UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
PROXY
STATEMENT PURSUANT TO SECTION 14(A) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Filed
by the Registrant x
Filed
by a Party other than the Registrant ¨
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the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to § 240.14a-12
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ISORAY,
INC.
(Name
of Registrant as Specified in Its Charter)
N/A
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title
of each class of securities to which transaction applies:
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Aggregate
number of securities to which transaction applies:
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(3)
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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):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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Fee
paid previously with preliminary materials.
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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.
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(1)
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Amount
Previously Paid:
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Schedule or Registration Statement No.:
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Party:
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January
18, 2007
Dear
Shareholder:
You
are
cordially invited to attend the Annual Meeting of Shareholders of IsoRay, Inc.
(the “Company”) to be held at the Caleo Resort and Spa, Scottsdale, Arizona, at
1:00 p.m. local time on Tuesday, February 20, 2007.
The
enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted at the Annual Meeting. During the Annual Meeting,
we
will also report on the operations of the Company, and its subsidiary, IsoRay
Medical, Inc. Directors and officers of the Company, and representatives of
the
Company’s auditor, will be present to respond to appropriate questions from
shareholders.
Detailed
information concerning our activities and operating performance during the
fiscal year ended June 30, 2006 is contained in the Annual Report to
Shareholders.
Your
vote is important. Whether or not you are able to attend, it is important that
your shares be represented at the Annual Meeting.
Accordingly, we ask that you please sign, date and return the enclosed proxy
card at your earliest convenience.
We
look
forward to seeing you at the Annual Meeting.
Sincerely,
/s/
Roger
E. Girard
Roger
E.
Girard
President,
CEO and Chairman of the Board
Enclosure
350
Hills Street, Suite 106
Richland,
WA 99354
www.isoray.com
ISORAY,
INC.
NOTICE
OF ANNUAL MEETING
OF
SHAREHOLDERS
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TIME
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1:00
p.m., Mountain Standard Time, on Tuesday, February 20,
2007.
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PLACE
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Caleo
Resort and Spa, 4925 N. Scottsdale, Rd., Scottsdale, Arizona 85251
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ITEMS
OF BUSINESS
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1.
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To
elect seven directors to hold office until the 2008 Annual Meeting
of
Shareholders;
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2.
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To
ratify the appointment of DeCoria, Maichel & Teague, P.S. as the
independent registered public accounting firm of the Company for
the
fiscal year ending June 30, 2007; and
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3.
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To
take action on any other business that may properly be considered
at the
Annual Meeting or any adjournment thereof.
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RECORD
DATE
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You
may vote at the Annual Meeting if you were a shareholder of record
at the
close of business on January 5, 2007.
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VOTING
BY PROXY
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If
you cannot attend the Annual Meeting, you may vote your shares by
completing and promptly returning the enclosed proxy card in the
envelope
provided.
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ANNUAL
REPORT
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IsoRay,
Inc.’s June 30, 2006 Annual Report on Form 10-KSB, which is not part of
the proxy soliciting material, is enclosed.
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By
Order of the Board of Directors,
/s/
David J. Swanberg
David
J. Swanberg
Secretary
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This
Notice of Annual Meeting, Proxy Statement and accompanying proxy
card
are
being
distributed on or about January 18, 2007.
ISORAY,
INC.
350
Hills Street, Suite 104
Richland,
Washington 99354
____________________
PROXY
STATEMENT
Annual
Meeting of Shareholders
February
20, 2007
We
are
providing these proxy materials in connection with the solicitation by the
Board
of Directors of IsoRay, Inc. (the “Company”) of proxies to be voted at the
Company’s Annual Meeting of Shareholders to be held on February 20, 2007 (the
“Annual Meeting”), and at any adjournment of the Annual Meeting.
GENERAL
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Who
may vote at the Annual
Meeting?
The
Board
of Directors of the Company (the “Board”) has set January 5, 2007, as the record
date for the Annual Meeting. If you were the owner of Company common stock
at
the close of business on January 5, 2007, you may vote at the Annual Meeting.
You are entitled to one vote for each share of common or preferred stock you
held on the record date.
What
proposals will be voted on at the Annual Meeting?
Two
proposals are scheduled to be voted on at the Annual Meeting. The first is
the
election of seven directors to hold office until the 2008 Annual Meeting of
Shareholders. The second is the ratification of the appointment by the Audit
Committee of DeCoria, Maichel & Teague, P.S. as the Company’s independent
registered public accounting firm for the fiscal year ending June 30, 2007.
How
many votes are required to approve the proposal?
The
presence, in person or by proxy, of a majority of the outstanding shares of
our
common stock and preferred stock voting together as one class is necessary
to
constitute a quorum at the Annual Meeting. In counting the votes to determine
whether a quorum exists at the Annual Meeting, we will use the proposal
receiving the greatest number of all votes “for” or “against” and abstentions
(including instructions to withhold authority to vote). As of January 5, 2007,
there were 16,296,045 shares of common stock and 77,080 shares of preferred
stock outstanding.
In
voting
with regard to the proposal to elect directors (Proposal 1), you may vote in
favor of all nominees, withhold your vote as to all nominees or vote in favor
of
or withhold your vote as to specific nominees. The vote required to approve
Proposal 1 is governed by Minnesota law and is a plurality of the votes cast
by
the holders of shares represented and entitled to vote at the Annual Meeting,
provided a quorum is present. As a result, in accordance with Minnesota law,
votes that are withheld will be counted in determining whether a quorum is
present but will have no other effect on the election of directors.
In
voting
with regard to the proposal to ratify the Audit Committee’s appointment of the
independent registered public accounting firm (Proposal 2), you may vote in
favor of the proposal, vote against the proposal or abstain from voting. The
vote required to approve the proposal is governed by Minnesota law and is the
affirmative vote of the holders of a majority of the shares represented and
entitled to vote at the Annual Meeting, provided a quorum is present. As a
result, abstentions will be considered in determining whether a quorum is
present and the number of votes required to obtain the necessary majority vote
and therefore will have the same legal effect as voting against the proposal.
-1-
You
may
either vote “FOR” or “AGAINST” Proposal 2, and “FOR” or “WITHHOLD” authority to
vote for each nominee for the Board of Directors. If you withhold authority
to
vote for the election of directors, your shares will not be voted with respect
to the director or directors identified. If you sign and submit your proxy
card
without voting instructions, your shares will be voted “FOR” each proposal and
all director nominees.
Under
the
rules of the New York and American Stock Exchanges (the “Exchanges”) that govern
most domestic stock brokerage firms, member firms that hold shares in street
name for beneficial owners may, to the extent that such beneficial owners do
not
furnish voting instructions with respect to any or all proposals submitted
for
shareholder action, vote in their discretion upon proposals which are considered
“discretionary” proposals under the rules of the Exchanges. These votes by
brokerage firms are considered as votes cast in determining the outcome of
any
discretionary proposal. Member brokerage firms that have received no
instructions from their clients as to “non-discretionary” proposals do not have
discretion to vote on these proposals. If the brokerage firm returns a proxy
card without voting on a non-discretionary proposal because it received no
instructions, this is referred to as a “broker non-vote” on the proposal.
“Broker non-votes” are considered in determining whether a quorum exists at the
Annual Meeting, but are not considered as votes cast in determining the outcome
of any proposal. We believe that Proposals 1 and 2 are discretionary.
As
of
January 5, 2007, our directors and executive officers held or controlled
approximately 915,035 shares of our common stock, constituting approximately
5.62% of the outstanding common stock. As of January 5, 2007, our directors
and
executive officers did not hold or control any shares of our preferred stock.
We
believe that these holders will vote all of their shares of common stock in
favor of each of the proposals.
How
does the Board recommend that I vote?
The
Board
recommends that you vote your shares “FOR” each of the proposals.
Can
my shares be voted on matters other than those described in this proxy
statement?
Yes.
We have not received proper notice of, and are not aware of, any business to
be
transacted at the meeting other than as indicated in this proxy statement.
If
any other item or proposal properly comes before the meeting, the proxies
received will be voted on those matters in accordance with the discretion of
the
proxy holders.
How
do I vote my shares without attending the Annual Meeting?
If
you
are a shareholder of record, you may vote by granting a proxy. For shares held
in street name, you may vote by submitting voting instructions to your broker
or
nominee. In any circumstance, you may vote by
mail
by signing and dating your proxy card and mailing it in the envelope provided.
You should sign your name exactly as it appears on the proxy card. If you are
signing in a representative capacity (for example, as guardian, executor,
trustee, custodian, attorney or officer of a corporation), you should indicate
your name and title or capacity. To be valid, your proxy card must be received
by the Company prior to the start of the Annual Meeting.
How
do I vote my shares in person at the Annual Meeting?
If
you
are a shareholder of record and prefer to vote your shares at the Annual
Meeting, you should bring the enclosed proxy card or proof of identification.
You may vote shares held in street name at the Annual Meeting only if you obtain
a signed proxy from the record holder (broker or other nominee) giving you
the
right to vote the shares.
-2-
Even
if
you plan to attend the Annual Meeting, we encourage you to vote in advance
by
proxy card so your vote will be counted even if you later decide not to attend
the Annual Meeting.
May
shareholders ask questions at the meeting?
Yes.
Representatives of the Company will answer shareholders’ questions of general
interest at the end of the meeting. In order to give a greater number of
shareholders an opportunity to ask questions, individuals or groups will be
allowed to ask only one question and no repetitive or follow-up questions will
be permitted.
What
does it mean if I receive more than one proxy card?
It
generally means you hold shares registered in more than one account. To ensure
that all your shares are voted, sign and return each proxy card.
May
I change my vote?
Yes.
If
you vote by mail, you may later change your vote and revoke your proxy card
by:
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Sending
a written statement to that effect to the Secretary of the Company
on or
before February 13, 2007;
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Submitting
a properly signed proxy card with a later date;
or
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Voting
in person at the Annual Meeting.
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PROPOSAL
1 - ELECTION OF DIRECTORS
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Nominees
Our
board
of directors currently consists of seven members. The
board
has nominated the following seven members for re-election to the board of
directors at the 2007 Annual Meeting: Roger E. Girard, David J. Swanberg, Dwight
Babcock, Stephen R. Boatwright, Robert Kauffman, Thomas LaVoy and Albert Smith.
All seven nominees currently are directors of the Company. If elected as a
director at the Annual Meeting, each of the nominees would serve a one-year
term
expiring at the 2008 Annual Meeting of Shareholders and until his or her
successor has been duly elected and qualified. There are no family relationships
among our directors or our executive officers.
Each
of
the nominees has consented to serve as a director if elected. If any of the
nominees should be unavailable to serve for any reason (which is not
anticipated), the board of directors may designate a substitute nominee or
nominees (in which event the persons named on the enclosed proxy card will
vote
the shares represented by all valid proxy cards for the election of such
substitute nominee or nominees), allow the vacancies to remain open until a
suitable candidate or candidates are located, or by resolution provide for
a
lesser number of directors or fill the position.
The
board of directors unanimously recommends that the shareholders vote “FOR”
Proposal No. 1 to elect Roger E. Girard, David J. Swanberg, Dwight Babcock,
Stephen R. Boatwright, Robert Kauffman, Thomas LaVoy and Albert Smith as
directors for a one year term expiring at the 2008 Annual Meeting of
Shareholders and until their successors have been duly elected and qualified.
Directors
and Executive Officers
Set
forth
below is certain information as of January 5, 2007 regarding our current
directors, nominees for director and executive officers, including biographical
information for all nominees for director and our executive officers.
Each
of
our directors and executive officers took office in July 2005, except for Mr.
Babcock and Mr. Smith, who took office on March 31, 2006. Our Board of Directors
appoints our officers, and their terms of office are at the discretion of the
Board of Directors, except to the extent governed by an employment contract.
-3-
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Name
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Age
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Position
Held
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Roger
Girard
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63
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Chairman,
President, CEO (Nominee for Director)
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Jonathan
Hunt
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39
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Chief
Financial Officer - Treasurer
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David
Swanberg
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50
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Executive
Vice President - Operations and Corporate Secretary, Director (Nominee
for
Director)
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Robert
Kauffman
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65
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Director
(Nominee for Director)
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Thomas
LaVoy
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46
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Director
(Nominee for Director)
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Stephen
Boatwright
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43
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Director
(Nominee for Director)
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Dwight
Babcock
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58
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Director
(Nominee for Director)
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Albert
Smith
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62
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Director
(Nominee for Director)
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Roger
Girard - In addition to serving as President, Chairman and CEO for the Company,
Mr. Girard is also the CEO, President and Chairman of the Board of IsoRay
Medical, Inc., and has served in these positions since the formation of IsoRay
Medical, Inc. Mr. Girard was CEO and Chairman of IsoRay’s predecessor company
from August of 2003 until October 1, 2004. Mr. Girard has been actively involved
in the management and the development of the management team at IsoRay, and
his
experienced leadership has helped drive IsoRay’s development to date. From June
1998 until August of 2003, Mr. Girard served as President of Strategic Financial
Services, a business consulting company based in Seattle, Washington designed
to
help wealthy individuals and companies with strategic planning and financial
strategy. Strategic Financial Services previously provided its services to
a
medical device company. Mr. Girard served as its sole employee. Mr. Girard also
served as the managing partner for the Northwest office of Capital Consortium,
another business consulting company based in Seattle, during this time. Capital
Consortium employed four people and analyzed business market potential for
start-ups and early stage companies. Mr. Girard has knowledge, experience and
connections to private, institutional and public sources of
capital and is experienced in managing and designing capital structures for
business organizations as well as organizing and managing the manufacturing
process, distribution, sales, and marketing, based on his 35 years of
experience.
Jonathan
Hunt - Mr. Hunt has over 10 years of finance and accounting experience,
including financial reporting, SEC knowledge, and operational analysis. Before
joining IsoRay earlier this year, he was employed by Hypercom Corporation,
a
global provider of electronic payment solutions and manufacturer of credit
card
terminals, serving as its Assistant Corporate Controller from 2005 to 2006.
His
finance background also includes serving as both a Manager and Director of
Financial Reporting and a Director of Operational Planning and Analysis for
Circle K Corporation and its affiliates from 2000 to 2005 and working for
PricewaterhouseCoopers LLP from 1992 to 1999 where his last position held was
Business Assurance Manager. Mr. Hunt holds Masters of Accountancy and Bachelor
of Science degrees from Brigham Young University and is a Certified Public
Accountant.
David
Swanberg
- Mr.
Swanberg has more than 22 years experience in engineering and materials science,
nuclear waste and chemical processing, aerospace materials and processes, and
environmental technology development and environmental compliance. Beginning
in
November 1995 and until January 2004, Mr. Swanberg was employed full time as
Sr.
Chemical/Environmental Engineer for Science Applications International
Corporation working on a variety of projects including nuclear waste research
and development. Mr. Swanberg joined IsoRay’s predecessor company in March of
1999 on a part-time basis and has held management positions in the IsoRay
companies since 2000. Mr. Swanberg began full-time employment with IsoRay in
February 2004. He has been instrumental in development of IsoRay’s initial
product, the Cs-131 brachytherapy seed, including interfaces with technical,
regulatory, and quality assurance requirements. With IsoRay and its predecessor
companies, he has managed the development and production of radioactive seeds
to
support testing to meet NRC and FDA requirements, provided technical guidance
for characterization of the IsoRay seed to meet AAPM Task Group 43 protocols,
and coordinated production and testing of non-radioactive seeds to conform
to
ISO standards for brachytherapy devices. He is President of the Nuclear Medicine
Research Council. He holds an MS in Chemical Engineering, is a licensed Chemical
Engineer, and a certified Level II Radiation Worker.
-4-
Robert
Kauffman - Mr. Kauffman has served as Chief Executive Officer and Chairman
of the Board of Alanco Technologies, Inc. (NASDAQ: ALAN), an Arizona-based
information technology company, since July 1, 1998. Mr. Kauffman was
formerly President and Chief Executive Officer of NASDAQ-listed Photocomm,
Inc.,
from 1988 until 1997 (since renamed Kyocera Solar, Inc.). Photocomm was the
nation’s largest publicly owned manufacturer and marketer of wireless solar
electric power systems with annual revenues in excess of $35 million. Prior
to
Photocomm, Mr. Kauffman was a senior executive of the Atlantic Richfield
Company (ARCO) whose varied responsibilities included Senior Vice President
of
ARCO Solar, Inc., President of ARCO Plastics Company and Vice President of
ARCO
Chemical Company. Mr. Kauffman earned an M.B.A. in Finance at the Wharton
School of the University of Pennsylvania, and holds a B.S. in Chemical
Engineering from Lafayette College, Easton, Pennsylvania.
Thomas
LaVoy - Mr. LaVoy has served as Chief Financial Officer of SuperShuttle
International, Inc., since July 1997 and as Secretary since March 1998.
SuperShuttle is one of the largest providers of shuttle services in major cities
throughout the West and Southwest regions of the United States. He has also
served as a director of Alanco Technologies, Inc. (NASDAQ: ALAN) since 1998.
From September 1987 to February 1997, Mr. Lavoy served as Chief Financial
Officer of NASDAQ-listed Photocomm, Inc. Mr. Lavoy was a Certified Public
Accountant with the firm of KPMG Peat Marwick from 1980 to 1983. Mr. Lavoy
has a
Bachelor of Science degree in Accounting from St. Cloud University, Minnesota,
and is a Certified Public Accountant.
Stephen
Boatwright - Mr. Boatwright has been a member of Keller Rohrback, PLC in
Phoenix, Arizona since January 2005. From 1997 through January 2005,
Mr. Boatwright was a partner at Gammage & Burnham, PLC, also in
Phoenix, Arizona. Throughout his career, he has provided legal counsel to both
private and public companies in many diverse industries. In recent years,
Mr. Boatwright’s legal practice has focused on representing technology,
biotechnology, life science and medical device companies for their securities,
corporate and intellectual property licensing needs. Mr. Boatwright earned
both a J.D. and an M.B.A. from the University of Texas at Austin, and holds
a
B.A. in Philosophy from Wheaton College.
Dwight
Babcock - Mr. Babcock has served as Chairman and Chief Executive Officer of
Apex
Data Systems, Inc. an information technology company, since 1975. Apex Data
Systems automates the administration and claims adjudication needs of insurance
companies both nationally and internationally. Mr. Babcock was formerly
President and CEO of Babcock Insurance Corporation (BIC) from 1974 until 1985.
BIC was a nationally recognized Third Party Administrator operating within
35
states. Mr. Babcock has knowledge and experience in the equity arena and has
participated in various activities within the venture capital, private and
institutional capital markets. Mr. Babcock studied marketing and economics
at
the University of Arizona where he currently serves on the University of Arizona
Astronomy Board.
Albert
Smith - Mr. Smith was the co-founder of and served as Vice Chairman of CSI
Leasing, Inc., a private computer leasing company from 1972 until March 2005.
He
founded Extreme Video, LLC a private video conferencing company in Scottsdale,
Arizona in December 2005 where he presently serves as CEO and President. Mr.
Smith presently serves as a director for Center for Arizona Policy (Scottsdale)
and Doulos Ministries (Denver). Mr. Smith has extensive experience in marketing
and sales having managed a national sales force of over fifty people while
at
CSI Leasing, Inc. Mr. Smith has a BS in Business Administration from Ferris
State College.
Significant
Employees
Certain
significant employees of our subsidiary, IsoRay Medical, Inc., and their
respective ages as of the date of this Prospectus are set forth in the table
below. Also provided is a brief description of the experience of each
significant employee during the past five years.
-5-
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Name
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Age
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Position
Held
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Lori
Woods
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44
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Vice
President
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Lane
Bray
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78
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Chemist
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Garrett
Brown
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43
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Chief
Technology Officer
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Oleg
Egorov
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36
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Director
of Radiochemical Development
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Lisa
Mayfield
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37
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Director
of Operations
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Fredric
Swindler
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59
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VP,
Regulatory Affairs and Quality
Assurance
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Lori
Woods - Ms. Woods joined the Company in July 2006 and has over 20 years
experience in medical device technology and healthcare services. Ms. Woods
served as the CEO of Pro-Qura, a medical services company focusing on
brachytherapy quality assurance and education, from 2002 until joining the
Company. During her tenure at Pro-Qura, Ms. Woods developed its business
strategy, expanded its business portfolio in quality assurance beyond prostate
brachytherapy into other areas of cancer, and increased funding by 50%. Prior
to
this, she served as the Vice President of Sales at ATI Medical in 2002, Vice
President of Sales - West and Vice President of Marketing and Business
Development for Imagyn Medical Technologies from 2000 to 2002, Director of
Business Development for Seattle Prostate Institute from 1998 to 2000, and
Regional Vice President and Regional Manager of Interdent from 1994 to 1998.
Ms.
Woods holds a Bachelor of Science degree in Business Administration - Marketing
from Loma Linda University.
Lane
Bray
- Mr. Bray is known nationally and internationally as a technical expert in
separations, recovery, and purification of isotopes and is a noted authority
in
the use of cesium and strontium ion exchange for Department of Energy’s West
Valley and Hanford nuclear waste cleanup efforts. In 2000, Mr. Bray
received the ’Radiation Science and Technology’ award from the American Nuclear
Society. Mr. Bray has authored or co-authored over 110 research
publications, 12 articles for 9 technical books, and holds 24 U.S. and foreign
patents. Mr. Bray patented the USDOE/PNNL process for purifying medical
grade Yttrium-90 that was successfully commercialized in 1999. Mr. Bray
also recently invented and patented the proprietary isotope separation and
purification process that is assigned to IsoRay. Mr. Bray was elected
’Tri-Citian of the Year’ in 1988, nominated for ’Engineer of the Year’ by the
American Nuclear Society in 1995, and was elected ’Chemist of the Year for 1997’
by the American Chemical Society, Eastern Washington Section. Mr. Bray
retired from the Pacific Northwest National Laboratory in 1998. Since retiring
in 1998, Mr. Bray worked part time for PNNL on special projects until
devoting all of his efforts to IsoRay in 2004. Mr. Bray has been a
Washington State Legislator, a Richland City Councilman, and a Mayor of
Richland. Mr. Bray has a B.A. in Chemistry from Lake Forest
College.
Garrett
Brown - Dr. Brown was Manager of Radiochemistry - Hot Cell Operations for
International Isotopes, Inc., a major radiopharmaceutical and medical device
startup company, from January 1998 until May 1999 and was instrumental in
bringing a new brachytherapy seed implant device to commercialization.
Dr. Brown’s responsibilities included hands-on radiological work in fume
hoods, glove boxes and remote manipulator hot cells, process definition,
research, development, installation, optimization, waste minimization, procedure
documentation, facility design and training. Dr. Brown also served as the
technical interface to executive management for business development,
shipping/receiving, QA/QC, facilities and marketing/sales. Prior to that,
Dr. Brown, as a Senior Research Scientist at the Pacific Northwest National
Laboratory, was responsible for the weekly production of multi-Curie quantities
of medical grade Y-90, and research programs to develop high tech sorbents
for
separation of Cs-137, Sr-90 and Tc-99 from high-level radioactive wastes stored
at the Hanford Nuclear Reservation. From May 1999 to 2003, Dr. Brown was a
technical consultant with GNB Technical Consultants. Dr. Brown has
co-authored numerous technical publications in the field. Dr. Brown has a
Ph.D. in Analytical Chemistry and BS in Chemistry, cum laude. He has served
as
IsoRay’s Chief Technical Officer since May of 2000. In March 2004,
Dr. Brown was certified as a Radiation Safety Officer.
-6-
Oleg
Egorov - Dr. Egorov is recognized nationally and internationally for his work
in
radiochemistry, radioanalytical chemistry, analytical chemistry and
instrumentation. Prior to joining IsoRay in December of 2005 as Director of
Radiochemical Development, Dr. Egorov worked from May 1998 as a Senior Research
Scientist at the Pacific Northwest National Laboratory (PNNL). Prior to that
time, he served the Environmental Molecular Sciences Laboratory at PNNL as
a
Graduate Research Fellow, from August 1994 to May 1998, and as a Graduate
Research Assistant to the University of Washington’s Center for Process
Analytical Chemistry from September 1992 to August 1993. Former positions
included a tenure as a Research Engineer at the Department of Radiochemistry
at
the Moscow State University, Moscow, Russia between September 1998 to August
1992, and Field Chemist at the Institute of Volcanology, at the Russian Academy
of Science at Petropavlovsk-Kamchatsky, Russia, during the summers of 1989
and
1990 concurrent to studies that lead to his acquisition of Master of Science
in
Radiochemistry from the Moscow State University. During his tenure at PNNL,
Dr.
Egorov had led world-class basic and applied R&D programs directed at new
chemistries and instrumentation for automated production of short-lived medical
isotopes for the treatment of cancer, automated process monitoring, radionuclide
sensors for groundwater monitoring, and laboratory automation. Dr. Egorov
pioneered the application of flow-based techniques for automating radiochemical
analyses of nuclear wastes, renewable surface sensing and separations, and
equilibration-based radionuclide sensing. He has authored/co-authored numerous
peer-reviewed publications in these areas, including several book chapters.
Dr.
Egorov holds four U.S./international patents, three of which have been licensed
to industry. Dr. Egorov was a recipient of numerous outstanding performance
and
key contributor awards. In 2003, Dr. Egorov was nominated for the American
Chemical Society Arthur F. Findeis Award for Achievements by a Young Analytical
Scientist. In 2004, Dr. Egorov was a recipient of a Federal Laboratory
Consortium Award for Excellence in Technology Transfer for “Alpha Particle
Immunotherapy for Treating Leukemia and Solid-Tumor Metastases”. Dr. Egorov
holds a M.S. in Radiochemistry from Moscow State University, Moscow, Russia;
a
M.S. in Environmental and Analytical Chemistry and a Ph.D. in Analytical
Chemistry from the University of Washington.
Lisa
Mayfield - Lisa Mayfield has over ten years of commercial healthcare sales,
marketing and business development experience. Between December 1993 and August
2004, Ms. Mayfield has held senior management positions in the pharmaceutical
and medical device and diagnostics sectors of Johnson & Johnson as well as
at J&J Corporate. During her time at J&J and prior to joining IsoRay in
December 2005, Ms. Mayfield was responsible for implementing positive business
results in over 11 different therapeutic markets. After leaving J&J and
prior to joining IsoRay, Ms. Mayfield worked as a consultant to various
healthcare companies in the radioisotope and oncology markets. As a result
of
her exposures, Ms. Mayfield has built a wealth of knowledge about the healthcare
marketplace as a whole and complements this knowledge with a comprehensive
understanding of internal operations. Ms. Mayfield has been responsible for
best
practices for product development, branding, forecasting, regulatory compliance,
reimbursement and strategic planning. During her time at IsoRay, Ms. Mayfield
has been able to successfully implement new policies and procedures that
facilitate growth as well as provide top level guidance over strategic business
operations. Ms. Mayfield is acting Director of Operations at IsoRay. Ms.
Mayfield holds a Bachelors of Science in Economics from the University of
Washington.
Fredric
Swindler - Mr. Swindler joined the Company in October 2006 and has over 30
years
experience in manufacturing and regulatory compliance. Mr. Swindler served
as
VP, Quality Assurance and Regulatory Affairs for Medisystems Corporation, a
manufacturer and distributor of medical devices, from 1994 until joining the
Company. During his tenure at Medisystems Corporation, Mr. Swindler developed
a
quality system to accommodate vertically integrated manufacturing, developed
regulatory strategies, policies and procedures, and submitted nine pre-market
notifications (510(k)) to the FDA. Prior to this, Mr. Swindler held various
positions with Marquest Medical Products from 1989 to 1994, Sherwood Medical
Products from 1978 to 1989, Oak Park Pharmacaceuticals in 1978, and Mead Johnson
& Company from 1969 to 1978. Mr. Swindler holds a Bachelor of Science degree
in Biomedical Engineering from Rose Hulman Institute of Technology and a Masters
of Business Administration from the University of Evansville.
Board
Committees and Annual Meetings
During
the year ended June 30, 2006, the Board held six regular meetings. The Board
has
an Audit Committee, a Compensation Committee and a Nominations and Corporate
Governance Committee.
-7-
Audit
Committee. The
Audit
Committee is responsible to the Board for the areas of audit and compliance,
and
oversees the Company’s financial reporting process, including monitoring the
integrity of the financial statements and the independence and performance
of
the auditors and supervises the Company’s compliance with legal and regulatory
requirements. The Committee operates under a charter approved by the Board.
The
Audit Committee Charter is attached as Appendix A to this Proxy Statement.
The
current members of the Audit Committee, Mr. LaVoy (Chairman), Mr. Kauffman
and
Mr. Babcock, are “independent” directors within the meaning of Securities and
Exchange Commission (SEC) rules. The Board has determined that Mr. LaVoy and
Mr.
Kauffman are “audit committee financial experts” as defined under SEC
rules.
Compensation
Committee. The
Compensation Committee is responsible for establishing and reviewing the
compensation and employee benefit policies of the Company. The Committee
approves compensation of executive officers, and recommends the granting of
stock options. The Committee operates under a charter approved by the Board.
The
Company will provide a copy of the charter to shareholders upon request. The
members of the Compensation Committee are Mr. Babcock (Chairman) and Mr. Smith,
each of whom are “independent” directors within the meaning of SEC
rules.
Nominations
Committee. The
Nominations and Corporate Governance Committee consists of four directors who
are determined to be independent as defined by the SEC rules. All Directors
except Mr. Girard, Mr. Swanberg and Mr. Boatwright currently serve on the
Nominations and Corporate Governance Committee. The Committee provides
assistance to the Board by identifying qualified individuals as prospective
Board members. The Committee recommends to the Board of Directors the director
nominees for election at the annual meeting of shareholders. The Committee
oversees the annual review and evaluation of the performance of the Board and
its committees, and develops and recommends corporate governance guidelines
to
the Board of Directors. In addition, the Committee examines, evaluates, and
monitors the independence of directors for general Board positions as well
as
for specific committee duties; and evaluates specific qualifications for members
serving as audit committee financial experts. The Committee’s charter as
approved by the Board is attached as Appendix B.
The
Board
and its committees may retain outside advisors as they determine necessary
to
fulfill their responsibilities. All committees report their activities to the
full Board.
Each
Board member attended at least 75% of the aggregate meetings of the Board and
of
the Committees on which he or she served that were held during the period for
which he or she was a Board or Committee member.
The
following table summarizes the membership of the Board and each of its
committees, as well as the number of times each committee met during the fiscal
year ended June 30, 2006. As the Compensation Committee was established on
August 8, 2006 and the Nominations and Corporate Governance Committee was
established on December 12, 2006, no meetings of either committee were held
during our last fiscal year.
|
Board
|
Audit
|
Compensation
|
Nominations
|
|
|
Dwight
Babcock
|
Member
|
Member
|
Chair
|
Member
|
|
Stephen
R. Boatwright
|
Member
|
|||
|
Roger
E. Girard
|
Chair
|
|||
|
Robert
Kauffman
|
Member
|
Member
|
Member
|
|
|
Thomas
LaVoy
|
Member
|
Chair
|
Member
|
|
|
Albert
Smith
|
Member
|
Member
|
Chair
|
|
|
David
J. Swanberg
|
Member
|
|||
|
Number
of Meetings Held
in
Fiscal 2006
|
6
|
4
|
0
|
0
|
-8-
Report
of the Audit Committee of the Board of Directors
The
Audit
Committee consists of three outside directors, each of whom is determined to
be
financially literate and meets the independence standards for members of public
company audit committees set forth in SEC rules adopted under the Sarbanes-Oxley
Act of 2002. The Committee operates under a written charter adopted by the
Board. Committee members include independent directors Thomas LaVoy, (Chair),
Robert Kauffman and Dwight Babcock. Both Mr. LaVoy and Mr. Kauffman have each
been determined to be qualified as an Audit Committee financial expert as
defined in Item 401 of Regulation S-B.
The
Committee provides assistance to the Board in fulfilling its oversight
responsibilities relating to corporate accounting and reporting practices of
the
Company toward assurance of the quality and integrity of its consolidated
financial statements. The purpose of the Committee is to serve as an independent
and objective party to monitor the Company’s financial reporting process and
internal control system; oversee, review and appraise the audit activities
of
the Company’s independent auditors and internal auditing function, maintain
complete, objective and open communication between the Board, the independent
accountants, financial management, and the internal audit function. The Audit
Committee met four times during the 2006 fiscal year.
The
Company’s independent auditor reports directly to the Committee. The Audit
Committee is solely responsible to appoint or replace the Company’s independent
auditor, and to assure the independence and to provide oversight and supervision
thereof. The Committee determines compensation of the independent auditor and
has established a policy for approval of non-audit related engagements awarded
to the independent auditor. Such engagements must not impair the independence
of
the auditor with respect to the Company, as prescribed by the Sarbanes-Oxley
Act
of 2002; thus payment amounts are limited and non-audit related engagements
must
be approved in advance by the Committee. The Committee determines the extent
of
funding that the Company must provide to the Committee to carry out its duties,
and has determined that such amounts were sufficient in 2006.
With
respect to the fiscal year ended June 30, 2006, in addition to its other work,
the Committee:
|
·
|
Reviewed
and discussed with management the audited consolidated financial
statements of the Company as of June 30, 2006 and the year then ended;
|
|
·
|
Discussed
with DeCoria, Maichel & Teague, P.S. the matters required to be
discussed by Statement on Auditing Standards No. 61, “Communication with
Audit Committees,” as amended, with respect to its review of the findings
of the independent auditor during its examination of the Company’s
financial statements; and
|
|
·
|
Received
from DeCoria, Maichel & Teague, P.S. written affirmation of its
independence. In addition, discussed with the auditors the firm’s
independence and determined that the provision of non-audit services
was
compatible with maintaining auditor
independence.
|
The
Committee recommended, based on the review and discussion summarized above,
that
the Board include the audited consolidated financial statements in the Company’s
Annual Report on Form 10-KSB for the year ended June 30, 2006 for filing with
the SEC.
|
AUDIT
COMMITTEE
|
|
|
Thomas
LaVoy, Chair
|
|
|
Robert
Kauffman
|
|
|
Dwight
Babcock
|
-9-
Nomination
Process
The
Nominations and Corporate Governance Committee (the “Governance Committee”) is
the nominating committee of the Board. The Governance Committee is governed
by
the Company’s Articles of Incorporation and Bylaws with respect to the
nominations. The Governance Committee is responsible for selecting nominees
for
election to the Board. The Governance Committee will consider nominations from
shareholders, provided that such nominations are received by the Company’s
Secretary in accordance with the Articles of Incorporation, the Bylaws, and
the
date set in the prior year’s Proxy Statement for the Annual Meeting of
Shareholders.
The
Governance Committee will perform the following duties with respect to director
nominations: (a) consider the criteria for identifying and selecting individuals
who may be nominated for election to the Board; (b) determine the slate of
nominees for election to the Board; (c) as the need arises, fill vacancies
and
actively seek individuals qualified to become Board members; and (d) consider
shareholder nominations for the Board when properly submitted in accordance
with
the Company’s Articles of Incorporation and Bylaws.
The
Governance Committee will consider candidates for the Board who are recommended
by its members, other Board members, shareholders and management, as well as
those identified by a third party search firm the Company may retain to assist
in identifying and evaluating possible candidates. The Committee evaluates
candidates recommended by shareholders in the same manner that it evaluates
other candidates. The Committee’s evaluations will be based upon several
criteria, including their broad-based business and professional skills and
experiences; commitment to representing the long-term interests of shareholders;
an inquisitive and objective perspective; the willingness to take appropriate
risks; leadership ability; personal and professional ethics; personal integrity
and judgment; and practical wisdom and sound judgement. Candidates should have
reputations, both personal and professional, consistent with the Company’s image
and reputation.
At
a
minimum, the majority of directors on the Board should be “independent,” not
only as that term may be legally defined, but also without the appearance of
any
conflict in serving as a director. In addition, directors must have time
available to devote to Board activities and to enhance their knowledge of the
medical isotope industry. Accordingly, the Governance Committee seeks to attract
and retain highly qualified directors who have sufficient time to attend to
their substantial duties and responsibilities to the Company.
The
Governance Committee will utilize the following process for identifying and
evaluating nominees to the Board. In the case of incumbent directors whose
terms
of office are set to expire, the Governance Committee will review such
directors’ overall service to the Company during their term, including the
number of meetings attended, level of participation and quality of performance.
In the case of new director candidates, the members of the Governance Committee
will be polled for suggestions as to potential candidates that may meet the
criteria above, discuss candidates suggested by Company shareholders and may
also engage, if the Board deems appropriate, a professional search firm. To
date, the Board and the Governance Committee have not engaged professional
search firms to identify or evaluate potential nominees but may do so in the
future, if necessary. The Governance Committee will then meet to discuss and
consider these candidates’ qualifications and then choose a candidate by
majority vote.
Directors’
Compensation
Since
July 28, 2005, we have paid our directors who are not employees of the Company
a
director’s fee of $1,000 per Annual Meeting attended, plus expenses. We also
granted each non-employee director immediately exercisable options to purchase
100,000 shares of our common stock during the fiscal year ended June 30, 2006.
Robert Kauffman, Thomas LaVoy and Stephen Boatwright each received 100,000
options at an exercise price of $2.00 per share. Dwight Babcock and Al Smith
each received 100,000 options, 50,000 of which are exercisable at $6.30 per
share and 50,000 of which are exercisable at $3.80 per share.
-10-
Code
of Ethics
We
have
adopted a Code of Conduct and Ethics that applies to all of our officers,
directors and employees and a separate Code of Ethics for Chief Executive
Officer and Senior Financial Officers that supplements our Code of Conduct
and
Ethics. The Code of Conduct and Ethics was previously filed as Exhibit 14.1
to
our Form 10-KSB for the period ended June 30, 2006, and the Code of Ethics
for
Chief Executive Officer and Senior Financial Officers was previously filed
as
Exhibit 14.2 to this same report. The Code of Ethics for Chief Executive Officer
and Senior Financial Officers is also available to the public on our website
at
http://www.isoray.com/ethicsForCeo.htm. Each of these policies comprises written
standards that are reasonably designed to deter wrongdoing and to promote the
behavior described in Item 406 of Regulation S-B promulgated by the Securities
and Exchange Commission. Each of these policies was adopted during our fiscal
year ended June 30, 2006.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
|
The
following tables set forth certain information regarding the beneficial
ownership of the Company’s common stock and preferred stock as of January 5,
2007 for (a) each person known by the Company to be a beneficial owner of five
percent or more of the outstanding common or preferred stock of the Company,
(b)
each executive officer, director and nominee for director of the Company, and
(c) directors and executive officers of the Company as a group. As of January
5,
2007, the Company had 16,296,045 shares of common stock and 77,080 shares of
preferred stock outstanding.
|
Name
and Address of Beneficial Owner (1)
|
Amount
of Common Shares Owned
|
Derivative
Securities Exercisable or Convertible Within 60 Days of January 5,
2007
|
Total
Common Shares Beneficially Owned
|
Percent
of Common Shares Owned(2)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
Roger
Girard, Chief Executive Officer, President and Chairman
|
|
368,534
|
|
513,840
|
|
882,374
|
|
5.25
|
%
|
|
Jonathan
Hunt, Chief Financial Officer
|
--
|
--
|
--
|
--
|
%
|
||||
|
Michael
Dunlop, Former Chief Financial Officer
|
|
164,050
|
|
95,000
|
|
259,050
|
|
1.58
|
%
|
|
David
Swanberg, Executive Vice President and Director(3)
|
|
324,327
|
|
162,167
|
|
486,494
|
|
2.96
|
%
|
|
Robert
Kauffman, Director
|
|
43,802
|
|
150,000
|
|
193,802
|
|
1.18
|
%
|
|
Thomas
LaVoy, Director
|
|
8,423
|
|
150,000
|
|
158,423
|
|
0.96
|
%
|
|
Stephen
Boatwright, Director(4)
|
|
--
|
|
210,000
|
|
210,000
|
|
1.27
|
%
|
|
Dwight
Babcock, Director(5)
|
61,002
|
162,500
|
223,502
|
1.36
|
%
|
||||
|
Albert
Smith, Director
|
108,947
|
162,500
|
271,447
|
1.65
|
%
|
||||
|
Thomas
K. Scallen, Former Chief Executive Officer(6)
|
|
50,000
|
|
--
|
|
50,000
|
|
0.31
|
%
|
|
MicroCapital
Fund LP and MicroCapital Fund Ltd(7)
|
1,200,000
|
1,000,000
|
2,200,000
|
12.72
|
%
|
||||
|
All
Officers and Directors as a group (8 persons)
|
|
915,035
|
|
1,511,007
|
|
2,426,042
|
|
13.62
|
%
|
-11-
|
(1)
|
Except
as otherwise noted, the address for each of these individuals is
c/o
IsoRay, Inc., 350 Hills St., Suite 106, Richland, Washington
99354.
|
|
(2)
|
Percentage
ownership is based on 16,296,045 shares of Common Stock outstanding
on
January 5, 2007. Shares of Common Stock subject to stock options,
warrants
or convertible debentures which are currently exercisable/convertible
or
will become exercisable/convertible within 60 days after January
5, 2007
are deemed outstanding for computing the percentage ownership of
the
person or group holding such options, but are not deemed outstanding
for
computing the percentage ownership of any other person or
group.
|
|
(3)
|
Mr.
Swanberg’s options include 6,667 owned by his
spouse.
|
|
(4)
|
Mr.
Boatwright’s options include 60,000 options held by an entity controlled
by Mr. Boatwright.
|
|
(5)
|
Mr.
Babcock’s common shares include 2,695 shares owned by his
spouse.
|
|
(6)
|
Mr.
Scallen’s address is 4701 IDS Center, Minneapolis, MN
55302.
|
|
(7)
|
MicroCapital
Fund LP and MicroCapital Fund Ltd’s address is 1285 Avenue of the
Americas, New York, NY 10019.
|
Preferred
Stock Share Ownership as of January 5, 2007
|
Name
and Address of Beneficial Owner
|
|
Amount
of Preferred Shares Owned
|
|
Options
or Warrants Exercisable Within 60 Days of January 5,
2007
|
|
Total
Preferred Shares Beneficially Owned
|
|
Percent
of Preferred Shares Owned(1)
|
|
|
|
|
|
|
|
|
|
|
||
|
Aissata
Sidibe(2)
|
|
20,000
|
|
--
|
|
20,000
|
|
25.95
|
%
|
|
Daniel
MacKay(3)
|
18,015
|
--
|
18,015
|
23.37
|
%
|
||||
|
William
and Karen Thompson Trust(4)
|
14,218
|
--
|
14,218
|
18.45
|
%
|
||||
|
Jamie
Granger(5)
|
10,529
|
--
|
10,529
|
13.66
|
%
|
||||
|
Hostetler
Living Trust(6)
|
9,479
|
--
|
9,479
|
12.30
|
%
|
||||
|
(1)
|
Percentage
ownership is based on 77,080 shares of Preferred Stock outstanding
on
January 5, 2007. Shares of Preferred Stock subject to stock options
or
warrants which are currently exercisable or will become exercisable
within
60 days after January 5, 2007 are deemed outstanding for computing
the
percentage ownership of the person or group holding such options,
but are
not deemed outstanding for computing the percentage ownership of
any other
person or group.
|
|
(2)
|
The
address of Ms. Sidibe is 229 Lasiandra Ct, Richland, WA
99352.
|
|
(3)
|
The
address of Mr. MacKay is 4041 NW Sierra Drive, Camas, WA
98607.
|
|
(4)
|
The
address of the William and Karen Thompson Trust is 285 Dondero Way,
San
Jose, CA 95119.
|
|
(5)
|
The
address of Jamie Granger is 53709 South Nine Canyon Road, Kennewick,
WA
99337.
|
|
(6)
|
The
address of the Hostetler Living Trust is 9257 NE 175th
Street, Bothell, WA 98011.
|
No
officers or directors beneficially own shares of Preferred Stock.
|
COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE
ACT
|
Section
16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the
Company’s directors and executive officers, and persons who beneficially own
more than ten percent of a registered class of our equity securities, to file
with the Securities and Exchange Commission (the “Commission”) initial reports
of beneficial ownership and reports of changes in beneficial ownership of our
Common Stock. The rules promulgated by the Commission under Section 16(a) of
the
Exchange Act require those persons to furnish us with copies of all reports
filed with the Commission pursuant to Section 16(a). The information in this
section is based solely upon a review of Forms 3, Forms 4, and Forms 5 received
by us.
-12-
We
believe that IsoRay’s executive officers, directors and 10% shareholders timely
complied with their filing requirements during the year ended June 30, 2006
except as follows: Roger Girard (one Form 3), Robert Kauffman (one Form 3 and
one Form 4), John Hrobsky (one Form 3), Karen Thompson (one Form 3), Stephen
Boatwright (one Form 4), Thomas LaVoy (one Form 4), Michael Dunlop (one Form
4),
David Swanberg (one Form 4), Dwight Babcock (one Form 3 and one Form 4), and
Albert Smith (one Form 3 and one Form 4). We believe all of these forms had
been
filed as of the date of our annual report.
EXECUTIVE
COMPENSATION
The
following summary compensation table sets forth information concerning
compensation for services rendered in all capacities during our past three
fiscal years awarded to, earned by or paid to each of the following executive
officers (the “Executive Officers”). None of the Company’s executive officers,
other than those listed below, received compensation in fiscal year 2006 in
excess of $100,000.
|
Annual
Compensation
|
Long-Term
Compensation Awards
|
||||||||||||||||
|
Name
and Principal Position
|
Fiscal
Year(1)
|
Salary
|
|
Bonus
|
Restricted
Stock Awards
|
Securities
Underlying Options
|
All
Other
Compensation
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Roger
Girard, Chief Executive Officer(5)
|
2006
|
|
$
|
199,231
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
|||||
|
2005
|
|
$
|
113,958
|
--
|
|
|
--
|
|
|
--
|
|
|
--
|
||||||
|
2004
|
|
$
|
71,031
|
--
|
|
$
|
9,900
|
|
|
513,840
|
|
|
--
|
|
|||||
|
Thomas
Scallen, Former Chief Executive Officer(2)
|
2006
|
|
|
--
|
--
|
|
|
--
|
|
|
--
|
|
--
|
||||||
|
|
2005
|
|
|
--
|
--
|
|
|
--
|
|
|
--
|
|
$
|
50,000
|
(3)
|
||||
|
|
2004
|
|
|
--
|
--
|
|
$
|
7,871
|
(4)
|
|
--
|
|
|
--
|
|
||||
|
David
Swanberg, Executive Vice President - Operations
|
2006
|
$
|
120,000
|
$
|
25,000
|
--
|
150,000
|
--
|
|||||||||||
|
2005
|
$
|
54,746
|
--
|
--
|
|
|
--
|
|
|
--
|
|||||||||
|
2004
|
$
|
32,515
|
--
|
--
|
|
|
--
|
|
|
--
|
|||||||||
|
Barry
Griffiths, Former Western Area Director -
|
2006
|
$
|
124,800
|
$
|
55,000
|
--
|
--
|
--
|
|||||||||||
|
Sales
& Marketing
|
2005
|
$
|
79,241
|
$
|
52,500
|
--
|
252,708
|
--
|
|||||||||||
|
2004
|
$
|
15,000
|
--
|
--
|
--
|
--
|
|||||||||||||
|
Curtis
Ellis, Midwest Area Director - Sales & Marketing
|
2006
|
$
|
168,115
|
$
|
39,125
|
--
|
84,236
|
--
|
|||||||||||
|
2005
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||
|
2004
|
--
|
--
|
--
|
--
|
--
|
||||||||||||||
-13-
|
(1)
|
Fiscal
year 2006 consisted of the period from July 1, 2005 to June 30, 2006;
fiscal year 2005 consisted of the period from October 1, 2004 through
June
30, 2005; and, fiscal year 2004 consisted of the year ended September
30,
2004.
|
|
(2)
|
Mr. Scallen
served as our Chief Executive Officer during the listed fiscal years
and
until his resignation effective July 28,
2005.
|
|
(3)
|
Represents
a $50,000 cash payment in June 2005 to Mr. Scallen in settlement of
all accrued but unpaid
compensation.
|
|
(4)
|
Represents
the issuance of 787,100 shares of restricted common stock as compensation
associated with the conversion of the outstanding notes payable and
accrued interest payable. This transaction was valued at approximately
$7,781, which was equal to the “fair value” of the Company’s common stock
on the conversion date. The Company relied upon Section 4(2) of the
Securities Act of 1933, as amended, for an exemption from registration
for
this issuance.
|
|
(5)
|
Mr.
Girard did not begin serving as our CEO until July 28, 2005, but
he has
served as CEO of our subsidiary and its predecessor company since
August
2003. The compensation listed was paid to Mr. Girard by IsoRay or
its
predecessor company.
|
Option/SAR
Grants in Last Fiscal Year
The
following table sets forth information concerning grants of stock options to
the
Executive Officers during the fiscal year ended June 30, 2006.
|
Name
|
Number
of Securities Underlying Options
|
Percent
of Total Options Granted to Employees in Fiscal
Year
|
Exercise
Price ($/Share)
|
Expiration
Date
|
|
|
David
Swanberg
|
150,000
|
23.45%
|
$
|
1.00
|
8/18/2015
|
|
Curtis
Ellis
|
84,236
|
13.17%
|
$
|
4.15
|
8/01/2015
|
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The
following table sets forth the number of shares covered by unexercised stock
options held by the Executive Officers as of June 30, 2006, and the value of
“in-the-money” stock options, which represents the positive spread between the
exercise price of a stock option or warrant and the market price of the shares
subject to such option or warrant as of June 30, 2006.
|
Number
of Shares Acquired on Exercise
|
Number
of Securities Underlying Unexercised Options at Fiscal
Year-End
|
Value
of Unexercised In-the-Money Options at Fiscal
Year-End
|
||||||||
|
Name
|
Value
Realized
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||
|
Roger
Girard
|
0
|
$
|
0
|
513,840
|
0
|
$
|
1,186,970
|
$
|
N/A
|
|
|
David
Swanberg
|
0
|
$
|
0
|
150,000
|
0
|
$
|
375,000
|
$
|
N/A
|
|
|
Barry
Griffiths
|
0
|
$
|
0
|
84,236
|
168,472
|
$
|
194,585
|
$
|
389,170
|
|
|
Curtis
Ellis
|
0
|
$
|
0
|
0
|
84,236
|
$
|
N/A
|
$
|
N/A
|
|
Employment
Agreements
The
Company entered into an employment agreement with Roger Girard, its Chief
Executive Officer, effective October 6, 2005 (the “Girard Agreement”). The term
of the Girard Agreement is through October 6, 2009, and will automatically
extend for an additional one year term on each anniversary date unless the
term
is modified or terminated in accordance with the terms of the Girard Agreement
at least ninety days prior to a given anniversary date. The Girard Agreement
provides for a base salary of $300,000 which was effective July 1, 2006. Mr.
Girard is also entitled to participate in any benefit plans provided to key
executives of the Company, and to a bonus at the discretion of the Board of
Directors.
The
Company has not entered into employment agreements with any other officers
as of
the date of this filing.
-14-
EQUITY
COMPENSATION PLAN INFORMATION
On
May
27, 2005, the Company adopted the 2005 Stock Option Plan (the “Option Plan”) and
the 2005 Employee Stock Option Plan (the “Employee Plan”), pursuant to which it
may grant equity awards to eligible persons. On August 15, 2006, the Company
adopted the 2006 Director Stock Option Plan (the “Director Plan”) pursuant to
which it may grant equity awards to eligible persons. The Option Plan allows
the
Board of Directors to grant options to purchase up to 1,800,000 shares of common
stock to directors, officers, key employees and service providers of the
Company, and the Employee Plan allows the Board of Directors to grant options
to
purchase up to 2,000,000 shares of common stock to officers and key employees
of
the Company. The Director Plan allows the Board of Directors to grant options
to
purchase up to 1,000,000 shares of common stock to directors of the Company.
Options granted under all of the Plans have a ten year maximum term, an exercise
price equal to at least the fair market value of the Company’s common stock
(based on the trading price on the OTC Bulletin Board) on the date of the grant,
and with varying vesting periods as determined by the Board.
As
of
June 30, 2006, the following options had been granted under the option
plans.
|
Plan
Category
|
|
Number
of securities to be issued on exercise of outstanding options, warrants
and rights
#
|
Weighted-average
exercise price of outstanding options, warrants, and rights
$
|
Number
of securities remaining available for future issuance under equity
compensation plans
|
|
|||||
|
Equity
compensation plans approved by shareholders
|
|
|
N/A
|
N/A
|
N/A
|
|
||||
|
Equity
compensation plans not approved by shareholders
|
|
|
3,257,592
|
$
|
2.11
|
333,982
|
|
|||
|
Total
|
|
|
3,257,592
|
$
|
2.11
|
333,982
|
|
|||
TRANSACTIONS
WITH MANAGEMENT AND OTHERS
Through
June 30, 2005, the Company’s former Chief Executive Officer, Thomas K. Scallen,
advanced the Company an aggregate of approximately $44,500 to support
operations, settle outstanding trade accounts payable and provide working
capital. The advance was repayable upon demand and was non-interest bearing
and
was unsecured. Effective June 30, 2005, with the anticipation of the
consummation of the reverse acquisition transaction with IsoRay Medical, Inc.,
as previously discussed, these advances were forgiven and reclassified as
additional paid-in capital in the accompanying financial statements as of that
date.
Mr. Stephen
Boatwright, a Company director, has been actively involved in providing various
legal services to the Company, IsoRay Medical, Inc. and IsoRay Medical, Inc.’s
predecessors through the law firms of Gammage and Burnham and Keller Rohrback,
PLC. From September 2004 until January 2005, Gammage and Burnham received
approximately $141,000 as payment for legal services performed for IsoRay
Medical, Inc. and its predecessors. From February 2005 though June 30, 2005,
IsoRay Medical, Inc. paid Keller Rohrback, PLC approximately $144,000 for legal
services. During the fiscal year ended June 30, 2006, the Company paid Keller
Rohrback, PLC approximately $390,000 for legal services. In addition, the
Company had accrued at June 30, 2006 approximately $77,000 in legal fees to
be
paid. In exchange for consulting services including providing advice to IsoRay
Medical, Inc. as to the structure of organization and compensation arrangements
with employees and also in connection with developing various policies and
procedures, Quatsch Ventures, LLC, an entity controlled by Mr. Boatwright,
received options to purchase 84,236 shares of our common stock in 2004.
-15-
IsoRay
Medical, Inc.’s patent rights to its Cesium-131 process were acquired from Lane
Bray, a shareholder of the Company, and are subject to a 1% royalty on gross
profits and certain contractual restrictions. Pursuant to the royalty agreement,
the Company must also pay a royalty of 2% of Gross Sales, as defined, for any
sub-assignments of the aforesaid patented process to any third parties. The
royalty agreement will remain in force until the expiration of the patents
on
the assigned technology, unless earlier terminated in accordance with the terms
of the underlying agreement. To date, there have been no product sales
incorporating the technology and there is no royalty due pursuant to the terms
of the agreement.
On
January 16, 2005, in addition to certain other shareholders, the following
officers and directors (including certain now-former officers) of the Company
were awarded shares of common stock for guaranteeing a loan with the Benton
Franklin Economic Development District (“BFEDD”) in the amount of $230,000,
which was funded in December 2004, and a line of credit with Columbia River
Bank
in the amount of $395,000: Michael Dunlop guaranteed $15,000 of the BFEDD loan
and $30,000 of the Columbia River Bank line of credit, for which he received
12,888 post-merger shares; Roger Girard guaranteed $20,000 of the BFEDD loan,
for which he received 5,728 post-merger shares; John Hrobsky guaranteed $15,000
of the Columbia River Bank line of credit, for which he received 4,296 post
merger shares; and David Swanberg guaranteed $30,000 of the Columbia River
Bank
line of credit, for which he received 8,592 post-merger shares. During fiscal
year 2006, certain original guarantors, including John Hrobsky, declined to
continue guaranteeing the loans and forfeited the shares which had been granted
to them. Due to this the following officers agreed to increase the amount of
their guarantees as follows: Michael Dunlop guaranteed an additional $5,000
of
the Columbia River Bank line of credit, for which he received an additional
1,432 common shares; and Roger Girard guaranteed an additional $105,000 of
the
Columbia River Bank line of credit, for which he received an additional 30,072
common shares.
On
May
27, 2005, the Company, Century Park Transitory Subsidiary, Inc., a Delaware
corporation, Thomas Scallen and Anthony Silverman (shareholders of the Company),
and IsoRay Medical, Inc., a Delaware corporation, entered into a Merger
Agreement. Pursuant to the Merger Agreement, Century Park Transitory Subsidiary,
Inc. was merged with and into IsoRay Medical, Inc. and IsoRay Medical, Inc.
became a wholly-owned subsidiary of the Company. The Merger Agreement was
subject to the satisfaction of certain conditions, including the granting of
certain “piggy-back” and demand registration rights to the purchasers of certain
convertible debentures of IsoRay Medical, Inc., Anthony Silverman and certain
other affiliates of the Company; the agreements of the officers and directors
of
IsoRay Medical, Inc. to lock-up the shares of common stock of the Company they
received in the merger for a period of one year from the closing of the merger;
the agreements of Thomas Scallen and Anthony Silverman to escrow certain shares
of common stock of the Company; and the receipt by IsoRay Medical, Inc. from
Anthony Silverman or his associates of one million dollars as the purchase
price
of certain securities of IsoRay Medical, Inc. before the closing. These
conditions were satisfied prior to the closing of the merger, which occurred
on
July 28, 2005.
The
Board
voted on July 28, 2005 to compensate each of the independent Directors $1,000
per Annual Meeting for their attendance at the Board Annual Meetings. On July
28, 2005, the Company’s Board of Directors granted 100,000 options to purchase
common stock to each of its three independent Directors: Thomas Lavoy, Stephen
Boatwright, and Robert Kauffman. On March 31, 2006 and June 30, 2006, the
Company’s Board of Directors granted a total of 100,000 options to purchase
common stock to its new independent Directors: Albert Smith and Dwight Babcock.
Directors who are also serving as management of the Company were not granted
stock options for Director service, and will not be paid for attendance at
Board
Annual Meetings.
-16-
During
2005, IsoRay Medical, Inc. paid or accrued $5,600 for accounting services
performed by a company owned by a member of the Board of Directors of IsoRay
Medical, Inc.
Effective
July 12, 1999, Lane Bray, a Member of IsoRay, LLC (and also a shareholder of
IsoRay, Inc.), assigned his right, title and interest in an invention (including
the U.S. patent application therefore and any associated patent rights) to
IsoRay, LLC in exchange for a royalty equal to 1% of the Gross Profit, as
defined, from the sale of “seeds” incorporating the technology. IsoRay, LLC also
agreed to pay all remaining costs associated with obtaining the patent. In
January 2000, IsoRay, LLC applied for the patent, which was subsequently granted
effective May 23, 2000. The patent and associated royalty obligation were
transferred to IsoRay, Inc. (WA domiciled) effective May 1, 2002 in connection
with a tax-free reorganization whereby IsoRay LLC ceased operations, and
assigned all assets and liabilities to IsoRay, Inc. (WA domiciled).
IsoRay
Inc. assigned this patent to IsoRay Products LLC, who assigned the patent to
IsoRay Medical, Inc. who, pursuant to the royalty agreement must also pay a
royalty of 2% of Gross Sales, as defined, for any sub-assignments of the
aforesaid patented process to any third parties. The royalty agreement will
remain in force until the expiration of the patents on the assigned technology,
unless earlier terminated in accordance with the terms of the underlying
agreement. To date, there have been no product sales incorporating the
technology and there is no royalty due pursuant to the terms of the
agreement.
Patent
and Know-How Royalty License Agreement
Effective
August 1, 1998, Pacific Management Associates Corporation (PMAC) transferred
its
entire right, title and interest in an exclusive license agreement with Donald
Lawrence to IsoRay, LLC (a predecessor company) in exchange for a membership
interest. The terms of the license agreement require the payment of a royalty
based on the Net Factory Sales Price, as defined in the agreement, of licensed
product sales. Because the licensor’s patent application was ultimately
abandoned, only a 1% “know-how” royalty based on Net Factory Sales Price, as
defined, remains applicable. To date, there have been no product sales
incorporating the licensed technology and there is no royalty due pursuant
to
the terms of the agreement. The Company believes that because this technology
is
not presently being used and believes it will not be used in the future that
no
royalties will be paid under this agreement.
PUBLIC
ACCOUNTING FIRM
The
Audit
Committee has re-appointed the firm of DeCoria, Maichel & Teague, P.S. to
serve as our independent registered public accounting firm for the year ending
June 30, 2007, and has directed that such re-appointment be submitted to our
shareholders for ratification at the Annual Meeting. If our shareholders do
not
ratify the re-appointment of DeCoria, Maichel & Teague, P.S., the Audit
Committee will reconsider the appointment.
Representatives
of DeCoria, Maichel & Teague, P.S. are expected to be present at the Annual
Meeting and will have an opportunity to make a statement if they desire to
do
so. They also will be available to respond to appropriate questions from
shareholders.
Audit
and Non-Audit Fees
Aggregate
fees for professional services rendered for the Company by DeCoria, Maichel
& Teague, P.S. as of or for the fiscal years ended June 30, 2006 and 2005
are set forth below. The aggregate fees included in the Audit category are
fees
billed for the
fiscal years for the audit of the Company’s annual financial statements and
review of financial statements. The aggregate fees included in each of the
other
categories are fees billed in the
fiscal years.
-17-
|
|
Fiscal Year
2006
|
Fiscal Year
2005
|
|||||
|
Audit
Fees
(1)
|
$
|
72,292
|
$
|
4,663
|
|||
|
Audit-Related
Fees
|
1,150
|
—
|
|||||
|
Tax
Fees
|
2,750
|
—
|
|||||
|
All
Other Fees
|
—
|
—
|
|||||
|
Total
|
$
|
76,192
|
$
|
4,663
|
|||
|
(1)
|
Fees
for the year ended June 30, 2006 were as follows: $49,125 paid to
DeCoria,
Maichel & Teague, P.S. and $23,167 paid to S. W. Hatfield,
CPA.
|
Audit
Fees for
the
fiscal years ended June 30, 2006 and 2005 were for professional services
rendered for the audits of the annual consolidated financial statements of
the
Company included in the Company’s Annual Report on Form 10-KSB and quarterly
review of the financial statements included in the Company’s Quarterly Reports
on Form 10-QSB. Audit
Fees for
the
fiscal year ended June 30, 2006 also included services related to one
registration statement on Form SB-2 and one registration statement on Form
S-8.
There
were no Audit-Related
Fees
paid for
the fiscal year ended June 30, 2005. During the fiscal year ended June 30,
2006,
Audit-Related
Fees
were
paid for review of private placement memoranda.
There
were no Tax
Fees
paid to
for the fiscal years ended June 30, 2005.
During
the fiscal year ended June 30, 2006, Tax
Fees
were
paid for the completion and filing of tax returns.
There
were no fees that fall into the classification of All
Other Fees
as of
the fiscal years ended June 30, 2006 and 2005.
Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
of
the Independent Registered Public Accounting Firm
As
specified in the Audit Committee charter, the Audit Committee pre-approves
all
audit and non-audit services provided by the independent registered public
accounting firm prior to the receipt of such services. Thus, the Audit Committee
approved 100% of the services set forth in the above table prior to the receipt
of such services and no services were provided under the permitted de
minimus
threshold provisions.
The
Audit
Committee of the board of directors has determined that the provision of these
services is compatible with the maintenance of the independence of DeCoria,
Maichel & Teague, P.S.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND
FINANCIAL DISCLOSURE
The
Company’s Board of Directors engaged DeCoria, Maichel & Teague, P.S., the
independent auditor for the Company’s wholly-owned subsidiary, to be its new
independent auditor effective November 15, 2005, which was also the effective
date of S.W. Hatfield, CPA’s dismissal as the Company’s certifying accountant by
the Board.
-18-
Except
for an expression of doubt about our ability to continue as a going concern,
S.W. Hatfield’s audit reports on the Company’s financial statements as of June
30, 2005 and September 30, 2004 did not contain an adverse opinion or disclaimer
of opinion, nor were they qualified or modified as to uncertainty, audit scope
or accounting principles.
During
the two fiscal years ended June 30, 2005 and September 30, 2004, and through
November 15, 2005 there were no disagreements with S.W. Hatfield on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements, if not resolved to the
satisfaction of S.W. Hatfield would have caused it to make a reference to the
subject matter of the disagreements in connection with its report; and there
were no reportable events as described in Item 304(a)(1)(iv)(B) of Regulation
S-B promulgated by the Securities and Exchange Commission (the “SEC”) pursuant
to the Securities Exchange Act of 1934, as amended.
During
the Company’s two most recent fiscal years and through November 15, 2005, the
Company did not consult DeCoria, Maichel & Teague with respect to the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered
on
the Company’s financial statements, or any other matters or reportable events
listed in Item 304(a)(2) of Regulation S-B. However, IsoRay Medical, the
Company’s wholly-owned subsidiary, has consulted with DeCoria, Maichel &
Teague, its independent auditor, during these time periods solely in connection
with IsoRay Medical’s financial statements.
The
Board of Directors unanimously recommends that the shareholders vote “FOR”
Proposal No. 2 to ratify the re-appointment of DeCoria, Maichel &
Teague, P.S. as the independent registered public accounting firm of the
Company.
OTHER
INFORMATION
Shareholder
Communications with the Board
To
contact members of the Board, individually or collectively, on any subject,
please address that communication to:
David
J.
Swanberg, Corporate Secretary
IsoRay,
Inc.
350
Hills
St., Suite 106
Richland,
WA 99354
The
Corporate Secretary will acknowledge the receipt of the communication; inform
the shareholder concerning the distribution of that communication; and when
any
action (if requested) would be reviewed by the Board and/or the relevant
functional committee. The Corporate Secretary will notify the shareholder of
any
action taken by the Board in reference to the shareholder’s
request.
Board
Attendance at Annual Meeting
While
the
Company does not have a formal policy regarding attendance by members of the
Board at the Company’s Annual Meetings of Shareholders, it has encouraged its
directors to attend this Annual Meeting and expects to continue this informal
policy. Shareholders are encouraged to interact with the directors at that
time.
The Company did not hold an annual meeting in fiscal 2005, and thus none of
the
current directors attended the fiscal 2005 annual meeting of the Company’s
shareholders.
-19-
Expenses
of Solicitation
The
expense of preparing, printing and mailing this proxy statement and the proxies
solicited hereby will be borne by the Company. Proxies will be solicited by
mail
and may also be solicited by directors, officers and other employees of the
Company, without additional remuneration, in person or by telephone or facsimile
transmission. The Company will also request brokerage firms, banks, nominees,
custodians and fiduciaries to forward proxy materials to the beneficial owners
of shares of Common and Preferred Stock as of the Record Date and will reimburse
such persons for the cost of forwarding the proxy materials in accordance with
customary practice. Your cooperation in promptly voting your shares and
submitting your proxy by telephone, the Internet or by completing and returning
the enclosed proxy card will help to avoid additional expense. Proxies and
ballots will be received and tabulated by Computershare Trust Company, the
Company’s transfer agent and the inspector of elections for the Annual
Meeting.
Shareholder
Proposals and Director Nominations
In
order
to be eligible for inclusion in the Company's proxy materials for the 2008
Annual Meeting of Shareholders, any shareholder proposal to take action at
such
annual meeting must be received at the Company's executive offices at 350 Hills
St., Richland, Washington 99354 no later than November 20, 2007. Any such
proposal shall be subject to the requirements of the proxy rules adopted under
the Exchange Act.
The
notice with respect to business proposals to be brought before the annual
meeting must state the shareholder's name, address and the number of shares
of
common stock held, and briefly discuss the business to be brought before the
annual meeting, the reasons for conducting such business at the annual meeting
and any interest of the shareholder in the proposal.
Shareholders
wishing to submit recommendations for director candidates must provide the
following information in writing to the attention of the Secretary of the
Company by certified or registered mail:
|
·
|
The
name, address, and biography of the candidate, including such person's
written consent to being named in the Proxy Statement as a nominee
and to
serving as a director, if elected, and certain information regarding
the
shareholder giving such notice;
|
|
·
|
The
name, address, and phone number of the shareholder or group of
shareholders making the recommendation;
and
|
|
·
|
With
respect to common stock beneficially owned by the shareholder or
group of
shareholders making the recommendation, and to the extent any shareholder
is not a registered holder, proof of the number of shares held.
|
To
be
considered by the Board for the 2008 Annual Meeting of Shareholders, a director
candidate nomination must be received by the Secretary by November 20,
2007.
Shareholder
proposals submitted for consideration at the 2008 annual meeting but not
submitted for inclusion in the Company’s fiscal 2007 proxy statement, including
shareholder nominations for candidates for election as directors, generally
must
be received by the Company at its executive offices on or prior to November
20,
2007 in order to be considered timely under SEC rules and the Company’s Bylaws.
However, if the date of the 2008 annual meeting is a date that is not within
30 days before or after the anniversary date of the 2007 Annual Meeting,
notice by the shareholder of a proposal must be received no later than the
close
of business on the 10th calendar day after the first public announcement of
the date of such annual meeting. A public announcement includes disclosure
in
(1) a document filed by the Company with the SEC, (2) a mailed notice
of the 2008 annual meeting, and (3) a press release reported by a national
news service. Under applicable rules of the SEC, the Company’s management may
vote proxies in their discretion regarding these proposals if (1) the
Company does not receive notice of the proposal on or prior to November 20,
2007, or (2) the Company receives written notice of the proposal on or
prior to November 20, 2007, describes the proposal in the Company’s proxy
statement relating to the 2008 annual meeting and states how the management
proxies intend to vote with respect to such proposal.
-20-
Unless
contrary instructions are received, we may send a single copy of the Annual
Report, Proxy Statement and Notice of Annual Meeting to any household at which
two or more shareholders reside if we believe the shareholders are members
of
the same family. Each shareholder in the household will continue to receive
a
separate proxy card. This process is known as “householding” and helps reduce
the volume of duplicate information received at a single household, which
reduces costs and expenses borne by us.
If
you
would like to receive a separate set of our annual disclosure documents this
year or in future years, follow the instructions described below and we will
deliver promptly a separate set. Similarly, if you share an address with another
shareholder and the two of you would like to receive only a single set of our
annual disclosure documents, follow the instructions below:
1.
If
your shares are registered in your own name, please contact our transfer agent
by writing to them at Computershare Trust Company, 350 Indiana Street,
8th
Floor,
Golden, Colorado 80401 (Attn: IsoRay, Inc. Representative) or calling (303)
262-0710.
2.
If a
bank, broker or other nominee holds your shares, please contact your bank,
broker or other nominee directly.
MISCELLANEOUS
The
Company’s June 30, 2006 Annual Report on Form 10-KSB is being sent to
shareholders of record as of January 5, 2007, together with this Proxy
Statement.
The
Company will furnish to shareholders without charge a copy of its Form 10-KSB
for the fiscal year ended June 30, 2006, as filed with the Securities and
Exchange Commission, upon receipt of a written request addressed to IsoRay,
Inc., 350 Hills St., Suite 104, Richland, WA 99354.
Reports,
proxy statements and other information filed by the Company are also available
on the internet at the SEC’s World Wide Web site at
http://www.sec.gov.
The
Board
knows of no other matters to be presented at the Annual Meeting. If any other
business properly comes before the Annual Meeting or any adjournment thereof,
the proxies will vote on that business in accordance with their best
judgment.
By
Order
of the Board of Directors,
/s/
David
J. Swanberg
David
J.
Swanberg
Secretary
-21-
APPENDIX
A
Audit
Committee Charter
Purpose
The
purpose of the Audit Committee (the “Committee”) shall be as
follows:
1.
To
oversee the accounting and financial reporting processes of the Company and
audits of the financial statements of the Company.
2.
To
provide assistance to the Board of Directors with respect to its oversight
of
the following:
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The
integrity of the Company’s financial
statements.
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The
Company’s compliance with legal and regulatory
requirements.
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The
independent auditor’s qualifications and
independence.
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The
performance of the Company’s internal audit function, if any, and
independent auditor.
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3.
To
prepare the report that SEC rules require be included in the Company’s annual
proxy statement.
Composition
The
Committee shall consist of two members of the Board of Directors, at least
one
of whom is determined by the Board of Directors to be “independent” pursuant to
Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 adopted pursuant
to
the Sarbanes-Oxley Act and shall satisfy any other regulatory
requirements.
No
independent member of the Committee shall receive directly or indirectly any
consulting, advisory, or other compensatory fees from the Company other than
(1)
director’s fees for service as a director of the Company, including reasonable
compensation for serving on Board committees and regular benefits that other
directors receive; and (2) a pension or similar compensation for past
performance, provided that such compensation is not conditioned on continued
or
future service to the Company. In addition, no member of the Committee may
be an
affiliate of the Company or any subsidiary of the Company whether by being
an
officer or owning more than 10 percent of the Company’s voting securities.
Qualifications
All
members of the Committee shall be able to read and understand fundamental
financial statements (including a company’s balance sheet, income statement, and
cash flow statement) and at least one member must either have past employment
experience in finance or accounting, requisite professional certification in
accounting, or any other comparable experience or background, which results
in
the individual’s financial sophistication, including being or having been a
chief executive officer, chief financial officer, or other senior officer with
financial oversight responsibilities or be an “audit committee financial expert”
as defined by the SEC. Committee members may enhance their familiarity with
finance and accounting by participating in educational programs conducted by
the
Company or by an outside organization.
-1-
Appointment
and Removal
The
members of the Committee shall be appointed by the Board of Directors. A member
shall serve until such member’s successor is duly elected and qualified or until
such member’s earlier resignation or removal. The members of the Committee may
be removed, with or without cause, by a majority vote of the Board of
Directors.
Chairman
Unless
a Chairman is elected by the full Board of Directors, the members of the
Committee shall designate a Chairman by the majority vote of the full Committee
membership. The Chairman will chair all regular sessions of the Committee and
set the agendas for Committee meetings.
Delegation
to Subcommittees
In
fulfilling its responsibilities, the Committee shall be entitled to delegate
any
or all of its responsibilities to a subcommittee of the Committee.
Meetings
The
Committee shall meet as frequently as circumstances dictate, but at least on
a
quarterly basis. The Chairman of the Committee or a majority of the members
of
the Committee may call meetings of the Committee. Any one or more of the members
of the Committee may participate in a meeting of the Committee by means of
conference call or similar communication device by means of which all persons
participating in the meeting can hear each other.
All
non-management directors who are not members of the Committee may attend
meetings of the Committee, but may not vote. In addition, the Committee may
invite to its meetings any director, member of management of the Company, and
such other persons as it deems appropriate in order to carry out its
responsibilities. The Committee may also exclude from its meetings any persons
it deems appropriate.
As
part of its goal to foster open communication, the Committee shall periodically
meet separately with each of management, the director of the internal auditing
department, if any, and the independent auditor to discuss any matters that
the
Committee or any of these groups believe would be appropriate to discuss
privately. In addition, the Committee should meet with the independent auditor
and management periodically to review the Company’s financial statements in a
manner consistent with that outlined in this Charter.
Duties
and Responsibilities
The
Committee shall carry out the duties and responsibilities set forth below.
These
functions should serve as a guide with the understanding that the Committee
may
determine to carry out additional functions and adopt additional policies and
procedures as may be appropriate in light of changing business, legislative,
regulatory, legal, or other conditions. The Committee shall also carry out
any
other duties and responsibilities delegated to it by the Board of Directors
from
time to time related to the purposes of the Committee outlined in this Charter.
The Committee may perform any functions it deems appropriate under applicable
law, rules, or regulations, the Company’s by-laws, and the resolutions or other
directives of the Board, including review of any certification required to
be
reviewed in accordance with applicable law or regulations of the
SEC.
-2-
In
discharging its oversight role, the Committee is empowered to study or
investigate any matter of interest or concern that the Committee deems
appropriate. In this regard and as it otherwise deems appropriate, the Committee
shall have the authority, without seeking Board approval, to engage and obtain
advice and assistance from outside legal and other advisors as it deems
necessary to carry out its duties. The Committee also shall have the authority
to receive appropriate funding, as determined by the Committee, in its capacity
as a committee of the Board of Directors, from the Company for the payment
of
compensation to any accounting firm engaged for the purpose of preparing or
issuing an audit report or performing other audit, review, or attest services
for the Company; to compensate any outside legal or other advisors engaged
by
the Committee; and to pay the ordinary administrative expenses of the Committee
that are necessary or appropriate in carrying out its duties.
The
Committee shall be given full access to the Company’s internal audit group, if
any, Board of Directors, corporate executives, and independent auditor as
necessary to carry out these responsibilities. While acting within the scope
of
its stated purpose, the Committee shall have all the authority of the Board
of
Directors, except as otherwise limited by applicable law.
Notwithstanding
the foregoing, the Committee is not responsible for certifying the Company's
financial statements or guaranteeing the independent auditor’s report. The
fundamental responsibility for the Company's financial statements and
disclosures rests with management and the independent auditor. It also is the
job of the Chief Executive Officer and senior management, rather than that
of
the Committee, to assess and manage the Company's exposure to risk.
Documents/Reports
Review
1.
Discuss
with management and the independent auditor, prior to public dissemination,
the
Company's annual audited financial statements and quarterly financial
statements, including the Company's disclosures under “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and discuss with
the independent auditors the matters required to be discussed by Statement
of
Auditing Standards No. 61.
2.
Discuss
with management and the independent auditor, prior to the Company's filing
of
any quarterly or annual report, (a) whether any significant deficiencies in
the
design or operation of internal control over financial reporting exist that
could adversely affect the Company's ability to record, process, summarize,
and
report financial data; (b) the existence of any material weaknesses in the
Company's internal control over financial reporting; and (c) the existence
of
any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company's internal control over financial
reporting.
3.
Discuss
with management and the independent auditor the Company's earnings press
releases (paying particular attention to the use of any “pro forma” or
“adjusted” non-GAAP information), as well as financial information and earnings
guidance provided to analysts and rating agencies.
4.
Discuss
with management and the independent auditor the Company's major financial risk
exposures, the guidelines and policies by which risk assessment and management
is undertaken, and the steps management has taken to monitor and control risk
exposure.
Independent
Auditors
5.
Appoint,
retain, compensate, evaluate, and terminate any accounting firm engaged by
the
Company for the purpose of preparing or issuing an audit report or performing
other audit, review, or attest services for the Company and, in its sole
authority, approve all audit engagement fees and terms as well as all non-audit
engagements with the accounting firm.
6.
Oversee
the work of any accounting firm engaged by the Company for the purpose of
preparing or issuing an audit report or performing other audit, review, or
attest services for the Company, including the resolution of any disagreements
between management and the independent auditor regarding financial
reporting.
-3-
7.
Pre-approve,
or adopt procedures to pre-approve, all audit, audit related, tax, and other
services permitted by law or applicable SEC regulations (including fee and
cost
ranges) to be performed by the independent auditor. Any pre-approved services
that will involve fees or costs exceeding pre-approved levels will also require
specific pre-approval by the Committee. Unless otherwise specified by the
Committee in pre-approving a service, the pre-approval will be effective for
the
12-month period following pre-approval. The Committee will not approve any
non-audit services prohibited by applicable SEC regulations or any services
in
connection with a transaction initially recommended by the independent auditor,
the purpose of which may be tax avoidance and the tax treatment of which may
not
be supported by the Internal Revenue Code and related regulations.
8.
To
the extent it deems it appropriate, delegate pre-approval authority to the
Chairman of the Committee or any one or more other members of the Committee
provided that any member of the Committee who has exercised such delegation
must
report any such pre-approval decisions to the Committee at its next scheduled
meeting. The Committee will not delegate the pre-approval of services to be
performed by the independent auditor to management.
9.
Require
that the independent auditor, in conjunction with the Chief Financial Officer,
be responsible for seeking pre-approval for providing services to the Company
and that any request for pre-approval must inform the Committee about each
service to be provided and must provide detail as to the particular service
to
be provided.
10.
Inform
each accounting firm engaged for the purpose of preparing or issuing an audit
report or to perform audit, review, or attest services for the Company that
such
firm shall report directly to the Committee.
11.
Review,
at least annually, the qualifications, performance, and independence of the
independent auditor. In conducting its review and evaluation, the Committee
should do the following:
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At
least annually obtain and review a report by the Company's independent
auditor describing (i) the auditing firm’s internal quality-control
procedures; (ii) any material issues raised by the most recent internal
quality-control review, or peer review, of the auditing firm, or
by any
inquiry or investigation by governmental or professional authorities,
within the preceding five years, respecting one or more independent
audits
carried out by the auditing firm, and any steps taken to deal with
any
such issues; and (iii) all relationships between the independent
auditor
and the Company.
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Ensure
the receipt from the independent auditor of a formal written statement
delineating all relationships between the auditor and the Company,
consistent with Independence Standards Board Standard No.
1.
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Actively
engage in a dialogue with the independent auditor with respect to
any
disclosed relationships or services that may impact the objectivity
and
independence of the auditor.
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Take,
or recommend that the full Board of Directors take, appropriate action
to
oversee the independence of the independent
auditor.
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Ensure
the rotation of the lead audit (or coordinating) partner at least
every
five years, and consider whether there should be regular rotation
of the
audit firm itself.
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Confirm
with the independent auditor that the lead (or coordinating) audit
partner, the concurring (or reviewing) partner, and each other active
audit engagement team partner satisfies the rotation requirements
of Rule
2-01(c)(6) of Regulation S-X.
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Take
into account the opinions of management and the Company’s internal auditor
(or other personnel responsible for the internal audit function),
if
any.
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-4-
Financial
Reporting Process
12.
In
consultation with the independent auditor, management, and the internal auditor,
if any, review the integrity of the Company's financial reporting processes,
both internal and external. In that connection, the Committee should obtain
and
discuss with management and the independent auditor reports from management
and
the independent auditor regarding (a) all critical accounting policies and
practices to be used by the Company and the related disclosure of those critical
accounting policies under “Management's Discussion and Analysis of Financial
Condition and Results of Operations”; (b) analyses prepared by management and/or
the independent auditor setting forth significant financial reporting issues
and
judgments made in connection with the preparation of the financial statements,
including all alternative treatments of financial information within generally
accepted accounting principles that have been discussed with the Company’s
management, the ramifications of the use of the alternative disclosures and
treatments, and the treatment preferred by the independent auditor; (c) all
alternative treatments of financial statements within generally accepted
accounting principals that have been discussed with the Company’s management,
the ramifications of the use of alternative disclosures and treatments, and
the
treatment preferred by the independent auditor; (d) major issues regarding
accounting principles and financial statement presentations, including any
significant changes in the Company’s selection or application of accounting
principles; (e) major issues as to the adequacy of the Company’s internal
controls and any specific audit steps adopted in light of material control
deficiencies; (f) issues with respect to the design and effectiveness of the
Company's disclosure controls and procedures, management's evaluation of those
controls and procedures, and any issues relating to such controls and procedures
during the most recent reporting period; (g) the effect of regulatory and
accounting initiatives, as well as off-balance sheet structures on the financial
statements of the Company; (h) any significant matters arising from any audit,
including audit problems and difficulties, whether raised by management, the
internal auditor, if any, and the independent auditor, relating to the Company’s
financial statements; and (i) any other material written communications between
the independent auditor and the Company’s management.
13.
Review
periodically the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures, on the financial statements of the
Company.
14.
Review
with the independent auditor any audit problems or difficulties encountered
and
management's response thereto. In this regard, the Committee will regularly
review with the independent auditor (a) any audit problems or other difficulties
encountered by the auditor in the course of the audit work, including any
restrictions on the scope of the independent auditor’s activities or on access
to requested information, and any significant disagreements with management
and
(b) management’s responses to such matters. Without excluding other
possibilities, the Committee may review with the independent auditor (i) any
accounting adjustments that were noted or proposed by the auditor but were
“passed” (as immaterial or otherwise), (ii) any communications between the audit
team and the audit firm’s national office respecting auditing or accounting
issues presented by the engagement, and (iii) any “management” or “internal
control” letter issued, or proposed to be issued, by the independent auditor to
the Company.
15.
Obtain
from the independent auditor assurance that the audit of the Company’s financial
statements was conducted in a manner consistent with Section 10A of the
Securities Exchange Act of 1934, which sets forth procedures to be followed
in
any audit of financial statements required under the Securities Exchange Act
of
1934.
16.
Discuss
the scope of the annual audit and review the form of the opinion the independent
auditor proposes to issue.
17.
Review
and discuss with management and the independent auditor the responsibilities,
budget, and staffing of the Company’s internal audit function, if
any.
-5-
Legal
Compliance/General
18.
Review
periodically, with the Company’s counsel, any legal matter that could have a
significant impact on the Company’s financial statements.
19.
Discuss
with management and the independent auditor the Company’s guidelines and
policies with respect to risk assessment and risk management. The Committee
will
discuss the Company’s major financial risk exposures and the steps management
has taken to monitor and control such exposures.
20.
Set
clear hiring policies for employees or former employees of the independent
auditor. At a minimum, these policies should provide that any accounting firm
may not provide audit services to the Company if the Chief Executive Officer,
Chief Financial Officer, Chief Accounting Officer, Controller, or any person
serving in an equivalent position for the Company was employed by the accounting
firm and participated in any capacity in the audit of the Company within one
year of the initiation of the current audit.
21.
Establish
procedures for (i) the receipt, retention, and treatment of complaints received
by the Company regarding accounting, internal accounting controls, or auditing
matters; and (ii) the confidential, anonymous submission by employees of the
Company of concerns regarding questionable accounting or auditing
matters.
22.
Unless
assigned to a comparable committee or group of independent directors, review
and
approve all related party transactions as specified in Item 404 of Regulation
S-K or SB.
23.
Review
and reassess the adequacy of this Charter on an annual basis.
24. Conduct
an annual performance evaluation of itself.
25. Perform
any other activities consistent with this Charter, the Company’s By-laws and
governing law as the Committee or the Board deems necessary or
advisable.
26. Review
and approve (i) any change or waiver in the Company’s code of business conduct
and ethics for directors and executive officers, and (ii) any disclosure made
on
Form 8-K regarding such change or waiver.
Reports
27.
Prepare
all reports required to be included in the Company’s proxy statement pursuant to
and in accordance with applicable rules and regulations of the SEC.
28.
Report
regularly to the full Board of Directors. In this regard, the Committee should
review with the full Board any issues that arise with respect to the quality
or
integrity of the Company’s financial statements, the Company’s compliance with
legal or regulatory requirements, the performance and independence of the
Company’s independent auditor, and the performance of the internal audit
function, if any.
29.
The
Committee shall provide such recommendations as the Committee may deem
appropriate. The report to the Board of Directors may take the form of an oral
report by the Chairman or any other member of the Committee designated by the
Committee to make such report.
30.
Maintain
minutes or other records of meetings and activities of the
Committee.
-6-
Limitation
of Audit Committee's Role
With
respect to the foregoing responsibilities and processes, the Committee
recognizes that the Company's financial management, including the internal
audit
staff, if any, as well as the independent auditor have more time, knowledge,
and
detailed information regarding the Company than do Committee members.
Consequently, in discharging its oversight responsibilities, the Committee
will
not provide or be deemed to provide any expertise or special assurance as to
the
Company's financial statements or any professional certification as to the
independent auditors' work.
While
the Committee has the responsibilities and powers set forth in this Charter,
it
is not the duty of the Committee to plan or conduct audits or to determine
that
the Company's financial statements and disclosures are complete and accurate
and
are in accordance with generally accepted accounting principles and applicable
rules and regulations. These are the responsibilities of management and the
independent auditor. It also is not the duty of the Committee to conduct
investigations or to assure compliance with laws and regulations and the
Company's internal policies and procedures.
-7-
APPENDIX
B
Nominations
and Corporate Governance Committee Charter
Purpose
The
purpose of the Nominations and Corporate Governance Committee (the “Committee”)
shall be as follows:
1.
To
select, or recommend for the Board of Directors’ selection, the individuals to
stand for election as directors at the annual meeting of stockholders or, if
applicable, a special meeting of stockholders.
2.
To
oversee the selection and composition of committees of the Board of Directors
and, as applicable, oversee management continuity planning
processes.
Board
of Directors shall determine whether the Committee shall make determinations
as
a committee or shall make recommendations to the Board of
Directors.
Composition
The
Committee shall consist of two or more members of the Board of Directors, each
of whom is determined by the Board of Directors to be “independent” in
accordance with the rules of the SEC and any other applicable regulatory
authorities.
Appointment
and Removal
The
members of the Committee shall be appointed by the Board of Directors. Each
member shall serve until such member’s successor is duly elected and qualified
or until such member’s earlier resignation or removal. The members of the
Committee may be removed, with or without cause, by a majority vote of the
Board
of Directors.
Chairman
Unless
a Chairman is elected by the full Board of Directors, the members of the
Committee shall designate a Chairman by majority vote of the full Committee
membership. The Chairman will chair all regular sessions of the Committee and
set the agendas for Committee meetings.
Delegation
to Subcommittees
In
fulfilling its responsibilities, the Committee shall be entitled to delegate
responsibilities to a subcommittee of the Committee.
Meetings
The
Committee shall meet as frequently as circumstances dictate. The Chairman of
the
Committee or a majority of the members of the Committee may call meetings of
the
Committee. Any one or more of the members of the Committee may participate
in a
meeting of the Committee by means of conference call or similar communication
device by means of which all persons participating in the meeting can hear
each
other.
All
non-management directors who are not members of the Committee may attend
meetings of the Committee, but may not vote. In addition, the Committee may
invite to its meetings any director, member of management of the Company, and
such other persons as it deems appropriate in order to carry out its
responsibilities. The Committee may also exclude from its meetings any persons
it deems appropriate.
-1-
Duties
and Responsibilities
The
Committee shall carry out the duties and responsibilities set forth below.
These
functions should serve as a guide with the understanding that the Committee
may
determine to carry out additional functions and adopt additional policies and
procedures as may be appropriate in light of changing business, legislative,
regulatory, legal, or other conditions. The Committee shall also carry out
any
other responsibilities and duties delegated to it by the Board of Directors
from
time to time related to the purposes of the Committee outlined in this
Charter.
In
discharging its oversight role, the Committee is empowered to study or
investigate any matter of interest or concern that the Committee deems
appropriate and shall have the sole authority, without seeking Board approval,
to retain outside counsel or other advisors for this purpose, including the
sole
authority to approve the fees payable to such counsel or advisors and any other
terms of retention.
Board
Selection, Composition, and Evaluation
1.
Establish
criteria for the selection of new directors to serve on the Board of
Directors.
2.
Identify
individuals believed to be qualified as candidates to serve on the Board of
Directors and select, or recommend that the Board of Directors select, the
candidates for all directorships to be filled by the Board of Directors or
by
the shareholders at an annual or special meeting. In identifying candidates
for
membership on the Board of Directors, the Committee shall take into account
all
factors it considers appropriate, which may include strength of character,
mature judgment, career specialization, relevant technical skills, diversity,
and the extent to which the candidate would fill a present need on the Board
of
Directors.
3. The
Company is of the view that the continuing service of qualified incumbents
promotes stability and continuity in the board room, giving the Company the
benefit of the familiarity and insight into the Company's affairs that its
directors have accumulated during their tenure, while contributing to the
Board's ability to work as a collective body. Accordingly, the process of the
Committee for identifying nominees shall reflect the Company's practice of
re-nominating incumbent directors who continue to satisfy the Committee's
criteria for membership on the Board, whom the Committee believes will continue
to make important contributions to the Board and who consent to continue their
service on the Board.
4.
Review
and make recommendations to the full Board of Directors, or determine, whether
members of the Board should stand for re-election. Consider matters relating
to
the retirement of Board members, including term limits or age caps.
5.
In
the case of a director nominated to fill a vacancy on the Board of Directors
due
to an increase in the size of the Board, recommend to the Board of Directors
the
class of directors in which the director-nominee should serve.
6.
Conduct
all necessary and appropriate inquiries into the backgrounds and qualifications
of possible candidates. In that connection, the Committee shall have sole
authority to retain and to terminate any search firm to be used to assist in
identifying candidates to serve as directors of the Company, including sole
authority to approve the fees payable to such search firm and any other terms
of
retention.
7.
Consider
questions of independence and possible conflicts of interest of members of
the
Board of Directors and executive officers.
8.
Review
and make recommendations, as the Committee deems appropriate, regarding the
composition and size of the Board of Directors in order to ensure the Board
has
the requisite expertise and its membership consists of persons with sufficiently
diverse and independent backgrounds.
-2-
9.
Oversee
the evaluation, at least annually, and as circumstances otherwise dictate,
of
the Board of Directors and management.
Committee
Selection and Composition
10.
Recommend
members of the Board of Directors to serve on the committees of the Board,
giving consideration to the criteria for service on each committee as set forth
in the charter for such committee, as well as to any other factors the Committee
deems relevant, and when appropriate, make recommendations regarding the removal
of any member of any committee.
11.
Recommend
members of the Board of Directors to serve as the Chair of the committees of
the
Board of Directors.
12.
Establish,
monitor, and recommend the purpose, structure, and operations of the various
committees of the Board of Directors, the qualifications and criteria for
membership on each committee of the Board, and as circumstances dictate, make
any recommendations regarding periodic rotation of directors among the
committees and impose any term limitations of service on any Board
committee.
13.
Periodically
review the charter and composition of each committee of the Board of Directors
and make recommendations to the Board for the creation of additional committees
or the elimination of Board committees.
Continuity
/ Succession Planning Process
14.
Oversee
and approve the management continuity planning process. Review and evaluate
the
succession plans relating to the Chief Executive Officer and other executive
officer positions and make recommendations to the Board of Directors with
respect to the selection of individuals to occupy these positions.
Reports
15.
Report
regularly to the Board of Directors following meetings of the Committee, (a)
with respect to such matters as are relevant to the Committee’s discharge of its
responsibilities, and (b) with respect to such recommendations as the Committee
may deem appropriate. The report to the Board of Directors may take the form
of
an oral report by the Chairman or any other member of the Committee designated
by the Committee to make such report.
16.
Maintain
minutes or other records of meetings and activities of the
Committee.
Corporate
Governance.
To the extent deemed appropriate by the Board of Directors and the Committee,
the Committee will do as follows:
17.
Consider
the adequacy of the certificate of incorporation and by-laws of the Company
and
recommend to the Board of Directors, as conditions dictate, that it propose
amendments to the certificate of incorporation and by-laws for consideration
by
the stockholders.
18.
Develop
and recommend to the Board of Directors a set of corporate governance principles
applicable to the Company and keep abreast of developments with regard to
corporate governance to enable the Committee to make recommendations to the
Board of Directors in light of such developments as may be
appropriate.
19.
Consider
policies relating to meetings of the Board of Directors. This may include
meeting schedules and locations, meeting agendas, and procedures for delivery
of
materials in advance of meetings.
-3-
Policy
and Procedures Regarding Nominating Recommendations of Security
Holders
20. The
Committee shall formulate and recommend for adoption to the full Board a policy
regarding consideration of nominees for election to the Board of Directors
who
are recommended by security holders of the Company.
21.
The
policy shall state at a minimum that the Committee will consider candidates
nominated by shareholders of the Company.
22.
The
policy shall contain any other elements that the Committee deems appropriate.
These elements may include requirements relating to share ownership of
recommending security holders; qualifications of recommended candidates; and
compliance with procedures for submission of recommendations.
24.
The
Committee shall adopt procedures for the submission of shareholder nominating
recommendations to the Committee, consistent with the policy adopted by the
Board. These procedures shall at a minimum include requirements and
specifications relating to-
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the
timing for submission of recommendations;
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the
manner of submission of recommendations;
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information
required to be provided concerning the recommending shareholder;
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information
required to be provided concerning the proposed nominee;
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·
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the
consent of the proposed nominee to be contacted and interviewed by
the
Committee; and
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the
consent of the proposed nominee to serve if nominated and elected.
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Procedures
for Security Holder Communications with the Board
25.
It
is the
policy of the Company to facilitate security holder communications to the
Board.
26.
The
Committee shall formulate procedures for security holders to send communications
to the Board. These procedures shall at a minimum include requirements and
specifications relating to-
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the
manner in which communications may be sent to the directors;
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·
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any
information required to be provided concerning the communicating
security
holder or other party;
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·
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the
process for collecting and organizing communications;
|
|
·
|
the
process for determining which communications will be relayed to the
directors; and
|
|
·
|
the
manner and timing of delivery of communications to the directors.
|
Policy
on Director Attendance at Annual Meetings
27.
The
Committee shall formulate and recommend to the Board for adoption a policy
regarding attendance of directors at annual meetings of the Company's
shareholders.
28.
The
policy may provide for attendance of directors by appropriate means of
electronic conferencing.
-4-
