<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
NORD PACIFIC LIMITED
- --------------------------------------------------------------------------------
(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 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>
LOGO NORD PACIFIC LIMITED
22 Church Street
Hamilton, HM 11
Bermuda
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 17 , 1997
To the Stockholders of
NORD PACIFIC LIMITED:
Notice is hereby given that the annual meeting of the stockholders of Nord
Pacific Limited (the "Corporation") will be held at the New York Palace, 455
Madison Avenue, New York, New York on June 17, 1997 at 2:30 P.M. (E.D.T.) for
the following purposes:
1. To elect eight directors of the Corporation.
2. To consider and act upon a proposal to abolish the Outside Date as to when
the Canadian Offering must be consummated by.
3. To consider and act upon a proposal to amend the Corporation's Memorandum
of Association to clarify that the authorized share capital of the Corporation
is US$1,000,000 divided into shares of US$0.05 each.
4. To consider and act upon a proposal to amend the Corporation's By-laws to
permit persons, who are not Members of the Corporation, but who hold proxies
from Members, to be counted for quorum and polling purposes at stockholders'
meetings.
5. To consider and act upon a proposal to amend the Corporation's By-laws
regarding indemnification of directors, officers and other specified persons.
6. To ratify the appointment of independent auditors and authorize the Board
to set their compensation.
7. To act upon such other matters as may properly come before the meeting or
any adjournment thereof.
The close of business on April 21, 1997 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
annual meeting and any adjournment thereof.
YOUR PROXY IS IMPORTANT TO ASSURE A QUORUM AT THE MEETING. WHETHER OR NOT
YOU EXPECT TO BE PRESENT, YOU ARE REQUESTED TO MARK, DATE, SIGN AND MAIL THE
ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE WHICH HAS BEEN PROVIDED FOR THAT
PURPOSE. THE PROXY MAY BE REVOKED BY YOU AT ANY TIME BEFORE IT IS EXERCISED,
AND THE GIVING OF YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ATTEND THE MEETING.
By the Order of the
Board of Directors,
Leo E. Dugdale III
Secretary
May 13, 1997
<PAGE>
NORD PACIFIC LIMITED
22 Church Street, Hamilton HM 11
Bermuda
PROXY STATEMENT
For the Annual Meeting of Stockholders
June 17, 1997
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Corporation's Board of Directors (the "Board") of proxies in the
accompanying form for the annual meeting of stockholders of Nord Pacific Limited
(the "Corporation").
Shares cannot be voted at the meeting unless the holder is present in
person or represented by proxy. All shares represented by properly executed
proxies received by the Board pursuant to this solicitation will be voted in
accordance with the stockholder's directions specified on the proxy. If no
directions have been specified by marking the appropriate squares on the
accompanying proxy card, the shares will be voted in accordance with the
Board's recommendations. A stockholder signing and returning the accompanying
proxy has the power to revoke it at any time prior to its exercise by delivering
to the Corporation a later dated proxy or by giving notice to the Corporation in
writing or in open meeting, but without affecting any vote previously taken.
All information regarding shares of Common Stock of the Corporation,
including number of shares and dollars per share, reflect the one-for-five
reverse stock split effected on March 10, 1997. Unless otherwise indicated all
references herein to "dollars" or "$" are to United States dollars.
As of the record date, April 21, 1997, there were issued and outstanding
9,515,654 shares of Common Stock of the Corporation. Only stockholders of
record at the close of business on the record date are entitled to vote at the
meeting. Except as indicated above, each share is entitled to one vote and
cumulative voting is not permitted. A list of stockholders of record entitled
to vote at the meeting will be available at the annual meeting for examination
by any stockholder for any purpose germane to the annual meeting.
The holders of a majority of the Corporation's outstanding shares, present
in person or represented by proxy are entitled to vote, constitute a quorum for
the transaction of all business at the Meeting. Automated systems administered
by the Corporation's transfer agent tabulates the votes. Abstentions and broker
non-votes are each included in the determination of the number of shares present
at the meeting. An affirmative vote of a majority of the shares present and
voting at the Meeting is required for the election of directors and for the
transaction of any other business.
1
<PAGE>
Beginning on or about May 13, 1997, copies of this Proxy Statement, the
accompanying proxy card and the Corporation's Annual Report to stockholders for
1996 will be mailed to all stockholders entitled to receive notice of, and to
vote at, the annual meeting.
PRINCIPAL STOCKHOLDERS
The following table sets forth the only person known by the Board to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock of
the Corporation as of April 21, 1997.
Common Stock Beneficially
Owned as of April 21, 1997
---------------------------
Name and Address of Beneficial Owner Number Percent of Class
- ------------------------------------ ------ ----------------
Nord Resources Corporation 3,348,012(1) 35.2%
8150 Washington Village Drive
Dayton, Ohio 45458
__________________________________
1 On April 2, 1990, Nord Resources Corporation received 1,915,200 shares of
Common Stock in connection with an Exchange Offer (as defined below).
Subsequent to April 2, 1990, and up to April 1, 1993, Nord Resources
Corporation purchased in market transactions on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") a total of 142,476
shares of the Corporation's Common Stock at an average purchase price of
$4.10 per share. On September 3, 1993 Nord Resources Corporation converted
$2.5 million of debt owed it by the Corporation into 592,592 shares of
Common Stock of the Corporation at the then prevailing market price. On
February 15, 1994, Nord Resources Corporation received 697,744 additional
shares of the Corporation's Common Stock in exchange for converting an
additional $2.9 million of debt owed it by the Corporation. In April 1990,
the Corporation issued shares of its Common Stock to Nord Australex Limited
Partnership and Hicor Mineral Exploration Series-I in exchange for all of
their respective assets and liabilities (the "Exchange Offer"). Nord
Resources Corporation was the general partner of each partnership.
ITEM 1
ELECTION OF DIRECTORS
Eight directors are to be elected to hold office until the next annual
meeting of stockholders and until their successors are elected and qualified.
The Board has nominated for election as directors the eight persons named below,
all of whom presently serve as members of the Board. The shares represented by
the accompanying proxy, unless the giver of the proxy indicates otherwise, will
be voted at the meeting in favor of the election of the nominees named below.
2
<PAGE>
Each of the nominees named below is, at present, available for election.
If any such nominees should for any reason become unavailable for election,
proxies in the accompanying form will be voted for a substitute nominee
designated by the Board. There are no family relationships among any nominees
or directors or among them and any officer of the Corporation or any of its
subsidiaries.
Set forth below is certain information for each nominee for election as
director and each executive officer named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Common Stock Beneficially
Owned as of April 21, 19971
---------------------------
Nominees for Director
Election as Directors Age Since Number Percent of Class
- --------------------- --- ----- ------ ----------------
<S> <C> <C> <C> <C>
Edgar F. Cruft 64 1988 3,808,012(2) 38.8%
W. Pierce Carson 54 1988 3,808,012(2) 38.8%
Terence H. Lang 60 1988 3,488,012(3) 36.2%
Leonard Lichter 69 1988 3,473,312(3) 36.2%
John C.R. Collis 38 1988 81,602(4) *
Michel J. Drew 61 1988 81,602(4) *
Lucile Lansing 68 1990 81,600(4) *
John B. Roberts 61 1994 54,600(5) *
Officer
Other Named Executive Age Since Number Percent of Class
- --------------------- --- ----- ------ ----------------
Officers
- --------
Mark R. Welch 58 1990 152,800(6) 1.6%
All Named Executive Officers
and Directors as a Group
(9 persons) -- -- 4,985,515(7) 46.4%
</TABLE>
- --------------------------------------------------------
* Represents less than 1% of the shares outstanding.
(1) Ownership includes sole voting and investment power except as otherwise
noted. When applicable, the number of shares beneficially owned includes
the number of unissued shares which the listed person has the right to
acquire within 60 days after April 21, 1997. In determining the number of
shares outstanding for computing the percent of class owned by the listed
person, the number of shares outstanding of the Corporation has been
increased by the number of unissued shares which the listed person has the
right to acquire from the Corporation within 60 days after April 21, 1997.
(2) Includes options to purchase 72,000 shares under 1991 Stock Option Plan.
Includes options to purchase 60,000 shares under the 1995 Stock Option
Plan. Includes non-plan options to purchase 160,000 shares. Includes
3,348,012 shares of Common Stock which are owned by Nord Resources
Corporation, of which Dr. Cruft is Chairman, CEO and President, and Dr.
Carson is a director.
(3) Includes options to purchase 12,000 shares under the 1991 Stock Option Plan
and non-plan options to purchase 64,000 shares for Mr. Lang and 45,600
shares for Mr. Lichter. Includes option to purchase 40,000 shares for Mr.
Lang and 24,000 shares for Mr. Lichter under the 1995 Stock Option Plan.
Includes 3,348,012 shares of Common Stock which are owned by Nord
3
<PAGE>
Resources Corporation of which Mr. Lichter is a director and Mr. Lang is a
director and senior vice president. As to Mr. Lang, also includes 6,000
shares owned by his wife for which shares he disclaims beneficial
ownership.
(4) Includes options to purchase 12,000 shares under the Corporation's 1991
Stock Option Plan, options to purchase 24,000 shares under the 1995 Stock
Option Plan, and non-plan options to purchase 45,600 shares.
(5) Also includes options to purchase 12,000 shares under the Corporation's
1991 Stock Option Plans and options to purchase 24,000 shares under the
1995 Stock Option Plan and non-plan options to purchase 17,600 shares.
(6) Includes options to purchase 12,000 shares under the 1989 Stock Option Plan
and options to purchase 83,200 shares under the Corporation's 1991 Stock
Option Plan and options to purchase 44,800 shares under the 1995 Stock
Option Plan.
(7) Includes options to purchase 1,220,000 shares. Also includes 3,348,012
shares owned by Nord Resources Corporation of which Messrs. Cruft, Carson,
Lang and Lichter are directors and Messrs. Cruft and Lang are executive
officers.
- --------------------------------------------------------
Dr. Cruft is the Chairman and Chief Executive Officer of the Corporation
and has been so since its inception. He is also a founder of Nord Resources
Corporation and has served as its Chairman, President, Chief Executive Officer
and a director since its inception in 1968. He holds a Bachelors Degree in
Geology from Durham University, England and a Ph.D. in Geochemistry from
McMaster University, Canada.
Dr. Carson is a director and the President of the Corporation and has been
so since its inception. He was previously Senior Vice President of Exploration
for Nord Resources Corporation and has 30 years experience in the mining
industry. Between 1980 and April 1990, he was responsible for closely directing
exploration and mining activities for the Corporation's predecessor while under
the employment of Nord Resources Corporation. Dr. Carson holds a Bachelors
Degree in Geology from Princeton University and a Ph.D. in Economic and
Structural Geology from Stanford University. Dr. Carson has been a director of
Nord Resources Corporation since January 1994.
Mr. Lang is a director, Vice President and the Treasurer of the Corporation
and has been so since its inception. He is and has been a director and employee
of Nord Resources Corporation since 1978 and holds a degree in business
administration. He is Senior Vice President-Finance and Treasurer of Nord
Resources Corporation.
Mr. Lichter is a director of the Corporation and has been so since its
inception. He is an attorney and a Certified Public Accountant and since 1971
has been a principal in the law firm of Spitzer & Feldman P.C., New York, New
York, which is counsel to the Corporation. He is also a director of Nord
Resources Corporation.
Mr. Collis, a director of the Corporation since its inception, is, and has
been employed for more than the past five years at Conyers, Dill & Pearman,
Barristers and Attorneys, Hamilton, Bermuda, where he is a partner and which
firm is special Bermuda counsel to the Corporation. Mr. Collis received a
Bachelor of Commerce degree from McGill University, Canada, and a Bachelor of
Arts (Jurisprudence) from Oxford University, England. He is a member of the Bar
of England and Wales and of the Bar of Bermuda. The registered office of the
Corporation is located at the offices of Conyers, Dill & Pearman.
4
<PAGE>
Mr. Drew, a director of the Corporation since its inception, is President
and a majority stockholder of International Services Limited, a management
services company based in Bermuda which provides services to the Corporation.
He is a director of Old Mutual South Africa Trust and Old Mutual Equity Growth
Assets South Africa Fund. He is a member of the Institutes of Chartered
Accountants of Canada, Ontario and Bermuda and of the executive committee of the
International Companies Division of the Bermuda Chamber of Commerce. The
executive offices of the Corporation are located at the offices of International
Services Limited.
Ms. Lansing, a director of the Corporation since May 1990, is, and has been
since 1979, President of Lansing Financial Group, Inc., the general partner of a
venture capital fund and also a registered securities principal which provides
general administrative services to registered representatives. She is also
Chief Executive Officer of Ceracon, Inc., a technology company and a director of
Octus, Inc. of San Diego, California.
Mr. Roberts became a director of the Company in January 1994. He has over
39 years of mining related experience and was Chairman of Australian Resources
Limited from August 1993 to February 1997 and is presently a director.
Australian Resources Limited is a public company producing gold and copper in
Australia. Mr. Roberts was previously Managing Director of Homestake Gold of
Australia Limited, which he served in various capacities in Australia and the
United States. He holds a Bachelor of Science degree in Geology from University
of Adelaide, South Australia and is a Fellow of the Australian Institute of
Mining and Metallurgy, among other professional association memberships.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Directors who are not otherwise employed by the Corporation receive
$1,000 per calendar quarter and $500 for attending each in-person meeting of
the Board. Mr. Lichter does not receive any fees for his membership on the
Board. Mr. Lichter bills his time through Spitzer & Feldman P.C., of which
he is a principal, and which is counsel to the Corporation. Mr. Collis also
does not receive any fees for his membership on the Board. He bills his time
through Conyers, Dill & Pearman, of which he is a partner and which is
special counsel to the Corporation in Bermuda. Mr. Drew is employed by
International Services Limited, which receives payment under contract from
the Corporation for corporate services, including his time as a director,
therefore he also does not receive fees for his membership on the Board. Mr.
Roberts, in addition to his Board fees, receives a fee as a consultant to the
Corporation.
During 1996 the Board held six meetings. All Board members attended at
least 75% of the Board meetings and Committee meetings except for Mr. Drew who
attended three of the Board meetings and Ms. Lansing who attended four of the
Board meetings in 1996.
5
<PAGE>
The Board has a Compensation Committee, composed of Dr. Cruft, Mr. Drew and
Mr. Collis, and an Audit Committee composed of Mr. Lichter and Mr. Drew. The
Audit Committee meets independently with the internal auditing staff, with
representatives of the Corporation's independent accountants and with
representatives of senior management. The Audit Committee reviews the general
scope of the Corporation's annual audit, the fee charged by the independent
accountants and other matters relating to internal control systems. In
addition, the Audit Committee is responsible for recommending the engagement or
discharge of the Corporation's independent accountants. The Compensation
Committee is responsible for approving and reporting to the Board on the annual
compensation for all officers, including salary and stock options. The
Compensation Committee also is responsible for granting stock options and other
awards to be made under the Corporation's existing compensation and bonus plans.
The Compensation Committee did not meet during 1996 and matters of compensation
and the granting of stock options were addressed by the full Board. The Audit
Committee met once during the year to review the audited financial statements
for 1995. The Corporation does not have a nominating committee.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Corporation's directors, executive officers and
beneficial holders of more than 10% of the Corporation's Common Stock to file
with the United States Securities and Exchange Commission ("SEC") initial
reports of ownership and reports of changes in ownership of Common Stock of
the Corporation. Based solely upon the Corporation's review of copies of
forms it receives from executive officers, directors and beneficial holders
owning more than 10% of the outstanding shares of Common Stock of the
Corporation and on written representations from certain of such persons, the
Corporation believes that during the fiscal year ended December 31, 1996 all
filing requirements under Section 16(a) of the Exchange Act were made by such
persons on a timely basis.
OTHER EXECUTIVE OFFICERS
Mark Welch, 58, was appointed Vice President-Development of the Corporation
in February 1990. Mr. Welch was Chief Engineer of Ranchers Exploration and
Development Corporation from 1974-1984 where he had major responsibility for
development and operation of various gold, silver, copper, uranium and
industrial minerals projects. From 1984 to 1990 he was Vice President of
Western Resources Corporation, a mining industry company. He holds the degree
of B.S. Mining Engineering from Washington State University.
6
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 2, 1990, the Corporation entered into a management agreement (the
"Management Agreement") with Nord Resources Corporation ("Resources"). The
Management Agreement provides that Resources will make available to the
Corporation the services of Terence H. Lang, on a part-time basis, to serve as
the Chief Financial and Accounting Officer and Treasurer of the Corporation and
that Resources will provide such corporate and administrative services as the
Corporation shall request. In exchange, the Corporation will pay Resources an
amount equal to the fair and equitable allocation of Resources expenses. The
Management Agreement is cancelable by either party on thirty (30) days' prior
written notice. As of March 1, 1997, the Corporation owed Resources $205,000
under the Management Agreement. In 1996, 1995 and 1994 the Corporation paid
Resources, $161,000, $277,000 and $221,000, respectively, under the Management
Agreement.
In October 1996, Resources agreed to make available to the Company, at
Resources' discretion, up to $1,000,000 in the form of an operating loan and up
to an additional $1,000,000 to satisfy the requirements of the Company's debt
service reserve account with the Girilambone lender. The loans are payable upon
demand and bear interest at the prime rate plus 1%. The amount owed to
Resources under the operating loan at December 31, 1996, was $947,000.
The Corporation has retained International Services Limited, a Bermuda
entity of which Michel J. Drew, a director, is a principal shareholder, to
maintain the executive offices of the Corporation in Bermuda and to render
additional services that may be required in Bermuda. The minimum annual fee for
such services is $6,000 and additional fees may be payable based on the time
expended with respect to such required services. In the fiscal year ended
December 31, 1996 the Corporation paid International Services Limited $13,900
for such fees and services.
Spitzer & Feldman P.C., of which Mr. Lichter is a principal, performs
certain legal services for the Corporation. Conyers, Dill & Pearman, of which
John C.R. Collis is a partner, also performs certain legal services for the
Corporation.
In February 1994, the Corporation entered into a consulting agreement with
John Roberts for approximately $14,000 per year for twenty-four days of
consulting per year. The agreement may be terminated at any time by notice from
either party after December 31, 1994. This agreement was in effect in 1996.
Any future transactions with officers, directors or their affiliates will
be on terms at least as favorable as those available from unaffiliated parties.
7
<PAGE>
EXECUTIVE OFFICERS COMPENSATION
Summary Compensation Table
The following table sets forth compensation earned in fiscal years ended
December 31, 1996, 1995 and 1994 by (hereinafter collectively "Named
Executive Officers") (i) the Chief Executive Officer of the Corporation and
(ii) the Corporation's other most highly compensated executive officers,
whose aggregate salary and dollar value of bonus for the fiscal year ended
December 31, 1996 exceeded $100,000.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------------------- ----------------------------
Awards
----------------------------
Other Securities
Annual Underlying,
Name & Principal Salary Bonus Compensation Options/SARs
Position Year ($) ($) ($) Options (#)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edgar F. Cruft - 1996 166,810 20,760(1) 48,000(3)
CEO(2) 1995 158,840 20,760(1) 60,000(6)
1994 150,432 72,000
- ----------------------------------------------------------------------------------------------
W. Pierce Carson - 1996 230,475 79,408(4) 48,000(3)
President 1995 218,705 77,302(4) 60,000(6)
1994 197,558 55,041(4) 72,000
- ----------------------------------------------------------------------------------------------
Mark R. Welch - 1996 125,500 61,293(4) 25,600(5)
Vice President 1995 118,422 55,264(4) 32,000(7)
Development 1994 100,058 29,780(4) 32,000
</TABLE>
- --------------------------------------------------------------------------------
(1) Represents the Company's contribution to Dr. Cruft's 401(k) plan.
(2) Dr. Cruft devotes approximately 25% of his working time to the activities
of the Corporation.
(3) Subject to a one year restriction on exercise from February 2, 1996 for
24,000 shares and two years for 24,000 shares.
(4) Includes additional cash compensation of $50,300, $47,600 and $49,700 to
Dr. Carson and $43,100, $40,800 and $28,400 to Mr. Welch for 1996, 1995
and 1994 respectively paid as a living allowance since the Company's
business requires these officers to spend a significant portion of their
time in Australia. Also includes $20,760 to Mr. Carson in 1996 and 1995
and $16,390 to Mr. Welch in 1996 as the Company's contribution to each
individual's 401(k) plan.
(5) Subject to a one year restriction on exercise from February 2, 1996 for
12,800 shares and two years for 12,800 shares.
(6) Subject to a one year restriction on exercise from January 31, 1995 for
30,000 shares and two years for 30,000 shares.
(7) Subject to a one year restriction on exercise from April 6, 1995 for 16,000
shares and two years for 16,000 shares.
- ----------------------------------------
8
<PAGE>
STOCK OPTION PLANS AND STOCK BONUS PLAN
As of February 28, 1997 the Corporation had a 1989 Stock Option Plan (the
"1989 Option Plan"), a 1990 Stock Bonus Plan (the "1990 Bonus Plan"), a 1991
Stock Option Plan (the "1991 Option Plan") and a 1995 Stock Option Plan (the
"1995 Option Plan"), each of which has been approved by the shareholders of the
Corporation. The Corporation has also granted non-plan stock options ("Non-plan
Options"). Each of the plans and the Non-plan Options are administered by the
Compensation Committee.
The 1989 Option Plan, the 1991 Option Plan and 1995 Option Plan
(collectively "Option Plans") provide for the grant of options to purchase
shares of Common Stock to officers and other key employees of the Corporation
and its subsidiaries. Directors and officers who are also directors are not
permitted to participate in the 1989 Option Plan, however such persons can
participate in the 1991 Option Plan and the 1995 Option Plan pursuant to the
grant of Formula Options ("Formula Options"), which are limited to 304,000
shares in total for the 1995 Option Plan and 240,000 shares in total for the
1991 Option Plan. Options granted under the Option Plans can be incentive stock
options or non-qualified stock options, as defined in the United States Internal
Revenue Code of 1986, as amended (the "Code"). For incentive options and
Formula Options the purchase price cannot be less than the fair market value of
a share on the date of grant. Non-qualified options may be granted at less than
fair market value, as determined by the Compensation Committee. The term of
options granted under the Option Plans cannot exceed 10 years.
The 1989 Option Plan provides for grant of options to purchase up to
160,000 shares of Common Stock. As of February 28, 1997, all options under the
1989 Option Plan had been granted at exercise prices ranging from $1.875 to
$4.375 per share.
The 1991 Option Plan provides for the grant of options to purchase up to
480,000 shares of Common Stock. As of February 28, 1997, options to purchase
474,000 shares had been granted of which 69,078 options have been terminated,
leaving 75,078 shares available for grant. Options granted to February 28, 1997
under the 1991 Option Plan provide for exercise prices ranging from $2.55 to
$4.80 per share.
The 1995 Option Plan provides for the grant of options to purchase 600,000
shares of Common Stock. As of February 28, 1997 options to purchase 468,800
shares had been granted of which 800 have been terminated and 132,000 remain
available for grant. Options granted to February 28, 1997 under the 1995 Option
Plan provide for an exercise price ranging from $4.00 to $4.50 per share.
The 1990 Bonus Plan provides for the issuance of shares of Common Stock of
the Corporation to officers and other key employees (other than officers who are
also directors) as incentive bonuses. The Bonus Plan provides for the issuance
of up to 80,000 shares. As of February 28, 1997, awards had been made for
76,193 shares, leaving 3,807 shares for future awards.
9
<PAGE>
As of February 28, 1997, Non-plan Options to acquire 224,000 shares of
Common Stock at an exercise price of $4.50 per share have been granted, of which
96,000 options were granted to non-officer directors and 128,000 options were
granted to officers who are directors. Non-Plan options to acquire 208,000
shares of Common Stock at an exercise price of $4.26 per share have also been
granted, of which 64,000 options were granted to non-officer directors and
144,000 options were granted to officers who are directors. Non-plan Options to
purchase 264,000 shares of Common Stock at an exercise price of $4.45 per share
have also been granted, of which 88,000 options were granted to non-officer
directors and 176,000 options were granted to officers who are directors. The
aforementioned grants were made at the market price at the date of grant.
Stockholders approval was obtained for the granting of the 264,000 Non-plan
Options and stockholder approval was not required for the granting of the
208,000 and 224,000 Non-plan Options. These Non-plan Options were granted for
periods of five to ten years. In addition, in 1994 a Non-plan Option for 24,000
shares which expires three years from date of grant was issued to a consultant
to the Company. In 1995, Non-plan Options for 22,000 shares expiring from three
to five years from date of grant were issued to three consultants to the
Company. In 1996, Non-plan Options for 33,600 shares which expire five years
from date of grant were issued to five consultants to the Company.
The following table shows as to each Named Executive Officer for the 1996
calendar year (i) the number of shares with respect to which options were
granted by the Corporation (ii) the percentage of total options granted to
employees, (iii) the per share exercise price for such options, (iv) the
expiration date of the options, and (v) potential realized value of the options.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------------------------------
Potential Realizable
Number of % of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise or Price Appreciation for
Options Employees in Base Price Expiration Option Term(2)
Name Granted(#) 1996(1) ($/SH) Date
<S> <C> <C> <C> <C> <C>
5% 10%
- ---------------------------------------------------------------------------------------------------------
Edgar F. Cruft 48,000 13.8 4.50 Feb. 2, 2001 $59,677 $131,870
- ---------------------------------------------------------------------------------------------------------
W. Pierce Carson 48,000 13.8 4.50 Feb. 2, 2001 $59,677 $131,870
- ---------------------------------------------------------------------------------------------------------
Mark Welch 25,600 7.4 4.50 Feb. 2, 2001 $31,828 $ 70,331
- ---------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
(1) The Corporation granted options to purchase 347,200 shares in 1996.
(2) Dollar amounts under these columns are the result of calculations based on
assumed annualized rates of stock appreciation of 5% and 10% as prescribed
by the SEC. The assumed rates are not intended by the Corporation to
forecast possible future appreciation, if any, of its stock price, which
will be determined by future events and unknown factors.
The following table presents information concerning options exercised
during 1996 and the value of unexercised options at December 31, 1996 for each
Named Executive Officer.
AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END OPTIONS VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Shares Acquired Options at December 31, Money Options at December
Name on Exercise 1996 (#) 31, 1996(1)($)
- ----------------------------------------------------------------------------------------------------
Exercisable/Unexercisable Exercisable/Unexercisable
------------------------- -------------------------
<S> <C> <C> <C>
Edgar F. Cruft None 238,000 78,000 599,658 153,938
W. Pierce Carson None 238,000 78,000 599,658 153,938
Mark R. Welch None 111,200 41,600 253,115 82,100
</TABLE>
- ----------------------------------------
(1) Based upon the closing price of the Corporation's Common Stock on December
31, 1996 of $6.2813 per share as quoted on NASDAQ and after giving effect
to the 5 for 1 reverse stock split effective March 10, 1997.
RETIREMENT AND CHANGE IN CONTROL AGREEMENTS
FOR NAMED EXECUTIVE OFFICERS
The Corporation has a severance agreement with Dr. Carson to pay him
two years of his salary and bonuses, if any, should his employment be terminated
within two years of acquisition of control of the Corporation by a group other
than Nord Resources Corporation. In such event, Dr. Carson would also be paid
the "spread" or difference between the market price and exercise price of any
unexercised stock options he holds at that time. The Corporation has a
severance agreement with Mr. Welch to pay six months of salary and bonus, if
any, should his employment be terminated within two years of acquisition of
control of the Corporation by a group other than Nord Resources Corporation.
These agreements are intended to insure the establishment and maintenance of a
sound and vital management, essential to protecting and enhancing the best
interests of the Corporation and its stockholders.
11
<PAGE>
Prior to joining the Corporation full-time in April 1990, Dr. Carson
had a separate retirement agreement with Nord Resources Corporation which
provided annual payments to Dr. Carson for a period of 15 years commencing at
age 62, or on termination of employment, whichever is later (or age 55 in the
event the provisions of the agreement with respect to early retirement are
satisfied). The payments were based on a percentage of his average annual
compensation over his final three years of employment. The percentage is
equal to 5% plus 1-1/2% for each year of service that Dr. Carson has with
Nord Resources Corporation to a maximum of 30 years. At December 31, 1996,
Dr. Carson had 16 years of service. The agreement also provided for payment
of certain death benefits. The Corporation assumed the agreement and Dr.
Carson's years of service under the agreement includes the years he was
employed by Nord Resources Corporation. For the years ended December 31,
1996, 1995 and 1994, the Corporation accrued $68,000, $59,000 and $76,000,
respectively, relating to the retirement benefits expected to be paid to Dr.
Carson.
The following table illustrates the estimated annual retirement
benefit that would be payable for 15 years to Dr. Carson at specified levels of
compensation and years of service to the Corporation. In 1992, however, the
agreement was amended to provide that the net present value of his future
retirement benefits at the time of his retirement would be paid to him within
three years of his retirement, reduced by his share of the cash value of a
certain insurance policy which the Corporation transferred to him in 1992.
Years of Service
----------------
<TABLE>
<CAPTION>
FINAL AVERAGE
COMPENSATION 10 15 20 25 30
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $20,000 $27,500 $35,000 $42,500 $50,000
$125,000 $25,000 $34,375 $43,750 $53,125 $62,500
$150,000 $30,000 $41,250 $52,500 $63,750 $75,000
$175,000 $35,000 $48,125 $61,250 $74,375 $87,500
$200,000 $40,000 $55,000 $70,000 $85,000 $100,000
$225,000 $45,000 $61,875 $78,750 $95,625 $112,500
$250,000 $50,000 $68,750 $87,500 $106,250 $125,000
</TABLE>
BOARD COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
PHILOSOPHY
The Corporation applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the premise
that the achievements of the Corporation result from the coordinated efforts of
all individuals working toward common objectives. The Corporation strives to
achieve those objectives through teamwork that is focused
12
<PAGE>
on meeting the periodic goals established by the Corporation and the
expectations of stockholders. The compensation program goals are to enable
the Corporation to attract, retain and reward key personnel who contribute to
the long-term success of the Corporation and to align compensation with
business objectives and performance. The Corporation's compensation program
for executive officers is based on the same principles applicable to
compensation decisions for all employees of the Corporation. Through the
grant of stock options, stock bonuses and restricted stock, the Corporation
intends to relate compensation to overall corporate performance as reflected
in the price of its stock.
COMPENSATION AND PERFORMANCE
Executive officers are rewarded based upon corporate performance and
individual performance. Corporate performance is evaluated by reviewing the
extent to which strategic and specific goals are met, including such factors as
demonstrating measurable progress in the exploration, development and operation
of the Corporation's properties and acquiring new properties for exploration and
development. Individual performance is evaluated by reviewing organizational
and management development progress and the degree to which the employee has
contributed to the success of the Corporation.
The Corporation applies its compensation philosophy worldwide. The
Corporation strives to achieve a balance of the compensation paid to a
particular individual and the compensation paid to other executives both inside
the Corporation and at comparable companies.
COMPENSATION TO CEO AND PRESIDENT
Matters relating to compensation of executives officers were addressed by
the full Board of Directors in 1996. The Board approved a 5% increase in the
salaries of Dr. Cruft and Dr. Carson for fiscal year 1996. The Board also
approved a contribution to the 401(k) plan of $20,760 each for Dr. Cruft and Dr.
Carson.
COMPENSATION VEHICLES
The Corporation has a history of using a program that consists of cash and
equity based compensation. Having a compensation program that allows the
Corporation to successfully attract and retain key employees permits it to
explore and develop mines and produce its minerals at expected competitive
levels of production and costs, to enhance stockholder value, motivate
technological innovation, foster teamwork and adequately reward employees. The
compensation vehicles are:
(a) Cash Based Compensation - The Corporation sets base salary for
employees by reviewing the aggregate of base salary and annual bonus for
competitive positions in the market and by reviewing the employee's historical
compensation and the effect of inflation on such compensation.
13
<PAGE>
(b) Stock Bonus Plan - The Corporation has the 1990 Bonus Plan under which
awards of stock are made from time to time for outstanding performance and as an
incentive for future performance. Directors and officers who are directors are
not eligible for awards under the 1990 Bonus Plan.
(c) Restricted Stock - Awards of stock can be made under this plan to
reward prior service and as an incentive for future service. Recipients of
restricted stock awards must continue in the employ of the Corporation for
specified periods or the stock is forfeited.
(d) Stock Option Program - The purpose of this program is to provide
additional incentive to employees to work to maximize stockholder value. The
option program also utilizes vesting periods to encourage all employees to
continue in the employ of the Corporation. The Corporation grants stock options
annually to most, and sometimes all, of its employees.
(e) Deferred Compensation for Senior Executives - The Corporation has
entered into a retirement agreement with its President. The agreement provides
benefits to this senior executive upon retirement based on several factors,
including the number of years of service to the Corporation. The purpose of
this retirement agreement is to provide incentive to that senior executive to
continue to provide his services to the Corporation. Deferred compensation may
be made available in the future to other senior executives.
(f) 401(k) Plan - The Corporation provides a retirement and savings plan
for its salaried U.S. employees pursuant to Section 401(k) of the Internal
Revenue Code. Each employee may contribute up to 15% of his or her salary to
this plan, to a maximum of $9,500 in 1996 and defer taxes on that contribution.
In 1995 the Corporation made a contribution to the respective 401(k) plans of
employees. This plan helps the Corporation to attract and retain employees upon
whom the Corporation relies in operating its business.
Compensation Committee:
Edgar F. Cruft
John C.R. Collis
Michel J. Drew
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dr. Cruft is Chairman and CEO of the Corporation and a member of the
Compensation Committee. Dr. Cruft is also Chairman and CEO of Nord Resources
Corporation, which entity owns approximately 35% of the issued and outstanding
shares of common stock of the Corporation. Dr. Carson is President of the
Corporation. Dr. Carson is also a Director of Nord Resources Corporation and a
member of that company's Compensation Committee. Mr. Collis is a member of the
law firm of Conyers Dill & Pearman, special Bermuda counsel to the Corporation.
During 1996 Conyers Dill & Pearman was paid $ 8,400 for legal services. Mr.
Drew is a principal in International Services
14
<PAGE>
Limited, which provides corporate services for the Corporation in Bermuda.
International Services Limited was paid $13,900 by the Corporation in 1995 to
perform such services.
STOCKHOLDER RETURN ON COMMON STOCK
The following graph compares the total annual return on the Corporation's
Common Stock with the annual return of the CRSP Total Return Index for the
NASDAQ Stock Market (U.S. and Foreign Companies) for the period December 31,
1991 to December 31, 1996, and with the CRSP Index for NASDAQ stocks with SIC
codes 1000-1099 (metal mining companies).
Comparison of Five Year - Cumulative Total Returns
Performance Graph for Nord Pacific Limited
December 31, 1991 to December 31, 1996
The performance graph contains the following information plotted in a line
graph with the December 31, 1996 values indicated beside the plotted number
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Nord Pacific Limited 100.0 83.2 122.8 110.9 85.5 163.1
Nasdaq Stock Market 100.0 116.0 134.3 130.3 183.0 224.1
(U.S. & Foreign)
Nasdaq Stocks Metal 100.0 71.9 166.9 151.6 144.1 163.2
Mining
</TABLE>
15
<PAGE>
ITEM 2
ABOLISH OUTSIDE DATE REGARDING
CONSUMMATION OF CANADIAN OFFERING
BACKGROUND
On February 17, 1997, the stockholders of the Corporation, at a Special
General Meeting of Stockholders (the "Prior Meeting") called pursuant to a
Notice of Special General Meeting of Stockholders and Proxy Statement dated
January 13, 1997 (the "Prior Proxy Statement"), approved the Canadian Offering
(as defined below) by a vote of 6,090,810 shares FOR, 68,443 shares AGAINST,
and 1,728 shares ABSTAIN. At the Prior Meeting, the Stockholders also: (i)
approved the Reverse Stock Split (as defined below); and (ii) authorized the
Board of Directors to delist the Corporation's Common Stock from the
Australian Stock Exchange Limited ("ASX"). The Reverse Stock Split was
effected on March 10, 1997, and, as previously set forth, all information in
this Proxy Statement regarding shares of Common Stock of the Corporation
reflect the Reverse Stock Split. On February 20, 1997, the Board of
Directors authorized the delisting of the Corporation's Common Stock from the
ASX and on March 5, 1997, the Corporation's shares of Common Stock were
delisted. Furthermore, in connection with the stockholder approval of the
Canadian Offering at the Prior Meeting and the effecting of the Reverse Stock
Split, the Corporation has provided notice of termination of the American
Depositary Receipt program (the "ADR Program") to The Bank of New York
("BONY") regarding the American Depositary Receipts ("ADRs") issued by
16
<PAGE>
BONY. The ADR Program will terminate effective on or about June 10, 1997. The
Corporation has also made application to the NASD Stock Market ("NASDAQ") to
list the Corporation's Common Stock on the National Market System (the
"NASDAQ-NMS"). NASDAQ has informed the Corporation that its listing application
has been approved and the Corporation expects that its shares of Common Stock
will commence trading on the NMS on May 15, 1997.
SUMMARY OF THE CANADIAN OFFERING
On December 17, 1996, the Board unanimously adopted a resolution proposing
that the Board recommend to the stockholders, for approval, the Canadian
Offering. On December 19, 1996, the Corporation filed a preliminary prospectus
in Canada which was amended by filings on April 8, 1997 and April 17, 1997 (the
"Prospectus"). Pursuant to the Prospectus, Canaccord Capital Corporation
("Canaccord") proposes to underwrite the sale by the Corporation (the "Canadian
Offering") of shares of Common Stock not to exceed 4,500,000 shares of Common
Stock in the aggregate, the exact number of such shares to be sold and the price
thereof to be determined by market conditions at the time of sale; it is
intended, however, that such price will be at or near the market price for such
shares on the date the Canadian Offering commences. Canaccord would receive,
upon the successful completion of the Canadian Offering, a fee of five and
one-half (5 1/2%) percent of the gross proceeds of the Canadian Offering and
reimbursement of certain expenses. In addition, Canaccord will receive, for
corporate finance services, warrants to purchase 225,000 shares of Common Stock
exercisable at the offering price per share of Common Stock in the Canadian
Offering, which warrants will be exercisable for two (2) years following the
closing of the Canadian Offering (the "Canaccord Warrants"). The Canadian
Offering is currently subject to a number of conditions, including (i) review of
and the issuance of receipts for the final version of the Prospectus by the
relevant securities regulatory authorities in Canada; (ii) listing of the Common
Stock for trading on The Toronto Stock Exchange ("TSE"); (iii) approval of this
Item 2 by the stockholders of the Corporation; (iv) market conditions at the
time of the Canadian Offering and, therefore, the economic terms of the Canadian
Offering are subject to change to reflect such conditions.
Currently, only the ADRs trade on an exchange. The closing bid and asked
prices for the Corporation's ADRs on May 6, 1997, as listed on the NASDAQ-NMS,
was $6.00 and $6.25, respectively, per ADR.
Annexed hereto as EXHIBIT A is a Pro Forma Condensed Balance Sheet as at
December 31, 1996 and footnotes of the Corporation which discloses the effect of
the sale of an estimated 3,300,000 shares of Common Stock of the Corporation in
the Canadian Offering and the sale of an estimated 700,000 shares of Common
Stock in the NRC Private Placement (as defined below) at an estimated price of
$5.50 per share, assuming that the Canadian Offering and NRC Private Placement
were consummated on December 31, 1996.
The Corporation currently contemplates using the net proceeds from the
Canadian Offering estimated at approximately $15,750,000 after deduction of all
costs of the Canadian Offering, and the cost of terminating the ADR Program, and
the proceeds from the NRC Private Placement estimated at $3,850,000 ($19,600,000
in the aggregate), as set forth below. No assurance can be
17
<PAGE>
given as to the total amount of the actual net proceeds to be received by the
Corporation from the Canadian Offering and the proceeds from the NRC Private
Placement (which in each case may be more or less than the foregoing amount), or
that these net proceeds will be used as set forth below, as future events and
conditions beyond the control of the Corporation may affect the Corporation and
its properties and business and the price of the shares offered pursuant to the
Canadian Offering and the NRC Private Placement. Management and the Board may
reallocate the use of proceeds based upon such future events.
IN MILLIONS
DESCRIPTION OF US DOLLARS
----------- -------------
(i) Ramu Nickel - Cobalt Project - Feasibility $7.0
(ii) Tabar Islands Gold - Exploration 5.5
(iii) Tritton Copper Project - Exploration, Feasibility 1.5
(iv) Girilambone Area Copper - Exploration 1.5
(v) Working Capital 4.1
-----
Total $19.6
------
------
The Canadian Offering will be made by the Corporation and Canaccord in
compliance with Regulation S ("Reg S"), which has been promulgated by the United
States Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended ("1933 Act"). It is further currently contemplated that the
Corporation's Common Stock, in addition to being listed on the NASDAQ-NMS, will
be listed for trading on the TSE. The shares of Common Stock which are sold in
the Canadian Offering are not permitted to be sold in the United States or
otherwise in violation of Reg S until at least forty (40) days after the closing
of the Canadian Offering. It should be noted that after the forty (40) days,
U.S. Persons will be able to purchase and sell the Common Stock sold in the
Canadian Offering.
Assuming that the Canadian Offering of an estimated 3,300,000 shares of
Common Stock, the NRC Private Placement of an estimated 700,000 shares of Common
Stock and other transactions contemplated thereby are consummated, the
purchasers of the shares in the Canadian Offering would own, in the aggregate,
approximately 24.4% of the Corporation's then issued and outstanding shares of
Common Stock. Nord Resources, which currently owns approximately 35.2% of the
issued and outstanding shares of Common Stock of the Corporation, has agreed
with the Corporation that concurrent with the closing of the Canadian Offering,
Nord Resources will, in a private placement (the "NRC Private Placement") under
Section 4(2) of the 1933 Act, purchase that number of shares of Common Stock at
the same purchase price as in the Canadian Offering so that after the completion
of the Canadian Offering and the NRC Private Placement, Nord Resources would own
approximately 30% of the Corporation's issued and outstanding shares of Common
Stock. Assuming that 3,300,000 shares of Common Stock are sold in the Canadian
Offering, Nord Resources will concurrently purchase 700,000 shares of Common
Stock in the NRC Private Placement. The shares of Common Stock to be purchased
by Nord Resources in the NRC Private Placement will not be registered under the
1933 Act and, therefore, may not be sold or otherwise
18
<PAGE>
transferred unless registered under the 1933 Act or unless such sale or other
transfer is effected in accordance with an exemption from registration under the
1933 Act.
No assurance can be given that Canaccord will proceed with the Canadian
Offering or, if they proceed, that the Canadian Offering will be successful.
Furthermore, as the Prospectus is subject to change, the amount of funds to be
raised, the number of shares of Common Stock to be sold as well as the other
terms discussed herein may be different in the event that the Canadian Offering
is consummated. The purchasers of the shares of Common Stock in the Canadian
Offering will be determined by Canaccord on the closing date of the Canadian
Offering.
PROPOSAL TO ABOLISH OUTSIDE DATE
The Prior Proxy Statement also stated that the Canadian Offering would
occur "no later than three (3) months after the date of this special general
meeting". At the time that the Prior Proxy Statement was mailed to
stockholders, the Corporation believed that the Canadian Offering would be
consummated shortly after the February 17, 1997 Prior Meeting. However, due to
market conditions, the Canadian Offering has not yet been consummated.
The requirement that the Canadian Offering be consummated within three (3)
months after the date of the Prior Meeting was dictated by the rules of the
ASX and as the Corporation's shares of stock are no longer listed on the ASX,
the requirement for an outside date is no longer necessary. On May 8, 1997,
the Board of Directors unanimously adopted a resolution proposing that the
Board recommend to the Stockholders, for approval, that the outside date for
the Canadian Offering be abolished so that the Canadian Offering can occur at
such time and on such conditions as the Board determines (the "Outside Date
Abolishment").
Nord Resources and the directors and executive officers of the Corporation
who, in the aggregate own approximately 40% of the issued and outstanding shares
of Common Stock of the Corporation (including the shares of Common Stock owned
by Nord Resources), have advised the Corporation that they intend to vote in
favor of the Outside Date Abolishment. The text of the resolution to be voted
upon with respect to the Outside Date Abolishment is annexed hereto as EXHIBIT
B.
THE BOARD OF DIRECTORS RECOMMEND THAT YOU VOTE "FOR" ITEM 2, THE OUTSIDE
DATE ABOLISHMENT.
19
<PAGE>
ITEM 3
APPROVAL OF MEMORANDUM AMENDMENT
At the Prior Meeting, the stockholders approved a proposal to effect a
one-for-five reverse stock split (the "Reverse Stock Split") of the
Corporation's Common Stock and on March 10, 1997, the Corporation, pursuant to
resolutions adopted by the Board on February 27, 1997, effected the Reverse
Stock Split. The Board of Directors, on May 8, 1997, unanimously adopted a
resolution proposing that the Board recommend to the stockholders for approval
an amendment to the Corporation's Memorandum of Association to clarify that the
Reverse Stock Split is of all of the Corporation's authorized share capital (the
"Memorandum Amendment"). To effect the Reverse Stock Split, the Corporation was
not required to amend its Memorandum of Association so that any person searching
the Corporation's public file at the office of the Registrar of Corporations in
Bermuda would have no indication that the share capital of the Corporation had
been consolidated. By restating the paragraph in question in the Corporation's
Memorandum of Association to reflect the Reverse Stock Split, the Corporation's
capital structure will be clear and apparent to any person reviewing the
Corporation's basic constituted documents.
The text of the resolution to be acted upon with respect to the Memorandum
Amendment is annexed hereto as EXHIBIT C. Nord Resources and the directors and
executive officers of the Corporation who, in the aggregate own approximately
40% of the issued and outstanding shares of Common Stock of the Corporation
(including the shares of Common Stock owned by Nord Resources), have advised the
Corporation that they intend to vote in favor of the Memorandum Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ITEM 3, THE
MEMORANDUM AMENDMENT.
ITEM 4
APPROVAL OF BYE-LAW AMENDMENT REGARDING QUORUMS AND POLLING
The Board of Directors, on May 8, 1997, unanimously adopted a resolution
proposing that the Board recommend to the stockholders for approval, a proposal
to amend Sections 28(1) and 29(4) of the Corporation's By-laws to facilitate the
holding of stockholders meetings by permitting persons who are not Members (as
defined below) but hold proxies from Members, to be counted for quorum and
polling purposes (the "Quorum Amendment").
Section 28(1) of the Corporation's By-laws provide that "[a]t any General
Meeting of the Company, two Members present in person and representing in person
or by proxy in excess of 50% of the outstanding voting shares of the capital
stock of the Company throughout the meeting shall form a quorum for the
transaction of business;". Section 29(4) of the Corporation's By-laws provides
that when "...a poll is demanded, ... every Member present in person at such
meeting shall
20
<PAGE>
have one (1) vote for each share of which he is the holder and for which he
holds a proxy ...". Member is defined in Section 1(4) of the By-laws as "the
person(s) registered in the Registrar of Members as the holder of shares in the
Company". As a result, a person who is not a Member but who holds proxies from
Members and attends a General Meeting is NOT counted for quorum or polling
purposes, although such a person can vote on matters requiring a vote of
stockholders.
Since the By-laws currently require MEMBERS representing in person or by
proxies in excess of 50% of the outstanding shares of Common Stock, the
Corporation has had problems insuring that a quorum of Members is present at its
General Meeting. The Board believes that the Corporation would be better served
if management devoted themselves to the operation of the Corporation's business
rather than, on at least an annual basis, determining whether two (2) or more
Members with more than 50% of the Common Stock either in person or by proxy will
be attending General Meetings.
The text of the resolution to be voted upon with respect to the Quorum
Amendment is annexed hereto as EXHIBIT D. Nord Resources and the directors and
executive officers of the Corporation who, in the aggregate own approximately
40% of the issued and outstanding shares of Common Stock of the Corporation
(including the shares of Common Stock owned by Nord Resources), have advised the
Corporation that they intend to vote in favor of Quorum Amendment.
THE BOARD OF DIRECTORS RECOMMEND THAT
YOU VOTE "FOR" ITEM 4, THE QUORUM AMENDMENT
ITEM 5
APPROVAL OF BYE-LAW AMENDMENT REGARDING INDEMNIFICATION
On May 8, 1997, the Board unanimously adopted a resolution proposing that
the Board recommend to the Stockholders for approval, a proposal to amend the
By-laws of the Corporation to revise the indemnification provisions in Sections
58 and 59 of the By-laws by deleting all references to the words "willful
negligence" and "willful default" (the "Indemnification Amendment"). The
Indemnification Amendment is being proposed to conform to recent changes in
Bermuda company law which provide for indemnification of directors, officers and
other specified persons unless they engaged in fraud or dishonesty.
The Board also believes that the Indemnification Amendment is desirable so
that the Corporation can continue to attract and retain responsible individuals
to serve as its directors and officers in light of the present difficult
environment in which such persons must serve. In recent years, investigations,
claims, actions, suits or proceedings (including stockholder derivative actions)
("Proceedings") seeking to impose liability on, or involving as witnesses,
directors and officers of publicly held corporations have become the subject of
much public discussion. Such Proceedings are typically extremely expensive
whatever their eventual outcome. As a result, an individual may conclude that
potential exposure to the costs and risks of Proceedings in which he or she may
21
<PAGE>
become involved exceeds any benefit to him or her from serving as a director or
officer of a publicly held corporation.
The Corporation has not received notice of any Proceedings against an
executive officer or director of the Corporation to which the protections and
benefits under the Indemnification Amendment might apply. In addition, the
Indemnification Amendment is being proposed in response to any specific
resignation, threat of resignation or refusal to serve by any director or
potential director. The By-laws as amended would cover acts and omissions that
occurred before its adoption, even though suit is not filed until later.
The complete text of the resolutions for the Indemnification Amendment is
set forth on EXHIBIT E to this Proxy Statement. Nord Resources and the
directors and executive officers of the Corporation who, in the aggregate own
approximately 40% of the issued and outstanding shares of Common Stock of the
Corporation (including the shares of Common Stock owned by Nord Resources), have
advised the Corporation that they intend to vote in favor of Indemnification
Amendment.
THE BOARD OF DIRECTORS RECOMMEND THAT YOU VOTE
"FOR" ITEM 5, THE INDEMNIFICATION AMENDMENT
22
<PAGE>
ITEM 6
APPOINTMENT OF INDEPENDENT AUDITORS AND AUTHORIZATION
OF BOARD TO SET THEIR COMPENSATION
The Board has recommended the appointment of Deloitte & Touche, chartered
accountants of Hamilton, Bermuda, which has acted as independent accountants for
the Corporation since its inception, to act as independent accountants to audit
the financial statements of the Corporation for the fiscal year ending December
31, 1996. The Board also requests that stockholders authorize the Board to set
the compensation for the independent accountants for the fiscal year ending
December 31, 1997. It is intended that proxies in the accompanying form will
be voted at the meeting in favor of such appointment and authorization unless
otherwise indicated on the proxy. A representative of Deloitte & Touche is
expected to be present at the annual meeting. The financial statements and
report of the auditor for 1996 have been provided to the stockholders and will
be set out for the annual meeting, with the balance sheet signed by at least two
directors.
OTHER MATTERS
The management is not aware of any matters not referred to in the enclosed
form of proxy that will be presented for action at the annual meeting. If any
such matter properly comes before the annual meeting, the proxies in the
accompanying form will be voted with respect thereto in accordance with the
judgment of the person or persons voting such proxies.
The management is soliciting, or plans to solicit, by mail the proxies of
the holders of all shares of Common Stock. The Corporation's Transfer Agent,
American Stock Transfer & Trust Company in the United States, is to perform
certain services in connection with this solicitation, including tabulation of
proxies and personal or telephone inquiries to stockholders and brokers, banks
or others acting as custodians. For these services the Transfer Agent will
receive fees at customary rates and reimbursement of certain out-of-pocket
expenses. Brokers, banks and other persons acting as custodians may be
reimbursed for certain expenses incurred by them in obtaining instructions from
beneficial owners of the Corporation's shares. Directors and officers of the
Corporation may, without compensation other than their regular compensation,
solicit proxies from stockholders by telephone, telegraph or personal interview.
All costs of solicitations will be borne by the Corporation.
THE CORPORATION WILL PROVIDE, WITHOUT CHARGE, TO EACH STOCKHOLDER WHOSE
PROXY IS BEING SOLICITED HEREBY, A COPY OF THE CORPORATION'S ANNUAL REPORT TO
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION FOR 1996 ON FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, UPON WRITTEN REQUEST DIRECTED TO LEO E. DUGDALE III, SECRETARY, NORD
PACIFIC LIMITED, 22 CHURCH STREET, HAMILTON, HM 11, BERMUDA.
23
<PAGE>
STOCKHOLDER PROPOSALS
A proposal by a stockholder intended for inclusion in the Corporation's
proxy statement for the 1997 annual meeting of stockholders must be received by
the Corporation at the address noted immediately above marked:
"Attention: Secretary", on or before January 13, 1998, in order to be eligible
for such inclusion.
For the Board of Directors,
Leo E. Dugdale III
Secretary
FOR UNITED STATES AND OTHER
NON-AUSTRALIAN STOCKHOLDERS:
Please sign the proxy and return it promptly in the enclosed envelope
addressed to American Stock Transfer & Trust Company, to which no postage need
be affixed if mailed within the United States.
FOR AUSTRALIAN STOCKHOLDERS:
Please sign the proxy and return it promptly in the enclosed envelope to
which no postage need be affixed if mailed within the Commonwealth of Australia.
May 13, 1997 NORD PACIFIC LIMITED
22 Church Street
Hamilton HM 11
Bermuda
24
<PAGE>
EXHIBIT A
NORD PACIFIC LIMITED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS OF US DOLLARS)
ASSETS
<TABLE>
<CAPTION>
Historical Pro Forma Pro Forma
Balances Adjustments Results
---------- ----------- ---------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 439 $19,600(1) $ 20,039
Accounts Receivable 1,932 1,932
Inventories 326 326
Premium on Copper Contracts 1,193 1,193
Forward Currency Exchange Contracts 76 76
Prepaids 96 96
-------- ---------- --------
TOTAL CURRENT ASSETS 4,062 19,600 23,662
Forward Currency Exchange Contracts 18 18
Premium on Copper Contracts 311 311
Deferred Costs Associated with
Ore Under Leach 7,897 7,897
Property, Plant and Equipment - Net 5,411 5,411
Deferred Exploration and
Development Costs 21,778 21,778
Other 264 264
-------- ---------- --------
$ 39,741 $19,600 $59,341
-------- ---------- --------
-------- ---------- --------
</TABLE>
See Notes to Pro Forma Condensed Consolidated Balance Sheet
<PAGE>
EXHIBIT A (CONTINUED)
NORD PACIFIC LIMITED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS OF US DOLLARS)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Historical Pro Forma Pro Forma
Balances Adjustments Results
---------- ----------- ---------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $ 1,871 $ $ 1,871
Note Payable - Nord Resources Corporation 947 947
Accrued Expenses 1,067 1,067
Deferred Gain on Copper Contracts 1,565 1,565
Current Maturities of Long-Term Debt 1,700 1,700
-------- ---------- --------
TOTAL CURRENT LIABILITIES 7,150 7,150
LONG-TERM LIABILITIES:
Long-Term Debt 3,334 3,334
Payable on Copper Contracts 311 311
Deferred Income Tax Liability 3,740 3,740
Obligation Under Purchase Agreement 795 795
Retirement Benefits 202 202
-------- ---------- --------
8,382 8,382
SHAREHOLDERS' EQUITY:
Common Stock 476 200(2) 676
Additional Paid-In Capital 31,467 19,400(3) 50,867
Deficit (8,532) (8,532)
Cumulative Foreign Currency
Translation Adjustment 798 798
-------- ---------- --------
TOTAL SHAREHOLDERS' EQUITY 24,209 19,600 43,809
-------- ---------- --------
$39,741 $19,600 $59,341
-------- ---------- --------
-------- ---------- --------
</TABLE>
See Notes to Pro Forma Condensed Consolidated Balance Sheet
<PAGE>
EXHIBIT A (CONTINUED)
NORD PACIFIC LIMITED
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(UNAUDITED)
(IN THOUSANDS OF US DOLLARS)
(1) - Consists of the following:
Proceeds from the Canadian Offering $18,150
Issue costs (2,400)
-------
15,750
Proceeds from the NRC Private Placement 3,850
-------
$19,600
-------
-------
(2) - Consists of the following:
Shares issued in the Canadian Offering $ 165
Shares issued in the NRC Private Placement 35
-------
$ 200
-------
-------
(3) - Consists of the following:
Proceeds from the Canadian Offering $18,150
Issue costs (2,400)
-------
15,750
Proceeds from the NRC Private Placement 3,850
-------
19,600
Par value of Shares issued in the Canadian Offering
and in the NRC Private Placement (200)
-------
$19,400
-------
-------
<PAGE>
EXHIBIT B
"That the Corporation be authorized to engage in the Canadian Offering, as
summarized in the Corporation's Proxy Statement dated May 13, 1997 and sell up
to 4,500,000 shares of its common stock, in the aggregate, the exact number of
shares to be sold, the price thereof, and all other economic aspects of the
Canadian Offering to be determined by the Board of Directors, based upon market
conditions at the time of the sale, and that such sale shall occur at such time
as the Board of Directors determines without regarding to any outside date."
<PAGE>
EXHIBIT C
"That the Memorandum of Association of the Corporation be altered by the
deletion of the first sentence of paragraph 6 and the substitution therefor of
the following words: "the authorized share capital of the Company is
US$1,000,000 divided into shares of US$0.05 each"."
<PAGE>
EXHIBIT D
"That the Bye-laws of the Company be amended in the following manner:
(i) by the deletion of the word "Members" where it appears in the first line of
Bye-law 28(1) and the substitution therefor of the word "persons"; (ii) by the
deletion of the word "Member" where it appears in the third line of Bye-law
29(4) and the substitution therefor of the word "person"."
<PAGE>
EXHIBIT E
"That the bye-laws of the Corporation be amended by the deletion of the
words "willful negligence, willful default," where they appear in Bye-law 58 and
Bye-law 59."
<PAGE>
PROXY CARD
NORD PACIFIC LIMITED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JUNE 17, 1997
The undersigned hereby appoints Edgar F. Cruft, Leonard Lichter, Terence H.
Lang, W. Pierce Carson or Ann Bianco and each or any one of them, attorneys and
proxies with full power of substitution in each of them, in the name, place and
stead of the undersigned to vote as proxy all the stock of the undersigned in
Nord Pacific Limited.
(To be Signed on Reverse Side)
------------------------------------------
/X/ Please mark your
votes as in this
example.
1. Election of Nominees For Against Nominees:
/ / / / John C.R. Collis
W. Pierce Carson
Edgar F. Cruft
Michel J. Drew
For, except vote withheld from Terence H. Lang
the following nominee(s): Leonard Lichter
Lucile Lansing
John B. Roberts
- ------------------------------------------
2. To consider and act upon a proposal to abolish the Outside Date as to when
the Canadian Offering must be consummated by.
3. To consider and act upon a proposal to amend the Corporation's Memorandum
of Association to clarify that the authorized share capital of the Corporation
is US$1,000,000 divided into shares of US$0.05 each.
4. To consider and act upon a proposal to amend the Corporation's By-laws to
permit persons, who are not Members of the Corporation, but who hold proxies
from Members, to be counted for quorum and polling purposes at stockholders'
meetings.
5. To consider and act upon a proposal to amend the Corporation's By-laws
regarding indemnification of directors, officers and other specified persons.
6. To ratify the appointment of independent auditors and authorize the Board to
set their compensation.
7. The transaction of such other business as may come before the meeting.
The close of business on April 21, 1997 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
annual meeting and any adjournment thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR ALL THE PROPOSALS IF
NO INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO INSTRUCTION IS GIVEN.
Your proxy is important to assure a quorum at the meeting. Whether or not
you expect to be present, you are requested to mark, date, sign and mail the
enclosed proxy in the postage-paid envelope which has been provided for that
purpose. The proxy may be revoked by you at any time before it is exercised,
and the giving of your proxy will not affect your right to vote in person if you
attend the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURES_______________________________________________DATE______________
Note: Please sign exactly as your name appears hereon. Executors,
administrators, trustees, etc., should so indicate when signing, giving full
title as such. If signer is a corporation, execute in full corporate name by
authorized officer. If shares held in the name of two or more persons all
should sign.
