STANSBURY HOLDINGS CORPORATION
676 LOUIS DRIVE
WARMINSTER, PENNSYLVANIA 18974
(215) 328-9566
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Stansbury Holdings Corporation, a Utah corporation (the "Company"), will be held
on April 23, 1999, at 9:00 A.M., local time, at the Westin Suites Philadelphia
Airport, 4101 Island Avenue, Philadelphia, Pennsylvania 19153 (telephone number
(215) 365-6600), for the following purposes, all of which are set forth more
completely in the accompanying Proxy Statement:
(1) To approve the adoption of the Company's entry into the joint
venture with Nevada Vermiculite LLC, pursuant to which the
Company intends to develop its existing vermiculite property,
and develop other vermiculite mining and milling operations.
(2) To amend the Articles of Incorporation of the Company to
increase the authorized capitalization of the Company from
25,000,000 shares of common stock, par value $.25 per share,
to 100,000,000 shares of common stock, par value $.001 per
share.
(3) To amend the Articles of Incorporation of the Company to add a
provision indemnifying the Board of Directors and providing
for the payment of the Directors legal defenses in actions
brought by shareholders and third parties.
(4) To amend the Articles of Incorporation of the Company to
provide for a classified Board of Directors;
(5) To elect five persons to the Board of Directors; two persons
each to hold office for a term of three years, one person for
a term of two years, and two persons each for a term of one
year;
(6) To approve the adoption of the Company's 1999 Stock Option
Plan by which options for up to 3.5 million shares may be
issued to officers, directors and key employees and
consultants of the Company.
(7) To approve the appointment of independent public accountants;
and
(8) To transact such other business as may properly come before
the meeting, including the ratification of the acts of the
Board of Directors set forth in the 1997 and 1998 fiscal year
audited financial statements.
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Pursuant to the Company's Bylaws, the Board of Directors has fixed the
close of business on April 7, 1999, as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting.
A FORM OF PROXY AND THE ANNUAL REPORT OF THE COMPANY FOR THE FISCAL
YEAR ENDED JUNE 30, 1997 AND JUNE 30, 1998 ARE ENCLOSED. IT IS IMPORTANT THAT
PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU PLAN TO BE PRESENT
IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE WHICH DOES NOT REQUIRE POSTAGE IF MAILED IN
THE UNITED STATES.
BY ORDER OF THE BOARD OF
DIRECTORS
EDWARD C. STANOJEV, JR., PRESIDENT
WARMINSTER, PENNSYLVANIA
APRIL 12, 1999
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STANSBURY HOLDINGS CORPORATION
676 LOUIS DRIVE
WARMINSTER, PENNSYLVANIA 18974
(215) 328-9566
_______________
PROXY STATEMENT
_______________
The enclosed proxy is solicited by the Board of Directors of Stansbury
Holdings Corporation, a Utah corporation (the "Company"), for use at the Annual
Meeting of Shareholders to be held on April 23, 1999, and the approximate date
on which this statement and the enclosed proxy will be sent to shareholders will
be April 12, 1999. The form of proxy provides a space for you to withhold your
vote for any proposal. You are urged to indicate your vote on each matter in the
space provided; if no space is marked, it will be voted by the persons therein
named at the meeting (i) for the Company's entry into the joint venture with
Nevada Vermiculite LLC to develop vermiculite projects; (ii) for the proposed
amendment to the Articles of Incorporation to increase the authorized
capitalization of the Company to 100,000,000 shares of common stock, par value
$.001 per share; (iii) for the proposed amendment to the Articles of
Incorporation to add a new provision indemnifying the Board of Directors and
paying their legal defenses in actions brought against them; (iv) for the
proposed amendment to the Articles of Incorporation to create a classified Board
of Directors; (v) for the election of five persons to the Board of Directors as
set forth below; (vi) for the adoption of the Company's 1999 Stock Option Plan;
(vii) for the approval of selection of independent accountants; (viii) for the
ratification of the actions of the Board of directors as revealed in the fiscal
year 1997 and 1998 audited financial statements; and (ix) in their discretion,
upon such other business as may properly come before the meeting. Whether or not
you plan to attend the meeting, please fill in, sign and return your proxy card
to the Company at the address noted above in the enclosed envelope, which
requires no postage if mailed in the United States.
The cost of the Board of Directors' proxy solicitation will be borne by
the Company. In addition to solicitation by mail, officers and employees of the
Company may solicit proxies personally and by telephone and telegraph, all
without extra compensation.
At the record date for the meeting, which is the close of business on
April 7, 1999, the Company had outstanding 24,899,585 shares of $.25 par
value common stock ("Common Stock"). Each share of Common Stock entitles the
holder thereof on the record date to one vote on each matter submitted to a vote
of shareholders. Only shareholders of record at the close of business on
April 7, 1999 are entitled to notice of and to vote at the Annual Meeting.
In the event that there are not sufficient votes for approval of any of the
matters to be voted upon at the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies. The quorum
necessary to conduct business at the Annual Meeting consists of a majority of
the outstanding shares of Common Stock. The approval of the proposals covered by
the Proxy Statement will require an affirmative vote of the holders of a
majority of the shares of Common Stock voting in person or by proxy at the
Annual Meeting.
All shares of Common Stock that are represented at the Annual Meeting
by properly executed proxies received prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxies. If no instructions are indicated, such proxies will
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be voted for approval of each matter voted upon. Abstentions or broker non-votes
are counted as shares present in the determination of whether shares of Common
Stock represented at the meeting constitute a quorum. Abstentions or broker
non-votes are tabulated separately. As to other matters to be acted upon at the
Annual Meeting, abstentions are treated as AGAINST votes, whereas broker
non-votes are counted for the purpose of determining whether the proposal has
been approved.
A SHAREHOLDER WHO SUBMITS A PROXY ON THE ACCOMPANYING FORM HAS THE POWER TO
REVOKE IT AT ANY TIME PRIOR TO ITS USE BY DELIVERING A WRITTEN NOTICE TO THE
SECRETARY OF THE COMPANY, BY EXECUTING A LATER-DATED PROXY OR BY ATTENDING THE
MEETING AND VOTING IN PERSON. UNLESS AUTHORITY IS WITHHELD, PROXIES WHICH ARE
PROPERLY EXECUTED WILL BE VOTED FOR THE PURPOSES SET FORTH THEREON.
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The following table sets forth the shares of the Company's Common Stock
beneficially owned at April 7, 1999, by (i) each person known to management
of the Company to be the beneficial owner of more than 5% of the outstanding
shares of the Company's Common Stock, (ii) each Director of the Company, (iii)
each executive officer of the Company named under "Executive Remuneration," and
(iv) all executive officers and Directors of the Company as a group.
<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY SHARES
BENEFICIALLY
OWNED(1)
NUMBER(2) PERCENT(2)
<S> <C> <C> <C>
EXECUTIVE OFFICERS AND
DIRECTORS:(3)
Edward C. Stanojev, Jr. President and Director 74,202 *
Aldine J. Coffman, Jr. Vice President and Director 6,020,000 (4) 19.47 (6)
James R. Hindman, Ph.D. Vice President and Director 6,020,000 (5) 19.47 (6)
Jeff Wertz Secretary, Treasurer and Director -0- *
Martin J. Peskin Director 833,200 3.34%
All Directors and executive
officers as a group (5 persons) 6,927,402 (4)(5) 22.40% (6)
</TABLE>
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<TABLE>
<CAPTION>
BENEFICIAL OWNERS OF MORE
THAN 5%
NAME AND ADDRESS SHARES BENEFICIALLY OWNED(1)
NUMBER(2) PERCENT(2)
<S> <C> <C>
Dr. Sami Samani 2,135,392 8.58%
146 Ridge Road
North Arlington, NJ 07031
Nevada Vermiculite LLC 6,020,000 (6) 19.47% (6)
c/o Channel & Basin Reclamation, Inc.
15218 Sierra Highway
Saugus, CA 91350
</TABLE>
- ---------------------
* Less than 1%
(1) Unless otherwise indicated, each shareholder has sole voting and
investment power with respect to the Common Stock indicated as
beneficially owned thereby.
(2) In accordance with Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), shares that are not outstanding, but
that are subject to warrants, options or conversion privileges
exercisable or convertible within 60 days of the date of this Proxy
Statement, have been deemed to be outstanding for the purpose of
computing the percentage of outstanding shares owned by the individual
having such right, but have not been deemed outstanding for the purpose
of computing the percentage for any other person.
(3) Unless otherwise indicated, the address for each Director is c/o
Stansbury Holdings Corporation, 676 Louis Drive, Warminster,
Pennsylvania 18974.
(4) Mr. Coffman does not directly own or have the power to dispose of these
shares. The voting and dispositive power with respect to these shares
is held by Nevada Vermiculite LLC, a Nevada Limited Liability Company,
which holds the right to acquire up to 6,020,000 shares of the
Company's Common Stock (see "Item 1 - Approval of the Company's Entry
Into the Joint Venture With Nevada Vermiculite LLC, to Develop
Vermiculite Projects"). Mr. Coffman holds a 12.5% membership interest
in Nevada Vermiculite LLC.
(5) Dr. Hindman does not directly own or have the power to dispose of these
shares. The voting and dispositive power with respect to these shares
is held by Nevada Vermiculite LLC, a Nevada Limited Liability Company,
which holds the right to acquire up to 6,020,000 shares of the
Company's Common Stock (see "Item 1 - Approval of the Company's Entry
Into the Joint Venture With Nevada Vermiculite LLC, to Develop
Vermiculite Projects"). Dr. Hindman holds a 12.5% membership interest
in Nevada Vermiculite LLC.
(6) Includes 520,000 shares which Nevada Vermiculite LLC has the right to
acquire upon the conversion of $130,000 in debt owed by the Company,
based on a conversions price of $.25 per share, and includes 5,000,000
shares which Nevada Vermiculite LLC has the right to acquire upon such
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company's exercise of a Warrant to purchase such shares at $.25 per
share. None of these shares are currently available for issuance and
will only be available for issuance upon the shareholders approval of
Item 2 of this Proxy Statement for the amendment to the Company's
Articles of Incorporation to increase the authorized capital of the
company to 100,000,000 shares. For a description of the debt conversion
and Warrant see Item 1 of this Proxy Statement.
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ITEM 1 - APPROVAL OF THE COMPANY'S ENTRY INTO THE JOINT
VENTURE WITH NEVADA VERMICULITE LLC, TO DEVELOP
VERMICULITE PROJECTS.
In June 1985, the Company was reorganized as part of a Plan of
Reorganization under a Chapter 11 proceeding pursuant to the Federal Bankruptcy
Act. In December 1994, an election was held as a result of a proxy contest by a
shareholders' committee. As a result of that election, management of the Company
was transferred to a new management group. The new management group has focused
on corporate clean up and development of Company assets.
As part of its corporate clean up, the Company elected to write down,
as of June 30, 1997, certain accounts payable totaling $75,892 to 30 different
vendors which had been carried on the financial statements since 1991. The
Company believes that some of the accounts payable eliminated were to defunct
entities, and that other payables were paid, but were erroneously continued to
be reported as accounts payable.
In the fiscal year ended June 30, 1997, the Company decided to
reclassify its assets consistent with generally accepted accounting principles.
This reclassification arose from the Company choosing to report its assets on a
cost basis rather than the previously used fair market value basis. The change
was made to be effective as of June 30, 1996. The reclassification resulted in
the assets of the Company being restated as $14,814,215 as of June 30, 1996,
rather than the previously stated $36,811,743 as of June 30, 1996.
The Company currently is an exploration stage mining company. Since its
reorganization in 1985, the principal business of the Company is vermiculite
mining exploration and preparation for development of vermiculite projects. The
principal project of the Company has been the Hamilton Vermiculite Project.
Since 1985, the Company has spent in excess of $2 million to establish the
viability of the proposed vermiculite mine near Hamilton, Montana. The Company
intends to develop and operate an open pit vermiculite mine and mill on 96
unpatented mineral claims owned by the Company in Montana. The property consists
of mining and milling claims covering 1,750 acres. The Company is of the opinion
that the Hamilton site represents the largest known vermiculite deposit
available for development in the western United States.
Since the construction of a proposed mine and mill for the Hamilton
Vermiculite Project has not yet commenced, the Company has not engaged in
operations nor has it derived revenue from any source during fiscal years ended
June 30, 1996, June 30, 1997, June 30, 1998, or yet during the current fiscal
year.
The Board of Directors of the Company has examined the factors that
have contributed to the Company's inability to place its Hamilton Vermiculite
Project into production. The Board has determined that it is in the best
interest of the Company to enter into a cooperative joint venture with an entity
that can provide adequate and timely working and investment capital for the
mining and milling project. To this end, the Company has entered into
negotiations to form a joint venture with Nevada Vermiculite LLC ("Nevada
Vermiculite") for all vermiculite undertakings.
The Company has been advised that Nevada Vermiculite was formed in May,
1998, and was capitalized to mine and mill a vermiculite site located in Nevada
which, at that time, Nevada Vermiculite was negotiating to acquire. The owner of
the Nevada site chose not to sell the site to Nevada Vermiculite at that time. A
funded Nevada Vermiculite was informed by one of its minority members (Aldine J.
Coffman) of a company that had retained him regarding vermiculite mining claims
it owned. The company
6
<PAGE>
was Stansbury Holdings Corporation. The Company had significant debt, no
operating capital, and a vermiculite mine that appeared to Nevada Vermiculite as
commercially viable. Mr. Coffman proposed a joint venture to the Company and
Nevada Vermiculite. Both parties decided to pursue the possibility of a joint
venture. The Company retained independent counsel to produce an operating
agreement that would govern what would be the limited liability company through
which the proposed joint venture would operate. Substantial parts of Nevada
Vermiculite's and the Company's deal points were communicated to counsel by Mr.
Coffman. The governance document prepared by the Company's counsel was presented
to Nevada Vermiculite, which accepted it without substantial change.
Nevada Vermiculite's primary purpose is to acquire and develop
vermiculite projects through the expected joint venture with the Company. In
October, 1998, Nevada Vermiculite provided funding to the Company so that the
Company could discharge the debt to its largest creditor, Southern American
Insurance Corporation in Liquidation. The liability to this creditor, which
dates back to the late 1980s, from principal and accrued interest was in excess
of $2,056,474. This liability had been secured by a first mortgage on the
vermiculite claims at the Hamilton site. The liability has been settled and
released. The amount of settlement was $130,000, which the Company raised
through the issue of convertible debt and a warrant to Nevada Vermiculite. The
debt converts, at Nevada Vermiculite's option, at $.25 per share. The warrant is
for 5,000,000 shares at $.25 per share, and expires on October 28, 2003.
Company directors and officers Aldine J. Coffman and James R. Hindman
are minority members of Nevada Vermiculite, each owning 12 1/2% of Nevada
Vermiculite. The principals and certain employees of Channel and Basin
Reclamation, Inc. ("Channel & Basin") own 75% of Nevada Vermiculite. Channel &
Basin owns and operates three large-scale sand and gravel operations with
revenues of approximately $12 million per year.
The Company and Nevada Vermiculite would form a limited liability
company called International Vermiculite Limited LLC ("International
Vermiculite"). The Company and Nevada Vermiculite will each share equally
(50/50) in International Vermiculite's income. The Company and Nevada
Vermiculite would each be required to offer International Vermiculite the right
to lease any vermiculite projects they acquire. The Company anticipates that the
lease payments made by International Vermiculite would equal the actual costs of
the Company or Nevada Vermiculite for obtaining the vermiculite project.
The Company will lease its development rights for the Hamilton
Vermiculite Project to International Vermiculite. Nevada Vermiculite will
contribute up to $100,000 for exploratory drilling, mill design, and expenses
for International Vermiculite to begin mining and milling operations. Nevada
Vermiculite and the Company will attempt to acquire other mining properties to
offer for lease to International Vermiculite. Both Nevada Vermiculite and the
Company are actively involved in separate negotiations to acquire additional
vermiculite mines and mill sites for development by International Vermiculite.
The Company anticipates that Channel & Basin also will provide other
working capital, equipment and expertise needed for mining and milling
International Vermiculite's initial vermiculite projects in the United States.
International Vermiculite would repay Channel & Basin's actual costs plus 15%
for providing this other working capital, equipment and expertise.
The Company anticipates that the leases from the Company and from
Nevada Vermiculite to International Vermiculite will have initial 20-year terms
with automatic extensions. Neither the Company nor Nevada Vermiculite may engage
in any activity related to the production, marketing or product
7
<PAGE>
enhancement of any vermiculite product except through International Vermiculite.
This restriction applies to both the Company and Nevada Vermiculite while that
joint venture partner is involved in the joint venture, and for five years
thereafter.
International Vermiculite will be governed by a six-member Management
Committee. Three of the Management Committee members will be selected by the
Company, and three members will be selected by Nevada Vermiculite. The
Management Committee must have at least four of its six members vote in favor of
a proposal for it to pass. The Company anticipates that its three Management
Committee members will be Edward C. Stanojev, Jr. (President and Director of the
Company), Jeff Wertz (Secretary, Treasurer and Director of the Company), and
Martin J. Peskin (Director and owner of 833,200 shares of the Company), and
Nevada Vermiculite's three Management Committee members will be Bill Blomgren
(co-owner of Channel & Basin and 35% of Nevada Vermiculite), Daniel McDonald
(Chief Financial Officer of Channel & Basin and owner of 15% of Nevada
Vermiculite), and Cindy Gualtierri (employee of Channel & Basin and co-owner of
25% of Nevada Vermiculite).
The day-to-day operations of the Joint Venture generally will be
managed by managers. The managers are appointed by, and answer to, the
Management Committee. The Management Committee may remove, replace and appoint
the manager or managers. The initial managers will be Aldine J. Coffman and
James R. Hindman.
The Company does not believe that shareholder approval is required for
its entry into the joint venture; however, the Company is seeking shareholder
approval because (i) it believes its entry into the joint venture is
significantly different than its sole development of its own assets, (ii) entry
into the joint venture should result in Nevada Vermiculite receiving one-half of
the net income from the operation of the vermiculite projects secured by the
Company (similarly, the Company should receive one-half of the net income from
the operation of the vermiculite projects secured by Nevada Vermiculite), and
(iii) while the Company (through its managers at International Vermiculite)
would have to vote for development of Nevada Vermiculite's vermiculite projects
before they could be developed and operated, Nevada Vermiculite (through its
managers) would have to vote for development of the Company's vermiculite
projects before they could be developed and operated. The Company's Board of
Directors believes that the Company's entry into the joint venture is likely to
significantly affect the governance of its operating assets, therefore it has
chosen to seek shareholder approval prior to its entry into the joint venture.
If the shareholders do not vote for the Company to enter into the joint
venture, the Company will not enter into it. The Company expects that if the
shareholders reject the joint venture, the Company would not be able to begin
development of the Hamilton Vermiculite Project without locating and securing
another source to finance its operations. The Company anticipates that it would
continue to seek shareholder approval for entry into the joint venture, and to
that end, would again prepare appropriate proxy materials so that it could
secure shareholder approval for the proposed joint venture.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS ITEM 1.
8
<PAGE>
ITEM 2 - AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED CAPITALIZATION OF THE COMPANY FROM 25,000,000
SHARES OF COMMON STOCK, PAR VALUE $.25 PER SHARE, TO 100,000,000
SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE.
Article V of the Articles of Incorporation of the Company fixes the
authorized capital stock at 25,000,000 shares of common stock, par value $.25
per share. Currently 24,899,585 shares are issued and outstanding. The Board of
Directors recommends an amendment to increase the authorized amount of shares of
Common Stock to 100,000,000 shares of common stock, par value $.001 per share.
The text of the proposed resolution and amendment to the Articles of
Incorporation is set forth in attached Exhibit A.
The proposed amendment would provide additional authorized and unissued
shares which could be used for any proper corporate purpose, including, for
example, financing programs, acquisitions, payment of stock dividends, stock
splits and issuance under stock option plans or purchase plans, or any such
plans that may be adopted by the Shareholders at this Annual Meeting or in the
future. Any of the proposed additional authorized shares would be available for
issuance by the Board of Directors for any of the foregoing purposes, in their
discretion, and normally without further action by the Company's shareholders.
The Board of Directors believes that it will be in the best interest of
the Company to increase the authorized common stock available to the Company for
issuance when such issuance is desirable. In the event a specific opportunity
arises which would require the issuance of additional shares in excess of the
presently authorized amount, the possible delay and expense of a special
shareholders' meeting might deprive the Company of the ability to quickly take
advantage of an existing favorable market condition.
No shareholder of the Company has any pre-emptive right to subscribe
for or purchase any of the new shares of common stock proposed to be authorized
hereby.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS AMENDMENT TO
THE ARTICLES OF INCORPORATION.
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<PAGE>
ITEM 3. - AMENDMENT TO THE ARTICLES OF INCORPORATION OF THE COMPANY
TO PROVIDE FOR THE INDEMNIFICATION OF THE DIRECTORS AND
OFFICERS OF THE COMPANY IN ANY PROCEEDING THAT MAY BE
BROUGHT BY SHAREHOLDERS OR THIRD PARTIES AND TO PAY FOR OR
REIMBURSE THE REASONABLE EXPENSES INCURRED BY SUCH
PROCEEDING.
The Board of Directors recommends that the Company's Articles of
Incorporation be amended to provide for the indemnification of each Director of
the Board of Directors and each Officer of the Company, if that person was not
negligent nor committed willful misconduct as a Director or Officer in
connection with the matter for which he or she seeks indemnification. The text
of the proposed amendment is set forth in attached Exhibit B.
To date, the Company has not had any difficulty in attracting or
retaining its present Directors or officers and no person has declined to be
nominated as a Director nor has any person resigned or threatened to resign as a
Director, specifically because of the risks of litigation. However, the Company
recognizes that litigation against directors and officers of public companies as
well as the costs of defending such litigation have been increasing. Therefore,
the Board of Directors believes that the Company should provide indemnification
protection for its present and future directors and officers, both as a matter
of fairness and to assist the Company in attracting and retaining capable
individuals to serve in such capacities. Management believes it is appropriate
that the adoption of this Amendment to the Articles of Incorporation be
submitted to the Company's shareholders for their consideration since each
member of the Board of Directors will be a beneficiary of the rights contained
in such Amendment. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock represented and entitled to vote at the
Annual Meeting will constitute ratification and approval of such Amendment for
the Directors and nominees for director. No determination has been made as to
what action the Board of Directors or any of its members individually would take
if the Company's shareholders do not ratify and approve the Amendment.
Management generally believes that because of claims and litigation
associated with businesses, directors, officers, employees and other persons
acting on behalf of the Company are exposed to claims, suits and other
proceedings, even if their actions are taken in good faith. Responding to such
claims and litigation can involve substantial personal expense, including legal
fees, disbursements, settlements and even judgments. For several reasons,
management believes that it is unfair to expect the Company's Officers and
Directors to personally bear expenses that result from the Company's operations.
Pursuant to the Amendment, the right to indemnification extends to any
person who is a party or is threatened to be made a party to any action by
reason of the fact that he is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another entity, provided that person has not been
adjudicated to have been negligent nor to have committed willful misconduct as a
Director or Officer in connection with the matter for which he seeks
indemnification. Indemnification extends to the costs and expenses (including
trial, appellate and other attorneys' fees), judgments, fines, penalties, and
amounts paid in settlement, actually and reasonably incurred by such officer or
director in connection with such action.
Indemnification is available in any action except (i) in connection
with a proceeding by or in the right of the Company in which the Director was
adjudged liable to the Company; or (ii) in connection with any proceeding
charging that the Director derived an improper personal benefit, whether or not
involving action
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in his official capacity, in which proceeding he was adjudged liable on the
basis that he derived an improper personal benefit.
Management is aware of no pending or threatened litigation in which the
Directors and Officers of the Company may be named as defendants, and is not
aware of any claims by any Officer or Director for indemnification likely to
result from any past, pending or threatened litigation.
In summary, should the shareholders of the Company approve this
amendment to the Articles of Incorporation, the Company generally will be
obligated to indemnify each of its Officers and Directors with respect to
liability and loss suffered, and reasonable expense incurred, by such person in
any action, suit or proceeding in which such person was or is made or threatened
to be made a party or is otherwise involved by reason of the fact that such
person is or was a Director or Officer of the Company. The Company also will be
obligated to pay the reasonable expenses of indemnified Directors or Officers in
defending such proceedings if the indemnified party agrees to repay all amounts
advanced should it be ultimately determined that such person is not entitled to
indemnification.
At such time when the Board of Directors determines it to be
financially reasonable for the Company, the Company intends to provide insurance
under which the Directors and Officers of the Company will be insured, subject
to the limits of the policy, against certain losses arising from claims made
against such Directors and officers, including liabilities under the Securities
Act of 1933, as amended (the "Act"). Insofar as indemnification for liabilities
arising under the Act may be permitted for Directors, Officers and controlling
persons of the Company or of an affiliate of the Company pursuant to the
foregoing provisions, or otherwise, the Company has been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company for expenses incurred or paid by a Director,
Officer or controlling person of the Company or an affiliate of the Company in
the successful defense of any action, suit or proceeding) is asserted by a
Director, Officer or controlling person in connection with securities which have
been registered, the Company will, unless in the opinion of counsel the matter
has been settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
In effect, therefore, absent a court decision in the individual case,
or controlling precedent, the provisions of the Amendment will not apply to
liabilities arising in connection with securities registered under the Act
(primarily relating to public distributions of securities) unless such officer,
director or controlling person is successful in the defense of the action, suit
or proceeding in question.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS AMENDMENT TO
THE ARTICLES OF INCORPORATION.
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ITEM 4 - AMENDMENT TO ARTICLES OF INCORPORATION TO
PROVIDE FOR CLASSIFIED BOARD OF DIRECTORS
The Board of Directors recommends that the Company's Articles of
Incorporation be amended to provide for a classified Board of Directors
consisting of up to nine Directors. The text of the proposed amendment is set
forth in attached Exhibit C. This amendment provides for the classification of
the Directors of the Company into three classes whose terms of office will
expire at one-year intervals. The term of office of the first class of Directors
elected at the Annual Meeting in 1999 will expire at the Annual Meeting in 2000;
the second class of Directors in 2001; and the third class of Directors in 2002.
Presently the Company's Directors are elected at each annual meeting to serve
for one year. Directors elected by the Board to fill vacancies will continue to
hold office for the remainder of the term to which the previous Director was
elected.
When the classified Board of Directors is fully implemented, a portion
of the Directors will be elected at each annual meeting for three-year terms.
Although the Board of Directors has not in the past experienced problems as to
stability or continuity, staggering the election of the Board in such a fashion
increases the potential for corporate stability through the prospect of
increased continuity of Board membership by insuring that a number of the
Directors on the Board have been associated with the Company over a period of
years and, therefore, are experienced in the affairs of the Company. The
proposed amendment, however, will make it more difficult for the shareholders to
replace the entire Board of Directors at one annual meeting even where this may
be considered desirable by the shareholders.
In addition to increasing the potential for the continuity of Board
membership, the classification system will make it more difficult to acquire or
take over the Company by merger, acquisition of its assets or other means to
gain control of the Company's Board of Directors prior to effecting the takeover
transaction, if such transaction is opposed by the Board of Directors. This
proposal may accordingly be deemed to be an anti-takeover proposal. Management
is not aware of any specific effort to accumulate the Company's securities or to
obtain control of the Company through a merger, tender offer, solicitation in
opposition to Management or otherwise and this proposal is not being made in
response to any such effort. In the event a takeover group were able to control
the Board of Directors, Management would be forced to negotiate the terms of any
proposed takeover bid with a corporation or group which had its own
representatives on the Company's Board of Directors. The interests of the
shareholders conceivably may be represented by groups other than Management; a
takeover transaction could also conceivably be viewed as beneficial by a
majority of shareholders.
The Articles of Incorporation and By-Laws of the Company currently
contain no anti-takeover provisions. In addition, it should be noted that Utah
and federal law provides certain protections for shareholders' interests in
certain takeover situations, including a state law which restricts the ability
of the Company to engage in any business combination with certain "interested"
shareholders for three years, along with minority shareholder appraisal rights
in cases of mergers and acquisitions, as well as disclosure requirements under
the federal securities laws. The content of the proposed amendment to the
Articles of Incorporation and By-Laws has not been subject to specific, formal
Board action.
Management believes that representation on the Company's Board of
Directors, however, by persons seeking to take over the Company would inhibit
Management's ability to negotiate at arm's length for the
11
<PAGE>
best interest of all shareholders. Therefore the Board of Directors believes
this proposal is in the best interest of the shareholders.
The adoption of this proposal requires authorization by the holders of
a majority of the Company's common stock present, either in person or by proxy,
and voting at the Annual Meeting.
This proposal will make it more difficult to remove the current Board
of Directors or effect a merger or takeover opposed by the current Board of
Directors. Classification of the Board of Directors will result in the election
of a fraction of the Directors each year which will make it more difficult for
shareholders to change Directors and may require two or more successive annual
meetings to replace the majority of the Directors in order to effect a change in
management policies. The proposed amendment may also discourage any group from
attempting to acquire the Company, even where this may be considered desirable
by a simple majority of the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS AMENDMENT TO
THE ARTICLES OF INCORPORATION.
12
<PAGE>
ITEM 5 - ELECTION OF DIRECTORS OF THE COMPANY
NOMINEES
As provided for in Article IX of its Articles of Incorporation, as
amended by Item 4, above, the Company is to have a classified Board of Directors
consisting of Classes I, II and III, with one class to be elected at each Annual
Meeting of Shareholders. If any nominee for Director is unable or declines to
serve for any reason not now foreseen, the discretionary authority provided in
the proxy will be exercised to vote for a substitute. All nominees have
consented to serve as Directors. The following persons are Management's
nominees, by class, to serve as Directors of the Company:
CLASS I CLASS II CLASS III
(EXPIRES 2000) (EXPIRES 2001) (EXPIRES 2002)
- -------------- -------------- --------------
Jeff Wertz Martin J. Peskin Aldine J. Coffman, Jr.
James R. Hindman, Ph.D. Edward C. Stanojev, Jr.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF EACH OF THE FOREGOING NOMINEES
FOR ELECTION TO THE BOARD.
The following information is set forth below for each nominee:
principal occupations during the past five years, the period of service as a
Director of the Company or its predecessor, or other directorships and business
affiliations (including public company directorships), and age:
MR. WERTZ, age 41, has served as a Director, Secretary, Treasurer and
Chief Financial Officer of the Company since June 1997, where he has provided
all aspects of accounting and compliance reporting services to the Company. From
January 1998 until December 1998, Mr. Wertz served as the Chief Financial
Officer of Auction Television Network, Inc., an Arizona corporation located in
Warminster, Pennsylvania, and its wholly owned subsidiary, Single Source
Technology, Inc. He served as the Corporate Accountant, providing accounting and
reporting services, for Penn Independent, an insurance holding company, located
in Hatboro, Pennsylvania from June 1995 to December 1997. Mr. Wertz also served
as the Property Management Accountant for Pacific Southwest Mortgage, a property
management company, located in San Diego, California, from December 1992 until
May 1995, where he provided property accounting services for professional
Southern California offices and medical complexes. Mr. Wertz received his
Masters Degree in Accounting, specializing in taxation, from San Diego State
University in 1991, where he also received his Bachelor's Degree in Finance,
Summa Cum Laude in 1989.
DR. HINDMAN, age 52, has served as a Director and Vice President, in
charge of operations of the Company, since June 1997. Since 1985, Dr. Hindman
has had his own consulting firm, Vermiculite Technologies, out of Dillon,
Montana. From 1978 to 1985 Dr. Hindman was employed as the Senior Metallurgist
by W.R. Grace & Company, at their Libby, Montana vermiculite operation. Dr.
Hindman received a Bachelor of Science degree in Geological Sciences from the
University of Southern California, and a Ph.D. in Geological Sciences from the
University of Utah.
13
<PAGE>
MR. PESKIN, age 61, has served as a Director of the Company since
February 1995 and as an outside Director of the Company since July 1997. Prior
to 1996, he served in various executive officer capacities of the Company. Mr.
Peskin retired from his dentistry practice in 1991 and since that time has been
managing his private investment portfolio.
MR. COFFMAN, JR., age 58, has served as Executive Vice President and
Chief Administrative Officer and as a Director of the Company since October
1998. He served as the Chief Financial Officer of International Methane
Corporation, Ltd, a Belize company, specializing in energy, with offices in
Denver, Colorado, from September 1993 to June 1995, and as such company's Chief
Executive Officer from June 1995 to March 1997. Mr. Coffman has also served as a
Director of such company from September 1993 to the present. Mr. Coffman has
owned his own management services company, Far Country Services, Inc., located
in Cherry Hills, Colorado, since 1992, for which he serves as Chief Executive
Officer.
MR. STANOJEV, JR., age 45, has served as a Director and President of
the Company since May 1997. He is also the President of Auction Television
Network, Inc., an Arizona corporation located in Warminster, Pennsylvania,
specializing in Internet software technology, a position which he has held since
May 1997. Mr. Stanojev also served as President of AHS, Inc., a Pennsylvania
corporation, located in Warminster, Pennsylvania, specializing in debt
restructuring, a position which he has held since August 1994. From August 1980
until August 1994, Mr. Stanojev served as President of Accu-Weld, Inc., a
Pennsylvania corporation, located in Philadelphia, Pennsylvania, specializing in
window manufacturing and sales. In 1989 and 1990, Accu-Weld, Inc. was involved
in a corporate consolidation during which accounting personnel were changed.
During this period, Accu-Weld, Inc. was accused of failing to properly file its
required tax reports with the State of Pennsylvania. As a result of this
failure, Mr. Stanojev and two other officers of Accu-Weld, Inc., in October
1995, pleaded nolo contendere to misdemeanor charges, including willful failures
to remit sales tax and willful failures to pay state income tax. Each of the
three officers were fined $56,000 plus court costs, and placed on probation for
six months, which probation was terminated after three months.
14
<PAGE>
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
MEETINGS - All of the Company's Directors attended more than 75% of the
meetings of the Board of Directors during the fiscal year ended June 30, 1998.
There were a total of 12 Board meetings held during such year.
COMPENSATION OF DIRECTORS - Each Director of the Company currently
receives $1,000 per month in Director fees and to date, such fees are due and
owing all Directors; however, in the event Item 2 above is passed by the
Shareholders, only outside Directors will receive such fees, commencing January
1, 1999.
COMMITTEES OF THE BOARD OF DIRECTORS - Since the fiscal year ended June
30, 1998, the Board of Directors has recently formed the Audit Committee and the
Compensation Committee. At this time the Audit Committee and the Compensation
Committee is comprised of the Company's sole outside director, Martin J. Peskin.
The Audit Committee will be responsible for meeting with representatives of the
Company's independent accountants and with representatives of senior management
to review the general scope of the Company's annual audit, matters relating to
internal audit control systems and the fee charged by the independent
accountants. In addition, the Audit Committee will be responsible for reviewing
and monitoring the performance of non-audit services by the Company's
independent accountants and for recommending the engagement or discharge of the
Company's independent accountants. The Compensation Committee will be
responsible for approving and reporting to the Board on the annual compensation
of all officers, including salaries, stock options and stock. The Compensation
Committee will also be responsible for the granting of stock awards, stock
options and other awards made under the Company's stock option plans.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 -
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors, executive officers and persons who beneficially own more than 10% of
a registered class of the Company's equity securities ("Reporting Persons") to
file certain reports concerning their beneficial ownership of the Company's
equity securities. None of the Officers and Directors of the Company had met
their Section 16(a) filing obligations until 1999; however, all known
delinquencies were cured and all officers and directors of the Company have made
their requisite filings.
15
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the position and term of office (with the
Company or its predecessor) of each executive officer of the Company:
EXECUTIVE OFFICER
NAME POSITION(S) SINCE
- ----------------- ---------- ------
Edward C. Stanojev, Jr. President 1997
Aldine J. Coffman, Jr. Vice President 1998
James R. Hindman, Ph.D. Vice President 1997
Jeff Wertz Secretary and
Treasurer 1997
See information concerning Messrs. Stanojev, Jr., Coffman, Hindman and
Wertz under "Election of Directors of the Company," above.
* * * *
Officers are elected by the Board of Directors and their terms of
office are at the discretion of the Board, subject to the Company's obligation
to pay any compensation required under applicable employment agreements. All of
the Company's executive officers are full-time employees of the Company. See
"Executive Remuneration - Employment Contracts." There are no family
relationships among any of the officers or Directors of the Company.
EXECUTIVE REMUNERATION
The following table provides information with respect to the
compensation paid to Martin J. Peskin, the Chairman of the Board of the Company,
and the above named executive officers. There was no executive officer whose
salary was in excess of $100,000 for any period in fiscal 1998.
16
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term
Compensation
Awards
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f)
Other Restricted
Name and Annual Stock
Principal Fiscal Year Compen- Award(s)
Position Ended June Salary($) Bonus($) sation($) ($)
30
- --------------------------------------------------------------------------------------------------------------------
Edward C. 1998 $72,000(1) - $12,000(2) -
Stanojev, Jr., 1997 $ 6,000(1) - $ 2,000(2) -
President 1996 - - - -
- --------------------------------------------------------------------------------------------------------------------
Jeff Wertz, 1998 $26,500(3) - $12,000(2) -
Secretary, 1997 - - - -
Treasurer and 1996 - - - -
Chief Financial
Officer
- --------------------------------------------------------------------------------------------------------------------
James R. 1998 $36,000 - $12,000(2) -
Hindman, Vice 1997 $ 3,000 - $ 1,000(2) -
President 1996 - - - -
- --------------------------------------------------------------------------------------------------------------------
Martin J. Peskin, 1998 - - $13,500(4) -
Chairman of the 1997 - - $30,000(4) -
Board 1996 - - $30,000(4) -
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- ---------------
(1) This amount reflects the salary earned but not paid to Mr. Stanojev; such salary is due and owing
to Mr. Stanojev.
(2) Each Director receives Director's Fees of $1,000 per month; however,
the Directors fees have not been paid to the Directors and such
Directors fees are due and owing to each Director.
(3) $14,000 of this amount has been earned but not paid to Mr. Wertz; the accrued unpaid salary of
$14,000 is due and owing to Mr. Wertz.
(4) Mr. Peskin received Directors fees of $2,500 per month through July
1997; since such time Mr. Peskin receives Directors fees of $1,000 per
month; however, such Directors fees have not been paid and are due and
owing to Mr. Peskin.
</TABLE>
17
<PAGE>
STOCK OPTIONS PLANS
The Company has no stock option plans in place as of this time;
however, see Item 6, below, recommending approval of the 1999 Stock Option Plan.
EMPLOYMENT CONTRACTS
On June 25, 1997, the Company and James R. Hindman, Ph.D. entered into
an employment agreement for an initial six-month term (which agreement may be
renewed for such period or periods as may be mutually agreed to by the Company
and Dr. Hindman in a written supplement to such agreement), which provides for a
base salary of $36,000. In addition, the agreement provides for certain standard
employment benefits. This agreement also contains customary non-competition
provisions prohibiting competition with the Company during the term of
employment and for two years thereafter.
In addition to these terms, Dr. Hindman shall be entitled to receive as
additional compensation 500,000 shares of the company's common stock, to be
issued in increments of 100,000 shares of common stock upon the completion of
certain criteria, as set forth in such employment agreement, the form of which
is attached hereto as Exhibit "D".
The Company, at this time, has not entered into any other formal
written employment agreements; however, the Company is currently negotiating
employment agreements with the principal executive officers of the Company noted
herein.
18
<PAGE>
CERTAIN TRANSACTIONS
The Company requires that transactions with affiliates be made on terms
that the Company believes are at least as favorable as those obtainable from
unaffiliated third parties, and such transactions will be approved by a majority
of the independent, disinterested Directors.
Subject to shareholder approval, the Company intends to enter into a
joint venture with Nevada Vermiculite LLC, which would enable the Company to
develop its existing vermiculite property and develop other vermiculite mining
and milling operations. For a more detailed discussion of this joint venture,
please see Item 1 of this Proxy Statement.
19
<PAGE>
ITEM 6 - APPROVAL OF 1999 STOCK OPTION PLAN.
The Board of Directors of the Company adopted the 1999 Stock Option
Plan (the "Plan"), subject to shareholder approval, on February 18, 1999. Under
the Plan, the Company has reserved 3,500,000 shares of Common Stock for issuance
upon the exercise of options to purchase Common Stock granted under the Plan. As
of February 18, 1999, approximately five employees of the Company were eligible
to be granted options under the Plan; however, no options have yet been granted
under the Plan. The period through which options may be granted expires on March
29, 2010.
A description of the Plan is set forth in this Item 6, but this is a
general description and is qualified by reference to the full text of the Plan,
a copy of which is attached hereto as Exhibit "E".
The purpose of the Plan is to advance the interests of the Company by
providing an additional incentive to attract and retain qualified and competent
employees upon whose efforts and judgment the success of the Company is largely
dependent. The persons eligible to participate in the Plan are the directors,
officers, and key employees of the Company or its subsidiaries who occupy
responsible managerial, professional or advisory positions with Company.
The Plan is to be administered by the Compensation Committee of the
Board of Directors or by such other committee or subcommittee designated by the
Board (the"Committee"). The Committee determines, among other things, the
construction and interpretation of the provisions of the Plan, which employees
of the Company shall receive options under the Plan, the number of shares with
respect to which options shall be granted, the exercise price per share of any
options granted and the date of grant of such options.
The exercise price for each stock option granted under the Plan is
determined by the Committee, and is required to be at least the fair market
value per share of the Common Stock covered by such stock option on the date of
grant. The purchase price of any shares issued upon the exercise of options
under the Plan must be paid in full in cash or, in the discretion of the
Committee, in the Common Stock of the Company or a promissory note of the
optionee, or by a combination of the above. The value of any Common Stock
accepted by the Company in payment of the exercise price of shares of Common
Stock acquired pursuant to the outstanding options shall be 100% of the fair
market value of such Common Stock on the date of exercise.
When an option is granted under the Plan, the Committee at its
discretion specifies the option price, the type of option (either "incentive" or
"nonqualified") to be granted and the number of shares of Common Stock which may
be purchased upon exercise of the option. The exercise price of an incentive
stock option may not be less than 100% of the fair market value of the Company's
Common Stock on the date of grant and, unless otherwise determined by the
Committee, the option price of a nonqualified option may not be less than 100%
of the fair market value of the Company's Common Stock on the date of grant. The
market value of the Company's Common Stock on February 18, 1999 was $8,465,859.
The term during which the option may be exercised and whether the option will be
exercisable immediately, in stages or otherwise are set by the Committee, but
the term of an incentive stock option may not exceed ten years from the date of
grant. Each incentive stock option and, unless otherwise determined by the
Committee, each nonqualified stock option granted under the 1999 Plan is
nontransferable during the lifetime of the optionee. Except as stated below,
each outstanding option under the 1999 Plan will terminate earlier than its
stated expiration date in the event of the optionee's termination of employment.
20
<PAGE>
If the optionee dies or terminates employment due to disability, his or
her options will become immediately exercisable for up to one year or, if
sooner, upon the expiration date of the options. If a director retires from, or
otherwise has his or her service as a director terminated, that person will have
three months from completion of term as a director to exercise any options,
provided the right to exercise the option terminates on the expiration date of
the option.
The Committee may provide in a stock option agreement that upon a
change of corporate control or certain extraordinary corporate transactions, the
outstanding stock options covered by that stock option agreement shall be fully
vested and immediately exercisable; and the Committee may provide in the
agreement that the option will not accelerate if the option is assumed by the
successor company or the option is replaced with a cash incentive program that
preserves the option spread existing at the change of control or the
extraordinary corporate transaction. In the case of an option agreement that
contains an acceleration clause for an extraordinary corporate transaction due
to a merger or consolidation in which the Company is not the survivor, or due to
the sale of substantially all the assets of the Company, the option agreement
must provide that the Committee can give the participant 60 days prior to the
merger or consolidation or the sale of assets in which to exercise all of his
options which will terminate upon the merger, consolidation, or sale of assets.
If the option agreement has an acceleration provision, it must provide that the
option shall remain exercisable for its remaining term if the Company
experiences a change of control or an extraordinary corporate transaction due to
a reverse merger in which the Company survives but majority voting control is
transferred in the transaction.
In the event that the outstanding shares of Common Stock of the Company
are changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
reorganization, recapitalization, reclassification, change in par value, stock
split-up, combination of shares or dividend payable in capital stock, or the
like, then appropriate adjustment shall be made in the number and kind of shares
and in the exercise price per share with respect to outstanding options to
prevent dilution or enlargement of the rights granted to or available for
optionees.
Under present law, an optionee will not realize any taxable income on
the date a nonqualified option is granted pursuant to the 1999 Plan. Upon
exercise of the option, however, the optionee must recognize, in the year of
exercise, ordinary income equal to the difference between the option price and
the fair market value of the Company's Common Stock on the date of exercise.
Upon the sale of the shares, any resulting gain or loss will be treated as
capital gain or loss. The Company will receive an income tax deduction in its
fiscal year in which options are exercised, equal to the amount of ordinary
income recognized by those optionees exercising options, and must withhold
income and other employment-related taxes on such ordinary income.
Incentive stock options granted under the 1999 Plan are intended to
qualify for favorable tax treatment under Internal Revenue Code Section 422.
Under Section 422, an optionee recognizes no taxable income when the option is
granted. Further, the optionee generally will not recognize any taxable income
when the option is exercised if he or she has at all times from the date of the
option's grant until three months before the date of exercise been an employee
of the Company. The Company ordinarily is not entitled to any income tax
deductions upon the grant or exercise of an incentive stock option. Certain
other favorable tax consequences may be available to the optionee if he or she
does not dispose of the shares acquired upon the exercise of an incentive stock
option for a period of two years from the granting of the option and one year
from the receipt of the shares.
21
<PAGE>
The Committee may from time to time amend the Plan or any outstanding
option; provided, that without approval by the shareholders of the Company, no
such amendment shall materially (i) increase the benefits accruing to
participants under the Plan, (ii) increase the number of shares reserved for
options under the Plan, or (iii) modify or change the class of employees
eligible to receive options; and, no such amendment shall substantially impair
any option previously granted to any optionee without the consent of such
optionee.
The Plan shall terminate on March 29, 2010. The Plan may be terminated
at an earlier date by a vote of the shareholders of the Company. Any such
earlier termination will not affect any options granted prior to the effective
date of such termination.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
22
<PAGE>
ITEM 7 - APPROVAL OF SELECTION OF INDEPENDENT ACCOUNTANTS
Sellers & Associates, Certified Public Accountants (formerly known as
Taylor & Company), served as the Company's independent accountants to audit the
consolidated financial statements of the Company for the fiscal years ending
June 30, 1997 and June 30, 1998. The Company's newly formed Audit Committee has
selected Haugen Springer & Company, Certified Public Accountants, located in
Denver, Colorado, to replace Sellers & Associates. Sellers & Associates' report
on the Company's financial statements for the last two fiscal years did not
contain any adverse opinion, or disclaimer of opinion, nor were any such reports
modified as to uncertainty, audit scope or accounting principles. Further there
have been no disagreements with Sellers & Associates on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which disagreement, if not resolved to the satisfaction of such
accountants, would have caused such accountants to make reference to the subject
matter of the disagreement(s) in connection with their reference report(s)
thereon during the Company's two most recent fiscal years. A copy of the of
Sellers & Associates resignation letter appears as Exhibit "F" hereto. The
selection of Haugen Springer & Company has been approved by the Board of
Directors and is being submitted by the Board for approval by shareholders at
the Annual Meeting.
The affirmative vote of the holders of a majority of the shares voted
is required for the approval of the foregoing proposal. The holders of the
enclosed proxy will vote to ratify the action of the Board of Directors, unless
otherwise directed.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS ITEM 7.
OTHER MATTERS
Other than the approval of the actions of the officers and directors,
during the last two fiscal years, involving borrowings, settling debts, filling
Board vacancies and electing officers, the Board of Directors is not aware of
any other business that may come before the meeting. However, if additional
matters properly come before the meeting, proxies will be voted at the
discretion of the proxy holders.
23
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the Company's 2000
Annual Meeting of Shareholders must be received by the Company not later than
November 1, 1999, at its principal executive offices, 676 Louis Drive,
Warminster, Pennsylvania 18974 Attention: Secretary, for inclusion in the Proxy
Statement and proxy relating to the 2000 Annual Meeting of Shareholders.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report to shareholders for the fiscal
year ended June 30, 1998 accompanies this Notice of Meeting and Proxy Statement.
No part of the Annual Report is incorporated herein and no part thereof is to be
considered proxy soliciting material.
FORM 10-KSB
The Company will furnish without charge to each person whose proxy is
being solicited, upon written request of any such person, a copy of the
Company's Annual Report on Form 10-KSB/A for the fiscal year ended June 30,
1998, as filed with the Securities and Exchange Commission, including the
financial statement schedules thereto. The Company will furnish to any such
person any exhibit described in the list accompanying the Form 10-KSB, upon the
payment, in advance, of reasonable fees related to the Company's furnishing such
exhibit(s). Requests for copies of such report and/or exhibit(s) should be
directed to Jeffrey L. Wertz, Vice President of Finance, at the Company's
principal address.
BY ORDER OF THE BOARD OF
DIRECTORS
EDWARD C. STANOJEV, JR., PRESIDENT
AND DIRECTOR
APRIL 12, 1999
WARMINSTER, PENNSYLVANIA
24
<PAGE>
EXHIBIT A
RESOLVED, that ARTICLE V - CORPORATE SHARES be deleted in its entirety and
amended to read as follows:
ARTICLE V
CORPORATE SHARES
The aggregate number of shares which the corporation shall
have authority to issue is ONE HUNDRED MILLION (100,000,000)
shares of common stock, par value $.001 per share, all stock
to be of one class, non-assessable with no provisions for
cumulative voting or pre-emptive rights.
25
<PAGE>
EXHIBIT B
RESOLVED, that the following ARTICLE XVII - INDEMNIFICATION OF DIRECTORS be
incorporated into the Company's Articles of Incorporation, as follows:
ARTICLE XVII
INDEMNIFICATION OF DIRECTORS
In order to induce officers or directors of the Corporation to serve or
continue to serve as such, the Corporation shall indemnify and hold harmless
each person who shall serve at any time hereafter as a director or officer of
the Corporation, and any person who serves at the request of this Corporation as
a director or officer of any other corporation, from and against any and all
claims and liabilities to which such person shall become subject by reason of
his having heretofore or hereafter been a director or officer of the
Corporation, or by reason of any action alleged to have been heretofore or
hereafter taken or omitted by him as such director or officer, and shall
reimburse each such person for all legal and other expenses reasonably incurred
by him in connection with any such claim or liability; provided that no person
shall be indemnified against, or be reimbursed for, any expenses incurred in
connection with any claim or liability (i) in connection with a proceeding by or
in the right of the Company in which the Director was adjudged liable to the
Company; or (ii) in connection with any proceeding charging that the Director
derived an improper personal benefit, whether or not involving action in his
official capacity, in which proceeding he was adjudged liable on the basis that
he derived an improper personal benefit.
The rights accruing to any person under the foregoing provisions shall
not exclude any other right to which he may be lawfully entitled, nor shall
anything herein contained restrict the right of the Corporation to indemnify or
reimburse such person in any proper case even though not specifically herein
provided for.
26
<PAGE>
EXHIBIT C
RESOLVED, that ARTICLE IX - BOARD OF DIRECTORS be deleted in its entirety and
amended to read as follows:
ARTICLE IX
BOARD OF DIRECTORS
(a) The number of directors constituting the whole Board shall be
as fixed from time to time by vote of a majority of the whole
Board; provided, however, that the number of directors shall
not be less than three and that number shall not be reduced so
as to shorten the term of any director at the time in office.
The number of directors constituting the whole Board shall not
be greater than nine until otherwise fixed by a majority of
the whole Board in accordance with the preceding sentence.
(b) The Board shall be divided into three classes, designated
Class I, Class II and Class III, as nearly equal in number as
the then total number of directors constituting the whole
Board permits, with the term of office of one class expiring
each year. At the Annual Meeting of Shareholders in 1999,
directors of Class I shall be elected to hold office for a
term expiring at the next succeeding annual meeting, directors
of Class II shall be elected to hold office for a term
expiring at the second succeeding annual meeting, and
directors of Class III shall be elected to hold office for a
term expiring at the third succeeding annual meeting. At each
annual meeting of shareholders the successors to the class of
directors whose term shall then expire shall be elected to
hold office for a term expiring at the third succeeding annual
meeting. Any vacancies in the Board of Directors for any
reason, and any increase in the directors, may be filled by
the Board of Directors, acting by a majority of the directors
then in office, or by a sole remaining director. Any directors
so chosen shall hold office until the next election of the
class for which such directors shall have been chosen and
until their successors shall be elected and qualified,
subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Any newly created or
eliminated directorships resulting from an increase or
decrease in the authorized number of directors shall be
apportioned by the Board of Directors among the three classes
of directors so as to maintain such classes as nearly equal as
possible.
27
<PAGE>
EXHIBIT D
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of the 25th day
of June, 1997, by and between Stansbury Holdings Corporation, a Utah corporation
(the "Company"), and James R. Hindman, Ph.D. (the "Executive").
PRELIMINARY STATEMENTS:
A. The Executive has been approved by the Board of Directors (the
"Board") as Vice President of the Company.
B. The Executive is widely regarded as an international expert in the
field of commercial vermiculite and possesses extensive knowledge of the
vermiculite industry and the ability to apply this knowledge to the business and
affairs of the Company, its policies, methods and personnel and industry.
C. The Board recognizes that the Executive will contribute to the
growth and success of the Company and desires to assure the Company of the
Executive's employment and to compensate him therefor.
D. The Board has determined that this Agreement will reinforce and
encourage the Executive's attention and dedication to the Company.
E. The Company acknowledges that the Executive possesses specific
intellectual property and assets which are not to be included within the scope
of this agreement. These include, but are not limited to, (i) proprietary
information, ideas and concepts for new and improved vermiculite products and
applications, conceived and considered as part of the Executive's business known
as Vermiculite Technologies; (ii) proprietary information obtained, distributed,
or documented in the Executive's publication Vermiculite Technology Newsletter;
and (iii) interests and ownership positions in certain developmental companies
including Resource Vermiculite LLC.
F. The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties agree as follows:
1. EMPLOYMENT.
1.1 GENERAL. The Company hereby agrees to employ the Executive,
and the Executive hereby agrees to serve the Company, on the terms and subject
to the conditions set forth herein.
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1.2 DUTIES OF EXECUTIVE. During the term of this Agreement, the
Executive shall serve as the Vice President of the Company, shall diligently
perform all services as may be assigned to him by the Board, and shall exercise
such power and authority as may from time to time be delegated to him by the
Board. The Executive shall devote at least twenty (20) hours per week of his
time, energy and attention to the business and affairs of the Company, render
such services to the best of his ability, and use his best efforts to promote
the interests of the Company.
2. TERM.
2.1 INITIAL TERM. The initial term of this Agreement and the
employment of the Executive hereunder shall be for the period from the date
hereof through December 31, 1997 (the "Initial Term"), unless sooner terminated
in accordance with the terms and conditions hereof.
2.2 RENEWAL TERMS. The Initial Term of this Agreement, and the
employment of the Executive hereunder, may be renewed and extended for such
period or periods as may be mutually agreed to by the Company and the Executive
in a written supplement to this Agreement signed by the Executive and the
Company (the "Written Supplement"). If this Agreement is not so renewed and
extended the employment of the Executive hereunder, shall automatically
terminate upon the expiration of the Initial Term.
3. COMPENSATION.
3.1 BASE SALARY. The Executive shall receive a base salary at
the following annual rates (the "Base Salary") during the Initial Term of this
Agreement:
PERIOD BASE SALARY
------ ------------
6/1/97 - 12/31/97 $36,000
The Base Salary shall be payable in equal installments consistent with the
Company's normal monthly payroll schedule, subject to applicable withholding and
other taxes. If the term of this Agreement shall be renewed and extended as
provided in Section 2.2 hereof, then during such renewal term of this employment
hereunder the Executive shall be paid a base salary as set forth in the Written
Supplement.
3.2 INCENTIVE COMPENSATION - STOCK PARTICIPATION PROGRAM.
(a) In addition to the Base Salary, the Executive
shall be entitled to receive as additional compensation (the "Incentive
Compensation - Stock Participation Program") for the attainment of specific
goals, as set forth in Exhibit "A" attached hereto, during the term of the
Executive's employment hereunder, a total of 500,000 shares of the Company's
common stock (the "Shares") to be issued in increments of 100,000 each upon the
completion of each of the following criteria: (i) the execution of the
employment agreement; (ii) entering into an agreement directly with the claim
owners or through Resource Vermiculite LLC which will allow Stansbury immediate
access to the mine and mill for the production of vermiculite concentrates;
(iii)
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commencement of production from the Elk Gulch mine and mill by Stansbury
Holdings, with "production" being defined as the mining and milling of
vermiculite ore to produce sufficient concentrated and sized vermiculite to be
marketed in truck load and rail car load quantities; (iv) entering into an
agreement with the HPS claim owners which will allow for the long term access to
the Elk Gulch mine and mill; and (v) the successful modification of mill
circuitry to allow for a potential mill production capacity of 25,000 tons per
year based on a full year production schedule.
(b) For purposes of this Agreement, the Shares
(Incentive Compensation) shall be deemed earned by the Executive as of the
completion dates of tasks (i) through (v) in Section 3.2 (a), all of such being
Shares duly authorized, validly issued, fully paid and non-assessable. The
Company agrees to register the Shares within a period of 90 days subsequent to
the date the Shares are so issued. The Company further agrees to remain in good
standing pursuant to Section 12(g) of the Securities Exchange Act of 1934, and
to keep all reports and filings required to be made with the Securities and
Exchange Commission current. Any termination of this Agreement by the Company
prior to the expiration if its stated term as provided in paragraph 2 hereof
shall not affect or in any way impair the Executive's right (or those of his
transferees) to sell or otherwise dispose of such Shares.
(c) The Company shall permit the Executive or his
designated representative, on reasonable advance notice, from time to time to
review the Company's books and records relevant to the calculation of the
Incentive Compensation. The Executive shall bear the entire cost of such review.
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 EXPENSE REIMBURSEMENT. The Executive shall be entitled to
reimbursement by the Company for all reasonable business expenses incurred by
him in connection with the performance of his duties hereunder; provided,
however, that such entitlement is conditioned upon the Executive providing the
Company with appropriate documentation of such expenses in accordance with
Company policy.
4.2 OTHER BENEFITS. The Executive shall be entitled to
participate in all medical, hospitalization, disability and group life insurance
plans, and any and all other employee benefit plans, as are presently and
hereafter provided by the Company to its executives. The Executive shall be
entitled to four weeks vacation per year in accordance with the Company's
prevailing policy for its executives; provided, however, that in no event may a
vacation be taken when to do so could reasonably be expected to materially and
adversely affect the Company's business and unused vacation time shall not be
carried over to any subsequent year. Notwithstanding the foregoing, the
Executive shall be entitled to employee benefits which are no less favorable
than those currently provided to him by the Company.
4.3 WORKING FACILITIES. The Company shall utilize the
Executive's existing office, secretarial help and other facilities and services
currently available to him ; the Company shall not be required to provide rent,
additional staff wages or utilities at this time. It is contemplated that as the
Company moves from the developmental stage to an operational phase (defined as
the
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commencement of vermiculite mining and milling to produce saleable product),
existing facilities will change and the Company will assume the expense thereof.
5. TERMINATION.
5.1 TERMINATION FOR CAUSE. The Company shall at all times have
the right, upon written notice to the Executive, to terminate the Executive's
employment hereunder for Cause (as hereinafter defined). For purposes of this
Agreement, the term "Cause" shall mean (a) a willful breach by the Executive of
any of the material terms or provisions of this Agreement, (b) the conviction of
the Executive of a felony, (c) commission by the Executive of an act or acts
involving fraud, embezzlement, misappropriation, theft, breach of fiduciary duty
or dishonesty against the property or personnel of the Company, or (d) willful
or reckless conduct by the Executive which the Board in good faith determines
could reasonably be expected to have a material adverse effect on the business,
assets, properties, results of operations, financial condition or prospects of
the Company. Upon any termination pursuant to this Section 5.1, the Executive
shall be entitled to be paid any unpaid amounts of his Base Salary or $72,000
per year, which ever is greater, which accrued through the date of termination
and the Company shall have no further liability under this Agreement (other than
for reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however to the provisions of Section 4.1).
5.2 DISABILITY. The Company shall at all times have the right,
upon written notice to the Executive, to terminate the Executive's employment
hereunder, if the Executive shall, as the result of mental or physical
incapacity, illness or disability, become unable to perform his duties hereunder
for in excess of 60 consecutive calendar days or 90 calendar days in any
12-month period. Upon any termination pursuant to this Section 5.2, (a) the
Company shall pay to the Executive (i) immediately any unpaid amounts of his
Base Salary or $72,000 per year, which ever is greater, accrued through the
effective date of termination, plus (ii) in accordance with Section 3.2(b), an
amount earned through the date of termination but unpaid pursuant to the
Incentive Compensation - Stock Participation Program, and (b) the Company shall
have no further liability under this Agreement (other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the provisions of Section 4.1).
5.3 DEATH. In the event of the death of the Executive during
the term of his employment hereunder, (a) the Company shall pay to the deceased
Executive's designated beneficiary or, if no beneficiary has been designated,
the deceased Executive's estate (i) immediately any unpaid amounts of his Base
Salary accrued through the effective date of termination, plus (ii) in
accordance with Section 3.2(b), an amount earned through the date of termination
but unpaid pursuant to the Incentive Compensation - Stock Participation Program,
and (b) the Company shall have no further liability under this Agreement (other
than for reimbursement for reasonable business expenses incurred prior to the
date of termination, subject, however, to the provisions of Section 4.1).
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5.4 TERMINATION WITHOUT CAUSE.
Effective at any time at least one year after the commencement
of the Executive's employment hereunder, the Company shall have the right to
terminate the Executive's employment hereunder without cause upon at least 90
days' prior written notice to the Executive; provided, however, that the Company
shall pay to the Executive (i) on the effective date of termination specified in
the notice, any unpaid Base Salary accrued through the effective date of
termination, (ii) if the Company has selected a Non-competition Period (as
defined in Section 6.1) in its notice of termination, his then-effective Base
Salary or $72,000 per year, which ever is greater, in equal installments
consistent with the Company's normal payroll practices, from such termination
date until the end of the Non-competition Period, and (iii) in accordance with
Section 3.2(b), an amount earned through the date of termination but unpaid
pursuant to the Incentive Compensation - Stock Participation Program, and (b)
the Company shall have no further liability under this Agreement (other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 4.1).
5.5 TERMINATION BY THE EXECUTIVE. Effective at any time at
least one year after the commencement of the Executive's employment hereunder,
the Executive shall have the right to terminate his employment hereunder upon at
least 90 days prior written notice to the Company. In the event of such
termination, the Company shall pay to the Executive (i) on the effective date of
termination specified in the notice, any unpaid Base Salary accrued through the
effective date of termination, plus (ii) in accordance with Section 3.2(b), an
amount earned through the date of termination but unpaid pursuant to the
Incentive Compensation - Stock Participation Program, and (b) the Company shall
have no further liability under this Agreement (other than for reimbursement of
reasonable business expenses incurred prior to the date of termination, subject,
however to the provisions of Section 4.1).
5.6 EXPIRATION OF INITIAL TERM AND NON-COMPETITION PERIOD. In
the event that the Executive's employment hereunder is terminated by reason of
the expiration of the Initial Term, the Company may, pursuant to written notice
to the Executive given at least 90 days prior to the expiration of the Initial
Term, require the Executive to submit to a Non-competition Period of up to one
year, in which case the Company shall continue to pay to the Executive his
then-effective Base Salary or $72,000 per year, which ever is greater, from the
expiration of the Initial Term until the end of the Non-competition Period, in
equal installments consistent with the Company's normal payroll practices. Upon
such expiration and receipt of such payments described in the preceding
sentence, together with the payment of any unpaid amounts pursuant to the
Incentive Compensation - Stock Participation Program through the expiration of
the Initial Term, the Company shall have no further liability under this
Agreement (other than for reimbursement for reasonable business expenses
incurred prior to the date of expiration, subject, however, to the provisions of
Section 4.1).
6. RESTRICTIVE COVENANTS.
6.1 NON-COMPETITION. While employed by the Company and during
the Non-competition Period (as hereinafter defined) and with the exception(s)
specified in Section E of the Preliminary Statements, the Executive shall not,
directly or indirectly, engage in or have any interest
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in any sole proprietorship, partnership, corporation or business or any other
person or entity other than the Company, its subsidiaries or affiliates (whether
as an employee, officer, director, partner, agent, security holder, creditor,
consultant or otherwise) unless the Executive receives appropriate authorization
from the Company allowing such interest or employment, and that directly or
indirectly engages in the manufacture, import, design, merchandising and/or
marketing of products competitive with the products then offered for sale by the
Company anywhere the Company's products are then offered for sale (as may
reasonably be determined by the Company to be the appropriate geographical
market(s) for such products); provided, however, that nothing contained herein
shall be deemed to prevent or restrict the Executive from owning up to 4.9% of
the shares of any class of capital stock of any corporation whose shares are
listed on a national securities exchange or are regularly traded in the
over-the-counter market; provided that the Executive does not actively
participate or engage in the conduct of the business of any such other
corporation. For purposes of this Section 6.1, the term "Non-competition Period"
shall mean (a) in the event the Executive's employment is terminated pursuant to
Section 5.2, 5.4 or 5.6, the non-competition period, if any, selected by the
Company in its notice to the Executive, which period may not exceed one year
following the effective date of such termination, (b) in the event the
Executive's employment is terminated pursuant to Section 5.5, the period
beginning on the effective date of such termination and ending one year
thereafter, or (c) in the event the Executive's employment hereunder is
terminated pursuant to Section 5.1 a period of two years following the date his
employment is terminated. The Company specifically acknowledges exceptions of
those interests disclosed by employee in Section E of the Preliminary
Statements.
6.2 NONDISCLOSURE. The Executive shall not divulge,
communicate, or use to the detriment of the Company or for the benefit of any
other person or persons, or misuse in any way, any confidential information
pertaining to the business of the Company. For purposes hereof, "confidential
information" means information, including but not limited to, technical or
non-technical data, a formula, pattern, compilation, program, device, method,
technique, drawing, process, financial data, or list of actual or potential
customers or suppliers, that: (i) is sufficiently secret to derive economic
value, actual or potential, from not being generally known to other persons who
can obtain economic value from its disclosure or use; and (ii) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy or
confidentiality. Any confidential information now known which was provided by
the Company or hereafter acquired by the Executive with respect to the business
of the Company shall be deemed a valuable, special and unique asset of the
Company that is received by the Executive in confidence and as a fiduciary, and
the Executive shall remain a fiduciary to the Company with respect to all of
such information.
6.3 NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. While employed
by the Company and for two years following the termination of his employment for
any reason, the Executive shall not, directly or indirectly, for himself or for
any other person, firm, corporation, partnership, association or other entity,
attempt to employ or enter into any contractual arrangement with any employee or
former employee of the Company, unless such employee or former employee has not
been employed by the Company for a period in excess of one year.
6.4 BOOKS AND RECORDS. All books, records and accounts relating
in any manner to the business, customers, suppliers or clients of the Company
and all other documents, disks,
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software or other items containing confidential information relating to the
Company, whether prepared by the Executive or otherwise coming into the
Executive's possession, shall be the exclusive property of the Company and shall
be returned immediately, together with any copies, to the Company on termination
of the Executive's employment hereunder or on the Company's request at any time.
7. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Section 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Section 6 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Montana.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and, upon
its effectiveness, shall supersede all prior agreements, understandings and
arrangements, both oral and written, between and among the Executive and the
Company (or any of their affiliates) with respect to such subject matter. Except
for the obligation to pay any accrued but unpaid salary and expense
reimbursements in the ordinary course of business due the Executive, all such
prior agreements, understandings and arrangements for the provision of services
by the Executive to the Company and/or any of its affiliates and the
compensation of the Executive in any form shall automatically terminate upon the
execution of this Agreement, and each party shall thereupon and thereby, without
any further action, release and forever discharge the other (and the other's
affiliates) from any and all liabilities and obligations of any nature arising
out of or in connection with any and all such prior agreements, understandings
or arrangements. This Agreement may not be modified in any way unless by a
written instrument signed by both the Company and the Executive.
10. NOTICES. Any notice required or permitted to be given hereunder
shall be deemed given when delivered by hand, by facsimile or three business
days after being deposited in the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, (i) if to the Company, to the
address of its principal offices in Virginia Beach, Virginia, and (ii) if to the
Executive, to his address as reflected on the payroll records of the Company, or
to such other address as either party hereto may from time to time give notice
of to the other.
11. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representative, legal representatives, successors and, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise; provided, however, that under no circumstances may the Executive
delegate his employment obligations hereunder or any portion thereof.
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12. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
13. WAIVER. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.
14. DAMAGES; PREVAILING PARTY. Nothing contained herein shall be
construed to prevent the Company or the Executive from seeking and recovering
from the other damages sustained by either or both of them as a result of its or
his breach of any term or provision of this Agreement. If there is any legal
action or proceeding to enforce or interpret any provision of this Agreement or
to protect or establish any right or remedy of any party, the nonprevailing
party to such action or proceeding shall pay to the prevailing party all costs
and expenses, including reasonable attorneys' fees and costs, incurred by such
prevailing party in such action or proceeding, in enforcing its judgment, and in
connection with any appeal from such judgment. Reasonable attorneys' fees and
costs incurred in enforcing any judgment or in connection with any appeal shall
be recoverable separately from and in addition to any other amount included in
such judgment. The prevailing party's rights under this Section 14 shall not
merge into any judgment and shall survive until all such fees and costs have
been paid. The parties consent and agree to submit to the exclusive jurisdiction
of the courts located in Beaverhead County, Montana, with respect to any
litigation arising hereunder, and each party hereby waives any objection it
might have to venue in any such court.
15. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
17. SUBSIDIARIES. All references to the "Company" in this Agreement,
including but not limited to those in Section 6, shall be deemed to include any
and all of the Company's direct and indirect subsidiaries to the extent the
context may require.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
[COMPANY]
STANSBURY HOLDINGS CORPORATION
By:______________________________
Dr. Martin Peskin, Chairman of
the Board of Directors
[EXECUTIVE]
_________________________________
James R. Hindman, Ph.D.
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EXHIBIT A
JAMES R. HINDMAN, PH.D.
EMPLOYMENT AGREEMENT
INCENTIVE COMPENSATION - STOCK PARTICIPATION PROGRAM
In addition to the Base Salary, the Executive shall be entitled to
receive additional compensation; a total of 500,000 shares to be issued in
increments of 100,000 each upon the completion of each of the following goals,
i.e., (i) the execution of the employment agreement; (ii) entering into an
agreement directly with the claim owners or through Resource Vermiculite LLC
which will allow Stansbury immediate access to the mine and mill for the
production of vermiculite concentrates with "production" being defined as the
mining and milling of vermiculite ore to produce sufficient concentrated and
sized vermiculite to be marketed in truck load and rail car load quantities;
(iii) commencement of production from the Elk Gulch mine and mill by Stansbury
Holdings; (iv) entering into an agreement with the HPS claim owners for which
will allow for the long term access to the Elk Gulch mine and mill; and (v) the
successful modification of mill circuitry to allow for a potential mill
production capacity of 25,000 tons per year based on a full year production
schedule.
For purposes of this Agreement, the Shares (Incentive Compensation)
shall be deemed earned by the Executive as of the date issued, all of such being
Shares duly authorized, validly issued, fully paid and non-assessable. The
Company agrees to register the Shares within a period of 90 days subsequent to
the date the Shares are so issued. The Company further agrees to remain in good
standing pursuant to Section 12(g) of the Securities Exchange Act of 1934, and
to keep all reports and filings required to be made with the Securities and
Exchange Commission current. Any termination of this Agreement by the Company
prior to the expiration if its stated term as provided in paragraph 2 hereof
shall not affect or in any way impair the Executive's right (or those of his
transferees) to sell or otherwise dispose of such Shares.
The Company shall permit the Executive or his designated
representative, on reasonable advance notice, from time to time to review the
Company's books and records relevant to the calculation of the Incentive
Compensation. The Executive shall bear the entire cost of such review.
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EXHIBIT E
STANSBURY HOLDINGS CORPORATION 1999 STOCK OPTION PLAN
Article I
1.1 Name and Purpose. The name of this Plan is the "Stansbury Holdings
Corporation 1999 Stock Option
Plan" (the "Plan"). Its purpose is (a) to maximize the long-term success of
Stansbury Holdings Corporation (the "Company"), (b) to ensure a balanced
emphasis on both current and long-term performance, (c) to enhance Participants'
identification with shareholders' interests, and (d) to facilitate the
attraction and retention of key individuals with outstanding ability.
1.2 Definitions. Whenever used in the Plan, the following terms shall have the
meaning set forth below:
(a) "Board of Directors" or "Board" shall mean the Board of Directors of
Stansbury Holdings Corporation as constituted from time to time
(b) "Change of Control" shall have the meaning ascribed by Section 5.5 hereof.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
(d) "Common Stock" shall mean the common voting shares of the Company.
(e) "Committee" shall mean the Compensation Committee of the Board or such other
committee or subcommittee of the Board as may have been or may be designated or
appointed by the Board.
(f) "Company" shall mean Stansbury Holdings Corporation or any successor
thereto.
(g) "Control Transaction" shall have the meaning ascribed by Section 5.5 hereof.
(h) "Disability" shall mean total and permanent disability as defined in Code
Section 22(e).
(i) "Employee" shall mean any person who is currently a common law employee of
the Company or any of its Subsidiaries.
(j) "Effective Date" shall mean the date the Plan is adopted by the Board,
subject to approval by the shareholders of the Company at a meeting held within
twelve (12) months following the date of adoption by the Board.
(k) "Fair Market Value" or "FMV" shall mean the fair market value of the Common
Stock, which shall be determined as Follows:
(i) if the Common Stock is listed on any established stock exchange or a
national market system, including, without limitation, the NASDAQ National
Market, its fair market value shall be the average, over the twenty (20 )
trading days preceding the date of the grant of an option, of the closing
selling prices for such stock on the principal securities exchange or national
market system on which the Common Stock is at the time listed for trading. If
there are no sales of Common Stock on any of those dates, then the closing
selling price for the Common Stock on the next preceding day for which such
closing selling price is quoted shall be deemed to be the fair market value; or
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(ii) If the Common Stock is not traded on an exchange or a national market
system, its Fair Market Value shall be determined in good faith by the
Committee, possibly based upon, but not limited to, a fair market value concept
averaged over the twenty (20) trading days preceding the date of the grant of an
option or other relevant date, and such determination shall be conclusive and
binding on all persons.
In no event shall the Fair Market Value equal less than the par value of the
Common Stock.
(l) "Incentive Stock Option" shall mean a stock option within the meaning of
Section 422 of the Code granted pursuant to Section 4.1 hereof.
(m) "Nonqualified Stock Option" shall mean an Option, other than an Incentive
Stock Option, granted pursuant to Section 4.1 hereof.
(n) "Option" shall mean individually and collectively, an Incentive Stock Option
and Nonqualified Stock Option to purchase Common Stock.
(o) "Option Price" shall mean the price per share of Common Stock set by the
Committee upon the grant of an Option.
(p) "Parent" shall mean any corporation which qualifies as a parent of the
Company under the definition of "parent corporation" under Code Section 424(c).
(q) "Participant" shall mean any person who satisfies the criteria set forth in
Article III hereof.
(r) "Person" shall mean any individual, partnership, association, corporation,
trust, or other legal entity.
(s) "Separation Date" shall mean, as determined by the Committee, the date on
which a Participant's Service as a member of the Board terminates or employment
with the Company or a Subsidiary terminates for reasons other than transfer of
employment to a Parent or Subsidiary. Whether any leave of absence shall
constitute termination of employment for purposes of this Plan shall be
determined in each case by the Committee at its sole discretion.
(t) "Subsidiary" shall mean a subsidiary corporation of the Company as defined
in Code Section 424(f).
(u) "Termination for Cause" shall mean the termination of the Participant's
employment with the Company for any of the following reasons. (I) any act of
malfeasance or wrongdoing affecting the company, its Parent or Subsidiaries,
(ii) the breach of any covenant not to compete, or employment contact, with the
Company, its Parent or Subsidiaries, or (iii) engaging in any other conduct
which would warrant Participant's discharge for cause, excluding general
dissatisfaction with the performance of Participant's duties, but including any
act of disloyalty or conduct clearly tending to bring discredit upon the
Company, its Parent or Subsidiaries.
Where the context requires, words in the masculine gender shall include the
feminine and neuter genders, words in the singular shall include the plural, and
words in the plural shall include the singular.
1.3 Plan Duration. The Plan shall remain in effect for ten (10) years from the
Effective Date or until terminated by the Board, whichever comes first.
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ARTICLE II
2.1 Plan Administration.
(a) The Plan shall be administered by the Committee. The Committee is authorized
to establish such rules and to appoint such agents as it deems appropriate for
the proper administration of the Plan, and to make such determinations (which
shall be sufficiently evidenced if set forth in any written action of the
Committee or in any written stock option agreement approved by the committee)
and to take such steps in connection with the Plan or the benefits provided
hereunder as it deems necessary or advisable. The Committee also is authorized
to delegate administrative functions to others to the extent such action is not
inconsistent with the express provisions of this Plan.
(b) The Committee shall have the authority, in its sole discretion and from time
to time to take the following actions:
(i) Select those individuals who meet the participation requirements of the
Plan,
(ii) Grant Options provided by the Plan in such form and amount as the Committee
shall determine;
(iii) Impose such limitations, restrictions and conditions upon any such Options
as the Committee shall deem appropriate; and
(iv) Interpret the Plan, adopt, amend and rescind rules and regulations related
to the Plan, and make all other determinations and take all other action
necessary or advisable for the implementation and administration of the Plan.
ARTICLE III
3.1 Eligibility. The Participants in the Plan shall be selected by the Committee
from the directors of the Company and the officers and key Employees of the
Company or its Subsidiaries who occupy responsible managerial, professional or
advisory positions and who have the capability of making a substantial
contribution to the success of the Company. In making this selection and in
determining the form and amount of Option, the Committee shall consider any
factors deemed relevant, including the individuals functions, responsibilities,
value of service to the Company or its Subsidiaries and past and potential
contributions to the Company's profitability and sound growth. Participants who
are not otherwise Employees may receive Nonqualified Stock Options but may not
receive Incentive Stock Options under the Plan.
ARTICLE IV
4.1 Options. The Committee shall determine the forms and amounts of Options for
Participants. All Options shall be subject to the terms and conditions of the
Plan and to such other terms and conditions consistent with the Plan as the
Committee deems appropriate. Options under the Plan need not be uniform and
Incentive Stock Options and Nonqualified Stock Options may be granted in one
agreement. Options may take the following forms, in the Committee's sole
discretion:
<PAGE>
(a) Incentive Stock Options.
(i) The Committee may grant Incentive Stock Options within the meaning of Code
Section 422 to purchase Common Stock. In addition to other restrictions
contained in the Plan, an Incentive Stock Option (1) shall not be exercised more
than ten (10) years following the date of grant, (2) shall not have an Option
Price less than the FMV of Common Stock on the date Incentive Stock Option is
granted, (3) shall otherwise comply with Code Section 422, and (4) shall be
designated in writing as an "Incentive Stock Option" by the Committee. The date
an Incentive Stock Option is granted shall mean the date selected by the
Committee as of which the Committee allots a specific number of shares to a
Participant pursuant to the Plan Notwithstanding the foregoing, The Option Price
of an Incentive Stock Option granted to any owner of 10% or more of the total
combined voting power of the Company, its Parent or Subsidiaries shall be no
less than 110% of FMV and such Option shall not be exercisable after the
expiration of five years from the date of its grant. No Incentive Stock Option
shall be granted to any Participant who is not otherwise an Employee.
(ii) The grant of an Incentive Stock Option shall be evidenced by a written
Incentive Stock Option Agreement, executed by the Company and the holder of an
Incentive Stock Option, stating the number of shares of Common Stock subject to
the Incentive Stock Option evidenced thereby, and in such form as the Committee
may from time to time determine.
(b) Nonqualified Stock Options.
(i) The Committee may grant Nonqualified Stock Options to purchase Common Stock
which are not intended to qualify as Incentive Stock Options under Code 422 and
which are designated in writing be the Committee as "Nonqualified Stock
Options." At the time of the grant, the Committee shall determine the Option
exercise period, the Option Price, and such other conditions or restrictions on
the exercise of the Nonqualified Stock Option as the Committee deems
appropriate.
(ii) The Committee shall cause the Company to enter into a written Nonqualified
Stock Option Agreement with the Participant stating that the Options are
Nonqualified Stock Options, the number of shares of Common Stock subject to the
Nonqualified Stock Option, any conditions and restrictions on the exercise of
the Option imposed by the Plan and the Committee, and in such form as the
Committee shall from time to time determine.
4.2 Option Exercise. Except as otherwise provided in Article V hereof, an
Incentive Stock Option may not be exercised at any time unless the holder
thereof is then an Employee of the company, its Parent or Subsidiary. Options
may be exercised in whole at any time, or in part from time to time, with
respect to whole shares only, within the period permitted for the exercise
thereof, and shall be exercised by written notice of intent to exercise the
Option with respect to a specified number of shares delivered to the Company's
Secretary at the Company's principal office, and payment in full to the Company
at said office of the amount of the Option Price for the number of shares of
Common Stock with respect to which the Option is then being exercised. In
addition to and at the time of payment of the Option Price, the Participant
shall pay to the Company in cash or in Common Stock, the full amount, if any,
that the Company is required to withhold or pay under Federal or State Law with
respect to the exercise of the Option. Alternatively, the number of shares
delivered by the Company upon exercise of the Option shall be appropriately
reduced to reimburse the Company for such payment.
4.3 Payment. Payment of the purchase price upon exercise of any Option granted
under this Plan shall be made in cash or by optionee's personal check, certified
check or bank draft, payable to the order of the Company in lawful money of the
United States, provided however, that the Committee, in its sole discretion, may
permit an optionee to pay the Option Price in whole or in part (a) with shares
of
<PAGE>
Common Stock owned by the optionee or with shares of Common Stock withheld
from the shares otherwise deliverable to the optionee upon exercise of an Option
(in each case only to the extent that such an exercise of the Option would not
result in an accounting compensation charge with respect to the shares used to
pay the Option Price), (b) by delivery on a form prescribed by the Committee of
an irrevocable direction to a securities broker approved by the Committee to
sell shares of Common Stock and deliver all or a portion of the proceeds to the
Company in payment for the Common Stock, (c ) by delivery of the optionee's
promissory note with such recourse, interest, security, and redemption
provisions as the Committee in its discretion determines appropriate, or
(d) in any combination of the foregoing. Any such alternative permissible
methods of exercise of any Incentive Stock Option shall be set forth in the
stock option agreement relating to such Incentive Stock Option. In the event the
Option Price is paid in whole or in part with shares of Common Stock such shares
shall be valued at their FMV as of the date of exercise of the Option. Such
shares shall be delivered along with any portion to be paid in cash or by
promissory note within (5) days after the date of exercise. If the Participant
fails to pay the Option Price within such five (5) day period, the Committee
shall have the right to take whatever action it deems appropriate, including
terminating the Option or voiding the exercise of the Option. The Company shall
not issue or transfer Common Stock upon the exercise of an Option until the
Option Price is paid in full.
ARTICLE V
5.1 Termination of Employment or Service as a Director. Except as provided in
this Article V or except as otherwise determined by the Committee, all Options
under the Plan shall terminate upon the termination of the Participant's
employment or services as a director of the Company as of the Participant's
Separation Date.
5.2 Death of a Participant. In the event of the death of a Participant prior to
the exercise of all Options granted to such Participant, all unexercised Options
shall become immediately exercisable and the administrator of the deceased
Participant's estate, the executor under his or her will, or the person(s) to
whom the Options shall have been validly transferred by such executor or
administrator pursuant to the will or laws of intestate succession shall have
the right, within one year from the date of such Participant's death, but not
beyond the expiration date of the Options, to exercise such Options.
5.3 Retirement or Termination.
(a) In the event of termination of a Participant's employment or service as a
director of the Company prior to the exercise of all Incentive Stock Options
granted to the Participant, such Participant shall have the right, within (3)
months of his Separation Date, but not beyond the expiration date of such
Options, to exercise such Incentive Stock Options to the extent exercisable on
his Separation Date.
(b) In the event of the termination of a Participant's employment or service as
a director of the Company prior to the exercise of all Nonqualified Stock
Options granted to the Participant, such Participant shall have the right,
within three (3) months of his Separation Date, but not beyond the expiration
date of such Nonqualified Stock Options, to exercise such Nonqualified Stock
Options to the extent exercisable on his Separation Date.
5.4 Disability.
(a) In the event of the termination of a Participant's employment by Disability
prior to the exercise of all
<PAGE>
Incentive Stock Options granted to the Participant, all unexercised Incentive
Stock Options shall become immediately exercisable and such Participant or his
legal representative shall have the right, within twelve (12) months of his
Separation Date, but not beyond the expiration date of such Incentive Stock
Options, to exercise such Incentive Stock Options.
(b) In the event of the termination of a Participant's employment by Disability
prior to the exercise of all Nonqualified Stock Options granted to the
Participant, all unexercised Nonqualified Stock Options shall become immediately
exercisable and such Participant or his legal representative shall have the
right, within twelve (12) months of his Separation Date, but not beyond the
expiration date of such Nonqualified Stock Options, to exercise such
Nonqualified Stock Options.
5.5 Change of Control.
(a) For purposes of this Section 5.5, a "Change of Control" shall be deemed to
occur upon
(i) the direct or indirect acquisition by any Person or related group of Persons
(other than an acquisition from or by the Company or by a Company-sponsored
employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
securities possessing more than fifty (50%) of the total combined voting power
of the Company's outstanding Common Stock, or
(ii) a change in the composition of the Board over a period of thirty-six (36)
months or less such that a majority of the Board members ceases, by reason of
one or more contested elections for Board membership or by one or more actions
by written consent of shareholders, to be comprised of individuals who either
(1) have been Board members continuously since the beginning of such period or
(2) have been elected or nominated for election as Board members during such
period by at least a majority of the Board members described in clause (1) who
were still in office at the time such election or nomination was approved by the
Board.
(b) For purposes of this Section 5.5, a "Corporate Transaction" shall be deemed
to occur upon any of the following transactions to which the Company is a party:
(i) approval by the Company's shareholders of a merger or consolidation in which
the Company is not the surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Company is incorporated.
(ii) approval by the Company's shareholders of the sale, transfer or other
disposition of all or substantially all of the assets of the Company (including
the capital stock of the Company's subsidiary corporations) in connection with a
complete liquidation or dissolution of the Company, or
(iii) approval by the Company's shareholders of any reverse merger in which the
Company is the surviving entity but in which securities possessing more than
fifty (50%) of the total combined voting power of the Company's outstanding
securities are transferred to a Person or Persons different from those who held
such securities immediately prior to such merger
(c) In its discretion, the Committee may provide in any stock option agreement
(or in an amendment thereto) evidencing an Option hereunder that, in the event
of any Corporate Transaction or an event giving rise to a Change of Control, any
outstanding options covered by such an agreement shall be fully vested,
nonforfeitable and become exercisable as of the date of the Change of Control or
Corporate Transaction or as otherwise determined in accordance with this Section
5.5(c). However, the committee may provide in any such agreement that, in the
case of a Corporate Transaction, the Committee may determine that an outstanding
Option will not be so accelerated if and to the extent (i) such Option is
<PAGE>
either to be assumed by the successor or parent thereof or to be replaced with a
comparable Option to purchase shares of the capital stock of the successor
corporation or parent thereof, or (ii) such Option is to be replaced with a cash
incentive program of the successor corporation that preserves the option spread
existing at the time of the Corporate Transaction and provides for subsequent
payment in accordance with the same vesting schedule applicable to such Option.
Any stock option agreement incorporating a Change in Control or Corporate
Transaction acceleration provision shall provide that, with respect to any
Corporate Transaction described in clauses (i) or (ii) of Section 5.5(b) above,
the Committee may, upon no less than 60 days notice to the optionee (an
"Acceleration Notice") determine that such optionee's Options will terminate as
of the effective date of such Corporate Transaction, in which event such Options
shall be fully vested, nonforfeitable and become exercisable immediately as of
the date of such Acceleration Notice.
(d) If the Committee determines to incorporate a Change in Control or Corporate
Transaction acceleration provision in any option agreement hereunder, the
agreement shall provide that, (i) in the event of a Change in Control or
Corporate Transaction described in clauses (a)(i), (a)(ii) and (b)(iii) of
section 5.5 above or in the event the Acceleration Notice is not timely given,
the Option shall remain exercisable for the remaining term of the Option
notwithstanding the provisions of Article V hereof or any corresponding
provisions of the stock option agreement, subject to any limitations thereto
which may be applicable to Incentive Stock Options and (ii) in the event of a
Corporate Transaction described in clauses (b)(i) and (b)(ii) of Section 5.5
above, which is proceeded by a timely Acceleration Notice, the Option shall
terminate as of the effective date of the Corporate Transaction described
therein. In no event shall any Option under the Plan be exercised after the
expiration of the term provided for in the related stock option agreement.
(e) The Committee may provide in any option agreement hereunder that, should the
company dispose of its equity holdings in any subsidiary corporation effected by
(i) merger or consolidation involving that subsidiary; (ii) the sale of all or
distribution of substantially all of the assets of that subsidiary; or (iii) the
Company's sale of a distribution to shareholders of substantially all of the
outstanding capital stock of such subsidiary ("Subsidiary Disposition") while a
holder of the Option is engaged in the performance of services for the affected
subsidiary corporation, then such Option shall, immediately prior to the
effective date of such Subsidiary Disposition, become fully exercisable with
respect to all of such shares at the time represented by such Option and may be
exercised with respect to any or all of such shares. Any such Option shall
remain so exercisable until the expiration or sooner termination of the term of
the Option.
ARTICLE VI
6.1 Limitation of Shares of Common Stock Available under the Plan.
(a) Shares of stock which may be issued under the Plan shall be authorized and
unissued or treasury shares of Common Stock. The total number of shares of
Common Stock available to be granted by the Committee as Options to the
Participants under the Plan, shall not exceed 3,500,000 shares (which number may
be increased by the Committee without shareholder approval, to reflect
adjustments pursuant to section 7.1 below).
(b) The grant of Incentive Stock Options and Nonqualified Stock Options shall
reduce the available shares by the number of shares subject to such Options.
(c) The lapse or cancellation of an Incentive Stock Option or Nonqualified Stock
Option shall increase the available shares by the number of shares released form
such Option.
<PAGE>
ARTICLE VII
7.1 Adjustment Upon Changes in Capitalization. In the event of any change in the
outstanding Common Stock by reason of a stock dividend or distribution,
recapitalization, merger, consolidation, split-up, combination, exchange of
shares or the like, the Committee may appropriately adjust the number and kind
of shares which may be issued under the Plan, the number and kind of shares
subject to Options theretofore granted under the Plan, the Option Price of
Options theretofore granted under the Plan, and any and all other matters deemed
appropriate by the committee.
ARTICLE VIII
8.1 Employment. The establishment of the Plan and Options hereunder shall not be
construed as conferring on any Participant any right to continued employment,
and the employment of any Participant may be terminated without regard to the
effect which such action might have upon him/her as a Participant.
8.2 Rights as a Shareholder. The recipient of any Option under the Plan shall
have no rights as a shareholder with respect thereto unless and until
certificates for shares of Common Stock are issued to him.
8.3 Non-Assignability. During the life of the Participant, Options awarded under
this Plan shall be exercisable only by such person or by such person's guardian
or legal representative.
8.4 Shareholder Approval. Continuance of the Plan for purposes of granting
Incentive Stock Options shall be subject to approval by the shareholders of the
Company within twelve (12) months after the date the Plan is adopted by the
Board. Any Incentive Stock Options granted hereunder shall become effective only
upon such shareholder approval. The Committee may grant Incentive Stock Options
or Nonqualified Stock Options under the Plan prior to such shareholder approval,
but until shareholder approval is obtained, no such Option shall be exercisable.
In the event that such shareholder approval is not obtained within the period
provided above, all Options previously granted pursuant to the Plan shall
terminate. If such shareholder approval is obtained at a meeting of
shareholders, the Plan must be approved by a majority of the votes cast at such
meeting at which a quorum representing a majority of all outstanding voting
stock of the Company is, either in person or by proxy, present and voting on the
Plan. If such shareholder approval is obtained by written consent, it must be
obtained by written consent of the holders of a majority of all outstanding
voting stock of the Company.
8.5 Amendment, Modification and Termination of the Plan. The Board, at any time,
may terminate and in any respect amend or modify the Plan, provided, however,
that no such action, without approval of the Company's shareholders, may:
(a) increase the total number of shares of Common Stock available under the
Plan, other than increases pursuant to Section 7.1 hereof,
(b) materially increase the benefits accruing to Participants under the Plan,
(c) materially modify the requirements as to eligibility for participation in
the Plan,
(d) extend the period during which any Option may be granted or exercised; or
<PAGE>
(e) extend the term of the Plan
Except as provided in Section 7.1 hereof, no amendment, modification,
or termination of the Plan shall in any manner adversely affect the rights of
any Participant under the Plan without the consent of such Participant.
8.6 Indemnification. Each person who is or shall still have been a member of the
Board shall be indemnified and held harmless be the Company against and from any
loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him in connection with or resulting from any claim, action, suit, or
proceeding to which he may be a party or in which he may be involved by reason
of any action or failure to act under the Plan and against and from any and all
amounts paid by him in satisfaction of judgment in any such action, suit, or
proceeding against him. Such person shall give the Company an opportunity, at
its own expense, to handle and defend the same before he undertakes to handle
and defend it on his own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's Articles of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
8.7 Reliance on Reports. Each member of the Committee shall be fully justified
in relying or acting in good faith upon any report made by the independent
public accountants of the Company and upon any other information furnished in
connection with the Plan by any person or persons other than himself. In no
event shall any person who is or shall have been a member of the Committee be
liable for any determination made or other action taken or any omission to act
in reliance upon any such report or information or for any action taken,
including the furnishing of information, or failure to act, if in good faith.
8.8 Governing Law. to the extent that Federal Law shall not be held to have
preempted local laws, this Plan shall be governed by the laws of the State of
Utah. If any provision of the Plan shall be held invalid or unenforceable, the
remaining provisions hereof shall continue in full force and effect.
IN WITNESS WHEREOF, the Company has caused the Stansbury Holdings Corporation
1999 Stock Option Plan to be executed by its duly authorized officer pursuant to
resolutions of the Board to be effective as of the 1st day of January, 1999.
Stansbury Holdings Corporation
By: ______________________________
Edward C. Stanojev, Jr.
President
<PAGE>
EXHIBIT F
SELLERS & ASSOCIATES LOGO
3785 Harrison Blvd., Suite 101 - Ogden, Utah 84403
(801) 621-8128 /bullet/ FAX (801) 627-1639
Securities and Exchange Commission
340 Fifth Street, N.W.
Washington, D.C. 20549
February 4, 1999
Commissioners:
This is to confirm that the client-auditor relationship between Stansbury
Holdings Corporation (Stansbury) and Sellers and Associates has ceased.
We have no disagreements with Stansbury regarding accounting policies or
practices, nor with their internal controls, nor with any representations made
to us by Stansbury. The choice to change auditors was Stansbury's based on
business reasons and convenience of the new auditors to Stansbury's Chief
Administrative Officer.
We will continue providing Stansbury management with advisory and tax services.
Sincerely,
/s/ Richard E. Sellers, CPA
-----------------------
Richard E. Sellers, CPA
Sellers and Associates
<PAGE>
STANSBURY HOLDINGS CORPORATION
676 LOUIS DRIVE
WARMINSTER, PENNSYLVANIA 18974
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 23, 1999
The undersigned shareholder of STANSBURY HOLDINGS CORPORATION (the
"Company") hereby appoints Aldine J. Coffman and Jeff Wertz, and each of them,
true and lawful proxy or proxies, with full power of substitution in each, for
and in the name of the undersigned to vote all shares of common stock, $0.25 par
value, of the Company outstanding in the name of the undersigned at the Annual
Meeting of Shareholders of the Company to be held at the Westin Suites
Philadelphia Airport, 4101 Island Avenue, Philadelphia, Pennsylvania 19153, on
April 23, 1999, at 9:00 A.M., local time, and at any and all adjournments
thereof, with all the powers the undersigned would possess if personally
present, hereby revoking all previous proxies. This proxy is revocable. The
undersigned reserves the right to attend and vote in person. The undersigned
hereby acknowledges receipt of the Notice of Meeting of Shareholders dated April
12, 1999, the Proxy Statement accompanying the Notice, and the Company's Annual
Report on Form 10-KSB/A for the two fiscal years ended June 30, 1998.
Said proxies are directed to vote as indicated in the following
proposals:
1. ITEM 1: THE COMPANY'S ENTRY INTO THE JOINT VENTURE WITH NEVADA
VERMICULITE LLC, PURSUANT TO WHICH THE COMPANY INTENDS TO
DEVELOP ITS EXISTING VERMICULITE PROPERTY, AND DEVELOP
OTHER VERMICULITE MINING AND MILLING OPERATIONS.
___ FOR ___ AGAINST ___ABSTAIN
2. ITEM 2: TO AMEND THE ARTICLES OF INCORPORATION OF THE COMPANY TO
INCREASE THE AUTHORIZED CAPITALIZATION OF THE COMPANY FROM
25,000,000 SHARES OF COMMON STOCK, PAR VALUE $.25 PER
SHARE, TO 100,000,000 SHARES OF COMMON STOCK, PAR VALUE
$.001 PER SHARE.
___ FOR ___ AGAINST ___ABSTAIN
3. ITEM 3: TO AMEND THE ARTICLES OF INCORPORATION OF THE COMPANY TO
ADD A PROVISION INDEMNIFYING THE BOARD OF DIRECTORS AND
PROVIDING FOR THE PAYMENT OF THE DIRECTORS LEGAL DEFENSES
IN ACTIONS BROUGHT BY SHAREHOLDERS AND THIRD PARTIES.
___ FOR ___ AGAINST ___ABSTAIN
4. ITEM 4: TO AMEND THE ARTICLES OF INCORPORATION OF THE COMPANY TO
PROVIDE FOR A CLASSIFIED BOARD OF DIRECTORS.
___ FOR ___ AGAINST ___ABSTAIN
<PAGE>
5. ITEM 5: TO ELECT FIVE PERSONS TO THE BOARD OF DIRECTORS; TWO
PERSONS EACH TO HOLD OFFICE FOR A TERM OF THREE YEARS, ONE
PERSON FOR A TERM OF TWO YEARS, AND TWO PERSONS EACH FOR
A TERM OF ONE YEAR.
___ FOR ___ AGAINST ___ABSTAIN
6. ITEM 6: TO APPROVE THE ADOPTION OF THE COMPANY'S 1999 STOCK OPTION
PLAN BY WHICH OPTIONS FOR UP TO 3.5 MILLION SHARES MAY BE
ISSUED TO OFFICERS, DIRECTORS AND KEY EMPLOYEES AND
CONSULTANTS OF THE COMPANY.
___ FOR ___ AGAINST ___ABSTAIN
7. ITEM 7: TO APPROVE THE APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS.
___ FOR ___ AGAINST ___ABSTAIN
8. ITEM 8: TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING, INCLUDING THE RATIFICATION OF THE ACTS
OF THE BOARD OF DIRECTORS SET FORTH IN THE 1997 AND 1998
FISCAL YEAR AUDITED FINANCIAL STATEMENTS.
Each shareholder should specify by a mark in the appropriate box above
how they wish their shares voted. Shares will be voted as specified. IF NO
SPECIFICATION IS MADE ABOVE, SHARES WILL BE VOTED FOR ITEMS 1 THROUGH 7, ABOVE.
Please date, sign and promptly return this proxy in the reply envelope;
in addition, please check the box below if you are planning to attend the
meeting in person.
____ I am planning to attend the Annual Meeting in person.
DATED: APRIL _, 1999
____________________________________
____________________________________
____________________________________
SIGNATURE(S) OF SHAREHOLDER(S)
Shareholders Telephone
Number: __________________________
Number of Shares Held in
Certificate: _____________________
Total Number of Shares held: _______
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. IF THE
STOCK IS REGISTERED IN THE NAMES OF TWO OR MORE
PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS, ATTORNEYS AND CORPORATE OFFICERS
SHOULD INCLUDE THEIR TITLES. Should you have any
questions please call Brian McCarty at (215) 928-9630
