Exhbit 99
GORAN CAPITAL INC.
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual and a Special Meeting (the
"Meeting") of the Shareholders of Goran Capital Inc. (the "Corporation") will be
held at 181 University Avenue, Suite 1101, Toronto, Ontario, on Tuesday, May 19,
1998, at 10:00 a.m., Toronto time, for the following purposes:
1. To receive the annual report and financial statements of the
Corporation for the year ended December 31, 1997, and the report of
the auditor thereon;
2. To elect directors;
3. To appoint an auditor and to authorize the directors to fix the
auditor's remuneration;
4. To consider, and if thought fit, approve certain amendments to the
Corporation's Share Option Plan.
5. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The accompanying management information circular provides additional
information relating to the matters to be dealt with at the Meeting and forms
part of this Notice.
Shareholders who are unable to attend the Meeting are requested to
date, sign and return the accompanying form of proxy in the envelope provided
for that purpose.
DATED at Toronto, this 27th day of March, 1998.
BY ORDER OF THE BOARD
ALAN G. SYMONS
CEO and President
March 27, 1998
Dear Shareholder:
Re: Supplemental Mailing List
If you wish to have your name added to the supplemental mailing list of Goran
Capital Inc. so you may receive the Corporation's quarterly reports which
contain interim unaudited financial statements, please fill in your name and
address in the space provided below and return to our transfer agent, Montreal
Trust Company, 151 Front Street West, 8th Floor, Toronto, Ontario M5J 2N1.
NAME:
Please print
ADDRESS:
CITY:
PROVINCE: POSTAL CODE:
I hereby confirm that I am the owner of shares issued by the above-mentioned
Corporation.
SIGNATURE:
DATE:
GORAN CAPITAL INC.
MANAGEMENT PROXY CIRCULAR
Solicitation of Proxies
This Management Proxy Circular is furnished in connection with the
solicitation of proxies by the management of Goran Capital Inc. (the
"Corporation") for use at the Annual and Special Meeting (the "Meeting") of
Shareholders of the Corporation to be held Tuesday, May 19, 1998, at 10:00 a.m.,
or at any and all adjournments thereof, for the purposes set forth in the
accompanying Notice of Meeting. It is expected that the solicitation will be
primarily by mail, but proxies may also be solicited personally, by telephone or
by telecopier, by directors, officers or regular employees of the Corporation.
The costs of such solicitation will be borne by the Corporation.
Revocation of Proxies
A shareholder who has given a proxy may revoke at any time to the
extent it has not been exercised. In addition to revocation in any other manner
permitted by law, a proxy may be revoked by instrument in writing executed by
the shareholder or his attorney authorized in writing, and deposited either at
the registered office of the Corporation at any time up to 5:00 p.m. (Toronto
time) on the last business day preceding the day of the Meeting, or any
adjournment thereof, at which the Proxy is to be used, or with the Chairman of
the Meeting prior to the beginning of the Meeting on the day of the Meeting, or
any adjournment thereof or in any other manner provided by law.
Voting of Shares Represented by Management Proxies
The persons specified in the enclosed form of proxy are directors and
officers of the Corporation and will represent management at the Meeting. Each
shareholder of the Corporation has the right to appoint a person (who need not
be a shareholder), other than the persons specified in the enclosed form of
proxy, to attend for him and on his behalf at the Meeting or any adjournment
thereof. Such right may be exercised by striking out the names of the specified
persons and inserting the name of the shareholder's nominee in the space
provided or by completing another appropriate form of proxy and, in either case,
signing, dating and delivering the form of proxy to the Corporation prior to the
holding of the Meeting.
The persons named in the enclosed form of proxy will vote the shares in
respect of which they are appointed by proxy on any ballot that may be called
for in accordance with the instructions thereon. In the absences of such
specifications, such shares will be voted in favour of each of the matters
referred to herein.
The enclosed form of proxy confers discretionary authority upon the
persons named therein with respect to amendments to or variations of matters
identified in the Notice of Meeting and with
respect to other matters, if any, that may properly come before the Meeting. As
of the date of this Circular, management of the Corporation knows of no such
amendments, variations or other matters to come before the Meeting other than
the matter referred to in the Notice of Meeting and routine matters incidental
to the conduct of the Meeting. However, if any other matters that are not known
to management should properly come before the Meeting, the proxy will be voted
on such matters in accordance with the best judgment of the named proxy.
Voting Securities
The only voting securities of the Corporation currently outstanding and
entitled to be voted at the Meeting are 5,806,466 common shares, each of which
carries one vote.
The Corporation has fixed March 20, 1998 as the Record Date for the
Meeting. The Corporation will prepare a list of the holders of common shares at
the close of business on that day. Each person named in such list is entitled to
be present and vote the shares shown opposite his name on such list at the
Meeting except to the extent that he has transferred ownership of any of his
shares after that date and the transferee of those shares produces properly
endorsed share certificates or otherwise establishes that he owns the shares and
demands, not later than ten days before the Meeting, that his name be included
in the list before the Meeting, in which case the transferee is entitled to vote
his shares at the Meeting or any adjournment thereof.
Principal Holders of Voting Securities
To the knowledge of the directors and officers of the Corporation, the
following are the only persons who beneficially own or exercise control or
direction over more than 10% of the outstanding common shares of the
Corporation:
- ----------------------------------------------------------------------------------------------------
Number of Common Shares Percentage of Outstanding
Name Beneficially Owned, Common Shares
Controlled or Directed1
- ----------------------------------------------------------------------------------------------------
Symons International Group 1,646,413 28.4%
Ltd.2
- ----------------------------------------------------------------------------------------------------
G. Gordon Symons 544,511 9.4%
- ----------------------------------------------------------------------------------------------------
Alan G. Symons 506,366 8.7%
- ----------------------------------------------------------------------------------------------------
Douglas H. Symons 195,722 3.4%
- ----------------------------------------------------------------------------------------------------
1 The information as to beneficial ownership of shares not being within the
knowledge of the Corporation, has been furnished by the persons and companies
listed above. Information presented is as of March 18, 1988.
2 Mr. G. Gordon Symons is the controlling shareholder of Symons International
Group Ltd., a private company.
2
Particulars of Matters to be Acted Upon
At the Meeting, shareholders will be asked to elect directors, to
appoint an auditor and to authorize the directors to fix the auditor's
remuneration, to consider and, if thought fit, approve certain proposed changes
to the Corporation's Share Option Plan and to deal with other matters which may
properly come before the Meeting.
Election of Directors
The Articles of the Corporation currently provide for a board
consisting of a minimum of three and a maximum of ten directors. The board
currently consists of seven Directors until otherwise determined by further
resolution of the board of directors of the Corporation.
Unless otherwise specified therein, proxies received in favour of
management nominees will be voted for the following proposed nominees (or for
substitute nominees in the event of contingencies not known at present) whose
term of office will continue until the next Annual Meeting of Shareholders or
until they are removed or their successors are elected or appointed in
accordance with the Canada Business Corporations Act and the bylaws of the
Corporation.
- -----------------------------------------------------------------------------------------------------------------------
Year First Number of Commons
Name and Principal Position in the Became Shares of the Corporation
Occupation Corporation Director Beneficially Owned1
- -----------------------------------------------------------------------------------------------------------------------
G. Gordon Symons Chairman of the 1986 2,190,9244
Chairman of the Board Board
Goran Capital Inc.
- -----------------------------------------------------------------------------------------------------------------------
Alan G. Symons2 CEO and President 1986 506,366
CEO and President
Goran Capital Inc.
- -----------------------------------------------------------------------------------------------------------------------
Douglas H. Symons3 COO and Vice 1989 195,722
President, Symons International President
Group, Inc., Chief Operating
Officer, Goran Capital Inc.
- -----------------------------------------------------------------------------------------------------------------------
J. Ross Schofield,3 President Director 1992 3,800
Schofield Insurance Brokers
- -----------------------------------------------------------------------------------------------------------------------
David B. Shapira,3 Director Director 1989 100,000
Enershare Technology Corporation
- -----------------------------------------------------------------------------------------------------------------------
James G. Torrance, Q.C.2 Director 1995 2,000
Partner Emeritus
Smith Lyons, Barristers & Solicitors
- -----------------------------------------------------------------------------------------------------------------------
John K. McKeating2 Director 1995 -0-
Partner
Vision 2120, Inc.
- -----------------------------------------------------------------------------------------------------------------------
1 Information as to the shareholdings of each nominee has been provided by the
nominee.
2 Member of the Audit Committee.
3 Member of the Compensation Committee
4 Includes 1,646,413 shares owned by Symons International Group Ltd., a private
company of which Mr. G. Gordon Symons is the controlling shareholder.
3
Each of the foregoing nominees has held the principal occupation
indicated above during the past five years except: (i) David B. Shapira who
prior to 1995 was the President of Morse Jewelers Inc.
Proposed Amendments to the Share Option Plan
The Corporation has a share option plan (the "Option Plan"). Under the
Option Plan, options to acquire shares in the Corporation may be granted to
employees (including directors if they are full-time employees) of the
Corporation, its subsidiaries and affiliates and certain other service
providers. In the opinion of the board of directors and management of the
Corporation, the strength and motivation of the Corporation and its related
entities is and will continue to be of significant importance to the continued
success of the Corporation and the enhancement of shareholder value, and these
assets are promoted and supported by the Option Plan. The Option Plan presently
provides that the aggregate number of shares issuable thereunder cannot exceed
10% of the number of outstanding shares and that the exercise price of any
option granted thereunder may not be less than the Fair Market Value (as defined
in the Option Plan) of the shares at the time of the grant.
Certain of the rules of the Toronto Stock Exchange (the "TSE")
necessitate certain changes to the Option Plan. These changes will: (i) fix the
maximum number of shares issuable thereunder at 871,000 (representing
approximately 15% of the outstanding issue); (ii) provide that the exercise
price of any option granted thereunder shall be not less than the Fair Market
Value of the shares, on the date of the grant; (iii) limit the number of shares
issuable to any one person thereunder to 5% of the number of shares outstanding,
and (iv) increasing the period in which the option may be exercised to ten (10)
years, and certain other related and non-substantive amendments as may be
required by regulators with jurisdiction in the matter (collectively, the "Plan
Amendments").
The approval of the Plan Amendments at the Meeting by a majority of
disinterested shareholders is a requirement of the TSE. The form of resolution
to be considered at the Meeting concerning the Plan Amendments is set forth as
Appendix I to this management information circular. The need for disinterested
shareholder approval arises because the Plan Amendments do not include certain
limitations on option grants described below which would limit the flexibility
of the Corporation's board of directors in administering the Option Plan.
If (and only if) the Plan Amendments do not receive the requisite level
of shareholder approval, the shareholders will be asked to consider the
following amendments to the Option Plan (collectively, the "Additional
Amendments"): (i) limiting the number of shares reserved for issuance under the
Option Plan to insiders, and the number of shares issued under the Option Plan
to insiders within any one-year period, to 10% of outstanding issue; (ii)
limiting the number of shares issued under the Option Plan within any one-year
period to 5% of outstanding issue; and (iii) the Plan Amendments, and certain
other related and non-substantive amendments as may be required by regulators
with jurisdiction in the matter.
4
The approval of the Additional Amendments at the Meeting by a majority
of all shareholders is a requirement of the TSE. The form of resolution to be
considered at the Meeting concerning the Additional Amendments is set forth as
Appendix II to this management proxy circular. Management recommends approval of
Proposal 3 on the form of proxy and approval by the shareholders of the
Shareholder's Resolution attached as Appendix I hereto.
Directors and Officers Remuneration
The aggregate remuneration paid by the Corporation and its subsidiaries
to its five highest paid employees or officers, including the three inside
directors, during the financial year ended December 31, 1997 was $1,860,413 all
in the form of salary, bonus and consulting fees.
In 1997, the Corporation's directors received (i) a flat annual fee of
$10,000 for each director; and (ii) a $1,000 meeting fee for each quarterly
board or committee meeting attended.
Interest of Insiders in Material Transactions
Reference is made to the 1997 Annual Report, sent to each shareholder
with this management proxy circular, and to Note 14, Related Party Transactions,
to the Corporation's financial statements as at and for the year ended December
31, 1997.
Indebtedness of Officers and Directors of the Corporation
The following directors and officers of the Corporation were indebted
to the Corporation in amounts exceeding $10,000 during the financial year ended
December 31, 1997, on account of loans to purchase common shares of the
Corporation and its affiliates:
- -------------------------------------------------------------------------------------------------------
Name and
Municipality of Largest Balance
Residence Date of Loan During 1997 Present Balance
- -------------------------------------------------------------------------------------------------------
G. Gordon Symons June 27, 1986 $148,000 $148,000
Bermuda June 30, 1986 $200,000 $200,000
May 31, 1988 (US) $51,729 - 0 -
- -------------------------------------------------------------------------------------------------------
Alan G. Symons June 30, 1986 $29,722 $19,772
Indianapolis, Indiana February 25, 1988 (US) $27,309 $27,309
- -------------------------------------------------------------------------------------------------------
Douglas H. Symons June 30, 1986 $15,000 $15,000
Indianapolis, Indiana February 25, 1988 (US) $2,219 (US) $2,219
- -------------------------------------------------------------------------------------------------------
The foregoing loans dated June 27, 1986 and June 30, 1986 were made for
the purchase of common shares of the Corporation require that the shares
acquired be pledged for the benefit of the
5
Corporation as security until these amounts are fully paid. The other loans are
each unsecured. The loans dated prior to 1988 are payable on demand and are
interest free. The loans dated in 1988 are payable on demand and bear interest
at 90 day T-Bill rates.
During 1997 Mr. G. Gordon Symons had an outstanding unsecured loan in
the amount of $70,000 not relating to the purchase of common shares of the
Corporation. This loan was repaid March 26, 1998. In November, 1990, the
Corporation loaned Douglas H. Symons $39,377 (U.S.) for acquisition of a
residence. This loan bears interest at prime plus 1% and has accrued an unpaid
interest of $24,577. In February, 1997, Mr. G. Gordon Symons repaid in full the
U.S. mortgage note principal amount of $277,502 (U.S.) supported by a
residential collateral mortgage, originally taken out on October 3, 1988. During
1997, the Company loaned an aggregate of $515,000 to Alan G. Symons. This sum,
plus applicable interest, was repaid to the Company prior to December 31, 1997.
Also during 1997, the Company advanced to Symons International Group, Ltd. sums
representing unearned management fees. At December 31, 1997, such over-advance
aggregated $295,091. Mr. G. Gordon Symons is the Controlling Shareholder of
Symons International Group, Ltd.
Executive Compensation
The Corporation had five executive officers during 1997. The aggregate
cash compensation paid by the Corporation and its subsidiaries to the
Corporation's executive officers including salaries, fees, commissions and
bonuses, during 1997 was $1,860,413. The aggregate value of compensation, other
than that referred to above, paid to executive officers during 1997 does not
exceed $10,000 times the number of executive officers.
Table 1 sets forth certain compensation information, paid by the
Corporation and its subsidiaries, to the Corporation's Chief Executive Officer
and each of the Corporation's other executive officers during the Corporation's
three most recently completed fiscal years.
6
TABLE 1: SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------
Long-
Annual Term
Compensation Awards
- -----------------------------------------------------------------------------------------------------------------------
Securities
Other Under
Salary Bonus Annual Options All Other
Name and US $ US $ Compensation Granted Compensation
Principal Position Year Note A Note A US$ Note B (#) Note C US $
- -----------------------------------------------------------------------------------------------------------------------
G. Gordon 1997 -0- -0- Nil 166,651 $440,000H
Symons, Chairman 1996 $171,000 $393,945 Nil 51,524 $170,799E
1995 $175,000 $70,0000 Nil 18,946 $25,272D
- -----------------------------------------------------------------------------------------------------------------------
Alan G. Symons 1997 $378,230F $300,000G Nil 9,650 Note B
CEO, President 1996 $242,786 $143,333 Nil 51,399 Note B
and Secretary 1995 $148,077 $42,893 Nil 18,945 Note B
- -----------------------------------------------------------------------------------------------------------------------
Douglas H. Symons 1997 $200,000I $200,000I Nil 9,650 Note B
Vice President and 1996 $195,973 $50,000 Nil 54,333 Note B
COO 1995 $149,982 $100,000 Nil 9,473 Note B
- -----------------------------------------------------------------------------------------------------------------------
Gary P. Hutchcraft 1997 $127,846I $65,564 Nil 1,000 Note B
Vice President and 1996 $55,418 $28,000 Nil -0- N/R
Treasurer 1995 N/R N/R Nil N/R N/R
- -----------------------------------------------------------------------------------------------------------------------
David L. Bates 1997 $107,307I $41,461I Nil 3,704 Note B
Vice President and 1996 $95,162 $97,076 Nil -0- Note B
General Counsel 1995 $63,237 -0- Nil N/R N/R
- -----------------------------------------------------------------------------------------------------------------------
N/R Not required.
Note A Salary and bonus are stated in U.S. dollars as the majority of payments
are actually made in U.S. dollars.
Note B Aggregate amounts not greater than the lesser of $50,000 and 10% of the
total of the annual salary and bonus.
Note C No stock appreciation rights (SAR's), restricted shares, or restricted
share units were granted during any of the past three completed fiscal
years. Amounts reflect stock options granted during 1997.
Note D Imputed interest on interest-free stock purchase loan.
Note E Consulting fees paid to companies owned by Mr. G. Gordon Symons
including $52,411 paid to such companies by the Company's 67% owned
subsidiary, Symons International Group, Inc.
Note F Includes $278,230 paid by Symons International Group, Inc.
Note G Includes $200,000 paid by Symons International Group, Inc.
Note H Amount paid by a subsidiary of the Company, Granite Re, a Barbados
company to companies owned by Mr. G. Gordon Symons.
Note I Amount paid by Symons International Group, Inc.
7
Employee Share Option Plan
The Corporation has a Share Option Plan (as defined above, the "Option
Plan"). Certain terms of the Plan are described above under "Proposed Amendments
to the Share Option Plan." The terms, conditions and limitations of options
granted under the Option Plan are determined by the board of directors of the
Corporation with respect to each option, within certain limitations. The
exercise price per share is payable in full on the date of exercise. Options
granted under the Option Plan are not assignable.
During 1997, options to purchase a total of 188,355 common shares were
granted to executive officers pursuant to the Option Plan.
Including the options referred to above, there were outstanding options
to purchase a total of 550,690 common shares as of December 31, 1997, at an
average exercise price of $17.46.
TABLE 2: OPTION GRANTS DURING 1997
- --------------------------------------------------------------------------------------------------------------------------
Market Value
% Of Total Of Securities
Securities Options Underlying
Under Granted To Exercise Or Options On The
Options Employees Base Price Date Of Grant Expiration
Name Granted (#) 1997 ($/Security) ($/Security) Date
- --------------------------------------------------------------------------------------------------------------------------
G. Gordon 164,030 87.1% $29.00 $29.00 Jan 29, 2007
Symons 2,621 1.4% $39.00 $39.00 Aug 13, 2007
- --------------------------------------------------------------------------------------------------------------------------
Alan G. 7,030 3.7% $29.00 $29.00 Jan 29, 2007
Symons 2,620 1.4% $39.00 $39.00 Aug 13, 2007
- --------------------------------------------------------------------------------------------------------------------------
Douglas H. 7,030 3.7% $29.00 $29.00 Jan 29, 2007
Symons 2,620 1.4% $39.00 $39.00 Aug 13, 2007
- --------------------------------------------------------------------------------------------------------------------------
David L. 704 .4% $29.00 $29.00 Jan 29, 2007
Bates
- --------------------------------------------------------------------------------------------------------------------------
Gary P. 1,000 .5% $29.00 29.00 Jan 29, 2007
Hutchcraft
- --------------------------------------------------------------------------------------------------------------------------
8
TABLE 3: AGGREGATED OPTION EXERCISES
DURING 1997 AND FINANCIAL YEAR-END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------
Value Of
Unexercised Unexercised In-
Securities Options The-Money
Acquired Aggregate at FY-End (#) Options ($)
On Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------
G. Gordon Symons 157,000 $4,304,940 283,121/0 $11,324,840/0
- -----------------------------------------------------------------------------------------------------------------------
Alan G. Symons - 0 - - 0 - 94,994/0 $3,794,760/0
- -----------------------------------------------------------------------------------------------------------------------
Douglas H. Symons - 0 - - 0 - 104,505/0 $4,180,200/0
- -----------------------------------------------------------------------------------------------------------------------
Composition of the Compensation Committee
At its meeting on March 19, 1997, the Board reconfigured the
Compensation Committee to consist of Messrs. J. Ross Schofield, David B. Shapira
and Douglas H. Symons. Mr. Douglas H. Symons was Chief Operating Officer and
Vice President of the Corporation throughout 1997. The role of the Compensation
Committee is to review the total compensation of the Corporation's Executive
Officers in an effort to ensure that the Corporation attracts and retains the
talent commensurate with its business objectives.
Report On Executive Compensation
The Corporation's Executive Compensation Policy (the "Policy")
considers an individual's experience, market conditions (including industry
surveys), individual performance and overall financial performance of the
Corporation. The Corporation's total compensation program for officers includes
base salaries, bonuses and the grant of stock options pursuant to the Option
Plan. The Corporation's primary objective is to achieve above-average
performance by providing the opportunity to earn above-average total
compensation (base salary, bonus, and value derived from stock options) for
above-average performance. Each element of total compensation is designed to
work in concert. The total program is designed to attract, motivate, reward and
retain the management talent required to serve shareholder, customer and
employee interests. The Corporation believes that this program also motivates
the Corporation's officers to acquire and retain appropriate levels of stock
ownership. It is the opinion of the Compensation Committee that the total
compensation earned by the Corporation's officers during 1997 achieves these
objectives and is fair and reasonable.
9
Compensation is comprised of base salary, annual cash incentive (bonus)
opportunities, and long-term incentive opportunities in the form of stock
options. Individual performance is determined in relation to short and long-term
objectives that are established and maintained on an on-going basis. Performance
of these objectives is formally reviewed annually and base salary adjusted as a
result. Bonus rewards are provided upon the attainment of corporate financial
performance objectives as well as the individual's direct responsibilities and
their attainment of budget and other objectives.
The Policy also strives to establish long-term incentives to executive
officers by aligning their interests with those of the Corporation's
shareholders through award opportunities that can result in the ownership of the
Corporation's common stock.
10
COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL RETURN OF GORAN CAPITAL INC.
WITH TSE 300
[GRAPHIC OMITTED]
1992 1993 1994 1995 1996 1997
GNC $100 $177 $275 $448 $1,038 $1,589
TSE300 $100 $129 $126 $141 $177 $200
Performance Graph
The graph shown above compares the total cumulative shareholder return
for $100 invested in common shares of GNC on December 31, 1992, with the
cumulative total return of the TSE 300 Stock Index for the five most recently
completed financial years.
Appointment of Auditor
Unless otherwise instructed, the persons named in the enclosed form of
proxy intend to vote for the appointment of Schwartz Levitsky Feldman, Chartered
Accountants as auditor of the Corporation to hold office until the next annual
meeting of shareholders. Schwartz Levitsky Feldman was first appointed auditor
of the Corporation in 1990.
11
Statement of Corporate Governance Practices
In February, 1995, the Toronto Stock Exchange ("TSE") announced that
all companies with a year-end on or after June 30, 1995 would be required to
describe their practices of corporate governance with reference to TSE
Guidelines previously published. Goran conforms with the majority of these
Guidelines except as noted below:
"Corporate Governance" is the process and structure used to direct and
manage the business and affairs of the Corporation to achieve shareholders'
objectives. The shareholders of the Corporation elect the directors who, in
turn, are responsible for overseeing all aspects of the operation of the
Corporation, appointing management and ensuring that the business is managed
properly, taking into account the interests of the shareholders.
The Guidelines suggest that the chairman of the board of directors not
be a member of management and state that members of the board's nominating
committee should be exclusively non-management directors. In this respect, the
Corporation does not comply. The Corporation currently does not have a
nominating or corporate governance committee. Further, the knowledge and
experience of G. Gordon Symons, the founder of the Corporation and its current
chairman, are very important to the Corporation and the board. Further, it is
believed that the best interests of the Corporation's shareholders, the
Corporation and the board would not be properly served with either Mr. Symons
relinquishing his management function or the board appointing a different
chairman. The board of the Corporation is currently comprised of seven members,
four of whom are "unrelated" within the meaning of the Guidelines and this
majority of unrelated directors allows the board the independence of management
which is a fundamental cornerstone of the TSE Guidelines.
Another Guideline states that position descriptions should be developed
for the board and for the chief executive officer which delineate and define
management's responsibilities. The segregation of duties and responsibilities
between the board and its chief executive officer have been traditionally
understood but have not been formalized.
The Corporation has a significant shareholder and the percentage of
shares held by individuals or entities who are not directly or indirectly
related to the Corporation's significant shareholder is approximately 50%. Yet,
the Corporation has a majority of its directors who are unrelated directors. The
number of such directors more than fairly reflects the investment in the
Corporation by shareholders other than the significant shareholder and those
persons or entities directly or indirectly related to the significant
shareholder. Therefore, the unrelated directors (and the board as a whole) are
in a position to fairly represent minority shareholders.
12
Mandate Of The Board
The responsibility of the Corporation's board of directors is to
oversee the conduct of the Corporation's business and to supervise management.
The board discharges its responsibilities either directly or through its
committees. The board met seven (7) times during 1997 and also acted through the
medium of unanimous written consent.
The board has three committees. All of these committees (except the
executive committee) have a majority of members who are unrelated directors.
During the early part of 1997, the audit committee was comprised of
Alan G. Symons, David B. Shapira, John K. McKeating and James G. Torrance. At
its meeting on March 19, 1997, the Board selected Messrs. Torrance, McKeating
and Alan G. Symons to serve on the Board's Audit Committee. Its principal
responsibilities are to review annual audited financial statements prior to
submission to the board for approval, review the nature and scope of the annual
audit, evaluate auditors' performance, review fees and make recommendations as
to the appointment of auditors for the ensuing year and review the adequacy of
internal accounting control procedures and systems.
During the early part of 1997, the compensation committee was comprised
Douglas H. Symons, J. Ross Schofield and James G. Torrance. At its meeting on
March 19, 1997, the Board selected Messrs. Schofield, Shapira and Douglas H.
Symons to serve on the Board's compensation committee. Its role is to review the
performance of the chairman and chief executive officer as regards compensation,
determine compensation practices for the officers of the Corporation,
periodically review the Corporation's long-range plans and policies for
recruiting, developing and motivating personnel, and to make recommendations to
the board concerning stock option grants.
Decisions Requiring Prior Approval Of The Board
In general, the management of the Corporation is empowered to run the
business on a day-to-day basis. The board approves the annual business and
strategic plan and reviews performance against those plans on an interim basis
throughout the year. The board, of necessity, would approve any action leading
to a material change in the nature of the business of the Corporation, including
any acquisition or disposition of a significant operating unit. The board also
approves key borrowing and financing decisions. The board also appoints the
officers of the Corporation, determines directors' compensation and declares
dividends (if any).
Recruitment Of New Directors
Currently, if vacancies should occur on the board, the board seeks and
receives input from individual board members and reviews the qualifications of
prospective members while taking into consideration current board composition
and the Corporation's needs.
13
Measures For Receiving Shareholder Feedback
The board has requested management to make it aware, on an on-going
basis, of any significant shareholder concerns which are communicated to
management.
The Board's Expectation Of Management
The board expects management to operate the Corporation in accordance
with prudent business practices and the direction of the board. The goal of
management, the Corporation and the board is to protect and enhance shareholder
value while managing the Corporation in a prudent manner as a fiduciary for the
Corporation's shareholders. Management is expected to provide regular financial
and operating reports to the board and to make the board aware of all important
issues and major business developments, especially those which have not been
anticipated. Consistent with its previously enunciated goal, management is
expected to seek out opportunities for business acquisitions and expansion and
to forward appropriate recommendations to the board for its action.
Directors' Approval
The contents of this information circular and the sending thereof have
been approved by the board of directors of the Corporation.
March 27, 1997
Alan G. Symons
President and CEO
14
APPENDIX I
RESOLVED THAT:
1. The Corporation's share option plan (the "Option Plan") be
amended, subject to receipt of all requisite regulatory
approvals, as follows:
(i) by deleting the first sentence of Section 3 of the
Option Plan and replacing with the following; "The
aggregate number of Shares that may be issued
pursuant to the exercise of Options shall not exceed
871,000, subject to adjustment in accordance with
Section 12 hereof, which Shares shall be made
available from the authorized but unissued Shares and
which have been reserved for issuance upon the
exercise of Options granted under the Plan.";
(ii) by adding the following sentence to the end of
Section 3 of the Option Plan: "Options shall not be
granted hereunder which could result in the issuance
to any Participant, pursuant to the Plan and any
other share compensation arrangement established by
the Corporation, of a number of shares exceeding 5%
of the number of Shares then outstanding, on a
non-diluted basis.";
(iii) by deleting the words "90% of the" from subsection
6(a) of the Option Plan, such that the exercise price
of any Option granted thereunder may not be less than
the Fair Market Value (as defined in the Option
Plan); and
(iv) by adding a new sentence at the end of Section 12 of
the Option Plan as follows: "Upon the occurrence of
the events described in subsections (a), (b) and/or
(c) of this Section 12, the number of Shares reserved
for issuance under this Plan pursuant to Section 3
shall be correspondingly adjusted."
(v) by deleting the word "eight" and replacing it with
the word "ten" in Section 6(b)(ii), referring to the
years in which an optionee has to exercise an option.
2. The Corporation's board of directors is authorized to take all such
actions including, without limitation, making further consequential or
related amendments to the Option Plan, as the board of directors deems
necessary or appropriate in order to give full effect to the meaning
and intent of the above resolutions.
APPENDIX II
RESOLVED THAT:
1. The Corporation's share option plan (the "Option Plan") be amended,
subject to receipt of all requisite regulatory approvals, as follows:
(i) by deleting the first sentence of Section 3 of the Option Plan
and replacing with the following: "The aggregate number of
Shares that may be issued pursuant to the exercise of Options
shall not exceed 1,015,000, subject to adjustment in
accordance with Section 12 hereof, which Shares shall be made
available from the authorized but unissued Shares and which
have been reserved for issuance upon the exercise of Options
granted under the Plan.";
(ii) by adding the following text at the end of Section 3 of the
Option Plan: "Options shall not be granted hereunder which
could result in the issuance to any Participant, pursuant to
the Plan and any other share compensation arrangement
established by the Corporation, of a number of Shares
exceeding 5% of the number of Shares then
outstanding, on a non-diluted basis. In addition, Options
shall not be granted hereunder which could result in the
issuance, within any one-year period, pursuant to the Plan or
any other share compensation arrangement established by the
Corporation, of a number of Shares exceeding: (a) 10% of the
number of Shares then outstanding, on a non-diluted basis; or
(b) 5% of the number of shares then outstanding, on a
non-diluted basis, to an insider and his or her affiliates.
For the purposes of this section, "insider", "associate" and
"affiliate" shall have the meanings ascribed thereto in the
Ontario Securities Act.";
(iii) by deleting the words "90% of the" from subsection 6(a) of the
Option Plan, such that the exercise price of any Option
granted thereunder may not be less than the Fair Market Value
(as defined in the Option Plan); and
(iv) by adding a new sentence at the end of Section 12 of the
Option Plan as follows: "Upon the occurrence of the events
described in subsections (a), (b) and/or (c) of this Section
12, the number of shares reserved for issuance under this Plan
pursuant to Section 3 shall be correspondingly adjusted."
(v) by deleting the word "eight" and replacing it with the word
"ten" in Section 6(b)(ii), referring to the years in which an
optionee has to exercise an option.
2. The Corporation's board of directors is authorized to take all such
actions including, without limitation, making further consequential or
related amendments to the Option Plan, as the board of directors deems
necessary or appropriate in order to give full effect to the meaning
and intent of the above resolutions.