaction, in each case which the
Board does not recommend such stockholders to accept; or
(b) a change in the composition of the Board over a period of 24
consecutive months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more
contested elections for Board membership, to be comprised of
individuals who either (i) have been Board members continuously since
the beginning of such period or (ii) have been elected or nominated
for election as Board members during such period by at least a
majority of the Board members described in clause (i) who were still
in office at the time such election or nomination was approved by the
Board; or (c) a Corporate Transaction as defined below.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder.
24
"COMMITTEE" shall mean the Committee, if any, appointed by the Board in
accordance with SECTION 4.1 of the Plan, if one is appointed.
"COMPANY" shall mean Aurora Gold Corporation, a Delaware corporation, and
shall include any parent or subsidiary corporation of the Company as
defined in Sections 424(e) and (f), respectively, of the Code.
"CONSULTANTS" and "ADVISORS" shall include any third party (and/or
employees or principals thereof) retained or engaged by the Company to
provide ongoing consulting services to the Company pursuant to a written
contract, including any consulting company wholly owned by such person;
provided that such consultant: (a) possess technical, business, management,
or legal expertise of value to the Company or an affiliate; (b) spends a
significant amount of time and attention on the business and affairs of the
Company; and (c) has a relationship with the Company or an affiliate that
enables the individual to have knowledge concerning the business and
affairs of the Company.
"CORPORATE TRANSACTION" means any of the following stockholder-approved
transactions to which the Company is a party:
(a) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;
(b) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in complete liquidation
or dissolution of the Company; or
(c) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than 50% of the total
combined voting power of the Company's outstanding securities are
transferred to a person or persons different from the persons holding
those securities immediately prior to such merger.
"DATE OF GRANT" means the date specified by the Board or the Committee on
which a grant of Options shall become effective.
"DISABILITY" shall mean the inability of an Optionee to perform his or her
duties and responsibilities for a period of 60 consecutive days or an
aggregate period of 120 days in any two year period.
"DIRECTOR" shall mean a member of the Board.
"EFFECTIVE DATE" shall have the meaning ascribed thereto in SECTION 6.
"EMPLOYEE" shall mean any employee or Officer of the Company. For purposes
of SECTION 7 hereof, the term "Employee" shall also include Advisers,
Directors, Consultants and Advisors.
"EXCHANGE ACT" shall mean the United States Securities Exchange Act of
1934, as amended.
"FAIR MARKET VALUE" shall mean, with respect to the date a given Option is
granted or exercised, the value of the Shares determined by the Board
or the Committee in such manner as it may deem equitable for Plan purposes,
but no less than is required by applicable laws or regulations; provided,
25
however, that where there is a public market for the Shares, the Fair
Market Value per share shall be the average of the closing bid and asked
prices of the Shares on the Date of Grant, as reported by Bloomberg, L.P.
("BLOOMBERG"), (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation System-Small
Cap or National Markets or the National Association of Security Dealers
Over the Counter Bulletin Board).
"NON-EMPLOYEE DIRECTORS" shall have the meaning ascribed thereto in Rule
16b-3.
"NON-QUALIFIED STOCK OPTION" means an Option that is not intended to
qualify as a Tax-qualified Option (as defined in the Code) and granted
pursuant to the Plan.
"OFFICER" shall mean any officer of the Company.
"OPTION" means the right to purchase Shares from the Company upon the
exercise of a Non-qualified Stock Option or a Tax-qualified Option
granted pursuant to this Plan.
"OPTION AGREEMENT" shall mean the written agreement between the Company and
the Participant relating to Options granted under this Plan.
"OPTION PRICE" means the purchase price payable upon the exercise of an
Option.
"OPTIONED STOCK" shall mean the Shares subject to an Option.
"OPTION TERM" shall have the meaning ascribed to it in SECTION 7.3.
"OPTIONEE" shall mean an Employee, Director, Consultant or Advisor of the
Company who has been granted one or more Options.
"PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
"PARTICIPANT" means a person who is selected by the Board or a Committee to
receive benefits under this Plan and (i) is at that time an Advisor
Employee, Officer, Director, or Consultant, to the Company, or (ii) has
agreed to commence serving in any such capacity.
"PLAN" shall mean this Aurora Gold Corporation 2007 Incentive Plan, as
amended from time to time in accordance with the terms hereof.
"RELATIONSHIP STATUS" means a Participant's status as an Advisor,
Consultant, Director or Employee of the Company.
"RULE 16B-3" means Rule 16b-3, as promulgated and amended from time to time
by the Securities and Exchange Commission under the Exchange Act, or
any successor rule to the same effect.
"SECURITIES ACT" shall mean the United States Securities Act of 1933, as
amended.
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"SECTION 409A" shall have the meaning ascribed thereto in SECTION 14.15.
"SHARES" shall mean (i) shares of the Common Stock, $.001 par value, of the
Company described in the Company's Certificate of Incorporation, as
the same may be further amended or restated from time to time, and (ii) any
security into which shares of the Common Stock may be converted by reason
of any transaction or event of the type referred to in SECTION 8 of this
Plan, in each case as the same may be adjusted pursuant to SECTION 8 of
this Plan.
"SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
"TAX DATE" shall mean the date an Optionee is required to pay the Company
an amount with respect to tax withholding obligations in connection
with the exercise of an Option.
"TAX-QUALIFIED OPTION" shall mean an Option granted hereunder the terms of
which are intended to qualify for tax treatment under specified
provisions of the Code.
"TERMINATION DATE" shall have the meaning ascribed thereto in SECTION 11.
3. SHARES SUBJECT TO THE PLAN.
Subject to the provisions of SECTION 8 of the Plan, the maximum aggregate
number of Shares which may be optioned and sold or otherwise awarded under the
Plan is ten percent (10%) of the total Shares outstanding from time to time,
less the number of Shares underlying unexercised Options on the Effective Date.
Any Shares available for grants and awards at the end of any calendar year shall
be carried over and shall be available for grants and awards in the subsequent
calendar year. For the purposes of this SECTION 3:
3.1 TREATMENT OF SHARES UNDER AN EXPIRED OPTION. Upon expiration,
forfeiture or cancellation of any Option granted under this Plan, or
settlement of an Option in cash in lieu of Shares or in a manner such that
all or some of the Shares covered by an Option are not issued to a
Participant, any Shares that were covered by such Option shall again be
available for issuance or transfer hereunder.
3.2 TREATMENT OF SHARES UNDER AN EXERCISED OPTION. Shares covered by any
Option granted under this Plan shall be deemed to have been issued,
and shall cease to be available for future issuance in respect of any other
Option granted hereunder, at the earlier of the time when they are actually
issued upon exercise or the time when dividends or dividend equivalents are
paid thereon.
4. ADMINISTRATION OF THE PLAN.
4.1 PROCEDURE.
(a) The entire Board shall administer the Plan; provided, however,
that the Board may appoint a Committee consisting solely of two (2) or
more "NON-EMPLOYEE DIRECTORS" to administer the Plan on behalf of the
Board, in accordance with Rule 16b-3.
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(b) Once appointed, the Committee shall continue to serve until
otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause), appoint new members
in substitution therefor, and fill vacancies however caused; provided,
however, that at no time may any person serve on the Committee if that
person's membership would cause the Committee not to satisfy the
requirements of Rule 16b-3.
(c) A majority of the Committee shall constitute a quorum, and
the acts of the members of the Committee who are present at any
meeting thereof at which a quorum is present, or acts unanimously
approved by the members of the Committee in writing, shall be the acts
of the Committee.
(d) Any reference herein to the Board shall, where appropriate,
encompass a Committee appointed to administer the Plan in accordance
with this SECTION 4.
4.2 POWER OF THE BOARD OR THE COMMITTEE.
(a) Subject to the provisions of the Plan, the Board shall have
the authority, in its discretion: (i) to grant Options to
Participants; (ii) to determine, upon review of relevant information
and in accordance with SECTION 2 of the Plan, the Fair Market Value of
the Shares; (iii) to determine the Option Price per share of Options
to be granted, which Option Price shall be determined in accordance
with SECTION 7.4 of the Plan; (iv) to determine the number of Shares
to be represented by each Option; (v) to determine the Participants to
whom, and the time or times at which, Options and Cash Awards shall be
granted; (vi) to interpret the Plan; (vii) to prescribe, amend and
rescind rules and regulations relating to the Plan; (viii) to
determine the terms and provisions of each Option granted (which need
not be identical) and, with the consent of the Optionee thereof,
modify or amend such Option; (ix) to accelerate or defer (with the
consent of the Optionee) the exercise date of any Option; (x) to
authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously
granted by the Board; (xi) to accept or reject the election made by an
Optionee pursuant to SECTION 7.5 of the Plan; (xii) to impose such
additional conditions, as it deems advisable, as to the vesting and
exercise of any Options granted pursuant to the Plan, including, but
not limited to, performance criteria, and (xiii) to make all other
determinations deemed necessary or advisable for the administration of
the Plan.
(b) The Board or a Committee may delegate to an Officer of the
Company the authority to make decisions pursuant to this Plan,
provided that no such delegation may be made that would cause any
award or other transaction under the Plan to cease to be exempt from
Section 16(b) of the Exchange Act. A Committee may authorize any one
or more of its members or any Officer of the Company to execute and
deliver documents on behalf of the Committee.
4.3 EFFECT OF BOARD OR COMMITTEE DECISIONS. All decisions and
determinations and the interpretation and construction by the Board or
a Committee of any provision of this Plan or any agreement, notification or
document evidencing the grant of Options or Cash Awards and any
determination by the Board or a Committee pursuant to any provision of this
Plan or any such agreement, notification or document, shall be final,
binding and conclusive with respect to all Participants and/or Optionees
and any other holders of any Option granted under the Plan. No
28
member of the Board or a Committee shall be liable for any such action
taken or determination made in good faith.
5. ELIGIBILITY.
Consistent with the Plan's purposes, Options and Cash Awards may be granted
only to such Directors, Officers, Employees, Consultants and Advisors of the
Company as determined by the Board or a Committee. Subject to the terms of the
Plan, a Director, Officer, Employee, Consultant or Advisor who has been granted
an Option may, if he or she is otherwise eligible, be granted an additional
Option. Tax-qualified Options may be granted only to those Participants who meet
the requirements applicable under Section 422 of the Code. Qualified Cash Awards
may be granted only to such Employees of the Company as determined by the Board
or a Committee.
6. BOARD APPROVAL; EFFECTIVE DATE.
Subject to the approval of the Company's stockholders at the 2007 Annual
Meeting of Stockholders, the Plan, as amended and restated herein, shall take
effect on JUNE 1, 2007 (the "EFFECTIVE DATE"). No Option may be granted after
the Termination Date as hereinafter defined.
7. OPTIONS.
The Board or the Committee may from time to time authorize grants to
Participants of Options to purchase Shares upon such terms and conditions as the
Board or the Committee may determine in accordance with the following
provisions:
7.1 OPTIONS TO BE GRANTED; TERMS.
(a) Options granted pursuant to this SECTION 7 may be
Non-qualified Stock Options, Tax-qualified Options, or combinations of
both. The Board or the Committee shall determine the specific terms of
Options.
(b) Each grant shall specify the period or periods of continuous
employment, or continuous engagement of the consulting or advisory
services, of the Optionee by the Company or any Subsidiary, or such
other conditions as the Board or the Committee may provide, that are
necessary before the Options or instalments thereof shall become
exercisable.
(c) The granting of Tax-qualified Options to Participants who
directly or indirectly beneficially own 10% or more of the Company's
issued and outstanding Shares or who is an affiliate of such person
must be approved by the requisite vote of stockholders in accordance
with applicable securities and tax regulatory requirements.
7.2 NUMBER OF SHARES SUBJECT TO OPTIONS; MAXIMUM LIMIT. Each grant
shall specify the number of Shares to which it pertains. Successive grants
may be made to the same Optionee regardless of whether any Options
previously granted to the Optionee remain unexercised. NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN THE PLAN, NO PARTICIPANT MAY BE
GRANTED, DURING ANY CALENDAR YEAR, OPTIONS THAT ARE EXERCISABLE FOR MORE
THAN 1,000,000 SHARES.
29
7.3 TERM OF OPTION; EARLIER TERMINATION. The term (the "OPTION TERM")
of each Option shall not exceed ten (10) years from the Date of Grant,
provided that no grant shall be effective until the Company and the
Participant have executed and delivered an Option Agreement. In the case of
a Tax-qualified Option granted to a Participant who, at the time the
Tax-qualified Option is granted, owns ten percent (10%) or more of the
Common Stock as such amount is calculated under Section 422(b)(6) of the
Code ("TEN PERCENT STOCKHOLDER"), the term of the Tax-qualified Option
shall be five (5) years from the Date of Grant thereof or such shorter time
as may be provided in the Option Agreement.
7.4 EXERCISE PRICE.
(a) Each grant shall specify an Option Price per Share for the
Shares to be issued pursuant to exercise of an Option, which shall be
determined by the Board or the Committee and shall be no less than the
Fair Market Value per Share on the Date of Grant. Notwithstanding the
foregoing, in the case of a Tax-qualified Option granted to a
Participant who, at the time of the grant of such Tax-qualified
Option, is a Ten Percent Stockholder, the per Share exercise price
shall be no less than one hundred ten percent (110%) of the Fair
Market Value per Share on the Date of Grant.
(b) With respect to Tax-qualified Options, the aggregate Fair
Market Value (determined as of the respective Date or Dates of Grant)
of Shares for which one or more options granted to any Optionee under
this Plan may for the first time become exercisable as Tax-qualified
Options under the federal tax laws during any one calendar year (under
all employee benefit plans of the Company) shall not exceed $100,000.
To the extent that the Optionee holds two or more such options which
become exercisable for the first time in the same calendar year, the
foregoing limitation on the exercisability of such options as
Tax-qualified Options shall be applied on the basis of the order in
which such options are granted. Should the number of Shares for which
any Tax-qualified Option first becomes exercisable in any calendar
year exceed the applicable $100,000 limitation, then that Option may
nevertheless be exercised in such calendar year for the excess number
of Shares as a Non-qualified Stock Option under the applicable federal
tax laws.
7.5 PAYMENT FOR SHARES. The Option Price of an exercised Option and
any taxes attributable to the delivery of Shares under the Plan or portion
thereof, shall be paid as follows:
(a) FORMS OF PAYMENT. Each grant shall specify the form of
consideration to be paid in satisfaction of the Option Price and the
manner of payment of such consideration, which may include (i) cash in
the form of United States currency or check or other cash equivalent
acceptable to the Company, (ii) non-forfeitable, unrestricted Shares,
which are already owned by the Optionee, (iii) any other legal
consideration that the Board or the Committee may deem appropriate,
including without limitation any form of consideration authorized
pursuant to this SECTION 7 on such basis as the Board or the Committee
may determine in accordance with this Plan, or (iv) any combination of
the foregoing.
(b) DEFERRED PAYMENT. Any grant may allow for deferred payment of
the Option Price through a sale and remittance procedure by which an
Optionee shall provide concurrent irrevocable written instructions to
(i) a Company-designated brokerage firm to effect the immediate sale
of the purchased Shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate Option Price payable for the purchased Shares, and (ii)
the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm to complete the sale transaction.
30
(c) TENDER OF SHARES. The Board or Committee shall determine
acceptable methods for tendering Shares as payment upon exercise of an
Option and may impose such limitations and prohibitions on the use of
Shares to exercise an Option as it deems appropriate.
7.6 RIGHTS AS A STOCKHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such
Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding
the exercise of an Option. No adjustment will be made for a dividend or the
right thereto for which the record date is prior to the date the stock
certificate is issued, except as provided in SECTION 8 of the Plan.
7.7 EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE.
(i) Any Option granted hereunder shall be exercisable at such
times and under such conditions as determined by the Board or the
Committee, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under
the terms of the Plan. Unless otherwise determined by the Board
at the time of grant, an Option may be exercised in whole or in
part.
(ii) An Option shall be deemed to be exercised on the date the
Company receives the proceeds of a sale of Shares in connection
with a broker-assisted exercise pursuant to SECTION 7.5 hereof,
or otherwise, when written notice of such exercise has been given
to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the
Board, consist of any consideration and method of payment
allowable under SECTION 7.5 of the Plan.
(iii) Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be
available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is
exercised.
(b) TERMINATION OF OPTIONEE'S RELATIONSHIP STATUS. Unless otherwise
provided in an Option Agreement, if a Participant's Relationship
Status is terminated by the Company, for cause, then the Option, to
the extent not exercised, shall terminate on the date on which the
Optionee receives notice that his Relationship Status has been
terminated by the Company. If the termination of an Optionee's
Relationship Status is voluntary, without cause, or occurs due to
retirement with the consent of the Board, then Optionee may after the
date such termination, exercise his or her Option at any time within
one (1) month after the date his Relationship Status is terminated,
but only to the extent that he was entitled to exercise it on the date
of such termination. To the extent that the Optionee was not entitled
to exercise the Option at the date of such termination, or if the
Optionee does not exercise such Option (which he was entitled to
exercise) within the time specified herein, the Option shall
terminate.
31
(c) DISABILITY. Unless otherwise provided in the Option Agreement,
notwithstanding the provisions of SECTION 7.7(B) above, in the event
an Optionee is unable to continue his or her Relationship Status with
the Company as a result of his or her disability, the Optionee may
exercise his Option at any time within one (1) month after the date of
termination, but only to the extent the Optionee was entitled to
exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of
termination, or if the Optionee does not exercise such Option (which
he was entitled to exercise) within the time specified herein, the
Option shall terminate.
(d) DEATH. Unless otherwise provided in the Option Agreement,
notwithstanding the provisions of SECTION 7.7(B) above, if an Optionee
dies during the term of the Option and at the time of his death his
Relationship Status had not been otherwise terminated, the Option may
be exercised at any time within one (1) month following the date of
death by the Optionee's executor or other legal representative or by a
person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent that the Optionee was entitled to
exercise the Option on the date of death, or if the Optionee's estate,
or person who acquired the right to exercise the Option by bequest or
inheritance, does not exercise such Option (which he was entitled to
exercise) within the time specified herein, the Option shall
terminate.
7.8 INCENTIVE STOCK OPTIONS-DISPOSITION OF SHARES. In the case of an
Incentive Stock Option, a Participant who disposes of Common Stock acquired
upon exercise of such Incentive Stock Option by sale or exchange (i) within
two (2) years after the Date of Grant of the Option, or (ii) within one (1)
year after the exercise of the Option, shall notify the Company of such
disposition and the amount realized upon such disposition.
7.9 OPTION AGREEMENT. Each grant of an Option shall be evidenced by an
Option Agreement, which shall be executed on behalf of the Company by any
Officer thereof and delivered to and accepted by the Optionee and shall
contain such terms and provisions as the Board or the Committee may
determine consistent with this Plan.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
Subject to any required action by the stockholders of the Company, the
number of Shares covered by each outstanding Option, the maximum number of
Options that any one Participant may be granted in a calendar year, and the
number of Shares which have been authorized for issuance under the Plan but as
to which no Options have yet been granted or which have been returned to the
Plan upon cancellation or expiration of an Option, as well as Shares covered by
each such outstanding Option, shall be proportionately adjusted for any increase
or decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Shares, or
any other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board or the Committee, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof, shall
be made with respect to the number Shares subject to an Option or the Option
Price thereof.
32
In the event of the proposed dissolution or liquidation of the Company, all
Options will terminate immediately prior to the consummation of such proposed
action unless otherwise provided by the Board. The Board may, in the exercise of
its sole discretion in such instances, declare that any Option shall terminate
as of a date fixed by the Board and give each holder the right to exercise his
or her Option as to all or any part thereof, including Shares as to which the
Option would not otherwise be exercisable. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, the Option shall be assumed or an
equivalent Option shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless the Board determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
that the holder shall have the right to exercise the Option as to all of the
Shares, including Shares as to which the Option would not otherwise be
exercisable. If the Board makes an Option exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify
the holder that the Option shall be fully exercisable for a period of sixty (60)
days from the date of such notice (but not later than the expiration of the term
of the Option), and the Option will terminate upon the expiration of such
period.
9. TRANSFERABILITY.
Except to the extent otherwise expressly provided in the Plan or an Option
Agreement, the right to acquire Shares or other assets under the Plan may not be
assigned, encumbered or otherwise transferred by an Optionee and any attempt by
an Optionee to do so will be null and void. Subject to the approval of the
Committee, in its sole discretion, an Option may be transferred by the Optionee
to (i) the children or grandchildren of the Optionee ("IMMEDIATE FAMILY
MEMBERS"), (ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members or (iii) a partnership or partnerships in which such Immediate
Family Members have at least 99% of the equity, profit and loss interests.
Except as provided in the preceding sentence, transfers of Options shall be
prohibited except pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, as amended,
or the rules thereunder or equivalent laws of the Optionee's jurisdiction of
residence, or by will or the laws of descent and distribution. No transfer shall
be effective unless and until written notice of such transfer is provided to the
Committee, in the form and manner prescribed by the Committee. Following
transfer, any such Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, and, except as
otherwise provided herein, the term Optionee shall be deemed to refer to the
transferee. Following the death of the Optionee, only the Optionee's executor or
the personal representative of the Optionee's estate (or by the Optionee's
transferee, in the event of a permitted transfer) may exercise the Option, and
only to the extent that the Option was exercisable on the date of the Optionee's
death.
10. TIME OF GRANTING OF OPTIONS.
The Date of Grant of an Option shall, for all purposes, be the date on
which the Board or Committee makes the determination granting such Option.
Notice of the determination shall be given to each Participant to whom an Option
is so granted within a reasonable time after the date of such grant.
11. AMENDMENT AND TERMINATION OF THE PLAN.
11.1 The Board may amend Plan from time to time in such respects as
the Board may deem advisable or otherwise terminate the Plan.
11.2 Any such amendment or termination of the Plan shall not affect
Options or Cash Awards already granted and such awards shall remain in full
force and effect as if this Plan had not been
33
amended or terminated, unless mutually agreed otherwise between the
Participant and the Board, which agreement must be in writing and signed by
the Participant and the Company.
11.3 Notwithstanding the foregoing, this Plan shall terminate upon the
earlier of (i) MAY 31, 2017 or such earlier date as the Board shall
determine, or (ii) the date on which all Options available for issuance in
the last year of the Plan shall have been granted and have been fully
exercised (the "TERMINATION DATE"). Upon termination of the Plan, no
further Options or Cash Awards may be granted pursuant to the Plan, but all
such awards granted prior thereto and still outstanding on such date shall
thereafter continue to have force and effect in accordance with the
provisions of the applicable award agreement evidencing such award.
12. WITHHOLDING TAXES.
The Company is authorized to withhold income taxes as required under
applicable laws or regulations. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by an Optionee or other person under this Plan, and the
amounts available to the Company for the withholding are insufficient, it shall
be a condition to the receipt of any such payment or the realization of any such
benefit that the Optionee or such other person make arrangements satisfactory to
the Company for payment of the balance of any taxes required to be withheld. At
the discretion of the Board or the Committee, any such arrangements may without
limitation include relinquishment of a portion of any such payment or benefit or
the surrender of outstanding Shares. The Company and any Optionee or such other
person may also make similar arrangements with respect to the payment of any
taxes with respect to which withholding is not required.
13. CORPORATE TRANSACTION OR CHANGE OF CONTROL.
The Board or the Committee shall have the right in its sole discretion to
include with respect to any award granted to a Participant hereunder provisions
accelerating the benefits of the award in the event of a Corporate Transaction
or Change of Control, which acceleration rights may be granted in connection
with an award pursuant to the agreement evidencing the same or at any time after
an award has been granted to a Participant.
14. MISCELLANEOUS PROVISIONS.
14.1 PLAN EXPENSE. Any expenses of administering this Plan shall be
borne by the Company.
14.2 CONSTRUCTION OF PLAN. The place of administration of the Plan
shall be in Coolum Beach, Queensland, Australia or such other cities as the
Board of Directors may designate, and the validity, construction,
interpretation, administration and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined in
accordance with the laws of the State of Delaware and the laws of the
United States of America applicable therein without regard to conflict of
law principles and, where applicable, in accordance with the Code.
14.3 OTHER COMPENSATION. The Board or the Committee may condition the
grant of any award or combination of awards authorized under this Plan on
the surrender or deferral by the Participant of his or her right to receive
a cash bonus or other compensation otherwise payable by the Company or a
Subsidiary to the Participant.
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14.4 CONTINUATION OF EMPLOYMENT OR SERVICES. This Plan shall not
confer upon any Participant any right with respect to continuance of
employment or other service with the Company or any Subsidiary and shall
not interfere in any way with any right that the Company or any Subsidiary
would otherwise have to terminate any Participant's employment or other
service at any time. Nothing contained in the Plan shall prevent the
Company or any Subsidiary from adopting other or additional compensation
arrangements for its Employees.
14.5 CERTAIN TERMINATIONS OF EMPLOYMENT OR CONSULTING SERVICES,
HARDSHIP AND APPROVED LEAVES OF ABSENCE. Notwithstanding any other
provision of this Plan to the contrary, in the event of termination of
employment or consulting services by reason of death, disability, normal
retirement, early retirement with the consent of the Company, termination
of employment or consulting services to enter public or military service
with the consent of the Company or leave of absence approved by the
Company, or in the event of hardship or other special circumstances
identified by the Board or the Committee, of a Participant who holds an
award that is not immediately and fully vested and/or exercisable, the
Board or the Committee may take any action that it deems to be equitable
under the circumstances or in the best interest of the Company, including
without limitation waiving or modifying any limitation or requirement with
respect to any award under this Plan.
14.6 BINDING EFFECT. The provisions of the Plan and the applicable
award agreements shall inure to the benefit of, and be binding upon, the
Company and its successors or assigns, and the Participants, their legal
representatives, their heirs or legacies and their permitted assignees.
14.7 EXCHANGE ACT COMPLIANCE. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successors
under the Exchange Act. To the extent any provisions of the Plan or action
by the Board or the Committee fails to so comply, they shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Board
or the Committee.
14.8 CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, and
the, applicable securities regulations in an other jurisdiction (including,
but not limited to, the jurisdiction in which an Optionee resides), and the
requirements of any stock exchange upon which the Shares may then be
listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
(a) As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at
the time of any such exercise that the Shares are being purchased or
otherwise acquired only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of
counsel for the Company such a representation is required by any of
the aforementioned relevant provisions of law.
(b) Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of
any Share hereunder, shall relieve the Company of any liability in
respect of the
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failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
14.9 FRACTIONAL SHARES. The Company shall not be required to issue any
fractional Shares pursuant to this Plan. The Board or the Committee may
provide for the elimination of fractions or for the settlement thereof in
cash.
14.10 RESERVATION OF SHARES. The Company will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
14.11 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board, the members of
the Board and of the Committee shall be indemnified by the Company against
all costs and expenses reasonably incurred by them in connection with any
action, suit or proceeding to which they or any of them may be party by
reason of any action taken or failure to act under or in connection with
the Plan or any Option or Cash Award, and against all amounts paid by them
in settlement thereof (provided such settlement is approved by independent
legal counsel selected by the Company) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except a judgment based
upon a finding of bad faith; provided that upon the institution of any such
action, suit or proceeding a Board member or Committee member shall, in
writing, give the Company notice thereof and an opportunity, at its own
expense, to handle and defend the same before such Board member or
Committee member undertakes to handle and defend it on his own behalf
14.12 GENDER. For purposes of this Plan, words used in the masculine
gender shall include the feminine and neuter, and the singular shall
include the plural and vice versa, as appropriate.
14.13 USE OF PROCEEDS. Any cash proceeds received by the Company from
the sale of Shares under the Plan shall be used for general corporate
purposes.
14.14 REGULATORY APPROVALS.
(a) The implementation of the Plan, the granting of any awards
under the Plan and the issuance of any Shares shall be subject to the
Company's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the awards
granted under it and the Shares issued pursuant to it.
(b) No Shares or other assets shall be issued or delivered under
this Plan unless and until there shall have been compliance with all
applicable requirements of federal, provincial and applicable foreign
securities laws. Certificates for Shares issued upon exercise of an
Option shall bear such legend or legends as the Exchanges, the Board
or the Committee, as the case may be, in their sole discretion,
determine to be necessary or appropriate to prevent a violation of, or
to perfect an exemption from, the registration requirements of the
Securities Act or to implement the provisions of any requirements of
the Securities Act or to implement the provisions of any agreements
between Company and the Eligible Participant with respect to such
Shares or to comply with the requirements of the Exchanges.
14.15 SECTION 409A OF THE CODE. Notwithstanding anything in this Plan
to the contrary, if any Plan provision or award under the Plan would result
in the imposition of an applicable tax under
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Section 409A of the Code and related regulations and Treasury
pronouncements ("SECTION 409A"), that Plan provision or award will be
reformed to avoid imposition of the applicable tax and no action taken to
comply with SECTION 409A shall be deemed to adversely affect the
Participant's rights to an award.
14.16 OTHER TAX MATTERS. Reference herein to the Code and any described tax
consequences related to the Plan or the granting or exercise of an award
hereunder pertain only to those persons (including the Company) subject to
the tax laws of the United States of America or any state or territory
thereof.
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