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EX-31.3 - Searchlight Minerals Corp. | v182651_ex31-3.htm |
EX-99.4 - Searchlight Minerals Corp. | v182651_ex99-4.htm |
EX-99.5 - Searchlight Minerals Corp. | v182651_ex99-5.htm |
EX-31.4 - Searchlight Minerals Corp. | v182651_ex31-4.htm |
EX-99.6 - Searchlight Minerals Corp. | v182651_ex99-6.htm |
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment
No. 1
TO
Form
10-K
ON
FORM
10-K/A
(Mark
One)
x |
Annual report pursuant to
Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For the fiscal year ended December
31, 2009.
OR
o |
Transition report pursuant to
Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For
the transition period from
to
Commission
File Number 000-30995
SEARCHLIGHT
MINERALS CORP.
(Name of
registrant as specified in its charter)
Nevada
|
98-0232244
|
State
or other jurisdiction of incorporation or organization
|
I.R.S.
Employer Identification Number
|
#120
- 2441 West Horizon Ridge Pkwy.
|
|
Henderson,
Nevada
|
89052
|
Address
of principal executive offices
|
Zip
Code
|
(702)
939-5247
|
|
Registrant’s
telephone number, including area
code
|
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, par value $0.001
Common
Stock Purchase Rights
Indicate by check mark if
the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes
o No
x
Indicate by check mark if
the registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Exchange Act. Yes
o No
x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No
o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files). Yes o No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large
accelerated filer o
|
Accelerated
filer x
|
Non-accelerated
filer o
|
Smaller
reporting company o
|
(Do not
check if a smaller reporting company)
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No
x
The
aggregate market value of the voting common stock held by non-affiliates of the
registrant as of June 30, 2009 (80,911,141 shares) was approximately
$196,560,290 (computed based on the closing sale price of the common stock at
$2.44 per share as of such date). Shares of common stock held by each
officer and director and each person owning more than ten percent of the
outstanding common stock have been excluded in that such persons may be deemed
to be affiliates. This determination of the affiliate status is not
necessarily a conclusive determination for other purposes.
The number of shares of common stock of the issuer outstanding as of
April 29, 2010 was
118,783,373.
EXPLANATORY
NOTE
Searchlight
Minerals Corp. is filing this Amendment No. 1 to its Annual Report on Form 10-K
for the year ended December 31, 2009, as originally filed with the Securities
and Exchange Commission (“SEC”) on March 12, 2010, for the sole purpose of
including the disclosures required by Part III of Form 10-K, as set forth below,
which disclosures we had originally intended to incorporate by reference to our
definitive proxy statement. This Amendment No. 1 on Form 10-K/A does
not change the previously reported financial statements and other financial
disclosures included in our Annual Report on Form 10-K. No attempt has been made
in this Amendment to modify or update the other disclosures presented in the
10-K. Accordingly, this Amendment should be read in conjunction with
the 10-K and our other filings with the SEC.
In
addition, in connection with the filing of this Amendment No. 1 and pursuant to
the rules of the SEC, we are including as exhibits to this Amendment No. 1
certain currently dated certifications by our principal executive officer and
principal financial officer and certain corporate governance documents adopted
by us since the filing of the original Form 10-K. Accordingly, Item
15 of Part IV has also been amended to reflect the filing of these currently
dated certifications and such other documents.
In this
report, “we,” “us,” and “our” refer to Searchlight Minerals Corp. and its
consolidated subsidiaries.
TABLE
OF CONTENTS
PAGE
|
|||
PART
III
|
5
|
||
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
5
|
|
Item
11.
|
Executive
Compensation
|
19
|
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
31
|
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
33
|
|
Item
14.
|
Principal
Accountant Fees and Services
|
43
|
|
PART
IV
|
45
|
||
Item
15.
|
Exhibits
and Financial Statement Schedules
|
45
|
4
PART
III
Item
10. Directors, Executive
Officers and Corporate Governance
General
Our
bylaws provide that the terms of office of the members of our board of directors
be divided into three classes, Class I, Class II and Class III, the members of
which serve for a staggered three-year term. The terms of the current
Class I, Class II and Class III directors are set to expire at the next annual
meeting of stockholders in 2010, 2012 and 2011, respectively. At each
annual meeting of stockholders, directors chosen to succeed those whose terms
then expire are elected for a term of office expiring at the third succeeding
annual meeting of stockholders after their election or until their successors
are elected and qualify, subject to their prior death, resignation or
removal. Our board presently consist of six directors. Two
directors serve in each class of directors.
Ian R.
McNeil, our President, Chief Executive Officer and a member of our board of
directors is the brother in law of Carl S. Ager, our Vice President, Secretary
and Treasurer and a member of our board of directors. Other than for
these relationships, none of our directors or executive officers are related to
one another.
Our board
members are encouraged to attend meetings of the board of directors and the
annual meeting of stockholders. The board of directors held 43
meetings and adopted five unanimous written consents in lieu of meetings in
2009. Officers serve at the discretion of the board of
directors.
The
following table sets forth certain biographical information with respect to our
directors and executive officers:
Name
|
Position
|
Age
|
||
Ian
R. McNeil
|
Director
(Class I), Chairman of the Board, Chief Executive Officer and
President
|
37
|
||
Carl
S. Ager
|
Director
(Class II), Vice President, Secretary and Treasurer
|
35
|
||
Harry
B. Crockett
|
Director
(Class II)
|
67
|
||
Robert
D. McDougal
|
Director
(Class III)
|
77
|
||
Martin
B. Oring
|
Director
(Class III)
|
64
|
||
Jordan
M. Estra
|
Director
(Class I)
|
63
|
||
Melvin
L. Williams
|
Chief
Financial Officer
|
49
|
5
Ian R. McNeil, Chief Executive
Officer, President and Director (Chairman of the Board). Mr.
McNeil has been a member of our board of directors since July 25, 2005 and our
Chief Executive Officer and President since October 7, 2005. He also
serves as Chairman of the board. Mr. McNeil has been involved in
starting his own businesses and has worked in executive positions for both large
and small companies. Mr. McNeil graduated with a Bachelor of Commerce degree
from the University of Victoria in 1996. In 1997, Mr. McNeil founded
McNeil Enterprises, a British Columbia based small business consulting company
that specialized in business plan creation and event management. In
1998, Mr. McNeil co-founded a private furniture, manufacturing and retail
company based in Langley, British Columbia. From June 2003 until June
2007, Mr. McNeil served as president and a director of Nanominerals, one of our
principal stockholders, which operates in the business of precious metal
exploration and development. During his time at Nanominerals, Mr.
McNeil helped define much of the corporate strategy, raised money and ran the
day to day operations. Prior to joining Nanominerals, Mr. McNeil was
the director of operations for the eSolutions division of Telus Corporation
(2000-2003) a large telecommunications company based in Canada. While
at Telus, Mr. McNeil managed a team of over 100 people spread over three
geographical offices. Telus provides a wide range of wireline and
wireless telecommunications products and services including data, Internet
Protocol (IP), voice, video and entertainment services. As an
executive with experience in working with our company since 2005 and in founding
other companies, we believe that Mr. McNeil contributes his leadership skills,
knowledge, finance and technology background, and business experience to our
board of directors. In addition, we believe that Mr. McNeil’s
membership on our board of directors helps to achieve the objective that its
membership be composed of experienced and dedicated individuals with diversity
of backgrounds, perspectives, skills and other individual qualities that
contribute to board heterogeneity.
Carl S. Ager, Director, Vice
President, Secretary and Treasurer. Mr. Ager has been a member
of our board of directors since July 25, 2005 and our Vice President, Secretary
and Treasurer since October 7, 2005. In 1997, Mr. Ager obtained his
Bachelor of Applied Sciences – Engineering Geophysics degree from Queen’s
University in Kingston, Ontario. Since January, 2003, Mr. Ager has
been President of CSA Management Corp, a private Nevada corporation which
provides consulting services, including business planning and
administration. However, CSA has not had active operations since
2005. Mr. Ager also served as Vice President and a director of
Nanominerals from June 2003 until June 2007. Prior to joining
Nanominerals and CSA Management, Mr. Ager’s experience included working as an
investment executive for Scotia McLeod, one of Canada’s leading full-service
brokerage firms (2000-2002). As an engineer and an executive with
experience in working with natural resource companies, we believe that Mr. Ager
contributes his leadership skills, knowledge, finance and technology background,
and business experience to our board of directors. In addition, we
believe that Mr. Ager’s membership on our board of directors helps to achieve
the objective that its membership be composed of experienced and dedicated
individuals with diversity of backgrounds, perspectives, skills and other
individual qualities that contribute to board heterogeneity.
Harry B. Crockett,
Director. Mr. Crockett has been a member of our board of
directors since February 16, 2007. Mr. Crockett is the managing
member of Verde River Iron Company, LLC, a private Nevada limited liability
company, which was our prior joint venture partner on the Clarkdale Slag Project
and the prior owner of the Clarkdale Slag Project. Mr. Crockett
serves as a court appointed receiver serving various Superior Courts throughout
California having served in this capacity over the last 15 years. Mr.
Crockett has previously served as an Executive Vice President of American
Savings, specializing in troubled debt and troubled assets, as well as serving
as Chairman of the Make a Wish Foundation of San Joaquin County, a charitable
foundation serving the needs of terminally ill children. Mr. Crockett
holds a Bachelor of Arts degree from Golden Gate University in San Francisco,
California and a California Real Estate Brokers license. Mr. Crockett
also has a pilot license with a single and multi engine land and instrument
ratings. As an executive with experience in banking and managing
companies and his background with the Clarkdale Slag Project, we believe that
Mr. Crockett contributes his leadership skills, knowledge, finance and
technology background, and business experience to our board of
directors. In addition, we believe that Mr. Crockett’s membership on
our board of directors helps to achieve the objective that its membership be
composed of experienced and dedicated individuals with diversity of backgrounds,
perspectives, skills and other individual qualities that contribute to board
heterogeneity.
6
Robert D. McDougal,
Director. Mr. McDougal has been a member of our board of
directors since July 25, 2005. He is a Certified Public
Accountant. He began practicing public accounting in 1973 and
established his own practice in 1981. The major portion of the
practice is with mining and mining related clients including public companies,
private companies, partnerships and individuals. He was a director
and officer of GEXA Gold Corporation, a publicly traded mining company, from
1985 to 2001. Mr. McDougal was one of the founders of Millennium
Mining Corporation which has been merged into Gold Summit Corporation, a
publicly traded company. He is the managing partner of GM Squared,
LLC, which holds numerous mining claims. He also serves as the chief financial
officer and a director of Ireland Inc., a publicly traded exploration stage
company primarily focused on the acquisition and exploration of mining
properties, of which Nanominerals is the principal stockholder. He
served on the Nevada Society of Certified Public Accountants Committee on
Natural Resources for seven years, four years as chairman. Prior to
this time, Mr. McDougal served 20 years in the United States Air Force, retiring
with the rank of Major. Following his retirement from the United
States Air Force, Mr. McDougal obtained a Bachelor of Arts degree in accounting
from the University of Nevada, Reno, graduating with distinction. As
an accountant and an executive with experience in working with mining companies
and as an Audit Committee financial expert, we believe that Mr. McDougal
contributes his leadership skills, knowledge, finance and technology background,
and business experience to our board of directors. In addition, we
believe that Mr. McDougal’s membership on our board of directors helps to
achieve the objective that its membership be composed of experienced and
dedicated individuals with diversity of backgrounds, perspectives, skills and
other individual qualities that contribute to board heterogeneity.
Martin B. Oring,
Director. Mr. Oring has been a member of our board of
directors since October 6, 2008. Mr. Oring, a senior
financial/planning executive, has served as the President of Wealth
Preservation, LLC, a financial advisory firm that serves high-net-worth
individuals, since 2001. Since the founding of Wealth Preservation,
LLC in 2001, Mr. Oring has completed the financial engineering, structuring, and
implementation of over $1 billion of proprietary tax and estate planning
products in the capital markets and insurance areas for wealthy individuals and
corporations. From 1998 until 2001, Mr. Oring served as Managing
Director, Executive Services at Prudential Securities, Inc., where he was
responsible for advice, planning and execution of capital market and insurance
products for high-net-worth individuals and corporations. From 1996
to 1998, he served as Managing Director, Capital Markets, during which time he
managed Prudential Securities’ capital market effort for large and medium-sized
financial institutions. From 1989 until 1996, he managed the Debt and
Capital Management group at The Chase Manhattan Corporation as Manager of
Capital Planning (Treasury). Prior to joining Chase Manhattan, he
spent approximately eighteen years in a variety of management positions with
Mobil Corporation, one of the world’s leading energy companies. When
he left Mobil in 1986, he was Manager, Capital Markets & Investment Banking
(Treasury). Mr. Oring is also currently a director of PetroHunter
Energy Corporation, and was previously a director of Parallel Petroleum
Corporation, each of which is a publicly traded oil and gas exploration and
production company. Mr. Oring has served as a Lecturer at Lehigh
University, the New York Institute of Technology, New York University, Xerox
Corporation, Salomon Brothers, Merrill Lynch, numerous Advanced Management
Seminars, and numerous in-house management courses for a variety of corporations
and organizations. He has an MBA Degree in Production Management,
Finance and Marketing from the Graduate School of Business at Columbia
University, and a B.S. Degree in Mechanical Engineering from Carnegie Institute
of Technology. As a financial planner and an executive with
experience in banking and finance, and as an Audit Committee financial expert,
we believe that Mr. Oring contributes his leadership skills, knowledge and
finance background, and business experience to our board of
directors. In addition, we believe that Mr. Oring’s membership on our
board of directors helps to achieve the objective that its membership be
composed of experienced and dedicated individuals with diversity of backgrounds,
perspectives, skills and other individual qualities that contribute to board
heterogeneity.
7
Jordan M. Estra,
Director. Mr. Estra has been a member of our board of
directors since March 1, 2010. Since May 2009, Mr. Estra has been the
Managing Director of Private Equity at Sutter Securities Incorporated in San
Francisco, California and Boca Raton, Florida, where he specializes in raising
capital for emerging natural resource companies. Since February 12,
2010, Mr. Estra has also served as a director of Ensurge Inc., a mining
investment company that is seeking gold mining opportunities in
Brazil. From October 2009 through December 2009, Mr. Estra served as
the Chief Executive Officer of Signature Exploration and Production
Corp. From April 2007 to April 2009, Mr. Estra was a Managing
Director of Investment Banking with Jesup & Lamont Securities,
Inc. Mr. Estra was a Senior Vice President of Investment Banking with
Dawson James Securities, Inc. from September 2006 to March 2007 and a Managing
Director of Healthcare Investment Banking with Stanford Financial Group from
June 2003 to September 2006. From 1986 to 2003 Mr. Estra held senior
research and/or investment banking positions with a number of brokerage and
investment banking firms. From 1971 to 1986 Mr. Estra held various
positions in finance, corporate strategic planning and marketing with AMAX,
Inc., a global natural resources leader with interests in precious metals,
copper, lead, zinc, coal, oil and gas, molybdenum, tungsten and iron
ore. He served as Assistant to the Chairman and was Vice President of
Marketing and Strategic Planning when he resigned in 1986 to pursue a career on
Wall Street. Mr. Estra graduated with High Distinction from Babson
College with a degree in International Economics and with Honors from the
Columbia University Graduate School of Business with an MBA in
Finance. He holds Series 7, 24, 63, 86 and 87 securities
licenses. As an investment banker and an executive with experience in
working with natural resource companies and as an Audit Committee financial
expert, we believe that Mr. Estra contributes his leadership skills, knowledge,
finance and technology background, and business experience to our board of
directors. In addition, we believe that Mr. Estra’s membership on our
board of directors helps to achieve the objective that its membership be
composed of experienced and dedicated individuals with diversity of backgrounds,
perspectives, skills and other individual qualities that contribute to board
heterogeneity.
Melvin L. Williams, Chief Financial
Officer. Mr. Williams has been our Chief Financial Officer
since June 14, 2006. Mr. Williams is a certified public accountant
with over 20 years' experience in the public accounting industry with the firm
of Cupit, Milligan, Ogden and Williams in Reno, Nevada. During this
period, he provided auditing, consulting, merger/acquisition, valuation and tax
services to companies in the manufacturing, technology, mining, healthcare and
service industries, including publicly traded mining companies, as well as to
various non-profit organizations. From 1984 until 1987, Mr. Williams
served on the accounting staff of the University of Oregon Foundation, a private
fund raising entity that also maintains endowment and trust investments for the
continuing support of the University. Mr. Williams, a member of the
American Institute of Certified Public Accountants since 1989, is also a member
of the Nevada Society of CPAs and past president of the Reno, Nevada chapter of
the Institute of Management Accountants. He earned a Bachelor of
Business Administration degree at the University of Oregon in 1983.
Consultants
Nanominerals
Corp. (“Nanominerals”) is a private Nevada corporation principally engaged in
the business of mineral exploration. We have engaged Nanominerals as
a consultant to provide us with the use of its laboratory, instrumentation,
milling equipment and research facilities which has allowed us to perform tests
and analysis both effectively and in a more timely manner than would otherwise
be available from other such consultants. Dr. Charles A. Ager
performs the services for us in his authorized capacity with Nanominerals under
our consulting arrangement with Nanominerals. Dr. Ager currently is
the sole officer and director of Nanominerals, and controls its day to day
operations. The following sets forth certain biographical information
with respect to Dr. Ager:
8
Dr. Charles A. Ager is a geophysical
engineer with approximately 40 years of experience in the areas of mining
discovery and production. He is a registered geophysicist in the
State of California and a registered professional engineer and professional
geoscientist in British Columbia, Canada. Dr. Ager received a PhD
degree in geophysics from the University of British Columbia in 1974 and a
Masters of Science degree from the University of British Columbia in
1972. He received his undergraduate degree in mathematics and physics
from California State University, Sacramento in 1968. Dr. Ager has
been associated with Nanominerals from 1988 until present. Dr. Ager
was the Chairman of ABM Mining Group from 1979 until 1988, when it was acquired
by Northgate Mining. ABM Mining Group was involved in providing
technical and financial assistance in building and operating medium sized mining
companies. Project duties included property acquisition, exploration,
permitting, development, production and finance. Dr. Ager also was
the President of the Ager Group of Geotechnical Companies from 1968 to
1979. The Ager Group of Geotechnical Companies was involved in
providing technical and financial assistance for exploration and development
projects in Canada, the United States, Africa and the Far
East. Project work included the use of water, ground and air surveys
in the exploration for oil and gas, coal, industrial minerals and base and
precious metals. Dr. Ager is a member of the Association of
Professional Engineers and Geoscientists of British Columbia, Canada, the
Society of Exploration Geophysicists and the Society of Mining, Metallurgy and
Exploration.
Director
Qualifications
We
believe that our directors should have the highest professional and personal
ethics and values, consistent with our longstanding values and
standards. They should have broad experience at the policy-making
level in business or banking. They should be committed to enhancing
stockholder value and should have sufficient time to carry out their duties and
to provide insight and practical wisdom based on experience. Their
service on other boards of public companies should be limited to a number that
permits them, given their individual circumstances, to perform responsibly all
director duties for us. Each director must represent the interests of
all stockholders. When considering potential director candidates, the
board of directors also considers the candidate’s character, judgment, age and
skills, including financial literacy and experience in the context of our needs
and the needs of the board of directors. In addition to considering
an appropriate balance of knowledge, experience and capability, the board of
directors has as an objective that its membership be composed of experienced and
dedicated individuals with diversity of backgrounds, perspectives, skills and
other individual qualities that contribute to board heterogeneity.
Independent
Directors; Review, Approval or Ratification of Transactions with Related
Persons
We
currently have six members on our board of directors. We believe that
each of Martin B. Oring and Jordan M. Estra is independent under the criteria
established by Section 803A of the NYSE Amex LLC (“AMEX”) Company Guide for
director independence, but that none of the remaining four members are
independent. The AMEX criteria include various objective standards
and a subjective test. A member of the board of directors is not
considered independent under the objective standards if, for example, he or she
is employed by us. Mr. McNeil and Mr. Ager are not independent
because they are our employees.
9
The
subjective test requires that each independent director not have a relationship
which, in the opinion of the board of directors, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director. We considered commercial, financial services, charitable,
and other transactions and other relationships between us and each director and
his or her family members and affiliated entities.
For
Messrs. Oring and Estra, we believe that each did not have any transactions or
other relationships which would have exceeded the AMEX objective standards or
would otherwise interfere with the exercise of independent judgment in carrying
out the responsibilities of a director.
With
respect to our other four directors, we believe that we have ongoing business
relationships with these directors or their affiliates which would not satisfy
the AMEX subjective standards regarding the exercise of independent judgment in
carrying out the responsibilities of a director.
In
particular, we have continuing obligations under the agreements under which we
acquired the assets relating to our Clarkdale Slag Project. We remain
obligated to pay a royalty which may be generated from the operations of the
Clarkdale Slag Project with Nanominerals, one of our principal stockholders,
which is an affiliate of two members of our executive management and board of
directors, Carl S. Ager and Ian R. McNeil. We also have engaged
Nanominerals as a paid consultant to provide technical services to
us. In addition, we have a similar royalty arrangement with Verde
River Iron Company (“VRIC”), an affiliate of another member of our board of
directors, Harry B. Crockett. Further, one of our board members,
Robert D. McDougal, serves as the chief financial officer and a director of
Ireland, Inc., a publicly traded, mining related company, which is an affiliate
of Nanominerals. For these reasons, Messrs. McNeil, Ager, McDougal
and Crockett do not qualify as independent members of our board
directors. We had negotiated the revenue sharing agreements with each
of Nanominerals and VRIC prior to the time that Messrs. Ager, McNeil and
Crockett, as applicable, became board members. These persons are
subject to a fiduciary duty to exercise good faith and integrity in handling our
affairs. However, the existence of these continuing obligations may
create a conflict of interest between us and all of our board members and senior
executive management, and any disputes between us and such persons over the
terms and conditions of these agreements that may arise in the future may raise
the risk that the negotiations over such disputes may not be subject to being
resolved in an arms’ length manner. In addition, Nanominerals’
interest in Ireland, Inc. and its other mining related business interests may
create a conflict of interest between us and our board members and senior
executive management who are affiliates of Nanominerals.
Further,
the interests of K. Ian Matheson, one of our principal stockholders (and a
former officer and director), in Royal Mines and Minerals Corp., a publicly
traded mining company based in Nevada, of which Mr. Matheson is an affiliate,
and other mining related business interests may create a conflict of interest
between us and Mr. Matheson.
Because
we currently only have two independent directors, the existence of these
continuing obligations to our affiliates may create a conflict of interest
between us and our non-independent board members and senior executive
management, and any disputes between us and such persons over the terms and
conditions of these agreements that may arise in the future may raise the risk
that the negotiations over such disputes may not be subject to being resolved in
an arms’ length manner. We intend to make good faith efforts to
recruit independent persons to our board of directors.
Although
we only have two independent directors, the board of directors has adopted a
written Related Person Transactions Policy, that describes the procedures used
to identify, review, approve and disclose, if necessary, any transaction or
series of transactions in which: (i) we were, are or will be a participant, (ii)
the amount involved exceeds $120,000, and (iii) a related person had, has or
will have a direct or indirect material interest. There can be no
assurance that the above conflicts will not result in adverse consequences to us
and the interests of the other stockholders.
10
Although
our management intends to avoid situations involving conflicts of interest and
is subject to a Code of Ethics, there may be situations in which our interests
may conflict with the interests of those of our management or their
affiliates. These could include:
|
·
|
competing
for the time and attention of
management,
|
|
·
|
potential
interests of management in competing investment ventures,
and
|
|
·
|
the
lack of independent representation of the interests of the other
stockholders in connection with potential disputes or negotiations over
ongoing business relationships.
|
Committee
Interlocks and Insider Participation
Robert D.
McDougal, a member of our board of directors, serves as the chief financial
officer and a director of Ireland Inc., a publicly traded exploration stage
company primarily focused on the acquisition and exploration of mining
properties. Nanominerals, one of our principal stockholders and an
affiliate of Ian R. McNeil and Carl S. Ager, two of our executive directors and
officers, is the principal stockholder of Ireland Inc.
Except as
set forth above, no interlocking relationship exists between any member of our
board of directors and any member of the board of directors or compensation
committee of any other companies, nor has such interlocking relationship existed
in the past.
Committees
of the Board Of Directors
Audit
Committee. We have an Audit Committee and an audit committee
charter. Our Audit Committee is presently comprised of Robert D.
McDougal, Martin B. Oring and Jordan M. Estra. Mr. McDougal is the
Chairman of the Audit Committee. Each of Messrs. Oring and Estra is
an independent director. However, Mr. McDougal is not an independent
director. We believe that each of Messrs. Estra, McDougal and Oring
qualifies as an “audit committee financial expert” under Item 407(d)(5) of
Regulation S-K under the Securities Act of 1933, as amended (the “Securities
Act”). On September 8, 2006, we adopted a revised audit committee
charter and a whistle blower policy. The purpose of the
amendments to the audit committee charter is to expand on the role of the Audit
Committee’s relationship with external auditors and the primary committee
responsibilities. The purpose of the whistle blower policy is to
encourage all employees to disclose any wrongdoing that may adversely impact us,
our stockholders, employees, investors, or the public at large. The
policy also sets forth (i) an investigative process of reported acts of
wrongdoing and retaliation, and (ii) procedures for reports of questionable
auditing, accounting and internal control matters from employees on a
confidential and anonymous basis and from other interested third
parties. A copy of our audit committee charter was filed as an
exhibit to our Current Report on Form 8-K filed with the SEC on September 27,
2006. Our Audit Committee is responsible for:
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selecting,
hiring and terminating our independent
auditors,
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evaluating
the qualifications, independence and performance of our independent
auditors,
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11
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approving
the audit and non-audit services to be performed by our independent
auditors,
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reviewing
the design, implementation, adequacy and effectiveness of our internal
controls and critical accounting
policies,
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overseeing
and monitoring the integrity of our financial statements and our
compliance with legal and regulatory requirements as they relate to
financial statements or accounting
matters,
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establishing
procedures for the confidential, anonymous submission by
our employees of concerns regarding accounting and auditing
matters,
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reviewing
with management and our independent auditors, any earnings announcements
and other public announcements regarding our results of
operations,
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preparing
the Audit Committee report that the SEC requires in our annual proxy
statement,
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engaging
outside advisors, and
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authorizing
funding for the outside auditor and any outside advisors engaged by the
Audit Committee.
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Compensation
Committee. We have a Compensation Committee and have adopted a
Compensation Committee charter. Our Compensation Committee assists
our board of directors in determining and developing plans for the compensation
of our officers, directors and employees. Specific responsibilities
include the following:
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approving
the compensation and benefits of our executive
officers,
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reviewing
the performance objectives and actual performance of our officers,
and
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administering
our stock option and other equity compensation
plans.
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Our
Compensation Committee is comprised of Robert D. McDougal, Martin B. Oring and
Jordan M. Estra. Mr. McDougal is the Chairman of the Compensation
Committee. Each of Messrs. Oring and Estra is an independent
director. However, Mr. McDougal is not an independent
director.
Nominating and Governance
Committee. We have a Nominating and Governance Committee and
have adopted a Nominating and Governance Committee charter. Our
Nominating and Governance Committee will assist the Board of Directors by
identifying and recommending individuals qualified to become members of our
Board of Directors, reviewing correspondence from our stockholders,
establishing, evaluating and overseeing our corporate governance guidelines, and
recommending compensation plans for our directors. Specific
responsibilities include the following:
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evaluating
the composition, size and governance of our Board of Directors and its
committees and making recommendations regarding future planning and the
appointment of directors to our
committees,
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establishing
a policy for considering stockholder nominees for election to our Board of
Directors,
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evaluating
and recommending candidates for election to our Board of Directors;
and
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recommending
and determining the compensation of our
directors.
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Our
Nominating and Governance Committee is comprised of Robert D. McDougal, Martin
B. Oring and Jordan M. Estra. Mr. Estra is the Chairman of the
Nominating and Governance Committee. Each of Messrs. Oring and Estra
is an independent director. However, Mr. McDougal is not an
independent director.
Disclosure Committee and
Charter. We have a Disclosure Committee and a Disclosure
Committee charter. A copy of the disclosure committee charter was
filed as an exhibit to our Form 10-KSB filed with the SEC on April 13,
2004. The purpose of the committee is to provide assistance to the
Chief Executive Officer and the Chief Financial Officer in fulfilling their
responsibilities regarding the identification and disclosure of material
information about us and the accuracy, completeness and timeliness of our
financial reports.
Our
Disclosure Committee is presently comprised of Carl S. Ager, Ian R. McNeil,
Robert D. McDougal, Martin B. Oring and Jordan M. Estra. Mr. McDougal
is the Chairman of the Disclosure Committee. Each of Messrs. Oring
and Estra is an independent director. However, none of Messrs. Ager,
McNeil or McDougal is an independent director.
Board
Leadership Structure and Risk Oversight
Our board
of directors has an integrated structure in which the roles of Chairman and
Chief Executive Officer are combined and an independent lead director has been
appointed. The board has determined that only two of our
non-management directors are independent. The board of directors
appointed Martin B. Oring as the board’s independent lead
director. The independent lead director presides at the executive
sessions of the non-management directors and at all board meetings at which the
Chairman is not present, serves as liaison between the Chairman and the
independent directors, frequently communicates with the Chief Executive Officer,
calls meetings of the independent directors, obtains board member and management
input and sets the agenda for the board with the Chief Executive Officer,
approves meeting schedules to assure there is sufficient time for discussion of
all agenda items, works with the Chief Executive Officer to ensure the board
members receive the right information on a timely basis, stays current on major
risks and focuses the board members on such risks, molds a cohesive board, works
with the Audit Committee and Compensation Committee to evaluate board and
committee performance, facilitates communications among directors, assists in
recruiting and retention for new board members, ensures that committee structure
and committee assignments are appropriate and effective, ensures outstanding
governance processes, and leads discussions regarding Chief Executive Officer
performance, personal development and compensation.
The board
has had several years of successful experience with a leadership structure in
which the roles of Chairman and Chief Executive Officer are combined, and has
determined that this structure, together with a very active and involved
independent lead director, is most appropriate and effective for
us. The board believes that this structure promotes greater
efficiency, within the context of an active and independent board, through more
direct communication of critical information from management to the board and
from the board to management. In addition, the Chief Executive
Officer’s extensive knowledge of our business uniquely qualifies him, in close
consultation with the independent lead director, to lead the board in assessing
risks and focusing on the issues that are most material to us.
13
The
board’s involvement in risk oversight includes receiving regular reports from
members of senior management and evaluating areas of material risk to us,
including operational, financial, legal and regulatory, and strategic and
reputational risks. The Audit Committee, pursuant to its charter, is
responsible for overseeing the assessment of the business risk management
process, including the adequacy of our overall control environment and controls
in selected areas representing significant financial and business
risk. In carrying out this responsibility, the Audit Committee
regularly evaluates our risk identification, risk management and risk mitigation
strategies and practices. In general, the reports identify, analyze,
prioritize and provide the status of major risks to us. In addition,
the Compensation Committee regularly considers potential risks related to our
compensation programs. Further, the Disclosure Committee reviews the
identification and disclosure of material information about us and the accuracy,
completeness and timeliness of our financial reports.
Related
Person Transactions Policy
On March
17, 2009, the board of directors adopted a written Related Person Transactions
Policy, that describes the procedures used to identify, review, approve and
disclose, if necessary, any transaction or series of transactions in which: (i)
we were, are or will be a participant, (ii) the amount involved exceeds
$120,000, and (iii) a related person had, has or will have a direct or indirect
material interest. Related party transactions, which are limited to
those described in this policy, are subject to the approval or ratification by
the Audit Committee in accordance with this policy.
Our Code
of Ethics, which applies to our directors and executive officers, including our
Chief Executive Officer, Chief Financial Officer and all senior financial
officers, provides that all conflicts of interest should be
avoided. Pursuant to Item 404 of Regulation S-K of the SEC, certain
transactions between the issuer and certain related persons need to be disclosed
in our filings with the SEC. In addition, under Section 78.140
of the Nevada Revised Statutes, certain transactions between us and our
directors and officers may need to be approved by our board of directors or a
duly authorized committee of the board. Finally, SEC rules require
our board to assess whether relationships or transactions exist that may impair
the independence of our outside directors. The policy is intended to
provide guidance and direction on related party transactions.
A
“related party transaction” is any transaction directly or indirectly involving
any related party that would need to be disclosed under Item 404(a) of
Regulation S-K. Under Item 404(a), we are required to disclose any
transaction occurring since the beginning of our last fiscal year, or any
currently proposed transaction, involving us where the amount involved exceeds
$120,000, and in which any related person had or will have a direct or indirect
material interest. “Related party transaction” also includes any
material amendment or modification to an existing related party
transaction.
For
purposes of the policy, “related party” means any of the following:
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a
director (which term when used therein includes any director
nominee),
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an
executive officer,
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14
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a
person known by us to be the beneficial owner of more than 5% of our
common stock (a “5% stockholder”),
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an
entity which is owned or controlled by a person listed above, or an entity
in which a person listed above has a substantial ownership interest or
control of such entity, or
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a
person who is an immediate family member of any of the
foregoing.
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“Immediate
family member” means a child, stepchild, parent, stepparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law of such director, executive officer, nominee for director or
beneficial owner, and any person (other than a tenant or employee) sharing the
household of such director, executive officer, nominee for director or
beneficial owner.
All
related party transactions are required to be disclosed to the Audit Committee
of the board and any material related party transaction are required to be
disclosed to the full board of directors. Related party transactions
will be brought to management’s and the board’s attention in a number of
ways. Each of our directors and executive officers is instructed and
periodically reminded to inform the Office of the Secretary of any potential
related party transactions. In addition, each such director and
executive officer completes a questionnaire on an annual basis designed to
elicit information about any potential related party
transactions. Any potential related party transactions that are
brought to our attention are analyzed by our legal department, or if none
exists, our outside counsel, in consultation with management, as appropriate, to
determine whether the transaction or relationship does, in fact, constitute a
related party transaction requiring compliance with the policy.
At each
of its meetings, the Audit Committee will be provided with the details of each
new, existing or proposed related party transaction, including the terms of the
transaction, the business purpose of the transaction, and the benefits to us and
to the relevant related party. In determining whether to approve a
related party transaction, the Audit Committee will consider, among other
factors, the following factors to the extent relevant to the related party
transaction:
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whether
the terms of the related party transaction are fair to us and on the same
basis as would apply if the transaction did not involve a related
party,
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whether
there are business reasons for us to enter into the related party
transaction,
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whether
the related party transaction would impair the independence of an outside
director,
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whether
the related party transaction would present an improper conflict of
interests for any of our directors or executive officers, taking into
account the size of the transaction, the overall financial position of the
director, executive officer or related party, the direct or indirect
nature of the director’s, executive officer’s or related party’s interest
in the transaction and the ongoing nature of any proposed relationship,
and
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any
other factors the Audit Committee deems
relevant.
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15
The Audit
Committee will apply these factors, and any other factors it deems relevant to
its determination, in a manner that is consistent with the rules and regulations
promulgated by the Commission and the objectives of the policy. Given
that this list of factors is non-exclusive and, further, that the factors have
not been assigned any particular level of importance with respect the other
factors, the Audit Committee will have a certain amount of discretion in
applying these factors. The members of the Audit Committee, however,
must exercise their reasonable business judgment in making a determination
regarding the transaction at issue.
As a
result, the specific application of these factors will be determined by the
Audit Committee on a case-by-case basis. The Audit Committee will
examine each factor, both individually and collectively, in the context of our
overall business and financial position, as well as our short-term and long-term
strategic objectives. In doing so, the Audit Committee will look at
the particular facts and circumstances of the transaction at issue, as well as
the totality of the circumstances surrounding the transaction as a
whole. The Audit Committee will examine the relationship of the facts
and circumstances with our overall business and financial position and strategic
objectives. If, as and when special or unique concerns must be
addressed, the Audit Committee will take such concerns into
account.
For
example, regarding transactions that would impair independence, if our
securities become listed on a national securities exchange that requires a
certain percentage of the board of directors to be independent, and the Audit
Committee determines that a particular transaction will impair the independence
of an outside director, potentially causing us to contradict the exchange
mandated independence requirement, that particular transaction may be
rejected. However, there could arise a situation where, due to the
importance of the transaction to our overall business and financial position and
strategic objectives and our ability to appoint another independent director,
such a transaction might be approved by the Audit Committee.
Any
member of the Audit Committee who has an interest in the transaction under
discussion will abstain from voting on the approval of the related party
transaction, but may, if so requested by the Chairperson of the Audit Committee,
participate in some or all of the Audit Committee’s discussions of the related
party transaction. Upon completion of its review of the transaction,
the Audit Committee may determine to permit or to prohibit the related party
transaction.
A related
party transaction entered into without pre-approval of the Audit Committee will
not be deemed to violate the policy, or be invalid or unenforceable, so long as
the transaction is brought to the Audit Committee as promptly as reasonably
practical after it is entered into or after it becomes reasonably apparent that
the transaction is covered by the policy.
Under the
policy, any “related party transaction” will be consummated or will continue
only if:
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the
Audit Committee shall approve or ratify such transaction in accordance
with the guidelines set forth in the policy and if the transaction is on
terms comparable to those that could be obtained in arm’s length dealings
with an unrelated third party,
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the
transaction is approved by the disinterested members of the board of
directors, or
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if
the transaction involves compensation, that such transaction is approved
of by our Compensation Committee.
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16
Corporate
Governance Guidelines
Our Board
has adopted Corporate Governance Guidelines which govern, among other things,
Board member criteria, responsibilities, compensation and education, Board
committee composition and charters and management succession.
Code
of Ethics
Our
directors and executive officers, including our Chief Executive Officer, Chief
Financial Officer and all senior financial officers, are bound by a Code of
Ethics that complies with Item 406 of Regulation S-K of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).
A Code of
Ethics relates to written standards that are reasonably designed to deter
wrongdoing and to promote:
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honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships,
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full,
fair, accurate, timely and understandable disclosure in reports and
documents that are filed with, or submitted to, the SEC and in other
public communications made by an
issuer,
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compliance
with applicable governmental laws, rules and
regulations,
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the
prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code,
and
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accountability
for adherence to the code.
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Rule
10b5-1 Plans
The board
of directors has authorized directors and other executive officers who are
subject to our stock-trading pre-clearance and quarterly blackout requirements,
at their election, to enter into plans, at a time they are not in possession of
material non-public information, to purchase or sell shares of our common stock
that satisfy the requirements of Exchange Act Rule 10b5-1. Rule
10b5-1 permits trading on a pre-arranged, “automatic-pilot” basis subject to
certain conditions, including that the person for whom the plan is created (or
anyone else aware of material non-public information acting on such person’s
behalf) not exercise any subsequent influence regarding the amount, price and
dates of transactions under the plan. Using these plans, officers and
directors can gradually diversify their investment portfolios and spread stock
trades over a period of time regardless of any material, non-public information
they may receive after adopting their plans. As a result, trades
under 10b5-1 plans by our directors, and other executive officer may not be
indicative of their respective opinions of our performance at the time of the
trade or of our potential future performance. The board believes that
it is appropriate to permit directors and senior executives, whose ability to
purchase or sell our common stock is otherwise substantially restricted by
quarterly and special stock-trading blackouts and by their possession from time
to time of material nonpublic information, to engage in pre-arranged trading in
accordance with Rule 10b5-1. Trades by our directors and executive
officers pursuant to 10b5-1 trading plans will be disclosed publicly through
Form 144 and Form 4 filings with the SEC, as required by applicable
law.
17
On
November 25, 2009, one of our directors, Harry B. Crockett, entered into a Rule
10b5-1 trading plan to sell up to 1,000,0000 of his shares of our common
stock. As of April 29, 2010, 500,000 of these shares were sold
pursuant to the trading plan. Mr. Crockett informed us that this plan is
part of his individual long-term strategy for asset diversification, tax and
estate planning. The Rule 10b5-1 plan is set up in accordance with
Rule 10b5-1 under the Exchange Act and our policies regarding stock
transactions.
Stockholder
Communication with Our Board of Directors
Our board
of directors has established a process for stockholders to communicate with the
board of directors or with individual directors. Stockholders who
wish to communicate with our board of directors or with individual directors
should direct written correspondence to our Corporate Secretary at our principal
executive offices located at 2441 West Horizon Ridge Pkwy., Suite 120,
Henderson, Nevada, 89052. Any such communication must
contain:
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a
representation that the stockholder is a holder of record of our capital
stock,
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the
name and address, as they appear on our books, of the stockholder sending
such communication, and
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the
class and number of shares of our capital stock that are beneficially
owned by such stockholder.
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The
Corporate Secretary will forward such communications to our board of directors
or the specified individual director to whom the communication is directed
unless such communication is unduly hostile, threatening, illegal or similarly
inappropriate, in which case the Corporate Secretary has the authority to
discard the communication or to take appropriate legal action regarding such
communication.
Section
16(A) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our directors and executive officers and
beneficial holders of more than 10% of our common stock to file with the SEC
initial reports of ownership and reports of changes in ownership and reports of
changes in ownership of our equity securities. As of the date of this
Report, and based solely on our review of the copies of such reports furnished
to us and written representations from the directors and executive officers, we
believe that all reports needed to be filed by current Section 16 reporting
persons have been filed in a timely manner for the year ended December 31, 2009,
with the exception of the following:
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Nanominerals,
one of our principal stockholders and an affiliate of Ian R. McNeil and
Carl S. Ager, who are our executive officers and members of our board of
directors, was delinquent in the reporting of four transactions on Form 4
(Statement of Changes in Beneficial Ownership of Securities) relating to
two transactions occurring prior to 2009 and two transactions occurring in
2009, and which were reported on a delinquent basis on three
reports,
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Dr.
Charles Ager, an affiliate of Nanominerals, was delinquent in: (a) the
filing of a Form 3 (Initial Statement of Beneficial Ownership of
Securities) relating to an event occurring prior to 2009 and which was
reported on a delinquent basis on a report filed in 2009, and (b) the
reporting of six transactions on Form 4 (Statement of Changes in
Beneficial Ownership of Securities) relating to transactions occurring
prior to 2009 and which were reported on a delinquent basis on three
reports,
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Harry
B. Crockett, one of our directors, was delinquent in the reporting of
three transactions in 2009 on Form 4 which were reported on a delinquent
basis on three reports,
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Martin
B. Oring, one of our directors, was delinquent in the reporting of six
transactions in 2009 on Form 4 which were reported on a delinquent basis
on five reports,
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Robert
D. McDougal, one of our directors, was delinquent in the reporting of
three transactions in 2009 on Form 4 which were reported on a delinquent
basis on three reports, and
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K.
Ian Matheson, one of our principal stockholders, was delinquent in the
reporting of 31 transactions in 2009 on Form 4 which were reported on a
delinquent basis on eight reports.
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Item
11. Executive
Compensation
Compensation
Discussion and Analysis
Process Overview. The
Compensation Committee of the board of directors discharges the board of
directors’ responsibilities relating to compensation of all of our executive
officers. The Compensation Committee is comprised of three
non-employee directors.
The
agenda for meetings is determined by the Chair of the Compensation Committee
with the assistance of Ian R. McNeil, our President and Chief Executive Officer,
and Melvin L. Williams, our Chief Financial Officer. Compensation
Committee meetings are regularly attended by one or more of our
officers. However, they do not attend the portion of meetings during
which their own performance or compensation is being discussed. Mr.
Williams and Mr. Ager support the Compensation Committee in its work by
providing information relating to our financial plans, performance assessments
of our executive officers and other personnel-related data. In
addition, the Compensation Committee has the authority under its charter to
hire, terminate and approve fees for advisors, consultants and agents as it
deems necessary to assist in the fulfillment of its
responsibilities.
The
Compensation Committee has not delegated its authority to grant equity awards to
any of our employees, including the executive officers.
Compensation Philosophy and
Objectives. The Compensation Committee believes that our
compensation philosophy and programs are designed to foster a
performance-oriented culture that aligns our executive officers’ interests with
those of our stockholders. The Compensation Committee also believes
that the compensation of our executive officers is both appropriate and
responsive to the goal of improving stockholder value.
The
Compensation Committee’s philosophy is to link the named executive officers’
compensation to corporate performance. The base salary, bonuses and
stock option grants of the named executive officers are determined in part by
the Compensation Committee reviewing data on prevailing compensation practices
of comparable companies with whom we compete for executive talent, and
evaluating such information in connection with our corporate goals and
compensation practices.
19
Because
of our size and due to our stage of development, we do not have an extensive
executive compensation program. Instead, we have a fairly simple
executive compensation program that is intended to provide appropriate
compensation for our executive officers.
Our
current compensation arrangements for several of our executive officers,
including our Chief Executive Officer, are below average compensation levels for
similar positions at comparable companies. As we continue to grow, we
may need to increase our recruiting of new executives from outside of the
Company. This in turn may require us to pay higher compensation which
may be closer to or in excess of comparable company averages.
Finally,
we believe that creating stockholder value requires not only managerial talent,
but active participation by all employees. In recognition of this, we
try to minimize the number of compensation arrangements that are distinct or
exclusive to all of our executive officers. We currently provide base
salary, bonuses and long-term equity incentive compensation to a number of our
employees.
Because
we are an exploration company, we are in the process of refining our
compensation policies and anticipate that this will be an ongoing process as our
company moves forward in its exploration, testing and construction
plans.
In light
of the above, since our company could develop in a number of directions, such as
exploration only, or exploration with a producing mine, we have looked at a
broad range of mining companies to establish our compensation
packages. In general, these companies consisted of a mix of smaller
to medium-sized public mining companies. Most are at late stages of a
mine development project or have either one or two operating
mines. Although many companies were considered for comparative
purposes by our Compensation Committee, initially the Compensation Committee
focused on the following companies as likely to be more relevant to our own as
we develop: General Moly, Inc., Allied Nevada Gold Corp., Great Basin Gold Ltd.,
Gryphon Gold Corp. and Midway Gold Corp. Each company’s
publicly-disclosed information was compiled to provide data on executive
compensation, including base pay, other cash compensation and stock-based
compensation. It is our intent to formulate executive compensation
packages that are both representative of industry practices and are sufficient
to attract and retain capable and experienced people.
The board
believes that the comparison companies noted above are a representative list of
comparison companies currently, but expects the list to change to reflect
developments in the mining industry and related markets. As we
develop, the comparison companies will be selected to be comparative to our size
and complexity at the time of the comparison. In addition, the
comparison companies will also develop over time, which will necessarily result
in changes in the composition of the comparison group. Future
comparison groups may include some, none or all of the companies in the current
group. For example, exploration companies may begin to operate mines
or may be acquired in a merger or acquisition.
Our
compensation policies and programs are designed to make us competitive with
similar mining companies, to recognize and reward executive performance
consistent with the success of our business and to attract and retain capable
and experienced people. The Compensation Committee’s role and
philosophy is to ensure that our compensation goals and objectives, as applied
to the actual compensation paid to our executive officers, are aligned with our
overall business objectives and with stockholder interests.
20
In
addition to industry comparables, the Compensation Committee considers a variety
of factors when determining both compensation policies and programs and
individual compensation levels, including the stockholder interests, our overall
financial and operating performance and the Compensation Committee’s assessment
of each executive’s individual performance and contribution toward meeting our
corporate objectives. As we develop, we will place increasing
importance on the incentive-based component of compensation because we believe
that a significant portion of an executive’s compensation should depend upon our
overall corporate performance, including share price performance relative to our
peer group.
2009 Executive Officer Compensation
Components. For the year ended December 31, 2009, the
principal component of compensation for our executive officers was a base
salary.
Base Salary. Base salaries
for our executive officers, other than the Chief Executive Officer (CEO), are
determined by the Compensation Committee based upon recommendations by our Chief
Executive Officer, taking into account such factors as salary norms in
comparable companies, individual responsibilities, performance and experience of
the executive officer.
The
Compensation Committee, after review of compensation paid by peer group
companies, supplemented by published compensation surveys of public companies
and a review of the CEO’s responsibilities, performance, and experience, sets
the CEO’s salary. A review of the salaries of our executive officers
is conducted at least annually.
During
2007, the Compensation Committee approved increases in base salaries for our
executive officers from 2006 to realign salaries with market levels after taking
into account individual responsibilities, performance and
experience. The Compensation Committee determined that in connection
with the closing of the acquisition of 100% of the Clarkdale Slag Project and as
a result of the increase in the scope of responsibilities of our executives
during 2007, it was appropriate to review the compensation of salaries for
comparable executives in the peer group. The increase in the scope of
responsibilities during 2007 included the additional work performed and to be
performed by the executives to acquire 100% of the Clarkdale Slag Project,
design and engineer our first production module, conduct multiple financings,
and supervise an increased number of employees. During its review of
the peer group, the Compensation Committee decided to increase the salaries of
the executive officers to reduce the size of the disparity between the
compensation paid to our executive officers and the compensation paid to the
executive officers in the peer group. The realignment resulted in
different changes in percentage increases among our executive officers because
not all of the executives required the same percentage increase to narrow the
gap between our officers’ salaries and the salaries for comparable executives in
the peer group. The Compensation Committee was focused on bringing
the dollar amount of our executives’ salaries closer to the peer group, not on
increasing the salaries at the same rate as the percentage increase
of market salaries. As such, market salaries increased at
a lower percentage rate than our executives’ salaries. The
Compensation Committee did not have a specific formula to determine the amount
of the executive compensation or the specific increases for each individual
executive. In addition to industry comparables, the Compensation
Committee reviewed the National Association of Corporate Directors “Report of
the Blue Ribbon Commission on Executive Compensation and the Role of the
Compensation Committee” for 2007. Our executives’ salaries were
subjectively determined in the discretion of the Compensation Committee, taking
into account the foregoing factors.
21
The
Compensation Committee considered the lack of formal training of Mr. McNeil and
Mr. Ager in the specific technicalities of mineral exploration, but determined
that their general business management experience merited their compensation
levels, and that we could engage technical mineral exploration specialists, as
necessary and appropriate. Mr. Williams’ increase reflected a change
in his contract, increasing his time commitment to us from a range of 300-600
hours per year to 600-800 hours per year. The Compensation Committee
did not have a specific formula to determine the amount of the executive
compensation.
The 2008
and 2009 salaries for our executive officers were not increased by mutual
agreement between the board and the individual executives. Continuing
into 2010, the Compensation Committee decided to postpone most compensation
adjustments for our executive officers due to the status of the development of
our mineral properties and our focus of cash resources into
those projects.
The
following charts reflect changes in the base salaries of our executive officers
between from 2007 to 2009:
Name
|
Principal
Position
|
2008
Salary
|
2009
Salary
|
Base
Salary
%
Change
|
||||||||||
Ian
R. McNeil
|
President,
Chief Executive Officer and Chairman of the Board
|
$ | 190,000 | $ | 190,000 | 0 | % | |||||||
Melvin
L. Williams
|
Chief
Financial Officer
|
$ | 130,000 | $ | 130,000 | 0 | % | |||||||
Carl
S. Ager
|
Vice
President, Treasurer, and Director
|
$ | 160,000 | $ | 160,000 | 0 | % |
Name
|
Principal
Position
|
2007
Salary
|
2008
Salary
|
Base
Salary
%
Change
|
||||||||||
Ian
R. McNeil
|
President,
Chief Executive Officer and Chairman of the Board
|
$ | 190,000 | $ | 190,000 | 0 | % | |||||||
Melvin
L. Williams
|
Chief
Financial Officer
|
$ | 130,000 | $ | 130,000 | 0 | % | |||||||
Carl
S. Ager
|
Vice
President, Treasurer, and Director
|
$ | 160,000 | $ | 160,000 | 0 | % |
Bonuses. Our cash bonus
program seeks to motivate executive officers to work effectively to achieve our
financial performance objectives and to reward them when such objectives are
met. Bonuses for executive officers are subject to approval by the Compensation
Committee. For the year ended December 31, 2009, bonuses for
executive officers were not authorized per their request.
Equity-Based Incentive
Compensation. Stock options are an important component of the
total compensation of executive officers. We believe that stock
options align the interests of each executive with those of the
stockholders. They also provide executive officers a significant,
long-term interest in our success and help retain key executive officers in a
competitive market for executive talent. Our 2007 Stock Option Plan
authorizes the Compensation Committee to grant stock options to executive
officers. The number of shares owned by, or subject to options held
by, each executive officer is periodically reviewed and additional awards are
considered based upon past performance of the executive and the relative
holdings of other executive officers. The option grants generally
expire no later than five years from the date of grant.
22
Further,
our 2009 Stock Incentive Award Plan (“2009 Incentive Plan”) provides for grants
to our employees and service providers of options to purchase shares of our
common stock, rights to receive the appreciation in value of common shares,
awards of common shares subject to vesting and other restrictions on transfer,
and other awards based on common shares. The 2009 Incentive Plan
authorizes the issuance of up 3,250,000 shares of common stock.
For the
year ended December 31, 2009, equity awards for executive officers were not
granted by mutual agreement between the board and the individual
executives.
Stock Ownership
Guidelines. We currently do not require our directors or
executive officers to own a particular amount of our common
stock. The Compensation Committee is satisfied that stock and option
holdings among our directors and executive officers are sufficient at this time
to provide motivation and to align this group’s interests with those of our
stockholders.
Other
Benefits
Health and Welfare
Benefits. Our executive officers
receive the same health and welfare benefits offered to other employees,
including medical, and holiday pay.
Retirement
Program. We
currently have no Supplemental Executive Retirement Plan, or SERP,
obligations. We do not have any defined benefit retirement
plans.
Perquisites. We do not provide
special benefits or other perquisites to any of our executive
officers.
Employment
Arrangements, Severance and Change of Control Benefits. Other
than as described below, we are not party to any employment contracts with our
officers and directors.
Ian R. McNeil. We entered into
an employment agreement with Ian R. McNeil, our President and Chief Executive
Officer, effective January 1, 2006 and as amended February 16,
2007. Pursuant to the terms of the employment agreement, we have
agreed to pay Mr. McNeil an annual salary of $190,000. On December
30, 2005, Mr. McNeil received a one time bonus of $36,000 on execution of the
agreement. In addition to his annual salary, Mr. McNeil may be
granted a discretionary bonus and stock options, to the extent authorized by our
board of directors. The term of the agreement is for an indefinite
period, unless otherwise terminated by either party pursuant to the terms of the
agreement. In the event that the agreement is terminated by us, other
than for cause, we will provide Mr. McNeil with six months written notice or
payment equal to six months of his monthly salary.
Carl S. Ager. We entered into
an employment agreement with Carl S. Ager, our Vice President, Secretary and
Treasurer, effective January 1, 2006 and as amended February 16,
2007. Pursuant to the terms of the employment agreement, we have
agreed to pay Mr. Ager an annual salary of $160,000. On December 30,
2005, Mr. Ager received a one time bonus of $26,666 on execution of the
agreement. In addition to his annual salary, Mr. Ager may be granted
a discretionary bonus and stock options, to the extent authorized by our board.
The term of the agreement is for an indefinite period, unless otherwise
terminated by either party pursuant to the terms of the agreement. In
the event that the agreement is terminated by us, other than for cause, we will
provide Mr. Ager with six months written notice or payment equal to six months
of his monthly salary.
23
Melvin L.
Williams. We entered into
an employment agreement with Melvin L. Williams, our Chief Financial Officer,
effective June 14, 2006 and as amended February 16, 2007. Pursuant to
the terms of the employment agreement, we have agreed to pay Mr. Williams an
annualized salary of $130,000 based on an increase in time commitment from
300-600 hours worked to 600-800 hours worked. On June 14, 2006, we
issued 50,000 restricted shares of our common stock, as a one time bonus, and
granted options to purchase 100,000 shares of our common stock at an exercise
price of $2.06 per share, exercisable for a period of five years until June 14,
2011. The options vested 50% on each of the first and second
anniversaries of the execution of the agreement. The price of the
shares issued and the exercise price of the options granted were valued based on
the closing price of the common stock on the OTCBB on June 14,
2006. In the event the employment agreement is terminated by us
without cause, we have agreed to pay Mr. Williams an amount equal to three
months’ salary in a lump sum as full and final payment of all amounts payable
under the agreement.
Tax and
Accounting Treatment of Compensation. In our review and
establishment of compensation programs and payments, we consider, but do not
place great emphasis on, the anticipated accounting and tax treatment of our
compensation programs on us and our executive officers. While we may
consider accounting and tax treatment, these factors alone are not
dispositive. Among other factors that receive greater consideration
are the net costs to us and our ability to effectively administer executive
compensation in the short and long-term interests of stockholders under a
proposed compensation arrangement.
Our
Compensation Committee and our board have considered the potential future
effects of Internal Revenue Code Section 162(m), Trade or Business Expense,
Certain excessive employee remuneration (“Section 162(m)”) on the compensation
paid to our executive officers. Section 162(m) disallows a tax
deduction for any publicly held corporation for individual compensation
exceeding $1.0 million in any taxable year for any of our executive
officers. There is an exemption from the $1 million limitation for
performance-based compensation that meets certain requirements. In
approving the amount and form of compensation for our executive officers, our
compensation committee will continue to consider all elements of the cost to us
of providing such compensation, including the potential impact of Section
162(m).
In order
to qualify certain forms of equity based compensation, such as stock options, as
performance-based compensation, each of the 2007 Stock Option Plan and 2009
Incentive Plan was submitted to and approved by our stockholders and is
structured to provide 162(m) qualification to stock options and other forms of
performance-based awards. Grants of equity based compensation under
each of the 2007 Stock Option Plan and 2009 Incentive Plan may qualify for the
exemption if vesting is contingent on the attainment of objectives based on
performance criteria set forth by our compensation committee, and if certain
other requirements are satisfied as set forth under Section
162(m). The compensation paid to any of our executive officers in
2009 did not exceed the $1 million threshold under Section 162(m). Thus, at the
present time, neither we nor any of our executives are impacted by Section
162(m).
24
We
monitor whether it might be in our best interest to comply with Section 162(m)
of the Code, but reserve the right to award future compensation which would not
comply with the Section 162(m) requirements for non-deductibility if the
Compensation Committee concludes that it is in our best interest to do
so. We seek to maintain flexibility in compensating executive
officers in a manner designed to promote varying corporate goals and therefore
the Compensation Committee has not adopted a policy requiring all compensation
to be deductible. The Compensation Committee will continue to assess
the impact of Section 162(m) on its compensation practices and determine what
further action, if any, is appropriate.
We
account for equity compensation paid to our employees under the rules of
Accounting Standards Codification 718, “Compensation-Stock Compensation” (ASC
718), which requires us to estimate and record an expense for each award of
equity compensation over the service period of the award. Accounting
rules also require us to record cash compensation as an expense at the time the
obligation is incurred. We have not tailored our executive
compensation program to achieve particular accounting results.
We intend
that our plans, arrangements and agreements will be structured and administered
in a manner that complies with the requirements of Internal Revenue Code Section
409A, Inclusion in gross income of deferred compensation under nonqualified
deferred compensation plans (“Section 409A”). Participation in, and
compensation paid under our plans, arrangements and agreements may, in certain
instances, result in the deferral of compensation that is subject to the
requirements of Section 409A. If our plans, arrangements and
agreements as administered fail to meet certain requirements under Section 409A,
compensation earned thereunder may be subject to immediate taxation and tax
penalties.
Section
409A requires programs that allow executives to defer a portion of their current
income to meet certain requirements regarding risk of forfeiture and election
and distribution timing (among other considerations).
Section
409A requires that “nonqualified deferred compensation” be deferred and paid
under plans or arrangements that satisfy the requirements of the statute with
respect to the timing of deferral elections, timing of payments and certain
other matters. Failure to satisfy these requirements can expose
employees and other service providers to accelerated income tax liabilities and
penalty taxes and interest on their vested compensation under such
plans. Accordingly, as a general matter, it is our intention to
design and administer our compensation and benefits plans and arrangements for
all of our employees and other service providers, including the named executive
officers, so that they are either exempt from, or satisfy the requirements of,
Section 409A.
Our
current compensation and benefit plans are not subject to Section
409A. We have reviewed our compensation arrangements with our
executives and employees, and have determined that they are excepted from the
requirements of Section 409A. The severance provisions and
discretionary bonus provisions under our Employment Agreements fall within
the short-term deferral rules of Treasury Regulations Section1.409A-1(b)(4). The
equity awards issued under each of the 2007 Stock Option Plan and 2009 Incentive
Plan (both statutory and nonstatutory stock options) are excepted from Section
409A. Statutory options under Internal Revenue Code Section 422 are
not subject to Section 409A. Likewise, the nonstatutory options are
excepted from Section 409A under Treasury Regulations Section
1.409A-1(b)(5)(i)(A) because the exercise prices for all awards issued
thereunder are the fair market value of the underlying stock on the date the
option was granted and the options do not include any feature for the deferral
of compensation other than deferral of recognition of income until the later of
the exercise or disposition of the option or the date the options become
substantially vested. The underlying stock for all the options
constitutes "service recipient stock" within the meaning of Treasury Regulation
Section 1.409-A-1(b)(5)(iii). If we adopt new compensation plans that
constitute non-qualified deferred compensation, they will be operated in
compliance with Section 409A and regulatory guidance issued by the Internal
Revenue Service.
25
Compensation
Committee Report. The Compensation Committee of the Board has
reviewed this Compensation Discussion and Analysis and discussed that analysis
with management. Based on its review and discussions with management,
the committee recommended to our board that this Compensation Discussion
and Analysis be included in our Form 10-K for the year ended December 31,
2009. This report is provided by the following directors, who
comprise the committee:
Robert D.
McDougal (Chairman)
Martin B.
Oring
Jordan M.
Estra
26
Summary
Compensation Table
The
following table sets forth all compensation received during the three years
ended December 31, 2009 by our Chief Executive Officer, Chief Financial Officer
and each of the other most highly compensated executive officers whose total
compensation exceeded $100,000 in such fiscal year. These officers
are referred to as the Named Executive Officers in this Report:
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
|
Option
Awards
(1)
|
Non-Equity
Incentive
Plan
Compensation
|
Non-qualified
Deferred
Compensation
Earnings
|
All
Other
Compensation
($)
|
Total
($)
|
||||||||||||
Ian
R. McNeil,
|
2009
|
190,000 | - | - | - | - | - | - | 190,000 | ||||||||||||
Director,
|
2008
|
190,000 | - | - | - | - | - | - | 190,000 | ||||||||||||
President
and
|
2007
|
179,750 | - | - | 40,643 | - | - | - | 220,393 | ||||||||||||
CEO
(2)
|
|||||||||||||||||||||
Carl
S. Ager,
|
2009
|
160,000 | - | - | - | - | - | - | 160,000 | ||||||||||||
Director,
Vice
|
2008
|
160,000 | - | - | - | - | - | - | 160,000 | ||||||||||||
President
|
2007
|
150,000 | - | - | 40,643 | - | - | - | 190,643 | ||||||||||||
and
|
|||||||||||||||||||||
Secretary
(3)
|
|||||||||||||||||||||
Melvin
L. Williams,
|
2009
|
130,000 | - | - | - | - | - | 61,165 | 191,165 | ||||||||||||
Chief
Financial
|
2008
|
130,000 | - | - | - | - | - | 22,468 | 152,468 | ||||||||||||
Officer
(4)
|
2007
|
121,250 | - | - | 30,482 | - | - | 11,260 | 162,992 |
(1)
|
Amounts
listed in this column represents the estimated fair value of option awards
recognized by us under ASC 718, disregarding estimated forfeitures, for
the year ended December 31, 2009, rather than amounts realized by the
named individuals. See Note 9 to the consolidated financial
statements (“Stock Option Plans and Warrants”) included in our Annual
Report on Form 10-K for the year ended December 31, 2009 for our
valuation assumptions for this expense.
|
(2)
|
Mr.
McNeil was appointed as our President and Chief Executive Officer on
October 7, 2005. Mr. McNeil entered into an employment
agreement on January 1, 2006 for an annual salary of
$108,000. On February 16, 2007, we increased the salary of Mr.
McNeil under this agreement to $190,000.
|
(3)
|
Mr.
Ager was appointed as our Secretary, Treasurer and Chief Financial Officer
on October 7, 2005. Mr. Ager
entered
into an employment agreement on January 1, 2006 pursuant to which he
receives an annual salary of $80,000. On June 14, 2006, Mr.
Ager resigned as Chief Financial Officer. On February 16, 2007, we
increased the salary of Mr. Ager under this agreement to
$160,000.
|
(4)
|
Mr.
Williams was appointed as our Chief Financial Officer on June 14,
2006. Mr. Williams entered into an employment agreement on June
14, 2006 pursuant to which he is paid an annual salary of
$60,000. On February 16, 2007, we increased the salary of Mr.
Williams to $130,000. Other compensation includes direct
benefit to Mr. Williams of $11,260, $22,468 and $61,165 from fees incurred
in 2007, 2008 and 2009, respectively, with Cupit, Milligan, Ogden &
Williams, an affiliate of Mr. Williams, to provide accounting support
services. These amounts were based on the profit percentage
derived by Mr. Williams from the revenue earned by Cupit Milligan in the
applicable period, as applied to the fees for services provided to
us.
|
27
Outstanding
Equity Awards At Fiscal Year-End
The
following table provides information concerning unexercised options for each of
our Named Executive Officers outstanding as of December 31, 2009:
Option
Awards
|
|
||||||||||||||||||||
Name
and
Position
|
Number
of
Securities
Underlying
Options
(#)Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
|
Option
Exercise
Price
|
Option
Expiration
Date
|
Stock
Awards Number
ofShares
or
Units
of
Stock
that
Have
Not
Vested
(#)
|
|||||||||||||||
Ian
R. McNeil
|
500,000 | - | - | $ | 0.44 |
11/21/10
|
- | ||||||||||||||
Director,
President
|
60,000 | - | - | $ | 1.70 |
4/7/11
|
- | ||||||||||||||
and
CEO
|
250,000 | - | - | $ | 2.40 |
6/6/11
|
- | ||||||||||||||
24,800 | - | - | $ | 4.04 |
2/16/12
|
–
|
|||||||||||||||
Carl
S. Ager
|
500,000 | - | - | $ | 0.44 |
11/21/10
|
- | ||||||||||||||
Director,
Vice
|
60,000 | - | - | $ | 1.70 |
4/7/11
|
- | ||||||||||||||
President,
|
250,000 | - | - | $ | 2.40 |
6/6/11
|
- | ||||||||||||||
Treasurer
and
|
24,800 | - | - | $ | 4.04 |
2/16/12
|
- | ||||||||||||||
Secretary
|
|
||||||||||||||||||||
Melvin
L. Williams
|
100,000 | - | - | $ | 2.06 |
6/14/11
|
- | ||||||||||||||
Chief
Financial
|
18,600 | - | - | $ | 4.04 |
2/16/12
|
- | ||||||||||||||
Officer
|
None of
our Named Executives acquired shares of common stock by the exercise of stock
options during the year ended December 31, 2009.
Potential
Payments upon Termination of Employment or a Change of Control
We have
entered into change in control agreements with Ian R. McNeil, our President and
Chief Executive Officer, Carl S. Ager, our Vice President, Secretary and
Treasurer, and Melvin L. Williams, our Chief Financial Officer, in connection
with their respective employment agreements. These agreements provide
for payments to be made to each named executive officer upon termination of
employment.
In the
event that the agreement with Mr. McNeil or Mr. Ager is terminated by us, other
than for cause, we will provide Mr. McNeil or Mr. Ager, as applicable, with six
months written notice or payment equal to six months of their respective monthly
salaries. In the event the employment agreement with Mr. Williams is
terminated by us without cause, we have agreed to pay Mr. Williams an amount
equal to three months’ salary in a lump sum as full and final payment of all
amounts payable under the agreement.
The
severance amounts are payable in cash, in a lump sum. As of December
31, 2009, in the event of a qualifying termination, Mr. McNeil would have been
entitled to cash payments totaling $95,000, Mr. Ager would have been entitled to
cash payments totaling $80,000, and Mr. Williams would have been entitled to
cash payments totaling $32,500.
28
Director
Compensation
This
section provides information regarding the compensation policies for our
directors and amounts paid and securities awarded to these directors in the year
ended December 31, 2009.
From
January 2007 until July 1, 2007 we paid non-employee directors a fee of $1,000
per meeting in cash. During that period, we paid an aggregate of
$5,000 to our non-employee directors for meeting
attendance. Effective July 1, 2007, we pay non-employee directors
compensation of $3,000 per month in cash and $9,000 value of our common stock
per quarter, where the appropriate number of shares to equal $9,000 is
determined by the closing price of our stock on the last trading day of
each quarter. We may also periodically grant additional stock options
to our directors in consideration for their providing services to us as
directors.
Further,
our 2009 Stock Incentive Plan for Directors (“2009 Directors Plan”) provides for
grants to our directors of options to purchase shares of our common stock,
rights to receive the appreciation in value of common shares, awards of common
shares subject to vesting and other restrictions on transfer, and other awards
based on common shares. The 2009 Directors Plan authorizes the
issuance of up 750,000 shares of common stock.
The
following table summarizes the compensation paid to our non-employee directors
for the fiscal year ended December 31, 2009:
Name
|
Fees
Earned
or
Paid in
Cash
($)
|
Stock
Awards
($)(1)(2)
|
Option
Awards
($)(1)(3)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
All
Other
Compensation
($)
|
Total
($)
|
||||||||||||||||||
Martin
B. Oring (4)
|
36,000 | - | 34,431 | - | - | 70,431 | ||||||||||||||||||
Robert
D. McDougal (5)
|
36,000 | 36,000 | - | - | - | 72,000 | ||||||||||||||||||
Harry
B. Crockett (6)
|
36,000 | 36,000 | - | - | - | 72,000 |
(1)
|
Amounts
listed in these columns represent the compensation expense of stock awards
and option awards recognized by us under Accounting Standards Codification
718, “Compensation—Stock Compensation,” (ASC 718) for the year ended
December 31, 2009, rather than the amounts realized by the named
individuals. See Note 9 to the consolidated financial
statements (“Stock Option Plans and Warrants”) included in our Annual
Report on Form 10-K for the year ended December 31, 2009 for our valuation
assumptions for this expense.
|
(2)
|
The
following stock option awards were made to the directors in the table in
2009, as computed in accordance with ASC 718: (i) 6,569 stock options with
an exercise price and a grant date value of $2.74 per share (March 31,
2009), (ii) 7,377 stock options with an exercise price and a grant date
value of $2.44 per share (June 30, 2009), (iii) 9,890 stock options with
an exercise price and a grant date value of $1.82 per share (September 30,
2009), and (iv) 11,250 stock options with an exercise price and a grant
date value of $1.60 per share (December 31, 2009).
|
(3)
|
The
following stock awards were made to the directors in the table in 2009, as
computed in accordance with ASC 718: (i) 6,569 shares with a grant date
value of $2.74 per share (March 31, 2009), (ii) 7,377 shares with a grant
date value of $2.44 per share (June 30, 2009), (iii) 9,890 shares with a
grant date value of $1.82 per share (September 30, 2009), and (iv) 11,250
shares with a grant date value of $1.60 per share (December 31,
2009).
|
29
(4)
|
Mr.
Oring joined our board of directors on October 10, 2008. Mr.
Oring held 242,433 stock options, which included 150,000 unvested stock
options, at December 31, 2009. We granted 35,086 stock options
and no stock awards to Mr. Oring in 2009.
|
(5)
|
Mr.
McDougal held 550,000 stock options and no unvested shares as stock
awards, at December 31, 2009. We granted no stock options and
17,543 shares as stock awards to Mr. McDougal in 2009.
|
(6)
|
Mr.
Crockett held no stock options and no unvested shares as stock awards, at
December 31, 2009. We granted no stock options and 17,543
shares as stock awards to Mr. Crockett in
2009.
|
Limitation
of Liability of Directors
Nevada
Revised Statutes provide that, subject to certain exceptions, or unless the
articles of incorporation or an amendment thereto, provide for greater
individual liability, a director or officer is not individually liable to the
corporation or its stockholders or creditors for any damages as a result of any
act or failure to act in his capacity as a director or officer unless it is
proven that his act or failure to act constituted a breach of his fiduciary
duties as a director or officer, and his breach of those duties involved
intentional misconduct, fraud or a knowing violation of law. Our
Articles of Incorporation do not contain a provision which provides for greater
individual liability of our directors and officers.
Our
Articles of Incorporation include provisions for limiting liability of our
directors and officers under certain circumstances and for permitting
indemnification of directors, officers and certain other persons, to the maximum
extent permitted by applicable Nevada law, including that:
|
·
|
no
director or officer is individually liable to us or our stockholders or
creditors for any damages as a result of any act or failure to act in his
capacity as a director or officer, provided, that the foregoing clause
will not apply to any liability of a director or officer for any act or
failure to act for which Nevada law proscribes this limitation and then
only to the extent that this limitation is specifically
proscribed,
|
|
·
|
any
repeal or modification of the foregoing provision will not adversely
affect any right or protection of a director existing at the time of such
repeal or modification,
|
|
·
|
we
are permitted to indemnify our directors, officers and such other persons
to the fullest extent permitted under Nevada law. Our current
Bylaws include provisions for the indemnification of our directors,
officers and certain other persons, to the fullest extent permitted by
applicable Nevada law, and
|
|
·
|
with respect to the limitation of
liability of our directors and officers or indemnification of our
directors, officers and such other persons, neither any amendment or
repeal of these provisions nor the adoption of any inconsistent provision
of our Articles of Incorporation, will eliminate or reduce the effect of
these provisions, in respect of any matter occurring, or any action, suit
or proceeding accruing or arising or that, but for these provisions, would
accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.
|
30
Item
12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters
The
following table sets forth certain information concerning the number of shares
of our common stock owned beneficially as of April 29, 2010 by: (i) each
person (including any group) known to us to own more than five percent (5%) of
any class of our voting securities, (ii) each of our directors and each of our
named executive officers, and (iii) officers and directors as a
group. Unless otherwise indicated, the stockholders listed possess
sole voting and investment power with respect to the shares shown and the
officers, directors and stockholders can be reached at our principal offices at
2441 West Horizon Ridge Parkway, Suite 120, Henderson, Nevada
89052:
Name and Address of Beneficial Owner
|
Amount and Nature of
Beneficial Ownership
|
Percentage of
Common Stock(1)
|
||||||||
DIRECTORS
AND OFFICERS
|
||||||||||
Ian
R. McNeil
|
17,842,394 | (2)(8) | 14.89 | % | ||||||
Carl
S. Ager
|
17,842,394 | (3)(8) | 14.89 | % | ||||||
Melvin
L. Williams
|
174,600 | (4) | * | |||||||
Robert
D. McDougal
|
826,339 | (5) | * | |||||||
Harry
B. Crockett
|
7,156,107 | (6) | 6.02 | % | ||||||
Martin
B. Oring
|
879,933 | (7) | * | |||||||
Jordan
M. Estra
|
209,000 | (8) | * | |||||||
All
officers and directors
as
a group (7 persons)
|
28,330,767 | 23.25 | % | |||||||
HOLDERS
OF MORE THAN 5% OF OUR COMMON STOCK
|
||||||||||
Nanominerals
Corp.
3500
Lakeside Court, Suite 206
Reno,
Nevada 89509
|
16,600,000 | (9) | 13.95 | % | ||||||
K.
Ian Matheson
2215
Lucerne Circle
Henderson,
Nevada 89014
|
8,362,504 | (10) | 6.70 | % | ||||||
Dr.
Charles A. Ager
17146
– 20th
Avenue
Surrey,
British Columbia, Canada V3S 9N4
|
17,645,190 | (9)(11) | 14.83 | % | ||||||
Luxor
Capital Group, LP
767
Fifth Avenue, 19th Floor
New
York, New York 10153
|
18,076,561 | (12) | 14.49 | % |
31
* Less
than 1%.
(1)
|
Beneficial
ownership is determined in accordance with the rules of the
SEC. Shares of common stock subject to options or warrants
currently exercisable or exercisable within 60 days of the date of this
Report, are deemed outstanding for computing the percentage ownership of
the stockholder holding the options or warrants, but are not deemed
outstanding for computing the percentage ownership of any other
stockholder. Unless otherwise indicated in the footnotes to
this table, we believe stockholders named in the table have sole voting
and sole investment power with respect to the shares set forth opposite
such stockholder's name. Percentage of ownership is based on
118,783,373 shares of common stock outstanding as of April
29, 2010.
|
(2)
|
Consists
of 407,594 shares and options to acquire an additional 834,800 shares of
our common stock held directly by Ian R. McNeil, our Chief Executive
Officer and a member of our board of directors. In addition,
Mr. McNeil is a 17.5% stockholder of Nanominerals, a company that owns
16,400,000 of our outstanding shares of common stock and warrants to
purchase up to 200,000 shares of common stock. However, Mr.
McNeil does not have any voting or investment powers over the 16,400,000
shares or the 200,000 warrants owned by Nanominerals. For
purposes of Rule 13d-3 of the Exchange Act, Mr. McNeil may be deemed to be
a beneficial owner of the 16,400,000 shares and the 200,000 warrants owned
by Nanominerals by virtue of his ownership interest in
Nanominerals. However, for purposes of Section 13(d) of the
Exchange Act, Mr. McNeil disclaims beneficial ownership of all but a
number of shares not in excess of 2,870,000 of the 16,400,000 shares and
35,000 of the 200,000 warrants owned by Nanominerals, which reflects his
17.5% ownership interest in Nanominerals. See footnote (9)
below.
|
(3)
|
Consists
of 407,594 shares and options to acquire an additional 834,800 shares of
our common stock held directly by Carl S. Ager, our Vice President,
Secretary and Treasurer and a member of our board of
directors. In addition, Mr. Ager is a 17.5% stockholder of
Nanominerals, a company that owns 16,400,000 of our outstanding shares of
common stock and warrants to
purchase up to 200,000 shares of common stock. However, Mr.
Ager does not have any voting or investment powers over the 16,400,000
shares or the 200,000 warrants owned by Nanominerals. For
purposes of Rule 13d-3 of the Exchange Act, Mr. Ager may be deemed to be a
beneficial owner of the 16,400,000 shares and the 200,000 warrants owned
by Nanominerals by virtue of his ownership interest in
Nanominerals. However, for purposes of Section 13(d) of the
Exchange Act, Mr. Ager disclaims beneficial ownership of all but a number
of shares not in excess of 2,870,000 of the 16,400,000 shares and 35,000
of the 200,000 warrants owned by Nanominerals, which reflects his 17.5%
ownership interest in Nanominerals. See footnote (9)
below.
|
(4)
|
Consists
of 56,000 shares held directly by Melvin L. Williams and options to
acquire an additional 118,600 shares of our common
stock.
|
(5)
|
Consists
of 238,155 shares held directly by Robert D. McDougal, 38,184 shares held
by Robert D. McDougal as Trustee of the Robert D. McDougal and Edna D.
McDougal Family Trust Dated December 13, 2007 and options to acquire an
additional 550,000 shares of our common
stock.
|
(6)
|
Consists
of 7,122,007 shares held by Harry B. Crockett, as Trustee of the Marcia
and Harry Crockett 2004 Family Trust UA dated April 24, 2004 and 34,100
shares held directly by Mr.
Crockett.
|
(7)
|
Consists
of 455,000 shares held directly by Martin B. Oring, 105,000 shares held by
Martin Oring Financial Trust dated December 20, 2006, a family trust of
which Mr. Oring’s wife serves as a trustee, and options and warrants to
acquire an additional 319,933 shares of common stock held by Mr. Oring and
his affiliated entities.
|
(8)
|
Consists
of an aggregate of 4,000 shares held directly by Jordan M. Estra (jointly
with his wife) and in his personal IRA, and options to acquire an
additional 205,000 shares of our common stock held by Mr. Estra and his
affiliated entities.
|
(9)
|
Nanominerals
is a privately held Nevada corporation which owns 16,400,000 shares of our
common stock and warrants to purchase up to 200,000 shares of common
stock. Ian R. McNeil and Carl S. Ager, who are our officers and
directors, each own 17.5% of the issued and outstanding shares of
Nanominerals. Dr. Charles A. Ager, the sole director and
officer of Nanominerals, and his wife, Carol Ager, collectively own 35% of
the issued and outstanding shares of Nanominerals. Further,
Messrs. Ager and McNeil have given an irrevocable proxy to Dr. Ager
to vote their respective shares of Nanominerals during the time that Mr.
Ager or Mr. McNeil, as the case may be, serves as one of our directors or
executive officers. Dr. Ager has sole voting and investment
powers over the 16,400,000 shares and the 200,000 warrants owned by
Nanominerals. A group of additional shareholders of
Nanominerals, none of who is an officer or director of Searchlight or
Nanominerals, collectively own 30% of the outstanding shares of
Nanominerals.
|
(10)
|
Mr.
Matheson beneficially owns 8,362,504 shares of common
stock. These shares include 1,140,002 shares held directly by
K. Ian Matheson, 1,222,502 shares held by Mr. Matheson’s wife and related
companies, warrants to purchase an additional 6,000,000 shares held
directly by Mr. Matheson.
|
32
(11)
|
These
shares include the 16,400,000 shares and warrants to purchase up to
200,000 shares of common stock owned by Nanominerals. Pursuant
to a Schedule 13D filed by Dr. Ager, Dr. Ager and his wife, Carol Ager,
collectively own 35% of the outstanding shares of
Nanominerals. Dr. Ager is the sole director and officer of
Nanominerals. Further, Messrs. Ager and McNeil have given an
irrevocable proxy to Dr. Ager to vote their respective shares of
Nanominerals during the time that Mr. Ager or Mr. McNeil, as the case
may be, serves as one of our directors or executive
officers. Dr. Ager has sole voting and investment powers over
the 16,400,000 shares and the 200,000 warrants owned by
Nanominerals. See footnote (8) above. In addition,
Dr. Ager’s affiliate, Geotech Mining Inc., owns 140,000 shares of common
stock. Further Mrs. Ager owns 765,190 shares in her own name,
and her affiliate, Geosearch Inc., owns an additional 140,000
shares.
|
(12)
|
Luxor
Capital Group, LP (“Luxor Capital Group”) acts as the investment manager
of Luxor Capital Partners, LP, Luxor Spectrum, LLC, Luxor Wavefront, LP,
Luxor Capital Partners Offshore Master Fund, LP, Luxor Capital Partners
Offshore, Ltd., Luxor Spectrum Offshore Master Fund, LP and Luxor Spectrum
Offshore, Ltd. (collectively, the “Luxor Group Funds”) and to an account
it separately manages (the “Luxor Separate Account”). The Funds
beneficially own an aggregate of 11,905,895 shares of common
stock and warrants to purchase up to an additional 6,000,000 shares of
common stock. The securities beneficially owned by the Funds
are held directly owned, in various amounts, by Luxor Capital
Partners, LP, Luxor Wavefront, LP and
Luxor Capital Partners Offshore Master Fund, LP. There are an
additional 170,666 shares of common stock held in the Luxor Separate
Account. Luxor Management, LLC (“Luxor Management”) is the
general partner of Luxor Capital Group. Christian Leone is the
managing member of Luxor Management. Luxor Capital Partners
Offshore Master Fund, LP is a subsidiary of Luxor Capital
Partners Offshore, Ltd., and Luxor Spectrum Offshore Master Fund, LP is a
subsidiary of Luxor Spectrum
Offshore, Ltd. LCG Holdings, LLC (“LCG Holdings”) serves as the
general partner or the managing member of certain of the
Funds. Mr. Leone is the managing member of LCG
Holdings. Luxor Capital Group, Luxor Management and Mr. Leone
may be deemed to be the beneficial owner of the 18,076,561 shares owned by
the Funds and held in the Luxor Separate Account. LCG Holdings
may be deemed to be the beneficial owner of the 17,905,895 shares owned by
the Funds.
|
Item
13. Certain Relationships and Related
Transactions, and Director Independence
General
We have
ongoing business relationships with affiliates of our management and principal
stockholders. In particular, we have continuing obligations under the
agreements under which we acquired the assets relating to our Clarkdale Slag
Project. We remain obligated to pay a royalty which may be generated
from the operations of the Clarkdale Slag Project to Nanominerals, one of our
principal stockholders, which is an affiliate of two members of our executive
management and board of directors, Carl S. Ager and Ian R. McNeil. We
also have engaged Nanominerals as a paid consultant to provide technical
services to us. In addition, we have a similar royalty arrangement
with VRIC, an affiliate of another member of our board of directors, Harry B.
Crockett. Further, one of our board members, Robert D. McDougal,
serves as the chief financial officer and a director of Ireland Inc., a publicly
traded, mining related company, which is an affiliate of
Nanominerals. For these reasons, Martin B. Oring and Jordan M. Estra
are the only independent members of our board of directors. We had
negotiated the revenue sharing agreements with each of Nanominerals and VRIC
prior to the time that Messrs. Ager, McNeil and Crockett, as applicable, became
board members. These persons are subject to a fiduciary duty to
exercise good faith and integrity in handling our affairs. However,
the existence of these continuing obligations may create a conflict of interest
between us and our board members and senior executive management, and any
disputes between us and such persons over the terms and conditions of these
agreements that may arise in the future may raise the risk that the negotiations
over such disputes may not be subject to being resolved in an arms’ length
manner. In addition, Nanominerals’ interest in Ireland Inc. and its
other mining related business interests may create a conflict of interest
between us and our board members and senior executive management who are
affiliates of Nanominerals. Further, the interests of K. Ian
Matheson, one of our principal stockholders (and a former officer and director),
in Royal Mines and Minerals Corp., a publicly traded mining company based in
Nevada, of which Mr. Matheson is an affiliate, and other mining related business
interests may create a conflict of interest between us and Mr.
Matheson.
33
Although
our management intends to avoid situations involving conflicts of interest and
is subject to a Code of Ethics, there may be situations in which our interests
may conflict with the interests of those of our management or their
affiliates. These could include:
|
·
|
competing
for the time and attention of
management,
|
|
·
|
potential
interests of management in competing investment ventures,
and
|
|
·
|
the
lack of independent representation of the interests of the other
stockholders in connection with potential disputes or negotiations over
ongoing business relationships.
|
Although
we only have two independent directors, the board of directors has adopted
a written Related Person Transactions Policy, that describes the procedures used
to identify, review, approve and disclose, if necessary, any transaction or
series of transactions in which: (i) we were, are or will be a participant, (ii)
the amount involved exceeds $120,000, and (iii) a related person had, has or
will have a direct or indirect material interest. There can be no
assurance that the above conflicts will not result in adverse consequences to us
and the interests of the other stockholders.
Prior to
the adoption of the Related Person Transactions Policy on March 17, 2009,
related party transactions were subject to our Code of Ethics, which was adopted
July 18, 2006, and an unwritten policy that any transactions with related
persons would be approved of by a majority of our independent, disinterested
directors, and would comply with the Sarbanes Oxley Act and other securities
laws and regulations. However, we did not have any independent
directors until October 2008. At any point at which we did not have
independent directors on our board, any transactions with related persons were
approved of by a majority of our then disinterested directors.
The
following is a description of related party transactions in the three most
recent fiscal years ended December 31, 2009.
Transactions
with Certain Former Members of Management
As of
December 31, 2006, we had a related party loan payable of $382,792, which
consisted of borrowings from an affiliate of our former officers and
directors. In addition, $360,056 was included in accounts payable
that was an intercompany payable to a former subsidiary dating back to
2002. We recorded the removal of these items at December 31, 2007 as
capital transactions of related parties and increased paid-in capital by
$742,848 based upon our internal review of the status of these items and
determination that, based on the failure of any potential claimants to make
demand for payment of such amounts, these items had been canceled by such
affiliates and should be treated as capital contributions related to our
restructuring. In 2009, we updated our internal review of the status
of the payables and recorded a $270,457 gain resulting from relief of
liabilities that were cleared based on expiration of United Kingdom statutes of
limitations. The gain was reflected as a gain from discontinued
operations.
34
Transactions
with Searchlight Claim Owners and Affiliates of K. Ian Matheson
In
connection with our February 2005 change of business, on February 8, 2005, we
entered into mineral option agreements with the Searchlight Claim owners to
acquire 20 mineral claims representing an area of 3,200 acres located in Clark
County, south of Searchlight, Nevada. The acquisition of the
Searchlight Claims was initially valued at a negotiated price between us and the
claim owners of $2,000 per claim for a total of $40,000 plus actual costs
incurred in maintaining the claims of $87,134. Further, on April 12,
2005, Mr. Harlingten and his affiliates transferred 95,400,000 shares of our
common stock to Mr. Matheson in connection with Mr. Matheson’s bringing the
business opportunity relating to the Searchlight Claims to us. Prior
to entering into the option agreements with us, the Searchlight Claim owners had
optioned their respective interests in the claims to Searchlight Minerals Inc.
(“SMI”), a company controlled by Mr. Matheson. In connection with our
acquisition of the Searchlight Claims, SMI assigned to us SMI’s rights in the
Searchlight Claims under the prior option agreements with the Searchlight Claim
owners. The 95,400,000 shares represented approximately 88% of the
outstanding shares of common stock at the time of such
transfer. Subsequently, on April 29, 2005, Mr. Matheson cancelled
70,000,000 shares of our common stock held by him for no consideration for the
purpose of making our capitalization more attractive to future equity
investors.
Mr.
Matheson was appointed as our Chief Executive Officer, Chief Financial Officer,
President, Secretary and Treasurer and as a member of our board of directors on
February 10, 2005. He resigned as Chief Executive Officer, Chief
Financial Officer, President, Secretary and Treasurer on October 7, 2005, and
resigned from our board of directors on February 16, 2007.
Under the
option agreement with the Searchlight Claim owners, we had agreed to issue an
aggregate of 5,600,000 shares of our common stock in four equal installments of
1,400,000 shares over a three year period to the claim owners, after which all
of the claim owner’s rights and interests in the Searchlight Claims would be
assigned to us. We issued the initial 4,200,000 shares of the
5,600,000 shares in three installments of 1,400,000 shares on July 7, 2005, July
27, 2006 and June 29, 2007. During the second quarter of 2008, the
Searchlight Claim owners transferred title to the Searchlight Claims to us in
consideration of our agreement to issue to the claim owners the balance of the
1,400,000 shares of common stock by June 30, 2008. We issued the
1,400,000 shares to the remaining Searchlight Claim owners in June 2008, and now
have issued all 5,600,000 of the shares of our common stock required to be
issued to the Searchlight Claim owners. We valued the shares issued
to obtain the Searchlight Claims at their market price at the date of the
issue. In connection with this transaction, K. Ian Matheson (one of
our principal stockholders and a former member of the board of directors) and
his wife, Debra Matheson, and his affiliated companies (including Pass Minerals
Inc., Gold Crown Minerals Inc. and Kiminco Inc.), have received 1,050,000 shares
of common stock. Mr. Matheson may be considered a promoter of the
Company by virtue of his positions in the Company and with certain of the
Searchlight Claim owners. Also, in connection with the acquisition of
the Searchlight Claims in February 2005, Geotech Mining Inc. and Geosearch
Mining Inc., which are affiliates of Dr. Charles A. Ager and his wife, Carol
Ager, who were Searchlight Claim owners, have each received 140,000 shares of
common stock with respect to the transfer of title to their interests in the
Searchlight Claims under the option agreements for the Searchlight Gold
Project. Dr. Ager and his affiliate, Nanominerals, were also our
affiliates at the time of the final three stock issuances in connection with the
option agreement to acquire the Searchlight Claims. Mr. Matheson was
one of our officers and/or directors at the time of the initial two stock
issuances in connection with the option agreement to acquire the Searchlight
Claims, and has been one of our principal stockholders at the time of all such
issuances.
35
Transactions
with Nanominerals Corp. and Affiliates
General. Nanominerals
is a private Nevada corporation principally engaged in the business of mineral
exploration. Nanominerals does not have any employees and relies on
third party consultants for the provision of services. Nanominerals
owns approximately 15.13% of our issued and outstanding shares of common
stock. Dr. Ager and Mrs. Ager, collectively own 35% of the
outstanding common stock of Nanominerals. Two of our executive
officers and directors, Carl S. Ager and Ian R. McNeil, are stockholders of
Nanominerals, but neither currently serves as an officer, director or employee
of Nanominerals. Messrs. Ager and McNeil each own 17.5% of the issued
and outstanding shares of common stock of Nanominerals, representing an
aggregate of 35% of the outstanding common stock of Nanominerals. Dr.
Ager currently is the sole officer and director of Nanominerals, and controls
its day to day operations. Further, Messrs. Ager and McNeil have
given an irrevocable proxy to Dr. Ager to vote their respective shares of
Nanominerals during the time that Mr. Ager or Mr. McNeil, as the case may be,
serves as one of our directors or executive officers. Dr. Ager has
sole voting and investment powers over the 16,400,000 shares and 200,000 common
stock purchase warrants owned by Nanominerals. Messrs. Ager and
McNeil are the son and son-in-law, respectively, of Dr. Ager and Mrs.
Ager. Dr. Ager, Mr. Ager and Mr. McNeil may be considered promoters
of the Company by virtue of their positions in the Company and
Nanominerals. Nanominerals is the principal stockholder of another
publicly traded mining company (Ireland Inc.) and has other mining related
business interests which may create a conflict of interest between us and our
board members and senior executive management who are affiliates of
Nanominerals.
Acquisition of
Searchlight Claims. In connection with the acquisition of the
Searchlight Claims in February 2005, Geotech Mining Inc. and Geosearch Mining
Inc., which are affiliates of Dr. Ager and Mrs. Ager, who were Searchlight Claim
owners, have each received 140,000 shares of common stock with respect to the
transfer of title to their interests in the Searchlight Claims under the option
agreements for the Searchlight Gold Project.
Acquisition of
Interest of Joint Venture in Clarkdale Slag
Project. Under the terms of an Assignment Agreement, dated
June 1, 2005, and as amended on August 31, 2005 (for the purpose of extending
the closing date of the transaction by requiring us to confirm receipt of $1.5
million in financing by September 15, 2005), and October 24, 2005, Nanominerals
assigned to us its 50% financial interest and the related obligations arising
under a Joint Venture Agreement, dated May 20, 2005, between Nanominerals and
VRIC. The joint venture related to the exploration, testing,
construction and funding of the Clarkdale Slag Project.
On
October 24, 2005, in connection with the terms of the Assignment Agreement with
Nanominerals, we issued to Nanominerals and its designates warrants to purchase
12,000,000 shares of our common stock exercisable through May 31, 2015, at an
exercise price of $0.375 per share. At the instruction of
Nanominerals, we issued 2,000,000 of the 12,000,000 warrants to Clarion Finanz
AG, a designate of Nanominerals.
In
addition, in connection with the Assignment Agreement, we paid Nanominerals
$690,000 in respect of certain payments made by Nanominerals towards the
acquisition of the Clarkdale Slag Project, including reimbursement of payments
previously made by Nanominerals to VRIC under the Joint Venture Agreement, and
reimbursement of other previously paid expenses incurred by Nanominerals
relating to the Clarkdale Slag Project.
Further,
under the terms of the Assignment Agreement, we assumed the obligations of
Nanominerals under the Joint Venture Agreement relating to the Clarkdale Slag
Project, including the funding of a four phase program:
|
·
|
drilling
and ore reserve studies (Phase 1),
|
36
|
·
|
a
report of the commercial, technical and environmental feasibility of the
processing and smelting of metals and other mineral materials from a
deposit that is prepared in such depth and detail as would be acceptable
to lending institutions in the United States, or a “bankable feasibility
study” (Phase 2),
|
|
·
|
the
construction of a commercial production facility to process slag
materials, as recommended by the bankable feasibility study (Phase 3),
and
|
|
·
|
the
expansion of additional commercial production capacity to process slag
materials (Phase 4).
|
In
addition, we appointed Ian R. McNeil, Carl S. Ager and Robert D. McDougal, as
nominees of Nanominerals, to serve on our board of directors, thereby
constituting a majority of the board members.
Further,
under the terms of the Assignment Agreement, we have a continuing obligation to
pay Nanominerals a royalty consisting of 2.5% of the “net smelter returns” on
any and all proceeds of production from the Clarkdale Slag
Project. Under the agreements, we agreed to pay Nanominerals a 5%
royalty on “net smelter returns” payable from our 50% joint venture interest in
the production from the Clarkdale Slag Project. The original June 1,
2005 assignment agreement did not include a specific definition of the term “net
smelter returns.” However, the parties agreed to a specific
definition of the term “net smelter returns” in the October 24, 2005 amendment,
which specific definition we believe conforms with the industry standard
interpretation of such term. Upon the assignment of the assignment to
us of VRIC’s 50% interest in the Joint Venture Agreement in connection with our
reorganization with Transylvania International, Inc., we continue to have an
obligation to pay Nanominerals a royalty consisting of 2.5% of the net smelter
returns on any and all proceeds of production from the Clarkdale Slag
Project.
The
following sets forth certain information regarding the acquisition of the 50%
financial interest in the Joint Venture Agreement with respect to the Clarkdale
Slag Project from Nanominerals, as such information relates to Dr. Charles A.
Ager, Carl S. Ager and Ian R. McNeil, who may be considered promoters of the
Company by virtue of their positions in the Company and
Nanominerals:
|
·
|
We
acquired the assets consisting of the 50% financial interest in the Joint
Venture Agreement with respect to the Clarkdale Slag Project from
Nanominerals.
|
|
·
|
We
applied ASC 805-10-25-1 with regard to the acquisition of the joint
venture interest in the Clarkdale Slag Project from
Nanominerals. We determined that the acquisition of the joint
venture interest in the Clarkdale Slag Project did not constitute an
acquisition of a business, as that term is defined in ASC 805-10-55-4, and
we recorded the acquisition as a purchase of
assets.
|
|
·
|
The
Assignment Agreement and each of the August 31, 2005 and October 24, 2005
amendments, including the determination of the amount at which we acquired
such assets, were negotiated on our behalf by K. Ian Matheson, who served
as an executive officer and director at the time of the execution of the
Assignment Agreement and the August 31, 2005 amendment and as a director
at the time of the execution of the October 24, 2005
amendment.
|
|
·
|
The
$690,000 which we paid to Nanominerals in respect of the acquisition of
the Clarkdale Slag Project represents the cost to Nanominerals of the
assets consisting of the rights in the Joint Venture Agreement assigned by
Nanominerals in connection with the Assignment
Agreement.
|
37
Consulting
Arrangement with Nanominerals. Nanominerals provides us with
the use of its laboratory, instrumentation, milling equipment and research
facilities which has allowed us to perform tests and analysis both effectively
and in a more timely manner than would otherwise be available from other such
consultants. We believe that Nanominerals’ knowledge and
understanding of the science and technology in our business, along with its
understanding of how to implement our business plan in a practical manner, has
made Nanominerals an important part of our technical team. Dr. Ager
performs the services for us in his authorized capacity with Nanominerals under
our consulting arrangement with Nanominerals. Nanominerals also
engages the services of outside technical consultants to perform the services
for us, depending on the specific goal of a particular project. Some
of our consultants, such as Dr. Hewlett, have worked directly with Nanominerals
in an ongoing manner and performed day-to-day work and tests. The
consulting services provided by Nanominerals are highly specialized and unique
to the mineral exploration industry, and there is a limited number of experts
that can perform these types of services. We currently do not rely
solely on Nanominerals to provide us with technical expertise to guide the
project technically. However, Nanominerals continues to be an
important consultant to assist us with our technical challenges.
We pay
Nanominerals a $30,000 per month fee, together with expense reimbursement and
some expenses, to cover their services. The services provided by
Nanominerals include:
|
·
|
SEM/EDS
Studies: Nanominerals uses SEM/EDS to identify the
minerals (gold, silver, copper and zinc) in the slag material and
understand the physical make-up of the slag. This information
has provided us with an understanding how to potentially liberate the
minerals from the slag material by mechanical methods
(grinding). This type of work is highly specialized and very
unique to the mineral exploration
industry.
|
|
·
|
Grinding
Studies: Looking at the ground material again using
SEM/EDS, Nanominerals has assisted us in testing a number of different
grinders and variables (size of material fed to grinder, grinding time,
etc.) to find the best way to mechanically liberate and expose the
minerals within the slag material. Without mechanical
liberation, the chemicals used in the extraction process (leaching) cannot
perform. Therefore, grinding is a crucial step in the overall
processing of the slag material. The unique nature of the
slag material (i.e. it is very hard and abrasive and the minerals are
entombed within the slag) makes the proper grinding of the slag material
very difficult. Grinding and crushing are commonly used in the
mining industry.
|
|
·
|
Analytical and
Extraction Studies: Nanominerals has provided us the use of its
laboratory, instrumentation, milling equipment and research facilities and
has performed (and continues to perform) analytical and extraction studies
for the presence of gold, silver, copper and zinc in the slag
material. Nanominerals has tested different variables
(chemicals, pH, ORP, machines, instruments, etc.) to attempt to determine
the most effective methods to analyze and extract the desired
metals.
|
38
|
·
|
Flow-Sheet
Development: Nanominerals,
in conjunction with Dr. Hewlett, has developed a flow sheet for the
Clarkdale Project to attempt to determine methods to process the slag
material on a large scale. The flow-sheet for the first
production module has been designed with the intention to allow for the
most effective and economic extraction of metals from the slag material
with the least environmental impact. Nanominerals assisted us
in: (i) building the pilot plant, where the grinding, leaching, filtering
and extraction of the metals was performed, (ii) gathering information
from the pilot plant, and (iii) making changes to the design, equipment
and chemicals used in the process of extracting metals from the slag
material. Nanominerals continues to assist us in determining
the most effective methods used in the process of extracting metals from
the slag material.
|
|
·
|
Financings: Nanominerals
has introduced us to investors and potential investors which have led to
participation in our previous financings. Nanominerals has also
provided assistance to us when potential financiers performed technical
due diligence on our projects, including making technical presentations to
potential investors. We have not provided special fees to
Nanominerals in connection with such
financings.
|
We
commenced our consulting arrangement with Nanominerals in 2005 following the
completion of the Assignment Agreement relating to the Clarkdale Slag
Project. In 2005, we only reimbursed Nanominerals for technical
expenses. However, in 2006, we began to pay Nanominerals the $30,000
monthly fee, plus expense reimbursement due to the significant amount of work
that Nanominerals was performing for us. This consulting arrangement
was approved by the board, including by K. Ian Matheson, who has never had a
direct or indirect financial interest in Nanominerals.
The board
initially determined that $30,000 per month fee was a reasonable rate for
Nanominerals based on several factors:
|
·
|
the
technical services provided by Nanominerals were highly specialized and
required scientists with significant experience in mining, metallurgy and
chemistry.
|
|
·
|
we
required a significant amount of time to be devoted to our projects (most
importantly at Clarkdale). Nanominerals was available to us
nearly every day (at least 100 hours per
month).
|
|
·
|
Nanominerals
had available resources, such as outside scientific contacts whom the
consultant could use to perform specific work (i.e. SEM specialists,
metallurgists in certain specialized fields,
etc.).
|
|
·
|
Nanominerals
had instrumentation and laboratory facilities at its disposal, either to
be able to prepare or provide technical presentations and coordinate
technical due-diligence presentations to prospective
investors.
|
|
·
|
Nanominerals
was willing to provide the services to us on a month-to-month with the
ability to terminate at any time.
|
Given the
time commitment that we required and the general market rate for qualified
consultants of approximately $500 per hour, anticipated monthly fees for the
services that Nanominerals was to perform were estimated to be a minimum of
$50,000. Given these criteria, we believe that engaging Nanominerals
to perform these services at the $30,000 monthly rate, plus expense
reimbursement, has provided an advantage to us over other technical
consultants.
39
During
the years ended December 31, 2007, 2008 and 2009, we utilized the services of
Nanominerals to provide technical assistance and financing related activities
primarily to the Clarkdale Slag Project and Searchlight Gold
Project. In addition, Nanominerals provided us with the use of its
laboratory, instrumentation, milling equipment and research
facilities. For the year ended December 31, 2007, we incurred total
fees and reimbursement of expenses to Nanominerals of $360,000 and $105,346,
respectively. For the year ended December 31, 2008, we incurred total
fees and reimbursement of expenses to Nanominerals of $360,000 and $104,269,
respectively. For the year ended December 31, 2009, we incurred total
fees and reimbursement of expenses to Nanominerals of $360,000 and $116,145,
respectively. At December 31, 2009, we had an outstanding balance due
to Nanominerals of $167,905.
Other Agreements
with Nanominerals. We currently have a verbal understanding
with Nanominerals which provides us with the use of a patented halide leach
(comprised of chloride and bromide) technology at the Clarkdale Slag Project
site without a royalty. The expiration date of the patent would have
been October 28, 2014. However, the US Patent and Trademark Office
website indicates that the patent has expired for failure to pay maintenance
fees on the patent, and, therefore, the patent is now in the public
domain. As a result of the expiration of the patent, we do not
believe that we will need a formal agreement to use the technology at the
Clarkdale Slag Project site.
November 2009
Private Placement. On November 12, 2009, we completed a
private placement of 12,078,596 units of our securities of our securities to
certain investors, including Nanominerals, at a purchase price of $1.25 per
unit, resulting in aggregate gross proceeds to us of
$15,098,245. Each unit consists of one share of our common stock and
one half share of common stock purchase warrant. In connection with
the private placement, Nanominerals purchased 400,000 units of securities at an
aggregate purchase price of $500,000.
Transactions
with Verde River Iron Company and Harry B. Crockett
Under the
terms of a letter agreement, dated November 22, 2006 and as amended on February
15, 2007, with VRIC, Harry B. Crockett and Gerald Lembas, and an Agreement and
Plan of Merger with VRIC and Transylvania, dated and completed on February 15,
2007, we acquired all of the outstanding shares of Transylvania from VRIC
through the merger of Transylvania into our wholly-owned subsidiary, Clarkdale
Minerals LLC, a Nevada limited liability company. VRIC is an
affiliate of our director, Harry B. Crockett. As a result of the
merger, we own title to the approximately 200 acre property underlying a slag
pile located in Clarkdale, Arizona from which we are seeking to recover base and
precious metals through the reprocessing of slag material, approximately 600
acres of additional land adjacent to the project property and a commercial
building in the town of Clarkdale, Arizona. In accordance with the
terms of these agreements, we: (i) paid $10,100,000 in cash to VRIC, and (ii)
issued 16,825,000 shares of our common stock to Harry B. Crockett and Gerald
Lembas, the equity owners of VRIC, and certain designates of VRIC under the
agreements, who are not our affiliates. The $10,100,000 cash payment
to VRIC consisted of (i) $9,900,000 in connection with the acquisition of
Transylvania and (ii) $200,000 paid to VRIC for an option to enter into the
reorganization with Transylvania.
Under the
terms of our 2007 agreements to acquire Transylvania with VRIC, we have the
following continuing obligations:
·
|
we
agreed to continue to pay VRIC $30,000 per month (which amount we had
previously paid to VRIC under the Joint Venture Agreement since June 2005)
until the earlier of: (i) the date that is 90 days after we receive a
bankable feasibility study, or (ii) the tenth anniversary of the date of
the execution of the letter
agreement,
|
40
·
|
we
have agreed to pay VRIC $6,400,000 within 90 days after we receive a
bankable feasibility study,
|
·
|
we
have agreed to pay VRIC a minimum annual royalty of $500,000, commencing
90 days after we receive a bankable feasibility study, and an additional
royalty consisting of 2.5% of the “net smelter returns” on any and all
proceeds of production from the Clarkdale Slag Project. The
minimum royalty remains payable until the first to occur of: (1) the end
of the first calendar year in which the percentage royalty equals or
exceeds $500,000, or (2) February 15, 2017. In any calendar
year in which the minimum royalty remains payable, the combined minimum
royalty and percentage royalty will not exceed $500,000,
and
|
·
|
we
have agreed to pay VRIC an additional amount of $3,500,000 from the net
cash flow of the Clarkdale Slag Project after such time that we have
constructed and are operating a processing plant or plants that are
capable of processing approximately 2,000 tons of slag material per day at
the Clarkdale Slag Project. The acquisition agreement does not
include a specific provision with respect to the periods at the end of
which “net cash flow” is measured, once the production threshold has been
reached. Therefore, the timing and measurement of specific
payments may be subject to dispute. The parties intend to
negotiate a clarification of this provision in good faith before the
production threshold has been
reached.
|
41
We have
recorded a liability for the $30,000 monthly payment commitment using imputed
interest based on our best estimate of future cash flows. The
effective interest rate used was 8.00%, resulting in an initial present value of
$2,501,187 and imputed interest of $1,128,813. The expected term used
was ten years, which represents the maximum term the VRIC liability is payable
if the Project Funding Date does not occur by the tenth anniversary of the date
of the execution of the letter agreement. Actual payments made under
the letter agreement subsequent to the acquisition have been made as
follows:
Total Payments
|
Amount
Applied to
Interest
|
Amount
Applied to
Principal
|
Balance
|
|||||||||||||
2/15/07
Discounted Acquisition Liability
|
$ | 2,501,187 | ||||||||||||||
Quarter
Ended 3/31/07
|
$ | 60,000 | $ | 17,942 | $ | 42,058 | 2,459,129 | |||||||||
Quarter
Ended 6/30/07
|
90,000 | 48,910 | 41,090 | 2,418,039 | ||||||||||||
Quarter
Ended 9/30/07
|
90,000 | 48,082 | 41,918 | 2,376,121 | ||||||||||||
Quarter
Ended 12/31/07
|
90,000 | 47,239 | 42,761 | 2,333,360 | ||||||||||||
2007
Totals
|
330,000 | 162,173 | 167,827 | 2,333,360 | ||||||||||||
Quarter
Ended 3/31/08
|
90,000 | 46,378 | 43,622 | 2,289,738 | ||||||||||||
Quarter
Ended 6/30/08
|
90,000 | 45,499 | 44,501 | 2,245,237 | ||||||||||||
Quarter
Ended 9/30/08
|
90,000 | 44,603 | 45,397 | 2,199,840 | ||||||||||||
Quarter
Ended 12/31/08
|
90,000 | 43,690 | 46,310 | 2,153,530 | ||||||||||||
2008
Totals
|
360,000 | 180,170 | 179,830 | 2,153,530 | ||||||||||||
Quarter
Ended 3/31/09
|
90,000 | 42,757 | 47,243 | 2,106,287 | ||||||||||||
Quarter
Ended 6/30/09
|
90,000 | 41,806 | 48,194 | 2,058,093 | ||||||||||||
Quarter
Ended 9/30/09
|
90,000 | 40,835 | 49,165 | 2,008,928 | ||||||||||||
Quarter
Ended 12/31/09
|
90,000 | 39,845 | 50,155 | 1,958,774 | ||||||||||||
2009
Totals
|
$ | 360,000 | $ | 165,244 | $ | 194,756 | $ | 1,958,774 |
Other
than the total $30,000 monthly payment, which includes imputed interest as set
forth in the table above, we have accounted for the payments that are dependent
upon future events as contingent payments. Upon meeting the
contingency requirements described above, the purchase price of the Clarkdale
Slag Project will be adjusted to reflect the additional
consideration.
Transactions
with Affiliate of our Chief Financial Officer
During
the years ended December 31, 2009, 2008 and 2007, we utilized the accounting
firm of Cupit, Milligan, Ogden & Williams, an affiliate of Melvin L.
Williams, our Chief Financial Officer, to provide accounting support
services.
We
incurred total fees to Cupit Milligan of $139,011, $83,213 and $31,277 for the
years ended December 31, 2009, 2008 and 2007, respectively. We also
reimbursed expenses to Cupit Milligan of $120 and $1,144 for the years ended
December 31, 2008 and 2007, respectively. At December 31, 2009, we
had an outstanding balance due to the firm of $26,785. These
accounting support services included bookkeeping input for Clarkdale facility,
assistance in preparing working papers for quarterly and annual reporting, and
preparation of federal and state tax filings. These expenses do not
include any fees for Mr. Williams’ time in directly supervising the support
staff. Mr. Williams’ compensation has been provided in the form of
salary. The direct benefit to Mr. Williams of the above Cupit,
Milligan fees was $61,165, $22,468 and $11,260 for the years ended December 31,
2009, 2008 and 2007, respectively.
42
We
believe that all transactions with our affiliates have been entered into on
terms no less favorable to us than could have been obtained from independent
third parties. We intend that any transactions with officers,
directors and 5% or greater stockholders will be on terms no less favorable to
us than could be obtained from independent third parties.
We
currently only have two independent directors and the existence of these
continuing obligations to our affiliates may create a conflict of interest
between us and all of our board members and senior executive management, and any
disputes between us and such persons over the terms and conditions of these
agreements that may arise in the future may raise the risk that the negotiations
over such disputes may not be subject to being resolved in an arms’ length
manner. We intend to make good faith efforts to recruit additional
independent persons to our board of directors. We intend that any
transactions with our affiliates will be approved by a majority of our
independent, disinterested directors and will comply with the Sarbanes Oxley Act
and other securities laws and regulations.
Item
14. Principal Accountant Fees and
Services
The
following table shows the fees paid or accrued by us for the audit and other
services provided by Brown Armstrong Paulden McCown Starbuck Thornburgh &
Keeter Accountancy Corporation, our independent auditors for the years ended
December 31, 2009 and 2008:
2009
|
2008
|
|||||||
Audit
Fees
|
$ | 122,210 | $ | 80,436 | ||||
Audit-Related
Fees
|
- | - | ||||||
Tax
Fees
|
- | - | ||||||
All
Other Fees
|
- | 34,643 | ||||||
Total
|
$ | 122,210 | $ | 115,079 |
The
following table shows the fees paid or accrued by us for the audit and other
services provided by Kyle L. Tingle, CPA, LLC for the years ended December 31,
2009 and 2008:
2009
|
2008
|
|||||||
Audit
Fees
|
$ | - | - | |||||
Audit-Related
Fees
|
- | - | ||||||
Tax
Fees
|
- | - | ||||||
All
Other Fees
|
- | 3,900 | ||||||
Total
|
$ | - | $ | 3,900 |
As
defined by the SEC, (i) “audit fees” are fees for professional services rendered
by our principal accountant for the audit of our annual financial statements and
review of financial statements included in our Form 10-QSB, or for services that
are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for those fiscal years, (ii) “audit-related
fees” are fees for assurance and related services by our principal accountant
that are reasonably related to the performance of the audit or review of our
financial statements and are not reported under “audit fees,” (iii) “tax fees”
are fees for professional services rendered by our principal accountant for tax
compliance, tax advice, and tax planning, and (iv) “all other fees” are fees for
products and services provided by our principal accountant, other than the
services reported under “audit fees,” “audit-related fees,” and “tax
fees.”
43
Under
applicable SEC rules, the Audit Committee is required to pre-approve the audit
and non-audit services performed by the independent auditors in order to ensure
that they do not impair the auditors’ independence. The SEC’s rules
specify the types of non-audit services that an independent auditor may not
provide to its audit client and establish the Audit Committee’s responsibility
for administration of the engagement of the independent auditors.
Consistent
with the SEC’s rules, the audit committee charter requires that the Audit
Committee review and pre-approve all audit services and permitted non-audit
services provided by the independent auditors to us or any of our
subsidiaries. The Audit Committee may delegate pre-approval authority
to a member of the Audit Committee and if it does, the decisions of that member
must be presented to the full Audit Committee at its next scheduled
meeting.
44
PART
IV
Item
15. Exhibits and Financial Statement
Schedules
EXHIBIT
INDEX
The
following is a complete list of exhibits filed as part of this Report, some of
which are incorporated herein by reference from the reports, registration
statements and other filings of the issuer with the Securities and Exchange
Commission, as referenced below:
Reference
Number
|
Item
|
|
3.1
|
Amended
and Restated Articles of Incorporation
(1)
|
|
3.2
|
Amended
and Restated Bylaws (2)
|
|
4.1
|
Specimen
Stock Certificate (3)
|
|
4.2
|
Form
of US Warrant Certificate dated February 23, 2007, as amended (4)
|
|
4.3
|
Form
of US Broker’s Warrant Certificate dated February 23, 2007, as amended
(4)
|
|
4.4
|
Form
of Non-US Warrant Certificate dated February 23, 2007, as amended (4)
|
|
4.5
|
Form
of Non-US Broker’s Warrant Certificate dated February 23, 2007, as amended
(4)
|
|
4.6
|
Form
of Warrant Certificate dated March 22, 2007, as amended (4)
|
|
4.7
|
Form
of Broker’s Warrant Certificate dated March 22, 2007, as amended (4)
|
|
4.8
|
Form
of Warrant Certificate, dated December 26, 2007, as amended (4)
|
|
4.9
|
Form
of US Warrant Certificate, dated February 7, 2008, as amended (4)
|
|
4.10
|
Form
of Non-US Warrant Certificate, dated February 7, 2008, as amended (4)
|
|
4.11
|
Form
of Common Stock Purchase Warrant, dated November 12, 2009 (4)
|
|
4.12
|
Rights
Agreement, dated August 24, 2009, between Searchlight Minerals Corp. and
Empire Stock Transfer Inc. (5)
|
|
10.1
|
2002
Nonqualified Stock Option Plan (6)
|
|
10.2
|
2003
Nonqualified Stock Option Plan (7)
|
|
10.3
|
2009
Stock Incentive Award Plan, adopted December 15, 2009 (8)
|
|
10.4
|
2009
Equity Incentive Plan for Directors, adopted December 15, 2009 (8)
|
|
10.5
|
Letter
Agreement between Phage Genomics, Inc., Searchlight Minerals Inc., Kiminco
Inc., Pass Minerals Inc., Debra L. Matheson, and Pilot Plant Inc. dated
February 8, 2005
(9)
|
|
10.6
|
Letter
Agreement between Phage Genomics Inc., Searchlight Minerals, Inc., K. Ian
Matheson, and Pilot Plant Inc. dated February 8, 2005 (9)
|
|
10.7
|
Letter
Agreement between Phage Genomics, Inc., Searchlight Minerals, Inc., K. Ian
Matheson, and Bear Dog Mines Inc. dated February 8, 2005 (9)
|
|
10.8
|
Letter
Agreement between Phage Genomics, Inc., Searchlight Minerals, Inc., K. Ian
Matheson, and Gold Hunter Inc. dated February 8, 2005
(9)
|
|
10.9
|
Letter
Agreement between Phage Genomics, Inc., Searchlight Minerals, Inc.,
Kiminco Inc., Pass Minerals Inc., Michael D. Anderson, Farrell Drozd,
Michael I. Matheson, and Pass Minerals Inc. dated February 8, 2005
(9)
|
|
10.10
|
Letter
Agreement between Phage Genomics, Inc., Searchlight Minerals, Inc., K. Ian
Matheson, and Britti Gold Inc. dated February 8, 2005
(9)
|
45
10.11
|
Letter
Agreement between Phage Genomics, Inc., Searchlight Minerals, Inc.,
Kiminco Inc., Pass Minerals Inc., Michael D. Anderson, Geosearch Inc.,
Patrick I. Matheson, and Geotech Mining Inc. dated February 8, 2005
(9)
|
|
10.12
|
Letter
Agreement between Phage Genomics, Inc., Searchlight Minerals, Inc.,
Kiminco Inc., Pass Minerals Inc., and Gold Crown Inc. dated February 8,
2005
(9)
|
|
10.13
|
Engagement
Letter dated June 17, 2005 between Searchlight Minerals Corp. and Clarion
Finanz AG (10)
|
|
10.14
|
Extension
Agreement dated effective June 22, 2005 among Searchlight Minerals Corp.,
K. Ian Matheson, Searchlight Minerals, Inc. and Pilot Plant Inc.
(10)
|
|
10.15
|
Extension
Agreement dated effective June 22, 2005 among Searchlight Minerals Corp.,
K. Ian Matheson, Searchlight Minerals, Inc. and Bear Dog Mines Inc.
(10)
|
|
10.16
|
Extension
Agreement dated effective June 22, 2005 among Phage Genomics, Inc.,
Searchlight Minerals, Inc., K. Ian Matheson, and Gold Hunter Inc.
(10)
|
|
10.17
|
Extension
Agreement dated effective June 22, 2005 among Searchlight Minerals Corp.,,
K. Ian Matheson, Searchlight Minerals, Inc., Pass Minerals Inc., Michael
D. Anderson, Farrell Drozd and Michael I. Matheson
(10)
|
|
10.18
|
Extension
Agreement dated effective June 22, 2005 among Searchlight Minerals Corp.,
K. Ian Matheson, Searchlight Minerals, Inc. and Britti Gold Inc.
(10)
|
|
10.19
|
Extension
Agreement dated effective June 22, 2005 among Searchlight Minerals Corp.,
K. Ian Matheson, Searchlight Minerals, Inc., Geotech Mining Inc., Michael
D. Anderson, Geosearch Inc. and Patrick B. Matheson
(10)
|
|
10.20
|
Extension
Agreement dated effective June 22, 2005 among Searchlight Minerals Corp.,
K. Ian Matheson, Searchlight Minerals, Inc. and Gold Crown Minerals
Inc.
(10)
|
|
10.21
|
Assignment
Agreement dated for reference June 1, 2005 between Searchlight Minerals
Corp. and Nanominerals Corp.
(11)
|
|
10.22
|
First
Amendment to Assignment Agreement between Nanominerals Corp. and
Searchlight Minerals Corp. dated August 31, 2005
(12)
|
|
10.23
|
Second
Amendment to Assignment Agreement between Nanominerals Corp. and
Searchlight Minerals Corp. dated October 24, 2005
(13)
|
|
10.24
|
Office
Suite Lease Agreement between Burnett & Williams Executive Suites and
Searchlight Minerals Corp. dated September 6, 2005
(12)
|
|
10.25
|
Employment
Agreement between Searchlight Minerals Corp. and Carl S. Ager dated as of
January 1, 2006 (13)
|
|
10.26
|
Employment
Agreement between Searchlight Minerals Corp. and Ian R. McNeil dated as of
January 1, 2006 (14)
|
|
10.27
|
Employment
Agreement between Searchlight Minerals Corp. and Melvin L. Williams dated
as of June 14, 2006 (15)
|
|
10.28
|
2007
Stock Option Plan (16)
|
|
10.29
|
Engineering
Services Agreement dated as of May 1, 2006 with Cimetta Engineering and
Construction Co. (17)
|
|
10.30
|
Office
Suite Lease Agreement between Burnett & Williams Executive Suites and
Searchlight Minerals Corp. dated July 20, 2006 (18)
|
|
10.31
|
Contract
for Engineering Services dated March 21, 2005
(18)
|
|
10.32
|
Contract
for Drilling Services dated May 23, 2006 between Boart Longyear Company
and Searchlight Minerals Corp. and Contact for Services dated October 17,
2005 between Boart Longyear Company and Searchlight Minerals Corp.
(18)
|
|
10.33
|
Letter
Agreement dated November 22, 2006 among Verde River Iron Company, LLC,
Harry B. Crockett, Gerald Lembas and Searchlight Minerals Corp. (19)
|
|
10.34
|
Notice
of Exercise Option (20)
|
|
10.35
|
Amendment
No. 1 to Letter Agreement dated February 15, 2007 (5)
|
46
10.36
|
Agreement
and Plan of Merger dated February 15, 2007 between Verde River Iron
Company, LLC, Transylvania International, Inc., Clarkdale Minerals LLC and
Searchlight Minerals Corp.
(21)
|
|
10.37
|
Special
Warranty Deed dated February 15, 2007 (21)
|
|
10.38
|
Bill
of Sale dated February 15, 2007 (21)
|
|
10.39
|
Agreement
between Transylvania International, Inc. and Architecture Works Inc.
(Reynold P. Radoccia, Architect) dated November 14, 2005
(21)
|
|
10.40
|
Effluent
lease dated August 25, 2004 between Town of Clarkdale, Transylvania
International, Inc. and Verde River Iron Company, LLC
(21)
|
|
10.41
|
Articles
of Merger between Transylvania International, Inc. and Clarkdale Minerals
LLC dated February 15, 2007 (21)
|
|
10.42
|
First
Amendment to Employment Agreement dated February 16, 2007 between
Searchlight Minerals Corp. and Ian R. McNeil.
(22)
|
|
10.43
|
First
Amendment to Employment Agreement dated February 16, 2007 between
Searchlight Minerals Corp. and Carl S. Ager.
(22)
|
|
10.44
|
First
Amendment to Employment Agreement dated February 16, 2007 between
Searchlight Minerals Corp. and Melvin L. Williams.
(22)
|
|
10.45
|
Non-Exclusive
Agency Agreement dated February 9, 2007 between Empire Financial Group,
Inc. and Searchlight Minerals Corp.
(23)
|
|
10.46
|
Agency
Agreement dated January 30, 2007 between S&P Investors, Inc. and
Searchlight Minerals Corp.(23)
|
|
10.47
|
Agency
Agreement dated January 31, 2007 between Zuri Invest Limited and
Searchlight Minerals Corp.(23)
|
|
10.48
|
Agency
Agreement dated March 21, 2007 between D&D Securities Company and
Searchlight Minerals Corp.(24)
|
|
10.49
|
Consulting
Agreement dated January 31, 2008 between Searchlight Minerals Corp. and RJ
Falkner and Company, Inc. (25)
|
|
10.50
|
Letter
of Engagement with DCM Structured Finance dated September 6, 2007 (26)
|
|
10.51
|
General
Contractor Agreement, dated May 4, 2007 (and addendums thereto) between
the Company and Talson Corporation (27)
|
|
10.52
|
Engineering
Services Agreement, dated April 4, 2006 (and addendum thereto) between the
Company and Cimetta Engineering and Construction Co., Inc. (27)
|
|
10.53
|
Agreement
for Architectural Services, dated November 14, 2005 (and addendum thereto)
between the Company and Architecture Works Inc. (27)
|
|
10.54
|
Mining
Claim Purchase Agreements regarding transfer of title to Searchlight
Claims (1)
|
|
10.55
|
Independent
Contractor Agreement with Donald Wohl, dated May 1, 2008 (1)
|
|
10.56
|
General
Contractor Agreement, dated August, 2008 (and addendums thereto) between
the Company and Talson Corporation (1)
|
|
10.57
|
Development
Agreement, dated as of January 9, 2009, between Clarkdale Minerals, LLC
and the Town of Clarkdale, Arizona (5)
|
|
14.1
|
Code
of Ethics (28)
|
|
21.1
|
List
of Wholly Owned Subsidiaries (29)
|
|
23.1
|
Consent
of Dr. Richard F. Hewlett (29)
|
|
23.2
|
Consent
of Nanominerals Corp. (29)
|
|
23.3
|
Consent
of Mountain States R&D International Inc. (29)
|
|
23.4
|
Consent
of Independent Mining Consultants, Inc. (29)
|
|
23.5
|
Consent
of Arrakis, Inc. (29)
|
|
23.6
|
Consent
of Brown Armstrong Paulden McCown Starbuck Thornburgh & Keeter
Accountancy Corporation (29)
|
|
23.7
|
Consent
of Scott W. Lindsay (29)
|
47
23.8
|
Consent
of Canadian Environmental & Metallurgical Inc. (29)
|
|
23.9
|
Consent
of SGS Lakefield Research Limited (29)
|
|
23.10
|
Consent
of Kyle L. Tingle, CPA, LLC (29)
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a)
promulgated under the Securities Exchange Act of 1934 (29)
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a)
promulgated under the Securities Exchange Act of 1934
(29)
|
|
31.3
|
Certification
of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a)
promulgated under the Securities Exchange Act of 1934
|
|
31.4
|
Certification
of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a)
promulgated under the Securities Exchange Act of 1934
|
|
32.1
|
Certifications
of Chief Executive Officer and Chief Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (29)
|
|
99.1
|
Audit
Committee Charter (28)
|
|
99.2
|
Disclosure
Committee Charter (30)
|
|
99.3
|
Related
Party Transactions Policy (31)
|
|
99.4
|
Compensation
Committee Charter
|
|
99.5
|
Nominating
and Corporate Governance Charter
|
|
99.6
|
Corporate
Governance Guidelines
|
(1)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
December 28, 2009.
|
(2)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
April 29, 2009.
|
(3)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form 10-SB
originally filed on July 11, 2000.
|
(4)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
November 13, 2009.
|
(5)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form 8-A filed
on August 25, 2009 (No. 000-30995), which includes as Exhibit A thereto
the Form of Right Certificate and as Exhibit B thereto the Summary of
Common Share Purchase Rights.
|
(6)
|
Filed
with the SEC as an exhibit to our Form S-8 Registration Statement filed on
April 10, 2002.
|
(7)
|
Filed
with the SEC as an exhibit to our Form S-8 filed on June 30,
2003.
|
(8)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
December 17, 2009.
|
(9)
|
Filed
with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on
April 15, 2005.
|
(10)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on June
24, 2005.
|
(11)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on June
16, 2005.
|
(12)
|
Filed
with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on
November 21, 2005.
|
(13)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
October 28, 2005.
|
(14)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
March 2, 2006.
|
(15)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on June
20, 2006.
|
(16)
|
Filed
with the SEC as an exhibit to our proxy statement on Schedule 14A filed on
May 22, 2007.
|
(17)
|
Filed
with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on
August 14, 2006.
|
(18)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form SB-2/A
(No. 333-133929) filed on October 30, 2006.
|
(19)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
November 28, 2006.
|
(20)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
January 16, 2007.
|
(21)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
February 22, 2007.
|
(22)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
February 23, 2007.
|
48
(23)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
March 5, 2007.
|
(24)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
March 29, 2007.
|
(25)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
February 21, 2008.
|
(26)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
October 10, 2007.
|
(27)
|
Filed
with the SEC as an exhibit to our Registration Statement on Form S-1/A
(No. 333-132929) filed on July 17, 2008.
|
(28)
|
Filed
with the SEC as an exhibit to our Current Report on Form 8-K filed on
September 27, 2006.
|
(29)
|
Previously
filed as an exhibit to Form 10-K filed March 12, 2010.
|
(30)
|
Filed
with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on
April 13, 2004.
|
(31)
|
Filed
with the SEC as an exhibit to our registration statement on Form S-1/A
(No. 333-132929) filed on September 2,
2009.
|
49
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Date: April
30, 2010
|
SEARCHLIGHT
MINERALS CORP.
|
|
a
Nevada corporation
|
||
By:
|
/s/ IAN R. MCNEIL
|
|
Ian
R. McNeil
|
||
President
and Chief Executive Officer
|
||
(Principal
Executive Officer)
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Signature
|
Title
|
Date
|
||
/s/
IAN R. MCNEIL
|
Chief
Executive Officer, President and Director
|
April
30, 2010
|
||
Ian
R. McNeil
|
(Principal
Executive Officer)
|
|||
/s/
CARL S. AGER
|
Vice
President, Secretary, Treasurer and Director
|
April
30, 2010
|
||
Carl
S. Ager
|
||||
/s/
MELVIN L. WILLIAMS
|
Chief
Financial Officer
|
April
30, 2010
|
||
Melvin
L. Williams
|
(Principal
Accounting Officer)
|
|||
Director
|
|
|||
Harry
B. Crockett
|
||||
/s/
ROBERT D. MCDOUGAL
|
Director
|
April
30, 2010
|
||
Robert
D. McDougal
|
||||
/s/
MARTIN B. ORING
|
Director
|
April
30, 2010
|
||
Martin
B. Oring
|
||||
/s/
JORDAN M. ESTRA
|
Director
|
April
30, 2010
|
||
Jordan
M. Estra
|
|
|
50