Definitive Proxy Statement
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed
by the Registrant x |
Filed
by a Party other than the Registrant o |
Check
the
appropriate box:
o |
Preliminary
Proxy Statement
|
o |
Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|
x |
Definitive
Proxy Statement
|
o |
Definitive
Additional Materials
|
o |
Soliciting
Material Pursuant to §240.14a-12
|
Altair
Nanotechnologies Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Paymentof
Filing
Fee (Check the appropriate box):
o |
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
(1) |
Title
of each class of securities to which transaction
applies:
|
(2) |
Aggregate
number of securities to which transaction
applies:
|
(3) |
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was
determined):
|
(4) |
Proposed
maximum aggregate value of
transaction:
|
o |
Fee
paid previously with preliminary
materials.
|
o |
Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously.
Identify the previous
filing by registration statement number, or the Form or Schedule
and the
date of its
filing.
|
(1) |
Amount
Previously Paid:
|
(2) |
Form,
Schedule or Registration Statement
No.:
|
ALTAIR
NANOTECHNOLOGIES INC.
204
Edison Way
Reno,
Nevada 89502
U.S.A.
MANAGEMENT
INFORMATION CIRCULAR
AND
PROXY STATEMENT
Solicitation
of Proxies
THIS
MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT (THE “INFORMATION CIRCULAR”)
IS FURNISHED IN CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT OF ALTAIR
NANOTECHNOLOGIES INC. (THE “CORPORATION”) OF PROXIES TO BE USED AT THE ANNUAL
AND SPECIAL MEETING OF SHAREHOLDERS OF THE CORPORATION TO BE HELD AT THE TIME
AND PLACE AND FOR THE PURPOSES SET FORTH IN THE ENCLOSED NOTICE OF MEETING
(THE
“MEETING”).
This
Information Circular, the notice of Meeting attached hereto, and the
accompanying form of proxy and the Annual Report of the Corporation for the
year
ended December 31, 2006 are first being mailed to the shareholders of the
Corporation on or about April 30, 2007. It is expected that the solicitation
will be primarily by mail, but proxies may also be solicited personally, by
email, by facsimile or by telephone by officers and employees of the Corporation
without additional compensation therefor. If one or more shareholders files
a
proxy statement or solicits proxies in opposition to the recommendations of
the
board of directors of the Corporation (the “Board of Directors” or the “Board”),
the Corporation may engage outside solicitors to assist with its solicitation
of
proxies. Details regarding any such engagement would be set forth in a
supplement to this Information Circular.
The
cost
of solicitation by management will be borne directly by the Corporation.
Arrangements will be made with brokerage firms and other custodians, nominees
and fiduciaries for the forwarding of solicitation materials to the beneficial
owners of the Common Shares of the Corporation (“Common Shares”) held by such
persons, and the Corporation will reimburse such brokerage firms, custodians,
nominees and fiduciaries for the reasonable out-of-pocket expenses incurred
by
them in connection therewith.
Appointment
and Revocation of Proxies
The
persons named in the enclosed form of proxy are officers and/or directors of
the
Corporation. A
SHAREHOLDER DESIRING TO APPOINT SOME OTHER PERSON TO REPRESENT HIM AT THE
MEETING MAY DO SO
either
by inserting such person’s name in the blank space provided in that form of
proxy or by completing another proper form of proxy and, in either case,
depositing the completed proxy at the office of the transfer agent indicated
on
the enclosed envelope not later than 48 hours (excluding Saturdays and holidays)
before the time of holding the Meeting, or by delivering the completed proxy
to
the chairman on the day of the Meeting or adjournment thereof.
A
proxy
given pursuant to this solicitation may be revoked by instrument in writing,
including another proxy bearing a later date, executed by the shareholder or
by
his attorney authorized in writing, and deposited either at the Corporation’s
principal office located at 204 Edison Way, Reno, Nevada 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, or in any other
manner permitted by law.
Voting
of Proxies
THE
COMMON SHARES REPRESENTED BY A DULY COMPLETED PROXY WILL BE VOTED OR WITHHELD
FROM VOTING IN ACCORDANCE WITH THE INSTRUCTIONS OF THE SHAREHOLDER ON ANY BALLOT
THAT MAY BE CALLED FOR AND, IF THE SHAREHOLDER SPECIFIES A CHOICE WITH RESPECT
TO ANY MATTER TO BE ACTED UPON, SUCH COMMON SHARES WILL BE VOTED ACCORDINGLY.
UNLESS OTHERWISE INDICATED ON THE FORM OF PROXY, SHARES REPRESENTED BY PROPERLY
EXECUTED PROXIES IN FAVOUR OF PERSONS DESIGNATED IN THE PRINTED PORTION OF
THE
ENCLOSED FORM OF PROXY WILL BE VOTED (I) TO ELECT MANAGEMENT’S SEVEN NOMINEES
FOR DIRECTOR, (II) TO APPOINT PERRY SMITH LLP AS THE CORPORATION’S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2007 AND (III) TO APPROVE
AN
INCREASE OF 6,000,000 IN THE NUMBER OF AUTHORIZED SHARES AVAILABLE UNDER THE
ALTAIR NANOTECHNOLOGIES INC. 2005 STOCK INCENTIVE PLAN TO AN AGGREGATE OF
9,000,000 COMMON SHARES. The enclosed form of proxy confers discretionary
authority upon the persons named therein with respect to amendments or
variations to matters identified in the notice of Meeting, or other matters
which may properly come before the Meeting. At the time of printing this
Information Circular, management of the Corporation knows of no such amendments,
variations or other matters to come before the Meeting.
Voting
Securities and Principal Holders of Voting Securities
The
authorized capital of the Corporation consists of an unlimited number of Common
Shares. As of April 10, 2007, the Corporation had 70,020,626 Common Shares
issued and outstanding,
The
Corporation shall make a list of all persons who are registered holders of
Common Shares on April 10, 2007 (the “Record Date”) and the number of Common
Shares registered in the name of each person on that date. Each shareholder
is
entitled to one vote for each Common Share registered in his name as it appears
on the list.
One-third
of the outstanding Common Shares entitled to vote, represented in person or
by
properly executed proxy, is required for a quorum at the Meeting. Abstentions
will be counted as “represented” for purposes of determining the presence or
absence of a quorum. Complete broker non-votes, which are indications by a
broker that it does not have discretionary authority to vote on any of the
matters to be considered at the Meeting, will not be counted as “represented”
for the purpose of determining the presence or absence of a quorum.
To
the
knowledge of the directors and executive officers of the Corporation, as of
March 31, 2007, no person beneficially owns, directly or indirectly, or
exercises control or direction over more than 10% of the outstanding Common
Shares.
Under
the
Canada Business
Corporations Act
(the
“CBCA”), once a quorum is established, in connection with the election of
directors, the seven nominees receiving the highest number of votes will be
elected. In order to approve the proposal in respect of the appointment of
independent auditors and the increase in the number of authorized shares under
the Altair Nanotechnologies, Inc. 2005 Stock Incentive Plan (the “2005 Stock
Plan”), the votes cast in favour of such proposal must exceed the votes cast
against. Abstentions and broker non-votes will not have the effect of being
considered as votes cast against any of the matters considered at the
Meeting.
Exchange
Rate Information
The
following exchange rates represent the noon buying rate in New York City for
cable transfers in Canadian dollars (CDN. $), as certified for customs purposes
by the Federal Reserve Bank of New York. The following table sets forth, for
each of the years indicated, the period end exchange rate, the average rate
(i.e. the average of the exchange rates on the last day of each month during
the
period), and the high and low exchange rates of the U.S. Dollar (U.S. $) in
exchange for the Canadian Dollar (CDN. $) for the years indicated below, based
on the noon buying rates.
For
the Year Ended December 31,
|
|
2006
|
2005
|
2004
|
2003
|
2002
|
(Each
U.S. Dollar Purchases the Following Number of Canadian
dollars)
|
High
|
1.1726
|
1.2703
|
1.3970
|
1.5750
|
1.6128
|
Low
|
1.0989
|
1.1507
|
1.1775
|
1.2923
|
1.5108
|
Average
|
1.1340
|
1.2083
|
1.2984
|
1.3916
|
1.5702
|
Year
End
|
1.1652
|
1.1656
|
1.2034
|
1.2923
|
1.5800
|
PROPOSAL
NO. 1 — ELECTION OF DIRECTORS
The
Articles of Continuance of the Corporation (the “Articles”) provide that the
Board may consist of a minimum of three and a maximum of nine directors, to
be
elected annually. Each director will hold office until the next annual meeting
or until his successor is duly elected unless his office is earlier vacated
in
accordance with the by-laws of the Corporation. Pursuant to the Articles, the
Board has been empowered to set the size of the Board, subject to any
limitations set forth in the Articles or the CBCA. The Articles provide that
the
Board may, between meetings of shareholders, appoint one or more additional
directors, but only if, after such appointment, the total number of directors
would not be greater than one and one-third times the number of directors
required to have been elected at the last annual meeting of shareholders. The
entire Board is currently composed of eight directors but will be reduced
to seven directors effective as of the Meeting.
Certain
information with respect to the seven nominees of the Board for election as
directors is set forth in the table below:
Name
& Province/State and Country
|
Office
with Corporation
|
Period
of Service as a Director
|
Number
of Common Shares Beneficially Owned or Over Which Control or Direction
is
Exercised as of March 31, 2007(1)
|
Michel
Bazinet
Quebec,
Canada
|
Director
(B)
|
Since
2004
|
69,375(2)
|
Jon
N. Bengtson
Nevada,
U.S.A.
|
Chairman
(A)
|
Since
2003
|
94,375
(3)
|
Alan
J. Gotcher
Nevada,
U.S.A.
|
President,
Chief Executive Officer and Director
|
Since
2004
|
678,555(4)
|
George
Hartman
Ontario,
Canada
|
Director
(A)
|
Since
1997
|
105,675(5)
|
Robert
Hemphill
Maryland,
U.S.A.
|
Director
|
Since
April 2007
|
895,523(6)
|
Christopher
E. Jones
California,
U.S.A.
|
Director
(A)
|
Since
2004
|
94,375(7)
|
Pierre
Lortie
Quebec,
Canada
|
Director(B)
|
Since
2006
|
15,000
|
(A)
Member of Audit Committee
|
(B)
Member of Compensation, Corporate Governance and Nominations Committee
(the
“Compensation and Nominating
Committee”)
|
|
(1)
|
The
information as to Common Shares beneficially owned or over which
control
or direction is exercised is not within the knowledge of the Corporation
and has been furnished by the respective nominees individually. This
information includes all Common Shares issuable pursuant to the exercise
of options that are exercisable within 60 days of March 31, 2007.
This
information does not include any Common Shares subject to options
that are
not exercisable within 60 days of March 31, 2007 or subject to options
that vest only upon the occurrence of events, such as a rise in the
market
price of the Common Shares, outside of the control of the optionee.
|
|
(2)
|
Includes
50,000 Common Shares subject to options granted to Mr. Bazinet pursuant
to
the Corporation’s 1998 Stock Option Plan (the “1998
Plan”).
|
|
(3)
|
Includes
75,000 Common Shares subject to options granted to Mr. Bengtson pursuant
to the 1998 Plan.
|
|
(4)
|
Includes
300,000 Common Shares subject to options granted to Mr. Gotcher pursuant
to the 1998 Plan and 283,140 Common Shares subject to options granted
to
Mr. Gotcher pursuant to the Corporation’s 2005 Plan. Includes 5,265 Common
Shares owned by his wife and 1050 Common Shares owned by his adult
stepson, with respect to which Mr. Gotcher disclaims beneficial ownership.
|
|
(5)
|
Includes
85,000 Common Shares subject to options granted to Mr. Hartman pursuant
to
the 1998 Plan. Includes 500 Common Shares owned by Julie Bredin,
the
spouse of Mr. Hartman.
|
|
(6) |
The
owner of record of these shares is The AES Corporation, however, Mr.
Hemphill has no voting control and investment discretion over these
securities. Mr. Hemphill has no direct financial interest in such
securities and disclaims beneficial ownership of these
securities. |
|
(7)
|
Includes
75,000 Common Shares subject to options granted to Mr. Jones pursuant
to
the Corporation’s 1996 Stock Option Plan (the “1996
Plan”).
|
IF
ANY OF
THE NOMINEES IS FOR ANY REASON UNAVAILABLE TO SERVE AS A DIRECTOR, PROXIES
IN
FAVOUR OF MANAGEMENT WILL BE VOTED FOR ANOTHER NOMINEE IN THEIR DISCRETION
UNLESS THE SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS SHARES ARE TO BE
WITHHELD FROM VOTING IN THE ELECTION OF DIRECTORS.
Set
forth
below is a description of each of the directors of the Corporation who
is
nominted for election at the Meeting and each of the executive officers of
the Corporation, including their principal occupations for the past five
years.
Directors
Michel
Bazinet,
51,
has
been appointed a director of the Corporation since July 2004. Since January
2003, Dr. Bazinet has been chairman & chief executive officer of privately
held Replicor, Inc., which develops new antiviral therapies. Prior to his
involvement with Replicor, Inc., from 1996 to 2000, Dr. Bazinet was the founder
and medical director of Mediconsult, a healthcare knowledge company. Mediconsult
completed its initial public offering in 1999 and was ultimately acquired by
The
Cybear Group in 2000. Dr. Bazinet, a board-certified urologist, received his
MD
from Sherbrooke University. He completed his residency at McGill University,
Montreal, and has been a research fellow at Memorial Sloan-Kettering Cancer
Center, New York. Dr. Bazinet, a former assistant professor of both urology
and
oncology at McGill University, is also an accomplished speaker, medical industry
author and consultant. Dr. Bazinet is on the board of directors of Bioniche
Life
Sciences Inc., shares of which are traded on the Toronto Stock
Exchange.
Jon
N. Bengtson,
63, has
been a director of the Corporation since July 2003 and was appointed Chairman
of
the Board in June 2004. He served as the chairman of the board of The Sands
Regent Hotel Casino until its acquisition in January, 2007 and served as
chairman of the board of Radica Games Limited until its acquisition by Mattel,
Inc. in October 2006. Mr. Bengtson began his career with Harrah's Entertainment,
Inc., where he served for nine years in various management positions, including
vice president of management information systems. He joined International Game
Technology in 1980 as vice president, chief financial officer and director
and
was subsequently promoted to vice president of marketing in 1982. Mr. Bengtson
joined The Sands Regent Hotel Casino in June 1984 and served in various
positions, including vice president of finance and administration, chief
financial officer, treasurer and director, senior vice president and director,
executive vice president, chief operating officer and director until December
1993. In January 1994, he joined Radica Games Limited as vice president and
chief financial officer and was appointed president and chief executive officer
of Radica USA Ltd. in December 1994 and served as chairman of the board from
January 1996 until October 2006. Mr. Bengtson was a founder and chief financial
officer of ShareGate, Inc., a venture funded telecommunications equipment
company from March 1996 until October 2001. Mr. Bengtson is also the founder
and
Director for Pinyon Technology, a start-up technology corporation developing
wireless smart antenna networking technology. He holds a bachelors degree in
business administration and a Master of Business Administration from the
University of Nevada, Reno.
Alan
J. Gotcher,
57, was
appointed as Chief Executive Officer and a director of the Corporation in August
2004 and was also appointed as President of the Corporation in March 2005.
Mr.
Gotcher is also a director and the President of each of the Corporation’s
subsidiaries. Prior to joining the Corporation, Dr. Gotcher was chairman and
chief executive officer of InDelible Technologies, Inc., a development stage
company that provides secure logistics through covert bar code marking systems
and invisible bar code reading technologies from January 2000 to August 2004.
From 2000 through 2003, Dr. Gotcher was co-managing partner of IdeaSpring,
LLC,
a private investment company. Prior to founding InDelible, Dr. Gotcher spent
fourteen years with Avery Dennison, where he served as senior vice president,
manufacturing & technology, and chief technology officer. During his tenure,
Dr. Gotcher led Avery’s teams that created and commercialized the Duracell
On-Cell tester battery label and pressure sensitive battery labels and the
United States Postal Service’s self-stick stamp products. Prior to joining Avery
Dennison, Dr. Gotcher was laboratory director, U.S. Corporate Research and
Development, with Raychem Corporation where he lead the business development
teams that created, developed and commercialized the conductive polymer- based
PolySwitch® over-current protection device business. Dr.
Gotcher received his Ph.D. in Chemistry from the University of California,
Irvine.
George
E. Hartman,
58, was
elected a director of the Corporation in March 1997. From 1995 until 1998,
Mr.
Hartman served as president of Planvest Pacific Financial Corp., a
Vancouver-based financial planning firm with U.S. $1 billion of assets under
management. Mr. Hartman also served on the board of directors of the parent
of
Planvest Pacific Financial Corp., Planvest Capital Corp. (TSE:PLV). From 1998
until 2000, Mr. Hartman was senior vice president of Financial Concept Group
until the firm’s sale to Assante Corporation, a North American financial
services industry consolidator. At that time, he became chief executive officer
of PlanPlus Inc., Canada’s oldest firm specializing in the development and
distribution of wealth management software. In April 2004, Mr. Hartman joined
The Covenant Group, a management-consulting firm where he is Senior
Vice-President, Corporate Capabilities. Mr. Hartman is the author of Risk is
a
Four-Letter Word-The Asset Allocation Approach to Investing (1992) and its
sequel; Risk is STILL a Four Letter Word (2000), both of which achieved
best-seller status in Canada. Mr. Hartman also continues as President of Hartman
& Company, Inc., a firm he founded in 1991 which provides consulting
services to the financial services industry. Mr. Hartman holds a Masters of
Business Administration from Wilfred Laurier University in Waterloo, Ontario.
Mr. Hartman is also a director of PlanPlus Inc., a private corporation engaged
in the development and distribution of wealth management software.
Robert
F. Hemphill, Jr., 64,
a
nominee for inclusion on the Board of Directors, began
serving as Executive Vice President of The AES Corporation (AES:NYSE) in
2005.
AES is one of the world’s largest global power companies with operations in 26
countries on five continents. Mr. Hemphill joined AES in 1981 and has held
a
series of senior leadership positions, including serving as AES’s Executive Vice
President of Global Development from 2003 to 2004. Earlier in his tenure,
he
participated in or oversaw the development of many of AES’s earliest projects.
Mr. Hemphill resigned from The AES Corporation in June 1996 and subsequently
returned in January 2003. Mr. Hemphill also served as a member of the AES
Board
of Directors from June 1996 to February 2004. From 1995 to 2002, Mr. Hemphill
served as the Managing Director of Toucan Capital Fund II, L.P., a $120 million
private venture capital fund focused on seed and early-stage life science
and
advanced technology investments. Prior to joining AES in 1981, Mr. Hemphill
held
senior management positions with the Tennessee Valley Authority, US Department
of Energy and the Office of Management and Budget. Mr. Hemphill is a director
of
Reactive NanoTechnologies Inc., a private company engaged in the development
and
manufacture of nanotechnology designed to control the instantaneous release
of
heat energy for reaction initiation and American Grid Inc., a private company
engaged in systems integration for the power distribution industry. Mr. Hemphill
holds a bachelor’s degree in political science from Yale University, a masters
in political science from the University of California, Los Angeles, and
a
Masters of Business Administration from The George Washington University.
The
appointment of Mr. Hemphill was recommended by Alan Gotcher, our Chief Executive
Officer.
Christopher
E. Jones, 60,
was
appointed a director of the Corporation in May 2004. Since 1998, Mr. Jones
has
been the Senior Vice President of Manufacturing and Engineering at Behr Process
Corporation, where he is responsible for the construction and operations of
all
coating plant operations for the largest DIY architectural coatings corporation
in North America. Prior to joining Behr, Mr. Jones was the president of Kronos
Louisiana and the vice president of manufacturing of Kronos International,
Inc.,
a producer of titanium dioxide. Mr. Jones earned a Bachelors of Arts degree
in
Chemistry from Oakland University and a Ph.D. in Organo-Metallic Chemistry
from
Michigan State University and completed postdoctoral work at University of
Leeds, England and University of Alberta in Edmonton, Canada.
Pierre
Lortie, 60,
was
appointed a director of the corporation in June, 2006. Since May 2006, Mr.
Lortie has served as Senior Business Advisor to Fraser Milner Casgrain LLP,
one
of Canada's leading full service business law firms serving both Canadian and
international clients. From June 2004 to December 2005, Mr. Lortie was the
President of the Comité de transition de l’aggloméation de Montréal. Since April
2004, Mr. Lortie has served as the President of G&P Montrose, a management
consulting company. Mr. Lortie worked at Bombardier for more than ten years,
including serving as president and COO of Bombardier’s transportation, capital,
international and regional aircraft aerospace groups from December 2000 to
December 2003. Mr. Lortie has held several positions in the technology field,
including Chairman of the Centre for Information Technology Innovation and
Vice
Chairman of Canada’s National Advisor Board on Science and Technology. Mr.
Lortie was a representative of the Prime Minister of Canada on the APEC Business
Advisory Council (ABAC) from 1999 to 2004. He currently serves as chairman
of
the board of Lyrtech (TSX-V:LYT), a public corporation engaged in electronic
design, prototyping, and manufacturing of advanced digital signal processing
solutions, as chairman of the board of Country Style Food Services, a private
corporation engaged in quick food restaurant services, and is a director of
Dynaplas, a private corporation engaged in precision injection moulding
manufacturing for the automotive industry, and Group Canam (TSX-V:CAM), a public
corporation engaged in the design and fabrication of construction products
and
solutions. Mr. Lortie holds a bachelor’s degree in Applied Sciences in
Engineering Physics from Université Laval, a degree in Applied Economics from
the Université de Louvain, Belgium, and a Masters of Business Administration
with honors from the University of Chicago.
Executive
Officers
The
executive officers of the Corporation are Alan J. Gotcher, Edward H. Dickinson,
Bruce Sabacky, and Douglas K. Ellsworth. On February 23, 2007, Stephen A. Balogh
was appointed as an officer of the Company. Certain information regarding Dr.
Gotcher is set forth above under “Election of Directors - Directors.” Certain
information regarding Messrs. Dickinson, Sabacky Ellsworth, and Balogh
follows.
Edward
H. Dickinson,
60, was
appointed Chief Financial Officer of the Corporation in March 2000, and was
appointed Secretary in June 2001. Mr. Dickinson had previously served as
Director of Finance of the Corporation from August 1996 through March 2000.
Mr.
Dickinson is a director, treasurer and secretary of each of the Corporation’s
subsidiaries. From 1994 to 1996, Mr. Dickinson was employed by the Southern
California Edison Company as a negotiator of non-utility power generation
contracts. Mr. Dickinson was vice president and director of Geolectric Power
Company during 1993 and 1994, and from 1987 through 1992, he was the director
of
finance and administration for OESI Power Corporation. Prior to 1987, Mr.
Dickinson held various accounting and program management positions in the United
States Department of Energy. Mr. Dickinson obtained a masters degree in
accounting from California State University, Northridge in 1978.
Bruce
J. Sabacky, 56,
was
appointed Chief Technology Officer of the Corporation in June, 2006. Dr. Sabacky
was appointed Vice President of Research and Engineering for Altairnano, Inc.,
the operating subsidiary through which the Corporation conducts its
nanotechnology business, in October 2003. Dr. Sabacky joined Altairnano, Inc.
in
January 2001 as Director of Research and Engineering. Prior to that, he was
the
manager of process development at BHP Minerals Inc.’s Center for Minerals
Technology from 1996 to 2001, where he was instrumental in developing the
nanostructured materials technology. Dr. Sabacky was the technical
superintendent for Minera Escondida Ltda. from 1993 to 1996 and was a principal
process engineer with BHP from 1991 to 1993. Prior to that, he held senior
engineering positions in the minerals and metallurgical industries. Dr. Sabacky
obtained bachelor of science and master of science degrees in metallurgical
engineering from the South Dakota School of Mines and Technology and a Ph.D.
in
materials science & mineral engineering with minors in chemical engineering
and mechanical engineering from the University of California,
Berkeley.
Douglas
K. Ellsworth,
53,
served as President, Altairnano, Inc., the operating subsidiary through which
the Corporation conducts its nanotechnology business, from June 2003 through
February 2007 and has served as Senior Vice President of the Corporation since
March 2004. Mr. Ellsworth previously held various other positions with
Altairnano. Inc. Prior to joining the Corporation, Mr. Ellsworth was the manager
of technical support for the BHP Inc. Center for Minerals Technology in Reno,
Nevada from 1984 through 1999. Mr. Ellsworth began work at BHP in 1984 as the
chief chemist. Mr. Ellsworth worked as a chemist and manager at Skyline Labs
in
Colorado and Alaska from 1975 to 1979 and as a chemist for Utah International,
Inc.'s Minerals Laboratory in Sunnyvale California from 1979-1984. Mr Ellsworth
received his bachelor of science degree in chemistry and geology from the State
University of New York College, Oneonta.
Stephen
A. Balogh, 60,
joined the Corporation as Vice President, Human Resources, in July 2006. In
2001, Mr. Balogh founded PontusOne, providing executive search and consulting
services to technology companies, where he continued to work through 2007.
Before founding PontusOne, Mr. Balogh was a managing partner of David Powell,
Inc., a Silicon Valley based executive search firm from 1997 to 2001.
Previously, Mr. Balogh served more than 23 years in various managerial positions
at Raychem Corporation, a multibillion-dollar, international material science
company. In his last position, he served as Raychem’s Corporate vice president
of human resources from 1990 through 1996. From 1984 to 1990 at Raychem, Mr.
Balogh was general manager for Chemelex, a worldwide division of Raychem. His
extensive global business experience with Raychem includes expatriate
assignments in both Brussels and Paris. Mr. Balogh holds a bachelor of science
degree and a Dean’s Certificate of Advanced Engineering Study in chemical
engineering from Cornell University and a masters of business administration
from the Stanford Graduate School of Business.
Security
Ownership of Certain Beneficial Owners and Management
Set
forth
below is information with respect to beneficial ownership of Common Shares
as of
March 31, 2007 by the Corporation’s Chief Executive Officer, Chief Financial
Officer and by the three other most highly compensated continuing executive
officers (collectively, the “named executive officers”), by each of the
directors of the Corporation and by all current officers and directors of
the
Corporation as a group. To our knowledge, no persons beneficially own more
than
5% of the outstanding Common Shares. Unless otherwise indicated, each of
the
shareholders named in the table has sole voting and investment power with
respect to the Common Shares identified as beneficially owned. The Corporation
is not aware of any arrangements, the operation of which may at a subsequent
date result in a change in control of the Corporation.
Title
of Class
|
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership (1)
|
Percentage
of Class (2)
|
Common
|
Alan
J. Gotcher (President, Chief Executive Officer and Director)
930
Tahoe Blvd., #802-216
Incline
Village, Nevada 89451
|
678,555(3)
|
1.0%
|
Common
|
Edward
H. Dickinson (Chief Financial Officer and Secretary)
659
Caughlin Glen
Reno,
Nevada 89519
|
463,012(4)
|
*
|
Common
|
Douglas
K. Ellsworth (Senior Vice President)
4310
Wild Eagle Terrace
Reno,
Nevada 89511
|
161,058(5)
|
*
|
Common
|
Stephen
Balogh (Vice President, Human Resources)
20162
Bordeaux Drive
Reno,
Nevada 89511
|
75,263(6)
|
*
|
Common
|
Bruce
J. Sabacky (Chief Technology Officer)
8555
Council Lane
Reno,
Nevada 89511
|
102,074(7)
|
*
|
Common
|
Michel
Bazinet (Director)
343
Brookfield Avenue
Mount-Royal,
Quebec H3P 2A7
|
69,375(8)
|
*
|
Common
|
Jon
N. Bengtson (Director)
2370
Solari Drive
Reno,
Nevada 89509
|
94,375
(9)
|
*
|
Common
|
James
I. Golla (Director)
829
Terlin Boulevard
Mississauga,
Ontario L5H 1T1
|
132,375
(10)
|
*
|
Common
|
George
Hartman (Director)
80
Cumberland Street
Toronto,
ON M5R 3V1
|
105,675
(11)
|
*
|
Common
|
Christopher
Jones (Director)
1140
Cuchara Drive
Del
Mar, California 92014
|
94,375
(12)
|
*
|
Common
|
Pierre
Lortie (Director)
243
Montrose
Saint-Lambert,
A8 J4R 1X4
|
15,000
|
*
|
Common
|
Robert
F. Hemphill, Jr. (Director)
9306
Kendale Road
Potomac,
Maryland 20854
|
895,523(13)
|
1.3%
|
Common
|
All
Directors and Officers as a Group
(12
persons)
|
2,886,660
(14)
|
4.1%
|
*
Represents less than 1% of the outstanding Common Shares.
|
(1)
|
Includes
all Common Shares issuable pursuant to the exercise of options and
warrants that are exercisable within 60 days of March 31, 2007. Does
not
include any Common Shares subject to options that are not exercisable
within 60 days of March 31, 2007 or subject to options that vest
only upon
the occurrence of events, such as a rise in the market price of the
Common
Shares, outside of the control of the optionee.
|
|
(2)
|
Based
on 70,020,626 Common Shares outstanding as of March 31, 2007. Common
Shares underlying options, warrants or other convertible or exercisable
securities are, to the extent exercisable within 60 days of March
31,
2007, deemed to be outstanding for purposes of calculating the percentage
ownership of the owner of such convertible securities, but not for
purposes of calculating any other person’s percentage ownership.
|
|
(3)
|
Includes
300,000 Common Shares subject to options granted to Mr. Gotcher pursuant
to the 1998 Plan and 283,140 Common Shares subject to options granted
to
Mr. Gotcher pursuant to the 2005 Plan. Includes 5,265 Common Shares
owned
by his wife and 1,050 Common Shares owned by his adult stepson, with
respect to which Mr. Gotcher disclaims beneficial ownership
|
|
(4)
|
Includes
150,000 Common Shares subject to options granted to Mr. Dickinson
pursuant
to the 1996 Plan, 211,200 Common Shares subject to options granted
to Mr.
Dickinson pursuant to the 1998 Plan and 95,312 Common Shares subject
to
options granted to Mr. Dickinson pursuant to the 2005 Plan.
|
|
(5)
|
Includes
127,200 Common Shares subject to options granted to Mr. Ellsworth
pursuant
to the 1998 Plan and 28,525 Common Shares subject to options granted
to
Mr. Ellsworth pursuant to the 2005 Plan.
|
|
(6)
|
Includes
51,963 Common Shares subject to options granted to Mr. Balogh pursuant
to
the 2005 Plan. Includes 23,000 shares owned by Linda Balogh, the
spouse of
Mr. Balogh.
|
|
(7)
|
Includes
25,000 Common Shares subject to options granted to Mr. Sabacky pursuant
to
the 1998 Plan and 77,704 Common Shares subject to options granted
to Mr.
Sabacky pursuant to the 2005 Plan.
|
|
(8)
|
Includes
50,000 Common Shares subject to options granted to Mr. Bazinet pursuant
to
the 1998 Plan.
|
|
(9)
|
Includes
75,000 Common Shares subject to options granted to Mr. Bengtson pursuant
to the 1998 Plan.
|
|
(10)
|
Includes
10,000 Common Shares subject to options granted to Mr. Golla pursuant
to
the 1996 Plan and 85,000 Common Shares subject to options granted
to Mr.
Golla pursuant to the 1998 Plan.
|
|
(11)
|
Includes
85,000 Common Shares subject to options granted to Mr. Hartman pursuant
to
the 1998 Plan. Includes 500 Common Shares owned by Julie Bredin,
the
spouse of Mr. Hartman.
|
|
(12)
|
Includes
75,000 Common Shares subject to options granted to Mr. Jones pursuant
to
the 1996 Plan.
|
|
(13)
|
The owner of record of these shares is The AES
Corporation, however, Mr. Hemphill has voting control and investment
discretion over these securites. Mr. Hemphill has no direct
financial interest in such securities and disclaims beneficial ownership
of these securities. |
|
(14)
|
Includes
235,000 Common Shares subject to options granted to officers and
directors
pursuant to the 1996 Plan, 958,400 Common Shares subject to options
granted to officers and directors pursuant to the 1998 Plan and 536,014
Common Shares subject to options granted to officers and directors
pursuant to the 2005 Plan.
|
Compensation,
Nominating and Governance Committee
The
Compensation, Nominating and Governance Committee discharges the Board’s
responsibilities relating to compensation of the Corporation’s directors and
officers, to oversee and monitor the Corporation’s management in the interest
and for the benefit of the stockholders and assist the board by identifying
individuals qualified to become board members. The Compensation, Nominating
and
Governance Committee has overall responsibility for approving and evaluating
the
director and officer compensation plans, policies and programs of the
Corporation.
The
members of the Compensation, Nominating and Governance Committee are Pierre
Lortie (Chair), James Golla and Michel Bazinet, each of whom is independent
under NASDAQ’s listing standards. Prior to June 1, 2006, the members of the
Compensation, Nominating and Governance Committee were George Hartman (Chair),
James Golla and David King. The Compensation, Nominating and Governance
Committee met one time during 2006 in person or by telephone. The charter
governing operations of the Compensation, Nominating and Governance Committee
was adopted in April 2004 and updated in February 2007, and is available at
the
Corporation’s website at www.altairnano.com under “Investor Relations.”
Compensation,
Nominating and Governance Committee Interlocks and Insider Participation
The
members of the Compensation, Nominating and Governance Committee are Pierre
Lortie (Chair), James Golla and Michel Bazinet. Prior to June 1, 2006, the
members of the Compensation, Nominating and Governance Committee were George
Hartman (Chair), James Golla and David King. None of Messrs. Lortie, Golla,
Bazinet, Hartman or King is currently, or has formerly been, an officer or
employee of the Corporation or any of its subsidiaries. The Corporation had
no
relationship during 2006 requiring disclosure under Item 404 of Regulation
S-K
with respect to any of the persons who served on the Compensation, Nominating
and Governance Committee during 2006.
Compensation
Discussion & Analysis
Pursuant
to Item 402(b) of Regulations S-K, promulgated under the United States
Securities Act of 1933, as amended (the “Securities Act”), the following
discussion is meant to provide an overview of the material elements of the
Corporation’s compensation policy (the “Compensation Policy”). The following
discussion is meant to be a principle-based discussion of the Corporation’s
compensation policies and provide context to the tables that follow. Specific
reference to disclosures in the Compensation Tables will be discussed in
narrative descriptions following the respective Compensation Tables.
Compensation
Philosophy
The
objectives of our executive officer compensation policy are to attract and
retain talented and dedicated executives, to tie compensation to the achievement
of specified short-term and long-term performance objectives, and to align
executives’ incentives with the creation of shareholder value. The Compensation,
Nominating and Governance Committee approves and annually evaluates the
Corporation’s compensation policies applicable to, and the performance of, the
Corporation’s executive officers, including the Chief Executive Officer, Chief
Financial Officer and the other executive officers identified in the Summary
Compensation Table on page 19 (referred to as the “named executive officers”).
The
following objectives guide compensation decisions:
|
-
|
Provide
a competitive total compensation package that enables the Corporation
to
attract and retain key executive
talent;
|
|
-
|
Align
key elements of compensation with the Corporation’s annual and long-term
business strategies & objectives;
and
|
|
-
|
Provide
a mix of base compensation and performance-based compensation that
directly links executive rewards to the performance of the Corporation
and
shareholder return.
|
Elements
of Executive Compensation
The
principal components of compensation for the Corporation’s named executive
officers are as follows:
|
-
|
Annual
incentive bonus;
|
|
-
|
Long-term
equity-based incentives, primarily stock options;
and
|
Named
executive officers are entitled to benefits generally available to all full-time
salaried employees of the Corporation. These benefits include up to 5 weeks
per-year of paid time off for medical and vacation leave, subsidized group
health plan coverage offered to all salaried employees of the Corporation,
and
eligibility to participate in the Corporation’s 401(k) Profit Sharing Plan (the
“401(k) Plan”), matching contributions under the 401(k) Plan in an amount up to
the greater of 50% of the first $2,500 contributed or 3% of the employee’s base
salary. As explained in “Termination and Change of Control Agreements” below,
certain named executive officers may be entitled to severance payments in
connection with a change of control or termination of their employment. Other
than as described above, the named executive officers are not provided with
special benefits or perquisites such as company cars, enhanced medical plans
or
dental plans.
Determination
of Compensation
In
order
to evaluate the Corporation’s competitiveness and appropriateness of the
Corporation’s total compensation, and mix of compensation, for executive
officers, the Compensation, Nominating and Governance Committee reviews data
on
the base, annual incentive bonus and equity-based incentive compensation for
various executive positions, as well as the mix of compensation components,
of
executive officers of a benchmark group of companies (about 240) that comprise
the chemicals and biotech/biopharma business sectors of reporting public
companies with annual revenues of less than $100-million.
In
addition, the Compensation, Nominating and Governance Committee receives a
report on the base, annual incentive bonus and equity-based incentive
compensation for various executive positions at the following selected 24
nanotechnology or biopharma companies:
Accelrys,
Inc.
Advanced
Battery Technologies, Inc.
Arrowhead
Research Corp.
Biophan
Technologies, Inc.
Biosante
Pharmaceuticals, Inc.
Cambridge
Display Technology, Inc.
FEI
Co.
Harris
& Harris Group, Inc.
Immunicon
Corp.
JMAR
Technologies, Inc.
Lumera
Corp.
Luna
Innovations, Inc.
Nano
Chemical Systems Holdings, Inc.
Nano
Proprietary, Inc.
Nanogen,
Inc.
Nanometrics,
Inc.
Nanophase
Technologies Corp.
NVE
Corp.
Spectrum
Pharmaceuticals, Inc.
SYMX
Technologies, Inc.
Tegal
Corp.
US
Global
Nanospace, Inc.
VEECO
Instruments, Inc.
The
Compensation, Nominating and Governance Committee may add or delete from this
select group from year to year. This group is used as a second source of
benchmark information. Equilar, an independent company, produces all
compensation reports.
In
addition to the benchmark company information, in determining the amount of
and
mix of compensation, the Compensation, Nominating and Governance Committee
considers evaluations of the Chief Executive Officer by each of the directors
the Corporation, the recommendations of the Chief Executive Officer and Vice
President of Human Resources with respect to officers other than the Chief
Executive Officer, the performance of each executive officer against
pre-determined business goals and objectives and the potential role of the
executive in the strategic plan of the Corporation. Subject to adjustment upward
or downward based upon the various evaluations, the Compensation, Nominating
and
Governance Committee generally targets base compensation and equity-based
incentive awards near the median of the benchmark group and targets maximum
annual incentive bonus near the 75th
percentile of the benchmark group.
Mix
of Compensation
The
Compensation, Nominating and Governance Committee believes that a significant
percentage of the annual compensation of the named executive officers should
be
at-risk. During 2006, between approximately 38% and 44% of the named executive
officers’ potential annual compensation was dependent upon the achievement of
individual and corporate goals. In addition, stock options granted to the
Corporation’s named executive officers for retention and incentive purposes
generally vest over a period of three years.
The
percentage of compensation at risk increases as the level of position increases,
with the top figures in each of the ranges set forth above being that of the
Corporation’s Chief Executive Officer. This provides additional upside potential
and downside risk for senior positions, recognizing that these roles have
greater influence on the Corporation’s performance.
Base
Salary
Base
salaries for the named executive officers are established based on the scope
of
their responsibilities, their skills and their historical and potential
contributions to the Corporation, as well as the compensation paid by
benchmarked companies for similar positions. Generally, base salaries are
targeted near the median of the range of salaries for executives in similar
positions with similar responsibilities at benchmark companies, in line with
our
compensation philosophy. Base salaries are reviewed annually, and adjusted
from
time to time to realign salaries with market levels after taking into account
individual responsibilities, performance and experience.
Annual
Incentive Bonus
The
annual incentive bonus is intended to compensate executives for achieving
corporate goals and individual performance objectives. A portion, usually 50%,
of each named executive officer’s annual incentive bonus is contingent upon the
Corporation achieving pre-determined financial and operational goals. In
addition, a portion, usually 50%, of each named executive officer’s annual
incentive bonus is contingent upon the achievement of pre-determined objectives
within the scope of influence of the particular executive. Examples include
strategic factors such as cash flow, product sales, new product & process
developments, net loss and stock price.
Decisions
with respect to annual incentive bonus are made shortly after the end of each
fiscal year. At the beginning of each year, the Compensation, Nominating and
Governance Committee sets annual performance goals, a target and maximum
incentive bonus amount and a formula for determining the amount, if any, of
the
bonus each executive officer is entitled to receive. Annual incentive bonuses
are paid 60% cash and 40% in stock options (with the value of the stock options
being determined using the Black-Scholes formula). The Compensation, Nominating
and Governance Committee reserves the right to award annual incentive bonuses
above, and below, target amounts as it deems appropriate.
Targets
and Results for 2006. During
2006, each named executive officer was eligible for target annual incentive
bonuses ranging from 60% to 80% of his base salary, depending on his position.
Of these amounts, 50% was tied to the achievement of corporate goals,
specifically a revenue and net loss target in line with the Corporation’s
board-approved budget, and 50% was tied to the performance of individual goals.
The Compensation, Nominating and Governance Committee reserve the discretion
to
award, or to deny, annual incentive bonuses whether or not performance targets
were achieved, as it deems appropriate.
In
2006,
the Corporation reached 79.3% of the revenue goal and 75% of the net loss goal.
As a result, named executive officers were not eligible to, and did not, receive
the 50% of the annual incentive bonus tied to achievement of corporate goals.
In
2006,
three of the four named executive officers achieved or exceeded all individual
goals. As a result, each named executive officer was eligible to receive, and
was paid, the 50% of the annual incentive bonus tied to achievement of
individual goals.
Based
upon having achieved his individual goals in 2006, Alan Gotcher, the
Corporations’ Chief Executive Officer, received an annual incentive bonus of
$86,400 in cash and options to purchase an aggregate of 32,224 Common Shares
at
an exercise of $2.63 per share (with a deemed value of $55,446). The options
were granted on January 15, 2007, have a 10-year term and vest immediately.
The
option exercise price was equal to the fair market value of the underlying
Common Shares on the date of grant.
Based
upon having achieved their individual goals in 2006, the remaining four named
executive officers received a combined annual incentive bonus of $65,400 in
cash
and options to purchase an aggregate of 25,603 Common Shares at an exercise
of
$2.63 per share (with a deemed value of $41,912). The options were granted
on
January 15, 2007, have a 10-year term and vest immediately.
Long
term Equity-Based Incentives
The
Corporation’s 2005 Stock Incentive Plan (the “2005 Stock Plan”) was adopted at
the Corporation’s Annual Meeting of Shareholders in May 2005. Under the 2005
Stock Plan, the Corporation is authorized to issue equity-based awards,
including stock options, stock bonuses, restricted stock, stock appreciation
rights, and performance-based awards, with respect to up to 3,000,000 Common
Shares. The Compensation, Nominating and Governance Committee and the Board
of
Directors have joint authority to grant awards under the 2005 Stock
Plan.
The
Corporation had previous authorized its 1996 Stock Option Plan and 1998 Stock
Option Plan, under which an aggregate of 1,915,600 awards continue to be
outstanding as of March 15, 2007; however, awards can no longer be granted
under
such plans.
The
Corporation’s long-term equity-based incentive program is focused on rewarding
performance that enhances shareholder value. The program involves the periodic
grant of options to purchase Common Shares in order to provide executive
officers with the opportunity to purchase an equity interest in the Corporation
and to share in the appreciation of the value of the Corporation’s Common
Shares.
The
program currently consists of two components. First, as explained above, 40%
of
the annual incentive bonus for each executive officer is paid in the form of
a
stock option. The value of each option is determined using the Black-Scholes
formula, and the options have an exercise price equal to the market price on
the
date of grant, a 10-year term and vest immediately upon grant. Discretionary
bonuses may also be paid through the grant of stock options.
Second,
the Compensation, Nominating and Governance Committee periodically considers
whether or not to grant additional stock options in order to maintain the
overall competitiveness of the Corporation’s compensation package for each
executive officer and to ensure that executives, particularly executives whose
other stock options have vested and or been exercised, have an incentive to
remain with the Corporation long term and to increase shareholder value. Factors
weighed in determining whether to make, and the amount of, these grants include
the above-described review of benchmark compensation data and assessment of
past
performance, retention considerations, information regarding each named
executive officer’s existing equity and stock option ownership, potential
shareholder dilution and the expense to the Corporation pursuant to Standard
of
Financial Accounting Standards No. 123(R), Share-Based Payment (“FAS No.
123(R)”). Such options generally have an exercise price equal to the market
price on the date of grant, a 10-year term and generally vest over a three-year
term.
In
addition, from time to time stock option grants are made to newly hired
employees based on their level of responsibility and competitive
practices.
Retention
Grants.
In
addition to the stock options awarded to him as part of his annual incentive
bonus, Alan Gotcher was awarded a grant of options to purchase 200,000 Common
Shares at an exercise price of $2.63 per share on January 15, 2007. The options
have a 10-year term and vest 33% immediately, 33% on January 15, 2008, and
33%
on January 15, 2009. This retention grant was determined to be in line with
median grants to CEO’s in benchmarked companies.
In
addition to the stock options awarded to them as part of their annual incentive
bonuses, the remaining named executive officers were granted retention options
to purchase an aggregate of 245,500 Common Shares at an exercise price of $2.63
per share on January 15, 2007. The options have a 10-year term and vest 33%
immediately, 33% on January 15, 2008, and 33% on January 15, 2009.
Discretionary
Bonus
The
Compensation and Nominations Committee may also make discretionary bonuses
from
time to time if it determines, after considering the total base salary, annual
incentive bonus and equity-based compensation to the executive, that the total
compensation otherwise earned by the executed underrepresented the value or
contribution of the executive during the year. A discretionary bonus may also
be
considered if necessary for retention or other purposes.
Results
for 2006. During
2006, the Compensation and Nominations Committee determined to grant Alan
Gotcher a discretionary bonus in the form of options to purchase 64,448 Common
Shares at an exercise price of $2.63 per share (with a deemed value of $110,892
based upon the Black-Scholes formula). The options were granted on January
15,
2007, have a 10-year term and vest immediately. The option exercise price is
equal to the fair market value of a Common Share on the grant date.
No
other
named executive officers received a discretionary bonus.
Compensation
Adjustments
The
Corporation may increase or decrease an executive’s overall compensation at any
time during any fiscal year after considering several factors, including level
and scope of responsibilities, contribution to overall corporate performance
and
achievement of personal goals and objectives.
Termination
and Change-of-Control Agreements
The
employment agreements of the following named executive officers provide for
termination and change of control benefits as follows:
Under
the
employment agreement of our Chief Executive Officer, Dr. Alan Gotcher, if Dr.
Gotcher’s employment is terminated by the Corporation without cause or by Dr.
Gotcher with good reason during the term, which expires on February 17, 2009,
he
is entitled to receive his base salary, continuing group plan health coverage
and his annual incentive bonus, to the extent earned, for a period of 12 months
from the date of termination. If Dr. Gotcher’s employment is terminated by the
Corporation without cause subsequent to a Change of Control during the term,
he
is entitled to receive his base salary and continuing group health plan coverage
for a period of 24 months from the date of termination. A “Change of Control”
includes (a) any capital reorganization, reclassification of the capital stock
of the Corporation, consolidation or merger of the Corporation with another
corporation in which the Corporation is not the survivor (other than a
transaction effective solely for the purpose of changing the jurisdiction of
incorporation), (b) the sale, transfer or other disposition of all or
substantially all of the Corporation’s assets to another entity, or (c) the
acquisition by a person or group of more than 40% of the Common Shares of the
Corporation. Dr. Gotcher’s current base salary is $360,000 per year, and his
target bonus for 2007 is $288,000.
Under
the
employment agreement of our Chief Financial Officer, Edward Dickinson, if Mr.
Dickinson’s employment is terminated by the Corporation without cause or by Mr.
Dickinson with good reason during the term, which expires on February 17, 2008,
he is entitled to receive his base salary and continuing group health plan
coverage for a period of 12 months from the date of termination. If Mr.
Dickinson’s employment is terminated by the Corporation without cause subsequent
to a Change of Control during the term, he is entitled to receive his base
salary and continuing group health plan coverage for a period of 18 months
from
the date of termination. Mr. Dickinson’s current base salary is $190,000 per
year.
Under
the
employment agreement of our Chief Technology Officer, Dr. Bruce Sabacky, if
Dr.
Sabacky’s employment is terminated by the Corporation without cause or by Dr.
Sabacky with good reason during the term, which expires on June 1, 2008, he
is
entitled to receive his base salary and continuing group health plan coverage
for a period of 12 months from the date of termination. If Dr. Sabacky’s
employment is terminated by the Corporation without cause subsequent to a Change
of Control during the term, he is entitled to receive his base salary and
continuing group health plan coverage for a period of 18 months from the date
of
termination. Dr. Sabacky’s current base salary is $190,000 per year.
The
Compensation, Nominating, and Governance Committee believes that providing
a
reasonable severance arrangement tied to termination without cause is essential
to attracting and retaining talented executive officers. In addition, the
Compensation, Nominating and Governance Committee believes that the severance
arrangements provided to certain of its named executive officers serve the
best
interests of the Corporation and its shareholders by ensuring that, if a hostile
or friendly change of control is under consideration, its executives will feel
secure enough about their post-transaction financial future that they will
advise the Board of Directors about the potential transaction without
consideration, or with lessened consideration, of any adverse effect of the
transaction on their future compensation. The Corporation has no other severance
agreements in place with other employees.
Role
of Executive Officers in Determining Executive Pay
The
Compensation Committee makes all decisions with respect to base compensation,
annual incentive compensation and the award of stock options to the executive
officers of the Corporation, including all named executive officers.
At
the
end of each fiscal year, the Corporation’s Vice President of Human Resources and
Chief Executive Officer are responsible for evaluating the performance of each
named executive officer (and other officers) against corporate and individual
performance objectives and for submitting a report to the Compensation Committee
detailing the results of their evaluations. In connection with this report,
each
of the Vice President of Human Resources and Chief Executive Officer makes
recommendations to the Compensation Committee with respect to compensation
matters related to the prior year, including employee-specific recommendations
but not with respect to himself. In addition, each of the two officers makes
recommendations to the Compensation Committee with respect to compensation
matters related to the upcoming year, including employee-specific
recommendations (but not with respect to himself) and strategic and design
recommendations. The Compensation, Nominating and Governance Committee considers
these recommendations, and the report of these officers, among other factors
by
the Compensation Committee as it makes prior-year and coming-year compensation
decisions.
Tax
and Accounting Considerations
Accounting
Treatment
The
Corporation adopted Standard of Financial Accounting Standards No. 123(R),
Share-Based Payment, which requires companies to expense the costs of
stock-based compensation in their financial statements. As such, the
Corporation began recording stock-based compensation expense in the income
statement in 2006. The fair value of each award is estimated on the date
of grant, using the Black-Scholes option-pricing model. Once the fair value
of each award is determined, it is expensed in the income statement over the
vesting period.
Deductibility
of Executive Compensation
Section 162(m)
of the United States Internal Revenue Code of 1986, as amended (the “Code”),
imposes a $1 million annual limit on the amount that a public company may deduct
for compensation paid during a tax year to the company’s Chief Executive Officer
or to any of the company’s four other most highly compensated executive officers
who are still employed at the end of the tax year. The limit does not apply
to
compensation that the meets the requirements of Code Section 162(m) for
“qualified performance-based” compensation (i.e., compensation paid only if the
executive meets pre-established, objective goals based upon performance criteria
approved by the company’s shareholders).
The
Compensation, Nominating and Governance Committee reviews and considers the
deductibility of executive compensation under Section 162(m) of the Code.
In certain situations, the Compensation, Nominating and Governance Committee
may
approve compensation that will not meet the requirements of Code Section 162(m)
in order to ensure competitive levels of total compensation for its executive
officers. Stock option grants in 2006 were intended to constitute “qualified
performance-based compensation” under Section 162(m). The Corporation’s 2006
annual performance bonuses, however, were not “qualified performance-based
compensation.” In 2006, none of the named executive officers received base pay,
annual bonus and other compensation in an amount in excess of the $1 million
deduction limit.
Compensation,
Nominating and Governance Committee Report
This
section is not "soliciting material," is not deemed "filed" with the SEC, and
is
incorporated by reference in the Corporation’s Annual Report on Form 10-K under
the Securities Exchange Act of 1934, as amended.
The
Compensation, Nominating and Governance Committee has reviewed and discussed
the
Compensation Discussion & Analysis section included in this Information
Circular with management. Each member of the Compensation, Nominating and
Governance Committee is entitled to rely on (i) the integrity of those persons
within the Corporation and of the professionals and experts from which the
Compensation, Nominating and Governance Committee receives information, (ii)
and
the accuracy of the financial and other information provided to the
Compensation, Nominating and Governance Committee by such persons, professionals
or experts absent actual knowledge to the contrary.
Based
upon that review and related discussions, the Compensation, Nominating and
Governance Committee recommends to the Corporation’s Board of Directors that the
Compensation Discussion & Analysis contained herein be include in this
Information Circular and Proxy Statement.
COMPENSATION,
NOMINATING AND GOVERNANCE COMMITTEE
Pierre
Lortie, Chair
Michel
Bazinet
James
Golla
April
23,
2007
Executive
Compensation
The
following tables, presented in accordance with Regulation 14A promulgated under
the United States Securities Exchange Act of 1934, as amended (the “Exchange
Act”); set forth compensation for services rendered by the named executive
officers in all capacities to the Corporation and its subsidiaries for the
fiscal years ended December 31, 2006.
(a) Summary
Compensation Table
The
following table provides details with respect to the total compensation of
the
Corporation’s named executive officers during the year ended December 31,
2006:
Name
and Principal Position
(a)
|
Year
(b)
|
Salary
($)
(c)
|
Bonus
($)
(d)
|
Stock
Awards
($)
(e)
|
Option
Awards (2)
($)
(f)
|
Non-Equity
Incentive Plan Compensation (4)
($)
(g)
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
($)
(h)
|
All
Other Compensation (5)
($)
(i)
|
Total
($)
(j)
|
Alan
J. Gotcher, President, Chief Executive Officer and
Director
|
2006
|
360,000
|
110,892(1)
|
Nil
|
237,740(3)
|
86,400
|
Nil
|
7,500
|
802,531
|
Edward
H. Dickinson, Chief Financial Officer
|
2006
|
150,000
|
Nil
|
Nil
|
112,879(3)
|
27,000
|
Nil
|
4,500
|
294,379
|
Douglas
K. Ellsworth, Sr. Vice President
|
2006
|
150,000
|
Nil
|
Nil
|
31,263(3)
|
Nil
|
Nil
|
4,500
|
185,763
|
Bruce
J. Sabacky, Chief Technology Officer
|
2006
|
150,000
|
Nil
|
Nil
|
73,084(3)
|
27,000
|
Nil
|
4,500
|
254,584
|
Stephen
A. Balogh, Vice President - Human Resources
|
2006
|
109,600
|
Nil
|
Nil
|
36,272(3)
|
11,400
|
Nil
|
Nil
|
157,272
|
(1)
Represents discretionary portion of the 2006 bonus, awarded to Dr. Gotcher
in
the form of an additional option grant over and above the 40% as calculated
in
accordance with the annual incentive bonus plan as determined by the
Compensation, Nominating and Governance Committee.
(2) The
amounts in column (f) reflect the dollar amount recognized for financial
statement reporting purposes for the year ended December 31, 2006, in accordance
with FAS 123 (R) of awards pursuant to the Stock Incentive Plans and thus may
include amounts from awards granted in and prior to 2006. Assumptions used
in
the calculation of these amounts are included in Note 10 to the Corporation’s
audited financial statements for the year ended December 31, 2006 included
in
the Corporation’s Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 13, 2007.
(3)
The
option value reported includes the 40% portion of the 2006 annual incentive
bonus paid through the issuance of options. The value of the options issued
relating to the annual 2006 bonus for each named executive officer is as
follows: Mr Gotcher - $166,338, of which $110,892 is reported in the bonus
column (d); Mr. Dickinson - $17,640; Mr. Ellsworth - no bonus options issued;
Mr. Sabacky - $17,640; and Mr. Balogh - $6,632.
(4)
Represents cash portion of annual incentive bonus earned with respect to
indicated fiscal year. Bonuses are generally paid in the subsequent fiscal
year.
(5)
Reflects value of matching contributions made by the Company in connection
with
the 401(k) Plan.
(b)
|
Grant
of Plan-Based Awards Table
|
The
following table provides details with respect to plan-based awards, if any,
granted to the named executive officers during the year ended December 31,
2006:
Name
(a)
|
Grant
Date
(b)
|
Possible
Payouts
Under
Non-Equity Incentive
Plan
Awards (1)
|
Possible
Payouts Under Equity Incentive Plan Awards(1)
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
(#)
(i)
|
All
Other
Option
Awards:
Number
of
Securities
Under-
Lying
Options
(#)
(j)
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)
(k)
|
Grant
Date Fair Value of Stock and Option Awards
($)
(l)
|
Threshold
($)
(c)
|
Target
($)
(d)
|
Maximum
($)
(e)
|
Threshold
(#)
(f)
|
Target
(#)
(g)
|
Maxi-
mum
(#)
(h)
|
Alan
J. Gotcher, President, Chief Executive Officer and
Director
|
3/10/06
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
66,802(2)
|
3.42
|
156,891(2)
|
3/10/06
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
100,000(3)
|
3.42
|
116,285
|
3/10/06
|
Nil
|
172,800
|
172,800
|
Nil
|
49,021
|
49,021
|
Nil
|
Nil
|
Nil
|
Nil
|
Edward
H. Dickinson, Chief Financial Officer
|
3/10/06
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
22,242(2)
|
3.42
|
52,238(2)
|
3/10/06
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
75,000(3)
|
3.42
|
87,204
|
3/10/06
|
Nil
|
54,000
|
54,000
|
Nil
|
15,319
|
15,319
|
Nil
|
Nil
|
Nil
|
Nil
|
Douglas
K. Ellsworth, Sr. Vice President
|
3/10/06
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
11,859(2)
|
3.42
|
27,852(2)
|
3/10/06
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
20,000(3)
|
3.42
|
23,227
|
3/10/06
|
Nil
|
54,000
|
54,000
|
Nil
|
15,319
|
15,319
|
Nil
|
Nil
|
Nil
|
Nil
|
Bruce
J. Sabacky, Chief Technology Officer
|
3/10/06
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
21,504(2)
|
3.42
|
50,5042)
|
3/10/06
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
40,000(3)
|
3.42
|
47,315
|
3/10/06
|
Nil
|
54,000
|
54,000
|
Nil
|
15,319
|
15,319
|
Nil
|
Nil
|
Nil
|
Nil
|
Stephen
A. Balogh, Vice President - Human Resources
|
3/10/06
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
20,000(3)
|
3.42
|
29,640
|
3/10/06
|
Nil
|
22,800
|
22,800
|
Nil
|
6,468
|
6,468
|
Nil
|
Nil
|
Nil
|
Nil
|
(1)
Amounts reflect bonus amounts calculated based on the 2006 annual incentive
bonus plan as approved by the Compensation, Nominating and Governance Committee
on March 10, 2006 and an assumed grant date of March 10, 2006. The target equals
the maximum since the bonus plan is capped at 100%.
(2) The
number of options granted reflects the 40% portion of the annual 2005 bonus
paid
through the issuance of options in 2006. Since these options were associated
with 2005 performance, the vesting terms were immediate. Since the service
period of these options related to 2005, which is prior to the Company’s
adoption of FAS 123(R), no expense was booked for this option grant in the
fiscal year ended December 31, 2006. The value associated with these awards
was
included in the disclosures presented in Note 2 in the Company’s audited
financial statements for the year ended December 31, 2005 included in the
Company’s Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 16, 2006. The values presented in the table above were
calculated in accordance with FAS 123(R) utilizing the Black-Scholes model
and a
grant date of March 10, 2006.
(3) These
options were issued in connection with the 2006 retention grant. As such, the
vesting terms were set at 25% to vest immediately and 25% to vest over the
next
3 years from date of grant. The same vesting terms applied to all retention
grants issued in 2006 to other employees of the Corporation.
(c) |
Outstanding
Equity Awards at Fiscal Year-End
Table
|
The
following table provides information regarding equity awards held by the named
executive officers as of December 31, 2006:
|
Option
Awards
|
Stock
Awards
|
Name
(a)
|
Number
of
Securities Underlying
Unexercised
Options
(#)
Exercisable
(b)
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Un-Exercisable
(c)
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
|
Option
Exercise
Price
($)
(e)
|
Option
Expiration
Date
(f)
|
Number
Of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
(g)
|
Market
Value
of
Shares
or
Units
of
Stock
That Have
Not
Vested
($)
(h)
|
Equity
Incentive Plan Awards:
Number
Of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
(i)
|
Equity
Incentive
Plan
Awards
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)
(j)
|
Alan
J. Gotcher, President, Chief Executive Officer and
Director
|
200,000(1)
|
Nil
|
100,000(1)
|
1.02
|
8/16/2014
|
Nil
|
Nil
|
Nil
|
Nil
|
100,000(2)
|
Nil
|
Nil
|
3.62
|
4/8/2015
|
Nil
|
Nil
|
Nil
|
Nil
|
66,802(3)
|
Nil
|
Nil
|
3.42
|
3/10/2016
|
Nil
|
Nil
|
Nil
|
Nil
|
25,000(4)
|
75,000(4)
|
Nil
|
3.42
|
3/10/2016
|
Nil
|
Nil
|
Nil
|
Nil
|
Edward
H. Dickinson, Chief Financial Officer
|
150,000(5)
|
Nil
|
Nil
|
6.85
|
8/26/2007
|
Nil
|
Nil
|
Nil
|
Nil
|
29,700(5)
|
Nil
|
Nil
|
6.13
|
4/13/2009
|
Nil
|
Nil
|
Nil
|
Nil
|
45,000(5)
|
Nil
|
Nil
|
1.20
|
2/9/2011
|
Nil
|
Nil
|
Nil
|
Nil
|
100,000(6)
|
Nil
|
Nil
|
1.00
|
5/14/2008
|
Nil
|
Nil
|
Nil
|
Nil
|
10,000(5)
|
Nil
|
Nil
|
1.22
|
11/10/2008
|
Nil
|
Nil
|
Nil
|
Nil
|
26,500(7)
|
Nil
|
Nil
|
4.07
|
3/10/2015
|
Nil
|
Nil
|
Nil
|
Nil
|
22,242(3)
|
Nil
|
Nil
|
3.42
|
3/10/2016
|
Nil
|
Nil
|
Nil
|
Nil
|
18,750(4)
|
56,250(4)
|
Nil
|
3.42
|
3/10/2016
|
Nil
|
Nil
|
Nil
|
Nil
|
Douglas
K. Ellsworth, Sr. Vice President
|
90,000(8)
|
Nil
|
Nil
|
1.06
|
9/4/2008
|
Nil
|
Nil
|
Nil
|
Nil
|
10,000(5)
|
Nil
|
Nil
|
1.22
|
11/10/2008
|
Nil
|
Nil
|
Nil
|
Nil
|
27,200(9)
|
Nil
|
Nil
|
4.07
|
3/10/2015
|
Nil
|
Nil
|
Nil
|
Nil
|
11,859(3)
|
Nil
|
Nil
|
3.42
|
3/10/2016
|
Nil
|
Nil
|
Nil
|
Nil
|
5,000(4)
|
15,000(4)
|
Nil
|
3.42
|
3/10/2016
|
Nil
|
Nil
|
Nil
|
Nil
|
Bruce
J. Sabacky, Chief Technology Officer
|
25,000(10)
|
Nil
|
Nil
|
4.07
|
3/25/2015
|
Nil
|
Nil
|
Nil
|
Nil
|
21,504(3)
|
Nil
|
Nil
|
3.42
|
3/10/2016
|
Nil
|
Nil
|
Nil
|
Nil
|
10,000(4)
|
30,000(4)
|
Nil
|
3.42
|
3/10/2016
|
Nil
|
Nil
|
Nil
|
Nil
|
Stephen
A. Balogh, Vice President - Human Resources
|
10,000(4)
|
10,000(4)
|
Nil
|
3.42
|
3/10/2016
|
Nil
|
Nil
|
Nil
|
Nil
|
12,500(11)
|
37,500(11)
|
Nil
|
2.96
|
7/26/2016
|
Nil
|
Nil
|
Nil
|
Nil
|
(1)
Vesting of these options is dependent upon the market price of the Corporation’s
stock according to the following conditions: 100,000 vest if the market price
equals or exceeds $2.50 for at least 15 consecutive days from August 16, 2004
to
August 16, 2005; 100,000 vest if the market price equals or exceeds $3.50 for
at
least 15 consecutive days from August 16, 2004 to August 16, 2006; and 100,000
vest if the market price equals or exceeds $4.50 for at least 15 consecutive
days from August 16, 2004 to August 16, 2007. 200,000 of the options vested
based on meeting the $2.50 and $3.50 conditions.
(2)
Options vested within one year of issuance on April 8, 2006.
(3)
Options vested immediately on the grant date of March 10, 2006.
(4)
Options vest over four years from date of grant: 25% vest immediately; 25%
vest
on March 10, 2007; 25% vest on March 10, 2008; and 25% vest on March 10,
2009.
(5)
Options were modified to fully vest on November 23 2004.
(6)
Options vested immediately on the grant date of May 14, 2003.
(7)
Options vest over one year from date of grant: 6,500 vest immediately and 20,000
vest on March 10, 2006.
(8)
Options vested immediately on the grant date of September 4, 2003.
(9)
Options vest over one year from date of grant: 7,200 vest immediately and 20,000
vest on March 10, 2006.
(10)
Options vest over one year from date of grant: 5,000 vest immediately and 20,000
vest on March 10, 2006.
(11)
Options vest over three years from date of grant: 25% vest immediately; 25%
vest
on July 26, 2007; 25% vest on July 26, 2008; and 25% vest on July 26,
2009.
(d) |
Option
Exercises and Stock Vested
|
There
were no options exercised and restricted stock or similar instruments vested
by
or in relation to named executive officers during the fiscal year ended December
31, 2006.
(e) |
Pension
Benefits Table and Non-Qualified Deferred
Compensation
|
The
Corporation does not sponsor, and is not obligated to, provide any benefits
under any defined benefit or non-qualified deferred compensation plan The
Corporation does provide a limited matching contribution under the 401(k) Plan,
as explained in “Compensation Discussion and Analysis” above.
(f) |
Potential
Payments Upon Termination or Change-in-Control
|
For
information on severance to which the named executive officers may be entitled
upon termination of employment or in connection with a Change of Control, see
the subsection entitled “Termination and Change-of-Control Agreements” in the
Compensation Discussion and Analysis section above.
In
addition, as of December 31, 2006, each of the named executive officers would
have been entitled upon termination of employment to receive the following
dollar amount in exchange for accrued, but unused medical and vacation
leave:
Name
|
Accrued
Medical and Vacation Leave
($)
|
Alan
J. Gotcher, President, Chief Executive Officer and
Director
|
33,046
|
Edward
H. Dickinson, Chief Financial Officer
|
32,492
|
Bruce
J. Sabacky, Chief Technology Officer
|
34,150
|
Stephen
A. Balogh, Vice President Human Resources
|
2,526
|
Compensation
of Directors
The
following table presents information regarding the compensation of the
Corporation’s directors during the fiscal year-ended December 31, 2006, except
for Alan J. Gotcher, the Corporation’s Chief Executive Officer, whose
compensation is described in the previous tables:
Name
(a)
|
Fees
Earned
Or
Paid in Cash(1)
($)
(b)
|
Stock
Awards(2)
($)
(c)
|
Option
Awards(3)
($)
(d)
|
Non-Equity
Incentive
Plan
Compensation
($)
(e)
|
Change
in
Pension
Value
And
Nonqualified
Deferred
Compensation
Earnings
($)
(f)
|
All
Other
Compensation
($)
(g)
|
Total
($)
(h)
|
Michel
Bazinet
|
24,000
|
28,026
|
5,690
|
Nil
|
Nil
|
Nil
|
57,716
|
Jon
N. Bengtson
|
48,000
|
28,026
|
Nil
|
Nil
|
Nil
|
Nil
|
74,693
|
James
I. Golla
|
24,000
|
28,026
|
5,690
|
Nil
|
Nil
|
Nil
|
57,716
|
George
E. Hartman
|
24,000
|
28,026
|
5,690
|
Nil
|
Nil
|
Nil
|
57,716
|
Christopher
E. Jones
|
24,000
|
28,026
|
4,784
|
Nil
|
Nil
|
Nil
|
56,810
|
Pierre
Lortie
|
21,000
|
25,333
|
Nil
|
Nil
|
Nil
|
Nil
|
46,333
|
(1) During
2006, the Corporation paid all directors who are not employees of the
Corporation a fee of $5,000 per quarter. In addition, directors who are not
employees and provide service in the following positions received the following
additional fees:
Position
|
Additional
Compensation
|
Chairman
of the Board
|
$4,000
per quarter
|
Audit
Committee Chair
|
$2,000
per quarter
|
Compensation,
Nominating and Governance Committee Chair
|
$1,000
per quarter
|
Audit
or Compensation, Nominating and Governance Committee Member
|
$1,000
per quarter
|
Other
Committee Chair or Member
|
Determined
upon formation of committee
|
Directors
are also entitled to receive compensation to the extent that they provide
services to the Corporation at rates that would be charged by such directors
for
such services to arm’s length parties. No amounts were paid to Dr. Gotcher in
2006 in his capacity as director.
(2) The
value
reported for stock awards is based on the portion of restricted stock that
vested during the year ended December 31, 2006 and was booked as compensation
expense by the Company. A graded vesting
method
was utilized to amortize the compensation expense. Under this method, unvested
amounts begin amortizing at the beginning of the month in which the stock awards
are granted.
Unvested stock awards held by each director at December 31, 2006 were as
follows: Mr. Bazinet - 14,375 shares; Mr. Bengtson - 14,375 shares; Mr. Golla
-
14,375 shares; Mr. Hartman - 14,375 shares; Mr. Jones - 14,375 shares; and
Mr.
Lortie - 5,000 shares.
(3) Directors
of the Corporation and its subsidiaries are also entitled to participate in
the
1996 Plan, 1998 Plan and the 2005 Plan. An aggregate of 486,875 stock awards
and
option awards were outstanding and held by directors, excluding Dr. Gotcher,
as
of December 31, 2006. The number of option awards outstanding as of December
31,
2006 for each of the directors is as follows: Mr. Bazinet - 50,000 options;
Mr.
Bengtson - 75,000 options;, Mr. Golla - 95,000 options; Mr. Hartman - 85,000
options; Mr. Jones - 75,000 options; and Mr. Lortie has no options
outstanding.
Audit
Committee and Audit Committee Report
Audit
Committee
The
Audit
Committee operates pursuant to a written charter adopted by the Board, a copy
of
which may be found on the Corporation’s website under the heading “Investors”
and is attached hereto as Appendix B. A copy may also be obtained free of charge
by mailing a request in writing to: Secretary, Altair Nanotechnologies Inc.
204
Edison Way, Reno, Nevada 89502.
The
Audit
Committee is comprised solely of non-employee directors, each of whom has been
determined by the Board to be independent under the requirements of the NASDAQ
listing standards and National Instrument 52-110 of the Canadian Securities
Administrators (“NI 52-110”). The Audit Committee is comprised of Jon Bengtson,
George Hartman and Christopher Jones. If elected by the shareholders, Jon
Bengtson, George Hartman and Christopher Jones are expected to be members of
the
Audit Committee during 2007. The Audit Committee held one meeting in person
and
five meetings via conference call during the fiscal year ended December 31,
2006.
The
Board
has determined in its business judgment that each member of the Audit Committee
satisfies the requirements with respect to financial literacy set forth in
NASD
Rule 4350(d)(2)(A)(iv) and applicable Canadian securities laws; and the Board
has determined than Jon Bengtson, the Chair of the Audit Committee, is an “audit
committee financial expert” as such term is defined in Item 401(h) of Regulation
S-K promulgated by the SEC, is independent under Item 7(d)(3)(iv) of Schedule
14A under the Exchange Act and is, as a result of his past employment experience
in finance or accounting, requisite professional certification in accounting
or
other comparable experience or background, sophisticated with respect to
financial matters.
The
Audit
Committee’s responsibility is to assist the Board in its oversight of the (a)
quality and integrity of the Corporation’s financial reports, (b) the
independence and qualifications of the Corporation’s independent auditor and (c)
the compliance by the Corporation with legal and regulatory requirements.
Management of the Corporation has the responsibility for the Corporation’s
financial statements as well as the Corporation’s financial reporting process,
principles and internal controls. The Corporation’s independent auditors are
responsible for performing an audit of the Corporation’s financial statements
and expressing an opinion as to the conformity of such financial statements
with
accounting principles generally accepted in the United States of
America.
Audit
Committee Report
This
section is not "soliciting material," is not deemed "filed" with the SEC, and
is
not to be incorporated by reference in any filing of the Corporation under
the
Securities Act or the Securities Exchange Act of 1934, each as amended,
regardless of date or any other general incorporation language in such
filing.
The
Audit
Committee has reviewed and discussed the audited financial statements of the
Corporation as of and for the year ended December 31, 2006 with management
and
the independent auditors. The Audit Committee has discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees), as currently in effect. In
addition, the Audit Committee has received the written disclosures and the
letter from the independent auditors required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), as currently
in
effect, and it has discussed with the independent auditors their independence
from the Corporation.
The
Audit
Committee has also considered whether the independent auditor’s provision of
non-audit services to the Corporation is compatible with maintaining the
auditors’ independence.
The
members of the Audit Committee are not engaged in the accounting or auditing
profession and, consequently, are not experts in matters involving auditing
or
accounting including in respect of auditor independence. As such, it is not
the
duty of the Audit Committee to plan or conduct audits or to determine that
the
Corporation’s financial statements fairly present the Corporation’s financial
position and results of operation and are in accordance with generally accepted
accounting principles and applicable laws and regulations. Each member of the
Audit Committee is entitled to rely on (i) the integrity of those persons within
the Corporation and of the professionals and experts (such as the independent
auditor) from which the Audit Committee receives information, (ii) the accuracy
of the financial and other information provided to the Audit Committee by such
persons, professionals or experts absent actual knowledge to the contrary and
(iii) representations made by management or the independent auditors as to
any
information technology services of the type described in Rule 2-01(c)(4)(ii)
of
Regulation S-X and other non audit services provided by the independent auditor
to the Corporation.
Based
on
the reports and discussions described above, the Audit Committee recommended
to
the Board that the audited financial statements be included in the Corporation’s
Annual Report on Form 10-K for the year ended December 31, 2006, for filing
with
the SEC.
AUDIT
COMMITTEE
Jon
Bengtson, Chair
George
Hartman
Christopher
Jones
March
8,
2007
Meetings
of Directors and Attendance at Shareholders Meetings
During
the year ended December 31, 2006, the Board held four meetings in person and
two
meetings via conference call. All directors attended all of the in-person
meetings, with the exception of Pierre Lortie, who was unable to attend one
of
the meetings. All directors participated in all conference calls, with the
exception of Alan Gotcher, who was unable to attend one of the meetings. In
addition, the Board considered and acted on various matters throughout the
year
by executing four consent resolutions.
The
Corporation does not have a policy with respect to the attendance of shareholder
meetings by directors. All members of the Board attended the 2006 annual
shareholders meeting.
Nominating
Committee
The
purpose of the Compensation, Nominating and Governance Committee related to
nomination of directors and corporate governance matters is (i) to recommend
to
the Board the slate of director nominees for election to the Corporation’s Board
of Directors, individuals to fill vacancies occurring between annual meetings
of
stockholders, and individuals for nomination as members of the standing
committees of the Board and (ii) to develop and recommend to the Board a set
of
corporate governance principles applicable to the Corporation.
In
identifying nominees for directors, the Compensation, Nominating and Governance
Committee takes into consideration such factors as it deems appropriate. These
factors may include judgment, skill, diversity, experience with businesses
and
other organizations of comparable size, relationship of work experience and
education to the current and proposed lines of business of the Corporation,
the
interplay of the candidate’s experience with the experience of other Board
members, the extent to which the candidate would be a desirable addition to
the
Board and any committees of the Board and the extent to which the candidate
satisfies any objective requirements (such as residence, independence or
expertise requirements) applicable to the Board or any committees of the Board.
The Compensation, Nominating and Governance Committee considers candidates
submitted by shareholders in accordance with the policies set forth in the
most
recent proxy statement delivered to shareholders and may, but is not required
to, consider candidates proposed by management.
The
Compensation, Nominating and Governance Committee met one time during 2006
in
person or by telephone. The members of the Compensation, Nominating and
Governance Committee are Pierre Lortie (Chair),
James Golla and Michel Bazinet,
each of
whom is independent under NASDAQ’s listing standards. The
charter governing operations of the Compensation, Nominating and Governance
Committee was initially adopted in April 2004, was updated in February 2007
and
is available at the Corporation’s website at www.altairnano.com
under “Investors.”
Shareholder
Suggestions for Nominees and Communications with the Board of
Directors
The
Board
will consider director candidates recommended by shareholders. Such
recommendations should include the name, age, address, telephone number,
principal occupation or employment, background and qualifications of the nominee
and the name, address and telephone number of and number of Common Shares owned
by the shareholder making the recommendation. It should be sent to the Secretary
of the Corporation at the address first set forth above. Candidates submitted
by
shareholders in accordance with the policies set forth in the most recent proxy
statement delivered to shareholders are considered under the same standards
as
nominees recommended by other persons.
Shareholders
may send communications to the Board or to specified individual directors by
mailing such communications to the Secretary of the Corporation at the address
of the Corporation first set forth above and indicating that such communications
are for the Board or specified individual directors, as appropriate. All
communications received by mail are forwarded to the directors to which they
are
addressed unless the communications contain information substantially similar
to
that forwarded by the same shareholder, or an associated shareholder, within
the
past 90 days.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of
the Exchange Act requires the Corporation’s officers and directors to file
reports concerning their ownership of Common Shares with the SEC and to furnish
the Corporation with copies of such reports. Based solely upon the Corporation’s
review of the reports required by Section 16 and amendments thereto furnished
to
the Corporation, the Corporation believes that all reports required to be filed
pursuant to Section 16(a) of the Exchange Act during 2006, were filed with
the
SEC on a timely basis except as follows: (a) a Form 4 for David King, a
Director, was due on June 5, 2006 but was filed on June 12, 2006; and (b) a
Form
4/A for Pierre Lortie, a Director, was due on June 6, 2006 but was filed on
June
8, 2006.
Code
of Ethics and Code of Conduct
The
Corporation has adopted the Code of Ethics for Senior Executive, Financial
Officers and Members of the Management Executive Committee (the “Code of
Ethics”), which constitutes a code of ethics that applies to the principal
executive officer, principal financial officer, principal accounting officer
or
controller, or persons performing similar functions, as defined in Item 406
of
Regulation S-K under the Exchange Act. The Code of Ethics is available on the
Corporation’s website at www.altairnano.com under “Investors.”
The
Corporation has adopted the Altair Nanotechnologies Inc. Code of Conduct (the
“Code of Conduct”), which constitutes a code of conduct applicable to all
officers, directors and employees that complies with NASDAQ Rule 4350(n). The
Code of Conduct is available on the Corporation’s website at www.altairnano.com
under “Investors.”
Securities
Authorized for Issuance under Equity Compensation
Plans
Set
forth
below is a summary of securities issued and issuable under all equity
compensation plans of the Corporation as at December 31, 2006. As of the date
hereof, the 1996 Plan, the 1998 Plan and the 2005 Plan are the only equity
compensation plans of the Corporation. In the table below, outstanding
securities information is presented for the 1996 Plan and the 1998 Plan,
however, no shares may be issued from these inactive plans.
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and
rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
Plan
Category
|
(a)
|
(b)
|
(c)
|
Equity
compensation plans approved by security holders
|
3,278,222
|
$3.06
|
1,641,029
|
Equity
compensation plans not approved by security
holders
|
None
|
N/A
|
None
|
Total
|
3,278,222
|
$3.06
|
1,641,029
|
Statement
of Corporate Governance
Practices
National
Policy 58-201 of the Canadian Securities Administrators has set out a series
of
guidelines for effective corporate governance (the “Guidelines”). The Guidelines
address matters such as the constitution and independence of corporate boards,
the functions to be performed by boards and their committees and the
effectiveness and education of board members. National Instrument 58-101 (“NI
58-101”) of the Canadian Securities Administrators requires the disclosure by
each listed corporation of its approach to corporate governance with reference
to the Guidelines as it is recognized that the unique characteristics of
individual corporations will result in varying degrees of compliance.
Set
out
below is a description of the Corporation’s approach to corporate governance in
relation to the Guidelines.
1. |
The
Board of Directors
|
NI
58-101
defines an “independent director” as a director who has no direct or indirect
material relationship with the corporation. A “material relationship” is in turn
defined as a relationship that could, in the view of the corporation’s board of
directors, be reasonably expected to interfere with such member’s independent
judgement. The Board of Directors of the Corporation is currently comprised
of
eight members, a majority of whom the Board has determined are “independent
directors” within the meaning of NI 58-101.
Dr.
Gotcher is considered a non-independent director, as he is an officer of the
Corporation. Mr. Hemphill is an Executive Vice President of The AES Corporation,
an investor in the Corporation and potential business partner. Notwithstanding
that Mr. Hemphill qualifies as independent according to the objective criteria
under the listing standards of the NASDAQ, the Board of Directors believes
that
Mr. Hemphill is not independent based on a previous financing and contemplated
future business transactions.
Messrs.
Bazinet, Bengtson, Golla, Hartman, Jones and Lortie are considered independent
directors since they are all independent of management and free from any
material relationship with the Corporation. The basis for this determination
is
that, since the beginning of the fiscal year ended December 31, 2006, none
of
the independent directors have worked for the Corporation, received more than
Cdn$75,000 in annual remuneration from the Corporation, excluding fees received
for serving on the board of directors or any board committee, or had material
contracts with or material interests in the Corporation which could interfere
with their ability to act with a view to the best interests of the Corporation.
The
Board
believes that it functions independently of management. To enhance its ability
to act independent of management, the Board may meet in the absence of members
of management and the non-independent directors or may excuse such persons
from
all or a portion of any meeting where a potential conflict of interest arises
or
where otherwise appropriate. The Board held six
meetings
of the independent directors in the absence of members of management and the
non-independent directors during the fiscal year ended December 31, 2006. Mr.
Bengtson, Chairman of the Board, generally acts as the chairman during meetings
of the independent directors.
Additional
information concerning meetings of the Board held in fiscal 2006 is set forth
above under the heading “Meetings of the Directors and Attendance at
Shareholders Meeting.”
Mr.
Lortie serves as chairman of the board of Lyrtech (TSX-V:LYT), and as director
of Group Canam (TSX-V:CAM).
The
responsibilities of the Chairman of the Board are to consult with other Board
members in determining the times and duration of the Board meetings, chair
all
regular sessions of the Board and set the agenda for Board
meetings.
The
Board
has a mandate to set the strategic direction of the Corporation and to oversee
its implementation by management of the Corporation. A copy of the Board mandate
is set forth in Appendix A to this Information Circular and a copy may also
be
found on the Corporation’s website, http://www.altairnano.com,
under
the heading “Investors.”
Given
the
current size of the Corporation’s infrastructure and the existence of only four
executive officers and seven directors, the Board does not feel that it is
necessary at this time to formalize position descriptions or corporate
objectives for any of the Chairman of the Board, Chairmen of committees of
the
Board, or the President and Chief Executive Officer in order to delineate their
respective responsibilities. Accordingly, the roles of the executive officers
of
the Corporation are delineated on the basis of the customary practice
4. |
Orientation
and Continuing Education
|
Although
the Corporation currently has no formal orientation and education program for
new Board members, sufficient information (such as recent annual reports,
prospectus, proxy solicitation materials and various other operating and budget
reports) is provided to any new Board member to ensure that new directors are
familiarized with the Corporation’s business and the procedures of the Board. In
addition, on at least an annual basis, the Board is given a presentation by
an
attorney or other professional regarding their role, responsibilities and
obligations. In addition, new directors are encouraged to visit and meet with
management on a regular basis. The Corporation also encourages continuing
education of its directors and officers where appropriate in order to ensure
that they have the necessary skills and knowledge to meet their respective
obligations to the Corporation.
5. |
Ethical
Business Conduct
|
The
Board
has adopted a formal code of conduct and code of ethics. See “Code of Conduct
and Code of Ethics” above.
In
order
to ensure compliance with the Code of Conduct and Code of Ethics, and to ensure
that directors exercise independent judgement, the Audit Committee has assumed
responsibility for approving transactions involving the Corporation and any
“related party” (as that term is defined in Ontario Securities Commission Rule
61-501),
except
for decisions related to compensation, which are approved by the Compensation,
Nominating and Governance Committee.
The full
Board is responsible for monitoring the Corporation’s compliance with strategic
planning matters, implementing a process for assessing the effectiveness of
committees of directors and individual directors, and reviewing changes in
or
additions to compliance policies, standards, codes and programs, as well as
applicable legislation.
6. |
Nomination
of Directors
|
The
Board
has established a Compensation, Nominating and Governance Committee, which
has
assumed the responsibility for identifying new candidates for Board nomination.
See “Nominating Committee” above.
The
Board
has established a Compensation, Nominating and Governance Committee, which
has
assumed the responsibility for making recommendations to the Board on
compensation related matters. See “Composition of the Compensation Committee”
and “Compensation Committee Report on Executive Compensation” above. During 2005
and 2006, a compensation consultant was retained to review and make
recommendations with respect to compensation for directors, officers and
employees of the Corporation.
The
Board
currently has no standing committees other than the Audit Committee and the
Compensation, Nominating and Governance Committee.
The
Board
assesses, on an annual basis, the contributions of the Board as a whole,
the
Audit
Committee
and
Compensation, Nominating and Governance Committee, and each of the individual
directors, in order to determine whether each is functioning effectively. The
Compensation, Nominating and Governance Committee has responsibility for
conducting and overseeing the annual self-evaluations for the Board and
reporting such results to the Board following the end of each fiscal year.
The
evaluations, documented in the form of questionnaires, include peer review
evaluations and are based on such objective and subjective criteria, as such
committee deems appropriate.
Interest
of Informed Persons in Material Transactions
Except
as
otherwise disclosed in
the
Information Circular (see “Certain Relationships and Related
Transactions”),
no
informed person of the Corporation (within the meaning of applicable Canadian
securities laws), any nominee for election as a director or any associate or
affiliate thereof, has or has had any material interest in any transaction
since
the commencement of the Corporation’s last completed financial year, or in any
proposed transaction, which has materially affected or would materially affect
the Corporation.
Indebtedness
of Directors and Executive Officers
There
is
currently no outstanding indebtedness of (i) any present or former director,
executive officer or employee; or (ii) any associate of any current or former
director, executive officer or employee, either owing to the Corporation or
any
of its subsidiaries, or owing to another entity which is the subject of a
guarantee, support agreement, letter of credit or similar arrangement or
understanding provided by the Corporation or any of its
subsidiaries.
Policies
for Approval of Related Party Transactions
the
Corporation’s Audit Committee has the authority and responsibility to review and
approve any proposed transactions between the Corporation (including its
subsidiaries) and any person that is an officer, key employee, director or
affiliate of the Corporation (or any subsidiary), other than transactions
related to the employment and compensation of such persons, which are reviewed
and approved by the Compensation, Nominating and Governance
Committee.
Vote
Required
PROPOSAL
NO. 1 — ELECTION OF DIRECTORS
In
connection with the election of directors, the seven nominees receiving the
highest number of votes will be elected.
PROPOSAL
NO. 2 — APPOINTMENT OF INDEPENDENT AUDITORS
Approval
of the appointment of Perry Smith LLP as the independent auditors for the
Corporation for the fiscal year ending December 31, 2007, and authorization
of
the Audit Committee to set their remuneration, is to be voted upon at the
Meeting. Representatives of Perry Smith LLP are expected to be present at the
Meeting but will not have an opportunity to make a statement. However,
representatives of Perry Smith LLP will be available to respond to appropriate
questions. Perry Smith LLP were first appointed auditors of the Corporation
on
September 26, 2005, prior to which Deloitte & Touche LLP acted as auditors
of the Corporation from 2001 to August 18, 2005.
Change
of Independent Auditors
Deloitte
& Touche LLP, the independent auditors initially retained by the Corporation
for the fiscal year ended December 31, 2005, resigned on August 18, 2005. In
connection with the audit of the Corporation’s financial statements for the
fiscal years ended December 31, 2003 and December 31, 2004 and the subsequent
interim period ended August 18, 2005, there were no disagreements with Deloitte
& Touche on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreement if
not
resolved to Deloitte & Touche’s satisfaction would have caused them to make
reference in connection with their opinion to the subject matter of the
disagreement. The audit reports of Deloitte & Touche on the consolidated
financial statements of the Corporation and its subsidiaries as of and for
the
fiscal years ended December 31, 2003 and December 31, 2004 did not contain
any
adverse opinion or disclaimer of opinion, nor were they qualified or modified
as
to uncertainty, audit scope, or accounting principles.
Pursuant
to the recommendation of management and the approval of the Board and Audit
Committee, the Corporation appointed Perry-Smith LLP as the Corporation’s
independent auditors for the fiscal year ended December 31, 2005. No
consultations occurred between the Corporation and Perry-Smith during the two
fiscal years and any interim period preceding the appointment of Perry-Smith
regarding the application of accounting principles, the type of audit opinion
that might be rendered or other accounting, auditing or financial reporting
issues. The Corporation engaged Perry-Smith LLP effective September 26,
2005.
Audit
Fees.
During
the fiscal years ended December 31, 2005 and 2006, the aggregate fees billed
by
the Corporation’s independent auditors for the audit of the Corporation’s
financial statements for such fiscal years, for the reviews of the Corporation’s
interim financial statements and for the review of SEC registration statements,
including the cost of auditing internal controls were $132,012 and $187,575,
respectively.
Audit-Related
Fees. During
the fiscal year ended December 31, 2005, the Corporation paid audit-related
fees
of $132,012 to Deloitte & Touche and to $5,100 to Perry-Smith LLP During the
fiscal year ended December 31, 2006, the Corporation paid audit-related fees
of
$162,075 to Perry-Smith LLP. These fees include any internal control audit
fees.
Tax
Fees. During
the fiscal year ended December 31, 2005, the Corporation did not pay to Deloitte
& Touche or Perry-Smith LLP any fees for tax compliance, advice and
planning. During the fiscal year ended December 31, 2006, the Corporation paid
fees for tax compliance, advice and planning of $1,475.
All
Other Fees.
During
the fiscal year ended December 31, 2005, the Corporation paid Deloitte
& Touche LLP $17,180 of consulting fees in connection with the
implementation requirements of Section 404 of the Sarbanes - Oxley Act and
$10,712 in connection with other matters. During the fiscal year ended December
31, 2006, the Corporation paid Perry-Smith LLP $35,340 in connection with other
matters.
Audit
Committee Pre-Approval Policy.
The
Audit Committee pre-approves the services provided to the Corporation by its
independent auditors in connection with the audit of the Corporation’s annual
financial statements, the review of the Corporation’s quarterly financial
statements and tax preparation and consultation. Management is not permitted
to
engage its independent auditors for
other
audit or permitted non-audit services without the case-by-case pre-approval
of
the Audit Committee. The Audit Committee approved all the services provided
to the Corporation by its independent auditors described above.
Vote
Required and Recommendation of the Board of Directors
The
affirmative vote of a majority of the votes cast on this proposal shall
constitute approval of the appointment of Perry-Smith LLP and authorization
of
the Audit Committee to set their remuneration.
The
Board recommends a vote FOR approval of the appointment of Perry-Smith LLP
as
the Corporation’s independent auditors for the fiscal year ending December 31,
2007 and authorization of the Audit Committee to set their
remuneration.
PROPOSAL
NO. 3 - APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED SHARES
UNDER
ALTAIR NANOTECHNOLOGIES INC. 2005 STOCK INCENTIVE PLAN
In
2005,
the Board and the shareholders of the Company approved the Altair
Nanotechnologies Inc. 2005 Stock Plan, pursuant to which the Board and any
authorized subcommittee thereof (the Board and any authorized committees, the
“Committee”) are authorized to grant options and other incentive awards with
respect to an aggregate of 3,000,000 Common Shares and to otherwise administer
the Plan. The Board believes that it is in the best interests of the Company
to
increase the number of authorized shares available under the 2005 Plan for
the
grant of options and other equity-based incentive awards by 6,000,000 shares
to
an aggregate of 9,000,000 Common Shares. Under rules governing the Corporation’s
listing on the NASDAQ SmallCap Market, the Corporation is required to seek
shareholder approval for an increase in the number of authorized shares
available under the 2005 Plan.
The
Board
believes that the availability of stock options and other equity-based
incentives is an important factor in the Corporation's ability to attract and
retain qualified employees and to provide an incentive for them to exert their
best efforts on behalf of the Corporation. The Corporation has, and may
periodically continue to, use stock options and other incentive awards to
compensate consultants that provide services to the Corporation.
Description
of the 2005 Stock Incentive Plan
The
following summary of the 2005 Plan is qualified in its entirety by reference
to
the full text of the 2005 Plan, a copy of which is available from the
Corporation upon request.
Shares
Reserved for Issuance Under the 2005 Plan.
The
Corporation has reserved a total of 3,000,000 Common Shares for issuance under
the 2005 Plan. The Board is currently seeking shareholder approval to increase
the number of shares available under the 2005 Plan to 9,000,000 Common Shares.
There are no other amendments to the 2005 Plan. The number and kind of shares
available for grants under the 2005 Plan will be adjusted proportionately by
the
Board if the number of outstanding Common Shares is hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Corporation by reason of any stock split, combination
of shares, dividend payable in shares, recapitalization or reclassification.
As
of April 10, 2007, the closing sale price of the Common Shares, as reported
by
the NASDAQ SmallCap Market, was $3.17 per share.
Types
of Awards.
The
2005 Plan authorizes the Committee to grant incentive stock options,
non-incentive stock options, stock bonuses, restricted stock and
performance-based awards.
Eligibility.
Grants
under the 2005 Plan may, at the discretion of the Committee, be awarded to
directors, officers and employees and non-employee agents, consultants, advisers
and independent contractors of the Corporation or any parent or subsidiary
of
the Corporation. The Corporation currently has seven directors, seventy-six
employees and officers, and an indeterminable number of consultants and advisers
who are eligible to receive grants under the 2005 Plan.
Administration.
The
Compensation, Nominating and Governance Committee currently acts as the
“Committee” with respect to administration of the 2005 Plan; however, the Board
retains overlapping authority. Subject to the terms of the 2005 Plan, the
Committee may from time to time adopt and amend rules and regulations relating
to the administration of the 2005 Plan, advance the lapse of any waiting period,
accelerate any exercise date, waive or modify any restriction applicable to
shares (except those restrictions imposed by law) and make all other
determinations in the judgment of the Committee necessary or desirable for
the
administration of the 2005 Plan. Not withstanding the broad delegation of
authority to the Committee, only the Board may amend or terminate the 2005
Plan.
Amendment
and Termination of the 2005 Plan.
The
Board may amend the 2005 Plan at any time in any respect, subject to any legal
or regulatory restriction. Except for changes in outstanding options in
connection with changes in capital structure and Significant Transactions (as
defined blow), no change in an option already granted may be made without the
consent of the holder of the option. The 2005 Plan will terminate when all
shares reserved for issuance under the 2005 Plan have been issued and all
restrictions on such shares have lapsed or when earlier terminated by the Board.
Description
of Stock Options
Options
Terms.
With
respect to each option grant, the Committee determines the number of shares
subject to the option, the exercise price, the term of the option and the time
or times at which the option may be exercised. At the time of the grant of
an
option or at any time thereafter, the Committee may provide that an optionee
who
exercised an option to purchase Common Shares shall automatically receive a
new
option to purchase additional shares equal to the number of shares surrendered
and may specify the terms and conditions of such new options.
Exercise
of Options.
Except
as described under “Termination of Employment, Disability or Death” below or as
determined by the Committee, an option may not be exercised unless, when
exercised, the optionee is an employee of, or is providing service to, the
Corporation or any subsidiary of the Corporation and has been continuously
so
employed or providing service since the date the option was granted. Absence
on
leave approved by the Corporation, parent or subsidiary or on account of illness
or disability is not deemed a termination or interruption of employment or
service for this purpose. Unless otherwise determined by the Committee, vesting
of options continues during a medical, family or military leave of absence,
whether paid or unpaid, and vesting of options is suspended during any other
unpaid leave of absence.
When
exercising an option, the optionee must pay the full purchase price in cash
or
check unless the Committee determines otherwise. Subject to the approval of
the
Committee, which may be withheld for any or no reason, an optionee may pay
for
all or some of the shares with Common Shares of the Corporation valued at fair
market value, restricted stock, performance units or other contingent awards
denominated in either stock or cash or other forms of consideration. The 2005
Plan permits the Committee to accept promissory notes as consideration for
stock
options; however promissory notes are generally not sufficient consideration
for
the issuance of Common Shares under the CBCA.
Termination
of Employment, Disability or Death.
Unless
otherwise determined by the Committee at any time, if an optionee ceases to
be
employed by or to provide service to the Corporation, any parent or subsidiary
of the Corporation for any reason other than death or total disability, the
optionee may exercise any option then held at any time prior to the earlier
of
its expiration date or 30 days following the termination date, but only if
and
to the extent the option was exercisable as of the termination date. Any portion
of an option not exercisable at the date of termination lapses.
Unless
otherwise determined by the Committee, if the optionee’s employment or service
terminates because of total disability, the optionee may exercise any option
then held at any time prior to the earlier of its expiration date or 12 months
after the date of termination, but only to the extent the option was exercisable
on the date of termination.
Unless
otherwise determined by the Committee, if an optionee dies while in the
employment of or providing services to the Corporation or any parent or
subsidiary of the Corporation, the option then held may be exercised by the
optionee’s legal heirs at any time prior to the earlier of its expiration date
or 12 months after the date of death, but only if and to the extent the option
was exercisable as of the date of death.
Non-Transferability
of Options.
Unless
otherwise determined by the Committee at any time, each stock option granted
under the 2005 Plan by its terms is nonassignable and nontransferable by an
optionee, either voluntarily or by operation of law, other than by will or
the
laws of descent or distribution upon the death of an optionee. An option may
be
exercised only by an optionee or, after death, by a successor or representative
of an optionee.
Merger,
Reorganization, Dissolution, Stock Split or Similar Event.
In the
event of a merger, consolidation, plan of exchange, acquisition of property
or
stock, split-up, split-off, spin-off, reorganization or liquidation to which
the
Corporation is a party or any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Corporation, or the transfer by one or more shareholders,
in one transfer or several related transfers, of 50% of more of the Common
Shares outstanding on the date of such transfer (or the first of such related
transfers) to persons, other than wholly-owned subsidiaries or family trusts,
who were not shareholders of the Corporation prior to the first such transfer
(each, a “Significant Transaction”), the Committee shall, in its sole discretion
and to the extent possible under the structure of the Significant Transaction,
select one of the following alternatives for treating outstanding options under
the 2005 Plan:
|
·
|
Outstanding
options shall remain in effect in accordance with their
terms;
|
|
·
|
Outstanding
options shall be converted into options to purchase stock in one
or more
of the corporations, including the Corporation, that are the surviving
or
acquiring corporations in the Significant Transaction (with the amount,
type of securities subject thereto and exercise price of the converted
options being determined by the Committee taking into account the
relative
values of the companies involved in the Significant
Transaction)
|
|
·
|
The
Committee shall provide a period at least 10 days before the completion
of
the Significant Transaction during which outstanding options may
be
exercised to the extent then exercisable, and upon the expiration
of that
period, all unexercised options shall immediately terminate (The
Committee
may, in its sole discretion, accelerate the exercisability of options
so
that they are exercisable in full during that
period.)
|
In
the
event of the dissolution of the Corporation, options will be treated as provided
in the immediately preceding paragraph.
Stock
Bonuses and Restricted Stock.
The
Committee may award Common Shares under the 2005 Plan as stock bonuses or as
restricted stock. Shares awarded as a bonus or as restricted stock are subject
to the terms, conditions and restrictions determined by the Committee, including
restrictions concerning transferability and forfeiture of the shares awarded.
The Committee may require the recipient to sign an agreement as a condition
of
the award, which agreement shall contain any terms, conditions, restrictions,
representations and warranties required by the Committee. The certificates
representing the shares shall bear any legends required by the
Board.
Performance-based
Awards.
Under
the
2005 Plan, the Committee may grant performance-based awards. These awards are
intended to qualify as qualified performance-based compensation under Section
162(m) of the Code and regulations thereunder. Performance-based awards shall
be
denominated at the time of grant either in Common Shares or in dollar amounts.
Performance-based awards may be granted in whole or in part if the Corporation
achieves written objective goals established by the Committee over a designated
period of time. Payment of an award earned may be in cash or stock or both
as
determined by the Committee. In addition to the requirement that participants
satisfy certain performance goals, the Committee may impose additional
restrictions to payment under a performance-based award.
No
participant may receive in any fiscal year stock-based performance awards under
which the aggregate amount payable under the awards exceeds the equivalent
of
500,000 Common Shares or cash-based performance awards under which the aggregate
amount payable exceeds $1,000,000.
United
States Federal Income Tax Consequences
The
following is a general discussion of certain United States federal income tax
consequences of stock options granted under the 2005 Plan. The discussion does
not describe any tax consequences under the tax laws of any state, locality
or
foreign jurisdiction and does not include any tax consequences associated with
any awards other than stock options. Furthermore, the discussion is based on
the
provisions of the Code and regulations, rulings and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed or
modified retroactively so as to result in federal income tax consequences
different from those discussed below. The discussion below does not discuss
all
federal tax consequences that may be relevant to a particular grantee, and
is
not intended as tax advice. Each grantee should consult his or her individual
tax adviser.
Options
Incentive
Options.
No
income is recognized by the grantee of an incentive stock option upon the grant
or timely exercise of the incentive stock option. Exercise of an incentive
stock
option may, however, give rise to taxable ordinary income to the optionee if
the
optionee subsequently engages in a "disqualifying disposition," as described
below. Additionally, the spread between the fair-market value of shares obtained
upon exercise of an incentive stock option and the exercise price normally
is an
adjustment to alternative minimum taxable income and may result in the optionee
having to pay federal alternative minimum tax for the year of
exercise.
A
sale,
exchange or disposition by an optionee of Common Shares acquired through the
exercise of an incentive stock option more than one year after the transfer
of
the shares to such optionee and more than two years after the date of grant
of
the incentive stock option will result in any difference between the net sale
proceeds and the exercise price being treated as long-term capital gain (or
loss) to the optionee. If such a sale, exchange or disposition (including inter
vivos gifts) takes place within two years after the date of grant of the
incentive stock option or within one year from the date of exercise of the
incentive stock option, such sale or exchange will generally constitute a
"disqualifying disposition" of the Common Shares.
A
disqualifying disposition will have the following results: any excess of (i)
the
lesser of (a) the fair market value of one Common Share at the time of exercise
of the incentive stock option or (b) the amount realized on a disqualifying
disposition of the Common Shares through sale; less (ii) the exercise price,
will be ordinary income to the optionee, subject to applicable tax reporting
requirements. Any further gain generally will qualify as capital gain, and
will
be long-term capital gain if the holding period for such Common Shares is more
than one year from the date of exercise.
Non-Incentive
Options.
Provided that the exercise price is not less than the fair market value of
the
underlying stock on the date of grant, no income is recognized by the grantee
of
a non-incentive stock option until the non-incentive option is exercised. When
the non-incentive stock option is exercised, the optionee recognizes ordinary
compensation income, and the Corporation generally becomes entitled to a
deduction, in the amount by which the fair market value of the shares subject
to
the non-incentive stock option at the time of exercise exceeds the exercise
price. With respect to non-incentive options exercised by certain executive
officers, the Corporation’s deduction can in certain circumstances be limited by
the $1,000,000 cap on deductibility set forth in Section 162(m) of the Code.
The
Corporation is required to withhold on all amounts treated as ordinary income
to
optionees who are employees of the Corporation or an affiliate of the
corporation. Upon the sale of shares acquired by exercise of a stock option,
the
optionee generally will recognize capital gain or loss measured by the
difference between the sale proceeds and the fair market value of the shares
on
the date of exercise. That gain or loss will be long-term if shares have been
held for more than one year.
Canadian
Income Taxation
If
an
optionee is a resident of the United States and not a resident of Canada, and
if
the optionee has not been employed in Canada, (i) neither the receipt nor the
exercise of a stock option will give rise to federal Canadian income tax
liability and (ii) the sale of the underlying Common Shares generally will
not
be subject to federal Canadian income tax unless (a) the optionee and persons
who do not deal at arm’s length with the optionee owned, at any time in the five
year period before sale, 25% or more of the outstanding Common Shares, or (b)
if
the Common Shares are used in carrying on a business in Canada.
Restrictions
on Transferability of Shares
The
Corporation is not obligated to cause to be issued or delivered any certificates
evidencing Common Shares pursuant to the 2005 Plan unless and until the
Corporation is advised by its counsel that the issuance and delivery of such
certificates is in compliance with all applicable laws and regulations of any
governmental authority and the requirements of any securities exchange on which
Common Shares are traded. The Corporation may require, as a condition of the
issuance and delivery of certificates evidencing Common Shares pursuant to
the
2005 Plan, that the recipient of such shares make such covenants, agreements
and
representations, and that such certificates bear such legends as the
Corporation, in its sole discretion, deems necessary or desirable.
New
Plan Benefits
As
of
April 10, 2007, a total of 2,838,513 stock options and other awards have been
granted under the 2005 Plan. The Corporation is unable to determine the amount
of awards that may be granted in the future to its officers, directors, or
affiliates, inasmuch as grants of awards are subject to the discretion of the
Board.
Vote
Required for Approval and Recommendation by the Board
The
Board
recommends a vote FOR approval of an increase of 6,000,000 in the number of
authorized shares available under the 2005 Plan to an aggregate of 9,000,000
Common Shares. The proposal to approve this must be approved by the holders
of
at least a majority of the votes cast at the Meeting. Abstentions, and broker
non-votes are not counted and have no effect on the results of the vote.
OTHER
MATTERS
Proposals
of Shareholders
Pursuant
to rules adopted by the SEC, if a shareholder intends to propose any matter
for
a vote at the annual
meeting of the shareholders to be held in 2008, but fails
to
notify the Corporation of such intention prior to March 14, 2008, then a proxy
solicited by the Board may be voted on such matter in the discretion of the
proxy holder, without discussion of the matter in the proxy statement soliciting
such proxy and without such matter appearing as a separate item on the proxy
card.
In
order
to be included in the proxy statement and form of proxy relating to the
Corporation’s annual meeting of shareholders to be held in 2008, proposals which
shareholders intend to present at such annual meeting must be received by the
corporate secretary of the Corporation, at the Corporation’s principal business
office, 204 Edison Way, Reno, Nevada 89502, no later than December
29,
2008.
Undertakings
Unless
the Corporation has received contrary instructions, the Corporation intends
to
deliver only one copy of this Information Circular and one copy of the Annual
Report for the year ended December 31, 2006 to multiple shareholders sharing
the
same address. Upon written or oral request, the Corporation will provide,
without charge, an additional copy of such documents to each shareholder at
a
shared address to which a single copy of such documents was delivered
Shareholders at shared addresses that are receiving a single copy of such
documents but wish to receive multiple copies, and shareholders at shared
addresses that are receiving multiple copies of such documents but wish to
receive a single copy, should contact Edward Dickinson, Chief Financial Officer,
at 204 Edison Way, Reno, Nevada, 89502, U.S.A., or at the following telephone
number: (775) 858-3750.
Additional
Information
Additional
information relating to the Corporation is available on SEDAR at www.sedar.com.
Financial information is provided in the Corporation’s comparative financial
statements and Management’s Discussion and Analysis of Financial Condition and
Results of Operations for the year ended December 31, 2006. Shareholders may
contact Shaun Drake at 360 Bay Street, Suite 500, Toronto, Ontario M5H 2V6
(416-361-0737), to request copies of the Company’s financial statements and
Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
Upon
written or oral request, the Corporation will provide, without charge, to each
person to whom a copy of this Information Circular has been delivered, a copy
of
the Corporation’s Annual Report on Form 10-K for the year ended December 31,
2006 filed with the SEC (other than the exhibits except as expressly requested).
Requests should be directed to Edward Dickinson, Chief Financial Officer, at
204
Edison Way, Reno, Nevada, 89502, U.S.A., or at the following telephone number:
(775) 858-3750.
*
* * * *
* * * *
The
contents and sending of this Information Circular have been approved by the
directors of the Corporation.
Dated
as of
the 23rd day of April, 2007.
|
ALTAIR
NANOTECHNOLOGIES INC.
|
|
/s/
Alan J. Gotcher
|
|
Alan
J. Gotcher, President and Chief Executive
Officer
|
Appendix
A
Copy
of
Board Mandate
[see
attached]
Mandate
of the Board of Directors
Mandate
The
Board
of Directors (the “Board”) of Altair Nanotechnologies Inc (the “Company”) will
oversee the governance of the Company’s business.
Directors
shall exercise their judgment in a manner consistent with their fiduciary
duties. In particular, directors are required to act honestly and in good
faith, with a view to the best interests of the Company and its shareholders
and
to exercise the care, diligence and skill that a reasonably prudent person
would
exercise in comparable circumstances.
Responsibilities
The
Board
discharges its responsibilities directly, through delegation to committees
of
the Board and, as appropriate, through delegation to individual directors.
The
Board’s responsibilities, to be discharged directly, through delegation to
committees of the Board and, as appropriate, through delegation to individual
directors shall include:
Oversight
of Management
|
·
|
Participating
in the selection, appointment, development, evaluation and compensation
of
the Chief Executive Officer (“CEO”) and other senior officers directly and
through the Compensation and Nominating
Committee.
|
|
·
|
Promoting,
by the actions of the Board and its individual directors, a culture
of
integrity throughout the Company, consistent with the Company’s Code
of Conduct and
Code of Ethics.
By the Board’s oversight of senior officers, the Board will encourage the
CEO and other executive officers to act with integrity and to create
a
culture of integrity throughout the
Company.
|
|
·
|
Periodically
reviewing the Company’s Code
of Conduct and
Code of Ethics and making changes as
appropriate.
|
Financial
and Risk Matters
|
·
|
Overseeing
the reliability and integrity of the financial statements and other
publicly reported financial information, and of the disclosure principles
and practices followed by
management.
|
|
·
|
Overseeing
the integrity of the Company’s internal controls and management
information.
|
|
·
|
Reviewing
and approving an annual operating budget for the Company and its
subsidiaries on a consolidated basis and monitoring the Company’s
performance against such budget.
|
|
·
|
Reviewing
and approving quarterly financial statements and the release thereof
by
management.
|
|
·
|
Overseeing
the Company’s controls and procedures for the preparation and
dissemination of current reports and news releases in an effort to
ensure
that material information is disseminated in a timely and accurate
fashion.
|
|
·
|
Periodically
assessing the processes utilized by management with respect to risk
assessment and risk management, including the identification by management
of the principal risks of the business of the Company, and the
implementation by management of appropriate systems to deal with
such
risks.
|
Business
Strategy
|
·
|
Adopting
a strategic planning process pursuant to which management develops
and
proposes, and the Board reviews and approves, significant corporate
strategies and objectives, taking into account the opportunities
and risks
of the business.
|
|
·
|
Reviewing
and approving all major acquisitions, dispositions and investments
and all
significant financings and other significant matters outside the
ordinary
course of the Company’s business.
|
Corporate
Governance
|
·
|
Overseeing
the development, implementation and operation of the Company’s corporate
governance initiatives.
|
|
·
|
Taking
appropriate steps to remain informed about the Board’s duties and
responsibilities and about the business and operations of the
Company.
|
|
·
|
Ensuring
that the Board receives from senior officers the information and
input
required to enable the Board to effectively perform its
duties.
|
|
·
|
Assessing
the performance of the Chairman of the Board, the Chairperson of
each
committee of the Board and each
director.
|
Appendix
B
Copy
of
Audit Committee Charter
[see
attached]
ALTAIR
NANOTECHNOLOGIES, INC.
AUDIT
COMMITTEE CHARTER
The
Audit
Committee (“Committee”) is appointed by the Board of Directors (“Board”) to
assist the Board in monitoring (1) the integrity of the financial statements
of
the Company, (2) compliance by the Company with legal and regulatory
requirements, (3) the independent auditor’s qualifications and independence, (4)
performance of the Company’s internal and independent auditors, and (5) the
business practices and ethical standards of the Company. The Committee is also
directly responsible for (a) the appointment, compensation, retention and
oversight of the work of the Company’s independent auditors, and (b) the
preparation of the report that the Securities and Exchange Commission
(“Commission”) requires to be included in the Company’s annual proxy statement.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company’s financial statements and disclosures are presented
fairly in all material respects in accordance with generally accepted accounting
principles. These are the responsibility of management and the independent
auditor.
Independence.
The
Committee shall consist of three or more members of the Board of Directors,
each
of whom shall be independent. Independence shall be determined as to each member
by the full board. To be considered independent, each Committee member must
meet
the independence requirements applicable to Audit Committees of companies listed
on the NASDAQ Stock Market (“NASDAQ”) under NASDAQ rules and the securities laws
of the United States and Canada, and rules promulgated thereunder (the
“Securities Laws”). Audit Committee members shall not simultaneously serve on
the audit committees of more than two other public companies.
Financial
Literacy.
All
members of the Committee shall be financially literate, as defined by the
Commission, or must become financially literate within a reasonable period
of
time after their appointment to the Committee, and at least one member of the
Committee shall be an audit committee financial expert, as determined in the
judgment of the Board with reference to the Securities Laws and NASDAQ
rules.
III. |
COMMITTEE
COMPOSITION
|
The
members of the Committee shall be nominated by the Compensation, Nominating
and
Corporate Governance Committee and appointed by the Board at the annual
organizational meeting of the Board and shall serve until their successors
shall
be duly elected and qualified. The Board may remove any member of the Committee
at any time.
Chairman.
Unless
a Chairman is elected by the full Board, the members of the Committee shall
designate a Chair by majority vote of all the Committee members.
The
Committee shall meet at least four times annually or more frequently as
circumstances dictate. Meetings may be in person or by telephone as needed
to
conduct the business of the Committee. The Committee may take action by the
unanimous written consent of the members in the absence of a meeting. The
Committee shall meet periodically with management, the internal auditors and
the
independent auditor is separate executive sessions.
V. |
AUTHORITY
AND RESPONSIBILITY OF THE
COMMITTEE
|
The
Audit
Committee shall have the authority (1) to exercise all powers with respect
to
the appointment, compensation, retention and oversight of the work of the
independent auditor for the Company and its subsidiaries, (2) to retain special
legal, accounting or other consultants to advise the Committee and to pay the
fees of such advisors and (3) to determine the amount of funds it needs to
operate and direct the CFO make such funds available. As part of its oversight
role, the Committee may investigate any matter brought to its attention, with
the full power to retain outside counsel or other experts for this purpose.
Unless special circumstances require the fact or terms of any engagement or
appointment made by the Committee to be kept confidential from the Chief
Financial Officer, the Committee shall promptly notify the Chief Financial
Officer of the fact and terms of any appointment or engagement, and provide
copies of related agreements, and shall cause all invoices to be forwarded
to or
at the direction of the Chief Financial Officer promptly following receipt.
Confidential portions of any agreement or invoice may be redacted. The Audit
Committee may request any officer of employee of the Company or the Company’s
outside counsel or independent auditor to attend a meeting of the Committee
or
to meet with any member of, or consultant to, the Committee. Without limiting
the generality of the foregoing, the Audit Committee shall:
Financial
Statements and Disclosure Matters
|
1.
|
Review
and discuss prior to public dissemination the annual audited and
quarterly
unaudited financial statements with management and the independent
auditor, including major issues regarding accounting, disclosure
and
auditing procedures and practices as well as the adequacy of internal
controls that could materially affect the Company’s financial statements.
In addition, the review shall include the Company’s disclosures under
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations.” Based on the annual review, the Audit Committee shall
recommend inclusion of the financial statements in the Annual Report
on
Form 10-K to the Board.
|
|
2.
|
Discuss
with management and the independent auditor significant financial
reporting issues and judgments made in connection with the preparation
of
the Company’s financial statements, including any significant changes in
the Company’s selection or application of accounting principles, any major
issues as to the adequacy of the Company’s internal controls and any
special steps adopted in light of material control
deficiencies.
|
|
3.
|
Review
and discuss reports from the independent auditors
on:
|
|
A.
|
Critical
accounting policies and practices to be
used.
|
|
B.
|
Alternative
treatments of financial information within generally accepted accounting
principles that have been discussed with management, ramification
of the
use of such alternative disclosures and treatments, and the treatment
preferred by the independent
auditor.
|
|
C.
|
Other
material written communications between the independent auditor and
management, such as any management
letter.
|
|
4.
|
Discuss
with management the Company’s earnings press releases as well as financial
information and earnings guidance provided to analysts and rating
agencies. Such discussion may be done generally consisting of discussing
the types of information to be disclosed and the types of presentations
to
be made. In its discretion, the Committee may adopt policies requiring
specific reviews and approvals with respect to press releases, SEC
reports
and other disclosures, whether or not financial in nature.
|
|
5.
|
Discuss
with management and the independent auditor the effect on the Company’s
financial statements of significant regulatory and accounting initiatives
as well as off-balance sheet
structures.
|
|
6.
|
Discuss
with management the Company’s major financial risk exposures and the steps
management has taken to monitor and control such exposures, including
the
Company’s risk assessment and risk management
policies.
|
|
7.
|
Review
with the independent auditor any audit problems or difficulties and
management responses, including but not limited to (1) any restrictions
on
the scope of the auditor’s activities, (2) any restrictions on the access
of the independent auditor to requested material, (3) any significant
disagreements with management and (4) any audit differences that
were
noted or proposed by the auditor but for which the Company’s financial
statements were not adjusted (as immaterial or otherwise). The Committee
will resolve any disagreements between the auditors and management
regarding financial reporting.
|
|
8.
|
Review
disclosures made to the Audit Committee by the Company’s CEO and CFO
during their certification process for the Form 10-K and Form 10-Q
about
any significant deficiencies in the design or operation of disclosure
controls and procedures and internal controls over financial reporting
and
any fraud involving management or other employees who have a significant
role in the Company’s internal
controls.
|
|
9.
|
Discuss
at least annually with the independent auditor the matters required
to be
discussed by Statement of Auditing Standards No. 61 - Communication
with
Audit Committees.
|
|
10.
|
Prepare
the Audit Committee report that the Commission requires to be included
in
the Company’s annual proxy statement and review the matters described in
such report.
|
|
11.
|
Obtain
from management the annual report on internal controls over financial
reporting required by governing rules, as well as the independent
auditor’s attestation report on management’s assessment of internal
controls over financial reporting.
|
Responsibility
For The Company’s Relationship With The Independent Auditor
|
12.
|
Be
solely responsible for the appointment, compensation, retention and
oversight of the work of the independent auditors employed by the
Company.
The independent auditor shall report directly to the Audit Committee.
If
the appointment of the independent auditors is submitted for any
ratification by stockholders, the Audit Committee shall be responsible
for
making the recommendation of the independent
auditors.
|
|
13.
|
Review,
at least annually, the qualifications, performance and independence
of the
independent auditor. In conducting such review, the Committee shall
obtain
and review a report by the independent auditor describing (1) the
firm’s
internal quality-control procedures, (2) any material issues raised
by the
most recent internal quality-control review, or peer review, of the
firm
or by any formal investigation by governmental or professional authorities
regarding services provided by the firm which could affect the financial
statements of the Company, and any steps taken to deal with any such
issues, and (3) all relationships between the independent auditor
and the
Company that could be considered to bear on the auditor’s independence.
This evaluation shall include the review and evaluation of the lead
partner of the independent auditor and shall ensure the rotation
of
partners in accordance with Commission rules and the securities laws.
In
addition, the Committee shall consider the advisability of regularly
rotating the audit firm in order to maintain the independence between
the
independent auditor and the
Company.
|
|
14.
|
Approve
in advance any audit or permissible non-audit engagement or relationship
between the Company and the independent auditors. The Committee shall
establish guidelines for the retention of the independent auditor
for any
permissible non-audit services. The Committee hereby delegates to
the
Chairman of the Committee the authority to approve in advance all
audit or
non-audit services to be provided by the independent auditor if presented
to the full Committee at the next regularly scheduled
meeting.
|
|
15.
|
Meet
with the independent auditor prior to the audit to review the planning
and
staffing of the audit including the responsibilities and staffing
of the
Company’s internal audit department personnel who will assist in the
audit.
|
|
16.
|
Recommend
to the Board policies for the Company’s hiring of employees or former
employees of the independent auditor who participated in any capacity
in
the audit of the Company.
|
|
17.
|
Ensure
its receipt from the independent auditors of a formal written statement
delineating all relationships between the auditor and the company,
consistent with Independence Standards Board Standard 1, engage in
a
dialogue with the auditor with respect to any disclosed relationships
or
services that may impact the objectivity and independence of the
auditor
and take, or recommend that the Board take, appropriate action to
oversee
the independence of the outside
auditor.
|
Oversight
Of The Company’s Internal Audit Function
|
18.
|
Review
the appointment and replacement of the senior internal auditing executive
or functional outside equivalent.
|
|
19.
|
Review
the activities and organizational structure of the internal auditing
function and the significant reports to management prepared by the
internal auditing department and management’s
responses.
|
|
20.
|
Discuss
with the independent auditor and management the internal audit function
responsibilities, budget and staffing and any recommended changes
in the
planned scope of the internal audit
department.
|
|
21.
|
Obtain
from the independent auditor assurance that Section 10A (b) of the
Securities Exchange Act of 1934, as amended, has not been
implicated.
|
|
22.
|
Obtain
reports from management and the Company’s internal auditing function that
the Company is in conformity with applicable legal requirements and
the
Company’s Code of Conduct and its Code of Ethics for Senior Executives,
Financial Officers and Members of the Management Executive Committee
(the
“Codes”). Advise the Board with respect to the Company’s policies and
procedures regarding compliance with applicable laws and regulations
and
with the Codes.
|
|
23.
|
Establish
and maintain procedures for the receipt, retention and treatment
of
complaints received by the Company regarding accounting, internal
controls
or auditing matters. Also, the Committee shall maintain the Anonymous
Reporting Hotline for the confidential anonymous submission by employees
of the Company of concerns regarding questionable accounting, internal
controls or auditing matters.
|
|
24.
|
Discuss
with management and the independent auditor any correspondence with
regulators or governmental agencies and any published reports that
raise
material issues regarding the Company’s financial statements or accounting
policies.
|
|
25.
|
Review
at least annually legal matters with the Company’s General Counsel that
may have a material impact on the financial statements, the Company’s
compliance policies, including but not limited to the Foreign Corrupt
Practices Act, and any material reports or inquires received from
regulators or governmental
agencies.
|
Review
of Related Party Transactions
|
26.
|
Review
and approve (or decline to approve) any proposed transactions between
the
Company (including its subsidiaries) and any person that is an officer,
key employee, director or affiliate of the Company (or any subsidiary),
other than transactions that related to the employment and compensation
of
such persons and are within the scope of the charter of the Compensation,
Nominating and Governance Committee Charter. Review disclosures required
to be made under the securities laws of insider and affiliated party
transactions.
|
Other
|
27.
|
Report
regularly to the Board with respect to any issues that arise with
respect
to the quality or integrity of the Company’s financial statements, the
Company’s compliance with legal or regulatory requirements, the
performance and independence of the Company’s independent auditors or the
performance of the internal audit
function.
|
|
28.
|
Review
and reassess the adequacy of this Charter annually and recommend
any
proposed changes to the Board for
approval.
|
|
29.
|
Perform
an annual performance self-evaluation.
|
COMMITTEE
OPERATIONS
The
Committee shall meet in person or telephonically at a time and place determined
by the Chairman of the Committee, with further meeting to occur, or actions
to
be taken by unanimous written consent, when deemed appropriate or desirable
by
the Committee Chairman. A majority of the Committee members shall constitute
a
quorum for the transaction of business. The action of a majority of those
present at a meeting when a quorum is present will constitute the actions of
the
Committee. The Secretary of the Company, or his or her designee, will keep
minutes of all Committee meetings, which will be distributed to all members
of
the Board. Prior to each meeting, a preliminary agenda will be prepared by
either the Secretary or the Chairman of the Committee. The Chairman of the
Committee will make the final decision regarding the agenda. The agenda and
all
materials to be reviewed at the meeting shall be received by the Committee
members as far in advance of the meeting date as reasonably practicable. The
Committee shall have such resources and authority as it deems desirable or
appropriate to discharge its duties and responsibilities, including the
authority to obtain advice and assistance from internal or external legal,
human
resource, accounting or other experts, advisors or consultants, without seeking
approval of the Board or management. Such independent advisors may be the
regular advisors of the Company. The Committee shall have the authority to
conduct or authorize investigations into any matters within the scope of its
responsibilities as it shall deem appropriate, including the authority to
request any officer, employee or advisor of the Company to meet with the
Committee or any advisors engaged by the Committee.
PROXY
Altair
Nanotechnologies Inc.
Annual
and Special Meeting of Shareholders
on
May
30, 2007
This
Proxy Is Solicited By The Board of Directors Of
Altair
Nanotechnologies Inc.
The
undersigned shareholder of Altair Nanotechnologies Inc. (the "Corporation")
hereby nominates, constitutes and appoints Alan J. Gotcher, President, Chief
Executive Officer and director, or failing him, Edward Dickinson, Chief
Financial Officer, or instead of any of them, ___________________________,
as
nominee of the undersigned to attend and vote for and on behalf of the
undersigned at the annual and special meeting of shareholders of the Corporation
(the "Meeting") to be held on the 30th day of May, 2007 and at any adjournment
or adjournments thereof, to the same extent and with the same power as if the
undersigned were personally present at the said meeting or such adjournment
or
adjournments thereof, and without limiting the generality of the power hereby
conferred, the nominees are specifically directed to vote the shares represented
by this proxy as indicated below.
This
proxy also confers discretionary authority to vote in respect of any amendments
or variations to the matters identified in the Notice of Meeting, matters
incident to the conduct of the Meeting and any other matter which may properly
come before the Meeting about which the Corporation did not have notice as
of
the date the Information Circular was filed with the SEC and in such manner
as
such nominee in his judgement may determine.
A
shareholder has the right to appoint a person to attend and act for him and
on
his behalf at the Meeting other than the persons designated in this form of
proxy. Such right may be exercised by filling the name of such person in the
blank space provided and striking out the names of management's nominees, or
by
completing another proper form of proxy and, in either case, depositing the
proxy as instructed below.
To
be valid, this proxy must be received by the transfer agent of the Corporation
at 120
Adelaide Street West, Suite 420, Toronto, Ontario M5H 4C3,
Canada
not later than 48 hours (excluding Saturdays and holidays) before the time
of
holding the Meeting or adjournment thereof, or delivered to the chairman on
the
day of the Meeting or adjournment thereof.
The
nominees are directed to vote the shares represented by this proxy as
follows:
|
(1)
|
ELECTION
OF DIRECTORS, each to serve until the next annual meeting of shareholders
of the Corporation or until their respective successor shall have
been
duly elected, unless earlier terminated in accordance with the bylaws
of
the Corporation:
|
□ FOR
all
nominees listed below (except as marked to the contrary).
□ WITHHOLD
AUTHORITY to vote for all nominees listed below.
(INSTRUCTION:
To withhold authority to vote for any individual nominee, strike a line through
the nominee's name in the list below.)
Michel
Bazinet
|
Jon
N. Bengtson
|
Alan
J. Gotcher
|
George
E. Hartman
|
|
|
|
|
Robert
F. Hemphill, Jr.
|
Christopher
E. Jones
|
Pierre
Lortie
|
|
[See
Reverse Side]
|
(2)
|
Proposal
to appoint Perry Smith LLP as independent auditors of the Corporation
for
the fiscal year ending December 31, 2007 and to authorize the Audit
Committee of the Board of Directors to fix their
remuneration.
|
□
FOR
|
□
AGAINST
|
□
WITHHOLD
|
|
(3)
|
Proposal
to increase by 6,000,000 the number of authorized shares available
under
the Altair Nanotechnologies Inc. 2005 Stock Incentive Plan to an
aggregate
of 9,000,000 Common Shares.
|
□
FOR
|
□
AGAINST
|
□
WITHHOLD
|
|
(4)
|
At
the nominee's discretion upon any amendments or variations to matters
specified in the notice of the Meeting, matters incident to the conduct
of
the Meeting, and upon any other matters as may properly come before
the
Meeting or any adjournments thereof about which the Corporation did
not
have notice as of the date 45 days before the date on which the
Corporation first mailed proxy materials to shareholders.
|
THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED OR WITHHELD FROM VOTING IN
ACCORDANCE WITH THE INSTRUCTIONS GIVEN ON ANY VOTE OR BALLOT CALLED FOR AT
THE
MEETING AND, WHERE A SHAREHOLDER HAS SPECIFIED A CHOICE, WILL BE VOTED OR
WITHHELD FROM VOTING ACCORDINGLY. UNLESS A SPECIFIC INSTRUCTION IS INDICATED,
SAID SHARES WILL BE VOTED IN FAVOUR OF ALL NOMINEES OF THE BOARD OF DIRECTORS,
IN FAVOUR OF THE APPOINTMENT OF AUDITORS, AND IN FAVOUR OF AN INCREASE OF
6,000,000 IN THE NUMBER OF SHARES AVAILABLE UNDER THE ALTAIR NANOTECHNOLOGIES
INC. 2005 STOCK INCENTIVE PLAN TO AN AGGREGATE OF 9,000,000 COMMON SHARES,
ALL
OF WHICH ARE SET FORTH IN THE INFORMATION CIRCULAR, ACCOMPANYING THIS PROXY,
WHICH IS INCORPORATED HEREIN BY REFERENCE AND RECEIPT OF WHICH IS HEREBY
ACKNOWLEDGED.
This
proxy revokes and supersedes all proxies of earlier date.
DATED
this ____ day of ________________ , 2007.
PRINT
NAME: _______________________________
SIGNATURE:
________________________________
NOTES:
|
(1)
|
This
proxy must be signed by the shareholder or the shareholder’s attorney duly
authorized in writing, or if the shareholder is a corporation, by
the
proper officers or directors under its corporate seal, or by an officer
or
attorney thereof duly authorized.
|
|
(2)
|
A
person appointed as nominee to represent a shareholder need not be
a
shareholder of the Corporation.
|
|
(3)
|
If
not dated, this proxy is deemed to bear the date on which it was
mailed on
behalf of the management of the
Corporation.
|
|
(4)
|
Each
shareholder who is unable to attend the Meeting is respectfully requested
to date and sign this form of proxy and return it using the self-addressed
envelope provided.
|
ALTAIR
NANOTECHNOLOGIES
INC.
NOTICE
OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE
IS HEREBY GIVEN
that an
annual and special meeting (the "Meeting") of the shareholders of Altair
Nanotechnologies Inc. (the "Corporation") will be held at the Grand
Sierra Resort, 2500
E.
2nd
Street,
Reno, Nevada 89502, Wednesday, the
30th
day of May 2007, at the hour of 10:00 o'clock in the morning (Pacific time)
for
the following purposes:
(1)
|
To
receive the audited financial statements of the Corporation for the
twelve
months ended December 31, 2006, together with the report of the
auditors thereon;
|
(3)
|
To
authorize the appointment of the auditors and to authorize the
Audit
Committee of the Board of Directors
to
fix their remuneration;
|
(4)
|
To
authorize an increase in the number of shares available under the
Altair
Nanotechnologies Inc. 2005 Stock Incentive Plan to an aggregate of
9,000,000 Common Shares; and
|
(4)
|
To
transact such further or other business as may properly come before
the
Meeting or any adjournment or adjournments
thereof.
|
This
notice is accompanied by a form of proxy, a management information circular,
the
annual report to shareholders of the Corporation containing the audited
consolidated financial statements of the Corporation for the fiscal year ended
December 31, 2006, and a supplemental mailing list form.
Shareholders
who are unable to attend the Meeting in person are requested to complete, date,
sign and return the enclosed form of proxy so that as large a representation
as
possible may be had at the Meeting.
DATED
at
Toronto, Ontario as of the 23rd day of April, 2007.
BY:
ORDER
OF THE BOARD
(Sgd.)
Alan J. Gotcher
President
and Chief Executive Officer