PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
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AMERALIA, INC.
---------------
(Name of Registrant as Specified In Its Charter)
Robert C.J. van Mourik, Executive Vice President
------------------------------------------------
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AMERALIA, INC.
20971 East Smoky Hill Rd.
Centennial, CO 80015
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 18, 2002
- --------------------------------------------------------------------------------
May 15, 2002
TO THE SHAREHOLDERS OF AMERALIA, INC.:
The Annual Meeting of Shareholders of AmerAlia, Inc., a Utah
corporation, ("AmerAlia" or "we") will be held at the DoubleTree Hotel, 9599
Skokie Blvd, Skokie, Chicago, Illinois, on June 18, 2002 at 10:00 a.m. local
time, to consider and take action on:
1. The election of seven directors to serve until the next annual
meeting of shareholders and until their successors have been
elected and qualified.
2. Such other business as may properly come before the meeting,
or any adjournments or postponements thereof.
The discussion of the proposal set forth above is intended only as a
summary, and is qualified in its entirety by the information contained in the
accompanying Proxy Statement.
Only holders of record of common stock at the close of business on May
9, 2002, will be entitled to notice of and to vote at this Annual Meeting, and
any postponements or adjournments thereof.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON AND WE HOPE
YOU WILL ATTEND.
Shareholders, whether or not they expect to be present at the meeting,
are requested to sign and date the enclosed proxy and return it promptly in the
envelope enclosed for that purpose. Any person giving a proxy has the power to
revoke it at any time by following the instructions provided in the Proxy
Statement.
By Order of the Board of Directors:
Bill H. Gunn, President
PLEASE DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES. THE GIVING OF SUCH PROXY DOES NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
YOUR VOTE IS IMPORTANT
AMERALIA, INC.
20971 EAST SMOKY HILL RD.
CENTENNIAL, CO 80015
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 18, 2002
May 15, 2002
This Proxy Statement is being furnished to shareholders of AmerAlia,
Inc. ("AmerAlia" or "we") in connection with the solicitation of proxies by and
on behalf of AmerAlia's Board of Directors for use at the Annual Meeting of
shareholders of AmerAlia (the "Annual Meeting") and at any adjournments or
postponements thereof. The Annual Meeting will be held at 10:00 a.m. local time,
at the DoubleTree Hotel, 9599 Skokie Blvd, Skokie, Chicago, Illinois, on June
18, 2002. This Proxy Statement will be first mailed to the shareholders on or
about May 19, 2002.
VOTING SECURITIES
Holders of record of AmerAlia's common stock (the "Common Stock") at
the close of business on May 9, 2002 (the "Record Date") will be entitled to
vote on all matters. On the Record Date, we had 13,971,276 shares of Common
Stock outstanding and 82 shares of Series E Preferred Stock ,outstanding. The
holders of shares of Common Stock are entitled to one vote per share; the
holders of the Series E Preferred Stock are not entitled to vote. Our voting
securities include only the outstanding Common Stock.
A majority of the issued and outstanding shares of the Common Stock
entitled to vote, represented in person or by proxy, constitutes a quorum for
the transaction of business at the meeting. As described in more detail below,
if there is a quorum present the seven nominees for the Board receiving the
greatest number of affirmative votes will be elected as directors (proposal 1).
Management may, in its discretion, seek an adjournment of the meeting
to a specific time and place if a quorum is not present.
Abstentions will be treated as shares present or represented and
entitled to vote for purposes of determining the presence of a quorum, but will
not be considered as votes cast in determining whether a matter has been
approved by the shareholders. Any shares a broker indicates on its proxy that it
does not have the authority to vote on any particular matter because it has not
received direction from the beneficial owner thereof will not be counted as
voting on a particular matter.
A shareholder who gives his proxy pursuant to this solicitation may
revoke it at any time before it is voted either by giving notice of the
revocation thereof to our Secretary, by filing another proxy with the Secretary
or by attending the Annual Meeting and voting in person. All properly executed
and unrevoked proxies, if received in time, will be voted in accordance with the
instructions of the beneficial owners contained thereon.
We will bear the cost of the solicitation. In addition to solicitation
by mail, we will request banks, brokers and other custodian nominees and
fiduciaries to supply proxy materials to the beneficial owners of AmerAlia's
Common Stock for whom they hold shares and will reimburse them for their
reasonable expenses.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
At May 9, 2002, we had one class of outstanding voting securities, our
common stock (referred to herein as the "Common Stock"). The following table
sets forth information as of May 9, 2002 with respect to the ownership of the
Common Stock and Series E Preferred Stock for all directors, individually, all
executive officers named in the compensation table, all executive officers and
directors as a group, and all beneficial owners of more than five percent of the
Common Stock (not including shares held in the name of known depositories, such
as CEDE & Co., for the benefit of the underlying beneficial shareholders). The
following shareholders have sole voting and investment power with respect to the
shares unless indicated otherwise.
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Name & Address Amount & Nature Percent Percent
of of Beneficial of of Voting
Beneficial Owner Ownership Class Securities
- -------------------------------------------------------------------------------------------------
Bill H. Gunn 474,060(1) 3.3% 0.8%
Robert C.J. van Mourik 320,384(2) 2.3% 1.0%
John F. Woolard 277,500(3) 2.0% 0.2%
James V. Riley 275,000(4) 2.0% 1.4%
Geoffrey C. Murphy 152,500(5) 1.1% 0.3%
Neil E. Summerson 187,500(6) 1.3% nil
Robert A. Cameron 187,500(7) 1.3% nil
Roger Day 80,000(8) 0.6% nil
OFFICERS & DIRECTORS
AS A GROUP (8 PERSONS) 1,954,444(9) 12.7% 3.8%
Jacqueline Badger Mars 7,177,460(10) 51.4% 51.4%
atf the Jacqueline
Badger Mars Trust dated
Feb 5, 1975 as amended
6885 Elm St., McLean, VA 22101
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(1) Mr. Gunn: Includes 87,935 shares of Common Stock owned
directly by Mr. Gunn and 96,125 shares of Common Stock owned
by Gunn Development Pty. Ltd. (of which Mr. Gunn is a
controlling shareholder); options to acquire 140,000 shares of
Common Stock at $1.50 per share until June 28, 2006; and
options to acquire 150,000 shares of Common Stock at $1.09 per
share until April 30, 2005. Mr. Gunn has pledged 107,310
shares to another stockholder as security for a loan. Does not
include 70,000 Stock Appreciation Rights issued at $1.50 per
share expiring June 28, 2006.
(2) Mr. van Mourik: Includes 500 shares of Common Stock owned
directly by Mr. van Mourik, 90,759 shares of Common Stock
owned by Ahciejay Pty. Ltd. as Trustee for The R.C.J. Trust,
and 54,125 shares of Common Stock owned by the R.C.J.
Superannuation Fund, as to both of which Mr. van Mourik and
his family are beneficiaries. Also includes options to acquire
75,000 shares of Common Stock at $1.50 per share expiring on
June 28, 2006 and options to acquire 100,000 shares of Common
Stock at $1.09 per share expiring April 30, 2005.
(3) Mr. Woolard: Includes 27,500 shares of Common Stock, options
to acquire 100,000 shares of Common stock at $1.09 per share
exercisable through March 31, 2003, and options to acquire
150,000 shares of Common Stock at $1.50 per share exercisable
through March 31, 2003.
(4) Mr. Riley: Includes 200,000 shares held by a trust in which
Mr. Riley has a beneficial interest and options to acquire
75,000 shares at $0.71 expiring October 24, 2004.
(5) Mr. Murphy: Includes 40,000 shares of common stock. Also
includes options to acquire 75,000 shares at $1.09 per share
expiring April 30, 2005 and options to acquire 37,500 shares
at $1.45 expiring June 30, 2005.
(6) Mr. Summerson: Represents options to acquire 75,000 shares of
common stock for $1.50 per share expiring June 28, 2006;
options to acquire 75,000 shares of Common Stock at $1.09 per
share expiring April 30, 2005 and options to acquire 37,500
shares at $1.45 expiring June 30, 2005. The options are held
by Glendower Investments Pty. Ltd. as trustee for a trust of
which Mr. Summerson and his family are beneficiaries.
(7) Mr. Cameron: Represents options to acquire 75,000 shares of
Common Stock at $1.50 per share expiring on June 28, 2006;
options to acquire 75,000 shares of Common Stock at $1.09 per
share expiring April 30, 2005 and options to acquire 37,500
shares at $1.45 expiring June 30, 2005. The options are held
by Jacinth Pty. Ltd., a company in which Mr. Cameron is a
controlling shareholder.
(8) Mr. Day: Represents options to purchase 80,000 shares of
Common Stock at $1.50 per share until December 31, 2003.
(9) All officers and directors: Includes beneficial ownership of
Messrs. Gunn, van Mourik, Woolard, Murphy, Summerson, Cameron,
and Day as described in notes 1, 2, 3, 4, 5, 6, 7 and 8,
above. Does not include options held by Mr. Day to acquire
20,000 shares of Common Stock at $1.50 per share, which vest
through December 31, 2003.
(10) Mars Trust: Includes 7,177,460 shares of Common Stock. See
"Certain Relationships and Related Party Transactions", below.
This table does not include the possible effect of issuance of up to
140,000 shares of Common Stock pursuant to the exercise of options at $1.50 per
share until June 28, 2006 and 50,000 options to acquire shares of Common Stock
at $1.09 expiring April 30, 2005, held by persons who are neither officers,
directors, nor significant shareholders of AmerAlia.
The Series E Stock consists of 82 shares issued at $1,000 per share.
Under the Statement of Preferences governing the Series E preferred stock, the
rights of the preferred stockholders to convert their shares expired October 31,
2000. Holders of 2,904 shares of preferred stock exercised their conversion
rights during October. The outstanding 82 shares of preferred stock, held by a
single person, have a liquidation preference of $1,000 per share plus accrued
dividends and are entitled to a dividend of 10% of the liquidation preference
when declared by the Board. The dividends are cumulative if unpaid. The
preferred stock does not have voting rights.
To the best of our knowledge, there are no arrangements, understandings
or agreements relative to the disposition of any of our securities, the
operation of which would at a subsequent date result in a change in control of
AmerAlia.
PROPOSAL 1
ELECTION OF DIRECTORS
The following seven persons are nominated as directors of AmerAlia for
a term of one year and until the election and qualification of their successors:
Bill H. Gunn Robert C.J. van Mourik John F. Woolard
Neil E. Summerson Robert A. Cameron Geoffrey C. Murphy
James V. Riley
These persons will constitute the entire Board of Directors. The person
named in the proxy intends to vote for those nominees, each of whom has been
recommended for election by our Board of Directors, unless a shareholder
withholds authority to vote for any or all of the nominees. The seven nominees
receiving the greatest number of affirmative votes will be elected as directors.
If any nominee is unable to serve, or will not serve for good cause, the person
named in the proxy reserves the right to substitute another person of his choice
as nominee in his place. Each of the nominees has agreed to serve, if elected.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth the names and ages of all the Directors
and Executive Officers of AmerAlia, positions held by each such person, and when
such person was first elected or appointed. The directors each serve until their
successors are duly elected and qualified; officers are appointed by, and serve
at the pleasure of, the Board of Directors.
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First
Elected or
Name & Age Position Appointed
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Bill H. Gunn Chairman of the Board, 02/84
Age 60 President, & Chief
Executive Officer
Robert C.J. van Mourik Director, 09/90
Age 49 Executive Vice President 01/89
Chief Financial Officer,
Secretary & Treasurer
Neil E. Summerson Director 09/90
Age 54 (1,2)
Robert A. Cameron Director 09/90
Age 63 (2)
John F. Woolard Director, 10/98
Age 62 Executive Vice President 06/98
Geoffrey C. Murphy Director 06/99
Age 61 (1,2)
James V. Riley Director 10/01
Age 65 (2)
Roger Day President, Natural Soda, Inc. 02/99
Age 52
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(1) Members of the Compensation Committee.
(2) Members of the Audit Committee
There are no family relationships among the officers or directors. No
arrangement exists between any of the above officers and directors pursuant to
which any one of those persons was elected to such office or position. None of
our directors is a director of a company having securities registered under
Section 12 or subject to Section 15(d) of the Securities Exchange Act of 1934 or
a company registered under the Investment Company Act of 1940.
Directors hold office until the next annual meeting of shareholders and
a successor is elected and qualified, or until their resignation. Executive
officers are elected at annual meetings of the Board of Directors. Each such
officer holds office for one year or until a successor has been duly elected and
qualified or until death, resignation or removal.
A brief summary of the business experience of each person who is
currently an officer or director of AmerAlia, and such person's service with us
is as follows:
BILL H. GUNN
Mr. Gunn graduated in Commerce from the University of Queensland in
1963, achieving his Accounting Certificate from the University of Queensland in
the same year. Subsequently, he was admitted as a member of the Australian
Society of Certified Practising Accountants and has successfully completed and
passed the examinations for admittance as a Certified Public Accountant (CPA) in
the USA.
Since March, 1977, Mr. Gunn has been a self-employed investor, CPA, and
a director of several Stock Exchange listed public companies, as well as a
number of majority owned private corporations. These companies have been active
in the field of retailing, hotels, feed mills, mining exploration, automotive
components, securities investment, financing, property development and numerous
related fields.
During his business experience, Mr. Gunn has been exposed to a wide
variety of corporate investments and has been involved in major business
acquisition and development activities. His principal activity is now serving as
our Chairman and President.
ROBERT C.J. VAN MOURIK
Mr. van Mourik graduated in 1974 with a Bachelor of Applied Science
(Chemistry) and in 1981 with a Masters Degree in Business Administration. His
employment experience includes manufacturing, real estate development and
marketing, investment consulting and corporate reconstruction. He has served as
our Executive Vice President, Chief Financial Officer, Treasurer and Secretary
since 1989 and in September 1990, he was elected a Director. In addition to
serving as an executive officer and director of AmerAlia, Mr. Van Mourik manages
his own investments.
NEIL E. SUMMERSON
Until July 1997, Mr. Summerson was the senior partner, and for five
years prior was managing partner, in the international accounting firm of Ernst
& Young, at its offices in Brisbane, Australia. Prior
to 1992, he worked in the Corporate Recovery and Insolvency Division, which is
involved in the administration of insolvent companies, as well as providing
counsel to small businesses in the area of taxation, audit procedures and
management advisory services. Mr. Summerson received his Bachelor of Commerce
degree from the University of Queensland in 1968. He is a Fellow of the
Institute of Chartered Accountants, an Associate of the Australian Institute of
Credit Management, a Registered Public Accountant in Queensland, a registered
Company Liquidator in Queensland, an Official Liquidator, and an Officer of the
Supreme Court of Queensland. Mr. Summerson serves as one of our Directors and
also is a director of several Australian public and private companies.
ROBERT A. CAMERON
Mr. Cameron graduated with Honors in Metallurgical and Chemical
Engineering from the University of Adelaide, Australia in April, 1961. Mr.
Cameron has had 16 years experience as Chief Executive Officer and director of a
number of Australian public companies. Mr. Cameron has been responsible for
developing mining operations involving such industrial minerals as rutile,
zircon, ilmenite, bentonite clay, calcium carbonate and silver and gold
properties. From 1983 until 1991, Mr. Cameron was Chairman of the Board of
Directors of Denison Resources Ltd., an Australian stock exchange listed public
company formed for the specific purpose of exploring and developing underground
natural soda resources in Queensland, Australia. This led to the investigation
of natural soda deposits in the United States and securing the Rock School Lease
interest later transferred to AmerAlia. Presently, Mr. Cameron serves as one of
our Directors and for more than the past five years Mr. Cameron has been serving
as an independent consultant.
JOHN F. WOOLARD
Mr. Woolard graduated from the University of Wisconsin, Madison,
Wisconsin, in June 1961. He received a Bachelor of Science degree with a major
in economics. After graduation he was employed by an advertising agency, working
in all major departments and finally as an account executive handling $5,000,000
annual advertising budgets. He joined an investment banking firm in 1968. In his
30 years in the investment banking business, Mr. Woolard has supervised all
departments in the firm, including retail sales, corporate finance,
underwriting, and accounting. Mr. Woolard has been a registered principal with
the New York Stock Exchange member firm, Stiffel, Nicolas & Co. for more than
the past five years until taking a leave of absence in January 1998. He is also
a director and an investor in a number of privately-held companies. Presently,
Mr. Woolard serves as our Executive Vice President and a Director.
GEOFFREY C. MURPHY
Mr. Murphy serves as one of our Directors and (since 2001) is Senior
Vice President of Citrico Holdings, Inc., a privately held processor of citrus
products. Previously, since 1990, he was a principal of Coloney Von Soosten +
Associates Inc., a consulting firm located in Kenilworth, Illinois. Mr Murphy
graduated with a Bachelor's degree from Dartmouth College, and a Master's of
Business Administration from the Amos Tuck School of Business Administration at
Dartmouth College.
JAMES RILEY
Since 1975, Mr. Riley has served as Founder, President, and Chief
Executive Officer for Transportation Media, Inc., which was sold to Clear
Channel Communications in February of 1998. The corporation is now known as
Clear Channel Airports, which specializes in the operation and sales of
out-of-home venues. Mr. Riley is currently Chairman of Clear Channel Airports.
ROGER DAY
Mr. Day is a graduate from Michigan Technical University with
approximately twenty years experience in researching, developing and managing
operations similar to AmerAlia's undertakings. Mr.
Day previously held senior technical and management positions with two mining
operations in Colorado. As President of Natural Soda, Inc., Mr. Day is
responsible for supervising the design, construction and management of the
solution mine and processing plant on our lease.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held eight formal meetings during the fiscal
year ended June 30, 2001. Each director attended all of the formal meetings
either in person or by telephone except Mr. Cameron who did not attend two
meetings, and Mr. Summerson who did not attend one meeting. The Board of
Directors has since held three meetings through March 31, 2002. In addition,
regular communications were maintained throughout the year among all of our
officers and directors and the directors acted by unanimous consent three times
during fiscal 2001 and once subsequently. We have standing audit and
compensation committees. We do not have a standing nomination committee.
Audit Committee. The audit committee is comprised of Messrs. Summerson,
Murphy, Riley and Cameron. Each of the members of the audit committee is
independent as that term is defined in Rule 4400(a)(15) of the Nasdaq listing
standards. The committee held two formal meetings during the fiscal year ended
June 30, 2001 and two meetings subsequently through May 6, 2002. The Board of
Directors has adopted a written charter for the audit committee, a copy of which
is attached hereto.
The following constitutes the report the Audit Committee has made to the Board
of Directors:
REPORT OF THE AUDIT COMMITTEE
To the Board of Directors of AmerAlia, Inc.
We hereby report to the Board of Directors of AmerAlia, Inc. that, in
connection with the financial statements for the year ended June 30, 2001, and
the anticipated preparation of the financial statements for the year ending June
30, 2002, we have
- reviewed and discussed the audited financial statements with
management;
- recommended the appointment of independent accountants;
- reviewing the arrangements and standards for and the scope of
the audit by independent accountants;
- reviewed the independence of the independent accountants;
- considered the adequacy of the system of internal accounting
controls and reviewing any proposed corrective actions;
- reviewed and monitoring our policies regarding business ethics
and conflicts of interest;
- reviewed the activities and recommendations of our accounting
department;
- discussed with the independent auditors the matters required
to be discussed by SAS 60 (Codification of Statements on
Auditing Standards, AU section 380), as may be modified or
supplemented; and
- received the written disclosures and the letter from the
independent accountants required by Independence Standards
Board Standard No. 1 (Independence Standards Board Standard
No.1, Independence Discussions with Audit Committees), as may
be modified or supplemented, and discussed with the
independent accountant the accountant's independence.
Based on those disclosures and discussions, we are not aware of any
relationship between the independent auditors and AmerAlia that affects the
objectivity or independence of the independent auditors. Based on the
discussions and our review discussed above, we recommended to the Board of
Directors that the audited financial statements for fiscal 2001 be included in
AmerAlia's 2001 Annual Report to shareholders.
Respectfully submitted,
The AmerAlia, Inc. Audit Committee
Neil E. Summerson, Chairman
Geoffrey C. Murphy, Member
Robert A. Cameron, Member
James V. Riley, Member
Compensation Committee. A compensation committee comprising the
non-executive directors of the Board of Directors was formed early in 1993 and
determined the management fees payable to Messrs. Gunn, van Mourik and Woolard,
as set out below. The compensation committee now comprises Mr. Summerson, Mr
Murphy and Mr. Riley, none has been an officer nor an employee of AmerAlia or
any of our subsidiaries during the fiscal year ended June 30, 2001, or
subsequently. Neither Mr. Summerson, Mr. Murphy nor Mr. Riley has any other
direct or indirect relationship with AmerAlia requiring disclosure by us
pursuant to Item 401 of Regulation S-K. Furthermore, no executive officer of
AmerAlia served as a member of the compensation committee (or similar committee)
of another entity that dealt with compensation paid to any member of our
compensation committee, or with which any other interlocking relationship
exists.
The compensation committee held one formal meeting during the fiscal
year ended June 30, 2001 and none subsequently through May 6, 2002. The
compensation committee has the authority to review and make recommendations to
our Board of Directors with respect to the compensation of our executive
officers.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
SECTION 16(A) DISCLOSURE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires AmerAlia's directors and officers and persons who own more than
10% of AmerAlia's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Directors,
officers, and greater-than-10% shareholders are required by SEC regulation to
furnish us with copies of all Section 16(a) reports filed.
Based solely on its review of the copies of the reports it received
from persons required to file, AmerAlia believes that during the period from
July 1, 2000 through June 30, 2001, all filing requirements applicable to
officers, directors, and greater-than-10% shareholders were met in accordance
with the requirements of Section 16(a) except that Mr. R. Day's filing on Form 4
reporting his receipt of 16,000 shares in October 2000 was filed in September
2001. Furthermore, it appears that the Jacqueline Badger Mars Trust was
obligated to file a Form 4 reporting a transaction in January 2002 which was not
timely filed.
AmerAlia was obligated to pay common stock dividends to the holders of
its Series E Preferred Stock as a class. Some of these holders are subject to
the reporting obligations of Section 16(a). It is the position of these
reporting persons that the dividends were exempt from the reporting requirements
by virtue of Rule 16a-9 and, therefore, reports were not required to be filed to
report each issuance of dividends.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation paid
to our officers during the three fiscal years ended June 30, 2001. Messrs. Gunn,
Woolard, van Mourik, and Day were the only executive officers receiving
compensation exceeding $100,000 during fiscal 2001, as shown below. Compensation
to Mr. Gunn is paid to Gunn Development Pty. Ltd., of which Mr. Gunn is a
controlling shareholder. Compensation to Mr. van Mourik is paid to Ahciejay Pty
Ltd, a company in which he has a controlling interest.
We have no plans for the payment or accrual for payment of any amounts
to any executive officer in connection with his resignation, retirement, or
other termination, or change of control or change in the executive officer's
responsibilities.
We have adopted for our employees a group medical insurance plan that
includes dental coverage. This plan also provides a minimum amount of life
insurance. We have not adopted any other benefit plan for our employees. Prior
to the adoption of that plan, we reimbursed Messrs. Woolard, Gunn, and Day for
certain medical expenses and insurance premiums. We currently have no stock
ownership, other profit-sharing or pension plans, but may adopt such plans in
the future. We have no retirement plans and, therefore, have not made
contributions to any such plan on behalf of the named officers.
Annual Compensation Long Term Compensation
------------------------------------------ -----------------------------
Awards Payout All
-------------------- ------ Other
Name and Restricted Options LTIP Comp-
Position Year Salary Bonus Other Awards & SAR's Payout ensation
- ------------------------- ---- --------- -------- ------------- ---------- ------- ------ --------
Bill H. Gunn,
President and 2001 $ 150,000 -0- $14,000 (a) -0- -0- -0- -0-
Chief Executive 2000 $ 150,000 -0- $14,000 (a) -0- -0- -0- -0-
Officer 1999 $ 125,000 -0- $14,000 (a) -0- -0- -0- -0-
- ------------------------- ---- --------- -------- ------------- ---- ---- ---- ----
John F.
Woolard, 2001 $ 150,000 -0- $14,000 (a,b) -0- -0- -0- -0-
Executive Vice 2000 $ 150,000 -0- $14,000 (a,b) -0- -0- -0- -0-
President 1999 $ 135,000 -0- $ 9,333 (a,b) -0- -0- -0- -0-
- ------------------------- ---- --------- -------- ------------- ---- ---- ---- ----
Robert C.J.
van Mourik, 2001 $ 133,000 -0- $14,000 (a) -0- -0- -0- -0-
Chief Financial 2000 $ 55,000 -0- $14,000 (a) -0- -0- -0- -0-
Officer & EVP 1999 $ 55,000 -0- $14,000 (a) -0- -0- -0- -0-
- ------------------------- ---- --------- -------- ------------- ---- ---- ---- ----
Roger L. Day, 2001 $ 105,000 $ 20,000 -0- -0- -0- -0- -0-
Vice President 2000 $ 105,000 -0- -0- -0- -0- -0- -0-
Operations 1999 $ 66,667 -0- -0- -0- -0- -0- -0-
- ------------------------- ---- --------- -------- ------------- ---- ---- ---- ----
Notes: (a) Directors fees
(b) These fees have not been paid but have been accrued as
liabilities.
OPTIONS/SAR GRANTED DURING YEAR ENDED JUNE 30, 2001
In May 2000, as part of an arrangement to compensate directors for
significant services expended on our behalf over an extended period of time, we
granted:
- Mr. Gunn options to purchase 150,000 shares of Common Stock;
- Mr. van Mourik options to purchase 100,000 shares of Common
Stock; and
- Messrs. Cameron and Summerson options to purchase 75,000
shares of Common Stock each.
Our shareholders approved these options in June 2001. These options
expire April 30, 2005. The exercise price was determined based upon the market
price of our shares during August 2000.
In April 2001, the Board of Directors extended this arrangement to
include additional options to other directors including:
- An option to John F. Woolard (who is also an executive vice
president) to purchase 100,000 options at $1.09 per share,
exercisable through March 31, 2003.
- Options expiring April 30, 2005 to purchase 75,000 shares at
$1.09 per share to Geoffrey C. Murphy, the director at that
time who was not an executive officer. (Samuel Stern, who was
also a non-executive director, also received options at the
time, but they expired following his resignation.
These options can be exercised on December 21, 2001. The exercise price
was in excess of market price at the time granted, and is equal to the price of
the options granted to the other directors. The shareholders approved each of
these grants in June 2001. If a director ceases to be a member of the Board of
Directors, the options expire three months after the holder is no longer a
director.
EQUITY COMPENSATION PLAN INFORMATION
- ------------------------------------------------------------------------------------------------------------
Equity Compensation Plan Information (a)
- ------------------------------------------------------------------------------------------------------------
Plan Category and Number of Securities Weighted-average exercise Number of securities remaining
Description to be issued upon price of outstanding available for future issuance
exercise of options, warrants, and under equity compensation plans
outstanding options, rights (excluding securities reflected
warrants, and rights in column (a))
- -------------------- -------------------- ------------------------- -------------------------------
Equity compensation
plans approved by
security holders 762,500 $1.11 1,000,000
- -------------------- -------------------- ------------------------- -------------------------------
Equity compensation
plans not approved
by security holders 595,000 $1.50 0
(b)
- -------------------- -------------------- ------------------------- -------------------------------
70,000(c) $1.50 0
- -------------------- -------------------- ------------------------- -------------------------------
Total 1,427,500 $1.29 1,000,000
- -------------------- -------------------- ------------------------- -------------------------------
(a) This does not include options held by management and directors
that were not granted as compensation. In each case, the
disclosure refers to options or warrants unless otherwise
specifically stated.
(b) The compensatory options and stock appreciation rights
described in this portion of the table were granted at various
times before the fiscal year ended June 30, 2001. Generally
they were
granted in connection with the commencement of employment
(with vesting requirements) or granted to compensate directors
and officers for periods of time served without cash
compensation. These options expire, unless exercised,
commencing March 31, 2003 through June 28, 2006.
(c) These represent stock appreciation rights granted in June 1996
and are exercisable at any time after the market for AmerAlia
common stock has sustained an average bid price for more than
$3.50 per share for a six month period before June 28, 2006
(when the rights expire). At that time, AmerAlia will be
indebted to the holder for $1.50 per right, which AmerAlia may
satisfy by issuing one share of its common stock for each such
right.
2001 Directors' Incentive Plan: In March 2001, the Board of Directors
adopted a plan by which each director (who is not an employee or officer) is
granted:
- An option to purchase 75,000 shares at a current market price
when such person joins the Board of Directors; and
- An option to purchase 37,500 shares if such director is a
director at July 1 of each year.
The exercise price for these options is the average market price of our
Common Stock during the month of June preceding each grant date, and the options
have a three-year term. All options granted under this plan are exercisable six
months after the date of grant.
Under this plan, we granted 37,500 options (which first become
exercisable after six months) to acquire shares of Common Stock at $1.45 per
share until June 30, 2004 to each of the following the non-executive directors,
on July 1, 2001:
- Geoffrey C. Murphy;
- Neil E. Summerson; and
- Robert A. Cameron,
We granted James Riley an option to purchase 75,000 shares of our
common stock at an exercise price of $0.71 per share when he became a director
in October, 2001. These options will expire on October 24, 2004 unless
exercised.
In each case, the non-executive directors (Messrs. Murphy, Summerson,
Cameron and Riley) will receive 37,500 options if they are re-elected at the
next annual meeting.
2001 Stock Option Plan: In March 2001, the Board of Directors also
adopted a stock option plan for its officers, employees, and consultants. The
Board of Directors (through its compensation committee) can issue options to
acquire up to 1,000,000 shares to officers, employees and consultants to provide
incentives to attract, retain and motivate eligible persons whose present and
potential contributions are important to our success by offering them an
opportunity to participate in our future performance through awards of stock
options. In each case, the Board of Directors (through its compensation
committee) will determine the price at which options may be issued, the term of
the options, and the number of options to be issued. In no case may the exercise
price be less than the market value of the underlying shares at the time of
grant. Our shareholders approved this plan at the annual meeting of shareholders
held in June 2001. At the present time, we have not granted any options under
this plan.
During the fiscal year ended June 30, 1999, AmerAlia granted stock
options, as described below, to Roger Day who became an executive officer in
April 1999. We have not adopted any other stock option or stock appreciation
rights plan.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE.
No officer exercised stock options during the fiscal year ended June
30, 2001, or subsequently. The following table sets forth information regarding
the year-end value of options and Stock Appreciation Rights held by the Chief
Executive Officer and the other named officers on June 30, 2001. No other Stock
Appreciation Rights have been granted, or are held by, any such person.
# of unexercised Value of
Name Shares acquired Value options at FY end in-the-money
on exercise Realized (exercisable/ options at FY end
unexercisable) (exercisable/
unexercisable)
- ------------------------- --------------- -------- ------------------ -----------------
Bill H. Gunn -0- -0- 290,000 76,000
- ------------------------- --------------- -------- ------------------ -----------------
Robert C.J. van Mourik -0- -0- 175,000 49,750
- ------------------------- --------------- -------- ------------------ -----------------
John F. Woolard -0- -0- 250,000 53,500
- ------------------------- --------------- -------- ------------------ -----------------
Roger L. Day -0- -0- 60,000 3,000
- ------------------------- --------------- -------- ------------------ -----------------
# of unexercised Value of
Name Shares acquired Value SAR's at FY end in-the-money
on exercise Realized (exercisable/ SAR's at FY end
unexercisable) (exercisable/
unexercisable)
- ------------------------- --------------- -------- ------------------ -----------------
Bill H. Gunn -0- -0- 70,000 3,500
- ------------------------- --------------- -------- ------------------ -----------------
LONG TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
AmerAlia has no long term incentive compensation plans, defined benefit
plans, or actuarial plans. There are no plans to pay bonuses or deferred
compensation to employees of AmerAlia. AmerAlia has not adopted any medical,
life or other insurance plan for its employees.
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
Not applicable since AmerAlia has not defined benefit or actuarial
plans.
COMPENSATION OF DIRECTORS
STANDARD ARRANGEMENTS. Our directors who are not executive officers are
authorized to receive $14,000 cash compensation per year for their services as
directors each year. These amounts have been accrued but have not been paid.
Currently, the accruals due to the directors are summarized below under Related
Party loans to AmerAlia under "Certain Relationships and Related Party
Transactions - Transactions with Management and Others":
In connection with certain consulting services rendered by them, we
paid or accrued liabilities to an affiliate of Robert A. Cameron $382 for
services rendered during the fiscal year ended June 30, 2001, and $25,972 for
the fiscal year ended June 30, 2000. In addition, we paid Coloney Von Soosten +
Associates Inc. a retainer of $2,500 per month for financial and administrative
services. Hours in excess of 15 per month were paid to Coloney Von Soosten +
Associates Inc. at the rate of $200 per hour. This consulting agreement ended in
September 2000. Geoffrey C. Murphy was a principal of Coloney Von Soosten +
Associates Inc., and had primary responsibility for the services it provided to
us Mr. Murphy became a director in June 1999 following the annual meeting of
shareholders.
For the period November 2, 2000 through August 7, 2001, Samuel A. Stern
was one of our directors. In March 2001, we issued 8,210 shares to Mr. Stern who
provided legal and other services to us in connection with our efforts to
finance our Rock School Project. Mr Stern billed us $8,702.60 for these
services. We also issued 8,210 shares to Mr. Stern's law partner for services he
performed. In addition, the law firm of Hills & Stern has submitted an invoice
to us in the amount of $75,032.50 for services rendered through June 26, 2001.
We have not paid this invoice and we are seeking a resolution of this matter
with Hills & Stern.
We also reimburse directors for expenses incurred on behalf of AmerAlia
on a fully accountable basis. As described above, the Board of Directors has
adopted a Directors' Incentive Plan to provide additional incentive to the
directors. The shareholders approved this plan in June 2001.
OTHER ARRANGEMENTS. Except as described herein, no officer or director of
AmerAlia has been or is being paid any cash compensation, or is otherwise
subject to any deferred compensation plan, bonus plan or any other arrangement
and understanding whereby such person would obtain any cash compensation for his
services for and on behalf of AmerAlia.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS.
AmerAlia has no compensation plan or arrangement with respect to any
executive officer which plan or arrangement results or will result from the
resignation, retirement or any other termination of such individual's employment
with AmerAlia. AmerAlia has no plan or arrangement with respect to any such
persons which will result from a change in control or a change in the
individual's responsibilities following a change in control.
We currently have no employment contracts. Previously, our only
employment contract was with Roger Day, currently President of our subsidiary,
Natural Soda, Inc. In April 1999, effective November 1998, we had entered into a
five-year employment agreement with Mr. Day. As compensation for services
rendered under the employment agreement, Mr. Day received (and continues to
receive) a salary of $100,000 per annum, plus bonuses and salary increases as
the Board of Directors may determine in its sole discretion. Because of
AmerAlia's working capital shortages, we have not always been able to pay Mr.
Day his salary timely. We also granted Mr. Day options to acquire 100,000 shares
of Common Stock for an exercise price of $1.50 per share, exercisable through
December 31, 2003. Options to acquire 20,000 shares vested on Board approval of
the employment agreement; the remainder vest annually through November 2002. In
addition, AmerAlia advanced $25,000 to Mr. Day as a loan, which amount was to be
forgiven over the period of his employment under the contract. In October, 2000
AmerAlia granted Mr. Day a stock bonus of 16,000 shares of Common Stock. In
April 2002, we agreed with Mr. Day to terminate his contract and he has since
been providing services as President to Natural Soda, Inc. on a month-to-month
basis. We have agreed that we shall forgive the balance of his loan account
including outstanding interest due as part of his compensation and that he will
continue to receive the outstanding options as they vest.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The following sets out information regarding transactions between
officers, directors and significant shareholders of AmerAlia during the most
recent two fiscal years and subsequently.
Corporate Loans - Loans to AmerAlia. During the fiscal years ended June
30, 2000 and 2001, certain related parties advanced loans to us as detailed in
the Notes to the Financial Statements. This comprised advances to us, as well as
accrued but unpaid compensation and directors fees. The following
summarises our liabilities to related parties:
June 30, June 30,
Related Party 2001 2000
----------------------------------------------------------------------------------------------
Ahciejay Pty. Ltd. (an affiliate of Robert van Mourik) $ 82,380 $ 51,700
Jacinth Pty. Ltd. (an affiliate of Robert A. Cameron) 29,117 28,729
John F. Woolard 20,071 23,333
Geoffrey C. Murphy 28,000 14,000
Neil E. Summerson 19,000 14,000
--------- ---------
Total: $ 187,948 $ 131,762
--------- ---------
In addition, at June 30, 2000 AmerAlia owed John F. Woolard $50,818 for
reimbursement of expenses paid on behalf of AmerAlia. This liability was
extinguished in July 2000.
Corporate Loans - Loans from AmerAlia. As detailed in Note 2 to the
Financial Statements, we advanced funds to Gunn Development Pty. Ltd., an
associate of Mr. Gunn. The following summarizes these advances during the fiscal
years ended June 30, 2000 and 2001:
Balance due from Gunn Development Pty Ltd at June 30, 1999: $ 43,008
Advances to Gunn Development during year: 28,063
Repayments received during year: 14,000
Net interest accrued: Nil
--------
Balance due from Gunn Development at June 30, 2000: $ 57,071
--------
Advances to Gunn Development during year: 11,649
Repayments received during year: 14,000
Net interest accrued: Nil
--------
Balance due from Gunn Development at June 30, 2001: $ 54,720
--------
Compensation Arrangements. We entered into an employment agreement with
Roger Day, our former Vice President of Operations, in November 1998, as
described above under "Executive Compensation - Employment contracts,
Termination of Employment and Change-In-Control Arrangements". The Board of
Directors approved this agreement in April 1999. Mr. Day is now President of
Natural Soda, Inc., our wholly owned subsidiary.
For the period November 2, 2000 through August 7, 2001, Samuel A. Stern
was one of our directors. In March 2001, we issued 8,210 shares to Mr. Stern who
provided legal and other services to us in connection with our efforts to
finance our Rock School Project. Mr. Stern billed us $8,702.60 for these
services. We also issued 8,210 shares to Mr. Stern's law partner for services he
performed. In addition, Mr. Stern's law firm, Hills & Stern, has submitted an
invoice to us in the amount of $75,032.50 for services rendered through June 26,
2001. We have not paid this invoice and we are seeking a resolution of this
matter with Hills & Stern.
Our directors and our other officers are compensated as described above
under "Executive Compensation - Compensation of Directors."
Guaranty Agreement - Mars Trust. We entered into an agreement with the
Mars Trust on September 13, 1999 for the purpose of establishing a loan with
Bank of America, N.A. We subsequently borrowed $4.2 million and additional loans
from Bank of America until they were aggregated into one loan of approximately
$10,000,000 due March 31, 2002. The Mars Trust facilitated the loan by
guaranteeing its repayment in a manner satisfactory to the bank. To compensate
the Trust, we agreed to pay a guaranty fee and renegotiated this fee with each
increment in the borrowings and extension of term until the total guaranty fee
due for the facilities until March 31, 2002 was $1,780,000. We granted the
Trust security over our entire interest in Natural Soda, Inc., a wholly owned
subsidiary formed to acquire our entire interest in the Rock School Project and
the Rock School Lease, as collateral for the repayment of the entire loan and
the Trust's liability under this Guaranty.
In February 2002 we reached an agreement with the Trust to issue
1,780,000 shares in satisfaction of the guaranty fee with the number of shares
issued subject to recalculation based on market prices of our shares through
December 2002.
To date, we have paid the Bank of America, N.A. interest for its
existing loan of approximately $10,000,000, and in March 2002, with the consent
of the Mars Trust extended the due date of the loan until June 30, 2002. We
entered into a new guaranty agreement the Mars Trust by which we agreed to pay
the Mars Trust a fee for guaranteeing the bank loans in an amount equal to
1.083% of the amount of the loans received per month while the loans are
outstanding. This compensation will be payable in shares of AmerAlia's
restricted common stock valued at $1.00 per share, subject to certain
readjustments.
Guaranty Agreement - Messrs. C. O'Kieffe & R. Woolard. We entered into
an agreement with a former five percent shareholder, Mr. Charles O'Kieffe and
another shareholder, Mr. Robert C. Woolard, on June 6, 2001 for the purpose of
establishing a loan with Harris Bank for $500,000 until June 30, 2002. We have
issued 74,000 shares of common stock to Messrs. C. O'Kieffe & R. Woolard, with
the right to reduce the number of shares issued based on future events.
In March 2002, we received approximately $600,000 funds from a new loan
from the Harris Bank as a result of a loan guaranty made by Mr. O'Kieffe. The
funds were used to repay an existing obligation of $100,000 due to Messrs.
O'Kieffe and Woolard, and pay fees and interest in advance to extend our loan
from the Bank of America through June 30, 2002 (approximately $120,000). As a
result, AmerAlia received net proceeds of approximately $380,000. We have used
the proceeds to pay certain past-due expenses, and intend to use the remaining
portion of the net proceeds for working capital purposes in connection with the
negotiation of our debt facility, equity investment, and the construction of a
plant on our Rock School lease or the possible acquisition of neighboring sodium
bicarbonate production assets.
We entered into a additional guaranty agreement with Mr. O'Kieffe by
which we agreed to pay him a fee for guaranteeing the bank loans in an amount
equal to 1.083% of the amount of the loans received per month while the loans
are outstanding on the same terms as the guaranty agreement with the Mars Trust.
It is our understanding that there is an arrangement between Mr. O'Kieffe and
Mr. Robert Woolard (brother of one of our directors, John Woolard) to share the
risk of the guaranty as well as the fee.
No nominee or director of AmerAlia is, or has been, a partner or
executive officer of any investment banking firm that has performed services for
AmerAlia during the last fiscal year or that AmerAlia proposes to have perform
services during the current year. AmerAlia is not aware of any other
relationship between its directors and AmerAlia that are similar in nature and
scope to those relationships listed in paragraphs (b)(1) through (5) of this
Item 13 except as described above.
Dividend Payments. During the fiscal year ended June 30, 2001,
dividends aggregating $74,650 became payable to the holders of the Series E
Preferred Stock. We have since paid these dividends to the holders of the Series
E Preferred Stock through the issuance of 74,650 shares of our restricted Common
Stock. Provision has been made for undeclared and unpaid dividends on the
remaining shares of Series E Preferred Stock of $6,304 as at June 30, 2001.
Employment Disputes. Marvin Hudson, formerly a vice president, employee
and greater-than-10% shareholder of AmerAlia, has made certain claims against
AmerAlia and has filed litigation against AmerAlia as described above. AmerAlia
has also filed litigation against Mr. Hudson.
INDEPENDENT AUDITORS
The Board of Directors selected the independent accounting firm of HJ &
Associates with respect to audit of our consolidated financial statements for
the fiscal year ending June 30, 2001, as well as many prior fiscal years. A
representative of HJ & Associates is not expected to be present at the Annual
Meeting.
Audit Fees. In connection with professional services rendered for the
audit of our annual financial statements for the most recent fiscal year and the
reviews of the financial statements included in our quarterly reports filed on
Form 10-Q for the most recent fiscal year, and the preparation of taxation
returns, we were billed fees in the aggregate amount of $26,906.
Financial Information Systems Design and Implementation Fees. We do not
have an information system or a local area network. Moreover, we do not have a
hardware or software system that aggregates source data underlying the financial
statements or generates information that is significant to our financial
statements taken as a whole, nor did we engage our principal accountant to
design, develop or implement any such system.
All Other Fees. No fees other than those mentioned above were billed
for services rendered by our principal accountant for the most recent fiscal
year.
The audit committee has considered the information described in
"Financial Information Systems Design and Implementation Fees" and "All Other
Fees" above and believes that it is compatible with maintaining the principal
accountant's independence.
Our principal accountant (through its full time employees) performed
all work regarding the audit of our financial statements for the most recent
fiscal year.
PROPOSALS FROM SHAREHOLDERS
Proposals from shareholders intended to be present at the next Annual
Meeting of shareholders should be addressed to AmerAlia, Inc., Attention:
Corporate Secretary, 20971 East Smoky Hill Rd., Centennial, CO 80015 and we must
receive the proposals by December 15, 2002. Upon receipt of any such proposal,
we shall determine whether or not to include any such proposal in the Proxy
Statement and proxy in accordance with applicable law. It is suggested that
shareholders forward such proposals by Certified Mail-Return Receipt Requested.
After December 15, 2002, any shareholder proposal submitted outside the process
of Rule 14a-8 will be considered to be untimely.
ANNUAL REPORT TO SHAREHOLDERS
This proxy statement is being accompanied by our annual report to
shareholders. The annual report to shareholders does include our audited
financial statements.
ANNUAL REPORT ON FORM 10-K AND QUARTERLY REPORT ON FORM 10-Q
OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 30, 2001, OUR
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2002, AND OTHER
REPORTS FILED UNDER THE SECURITIES EXCHANGE ACT OF 1934, ARE AVAILABLE TO ANY
SHAREHOLDER AT NO COST UPON REQUEST TO: CORPORATE SECRETARY, 20971 EAST SMOKY
HILL RD., CENTENNIAL, COLORADO 80015, OR BY TELEPHONE: (720) 876-2373, OR
THROUGH THE INTERNET AT WWW.SEC.GOV.
OTHER MATTERS
We do not know of any other matters to be brought before the meeting.
Should any other matter requiring a vote of shareholders arise at the meeting,
the persons named in the proxy will vote the proxies in accordance with their
best judgment.
By Order of the Board of Directors:
AMERALIA, INC.
Bill H. Gunn, President
APPENDIX A
AMERALIA, INC.
AUDIT COMMITTEE CHARTER
Adopted by the Board of Directors effective May 6, 2000, as amended
April 16, 2001, and amended May 6, 2002
ORGANIZATION AND QUALIFICATIONS
There shall be a committee of the Board of Directors of AmerAlia, Inc. to be
known as the Audit Committee.
Independence. The Audit Committee shall be composed of a minimum of
three directors, each of whom is independent of the management of the
Corporation and is free of any relationship that, in the opinion of the Board of
Directors, would interfere with his or her exercise of independent judgment as a
member of the Audit Committee. Each member shall otherwise be considered
"independent" as defined in Nasdaq Marketplace Rule 4200(a)(14), as such rule
may be amended from time-to-time.(1)
Financial Literacy. All members of the Audit Committee must be able to
read and understand fundamental financial statements (including a balance sheet,
income statement, and cash flow statement) and shall have a working familiarity
with basic finance and accounting practices.
At least one member of the Audit Committee must have past employment
experience in finance or accounting, requisite professional certification in
accounting, or other comparable experience or background (including a current or
past position as a chief executive or financial officer or other senior officer
with financial oversight responsibilities).
Selection. The members of the committee shall be elected by the Board
of Directors at its annual organizational meeting and shall serve thereafter
until their successors shall be duly elected. The members of the Audit Committee
may designate a Chair by majority of the full committee membership.
- -----------
(1) As of April 1, 2002, Nasdaq Marketplace Rule 4200(a)(14) reads as
follows: "Independent director" means a person other than an officer or employee
of the company or its subsidiaries or any other individual having a relationship
which, in the opinion of the company's board of directors, would interfere with
the exercise of independent judgment in carrying out the responsibilities of a
director. The following persons shall not be considered independent:
(A) a director who is employed by the corporation or any of its
affiliates for the current year or any of the past three years;
(B) a director who accepts any compensation from the corporation or any
of its affiliates in excess of $60,000 during the previous fiscal year,
other than compensation for board service, benefits under a tax-qualified
retirement plan, or non-discretionary compensation;
(C) a director who is a member of the immediate family of an individual
who is, or has been in any of the past three years, employed by the
corporation or any of its affiliates as an executive officer. Immediate
family includes a person's spouse, parents, children, siblings,
mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law,
daughter-in-law, and anyone who resides in such person's home;
(D) a director who is a partner in, or a controlling shareholder or an
executive officer of, any for-profit business organization to which the
corporation made, or from which the corporation received, payments (other
than those arising solely from investments in the corporation's
securities) that exceed 5% of the corporation's or business organization's
consolidated gross revenues for that year, or $200,000, whichever is more,
in any of the past three years;
(E) a director who is employed as an executive of another entity where
any of the company's executives serve on that entity's compensation
committee.
A-1
PURPOSE
The Audit Committee shall provide assistance to the corporate directors
in fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the corporation, and the quality and integrity of the financial reports of
the corporation.
In doing so, it is the responsibility of the Audit Committee to
maintain free and open means of communication between the directors, the
independent auditors, and the financial management of the corporation.
The independent auditors shall be accountable to the Audit Committee
and to the Board of Directors as representative of the shareholders.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible in order to best react to
changing conditions; and to ensure to the directors and shareholders the
corporate accounting and reporting practices of the corporation are in
accordance with all requirements and are of the highest quality. In carrying out
these responsibilities, the Audit Committee will:
- Review and recommend to the directors the independent auditors
to be selected to audit the financial statements of the
corporation and its divisions and subsidiaries.
- Receive from the independent auditors on not less than an
annual basis a formal written statement delineating all
relationships between the auditor and AmerAlia. This statement
shall be consistent with Independence Standard Board Standard
#1. (i) The Audit Committee shall thereafter engage in a
dialogue with the auditor with respect to any disclosed
relationships or services that (in the opinion of the Audit
Committee) may impact the objectivity and independence of the
auditor. (ii) The Audit Committee shall take, or recommend the
Board of Directors take, appropriate action to oversee the
independence of the outside auditor, including (without
limitation) consideration of appointment of a new firm of
independent auditors.
- Meet with the independent auditors and financial management of
the corporation at a minimum of once a quarter (i) to review
any comments or recommendations of the independent auditors;
(ii) to discuss the matters required to be discussed by SAS 60
(Codification of Statements on Auditing Standards, AU section
380), as may be modified or supplemented; (iii) to review the
adequacy and effectiveness of the accounting and financial
controls of the corporation; (iv) to assess the quality of
earnings; and (v) to review the annual report to shareholders
to ensure the independent auditors are satisfied with the
disclosure and content of the financial statements and other
financial information presented to the shareholders.
- Review current financial results and interim financial
statements with management and the independent auditor as the
Committee deems appropriate
- Inquire of management and the independent auditor about
significant risks or exposures and assess the steps management
has taken to minimize such risk to the company.
- Review accounting and financial human resources and succession
planning within the company.
- Submit the minutes of all meetings of the Audit Committee to,
or discuss the matters discussed at each committee meeting
with, the Board of Directors.
- Investigate any matter brought to its attention within the
scope of its duties, with the power to retain outside counsel
for this purpose if, in its judgment, that is appropriate.
- In addition to the above-mentioned meetings and as part of the
Audit Committee's job to foster open communication, the
committee should meet at least annually with management and
the independent auditors in separate executive sessions to
discuss any matters the committee or each of these groups
believe should be discussed privately.
Annual Review and Assessment
The Audit Committee will review and assess this charter and (to the
extent necessary) amend or modify this charter on not less than an annual basis.
A-2
AMERALIA, INC.
20971 East Smoky Hill Rd.
Centennial, CO 80015
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Bill H. Gunn and John F. Woolard, or either
one of them, as Proxy, each with the power to appoint his substitute, and hereby
authorizes them to vote, as designated below, all of the shares of Common Stock
or Preferred Stock of AmerAlia, Inc. held of record by the undersigned on May 9,
2002, at the Annual Meeting of Shareholders to be held on June 18, 2002 and at
any adjournments or postponements thereof.
1. ELECTION OF DIRECTORS
<Table>
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to
below (except as marked vote for all nominees
to the contrary below) listed below
</Table>
(INSTRUCTION) To withhold authority to vote for any individual nominee mark the
box next to the nominee's name below.
<Table>
[ ] Bill H. Gunn [ ] Robert C.J. van Mourik [ ] John F. Woolard
[ ] Neil E Summerson [ ] Robert A. Cameron [ ] Geoffrey C. Murphy
[ ] James V. Riley
</Table>
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(over)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES AND WILL ABSTAIN FROM
VOTING ON ALL OTHER MATTERS.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, AS EXECUTOR, ADMINISTRATOR,
TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
<Table>
Date: , 2002
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Signature
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Signature if held jointly
</Table>
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY IN THE ENCLOSED ENVELOPE