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SAND TECHNOLOGY SYSTEMS INTERNATIONAL INC.
4141 Sherbrooke Street West
Suite 410
Westmount, Quebec, Canada H3Z 1B8
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that the Annual and Special Meeting of the
Shareholders of SAND TECHNOLOGY SYSTEMS INTERNATIONAL INC. (the "Corporation")
will be held at the offices of Lavery, de Billy, 40th Floor, 1 Place Ville
Marie, Montreal, Quebec, Canada, on Friday, December 17, 1999 at 10:00 o'clock
(Montreal time) in the morning (the "Meeting"), for the following purposes:
1. to receive the Report of the Directors and the accompanying
Consolidated Financial Statements of the Corporation for the fiscal
year ended July 31, 1999, together with the Report of the Auditors
thereon;
2. to elect five (5) directors;
3. to appoint auditors and grant the directors the authority to fix their
remuneration;
4. to adopt a resolution to amend the 1996 Stock Incentive Plan;
5. to adopt a resolution to amend the 1996 Stock Option Plan;
6. to adopt a special resolution to amend the Articles of the Corporation
to change the name of the Corporation;
7. to transact such other business as may properly be brought before the
Meeting or any adjournment thereof.
The specific details of the matters proposed to be put before the meeting are
set forth in the Management Proxy Circular accompanying this Notice.
Dated at Westmount, Province of Quebec, Canada, this 9th day of November, 1999.
By Order of the Board of Directors,
Arthur G. Ritchie
Chairman of the Board
President and Chief Executive Officer
PROPERLY EXECUTED FORMS OF PROXY MUST BE DEPOSITED NO LATER THAN 5:00 O'CLOCK
(NEW YORK TIME) IN THE AFTERNOON, ON TUESDAY, DECEMBER 14, 1999, WITH THE
SECRETARY OF THE CORPORATION, C/O CONTINENTAL STOCK TRANSFER & TRUST COMPANY, 2
BROADWAY, NEW YORK, NEW YORK 10004, U.S.A. IN ORDER TO BE VALID AND ACTED UPON
AT THE MEETING.
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SAND TECHNOLOGY SYSTEMS INTERNATIONAL INC.
4141 Sherbrooke Street West
Suite 410
Westmount, Quebec, Canada H3Z 1B8
Telephone: (514) 939-3477
MANAGEMENT PROXY CIRCULAR*
SOLICITATION OF PROXIES
THIS PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION BY
THE MANAGEMENT OF SAND TECHNOLOGY SYSTEMS INTERNATIONAL INC. (THE "CORPORATION"
OR "SAND") OF PROXIES FOR USE AT THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
OF SAND TO BE HELD AT THE OFFICES OF LAVERY, DE BILLY, 40TH FLOOR, 1 PLACE VILLE
MARIE, MONTREAL, QUEBEC, CANADA, ON FRIDAY, DECEMBER 17, 1999 AT 10:00 O'CLOCK
(MONTREAL TIME) IN THE MORNING (THE "MEETING") FOR THE PURPOSES SET FORTH IN THE
ACCOMPANYING NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS ("NOTICE OF
MEETING") OR AT ANY ADJOURNMENT THEREOF.
SOLICITATION OF PROXIES
The solicitation of proxies by the Corporation will be primarily by
mail but proxies may be solicited by other means of delivery or in person or by
telephone by regular employees of the Corporation or its subsidiaries, or by
Continental Stock Transfer & Trust Company, its transfer agent. The solicitation
of proxies from non-registered shareholders will be carried out by
intermediaries, or by the Corporation or its transfer agent if the names and
addresses of non-registered shareholders are provided by such intermediaries
(see "Non-Registered Holders"). THE SOLICITATION OF PROXIES BY THIS CIRCULAR IS
BEING MADE BY OR ON BEHALF OF MANAGEMENT OF THE CORPORATION. The total cost of
the solicitation will be borne by the Corporation.
APPOINTMENT OF PROXY
The persons named in the enclosed form of proxy are Directors and
Officers of the Corporation. A SHAREHOLDER DESIRING TO APPOINT SOME OTHER PERSON
(WHO NEED NOT BE A SHAREHOLDER, DIRECTOR OR AN OFFICER) TO REPRESENT THE
SHAREHOLDER AT THE MEETING MAY DO SO BY INSERTING SUCH PERSON'S NAME IN THE
BLANK SPACE PROVIDED IN THE FORM OF PROXY. The shareholder may direct that the
shares of the shareholder be voted for, or against, or be withheld from voting
on matters specified in the proxy, by marking the form of proxy as appropriate.
TO BE VALID, A PROXY MUST BE EXECUTED LEGIBLY BY A REGISTERED
SHAREHOLDER, AS REGISTERED. A proxy executed by a registered shareholder which
is a corporation must be properly executed. Evidence of authority to sign,
satisfactory to the Corporation, may be filed with such proxy or may be
requested by the Corporation or by Continental Stock Transfer & Trust
--------
* This Management Proxy Circular has been prepared in accordance with
Canadian requirements. Sand Technology Systems International Inc., as a
Canadian corporation, became exempt in 1991 from compliance with the
proxy rules of the United States Securities and Exchange Commission.
The information herein is given as of November 9, 1999 unless otherwise
indicated. All dollar amounts stated herein are in Canadian dollars
unless otherwise indicated.
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Company, prior to accepting such proxy for use at the Meeting. Properly executed
forms of proxy must be deposited no later than 48 hours preceding the Meeting or
any adjournments thereof, with Continental Stock Transfer & Trust Company, 2
Broadway, New York, New York 10004, U.S.A.
Non-Registered Holders
Only registered holders of Class A Common Shares (the "Common Shares")
of the Corporation, or the persons they appoint as their proxies, are permitted
to attend and vote at the Meeting. However, in many cases, Common Shares of the
Corporation beneficially owned by a holder (a "Non-Registered Holder") are
registered either:
- in the name of an intermediary (an "Intermediary") that the
Non-Registered Holder deals with in respect of the Common Shares,
such as, among others, banks, trust companies, securities dealers
or brokers and trustees or administrators of self-administered
RRSPs, RRIFs, RESPs and similar plans; or
- in the name of a clearing agency of which the Intermediary is a
participant. In accordance with the requirements of National Policy
Statement No. 41 of the Canadian Securities Administrators, the
Corporation has distributed copies of the Notice of Meeting, this
Management Proxy Circular, the Form of Proxy, the 1999 Annual
Report (which includes Management's Discussion and Analysis of
Financial Condition and Results of Operations) (collectively, the
"Meeting Materials") to the clearing agencies and Intermediaries
for onward distribution to Non-Registered Holders.
Intermediaries are required to forward Meeting Materials to
Non-Registered Holders unless a Non-Registered Holder has waived the right to
receive them. Very often, Intermediaries will use service companies to forward
the Meeting Materials to Non-Registered Holders. Generally, Non-Registered
Holders who have not waived the right to receive Meeting Materials will either:
- be given a proxy which has already been signed by the Intermediary
(typically by a facsimile, stamped signature) which is restricted
as to the number of shares beneficially owned by the Non-Registered
Holder but which is otherwise uncompleted. This form of proxy need
not be signed by the Non-Registered Holder. In this case, the
Non-Registered Holder who wishes to submit a proxy should otherwise
properly complete the Form of Proxy and deposit it with Continental
Stock Transfer & Trust Company as described above; or
- more typically, be given a voting instruction form which must be
completed and signed by the Non-Registered Holder in accordance
with the directions on the voting instruction form which may in
some cases permit the completion of the voting instruction form by
telephone.
The purpose of these procedures is to permit Non-Registered Holders to
direct the voting of the shares they beneficially own. Should a Non-Registered
Holder who receives either a form of proxy, a proxy or a voting instruction form
wish to attend and vote at the Meeting in person (or have another person attend
and vote on behalf of the Non-Registered Holder), the Non-Registered Holder
should strike out the names of the persons named in the proxy and insert the
name of the Non-Registered Holder (or the name of such other person) in the
blank space provided or, in the case of a voting instruction form, follow the
corresponding directions on the
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form. IN EITHER CASE, NON-REGISTERED HOLDERS SHOULD CAREFULLY FOLLOW THE
INSTRUCTIONS OF THEIR INTERMEDIARIES, INCLUDING THOSE REGARDING WHEN AND WHERE
THE PROXY OR THE PROXY AUTHORIZATION FORM IS TO BE DELIVERED, AND THEIR SERVICE
COMPANIES.
RIGHT OF REVOCATION
A registered shareholder who has given a proxy may revoke the proxy by
(a) completing and signing a proxy bearing a later date and depositing it with
Continental Stock Transfer & Trust Company as described above; or (b) under
section 148(4) of the CANADA BUSINESS CORPORATIONS ACT (the "CBCA") by
instrument in writing properly executed by such shareholder or by his attorney
authorized in writing, or if the shareholder is a corporation, under its
corporate seal, and deposited at the registered office of the Corporation at any
time up to and including the last business day preceding the day of the Meeting
at which the proxy is to be used or any adjournments thereof, or depositing such
an instrument with the Chairman of the Meeting prior to the commencement of the
Meeting on the day of the Meeting or any adjournments thereof, or in any other
manner permitted by law.
A non-registered shareholder may revoke a voting instruction form or a
waiver of the right to receive documents and to vote given to an Intermediary at
any time by written notice to the Intermediary, except that an Intermediary is
not required to act on a revocation of a voting instruction form or of a waiver
of the right to receive documents and to vote that is not received by the
Intermediary at least seven days prior to the Meeting.
VOTING OF PROXIES
The management representatives designated in the enclosed form of proxy
will vote or withhold from voting the shares in respect of which they are
appointed by proxy on any ballot that may be called for in accordance with the
instructions of the shareholder as indicated on the proxy and, if the
shareholder specified a choice with respect to any matter to be acted upon, the
shares will be voted accordingly. IN THE ABSENCE OF SUCH DIRECTION, SUCH SHARES
WILL BE VOTED BY THE MANAGEMENT REPRESENTATIVES FOR THE ELECTION OF DIRECTORS
AND FOR THE APPOINTMENT OF AUDITORS AS INDICATED UNDER THOSE HEADINGS IN THIS
CIRCULAR.
Proxies in favour of Management confer discretionary authority upon the
management representatives in the Form of Proxy with respect to amendments to
matters identified in the Notice of Meeting or other matters that may properly
come before the Meeting and will be voted in accordance with the best judgment
of the person voting the proxy. Management knows of no such amendments or other
matters to come before the Meeting.
VOTING SHARES
The Common Shares of the Corporation are the only shares entitled to
vote at the Annual Meeting of Shareholders. Each Common Share carries one vote.
On November 9, 1999, there were outstanding 8,528,206 Common Shares.
The board of directors of Sand (the "Board of Directors") has fixed the
close of business on November 5, 1999 as the record date (the "Record Date") for
the purpose of determining shareholders entitled to receive notice of, and to
vote at, the Meeting but the failure of any
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shareholder to receive Notice of the Annual Meeting does not deprive the
shareholder of a vote at the Meeting. If a person has acquired shares after the
Record Date, that person is entitled to vote those shares at the Meeting upon
producing properly endorsed share certificates, or otherwise establishing share
ownership, and demanding the inclusion of his or her name in the list of
shareholders not later than ten (10) days before the date of the Meeting.
The following are the only persons who, to the knowledge of the
directors and officers of the Corporation, beneficially own or exercise control
or direction over shares carrying more than ten percent (10%) of the votes
attached to the shares of the Corporation:
<TABLE>
<CAPTION>
Number of Common Shares Beneficially Percentage of Common Shares
Owned, Owned, Controlled
Controlled or Directed or Directed
----------------------------------------- ---------------------------------
<S> <C> <C>
ARTHUR G. RITCHIE............... 1,720,000 20.17%
JEROME SHATTNER................. 1,100,000 12.9%
</TABLE>
ELECTION OF DIRECTORS
Pursuant to the Articles and by-laws of the Corporation and the
requirements of the CBCA under which the Corporation is organized, the Board of
Directors shall consist of not fewer than three (3) and not more than eleven
(11) directors. The Board of Directors has fixed the number of directors at five
(5). Proxies cannot be voted for a greater number of persons than the number of
nominees named.
The following is a list of the nominees to serve as directors until the
close of the next annual meeting of shareholders or until their respective
successors are duly elected or appointed. All the nominees are currently
directors of the Corporation. IN THE ABSENCE OF A CONTRARY INSTRUCTION, THE
PERSONS NAMED IN THE ENCLOSED FORM OF PROXY INTEND TO VOTE FOR THE ELECTION OF
THE PERSONS NAMED BELOW, EACH OF WHOM IS PROPOSED AS NOMINEE FOR ELECTION AS A
DIRECTOR. If, for any reason prior to the Meeting, it is determined that any of
the five (5) nominees for election will be unable to serve as a director, the
persons designated in the printed portion of the accompanying form of proxy
intend to vote for such other properly qualified nominee, as they, in their
discretion, determine, unless otherwise instructed by the shareholder pursuant
to the proxy.
There is no contract, arrangement or understanding between any proposed
nominee and any other person pursuant to which the nominee is to be elected.
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The information as to shares beneficially owned or over which control
or direction is exercised, not being within the knowledge of the Corporation,
has been furnished by the respective nominees individually. Information as to
the five (5) nominees for election as directors is as follows:
<TABLE>
<CAPTION>
COMMON SHARES
BENEFICIALLY OWNED OR
OVER WHICH CONTROL OR
NAME PRINCIPAL OCCUPATION DIRECTOR SINCE DIRECTION IS EXERCISED
-------------------------- ------------------------------------- ----------------- --------------------------
<S> <C> <C> <C>
ARTHUR G. RITCHIE Chairman of the Board, President 1983 1,720,000
and Chief Executive Officer
of Sand
JOSEPHINE MUNROE Consultant 1990 1,800
MARTIN SHINDLER Accountant and 1987 2,140
Business Consultant
GEORGES DUBE Partner, Lavery, de Billy 1996 3,000
Barristers and Solicitors
GEORGE WICKER Executive, Lockheed Martin 1996 10,400
Corporation
</TABLE>
Messrs. Dube and Wicker and Ms. Munroe comprise the Audit Committee.
Ms. Munroe and Mr. Shindler comprise the Option Committee which
administers the Share Option Plan, the 1996 Stock Incentive Plan and the 1996
Stock Option Plan which are described under the subsections entitled "Share
Option Plan", "1996 Stock Incentive Plan" and "1996 Stock Option Plan".
All nominees for election as directors have held their present
positions or other executive positions with the same or associated firms during
the past five years.
REMUNERATION OF DIRECTORS
For the fiscal year ended July 31, 1999, each director, other than
those directors who are salaried officers of Sand, was paid a basic retainer of
$5,000 for serving as a director and an additional $1,500 for serving as a
member of each committee.
EXECUTIVE REMUNERATION
CASH REMUNERATION
For the fiscal year ended July 31, 1999, the aggregate cash
remuneration including salaries and bonuses paid by Sand to six (6) executive
officers for services rendered in all capacities to the Corporation and its
subsidiaries was $1,073,870.
The aggregate value of other compensation did not exceed the lesser of
$10,000 times the number of executive officers or ten percent (10%) of the cash
compensation paid to such executive officers.
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EMPLOYEE COMPENSATION PLAN
The Corporation has an informal employee compensation plan which also
applies to management pursuant to which, if employees fulfill stated goals with
respect to sales revenue, new account penetration, profit contribution and other
criteria, their incomes will increase proportionately above the guaranteed base
until the noted target income is earned or exceeded. The informal employee
compensation plan is not a mathematical formula with respect to management, but
is the subject of individual negotiation.
SHARE OPTION PLAN
On November 1, 1989, the Board of Directors adopted a Share Option Plan
(the "Plan") pursuant to which the beneficiaries selected by a committee of the
Board of Directors may be granted the right to subscribe for Common Shares.
The Plan is administered by a committee (the "Committee") consisting of
members of the Board of Directors who are not eligible, or have waived the
right, to receive options under the Plan.
The total number of shares which may be issued pursuant to the Plan is
limited to 10% of the outstanding Common Shares. The number of Common Shares
which may be subject to options in favour of a single beneficiary may not exceed
5% of the outstanding Common Shares. The term and number covered by each option
as well as the permitted frequency of exercise of such options are determined by
the Committee at the time the options are granted to the beneficiaries. The
exercise price of each option is the closing price of the Common Shares on
NASDAQ/National Market System on the trading day prior to the day the option is
granted or, if there was no transaction on that day, the average of the bid and
ask prices on that day, less any discount as decided by the Board of Directors
within the extent permitted by the applicable regulatory provisions. Options
granted under the Plan may not be assigned or pledged. An optionee may obtain
from the Corporation, upon exercise of the option, a loan bearing no interest,
within the limit established by the Board of Directors, to pay for the shares
subscribed for by him or her under the Plan. The recipient of such a loan is
required to pledge the shares subscribed for by him or her under the Plan as
security for the repayment of the loan. The corporation reserves the right to
terminate the Plan at any time subject to vested rights.
On May 17, 1990, the Board of Directors granted to each of Jerome
Shattner and Arthur G. Ritchie 440,000 (as adjusted to reflect the share
subdivision on a two-for-one basis on December 31, 1996) stock options entitling
the holder of each option to purchase one (1) Common Share per stock option at
an exercise price of US$0.25 per Common Share. These options are exercisable at
any time over a ten-year period. Jerome Shattner exercised all his outstanding
options on October 23, 1996. The Corporation has no options outstanding under
this Share Option Plan other than those granted to Arthur G. Ritchie. The
Corporation does not anticipate granting any additional options under this Plan.
1996 STOCK INCENTIVE PLAN
On July 8, 1996, the Board of Directors adopted the 1996 Stock
Incentive Plan (the "1996 Incentive Plan") pursuant to which the beneficiaries
selected by a committee of the Board of Directors may be granted the right to
subscribe for Common Shares. The 1996 Incentive Plan
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was confirmed, approved and ratified by the shareholders of the Corporation at
the annual and special meeting of the shareholders held on December 17, 1996.
The Plan is administered by a committee (the "Committee") consisting of
not less than two (2) members of the Board of Directors each of whom is a
"disinterested person" as defined under the SECURITIES AND EXCHANGE ACT OF 1934
and an "outside director" as defined in the UNITED STATES INTERNAL REVENUE CODE.
The Plan permits the granting of incentive stock options on terms designed to
gain certain advantages under United States Federal income tax law.
The total number of Common Shares of the Corporation authorized for
grants of options is 800,000 (as adjusted to reflect the share subdivision on a
two-for-one basis on December 31, 1996) subject to adjustment to take into
account changes in the capital structure of the Corporation. The number of
Common Shares which may be subject to option in favour of a single recipient may
not exceed 5% of the outstanding Common Shares of the Corporation.
The term and number of Common Shares covered by each option as well as
the permitted frequency of exercise of such options are determined by the
Committee at the time the options are granted to the recipients. An option is to
be exercised within a period of ten years after the date on which the option is
granted. The exercise price of each option for Common Shares is not less than
the closing price of the Common Shares on the National Association of Securities
Dealers, Automated Quotation System (NASDAQ) on the trading day prior to the day
the option is granted or, if there was no transaction on that day, the average
of the bid and ask prices on that day, less any discount as decided by the Board
of Directors within the extent permitted by the applicable regulatory
provisions. Options granted under the 1996 Incentive Plan may not be assigned or
pledged. No financial assistance is available to recipients in connection with
the exercise of an option. The Corporation may terminate the 1996 Incentive Plan
at any time subject to vested rights.
On July 20, 1996, the Committee granted an option to purchase 400,000
Common Shares (as adjusted to reflect the share subdivision on a two-for-one
basis on December 31, 1996) to an officer of a subsidiary at an exercise price
of US$5 per share which was the closing price of the Common Shares on
NASDAQ/National Market System on the day prior to the grant. No options were
granted during the fiscal year ended July 31, 1997. During the fiscal year ended
July 31, 1998, the Committee granted options which remain outstanding to
purchase an aggregate of 123,500 Common Shares to employees at exercise prices
which vary from US$3.75 to US$8.75 per share which were the respective closing
prices of the Common Shares on NASDAQ/National Market System on the day prior to
each grant. During the fiscal year ended July 31, 1999, the Committee granted
options which remain outstanding to purchase an aggregate of 107,500 Common
Shares to employees or its subsidiaries at exercise prices which vary from
US$5.00 to US$7.563 per share which were not less than the closing prices of the
Common Shares on NASDAQ/National Market System on the day prior to the grant and
one employee exercised an option to purchase 8,000 Common Shares. Since July 31,
1999, the Committee granted options to purchase an aggregate of 4,000 Common
Shares to two employees at exercise prices which vary from US$3.625 to US$5.00
per share which were not less than the respective closing prices of the Common
Shares on NASDAQ/National Market System on the day prior to each grant and 2,750
options were cancelled.
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1996 STOCK OPTION PLAN
On July 8, 1996, the Board of Directors adopted the 1996 Stock Option
Plan (the "1996 Option Plan") pursuant to which the beneficiaries selected by a
committee of the Board of Directors may be granted the right to subscribe for
Common Shares. The 1996 Option Plan was confirmed, approved and ratified by the
shareholders of the Corporation at the annual and special meeting of the
shareholders held on December 17, 1996.
The Plan is administered by a committee (the "Committee") consisting of
not less than two (2) members of the Board of Directors each of whom is a
"disinterested person" as defined under the SECURITIES AND EXCHANGE ACT OF 1934
and an "outside director" as defined in the UNITED STATES INTERNAL REVENUE CODE.
The total number of Common Shares of the Corporation authorized for
grants of options is 700,000 (as adjusted to reflect the share subdivision on a
two-for-one basis on December 31, 1996) subject to adjustment to take into
account changes in the capital structure of the Corporation. The number of
Common Shares which may be subject to option in favour of a single recipient may
not exceed 5% of the outstanding Common Shares of the Corporation.
The term and number of Common Shares covered by each option as well as
the permitted frequency of exercise of such options are determined by the
Committee at the time the options are granted to the recipients. An option is to
be exercised within a period of ten years after the date on which the option is
granted. The exercise price of each option for Common Shares is not less than
the price of the Common Shares as determined by the Committee within the extent
permitted by the applicable regulatory provisions. Options granted under the
1996 Option Plan may not be assigned or pledged. No financial assistance is
available to recipients in connection with the exercise of an option. The
Corporation may terminate the 1996 Option Plan at any time subject to vested
rights.
On July 19, 1996, the Committee granted options to purchase an
aggregate of 440,000 Common Shares (as adjusted to reflect the share subdivision
on a two-for-one basis on December 31, 1996) to eligible directors, officers and
key employees of the Corporation at exercise prices which vary from US$0.6562 to
US$3.375 per share. During the fiscal year ended July 31, 1997, the Committee
granted options which remain outstanding to purchase an aggregate of 80,000
Common Shares to one employee at an exercise price of US$5.563 per share which
was the closing price of the Common Shares on NASDAQ/National Market System on
the day prior to the grant and one employee exercised an option to purchase
16,000 Common Shares. During the fiscal year ended July 31, 1998, the Committee
granted options which remain outstanding to purchase an aggregate of 57,500
Common Shares to employees at exercise prices which vary from US$4.00 to US$5.50
per share which were the respective closing prices of the Common Shares on
NASDAQ/National Market System on the day prior to each grant. During the fiscal
year ended July 31, 1999, the Committee granted options which remain outstanding
to purchase an aggregate of 142,000 Common Shares to employees at exercise
prices which vary from US$5.75 to US$7.313 per share which were the respective
closing prices of the Common Shares on NASDAQ/National Market System on the day
prior to each grant. Since July 31, 1999, the Committee granted options to
purchase an aggregate of 50,500 Common Shares to employees at an exercise price
of US$5.00 per share which was not less than the respective closing prices of
the Common Shares on NASDAQ/National Market System on the day prior to each
grant and 30,000 options were cancelled.
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EMPLOYMENT AGREEMENT
Arthur G. Ritchie, Chairman of the Board, President and Chief Executive
Officer and a Director of the Corporation, entered into an employment agreement
("the Agreement") with the Corporation upon the expiry of his previous
employment agreement on December 31, 1993. The Agreement, effective January 1,
1994 is for an initial term of five (5) years and shall be automatically
extended for additional periods of twelve (12) months each unless the
Corporation or Mr. Ritchie shall have given the other a notice of termination of
the Agreement not less than three (3) months prior to the end of its term. In
the event the employment of Mr. Ritchie (i) is terminated by the Corporation for
any reason other than for Cause (as defined in the Agreement) or death or (ii)
is terminated by Mr. Ritchie for Good Reason (as defined in the Agreement), Mr.
Ritchie will be entitled to receive, among other things, a lump sum payment
equivalent to two (2) times the sum of his then current annual base salary and
the amount of the bonuses received by him in the immediate past year and Mr.
Ritchie shall continue for a period of two (2) years to participate in all plans
and programs of the Corporation to the extent such participation is possible,
and, if such continued participation is barred, to receive amounts equal to the
out-of-pocket costs of participation in plans and programs providing
substantially similar benefits. The employment of Mr. Ritchie with the
Corporation was automatically extended to December 31, 1999 on terms similar to
those in the Agreement and his employment shall be extended beyond January 1,
2000 either on terms similar to those in the Agreement or on terms to be agreed
upon.
SPECIAL BUSINESS
AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN
The Corporation maintains the 1996 Stock Incentive Plan described under
"Executive Remuneration - 1996 Stock Incentive Plan" for the benefit of
employees of the Corporation and its subsidiaries in order to assist the
Corporation in attracting, retaining and motivating such persons by providing
them with the opportunity, through stock options, to acquire an increased
proprietary interest in the Corporation.
Prior to November 9, 1999, the 1996 Stock Incentive Plan provided that
a maximum of 800,000 Common Shares were issuable pursuant to options granted
under the Plan. As at November 8, 1999, 632,250 options had been granted and
remained outstanding under the 1996 Stock Incentive Plan and 167,750 remained
available for grant.
On November 9, 1999, the directors of the Corporation by resolution
amended the 1996 Stock Incentive Plan to increase the maximum aggregate number
of Common Shares which may be issued and sold pursuant to options granted under
the 1996 Stock Incentive Plan by an additional 300,000 Common Shares, subject to
the receipt of shareholder approval.
The board of directors determined that it was in the best interests of
the Corporation to increase the number of shares available to be issued pursuant
to the 1996 Stock Incentive Plan by an additional 300,000 Common Shares in order
to have options available to compensate a broad range of personnel and to
attract additional personnel necessary to manage the expansion of the business
of Sand. Stock options are a significant long-term incentive and are viewed as
an important aspect of total employee compensation. In arriving at their
determination, the directors took into consideration the fact that in 1997 the
Corporation
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purchased and cancelled 800,000 Common Shares for a total consideration of
$2,223,284 thereby reducing the number of outstanding Common Shares.
The shareholders are being asked to consider and, if thought advisable,
to approve, confirm and ratify a resolution to approve an amendment to the 1996
Stock Incentive Plan to increase the number of Common Shares reserved for
issuance pursuant to options granted under the plan.
At the Meeting, the following resolution will be placed before the
shareholders for approval:
"BE IT RESOLVED THAT:
1. the amendment of the 1996 Stock Incentive Plan of the
Corporation, as authorized and approved by the board of
directors of the Corporation on November 9, 1999, to increase
the maximum aggregate number of shares of the Corporation
which may be issued and sold under the 1996 Stock Incentive
Plan by 300,000 Common Shares, is hereby approved, authorized,
ratified and confirmed; and
2. any director or officer of the Corporation is hereby
authorized and directed, for and in the name of and on behalf
of the Corporation, to execute all documents and to do all
such other acts and things as he or she may determine to be
necessary or advisable to give effect to the foregoing
resolution."
To be effective, this resolution must be passed by at least 50% of the
votes cast by shareholders present in person or represented by proxy at the
Meeting. The board of directors unanimously recommends that shareholders vote in
favour of passing this resolution.
IN THE ABSENCE OF A CONTRARY INSTRUCTION, THE PERSONS NAMED IN THE
ENCLOSED FORM OF PROXY INTEND TO VOTE IN FAVOUR OF PASSING THIS RESOLUTION.
AMENDMENT TO THE 1996 STOCK OPTION PLAN
The Corporation maintains the 1996 Stock Option Plan described under
"Executive Remuneration - 1996 Stock Option Plan" for the benefit of employees,
non-employee directors and other full-time service providers of the Corporation
and its subsidiaries in order to assist the Corporation in attracting, retaining
and motivating such persons by providing them with the opportunity, through
stock options, to acquire an increased proprietary interest in the Corporation.
Prior to November 9, 1999, the 1996 Stock Option Plan provided that a
maximum of 700,000 Common Shares were issuable pursuant to options granted under
the Plan. As at November 8, 1999, 665,000 options had been granted and remained
outstanding under the 1996 Stock Option Plan, and 35,000 remained available for
grant.
On November 9, 1999, the directors of the Corporation by resolution
amended the 1996 Stock Option Plan to increase the maximum number of Common
Shares which may be issued
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and sold pursuant to options granted under the 1996 Stock Option plan by an
additional 200,000 Common Shares, subject to the receipt of all required
shareholder and regulatory approvals.
The board of directors determined that it was in the best interests of
the Corporation to increase the number of shares available to be issued pursuant
to the 1996 Stock Incentive Plan by an additional 200,000 Common Shares in order
to have options available to compensate a broad range of personnel and to
attract additional personnel necessary to manage the expansion of the business
of Sand. Stock options are a significant long-term incentive and are viewed as
an important aspect of total employee compensation. In arriving at their
determination, the directors took into consideration the fact that in 1997, the
Corporation purchased and cancelled 700,000 Common Shares for a total
consideration of $2,223,284 thereby reducing the number of outstanding Common
Shares.
The shareholders are being asked to consider and, if thought advisable,
to approve, confirm and ratify a resolution to approve an amendment to the 1996
Stock Option Plan to increase the number of Common Shares reserved for issuance
pursuant to options granted under the plan.
At the Meeting, the following resolution will be placed before the
shareholders for approval:
"BE IT RESOLVED THAT:
1. The amendment of the 1996 Stock Option Plan of the
Corporation, as authorized and approved by the board of
directors of the Corporation on November 9, 1999, to increase
the maximum aggregate number of shares of the Corporation
which may be issued and sold under the 1996 Stock Option Plan
by 200,000 Common Shares, is hereby approved, authorized,
ratified and confirmed; and
2. Any director or officer of the Corporation is hereby
authorized and directed, for and in the name of and on behalf
of the Corporation, to execute all documents and to do all
such other acts and things as he or she may determine to be
necessary or advisable to give effect to the foregoing
resolution."
To be effective, this resolution must be passed by at least 50% of the
votes cast by shareholders present in person or represented by proxy at the
Meeting. The board of directors unanimously recommends that shareholders vote in
favour of passing this resolution.
IN THE ABSENCE OF A CONTRARY INSTRUCTION, THE PERSONS NAMED IN THE
ENCLOSED FORM OF PROXY INTEND TO VOTE IN FAVOUR OF PASSING THIS RESOLUTION.
AMENDMENT TO THE ARTICLES OF THE CORPORATION TO CHANGE THE NAME OF THE
CORPORATION
The Corporation has been advised that its current name is too long and
no longer properly reflects its business. The board of directors considers this
change to be desirable. For these reasons, shareholders are being asked to
consider and, if thought advisable, to adopt the special resolution set out in
Schedule A to this Management Proxy Circular to change the
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English language name of the Corporation to "Sand Technology Inc." and the
French language name to "Technologie Sand Inc.".
At the Meeting, the following resolution will be placed before the
shareholders for approval:
"BE IT RESOLVED THAT:
1. the English language name of the Corporation shall henceforth
be "Sand Technology Inc." and the French language name of the
Corporation shall henceforth be "Technologie Sand Inc.";
2. any director or officer of the Corporation be and he is hereby
authorized and directed to sign for and on behalf of the
Corporation, the Articles of Amendment containing the
provisions of the previous paragraph and to do all things and
sign all other documents necessary or desirable to effect the
amendment of the Articles of the Corporation contemplated by
this special resolution, and to obtain any regulatory approval
in connection therewith; and
3. the directors of the Corporation may revoke the foregoing
resolution without further approval of the shareholders of the
Corporation at any time prior to the issue by the Director of
a Certificate of Amendment relating to it."
To be effective, this special resolution, subject to regulatory
approval, must be passed by a majority of at least two-thirds of the votes cast
by shareholders present in person or represented by proxy at the Meeting. The
board of directors unanimously recommends that shareholders vote in favour of
passing this special resolution.
IN THE ABSENCE OF A CONTRARY INSTRUCTION, THE PERSONS NAMED IN THE
ENCLOSED FORM OF PROXY INTEND TO VOTE IN FAVOUR OF PASSING THIS SPECIAL
RESOLUTION.
DIRECTORS AND OFFICERS LIABILITY INSURANCE
Sand maintains directors' and officers' liability insurance which,
subject to the provisions and exclusions contained in the policy, protects the
directors and officers, as such, against any claims made during the term of
their office against any of them for a wrongful act, provided they acted
honestly and in good faith with a view to the best interests of Sand. The policy
provides coverage with a limit of US$2,000,000 in each policy year, subject to a
corporate reimbursement deductible of US$100,000 per loss except for losses
resulting from securities legislation when the deductible is US$200,000. The
current annual premium is paid entirely by the Corporation and amounts to
US$50,725. To the extent permitted by law, Sand has entered into an
indemnification agreement with each of its directors and senior officers.
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AUDITORS
There will be submitted to the Meeting a resolution to reappoint
Deloitte & Touche, Chartered Accountants, to the office of auditors of Sand for
a term expiring at the close of the next annual meeting of shareholders and to
authorize the directors to fix their remuneration. Deloitte & Touche has acted
as the auditors of the Corporation for more than five years. Representatives of
Deloitte & Touche will be present at the Meeting with the opportunity to make a
statement if they so desire and to respond to appropriate questions.
IN THE ABSENCE OF A CONTRARY INSTRUCTION, THE PERSONS NAMED IN THE
ENCLOSED FORM OF PROXY INTEND TO VOTE FOR THE RE-APPOINTMENT OF DELOITTE &
TOUCHE, CHARTERED ACCOUNTANTS, AS AUDITORS OF THE CORPORATION TO HOLD OFFICE
UNTIL THE CLOSE OF THE NEXT ANNUAL MEETING OF SHAREHOLDERS AND TO AUTHORIZE THE
DIRECTORS TO FIX THEIR REMUNERATION.
AVAILABILITY OF DOCUMENTS
COPIES OF THE FOLLOWING DOCUMENTS ARE AVAILABLE ON THE WRITTEN REQUEST
OF THE VICE PRESIDENT, FINANCE AND ADMINISTRATION AT THE ADDRESS SHOWN FOR SAND
APPEARING ON PAGE 1 OF THIS MANAGEMENT PROXY CIRCULAR: THE FORM 20-F FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION; THE 1999 ANNUAL REPORT TO SHAREHOLDERS
CONTAINING THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JULY 31, 1999
TOGETHER WITH THE AUDITORS' REPORT THEREON AND MANAGEMENT'S DISCUSSION AND
ANALYSIS IN RESPECT THEREOF; THE INTERIM FINANCIAL STATEMENTS FOR FISCAL PERIODS
SUBSEQUENT TO JULY 31, 1999 AND THIS MANAGEMENT PROXY CIRCULAR.
APPROVAL OF DIRECTORS
THE CONTENTS AND THE SENDING OF THIS MANAGEMENT PROXY CIRCULAR HAVE
BEEN APPROVED BY THE DIRECTORS OF SAND.
Arthur G. Ritchie
Chairman of the Board,
President and Chief Executive Officer
Westmount, Quebec
November 9, 1999
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