UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
Report of Foreign issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
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For the Month of April 2003
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(Commission File. No 0-30718).
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SIERRA WIRELESS, INC., A CANADA CORPORATION
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(Translation of registrant's name in English)
13811 Wireless Way
Richmond, British Columbia, Canada V6V 3A4
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(Address of principal executive offices and zip code)
Registrant's Telephone Number, including area code: 604-231-1100
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F: Form 20-F X 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes: No: X
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SIERRA WIRELESS, INC.
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that an annual and special meeting (the "Meeting") of
shareholders of Sierra Wireless, Inc. (the "Corporation") will be held at The
Fairmont Waterfront Centre Hotel, Ballroom C, Vancouver, British Columbia on
Monday, April 28, 2003 at 4:00 p.m. (Vancouver time) for the following purposes:
1. To receive the report of the directors;
2. To receive the consolidated financial statements for the year ended
December 31, 2002 and the auditors' report thereon;
3. To appoint KPMG LLP, Chartered Accountants, as auditors of the
Corporation and to authorize the directors to fix the auditors'
remuneration;
4. To elect directors for the ensuing year;
5. To consider and, if deemed advisable, pass an ordinary resolution
authorizing and approving the continued existence of the Corporation's
Shareholder Rights Plan;
6. To consider and, if deemed advisable, pass an ordinary resolution
confirming the amendments approved by the Board of Directors to the
Corporation's Amended and Restated By-law No. 1; and
7. To transact such other business as may be properly brought before the
Meeting.
Further details of the above matters are set out in the attached Information
Circular.
DATED at Richmond, British Columbia, this 19th day of March, 2003.
By Order of the Board of Directors
/s/ Peter W. Roberts
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Peter W. Roberts,
Chief Financial Officer and Secretary
IMPORTANT
Only holders of common shares of the Corporation of record at the close of
business on March 26, 2003 are entitled to notice of the Meeting and only those
holders of common shares of the Corporation of record at the close of business
on March 26, 2003, or who subsequently become shareholders and comply with the
provisions of the CANADA BUSINESS CORPORATIONS ACT, are entitled to vote at the
Meeting. Shareholders who are unable to attend the Meeting in person are
requested to complete, sign, date and mail the enclosed form of proxy in
accordance with the instructions set out in the proxy and in the Information
Circular accompanying this Notice.
Proxies, to be valid, must be deposited at the office of the registrar and
transfer agent of the Corporation, Computershare Trust Company of Canada, 9th
Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, not less than 48 hours
(excluding Saturdays, Sundays, and statutory holidays) preceding the Meeting or
any adjournment of the Meeting.
SIERRA WIRELESS, INC.
13811 Wireless Way
Richmond, British Columbia Canada V6V 3A4
INFORMATION CIRCULAR
As at March 19, 2003
GENERAL PROXY INFORMATION
SOLICITATION OF PROXIES
This Information Circular is furnished in connection with the solicitation of
proxies by the management (the "Management") of Sierra Wireless, Inc. (the
"Corporation") for use at the annual and special meeting (the "Meeting") of
shareholders of the Corporation (and any adjournment thereof) to be held on
Monday, April 28, 2003 at the time and place and for the purposes set forth in
the accompanying Notice of Meeting. While it is expected that the solicitation
will be primarily by mail, proxies may be solicited personally or by telephone
by the directors and regular employees of the Corporation. All costs of
solicitation will be borne by the Corporation.
APPOINTMENT OF PROXYHOLDER
The individuals named in the accompanying form of proxy are the Chief Executive
Officer and Chief Financial Officer of the Corporation. A SHAREHOLDER MAY
APPOINT SOME OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO ATTEND AND ACT ON
THE SHAREHOLDER'S BEHALF AT THE MEETING. TO EXERCISE THIS RIGHT, THE SHAREHOLDER
MAY EITHER INSERT THE NAME OF SUCH OTHER PERSON IN THE BLANK SPACE PROVIDED IN
THE FORM OF PROXY OR COMPLETE AND SUBMIT ANOTHER FORM OF PROXY.
A proxy will not be valid unless the completed form of proxy is received by the
Corporation at the offices of the Corporation's registrar and transfer agent,
Computershare Trust Company of Canada, at 9th Floor, 100 University Avenue,
Toronto, Ontario, M5J 2Y1 (fax: 1.866.249.7775), not later than 48 hours
(excluding Saturdays, Sundays and statutory holidays) before the time for
holding the Meeting or any adjournment thereof.
REVOCATION OF PROXY
A shareholder may revoke a proxy by delivering an instrument in writing executed
by the shareholder or the shareholder's attorney authorized in writing or, where
the shareholder is a corporation, by a duly authorized officer or attorney for
the corporation, either to the registered office of the Corporation at Suite
2600, Three Bentall Centre, 595 Burrard Street, P.O. Box 49314, Vancouver,
British Columbia, V7X 1L3, at any time up to and including 48 hours preceding
the Meeting, or if adjourned, any reconvening thereof, or to the Chairman of the
Meeting on the day of the Meeting before any vote in respect of which the proxy
is to be used shall have been taken or in any other manner provided by law.
A revocation does not affect any matter on which a vote has been taken prior to
the revocation. A shareholder of the Corporation may also revoke a proxy by
signing a form of proxy bearing a later date and returning such proxy and
delivering it to Computershare Trust Company of Canada as aforesaid at any time
up to and including 48 hours preceding the Meeting or any adjournment thereof.
A person duly appointed under a form of proxy will be entitled to vote the
shares represented thereby only if the form of proxy is properly completed and
delivered in accordance with the requirements set out above under the heading
"Appointment of Proxyholder" and such proxy has not been revoked.
VOTING OF PROXIES AND DISCRETIONARY AUTHORITY
Unless specifically directed in the form of proxy to withhold the shares
represented by the form of proxy from a ballot or show of hands, the proxies
named in the accompanying form of proxy shall vote the shares represented by the
form of proxy on each ballot or show of hands. Where a choice with respect to
any matter to be acted upon has been specified in the form of proxy, the shares
will be voted in accordance with the specifications so made.
IN THE ABSENCE OF ANY INSTRUCTIONS ON THE PROXY OR IF SUCH INSTRUCTIONS ARE
UNCLEAR, SHARES REPRESENTED BY THE FORM OF PROXY WILL BE VOTED:
1. FOR THE APPOINTMENT OF KPMG LLP, CHARTERED ACCOUNTANTS, AS AUDITORS OF
THE CORPORATION AND AUTHORIZING THE DIRECTORS TO FIX THE AUDITORS'
REMUNERATION;
2. FOR THE ELECTION OF THE INDIVIDUALS LISTED IN THE PROXY AS DIRECTORS
OF THE CORPORATION;
3. FOR THE ORDINARY RESOLUTION AUTHORIZING AND APPROVING THE CONTINUED
EXISTENCE OF THE CORPORATION'S SHAREHOLDER RIGHTS PLAN; AND
4. FOR THE ORDINARY RESOLUTION CONFIRMING THE AMENDMENTS APPROVED BY THE
BOARD OF DIRECTORS TO THE CORPORATION'S AMENDED AND RESTATED BY-LAW
NO. 1,
in each case as more particularly described elsewhere in this Information
Circular.
The enclosed form of proxy when properly completed and delivered and not revoked
confers discretionary authority upon the person appointed proxy thereunder to
vote with respect to amendments or variations of matters identified in the
Notice of Meeting, and with respect to other matters which may properly come
before the Meeting. In the event that amendments or variations to matters
identified in the Notice of Meeting are properly brought before the Meeting or
any further or other matter of business is properly brought before the Meeting,
it is the intention of the persons designated in the enclosed form of proxy to
vote in accordance with their best judgement on such matter of business. At the
time of the printing of this Information Circular, Management knows of no such
amendment, variation or other matter which may be presented at the Meeting.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Other than as disclosed in this Information Circular, no director or senior
officer, past, present or nominated, or any associate or affiliate of such
persons, or any person on behalf of whom this solicitation is made, has any
interest, direct or indirect, in any matter to be acted upon at the Meeting,
except to the extent that such persons may be directly involved in the normal
business of the Meeting or the general affairs of the Corporation.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Corporation is authorized to issue an unlimited number of common shares in
the capital of the Corporation ("Common Shares") of which, as of the date of
this Information Circular, 16,375,280 Common Shares are issued and outstanding
as fully paid and non-assessable shares. The holders of Common Shares are
entitled to one (1) vote for each Common Share held. The Corporation is also
authorized to issue an unlimited number of preference shares issuable in series,
of which none are issued and outstanding.
Any shareholder of record at the close of business on March 26, 2003 (the
"Record Date") who either personally attends the Meeting or who has completed
and delivered a form of proxy in the manner and subject to the provisions
described above shall be entitled to vote or have his Common Shares voted at the
Meeting.
The following are the names of the shareholders of the Corporation that are
known by the Corporation to own beneficially, directly or indirectly, or
exercise control or direction over, more than 10% of the Common Shares as at
March 19, 2003:
NAME AND ADDRESS NO. OF COMMON SHARES PERCENTAGE OF COMMON SHARES
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PMC-SIERRA, INC. 1,912,987 11.68%
Burnaby, British Columbia
SCOTIA MERCHANT CAPITAL CORPORATION 1,638,796 10.01%
Toronto, Ontario
MATTERS TO BE ACTED UPON AT THE MEETING
APPOINTMENT OF AUDITORS
Management will recommend that the Meeting appoint KPMG LLP, Chartered
Accountants, as auditors of the Corporation and authorize the directors to fix
their remuneration.
ELECTION OF DIRECTORS
The term of office of each of the present directors expires at the Meeting. The
Board of Directors presently consists of seven (7) directors and it is intended
to elect six (6) directors for the ensuing year. Each director elected will hold
office until the next annual meeting of the Corporation or until his or her
successor is elected or appointed, unless his or her office is earlier vacated
in accordance with the By-laws of the Corporation or with the provisions of the
CANADA BUSINESS CORPORATIONS ACT.
The persons named below will be presented for election at the Meeting as
Management's nominees for the Board of Directors, and the proxies named in the
accompanying form of proxy intend to vote for the election of these nominees.
Management does not contemplate presenting for election any person other than
these nominees but, if for any reason Management does present another nominee
for election, the proxies named in the accompanying form of proxy reserve the
right to vote for such other nominee in their discretion unless the shareholder
has specified otherwise in the form of proxy.
Mr. James V. Diller has decided to retire after serving 10 years on the Board
and accordingly Management will not be presenting Mr. Diller for re-election as
a director of the Corporation. Mr. Richard J. Lynch, a Board member since 1998,
will be dedicating more attention to his executive duties at Verizon Wireless
and accordingly Management will not be presenting Mr. Lynch for re-election as a
director of the Corporation. Management is presenting Mr. Nadir Mohamed,
President and Chief Executive Officer of Rogers Wireless Communications Inc.,
for election as a director of the Corporation.
The following table sets out the names of the nominees for election as
directors, the municipality in which each is ordinarily resident, all offices of
the Corporation now held by each of them, their present principal occupations,
their principal occupation within the five preceding years unless he or she is
now a director and was elected to his or her present term at the last annual
meeting of the Corporation, the period of time for which each has been a
director of the Corporation, and the number of Common Shares beneficially
owned by each, directly or indirectly, or over which each exercises control or
direction, as at the date hereof.
NO. OF
NAME, POSITION AND RESIDENCE PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR SINCE COMMON SHARES
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DAVID B. SUTCLIFFE Chairman and Chief Executive Officer June 1995 180,542 (1)
Chairman, CEO and Director
North Vancouver,
British Columbia
GREGORY D. AASEN (b) Chief Operating Officer of PMC-Sierra, Ltd., December 1997 20,000 (2)
Director a wholly-owned subsidiary of PMC-Sierra, Inc.
West Vancouver,
British Columbia
S. JANE ROWE (a),(b) Senior Vice President, Global Risk March 1998 86,156 (3)
Director Management Division of Scotiabank from 2002
Toronto, Ontario to present; Managing Director and Co-Head of
Scotia Merchant Capital Corporation from
1997 to 2002
PAUL G. CATAFORD (a),(c) Managing Partner of HorizonOne Asset July 1998 2,100 (4)
Director Management from December 2002 to present;
Toronto, Ontario Consultant from March 2002 to December 2002;
Executive Managing Director of BMO Nesbitt
Burns Equity Partners Inc. from 2001 to
2002; Managing Director and President BCE
Capital Inc. from 1997 to 2001
PETER CICERI (c) Executive in residence at the Faculty of February 2000 5,500 (5)
Lead Independent Director Commerce and Business Administration at the
Whistler, British Columbia University of British Columbia from
September 2001 to present; President of
Rogers Telecom, Inc. from 2000 to May 2001;
President and Managing Director of Compaq
Canada Ltd. and Vice-President Compaq
Computer Corporation (US) from 1996 to 2000
NADIR MOHAMED President, Chief Executive Officer and N/A Nil
Toronto, Ontario Director of Rogers Wireless Communications
Inc. from 2001 to present; President and
Chief Operating Officer of Rogers Wireless
Communications Inc. from 2000 to 2001;
Senior Vice President, Marketing and Sales
of Telus Communications Inc. from 1999 to
2000; President and Chief Operating Officer
of BC Tel Mobility from 1997 to 1999
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NOTES:
(a) Member of the Audit Committee
(b) Member of the Compensation Committee
(c) Member of the Governance and Nominating Committee
(1) Excludes options to purchase an aggregate of 234,111 Common Shares at
prices ranging from Cdn.$3.38 per Common Share to Cdn.$104.50 per Common
Share.
(2) Excludes options to purchase an aggregate of 30,250 Common Shares at prices
ranging from Cdn.$3.50 per Common Share to Cdn.$62.00 per Common Share.
Excludes 1,912,987 Common Shares held by PMC-Sierra, Inc. According to
publicly available information, Mr. Aasen holds directly or indirectly
125,094 common shares of PMC-Sierra, Inc. Mr. Aasen disclaims beneficial
ownership of Common Shares of the Corporation held by PMC-Sierra, Inc.
(3) Excludes options to purchase an aggregate of 30,250 Common Shares at prices
ranging from Cdn.$3.50 per Common Share to Cdn.$62.00 per Common Share.
(4) Excludes options to purchase an aggregate of 21,000 Common Shares at
prices ranging from Cdn.$3.50 per Common Share to Cdn.$16.85 per Common
Share.
(5) Excludes options to purchase an aggregate of 36,250 Common Shares at prices
ranging from Cdn.$3.50 per Common Share to Cdn.$176.05 per Common Share.
SHAREHOLDER RIGHTS PLAN
It is being proposed that the shareholders of the Corporation authorize and
approve by ordinary resolution the continued existence of the Corporation's
shareholder rights plan agreement (the "Shareholder Rights Plan"). The
Shareholder Rights Plan was originally approved by the shareholders of the
Corporation at the Corporation's 2000 annual and special meeting of shareholders
on April 27, 2000 and is documented in an agreement dated April 27, 2000 between
the Corporation and Montreal Trust Company of Canada (now Computershare Trust
Company of Canada as successor to Montreal Trust Company of Canada), as rights
agent.
Under the terms of the Shareholder Rights Plan, the Board of Directors of the
Corporation is required to submit, at or prior to the Corporation's 2003 annual
meeting of shareholders, a resolution ratifying the continued existence of the
Shareholder Rights Plan to the "Independent Shareholders" (as defined in the
Shareholder Rights Plan) of the Corporation for their consideration and, if
thought advisable, approval. All of the shareholders of the Corporation are
"Independent Shareholders". If the continued existence of the Shareholder Rights
Plan is approved, then the Shareholder Rights Plan will expire in accordance
with its terms upon the termination of the Corporation's annual meeting of
shareholders of the Corporation in 2006.
OBJECTIVES OF THE SHAREHOLDER RIGHTS PLAN
The Corporation is a widely-held corporation with no controlling shareholder.
When it first proposed the Shareholder Rights Plan to the shareholders of the
Corporation at the Corporation's 2000 Annual and Special Meeting of
Shareholders, the Board of Directors considered various strategies, including
approval of a shareholder rights plan, to ensure that, in the context of a bid
for control of the Corporation through an acquisition of the Corporation's
Common Shares, shareholders would be positioned to receive full and fair value
for their shares. Of particular concern to the Board of Directors was the widely
held view that Canadian securities legislation provided too short of a response
time to a corporation that is the subject of an unsolicited bid for control. An
inadequate response time has been identified as an impediment to ensuring that
shareholders are offered full and fair value for their shares. Also of concern
to the Board of Directors was the possibility that, under securities laws, the
Corporation's shareholders could be treated unequally in the context of a bid
for control. The Shareholder Rights Plan was not put forth in response to or in
anticipation of any pending or threatened take over bid, nor to deter takeover
bids for control of the Corporation generally. As of the date of this
Information Circular, the Board of Directors is not aware of any third party
considering or preparing any proposal to acquire control of the Corporation.
Rather, the
objective of the Shareholder Rights Plan was and is to give adequate
time for shareholders to properly assess a takeover bid without undue pressure,
for the Board of Directors to consider value-enhancing alternatives and to allow
competing bids to emerge. Also, the Shareholder Rights Plan was designed to
provide shareholders of the Corporation with equal treatment in a bid for
control of the Corporation. It was not, and is not, the intention of the Board
of Directors to secure the continuance in office of the existing members of the
Board of Directors or to avoid an acquisition of control of the Corporation in a
transaction that is fair and in the best interest of shareholders. The rights of
shareholders under existing laws to seek a change in the Management of the
Corporation or to influence or promote action of Management in a particular
manner is not affected by the Shareholder Rights Plan.
The complete text of the disclosure made in the Information Circular for the
2000 Annual General and Special Meeting of Shareholders of the Corporation
regarding the Shareholder Rights Plan has been reproduced as Appendix A to this
Information Circular. A copy of the Shareholder Rights Plan is available on
request from the Corporate Secretary of the Corporation at the address noted on
the first page of this Information Circular.
APPROVAL BY SHAREHOLDERS
The text of the resolution of the shareholders of the Corporation to approve the
continued existence of the Shareholder Rights Plan is set forth below:
"BE IT RESOLVED, as an ordinary resolution of the shareholders of Sierra
Wireless, Inc. (the "Corporation"), that:
1. The continued existence of the Shareholder Rights Plan Agreement dated
April 27, 2000 made between the Corporation and Montreal Trust Company
of Canada (now Computershare Trust Company of Canada as successor to
Montreal Trust Company of Canada) be approved in accordance with
section 5.19 thereof; and
2. Any director or senior officer of the Corporation be and is hereby
authorized, for and on behalf of the Corporation, to do all such
things and execute all such documents and instruments as may be
necessary or desirable to give effect to this resolution."
THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY, IF NAMED AS PROXY, INTEND TO
VOTE IN FAVOUR OF THE RESOLUTION REGARDING THE APPROVAL OF THE CONTINUED
EXISTENCE OF THE SHAREHOLDER RIGHTS PLAN UNLESS A SHAREHOLDER HAS SPECIFIED IN
SUCH SHAREHOLDER'S PROXY THAT SUCH SHAREHOLDER'S SHARES ARE TO BE VOTED AGAINST
SUCH RESOLUTION.
THE FOREGOING RESOLUTION MUST BE APPROVED BY A SIMPLE MAJORITY OF 50% PLUS ONE
VOTE OF THE VOTES CAST BY SHAREHOLDERS.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has determined that the approval of the continued
existence of the Shareholder Rights Plan is in the best interests of the
Corporation and the holders of its Common Shares. The Board of Directors
unanimously recommends that the shareholders vote in favour of the approval of
the continued existence of the Shareholder Rights Plan.
The Corporation has been advised that the directors and senior officers of the
Corporation intend to vote all Common Shares held by them in favour of the
approval of the continued existence of the Shareholder Rights Plan.
AMENDMENT OF BY-LAW NO. 1
It is being proposed that the shareholders of the Corporation confirm by
ordinary resolution the amendments to the Corporation's Amended and Restated
By-law No. 1 (the "By-law") approved by the Board of Directors on March 20,
2003. The Board of Directors amended the By-law to take into account certain
changes made to the Corporation's governing statute, the CANADA BUSINESS
CORPORATIONS ACT (the "Act"), concerning: (1) the residency requirements of the
members of the Board of Directors and of committees of the Board of Directors;
and (2) the advance of moneys by the Corporation to a director, officer or other
person for the costs of a proceeding for which the Corporation is obligated to
indemnify such person.
With respect to the residency requirements, the By-law was amended as follows:
o the Canadian residency requirement for the Board of Directors of the
Corporation was reduced from a majority of the total number of
directors of the Corporation to at least 25% of the total number of
directors;
o the Canadian residency requirement for directors attending meetings of
the Board of Directors was reduced from a majority of directors
attending a meeting to at least 25% of the directors attending a
meeting; and
o the Canadian residency requirement for members of committees of the
Board of Directors was removed.
The sections of the By-law that were amended, with the amendments indicated
therein, are attached as Appendix B to this Information Circular.
With respect to the advance of moneys to directors, officers or others, the
By-law was amended by adding the following section:
7.3 ADVANCE OF COSTS. The Corporation shall advance moneys to a director,
officer or other individual for the costs, charges and expenses of a
proceeding referred to in section 7.2. The individual shall repay the
moneys if the individual does not fulfil the conditions of section 7.2.
The addition reflects an amendment to the Act which expressly allows the
Corporation to advance moneys to a director, officer or other person for the
costs, charges and expenses of any civil, criminal, administrative,
investigative or other proceeding in which such person is involved because of
such person's association with the Corporation. The indemnified person must
repay to the Corporation any moneys advanced to the person if: (1) the person
did not act honestly or in good faith with a view to the best interests of the
Corporation; or (2) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, the person did not have
reasonable grounds for believing his or her conduct was lawful.
APPROVAL BY SHAREHOLDERS
The text of the resolution of the shareholders of the Corporation to confirm the
amendments approved by the Board of Directors to the By-law is set forth below:
"BE IT RESOLVED, as an ordinary resolution of the shareholders of Sierra
Wireless, Inc. (the "Corporation"), that:
1. The amendments approved by the Board of Directors of the Corporation
to the Amended and Restated By-law No. 1 of the Corporation be
confirmed; and
2. Any director or senior officer of the Corporation be and is hereby
authorized, for and on behalf of the Corporation, to do all such
things and execute all such documents and instruments as may be
necessary or desirable to give effect to this resolution."
THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY, IF NAMED AS PROXY, INTEND TO
VOTE IN FAVOUR OF THE RESOLUTION REGARDING THE CONFIRMATION OF THE AMENDMENTS
MADE TO THE BY-LAW UNLESS A SHAREHOLDER HAS SPECIFIED IN THEIR PROXY THAT THEIR
SHARES ARE TO BE VOTED AGAINST SUCH RESOLUTION.
THE FOREGOING RESOLUTION MUST BE APPROVED BY A SIMPLE MAJORITY OF 50% PLUS ONE
VOTE OF THE VOTES CAST BY SHAREHOLDERS.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has determined that the confirmation of the amendments
approved by the Board of Directors to the By-law is in the best interests of the
Corporation and the holders of its Common Shares. The Board of Directors
unanimously recommends that the shareholders vote in favour of the confirmation
of the amendments approved by the Board of Directors to the By-law.
The Corporation has been advised that the directors and senior officers of the
Corporation intend to vote all Common Shares held by them in favour of the
confirmation of the amendments approved by the Board of Directors to the By-law.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
In compliance with the requirements and guidelines (the "Guidelines") respecting
corporate governance practices set out in the Company Manual of the Toronto
Stock Exchange (the "Company Manual"), the Corporation is pleased to disclose
its corporate governance practices.
MANDATE OF THE BOARD OF DIRECTORS
The Board of Directors of the Corporation manages or supervises the management
of the affairs and business of the Corporation pursuant to the powers vested in
the Board of Directors by the CANADA BUSINESS CORPORATIONS ACT, the Restated
Articles of Incorporation and By-laws of the Corporation and all other statutory
and legal requirements generally applicable to directors of a business
corporation that is also a "reporting issuer" under applicable securities
legislation. Management is responsible for the day-to-day operation of the
business and affairs of the Corporation.
In fulfilling its mandate, the Board of Directors is responsible, among other
things, for the following:
o adoption of a strategic planning process to establish the
Corporation's intermediate and long-term goals;
o ensuring the establishment of systems to manage the principal risks
arising from or incidental to the business activities of the
Corporation;
o appointing, defining functions for, and monitoring the performance of
all senior Management which includes establishing executive
compensation policies and their implementation with respect to
individual performance and attainment of established goals;
o overseeing the Corporation's public communications policy and
implementation, including disclosure of material information and
shareholder communications; and
o the integrity of the Corporation's internal control and management
information systems.
In order to carry out its functions, the Board of Directors holds regular
meetings and additional meetings as necessary to consider particular matters or
evaluate matters between formal meetings, wherever appropriate.
In the year ended December 31, 2002, the Board of Directors met on 7 occasions.
Independently of formal meetings, Management communicates informally with
members of the Board of Directors on a regular monthly basis, and solicits the
advice of Board of Directors members falling within their special knowledge or
experience.
The Board of Directors expects members of Management of the Corporation to carry
out their duties and to discharge their responsibilities in a professional,
competent and ethical manner. The Board of Directors approves senior executive
appointments and accepts only those individuals who bring exemplary
qualifications and demonstrated abilities to the position. The Board of
Directors fully expects each executive to strive diligently and effectively to
improve the fortunes of the Corporation and contribute to shareholder value.
COMPOSITION OF THE BOARD OF DIRECTORS
The Board of Directors is composed of seven directors of which all but Mr. David
B. Sutcliffe are "unrelated directors" as that term is defined in the Company
Manual. The Board of Directors has appointed Mr. Peter Ciceri as Lead
Independent Director. In this capacity, Mr. Ciceri provides leadership to
enhance board effectiveness, manages the Board of Directors and acts as liaison
between the Board of Directors and Management.
SIGNIFICANT SHAREHOLDER
The Corporation has no "significant shareholder", which the Company Manual
defines as a shareholder with the ability to exercise a majority of the votes
for the election of the Board of Directors of a corporation.
BOARD OF DIRECTORS COMMITTEES
The Audit Committee is composed of three unrelated directors, who are Mr. James
V. Diller, Ms. S. Jane Rowe and Mr. Paul G. Cataford. The Audit Committee is
authorized to review and approve the financial statements of the Corporation and
the overall scope and results of the audit and internal financial controls of
the Corporation. In 2002, the Board of Directors provided the Audit Committee
with a new charter which outlines, among other things, the purpose,
organization, responsibilities and duties of the Audit Committee.
The Compensation Committee is composed of two unrelated directors, who are Mr.
Gregory D. Aasen and Ms. S. Jane Rowe. The Compensation Committee is authorized
to determine compensation for, and monitor the performance of, the executives
and senior Management of the Corporation. The Committee has reviewed the
adequacy and form of the compensation of the directors and has determined that
the compensation realistically reflects the responsibilities and risk involved
in being an effective director of the Corporation.
The Governance and Nominating Committee was formed in December 2002 and is
composed of two unrelated directors, who are Mr. Peter Ciceri and Mr. Paul G.
Cataford. The mandate of the Governance
and Nominating Committee is, among other things, to monitor external corporate
governance requirements and ensure corporate compliance with such requirements,
to make disclosure of the Company's system of corporate governance annually, to
ensure that the Board and committees of the Board have documented mandates that
are reviewed annually, and to assess the effectiveness of the Board, committees
of the Board and individual directors.
POSITION DESCRIPTIONS
In accordance with the Guidelines, the Board of Directors, together with the
Chief Executive Officer, have developed position descriptions for the Board and
for the CEO involving the definition of the limits to Management's
responsibilities, and the Board of Directors approves or develops the corporate
objectives which the CEO is responsible for meeting.
DECISIONS REQUIRING BOARD OF DIRECTORS APPROVAL
In addition to those matters which must by law or by the Restated Articles of
Incorporation and By-laws of the Corporation be approved by the Board of
Directors, decisions of strategic significance to the Corporation must be
approved by the Board of Directors. Business plans, budgets, material
expenditures or legal commitments (including, without limitation, any debt or
equity financings, investments, acquisitions and divestitures) by the
Corporation are also subject to review or approval by the Board of Directors.
Financial statements and major disclosure documents are also subject to review
and approval by the Board of Directors or a committee of the Board of Directors.
INDEPENDENCE FROM MANAGEMENT
The Guidelines state that the Board of Directors should have in place
appropriate structures and procedures to ensure that the Board can function
independently of Management. The Guidelines suggest that an appropriate manner
in which to do so would be to appoint a Chairman of the Board who is not a
member of Management and who is responsible for ensuring that the Board
functions independently of Management. While the Chairman of the Board, Mr.
David B. Sutcliffe, is a member of Management, the Board of Directors has
concluded that, by virtue of the number of unrelated directors and the
appointment of Mr. Peter Ciceri as Lead Independent Director, it operates
independently from Management.
NEW DIRECTORS AND ORIENTATION AND EDUCATION PROGRAM
The Board of Directors recruits new directors on an as needed basis, and it is
now the responsibility of the Governance and Nominating Committee to propose new
nominees to the Board of Directors. Any appointment of a new director will
require approval of the Board of Directors and will be subject, ultimately, to
approval by the shareholders of the Corporation at the next annual meeting of
the Corporation. Upon the addition of a new director, the Governance and
Nominating Committee will ensure that the new director is provided orientation
in a timely manner. In this regard, Management of the Corporation will make
itself available to a new director in order to provide information and answer
any questions that the new director may have.
OUTSIDE ADVICE
The directors of the Corporation are permitted to contact and engage an outside
adviser at the expense of the Corporation in appropriate circumstances. The
engagement of an outside adviser is subject to the approval of the Board of
Directors.
INVESTOR RELATIONS
The Chief Financial Officer, the Chief Executive Officer and the corporate
financial staff are responsible for investor relations functions. Inquiries from
shareholders and investment analysts are promptly responded to by employees
responsible for investor relations, or when appropriate, by other executives of
the Corporation.
EXECUTIVE OFFICERS
The following table sets out the names and ages of each of the executive
officers of the Corporation, the position each executive officer holds with the
Corporation, the length of each executive officer's service with the
Corporation, and all other employment held by each executive officer in the last
five years.
POSITION WITH THE OTHER EMPLOYMENT HELD IN THE
NAME AND AGE OF EXECUTIVE(1) CORPORATION LENGTH OF SERVICE LAST 5 YEARS(2)
- ------------------------------- ---------------------------- ------------------ --------------------------------------
David B. Sutcliffe Chairman, Chief Executive 8 years Chairman of the Corporation since
(43) Officer and Director May 2001. President of the
Corporation from May 1995 to May 2001
Norman Toms Chief Technical Officer 10 years N/A
(58)
Peter W. Roberts Chief Financial Officer 4 years Finance Director of Service Corp.
(59) and Secretary International (UK) Inc., a
wholly-owned subsidiary of Service
Corp. International Inc., from 1997
to 1998
Andrew S. G. Harries Senior Vice-President, 10 years Vice-President, Marketing of the
(41) Corporate Development Corporation from 1993 to
February 2000
Jason W. Cohenour Senior Vice-President, 7 years Senior Vice-President, Distribution
(41) Worldwide Sales and of the Corporation from February
Marketing 2000 to June 2002; Vice-President,
Sales of the Corporation from 1996
to February 2000
- ------------------------------
NOTES:
(1) Glen M. Brownlee was President and Chief Operating Officer of the
Corporation from May 2001 until his resignation in June 2002. From January
2000 until May 2001, Mr. Brownlee was the Executive Vice-President and
Chief Operating Officer of the Corporation.
(2) The information as to "other employment" is not within the knowledge of
Management and has been furnished by the respective executive officers.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
There has been no indebtedness outstanding to the Corporation or any of its
subsidiaries owed by any current and former officers, directors and employees of
the Corporation and its subsidiaries at any time during the most recently
completed fiscal year ended December 31, 2002.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
Other than as disclosed in this Information Circular, no insider, proposed
nominee for election as a director, or any associate or affiliate of the
foregoing, had any material interest, direct or indirect, in any
transaction or proposed transaction which has materially affected or would
materially affect the Corporation or any of its subsidiaries.
STATEMENT OF EXECUTIVE COMPENSATION
AGGREGATE COMPENSATION
During the fiscal year ended December 31, 2002, there were six (6) executive
officers of the Corporation, including Mr. Brownlee who resigned from the
Corporation in June 2002, and the aggregate cash compensation paid to them by
the Corporation and its subsidiaries was U.S.$1,221,110.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table sets forth all compensation paid in respect of individuals
(Named Executive Officers) who were, during the fiscal year ended December 31,
2002 (or any portion thereof), the Chief Executive Officer and each of the
Corporation's four most highly compensated executive officers earning a combined
salary and bonus in excess of Cdn.$100,000.
- --------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------- ----------------------------------
AWARDS PAYOUTS
----------------------- ----------
SECURITIES LONG TERM
OTHER(3) UNDER INCENTIVE
ANNUAL OPTIONS RESTRICTED PLAN ALL OTHER(5)
NAME AND PRINCIPAL FISCAL SALARY BONUS(2) COMPENSATION GRANTED(4) SHARES PAYMENTS COMPENSATION
POSITION(1) YEAR ($) ($) ($) (#) ($) ($) ($)
- --------------------------------------------------------------------------------------------------------------------------
David B. Sutcliffe(6) 2002 222,930 - - 110,000 - - 3,857
Chairman and Chief 2001 224,400 61,946 - 12,000 - - 6,060
Executive Officer 2000 149,729 143,834 - 60,000 - - 6,069
- --------------------------------------------------------------------------------------------------------------------------
Norman Toms 2002 143,312 - - 12,500 - - 1,089
Chief Technical Officer 2001 144,572 46,105 - 8,000 - - 943
2000 113,114 76,375 - 17,500 - - 863
- --------------------------------------------------------------------------------------------------------------------------
Andrew S. G. Harries(7) 2002 143,312 - - 50,000 - - 1,234
Senior Vice-President, 2001 144,696 47,213 - 8,000 - - 1,005
Corporate Development 2000 112,986 92,710 - 22,500 - - 3,496
- --------------------------------------------------------------------------------------------------------------------------
Jason W. Cohenour(8) 2002 191,000 - - 50,000 - - 24,917
Senior Vice-President, 2001 190,211 74,294 9,530 8,000 - - 9,000
Worldwide Sales and 2000 150,000 65,924 194,288 20,000 - - 7,800
Marketing
- --------------------------------------------------------------------------------------------------------------------------
Peter W. Roberts 2002 133,758 - - 12,500 - - 1,060
Chief Financial 2001 134,826 30,973 - 8,000 - - 919
Officer and Secretary 2000 99,713 75,251 - 17,500 - - 837
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Glen Brownlee(9) 2002 98,726 - - 25,000 - - 288,657(10)
President and Chief 2001 198,764 45,842 - 50,000 - - 1,092
Operating Officer 2000 120,707 79,552 - 110,000 - - 592
- --------------------------------------------------------------------------------------------------------------------------
NOTES:
(1) All compensation is paid in Cdn.$, except for Mr. Cohenour who is paid in
U.S.$. All amounts on this table are reflected in U.S.$ at exchange rates
of 1.570 for 2002, 1.549 for 2001 and 1.4995 for 2000.
(2) Bonuses are generally granted pursuant to the management incentive plan,
which has been approved by the Compensation Committee, to reward Management
team performance and are based on actual revenues and profits versus
budgeted revenues and profits. Bonuses may also be granted to reward
outstanding performance. No bonuses were granted during fiscal 2002.
(3) Other Annual Compensation relates to income from commissions.
(4) All options were granted under the Corporation's Amended and Restated 1997
Stock Option Plan.
(5) All Other Compensation relates to severance, moving compensation, vehicle
leases and/or other taxable benefits.
(6) Mr. Sutcliffe served as both President and Chief Executive Officer of the
Corporation from May 1995 to May 2001. In May 2001, Mr. Sutcliffe resigned
as President of the Corporation and was appointed as the Chairman and Chief
Executive Officer of the Corporation.
(7) Mr. Harries was previously the Vice-President, Marketing from 1993 to 2000.
(8) Mr. Cohenour was previously the Senior Vice-President, Distribution from
February 2000 to June 2002.
(9) Mr. Brownlee joined the Corporation in January 2000 and served as both
Executive Vice-President and Chief Operating Officer of the Corporation
from January 2000 to May 2001. In May 2001, Mr Brownlee resigned as
Executive Vice-President and was appointed as the President and Chief
Operating Officer of the Corporation. Mr. Brownlee resigned from the
Corporation in June 2002 and accordingly amounts shown for 2002 reflect
only 6 months of employment.
(10) This figure includes the amount of U.S.$288,071 paid to Mr. Brownlee
pursuant to the terms of a termination agreement entered into upon his
resignation from employment with the Corporation on June 24, 2002.
The aggregate amount paid to all directors and executive officers as a group in
2002 was U.S.$1,300,610.
TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS
On various dates in February and March 2002, the Corporation entered into
executive employment agreements with each of the Named Executive Officers under
which each such executive has agreed to continue to serve the Corporation in his
current office and perform the duties of such office for an indefinite term.
Under the terms of each of the executive employment agreements, each executive
has made commitments in favour of the Corporation, including non-competition and
non-solicitation covenants, minimum and maximum notice periods in the event of
the executive's resignation, and continued service for a minimum period of time
in the event of a change of control. In consideration of the services to be
rendered by each executive under each of the executive employment agreements,
each executive receives an annual salary and is entitled to participate in the
Management bonus, profit sharing and stock option programs of the Corporation
and the dental, medical and other benefit plans as may be offered by the
Corporation to senior officers from time to time. In the event of the
termination of an executive's employment other than for just cause, the
Corporation may elect to provide such executive with either: (i) 12 months
working notice (15 months in the case of Mr. Sutcliffe), plus an additional
month of working notice for each completed 12 month period of service to the
Corporation commencing on the date that the executive commenced employment with
the Corporation (not to exceed 24 months); or (ii) severance pay in lieu of such
working notice. Under the terms of the executive employment contracts for all of
the Named Executive Officers, in the event of actual or constructive termination
of an executive's employment within 12 months following the date of a change of
control of the Corporation, such executive shall be entitled to a severance
payment in an amount equal to 18 months of the executive's average annual
earnings, plus payment in lieu of benefits equal to 15% of the executive's
annual salary.
Mr. Brownlee resigned from the Corporation in June 2002. Under the terms of his
termination agreement, Mr. Brownlee received a payment of U.S.$288,071
representing severance pay in lieu of working notice of U.S.$271,364 and accrued
vacation pay of U.S.$16,707.
OTHER COMPENSATION MATTERS
During the most recently completed financial year, there were no long-term
incentive awards made to Named Executive Officers of the Corporation, there were
no pension plan benefits in place for any of the
Named Executive Officers and there were no plans in place with respect to any of
the Named Executive Officers for termination of employment, change in
responsibilities or change in control.
COMPOSITION OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is currently composed of
two unrelated directors, who are Gregory D. Aasen and S. Jane Rowe.
OPTIONS TO PURCHASE SECURITIES
There were options to purchase an aggregate of 260,000 Common Shares of the
Corporation granted during the fiscal year ended December 31, 2002 to the Named
Executive Officers as described in the table below.
- ----------------------------------------------------------------------------------------------------------------------
MARKET VALUE OF
COMMON SHARES
% OF TOTAL UNDERLYING
COMMON OPTIONS OPTIONS
SHARES UNDER GRANTED TO EXERCISE ON THE
OPTIONS GRANTED EMPLOYEES IN PRICE PER DATE OF GRANT EXPIRATION
NAME (#) FISCAL YEAR COMMON SHARE ($/COMMON SHARE) DATE
- ----------------------------------------------------------------------------------------------------------------------
David B. Sutcliffe 60,000 8.19 Cdn. $27.15 Cdn. $27.15 January 24, 2007
50,000 6.83 Cdn. $3.50 Cdn. $3.50 July 26, 2007
- ----------------------------------------------------------------------------------------------------------------------
Norman Toms 12,500 1.71 Cdn. $3.50 Cdn. $3.50 July 26, 2007
- ----------------------------------------------------------------------------------------------------------------------
Andrew S.G. Harries 25,000 3.41 Cdn. $27.15 Cdn. $27.15 January 24, 2007
25,000 3.41 Cdn. $3.50 Cdn. $3.50 July 26, 2007
- ----------------------------------------------------------------------------------------------------------------------
Jason W. Cohenour 25,000 3.41 U.S. $17.00 U.S. $17.00 January 24, 2007
25,000 3.41 U.S. $2.23 U.S. $2.23 July 26, 2007
- ----------------------------------------------------------------------------------------------------------------------
Peter W. Roberts 12,500 1.71 Cdn. $3.50 Cdn. $3.50 July 26, 2007
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Glen Brownlee 25,000 3.41 Cdn. $27.15 Cdn. $27.15 January 24, 2007
- ----------------------------------------------------------------------------------------------------------------------
OPTION EXERCISES AND NOTIONAL YEAR-END OPTION VALUES
There were options to purchase an aggregate of 100,218 Common Shares exercised
by Named Executive Officers during the fiscal year ended December 31, 2002 as
described in the table below. In addition, the notional value of unexercised but
exercisable/unexercisable options at year-end is set out in the table below. The
value of unexercised in-the-money options is based on a price of Cdn.$6.90, the
closing price of the Common Shares of the Corporation on The Toronto Stock
Exchange on December 31, 2002.
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF COMMON SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END
---------------------------------- ---------------------------------
COMMON
SHARES AGGREGATE
ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
(#) (CDN.$) (#) (#) (CDN.$) (CDN.$)
- ------------------------------------------------------------------------------------------------------------------------
David B. Sutcliffe 100,218 2,342,095 84,215 149,896 39,111 170,000
- ------------------------------------------------------------------------------------------------------------------------
Norman Toms - - 56,419 30,159 120,000 42,500
- ------------------------------------------------------------------------------------------------------------------------
Andrew S. G. Harries - - 36,877 68,032 60,000 85,000
- ------------------------------------------------------------------------------------------------------------------------
Jason W. Cohenour - - 84,426 67,407 187,732 85,000
- ------------------------------------------------------------------------------------------------------------------------
Peter W. Roberts - - 127,333 30,667 146,050 48,850
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Glen Brownlee - - 95,625 40,417 - 136,042
- ------------------------------------------------------------------------------------------------------------------------
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has prepared the following report on compensation for
the chief executive officer and other executive officers.
The Compensation Committee is responsible for maintaining the integrity of all
compensation programs and reviewing, and in certain cases recommending
modifications to, the Corporation's executive base and annual incentive
compensation programs. The incentive plans will typically be awarded in the form
of cash and stock option grants and are based on competitive practices of
comparable companies, and serve to align the interests of the executives with
those of the Corporation's shareholders. The Compensation Committee also
establishes levels of compensation for the chief executive officer and other
executive officers, and recommends to the Board of Directors the granting of
discretionary stock option and cash bonus awards to certain executives, senior
Management, and other key employees.
It is the policy of the Corporation to compensate its executive and senior
Management employees for exceptional performance using three forms of
remuneration: base salary, incentive cash awards and stock option grants. Base
salary will be determined largely by reference to market conditions, while
annual incentive cash and stock option awards will provide the opportunity for
cash compensation and enhanced share value for an identified group of employees
based upon exceptional individual and departmental performance, and the overall
success of the Corporation in any given year. Each annual incentive program
provides cash bonus and option grant targets based upon the specific position's
level of responsibility and the position's influence on the immediate and
sustained growth of the Corporation, with final awards determined by a mix of
individual, departmental and Corporation performance.
Presented by the Compensation Committee:
Gregory D. Aasen
S. Jane Rowe
COMPENSATION OF DIRECTORS
During the financial year ended December 31, 2002, the directors of the
Corporation who were not officers of the Corporation each received remuneration
as follows:
Annual Retainer U.S.$10,000
Lead Independent Director's Retainer U.S.$25,000
In-person board or committee meeting U.S.$750
Board or committee conference call U.S.$375
Directors are limited to one participation fee payable per calendar day. All
directors are reimbursed for travel and other reasonable expenses incurred in
attending board or committee meetings.
All outside directors are eligible to participate in the Amended and Restated
1997 Stock Option Plan. James V. Diller, Gregory D. Aasen, S. Jane Rowe, Paul G.
Cataford, Richard J. Lynch, and Peter Ciceri, all being outside directors of the
Corporation as at December 31, 2002, were each granted options to purchase 5,000
common shares of the Corporation at an exercise price of Cdn.$3.50 (U.S.$2.23).
Executive officers of the Corporation are not permitted to receive any
compensation, including stock options, to which they might be otherwise entitled
by virtue of being directors of the Corporation.
Effective October 1, 2002, the Compensation Committee of the Board of Directors
approved a cash compensation arrangement for the Lead Independent Director in
the form of U.S. $25,000 annual retainer, U.S.$750 for an in-person board or
committee meeting, and U.S.$375 for a board or committee
conference call. In addition, the Lead Independent Director was granted options
to purchase 10,000 common shares of the Corporation.
SHARE PERFORMANCE TABLE
The following table compares the Corporation's cumulative shareholder return on
a Cdn.$100 investment in its Common Shares (made May 17, 1999) to the cumulative
return of a comparable investment on S&P/TSX Composite Index (formerly the TSE
300 Composite Index).
---------------------------------------------------------------------------------------------
May 1999 Jun 1999 Dec 1999 Jun 2000 Dec 2000 Jun 2001 Dec 2001 Jun 2002 Dec 2002
- ------------------------------------------------------------------------------------------------------------------------
Sierra Wireless, Inc. 100.00 89.12 442.18 544.22 489.80 190.09 204.08 34.46 46.62
S&P/TSX Composite Index 100.00 102.46 122.98 149.02 130.57 113.08 112.37 104.44 96.68
- ------------------------------------------------------------------------------------------------------------------------
Assuming an investment of Cdn.$100 and the reinvestment of dividends
FINANCIAL STATEMENTS
The consolidated financial statements of the Corporation for the fiscal year
ended December 31, 2002, together with the auditor's report on these statements,
will be placed before shareholders at the Meeting. These financial statements
form part of the accompanying annual report.
GENERAL
All matters referred to herein for approval by the shareholders require a simple
majority of the shareholders voting, in person or by proxy, at the Meeting.
The Corporation knows of no other matters to be submitted to the Meeting. If any
other matters properly come before the Meeting, the persons named in the
accompanying form of proxy will vote the shares represented by the proxy as the
Board of Directors may recommend or as the proxy holders, acting in their sole
discretion, may determine.
The contents and sending of this Information Circular have been approved by the
Board of Directors of the Corporation.
Dated at Richmond, British Columbia this 19th day of March, 2003.
On Behalf of the Board of Directors
/s/ Peter W. Roberts
-------------------------------------
Peter W. Roberts,
Chief Financial Officer and Secretary
APPENDIX A
DISCLOSURE FROM 2000 INFORMATION CIRCULAR
WITH RESPECT TO SHAREHOLDER RIGHTS PLAN
It is being proposed that the Corporation approve and adopt a shareholder rights
plan (the "Rights Plan"). The approval of the Rights Plan is subject to approval
by the Board of Directors, regulatory approval and shareholder approval by the
shareholders at the Meeting.
All capitalized terms used without definition under the heading, "Shareholder
Rights Plan", have the meanings ascribed to them in the Shareholder Rights Plan
Agreement (as hereinafter defined) unless otherwise indicated. The complete text
of the Shareholder Rights Plan Agreement is available on request from the
Corporate Secretary of the Corporation at the address noted on the first page of
this Information Circular.
APPROVAL BY SHAREHOLDERS
If the Rights Plan is approved by the Board of Directors, regulatory authorities
and by the shareholders at the Meeting, then the Corporation and Montreal Trust
Company of Canada will enter into the shareholder rights plan agreement (the
"Shareholder Rights Plan Agreement") effective as of the date that the approval
of the Plan is obtained from the Corporation's shareholders as set forth herein.
The Toronto Stock Exchange requires that a shareholder rights plan which
provides for different treatment of shareholders under that plan, be approved
by:
(a) ordinary resolution of all of the shareholders of the Corporation; and
(b) ordinary resolution of all of the shareholders of the Corporation,
excluding those shareholders that receive different treatment under
the plan.
Under the Shareholder Rights Plan Agreement, shareholders who own greater than
20% of the outstanding common shares of the Corporation at the time the Rights
Plan becomes effective (the "Grandfathered Persons") are exempt from the Rights
Plan to the extent they acquire up to an additional 1% of the outstanding common
shares of the Corporation. See "Terms of the Rights Plan - Grandfathered
Persons".
As such, the ordinary resolution to approve the Rights Plan must be approved by:
(a) all of the shareholders of the Corporation; and
(b) all of the shareholders of the Corporation, excluding those
shareholders that are Grandfathered Persons.
The text of the resolution of all of the shareholders of the Corporation to
approve the Rights Plan is set forth below:
"BE IT RESOLVED, as an ordinary resolution of the shareholders of Sierra
Wireless, Inc. (the "Corporation"), that:
3. The Shareholder Rights Plan of the Corporation be approved and the
Shareholder Rights Plan Agreement to be made as of April 27, 2000
between the Corporation and Montreal Trust Company of Canada, be and
it is hereby confirmed and approved; and
4. Any director of the Corporation be and is hereby authorized, for and
on behalf of the Corporation, to do all such things and execute all
such documents and instruments as may be necessary or desirable to
give effect to this resolution, including, without limitation, the
Shareholder Rights Plan Agreement."
The text of the resolution of all of the shareholders excluding Grandfathered
Persons is set forth below:
"BE IT RESOLVED, as an ordinary resolution of the shareholders of Sierra
Wireless, Inc. (the "Corporation"), excluding those shareholders who own
greater than 20% of outstanding common shares of the Corporation at the
time of the resolution, that:
1. The Shareholder Rights Plan of the Corporation be approved and the
Shareholder Rights Plan Agreement to be made as of April 27, 2000
between the Corporation and Montreal Trust Company of Canada, be and
it is hereby confirmed and approved; and
2. Any director of the Corporation be and is hereby authorized, for and
on behalf of the Corporation, to do all such things and execute all
such documents and instruments as may be necessary or desirable to
give effect to this resolution, including, without limitation, the
Shareholder Rights Plan Agreement."
THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY, IF NAMED AS PROXY, INTEND TO
VOTE IN FAVOUR OF THE RESOLUTION REGARDING APPROVAL AND RECONFIRMATION OF THE
RIGHTS PLAN UNLESS A SHAREHOLDER HAS SPECIFIED IN THEIR PROXY THAT THEIR SHARES
ARE TO BE VOTED AGAINST SUCH RESOLUTION.
THE FOREGOING RESOLUTION MUST BE APPROVED BY A SIMPLE MAJORITY OF 50% PLUS ONE
VOTE OF THE VOTES CAST BY SHAREHOLDERS.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has determined that the approval of the Rights Plan is in
the best interests of the Corporation and the holders of its common shares. The
Board of Directors unanimously recommends that the shareholders vote in favour
of the confirmation and approval of the Rights Plan.
The Corporation has been advised that the directors and senior officers of the
Corporation intend to vote all common shares held by them in favour of the
confirmation and approval of the Rights Plan.
BACKGROUND AND OBJECTIVES OF THE RIGHTS PLAN
The Corporation is a widely-held company with no controlling shareholder. The
Board of Directors considered various strategies, including approval of a
shareholder rights plan, to ensure that, in the context of a bid for control of
the Corporation through an acquisition of the Corporation's common shares,
shareholders will be positioned to receive full and fair value for their shares.
Of particular concern to the Board of Directors is the widely held view that
existing Canadian securities legislation provides too short a response time to a
corporation that is the subject of an unsolicited bid for control. An inadequate
response time has been identified as an impediment to ensuring that shareholders
are offered full and fair value for their shares. Also of concern to the Board
of Directors is the possibility that, under existing securities laws, the
Corporation's shareholders could be treated unequally in the context of a bid
for control. These concerns are described in more detail below.
The Rights Plan is not being considered in response to or in anticipation of any
pending or threatened takeover bid, nor to deter takeover bids generally. As of
the date of this Circular, the Board of Directors was not aware of any third
party considering or preparing any proposal to acquire control of the
Corporation. Rather, the objective of the Rights Plan is to give adequate time
for shareholders to properly
assess a bid without undue pressure, for the Board of Directors to consider
value-enhancing alternatives, and to allow competing bids to emerge. In
addition, the Rights Plan has been designed to provide shareholders of the
Corporation with equal treatment in a bid for control of the Corporation. It is
not the intention of the Board of Directors to secure the continuance in office
of the existing members of the Board of Directors or to avoid an acquisition of
control of the Corporation in a transaction that is fair and in the best
interest of shareholders. The rights of shareholders under existing law to seek
a change in the management of the Corporation or to influence or promote action
of management in a particular manner will not be effected by the Rights Plan.
The approval of the Rights Plan does not affect the duty of the Board of
Directors to act honestly and in good faith with a view to the best interest of
the Corporation and its shareholders.
In reviewing the Rights Plan, the Board of Directors considered the following
concerns inherent in the existing legislative framework governing takeover bids
in Canada:
(a) TIME. Current legislation permits a takeover bid to expire in 21 days.
The Board of Directors is of the view that this is not sufficient time
to permit shareholders to consider a takeover bid and to make a
reasoned and unhurried decision. The Rights Plan provides a mechanism
whereby the minimum expiry period for a takeover bid must be 45 days
after the date of the bid and the bid must remain open for a further
period of 10 Business Days after the Offeror publicly announces that
the shares deposited or tendered and not withdrawn constitute more
than 50% of the Voting Shares outstanding held by Independent
Shareholders (generally, shareholders other than the Offeror or
Acquiring Person, their Associates and Affiliates, the persons acting
jointly or in concert with the Offeror or Acquiring Person). The
Rights Plan is intended to provide shareholders with adequate time to
properly evaluate the offer and to provide the Board of Directors with
sufficient time to explore and develop alternatives for maximizing
shareholder value. Those alternatives could include, if deemed
appropriate by the Board of Directors, the identification of other
potential bidders, the conducting of an orderly auction or the
development of a corporate restructuring alternative which could
enhance shareholder value.
(b) PRESSURE TO TENDER. A shareholder may feel compelled to tender to a
bid which the shareholder considers to be inadequate out of concern
that failing to tender may result in the shareholder being left with
illiquid or minority discounted shares in the Corporation. This is
particularly so in the case of a partial bid for less than all shares
of a class, where the bidder wishes to obtain a control position but
does not wish to acquire all of the Voting Shares. The Rights Plan
provides a shareholder approval mechanism in the Permitted Bid
provision which is intended to ensure that a shareholder can separate
the tender decision from the approval or disapproval of a particular
takeover bid. By requiring that a bid remain open for acceptance for a
further 10 Business Days following public announcement that more than
50% of the Voting Shares held by Independent Shareholders have been
deposited, a shareholder's decision to accept a bid is separated from
the decision to tender, lessening the undue pressure to tender
typically encountered by a shareholder of a corporation that is the
subject of a takeover bid.
(c) UNEQUAL TREATMENT. While existing securities legislation has
substantially addressed many concerns of unequal treatment, there
remains the possibility that control of a corporation may be acquired
pursuant to a private agreement in which a small group of shareholders
dispose of shares at a premium to market price which premium is not
shared with other shareholders. In addition, a person may slowly
accumulate shares through stock exchange acquisitions which may
result, over time, in an acquisition of control without payment of
fair value for control or a fair sharing of a control premium among
all shareholders. The Rights Plan addresses these concerns by applying
to all acquisitions of
greater than 20% of the Voting Shares, to better ensure that
shareholders receive equal treatment.
GENERAL IMPACT OF THE RIGHTS PLAN
In the past, shareholder rights plans have been criticized by some commentators
on the basis that they may serve to deter takeover bids, to entrench management,
and to place in the hands of boards of directors, rather than shareholders, the
decision as to whether a particular bid for acquisition of control is
acceptable. Critics of some shareholder rights plans have also alleged that they
cast a needlessly wide net, thereby increasing the likelihood of an inadvertent
triggering of the plan, while at the same time deterring shareholders from
participating in legitimate corporate governance activities.
The Board of Directors has considered these concerns, and believes that they
have been largely addressed in the Rights Plan.
It is not the intention of the Board of Directors to secure the continuance of
existing directors or management in office, nor to avoid a bid for control of
the Corporation. For example, through the Permitted Bid mechanism, described in
more detail below, shareholders may tender to a bid which meets the Permitted
Bid criteria without triggering the Rights Plan, regardless of the acceptability
of the bid to the Board of Directors. Furthermore, even in the context of a bid
that does not meet the Permitted Bid criteria, the Board of Directors will
continue to be bound to consider fully and fairly any bid for the Corporation's
common shares in any exercise of its discretion to waive application of the
Rights Plan or redeem the Rights. In all such circumstances, the Board of
Directors must act honestly and in good faith with a view to the best interests
of the Corporation and its shareholders.
The Rights Plan does not preclude any shareholder from utilizing the proxy
mechanism of the CANADA BUSINESS CORPORATIONS ACT to promote a change in the
management or direction of the Corporation, and has no effect on the rights of
holders of outstanding voting shares of the Corporation to requisition a meeting
of shareholders, in accordance with the provisions of applicable corporate and
securities legislation, or to enter into agreements with respect to voting their
common shares. The definitions of "Acquiring Person" and "Beneficial Ownership"
have been developed to minimize concerns that the Plan may be inadvertently
triggered or triggered as a result of an overly-broad aggregating of holdings of
institutional shareholders and their clients.
The Board of Directors believes that the dominant effect of the Rights Plan will
be to enhance shareholder value, and ensure equal treatment of all shareholders
in the context of an acquisition of control.
The Rights Plan will not interfere with the day-to-day operations of the
Corporation. The initial issuance of the Rights does not in any way alter the
financial condition of the Corporation, impede its business plans or alter its
financial statements. In addition, the Rights Plan is initially not dilutive and
is not expected to have any effect on the trading of common shares. However, if
a Flip-In Event occurs and the Rights separate from the common shares, as
described in the summary below, reported earnings per share and reported cash
flow per share on a fully-diluted basis may be affected. In addition, holders of
Rights not exercising their Rights after a Flip-In Event may suffer substantial
dilution.
RECENT DEVELOPMENTS
The Board of Directors believes that the results of several recent unsolicited
take-over bids in Canada demonstrate that shareholder rights plans can enhance
shareholder value without removing the ultimate decision from the shareholders.
In a number of instances since 1996, a change of control was achieved following
an unsolicited bid in circumstances where the ultimately successful bid was
substantially better than the original offer made by the bidder. There can be no
assurance however that the Rights Plan, if approved, would serve to cause a
similar result.
In recent decisions, the Ontario Securities Commission has indicated that the
board of directors of a company confronted with an unsolicited take-over bid
will not be allowed to maintain a shareholder rights plan indefinitely to keep a
bid from the shareholders; however, these decisions also indicate that so long
as the board of directors is actively and realistically seeking value-maximizing
alternatives, shareholder rights plans may serve a legitimate purpose.
TERMS OF THE RIGHTS PLAN
The following is a summary of the terms of the Rights Plan. The summary is
qualified in its entirety by the full text of the Shareholder Rights Plan
Agreement, a copy of which is available on request from the Secretary of the
Corporation as described above. Appendix A to this Circular reproduces certain
key definitions used in the Rights Plan. All defined terms, where used in this
summary, are capitalized for ease of identification.
(a) ISSUANCE OF RIGHTS. One Right will be issued by the Corporation in respect
of each common share outstanding at the close of business on the date of
implementation of the Rights Plan, and one Right will be issued in respect
of each common share of the Corporation issued thereafter, prior to the
earlier of the Separation Time and the Expiration Time. Each Right entitles
the registered holder thereof to purchase from the Corporation one common
share at the exercise price of $1,000, subject to adjustment and certain
anti-dilution provisions (the "Exercise Price"). The Rights are not
exercisable until the Separation Time. If a Flip-In Event occurs, each
Right will entitle the registered holder to receive, upon payment of the
Exercise Price, common shares of the Corporation having an aggregate market
price equal to twice the Exercise Price.
(b) TRADING OF RIGHTS. Until the Separation Time (or the earlier termination or
expiration of the Rights), the Rights will be evidenced by the certificates
representing the common shares of the Corporation and will be transferable
only together with the associated common shares. From and after the
Separation Time, separate certificates evidencing the Rights ("Rights
Certificates"), together with a disclosure statement prepared by the
Corporation describing the Rights, will be mailed to holders of record of
common shares (other than an Acquiring Person) as of the Separation Time.
Rights Certificates will also be issued in respect of common shares issued
prior to the Expiration Time, to each holder (other than an Acquiring
Person) converting, after the Separation Time, securities ("Convertible
Securities") convertible into or exchangeable for common shares. The Rights
will trade separately from the common shares after the Separation Time.
(c) SEPARATION TIME. The Separation Time is the Close of Business on the tenth
Business Day after the earlier of (i) the "Stock Acquisition Date", which
is generally the first date of public announcement of facts indicating that
a Person has become an Acquiring Person; (ii) the date of the commencement
of, or first public announcement of the intent of any Person to commence a
Take-over Bid; and (iii) the date upon which a Permitted Bid ceases to be a
Permitted Bid. In either case, the Separation Time can be such later date
as may from time to time be determined by the Board of Directors. If a
Take-over Bid expires, is cancelled, terminated or otherwise withdrawn
prior to the Separation Time, it shall be deemed never to have been made.
(d) ACQUIRING PERSON. In general, an Acquiring Person is a Person who is the
Beneficial Owner of 20% or more of the Corporation's outstanding Voting
Shares. Excluded from the definition of "Acquiring Person" are the
Corporation and its Subsidiaries, and any Person who becomes the Beneficial
Owner of 20% or more of the outstanding Voting Shares as a result of one or
more or any combination of an acquisition or redemption by the Corporation
of Voting Shares, a Permitted Bid Acquisition, an Exempt Acquisition, a
Convertible Security Acquisition and a Pro Rata Acquisition. The
definitions of "Permitted Bid Acquisition", "Exempt Acquisition",
"Convertible Security Acquisition" and "Pro Rata Acquisition" are set out
in the Shareholder Rights Plan Agreement. However, in general:
(i) a "Permitted Bid Acquisition" means an acquisition of Voting Shares
made pursuant to a Permitted Bid or a Competing Permitted Bid;
(ii) an "Exempt Acquisition" means a share acquisition in respect of which
the Board of Directors has waived the application of the Rights Plan;
(iii) a "Convertible Security Acquisition" means an acquisition of Voting
Shares upon the exercise of Convertible Securities received by such
Person pursuant to a Permitted Bid Acquisition, Exempt Acquisition
or a Pro Rata Acquisition; and
(iv) a "Pro Rata Acquisition" means an acquisition of Voting Shares of
Convertible Securities as a result of a stock dividend, a stock split
or other similar event, acquired on the same pro rata basis as all
other holders of Voting Shares.
Also excluded from the definition of "Acquiring Person" are underwriters or
members of a banking or selling group acting in connection with a
distribution of securities by way of prospectus or private placement, and a
Person in its capacity as an Investment Manager, Trust Corporation, Plan
Trustee, Statutory Body or Crown agent or agency (provided that such person
is not making or proposing to made a Take-over Bid).
(e) GRANDFATHERED PERSONS. Shareholders of the Corporation who are the
Beneficial Owner of 20% or more of the outstanding common shares of the
Corporation at the time that the Shareholder Rights Plan Agreement becomes
effective are Grandfathered Persons. Grandfathered Persons are also
excluded from the definition of "Acquiring Person". However, if a
Grandfathered Person becomes the Beneficial Owner of an additional 1% of
the outstanding common shares of the Corporation other than through the
share acquisitions or redemptions of shares by the Corporation, Permitted
Bid Acquisitions, Exempt Acquisitions, Convertible Security Acquisitions or
Pro Rata Acquisitions, then the Grandfathered Person will become an
Acquiring Person on the date of such acquisition.
(f) BENEFICIAL OWNERSHIP. In general, a Person is deemed to Beneficially Own
common shares actually held by others in circumstances where those holdings
are or should be grouped together for purposes of the Rights Plan. Included
are holdings by the Person's Affiliates (generally, a person that controls,
is controlled by, or under common control with another person) and
Associates (generally, relatives sharing the same residence). Also included
are securities which the Person or any of the Person's Affiliates or
Associates has the right to acquire within 60 days (other than (1)
customary agreements with and between underwriters and/or banking group
and/or selling group members with respect to a public offering of
securities; or (2) pursuant to a pledge of securities).
A Person is also deemed to "Beneficially Own" any securities that are
Beneficially Owned (as described above) by any other Person with which the
Person is acting jointly or in concert (a "Joint Actor"). A Person is a
Joint Actor with any Person who is a party to an agreement, arrangement or
understanding with the first Person or an Associate or Affiliate thereof
for the purpose of acquiring or offering to acquire common shares.
The definition of "Beneficial Ownership" contains several exclusions
whereby a Person is not considered to "Beneficially Own" a security. There
are exemptions from the deemed "Beneficial Ownership" provisions for
institutional Shareholders acting in the ordinary course of business. These
exemptions apply to (i) an investment manager ("Investment Manager") which
holds
securities in the ordinary course of business in the performance of its
duties for the account of any other Person (a "Client"); (ii) a licensed
trust company ("Trust Company") acting as a trustee or administrator or in
a similar capacity in relation to the estates of deceased or incompetent
persons (each an "Estate Account") or in relation to other accounts (each
an "Other Account") and which holds such security in the ordinary course of
its duties for such accounts; (iii) the administrator or the trustee (a
"Plan Trustee") of one or more pension funds or plans (a "Plan") registered
under applicable law; (iv) a Person who is a Plan or is a Person
established by statute (the "Statutory Body"), and its ordinary business or
activity includes the management of investment funds for employee benefit
plans, pension plans, insurance plans, or various public bodies, or (v) a
Crown agent or agency. The foregoing exemptions only apply so long as the
Investment Manager, Trust Company, Plan Trustee, Plan, Statutory Body or
Crown agent or agency is not then making or has not then announced an
intention to made a Take-over Bid, other than an offer to Acquire Voting
Shares or other securities pursuant to a distribution by the Corporation or
by means of ordinary market transactions.
A Person will not be deemed to "Beneficially Own" a security because (i)
the Person is a Client of the same Investment Manager, an Estate Account or
an Other Account of the same Trust Company, or Plan with the same Plan
Trustee as another Person or Plan on whose account the Investment Manager,
Trust company or Plan Trustee, as the case may be, holds such security; or
(ii) the Person is a Client of an Investment Manager, Estate Account, Other
Account or Plan, and the security is owned at law or in equity by the
Investment Manager, Trust company or Plan Trustee, as the case may be.
Under the Rights Plan, a Person will not be deemed to "Beneficially Own"
any security where the holder of such security has agreed to deposit or
tender such security pursuant to a Permitted Lock-up Agreement to a
Take-over bid made by such Person or such Person's Affiliates or Associates
of Joint Actor, or such security has been deposited or tendered pursuant to
a Take-over Bid made by such Person or such Person's Affiliates, Associates
or Joint Actors until the earliest time at which any such tendered security
is accepted unconditionally for payment or is take up or paid for.
A Permitted Lock-up Agreement is essentially an agreement between a Person
and one or more holders of Voting Shares (the terms of which are publicly
disclosed, reduced to writing and available to the public within the time
frames set forth in the definition of Permitted Lock-up Agreement) pursuant
to which each Locked-up Person agrees to deposit or tender Voting Shares to
the Lock-up Bid and which further provides that such agreement permits the
Locked-up Person to withdraw its Voting Shares in order to deposit or
tender the Voting Shares to another Take-Over Bid or support another
transaction: (i) at a price or value that exceeds the price under the
Lock-Up Bid; or (ii) is for a number of Voting Shares at least 7% greater
than the number of Voting Shares under the Lock-Up Bid at a price or value
that is not less than the price or value offered in the Lock-up Bid; or
(iii) that contains an offering price that exceeds the offering price in
the Lock-up Bid by as much as or more than a Specified Amount and does not
provide for a Specified Amount greater than 7% of the offering price in the
Lock-up Bid. A permitted Lock-up Agreement may contain a right of first
refusal or require a period of delay to give the Person who made the
Lock-up Bid an opportunity to match a higher price in another Take-Over Bid
or other similar limitation on a Locked-up Person's right to withdraw
Voting Shares so long as the limitation does not preclude the exercise by
the Locked-up Person of the right to withdraw Voting Shares during the
period of the other Take-Over Bid or transaction. Finally, under a
Permitted Lock-up Agreement no "break up" fees, "top up" fees, penalties,
expenses or other amounts that exceed in aggregate the greater of (i)
2 1/2% of the price or value of the consideration payable under the Lock-up
Bid; and (ii) 50% of the amount by which the price or value of the
consideration received by a Locked-up Person under another Take-Over Bid or
transaction exceeds what such Locked-up Person would have received under
the Lock-up Bid can be payable
by such Locked-up Person if the Locked-up Person fails to deposit or tender
Voting Shares to the Lock-up Bid or withdraws Voting Shares previously
tendered thereto in order to deposit such Voting Shares to another
Take-Over Bid or support another transaction.
(g) FLIP-IN EVENT. A Flip-In Event occurs when any Person becomes an Acquiring
Person. In the event that, prior to the Expiration Time, a Flip-In Event
which has not been waived by the Board of Directors occurs (see
"Redemption, Waiver and Termination"), each Right (except for Rights
Beneficially Owned or which may thereafter be Beneficially Owned by an
Acquiring Person or a transferee of such a Person, which Rights will become
null and void) shall constitute the right to purchase from the Corporation,
upon exercise thereof in accordance with the terms of the Rights Plan, that
number of common shares having an aggregate Market Price on the date of the
Flip-In Event equal to twice the Exercise Price, for the Exercise Price
(such Right being subject to anti-dilution adjustments). For example, if at
the time of the Flip-In Event the Exercise Price is $1,000 and the Market
Price of the common shares is $200, the holder of each Right would be
entitled to purchase common shares having an aggregate Market Price of
$2,000 (that is, 10 common shares) for $1,000 (that is, a 50% discount from
the Market Price).
(h) PERMITTED BID AND COMPETING PERMITTED BID. A Permitted Bid is a Take-over
Bid made by way of a Take-over Bid circular and which complies with the
following additional provisions:
(i) the Take-over Bid is made to all holders of record of Voting Shares as
registered on the books of the Corporation, other than the Offerer;
(ii) the Take-over Bid contains irrevocable and unqualified conditions
that:
(a) no Voting Share shall be taken up or paid for pursuant to the
Take-over Bid prior to the close of business on a date which is
not less than 45 days following the date of the Take-over Bid and
the provisions for the take-up and payment for Voting Shares
tendered or deposited thereunder shall be subject to such
irrevocable and unqualified condition;
(b) unless the Take-over Bid is withdrawn, Voting Shares may be
deposited pursuant to the Take-over Bid at any time prior to the
close of business on the date of first take-up or payment for
Voting Shares and all Voting Shares deposited pursuant to the
Take-over Bid may be withdrawn at any time prior to the close of
business on such dates;
(c) more than 50% of the outstanding Voting Shares held by
Independent Shareholders must be deposited to the Take-over Bid
and not withdrawn at the close of business on the date of first
take-up or payment for Voting Shares; and
(d) in the event that more than 50% of the then outstanding Voting
Shares held by Independent Shareholders have been deposited to
the Take-over Bid and not withdrawn as at the date of first
take-up or payment for Voting Shares under the Take-over Bid, the
Offeror will make a public announcement of that fact and the
Take-over Bid will remain open for deposits and tenders of Voting
Shares for not less than 10 Business Days from the date of such
public announcement
A Competing Permitted Bid is a take-over Bid that is made after a
Permitted Bid has been made but prior to its expiry, satisfies all the
requirements of a Permitted Bid as described above, except that a
Competing Permitted Bid is not required to remain open for 45 days so
long as it is open until the later of (i) the earliest date on which
common shares may be taken-up or paid for under any earlier Permitted
Bid or Competing Permitted Bid that is in existence and (ii) 21 days
(or
such other minimum period of days as may be prescribed by applicable
law in British Columbia) after the date of the Take-over Bid
constituting the Competing Permitted Bid.
(i) REDEMPTION, WAIVER AND TERMINATION.
(i) Redemption of Rights on Approval of Holders of Voting Shares and
Rights.
The Board of Directors acting in good faith may, after having obtained
the prior approval of the holders of Voting Shares or Rights, at any
time prior to the occurrence of a Flip-In Event, elect to redeem all
but not less than all of the then outstanding Rights at a redemption
price of $0.00001 per Right, appropriately adjusted for anti-dilution
as provided in the Shareholder Rights Plan Agreement (the "Redemption
Price").
(ii) Waiver of Inadvertent Acquisition.
The Board of Directors acting in good faith may waive the application
of the Rights Plan in respect of the occurrence of any Flip-In Event
if (i) the Board of Directors has determined that a Person became an
Acquiring Person under the Rights Plan by inadvertence and without any
intent or knowledge that it would become an Acquiring Person; and (ii)
the Acquiring Person has reduced its Beneficial Ownership of Voting
Shares such that at the time of waiver the Person is no longer an
Acquiring Person.
(iii) Deemed Redemption.
In the event that a Person who has made a Permitted Bid or a Take-over
Bid in respect of which the Board of Directors has waived or has
deemed to have waived the application of the Rights Plan consummates
the acquisition of the Voting Shares, the Board of Directors shall be
deemed to have elected to redeem the Rights for the Redemption Price.
(iv) Discretionary Waiver with Mandatory Waiver of Concurrent Bids.
The Board of Directors acting in good faith may, prior to the
occurrence of the relevant Flip-In Event as to which the Rights Plan
has not been waived under this clause, upon prior written notice to
the Rights Agent, waive the application of the Rights Plan to a
Flip-In Event that may occur by reason of a Take-over Bid made by
means of a Take-over Bid circular to all holders of record of Voting
Shares. However, if the Board of Directors waives the application of
the Rights Plan, the Board of Directors shall be deemed to have waived
the application of the Rights Plan in respect of any other Flip-In
Event occurring by reason of such a Take-over Bid made prior to the
expiry of a bid for which a waiver is, or is deemed to have been,
granted.
(v) Discretionary Waiver respecting Acquisition not by Take-over Bid
Circular.
The Board of Directors acting in good faith may, with the prior
consent of the holders of Voting Shares, determine, at any time prior
to the occurrence of a Flip-In Event as to which the application of
the Rights Plan has not been waived, if such Flip-In Event would occur
by reason of an acquisition of Voting Shares otherwise than pursuant
to a Take-over Bid made by means of a Take-over Bid circular to
holders of Voting Shares and otherwise than by inadvertence when such
inadvertent Acquiring Person has then reduced its holdings to below
20%, to waive the application of the Rights Plan to such Flip-In
Event. However, if the Board of Directors waives the application of
the Rights Plan, the Board of Directors shall extend the Separation
Time to a date subsequent to and not more
than 10 Business Days following the meeting of Shareholders called to
approve such a waiver.
(vi) Redemption of Rights on Withdrawal or Termination of Bid.
Where a Take-over Bid that is not a Permitted Bid is withdrawn or
otherwise terminated after the Separation Time and prior to the
occurrence of a Flip-In Event, the Board of Directors may elect to
redeem all the outstanding Rights at the Redemption Price.
If the Board of Directors is deemed to have elected or elects to redeem the
Rights as described above, the right to exercise the Rights will thereupon,
without further action and without notice, terminate and the only right
thereafter of the holders of Rights is to receive the Redemption Price.
Within 10 Business Days of any such election or deemed election to redeem
the Rights, the Corporation will notify the holders of the Voting Shares
or, after the Separation Time, the holders of the Rights.
(j) ANTI DILUTION ADJUSTMENTS. The Exercise Price of a Right, the number and
kind of shares subject to purchase upon exercise of a Right, and the number
of Rights outstanding, will be adjusted in certain events, including:
(i) if there is a dividend payable in Voting Shares or Convertible
Securities (other than pursuant to any optional stock dividend program
or dividend reinvestment plan or a dividend payable in Voting Shares
in lieu of a regular periodic cash dividend) on the common shares, or
a subdivision or consolidation of the common shares, or an issuance of
common shares or Convertible Securities in respect of, in lieu of or
in exchange for common shares; or
(ii) if the Corporation fixes a record date for the distribution to all
holders of common shares of certain rights or warrants to acquire
common shares or Convertible Securities, or for the making of a
distribution to all holders of common shares of evidences of
indebtedness or assets (other than regular periodic cash dividends or
stock dividends payable in common shares) or rights or warrants.
(k) SUPPLEMENTS AND AMENDMENTS. Changes that the Board of Directors acting in
good faith, determines are necessary to maintain the validity of the
Shareholder Rights Plan Agreement as a result of any change in any
applicable legislation, rules or regulation may be made subject to
subsequent confirmation by the holders of the common shares or after the
Separation Time, Rights. The Corporation may make amendments to correct any
clerical or typographical error.
Subject to the above exceptions, after the Meeting, any amendment,
variation or deletion of or from the Shareholder Rights Plan Agreement and
the Rights, is subject to the prior approval of the holders of common
shares, or, after the Separation Time, the holders of the Rights.
The Board of Directors reserves the right to supplement, amend, vary,
rescind or delete any terms of or not to proceed with the Rights Plan at
any time prior to the Meeting in the event that the Board of Directors
determines that it would be in the best interests of the Corporation and
its shareholders to do so, in light of subsequent developments.
(l) EXPIRATION. If the Rights Plan is confirmed and approved at the Meeting, it
will become effective immediately following such approval and remain in
force until the earlier of the Termination Time (the time at which the
right to exercise Rights shall terminate pursuant to the Rights Plan) and
the termination of the annual meeting of the shareholders in the year 2003
unless at or prior to such meeting the Independent Shareholders ratify the
continued existence of the Rights Plan in
which case the Rights Plan would remain in effect until the termination of
the annual meeting of shareholders of the Corporation in the year 2006.
CANADIAN FEDERAL INCOME TAX CONSEQUENCES
While the matter is not free from doubt, the issue of the Rights may be a
taxable benefit which must be included in the income of shareholders. However,
no amount must be included in income if the Rights do not have a monetary value
at the date of issue. The Corporation considers that the Rights, when issued,
will have negligible monetary value, there being only a remote possibility that
the Rights will ever be exercised.
Assuming that the Rights have no value, shareholders will not be required to
include any amount in income or be subject to withholding tax under the Income
Tax Act (Canada) (the "Tax Act") as a result of the issuance of the Rights. The
Rights will be considered to have been acquired at no cost.
The holders of Rights may have income or be subject to withholding tax under the
Tax Act if the Rights are exercised or otherwise disposed of.
THIS STATEMENT IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO CONSTITUTE NOR
SHOULD IT BE CONSTRUED TO CONSTITUTE LEGAL OR TAX ADVICE TO ANY PARTICULAR
SHAREHOLDER. SHAREHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISERS
REGARDING THE CONSEQUENCES OF ACQUIRING, HOLDING, EXERCISING OR OTHERWISE
DISPOSING OF THEIR RIGHTS, TAKING INTO ACCOUNT THEIR OWN PARTICULAR
CIRCUMSTANCES AND APPLICABLE FOREIGN OR PROVINCIAL LEGISLATION.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
As the possibility of the rights becoming exercisable is both remote and
speculative, the adoption of the Rights Plan will not constitute the
distribution of stock or property by the Corporation to its shareholders, an
exchange of property or stock, or any other event giving rise to the realization
of gross income by any shareholder. THE HOLDER OF RIGHTS MAY HAVE TAXABLE INCOME
IF THE RIGHTS BECOME EXERCISABLE OR ARE EXERCISED OR SOLD. IN THE EVENT THE
RIGHTS SHOULD BECOME EXERCISABLE, SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISOR CONCERNING THE CONSEQUENCES OF ACQUIRING, HOLDING, EXERCISING OR
DISPOSING OF THEIR RIGHTS.
ELIGIBILITY FOR INVESTMENT IN CANADA
The Rights are qualified investments under the Tax Act for registered retirement
savings plans ("RRSP's"), registered retirement income funds ("RRIF's"), and
deferred profit sharing plans ("DPSP's"), and will not constitute foreign
property of any such plan or any other taxpayer subject to Part XI of the Act,
provided that the common shares continue to be qualified investments that are
not foreign property for such plans.
The issuance of the Rights will not affect the eligibility of the common shares
on the Effective Date as investments for investors governed by certain Canadian
federal and provincial legislation governing insurance companies, trust
companies, loan companies and pension plans.
APPENDIX B
Following are the amended sections of By-Law No. 1. Capitalized text indicates
the text has been deleted. Text in brackets indicates the addition of new text.
AMENDED SECTIONS OF BY-LAW NO. 1
4.2 Qualification. - No person shall be qualified for election as a director if
he is less than 18 years of age, if he is of unsound mind and has been so found
by a court in Canada or elsewhere, is not an individual, or has the status of a
bankrupt. A director need not be a shareholder. A MAJORITY [Subject to the Act,
at least 25 percent] of the directors shall be resident Canadians [, or if the
number of directors is fewer than four, at least one director shall be a
resident Canadian]. As long as required by the Act, at least 2 directors shall
not be officers or employees of the Corporation or its affiliates.
4.8 Canadian Majority at Meetings. - The board shall not transact business at a
meeting, other than filling a vacancy in the board, unless A MAJORITY [at least
25 percent] of the directors present are resident Canadians[, or if the
Corporation has fewer than four directors, at least one of the directors present
is a resident Canadian], except where
(a) a resident Canadian director who is unable to be present approves in
writing or by telephone or other communications facilities the
business transacted at the meeting; and
(b) A MAJORITY OF [at least 25 percent of the directors present would have
been] resident Canadians WOULD HAVE BEEN PRESENT had that director
been present at the meeting.
5.1 Committees of the Board. - The board may appoint one or more committees of
the board, however designated, and delegate to any such committee any of the
powers of the board except those which pertain to items which, under the Act, a
committee of the board has no authority to exercise. A MAJORITY OF THE MEMBERS
OF ANY SUCH COMMITTEE SHALL BE RESIDENT CANADIANS.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Sierra Wireless, Inc.
By: /s/ David B. Sutcliffe
---------------------------------
David B. Sutcliffe
Chairman and Chief Executive Officer
Date: April 4, 2003