--------------------------------------------------------------------------------
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a)
Of The Securities Exchange Act Of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, Use of the Commission Only (as permitted by Rule
14a-6(e)(2))Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 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)
Payment of Filing Fee (Check the appropriate box):
[X]: No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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: 5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
--------------------------------------------------------------------------------
ALTAIR NANOTECHNOLOGIES INC.
1725 Sheridan Avenue, Suite 140
Cody, Wyoming 82414
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, the accompanying form of proxy and the Annual Report of the
Corporation for the year ended December 31, 2002 are first being mailed to the
shareholders of the Corporation on or about May 19, 2003. 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 regular employees of the
Corporation without additional compensation therefor. 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 delivered 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 registered office of the Corporation 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
-----------------
UNLESS OTHERWISE INDICATED ON THE FORM OF PROXY, SHARES REPRESENTED BY
PROPERLY EXECUTED PROXIES IN FAVOR OF PERSONS DESIGNATED IN THE PRINTED PORTION
OF THE ENCLOSED FORM OF PROXY WILL BE VOTED (I) TO ELECT MANAGEMENT'S FIVE
NOMINEES FOR DIRECTOR, (II) TO APPOINT DELOITTE & TOUCHE LLP AS THE
CORPORATION'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003,
(III) TO APPROVE THE DORAL TRANSACTIONS AND DORAL TRANSACTION DOCUMENTS AND THE
ISSUANCE OF THE DORAL SHARES, AND (IV) TO APPROVE THE BY-LAW AMENDMENT, AS SUCH
MATTERS ARE DESCRIBED AND DEFINED BELOW. IF SO INDICATED ON THE FORM OF PROXY,
SHARES REPRESENTED BY PROPERLY EXECUTED PROXIES IN FAVOR OF PERSONS DESIGNATED
IN THE PRINTED PORTION OF THE ENCLOSED FORM OF PROXY WILL BE WITHHELD FROM
VOTING WITH RESPECT TO, OR VOTED AGAINST, ANY OR ALL OF THE FOUR MATTERS
IDENTIFIED IN THE PRECEDING SENTENCE. 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
-----------------
The authorized capital of the Corporation consists of an unlimited
number of Common Shares. As of [date within 30 days of mailing], 2003, the
Corporation had issued and outstanding [31,110,107] Common Shares.
The Corporation shall make a list of all persons who are registered
holders of Common Shares on May [13], 2003 (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 except to the extent that such shareholder has
transferred any of his shares after the Record Date and the transferee of those
shares produces properly endorsed share certificates or otherwise establishes
that he owns the shares and demands, not later than ten days before the Meeting,
that his name be included in the list. In such case the transferee is entitled
to vote his shares at the Meeting.
Two persons present in person and each entitled to vote at a meeting of
shareholders is required for a quorum. An abstention will be counted as
"represented" for the purpose of determining the presence or absence of a
quorum. A broker non-vote, which is an indication by a broker that it does not
have discretionary authority to vote on a particular matter, will not be treated
as "represented" for quorum purposes.
Under the Canada Business Corporations Act (the "CBCA"), once a quorum
is established, in connection with the election of directors, the five nominees
receiving the highest number of votes will be elected. In order to approve each
of the proposals in respect of the appointment of independent auditors, the
proposal to approve the Doral Transactions, Doral Transaction Documents and
Doral Shares, and the proposal to approve the By-law Amendment, 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.
2
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.
--------------------------------------------------------------------------------------------------------
Year Ended December 31,
2002 2001 2000 1999 1998
--------------------------------------------------------------------------------------------------------
(Each U.S. Dollar Purchases the Following Number of Canadian Dollars)
--------------------------------------------------------------------------------------------------------
High 1.6128 1.6023 1.5600 1.5302 1.5770
--------------- -------------- -------------- ------------------- ------------------ -------------------
Low 1.5108 1.4933 1.4350 1.4440 1.4075
--------------- -------------- -------------- ------------------- ------------------ -------------------
Average 1.5702 1.5519 1.4871 1.4827 1.4894
--------------- -------------- -------------- ------------------- ------------------ -------------------
Year End 1.5800 1.5925 1.4995 1.4440 1.5375
--------------- -------------- -------------- ------------------- ------------------ -------------------
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
The Articles of Continuance of the Corporation (the "Articles"),
provide that the board of directors of the Corporation (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 of 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.
At the Meeting, shareholders of the Corporation will be asked to elect
five directors. The following table provides the names of the director nominees
of management of the Corporation (the "Nominees") and information concerning
them. The persons in the enclosed form of proxy intend to vote for the election
of the Nominees. Management does not contemplate that any of the Nominees will
be unable to serve as a director. None of the Nominees or current directors or
officers was selected pursuant to any arrangement or understanding between him
and any other person.
------------------------------------------------------------------------------------------------------------------
Number of Common Shares
Period of Service as a Beneficially Owned or Over
Name & Municipality of Residence Office Director Which Control is Exercised(1)
------------------------------------------------------------------------------------------------------------------
William Long Chief Executive Since 1988 2,369,529 (2)
Cody, Wyoming Officer & Director
------------------------------------------------------------------------------------------------------------------
James Golla Director Since 1994 55,000 (3)
Mississauga, Ontario
------------------------------------------------------------------------------------------------------------------
George Hartman Director Since 1997 45,000 (4)
Fenelon Falls, Ontario
------------------------------------------------------------------------------------------------------------------
Robert Sheldon Director Since 1997 45,000 (5)
Half Moon Bay, British Columbia
------------------------------------------------------------------------------------------------------------------
Edward Dickinson Chief Financial Since 2002 379,700(6)
Reno, Nevada Officer, Secretary &
Director
------------------------------------------------------------------------------------------------------------------
3
(1) The information as to Common Shares beneficially owned or over which
they exercise control or direction not being within the knowledge of
the Corporation has been furnished by the respective Nominees
individually. Includes all Common Shares issuable pursuant to the
exercise or conversion of options that are exercisable within 60 days.
(2) Includes 287,500 Common Shares held by the MBRT Trust, an irrevocable
trust for the benefit of the minor children of Dr. Long, and 125,000
Common Shares subject to warrants held by the MBRT Trust. Dr. Long
disclaims any beneficial interest in such 412,500 Common Shares. Also
includes 100,000 Common Shares subject to presently exercisable options
granted to Dr. Long pursuant to the 1996 Plan and 260,000 Common Shares
subject to presently exercisable options granted to Dr. Long pursuant
to the 1998 Plan.
(3) Includes 20,000 Common Shares subject to presently exercisable options
granted to Mr. Golla pursuant to the 1996 Plan and 35,000 Common Shares
subject to presently exercisable options granted to Mr. Golla pursuant
to the 1998 Plan.
(4) Includes 45,000 Common Shares subject to presently exercisable options
granted to Mr. Hartman pursuant to the 1998 Plan.
(5) Includes 45,000 Common Shares subject to presently exercisable options
granted to Mr. Sheldon pursuant to the 1998 Plan.
(6) Includes 250,000 Common Shares subject to presently exercisable options
granted to Mr. Dickinson pursuant to the 1996 Plan and 129,700 Common
Shares subject to presently exercisable options granted to Mr.
Dickinson pursuant to the 1998 Plan.
IF ANY OF THE NOMINEES IS FOR ANY REASON UNAVAILABLE TO SERVE AS A
DIRECTOR, PROXIES IN FAVOR 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, nominees and
executive officers of the Corporation and a key employee of the Corporation,
including their principal occupations for the past five years:
Directors
---------
William P. Long, 56, was President from 1998 until April 2002, at which
time he was replaced as President and was appointed to the newly created office
of Chief Executive Officer. Dr. Long has also been a director of the Corporation
since 1988, and an officer and director of Fine Gold Recovery Systems, Inc.
("Fine Gold"), a wholly-owned subsidiary of the Corporation, since February
1996. Dr. Long has been an executive officer of Mineral Recovery Systems, Inc.
("MRS"), since its formation in April 1987 and is also a director. In addition,
he is a director of Altair Nanomaterials, Inc., a wholly-owned subsidiary of
MRS. From 1987 to 1988, Dr. Long was a mineral and energy consultant, providing
various services to clients in the mining and energy industries, including
arranging precious metal property acquisitions, supervising mineral evaluations,
4
and providing market analyses. From 1980 to 1986, Dr. Long served as the
Executive Vice President and Chief Financial Officer of Thermal Exploration
Corporation. From 1974 to 1980, Dr. Long was employed by Amax Exploration, Inc.
in various capacities, including Systems Engineer, Business Analyst and Business
Manager. Dr. Long is affiliated with the American Institute of Chemical
Engineers and the American Institute of Mining Engineers. He obtained a
bachelors degree in Chemical and Petroleum Refining Engineering and a Ph.D. in
Mineral Economics from the Colorado School of Mines in 1969 and 1974,
respectively.
James I. Golla, 70, has been a director of the Corporation since
February 1994. He also currently serves as a director of Apogee Minerals Ltd,
European Gold Resources Inc., Assure Energy, Inc., Radiant Energy Inc. and
Barton Bay Resources Inc. Mr. Golla was a journalist with the Globe and Mail,
Canada's national newspaper, from 1954 until his retirement early in 1997.
George E. Hartman, 54, was elected a director of the Corporation in
March 1997. From 1995 until 1998, Mr. Hartman served as President of Planvest
Pacific Financial Corp. ("Planvest Pacific"), 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 Planvest Capital Corp., the parent of
Planvest Pacific. 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 to the financial
services industry. 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 is the author of Risk is a Four-Letter
Word--The Asset Allocation Approach to Investing, a Canadian best-seller
published in 1992, and is the author of its sequel, Risk is STILL a Four Letter
Word, released in 2000.
Robert Sheldon, 80, has been a director of the Corporation since June
1997. He also currently serves as a director of Aspen Exploration Corporation,
Tananger Resources and Pallaum Mining Inc. Since his retirement in 1988, Mr.
Sheldon has performed consulting work for several clients, including Newmont
Exploration of Canada Limited. Mr. Sheldon served as President of Newmont
Exploration of Canada Limited and Vice President of Newmont Mines Limited from
1975 until 1988 when he retired. Mr. Sheldon was responsible for mineral
exploration, appraisals and development of mining properties throughout Canada
for Newmont Mining Corporation, a natural resource company with worldwide
operations. Mr. Sheldon obtained a bachelors degree in Geological Engineering
from the University of British Columbia in 1948. He is a member of the
Association of Professional Engineers of British Columbia, the American
Institute of Mining and Metallurgy, the Canadian Institute of Mining and
Metallurgy, the Society of Mining Engineers, the British Columbia and Yukon
Chamber of Mines (past president) and the Engineers Club, Vancouver, British
Columbia (past president).
Edward H. Dickinson, 56, was appointed Chief Financial Officer of the
Corporation in March 2000, was appointed Secretary in June 2001 and has been a
director of the Corporation since 2002. He also currently serves as Secretary,
Treasurer and a director of MRS and Secretary and Treasurer of Altair
Nanomaterials, Inc. Mr. Dickinson had previously served as Director of Finance
of the Corporation since August 1996. 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 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, who is a
certified public accountant, obtained a masters degree in Accounting from
California State University, Northridge in 1978.
5
Executive Officers
------------------
The executive officers of the Corporation are William P. Long, Rudi E.
Moerck, C. Patrick Costin, and Edward H. Dickinson. Certain information
regarding Messrs. Long and. Dickinson is set forth above under "Election of
Directors - Directors." Certain information regarding Messrs. Moerck and Costin
follows.
Rudi E. Moerck, 56, was appointed as Vice President of Business
Development of the Corporation in January 2002 and was promoted to President of
the Corporation in April 2002. Prior to joining the Corporation, in April 1997,
Dr. Moerck founded www.Smrtdoc.com, a consulting services provider to the
pharmaceutical, virtual pharmaceutical and fine chemical industries. Key
assignments at www.Smrtdoc.com have included commercial development projects and
mergers and acquisitions. Dr. Moerck also held key senior management positions,
including Senior Vice President and General Manager as well as Senior Vice
President of Sales and Marketing with Catalytica Pharmaceuticals between June
1998 and January 2002. In 2000, DSM of the Netherlands purchased Catalytica for
$800 million. Prior to joining Catalytica Pharmaceuticals, Dr. Moerck held the
position of President of Salsbury Chemicals, a subsidiary of Cambrex
Corporation, from 1996-1997 and held the position of President of the
Pharmaceuticals and Fine Chemicals Group of Cambrex from 1997-1998. Degussa
Corporation and Degussa AG employed Dr. Moerck for 13 years during which he held
various positions of increasing responsibility, which included the successful
green field launch of Degussa's hydrogen peroxide business in North America. Dr.
Moerck obtained a bachelors degree in Biology/Chemistry from Florida South
College in 1969 and a Ph.D. in Organic Chemistry from University of Florida in
1975, and completed Postdoctoral Fellowships at Ohio State University between
1975 and 1979.
C. Patrick Costin, 60, was appointed a Vice President of the
Corporation in June 1996 and currently serves as the President and a director of
Fine Gold and MRS and Vice President of Altair Nanomaterials, Inc. Mr. Costin is
the chief executive officer of Costin and Associates, a minerals consulting
organization founded by Mr. Costin in 1992 which specializes in identification
and evaluation of North American mine and mineral deposit acquisition
opportunities. From 1982 to 1992, Mr. Costin served as the manager of U.S.
exploration for Rio Algom Ltd. Mr. Costin's additional experience in the mining
and minerals industry includes Senior Mineral Economist for the Stanford
Research Institute from 1977 to 1982, Senior Geologist for Chevron Resources
from 1975 to 1976, Senior Geologist for Newmont Mining Corporation of Canada
from 1967 to 1975, and Geologist for United Keno Hill Mines Ltd. from 1965 to
1967. Mr. Costin obtained a bachelors degree in Geological Engineering and a
masters degree in Minerals Economics from the Colorado School of Mines in 1965
and 1975, respectively.
Key Employees
-------------
In addition to its directors and executive officers, the Corporation
believes that the performance of Kenneth Lyon, President of Altair
Nanomaterials, Inc. is important to the success of the Corporation. Certain
information regarding Mr. Lyon is set forth below:
6
Kenneth E. Lyon, 62, was appointed President of Altair Nanomaterials,
Inc., a wholly-owned subsidiary of the Corporation, in August 2000. Prior to
joining Altair Nanomaterials as an officer, Mr. Lyon provided consulting
services to Altair Nanomaterials from November 1999 to August 2000. Prior to
commencing work with Altair Nanomaterials, Mr. Lyon founded and was president of
Idaho Chemical Industries, a chemical distribution and plastics fabrication
company, from December 1986 to December 1999. From June 1996 to August 2000, Mr.
Lyon also consulted with Project Resources Group for Nippon Sheet Glass and
Sumitomo Corporation. Prior to founding Idaho Chemical Industries, Mr. Lyon
worked at Morrison-Knudsen Company for nine years where he worked to develop a
new business in Chemical and Energy Engineering and held a variety of positions
including Director of Synthetic fuels development, Process Facilities
Manager-Chevron Shale oil project, Director of Marketing of MK Industrial/MK
Furgason, and General Manager of Marketing Latin America. Mr. Lyon was Chairman
of the Advisory Counsel of the Technical and Industrial Extension Service of
Boise State University from June 1994 to December 1998 and Public Works
Commissioner for the City of Boise from June 1989 to November 1999. Mr. Lyon
received a bachelors of science degree in chemical engineering from the
University of Idaho in 1962.
Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
Set forth below is information with respect to beneficial ownership of
Common Shares as of April [date within 30 days of mailing], 2003 by persons
known to the Corporation to own more than 5% of the outstanding Common Shares,
each of the Corporation's current executive officers and directors, and by all
current officers and directors of the Corporation as a group. 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 Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership(1) of Class(2)
-----------------------------------------------------------------------------------------------------------------
Common William P. Long (Chief Executive 2,369,529(3) 7.1%
Officer & Director)
57 Sunset Rim
Cody, Wyoming 82414
-----------------------------------------------------------------------------------------------------------------
Common Rudi E. Moerck (President) 103,500(4) *
25107 Callaway
San Antonio, Texas 78258
-----------------------------------------------------------------------------------------------------------------
Common C. Patrick Costin (Vice President) 1,083,333(5) 3.4%
1850 Aquila Avenue
Reno, Nevada 89509
-----------------------------------------------------------------------------------------------------------------
Common Edward H. Dickinson (Chief Financial 379,700(6) 1.2%
Officer, Secretary and Director)
2595 Sagittarius Drive
Reno, Nevada 89509
-----------------------------------------------------------------------------------------------------------------
Common James L. Golla (Director) 55,000(7) *
829 Terlin Boulevard
Mississauga, Ontario L5H 1T1
-----------------------------------------------------------------------------------------------------------------
Common George Hartman (Director) 45,000(8) *
136 Colborne
Fenelon Falls, ON K0M 1N0
-----------------------------------------------------------------------------------------------------------------
7
-----------------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership(1) of Class(2)
-----------------------------------------------------------------------------------------------------------------
Common Robert Sheldon (Director) 45,000(9) *
8789 Redrooffs Road
Half Moon Bay, British Columbia
V0N 1Y0
-----------------------------------------------------------------------------------------------------------------
Common Louis Schnur (Significant 3,406,868(10) 9.9%(10)
Shareholder)
6941 South Western Ave.
Chicago, IL 60613
-----------------------------------------------------------------------------------------------------------------
Common Cranshire Capital, L.P. (Significant 1,819,945(11) 5.5%
Shareholder)
666 Dundee Road, Suite 1901
Northbrook, IL 60062
-----------------------------------------------------------------------------------------------------------------
Common All Directors and Officers as a 4,081,062(12) 11.6%
Group
(7 persons)
-----------------------------------------------------------------------------------------------------------------
* Represents less than 1% of the outstanding Common Shares.
(1) Includes all Common Shares issuable pursuant to the exercise or
conversion of options and warrants that are exercisable within 60 days
of [date within 30 days of mailing], 2003.
(2) Based on [31,005,941] Common Shares outstanding as of [date within 30
days of mailing], 2003. Common Shares underlying options or other
convertible securities are 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 287,500 Common Shares held by the MBRT Trust, an irrevocable
trust for the benefit of the minor children of Dr. Long, and 125,000
Common Shares subject to warrants held by the MBRT Trust. Dr. Long
disclaims any beneficial interest in such 412,500 Common Shares. Also
includes 100,000 Common Shares subject to presently exercisable options
granted to Dr. Long pursuant to the 1996 Altair Nanotechnologies Inc.
Stock Option Plan (the "1996 Plan") and 260,000 Common Shares subject
to presently exercisable options granted to Dr. Long pursuant to the
1998 Altair Nanotechnologies Inc. Stock Option Plan (the "1998 Plan").
(4) Includes 100,000 Common Shares subject to presently exercisable options
granted to Mr. Moerck pursuant to the 1998 Plan.
(5) Includes 100,000 Common Shares subject to presently exercisable options
granted to Mr. Costin pursuant to the 1996 Plan and 175,000 Common
Shares subject to presently exercisable options granted to Mr. Costin
pursuant to the 1998 Plan.
(6) Includes 250,000 Common Shares subject to presently exercisable options
granted to Mr. Dickinson pursuant to the 1996 Plan and 129,700 Common
Shares subject to presently exercisable options granted to Mr.
Dickinson pursuant to the 1998 Plan.
(7) Includes 20,000 Common Shares subject to presently exercisable options
granted to Mr. Golla pursuant to the 1996 Plan and 35,000 Common Shares
subject to presently exercisable options granted to Mr. Golla pursuant
to the 1998 Plan.
(8) Includes 45,000 Common Shares subject to presently exercisable options
granted to Mr. Hartman pursuant to the 1998 Plan.
(9) Includes 45,000 Common Shares subject to presently exercisable options
granted to Mr. Sheldon pursuant to the 1998 Plan.
(10) Includes 2,886,449 presently exercisable warrants to purchase Common
Shares. Mr. Schnur's warrants are all subject to a provision
prohibiting exercise of such warrants if, after such exercise, Mr.
Schnur would beneficially own more than 9.9% of the outstanding Common
Shares. But for the effect of such provision, Mr. Schnur would
beneficially own 4,152,640 Common Shares (3,632,221 subject to
warrants), representing 11.8% of the Common Shares that would be
outstanding were such warrants exercised.
(11) Includes 1,155,211 presently exercisable warrants to purchase Common
Shares.
(12) Includes 470,000 Common Shares subject to presently exercisable options
granted to officers and directors pursuant to the 1996 Plan, 789,700
Common Shares subject to presently exercisable options granted to
officers and directors pursuant to the 1998 Plan, and 125,000 Common
Shares subject to warrants held by the MBRT Trust.
8
Executive Compensation
----------------------
(a) Compensation of Officers
The following table, presented in accordance with Regulation 14A
promulgated under the United States Securities Exchange Act of 1934, as amended
(the "Exchange Act"), sets forth all annual and long-term compensation for
services rendered in all capacities to the Corporation and its subsidiaries for
the fiscal years ended December 31, 2002, December 31, 2001 and December 31,
2000 in respect of William P. Long who was, at December 31, 2002, the Chief
Executive Officer of the Corporation and C. Patrick Costin who was, at December
31, 2002, the Vice President of the Corporation. The Corporation had no other
executive officer whose total salary and bonuses during the fiscal year ended
December 31, 2002 exceeded U.S. $100,000. The table also sets forth all annual
and long-term compensation for services rendered in all capacities to the
Corporation and its subsidiaries for the fiscal years ended December 31, 2002,
December 31, 2001 and December 31, 2000 in respect of Kenneth E. Lyon, who was,
at December 31, 2002, the President of Altair Nanomaterials, Inc., a wholly
owned subsidiary of the Corporation.
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------- ----------------------
Restricted
Other Shares or Securities
Fiscal Annual Restricted Under All Other
Year Compens Share Options LTIP Compen-
Ended Salary (1) Bonus(1) ation Units Granted Payouts sation
Name and Title Dec. 31, (U.S. $) (U.S. $) (U.S. $) (#) (#) (U.S. $) (U.S. $)
-------------- -------- -------- -------- -------- --- --- -------- --------
William P. Long, Chief 2002 91,200 9,120 Nil Nil 110,000 Nil 116,000(2)
Executive Officer and 2001 91,200 9,120 Nil Nil 100,000 Nil Nil
Director 2000 91,200 9,120 Nil Nil Nil Nil Nil
C. Patrick Costin, Vice 2002 100,320 Nil Nil Nil Nil Nil Nil
President 2001 100,320 Nil Nil Nil 125,000 Nil Nil
2000 100,320 Nil Nil Nil Nil Nil Nil
Kenneth E. Lyon 2002 108,000 Nil Nil Nil 10,000 Nil Nil
President of Altair 2001 103,846 Nil Nil Nil 30,000 Nil Nil
Nanomaterials, Inc. 2000 49,500 Nil Nil Nil 20,000 Nil Nil
(1) Bonus and salary amounts reflect amounts accrued and payable to Dr.
Long for each fiscal year in accordance with the terms of his
employment agreement with the Corporation. See "Executive Compensation
- Employment Contracts." Amounts actually paid to Dr. Long in fiscal
years 2002, 2001 and 2000 were U.S. $100,320, U.S. $91,200 and U.S.
$100,320, respectively.
(2) This amount represents the value, as of the issue date, of 200,000
Common Shares issued to Dr. Long in connection with the termination of
certain terms of his employment agreement.
(b) Option Grants in 2002
The following table provides details with respect to stock options, if
any, granted to Dr. Long, Mr. Costin and Mr. Lyon during the year ended December
31, 2002:
9
Individual Grants
-----------------------------------------------------------------------------------------------------------------------------
% of Total Market Value of Potential Realizable
Options Securities Value at Assumed Rates
Granted to Exercise Underlying of Share Price
Employees in Price per Options on the Appreciation for Option
Financial Share Date of Grant Expiration Term (US$)
Name Year (US$) (US$) Date 5% 10%
----------------------------------------------------------------------------------------------------------------------------
William P. Long, 110,000 16.2% 1.20 0.89 05/04/07 (7,052) 25,669
President and Director
----------------------------------------------------------------------------------------------------------------------------
Kenneth E. Lyon, 10,000 1.5% 0.70 0.50 12/30/07 (619) 1,053
President of Altair
Nanomaterials, Inc.
----------------------------------------------------------------------------------------------------------------------------
On May 6, 2002, the Board approved an extension of the expiry date from
May 14, 2002 to May 14, 2004 for 100,000 options held by Dr. Long and 100,000
options held by Mr. Costin.
(c) Aggregated Option Exercises and Year-end Option Values
The following table provides information regarding options held by Dr.
Long, Mr. Costin and Mr. Lyon as at December 31, 2002 and options exercised by
them during the year ended December 31, 2002:
-------------------------------------------------------------------------------------------------------------------------
Securities Number of Securities Underlying Value of Unexercised
Acquired on Aggregate Unexercised Options at In-the-money Options at
Exercise Value December 31, 2002 December 31, 2002
Name (#) Realized Exercisable Unexercisable
(#) (#) Exercisable Unexercisable
-------------------------------------------------------------------------------------------------------------------------
William P. Long, Nil Nil 360,000 Nil Nil N/A
CEO and Director
-------------------------------------------------------------------------------------------------------------------------
C. Patrick Costin, Nil Nil 275,000 Nil Nil N/A
Vice President
-------------------------------------------------------------------------------------------------------------------------
Kenneth E. Lyon
President of Altair Nil Nil 260,000 Nil Nil N/A
Nanomaterials Inc.
-------------------------------------------------------------------------------------------------------------------------
(d) Compensation of Directors
Directors who are not officers of the Corporation are paid U.S. $1,000
per meeting attended in person for their services as directors. During the year
ended December 31, 2002, there were no payments made to directors of the
Corporation for attending meetings. Directors who are not officers are 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 such amounts were paid to directors during the year
ended December 31, 2002 other than amounts paid to Dr. Long in his capacity as
Chief Executive Officer set forth herein.
10
Directors of the Corporation and its subsidiaries are also entitled to
participate in the 1996 Plan and the 1998 Plan. As at [date within 30 days of
mailing], 2003, the Corporation had outstanding options to purchase 735,000
Common Shares under the 1996 Plan, 370,000 of which have been granted to
directors, and options to purchase 3,326,700 Common Shares under the 1998 Plan,
514,700 of which have been granted to directors.
(e) Employment Contracts
William P. Long, Chief Executive Officer of the Corporation, has
entered into an employment agreement with the Corporation dated January 1, 1998.
The term of the agreement commenced on January 1, 1998 and, unless earlier
terminated, expires on December 31, 2007. Pursuant to the agreement, Dr. Long is
paid a salary of U.S. $7,600 per month and an annual bonus, determined by the
Board, of not less than 10% of Dr. Long's annual compensation.
(f) Compensation Committee Interlocks and Insider Participation
The Corporation's executive compensation program is administered by the
Board as the Corporation does not have an independent compensation committee.
The Board currently consists of William Long, Robert Sheldon, James Golla,
George Hartman and Edward Dickinson. In addition to evaluating and approving
employment contracts for key employees throughout the year, the Board formally
considered compensation issues five times during the 2002 fiscal year in
connection with the authorization of grants of options to purchase Common
Shares. Dr. Long is the Chief Executive Officer of the Corporation and Edward
Dickinson is the Chief Financial Officer and Secretary of the Corporation. None
of the other directors is an officer or employee of the Corporation. Although
certain members of the Board are executive officers, none participates in the
determination of his own salary or bonus.
(g) Compensation Committee Report
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the United States Securities Act of 1933,
as amended (the "Securities Act"), or the Exchange Act, that incorporates by
reference, in whole or in part, subsequent filings including, without
limitation, this Information Circular and Proxy Statement, the Compensation
Committee Report and the Performance Graph set forth below shall not be deemed
to be incorporated by reference into any such filings.
As required by the proxy rules promulgated by the Securities and
Exchange Commission (the "SEC") and applicable Canadian securities laws, this
Compensation Committee Report describes the overall compensation goals and
policies applicable to the executive officers of the Corporation, including the
basis for determining the compensation of executive officers for the 2002 fiscal
year.
11
Compensation Objectives and Policies
In determining the amount and composition of compensation for the
Corporation's executive officers, the Board is guided by several factors.
Because the Corporation has a small number of employees, compensation practices
are flexible in response to the needs and talents of the individual officer,
entrepreneurial, and geared toward rewarding contributions that enhance
shareholder value. Because the Corporation has no substantial revenues from
operations and needs capital for research and development, the Corporation keeps
salaries and bonuses at levels that the Corporation believes are lower than many
of the Corporation's competitors and compensates employees (including executive
officers) primarily in the form of stock options. The extensive use of stock
options is also designed to align the interest of the executive officers and
other employees with the long-term interests of the Corporation and to attract
and retain talented employees who can enhance the Corporation's value.
Compensation Components
Annual Base Salary. The Corporation's compensation of its executive
officers consists of three components: base salary, bonuses, and long-term
incentive awards in the form of stock options. The Board establishes base
salaries based primarily on its subjective judgment, taking into consideration
both qualitative and quantitative factors. Among the factors considered by the
Board are: (i) the qualifications and performance of each executive officer;
(ii) the performance of the Corporation as measured by such factors as progress
in product development and increased shareholder value; (iii) salaries provided
by other companies inside and outside the industry that are of a comparable size
and at a similar development stage, to the extent known; and (iv) the capital
position and needs of the Corporation. The Board does not assign any specific
weights to these factors in determining salaries. It does, however, try to keep
base salaries as low as possible, consistent with the needs and status of the
executive officers, in order to preserve capital for future growth and
development.
Incentive Bonuses. The Corporation also compensates its executive
officers in the form of bonuses. Pursuant to the terms of an employment
agreement executed by the Corporation and the Corporation's Chief Executive
Officer, William P. Long, Dr. Long is entitled to receive a bonus, the amount of
which is determined by the Board but in no event is less than ten percent of his
annual base salary. In addition, the Corporation may pay bonuses to other
executive officers or key employees in the future as a reward for significant
and specific achievements that have a significant impact on shareholder value.
Because the Corporation does not have a history of earnings per share, net
income, or other conventional data to use as a benchmark for determining the
amount or existence of bonus awards, the Board generally makes such
determinations based on its subjective evaluation of each individual's
contribution to the Corporation. In some cases, however, bonuses payable to
individuals may be tied to specific criteria identified at the time of
engagement. In the 2002 fiscal year, no executive officer received a bonus
except that received by Dr. Long, as described in greater detail below. The
Board's action was based on its conclusion that, despite the superior personal
performance of the executive officers, no cash incentive bonuses other than the
mandatory bonus paid to Dr. Long should be awarded in the 2002 fiscal year due
to the lack of substantial revenue during the 2002 fiscal year.
Stock Options. The Corporation relies extensively on stock options to
compensate executive officers and other key employees. The 1996 Plan and the
1998 Plan are designed to give each option holder an interest in preserving and
maximizing shareholder value in the longer term, to reward option holders for
past performance and to give option holders the incentive to remain with the
Corporation long term. Individual grants are determined on the basis of the
Board's assessment of an individual's current and expected future performance,
level of responsibilities, and the importance of his or her position with, and
contribution to, the Corporation. In the 2002 fiscal year, the Board awarded
options to purchase 110,000 Common Shares to Dr. Long, 300,000 Common Shares to
Dr. Moerck and 10,000 Common Shares to Mr. Lyon in order to ensure that they
have a continued interest in setting strategies and making decisions that
enhance shareholder value.
12
Chief Executive Compensation for 2002
Based on the Board's subjective impression of the salaries of
presidents or chief executive officers of similarly situated development stage
companies (both in and outside the industry), the value of the Common Shares,
the Corporation's progress in finding a market niche and exploiting its assets,
and the Board's subjective assessment of the contribution of Dr. Long, the Board
determined in January, 1998 to retain Dr. Long's base salary at U.S. $7,600 per
month and guarantee him a bonus equal to at least 10% of his annual salary.
Based on all of the aforementioned factors, but primarily the Corporation's lack
of substantial revenue during the 2002 fiscal year, the Board determined to pay
Dr. Long a bonus of U.S. $9,120 in respect of the 2002 fiscal year, the minimum
permitted under his employment contract.
The foregoing is submitted by the Board of directors:
William P. Long
James Golla
Robert Sheldon
George Hartman
Edward Dickinson
(h) Performance Graph
The following chart compares the total cumulative shareholder return
for U.S. $100 invested in the Common Shares with the total return of all shares
traded on the NASDAQ National Market and NASDAQ SmallCap Market (the "NASDAQ
Index") and the total return of shares included in the Standard & Poor's
Specialty Chemicals Index (the "S&P Specialty Chemicals Index").
[OBJECT OMITTED] 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
Altair Nanotechnologies Inc. 100 59 22 21 8
Nasdaq Index 100 186 112 89 62
S&P Specialty Chemicals Index 100 108 94 87 51
13
Audit Committee and Audit Committee Report
------------------------------------------
Audit Committee(1). The Corporation is required to have an audit
committee, the function of which is to recommend the Corporation's independent
auditors and to review the Corporation's accounting practices, controls and all
services performed by the independent auditors.
The audit committee was comprised of James Golla, George Hartman and
Robert Sheldon during the 2002 fiscal year and, if elected by the shareholders,
each such director is expected to be a member of the audit committee during
2003. The audit committee met twice, via conference call, during the fiscal year
ended December 31, 2002. All members of the audit committee are independent
according to Nasdaq's independent director and audit committee listing
standards.
Audit Committee Report(1). The audit committee has reviewed and
discussed the audited financial statements for fiscal year 2002 with management
and the independent auditors. Specifically, the audit committee discussed with
the independent auditors the matters required to be discussed by Statements on
Auditing Standards No. 61, or SAS 61. In addition, the audit committee discussed
with the independent auditors the auditors' independence from management and the
Corporation, including the matters in the written disclosures and the letter
from the independent auditors required by the Independence Standards Board,
Standard No. 1.
Based on the review and discussions with management and the independent
auditors described above, the audit committee recommended to the Board that the
Corporation's audited financial statements be included in its Annual Report on
Form 10-K for the year ended December 31, 2002, for filing with the Securities
and Exchange Commission.
Audit Committee Members
James Golla
George Hartman
Robert Sheldon
-----------------------------
(1) This section is not "soliciting material," is not deemed "filed"
with the Securities and Exchange Commission, and is not to be incorporated by
reference in any filing of the Company under the Securities Act of 1933 or the
Securities Exchange Act of 1934, each as amended, regardless of date or any
other general incorporation language in such filing.
Report On Repricing Of Stock Options
------------------------------------
On May 6, 2002, the Board authorized the repricing of existing options
held by certain employees, including outstanding options held by Mr. Lyon and
Mr. Dickinson. The Board, in consideration of the decline in trading price of
the Corporation's Common Shares since the original options were granted, desired
to continue to provide sufficient incentive for the option holders to remain
employees of the Corporation. Accordingly, the Board reduced the exercise price
of the options to a price nearer the then-current market price of the Common
Shares. The foregoing is submitted by the Board of directors:
14
William P. Long
James Golla
Robert Sheldon
George Hartman
Edward Dickinson
The following table provides information related to any options held by
executive officers of the Company or its consolidated subsidiaries that have
been repriced during the prior 10 completed fiscal years of the Company:
-----------------------------------------------------------------------------------------------------------------
Number of Market Length of
Securities Price of Original
Underlying Stock at Exercise Option Term
Options/SARs Time of Price at Time New Remaining at
Repriced or Repricing of Repricinge or Exercise Date of
Name and Position Date Amended (#) or Amendment Amendment ($) Price ($) Amendment (Years)
-----------------------------------------------------------------------------------------------------------------
Edward Dickinson May 6, 2002 45,000 $0.89 $3.06 $1.20 3.8
(Chief Financial
Officer, Secretary
and Director)
-----------------------------------------------------------------------------------------------------------------
Kenneth Lyon May 6, 2002 30,000 $0.89 $2.25 $1.20 4.2
(President of Altair
Nanomaterials, Inc.)
-----------------------------------------------------------------------------------------------------------------
Meetings of Directors and Nominating Committee
----------------------------------------------
During the fiscal year ended December 31, 2002, the Board held six
meetings via conference call. In addition, the Board considered and acted on
various matters throughout the year by executing twenty-two consent resolutions
by unanimous written consent. The Corporation does not maintain a standing
nominating committee of the Board.
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
were filed with the SEC on a timely basis except as follows: (a) A Form 4
related to a transaction occurring on January 30, 2002 for Dr. William P. Long,
our Chief Executive Officer, was due on February 10, 2002 but was filed on
October 23, 2003; (b) Forms 4 related to transactions occurring on April 10,
2002 and December 30, 2002 for Rudi E. Moerck, our President, were due on May
10, 2002 and January 2, 2003, respectively, but were filed on a single Form 4 on
February 24, 2003; and (c) a Form 4 related to a transaction occurring on
February 20, 2003 for Rudi E. Moerck, our President, was due on February 24,
2003 but was filed on March 14, 2003.
Certain Relationships and Related Transactions
----------------------------------------------
During September 2002, Louis Schnur, a principal shareholder of the
Corporation, purchased 890,593 Common Shares and 1,335,890 warrants for total
consideration of $935,123. The warrants have exercise prices ranging from $1.50
to $2.50 and expiration dates ranging from September 5, 2007 to September 26,
2007, but may be triggered earlier dependent upon the closing price of the
Common Shares. In addition, Mr. Schnur exercised warrants in April 2002 to
purchase 286,169 Common Shares at $1.05 per share. These warrants had been
repriced to $1.05 per share from prices ranging from $3.50 to $5.00 per share.
15
Cranshire Capital, L.P. became a significant shareholder of the
Corporation on May 7, 2003, following its purchase, for an aggregate purchase
price of $750,000 of 937,500 Common Shares and 234,375 warrants to purchase
common shares. The warrants have an exercise price of $1.13 per share and expire
on May 7, 2002.
Between September 5, 2002, and November 26, 2002, Cranshire Capital,
L.P. purchased an aggregate of 1,233,334 Common Shares and 920,836 warrants to
purchase common shares for an aggregate purchase price of $600,000. The warrants
have exercise prices ranging from $1.00 to $1.75 per share and expiration dates
ranging from September 5, 2007 to November 26, 2007.
In October 2001, C. Patrick Costin, Vice President of the Corporation,
loaned $75,000 to the Corporation on a short-term, unsecured basis. The loan was
non-interest bearing and payable on demand. In November 2001, $25,000 was repaid
and the remaining $50,000 was repaid in 2002.
During 2001, William Long, Chief Executive Officer of the Corporation
made loans to the Corporation totaling $63,000 on a short-term, unsecured basis.
The loans were non-interest bearing and payable on demand. The loans were repaid
in 2002.
The employment agreement between the Corporation and Dr. Long, our
Chief Executive Officer, contains a provision requiring the Corporation to issue
Dr. Long 200,000 Common Shares in connection with a termination of his
employment agreement. In exchange for Dr. Long's termination of his rights under
such provision, during December 2002, Dr. Long was issued 200,000 Common Shares.
Indebtedness of Officers and Directors to the Corporation
---------------------------------------------------------
No officer or director of the Corporation was indebted to the
Corporation as of December 31, 2002 or as at the date of this Information
Circular.
Interest of Insiders in Material Transactions
---------------------------------------------
Except as otherwise disclosed herein, no insider of the Corporation has
any interest in material transactions involving the Corporation.
Vote Required
-------------
In connection with the election of directors, the five nominees
receiving the highest number of votes will be elected.
16
PROPOSAL NO. 2 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Ratification of the appointment by the Board of Deloitte & Touche LLP
as the independent public accountants for the Company for the fiscal year ending
December 31, 2003, and authorization of the Board to set their remuneration, is
to be voted upon at the Meeting. Representatives of Deloitte & Touche LLP are
not expected to be present at the Meeting to answer questions or make a
statement.
Audit Fees
----------
The Corporation was billed $107,977 for professional services rendered
for the audit of its financial statements for the year ended December 31, 2002,
the review of the financial statements included in the Corporation's quarterly
reports for such year and review of SEC registration statements during the year.
Financial Information Systems Design and Implementation Fees and All Other Fees
-------------------------------------------------------------------------------
During the 2002 fiscal year, Deloitte & Touche LLP were not
commissioned to provide any services other than the audit and review services
described in "Audit Fees" above.
Change of Independent Auditors During 2001
------------------------------------------
McGovern, Hurley, Cunningham, LLP, Chartered Accountants, the
independent public accountants initially retained by the Corporation for the
fiscal year ended December 31, 2000, were dismissed as of March 20, 2001. The
decision to change the Corporation's independent public auditors was recommended
by management and approved by the Board and the audit committee of the
Corporation. In connection with the audit of the Corporation's financial
statements for the fiscal years ended December 31, 1999 and December 31, 1998
and the subsequent interim period ended March 20, 2001, there were no
disagreements with McGovern, Hurley, Cunningham on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreement if not resolved to McGovern, Hurley, Cunningham'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
McGovern, Hurley, Cunningham on the consolidated financial statements of the
Corporation and its subsidiaries as of and for the fiscal years ended December
31, 1999 and December 31, 1998 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 of the Corporation, the Corporation appointed Deloitte
& Touche LLP as the Corporation's independent public accountants for the fiscal
year ended December 31, 2000. No consultations occurred between the Corporation
and Deloitte & Touche during the two fiscal years and any interim period
preceding the appointment of Deloitte & Touche 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
Deloitte & Touche effective March 20, 2001.
Vote Required and Recommendation of the Board of Directors
----------------------------------------------------------
The affirmative vote of a majority of the votes cast on this proposal
shall constitute ratification of the appointment of Deloitte & Touche LLP. Under
the CBCA, once a quorum is established, shareholder approval with respect to a
particular resolution is generally obtained when the votes cast in favour of the
17
proposal exceed the votes cast against such proposal. Accordingly, abstentions
and broker non-votes will not have the effect of being considered as votes cast
against the ratification of the appointment of Deloitte & Touche LLP.
The Board recommends a vote FOR ratification of the appointment of
Deloitte & Touche LLP as independent public accountants for the fiscal year
ending December 31, 2003 and authorization of the board of directors to set
their remuneration.
PROPOSAL NO. 3 - APPROVAL OF DORAL TRANSACTIONS
Since December 15, 2000, the Corporation has entered into various
related transactions with Doral 18, LLC ("Doral") involving the issuance of
Common Shares, notes convertible into Common Shares and warrants for the
purchase of Common Shares. In order to satisfy a covenant in one such note, and
a listing requirement of the Nasdaq SmallCap Market, at the Meeting,
shareholders are being asked to consider and authorize, approve, adopt and
ratify such transactions, the related agreement and the Common Shares issued in
such transactions.
Description of Doral Transactions and Related Securities
--------------------------------------------------------
Initial Transaction. On December 15, 2000, the Corporation and Doral
entered into a Securities Purchase Agreement (the "Initial Purchase Agreement")
pursuant to which the Corporation issued to Doral a $7,000,000 Asset-Backed
Exchangeable Term Note (the "Initial Note") and a Warrant to purchase 350,000
Common Shares at an initial exercise price of $3.00 per share at any time on or
before December 15, 2005 (the "Initial Warrants"). The Initial Note, the Initial
Warrants and related rights were sold to the investor in exchange for $7,000,000
(less financing fees).
The Initial Note was in the principal amount of $7,000,000 and the
holder earned interest at a rate of 10% per annum. Under the Initial Note, the
Corporation was required to make monthly payments on or before the 15th day of
each calendar month in the principal amount of $291,667 plus accrued interest
(the "Monthly Payment Amount"). The Initial Note was due and payable in full on
December 15, 2003. The Corporation was permitted to redeem the Monthly Payment
Amount in cash. If the Corporation elected not to redeem the Monthly Payment
Amount, on each due date, the holder of the Initial Note automatically received
the right to exchange (immediately or at any later date during the term) the
Monthly Payment Amount into Common Shares at the applicable "Exchange Price."
The Exchange Price for any date was the lesser of (a) a Fixed Exchange Price, as
adjusted, or (b) the average of the lowest three daily trading prices of the
Common Shares during the 15 trading days ending on the day before an exchange
right was exercised. Through December 28, 2001, a total of 824,800 Common Shares
were issued under exchange rights that accrued under the Initial Note.
The Initial Note was secured by a pledge of the intellectual property
and common stock of Altair Nanomaterials, Inc., a second-tier wholly-owned
subsidiary of the Corporation. Altair Nanomaterials, Inc. owns and operates the
titanium processing technology the Corporation acquired in 1999. The Initial
Note was also secured by a pledge of the common stock and leasehold interests of
Mineral Recovery Systems, Inc., which owns and operates the Corporation's
leasehold interests in the Camden, Tennessee area.
In addition, in connection with the issuance of the Initial Note, the
Corporation agreed to file, and cause to be effective within a certain time
period, a registration statement registering the re-sale of the Common Shares
issuable in connection with the Initial Note and the Initial Warrants. In part
because of a lengthy Commission review of the registration statement and a
18
change in the Corporation's independent auditors, the Corporation was unable to
cause such registration statement to be effective on a timely basis. As part of
a negotiated settlement for the untimely registration statement, the Corporation
issued to Doral a warrant to purchase 300,000 Common Shares at an exercise price
of $3.00 per share at any time on or before December 15, 2005 or the date 60
days following the fifth day the closing price of the Common Shares equals or
exceeds $12.00 per share (the "Penalty Warrants").
The First Note Amendment. On December 28, 2001, the Corporation and Doral
entered into a Note Termination and First Amendment Agreement (the "First
Amendment Agreement") pursuant to which Doral agreed to terminate the Initial
Note in exchange for (i) $2,500,732 in cash that had been held as collateral for
a letter of credit that secured the Initial Note, (ii) a $2 million Secured Term
Note (the "First Amended Note"), (iii) warrants (the "First Amendment Warrants")
for 200,000 Common Shares of the Corporation with an exercise price of $1.50 per
share and (iv) conditional warrants (the "Conditional Warrants") with a nominal
exercise price of $.01 per share that vests with respect to 25,000 Common Shares
when the price of the Common Shares reaches $2.00 per share and an additional
25,000 Common Shares for each $.50 increase thereafter. The Conditional Warrants
expired on March 31, 2003. In connection with the First Amendment Agreement, the
Corporation also entered into an Amendment No. 1 to Stock Purchase Warrants (the
"Warrant Amendment Agreement") pursuant to which the exercise price of the
Initial Warrants and the Penalty Warrants was reduced to $1.50 and pursuant to
which all provisions that would cause the exercise price to round down in
connection with lower price issuances were deleted.
The First Amended Note was in the principal amount of $2,000,000, and
the holder earned interest at a rate of 11% per annum. Under the First Amended
Note, the Corporation was required to make monthly interest payments on or
before the 28th day of each calendar month. If the Corporation did not make
interest payments in cash on or before the due date, the holder received the
right to exchange the amount of the monthly interest payment into Common Shares
at a price equal to 75% of the average closing price of the Common Shares as
reported by Bloomberg for the five preceding trading days. Between December 28,
2001 and December 31, 2002, a total of 299,304 Common Shares were issued with
respect to interest accrued under the First Amended Note.
The First Amended Note continued to be secured by the same collateral
that secured the Initial Note. In connection with the First Amended Note, the
Corporation agreed to register, and has registered, the re-sale of all Common
Shares issued in connection with the First Amended Note, the First Amendment
Warrants, the Conditional Warrants and the Penalty Warrants.
Second Note Amendment. On November 25, 2002, the Corporation and
Doral entered into a Note Amendment Agreement dated November 21, 2002 (the
"Second Amendment Agreement"), pursuant to which, among other things, (1) the
principal amount of the First Amended Note was reduced from $2,000,000 to
$1,400,000 in exchange for the Corporation's issuance of 1,500,000 Common
Shares, (2) the First Amended Note was amended to extend the maturity date from
March 31, 2003 to March 31, 2004, and (3) warrants (the "Second Amendment
Warrants") to purchase 750,000 Common Shares were issued to Doral. The Second
Amendment Warrants are exercisable at $1.00 per share and expire on the earlier
of November 21, 2007 or, anytime after the underlying Common Shares have been
registered for sale, the 180th day following the date the closing price equals
or exceeds $3.00 for five consecutive days. In order to effect these amendments
to the First Amended Note, and others described below, the parties entered into
a Second Amended and Restated Secured Term Note dated November 21, 2002 (the
"Second Amended Note"), which supersedes the First Amended Note.
19
The Second Amended Note is in the principal amount of $1,400,000 and
is due and payable on March 31, 2004. Interest on the Second Amended Note
accrues at the rate 11% per annum and is payable monthly in arrears in cash.
Under the Second Amended Note, a right to convert $280,000 of principal (a
"Conversion Right") accrues on each of March 1, 2003, June 1, 2003, September 1,
2003, December 1, 2003 and March 1, 2004. If the amount that would be subject to
a Conversion Right is prepaid prior to the date of accrual, such Conversion
Right does not accrue. Once a Conversion Right has accrued, the principal amount
subject to such Conversion Right cannot be prepaid unless all principal amounts
not subject to a Conversion Right have been prepaid in full. Each Conversion
Right gives the holder the right to convert the subject principal amount into
Common Shares at a conversion price equal to the lesser of, (a) $1.00, and (b)
70% of the average of the closing price of the Common Shares for the five (5)
trading days ending on the trading day immediately preceding the date with
respect to which such Conversion Right accrued.
Rule 4350(i)(1)(D) ("Rule 4350") promulgated by the NASD with respect to
the Nasdaq SmallCap Market requires that an issuer whose securities are listed
on the Nasdaq SmallCap Market obtain shareholder approval prior to entering into
any agreement, or issuing any security, under which the total number of common
shares of the company issued could exceed 19.9% of the common shares outstanding
immediately prior to the transaction (or the first in a series of related
transactions). In order to ensure compliance with Rule 4350, Altair and Doral
included in the Second Amended Note a provision that prohibits exercise of any
conversion rights under the Second Amended Note if, following such exercise, the
total number of common shares issued in connection with the Second Amended Note,
all predecessor notes and all related warrants and agreements, would exceed
19.9% of the outstanding common shares on December 15, 2000. In order to
persuade Doral to agree to such limitation, the Corporation was required to
covenant to submit the Second Amended Note and related transactions to the
Corporation's shareholders for approval at the Meeting and to permit Doral to
call the Second Amended Note in the event such transactions are not approved at
the Meeting.
The Initial Purchase Agreement, Initial Note, Initial Warrants, Penalty
Warrants, First Amendment Agreement, First Amended Note, First Amendment
Warrants, Conditional Warrants, Second Amendment Agreement, Second Amended Note
and Second Amendment Warrants are collectively referred to as the "Doral
Transaction Documents;" and the Common Shares issued under the Doral Transaction
Documents to date, and issuable in connection with such documents in the future,
are collectively referred to as the "Doral Shares;" and the transaction in which
the Doral Transaction Documents were executed and the Doral Shares were or may
be issued are collectively referred to as the "Doral Transactions."
Common Shares Issued And Description of Common Shares
-----------------------------------------------------
Common Shares Issued in Doral Transactions. To date, an aggregate of
3,323,259 Common Shares have been issued pursuant to the Doral Transaction
Documents. Subject to approval of the Doral Note Transaction at the Meeting, an
indeterminable number of additional Common Shares may become issuable upon the
exercise of Conversion Rights that may accrue under the Second Amended Doral
Note. In addition, Doral has the right to purchase an aggregate of 2,100,000
Common Shares upon the exercise of the Initial Warrant, the Penalty Warrant, the
First Amendment Warrant and the Second Amendment Warrant. No other Doral
Transaction Documents provide for future issuances of Common Shares to Doral.
Description of Common Shares. The Articles authorize the issuance of an
unlimited number of Common Shares, which do not have par value. Holders of
Common Shares are entitled to one vote per share on all matters to be voted on
by shareholders. There is no cumulative voting with respect to the election of
directors. The holders of Common Shares are entitled to receive dividends, if
any, as may be declared from time to time by our Board in its discretion from
funds legally available therefor. Upon our liquidation, dissolution or winding
up, the holders of Common Shares are entitled to receive ratably any assets
available for distribution to shareholders. The Common Shares have no preemptive
or other subscription rights, and there are no conversion rights or redemption
or sinking fund provisions with respect to such shares. All of the outstanding
Common Shares are fully paid and nonassessable.
20
Neither the Articles nor the By-laws of the Corporation contain any
provision that would delay, defer or prevent a change in control. The
Corporation has, however, adopted an Amended and Restated Shareholder Rights
Plan Agreement dated October 15, 1999, which allows our shareholders to acquire
additional Common Shares at a price that would create a strong disincentive to a
tender offer or similar change of control transaction, if a person acquires, or
announces an intent to acquire, 15% or more of the outstanding Common Shares,
and if certain other conditions are met. A copy of this agreement is attached as
Exhibit 10.1 to the Corporation's Current Report on Form 8-K filed with the SEC
on November 18, 1999. A copy of this agreement is also available upon written
request to the Corporation.
Use of Proceeds
---------------
The Corporation received an aggregate of $7,000,000 in connection with
the issuance of the Initial Doral Note in December 2000. Since issuing the
Initial Doral Note, the Corporation has received additional cash from other
sales of its securities to other investors, and the proceeds from such
subsequent sales are, to some extent, fungible with and indistinguishable from
the proceeds the Corporation received from the issuance of the Initial Doral
Note. Nonetheless, to the extent the Corporation can determine how the proceeds
from the issuance of the $7,000,000 Initial Doral Note have been used, such
proceeds have been used for the following general purposes:
---------------------------------------------------------- ------------------
Estimated Amount
So Used
Use of Proceeds
---------------------------------------------------------- ------------------
Repayment of cash held as collateral for letter of credit
$2,500,732
---------------------------------------------------------- ------------------
Buyout of repricing rights under common stock purchase
agreement (1) 1,650,000
---------------------------------------------------------- ------------------
Costs of initial debt offering 115,000
---------------------------------------------------------- ------------------
Working capital 2,734,268
---------------------------------------------------------- ------------------
(1) On March 31, 2000, the Corporation entered into a common stock
purchase agreement with a private equity fund under which the equity fund
purchased 1,251,303 Common Shares for an aggregate purchase price of
$6,000,000. The number of shares received by the equity fund was subject
to repricing adjustments based on subsequent closing prices of the
Corporation's Common Shares. This amount was paid to the equity fund to
terminate the remaining repricing rights in December 2000.
Reasons For Seeking Shareholder Approval
----------------------------------------
As discussed above, under Rule 4350, an issuer whose securities are
listed on the Nasdaq SmallCap Market is required to obtain shareholder approval
prior to entering into any agreement, or issuing any security, under which the
total number of common shares of the company issued could exceed 19.9% of the
common shares outstanding immediately prior to the transaction (or the first in
a series of related transactions). In order to ensure compliance with Rule 4350,
Altair and Doral included in the Second Amended Doral Note a provision that
prohibits exercise of any conversion rights under the Second Amended Doral Note
if, following such exercise, the total number of common shares issued in
connection with the Doral Transaction Documents would exceed 19.9% of the
outstanding Common Shares on December 15, 2000. In order to persuade Doral to
agree to such limitation, the Corporation was required to covenant to submit the
Doral Transaction Documents, and the issuance of the Doral Shares thereunder, to
the Corporation's shareholders for approval at the Meeting and to permit Doral
to accelerate the due date of the Second Amended Doral Note in the event the
Doral Transaction Documents and issuance of the Doral Shares are not approved at
the Meeting. Absent a significant change in the amount of cash and current
assets held by the Corporation in the near future, management believes that, if
the Doral Transaction Documents and the issuance of the Doral Shares are not
approved and Doral subsequently determines to accelerate the due date of the
Second Amended Doral Note, the Corporation would be unable to immediately repay
the Second Doral Amended Note and would fall into default thereunder.
The Corporation is seeking approval of the Doral Transactions and Doral
Transaction Documents and the issuance of the Doral Shares in order to comply
with Rule 4350 and its obligations under the Second Amended Doral Note and in an
attempt to ensure that Doral is not able to accelerate the due date of the
Second Amended Doral Note and cause the Corporation to be in default thereunder.
21
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 Doral Transactions and Doral Transaction
Documents and the issuance of the Doral Shares. Under the CBCA, once a quorum is
established, shareholder approval with respect to a particular resolution is
generally obtained when the votes cast in favour of the proposal exceed the
votes cast against such proposal. Accordingly, abstentions and broker non-votes
will not have the effect of being considered as votes cast against the Doral
Transactions and Doral Transaction Documents and the issuance of the Doral
Shares.
The Board recommends a vote FOR approval of the Doral Transactions and
Doral Transaction Documents and the issuance of the Doral Shares.
PROPOSAL NO. 4 - AUTHORIZATION OF BY-LAW AMENDMENT
The Board has adopted, and is submitting to the shareholders of the
Corporation for approval, By-law No. 8 (the "By-law Amendment," a copy of which
is attached hereto as Appendix A), which amends By-law No. 1 of the Corporation
by revoking Paragraph 29 thereof and inserting in its place a new Paragraph 29.
The By-law Amendment provides for, among other things, the indemnification of
officers and directors of the Corporation to the maximum extent permitted by
law. If the By-law Amendment is approved by the Corporation's shareholders at
the Meeting, the officers of the Corporation will be authorized to take any and
all action necessary or reasonable to comply the intent of the By-law Amendment.
Purpose and Summary of Proposed By-law Amendment
------------------------------------------------
The purpose of the proposed By-law Amendment is to enable the
Corporation to attract and retain qualified directors and officers by requiring
the Corporation to indemnify such individuals in certain situations. The By-law
Amendment requires the Corporation to indemnify, to the maximum extent permitted
by law, (i) directors and officers of the Corporation, (ii) former directors and
officers of the Corporation, and (iii) any other individual who acts or acted at
the Corporation's request on behalf of another entity as a director or officer
(collectively, "Corporate Managers") against all costs reasonably incurred in
connection with any threatened, pending, or completed litigation in which such
Corporate Manager is involved because of that association with the Corporation
or the other entity. However, the Corporation may not indemnify a Corporate
Manager if a court renders a final, unappealable decision that such Corporate
Manager either (i) did not act honestly and in good faith with a view to the
best interest of the Corporation or (ii) did not have reasonable grounds for
believing that his or her conduct was lawful. The By-law Amendment also requires
the Corporation to advance monies to a Corporate Manager for the costs of
pending or threatened litigation if the Corporation receives an unsecured
conditional personal promissory note from such Corporate Manager obligating him
22
or her to repay the advanced monies if a court renders a final, unappealable
decision that he or she either (i) did not act honestly and in good faith with a
view to the best interest of the Corporation or (ii) did not have reasonable
grounds for believing that his or her conduct was lawful. Court approval is
required in order for the Corporation to indemnify or advance monies to a
Corporate Manager in the case of a derivative action.
The By-law Amendment is, generally, consistent with Section 124 of the
CBCA, which is the Section of the CBCA related to the indemnification of
Corporate Managers. However, while the advancement of monies to a Corporate
Manager in connection with threatened or pending litigation is merely permissive
under Section 124 of the CBCA, the Corporation is required to do so under the
terms of the By-law Amendment if the Corporate Manager delivers an unsecured
conditional personal promissory note to the Corporation as discussed above.
Effect of Proposed By-law Amendment
-----------------------------------
If the By-law Amendment is approved at the Meeting, the Board believes
that the Corporation will be better suited to attract and retain qualified
directors and officers. However, there can be no assurance that the By-law
Amendment will have the desired effect. Additionally, because the By-law
Amendment requires the Corporation to indemnify and advance monies to Corporate
Managers as discussed above, the By-law Amendment could materially increase the
future liabilities of the Corporation.
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 By-law Amendment. Abstentions and broker
non-votes will not have the effect of being considered as votes cast against the
By-law Amendment.
The Board of Directors recommends a vote FOR the By-law Amendment.
OTHER MATTERS
Proposals of Shareholders
-------------------------
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 2004,
proposals which shareholders intend to present at such annual meeting must be
received by the corporate secretary of the Corporation, at the Corporation's
executive offices, 1725 Sheridan Avenue, Suite 140, Cody, Wyoming 82414, no
later than January 19, 2004. Pursuant to rules adopted by the SEC, if a
shareholder intends to propose any matter for a vote at the Corporation's annual
meeting of shareholders to be held in the 2004 calendar year, but fails to
notify the Corporation of such intention prior to April 4, 2004, then a proxy
solicited by the board of directors 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.
23
Undertakings
------------
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, 2002 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.
Items Incorporated By Reference
-------------------------------
The Corporation has delivered herewith a copy of the Corporation's
Annual Report for the fiscal year ended December 31, 2002, including the
financial statements and schedules thereto. The supplementary financial
information, management's discussion and analysis of financial condition and
results of operations, and audit report and financial statements from such
Annual Report are incorporated in this Information Circular by reference.
* * * * * * * * *
The contents and sending of this Information Circular have been
approved by the directors of the Corporation.
DATED as of the __th day of ______, 2003.
ALTAIR NANOTECHNOLOGIES INC.
/s/ William Long, Chief Executive Officer
-------------------------------------------
William Long, Chief Executive Officer
24
Appendix A
By-law Amendment
BY-LAW NO. 8
------------
A by-law to amend By-law No. 1 of ALTAIR NANOTECHNOLOGIES INC.
(the "Corporation")
BE IT ENACTED as a by-law of the Corporation as follows:
29. INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
-------------------------------------------
a) To the maximum extent permitted by law, the Corporation shall
indemnify a director or officer of the Corporation, a former
director or officer of the Corporation, or any other individual
(regardless of whether the other individual is or is not an
officer or director or a former officer or director of the
Corporation) who acts or acted at the Corporation's request for or
on behalf of another entity as a director or officer or in any
similar capacity, including action as an employee of the other
entity in the capacity of an attorney, against all costs, charges
and expenses reasonably incurred by the individual in respect of
any threatened, pending or completed civil, criminal,
administrative, investigative or other proceeding in which the
individual is involved or threatened to become involved as a
party, a witness or in any other fashion because of that
association with the Corporation or with the other entity. If but
only if a proceeding is a derivative action brought by or on
behalf of the Corporation or some other entity to procure a
judgement in its favour, the indemnification that is provided for
in this Section 29(a) and the advancement of monies that is
provided for in Section 29(c) shall require prior approval by a
court of competent jurisdiction.
b) Regardless of Section 29(a), the Corporation shall not indemnify
an individual if it is ultimately determined by a final and
unappealable decision of a court of competent jurisdiction that
(i) he or she did not act honestly and in good faith with a view
to the best interests of the Corporation or, as the case may be,
to the best interests of the other entity for which he or she
acted as a director or officer or in a similar capacity at the
Corporation's request, or (ii) that he or she did not have
reasonable grounds for believing that his or her conduct was
lawful in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty.
25
c) The Corporation shall advance monies to a director, officer,
employee or other indemnified individual for the costs, charges
and expenses of any threatened or pending proceeding that is
referred to in Section 29(a) as they are incurred and before the
final disposition of the proceeding as soon as the Corporation
receives an unsecured conditional personal promissory note
obligating the individual who is entitled to receive the advanced
monies to repay them if it is ultimately determined by a final and
unappealable decision of a court of competent jurisdiction that
the individual must repay the advances because he or she did not
satisfy the conditions for indemnification that are set forth in
Section 29(b). An individual's right to advancement of monies
under this Section 29(c) is separate and independent of his or her
ultimate right to indemnification under Section 29(a), and no
preliminary determination that he or she will ultimately be
entitled to indemnification shall be required before the advances
required by this Section 29(c) must be made to him or her by the
Corporation. For purposes of the advances required by this Section
29(c), there shall be a presumption that the individual receiving
advanced monies satisfied or satisfies the conditions for
indemnification that are set forth in Section 29(b) and the
presumption shall continue to apply unless and until it is
determined by a final and unappealable decision of a court of
competent jurisdiction that the individual does or did not satisfy
the conditions for indemnification that are set forth in Section
29(b).
d) For purposes of Section 29(a) related to indemnification and
Section 29(c) related to the advancement of monies, the words
"costs, charges and expenses" (collectively referred to as
"Expenses") shall be broadly construed and shall include Expenses
actually and reasonably paid or incurred in connection with the
establishment, confirmation, approval, or enforcement of any right
to indemnification or advancement of monies under these by-laws as
well as Expenses paid or incurred in connection with the
prosecution of any claim, counterclaim, or affirmative or other
defense in or the investigation, conduct, settlement or appeal of
any proceeding that is referred to in Section 29(a). To the
maximum extent permitted by law, Expenses shall include amounts
paid in settlement, judgements, fines penalties and other
liabilities of every kind and character. Expenses shall also
include, without limitation (i) attorney's fees, (ii) the fees of
any expert witness, investigator, or other individual who is
employed by or acting at the request of an attorney, (iii) filing
fees and any other costs imposed by or paid to a court or other
agency or tribunal, (iv) amounts paid or incurred in connection
with the taking, reporting, and transcription of depositions, (v)
witness fees and mileage, (vi) amounts paid or incurred for
computerized legal or factual research, the preparation of models,
exhibits or similar materials for use at trial or otherwise,
transportation, lodging, meals, long-distance telephone, telecopy,
photocopying, postage, freight, and delivery service, and (vii)
reasonable compensation to an individual for which he is not
otherwise compensated by the Corporation or other entity for his
or her time spent while engaged in the investigation, conduct,
settlement, or appeal of any proceeding that is referred to in
Section 29(a).
26
e) As soon as the Corporation has received the unsecured conditional
personal promissory note that is required by Section 29(c), the
Corporation shall advance monies to an individual who is entitled
to advancement under Section 29(c) and the advances shall be made
in the fashion required by this Section 29(e). Within fifteen (15)
days aver the Corporation receives a written statement itemizing
Expenses to be advanced from the individual who is entitled to
advancement; the Corporation shall advance them by delivery to him
or her of a cashier's check made payable to him or her in. the
full amount of the itemized Expenses. Copies of all relevant
receipts and invoices must accompany the itemized statement, but
no invoice from an attorney must include information that the
attorney believes is subject to the attorney-client or the
solicitor-client privilege. No question by the Corporation
concerning the itemized statement shall delay advancement of the
full amount of Expenses itemized therein, but advancement of the
Expenses by the Corporation shall not prejudice the Corporation's
right to later question the accuracy or reasonableness of any
itemized statement in any court of competent jurisdiction if and
when the Corporation chooses to do so.
f) The provisions for indemnification and advancement of monies that
are contained in these by-laws shall not be deemed exclusive of
any other rights to which any person seeking indemnification or
advancement may be entitled under the Act, other applicable law,
or any agreement, vote of shareholders or directors or otherwise,
both as to action in the individual's official capacity and as to
action in another capacity, and shall continue as to a person who
has ceased to be a director, officer, employee or agent of the
Corporation or of another entity and shall inure to the benefit of
the heirs and legal representatives of such a person. The rights
to indemnification and advancement of monies that are contained in
these by-laws shall be presumed to have been relied upon by the
directors, officers, employees and agents of the Corporation or
other entity and shall be enforceable as a contract right.
REPEAL
------
Paragraph No. 29 of By-law No. 1 with respect to Indemnity of Directors and
Officers be revoked, and any other by-laws inconsistent herewith be and the same
are hereby repealed.
27
PROXY
Altair Nanotechnologies Inc.
Annual and Special Meeting Of Shareholders
June 27, 2003
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 William P. Long, Chief
Executive Officer and director, or failing him, James Golla, director, 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 27th day of June, 2003 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.
The shares represented by this proxy will be voted and, where a choice
is specified, will be voted as directed. Where no choice is specified, this
proxy will confer discretionary authority and will be voted in favour of the
resolutions referred to below and on the reverse side.
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 does not know as of
the date this proxy is mailed 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 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 and until their respective successor shall have
been duly elected and shall qualify:
[ ] 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.)
William Long James Golla Edward Dickinson
George Hartman Robert Sheldon
28
[See Reverse Side]
2. Proposal in respect to the appointment of Deloitte & Touche LLP as
independent auditors of the Corporation for the fiscal year ending December 31,
2003 and to authorize the board of directors to fix their remuneration.
[ ] FOR [ ] AGAINST [ ] WITHHOLD
3. Proposal to approve the Doral Transactions and Doral Transaction Documents
and the issuance of the Doral Shares.
[ ] FOR [ ] AGAINST [ ] WITHHOLD
4. Proposal to approve the By-law Amendment.
[ ] FOR [ ] AGAINST [ ] WITHHOLD
5. 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 does not know as of the
date this proxy is mailed.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN ON ANY VOTE OR BALLOT CALLED AT THE MEETING. UNLESS A
SPECIFIC INSTRUCTION IS INDICATED, SAID SHARES WILL BE VOTED FOR CONFIRMATION
AND/OR APPROVAL OF THE MATTERS SPECIFIED IN ITEMS 1, 2, 3, AND 4, ALL OF WHICH
ARE SET FORTH IN THE ACCOMPANYING CIRCULAR, RECEIPT OF WHICH IS HEREBY
ACKNOWLEDGED.
This proxy revokes and supersedes all proxies of earlier date.
DATED this ____ day of ________________ , 2003.
PRINT NAME: _______________________________
SIGNATURE: ________________________________
NOTES:
1. This proxy must be signed by the shareholder or his 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.
29
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 offices of Equity Transfer Services, Inc.,
120 Adelaide Street West, Suite 420, Toronto, Ontario M5H 4C3, Canada Friday.
the 27th day of June 2003, at the hour of 10:00 o'clock in the morning (Toronto
time) for the following purposes:
(1) To receive the audited financial statements of the Corporation for the
twelve months ended December 31, 2002, together with the report of the
auditors thereon;
(2) To elect directors;
(3) To appoint auditors and to authorize the directors to fix their
remuneration;
(4) To consider and vote upon a proposal to authorize, approve, adopt and
ratify the issuance of common shares in connection with note, warrant
and equity transactions between the Corporation and Doral 18, LLC;
(5) To consider and vote upon a proposal to approve an amendment to the
By-laws of the Corporation related to the indemnification of officers
and directors of the Corporation; and
(6) 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 copy of the
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, 2002, 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 __th day of ______, 2003.
BY: ORDER OF THE BOARD
(Sgd.) William P. Long
Chief Executive Officer
30