SCHEDULE 14A INFORMATION
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
[ X ] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SECTION 240.14A-11(C) OR SECTION
240.14A-12
LA TEKO RESOURCES LTD.
(Name of Registrant as Specified In Its Charter)
LA TEKO RESOURCES LTD.
(Name of Person(s) Filling Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ x ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] 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:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
LA TEKO RESOURCES LTD.
(the "Company")
NOTICE OF ANNUAL GENERAL MEETING OF MEMBERS
NOTICE IS HEREBY GIVEN THAT the annual general meeting of members of LA TEKO
RESOURCES LTD. (the "Company") will be held on the 12th Floor of 625 Howe
Street, Vancouver, British Columbia, V6C 2T6 on June 5, 1997 at the hour of
10:00 a.m., Vancouver time, for the following purposes:
1) To receive the report of the directors of the Company for the year ended
December 31, 1996.
2) To receive the comparative audited financial statements of the Company and
the auditors' report thereon for the year ended December 31, 1996.
3) To fix the number of directors at six.
4) To elect directors for the ensuing year.
5) To appoint auditors for the ensuing year and to authorize the directors to
fix the remuneration to be paid to the auditors.
6) To consider and, if thought appropriate, pass an ordinary resolution to
establish a formal stock option plan, subject to regulatory approval, as
more fully set forth in the information circular attached hereto.
7) To consider and, if thought appropriate, approve and ratify stock options,
and amendments to stock options to purchase shares of the Company granted
to insiders which have not previously been approved by the members and to
authorize the directors in their discretion to grant stock options to
insiders and to amend stock options granted to insiders during the ensuing
year, as more fully set forth in the information circular accompanying this
notice.
8) To transact such further or other business as may properly come before the
meeting and any adjournment or adjournments thereof.
This notice and form of proxy are being first furnished to shareholders of the
Company on April 30th, 1997. The accompanying information circular provides
additional information relating to the matters to be dealt with at the meeting
and is incorporated by reference into and deemed to form part of this notice.
The board of directors has fixed the close of business on April 25, 1997 as the
record date for the determination of members entitled to notice of the meeting
or any adjournment or adjournments thereof and the right to vote thereat.
The audited comparative financial statements for the year ended December 31st,
1996, together with the auditors' report thereon are included with this notice.
Members who are unable to attend the meeting in person are requested to
complete, sign, date and return the enclosed form of proxy. A proxy will not be
valid unless it is deposited at the office of the transfer agent in accordance
with instructions contained herein before 10:00 a.m. June 3, 1997. If your
shares are held in the name of a brokerage firm, nominee, or other institution,
only it can vote your shares. Please contact the person responsible for your
account and give instructions for your shares to be voted. Notwithstanding the
issuance of a proxy statement, members present at the meeting will be entitled
to vote their shares.
Dated this 25th day of April, 1997. FOR THE BOARD OF DIRECTORS
/s/ GERALD G. CARLSON, PRESIDENT
<PAGE>
LA TEKO RESOURCES LTD.
(the "Company")
INFORMATION CIRCULAR
as at April 25, 1997, for the Meeting of the
Members of La Teko Resources Ltd.
to be held on June 5, 1997
SOLICITATION OF PROXIES
This information circular is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the annual general
meeting to be held on June 5, 1997 and any adjournments thereof. The
solicitation will be conducted by mail and may be supplemented by telephone or
other personal contact to be made without special compensation by officers and
employees of the Company. The cost of solicitation will be borne by the Company.
This information circular and related proxy are first being provided to
shareholders on April 30, 1997.
VOTING OF PROXIES
A MEMBER/SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
MEMBER/SHAREHOLDER) TO ATTEND AND ACT FOR HIM AND ON HIS BEHALF AT THE MEETING
OTHER THAN THE PERSONS DESIGNATED IN THE ACCOMPANYING FORM OF PROXY. TO
EXERCISE THIS RIGHT, THE MEMBER/SHAREHOLDER MAY INSERT THE NAME OF THE DESIRED
PERSON IN THE BLANK SPACE PROVIDED IN THE PROXY AND STRIKE OUT THE OTHER NAMES
OR MAY SUBMIT ANOTHER PROXY.
THE SHARES PRESENTED BY PROXIES IN FAVOR OF MANAGEMENT WILL BE VOTED ON ANY
BALLOT (SUBJECT TO ANY RESTRICTIONS THEY MAY CONTAIN) IN FAVOR OF THE MATTERS
DESCRIBED IN THE PROXY.
A shareholder or intermediary may indicate the manner in which the persons named
in the enclosed proxy are to vote with respect to any matter by checking the
appropriate space on the proxy.
If the shareholder or intermediary wishes to confer a discretionary authority
with respect to any matter, the space provided on the proxy should be left
blank. IN SUCH INSTANCE, THE NOMINEE, IF ONE IS PROPOSED BY MANAGEMENT, INTENDS
TO VOTE THE SHARES REPRESENTED BY THE PROXY IN FAVOUR OF THE MOTION. The
enclosed proxy, when properly signed, also confers discretionary authority with
respect to amendments or variations to the matters identified in the notice of
meeting and with respect to other matters which may be properly brought before
the meeting. At the time of printing this circular, the management of the
Company is not aware that any such amendments, variations or other matters are
to be presented for action at the meeting. If, however, other matters which are
not now known to the management should properly come before the meeting, the
proxies solicited will be exercised on such matters in accordance with the best
judgment of the nominees.
The proxy must be dated and signed by the shareholder or by his attorney
authorized in writing or by the intermediary. In the case of a corporation, the
proxy must be executed under its corporate seal, if not signed, or signed by a
duly authorized officer of attorney for the corporation with proof of authority
accompanying the proxy.
COMPLETED PROXIES TOGETHER WITH THE POWER OF ATTORNEY OR OTHER AUTHORITY, IF
ANY, UNDER WHICH IT WAS SIGNED OR A NOTARIALLY CERTIFIED COPY THEREOF MUST BE
DEPOSITED WITH MONTREAL TRUST COMPANY OF CANADA, 510 BURRARD STREET, VANCOUVER,
B.C., V6C 3B9 AT LEAST 48 HOURS, EXCLUDING SATURDAYS, SUNDAYS AND HOLIDAYS,
BEFORE THE TIME OF THE MEETING OR ADJOURNMENT THEREOF.
REVOCABILITY OF PROXY
The persons named as proxyholders in the enclosed form of proxy are directors or
officers of the Company.
Any member/shareholder returning the enclosed form of proxy may revoke the same
at any time insofar as it has not been exercised. In addition to revocation in
any other manner permitted by law, a proxy may be revoked by instrument in
writing executed by the member/shareholder or by his attorney authorized in
writing or, if the member/shareholder is a corporation, under its corporate seal
or by an officer or attorney thereof duly authorized, and deposited at the
registered office of the Company, at any time up to and including the last
business day preceding the day of the meeting, or any adjournment thereof.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Company is authorized to issue 100,000,000 shares without par value (the
"common shares"), of which 37,251,888 common shares were issued on the record
date, April 25, 1997. Of the 37,251,888 common shares issued, 13,744,530 common
shares are held by Gateway Mining Company, a wholly owned subsidiary of La Teko
Resources Ltd. Accordingly, the number of outstanding common shares of the
Company which are not held by the Company itself is 23,507,358. The holders of
common shares are entitled to one vote for each common share held. Holders of
common shares of record at the close of business on April 25, 1997 are entitled
to receive notice of and vote at the meeting. The Company has only one class of
shares.
To the knowledge of the directors and senior officers of the Company, no person
beneficially owns, directly or indirectly, or exercises control or direction
over shares carrying more than 10% of the voting rights attached to all shares
of the Company except as follows:
Name Number Percentage of
of Shares Issued Capital
Cede & Co. (1) 12, 202,836 52%
(1) Beneficial holders of these shares are unknown.
AUTHORIZATIONS FOR APPROVAL
Any matter submitted at the annual general meeting for approval of the
members/shareholders shall require a majority vote of more than 50% of the
members/shareholders present at the meeting and voting either in person or by
proxy concerning said issues.
Shares that abstain or withhold from voting as to a particular matter and shares
held in "street name" through a clearing firm, brokerage firm or similar nominee
which indicates on its proxy that such nominee does not have discretionary
authority to vote such shares as to a particular matter will be counted for
purposes of determining whether sufficient shares are represented to constitute
a quorum authorized to conduct an annual general meeting of the shareholders.
Directors are elected and auditors are appointed by a plurality of the votes
cast. With respect to the election of directors, the number of nominees
equivalent to the number of directors to be elected who receive the highest
number of votes cast are elected. With respect to the appointment of auditors,
the auditors receiving the highest number of votes cast are appointed. In both
cases, shares that abstain or withhold from voting and broker non-votes are not
counted, and will have no effect on the outcome of such votes.
Ordinary resolutions, as defined by law, are adopted if approved by a majority
of the votes cast, and shares that abstain or withhold from voting and broker
non-votes are not counted. Therefore, shares that abstain or withhold from
voting and broker non-votes have the effect of a vote against such ordinary
resolutions.
RECORD DATE
Any shareholder of record at the close of business on April 25th, 1997 who
either personally attends the meeting or has completed and delivered a form of
proxy in the manner and subject to the provisions described above will be
entitled to vote or to have his shares voted at the meeting.
FINANCIAL STATEMENTS
The audited comparative financial statements of the Company for the year ended
December 31st, 1996 and the auditors' report thereon accompanying this circular
will be placed before the meeting for consideration by the members.
ELECTION OF DIRECTORS
The size of the board is currently fixed at five. At the meeting, shareholders
will be asked to fix the number of directors at six. A majority of the
directors must be residents of Canada. The directors of the Company are elected
at each annual general meeting and hold office until the next annual general
meeting or until their successors are appointed. In the absence of instructions
to the contrary, a properly executed and returned proxy will be voted for the
nominees herein listed.
Management of the Company proposes to nominate each of the following for
election as a director. Information concerning such persons, as furnished by
the individual nominees, is as follows:
PRINCIPAL
OCCUPATION OR
EMPLOYMENT AND,
IF NOT A
PREVIOUSLY ELECTED NUMBER OF
DIRECTOR, COMMON SHARES
OCCUPATION PREVIOUS BENEFICIALLY
NAME, MUNICIPALITY OF DURING THE PAST SERVICE AS A OWNED OR
RESIDENCE AND POSITION FIVE YEARS DIRECTOR CONTROLLED(2)
- ------------------- ----------------- ------------ --------------
GERALD G. CARLSON(1) President and Since 11,000
Vancouver, B.C. General Manager of December 1996
President, Treasurer, La Teko; past
Chief Executive Officer President, Vice-
and Director President and
Exploration
Geologist
respecting mining
and exploration
activities in
Canada, Mexico and
the Northwest
Territories
ROBERT W. GENTRY Businessman and Since May 316,200(3)
Dallas, Texas Investment Advisor 1995
Director
JOHN S. AUSTON
West Vancouver, B.C. Mining Executive Since June 4,000
Director 1996
DOUGLAS R. BEAUMONT Mining Executive Since June None
Toronto, Ontario 1995
Director
GORDON J. FRETWELL(1) Lawyer through his Since 3,000
West Vancouver, B.C. own law firm November 1995
Director and Secretary
JOHN R. HARDESTY(1) Businessman, Since May 60,000
Carefree, Arizona manufacturing, 1995
Director Finance,
Administration,
Sales and Business
Planning
(1) Member of the Audit Committee
(2) Shares beneficially owned, directly or indirectly, or over which control or
direction is exercised, as of April 25, 1997, is based upon information
furnished to the Company by the individual directors. Unless otherwise
indicated, such shares are held directly.
(3) Includes 16,200 shares beneficially owned for children.
DIRECTORS AND EXECUTIVE OFFICERS
The following is a listing of the current directors and officers of the Company:
Gerald G. Carlson [51] President, Treasurer, Chief Executive Officer and
Director
Gordon Fretwell [45] Secretary and Director
Robert W. Gentry [49] Director
John R. Hardesty [57] Director
John S. Auston [60] Director
Douglas R. Beaumont [65] Director
Directors have been elected to serve until the next general meeting of
shareholders. Based upon Canadian corporate regulatory provisions, a majority
of the Company's directors must be Canadian residents.
Gerald G. Carlson, Gordon J. Fretwell and John Hardesty were appointed to serve
as the Company's audit committee. The audit committee recommends the
appointment of Bedford Curry as auditors for the Company for 1997. This
committee reviews internal accounting and auditing policies and procedures,
budgets, scope of audit and programs to comply with applicable regulatory and
other accounting and income tax requirements relating to financial matters.
These functions were accomplished during regular directors' meetings held
throughout the year.
During 1996, there were 10 directors' meetings held, including six which were
telephone meetings. None of the directors attended fewer than 75% of the
meetings called. In addition to formal actions of the board of directors, the
directors participated in separate matters during the year which were documented
by unanimous consent forms, together with numerous informal discussions held
among the directors concerning other business matters. The directors have not
appointed a nominating committee.
BUSINESS BIOGRAPHIES
OFFICERS AND DIRECTORS
GERALD G. CARLSON, PH.D., P. ENG. is the President, Treasurer, Chief Executive
Officer and director of La Teko Resources Ltd. and its wholly-owned
subsidiaries. He has been involved in mineral exploration and junior
exploration company management for over 25 years. Mr. Carlson's educational
background includes the following degrees: B.A. Sc. 1969 from the University of
Toronto; M.Sc 1974 from Michigan Technological University and Ph. D. 1978 from
Dartmouth College, New Hampshire. He is past President of ConSil Corp., past
Vice President, exploration, for Dentonia Resources Ltd. Both positions
included management of exploration activities in Mexico and the Northwest
Territories. He became a director of La Teko on December 2, 1996 and continues
to serve as a member of the Board of Directors of Dentonia Resources Ltd.
ROBERT W. GENTRY is the President, Director and co-owner of Genoa Management
Company, a certified investment advisory company specializing in serving
independent community banks. He has held several key positions with the Ford
Bank Group from 1982 through 1992 including that of Senior Vice President, First
National Bank, Lubbock, Texas, President/CEO of United National Bank of Denton,
Texas, President/CEO of First National Bank of Borger, Texas, Organizing
President of United National Bank of Dallas, Texas, and Organizing Vice-Chairman
of Ford Capital, Ltd., Dallas, Texas. Mr. Gentry is a graduate of Texas Tech
University with a B.A. degree in finance. Mr. Gentry became a director of La
Teko in May 1995 and served as Corporate President from February 27, 1996 to
December 2, 1996.
GORDON FRETWELL is engaged in the private practice of law through his own law
firm in Vancouver, British Columbia. Mr. Fretwell specializes in securities and
mining law and acts for several public companies engaged in the mineral resource
sector. Mr. Fretwell was appointed as a director of the Company on November 24,
1995 and was elected Corporate Secretary on February 27, 1996. Mr. Fretwell is
the former Secretary of Crystallex International Corporation.
JOHN R. HARDESTY is owner and President of Thermo Dynamics, Inc., Laughlin,
Nevada; and Chairman of Electro Dynamics Crystal Corporation, Inc., Overland
Park, Kansas. He is a previous owner of Dixson, Inc., Grand Junction,
Colorado. Mr. Hardesty is a graduate of Wayne State University with a B.S.
degree in business administration, majoring in accounting. He is a non-
practicing certified public accountant having been a past audit manager with
Ernst & Young, Certified Public Accountants from 1962 through 1968. From 1968
through 1986 he was involved extensively in corporate finance and sales with
other business entities. He has been an operations manager with expertise in
manufacturing, finance,administration, sales and corporate strategic planning
and acquisitions. Mr. Hardesty currently serves as a director of Reno Air,
Inc., Reno, Nevada. He became a La Teko director in May 1995.
JOHN S. AUSTON is a geologist with 38 years of diversified world-wide experience
in the precious metals, base metals, uranium and coal mining industries in
Canada, the United States and Australia. He was involved in a senior capacity
for many years in the Canadian, U.S. and Australian exploration and mining
activities of the Selection Trust Group of London and British Petroleum. He is
past President and CEO of Granges, Inc. and HyCroft Resources of Vancouver and
is currently President, CEO and a Director of Ashton Mining of Canada Inc. of
Vancouver. He currently also serves as a director of Lysander Gold Corporation.
Mr. Auston is a graduate of McGill University with the degrees of Bachelor of
Science and Master of Science (Applied). He became a Director of La Teko on
June 5, 1996.
DOUGLAS R. BEAUMONT is a professional engineer. His forty years of mining
experience include project development and design and operation of mineral
processing plants. He is currently Senior Vice President - Technical for
Kilborn, SNC - Lavalin, having joined the Kilborn group of companies in 1979,
serving as Vice President and General Manager for Canadian and International
operations in Peru, Chile and Brazil. Mr. Beaumont is currently a Director of
Agnico Mines Ltd. He became a Director of La Teko on June 5, 1996.
PROJECT MANAGER
RICHARD A. HUGHES is the Project Manager for the Ryan Lode Mine, a position
which he has held since March, 1993. Mr. Hughes was President and Mining
Consultant for BTW Mining & Exploration from 1983 to 1994. From 1988 to 1989,
Mr. Hughes was employed by Valdez Creek Mining Company, Inc., as the general
manager of a large open-pit placer mining and wash plant operation. Prior to
that time, from 1981 to 1987, Mr. Hughes was with ARCO Alaska, Inc., as the
quality assurance and safety director at Prudhoe Bay, Alaska. From 1977 to
1981, Mr. Hughes worked with Exxon Minerals Company, where he was the project
manager of an underground project in New Mexico and assistant manager of a
uranium operation in Wyoming. Mr. Hughes has been employed in the mining
industry in various other capacities since 1960. He is a registered
professional mining engineer in Alaska and Nevada. Mr. Hughes received a
Bachelor of Science degree in Mining Engineering from the University of Nevada
in 1960.
COMPLIANCE WITH SECTION 16(A) OF THE UNITED STATES SECURITIES AND EXCHANGE ACT
OF 1934
Based solely upon a review of Forms 3, 4, and 5 and amendments thereto,
furnished to the Company during or respecting its last fiscal year, no person
who, at any time during the most recent fiscal year, was a director, officer,
beneficial owner of more than 10% of any class of equity securities of the
Company or any other person known to be subject to Section 16 of the Exchange
Act failed to file, on a timely basis, reports required by Section 16(a) of the
Exchange Act, except that Douglas Beaumont failed to timely file the report of
his initial ownership after being appointed a director and Gerald Carlson failed
to timely file the report of his initial ownership after being appointed an
officer and director less than one month late and John Hardesty failed to timely
file the report of his initial ownership after being appointed a director less
than two days late.
EXECUTIVE COMPENSATION
On February 27, 1996, Robert W. Gentry was elected President, Treasurer and
Chief Executive Officer of the Company. He served as President of La Teko until
December 2, 1996 and continues to serve as a member of its Board of Directors.
Mr. Gentry replaced Jack Layne who served as President, Treasurer and Chief
Executive Officer until February 27, 1996.
Gerald G. Carlson became President, Treasurer and Chief Executive Officer of La
Teko and was appointed to the Board of Directors on December 2, 1996. Annual
compensation pursuant to an employment agreement dated December 2, 1996 is
approximately US$108,000 per annum.
SUMMARY COMPENSATION
The following table sets forth the compensation received by each person who
served as the chief executive officer of the Company during 1996 (a "Named
Executive Officer").
All monetary figures are in United States dollars.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation and Awards/Payouts
------------------------ -------------------------------------------
Other Securities
Annual Underlying
Name and Year Compen- Restricted Options/ LTIP All Other
Principal Ended Salary Bonus sation Stock SARs Payouts Compensation
Position Dec. 31 ($)(1) (4) ($) Award(s) (No.) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -------------- -------- -------- ------ ------- --------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerald G. 1996 $8,837 -- -- -- 500,000(4) -- $64,000 (2)
Carlson
President,
Treasurer, CEO
and Director
Robert W. 1996 $3,100 -- -- -- 100,000 -- $63,377 (2)
Gentry, 1995 $3,000 100,000(5) $ 3,750 (2)
Director (CEO
from Feb/96 to
Dec/96)
Jack Layne, 1996 $ 750 -- -- -- -- -- $30,000 (2)
Former Director 1995 $2,250 100,000(3) $44,000 (2)
(CEO until 1994 $2,250 100,000
Feb/96)
</TABLE>
(1) Includes amounts paid to each Named Executive Officer for services
rendered by such Named Executive Officers as directors of the Company.
(2) Other compensation consists of the aggregate amount by which the market
price as of the date such options first became exercisable exceeded the
exercise price of exercisable options.
(3) Mr. Layne was granted options to purchase 100,000 common shares on August
17, 1994. These options were re-priced on November 16, 1995.
(4) These options vested as to 200,000 upon granting and will vest as to
100,000 on each anniversary date of granting for the next 3 years.
(5) These options vested as to 25,000 upon granting and will vest as to 25,000
on each anniversary date of granting for the next 3 years.
See below for a discussion of certain terms of options granted to Named
Executive Officers.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information respecting all individual grants of
options and stock appreciation rights ("SARs") made during the last completed
fiscal year to a Named Executive Officer and each other executive officer of
the Company.
All figures and in United States dollars.
<TABLE>
<CAPTION>
Individual Grants Potential Realized Value at
Assumed Annual Rates of Stock
Appreciation for Option Term
----------------- ----------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options/
Underlying SARs Market
Options/ Granted to Exercise Price
SARs Employees of Base as of
Granted During Price Date of Expiration
Name (#) Fiscal Year ($/share) Grant Date 0%($) 5%($) 10%($)
- ------- ---------- -------- ------------ ------ -------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerald 200,000 62.5% $1.85 $2.17 12/10/2001 $ 64,000 $183,905 $ 328,713
G. 100,000 12/10/2002 $ 32,000 $105,800 $ 199,292
Carlson 100,000 12/10/2003 $ 32,000 $120,340 $ 237,722
100,000 12/10/2004 $ 32,000 $135,607 $ 279,994
------- -------- -------- ----------
500,000(1) $160,000 $545,652 $1,045,721
Robert 100,000(2) 12.5% $2.50 $2.94 03/14/2001 $ 44,000 $125,226 $ 223,490
W.
Gentry
Jack -- -- -- -- -- -- -- --
Layne
</TABLE>
(1) Granted December 10, 1996
(2) Granted March 14, 1996
See below for a discussion of the terms of the options granted to executive
officers.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION/SAR
VALUES
The following table sets forth information respecting the exercise of options
and SARs during the last completed fiscal year by Named Executive Officers of
the Company and the fiscal year end values of unexercised options and SARs.
All figures are in United States dollars.
<TABLE>
<CAPTION>
Number of Securities
Underlying
Unexercised Value of Unexercised
Shares Options/SARs at FY In-the-Money
Acquired End Options/SARs
on Value Exercisable/ at FY End ($)
Exercise Realized Unexercisable Exercisable/
Name (No.) ($) (No.)(1) Unexercisable
- --------- --------- --------- ----------------- -----------------
<S> <C> <C> <C> <C>
Gerald G. -- -- 200,000/300,000 $30,000/$45,000
Carlson
Robert W. -- -- 150,000/50,000 $60,000/$20,000
Gentry
Jack Layne -- -- 200,000/-- $80,000/--
</TABLE>
(1) Market price at December 31, 1996 was $2.00 per share.
EXECUTIVE COMPENSATION AND BENEFITS
On December 2, 1996, Gerald Carlson was elected President, Treasure and CEO of
the Company to succeed Robert W. Gentry and was also appointed a director. At
that time, he was granted options to acquire 500,000 shares of La Teko stock at
US$1.85 per share, 85% of the then-existing market price. Two hundred thousand
shares of the options are exercisable upon grant and 100,000 shares each become
exercisable on each successive anniversary date following the date of grant.
Each tranche of options are exercisable for five years following the date they
initially become exercisable.
Mr. Carlson is employed under a letter agreement dated December 2, 1996, for an
initial term of three years as President, Treasurer and Chief Executive Officer
of the Company. The Company pays Mr. Carlson a salary of Cdn$12,000 per month
and provides him with a leased automobile. In the event of certain change of
control transactions which result in Mr. Carlson no longer serving as President
and Chief Executive Officer, he will receive a severance package of Cdn$144,000,
and 50% of his unvested stock options will immediately vest if the change in
control occurs in the first year of employment and all unvested options will
immediately vest if the change in control occurs thereafter.
On February 27, 1996, Gordon Fretwell, director and corporate counsel was
appointed secretary of the Company. The Company has paid or accrued to Mr.
Fretwell during 1996 $3,100 in director's fees.
The Company has no pension, retirement or similar benefits for officers,
directors or other employees of the Company except that effective December 10,
1996, the Company implemented a salary reduction simplified employee pension
plan to be funded solely by eligible employees during 1996. No contribution to
the plan was made by the Company. Effective March, 1992, the Company initiated
a medical and life insurance plan for the benefit of all eligible employees.
Currently, the Company pays approximately 85% of insurance premiums for
employees and 50% of insurance premiums for their dependents.
COMPENSATION OF DIRECTORS
Based on authority of the board of directors granted November 19, 1991, the
Company pays director's fees at a rate of $750 per meeting attended by each
director plus travel and subsistence expenses. A similar fee per meeting is
paid to members of the board of directors serving on executive committees of the
board of directors. The Company also pays a $100 directors' fee for director
meetings held by telephone.
Directors other than Gerald G. Carlson, Robert W. Gentry, and Gordon Fretwell
received an aggregate of $10,050 as directors' fees during 1996.
See "Executive Compensation" and "Current Director and Officer Stock Options"
for details of incentive stock options which have been granted to the Company's
directors.
TERMINATION OF EMPLOYMENT OR CHANGE OF CONTROL
The employment agreement between the Company and Gerald G. Carlson dated
December 2, 1996 provides that in the event of termination or a change of
control which results in Mr. Carlson no longer serving as President and Chief
Executive Officer of the Company, Mr. Carlson will receive a severance package
of one year's salary (Cdn $144,000). In addition, 50% of Mr. Carlson's unvested
stock options will immediately vest if the change in control occurs in the first
year of employment and all of his unvested options will immediately vest if the
change in control occurs thereafter.
INDEBTEDNESS TO COMPANY OF DIRECTORS AND OFFICERS
None of the directors or senior officers of the Company are indebted to the
Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not have a formal Compensation Committee. Compensation to
executive officers is determined by the board of directors. There were no
directors or executive officers that were functioning in interlocking boards or
committees of other entities.
REPORT ON EXECUTIVE COMPENSATION
During the last completed fiscal year, until December 2, 1996, the Company
relied on the volunteer services of its Chief Executive Officer, Robert Gentry,
who was also a major shareholder and who did not require cash compensation. In
recognition of the CEO's services, however, on March 14, 1996, the board of
directors approved the grant to the chief executive officer of options to
purchase 100,000 shares at $2.50 per share, a discount of 15% from the market
price for the common stock of the Company at the date of grant. The aggregate
amount of the discount of the exercise price below the market price of the
common stock as of the date of grant aggregated $44,000. The determination of
the terms of the options granted to the Chief Executive Officer was not based
upon any objective criteria or comparison with any peer group, but was merely
determined on an individual basis by the board of directors in recognition of
the Chief Executive Officer's time and attention devoted to the Company.
This report is provided by the incumbent members of the board of directors that
were in office on March 14, 1996 which were Jack Layne, Gordon Fretwell, John
Hardesty, Michael Delich and Yvonne Quick.
STOCK OPTION PLANS
(i) The Company has no plans other than as set out herein pursuant to which
cash or non-cash compensation was paid or distributed to the executive
officers during the most recently-completed financial year or is proposed
to be paid or distributed in a subsequent year.
(ii) The Company presently does not have a formalized stock option plan for the
granting of incentive stock options to the executive officers, employees or
directors of the Company. To date, the Company has granted stock options
to certain executive officers, employees or directors of the Company
pursuant to the policies of the Vancouver Stock Exchange which do not
require a formal plan. The purpose of granting such options is to assist
the Company in compensating, attracting, retaining and motivating the
executive officers, directors and employees of the Company and to closely
align the personal interests of such persons to that of the shareholders.
A proposal to establish a formal stock option plan is included in this
proxy statement. See "Approval of Formal Stock Option Plan" for further
details.
APPROVAL OF FORMAL STOCK OPTION PLAN
GENERAL
The Company does not currently have a formal stock option plan under which it
issues incentive stock options. Rather, to date, incentive stock options have
been issued by the Company pursuant to the applicable policies of The Vancouver
Stock Exchange. There are currently 1,679,000 common shares of the Company
allotted and reserved for future issuance pursuant to directors' and employees'
stock options granted by the Company. These allotted shares represent
approximately 7% of the currently issued and outstanding share capital of the
Company.
Accordingly, management seeks shareholder approval for the Company to adopt a
formal stock option plan (the "Stock Option Plan").
It is proposed that under the Stock Option Plan, which will be subject to both
shareholder and regulatory approval, a total of 2,500,000 common shares will be
allotted and reserved for stock options, of which 1,679,000 have been previously
granted and approved, representing, in total, approximately 10% of the currently
issued and outstanding share capital of the Company.
Regulatory Requirements
The Company's common shares trade on the Vancouver Stock Exchange which requires
that listed companies obtain the approval of their shareholders for "share
compensation arrangements" which the Stock Option Plan is, where:
1) the share compensation arrangement is a stock option plan or employee stock
purchase plan and the majority of the shares to be allocated under the plan
or plans will or may be issuable to "insiders" of the company;
2) the share compensation arrangement is for an "insider", other than a stock
option plan or employee stock purchase plan, unless the share compensation
arrangement is used as an inducement to a person, not previously employed
by and not previously an insider of the company, to enter into a contract
of full-time employment with the company; or
3) it is a share compensation arrangement which, together with all of the
company's other previously established or proposed share compensation
arrangements, could result, at any time, in:
(a) the number of shares reserved for issuance pursuant to stock options
exceeding 10% of the company's issued and outstanding share capital;
or
(b) the issuance, within a one year period, of a number of shares
exceeding 10% of the company's issued and outstanding share capital.
For the purposes of subparagraph (3)(b) above, a company's issued and
outstanding share capital is determined on the basis of the number of shares
that are issued and outstanding immediately prior to the share issuance in
question, excluding shares issued pursuant to share compensation arrangements
over the preceding one year period.
The Company's insiders will participate in the Company's new Stock Option Plan.
Therefore, criterion (1) above is applicable in that a majority of the shares to
be allocated under the plan may be issuable to insiders.
The number of shares that will be reserved for issuance under the new Stock
Option Plan, together with the number of shares allocated pursuant to existing
options will represent just over 10% of the Company's issued and outstanding
share capital. Therefore, criterion (3) above will also be applicable. Since
both criterion nos. (1) and (3) will be applicable, management will ask the
shareholders to approve the new Stock Option Plan (see "Shareholder Approval"
below).
The Terms of the New Stock Option Plan
A full copy of the Stock Option Plan will be available at the annual general
meeting for review by shareholders. Also, shareholders may obtain copies of the
plan from the Company prior to the meeting on request. The following is a
summary of the plan:
The Stock Option Plan will terminate when all of the options have been granted
or when the plan is otherwise terminated by the Company. Any options
outstanding when the plan terminated will remain in effect until they are
exercised or they expire.
The Stock Option Plan provides that stock options can be issued to "Eligible
Persons" which, in summary, means a director, officer, employee, part-time
employee or consultant of the Company or any of its affiliates or subsidiaries.
The plan provides that it is solely within the discretion of the Board to
determine who should receive options and in what amounts.
Options granted under the plan will be for a term not to exceed 10 years from
the date of their grant. The options will be non-assignable except that they
will be exercisable by the personal representative of the option holder in the
event of the option holder's death.
The options will be exercisable at a price which is not less than the closing
price of the Company's shares on the Exchange on the trading day preceding the
day the options are granted.
The Company will not issue shares pursuant to options granted under the plan
until the shares have been fully paid for. The Company will not provide
financial assistance to option holders to assist them in exercising their
options.
The Plan is intended to assist the Company in attracting competent individuals
to serve as directors and ensure the retention of the services of existing
directors by permitting such individuals to participate in ownership in the
Company and to share in increases in the value which they help produce.
Shareholder Approval
To meet the regulatory requirements of adopting a formal Stock Option Plan (see
"Regulatory Requirements" above), the Company must obtain the approval of its
shareholders by putting the proposal to establish the Stock Option Plan to the
shareholders for a vote.
The board of directors recommends a vote "FOR" the approval of the Stock Option
Plan. It is intended that, in the absence of contrary specifications, votes
will be cast pursuant to the enclosed proxy for the approval of the Stock Option
Plan.
CURRENT DIRECTORS AND OFFICERS STOCK OPTIONS
The members/ shareholders of the Company will be asked to approve and ratify
incentive stock options, and amendments to incentive stock options, to purchase
shares of the Company granted to insiders of the Company which have not
previously been approved by members and to authorize the directors in their
discretion to grant stock options to insiders and to amend stock options granted
to insiders during the ensuing year.
To date, the Company's policy with respect to Directors' Stock Options provides
that each director of the Company, including directors that are subsequently
appointed, is to receive a Director Option to purchase common stock. Each
Director will receive Director Options that are immediately exercisable to
purchase 25,000 shares of common stock and vest on the next three anniversary
dates of their grant to purchase an additional 25,000 shares of the Company's
common stock. Director Options may be exercised, in whole or in part, for a
period of five years from the date such portion of such Directors' Options first
becomes exercisable, subject to continued service by the holder as a director of
the company. Director Options granted will be exercisable during the applicable
exercise period at an exercise price equal to the greater of the closing price
on the last trading day preceding the announcement of the granting of the stock
option. The number of shares under option from time to time and the exercise
prices of such options, and any amendments thereto, will be and have been
determined by the directors in accordance with the policies of the Vancouver
Stock Exchange.
In the event of a merger or in the case of the Company being sold, the Board of
Directors agreed to amend the vesting schedule of directors options so that a
director's 100,000 share option would be exercisable to the extent of 50,000
shares upon sale or merger during the first term of a director's participation
as a director, and that the balance, aggregating the full 100,000 shares be
exercisable upon sale or merger if such a transaction were to occur after the
first term that a director served in such capacity. In essence, if negotiations
and the consummation of a transaction extend beyond the first term of a
director's appointment, the full balance of the outstanding options would vest
upon the closing of the sale or merger or other similar corporate transaction or
reorganization.
The granting of stock options to directors of the Company is intended to assist
the Company in attracting competent individuals to serve as directors and ensure
the retention of the services of existing directors by permitting such
individuals to participate in ownership in the Company and to share in increases
in the value which they help produce.
The following table summarizes information regarding Officer/Director Stock
Options previously approved by the Board of Directors and those contemplated for
approval at the June 5, 1997 annual general meeting, including the name of each
Optionee, the number of shares of Common Stock issuable on exercise of each
Optionee's Option ("Option Shares"), the expiration date of each Option, and the
applicable category of each Option:
EXERCISE
NAME OPTION SHARES PRICE (US$) EXPIRY DATE
- ----------------- ------------- ----------- --------------
DIRECTORS
Gerald G. 500,000(1) $1.85 12/10/2001-04
Carlson
Robert W. Gentry 100,000 $1.60 11/16/2000-03
100,000(2) $2.50 03/14/2001
Gordon J. 100,000(2) $1.60 11/24/2000-03
Fretwell
John R. Hardesty 100,000(2) $1.60 11/16/2000-03
John S. Auston 100,000(2) $2.41 06/18/2001-04
Douglas R. 100,000(2) $2.41 06/18/2001-04
Beaumont
PREVIOUS DIRECTORS
Jack Layne 100,000 (3) $1.60 01/31/1998
100,000 (3) $1.60 01/31/1998
David Tinsley 25,000 $1.60 06/05/1997
(1) These options are exercisable as to 200,000 upon granting and vest as to
100,000 on each of the anniversary dates of granting for 3 years.
(2) These options are exercisable as to 25,000 shares upon granting and vest on
the next three anniversary dates of their grant to purchase an additional
25,000 common shares.
(3) Mr. Layne ceased to be an employee of the Company and as such, the board of
directors agreed to extend the normal 30 day expiry date of these options
to January 31st, 1998 due to Mr. Layne's valuable contribution to the
Company.
Each of the options listed above is contingent upon the optionee's continued
employment with the Company. These options are exercisable, in whole or in
part, for a period of five years from the date such portion of such option first
becomes exercisable subject to continued service by the holder as a director of
the Company. These stock options will be included under the proposed Stock
Option Plan described in this proxy statement.
Generally, in the event that an Optionee ceases to be an employee, director or
officer of the Company, as applicable, prior to the expiration date of the
Optionee's Option, such Option, to the extent it remains unexercised, shall
terminate and be deemed null and void on the earlier of the expiration date or
the date that is thirty (30) days from the date the Optionee ceases to be an
employee, director or officer of the Company, as applicable. In the event that
an Optionee dies on or prior to the expiration date while an employee, director
or officer of the Company, as applicable, the Optionee's Option, to the extent
it remains unexercised, may be exercised by the legal representative of the
Optionee at any time before the earlier of the expiration date or the date that
is one year following the date of death of the Optionee.
The Options are not assignable by the respective Optionee, or the Optionee's
legal representative, except by will or the laws of intestacy and may be
exercised during the Optionee's lifetime only by the Optionee or, after the
death, by the Optionee's legal representative as described above.
The terms of each Option may be amended only by means of a joint written
agreement between the Company and the respective Optionee.
SHAREHOLDER APPROVAL
Approval of the grant of the Options requires the approval of a majority of the
shares present in person or by proxy and entitled to vote at the Annual Meeting.
Abstentions will not be counted in determining whether the Plan is approved by
the shareholders.
INCOME TAX CONSEQUENCES
The following discussion of the income tax consequences of the Options is only a
summary, does not purport to be complete, and does not cover, among other
things, state, provincial and local tax consequences. In addition, differences
in each Optionee's financial situations may cause Federal, state, provincial and
local tax consequences of the Options to vary.
U.S. TAXES
The following summary of the major U.S. income tax consequences of the Options
is based on the pertinent provisions of the Code, the applicable regulations
promulgated by the Treasury Department under the Code (the "Regulations"),
judicial and administrative interpretations of the Code and Regulations, the
U.S.-Canada Income Tax Convention (the "Convention"), and the current
interpretations thereof. The Optionees should be aware that the Code, the
Regulations, the Convention and interpretations are subject to change and that
such changes may be given retroactive effect. The Options have not been granted
and issued in accordance with the requirements of Section 422 of the Code and,
therefore, do not qualify as incentive stock options under the Code. The
Options also do not qualify under Section 401(a) of the Code as qualified
pension, profit sharing, or stock bonus plans.
TREATMENT OF NONQUALIFIED OPTIONS
Under the current provisions of the Code, the following consequences will result
from the grant and exercise of the options pursuant to the Options (assuming
there is not an active trading market for the options of the Company): (i) on
the date of grant, the Company will be entitled to deduct as compensation
expense for financial statement purposes, an amount equal to the per-share
exercise price on the date of the grant times the number of shares available for
exercise; (ii) income will not be recognized by the Optionee at the time of the
grant of the Option; however, (iii) on exercise of the Option the Optionee will
realize ordinary income in an amount equal to the excess of the fair market
value of the Option Shares acquired at the time of exercise over the Option
exercise price; (iv) upon the sale of the Option Shares acquired pursuant to the
exercise of an Option, the Optionee will realize short-term or long-term capital
gain or loss, as the case may be, in an amount equal to the difference between
the amount realized on such sale and the Optionee's tax basis in the Option
Shares (as described below); and (v) the Company will be entitled to record a
compensation expense for Federal and state income taxation purposes in an amount
equal to the ordinary income recognized by the Optionee as set forth in clause
(iii) above.
If the payment of the exercise price is made entirely in cash, the tax basis of
the Option Shares will be equal to the Option exercise price paid, if any, plus
the ordinary income recognized by the Optionee, which sum should equal the fair
market value of the shares of the Option Shares acquired on the date of
exercise, and the holding period will begin on the day after the tax basis of
the shares is so determined.
The ordinary income received by the Optionee on the exercise of an Option is
considered compensation from the Company. As with other forms of compensation,
withholding tax and other trust fund payments will be owed with respect to the
exercise of the Option. The Company may accept payment of such withholding tax
or other trust fund payments in one or more of the following ways; (i) the
Optionee may pay the required taxes to the Company together with the exercise
price of shares being acquired; (ii) the Optionee delivering shares of Common
Stock with a fair market value equal to such requirements; (iii) the Company
withholding Option Shares subject to the Option, with a fair market value equal
to such requirements; or (iv) the Company making such withholding or other trust
fund payments and the Optionee reimbursing the Company such amount paid within
10 days after written demand therefor from the Company.
INVESTMENT BY A U.S. PERSON IN A FOREIGN CORPORATION
Because the Company is a foreign corporation, the acquisition of the Option
Shares by an Optionee on exercise of an Option may subject the Optionee to
certain rules and provisions not otherwise applicable to shareholders of a
domestic corporation.
Among other things, Section 367(a) of the Code may apply to situations involving
a direct or indirect transfer of appreciated property by a U.S. person to a
foreign corporation in a transaction otherwise qualifying as a corporate
organization, reorganization, or liquidation. In such situations, the transfer
of property may be treated as a taxable exchange rather than as a tax-free
transaction to prevent U.S. persons from deferring taxes on gain by using a tax-
free transaction to transfer appreciated assets to a foreign corporation.
The Code requires U.S. shareholders of a "controlled" foreign corporation to
report currently their pro rata share of certain categories of foreign income
even though it is not distributed to them. In addition, the Code provides that
in some circumstances a shareholder's gain on a sale, exchange, or redemption of
the stock of a controlled foreign corporation or on a liquidating distribution
from the foreign corporation is taxable as ordinary dividend income rather than
as capital gain. The Company believes that it should not be treated as a
controlled foreign corporation. There can be no assurance that the Company will
not in the future be treated as a controlled foreign corporation, thereby
subjecting the U.S. shareholders to the reporting requirements described above.
U.S. persons owning an interest in the Company may also be required to recognize
gain under Section 367(b) of the Code on certain transfers by the Company to a
U.S. corporation or to another foreign corporation to prevent the permanent
avoidance of U.S. tax on the accumulated earnings and profits of the Company
attributable to the portion of its stock owned by U.S. persons.
Citizens and residents of the U.S., as well as domestic corporations, are
subject to U.S. income tax on their income from all sources, including income
from foreign sources. To avoid any income being subject to taxation both in
Canada and in the U.S., a credit against U.S. income taxes is allowed for taxes
paid to the foreign jurisdiction, subject to limitations to prevent taxpayers
from using foreign tax credits to reduce U.S. tax liability on income from
sources within the U.S.
CANADIAN TAXES
The following summary of the major Canadian income tax consequences of
participation in the Options is based on the pertinent provisions of the
Canadian Income Tax Act (the "Canadian Tax Act") and accompanying regulations
(the "Canadian Regulations"), the Convention, and current interpretations
thereof. The Optionees should be aware that the Canadian Tax Act, the Canadian
Regulations, the Convention and interpretations are subject to change and that
such changes may be given retroactive effect.
For Canadian residents, stock option benefits are taxable as employment income
under the Canadian Tax Act. Generally, the value of the benefit is the
difference between the cost of the shares to the optionee and their fair market
value at the time they are acquired from the Company. To prevent double
taxation of the same gain, the value of any benefit included in a taxpayers
employment income is added to the cost base of the shares acquired. Thus, any
subsequent gain or loss on the disposition of the shares will be reduced or
increased accordingly.
Non-residents are not subject to any Canadian Tax in respect of benefits
received when stock options are exercised.
Canadian resident individuals and corporations who dispose of shares must pay
tax on 3/4 of the gain realized on those shares.
Persons resident outside Canada, however, are subject to the capital gains rules
only in relation to dispositions of "Taxable Canadian Property." "Taxable
Canadian Property" generally will not include shares in companies listed on
Canadian Stock Exchanges, so long as the non-resident shareholder controls less
than 25% of the issued shares of the Company.
However, if a non-resident disposes of shares that are "Taxable Canadian
Property," he or she can proceed in two (2) ways under the Canadian Tax Act:
1) Certificates of Compliance Obtained in Advance:
The non-resident vendor may file a prescribed form of notice in advance of
the disposition. If there is an expected capital gain and the vendor pays
33 1/3% of the gain on account of the vendor's tax liability or provides
acceptable security, Revenue Canada will issue a Certificate of Compliance.
2) No Certificate of Compliance Obtained:
If the non-resident vendor does not obtain a Certificate of Compliance, or
if the proceeds of disposition are higher than originally stated in the
notice, the purchaser may be liable to pay on account of the vendor's tax
liability, an amount equal to 33 1/3% of the purchase price of the
property.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the Company's security ownership information as
of April 25, 1997 for persons known by the Company to own beneficially more than
5% of the Company's common stock, for each director and for all officers and
directors of the Company as a group. There were no shareholders of record that
owned in excess of 5% of the Company's common stock.
NUMBER OF PERCENTAGE
NAME OF NATURE OF SHARES/ OF
BENEFICIAL OWNER OWNERSHIP (1) OPTIONS(4) OWNERSHIP(2)
- ---------------- -------------- --------- -------------
Gerald G. Common Stock 11,000 Less than 0.1
Carlson Options 200,000 0.85
Total 209,000 0.89
Robert W. Gentry Common Stock 316,200 1.35
Options 200,000(3) 0.85
Total 516,200 2.20
John R. Hardesty Common Stock 60,000 0.25
Options 50,000 0.21
Total 110,000 0.46
Gordon J. Common Stock 3,000 Less than 0.1
Fretwell Options 50,000 0.21
Total 53,000 0.22
John S. Auston Common Stock 4,000 Less than 0.1
Options 25,000 0.10
Total 29,000 0.10
Douglas R. Common Stock -- --
Beaumont Options 25,000 0.10
Total 25,000 0.10
All Executive Common Stock 394,200 1.67
Officers and Options 550,000 2.34
Directors Total 942,200 4.01
(1) Unless others indicated, all securities are owned beneficially and of
record, and such record stockholder has sole voting, investment and
dispositive power.
(2) Calculations of total percentages of ownership outstanding for each
individual assumes the exercise of options held by that individual to which
the percentage relates. Percentages calculated for totals of all executive
officers and directors as a group assume the exercise of all options held
by the indicated group.
(3) Includes 16,200 shares in the names of Mr. Gentry's minor children.
(4) These options figures only include the number of options that are
exercisable as of the date hereof. See "Current Directors and Officers
Stock Options"
CERTAIN RELATIONS AND RELATED TRANSACTIONS
The Company granted stock options to officers, directors and employees in the
aggregate amount of 800,000 shares in fiscal year 1996 as explained in
"Executive Compensation" and "Interest of Insiders in Material Transactions" of
this report.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
No insider or proposed nominee for election as a director of the Company and no
associate or affiliate of the foregoing persons has or has had any material
interest, direct or indirect, in any transaction since the commencement of the
Company's last completed financial year or in any proposed transaction which in
either such case has materially affected or will materially affect the Company
except as follows:
GRANT OF STOCK OPTIONS IN 1996 FISCAL YEAR
Number of Exercise Date of
Name of Insider Options Price Grant
- ----------------- ---------- ------- --------
Gerald G. Carlson 500,000(1) US$1.85 12/10/96
John Auston 100,000(2) US$2.41 06/18/96
Doug Beaumont 100,000(2) US$2.41 06/18/96
Robert Gentry 100,000(2) US$2.50 13/14/96
(1) These options are exercisable as 200,000 upon granting and vest as to
100,000 on each anniversary date of granting for the next 3 years.
(2) These options are exercisable as to 25,000 upon granting and vest as to
25,000 on each anniversary date of granting for the next 3 years.
PERFORMANCE GRAPH
The two graphs on the following pages show the cumulative percentage change of
total shareholder return on the Company's common stock compared to the
cumulative total results of other stock market indexes. 1) A peer group of US
companies; 2) Standard & Poor's gold index. The time period graphed is the
period from December 31, 1991 through December 31, 1996.
The peer group of small market capitalization North American gold mining
companies includes data from ten companies, all of which are listed on NASDAQ,
AMEX or NYSE. To date, the following ten companies have been used in the peer
group of the Company as reflected in Graph #1: USMX Inc., Crown Resources
Corporation, Atlas Corporation, Alta Gold Company, Dakota Mining Corporate,
Glamis Gold Ltd., Piedmont Mining Company Inc., Cour d'Alene Mines Corporation,
Hecla Mining Company and Sunshine Mining Company. These companies are all
significantly larger than La Teko and most have a long history of precious
metals production. For this and other reasons, management is of the view that
the peer group used in Graph #2 is a more accurate reflection of the Company's
comparative position due to the nature of the operations of the companies
included. The ten new companies used in the peer group on Graph #2 are:
Peer Group: Alaska Apollo Resources, Commerce Group, Consolidated Nevada
Goldfields, Cornucopia Resources, Gold Standard, Golden Quail Resources,
Inland Resources, North Lily Mining, Pacific Sentinel Gold and Silverado
Mines.
In the future, the companies used in the peer group of Graph #2 will replace the
ones previously used in Graph #1.
The NASDAQ Stock Market (US companies) index is an index comprising all domestic
common shares traded on the NASDAQ national market and the NASDAQ small cap
market. The Standard & Poor's gold index includes data from four large North
American gold mining companies, Echo Bay Mines, Ltd., Homestake Mining Company,
Newmont Gold Company, and Placer Dome, Ltd.
APPOINTMENT OF AUDITOR
Unless otherwise instructed, the proxies given pursuant to this solicitation
will be voted for the appointment of Bedford Curry, Chartered Accountants,
Vancouver, B.C., Canada as the auditor of the Company to hold office for the
ensuing year at a remuneration to be fixed by the directors. It is not
anticipated that a representative of Bedford Curry will be present at the
meeting, but if a representative is present, such representative will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
MANAGEMENT CONTRACTS
None other than as disclosed elsewhere herein.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Except as set herein, no director or senior officer of the Company or any
proposed nominee of management of the Company for election as a director of the
Company, nor any associate or affiliate of the foregoing persons has any
substantial interest, direct or indirect, by way of beneficial ownership or
otherwise, in matters to be acted upon at the meeting, except that directors
and senior officers of the Company may be granted incentive stock options to
acquire shares of the Company.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
Management of the Company is not aware of any other matters to come before the
meeting other than as set forth in the notice of meeting. If any other matters
properly come before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote the shares represented thereby in accordance
with their best judgment on such matter.
If any shareholder wishes to present a proposal for action at the 1998 annual
meeting of the shareholders, the shareholder must comply with applicable
Securities and Exchange Commission regulations, including adequate notice to the
Company. Any proposal must be submitted in writing by certified mail, return
receipt requested, to La Teko Resources Ltd., 625 Howe Street, #500, Vancouver,
B.C. V6C 2T6, on or before December 31, 1997.
These proxy materials are being distributed to members/shareholders of record as
of April 25, 1997.
FOR THE BOARD OF DIRECTORS
/s/ GERALD G. CARLSON, PRESIDENT
<PAGE>
LA TEKO RESOURCES LTD.
(THE "COMPANY")
P R O X Y
ANNUAL GENERAL MEETING
June 5, 1997
THIS PROXY IS FURNISHED TO SHAREHOLDERS OF THE COMPANY for the Annual General
Meeting of the Members to be held at 10:00 a.m., Vancouver time on the 5th day
of June, 1997 on the 12th Floor of 625 Howe Street, Vancouver, B.C., V6C 2T6.
The undersigned member/shareholder of the Company hereby appoints Gerald G.
Carlson, or failing him, Gordon J. Fretwell or in place of the foregoing
with full power of substitution, as
- --------------------------------------------
proxy holder for and on behalf of the undersigned to attend the annual general
meeting of the members/shareholders of the Company and at any adjournments
thereof, to act for and on behalf of and to vote the shares of the undersigned
and to cast the number of votes the undersigned would be entitled to cast if
personally present with respect to the matters specified below.
These proxy materials are being distributed to members/shareholders of record as
of April 25, 1997.
The Board of Directors have approved the foregoing proposals and recommend that
the shareholders vote for each of the proposals. Proxies solicited by the
Company will be voted FOR each of the proposals unless a vote against, or an
abstention from, one or more of the proposals is specifically indicated on the
proxy.
IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED AS IF THE MEMBER HAD
SPECIFIED AN AFFIRMATIVE VOTE.
I direct my proxy to vote as follows:
1) To fix the number of directors at six.
For ---- Against ----
2) To elect the following persons as directors of the Company for the ensuing
year.
GERALD G. CARLSON
For ---- Withhold Vote ----
ROBERT W. GENTRY
For ---- Withhold Vote ----
JOHN R. HARDESTY
For ---- Withhold Vote ----
JOHN S. AUSTON
For ---- Withhold Vote ----
DOUGLAS R. BEAUMONT
For ---- Withhold Vote ----
GORDON J. FRETWELL
For ---- Withhold Vote ----
3) To appoint Bedford Curry, Chartered Accountants, Vancouver, B.C., Canada as
auditor of the Company for the ensuing year and to authorize the directors
to fix the remuneration to be paid to the auditors.
For ---- Withhold Vote ----
4) To pass an ordinary resolution to establish a formal stock option plan,
subject to regulatory approval, as more fully set forth in the information
circular attached hereto.
For ---- Against ----
5) To approve and ratify stock options, and amendments to stock options, to
purchase shares of the Company granted to insiders which have not
previously been approved by the members and to authorize the directors in
their discretion to grant stock options to insiders and to amend stock
options granted to insiders during the ensuing year, as more fully set
forth in the information circular accompanying this proxy.
For ---- Against ----
THE PROXYHOLDER MAY AT HIS DISCRETION VOTE ACCORDING TO HIS BEST JUDGMENT UPON
ANY AMENDMENT OR VARIATION OF THE ABOVE MATTERS OR ANY OTHER MATTERS THAT MAY
PROPERLY BE BROUGHT BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. THE MEMBER
MAY REVOKE THIS DISCRETION BY PLACING HIS INITIALS IN THE SPACE PROVIDED
IMMEDIATELY BELOW:
Voting Discretion:
----------------------
Dated:
--------------------------------
The undersigned hereby revokes any proxy previously given.
EXECUTED on the day of
, 1997.
Signature of Member(s) Number of Shares Held
- ---------------------- ---------------------
Name of Member(s)
(Please print clearly)
- ----------------------
Address
- ----------------------
City/Province
NOTES TO INSTRUMENT OF PROXY
1) THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS THE MEMBER/
SHAREHOLDER MAY HAVE SPECIFIED BY MARKING AN "X" IN THE SPACE PROVIDED FOR
THAT PURPOSE. IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED AS IF
THE MEMBER HAD SPECIFIED AN AFFIRMATIVE VOTE.
2) A MEMBER/SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON TO REPRESENT HIM AT
THE MEETING OTHER THAN THE PERSONS DESIGNATED IN THE INSTRUMENT OF PROXY.
IF THE MEMBER/SHAREHOLDER DOES NOT WISH TO APPOINT EITHER OF THE PERSONS
NAMED IN THE INSTRUMENT OF PROXY, HE SHOULD STRIKE OUT THEIR NAMES AND
INSERT IN THE BLANK SPACE PROVIDED THE NAME OF THE PERSON HE WISHES TO ACT
AS HIS PROXYHOLDER. SUCH OTHER PERSON NEED NOT BE A MEMBER OF THE COMPANY.
3) NO MATTERS OTHER THAN THOSE STATED IN THE ATTACHED NOTICE ARE KNOWN TO BE
IN PROSPECT FOR THE MEETING, AND MANAGEMENT IS NOT AWARE AS AT THE DATE TO
THE ACCOMPANYING /PROXY STATEMENT, OF ANY AMENDMENTS OR VARIATIONS TO
MATTERS IDENTIFIED IN THE NOTICE OF MEETING OR ANY OTHER MATTERS TO BE
PRESENTED FOR ACTION AT THE MEETING. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY, HOWEVER, WITH RESPECT TO AMENDMENTS OR VARIATIONS TO MATTERS
IDENTIFIED IN THE NOTICE OF MEETING AS WELL AS OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING, AND WILL ACCORDINGLY BE VOTED IN
ACCORDANCE WITH THE DISCRETION OF THE PROXYHOLDER ON SUCH MATTERS.
4) This proxy shall not confer authority to vote
a) for the election of any person or company as a Director of the Company
unless a bona fide proposed nominee for such election is named in the
accompanying Information Circular/Proxy Statement; or
b) at any meeting other than the meeting specified in the accompanying
Notice of Meeting or any adjournment thereof.
5) The Instrument of Proxy may not be valid unless it is dated and signed by
the Member/Shareholder or by his attorney duly authorized by him in
writing, or, in the case of a corporation, is executed under its corporate
seal or by an officer or officers or attorney for the corporation duly
authorized. If the Instrument of Proxy is executed by an attorney for an
individual member/shareholder or a joint member/shareholder or by an
officer or officers or attorney of a corporate member/shareholder not under
its corporate seal, the instrument so empowering the officer or officers or
the attorney, as the case may be, or a notarial copy thereof, should
accompany the Instrument of Proxy.
6) The Proxy may not be used at the General Meeting or any adjournment thereof
unless the same is deposited at the office of the registrar and Transfer
Agent of the Company, Montreal Trust Centre, 510 Burrard Street, Vancouver,
British Columbia V6C 3B9, at least 48 hours before the time of the meeting.
The Chairman of the Meeting has the discretion to accept proxies filed less
than 48 hours before the time of the meeting.
7) Any shareholder who executes and delivers a proxy has the right to revoke
it at any time insofar as it has not been exercised. In addition to
revocation in any manner permitted by law, a proxy may be revoked by
providing the Company with an instrument in writing executed by the
member/shareholder or by his attorney authorized in writing or if a
corporation, under its corporate seal or by an officer or attorney thereof
duly authorized and deposited at the registered office of the Company at
any time up to and including the last business day preceding the day of the
meeting, or any adjournment thereof or with the chairman of the meeting on
the day of the meeting.
8) PROXIES ARE BEING SOLICITED BY THE COMPANY AND ALL COSTS AND EXPENSES
INCURRED IN CONNECTION WITH THE SOLICITATION WILL BE PAID BY THE COMPANY.
PROXIES ARE BEING SOLICITED BY MAIL BUT OFFICERS AND DIRECTORS OF THE
COMPANY MAY MAKE FURTHER SOLICITATION IN PERSON, BY TELEPHONE, FACSIMILE OR
OTHER PERSONAL CONTACT AS MAY BE REQUIRED.
<PAGE>
To: REGISTERED AND NON-REGISTERED MEMBERS/SHAREHOLDERS
National Policy 41 provides Members/Shareholders with the opportunity to elect
annually to have their names added to the Company's supplemental mailing list in
order to receive quarterly financial statements of the Company. If you wish to
receive such statements, please complete and return this form to:
MONTREAL TRUST CENTRE
510 Burrard Street
Vancouver, B.C. V6C 3B9
---------------------------------------
PLEASE PRINT NAME OF MEMBER/SHAREHOLDER
---------------------------------------
STREET ADDRESS
---------------------------------------
CITY/TOWN
---------------------------------------
PROVINCE/STATE POSTAL CODE
BY SIGNATURE BELOW, THE UNDERSIGNED HEREBY
CERTIFIES TO BE A MEMBER/SHAREHOLDER OF THE COMPANY.
DATE:------------------------
---------------------------------------
SIGNATURE OF MEMBER/SHAREHOLDER
