UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14a
(RULE 14A -101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
IMAX CORPORATION
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
____________________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
____________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
____________________________________________________________________________
(4) Proposed maximum aggregate value of transaction.
____________________________________________________________________________
(5) Total fee paid:
____________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
_______________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
____________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
____________________________________________________________________________
(3) Filing Party:
____________________________________________________________________________
(4) Date Filed:
____________________________________________________________________________
[IMAX(R) LOGO]
IMAX Corporation PRELIMINARY COPY
2525 Speakman Drive Definitive Copies are intended to be
Mississauga, Ontario, Canada, L5K 1B1 released to security holders on April
29, 2004.
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual and Special Meeting of shareholders of
IMAX CORPORATION (the "Company") will be held at IMAX Corporation's Corporate
Headquarters and Technology Centre, 2525 Speakman Drive, Mississauga, Ontario,
Canada, on Thursday, June 3, 2004 at 10:30 a.m. (the "Meeting"), for the
purposes of:
(1) receiving the consolidated financial statements for the fiscal
year ended December 31, 2003, together with the auditors'
report thereon;
(2) electing directors;
(3) appointing auditors and authorizing the directors to fix the
auditors' remuneration;
(4) approving by special resolution proposed amendments to the
Articles of Amalgamation of the Company;
(5) approving, by ordinary resolution, proposed amendments to
By-Law No. 1 of the Company; and
(6) transacting such other business as may properly be brought
before the Meeting or any adjournment or adjournments thereof.
By Order of the Board,
"G. Mary Ruby"
G. MARY RUBY
Senior Vice President Legal Affairs
and Corporate Secretary
Mississauga, Ontario
April 29, 2004
SHAREHOLDERS WHO ARE UNABLE TO BE PRESENT AT THE MEETING ARE REQUESTED TO
COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED FOR THAT
PURPOSE. PROXIES MUST BE DEPOSITED WITH COMPUTERSHARE TRUST COMPANY OF CANADA,
C/O STOCK AND BOND TRANSFER DEPT., 100 UNIVERSITY AVENUE, TORONTO, ONTARIO,
CANADA, M5J 2Y1 OR AT THE CORPORATE HEADQUARTERS OF THE COMPANY NOTED ABOVE ON
OR BEFORE 4:30 P.M. (EASTERN DAYLIGHT SAVING TIME) ON JUNE 2, 2004.
[IMAX(R) LOGO]
PRELIMINARY COPY
DEFINITIVE COPIES ARE INTENDED TO BE RELEASED TO SECURITY HOLDERS
ON APRIL 29, 2004.
PROXY CIRCULAR
AND
PROXY STATEMENT
IMAX CORPORATION
2525 Speakman Drive, Mississauga, Ontario, Canada L5K 1B1
tel: 905-403-6500 fax: 905-403-6540
www.imax.com
TABLE OF CONTENTS
GENERAL INFORMATION..................................................................................... 1
SOLICITATION OF PROXIES BY MANAGEMENT................................................................... 1
INFORMATION ON VOTING................................................................................... 1
Record Date for Notice of Annual and Special Meeting and Provisions Relating to Voting............. 1
Appointment and Delivery of Proxies................................................................ 1
Revocability of Proxies............................................................................ 2
Voting By Proxy.................................................................................... 2
Exercise of Discretion by Proxies.................................................................. 2
VOTING SHARES........................................................................................... 2
PRINCIPAL SHAREHOLDERS OF VOTING SHARES................................................................. 3
FINANCIAL STATEMENTS AND AUDITORS' REPORT............................................................... 3
SHAREHOLDER PROPOSALS FOR THE COMPANY'S 2005 ANNUAL MEETING............................................. 3
ELECTION OF DIRECTORS................................................................................... 4
NOMINEES FOR ELECTION................................................................................... 4
Directors who Continue in Office after the Meeting................................................. 5
EXECUTIVE OFFICERS...................................................................................... 6
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT.......................................................... 7
Section 16(a) Beneficial Ownership Reporting Compliance............................................ 8
EXECUTIVE COMPENSATION.................................................................................. 9
Summary Compensation Table......................................................................... 9
Options Granted.................................................................................... 10
Aggregated Option Exercises and Year-End Option Values............................................. 11
Pension Plans...................................................................................... 11
Employment Contracts............................................................................... 11
Equity Compensation Plans.......................................................................... 13
BUSINESS CONDUCT AND CORPORATE ETHICS POLICY............................................................ 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION............................................. 14
REPORT ON EXECUTIVE COMPENSATION........................................................................ 14
Composition of Compensation Committee.............................................................. 14
Base Salary........................................................................................ 14
Annual Incentive Compensation...................................................................... 14
Stock Options...................................................................................... 14
Compensation of Co-Chief Executive Officers........................................................ 15
Performance Graph.................................................................................. 15
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE............................................................ 16
DIRECTORS' COMPENSATION................................................................................. 16
CORPORATE GOVERNANCE.................................................................................... 16
Committees of the Board............................................................................ 16
Audit Committee.................................................................................... 16
Compensation Committee............................................................................. 17
Governance Committee............................................................................... 17
Option Committee................................................................................... 17
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................................................... 17
Shareholders' Agreements........................................................................... 17
Registration Rights Agreements..................................................................... 17
AUDITOR INDEPENDENCE.................................................................................... 18
REPORT OF THE AUDIT COMMITTEE........................................................................... 18
APPOINTMENT OF AUDITORS................................................................................. 19
AMENDMENTS TO ARTICLES OF AMALGAMATION AND BY-LAW NO. 1................................................. 19
AVAILABLE INFORMATION................................................................................... 19
APPROVAL BY BOARD OF DIRECTORS.......................................................................... 19
APPENDIX "A"............................................................................................ A - 1
APPENDIX "B"............................................................................................ B - 1
APPENDIX "C"............................................................................................ C - 1
[IMAX(R) LOGO]
IMAX Corporation
2525 Speakman Drive
Mississauga, Ontario, Canada L5K 1B1
PRELIMINARY COPY OF PROXY CIRCULAR AND PROXY STATEMENT
Definitive Copies are intended to be released to security holders on
April 29, 2004.
GENERAL INFORMATION
The Annual and Special Meeting (the "Meeting") of shareholders of IMAX
Corporation (the "Company") will be held at IMAX Corporation's Corporate
Headquarters and Technology Centre, 2525 Speakman Drive, Mississauga, Ontario,
Canada, on Thursday, June 3, 2004 at 10:30 a.m., for the purposes of: (i)
receiving the consolidated financial statements for the fiscal year ended
December 31, 2003, together with the auditors' report thereon; (ii) electing
directors; (iii) appointing auditors and authorizing the directors to fix the
auditors' remuneration; (iv) approving proposed amendments to the Articles of
Amalgamation of the Company; (v) approving proposed amendments to By-Law No. 1
of the Company; and (vi) transacting such other business as may properly be
brought before the Meeting or any adjournment or adjournments thereof.
The Notice of Annual and Special Meeting, this document and the Proxy
will be mailed commencing on or about April 29, 2004 to registered holders of
the Company's Common Shares as of the close of business on April 23, 2004, the
record date for the Annual and Special Meeting.
SOLICITATION OF PROXIES BY MANAGEMENT
THIS PROXY CIRCULAR AND PROXY STATEMENT (THE "CIRCULAR") IS FURNISHED
IN CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT OF THE COMPANY OF PROXIES
TO BE USED AT THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS OF THE COMPANY TO
BE HELD ON THURSDAY, JUNE 3, 2004 AT THE COMPANY'S CORPORATE HEADQUARTERS AND
TECHNOLOGY CENTRE, 2525 SPEAKMAN DRIVE, MISSISSAUGA, ONTARIO, CANADA, AT 10:30
A.M., AND AT ANY ADJOURNMENTS THEREOF FOR THE PURPOSES SET FORTH IN THE
ACCOMPANYING NOTICE OF ANNUAL AND SPECIAL MEETING. While management intends to
solicit most proxies by mail, some proxies may be solicited by telephone or
other personal contact by directors or officers of the Company. Directors and
employees will not receive any additional compensation for such activity. The
Company will, upon request, pay brokers and certain other persons who hold the
Company's Common Shares for others, their reasonable expenses for sending proxy
materials to the beneficial owners of the Company's Common Shares. The cost of
solicitation will be borne by the Company.
INFORMATION ON VOTING
RECORD DATE FOR NOTICE OF ANNUAL AND SPECIAL MEETING AND PROVISIONS RELATING TO
VOTING
The Board of Directors has fixed April 23, 2004 as the record date for
the Meeting. Accordingly, each holder of Common Shares of record on that date is
entitled to one vote for each Common Share shown as registered in the
shareholder's name on the list of shareholders prepared as of April 23, 2004.
APPOINTMENT AND DELIVERY OF PROXIES
The persons named in the accompanying Proxy are directors and officers
of the Company. A shareholder has the right to appoint a person, who need not be
a shareholder of the Company, other than the persons designated as proxyholders
in the accompanying Proxy, to attend and act on behalf of the shareholder at the
Meeting. To exercise this right, a shareholder may either insert such other
person's name in the blank space provided in the accompanying Proxy, or complete
another appropriate form of proxy.
To be valid, a Proxy must be dated and signed by the shareholder or his
attorney authorized in writing. The Proxy, to be acted upon, must be deposited
with the Company c/o its transfer agent, Computershare Trust Company of Canada,
c/o Stock & Bond Transfer Dept., 100 University Avenue, Toronto, Ontario,
Canada, M5J 2Y1, by 4:30 p.m., Eastern Daylight Saving Time, on Wednesday, June
2, 2004 or 4:30 p.m. on the last business day prior to the date of any
adjournment of the Meeting, or with the chairman of the Meeting on the day of
the Meeting or any adjournment of the Meeting prior to the commencement of the
Meeting or the adjournment, as the case may be.
Unless otherwise indicated, all references in this document to dollar amounts
are to U.S. dollars. All information contained in this document is as of
April 19th, 2004, unless otherwise indicated.
1
REVOCABILITY OF PROXIES
A shareholder who has given a Proxy may revoke it by depositing an
instrument in writing (including another proxy) executed by the shareholder or
his attorney authorized in writing at the registered office of the Company at
any time up to and including 4:30 p.m., Toronto time, on the last business day
prior to the day of the Meeting or any adjournment thereof, or with the chairman
of the Meeting on the day of the Meeting or at any adjournment thereof at any
time before it is exercised on any particular matter or in any other manner
permitted by law including attending the Meeting in person.
VOTING BY PROXY
For the purpose of voting by Proxy, proxies marked as "WITHHOLD" will
be treated as present for the purpose of determining a quorum but will not be
counted as having been voted in respect of any matter to which the instruction
to "WITHHOLD" is indicated.
On any ballot that may be called for regarding the matters listed in
the Notice of Annual and Special Meeting and in the Proxy, the Common Shares
represented by the enclosed Proxy will be voted or withheld from voting in
accordance with the instructions of the shareholder indicated thereon by marking
an "X" in the boxes provided for the purpose on the Proxy. IN THE ABSENCE OF
SUCH INSTRUCTIONS THE COMMON SHARES WILL BE VOTED FOR: (I) THE ELECTION OF
DIRECTORS; (II) THE APPOINTMENT OF AUDITORS AND AUTHORIZING THE DIRECTORS TO FIX
THE AUDITORS' REMUNERATION; (III) THE PROPOSED AMENDMENTS TO THE ARTICLES OF
AMALGAMATION OF THE COMPANY; AND (IV) THE PROPOSED AMENDMENTS TO BY-LAW NO. 1 OF
THE COMPANY, IN EACH CASE, AS REFERRED TO IN THIS CIRCULAR.
Proxies returned by intermediaries as "non-votes" because the
intermediary has not received instructions from the non-registered shareholder
with respect to the voting of certain shares or, under applicable stock exchange
or other rules, the intermediary does not have the discretion to vote those
shares on one or more of the matters that come before the Meeting, will be
treated as not entitled to vote on any such matter and will not be counted as
having been voted in respect of any such matter. Shares represented by broker
"non-votes" will, however, be counted in determining whether there is a quorum.
EXERCISE OF DISCRETION BY PROXIES
The person appointed as proxyholder has discretionary authority and may
vote the Common Shares represented thereby as such person considers best with
respect to amendments or variations to matters identified in the Notice of
Annual and Special Meeting, and with respect to any other matter which may
properly come before the Meeting. As of the date of this Circular, management of
the Company is not aware of any such amendment, variation or other matter
proposed or likely to come before the Meeting. However, if any such amendment,
variation or other matter properly comes before the Meeting, it is the intention
of the persons named in the enclosed Proxy to vote on such other business in
accordance with their judgement.
VOTING SHARES
On April 23, 2004, the Company had 39,304,991 Common Shares issued and
outstanding, each carrying the right to one vote at all meetings of the
shareholders of the Company.
A quorum for the transaction of business at the Meeting shall be at
least two persons present in person, each being a shareholder entitled to vote
thereat or a duly appointed proxyholder for such a shareholder and together
holding or representing by Proxy not less than 33-1/3% of the outstanding Common
Shares of the Company entitled to be voted at the Meeting.
2
PRINCIPAL SHAREHOLDERS OF VOTING SHARES
The Company is not aware of any persons who as of April 19, 2004,
beneficially owned or exercised control or direction over more than 5% of the
Company's Common Shares except:
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OF PERCENT OF OUTSTANDING
BENEFICIAL OWNER OF COMMON SHARES COMMON SHARES (1) COMMON SHARES (2)
-----------------------------------------------------------------------------------------------------------
JOHN HANCOCK FINANCIAL SERVICES, INC. 2,055,950 (3) 5.2%
John Hancock Life Insurance Company
John Hancock Subsidiaries, LLC
The Berkeley Financial Group, LLC
John Hancock Advisers, LLC
RICHARD L. GELFOND 2,512,900 (4) 6.2%
Suite 2100, 110 E 59th Street, New York, New York
BRADLEY J. WECHSLER 2,397,800 (5) 6.0%
Suite 2100, 110 E 59th Street, New York, New York
Statements as to securities beneficially owned by the above-mentioned
beneficial owners, or as to securities, over which they exercise control or
direction, are based upon information obtained from such beneficial owners and
from records available to the Company.
(1) Includes number of Common Shares owned at April 19, 2004 and Common Shares
as to which each individual had at April 19, 2004 the right to acquire
beneficial ownership through the exercise of vested options plus options
that vest within 60 days of that date.
(2) Based on dividing the number of Common Shares beneficially owned by such
person by 39,304,991 Common Shares outstanding as of April 19, 2004
adjusted for shares issuable through the exercise of vested options, held
by such person, plus options, held by such person, that vest within 60 days
of that date.
(3) Based on information contained in a Schedule 13G dated February 4, 2004
filed by John Hancock Financial Services, Inc., John Hancock Place, P.O.
Box 11, Boston, MA 02117.
(4) Included in the amount shown are 990,000 Common Shares as to which Mr.
Gelfond had the right to acquire beneficial ownership through the exercise
of options.
(5) Included in the amount shown are 990,000 Common Shares as to which Mr.
Wechsler had the right to acquire beneficial ownership through the exercise
of options.
FINANCIAL STATEMENTS AND AUDITORS' REPORT
The Board of Directors will submit to the shareholders at the Meeting
the consolidated financial statements for the fiscal year ended December 31,
2003, and the Auditors' Report thereon. A copy of these financial statements and
the Auditors' Report is included in the Annual Report to Shareholders, which is
being mailed to the Company's shareholders together with this Circular.
SHAREHOLDER PROPOSALS FOR THE COMPANY'S 2005 ANNUAL MEETING
If a shareholder wishes to propose any matter for a vote by the
Company's shareholders at its 2005 annual meeting, he/she must send his/her
proposal to the Company's corporate office at the following address: IMAX
Corporation, 2525 Speakman Drive, Mississauga, Ontario, Canada, L5K 1B1,
Attention: Corporate Secretary. The Company may omit the proposal from next
year's proxy circular and proxy statement under applicable United States
securities laws if it is not received by the Company's Corporate Secretary at
the address noted above by December 31, 2004 and may omit the proposal from next
year's proxy circular and proxy statement under applicable Canadian corporate
law if it is not received by the Company's Corporate Secretary at the address
noted above by January 30, 2005.
3
ELECTION OF DIRECTORS
The Company's articles permit the Company to have between one and 15
directors, with the actual number determined by the Board of Directors. The
number of directors presently in office is eight.
At the Meeting, shareholders will be asked to approve the election of
directors, by ordinary resolution, which requires that a majority of the votes
cast at the Meeting be in favour of the resolution for the election of nominees.
IN THE ABSENCE OF ANY INSTRUCTION ON THE ACCOMPANYING PROXY, IT IS THE INTENTION
OF THE PERSONS NAMED BY MANAGEMENT IN THE PROXY TO VOTE THE COMMON SHARES
REPRESENTED BY THE PROXY IN FAVOUR OF THE RESOLUTION.
The Board of Directors is divided into three classes, each of which
serves for a three year term. The Board of Directors is currently composed of
Neil S. Braun, Kenneth G. Copland, Michael Fuchs, Richard L. Gelfond, Garth M.
Girvan, David W. Leebron, Marc A. Utay and Bradley J. Wechsler. At the Meeting
the term of Class III directors expires. The term of Class II directors expires
in 2005. The term of Class I directors expires in 2006.
During the fiscal year ended December 31, 2003, the Board of Directors
held 7 meetings. The Audit Committee held 7 meetings and the Compensation
Committee held 1 meeting. During the fiscal year ended December 31, 2003, no
director attended fewer than 75% of the aggregate of: (i) the total number of
meetings of the Board of Directors; and (ii) the total number of meetings held
by all committees of the board on which he served. While the Company encourages
each director to attend each annual meeting of shareholders, it has no formal
policy concerning such attendance. All directors attended last year's annual
meeting of shareholders. In addition, although the Company does not have a
formal policy regarding shareholders communicating with the Board of Directors,
shareholders may do so in writing to IMAX Corporation, 2525 Speakman Drive,
Mississauga, Ontario, Canada, L5K 1B1, Attention: Board of Directors.
NOMINEES FOR ELECTION
As a result of certain events including the reduction of the size of
the Board and the resignation of a director, the number of directors in each
Class of Directors was no longer equal. Mr. Copland has resigned as a Class II
director, effective at the Meeting, and will stand for re-election as a Class
III director. Therefore, three directors are to be elected at the Meeting in
Class III. The individuals noted below are to be nominated for election to the
Board of Directors of the Company.
The following table lists certain information concerning the persons to
be nominated for election to the Board of Directors of the Company and the
directors whose terms continue after the Meeting.
CURRENT POSITION
NOMINEES FOR ELECTION AS CLASS III DIRECTORS FOR THE TERM EXPIRING IN 2007 WITH THE COMPANY
--------------------------------------------------------------------------------------------------------------------------------
Richard L. Gelfond, 48, New York, New York. Director, Co-Chairman
Richard L. Gelfond has been Co-Chairman of the Company since June 1999 and Co-Chief Executive Officer & Co-Chief Executive
since May 1996. From March 1994 to June 1999 Mr. Gelfond served as Vice Chairman of the Company. Mr. Officer
Gelfond serves as Chairman of the Board of Trustees of the Stony Brook Foundation, Inc., affiliated
with Stony Brook University, and is on the Board of Directors for Brookhaven Science Associates, the
Management Company of Brookhaven National Laboratories. He is also Vice Chairman of the Executive
Committee at the New York Historical Society. Mr. Gelfond is the Chairman of the Columbia Shuttle
Memorial Trust Steering Committee, which was established in cooperation with NASA to support the
families of the seven crew members of the STS-107 mission of the Space Shuttle Columbia, which came
to a tragic end on February 1, 2003.
Bradley J. Wechsler, 52, New York, New York. Director, Co-Chairman
Bradley J. Wechsler has been Co-Chief Executive Officer of the Company with Mr. Gelfond since May & Co-Chief Executive
1996. From March 1994 to June 1999, Mr. Wechsler served as Chairman of the Company and has served as Officer
Co-Chairman with Mr. Gelfond since June 1999. Mr. Wechsler serves on the boards of NYU Hospital, where
he is a Vice Chairman and member of the Executive Committee, the Kernochan Center for Law, Media and
the Arts, the American Museum of the Moving Image and the Ethical Culture Fieldston School.
* Kenneth G. Copland, 65, Toronto, Ontario. Director
Mr. Copland, a director of the Company since June 1999, is the Chairman of KGC Ltd. Mr. Copland was
the Vice-Chairman of BMO Nesbitt Burns Inc. from 1994 to May 2001. He is Chairman of Humber College
Foundation and HC Educational Ventures Limited. Mr. Copland is a director of the Investment Dealers
Association of Canada. Mr. Copland is a Canadian citizen.
4
DIRECTORS WHO CONTINUE IN OFFICE AFTER THE MEETING EXPIRY OF TERM OF OFFICE
---------------------------------------------------------------------------------------------------------------------------------
Neil S. Braun, 50, New York, New York. 2006
Mr. Braun, a director of the Company since June 2003 and has been the President of Vanguard Animation
Studio since 2001. He was the President of Vast Video Inc. prior to this and was President of iCast
Corporation a wholly-owned subsidiary of CMGI, Inc. during 1999. From 1994 to 1998, Mr. Braun was
President of NBC Television Network. Mr. Braun also sits on the Share our Strength and Westhampton
Beach Performing Arts Center boards of directors and is a member of the University of Pennsylvania
School of Arts and Sciences Board of Overseers, all non-profit organizations.
= (dagger) Michael Fuchs, 56, New York, New York. 2006
Mr. Fuchs, a director of the Company since October 2002; previously he was a director of the Company
from May 1996 to June 1999. Mr. Fuchs is the Chairman and director of Autobytel.com and the Chairman
of Bryant Park Restoration Corporation. Mr. Fuchs held the position of Chairman and Chief Executive
Officer of Home Box Office from October 1984 until November 1995. In May 1995, he also became chairman
of Warner Music Group. Mr. Fuchs is also on the Board of Trustees of the Simon Wiesenthal Center and
a member of the board of the Alzheimer Association.
* (dagger) = + Garth M. Girvan, 54, Toronto, Ontario. 2005
Mr. Girvan, a director of the Company since March 1994, is a partner of McCarthy
Tetrault, Canadian counsel to the Company. Mr. Girvan is a director of Corby
Distilleries Limited. Mr. Girvan has served as Chairman of the Audit Committee
and Chairman of the Compensation Committee of the Company and is a Canadian citizen.
= David Leebron, 49, New York, New York. 2005
Mr. Leebron, a director of the Company since September 2003. Mr. Leebron has been the Dean and Lucy G.
Moses Professor of Law at Columbia University School of Law since 1996, and Professor of Law since
1989. Effective July 1, 2004, Mr. Leebron will become President of Rice University. Mr. Leebron is a
member of the American Bar Association and is on the Board of Directors of the American Law Dean's
Association. Mr. Leebron serves as Chairman of the Governance Committee of the Company.
* = + Marc A. Utay, 43, New York, New York. 2005
Marc A. Utay, a director of the Company since May 1996, has been a Managing Member of Clarion Capital
Partners, a private equity investment firm since November 1999. Prior to joining Clarion, Mr. Utay was
a Managing Director of Wasserstein Perella & Co. Inc. and a member of Wasserstein Perella's Policy
Committee. Mr. Utay was co-head of Wasserstein Perella's Leveraged Finance, Retailing and Media,
Telecommunication and Entertainment groups. Until December 2002, Mr. Utay was also a Senior Advisor to
Dresdner Kleinwort Wasserstein. Prior to his joining Wasserstein Perella, Mr. Utay was Managing
Director at Bankers Trust Company where he specialized in leveraged finance and mergers and
acquisitions. Mr. Utay is a director of P & F Industries, Inc.
* Member, Audit Committee of the Company
(dagger) Member, Compensation Committee of the Company
= Member, Governance Committee of the Company
+ Member, Option Committee of the Company
The Board of Directors recommends that you vote in favour of the
election of the nominees whose names are set forth above.
THE PERSONS NAMED IN THE ENCLOSED PROXY INTEND TO VOTE FOR THE ELECTION
OF THE NOMINEES WHOSE NAMES ARE SET FORTH ABOVE. IF ANY OF THE ABOVE NOMINEES IS
FOR ANY REASON UNABLE TO SERVE AS A DIRECTOR, PROXIES IN FAVOUR OF MANAGEMENT
WILL BE VOTED FOR ANOTHER NOMINEE IN THEIR DISCRETION UNLESS THE SHAREHOLDER HAS
SPECIFIED IN THE PROXY THAT SUCH SHAREHOLDER'S SHARES ARE TO BE WITHHELD FROM
VOTING ON THE ELECTION OF DIRECTORS.
Management does not anticipate that any of the nominees for election as
directors will be unable to serve as a director. Each director elected will hold
office until the expiry of the term for which he has been elected or until his
successor is elected or appointed, unless his office is earlier vacated.
Shareholders who wish to have the Board of Directors consider the
nomination of any person for director at the 2005 meeting of shareholders should
communicate with the Company's Corporate Secretary at the Company's corporate
office.
5
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
executive officers of the Company.
Name Age Position
---- --- --------
Richard L. Gelfond.............. 48 Co-Chairman, Co-Chief Executive Officer and Director
Bradley J. Wechsler............. 52 Co-Chairman, Co-Chief Executive Officer and Director
Greg Foster..................... 41 President, Filmed Entertainment
Francis T. Joyce................ 51 Chief Financial Officer
Robert D. Lister................ 35 Executive Vice President, Business & Legal Affairs and General Counsel
Brian Bonnick................... 47 Senior Vice President, Technology
David B. Keighley............... 56 Senior Vice President & President, David Keighley Productions 70MM Inc.
Larry O'Reilly.................. 41 Senior Vice President, Theatre Development & Film Distribution
G. Mary Ruby.................... 46 Deputy General Counsel, Senior Vice President, Legal Affairs
and Corporate Secretary
Mary C. Sullivan................ 40 Senior Vice President, Human Resources & Administration
Mark Welton..................... 40 Senior Vice President, Theatre Operations
Kathryn A. Gamble............... 36 Vice President, Finance and Controller
Edward MacNeil.................. 39 Vice President, Finance, Special Projects
RICHARD L. GELFOND has been Co-Chairman of the Company since June 1999
and Co-Chief Executive Officer since May 1996. From March 1994 to June 1999 Mr.
Gelfond served as Vice Chairman of the Company. Mr. Gelfond serves as Chairman
of the Board of Trustees of the Stony Brook Foundation, Inc., affiliated with
Stony Brook University, and is on the Board of Directors for Brookhaven Science
Associates, the Management Company of Brookhaven National Laboratories. He is
also Vice Chairman of the Executive Committee at the New York Historical
Society. Mr. Gelfond is the Chairman of the Columbia Shuttle Memorial Trust
Steering Committee, which was established in cooperation with NASA to support
the families of the seven crew members of the STS-107 mission of the Space
Shuttle Columbia, which came to a tragic end on February 1, 2003.
BRADLEY J. WECHSLER has been Co-Chief Executive Officer of the Company
with Mr. Gelfond since May 1996. From March 1994 to June 1999, Mr. Wechsler
served as Chairman of the Company and has served as Co-Chairman with Mr. Gelfond
since June 1999. Mr. Wechsler serves on the boards of NYU Hospital, where he is
a Vice Chairman and member of the Executive Committee, the Kernochan Center for
Law, Media and the Arts, the American Museum of the Moving Image and the Ethical
Culture Fieldston School.
GREG FOSTER joined the Company in March 2001 as President, Filmed
Entertainment. Prior to joining the Company, Mr. Foster was Executive
Vice-President of Production at MGM/UA. Prior to that Mr. Foster held other
senior positions including Senior Vice-President of Motion Picture Marketing
Research during his 15 years at MGM/UA. In 1999, Mr. Foster founded uMogul, a
financial services company and held the position of Chairman, Co-Founder and
President.
FRANCIS T. JOYCE joined the Company in March 2001, as Chief Financial
Officer. Prior to joining the Company Mr. Joyce held the position of Chief
Financial Officer of the Internet company theglobe.com from 1998 until his
employment with the Company. From 1997 to 1998, Mr. Joyce served as Chief
Financial Officer of Reed Travel Group, a division of Reed Elsevier PLC and from
1994 to 1997 served as Chief Financial Officer of the Alexander Consulting
Group, a division of Alexander and Alexander Services Inc., an international
professional services firm. Mr. Joyce is a member of Financial Executive
International and the American Institute of Certified Public Accountants.
ROBERT D. LISTER joined the Company in May 1999 as Senior Vice
President, Legal Affairs and General Counsel and was appointed Executive Vice
President, Business & Legal Affairs in May 2001. Prior to joining the Company,
Mr. Lister was Vice President, General Counsel and Secretary of Clearview
Cinemas, a film exhibitor, from March 1998 until his employment with the
Company. Prior to that, Mr. Lister served as Associate General Counsel of Merit
Behavioral Care Corporation, a behavioral healthcare company, from March 1996
through March 1998. Mr. Lister serves on the board of Giant Screen Theater
Association. Mr. Lister is a member of the New York State Bar Association.
BRIAN BONNICK joined the Company in January 1999 as Vice President,
Research & Development and was appointed Senior Vice President, Technology in
August 2001. Prior to joining the Company, Mr. Bonnick was Vice President,
Engineering and Operations for Electrohome Corporation. Prior to that Mr.
Bonnick was Vice President and General Manager at TSB International Inc. a
telecommunications company. Mr. Bonnick is registered as a professional engineer
by the Association of Professional Engineers of Ontario.
DAVID B. KEIGHLEY joined the Company in January, 1995 as Vice President
and was appointed a Senior Vice President of the Company since July 1997 and is
President of David Keighley Productions 70MM Inc., subsidiary of the Company.
6
Company. Mr. Keighley is responsible for motion picture and digital
post-production and image quality assurance for 15/70-format films.
LARRY O'REILLY joined the Company in March 1994 as the Sales Manager,
Film Distribution and was appointed Senior Vice President, Theatre Development &
Film Distribution in January 2002. Mr. O'Reilly has held various positions
within the Company including Manager, Business Development: Film; Director,
Strategic Partnerships; Director, Commercial Marketing: The Americas and Vice
President, Sales, The Americas.
G. MARY RUBY joined the Company in October 1987 as Associate General
Counsel and was appointed Senior Vice President, Legal Affairs in July 2001. Ms.
Ruby was General Counsel of the Company from February 1989 to February 1997. Ms.
Ruby is Deputy General Counsel and acts as Corporate Secretary to the Board of
Directors. Ms. Ruby is a member of the Ontario Bar Association.
MARY C. SULLIVAN joined the Company in January 1996 as Director, Human
Resources and was appointed Vice President, Human Resources and Administration
in 1998 and Senior Vice President, Human Resources and Administration in January
2000. Prior to joining the Company, Ms. Sullivan was Director, Human Resources
of Central Park Lodges. Ms. Sullivan is a director of the Women's Legal
Education and Action Fund and its Foundation.
MARK WELTON joined the Company in July 1997 as Director, Business
Affairs and was appointed Senior Vice President, Theatre Operations in October
2003. Previous to that Mr. Welton was Senior Vice President, Business Affairs, a
position he held since September 2001. Prior to joining the Company Mr. Welton
was an Associate Lawyer at Stikeman, Elliot from 1994 until his employment with
the Company.
KATHRYN A. GAMBLE joined the Company in July 2001 as Vice President,
Finance and Controller. Prior to joining the Company Ms. Gamble served as Vice
President, Finance and Chief Financial Officer of the Internet company
Healthyconnect.com Inc. from 2000 until her employment with the Company. From
1996 to 2000, Ms. Gamble served as Vice President and Chief Financial Officer of
Med-Emerg International Inc. healthcare company. Ms. Gamble is a member of the
Canadian Institute of Chartered Accountants.
EDWARD MACNEIL joined the Company in April 1994 as Director, Taxation &
Treasury and was appointed Vice President, Finance, Special Projects in
September 2001. From October 1999 to August 2001, Mr. MacNeil held the position
of Director and Senior Vice President, Digital Projection Limited, a former
subsidiary of the Company. Prior to joining the Company Mr. MacNeil was a
Taxation Manager at PricewaterhouseCoopers. Mr. MacNeil is a member of the
Canadian Institute of Chartered Accountants.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Shares as of April 19, 2004 or as
otherwise indicated in the notes below, including (i) all persons to be
nominated for election to the Board of Directors, individually; (ii) all
directors and the Named Executive Officers, individually, and (iii) all
directors and executive officers as a group.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF PERCENT OF OUTSTANDING
NAME OF BENEFICIAL OWNER OF COMMON SHARES COMMON SHARES (1) COMMON SHARES (2)
----------------------------------------- ----------------------- ----------------------
RICHARD L. GELFOND 2,512,900 (3) 6.2
BRADLEY J. WECHSLER 2,397,800 (4) 6.0
NEIL S. BRAUN 8,000 (5) *
KENNETH G. COPLAND 59,822 (6) *
MICHAEL FUCHS 34,099 (7) *
GARTH M. GIRVAN 79,636 (8) *
DAVID W. LEEBRON 7,300 (9) *
MARC A. UTAY 1,228,065 (10) 3.1
GREG FOSTER 180,166 (11) *
FRANCIS T. JOYCE 92,000 (12) *
ROBERT D. LISTER 136,666 (13) *
DAVID B. KEIGHLEY 77,867 (14) *
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP (19 PERSONS) 7,069,788 (15) 16.7
* less than 1%
Statements as to securities beneficially owned by directors and by
executive officers, or as to securities, over which they exercise control or
direction, are based upon information obtained from such directors and executive
officers and from records available to the Company.
7
(1) Includes number of Common Shares owned at April 19, 2004 and Common Shares
as to which each individual had at April 19, 2004 the right to acquire
beneficial ownership through the exercise of vested options plus options
that vest within 60 days of that date.
(2) Based on dividing the number of Common Shares beneficially owned by such
person by 39,304,991 Common Shares outstanding as of April 19, 2004
adjusted for shares issuable through the exercise of vested options, held
by such person, plus options, held by such person, that vest within 60 days
of that date.
(3) Included in the amount shown are 990,000 Common Shares which Mr. Gelfond
had the right to acquire beneficial ownership through the exercise of
options.
(4) Included in the amount shown are 990,000 Common Shares which Mr. Wechsler
had the right to acquire beneficial ownership through the exercise of
options.
(5) Included in the amount shown are 8,000 Common Shares which Mr. Braun had
the right to acquire beneficial ownership through the exercise of options.
(6) Included in the amount shown are 49,822 Common Shares which Mr. Copland had
the right to acquire beneficial ownership through the exercise of options.
(7) Included in the amount shown are 34,099 Common Shares which Mr. Fuchs had
the right to acquire beneficial ownership through the exercise of options.
(8) Included in the amount shown are 53,738 Common Shares which Mr. Girvan had
the right to acquire beneficial ownership through the exercise of options.
(9) Included in the amount shown are 6,000 Common Shares which Mr. Leebron had
the right to acquire beneficial ownership through the exercise of options.
(10) Included in the amount shown are 203,738 Common Shares which Mr. Utay had
the right to acquire beneficial ownership through the exercise of options.
(11) Included in the amount shown are 169,166 Common Shares which Mr. Foster had
the right to acquire beneficial ownership through the exercise of options.
(12) Included in the amount shown are 92,000 Common Shares which Mr. Joyce had
the right to acquire beneficial ownership through the exercise of options.
(13) Included in the amount shown are 131,666 Common Shares which Mr. Lister had
the right to acquire beneficial ownership through the exercise of options.
(14) Included in the amount shown are 77,667 Common Shares which Mr. Keighley
had the right to acquire beneficial ownership through the exercise of
options.
(15) Included in the amount shown are 3,053,761 Common Shares as to which all
directors and executive officers as a group had the right to acquire
beneficial ownership through the exercise of options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and
persons who own more than 10% of a registered class of the Company's equity
securities (collectively, the "Reporting Persons") to file reports of ownership
on Form 3 and changes in ownership on Form 4 or Form 5 with the Securities and
Exchange Commission (the "SEC"). The Reporting Persons are also required by the
Exchange Act to furnish the Company with copies of all Section 16(a) reports
they file.
Based solely upon review of Forms 3 and 4 (and amendments thereto)
received from or written representations by the Reporting Persons, in respect of
the fiscal year ended December 31, 2003, the Company believes that initial
reports on Form 3 were not timely filed for Messrs. Braun and Leebron. Form 4s
were not timely filed for: Messrs. Bonnick, Braun, Copland, Fuchs, Girvan,
Keighley, Leebron, O'Reilly and Utay regarding one grant of options; Messrs.
Joyce and Ziebold (a former director) and Ms. Sullivan regarding to the exercise
of options and related disposition of Common Shares; Mr. Ziebold regarding the
acquisition of Common Shares; and Mr. Keighley regarding the disposition of
Common Shares and the exercise of options and related disposition of Common
Shares.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the periods indicated, the
compensation paid or granted by the Company to the individuals who served during
2003 as Chief Executive Officers and the four most highly compensated executive
officers of the Company, other than the Chief Executive Officers, who were
serving as executive officers at December 31, 2003 (collectively, the "Named
Executive Officers").
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------- -------------------------------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION OF YEAR ENDED SALARY BONUS (1) COMPENSATION (2) STOCK AWARDS OPTIONS COMPENSATION (3)
NAMED EXECUTIVE OFFICER DECEMBER 31 ($) ($) ($) ($) (#) ($)
------------------------------ ------------ ------ --------- ---------------- ------------- ----------- ----------------
Richard L. Gelfond 2003 500,000 750,000 -- -- -- 4,270 (4)
Co-Chairman and Co-Chief 2002 500,000 750,000 -- -- 700,000 (5) 4,077
Executive Officer 2001 500,000 125,000 -- 1,305,000 (6) -- 1,898
Bradley J. Wechsler 2003 500,000 750,000 -- -- -- 4,414 (7)
Co-Chairman and Co-Chief 2002 500,000 750,000 -- -- 700,000 (5) 4,077
Executive Officer 2001 500,000 125,000 -- 1,305,000 (6) -- 1,898
Greg Foster 2003 394,519 250,000 -- -- 50,000 (8) 3,580 (9)
President, Filmed 2002 370,288 250,000 -- -- 200,000 (10) 292
Entertainment 2001 286,057 175,000 (11) -- -- 75,000 (8) 176
Francis T. Joyce 2003 291,673 90,000 -- -- 66,000 (8) 4,414 (7)
Chief Financial Officer 2002 275,000 84,219 -- -- -- 3,692
2001 174,794 75,000 -- -- 100,000 (8) 238
Robert D. Lister 2003 255,000 100,000 -- -- 51,250 4,162 (12)
Executive Vice President, 2002 240,000 90,000 -- -- 40,000 3,692
Business and Legal Affairs 2001 230,685 157,500 (13) -- -- 60,000 3,638
& General Counsel
David B. Keighley 2003 277,292 (16) -- -- 15,000 4,774 (14)
Senior Vice President and 2002 264,137(15) 209,250 -- -- -- 3,692
President, David Keighley 2001 251,559 122,853 -- -- 50,000 3,759
Productions 70MM Inc.
(1) These amounts are paid under annual incentive arrangements that the
Company has with each of the Named Executive Officers, as detailed under
"Employment Contracts" below.
(2) The value of perquisites and other personal benefits for each Named
Executive Officer does not exceed the lesser of $50,000 and 10% of his
annual salary and bonus.
(3) These amounts reflect (i) the payment by the Company of life insurance
premiums on the lives of the Named Executive Officers, and (ii)
contributions to the Company's defined contribution pension plans.
(4) This amount reflects (i) the payment of $270 by the Company of life
insurance premiums on the life of the Named Executive Officer, and (ii)
contributions of $4,000 to the Company's defined contribution pension
plans.
(5) The Named Executive Officer received a grant of 100,000 options to
purchase Common Shares in accordance with the Stock Option Plan with
respect of the bonus for 2001 and a grant of 600,000 options to purchase
Common Shares in accordance with the Stock Option Plan in accordance with
his employment agreement as detailed under "Employment Contracts" below.
(6) This amount represents the dollar value of 500,000 Common Shares, which
were issued to the Named Executive Officer on April 3, 2001, of which
325,000 Common Shares were issued in exchange for the surrender by the
Named Executive Officer of 1,300,000 previously granted options, in
accordance with his employment agreement.
(7) This amount reflects (i) the payment of $414 by the Company of life
insurance premiums on the life of the Named Executive Officer, and (ii)
contributions of $4,000 to the Company's defined contribution pension
plans.
(8) These options were granted in accordance with the Stock Option Plan to the
Named Executive Officer, in accordance with his employment agreement, as
detailed under "Employment Contracts" below.
9
(9) This amount reflects (i) the payment of $180 by the Company of life
insurance premiums on the life of the Named Executive Officer, and (ii)
contributions of $3,400 to the Company's defined contribution pension
plans.
(10) 175,000 of these options were granted in accordance with the Stock Option
Plan to the Named Executive Officer, in accordance with his employment
agreement, as detailed under "Employment Contracts" below.
(11) This amount also includes payment of $25,000 with respect of the Named
Executive Officer's signing bonus in accordance with his employment
agreement as detailed under "Employment Contracts" below.
(12) This amount reflects (i) the payment of $162 by the Company of life
insurance premiums on the life of the Named Executive Officer, and (ii)
contributions of $4,000 to the Company's defined contribution pension
plans.
(13) This amount also includes payment of $107,500 with respect of the Named
Executive Officer's retention bonus.
(14) This amount reflects (i) the payment of $774 by the Company of life
insurance premiums on the life of the Named Executive Officer, and (ii)
contributions of $4,000 to the Company's defined contribution pension
plans.
(15) This amount also includes $5,958 paid in 2003, with respect of the Named
Executive Officer's salary earned in 2002.
(16) The calculation of Mr. Keighley's 2003 bonus is currently being finalized
and is expected to fall within a range of $210,000 to $240,000.
OPTIONS GRANTED
The following table sets forth information relating to individual grants of
options to purchase Common Shares of the Company to Named Executive Officers
under the Stock Option Plan during the fiscal year ended December 31, 2003 in
respect of services rendered or to be rendered to the Company.
INDIVIDUAL GRANTS
------------------------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS AT ASSUMED ANNUAL RATES
UNDERLYING GRANTED TO OF STOCK PRICE APPRECIATION
OPTIONS PARTICIPANTS EXERCISE PRICE FOR OPTION TERM
NAME GRANTED (#) IN FISCAL YEAR ($/SH) EXPIRATION DATE 5% ($) 10% ($)
------------------- ----------- -------------- -------------- --------------- ---------- -------
Richard L. Gelfond Nil n/a n/a n/a Nil Nil
Bradley J. Wechsler Nil n/a n/a n/a Nil Nil
Greg Foster 50,000 (1) 6.4 4.60 March 18, 2010 326,508 540,717
Francis T. Joyce 66,000 (2) 8.4 7.31 June 16, 2010 252,131 534,887
Robert D. Lister 51,250 (3) 6.5 7.45 August 14, 2010 188,608 408,173
David B. Keighley 15,000 (4) 1.9 7.45 August 14, 2010 55,202 119,465
(1) These options were granted pursuant to the Named Executive Officer's
employment agreement, as detailed under "Employment Contracts" below, and
entitle the Named Executive Officer to purchase one Common Share for each
option. The market value of the Common Shares underlying the options was
equal to the exercise price on the date of the grant. These options vest
subject to certain performance criteria
(2) These options were granted pursuant to the Named Executive Officer's
employment agreement, as detailed under "Employment Contracts" below, and
entitle the Named Executive Officer to purchase one Common Share for each
option. The market value of the Common Shares underlying the options was
equal to the exercise price on the date of the grant. 22,000 of these
options vest on each of June 16, 2004, June 16, 2005 and June 16, 2006
pursuant to such employment agreement.
(3) These options entitle the Named Executive Officer to purchase one Common
Share for each option. The market value of the Common Shares underlying the
options was equal to the exercise price on the date of the grant. 17,083 of
these options vest on each of August 14, 2004 and August 14, 2005 and
17,084 of these options vest on August 14, 2006.
(4) These options entitle the Named Executive Officer to purchase one Common
Share for each option. The market value of the Common Shares underlying the
options was equal to the exercise price on the date of the grant. 5,000 of
these options vest on each of August 14, 2004, August 14, 2005 and August
14, 2006.
10
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information relating to options exercised
during the fiscal year ended December 31, 2003 and the year-end option values
for the Named Executive Officers.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT VALUE OF UNEXERCISED
SECURITIES FISCAL YEAR-END IN-THE-MONEY OPTIONS
ACQUIRED VALUE EXERCISABLE/ AT FISCAL YEAR-END
ON EXERCISE REALIZED UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME (#) ($) (#) ($)(1)
------------------- ----------- -------- ---------------------- --------------------------
Richard L. Gelfond Nil Nil 1,070,000 / 68,000 2,067,920 / 61,880
Bradley J. Wechsler Nil Nil 1,070,000 / 68,000 2,067,920 / 61,880
Greg Foster Nil Nil 160,833 / 156,667 672,598 / 522,401
Francis T. Joyce 30,000 164,706 36,666 / 99,334 189,197 / 211,603
Robert D. Lister Nil Nil 95,333 / 130,917 205,898 / 289,277
David B. Keighley 65,500 233,974 61,000 / 49,000 Nil / 128,650
(1) Calculated based on the December 31, 2003 closing price of the Common Shares
on Nasdaq of $7.91.
PENSION PLANS
The Company maintains defined contribution employee pension plans for
its employees, including its executive officers. The Company makes contributions
to these plans on behalf of employees in an amount up to 5% of their base salary
subject to certain prescribed maximums. During the fiscal year ended December
31, 2003, the Company contributed an aggregate of $23,400 to the Company's
defined contribution employee pension plan qualified under Section 401(k) of the
U.S. Internal Revenue Code on behalf of Messrs. Gelfond, Wechsler, Foster,
Joyce, Lister and Keighley.
On July 12, 2000, the Company established a defined benefit pension
plan covering its two Co-Chief Executive Officers. The plan provides for a
lifetime retirement benefit from age 55 determined as 75% of the member's best
average 60 consecutive months of earnings during the 120 months preceding
retirement. Once benefit payments begin, the benefit is indexed annually to the
cost of living and further provides for 100% continuance for life to the
surviving spouse. The benefits were 50% vested as of July 12, 2000, the plan
initiation date. The vesting percentage increases on a straight-line basis from
inception until age 55. The vesting percentage of a member whose employment
terminates other than by voluntary retirement shall be 100%. Also, upon the
occurrence of a change in control of the Company prior to termination of a
member's employment, the vesting percentage shall become 100%. The Company
currently estimates that the annual benefits upon retirement at normal
retirement age (as defined in the plan) will be approximately $1.0 million for
each of the Co-Chief Executive Officers. The Company intends to use the proceeds
of life insurance policies which were taken out contemporaneously with the
establishment of the plan to satisfy, in whole or in part, benefits due and
payable under the plan.
EMPLOYMENT CONTRACTS
On November 3, 1998 the Company entered into renewal employment
agreements (the "1998 Agreements") with each of Messrs. Gelfond and Wechsler
("the Executives") with effect from July 1, 1998 for a three-year term. Under
the 1998 Agreements, each of the Executives is to perform such services with
respect to the Company's business as may be reasonably requested from time to
time by the Board of Directors and which are consistent with his position as
Co-Chief Executive Officer. In addition, the Company is to use its best efforts
to cause the Executives to be elected to the Board of Directors. In addition, a
provision contained in their original employment agreements, dated March 1,
1994, was continued, whereby each of the Executives is also entitled to receive,
upon a sale of the Company, a cash bonus in an amount equal to the product of
(a) 0.375% and (b) the amount by which the sale or liquidation transaction
imputes an equity value in excess of Cdn. $150,000,000 to the Common Shares
originally issued by the Company (on a fully diluted basis but excluding the
Common Shares issued upon the conversion of the Class B convertible preferred
shares of the Company formerly outstanding which were converted into Common
Shares on June 16, 1994 and the Common Shares issuable upon the exercise of
warrants owned by each of Messrs. Gelfond and Wechsler). Under the 1998
Agreements, the Company is to equalize the Executives to the taxes which each of
the Executives would have paid had he earned his employment compensation and
paid taxes thereon solely in the United States. The employment agreements also
contain non-competition provisions.
11
On July 12, 2000, the Company entered into amendments to the employment
agreements of the Executives (the "2000 Amendments"). Pursuant to the 2000
Amendments, the Executives were each granted 800,000 options to purchase Common
Shares in accordance with the Stock Option Plan, which options expire on July
12, 2010, as well as 180,000 restricted shares which, in the event that
regulatory or shareholder approval is not obtained, are deemed phantom stock.
The options and restricted shares, or phantom stock equivalent became fully
vested on June 30, 2001. In 2003, a payment of $775,000 was made to each
Executive to reflect the value of the cancellation of 100,000 of the phantom
stock granted in 2000. Under the 2000 Amendments, the Company agreed to create a
defined benefit plan, to provide retirement benefits for the Executives (see
description of this plan under "Pension Plans" above). The 2000 Amendments
further provide for the extension of the Executives' non-competition covenants
to four years beyond termination of employment and for the agreement by the
Executives to consult with the Company for three years following the end of
their employment with the Company.
On April 3, 2001, the Company entered into amendments to the employment
agreements of the Executives (the "2001 Amendments"). Under the 2001 Amendments,
the Executives' employment terms were each extended for one additional year,
with the new term running through June 30, 2002. The restrictive covenants,
including non-competition provisions, of the Executives' existing employment
agreements, as well as other provisions not modified by the 2001 Amendments,
remain in force.
On April 23, 2002, the Company entered into amendments to the
employment agreements of the Executives (the "2002 Amendments"). Under the 2002
Amendments, the Executives' employment terms were each extended for two
additional years, with the new term running through June 30, 2004. The 2002
Amendments also provide that each of the Executives will be considered for a
bonus payable in 2003 and 2004 based upon performance to December 31, 2002 and
December 31, 2003, respectively, and for a further bonus payable on a pro rata
basis for the period from December 31, 2003 to June 30, 2004. Pursuant to the
2002 Amendments, on April 23, 2002 the Executives were each granted 532,000
options to purchase Common Shares in accordance with the Stock Option Plan, 50%
of which vested on each of July 1, 2002 and July 1, 2003. These options expire
on April 23, 2012. The Executives were also each granted 68,000 options to
purchase Common Shares in accordance with the Stock Option Plan on June 5, 2002,
which options are to vest on July 1, 2004. These options expire on June 5, 2012.
The restrictive covenants, including non-competition provisions, of the
Executives' existing employment agreements, as well as other provisions not
modified by the 2002 Amendments, remain in force. The Company is currently
negotiating with the Executives concerning the renewal of these agreements.
The Company and Greg Foster entered into an employment agreement on
March 9, 2001. The agreement was for a two-year term and provided for a signing
bonus, annual base salaries and minimum annual bonuses for each year of the
term. Under the agreement, Mr. Foster was granted 75,000 options to purchase
Common Shares in accordance with the Stock Option Plan on March 19, 2001. These
options expire on March 19, 2011. Mr. Foster also received an additional grant
of 75,000 options to purchase Common Shares in accordance with the Stock Option
Plan on March 9, 2002. These options expire on March 19, 2009. Mr. Foster has
agreed to restrictive covenants, including confidentiality and non-competition
covenants. The agreement provides that the employment of Mr. Foster may be
terminated at any time for cause or without cause. If Mr. Foster's employment is
terminated without cause prior to the end of the employment term, the Company
must continue to pay Mr. Foster his annual base salary and benefits for the
greater of the remainder of his employment term and six months, subject to
mitigation by Mr. Foster.
On August 8, 2002, the Company entered into an amendment to the
employment agreement with Mr. Foster, under which Mr. Foster's employment term
was extended to March 18, 2005. Under the amended agreement, Mr. Foster is to
receive an annual salary of $400,000, and effective March 19, 2004, received an
annual salary of $425,000. The amendment further provides that Mr. Foster is
entitled to receive a minimum annual bonus of $200,000 for the third year of the
employment term, and a minimum annual bonus of $100,000 in respect of the fourth
year of the employment term, in the event the agreement is not renewed. Pursuant
to the amendment, Mr. Foster was granted 100,000 options to purchase Common
Shares in accordance with the Stock Option Plan on September 6, 2002, which
options shall vest as to 50% on each of September 6, 2004 and September 6, 2005
and expire on September 6, 2009. The amendment also provides for Mr. Foster to
receive a grant of 50,000 options to purchase Common Shares in accordance with
the Stock Option Plan on March 18, 2003, which options shall vest subject to
certain performance criteria and expire on March 18, 2010. The restrictive
covenants, including confidentiality and non-competition provisions, of Mr.
Foster's existing employment agreement, remain in force.
The Company and Francis T. Joyce entered into an employment agreement
on May 9, 2001. The agreement was for a two-year term and provided for an annual
base salary and a minimum annual bonus in respect of 2001 as well as a
discretionary bonus based on a percentage of base salary throughout the
employment term. Pursuant to the agreement, Mr. Joyce was granted 100,000
options to purchase Common Shares in accordance with the Stock Option Plan on
May 15, 2001, which options vested as to 33,333 on each of May 15, 2002 and May
15, 2003, with 33,334 scheduled to vest on May 15, 2004. These options expire on
May 15, 2008. Mr. Joyce has agreed to restrictive covenants, including
confidentiality and non-competition covenants. The agreement provides that the
employment of Mr. Joyce may be terminated at any time for cause or without
cause. If Mr. Joyce's employment is terminated without cause prior to the end of
the employment term, the Company must continue to pay Mr. Joyce his annual
salary, pro-rata bonus and benefits for a minimum of twelve months, subject to
mitigation by Mr. Joyce.
12
On May 14, 2003, the Company entered into an amendment to the
employment agreement with Mr. Joyce, under which Mr. Joyce's employment term was
extended until May 14, 2005. The amendment provided for an annual salary of
$300,000 and, effective May 14, 2004, an annual salary of $310,000. Pursuant to
the amendment, Mr. Joyce was granted 66,000 options to purchase Common Shares in
accordance with the Stock Option Plan on June 16, 2003, which options shall vest
as to 22,000 on each of June 16, 2004, June 16, 2005 and June 16, 2006. These
options expire on June 16, 2010. The restrictive covenants, including
confidentiality and non-competition provisions, of Mr. Joyce's existing
employment agreement, remain in force.
The Company and Robert D. Lister entered into an employment agreement
on May 17, 1999. The agreement was for a two-year term and provided for annual
base salary and a minimum annual bonus in respect of 1999. Pursuant to the
agreement, Mr. Lister was granted 25,000 options to purchase Common Shares in
accordance with the Stock Option Plan on May 19, 1999, which options vest as to
20% on each of the first five anniversary dates of the grant date and expire on
May 19, 2009. The agreement also provided for a minimum grant of 15,000 options
to purchase Common Shares in accordance with the Stock Option Plan on May 19,
2000. Mr. Lister has agreed to restrictive covenants, including confidentiality
and non-competition covenants. The agreement provides that the employment of Mr.
Lister may be terminated at any time for cause or without cause.
On April 4, 2001, the Company entered into an amendment to the
employment agreement with Mr. Lister, under which Mr. Lister's employment term
was extended until December 31, 2003. The amendment provided for an annual
salary of $240,000, subject to an annual review. The amendment also provided
that if Mr. Lister's employment is terminated without cause prior to the end of
the employment term, or his agreement is not renewed, the Company must continue
to pay Mr. Lister his annual salary, target bonus and benefits for the greater
of the remainder of his employment term and twelve months, subject to mitigation
by Mr. Lister. The restrictive covenants, including confidentiality and
non-competition provisions, of Mr. Lister's existing employment agreement,
remain in force.
On January 1, 2004, the Company entered into an amendment to the
employment agreement with Mr. Lister, under which Mr. Lister's employment term
was extended until June 30, 2006. The amendment provided for an annual salary of
$275,000, subject to an annual review. The restrictive covenants, including
confidentiality and non-competition provisions, of Mr. Lister's existing
employment agreement, remain in force.
The Company, David Keighley Productions 70 MM Inc. (formerly David
Keighley Productions and 70MM Inc.) ("DKP/70MM"), a wholly owned subsidiary of
the Company and David B. Keighley entered into an employment agreement on July
15, 1997. The agreement was for a five-year term and provided for an annual base
salary, annual bonus and additional bonus of 10% of any excess of DKP/70MM
audited profit before taxes over DKP/70MM's enumerated pre-tax profit threshold.
Under the agreement, Mr. Keighley has given restrictive covenants including
confidentiality and non-competition covenants. The agreement provides that the
employment of Mr. Keighley may be terminated at any time for cause or without
cause. If Mr. Keighley's employment is terminated without cause prior to the end
of the employment term, DKP/70MM must continue to pay Mr. Keighley his annual
base salary for the remainder of his employment term, subject to mitigation by
Mr. Keighley. The Company has agreed to renew Mr. Keighley's employment
agreement beyond July 2002 on terms to be finalized.
EQUITY COMPENSATION PLANS
The following table sets forth information regarding the Company's Equity
Compensation Plans as of December 31, 2003:
Number of securities
remaining available for
Number of securities to Weighted average future issuance under equity
be issued upon exercise exercise price of compensation plans (excluding
of outstanding options, outstanding options, securities reflected in
Plan category warrants and rights warrants and rights column (a))
------------------------------ ----------------------- -------------------- -----------------------------
(a) (b) (c)
Equity compensation plans 5,677,806 $11.11 2,199,795
approved by security holders
Equity compensation plans not
approved by security holders 550,000(1) $ 6.06 nil
--------------------- -------------------- -----------------------------
Total 6,227,806 $10.66 2,199,795
===================== ==================== =============================
(1) Warrants issued to certain strategic partners of the Company. Of the
550,000 warrants, the Company believes that only 200,000 will
ultimately vest. The warrants generally expire 5 years after the date
of grant or vesting. At December 31, 2003, 200,000 warrants were vested
and exercisable.
13
BUSINESS CONDUCT AND CORPORATE ETHICS POLICY
The Company has a Code of Ethics applicable to all employees, including
the Company's Co-Chief Executive Officers, Chief Financial Officer and
Controller and all other persons performing similar functions. A copy of the
Code of Ethics is available, without charge, at www.imax.com or upon written
request to the Company at IMAX Corporation, 2525 Speakman Drive, Mississauga,
Ontario, Canada, L5K 1B1, Attention: Corporate Secretary. Any amendments to, or
waivers of, the Code of Ethics, which specifically relate to any financial
professional will be disclosed promptly following the date of such amendment or
waiver.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2003, three members of the Board of Directors served as members
of the Compensation Committee: Messrs. Girvan, Fuchs and Koffler (until
September 10, 2003, when Mr. Koffler resigned from the Board of Directors).
The law firm of McCarthy Tetrault, of which Mr. Girvan is a senior
partner, provided legal services to the Company on several matters in 2003 and
is expected to provide legal services in 2004.
No executive officers of the Company serve on boards of directors or
compensation committees of any other entities that had or have had one or more
of its executive officers serving as a member of the Company's Board of
Directors.
REPORT ON EXECUTIVE COMPENSATION
COMPOSITION OF COMPENSATION COMMITTEE
The Board of Directors constituted a Compensation Committee in November
1996. The current members of the Compensation Committee are Messrs. Girvan and
Fuchs. As the Compensation Committee did not participate in executive
compensation decisions in respect of 2003 other than the compensation of Messrs.
Gelfond and Wechsler, the compensation of the Company's employees was
established through guidelines set by the Board of Directors.
Compensation for all of the Company's employees, including its Named
Executive Officers, is based on each employee's job responsibilities and on his
or her individual performance over time. The Company's executive compensation
program has three principal components: base salary, annual variable incentive
compensation and stock options. The Company believes these components
collectively provide a fair and competitive pay package and an appropriate
relationship between an executive's compensation, the executive's performance
and the Company's performance.
BASE SALARY
A salary range is established for each salaried position in the
Company, including each Named Executive Officer position other than the
Executives. The midpoint of each salary range is generally equal to the average
salary of equivalent positions at other comparable companies. Each executive
officer's base salary is determined by reviewing his or her sustained job
performance over time, based on individual performance and performance of the
business or staff unit over which the executive officer exercises
responsibility. Business or staff unit performance is assessed on return on
total capital, achievement of sales or production targets, effectiveness of
cost-containment measures, progress toward implementation of process
improvements and other factors relevant to each executive officer's position.
The relative weight attributed to each factor, with respect to each executive
officer, is an inherently subjective judgement.
ANNUAL INCENTIVE COMPENSATION
Certain employees of the Company, including most of its executive
officers other than the Co-Chief Executive Officers, receive a portion of their
annual compensation in the form of bonuses under the Management Incentive Plan.
Bonuses are awarded under this plan provided annual operating objectives targets
are achieved by the Company and provided that personal performance standards are
achieved by the participating employees. An aggregate of $1,539,987 has been
paid to all employees participating in this plan in respect of 2003.
STOCK OPTIONS
The Company's long-term incentive compensation for executive officers
and other key managers is provided through grants of stock options. The Company
has a stock option plan (the "Stock Option Plan") under which the Company may
grant options to officers, employees, consultants and eligible directors
("Participants") to purchase Common Shares on terms that may be determined,
within the limitations of the Stock Option Plan. The Stock Option Plan has
received shareholder approval and is administered by the Option Committee of the
Board of Directors. The number of stock options granted is determined by a
competitive compensation analysis and is based on each individual's salary range
and responsibility.
14
All grants pursuant to the Stock Option Plan are made with an exercise
price equal to the fair market value of the Company's Common Shares on the date
of grant. An option will be exercisable for a maximum period of 10 years from
the date of grant, subject to earlier termination if the Participant's
employment, consulting arrangement or term of office with the Company
terminates. The Board of Directors determines vesting requirements. If a
Participant's employment, consulting arrangement or term of office with the
Company terminates for any reason, any options which have not vested will
generally be surrendered for cancellation without any consideration being paid
therefor. If the Participant's employment, consulting arrangement or term of
office is terminated without cause or by reason of such Participant's
resignation, death or permanent disability, the Participant (or the
Participant's estate) will generally be entitled to exercise the Participant's
vested options for a period thereafter. If the Participant's employment,
consulting arrangement or term of office is terminated for cause, such
Participant's vested options will be surrendered for cancellation without any
consideration being paid therefor. If the Participant is a party to an
employment agreement with the Company or any of its subsidiaries and breaches
any of the restrictive covenants in such agreement, such Participant will be
required to surrender all unexercised options for cancellation without any
consideration being paid therefor and will be obligated to pay to the Company an
amount equal to the aggregate profit realized by such Participant with respect
to any prior option exercises. Options to purchase 5,677,806 Common Shares have
been granted and are outstanding under the Stock Option Plan as of December 31,
2003. Of those outstanding options, 31.1%, or 1,765,638 options, have exercise
prices above $20 per option. Under the terms of the Stock Option Plan, the
maximum number of Common Shares that the Company may issue under options is
7,877,601 Common Shares as of December 31, 2003. In 2003, 259,163 options were
cancelled by or forfeited to the Company. During 2003, stock options were
granted to certain of the Company's executive officers and other Stock Option
Plan Participants. Certain Named Executive Officers received options to purchase
Common Shares of the Company, as detailed in the "Options Granted" Table above.
In determining the number of options to grant to the Named Executive Officers,
consideration was given to information about stock option grants to executive
officers in comparable companies and the number of options granted to other
executive officers.
COMPENSATION OF CO-CHIEF EXECUTIVE OFFICERS
The Compensation Committee of the Board of Directors makes
recommendations to the Board of Directors regarding the compensation of the
Co-Chief Executive Officers, Messrs. Gelfond and Wechsler. The
pay-for-performance philosophy of the Company's executive compensation program
applies equally to the Co-Chief Executive Officers. The compensation of the
Co-Chief Executive Officers was recommended by the Compensation Committee and
approved by the Board of Directors after careful assessment of their personal
contributions to the performance of the Company. The assessment of the Co-Chief
Executive Officers' performance was based on a number of quantitative and
qualitative factors, which included corporate financial results and strategic
planning.
The foregoing Report on Executive Compensation, dated April 29, 2004,
has been furnished by G.M. Girvan and M. Fuchs, as members of the Compensation
Committee and by N.S. Braun, K.G. Copland, M. Fuchs, G.M. Girvan, D.W. Leebron
and M.A. Utay, as members of the Board of Directors.
PERFORMANCE GRAPH
The following graph compares the total cumulative shareholder return
for $100 invested (assumes that all dividends were reinvested) in Common Shares
of the Company against the cumulative total return of the Nasdaq Composite
Index, the Toronto Stock Exchange (the "TSX") S&P/TSX Composite Index and the
Bloomberg Hollywood Reporter Index from June 1994, when the Company became
listed on the Nasdaq Stock Market, to the end of the most recently completed
fiscal year.
CUMULATIVE VALUE OF $100 INVESTMENT
'10-June- '31-Dec- '31-Dec- '31-Dec- '31-Dec- '31-Dec- '31-Dec- '31-Dec- '31-Dec- '31-Dec- '31-Dec-
94 94 95 96 97 98 99 00 01 02 03
----------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
IMAX 100 62.96 168.52 229.63 325.93 468.52 405.56 40.74 29.93 59.85 117.19
Nasdaq 100 103.17 144.35 176.78 216.34 298.60 546.91 336.29 265.04 183.53 276.37
S&P/TSX Composite 100 104.45 122.83 157.14 173.11 159.12 222.26 229.46 189.13 166.93 258.63
Bloomberg Hollywood Reporter 100 95.59 121.99 123.25 173.67 264.73 402.21 261.59 223.30 135.51 185.02
15
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
As contemplated under Section 124 of the Canada Business Corporations
Act, the Company has acquired insurance coverage with a yearly limit of
$70,000,000 in respect of potential claims against its directors and officers
and in respect of losses for which the Company may be required or permitted by
law to indemnify such directors and officers. The insurance, in respect of which
a $1,338,184 yearly premium was paid by the Company, includes a $100,000
deductible for each claim under the policy other than claims made under U.S.
securities law as to which a deductible of $500,000 applies.
DIRECTORS' COMPENSATION
Directors are reimbursed for expenses incurred in attending meetings of
the Board of Directors and Committees of the Board. In addition, members of the
Board of Directors who are not also employees of the Company receive Cdn.
$20,000 per year (or may elect to receive options to purchase Common Shares of
the Company in lieu of this payment) plus Cdn. $1,500 for each meeting of the
Board of Directors attended in person and Cdn. $750 for each telephone meeting
of the Board of Directors or meeting of any committee of the Board of Directors,
whether participating in person or by telephone. In addition, each of the
directors who are not also employees of the Company are granted options annually
to purchase 8,000 Common Shares at an exercise price equal to the market value
of the Common Shares of the Company on the date of grant which vest on the date
of grant and expire on the earlier of the date which is two years after the
termination of the Optionee's service as a director of the Company or seven
years after the date of the grant.
CORPORATE GOVERNANCE
Over the last few years, there have been extensive regulatory changes
based on reforms arising out of the Sarbanes Oxley Act of 2002 ("SOX"), the
reforms of the SEC, the new listing requirements of the Nasdaq Stock Market, the
newly promulgated and/or proposed reforms of the Ontario Securities Commission
and the proposed amendments to the guidelines for improved corporate governance
of the TSX (the "TSX Guidelines"). With shares listed on the TSX and Nasdaq, the
Company reviews its governance policies and practices against these standards
under the direction of its Board of Directors and Governance Committee.
The TSX passed a by-law in 1995 which requires companies incorporated
in Canada and listed on the TSX to disclose their corporate governance practices
in their annual meeting materials. This by-law contains a number of guidelines
relating to corporate governance practices which have been considered in light
of the unique opportunities and challenges facing the Company, as well as the
nature of its share ownership. Appendix "A" to this Circular describes the
Company's various governance practices with reference to the TSX Guidelines and,
where applicable, with the Nasdaq rules, as these rules have been approved by
the SEC.
The Board has assumed responsibility for identifying and recommending
candidates for election to the Board and believes, considering the size and
composition of the Board, that this is the most efficient means to identify
nominees for election to the Board of Directors. Such candidates are then
nominated for election by majority of independent directors. The Company had
previously established a nominating committee in accordance with an agreement
concerning various matters of corporate governance with a former shareholder.
This shareholder disposed of its shares in the Company in 2003 and,
subsequently, the committee was disbanded. The Board has not adopted a formal
charter regarding the nominating function. The Board evaluates potential new
candidates for the Board of Directors on an ongoing basis in light of
opportunities and risks facing the Company, and the competencies, skills and
personal qualities that are desirable to add value to the Company. Candidates
are identified from a number of sources including recommendations from Board
members.
COMMITTEES OF THE BOARD
The Board of Directors has delegated some of its duties to four
specific committees of the Board: Audit Committee, Compensation Committee,
Governance Committee and Option Committee. Each of these committees are
appointed annually and has a written mandate which sets out its principal duties
and responsibilities.
AUDIT COMMITTEE
The Audit Committee is currently composed of Messrs. Girvan, Copland
and Utay. Nasdaq now requires that as of the date of the Meeting, all members of
the Audit Committee must be independent directors as defined in Rule 4200
(a)(15) of the National Association of Securities Dealers ("NASD") listing
standards and that they must have an understanding of financial statements and
financial affairs. The Company is in the process of reconstituting the Audit
Committee to ensure compliance with these rules by the required date. The Board
had determined that Mr. Copland, an independent director, qualifies as an audit
committee financial expert. The membership of the Audit Committee currently
complies with the TSX Guidelines. The Audit Committee operates under a written
mandate, the Audit Committee Charter, adopted by the Company's Board of
Directors. A copy of the Audit Committee Charter is available at www.imax.com or
upon written request to the Company at IMAX Corporation, 2525 Speakman Drive,
Mississauga, Ontario, Canada, L5K 1B1, Attention: Corporate Secretary.
16
The preceding information in this paragraph shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
be incorporated by reference into any future filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent that the Company specifically incorporates it by reference in such
filing.
The Audit Committee meets with the external auditors of the Company,
both with and without management present, to review the Company's accounting
policies, its quarterly and year-end financial statement information and their
presentation, and significant financial issues which may arise for the Company.
The Audit Committee will review and assess the adequacy of the Audit Committee
Charter on an annual basis.
COMPENSATION COMMITTEE
The Compensation Committee is currently composed of Messrs. Girvan and
Fuchs. The Compensation Committee is responsible for setting objectives for the
Co-Chief Executive Officers, assessing their performance on a periodic basis and
reviewing the Stock Option Plan, from time to time. The Report on Executive
Compensation is located above. A copy of the Compensation Committee Charter is
available at www.imax.com or upon written request to the Company at IMAX
Corporation, 2525 Speakman Drive, Mississauga, Ontario, Canada, L5K 1B1,
Attention: Corporate Secretary.
GOVERNANCE COMMITTEE
The Governance Committee is currently composed of Messrs. Leebron,
Girvan and Utay. In light of recent developments in corporate governance
requirements and the disclosure thereof, the Company established a formal
governance committee in the fall of 2002. The Governance Committee is
responsible for monitoring and evaluating the Company's compliance with regard
to the recently enacted regulations in connection with the SOX; monitoring and
evaluating compliance with the Company's articles, by-laws and governance
agreements; monitoring and evaluating the Company's corporate policies and
practices, with particular attention to the Company's disclosure and trading
policies; and monitoring the effectiveness of the Board of Directors in the
discharge of its general oversight responsibilities. A copy of the Governance
Committee Charter is available at www.imax.com or upon written request to the
Company at IMAX Corporation, 2525 Speakman Drive, Mississauga, Ontario, Canada,
L5K 1B1, Attention: Corporate Secretary.
OPTION COMMITTEE
The Option Committee is currently composed of Messrs. Girvan and Utay.
The Option Committee is responsible for performing the functions required of it
under the Stock Option Plan including the grant of options to Participants under
the Stock Option Plan, from time to time, subject to guidelines determined by
the Company's human resources department and the Compensation Committee. The
Option Committee enacts written resolutions from time to time authorizing the
grant of stock options but does not conduct formal meetings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No director or executive officer of the Company, nor any nominee for
election as a director or any security holder of record as of the date of this
circular who owned, of record or to the Company's knowledge, more than 5% of the
outstanding Common Shares, or any member of such person's immediate family, had
any material interest, direct or indirect, in any transaction during the last
fiscal year, or since the commencement of the current fiscal year, in any
completed or proposed transaction which has materially affected or will
materially affect the Company except:
The law firm of McCarthy Tetrault, of which Mr. Girvan is a senior
partner, provided legal services to the Company on several matters in 2003 and
is expected to provide legal services in 2004.
Mr. Utay is a Managing Partner of Clarion Capital Partners, LLC which
leases office space from the Company for an annual rent of approximately
$150,000.
SHAREHOLDERS' AGREEMENTS
The Company, Wasserstein Perella Partners, L.P., Wasserstein Perella
Offshore Partners, L.P., WPPN, Inc., and the Michael J. Biondi Voting Trust
(collectively "WP"), and each of Messrs. Gelfond and Wechsler were parties to a
Second Amended and Restated Shareholders' Agreement (the "Shareholders'
Agreement") dated as of February 9, 1999, which amended and restated the
previous amended and restated shareholders' agreement among those parties dated
June 16, 1994 and which terminated on March 1, 2004.
REGISTRATION RIGHTS AGREEMENTS
The Company, WP and Messrs. Gelfond and Wechsler entered into a
registration rights agreement (the "Registration Rights Agreement") dated as of
February 9, 1999, which carried forward the corresponding provisions of the June
16, 1994 shareholders' agreement, and pursuant to which each of Messrs. Gelfond
and Wechsler have certain rights to cause the Company to use its best efforts to
register their securities under the U.S. Securities Act of 1933 (the "1933
Act"). Messrs. Gelfond and Wechsler are entitled to make two such demand
registrations. Messrs. Gelfond and Wechsler also have unlimited piggyback rights
to register their securities
17
under the Registration Rights Agreement whenever the Company proposes to
register any securities under the 1933 Act, other than the registration of
securities pursuant to an initial public offering or the registration of
securities upon Form S-4 or S-8 under the 1933 Act or filed in connection with
an exchange offer or an offering of securities solely to the Company's existing
shareholders.
Messrs. Gelfond and Wechsler, and certain shareholders of the Company
have entered into another shareholders' agreement on January 3, 1994 as amended
on March 1, 1994 (the "Selling Shareholders' Agreement") which includes, among
other things, registration rights, tag along rights and drag along rights.
AUDITOR INDEPENDENCE
PricewaterhouseCoopers, LPP ("PWC") are the principal independent
accountants of the Company. PWC, or one of its predecessors, have been the
auditors of the Company for more than five years.
AUDIT FEES
For professional services rendered by PWC for the audit of the
Company's financial statements and review of the quarterly financial statements
included in the Company's Form 10-Ks and 10-Qs and services that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements during the fiscal year ended December 31, 2003, PWC billed the
Company $406,245 (2002 - $340,518).
AUDIT-RELATED FEES
For professional services rendered by PWC for assurance and related
services that are reasonably related to the performance of the audit or review
of financial statements and include consultations concerning financial
accounting and reporting standards; review of operational effectiveness of
systems; and services related to debt financing during the fiscal year ended
December 31, 2003, PWC billed the Company $293,322 (2002 - $153,890).
TAX FEES
For professional services rendered by PWC for tax compliance, tax
advice and tax planning during the fiscal year ended December 31, 2003, PWC
billed the Company $147,599 (2002 - $13,616).
ALL OTHER FEES
PWC did not bill the company for services rendered during the fiscal
year ended December 31, 2003, other than the services described above.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
Section 10A(i)(1) of the Exchange Act and related SEC rules require
that all auditing and permissible non-audit services to be performed by a
company's principal accountants be approved in advance by the Audit Committee of
the Board of Directors, subject to a de minimus exception set forth in the SEC
rules (the "De Minimus Exception"). Pursuant to Section 10A(i)(3) of the
Exchange Act and related SEC rules, the Audit Committee has established
procedures by which the Chairman of the Audit Committee may pre-approve such
services provided the pre-approval is detailed as to the particular service or
category of services to be rendered and the Chairman reports the details of the
services to the full Audit Committee at its next regularly scheduled meeting.
None of the audit-related or non-audit services described above were performed
pursuant to the De Minimus Exception during the periods in which the
pre-approval requirement has been in effect.
REPORT OF THE AUDIT COMMITTEE
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended December 31,
2003.
The Audit Committee meets privately with PWC on a periodic basis and
PWC has unrestricted access to the Audit Committee. The Audit Committee has
reviewed and discussed the Company's audited financial statements for the fiscal
year ended December 31, 2003 with senior management. The Audit Committee has
discussed with PWC the matters required to be discussed by SAS 61 (Codification
of Statements on Accounting Standards) which include, among other items, matters
related to the conduct of the audit of the Company's financial statements. The
Audit Committee has also received written disclosures and the letter from PWC
required by Independence Standards Board Standard No. 1 (which relates to the
accountant's independence from the Company and related entities) and has
discussed with PWC their independence from the Company. Based on the review and
discussions referred to above, the Audit Committee recommended to the Company's
Board of Directors that the Company's audited financial statements be included
in the Company's Annual Report on Form 10-K and the Company's Annual Information
Form for the fiscal year ended December 31, 2003.
The information contained in this report shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such information
be incorporated by reference into any future filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent that the Company specifically incorporates it by reference in such
filing.
18
The foregoing Report of the Audit Committee, dated April 29, 2004, has
been furnished by G.M. Girvan, K.G. Copland and Marc A. Utay as members of the
Audit Committee of the Board of Directors.
APPOINTMENT OF AUDITORS
At the Meeting, the shareholders will be asked to approve the
appointment of PricewaterhouseCoopers LLP, Chartered Accountants, as auditors of
the Company to hold office until the close of the next annual meeting of
shareholders at a remuneration rate to be fixed by the Board of Directors.
Representatives of PWC are expected to be present at the Meeting and to
be available to respond to appropriate questions and to make statements as they
desire.
Shareholders will be asked to approve the appointment by ordinary
resolution, which requires that a majority of the votes cast at the Meeting be
in favour of the resolution. IN THE ABSENCE OF ANY INSTRUCTION ON THE
ACCOMPANYING PROXY, IT IS THE INTENTION OF THE PERSONS NAMED BY MANAGEMENT IN
THE PROXY TO VOTE THE COMMON SHARES REPRESENTED BY THE PROXY IN FAVOUR OF THE
RESOLUTION.
AMENDMENTS TO ARTICLES OF AMALGAMATION AND BY-LAW NO. 1
ARTICLES OF THE CORPORATION
At the Meeting, the shareholders will be asked to approve amendments to
the Articles of Amalgamation of the Company, as well as amendments to By-Law No.
1 of the Company.
SUMMARY OF PROPOSED AMENDMENTS
The proposed amendments to the Articles of Amalgamation delete
references to Class C Shares which the Company fully redeemed in January 1999.
In addition, the requirement that certain matters be approved by a seventy-five
percent (75%) majority of the directors, which was implemented in connection
with an agreement with Messrs. Gelfond and Wechsler and former shareholders
Wasserstein Perella Partners, L.P., Wasserstein Perella Offshore Partners, L.P.,
WPPN, Inc., and the Michael J. Biondi Voting Trust, has been deleted. In
addition, the place in which meetings of shareholders may be held has been
expanded to include various cities in the United States.
The proposed amendments to By-Law No 1. of the Company address certain
administrative matters such as enabling the Board to determine procedures to be
followed at any meeting and to reduce the amount of notice required to be given
in advance of Board and Board committee meetings from two business days to
forty-eight hours. In addition, references to a "Non-Executive Chairman" have
been deleted as the company no longer maintains this office.
SHAREHOLDER APPROVAL
The amendments to the Articles of Amalgamation requires the approval of
shareholders by special resolution, which must be approved by a majority of no
less than two-thirds (66-2/3%) of the votes cast on the special resolution. (see
Appendix "B"). If approved by the holders of the Common Shares the amendments to
the Articles of Amalgamation will become effective upon filing with the Director
under the Canada Business Corporations Act. The amendments to By-Law No. 1
requires the approval of shareholders by ordinary resolution, which must be
approved by a majority of the votes cast on the resolution (see Appendix "C").
If approved by the holders of the Common Shares the amendments to By-Law No. 1
will become effective immediately. IN THE ABSENCE OF ANY INSTRUCTIONS ON THE
ACCOMPANYING PROXY, IT IS THE INTENTION OF THE PERSONS NAMED BY MANAGEMENT IN
THE PROXY TO VOTE THE SHARES REPRESENTED BY THE PROXY IN FAVOUR OF EACH OF THE
SPECIAL RESOLUTION AND THE ORDINARY RESOLUTION.
AVAILABLE INFORMATION
The Company makes available free of charge its annual reports on Form
10-K, quarterly reports on Form 10-Q and current reports on Form 8-K as soon as
reasonably practicable after the such filing has been made with the SEC. Reports
are available at www.imax.com or by calling investor relations at 905-403-6500.
APPROVAL BY BOARD OF DIRECTORS
The contents and the sending of this Proxy Circular and Proxy Statement
to each shareholder entitled to receive notice of the Meeting, to each director
and to the auditors of the Company have been approved by the Board of Directors.
DATED at Mississauga, Ontario, Canada,
April 29, 2004.
"G. Mary Ruby"
------------------------------------
G. MARY RUBY
Senior Vice President, Legal Affairs
and Corporate Secretary
19
APPENDIX "A"
IMAX CORPORATION
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The following table indicates how the Company's system of corporate
governance aligns with the Toronto Stock Exchange Guidelines (the "TSX
Guidelines"). Where applicable, the Company has also disclosed a comparison with
the Nasdaq Stock Market rules (the "Nasdaq Rules"), as those rules have been
approved by the United States Securities and Exchange Commission (the "SEC").
TSX CORPORATE GOVERNANCE GUIDELINE COMMENTS
--------------------------------------------------------------------------------
1. The Board of Directors should explicitly The Company aligns with this
assume responsibility for stewardship of Guideline as the Board has
the Company, and specifically assume assumed the duty of stewardship
responsibility for: and assesses and monitors
management's performance
although management conducts
the day-to-day operations of
the Company. The Company has
also adopted a Code of Ethics
that applies to all directors,
officers and employees of the
Company. The Code of Ethics may
be obtained on the Company's
web-site, www.imax.com
(a) Adoption of a strategic planning The Company aligns with this
process Guideline. The development of
the Company's strategic
undertakings is an interactive
process with Board involvement
and input. The formal annual
strategic objectives and
operating plan are reviewed and
approved at a dedicated meeting
with the Board.
(b) Identification of principal risks, The Company aligns with this
and implementing risk management systems Guideline. The Audit Committee
and the Board of Directors
have specifically identified
the Company's principal
operational and strategic
risks and are continually
working with management in the
development of appropriate
controls and procedures which
constitute the Company's risk
management systems. The Audit
Committee has been delegated
the responsibility to work
with management and external
professional advisors to
review and if necessary
improve, internal procedures
and controls and to establish
risk management processes. The
principal risks to the
business are identified in the
Company's Annual Report on
Form 10-K.
(c) Succession planning and monitoring The Company aligns with this
senior management Guideline. The Compensation
Committee reviews and reports
to the Board of Directors on
succession issues relating to
the Co-Chief Executive
Officers. The Board of
Directors, through the
Compensation Committee,
defines its expectations of
the Co-Chief Executive
Officers by establishing
annual performance objectives,
conducting annual performance
assessments and establishing
annual compensation and bonus
levels based on actual
performance to objectives. The
Board of Directors also
receives operational reports
at least quarterly by the
Co-Chief Executive Officers to
ensure accountability of
senior management.
(d) Communications policy The Company aligns with this
Guideline. The Company has
verified through the
establishment of a formal
Disclosure Committee that
procedures are in place to
ensure effective communication
between the Company and its
shareholders and the public.
The Company promptly provides
full, true and plain
disclosure of all material
information, as required by
law. In addition, all material
press releases and other
significant corporate
disclosures are reviewed by
counsel prior to being
disclosed. The Company has a
web-site on which the Company
posts all of the Company's
press releases, Annual Report,
SEC filings and other
meaningful information. The
Company's Investor Relations
Department has also
implemented procedures to
enhance effective
communication with the
Company's shareholders and the
public. For example, the
Investor Relations Department
maintains a distribution list
of persons who have requested
information about the Company
and delivers to those persons
all material press releases,
including earnings releases,
either by facsimile or by
e-mail. The Company also holds
quarterly meetings with
analysts and institutional
investors by telephone
conference call, which are
open to the financial press as
well as the public. Recordings
of the meetings are available
for playback for appropriate
periods of time.
A - 1
TSX CORPORATE GOVERNANCE GUIDELINE COMMENTS
--------------------------------------------------------------------------------
(e) Integrity of internal control and The Company aligns with this
management information systems Guideline. The Audit Committee
is responsible for overseeing
the Company's internal control
structure over financial
reporting. This responsibility
includes monitoring and
reviewing accounting controls,
procedures and policies,
information gathering systems
and management reporting. The
external auditors report to
the Audit Committee, when
requested, on matters relating
to internal controls and
procedures.
2. A majority of directors should be The Company aligns with this
"unrelated" (free from conflict of Guideline. A majority of
interest) the directors (6 out of 8)
are independent from
management and free from any
interest business or other
relationship that could or
could reasonably be perceived
to, materially interfere with
the director's ability to act
in the Company's best
interests (as such terms are
used in the TSX Guidelines).
The Board has determined that
five of the six "unrelated
directors" qualify as
"independent directors", as
that expression is defined in
Rule 4200(a)(15) of the Nasdaq
Rules.
3. Disclose, for each director, whether he The Company aligns with this
or she is "related", and how that guideline. A determination
conclusion was reached on an ongoing basis is made as
to whether each director is an
"unrelated director". In order
to make that determination, all
relationships of the directors
with the Company are annually
analyzed on the basis of
answers given by each of the
directors to a detailed
questionnaire. Messrs.
Wechsler and Gelfond cannot be
qualified as "unrelated
directors" since they are the
Co-Chief Executive Officers of
Company. The other directors,
namely Messrs. Braun, Copland,
Fuchs, Leebron, Girvan and
Utay are "unrelated directors"
for purposes of the TSX
Guidelines. None of these
"unrelated directors" work in
the day-to-day operations of
the Company, or are party to
any material contracts with
the Company or personally
receive any fees from the
Company other than as
directors. The Board has
determined that legal services
provided by McCarthy Tetrault
to the Company do not
interfere with the ability of
Mr. Girvan, who is a partner
of such firm, to act in the
Company's best interests. More
information about each
directors can be found in the
Directors Table on page 3 of
this Proxy Circular and Proxy
Statement.
4. The Board of Directors should appoint a The Board of Directors as a
committee of directors responsible for whole evaluates potential new
proposing to the full Board of Directors candidates for the Board of
new nominees for election to the board Directors on an ongoing basis
and for assessing directors on an in light of opportunities and
ongoing basis risks facing the Company, and
the competencies, skills and
personal qualities that are
desirable to add value to the
Company. Candidates are
identified from a number of
sources including from
recommendations from the
Co-Chief Executive Officers
and other Board members. The
Board will consider nominees
recommended by shareholders.
The names and biographies of
any such proposed nominees
should be sent to IMAX
Corporation, 2525 Speakman
Drive, Mississauga, Ontario
L5K 1B1, Attention: Corporate
Secretary.
5. Implement a process for assessing the The Company aligns with this
effectiveness of the Board of Directors Guideline. The Company's
its committees and individual directors Governance Committee is
mandated to review and to
assess the effectiveness of
the Board, its committees and
individual directors, and to
make recommendations for
improvements.
6. Provide an orientation and education The Company aligns with this
program for new directors Guideline. The Company has
developed and implemented
orientation materials and
procedures for new directors.
In this regard, a Board of
Directors Manual is provided
to all new Board members.
Reports, materials and
presentations relating to the
Company's business are
periodically provided to the
Board. New directors also have
access to fellow directors and
senior management.
7. Examine board size with a view to The Company aligns with this
determining the impact of the number of Guideline. The Board of
directors upon board effectiveness and Directors has considered this
where appropriate, undertake a program issue and in 2003 reduced the
to reduce the number of directors to a size of the Board from 11 to
number that will facilitate more 8. The Board is of the view
effective decision making that its current size and
composition are suited to the
Company's circumstances and
allow for the efficient
functioning of the Board of
Directors as a decision-
making body and the
appropriate staffing of
committees (in accordance with
these TSX Guidelines) to which
active mandates have been
delegated.
A - 2
TSX CORPORATE GOVERNANCE GUIDELINE COMMENTS
--------------------------------------------------------------------------------
8. The Board of Directors should review The Company aligns with this
compensation of directors in light Guideline. The mandate of the
of risks and responsibilities involved Company's Governance Committee
being a director includes reviewing and
recommending to the Board of
Directors proposals for the
remuneration of directors. See
"Directors' Compensation"
on page 16 of this Proxy
Circular and Proxy Statement.
The members of the Governance
Committee are "unrelated"
directors for the purposes of
this Guideline. In addition,
the Board of Directors has
determined that the members of
the Governance Committee
qualify as "independent
directors", as that expression
is defined in Section
4200(a)(15) of the Nasdaq
Rules.
9. Committees of the Board of Directors The Company aligns with this
should generally be composed of Guideline. The Company's
outside (non-management) directors, a Governance Committee, Audit
majority of whom are unrelated Committee and Compensation
Committee are composed solely
of outside (non-management)
directors all of whom are
"unrelated" in accordance
with this Guideline.
10. Appoint a committee responsible for The Company aligns with this
approach to corporate governance Guideline. The Governance
issues and guidelines Committee is responsible
approach to corporate
governance responsible for the
Company's. As part of its
mandate, the Governance
Committee reviews the Company's
policies and procedures and the
Code of Ethics on a periodic
basis, adopting best practices
to meet the needs and
circumstances of the Company.
11. (a) Define limits to management's The Company aligns with this
responsibilities by developing mandates Guideline. The Board has both
for the Board of Directors statutory and regulatory
duties and standards of care
in its role of overseeing the
management and affairs of the
Company. In addition, the
Board has duties, including
contribution to and approval
of all strategic objectives
and business plans and all
significant initiatives
including acquisitions,
divestitures, financings and
capital expenditures. In
addition, through various
committees, it oversees the
development and implementation
of procedures and controls for
the management of risk, the
Company's communication policy
and the integrity of the
Company's internal control and
management systems.
(b) The Board of Directors should The Company aligns with this
approve the CEO's corporate Guideline. The Co-Chief
objectives Executive Officers' objectives,
as noted above, are reviewed
and approved by the full Board
of Directors, on
recommendations of the
Compensation Committee, on an
annual basis.
12. Establish procedures to ensure the The Company aligns with this
Board can function independently Guideline. The Board meets
of management independently of management on
a regularly scheduled basis,
at least quarterly. The Board
of Directors has assigned
certain of its responsibilities
to the Governance Committee
which is comprised solely of
directors who are not members
of management, which ensures
that the Board of Directors
fulfills its responsibilities
under the Company's system of
corporate governance and has
established an Audit Committee
with a specific mandate (see
item 13 below).
A - 3
TSX CORPORATE GOVERNANCE GUIDELINE COMMENTS
--------------------------------------------------------------------------------
13. (a) Establish an audit committee with a The Company aligns with this
specifically defined mandate Guideline. The Company has
established an Audit Committee
that is mandated to: oversee
the retention, independence,
performance and compensation
of the Company's independent
auditors and the establishment
and oversight of the Company's
systems of internal accounting
and auditing control. In
particular, the Audit
Committee is responsible for
ensuring that there are
adequate internal controls
over accounting and financial
reporting systems. The Audit
Committee is permitted and
encouraged to consult with
management, internal
accountants, and the Company's
independent auditors on
matters related to the
preparation of the Company's
annual and quarterly financial
status and the internal
controls, published financial
statements, accounting
principles and auditing
procedures. In addition, the
Audit Committee must meet
separately with the Company's
external auditors without
management, at least once a
year and more frequently as
required, during which the
Company's financial
statements, internal controls
and procedures are discussed.
In accordance with Nasdaq's
listing standards, the Company
has adopted a formal charter
for the Audit Committee that
details its mandate, a copy of
which is available on the
Company's web-site:
www.imax.com.
(b) All members of the Audit Committee The Company aligns with this
should be non-management directors Guideline. All members of
the Audit Committee are
non-management directors.
All of the members of the
Audit Committee are
financially literate.
On the date of the Company's
2004 Annual General Meeting,
all of the Audit Committee
members will be "independent"
within the meaning of Rule
4200(a)(15) of the Nasdaq
Rules, and the composition of
the Audit Committee will
satisfy Section 4350(d)(2) of
the Nasdaq Rules.
14. Implement a system to enable individual In performing its or their
directors to engage outside individual responsibilities,
advisors, at the Company's expense directors may, with the
authorization of the
Governance Committee, engage
outside advisors at the
Company's expense.
A - 4
APPENDIX "B"
IMAX CORPORATION
RESOLVED that the Articles of Amalgamation of the Company be amended by
deleting Schedules I, 1-A and II thereof and replacing those schedules with the
following:
SCHEDULE I
The Corporation is authorized to issue an unlimited number of Common
Shares and an unlimited number of Special Shares, issuable in series. Schedule
I-A attached hereto sets forth the rights, privileges, restrictions and
conditions of such shares.
SCHEDULE I-A
1. COMMON SHARES
The rights, privileges, restrictions and conditions attaching to the Common
Shares are as follows:
(a) Payment of Dividends: The holders of the Common Shares shall be
entitled to receive dividends if, as and when declared by the Board of
Directors of the Corporation out of the assets of the Corporation
properly applicable to the payment of dividends in such amounts and
payable in such manner as the Board of Directors may from time to time
determine. Subject to the rights of the holders of any other class of
shares of the Corporation entitled to receive dividends in priority to
or ratably with the holders of the Common Shares, the Board of
Directors may in their sole discretion declare dividends on the Common
Shares to the exclusion of any other class of shares of the
Corporation.
(b) Participation upon Liquidation, Dissolution or Winding-Up: In the event
of the liquidation, dissolution or winding-up of the Corporation or
other distribution of assets of the Corporation among its shareholders
for the purpose of winding-up its affairs, the holders of the Common
Shares shall, subject to the rights of the holders of any other class
of shares of the Corporation entitled to receive the assets of the
Corporation upon such a distribution in priority to or ratably with the
holders of the Common Shares, be entitled to participate ratably in any
distribution of the assets of the Corporation.
(c) Voting Rights: The holders of the Common Shares shall be entitled to
receive notice of and to attend all annual and special meetings of the
shareholders of the Corporation and to one vote in respect of each
Common Share held at all such meetings.
2. SPECIAL SHARES
The rights, privileges, restrictions and conditions attaching to the Special
Shares are as follows:
(a) Series: The Special Shares may at any time or from time to time be
issued in one or more series. The Board of Directors of the Corporation
may from time to time before the issue thereof fix the number of shares
in, and determine the designation, rights, privileges, restrictions and
conditions attaching to the shares of, each series of Special Shares.
(b) Priority: The Special Shares shall be entitled to priority over the
Common Shares and all other shares ranking junior to the Special Shares
with respect to the payment of dividends and the distribution of assets
of the Corporation in the event of any liquidation, dissolution or
winding-up of the Corporation or other distribution of assets of the
Corporation among its shareholders for the purpose of winding-up its
affairs.
(c) Voting Rights: Except as otherwise provided by law, the holders of the
Special Shares shall not, as such, be entitled to receive notice of or
to attend any meeting of the shareholders of the Corporation and shall
not be entitled to vote at any such meeting. Without limiting the
generality of the foregoing, the holders of the Special Shares shall
not be entitled to vote separately as a class on any proposal to amend
the Articles of the Corporation to:
(i) increase or decrease any maximum number of authorized Special
Shares, or increase any maximum number of authorized shares of
a class having rights or privileges equal or superior to the
Special Shares; or
(ii) effect an exchange, reclassification or cancellation of all or
part of the Special Shares; or
(iii) create a new class of shares equal or superior to the Special
Shares.
B - 1
SCHEDULE II
1. The number of directors of the Corporation at any time shall be such
number within the minimum and maximum number of directors set forth in
the articles of the Corporation as is determined from time to time by
resolution of the directors in light of the Corporation's contractual
obligations in effect from time to time.
2. Subject to the Canada Business Corporations Act and the Corporation's
contractual obligations then in effect, the directors may fill any
vacancies among the directors, whether arising due to an increase in
the number of directors within the minimum and maximum number of
directors set forth in the articles of the Corporation or otherwise.
3. The directors shall be divided into three classes and for a term of
three years. In any election or appointment of a director to fill a
vacancy created by any director ceasing to hold office, the election or
appointment shall be for the unexpired term of the director who has
ceased to hold office. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes of
directors in such a manner as will maintain or attain, to the extent
possible, an equal number of directors in each class of directors. If
such equality is not possible, the increase or decrease shall be
apportioned among the classes of directors in such a manner that the
difference in the number of directors in any two classes shall not
exceed one.
4. Meetings of shareholders may be held in New York, New York; Los
Angeles, California; Chicago, Illinois; Houston, Texas; Philadelphia,
Pennsylvania; San Diego, California; Dallas, Texas; Phoenix, Arizona;
Detroit, Michigan; San Antonio, Texas and Washington, DC; or in any
place in Canada that the directors from time to time determine.
B - 2
APPENDIX "C"
IMAX CORPORATION
RESOLVED that By-Law No. 1 of the Corporation be repealed and replaced
with the following:
BY-LAW NO. 1
A by-law regulating generally the transaction of the business and
affairs of IMAX Corporation.
SECTION 1
INTERPRETATION
1.1 DEFINITIONS. In this by-law, which may be cited as the By-law, unless
the context otherwise requires:
"Act" means the Canada Business Corporations Act, R.S.C. 1985, C. 44
and any statute that may be substituted therefor, as from time to time
amended;
"Articles" includes the original or restated articles of incorporation,
articles of amendment, articles of amalgamation, articles of
continuance, articles of reorganization, articles of arrangement and
articles of revival of the Corporation;
"Board" means the Board of Directors of the Corporation;
"Corporation" means IMAX Corporation;
"meeting of shareholders" means any meeting of shareholders including
an annual meeting and a special meeting;
"non-business day" means Saturday, Sunday and any other day that is a
holiday as defined in the Interpretation Act (Canada);
"recorded address" means in the case of a shareholder his address as
recorded in the securities register; and in the case of joint
shareholders the address appearing in the securities register in
respect of such joint holding or the first address so appearing if
there are two or more; and in the case of a director, officer or
auditor, his latest address as recorded in the records of the
Corporation.
1.2 CONSTRUCTION. Save as aforesaid, words and expressions defined in the
Act have the same meanings when used herein; and words importing the
singular include the plural and vice versa; words importing gender
include the masculine, feminine and neuter genders; and words importing
persons include individuals, bodies corporate, partnerships,
associations, trusts, executors, administrators, legal representatives,
and unincorporated organizations and any number or aggregate of
persons.
SECTION 2
MEETINGS OF SHAREHOLDERS
2.1 MEETINGS OF SHAREHOLDERS. The annual meeting of shareholders shall be
held in each year on a date to be determined by the Board. The Board,
one of the Co-Chairmen or the Chairman if there is only one, a
Vice-Chairman, one of the Co-Chief Executive Officers, or the Chief
Executive Officer if there is only one, may call a special meeting of
shareholders, at any time, provided however, that one of the Co-Chief
Executive Officers or the Chief Executive Officer if there is only one,
shall have approved the date, time and agenda for such meeting.
2.2 CHAIRMAN, SECRETARY AND SCRUTINEERS. The chairman of any meeting of
shareholders shall be the first mentioned of such of the following
officers who is present at the meeting: one of the Co-Chief Executive
Officers or the Chief Executive Officer if there is only one, one of
the Co-Chairmen or the Chairman if there is only one, a Vice-Chairman
or a Vice-President who is a director of the Corporation. If no such
officer is present within fifteen minutes from the time fixed for
holding the meeting, the persons present and entitled to vote shall
choose one of their number to act as chairman. The secretary of any
meeting of shareholders shall be the Secretary of the Corporation. If
the Secretary is absent, the chairman shall appoint some person, who
need not be a shareholder, to act as secretary of the meeting. The
chairman may appoint one or more persons who need not be shareholders
to act as scrutineers at the meeting.
2.3 PERSONS ENTITLED TO BE PRESENT. The only persons entitled to be present
at a meeting of shareholders shall be those entitled to vote thereat,
the directors, the auditor of the Corporation and others who, although
not entitled to vote, are entitled or
C - 1
required under any provision of the Act or the Articles to be present.
Any other person may be admitted with the consent of the meeting or of
the chairman of the meeting.
2.4 QUORUM. Except as otherwise provided in the Articles, a quorum for the
transaction of business at any meeting of shareholders shall be at
least two persons present in person, each being a shareholder entitled
to vote thereat or a duly appointed proxyholder for such a shareholder
and together holding or representing by proxy not less than 33-1/3% of
the outstanding shares of the Corporation entitled to be voted at the
meeting.
2.5 PROCEDURES AT MEETINGS. The Board may determine the procedures to be
followed at any meeting of shareholders including, without limitation,
the rules of order. Subject to the foregoing, the chairman of a meeting
may determine the procedures of the meeting in all respects.
SECTION 3
DIRECTORS
3.1 NUMBER OF DIRECTORS; FILLING VACANCIES. Subject to the Act and the
Articles and the contractual obligations of the Corporation then in
effect, the number of directors of the Corporation may be fixed from
time to time by resolution of the Board, and any vacancies on the
Board, whether arising due to an increase in the number of directors or
otherwise, may be filled by the Board.
3.2 TERM OF OFFICE. Subject to Section 3.3 hereof, each director shall be
elected for a term as provided in the Articles.
3.3 QUALIFICATION OF DIRECTORS. In addition to the disqualifications
provided for in the Act, a director who is a salaried officer of the
Corporation other than any of the Co-Chief Executive Officers or the
Chief Executive Officer if there is only one, any of the Co-Chairmen or
the Chairman if there is only one, or a Vice-Chairman, shall cease to
hold office as a director when he ceases to be a salaried officer of
the Corporation.
3.4 QUORUM. A majority of the directors holding office at any particular
time shall constitute a quorum of the Board.
3.5 MEETING FOLLOWING ANNUAL MEETING. The Board shall meet without notice
as soon as practicable after each annual meeting of shareholders to
transact such business as may come before the meeting and to appoint by
election:
(1) the Chairman or one or more Co-Chairmen;
(2) one or more Vice-Chairmen;
(3) the Chief Executive Officer or one or more Co-Chief
Executive Officers;
(4) the Secretary;
(5) one or more Vice-Presidents; and
(6) such other officers as the Board chooses to appoint.
Each of the officers appointed by the Board, whether at the meeting of
the Board after the annual meeting of shareholders or at any other
meeting shall perform such duties and have such powers as are
customarily performed and held by such officers, subject to any
limitations or specific duties required to be performed or specific
powers bestowed by the Board from time to time.
3.6 OTHER MEETINGS OF THE BOARD. Meetings of the board shall be held from
time to time at a date, time and place determined by one of the
Co-Chairmen, or the Chairman if there is only one, a Vice-Chairman or a
majority of the directors, provided however, that other than for
regular quarterly meetings of the board and the meeting following the
annual meeting of shareholders, and one of the Co-Chief Executive
Officers or the Chief Executive Officer if there is only one shall have
approved the date, time and agenda for such meeting.
3.7 NOTICE OF MEETING. Notice of the time and place of each meeting of the
Board requiring notice shall be given to each director not less than
forty-eight (48) hours before the time at which the meeting is to be
held.
3.8 CHAIRMAN. The chairman of any meeting of the Board shall be the first
mentioned of such of the following officers who is present at the
meeting: one of the Co-Chairmen or the Chairman if there is only one,
one of the Co-Chief Executive Officers or the Chief Executive Officer
if there is only one, a Vice-Chairman or a Vice-President who is a
director of the Corporation. If no such officer is present, the
directors present shall choose one of their number to act as chairman.
C - 2
3.9 VOTES TO GOVERN. Subject to the Articles and this by-law at all
meetings of the Board, every question shall be decided by a majority of
the votes cast. The chairman of any meeting may vote as a director and,
in the event of an equality of votes, the chairman shall not be
entitled to a second or casting vote.
3.10 REMUNERATION. No director who is a salaried officer of the Corporation
shall be entitled to any remuneration for the performance of his duties
as a director. If any director or officer of the Corporation shall be
employed by or shall perform services for the Corporation otherwise
than as a director or officer or shall be a member of a firm or a
shareholder, director or officer of a body corporate which is employed
by or performs services for the Corporation, the fact of his being a
director or officer of the Corporation shall not disentitle such
director or officer or such firm or body corporate, as the case may be,
from receiving proper remuneration for such services.
3.11 INTEREST OF DIRECTORS AND OFFICERS GENERALLY IN CONTRACTS. No director
or officer shall be disqualified by his office from contracting with
the Corporation nor shall any contract or arrangement entered into by
or on behalf of the Corporation with any director or officer or in
which any director or officer is in any way interested be liable to be
voided nor shall any director or officer so contracting or being so
interested be liable to account to the Corporation for any profit
realized by any such contract or arrangement by reason of such director
or officer holding that office or of the fiduciary relationship thereby
established; provided that the director or officer shall have complied
with the provisions of the Act.
SECTION 4
COMMITTEES
4.1 COMMITTEES. The Board shall, from time to time, appoint members of an
Audit Committee, a Compensation Committee and a Governance Committee
and such additional committees as it deems necessary and, subject to
the Act, delegate to the committees such powers of the Board and assign
to the committees such duties, as the Board considers appropriate.
4.2 COMPOSITION OF COMMITTEES. To the extent required by regulatory
requirements applicable to the Corporation, at least a majority of the
members of the Audit and Compensation Committees shall be directors who
are independent directors for the purposes of such regulatory
requirements applicable to the Corporation. Subject to the foregoing,
the composition of each committee shall have been proposed to the Board
by one of the Co-Chief Executive Officers or the Chief Executive
Officer if there is only one.
4.3 OPERATION OF COMMITTEES. In the case of each committee, a majority of
members holding office at any particular time shall constitute a quorum
for the transaction of business at that time. The Board shall appoint a
chairman of each committee. Each committee shall meet at the call of
its chairman, on not less than forty-eight (48) hours notice to each
member of the committee prior to the date on which the meeting is to be
held. All acts or proceedings of any committee shall be reported to the
Board at or before the next meeting thereof.
SECTION 5
THE TRANSACTION OF BUSINESS
5.1 EXECUTION OF INSTRUMENTS. Contracts, documents or instruments in
writing requiring execution by the Corporation shall be signed by any
two officers or directors, and all contracts, documents or instruments
in writing so signed shall be binding upon the Corporation without any
further authorization or formality. The board is authorized from time
to time by resolution to appoint any officer or officers or any other
person or persons on behalf of the Corporation to sign and deliver
either contracts, documents or instruments in writing generally or to
sign either manually or by facsimile signature and deliver specific
contracts, documents or instruments in writing. The term "contracts,
documents or instruments in writing" as used in this by-law shall
include deeds, mortgages, charges, conveyances, powers of attorney,
transfers and assignments of property of all kinds including
specifically but without limitation transfers and assignments of
shares, warrants, bonds, debentures or other securities and all paper
writings.
5.2 BANKING ARRANGEMENTS. The banking business of the Corporation, or any
part thereof, shall be transacted with such banks, trust companies or
other financial institutions as the board may designate, appoint or
authorize from time to time by resolution and all such banking
business, or any part thereof, shall be transacted on the Corporation's
behalf by such one or more officers and/or other persons as the board
may designate, direct or authorize from time to time by resolution and
to the extent therein provided.
C - 3
SECTION 6
DIVIDENDS
6.1 DIVIDENDS. The Board may from time to time declare dividends payable to
shareholders according to their respective rights.
6.2 DIVIDEND PAYMENT. A dividend payable in money may be paid by cheque
drawn on the Corporation's bankers, or one of them, to the order of
each registered holder of shares of a class or series in respect of
which the dividend has been declared, and mailed by prepaid ordinary
mail to such registered holder at his recorded address. In the case of
joint holders the cheque shall, unless such joint holders otherwise
direct, be made payable to the order of all of such joint holders and
mailed to them at their recorded address. The Corporation may pay a
dividend by cheque to a registered holder or to joint holders other
than in the manner herein set out, if the registered holder or joint
holders so request.
6.3 IDEM. The Corporation may, when so directed by a registered holder of a
share in respect of which a dividend in money has been declared, pay
the dividend in the manner so directed.
6.4 NON-RECEIPT OR LOSS OF DIVIDEND CHEQUES. In the event of non-receipt or
loss of any dividend cheque by the person to whom it is sent, the
Corporation shall issue to such person a replacement cheque for a like
amount on such terms as to indemnity, reimbursement of expenses and
evidence of non-receipt or loss and of entitlement as the Board or the
Vice-President in charge of finance may from time to time prescribe,
whether generally or in a particular case.
SECTION 7
PROTECTION OF DIRECTORS AND OFFICERS
7.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Corporation shall
indemnify a director or officer of the Corporation, a former director
or officer of the Corporation or a person who acts or acted at the
Corporation's request as a director or officer of a body corporate of
which the Corporation is or was a shareholder or creditor, and his
heirs and legal representatives to the extent permitted by the Act.
7.2 INDEMNITY OF OTHERS. Except as otherwise required by the Act and
subject to paragraph 7.1, the Corporation may from time to time
indemnify and save harmless any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was an employee or
agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, agent of or participant
in another body corporate, partnership, joint venture, trust or other
enterprise, against expenses (including legal fees), judgments, fines
and any amount actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted honestly and in good
faith with a view to the best interests of the Corporation and, with
respect to any criminal or administrative action or proceeding that is
enforced by a monetary penalty, had reasonable grounds for believing
that his conduct was lawful. The termination of any action, suit or
proceeding by judgment, order, settlement or conviction shall not, of
itself, create a presumption that the person did not act honestly and
in good faith with a view to the best interests of the Corporation and,
with respect to any criminal or administrative action or proceeding
that is enforced by a monetary penalty, had no reasonable grounds for
believing that his conduct was lawful.
7.3 RIGHT OF INDEMNITY NOT EXCLUSIVE. The provisions for indemnification
contained in the by-laws of the Corporation shall not be deemed
exclusive of any other rights to which any person seeking
indemnification may be entitled under any agreement, vote of
shareholders or directors or otherwise, both as to action in his
official capacity and as to action in another capacity, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs and legal
representatives of such a person.
C - 4
7.4 NO LIABILITY OF DIRECTORS OR OFFICERS FOR CERTAIN MATTERS. To the
extent permitted by law, no director or officer for the time being of
the Corporation shall be liable for the acts, receipts, neglects or
defaults of any other director or officer or employee or for joining in
any receipt or act for conformity or for any loss, damage or expense
happening to the Corporation through the insufficiency or deficiency of
title to any property acquired by the Corporation or for or on behalf
of the Corporation or for the insufficiency or deficiency of any
security in or upon which any of the moneys of or belonging to the
Corporation shall be placed out or invested or for any loss or damage
arising from the bankruptcy, insolvency or tortious act of any person,
firm or body corporate with whom or which any moneys, securities or
other assets belonging to the Corporation shall be lodged or deposited
or for any loss, conversion, misapplication or misappropriation of or
any damage resulting from any dealings with any moneys, securities or
other assets belonging to the Corporation or for any other loss, damage
or misfortune whatever which may happen in the execution of the duties
of his respective office or trust or in relation thereto unless the
same shall happen by or through his failure to act honestly and in good
faith with a view to the best interests of the Corporation and in
connection therewith to exercise the care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances.
If any director or officer of the Corporation shall be employed by or
shall perform services for the Corporation otherwise than as a director
or officer or shall be a member of a firm or a shareholder, director or
officer of a body corporate which is employed by or performs services
for the Corporation, the fact of his being a director or officer of the
Corporation shall not disentitle such director or officer or such firm
or body corporate, as the case may be, from receiving proper
remuneration for such services.
SECTION 8
MISCELLANEOUS
8.1 OMISSIONS AND ERRORS. The accidental omission to give any notice to any
shareholder, officer or auditor or the non-receipt of any notice by any
such person or any error in any notice not affecting the substance
thereof shall not invalidate any action taken at any meeting to which
the notice related.
8.2 PERSONS ENTITLED BY DEATH OR OPERATION OF LAW. Every person who, by
operation of law, transfer, death of a shareholder or any other means
whatsoever, becomes entitled to any share, shall be bound by every
notice in respect of such share which shall have been duly given to the
shareholder from whom he derives his title to such share prior to his
name and address being entered on the securities register.
8.3 WAIVER OF NOTICE. A shareholder, proxyholder, director, officer or
auditor may at any time waive any notice, or waive or abridge the time
for any notice, required to be given to him under any provision of the
Act, the regulations thereunder, the Articles or otherwise and such
waiver or abridgment, whether given before or after the meeting or
other event of which notice is required to be given, shall cure any
default or defect in the giving or in the time of such notice, as the
case may be. Any such waiver or abridgment shall be in writing except a
waiver of notice of a meeting of shareholders or of the Board or of a
committee of the Board which may be given in any manner.
8.4 INVALIDITY OF ANY PROVISIONS OF THIS BY-LAW. The invalidity or
unenforceability of any provision of this by-law shall not affect the
validity or enforceability of the remaining provisions of this by-law.
SECTION 9
REPEAL
9.1 REPEAL. By-Law No. 1 of the Corporation adopted and confirmed by the
shareholders of the Corporation on June 7, 1999 is repealed on the
coming into force of this by-law. Such repeal shall not affect the
previous operation of any by-law of the Corporation or its predecessors
or affect the validity of any act done or right, privilege, obligation
or liability acquired or incurred under or the validity of any contract
or agreement made pursuant to such by-law prior to its repeal. All
officers and persons acting under the by-law so repealed shall continue
to act as if appointed by the directors under the provisions of this
by-law or the Act until their successors are appointed.
C- 5
[IMAX(R) LOGO]
IMAX CORPORATION
2525 Speakman
Drive
PRELIMINARY COPY Mississauga,
[IMAX(R) LOGO] DEFINITIVE COPIES ARE INTENDED TO BE RELEASED Ontario, Canada,
FORM OF PROXY TO SECURITY HOLDERS ON APRIL 29, 2004. L5K 1B1
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT OF IMAX CORPORATION (THE
"COMPANY") TO BE USED AT THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS OF THE
COMPANY (THE "MEETING") TO BE HELD AT IMAX CORPORATION'S CORPORATE HEADQUARTERS
AND TECHNOLOGY CENTER, 2525 SPEAKMAN DRIVE, MISSISSAUGA, ONTARIO, CANADA, ON
THURSDAY, JUNE 3, 2004 AT 10:30 A.M., AND AT ANY ADJOURNMENTS THEREOF FOR THE
PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE OF ANNUAL AND SPECIAL MEETING.
The undersigned common shareholder of IMAX Corporation (the "Company") hereby
appoints Bradley J. Wechsler, failing whom, Richard L. Gelfond, failing whom,
Robert D. Lister, failing whom, G, Mary Ruby, or instead of the
foregoing,___________________as the proxyholder of the undersigned to attend and
act for and on behalf of the undersigned at the Annual and Special Meeting of
Shareholders of the Company to be held on June 3, 2004, and at any adjournments
thereof, to the same extent and with the same power as if the undersigned were
present in person thereat and with the authority to vote and act in the said
proxyholder's discretion with respect to amendments or variations to matters
referred to in the Notice of Annual and Special Meeting and with respect to
other matters which may properly come before the Meeting.
The said proxyholder is specifically directed to vote or withhold from voting
the shares registered in the name of the undersigned as indicated below:
(1) In respect of the election of the nominees for directors of the Company
listed below:
VOTE [ ] FOR [ ] WITHHOLD FROM VOTING
Richard L. Gelfond
VOTE [ ] FOR [ ] WITHHOLD FROM VOTING
Bradley J. Wechsler
VOTE [ ] FOR [ ] WITHHOLD FROM VOTING
Kenneth G. Copland
(2) In respect of the appointment of PricewaterhouseCoopers LLP as auditors of
the Company and authorizing the directors to fix their remuneration.
VOTE [ ] FOR [ ] WITHHOLD FROM VOTING
(3) In respect of the special resolution set forth in Schedule "B" to the Proxy
Circular and Proxy Statement to approve certain amendments to the Articles
of Amalgamation of the Company.
VOTE FOR [ ] AGAINST [ ]
(4) In respect of the ordinary resolution set forth in Schedule "C" to the
Proxy Circular and Proxy Statement to approve certain amendments to By-law
No. 1 of the Company.
VOTE FOR [ ] AGAINST [ ]
Date: _________________, 2004
________________________________________________________
(Print name of Registered Holder of Common Shares)
________________________________________________________
(Signature of Registered Holder or Authorized Signatory)
Notes:
(1) YOU HAVE THE RIGHT TO APPOINT A PERSON OTHER THAN THE MANAGEMENT NOMINEES
TO ATTEND AND ACT FOR YOU AT THE MEETING. SUCH PERSON NEED NOT BE A
SHAREHOLDER OF THE COMPANY. In such case, please delete the names of
Messrs. Wechsler, Gelfond, Lister and Ms. Ruby as your Proxy nominee and
insert the name of the desired person in the blank space provided for this
purpose.
(2) If the Proxy is not dated in the space provided for this purpose, it will
be deemed to bear the date on which it was mailed by the Company.
(3) To be valid, this Proxy must be dated and signed by yourself, as the
registered holder of Common Shares, or as a person named as a Proxy nominee
in respect of this Meeting in an omnibus proxy containing a power of
substitution pursuant to applicable securities laws, or your attorney. If
the registered holder or the person named in an omnibus proxy is a
corporation, this Proxy must be signed by an authorized officer or attorney
of such corporation.
(4) For the purpose of voting by proxy, proxies marked as "WITHHOLD" will be
treated as present for the purpose of determining a quorum but will not be
counted as having been voted in respect of any matter to which the
instruction to "WITHHOLD" is indicated.
(5) On any ballot that may be called for regarding the matters listed in the
Notice of Annual and Special Meeting and in this Proxy, the Common Shares
represented by the Proxy will be voted or withheld from voting in
accordance with the instructions of the shareholder indicated thereon by
marking an "X" in the boxes provided for the purpose on the Proxy. IN THE
ABSENCE OF SUCH INSTRUCTIONS THE SHARES WILL BE VOTED FOR (I) THE ELECTION
OF DIRECTORS AND (II) THE APPOINTMENT OF AUDITORS AND AUTHORIZING THE
DIRECTORS TO FIX THE AUDITORS' REMUNERATION (III) THE APPROVAL OF THE
PROPOSED AMENDMENTS TO THE ARTICLES OF AMALGAMATION OF THE COMPANY (IV) THE
APPROVAL OF THE PROPOSED AMENDMENTS TO BY-LAW NO. 1 OF THE COMPANY, IN EACH
CASE, AS REFERRED TO IN THE PROXY CIRCULAR AND PROXY STATEMENT.