RTN STEALTH SOFTWARE INC.
5250 Satellite Drive, Unit 22
Mississauga, Ontario
L4W 5G5
NOTICE OF THE ANNUAL GENERAL AND SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD ON MARCH 30, 2011
NOTICE IS HEREBY GIVEN that the annual general and special meeting (the “Meeting”) of
the shareholders of RTN Stealth Software Inc. (the “Corporation”) will be held at the offices of
FASKEN MARTINEAU DUMOULIN LLP, LOCATED AT 333 BAY STREET, 24TH FLOOR,
TORONTO, ON, M5H 2T6 ON WEDNESDAY, MARCH 30, 2011 AT THE HOUR OF
4:00 P.M. (TORONTO TIME), for the following purposes:
1.
To receive and consider the financial statements of the Corporation for the fiscal year
ended December 31, 2010;
2.
To fix the number of directors on the board of directors of the Corporation (the “Board
of Directors”) at nine (9) and to elect directors for the ensuing year;
3.
To appoint auditors for the ensuing year and to authorize the directors to fix their
remuneration;
4.
To ratify the Board of Directors’ decision to convert the special convertible Class B
preferred shares (Series 1) into common shares and simplify the capital structure of the
Corporation into one class of common shares and one class of preferred shares;
5.
To ratify the Board of Directors’ decision to continue the Corporation from British
Columbia into Ontario under the name Quantitative Alpha Trading Inc., to authorize the
filing of articles of continuance and adopt a new general by-law;
6.
To ratify the Board of Directors’ decision to adopt a long-term incentive stock option
plan; and
7.
To transact such other business as may properly be brought before the Meeting.
The enclosed Information Circular accompanying this Notice of Meeting should be
consulted for further details on the matters to be acted upon.
DATED as of the 28th day of February, 2011.
BY ORDER OF THE BOARD OF DIRECTORS
“Michael Boulter”
Michael Boulter, President, Chief Operating Officer and
Interim Chief Executive Officer
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IMPORTANT
Only holders of common shares of the Corporation of record at the close of business on February
24, 2011 are entitled to notice of the Meeting and only those holders of the common shares of the
Corporation of record at the close of business on February 24, 2011, or who subsequently
become shareholders and comply with the provisions of the Business Corporations Act
(British Columbia) (“BCBCA”), are entitled to vote at the Meeting. If you are unable to attend in
person, kindly fill in, sign and return the enclosed proxy in the envelope provided for that
purpose.
Proxies, to be valid, must be deposited at the office of the registrar and transfer agent of the
Corporation, Computershare Trust Company of Canada, 2nd Floor, 510 Burrard Street,
Vancouver, British Columbia, V6C 3B9 (Facsimile: (604) 689-8144) not less than 48 hours,
excluding Saturdays, Sundays and statutory holidays, preceding the Meeting or any adjournment
of the Meeting.
DM_TOR/286344-00002/4367671.4C
RTN STEALTH SOFTWARE INC.
212 King Street West, Suite 203
Toronto, Ontario
M5H 1K5
INFORMATION CIRCULAR
PURPOSE OF SOLICITATION
THIS INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH
THE SOLICITATION OF PROXIES BY THE MANAGEMENT OF RTN STEALTH
SOFTWARE INC. (THE “CORPORATION”) FOR USE AT THE ANNUAL GENERAL
AND SPECIAL MEETING OF SHAREHOLDERS OF THE CORPORATION (THE
“MEETING”) TO BE HELD AT THE OFFICE OF FASKEN MARTINEAU
DUMOULIN LLP, LOCATED AT 333 BAY STREET, BAY ADELAIDE CENTRE,
24TH FLOOR, TORONTO, ONTARIO, M5H 2T6 ON WEDNESDAY, MARCH 30, 2011
AT THE HOUR OF 4:00 P.M. (TORONTO TIME), AND AT ANY ADJOURNMENT
THEREOF FOR THE PURPOSES SET OUT IN THE ACCOMPANYING NOTICE OF
MEETING. Although it is expected that the solicitation of proxies will be primarily by mail,
proxies may also be solicited personally or by telephone by directors or officers of the
Corporation. Pursuant to National Instrument 54-101 Communication with Beneficial Owners of
Securities of a Reporting Issuer, arrangements have been made with clearing agencies, brokerage
houses and other financial intermediaries to forward proxy solicitation material to the beneficial
owners of the common shares of the Corporation (“Common Shares”). The cost of any such
solicitation will be borne by the Corporation.
VOTING OF PROXIES
All Common Shares represented at the Meeting by properly executed proxies will be
voted or withheld from voting and where a choice with respect to any matter to be acted upon
has been specified in the instrument of proxy, the Common Shares represented by the proxy will
be voted or withheld from voting in accordance with such specifications. IN THE ABSENCE
OF ANY SUCH SPECIFICATIONS, THE MANAGEMENT DESIGNEES WILL VOTE
IN FAVOUR OF ALL THE MATTERS SET OUT HEREIN.
THE ENCLOSED INSTRUMENT OF PROXY CONFERS DISCRETIONARY
AUTHORITY UPON THE MANAGEMENT DESIGNEES, OR OTHER PERSONS
NAMED AS PROXY, WITH RESPECT TO AMENDMENTS TO OR VARIATIONS OF
MATTERS IDENTIFIED IN THE NOTICE OF MEETING AND ANY OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING. AT THE
DATE OF THIS INFORMATION CIRCULAR, THE CORPORATION IS NOT AWARE
OF ANY AMENDMENTS TO, OR VARIATIONS OF, OR OTHER MATTERS WHICH
MAY COME BEFORE THE MEETING. IN THE EVENT THAT OTHER MATTERS
COME BEFORE THE MEETING, THEN THE MANAGEMENT DESIGNEES INTEND
TO VOTE IN ACCORDANCE WITH THE JUDGMENT OF THE MANAGEMENT
DESIGNEES.
DM_TOR/286344-00002/4367671.4C
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Proxies, to be valid, must be deposited at the office of the Registrar and Transfer Agent
of the Corporation, Computershare Trust Company of Canada, 2nd Floor, 510 Burrard Street,
Vancouver, British Columbia, V6C 3B9, not less than 48 hours, excluding Saturdays, Sundays
and statutory holidays, preceding the Meeting or any adjournment of the Meeting.
APPOINTMENT OF PROXY
A SHAREHOLDER HAS THE RIGHT TO DESIGNATE A PERSON OR
COMPANY (WHO NEED NOT BE A SHAREHOLDER OF THE CORPORATION), TO
ATTEND AND ACT AND ON BEHALF OF SUCH SHAREHOLDER AT THE
MEETING OR ANY ADJOURNMENT THEREOF. Such right may be exercised by
inserting in the blank space provided, the name of the person or company to be designated and
striking out therefrom, the names of the management designees or by completing another proper
instrument of proxy and, in either case, signing, dating and depositing the instrument of proxy
with the Registrar and Transfer Agent of the Corporation, Computershare Trust Company of
Canada, 2nd Floor, 510 Burrard Street, Vancouver, British Columbia, V6C 3B9, not less than
48 hours, excluding Saturdays, Sundays and statutory holidays, preceding the Meeting or any
adjournment of the Meeting.
REVOCATION OF PROXIES
A shareholder who has given a proxy may revoke it as to any matter upon which a vote
has not already been cast pursuant to the authority conferred by the proxy.
A shareholder may revoke a proxy by:
(a)
depositing an instrument in writing, executed by him or her or his or her attorney
authorized in writing, or if the shareholder is a corporation, under its corporate
seal or signed by a duly authorized officer or attorney for the Corporation:
(i)
at the offices of the Registrar and Transfer Agent of the Corporation,
Computershare Trust Company of Canada, 2nd Floor, 510 Burrard Street,
Vancouver, British Columbia, V6C 3B9, at any time, but not less than
48 hours, excluding Saturdays, Sundays and statutory holidays, preceding
the Meeting or any adjournment of the Meeting at which the proxy is to be
used;
(ii)
at the registered office of the Corporation, 5250 Satellite Drive, Unit 22,
Mississauga, Ontario L4W 5G5 at any time up to and including the last
business day preceding the day of the Meeting at which the proxy is to be
used; or
(iii) before the commencement of the Meeting with the chairman of the
Meeting on the day of the Meeting or any adjournment of the Meeting; or
(b)
in any other manner permitted by law.
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In addition, a proxy may be revoked by the shareholder executing another form of proxy
bearing a later date and depositing same at the offices of the Registrar and Transfer Agent of the
Corporation within the time period set out under the heading “Voting of Proxies”, or by the
shareholder personally attending the Meeting and voting his, her or its shares.
ADVICE TO BENEFICIAL HOLDERS OF COMMON SHARES
ON VOTING COMMON SHARES
Shareholders who do not hold their shares in their own name (referred to in this
Information Circular as “Beneficial Shareholders”) should note that only proxies deposited by
shareholders whose names appear on the records of the Corporation as the registered holders of
Common Shares can be recognized and acted upon at the Meeting. If Common Shares are listed
in an account statement provided to a shareholder by a broker, then, in almost all cases, those
Common Shares will not be registered in the shareholder’s name on the records of the
Corporation. Such Common Shares will more likely be registered under the name of the
shareholder’s broker or an agent of that broker. In Canada, the vast majority of such shares are
registered under the name of CDS & Co. (the nominee of The Canadian Depository for
Securities Limited, which acts as depositary for many Canadian brokerage firms). Common
Shares held by brokers or their agents or nominees can only be voted (for or against resolutions)
upon the instructions of the Beneficial Shareholder. Without specific instructions, a broker and
its agents and nominees are prohibited from voting shares for the broker’s clients. Therefore,
Beneficial Shareholders should ensure that instructions respecting the voting of their
Common Shares are communicated to the appropriate person.
Applicable regulatory rules require intermediaries/brokers to seek voting instructions
from Beneficial Shareholders in advance of shareholders’ meetings. Every intermediary/broker
has its own mailing procedures and provides its own return instructions to clients, which should
be carefully followed by Beneficial Shareholders in order to ensure that their Common Shares
are voted at the Meeting. Often, the form of proxy supplied to a Beneficial Shareholder by its
broker (or the agent of the broker) is identical to the form of proxy provided to registered
shareholders. However, its purpose is limited to instructing the registered shareholder (the broker
or agent of the broker) how to vote on behalf of the Beneficial Shareholder. The majority of
brokers now delegate responsibility for obtaining instructions from clients to Broadridge
Financial Solutions, Inc. (“Broadridge”). Broadridge typically prepares machine-readable
voting instruction forms, mails those forms to the Beneficial Shareholders and asks Beneficial
Shareholders to return the voting instructions to Broadridge or to call their toll free telephone
number to vote their shares or access their web sitewww.proxyvotecanada.com to deliver voting
instructions. Broadridge then tabulates the results of all instructions received and provides
appropriate instructions respecting the voting of shares to be represented at a meeting. A
Beneficial Shareholder receiving a voting instruction form cannot use that form to vote
Common Shares directly at the Meeting. The voting instructions must be communicated to
Broadridge well in advance of the Meeting in order to have the Common Shares voted at
the Meeting.
Although a Beneficial Shareholder may not be recognized directly at the Meeting for the
purposes of voting Common Shares registered in the name of his or her broker (or an agent of the
broker), a Beneficial Shareholder may attend at the Meeting as proxyholder for the registered
DM_TOR/286344-00002/4367671.4C
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shareholder and vote the Common Shares in that capacity. Beneficial Shareholders who wish to
attend the Meeting and indirectly vote their Common Shares as proxyholder for the registered
shareholder, should enter their own names in the blank space on the form of proxy provided to
them and return the same to their broker (or the broker’s agent) in accordance with the
instructions provided by such broker (or agent), well in advance of the Meeting.
Non-Objecting Beneficial Owners
These security holder materials are being sent to both registered and non-registered
owners of the securities. If you are a non-registered owner, and the Corporation or its agent has
sent these materials directly to you, your name and address and information about your holdings
of securities, have been obtained in accordance with applicable securities regulatory
requirements from the intermediary holding on your behalf. By choosing to send these materials
to you directly, the Corporation (and not the intermediary holding on your behalf) has assumed
responsibility for (i) delivering these materials to you, and (ii) executing your proper voting
instructions. Please return your voting instructions as specified in the request for voting
instructions or form of proxy delivered to you.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Minute Book of the Corporation provides that it is authorized to issue an unlimited
number of Class A common shares (“Common Shares”) in the share capital of the Corporation
without nominal or par value. According to the records of the Transfer Agent, a total of
133,825,238 Common Shares are issued and outstanding on the date hereof and entitled to vote
at the Meeting on the basis of one vote for each Common Share held.
According to the Minute Book of the Corporation, a total of 5,250,000 special Class B
preferred shares (Series 1), convertible into Common Shares on a 10:1 ratio, all subject to the
satisfaction of certain conditions (the “Special Preferred Shares”) are also issued and
outstanding, together with warrants to acquire 38,095,238 additional Common Shares of the
Corporation from Treasury at $0.0525 per share.
Finally, pursuant to an agreement to restructure its indebtedness reached in January 2010,
certain insiders led by Mr. Todd Halpern agreed to purchase and hold promissory notes of the
Company in an aggregate principal amount of US$2,407,212, together with interest accruing
thereon at the rate of Prime + 1% (the “Notes”). Under the terms of the agreement, the Company
may elect at any time prior to March 30, 2011, to pay all, but not less than all, of the aggregate
principal amount then outstanding on one or more of the Notes, together with accured and unpaid
interest thereon, by issuing to the holder a number of Common Shares equal to the amount then
owning on the relevant note divided by an issue price of $0.0525 per share. Although holders of
the Notes have also agreed to extend the term of the Notes for three (3) years on the same terms
and conditions, it is currently anticipated that the Company will elect to satisfy its indebtedness
by the issuance of Common Shares. The satisfaction by the Corporation of all amounts
outstanding under the Notes as at February 28, 2010 inclusive of accrued interest would require
the issuance of 47,254,529 Common Shares.
DM_TOR/286344-00002/4367671.4C
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Clarification and Rectification of Shareholder Record
The Corporation has undertaken a review of its books and records with the assistance of
counsel and is seeking to satisfy itself that adequate consideration was paid in connection with
certain share issuances processed in 2009. Depending on the outcome of its enquiry, the
Corporation will take such steps as it is entitled to in order to to resolve any deficiency in the
consideration received by the Corporation.
Additionally, it appears that the Corporation neglected to complete certain required
filings with the Registrar of Companies in 2009 in relation to the change of its name from ‘Arris
Resources Inc.’ to ‘RTN Stealth Software Inc’, the alteration of its authorized share structure (the
creation of the Common Shares and the Special Preferred Shares) and the 5:1 split of Common
Shares approved by the shareholders as part of the arrangement that resulted in the current share
capitalization of the Corporation. The Board of Directors has instructed counsel to proceed with
an application for Order of the Court pursuant to, inter alia, Section 68 of the BCBCA validating
the creation and issuance of the the Common Shares and the Special Preferred Shares on the
grounds that it is just and equitable to do so given that the failure to make the required filings
was in error.
Subject to the foregoing, the holders of Common Shares of record at the close of business
on the record date, set by the directors of the Corporation to be February 24, 2011 (the “Record
Date”), are entitled to vote such Common Shares at the Meeting.
Under the Corporation’s Articles, one shareholder must be present in person or by proxy
and entitled to vote at the Meeting before any action may validly be taken at the Meeting. If such
a quorum is not present, the Meeting will be rescheduled.
Pursuant to the Alpha Voting Trust, absent a proposal to liquidate or wind-up the
Corporation and for so long as the Common Shares are listed for trading on a recognized stock
exchange, the voting rights in respect of a total of 74,647,815 Common Shares registered in the
name of Alpha Voting Trust beneficially owned by others, representing 55.78% of the issued and
outstanding Common Shares of the Corporation, are irrevocably in the discretion of, and
controlled by:
(1) Mr. Todd Halpern, Chair of the Board of Directors, and
(2) Mr. Alfred Apps, proposed Director,
acting jointly under full indemnity from the beneficial owners, which include Joseph Ertl
beneficially owning 37,323,908 Common Shares representing 27.89% of the issued and
outstanding Common Shares of the Corporation and Travis Trust, as trustee (the adult
beneficiaries of Travis Trust are Marsha Arviv, Adam Arviv and Jennifer Arviv and the minor
benficiaries are Oiana Arviv, Kayla Arviv and Alexis Arviv) beneficially owning 37,323,907
Common Shares, representing 27.89% of the issued and outstanding Common Shares of the
Corporation.
To the knowledge of the directors and executive officers of the Corporation, as at the date
hereof, no other person beneficially owns, or controls or directs, directly or indirectly, Common
DM_TOR/286344-00002/4367671.4C
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Shares carrying more than 10% of the voting rights of the issued and outstanding Common
Shares of the Corporation.
PARTICULARS OF MATTERS TO BE ACTED UPON
To the knowledge of the Corporation’s directors, the only matters to be dealt with at the
Meeting are those matters set forth in the accompanying Notice of Meeting relating to:
(i) receiving and considering the financial statements of the Corporation for the fiscal year ended
December 31, 2010; (ii) fixing the number of directors at nine (9) and the election of directors of
the Corporation; (iii) appointing auditors for the ensuing year and to authorizing the directors to
fix their remuneration; (iv) the ratification of the amendment of the Corporation’s articles of
incorporation to permit the early conversion of the Special Preferred Shares into Common Shares
and the simplification of the capital structure of the Corporation into one class of common shares
and one class of preferred shares; (v) the ratification of the continuance of the Corporation from
British Columbia into Ontario under the name Quantitative Alpha Trading Inc. and the adoption
of a new general by-law; and (vi) the ratification of the adoption of a long-term incentive stock
option plan.
I.
FINANCIAL STATEMENTS
Financial statements for the Corporation will be placed before the shareholders at the
Meeting. Shareholders who have previously requested financial statements will receive a copy
of the financial statements by mail, or if eligible, by email. Shareholders can request future
financial statements by completing the proxy accompanying the Notice of Meeting and
Information Circular. Copies of the financial statements and management’s discussion and
analysis are also available at www.sedar.com.
II.
ELECTION OF DIRECTORS
The board of directors of the Corporation (the “Board of Directors”) presently consists
of four directors to be elected annually. In accordance with the BCBCA, the number of directors
cannot be fewer than three. It is proposed to fix the number of directors at nine (9) persons.
Some of the nominees are now directors of the Corporation and have been directors since
the dates indicated below. Nikolas Perrault and Donald Ziraldo have advised the Corporation that
they will not be seeking re-election.
It is proposed that the persons named below will be nominated as directors at the
Meeting. Each director elected will hold office until the next annual meeting of shareholders or
until his successor is duly elected or appointed pursuant to the Articles of the Corporation unless
his office is earlier vacated in accordance with the provisions of the BCBCA or the
Corporation’s Articles.
IT IS THE INTENTION OF THE MANAGEMENT DESIGNEES, IF NAMED AS
PROXY, TO VOTE FOR THE ELECTION OF SAID PERSONS TO THE BOARD OF
DIRECTORS. MANAGEMENT DOES NOT CONTEMPLATE THAT ANY OF SUCH
NOMINEES WILL BE UNABLE TO SERVE AS DIRECTORS. HOWEVER, IF, FOR
ANY REASON ANY OF THE PROPOSED NOMINEES DO NOT STAND FOR
DM_TOR/286344-00002/4367671.4C
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ELECTION OR ARE UNABLE TO SERVE AS SUCH, PROXIES IN FAVOUR OF
MANAGEMENT DESIGNEES WILL BE VOTED FOR ANOTHER NOMINEE IN
THEIR DISCRETION UNLESS THE SHAREHOLDER HAS SPECIFIED IN HIS OR
HER PROXY THAT HIS OR HER SHARES ARE TO BE WITHHELD FROM VOTING
IN THE ELECTION OF DIRECTORS.
The following information relating to the nominees as directors is based on information
received by the Corporation from the said nominees.
Name and
Number of
Province and
Common
Country of
Residence and
Principal Occupation
Director
Shares
Since
Beneficially
Position(s) with
Owned,
the Corporation
Controlled or
Directed(1)
Todd Halpern
Mr. Halpern is currently President of Halpern Enterprises, a family October 12,
Nil
(2)(3)(5)
business founded by his father over 57 years ago. Mr. Halpern
2010
Ontario, Canada
joined Halpern Enterprises in 1979, and since has grown the
Chairman &
company tremendously. Today, Halpern Enterprises is a leading
Director
importer of fine wines and spirits into North America,
representing over 100 of the world’s finest wine and spirit
producers.
A member of the Board of Directors of Toronto General Hospital
since 2005, Mr. Halpern is also Chair of the Board of Directors of
the Krembil Neuroscience Centre’s Krembil Discovery Tower and
Krembil Neuro Program. In addition, Mr Halperns chairs the
Grand Cru Culinary Wine Festival, which benefits research at
University Health Network.
Mr. Halpern was formerly a member of the Board of Directors of
Sentinelle Medical Inc. and was involved in the successful
acquisition of the company by Hologic Inc. and is currently a
member of the Board of Directors of Mobilotto Systems Inc., a
software development company focused on creating secure mobile
games for regulated environments.
(2)(3)
DM_TOR/286344-00002/4367671.4C
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Name and
Number of
Province and
Common
Country of
Residence and
Principal Occupation
Director
Shares
Since
Beneficially
Position(s) with
Owned,
the Corporation
Controlled or
Directed(1)
James McGovern Mr. McGovern founded Arrow Hedge Partners Inc. in 1999 after
N/A
1,904,762
Ontario, Canada
working for over thirteen years at BPI Financial Corporation
Vice-Chair &
(Canada) (“BPI”), the company of which he co-founded, and
Chief Executive
where he ultimately held the positions of President and Chief
Officer
Executive Officer. BPI, a publicly traded company, managed or
administered over $6 billion in investment assets on behalf of
Canadian and U.S. investors.
Mr. McGovern was the founding Chairman (currently, Past
Chairman) of the Canadian Chapter of the Alternative Investment
Management Association (“AIMA”). He is actively involved in
the international hedge fund community and has spoken at
conferences in Canada and globally.
Mr. McGovern graduated from the University of Toronto with a
Bachelor of Commerce and Finance degree in 1985. He is active
in charitable organizations, including Hedge Funds Care Canada
and the University Health Network.
Mr. McGovern also serves on the Board of Trustees of the Fraser
Institute, an independent Canadian economic and social research
and educational organization.
Michael Boulter
Michael Boulter is the Vice-President and COO of the Company.
May 17,
5,000,000(4)
Ontario, Canada
2010
Vice-President,
Prior to joining the Company in 2009, Mr. Boulter was the
COO & Director
founder of ENAJ Mercantile Corporation (“ENAJ”) and the
principal architect of its proprietary software, the Stealth© “Black
Box” E-mini S&P 500 Futures trading system (previously known
as the EMC-ALGO software), which was acquired by the
Company in 2009 and remains one of its core assets.
From 1986 to 2008, Mr. Boulter was employed as a Quantitative
Analyst/Portfolio Strategist and Institutional Salesman by several
major investment houses in Canada and the United States. He
holds an Economics degree from York University where he
studied through the early 1980’s, specializing in Econometrics.
DM_TOR/286344-00002/4367671.4C
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Name and
Number of
Province and
Common
Country of
Residence and
Principal Occupation
Director
Shares
Since
Beneficially
Position(s) with
Owned,
the Corporation
Controlled or
Directed(1)
Dr. Alex Bogdan
Dr. Alex Bogdan is the CTO of the Company.
N/A
8,927,520
Ontario, Canada
President and Chief The lead scientist and developer behind the Stealth© software, Dr.
Technology Officer Bogdan holds a PhD in artificial intelligence and cybernetics, a
master’s degree in Power Electronics and a bachelor’s degree in
mathematical psychology.
Prior to developing Stealth©, Dr. Bogdan was involved in many
important scientific projects in Europe, Canada and the United
States. He is the author of more than 50 international patents on
various devices and methods, some of which have been
successfully implemented and commercialized by private and
public companies around the world.
In 1985 he was awarded a prestigious national award (gold medal)
for exceptional achievement in science dedicated to a scientist
under the age of 30.
Edward Milstein
Edward Milstein has a broad range of business interests but is
N/A
0
Connecticut,
primarily involved in real estate, land development, banking and
United States
the funding of early round venture capital for companies involved
in cable television, real-estate services, computer software,
Director
internet-related services and applications, as well as other hi-tech
companies.
Mr. Milstein is co-Chairman of both Milstein Brothers Capital
Partners and of Emigrant Savings Bank, a $9 billion institution
with equity in excess of $1 billion. He is also President of Timko
Contracting Corporation, a builder of New York apartments and
office space. The Milstein family has taken a leading role in the
business life of New York City for three generations.
In addition to his various charitable activities, Mr. Milstein has
served as a Board member on the National Crime Prevention
Council, the Citizens Crime Commission of New York City and
of the New York City Police.
DM_TOR/286344-00002/4367671.4C
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Name and
Number of
Province and
Common
Country of
Residence and
Principal Occupation
Director
Shares
Since
Beneficially
Position(s) with
Owned,
the Corporation
Controlled or
Directed(1)
Richard Schaeffer Richard Schaeffer is the retired Chairman of NYMEX Holdings,
N/A
1,904,762
New York,
Inc. and the New York Mercantile Exchange. He served as a
United States
member of the Board of Directors of NYMEX from March 1990
to 2008, serving as Treasurer from 1993 to 2004, Vice Chairman
Director
from 2004 to 2006, and Chairman from 2006 to 2008. Mr.
Schaeffer has been a NYMEX member and seat owner since 1981.
Mr. Schaeffer has also served as a director on the Board of
Directors of the leading Norwegian financial derivatives exchange
IMAREX as well as on the Board of Directors of the Montreal
Stock Exchange. Mr. Schaeffer currently serves as a special
advisor to General Atlantic, a leading global private equity
investment firm.
Deeply involved with children’s charitable causes for many years,
Mr. Shaeffer was Chairman of the NYMEX Foundation’s Board
of Directors from 2006 to 2008, a board he was first invited to join
in 1989. He currently sits on the Board of Directors of the
Museum of American Finance and of the Tribeca Film Festival,
He has also raised funds for New York Presbyterian Hospital and
the We Are Family Foundation among others.
In 2008, Mr. Schaeffer was honoured by Foundation Fighting
Blindness during their NYC Dining in the Dark event. He was
awarded Chai Lifeline’s Man of the Year in 2005 and again in
2008. He received the We Are Family Foundation Visionary
Award in 2007 and the United Cerebral Palsy of Suffolk County,
NY Distinguished Leader Award in 2006. Futures & Options for
Kids granted him their Community Service Award in 2007.
Mr. Schaeffer graduated from the Robert H. Smith School of
Business at the University of Maryland in 1974. He delivered the
school’s commencement address in 2006.
DM_TOR/286344-00002/4367671.4C
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Name and
Number of
Province and
Common
Country of
Residence and
Principal Occupation
Director
Shares
Since
Beneficially
Position(s) with
Owned,
the Corporation
Controlled or
Directed(1)
Alfred Apps (3)
Alfred Apps is one of Canada’s leading counsel in the area of
N/A
0
Ontario, Canada
restructuring, corporate finance, mergers and acquisitions, private
Director
equity investment and infrastructure finance and has been ranked
as a leading lawyer by LEXPERT© and UK-based Practical Law
Company©. He has acted on many of the significant Canadian
corporate restructurings. In 2009, he acted as debtor counsel in the
$32BN restructuring of the Canadian third party (i.e. non-bank)
asset-backed commercial paper market, the largest such
transaction in Canadian history.
Apps joined the international law firm of Fasken Martineau
DuMoulin LLP (“Fasken Martineau”) as an associate in 1989
and was named partner in 1991. In 1993, he withdrew from the
partnership on being named CEO of The Lehndorff Group (an
international commercial real estate firm with assets in Canada,
the United States and Europe), where he led a 47-lender $1 billion
debt restructuring and oversaw the creation of one of Canada’s
first real estate investment trusts, Residential Equities REIT or
RESREIT (now CAPREIT). In 1998, Mr. Apps led a business
combination between The Lehndorff Group and Dundee Realty
Corporation and, following a short period as President and COO
of the successor corporation, was appointed CEO of Newstar
Technologies Inc. In 2001, upon completing a merger of Newstar
with three of its principal U.S. competitors, together with a
US$140 million first-round equity financing, he rejoined the
partnership at Fasken Martineau, where he continues to practice
corporate/commercial law specializing in corporate mergers,
acquisitions and financings as Counsel.
In addition to being a longtime member of the Huron University
College Corporation, Apps served as a member (2001-2006) and
as Chair (2006-2007) of the Foundation Board of Directors for the
Centre for Addiction and Mental Health in Toronto and was
President of the Empire Club of Canada for the 2009-2010 year.
He has been active in a number of arts and youth-oriented
charities. On March 31, 2009, he was acclaimed as President of
the Liberal Party of Canada, a position he still holds.
Mr. Apps is an honours graduate of the University of Western
Ontario and of the University of Toronto Faculty of Law.
DM_TOR/286344-00002/4367671.4C
- 14 -
Name and
Number of
Province and
Common
Country of
Residence and
Principal Occupation
Director
Shares
Since
Beneficially
Position(s) with
Owned,
the Corporation
Controlled or
Directed(1)
Simon Posen
Mr. Posen was born and raised in the United Kingdom and moved
N/A
2,095,038
New York,
to the United States in 1993, where he immediately began working
United States
at the New York Mercantile Exchange (“NYMEX”). He became
an independent Precious Metal Trader in 1996. From January
Director
1998 through March 1999 he ran the floor operations for Mitsui
USA. In July of 1999, he became a member of the NYMEX,
specializing as an independent market maker in the Natural Gas
market. Mr. Posen left the floor in 2008 to pursue electronic
trading opportunities.
John Gibson
John Gibson is CEO and a founder of Integral Wealth Securities
N/A
476,190
Ontario, Canada
Limited, a national securities dealer headquartered in Toronto.
Director
Integral provides investment banking, institutional sales / trading
to corporate and institutional clients as well as wealth management
services to individuals.
Prior to Integral, Mr. Gibson was CEO of Patriot Equities Corp.
(“Patriot”), a TSX-listed real estate company engaged in the re-
development of urban shopping centres. Prior to his time at
Patriot, Mr. Gibson was engaged in the acquisition of distress
commercial mortgage loans from Canadian lending institutions in
conjunction with Lone Star Opportunity Fund, and prior to Lone
Star’s formation, with the Brazos Fund.
Mr. Gibson is a past President of the Couchiching Institute on
Public Affairs, Canada’s oldest non-partisan forum on public
affairs.
Mr. Gibson holds a Bachelor of Commerce (Honours) degree from
Queen’s University.
Notes:
1.
Information as to Common Shares beneficially owned, not being in the knowledge of the Corporation, has been
furnished by the respective directors, and does not include Common Shares that may be acquired upon exercise of stock options
or share purchase warrants of the Corporation. The following directors hold warrants to acquire the number of Common Shares
indicated below at $0.0525 per Common Share. The warrants expire on March 31, 2011.
Name of Director
Number of Warrants to acquire Common Shares
Arrow Hedge Partners Inc. (James McGovern controls this
7,619,048
company)
Richard Schaeffer
7,619,048
Simon Posen
8,380,952
John Gibson
1,904,760
DM_TOR/286344-00002/4367671.4C
- 15 -
2.
Pursuant to an agreement to restructure its indebtedness reached in January 2010, certain insiders led by Mr. Todd
Halpern agreed to purchase and hold promissory notes of the Company in an aggregate principal amount of US$2,407,212,
together with interest accruing thereon at the rate of Prime + 1% (the “Notes”). Under the terms of the agreement, the Company
may elect at any time prior to March 30, 2011, to pay all, but not less than all, of the aggregate principal amount then outstanding
on one or more of the Notes, together with accured and unpaid interest thereon, by issuing to the holder a number of Common
Shares equal to the amount then owning on the relevant note divided by an issue price of $0.0525 per share. Although holders of
the Notes have also agreed to extend the term of the Notes for three (3) years on the same terms and conditions, it is currently
anticipated that the Company will elect to satisfy its indebtedness by the issuance of Common shares. The satisfaction by the
Corporation of all amounts outstanding under the Notes as at February 28, 2010 inclusive of accrued interest would require the
issuance of 47,254,529 Common Shares.
3.
Messrs. Halpern and Apps are trustees under indemnity in respect of a total of 74,647,815 Common Shares of the
Corporation registered in the name of Alpha Voting Trust (the “Trust Shares”) pursuant to a voting trust agreement (the “Voting
Trust”) under which said trustees, acting jointly, have an unfettered discretion to vote the Trust Shares, representing 55.87% of
the issued and outstanding Common Shares of the Corporation on any matter pertaining to the Corporation excepting a
liquidation or winding-up thereof. The Voting Trust is revocable and terminable only in the event that the Common Shares of the
Corporation are no longer listed for trading on a recognized public stock exchange.
4.
Of the total of 5,000,000 Common Shares of the Corporation controlled by Michael Boulter, one-half or 2,500,000
Common Shares are owned by ENAJ Mercantile Corporation, a corporation controlled by Michael Boulter and related persons.
The other 2,500,000 shares issued to Michael Boulter personlly have been issued, in lieu of cash, as compensation for his services
to the Company as a senior officer and become free trading inequal shares over three years commencing on May 15, 2011.
5.
The Corporation has, due to changes in the composition of its Board of Directors during its term, amended the
composition of its Audit Committee to include Todd Halpern, Donald Ziraldo (returning) and Nikolas Perrault (returning). A
new Audit Committee will be formed by the incoming Board of Directors.
Cease Trade Orders or Similar Orders
No proposed director:
(a)
is, as at the date of the Information Circular, or has been, within 10 years before
the date of the Information Circular, a director, chief executive officer or chief
financial officer of any company (including the Corporation) that,
(i)
was subject to an order that was issued while the proposed director was
acting in the capacity as director, chief executive officer or chief financial
officer; or
(ii)
was subject to an order that was issued after the proposed director ceased
to be a director, chief executive officer or chief financial officer and which
resulted from an event that occurred while that person was acting in the
capacity as director, chief executive officer or chief financial officer, or
(b)
is, as at the date of the Information Circular, or has been within 10 years before
the date of the Information Circular, a director or executive officer of any
company (including the Corporation) that, while that person was acting in that
capacity, or within a year of that person ceasing to act in that capacity, became
bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency or was subject to or instituted any proceedings, arrangement or
compromise with creditors or had a receiver, receiver manager or trustee
appointed to hold its assets; or
DM_TOR/286344-00002/4367671.4C
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(c)
has, within the 10 years before the date of the Information Circular, become
bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency, or become subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee
appointed to hold the assets of the proposed director.
For the purpose of the preceding paragraph (a), (b) and (c) “order” means:
(a)
a cease trade order;
(b)
an order similar to a cease trade order; or
(c)
an order that denied the relevant company access to any exemption under
securities legislation,
that was in effect for a period of more than 30 consecutive days.
Penalties and Sanctions
No proposed director has been subject to:
(a)
any penalties or sanctions imposed by a court relating to securities legislation or
by a securities regulatory authority or has entered into a settlement agreement
with a securities regulatory authority; or
(b)
any other penalties or sanctions imposed by a court or regulatory body that would
likely be considered important to a reasonable securityholder in deciding whether
to vote for a proposed director.
III.
APPOINTMENT OF AUDITORS
The management designees, if named as proxy, intend to vote the Common Shares
represented by any such proxy for the appointment of Grant Thornton LLP, as auditors of
the Corporation at a remuneration to be fixed by the Board of Directors unless the
shareholder has specified in his, her or its proxy that the Common Shares are to be
withheld from voting in the re-appointment of the auditors.
The Board of Directors recommends that the shareholders vote in favour of the
appointment of Grant Thornton LLP, as auditors of the Corporation until the next annual
meeting, and grant the Board of Directors the authority to determine the remuneration to be paid
to the auditor. During the financial year ended December 31, 2009 and December 31, 2010,
ACAL Group, Chartered Accountants, served as the Corporation’s auditor. ACAL Group,
Chartered Accountants were appointed as auditor to the Corporation on October 26, 2009 and
resigned on February 25, 2011.
The full text of the following documents are attached as Schedule A hereto: (i) Notice of
Change of Auditor referencing the resignation of ACAL Group, Chartered Accountants and the
appointment of Grant Thornton LLP and indicating there are no reportable events (the “Notice”);
DM_TOR/286344-00002/4367671.4C
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(ii) a letter from ACAL Group, Chartered Accountants stating their agreement with each
statement in the Notice; and (iii) a letter from Grant Thornton LLP stating their agreement with
each statement in the Notice.
IV.
RATIFICATION OF THE EARLY CONVERSION OF THE SPECIAL
PREFERRED SHARES INTO COMMON SHARES
The special rights and restrictions currently attaching to the Special Preferred Shares are
set out in Schedule B (the “Special Preferred Share Conditions”). The Board of Directors
recommends that shareholders approve and ratify (1) the amendment the Corporation’s articles
of incorporation and, in particular, the Special Preferred Share Conditions, to permit the
immediate conversion of the 5,250,000 Special Preferred Shares into 52,500,000 Common
Shares of the Corporation in accordance with the 10:1 conversion ratio specified in its current
articles of incorporation notwithstanding that a Conversion Event, as defined therein, has not yet
occurred and (2) the implementation of such conversion by the Board of Directors of the
Corporation. In accordance with and subject to the rules and policies of the Canadian National
Stock Exchange (“CNSX”), the shareholders of the Corporation will be asked to consider and if
thought fit, approve a special resolution to convert all of the 5,250,000 Special Preferred Shares
into 52,500,000 Common Shares.
The Board of Directors also recommends that the capital structure of the Corporation be
simplified by allowing for the issuance of only one class of common shares, being the Common
Shares, and one class of preferred shares, being the Special Preferred Shares.
The shareholders of the Corporation will be asked to consider, and if thought fit, to pass
the following resolution:
“BE IT RESOLVED THAT:
(i)
the special rights and restrictions currently attaching to the special convertible
Class B preferred shares (Series 1) of the Corporation, being Part 28 of the
Articles of the Corporation, be amended to permit the immediate conversion of
the 5,250,000 Special Preferred Shares into 52,500,000 Class A common shares
of the Corporation in accordance with the 10:1 conversion ratio specified
notwithstanding that a Conversion Event, as defined therein, has not yet occurred;
(ii)
the conversion of all of the 5,250,000 special convertible Class B preferred
shares (Series 1) of the Corporation into 52,500,000 Class A common shares of
the Corporation as described in the Information Circular of the Corporation dated
February 28, 2011 be and is hereby approved, adopted, ratified and confirmed;
(iii)
the simplification of the capital structure of the Corporation into one class of
preferred shares, being the special convertible Class B preferred shares (Series 1),
and one class of common shares, being Class A common shares, all as described
in the Information Circular of the Corporation dated February 28, 2011 be and is
hereby approved, adopted, ratified and confirmed; and
DM_TOR/286344-00002/4367671.4C
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(iv)
any one director or officer of the Corporation be authorized to make all such
arrangements, to do all acts and things and to sign and execute all documents and
instruments in writing, whether under corporate seal or otherwise, as may be
considered necessary or advisable to give full force and effect to the foregoing.”
The resolution must be approved by a majority approval of no less than two thirds
of the votes cast at the Meeting by the holders of Common Shares.
If named as proxy, the management designees intend to vote the Common Shares
represented by such proxy for approval of the conversion of the Special Preferred Shares
into Common Shares, unless otherwise directed in the instrument of proxy.
V.
RATIFICATION OF THE CONTINUANCE OF THE CORPORATION FROM
BRITISH COLUMBIA INTO ONTARIO UNDER THE NAME QUANTITATIVE
ALPHA TRADING INC. AND ADOPTION OF A NEW GENERAL BY-LAW
The Corporation is currently existing under the BCBCA and the Corporation is seeking
shareholder approval to continue the Corporation to Ontario under the Ontario Business
Corporations Act (“OBCA”). Upon the Continuance, the BCBCA will cease to apply to the
Corporation and the Corporation will thereupon become subject to the OBCA, as if it had been
originally incorporated as an Ontario company. The Continuance will not result in any change in
the business of the Corporation or its assets, liabilities or net worth, nor in the persons who
constitute the Corporation’s Board of Directors and management. The listing of the
Corporation’s shares on the CNSX will not in any way be affected by the Continuance. The
continuance is not a reorganization, an amalgamation or a merger.
The management and head office of the Corporation is located in Toronto, Ontario and,
as such, management believes that it will be more efficient and cost effective for the Corporation
to be governed by the laws of Ontario.
If the resolution is approved at the Meeting, the Corporation shall apply to and file all
necessary documentation with the Registrar under the BCBCA for an authorization to continue
into the Province of Ontario. Immediately following the receipt of the Registrar’s authorization,
the Corporation shall apply for a certificate of continuance and file articles of continuance
substantially in the form of Schedule C (“Articles of Continuance”) to continue the Corporation
into Ontario. The articles of continuance will constitute the governing instrument of the
continued company under the OBCA and the certificate of continuance issued by the Director
under the OBCA will be deemed to be the certificate of incorporation of the continued company.
The Board of Directors recommends that the Corporation be continued from British
Columbia into Ontario, effect a name change to the name Quantitative Alpha Trading Inc. by
way of the filing of Articles of Continuance and adopt a new general by-law. The shareholders of
the Corporation will be asked to consider and if thought fit, approve a special resolution to
continue the Corporation from British Columbia into Ontario under the name Quantitative Alpha
Trading Inc., authorize the filing of the Articles of Continuance, apply to the Registrar of
Corporations (Ontario) to permit the continuance and to the Registrar of Companies (B.C.) to
DM_TOR/286344-00002/4367671.4C
- 19 -
permit the continuance and to adopt a new general by-law in substantially the form of text
attached hereto as Schedule D.
The shareholders of the Corporation will be asked to consider, and if thought fit, to pass
the following resolution:
“BE IT RESOLVED THAT:
(i)
the continuance of the Corporation from British Columbia into Ontario under the
name Quantitative Alpha Trading Inc. as described in the Information Circular of
the Corporation dated February 28, 2011 and the filing of articles of continuance
substantially in the form annexed thereto as Schedule C be and is hereby
approved, adopted, ratified and confirmed;
(ii)
the Corporation is hereby authorized and directed to apply to the Registrar of
Corporations (Ontario) to permit the continuance in accordance with section 180
of the Ontario Business Corporations Act as if the Corporation had been
incorporated under the laws of Ontario;
(iii) the Corporation is hereby authorized and directed to apply to the Registrar of
Companies (B.C.) to permit the continuance in accordance with section 308 of the
British Columbia Corporations Act;
(iv)
the adoption of a new general by-law as described in the Information Circular of
the Corporation dated February 28, 2011 be and is hereby approved, adopted,
ratified and confirmed; and
(v)
any one director or officer of the Corporation be authorized to make all such
arrangements, to do all acts and things, to amend the articles of the Corporation to
comply with the Ontario Business Corporations Act and to sign and execute all
documents and instruments in writing, whether under corporate seal or otherwise,
as may be considered necessary or advisable to give full force and effect to the
foregoing.”
The special resolution must be approved by a majority approval of not less than two
thirds of the votes cast at the Meeting by the holders of Common Shares.
If named as proxy, the management designees intend to vote the Common Shares
represented by such proxy for approval of the continuance of the Corporation from British
Columbia into Ontario under the name Quantitative Alpha Trading Inc., the filing of the
Articles of Continuance, the applications to the Registar of Corporations (Ontario) and the
Registrar of Companies (British Columbia) to permit the continuance and the adoption of
a new general by-law, unless otherwise directed in the instrument of proxy.
If the Special Resolution approving the continuance is approved by the special majority,
any shareholder of the Corporation may send a notice of dissent, pursuant to section 309 of the
BCBCA. A dissenting shareholder is entitled to be paid for the fair market value of the shares in
accordance with section 185 of the OBCA,
DM_TOR/286344-00002/4367671.4C
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VI.
RATIFICATION OF THE LONG-TERM INCENTIVE PLAN
The Board of Directors recommends the adoption of a long-term incentive plan.
Shareholders will be asked to consider and if thought fit, approve an ordinary resolution to
approve the adoption of the Corporation’s long-term incentive plan (the “LTIP”). The full text
of the LTIP is attached as Schedule E hereto.
The shareholders of the Corporation will be asked to consider, and if thought fit, to pass
the following resolution:
“BE IT RESOLVED THAT:
(i)
the long-term incentive plan of the Corporation as described in the Information
Circular of the Corporation dated February 28, 2011 be and is hereby approved,
adopted, ratified and confirmed; and
(ii)
any one director or officer of the Corporation be authorized to make all such
arrangements, to do all acts and things and to sign and execute all documents and
instruments in writing, whether under corporate seal or otherwise, as may be
considered necessary or advisable to give full force and effect to the foregoing.”
The resolution must be approved by a simple majority approval of the votes cast at
the Meeting by the holders of Common Shares.
If named as proxy, the management designees intend to vote the Common Shares
represented by such proxy for approval of the long-term incentive plan of the Corporation,
unless otherwise directed in the instrument of proxy.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Definitions:
For the purpose of this Information Circular:
“CEO” means an individual who acted as chief executive officer of the company,
or acted in a similar capacity, for any part of the most recently completed
financial year;
“CFO” means an individual who acted as chief financial officer of the
Corporation, or acted in a similar capacity, for any part of the most recently
completed financial year;
“company” includes other types of business organizations such as partnerships,
trusts and other unincorporated business entities;
DM_TOR/286344-00002/4367671.4C
- 21 -
“equity incentive plan” means an incentive plan, or portion of an incentive plan,
under which awards are granted and that falls within the scope of Section 3870 of
the Handbook;
“Handbook” means the Handbook of the Canadian Institute of Chartered
Accountants, as amended from time to time;
“incentive plan” means any plan providing compensation that depends on
achieving certain performance goals or similar conditions within a specified
period;
“incentive plan award” means compensation awarded, earned, paid, or payable
under an incentive plan;
“NEO” or “Named Executive Officer” means each of the following individuals:
(a)
a CEO;
(b)
a CFO;
(c)
each of the three most highly compensated executive officers, or the three
most highly compensated individuals acting in a similar capacity, other
than the CEO and CFO, at the end of the most recently completed
financial year whose total compensation was, individually, more than
$150,000, as determined in accordance with subsection 1.3(6) of National
Instrument 51-102, for that financial year; and
(d)
each individual who would be an NEO under paragraph (c) but for the fact
that the individual was neither an executive officer of the company, nor
acting in a similar capacity, at the end of that financial year;
“non-equity incentive plan” means an incentive plan or portion of an incentive
plan that is not an equity incentive plan;
“option-based award” means an award under an equity incentive plan of options,
including, for greater certainty, share options, share appreciation rights, and
similar instruments that have option-like features;
“plan” includes any plan, contract, authorization, or arrangement, whether or not
set out in any formal document, where cash, securities, similar instruments or any
other property may be received, whether for one or more persons;
“share-based award” means an award under an equity incentive plan of equity-
based instruments that do not have option-like features, including, for greater
certainty, common shares, restricted shares, restricted share units, preferred share
units, phantom shares, phantom share units, common share equivalent units, and
stock.
DM_TOR/286344-00002/4367671.4C
- 22 -
Given the Corporation’s current size and stage of development, the Board of Directors
has not appointed a formal compensation committee, however it is the Board of Directors’ policy
that management directors are required to abstain from voting in respect of their own
compensation thereby providing the independent members of the Board of Directors with
considerable input as to executive compensation. The Board of Directors’ compensation
philosophy is aimed at attracting and retaining quality and experienced people with established
records in managing and maintaining public companies which is critical to the success of the
Corporation. These key persons create the framework for future success and later will share in
any success of the Corporation. Such a reward system supports the Corporation’s commitment to
delivering strong performance for the Shareholders. At the present time the Corporation does not
have a compensation program in place for its NEOs or directors, as is evidenced by the Summary
Compensation Table, below. See also Compensation of Directors, later in this Information
Circular.
The Board of Directors reviews on an annual basis the corporate goals and objectives
relevant to executive compensation, and determines if a compensation package should be
implemented. The Board of Directors also takes into consideration the Corporation’s overall
performance, shareholder returns, the value of similar incentive awards to executive officers at
comparable companies and the awards given to executive officers in past years. The Board of
Directors intends to make awards to senior officers including NEOs and directors under the LTIP
subject to the approval of the LTIP by shareholders.
Summary Compensation Table
The following table provides a summary of the total compensation for the three most
recently completed financial years paid to the Named Executive Officers: the President and
CEO, and the CFO and the three most highly compensated executive officers, other than the
CEO and CFO of the Corporation. No other executive officer of the Corporation or any of its
subsidiaries received total compensation in excess of $150,000 in respect of the financial year
ended December 31, 2010.
Non-Equity Incentive
Plan Compensation
($)
Share-
Option-
Name and
Based
Based
Annual
Long-term
Pension
All Other
Total
Principal
Year
Salary
Awards
Awards(1)
Incentive
Incentive
Value
Compensation
Compensation
Position
Ended
($)
($)
($)
Plans
Plans
($)
($)
($)
Michael
2010
N/A
520,625
N/A
N/A
N/A
N/A
N/A
520,625
Boulter,
Common
Common Shares
President
Shares
and Interim
CEO(1)
DM_TOR/286344-00002/4367671.4C
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Non-Equity Incentive
Plan Compensation
($)
Share-
Option-
Name and
Based
Based
Annual
Long-term
Pension
All Other
Total
Principal
Year
Salary
Awards
Awards(1)
Incentive
Incentive
Value
Compensation
Compensation
Position
Ended
($)
($)
($)
Plans
Plans
($)
($)
($)
Alex
2010
N/A
N/A
N/A
N/A
N/A
N/A
75,165.09(6)
75,165.09
Bogdan
Chief
Technology
Officer
Rana Vig
2010
$30,000
N/A
Nil
N/A
N/A
N/A
N/A
$30,000
Vice-
President,
Corporate
Operartions
Lucky
2010
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Janda(2)
2009
N/A
N/A
N/A
N/A
N/A
N/A
$48,229 finders
$264,979
CEO,
fees to 849928
President
BC Ltd..(3)
$22,750
management fees
to Cambrel
Industries Ltd.(3)\
$45,000
management fees
to INFA
Investment Ltd.(3)
$39,000
consulting fees to
Cambrel
Industries Ltd..(3)
$50,000 property
research fees to
Forbes and
Manhattan BC
Ltd..(3)
$60,000 rent to
Cambrel
Industries Ltd..(3)
2008
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Sandeep
2010
N/A
N/A
Nil
N/A
N/A
N/A
N/A
$3,000
Poonia
2009
N/A
N/A
N/A
N/A
N/A
N/A
$3,000 director’s
$3,000
President(4)
fees
DM_TOR/286344-00002/4367671.4C
- 24 -
Non-Equity Incentive
Plan Compensation
($)
Share-
Option-
Name and
Based
Based
Annual
Long-term
Pension
All Other
Total
Principal
Year
Salary
Awards
Awards(1)
Incentive
Incentive
Value
Compensation
Compensation
Position
Ended
($)
($)
($)
Plans
Plans
($)
($)
($)
Parmjeet
2009
N/A
N/A
N/A
N/A
N/A
N/A
$3,000 director’s
$3,000
Johal
fees
Harpreet
2009
N/A
N/A
N/A
N/A
N/A
N/A
$3,000 director’s
$3,000
Janda
fees
Chief
2008
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Financial
Officer
Curt Huber
2009
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
President(5)
2008
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Notes:
1.
Mr. Boulter became President and Interim CEO of the Company on May 15, 2010.
2.
Mr. Janda served as CEO and a director of the Corporation until October 12, 2010.
3.
Company which Mr. Janda controls and is on the Board of Directors.
4.
Mr. Sandeep Poonia served as President and a director of the Corporation until May 15, 2010.
5.
Mr. Huber resigned as President and a director of the Corporation April 8, 2009.
6.
Consulting fees paid to Dr. Bogdan.
INCENTIVE PLAN AWARDS
Outstanding Share-Based Awards and Option-Based Awards
The Corporation has not had a formalized stock option plan for the granting of incentive
stock options to the officers, employees, consultants and Directors.
PENSION PLAN BENEFITS
The Corporation does not have any pension, retirement or deferred compensation plans,
including defined contribution plans.
TERMINATION AND CHANGE OF CONTROL BENEFITS
The Corporation has not entered into any compensatory plans, contracts or arrangements
with any of its Named Executive Officers whereby such officers are entitled to receive
compensation as a result of the resignation, retirement or any other termination of employment
of the Named Executive Officer with the Corporation or from a change in control of the
DM_TOR/286344-00002/4367671.4C
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Corporation or a change in the Named Executive Officer’s responsibilities following a change in
control.
DIRECTOR COMPENSATION
Information regarding the compensation received, including options, from the
Corporation by any director who was also a Named Executive Officer during the financial year
ended December 31, 2010 may be found under the heading “Summary Compensation Table.”
Non-management directors of the Corporation do not currently receive any compensation
for their services as directors of the Corporation. The directors are entitled to be reimbursed for
reasonable expenditures incurred in performing their duties as directors.
Executive officers who also act as directors of the Corporation do not receive any
additional compensation for services rendered in their capacity as directors.
Director Compensation
With the exception of the compensation provided to Nikolas Perrault described in the
table below, there was no compensation provided to the directors or director nominees for the
most recently completed financial year.
Non-equity
Share-
Option-
incentive
Pensio
Fees
Based
Based
plan
n
All Other
Total
Year
Earned
Awards
Awards(1)
compensation
Value
Compensation
Compensation
Name
Ended
($)
($)
($)
($)
($)
($)
($)
Nikolas
2010
N/A
N/A
N/A
N/A
N/A
250,000 Special
250,000 Special
Perrault,
Preferred
Preferred Shares
Director
Shares(1)
2009
N/A
N/A
N/A
N/A
N/A
183,000
183,000
Common Shares
Common Shares
to Twilight
Capital(2)(3)
Notes:
1.
Private placement finder’s fee earned by Mr. Perrault prior to joining the Board of Directors.
2.
Private placement finder’s fee earned by Mr. Perrault prior to joining the Board of Directors.
3.
Company in which Nikolas Perrault controls and is on the Board of Directors.
Outstanding Share-Based Awards and Option-Based Awards
No director has any awards outstanding at the end of the most recently completed
financial year. This includes awards granted before the most recently completed financial year.
DM_TOR/286344-00002/4367671.4C
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EQUITY COMPENSATION PLAN INFORMATION
As of December 31, 2010, the Corporation’s most recently completed financial year, the
Corporation had terminated its only equity compensation plan, being the plan approved by the
shareholders of the Corporation on May 31, 2006, and no options, warrants or other rights were
outstanding thereunder. The LTIP has been proposed for consideration by shareholders at the
Meeting.
CORPORATE GOVERNANCE
General
Corporate governance relates to the activities of the Board of Directors of the
Corporation (the “Board of Directors”), the members of which are elected by and are
accountable to the shareholders, and takes into account the role of the individual members of
management who are appointed by the Board of Directors and who are charged with the day to
day management of the Corporation. The Board of Directors and senior management consider
good corporate governance to be central to the effective and efficient operation of the
Corporation.
The Canadian Securities Administrators (the “CSA”) have adopted National Policy 58-
201 Corporate Governance Guidelines, which provides non-prescriptive guidelines on corporate
governance practices for reporting issuers such as the Corporation. The Corporation has
reviewed its own corporate governance practices in light of these guidelines. In certain cases, the
Corporation’s practices comply with the guidelines, however, the Board of Directors considers
that some of the guidelines are not suitable for the Corporation at its current stage of
development and therefore these guidelines have not been adopted.
In addition, the CSA have implemented National Instrument 58-101 Disclosure of
Corporate Governance Practices (“NI 58-101”), which prescribes certain disclosure by the
Corporation of its corporate governance practices. This disclosure is presented below. As a
“venture issuer”, as defined in NI 58-101, the Corporation is required to make such disclosure
with reference to the requirements of Form 58-101F2, which disclosure is set forth below.
Board of Directors - Structure and Composition
The Board of Directors currently consists of four directors, of whom two (2) are
independent, namely Messrs. Ziraldo and Perrault. None of the independent directors has any
direct or indirect material relationship with the Corporation (other than shareholdings) which
could, in the view of the Corporation’s Board of Directors, reasonably interfere with the exercise
of a director’s independent judgment. If management’s nominees for directors are elected at the
Meeting, following the Meeting the Board of Directors will consist of nine (9) directors, of
whom two (3) will be independent including Messrs. Gibson, Milstein and Schaeffer.
The following prospective directors are not independent:
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1. Messrs. Halpern and Apps on the basis that, on account of their position as trustees of
Alpha Holding Trust, they jointly control the votes represented by 74,647,815 Common Shares
of the Corporation; and
2. Messrs. Bogdan, Boulter and McGovern on the basis that they also serve and are
employed as senior officers of the Corporation.
Board of Directors – Mandate of the Board of Directors
The mandate of the Board of Directors is to manage or supervise the management of the
business and affairs of the Corporation and to act with a view to the best interests of the
Corporation. In doing so, the Board of Directors oversees the management of the Corporation’s
affairs directly and through its Audit Committee (see “Committees of the Board of Directors”
below). In fulfilling its mandate, the Board of Directors, among other matters, is responsible for
reviewing and approving the Corporation’s overall business strategies and its annual business
plan, reviewing and approving the annual corporate budget and forecast, reviewing and
approving significant capital investments outside the approved budget; reviewing major strategic
initiatives to ensure that the Corporation’s proposed actions accord with shareholder objectives;
reviewing succession planning; assessing management’s performance against approved business
plans and industry standards; reviewing and approving the reports and other disclosure issued to
shareholders; ensuring the effective operation of the Board of Directors; and safeguarding
shareholders’ equity interests through the optimum utilization of the Corporation’s capital
resources. The Board of Directors also takes responsibility for identifying the principal risks of
the Corporation’s business and for ensuring these risks are effectively monitored and mitigated
to the extent reasonably practicable. At this stage of the Corporation’s development, the Board of
Directors does not believe it is necessary to adopt a written mandate, as sufficient guidance is
found in the applicable corporate and securities legislation and regulatory policies. However, as
the Corporation grows, the Board of Directors will move to develop a formal written mandate.
In keeping with its overall responsibility for the stewardship of the Corporation, the
Board of Directors is also responsible for the integrity of the Corporation’s internal control and
management information systems and for the Corporation’s policies respecting corporate
disclosure and communications.
The Board of Directors ordinarily delegates to management, through the Chief Executive
Officer and Chief Financial Officer, responsibility for meeting defined corporate objectives,
implementing approved strategic and operating plans, carrying on the Corporation’s business in
the ordinary course, managing the Corporation’s cash flow, evaluating new business
opportunities, recruiting staff and complying with applicable regulatory requirements. The Board
of Directors also looks to management to furnish recommendations respecting corporate
objectives, long-term strategic plans and annual operating plans.
The Board of Directors has found that the fiduciary duties placed on management by the
Corporation’s governing corporate legislation and common law and the restrictions on an
individual director’s participation in decisions of the Board of Directors in which the director has
an interest under applicable corporate and securities legislation provide the “independent”
directors with significant input and leadership in exercising their responsibilities for independent
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oversight of management. In addition, each member of the Board of Directors understands that
he is entitled to seek the advice of an independent expert if he reasonably considers it warranted
under the circumstances and the “independent” directors have the ability to meet independently
of management whenever deemed necessary.
Directorships
The following directors and nominee directors of the Corporation are also directors of
other reporting issuers, as described in the table below:
Name of Director
Other reporting issuer (or equivalent in a foreign jurisdiction)
Richard Schaeffer
Vocaltec
Orientation and Continuing Education of Board of Directors Members
Orientation and education of new members of the Board of Directors is conducted
informally by management and members of the Board of Directors. The orientation provides
background information on the Corporation’s history, performance and strategic plans.
New directors are briefed on strategic plans, short, medium and long term corporate
objectives, business risks and mitigation strategies, corporate governance guidelines and existing
company policies. However, there is no formal orientation for new members of the Board of
Directors, and this is considered to be appropriate, given the Corporation’s size and current
operations.
The skills and knowledge of the Board of Directors as a whole is such that no formal
continuing education process is currently deemed required. The Board of Directors is comprised
of individuals with varying backgrounds, who have, both collectively and individually, extensive
experience in running and managing public companies. Board of Directors members are
encouraged to communicate with management, auditors and technical consultants to keep
themselves current with industry trends and developments and changes in legislation, with
management’s assistance. Board of Directors members have full access to the Corporation’s
records.
Measures to Encourage Ethical Business Conduct
The Board of Directors expects management to operate the business of the Corporation in
a manner that enhances shareholder value and is consistent with the highest level of integrity.
Management is expected to execute the Corporation’s business plan and to meet performance
goals and objectives.
To date, the Board of Directors has not adopted a formal written Code of Business
Conduct and Ethics. The Board of Directors has found that the fiduciary duties placed on
individual directors by the Corporation’s governing corporate legislation and the common law,
as well as the restrictions placed by applicable corporate and securities legislation on the
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individual director’s participation in decisions of the Board of Directors in which the director has
an interest, have been sufficient to ensure that the Board of Directors operates independently of
management and in the best interests of the Corporation and its shareholders.
Nomination of Board of Directors Members
Given its current size and stage of development, the Board of Directors has not appointed
a nominating committee and these functions are currently performed by the Board of Directors as
a whole. Nominees are generally the result of recruitment efforts by Board of Directors
members, including both formal and informal discussions among Board of Directors members
and the President, and proposed directors’ credentials are reviewed in advance of a Board of
Directors meeting with one or more members of the Board of Directors prior to the proposed
director’s nomination. It is anticipated that the Board of Directors will establish a Governance
and Nominating Committee for the coming year.
Composition of the Board of Directors
Members of the Board of Directors are not compensated for acting as directors, save for
being granted incentive stock options which may be granted pursuant to the policies of the
Exchange and the Corporation’s LTIP. The Board of Directors as a whole determines the stock
option grants for each director.
In addition, compensation to be paid to executive officers who are also directors must be
approved by the disinterested directors thereby providing the non-executive officer directors with
significant input into compensation decisions.
Board of Directors Committees
The Board of Directors is satisfied that in view of the size and composition of the Board
of Directors, it is more efficient and cost effective for the full Board of Directors to perform the
duties that would be required by standing committees, other than the audit committee. Over the
coming year, it is anticipated that additional standing and/or ad hoc committees may be formed
as required.
Assessment of Directors, the Board of Directors and Board of Directors Committees
The Board of Directors does not, at present, have a formal process in place for assessing
the effectiveness of the Board of Directors as a whole, its committees or individual directors, but
will consider implementing one in the future should circumstances warrant. Based on the
Corporation’s current size, its stage of development and the limited number of individuals on the
Board of Directors, the Board of Directors considers a formal assessment process to be
inappropriate at this time. The Board of Directors plans to continue evaluating its own
effectiveness and the effectiveness and contribution of its committees or individual directors on
an ad hoc basis.
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AUDIT COMMITTEE
Audit Committee Charter
A copy of the Audit Committee Charter is attached hereto as Schedule F.
Composition of the Audit Committee
The Audit Committee was recently reconstituted and currently consists of Todd Halpern,
Nikolas Perrault and Donald Ziraldo. The Audit Committee will be re-constituted after the
Meeting. All of the Audit Committee members are independent and financially literate under
National Instrument 52-110 - Audit Committees.
Reliance on Certain Exemptions
The Corporation is relying upon the exemption granted in section 6.1 of National
Instrument 52-110 - Audit Committees as a Venture Issuer.
Pre-Approval Policies and Procedures
Under the policy, the Audit Committee shall approve all non-audit services to be
provided by the independent auditor prior to the services being performed, including the amount
of any related fees. To the extent deemed necessary by the Audit Committee, it shall have the
authority to engage outside counsel and/or independent accounting consultants to review any
matter under its responsibility.
External Auditor Service Fees (By Category)
The following table provides information about the fees billed to the Corporation for
professional services rendered by ACAL Group, Chartered Accountants and Grant Thornton
LLP during fiscal year 2009 and 2010. These fees were paid or estimated to be payable for
services in the year indicated:
2010
2009
Grant Thornton LLP
ACAL Group, Chartered Accountants
($)
($)
Audit Fees(1)
$45,000 (est)
$17,000
Audit-Related Fees(2)
0
0
Tax Fees(3)
0
$950
All Other Fees(4)
0
$3,000
Total:(5)
$45,000
$20,950
Notes:
1.
Audit fees were for professional services rendered for the audit of the Corporation’s annual consolidated financial
statements as well as services provided in connection with statutory and regulatory filings.
DM_TOR/286344-00002/4367671.4C
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2.
Audit-related fees are fees not included in audit fees that are billed by the auditor for assurance and related services that
are reasonably related to the performance of the audit or review of the Corporation’s financial statements.
3.
Professional services rendered for tax compliance, tax advice and tax planning.
4.
All other fees performed by the Corporation’s auditors.
5.
These fees only represent professional services rendered and do not include any out-of -pocket disbursements or fees
associated with filings made on the Corporation’s behalf. These additional costs are not material as compared to the total
professional services fees for each year.
When active, the Audit Committee ordinarily meets with the Corporation’s auditors
regularly, independent of management, and has direct communication channels with the external
auditors to discuss and review specified issues as appropriate.
At no time since the commencement of the Corporation’s most recently completed
financial year was a recommendation of the Committee to nominate or compensate an external
auditor not adopted by the Board of Directors.
MANAGEMENT CONTRACTS
Management functions of the Corporation are performed by the directors and senior
officers of the Corporation and are not to any substantial degree performed by any other person
or corporation.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No Person has any material interest, direct or indirect, by way of beneficial ownership of
securities or otherwise, in matters to be acted upon at the Meeting other than the election of
directors and approval of the long-term incentive plan. For the purpose of this paragraph,
“Person” shall include each person: (a) who has been a director or executive officer of the
Corporation at any time since the commencement of the Corporation’s last financial year;
(b) who is a proposed nominee for election as a director of the Corporation; or (c) who is an
associate or affiliate of a person included in subparagraphs (a) or (b).
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
Since the commencement of the Corporation’s most recently completed financial period,
no informed person of the Corporation, nominee for director or any associate or affiliate of an
informed person or nominee, had any material interest, direct or indirect, in any transaction or
any proposed transaction which has materially affected or would materially affect the
Corporation. An “informed person” means: (a) a director or executive officer of the
Corporation; (b) a director or executive officer of a person or company that is itself an informed
person or subsidiary of the Corporation; (c) any person or company who beneficially owns,
directly or indirectly, voting securities of the Corporation or who exercises control or direction
over voting securities of the Corporation or a combination of both carrying more than 10% of the
voting rights other than voting securities held by the person or company as underwriter in the
course of a distribution; and (d) the Corporation itself, if and for so long as it has purchased,
redeemed or otherwise acquired any of its shares.
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INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
No individual who is or, at any time during the most recently completed financial year
was, a director or executive officer of the Corporation, and no person who is a proposed nominee
for election as a director of the Corporation, and no associate of any of the foregoing is, or at any
time since the beginning of the most recently completed financial year had been (i) indebted to
the Corporation, or (ii) indebted to another entity where such indebtedness was the subject of a
guarantee, support agreement, letter of credit or other similar arrangement or understanding
provided by the Corporation.
As of February 28, 2011, no executive officer, director, employee or former executive
officer, director or employee of the Corporation was (i) indebted to the Corporation, or
(ii) indebted to another entity where such indebtedness was the subject of a guarantee, support
agreement, letter of credit or other similar arrangement or understanding provided by the
Corporation.
ADDITIONAL INFORMATION
Financial information will be provided in the Corporation’s audited annual financial
statements and accompanying managements’ discussion and analysis (“MD&A”) for the year
ended December 31, 2010. The 2010 audited annual financial statements and MD&A will be
mailed to registered shareholders that have requested them.
Additional information relating to the Corporation is available on the SEDAR website at
www.sedar.com or may be obtained by contacting the Corporation at its business office
5250 Satellite Drive, Unit 22, Mississauga, Ontario, L4W 5G5, or by telephone at (416) 629
1333.
GENERAL
The contents and sending of this Information Circular have been approved by the Board
of Directors of the Corporation. Unless otherwise stated, the information contained herein is
given as of the 28th day of February, 2011.
DATED as of the 28th day of February, 2011.
BY ORDER OF THE BOARD OF DIRECTORS
“Michael Boulter”
Michael Boulter, President, Chief Operating Officer and
Interim Chief Executive Officer
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