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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PROXY STATEMENT
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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
POLYMER SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Nevada, U.S.A. 88-0360526
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
NOT APPLICABLE
(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)(1) and 0-11.
1. Title of each class of securities to which transaction
applies:
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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 transaction:
-----------------------------------------------------------
5. Total fee paid:
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[ ] 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 number, or the Form or
Schedule and the date of its filing.
1. Amount previously paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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POLYMER SOLUTIONS, INC.
1569 Dempsey Road
North Vancouver, British Columbia
Canada V7K 1S8
www.polysolutions.com
(Principal executive office)
PROXY STATEMENT
ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 2, 2000
-------------------------------------------------------------------------------
SOLICITATION OF PROXIES
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES
BY THE BOARD OF DIRECTORS (THE "BOARD OF DIRECTORS" OR "BOARD") OF POLYMER
SOLUTIONS, INC. (THE "COMPANY"), A NEVADA CORPORATION, FOR USE AT THE ANNUAL AND
SPECIAL MEETING (THE "MEETING") OF THE SHAREHOLDERS OF THE COMPANY TO BE HELD ON
AUGUST 2, 2000 AT 10:00 a.m. (local time), AT 888 DUNSMUIR STREET, 2nd FLOOR,
VANCOUVER, BRITISH COLUMBIA, CANADA FOR THE PURPOSES SET FORTH IN THE
ACCOMPANYING NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS. This Proxy
Statement, and the accompanying Notice and Form of Proxy are being mailed on or
about June 30, 2000, to shareholders of the Company entitled to vote at the
Meeting, as of the record date, being June 23, 2000. It is expected that the
solicitation will be primarily by mail. Proxies may also be solicited personally
or by mail, telephone or telegraph by directors ("Directors"), officers
("Officers") or regular employees of the Company for no additional compensation,
however, out-of-pocket expenses will be reimbursed. Brokerage houses and other
custodians, nominees and fiduciaries will be requested, in connection with the
shares registered in their names, to forward solicitation materials to the
beneficial owners of such shares. The Company will reimburse brokerage firms and
other persons representing beneficial owners of the common shares for their
reasonable expenses in forwarding solicitation material to such beneficial
owners. THE COSTS OF THIS SOLICITATION WILL BE BORNE BY THE COMPANY.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the accompanying Form of Proxy are executive officers
("Executive Officers" or "Officers") of the Company planning to be in attendance
at the Meeting and nominated by the Board of Directors. A SHAREHOLDER DESIRING
TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM OR
HER AT THE MEETING AS PROXYHOLDER MAY DO SO, EITHER BY:
1. STRIKING OUT THE PRINTED NAMES AND INSERTING THE DESIRED PERSON'S NAME IN
THE BLANK SPACE PROVIDED IN THE FORM OF PROXY; OR
2. BY COMPLETING ANOTHER PROPER FORM OF PROXY.
The completed Form of Proxy must be received at the office of the transfer
agent, Pacific Corporate Trust Company (the "Transfer Agent"), located at
830-625 Howe Street, Vancouver, British Columbia, V6C 3B8, not less than 48
hours (excluding Saturdays, Sundays and holidays) before the time fixed for the
Meeting or before the time that the Meeting is to be reconvened following any
adjournment thereof. A Form of Proxy received at the offices of the Transfer
Agent or the Company after this time, but prior to the Meeting, may be accepted
or rejected as late, at the discretion of the Chairman.
A shareholder's Form of Proxy will be returned if the shareholder is present at
the Meeting and should request its return. A shareholder who has given a Form of
Proxy may also revoke it by an instrument in writing delivered to the office of
the Transfer Agent or to the registered office of the Company, 1575 Delucchi
Lane, Suite 224, Reno, Nevada, 89502 U.S.A., at any time up to and including the
last business day preceding the day of the Meeting, or any adjournment thereof,
or to the Chairman of the Meeting on the day of the Meeting or any adjournment
thereof, or in any other manner provided by law. If the shareholder is a
corporation, any such instrument of revocation must be executed under the
corporate seal or by a duly authorized officer or attorney of the corporation.
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VOTING OF PROXIES
If the Form of Proxy is properly completed and returned to the Transfer Agent,
the shares represented by the Form of Proxy will be voted at the Meeting. Where
a shareholder indicates a choice with respect to any matter to be acted upon at
the Meeting, the shares will be voted in accordance with the specification so
made. IF A CHOICE IS NOT SO SPECIFIED, IT IS INTENDED THAT THE PERSON DESIGNATED
BY THE BOARD OF DIRECTORS IN THE ACCOMPANYING FORM OF PROXY WILL VOTE THE SHARES
REPRESENTED BY THE FORM OF PROXY IN FAVOR OF EACH MATTER IDENTIFIED ON THE FORM
OF PROXY.
The Form of Proxy accompanying this Proxy Statement confers discretionary
authority upon the named proxyholder with respect to amendments or variations to
the matters identified in the accompanying Notice of Annual Meeting and with
respect to any other matters which may properly come before the Meeting. As of
the date of this Proxy Statement, the Board of Directors of the Company knows of
no such amendment or variation or matters to come before the meeting other than
those referred to in the accompanying Notice of Annual and Special Meeting.
VOTING SHARES
On June 14, 2000, 8,870,939 common shares ("Common Shares") without par value of
the Company were issued and outstanding, each such share carrying the right to
one vote at the Meeting. The Record Date as of which members are entitled to
receive notice of and to vote at the Meeting is June 23, 2000. The closing price
of the Company's Common Shares on June 14, 2000 on the Canadian Venture Exchange
(the "Exchange") under the symbol "PYM" was Cdn$1.00 and the closing price under
the symbol "PYSU" on the OTCBB was US$.75.
FINANCIAL STATEMENTS
The Company's 2000 Annual Report, which contains the consolidated Financial
Statements for the fiscal year ended March 31, 2000 and Management's Discussion
and Analysis thereon, is being mailed with this Proxy Statement to shareholders
entitled to notice of the Meeting.
AUDITORS
APPOINTMENT OF AUDITORS
(ITEM 1 OF FORM OF PROXY)
The Board of Directors of the Company recommends PricewaterhouseCoopers LLP,
("PricewaterhouseCoopers") Certified Public Accountants for appointment by the
shareholders as the Company's independent public auditor for the fiscal year
ended March 31, 2001. PricewaterhouseCoopers has acted as the Company's auditor
since fiscal 1989 and will have a representative present at the Meeting to make
a statement, if they desire to do so, and to respond to any questions from the
shareholders.
DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
(ITEM 2 OF FORM OF PROXY)
The number of Directors may be determined by resolution of the Board of
Directors at any meeting; presently, the Board has set the number of Directors
at seven (7).
Unless otherwise directed in the accompanying Form of Proxy, the persons
appointed in the Form of Proxy intend to nominate and vote the shares
represented by such Form of Proxy "FOR" the election of each of the following
nominees for the office of Director of the Company, to serve as a Director for a
term of one year, or until his successor is duly elected or appointed, unless
his office is earlier vacated in accordance with the By-laws of the Company or
he becomes disqualified to act as a Director. All of the nominees are presently
Directors and will have their terms of office as Directors expire at the
Meeting.
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<TABLE>
<CAPTION>
DIRECTOR OF PSI TERM AS
PRESENT POSITION AND PREDECESSOR DIRECTOR
NOMINEE AGE WITH COMPANY SINCE TO EXPIRE
-------------------------------- ------------- ----------------------------------- ---------------------- ------------------
<S> <C> <C> <C>
Gordon L. Ellis 53 Director, Chairman Dec. 1986 2000
John J. Sutherland 50 Director Aug. 1989 2000
Stephen H. Silbernagel 53 Director Sept. 1990 2000
Darryl F. Jones 46 Director, Secretary/Treasurer Jan. 1994 2000
William A. Maligie 42 Director, President of AMT U.S.A. Sept. 1995 2000
Gerald A. Habib 54 Director May 2, 1996 2000
E. Laughlin Flanagan 52 Director, President, CEO Mar. 25, 1998 2000
-------------------------------- ------------- ----------------------------------- ---------------------- ------------------
</TABLE>
Although the Company does not contemplate that the above named nominees will
refuse or be unable to accept or serve as Directors of the Company, the persons
appointed in the enclosed accompanying Form of Proxy intend, if a nominee
becomes unavailable, to vote the shares represented by the Form of Proxy "FOR"
the election of such other person as may be nominated or designated by the Board
of Directors, unless they are directed by the Form of Proxy to do otherwise.
No family relationship exists between any Director, Executive Officer, or
significant employee.
No director or officer of the Company is, or within the past five years has
been, a director or officer of any other registrant that, while that person was
acting in the capacity of a director or officer for said issuer, was the subject
of a cease trade or similar order or an order that denied the registrant access
to any statutory exemptions for a period of more than 30 consecutive days, or
was declared bankrupt or made a voluntary assignment in bankruptcy, made a
proposal under any legislation relating to bankruptcy or insolvency, or has been
subject to or instituted any proceedings, arrangement or compromise with
creditors or had a receiver, receiver manager or trustee appointed to hold the
assets of that registrant, with the exception of John Sutherland. JCI
Technologies, of which Mr. Sutherland was a Director at that time, was subject
to a cease trading order in early 1999 for 33 days on the Alberta Stock Exchange
as a result of its failure to file financial statements. The cease trade order
has since been lifted.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
The following is a brief summary of the business experience, during the past
five years, of each Director and nominee for Director of the Company.
Gordon L. Ellis has been Chairman and a Director of the Company or its
predecessors since December 1986. Mr. Ellis is also a Director of Alternative
Materials Technology, Inc. ("AMT USA"), the Company's operating subsidiary. Mr.
Ellis is President, C.E.O. and a director of International Absorbents Inc.
("IAB"), a publicly held company, listed on the OTC Bulletin Board, which
manufactures and sells absorbent products for the industrial and animal care
markets. Mr Ellis is also Chairman of the Board and a Director of Excape.Net,
Inc. ("Excape.Net") a private holding company which provides, through subsidiary
operations, e-commerce and transaction processing services empowering
organizations in North American markets with electronic-commerce enabling
technologies that leverage the Internet and eXcape's private network. Mr. Ellis
is a Director and President of W4.net, Inc. a private company, established to
provide satellite service to ISP's and Universities and is a Director of
Pinewood Resources Ltd., a resource company listed on CDNX.
John J. Sutherland has been a director of the Company or its predecessors since
August 1989. Mr. Sutherland is a Certified General Accountant and as of March,
1997 served as President and CEO of ASC AVCAN Systems Corporation ("ASC"), a
CDNX-listed company, which develops software for use in global positioning
satellite systems. Prior to joining ASC, Mr. Sutherland was Vice-President
Finance of Arequipa Resources Ltd. and Zen International Resources Ltd. from
April 1996 to February 1997 and previous to that, a financial consultant to
public and private companies in Vancouver, British Columbia. Mr. Sutherland is a
Director of IAB and a Director of JCI Technologies Inc., a publicly held company
listed on the Alberta Stock Exchange.
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Stephen H. Silbernagel has been a director of the Company or its predecessors
since September 1990. Mr. Silbernagel is a lawyer, practicing in Vancouver,
British Columbia and is a partner in the firm Silbernagel & Company. Mr.
Silbernagel is a director of IAB.
Darryl F. Jones is the Secretary/Treasurer of the Company and has been a
director of the Company or its predecessors since January 1994. Mr. Jones is a
Chartered Accountant and the Vice-President, Finance & CFO and the
Secretary/Treasurer of various Corporate entities within the eXcape Group of
Companies., From September 1997 to July 1999, he held these same positions with
Orion Technologies (Canada) Inc. Between January 1993 and October 1996, Mr.
Jones was the President, CEO and a Director of IAB.
William A. Maligie has been a Director of the Company or its predecessors since
September 1995 and has been a Director and the President of AMT USA since its
inception in 1989. Mr. Maligie is responsible for all aspects of the Company's
manufacturing operations, including product and market development and sales.
Gerald Habib has been a Director of the Company since May 1996. Mr. Habib served
as a Director of Besicorp Group until its merger in 1999 and was a Director of
Besicorp Ltd. until it's going private transaction in May, 2000. Until May 1999
Mr. Habib served as a Vice President of a specialty polymer company. In 1993 Mr.
Habib formed The Berkshire Group, a screening and assessment company for mergers
and acquisitions. In the past, Mr. Habib directed worldwide planning and
business development for NL, Chemicals and was Vice-President of Elitine Corp.
and was Business and Planning Manager for Olin Chemicals.
E. Laughlin Flanagan is President, CEO and a Director of the Company since
February, 1998. Mr. Flanagan is also a Director and Secretary/Treasurer of AMT
USA. Immediately prior to joining the Company, Mr. Flanagan was COO, CFO and
Principal of LTAC, Inc., a holding company established for the acquisition of
other companies. Prior to that, he was Vice President of Operations and CFO of
Active Noise and Vibration Technologies, Inc. Mr. Flanagan is also Chief
Administrative Officer and CFO of W4 Corp. a private company providing satellite
services to ISP's and universities.
BOARD MATTERS AND COMMITTEES
During the 2000 fiscal year, the Board of Directors of the Company or its
predecessors held nine regular (monthly) meetings and one special meeting. Each
of the members of the Board of Directors of the Company participated in at least
75% of the aggregate number of meetings of the Board of Directors and all
committees of the Board on which the Director served during the 2000 fiscal
year.
The Company's Board of Directors has three committees, an audit committee
("Audit Committee") comprised of Messrs. Jones, as Chairman, Flanagan, and
Sutherland; a compensation committee ("Compensation Committee") comprised of Mr.
Silbernagel, as Chairman, Mr. Sutherland and Mr. Jones and an executive
committee ("Executive Committee") comprised of Mr. Flanagan, as Chairman, Mr.
Ellis and Mr. Habib for the fiscal year ended March 31, 2000.
The Audit Committee held one meeting during the 2000 fiscal year. Its duties
include making recommendations to the Board of Directors concerning the hiring
and dismissal of the Company's independent auditors; reviewing the completed
audit with the independent auditors regarding the conduct of the audit,
accounting adjustments, recommendations for improving internal controls and any
other significant findings during the audit; meeting periodically with
management to discuss accounting and financial controls; and initiating and
supervising any special investigations deemed necessary.
The Compensation Committee held five meetings during the 2000 fiscal year. Its
primary duties involve the granting and amending of incentive stock options,
warrants and bonuses to employees and Executive Officers of the Company; review
and implement Executive Officers employment contracts and the hiring and
dismissal thereof and any other such compensation which may come before the
Committee in which recommendations are submitted to the Board of Directors.
Please see "SPECIAL BUSINESS" (ITEM 3 OF THE FORM OF PROXY) for the approval of
Stock Option Grants to insiders of the Company including Directors, Senior
Officers and holders of greater than 10% of the issued and outstanding shares;
and (ITEM 4 OF THE FORM OF PROXY) for a description of the amendments to the
1998 Stock Option Plan, approved by the Board of Directors and submitted for
approval to the shareholders at the Meeting.
The Executive Committee was formed in February 1999 and held one meeting during
the fiscal year. The Executive Committee was formed to negotiate and sign
letters of intent for any strategic relationship, including acquisitions,
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divestitures, joint ventures or other such strategic relationships.
PRINCIPAL SHAREHOLDERS AND
SHARE OWNERSHIP OF MANAGEMENT
The following table provides information, as of April 30, 2000, with respect to
Common Share ownership by (i) the persons known to management beneficially
owning Common Shares carrying more than 5% of the voting rights attached to all
Common Shares of the Company, (ii) each Director, (iii) the Chief Executive
Officer, (iv) each Executive Officer named in the Summary Compensation Table,
and (v) all Directors and Executive Officers as a group. Except as otherwise
indicated in the footnotes below, all of the shares listed for a person named in
the table are directly held, with sole voting and dispositive power.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT OWNED PERCENT OF CLASS
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Gordon L. Ellis (1)(2)(3) 1,238,021 13.8%
North Vancouver, British Columbia, Canada
Common E. Laughlin Flanagan (4)
Chico, California, USA 432,889 4.7%
Common William A. Maligie (5)(6)(7)
Chico, California, USA 417,021 4.6%
Common Stephen H. Silbernagel (8)(9) 147,689 1.7%
Vancouver, British Columbia, Canada
Darryl F. Jones (10)
Common Surrey, British Columbia, Canada 57,805 <1.0%
Gerald A. Habib (11)
Common Shokan, New York, USA 50,000 <1.0%
Common John J. Sutherland (12) 50,000 <1.0%
West Vancouver, British Columbia, Canada
Common Craig Pollock (13) 20,956 <1.0%
Chico, California, USA
--------------------------------------------------------------------------------------------------------------------------
Common Directors and Executive Officers 2,414,381 26.7%
as a Group (8 Persons)
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
(1) Includes 817,077 common shares of which 38,888 common shares are subject to
earn-out provisions (see "Escrow Shares" below), held by ABE Industries
(1980) Inc. Mr. Ellis controls voting and dispositive powers.
(2) Includes 133,000 commons shares of which 11,666 common shares are subject
to earn-out provisions (see "Escrow Shares" below) held by Gordann
Consultants Ltd. Gordon L. Ellis owns 51% interest and Mr. Ellis' spouse
owns 49% interest in Gordann Consultants Ltd., Mr. Ellis controls voting
and dispositive powers.
(3) Includes 134,860 common shares underlying incentive stock options granted
to Mr. Ellis.
(4) Includes 250,000 common shares underlying share purchase warrants with
one-third vested February 1st each year, commencing February 1, 1999.
(5) Includes 150,000 common shares underlying incentive stock options granted
to Mr. Maligie.
(6) Includes 100,000 common shares underlying share purchase warrants granted
to Mr. Maligie.
(7) Includes 19,444 common shares subject to earn-out provisions (see "Escrow
Shares" below).
(8) Includes 87,367 common shares held by L.E. Management Ltd. Mr. Silbernagel
owns 33% interest in L.E. Management Ltd. and controls 100% of share voting
and dispositive powers.
(9) Includes 50,000 common shares underlying incentive stock options granted to
Mr. Silbernagel.
(10) Includes 50,000 common shares underlying incentive stock options granted to
Mr. Jones.
(11) Includes 50,000 common shares underlying incentive stock options granted to
Mr. Habib.
(12) Includes 50,000 common shares underlying incentive stock options granted to
Mr. Sutherland.
(13) Includes 6,956 common shares underlying incentive stock options granted to
Mr. Pollock.
</FN>
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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), as
amended, requires the Company's Officers and Directors, and persons who
beneficially own more than 10% of a registered class of the Company's equity
securities, to file reports of securities ownership and changes in such
ownership with the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc. Officers, Directors and greater than 10%
beneficial owners also are required by the rules promulgated by the Securities
and Exchange Commission to furnish the Company with copies of all Section 16(a)
forms they file.
The Officers, Directors and greater than 10% beneficial owners became subject to
Section 16 on February 26, 1997 at which time the Company was no longer deemed a
"foreign private issuer" as such term is defined in Rule 3b-4 of the Securities
Exchange Act of 1934. The Company has received copies of the filings from its
Officers and Directors and has determined whether such Officers and Directors
filed all reports required of them on a timely basis. The Company has obtained
an undertaking by such Officers and Directors to make all future requisite
filings.
Gordon L. Ellis has filed all Section 16(a) reports required. Of the reports
filed, Form 3 from February, 1997 was received late and the Securities Exchange
Commission received 9 reports on Form 4 late.
E. Laughlin Flanagan has filed all Section 16(a) reports required. Of the
reports filed, Form 3 from February, 1997 was received late and the Securities
Exchange Commission received 1 report on Form 4 late.
William A. Maligie has filed all Section 16(a) reports required. Of the reports
filed, Form 3 from February, 1997 was received late and the Securities Exchange
Commission received 5 reports on Form 4 late.
Stephen H. Silbernagel has filed all Section 16(a) reports required. Of the
reports filed, Form 3 from February, 1997 was received late and the Securities
Exchange Commission received 6 reports on Form 4 late.
Darryl Jones has filed all Section 16(a) reports required. Of the reports filed,
Form 3 from February, 1997 was received late and the Securities Exchange
Commission received 3 reports on Form 4 late.
Gerald Habib has filed all Section 16(a) reports required. Of the reports filed,
Form 3 from February, 1997 was received late and the Securities Exchange
Commission received 2 reports on Form 4 late.
John J. Sutherland has filed all Section 16(a) reports required. Of the reports
on Form 3 from February, 1997 was received late and the Securities Exchange
Commission received 2 reports on Form 4 late.
EXECUTIVE OFFICERS OF THE COMPANY
For the purpose of this Proxy Statement, "Executive Officer" of the Company
shall mean the Chief Executive Officer and President and any Vice-President of
the Company, where that person performs the functions of such officer on a
full-time basis; the President, and any Vice-President in charge of a principal
business unit such as sales, finance or production, and any officer of a
subsidiary of the Company who performs a policy-making function in respect of
the Company, whether or not such officer is also a Director of the Company or
the subsidiary.
The Executive Officers (collectively, the "Named Executive Officers") of the
Company (including positions held with the operating subsidiary, Alternative
Materials Technology, Inc.), their ages, principal occupations and business
experience for the past five years, and tenures as Executive Officers are shown
in the following table. Executive officers are appointed by, and serve at the
pleasure of, the Board of Directors. See "Elections of Directors" for a
description of the business experience of Mr. Flanagan and Mr. Maligie.
<TABLE>
<CAPTION>
OFFICE HELD SINCE OFFICE HELD WITH COMPANY (OR PREDECESSORS) AND OPERATING
NAME AGE SUBSIDIARY
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
E. Laughlin Flanagan 52 1998 President, C.E.O. and Director
Secretary/Treasurer and Director of AMT USA
William A. Maligie 42 1989 President, C.E.O. and Director of AMT USA
1995 Director
Craig Pollock 39 1999 Vice President, Marketing & Sales of AMT USA
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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Craig Pollock has been Vice President of Marketing and Sales of the Company's
subsidiary AMT USA since January 1999. Previously, Mr. Pollock was a consultant
to AMT USA. Prior to becoming a consultant in October 1998, Mr. Pollock was VP
Sales and Marketing for GMG Distribution Co. for three years and for six years
prior to this, he was the Vice President of Duckback Products Inc. a subsidiary
of a publicly-held company Katy Industries.
COMPENSATION OF EXECUTIVE OFFICERS
REPORT ON EXECUTIVE COMPENSATION
The Board of Directors submits the following report to shareholders in respect
to the compensation policies applicable to the Company's Executive Officers
during the fiscal year ended March 31, 2000.
COMPENSATION PHILOSOPHY
The Board of Directors believes that the Company's executive compensation policy
("Executive Compensation Policy") is a critical part of the effective management
of its key executives. The Executive Compensation Policy serves to reward senior
management behavior, which in turn builds the long-term value of the Company for
shareholders, by focusing on the following objectives:
- Maintaining a strong relationship between performance and rewards;
- Establishing consistent decision-making processes and rules of conduct;
- Clearly communicating the pay program and its link to performance; and
- Actively encouraging share ownership.
EXECUTIVE COMPENSATION POLICY
The principal elements of the Company's Executive Compensation Policy are base
salary and incentive compensation, through annual bonuses and stock options,
this policy applies to all salaried executive employees.
Base Salary
The Company establishes base salaries annually in relation to comparable
positions among industry competitors and (geographical) neighboring businesses.
Base salaries may be adjusted from time to time to reflect increased average
salary within industry and local employers, increased responsibilities
undertaken by the executive, or individual performance of the executive.
Although base salaries may be set at levels somewhat below these other
employers, performance-based incentive compensation provides an opportunity for
above-market total compensation.
Employee Benefit and other Compensatory Plans
The Company provides incentive compensation in the form of annual bonuses and
grants of stock options. The Company does not have any pension, cash profit
sharing, retirement or similar plans or agreements or understandings pursuant to
which cash or non-cash compensation (including non-accountable expense
allowances or commissions) is payable to any of its Executive Officers, other
Officers or Directors other than as provided in this Proxy Statement. Within the
next fiscal year the Company has plans to implement a 401K plan as a means to
provide a retirement planning vehicle for its employees.
The Company, and its subsidiaries, in association with the Stock Option Program,
has initiated the use of an Economic Value Added calculation method (the "EVA"
Plan) as a mechanism by which to determine the number of stock options to be
allocated to employees, including Executive Officers under the Company's 1998
Stock Option Plan.
EVA is based on the performance measure of the creation of economic value. EVA
reflects the benefits and costs of capital employment. Managers create value
when they employ capital in an endeavor that generates a return that exceeds the
cost of the capital employed. EVA is the operating profit remaining after taxes
have been paid and a minimum return has been earned on the capital employed. The
EVA Plan will reward achievement based on increases in economic value and
penalize on any decreases in economic value, and will operate over a long-term
horizon. The EVA Plan is designed to operate in such a manner as to encourage
consistent improvement in EVA over the long term.
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The Company has determined that it will reward its employees, including
Executive Officer through Stock Options as an award for improved EVA. PLEASE SEE
"SPECIAL BUSINESS" (ITEM 3 AND 4 OF THE FORM OF PROXY) for approval of stock
options issued to Directors and a description of the amendments to the 1998
Stock Option Plan, as approved by the Board of Directors and submitted for
approval to the shareholders at the Annual and Special Meeting. The shareholders
are being asked to vote on a proposal to amend the Stock Option Plan by
increasing the authorized number of Common Shares reserved for issuance by
650,000 shares.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the total direct or
indirect (management service agreements) compensation during the last three
fiscal years of the Company's Chairman and its other Executive Officers whose
compensation exceeded (US) $100,000. Information is given for each of the last
three fiscal years for each Executive Officer who served at any time during such
year as an Executive Officer of the Company, its predecessors or its
subsidiaries.
U.S. DOLLARS
<TABLE>
<CAPTION>
NAME AND PRINCIPAL FISCAL ANNUAL COMPENSATION (1) LONG TERM ALL OTHER
POSITION YEAR COMPENSATION COMPENSATION
----------------------------------------------------- -----------------
($)
SALARY ($) BONUS ($) OTHER OPTIONS/WARRANTS
COMPENSATION ($) GRANTED (#)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E. LAUGHLIN FLANAGAN 2000 $167,548 - - 136,301 -
President & C.E.O. 1999 $124,758 $25,572 - 250,000(3) -
1998 $10,000 - $34,816(2) - -
WILLIAM A. MALIGIE 2000 $129,240 - - - -
President & C.E.O. AMT 1999 $124,650 - - 100,000(4) -
USA 1998 $120,750 - - 150,000 -
CRAIG POLLOCK 2000 $61,333 $43,507 - 6,956 -
VP Marketing & Sales 1999 $10,000 - - -
</TABLE>
[FN]
(1) Paid or payable by the Company or its subsidiaries.
(2) Includes Relocation Cost Reimbursement
(3) Includes warrants granted to Mr. Flanagan December 15, 1998
(4) Includes warrants granted to Mr. Maligie December 15, 1998
</FN>
OPTION GRANTS IN THE LAST FISCAL YEAR
The Company has never granted stock appreciation rights ("SAR's") and it is
currently intended that none be granted in the future. The following table sets
forth information regarding all grants of options to the individuals named in
the Summary Compensation Table during the fiscal year ended March 31, 2000, and
the potential realizable value of such options using a 5% and 10% assumed annual
rate of appreciation in the price of the Company's Common Shares. The particular
assumed annual rates of stock appreciation used in this table are specified
under the rules and regulations of the Securities and Exchange Commission and
are not necessarily indicative of future stock price performance or the
Company's projections thereof. Over a three-year option term, the corresponding
increase in the Company's market capitalization over the same period (measured
from the end of the last fiscal year) would be (a) $1,003,665 with an assumed 5%
annual rate of stock appreciation, and (b) $2,107,616 with an assumed 10% annual
rate of stock appreciation.
9
<PAGE> 10
<TABLE>
<CAPTION>
NAME OPTIONS GRANTED PERCENTAGE OF TOTAL EXERCISE PRICE EXPIRATION POTENTIAL REALIZABLE
(NO. OF SHARES) OPTIONS GRANTED TO US$ DATE VALUE IN U.S. $ AT
EMPLOYEES IN FISCAL YEAR ASSUMED ANNUAL RATES OF
APPRECIATION FOR OPTION
TERM
5% 10%
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E. Laughlin January 14,
Flanagan 136,301 39% US$0.78 2005 $16,758 $35,190
William Maligie Nil n/a n/a n/a Nil Nil
Craig January 14,
Pollock 6,956 2% US$0.78 2005 $ 855 $ 1,796
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
OPTION EXERCISES AND FISCAL YEAR-END VALUE
The following table sets forth information concerning the exercise of options
during the fiscal year and the value at March 31, 2000 of unexercised
"in-the-money" options held by each of the Executive Officers named in the
Summary Compensation Table. All options are exercisable, in whole or in part, at
any time until date of expiration.
<TABLE>
<CAPTION>
AT MARCH 31, 2000
-------------------------------------------------
NAME # OF SHARES AGGREGATE VALUE # OF EXERCISABLE / VALUE OF EXERCISABLE IN-THE
ACQUIRED ON REALIZED UNEXERCISABLE OPTIONS/ MONEY OPTIONS $ (2)
EXERCISE ($) (1) WARRANTS
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
E. Laughlin Flanagan - - 290,931/95,370(3) Nil
William Maligie - - 250,000 (4) US$7,000
Craig Pollock - - 6,956 Nil
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[FN]
(1) Based on the difference between the option exercise price and the closing
market price of the Company's shares.
(2) In-the-Money Options are those where the market value of the underlying
securities as at the most recent fiscal year end exceeds the option
exercise price. The closing market price on the Exchange of the Company's
shares as at fiscal year ended March 31, 2000 was US$0.72
(3) Included 250,000 warrants issued December 15,1999.
(4) Includes 100,000 warrants issued December 15, 1999.
</FN>
EMPLOYMENT AGREEMENTS
In March 1997 the Company and AMT USA entered into a written employment
agreement with William A. Maligie in respect to his position as President of AMT
USA and confirming the basic terms of his employment and responsibilities which
have been established orally from time to time since AMT USA's formation in
1989. Mr. Maligie currently receives a base salary of US$11,129 per month, which
will increase each January 1st by an amount equal to the greater of the consumer
Price Index or by 3% per year for the term of the contract. The written
employment agreement has a six-year term ending March 1, 2003 and contains
compensation (remaining salary until expiry of term) and non-compete covenants
in the case of the Company's termination of Mr. Maligie's employment without
cause.
The Company and Mr. E. Laughlin Flanagan entered into an employment agreement in
February 1998, as amended June 14, 1999. As in the original employment
agreement, Mr. Flanagan, acting as President and Chief Executive Officer of the
Company has a basic monthly salary of $12,500 per month. The amendment
incorporates a yearly performance bonus based upon the attainment of mutually
agreed benchmarks established annually. The term of the employment agreement is
for a period of three years ending February 6, 2001 and automatically renews
annually
10
<PAGE> 11
until terminated by either party.
In December 1999, the Company and AMT USA entered into a letter of employment
with Mr. Craig Pollock in respect of his position as Vice-President of Marketing
and Sales of AMT USA, which confirms the basic terms of his employment. Mr.
Pollock's base salary is currently $5,333 per month plus commission and standard
employee benefits with reimbursement of business and automobile expenses. Either
party may terminate the agreement at any time.
COMPENSATION OF DIRECTORS
During 1988, the Company entered into a management services agreement with
Gordann Consultants Ltd., (50.1% of the shares of which are owned by Gordon L.
Ellis) for the services of Gordon L. Ellis serving as Chairman of the Board. The
Company pays Cdn$5,000 per month to Gordann Consultants Ltd. for management
services. The management services agreement is terminable upon three months
notice by either party.
In January, 1999 it was established that outside directors receive $200 cash per
meeting, plus 20,000 options per year, to a maximum of 60,000 stock options, as
remuneration for attendance at regular meetings or other deliberations.
Remuneration in attending an Audit Committee meeting is $200 and $50 for each
committee member being present at an Executive or Compensation meeting.
BOARD COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee establishes the policies governing the
compensation of the Company's Executive Officers. Messrs Silbernagel,
Sutherland, Jones and Habib, the Company's outside directors, were not at any
time during fiscal 2000, nor during any preceding fiscal year, an Executive
Officer or employee of the Company or its predecessors.
Messrs. Flanagan and Maligie serve as Executive Officers of the Company and are
compensated pursuant to written management service agreements. During the fiscal
year amendments to the compensation terms provided in those agreements are
disclosed above (Please see "EMPLOYMENT AGREEMENTS").
It is the policy of the Board to exclude any interested Director from voting on
any matter, which may involve an actual or potential conflict of interest,
including the granting or amending of stock options.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
Other than routine indebtedness, none of the Directors, Executive Officers and
proposed nominees for election as Directors of the Company, and associates or
affiliates of such Directors, Executive Officers or proposed nominees are or
have been indebted to the Company since the beginning of the last completed
financial year of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since the commencement of the Company's last completed fiscal year, no insider
of the Company, proposed nominee for election as a Director of the Company, nor
any associate or affiliate of such insider or proposed nominee, has been
materially interested in any transaction of the Company, nor is any such person
interested in any proposed transaction which has materially affected or would
materially affect the Company (or any of its subsidiaries) except for the
matters referred to below. With regard to any matter involving an actual or
potential conflict of interest with any member of the Company's Board of
Directors, it has been the policy of the Board to exclude the interested
Director from voting on such a matter.
Since February 1, 1995, the Company and certain of its subsidiaries have rented
their executive office space and office equipment in North Vancouver, British
Columbia from ABE, a company controlled by Gordon L. Ellis, for a total monthly
fee of Cdn$1,000 per month. Management believes this rental fee is less than
rents charged by third parties for similar accommodations.
During the year ended March 31, 2000, ABE was paid $73,104 for office rent and
related services, and reimbursement of advances, investor relations and
secretarial services. In addition, as at March 31, 2000, $5,029 was owed by the
Company to ABE for these advances and reimbursable expenses.
The Company has entered into a management services agreement with Gordann
Consultants for the services of Gordon L. Ellis (Chairman of the Board of
Directors) and employment agreements with William A. Maligie and E.
11
<PAGE> 12
Laughlin Flanagan. Please see "COMPENSATION OF DIRECTORS" and "EMPLOYMENT
AGREEMENTS" for a description of the remuneration paid or payable under these
agreements.
Messrs. Silbernagel, Jones and Sutherland are responsible for administering the
Economic Value Added Incentive Compensation Plan ("EVA Plan") and are
non-employee directors of the Company ("Outside Directors"). Each Outside
Director of the Company is granted 20,000 stock options annually in lieu of any
discretionary grants in establishing the granting of stock options to the
outside Directors. Messrs. Silbernagel, Jones, Sutherland and Habib are
considered Outside Directors as of the date of this Proxy Statement. Please see
"COMPENSATION OF DIRECTORS".
SPECIAL BUSINESS
APPROVAL OF STOCK OPTION GRANTS TO INSIDERS
(ITEM 3 OF THE FORM OF PROXY)
In order to satisfy certain requirements provided under the securities laws of
British Columbia and in accordance with the Policies of the Canadian Venture
Exchange, disinterested shareholder approval must be obtained prior to the
exercise of stock option, if the holder of the stock option is an Insider of the
Company.
The following table set forth the information concerning the grant of stock
options to Messrs. Ellis, Flanagan and Maligie during the fiscal year ended
March 31, 2000, being insiders of the Company at the time of grant and subject
to approval by the Shareholders.
<TABLE>
<CAPTION>
NAME PRINCIPAL POSITION OPTIONS GRANTED Exercise GRANT EXPIRATION
(NO. OF SHARES) price DATE DATE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gordon L. Ellis Chairman of the 60,000 Cdn$1.00 Aug. 21, 1999 Aug 21, 2001
Board, Director 101,228 Cdn$1.13 Jan. 14, 2000 Jan. 14, 2005
100,500 Cdn$1.00 June 19, 2000 June 19, 2005
E. Laughlin Flanagan Chief Executive 136,301 US$0.78 Jan. 14, 2000 Jan. 14, 2005
Officer, Director
William A. Maligie President of AMT 150,000 US$0.67 June 19, 2000 June 19, 2003
US/Director
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Shareholder approval of the granting of stock options to directors of the
Company is being solicited in order to satisfy certain legal and regulatory
requirements. The approval of the granting requires the affirmative vote of the
holders of a majority of the Common Shares present or represented and entitled
to vote at the Annual General Meeting.
REQUIRED VOTE
"RESOLVED THAT:
1. the granting of stock options to directors of the Company, as set out in the
Company's Proxy Statement, are hereby ratified, adopted and approved;
2. all such acts, deeds and things taken by management of the Company to effect
the issuance of stock options described above and the signing of
documentation required to effect the issuance are hereby ratified, adopted
and approved; and
3. no further resolution or approval by the shareholders shall be required for
the implementation of the issuance of stock options pursuant to this
resolution."
In June, 2000 a resolution was voted upon and unanimously approved by the Board
of Directors, as recommended by the Compensation Committee, with Messrs. Ellis,
Flanagan and Maligie abstaining, to grant stock options and to obtain approval
by the Shareholders in granting their stock options in order to satisfy legal
and regulatory requirements, since they are considered Insiders of the Company.
It is the intention of the Board of Directors to issue the stock options as
indicated above and therefore the Board of Directors recommends to the
shareholders that they vote "FOR" the issuance of stock options.
12
<PAGE> 13
AUTHORIZED SHARE AMENDMENT TO THE POLYMER SOLUTIONS, INC. 1998 DIRECTOR,
CONSULTANTS AND EMPLOYEE STOCK OPTION PLAN (THE "PLAN")
(ITEM 4 OF FORM OF PROXY)
The shareholders are being asked to vote on a proposal to amend the Plan to
increase the total number of Common Shares available for future stock options to
be granted under the Plan from 1,000,000 Common Shares to 1,650,000 Common
Shares. With the steady and aggressive growth in the Company over the past year,
it is the intention of the Company to reward its current employees by granting a
greater number of stock options. The Company also anticipates an increase in the
number of key employees in the near future to support the continued growth.
Increasing the Common Shares available will allow employees to participate in
the future of the Company and in turn, increase shareholder value. After
deducting the 1,000,000 Common Shares that are reserved for issuance pursuant to
the stock option plan, the Company would be authorized to grant further stock
options under the amended Plan of up to 650,000 Common Shares, constituting an
increase of 7% of the Company's issued and outstanding share capital as of June
23, 2000.
The Board of Directors adopted the amendment to the Plan on May 18, 2000,
subject to the approval of the shareholders of the Company at the Meeting and
the satisfaction of applicable securities laws of British Columbia and U.S.
federal and state regulatory requirements.
The Plan was adopted on August 6, 1998 to assist the Company and the Company's
subsidiaries in attracting and retaining the best available persons for
positions of responsibility and to provide certain key employees with an
additional incentive to contribute to the success of the Company. Due to the
growth in number of employees since the Plan adoption and the ensuing grants of
options to those employees and to attract additional key employees, the number
of authorized shares available for reservation under the Plan must be increased.
REQUIRED VOTE
Shareholder approval of the amendment of the 1998 Stock Option Plan to increase
the number of authorized Common Shares of the Company, is being solicited in
order to satisfy certain requirements provided in applicable securities laws in
British Columbia and the U.S. Internal Revenue Code of 1986, as amended (the
"Code"), and applicable securities laws. The approval of the amendment to the
Plan requires the affirmative vote of the holders of a majority of the Common
Shares present or represented and entitled to vote at the Meeting. The form of
resolution sought for shareholder approval of an amendment to the Plan is as
follows:
"RESOLVED THAT:
4. the amendment to increase the authorized number of Common Shares
reserved for issuance from 1,000,000 Common Shares to 1,650,000 Common
Shares under the Company's 1998 Stock Option Plan as set out in the
Company' proxy statement is hereby ratified, adopted and approved;
5. all such acts, deeds and things taken by management of the Company to
effect the amendments described above and the signing of documentation
required to effect the amendments are hereby ratified, adopted and
approved; and
6. no further resolution or approval by the shareholders shall be required
for the implementation of the amendment to the Plan pursuant to this
resolution."
Due to the important role the Plan plays in the Company's efforts to retain and
recruit the services of individuals with outstanding ability for itself and its
subsidiaries, the Board of Directors recommends to the shareholders that they
vote "FOR" the proposal to amend the Plan to increase the reservation of Common
Shares authorized for option grants from 1,000,000 Common Shares to 1,650,000
Common Shares.
ESCROW SHARES
(ITEM 5 OF THE FORM OF PROXY)
Pursuant to an Extraordinary Meeting of Shareholders held on November 12, 1996,
the Shareholders approved a plan of arrangement, which exchanged 3 shares of AMT
Environmental Products Inc. ("AMT") for one share of Polymer Solutions, Inc.
("PSI"). Subsequently, through the Reorganization of the Company, 593,331 Escrow
shares held in trust by the Transfer Agent were exchanged for 197,774 Escrow
shares (the "Escrow Shares"0. Theses shares were to be released subject to
earn-out provisions for each Cdn$14.22 in cash flow, together with release
criteria and procedures subject to the securities laws of British Columbia. At
the time of reorganization an omission occurred in that a resolution providing
for a replacement agreement for the original Escrow Agreement was not proposed
to the Shareholders at that time and needs to be resolved.
13
<PAGE> 14
Under the terms of the original Escrow Agreement, the Escrow Shares were issued
to Mr. Ellis, Mr. Maligie, Mr. Potter and Ms. Dragonvan and were due to be
cancelled on December 15, 1997. From the date of the reorganization until the
date of this Proxy Statement, none of the Escrow Shares have been released or
cancelled.
The Directors of the Company, with Messrs Ellis and Maligie abstaining,
recommend to the shareholders, that the original Escrow Agreement be replaced,
by extending the original agreement for ten years from the date of
reorganization of the Company effective from November 12, 1996, the date the
resolution should have been proposed to the shareholders. Such extension would
be normal when corporate reorganizations take place. Upon shareholder approval,
the Board of Directors intends to seek approval from the Securities Commission
of British Columbia.
The shareholders are being asked to vote on a proposal of replace the original
agreement and extend the date of expiration from the date of the reorganization
and recognized this change under a new agreement. A form of the agreement will
be presented at the Annual General Meeting.
REQUIRED VOTE
It is the intention of the Board to request Shareholder approval to extend the
ear-out provision from the date of the Plan of Arrangement, being November 12,
1996, and is being solicited in order to satisfy certain legal and regulatory
requirements. The approval of the extension from the date of November 12, 996
requires the affirmative vote of the holders of a majority of the Common Shares
present or represented and entitled to vote at the Annual and Special Meeting.
"RESOLVED THAT:
7. a replacement agreement of the Escrow Agreement, as set out in the
Company's Proxy Statement above, are hereby ratified, adopted and
approved;
8. all such acts, deeds and things taken by management of the Company to
effect the items described above and the signing of documentation
required to effect the items are hereby ratified, adopted and approved;
and
9. no further resolution or approval by the shareholders shall be required
for the replacement Agreement pursuant to this resolution."
Due to the reorganization of the Company and the relatively short time taken to
create a profitable organization with the efforts of the founders, the Board of
Directors recommends to the shareholders that they vote "FOR" the proposal to
extend the earn-out provision of the Escrow Shares as stated above.
DESCRIPTION OF THE 1998 DIRECTOR, CONSULTANT AND EMPLOYEE STOCK OPTION PLAN
(THE "PLAN")
The essential features of the Plan are outlined below. Copies of the Plan are
available upon written request to the Secretary of the Company.
PURPOSE
The purpose of the Plan is to advance the interests of the Company and its
shareholders and to promote the success of the Company's business by attracting
and retaining the best available persons for positions of responsibility and
provide certain key employees of the Company and its subsidiaries with an
additional incentive to contribute to the success of the Company.
ADMINISTRATION
The Plan is administered by the Board of Directors which has the final power to
construe and interpret the Plan, and to determine all questions that may arise
in the administration of the Plan, including particulars of the terms of the
options. As permitted under the Plan, the Board of Directors has delegated the
administration of the Plan to the Compensation Committee consisting of Messrs.
Silbernagel, as Chairman, Sutherland and Jones, three of the four non-employee
Directors of the Company.
DURATION, AMENDMENT AND TERMINATION
The Board of Directors may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan will terminate on August 6, 2008. The Board of
Directors may amend the Plan at any time or from time to time. In certain
circumstances, amendments must be approved by the vote of a majority of the
outstanding shares within 12 months before or after its adoption by the Board of
Directors.
14
<PAGE> 15
ELIGIBILITY
Options may be granted to qualifying Officers, Consultants and Employees of the
Company or any, subsidiary or affiliate of the Company. Stock Options may also
be granted to eligible Directors who are not Employees . A certain number of
options shall be automatically granted to current and future Directors of the
Company who are not also employees of the Company (ie. Outside Directors) in
accordance with the Plan. A participant may be granted more than one award under
the Plan.
TERMS OF OPTIONS
The principal terms of the options permitted by the Plan are as follows. Subject
to the terms and conditions of the Plan, individual option grants (which will be
evidenced by separate stock option agreements to be entered into by the Company
and the respective optionee) in any given case may vary as to any or all of the
option terms highlighted below.
Option Term. Options granted may have a maximum term of 5 years.
In the event of certain reorganization or take-over transaction, the Company may
adjust the number of options and the class of securities subject to the option,
adjust the exercise price, substitute a new option, accelerate the termination
of the option period or terminate the option in consideration of payment.
Option Exercise Price and Payment Terms. The exercise price for stock options
granted under the Plan may not be less than the fair market value of the Common
Shares on the date of grant. The exercise price of options granted under the
Plan must be paid in cash, shares or a qualifying deferred payment arrangement.
In addition, subject to applicable law, the Company may make loans to individual
optionees on such terms as may be approved by the Board of Directors for the
purpose of financing the exercise of options granted under the Plan. An Optionee
must pay the withholding tax in cash or by certified check or by the company
deducting a sufficient number of shares from the Option Shares.
Option Exercise and Transferability. The Option provides for a minimum six-month
holding period before options may be exercised by any Plan participant who is
subject to Section 16 of the Exchange Act. Options granted to participants who
are not subject to section 16 of the Exchange Act are subject to a four-month
hold period from the grant date of the options. Effect of Employment
Termination. The Option provides for the expiration of outstanding options
within certain defined periods of no more than 12 months after an optionee's
employment with the Company or its subsidiaries is terminated. Adjustment
Provisions. If there is any change in the shares subject to the Plan (through
recapitalization, stock dividend or otherwise), within certain limitations,
appropriate adjustment may be made by the Board of Directors.
COMPLIANCE WITH STATUTORY PROVISIONS
Options granted under the Plan to persons subject to Section 16 of the Exchange
Act are intended to comply with Rule 16B-3 of the Exchange Act and are not to
contain such additional conditions or restrictions as may be required thereunder
as of the time of grant to qualify for the exemptions from Section 16 of the
aforementioned Act. The Plan is intended to comply with the laws of the Province
of British Columbia and, for the benefit of persons who, from time to time, may
become subject to the provisions of Section 16 of the Exchange Act, to comply
with Rule 16b-3 of the Exchange Act.
CERTAIN CANADIAN FEDERAL INCOME TAX INFORMATION
The following is a summary, as of the date of this Proxy Statement, of the
principal Canadian tax considerations generally applicable to the granting of
employee stock options to residents of Canada who are employees of the Company
and who deal at arm's length with the Company and is not a complete analysis or
listing of all possible tax consequences. Nor does this summary deal with all
aspects of Canadian taxation that may be relevant to particular investors. This
summary is general information only and is not intended to be, nor should it be
construed to be, legal or tax advice to any particular person. Particular
optionees should seek independent advice from their own tax advisors as to the
income tax consequences to them having regard to their particular circumstances.
The following summary is based upon the current provisions of the ITA and the
Regulations to it as of the date of this Proxy Statement. This summary does not
take into account or anticipate changes in the law or the administrative or
assessing practices of Revenue Canada, Taxation, whether it be legislative,
governmental or judicial action and does not take into account or anticipate
provincial, territorial or foreign tax considerations.
CANADIAN TAX TREATMENT OF THE OPTIONEES
The issuance of a stock option to an employee of the Company will not result in
any tax consequences to the optionee until the option is either exercised or
disposed of, provided that no remuneration is foregone for the option. When the
option is exercised, a taxable benefit will result, treated as employment
income, equal to the amount by which the fair market value of the Company shares
at the time of exercise exceeds the exercise price. A deferral of a portion of
the taxable benefit may be possible to when the shares are actually disposed of.
The maximum benefit that may be deferred is subject to an annual vesting limit
of $100,000. The $100,000 limit is based on the fair market value of the
underlying shares at the time the options were granted.
The amount in excess of the $100,000 limit is included as a taxable benefit in
employment income when the options are exercised. The amount deferred is
included as a taxable benefit in employment income at the time the shares are
sold. A taxable benefit will also arise if a party not dealing at arm's length
with the original optionee exercises the option or disposes of it to a non-arm's
length party.
15
<PAGE> 16
A deduction may be available to the optionee equal to one-third of the income
inclusion related to the exercise of the option. Where the deduction is
available to the optionee, the net taxable effect to the optionee will be an
income inclusion equal to two-thirds of the excess of the fair market value of
the Company's shares at the time they are acquired over the exercise price of
the option. Generally, to qualify for the one-third deduction, the following
conditions must be met:
1. the exercise price must be at least equal to the fair market value of
the option shares at the time the option is granted, less any amount
paid by the optionee to acquire the shares; and
2. at the time the option was granted, the optionee deals at arm's length
with the Company.
When the shares are eventually sold, a capital gain or capital loss may also
result. The capital gain or capital loss is calculated by the proceeds of
disposition less the fair market value of the shares at the exercise date. The
capital gain or capital loss inclusion rate is two-thirds for gains or losses
realized after February 27, 2000.
CANADIAN TAX TREATMENT OF THE COMPANY
The ITA provides that generally, when shares have been issued to an employee and
such issuance is governed by the stock option benefit rules in the ITA, the
employer is not entitled to deduct any expenses related to granting of the
option. Accordingly, the Company will not be allowed any deductions for Canadian
tax purposes in respect of the granting of the stock option.
CERTAIN U.S. FEDERAL INCOME TAX INFORMATION
The following, which is based on the Code and the regulations, rulings, and
decisions currently in effect, all of which are subject to change, does not
address all aspects of federal income taxation that may be relevant to a
particular option holder in light of his or her personal investment
circumstances and does not discuss any aspects of state or local tax laws.
Furthermore, the following does not consider the potential effects, both adverse
and beneficial, of any recently proposed legislation which, if enacted, could be
applied, possibly on a retroactive basis, at any time.
U.S. TAX TREATMENT OF THE OPTIONEE
Incentive stock options under the Plan are afforded favourable federal income
tax treatment under the Code. If an option is treated as an incentive stock
option, the optionee will recognize no income upon grant or exercise of the
option unless the alternative minimum tax rules apply. Upon an optionee's sale
of the shares (assuming that the sale occurs no sooner than two years after
grant of the option and one year after exercise of the option), any gain will be
taxed to the optionee as long-term capital gain. Under the current law, the tax
on net capital gain (net long-term capital gain minus net short-term capital
loss) is capped at 28%. If the optionee disposes of the shares prior to the
expiration of the above holding periods, the optionee will recognize ordinary
income in an amount generally measured as the difference between the exercise
price and the lower of the fair market value of the shares at the exercise date
or the sale price of the shares. Any gain or loss recognized on such a premature
sale of the shares in excess of the amount treated as ordinary income will be
characterized as capital gain or loss.
All other options granted under the Plan are non-statutory options and will not
qualify for any special tax benefits to the optionee. Accordingly, an optionee
will not recognize any taxable income at the time he or she is granted a
non-statutory option. However, upon exercise of the option, the optionee will
recognize ordinary income for federal income tax purposes in an amount generally
measured as the excess of the then fair market value of the shares over the
exercise price. Upon an optionee's resale of such shares, any difference between
the sale price and the fair market value of such shares on the date of exercise
will be treated as capital gain or loss and will qualify for long-term capital
gain or loss treatment if the shares have been held for more than one year.
U.S. TAX TREATMENT OF THE COMPANY
The Company generally will not be entitled to a deduction upon the grant or
exercise of an incentive stock option, or the sale of the optioned stock by an
optionee. However, beyond the dilution of share capital, the Company will not
bear any significant costs in respect of the granting of the options. However,
if an optionee fails to satisfy the holding period, noted above, such that an
optionee has made a disqualifying disposition, the Company will be entitled to a
deduction in the year of the disqualifying disposition. The deduction will be
equal to the amount recognized by an optionee as ordinary income and the same
amount will be considered a capital contribution by the Company.
The Company generally will be entitled to a deduction upon the exercise of a
non-statutory stock option by an optionee. The deduction ordinarily will be
available in the year that an optionee exercises the option and the amount of
the deduction will be equal to the amount recognized by an optionee as a result
of exercising the non-statutory stock option.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
(Item 6 of the Form of Proxy)
It is not known that any other matters will come before the meeting other than
as set forth above and in the Notice of Annual and Special Meeting, but if such
should occur the persons named in the accompanying Form of Proxy intend to vote
on them in accordance with their best judgement, exercising discretionary
authority with respect to amendments or variations of matters identified in the
Notice of Annual and Special Meeting and other matters which may properly come
before the meeting or any adjournment thereof.
16
<PAGE> 17
PROPOSALS OF SHAREHOLDERS
In accordance with the rules of the Securities and Exchange Commission,
shareholders of the Company may present proposals to the Company for inclusion
in the Company's Proxy Statement prepared in connection with its next Annual and
Special Meeting of Shareholders. Proposals to be included in the Proxy Statement
prepared in connection with the next Annual and Special Meeting scheduled to be
held in August of 2001 must be received by the Company no later than March 16,
2001, in order to be considered for inclusion.
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Annual Report for the Fiscal Year ended March 31, 2000 is being mailed to
shareholders with this Proxy Statement. The Annual Report is not to be
considered as proxy soliciting material. The Company will provide without charge
to each person being solicited by this Proxy Statement, a copy of the Company's
Annual Report on Form 10-K (without exhibits) for the fiscal year ended March
31, 2000 upon written request to the Secretary, c/o the Company's address at
1569 Dempsey Road, North Vancouver, British Columbia, Canada V7K 1S8.
BOARD APPROVAL
The contents of this Proxy Statement have been approved and its mailing has been
authorized by a resolution of the Board of Directors of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gordon L. Ellis
-------------------
Gordon L. Ellis, Chairman
17
<PAGE> 18
POLYMER SOLUTIONS, INC.
1569 DEMPSEY ROAD
NORTH VANCOUVER, BRITISH COLUMBIA
CANADA V7K 1S8 TEL: (604) 683-3473
www.polysolutions.com
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 2, 2000
NOTICE IS HEREBY GIVEN that the Annual and Special Meeting (the "Meeting") of
the shareholders of Polymer Solutions, Inc. (the "Company"), a Nevada
corporation, will be held at 2nd floor, 888 Dunsmuir Street, Vancouver, British
Columbia, Canada on Tuesday, August 2, 2000 at 10:00 a.m. (Pacific time) for the
following purposes:
1. To appoint PricewaterhouseCoopers LLP, Certified Public Accountants as the
Company's independent public auditor for the fiscal year ending March 31,
2001.
2. To elect the following persons as Directors of the Company for a term of
1 year:
Gordon L. Ellis E. Laughlin Flanagan
Stephen H. Silbernagel Darryl F. Jones
William A. Maligie Gerald A. Habib
John J. Sutherland
3. To approve the granting of stock options to Directors of the Company to
satisfy certain requirements provided under the securities laws of British
Columbia and in accordance with the Policies of the Canadian Venture
exchange.
4. To amend the 1998 Director, Consultant and Employee Stock Option Plan to
increase the total number of Common Shares available for future stock
option grants under the Plan from 1,000,000 Common Shares to 1,650,000
Common Shares.
5. To approve a replacement agreement of the original Escrow Agreement, by
extending the original agreement for ten years from the date of
reorganization of the Company effective from November 12, 1996.
6. To transact such other business as may properly come before the Meeting or
any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on June 23, 2000 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Meeting or any adjournment(s) thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, SHAREHOLDERS ARE
URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED FORM OF PROXY IN THE
ENCLOSED ENVELOPE. A proxy will not be valid unless it is received at the office
of the Transfer Agent, Pacific Corporate Trust Company, 830-625 Howe Street,
Vancouver, British Columbia, V6C 3B6, not less than 48 hours (excluding
Saturdays, Sundays and holidays) before the time fixed for the Meeting. A Form
of Proxy received at the offices of the Transfer Agent or Company after this
time, but prior to the Meeting, may be accepted or rejected as late, at the
discretion of the Chairman. Your Form of Proxy will be returned to you if you
are present at the Meeting and should request its return.
DATED at Vancouver, British Columbia, BY ORDER OF THE BOARD OF DIRECTORS this
26th day of June, 2000.
/s/ Gordon L. Ellis
-------------------
Gordon L. Ellis, Chairman
<PAGE> 19
SUPPLEMENTAL MAILING LIST RETURN CARD
(National Policy 41)
NOTICE TO SHAREHOLDERS OF POLYMER SOLUTIONS, INC.
On October 28, 1987, the Canadian Securities Administrators gave approval to
National Policy Statement No. 41 - Shareholder Communication (the "Policy")
which essentially established a framework for communication between issuers and
their registered and non-registered shareholders.
Companies incorporated in British Columbia were formerly required to deliver
interim (semi-annual) financial statements only to their registered
shareholders. The Policy now exempts companies from having to deliver these
statements to their registered shareholders if the companies send 1st, 2nd and
3rd quarter financial statements to those shareholders, whether registered or
not, who request in writing to receive them.
If you are a registered or non-registered shareholder, and wish to be placed on
a supplemental mailing list for the receipt of these financial statements, you
must complete and return the Supplemental Return Card below.
The supplemental mailing list will be updated each year and, therefore, a Return
Card will be required annually in order to receive quarterly financial
statements. All other shareholder mailings will continue to be mailed to
registered shareholders in the normal manner without the completion of a Return
Card.
===============================================================================
POLYMER SOLUTIONS, INC.
The undersigned certifies that he is the owner of securities (other than debt
instruments) of the Company, and requests that he be placed on the Company's
Supplemental Mailing List in respect of its quarterly financial statements.
------------------------------------------
Name (Please print)
------------------------------------------
Address
------------------------------------------
City/Province (or State)/Postal Code
------------------------------------------ ---------------------------------
Signature Dated
PLEASE COMPLETE AND RETURN THIS CARD TO:
Polymer Solutions, Inc.
1569 Dempsey Road
North Vancouver, British Columbia V7K 1S8
Tel: (604) 683-3473
Fax: (604) 904-4105
