Borealis Exploration Limited
Fiscal Year 1998
1. SOLICITATION OF PROXIES:
This information circular is furnished in connection with the solicitation of proxies by the Management of Borealis Exploration Limited ("Company") for
use at its Annual Meeting of Shareholders to be held September 16, 1998, with Record Date of the meeting being August 7, 1998, for the purposes set forth in the
accompanying Notice of Meeting. It is expected that the solicitation will be by mail, fax, e-mail, web page, telephone or in person by officers of the Company. The
cost of solicitation will be borne by the Company. The information contained here is given as of August 18, 1998, unless otherwise indicated. All dollar figures set
forth are expressed in Canadian dollars. If necessary, this meeting will be adjourned for a time, until all of the issues of the Continuance have been resolved and all
items that may be necessary have been called to a vote, including voting on any changes needed in the documentation.
2. QUORUM AND VOTING:
The capital of the Company consists solely of common shares without par value of which 4,991,000 shares were outstanding at the close of business August 7, 1998.
Each holder of a common share of record as of the record date for the meeting is entitled to attend the meeting and to cast one vote for each share. Proxies
are being accepted by Mail, e-mail, voting on the Borealis Web page at www.Borealis.com, or by fax. Any resolution to be voted upon at the meeting must be approved
by a majority of the votes cast, unless the Canadian Business Corporations Act, the Company's Articles of Continuance, or the By-Laws of the Company stipulate a
number or proportion of the votes cast in excess of a majority, in which case, by such stipulated majority or proportion as the Canadian Business Corporations Act,
the Company's Articles of Continuance, or the By-Laws of the Company stipulate.
3. REVOCATION OF PROXIES:
Each shareholder has the power to revoke a proxy at any time as long as it has not been exercised. In addition to revocation in any other matter permitted
by law, a shareholder giving a proxy pursuant to this solicitation who wishes to revoke the proxy instrument may do so in writing, or via e-mail, or on the Borealis Web
Page, or by fax executed by the shareholder or by his attorney authorized in writing, or, if the shareholder is a Corporation, under its Corporate seal or by an Officer
or attorney thereof duly authorized, and deposit it either at the Head Office of the Company, or at firstname.lastname@example.org, or by fax to the head office of Borealis, at any
time up to and including the last business day preceding the day of the meeting, or any adjournment thereof at which the proxy is to be used, or with the Chairman of
such meeting on the day of the meeting, or adjournment thereof.
4. PRINCIPAL HOLDERS OF VOTING SHARES:
To the knowledge of the Directors and Officers of the Company, the only person who beneficially owns or exercises control or direction over shares carrying more than ten percent of the votes attached to shares of the Company as of August 7, 1998 is:
Name Number of Shares % of Outstanding Shares
Rodney T. Cox 556,773 11.16%
Rodney T. Cox holds, in addition to the above shares of the Company, options on 200,000 shares at a price of $5.00 per share to March 29, 2002.
Rodney T. Cox, along with Isaiah W. Cox, is a Director of the Hart Cox Foundation, a charitable foundation owning 50,000 shares of Borealis Exploration
Limited. Both claim no ownership interest in these shares, though they have influence on how the shares are voted.
5. ELECTION OF OFFICERS:
Present Directors and their terms of office are as follows:
Name Number of Years
Rodney T. Cox, Ph.D. 2
Jean-Francois Edelstein, M.B.A. 2
Marsha Berniker, M.S.W. 1
David M. Goldenberg, LL.B. 1
Wayne S. Marshall, Ph.D. 1
Isaiah W. Cox, A.B. Up for Election
Donald N. Jones, M.Sc. Up for Election
A. Asher Turin, Ph.D. Up for Elections
Joseph J. Cox, B.A. Up for Election
The enclosed instrument of proxy will be voted for the following proposed nominees (or for a substitute nominee in the event of contingencies not known at present)
who will serve for a period of 3 years, Except for Joseph J. Cox whose term is for 2 years or until his or their successors are elected or appointed in accordance with
the By-Laws of the Company, the share totals are as of August 8, 1998:
ISAIAH W. COX became a Director and Corporate Secretary on February 15, 1994. Mr. Cox has had capacities with the Company since 1987, where he is now
President, Chief Operating Officer, and a member of the Executive Committee, as well as being a Director for all companies in the Borealis Group of Companies. He
is also President of Thales Resources, Inc., the parent company of ThaleScope Limited. Isaiah W. Cox beneficially owns directly or indirectly 226,159 common shares
of the Company.
DONALD N. JONES became a Director of the Company December 19, 1991. He became a School Administrator on September 2, 1996; previously he was a teacher.
He beneficially owns directly or indirectly 55,548 common shares of the Company.
A. ASHER TURIN became a Director of the Company April 6, 1988. He is a member of the Audit Committee. He has been consultant to the Company from 1985 to
present. He is Executive Director of the Zvi Institute for Manuscript Research from 1978 to present. A. Asher Turin beneficially owns directly or indirectly 100 common
shares of the Company.
JOSEPH J. COX will become a Director of the Company if elected on September 16, 1998. He is founder of Aeslyn Education, a Computer Training company, as
well as an independent technical contractor. Mr. Cox has had capacities with the Company since 1990, where he is now a technical contractor. Joseph J. Cox
beneficially owns directly or indirectly 57,289 common shares of the company.
THE PRESENT POSITION AND OFFICE WITH THE COMPANY IF APPLICABLE, AND THE PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT OF THE INCUMBENT DIRECTORS AND OFFICERS ARE AS FOLLOWS. UNLESS OTHERWISE STATED, SUCH OCCUPATION
OR EMPLOYMENT HAS CONTINUED FOR MORE THAN THE LAST FIVE YEARS.
RODNEY T. COX is Chief Executive Officer and Chairman of the Board of the Company and has held similar positions since December 27, 1978; at which time he
also became a Director. Dr. Cox is a member of both the Executive and Audit Committees. Dr. Cox is a Director and member of the Audit and Executive Committee
for all companies and CEO and Chairman for most companies in the Borealis Group of Companies. He is a Director of Thales Resources, Inc. (the parent company
of ThaleScope Limited), and is a partner in The Parmenides Group. Rodney T. Cox beneficially owns directly or indirectly 556,773 common shares of the Company.
JEAN-FRANCOIS EDELSTEIN became a Director of the Company on July 30, 1997. From November of 1996 to present, Mr. Edelstein has been Managing Director
of Definitive Technologies. From October 1996 to November 1996, he was a freelance computer consultant. From January 1996 to September 1996, he managed
Information Technology for GE Capital Europe. From January 1993 to December 1995, he managed Information Technology for Classic Bottling Corporation. From
November 1991 to December 1992, he was Information Technical support specialist for Syfo Water Company. Since October 1997 Mr. Edelstein is Manager of
Systems, Americas, for the REL Consultancy Group. Jean-Francois Edelstein beneficially owns directly or indirectly 100 common shares of the Company.
MARSHA BERNIKER became a Director of the Company on July 2, 1997. She has been a Social Worker for Jewish Family & Child Services, from 1975 to present.
Marsha Berniker beneficially owns directly or indirectly 15,300 common shares of the Company.
DAVID M. GOLDENBERG has been the Solicitor for the Company since 1979, and served as the Corporate Secretary from 1982 to 1994. Mr. Goldenberg was a
director of the Company from April 15, 1988 until 1994. David M. Goldenberg rejoined the Board in 1996 and is a Partner in the law firm of Beaumont Church and
deals primarily in corporate/commercial law. Mr. Goldenberg beneficially owns directly or indirectly 100 common shares of the Company.
WAYNE S. MARSHALL became a Director of the Company on September 11, 1985. Dr. Marshall was Professor of Business Administration at Long Island University
until his retirement on August 31, 1994. He is on both the Executive and Audit Committees of all of the Borealis Group of Companies. Wayne S. Marshall beneficially
owns directly or indirectly 97,034 common shares of the Company.
6. REMUNERATION OF MANAGEMENT:
Management fees totaling approximately $269,000 (1997-$234,144) have been paid to a Partnership controlled by the CEO of the Company. Travel,
promotion, rent, and other expenses totaling approximately $133,000 (1997-$110,000 have been reimbursed to the CEO and a partnership controlled by the CEO of
7. APPOINTMENT OF AUDITORS:
Unless otherwise specified therein, it is presently intended to vote the accompanying proxy instrument to appoint BDO Dunwoody as auditors of the Company,
to hold office until the next annual meeting of shareholders, and to authorize the Directors to fix their remuneration.
The Company granted options expiring April 31, 1998 to directors, officers, employees and various other parties to acquire 170,500 shares of the Company's
capital stock at $3.00 per share. These options were all exercised after year end, though only 121,121 of the shares were issued. The remainder of the shares from the
exercise of the options are the obligation of the Company to issue on a timely basis when it has sufficient funds to buy the shares from shareholders and give them to
the shareholder who is due them from the option exercise. As noted earlier, options expiring March 29, 2002 are outstanding for a total of 200,000 shares of the
Company at a price of $5.00 per share. It should also be noted that as the company only has authorized 5,000,000 shares that the company will have to acquire shares
from private purchases or public transactions to honour these commitments to option holders who hold options and who have exercised options without the shares being
issued. The company intends to honour these obligations to deliver shares under these option agreements.
9. LIABILITY AND DIRECTORS AND OFFICERS INSURANCE:
The Company does not have any insurance in effect for the benefit of the Company and it Directors and Officers in respect of the performance by them of
the duties of their office. The company has liability insurance for its various office and laboratory facilities that it uses worldwide.
10. INTEREST OF LARGE SHAREHOLDERS IN MATERIAL TRANSACTIONS WITH BOREALIS EXPLORATION LIMITED:
Through the years, Rodney T. Cox and The Parmenides Group have paid many Company bills without reimbursement, have guaranteed Company obligations without compensation and have lent funds to the Company without interest being charged. In addition, the Company has engaged in numerous transactions with the above parties, all of which in the opinion of management and the Board of Directors have been in the best interest of Borealis. As necessary these services will continue to be provided on the same terms to the Borealis family of companies.
Almost all Borealis Directors, Officers and consultants, own either directly or indirectly shares in Borealis Cool Manufacturing Limited and shares in Borealis Power Manufacturing Limited and have options on shares in these companies that expire in 2003 at $5.238 USD per share. These shares were offered privately and officers and directors and consultants and business associates of Borealis purchased their shares on the same terms as all other parties. All of these individual holdings are each less than 10% of the outstanding shares (including full exersizing of options) of these two companies. As of this date share certificates for Borealis Cool Manufacturing Limited and Borealis Power Manufacturing Limited have not been issued
Members of the Executive Committee have to date each lent Borealis Technical 50,000 common shares of Borealis Exploration Limited to be used in funding the operations of the company. As of August 18, 1998, 44,940 of these shares had been sold privately and on the market to fund the company operations. With the non-delivery of exercised option shares the company and its subsidiaries as of this date are 94,319 shares short. This total with the rest of the option shares exercised and the remaining borrowed shares old will result in approximately 400,000 shares of Borealis Exploration being effectively sold short by the Company and its subsidiaries. Borealis and its subsidiary companies intend to honour the obligations thus created.
Borealis has entered into two very long term contracts with members of its technical staff with 10 year contracts and 2 ten year renewals. The first of these
contracts has 4 years remaining with 20 years of options. This first contract comes with substantial penalties to the Company should control change hands by way of
a payment to the Director of Research of the Company
11. CONTINUANCE OUT OF CANADA AND TO GIBRALTAR:
Your company is proposing that a Continuance out of Canada and a Continuance into Gibraltar. Our share listings will be maintained under the same name, with the existing certificates being considered as new certificates which will be phased in immediately, the number of shares will be the same with the authorized capital limited similarly to 5,000,000 shares. All stakeholders in Borealis will be in as near the same position with the move to Gibraltar as possible. The continued company will assume all existing obligations of the old company. The new company will retain all the assets and liabilities of the old company including the lawsuits against various parties for past actions. All the staff worldwide will be the same, and we expect no difference in any of our operations. We expect to continue to be a full reporting issuer in Ontario and a 12G reporter in the USA to the SEC.
The tax implications of the Continuance out of Canada may be significant. The potential tax liability will be estimated at the Annual General Meeting of Shareholders on September 16, 1998, but cannot be computed in advance.
There are many reasons for the move, the most important of which is that all of our Technical operations are already run out of Gibraltar and our Roche Bay Magnetite Deposits are already 100% owned and held by a Gibraltar Company. The Mind and Management of Borealis is currently in the European Union, and control of the Executive Committee of Borealis rests in the European Union.
Putting all the companies under one jurisdiction reduces our costs and makes administration simpler.
Borealis is one of the few true "Virtual Companies." We have "Virtual Offices" world wide, we run a "Virtual" board meeting round the clock for all the companies in the group. This allows us to base our operations anywhere, which makes the best sense for all stakeholders in the Company
The Continuance of Borealis Exploration Limited in Gibraltar is in the best interests of all Borealis Shareholders and Creditors. This will make us a stronger company and will make administration easier. We would expect that over the next 5 years, as a result of this move, our expenses for direct administration and taxes would be less than what they would have been, if the move had not been made.
Borealis has enjoyed very much our over 30 years in Canada. Because we are going to retain our current share listings, we will be making the same reporting to the Canadian and U.S. Regulatory authorities as we do now. We expect our relations to continue to be very cordial with the US and Canadian Governments.
The Continuance of Borealis Exploration Limited out of Canada to Gibraltar reflects the change in Borealis from a junior mining and exploration company a basic industrial research company. As our companies focus has shifted, the need to be in Europe, where most of our business and science is conducted has become pressing. Gibraltar provides the strength, security and flexibility that we require.
The move to Gibraltar will not adversely affect Borealis shareholders or creditors. Borealis will meet or exceed all of the requirements that the CANADA BUSINESS CORPORATIONS ACT requires for a continuance out of the jurisdiction.
The move to Gibraltar must be authorized by a special resolution of our shareholders. All shareholders are encouraged to thoroughly read the summary
of the pertinent sections of the CBCA to facilitate a full understanding of their rights and interests. Please read the Proxy, Notice of Annual Meeting of
Shareholder and this section carefully.
Summary of pertinent sections of the CANADA BUSINESS CORPORATIONS ACT and Gibraltar Law
What Steps Are Involved To Export Your Corporation Out Of The Federal Jurisdiction?
Should you wish to change the legislative jurisdiction governing your corporation from the CBCA to some other non-federal legislation, whether in Canada or another country, you must export your corporation to the other ("importing") jurisdiction. This procedure is generally done in two steps.
First, you must obtain from the Director a Letter of Satisfaction that you submit to the authorities of the importing jurisdiction (see subsection 188(1) of the CBCA) together with any continuance documents that may be required. This Letter of Satisfaction has a life of 90 days.
In the second step, if the authorities of the importing jurisdiction accept your application for continuance, they will issue you some kind of Certificate of Continuance indicating that your corporation is duly continued under that governing legislation as if it had been incorporated under that legislation. You must then give satisfactory notice of this continuance to the Director, who will issue a Certificate of Discontinuance (see subsection 188(7) of the CBCA). This completes the export process.
What Information Must Be Filed To Obtain A Letter Of Satisfaction?
Letters of Satisfaction are issued at the discretion of the Director. For guidance on how the Director is likely to exercise this discretion in typical situations, please refer to the Policy of the Director as to "Export" Transactions under the CBCA (Export Policy).
The principal concerns of the Director regarding an export action are whether the export:
* is legally possible
* has been duly authorized
* will not adversely affect creditors or shareholders of the corporation.
* To export to any other non-federal jurisdiction, you must send to the Director the following:
* a copy of the legislation of the importing jurisdiction
* opinion from counsel of the importing jurisdiction that its legislation permits import of a CBCA corporation and also provides for the rights listed in subsection 188(10) of the CBCA
* an affidavit of an authorized director or officer of the corporation regarding shareholders (see below)
* a statement of a director or officer regarding treatment of dissenters, if applicable (see below)
* a filing fee of $200.00, payable to the Receiver General for Canada.
The copy of the legislation and the opinion from counsel regarding this legislation will be referred to Legal Operations for an opinion.
The affidavit of an authorized director or officer of your corporation must state that:
* shareholders and creditors of the corporation will not be adversely affected by the export
* the export has been authorized by a special resolution of the shareholders of the corporation
* shareholders have been given full disclosure of the effect of the export on their rights and interests.
Where there are dissenters to the export, an authorized director or officer of your corporation must make a statement that the
* will undertake to honour the dissent right granted by section 190 of the CBCA and, if necessary, to attorn to Canadian courts for that purpose
* has sufficient funds to pay dissenting shareholders and has made arrangements to ensure that those funds will be available to satisfy
Any corporation wishing to export must be in good standing under the CBCA: that is, it must be up to date with filings of annual returns and with financial statements, if applicable; and it must not be subject to a current investigation.
The Director will audit proxy information circulars filed with the Director regarding export transactions, on a random basis,
to determine, with the assistance of legal counsel, the adequacy of the disclosure. Unless the Director receives complaints by persons
who feel themselves to be adversely affected or oppressed by the transaction, a Letter of Satisfaction will normally be issued upon
receipt of your documentation completed as described above.
How Do You Obtain A Certificate Of Discontinuance?
When your Letter of Satisfaction has been sent to the importing jurisdiction and you have received notice that your corporation has been continued under its jurisdiction, you must send to the Director a certified or notarized copy of that Certificate of Continuance from the importing jurisdiction. Certain jurisdictions will send a copy of the Certificate of Continuance directly to the Director. However, the onus is on you to ensure that the Director receives notice of the continuance by one means or the other.
Upon receiving such notice, the Director will issue a Certificate of Discontinuance dated retroactively to the date of effectiveness of the Certificate of Continuance.
A notice will be published in the monthly Canada Corporations Bulletin regarding your corporation's discontinuance under
the CBCA, showing the date of effectiveness.
APPLICATION TO DOMICILE IN GIBRALTAR A FOREIGN COMPANY
The following documents are required to be submitted: -
1. Certificate of incorporation
2. Resolution of the Company to establish a domicile in Gibraltar
3. The articles and memorandum of the Company and any amendments of the said Articles and memorandum that are to take effect on registration of the Company in Gibraltar
4. Evidence to the satisfaction of the Registrar that the Company is in good standing and that no proceedings for insolvency have been commenced against the Company
5. Where the Company carries on in or from the jurisdiction of its incorporation a business which, in accordance with a Community requirement, is licensed by a competent authority in that jurisdiction, evidence of the consent of that competent authority to the re-domiciliation
6. List of Directors with nationality, profession and address.
7. List of Shareholders with details of the shares they hold
8. Confirmation by the directors of the short particulars of all the charges registered against the company and the amounts; charged
9. The fee of £100.00
Those Borealis shareholders who desire more information about the Canada Business Corporations Act are invited to turn to the following official Canadian Government sources: Corporations Directorate Tel: (613) 941-9042 Fax: (613) 941-0601
9th Floor, Jean Edmonds Towers South
365 Laurier Avenue West
Ottawa, Ontario K1A 0C8
Or the internet under Consumers, and the Marketplace: Services, Laws and Regulations at: http://strategis.ic.gc.ca
The Management knows of no matter to come before the Annual Meeting other than the matters referred to in the Notice of the Meeting. If any matters that
are not now known to the Management should properly come before the meeting, the accompanying proxy instrument will be voted on such matters in accordance with
the best judgment of the person or persons voting it.
The contents and sending of this information have been approved by the Directors of the Company.
Dated this 18th day of August, 1998
Borealis Exploration Limited
Rodney T. Cox. Ph.D.
CEO/Chairman of the Board
Isaiah W. Cox