<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PLC Systems Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PLC SYSTEMS INC.
10 FORGE PARK
FRANKLIN, MASSACHUSETTS 02038
------------------------
NOTICE OF ANNUAL GENERAL MEETING OF STOCKHOLDERS
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that an Annual General Meeting (the "Meeting") of
shareholders ("Stockholders") of PLC SYSTEMS INC. (the "Corporation"), a Yukon
corporation, will be held on Monday, May 24, 1999, at 9:00 a.m. at the Radisson
Hotel Milford, 11 Beaver Street, Milford, Massachusetts for the following
purposes:
1. To elect members of the Board of Directors for a three year term of
office.
2. To approve new By-Laws in connection with the transfer of the
Corporation's jurisdiction of incorporation from British Columbia to the
Yukon Territory (as approved by the Stockholders at the 1998 Annual
Meeting).
3. To appoint Ernst & Young LLP as auditors for the current fiscal year
ending December 31,1999.
4. To consider and act upon any matters incidental to the foregoing and any
other matters that may properly come before the Meeting or any
adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 9, 1999, as
the record date for the determination of Stockholders entitled to notice of and
to vote at the Meeting and any adjournment or adjournments thereof.
We hope that all Stockholders will be able to attend the Meeting in person.
In order to assure that a quorum is present at the Meeting, please date, sign
and promptly return the enclosed proxy whether or not you expect to attend the
Meeting. A postage-prepaid envelope, addressed to U.S. Stock Transfer
Corporation, the Corporation's transfer agent, has been enclosed for your
convenience. If you attend the Meeting, your proxy, at your request, will be
returned to you and you may vote your shares in person.
If you plan to attend, please note that space limitations may make it
necessary to limit attendance to Stockholders and one guest. Admission to the
meeting will be on a first-come, first-served basis. Registration and seating
will begin at 9:00 a.m. Each Stockholder may be asked to present:
* an admission ticket, which is attached to your proxy card; and
* valid picture identification, such as driver's license or passport.
Stockholders holding stock in brokerage accounts ("street name" holders)
will need to bring a copy of a brokerage statement reflecting stock ownership as
of the record date. Cameras, recording devices and other electronic devices will
not be permitted at the meeting.
By Order of the Board of Directors
JENNIFER T. MILLER
SECRETARY
Franklin, Massachusetts
April 20, 1999
<PAGE>
PLC SYSTEMS INC.
10 FORGE PARK
FRANKLIN, MASSACHUSETTS 02038
------------------------
PROXY STATEMENT
------------------------
APRIL 20, 1999
THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND MANAGEMENT OF
PLC SYSTEMS INC. (THE "CORPORATION") FOR USE AT THE ANNUAL GENERAL MEETING (THE
"MEETING") OF SHAREHOLDERS (THE "STOCKHOLDERS") TO BE HELD ON MONDAY, MAY 24,
1999, AT 9:00 A.M. AT THE RADISSON HOTEL MILFORD, 11 BEAVER STREET, MILFORD,
MASSACHUSETTS, AND AT ANY ADJOURNMENT OF ADJOURNMENTS THEREOF.
Stockholders of record at the close of business on April 9, 1999 (the
"Record Date") will be entitled to notice of and to vote at the Meeting or any
adjournment or adjournments thereof. Notice of the Record Date, as required by
Section 135(4) of the Business Corporations Act of the Yukon Territory ("Yukon
Act"), was published in the Whitehorse Star newspaper on April , 1999. On the
Record Date, shares of Common Stock, no par value per share, of the
Corporation ("Common Stock" or "Voting Securities") were issued and outstanding.
Each share of Common Stock entitles the holder to one vote with respect to all
matters submitted to Stockholders at the Meeting. No other Voting Securities of
the Corporation are issued and outstanding.
A quorum for the Meeting is two Stockholders or proxyholders representing
two Stockholders or one Stockholder and a proxyholder representing one
Stockholder holding shares representing at least ten percent (10%) of the shares
outstanding present at the Meeting. Each proposal to be voted upon by the
Stockholders of the Corporation requires the votes of a majority of shares of
Common Stock present at the Meeting for passage. Abstentions are counted for
purposes of determining the presence or absence of a quorum at the Meeting but
are not counted in tabulation of the votes cast on proposals presented to
Stockholders. Yukon law does not recognize broker non-votes (which, under U.S.
law, result when a broker holding shares for a beneficial holder has not
received timely voting instructions on certain matters from such beneficial
holder and the broker does not have discretionary voting power on such matters).
The directors and executive officers of the Corporation as a group own or
may be deemed to control approximately % of the outstanding shares of
Common Stock of the Corporation. Each of the directors and officers has
indicated his or her intent to vote all shares of Common Stock owned or
controlled by him or her in favor of each item set forth herein.
Execution of a proxy will not in any way affect a Stockholder's right to
attend the Meeting and vote in person. The proxy may be revoked at any time
before it is exercised by written notice to the Secretary prior to the Meeting,
or by giving to the Secretary a duly executed proxy bearing a later date than
the proxy being revoked at any time before such proxy is voted, or by appearing
at the Meeting and voting in person. The shares represented by all properly
executed proxies received in time for the Meeting will be voted as specified
therein. IN THE ABSENCE OF SPECIAL PROXY INSTRUCTIONS, SHARES WILL BE VOTED IN
FAVOR OF THE ELECTION OF DIRECTORS OF THOSE PERSONS NAMED IN THIS PROXY
STATEMENT AND IN FAVOR OF ALL OTHER ITEMS SET FORTH HEREIN.
The persons named in the enclosed proxy for the Meeting are officers and/or
directors of the Corporation. STOCKHOLDERS HAVE THE RIGHT TO APPOINT SOME OTHER
PERSON, WHO NEED NOT BE A STOCKHOLDER, TO REPRESENT THE STOCKHOLDERS AT THE
MEETING BY STRIKING OUT THE NAMES OF THE PERSONS DESIGNATED IN THE ACCOMPANYING
PROXY AND BY INSERTING THAT OTHER PERSON'S NAME IN THE BLANK SPACE PROVIDED OR
BY EXECUTING A PROXY SIMILAR TO THE ENCLOSED FORM.
Shares represented by properly executed and deposited proxies will be voted
for or against or withheld from voting in accordance with the instructions of
the Stockholders on any ballot that may be called for and, if the Stockholders
specify a choice with respect to any matter to be acted upon at the Meeting,
shares represented by such proxies will be voted accordingly. IF A STOCKHOLDER
APPOINTS ONE OF THE PERSONS
<PAGE>
DESIGNATED IN THE ACCOMPANYING PROXY AS HIS PROXYHOLDER AND DOES NOT MAKE A
CHOICE TO DIRECT THE SAID PROXYHOLDER TO VOTE FOR OR AGAINST OR TO WITHHOLD FROM
VOTING ON A MATTER OR MATTERS WITH RESPECT TO WHICH AN OPPORTUNITY TO SPECIFY
HOW THE SHARES REGISTERED IN THE NAME OF SUCH STOCKHOLDER SHALL BE VOTED, THE
PROXY SHALL BE VOTED IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS
ATTORNEYS IN THE PROXIES. THE ENCLOSED PROXY CONFERS DISCRETIONARY AUTHORITY
UPON THE PERSONS NAMED THEREIN WITH RESPECT TO AMENDMENTS OR VARIATIONS TO
MATTERS IDENTIFIED IN THE NOTICE OF THE MEETING AND WITH RESPECT TO OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
The Board of Directors knows of no other matter to be presented at the
Meeting. If any other matter should be presented at the Meeting upon which a
vote may be taken, such shares represented by all proxies received by the Board
of Directors will be voted with respect thereto in accordance with the judgment
of the persons named as proxyholder in the proxies.
A Form 10-K containing financial statements for the fiscal years ended
December 31, 1998, 1997 and 1996 is being mailed herewith to all Stockholders
entitled to vote. This Proxy Statement and the accompanying proxy are expected
to be mailed to Stockholders on or about April 20, 1999.
ITEM NO. 1
ELECTION OF DIRECTORS
The Corporation's Articles of Continuance, as amended, provide that
directors may be elected for a term of office of one or more years as may be
specified in the resolution by which the directors are elected. At the
Corporation's 1995 Annual Meeting, it was resolved that the members of the Board
of Directors shall be classified and elected as nearly as possible into three
classes, each with approximately one-third of the members of the Board of
Directors. The classified board is designed to assure continuity and stability
in the Board of Director's leadership and policies. Dr. Rudko and Mr. Pendergast
are classified as Class I directors and serve until the 2001 Annual Meeting. Mr.
Pulkonik and Mr. Dow are classified as Class II directors and serve until the
2000 Annual Meeting. Drs. Norton and Smith and Mr. Capozzi are classified as
Class III directors and serve until the 1999 Annual Meeting. The successors to
the class of directors whose terms expire at that meeting would be elected for a
term of office to expire at the third succeeding annual meeting after their
election and until their successors have been duly elected by the Stockholders.
Directors chosen to fill vacancies on a classified board shall hold office until
the next election of the class for which directors shall have been chosen, and
until their successors are duly elected by the Stockholders. Officers are
appointed by and serve at the discretion of the Board of Directors, subject to
their employment contracts.
Shares represented by all proxies received by the Board of Directors and not
so marked as to withhold authority to vote for an individual director, or for
all directors, will be voted (unless one or more nominees are unable or
unwilling to serve) FOR the election of [To Be Determined by Nominating
Committee] as Class III directors, each to serve until the 2002 Annual Meeting.
The Board of Directors knows of no reason why such nominees should be unwilling
to serve, but if such should be the case, proxies will be voted for the election
of some other person or for fixing the number of directors within Class III at a
lesser number.
2
<PAGE>
The following table sets forth as of March 19, 1999, the ages of and
positions and offices presently held by the directors of the Corporation, as
well as the date each individual was first elected a director, if applicable.
For information about ownership of the Corporation's Voting Securities by each
director, see "Beneficial Ownership of Common Stock".
<TABLE>
<CAPTION>
CLASS TO
DATE FIRST WHICH THE
BECAME A NOMINEE
NAME AGE DIRECTOR POSITION BELONGS
- ----------------------------------------- --- ----------- ----------------------------------------- ---------------
<S> <C> <C> <C> <C>
Robert I. Rudko, Ph.D.................... 56 4/14/92 Director and Chief Scientist I
William C. Dow........................... 52 8/15/97 President, Chief Executive Officer and II
Director
Edward H. Pendergast..................... 65 9/24/92 Chairman of the Board of Directors I
Harold P. Capozzi........................ 74 4/15/91 Director III
H.B. Brent Norton, M.D................... 38 6/10/94 Director III
Kenneth J. Pulkonik...................... 58 9/14/92 Director II
Roberts A. Smith, Ph.D................... 70 1/22/93 Director III
</TABLE>
- ------------------------
COMMITTEES
The Board of Directors established an Audit Committee, a Compensation
Committee, and a Nominating Committee in January 1993. The Board of Directors
established an Executive Committee in July 1996.
In Fiscal 1998, Messrs. Pulkonik and Pendergast served as members of the
Audit Committee. The Audit Committee is concerned primarily with recommending
the selection of, and reviewing the effectiveness of, the Corporation's
independent auditors and reviewing the effectiveness of the Corporation's
accounting policies and practices, financial reporting and internal controls.
The Audit Committee reviews any transactions which involve a potential conflict
of interest and the scope of independent audit coverages, the fees charged by
the independent auditors, and internal control systems. The Audit Committee met
three times and held one telephonic meeting in Fiscal 1998.
In Fiscal 1998, Dr. Smith and Mr. Pendergast served on the Compensation
Committee. The Compensation Committee is responsible for setting and
administering the policies which govern annual compensation for the
Corporation's executives. The Compensation Committee negotiates and proposes to
the Board of Directors compensation arrangements for officers, other key
employees, certain consultants and directors of the Corporation. Following
review and approval by the Compensation Committee of the compensation policies,
all issues pertaining to executive compensation are submitted to the Board of
Directors for approval. The Compensation Committee met two times and held two
telephonic meetings in Fiscal 1998.
In Fiscal 1998, Dr. Rudko and Mr. Capozzi served on the Nominating
Committee, which was established for the purpose of nominating potential new
directors. The Nominating Committee will consider nominees recommended by
stockholders. A stockholder wishing to nominate a candidate should forward the
candidate's name and detailed background of the candidate's qualifications to
the Secretary of the Corporation. The Nominating Committee did not meet in
Fiscal 1998.
In Fiscal 1998, Mr. Dow, Mr. Pendergast and Dr. Rudko served on the
Executive Committee, which was established for the purpose of considering
matters arising between meetings of the Board. The Executive Committee met four
times and held two telephonic meetings in Fiscal 1998.
The Board of Directors held five formal meetings and seven telephonic
meetings during Fiscal 1998. No director attended fewer than 75% of the total
number of the meetings of the Board of Directors and those committees on which
he served during Fiscal 1998.
3
<PAGE>
No director or executive officer is related to any other director or
executive officer by blood or marriage.
BACKGROUND
The following is a brief account of the business experience of each
director.
HAROLD P. CAPOZZI, B.SC., B. COMM, B. ED. Mr. Capozzi has served as a
director of the Corporation since 1991. For approximately the last 35 years Mr.
Capozzi has acted in various managerial and operational capacities for several
family-owned businesses. These businesses, Capozzi Enterprises, Ltd., Pasadena
Investments, Ltd. and Catalina Properties, Ltd., operate primarily in the real
estate and real estate leasing markets and are privately held. He served seven
years as a member of the Legislative Assembly for the Province of British
Columbia. He was founding director of McDonald's Restaurants Canada Ltd. and Keg
Restaurants Ltd. From 1987 to 1991, Mr. Capozzi was a director for Pineridge
Capital Group Inc., a publicly traded venture capital company. From February
1997 to July 1998, he was a director of the Knightsbridge Corporation, a
publicly traded venture capital company, active in the field of Heart Monitoring
Technology. He was also a director of Richland Mines Inc., a publicly traded
company from 1994 to 1998. He is presently a director of two publicly traded
companies, Western Oil and Tire Distributors and Admiral Bay Mining Ltd., a
mining development company.
WILLIAM C. DOW. Mr. Dow has served as the President, Chief Executive
Officer and as a director of the Corporation since August 1997. Prior to joining
the Corporation, from 1993 to 1997, Mr..Dow served as President and Chief
Executive Officer of Deknatel Snowden Pencer Worldwide, Inc., a $100 million
medical device manufacturer. Deknatel Snowden Pencer Worldwide, Inc., became a
manufacturing and marketing subsidiary of Genzyme Corporation in 1996. Mr. Dow
has over 25 years of experience in the medical device and service industry
having held various positions in sales, marketing, distribution and general
management with Griffith Micro Science, Kendall, Terumo and American Hospital
Supply. Mr. Dow is a graduate of the United States Naval Academy with a Bachelor
of Science in Engineering and served as both a pilot and a Supply Corps officer
in the U.S. Navy.
H. B. BRENT NORTON, M.D. Dr. Norton has served as a director of the
Corporation since June 1994. He has served since 1991 as the President, Chief
Executive Officer and Director of IMI International Medical Innovations Inc.,
formerly IMI Diagnatech Inc., a publicly held biotechnology commercialization
company. Additionally, since 1990, he has owned and been the President of the
Ontario Workers Health Clinic, a privately held health assessment company. From
1990 to 1993, Dr. Norton was an associate at the Institute for Sport Medicine
and Human Performance, a privately held provider of medical care to athletes.
Dr. Norton received his degree as a Doctor of Medicine from McGill University
and a Master of Business Administration degree from the University of Western
Ontario.
EDWARD H. PENDERGAST. Mr. Pendergast was a director of PLC Medical from its
incorporation in 1981 until 1991. Mr. Pendergast has served as a director of the
Corporation since September 1992 and as its Lead Outside Director since March
1995. Mr. Pendergast assumed the position of Chairman of the Board in October
1998. Mr. Pendergast is the President of Pendergast & Company, a privately held
management consulting firm. From 1984 to 1989, Mr. Pendergast served as the
Chairman of Kennedy & Lehan, a public accounting firm. Mr. Pendergast serves as
a director of Plymouth Rubber Company Inc. (AMEX) and also serves as a member of
the Board of Directors of several other private companies. Mr. Pendergast is a
Certified Public Accountant and the former President of the Massachusetts
Society of Certified Public Accountants.
KENNETH J. PULKONIK. Mr. Pulkonik has served as a director of the
Corporation since 1992. Mr. Pulkonik has served as President and Chairman of the
Board of Rush Electronics Ltd. of Ontario, Canada, a privately held business,
since 1983. Mr. Pulkonik has also served as the Chairman of the Board for Rush
Corporation, the United States subsidiary of Rush Electronics Ltd., a privately
held company,
4
<PAGE>
since 1987. In 1971, Mr. Pulkonik co-founded Rush Industries, Inc., a privately
held industrial distributor to the electronics industry in the New England area.
Mr. Pulkonik received a S.B. in Chemical Engineering, a S.M. in Metallurgy, both
from MIT and a S.M. in Management from the Sloan School at MIT.
ROBERT I. RUDKO, PH.D. Dr. Rudko served as Chairman of the Corporation from
April 1992 until October 1998, President of the Corporation from April 1992
until October 1993, Chief Scientist of the Corporation from October 1993 to
October 1998 and President of Laser Engineering, Inc. (now known as PLC Medical
Systems, Inc. "PLC Medical"), a wholly owned subsidiary of the Corporation, from
1981 to October 1993. Dr. Rudko has over 30 years of experience in the analysis,
design, development, and manufacture of lasers and surgical laser systems. Prior
to founding PLC Medical in 1981, Dr. Rudko was employed by the Research Division
of Raytheon Company, a publicly traded defense contractor, from 1967 to 1981,
first as a Senior Research Scientist and then as Principal Research Scientist.
Dr. Rudko received his Ph.D. degree in electrical engineering from Cornell
University.
ROBERTS A. SMITH, PH.D. Dr. Smith has served as a director of the
Corporation since January 1993. From 1980 to 1986 and from 1988 to 1994, Dr.
Smith was the President of Viratek, Inc., a pharmaceutical development company.
He was the Vice President of SPI Pharmaceuticals, a pharmaceutical marketing
company from 1990 to 1992, and from 1985 to 1988, Dr. Smith was the Vice
President and a director of the Nucleic Acid Research Institute. Dr. Smith has
been the Vice Chairman since 1992 and a founding director since 1959 of ICN
Pharmaceuticals, Inc. the parent company of Viratek, Inc., a publicly traded
company, and SPI Pharmaceuticals. From 1958 to 1987, Dr. Smith was a full
Professor and from 1987 to the present, Dr. Smith has been a Professor Emeritus,
at the University of California, Los Angeles where he instructs in biochemistry.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The executive officers and significant employees of the Corporation and its
operating subsidiaries, PLC Medical Systems, Inc. and PLC Medical Systems AG,
their ages and positions as of March 19, 1999 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
William C. Dow*........................... 52 President, Chief Executive Officer and Director
Robert Svikhart*.......................... 41 Chief Financial Officer and Treasurer
Cindy Crosby.............................. 40 Vice President of Regulatory Affairs and Quality Assurance--PLC
Medical
Paul A. Levesque.......................... 51 Vice President of Marketing and New Business Development--PLC
Medical
Stephen J. Linhares....................... 42 Vice President of Research--PLC Medical
Kenneth L. Luppi.......................... 38 Vice President of Operations and Development--PLC Medical
Jennifer T. Miller........................ 32 Vice President, General Counsel and Secretary
Vincent Puglisi........................... 51 Managing Director--PLC Medical Systems AG
</TABLE>
- ------------------------
* Executive Officer
The following is a brief account of the business experience of each
executive officer and key employee of the Corporation, other than Mr. Dow, whose
background is summarized above:
ROBERT SVIKHART. Mr. Svikhart has served as the Corporation's Chief
Financial Officer and Treasurer since June 1998. Prior to joining the
Corporation, Mr. Svikhart was a private equity investor. He joined Kohlberg &
Co. in 1989 and was named a general partner of the private equity investment
firm in 1992. Mr. Svikhart founded his own firm, Sachem Advisors, in 1995, to
initiate the management buyout of AmeriClean Systems Inc., which was sold by an
investor group to Unilever in 1998. Prior to joining
5
<PAGE>
Kohlberg & Co., Mr. Svikhart worked for four years as an investment banker,
including three years at Lazard Freres & Co.
CINDY CROSBY. Ms. Crosby has served as PLC Medical's Vice President of
Quality Assurance and Regulatory Affairs since June 1998 and from September
1997, as Director of Quality Assurance and Regulatory Affairs. Prior to joining
PLC Medical from 1991 to 1997, Ms. Crosby held senior Quality/ Regulatory
positions with Nitinol Medical Technologies, Inc., a publicly traded
cardiovascular medical device company and Stryker Biotech, a division of Stryker
Corporation, an orthopedic medical device company. From 1985 to 1991, Ms. Crosby
held various Quality control and assurance management positions with Applied
BioTechnologies, Inc., Therion Biologics, and BioProcess Technologies. In
addition, Ms. Crosby has held research positions with the Massachusetts Eye and
Ear Infirmary.
PAUL A. LEVESQUE. Mr. Levesque has served as PLC Medical's Vice President
of Marketing and Business Development since February 1998. Prior to joining PLC
Medical, Mr. Levesque was Vice President of Marketing and Sales for Corometrics
Medical Systems, a division of American Home Products. From 1984 to 1991, Mr.
Levesque held senior marketing positions at General Electric Medical Systems and
Zoll Medical. In addition, Mr. Levesque has over 11 years experience at Hewlett
Packard, medical products group, where he served in various professional sales
and marketing positions.
STEPHEN J. LINHARES. Mr. Linhares has served as PLC Medical's Vice
President of Research since November 1998. Mr. Linhares served as PLC Medical's
Vice President of Research and Development and Clinical Trials from January 1996
to November 1998. Mr. Linhares was PLC Medical's Director of Engineering from
1987 to 1995. He joined PLC Medical in 1983 as an engineer and was subsequently
appointed Operations Manager in 1985 and Director of Engineering in 1987. His
responsibilities currently include managing all aspects of PLC Medical's product
research and development as well as clinical affairs. Prior to joining PLC
Medical, Mr. Linhares was employed in the Research Division of Raytheon Company,
a publicly traded defense contractor, as an Associate Scientist from 1979 to
1983.
KENNETH J. LUPPI. Mr. Luppi has served as PLC Medical's Vice President of
Operations and Development since November 1998. Mr. Luppi served as Vice
President of Operations from September 1997 until November 1998, and was Acting
Vice President of Operations from May 1997 to September 1997. Mr. Luppi was
hired in August 1993 as PLC Medical's Director of Service Operations. Prior to
joining PLC Medical, Mr. Luppi was employed as the National Service Manager of
Candela Laser Corporation, which manufactures medical lasers. Mr. Luppi holds a
BS degree in Biomedical Engineering from Boston University.
JENNIFER T. MILLER. Ms. Miller has served as the Corporation's General
Counsel since September 1997, a Vice President since May 1998, and Secretary
since January 1999. From 1991 to 1997, Ms. Miller was an attorney with the firm
of Fish & Richardson P.C. Ms. Miller is a magna cum laude graduate of Tufts
University, where she was awarded a Fulbright Scholarship. Ms. Miller received
her law degree from Harvard Law School.
VINCENT PUGLISI. Mr. Puglisi has served as the Managing Director of PLC
Medical Systems AG since August 1998 and previously served as PLC Medical's Vice
President of Corporate Sales since December 1997. From 1984 to 1997, Mr. Puglisi
was President of Medrep, an independent manufacturers' representative for
several medical supply and equipment companies. Prior to founding Medrep in
1984, Mr. Puglisi served as Vice President, Marketing and Sales for Professional
Disposables, Inc. beginning in 1980. He began his career in healthcare with
American Hospital Supply in 1975 and held several positions there until 1980.
Mr. Puglisi attended the U.S. Air Force Academy and served as Captain in the
USAF until 1975.
6
<PAGE>
CERTAIN TRANSACTIONS
During Fiscal 1991, the Corporation loaned Corhart Management Group, Inc.
("Corhart") the sum of $126,061 on a demand basis. Corhart provided office and
administration services for the Corporation's Vancouver office. Corhart then
loaned a portion of the $126,061 to Dr. Rudko. The balance of this loan plus
accrued interest is approximately $92,928.01. The loan currently bears interest
at 8.65%.
Prior to joining the Corporation as an employee, Mr. Svikhart provided
consulting services to the Corporation in Fiscal 1998, for which he received
fees from the Corporation in the amount of $45,000.
No insider or proposed nominee for election as a director of the Corporation
and no associate or affiliate of the foregoing persons has or has had any
material interest, direct or indirect, in any transaction since the commencement
of Fiscal 1998 or in any proposed transaction which in either such case has
materially affected or will materially affect the Corporation, except as
described above.
The Corporation believes that the aforementioned transaction was on terms as
favorable as could have been obtained from independent third parties, and that
any future transaction by the Corporation with its officers, directors or
principal stockholders will be on terms no less favorable than could be obtained
from independent third parties and will be subject to approval by a majority of
the independent directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
executive officers and directors, and persons who beneficially own more than ten
percent (10%) of the Corporation's stock to file initial reports of ownership on
Form 3, reports of changes in ownership on Form 4 and annual statements of
changes in beneficial ownership on Form 5 with the Securities and Exchange
Commission ("SEC") and any national securities exchange on which the
Corporation's securities are registered. Executive officers, directors and
greater than ten percent (10%) beneficial owners are required by SEC regulations
to furnish the Corporation with copies of all Section 16(a) forms they file.
Based on a review of the copies of such forms furnished to the Corporation
and written representations from its executive officers and directors, the
Corporation believes that all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than ten percent (10%) beneficial
owners were complied with for the fiscal year ended December 31, 1998 ("Fiscal
1998"), except for the following: Harold P. Capozzi and Kenneth J. Pulkonik each
failed to report one purchase transaction on Form 4 in Fiscal 1998. A timely
Form 5 was filed by Mr. Capozzi and Mr. Pulkonik reporting these transactions.
7
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of March 19, 1999, certain information
concerning stock ownership of the Corporation by (i) each person who is known to
the Corporation to be the beneficial owner of more than five percent (5%) of the
outstanding shares of the Corporation's Common Stock, (ii) each director of the
Corporation as of January 18, 1999; (iii) each of the executive officers named
in the Summary Compensation Table below, and (iv) all directors and executive
officers as a group as of January 18, 1999. Except as otherwise indicated in the
footnotes to the table, to the knowledge of the Corporation, the stockholders
listed in the table have sole voting and investment powers with respect to the
shares beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER
OF SHARES
BENEFICIALLY PERCENTAGE
NAME OF BENEFICIAL OWNER (1) OWNED (2) OF CLASS
- ----------------------------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
Robert I. Rudko, Ph.D. (3)............................................................... 1,494,762 7.3%
William C. Dow (4)....................................................................... 395,000 1.9%
Edward H. Pendergast (5)................................................................. 157,492 *
Harold P. Capozzi (6).................................................................... 122,062 *
H.B. Brent Norton, M.D. (7).............................................................. 75,000 *
Kenneth J. Pulkonik (8).................................................................. 170,500 *
Roberts A. Smith, Ph.D. (9).............................................................. 72,500 *
Robert Svikhart (10)..................................................................... 67,225 *
Paul Levesque (11)....................................................................... 21,167 *
Vincent Puglisi (12)..................................................................... 16,667 *
All current directors and Named Officers as a group (10 persons)......................... 2,592,375 12.5%
</TABLE>
- ------------------------
* Less than 1%
(1) Each such person may be reached through the Corporation at 10 Forge Park,
Franklin, Massachusetts 02038.
(2) Pursuant to the rules of the Securities and Exchange Commission, shares of
Common Stock which an individual or group has a right to acquire within 60
days of January 18, 1999 pursuant to the exercise of options or warrants are
deemed to be outstanding for the purpose of computing the percentage
ownership of such individual or group, but are not deemed to be outstanding
for the purpose of computing the percentage ownership of any other person
shown in the table.
(3) Includes 372,900 shares issuable pursuant to options that are currently
exercisable or will become exercisable within 60 days of January 18, 1999.
The table also includes 94,762 shares of Common Stock held by Dr. Rudko's
wife, but as to which Dr. Rudko disclaims any beneficial interest. The table
excludes 13,750 shares of Common Stock held by Dr. Rudko's adult children,
as to which he disclaims any beneficial interest.
(4) Includes 329,000 shares issuable pursuant to options that are currently
exercisable or will become exercisable within 60 days of January 18, 1999.
(5) Includes 117,000 shares issuable pursuant to options that are currently
exercisable or will become exercisable within 60 days of January 18, 1999.
(6) Includes 94,062 shares issuable pursuant to options that are currently
exercisable or will become exercisable within 60 days of January 18, 1999.
(7) Includes 65,000 shares issuable pursuant to options that are currently
exercisable or will become exercisable within 60 days of January 18, 1999.
8
<PAGE>
(8) Includes 132,000 shares issuable pursuant to options that are currently
exercisable or will become exercisable within 60 days of January 18, 1999.
(9) Includes 68,500 shares issuable pursuant to options that are currently
exercisable or will become exercisable within 60 days of January 18, 1999.
(10) Includes 52,225 shares issuable pursuant to options that are currently
exercisable or will become exercisable within 60 days of January 18, 1999.
(11) Includes 21,167 shares issuable pursuant to options that are currently
exercisable or will become exercisable within 60 days of January 18, 1999.
(12) Includes 16,667 shares issuable pursuant to options that are currently
exercisable or will become exercisable within 60 days of January 18, 1999.
COMPENSATION OF OFFICERS AND DIRECTORS
EXECUTIVE OFFICERS COMPENSATION
During Fiscal 1998, the aggregate cash compensation paid or payable to the
Corporation's officers was approximately $1,405,000.
The following table sets forth the compensation paid to (i) the
Corporation's President and Chief Executive Officer, and (ii) each of the four
other most highly compensated persons who were serving as officers of the
Corporation or its operating subsidiaries, PLC Medical Systems, Inc. and PLC
Medical Systems AG, as of December 31, 1998 (collectively the "Named Officers").
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION (F)
---------------------------------------------- SECURITIES
(E) UNDERLYING (G)
(A) (B) (C) (D) OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(4) (#) COMPENSATION
- --------------------------------------------- ---- -------- ------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert I. Rudko, Ph.D........................ 1998 $192,500(1) $ 0 $28,875(4) 0 $ 0
Chairman of the Board 1997 $192,500(1) $48,000(1) $28,875(4) 0 $ 0
and Chief Scientist 1996 $192,500(1) $38,500(1) $28,875(4) 0
William C. Dow............................... 1998 $300,000(2) $ 0 $45,000(4) 99,000 $ 0
President, Chief 1997 $116,538(2) $50,000(2) 660,000 $ 0
Executive Officer and Director
Robert Svikhart.............................. 1998 $ 76,961(3) $15,000(3) $11,544(4) 171,225 $11,067(5)
Chief Financial Officer
and Treasurer
Paul Levesque................................ 1998 $131,057(6) $ 0 $ 5,423(4) 54,500 $17,915(5)
PLC Medical's Vice
President of Marketing
and Business Dev.
Vincent Puglisi.............................. 1998 $158,775 $ 0 $ 8,735(4) 50,000 17,231(5)
PLC Medical Systems AG 1997 $ 4,492(7) $ 0 $ 125(4) 0
Managing Director
</TABLE>
- ------------------------
(1) Effective in September 1994, the Compensation Committee recommended and the
Board of Directors approved an employment agreement which provided for a
base salary of $175,000 for Dr. Rudko and benefits, to be selected by him up
to 15% of his base salary. This agreement, which was automatically renewed
for one year on January 1, 1998, provides for annual reviews of salary
increases and bonus plans by the Board of Directors for each fiscal year
beginning January 1, 1996. Effective January 1, 1996, the base salary of Dr.
Rudko increased from $175,000 to $192,500. No salary increase was provided
for Dr. Rudko for Fiscal 1997 and 1998. This agreement also provides that
Dr. Rudko may receive a bonus, commencing with Fiscal 1995, on a sliding
scale based upon the Corporation achieving a certain percentage of its
annual plan for sales and placements of the Heart Laser System, provided
that the Corporation must achieve at least 70% of plan for the bonus to be
paid. If the Corporation achieves at least 70% of its plan, Dr. Rudko will
receive 28% of his base salary as a bonus. If the Corporation achieves 100%
of its plan, Dr. Rudko will receive 40% of his base salary. The bonus
available provides for linear increases such that the maximum bonus Dr.
Rudko may receive is 120% of base salary if the Corporation achieves 190% of
its plan. Pursuant to the terms of this agreement, a bonus in the amount of
$38,500 was paid to Dr. Rudko for Fiscal 1996. In Fiscal 1997, the
Compensation Committee approved a $23,000 bonus for Dr. Rudko for acting as
Interim President of the Corporation as well as a $25,000 annual bonus. Dr.
Rudko received no bonus for Fiscal 1998.
(2) Mr. Dow joined the Corporation in August 1997. Effective August 15, 1997,
the Compensation Committee recommended and the Board of Directors approved
an employment agreement through August 31, 2000, for Mr. Dow which provides
for a base salary of $300,000 per annum through December 31,1998. Increases
for future years shall be established by the Board of Directors. This
agreement also provides that Mr. Dow may receive a yearly incentive bonus,
commencing with a
10
<PAGE>
guaranteed bonus of $50,000 for Fiscal 1997, followed by an incentive bonus
commencing in Fiscal 1998, on a sliding scale based upon the Corporation
achieving a certain percentage of its annual plan for sales and placements
of the Heart Laser System, revenue, operating results and other strategic
goals equal to or at least 70% of the performance plan as approved by the
Board of Directors. The incentive bonus will range from 70% to 120% of 50%
of Mr. Dow's then base salary for the fiscal year. Pursuant to this
agreement, a bonus of $50,000 was paid to Mr. Dow for Fiscal 1997. Pursuant
to this agreement, no bonus was paid to Mr. Dow for Fiscal 1998.
(3) Mr. Svikhart joined the Corporation in June 1998. Effective June 17, 1998,
the Compensation Committee recommended and the Board of Directors approved
an employment agreement through June 30, 2001, for Mr. Svikhart which
provides for a base salary of $145,000 per annum through December 31, 1999.
Increases for future years shall be established by the President and subject
to ratification by the Board of Directors. This agreement also provides that
Mr. Svikhart may receive a yearly incentive bonus, commencing with a
guaranteed bonus of $15,000 for Fiscal 1998, followed by an incentive bonus
commencing in Fiscal 1999, on a sliding scale based upon the Corporation
achieving a certain percentage of its annual plan for sales and placements
of the Heart Laser System, revenue, operating results and other strategic
goals equal to or at least 70% of the performance plan as approved by the
Board of Directors. The incentive bonus may range from 70% to 120% of 30% of
Mr. Svikhart's then base salary for the fiscal year. Pursuant to this
agreement, a bonus of $15,000 was paid to Mr. Svikhart for Fiscal 1998.
(4) In Fiscal 1995, the Compensation Committee approved a benefit allowance of
up to 15% of base salary for Dr. Rudko. In August 1997, a 15% benefit
allowance was approved as part of Mr. Dow's employment agreement. In June
1998, a 15% benefit allowance was approved as part of Mr. Svikhart's
employment agreement. The determination of such benefits is up to the
individual. Mr. Levesque and Mr. Puglisi each received a $500 per month
compensatory car allowance in Fiscal 1998. Mr. Puglisi's allowance was
increased to $1000 per month upon his relocation to Europe in September
1998. Executive officers participate in the Corporation's group life, health
and long-term disability insurance at generally the same benefit levels as
are available to all of the Corporation's full time employees.
(5) Consists of relocation reimbursements and cost of living allowances.
(6) Mr. Levesque joined the Corporation in February 1998.
(7) Mr. Puglisi joined the Corporation in December 1997.
The Corporation has no plans other than as set out herein pursuant to which
cash or non-cash compensation was paid or distributed to the Named Officers
during Fiscal 1998 or is proposed to be paid or distributed in a subsequent
year. Except as noted above, no other compensation was paid by the Corporation
to the Named Officers during Fiscal 1998, including personal benefits and
securities or property paid or distributed other than pursuant to a formal plan
under which compensation is offered on the same terms to all full time
employees.
11
<PAGE>
The following table sets forth the options granted to the Named Officers in
Fiscal 1998.
OPTION GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
------------------------------------------------- REALIZABLE VALUE
(C) AT ASSUMED ANNUAL
% OF RATES OF STOCK
TOTAL PRICE APPRECIATION
(B) OPTIONS FOR OPTION TERM
NUMBER OF GRANTED (D) (2)
SECURITIES TO EXERCISE ------------------
UNDERLYING EMPLOYEES OR BASE (E)
(A) OPTIONS IN FISCAL PRICE EXPIRATION (F) (G)
NAME GRANTED (#) YEAR (1) ($/SH) DATE 5% 10%
- ---------------------------------------- ----------- --------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
William Dow............................. 15,150 2% $ 5.3125 9/14/08 $ 50,616 $128,271
William Dow............................. 27,600 3% $ 5.375 9/14/08 93,297 236,432
William Dow............................. 30,750 4% $ 5.4375 9/14/08 105,153 266,479
William Dow............................. 25,500 3% $ 5.50 9/14/08 88,202 223,522
Paul Levesque........................... 30,000 4% $ 5.3125 2/6/08(3) 100,230 254,003
Paul Levesque........................... 20,000 2% $ 9.13 2/6/08(3) 114,836 291,017
Paul Levesque........................... 4,500 1% $ 5.3125 9/17/08 15,035 38,100
Vincent Puglisi......................... 50,000 6% $ 7.47 1/1/08(4) 234,892 595,263
Robert Svikhart......................... 65,000 8% $ 5.25 6/17/08(5) 214,610 543,865
Robert Svikhart......................... 83,500 10% $ 5.375 6/17/08(5) 282,256 715,292
Robert Svikhart......................... 9,750 1% $ 5.25 9/17/08 32,192 81,580
Robert Svikhart......................... 12,975 2% $ 5.375 9/17/08 43,860 111,149
</TABLE>
- ------------------------
(1) In Fiscal 1998, options to purchase 812,575 shares of Common Stock were
granted to Corporation employees, including executive officers.
(2) Amounts for the named executives shown in these columns have been derived by
multiplying (i) the difference between (a) the product of the per share
market price at the time of the grant and the sum of 1 plus the adjusted
stock price appreciation rate (the assumed rate of appreciation compounded
annually over the term of the option) and (b) the per share exercise price
of the option; and (ii) the number of securities underlying the option. The
dollar gains under these columns result from calculations assuming
hypothetical growth rates as set by the Securities and Exchange Commission
and are not intended to forecast possible future price appreciation, if any,
of the Corporation's Common Stock.
(3) These options vest over three years beginning February 7, 1999 as follows:
options to purchase 16,667 shares vested on February 7, 1999, options to
purchase 16,667 shares vest on February 7, 2000 and options to purchase
16,666 shares vest on February 7, 2001. These options are subject to earlier
termination upon certain events related to termination of employment.
(4) These options vest in equal installments over three years beginning January
2, 1999. These options are subject to earlier termination upon certain
events related to termination of employment.
(5) These options vest over time and/or the achievement of certain performance
criteria. Of these options, options to purchase 18,975 shares have vested as
of 12/31/98. Options to purchase 10,525 shares vested on 1/1/99. Options to
purchase 15,000 shares vest upon the earlier of the release of audited
financial statements by the Corporation for a completed fiscal year in which
the Corporation reports positive earnings after taxes (exclusive of
extraordinary items of gain or loss) or 6/17/01. Options to purchase 15,000
shares vest upon the earlier of the 30(th) consecutive trading day when the
12
<PAGE>
closing price of the Corporation's common stock exceeds $15.00 per share or
6/17/01. Options to purchase 15,000 shares vest upon the earlier of the
30(th) consecutive trading day when the closing price of the Corporation's
common stock exceeds $18.00 per share or 6/17/03. Options to purchase 15,000
shares vest upon the earlier of the 30(th) consecutive trading day when the
closing price of the Corporation's common stock exceeds $21.50 per share or
6/17/03. Options to purchase 30,000 shares vest upon the earlier of the
30(th) consecutive trading day when the closing price of the Corporation's
common stock exceeds $35.00 per share or 6/15/03. Options to purchase 30,000
shares vest upon the earlier of the 30(th) consecutive trading day when the
closing price of the Corporation's common stock exceeds $40.00 per share or
6/15/03. All options vest upon a sale or acquisition of substantially all of
the stock or assets of the Corporation. These options are subject to earlier
termination upon certain events related to termination of employment.
13
<PAGE>
The following table sets forth certain information with respect to the Named
Officers, including (i) the number of shares of Common Stock purchased upon
exercise of options in Fiscal 1998; (ii) the net value realized upon such
exercise; (iii) the number of unexercised options outstanding at December 31,
1998; and (iv) the value of such unexercised options at December 31, 1998.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
(D)
NUMBER OF SECURITIES (E)
(B) UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES (C) OPTIONS AT FY-END IN-THE-MONEY OPTIONS
(A) ACQUIRED VALUE EXERCISABLE/ AT FY-END EXERCISABLE/
NAME ON EXERCISE REALIZED ($) UNEXERCISABLE UNEXERCISABLE (1)(2)
- ----------------------------- ----------- ------------ ----------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert I. Rudko, Ph.D........ 0 0 372,900 / 372,900 $8,930 / $0
William C. Dow............... 0 0 329,000 / 759,000
Robert Svikhart.............. 0 0 52,225 171,225
Paul Levesque................ 0 0 21,167 54,500
Vincent Puglisi.............. 0 0 16,667 50,000
</TABLE>
- ------------------------
(1) In-the-Money options are those options for which the fair market value of
the underlying Common Stock is greater than the exercise prices of the
option.
(2) The value of unexercised options is determined by multiplying the number of
options held by the difference between the fair market value of the Common
Stock underlying the options at the end of Fiscal 1998 ($3.8125 per share as
determined by the average of the high and low sale prices of the Common
Stock as reported by the American Stock Exchange on December 31, 1998) and
the exercise price of the options granted. Since the fair market value at
the end of Fiscal 1998 was less than the exercise price of certain options
held, the following options were not included in the In the Money table; Mr.
Dow: 759,000 (329,000 exercisable and 430,000 unexercisable), Mr. Svikhart:
171,225 (52,225 exercisable and 119,000 unexercisable), Mr. Levesque: 54,500
options (21,167 exercisable and 33,333 unexercisable), Mr. Puglisi: 50,000
options (16,667 exercisable and 33,333 unexercisable).
COMPENSATION OF DIRECTORS
Each of the non-employee directors receives a fee of $650 for each meeting
of the Board of Directors plus reimbursement for related travel expenses. Each
of the non-employee directors receives an additional $2,000 per quarter.
Eligible directors also received an aggregate of 240,000 stock options through
1996 pursuant to the Corporation's 1993 Formula Stock Option Plan. In June 1997,
an aggregate of 70,000 stock options were granted to the non-employee directors
pursuant to the 1995 Stock Option Plan, except Mr. Capozzi. Mr. Capozzi's option
to purchase 10,000 shares was granted pursuant to the 1993 Formula Plan. In June
1998, an aggregate of 60,000 stock options were granted to the non-employee
directors pursuant to the 1995 Stock Option Plan. In March 1995, Mr. Pendergast
agreed to serve as the Lead Outside Director of the Corporation and effective
January 17, 1997, he received an additional $4,000 per quarter for his services
as lead outside director in addition to the fees and expenses referenced above.
Mr. Pendergast may also receive $200 per hour for other consulting activities
provided to the Corporation in excess of eight hours each month on a
pre-approved basis by the Board of Directors. Mr. Pendergast was also granted
options on August 4, 1995 and June 30, 1998 to purchase up to 10,000 shares of
Common Stock, subject to certain requirements and his continued service as Lead
Outside Director for the Corporation. The Corporation has no arrangements,
pursuant to which directors were compensated for their services in their
capacity as directors during Fiscal 1998 or thereafter, except as described
above.
14
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Corporation has arrangements with respect to compensation received or
that may be received by the Named Officers to compensate such officers in the
event of termination of employment (resignation, retirement, change in control)
or in the event of a change in responsibilities following a change in control.
An employment agreement was entered into in May 1992 between Dr. Rudko and
the Corporation providing for payment of 24 months' base salary and prior bonus
to Dr. Rudko. The agreement was amended in September 1994 to provide that in
addition to the severance benefits discussed above, in the event of a sale or
change of control in the Corporation, and if Dr. Rudko's employment is
terminated without cause, or if Dr. Rudko is transferred outside of Eastern
Massachusetts or if he has a significant reduction in responsibility with the
Corporation, then he shall be entitled to receive 299% of his prior year's
compensation (as determined by Section 280G of the Internal Revenue Code of
1986, as amended). In addition, this employment agreement, as modified, provides
that if Dr. Rudko remains with the Corporation for one year after a sale or
change of control in the Corporation, then he shall receive as a bonus an amount
equal to 18 months of his then current base salary.
An employment agreement was entered into in August 1997 between Mr. Dow and
the Corporation providing for payment of Severance Benefits of 150% of his then
current base salary, 150% of his incentive bonus earned in the Corporation's
most recent fiscal year and continuation of any other benefits available to Mr.
Dow and his family on his last day of service for twelve months if Mr. Dow's
employment is terminated without cause. If Mr. Dow's employment is terminated
without cause following a sale or change of control of the Corporation, then he
is entitled to receive 299% of his Severance Benefits. In addition, this
employment agreement provides that if Mr. Dow remains with the Corporation for
one year after a sale or change of control in the Corporation, then he shall
receive as a bonus an amount equal to 100% of his then current base salary and
incentive bonus paid during the preceding fiscal year and the fair market value
of all other benefits then payable, irrespective of whether he thereafter
actually terminates employment with the Corporation.
An employment agreement was entered into in June 1998 between Mr. Svikhart
and the Corporation providing for payment of Severance Benefits of 100% of his
then current base salary, 100% of his incentive bonus earned in the
Corporation's most recent fiscal year and continuation of any other benefits
available to Mr. Svikhart and his family on his last day of service for twelve
months if Mr. Svikhart's employment is terminated without cause. If Mr.
Svikhart's employment is terminated without cause following a sale or change of
control of the Corporation, then he is entitled to receive 200% of his Severance
Benefits. In addition, this employment agreement provides that if Mr. Svikhart
remains with the Corporation for one year after a sale or change of control in
the Corporation, then he shall receive as a bonus an amount equal to 100% of his
then current base salary and incentive bonus paid during the preceding fiscal
year and the fair market value of all other benefits then payable, irrespective
of whether he thereafter actually terminates employment with the Corporation.
MANAGEMENT CONTRACTS
No management functions of the Corporation are performed to any substantial
degree by a person other than the directors or executive officers of the
Corporation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1998, Dr. Smith and Mr. Pendergast served as members of the
Compensation Committee, which was established on January 22, 1993. None of the
executive officers of the Corporation has served on the Board of Directors or
compensation committee of any other entity that has had any of such entity's
officers serve either on the Corporation's Board of Directors or Compensation
Committee.
15
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, composed of Dr. Smith and Mr. Pendergast in
Fiscal 1998, is responsible for setting and administering the policies which
govern annual compensation for the Corporation's executives. Following review
and approval by the Compensation Committee of the compensation policies, all
issues pertaining to executive compensation will be submitted to the Board of
Directors for approval.
This report is provided as part of the Corporation's annual report to its
Stockholders and is not considered to be proxy soliciting material. This report
is not incorporated by reference in prior Securities Act of 1933 and Securities
Exchange Act of 1934 filings made by the Corporation that might have
incorporated future filings in their entirety, except to the extent that the
Corporation specifically incorporates this information by reference, and should
not be otherwise deemed filed under such Acts.
The Compensation Committee believes that the primary objectives of the
Corporation's compensation policies are to attract and retain a management team
that can effectively implement and execute the Corporation's strategic business
plan. These compensation policies include (i) an overall management compensation
program that is competitive with management compensation programs at companies
of similar size; (ii) to recognize individual initiative, leadership and
achievement; (iii) short-term bonus incentives for management to meet the
Corporation's performance goals; and (iv) long-term incentive compensation in
the form of stock options and other long-term equity compensation which will
encourage management to continue to focus on shareholder return. The
Compensation Committee will review its compensation policies from time to time
in order to determine the reasonableness of the Corporation's compensation
programs and to take into account factors which are unique to the Corporation.
EXECUTIVE OFFICER COMPENSATION
The Committee performs annual reviews of executive compensation to confirm
the competitiveness of the overall executive compensation packages as compares
with companies who compete with the Corporation for prospective employees. The
compensation program for executive officers consists of three elements: (1) base
salary, which is set on an annual basis; (2) annual incentive compensation, in
the form of cash bonuses, which is based on achievement of predetermined
financial objectives of the Corporation and individual objectives; and (3)
long-term incentive compensation, in the form of stock options, granted when the
executive officer joins the Corporation and on occasion thereafter with the
objective of aligning the executive officers' long-term interests with those of
the stockholders and encouraging the achievement of superior results over an
extended period.
BASE SALARY
Base salaries for executive officers are targeted at competitive market
levels for their respective positions, levels of responsibility and experience.
In addition to external market data, the Committee also reviews the
Corporation's financial performance and individual performance when adjusting
base salary annually.
BONUS AND COMMISSION COMPENSATION
Bonus compensation is based on the Corporation's achievement of
predetermined financial, operational and strategic objectives. Giving greatest
weight to attainment of financial targets, the Committee also awards bonuses
based on various operational and strategic objectives, such as management
efficiency, and the ability to motivate others and build a strong management
team, develop and maintain the skills necessary to work in a high-growth
company, recognize and pursue new business opportunities and initiate programs
to enhance the Corporation's growth and successes. Bonuses are awarded on an
annual basis.
16
<PAGE>
LONG TERM INCENTIVE COMPENSATION
Long-term incentive compensation, in the form of stock options, allows the
executive officers to share in any appreciation in the value of the
Corporation's Common Stock. The committee believes that stock option
participation aligns executive officers' interests with those of the
stockholders. In addition, the Committee believes that equity ownership by
executive officers helps to balance the short term focus of annual incentive
compensation with a longer term view and may help to retain key executive
officers.
When establishing stock option grant levels, the Committee considers general
corporate performance, the Chief Executive Officer's recommendations, level of
seniority and experience, existing levels of stock ownership, previous grants of
stock options, vesting schedules of outstanding options and the current stock
price.
It is the standard policy of the Corporation to grant an initial stock
option grant to all executive officers at the time they commence employment
consistent with the number of options granted to executive officers in the
medical device and biotechnology industry at similar levels of seniority. In
addition, the Committee may also make performance-based grants throughout the
year. In making such performance-based grants, the Committee considers
individual contributions to the Corporation's financial, operational and
strategic objectives.
Senior management also participates in company-wide employee benefit plans,
including the Corporation's 401(k) Plan. Benefits under these plans are not
dependent upon individual performance.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Dow has served as the Corporation's Chief Executive Officer and
President since August 1997. Effective August 15, 1997, the Compensation
Committee recommended and the Board of Directors approved an employment
agreement through August 31, 2000 for Mr. Dow which provides for a base salary
of $300,000 per annum through December 31, 1998. The compensation Committee
believes that Mr. Dow's base salary is consistent with the range of salary
levels received by his counterparts in the medical device and biotechnology
industry and other comparable companies. Increases for future years shall be
established by the Board of Directors. This agreement also provides that Mr. Dow
may receive a yearly incentive bonus, commencing with a guaranteed bonus of
$50,000 for fiscal 1997, followed by an incentive bonus commencing in Fiscal
1998, on a sliding scale based upon the Corporation achieving a certain
percentage of its annual plan for sales and placements of the Heart Laser
System, revenue, operating results and other strategic goals equal to or at
least 70% of the performance plan as approved by the Board of Directors. The
incentive bonus will range from 70% to 120% of 50% of Mr. Dow's then base salary
for the fiscal year. Pursuant to this agreement, no bonus was paid to Mr. Dow
for Fiscal 1998.
Pursuant to his employment agreement, Mr. Dow was also granted options to
purchase 660,000 shares of Common Stock at an exercise price of $12.88 per
share. Certain of these options vest over time and/or the achievement of certain
performance criteria. Of these options, options to purchase 230,000 shares have
vested as of December 31, 1998. Options to purchase 115,000 will vest on the
earlier of August 15, 2000 or release of audited financial statements reporting
positive earnings after taxes. Options to purchase 115,000 shares will vest on
the earlier of August 15, 2000 or the 30(th)consecutive day when the closing
price for the Corporation's Common Stock exceeds $15.00 per share. Options to
purchase 50,000 shares will vest on the earlier of August 15, 2002 or the 30(th)
consecutive day when the closing price for the Corporation's Common Stock
exceeds $18.00 per share. Options to purchase 50,000 shares will vest on the
earlier of August 15, 2002 or the 30(th) consecutive day when the closing price
for the Corporation's Common Stock exceeds $21.50 per share. Options to purchase
50,000 shares will vest on the earlier of August 15, 2002 or the 30(th)
consecutive day when the closing price for the Corporation's Common Stock
exceeds $35.00 per share. Options to purchase 50,000 shares will vest on the
earlier of August 15, 2002 or the 30(th) consecutive day when the closing price
for the Corporation's Common Stock exceeds $40.00 per share. All options vest
upon a sale or acquisition of substantially all of the stock or assets of the
Corporation. The exercise price of
17
<PAGE>
these options was reduced in Fiscal 1998, but the vesting requirements and
schedule described above was not changed. See "Repricing of Options" below.
The grant of these options is designed to align the interests of Mr. Dow
with those of the Corporation's stockholders with respect to operating results
and long term increases in the price of the Corporation's stock. The grant of
these options is consistent with the goals of the Corporation's stock option
program as a whole.
REPRICING OF OPTIONS
In Fiscal 1998, the Board of Directors of the Corporation approved the
repricing of options granted to directors, officers and employees of the
Corporation. In Fiscal 1998, there was a substantial decline in the market value
of the Corporation's stock and stocks in the Corporation's market sector.
Because of the decline in market value of the Corporation's Common Stock,
certain outstanding options were exercisable at prices that exceeded the market
value of the Common Stock. In view of this decline and in keeping with the
Corporation's philosophy of using equity incentives to motivate and retain
qualified directors, executives, and employees, the Board of Directors believed
it important to regain the incentive intended to be provided by options to
purchase shares of the Corporation's Common Stock. The Board of Directors
believed the repricing was necessary as a result of the intense competition in
the Corporation's industry for skilled directors, executives, engineers, sales
people, managers, and other employees. Further, equity-based compensation is of
particular importance among technology companies, and the failure of the
Corporation to provide competitive equity-based compensation could require the
Corporation to pay significantly higher cash salaries and bonuses in order to
attract and retain the best personnel. Because increased cash compensation would
reduce earnings and would likely result in an immediate drop in the value of the
stockholders' investments, the Board of Directors believed that repricing
outstanding options and regaining the incentive intended to be provided by such
options would be in the best interests of the Corporation and its stockholders.
As a result, the Board of Directors voted in January 1998 to reprice the
outstanding options of all non-executive employees of the Corporation having an
exercise price higher than $8.88 per share to $8.88. The Board of Directors
further voted in August 1998 to reprice the outstanding options of directors and
executive employees having a higher exercise price to the average daily closing
price of the Corporation's Common Stock, as traded on the American Stock
Exchange, for the three days immediately following FDA approval ($7.75 per
share).
In September 1998, the Board of Directors adopted a new Senior Management
Investment Program ("SMIP") to promote additional investment by directors and
members of the Corporation's senior management. Under the SMIP, directors and
senior management had to personally purchase Common Stock of the Corporation in
order to qualify for repricing of previously granted options. Under the SMIP,
individuals who purchased shares of the Corporation's Common Stock in the open
market between September 15, 1998 and December 31, 1998 (the "Participants")
received options to purchase an additional 1.5 shares of Common Stock at an
exercise price equal to the Participant's share purchase price (the "Share
Purchase Price"). In addition, Participants received ten "option credits" for
each share of Common Stock purchased between September 15, 1998 and December 31,
1998. Participants could use each "option credit" to:
(i) reduce the exercise price of an outstanding option (vested or unvested)
to purchase one share of Common Stock to the Participant's Share
Purchase Price; or
(ii) extend the expiration date of any outstanding option (vested or
unvested) for an additional three years; or
(iii) acquire new vested options with an exercise price equal to the
Participant's Share Purchase Price (at a rate of 6.67 option credits
for each new option to purchase one share of Common Stock).
18
<PAGE>
The Corporation's directors and senior management purchased 172,000 shares
of Common Stock in the open market pursuant to the SMIP at prices ranging from
$3.875 to $6.625, representing a total investment of over $887,000. Pursuant to
the SMIP, the exercise prices of options to purchase 1,219,500 shares of Common
Stock were repriced. The vesting requirements and vesting schedules of these
previously granted options were not changed.
In December 1998, the Board of Directors voted to reprice the outstanding
options held by employees not eligible to participate in the SMIP having a
higher exercise price to the closing price of our Common Stock, as traded on the
American Stock Exchange, on December 4, 1998 ($4.875 per share). As a result,
the exercise price of options to purchase 332,316 shares of Common Stock were
repriced to $4.875 per share.
The following table sets forth information with respect to the repricing of
options during Fiscal 1998: (i) the name of the director or executive officer,
(ii) the date of the repricing, (iii) the number of securities underlying the
amended option, (iv) the original exercise price or base price of the amended
option, (v) the per share exercise price or base price of the amended option;
and (vi) the amount of time remaining before the amended option would have
expired. In accordance with the rules of the Securities and Exchange Commission,
the following table includes information only with respect to optionees who were
directors and Named Officers of the Corporation at the time of the repricing.
TEN YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
EXERCISE NEW NEW
NUMBER OF PRICE AT EXERCISE MARKET EXERCISE
SECURITIES TIME OF PRICE AFTER DATE OF PRICE AT PRICE
UNDERLYING AUGUST AUGUST REPRICING TIME OF AFTER
REPRICED 1998 1998 PURSUANT SMIP SMIP
NAME OPTIONS REPRICING REPRICING TO SMIP REPRICING REPRICING
- ------------------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Harold P. Capozzi......................... 10,000 $ 10.44 $ 7.75 9/15/98 $ 4.625 $ 4.6875
Harold P. Capozzi......................... 10,000 $ 24.50 $ 7.75 9/15/98 $ 4.625 $ 4.6875
Harold P. Capozzi......................... 10,000 $ 20.75 $ 7.75 9/15/98 $ 4.625 $ 4.6875
Harold P. Capozzi......................... 10,000 $ 10.375 $ 7.75 9/15/98 $ 4.625 $ 4.6875
William C. Dow............................ 101,000 $ 12.88 $ 7.75 9/15/98 $ 4.625 $ 5.3125
William C. Dow............................ 184,000 $ 12.88 $ 7.75 9/15/98 $ 4.625 $ 5.375
William C. Dow............................ 205,000 $ 12.88 $ 7.75 9/15/98 $ 4.625 $ 5.4375
William C. Dow............................ 170,000 $ 12.88 $ 7.75 9/15/98 $ 4.625 $ 5.50
H. B. Brent Norton........................ 10,000 $ 24.50 $ 7.75 9/15/98 $ 4.625 $ 4.6875
H. B. Brent Norton........................ 10,000 $ 20.75 $ 7.75 9/15/98 $ 4.625 $ 4.6875
H. B. Brent Norton........................ 10,000 $ 10.375 $ 7.75 9/15/98 $ 4.625 $ 4.6875
Paul A. Levesque.......................... 30,000 $ 9.13 $ 7.75 9/18/98 $ 5.125 $ 5.3125
Paul A. Levesque.......................... 20,000 $ 9.13 $ 7.75 N/A N/A N/A
Edward Pendergast......................... 10,000 $ 10.44 $ 7.75 9/15/98 $ 4.625 $ 5.3125
Edward Pendergast......................... 10,000 $ 10.375 $ 7.75 9/15/98 $ 4.625 $ 5.3125
Edward Pendergast......................... 10,000 $ 24.50 $ 7.75 9/15/98 $ 4.625 $ 5.3125
Edward Pendergast......................... 30,000 $ 20.75 $ 7.75 9/15/98 $ 4.625 $ 5.3125
Edward Pendergast......................... 20,000 $ 10.375 $ 7.75 9/15/98 $ 4.625 $ 5.3125
Kenneth J. Pulkonik....................... 10,000 $ 10.44 $ 7.75 9/15/98 $ 4.625 $ 4.75
Kenneth J. Pulkonik....................... 10,000 $ 24.50 $ 7.75 9/15/98 $ 4.625 $ 4.75
Kenneth J. Pulkonik....................... 10,000 $ 20.75 $ 7.75 9/15/98 $ 4.625 $ 4.75
Kenneth J. Pulkonik....................... 10,000 $ 10.375 $ 7.75 9/15/98 $ 4.625 $ 4.75
Roberts A. Smith.......................... 10,000 $ 10.44 $ 7.75 9/15/98 $ 4.625 $ 5.5625
Roberts A. Smith.......................... 10,000 $ 24.50 $ 7.75 9/15/98 $ 4.625 $ 5.5625
<CAPTION>
LENGTH OF
ORIGINAL
OPTION
TERM
REMAINING
AT DATE
OF LAST
NAME REPRICING
- ------------------------------------------ -----------
<S> <C>
Harold P. Capozzi......................... 6/18/05
Harold P. Capozzi......................... 6/16/06
Harold P. Capozzi......................... 6/9/07
Harold P. Capozzi......................... 6/29/08
William C. Dow............................ 8/15/07(1)
William C. Dow............................ 8/15/07(1)
William C. Dow............................ 8/15/07(1)
William C. Dow............................ 8/15/07(1)
H. B. Brent Norton........................ 6/16/06
H. B. Brent Norton........................ 6/9/07
H. B. Brent Norton........................ 6/29/08
Paul A. Levesque.......................... 2/6/08(1)
Paul A. Levesque.......................... 2/6/08(1)
Edward Pendergast......................... 6/18/05
Edward Pendergast......................... 8/3/05
Edward Pendergast......................... 6/16/06
Edward Pendergast......................... 6/9/07
Edward Pendergast......................... 9/14/08
Kenneth J. Pulkonik....................... 6/18/05
Kenneth J. Pulkonik....................... 6/16/06
Kenneth J. Pulkonik....................... 6/9/07
Kenneth J. Pulkonik....................... 6/29/08
Roberts A. Smith.......................... 6/18/05
Roberts A. Smith.......................... 6/16/06
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
EXERCISE NEW NEW
NUMBER OF PRICE AT EXERCISE MARKET EXERCISE
SECURITIES TIME OF PRICE AFTER DATE OF PRICE AT PRICE
UNDERLYING AUGUST AUGUST REPRICING TIME OF AFTER
REPRICED 1998 1998 PURSUANT SMIP SMIP
NAME OPTIONS REPRICING REPRICING TO SMIP REPRICING REPRICING
- ------------------------------------------ ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Roberts A. Smith.......................... 10,000 $ 20.75 $ 7.75 9/15/98 $ 4.625 $ 5.5625
Roberts A. Smith.......................... 10,000 $ 10.375 $ 7.75 9/15/98 $ 4.625 $ 5.5625
Robert Svikhart........................... 65,000 $ 9.50 $ 7.75 9/18/98 $ 5.125 $ 5.25
Robert Svikhart........................... 83,500 $ 9.50 $ 7.75 9/18/98 $ 5.125 $ 5.375
<CAPTION>
LENGTH OF
ORIGINAL
OPTION
TERM
REMAINING
AT DATE
OF LAST
NAME REPRICING
- ------------------------------------------ -----------
<S> <C>
Roberts A. Smith.......................... 6/9/07
Roberts A. Smith.......................... 6/29/08
Robert Svikhart........................... 6/17/08(1)
Robert Svikhart........................... 6/17/08(1)
</TABLE>
- ------------------------
(1) These options are subject to earlier termination upon certain events related
to termination of employment.
As of March 19, 1999, the Corporation had outstanding 20,230,476 shares of
Common Stock and options to purchase an additional 2,889,973 shares of Common
Stock. The exercise prices of these options range from $3.69 to $8.88 per share,
with a weighted average purchase price of $5.13 per share.
COMPENSATION COMMITTEE
Edward H. Pendergast
Dr. Roberts A. Smith
April 20,1999
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return
(assuming reinvestment of dividends) from investing $100 on March 3, 1992 (the
day the Corporation's Common Stock began trading on the over-the-counter market
through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), and plotted at the end of each fiscal year thereafter as well
as at March 31, 1998 in each of the Corporation's Common Stock, the American
Stock Exchange Market Index of companies, and an index of 275 medical instrument
and supply companies (including Cooper Companies, Summit Technology, Inc. and a
number of other laser manufacturers) compiled by Media General Financial
Services, Inc. The Corporation's Common Stock traded on NASDAQ from March 3,
1992 to September 16, 1992 and then commenced trading on the American Stock
Exchange ("AMEX") on September 17, 1992.
20
<PAGE>
ITEM NO. 2
PROPOSAL TO CONSIDER AND VOTE UPON
AN ORDINARY RESOLUTION CONFIRMING
BY-LAW NO. 1 OF THE CORPORATION
On March 12, 1999 as authorized by a special resolution passed by the
stockholders of the Corporation at its Annual and Extraordinary General Meeting
held on June 30, 1998, the Corporation's jurisdiction of incorporation was
transferred from British Columbia under the provisions of the Company Act of
British Columbia (the "British Columbia Act") to the Yukon Territory under the
provisions of the Yukon Act. Effective March 12, 1999, the Board of Directors
adopted By-law No. 1 of the Corporation, the full text of which is set out in
Schedule 1 to this Proxy Statement. Under the provisions of the Yukon Act, the
directors of the Corporation are required to submit a by-law or an amendment or
a repeal of a by-law made by the directors at the next meeting of stockholders
for approval.
Accordingly, at the Meeting the stockholders will be asked to consider and
approve an ordinary resolution confirming By-law No. 1 of the Corporation. The
full text of the ordinary resolution approving the confirmation of By-Law No. 1
is set out in Exhibit A to this Proxy Statement.
In order to approve the ordinary resolution, a majority of the votes cast at
the Meeting must be voted in favor thereof.
Detailed disclosure of the comparison of the British Columbia Act and the
Yukon Act as applicable to the Corporation was contained in the Proxy Statement
in respect of the Corporation's Annual and Extraordinary General Meeting of its
stockholders held on June 30, 1998. The By-Laws of the Corporation under the
Yukon Act replace the previously existing Articles of the Corporation under the
British Columbia Act. There are certain differences between the By-Laws adopted
by the board and the previously existing Articles under the British Columbia
Act. However, none of such differences are in the opinion of the Board of
Directors significant or material to the Corporation or its stockholders.
Certain of the changes to the provisions that existed under the previous
Articles which are now contained in the By-Laws are in the view of the Board of
Directors of administrative and procedural benefit to the Corporation in respect
of the administration and management of its affairs.
21
<PAGE>
The following summary sets out the principal differences between the newly
adopted By-Laws and the previously existing Articles under the British Columbia
Act:
<TABLE>
<CAPTION>
PREVIOUSLY EXISTING ARTICLES UNDER NEW BY-LAWS UNDER
ITEM BRITISH COLUMBIA ACT YUKON ACT
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
Delegation by directors of borrowing Silent--not permitted by legislation Authority to delegate to one or more
powers directors or officers
Number of directors Not more than 7 and not less than Not more than 20 and not less than
three three
Additional directors Directors can appoint between annual Directors can appoint between annual
meetings up to 1/3 of the numbers of meetings up to 1/3 of the numbers of
directors elected or appointed at directors who held office at the
the last annual meeting expiration of the last annual
meeting
Remuneration of directors Determined by directors unless Determined by directors
ordinary resolution of members
requires that it be determined by
the shareholders
Alternate directors Directors could not act as Directors can act as alternates for
alternates of other directors and an other directors and an alternate may
alternate could act as such for only be appointed by more than one
one director at a time director at any time
Removal of a director Required a special resolution Requires an ordinary resolution
Meetings of directors by telephone Silent Permitted
Notice of directors meetings No requirement to specify nature of Must specify any matter referred to
business to be transacted in section 116(2) of the Yukon Act,
otherwise no need to specify
</TABLE>
22
<PAGE>
ITEM NO. 3
ACCOUNTING MATTERS AND RATIFICATION OF AUDITORS
Unless otherwise directed by the Stockholders, the persons named in the
enclosed proxy will vote to appoint Ernst & Young LLP as auditors for the
current fiscal year ending December 31, 1998 at a remuneration to be fixed by
the directors. Ernst & Young LLP have been auditors for the Corporation since
July 1995. A representative of Ernst & Young LLP is expected to be present at
the Meeting, and will have the opportunity to make a statement and answer
questions from Stockholders if he or she so desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF ERNST &
YOUNG AS THE CORPORATION'S AUDITORS, AND PROXIES SOLICITED BY THE BOARD OF
DIRECTORS WILL BE VOTED IN FAVOR OF SUCH APPOINTMENT UNLESS A STOCKHOLDER HAS
OTHERWISE INDICATED ON THE PROXY CARD.
VOTING AT MEETING
The Board of Directors has fixed April 9, 1999 as the record date for the
determination of stockholders entitled to vote at this Meeting. At the close of
business on that date, there were outstanding and entitled to vote
shares of Common Stock.
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Corporation.
Proxies will be solicited principally through the mails. Further solicitation of
proxies from some Stockholders may be made by directors, officers, and regular
employees of the Corporation personally, by telephone, telegraph or special
letter. No additional compensation, except for reimbursement of reasonable
out-of-pocket expenses, will be paid for any such further solicitation. In
addition, the Corporation may request banks, brokers and other custodians,
nominees and fiduciaries to solicit customers of theirs who have shares of the
Corporation registered in the name of the nominee. The Corporation will
reimburse any such persons for their reasonable out-of-pocket expenses.
REVOCATION OF PROXY
Subject to the terms and conditions set forth herein, all proxies received
by the Corporation will be effective, notwithstanding any transfer of the shares
to which such proxies relate, unless prior to the Meeting the Corporation
receives a written notice of revocation signed by the person who, as of the
record date, was the registered holder of such shares. The Notice of Revocation
must indicate the certificate number or numbers of the shares to which such
revocation relates and the aggregate number of shares represented by such
certificate(s).
The proxy may be revoked at any time before it is exercised by written
notice to the Secretary prior to the Meeting, or by giving to the Secretary a
duly executed proxy bearing a later date than the proxy being revoked at any
time before such proxy is voted, or by appearing at the Meeting and voting in
person.
23
<PAGE>
STOCKHOLDER PROPOSALS
In order to be included in proxy material for the 2000 Annual Meeting,
tentatively scheduled to be held on May 24, 2000, Stockholders' proposed
resolutions must be received by the Corporation on or before December 17, 1999.
It is suggested that proponents submit their proposals by certified mail, return
receipt requested, addressed to the Secretary of the Corporation.
ANNUAL REPORT ON FORM 10-K
THE CORPORATION IS PROVIDING WITH THIS PROXY STATEMENT TO EACH STOCKHOLDER,
WITHOUT CHARGE, A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K,
INCLUDING THE AUDITED FINANCIAL STATEMENTS AND RELATED SCHEDULE FOR THE
CORPORATION'S MOST RECENT FISCAL YEAR ENDED DECEMBER 31, 1998.
MISCELLANEOUS
The management does not know of any other matters which may come before this
Meeting. However, if any other matters are properly presented to the Meeting, it
is the intention of the persons named in the accompanying proxy to vote, or
otherwise act, in accordance with their judgment on such matters
By Order of the Board of Directors
Jennifer T. Miller
SECRETARY
Franklin, Massachusetts
April 20, 1999
24
<PAGE>
THE MANAGEMENT HOPES THAT STOCKHOLDERS WILL ATTEND THIS MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN, AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
25
<PAGE>
EXHIBIT A
ORDINARY RESOLUTION OF THE MEETING CONFIRMING BY-LAW NO. 1 OF THE CORPORATION:
BE IT RESOLVED, as an Ordinary Resolution, that:
1. By-Law No. 1, in substantially the form attached as Schedule "1" to the
Proxy Statement accompanying the notice of this Annual General Meeting, is
hereby confirmed in all respects, with such amendments thereto as the
director or officer executing the same may approve, such approval to be
conclusively evidenced by his or her signature thereto; and
2. any one director or officer of the Corporation is hereby authorized, for and
on behalf of the Corporation, to execute and deliver By-Law No. 1 and, if
appropriate, deliver all other documents and do all other things as in the
opinion of such director or officer may be necessary or desirable to
implement this ordinary resolution and the matters authorized hereby, such
determination to be conclusively evidenced by the execution and delivery of
such document or instrument and the taking of any such action.
26
<PAGE>
SCHEDULE 1
BY-LAW NO. 1
A BY-LAW RELATING GENERALLY TO THE TRANSACTION OF
THE BUSINESS AND AFFAIRS OF
PLC SYSTEMS INC.
(THE "CORPORATION")
CONTENTS:
1. Interpretation
2. Business of the Corporation
3. Borrowing and Securities
4. Directors
5. Committees
6. Officers
7. Protection of Directors, Officers and Others
8. Shares
9. Dividends and Rights
10. Meetings of Shareholders
11. Divisions and Departments
12. Notices
BE IT ENACTED as a By-Law of the Corporation as follows:
27
<PAGE>
SECTION ONE
INTERPRETATION
1.01 DEFINITIONS--in the By-Laws of the Corporation, unless the context
otherwise requires:
"ACT" means the BUSINESS CORPORATIONS ACT, and any statute that may be
substituted therefore, as from time to time amended; marginal references to
sections of the Act herein are not made for the purpose of modifying or
affecting the meaning of any provision of this By-Law in any way but are
inserted only for the purpose of directing attention to provisions of the Act
which may be regarded as relevant;
"APPOINT" includes "ELECT" and vice versa;
"ARTICLES" means the Articles attached to the Certificate of Continuance dated
the 12th day of March, 1999 of the Corporation as from time to time amended or
restated;
"BOARD" means the Board of Directors of the Corporation;
"BY-LAWS" means this By-Law and all other By-Laws of the Corporation from time
to time in force and effect relating to transaction of business and affairs of
the Corporation in addition hereto, or in amendment hereof or in substitution
for all or any part of this By-Law;
"CORPORATION" means the Corporation incorporated by Certificate of Continuance
under the Act and named: PLC SYSTEMS INC.
"MEETING OF SHAREHOLDERS" includes an annual meeting of Shareholders and a
Special Meeting of Shareholders; "Special Meeting of Shareholders" includes both
a meeting of any class or classes acting separately from any other class or
classes and also a meeting, other than an annual meeting, of all Shareholders
entitled to vote at any annual meeting of Shareholders;
"NON-BUSINESS DAY" means Saturday, Sunday and any other day that is a holiday as
defined in the INTERPRETATION ACT (CANADA); or the INTERPRETATION ACT (YUKON);
"PROHIBITED CORPORATE SHAREHOLDER" means a corporation prohibited from holding
shares in itself or its holding body corporate or a subsidiary corporation
prohibited from holding shares in its parent corporation pursuant to the Act and
not exempted from such prohibited shareholdings by virtue of the Act;
"RECORDED ADDRESS" means in the case of a Shareholder his address as recorded in
the securities register; and in the case of joint Shareholders the address
appearing in the securities register in respect of such joint holdings
determined under Section 8.09; and in the case of a Director, Officer, auditor
or member of a Committee of Directors, his latest address as recorded in the
records of the Corporation;
save as aforesaid, words and expressions defined in the Act have the same
meaning when used herein; and words importing the singular number include the
plural and vice versa; words importing gender include the masculine, feminine
and neuter genders; and words importing persons include individuals, bodies
corporate, partnerships, trusts and unincorporated organizations.
SECTION TWO
BUSINESS OF THE CORPORATION
2.01 REGISTERED OFFICE--Until changed in accordance with the Act, the registered
office of the Corporation shall be at the City of Whitehorse, in the Yukon
Territory, and at such location therein as the Board may from time to time
determine.
2.02 CORPORATE SEAL--Until changed by the Board, the corporate seal of the
Corporation and any facsimiles thereof adopted by the Board for use in
jurisdictions outside the Yukon Territory shall be in the form approved by the
Directors.
28
<PAGE>
2.03 FINANCIAL YEAR--The financial year of the Corporation shall end on the day
in each year that is established by the Board.
2.04 EXECUTION OF INSTRUMENTS--Deeds, transfers, assignments, contracts,
obligations, certificates and other instruments required by law or otherwise by
these By-Laws or any resolution of the Board or Shareholders of the Corporation
to be executed under corporate seal may be signed on behalf of the Corporation
by any one or more persons each of which is either a Director of the Corporation
or a person who holds the office of Chief Executive Officer, Chairman of the
Board, President, Managing Director, Vice-President, Secretary, Treasurer,
Assistant Secretary, Assistant Treasurer or any other office created by by-law
or by resolution of the Board. Notwithstanding the foregoing, the Board may from
time to time direct the manner in which and the person or persons by whom any
particular instrument or class of instruments may or shall be signed or sealed.
Any one Officer may affix the corporate seal to any instrument requiring the
same.
2.05 BANKING ARRANGEMENTS--The banking business of the Corporation including,
without limitation, the borrowing of money and the giving of security therefore,
shall be transacted with such banks, trust companies or other bodies corporate
or organizations as may from time to time be designated by or under the
authority of the Board. Such banking business or any part thereof shall be
transacted under such agreements, instructions and delegations of powers as the
Board may from time to time by resolution prescribe or authorize.
2.06 VOTING RIGHTS IN OTHER BODIES CORPORATE--Any one of the Officers of the
Corporation may execute and deliver proxies and arrange for the issuance of
voting certificates or other evidence of the right to exercise the voting rights
attaching to any securities held by the Corporation. Such instruments,
certificates or other evidence shall be in favour of such person or persons as
may be determined by the Officers executing such proxies or arranging for the
issuance of voting certificates or such other evidence of the right to exercise
such voting rights. In addition the Board may from time to time direct the
manner in which and the person or persons by whom any particular voting rights
or class of voting rights may or shall be exercised.
2.07 WITHHOLDING INFORMATION FROM SHAREHOLDERS--Subject to the provisions of the
Act, no Shareholder shall be entitled to discovery of any information respecting
any details or conduct of the Corporation's business which, in the opinion of
the Board, would not be in the best interests of the Shareholders or the
Corporation to communicate to the public. The Board may from time to time
determine whether and to what extent and at what time and place and under what
conditions or regulations the accounts, records and documents of the Corporation
or any of them shall be open to the inspection of Shareholders and no
Shareholder shall have any right of inspecting any account, record or document
of the Corporation except as conferred by the Act or authorized by the Board or
by resolution passed at a general meeting of Shareholders.
2.08 MECHANICAL REPRODUCTION OF SIGNATURES--The signature of any officer of the
Corporation may, if authorized by the Board, be printed, lithographed, engraved
or otherwise mechanically reproduced upon all instruments executed or issued by
the Corporation or any officer thereof; and any instrument on which the
signature of any such person is so reproduced, shall subject to Section 2.04
hereof be deemed to have been manually signed by such person whose signature is
so reproduced and shall be as valid to all intents and purposes as if such
instrument had been signed manually, and notwithstanding that the person whose
signature is so reproduced may have ceased to hold office at the date of the
delivery or issue of such instrument. The term "instrument" as used in this
Section shall include deeds, mortgages, hypothecs, charges, conveyances,
transfers and assignments of property, real or personal, agreements, releases,
receipts and discharges for the payment of money or other obligations,
certificates of the Corporation's shares, share warrants of the Corporation,
bonds, debentures and other debt obligations of the Corporation, and all paper
writings.
29
<PAGE>
SECTION THREE
BORROWING AND SECURITIES
3.01 BORROWING POWER--Without limiting the borrowing powers of the Corporation
as set forth in the Act, the Board is authorized from time to time:
(a) to borrow money upon the credit of the Corporation in such amounts and on
such terms as may be deemed expedient by obtaining loans or advances or by
way of overdraft or otherwise;
(b) to issue, re-issue, sell or pledge bonds, debentures, notes or other
evidence of indebtedness or guarantees of the Corporation, whether secured
or unsecured for such sums and at such prices as may be deemed expedient;
(c) subject to the Act, to issue guarantees on behalf of the Corporation to
secure the performance of the obligations of any person; and
(d) to charge, mortgage, hypothecate, pledge or otherwise create a security
interest in all or any currently owned or subsequently acquired real or
personal, movable or immovable, property and undertaking of the Corporation,
including book debts, rights, powers and franchises for the purpose of
securing any such bonds, debentures, notes or other evidences of
indebtedness or guarantee or any other present or future indebtedness or
liability of the Corporation.
Nothing in this section limits or restricts the borrowing of money by the
Corporation on bills of exchange or promissory notes made, drawn, accepted or
endorsed by or on behalf of the Corporation.
3.02 DELEGATION OF BORROWING POWER--The Board may from time to time delegate to
such one or more of the Directors and Officers of the Corporation as may be
designated by the Board all or any of the powers conferred on the Board by
Section 3.01 to such extent and in such manner as the Board shall determine at
the time of each such delegation.
3.03 EXECUTION OF DEBT OBLIGATION DOCUMENTS--If the Board so authorizes, or if
any instrument under which any bonds, debentures or other debt obligations of
the Corporation are issued so provides, any bonds, debentures and other debt
obligations of the Corporation, instead of being manually signed by the
Directors or Officers authorized in that behalf, may have the facsimile
signatures of such Directors or Officers printed or otherwise mechanically
reproduced thereon and in either case, shall be as valid as if signed manually,
but no such bond, debenture or other debt obligation, shall be issued unless it
is manually signed, countersigned or certified by or on behalf of a trust
company or other transfer agent or registrar duly authorized by the Board or the
instrument under which such bonds, debentures or other debt obligations are
issued so to do. Notwithstanding that any persons whose facsimile signature is
so used shall have ceased to hold the office that he is stated on such bond,
debenture or other debt obligation to hold at the date of the actual issue
thereof, the bond debenture or other debt obligation shall be valid and binding
on the Corporation.
SECTION FOUR
DIRECTORS
4.01 NUMBER OF DIRECTORS AND QUORUM--Until changed in accordance with the Act,
the Board shall consist of not fewer than three (3) and not more than twenty
(20) Directors. Subject to Section 4.07 and subject also to the Articles and the
Act, the quorum for the transaction of business at any meeting of the Board
shall consist of a majority of the Directors or such lesser number of Directors
as the Board may from time to time determine. A Director interested is to be
counted in a quorum notwithstanding his interest.
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4.02 QUALIFICATION--No person shall be qualified for election as a Director if
he is less than Nineteen (19) years of age; if he is of unsound mind and has
been so found by a Court in Canada or elsewhere; if he is not an individual; or
if he has the status of a bankrupt. A Director need not be a Shareholder.
4.03 ELECTION AND TERM--Each Director named in the Notice of Directors filed at
the time of continuance shall hold office from the date of the Certificate of
Continuance until the expiration of the term of office applicable to that
Director at the date of the Certificate of Continuance. At each annual general
meeting of the Corporation, the Corporation shall elect directors to the Board
as may be required to fill any positions vacated by reason of the expiration of
the term of office of one or more of the Directors. A Director may be elected
for a term of office of one or more years of office as may be specified in the
resolution by which he is elected. In this part, "year or office" means the
period of time commencing on the date of an annual general meeting of the
Corporation and ending on the date of the annual general meeting held in the
next subsequent calendar year. If in any calendar year the Corporation does not
hold an annual general meeting, the Directors whose terms of office would have
expired in such calendar year shall be deemed to have been elected as Directors
on the last date on which the annual general meeting could have been held in
such calendar year pursuant to the Act and each Director so deemed elected may
hold office until the next annual general meeting is held and other Directors
are elected. The shareholders may, by special resolution, vary the term of
office of any Director. The number of Directors to be elected at any such
meeting shall be the number of Directors in office prior to the meeting unless
the Directors or the Shareholders otherwise determine. The election shall be by
ordinary resolution of the Shareholders. If an election of Directors is not held
at the proper time, the incumbent Directors shall continue in office until their
successors are elected.
4.04 REMOVAL OF DIRECTORS--Subject to the provisions of the Act, the
Shareholders may by ordinary resolution passed at a special meeting remove any
Director from office and the vacancy created by such removal may be filled at
the same meeting failing which it may be filled by the Directors.
4.05 VACATION OF OFFICE--A Director ceases to hold office when: he dies; he is
removed from office by the Shareholders; he ceases to be qualified for election
as a Director; or his written resignation is sent or delivered to the
Corporation, or if a time is specified in such resignation, at the time so
specified, whichever is later.
4.06 VACANCIES
(a) Subject to the Act and the Articles, a quorum of the Board may fill a
vacancy in the Board, except a vacancy resulting from an increase in the
minimum number of Directors or from a failure of the Shareholders to elect
the minimum number of Directors. In the absence of a quorum of the Board, or
if the vacancy has arisen from a failure of the Shareholders to elect the
minimum number of Directors, the Board shall forthwith call a special
meeting of the Shareholders to fill the vacancy. If the Board fails to call
such meeting or if there are no such Directors then in office, any
Shareholder may call the meeting; and
(b) The Directors of the Corporation may, between annual general meetings of the
Corporation, appoint one or more additional Directors to serve until the
next annual general meeting but the number of additional Directors shall not
at any time exceed one third of the number of Directors who held office at
the expiration of the last annual general meeting, and in no event shall the
total number of Directors exceed the maximum number of Directors fixed
pursuant to paragraph 4 of the Articles of Continuance. Any Director so
appointed shall hold office only until the next following annual general
meeting of the Corporation but shall be eligible for election at such
meeting and, so long as he is an additional Director prior to such meeting,
the number of Directors for election at such meeting shall be increased
accordingly.
4.07 ACTION BY THE BOARD--The Board shall manage the business and affairs of the
Corporation. The powers of the Board may be exercised by resolution passed at a
meeting at which a quorum is present or by resolution in writing, whether by
document, telegram, telecopy or any method of transmitting legibly
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recorded messages or other means, signed by all the Directors entitled to vote
on that resolution at a meeting of the Board and any resolution in writing so
signed shall be as valid as if it had been passed at a meeting of Directors or a
Committee of Directors and shall be held to relate to any date therein stated to
be the effective date thereof, and a copy of every such resolution in writing
shall be kept with the minutes of the proceedings of Directors or Committee of
Directors. Where there is a vacancy in the Board, the remaining Directors may
exercise all the powers of the Board so long as a quorum remains in office.
Where the Corporation has only one Director, that Director may constitute a
meeting. An act of a Director is valid notwithstanding any irregularity in his
election or appointment or a defect in his qualifications.
4.08 MEETINGS BY TELEPHONE--If all of the Directors consent, a Director may
participate in a meeting of the Board or of a Committee of Directors by means of
telephone or such other communications facilities as permit all persons
participating in the meeting to hear each other, and a Director participating in
such a meeting by such means is deemed to be present at the meeting. Any such
consent shall be effective whether given before or after the meeting to which it
relates and may be given with respect to all meetings of the Board and of
Committees of Directors held while a Director holds office.
4.09 PLACE OF MEETING--Meetings of the Board may be held at any place in or
outside Canada.
4.10 CALLING OF MEETINGS--Meetings of the Board shall be held from time to time
and at such place as the Board may determine. In addition, each of the Chairman
of the Board, the Managing Directors, the President or any two Directors may
convene or direct the convening of a meeting of the Board.
4.11 NOTICE OF MEETING--Except as otherwise provided in Section 4.12, notice of
the time and place of each meeting of the Board shall be given in the manner
provided in Section 12.01 to each Director not less than forty-eight (48) hours
before the time when the meeting is to be held. A notice of a meeting of
Directors need not specify the purpose of or the business to be transacted at
the meeting except where Section 115(3) of the Act requires such purpose or
business to be specified, including any proposal to:
(a) submit to the Shareholders any question or matter requiring approval of the
Shareholders;
(b) fill a vacancy among the Directors or in the office of auditor;
(c) issue securities;
(d) declare dividends;
(e) purchase, redeem, or otherwise acquire shares of the Corporation;
(f) pay a commission for the sale of shares;
(g) approve a management proxy circular;
(h) approve any annual financial statements; or
(i) adopt, amend or repeal By-Laws.
A Director may in any manner waive notice of or otherwise consent to a meeting
of the Board either before or after the convening of the meeting.
4.12 REGULAR MEETINGS--The Board may by resolution appoint a day or days in any
month or months for regular meetings of the Board at a place and hour to be
named in the resolution. No notice shall be required for any such regular
meeting.
4.13 FIRST MEETING OF NEW BOARD--Provided a quorum of Directors is present, each
newly elected Board may without notice hold its first meeting immediately
following the meeting of Shareholders at which such Board or portion thereof is
elected.
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4.14 ADJOURNED MEETING--Notice of an adjourned meeting of the Board is not
required if the time and place of the adjourned meeting is announced at the
original meeting.
4.15 CHAIRMAN--The Chairman of any meeting of the Board shall be the first
mentioned of such of the following Officers as have been appointed and who is a
Director and is present at the meeting: Chairman of the Board, Managing
Director, President, or a Vice-President who is a Director. If no such Officer
is present, the Directors present shall choose one of their number to be
Chairman.
4.16 VOTES TO GOVERN--At all meetings of the Board every question shall be
decided by a majority of the votes cast on the question. In cases of an equality
of votes the Chairman of the meeting shall not be entitled to a second or
casting vote.
4.17 CONFLICT OF INTEREST--A Director or Officer who is a party to, or who is a
Director or Officer of or has a material interest in any person who is a party
to, a material contract or proposed material contract with the Corporation shall
disclose the nature and extent of his interest at the time and in the manner
provided by the Act. Any such contract or proposed contract shall be referred to
the Board or Shareholders for approval even if such contract is one that in the
ordinary course of the Corporation's business would not require approval by the
Board or Shareholders, and a Director interested in a contract so referred to
the Board shall not vote on any resolution to approve the same except as
provided by the Act.
4.18 REMUNERATION AND EXPENSES--The Directors shall be paid such remuneration
for their services as the Board may from time to time determine. The Directors
shall also be entitled to be reimbursed for travelling and other expenses
properly incurred by them in attending meetings of the Board or any committee
thereof. Nothing herein contained shall preclude any Director from serving the
Corporation in any other capacity and receiving remuneration therefore.
4.19 ALTERNATE DIRECTOR--Any director (herein called the "Appointor") may from
time to time by written notice to the Corporation appoint any person (herein
called the "Appointee") to be his alternate director provided that the directors
approve of such appointment by resolution. Such approval shall not be required
if a director is appointed alternate director for another director. A person
(including a director) may be appointed as an alternate director by more than
one director.
(a) The Appointee while he holds office as an alternate director shall be
entitled and authorized:
(i) if expressly so specified by the Appointor in the instrument appointing
the Appointee, to receive notice of meetings of the directors, and notice
of meetings of all committees of which the Appointor is a member;
(ii) to attend and vote as a director at meetings of the directors in the
absence of the Appointor;
(iii) to attend and vote at meetings of all committees of which the
Appointor is a member, in the absence of the Appointor;
(iv) execute consents to resolutions in writing of the directors and such
committees, in substitution for the Appointor; and
(v) if expressly so authorized by the Appointor in the instrument appointing
the Appointee, to execute all documents, instruments and writings under
the seal of the Corporation or otherwise which the Appointor is
authorized to execute on behalf of the Corporation, in substitution for
the Appointor,
and for the purposes thereof the Appointee shall be deemed to be a director.
He shall not be deemed to be the agent of the Appointor.
(b) The Appointee shall have a separate vote on behalf of each director for whom
he is an alternate director. If the Appointee is also a director, the
Appointee shall be counted separately in determining
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the quorum of a meeting and shall have a separate vote on behalf of each
director for whom he is an alternate director in addition to being so
counted and voting in his own right as a director.
(c) The Appointee shall not be entitled to be remunerated as an alternate
director otherwise than out of the remuneration of the Appointor.
(d) No person shall act as an alternate director unless he qualifies under the
Act to act as a director of the Corporation and has consented in writing to
his appointment.
(e) An Appointee's appointment as an alternate director shall terminate if:
(i) the Appointor gives written notice revoking the Appointee's appointment;
or
(ii) the Appointee resigns; or
(iii) The Appointor ceases for any reason to be a director; or
(iv) the Appointee ceases to be qualified under the Act to act as a
director; or
(v) the term of the Appointee's appointment, if any, expires.
(f) Any Appointor may make or revoke an appointment of an Appointee by notice in
writing delivered to, mailed to or transmitted by telegram, cable or
telecopier to the registered office of the Corporation, delivery, postage or
transmission charges prepaid.
SECTION FIVE
COMMITTEES
5.01 COMMITTEE OF DIRECTORS
(a) The Board may appoint one or more Committees of Directors, however
designated, and delegate to such committee any of the powers of the Board
except those which, under the Act, a Committee of Directors has no authority
to exercise.
(b) The Directors may by resolution appoint an Executive Committee to consist of
such member or members of their body as they think fit, which Committee
shall have, and may exercise during the intervals between the meetings of
the Board, all the powers vested in the Board except the power to fill
vacancies in the Board, the power to change the membership of, or fill
vacancies in, said Committee or any other committee of the Board and such
other powers, if any, as may be specified in the resolution. The said
Committee shall keep regular minutes of its transactions and shall cause
them to be recorded in books kept for that purpose, and shall report the
same to the Board of Directors at such times as the Board of Directors may
from time to time require. The Board shall have the power at any time to
revoke or override the authority given to or acts done by the Executive
Committee except as to acts done before such revocation or overriding and to
terminate the appointment or change the membership of such Committee and to
fill vacancies in it. The Executive Committee may make rules for the conduct
of its business and may appoint such assistants as it may deem necessary. A
majority of the members of said Committee shall constitute a quorum thereof.
(c) The Directors may from time to time by resolution constitute, dissolve or
reconstitute standing committees and other committees consisting of such
persons as the Board may determine. Every committee constituted by the Board
shall have the powers, authorities and discretions delegated to it by the
Board (which shall not include the power to fill vacancies in the Board and
the power to change the membership of or fill vacancies in any committee
constituted by the Board or the power to appoint or remove officers
appointed by the Board) and shall conform to the regulations which may from
time to time be imposed upon it by the Board.
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(d) The Executive Committee and any other committee may meet and adjourn as it
thinks proper. Questions arising at any meeting shall be determined by a
majority of votes of the members of the committee present, and in case of an
equality of votes the chairman shall not have a second or casting vote. A
resolution approved in writing by all the members of the Executive Committee
or any other committee shall be as valid and effective as if it had been
passed at a meeting of such Committee duly called and constituted. Such
resolution may be in two or more counterparts which together shall be deemed
to constitute one resolution in writing. Such resolution shall be filed with
the minutes of the proceedings of the committee and shall be effective on
the date stated thereon or on the latest date stated in any counterpart.
5.02 TRANSACTION OF BUSINESS--Subject to the provisions of Section 5.01, the
powers of a Committee of Directors may be exercised by a meeting at which a
quorum is present or by resolution in writing signed by all the members of such
committee who would have been entitled to vote on that resolution at a meeting
of the committee. Meetings of such committee may be held at any place in or
outside Canada.
5.03 AUDIT COMMITTEE--When required by the Act the Board shall, and at any other
time the Board may, elect annually from among its number an audit committee to
be composed of not fewer than three (3) directors of whom a majority shall not
be Officers or employees of the Corporation or its affiliates. The audit
committee shall have the powers and duties provided in the Act.
5.04 PROCEDURE--Unless otherwise determined by the Board, each Committee of
Directors shall have the power to fix its quorum at not less than a majority of
its members, to elect its Chairman and to regulate its procedure.
SECTION SIX
OFFICERS
6.01 APPOINTMENT--The Board may from time to time appoint a President, one or
more Vice-Presidents (to which title may be added words indicating seniority or
function), a Secretary, a Treasurer and such other Officers as the Board may
determine, including one or more assistants to any of the Officers so appointed
(herein referred to as "Officers"). The Board may specify the duties of and, in
accordance with this By-Law and subject to the provisions of the Act, delegate
to such Officers powers to manage the business and affairs of the Corporation.
Subject to Sections 6.02 and 6.03, an Officer may but need not be a Director and
one person may hold more than one office.
6.02 CHAIRMAN OF THE BOARD--The Board may from time to time also appoint a
Chairman of the Board who shall be a Director. The Chairman of the Board shall,
when present, preside at all meetings of the Board, Committees of Directors and
at all meetings of Shareholders. In addition, the Board may assign to him any of
the powers and duties that may by the provisions of this by-law be assigned to
the Managing Director or to the President; and he shall have such other powers
and duties as the board may specify.
6.03 MANAGING DIRECTOR--The Board may from time to time appoint a Managing
Director who shall be a Director. If appointed, he shall be the Chief Executive
Officer and, subject to the authority of the Board, shall have general
supervision of the business and affairs of the Corporation; and he shall,
subject to the provisions of the Act, have such other powers and duties as the
Board may specify. During the absence or disability of the President, or if no
President has been appointed, the Managing Director shall also have the powers
and duties of the President's office.
6.04 PRESIDENT-- The Board, from time to time, may elect from among its number,
a President. The President, in the absence or non-appointment of the Chairman of
the Board, shall preside at meetings of the Board and at all meetings of the
Shareholders. He shall have general and active management of the business and
affairs of the Corporation, and without limitation to the foregoing:
(i) he shall have general supervision and direction of all the other
officers of the Corporation;
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(ii) he shall submit the annual report of the Board, if any, and the annual
balance sheets and financial statements of the business and affairs and
reports on the financial position of the Corporation as required by the
statutes to the annual general meeting and from time to time shall report
to the Board on all matters within his knowledge which the interest of
the Corporation requires to be brought to their attention.
(iii) he shall be ex-officio a member of all standing committees.
6.05 VICE-PRESIDENT--A Vice-President shall have such powers and duties as the
Board may specify.
6.06 SECRETARY--The Secretary shall attend and be the Secretary of all meetings
of the Board, Shareholders and Committees of the Board and shall enter or cause
to be entered in records kept for that purpose minutes of all proceedings
thereat; he shall give or cause to be given, as and when instructed, all notices
to Shareholders, Directors, Officers, the auditor and members of the Committees
of Directors; he shall be the custodian of the stamp or mechanical device
generally used for affixing the corporate seal of the Corporation and of all
books, papers, records, documents and instruments belonging to the Corporation,
except when some other Officer or agent has been appointed for that purpose; and
he shall have such other powers and duties as the Board may specify.
6.07 TREASURER--The Treasurer shall keep proper accounting records in compliance
with the Act and shall be responsible for the deposit of money, the safekeeping
of securities and the disbursement of the funds of the Corporation; he shall
render to the Board whenever required an account of all his transactions as
Treasurer and of the financial position of the Corporation; and he shall have
such other powers and duties as the Board may specify.
6.08 POWERS AND DUTIES OF OTHER OFFICERS--The powers and duties of all other
Officers shall be such as the terms of their engagement call for or as the Board
or the Chief Executive Officer may specify. Any of the powers and duties of an
Officer to whom an assistant has been appointed may be exercised and performed
by such assistant, unless the Board otherwise directs.
6.09 VARIATION OF POWERS AND DUTIES--The Board may from time to time and subject
to the provisions of the Act, vary, add to or limit the powers and duties of any
Officer.
6.10 TERM OF OFFICE--The Board, in its discretion, may remove any Officer of the
Corporation, without prejudice to such Officer's rights under any employment
contract, otherwise each Officer appointed by the Board shall hold office until
the earlier of the date his resignation becomes effective, the date his
successor is appointed or he shall cease to be qualified for that office.
6.11 TERMS OF EMPLOYMENT AND REMUNERATION--The terms of employment and the
remuneration of Officers appointed by the Board shall be settled by it from time
to time.
6.12 CONFLICT OF INTEREST--An Officer shall disclose his interest in any
material contract or proposed material contract with the Corporation in
accordance with Section 4.17.
6.13 AGENTS AND ATTORNEYS--The Board shall have power from time to time to
appoint agents or attorneys for the Corporation in or outside of Canada with
such powers of management or otherwise (including the power to sub-delegate) as
may be thought fit.
6.14 FIDELITY BONDS--The Board may require such Officers, employees and agents
of the Corporation as the Board deems advisable to furnish bonds for the
faithful discharge of their powers and duties, in such form and with such surety
as the Board may from time to time determine.
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SECTION SEVEN
PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
7.01 LIMITATION OF LIABILITY--No Director shall be liable for the acts,
receipts, neglects or defaults of any other Director or Officer or employee, or
for joining in any receipt or other act for conformity, or for any loss, damage
or expense happening to the Corporation through the insufficiency or deficiency
of title to any property acquired for or on behalf of the Corporation, or for
the insufficiency or deficiency of any security in or upon which any of the
moneys of the Corporation shall be invested, or for any loss or damage arising
from the bankruptcy, insolvency or tortious acts of any person with whom any of
the moneys, securities or effects of the Corporation shall be deposited, or for
any loss occasioned by any error of judgment or oversight on his part, or for
any other loss, damage or misfortune whatever which shall happen in the
execution of the duties of his office or in relation thereto, unless the same
are occasioned by his own wilful neglect or default; provided that nothing
herein shall relieve any Director or Officer from the duty to act in accordance
with the Act and the regulations thereunder or from liability for any breach
thereof.
7.02 INDEMNITY--Subject to the limitations contained in the Act, and to the
extent he is otherwise fairly and reasonably entitled thereto, the Corporation
shall indemnify a Director or Officer, a former Director or Officer, or a person
who acts or acted at the Corporation's request as a Director or Officer of a
body corporate of which the Corporation is or was a Shareholder or creditor (or
a person who undertakes or has undertaken any liability on behalf of the
Corporation or any such body corporate) and his heirs and legal representatives,
against all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by him in respect of any
civil, criminal or administrative action or proceeding to which he is made a
party by reason of being or having been a Director or Officer of the Corporation
or such body corporate, if
(a) he acted honestly and in good faith with a view to the best interests of the
Corporation; and
(b) in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, he had reasonable grounds for believing that
his conduct was lawful.
7.03 INSURANCE--Subject to the limitations contained in the Act, the Corporation
may purchase and maintain such insurance for the benefit of its Directors and
Officers as the Board may from time to time determine.
7.04 DIRECTORS MAY RELY--Directors may rely upon the accuracy of any statement
of fact represented by an Officer of the Corporation to be correct or upon
statements in a written report of the auditor of the Corporation and shall not
be responsible or held liable for any loss or damage resulting from the paying
of any dividends or otherwise acting in good faith upon any such statement.
SECTION EIGHT
SHARES
8.01 ALLOTMENT AND ISSUE--The Board may from time to time allot, or grant
options to purchase the whole or any part of the authorized and unissued shares
of the Corporation at such times and to such persons and for such consideration
as the Board shall determine, provided that no share shall be issued until it is
fully paid as prescribed by the Act. Subject to the Articles, no holder of any
class of share of the capital of the Corporation shall be entitled as of right
to subscribe for, purchase or receive any part of any new or additional issue of
shares of any class, whether now or hereafter authorized or any bonds,
debentures or other securities convertible into shares of any class.
8.02 COMMISSIONS--The Board may from time to time authorize the Corporation to
pay a reasonable commission to any person in consideration of his purchasing or
agreeing to purchase shares of the
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Corporation, whether from the Corporation or from any other person, or procuring
or agreeing to procure purchasers for any such shares.
8.03 REGISTRATION OF TRANSFER
(a) Subject to the provisions of the Act, no transfer of shares shall be
registered in a securities register except upon presentation of the
Certificate representing such shares with a transfer endorsed thereon or
delivered therewith duly executed by the registered holder or by his
attorney or successor duly appointed, together with such reasonable
assurance or evidence of signature, identification and authority to transfer
as the Board may from time to time prescribe, upon payment of all applicable
taxes and any fees prescribed by the Board, upon compliance with such
restrictions on transfer, if any, as are authorized by the Articles, and
upon satisfaction of any lien referred to in Section 8.05.
(b) The signature of the registered owner of any shares, or of his duly
authorized attorney, upon an authorized instrument of transfer shall
constitute a complete and sufficient authority to the Corporation, its
Directors, Officers and agents to register, in the name of the transferee as
named in the instrument of transfer, the number of shares specified therein
or, if no number is specified, all the shares of the registered owner
represented by share certificates deposited with the instrument of transfer.
If no transferee is named in the instrument of transfer, the instrument of
transfer shall constitute a complete and sufficient authority to the
corporation, its Directors, Officers and agents to register, in the name of
the person in whose behalf any certificate for the shares to be transferred
is deposited with the Corporation for the purpose of having the transfer
registered, the number of shares specified in the instrument of transfer or,
if no number is specified, all the shares represented by all share
certificates deposited with the instrument of transfer.
(c) Neither the Corporation nor any Director, Officer or agent thereof shall be
bound to inquire into the title of the person named in the form of transfer
as transferee, or, if no person is named therein as transferee, of the
person on whose behalf the certificate is deposited with the Corporation for
the purpose of having the transfer registered or be liable to any claim by
such registered owner or by any intermediate owner or holder of the
certificate or of any of the shares represented thereby or any interest
therein for registering the transfer, and the transfer, when registered,
shall confer upon the person in whose name the shares have been registered a
valid title to such shares.
(d) Every instrument of transfer shall be executed by the transferor and left at
the registered office of the Corporation or at the office of its transfer
agent or branch transfer agent or registrar for registration together with
the share certificate for the shares to be transferred and such other
evidence if any, as the Directors or the transfer agent or branch transfer
agent or registrar or branch registrar may require to prove the title of the
transferor or his right to transfer the shares and the right of the
transferee to have the transfer registered. All instruments of transfer
where the transfer is registered shall be retained by the Corporation or its
transfer agent or branch transfer agent or registrar or branch registrar and
any instrument of transfer, where the transfer is not registered, shall be
returned to the person depositing the same together with the share
certificate which accompanied the same when tendered for registration.
(e) There shall be paid to the Corporation in respect of the registration of any
transfer such sum, if any, as the Directors may from time to time determine.
8.04 TRANSFER AGENTS AND REGISTRARS--The Board may from time to time appoint a
registrar to maintain the securities register and a transfer agent to maintain
the register of transfers and may also appoint one or more branch registrars to
maintain branch securities registers and one or more branch transfer agents to
maintain branch registers of transfer, but one person may be appointed both
registrar and transfer agent. The Board may at any time terminate any such
appointment.
8.05 PURCHASE AND REDEMPTION OF SHARES--Subject to the provisions of the Act and
the Articles, a Corporation may purchase or otherwise acquire shares issued by
it and may purchase or redeem any redeemable
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shares issued by it at prices not exceeding the redemption of those shares
stated in the Articles or calculated according to a formula stated in the
Articles.
8.06 NON-RECOGNITION OF TRUSTS--Subject to the provisions of the Act, the
Corporation shall treat as absolute owner of the share the person in whose name
the share is registered in the securities register as if that person had full
legal capacity and authority to exercise all rights of ownership, irrespective
of any indication to the contrary through knowledge or notice or description in
the Corporation's records or on the share certificate.
8.07 SHARE CERTIFICATES--Every holder of one or more shares of the Corporation
shall be entitled, at his option, to a share certificate, or to a
non-transferable written acknowledgement of his right to obtain a share
certificate, stating the number and list or series of shares held by him as
shown on the securities register. Share Certificates and acknowledgements of a
Shareholder's right to a share certificate, respectively, shall be in such form
as the Board shall from time to time approve. Any share certificate shall be
signed in accordance with Section 2.04 and need not be under the corporate seal;
provided that, unless the Board otherwise determines, certificates representing
shares in respect of which a transfer agent and/or registrar has been appointed
shall not be valid unless countersigned by or on behalf of such transfer agent
and/or registrar. The signature of one of the signing Officers or, in the case
of share certificates which are not valid unless countersigned by or on behalf
of a transfer agent and/or registrar, the signature of one of the Officers, may
be printed or mechanically reproduced in facsimile upon share certificates and
every such facsimile signature shall for all purposes be deemed to be the
signature of the Officer whose signature it reproduces and shall be binding upon
the Corporation. A share certificate executed as aforesaid shall be valid
notwithstanding that one or both of the Officers whose facsimile signature
appears thereon no longer holds office at the date of issue of the Certificate.
8.08 REPLACEMENT OF SHARE CERTIFICATES--The Board or any Officer or agent
designated by the Board may in its or his discretion direct the issue of a new
share certificate in lieu of and upon cancellation of a share certificate that
has been mutilated or in substitution for a share certificate claimed to have
been lost, destroyed or wrongfully taken or which does not comply as to form
with the requirements from time to time of the Act in this regard, on payment of
such fee as the Board may direct and on such terms as to indemnity,
reimbursement of expenses and evidence of loss and of title as the Board may
from time to time prescribe, whether generally or in any particular case.
8.09 JOINT SHAREHOLDERS--If two or more persons are registered as joint holders
of any share, the Corporation shall not be bound to issue more than one
certificate in respect thereof, and delivery of such certificate to one of such
persons shall be sufficient delivery to all of them. Any one of such persons may
give effectual receipts for the certificate issued in respect thereof or for any
dividend, bonus, return of capital or other money payable or warrant issuable in
respect of such share. Joint Shareholders may collectively designate in writing
an address as their recorded address for service of notice and payment of
dividends but in default of such designation the address of the first named
joint Shareholder shall be deemed to be the recorded address aforesaid.
8.10 DECEASED SHAREHOLDERS--In the event of the death of a holder, or of one of
the joint holders, of any share, the Corporation shall not be required to make
any entry in the securities register in respect thereof or to make payment of
any dividends thereon except upon production of all such documents as may be
required by law and upon compliance with the reasonable requirements of the
Corporation and its transfer agents.
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SECTION NINE
DIVIDENDS AND RIGHTS
9.01 DIVIDENDS--Subject to the provisions of the Act, the Board may from time to
time declare dividends payable to the Shareholders according to their respective
rights and interest in the Corporation. Dividends may be paid in money or
property or by issuing fully paid shares of the Corporation.
9.02 DIVIDEND CHEQUES--A dividend payable in cash shall be paid by cheque drawn
on the Corporation's bankers or one of them to the order of each registered
holder of shares of the class or series in respect of which it has been declared
and mailed by prepaid ordinary mail to such registered holder at his recorded
address, unless such holder otherwise directs. In the case of joint holders the
cheque shall, unless such joint holders otherwise direct, be made payable to the
order of all of such joint holders and mailed to them at their recorded address.
The mailing of such cheque as aforesaid, unless the same is not paid on due
presentation, shall satisfy and discharge the liability for the dividend to the
extent of the sum represented thereby plus the amount of any tax which the
Corporation is required to and does withhold.
9.03 NON-RECEIPT OF CHEQUES--In the event of non-receipt of any dividend cheque
by the person to whom it is sent as aforesaid, the Corporation shall issue to
such person a replacement cheque for a like amount on such terms as to
indemnity, reimbursement of expenses and evidence of non-receipt and of title as
the Board may from time to time prescribe, whether generally or in any
particular case.
9.04 RECORD DATE FOR DIVIDENDS AND RIGHTS--The Board may fix in advance a date,
preceding by not more than Fifty (50) days the date for the payment of any
dividend or the date for the issue of any warrant or other evidence of right to
subscribe for securities of the Corporation, as a record date for the
determination of the persons entitled to receive payment of such dividend or to
exercise the right to subscribe for such securities, provided that, where the
Corporation is a distributing Corporation for purposes of the Act, notice of any
such record date is given not less than seven (7) days before such record date
by newspaper advertisement and otherwise in the manner provided in the Act.
Where no record date is fixed in advance as aforesaid, the record date for the
determination of the persons entitled to receive payment of any dividend or to
exercise the right to subscribe for securities of the Corporation shall be at
the close of business on the day on which the resolution relating to such
dividend or right to subscribe is passed by the Board.
9.05 UNCLAIMED DIVIDENDS--Any dividend unclaimed after a period of six (6) years
from the date on which the same has been declared to be payable shall be
forfeited and shall revert to the Corporation.
SECTION TEN
MEETINGS OF SHAREHOLDERS
10.01 ANNUAL MEETINGS--The annual meeting of Shareholders shall be held at such
time in each year and, subject to the Act, the Articles and to Section 10.04, at
such place as the Board may from time to time determine, for the purpose of
considering the financial statements and reports required by the Act to be
placed before the annual meeting, electing Directors, appointing auditors and
for the transaction of such other business as may properly be brought before the
meeting.
10.02 SPECIAL MEETINGS--The Board shall have power to call a special meeting of
Shareholders at any time.
10.03 SPECIAL BUSINESS--All business transacted at a special meeting of
Shareholders and all business transacted at an annual meeting of Shareholders,
except consideration of the financial statements, auditors reports, election of
directors and reappointment of the incumbent auditors, is deemed to be special
business.
10.04 PLACE OF MEETING--Subject to the Articles, meetings of Shareholders may be
held in the Cities of Boston, in the State of Massachusetts, New York, in the
State of New York, Vancouver in the Province of
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British Columbia or such other place or places as the Directors in their
absolute discretion may determine from time to time.
10.05 NOTICE OF MEETING--Notice of the time and place of each meeting of
Shareholders shall be given in the manner provided in Section 12.01 not less
than twenty-one (21) nor more than fifty (50) days before the date of the
meeting to each Director, to the auditor and to each Shareholder who at the
close of business on the record date, if any, for notice is entered in the
securities register as the holder of one or more shares carrying the right to
vote at the meeting. Notice of a meeting of Shareholders called for any purpose
other than consideration of the financial statements and auditor's report,
election of Directors and re-appointment of the incumbent auditor shall state
the nature of such business in sufficient detail to permit the Shareholder to
form a reasoned judgment thereon and shall state the text of any special
resolution to be submitted to the meeting. A Shareholder and any other person
entitled to attend a meeting of Shareholders may in any manner waive notice of
or otherwise consent to a meeting of Shareholders.
10.06 LIST OF SHAREHOLDERS ENTITLED TO NOTICE--For every meeting of
Shareholders, at any time that the Corporation has more than fifteen (15)
Shareholders entitled to vote at a meeting of Shareholders, the Corporation
shall prepare a list of Shareholders entitled to receive notice of the meeting,
arranged in alphabetical order and showing the number of shares entitled to vote
at the meeting held by each Shareholder. If a record date for the meeting is
fixed pursuant to Section 10.07, the Shareholders listed shall be those
registered or constructively registered pursuant to the Act at the close of
business of the record date, such list to be prepared on a day not later than
ten (10) days after such record date. If no record date is fixed, the list of
Shareholders shall be prepared no later than at the close of business on the day
immediately preceding the day on which notice of the meeting is given, or where
no such notice is given, the day on which the meeting is held. The list shall be
available for examination by any Shareholder during usual business hours at the
records office of the Corporation or at the place where the central securities
register is kept and at the place where the meeting is held.
10.07 RECORD DATE FOR NOTICE--The Board may fix in advance a record date,
preceding the date of any meeting of Shareholders by not more than fifty (50)
days and not less than twenty-one (21) days for the determination of the
Shareholders entitled to notice of the meeting, provided that notice of any such
record date is given, not less than seven (7) days before such record date, by
newspaper advertisement in the manner provided in the Act. If no record date is
so fixed, the record date for the determination of the Shareholders entitled to
notice of the meeting shall be the close of business on the day immediately
preceding the day on which the notice is given, or if no notice is given, the
day on which the meeting is held.
10.08 MEETINGS WITHOUT NOTICE--A meeting of Shareholders may be held without
notice at any time and place permitted by the Act:
(a) if all the Shareholders entitled to vote thereat are present in person or
represented by proxy or if those not present or represented by proxy waive
notice of or otherwise consented to such meeting being held, and
(b) if the auditor and the Directors are present or waived notice of or
otherwise consent to such meeting being held.
At such meeting any business may be transacted which the Corporation at a
meeting of Shareholders may transact. If the meeting is held at a place outside
the Yukon Territory, Shareholders not present or represented by proxy, but who
have waived notice of or otherwise consented to such meeting, shall also be
deemed to have consented to the meeting being held at such place.
10.09 MEETINGS BY TELEPHONE--If all the Shareholders consent, a Shareholder may
participate in a meeting of Shareholders by means of telephone or such other
communications facilities as permit all persons
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participating in the meeting to hear each other, and a Shareholder participating
in such a meeting by such consent shall be effective whether given before or
after the meeting to which it relates.
10.10 CHAIRMAN, SECRETARY AND SCRUTINEERS--The Chairman of any meeting of
Shareholders shall be the first mentioned of such of the following Officers as
having been appointed and who is present at the meeting: Chairman of the Board,
President, Managing Director, or a Vice-President. If no such Officer is present
within fifteen (15) minutes from the time fixed for holding the meeting, the
persons present and entitled to vote shall choose one of their number to be
Chairman. If the Secretary of the Corporation is absent, the Chairman shall
appoint some person, who need not be a Shareholder, to act as Secretary of the
meeting. If desired, one or more scrutineers, who need not be Shareholders, may
be appointed by a resolution or by the Chairman with the consent of the meeting.
10.11 PERSONS ENTITLED TO BE PRESENT--The only persons entitled to be present at
a meeting of Shareholders shall be those entitled to vote thereat, the Directors
and auditor of the Corporation and others who, although not entitled to vote,
are entitled or required under any provision of the Act or the Articles or
By-Laws to be present at the meeting. Any other person may be admitted only on
the invitation of the Chairman of the meeting or with the consent of the
meeting.
10.12 QUORUM--Save as herein otherwise provided, a quorum shall be two
shareholders or proxyholders present, holding not less than ten percent (10%) of
the outstanding shares of the Corporation entitled to vote at the meeting. If
there is only one shareholder, the quorum is one person present and being, or
representing by proxy, such shareholder. The Directors, the Secretary or, in his
absence, an assistant Secretary, and the solicitor of the Corporation shall be
entitled to attend at any general meeting but no such person shall be counted in
the quorum or be entitled to vote at any general meeting unless he is a
shareholder or proxyholder entitled to vote thereat. If a quorum is present at
the opening of any meeting of Shareholders, the Shareholders present or
represented by proxy may proceed with the business of the meeting
notwithstanding that a quorum is not present throughout the meeting. No
business, other than the election of a Chairman of the meeting and the
adjournment of the meeting shall be transacted at any general meeting unless the
quorum requisite was present at the commencement of the meeting. If within
one-half hour from the time appointed for a meeting a quorum in not present, the
meeting if convened by requisition of the Shareholders, shall be dissolved; but
in any other case it shall stand adjourned to the same day in the next week at
the same time and place. If at such adjourned meeting a quorum is not present
within one-half hour from the time appointed, the Shareholders present in person
or by proxy shall be a quorum.
10.13 RIGHT TO VOTE--RECORD DATE FOR VOTING--Subject to the provisions of the
Act as to authorized representative of any other body corporate, at any meeting
of Shareholders in respect of which the Corporation has prepared the list
referred to in Section 10.06, every person who is named in such list shall be
entitled to vote the shares shown thereon opposite his name except, where the
Corporation has fixed a record date in respect of such meeting pursuant to
Section 10.07, to the extent that such person has transferred any of his shares
after such record date and the transferee, upon producing properly endorsed
Certificates evidencing such shares or otherwise establishing that he owns such
shares, demands not later than ten (10) days before the meeting that his name be
included in such list, in which event the transferee alone shall be entitled to
vote the transferred shares at the meeting. Where no record date for notice has
been fixed and no notice of meeting given, or in the absence of a list prepared
as aforesaid in respect of a meeting of Shareholders, every person shall be
entitled to vote at the meeting who at the time is entered in the securities
register as the holder of one or more shares carrying the right to vote at such
meeting.
10.14 PROXIES
(a) Every Shareholder entitled to vote at a meeting of Shareholders, may appoint
a proxyholder, or one or more alternate proxyholders, who need not be
Shareholders, to attend and act at the meeting in the manner and to the
extent authorized and with the authority conferred by the proxy. A proxy
shall be in writing executed by the Shareholder or his attorney and shall
conform with the requirements of the
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Act. An instrument of proxy shall be valid only at the meeting in respect of
which it is given or any adjournment thereof.
(b) Any corporation, other than a Prohibited Corporate Shareholder, which is a
Shareholder of the Corporation may by resolution of its Directors or other
governing body authorize such person as it thinks fit to act as its
representative at any meeting. The person so authorized shall be entitled to
exercise in respect of and at such meeting the same powers on behalf of the
corporation which he represents as that corporation could exercise if it
were an individual member of the Corporation personally present, including,
without limitation, the right, unless restricted by such resolution, to
appoint a proxyholder to represent such corporation, and shall, if present
at the meeting, be counted for the purpose of forming a quorum and be deemed
to be a member present at the meeting. Evidence of the appointment of any
such representative may be sent to the Corporation by written instrument,
telegram, telex, facsimile or any method of transmitting legibly recorded
messages.
(c) Every ballot case upon a poll and every proxy appointing a proxyholder who
cast a ballot upon a poll shall be retained by the Secretary for the period
and be subject to the inspection as the Act may provide.
10.15 TIME FOR DEPOSIT OF PROXIES--The Board may specify in a notice calling a
meeting of Shareholders a time, preceding the time of such meeting by not more
than forty-eight (48) hours exclusive of non-business days, before which time
proxies to be used at such meeting must be deposited. A proxy shall be acted
upon only if, prior to the time so specified, it shall have been deposited by
written instrument, telegram, telex, facsimile or any method of transmitting
legibly recorded messages with the Corporation or an agent thereof specified in
such notice or, if no such time is specified in such notice, unless it has been
received by the Secretary of the Corporation or by the Chairman of the meeting
or any adjournment thereof prior to the time of voting.
10.16 JOINT SHAREHOLDERS--If two or more persons hold shares jointly, any one of
them present in person or represented by proxy at a meeting of Shareholders may,
in the absence of the other or others, vote the shares but if two or more of
those persons are present in person or represented by proxy and vote, they shall
vote as one on the shares jointly held by them and in the absence of agreement
between those so voting the person named first in the Register shall vote the
shares.
10.17 VOTES TO GOVERN--At any meeting of Shareholders every question shall,
unless otherwise required by the Articles or By-Laws or by law, be determined by
the majority of the votes cast on the question. In case of an equality of votes
either upon a show of hands or upon a poll, the Chairman of the meeting shall be
entitled to a second or casting vote in addition to vote or votes to which he
may be entitled as a shareholder.
10.18 MOTION--No resolution proposed at a meeting need be seconded. The Chairman
may propose or second a motion.
10.19 SHOW OF HANDS--Subject to the provisions of the Act any question at a
meeting of Shareholders shall be decided by a show of hands unless a ballot
thereon is required or demanded as hereinafter provided. Upon a show of hands,
every person who is present and entitled to vote shall have one vote. Whenever a
vote by show of hands shall have been taken upon a question, unless a ballot
thereon is so required or demanded, a declaration by the Chairman of the meeting
that the vote upon the question has been carried or carried by a particular
majority or not carried, an entry to that effect in the minutes of the meeting
shall be conclusive evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against any resolution or other
proceeding in respect of the said question, and the result of the vote so taken
shall be the decision of the Shareholders upon the said question.
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10.20 BALLOTS
(a) On any question proposed for consideration at a meeting of Shareholders, and
whether or not a show of hands has been taken thereof, any Shareholder or
proxyholder entitled to vote at the meeting may require or demand a ballot.
A ballot so required or demanded shall be taken in such manner as the
Chairman shall direct. A requirement or demand for a ballot may be withdrawn
at any time prior to the taking of the ballot. If a ballot is taken each
person present shall be entitled in respect of the shares which he is
entitled to vote at the meeting upon the question, to that number of votes
provided by the Act or the Articles, and the result of the ballot so taken
shall be the decision of the Shareholders upon the said question.
(b) No ballot may be demanded on the election of a Chairman. A ballot demanded
on a question of adjournment shall be taken forthwith. A ballot demanded on
any other question shall be taken as soon as, in the opinion of the
chairman, is reasonably convenient, but in no event later than seven (7)
days after the meeting and at such time and place and in such manner as the
chairman of the meeting directs. The result of the ballot shall be deemed to
be the resolution of and passed at the meeting at which the ballot was
demanded. Any business other than that upon which the ballot has been
demanded may be proceeded with pending the taking of the ballot. In any
dispute as to the admission or rejection of a vote the decision of the
chairman made in good faith shall be final and conclusive.
10.21 ADJOURNMENT--If a meeting of Shareholders is adjourned for less than
thirty (30) days, it shall not be necessary to give notice of the adjourned
meeting, other than by announcement at the earliest meeting that it is
adjourned. If a meeting of Shareholders is adjourned by one or more adjournments
for an aggregate of thirty (30) days or more, notice of the adjourned meeting
shall be given as for an original meeting. At any such adjourned meeting no
business shall be transacted other than business left unfinished at the meeting
from which the adjournment took place.
10.22 RESOLUTION IN WRITING--A resolution in writing signed by all the
Shareholders entitled to vote on that resolution at a meeting of Shareholders is
as valid as if it had been passed at a meeting of the Shareholders, and shall be
held to relate to any date therein stated to be the effective date thereof.
10.23 ONLY ONE SHAREHOLDER--Where the Corporation has only one Shareholder or
only one holder of any class or series of shares, the Shareholder present in
person or by proxy constitutes a meeting.
10.24 ONLY TWO SHAREHOLDERS--Where the Corporation has only two Shareholders a
quorum for transaction of business at any meeting of Shareholders shall be one
(1) person present in person, being a Shareholder entitled to vote thereat, or a
duly appointed proxy of said Shareholder, holding not less than ten percent
(10%) of the outstanding shares of the Corporation entitled to vote at the
meeting.
SECTION ELEVEN
DIVISIONS AND DEPARTMENTS
11.01 CREATION AND CONSOLIDATION OF DIVISIONS--The Board may cause the business
and operations of the Corporation or any part thereof to be divided or to be
segregated into one or more divisions upon such basis, including without
limitation, character or type of operation, geographical territory, product
manufactured or service rendered, as the Board may consider appropriate in each
case. The Board may also cause the business and operations of any such division
to be further divided into sub-units and the business and operations of any such
divisions or sub-units to be consolidated upon such basis as the Board may
consider appropriate in each case.
11.02 NAME OF DIVISION--Subject to the Act any division or its sub-units may be
designated by such name as the Board may from time to time determine and may
transact business, enter into contracts, sign cheques and other documents of any
kind and do all acts and things under such name, provided that the Corporation
shall set out its name in legible characters in all contracts, invoices,
negotiable instruments
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and orders for goods or services issued or made by or on behalf of the
Corporation. Any such contract, cheque or documents shall be binding upon the
Corporation as if it had been entered into or signed in the name of the
Corporation.
11.03 OFFICERS OF DIVISION--From time to time the Board or if authorized by the
Board, the Chief Executive Officer, may appoint one or more Officers for any
division, prescribe their powers and duties and settle their terms of employment
and remuneration. The Board or, if authorized by the Board, the Chief Executive
Officer, may remove at its or his pleasure any Officers so appointed, without
prejudice to such Officer's right under any employment contract. Officers of
divisions or their sub-units shall not, as such, be Officers of the Corporation.
SECTION TWELVE
NOTICES
12.01 METHOD OF GIVING NOTICES--Any notice (which term includes any
communication or document) to be given (which term includes sent, delivered or
served) pursuant to the Act, the regulations thereunder, the Articles, the
By-Laws or otherwise to a Shareholder, Director, Officer, auditor or member of a
Committee of Directors shall be sufficiently given if delivered personally to
the person to whom it is to be given or if delivered to his recorded address by
any means of prepaid transmitted or recorded communication. A notice so
delivered shall be deemed to have been given when it is delivered personally or
to the recorded address as aforesaid; a notice so mailed shall be deemed to have
been received by him on the business day following the day the notice is posted;
and a notice so sent by any means of transmitted or recorded communication shall
be deemed to have been given when dispatched or delivered to the appropriate
communication corporation or agency or its representative for dispatch. Subject
to the Act, a notice of meeting of Shareholders shall be deemed to have been
sent to the Shareholder on the business day following the day on which it is
deposited in the mail. The Secretary may change or cause to be changed the
recorded address of any Shareholder, Director, Officer, auditor or member of a
Committee of Directors in accordance with any information believed by him to be
reliable.
12.02 NOTICE TO JOINT SHAREHOLDERS--If two or more persons are registered as
joint holders of any share, any notice shall be addressed to all of such joint
holders but notice given to any one or more of such persons at the recorded
address for such joint shareholders shall be sufficient notice to all of them.
12.03 COMPUTATION OF TIME--In computing the date when notice must be given under
any provision requiring a specified number of days notice of any meeting or
other event, the date of giving the notice shall be excluded and the date of the
meeting or other event in respect of which the notice is being given shall be
included.
12.04 UNDELIVERED NOTICES--If any notice given to a Shareholder pursuant to
Section 12.01 is returned on three (3) consecutive occasions because he cannot
be found or served or is unknown at his recorded address, the Corporation shall
not be required to give any further notices to such Shareholder until he informs
the Corporation in writing of his new recorded address.
12.05 PROOF OF SERVICE--A certificate of the Secretary or other duly authorized
Officer of the Corporation in office at the time of the making of the
certificate, or of any agent of the Corporation as to the facts in relation to
the mailing or delivery or sending of any notice to any Shareholder, Director,
the auditors, or conclusive evidence thereof and shall be binding on every
Shareholder, Director, the auditors or any Officer of the Corporation as the
case may be.
12.06 OMISSIONS AND ERRORS--The accidental omission to give any notice to any
Shareholder, Director, Officer, auditor or member of a Committee of Directors or
the non-receipt of any notice by any such person or any error in any notice not
affecting the substance thereof shall not invalidate any action taken at any
meeting held pursuant to such notice or otherwise founded thereon.
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12.07 PERSONS ENTITLED BY DEATH OR OPERATION OF LAW--Every person who by
operation of law, transfer, death of a Shareholder or any other means
whatsoever, shall become entitled to any share, shall be bound by every notice
in respect of such share which shall have been duly given to the Shareholder
from whom he derives his title prior to such person's name and address being
entered on the securities register (whether such notice was given before or
after the happening of the event upon which he became so entitled) and prior to
his furnishing to the Corporation the proof of authority or evidence of his
entitlement prescribed by the Act.
12.08 WAIVER OF NOTICE--Any Shareholder (or his duly appointed proxyholder),
Director, Officer, auditor or member of a Committee of Directors may at any time
waive the sending of any notice, or waive or abridge the time for any notice,
required to be given to him under any provision of the Act, the regulations
thereunder, the Articles, the By-Laws or otherwise and such waiver or
abridgement shall cure any default in the giving or the time of such notice, as
the case may be. Any such waiver or abridgement shall be in writing except a
waiver of notice of a meeting of Shareholders or of the Board which may be given
in any manner.
ENACTED by the Board the ____ day of ____________, 1999.
____________________
Chairperson of the
Directors Meeting
CONFIRMED by the Shareholders in accordance with the Act the ____ day of
____________, 1999.
____________________
Chairperson of the
Shareholders Meeting
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