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
MOORE CORPORATION LIMITED
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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 transaction 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:
MOORE(R)
[GRAPHIC OMITTED]
March 13, 2002
Dear Fellow Shareholders:
Our Annual Meeting of Shareholders will be held on Thursday April 18, 2002 at
12:00pm EDT at the Four Seasons Hotel, 57 East 57th Street, New York City and
we look forward to your attendance either in person or by proxy.
Holding the meeting in New York will accomplish several things. First, it will
reduce the amount of time that my team and I will need to be away from the
business. Second, it will allow us the opportunity to put on a full
presentation to our investor base that is very concentrated within the city.
Third, it will reduce expenses related to travel and fourth, it will be a sign
of support for the city as it continues its efforts to rebound following
September 11th.
I am looking forward to this opportunity to stand before you and discuss the
progress the company has made as well as our strategic direction for the
future. As you know, this company has made great strides over the course of
the last year, yet there remains much to be accomplished.
At this year's annual meeting you will be asked to approve the amendment of
the Articles of Amalgamation to decrease the minimum number of directors on
our board from 9 to 7 and to re-authorize the board to fix the number of
directors on the board within the range provided for in the articles, to
appoint our independent auditor, to amend the terms of the outstanding options
to acquire Series 1 Preference Shares, to relocate our registered office to
the Municipality of Mississauga, to approve the Corporation's continuance
under the Canada Business Corporations Act and to elect directors for the
coming year. The management team and the Board of Directors recommends that
you vote:
o FOR the amendment to the Articles of Amalgamation and to re-authorize
the board to fix the number of directors on the board within the range
provided for in the articles
o FOR the appointment of our independent auditor
o FOR the amendment to the terms of the outstanding options to acquire
Series 1 Preference Shares
o FOR the relocation of our registered office
o FOR the Corporation's continuance under the Canada Business
Corporations Act
o FOR the election of the slate of director nominees.
I am looking forward to discussing with you our results, our business plan for
the future and the positive momentum the company has despite a challenging
business environment, I encourage our investors who can attend this meeting to
join us in New York in April.
Sincerely yours,
/s/ Robert G. Burton
[GRAPHIC OMITTED]
Robert G. Burton
President and Chief Executive Officer
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MOORE CORPORATION LIMITED
Suite 3501, Scotia Plaza
40 King Street West
P.O. Box 205
Toronto, Ontario M5H 3Y2 Canada
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
The annual and special meeting of shareholders of Moore Corporation Limited
(the "Corporation") will be held at the Four Seasons Hotel, 57 East 57th
Street, New York, New York, on April 18, 2002 (please enter the Hotel on 58th
Street between Park and Madison Avenues) at 12:00 p.m. EDT for the following
purposes:
1. To receive the consolidated financial statements of the Corporation for
the year ended December 31, 2001, together with the auditor's report on
those statements;
2. To consider and, if thought fit, to approve as a special resolution the
amendment of the Corporation's Articles of Amalgamation to decrease the
minimum number of directors on our board from 9 to 7 and to re-authorize
the board to fix the number of directors on the board within the range
provided for in the articles;
3. To appoint auditors for the ensuing year and to authorize the directors to
fix the remuneration to be paid to the auditors;
4. To consider and, if thought fit, to approve the amendment of the terms of
the outstanding options to purchase Series 1 Preference Shares;
5. To consider and, if thought fit, to approve, as a special resolution, the
relocation of the registered office of the Corporation from the
Municipality of Toronto, Ontario to the Municipality of Mississauga,
Ontario;
6. To consider and, if thought fit, to approve as a special resolution the
continuation of the Corporation under the Canada Business Corporations
Act;
7. To elect directors for the ensuing year; and
8. To transact any other business properly before the meeting.
These items are more fully described in the accompanying management
information circular/proxy statement. Only shareholders of record of the
Corporation at the close of business on March 8, 2002 will be entitled to vote
at the annual meeting. To ensure that your vote is recorded promptly, please
vote as soon as possible, even if you plan on attending the annual meeting. To
vote, please COMPLETE, SIGN AND RETURN YOUR FORM OF PROXY IN THE ENCLOSED
ENVELOPE OR VIA FACSIMILE TO COMPUTERSHARE TRUST COMPANY OF CANADA
(416-981-9803). Proxies are counted and tabulated by Computershare Trust
Company of Canada, Moore's registrar and transfer agent, to protect the
confidentiality of how a particular shareholder votes. A proxy is referred to
Moore only in cases where it is clearly marked to indicate a particular
instruction to management, or unless it is necessary to refer to the proxy in
order to determine its validity or when it is necessary to do so to permit
management to meet its legal responsibility to shareholders.
Dated at Toronto, Canada, this 13th day of March, 2002.
By Order of the Board of Directors,
/s/ J.E. Lillie
[GRAPHIC OMITTED]
James E. Lillie
Executive Vice President Operations
Corporate Secretary
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MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT
Unless otherwise stated, the information in this statement is as of February
28, 2002, and unless otherwise indicated, all dollar amounts are expressed in
United States currency.
SOLICITATION OF PROXIES
THIS MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT IS FURNISHED IN
CONNECTION WITH THE SOLICITATION OF PROXIES BY THE MANAGEMENT OF MOORE
CORPORATION LIMITED (THE "CORPORATION" AND COLLECTIVELY WITH ITS SUBSIDIARIES
"MOORE") TO BE USED AT THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS ON APRIL
18, 2002 AND AT ALL ADJOURNMENTS THEREOF, FOR THE PURPOSES SET FORTH IN THE
ACCOMPANYING NOTICE OF MEETING. Solicitation will be made by mail commencing
March 13, 2002, but employees of the Corporation may also solicit proxies
personally. In addition, the Corporation will retain Georgeson Shareholder
Communications Canada of Toronto, Ontario, to aid in the solicitation of
proxies at a fee of approximately $Cdn 25,000 plus expenses. The total cost of
the solicitation will be borne by the Corporation.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the enclosed form of proxy are directors of the
Corporation and will vote or withhold from voting the shares in respect of
which they are appointed on any ballot that may be called for in accordance
with the instructions of the shareholder as indicated on the proxy. A
SHAREHOLDER DESIRING TO APPOINT SOME OTHER PERSON AS A REPRESENTATIVE AT THE
MEETING MAY DO SO either by inserting such person's name in the blank space
provided in the form of proxy or by completing another proper form of proxy
and delivering the completed form of proxy to the Secretary of the Corporation
in time for use at the meeting. If you submit your proxy by mail, but do not
fill out the voting instructions on the proxy card, the shares represented by
your proxy will be voted as follows:
1. FOR the amendment to the Articles of Amalgamation and to re-authorize the
board to fix the number of directors on the board within the range
provided for in the articles,
2. FOR the appointment of our independent auditor,
3. FOR the amendment to the terms of the outstanding options to acquire
Series 1 Preference Shares,
4. FOR the relocation of our registered office,
5. FOR the continuation of the Corporation under the Canada Business
Corporations Act, and
6. FOR the election of the slate of director nominees.
A shareholder who has given a proxy may revoke it either (a) by signing a form
of proxy bearing a later date and depositing it in time for use at the meeting
or (b) by depositing or transmitting by telephonic or electronic means an
instrument in writing executed by the shareholder or by the shareholder's
attorney authorized in writing or by electronic signature at the registered
office of the Corporation at any time up to and including 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 on the day of the
meeting, or any adjournment thereof, or (c) in any other manner permitted by
law.
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 which
may properly come before the meeting or any adjournment thereof. At the date
of this circular, the management of the Corporation knows of no such
amendments, variations or other matters.
VOTING SECURITIES/RECORD DATE
On February 28, 2002, the Corporation had 111,871,698 common shares
outstanding. Shareholders of record at the close of business on March 8, 2002
(record date) will be entitled to one vote for each common share held by them.
If a person has transferred any common shares after the record date and the
transferee of such common shares establishes proper ownership and asks, not
later than April 8, 2002, to be included in the list of shareholders entitled
to vote at the meeting, the transferee will be entitled to vote such common
shares. A majority of votes cast at the meeting is required for approval of
each item of regular business. A special majority of 66 2/3% of the votes cast
at the meeting is required for approval of (i) the amendment to the Articles
of Amalgamation to decrease the minimum
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number of directors from 9 to 7, (ii) the re-authorization of the Board to fix
the number of directors within the range provided for in the articles, (iii)
the relocation of the Corporation's registered office from the Municipality of
Toronto, Ontario to the Municipality of Mississauga, Ontario and (iv) the
continuation of the Corporation under the Canada Business Corporation Act. A
majority of votes cast at the meeting other than votes attaching to common
shares beneficially owned by insiders of the Corporation (and their
associates) to whom options to purchase Series 1 Preference Shares have been
granted is required for approval of the amendment of such options.
PROPOSAL 1: AMENDMENT TO THE CORPORATION'S ARTICLES
At the meeting, shareholders will be asked to approve a special resolution
(substantially in the form set out in Appendix "B" attached hereto), with or
without variation, authorizing the filing of articles of amendment to decrease
the minimum number of directors from 9 to 7 and to re-authorize the delegation
to the board of the authority to set the number of directors within the range
provided for in the Corporation's articles, as it may determine, in its sole
discretion from time to time. The Board believes seven directors are a
sufficient number to ensure that the Board will be able to function
independently of management.
A special majority of 66 2/3% of the votes cast at the meeting is required for
approval of this resolution.
If the resolution is approved at the meeting, then articles of amendment will
be filed with the Companies Branch in the Province of Ontario to give effect
to the decrease in the minimum number of directors. The decrease will not be
effective until such filing is complete.
THE BOARD RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE ARTICLES OF
AMALGAMATION TO DECREASE THE MINIMUM NUMBER OF DIRECTORS FROM 9 TO 7 AND TO
RE-AUTHORIZE THE BOARD TO FIX THE NUMBER OF DIRECTORS WITHIN THE RANGE
PROVIDED FOR IN THE ARTICLES.
PROPOSAL 2: APPOINTMENT OF INDEPENDENT AUDITOR
A resolution will be submitted to the meeting to appoint Deloitte & Touche LLP
as independent auditor of the Corporation for a term expiring at the annual
meeting of shareholders in 2003 and to authorize the directors to fix the
remuneration to be paid to the independent auditor. To become effective, such
resolution must be approved by a majority of the votes cast at the meeting.
Deloitte & Touche LLP will be represented at the meeting and will have an
opportunity to make a statement if they so desire and to answer appropriate
questions. Deloitte & Touche LLP was first appointed as the Corporation's
independent auditor in April 2001.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
INDEPENDENT AUDITOR OF THE CORPORATION.
PROPOSAL 3: AMENDMENT OF OPTIONS TO ACQUIRE SERIES 1 PREFERENCE SHARES
A resolution will be submitted to the meeting (substantially in the form set
out in Appendix "C" attached hereto) to amend the terms of the 1,580,000
options to purchase Series 1 Preference Shares that were granted to Messrs.
Burton, Lewis and Lillie and certain other members of senior management in
order to induce them to join the Corporation in December 2000. Currently, each
Series 1 Preference Share entitles the holder thereof to receive a
non-cumulative preferential annual dividend of Cdn$.001 per share and to
receive any dividend paid on a common share. In the event of liquidation,
dissolution or winding up of the Corporation, each holder of a Series 1
Preference Share has the right to receive Cdn$.001 per share, together with
all dividends declared and unpaid on that share. After that, the holder of a
Series 1 Preference Share will share equally in any remaining assets with a
holder of common shares. The Series 1 Preference Share options contain a
cash-out provision that permits the holder to receive, at his election and in
lieu of the delivery of the Series 1 Preference Share, an amount equal to the
closing price per common share of the Corporation on the trading day
immediately prior to exercise on The Toronto Stock Exchange.
The Corporation is proposing to amend such options to eliminate the cash-out
provision and to make them exercisable for one common share per option instead
of one Series 1 Preference Share. The exercise price (Cdn$3.65) would remain
unchanged. These options were structured as options to purchase Series 1
Preference
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Shares because of the existence of certain factors that made it financially
advantageous to the Corporation to issue options to purchase Series 1
Preference Shares rather than options to purchase common shares. These factors
are no longer relevant.
The proposed amendment will eliminate the Corporation's existing obligation to
potentially pay a cash amount upon exercise of the options. In addition, as a
result of changes to Canadian generally accepted accounting principles that went
into effect on January 2002, the Corporation is now required to mark to market
the value of these options on a quarterly basis. This means that as the price of
the Corporation's common shares rises, an amount equal to the difference between
the exercise price of any vested options and the fair market value of a common
share must be charged to compensation expense on a quarterly basis. This
volatility may negatively impact the Corporation's financial results on a
quarterly basis. The proposed amendment would eliminate this volatility and
benefit the Corporation without a positive or negative impact on the
optionholder.
To become effective, such resolution must be approved by a majority of the
votes cast at the meeting other than votes attaching to common shares
beneficially owned by insiders of the Corporation (and their associates) to
whom options to purchase Series 1 Preference Shares have been granted is
required for approval of the proposed amendment to the terms of the options to
purchase Series 1 Preference Shares.
THE BOARD RECOMMENDS A VOTE "FOR" THE AMENDMENT OF THE TERMS OF THE SERIES 1
PREFERENCE SHARE OPTIONS.
PROPOSAL 4: RELOCATION OF REGISTERED OFFICE
A special resolution (substantially in the form set out in Appendix "D"
attached hereto) will be submitted to the meeting to relocate the
Corporation's registered office from the Municipality of Toronto to an
existing facility in the Municipality of Mississauga. This relocation will
enable the Corporation to reduce corporate overhead by moving the registered
office to an existing facility located in Mississauga. To become effective,
this resolution must be approved by 66 2/3% of the votes cast at the meeting.
THE BOARD RECOMMENDS A VOTE "FOR" THE RELOCATION OF THE REGISTERED OFFICE TO
THE MUNICIPALITY OF MISSISSAUGA.
PROPOSAL 5: CONTINUATION OF CORPORATION
At the meeting, shareholders will be asked to approve a special resolution
(substantially in the form set out in Appendix "E" attached hereto) to
continue the Corporation from the Business Corporations Act (Ontario)
("OBCA"), which currently governs its affairs, to the Canada Business
Corporations Act ("CBCA").
Management believes that the continuance of the Corporation will permit it to
take advantage of recent amendments to the CBCA relating to residency
requirements of directors (described below) which will provide the Corporation
with greater flexibility to attract experienced and qualified individuals to
serve as directors of the Corporation.
If the special resolution is approved at the meeting, then articles of
continuance may be filed to give effect to the continuance. The continuance
will not be effective until such filings are complete. The Board reserves the
right to revoke all or part of the articles of continuance at any time prior
to their becoming effective, or to not proceed with the filing of the articles
of continuance at all.
To become effective, this resolution must be approved by 66 2/3% of the votes
cast at the meeting.
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CBCA VERSUS OBCA
In the event that the continuance of the Corporation is approved at the meeting
and a certificate of continuance is obtained under the CBCA, the Corporation
will be treated as if it had been incorporated under the CBCA rather than under
the OBCA. The relevant provisions of the CBCA are similar to those of the OBCA
and, accordingly, the rights of shareholders, the rights, powers and obligations
of directors and the power and authority of the Corporation will not
significantly change as a result of the continuance.
However, there are distinctions between the OBCA and CBCA. The following is a
brief summary of certain differences which management considers to be material.
This summary is not intended to be exhaustive and shareholders should consult
their legal advisors regarding implications of the continuance which may be of
particular importance to them.
Registered Office
The OBCA requires that a company's head office be located in Ontario and may be
re-located to different municipality only with the approval of shareholders. The
CBCA provides that a company's registered head office may be located in any
province in Canada and may be changed within a province by resolution of the
directors.
Owning Own Shares
The OBCA stipulates that the Corporation may only hold shares in itself as legal
representative or as security to establish Canadian ownership. The CBCA states
that a company may also hold shares in itself as security for the purpose of
lending money in the ordinary course of business.
Timing and Location of Annual Meetings
The CBCA provides that an annual meeting may be called no later than 6 months
following the end of a company's financial year. The OBCA has no equivalent
provision.
Currently, under the OBCA, the Corporation is permitted to hold annual meetings
at any location within or outside Ontario as may be determined by the directors.
Conversely, the CBCA states that meetings may not be held outside of Canada
unless all shareholders agree or such authorization is contained in the
articles. Accordingly, the Corporation is proposing to amend the articles of the
Corporation upon its continuance under the CBCA to provide that annual meetings
may be held within or outside Canada. This amendment will leave the Corporation
in substantially the same position under the CBCA in respect of the
determination of the location of annual meetings as it is now under the OBCA.
Voting at Annual Meeting
Both the CBCA and OBCA provide that, other than special resolutions which
require the approval of 66 K% of all vote cast, all questions will be
determined at an annual meeting by majority of votes cast. The OBCA states that
in the event of an equality of votes, the presiding chair of the meeting shall
not have a second vote. The CBCA contains no equivalent provision.
Board of Directors
Under the OBCA, a majority of the Corporation's directors, and a majority of the
members of any committee of directors, must be resident Canadians. The OBCA also
requires a minimum of 3 directors, at least one third of which are not officers
or employees of the Corporation or its affiliates. Alternatively, the CBCA
requires that only 25% of the directors be resident Canadians, unless the
Corporation has fewer than four directors in which case at least one must be a
Canadian resident, and imposes no residency requirements on committees. The CBCA
also requires a minimum of 3 directors, at least two of which are not officers
or employees of the company or its affiliates.
Quorum of Directors Meetings
Both the CBCA and OBCA state that quorum of directors meetings consists of a
majority of directors or the minimum number of directors required by the
articles, although the OBCA also stipulates that in no case may
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quorum be less than 2/5 of the directors or the minimum number of directors.
Further, while the OBCA requires that a majority of the directors present be
resident Canadians, the CBCA requires only that 25% of the directors present (or
at least one if less than four directors are appointed) be resident Canadians.
Shareholder Proposals
Both the CBCA and the OBCA provide for shareholder proposals. Under the OBCA,
any shareholder entitled to vote at a meeting of shareholders may submit a
proposal. Under the CBCA, either the registered or beneficial owner of shares
entitled to be voted at a meeting may submit a proposal, although such
registered or beneficial shareholder must either (i) have owned for six months
not less than 1% of the total number of voting shares or voting shares with a
fair market value of at least $2000; or (ii) have the support of persons who
have owned for six months not less than 1% of the total number of voting shares
or voting shares with a fair market value of at least $2000.
Director Indemnification
In comparison to the OBCA, the CBCA permits a company to indemnify its directors
and officers in a slightly broader range of proceedings, including
"investigative and other proceedings". The CBCA also permits a company to
advance funds to a director or officer to cover the costs and expenses of a
proceeding. The OBCA does not have an equivalent provision.
Financial Assistance
The OBCA requires disclosure of financial assistance given by a company in
connection within the purchase of shares of the company or its affiliates, or to
shareholders, beneficial shareholders, directors, officers or employees of the
company and its affiliates. The CBCA has no such requirement.
Fundamental Changes
The CBCA requires approval by a vote of all shareholders voting together,
whether or not otherwise entitled to vote, on a number of matters relating to
fundamental changes to a company, including an amalgamation and a continuance.
The OBCA provides only that holders of shares entitled to vote thereon may vote
on such events (absent circumstances giving rise to a class right to vote). The
CBCA also contains a slightly broader range of "fundamental changes" which
require the approval of 66 K% of all shareholder votes cast.
Increase in Number of Directors/Filling Vacancies
The OBCA stipulates that directors may fill vacancies on the Board other than
vacancies resulting from a failure to elect the required number of directors at
a shareholders meeting or an increase in the number of directors or maximum
number of directors on the Board. An exception to this provision is made for
circumstances in which directors are authorized by the shareholders to select
the number of directors within a range, in which case the number of directors
may be increased (and resulting vacancies may be filled) up to one and one-third
times the number of directors elected at the last annual meeting.
The CBCA provides that directors may fill vacancies on the Board other than
vacancies resulting from a failure to elect the number of minimum number of
directors or an increase in the number of directors or the minimum or maximum
number of directors on the Board. Unlike the OBCA, the CBCA stipulates that
directors may appoint additional directors not exceeding one third of the
directors elected at the last annual meeting only if so permitted by the
articles.
The Corporation's shareholders have previously granted the Board the authority
to set the number of directors of the Corporation within the range provided for
in the articles. The Board presently has the authority to increase the number of
directors of the Corporation and fill the resulting vacancies, subject to the
limitation described above. The Board will lose this authority upon the
continuance of the Corporation under the CBCA unless an appropriate amendment is
made to the articles at the time of the continuance. For this reason, the
Corporation is proposing to amend the articles of the Corporation upon its
continuance under the CBCA to provide that the directors may set the number of
directors within the specified range and appoint one or more additional
directors, who shall hold office for a term expiring not later than the close of
the next annual meeting of shareholders, provided that the total number of
directors so appointed may not exceed one-third of the number of directors
appointed at the previous annual meeting. This amendment will leave the Board in
substantially the same position under the CBCA in respect of the appointment of
directors as it is now under the OBCA.
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DISSENT RIGHTS
Under the provisions of section 185 of the OBCA, a registered shareholder of the
Corporation is entitled to send a written objection to the special resolution.
In addition to any other right a shareholder may have, when the action
authorized by the special resolution becomes effective, a registered shareholder
of the Corporation who complies with the dissent procedure under section 185 of
the OBCA is entitled to be paid the fair value of the shares held by the
shareholder in respect of which the shareholder dissents, determined as at the
close of business on the day before the special resolution is adopted.
The dissent procedure provided by Section 185 of the OBCA is summarized at
Appendix "F" hereto and a copy of section 185 of the OBCA is reproduced at
Appendix "G" hereto. The description of the dissent rights and procedure, as
set out in Appendix "F", is not a comprehensive statement of the procedure to
be followed by shareholders and is qualified in its entirety by the full text
of section 185 of the OBCA as reproduced in Schedule "G". Shareholders who may
wish to dissent should read Appendices "F" and "G" carefully and in their
entirety.
PERSONS WHO ARE BENEFICIAL OWNERS OF SHARES REGISTERED IN THE NAME OF A
BROKER, CUSTODIAN, NOMINEE, OTHER INTERMEDIARY OR IN SOME OTHER NAME WHO WISH
TO DISSENT, SHOULD BE AWARE THAT ONLY THE REGISTERED OWNER OF SUCH SECURITIES
IS ENTITLED TO DISSENT.
A SHAREHOLDER IS NOT ENTITLED TO DISSENT IF SUCH SHAREHOLDER VOTES ANY OF THE
SHARES BENEFICIALLY HELD BY IT IN FAVOUR OF THE SPECIAL RESOLUTION. THE
EXECUTION OR EXERCISE OF A PROXY DOES NOT CONSTITUTE A WRITTEN OBJECTION FOR
THE PURPOSES OF SECTION 185 OF THE OBCA.
FAILURE TO ADHERE STRICTLY TO THE REQUIREMENTS OF SECTION 185 OF THE OBCA MAY
RESULT IN THE LOSS OR UNAVAILABILITY OF RIGHTS UNDER THAT SECTION.
PROPOSAL 6: ELECTION OF DIRECTORS
The Corporation's by-laws and articles currently allow for the election of
between nine and fifteen directors. On March 4, 2002, the directors of the
Corporation voted to set the number of directors to be elected at the meeting
at nine.
The persons whose names are set out in the following table are proposed to be
nominated as directors at the annual meeting of shareholders. The management
representatives designated in the enclosed form of proxy intend to vote for
the election of such nominees. Management does not contemplate that any of the
proposed nominees will be unable to serve as a director but, if that should
occur for any reason prior to the meeting, the persons designated in the
enclosed form of proxy reserve the right to vote for another nominee at their
discretion. Each director elected will hold office until the next annual
meeting of shareholders or until a successor is elected or appointed.
Under the terms of the debenture purchase agreement (the "Debenture Purchase
Agreement") entered into between the Corporation and Chancery Lane/GSC
Investors L.P. (the "Partnership") on December 12, 2000, the Corporation and
the Partnership agreed that: (i) Mr. R. Theodore Ammon and Mr. Alfred C.
Eckert, III (or two other persons specified by the Partnership as to which a
majority of the Board of Directors does not have a bona fide objection) would
be nominated for election as directors of the Corporation; (ii) Mr. Robert G.
Burton, as the Corporation's Chief Executive Officer, would be nominated for
election as a director of the Corporation; and (iii) Mr. Newton N. Minow and
Mr. John W. Stevens (or, if Mr. Minow or Mr. Stevens are unable or unwilling
to act, other persons acceptable to the Partnership, acting reasonably) would
be nominated for election as directors of the Corporation. Upon Mr. Ammon's
death in October 2001, Mark A. Angelson was appointed to serve as
non-executive Chairman and director of the Corporation.
On December 28, 2001, the Corporation's $70.5 million subordinated convertible
debenture held by the Partnership was converted into 21,692,311 common shares.
The Debenture Purchase Agreement provided that if, at any time, the
Partnership and certain other specified entities (collectively, the
"Restricted Group") own common shares issued on the conversion of the
debenture which in the aggregate equal less than 50% of the initial number of
common shares to which the Restricted Group was entitled (assuming full
conversion of the debenture), the Partnership would lose its right to
designate one of the two nominees denoted in each of (i) and (iii) in the
paragraph above. Similarly, if at any time the Restricted Group owns common
shares issued on the conversion of the debenture which in the aggregate equal
less than 33 ?% of the initial number of common shares to which the Restricted
Group was entitled (assuming full conversion of the debenture), the
Partnership would have no further rights with respect to the
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nomination of directors. The Partnership dissolved on December 28, 2001 when
the debenture was converted. In connection with the dissolution of the
Partnership, the rights of the Partnership with respect to the nomination of
directors were assigned to Greenwich Street Capital Partners II, L.P. and
Greenwich Street Capital Partners II, L.P. advised the Corporation that so
long as it was entitled to nominate two directors for election, it would
nominate Messrs. Angelson and Eckert and in the event it was entitled to
nominate only one director for election, it would nominate Mr. Eckert.
-9-
The following table contains the names and biographical information for each
person nominated to serve as a director of the Corporation. THE BOARD
RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE FOLLOWING NOMINEES.
- -------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING
NAME, AGE AND PERIOD OF THE PAST FIVE YEARS, POSITIONS WITH MOORE AND
SERVICE DIRECTORSHIPS
- -------------------------------------------------------------------------------------------------------------------------------
MARK A. ANGELSON Non-Executive Chairman of the Board of the Corporation; Mr. Angelson
New York, NY serves as an ex-officio member of the Compensation and Audit Committees.
51 For the five years prior to December 31, 2001, Mr. Angelson served as
Since November 2001 the Deputy Chairman of Chancery Lane Capital LLC (a private equity
firm) and of Big Flower Holdings Inc.
- -------------------------------------------------------------------------------------------------------------------------------
ROBERT G. BURTON President and Chief Executive Officer of the
Greenwich, CT Corporation since December 2000; from May 1991 to November
63 1999 Mr. Burton was Chairman, President and Chief Executive Officer of
Since December 2000 World Color Press, Inc.; following World Color Press, Inc. and
preceding employment at Moore Mr. Burton was Chairman, President and
Chief Executive Officer of Walter Industries, Inc.
- -------------------------------------------------------------------------------------------------------------------------------
SHIRLEY A. DAWE President, Shirley Dawe Associates Inc. (a consulting firm specializing
Toronto, ON in retail management) and Corporate Director. Ms. Dawe is a director
55 of Gilmore's Specialty Stores, Henry Birks & Sons Inc., National Bank
Since November 1989 of Canada and OshKosh B'Gosh, Inc. Ms. Dawe serves on the Compensation
Committee.
- -------------------------------------------------------------------------------------------------------------------------------
RONALD J. DANIELS Dean, University of Toronto School of Law;
Toronto, ON Dean Daniels serves on the Compensation Committee. Dean Daniels is a
42 director of Great Lakes Power Inc., the Mutual Fund Dealers Association
Since July, 2001 of Canada and Computershare Investor Services.
- -------------------------------------------------------------------------------------------------------------------------------
ALFRED C. ECKERT, III Chairman and Chief Executive Officer of GSCP (NJ), Inc. (private equity
Bernardsville, NJ investment firm). Mr. Eckert is a director of West Point Stevens,
53 Kensington Group and McKesson HBOC Inc. Mr. Eckert is a member of the
Since December 2000 Compensation Committee.
- -------------------------------------------------------------------------------------------------------------------------------
JOAN D. MANLEY Retired group vice president and retired director of Time Incorporated.
Keystone, CO Ms. Manley serves on the board of directors of Sara Lee Corporation and
69 Dreyfus Founders Funds.
Sinch March 2002
- -------------------------------------------------------------------------------------------------------------------------------
DAVID R. MCCAMUS Corporate Director. Mr. McCamus is a director of Dofasco Ltd.
Oakville, ON and Trilon Financial Ltd.
69
Since November 1997
- -------------------------------------------------------------------------------------------------------------------------------
LIONEL H. SCHIPPER, C.M. President, Schipper Enterprises Inc. and Chairman, Fallbrook Holdings
Toronto, ON Ltd. Mr. Schipper is a director of Clairvest Group Inc., Co-Steel Inc.,
69 Four Seasons Hotels Inc. and H.O. Financial Ltd.
Since April 2000 Mr. Schipper is a member of the Compensation Committee and serves as
its Chairman.
- -------------------------------------------------------------------------------------------------------------------------------
JOHN W. STEVENS Executive Vice President and director of Arva Limited.
Toronto, ON Prior to June 2000, Mr. Stevens was a partner of Osler, Hoskin &
45 Harcourt LLP. Mr. Stevens is a member of the Audit Committee and serves
Since December 2000 as its Chairman.
- -------------------------------------------------------------------------------------------------------------------------------
-10-
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
BOARD MANDATE
The Board of Directors assumes ultimate responsibility for the stewardship of
Moore and carries out its mandate directly and through considering
recommendations it receives from the three Committees of the Board and from
management.
Management is responsible for the day-to-day operations of Moore, and pursues
Board approved strategic initiatives within the context of authorized business
and capital plans and corporate policies. Management is expected to report to
the Board on a regular basis on short term results and longer term development
activities.
The Board is specifically responsible for:
(a) Adoption of a strategic planning process
The Board's role is to ensure a strategic planning process is in place, to
review corporate and business unit strategies annually and to approve Moore's
annual business plan. Quarterly updates on achievement of financial objectives
of the annual business plan, business development and strategic initiatives
are presented to the Board by management.
(b) Identification of principal risks and implementing risk-management systems
The strategic planning process involves consideration and understanding by the
Board of the principal risks inherent in Moore's business. The Audit Committee
reviews financial risk-management issues and programs. During l998, the Audit
Committee approved the adoption of an integrated audit approach that involves
undertaking audits based on a risk assessment.
(c) Succession planning and monitoring senior management performance
The Board reviews the performance of the Chief Executive Officer and all
matters related to senior management recruitment, leadership development,
performance, compensation, organization structure and succession planning.
(d) Communications policy
The Board reviews and approves communications of a regulatory nature prior to
mailing to shareholders. The Board receives quarterly updates on reports by
analysts following the Corporation. Investor meetings are held following the
release of quarterly results. Investor inquiries are handled promptly by or
under the direction of the appropriate officer of the Corporation. Moore has
adopted a confidential shareholder voting policy and a Confidentiality,
Disclosure and Trading Policy.
(e) Integrity of internal control and management information systems
The Audit Committee is responsible for overseeing reporting on internal
control and management information systems. The Audit Committee meets
privately at each meeting with the representatives of the Corporation's
auditors to discuss matters of interest to the Committee.
The directors have confidence that the information provided by management is
accurate and sufficient to allow the Board to carry out its mandate.
HOW THE BOARD OPERATES
The Board currently has nine members who are elected annually by shareholders.
Currently, five of the directors are Canadian residents and four of the
directors are U.S. residents. The Board believes seven directors are a
sufficient number to ensure the Board will be able to function independently
of management. Consequently, if the proposed nominees are elected and the
Corporation continues under the CBCA, Ms. Dawe and Mr. McCamus have indicated
that they will resign from the Board. As a result, there will be four U.S.
resident directors and three Canadian resident directors.
Robert G. Burton was appointed President and Chief Executive Officer and a
director of the Corporation in December 2000. All current directors except Mr.
Burton are unrelated (within the meaning of that term in the 2001 Final Report
of the Joint Committee of The Toronto Stock Exchange, the Canadian Venture
Exchange and the Canadian Institute of Chartered Accountants on Corporate
Governance in Canada).
-11-
Mark A. Angelson, a director, serves as Non-Executive Chairman of the Board of
the Corporation.
The Board has regularly scheduled quarterly meetings with special meetings to
review matters when needed. The Board of Directors met five times in 2001. It
met three times in person and twice by telephone conference call.
To promote a greater alignment of interests between non-employee directors and
shareholders, between one-third and the full amount of a director's retainer
is, at the election of each director, paid in the form of share units. Awarded
share units are held until a director is no longer serving on the Board.
BOARD COMMITTEES
All Committees report and make recommendations to the Board on matters
reviewed. Following is a brief description of the Committees of the Board that
were in place in 2001.
Audit Committee
The principal duties of the Audit Committee are to review annual and interim
financial statements and all legally required public disclosure documents
containing financial information prior to their approval by the directors,
review the planned scope of the examination of the annual consolidated
financial statements by the auditors of the Corporation and review the
adequacy of the systems of internal accounting and audit controls established
by the Corporation. The Audit Committee met seven times in 2001. The current
members of the committee are John W. Stevens (Chairman), David R. McCamus and
Newton N. Minow. Mr. Angelson serves as an ex-officio member of the Committee.
Mr. Minow is not standing for re-election.
Compensation Committee
The principal duties of the Compensation Committee are to review matters
relating to executive recruitment, performance, development, compensation,
resignations, terminations and organization planning. The duties of the
Committee include evaluating the performance of senior executives, determining
appropriate policies and levels for executive officer compensation, and
establishing and administering appropriate short and long-term incentive
arrangements for executives. The Compensation Committee meets at least twice
each year and other additional times as necessary. It met twice in 2001. The
current members of the committee are Lionel S. Schipper (Chairman), Ronald J.
Daniels, Shirley A. Dawe and Alfred C. Eckert, III. Mr. Angelson serves as an
ex-officio member of the Committee.
-12-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the Corporation's knowledge, the following sets forth information regarding
ownership of the Corporation's outstanding common shares on February 28, 2002
by each person who holds, directly or indirectly, voting control over in
excess of 5% of the common shares of the Corporation. The Corporation is not
aware of any other person holding in excess of 5% of the common shares.
- -------------- --------------------------------------------- -------------------------------- -------------------------
TITLE OF NAME AMOUNT AND NATURE OF PERCENTAGE OF CLASS
CLASS BENEFICIAL OWNERSHIP
- -------------- --------------------------------------------- -------------------------------- -------------------------
Common Shares Greenwich Street Capital Partners II, L.P. 13,096,155 11.71
500 Campus Drive, Suite 220
Florham Park, NJ 07932
- -------------- --------------------------------------------- -------------------------------- -------------------------
Common Shares AIM Funds Management Inc. 7,816,230 6.99
5140 Yonge Street, Suite 900
Toronto, ON M2N 6X7
- -------------- --------------------------------------------- -------------------------------- -------------------------
To the Corporation's knowledge, the following sets forth information regarding
ownership of the Corporation's outstanding common shares on February 28, 2002
by (i) each director and named executive officer and (ii) all directors,
director nominees and named executive officers as a group.
- --------------------------------------------- --------------------------------------- -----------------------------
NAME AMOUNT AND NATURE OF BENEFICIAL PERCENTAGE OF COMMON SHARES
OWNERSHIP
- --------------------------------------------- --------------------------------------- -----------------------------
- --------------------------------------------- --------------------------------------- -----------------------------
Robert G. Burton 1,518,307(1) 1.2
- --------------------------------------------- --------------------------------------- -----------------------------
Robert B. Lewis 242,638(2) *
- --------------------------------------------- --------------------------------------- -----------------------------
James E. Lillie 261,173(3) *
- --------------------------------------------- --------------------------------------- -----------------------------
Thomas W. Oliva 88,446(4) *
- --------------------------------------------- --------------------------------------- -----------------------------
Dean E. Cherry 57,086(5) *
- --------------------------------------------- --------------------------------------- -----------------------------
Mark A. Angelson 315,756(6) *
- --------------------------------------------- --------------------------------------- -----------------------------
Shirley A. Dawe 27,966(7) *
- --------------------------------------------- --------------------------------------- -----------------------------
Ronald J. Daniels 2,294(8) *
- --------------------------------------------- --------------------------------------- -----------------------------
Alfred C. Eckert, III 11,683(9) *
- --------------------------------------------- --------------------------------------- -----------------------------
David R. McCamus 14,834(10) *
- --------------------------------------------- --------------------------------------- -----------------------------
Newton N. Minow 12,262(11) *
- --------------------------------------------- --------------------------------------- -----------------------------
Lionel H. Schipper, C.M. 37,145(12) *
- --------------------------------------------- --------------------------------------- -----------------------------
John W. Stevens 27,683(13) *
- --------------------------------------------- --------------------------------------- -----------------------------
All directors and named executive officers 2,603,273 2.2
as a group
- --------------------------------------------- --------------------------------------- -----------------------------
* Ownership represents less than 1% of the outstanding common shares.
NOTES
1. Includes 250,000 vested options to purchase Series 1 Preference
Shares, the terms of which are proposed to be amended to eliminate
the cash out option and to make such options exercisable for the
Corporation's common shares.
2. Includes 50,000 vested options to purchase Series 1 Preference
Shares, the terms of which are proposed to be amended to eliminate
the cash out option and to make such options exercisable for the
Corporation's common shares.
3. Includes 50,000 vested options to purchase Series 1 Preference
Shares, the terms of which are proposed to be amended to eliminate
the cash out option and to make such options exercisable for the
Corporation's common shares.
-13-
4. Includes 12,500 vested options under the 1999 Long Term Incentive
Plan.
5. Includes 12,500 vested options under the 1999 Long Term Incentive
Plan.
6. Includes 83,077 common shares owned by the Mark Alan Angelson 1997
Trust, of which Mr. Angelson serves as the Trustee and of which Mr.
Angelson may be deemed to have beneficial ownership, 3,219 deferred
share units and 6,300 vested options under the 2001 Long Term
Incentive Plan.
7. Includes 18,866 deferred share units and 5,000 vested options under
the 2001 Long Term Incentive Plan.
8. Includes 1,269 deferred share units.
9. Includes 6,683 deferred share units and 5,000 vested options under
the 2001 Long Term Incentive Plan. Mr. Eckert is the Chairman and
Chief Executive Officer of GSCP (NJ) Inc. and as such may be deemed
to have shared power to vote or direct the vote and share power to
dispose or direct the disposition of 13,096,155 common shares owned
by Greenwich Street Capital Partners II, L.P. and related funds.
10. Includes 9,834 deferred share units and 5,000 vested options under
the 2001 Long Term Incentive Plan.
11. Includes 7,262 deferred share units and 5,000 vested options under
the 2001 Long Term Incentive Plan. Mr. Minow resigned from the Board
effective March 4, 2002.
12. Includes 8,333 vested options under the 2001 Long Term Incentive
Plan.
13. Includes 6,683 deferred share units and 5,000 vested options under
the 2001 Long Term Incentive Plan. Mr. Stevens is a director,
officer and 20% shareholder of Arva Limited, a private equity fund.
As a result of his position with Arva Limited, Mr. Stevens may be
deemed to have shared power to vote or direct the vote and shared
power to dispose or direct the disposition of the 10,000 common
shares owned by Arva Limited.
DIRECTORS' AND EXECUTIVE OFFICERS' COMPENSATION
COMPENSATION OF DIRECTORS
The following table displays all components of director compensation for
directors who are not also an employee of the Corporation.
- ------------------------------------------------------------------------------------------------ --------------------
Annual Board Retainer(1) $25,000
- ------------------------------------------------------------------------------------------------ --------------------
- ------------------------------------------------------------------------------------------------ --------------------
Annual Option Grant(2) 5,000
- ------------------------------------------------------------------------------------------------ --------------------
- ------------------------------------------------------------------------------------------------ --------------------
Annual Retainer for Committee Chair $ 4,000
- ------------------------------------------------------------------------------------------------ --------------------
- ------------------------------------------------------------------------------------------------ --------------------
Board and Committee Meeting Fee (for meetings attended in person) $ 1,000
- ------------------------------------------------------------------------------------------------ --------------------
- ------------------------------------------------------------------------------------------------ --------------------
Board and Committee Meeting Fee (for meetings attended telephonically) $ 500
- ------------------------------------------------------------------------------------------------ --------------------
1. The Board of Directors has adopted the Share Plan for Non-Employee
Directors under which each director (other than the Chairman) receives $15,000
of the annual retainer in the form of deferred share units. Each director may
then elect to take the balance of $10,000 in cash, deferred share units or
common shares purchased on the open market. A deferred share unit is a
bookkeeping entry, equivalent in value to one common share of the Corporation.
Deferred share units awarded are held until the director is no longer serving
on the Board. Following termination of Board service, the fair market value of
the equivalent number of common shares is paid to a director, net of
withholdings, in cash or common shares. Each director is reimbursed for
expenses incurred in attending meetings.
Mr. Angelson became the Non-Executive Chairman of the Board and a director in
November 2001and receives an annual retainer of $150,000 payable solely in
deferred share units and options. Mr. Angelson's retainer was paid on a pro
rata basis for 2001 based on his months of service during the year.
2. Options having an exercise price equal to the fair market value of the
common shares on the date prior to the grant date are to be granted following
each Annual Meeting and are immediately exercisable. In April 2001, Mr.
Schipper received 8,333 options under the Corporation's 2001 Long Term
Incentive with an exercise price of $3.96 per share and Ms. Dawe and Messrs.
Eckert, McCamus, Minow and Stevens received 5,000 options under the
Corporation's 2001 Long Term Incentive Plan with an exercise price of Cdn$6.19
per share.
-14-
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides a summary of the compensation earned by each
individual who served as Chief Executive Officer in 2001 and the four other
most highly compensated executive officers of Moore (the "Named Executive
Officers") who served as executive officers in 2001. Specific aspects of the
compensation are dealt with further in the tables and in the narrative
following the tables.
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
- -----------------------------------------------------------------------------------------------------
Name and Principal Year Salary Bonus Securities Preference Share
Position Under Options(2)
Options/ (Series 1)
SARs
Granted(1)
(#)
$ $ (#)
- -----------------------------------------------------------------------------------------------------
Robert G. Burton 2001 900,000 2,400,000 500,000 -
President and Chief 2000(3) 51,924 - - 1,000,000
Executive Officer
- -----------------------------------------------------------------------------------------------------
Robert B. Lewis 2001 360,000 425,000 200,000 -
President, Business 2000(3) 20,770 - - 200,000
Communications Services
- -----------------------------------------------------------------------------------------------------
James E. Lillie 2001 360,000 425,000 200,000 -
Executive Vice President, 2000(3) 20,770 - - 200,000
Operations
- -----------------------------------------------------------------------------------------------------
Thomas W. Oliva 2001(4) 298,846 325,000 200,000 -
President, Forms and
Labels Business
- -----------------------------------------------------------------------------------------------------
Dean E. Cherry 2001(4) 290,000 325,000 200,000 -
President Commercial and
Subsidiary Operations
- -----------------------------------------------------------------------------------------------------
NOTES:
1. Awards are options to acquire the Corporation's common shares under
the Corporation's Long Term Incentive Plan.
2. Messrs Burton, Lewis and Lillie were granted an option to purchase
Series 1 Preference Shares at an exercise price of Cdn$ 3.65. The
terms of these options are proposed to be amended to eliminate the
cash out option and to make such options exercisable for the
Corporation's common shares.
3. Messrs Burton, Lewis and Lillie joined the Corporation on December
12, 2000.
4. Messrs. Oliva and Cherry joined the Corporation in January 2001.
-15-
OPTION/SAR GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
The following table provides information on stock options granted to the Named
Executive Officers in 2001.
- ------------------------------------------------------------------------------------------------------------------------------
Potential Potential
Percent of Market Value Realizable Realizable Value
Total of Securities Value at 5% at 10%
Securities Options/ Underlying Annual Rates of Annual Rate of
Under SARs Exercise Options/ SARs Stock Price Stock Price
Options/ Granted to Or on the Date of Appreciation Appreciation for
SARs Employees Base Price(3) Grant(3) Expiration for Option Term Option Term
Name Granted (#) in 2001 ($Cdn/Security) ($Cdn/Security) Date ($Cdn)(,2,3) ($Cdn)(2,3)
- ------------------------------------------------------------------------------------------------------------------------------
R.G.Burton 500,000(1) 30.8 14.215 14.215 12/24/2011 4,469,900 11,327,200
- ------------------------------------------------------------------------------------------------------------------------------
R. B. Lewis 200,000(1) 12.3 14.215 14.215 12/24/2011 1,787,960 4,530,880
- ------------------------------------------------------------------------------------------------------------------------------
J. E. Lillie 200,000(1) 12.3 14.215 14.215 12/24/2011 1,787,960 4,530,880
- ------------------------------------------------------------------------------------------------------------------------------
T. W. Oliva 50,000(1) 3.1 4.45 4.45 1/2/2011 139,930 354,605
150,000 9.2 14.215 14.215 12/24/2011 1,340,970 3,398,160
- ------------------------------------------------------------------------------------------------------------------------------
D. E. Cherry 50,000 3.1 6.18 6.18 1/15/2011 194,325 492,465
150,000(1) 9.2 14.215 14.215 12/24/2011 1,340,970 3,398,160
- ------------------------------------------------------------------------------------------------------------------------------
NOTES:
1. 25% of these options will become exercisable on December 24th in each of
2002 to 2005.
2. In accordance with Securities and Exchange Commission rules, these
columns show gains that could accrue for the respective options, assuming
that the market price of the Corporation's common shares appreciates from
the date of grant over a period of 10 years at an annualized rate of 5%
and 10%, respectively. If the share price does not increase above the
exercise price at the time of exercise, realized value to the named
executive officers from these options will be zero.
3. The Cdn$:$ exchange rate on December 31, 2001 was $US 0.628 per Canadian
Dollar.
AGGREGATED OPTION/SAR EXERCISES DURING THE MOST RECENTLY COMPLETED FINANCIAL
YEAR AND FINANCIAL YEAR-END OPTION/SAR VALUES
The following table provides information on the number of outstanding options
for each Named Executive Officer, whether or not the options were exercisable
and the value of the options at December 31, 2001.
- -----------------------------------------------------------------------------------------------------------------------------
Name Securities Aggregate Value Unexercised Value of Unexercised
Acquired on Realized Options/SARs at In-the-Money
Exercise December 31, 2001 Options/SARs at
December 31, 2001(1)
(#) ($) (#) (Cdn$)
Exercisable/ Exercisable/
Unexercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------------
R. G. Burton - - 250,000/1,500,000(2) 2,912,500/12,192,500
- -----------------------------------------------------------------------------------------------------------------------------
R. B. Lewis - - 50,000/400,000(2) 582,500/2,547,000
- -----------------------------------------------------------------------------------------------------------------------------
J. E. Lillie - - 50,000/400,000(2) 582,000/2,547,000
- -----------------------------------------------------------------------------------------------------------------------------
T. W. Oliva - - 0/200,000 0/705,250
- -----------------------------------------------------------------------------------------------------------------------------
D. E Cherry - - 0/200,000 0/618,750
- -----------------------------------------------------------------------------------------------------------------------------
NOTES:
1. The closing price of the Corporation's common shares on The Toronto Stock
Exchange on December 31, 2001 was Cdn$15.30.
2. Includes options to acquire Series 1 Preference Shares. The terms of
these options are proposed to be amended to eliminate the cash out option
and to make such options exercisable for the Corporation's common shares.
-16-
COMPENSATION UNDER RETIREMENT PLANS
Benefit accruals under the Retirement Income Plan of Moore North America, Inc.
ceased effective December 31, 2000. None of the named executive officers
participates in the Retirement Income Plan. Currently, the only retirement
plan available to the Corporation's U.S. employees is the Moore North America,
Inc. Savings Plan. The Corporation also has a Supplemental Executive
Retirement Plan - B, which provides a benefit of 6% of a participant's annual
earnings that are in excess of the maximum annual savings plan earnings
allowed by law under Section 401(a)(17) of the Internal Revenue Code of 1986,
as amended. Participants vest 25% for each year of service with the
Corporation. The following benefits accrued to the named executive officers
under the Supplemental Executive Retirement Plan-B in 2001: Mr. Burton
$51,432; Mr. Lewis $11,160; Mr. Lillie $11,160; Mr. Oliva $8,197; Mr. Cherry
$8,037.
EMPLOYMENT ARRANGEMENTS
Moore's employment arrangements with its Named Executive Officers provide for
their participation in Moore's executive compensation and benefit programs
that are available to all management employees. In the event of Termination
without Cause (as defined) or a Termination for Good Reason (as defined)
whether before or after a Change of Control (as defined), Messrs Lewis and
Lillie shall be entitled to all amounts then owing to them plus a lump sum
equal to one and one half times their Annualized Total Compensation (as
defined). In addition, Messrs. Lewis and Lillie are entitled to a continuation
of all benefits, including automobile and other related benefits for a period
of eighteen months following such termination and any outstanding stock
options, grants, restricted stock awards or other equity grants will vest 100%
immediately prior to a Change of Control becoming effective. Messrs Lewis and
Lillie are also entitled to receive Gross-Up Payments (as defined) in the
event that an excise tax is imposed on Payments (as defined) pursuant to
Section 4999 of the Internal Revenue Code of 1986, as amended or any interest
and penalties are incurred with respect to such excise tax.
Messrs. Cherry and Oliva are entitled to receive twelve months' salary and
bonus, medical benefits and auto allowance continuance as severance in the
event that either is terminated other than for cause, provided that each
agrees to certain confidentiality and non-competition provisions for such
twelve month period and each releases the Corporation from any employment
related liabilities.
Mr. Burton's employment arrangements are described under the section "Chief
Executive Officer's Compensation."
COMPOSITION OF THE COMPENSATION COMMITTEE
The current members of the Compensation Committee are Lionel S. Schipper
(Chairman), Ronald J. Daniels, Shirley A. Dawe and Alfred C. Eckert, III. Mr.
Angelson serves as a voting ex-officio member of the Committee. With the
exception of Mr. Angelson, who is Chairman of the Board, none of the Committee
members are, or have been, an officer or an employee of Moore or any of its
subsidiaries.
REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICY
The objectives of the executive compensation policies are to target a
competitive level of compensation that will enable Moore to attract, retain
and motivate qualified executives to create shareholder value, to carry out
its strategic objectives and to link the level of compensation to the
performance of Moore and the executive.
Moore's aim is to pay total compensation to its executives in the mid-range of
compensation paid to executives with similar responsibilities at comparable
corporations. Compensation packages at Moore consist of base salary, annual
incentive awards and equity based awards under long term incentive plans. The
compensation packages are designed to deliver up to the 80th-90th percentile
compensation for superior performance. The Committee believes that the
compensation package outlined above results in a substantial portion of total
compensation being at risk and appropriately relates to the achievement of
increased shareholder value. From time to time, Moore retains independent
consultants to assist its human resources staff and the Committee in obtaining
competitive data and to provide advice on meeting its overall compensation
objectives.
-17-
BASE SALARY
The current executive salary structure consists of salary ranges for all
executive positions including those of the Named Executive Officers. The
salary structure is reviewed each year to determine its competitive level
relative to a group of comparable companies. In 2001 Moore's objective was to
establish salary-range mid-points at the 50th (median) percentile of the
comparison group. The Committee reviews and recommends to the Board for
approval any proposed adjustment to the salary structure. With respect to
senior executives, the Committee assesses the overall scope and level of
responsibility of the senior executive position relative to other positions
within Moore and to the scope and level of responsibility of comparable
positions within the comparable group of companies. The executive salary
structure was frozen in 2001 as the senior management team curtailed pay
increases for the year in line with what it had mandated for the entire
Corporation.
Senior executive salary reviews are based on pay for performance and are
reviewed on an annual basis. In 2001, the new management team recommended to
the Committee that annual pay increases be eliminated and that the entire
management structure be moved under a compensation review program under which
performance is evaluated twice during the course of a year and increases in
compensation occur only on a 15 to 24 month basis depending on salary level
rather than on an annual basis. In making compensation decisions, the
Committee takes into consideration the Corporation's overall performance
measured primarily by the Corporation delivering on its financial commitments
to shareholders s well as the performance of the unit headed by the executive,
the performance of the executive, the relationship of the executive's salary
to the salary range for the position and other considerations the Committee
believes are appropriate in the circumstances. Assessment of performance also
takes into consideration the achievement of other operating objectives such as
market share improvement, new product introduction and succession planning and
development. The Committee makes recommendations on salary adjustments for
senior executives to the Board for approval.
ANNUAL INCENTIVE PLAN
In 2001, a management by objective program was introduced. Under this program,
the Corporation sets financial targets and objectives that the Corporation
must meet in order for any annual incentive awards to be paid. If these
financial objectives and targets are not met, no annual incentive awards are
paid. In addition, each employee who participates in the plan commits to
deliver four to five additional objectives. In January of the following year,
each employee is reviewed in order to determine what percentage of each
objective has been met and if the Corporation's financial targets and
objectives have been met, an award is made based on the percentage of the
personal goals and objectives that have been achieved.
LONG TERM INCENTIVE PLAN
The purpose of the long term incentive plan is to advance the interests of
Moore by providing certain of its key employees with additional equity based
incentives; encouraging stock ownership by such employees, thereby increasing
their proprietary interest in the success of Moore; encouraging them to remain
employees of Moore; and attracting new key employees.
The plan is an integral part of total executive compensation. In 2001 the
Committee recommended and the Board approved option grants that reflected the
performance of those employees that participated in the plan. Senior managers
recommended participants for the plan and were allotted a number of shares to
distribute to their employees at a level that was relative to the levels of
shares that might be awarded to an employee's peers. The Executive Vice
President, Operations and the President and Chief Executive Officer then
reviewed and approved those recommendations and presented the overall
recommendations to the Committee for consideration and presentation to the
Board.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Robert G. Burton was appointed President and Chief Executive Officer of the
Corporation on December 21, 2000. An employment agreement was entered into
with Mr. Burton that provides for an annual salary of $900,000. Mr. Burton's
compensation arrangement is consistent with the Corporation's compensation
policy.
Mr. Burton is eligible to receive a cash bonus of at least $2,000,000 to be
paid on an all-or-nothing basis in respect of each fiscal year in accordance
with the provisions of the annual incentive plan if the Corporation achieves
-18-
the earnings per share targets set by the Board of Directors. Mr. Burton's
annual bonus may be increased at the discretion of the Board of Directors. Mr.
Burton received a bonus of $2,400,000 in 2001.
In the event of Termination without Cause (as defined) or a Termination for
Good Reason (as defined), Mr. Burton shall be entitled to all amounts then
owing to him plus a lump sum equal to two times his Annualized Total
Compensation (as defined). In the event such termination is the result of a
Change of Control, the multiple is increased to three times. Mr. Burton is
also entitled to receive Gross-Up Payments (as defined) in the event that an
excise tax is imposed on Payments (as defined) pursuant to Section 4999 of the
Internal Revenue Code of 1986, as amended or any interest and penalties are
incurred with respect to such excise tax.
COMPENSATION COMMITTEE
Signed by: Lionel S. Schipper (Chairman), Mark A. Angelson (ex-officio),
Ronald J. Daniels, Shirley A. Dawe and Alfred C. Eckert, III.
AUDIT COMMITTEE REPORT
The responsibilities of the Audit Committee are set forth in the Audit
Committee Charter (a copy of which is set forth in Appendix "A" attached
hereto). Management is responsible for the Corporation's financial reporting
process, including its system of internal control and for the preparation of
consolidated financial statements in accordance with Canadian generally accepted
accounting principles. The Corporation's independent auditor is responsible
for auditing those financial statements. The Audit Committee's responsibility
is to monitor and review these processes. It is not the Audit Committee's duty
or responsibility to conduct auditing or accounting reviews or procedures. The
members of the Audit Committee are not employees of the Corporation and may
not be, and may not represent themselves to be or serve as, accountants or
auditors by profession or experts in the fields of accounting or auditing.
Therefore, the Audit Committee has relied, without independent verification,
on management's representation that the financial statements have been
prepared with integrity and objectivity and in conformity with accounting
principles generally accepted in Canada and on the representation of the
independent auditors included in their report on the Corporation's financial
statements. The Audit Committee's oversight does not provide it with an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or policies, or appropriate
internal controls or procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit
Committee's considerations and discussions with management and the independent
auditors do not assure that the Corporation's financial statements are
presented in accordance with generally accepted accounting principles, that
the audit of the Corporation's financial statements has been carried out in
accordance with generally accepted auditing standards or that the independent
auditor is in fact "independent."
The Corporation's audited financial statements included in the Annual Report
to Shareholders were reviewed and discussed with senior management. Management
has confirmed that such financial statements (i) have been prepared with
integrity and objectivity and are the responsibility of management and, (ii)
have been prepared in conformity with Canadian generally accepted accounting
principles.
Discussions occurred with Deloitte & Touche LLP, the Corporation's auditors,
with respect to the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communications with Audit Committee).
Deloitte & Touche LLP has provided the Audit Committee with a letter outlining
the disclosures required by the Canadian Institute of Chartered Accountants
Auditing Guidelines AUG-11 (Communications with the Audit Committee) and the
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees) with respect to any relationships between Deloitte & Touche LLP and
the Corporation that in their professional judgment may reasonably be thought to
bear on independence. Deloitte & Touche LLP has discussed its independence with
the Audit Committee, and has confirmed in such letter that, in its professional
judgment, it is objective and independent of the Corporation within the meaning
of the rules of professional conduct of the Institute of Chartered Accountants
of Ontario and United States federal securities laws.
Based on the review and discussions described above with respect to the
Corporation's consolidated audited financial statements included in the Annual
Report to Shareholders, the Audit Committee has recommended to the Board of
Directors that such financial statements be included in the Corporation's Annual
Report on Form 10-K and Annual Information Form.
It is not the duty of the Audit Committee to plan or conduct audits or to
determine that the Corporation's financial statements are complete and accurate
and in accordance with Canadian generally accepted accounting principles. That
is the responsibility of management and the Corporation's independent auditors.
In giving this recommendation to the
-19-
Board of Directors, the Audit Committee has relied on (i) management's
representation that such financial statements have been prepared with integrity
and objectivity and in conformity with Canadian generally accepted accounting
principles, and (ii) the report of the Corporation's auditors with respect to
such financial statements.
AUDIT COMMITTEE
Signed by: John W. Stevens (Chairman), Newton N. Minow and David R. McCamus
AUDIT FEES
The aggregate fees billed by Deloitte & Touche LLP for professional services
rendered in connection with (i) the audit of the Corporation's annual
financial statements set forth in the Corporation's Annual Report and Annual
Report on Form 10-K for the year ended December 31, 2001, and (ii) the review
of the Corporation's quarterly financial statements set forth in the
Corporation's Quarterly Reports on Form 10-Q for the quarters ended March 31,
2001, June 30, 2001 and September 30, 2001, were approximately $1,500,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by Deloitte & Touche LLP, the independent
auditors, for the Corporation's most recent fiscal year for professional
services rendered in connection with (i) operating or supervising the
operation of, the Corporation's information systems or managing the
Corporation's local area network and (ii) designing or implementing a hardware
or software system that aggregates source data underlying the financial
statements or generates information that is significant to the Corporation's
financial statements taken as a whole.
AUDIT RELATED FEES
The aggregate fees billed by Deloitte & Touche LLP for audit related work for
the year ended December 31, 2001 was approximately $700,000. These fees
consisted primarily of work pertaining to statutory audits, due diligence
services and other miscellaneous services.
ALL OTHER FEES
The aggregate fees for all other services rendered by Deloitte & Touche LLP for
the Corporation's independent auditor during the most recent fiscal year were
approximately $140,000. These fees include work performed with respect to tax
planning and compliance services and other miscellaneous services.
The Audit Committee has advised the Board of Directors that it has determined
that the non-audit services rendered by the Corporation's during the most recent
fiscal year are compatible with maintaining the objectivity and independence of
such auditors.
-20-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 2001, the Corporation reached an agreement with the Partnership
for the conversion of the $70.5 million, 8.7% subordinated convertible
debenture held by the Partnership. Under the terms of the debenture, the
debenture was convertible by the Partnership at any time, but the Corporation
did not have not have the right to redeem the debenture prior to December 22,
2005. The debenture was converted into 21,692,311 common shares at the
conversion price per share of $3.25 in accordance with its terms. The
conversion of the debenture eliminated annual interest expense of $6.13
million and reduced debt by approximately 23%.
As an inducement to obtain the conversion, the Corporation issued an
additional 1,650,000 common shares (the "additional shares") to Greenwich
Street Capital Partners II, L.P. and certain of its affiliates (collectively,
"GSC Partners"), which under the terms of the agreement governing the
Partnership, were entitled to all of the interest paid on the debenture and
any redemption premium. In addition, the Corporation also agreed to make a
payment in cash to GSC Partners if the 20 day weighted average trading price
of the common shares on the New York Stock Exchange at December 31, 2002 is
less than $8.00. The amount payable, if any, would be the difference between
$14 million and the value at December 31, 2002 of the additional shares
issued, provided the maximum amount payable by the Corporation shall not in
any event exceed the value of 3,000,000 common shares at such date. In
addition, if at December 31, 2003 the 20 day weighted average trading price of
the Corporation's common shares on the New York Stock Exchange is less than
$10.83, the Corporation agreed to make a further cash payment equal to the
lesser of $9 million and the value of 6 million common shares at such date. At
the option of the Corporation, any such payments may be made in common shares,
subject to regulatory approval.
Alfred C. Eckert III, the Chairman and CEO of GSC Partners is a director of
the Corporation. Additionally Robert G. Burton, President and Chief Executive
Officer and director, Mark A. Angelson, Non-Executive Chairman and director,
Robert B. Lewis, President, Business Communications Services (Connecticut),
James E. Lillie, Executive Vice President, Operations (Connecticut), Thomas J.
Quinlan, Executive Vice President, Treasurer (New York), Mark S. Hiltwein,
Executive Vice President, Chief Financial Officer (New Jersey), Robert G.
Burton, Jr., Senior Vice President, Investor Relations (Connecticut) and
Michael Burton, Vice President, Operations - Commercial and Subsidiary
Operations Division (Connecticut) were Class B limited partners of the
Partnership and, therefore, had an interest in the debenture conversion. Of
the 21,692,311 common shares issued upon conversion of the debenture,
11,466,155 were issued to GSC Partners, 306,237 were issued to Mr. Angelson
and a trust controlled by Mr. Angelson, 1,107,693 were issued to Mr. Burton,
166,154 were issued to each of Messrs. Lewis and Lillie, 138,462 were issued
to Mr. Quinlan and 55,385 were issued to Messrs. Hiltwein, Robert Burton Jr. and
Michael Burton.
After management and GSC Partners had come to a general understanding of the
agreement described above for the conversion of the debenture on December 1,
2001, the Corporation's Board of Directors on December 3, 2001 appointed a
special committee of three directors, entirely independent of the Partnership
and GSC Partners and with no personal interest in the transaction, to review
the transaction and report to the Board. Messrs. Schipper, Minow and McCamus
served on the special committee. The special committee retained independent
financial and legal advisors and based on their own review of the transaction,
and the advice they received from their advisors, including an opinion from
their financial advisor that the consideration to be paid by the Corporation
was fair from a financial point of view, the special committee recommended the
transaction to the Board of Directors for approval. The Board (with Messrs.
Angelson, Burton and Eckert having disclosed their interest and refrained from
voting) unanimously approved the transaction.
The options to purchase Series 1 Preference Shares were granted to Messrs.
Burton, Lewis, Lillie, Quinlan, Hiltwein and Robert Burton and Michael Burton
in order to induce them to join the Corporation in December 2000. The options
held by Messrs. Burton, Lewis and Lillie are reflected in the Summary
Compensation Table. Mr. Quinlan received 100,000 options, Mr. Hiltwein
received 40,000 options, Mr. Robert Burton, Jr. received 30,000 options and
Mr. Michael Burton received 10,000 options.
-21-
PERFORMANCE GRAPH
The following graph and related information compares the annual changes over
the last five years in the value of $Cdn.100 invested in Moore common shares,
assuming reinvestment of dividends in Canadian dollars, and the TSE 300 Index
which incorporates dividend reinvestment.
[GRAPHIC OMITTED]
MCL $100 $ 80 $ 65 $ 34 $ 19 $ 65
TSE 300 $100 $115 $119 $148 $159 $139
-----------------------------------------------------------------
1996 1997 1998 1999 2000 2001
-22-
Set forth is a bar graph comparing over the period of 2001 the Corporation's
cumulative total shareholder return with the cumulative total return of
companies in a peer group selected in good faith by the Corporation, companies
in the Dow Jones Industrial Average, Standard & Poor's 500 Index, and The
Toronto Stock Exchange 300 Composite Index. The companies in the peer group
are R.R. Donnelley and Sons Company, QuebecorWorld, Inc., Wallace Computer
Services, Inc. Standard Register Company, and Mail-Well, Inc. (collectively
the "Peer Group"). The total return information presented in the graph assumes
the reinvestment of dividends, in the event the dividends are paid. The
returns of each component company on the Peer Group have been weighted by
relative stock market capitalization.
[GRAPHIC OMITTED]
TOTAL RETURN 2001
211.8% 4.4% -5.4% -11.9% -12.6%
MCL Peer Group INDU S&P 500 TSE300
-23-
DIRECTORS' AND OFFICERS' INSURANCE
The Corporation has purchased insurance for the benefit of the directors and
officers subject to certain limitations contained in the OBCA. The premium
amounts to approximately $247,000 annually and is paid by the Corporation. The
policies provide coverage of $50 million for each director and officer subject
to a maximum of $50 million in any policy year. Each claim against a director or
officer is not subject to any deductible for the individual director or officer
or directors and officers as a group. The policy provides for a deductible of
$500,000 per occurrence for losses occurring in the United States and $250,000
per occurrence for losses occurring elsewhere.
The by-laws of the Corporation provide for the indemnification of directors
and officers from and against any liability and costs in respect of any action
or suit against them in respect of the execution of their duties of office
subject to the limitations referred to therein. In 1999, indemnification
agreements were put in place for directors and officers of the Corporation.
These agreements are complementary to by-law and insurance policy provisions
and specify the process for indemnification claims.
SHAREHOLDER PROPOSALS
Any shareholder proposals for the 2003 annual meeting of shareholders must be
submitted no later than February 18, 2003 to the Secretary of the Corporation,
at its executive offices at One Canterbury Green, Stamford Connecticut USA
06901, Attention: Secretary, in order to be considered for inclusion in the
Corporation's management information circular and proxy statement for that
meeting.
DIRECTORS' APPROVAL
The contents of this circular and the sending of it to the shareholders of the
Corporation, to each director and to the auditors of the Corporation have been
approved by the Board of Directors of the Corporation.
By order of the Board.
/s/ J. E. Lillie
[GRAPHIC OMITTED]
James E. Lillie
Executive Vice President, Operations
Corporate Secretary
APPENDIX "A"
MOORE CORPORATION LIMITED
AUDIT COMMITTEE CHARTER
1. Mandate
The primary function of the audit committee of the Board of Directors
of Moore Corporation Limited is to assist the Board in fulfilling its
management oversight responsibilities by reviewing the Corporation's
financial accounting and reporting process, system of internal
control and the significant findings of the internal and external
audit process. The primary responsibility of the audit committee is
to provide oversight and its activities in no way supersede or alter
the traditional role of management and the independent auditor.
2. Composition
The audit committee shall be composed of not fewer than three
members, a majority of whom shall be resident Canadians. Each member
shall be unrelated and independent as defined by the rules of the
Toronto and New York stock exchanges. In addition, each committee
member shall be financially literate and at least one member of the
audit committee shall have accounting or related financial management
expertise in each case as defined by the rules of the New York Stock
Exchange. Any director who is not a committee member is welcome to
attend any meeting of the committee as an observer.
3. Quorum
The committee shall have the power to fix its quorum at not less than
a majority of its members who are Canadian residents.
4. Election and Term of Office
The directors shall elect annually from among their number the
Chairman and the other members of the audit committee. Each member
shall hold office until the next annual meeting of shareholders or
until a successor is elected.
5. Absence of Chairman
In the absence of the Chairman, the other committee members shall
appoint a member to fill that office.
6. Calling of Meetings
The committee shall meet quarterly each calendar year on the day of
the quarterly Board Meeting and at such other times as may be
necessary.
7. Duties
The audit committee's specific responsibilities include:
(a) Review the Corporation's principal policies for accounting,
internal control and financial reporting.
(b) Review the Corporation's annual consolidated financial
statements and annual report on Form 10-K of the Corporation
before they are filed; review with the independent auditor the
results of the annual audit, including a discussion of major
issues and developments regarding financial reporting and
accounting matters; and review the management letter prepared
by the independent auditor and management's responses.
(c) Discuss with the independent auditor the matters required to
be discussed on an annual or quarterly basis, as the case may
be, under generally accepted auditing standards and any other
applicable laws or regulations relating to the conduct of the
audit.
-2-
(d) Review the quarterly financial statements on Form 10-Q; review
and discuss with management and the independent auditor the
results of any significant matter identified from the
independent auditor's review procedures prior to filing a Form
10-Q. The Chairman or his designee of the audit committee may
perform this function on behalf of the audit committee.
(e) Review the plan, scope, timing and results of audits performed
by the internal and external auditors of the Corporation.
(f) Review with management and the independent and internal
auditors the adequacy of the system of internal controls over
financial reporting and the safeguarding of assets and review
significant risks and control exposures and the steps being
taken by management to monitor such exposures.
(g) Review litigation and claims involving or against the
Corporation which could materially adversely affect its
financial position and which the independent auditor or any
officer of the Corporation may refer to the committee.
(h) Review and report to the directors regarding the nomination,
independence, remuneration and other material terms of the
engagement of the independent auditor and the performance by
the independent auditor thereunder, including the receipt on
an annual basis of a formal written statement delineating all
relationships between the independent auditor and the
Corporation.
(i) Review non-audit services and related fees provided by the
independent auditor.
(j) Review the status of taxation matters of the Corporation and
its major subsidiaries.
(k) Meet privately with both the internal and independent auditors
at least annually.
(l) Review and assess annually the adequacy of this Charter and
propose changes to the Board of Directors.
8. Reporting
The audit committee shall report on its review of the financial
statements of the Corporation and other matters reviewed by the
committee to the Board of Directors of the Corporation prior to the
approval of the audited financial statements by the Board of
Directors. The committee shall also prepare such reports to
shareholders as may be required by regulatory bodies.
APPENDIX "B"
AMENDMENT OF THE ARTICLES OF AMALGAMATION
RESOLVED AS A SPECIAL RESOLUTION THAT:
1. The Articles of the Corporation be amended to remove from paragraph 3:
"A minimum of 9 and a maximum of 15."
and substitute the following:
"A minimum of seven (7) and a maximum of fifteen (15)."
2. The directors are empowered to determine, by resolution, the number
of directors and the number of directors to be elected at annual
meetings of the shareholders.
3. Any director or officer of the Corporation is authorized and directed
to take all such action and execute all such documents, including the
execution and filing of Articles of Amendment, as such director or
officer deems necessary or advisable in order to complete the matters
provided for herein.
APPENDIX "C"
AMENDMENT OF TERMS OF SERIES 1 PREFERENCE SHARE OPTIONS
RESOLVED THAT:
1. The proposed amendments described below to the terms and conditions
attaching to the 1,580,000 options to purchase Series 1 Preference
Shares of the Corporation (the "Options") currently issued and
outstanding are hereby approved. The terms and conditions of the
Options shall be amended: (i) to remove the cash-out provision which
permits the holder thereof to receive, at such holder's election and
in lieu of the delivery of the Series 1 Preference Share for which
each such Option is otherwise exchangeable, an amount equal to the
closing price per common share of the Corporation on The Toronto
Stock Exchange on the trading day immediately prior to exercise, for
each such Option held; and (ii) to remove the right attached to each
Option to be exercised for one Series 1 Preference Share of the
Corporation and to instead provide that each such Option shall be
exercisable for one common share of the Corporation.
2. Any director or officer of the Corporation is authorized and directed
to take all such action and execute all such documents as such
director or officer deems necessary or advisable in order to complete
the matters provided for herein.
APPENDIX "D"
RELOCATION OF REGISTERED OFFICE
RESOLVED AS A SPECIAL RESOLUTION THAT:
The municipality in which the registered office address of the Corporation is
located is changed from the Municipality of Toronto, Ontario, to the
Municipality of Mississauga, Ontario, effective as of the date hereof.
APPENDIX "E"
CONTINUANCE TO CANADA BUSINESS CORPORATIONS ACT
WHEREAS:
A. The Corporation was amalgamated under the Business Corporations Act
(Ontario) ("OBCA") by Certificate and Articles of Amalgamation
effective January 1, 1993;
B. It is desirable that the Corporation be continued as a Corporation
under the Canada Business Corporations Act ("CBCA");
RESOLVED AS A SPECIAL RESOLUTION THAT:
3. The Corporation make application to the Director (the "Director")
appointed under the CBCA for a certificate of continuance continuing
the Corporation as a corporation to which the CBCA applies and in
connection therewith make application to the Director ("ON Director")
appointed under the OBCA for authorization to apply for a certificate
of continuance under the CBCA.
4. The articles of continuance shall be in the form attached as Schedule
1 hereto with such amendments, deletions or alterations as may be
considered necessary or advisable by any officer of the Corporation
in order to ensure compliance with the provisions of the CBCA, as the
same may be amended, and the requirements of the Director.
5. Subject to the issuance of such certificate of continuance by the
Director, and without affecting the validity of the incorporation or
existence of the Corporation by and under its articles or of any act
done thereunder, the Corporation is authorized to approve and adopt,
in substitution for the existing articles of the Corporation, the
articles of continuance attached as Schedule 1 hereto, with any
amendments, deletions or alterations, which articles of continuance
are approved, and all amendments to the articles of the Corporation
reflected therein are approved.
6. The board of directors of the Corporation is authorized, in its sole
discretion, to abandon the application for a certificate of
continuance continuing the Corporation as a corporation to which the
CBCA applies, or determine not to proceed with the continuance,
without further approval of the shareholders of the Corporation any
time prior to the endorsement by the Director of a certificate of
continuance.
7. Any officer or director of the Corporation is authorized, for and on
behalf of the Corporation, to execute and deliver such documents and
instruments and to take such other actions as such officer or
director may determine to be necessary or advisable to implement this
resolution and the matters authorized hereby including, without
limitation, the execution and filing of articles of continuance and
any forms prescribed or contemplated by the CBCA with the Director
and the filing with the ON Director an application for authorization
to continue in another jurisdiction.
-5-
[GRAPHIC OMITTED]
Industry Canada Industrie Canada FORM 11 FORMULE 11
ARTICLES OF CONTINUANCE CLAUSES DE PROROGATION
Canada Business Loi canadienne sur les (SECTION 187) (ARTICLE 187)
Corporations Act societes par actions
- ------------------------------------------------------------------------------------------------------------------------------------
1 -- Name of the Corporation Denomination sociale de la societe
MOORE CORPORATION LIMITED
- ------------------------------------------------------------------------------------------------------------------------------------
2 -- The province or territory in Canada where the registered La province ou le territoire au Canada ou se situera le siege
Province of Ontario social
- ------------------------------------------------------------------------------------------------------------------------------------
3 -- The classes and the maximum number of shares that the Categories et le nombre maximal d'actions que la societe est
corporation is authorized to issue authorisee a emettre
An unlimited number of common shares, an unlimited number of Preference Shares, issuable in series and an unlimited number of
Series 1 Preference Shares.
The rights, privileges, restrictions and conditions attaching to the common shares, the Preference Shares, issuable in series
and the Series 1 Preference Shares are as set out in Schedule A.
- ------------------------------------------------------------------------------------------------------------------------------------
4 -- Restrictions, if any, on share transfer Restrictions sur le transfert des actions, s'il y a lieu
None
- ------------------------------------------------------------------------------------------------------------------------------------
5 -- Number (or minimum and maximum number) of directors Nombre (ou nombre minimal et maximal) d'administrateurs
A minimum of seven (7) and a maximum of fifteen (15)
- ------------------------------------------------------------------------------------------------------------------------------------
6 -- Restrictions, if any, on business the corporation may carry Limites imposees a l'activite commerciale de la societe, s'il y a
None lieu
- ------------------------------------------------------------------------------------------------------------------------------------
7 -- (1) If change of name effected, previous name (1) S'il y a changement de denomination sociale, indiquer la
denomination sociale anterieure
N/A
(2) Details of incorporation
(2) Details de la constitution
Amalgamated under the Business Corporations Act (Ontario) by Certificate and Articles of Amalgamation dated January 1, 1993.
- ------------------------------------------------------------------------------------------------------------------------------------
8 -- Other provisions, if any Autres dispositions, s'il y a lieu
See attached Schedule B
- -------------------------------- ---------------------------------------------------------------------------------------------------
Date Signature 7 - Capacity of - En qualite de
-6-
- ------------------------------------------------------------------------------------------------------------------------------------
For Departmental Use Only Printed Name - Nome en lettres moulees
A l'usage du ministere
seulement
[GRAPHIC OMITTED]
Corporation No.
No dela societe
- ------------------------------------------------------------------------------------------------------------------------------------
IC 3247 (2001/11)
-7-
MOORE CORPORATION LIMITED
ARTICLES OF CONTINUANCE
SCHEDULE A
COMMON SHARES
The common shares shall have attached thereto the following rights,
privileges, restrictions and conditions:
8. VOTING RIGHTS
Each holder of common shares shall be entitled to receive notice of and to
attend all meetings of shareholders of the Corporation and to vote thereat,
except meetings at which only holders of a specified class of shares (other
than common shares) or specified series of shares are entitled to vote. At all
meetings of which notice must be given to the holders of the common shares,
each holder of common shares shall be entitled to one vote in respect of each
common share held by such holder.
9. DIVIDENDS
The holders of the common shares shall be entitled, subject to the rights,
privileges, restrictions and conditions attaching to any other class of shares
of the Corporation, to receive any dividend declared by the Corporation.
10. LIQUIDATION, DISSOLUTION OR WINDING-UP
The holders of the common shares shall be entitled, subject to the rights,
privileges, restrictions and conditions attaching to any other class of shares
of the Corporation, to receive the remaining property of the Corporation on a
liquidation, dissolution or winding-up of the Corporation, whether voluntary
or involuntary.
PREFERENCE SHARES
The Preference Shares, as a class, shall have attached thereto the following
rights, privileges, restrictions and conditions:
11. Each series of Preference Shares shall consist of such number of shares
as shall before issuance thereof be fixed by the directors who shall at
the same time determine the designation, rights, privileges, restrictions
and conditions attaching to the Preference Shares of each such series
including, without limiting the generality of the foregoing, the rate of
preferential dividends, whether dividends shall be cumulative or
non-cumulative, the dates of payment thereof, whether the shares shall be
redeemable and if so the redemption price and the terms and conditions of
redemption, any voting rights, any conversion rights, any sinking fund,
purchase fund or other provisions attaching thereto, and the amount
payable on return of capital in the event of the liquidation, dissolution
or winding up of the Corporation; provided however that the voting
rights, if any, which may be attached to any series of Preference Shares
shall arise only in the event of non-payment of dividends thereon.
12. The Preference Shares shall be entitled to a preference of the common
shares without par value and any other shares of the Corporation ranking
junior to the Preference Shares with respect to the payment of dividends
and all amounts payable on return of capital in the event of the
liquidation, dissolution or winding up of the Corporation but shall not
have any further right to participate in profits. The Preference Shares
of any series shall be entitled to such other preferences over the common
shares without par value and any other shares ranking junior to the
Preference Shares as may be determined by the directors when authorizing
the respective series.
-8-
13. The holders of the Preference Shares shall not be entitled to receive
notice of or to attend or to vote at any meeting of shareholders of the
Corporation and shall not be entitled to vote separately as a class or as
a series thereof upon any proposal to amend the articles of the
Corporation to change the maximum number of the shares of any class or
series thereof, or to effect an exchange, reclassification or
cancellation of the Preference Shares or any series thereof, or to create
a new class of shares or series thereof having rights or privileges equal
or superior to the Preference Shares or any series thereof; provided,
however, that notwithstanding the foregoing provisions of this paragraph
3:
(a) the holder of any series of the Preference Shares shall be entitled to
receive notice of and to attend and to vote at meetings of shareholders
of the Corporation to the extent specifically provided in the rights and
privileges to be attached to such series;
(b) the holders of the Preference Shares or of any series thereof shall be
entitled to vote separately as a class or as a series in respect of any
matter for which a separate vote is specially provided in the Canada
Business Corporations Act, or any successor statute thereto other than in
respect of a proposal to amend the articles in a manner as hereinbefore
in this paragraph 3 specified; and
(c) the holders of the Preference Shares shall be entitled to receive notice
of a meeting of shareholders called for the purpose of authorizing the
dissolution of the Corporation or the sale of its undertaking or a
substantial part thereof.
SERIES 1 PREFERENCE SHARES
The first series of Preference Shares which shall consist of an unlimited
number of shares designated as Series 1 Preference Shares and shall, in
addition to the rights, privileges, restrictions and conditions attaching to
the Preference Shares as a class, have the following rights, privileges,
restrictions and conditions:
14. DIVIDENDS
The holders of the Series 1 Preference Shares shall be entitled to receive and
the Corporation shall pay thereon, as and when declared by the board of
directors out of the moneys of the Corporation properly applicable to the
payment of dividends, preferential non-cumulative dividends in an amount equal
to $0.001 per annum per share as the directors may from time to time determine
and, except with the consent in writing of the holders of all the Series 1
Preference Shares outstanding, no cash dividend may be paid in any year to the
holders of the common shares or any other class of shares of the Corporation
ranking junior to the Series 1 preference shares unless in such year the full
amount of the preferential dividend herein provided for shall have been paid
to the holders of the Series 1 Preference Shares prior thereto or
simultaneously therewith.
15. ADDITIONAL DIVIDENDS
In addition to the preferential dividend attaching to the Series 1 Preference
Shares as provided for in paragraph 1 hereof, the holders of the Series 1
Preference Shares shall be entitled to participate share for share with the
holders of the common shares, without preference or distinction, in any cash
dividend paid in any one fiscal year on the common shares.
16. NO VOTING RIGHTS
Except as otherwise provided in the Canada Business Corporations Act, the
holders of the Series 1 Preference Shares shall not be entitled to receive
notice of, or to attend or to vote at any meeting of the shareholders of the
Corporation.
17. LIQUIDATION, DISSOLUTION OR WINDING-UP
In the event of the liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary, the holders of the Series 1 Preference
Shares shall be entitled to receive in respect of each such share, before any
distribution of any part of the assets of the Corporation among the holders of
the common shares and any other class of shares of the Corporation ranking
junior to the Series 1 Preference Shares, an amount equal to $0.001 together
with all dividends declared thereon and unpaid up to the date of liquidation,
dissolution or winding up. After
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payment to the holders of the Series 1 Preference Shares of the amount so
payable to such holders as herein provided, all of the property and assets of
the Corporation available for distribution to the holders of the Series 1
Preference Shares and the common shares shall be paid or distributed equally,
share for share, to the holders of the Series 1 Preference Shares and the
common shares, respectively, without preference or distinction.
18. CONVERSION
In the event that at the time of issuance of any Series 1 Preference Shares of
the Corporation the authorized capital of the Corporation shall include a
class of non-voting common shares (the "Non-Voting Common Shares"), such
Series 1 Preference Shares to be issued shall be automatically converted into
fully paid and non-assessable Non-Voting Common Shares of the Corporation as
the same shall be constituted at the time of conversion on the basis of one
(1) Non-Voting Common Share for each Series 1 Preference Share; provided,
however, that, in the event of liquidation, dissolution or winding up of the
Corporation, such right of conversion shall cease and expire at noon on the
business day next preceding the date of such liquidation, dissolution or
winding up.
Upon written request of the Corporation, the holder or holders of Series 1
Preference Shares being converted shall surrender the certificate or
certificates, if any, representing such holder's Series 1 Preference Shares to
be converted to the registered office of the Corporation or to the transfer
agent for the time being of such Series 1 Preference Shares and thereupon
there shall be issued to such holder by the Corporation, as fully paid and
non-assessable, the number of Non-Voting Common Shares to which such holder
shall be entitled upon such conversion.
No payment or adjustment in respect of unpaid non-cumulative dividends on the
Series 1 Preference Shares so converted shall be made upon any such
conversion.
19. ANTI-DILUTION PROVISION
In the event that the Corporation, shall: (i) subdivide or redivide the
outstanding common shares into a greater number of common shares; (ii) reduce,
combine or consolidate the outstanding common shares into a smaller number of
common shares; (iii) issue common shares to the holders of all or
substantially all of the outstanding common shares by way of a stock dividend
(other than common shares issued under a dividend reinvestment or similar
plan) or (iv) distribute to the holders of all or substantially all of the
outstanding common shares any evidences of indebtedness or assets, and the
Corporation does not also, on an equivalent share-for-share basis, (i)
subdivide or redivide the outstanding Series 1 Preference Shares into a
greater number of Series 1 Preference Shares; (ii) reduce, combine or
consolidate the outstanding Series 1 Preference Shares into a smaller number
of Series 1 Preference Shares; (iii) issue Series 1 Preference Shares (or
common shares) to the holders of all or substantially all of the outstanding
Series 1 Preference Shares by way of a stock dividend or (iv) distribute to
the holders of all or substantially all of the outstanding Series 1 Preference
Shares such evidences of indebtedness or assets, then the board of directors
of the Corporation shall make such adjustment to Series 1 Preference Shares as
the board of directors of the Corporation determines appropriate, in its sole
discretion.
20. AVOIDANCE OF FRACTIONAL SHARES
No holder of Series 1 Preference Shares shall be entitled to convert any
Series 1 Preference Shares into a fraction of a Non-Voting Common Share, but
in any such case the Corporation shall issue or cause to be issued in respect
of such fraction or fractions a scrip certificate, transferable by delivery,
entitling the holder thereof and of other similar scrip certificates
aggregating one full Non-Voting Common Share, upon surrender of such scrip
certificates at such place as may be designated therein, to obtain from the
Corporation a full Non-Voting Common Share and to receive a share certificate
therefor. Such scrip certificate shall be in such form and terms (including,
without in any way limiting the generality of the foregoing, terms with regard
to expiry on a specific date not less than 60 days after the issue thereof)
and shall be subject to such conditions as the Corporation may determine, and
shall provide that the holder thereof shall not be a shareholder or be
entitled to receive dividends or to any other rights of a shareholder.
21. DISSENT RIGHTS
The holders of Series 1 Preference Shares shall not be entitled to vote
separately as a class, and shall not be entitled to dissent, upon a proposal
to amend the articles of the Corporation to:
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(a) increase or decrease any maximum number of authorized Series 1 Preference
Shares, or increase any maximum number of authorized shares of a class or
series of a class having rights or privileges equal or superior to the
Series 1 Preference Shares;
(b) effect an exchange, reclassification or cancellation of the Series 1
Preference Shares; or
(c) create a new class or series of a class of shares equal or superior to
the Series 1 Preference Shares.
In addition, each holder of Series 1 Preference Shares shall exercise any
remaining voting rights in respect of the Series 1 Preference Shares in
accordance with the recommendation of the board of directors of the
Corporation.
MOORE CORPORATION LIMITED
ARTICLES OF CONTINUANCE
SCHEDULE B
8. Other provisions, if any:
(d) The directors may appoint from time to time one or more additional
directors within the limits provided in the Canada Business Corporations
Act.
(e) The directors may from time to time determine the number of directors of
the Corporation.
(f) Meetings of the shareholders of the Corporation may be held at any place
in Canada or in the United States of America.
APPENDIX "F"
SUMMARY OF PROCEDURE TO EXERCISE DISSENT RIGHT
The procedure to be followed by a shareholder who intends to dissent from the
approval of the special resolution set out in Appendix "E" hereto and who
wishes to require the Corporation to acquire the shareholder's shares and pay
to the shareholder the fair value thereof when the action approved by the
special resolution from which the shareholder dissents becomes effective,
determined as of the close of business on the day before the special
resolution is adopted, is set out in section 185 of the Ontario Business
Corporations Act (the "OBCA"). The following description of the rights of
shareholders to dissent and be paid fair value for their shares is not a
comprehensive statement of the procedures to be followed by such shareholders
and is qualified in its entirety by the reference to the full text of section
185 of the OBCA which is attached hereto in Appendix "G".
THE FOLLOWING IS ONLY A SUMMARY OF THE DISSENTING SHAREHOLDER PROVISIONS OF
THE OBCA, WHICH ARE TECHNICAL AND COMPLEX. PERSONS WHO ARE BENEFICIAL OWNERS
OF THE SHARES REGISTERED IN THE NAME OF A BROKER, CUSTODIAN, NOMINEE, OTHER
INTERMEDIARY, OR IN SOME OTHER NAME, WHO WISH TO DISSENT SHOULD BE AWARE THAT
ONLY THE REGISTERED OWNER OF SUCH SHARES IS ENTITLED TO DISSENT. SHAREHOLDERS
WISHING TO EXERCISE RIGHTS OF DISSENT IN ACCORDANCE WITH THE OBCA SHALL SEEK
THEIR OWN LEGAL ADVICE SINCE FAILURE TO COMPLY STRICTLY WITH THE APPLICABLE
PROVISIONS OF THE OBCA MAY PREJUDICE THE DISSENT RIGHTS OF SUCH SHAREHOLDERS.
Section 185 provides that a shareholder may only make a claim under that
Section with respect to all the shares of a class held by the shareholder on
behalf of any one beneficial owner and registered in the shareholder's name.
One consequence of this provision is that a shareholder may only exercise the
right to dissent under section 185 in respect of shares which are registered
in that shareholder's name. In many cases, shares beneficially owned by a
person (a "Non-Registered Holder") are registered either: (a) in the name of
an intermediary that the Non-Registered Holder deals with in respect of the
shares (such as banks, trust companies, securities dealers and brokers,
trustees or administrators or self-administered registered retirement savings
plans (RRSPs), registered retirement income funds (RRIFs), registered
education savings plans (RESPs) and similar plans, and their nominees); or (b)
in the name of a clearing agency (such a The Canadian Depository for
Securities Limited) of which the intermediary is a participant. Accordingly, a
Non-Registered Holder will not be entitled to exercise the right of dissent
under Section 185 directly (unless the shares are re-registered in the
Non-Registered Holder's name). A Non-Registered Holder who wishes to exercise
the right of dissent should immediately contact the intermediary who the
Non-Registered Holder deals with in respect of the shares and either: (i)
instruct the intermediary to exercise the right of dissent on the
Non-Registered Holder's behalf; or (ii) instruct the intermediary to
re-register the shares in the name of the Non-Registered Holder, in which case
the Non-Registered Holder would have to exercise the right of dissent
directly. In either case, the intermediary or the Non-Registered Holder, as
the case may be, must adhere strictly to the requirements of section 185.
A registered shareholder who wishes to invoke the provisions of section 185 of
the OBCA must send to the Corporation at or before the meeting of shareholders
at which the special resolution is to be voted on a written objection to the
special resolution (the "Notice of Dissent"). The sending of a Notice of
Dissent does not deprive a registered shareholder of the shareholder's right
to vote on the special resolution but a vote either in person or by proxy
against the special resolution does not constitute a Notice of Dissent. A vote
in favour of the special resolution will deprive the registered shareholder of
further rights under section 185 of the OBCA.
Within 10 days after the adoption of the special resolution by the
shareholders, the Corporation is required to notify in writing each
shareholder who has filed a Notice of Dissent and has not voted for the
special resolution or withdrawn the shareholder's objection (a "Dissenting
Shareholder") that the special resolution has been adopted. A dissenting
Shareholder shall, within 20 days after the shareholder receives notice of
adoption of the special resolution or, if the shareholder does not receive
such notice, within 20 days after the shareholder learns that the special
resolution has been adopted, send to the Corporation a written notice (the
"Demand for Payment") containing the shareholder's name and address, the
number and class of shares in respect of which the shareholder dissents, and a
demand for payment of the fair value of such shares. Within 30 days after
sending the shareholder's Demand for Payment, the Dissenting Shareholder shall
send the certificates representing the shares in respect of which the
shareholder dissents to the Corporation or its transfer agent. The Corporation
or the transfer agent shall endorse on the share certificates notice that the
holder thereof is a Dissenting Shareholder under section 185 of the OBCA and
shall forthwith return the share certificates to the Dissenting Shareholder.
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A Dissenting Shareholder who fails to send to the Corporation, within the
appropriate time frame, a Notice of Dissent, Demand for Payment and
certificates representing the shares in respect of which the Dissenting
Shareholder dissents forfeits the right to make a claim under section 185 of
the OBCA.
After sending a Demand for Payment, a Dissenting Shareholder ceases to have
any rights as a holder of the shares in respect of which the shareholder has
dissented other than the right to be paid the fair value of such shares as
determined under section 185 of the OBCA, unless:
(i) the Dissenting Shareholder withdraws the shareholder's Demand
for Payment before the Corporation makes an offer to the
Dissenting Shareholder pursuant to the OBCA;
(ii) the Corporation fails to make a timely Offer to Pay to the
Dissenting Shareholder and the Dissenting Shareholder
withdraws the Demand for Payment; or
(iii) the directors of the Corporation revoke the special
resolution in which case the rights of the Dissenting
Shareholder will be reinstated as of the date that the
Dissenting Shareholder sent the Demand for Payment.
Not later than seven days after the later of the day on which the action
approved by the special resolution is effective (the "Effective Date") or the
day the Corporation receives the Demand for Payment, the Corporation shall
send to each Dissenting Shareholder who has sent a Demand for Payment an offer
to pay for the shares of the Dissenting Shareholder in respect of which the
shareholder has dissented in an amount considered by the directors of the
Corporation to be the fair value thereof (an "Offer to Pay"), accompanied by a
statement showing how the fair value was determined. Every Offer to Pay made
to Dissenting Shareholders for shares of the same class shall be on the same
terms. The amount specified in an Offer to Pay which has been accepted by a
Dissenting Shareholder shall be paid by the Corporation within 10 days of the
acceptance, but an Offer to Pay lapses if the Corporation has not received an
acceptance thereof within 30 days after the Offer to Pay has been made.
If an Offer to Pay is not made by the Corporation, or if a Dissenting
Shareholder fails to accept an Offer to Pay, the Corporation may, within 50
days after the Effective Date or within such further period as a court of
competent jurisdiction (the "court") may allow, apply to the court to fix a
fair value for the shares of any Dissenting Shareholder. If the Corporation
fails to apply to the court, a Dissenting Shareholder may apply to the court
for the same purpose with a further period of 20 days or within such further
period as the court may allow. A Dissenting Shareholder is not required to
give security for costs in any application to the court.
Before the Corporation makes application to the court in order to fix the fair
value of the shares or, if such application is made by a Dissenting
Shareholder, not later than seven days after receiving notice of an
application to the court made by the Dissenting Shareholder, the Corporation
must give notice to each Dissenting Shareholder who has, at the date upon
which such notice is given, sent to the Corporation a Demand for Payment and
has not accepted an Offer to Pay. This notice must set out the date, place and
consequences of the application and the Dissenting Shareholder's right to
appear and be heard in person or by counsel. A similar notice must be given to
each Dissenting Shareholder who satisfies the above conditions, within three
days of satisfying such conditions.
Upon the application to the court, all Dissenting Shareholders whose shares
have not been purchased by the Corporation will be joined as parties and be
bound by the decision of the court, and the Corporation will be required to
notify each Dissenting Shareholder of the date, place and consequences of the
application and of the right to appear and be heard in person or by counsel.
Upon any such application to the court, the court may determine whether any
person is a Dissenting Shareholder who should be joined as a party, and the
court will then fix a fair value for the shares of all Dissenting Shareholders
who have not accepted an Offer to Pay. The final order of the court will be
rendered against the Corporation in favour of each Dissenting Shareholder and
for the amount of the fair value of the Dissenting Shareholder's shares as
fixed by the court. The court may, in its discretion allow a reasonable rate
of interest on the amount payable to each such Dissenting Shareholder from the
date on which the special resolution was adopted until the date of payment.
APPENDIX "G"
BUSINESS CORPORATIONS ACT (ONTARIO)
Rights of dissenting shareholders
185. (1) Subject to subsection (3) and to sections 186 and 248, if a
corporation resolves to,
(a) amend its articles under section 168 to add, remove or change
restrictions on the issue, transfer or ownership of shares of a
class or series of the shares of the corporation;
(b) amend its articles under section 168 to add, remove or change
any restriction upon the business or businesses that the
corporation may carry on or upon the powers that the
corporation may exercise;
(c) amalgamate with another corporation under sections 175 and 176;
(d) be continued under the laws of another jurisdiction under
section 181; or
(e) sell, lease or exchange all or substantially all its property
under subsection 184 (3),
a holder of shares of any class or series entitled to vote on the resolution may
dissent.
Idem
(2) If a corporation resolves to amend its articles in a manner referred
to in subsection 170 (1), a holder of shares of any class or series entitled
to vote on the amendment under section 168 or 170 may dissent, except in
respect of an amendment referred to in,
(a) clause 170 (1) (a), (b) or (e) where the articles provide that
the holders of shares of such class or series are not entitled
to dissent; or
(b) subsection 170 (5) or (6).
Exception
(3) A shareholder of a corporation incorporated before the 29th day of
July, 1983 is not entitled to dissent under this section in respect of an
amendment of the articles of the corporation to the extent that the amendment,
(a) amends the express terms of any provision of the articles of
the corporation to conform to the terms of the provision as
deemed to be amended by section 277; or
(b) deletes from the articles of the corporation all of the objects
of the corporation set out in its articles, provided that the
deletion is made by the 29th day of July, 1986.
Shareholder's right to be paid fair value
(4) In addition to any other right the shareholder may have, but subject
to subsection (30), a shareholder who complies with this section is entitled,
when the action approved by the resolution from which the shareholder dissents
becomes effective, to be paid by the corporation the fair value of the shares
held by the shareholder in respect of which the shareholder dissents,
determined as of the close of business on the day before the resolution was
adopted.
No partial dissent
(5) A dissenting shareholder may only claim under this section with
respect to all the shares of a class held by the dissenting shareholder on
behalf of any one beneficial owner and registered in the name of the
dissenting shareholder.
Objection
(6) A dissenting shareholder shall send to the corporation, at or before
any meeting of shareholders at which a resolution referred to in subsection
(1) or (2) is to be voted on, a written objection to the resolution, unless
the corporation did not give notice to the shareholder of the purpose of the
meeting or of the shareholder's right to dissent.
Idem
(7) The execution or exercise of a proxy does not constitute a written
objection for purposes of subsection (6).
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Notice of adoption of resolution
(8) The corporation shall, within ten days after the shareholders adopt
the resolution, send to each shareholder who has filed the objection referred
to in subsection (6) notice that the resolution has been adopted, but such
notice is not required to be sent to any shareholder who voted for the
resolution or who has withdrawn the objection.
Idem
(9) A notice sent under subsection (8) shall set out the rights of the
dissenting shareholder and the procedures to be followed to exercise those
rights.
Demand for payment of fair value
(10) A dissenting shareholder entitled to receive notice under subsection
(8) shall, within twenty days after receiving such notice, or, if the
shareholder does not receive such notice, within twenty days after learning
that the resolution has been adopted, send to the corporation a written notice
containing,
(a) the shareholder's name and address;
(b) the number and class of shares in respect of which the
shareholder dissents; and
(c) a demand for payment of the fair value of such shares.
Certificates to be sent in
(11) Not later than the thirtieth day after the sending of a notice under
subsection (10), a dissenting shareholder shall send the certificates
representing the shares in respect of which the shareholder dissents to the
corporation or its transfer agent.
Idem
(12) A dissenting shareholder who fails to comply with subsections (6),
(10) and (11) has no right to make a claim under this section.
Endorsement on certificate
(13) A corporation or its transfer agent shall endorse on any share
certificate received under subsection (11) a notice that the holder is a
dissenting shareholder under this section and shall return forthwith the share
certificates to the dissenting shareholder.
Rights of dissenting shareholder
(14) On sending a notice under subsection (10), a dissenting shareholder
ceases to have any rights as a shareholder other than the right to be paid the
fair value of the shares as determined under this section except where,
(a) the dissenting shareholder withdraws notice before the
corporation makes an offer under subsection (15);
(b) the corporation fails to make an offer in accordance with
subsection (15) and the dissenting shareholder withdraws
notice; or
(c) the directors revoke a resolution to amend the articles under
subsection 168 (3), terminate an amalgamation agreement under
subsection 176 (5) or an application for continuance under
subsection 181 (5), or abandon a sale, lease or exchange under
subsection 184 (8),
in which case the dissenting shareholder's rights are reinstated as of the
date the dissenting shareholder sent the notice referred to in subsection
(10), and the dissenting shareholder is entitled, upon presentation and
surrender to the corporation or its transfer agent of any certificate
representing the shares that has been endorsed in accordance with subsection
(13), to be issued a new certificate representing the same number of shares as
the certificate so presented, without payment of any fee.
Offer to pay
(15) A corporation shall, not later than seven days after the later of
the day on which the action approved by the resolution is effective or the day
the corporation received the notice referred to in subsection (10), send to
each dissenting shareholder who has sent such notice,
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(a) a written offer to pay for the dissenting shareholder's shares
in an amount considered by the directors of the corporation to
be the fair value thereof, accompanied by a statement showing
how the fair value was determined; or
(b) if subsection (30) applies, a notification that it is unable
lawfully to pay dissenting shareholders for their shares.
Idem
(16) Every offer made under subsection (15) for shares of the same class
or series shall be on the same terms.
Idem
(17) Subject to subsection (30), a corporation shall pay for the shares
of a dissenting shareholder within ten days after an offer made under
subsection (15) has been accepted, but any such offer lapses if the
corporation does not receive an acceptance thereof within thirty days after
the offer has been made.
Application to court to fix fair value
(18) Where a corporation fails to make an offer under subsection (15) or
if a dissenting shareholder fails to accept an offer, the corporation may,
within fifty days after the action approved by the resolution is effective or
within such further period as the court may allow, apply to the court to fix a
fair value for the shares of any dissenting shareholder.
Idem
(19) If a corporation fails to apply to the court under subsection (18),
a dissenting shareholder may apply to the court for the same purpose within a
further period of twenty days or within such further period as the court may
allow.
Idem
(20) A dissenting shareholder is not required to give security for costs
in an application made under subsection (18) or (19).
Costs
(21) If a corporation fails to comply with subsection (15), then the
costs of a shareholder application under subsection (19) are to be borne by
the corporation unless the court otherwise orders.
Notice to shareholders
(22) Before making application to the court under subsection (18) or not
later than seven days after receiving notice of an application to the court
under subsection (19), as the case may be, a corporation shall give notice to
each dissenting shareholder who, at the date upon which the notice is given,
(a) has sent to the corporation the notice referred to in
subsection (10); and
(b) has not accepted an offer made by the corporation under
subsection (15), if such an offer was made,
of the date, place and consequences of the application and of the dissenting
shareholder's right to appear and be heard in person or by counsel, and a
similar notice shall be given to each dissenting shareholder who, after the
date of such first mentioned notice and before termination of the proceedings
commenced by the application, satisfies the conditions set out in clauses (a)
and (b) within three days after the dissenting shareholder satisfies such
conditions.
Parties joined
(23) All dissenting shareholders who satisfy the conditions set out in
clauses (22) (a) and (b) shall be deemed to be joined as parties to an
application under subsection (18) or (19) on the later of the date upon which
the application is brought and the date upon which they satisfy the
conditions, and shall be bound by the decision rendered by the court in the
proceedings commenced by the application.
Idem
(24) Upon an application to the court under subsection (18) or (19), the
court may determine whether any other person is a dissenting shareholder who
should be joined as a party, and the court shall fix a fair value for the
shares of all dissenting shareholders.
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Appraisers
(25) The court may in its discretion appoint one or more appraisers to
assist the court to fix a fair value for the shares of the dissenting
shareholders.
Final order
(26) The final order of the court in the proceedings commenced by an
application under subsection (18) or (19) shall be rendered against the
corporation and in favour of each dissenting shareholder who, whether before
or after the date of the order, complies with the conditions set out in
clauses (22) (a) and (b).
Interest
(27) The court may in its discretion allow a reasonable rate of interest
on the amount payable to each dissenting shareholder from the date the action
approved by the resolution is effective until the date of payment.
Where corporation unable to pay
(28) Where subsection (30) applies, the corporation shall, within ten
days after the pronouncement of an order under subsection (26), notify each
dissenting shareholder that it is unable lawfully to pay dissenting
shareholders for their shares.
Idem
(29) Where subsection (30) applies, a dissenting shareholder, by written
notice sent to the corporation within thirty days after receiving a notice
under subsection (28), may,
(a) withdraw a notice of dissent, in which case the corporation is
deemed to consent to the withdrawal and the shareholder's full
rights are reinstated; or
(b) retain a status as a claimant against the corporation, to be
paid as soon as the corporation is lawfully able to do so or,
in a liquidation, to be ranked subordinate to the rights of
creditors of the corporation but in priority to its
shareholders.
Idem
(30) A corporation shall not make a payment to a dissenting shareholder
under this section if there are reasonable grounds for believing that,
(a) the corporation is or, after the payment, would be unable to
pay its liabilities as they become due; or
(b) the realizable value of the corporation's assets would thereby
be less than the aggregate of its liabilities. R.S.O. 1990, c.
B.16, s. 185 (1-30).
Court order
(31) Upon application by a corporation that proposes to take any of the
actions referred to in subsection (1) or (2), the court may, if satisfied that
the proposed action is not in all the circumstances one that should give rise
to the rights arising under subsection (4), by order declare that those rights
will not arise upon the taking of the proposed action, and the order may be
subject to compliance upon such terms and conditions as the court thinks fit
and, if the corporation is an offering corporation, notice of any such
application and a copy of any order made by the court upon such application
shall be served upon the Commission.
Commission may appear
(32) The Commission may appoint counsel to assist the court upon the
hearing of an application under subsection (31), if the corporation is an
offering corporation. 1994, c. 27, s. 71 (24).