Unassociated Document
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant ¨
Check the
appropriate box:
o
|
Preliminary
Proxy Statement
|
¨
|
Confidential,
for Use of the Commission Only (as Permitted by Rule
14a-6(e)(2))
|
x
|
Definitive
Proxy Statement
|
¨
|
Definitive
Additional Materials
|
¨
|
Solicitation
Material Pursuant to Rule 14a-11(c) or rule
14a-12
|
(Name of
Registrant as Specified in its Charter)
(Name of
Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
¨
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
|
1)
|
Title
of each class of securities to which transaction
applies:
|
|
2)
|
Aggregate
number of securities to which transaction
applies:
|
|
3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was
determined):
|
|
4)
|
Proposed
maximum aggregate value of
transaction:
|
¨
|
Fee
paid previously with preliminary
materials.
|
¨
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
|
|
(1)
|
Amount
Previously Paid:
|
|
(2)
|
Form,
Schedule or Registration Statement
No.:
|
CAPITAL
GOLD CORPORATION
76
Beaver Street, 14th Floor
New
York, NY 10005
December
14, 2009
To the
Stockholders of Capital Gold Corporation:
Capital
Gold Corporation (the “Company”) is pleased to send
you the enclosed notice of the 2009 Annual Meeting of Stockholders of the
Company (the “Meeting”)
to be held at 1 p.m. on Tuesday, January 19, 2010 at the Crowne Plaza Times
Square Manhattan, 1605 Broadway @ 49th Street,
New York, NY 10019. The items of business for the Meeting are listed in the
following Notice of Annual Meeting and are more fully addressed in the attached
Proxy Statement. The Proxy Statement is first being mailed to stockholders of
the Company on or about December 17, 2009.
Your vote is important—please date,
sign and return your proxy card in the enclosed envelope as soon as possible to
ensure that your shares will be represented and voted at the Meeting even if you
cannot attend. If you attend the Meeting, you may vote your shares in
person even though you have previously signed and returned your
proxy.
If you
have any questions regarding this material, please do not hesitate to call me at
(212) 344-2785.
Sincerely
yours,
|
|
Christopher
M. Chipman
|
Secretary
and Chief Financial Officer
|
Capital
Gold Corporation
|
WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE THE ENCLOSED PROXY CARD
AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION
OF YOUR SHARES AT THE MEETING.
CAPITAL
GOLD CORPORATION
76
Beaver Street, 14th Floor
New
York, NY 10005
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON JANUARY 19, 2010
To the
Stockholders of Capital Gold Corporation:
You are
cordially invited to attend the Annual Meeting of Stockholders (the “Meeting”)
of Capital Gold Corporation (the “Company”), a Delaware corporation, to be held
at the Crowne Plaza Times Square Manhattan, 1605 Broadway @ 49th Street,
New York, NY 10019, on Tuesday, January 19, 2010, at 1:00 p.m. local time, for
the following purposes:
|
1.
|
To
elect five members to the Board of Directors of the Company to serve until
their respective successors are elected and qualified (“Proposal No.
1”);
|
|
2.
|
To
amend our Amended and Restated By-laws to provide for the classification
of the Board of Directors into three classes of directors with staggered
three-year terms (“Proposal No.
2”);
|
|
3.
|
To
ratify the selection by our audit committee of Wolinetz, Lafazan &
Company, P.C., independent registered public accountants, to audit the
financial statements of the Company for the year ending July 31, 2010
(“Proposal No. 3”);
|
|
4.
|
To
amend our 2006 Equity Incentive Plan to increase the number of shares of
common stock authorized for issuance under the Plan from 10,000,000 to
17,500,000 shares (“Proposal No. 4”);
and
|
|
5.
|
To
transact such other matters as may properly come before the meeting or any
adjournment or postponement
thereof.
|
The Board
has no knowledge of any other business to be transacted at the
Meeting.
Only
stockholders of record at the close of business on December 8, 2009 are entitled
to notice of and to vote at the Meeting. A copy of the Company’s
Annual Report to Stockholder for the fiscal year ended July 31, 2009, which
contains financial statements and other information of interest to stockholders,
accompanies this Notice and the attached Proxy Statement.
The
Board of Directors unanimously recommends a vote “FOR” the approval of each of
the proposals to be submitted at the Meeting.
|
By
Order of the Board of Directors,
|
|
|
|
Christopher
M. Chipman, Secretary and Chief
Financial Officer
|
New York,
New York
December
14, 2009
WHETHER
OR NOT YOU ARE ABLE TO ATTEND THE MEETING, TO ASSURE YOUR REPRESENATION AT THE
MEETING, PLEASE READ THE ATTACHED PROXY STATEMENT AND PROMPTLY VOTE YOUR SHARES
BY SIGNING, DATING AND RETURNING THE ENCLOSED PROXY IN THE SELF ADDRESSED
STAMPED ENVELOPE PROVIDED.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDERS
MEETING TO BE HELD ON JANUARY 19, 2010.
The
Company’s Proxy Statement for the 2010 Annual Meeting of Stockholders and the
Company’s Annual Report to Stockholders for the fiscal year ended July 31, 2009
are available at www.capitalgoldcorp.com.
CAPITAL
GOLD CORPORATION
76
Beaver Street
14th
Floor
New
York, NY 10005
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
to
be held on Tuesday, January 19, 2010, 1 p.m.
Crowne
Plaza Times Square Manhattan
1605
Broadway @ 49th Street,
New York, NY 10019
QUESTIONS
AND ANSWERS ABOUT THESE PROXY MATERIALS
What
is the purpose of the Meeting?
At the
Meeting, stockholders will act upon the following matters:
|
·
|
To
elect five directors to the Board of Directors to serve until their
respective successors are elected and
qualified;
|
|
·
|
To
amend our Amended and Restated By-laws to provide for the classification
of the Board of Directors into three classes of directors with staggered
three-year terms;
|
|
·
|
To
ratify the selection by our audit committee of Wolinetz, Lafazan &
Company, P.C., independent registered public accountants, to audit the
financial statements of the Company for the year ending July 31,
2010;
|
|
·
|
To
amend our 2006 Equity Incentive Plan to increase the number of shares of
common stock authorized for issuance under the Plan from 10,000,000 to
17,500,000 shares; and
|
|
·
|
To
transact such other matters as may properly come before the meeting or any
adjournment or postponement
thereof.
|
In
addition, management will report on the Company’s performance during fiscal 2009
and respond to questions from stockholders.
Who
is entitled to vote?
Only
stockholders of record at the close of business on December 8, 2009, the record
date, are entitled to receive notice of, and vote at the Meeting. As of the
record date, the number and class of stock outstanding and entitled to vote at
the meeting was 193,973,949 shares of common stock, par value $.0001 per
share (the “Common Stock”). Each share of common stock is entitled to one vote
on all matters. No other class of securities will be entitled to vote at the
meeting. There are no cumulative voting rights.
How
do I vote?
Each
share of Capital Gold Common Stock that you own entitles you to one vote. Your
proxy card shows the number of shares of Capital Gold Common Stock that you own.
You may elect to vote in one of two methods:
|
·
|
By
Mail - You may vote your shares by signing and returning
the enclosed proxy card. If you vote by proxy card, your “proxy” (each or
any of the individuals named on the proxy card) will vote your shares as
you instruct on the proxy card.
|
|
·
|
In
Person - You may attend the Annual Meeting and vote in
person. We will give you a ballot when you arrive. If your stock is held
in the name of your broker, bank or another nominee (a “Nominee”), you
must present a proxy from that Nominee in order to verify that the Nominee
has not already voted your shares on your
behalf.
|
How
do street name holders vote?
If you
are the beneficial owner of shares held in street name by a broker, the broker,
as the record holder of the shares, is required to vote those shares in
accordance with your instructions. If you do not give instructions to the
broker, the broker will nevertheless be entitled to vote the shares with respect
to discretionary or “routine” items but will not be permitted to vote the shares
with respect to non-discretionary items (in which case, the shares will be
treated as broker non-votes). There are no known discretionary items to be voted
upon.
What
constitutes a quorum?
The
presence in person or by proxy of the holders of a majority of the shares of
Common Stock issued and outstanding on the record date and entitled to vote is
required to constitute a quorum at the Meeting. If a quorum is not
present, the stockholders entitled to vote who are present in person or
represented by proxy at the Meeting have the power to adjourn the Meeting until
a quorum is present, without notice other than an announcement at the Meeting,
so long as such adjournment is less than 30 days and a new record date is not
fixed. At any adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted at the Meeting as
originally scheduled. Abstentions and broker non-votes will count in
determining whether a quorum is present at the Meeting. A broker
non-vote occurs when a broker or other nominee holds shares represented by a
proxy, has not received voting instructions with respect to a particular item
and does not have discretionary authority to vote such shares.
How does discretionary voting
authority apply?
All
properly executed proxies will be voted in accordance with the instructions of
the stockholder. If no contrary instructions have been indicated, the
proxies will be voted FOR the nominees named in Proposal 1, FOR the
classification of the Board of Directors, FOR the ratification of the selection
of Wolinetz, Lafazan & Company, P.C. as the Company’s independent auditor
for the year ending July 31, 2010, and FOR the amendment to our 2006 Equity
Incentive Plan. The Board of Directors knows of no other matters to
be presented for consideration at the Meeting.
What
is the difference between holding shares as a stockholder of record and as a
beneficial owner?
Most of
our stockholders hold their shares in an account at a brokerage firm, bank or
other nominee holder, rather than holding share certificates in their own name.
As summarized below, there are some distinctions between shares held of record
and those owned beneficially.
Stockholder
of Record
If, on
the record date, your shares were registered directly in your name with our
transfer agent, you are a “stockholder of record” who may vote at the
Meeting, and we are sending these proxy materials directly to you. As the
stockholder of record, you have the right to direct the voting of your shares by
returning the enclosed proxy card to us or to vote in person at the Meeting.
Whether or not you plan to attend the Meeting, please complete, date and sign
the enclosed proxy card to ensure that your vote is counted.
Beneficial
Owner
If, on
the record date, your shares were held in an account at a brokerage firm or at a
bank or other nominee holder, you are considered the beneficial owner of shares
held “in street name,” and these proxy materials are being forwarded to you by
your broker or nominee who is considered the stockholder of record for purposes
of voting at the Meeting. As the beneficial owner, you have the right to direct
your broker on how to vote your shares and to attend the Meeting. However, since
you are not the stockholder of record, you may not vote these shares in person
at the Meeting unless you receive a valid proxy from your brokerage firm, bank
or other nominee holder. To obtain a valid proxy, you must make a special
request of your brokerage firm, bank or other nominee holder. If you do not make
this request, you can still vote by using the voting instruction card enclosed
with this proxy statement; however, you will not be able to vote in person at
the Meeting.
What
are the Board’s recommendations?
Unless
you give other instructions on your proxy card, Gifford A. Dieterle and
Christopher M. Chipman will vote in accordance with the recommendation of the
Board. The Board recommends a vote:
FOR the
election of the five nominees named in Proposal No. 1 to serve on the Board of
Directors until their respective successors are elected and
qualified;
FOR the
classification of the Board of Directors into three classes of directors with
staggered three-year terms;
FOR the
ratification of the selection of Wolinetz, Lafazan & Company, P.C. as the
independent auditor of the Company for the year ending July 31, 2010;
and
FOR the
amendment to our 2006 Equity Incentive Plan to increase the number of shares of
Common Stock authorized for issuance under the Plan from 10,000,000 shares to
17,500,000 shares.
With
respect to any other matter that properly comes before the Meeting, the proxy
holders will vote as recommended by the Board or, if no recommendation is given,
in their own discretion.
What
vote is required to approve each item?
Election
of Directors. Directors are
elected by a plurality of the votes. The five nominees for director
receiving the highest number of votes cast by stockholders entitled to vote for
directors will be elected to serve on the Board. Only the number of
votes FOR a nominee affect the outcome. Accordingly, votes withheld
and abstentions will have no effect on the result of the vote on this
matter.
Classification
of the Board of Directors. The amendment to our Amended and
Restated By-laws to provide for the classification of the Board of Directors
requires the affirmative vote of the holders of a majority of the votes present
in person or represented by proxy and entitled to be cast at the Annual
Meeting. A properly executed proxy marked ABSTAIN with respect to
such amendment will have the effect of a negative vote on this
matter. Broker non-votes are not considered as votes entitled to be
cast on the matter, and thus will have no effect on the result of the vote on
this matter.
Ratification
of Independent Registered Public Accounting Firm. The ratification
of Wolinetz, Lafazan & Company, P.C. as the Company’s independent registered
accounting firm for fiscal year 2010 requires the affirmative vote of the
holders of a majority of the votes present in person or represented by proxy and
entitled to be cast at the Annual Meeting. A properly executed proxy
marked ABSTAIN with respect to such ratification will have the effect of a
negative vote on this matter. Broker non-votes are not considered as
votes entitled to be cast on the matter, and thus will have no effect on the
result of the vote on this matter.
Amendment
to 2006 Equity Incentive Plan. The amendment to our 2006
Equity Incentive Plan requires the affirmative vote of the holders of a majority
of the votes present in person or represented by proxy and entitled to be cast
at the Annual Meeting. A properly executed proxy marked ABSTAIN with
respect to such amendment will have the effect of a negative vote on this
matter. Broker non-votes are not considered as votes entitled to be
cast on the matter, and thus will have no effect on the result of the vote on
this matter.
Are
Proposal No. 1 (Election of Directors) and Proposal No.
2 (Classification of the Board of Directors) conditioned upon one
another?
No. These
two proposals are separate and independent of each other and stockholders may
vote on each proposal independently. In the event Proposal No. 2 is approved by
stockholders, the nominees included in Proposal No. 1, if elected, will be
divided into three classes and will serve staggered three year terms as
described in Proposal No.2. However, if stockholders do not approve
Proposal No. 2, the nominees included in Proposal No. 1, if elected, will serve
until the next Annual Meeting and until their successors have been elected and
qualified.
Can
I change my vote after I return my proxy card?
If you
attend the meeting, you may vote in person, regardless of whether you have
submitted a proxy. Any person giving a proxy in the form accompanying this proxy
statement has the power to revoke it at any time before it is voted. It may be
revoked by (1) filing with our corporate secretary at our principal offices
located at 76 Beaver Street, 14th Floor, New York, NY 10005, a written notice of
revocation, (2) submitting a duly executed proxy bearing a later date, or (3) by
attending the Meeting and voting in person.
How are the votes
tabulated?
The votes
will be tabulated and certified by our transfer agent.
Who
bears the cost of the solicitation?
Capital
Gold has borne the cost of preparing, assembling and mailing this proxy
solicitation material. The total cost estimated to be spent and the total
expenditures to date for, in furtherance of, or in connection with the
solicitation of stockholders is approximately $40,000. We may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding soliciting materials to beneficial owners. Proxies
may be solicited by certain of our directors, officers and employees, without
additional compensation, personally, by telephone or by facsimile.
What
happens if I don’t indicate how to vote my proxy?
If you
just sign your proxy card without providing further instructions, your shares
will be counted as a “for” vote for all of the proposals being placed before our
stockholders at the Meeting.
Where
do I find the voting results of the Meeting?
We will
announce voting results at the Meeting.
Who
can help answer my questions?
You can
contact our Secretary and Chief Financial Officer, Christopher M. Chipman, at
(212) 344-2785 or by sending a letter to Mr. Chipman at the offices of the
Company at 76 Beaver Street, 14th Floor, New York, NY 10005 with any questions
about proposals described in this proxy statement or how to execute your
vote.
CAPITAL
GOLD CORPORATION
76
Beaver Street
14th
Floor
New
York, NY 10005
PROXY
STATEMENT
INTRODUCTION
This
proxy statement is furnished in connection with the solicitation of proxies for
use at the Annual Meeting of Stockholders of Capital Gold Corporation (“Capital
Gold,” the “Company,” “We” or “Us”) by its Board of Directors to be held on
January 19, 2010, and at any adjournments or postponements thereof (the
“Meeting”). This proxy statement and accompanying proxy are first being
distributed to stockholders beginning on or about December 17, 2009. Our
principal executive offices are located at 76 Beaver Street, 14th Floor, New
York, NY 10005, telephone (212) 344-2785.
Record
Date; Mailing Date
The Board
of Directors has fixed the close of business on December 8, 2009 as the record
date for the determination of stockholders entitled to notice of, and to vote
and act at, the Meeting. Only stockholders of record at the close of business on
that date are entitled to notice of, and to vote and act at, the Meeting. The
Proxy Statement is first being mailed to stockholders of the Company on or about
December 17, 2009.
Proposals
to be Submitted at the Meeting
At the
Meeting, Stockholders will be acting upon the following proposals:
|
1.
|
To
elect five members to the Board of Directors of the Company to serve until
their respective successors are elected and qualified (“Proposal No.
1”);
|
|
2.
|
To
amend our Amended and Restated By-laws to provide for the classification
of the Board of Directors into three classes of directors with staggered
three-year terms (“Proposal No.
2”);
|
|
3.
|
To
ratify the selection by our audit committee of Wolinetz, Lafazan &
Company, P.C., independent registered public accountants, to audit the
financial statements of the Company for the year ending July 31, 2010
(“Proposal No. 3”);
|
|
4.
|
To
amend our 2006 Equity Incentive Plan to increase the number of shares of
common stock authorized for issuance under the Plan from 10,000,000 to
17,500,000 shares (“Proposal No. 4”);
and
|
|
5.
|
To
transact such other matters as may properly come before the meeting or any
adjournment or postponement
thereof.
|
Principal
Offices
The
principal executive offices of the Company are located at76 Beaver Street, 14th
Floor, New York, NY 10005. The Company’s telephone number at such address is
(212) 344-2785.
Information
Concerning Solicitation and Voting
As of the
record date, there were 193,973,949 outstanding shares of Common Stock,
each share entitled to one vote on each matter to be voted on at the Meeting.
Only holders of shares of Common Stock on the record date will be entitled to
vote at the Meeting. The holders of Common Stock are entitled to one vote on all
matters presented at the meeting for each share held of record. There are no
cumulative voting rights.
The
presence in person or by proxy of the holders of a majority of the shares of
Common Stock issued and outstanding on the record date and entitled to vote is
required to constitute a quorum at the Meeting. If a quorum is not
present, the stockholders entitled to vote who are present in person or
represented by proxy at the Meeting have the power to adjourn the Meeting until
a quorum is present, without notice other than an announcement at the Meeting,
so long as such adjournment is less than 30 days and a new record date is not
fixed. At any adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted at the Meeting as
originally scheduled. Abstentions and broker non-votes will count in
determining whether a quorum is present at the Meeting. A broker
non-vote occurs when a broker or other nominee holds shares represented by a
proxy, has not received voting instructions with respect to a particular item
and does not have discretionary authority to vote such shares.
The
director nominees in Proposal No. 1 are elected by a plurality of the
votes. The five nominees for director receiving the highest number of
votes cast by stockholders entitled to vote for directors will be elected to
serve on the Board. Only the number of votes FOR a nominee affect the
outcome. Accordingly, votes withheld and abstentions will have no
effect on the result of the vote on this matter. Proposals No. 2, 3 and 4
require the affirmative vote of the holders of a majority of the votes present
in person or represented by proxy and entitled to be cast at the
Meeting. A properly executed proxy marked ABSTAIN with respect to
such amendment will have the effect of a negative vote on this
matter. Broker non-votes are not considered as votes entitled to be
cast on the matter, and thus will have no effect on the result of the vote on
this matter.
Expenses
Capital
Gold has borne the cost of preparing, assembling and mailing this proxy
solicitation material. The total cost estimated to be spent and the total
expenditures to date for, in furtherance of, or in connection with the
solicitation of stockholders is approximately $40,000. We may reimburse
brokerage firms and other persons representing beneficial owners of shares for
their expenses in forwarding soliciting materials to beneficial owners. Proxies
may be solicited by certain of our directors, officers and employees, without
additional compensation, personally, by telephone or by facsimile.
Revocability
of proxies
Any
person giving a proxy in the form accompanying this proxy statement has the
power to revoke it at any time before it is voted. It may be revoked by (1)
filing with our corporate secretary at our principal offices located at 76
Beaver Street, 14th Floor, New York, NY 10005, a written notice of revocation,
(2) submitting a duly executed proxy bearing a later date, or (3) by attending
the Meeting and voting in person.
ALL
PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES SPECIFIED ON SUCH
PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A PROPOSAL IF NO CONTRARY
SPECIFICATION IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE
DISCRETION OF THE PERSONS NAMED IN THE PROXY WITH RESPECT TO ANY OTHER BUSINESS
THAT MAY COME BEFORE THE ANNUAL MEETING.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF EACH OF
THE PROPOSALS TO BE SUBMITTED AT THE MEETING.
PROPOSALS TO
STOCKHOLDERS
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
We
currently have five directors, Gifford A. Dieterle, John Brownlie, Leonard J.
Sojka, John W. Cutler and Stephen M. Cooper, whose terms each expire at the
upcoming meeting. Our Board of Directors, based upon the
recommendation of the Corporate Governance and Nominating Committee, has
nominated Gifford A. Dieterle, John Brownlie, Leonard J. Sojka, John W. Cutler
and Stephen M. Cooper, of the current directors for reelection or election as
directors.
If
elected, such nominees will serve until the end of their terms and until their
successors are elected and qualified. In the event Proposal No. 2 is approved by
stockholders, the nominees will be divided into three classes and will serve
staggered three year terms as described in Proposal No. 2. However,
if stockholders do not approve Proposal No. 2, the nominees will serve until the
next Annual Meeting or until their successors are elected and
qualified.
The
nominees have consented to being named in this Proxy Statement and to serving if
elected. The Board of Directors has no reason to believe that any
nominee named herein will be unable or unwilling to serve if
elected. If any nominee becomes unavailable to serve as a director,
the persons named in the proxy will vote the proxy for a substitute nominee or
nominees as they, in their discretion, shall determine.
The
election of directors requires the affirmative vote of a plurality of the votes
cast by stockholders entitled to vote at the Meeting. Unless
otherwise specified, properly executed proxies will be voted in favor of the
election of the nominees. Accordingly, abstentions, broker non-votes
and votes withheld for a nominee will not have any effect on the election of a
director.
The
principal occupations and qualifications of each nominee for director are as
follows:
GIFFORD
A. DIETERLE, age 77, is our Chief Executive Officer, Treasurer and Chairman of
the Board of Directors. Mr. Dieterle was appointed Chief Executive
Officer in September 2009. Mr. Dieterle was appointed President in
September 1997, serving until September 2009 and has been an officer and
Chairman since 1981. He has a B.A. an M.S. in Geology obtained from New York
University. From 1977 until July 1993, he was Chairman, Treasurer, and Executive
Vice-President of Franklin Consolidated Mining Company. From 1982 to 1989, he
was Executive Vice President, Chairman and Treasurer of Jeger Oil
Corporation. From 1965 to 1987, he was professor and lecturer in
geology at the City University of N.Y. (Hunter Division) and Long Island
University.
JOHN
BROWNLIE, age 60, is our President, Chief Operating Officer
and Director, and has been with the company since May 2006 and was
instrumental in the development of the El Chanate mine. Mr. Brownlie
was appointed President in September 2009. He currently oversees the
operations and exploration activities in Mexico and represents the company in
investing activities. Mr. Brownlie provided team management for
mining projects requiring technical, administrative, political and cultural
experience over his 35 year mining career. From 2000 to 2006, Mr.
Brownlie was a consultant providing mining and mineral related services to
various companies including SRK, Oxus Mining plc and Cemco Inc. From 1995 to
2000, he was the General Manager for the Zarafshan-Newmont Joint Venture in
Uzbekistan, a one-million tonne per month heap leach operation that produced
over 450,000 ounces of gold annually. From 1988 to 1995, Mr. Brownlie served as
the Chief Engineer and General Manager for Monarch Resources in Venezuela, at
both the El Callao Revemin Mill and La Camorra gold mine. Before that, Mr.
Brownlie was a resident of South Africa and was associated with numerous mineral
processing and mining projects throughout Africa. He is a mechanical engineer
and fluent in Spanish. Mr. Brownlie is also a director of Palladon
Ventures, Ltd., a publicly traded mineral-related company.
LEONARD
J. SOJKA, age 53, has been a Director since September 2009. Mr. Sojka
has served as an investment advisor to institutional investors at SVR Capital
LLC since September 2002, where his primary industry focus is on the metals and
mining sector. As an investment advisor, Mr. Sojka applies
fundamental, technical and arbitrage analysis to corporate
securities. Since September 2008, Mr. Sojka has also served as a
director and the corporate secretary for Palladon Ventures, Ltd., which is
developing the Iron Mountain Project in southwest Utah. He was
appointed Palladon CFO in October 2009. He previously occupied
positions as an analyst or portfolio manager at a variety of firms, including
Whitebox Long/Short Fund, Bighorn Capital LLC, and Deephaven Capital
LLC.
JOHN W.
CUTLER, age 60, has been a Director since September 2009. Mr. Cutler has over 35
years of experience in the investment management and securities industries. He
is currently serving as the President, Chief Executive Officer and a director of
Palladon Ventures, Ltd. Mr. Cutler is also currently serving as the Managing
General Partner of Par Associates, an investment partnership which he organized
in 1988. Previously, from 2005 to 2009, Mr. Cutler served as a strategist at
Swank Capital, LLC, a multi-fund manager specializing in energy and natural
resource investments. Mr. Cutler also previously held positions with John S.
Herold, Inc., SmithBarney, Inc., and First Boston Corporation.
STEPHEN
M. COOPER, age 46, has been a Director since October 2009. Mr. Cooper has over
20 years of experience in the energy technology industry. He is
currently serving as the President of EnergyIQ, a Denver based exploration &
production data management group for the oil & gas
industry. Previously, he worked for over nine years with IHS
Energy. Mr. Cooper has a Ph.D. in Mining and a bachelor’s degree in
Mining Engineering, both from Nottingham University.
THE
BOARD OF DIRECTORS DEEMS PROPOSAL 1 TO BE IN THE BEST INTERESTS OF
THE
COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE “FOR” EACH OF
THE
FIVE
NOMINEES FOR DIRECTOR.
Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters.
The
following table sets forth as of November 6, 2009, the number and percentage of
outstanding shares of Common Stock beneficially owned by:
|
·
|
Each
person, individually or as a group, known to us to be deemed the
beneficial owners of five percent or more of our issued and outstanding
Common Stock;
|
|
·
|
Each
of our Directors and the Named Executives;
and
|
|
·
|
All
of our officers and Directors as a
group.
|
As of the foregoing date, there were
no other persons, individually or as a group, known to us to be deemed the
beneficial owners of five percent or more of the issued and outstanding Common
Stock.
This table is based upon information
supplied by Schedules 13D and 13G, if any, filed with the Securities and
Exchange Commission, and information obtained from our directors and named
executives. For purposes of this table, a person or group of persons is deemed
to have “beneficial ownership” of any shares of Common Stock which such person
has the right to acquire within 60 days of November 6, 2009. For purposes of
computing the percentage of outstanding shares of Common Stock held by each
person or group of persons named in the table, any security which such person or
persons has or have the right to acquire within such date is deemed to be
outstanding but is not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person. Except as indicated in the footnotes
to this table and pursuant to applicable community property laws, we believe,
based on information supplied by such persons, that the persons named in this
table have sole voting and investment power with respect to all shares Common
Stock which they beneficially own. Unless otherwise noted, the address of each
of the principal stockholders is care of us at 76 Beaver Street, 14th floor,
New York, NY10005.
Name
and Address of Beneficial
Owner
|
|
Amount
and Nature of
Beneficial
Ownership
|
|
|
Approximate
Percentage
Beneficial
Ownership (1)
|
|
|
|
|
|
|
|
|
Gifford
A. Dieterle*
|
|
|
4,027,781 |
(2) |
|
|
2.1 |
% |
16
Grouse Lane
|
|
|
|
|
|
|
|
|
Lloyd
Harbor, NY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Brownlie*
|
|
|
1,924,500 |
(2) |
|
|
1.0 |
% |
6040
Puma Ridge
|
|
|
|
|
|
|
|
|
Littleton,
CO 80124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
M. Chipman*
|
|
|
1,705,729 |
(2) |
|
|
** |
|
826
Fayette Street
|
|
|
|
|
|
|
|
|
Conshohocken,
PA 19428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott
Hazlitt*
|
|
|
1,750,000 |
(2) |
|
|
** |
|
9428
W. Highway 50
|
|
|
|
|
|
|
|
|
Salida,
CO 81201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leonard
J. Sojka*
|
|
|
26,340 |
|
|
|
|
|
1460
Spring Valley Road
|
|
|
|
|
|
|
|
|
Golden
Valley, MN 55422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
W. Cutler*
|
|
|
75,800 |
|
|
|
|
|
4190
Lively Lane
|
|
|
|
|
|
|
|
|
Dallas,
TX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
M. Cooper*
|
|
|
2,000 |
|
|
|
** |
|
10475
Park Meadows Drive
|
|
|
|
|
|
|
|
|
Suite
600
|
|
|
|
|
|
|
|
|
Lone
Tree, CO 80124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sprott
Asset Management, Inc.
|
|
|
30,911,900 |
|
|
|
15.9 |
% |
Suite
2700, South Tower
|
|
|
|
|
|
|
|
|
Royal
Bank Plaza
|
|
|
|
|
|
|
|
|
Toronto,
ON M5J 2J1
|
|
|
|
|
|
|
|
|
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sprott
Canadian Equity Fund
|
|
|
10,712,100 |
|
|
|
5.5 |
% |
Suite
2700, South Tower
|
|
|
|
|
|
|
|
|
Royal
Bank Plaza
|
|
|
|
|
|
|
|
|
Toronto,
ON M5J 2J1
|
|
|
|
|
|
|
|
|
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Van
Eck Associates Corporation
|
|
|
13,946,660 |
(3) |
|
|
7.2 |
% |
335
Madison Ave., 19th
Flr
|
|
|
|
|
|
|
|
|
New
York, NY 10017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Officers and Directors as a Group (7 persons)
|
|
|
9,512,150 |
|
|
|
4.8 |
% |
* Officer
and/or Director of Capital Gold Corporation
** Less
than 1%
(1)
|
Based
upon 193,973,949 shares issued and outstanding as of November 6,
2009.
|
(2)
|
For
Messrs. Dieterle, Brownlie, Chipman and Hazlitt includes, respectively,
1,000,000 shares, 1,000,000 shares, 750,000 shares and 600,000 shares
issuable upon exercise of options.
|
(3)
|
Represents
shares held within mutual funds and other client accounts managed by Van
Eck Associates Corporation, none of which owns more than 5% of our
outstanding shares of Common
Stock.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
In August 2002, we purchased marketable
equity securities of a related company. We recorded approximately $6,000, $6,000
and $9,000 in expense reimbursements including office rent from this entity for
the years ended July 31, 2009, 2008 and 2007, respectively (see Notes 3 and
11).
We utilize Caborca Industrial, a
Mexican corporation that is 100% owned by Gifford A. Dieterle, our Chief
Executive Officer, and Jeffrey W. Pritchard, our former Executive Vice
President, for mining support services. These services include but are not
limited to the payment of mining salaries and related costs. Caborca Industrial
bills us for these services at slightly above cost. Mining expenses charged by
Caborca Industrial and eliminated upon consolidation amounted to approximately
$4,767,000, $3,775,000 and $702,000 for the year ended July 31, 2009, 2008 and
2007, respectively.
During the years ended July 31, 2009,
2008 and 2007, we paid Jack Everett, our former Vice President, Exploration and
Director, consulting fees of $0, $100,000 and $0, respectively. In
addition, this individual earned wages of $120,000 during the year ended July
31, 2007. During the years ended July 31, 2009, 2008 and 2007, the
Company paid Robert Roningen, a director, legal and consulting fees of $8,000,
$35,000 and $24,000, respectively.
INFORMATION
REGARDING THE BOARD OF DIRECTORS AND CERTAIN
COMMITTEES
Our Board
of Directors is responsible for the management and direction of our company and
for establishing broad corporate policies. A primary responsibility of the Board
is to provide effective governance over our affairs for the benefit of our
stockholders. In all actions taken by the Board, the Directors are expected to
exercise their business judgment in what they reasonably believe to be the best
interests of our company. In discharging that obligation, Directors may rely on
the honesty and integrity of our senior executives and our outside advisors and
auditors.
On
November 18, 2009, the Board of Directors determined that Leonard Sojka, John
Cutler and Stephen Cooper are “independent directors” under Section 121B(2)(a)
of the NYSE Amex Company Guide.
The Board
of Directors met six times during fiscal 2009 and acted by unanimous written
consent on eight occasions. Each of the directors attended at least
83% of the aggregate of the total number of meetings of the Board of Directors
they were eligible to attend and the total number of meetings held by all
committees on which they served.
Recognizing
that director attendance at the Company’s annual meetings of stockholders can
provide stockholders with an opportunity to communicate with members of the
Board, Capital Gold strongly encourages (but does not require) members of the
Board to attend such meetings. In January 2009, the Company postponed
its annual meeting of stockholders, which had been scheduled for January 20,
2009. The annual meeting had been postponed to allow management
sufficient time to respond to comments of the staff of the Securities and
Exchange Commission resulting from a regular review of the
Company’s periodic filings. In addition to the
report of management on internal controls over financial reporting which was
contained in the Company’s recent Form 10-K, the Securities and Exchange
Commission’s (“SEC”) comments require the Company to obtain an attestation
report of the Company’s independent registered accounting firm of internal
controls over financial reporting, among other matters. At the time
that the Form 10-K was filed, the Company believed that only management’s report
on internal controls over financial reporting was required because the Company
was previously a smaller reporting company and not required to obtain an
attestation report of its independent auditor. The staff of the SEC
has indicated in its comment letter that an attestation report is
required. Accordingly, we engaged our independent auditor to provide
such an attestation report which was obtained in February 2009. In conjunction
with the proposed Gammon Gold transaction and the close proximity of our fiscal
year end, the Company elected to forgo the 2009 Annual Meeting of
Stockholders.
The Board
of Directors currently has three standing committees: an Audit
Committee, a Corporate Governance and Nominating Committee and a Compensation
Committee. In addition to the descriptions below, please refer to the
“Report of the Compensation Committee” and “Report of the Audit Committee”
included in this Proxy Statement.
On
August 28, 2009, Ian A. Shaw resigned as a director of the
Company. At the time of his resignation, Mr. Shaw served as the
chairman of the Audit Committee and Compensation Committee of the board of
directors.
On August
28, 2009, John T. Postle resigned as a director of the Company. At
the time of his resignation, Mr. Postle served as a member of the Audit
Committee and Compensation Committee.
On
September 2, 2009, Mark T. Nesbitt resigned as a director of the
Company. At the time of his resignation, Mr. Nesbitt served as a
member of the Audit Committee and Compensation Committee. Mr. Shaw,
Mr. Postle and Mr. Nesbitt also served on the Mergers and Acquisitions Committee
of the Board of Directors.
On
September 3, 2009, the Board of Directors of the Company appointed Leonard J.
Sojka and John W. Cutler to the Board in order to fill two of the vacancies
created by the resignations. Mr. Sojka was appointed as chairman of
the Audit Committee, and Mr. Cutler was appointed as chairman of the
Compensation Committee. Both Mr. Sojka and Mr. Cutler will serve on
their respective committees. Previously, on September 1, 2009, the Board had
appointed Mr. Sojka and Mr. Cutler as non-voting observers to the
Board.
On
September 17, 2009, the Company terminated Jeffrey W. Pritchard as Executive
Vice President and Secretary of the Company without cause pursuant to a
restructuring of its corporate investor relations functions. The
termination was effective September 15, 2009. Mr. Pritchard also
resigned as a Director of the Company effective September 29,
2009. As part of the settlement, Mr. Pritchard received a lump sum
payment of approximately $426,000, and will receive an additional payment of
approximately $65,000, if Mr. Pritchard fulfills certain terms of the
termination agreement. Mr. Pritchard will be entitled to change in
control benefits should the Company enter into a transaction on or before
December 31, 2009 with certain entities that would result in a “Change in
Control” as defined in his Change in Control Agreement with the Company. In
addition, on September 17, 2009, the Company appointed Robert Roningen Secretary
of the Company. Mr. Roningen previously was Secretary of the Company
from 2000 to February, 2007.
On
November 2, 2009, Robert Roningen resigned as a director of the
Company. Mr. Roningen also resigned as corporate secretary and Senior
Vice President of the Company effective November 12, 2009. He also
provided legal and consulting services to the Company. As part of the
settlement, Mr. Roningen received consulting fees for services provided to the
Company of $25,000. Mr. Roningen will be entitled to a benefit of
$95,000 upon the happening of a “change in control” (as defined in the Change in
Control Agreement dated January 1, 2009 between the Company and Gifford
Dieterle), if such change in control occurs within the one year period
commencing January 1, 2010 and terminating on December 31, 2010.
On
November 4, 2009, Roger Newell resigned as a director of the
Company.
Audit
Committee
The Audit
Committee currently consists of Leonard J. Sojka, Committee Chairman, John W.
Cutler and Stephen M. Cooper, the non-employee members of the
Board. The Board of Directors has determined that all three members
satisfy the definition of “independent directors” in Rule 10A-3(b)(1)(ii) under
the Securities Exchange Act of 1934 (the “Exchange Act”). The Audit Committee
met on four occasions in fiscal 2009. All committee members were present at the
meetings. Representatives of our independent auditor were in attendance at one
meeting without management present.
The Board
has determined that Mr. Sojka qualifies as an “audit committee financial expert”
as that term is defined by the rules and regulations of the SEC.
The Audit
Committee acts pursuant to the Audit Committee Charter as adopted by the
Board. The charter is available on our website at
www.capitalgoldcorp.com, and can be found under the Corporate Info; Corporate
Governance tab. The Audit Committee reviews and evaluates the charter
annually to ensure its adequacy and accuracy, and is charged with performing an
annual self-evaluation and reporting the results of the evaluation to the full
Board.
The Audit
Committee is directly responsible for the appointment, retention and
termination, and for determining the compensation of, the Company's independent
auditor engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Company. The Audit
Committee is also directly responsible for oversight of the work of the
independent auditor (including resolution of disagreements between management
and the independent auditor regarding financial reporting) engaged for the
purpose of preparing or issuing an audit report or performing other audit,
review or attest services for the Company. The Audit Committee
reviews the overall audit plan (both internal and external) with the independent
auditor and the members of management who are responsible for preparing the
Company's financial statements, including the Company's Chief Financial Officer,
all critical accounting policies and practices used or to be used by the
Company, the Company's disclosures under "Management's Discussion and Analysis
of Financial Conditions and Results of Operations" prior to the filing of the
Company's Annual Report on Form10-K, and significant financial reporting issues
that have arisen in connection with the preparation of such audited financial
statements.
The Audit
Committee also reviews any analyses prepared by management and/or the
independent auditors setting forth significant financial reporting issues and
judgments made in connection with the preparation of financial statements,
including analyses of the effects of alternative Generally Accepted Accounting
Principles methods on the financial statements, major issues as to the adequacy
of the Company's internal controls and any special audit steps adopted in light
of material control deficiencies; major issues regarding accounting principles
and procedures and financial statement presentations, including any significant
changes in the Company's selection or application of accounting principles; and
the effects of regulatory and accounting initiatives, as well as off-balance
sheet transactions and structures, on the financial statements of the
Company.
Corporate
Governance and Nominating Committee
The Corporate Governance and Nominating
Committee currently consists of Stephen M. Cooper, Committee Chair, John W.
Cutler and Leonard J. Sojka. The Corporate Governance and Nominating Committee,
consisting entirely of independent directors, proposes to the Board of Directors
slates of directors to be recommended for election at the Annual Meeting of
Stockholders (and any directors to be elected by the Board of Directors to fill
vacancies) and slates of officers to be elected by the Company’s Board of
Directors. It also advises the Board of Directors on various corporate
governance issues, and leads the Board of Directors in its annual review of the
Board’s performance. The Corporate Governance and Nominating Committee also is
responsible for recommending to the Board amounts of director compensation. Our
Board of Directors had nominated all directors for election in prior years as
the Company had not yet established a Corporate Governance and Nominating
Committee.
Capital Gold has established a process
for identifying and nominating director candidates. The following is an outline
of the process for nomination of candidates for election to the Board:
(a) the Chief Executive Officer, President, the Corporate Governance and
Nominating Committee or other members of the Board of Directors identify the
need to add new Board members, with careful consideration of the mix of
qualifications, skills and experience represented on the Board of Directors;
(b) the Chairman of the Corporate Governance and Nominating Committee
coordinates the search for qualified candidates with input from management and
other Board members; (c) the Corporate Governance and Nominating Committee
engages a candidate search firm to assist in identifying potential nominees, if
it deems such engagement necessary and appropriate; (d) selected members of
management and the Board of Directors interview prospective candidates; and
(e) the Corporate Governance and Nominating Committee recommends a nominee
and seeks full Board endorsement of the selected candidate, based on its
judgment as to which candidate will best serve the interests of Capital Gold’s
stockholders.
The Board
of Directors has determined that directors should possess the following minimum
qualifications: (a) the highest personal and professional ethics, integrity
and values; (b) commitment to representing the long-term interest of the
stockholders; (c) broad experience at the policy-making level in business
and ability to exercise sound judgment in matters that relate to our industry;
and (d) sufficient time to effectively fulfill duties as a Board member.
The Corporate Governance and Nominating Committee considers any candidates
submitted by stockholders on the same basis as any other candidate. Any
stockholder proposing a nomination should submit such candidate’s name, along
with a curriculum vitae or other summary of qualifications, experience and
skills to the Secretary, Capital Gold Corporation, 76 Beaver Street, 14th Flr,
New York, New York 10005. The request to nominate a director must be
made within the timeframe specified under “DEADLINE FOR RECEIPT OF STOCKHOLDER
PROPOSALS” below and accompanied by a statement by the nominee acknowledging
that he or she is willing to serve and, if elected, will owe a fiduciary
obligation to the Company and its shareholders.
The
Corporate Governance and Nominating Committee acts pursuant to the Corporate
Governance and Nominating Committee Charter as adopted by the
Board. The charter is available on our website at
www.capitalgoldcorp.com, and can be found under the Corporate Info; Corporate
Governance tab. The Corporate Governance and Nominating Committee
reviews and evaluates the charter annually to ensure its adequacy and
accuracy.
Compensation
Committee
The
Compensation Committee currently consists of John W. Cutler, Chairman, Leonard
J. Sojka and Stephen M. Cooper. Each is a “non-employee director,” as
defined in Rule 16b-3 of the Exchange Act and an “outside director,” as defined
in Section 162(m) of the Internal Revenue Code, as amended. The
Compensation Committee met on three occasions in fiscal 2009. All committee
members were present at the meetings.
The
Compensation Committee acts pursuant to the Compensation Committee Charter as
adopted by the Board. The charter is available on our website at
www.capitalgoldcorp.com, and can be found under the Corporate Info; Corporate
Governance tab. The Compensation Committee reviews and evaluates the
charter annually to ensure its adequacy and accuracy.
The
Compensation Committee is responsible for determining the compensation for the
Chairman and Chief Executive Officer (“CEO”), the President and Chief Operating
Officer (“COO”) and Chief Financial Officer (“CFO”) as well as approving the
compensation structure for other executives of the Company. Further, the
Compensation Committee approves broad-based and special compensation plans
across the Company.
As set
forth in its charter, the Compensation Committee’s authority and responsibility
include but are not limited to:
|
·
|
Review
executive officer compensation for compliance with Section 16 of the
Securities Exchange Act and Section 162(m) of the Internal Revenue Code,
as each may be amended from time to time, and any other applicable laws,
rules and regulations.
|
|
·
|
In
consultation with the CEO, the COO and the CFO, review the talent
development process within the Company to ensure it is effectively
managed.
|
|
·
|
Annually
review employee compensation strategies, benefits and equity
programs.
|
|
·
|
Annually
review the share usage, dilution and proxy
disclosures.
|
|
·
|
Review
and approve employment agreements, severance arrangements and change in
control agreements and provisions when, and if, appropriate, as well as
any special supplemental benefits.
|
|
·
|
Annually
review the Company’s progress in meeting diversity goals with respect to
the employee population
|
The
Compensation Committee has the authority to engage independent compensation
consultants or advisors, as it may deem appropriate in its sole discretion, and
to approve related fees and retention terms of such consultants or
advisors. In 2007,
the Compensation Committee engaged Mosteller & Associates, Inc.
(“Mosteller”) as its independent executive compensation consulting
firm. Mosteller conducted a review of the total compensation of the
Company’s executive officers and prepared reports for the review of the
Compensation Committee that were subsequently used in determining the
appropriate levels of compensation for each executive officer. In
April 2009, the Compensation Committee engaged the Hay Group as its independent
executive compensation consulting firm for the purpose of helping the
Compensation Committee evaluate its current compensation
programs. The Hay Group conducted its review of the total
compensation of the Company’s executive officers and presented its results for
the review of the Compensation Committee. The Compensation Committee will use
these results in assisting in determining the appropriate levels of compensation
for each executive officer on a going forward basis.
The Chief
Executive Officer attends the Compensation Committee meetings as management’s
representative. No other executives participate in the compensation
process or attend the Compensation Committee meetings. The CEO evaluates
and provides performance assessments and compensation recommendations for each
of the executive officers other than himself to the Compensation
Committee. The Compensation Committee considers these recommendations in
its deliberations to set executive compensation. The Compensation
Committee reviews the compensation package of the CEO and determines the
compensation package of the CEO in an executive session that the CEO does not
attend. The CEO does not engage in discussions with the Compensation
Committee or the Compensation Committee’s independent compensation consulting
firm regarding his compensation package.
Compensation
Committee Interlocks and Insider Participation
Throughout
fiscal 2009, Mr. Shaw, Mr. Postle and Mr. Nesbitt served on the Compensation
Committee. None of the members of the Compensation Committee was at any time
during fiscal 2009 an officer or employee of the Company.
No
executive officer of the Company during fiscal 2009 served as a member of the
board of directors or compensation committee of any entity that has one or more
executive officers serving as a member of the Company’s Board of Directors or
Compensation Committee.
Our
President and COO, John Brownlie, currently serves on the board of directors of
Palladon Ventures Ltd., a mining exploration and development
company. John W. Cutler is currently serving as the President, Chief
Executive Officer and a director of Palladon Ventures Ltd. and Leonard J. Sojka
serves as a director, corporate secretary and chief financial officer for
Palladon Ventures Ltd.
Corporate
Governance
As the
OTC Bulletin Board, on which the Company’s shares of Common Stock are quoted,
has no independence requirements, the Company has adopted the independence
definitions and requirements of the NYSE AMEX. The discussion below reflects
such standards of independence. In addition, the Company has adopted Corporate
Governance Guidelines that outline important policies and practices regarding
the governance of the Company. Each of the committees has also adopted a charter
outlining responsibilities and operations. The Corporate Governance Guidelines
and the charters are available at www.capitalgoldcorp.com and are
available in print upon request to the Investor Relations Department, Capital
Gold Corporation, 76 Beaver Street, 14th Flr.
New York, NY 10005.
Communication
with the Board of Directors
Interested
parties wishing to contact the Board of Directors of the Company may do so by
writing to the following address: Board of Directors, Capital Gold Corporation,
76 Beaver Street, 14th Floor, New York, NY 10005, Attn: Christopher M. Chipman,
Secretary. All letters received will be categorized and processed by Mr. Chipman
and then forwarded to the Company’s Board of Directors.
Code
of Ethics and Business Conduct
We
adopted a Code of Ethics that applies to our officers, directors and employees,
including our principal executive officer, principal financial officer and
principal accounting officer. The Code of Ethics is publicly available on our
website at www.capitalgoldcorp.com, where it may be found under the Corporate
Info; Corporate Governance tab. You also may obtain a copy of this code by
written request to our Office Manager at 76 Beaver Street, 14th Floor, New York,
NY 10005. Our Board of Directors is required to approve any substantive
amendments to this code of ethics or grant any waiver, including any implicit
waiver, from a provision of the code to our chief executive officer, principal
financial officer or principal accounting officer and we will disclose the
nature of such amendment or waiver in a report on Form 8-K within four business
days.
Compliance
with Section 16(a) of the Exchange Act
To our
knowledge, during the fiscal year ended July 31, 2009, based solely on a review
of such materials as are required by the Securities and Exchange Commission, no
officer, director or beneficial holder of more than ten percent of our issued
and outstanding shares of Common Stock failed to timely file with the Securities
and Exchange Commission any form or report required to be so filed pursuant to
Section 16(a) of the Securities Exchange Act of 1934.
Compensation
of Directors
During
the fiscal year ended July 31, 2009, our independent directors, Ian Shaw, John
Postle and Mark Nesbitt, each received a fee of $2,000 per
month. Non-independent directors, Robert Roningen and Roger Newell,
each received $1,000 per month. Directors are reimbursed for their
accountable expenses incurred in attending meetings and conducting their
duties.
On January 20, 2009, at the
recommendation of the Compensation Committee and on the approval by the Board of
Directors, the Company’s non-executive directors were granted 275,000 stock
options under our 2006 Equity Incentive Plan as incentive compensation. The
stock options were awarded as follows: Ian Shaw – 75,000, John Postle –
50,000, Mark T. Nesbitt – 50,000, Roger Newell -50,000 and Robert Roningen –
50,000. The
stock options have a term of five years and vest as follows: one-third vested
upon issuance and the balance vest on a one-third basis annually thereafter. The
exercise price of the stock options is $0.49 per share (per the Plan, the
closing price on the Toronto Stock Exchange on the trading day immediately prior
to the day of determination converted to U.S. Dollars). In the event of a
termination of continuous service (other than as a result of a change of
control, as defined in the Plan), unvested stock options shall terminate and,
with regard to vested stock options, the exercise period shall be the lesser of
the original expiration date or one year from the date continuous service
terminates. Upon a change of control, all unvested stock options and unvested
restricted stock grants immediately vest. The Company utilized the
Black-Scholes method to fair value the 275,000 options received by these
individuals. The grant date fair value of each stock option was
$0.29.
The
following tables set forth the compensation paid to our directors for the fiscal
year ended July 31, 2009:
Director
Compensation
|
|
Fees
Earned or
Paid in
Cash ($)(2)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($) (1)
|
|
|
All Other
Compensation
($)
|
|
|
Total
|
|
Ian
A. Shaw
|
|
|
76,000 |
|
|
|
- |
|
|
|
21,000 |
|
|
|
- |
|
|
|
97,000 |
|
John
Postle
|
|
|
54,000 |
|
|
|
- |
|
|
|
14,000 |
|
|
|
- |
|
|
|
68,000 |
|
Mark
T. Nesbitt
|
|
|
66,000 |
|
|
|
- |
|
|
|
14,000 |
|
|
|
- |
|
|
|
80,000 |
|
Roger
Newell
|
|
|
51,000 |
|
|
|
- |
|
|
|
14,000 |
|
|
|
- |
|
|
|
65,000 |
|
Robert
Roningen(3)
|
|
|
12,000 |
|
|
|
- |
|
|
|
14,000 |
|
|
|
8,000 |
|
|
|
34,000 |
|
(1)
|
Amounts shown
reflect amounts of option awards recognized for financial statement
reporting purposes in accordance with Statement of Financial Accounting
Standard No. 123R, using the Black-Scholes option-pricing model and
include amounts from stock option awards granted in fiscal 2009. Refer to
Note 15 to the Company’s Consolidated Financial Statements for a
discussion of assumptions made in the valuation of option
awards. During fiscal 2009, option awards were comprised of: 1)
75,000 stock options issued to Ian Shaw at an exercise price of
$0.49, 2) 50,000 stock options each issued to John Postle, Mark
T. Nesbitt, Roger Newell and Robert Roningen at an exercise price of
$0.49.
|
(2)
|
Amounts
shown for Ian Shaw, John Postle, Mark Nesbitt and Roger Newell also
includes committee fees earned with respect to merger and acquisition
activity during the fiscal year ended July 31, 2009. Ian Shaw acted as
committee chair. Fees earned were $52,000, $30,000, $42,000 and
$39,000 for Mr. Shaw, Mr. Postle, Mr. Nesbitt and Mr. Newell,
respectively.
|
(3)
|
Amount
shown for Robert Roningen represents fees for legal and consulting
services provided.
|
PROPOSAL
2
AMENDMENT
OF AMENDED AND RESTATED BY-LAWS TO PROVIDE FOR THE
CLASSIFICATION
OF THE BOARD OF DIRECTORS
The
Board of Directors has approved and recommended that stockholders approve an
amendment to our Amended and Restated By-laws to provide for the classification
of the Board of Directors into three classes of directors with staggered terms
of office. At present, the Board of Directors is comprised of a single class of
five directors, all of whom are elected at each annual meeting.
Delaware
law permits us to amend the Amended and Restated By-laws to provide for a
classified Board of Directors. The proposed classified board amendment to the
Amended and Restated By-laws would provide that directors will be classified
into three classes, as nearly equal in number as possible. One class would hold
office initially for a term expiring at the next Annual Meeting of Stockholders
(Class I); a second class would hold office initially for a term expiring at the
2011 Annual Meeting of Stockholders (Class II); and another class would hold
office initially for a term expiring at the 2012 Annual Meeting of Stockholders
(Class III). At each Annual Meeting following this initial classification and
election, the successors to the class of directors whose terms expire at that
meeting would be elected for a term of office to expire at the third succeeding
Annual Meeting after their election, and until their successors have been duly
elected and qualified. In the event we increase or decrease the number of the
members of the Board of Directors, any such increase or decrease will be
apportioned among the three classes to maintain the number of directors in each
class as nearly equal as possible. Directors chosen to fill vacancies on the
classified board would hold office for the remainder of the term of the class of
directors in which the vacancy occurred and until such director’s successor is
elected and qualified.
In
the event that this proposal is approved, the Board of Directors has nominated
Stephen M. Cooper for election as the Class I director, and, if elected, his
initial term will expire at the next Annual Meeting of Stockholders. Gifford A.
Dieterle and Leonard J. Sojka have been nominated for election as the Class II
directors, and, if elected, their initial term will expire at the Annual Meeting
of Stockholders in 2011. John Brownlie and John W. Cutler have been nominated
for election as the Class III directors, and, if elected, their initial term
will expire at the Annual Meeting of Stockholders in 2012. See Proposal No. 1
for information regarding the director nominees. If the proposed amendment to
the Amended and Restated By-laws is not approved, the five nominees, if elected,
will serve one-year terms until the next Annual Meeting of Stockholders and
until their successors are elected and qualified.
Reasons
for the Adoption of a Classified Board of Directors
The
election of directors is currently governed by our Amended and Restated By-laws,
which provides that all directors are to hold office until the next Annual
Meeting of Stockholders and until their successors are duly elected and
qualified. Section 141(d) of the Delaware General Corporation Law (“DGCL”)
permits either the certificate of incorporation or the bylaws of a corporation
to provide for the classification of directors for staggered terms of office.
Neither our Certificate of Incorporation or our Amended and Restated By-laws, in
their current form, contain any such provision.
The
amendment provides for the creation of three classes of directors, comprised of
an nearly equal number of members. The result of this process is that
approximately one-third of the Board of Directors will be up for election each
year. Should a vacancy occur or be created on the Board of Directors, such
vacancy shall be filled by a majority vote of the then serving directors, and
such newly appointed director shall serve until the end of the term of such
class.
The
Board of Directors believes that a classified board serves the best interests of
our stockholders by promoting the continuity and stability of our business. The
Board of Directors believes that a classified board may enhance our ability to
attract and retain well-qualified individuals who are able to commit the
necessary time and resources to understand our business affairs and operations.
The continuity and quality of leadership that results from a classified Board
should, in the opinion of the Board of Directors, promote
our long-term value. Staggered terms for directors may also moderate the pace of
change in the Board of Directors by extending the time required to elect a
majority of directors from one to two annual meetings of stockholders. This
delay is also designed to reduce our vulnerability to unsolicited takeover
attempts and attempts to compel our restructuring or otherwise force us into an
extraordinary transaction. The Board of Directors believes that this delay also
serves our best interests and the best interests of our stockholders by
encouraging potential acquirors to negotiate with the Board of Directors rather
than to act unilaterally. The Board of Directors believes that under most
circumstances it will be able to obtain the best terms for us and our
stockholders if it is in a position to negotiate effectively on their
behalf. This proposal is not in response to any specific effort of
which we are aware of to accumulate our stock or to obtain control of us through
a proxy solicitation in opposition to management or in any other
manner.
Effect
of Classified Board of Directors
Although
the creation of a classified Board of Directors is designed as a protective
measure for stockholders, the creation of a classified Board of Directors may
have the effect of preventing stockholders from realizing an opportunity to sell
their shares of capital stock at higher than market prices by deterring
unsolicited tender offers or other efforts to obtain control of us.
In
addition, classified board provisions will generally delay, deter or impede
changes in control of the Board of Directors or the approval of certain
stockholder proposals that might have the effect of facilitating changes in
control of the Board of Directors, even if the holders of a majority of the
Company’s voting securities believe the changes or actions would be in the best
interests of the Company and its stockholders. For example, classifying the
Board of Directors would increase the time required for someone to obtain
control of us without the cooperation or approval of the incumbent Board of
Directors, even if that person holds or acquires a majority of the voting
power.
Section
141(k)(1) of the DGCL provides that, unless a corporation’s certificate of
incorporation specifically provides otherwise, if a corporation has a staggered
board, the directors of the corporation may only be removed by stockholders for
cause. While our Certificate of Incorporation does not provide for the removal
of directors by stockholders without cause, our Amended and Restated By-laws
does include such a provision. Nevertheless, so long as we maintain a classified
Board of Directors, stockholders may only remove directors for
cause. The inability of stockholders to remove directors without
cause will make the removal of any director more difficult (unless cause is
readily apparent) even if a majority of the stockholders believe removal is in
their best interests.
The Board
of Directors considered the potential adverse impact of this proposal and
concluded that such adverse effects are outweighed by the benefits this
amendment would afford us and our stockholders.
The
proposed amendment to our Amended and Restated
By-laws is as follows:
The
entire paragraph of Section 1(c) in “Article III - Board of Directors” shall be
deleted in its entirety and shall be replaced with the
following:
“The
directors shall be divided into three classes designated as Class I, Class II
and Class III, with each class having as equal a number of members as reasonably
possible. The initial term of office of the Class I, Class II, and Class III
directors shall expire at the annual meeting of stockholders in 2010, 2011 and
2012, respectively. At each succeeding annual meeting of the Stockholders,
directors shall be elected for a full term of three years to succeed the
directors of the class whose terms expire at such annual meeting. If the number
of directors is changed, any increase or decrease shall be apportioned among the
classes by the Board of Directors so as to maintain the number of directors in
each class as nearly equal as is reasonably possible, and any additional
director of any class elected to fill a vacancy resulting from an increase in
such class shall hold office for a term that shall coincide with the remaining
term of that class. In no case will a decrease in the number of
directors shorten the term of any incumbent director, even though such decrease
may result in an inequality of the classes until the expiration of such
term. A director shall hold office until the annual meeting of the
Stockholders in the year in which his or her term expires and until his or her
successor shall be elected and qualified or until his or her prior death,
resignation or removal. Any director elected to fill a vacancy not resulting
from an increase in the number of directors shall have the same remaining term
as that of his or her predecessor.”
THE
BOARD OF DIRECTORS DEEMS PROPOSAL 2 TO BE IN THE BEST
INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
“FOR”
APPROVAL THEREOF.
PROPOSAL
3
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit
Committee has appointed the firm of Wolinetz, Lafazan & Company, P.C. (“WL”)
as our independent registered public accountants for the fiscal year ending July
31, 2010 subject to ratification by the stockholders.
The
affirmative vote of the majority of the shares present in person or represented
by proxy at the Meeting on the proposal shall constitute ratification of the
selection of WL. Even if the selection of WL as our independent
auditor is not ratified, the Audit Committee may, in its discretion, change the
appointment at any time during the year should it determine that such a change
would be in the best interest of the Company and the stockholders. If
the stockholders, however, do not ratify the appointment, the Audit Committee
will reconsider whether to retain WL, but may proceed with the retention of WL
if it deems it to be in the best interest of the Company and the
stockholders.
Representatives
of WL are expected to be present at the Meeting and will have an opportunity to
address the stockholders present at the Meeting and to respond to
questions.
WL
audited our financial statements for the years ended July 31, 2009, 2008 and
2007. All audit and professional services provided by WL were approved in
advance by the Audit Committee to assure such services do not impair the
auditor's independence from us. The total aggregate fees billed by WL were
$247,000, $125,000 and $140,000 for the fiscal years ended July 31, 2009, 2008
and 2007, respectively. The following table shows the detailed fees billed to us
by WL for professional services rendered during these fiscal years.
Description of Fees
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Audit
Fees
|
|
$ |
213,000 |
|
|
$ |
115,000 |
|
|
$ |
130,000 |
|
Audit-Related
Fees
|
|
|
24,000 |
|
|
|
- |
|
|
|
- |
|
Tax
Fees
|
|
|
10,000 |
|
|
|
10,000 |
|
|
|
10,000 |
|
All
Other Fees
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
Fees
|
|
$ |
247,000 |
|
|
$ |
125,000 |
|
|
$ |
140,000 |
|
Audit
Fees. Represents fees for professional services provided for
the audit of our annual financial statements, services that are performed to
comply with generally accepted auditing standards, and review of our financial
statements included in our quarterly reports and services in connection with
statutory and regulatory filings.
Audit-Related
Fees. Represents the fees for assurance and related services
that are reasonably related to the performance of the audit or review of our
financial statements.
Tax Fees. This
represents professional services rendered for tax compliance, tax advice and tax
planning.
All Other Fees. WL
was paid no other fees for professional services during the fiscal years ended
July 31, 2009, 2008 and 2007.
The Board
of Directors considers WL to be well qualified to serve as our independent
public accountants. The Audit Committee will pre-approve all auditing
services and the terms thereof (which may include providing comfort letters in
connection with securities underwriting) and non-audit services (other than
non-audit services prohibited under Section 10A(g) of the Exchange Act or the
applicable rules of the SEC or the Public Company Accounting Oversight Board) to
be provided to us by the independent auditor; provided, however, the
pre-approval requirement is waived with respect to the provisions of non-audit
services for us if the "de minimus" provisions of Section 10A(i)(1)(B) of the
Exchange Act are satisfied. This authority to pre-approve non-audit services may
be delegated to one or more members of the Audit Committee, who shall present
all decisions to pre-approve an activity to the full Audit Committee at its
first meeting following such decision. The Audit Committee may review and
approve the scope and staffing of the independent auditors' annual audit
plan.
PROPOSAL
4
AMENDMENT OF OUR 2006 EQUITY
INCENTIVE PLAN TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK AUTHORIZED FOR
ISSUANCE UNDER THE PLAN FROM
10,000,000 TO 17,500,000
SHARES
Our 2006
Equity Incentive Plan (the “Plan”) was approved by stockholders in February
2007. A maximum of 10,000,000 shares of our common stock are reserved for
issuance under the Plan. To date, we have issued an aggregate of 9,397,500
shares and options for the purchase of shares and 1,845,897 shares either
expired or were left unvested, leaving 2,918,375 shares available for future
issuance under the Plan. Our Board believes that the number of shares reserved
for issuance under the Plan needs to be increased by 7,500,000
shares.
The
following general description of certain features of the Plan is qualified in
its entirety by reference to the Plan, which is attached hereto as Annex A.
Capitalized terms not otherwise defined herein have the meanings ascribed to
them in the Plan. Please note that the only change to the Plan, if approved by
stockholders, will be the above-referenced increase in the number of shares
reserved for issuance under the Plan.
The Plan
authorizes the grant of non-qualified and incentive stock options, stock
appreciation rights and restricted stock awards (each, an “Award”). Unless
sooner terminated, the Plan will continue in effect for a period of 10 years
from its effective date.
The Plan
is administered by our Board of Directors which has delegated the administration
to our Compensation Committee. The Plan provides for Awards to be made to such
of our employees, directors and consultants and our affiliates as the Board may
select.
The
following limits apply to grants of Awards under the Plan: (i) the maximum
number of shares of common stock which may be reserved for issuance to all
directors, officers and ten percent stockholders, in the aggregate, under the
Plan, together with any other security-based compensation arrangement, shall
not, at any time, exceed 10% of the outstanding shares of common stock on a
non-diluted basis; and (ii) the maximum number of shares of common stock which
may be issued to all directors, officers and ten percent stockholders, in the
aggregate, under the Plan, together with any other security-based compensation
arrangement, within any one year period, shall not exceed ten percent (10%) of
the outstanding shares of common stock on a non-diluted basis.
The Board
has the authority to accelerate the vesting or exercise date of any Award.
Awards are subject to adjustment upon any change in capitalization of the Common
Stock. All Awards terminate immediately prior to a dissolution or liquidation of
the Company. Upon a Change in Control, all unvested Awards vest, and the Board
has the authority to accelerate the exercisability of any Award. A “change in
control,” is defined in the Plan to occur in the event one or more persons
acting individually or as a group:
(i) acquires
sufficient additional stock to constitute more than 50% of (A) the total Fair
Market Value of all common stock issued and outstanding or (B) the total voting
power of all shares of capital stock authorized to vote for the election of
directors;
(ii) acquires,
in a 12-month period, 35% or more of the voting power of all shares of capital
stock authorized to vote for the election of directors, or alternatively a
majority of the members of the board is replaced during any 12-month period by
directors whose appointment was not endorsed by a majority of the members of the
board; or
(iii) acquires,
during a 12-month period, more than 40% of the total gross Fair Market Value of
all of our assets.
Stock
options awarded under the Plan may vest and be exercisable at such times (not
later than 10 years after the date of grant) and at such exercise prices (not
less than Fair Market Value at the date of grant) as our Board may determine.
The Plan also provides that, should the expiry date of any vested option fall
on, or within nine business days immediately following a black-out period
self-imposed by us on the holder, the term of such option will automatically be
extended to a date which expires 10 business days following the end of such
black-out period. Unless otherwise determined by our Board, stock options shall
not be transferable except by will or by the laws of descent and distribution.
No options may be granted under the Plan after the tenth anniversary of its
effective date.
On
July 23, 2009, at the recommendation of the Compensation Committee and upon
approval by the Board of Directors, the Company amended the 2006 Equity
Incentive Plan to provide for cashless exercises of options by participants
under the Plan. Payment of the option exercise price may be made (i)
in cash or by check payable to the Company, (ii) in shares of Common Stock duly
owned by the optionholder (and for which the optionholder has good title free
and clear of any liens and encumbrances), valued at the Fair Market Value on the
date of exercise, or (iii) by delivery back to the Company from the shares
acquired on exercise of the number of shares of Common Stock equal to the
exercise price, valued at the Fair Market Value on the date of
exercise.
Unless
otherwise provided in an option agreement, in the event an optionholder’s
continuous service terminates (other than upon the optionholder’s death,
disability, retirement or as a result of a Change of Control), all options held
by the optionholder shall immediately terminate; provided, however, that an
option agreement may provide that if an optionholder’s continuous service is
terminated for reasons other than for cause, all vested options held by such
person shall continue to be exercisable until the earlier of the expiration date
of such option or 180 days after the date of such termination. All such
vested options not exercised within the period described in the preceding
sentence shall terminate.
Stock
appreciation rights (“SARS”), the right to receive in shares of common stock the
excess of the Fair Market Value of common stock on the date the rights are
surrendered over the Fair Market Value of common stock on the date of grant, may
be granted to any Employee, Director or Consultant selected by the
Board:
(i) in
connection and simultaneously with the grant of another Award;
(ii) with
respect to a previously granted Award; or
(iii) independent
of another Award.
The Board
may, in its discretion and on such terms as it deems appropriate, require as a
condition of the grant of a SAR that the Participant surrender for cancellation
some or all of the Awards previously granted to such person under the Plan or
otherwise. A SAR, the grant of which is conditioned upon such surrender, may
have an exercise price lower (or higher) than the exercise price of the
surrendered Award, may contain such other terms as the Board deems appropriate,
and shall be exercisable in accordance with its terms, without regard to the
number of shares, price, exercise period or any other term or condition of such
surrendered Award upon sale of the common stock.
Restricted
stock awarded under the Plan may be granted on such terms and conditions as the
Board may determine. The terms and conditions of restricted stock Award
Agreements may change from time to time, and the terms and conditions of
separate restricted stock Award Agreements need not be identical. Each
restricted stock Award Agreement:
(i) may
be awarded in consideration for past services actually rendered, or for future
services to be rendered, to us or an Affiliate for its benefit;
(ii) may
be subject to a vesting schedule to be determined by the Board, or be fully
vested at the time of grant;
(iii)
shall provide that, unless otherwise provided in the
restricted stock Award Agreement, in the event a Participant’s continuous
service to us terminates for cause prior to a vesting date set forth in the
restricted stock Award Agreement, any unvested restricted stock Award shall be
forfeited; and
(iv)
unless otherwise provided for therein, shall not be
transferable.
The
following is a brief summary of certain of the U.S. federal income tax
consequences of certain transactions under the Plan based on federal income tax
laws in effect as of the date of this proxy. This summary applies to the Plan as
normally operated and is not intended to provide or supplement tax advice to
eligible employees. The summary contains general statements based on current
U.S. federal income tax statutes, regulations and currently available
interpretations thereof. This summary is not intended to be exhaustive and does
not describe state, local or foreign tax consequences or the effect, if any, of
gift, estate and inheritance taxes.
Under
current federal laws, in general, recipients of grants of nonqualified stock
options and restricted stock awards under the Plan are taxed upon their actual
or constructive receipt of common stock with respect to such awards or grants
(i.e., upon exercise of nonqualified stock options and upon vesting of the
restricted stock). Subject to Section 162(m) of the Code and certain reporting
requirements, we would receive an income tax deduction with respect to the
amount of ordinary income recognized by the participant. Under Sections 421 and
422 of the Code, recipients of incentive stock options are generally not taxed
on their receipt of common stock upon the exercise of incentive stock options,
if they hold the common stock for specified minimum holding periods; therefore,
we would not receive an income tax deduction unless a participant failed to
satisfy the minimum holding periods. Assuming the required holding periods are
met, an incentive stock option recipient would recognize a capital
gain.
The Plan
is also structured to comply with the requirements imposed by Section 162(m) of
the Code and related regulations in order to preserve, to the extent
practicable, our tax deduction for awards made under our Plan to covered
employees. Section 162(m) of the Code generally denies an employer a deduction
for compensation in excess of $1,000,000 paid to covered employees of a publicly
held corporation (generally the named executive officers), unless the
compensation is exempt from the $1,000,000 limitation because it is
performance-based compensation.
Participants
may elect, under Section 83(b) of the Code, within 30 days of a grant of
restricted stock, to recognize taxable ordinary income on the date of grant,
rather than on the date of vesting. If a participant makes an election under
Section 83(b), the holding period will commence on the date of grant, the
participant's tax basis will equal the fair market value of the shares on the
grant date (determined without regard to restrictions), and we will be entitled
to a deduction equal to the amount that is taxable as ordinary income to the
participant.
The Plan
provides the Board with the general power to amend the Plan, or any portion
thereof at any time in any respect without the approval of our stockholders,
provided however, that the stockholders must approve any amendment which
increases the fixed maximum percentage of shares of common stock issuable
pursuant to the Plan, reduces the exercise price of an Award held by a director,
officer or ten percent stockholder or extends the term of an Award held by a
director, officer or ten percent stockholder. Accordingly, for example, the
Board may amend the terms of the Plan without seeking stockholder approval as
follows:
(a) amendments
of a “housekeeping” or ministerial nature including, without limiting the
generality of the foregoing, any amendment for the purpose of curing any
ambiguity, error or omission in the Plan or to correct or supplement any
provision of the Plan that is inconsistent with any other provision of the
Plan;
(b) amendments
necessary to comply with the provisions of applicable law (including, without
limitation, the rules, regulations and policies of the TSX or any other stock
exchange upon which the common stock is listed);
(c) amendments
respecting administration of the Plan;
(d) any
amendment to the vesting provisions of the Plan or any Award;
(e) any
amendment to the early termination provisions of the Plan or any Award, whether
or not such Award is held by a director, officer or ten percent stockholder,
provided such amendment does not entail an extension beyond the original expiry
date;
(f)
the addition of any form of financial
assistance by the Company for the acquisition by all or certain categories of
participants under the Plan, and the subsequent amendment of any such provision
which is more favorable to participants;
(g) the
addition or modification of a cashless exercise feature, payable in cash or
shares, which provides for a full deduction of the number of underlying shares
from the Plan reserve;
(h) amendments
necessary to suspend or terminate the Plan; and
(i)
any other amendment, whether fundamental or otherwise,
not requiring shareholder approval under applicable law (including, without
limitation, the rules, regulations and policies of the TSX or any other stock
exchange upon which the common stock is listed).
Notwithstanding
the foregoing, stockholder approval may still be necessary to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 of the Exchange Act or any
applicable stock exchange listing requirements. The Board may, in its sole
discretion, although not required under the terms of the Plan, submit any
amendment to the Plan for stockholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of Section 162(m) of
the Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers. The Board may amend the Plan in
any respect it deems necessary or advisable to provide eligible Employees with
the maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith. Rights under any Award granted before amendment of the
Plan cannot be impaired by any amendment of the Plan unless the Participant
consents in writing. The Board is empowered to amend the terms of any one or
more Awards; provided, however, that the rights under any Award shall not be
impaired by any such amendment unless the applicable Participant consents in
writing and further provided that the Board cannot amend the exercise price of
an option, the Fair Market Value of an Award or extend the term of an option or
Award without obtaining the approval of the stockholders if required by the
rules of the TSX or any stock exchange upon which the common stock is
listed.
During
the fiscal year ended July 31, 2009, the following options and shares were
granted under the Plan to the following persons: 500,000 options to Gifford A.
Dieterle, our Chief Executive Officer; 500,000 options to John Brownlie, our
President and Chief Operating Officer; 500,000 options to Jeffrey Pritchard, our
former Executive Vice President; 250,000 options to Christopher M. Chipman, Our
Chief Financial Officer; 250,000 options to J. Scott Hazlitt, our Vice President
Mine Development; 275,000 options to our non-executive directors as a group; and
125,000 options for services provided by vendors. All of the above options are
exercisable for periods ranging from two to seven years from issuance and have
exercise prices ranging from $0.35 to $0.65 per share (market price). We cannot
determine at this time the benefits or amounts that will be received by any
individual or group pursuant to the Plan in the future.
The last
reported sales price per share of our common stock as reported by the OTC
Bulletin Board on November 6, 2009, was $0.87. On November 6, 2009, the last
price of our common stock on the TSX was $0.94 CDN (approximately $0.88
USD).
THE
BOARD OF DIRECTORS DEEMS PROPOSAL 4 TO BE IN THE BEST
INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
“FOR”
APPROVAL THEREOF.
INFORMATION
CONCERNING EXECUTIVE OFFICERS
The
following sets forth biographical information about our executive officers and
key personnel:
Name
|
Age
|
Position
|
|
|
|
Gifford
A. Dieterle
|
76
|
Chief
Executive Officer, Treasurer &
Chairman
of the Board
|
John
Brownlie
|
60
|
President
& Chief Operating Officer
|
Christopher
M. Chipman
|
36
|
Chief
Financial Officer
|
J.
Scott Hazlitt
|
56
|
Vice
President - Mine Development
|
For
biographical information about Gifford A. Dieterle and John Brownlie please see
the discussion under the heading “Proposal 1 Election of Directors”
above.
CHRISTOPHER
M. CHIPMAN, Chief Financial Officer. Mr. Chipman has been our Chief Financial
Officer since March 1, 2006. Since November 2000, Mr. Chipman has been a
managing member of Chipman & Chipman, LLC, a consulting firm that assists
public companies with the preparation of periodic reports required to be filed
with the Securities and Exchange Commission and compliance with Section 404 of
the Sarbanes Oxley Act of 2002. The firm also provides outsourced financial
resources to clients assisting in financial reporting, forecasting and
accounting services. Mr. Chipman is a Certified Public Accountant and, from 1996
to 1998, he was a senior accountant with the accounting firm of Grant Thornton
LLP. Mr. Chipman was the Controller of Frontline Solutions, Inc., a software
company (2000); a Senior Financial Analyst for GlaxoSmithKline (1998-2000); and
an Audit Examiner for Wachovia Corporation (1994-1996). He received a B.A. in
Economics from Ursinus College in 1994. He is a member of the American and
Pennsylvania Institute of Certified Public Accountants.
J. SCOTT
HAZLITT, Vice President - Mine Development, has been in the mining business
since 1974. Since 2001, he has focused on development of our El Chanate
concessions. Currently, he is involved in mine expansion plans and
exploration. Mr. Hazlitt was a field geologist for ARCO Syncrude Division
at their CB oil Shale project in 1974 and 1975. He was a contract geologist for
Pioneer Uravan and others from 1975 to 1977. He was a mine geologist for Cotter
Corporation in 1978 and 1979, and was a mine geologist for ASARCO from 1979 to
1984. He served as Vice President of Exploration for Mallon Minerals from 1984
to 1988. From 1988 to 1992, Mr. Hazlitt was a project geologist and Mine
Superintendent for the Lincoln development project. From 1992 to 1995, he was
self-employed as a consulting mining geologist in California and Nevada. He was
Mine Operations Chief Geologist for Getchell Gold from 1995 to 1999. His work
experience has included precious metals, base metals, uranium, and oil shale.
Mr. Hazlitt served as mine manager at our Hopemore Mine in Leadville, Colorado
starting in November 1999. His highest educational degree is Master of Science
from Colorado State University. He is a registered geologist in the state of
California.
Executive
Compensation
Compensation
Discussion and Analysis
The
Compensation Discussion and Analysis (the “CD&A”) discusses the compensation
of our named executive officers for the fiscal year ended July 31,
2009. The named executive officers are Gifford A. Dieterle, Chief
Executive Officer, Director, Chairman and Treasurer, John Brownlie, President,
Chief Operating Officer and Director, Christopher Chipman, Secretary and Chief
Financial Officer, Jeffrey Pritchard, former Executive Vice President and J.
Scott Hazlitt, Vice President – Mine Development (collectively, the “named
executive officers”).
Objectives
and Philosophy of Executive Compensation
The
primary objectives of the Compensation Committee with respect to executive
compensation are to attract and retain the most talented and dedicated
executives possible, to tie annual and long-term cash and stock incentives to
achievement of measurable performance objectives, and to align executives'
incentives with stockholder value creation. To achieve these
objectives, the Compensation Committee strives to implement and maintain
compensation plans that tie a substantial portion of executives' overall
compensation to the experience level of the executive or employee, the
complexity and amount of responsibility of the employee’s job, key strategic
financial and operational goals such as the establishment and maintenance of key
strategic relationships, the development and operation of our mining projects,
the identification and possible development of additional mining properties and
the performance of our common stock price. The Compensation Committee evaluates
individual executive performance with the goal of setting compensation at levels
the Compensation Committee believes are comparable with executives in other
companies of similar size and stage of development operating in the mining
industry while taking into account our relative performance and our own
strategic goals.
The
Compensation Committee engaged Mosteller & Associates, Inc. (“Mosteller”),
an independent executive compensation consulting firm, to provide advice and
assistance in the area of executive and director compensation. Mosteller
conducted a review of the total compensation of the Company’s named executive
officers and prepared reports for the review of the Compensation Committee that
were subsequently used in determining the appropriate levels of compensation for
each executive officer. Specifically, in accordance with the scope
directed by the Compensation Committee, Mosteller reviewed the compensation
packages paid to the Company’s executives in 2006 and 2007, selected peer
sources against which to compare the data and analyzed comparable compensation
packages using appropriate regression analyses.
To
evaluate the Company’s compensation packages, Mosteller identified four sources
of comparison: (1) mining companies with revenues less than $10 million
and less than 100 employees that are headquartered in the northeastern United
States; (2) mining and natural resources divisions of utility companies with
revenues less than $50 million and less than 100 employees that are
headquartered in the States; (3) energy companies with revenues less than $50
million that are headquartered in the United States; and (4) a custom peer group
of mining companies that included Golden Star Resources, LTD, Miramar,
Northgate, Royal Gold, Inc., Coeur d’Alene Mines Corp., and Meridian Gold.
The Company believes that the companies in this custom peer group provide a good
basis of comparison because, similar to the Company, they are operational, are
producing product and have sizable assets and revenue streams.
In April
2009, the Compensation Committee engaged the Hay Group as its independent
executive compensation consulting firm for the purpose of helping the
Compensation Committee evaluate its current compensation
programs. The Hay Group conducted its review of the total
compensation of the Company’s executive officers and presented its results for
the review of the Compensation Committee. The Compensation Committee will use
these results in assisting in determining the appropriate levels of compensation
for each executive officer on a going forward basis.
The Chief
Executive Officer attends the Compensation Committee meetings as management’s
representative. No other executives participate in the compensation
process or attend the Compensation Committee meetings. The CEO evaluates
and provides performance assessments and compensation recommendations for each
of the executive officers other than himself to the Compensation
Committee. The Compensation Committee considers these recommendations in
its deliberations to set executive compensation. The Compensation
Committee reviews the compensation package of the CEO and determines the
compensation package of the CEO in an executive session that the CEO does not
attend. The CEO does not engage in discussions with the Compensation
Committee or the Compensation Committee’s independent compensation consulting
firm regarding his compensation package.
Elements
of Executive Compensation
Over the
past two years, the Company was able to successfully develop and build the El
Chanate mine on time and within budget. In addition, during the first
year of operations, the Company maintained operating costs significantly below
the industry average disclosing positive cash flow from operations and net
earnings per share. Also, the Company funded all capital expenditures
during fiscal 2008 and 2009 from operating cash flow generated at the
mine. As a result of these accomplishments, the Compensation
Committee seeks to target a total compensation program (including base salary,
annual bonus, and the grant value of equity incentives) at the 75% percentile of
comparable market practices. In the view of the Compensation Committee, this is
the proper level to target because the market for executive talent in the mining
industry is exceptionally competitive. In addition, other natural resource and
materials companies are typically more diverse than the Company and therefore
face lower potential volatility in performance results. The Compensation
Committee believes that an above market pay positioning strategy is appropriate
to compensate for the additional performance risk of being tied exclusively to
gold.
Regular
Compensation
Regular
compensation, or base salary, is reviewed annually, and adjusted from time to
time to realign salaries with market levels after taking into account individual
responsibilities, performance and experience. This review will occur in the
fourth fiscal quarter of each year. The target base pay positioning of the 75%
percentile of the applicable benchmark as stated above for each position is
intended to be a guideline, and the Compensation Committee makes its decisions
within the context of market practices. However, this is not intended to be an
exact science. Other factors such as an individual’s performance, tenure and
experience, the performance of the Company overall, any retention concerns and
the individual’s historical compensation and comparisons to peers at the Company
impact the decision-making process. The Compensation Committee does not weigh
any of these factors more heavily than others and does not use any formula to
assess these factors, but rather considers each factor in its judgment and at
its discretion.
On July
23, 2009, our named executive officers salaries were reviewed by the
Compensation Committee. It was determined that the salary
levels were consistent with the target pay positioning as stated
above. The base pay for the named executives is at the following
levels:
Name
|
|
Percentage Increase
|
|
|
Base Pay
|
|
Gifford
A. Dieterle
|
|
|
- |
|
|
$ |
287,500 |
|
John
Brownlie
|
|
|
- |
|
|
$ |
258,750 |
|
Jeffrey
Pritchard
|
|
|
- |
|
|
$ |
224,250 |
|
Christopher
M. Chipman
|
|
|
- |
|
|
$ |
201,250 |
|
J.
Scott Hazlitt
|
|
|
- |
|
|
$ |
155,250 |
|
Annual
Bonus
The
compensation program for named executive officers includes eligibility for both
an annual performance-based cash bonus and equity incentive
award. The Company did not formally establish corporate or individual
performance targets prior to, or at the beginning of, fiscal year 2009. At
the conclusion of fiscal 2009, the Compensation Committee reviewed the
performance of the Company and each executive during fiscal 2009. The
Compensation Committee noted several achievements, including, but not limited
to, the increase in ore mined, the increase in ounces produced, the increase in
the proceeds from sales of gold and silver, the increase in gold reserves, and
the completion of certain capital and plant upgrades.
On
January 20, 2009, at the recommendation of the Compensation Committee and on the
approval by the Board of Directors, the Company’s executive officers and
directors were granted 2,000,000 stock options under our 2006 Equity Incentive
Plan as incentive compensation. The stock options have a term of five years and
vest as follows: one-third vested upon issuance and the balance vest on a
one-third basis annually thereafter. The exercise price of the stock options is
$0.49 per share (per the Plan, the closing price on the Toronto Stock Exchange
on the trading day immediately prior to the day of determination converted to
U.S. Dollars). In the event of a termination of continuous service (other than
as a result of a change of control, as defined in the Plan), unvested stock
options shall terminate and, with regard to vested stock options, the exercise
period shall be the lesser of the original expiration date or one year from the
date continuous service terminates. Upon a change of control, all unvested stock
options and unvested restricted stock grants immediately vest. The
Company utilized the Black-Scholes method to fair value the 2,000,000 options
received by these individuals totaling $569,000. The grant date fair
value of each stock option was $0.29.
|
|
Stock
|
|
Name
|
|
Options
|
|
|
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
Gifford
Dieterle
|
|
|
500,000 |
|
John
Brownlie
|
|
|
500,000 |
|
Jeff
Pritchard
|
|
|
500,000 |
|
Christopher
Chipman
|
|
|
250,000 |
|
Scott
Hazlitt
|
|
|
250,000 |
|
On July
23, 2009, at the recommendation of the Compensation Committee and upon approval
by the Board of Directors, the Company’s executive officers were awarded cash
bonuses. The specific cash bonuses and awards are set forth
below.
|
|
Cash
|
|
Name
|
|
Bonus
|
|
|
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
Gifford
Dieterle
|
|
$ |
187,500 |
|
John
Brownlie
|
|
$ |
187,500 |
|
Jeff
Pritchard
|
|
$ |
168,750 |
|
Christopher
Chipman
|
|
$ |
168,750 |
|
Scott
Hazlitt
|
|
$ |
75,000 |
|
The stock
options awarded on January 20, 2009 were granted as a method to provide
incentive compensation to the Company’s named executive
officers. The Compensation
Committee believes that the recipients are motivated by the potential
appreciation of the stock price over time and will remain committed to the
Company while the grants vest.
On a
going forward basis, the Compensation Committee will determine the cash bonus
and/or equity incentive award based on the level of achievement of the financial
and operational goals of the Company and for the level of achievement of annual
performance objectives of each individual named executive officer. These
objectives may vary depending on the individual executive, but will relate
generally to strategic factors such as establishment and maintenance of key
strategic relationships, the development and operation of our mining projects,
the identification and possible development of additional mining properties, and
to financial factors such as raising capital and improving our results of
operations. Bonuses, if awarded, are determined at the sole discretion of the
Board of Directors as recommended by the Compensation Committee.
2006 Equity Incentive
Plan
The 2006
Equity Incentive Plan (the “Plan”) is intended to attract and retain individuals
of experience and ability, to provide incentive to our employees, consultants,
and non-employee directors, to encourage employee and director proprietary
interests in us, and to encourage employees to remain in our
employ. Each of the named executive officers is eligible for annual
equity awards, which are granted pursuant to the Plan.
The Plan
authorizes the grant of non-qualified and incentive stock options, stock
appreciation rights and restricted stock awards (each, an “Award”). A maximum of
10,000,000 shares of common stock are reserved for potential issuance pursuant
to Awards under the Plan. Unless sooner terminated, the Plan will
continue in effect for a period of 10 years from its effective
date.
The Plan
is administered by our Board of Directors which has delegated the administration
to our Compensation Committee. The Plan provides for Awards to be
made to such of our employees, directors and consultants and our affiliates as
the Board may select.
Stock
options awarded under the Plan may vest and be exercisable at such times (not
later than 10 years after the date of grant) and at such exercise prices (not
less than Fair Market Value at the date of grant) as the Board may
determine. Unless otherwise determined by the Board, stock options
shall not be transferable except by will or by the laws of descent and
distribution. The Board may provide for options to become immediately
exercisable upon a “change in control,” as defined in the Plan. We
believe this single-trigger is appropriate to ensure that continuing employees
are treated the same as terminated employees with respect to outstanding equity
grants. No options may be granted under the Plan after the tenth
anniversary of its effective date. Unless the Board determines
otherwise, there are certain continuous service requirements and the options are
not transferable. On July 23, 2009, at the recommendation of the
Compensation Committee and upon approval by the Board of Directors, the Company
amended the 2006 Equity Incentive Plan to provide for cashless exercises of
options by participants under the Plan. Payment of the option exercise price may
be made (i) in cash or by check payable to the Company, (ii) in shares of Common
Stock duly owned by the optionholder (and for which the optionholder has good
title free and clear of any liens and encumbrances), valued at the Fair Market
Value on the date of exercise, or (iii) by delivery back to the Company from the
shares acquired on exercise of the number of shares of Common Stock equal to the
exercise price, valued at the Fair Market Value on the date of
exercise.
The Plan
provides the Board with the general power to amend the Plan, or any portion
thereof at any time in any respect without the approval of our stockholders,
provided however, that the stockholders must approve any amendment which
increases the fixed maximum percentage of shares of common stock issuable
pursuant to the Plan, reduces the exercise price of an Award held by a director,
officer or ten percent stockholder or extends the term of an Award held by a
director, officer or ten percent stockholder. Notwithstanding the
foregoing, stockholder approval may still be necessary to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 of the Exchange Act or any
applicable stock exchange listing requirements. The Board may amend the Plan in
any respect it deems necessary or advisable to provide eligible Employees with
the maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith. Rights under any Award granted before amendment
of the Plan cannot be impaired by any amendment of the Plan unless the
Participant consents in writing. The Board is empowered to amend the
terms of any one or more Awards; provided, however, that the rights under any
Award shall not be impaired by any such amendment unless the applicable
Participant consents in writing and further provided that the Board cannot amend
the exercise price of an option, the Fair Market Value of an Award or extend the
term of an option or Award without obtaining the approval of the stockholders if
required by the rules of the TSX or any stock exchange upon which the common
stock is listed.
Although
non-cash compensation is utilized by us to prevent placing strains on liquidity,
care is taken by management to avoid materially diluting investors.
In the
event of a termination of continuous service (other than as a result of a change
of control, as defined in the Plan), unvested stock options shall terminate and,
with regard to vested stock options, the exercise period shall end on the
earlier of the original expiration date or one year from the date continuous
service terminates. Upon a change of control, all unvested stock options and
unvested restricted stock grants immediately vest.
Employment
Agreements
We have
entered into employment or engagements agreements with each of our named
executive officers. The agreements provide for certain payments if
the named executive officers are terminated without cause or leave the Company
due to a material breach of the employment agreement by us. In
connection with the employment/engagement agreements, the Company also entered
into change of control agreements with each of the named executive officers,
which provides for certain payments upon a termination in connection with a
change in control. The Company believes this is in the best interest
of the stockholders because it encourages the continued attention and dedication
of the named executive officers during a change in control. These
agreements are described in greater detail in the section entitled “Employment
Agreements and Change in Control Agreements.”
Tax
and Accounting Implications
As part
of its role, the Compensation Committee considers the deductibility of executive
compensation under Section 162(m) of the Internal Revenue Code, which provides
that the Company may not deduct non-performance based compensation of more than
$1 million that is paid to certain executives. The Compensation
Committee has considered the $1 million limit for federal income tax purposes on
deductible executive compensation that is not performance based and believes
that the compensation paid is generally fully deductible for federal income tax
purposes. However, in certain situations, the Compensation Committee
may approve compensation that will not meet these requirements in order to
ensure competitive levels of total compensation for the Company’s executive
officers.
SUMMARY
COMPENSATION TABLE
The
following tables set forth the total compensation paid to or earned by our named
executive officers for fiscal years ended July 31, 2009, 2008 and 2007,
respectively (in thousands):
Name
&
Principal
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
(1)
|
|
|
Option
Awards
(2)
|
|
|
Non-Equity
Incentive
Plan
Compen-
sation
|
|
|
Non-
qualified
Deferred
Compen-
sation
Earnings
|
|
|
All
Other
Compen-
sation
($)
|
|
|
Total
($)
|
|
Gifford
A. Dieterle,
|
|
2009
|
|
$ |
288 |
|
|
$ |
188 |
|
|
$ |
53 |
|
|
$ |
127 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
656 |
|
Director,
Chairman,
|
|
2008
|
|
$ |
244 |
|
|
$ |
325 |
|
|
$ |
102 |
|
|
$ |
60 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
731 |
|
Treasurer and
CEO
|
|
2007
|
|
$ |
180 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Brownlie,
|
|
2009
|
|
$ |
259 |
|
|
$ |
188 |
|
|
$ |
53 |
|
|
$ |
127 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
627 |
|
Director,
President
|
|
2008
|
|
$ |
275 |
|
|
$ |
318 |
|
|
$ |
102 |
|
|
$ |
112 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
807 |
|
and
COO |
|
2007
|
|
$ |
150 |
|
|
$ |
- |
|
|
$ |
225 |
|
|
$ |
34 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
Pritchard,
|
|
2009
|
|
$ |
224 |
|
|
$ |
169 |
|
|
$ |
53 |
|
|
$ |
58 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
504 |
|
Executive
Vice
|
|
2008
|
|
$ |
189 |
|
|
$ |
284 |
|
|
$ |
102 |
|
|
$ |
60 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
635 |
|
President
(3) |
|
2007
|
|
$ |
120 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
M. |
|
2009
|
|
$ |
201 |
|
|
$ |
169 |
|
|
$ |
53 |
|
|
$ |
84 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
507 |
|
Chipman,
CFO
|
|
2008
|
|
$ |
189 |
|
|
$ |
278 |
|
|
$ |
102 |
|
|
$ |
60 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
629 |
|
|
|
2007
|
|
$ |
118 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
79 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Scott Hazlitt,
|
|
2009
|
|
$ |
155 |
|
|
$ |
75 |
|
|
$ |
16 |
|
|
$ |
72 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
318 |
|
Vice
President –
|
|
2008
|
|
$ |
134 |
|
|
$ |
141 |
|
|
$ |
45 |
|
|
$ |
42 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
362 |
|
Mine
Development |
|
2007
|
|
$ |
105 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
105 |
|
(1)
|
Amounts shown
represent the amount of restricted stock award recognized for financial
statement reporting purposes in accordance with Statement of Financial
Accounting Standard No. 123R and include amounts from restricted
stock awards granted in fiscal 2008. Refer to Note 15 to the Company’s
Consolidated Financial Statements for a discussion of assumptions made in
the valuation of restricted stock awards. During 2009, Stock
Awards comprised of the vested portion of restricted stock awards issued
during fiscal 2008. During fiscal 2008, restricted stock awards were
comprised of: 1) 250,000 shares of restricted stock issued each to Gifford
A. Dieterle, John Brownlie, Jeffrey Pritchard and Christopher M. Chipman
as well as 75,000 shares of restricted stock issued to J. Scott Hazlitt at
the fair value of the Company’s stock on the date of grant of $0.63, 2)
100,000 shares of restricted stock issued each to Gifford A. Dieterle,
John Brownlie, Jeffrey Pritchard and Christopher M. Chipman as well as
50,000 shares of restricted stock to J. Scott Hazlitt at the fair value of
the Company’s stock on the date of grant of $0.70. During
fiscal 2007, restricted stock awards were comprised of 500,000 shares of
restricted stock issued to John Brownlie at the fair value of the
Company’s stock on the date of grant of
$0.45.
|
(2)
|
Amounts
shown reflect amounts of option awards recognized for financial statement
reporting purposes in accordance with Statement of Financial Accounting
Standard No. 123R, using the Black-Scholes option-pricing model and
include amounts from stock option awards granted in fiscal 2008 and 2009.
Refer to Note 15 to the Company’s Consolidated Financial Statements in Our
annual report on Form 10-K filed with the SEC on October 14,
2009 for a discussion of assumptions made in the valuation of
option awards. During fiscal 2009, option awards were comprised
of: 1) 500,000 stock options issued each to Gifford A. Dieterle, John
Brownlie and Jeffrey Pritchard at an exercise price of $0.49;
and 2) 250,000 stock options issued to Christopher M. Chipman
and J. Scott Hazlitt at an exercise price of $0.49 that vested during the
period. During fiscal 2008, option awards were comprised of: 1)
500,000 stock options issued each to Gifford A. Dieterle, John Brownlie,
Christopher M. Chipman and Jeffrey Pritchard at an exercise price of
$0.63; 350,000 options issued to J. Scott Hazlitt at an exercise price of
$0.63, 2) 150,000 stock options issued to John Brownlie at an
exercise price of $0.34 that vested during the period. During
fiscal 2007, option awards were comprised of: 1) 250,000 and
100,000 stock options issued to John Brownlie and Christopher M. Chipman,
respectively, at an exercise price of $0.36, 2) 500,000 stock options
issued to Christopher M. Chipman at an exercise price of
$0.38.
|
(3)
|
On
September 17, 2009, the Company terminated Jeffrey W. Pritchard as
Executive Vice President and Secretary of the Company without cause
pursuant to a restructuring of its corporate investor relations
functions. The termination was effective September 15,
2009. Mr. Pritchard also resigned as a Director of the Company
effective September 29, 2009.
|
GRANT
OF PLAN BASED AWARDS TABLE
The
following table sets forth information with respect to option awards and
restricted stock awards during the fiscal year ended July 31, 2009 to the
Company’s named executive officers:
Name
|
|
Grant
Date
|
|
All Other Stock
Awards(1)
(#)
|
|
|
All Other Option
Awards: Number
Of Securities
Underlying Options(1)
(# )
|
|
|
Exercise or
base price
of award(2)
($/Sh)
|
|
|
Grant Date
Fair Value of
Stock and
Option Awards (3)
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gifford
A.
|
|
12/20/07
|
|
|
- |
|
|
|
500,000 |
|
|
|
0.63 |
|
|
|
168,000 |
|
Dieterle
|
|
12/20/07
|
|
|
250,000 |
|
|
|
- |
|
|
|
0.63 |
|
|
|
158,000 |
|
|
|
7/17/08
|
|
|
100,000 |
|
|
|
- |
|
|
|
0.70 |
|
|
|
70,000 |
|
|
|
1/20/09
|
|
|
- |
|
|
|
500,000 |
|
|
|
0.49 |
|
|
|
142,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
|
|
12/20/07
|
|
|
- |
|
|
|
500,000 |
|
|
|
0.63 |
|
|
|
168,000 |
|
Brownlie
|
|
12/20/07
|
|
|
250,000 |
|
|
|
- |
|
|
|
0.63 |
|
|
|
158,000 |
|
|
|
7/17/08
|
|
|
100,000 |
|
|
|
- |
|
|
|
0.70 |
|
|
|
70,000 |
|
|
|
1/20/09
|
|
|
- |
|
|
|
500,000 |
|
|
|
0.49 |
|
|
|
142,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
|
|
12/20/07
|
|
|
- |
|
|
|
500,000 |
|
|
|
0.63 |
|
|
|
168,000 |
|
Pritchard
|
|
12/20/07
|
|
|
250,000 |
|
|
|
- |
|
|
|
0.63 |
|
|
|
158,000 |
|
|
|
7/17/08
|
|
|
100,000 |
|
|
|
- |
|
|
|
0.70 |
|
|
|
70,000 |
|
|
|
1/20/09
|
|
|
- |
|
|
|
500,000 |
|
|
|
0.49 |
|
|
|
142,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
|
|
12/20/07
|
|
|
- |
|
|
|
500,000 |
|
|
|
0.63 |
|
|
|
168,000 |
|
Chipman
|
|
12/20/07
|
|
|
250,000 |
|
|
|
- |
|
|
|
0.63 |
|
|
|
158,000 |
|
|
|
7/17/08
|
|
|
100,000 |
|
|
|
- |
|
|
|
0.70 |
|
|
|
70,000 |
|
|
|
1/20/09
|
|
|
- |
|
|
|
250,000 |
|
|
|
0.49 |
|
|
|
71,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Scott
|
|
12/20/07
|
|
|
- |
|
|
|
350,000 |
|
|
|
0.63 |
|
|
|
118,000 |
|
Hazlitt
|
|
12/20/07
|
|
|
75,000 |
|
|
|
- |
|
|
|
0.63 |
|
|
|
47,000 |
|
|
|
7/17/08
|
|
|
50,000 |
|
|
|
- |
|
|
|
0.70 |
|
|
|
35,000 |
|
|
|
1/20/09
|
|
|
- |
|
|
|
250,000 |
|
|
|
0.49 |
|
|
|
71,000 |
|
(1)
|
Refer
to the Compensation Discussion and Analysis beginning on page 23 for
a description of the terms of and criteria for making these
awards.
|
(2)
|
Exercise
price or base price of the awards (per the Company’s 2006 Equity Incentive
Plan) are based upon the closing price on the Toronto Stock Exchange on
the trading day immediately prior to the day of determination converted to
U.S. Dollars.
|
(3)
|
Reflects
the dollar amount the Company would expense in its financial statements
over the award vesting schedule recognized for financial reporting
purposes in accordance with SFAS 123R. Assumptions used in the
calculation of these amounts are included in Note 2 to the
Company’s Annual Report on Form 10-K, filed with the Securities Exchange
Commission on October 14, 2009.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
The
following table sets forth certain information with respect to outstanding
options and restricted stock previously awarded to the Company’s named executive
officers as of July 31, 2009.
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of
|
|
|
Value
of
|
|
|
|
Securities
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
|
|
|
Shares
or
|
|
|
Shares
or
|
|
|
|
Underlying
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Units
of
|
|
|
Units
of
|
|
|
|
Unexercised
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
|
|
|
Stock
That
|
|
|
Stock
That
|
|
|
|
Options(1)
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
Option
|
|
|
Have
|
|
|
Have
|
|
|
|
(#)
|
|
|
Options(2) (#)
|
|
|
Price
|
|
|
Grant
|
|
|
Expiration
|
|
|
Not
Vested(3)
|
|
|
Not
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Date
|
|
|
(#)
|
|
|
($)(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gifford
A. Dieterle
|
|
|
250,000
|
|
|
|
250,000
|
|
|
$
|
0.63
|
|
|
|
12/20/2007
|
|
|
|
12/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
$
|
0.49
|
|
|
|
01/20/2009
|
|
|
|
01/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,525
|
|
|
$ |
70,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Brownlie
|
|
|
250,000
|
|
|
|
250,000
|
|
|
$
|
0.63
|
|
|
|
12/20/2007
|
|
|
|
12/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
$
|
0.49
|
|
|
|
01/20/2009
|
|
|
|
01/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,525
|
|
|
$ |
70,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
Pritchard
|
|
|
250,000
|
|
|
|
250,000
|
|
|
$
|
0.63
|
|
|
|
12/20/2007
|
|
|
|
12/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
250,000
|
|
|
$
|
0.49
|
|
|
|
01/20/2009
|
|
|
|
01/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,525
|
|
|
$ |
70,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
M. Chipman
|
|
|
250,000
|
|
|
|
250,000
|
|
|
$
|
0.63
|
|
|
|
12/20/2007
|
|
|
|
12/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
125,000
|
|
|
$
|
0.49
|
|
|
|
01/20/2009
|
|
|
|
01/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,525
|
|
|
$ |
70,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Scott Hazlitt
|
|
|
175,000
|
|
|
|
175,000
|
|
|
$
|
0.63
|
|
|
|
12/20/2007
|
|
|
|
12/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
125,000
|
|
|
$
|
0.49
|
|
|
|
01/20/2009
|
|
|
|
01/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,658
|
|
|
$ |
21,000
|
|
(1)
|
Stock
options are generally granted one time per
year.
|
(2)
|
Stock
options issued on 12/20/07 vest at the rate of 20% upon grant date and 20%
per year thereafter. Stock options issued on 1/20/09 vest at the rate of
one-third upon issuance and the balance vest on a one-third basis annually
thereafter.
|
(3)
|
Restricted
stock vests equally over a three year
period.
|
(4)
|
Assumes
stock price of $0.61 the closing price on July 31,
2009.
|
OPTION
EXERCISED AND STOCK VESTED TABLE
The
following table sets forth certain information concerning options exercised and
the vesting of the Company’s common stock during the fiscal year ended July 31,
2009.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
(a)
|
|
Number of Shares
Acquired on Exercise (#)
(b)
|
|
|
Value Realized on
Exercise ($)
(c)
|
|
|
Number of Shares
Acquired on Vesting (#)
(d)
|
|
|
Value of Realized on
Vesting ($)
(e)
|
|
Gifford
A. Dieterle, Director,
Chairman, Treasurer and CEO
|
|
|
- |
|
|
$ |
- |
|
|
|
83,333 |
|
|
$ |
51,000 |
|
John
Brownlie, Director, President and COO
|
|
|
100,000 |
|
|
$ |
1,000 |
|
|
|
83,333 |
|
|
$ |
51,000 |
|
Jeffrey
Pritchard, Director and Executive Vice President
|
|
|
- |
|
|
$ |
- |
|
|
|
83,333 |
|
|
$ |
51,000 |
|
Christopher
M. Chipman, CFO
|
|
|
555,729 |
|
|
$ |
114,000 |
|
|
|
83,333 |
|
|
$ |
51,000 |
|
J.
Scott Hazlitt, Vice President – Mine Development
|
|
|
- |
|
|
$ |
- |
|
|
|
25,000 |
|
|
$ |
15,000 |
|
EMPLOYMENT
AGREEMENTS AND CHANGE IN CONTROL AGREEMENTS
Employment
Agreements and Engagement Agreements
The
Company has entered into employment agreements with Mr. Gifford Dieterle and
engagement agreements with Mr. Christopher Chipman, Mr. John Brownlie and Mr.
Scott Hazlitt. The Company amended and restated each of the
agreements effective January 1, 2009 to provide that each of the agreements
expire on December 31, 2011 and automatically renew for successive one-year
periods unless either party provides written notice of its intent not to review
at least 30 days prior to the expiration of the then-current term, to comply
with Section 409A of the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
Each of
the agreements provide that the named executive officer is entitled to a base
salary or base fee, payable in monthly installments, and to participate in any
annual incentive bonus opportunity offered by the Company. If the
Company awards bonuses, it must be paid within 90 days of the end of the
Company’s fiscal year for which the bonus is earned. If the named
executive officer is terminated without cause, or terminates employment because
of a material, uncured breach of the agreement by the Company, the named
executive officer is entitled to a pro rata portion of any bonus.
Each of
the named executive officers has agreed to maintain the confidentiality of the
Company’s proprietary information. In addition, for 180 days
following termination of employment (regardless of the reason for termination),
each of the named executive officers has agreed not to complete with the
Company, solicit the Company’s suppliers, vendors, business associates,
independent consultants or employees, or make any disparaging remarks about the
Company.
If the
named executive officer is terminated for “cause,” or the executive resigns,
dies or becomes disabled, the executive is entitled only to the fees and
reasonable and necessary business expenses incurred by him in connection with
the agreement. Cause includes the failure or refusal to perform the
services required under the agreement, a material breach by the executive of any
term of the agreement, or the conviction of a crime that results in imprisonment
or involves embezzlement, dishonesty, or activities injurious to the Company or
its reputation.
If the
named executive officer is terminated without “cause” or leaves the Company due
to a material, uncured breach by the Company of the agreement, the named
executive officer is entitled a cash payment equal to the greater of the
executive’s base salary or base rate in effect on the date of termination or the
balance of the base salary or base rate remaining in the then current term of
the agreement, payable in equal monthly installments. These payments
will terminate if the executive breaches the confidentiality and non-competition
provisions of the agreement.
On
September 17, 2009, the Company terminated Jeffrey W. Pritchard as Executive
Vice President and Secretary of the Company without cause pursuant to a
restructuring of its corporate investor relations functions. The
termination was effective September 15, 2009. Mr. Pritchard also
resigned as a Director of the Company effective September 29,
2009. As part of the settlement, Mr. Pritchard received a lump sum
payment of approximately $426,000, and will receive an additional payment of
approximately $65,000, if Mr. Pritchard fulfills certain terms of the
termination agreement. Mr. Pritchard will be entitled to change in
control benefits should the Company enter into a transaction on or before
December 31, 2009 with certain entities that would result in a “Change in
Control” as defined in his Change in Control Agreement with the
Company.
Change
in Control Agreements
The
Company has entered into an Agreement Regarding Change in Control with each of
the named executive officers. The Company amended and restated each
of the change in control agreements effective January 1, 2009 to provide that
each of the agreements expire on December 31, 2011 and automatically renew for
successive one-year periods unless the Company provides written notice of its
intent not to renew. However, if a change in control occurs during
the term of the change in control agreements, the term shall continue through
and terminate on the first anniversary of the date on which the change in
control occurs. In addition, the Company removed a provision that
provided that, upon a change in control, the exercise of all outstanding options
would decrease to $0.01.
The
Company believes it is essential to the best interests of the shareholders to
foster the continuous efforts of its key management team during significant
transactions such as a change in control. The Company believes that
there will likely be consolidation within its industry and believes it is
important to incent its executives to remain with the Company during any
potential corporate transaction.
Each of
the named executive officers are entitled to change in control benefits if their
employment is terminated after a change in control either (1) by the Company for
any reason other than permanent disability or cause, as defined in the
agreement, (2) by the executive for good reason, as defined in the agreement or,
(3) by the executive for any reason during the 30 day period commencing on the
first date which is six months after the date of the change in
control. The named executive officers are also entitled to change in
control benefits if a potential change in control (as defined below) occurs and
the Company terminates the executive’s employment for any reason other than due
to permanent disability or cause.
The
change in control benefits include a lump sum payment in an amount equal to
three times (1) the executive’s base salary in effect on the date of the change
in control, or, if greater, as in effect immediately prior to the change in
control; and (2) the executive’s bonus award for the year immediately preceding
the change in control. All unvested options immediately become
vested. In addition, the Company will pay for outplacement services
and tax and financial counseling services through the end of the second tax year
following termination. Each agreement also provides that the
executive is entitled to a payment to make him whole for any federal excise tax
imposed on change in control or severance payments received by
him.
A “change
of control” is deemed to occur on the earlier of (1) the date any person is or
becomes the beneficial owner of securities representing 30% or more of the
voting power of the Company’s then outstanding securities; (2) the date on which
the following individuals cease for any reason to constitute a majority of the
number of directors then serving: (i) individuals who, as of the date of the
change in control agreement, constitute the Board and (ii) any new director
(other than a director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date of
the change of control agreement or whose appointment, election or nomination for
election was previously so approved or recommended; (3) the consummation of a
merger or consolidation of the Company or any direct or indirect subsidiary with
another entity, other than a transaction where the individuals serving on the
board of directors constitute at least a majority of the combined entity and the
outstanding securities continue to represent at least 50% of the combined voting
power of the combined entity or a transaction to effect a recapitalization of
the Company where no person is or becomes the holder of securities representing
30% or more of the combined voting power; (4) the approval by the stockholders
of the Company or a plan of complete liquidation or dissolution of the Company;
or (5) the sale or disposition or all or substantially all of the Company’s
assets, other than a sale or disposition to an entity of which 50% the combined
voting power is held by the Company’s stockholders.
However,
a change in control will not be deemed to occur if the record holders of the
Company’s stock continue to have substantially the same proportionate ownership
of the Company following such transaction or series of
transactions.
A
“potential change in control” occurs when (1) the Company enters into an
agreement, the consummation of which would result in a change in control; (2) a
person publicly announces an intention to take or to consider taking actions,
the consummation of which would result in a change in control, which
announcement has not been rescinded; (3) a person becomes the beneficial owner
of securities representing 20% or more of outstanding shares of common stock of
the Company or the combined voting power of the Company’s then outstanding
securities; or (4) the Board adopts a resolution that a potential change in
control exists, which resolution has not been modified.
POTENTIAL
PAYMENTS UPON TERMINATION
The table
at the end of this section describes the estimated potential payments upon
termination or change in control of the Company for the Named Executive Officers
based upon the agreements that were then in effect. The table assumes
that the termination or change in control occurred on July 31,
2009. The Company amended and restated each of the executive’s agreements
effective January 1, 2009 to provide that each of the agreements expire on
December 31, 2011. The following disclosure information reflects the
terms of our agreements with the Named Executive Officers currently in effect
rather than those in effect on July 31, 2009 which the table is based
upon. Please refer to “Employment Agreements and Change in
Control Agreements” section above for more details on the provisions within
these agreements. The actual amounts to be paid can only be determined at the
time of such executive’s separation from the Company.
The
Company currently does not offer any employee benefit plans to all
employees.
Voluntary Termination or Expiration of
Agreement
A Named
Executive Officer would receive no payments or other benefits upon voluntary
termination or the expiration of his agreement, except for accrued base salary
or fees, vacation time or any reasonable and necessary business expenses
incurred in connection with his duties prior to termination.
Termination
Without Cause
The
Company provides for benefits in the case of termination without cause based
upon an amount equal to the greater of a Named Executive Officer’s base annual
salary or fees in effect upon the date of termination or the balance of the base
salary or fees remaining in the then current term of the Named Executive
Officer’s agreement. Please see the Employment Agreements and Change
of Control Agreement section above beginning on page 33 for a description
of the terms of these agreements. Each Named Executive Officer also
is entitled to accrued base salary or fees, vacation time or any reasonable and
necessary business expenses incurred in connection with his duties prior to
termination. In the event that a Named Executive Officer’s employment
terminates without cause prior to the last day of the fiscal year for which the
bonus applies, he will be entitled to a bonus prorated for the period from the
beginning of that fiscal year to the date of termination.
No
additional benefits are payable to any Named Executive Officer in any case of
termination for cause other than accrued base salary or fees, vacation time and
any reasonable and necessary business expenses incurred in connection with his
duties prior to termination. The Company generally defines cause as:
(a) failure or refusal to perform the services required; (b) a
material breach by the Named Executive Officer of any of the terms of their
applicable agreement; or (c) conviction of a crime that either results in
imprisonment or involves embezzlement, dishonesty, or activities injurious to
the Company or its reputation.
The
Company’s 2006 Equity Incentive Plan provides for immediate vesting of
unvested restricted stock and stock options upon a change in control of the
Company. The Company also provides change of control benefits to its
Named Executive Officers pursuant to Change in Control
agreements. These Agreements run through December 31, 2011 and
automatically renew for one year periods thereafter, unless the Company notifies
the executive prior to any extension date that the agreement term is not being
extended. A change of control is generally defined
as:
|
1)
|
The
date any person acquires beneficial ownership of 30% or more, directly or
indirectly, of the combined voting power of the then outstanding
securities of the Company entitled to
vote; or
|
|
2)
|
The
date on which the following individuals cease for any reason to constitute
a majority of the number of directors then serving: individuals who, on
the date of the Change In Control Agreement, constitute the Board and any
new director (other than one whose initial assumption of office in
connection with an actual or threatened election contest) whose
appointment or election by the Board or nomination for election by the
Company’s stockholders was approved or recommended by a vote of at least
2/3 of the directors then still in office who either were directors on the
date of the Change In Control Agreement or whose appointment, election or
nomination for election was previously so approved or
recommended; or
|
|
3)
|
The
date on which there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation or other entity, other than (i) a merger or consolidation (A)
immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the board of
directors of the Company, the entity surviving such merger or
consolidation or, if the Company or the entity surviving such merger or
consolidation is then a subsidiary, the ultimate parent thereof and (B)
which results in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the
Company, at least 50% of the combined voting power of the securities of
the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company representing
30% or more of the combined voting power of the Company’s then outstanding
securities; or
|
|
4)
|
The
date on which the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets, other than a sale or
disposition by the Company of all or substantially all of the Company’s
assets to an entity, at least 50% of the combined voting power of the
voting securities of which are owned by stockholders of the Company, in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any subsidiary
of the Company, in substantially the same proportions as their ownership
of the Company immediately prior to such
sale.
|
Change of Control Benefits
The Named
Executive Officers shall be entitled to change in control benefits if their
engagement by the Company is terminated during their applicable agreement term
but after a Change in Control (i) by the Company for any reason other than
permanent disability or cause, (ii) by the Named Executive Officer for good
reason or (iii) by the Named Executive Officer for any reason during the 30-day
period commencing on the first date which is six months after the date of the
Change in Control. The Company defines good reason as any of the
following without the executive’s prior consent: (a) a significant adverse
change in the nature, scope or status of the executive’s position, authorities
or services from those in effect immediately prior to the Change in Control;
(b) the failure by the Company to pay the executive any portion of the
executive’s current compensation; (c) a reduction in the executive’s annual
base compensation (or a material change in the frequency of payment) as in
effect immediately prior to the Change in Control; (d) the failure by the
Company to award the Executive an annual bonus in any year which is at least
equal to the annual bonus awarded to the Executive for the year immediately
preceding the year of the Change in Control; (e) the failure by the Company to
award the Executive equity-based incentive compensation (such as stock options,
shares of restricted stock, or other equity-based compensation) on a periodic
basis consistent with the Company’s practices with respect to timing, value and
terms prior to the Change in Control; (f) the failure of the Company to award
the Executive incentive compensation of any nature based on attained milestones
when such milestones are attained; or (g) the failure of the Company to obtain a
satisfactory agreement from any successor to the Company to assume and agree to
perform the Change In Control agreement.
If an
executive is eligible for termination benefits under the Change of Control
provisions within such executive’s agreement, the executive is entitled to, in
addition to any amounts he is entitled to under his employment
agreement:
|
·
|
an
amount equal to three times the executive’s base salary or fees in effect
on the date of the Change in Control or, if greater, as in effect
immediately prior to the date of
termination;
|
|
·
|
an
amount equal to three times the executive’s bonus award for the year
immediately preceding the year of the Change in
Control;
|
|
·
|
all
unvested Company options shall immediately become vested, and any exercise
must occur no later than March 15 of the calendar year after the date of
termination;
|
|
·
|
outplacement
services and tax and financial counseling suitable to such executive’s
position through the end of the second taxable year after the taxable year
of his or her separation from service with the Company (or earlier if such
executive gains
employment); and
|
|
·
|
certain
gross-up payments for excise taxes on the change of control
payment.
|
Upon
the death of a Named Executive Officer, his agreement terminates. The
Company will pay the executive’s estate or beneficiary, as applicable, all
accrued base salary, all accrued vacation time and any reasonable and necessary
business expenses incurred by executive in connection with his duties, all to
the date of termination.
The
Company can terminate a Named Executive Officer’s employment if such executive
is disabled, generally upon at least thirty 30 days’ written
notice. For most of the Named Executive Officers, disability means
that he is prevented by illness, accident or other disability (mental or
physical) from performing the essential functions of the position for one or
more periods cumulatively totaling three months during any consecutive 12 month
period. For Messrs. Brownlie and Chipman, disability means either
executive’s inability effectively to substantially provide their services by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months. In the event the
executive’s agreement is terminated, the Company shall pay to the executive all
accrued base salary or fees, all accrued vacation time and any reasonable and
necessary business expenses incurred by him in connection with his duties, all
to the date of termination. In addition, if Messrs. Dieterle,
Pritchard or Hazlitt is terminated due to their disability, the Company shall
pay to them severance payments in an amount equal to one month of their
respective base annual salaries.
Termination
by the Named Executive Officer Due to Material Breach By
Company
The Named
Executive Officer can terminate his agreement due to a material breach of such
agreement by the Company upon 30 days written notice specifying the breach, and
failure of the Company to either (i) cure or diligently commence to cure the
breach within the 30-day notice period, or (ii) dispute in good faith the
existence of the material breach. In the event of such a termination, the Named
Executive Officer is entitled to the same termination benefits described in
“Termination Without Cause” above.
Accelerated
Vesting of Restricted Stock and Stock Options
The
amounts shown below assume vesting as of July 31, 2009 of restricted stock
or stock options at the year-end closing price of $0.61.
Upon a
change in control of the Company, our executives may be subject to certain
excise taxes pursuant to Section 280G of the Internal Revenue Code. The
Company has agreed to reimburse our executives for all excise taxes that are
imposed on the executive under Section 280G. Any 280G tax
gross-up amounts reflected in the tables below assume that such executive is
entitled to a full reimbursement by the Company of any (a) excise taxes
that are imposed on the executive as a result of the change in control,
(b) any income and excise taxes imposed on the executive as a result of the
Company’s reimbursement of the excise tax amount, and (c) any additional
income taxes and excise taxes that are imposed on the executive as a result of
the Company’s reimbursement of the executive for any excise or income taxes. The
calculation of the 280G gross-up amount in the tables below is based upon a 280G
excise tax rate of 20%, a 35% federal income tax rate, a 1.45% Medicare tax rate
and a 6.85% state income tax rate.
For
purposes of the Section 280G calculation, it is assumed that no amounts will be
discounted as attributable to reasonable compensation and no value will be
attributed to the executive executing a non-competition agreement.
Name
|
|
Termination Without
Cause (1)
($)
|
|
|
Change in
Control (2)
($)
|
|
|
Death
($)
|
|
|
Disability
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gifford A. Dieterle
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Benefit
|
|
|
694,792 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Bonus
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Change
in Control Payment
|
|
|
- |
|
|
|
1,425,000 |
|
|
|
- |
|
|
|
- |
|
Accelerated
Vesting of Restricted Stock
|
|
|
- |
|
|
|
70,000 |
|
|
|
- |
|
|
|
- |
|
Accelerated
Vesting of Stock Options
|
|
|
- |
|
|
|
25,000 |
|
|
|
- |
|
|
|
- |
|
Disability
Coverage
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
23,958 |
|
Outplacement
Services
|
|
|
- |
|
|
|
10,000 |
|
|
|
- |
|
|
|
- |
|
280G
Tax Gross-Up
|
|
|
- |
|
|
|
698,458 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
694,792 |
|
|
|
2,228,458 |
|
|
|
- |
|
|
|
23,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Brownlie
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Benefit
|
|
|
625,313 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Bonus
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Change
in Control Payment
|
|
|
- |
|
|
|
1,338,750 |
|
|
|
- |
|
|
|
- |
|
Accelerated
Vesting of Restricted Stock
|
|
|
- |
|
|
|
70,000 |
|
|
|
- |
|
|
|
- |
|
Accelerated
Vesting of Stock Options
|
|
|
- |
|
|
|
25,000 |
|
|
|
- |
|
|
|
- |
|
Disability
Coverage
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outplacement
Services
|
|
|
- |
|
|
|
10,000 |
|
|
|
- |
|
|
|
- |
|
280G
Tax Gross-Up
|
|
|
- |
|
|
|
588,033 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
625,313 |
|
|
|
2,031,783 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher M. Chipman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Benefit
|
|
|
486,354 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Bonus
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Change
in Control Payment
|
|
|
- |
|
|
|
1,110,000 |
|
|
|
- |
|
|
|
- |
|
Accelerated
Vesting of Restricted Stock
|
|
|
- |
|
|
|
70,000 |
|
|
|
- |
|
|
|
- |
|
Accelerated
Vesting of Stock Options
|
|
|
- |
|
|
|
10,000 |
|
|
|
- |
|
|
|
- |
|
Disability
Coverage
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outplacement
Services
|
|
|
- |
|
|
|
10,000 |
|
|
|
- |
|
|
|
- |
|
280G
Tax Gross-Up
|
|
|
- |
|
|
|
475,543 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
486,354 |
|
|
|
1,675,543 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Scott Hazlitt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Benefit
|
|
|
375,188 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Bonus
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Change
in Control Payment
|
|
|
- |
|
|
|
690,750 |
|
|
|
- |
|
|
|
- |
|
Accelerated
Vesting of Restricted Stock
|
|
|
- |
|
|
|
21,000 |
|
|
|
- |
|
|
|
- |
|
Accelerated
Vesting of Stock Options
|
|
|
- |
|
|
|
11,500 |
|
|
|
- |
|
|
|
- |
|
Disability
Coverage
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12,938 |
|
Outplacement
Services
|
|
|
- |
|
|
|
10,000 |
|
|
|
- |
|
|
|
- |
|
280G
Tax Gross-Up
|
|
|
- |
|
|
|
303,256 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
375,188 |
|
|
|
1,036,506 |
|
|
|
- |
|
|
|
12,938 |
|
|
(1)
|
Termination
without cause payments for Named Executives Officers were based upon
employment and engagement agreements in effect as of July 31,
2009. All Named Executive Officers were eligible to receive a
cash payment equal to the greater of (i) the executive’s base salary or
base rate in effect on the date of termination or (ii) the balance of the
base salary or base rate remaining in the then current term of the
agreement.
|
COMPENSATION
COMMITTEE REPORT
Our
Committee has reviewed and discussed the Compensation Discussion and Analysis
contained in this Annual Report with management. Based on our
Committee’s review of and the discussions with management with respect to the
Compensation Discussion and Analysis, our Committee recommended to the board of
directors that the Compensation Discussion and Analysis be included in the our
Annual Report on Form 10-K for the fiscal year ended July 31, 2009 for filing
with the SEC.
COMPENSATION
COMMITTEE
|
John
W. Cutler, Committee Chairman
|
Leonard
J. Sojka
|
Stephen
M. Cooper
|
The
foregoing Compensation Committee report shall not be deemed incorporated by
reference into any filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934, and shall not otherwise be deemed filed under these acts,
except to the extent we specifically incorporate this report by reference into
such filings.
AUDIT COMMITTEE
REPORT
The
primary responsibility of the Audit Committee (the “Committee”) is to assist the
Board of Directors in discharging its oversight responsibilities with respect to
financial matters and compliance with laws and regulations. The primary methods
used by the Committee to fulfill its responsibility with respect to financial
matters are:
|
·
|
To
appoint, evaluate, and, as the Committee may deem appropriate, terminate
and replace Capital Gold’s independent registered public
accountants;
|
|
·
|
To
monitor the independence of Capital Gold’s independent registered public
accountants;
|
|
·
|
To
determine the compensation of Capital Gold’s independent registered public
accountants;
|
|
·
|
To
pre-approve any audit services, and any non-audit services permitted under
applicable law, to be performed by Capital Gold’s independent registered
public accountants;
|
|
·
|
To
review Capital Gold’s risk exposures, the adequacy of related controls and
policies with respect to risk assessment and risk
management;
|
|
·
|
To
monitor the integrity of Capital Gold’s financial reporting processes and
systems of control regarding finance, accounting, legal compliance and
information systems; and
|
|
·
|
To
facilitate and maintain an open avenue of communication among the Board of
Directors, management and Capital Gold’s independent registered public
accountants.
|
In
discharging its responsibilities relating to internal controls, accounting and
financial reporting policies and auditing practices, the Committee discussed
with Capital Gold’s independent registered public accountants, Wolinetz, Lafazan
& Company, P.C., the overall scope and process for its audit. The Committee
has met with Wolinetz, Lafazan & Company, P.C., with and without management
present, to discuss the results of its examinations and the overall quality of
Capital Gold’s financial reporting.
The
Committee has discussed with Wolinetz, Lafazan & Company, P.C. its judgments
about the quality, in addition to the acceptability, of the Capital Gold’s
accounting principles as applied in Capital Gold’s financial reporting, as
required by Statement on Auditing Standards No. 90 “Communications with Audit
Committees.”
The
Committee also has received a letter from Wolinetz, Lafazan & Company, P.C.
that is required by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent accountant's communications with the
audit committee concerning independence, and has discussed with Wolinetz,
Lafazan & Company, P.C. their independence.
The
Committee has met and held discussions with management. The Committee has
reviewed and discussed with management Capital Gold’s audited consolidated
financial statements as of and for the fiscal years ended July 31, 2009 and
2008.
Based on
the reviews and discussions referred to above, the Committee recommended to the
Board of Directors that the audited financial statements referred to above be
included in Capital Gold’s Annual Report for the year ended July 31,
2009.
This
report is respectfully submitted by the members of the Audit Committee of the
Board of Directors.
AUDIT
COMMITTEE
|
Leonard
J. Sojka, Committee Chairman
|
John
W. Cutler
|
Stephen
M. Cooper
|
DEADLINE
FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals
of stockholders to be considered for inclusion in the Proxy Statement and proxy
card for the Company’s 2010 Annual Meeting of Stockholders must be received by
the Company’s Secretary, at Capital Gold Corporation, 76 Beaver Street, 14th
Floor, New York, NY 10005 no later than August 17, 2010, which is 120 days prior
to the first anniversary of the mailing date of the proxy
statement.
Pursuant
to our Amended and Restated By-laws, all stockholder proposals may be brought
before an annual meeting of stockholders only upon timely notice thereof in
writing having been given to the Secretary of the company. To be timely, a
stockholder’s notice, for all stockholder proposals shall be delivered to the
Secretary at our principal executive offices not less than ninety (90) nor more
than one hundred twenty (120) days prior to the date of the meeting; provided,
however, that in the event that the annual meeting date is publicly disclosed
less than one hundred twenty (120) days prior to the date of the meeting, the
stockholders’ notice, in order to be timely, must be so received not later than
the close of business on the tenth (10th) day following the day on which such
notice of the date of the annual meeting was publicly disclosed. All such
stockholders must be stockholders of record on both the date such stockholders
provide notice of their proposals and on the record date for the determination
of stockholders entitled to vote at such meeting. In addition, all stockholder
proposals must contain all of the information required under our Amended and
Restated By-laws, a copy of which is available upon written request, at no
charge, from the Secretary at our New York office. The Company reserves the
right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
DELIVERY
OF MATERIALS TO SHAREHOLDERS WITH SHARED ADDRESSES
Stockholders
who own their shares through a broker, bank or other nominee and who share an
address with another such beneficial owner are only being sent one set of proxy
materials, unless such holders have provided contrary instructions. If you wish
to receive a separate copy of these materials or if you are receiving multiple
copies and would like to receive a single copy, please contact investor
relations by phone at (212) 344-2785 or write to us at Capital Gold Corporation,
76 Beaver Street, 14th floor, New York, New York 10005.
GENERAL
Unless
contrary instructions are indicated on the proxy, all shares of common stock
represented by valid proxies received pursuant to this solicitation (and not
revoked before they are voted) will be voted FOR all director nominees, FOR
Proposal No. 2, FOR Proposal No. 3 and FOR Proposal No. 4.
The Board
of Directors knows of no business other than that set forth above to be
transacted at the meeting, but if other matters requiring a vote of the
stockholders arise, the persons designated as proxies will vote the shares of
common stock represented by the proxies in accordance with their judgment on
such matters. If a stockholder specifies a different choice on the proxy, his or
her shares of common stock will be voted in accordance with the specification so
made.
Annual Report on Form
10-K
A copy of
our Annual Report on Form 10-K for the fiscal year ended July 31, 2009,
including financial statements, is enclosed with this proxy. Exhibits and any
additional amendments to our Form 10-K, as filed with the SEC, may be obtained
without charge upon written request to: Corporate Secretary, Capital Gold
Corporation, 76 Beaver Street, 14th Floor, New York, NY 10005. You can also get
copies of our filings made with the SEC, including the Annual Report on Form
10-K, by visiting the SEC’s web site at www.sec.gov.
IT IS
IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN, SIGN AND
RETURN THE ACCOMPANYING FORM OF PROXY IN THE PREPAID ENVELOPE PROVIDED, NO
MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
By
Order of the Board of Directors,
|
|
Christopher
M. Chipman, Secretary
|
New York,
New York
December
14, 2009
CAPITAL
GOLD CORPORATION
ANNUAL
MEETING OF STOCKHOLDERS
JANUARY
19, 2010
THIS
PROXY IS SOLICTED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned hereby appoints Gifford A. Dieterle and Christopher M. Chipman and
each of them, with full power of substitution, as proxies to represent the
undersigned at the Annual Meeting of Stockholders to be held at the Crowne Plaza
Times Square Manhattan, 1605 Broadway @ 49th Street,
New York, NY 10019 on Tuesday, January 19, 2010, at 1:00 p.m. local time and at
any adjournment thereof, and to vote all of the shares of common stock of
Capital Gold Corporation (the “Company”) the undersigned would be entitled to
vote if personally present, upon the following matters:
Please
mark box in blue or black ink.
1. Proposal 1- Election of
Directors.
Nominees: Gifford
A. Dieterle, John Brownlie, Leonard J. Sojka, John W. Cutler, Stephen M.
Cooper.
¨ For
all nominees (except as marked to the contrary
below) ¨ Authority
Withheld as to all Nominees
(INSTRUCTION:
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE’S NAME)
Gifford
A. Dieterle
|
John
Brownlie
|
Leonard
J. Sojka
|
John
W. Cutler
|
Stephen
M. Cooper
|
|
|
|
2. Proposal 2- Amendment of the Company’s
Amended and Restated By-Laws to provide for the classification of the Board of
Directors into three classes.
¨
For
|
¨ Against
|
¨ Abstain
|
3. Proposal 3-Ratification of the
selection of Wolinetz, Lafazan & Company, P.C., as independent auditors of
the Company for the year ending July 31, 2010.
¨
For
|
¨ Against
|
¨ Abstain
|
4. Proposal 4- Amendment of the
Company’s 2006 Equity Incentive Plan to increase the number of shares of common
stock authorized for issuance under the Plan from 10,000,000 to 17,500,000
shares.
¨
For
|
¨ Against
|
¨ Abstain
|
In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting.
THIS
PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS INDICATED, WILL BE VOTED
“FOR” THE ELECTION OF GIFFORD A. DIETERLE, JOHN BROWNLIE, LEONARD J. SOJKA, JOHN
W. CUTLER AND STEPHEN M. COOPER, AS DIRECTORS, AND “FOR” PROPOSAL NO. 2,
PROPOSAL NO. 3, PROPOSAL NO. 4 AND, IN THE DISCRETION OF THE PROXIES, ON ALL
OTHER MATTERS PROPERLY BROUGHT BEFORE THE ANNUAL MEETING. THIS PROXY
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Please
date, sign as name appears at left, and return promptly. If the
stock is registered in the name of two or more persons, each should
sign. When signing as Corporate Officer, Partner, Executor,
Administrator, Trustee, or Guardian, please give full
title. Please note any change in your address alongside the
address as it appears in the
Proxy.
|
Dated:
|
|
|
|
|
|
|
Signature
|
|
|
|
(Print
Name)
|
|
|
SIGN,
DATE AND RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE