EXHIBIT 99.2
INFOWAVE SOFTWARE, INC.
Suite 188, 4664 Lougheed Highway
Burnaby, British Columbia
V5C 5T5
Phone: (604) 473-3600
NOTICE OF 2000 ANNUAL AND
EXTRAORDINARY GENERAL MEETING OF MEMBERS
----------------------------------------
TAKE NOTICE that an Annual and Extraordinary General Meeting (the "Meeting") of
the Members of INFOWAVE SOFTWARE, INC. (hereinafter called the "Company") will
be held at Ballroom B, The Waterfront Centre Hotel, 900 Canada Place, Vancouver,
British Columbia, on June 5, 2000 at the hour of 2:00 p.m. (Vancouver time) for
the following purposes:
1. to receive the Report of Directors of the Company;
2. to receive the financial statements of the Company for its fiscal year
ended December 31, 1999 and the report of the Auditors thereon;
3. to appoint Auditors for the ensuing year and to authorize the Directors to
fix their remuneration;
4. to set the number of Directors of the Company at 5;
5. to elect Directors;
6. to confirm and approve amendments to the Stock Option Plan of the Company;
7. to amend the articles of the Company to grant the directors discretionary
power to increase the size of the Board of Directors by up to one-third;
8. to approve a Shareholder Rights Plan; and
9. to transact such other business as may properly come before the Meeting.
Accompanying this Notice are an Information Circular and Form of Proxy.
A member entitled to attend and vote at the Meeting is entitled to appoint a
proxy holder to attend and vote in his stead. If you are unable to attend the
Meeting in person, please read the Notes accompanying the Form of Proxy enclosed
herewith and then complete and return the Proxy within the time set out in the
Notes. The enclosed Form of Proxy is solicited by Management but, as set out in
the Notes, you may amend it if you so desire by striking out the names listed
therein and inserting in the space provided the name of the person you wish to
represent you at the Meeting.
DATED at Vancouver, British Columbia, this 1st day of May, 2000.
BY ORDER OF THE BOARD OF DIRECTORS
"Jim McIntosh"
Jim McIntosh
President, CEO and Director
<PAGE>
INFOWAVE SOFTWARE, INC.
ANNUAL AND EXTRAORDINARY GENERAL MEETING OF MEMBERS
---------------------------------------------------
INFORMATION CIRCULAR
--------------------
AS AT AND DATED MAY 1, 2000
SOLICITATION OF PROXIES
-----------------------
This Information Circular accompanies the Notice of the 2000 Annual and
Extraordinary General Meeting (the "Meeting") of members of INFOWAVE SOFTWARE,
INC. (the "Company") and is furnished in connection with a solicitation of
proxies for use at the Meeting and at any adjournment thereof. The enclosed Form
of Proxy is being solicited by management of the Company. Solicitations will be
made by mail and possibly supplemented by telephone or other personal contact to
be made without special compensation by regular officers and employees of the
Company. The Company may reimburse members' nominees or agents (including
brokers holding shares on behalf of clients) for the cost incurred in obtaining
from their principals authorization to execute forms of proxy. The cost of
solicitation will be borne by the Company.
APPOINTMENT OF PROXYHOLDER
--------------------------
The individuals named in the accompanying Form of Proxy (i.e., the Management
proxy) are the President and the Chief Financial Officer of the Company. A
MEMBER WISHING TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A MEMBER) TO
REPRESENT HIM AT THE MEETING HAS THE RIGHT TO DO SO, EITHER BY INSERTING SUCH
PERSON'S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY OR BY COMPLETING
ANOTHER FORM OF PROXY.
A proxy will not be valid unless the completed Form of Proxy is received by the
Company at the offices of the Company's registrar and transfer agent, Montreal
Trust Company of Canada, at its offices at 510 Burrard Street, Vancouver,
British Columbia, V6C 3B9, or at the head office of the Company at Suite #188,
4664 Lougheed Highway, Burnaby, British Columbia, V5C 5T5, not less than 48
hours (excluding Saturdays, Sundays and holidays) before the time for holding
the Meeting or any adjournment thereof, or delivered to the Chairman of the
Meeting prior to the commencement of the Meeting.
REVOCABILITY OF PROXY
' ---------------------
In addition to revocation in any other manner permitted by law, a proxy may be
revoked by instrument in writing executed by the member or his attorney
authorized in writing or, if the member is a corporation, by a duly authorized
officer or attorney thereof, and deposited either at the registered office of
the Company at any time up to and including the last business day preceding the
day of the Meeting, or any adjournment thereof or, as to any matter in respect
of which a vote shall not already have been cast pursuant to such proxy, with
the Chairman of the
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Meeting on the day of the Meeting, or any adjournment thereof, and upon either
of such deposits the proxy is revoked.
A revocation of a proxy does not affect any matter on which a vote has been
taken prior to the revocation. A member of the Company may also revoke a proxy
by signing a form of proxy bearing a later date and returning such proxy to the
Chairman of the Meeting prior to the commencement of the Meeting.
A person duly appointed under an instrument 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 EXERCISE OF DISCRETION
--------------------------------------------
If the instructions as to voting indicated in a proxy are certain, the shares
represented by the proxy will be voted on any poll where a choice with respect
to any matter to be acted upon has been specified in the proxy, in accordance
with the specifications so made. IF A CHOICE IS NOT SO SPECIFIED, IT IS INTENDED
THAT THE PERSON DESIGNATED BY MANAGEMENT IN THE ACCOMPANYING FORM OF PROXY WILL
VOTE THE SHARES REPRESENTED BY THE PROXY IN FAVOUR OF EACH MATTER IDENTIFIED ON
THE FORM OF PROXY AND FOR THE NOMINEES OF MANAGEMENT FOR DIRECTORS AND AUDITORS.
The Form of Proxy accompanying this Information Circular confers discretionary
authority upon the named proxy holder with respect to amendments or variations
to the matters identified in the accompanying Notice of Meeting and with respect
to any other matters which may properly come before the Meeting. As of the date
of this Information Circular, the management of the Company knows of no such
amendment or variation of matters to come before the Meeting other than those
referred to in the accompanying Notice of Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
-------------------------------------------
The Company is currently authorized to issue 100,000,000 common shares without
par value (the "Common Shares"). There are 19,179,800 Common Shares issued and
outstanding as of May 1, 2000. The Board of Directors of the Company have
determined that all members of record as of May 1, 2000 will be entitled to
receive notice of and to vote at the Meeting. At a general meeting of the
Company on a show of hands, every member present in person and entitled to vote
shall have one vote and on a poll every member present in person or represented
by proxy or other proper authority and entitled to vote shall have one vote for
each common share of which he is the holder. Common Shares represented by proxy
will only be voted on a poll.
To the knowledge of the Directors and Senior Officers of the Company as at the
date hereof, the persons or companies beneficially owning, directly or
indirectly, or exercising control or
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direction over voting securities carrying more than 10% of the outstanding
voting rights of the Company are as follows:
Name and Address Number of Shares Percentage
---------------- ---------------- ----------
529452 B.C. Ltd.(1) 3,289,756 17.2%
Vancouver, B.C.
Gary McIntosh(1) 48,733 0.3%
Burnaby, B.C.
Jim McIntosh(1)(2)(3) 673,886 3.5%
Anmore, B.C.
Notes: (1) The issued share capital of 529452 B.C. Ltd. consists
of 100 Class A voting shares and 100 Class B non-
voting shares and 1,000 Class C preferred shares and
1,000 Class D preferred shares. Gary McIntosh holds
49 Class A voting shares, 49 Class B non-voting
shares and all 1,000 of the Class C preferred shares.
Jim McIntosh holds 51 of the Class A voting shares,
51 of the Class B non-voting shares and all 1,000 of
the Class D preferred shares.
(2) Includes 82,375 Common Shares held by a trust
established under the Company's Employee Incentive
Plan. Jim McIntosh is the Trustee of and has the
power to vote the Common Shares held by this trust.
(3) Jim McIntosh also holds options to purchase up to
600,043 Common Shares. A total of 350,043 options
have an exercise price of $1.00 per Common Share
expiring on September 8, 2002 and a total of 250,000
options have an exercise price of $13.20 per Common
Share expiring on December 10, 2004.
ELECTION OF DIRECTORS
---------------------
Election of Directors
The term of office of each of the present Directors expires at the Meeting. Each
Director of the Company is elected annually and holds office until the next
Annual General Meeting of the Company unless that person ceases to be a Director
before then. The Company proposes to set the number of Directors at 5 at the
Meeting, subject to any increase as may be permitted under the Company Act
(British Columbia).
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. In
the absence of instructions to the contrary, the Common Shares represented by
proxy will be voted on a poll for the nominees herein listed.
MANAGEMENT DOES NOT CONTEMPLATE THAT ANY OF THE NOMINEES WILL BE UNABLE TO SERVE
AS A DIRECTOR. IN THE EVENT THAT PRIOR TO THE MEETING ANY VACANCIES OCCUR IN THE
SLATE OR NOMINEES HEREIN LISTED, IT IS INTENDED THAT DISCRETIONARY AUTHORITY
SHALL BE EXERCISED BY THE PROXY ON A POLL FOR THE ELECTION OF ANY OTHER PERSON
OR PERSONS AS DIRECTORS.
The following table sets out the names of the nominees for election as
Directors, the country in which each is ordinarily resident, all offices of the
Company now held by each of them, their
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principal occupations for the last five years if not presently elected as a
Director, the period of time for which each has been a Director of the Company,
and the number of Common Shares beneficially owned by each, directly or
indirectly, or over which they exercise control or direction, as at the date
hereof.
<TABLE>
Number of Common Shares
Beneficially Owned, Directly or Principal Occupation and if
Name, Present Office Indirectly, or over which Control is not at Present an Elected
Held and Country Exercised at the Date of this Director, Occupation During
Ordinarily Resident Director Since Information Circular the Past Five (5)
------------------- -------------- ------------------------------------ ---------------------------
<S> <C> <C> <C>
Jim McIntosh, President, February 21, 1997 3,963,642 Common Shares(1) (2) (3) President and Chief
Chief Executive Officer Executive Officer of the
and Director, Canada Company since June 1991
Morgan Sturdy, October 6, 1999 Nil(5) Executive Vice-President,
Chairman and Director, NICE Systems Ltd
Canada(4) (6)
Scot Land, Director, October 10, 1997 Nil(7) Managing Director,
United States(4) (6) En-Compass Ventures
David Neale, Director May 21, 1998 Nil(8) Vice-President, New Product
Canada (4) Development, Rogers AT&T
Wireless Inc.
David Wedge, Secretary, May 21, 1998 to 10,000 Lawyer, David J. Wedge Law
Canada October 6, 1999 Corporation, since March
1992
</TABLE>
Notes: (1) Includes 3,289,756 Common Shares held by 529452 B.C. Ltd. which
Jim McIntosh may be considered to beneficially own or have
control or direction over. See "Voting Shares and Principal
Holders Thereof."
(2) Includes 82,375 Common Shares held by a trust established under
the Company's Employee Incentive Plan. Jim McIntosh is the
Trustee of and has the power to vote the Common Shares held by
this trust.
(3) Jim McIntosh also holds options to purchase up to 600,043 Common
Shares. A total of 350,043 options have an exercise price of
$1.00 per Common Share expiring on September 8, 2002 and a total
of 250,000 options have an exercise price of $13.20 per Common
Share expiring on December 10, 2004.
(4) Member of Nominating Committee
(5) Morgan Sturdy holds options to purchase up to 100,000 Common
Shares at an exercise price equal to $3.57 per share expiring on
October 6, 2004.
(6) Member of Audit Committee and Compensation Committee.
(7) Scot Land holds options to purchase up to 100,000 Common Shares
at an exercise price equal to $1.00 per share expiring on October
10, 2002.
(8) David Neale holds options to purchase up to 48,000 Common Shares
at an exercise price equal to $2.55 per share expiring May 27,
2003.
Advance Notice of the Meeting was published in the March 10, 2000 edition of the
Vancouver Sun newspaper, pursuant to Section 111 of the Company Act.
EXECUTIVE COMPENSATION
----------------------
Aggregate Compensation
For the fiscal year ended December 31, 1999, there were 8 executive officers of
the Company and the aggregate cash compensation paid to them by the Company was
$1,030,018. Except as described herein, there are no plans in effect pursuant to
which cash or non-cash compensation
<PAGE>
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was paid or distributed to such executive officers during the most recently
completed financial year or is proposed to be paid or distributed in a
subsequent year.
Compensation of Named Executive Officers
The following table sets forth all compensation paid in respect of the Chief
Executive Officer of the Company and any person serving as executive officer at
the end of the most recently completed fiscal year of the Company whose total
salary and bonus exceeded $100,000 plus any additional individuals who were not
executive officers at the end of the fiscal year, but who would otherwise have
been included (the "Named Executive Officers") for the years ended December 31,
1999, 1998 and 1997.
<TABLE>
SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------------
Long-term
Annual Compensation Compensation
------------------- ---------------------
Awards
---------------------
Securities Under All Other
Name and Principal Position Year Salary Bonus Other Options Granted Compensation
$ $ $ # $
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jim McIntosh 1999 110,000 95,933 NIL 250,000 NIL
President and Chief Executive 1998 110,000 80,000 467 NIL NIL
Officer 1997 110,000 67,308 1,315 350,043 NIL
-------------------------------------------------------------------------------------------------------------------
Bijan Sanii 1999 110,000 147,674 7,500 290,000 NIL
Chief Operating Officer 1998 97,308 176,000 6,756 NIL NIL
1997 51,923 15,000 NIL 117,221 NIL
-------------------------------------------------------------------------------------------------------------------
Todd Carter 1999 110,000 90,000 NIL 150,000 NIL
Chief Financial Officer 1998 100,000 50,000 NIL 60,000 NIL
1997 19,500 NIL NIL 90,000 NIL
-------------------------------------------------------------------------------------------------------------------
Gord Watson 1999 83,000 25,491 5,400 NIL NIL
Vice President, Finance 1998 81,000 37,500 6,214 NIL NIL
1997 77,000 NIL 6,241 117,221 NIL
-------------------------------------------------------------------------------------------------------------------
Ron Jasper 1999 90,000 17,178 2,000 25,000 NIL
Vice President, Marketing, 1998 80,000 5,645 4,000 72,000 NIL
Wireless Division 1997 9,231 NIL NIL 45,000 NIL
-------------------------------------------------------------------------------------------------------------------
</TABLE>
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Options to Purchase Securities
A total of 715,000 options to purchase securities (i.e. Common Shares) of the
Company were granted to the Named Executive Officers during the fiscal year
ended December 31, 1999. These options are described in the table set forth
below:
<TABLE>
% of Total
Options Market Value of
Common Shares Granted to Exercise Price Common Shares
Under Options Employees in per Common Underlying Options on
Name Granted Financial Year Share the Date of Grant Expiration Date
----------------------- ------------------ ----------------- ---------------- ------------------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
Jim McIntosh 250,000 14.75 $13.20 $13.20 December 10, 2004
Bijan Sanii 250,000 14.75 $13.20 $13.20 December 10, 2004
Bijan Sanii 40,000 2.36 $1.56 $1.56 January 21, 2004
Todd Carter 150,000 8.85 $13.20 $13.20 December 10, 2004
Ron Jasper 25,000 1.48 $13.20 $13.20 December 10, 2004
</TABLE>
Notional Year-End Option Values
Options to acquire a total of 137,827 Common Shares of the Company were
exercised by the Named Executive Officers during the last completed financial
year. The notional value of unexercised but exercisable/unexercisable options at
year end is set out in the table below:
<TABLE>
YEAR END OPTION VALUES
Value of Unexercised but
Unexercised Options at Year Exercisable Options at
Securities End(1) Year End (2)
Acquired on Aggregate Value (#) ($)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
----------------------- ----------------- -------------------- ----------------------------- ----------------------------
<S> <C> <C> <C> <C>
Jim McIntosh NIL NIL 258,158 / 341,885 $3,911,094 / $2,129,558
Bijan Sanii 86,451 $230,632 NIL / 320,770 NIL / $1,787,266
Todd Carter 30,000 $225,410 73,258 / 196,742 $1,073,384 / $1,130,296
Ron Jasper 21,376 $101,045 29,476 / 91,148 $442,025 / $1,065,308
Gord Watson NIL NIL 86,451 / 30,770 $1,309,733 / $466,166
</TABLE>
Notes: (1) Options to purchase Common Shares.
(2) Maximum notional value at December 31, 1999 based upon
the closing price of the Common Shares on The Toronto
Stock Exchange of $16.15.
Termination of Employment Change in Responsibilities and Employment Contracts
The Company's policy is to require all employees, including its Named Executive
Officers, as a condition to their employment with the Company, to enter into
agreements requiring the non-disclosure of confidential information of the
Company, and the assignment and confirmation of
<PAGE>
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the Company's ownership of all intellectual property rights in the course of
such employee's employment with the Company.
A Statement of Corporate Governance Practices
The Board of Directors (the "Board") of the Company adopted a Corporate
Governance Policy (the "Policy") on March 20, 2000. The Company's compliance
with the guidelines for corporate governance as set out in The Toronto Stock
Exchange Company Manual (the "Manual") is described in Schedule "E" to this
Information Circular.
Compensation Committee
The Compensation Committee currently consists of Morgan Sturdy, Scot Land and
Gary McIntosh, all of whom are unrelated directors. The Compensation Committee
is responsible for establishing management compensation based on Board
evaluation of management performance. It is the responsibility of the committee
to ensure management compensation is competitive to enable the Company to
continue to attract talented individuals. The Chief Executive Officer meets with
the Compensation Committee annually to receive their recommendations. All final
decisions require Board approval.
It is the policy of the Company to compensate its management for exceptional
performance using three forms of remuneration: base salary, cash bonus 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 based upon
exceptional individual and departmental performance, and the overall success of
the Company in any given year.
<PAGE>
-8-
Performance Graph
The Common Shares of the Company currently trade on The Toronto Stock Exchange
(the "TSE"). The Common Shares were listed on the TSE on October 14, 1999. Prior
to listing on the TSE, the Common Shares were listed on the Vancouver Stock
Exchange (the "VSE") on October 14, 1997 and were delisted from the VSE on
November 26, 1999. The following chart compares the total cumulative shareholder
return for $100 invested in Common Shares of the Company on October 14, 1997,
with the cumulative total return of the TSE 300 Index for the period from
October 14, 1997, to December 31, 1999 (assuming reinvestment of dividends).
[Chart below represented as a performance graph in original.]
<TABLE>
Total Shareholder Return on $100 Investment (October 14, 1997 to December 31, 1999
IWM TSE Close Close Shares Shares Value Value
--- --- ----- ----- ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oct-14 2.2 7,168.77 45.45455 0.013949
Oct-97 100.00 100.00 2.15 6,842.36 98 95
Nov-97 85.00 91.00 1.70 6,512.78 77 91
Dec-97 100.00 93.00 2.00 6,699.44 91 93
Jan-98 75.00 93.00 1.50 6,700.20 68 93
Feb-98 135.00 99.00 2.70 7,092.49 123 99
Mar-98 152.50 105.00 3.05 7,558.50 139 105
Apr-98 137.50 107.00 2.75 7,664.99 125 107
May-98 142.50 106.00 2.85 7,589.78 130 106
Jun-98 100.00 103.00 2.00 7,366.89 91 103
Jul-98 85.00 97.00 1.70 6,931.43 77 97
Aug-98 50.00 77.00 1.00 5,530.71 45 77
Sep-98 62.50 78.00 1.25 5,614.12 57 78
Oct-98 58.50 87.00 1.17 6,208.28 53 87
Nov-98 60.00 88.00 1.20 6,343.87 55 88
Dec-98 52.50 90.00 1.05 6,485.94 48 90
Jan-99 94.50 94.00 1.89 6,729.56 86 94
Feb-99 68.00 88.00 1.36 6,312.69 62 88
Mar-99 66.50 92.00 1.33 6,597.79 60 92
Apr-99 192.50 98.00 3.85 7,014.70 175 98
May-99 211.50 95.00 4.23 6,841.80 192 95
Jun-99 175.00 98.00 3.50 6,958.87 159 97
Jul-99 184.50 99.00 3.69 7,050.29 168 98
Aug-99 172.50 97.00 3.45 7,039.74 157 98
Sep-99 175.00 97.00 3.50 6,957.72 159 97
Oct-99 152.50 101.00 3.05 7,256.22 139 101
Nov-99 310.00 105.00 6.20 7,523.23 282 105
Dec-99 807.50 117.00 16.15 8,413.75 734 117
Jan-00 1,175.00 118.00 23.50 8,481.11
Feb-00 2,100.00 127.00 42.00 9,128.99
Mar-00 1,560.00 132.00 31.20 9,462.39 Y/E Return Y/E Return
Apr-00 1,147.50 130.00 22.95 9,322.66 651 23
</TABLE>
Compensation of Directors
No remuneration was paid to the current Directors of the Company in their
capacity as Directors, for the fiscal year ended December 31, 1999.
There are currently no agreements or arrangements with any Directors of the
Company in respect of cash compensation in their capacity as Directors, other
than incentive stock options granted to such Directors.
No pension plan or retirement benefit plans have been instituted by the Company
and none are proposed at this time.
<PAGE>
-9-
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
---------------------------------------------
No Director, Officer, Promoter, or member of Management of the Company has been
indebted to the Company at any time during the previous fiscal year.
APPOINTMENT OF AUDITORS
-----------------------
Management proposes the appointment of KPMG, Chartered Accountants, as Auditors
of the Company for the ensuing year and that the Directors be authorized to fix
their remuneration. KPMG have been the Company's Auditors since December, 1996.
FINANCIAL STATEMENTS
--------------------
The audited financial statements for the fiscal year ended December 31, 1999
will be placed before the Meeting for approval of the shareholders.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
---------------------------------------------
Except as described herein, no director, nominee for director, senior officer or
principal shareholder of the Company, or any associate or affiliate of such
person, has any material interest, direct or indirect, in any material
transaction since the commencement of the Company's last financial year or in
any proposed transaction which has materially affected or would materially
affect the Company or any of its subsidiaries, except as set out herein. See
also "Executive Compensation".
David J. Wedge Law Corporation, a corporation controlled by David J. Wedge,
Director of the Company, provides legal services to the Company for fees.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
-------------------------------------------------------
None of the Directors or Senior Officers of the Company, no management nominee
for election as a Director of the Company, none of the persons who have been
Directors or Senior Officers of the Company since the commencement of the
Company's last completed financial year and no associate or affiliate of any of
the foregoing has any material interest, direct or indirect, by way of
beneficial ownership of securities or otherwise, in any matter to be acted upon
at the Meeting other than as disclosed under the heading "Particulars of Matters
to be Acted Upon".
PARTICULARS OF MATTERS TO BE ACTED UPON
---------------------------------------
Amendment of Articles
Management has determined that it is in the best interests of the Company to
permit the Directors to appoint additional directors between Annual General
Meetings, so that the size of the Board may be increased by up to one-third the
number of directors appointed at the last Annual General Meeting. This
discretionary authority allows the board to respond to strategic opportunities
by adding willing or available individuals to the board who may bring unique
skills or expertise.
<PAGE>
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The appointment of any such additional directors would be effective only until
the next following Annual General Meeting of Members of the Company. The
Directors currently have no intention of adding additional Directors.
Accordingly, the Members will be asked at the Meeting to pass a special
resolution approving an amendment to the Articles of the Company to grant the
Directors discretionary power to increase the size of the Board by up to one
third. The amendment to the Articles must be approved by special resolution of
the Members of the Company, which means that a majority of not less than 3/4 of
the votes cast by Members who, being entitled to do so, vote in person or by
proxy on the resolution. The form of resolution to be approved by the Members of
the Company is set out on Schedule A.
Stock Option Plan
In 1997, the Members and Board of Directors approved and adopted a Director and
Employee Stock Option Plan (the "Plan"). The principal purposes of the Plan are
to promote a proprietary interest in the Company among its directors and
employees; to retain, attract and motivate qualified directors, officers and
employees; to provide a long-term incentive element in overall compensation; and
to promote the long-term profitability of the Company.
The Plan is administered by the Board of Directors. Options may be granted at
any time to any Director, Senior Officer, full-time employee or consultant of
the Company, taking into consideration his or her contribution to the success of
the Company and any other factors which the Board of Directors may deem proper
and relevant, provided that a Director to whom any option may be granted may not
participate in the discussion of the Board of the Directors to grant such
option. Subject to applicable law and other applicable rules of any stock
exchange in Canada upon which Shares of the Company are listed, including The
Toronto Stock Exchange (the "TSE"), the Company may in its sole discretion
arrange for the Company or any Subsidiary to make loans or provide guarantees
for loans by financial institutions to assist Optionees to purchase Shares upon
the exercise of the Options so granted or to assist the Optionees to pay any
income tax exigible upon exercise of the Options. Such loans may be secured or
unsecured, and shall bear interest at such rates, if any, and be on such other
terms as may be determined by the Company.
At the time of listing of the Company's common shares on the TSE in October
1999, the Board of Directors amended the Plan, subject to receiving approval of
the amendments by the members of the Company. The material amendments are as
follows:
1. Number of Shares Reserved for Issuance. In 1997, the Company reserved for
future issuance under the Plan a total of 2,330,000 common shares which
represented approximately 20% of the issued and outstanding common shares
of the Company at that time. In December 1998, the Members of the Company
approved the increase of common shares reserved for issuance under the Plan
to a total of 3,047,300 common shares which represented approximately 20%
of the issued and outstanding common shares of the Company at that time. In
October 1999, when the Company was listed on the TSE, the
<PAGE>
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Board of Directors amended the Plan to effectively reset the number of
common shares reserved for issuance at 3,552,540 common shares, which
number represents approximately 18.5% of the issued and outstanding common
shares of the Company (or 17.7% of the issued and outstanding common shares
after giving effect to the issuance of 924,000 common shares upon the
exercise of special warrants issued in April, 2000). Under the rules and
policies of the TSE, the number of common shares stated as reserved under
the Plan must include all common shares issued in the past and issuable in
the future under the plan. The Company has issued 1,067,038 common shares
upon exercise of stock options granted under Plan since 1997. Accordingly,
the Plan was amended to state that 4,619,578 common shares may be issued
under the Plan. Of the 3,552,540 common shares effectively reserved for
future issuance, the Company has granted stock options to acquire up to
3,157,872 common shares.
2. Exercise Price. The exercise price of stock options granted under the Plan
was previously determined based upon the average closing price of the
common shares for the ten trading days prior to the grant of the options.
The Board of Directors amended the Plan to comply with the rules and
policies of the TSE which require that the exercise price of options be
determined based upon the closing price of the common shares on the TSE on
the day prior to the date of grant.
3. In accordance with the rules of the TSE, the Plan was amended to include
the following restrictions:
(a) the number of common shares reserved for issuance pursuant to stock
options granted to insiders (as defined in the Securities Act (British
Columbia)) under the Plan and all other compensation arrangements
cannot exceed 10% of the outstanding issued common shares at any time;
(b) the number of common shares which may be issued under the Plan and all
other compensation arrangements within a one year period to insiders
cannot exceed 10% at any time; and
(c) the number of common shares which may be issued under the Plan and all
other compensation arrangements to any one insider and such insider's
associates within a one-year period cannot exceed 5% of the
outstanding issued common shares at any time.
4. Vesting. The Plan was amended to permit the Board of Directors to allow
vesting of unvested options in the event of a change of control of the
Company.
Other minor amendments were made to bring the Plan into compliance with the
rules and policies of the TSE.
<PAGE>
-12-
Of the outstanding stock options to purchase 3,157,872 common shares, the
Company has granted stock options to purchase 1,980,262 common shares under the
original Plan and stock options to purchase the balance of the 1,177,610 common
shares under the amendments to the Plan approved by the Board of Directors in
October, 1999. The stock options to purchase the balance of the 1,177,610 common
shares are not exercisable unless the members approve the amendments to the Plan
described above.
The TSE has requested that the Company receive confirmation and approval of the
Members of the Company to the foregoing amendments to the Plan. The amendments
must be approved by an ordinary resolution of the Members of the Company. An
ordinary resolution requires approval by a majority of not less than 1/2 of the
votes cast by Members who, being entitled to do so, vote in person or by proxy
on the resolution. The form of ordinary resolution to be approved is set out on
Schedule B to this Information Circular.
A copy of the Plan, as amended, is available for inspection up to the time of
the meeting during regular business hours at the offices of Blake, Cassels &
Graydon LLP, 26th Floor - 595 Burrard Street, Vancouver, British Columbia, V7X
1L3 or may be obtained from the Company by contacting Richard Mockett of the
Company at (604) 473-3600.
Shareholder Rights Plan
It is being proposed that the Company 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, including approval of The
Toronto Stock Exchange, and approval by the Members 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
Secretary of the Company 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 Members at the Meeting, then the Company 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 Company's Members as set forth herein.
<PAGE>
-13-
The Toronto Stock Exchange requires that a shareholder rights plan which
provides for different treatment of shareholders under that plan, be approved
by:
(a) an ordinary resolution of all of the Members of the Company; and
(b) an ordinary resolution of all of the Members of the Company, excluding
those Members 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 Company 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 Company. 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 Company; and
(b) all of the shareholders of the Company, excluding those shareholders
that are Grandfathered Persons.
The text of the foregoing ordinary resolution to approve the Rights Plan is set
forth in Schedule "C" to this Information Circular:
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 resolutions must be approved by a simple majority of 50% plus one vote of
the votes cast on the resolution.
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 Company 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 Company has been advised that the directors and senior officers of the
Company intend to vote all common shares held by them in favour of approval of
the Rights Plan.
Background and Objectives of the Rights Plan
The Company 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
<PAGE>
-14-
that, in the context of a bid for control of the Company through an acquisition
of the Company'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 company 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 Company'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 Company.
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 Company with equal treatment in a bid for control of the
Company. 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 Company 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 Company 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 Company 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,
<PAGE>
-15-
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 Company. 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 company 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 company 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 Company. For example, through the Permitted Bid mechanism, described in more
detail below, shareholders may tender to a bid
<PAGE>
-16-
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 Company'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 Company and its shareholders.
The Rights Plan does not preclude any shareholder from utilizing the proxy
mechanism of the Company Act (British Columbia) to promote a change in the
management or direction of the Company, and has no effect on the rights of
holders of outstanding voting shares of the Company 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
Company. The initial issuance of the Rights does not in any way alter the
financial condition of the Company, 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.
<PAGE>
-17-
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
Company as described above. Schedule D 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 Company 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 Company 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 Company 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 Company 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 Company 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 Company 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 Company's outstanding Voting Shares.
Excluded from the definition of "Acquiring Person" are the Company and its
Subsidiaries, and any Person who becomes the Beneficial Owner of 20% or
more of the outstanding Voting Shares as
<PAGE>
-18-
a result of one or more or any combination of an acquisition or redemption
by the Company 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 Company, 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 Company who are the Beneficial
Owner of 20% or more of the outstanding common shares of the Company 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 Company other than through the share acquisitions or
redemptions of shares by the Company, 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
<PAGE>
-19-
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 Company 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.
<PAGE>
-20-
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 Company,
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).
<PAGE>
-21-
(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 Company, 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.
<PAGE>
-22-
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
<PAGE>
-23-
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 Company 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 Company 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.
<PAGE>
-24-
(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 Company 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 Company 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 Company 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 Company 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,
<PAGE>
-25-
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 Company 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.
PARTICULARS OF OTHER MATTERS TO BE ACTED UPON
---------------------------------------------
The Company will consider and transact such business as may properly come before
the Meeting or any adjournment thereof. The management of the Company knows of
no other matters to come before the Meeting other than those referred to in the
Notice of Meeting. Should any other matters properly come before the Meeting,
the shares represented by the proxy solicited hereby will be voted on such
matter in accordance with the best judgement of the persons voting by such
proxy.
Matters which may properly come before the Meeting shall be any matter not
effecting change in the Articles or Memorandum of the Company, not effecting a
change of control of the Company, or not disposing of all or substantially all
of the assets of the Company.
BY ORDER OF THE BOARD OF DIRECTORS
"Jim McIntosh"
Jim McIntosh
President, CEO, Director
<PAGE>
SCHEDULE "A"
SPECIAL RESOLUTION OF THE MEMBERS OF
INFOWAVE SOFTWARE, INC.
(the "Company")
AMENDMENTS OF ARTICLES
----------------------
RESOLVED AS A SPECIAL RESOLUTION THAT:
1. the following paragraph be added to the Articles of the Company:
"12.8 Between successive annual general meetings the directors shall
have power to appoint one or more additional directors but not more
than one-third of the number of directors elected or appointed at the
last annual general meeting at which directors were elected. Any
director so appointed shall hold office only until the next following
annual general meeting of the Company, but shall be eligible for
election at such meeting and so long as he is an additional director
the number of directors shall be increased accordingly."
2. Any Director or Officer of the Company is hereby authorized and
directed for and in the name of and on behalf of the Company to
execute, and to deliver to the Registrar of Companies under the
Company Act (British Columbia) the amended Articles, and to execute,
or cause to be executed, and to deliver or cause to be delivered all
such other documents and instruments, and to do or to cause to be done
all such other acts and things, as in the opinion of such Director or
Officer may be necessary or desirable in order to carry out the intent
of this Special Resolution.
3. Notwithstanding that this Special Resolution has been duly passed by
the Members of the Company, the Directors of the Company are hereby
authorized and empowered to revoke this Special Resolution without
further approval of the Members of the Company at any time prior to
the issuance of the Amended Articles giving effect to the amendment to
the Articles of the Company contemplated hereby.
<PAGE>
SCHEDULE "B"
ORDINARY RESOLUTION OF THE MEMBERS OF
INFOWAVE SOFTWARE, INC.
(the "Company")
APPROVAL OF STOCK OPTION PLAN
-----------------------------
RESOLVED AS AN ORDINARY RESOLUTION THAT:
1. The Director and Employee Stock Option Plan (the "Plan") of the
Company, providing for, among other things, the reservation of
4,619,578 common shares in the capital of the Company for issuance
upon exercise of options to be granted to directors, officers and
employees of the Company, be and is hereby approved.
2. Any one Director or Officer of the Company is hereby authorized and
directed for and in the name of and on behalf of the Company to
execute, or cause to be executed, and to deliver or cause to be
delivered all such other documents and instruments, and to do or cause
to be done all such other acts and things as in the opinion of such
Director or Officer may be necessary or desirable in order to carry
out the intent of this Resolution.
<PAGE>
SCHEDULE "C"
ORDINARY RESOLUTION OF THE MEMBERS OF
INFOWAVE SOFTWARE, INC.
(the "Company")
APPROVAL OF SHAREHOLDER RIGHTS PLAN
-----------------------------------
RESOLVED AS AN ORDINARY RESOLUTION THAT:
1. The Shareholder Rights Plan of the Company be approved and the
Shareholder Rights Plan Agreement to be made as of June 5, 2000
between the Company and Montreal Trust Company of Canada, be and it is
hereby confirmed and approved; and
2. Any director of the Company be and is hereby authorized, for and on
behalf of the Company, 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."
<PAGE>
SCHEDULE "D"
The following key definitions have been reproduced in full from the text of the
Shareholder Rights Plan Agreement and as such are applicable to and should be
read in conjunction with the information under the heading "Matters to be Acted
Upon at the Meeting - Shareholder Rights Plan". The numbering of the definitions
corresponds to the numbering set out in the Shareholder Rights Plan Agreement,
for consistency and ease of comparison.
(a) "Acquiring Person" shall mean any Person who is the Beneficial Owner of 20%
or more of the outstanding Voting Shares of the Corporation; provided,
however, that the term "Acquiring Person" shall not include:
(i) the Corporation or any Subsidiary of the Corporation;
(ii) any Person who becomes the Beneficial Owner of 20% or more of the
outstanding Voting Shares of the Corporation as a result of any one or
a combination of
(A) an acquisition or redemption by the Corporation of Voting Shares
of the Corporation which, by reducing the number of Voting Shares
outstanding, increases the proportionate number of Voting Shares
Beneficially Owned by such Person to 20% or more of the Voting
Shares of the Corporation then outstanding;
(B) share acquisitions made pursuant to a Permitted Bid ("Permitted
Bid Acquisitions");
(C) share acquisitions (1) in respect of which the Board of Directors
of the Corporation has waived the application of Section 3.1
pursuant to Sections 5.1(b), (c) or (d); or (2) which were made
on or prior to the date of the Rights Plan; or (3) which were
made pursuant to a dividend reinvestment plan of the Corporation;
or (4) pursuant to the receipt or exercise of rights issued by
the Corporation to all the holders of the Voting Shares (other
than holders resident in a jurisdiction where such distribution
is restricted or impractical as a result of applicable law) to
subscribe for or purchase Voting Shares or Convertible
Securities, provided that such rights are acquired directly from
the Corporation and not from any other person; or (5) pursuant to
a distribution by the Corporation of Voting Shares or Convertible
Securities made pursuant to a prospectus; or (6) pursuant to a
distribution by the Corporation of Voting Shares or Convertible
Securities by way of a private placement by the Corporation or
upon the exercise by an individual employee of stock options
granted under a stock option plan of the Corporation or rights to
purchase securities granted under a share purchase plan of the
Corporation, provided that (i) all necessary stock exchange
approvals for such private placement, stock option plan or share
purchase plan have been obtained and such private placement,
stock option plan or share purchase plan complies with the terms
and conditions of such approvals and (ii) such Person does not
become the Beneficial Owner of more than
<PAGE>
25% of the Voting Shares outstanding immediately prior to the
distribution, and in making this determination the Voting Shares
to be issued to such Person in the distribution shall be deemed
to be held by such Person but shall not be included in the
aggregate number of outstanding Voting Shares immediately prior
to the distribution ("Exempt Acquisitions");
(D) the 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 (as
defined below) ("Convertible Security Acquisitions"); or
(E) acquisitions as a result of a stock dividend, a stock split or
other event pursuant to which such Person receives or acquires
Voting Shares or Convertible Securities on the same pro rata
basis as all other holders of Voting Shares of the same class
("Pro Rata Acquisitions");
provided, however, that if a Person shall become the Beneficial Owner
of 20% or more of the Voting Shares of the Corporation then
outstanding by reason of any one or a combination of (i) share
acquisitions or redemptions by the Corporation or (ii) Permitted Bid
Acquisitions or (iii) Exempt Acquisitions or (iv) Convertible Security
Acquisitions or (v) Pro Rata Acquisitions and, after such share
acquisitions or redemptions by the Corporation or Permitted Bid
Acquisitions or Exempt Acquisitions, Convertible Security Acquisitions
or Pro Rata Acquisitions, such Person subsequently becomes the
Beneficial Owner of more than an additional 1.00% of the number of
Voting Shares of the Corporation outstanding other than pursuant to
any one or combination of share acquisitions or redemptions of shares
by the Corporation, Permitted Bid Acquisitions, Exempt Acquisitions,
Convertible Security Acquisitions or Pro Rata Acquisitions, then as of
the date of any such acquisition such Person shall become an
"Acquiring Person";
(iii) a Grandfathered Person provided, however, that if such Person shall
thereafter become the Beneficial Owner of more than an additional
1.00% of the number of Common Shares of the Corporation outstanding
other than pursuant to share acquisitions or redemption of shares by
the Corporation, Permitted Bid Acquisitions, Exempt acquisitions,
Convertible Security Acquisitions, Acquisitions, then as of the date
of any such acquisition such person shall become an "Acquiring
Person";
(iv) for a period of 10 days after the Disqualification Date, any Person
who becomes the Beneficial Owner of 20% or more of the outstanding
Voting Shares as a result of such Person becoming disqualified from
relying on clause 1.1(d)(B) solely because such Person makes or
announces an intention to make a Take-over Bid, either alone or by
acting jointly or in concert with any other Person. For the purposes
of this definition, "Disqualification Date" means the first date of
public announcement that any Person is making or intends to make a
Take-over Bid either alone or by acting jointly or in concert with any
other Person; or
<PAGE>
(v) an underwriter or member of a banking or selling group that becomes
the Beneficial Owner of 20% or more of the Voting Shares in connection
with a distribution of securities by way of prospectus or private
placement.
(b) "Affiliate", used to indicate a relationship with a specified Person, shall
mean a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such specified Person.
(c) "Associate" of a specified individual shall mean any individual to whom
such specified individual is married or with whom such specified individual
is living in a conjugal relationship, outside marriage, or any relative of
such specified individual or said spouse who has the same home as such
specified individual.
(d) A Person shall be deemed the "Beneficial Owner", and to have "Beneficial
Ownership", of, and to "Beneficially Own":
(i) any securities as to which such Person or any of such Person's
Affiliates or Associates is the owner at law or in equity;
(ii) any securities as to which such Person or any of such Person's
Affiliates or Associates has the right to acquire (A) upon the
exercise of any Convertible Securities, or (B) pursuant to any
agreement, arrangement or understanding whether such right is
exercisable immediately or within a period of 60 days thereafter and
whether or not on condition or the happening of any contingency (other
than (1) customary agreements with and between underwriters and
banking group or selling group members with respect to a distribution
to the public or pursuant to a private placement of securities or (2)
pursuant to a pledge of securities in the ordinary course of
business); and
(iii) any securities which are Beneficially Owned within the meaning of
clauses 1.1(d)(i) or (ii) above by any other Person with which such
Person is acting jointly or in concert;
provided, however, that a Person shall not be deemed the "Beneficial
Owner", or to have "Beneficial Ownership" of, or to "Beneficially Own", any
security:
(A) where (1) 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 any of such Person's
Affiliates or Associates or any other person referred to in
clause 1.1(d)(iii) or (2) such security has been deposited or
tendered pursuant to a Take-over Bid made by such Person or any
of such Person's Affiliates or Associates or any other Person
referred to in clause 1.1(d)(iii) until the earliest time at
which any such tendered security is accepted unconditionally for
payment or exchange or is taken up and paid for;
(B) where such Person, any of such Person's Affiliates or Associates
or any other Person referred to in clause 1.1(d)(iii), holds such
security provided that (1) the ordinary business of any such
Person (the "Investment Manager") includes the management of
investment funds for others and such security is held by the
Investment Manager in the ordinary course of such business in the
performance of such Investment Manager's duties
<PAGE>
for the account of any other Person, or (2) such Person (the
"Trust Company") is licensed to carry on the business of a trust
company under applicable laws and, as such, acts as trustee or
administrator or in a similar capacity in relation to the estates
of deceased or incompetent Persons or in relation to other
accounts and holds such security in the ordinary course of such
duties for the estates of deceased or incompetent Persons or for
such other accounts, or (3) such Person (the "Plan Trustee") is
the administrator or trustee of one or more pension funds or
plans (each a "Plan") registered under applicable laws and holds
such security for the purposes of its activity as such, or (4)
such Person is a Plan or is a Person established by statute (the
"Statutory Body") for purposes that include, and the ordinary
business or activity of such Person includes the management of
investment funds for employee benefit plans, pension plans,
insurance plans (other than plans administered by insurance
companies) or various public bodies or (5) such Person is a Crown
agent or agency; provided in any of the above cases, that the
Investment Manager, the Trust Company, the Plan Trustee, the
Plan, the Statutory Body or the Crown agent or agency, as the
case may be, is not then making a Take-over Bid or has not
announced a current intention to make 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 (including pre-arranged trades entered into in the
ordinary course of business of such Person) executed through the
facilities of a stock exchange, national securities quotations
system, or organized over-the-counter market, alone or by acting
jointly or in concert with any other Person; or
(C) because such Person is a client of or has an account with the
same Investment Manager as another Person on whose account the
Investment Manager holds such security, or where such Person is a
client of or has an account with the same Trust Company as
another Person on whose account the Trust Company holds such
security, or where such Person is a Plan and has a Plan Trustee
who is also a Plan Trustee for another Plan on whose account the
Plan Trustee holds such security; or
(D) where such Person is (i) a client of an Investment Manager and
such security is owned at law or in equity by the Investment
Manager, or (ii) an account of a Trust Company and such security
is owned at law or in equity by the Trust Company, or (iii) a
Plan and such security is owned at law or in equity by the Plan
Trustee; or
(E) where such Person is the registered holder of securities as a
result of carrying on the business of or acting as a nominee of a
securities depositary.
<PAGE>
For purposes of this Agreement, the percentage of Voting Shares
Beneficially Owned by any Person, shall be and be deemed to be
the product determined by the formula:
100 x A/B
Where:
A = the number of votes for the election of all directors
generally attaching to the Voting Shares Beneficially Owned
by such Person; and
B = the number of votes for the election of all directors
generally attaching to all outstanding Voting Shares. For
the purposes of the foregoing formula, where any person is
deemed to Beneficially Own unissued Voting Shares which may
be acquired pursuant to Convertible Securities, such Voting
Shares shall be deemed to be outstanding for the purpose of
calculating the percentage of Voting Shares Beneficially
Owned by such Person in both the numerator and the
denominator, but no other unissued Voting Shares which may
be acquired pursuant to any other outstanding Convertible
Securities shall, for the purposes of that calculation,
be deemed to be outstanding.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or a day
that is treated as a holiday at the Corporation's principal executive
offices in Vancouver, British Columbia, Canada.
(f) "Company Act" shall mean the Company Act (British Columbia) as amended, and
the regulations thereunder, and any comparable or successor laws or
regulations thereto.
(g) "Canadian-U.S. Exchange Rate" shall mean on any date the inverse of the
U.S. Canadian Exchange Rate.
(h) "Canadian Dollar Equivalent" of any amount which is expressed in United
States dollars shall mean on any day the Canadian dollar equivalent of such
amount determined by reference to the Canadian-U.S. Exchange Rate on such
date.
(i) "close of business" on any given date shall mean the time on such date (or,
if such date is not a Business Day, the time on the next succeeding
Business Day) at which the office of the transfer agent for the Voting
Shares in the City of Vancouver, British Columbia (or, after the Separation
Time, the offices of the Rights Agent in the City of Vancouver, British
Columbia) becomes closed to the public.
(j) "Common Shares of the Corporation" and "Common Shares" shall mean the
Common Shares in the capital stock of the Corporation as constituted as at
the Record Time and any other share of the Corporation into which such
Common Shares may be subdivided, consolidated, reclassified or changed from
time to time and "common shares" when used with reference to any Person
other than the Corporation means the class or classes of shares (or similar
equity interest) with the greatest per share voting power entitled to vote
generally in the election of all directors of such other Person or the
equity securities or other equity interest having power (whether or not
exercised) to control or direct the management of such other Person or, if
such other Person is a corporation controlled by another Person, the Person
(other than an individual) which ultimately controls such first mentioned
other Person.
(k) "Competing Permitted Bid" means a Take-over Bid that:
(i) is made after a Permitted Bid has been made and prior to the expiry of
the Permitted Bid;
(ii) satisfies all components of the definition of a Permitted Bid other
than the requirements set out in the clause (ii) of that definition;
and
<PAGE>
(iii) contains,and the take-up and payment for securities tendered or
deposited is subject to, an irrevocable and unqualified provision that
no Voting Shares will be taken up or paid for pursuant to the
Take-over Bid prior to the close of business on the date that is no
earlier than the later of (1) the earliest date on which Voting Shares
may be taken up or paid for under any Permitted Bid or Competing
Permitted Bid that is then in existence and (2) 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.
(l) "Convertible Securities" means at any time:
(i) any right (contractual or otherwise and regardless of whether such
right constitutes a security) to acquire Voting Shares from the
Corporation; and
(ii) any securities issued by the Corporation from time to time (other than
the Rights) carrying any exercise, conversion or exchange right;
which is then exercisable or exercisable within a period of 60 days from
that time pursuant to which the holder thereof may acquire Voting Shares or
other securities which are convertible into or exercisable or exchangeable
for Voting Shares (in each case, whether such right is then exercisable or
exercisable within a period of 60 days from that time and whether or not on
condition or the happening of any contingency).
(m) "Convertible Security Acquisitions" has the meaning set forth in the
definition of "Acquiring Person" herein.
(n) "Co-Rights Agents" shall have the meaning set forth in subsection 4.1(a).
(o) "Exempt Acquisition" has the meaning set forth in the definition of
"Acquiring Person" herein.
(p) "Exercise Price" shall mean, as of any date after the Record Time, the
price at which a holder may purchase the securities issuable upon exercise
of one whole Right and until adjustment thereof in accordance with the
terms hereof, the Exercise Price shall equal Cdn. $1,000.
(q) "Expiration Time" shall mean the earlier of:
(i) the Termination Time;
(ii) the termination of the annual meeting of shareholders of the
Corporation in the year 2003; and
(iii) provided, however, that if the resolution referred to in Section 5.19
is approved by Independent Shareholders in accordance with Section
5.19 at or prior to such meeting, "Expiration Time", means the earlier
of (i) the Termination Time and (ii) the termination of the annual
meeting of shareholders of the Corporation in 2006.
(r) A "Flip-in Event" shall mean a transaction occurring subsequent to the date
of this Agreement as a result of which any Person shall become an Acquiring
Person provided, however, that a Flip-in Event, shall be deemed to occur at
the close of business on the tenth day (or such later day as the Board of
Directors of the Corporation may determine) after the Stock Acquisition
Date.
<PAGE>
(s) "Grandfathered Person" means any Person who is the Beneficial Owner of 20%
or more of the Outstanding Common Shares of the Corporation at the Record
Time;
(t) "Independent Shareholders" shall mean holders of outstanding Voting Shares
of the Corporation excluding (i) any Acquiring Person; or (ii) any Person
(other than a Person referred to in Section 1.1(d)(B)) that is making or
has announced a current intention to make a Take-over Bid for Voting Shares
of the Corporation (including a Permitted Bid or a Competing Permitted Bid)
but excluding any such Person if the Take-over Bid so announced or made by
such Person has been withdrawn, terminated or, expired; or (iii) any
Affiliate or Associate of such Acquiring Person or Persons referred to in
clause (ii); or (iv) any Person acting jointly or in concert with such
Acquiring Person or a Person referred to in clause (ii); or (v) a Person
who is a trustee of any employee benefit plan, share purchase plan,
deferred profit sharing plan or any similar plan or trust for the benefit
of employees of the Corporation or a Subsidiary of the Corporation, unless
the beneficiaries of the plan or trust direct the manner in which the
Voting Shares are to be voted or direct whether the Voting Shares are to be
tendered to a Take-over Bid.
(u) "Market Price" per security of any securities on any date of determination
shall mean the average of the daily Closing Prices Per Security of such
securities (determined as described below) on each of the 20 consecutive
Trading Days through and including the Trading Day immediately preceding
such date; provided, however, that if an event of a type analogous to any
of the events described in Section 2.3 hereof shall have caused the price
used to determine the Closing Price Per Security on any Trading Day not to
be fully comparable with the price used to determine the Closing Price Per
Security on such date of determination or, if the date of determination is
not a Trading Day, on the immediately preceding Trading Day, each such
price so used shall be appropriately adjusted in a manner analogous to the
applicable adjustment provided for in Section 2.3 hereof in order to make
it fully comparable with the price per security used to determine the
Closing Price Per Security on such date of determination or, if the date of
determination is not a Trading Day, on the immediately preceding Trading
Day. The "Closing Price Per Security" of any securities on any date shall
be:
(i) the closing board lot sale price or, if such price is not
available, the average of the closing bid and asked prices, for
such securities as reported by the stock exchange or national
securities quotation system on which such securities are listed
or admitted to trading, (provided that if at the date of
determination such securities are listed or admitted to trading
on more than one stock exchange or national securities quotation
system, such price or prices shall be determined based on the
stock exchange or national securities quotation system on which
such securities are then listed or admitted to trading on which
the largest number of such securities were traded during the most
recently completed calendar year);
(ii) if, for any reason, none of such prices is available on such date
or the securities are not listed or admitted to trading on a
stock exchange or national securities quotation system, the last
sale price, or in case no sale takes place on such date, the
average of the high bid and low asked prices for such securities
in the over-the-counter market, as quoted by any reporting system
then in use (as selected by the Board of Directors); or
(iii) if the securities are not listed or admitted to trading as
contemplated in clause 1.1(v)(i) or (ii), the average of the
closing bid and asked prices as furnished by a professional
market maker making a market in the securities provided, however,
that if on any such date the Closing Price Per Security cannot be
determined in accordance with the foregoing, the Closing Price
Per Security of such securities
<PAGE>
on such date shall mean the fair value per share of such
securities on such date as determined in good faith by an
internationally recognized investment dealer or investment banker
with respect to the fair value per share of such securities. The
Market Price, shall be expressed in Canadian dollars and, if
initially determined in respect of any day forming part of the 20
consecutive trading day period in question in United States
dollars, such amount shall be translated into Canadian dollars at
the Canadian Dollar Equivalent thereof.
(v) "1933 Securities Act" shall mean the Securities Act of 1933 of the United
States, as amended, and the rules and regulations thereunder, and any
comparable or successor laws or regulations thereto.
(w) "1934 Exchange Act" shall mean the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations thereunder, and
any comparable or successor laws or regulations thereto.
(x) "Offer to Acquire" shall include:
(i) an offer to purchase, or a solicitation of an offer to sell,
Voting Shares; and
(ii) an acceptance of an offer to sell Voting Shares, whether or not
such offer to sell has been solicited;
or any combination thereof, and the Person accepting an offer to sell
shall be deemed to be making an offer to acquire to the Person that
made the offer to sell.
(y) "Offeror's Securities" means Voting Shares Beneficially Owned on the date
of an Offer to Acquire by any Person who is making a Take-over Bid and
"Offeror" means a Person who has announced a current intention to make or
is making a Take-over Bid.
(z) "Permitted Bid" means a Take-over Bid made by a Person by means of a
Take-over Bid circular and which also 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 Offeror;
(ii) the Take-over Bid shall contain, and the provisions for the
take-up and payment for Voting Shares tendered or deposited
thereunder shall be subject to, an irrevocable and unqualified
condition that no Voting Shares 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;
(iii) the Take-over Bid shall contain irrevocable and unqualified
provisions that, 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 that all Voting Shares deposited
pursuant to the Take-over Bid may be withdrawn at any time prior
to the close of business on such date;
(iv) the Take-over Bid shall contain an irrevocable and unqualified
condition that more than 50% of the outstanding Voting Shares
held by Independent Shareholders, determined as at the date of
first take-up or payment for Voting Shares under the Take-over
Bid, must be deposited to the Take-over Bid and not
<PAGE>
withdrawn at the close of business on the date of first take-up
or payment for Voting Shares; and
(v) the Take-over Bid shall contain an irrevocable and unqualified
provision that in the event that more than 50% of the then
outstanding Voting Shares held by Independent Shareholders shall
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;
provided that if a Take-over Bid constitutes a Competing
Permitted Bid, the term "Permitted Bid" shall also mean the
Competing Permitted Bid.
(aa) "Permitted Bid Acquisition" has the meaning set forth in the definition of
"Acquiring Person" herein.
(bb) "Permitted Lock-up Agreement" means an agreement (the "Lock-up Agreement")
between a Person and one or more holders of Voting Shares (each such holder
herein referred to as a "Locked-up Person") (the terms of which are
publicly disclosed and reduced to writing and a copy of which is made
available to the public (including the Corporation) not later than the date
of the Lock-up Bid (as defined below) or if the Lock-up Bid has been made
prior to the date of the Lock-up Agreement not later than the date of the
Lock-up Agreement) pursuant to which each Locked-up Person agrees to
deposit or tender the Voting Shares held by such holder to a Take-over Bid
(the "Lock-up Bid") made by the Person or any of such Person's Affiliates
or Associates or any other Person referred to in clause 1.1(d)(iii)
provided that:
(i) the Lock-up Agreement permits the Locked-up Person to withdraw its
Voting Shares from the Lock-up Agreement in order to deposit or tender
the Voting Shares to another Take-over Bid or to support another
transaction prior to the Voting Shares being taken up and paid for
under the Lock-up Bid:
(A) at a price or value per Voting Share that exceeds the price or
value per Voting Share offered under the Lock-up Bid; or
(B) for a number of Voting Shares at least 7% greater than the number
of Voting Shares that the Offeror has offered to purchase under
the Lock-up Bid at a price or value per Voting Share that is not
less than the price or value per Voting Share offered under the
Lock-up Bid; or
(C) (a) that contains an offering price for each Voting Share that
exceeds by as much as or more than a specified amount (the
"Specified Amount") the offering price for each Voting Share
contained in or proposed to be contained in the Lock-up Bid and
(b) does not by itself provide for a Specified Amount that is
greater than 7% of the offering price contained in or proposed to
be contained in the Lock-up Bid; and;
for greater clarity, the 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 from the agreement, so long as the
limitation does not preclude the exercise by the Locked-up Person of
the
<PAGE>
right to withdraw Voting Shares during the period of the other
Take-over Bid or transaction; and
(ii) no "break-up" fees, "top-up" fees, penalties, expenses or other
amounts that exceed in aggregate the greater of:
(A) 2 1/2% of the price or value of the consideration payable under
the Lock-up Bid to a Locked-up Person; and
(B) 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 the price or value of the
consideration that the Locked-up Person would have received under
the Lock-up Bid;
shall 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 or tender such Voting Shares to another Take-over Bid or
support another transaction.
(cc) "Person" shall mean any individual, firm, partnership, association, trust,
trustee, personal representative, body corporate, corporation,
unincorporated organization, syndicate or other entity.
(dd) "Pro Rata Acquisition" has the meaning set forth in the definition of
"Acquiring Person" herein.
(ee) "Record Time" shall mean the close of business on April 27, 2000.
(ff) "Redemption Price" has the meaning set forth in subsection 5.1(a) herein.
(gg) "Securities Act" shall mean the Securities Act (British Columbia), S.B.C.
1985, c. 83, as amended, and the rules and regulations thereunder, and any
comparable or successor laws, rules or regulations thereto.
(hh) "Separation Time" shall mean the close of business on the tenth Business
Day after the earlier of:
(i) the Stock Acquisition Date;
(ii) the date of the commencement of, or first public announcement of the
intent of any Person (other than the Corporation or any Subsidiary of
the Corporation) to commence a Take-over Bid (other than a Take-over
Bid which is a Permitted Bid so long as such Take-over Bid continues
to satisfy the requirements of a Permitted Bid), provided that, if any
Take-over Bid referred to in this clause (ii) expires, is cancelled,
terminated or otherwise withdrawn prior to the Separation Time, such
Take-over Bid shall be deemed, for purposes of this Section 1.1(ii),
never to have been made; and
(iii) the date upon which a Permitted Bid ceases to be a Permitted Bid;
or such later date as may be determined by the Board of Directors of the
Corporation acting in good faith provided that, if the foregoing results in
the Separation Time being prior to the Record Time, the Separation Time
shall be the Record Time and if the Board of Directors determines pursuant
to Section 5.1 to waive the application of Section 3.1 to a Flip-In Event,
the Separation Time in respect of such Flip-In Event shall be deemed never
to have occurred.
<PAGE>
(ii) "Stock Acquisition Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation,
a report filed pursuant to Section 111 of the Securities Act or Section
13(d) under the 1934 Exchange Act) by the Corporation or an Acquiring
Person that a Person has become an Acquiring Person.
(jj) "Subsidiary" of any specified Person shall mean any corporation or other
entity controlled by such specified Person.
(kk) "Take-over Bid" means an Offer to Acquire Voting Shares or securities
convertible into Voting Shares, where the Voting Shares subject to the
Offer to Acquire, together with the Voting Shares into which the securities
subject to the Offer to Acquire are convertible, and the Offeror's
Securities, constitute in the aggregate 20% or more of the outstanding
Voting Shares at the date of the Offer to Acquire.
(ll) "Termination Time" shall mean the time at which the right to exercise
Rights shall terminate pursuant to Section 5.1, 5.18 or 5.19 hereof.
(mm) "Trading Day", when used with respect to any securities, shall mean a day
on which the principal securities exchange or national securities quotation
system on which such securities are listed or admitted to trading is open
for the transaction of business or, if the securities are not listed or
admitted to trading on any securities exchange, a Business Day.
(nn) "U.S. Canadian Exchange Rate" shall mean on any date:
(i) if on such date the Bank of Canada sets an average noon spot rate of
exchange with a conversion of one United States dollar into Canadian
dollars, such rate;
(ii) in any other case, the rate for such date for the conversion of one
United States dollar into Canadian dollars which is calculated in the
manner which shall be determined by the Board of Directors from time
to time acting in good faith.
(oo) "U.S. Dollar Equivalent" of any amount which is expressed in Canadian
dollars shall mean on any day the United States dollar equivalent of such
amount determined by reference to the U.S.-Canadian Exchange Rate on such
date.
(pp) "Voting Shares" shall mean the Common Shares and any other securities the
holders of which are entitled to vote generally on the election of
directors of the Corporation and "voting shares" when used with reference
to any Person other than the Corporation means common shares of such other
Person and any other securities the holders of which are entitled to vote
generally in the election of the directors of such other Person.
<PAGE>
SCHEDULE "E"
A STATEMENT OF CORPORATE GOVERNANCE PRACTICES
Manual Guideline (1) Stewardship Responsibilities: The board of directors of
every corporation should explicitly assume responsibility for the stewardship of
the corporation and, as part of the overall stewardship responsibility, should
assume responsibility for the following matters:
a) adoption of a strategic planning process;
b) the identification of the principal risks of the corporation's business and
ensuring the implementation of appropriate systems to manage these risks;
c) succession planning, including appointing, training and monitoring senior
management;
d) a communications policy for the corporation; and
e) the integrity of the corporation's internal control and management
information systems.
Under the Policy established by the Board, the Board has an overall
responsibility to oversee the affairs of the Company for the benefit of the
shareholders. The Board is, with the exception of issues to be decided by the
Company's shareholders, the ultimate decision-making body of the Company. The
guiding principle of the Policy is that all significant Company decisions
require Board consideration and approval.
The Board assumes responsibility for overseeing the strategic planning of the
Company. The consideration of the strategic plan is an ongoing process and is
typically an agenda item at Board meetings. The Board provides input to the plan
throughout the process. The final Board meeting of the fiscal year provides a
formal framework for the full consideration of management's business plan. The
Board will approve, subject to the adoption of its recommendations, the business
plan.
The identification and management of the dominant business risks is an explicit
part of the strategic planning process. The Board accepts the responsibility for
monitoring the Company's risk management strategy and may instruct the Audit
Committee to investigate issues of concern. The Company's risk management
strategy requires Board approval.
The Board appoints the Chief Executive Officer and approves the appointment of
other management. The Board will plan for succession to the position of Chief
Executive Officer and other key management positions. The Chief Executive
Officer will provide to the Board an assessment of management and their
potential as a successor and an assessment of individuals considered potential
successors to selected management positions.
The Board believes that management is best able to speak on behalf of the
Company. The Chief Executive Officer is responsible for establishing effective
communication links with the Company's various stakeholders. All core disclosure
documents require Board approval before public release. Individual Board members
may periodically be asked by management to communicate with stakeholders when
appropriate.
The Audit Committee is responsible for overseeing the Company's system of
internal control
<PAGE>
Manual Guideline (2) Composition of Board: The board of directors of every
corporation should be constituted with a majority of individuals who qualify as
unrelated directors. An unrelated director is a director who is independent of
management and is free from any interest and any business or other relationship
which could, or could reasonably be perceived to, materially interfere with the
director's ability to act with a view to the best interests of the corporation,
other than interests and relationships arising from shareholding.
A related director is a director who is not an unrelated director. If the
corporation has a significant shareholder, in addition to a majority of
unrelated directors, the board should include a number of directors who do not
have interests in or relationships with either the corporation or the
significant shareholder and which fairly reflects the investment in the
corporation by shareholders other than the significant shareholder. A
significant shareholder is a shareholder with the ability to exercise a majority
of the votes for the election of the board of directors.
The Board currently consists of five directors of which all but Jim McIntosh are
"unrelated" directors as defined in the Manual. The Corporation has no
"significant" shareholder, which the Manual defines as a shareholder with the
ability to exercise a majority of the votes for the election of the board of
directors.
Manual Guideline (3) Unrelated Directors: The application of the definition of
"unrelated director" to the circumstances of each individual director should be
the responsibility of the board which will be required to disclose on an annual
basis whether the board has a majority of unrelated directors or, in the case of
a corporation with a significant shareholder, whether the board is constituted
with the appropriate number of directors which are not related to either the
corporation or the significant shareholder. Management directors are related
directors. The board will also be required to disclose on an annual basis the
analysis of the application of the principles supporting this conclusion.
The Board believes that it is composed of a majority of unrelated directors.
Scot Land and Morgan Sturdy are each free from any interest and any business or
other relationship which could, or could reasonably be perceived to, materially
interfere with the director's ability to act with a view to the best interests
of the Company, other than interests and relationships arising from
shareholding. David Neale is Vice-President, Product Development and Deployment
of Rogers AT&T Wireless Inc. On March 16, 2000, the Company announced that
Rogers AT&T Wireless Inc. placed an order for a branded version of the Company's
Symmetry software. Gary McIntosh is the father of Jim McIntosh. The Board
believes that these relationship do not materially interfere with either
director's ability to act with a view to the best interests of the Company.
Jim McIntosh as president and Chief Executive Officer is the only related
director and is a management director.
Manual Guideline (4) and (5) Nominating Committee and Assessing Effectiveness:
The board of directors of every corporation should appoint a committee of
directors composed exclusively of
<PAGE>
outside, i.e., non-management, directors, a majority of whom are unrelated
directors, with the responsibility for proposing to the full board new nominees
to the board and for assessing directors on an ongoing basis.
Every board of directors should implement a process to be carried out by the
nominating committee or other appropriate committee for assessing the
effectiveness of the board as a whole, the committees of the board and the
contribution of individual directors.
The Board established The Nominating Committee to assess the overall performance
of the Board. The Nominating Committee evaluates the contribution of each
director on an individual basis, assesses the collective performance of the
Board, proposes new nominees to the Board and analyses the existing size and
structure of the Board. The Nominating Committee is scheduled to meet annually,
and in consultation with the Chief Executive Officer, prepares and reports its
findings to the Board. The formal evaluation of each individual director is
undertaken once every three years. Final decisions are approved by the Board.
The Nominating Committee currently consists of three unrelated directors.
Manual Guideline (6) Orientation and Education: Every corporation, as an
integral element of the process for appointing new directors, should provide an
orientation and education program for new recruits to the board.
The Company will provide new directors with an orientation program upon joining
the Company that includes extensive corporate materials, a tour of the Company's
headquarters and meetings with management.
Manual Guideline (7) Size of Board: Every board of directors should examine its
size and, with a view to determining the impact of the number upon
effectiveness, undertake where appropriate, a program to reduce the number of
directors to a number which facilitates more effective decision-making.
The Board believes that the relatively small number of directors allows for
effective discussion and implementation of decisions but acknowledges that as
the Company continues to grow, it may need to increase this number to fully
conduct the range of its responsibilities. The size of the Board is to be
periodically reviewed.
Manual Guideline (8) Review of Compensation: The board of directors should
review the adequacy and form of the compensation of directors and ensure the
compensation realistically reflects the responsibilities and risk involved in
being an effective director.
The Board is compensated solely in incentive stock options to best align their
interests with those of the Company's shareholders. The Company pays reasonable
expenses incurred by the Board. The Compensation Committee monitors the
competitiveness of the Board compensation package to ensure the Board continues
to attract talented individuals.
Manual Guideline (9) Committee Composition: Committees of the board of directors
should generally be composed of outside directors, a majority of whom are
unrelated directors,
<PAGE>
although some board committees, such as the executive committee, may include one
or more inside directors.
The Board has established three committees - an audit committee, a compensation
committee and a nominating committee. All committees are composed of unrelated
directors.
Manual Guideline (10) Corporate Governance Policy: Every board of directors
should expressly assume responsibility for, or assign to a committee of
directors the general responsibility for, developing the corporation's approach
to governance issues. This committee would, amongst other things, be responsible
for the corporation's response to these governance guidelines.
The Board has adopted and approved the Policy. The Board collectively recognises
the importance of corporate governance and will review, and where appropriate
adjust, the Policy on at least an annual basis.
Manual Guideline (11) Position Descriptions: The board of directors, together
with the CEO, should develop position descriptions for the Board and for the
CEO, involving the definition of the limits to management's responsibilities. In
addition, the Board should approve or develop the corporate objectives which the
CEO is responsible for meeting.
The Board provides strategic guidance to the management team and monitors the
operations of the Company. Management has the sole responsibility to operate the
Company on a day-to-day basis. The Board with management will delineate areas of
responsibility for the Board and management. The outside directors are
responsible for setting goals for management to attain. The outside directors
will evaluate the performance of management annually against these
pre-determined goals. The evaluation is then passed to the Compensation
Committee. The Compensation Committee has the responsibility for making
recommendations for management compensation based on the performance
evaluations.
Manual Guideline (12) Structures and Procedures for Independence of Board: Every
board of directors should have in place appropriate structures and procedures to
ensure that the board can function independently of management. An appropriate
structure would be to (i) appoint a chair of the board who is not a member of
management with responsibility to ensure the board discharges its
responsibilities or (ii) adopt alternate means such as assigning this
responsibility to a committee of the board or to a director, sometimes referred
to as the "lead director". Appropriate procedures may involve the board meeting
on a regular basis without management present or may involve expressly assigning
the responsibility for administering the board's relationship to management to a
committee of the board.
The Board believes that it benefits from its close working relationship with
management but also recognises the importance of functioning independently from
management. To facilitate this principle it is a Board policy that the Chairman
of the Board is not a member of management and the Chairman is explicitly
charged with the responsibility of managing the Board's relationship with
management. In addition, the Board meets without management as and when
necessary.
<PAGE>
Manual Guideline (13) Audit Committee: The audit committee of every board of
directors should be composed only of outside directors. The roles and
responsibilities of the audit committee should be specifically defined so as to
provide appropriate guidance to audit committee members as to their duties. The
audit committee should have direct communication channels with the internal and
external auditors to discuss and review specific issues as appropriate. The
audit committee duties should include oversight responsibility for management
reporting on internal control. While it is management's responsibility to design
and implement an effective system of internal control, it is the responsibility
of the audit committee to ensure that management has done so.
The Audit Committee reviews the audited financial statements of the Company and
brings them to the Board for approval. In addition, the Audit Committee
recommends the Company's auditors and assesses the effectiveness of the
Company's internal financial controls and financial reporting. The Audit
Committee has established access to both auditors and appropriate management.
The Audit Committee meets as and when necessary and consists only of outside
directors. The Audit Committee is currently composed of three unrelated
directors.
Manual Guideline (14) Outside Advisors: The board of directors should implement
a system which enables an individual director to engage an outside advisor at
the expense of the corporation in appropriate circumstances. The engagement of
the outside advisor should be subject to the approval of an appropriate
committee of the board.
The Board has access to any Company employee. The Board can engage, subject to
the approval of the Board, a consultant at the Company's expense.
<PAGE>
INFOWAVE SOFTWARE, INC.
PROXY
SOLICITED BY MANAGEMENT FOR ANNUAL AND EXTRAORDINARY GENERAL MEETING
The undersigned member of Infowave Software, Inc. (the "Company") hereby
appoints Jim McIntosh, President, or failing him, Todd Carter, Chief Financial
Officer, or, in place of the foregoing, _________________________, as nominee of
the undersigned to attend, vote and act for and in the name of the undersigned
at the Annual and Extraordinary General Meeting of the members of the Company to
be held at Ballroom B, The Waterfront Centre Hotel, 900 Canada Place, Vancouver,
British Columbia, on June 5, at the hour of 2:00 p.m. (Vancouver time) and at
every adjournment thereof, to the same extent and with the same powers as if the
undersigned member were present at the said meeting. The undersigned member
hereby revokes any proxy previously given to attend and vote at said meeting.
<TABLE>
UNLESS THE UNDERSIGNED DIRECTS OTHERWISE, THE NOMINEE IS HEREBY INSTRUCTED TO
VOTE FOR THE FOLLOWING RESOLUTIONS:
<S> <C> <C> <C> <C>
FOR [ ] WITHHOLD VOTE [ ] To appoint KPMG, Chartered Accountants, as the Auditors of
the Company and to authorize the Directors to fix the
Auditors' remuneration.
FOR [ ] AGAINST [ ] To set the size of the board of Directors of the Company at
five, subject to increase as may be permitted under the
Company Act (British Columbia).
FOR [ ] WITHHOLD VOTE [ ] To elect Jim McIntosh as a Director.
FOR [ ] WITHHOLD VOTE [ ] To elect Morgan Sturdy as a Director.
FOR [ ] WITHHOLD VOTE [ ] To elect Scot Land as a Director.
FOR [ ] WITHHOLD VOTE [ ] To elect David Wedge as a Director.
FOR [ ] WITHHOLD VOTE [ ] To elect David Neale as a Director.
FOR [ ] AGAINST [ ] The Ordinary Resolution to confirm and approve amendments to
the Stock Option Plan of the Company.
FOR [ ] AGAINST [ ] The Special Resolution to amend the Articles of the Company
to grant the Directors of the Company discretionary power to
increase the size of the board by up to one third.
FOR [ ] AGAINST [ ] The Ordinary Resolution to approve a Shareholder Rights Plan.
[ ] Please sign here: ------------------------
(signature of member)
Affix Label Here ------------------------
Name of Proxy holder (print name of member)
Address of Proxy holder
Number of securities represented Date: -----------------------
by Proxy
This proxy form is not valid unless it is signed and dated. If someone other
[ ] than the member of the Company signs this proxy form on behalf of the named member
of the Company, documentation acceptable to the Chairman of the meeting must be
deposited with this proxy form, authorizing the signing person to do such.
To be presented at the meeting, this proxy form must be received at the office
of "Montreal Trust Company of Canada" by mail or by fax no later than forty eight
("48") hours prior to the time of the meeting or delivered to the Chairman of the
meeting prior to the commencement of the meeting. The mailing address of Montreal
Trust Company of Canada is 510 Burrard Street, Vancouver, British Columbia, V6C 3B9
and its fax number is (604) 683-3694.
</TABLE>
<PAGE>
1. This Proxy is solicited by the Management of the Company.
2. (a) If the member wishes to attend the meeting to vote on the resolutions
in person, please register your attendance with the Company's
scrutineers at the meeting.
(b) If the member has its securities held by a financial institution and
wishes to attend the meeting to vote on the resolutions in person,
please cross off the management appointee names, insert the member's
name in the blank space provided, do not indicate a voting choice by
any resolution, sign and date the proxy form and return the proxy form
as stated below. At the meeting a vote will be taken on each of the
resolutions as set out on this proxy form and the member's vote will
be counted at that time.
3. If the member cannot attend the meeting but wishes to vote on the
resolutions, the member can appoint another person, who need not be a
member of the Company, to vote according to the member's instructions. To
appoint someone other than the person named, please cross off the
management appointee names and insert your appointed proxyholder's name in
the space provided. Where no choice on a resolution is specified by the
member, this proxy form confirms discretionary authority upon the member's
appointed proxyholder.
4. If the member cannot attend the meeting but wishes to vote on the
resolutions and to appoint one of the management appointees named, please
leave the wording appointing a nominee as shown. Where no choice is
specified by a member on a resolution shown on the proxy form, a nominee of
management acting as proxyholder will vote the securities as if the member
had specified an affirmative vote.
5. The securities represented by this proxy form will be voted or withheld
from voting in accordance with the instructions of the member on any ballot
of a resolution that may be called for and, if the member specifies a
choice with respect to any matter to be acted upon, the securities will be
voted accordingly. With respect to any amendments or variations in any of
the resolutions shown on the proxy form, or matters which may properly come
before the Meeting, the securities will be voted by the nominee appointed
as the nominee in its sole discretion sees fit.
6. If the member votes on the resolutions and returns the proxy form, the
member may still attend the meeting and vote in person should the member
later decide to do so. To attend the meeting, the member must revoke the
proxy form by sending a new proxy form with the revised instructions.
