Schedule 14A Information
Proxy Statement Pursuant to Section 14(a)
of the Securities and Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to § 240.14a-11(c) or § 240.14a-12
RICH COAST INC.
(Name of Registrant as Specified in its Charter)
(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 the 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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
[ ] 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:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
<PAGE>
February 23, 1998
To Our Shareholders:
You are cordially invited to the 1998 Annual Meeting of Shareholders
(the "Meeting") of Rich Coast Inc. (the "Company") to be held at the offices
of the Company's counsel, Key & Mehringer, P.C., 555 Seventeenth Street,
Suite 3405, Denver, Colorado 80202, on Tuesday, March 31, 1998 at 10:00 a.m.
Mountain time.
The formal Notice of the Meeting and Proxy Statement describing the
matters to be acted upon at the Meeting are contained in the following
pages. Shareholders also are entitled to vote on any other matters which
properly come before the Meeting.
Enclosed is a proxy which will enable you to vote your shares on the
matters to be considered at the Meeting even if you are unable to attend the
Meeting. Please mark the proxy to indicate your vote, date and sign the
proxy and return it in the enclosed postage-paid envelope as soon as possible
for receipt prior to the Meeting.
WHETHER YOU OWN FEW OR MANY SHARES OF STOCK, PLEASE BE SURE YOU ARE
REPRESENTED AT THE MEETING EITHER BY ATTENDING IN PERSON OR BY RETURNING YOUR
PROXY AS SOON AS POSSIBLE.
Sincerely,
James P. Fagan, President
<PAGE>
Rich Coast Inc.
10200 Ford Road
Dearborn, Michigan 48126
(313) 582-8866
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 31, 1998
February 23, 1998
To the Shareholders of Rich Coast Inc.:
The 1998 Annual Meeting of Shareholders (the "Meeting") of Rich Coast
Inc. (the "Company") will be held at the offices of the Company's counsel,
Key & Mehringer, P.C., 555 Seventeenth Street, Suite 3405, Denver, Colorado
80202, on Tuesday, March 31, 1998, at 10:00 a.m., to consider and act upon the
following matters:
1. Election of five directors to terms expiring at the next annual meeting.
2. A proposal to amend Article FOURTH of the Company's Certificate of
Incorporation to effect a reverse stock split of the Company's Common
Stock of up to one-for-ten shares, at the discretion of the Board of
Directors.
3. Approval of the 1997 Stock Option and Stock Bonus Plan, pursuant to
which 4,500,000 shares of Common Stock are reserved for issuance as
bonuses or upon exercise of stock options which may be granted to
employees, officers or directors of, and consultants and advisers to,
the Company; and
4. A proposal to change the state of incorporation of the Company from
Delaware to Nevada.
The transaction of such other business as may properly
come before the Meeting or any adjournments thereof will be considered and
acted upon. The Board of Directors is not aware of any other business to
come before the Meeting. Pursuant to Bylaws, the Board of Directors has
fixed the close of business on January 30, 1998, as the record date for
determination of the shareholders entitled to vote at the Meeting and any
adjournments thereof.
You are requested to complete and sign the enclosed proxy which is
solicited by the Board of Directors and to return it promptly in the enclosed
envelope. The proxy will not be used if you attend the Meeting and vote in
person.
EACH SHAREHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE MEETING,
IS REQUESTED TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD. ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE REVOKED BY FILING WITH THE
SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY SHAREHOLDER PRESENT AT THE MEETING MAY REVOKE HIS
OR HER PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE MEETING.
HOWEVER, IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO
VOTE IN PERSON AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS,
Robert W. Truxell, Chairman
<PAGE>
Rich Coast Inc.
10200 Ford Road
Dearborn, Michigan 48126
(313) 582-8866
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 31, 1998
February 23, 1998
To Our Shareholders:
This proxy statement (the "Proxy Statement") is furnished in connection
with the solicitation by the Board of Directors of Rich Coast Inc. (the
"Company") of proxies to be used at the 1998 Annual Meeting (the "Meeting")
to be held at the offices of the Company's counsel, Key & Mehringer, P.C.,
555 Seventeenth Street, Suite 3405, Denver, Colorado 80202, on Tuesday, March
31, 1998, at 10:00 a.m., and at any adjournments or postponements thereof.
The Meeting is being held for the purposes set forth in the accompanying Notice
of Annual Meeting of Shareholders. This Proxy Statement, the accompanying
proxy card and the Notice of Annual Meeting (collectively, the "Proxy
Materials") are first being mailed to shareholders beginning on or about
February 23, 1998.
GENERAL INFORMATION
Solicitation
The enclosed proxy is being solicited by the Board of Directors of the
Company. In addition to solicitations by mail, solicitations may be made by
personal interview, telephone and telegram by directors and officers of the
Company. No compensation will be paid to the directors and officers of the
Company for the solicitation of proxies. The Company will reimburse banks,
brokers and others holding shares in their names or the names of the nominees
or otherwise for reasonable out-of-pocket expenses incurred in sending
proxies and proxy materials to the beneficial owners of such shares. The
cost of the solicitation will be borne by the Company.
Voting Rights and Votes Required
Holders of shares of Rich Coast Inc. common stock, $0.001 par value,
(the "Common Stock") at the close of business on January 30, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Meeting. On
the Record Date, 17,862,226 shares of Common Stock were outstanding.
Holders of Common Stock are entitled to one vote per share.
The presence, in person or by proxy, of holders of one-third of the
voting shares outstanding as of the Record Date constitutes a quorum for the
transaction of business at the Meeting. In the event there are not
sufficient votes for a quorum or to approve any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit further solicitation
of proxies. Abstentions will only count towards quorum requirements.
As to the election of directors under "Proposal 1 - Election of
Directors," the proxy card being provided by the Board enables a shareholder
to vote for the election of the nominees proposed by the Board, or to
withhold authority to vote for one or more of the nominees being proposed.
Directors are elected by a plurality of votes cast, without respect to either
(i) broker non-votes or (ii) proxies as to which authority to vote for one or
more of the nominees being proposed is withheld.
The affirmative vote of a majority of shares outstanding is required to
approve Proposals 2 and 4. The affirmative vote of a majority of the votes
cast at the Meeting by shareholders present or represented and entitled to
vote on the proposal is required to approve Proposal 3.
As to these proposals, a shareholder may: (i) vote "FOR" the proposal,
or (ii) vote "AGAINST" the proposal, or (iii) "ABSTAIN" with respect to the
proposal. These matters shall be determined by a majority of votes cast
affirmatively or negatively without regard to (a) broker non-votes, or (b)
proxies marked "ABSTAIN" as to that matter.
As to the other matters that may properly come before the Meeting, unless
otherwise required by law, the Articles, or the Bylaws, a majority of the
votes cast by shareholders shall be sufficient to approve the matter.
Voting and Revocability of Proxies
Shares of Common Stock represented by all properly executed proxies
received at the offices of the Company's Transfer Agent by 3:00 p.m., Pacific
time, on March 27, 1998 will be voted as specified in the proxy. Unless
contrary instructions are indicated on the proxy, the shares of Common Stock
represented by such proxy will be voted "FOR" the election of James P. Fagan,
Robert W. Truxell, Thornton J. Donaldson, George P. Nassos, and Geoffrey
Hornby as directors of the Company and "FOR" the proposals set forth in this
Proxy Statement. Management and the Board of Directors of the Company know of
no other matters to be brought before the Meeting other than as described
herein. If any other matters properly are presented to the shareholders for
action at the Meeting and any adjournments or postponements thereof, the
proxy holders named in the enclosed proxy intend to vote in their discretion
on all matters on which the shares of Common Stock represented by such proxy
are entitled to vote.
The giving of the enclosed proxy does not preclude the right to vote in
person should the shareholder giving the proxy so desire. A proxy may be
revoked at any time prior to its exercise by: providing notice in writing
that the proxy is revoked; presenting to the Company a later-dated proxy; or
by attending the Meeting and voting in person.
Annual Report
The Company's Form 10-KSB for the fiscal year ended April 30, 1997, and
Form 10-QSB for the quarter ended October 31, 1997, which are being mailed to
shareholders with this Proxy Statement, contain financial and other
information about the Company but are not incorporated into this Proxy
Statement and are not to be considered a part of the Proxy Statement or
soliciting materials.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables sets forth the beneficial ownership of the
Company's Common Stock as of December 31, 1997 by each Director and each
Executive Officer named in the Summary Compensation Table, and by all Directors
and Executive Officers as a group:
<TABLE>
<CAPTION>
Name of Beneficial Owner/
Name of Director/ Identity of Group Shares Beneficially Owned Percent
of Class
<C> <C> <C>
Robert W. Truxell
Chairman/Director/Secretary 4,105,848 <F1> 20.09%
James P. Fagan
President/CEO/Director 2,533,308 <F2> 12.70%
Thornton J. Donaldson
Director 283,856 <F3> 1.57%
Geoffrey Hornby
Director 54,192 <F4> *
George P. Nassos
Director 200,000 <F5> 1.11%
All directors and executive officers
as a group 7,177,204 <F6> 30.97%
* Less than 1%
<FN>
<F1>
Includes: (i) 1,383,200 shares held jointly with his wife; (ii) currently
exercisable options and warrants to purchase 200,000 shares at $0.18 per
share; (iii) currently exercisable options to purchase 2,022,648 shares at
$0.20 per share; and (iv) currently exercisable options to purchase 500,000
shares at $0.25 per share.
<F2>
Includes currently exercisable options and warrants to purchase:
(i) 281,544 shares at $0.20 per share; (ii) 500,000 common shares at
$0.22 per share; and (iii) 1,443,364 shares at $0.25 per share.
<F3>
Includes currently exercisable options to purchase 210,000 shares at $0.25
per share and 50,000 shares at $0.18 per share.
<F4>
Includes currently exercisable options to purchase 50,000 shares at $0.18 per
share.
<F5>
Includes currently exercisable options to purchase 200,000 shares at $0.18
per share.
<F6>
Includes securities reflected in footnotes 1-5.
</FN>
</TABLE>
To the knowledge of the Management of the Company, the following table
sets forth, as of December 31, 1997, the number of voting shares represented
by the securities beneficially owned by any person (including any "group")
who is known to the Company to be the beneficial owner of more than five
percent of any class of the Company's voting securities outstanding on that
date.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
of Beneficial Owner Beneficial Ownership Percent of Class
<C> <C> <C>
Robert W. and Linda C. Truxell 4,105,848 <F1> 20.09%
10200 Ford Road
Dearborn, MI 48126
Alan Moore 3,600,000 <F2> 21.74%
9441 LBJ Freeway
Suite 500
Dallas, TX 75243
James P. Fagan 2,533,308 <F3> 12.70%
10200 Ford Orad
Dearborn, MI 48126
<FN>
<F1>
Includes: (i) 1,383,200 shares held jointly; (ii) currently exercisable
options and warrants to purchase 200,000 shares at $0.18 per share;
(iii) currently exercisable options to purchase 2,022,648 shares at $0.20
per share; and (iv) currently exercisable options to purchase 500,000 shares
at $0.25 per share.
<F2>
Consists of currently exercisable warrants to purchase 3,600,000 common
shares at $0.30 per share on or before January 10, 2006.
<F3>
Includes currently exercisable options and warrants to purchase:
(i) 281,544 shares at $0.20 per share; (ii) 500,000 common shares at $0.22
per share; and (iii) 1,443,364 shares at $0.25 per share.
</FN>
</TABLE>
All percentages in this section were calculated on the basis of
outstanding securities plus securities deemed outstanding pursuant to Rule
13d-3 (d)(1) under the United States Securities Act of 1934.
Management is not aware of any arrangements or agreements pledging
securities which could in the future result in a change of control of the
Company.
MANAGEMENT
Executive officers of the Company are elected by the Board of Directors,
and serve for a term of one year and until their successors have been elected
and qualified or until their earlier resignation or removal by the Board of
Directors. There are no family relationships among any of the directors and
executive officers of the Company.
The following table sets forth names and ages of all executive officers
and directors whose terms will not expire prior to the Annual Meeting, and
all persons nominated to serve as directors and the positions and offices
that each person holds with the Company:
<TABLE>
<CAPTION>
Name, Age and
Municipality Residence Office Principal Occupation
<C> <C> <C>
Robert W. Truxell Chairman of the Chairman and Chief Executive
Bloomfield Hills, MI Board and Director Officer of Integrated Waste
Age: 73 since January 1996; Systems, 1992-1995; President
Secretary since of Microcel, Inc., 1990-1992;
December 1997 Vice-President of General
Dynamics, 1983-1990
James P. Fagan President and President and Chief Operating
Dearborn, Michigan Director since Officer of Waste Reduction
Age: 47 January 1996; Systems 1992-1995;
Chief Executive Vice-President of The Powers
Officer since Fagan Group, Inc. 1990-1996
January 1997
Thornton J. Donaldson Director since Self-employed financial and
West Vancouver, B.C. June 1984; Past mining consultant; President
Age: 67 President of the of United Corporate Advisors
Company (June Ltd. and Director of BYG
1984-January 1996) Natural Resources Inc. (TSE
listed)
Geoffrey Hornby Director since Geological Engineer - 10
Vancouver, B.C. June 1984 years experience in the
Age: 70 mining field and 23 years
experience in the forest
industry
George P. Nassos Director since Director of environmental
Glenview, IL August 1997 management program and
Age: 58 adjunct professor for Stuart
School of Business; 1996-
present-President-Fiber
Energy, Inc., an
environmental consulting
company; 1992-1995, Director
of Fiber Fuels division for
Cemtech LP; 1981-1992
employed by Chemical Waste
Management, Inc.
Michael M. Grujicich Chief Financial Director Sales Canada-WRS
Dearborn, MI Officer and 1993-1996, Director MRPII,
Age: 54 Treasurer since General Dynamics Land
August 1996 Systems Division 1983-1993,
Divisional Controller-
Rockwell International 1981-
1983
Meetings of the Board and Committees
During the last full fiscal year the Board of Directors took action 12
times by unanimous consent after telephonic discussion among the members. No
meetings of the Board of Directors took place.
The following are members of the Company's Audit Committee:
Thornton J. Donaldson
Geoffrey Hornby
Ronald Waltz, Comptroller, Rich Coast Inc.
No meetings of the Audit Committee were held during the last full fiscal
year.
Section 16(a) - Beneficial Ownership Reporting Compliance
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's directors and certain of its officers to file initial reports of
ownership and reports of changes in ownership with the Securities and
Exchange Commission and Nasdaq. Executive officers and directors are
required by SEC regulations to furnish the Company with copies of all Section
16 (a) forms they file. Based solely on a review of the copies of such forms
furnished to the Company and written representations from the Company's
executive officers and directors, the Company notes that its directors and
officers are in compliance.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets out the compensation received for the fiscal
years ended April 30, 1995, 1996, and 1997 in respect to each of the
individuals who were the Company's Chief Executive Officer at any time
during that period and the Company's other four most highly compensated
executive officers whose total salary and bonus exceeded $100,000 (the "Named
Executive Officers").
</TABLE>
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
Restricted
Securities Shares or
Other Annual Under Option/ Restricted LTIP All other
Name and Salary Bonus Compensation SAR's granted Share Units Payouts Compensation
Principal Position (a) Year (b) ($) (c) ($) (d) ($) (c) (#) (f) ($) (g) ($) (h) ($) (i)
<C> <C> <C> <C> <C> <C> <C> <C> <C>
Robert W. Truxell/ 1997 108,750 -0- -0- 100,000 360,399 -0- -0-
CEO 1996 74,917 -0- -0- 400,000 -0- -0- -0-
1995 N/A N/A N/A N/A N/A N/A N/A
Thornton J. 1997 8,800 -0- -0- 10,000 -0- -0- -0-
Donaldson 1996 30,000 -0- -0- 200,000 -0- -0- -0-
President/ CEO 1995 30,000 -0- -0- -0- -0- -0- -0-
James P. Fagan 1997 117,873 -0- -0- 100,000 180,000 -0- -0-
CEO/President 1996 105,290 -0- -0- 400,000 -0- -0- -0-
1995 N/A N/A N/A N/A N/A N/A N/A
</TABLE>
Agreements with Management
As part of the Agreement of Merger dated October 31, 1995, the Company
entered into an Employment Contract with Robert W. Truxell pursuant to which
he was compensated for serving as the Company's Chief Executive Officer and
Chairman of the Board of Directors commencing in January 1996. Under the
contract, Mr. Truxell received a salary of $150,000 per year until
January 1, 1997 at which time he resigned as Chief Executive Officer but
continues as Chairman of the Board at a salary of $125,000 per year for an
additional five years.
As part of the Agreement of Merger dated October 31, 1995, the Company
entered into an Employment Contract with James P. Fagan pursuant to which he
was compensated for serving as the Company's President and Chief Operating
Officer commencing in January 1996. Under the contract, Mr. Fagan received
a salary of $125,000 per year until January 1, 1997 at which time he became
the Company's Chief Executive Officer and his salary was increased to
$150,000
per year.
Option/Stock Appreciation Rights ("SAR") Grants during the
most recently completed Fiscal Year
The following table sets out the stock options granted by the Company
during the most recently completed fiscal year to the Named Executive
Officers
of the Company.
<TABLE>
Option/SAR Grants in Last Fiscal Year
Individual Grants
<CAPTION>
Number of Securities % of Total Options/
Underlying SARs Granted to
Options/SARs Employees in Fiscal Excercise or Base Market Price on Expiration
Name Granted (#) Year Price ($/Sh) Date of Grant Date
<C> <C> <C> <C> <C> <C>
Robert W. Truxell 100,000 10.0% $.75 <F1> $.75 <F1> 05/09/2001
James P. Fagan 100,000 10.0% $.75 <F1> $.75 <F1> 05/09/2001
<FN>
<F1>
Exercise price was reduced to $.25 per share, effective June 20, 1997.
</FN>
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
The following table sets out all Option/SAR exercises by the Named
Executive Officers during the most recently completed fiscal year and the
Option/SAR values for such persons as of the end of the most recently
completed fiscal year.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
<C> <C> <C> <C> <C>
Robert W. Truxell -0- -0- 500,000 $-0-
all exercisable
James P. Fagan -0- -0- 500,000 $-0-
all exercisable
</TABLE>
Compensation of Directors
The following table summarizes options granted during the most recently
completed fiscal year to the Directors of the Company (excluding the Named
Executive Officers):
<TABLE>
<CAPTION>
Market Value of
% of Total Options Securities
Name of Director Securities Granted to All Exercise or Underlying Options
and Officer Under Options Employees in the Base Price on the Date of Grant Date of Expiration
Fiscal Year-End Granted (#) Fiscal Year ($/Securities) ($/Security) Grant Date
<C> <C> <C> <C> <C> <C> <C>
Randall Pow 10,000 1% $.25 $.25 09/08/96 09/08/2001
</TABLE>
No pension or retirement benefit plan has been instituted by the Company
and none is proposed at this time and there is no arrangement for
compensation with respect to termination of the directors in the event of
change of control of the Company.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors has nominated all five of its current members for
reelection. The Bylaws of the Company provide for a single class of not less
than one director. Each director has a term which expires at the next
meeting of shareholders at which directors are elected. Directors serve
until the election and qualification of their successors or until their
resignation, death, disqualification or removal from office. Vacancies on the
Board of Directors may be filled by a majority of the remaining members.
Directors elected to fill vacancies serve until the next annual meeting of
shareholders and until their successors have been elected and qualified.
The Board of Directors recommends a vote "FOR" the election of Messrs.
Fagan, Truxell, Donaldson, Nassos and Hornby. Unless otherwise specified, the
enclosed proxy will be voted "FOR" the election of the Board of Directors'
slate of nominees. Neither Management nor the Board of Directors of the
Company is aware of any reason which would cause any nominee to be unavailable
to serve as a director. Discretionary authority may be exercised by the proxy
holders named in the enclosed proxy to vote for a substitute nominee proposed
by the Board of Directors if any nominee becomes unavailable for election.
At this time, the Board knows of no reason why any nominee might be
unavailable to serve.
PROPOSAL NO. 2
AMENDMENT TO CERTIFICATE OF INCORPORATION
The Board of Directors has approved an amendment to the Certificate of
Incorporation to effect a reverse stock split of the Company's Common Stock
whereby up to ten shares of outstanding Common Stock will be exchanged for
one share of Common Stock. If this Proposal is approved by the shareholders,
the Board, in its discretion will determine the number of shares (up to ten)
to be reverse split.
Effect of Approval of Proposal Number Two
The following table illustrates the effects of the proposed amendment for
a 1 for 10 reverse split and a 1 for 5 reverse split, respectively, on issued
and outstanding shares of Common Stock as of December 31, 1997:
<TABLE>
<CAPTION>
Prior to After 1 for 10 After 1 for 5
Number of Shares Amendment Reverse Split Reverse Split
<S> <C> <C> <C>
Authorized 100,000,000 100,000,000 100,000,000
Issued and Outstanding 17,711,119 1,771,112 3,542,224
Available for Future Issuance 82,288,881 98,228,880 96,457,776
</TABLE>
As of December 31, 1997 there were outstanding options and warrants to
purchase ______ shares of Common Stock. The number of shares of Common Stock
available for options and warrants and the number of such shares covered by
outstanding options and warrants, and the exercise price for the options
and warrants will be proportionately adjusted to reflect the reverse split.
Shareholders of the Company do not have preemptive rights to subscribe for
new shares that may be issued after the reverse stock split.
Effect of Reverse Stock Split, and Exchange of Certificates
Holders of Common Stock will not be required to recognize any gain or loss
as the result of the exchange of securities which is to occur in connection
with the reverse stock split. The tax basis of the aggregate shares of
Common Stock received by present shareholders will be equal to the basis of
the aggregate shares of Common Stock surrendered. The holding period for
shares of Common Stock received will include the holding period of Common Stock
exchanged therefor for both tax and Rule 144 purposes.
If Proposal Number Two is adopted by the shareholders, up to ten shares of
pre-amendment Common Stock ("Old Common Stock") would be exchanged for one
share of post-amendment Common Stock ("New Common Stock"). Persons holding
shares of Old Common Stock may obtain shares of New Common Stock by
surrendering certificates representing shares of Old Common Stock to the
Company's transfer agent, Montreal Trust Company, 510 Burrard Street, 4th Floor
Vancouver, BC V6C 389 (the "Transfer Agent"). If certificates representing
shares of Old Common Stock have been lost or misplaced, each owner of the lost
or misplaced certificates will need to contact the Transfer Agent for
instructions to be followed in obtaining New Common Stock in exchange for
such lost or misplaced certificates.
To determine the number of shares of New Common Stock issuable to any
record holder, the total number of shares represented by certificates issued in
the name of that record holder as set forth on the records of the Transfer
Agent (on the date upon which the reverse split becomes effective) will be
divided by the number to be determined by the Board (not to exceed ten). The
holder will, upon surrender of the share certificate(s) representing shares of
Old Common Stock, receive a share certificate representing the appropriate
number of shares of New Common Stock.
No fractional shares of New Common Stock will be issued. Any fractional
share will be rounded up to the next whole share.
Holders of certificates of Old Common Stock will be required to transmit
their certificates to the Transfer Agent if a holder wants to obtain shares
of New Common Stock. The effective date of the reverse split will be the
date the Certificate of Amendment is filed with the Secretary of State of
Delaware. The Board of Directors of the Company will select an effective date
of the reverse stock split following shareholder approval by filing the
Certificate of Amendment on that date. The Company will give public notice
(including notice to the Securities and Exchange Commission, the NASD, and by
press release) of the proposed effective date of the reverse stock split at
least ten days in advance of the proposed effective date. The Board of
Directors may determine, despite shareholder approval of this Proposal, to not
proceed with the reverse split if it deems such inaction to be in the best
interests of the Company and its shareholders.
Reasons for the Reverse Stock Split
Management and the Board of Directors have several reasons for proposing
the reverse stock split. Currently there are approximately 17,711,119 shares
of outstanding, which shares are trading on the NASDAQ Small Cap Market in
small quantities at very low prices. The NASDAQ Small Cap Market has
announced changes to its Small Cap Market maintenance requirements. The
changes become effective on February 23, 1998. Currently, the Company would
not meet the maintenance requirement of $1.00 minimum bid price. The Board
believes it is very important for the Company to continue its NASDAQ listing.
The Board believes listing on NASDAQ increases the likelihood of generating
interest in the Company's stock by more members of the brokerage community and
also enhances the likelihood for success of any financing efforts which might
be undertaken by the Company in the future.
After considerable review and discussion the Board of Directors has
determined that meeting the minimum bid price of $1.00 per share would best be
accomplished by reducing the number of shares of the Company's Common Stock
outstanding, and it believes that such action is in the best interests of the
Company and of its shareholders. The Board has determined the most effective
means of achieving this reduction is a reverse stock split. A 1-for-10 reverse
split would reduce the shares outstanding to approximately 1,771,112. Although
the stock price will not necessarily increase ten fold, the post split price
in such case would be approximately $4.37, assuming a pre-split bid price of
$0.437. If the Board decided to effect one-for-five reverse split, the
approximate post split price would be $2.18 based on a pre-split bid price of
$0.437. There is no assurance that the post split price will reflect a
proportionate adjustment in the stock price equal to the amount of the reverse
split.
Anti-Takeover Implications
Approval of the proposed amendment to Article Fourth will vest the Board
of Directors with the power to issue additional shares of Common Stock. This
power to issue additional shares of Common Stock could be used by incumbent
management to make more difficult a change in control of the Company. However,
the Board of Directors is proposing this amendment solely for the purpose of
allowing the Company to maintain its listing on NASDAQ and is not proposing the
amendment as an anti-takeover device.
Both the Delaware law and the Company's Bylaws allow for indemnification
of the Company's officers, directors, employees and agents. The availability
of indemnification to directors for liability based upon their actions in
choosing to issue shares in an attempt to resist a takeover could influence a
director in choosing whether to approve the issuance of such shares.
Vote Required; Recommendation of Board and Management
Approval of Proposal No. 2 requires the affirmative vote of a majority of
the Company's outstanding shares. The Board of Directors and Management
recommend that shareholders vote for the approval of the Amendment to Article
Fourth of the Company's Certificate of Incorporation and the reverse stock
split described therein.
PROPOSAL NO. 3
APPROVAL OF 1997 STOCK OPTION AND STOCK BONUS PLAN
On June 23, 1997, the Board of Directors of the Company adopted the 1997
Stock Option and Stock Bonus Plan (the "Plan"). On July 30, 1997, the Board
amended the Plan, increasing to 4,500,000 shares of Common Stock that are
reserved under the Plan and that may be issued as bonus shares or upon the
exercise of options ("Options"). The Plan includes: (i) options intended to
qualify as incentive stock options under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"); (ii) non-qualified Options which are
not intended to qualify as incentive Options; and (iii) shares issuable as
compensation. As of December 31, 1997, non-qualified Options to purchase
2,342,348 shares and incentive Options to purchase 1,066,164 shares had been
granted under the Plan. In addition, 50,000 Bonus Shares had been issued.
Incentive Options granted under the Plan will become non-qualified Options if
it is not approved by the Company's shareholders on or before June 23, 1998.
Shareholder approval of the Plan is sought to permit the issuance of Options
which will qualify as incentive Options pursuant to the Code.
The Plan is intended to provide incentives to officers, directors,
employees and other persons, including consultants and advisers, who contribute
to the success of the Company by offering them the opportunity to acquire an
ownership interest in it. The Board of Directors believes that this also
will help to align the interests of the Company's management and employees with
the interests of shareholders. The terms of the Plan concerning the incentive
Options and non-qualified Options are substantially the same except that only
employees of the Company or its subsidiaries are eligible to receive
incentive Options; employees and other persons are eligible to receive
non-qualified Options. The number of shares reserved for issuance under the
Plan is a maximum aggregate so that the number of incentive Options and/or
non-qualified Options that may be granted reduces the number of Bonus Shares
which may be granted, and vice versa.
Administration of the Plan
Although the Board of Directors has the authority to appoint a committee
to administer the Plan, the Plan is currently administered by the Board. In
addition to determining who will be granted Options or Bonus Shares, the
Board determines when Options and Bonus Shares will be granted and the number
of Options and Bonus Shares to be granted. The Board also may determine a
vesting and/or forfeiture schedule for Bonus Shares and/or Options granted, the
time or times when each Option becomes exercisable, the duration of the
exercise period for Options and the form or forms of the agreements,
certificates or other instruments evidencing grants made under the Plan. The
Board also may impose additional conditions or restrictions not inconsistent
with the provisions of the Plan. The Board may adopt, amend and rescind such
rules and regulations as in its opinion may be advisable for the
administration of the Plan.
The Board also has the power to interpret the Plan and the provisions in
the instruments evidencing grants made under it, and is empowered to make all
other determinations deemed necessary or advisable for the administration of
it. Unless sooner terminated by the Board, the Plan will terminate on
June 23, 2007. Neither Bonus Shares nor Options can be granted after that
date, although Options granted before the Plan terminates will expire in
accordance with their terms, even if after the Plan termination date.
Eligibility
Participants in the Plan may be selected from employees, officers and
directors of, and consultants and advisors to, the Company and its subsidiary
and affiliated companies. The Board may take into account the duties of
persons selected, their present and potential contributions to the success of
the Company and such other considerations as the Board deems relevant to the
purposes of the Plan.
The grant of Options or Stock Bonuses under the Plan does not confer any
rights with respect to continuation of employment, and does not interfere
with the right of the recipient or the Company to terminate the recipient's
employment, although a specific grant of Options or Shares may provide
that termination of employment or cessation of service as an employee,
officer, director, or consultant may result in forfeiture or cancellation of
all or a portion of the Bonus Shares or Options.
Adjustment
In the event a change, such as a stock split, is made in the Company's
capitalization which results in an exchange or other adjustment of each share
of Common Stock for or into a greater or lesser number of shares, appropriate
adjustments will be made to unvested Bonus Shares and in the exercise price
and in the number of shares subject to each outstanding Option. If Proposal
No. 2 is approved and the Board decides to proceed with a reverse split then
the number of shares of Common Stock available for options and the number of
such shares covered by outstanding options, and the exercise price of each
outstanding Option will be proportionately adjusted to reflect the reverse
split. The Board also may make provisions for adjusting the number of Bonus
Shares or shares underlying outstanding Options in the event the Company
effects one or more reorganizations, recapitalizations, rights offerings, or
other increases or reductions of shares of the Company's outstanding Common
Stock. Options and Bonus Shares may provide that in the event of the
dissolution or liquidation of the Company, a corporate separation or division
or the merger or consolidation of the Company, the holder may exercise the
Option on such terms as it may have been exercised immediately prior to such
dissolution, corporate separation or division or merger or consolidation and
that Bonus Shares will vest immediately. The Plan also provides that in the
event of a tender offer or exchange offer for the Company, certain mergers or
consolidations, or certain changes in control of the Company or of its Board
of Directors, outstanding Options and Bonus Shares previously subject to
vesting provisions will vest immediately.
Sale of Bonus Shares and Shares Underlying Options
The Company hopes to file in the near future a Registration Statement with
the Securities and Exchange Commission to permit public sale of the Bonus
Shares and the shares of Common Stock purchased upon exercise of the Options
issued under the Plan without limitation by persons who are not "affiliates"
of the Company and to permit public sale, subject to the volume, manner and
notice of sale provisions of Rule 144 under the Act, by persons who are
"affiliates" of the Company. "Affiliates" of the Company are persons who,
directly or indirectly, control, are controlled by, or are under common
control with, the Company or its subsidiaries. Control is presumed to exist in
circumstances of beneficial ownership of 10% or more of an entity's voting
securities. If the Company does not file such a registration statement, or
until one is filed, the Bonus Shares and shares underlying the Options will
be restricted securities under Rule 144.
Other Provisions
The exercise price of any incentive Option granted under the Plan must be
no less than 100% of the "fair market value" of the Company's Common Stock on
the date of grant. The exercise price of any non-qualified Option granted
under the Plan must be no less than 80% of the fair market value on the date
of grant. Fair market value is defined in the Plan as the most recent closing
sale price of the Common Stock as reported by Nasdaq.
The exercise price of an Option may be paid in cash, in shares of the
Company's Common Stock or other property having a fair market value equal to
the exercise price of the Option, or in a combination of cash, shares and
property. The Board of Directors shall determine whether or not property
other than cash or Common Stock may be used to purchase the shares underlying
an Option and shall determine the value of the property received.
Income Tax Consequences of the Plan
The incentive Options issuable under the Plan are structured to qualify
for favorable tax treatment to recipients provided by Section 422 of the
Internal Revenue Code of 1986, as amended (the"Code"). Pursuant to Section
422 of the Code, optionees will not be subject to federal income tax at the
time of the grant or at the time of exercise of an incentive Option. In
addition, provided that the stock underlying the Option is not sold within two
years after the grant of the Option and is not sold within one year after the
exercise of the Option, then the difference between the exercise price and
the sales price will be treated as long-term capital gain or loss. The Company
will not be entitled to receive any income tax deductions with respect to the
granting or exercise of incentive Options or the sale of the Common Stock
underlying the Options. The exercise price of incentive Options granted
cannot be less than the fair market value of the underlying Common Stock on the
date the Options were granted. In addition, the aggregate fair market value
(determined as of the date an Option is granted) of the Common Stock
underlying the Options granted to a single employee which become exercisable
in any single calendar year may not exceed the maximum permitted by the Code
for incentive Options. This amount currently is $100,000. No incentive
Option may be granted to an employee who, at the time the Option would be
granted, owns more than ten percent of the outstanding stock of the Company
unless the exercise price of the Options granted to the employee is at least
110% of the fair market value of the stock subject to the Option and the
Option is not exercisable more than five years from the date of grant.
Non-qualified Options will not qualify for the special tax benefits given
to incentive Options under Section 422 of the Code. An optionee does not
recognize any taxable income at the time he or she is granted a non-qualified
Option. However, upon exercise of the Option, the optionee recognizes
ordinary income for federal income tax purposes measured by the excess, if any,
of the then fair market value of the shares over the exercise price. The
ordinary income recognized by the optionee will be treated as wages and will
be subject to income tax withholding by the Company. Upon an optionee's sale
of shares acquired pursuant to the exercise of a non-qualified Option, any
difference between the sale price and the fair market value of the shares on
the date when the Option was exercised will be treated as long-term or
short-term capital gain or loss. Upon an optionee's exercise of a
non-qualified Option, the Company will be entitled to a tax deduction in the
amount recognized as ordinary income to the optionee.
With respect to Bonus Shares, generally, a grantee will recognize as
ordinary income the fair market value of the Bonus Shares as of the date of
receipt. The ordinary income recognized by the grantee will be treated as
wages and will be subject to income tax withholding by the Company. The
Company will be entitled to a tax deduction in the amount recognized as
ordinary income to the grantee.
New Plan Benefits
An aggregate of 3,858,512 in Stock Bonuses and Options to purchase shares
of Common Stock have been granted since adoption of the Plan by the Board of
Directors.
The following table sets forth information concerning the Options and
Stock Bonuses which have been granted pursuant to the Plan since its adoption
to: the Company's Chief Executive Officer and each other executive officer of
the Company required to be named in the Summary Compensation Table; to all
current executive officers of the Company as a group; and to all other
employees, including all current officers who are not executive officers, as a
group:
<TABLE>
<CAPTION>
Number of Shares of
Common Stock Exercise or Market Price on
Name Underlying Options (#) Base Price ($/Sh) Date of Grant ($/Sh)
<C> <C> <C> <C>
Robert W. Truxell 1,032,348 $.20 $.25
200,000 $.18 $.22
Thornton J. Donaldson 50,000 $.18 $.22
James P. Fagan 516,164 $.25 $.25
500,000 $.22 $.22
All Other Executive Officers -0- -0- -0-
Non-Officer Directors 250,000 $.18 $.22
All Others, including Non- 1,260,000 $.18 $.22
Executive Officers 50,000 $.22 $.22
</TABLE>
Vote Required; Recommendation of Board
Approval of the Plan requires the affirmative vote of the majority of
shares represented at the Annual Meeting of Shareholders.
The Board of Directors recommends that shareholders vote "FOR" the
adoption of the Plan, as it provides a means of compensating management of
the Company without utilizing the Company's cash resources. In addition,
the Board of Directors believes that the Plan will better align the interests
of the Company's employees, officers, directors, consultants and advisors with
the interests of the Company's shareholders by providing for increased share
ownership which will provide an additional incentive for those persons to
work for the success of the Company and to maximize shareholder value. The
Board of Directors believes that the Plan provides an incentive for those
persons to put forth maximum efforts for the Company's success in order to
maximize the value of the compensation provided to them through the Bonus
Shares and Stock Options.
PROPOSAL NO. 4
APPROVAL TO CHANGE THE STATE OF INCORPORATION
FROM DELAWARE TO NEVADA
The following discussion summarizes certain aspects of the proposal to
change the state of incorporation of the Company from Delaware to Nevada (the
"Reincorporation Merger"). The Reincorporation Merger will be effected
pursuant to an Agreement and Plan of Merger (the "Reincorporation Merger
Agreement") between Rich Coast Inc., a Delaware Corporation ("RC-Delaware")
and Rich Coast Inc., a Nevada corporation ("RC-Nevada").
Principal Reasons for Reincorporation in Nevada
The Board of Directors of the Company believes that the best interests of
the Company and its shareholders will be served by changing the Company's
state of incorporation from Delaware to Nevada. Most importantly, the annual
taxes and fees charged by the State of Nevada are significantly less than
those charged by the State of Delaware. For the fiscal year ending
April 30,1998, the Company anticipates it will be required to pay $7,000 to the
State of Delaware. If the Company becomes profitable and/or its total assets
increase, the fees will increase substantially. If the Company reincorporates
in Nevada, its annual fees will be less than $100 per year.
Operating the Company as a Nevada corporation will not interfere with, nor
substantially differ from, the present corporate activities of the Company.
As a Nevada corporation, RC-Nevada will be governed by the Nevada Revised
Statute (the "Nevada Statute"), whereas RC-Delaware is governed by the
Delaware General Corporation Law (the "Delaware Law"). The Board of Directors
has reviewed and analyzed the Nevada Statute and believes that it is a
comprehensive, flexible legal structure under which to operate. Because of
differences in the laws of these states, rights of the Company's shareholders
will change in several material respects as a result of the proposed
reincorporation.
Certain Changes in the Rights of Shareholders Resulting from the
Reincorporation Merger and the Effects Thereof
Although it is impracticable to describe all of the differences between
the corporation laws of Delaware, the state in which the Company is
incorporated, and the laws of the State of Nevada, the state in which
RC-Nevada is incorporated, the following is a summary of certain significant
differences between the rights which shareholders have as holders of shares of
RC-Delaware Common Stock, and those which they would have as holders of
shares of RC-Nevada Common Stock.
1. Shareholder Vote for Certain Matters
Both the Delaware Law and the Nevada Statute require an affirmative vote
of a majority of the outstanding stock in order to approve a merger (other
than certain parent-subsidiary mergers) or the sale, lease or exchange of all
or substantially all of the corporation's assets. The Delaware Certificate
of Incorporation (the "Delaware Certificate") and the Nevada Articles of
Incorporation (the "Nevada Articles") are silent regarding such a vote.
Accordingly, both the Delaware Certificate and Nevada Articles by operation
of law provide for a majority shareholder vote to approve such transactions.
The Delaware Law and the Nevada Statute both permit a subsidiary
corporation to merge into its parent corporation without approval of
shareholders of either corporation. This provision applies under both statutes
when the parent owns at least 90% of the subsidiary.
2. Removal of Directors
Under both the Delaware Law and the Nevada Statute, any director or the
entire board of directors may be removed, with or without cause, upon the
vote of the shares entitled to vote in the election of directors at a meeting
expressly called for such purpose. Under Delaware Law, a majority vote is
required to remove a director. Under the Nevada Statute a director may be
removed by the vote of shareholders representing not less than two-thirds of
the outstanding shares entitledto vote.
3. Cumulative Voting
Under both the Delaware Law and the Nevada Statute, cumulative voting is
not required unless provided for in the Certificate of Incorporation or
Articles of Incorporation. Neither the Delaware Certificate nor the Nevada
Articles provide for cumulative voting.
4. Dividends
A Delaware corporation, subject to any restrictions contained in its
certificate of incorporation, may pay dividends upon the shares of its
capital stock either: (i) out of its surplus; or (ii) in case there shall be
no such surplus, out of its net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year subject to certain
conditions. A Nevada corporation may make a distribution to its
stockholders, but no distribution may be made if , after giving it effect:
(i) the corporation would not be able to pay its debts as they become due in
the usual course of business; or (ii) except as otherwise specifically allowed
by the articles of incorporation, the corporation's total assets would be
less than the sum of its total liabilities plus the amount that would be
needed, if the corporation were to be dissolved at the time of distribution, to
satisfy the preferential rights upon dissolution of stockholders whose
preferential rights are superior to those receiving the distribution.
5. Special Meetings of Shareholders
Under the Delaware Law, special meetings of the stockholders may be called
by the board of directors or by such other person or persons as may be
authorized by the certificate of incorporation or by the bylaws. The bylaws
of RC-Delaware provide that special meetings may be called by the directors
or by any officer instructed by the directors to call the meeting. There is no
comparable provision in the Nevada Statute. The bylaws of RC-Nevada provide
that special meetings shall be called by the President or by the Board of
Directors.
6. Shareholder Action by Written Consent
The Delaware Law and the Nevada Statute both provide that any action
required to be taken at a meeting of shareholders may be taken without a
meeting if the shareholders consent in writing to the action proposed to be
taken. In both states, such a consent must be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted.
7. Indemnification
The Delaware Law and the Nevada Statute each specify certain circumstances
when a corporation must, and other circumstances when it may, indemnify its
officers, directors, employees and agents against legal expenses and
liabilities. Both states provisions are generally the same. Both the
Delaware Law and the Nevada Statute require, unless ordered by a court, a
finding to be made: that the officer, director, employee or agent has met the
required standard of conduct by majority vote of the board of directors for
which the quorum does not consist of parties to the proceeding; or by a
majority vote of a committee of the board consisting of two or more directors
not parties to the proceeding; or by independent legal counsel in a written
opinion; or by shareholder approval. Neither the provisions of the Nevada
Statute nor the Delaware Law are exclusive, and both permit indemnification
as provided under any bylaw, agreement, vote of shareholders or of
disinterested directors, or otherwise.
Both the Delaware Certificate and the Nevada Articles require
indemnification to the fullest extent allowable under the Delaware Law and
the Nevada Statute, respectively.
8. Directors' Liability
The Delaware Law permits a corporation, with the approval of its
shareholders, to eliminate or limit personal liability of its directors,
except for liability arising in connection with (i) a breach of the duty of
loyalty; (ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law; (iii) the payment of unlawful
dividends and approval of certain other actions prohibited by law; or (iv) a
transaction from which an improper personal benefit is derived. The Nevada
Statute permit a corporation to eliminate or limit personal liability of its
directors, except for liability arising in connection with (i) acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law; or (ii) the payment of distributions in violation of the Nevada Statute.
Under both the Delaware Certificate and the Nevada Articles, the applicable
provisions of the respective statutes are restated.
9. Amendment and Repeal of Bylaws
The Delaware Law provides that the power to adopt, amend or repeal bylaws
shall be in the stockholders unless specifically reserved to the directors in
the corporation's certificate of incorporation. Such provision does not
limit the stockholders' power to do so in either case. There is no similar
provision in the Nevada Statute. The Delaware Certificate states that the
power to adopt, amend, or repeal the bylaws is reserved to the Board of
Directors. The Nevada Articles are silent with respect to amendment and
repeal of the bylaws of RC-Nevada, but the bylaws of RC-Nevada which have
been adopted by the Board of Directors state that the power to adopt, amend or
repeal the bylaws is reserved to the Board. The bylaws adopted by the Board
are subject to any bylaws that may be adopted by the shareholders.
10. Stock Repurchases
The Delaware Law provides that a corporation may acquire its own shares.
No purchase of shares may be made when such a purchase would cause any
impairment of the capital of the corporation. Under the Nevada Statute a
corporation may acquire its own shares. However, no such purchase can be
made if, after giving effect to the purchase: (i) the corporation would not be
able to pay its debts as they become due in the usual course of business; or
(ii) the corporation's total assets would be less than the sum of its total
liabilities plus the amount that would be needed, if the corporation were to
be dissolved at the time of distribution, to satisfy preferential rights (if
any) of stockholders upon dissolution.
11. Loans to Employees and Directors
The Delaware Law permits loans or guarantees to any officer or other
employee, including any officer or employee who is a director, whenever, in the
judgment of the directors, such a loan or guarantee may reasonably be
expected to benefit the corporation. The Nevada Statute does not contain
specific restrictions on loans or guarantees to or for the benefit of any
employee. However, it does require that any contract or transaction
between the corporation and an officer or director either: (i) must be
approved by a majority vote of the disinterested directors, or a majority vote
of outstanding shares (including shares owned by the interested director or
officer) and in either instance the officer's or director's interest in the
transaction is known; or (ii) must be fair to the corporation.
12. Appraisal Rights
Under the Delaware Law and the Nevada Statute, shareholders, in certain
circumstances, have the right to dissent form certain corporate
reorganizations and mergers, provided certain statutory procedures are
followed. A shareholder exercising his right to dissent may demand payment in
cash for his shares equal to their fair value, excluding any appreciation or
depreciation in anticipation of the transaction (although such appreciation or
depreciation may be included in determining fair value if its exclusion would
be unfair). Fair value is determined by an appropriate court upon the
petition of the shareholder. See "Rights of Dissenting Shareholders" below.
The Delaware Law provides that shareholders who neither voted in favor of
a merger or consolidation nor consented thereto in writing shall be entitled to
an appraisal by the Court of Chancery of the fair value of the stockholder's
shares. Appraisal rights are available for the shares of any class or shares
of stock of a constituent corporation in a merger or consolidation. In
addition, any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation.
The Nevada Statute provides that a stockholder is entitled to dissent from
and obtain payment of the fair market value of his shares in the event of the
following corporate action: (a) consummation of a plan of merger to which the
domestic corporation is a party (i) if approval by the stockholders is
required for the merger and he is entitled to vote on the merger, or (ii) in
certain circumstances, if the domestic corporation is a subsidiary and is
merged with its parent; (b) consummation of a plan of exchange to which the
domestic corporation is a party as the corporation whose subject owner's
interests will be acquired, if he is entitled to vote on the plan; (c) any
corporate action taken pursuant to a vote of the stockholders to the extent
that the articles of incorporation, bylaws or a resolution of the board of
directors provides that voting or nonvoting stockholders are entitled to
dissent and obtain payment for their shares.
13. Tender Offers and Takeover Bids
The Delaware Law does not regulate the making of tender offers or takeover
bids. The Nevada Statute contains provisions that apply (unless the articles
of incorporation or bylaws in effect on the 10th day following the
acquisition of a controlling interest provide otherwise) to any acquisition
of a controlling interest in an issuing corporation. The articles of
incorporation or bylaws may impose stricter requirements on the acquisitions of
a controlling interest in the corporation. The Nevada Statute does not
restrict the directors of an issuing corporation from taking action to protect
the interests of the corporation and its stockholders, including, but not
limited to, adopting or executing plans, arrangements or instruments that deny
rights, privileges, power or authority to a holder of a specified number or
percentage of share ownership or voting power.
An "issuing corporation" is defined as a Corporation which is organized in
Nevada and has 200 or more stockholders, at least 100 of whom are stockholders
of record and residents of Nevada, and does business in Nevada. Based on
current operations, these provisions under the Nevada Statute would not apply
to RC-Nevada.
Rights of Dissenting Shareholders
Shareholders of the Company will have the right to dissent from the action
of other shareholders in approving the Reincorporation Merger. If the
Reincorporation Merger is consummated, all Rich Coast shareholders who properly
exercise their dissenters' rights would be entitled to rights of appraisal
under the Delaware Law. A copy of the applicable provisions of the Delaware
Law, Section 262, specifying the procedures to be followed by a dissenting
shareholder is reprinted in its entirety as Exhibit A.
STRICT COMPLIANCE WITH THE DELAWARE LAW WILL BE NECESSARY TO
RETAIN SUCH RIGHTS. THE FOLLOWING SUMMARY IS NOT A COMPLETE
STATEMENT OF THE PROVISIONS OF SECTION 262 OF THE DELAWARE LAW AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SECTION 262, A COPY OF WHICH IS
ATTACHED AS EXHIBIT A TO THIS PROXY STATEMENT.
A shareholder of Rich Coast has the right to dissent only as to all of the
shares registered in his name (or part of the shares registered in his name
only if he dissents with respect to all of the shares beneficially owned by
any one person) from the action of the other shareholders in approving the
Reincorporation Merger. Any shareholder who wishes to dissent and obtain
payment for his shares must file with the Company, prior to the Annual Meeting,
a written notice of his intention to demand that he be paid fair compensation
for his shares if the Reincorporation Merger is consummated, and must refrain
from voting his shares "FOR" Proposal No. 4. A shareholder who fails in
either respect will not acquire a right to payment for his shares. If a
shareholder returns an unmarked proxy, such proxy will be voted "FOR" all
proposals listed on the proxy which are unmarked, and thus, an unmarked proxy
with respect to Proposal No. 4 will be a vote "FOR" the Reincorporation
Merger and would constitute a waiver of the shareholder's appraisal rights. A
shareholder who abstains from voting by marking "ABSTAIN" on his proxy with
respect to Proposal No. 4 will not be considered to have waived his appraisal
rights.
If the Reincorporation Merger is consummated, Rich Coast will mail within
ten days of consummation a notice to all shareholders who gave due notice of
intention to demand payment and who refrained from voting "FOR" the
Reincorporation Merger. The notice will state that the merger has become
effective. Any stockholder entitled to appraisal rights may, within 20 days
after the date of mailing such notice, demand in writing from RC-Nevada the
appraisal of such holder's shares.
Within 120 days after the effective date of the Reincorporation Merger any
stockholder who has complied with the previously mentioned provisions and is
entitled to appraisal rights may file a petition with the Court of Chancery
demanding a determination of the value of the stock for all such
stockholders. Within 60 days after the effective date, any stockholder may
withdraw his demand for appraisal. Furthermore, within 120 days after the
Reincorporation Merger, any stockholder who is in compliance shall be
entitled to receive from the surviving corporation a statement setting forth
the aggregate number of shares not voted in favor of the Reincorporation Merger
and with respect to which demands for appraisal have been received.
Upon filing a petition, service shall be made on the surviving company
which will, within 20 days, file a verified list with the names and addresses
of all stockholders who have demanded payment with the Register in Chancery.
The Register in Chancery shall give notice of the time and place fixed for
the hearing of such petition. At the hearing, the Court will determine the
stockholders who have complied with the Delaware Law and are entitled to
appraisal rights. Then the Court will determine the fair value of the
shares, as well as interest, and will direct the surviving company to pay
these amounts to each stockholder. The costs of the preceding may be
determined by the Court and allocated to the parties as the Court deems
equitable.
For more detailed information as to rights of dissenting shareholders and
the procedures to be followed in the event of a dissension, shareholders are
referred to Section 262 of the Delaware Law, a copy of which is attached as
Exhibit A. A VOTE AGAINST PROPOSAL NO. 4 WILL NOT IN ITSELF CONSTITUTE THE
WRITTEN DEMAND REQUIRED BY THE DELAWARE LAW TO ENTITLE A SHAREHOLDER TO
PAYMENT FOR HIS SHARES.
The Reincorporation Merger
Effective Date
The Reincorporation Merger will be consummated and take effect on such
date (the "Effective Date") as the Certificate/Articles of Merger are filed
with the Secretary of State of the State of Nevada and the Secretary of State
of the State of Delaware. Such filings are anticipated to be made as soon as
practicable following the adoption and approval of the Reincorporation Merger
Agreement by the shareholders of RC-Delaware.
Capitalization of RC-Nevada; Stock Certificates
RC-Nevada will have authority to issue 100,000,000 shares of Common
Stock, par value $.001 per share.
In the Reincorporation Merger, RC-Delaware Common Stock will be converted,
without any action on the part of the holders thereof, share for share into
RC-Nevada Common Stock. All shares of RC-Nevada Common Stock to be issued in
the Reincorporation Merger will be fully paid and non-assessable. As holders
of stock in RC-Nevada, the RC-Nevada shareholders will have the rights
provided in the Nevada Articles and the Nevada Statute. See "Certain Changes
in the Rights of Shareholders Resulting from the Reincorporation Merger and
the Effects Thereof."
IT WILL NOT BE NECESSARY FOR HOLDERS OF RC-DELAWARE COMMON STOCK TO
SURRENDER THEIR CERTIFICATES FOR NEW CERTIFICATES REPRESENTING RC-NEVADA
COMMON STOCK.
After the Reincorporation Merger, certificates which previously
represented shares of RC-Delaware Common Stock will be deemed to represent an
equal number of shares of RC-Nevada Common Stock, unless the reverse stock
split described proposal No. 2 has been effected, in which case the number of
shares represented will need to be adjusted to reflect the reverse stock
split. Certificates representing RC-Nevada Common Stock will be replaced only
when submitted to the Transfer Agent with a request that they be so replaced
or when they are presented for transfer.
Options or warrants to acquire RC-Delaware Common Stock which are
outstanding immediately prior to the Reincorporation Merger will be converted
into options or warrants to purchase the same number of shares of RC-Nevada
Common Stock on the same terms and conditions as in effect immediately prior
to the Reincorporation Merger, and after an adjustment for the reverse split
has been taken into account.
Indebtedness of the Company
All indebtedness of RC-Delaware outstanding on the Effective Date will be
assumed by RC-Nevada in connection with the Reincorporation Merger.
Certain Federal Income Tax Consequences
The Company's management believes that, for federal income tax purposes:
1. No gain or loss will be recognized by RC-Delaware, RC-Nevada or
shareholders of RC-Delaware (other than dissenting shareholders; see
"Rights of Dissenting Rich Coast Shareholders") by reason of the
consummation of the Reincorporation Merger;
2. Each shareholder's tax basis in the RC-Nevada Common Stock into which his
RC-Delaware Common Stock is converted will be the same as the tax basis of
the RC-Delaware Common Stock held by him immediately prior to the
consummation of the Reincorporation Merger; and
3. A shareholder who holds RC-Delaware Common Stock as a capital asset will
include in his holding period for RC-Nevada Common Stock the period during
which he held RC-Delaware Common Stock.
The receipt of cash pursuant to the exercise of dissenters' rights will be
a taxable transaction for federal income tax purposes to the shareholders
receiving such cash. A dissenting RC-Delaware shareholder who owns no
shares of RC-Nevada Common Stock after the Effective Date (either
directly or constructively pursuant to Section 318 of the Internal Revenue
Code) will recognize gain or loss measured by the difference between the
cash received and his adjusted tax basis in the shares of RC-Delaware
Common Stock exchanged therefor.
No information is provided herein as to the state, local or foreign tax
consequences of the Reincorporation Merger. The federal income tax
discussion set forth above is for general information only. Each
shareholder is urged to consult his own tax advisor as to these and any
other tax consequences of the Reincorporation Merger.
Vote Required; Recommendation of Board
Approval of Proposal No. 4 requires the affirmative vote of a majority of
the Company's outstanding shares. The Board of Directors and Management
recommend that shareholders vote for approval of the Reincorporation Merger.
PRINCIPAL ACCOUNTANTS
The Board of Directors has not yet selected a principal accountant to audit
the Company's financial statements for the fiscal year ending April 30, 1998.
The firm of Smythe Ratcliffe, Chartered Accountants in British Columbia, was
the Company's principal accountant for the year ended April 30, 1997. Since the
Company is now domiciled in the United States, the Board is considering whether
it would be in the Company's best interest to engage an accounting firm in the
U.S. The Board of Directors is in the process of interviewing U.S. accounting
firms, and intends to make a decision in the next month. A representative of
Smythe Ratcliffe will not be present at the Annual Meeting of Shareholders.
OTHER MATTERS
Management and the Board of Directors of the Company know of no matters to
be brought before the Meeting other than as set forth herein. However, if any
such other matters properly are presented to the shareholders for action at
the Meeting and any adjournments or postponements thereof, it is the
intention of the proxy holders named in the enclosed proxy to vote in their
discretion on all matters on which the shares represented by such proxy are
entitled to vote.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder may desire to present at the 1998 Annual
Meeting of Shareholders must be received in writing by the Secretary of the
Company not later than October 26, 1998.
BY ORDER OF THE BOARD OF DIRECTORS,
Robert W. Truxell, Chairman
<PAGE>
PROXY
RICH COAST INC.
10200 Ford Road
Dearborn, Michigan 48126
(313) 582-8866
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RECEIPT OF ANNUAL REPORT AND PROXY STATEMENT HEREBY IS ACKNOWLEDGED
The undersigned hereby constitutes and appoints James P. Fagan and Robert
W. Truxell, or either of them, with full power of substitution, as proxies to
vote on behalf of the undersigned all shares which the undersigned may be
entitled to vote at the Annual Meeting of Shareholders to be held at the
offices of the Company's counsel, Key & Mehringer, P.C., 555 Seventeenth
Street, Suite 3405, Denver, Colorado 80202, on Tuesday, March 31, 1998, at
10:00 a.m., Mountain time, and at any adjournment or adjournments thereof, upon
the following:
Proposal No. 1 - Election of Directors
For Abstain
James P. Fagan / / / /
Robert W. Truxell / / / /
Thornton Donaldson / / / /
Geoffrey Hornby / / / /
George P. Nassos / / / /
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
_________________________________________________________________________
Proposal No. 2 - Amendment to Certificate of Incorporation
For / / Against / / Abstain / /
Proposal No. 3 - Approval of 1997 Stock Option and Stock Bonus Plan
For / / Against / / Abstain / /
Proposal No. 4 - Approval to change the state of incorporation from
Delaware to Nevada
For / / Against / / Abstain / /
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED HEREON WITH
RESPECT TO THE ABOVE PROPOSALS, BUT IF NO SPECIFICATION IS MADE THEY WILL BE
VOTED FOR ALL NOMINEES AND FOR THE OTHER PROPOSALS LISTED ABOVE. UNLESS
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION
OF THE PROXIES ON ANY OTHER BUSINESS.
Please mark, date and sign exactly as name appears hereon, including
designation as executor, Trustee, etc. if applicable. A corporation must sign
in its name by the President or other authorized officer. All co-owners and
each joint owner must sign.
Date: _______________________
_____________________________________
Signature(s)
Address if different from that on envelope:
_____________________________________
Street Address
_____________________________________
City, State and Zip Code
Please check if you intend to be present at the meeting:
<PAGE>
Appendix A
RICH COAST INC.
1997 STOCK OPTION AND STOCK BONUS PLAN
1. Purposes of and Benefits Under the Plan. This 1997 Stock
Option and Stock Bonus Plan (the "Plan") is intended to encourage stock
ownership by employees, consultants and directors of Rich Coast Inc. and its
controlled, affiliated and subsidiary corporations (collectively, the
"Corporation"), so that they may acquire or increase their proprietary
interest in the Corporation, and is intended to facilitate the Corporation's
efforts to (i) induce qualified persons to become employees, officers and
directors (whether or not they are employees) and consultants to the
Corporation; (ii) compensate employees, officers, directors and consultants
for services to the Corporation; and (iii) encourage such persons to remain in
the employ of or associated with the Corporation and to put forth maximum
efforts for the success of the Corporation. It is further intended that
options granted by the Committee pursuant to Section 6 of this Plan shall
constitute "incentive stock options" ("Incentive Stock Options") within the
meaning of Section 422 of the Internal Revenue Code, and the regulations
issued thereunder, and options granted by the Committee pursuant to Sections 7
of this Plan shall constitute "non-qualified stock options" ("Non-qualified
Stock Options").
2. Definitions. As used in this Plan, the following words and
phrases shall have the meanings indicated:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Committee" shall mean any Committee appointed by the Board
to administer this Plan, if one has been appointed. If no Committee has been
appointed, the term "Committee" shall mean the Board.
(c) "Common Stock" shall mean the Corporation's no par value
common stock.
(d) "Disability" shall mean a Recipient's inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous period of not less than
12 months. If the Recipient has a disability insurance policy, the term
"Disability" shall be as defined therein.
(e) "Fair Market Value" per share as of a particular date shall
mean the last sale price of the Corporation's Common Stock as reported on a
national securities exchange or on the NASDAQ National Market System or by
NASDAQ, if the quotation for the last sale reported is not available for the
Corporation's Common Stock, the average of the closing bid and asked prices of
the Corporation's Common Stock as so reported or, if such quotations are
unavailable, the value determined by the Committee in accordance with its
discretion in making a bona fide, good faith determination of fair market
value. Fair Market Value shall be determined without regard to any
restriction other than a restriction which, by its terms, never will lapse.
In the case of Options and Bonuses granted at a time when the Corporation does
not have a registration statement in effect relating to the shares issuable
hereunder, the value at which the Bonus shares are issued may be determined by
the Committee at a reasonable discount from Fair Market Value to reflect the
restricted nature of the shares to be issued and the inability of the
Recipient to sell those shares promptly.
(f) "Recipient" means any person granted an Option or awarded a
Bonus hereunder.
(g) "Internal Revenue Code" shall mean the United States
Internal Revenue Code of 1986, as amended from time to time (codified as Title
26 of the United States Code) (the" Internal Revenue Code"), and any successor
legislation.
3. Administration.
(a) The Plan shall be administered by the Committee. The Committee
shall have the authority in its discretion, subject to and not inconsistent
with the express provisions of the Plan, to administer the Plan and to
exercise all the powers and authorities either specifically conferred under
the Plan or necessary or advisable in the administration of the Plan,
including the authority: to grant Options and Bonuses; to determine the
vesting schedule and other restrictions, if any, relating to Options and
Bonuses; to determine the purchase price of the shares of Common Stock covered
by each Option (the "Option Price"); to determine the persons to whom, and the
time or times at which, Options and Bonuses shall be granted; to determine the
number of shares to be covered by each Option or Bonus; to determine Fair
Market Value per share; to interpret the Plan; to prescribe, amend and rescind
rules and regulations relating to the Plan; to determine the terms and
provisions of the Option agreements (which need not be identical) entered into
in connection with Options granted under the Plan; and to make all other
determinations deemed necessary or advisable for the administration of the
Plan. The Committee may delegate to one or more of its members or to one or
more agents such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may
employ one or more persons to render advice with respect to any responsibility
the Committee or such person may have under the Plan.
(b) Options and Bonuses granted under the Plan shall be evidenced
by duly adopted resolutions of the Committee included in the minutes of the
meeting at which they are adopted or in a unanimous written consent.
(c) The Committee shall endeavor to administer the Plan and grant
Options and Bonuses hereunder in a manner that is compatible with the
obligations of persons subject to Section 16 of the U.S. Securities Exchange
Act of 1934 (the "1934 Act"), although compliance with Section 16 is the
obligation of the Recipient, not the Corporation. Neither the Committee, the
Board nor the Corporation can assume any legal responsibility for a
Recipient's compliance with his obligations under Section 16 of the 1934 Act.
(d) No member of the Committee or the Board shall be liable for any
action taken or determination made in good faith with respect to the Plan or
any Option or Bonus granted hereunder.
(e) It is intended that Options and Bonuses be granted pursuant to
this Plan in accordance with applicable provisions of the British Columbia
Companies Act and that all grants pursuant to this Plan be so construed.
4. Eligibility.
(a) Subject to certain limitations hereinafter set forth, Options
and Bonuses may be granted to employees (including officers) and consultants
to and directors (whether or not they are employees) of the Corporation or
its present or future divisions and Subsidiary Corporations. In determining
the persons to whom Options or Bonuses shall be granted and the number of
shares to be covered by each Option or Bonus, the Committee shall take into
account the duties of the respective persons, their present and potential
contributions to the success of the Corporation, and such other factors as the
Committee shall deem relevant to accomplish the purposes of the Plan.
(b) A Recipient shall be eligible to receive more than one grant of
an Option or Bonus during the term of the Plan, on the terms and subject to
the restrictions herein set forth.
5. Stock Reserved.
(a) The stock subject to Options or Bonuses hereunder shall be
shares of Common Stock. Such shares, in whole or in part, may be authorized
but unissued shares or shares that shall have been or that may be reacquired
by the Corporation. The aggregate number of shares of Common Stock as to
which Options and Bonuses may be granted from time to time under the Plan
shall not exceed 2,800,000, subject to adjustment as provided in Section 8(i)
hereof.
(b) If any Option outstanding under the Plan for any reason expires
or is terminated without having been exercised in full, or if any Bonus
granted is forfeited because of vesting or other restrictions imposed at the
time of grant, the shares of Common Stock allocable to the unexercised portion
of such Option or the forfeited portion of the Bonus shall become available
for subsequent grants of Options and Bonuses under the Plan.
6. Incentive Stock Options.
(a) Options granted pursuant to this Section 6 are intended to
constitute Incentive Stock Options and shall be subject to the following
special terms and conditions, in addition to the general terms and conditions
specified in Section 8 hereof. Only employees of the Corporation shall be
entitled to receive Incentive Stock Options.
(b) The aggregate Fair Market Value (determined as of the date the
Incentive Stock Option is granted) of the shares of Common Stock with respect
to which Incentive Stock Options granted under this and any other plan of the
Corporation or any Parent Corporation or Subsidiary Corporation are
exercisable for the first time by an Recipient during any calendar year may
not exceed the amount set forth in Section 422(d) of the Internal Revenue
Code.
(c) Incentive Stock Options granted under this Plan are intended to
satisfy all requirements for incentive stock options under Section 422 of the
Internal Revenue Code and the Treasury Regulations thereunder and,
notwithstanding any other provision of this Plan, the Plan and all Incentive
Stock Options granted under it shall be so construed, and all contrary
provisions shall be so limited in scope and effect and, to the extent they
cannot be so limited, they shall be void.
7 Non-qualified Stock Options. Options granted pursuant to this
Section 7 are intended to constitute Non-qualified Stock Options and shall be
subject only to the general terms and conditions specified in Section 8
hereof.
8. Terms and Conditions of Options. Each Option granted pursuant to
the Plan shall be evidenced by a written Option agreement between the
Corporation and the Recipient, which agreement shall be substantially in the
form of Exhibit A hereto as modified from time to time by the Committee in its
discretion, and which shall comply with and be subject to the following terms
and conditions:
(a) Number of Shares. Each Option agreement shall state the
number of shares of Common Stock covered by the Option.
(b) Type of Option. Each Option Agreement shall specifically
identify the portion, if any, of the Option which constitutes an Incentive
Stock Option and the portion, if any, which constitutes a Non-qualified Stock
Option.
(c) Option Price. Subject to adjustment as provided in Section
8 (i) hereof, each Option agreement shall state the Option Price, which shall
be determined by the Committee subject only to the following restrictions:
(1) Each Option Agreement shall state the Option Price, which
(except as otherwise set forth in paragraphs 8(c)(2) and (3) hereof) shall not
be less than 100% of the Fair Market Value per share on the date of grant of
the Option.
(2) Any Incentive Stock Option granted under the Plan to a
person owning more than ten percent of the total combined voting power of the
Common Stock shall be at a price of no less than 110% of the Fair Market Value
per share on the date of grant of the Incentive Stock Option.
(3) Any Non-qualified Stock Option granted under the Plan
shall be at a price no less than 80% of the Fair Market Value per share on the
date of grant of the Non-qualified Stock Option.
(4) The date on which the Committee adopts a resolution
expressly granting an Option shall be considered the day on which such option
is granted, unless a future date is specified in the resolution.
(d) Term of Option. Each Option agreement shall state the
period during and times at which the Option shall be exercisable, in
accordance with the following limitations:
(1) The date on which the Committee adopts a resolution
expressly granting an Option shall be considered the day on which such Option
is granted, although such grant shall not be effective until the Recipient has
executed an Option agreement with respect to such Option.
(2) The exercise period of any Option shall not exceed ten
years from the date of grant of the Option.
(3) Incentive Stock Options granted to a person owning more
than ten percent of the total combined voting power of the Common Stock of the
Corporation shall be for no more than five years.
(4) The Committee shall have the authority to accelerate or
extend the exercisability of any outstanding Option at such time and under
such circumstances as it, in its sole discretion, deems appropriate. No
exercise period may be so extended to increase the term of the Option beyond
ten years from the date of the grant.
(5) The exercise period shall be subject to earlier
termination as provided in Sections 8(f) and 8 (g) hereof, and, furthermore,
shall be terminated upon surrender of the Option by the holder thereof if such
surrender has been authorized in advance by the Committee.
(e) Method of Exercise and Medium and Time of Payment.
(1) An Option may be exercised as to any or all whole shares
of Common Stock as to which it then is exercisable, provided, however, that no
Option may be exercised as to less than 100 shares (or such number of shares
as to which the Option is then exercisable if such number of shares is less
than 100).
(2) Each exercise of an Option granted hereunder, whether in
whole or in part, shall be effected by written notice to the Secretary of the
Corporation designating the number of shares as to which the Option is being
exercised, and shall be accompanied by payment in full of the Option Price for
the number of shares so designated, together with any written statements
required by, or deemed by the Corporation's counsel to be advisable pursuant
to, any applicable securities laws.
(3) The Option Price shall be paid in cash, or in shares of
Common Stock having a Fair Market Value equal to such Option Price, or in
property or in a combination of cash, shares and property and, subject to
approval of the Committee, may be effected in whole or in part with funds
received from the Corporation at the time of exercise as a compensatory cash
payment.
(4) The Committee shall have the sole and absolute discretion
to determine whether or not property other than cash or Common Stock may be
used to purchase the shares of Common Stock hereunder and, if so, to determine
the value of the property received.
(5) The Recipient shall make provision for the withholding of
taxes as required by Paragraph 7 hereof.
(f) Termination.
(1) Unless otherwise provided in the Option Agreement by and
between the Corporation and the Recipient, if the Recipient ceases to be an
employee or consultant or director of the Corporation (other than by reason of
death, Disability or retirement), all Options theretofore granted to such
Recipient but not theretofore exercised shall terminate three months following
the date the Recipient ceased to be an employee or consultant or director of
the Corporation, and shall terminate upon the date of termination of
employment if discharged for cause.
(2) Nothing in the Plan or in any Option or Bonus granted
hereunder shall confer upon an individual any right to continue in the employ
of or other relationship with the Corporation or interfere in any way with the
right of the Corporation to terminate such employment or other relationship
between the individual and the Corporation.
(g) Death, Disability or Retirement of Recipient. Unless
otherwise provided in the Option Agreement by and between the Corporation and
the Recipient, if a Recipient shall die while a director of, or employed by,
or a consultant to the Corporation, or within ninety days after the
termination of such Recipient's employment or directorship or consulting
relationship, other than termination for cause, or if the Recipient's
employment or directorship or consulting relationship, shall terminate by
reason of Disability or retirement, all Options theretofore granted to such
Recipient (whether or not otherwise exercisable) unless earlier terminated in
accordance with their terms, may be exercised by the Recipient or by the
Recipient's estate or by a person who acquired the right to exercise such
Options by bequest or inheritance or otherwise by reason of the death or
Disability of the Recipient, at any time within one year after the date of
death, Disability or retirement of the Recipient; provided, however, that in
the case of Incentive Stock Options such one-year period shall be limited to
three months in the case of retirement.
(h) Transferability Restriction.
(1) Options granted under the Plan shall not be transferable
other than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code or
Title I of the Employee Retirement Income Security Act of 1974, or the rules
thereunder. Options may be exercised, during the lifetime of the Recipient,
only by the Recipient and thereafter only by his legal representative.
(2) Any attempted sale, pledge, assignment, hypothecation or
other transfer of an Option contrary to the provisions hereof and/or the levy
of any execution, attachment or similar process upon an Option, shall be null
and void and without force or effect and shall result in a termination of the
Option.
(3)(A) As a condition to the transfer of any shares of Common
Stock issued upon exercise of an Option granted under this Plan, the
Corporation may require an opinion of counsel, satisfactory to the
Corporation, to the effect that such transfer will not be in violation of the
Securities Act of British Columbia ("B.C. Act") or the U.S. Securities Act of
1933, as amended (the "1933 Act") or any other applicable securities laws or
that such transfer has been registered under federal and all applicable state
securities laws. (B) Further, the Corporation shall be authorized to refrain
from delivering or transferring shares of Common Stock issued under this Plan
until the Committee determines that such delivery or transfer will not violate
applicable securities laws and the Recipient has tendered to the Corporation
any federal, state or local tax owed by the Recipient as a result of
exercising the Option or disposing of any Common Stock when the Corporation
has a legal liability to satisfy such tax. (C) The Corporation shall not be
liable for damages due to delay in the delivery or issuance of any stock
certificate for any reason whatsoever, including, but not limited to, a delay
caused by listing requirements of any securities exchange or any registration
requirements under the B.C. Act, the 1933 Act, the 1934 Act, or under any
other state, federal or provincial law, rule or regulation. (D) The
Corporation is under no obligation to take any action or incur any expense in
order to register or qualify the delivery or transfer of shares of Common
Stock under applicable securities laws or to perfect any exemption from such
registration or qualification. (E) Furthermore, the Corporation will not be
liable to any Recipient for failure to deliver or transfer shares of Common
Stock if such failure is based upon the provisions of this paragraph.
(4) A shareholder issued shares as a bonus under the Plan
and/or upon exercise of options granted under the Plan (the "Shares") and
wishing to trade such Shares in the Province of British Columbia will be
subject to the following resale restrictions in British Columbia: (A) the
shareholder must file with the British Columbia Securities Commission a report
within 10 days of the initial trade within British Columbia in any of the
Shares by the shareholder; and (B) where the shareholder has filed such report
with respect to any Shares, the shareholder is not required to file a further
such report in respect of additional trades of shares acquired on the same
date and under the same exemption as the Shares which are the subject of the
initial trade report referred to in Section 5(g)(4)(1) above.
(i) Effect of Certain Changes.
(1) If there is any change in the number of shares of
outstanding Common Stock through the declaration of stock dividends, or
through a recapitalization resulting in stock splits or combinations or
exchanges of such shares, the number of shares of Common Stock available for
Options and the number of such shares covered by outstanding Options, and the
exercise price per share of the outstanding Options, shall be proportionately
adjusted by the Committee to reflect any increase or decrease in the number of
issued shares of Common Stock; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated.
(2) In the event of the proposed dissolution or liquidation of
the Corporation, or any corporate separation or division, including, but not
limited to, split-up, split-off or spin-off, or a merger or consolidation of
the Corporation with another corporation, the Committee may provide that the
holder of each Option then exercisable shall have the right to exercise such
Option (at its then current Option Price) solely for the kind and amount of
shares of stock and other securities, property, cash or any combination
thereof receivable upon such dissolution, liquidation, corporate separation or
division, or merger or consolidation by a holder of the number of shares of
Common Stock for which such Option might have been exercised immediately prior
to such dissolution, liquidation, corporate separation or division, or merger
or consolidation; or, in the alternative the Committee may provide that each
Option granted under the Plan shall terminate as of a date fixed by the
Committee; provided, however, that not less than 30 days' written notice of
the date so fixed shall be given to each Recipient, who shall have the right,
during the period of 30 days preceding such termination, to exercise the
Option as to all or any part of the shares of Common Stock covered thereby,
including shares as to which such Option would not otherwise be exercisable.
(3) Paragraph 2 of this Section 8 (i) shall not apply to a
merger or consolidation in which the Corporation is the surviving corporation
and shares of Common Stock are not converted into or exchanged for stock,
securities of any other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any consolidation or merger
of another corporation into the Corporation in which the Corporation is the
surviving corporation and in which there is a reclassification or change
(including a change to the right to receive cash or other property) of the
shares of Common Stock (excluding a change in par value, or from no par value
to par value, or any change as a result of a subdivision or combination, but
including any change in such shares into two or more classes or series of
shares), the Committee may provide that the holder of each Option then
exercisable shall have the right to exercise such Option solely for the kind
and amount of shares of stock and other securities (including those of any new
direct or indirect Parent of the Corporation), property, cash or any
combination thereof receivable upon such reclassification, change,
consolidation or merger by the holder of the number of shares of Common Stock
for which such Option might have been exercised.
(4) In the event of a change in the Common Stock of the
Corporation as presently constituted into the same number of shares with a par
value, the shares resulting from any such change shall be deemed to be the
Common Stock of the Corporation within the meaning of the Plan.
(5) To the extent that the foregoing adjustments relate to
stock or securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive, provided that each Incentive Stock Option granted pursuant to this
Plan shall not be adjusted in a manner that causes such option to fail to
continue to qualify as an Incentive Stock Option within the meaning of Section
422 of the Internal Revenue Code.
(6) Except as expressly provided in this Section 8(i), the
Recipient shall have no rights by reason of any subdivision or consolidation
of shares of stock of any class, or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class, or
by reason of any dissolution, liquidation, merger, or consolidation or
spin-off of assets or stock of another corporation; and any issue by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to an Option. The grant of an Option pursuant to the Plan shall
not affect in any way the right or power of the Corporation to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structures, or to merge or consolidate, or to dissolve, liquidate, or
sell or transfer all or any part of its business or assets.
(j) No Rights as Shareholder - Non-Distributive Intent.
(1) Neither a Recipient of an Option nor such Recipient's
legal representative, heir, legatee or distributee, shall be deemed to be the
holder of, or to have any rights of a holder with respect to, any shares
subject to such Option until after the Option is exercised and the shares are
issued.
(2) No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 8(i) hereof.
(3) Upon exercise of an Option at a time when there is no
registration statement in effect under the B.C. Act and/or the 1933 Act
relating to the shares issuable upon exercise, shares may be issued to the
Recipient only if the Recipient represents and warrants in writing to the
Corporation that the shares purchased are being acquired for investment and
not with a view to the distribution thereof and provides the Corporation with
sufficient information to establish an exemption from the registration
requirements of the B.C. Act and/or the 1933 Act. A form of subscription
agreement containing representations and warranties deemed sufficient as of
the date of adoption of this Plan is attached hereto as Exhibit B.
(4) No shares shall be issued upon the exercise of an Option
unless and until there shall have been compliance with any then applicable
requirements of the U.S. Securities and Exchange Commission and the British
Columbia Securities Commission or any other regulatory agencies having
jurisdiction over the Corporation.
(k) Other Provisions. Option Agreements authorized under the
Plan may contain such other provisions, including, without limitation, (i) the
imposition of restrictions upon the exercise and (ii) in the case of an
Incentive Stock Option, the inclusion of any condition not inconsistent with
such Option qualifying as an Incentive Stock Option, as the Committee shall
deem advisable.
9. Grant of Stock Bonuses. In addition to, or in lieu of, the grant
of an Option, the Committee may grant Bonuses.
(a) At the time of grant of a Bonus, the Committee may impose
a vesting period of up to ten years, and such other restrictions which it
deems appropriate. Unless otherwise directed by the Committee at the time of
grant of a Bonus, the Recipient shall be considered a shareholder of the
Corporation as to the Bonus shares which have vested in the grantee at any
time regardless of any forfeiture provisions which have not yet arisen.
(b) The grant of a Bonus and the issuance and delivery of shares
of Common Stock pursuant thereto shall be subject to approval by the
Corporation's counsel of all legal matters in connection therewith, including
compliance with the requirements of the B.C. Act, the 1933 Act, the 1934 Act,
other applicable securities laws, rules and regulations, and the requirements
of any stock exchanges upon which the Common Stock then may be listed. Any
certificates prepared to evidence Common Stock issued pursuant to a Bonus
grant shall bear legends as the Corporation's counsel may seem necessary or
advisable. Included among the foregoing requirements, but without limitation,
any Recipient of a Bonus at a time when a registration statement relating
thereto is not effective under the B.C. Act and/or the 1933 Act shall execute
a Subscription Agreement substantially in the form of Exhibit B.
10. Agreement by Recipient Regarding Withholding Taxes. Each
Recipient agrees that the Corporation, to the extent permitted or required by
law, shall deduct a sufficient number of shares due to the Recipient upon
exercise of the Option or the grant of a Bonus to allow the Corporation to pay
federal, provincial, state and local taxes of any kind required by law to be
withheld upon the exercise of such Option or payment of such Bonus from any
payment of any kind otherwise due to the Recipient. The Corporation shall not
be obligated to advise any Recipient of the existence of any tax or the amount
which the Corporation will be so required to withhold.
11. Term of Plan. Options and Bonuses may be granted under this Plan
from time to time within a period of ten years from the date the Plan is
adopted by the Board.
12. Amendment and Termination of the Plan.
(a) (1) Subject to the policies, rules and regulations of any
lawful authority having jurisdiction (including any exchange with which the
shares of the Corporation are listed for trading), the Board of Directors may
at any time, without further action by the shareholders, amend the Plan or any
option granted hereunder in such respects as it may consider advisable and,
without limiting the generality of the foregoing, it may do so to ensure that
options granted hereunder will comply with any provisions respecting stock
options in the income tax and other laws in force in any country or
jurisdiction of which from time to time be resident or citizen or it may at
any time, without action by shareholders, terminate the Plan.
(2) provided, however, that any amendment that would: (A)
materially increase the number of securities issuable under the Plan to
persons who are subject to Section 16(a) of the 1934 Act; or (B) grant
eligibility to a class of persons who are subject to Section 16(a) of the 1934
Act and are not included within the terms of the Plan prior to the amendment;
(C) materially increase the benefits accruing to persons who are subject to
Section 16(a) of the 1934 Act under the Plan; or (D) require shareholder
approval under applicable state law, the rules and regulations of any national
securities exchange on which the Corporation's securities then may be listed,
the Internal Revenue Code or any other applicable law, shall be subject to the
approval of the shareholders of the Corporation as provided in Section 13
hereof;
(3) provided further that any such increase or modification
that may result from adjustments authorized by Section 8(i) hereof or which
are required for compliance with the 1934 Act, the Internal Revenue Code, the
Employee Retirement Income Security Act of 1974, their rules or other laws or
judicial order, shall not require such approval of the shareholders;
(b) Except as provided in Section 8 hereof, no suspension,
termination, modification or amendment of the Plan may adversely affect any
Option previously granted, unless the written consent of the Recipient is
obtained.
13. Approval of Shareholders. The Plan shall take effect upon its
adoption by the Board but shall be subject to approval at a duly called and
held meeting of stockholders in conformance with the vote required by the
Corporation's Charter documents, resolution of the Board, any other applicable
law and the rules and regulations thereunder, or the rules and regulations of
any national securities exchange upon which the Corporation's Common Stock is
listed and traded, each to the extent applicable.
14. Termination of Right of Action. Every right of action arising
out of or in connection with the Plan by or on behalf of the Corporation or of
any Subsidiary, or by any shareholder of the Corporation or of any Subsidiary
against any past, present or future member of the Board, or against any
employee, or by an employee (past, present or future) against the Corporation
or any Subsidiary, will, irrespective of the place where an action may be
brought and irrespective of the place of residence of any such shareholder,
director or employee, cease and be barred by the expiration of three years
from the date of the act or omission in respect of which such right of action
is alleged to have risen.
15. Tax Litigation. The Corporation shall have the right, but not
the obligation, to contest, at its expense, any tax ruling or decision,
administrative or judicial, on any issue which is related to the Plan and
which the Board believes to be important to holders of Options issued under
the Plan and to conduct any such contest or any litigation arising therefrom
to a final decision.
16. Adoption.
(a) This Plan was approved by resolution of the Board of Directors
of the Corporation on June 23, 1997.
(b) If this Plan is not approved by the shareholders of the
Corporation within 12 months of the date the Plan was approved by the Board of
Directors of the Corporation as required by Section 422(b)(1) of the Internal
Revenue Code, this Plan and any options granted hereunder to persons other
than directors shall be and remain effective, but the reference to Incentive
Stock Options herein shall be deleted and all options granted hereunder shall
be Non-qualified Stock Options pursuant to Section 7 hereof.
<PAGE>
EXHIBIT A
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
Section 262 Appraisal Rights.
(a) Any stockholder of acorporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to s 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this
section, the word "stockholder" means a holder of record of stock in a stock
corporation and also a member of record of a nonstock corporation; the words
"stock" and "share" mean and include what is ordinarily meant by those words
and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series
of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to s 251 (other than a merger effected pursuant to s 251(g)
of this title), s 252, s 254, s 257, s 258, s 263 or s 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or consolidation,
were either (i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or (ii) held of record by
more than 2,000 holders; and further provided that no appraisal rights
shall be available for any shares of stock of the constituent corporation
surviving a merger if the merger did not require for its approval the
vote of the stockholders of the surviving corporation as provided in
subsection (f) of s 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of stock
of a constituent corporation if the holders thereof are required by the terms
of an agreement of merger or consolidation pursuant to ss 251,252, 254, 257,
258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more
than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party
to a merger effected under s 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of his shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written demand
for appraisal of his shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of his shares. A proxy
or vote against the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the effective date of
such merger or consolidation, the surviving or resulting corporation
shall notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the merger
or consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to s 228 or s 253 of
this title, each consitutent corporation, either before the effective date of
the merger or consolidation or within ten days thereafter, shall notify each
of the holders of any class or series of stock of such constitutent
corporation who are entitled toappraisal rights of the approval of the merger
or consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation, such
notice shall be given by thesurviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand
will be sufficient if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify stockholders
of the effective date of the merger or consolidation, either (i) each such
constitutent corporation shall send a second notice before the effective date
of the merger or consolidation notifying each of the holders of any class or
series of stock of such constitutent corporation that are entitled to
appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after such effective
date; provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be
sent to each stockholder who is entitled to appraisal rights and who has
demanded appraisal of such holder's shares in accordance with this subsection.
An affidavit of the secretary or assistant secretary or of the transfer agent
of the corporation that is required to give either notice that such notice has
been given shall, in the absence of fraud, be prima facie evidence of the
facts stated therein. For purposes of determining the stockholders entitled to
receive either notice, each constitutent corporation may fix, in advance, a
record date that shall be not more than 10 days prior to the date the notice
is given, provided, that if the notice is given on or after the effective date
of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given prior to
the effective date, the record date shall be the close of business on the day
next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw his demand
for appraisal and to accept the terms offered upon the merger or
consolidation. Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which
demands for appraisal have been received and the aggregate number of holders
of such shares. Such written statement shall be mailed to the stockholder
within 10 days after his written request for such a statement is received by
the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted his certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that he is not entitled to
appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of his demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon
such terms as the Courtdeems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
