<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Imax Corporation
- --------------------------------------------------------------------------------
(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)(4) 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:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
Imax Corporation
2525 Speakman Drive
Mississauga, Ontario L5K 1B1
LOGO
- --------------------------------------------------------------------------------
notice of annual and special meeting of shareholders
NOTICE IS HEREBY GIVEN that the Annual and Special Meeting (the "Meeting") of
shareholders of Imax Corporation (the "Corporation") will be held at the Famous
Players IMAX(R) Theatre at Paramount Festival Hall, 259 Richmond Street, West,
Toronto, Ontario, on Wednesday, June 7, 2000 at 10:30 a.m., for the purposes of:
(1) receiving the consolidated financial statements for the year ended
December 31, 1999, together with the auditors' report thereon;
(2) electing directors;
(3) appointing auditors and authorizing the directors to fix the auditors'
remuneration;
(4) approving certain changes to the Corporation's Stock Option Plan; and
(5) transacting such other business as may properly be brought before the
Meeting or any adjournments thereof.
By Order of the Board,
LOGO
G. MARY RUBY
Vice President,
Legal Affairs and Corporate Secretary
Mississauga, Ontario
May 2, 2000
Shareholders who are unable to be present at the Meeting are requested to
complete and return the enclosed form of proxy in the envelope provided for that
purpose. Proxies must be deposited with Montreal Trust Company of Canada, 8th
Floor, 151 Front Street West, Toronto, Ontario, M5J 2N1 or at the corporate
office of the Corporation noted above on or before 4:30 p.m., (Eastern Daylight
Saving Time), on June 6, 2000.
<PAGE>
Imax Corporation
LOGO
- --------------------------------------------------------------------------------
MANAGEMENT PROXY CIRCULAR AND PROXY STATEMENT
May 2, 2000
solicitation of proxies by management
This management proxy circular and proxy statement is furnished in connection
with the solicitation by the management of Imax Corporation (the "Corporation")
of proxies to be used at the Annual and Special Meeting (the "Meeting") of
shareholders of the Corporation to be held on Wednesday, June 7, 2000 at the
Famous Players IMAX(R) Theatre at Paramount Festival Hall, 259 Richmond Street,
West, Toronto, Ontario, at 10:30 a.m., and at any adjournments thereof for the
purposes set forth in the accompanying Notice of Annual and Special Meeting.
While management intends to solicit most proxies by mail, some proxies may be
solicited by telephone or other personal contact by directors or officers of the
Corporation. The cost of solicitation will be borne by the Corporation.
appointment, delivery and revocation of proxies
The persons named in the accompanying form of proxy are directors and officers
of the Corporation. A shareholder has the right to appoint a person, who need
not be a shareholder of the Corporation, other than the persons designated as
proxyholders in the accompanying form of proxy, to attend and act on behalf of
the shareholder at the Meeting. To exercise this right, a shareholder may either
insert such other person's name in the blank space provided in the accompanying
form of proxy, or complete another appropriate form of proxy.
To be valid, a proxy must be dated and signed by the shareholder or his attorney
authorized in writing. The proxy, to be acted upon, must be deposited with the
Corporation, c/o its transfer agent, Montreal Trust Company of Canada, 8th
Floor, 151 Front Street West, Toronto, Ontario, M5J 2N1 by 4:30 p.m., Eastern
Daylight Saving Time, on Tuesday, June 6, 2000, or 4:30 p.m. on the last
business day prior to the date of any adjournment of the Meeting, or with the
chairman of the Meeting on the day of the Meeting or any adjournment of the
Meeting prior to the commencement of the Meeting or the adjournment, as the case
may be.
A shareholder who has given a proxy may revoke it by depositing an instrument in
writing (including another proxy) executed by the shareholder or his attorney
authorized in writing at the registered office of the Corporation at any time up
to and including 4:30 p.m., Toronto time, on the last business day prior to the
day of the Meeting or any adjournment thereof, or with the chairman of the
Meeting on the day of the Meeting or at any adjournment thereof at any time
before it is exercised on any particular matter or in any other manner permitted
by law including attending the Meeting in person.
voting by proxy
On any ballot that may be called for regarding the election of directors or the
appointment of auditors, the common shares represented by the enclosed form of
proxy will be voted or withheld from voting in accordance with the instructions
of the shareholder indicated thereon by marking an "X" in the boxes provided for
the purpose on the form of proxy. In the absence of such instructions with
regard to the election of directors or the appointment of auditors, the shares
will be voted for the election of the persons nominated for election as
directors and for the appointment of auditors, in each case, as referred to in
this management proxy circular and proxy statement.
Unless otherwise indicated, all references in this document to dollar amounts
are to U.S. dollars.
<PAGE>
-2-
The person appointed as proxy has discretionary authority and may vote the
shares represented thereby as such person considers best with respect to
amendments or variations to matters identified in the Notice of Meeting, and
with respect to any other matter which may properly come before the Meeting. As
of the date of this management proxy circular and proxy statement, management of
the Corporation is not aware of any such amendment, variation or other matter
proposed or likely to come before the Meeting. However, if any such amendment,
variation or other matter properly comes before the Meeting, it is the intention
of the persons named in the enclosed form of proxy to vote on such other
business in accordance with their judgement.
voting shares and principal holders
The Board of Directors has fixed April 28, 2000 as the record date for the
Meeting. Accordingly, each holder of common shares of record on that date is
entitled to one vote for each common share shown as registered in the
shareholder's name on the list of shareholders prepared as of April 28, 2000. In
the event of any transfer of common shares by any such shareholder after such
date, the transferee is entitled to vote those shares if he or she produces
properly endorsed share certificates or otherwise establishes that he or she
owns the shares, and requests Montreal Trust Company of Canada at its office
noted above to include the transferee's name in the shareholders' list not later
than ten days before the Meeting.
On April 28, 2000, the Corporation had 29,930,356, common shares issued and
outstanding, each carrying the right to one vote at all meetings of the
shareholders of the Corporation.
To the knowledge of the directors and officers of the Corporation, the only
persons who beneficially own or exercise control or direction over shares
carrying more than 10% of the votes attached to all the shares of the
Corporation entitled to be voted at the Meeting are as follows:
<TABLE>
<CAPTION>
Percentage of
Number of Outstanding
Name of Shareholder Common Shares Common Shares
- ------------------- ------------- -------------
Wasserstein Perella Group:
<S> <C> <C>
Wasserstein Perella Partners, L.P. 10,170,384(1) 34%
Wasserstein Perella Offshore Partners, L.P.
WPPN, Inc.
Michael J Biondi as Voting Trustee
(collectively, the Wasserstein Perella Group is referred
to in this circular as "Wasserstein Perella" or "WP")
</TABLE>
(1) Based on information contained in a Schedule 13G dated February 11, 2000.
election of directors
The Board of Directors of the Corporation is comprised of three classes, each
elected for a three-year term. The Board of Directors is currently composed of
Michael J. Biondi, Kenneth G. Copland, Richard L. Gelfond, J. Trevor Eyton,
Garth M. Girvan, G. Edmund King, Murray B. Koffler, Sam Reisman, Marc A. Utay,
Bradley J. Wechsler and W. Townsend Ziebold. At the Meeting, the term of the
Class I directors expires The term of the Class III directors expires at the
annual shareholders' meeting in 2001 and the term of the Class II directors
expires at the annual shareholders' meeting in 2002.
<PAGE>
-3-
In February 1999, the Corporation, Wasserstein Perella, Richard L. Gelfond and
Bradley J. Wechsler entered into an Amended and Restated Standstill Agreement, a
Second Amended and Restated Shareholders' Agreement and a Registration Rights
Agreement, which are described in detail elsewhere in this circular (see
"corporate governance - Standstill Agreement"; "interest of management in
certain transactions - Shareholders' Agreement"; and "interest of management in
certain transactions - Registration Rights Agreement"). Under these agreements,
each of Wasserstein Perella and Messrs. Wechsler and Gelfond agreed that they
are to be entitled, but not required, to designate certain individuals to be
nominated for election by the shareholders as directors of the Corporation.
Wasserstein Perella and Messrs. Wechsler and Gelfond also agreed to use their
best efforts to cause each of the individuals designated by the other party to
be elected as a director of the Corporation.
The individuals noted below are nominated for election to the Board of Directors
of the Corporation in Class I.
nominees for election
The following table lists certain information concerning the persons proposed to
be nominated for election as directors and the directors whose terms continue
after the Meeting. The information as to common shares has been furnished by the
respective individuals.
<TABLE>
<CAPTION>
Nominees for election as Class I directors Current position
for the term expiring in 2003. with the Corporation Common Shares
------------------------------ -------------------- -------------
<S> <C> <C>
The Honourable J. Trevor Eyton, O.C., Caledon, Ontario. Director NIL
Mr. Eyton has been Chairman, Group Advisory Board and Group Chairman,
International of EdperBrascan Corporation since April 1999. He previously held
the position of Senior Group Chairman of EdperBrascan Corporation. Prior to
August 1997, he was Chairman, Brascan Limited and Trilon Financial Corporation.
He is also a director of Barrick Gold Corporation, Brookfield Properties
Corporation, Coca-Cola Enterprises, General Motors of Canada, Limited, MA. Hanna
Company, Noranda Inc. and Trilon Financial Corporation. He has been a member of
the Senate of Canada since September 1990 and is an Officer of the Order of
Canada. Mr. Eyton has been a director of the Corporation since June 1999 and is a
Canadian citizen.
- ------------------------------------------------------------------------------------------------------------------------
* G. Edmund King, Toronto, Ontario. Director NIL
Mr. King has been Deputy Chairman and a director of McCarvill Corporation since
January, 1996. Mr. King is also a director of Falconbridge Ltd., Wolf Group
Integrated Communications Ltd. and Afton Food Group Ltd. Prior to November 1995,
he was the Chairman and Chief Executive Officer of The CIBC Wood Gundy
Corporation and from June 1994 to January 1998 was Chairman of WIC Western
International Communications. Mr. King has been a director of the Corporation
since June 1999 and is a Canadian citizen.
- ------------------------------------------------------------------------------------------------------------------------
Sam Reisman, Toronto, Ontario. Director 1,000
Mr. Reisman has been the principal shareholder, Chairman and Chief Executive
Officer of The Rose Corporation, a real estate finance and investment company
which was previously a real estate development company, since September 1986. Mr.
Reisman was the Chairman and Chief Executive Officer of the Equion Corporation, a
manufacturer and distributor of vehicular climate control systems and other
products for original equipment manufacturers, the aftermarket and industrial
customers from 1982 to 1996. Mr. Reisman is currently the principal shareholder
of Hayden Industrial Products of Corona, California, formerly a division of The
Equion Corporation. Mr. Reisman has been a director of the Corporation since June
1999 and is a Canadian citizen.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-4-
<TABLE>
<CAPTION>
Nominees for election as Class I directors Current position
for the term expiring in 2003. with the Corporation Common Shares
------------------------------ -------------------- -------------
<S> <C> <C>
+ W. Townsend Ziebold, New York, New York. Director 4,500
Mr. Ziebold has been a Managing Director of Wasserstein Perella & Co., Inc. and
head of its Venture Capital Practice since December 1994. Prior to 1994, he held
the position of director of Wasserstein Perella & Co., Inc. Mr. Ziebold was a
director of Maybelline, Inc. and Collins & Aikman Corporation and currently
serves on several private company boards in the media, entertainment and Internet
industries. He has been a director of the Corporation since June 1999.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Directors who continue Expiry of
in office after the Meeting Term of Office Common Shares
--------------------------- -------------- -------------
<S> <C> <C>
** Michael J. Biondi, New York, New York. 2001 NIL
Mr. Biondi has been the Chairman and Chief Executive Officer of Wasserstein
Perella & Co., Inc. since January, 1996. One of the founding partners of the
firm, Mr. Biondi oversees Wasserstein Perella's domestic investment banking
activities, and is the Chief Operating Officer of Wasserstein Perella Group, Inc.
Mr. Biondi was a CEO Advisor of the Corporation from June 1994 to March 1996 and
has been Non-Executive Chairman of the Board since June 1999. Mr. Biondi is a
trustee of the United States Ski and Snowboard Association and a director of
eMotion, Inc. He has been a director of the Corporation since June 1999.
- ------------------------------------------------------------------------------------------------------------------
Kenneth G. Copland, Toronto, Ontario. 2002 NIL
Mr. Copland has been the Vice-Chairman of BMO Nesbitt Burns Inc. since 1994, prior
to which he was the Executive Vice President. He is a director of BMO Nesbitt
Burns Corporation Limited, Advisor to New Brunswick Power Corporation and
Chairman of Humber College Foundation and Educational Ventures Corporation. Mr.
Copland has been a director of the Corporation since June 1999 and is a Canadian
citizen.
- ------------------------------------------------------------------------------------------------------------------
**Richard L. Gelfond, New York, New York. 2001 605,300
Mr. Gelfond has been Co-Chairman of the Corporation since June 1999 and Co-Chief
Executive Officer since May 1996. From March 1994 to June 1999 Mr. Gelfond served
as Vice-Chairman of the Corporation. In 1991 Mr. Gelfond founded Cheviot Capital
Advisors Inc., a financial advisory and merchant banking firm that specializes in
acquisitions and venture capital investments. In addition, Mr. Gelfond serves on
the boards of several private and philanthropic entities. Mr. Gelfond is also a
Member of Clarion Capital Partners. He has been a director of the Corporation
since March 1994.
- ------------------------------------------------------------------------------------------------------------------
*+++ Garth M. Girvan, Toronto, Ontario. 2002 25,898
Mr. Girvan is a partner of McCarthy Tetrault, Toronto, Ontario, barristers and
solicitors. He has been a director of the Corporation since 1994 and serves as
Chairman of the Audit and Compensation Committees of the Corporation. Mr. Girvan
is a Canadian citizen.
- ------------------------------------------------------------------------------------------------------------------
+ Murray B. Koffler, O.C., O.Ont., Toronto, Ontario. 2002 4,200
Mr. Koffler founded Shoppers Drug Mart in 1968 and presently serves as its
Honorary Chairman. Mr. Koffler co-founded Four Seasons Hotels Limited and
presently serves as a Director. Since 1988, Mr. Koffler has been Chairman of the
International Board of Directors of the Weizmann Institute of Science in Israel.
Mr. Koffler holds numerous other directorships. Mr. Koffler is an Officer of the
Order of Canada. Mr. Koffler has been a director of the Corporation since May
1996 and is a Canadian citizen.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-5-
<TABLE>
<CAPTION>
Directors who continue Expiry of
in office after the Meeting Term of Office Common Shares
--------------------------- -------------- -------------
<S> <C> <C>
++ Marc A. Utay, New York, New York. 2002 NIL
Mr. Utay has been a Member of Clarion Capital Partners since November 1999. Prior
to joining Clarion, Mr. Utay was a Managing Director of Wasserstein Perella &
Co., Inc. Prior to his joining Wasserstein Perella, Mr. Utay was Managing
Director at Bankers Trust Company. He has been a director of the Corporation
since May 1996 and serves as Chairman of the Option Committee of the Corporation.
- ------------------------------------------------------------------------------------------------------------------
* Bradley J. Wechsler, New York, New York. 2001 565,300
Mr. Wechsler has been Co-Chairman of the Corporation since June 1999 and Co-Chief
Executive Office since May 1996. Mr. Wechsler was Chairman of the Corporation
from March 1994 to June 1999. Mr. Wechsler also served as Interim Chief Executive
Officer. Mr. Wechsler also serves on the boards of NYU Hospital, the Kernochan
Center for Law, Media and the Arts, and the American Museum of the Moving Image.
Mr. Wechsler is also a Member of Clarion Capital Partners. He has been a director
of the Corporation since March 1994.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Member, Audit Committee of the Corporation
+ Member, Compensation Committee of the Corporation
** Member, Nominating Committee of the Corporation
++ Member, Option Committee of the Corporation
The persons named in the enclosed form of proxy intend to vote for the election
of the nominees whose names are set forth above. If any of the above nominees is
for any reason unable to serve as a director, proxies in favour of management
will be voted for another nominee in their discretion unless the shareholder has
specified in the proxy that such shareholder's shares are to be withheld from
voting on the election of directors.
Management does not anticipate that any of the nominees for election as
directors will be unable to serve as a director, but if that should occur for
any reason prior to the Meeting, the persons named in the enclosed form of proxy
reserve the right to vote for another nominee in their discretion. Each director
elected will hold office until the expiry of the term for which he has been
elected or until his successor is elected or appointed, unless his office is
earlier vacated. Each of Messrs. Wechsler and Gelfond and Wasserstein Perella
intend to vote in favour of the nominees set forth above pursuant to the
Shareholders' Agreement (see description of this agreement under "interest of
management in certain transactions" below).
As contemplated under Section 124(4) of the Canada Business Corporations Act,
the Corporation has acquired insurance coverage with a yearly limit of
$70,000,000 in respect of potential claims against its directors and officers
and in respect of losses for which the Corporation may be required or permitted
by law to indemnify such directors and officers. The insurance, in respect of
which a $255,642 yearly premium was paid by the Corporation, includes a $100,000
deductible for each claim under the policy other than claims made under U.S.
securities law as to which a deductible of $500,000 applies.
DIRECTORS' COMPENSATION
- -----------------------
Directors are reimbursed for the expenses of attending meetings of the Board of
Directors. In addition, members of the Board of Directors who are not also
employees of the Corporation receive Canadian $20,000 per year (or may elect to
receive options to purchase common shares of the Corporation under the
Corporation's Stock Option Plan (the "Stock Option Plan") in lieu of this
payment) plus Canadian $1,500 for each meeting of the Board attended in person
and Canadian $750 for each telephone meeting of the Board or meeting of any
committee of the Board, whether participating in person or by telephone. In
addition, each of the directors who are not also employees of the Corporation
are granted 4,000 options each year at an exercise price equal to the market
value of the common shares of the
<PAGE>
-6-
Corporation on the date of the grant, which vest on the date of grant and expire
on the earlier of the date which is 10 years after the date of grant or the
second anniversary of the date on which the director is no longer serving as a
director of the Corporation.
executive compensation
SUMMARY COMPENSATION TABLE
The following table sets forth, for the periods indicated, the compensation paid
or granted by the Corporation and its subsidiaries to the individuals who served
during 1999 as Chief Executive Officers and the four most highly compensated
executive officers of the Corporation, other than the Chief Executive Officers,
who were serving as executive officers at December 31, 1999 (collectively, the
"Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Other
Annual
Name and Principal Position of Year ended Compensation
Named Executive Officer December 31 Salary Bonus (1) (2)
----------------------------------- ----------- ------------ --------- --------------
($) ($) ($)
<S> <C> <C> <C>
Bradley J. Wechsler 1999 500,000 900,000 --
Co-Chairman and Co-Chief 1998 605,000 800,000 --
Executive Officer 1997 710,000 1,300,000 --
Richard L. Gelfond 1999 500,000 900,000 --
Co-Chairman and Co-Chief 1998 605,000 800,000 --
Executive Officer 1997 710,000 1,300,000 --
John M. Davison 1999 300,000 200,000 --
President, Chief Operating Officer, 1998 200,000 100,000 --
and Chief Financial Officer 1997 193,025 73,455 --
David B. Keighley, 1999 228,257 573,000
Senior Vice President and 1998 218,123 268,088 --
President, David Keighley 1997 178,849 220,597 --
Productions 70MM Inc.
Andrew Gellis 1999 250,000 65,000 50,000(5)
Senior Vice President, Film 1998 225,000 50,000 50,000(5)
1997 210,000 55,000 50,000(5)
Michael A. Gibbon 1999 190,452 70,000 --
Executive Vice President, 1998 141,246 60,000 --
Technology 1997 144,936 50,000 --
<CAPTION>
Long-Term
Compensation
------------
Name and Principal Position of Restricted Securities Under All Other
Named Executive Officer Stock Awards Options Granted Compensation (6)
----------------------------------- ------------- ---------------- ----------------
($) (#) ($)
<S> <C> <C>
Bradley J. Wechsler -- 400,000 8,243
Co-Chairman and Co-Chief 330,000(3) 458,000 8,522
Executive Officer 465,000(4) 80,000 8,614
Richard L. Gelfond -- 400,000 8,396
Co-Chairman and Co-Chief 330,000(3) 458,000 8,306
Executive Officer 465,000(4) 80,000 8,614
John M. Davison -- 125,000 14,930
President, Chief Operating Officer, -- 75,000 10,404
and Chief Financial Officer -- 75,000 10,273
David B. Keighley, 15,000 8,639
Senior Vice President and -- 15,000 8,522
President, David Keighley -- 15,000 11,019
Productions 70MM Inc.
Andrew Gellis -- -- 8,396
Senior Vice President, Film -- 12,500 8,306
-- 12,500 8,614
Michael A. Gibbon -- 30,000 14,480
Executive Vice President, -- 25,000 8,017
Technology -- 15,000 7,920
</TABLE>
(1) These amounts are paid under annual incentive arrangements that the
Corporation has with each of the Named Executive Officers, as detailed
under "Employment Contracts."
(2) The value of perquisites and other personal benefits for each Named
Executive Officer does not exceed the lesser of $50,000 and 10% of his
annual salary and bonus.
<PAGE>
-7-
(3) These amounts represent the dollar value of the grant of 15,000 phantom
stock on January 1, 1998 to each of Messrs. Wechsler and Gelfond.
(4) These amounts represent the dollar value of the grant of 30,000 synthetic
restricted shares ("phantom stock") on January 1, 1997 to each of Messrs.
Wechsler and Gelfond.
(5) This amount was paid on account of certain script writing services provided
by Mr. Gellis.
(6) These amounts reflect (i) the payment by the Corporation of life insurance
premiums on the lives of the Named Executive Officers, and (ii)
contributions to the Corporation's defined contribution pension plans.
OPTIONS GRANTED
The Corporation has a Stock Option Plan under which the Corporation may grant
options to officers, employees, consultants and eligible directors
("Participants") to purchase common shares on terms that may be determined,
within the limitations of the Stock Option Plan. The aggregate number of common
shares reserved for issuance under the Stock Option Plan is 7,710,836. As at
December 31, 1999, options had been granted and were outstanding enabling
holders to purchase 5,157,400 common shares. The exercise price for options
issued under the Stock Option Plan is not to be less than the market price of
the common shares on the date of grant. An option may be exercisable for a
maximum period of 10 years from the date of grant, subject to earlier
termination if the Participant's employment, consulting arrangement or term of
office (other than a director's office) with the Corporation terminates. The
Board of Directors determines vesting requirements. If a Participant's
employment, consulting arrangement or term of office with the Corporation
terminates for any reason, any options which have not vested will be surrendered
for cancellation without any consideration being paid therefor. If the
Participant's employment, consulting arrangement or term of office is terminated
without "cause" or by reason of such Participant's resignation, death or
permanent disability, the Participant (or the Participant's estate) will be
entitled to exercise the Participant's vested options for a period of 30 days.
If the Participant's employment, consulting arrangement or term of office is
terminated for cause, such Participant's vested options will be surrendered for
cancellation without any consideration being paid therefor. If the Participant
is a party to an employment agreement with the Corporation or any of its
subsidiaries and breaches any of the restrictive covenants in such agreement,
such Participant will be required to surrender all unexercised options for
cancellation without any consideration being paid therefor and will be obligated
to pay to the Corporation an amount equal to the aggregate profit realized by
such Participant with respect to any prior option exercises.
The following table sets forth information relating to individual grants of
options under the Stock Option Plan to Named Executive Officers during the
financial year ended December 31, 1999 in respect of services rendered or to be
rendered to the Corporation:
<PAGE>
-8-
Option Grants in Financial Year ended December 31, 1999
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
% of Total Annual Rates of
Options Stock Price
Securities Granted to Appreciation for
Under Participants Option Term
Options in Financial Exercise Expiration -------------------------
Name Granted Year Price Date 5% 10%
--------------------------- ------------ ------------ ------------ --------------- -- ---
(#) (%) ($/Common Share) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bradley J. Wechsler (1) 400,000 17.98 17.94 15-Oct-09 4,520,880 11,409,840
Richard L. Gelfond (1) 400,000 17.98 17.94 15-Oct-09 4,520,880 11,409,840
John M. Davison (2) 100,000 4.49 21.93 19-Aug-09 1,381,590 3,486,870
(2) 25,000 1.12 24.00 01-Feb-09 378,000 954,000
David B. Keighley (2) 15,000 0.67 21.93 19-Aug-09 207,239 523,031
Michael A. Gibbon (2) 30,000 1.35 21.93 19-Aug-09 414,477 1,046,061
</TABLE>
(1) 266,667 of these options vested immediately upon the grant date and the
remaining 133,333 vest on October 15, 2000. These options entitle the Named
Executive Officer to purchase one common share for each option. The market
value of the common shares underlying the options was equal to the exercise
price on the date of the grant.
(2) These options vest over five years at the rate of 20% per year and entitle
the Named Executive Officer to purchase one common share for each option.
The market value of the common shares underlying the options was equal to
the exercise price on the date of the grant.
Aggregated Option Exercised during the Financial Year
Ended December 31, 1999 and Financial Year-End Option Values
<TABLE>
<CAPTION>
Unexercised Options at Value of Unexercised
Securities Aggregate Financial Year-End in-the-money Options
Acquired On Value Exercisable/ at Financial Year-end
Name Exercise Realized Unexercisable Exercisable/Unexercisable (1)
---- -------- -------- ------------- -----------------------------
(#) ($) (#) ($)
<S> <C> <C> <C> <C>
Bradley J. Wechsler NIL NIL 804,667/133,333 5,648,113/1,257,997
Richard L. Gelfond NIL NIL 804,667/133,333 5,648,113/1,257,997
John M. Davison NIL NIL 69,008/218,000 933,988/1,174,290
David B. Keighley NIL NIL 52,500/43,000 863,618/266,055
Andrew Gellis 20,000 339,562 24,700/42,300 260,913/439,213
Michael A. Gibbon 11,200 247,988 41,800/66,800 624,555/405,150
</TABLE>
(1) Calculated based on the December 31, 1999 closing price of the common
shares on Nasdaq of $27.375.
PENSION PLANS
The Corporation maintains defined contribution employee pension plans for its
employees, including its executive officers. The Corporation makes contributions
to these plans on behalf of employees in an amount equal to 5% of their base
salary subject to certain prescribed maximums. During the financial year ended
December 31, 1999, the Corporation contributed an aggregate of $18,212 to the
<PAGE>
-9-
Canadian plan on behalf of Messrs. Davison and Gibbon and an aggregate of
$32,000 to the Corporation's defined contribution employee pension plan
qualified under Section 401(k) of the U.S. Internal Revenue Code on behalf of
Messrs. Wechsler, Gelfond, Keighley and Gellis. The Corporation does not have
any other pension plans for its employees.
EMPLOYMENT CONTRACTS
On November 3, 1998 the Corporation entered into renewal employment agreements
with each of Messrs. Wechsler and Gelfond ("the Executives") with effect from
July 1, 1998 for a three-year term. The renewal employment agreements provide
that each of the Executives will receive a salary of $500,000 in each year of
the term. These agreements also provide that each of the Executives will receive
a bonus for each of 1998, 1999, 2000 and the period January 1, 2001 to June 30,
2001 of $605,000, $500,000, $500,000 and $250,000 adjusted by a multiple of zero
to two times, tied to the performance of the Corporation and certain qualitative
and quantitative measures determined by the Compensation Committee of the Board.
The bonus paid to each of Messrs. Wechsler and Gelfond in respect of 1999 was
$900,000. In 1999, each Executive was also paid $485,625 upon exercising their
right to receive an amount equal to the fair market value of 15,000 common
shares of the Corporation which is equal to the number of synthetic restricted
shares ("phantom stock") which were originally to be granted on January 1, 1998
and, were later reduced by the renewal employment agreement. Each Executive was
also granted 400,000 options to purchase common shares in accordance with the
Stock Option Plan on October 15, 1999, which options expire on October 15, 2009.
Under the agreements, each of the Executives is to perform such services with
respect to the Corporation's business as may be reasonably requested from time
to time by the Board of Directors and which are consistent with his position as
Co-Chief Executive Officer. The Corporation is to use its best efforts to cause
the Executives to be elected to the Board of Directors. In addition, a provision
contained in their original employment agreements was continued, whereby each of
the Executives is also entitled to receive, upon a sale of the Corporation or
the exercise after March 1, 1999 by the Executives of their rights to require
the Corporation to take action to liquidate their common shares under a
Shareholders' Agreement among Wasserstein Perella Partners, L.P., Mr. Wechsler,
Mr. Gelfond and certain other investors dated as of June 16, 1994, a cash bonus
in an amount equal to the product of (a) 0.375% and (b) the amount by which the
sale or liquidation transaction imputes an equity value in excess of Canadian
$150,000,000 to the common shares originally issued by the Corporation (on a
fully diluted basis but excluding the common shares issued upon the conversion
of the Class B convertible preferred shares of the Corporation formerly
outstanding which were converted into common shares on June 16, 1994 and the
common shares issuable upon the exercise of warrants owned by each of Messrs.
Wechsler and Gelfond).
Under the employment agreements, the Corporation is to equalize the Executives
to the taxes which each of the Executives would have paid had he earned his
employment compensation and paid taxes thereon solely in the United States. The
employment agreements also contain non-competition provisions.
Mr. Davison entered into an employment agreement with the Corporation on January
16, 1991, as amended by a letter dated August 31, 1992, under which he was
employed as Director, Corporate Development and then promoted to Vice President,
Finance. The agreement is for an indefinite term and contains covenants
regarding confidentiality and non-competition. The agreement provides that the
employment of Mr. Davison may be terminated at any time for cause. If Mr.
Davison's employment is terminated without cause, the Corporation must pay Mr.
Davison his annual salary for 12 months. Mr. Davison and the Corporation entered
into a share option agreement dated as of April 8, 1994. Under this agreement
Mr. Davison was granted options to purchase 75,008 common shares of the
Corporation at Canadian $1.595 per share. The options vested over a five-year
period.
The Corporation and David Keighley Productions 70 MM Inc. (formerly David
Keighley Productions and 70MM Inc.) ("DKP/70MM"), a wholly owned subsidiary of
the Corporation, entered into an employment agreement on July 15, 1997. The
agreement is for a five-year term. Under this agreement, Mr. Keighley received
an annual base salary of $212,405 in the year ended July 15, 1998 and will
receive an annual base salary of 105% of the previous year's base salary in each
of the next four years during the term of the agreement. Mr. Keighley is
entitled to receive an annual bonus of one-third of his annual base salary if
DKP/70MM meets its pre-tax profit threshold as provided in the agreement. Mr.
Keighley is also entitled to receive a further profit-based bonus of 10% of any
excess of DKP/70MM audited profit before taxes over DKP/70MM's pre-tax profit
threshold. Mr. Keighley's bonus in respect of DKP/70MM's year ended
<PAGE>
-10-
December 31, 1999 was $573,000. Under the agreement, Mr. Keighley has also given
covenants regarding confidentiality and non-competition. The agreement provides
that the employment of Mr. Keighley may be terminated at any time for cause or
without cause. If Mr. Keighley's employment is terminated without cause,
DKP/70MM must continue to pay Mr. Keighley his annual base salary for a maximum
period of 36 months.
Mr. Gellis entered into an employment agreement effective January 1, 1998 under
which he was employed as Senior Vice President, Film of the Corporation. The
agreement was for a two-year term. Under this agreement Mr. Gellis received an
annual base salary of $225,000 for 1998 and $250,000 for 1999 plus an annual
performance bonus at a target of 30% of salary, with a guaranteed minimum annual
bonus of $50,000. Mr. Gellis is also entitled to receive a minimum of $50,000 in
each year of the term in respect of script writing services performed by Mr.
Gellis for the Corporation. Mr. Gellis has given covenants regarding
confidentiality and non-competition. The agreement provides that the employment
of Mr. Gellis may be terminated at any time for cause. If Mr. Gellis' employment
is terminated without cause, the Corporation must pay Mr. Gellis his annual
salary and guaranteed bonus and benefits for the balance of the term. If Mr.
Gellis' employment is terminated without cause in connection with a change in
control, the Corporation must pay Mr. Gellis his annual salary and guaranteed
bonus and benefits for the greater of the balance of the term and six months. A
revised employment agreement for Mr. Gellis is in progress and he continues to
be remunerated based on the 1998 plan.
Mr. Gibbon entered into an employment agreement with the Corporation on January
16, 1991, as amended by letters dated August 31, 1992 and December 22, 1999. The
agreement expires in April, 2001, upon Mr. Gibbon's planned retirement from the
Corporation and contains covenants regarding confidentiality and non-
competition. The agreement provides that the employment of Mr. Gibbon may be
terminated at any time for cause. If Mr. Gibbon's employment is terminated
without cause, the Corporation must pay Mr. Gibbon his annual salary, a prorated
share of his bonus, and other benefits for the remainder of the term of the
agreement. All options granted to Mr. Gibbon under the Corporation's Stock
Option Plan shall continue to vest and remain exercisable subsequent to his
retirement from the Corporation for a period of 10 years from the date of grant
and Mr. Gibbon is entitled to receive retiree benefits from the Corporation
subsequent to his retirement.
report on executive compensation
COMPENSATION STRATEGY
As the Compensation Committee did not participate in executive compensation
decisions in respect of 1999, other than the compensation of the Executives, the
compensation of the Corporation's employees was established through guidelines
set by the Board of Directors.
EXECUTIVE COMPENSATION REPORT
Compensation for all the Corporation's employees, including its Named Executive
Officers, is based on each employee's job responsibilities and on his or her
individual performance over time. The Corporation's executive compensation
program has three principal components: base salary, annual variable incentive
compensation and stock options. The Corporation believes these components
collectively provide a fair and competitive pay package and an appropriate
relationship between an executive's compensation, the executive's performance,
and the Corporation's performance.
BASE SALARY
A salary range is established for each salaried position in the Corporation,
including each Named Executive Officer position other than the Executives. The
midpoint of each salary range is generally equal to the average salary of
equivalent positions at other comparable companies. Each executive officer's
base salary is determined by reviewing his or her sustained job performance over
time, based on individual performance and performance of the business or staff
unit over which the executive officer exercises responsibility. Business or
staff unit performance is assessed on return on total capital, achievement of
sales or production targets, effectiveness of cost-containment
<PAGE>
-11-
measures, progress toward implementation of process improvements, and other
factors relevant to each executive officer's position. The relative weight
attributed to each factor, with respect to each executive officer, is an
inherently subjective judgement.
ANNUAL INCENTIVE COMPENSATION
Certain employees of the Corporation, including most of its executive officers
other than the Co-Chief Executive Officers, receive a portion of their annual
compensation in the form of bonuses under the Management Incentive Plan. Bonuses
are awarded under this plan provided annual operating targets are achieved by
the Corporation and provided that personal performance standards are achieved by
the participating employees. An aggregate of $1,510,043 has been paid to all
employees participating in the plan in respect of 1999.
STOCK OPTIONS
The Corporation's long-term incentive compensation for executive officers and
other key managers is provided through grants of stock options. The Stock Option
Plan has received shareholder approval and is administered by the Option
Committee of the Board of Directors. The number of stock options granted is
determined by a competitive compensation analysis and is based on each
individual's salary range and responsibility, and takes into account the number
and exercise price of options previously granted to individuals. All grants
pursuant to the Stock Option Plan are made with an exercise price equal to the
fair market value of the Corporation's common shares on the date of grant.
During 1999, stock options were granted to the Corporation's executive officers
and other Stock Option Plan participants. The Named Executive Officers received
options to purchase common shares of the Corporation, as detailed in the option
grants table above. In determining the number of shares to include in the Named
Executive Officers' grants, consideration was given to information about stock
option grants to executive officers in comparable companies and the number of
shares granted to other executive officers and the value of those options.
COMPENSATION OF CO-CHIEF EXECUTIVE OFFICERS
The Compensation Committee of the Board of Directors was constituted in November
1996 to make recommendations to the Board regarding the compensation of the Co-
Chief Executive Officers of the Corporation, Messrs. Wechsler and Gelfond.
In February 2000, the Board of Directors approved the recommendation of the
Compensation Committee that the bonus payable to each of Messrs. Wechsler and
Gelfond in respect of 1999 be $900,000. This bonus amount was considered
appropriate by the Board in light of the Corporation's success in meeting its
financial and non-financial goals during 1999. This recommendation took into
account the compensation of senior executives of other companies in the
entertainment industry.
The foregoing report has been furnished by G.M. Girvan, M.B. Koffler and W.T.
Ziebold, as members of the Compensation Committee and by M.J. Biondi, K.G.
Copland, J.T. Eyton, G.M. Girvan, G.E. King, M.B. Koffler, S. Reisman, M.A. Utay
and W.T. Ziebold, as members of the Board of Directors.
May 2, 2000.
<PAGE>
-12-
performance graph
The following graph compares the total cumulative shareholder return for $100
invested in common shares of the Corporation against the cumulative total return
of the Nasdaq Composite Index and The Toronto Stock Exchange (the "TSE") 300
Stock Index from June 10, 1994, the day on which the Corporation became listed
on the Nasdaq National Market, to the end of the most recently completed
financial year. The Corporation was included in the TSE 300 Stock Index for the
first time in 1996.
[LINE GRAPH]
CUMULATIVE VALUE OF $100 INVESTMENT
<TABLE>
<CAPTION>
10-Jun-94 '31-Dec-94 '31-Dec-95 '31-Dec-96 '31-Dec-97 '31-Dec-98 '31-Dec-99
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Imax 100 62.96 168.52 229.63 325.93 468.52 405.56
- --------------------------------------------------------------------------------
Nasdaq 100 103.17 144.35 176.78 216.34 298.60 546.91
- --------------------------------------------------------------------------------
TSE 300 100 99.99 117.58 150.42 165.71 152.32 212.76
- --------------------------------------------------------------------------------
</TABLE>
corporate governance
The TSE passed a by-law in 1995 which requires companies incorporated in Canada
and listed on the TSE to disclose their corporate governance practices in their
annual meeting materials. This by-law contains a number of guidelines
("Guidelines") relating to corporate governance practices which have been
considered in light of the unique opportunities and challenges facing the
Corporation, as well as the nature of its share ownership.
The Board of Directors of the Corporation is responsible for the supervision of
the management of the Corporation and for the overall strategic direction of its
business. The Board is also responsible, with the assistance of management, for
the identification of the risks and opportunities of the Corporation's business
and for monitoring how effectively the Corporation meets these risks and
capitalizes upon the opportunities. The corporate governance practices of the
Corporation have been designed and followed to assist the Corporation in meeting
its core objectives and to enhance shareholder value.
The Board is composed of 11 directors. Two of the directors, Messrs. Wechsler
and Gelfond are inside management directors and are considered to be "related"
within the meaning of the TSE Guidelines. Messrs. Biondi, Copland, Eyton,
Girvan, King, Koffler, Reisman,
<PAGE>
-13-
Utay and Ziebold are outside directors and are considered to be "unrelated"
within the meaning of the Guidelines. The Board considers that directors who are
"related" within the meaning of the Guidelines are able to, and do, act with a
view to the best interests of the Corporation and that their relationships with
the Corporation are central to their ability to act in its best interests. If
the directors nominated in this circular are elected at the Meeting, the ratio
of insider management directors to outside directors will not change.
The corporate governance practices followed by the Corporation were originally
instituted prior to the time the Corporation went public as one aspect of the
efforts of the new owners of the Corporation to introduce new strategic
directions to the Corporation. Key elements of these corporate governance
practices were contained in the Standstill Agreement between Wasserstein Perella
and the Corporation and the provisions in the Articles of the Corporation
providing for the CEO Advisors. The Standstill Agreement was amended in 1999
(see below for a description of this agreement) and amendments to the Articles
were approved in 1999. In addition to the Standstill Agreement, the Corporation,
Wasserstein Perella and each of Messrs. Wechsler and Gelfond have entered into
the Second Amended and Restated Shareholders' Agreement which contains
provisions relating to the composition of the Board and committees of the Board
(see a description of this agreement under "interest of management in certain
transactions" below).
To date, the Board has not thought it necessary for the Corporation to have the
extensive committee structure recommended in the Guidelines. A corporate
governance committee has not been created, as the Board retains responsibility
for these matters. The Board appoints the Corporation's Audit Committee,
Compensation Committee, Nominating Committee and Option Committee. The Audit
Committee is currently composed of Mr. Wechsler, and two outside directors,
Messrs. Girvan and King. The Audit Committee meets with the external auditors of
the Corporation, both with and without management present, to review the
Corporation's accounting policies, its year-end financial statement information
and presentation, and significant financial issues which may arise for the
Corporation. The Compensation Committee is currently composed of Messrs. Girvan,
Koffler and Ziebold. The Compensation Committee is responsible for setting
objectives for the Co-Chief Executive Officers, assessing their performance on a
periodic basis and reviewing the Stock Option Plan, from time to time. The
Option Committee is currently composed of Messrs. Girvan and Utay. The Option
Committee is responsible for performing the functions required of it under the
Stock Option Plan including the grant of options to participants under the Stock
Option Plan, from time to time. The Nominating Committee is currently composed
of Messrs. Biondi and Gelfond. The Nominating Committee is responsible for
identifying and recommending potential candidates for election to the Board.
If the directors nominated in this circular are elected at the Meeting, the new
Board of Directors will determine Committee memberships for the next year.
The Board has not felt it necessary to add to the procedures currently in place
to ensure its independence from management. The Board believes that the
participation of those members of the management of the Corporation who are on
the Board has been an essential element in the Board's ability to meet its
objectives. All directors exercise critical independent judgement and the
outside directors have unrestricted direct access to both the executives of the
Corporation and its external auditors. To date there has been no necessity for
discussion of a system enabling an individual director to engage an outside
advisor at the expense of the Corporation.
The Board has regarded its corporate governance practices as appropriate for its
business and shareholders and as providing for an efficient and effective
discharge of the responsibilities of the Board.
STANDSTILL AGREEMENT
The Corporation, each of Messrs. Wechsler and Gelfond and Wasserstein Perella
Partners, L.P., Wasserstein Perella Offshore Partners, L.P., WPPN, Inc., and the
Michael J. Biondi Voting Trust (collectively "WP"), entered into an Amended and
Restated Standstill Agreement (the "Standstill Agreement") as of February 9,
1999 which amended and restated the previous Standstill Agreement dated June 16,
1994. Under the terms of the Standstill Agreement, WP agreed to vote in any
election for directors in favour of each person nominated by the then current
Board of Directors, not to participate in or facilitate proxy contests, not to
deposit into a voting trust or subject voting securities to an agreement with
respect to voting such securities, not to acquire or affect or attempt to
acquire or effect control of the Corporation or to participate in a "group" as
defined pursuant to Section 13(d) of the U.S. Securities Exchange Act of 1934,
which owns or seeks to acquire beneficial ownership or control of the
Corporation, and not to attempt to influence the Corporation except through
<PAGE>
-14-
normal Board of Directors' processes. In addition, the parties agreed that the
CEO Advisors then provided for in the Articles and By-laws of the Corporation
would cease to exist upon the election of those directors (the "WP Employee
Designees") WP is to have the right to designate as provided in the Second
Amended and Restated Shareholders' Agreement (the "Shareholders' Agreement'),
which was also entered into by those same and special parties as of February 9,
1999. To accomplish this, the Corporation agreed to submit to its shareholders
at its annual meeting of shareholders (held June 7, 1999) resolutions to amend
the Articles and By-laws to delete reference to the CEO Advisors, and each of
the parties to the Standstill Agreement agreed to use their best efforts so to
amend the Articles and By-laws as of the date on which all of the WP Employee
Designees are elected or appointed as directors of the Corporation. The Articles
and By-laws were amended effective June 7, 1999. The Standstill Agreement
continues in effect until the earlier of June 30, 2001, unless extended by WP at
its option for successive one year terms until March 1, 2004, or the date upon
which WP holds less than 700,000 common shares.
As noted above, the Articles of the Corporation set forth the requirement that
certain matters be approved by 75% of the directors then in office. These
matters are: (i) hiring or terminating the employment of the Chief Executive
Officer or any Co-Chief Executive Officer of the Corporation; (ii) issuing any
shares of capital stock for a purchase price, or incurring indebtedness, in an
amount of $25 million or more; (iii) disposing of any material single asset, or
all or substantially all of the assets of the Corporation or approving the sale
or merger of the Corporation; (iv) acquiring a substantial interest in any other
entity or entering into any major strategic alliance; and (v) entering into or
changing the terms of any agreement or transaction with WP or Messrs. Wechsler
and Gelfond (other than agreements in the ordinary course of business, such as
employment agreements).
interest of management in certain transactions
SHAREHOLDERS' AGREEMENT
The Corporation, WP and each of Messrs. Wechsler and Gelfond are parties to a
Second Amended and Restated Shareholders' Agreement (the " Shareholders'
Agreement") dated as of February 9, 1999, which amends and restates the previous
amended and restated Shareholders' Agreement among those parties dated June 16,
1994. The Shareholders' Agreement includes, among other things, certain
restrictions on transfers of common shares, take-along rights and come-along
rights. If WP holds at least 35% of their original holdings and WP desires to
transfer all of their securities in a transaction in which a majority of the
shares of outstanding common stock are to be sold, then Messrs. Wechsler and
Gelfond will be required to sell their securities on the same terms as WP sells
its securities.
The Shareholders' Agreement also contains provisions related to the composition
of the Board of Directors and committees thereof. WP is entitled, but not
required, to designate individuals to be nominated for election as directors as
follows: so long as WP holds 3,685,759 or more common shares, it may designate
six nominees, of whom three may be employees of WP and its affiliates (the "WP
Employee Designees") and three shall be independent persons and resident
Canadians. If WP holds less than 3,685,759 common shares, but 1,842,879 or more
common shares, it may designate four nominees, of whom two may be WP Employee
Designees and two shall be independent persons and resident Canadians. If WP
holds less than 1,842,879 common shares but 921,439 or more common shares, it
may designate two nominees, one of whom may be a WP Employee Designee and the
other of whom shall be an independent person and shall be a resident Canadian.
In addition to these provisions, each of Messrs. Wechsler and Gelfond is
entitled to be a director of the Corporation so long as he is either a Co-Chief
Executive Officer or is the Chief Executive Officer of the Corporation or
Messrs. Wechsler and Gelfond own more than 375,000 common shares. In addition,
Messrs. Wechsler and Gelfond are collectively entitled, but not required, to
designate individuals to be nominated for election as directors as follows: so
long as they hold 1,628,000 or more common shares, they may designate three
nominees, all of whom shall be independent persons and resident Canadians. If
they hold less than 1,628,000 common shares, but 1,075,000 or more common
shares, they may designate two nominees, both of whom shall be independent and
resident Canadians. If they hold less than 1,075,000 common shares but 375,000
or more common shares, they may designate one nominee who shall be an
independent person. If the requirement that the Corporation have `resident
Canadian' directors is changed, then neither WP nor Messrs. Wechsler and Gelfond
will be required to designate resident Canadian nominees. Each of the nominees
of WP who is to be an independent person is subject to the approval by Messrs.
Wechsler and Gelfond, which approval is not to be unreasonably withheld;
<PAGE>
-15-
each of the nominees of Messrs. Wechsler and Gelfond is subject to the approval
of WP, which approval is in WP's sole discretion for the first nominee to serve
in each such position and thereafter, is not to be unreasonably withheld. Each
of WP and Messrs. Wechsler and Gelfond has agreed to use their best efforts to
cause each of the individuals designated to be elected or appointed as a
director of the Corporation.
The Shareholders' Agreement also provides that the Corporation, WP and each of
Messrs. Wechsler and Gelfond shall use their best efforts to cause the
Corporation to establish a nominating committee of the Board of Directors
consisting of two directors, one designated by WP and the other designated by
Messrs. Wechsler and Gelfond. In addition, WP has the right, subject to the
approval of Messrs. Wechsler and Gelfond, to designate a WP Employee Designee
for appointment by the Board of Directors of the Corporation as the Non-
Executive Chairman of the Corporation, as long as WP holds at least 2,948,607
common shares. Michael J. Biondi has been approved as such designee. If Mr.
Biondi no longer holds that position, then WP is to propose three replacements
and Messrs. Wechsler and Gelfond shall select one of those proposed for
appointment by the Board as the Non-Executive Chairman. Each of Messrs. Wechsler
and Gelfond is entitled to be appointed as a Co-Chairman or Chairman of the
Corporation as long as he is a Co-Chief Executive Officer or the Chief Executive
Officer of the Corporation. The Agreement provides that the duties of the Non-
Executive Chairman and the Co-Chief Executive Officers shall be as set forth in
the By-laws, including the requirement that the following actions be approved by
the Non-Executive Chairman and at least one of the Co-Chief Executive Officers:
setting the dates and times of meetings of the directors and shareholders (other
than normal quarterly Board of Directors, and annual shareholders' meetings),
setting the agenda of such meetings, and appointing members of committees of the
Board of Directors other than persons designated by WP and Messrs. Wechsler and
Gelfond as provided in the Shareholders' Agreement. Each of WP and Messrs.
Wechsler and Gelfond have the right to designate one director to serve on each
committee of the Board of Directors of the Corporation, provided that each such
person meets applicable regulatory requirements.
Each of WP and Messrs. Wechsler and Gelfond agreed to use their best efforts to
cause there no longer to be CEO Advisors as of the date upon which all of the WP
Employee Designees are elected as directors of the Corporation. All of the WP
Employee Designees were elected as directors at the Corporation's annual and
special meeting of shareholders held June 7, 1999 and the CEO Advisors were
disbanded in June, 1999. After that date, none of WP or Messrs. Wechsler and
Gelfond shall take any action to reestablish the CEO Advisors and the majority
approval requirements described above under "Standstill Agreement" would apply.
REGISTRATION RIGHTS AGREEMENT
The Corporation, WP and Messrs. Wechsler and Gelfond also entered into a
registration rights agreement (the "Registration Rights Agreement") dated as of
February 9, 1999, which carried forward the corresponding provisions of the June
16, 1994 Shareholders' Agreement, and pursuant to which each of WP and Messrs.
Wechsler and Gelfond have certain rights to cause the Corporation to use its
best efforts to register their securities under the U.S. Securities Act of 1933.
WP is entitled to effect up to four demand registrations and Messrs. Wechsler
and Gelfond are entitled to make two such demand registrations. WP and Messrs.
Wechsler and Gelfond also have unlimited piggy-back rights to register their
securities under the Registration Rights Agreement whenever the Corporation
proposes to register any securities under the U.S. Securities Act, other than
the registration of securities pursuant to an initial public offering or the
registration of securities upon Form S-4 or S-8 under the U.S. Securities Act or
filed in connection with an exchange offer or an offering of securities solely
to the Corporation's existing shareholders. In addition to these provisions, if
Messrs. Wechsler and Gelfond hold at least 25% of their original holdings, WP
has recouped its original investment plus a 30% compounded annual return on such
investment, and WP initiates the sale of the Corporation, then for 60 days
thereafter, WP will enter into exclusive negotiations with Messrs. Wechsler and
Gelfond, and for another 60 days thereafter WP may not enter into an agreement
for the sale of the Corporation to a third party. The Registration Rights
Agreement also provides that Messrs. Wechsler and Gelfond will have the right
from March 1 to March 31 in any, but only one, of 1999, 2000 and 2001, to notify
the Corporation of their decision to require the Corporation to take action to
liquidate their common shares. The Corporation is required to use its best
efforts to cause at its option either (i) the sale of the Corporation within a
period of 180 days from receipt of the notice to liquidate, (ii) the filing of a
registration statement pursuant to the U.S. Securities Act within a period of
120 days from its receipt of the notice to liquidate, or (iii) purchase the
securities owned by Messrs. Wechsler and Gelfond for cash at the fair market
value as agreed upon by the Corporation and Messrs. Wechsler and Gelfond within
20 days of the notice to
<PAGE>
-16-
liquidate, or in the event of their failure to reach an agreement, as determined
by a procedure utilizing nationally recognized investment banking firms. In the
event that Messrs. Wechsler and Gelfond exercise their rights to require the
Corporation to take such action, they may be entitled to certain cash bonus
payments as described above under "executive compensation - Employment
Contracts".
The former shareholders of the Corporation have substantially similar piggyback
registration rights that commenced on March 1, 1996 pursuant to the terms of the
Selling Shareholders' Agreement (as defined below).
WP, Messrs. Wechsler and Gelfond, and the former shareholders of the predecessor
corporation to the Corporation have entered into another shareholders' agreement
(the "Selling Shareholders' Agreement") which includes, among other things,
registration rights, tag along rights and drag along rights.
appointment of auditors
At the Meeting, the shareholders will be asked to approve, by ordinary
resolution, the appointment of PricewaterhouseCoopers LLP, ("PWC") Chartered
Accountants, as auditors of the Corporation to hold office until the close of
the next annual meeting of shareholders at a remuneration to be fixed by the
Board of Directors. PWC, or one of its predecessors have been the auditors of
the Corporation for more than five years. In the absence of any instruction on
the accompanying form of proxy, it is the intention of the persons named by
management in the form of proxy to vote the common shares represented by the
form of proxy in favour of the resolution.
amendments to stock option plan
SUMMARY OF STOCK OPTION PLAN
The purposes of the Stock Option Plan are to attract, retain and motivate
directors, officers, key employees and consultants of the Corporation and its
subsidiaries and to provide such persons with incentives and awards for superior
performance. The Stock Option Plan is subject to the policies of the TSE
respecting stock options or other share issuances which are used as incentives
or compensation mechanisms for employees, directors and other persons who
provide on-going services for listed companies.
Under the Stock Option Plan, options may be granted to employees and consultants
to the Corporation and any of its subsidiaries as well as to directors of the
Corporation who are not also employees of it as well as persons who have agreed
to commence serving in any such capacity within 90 days of the date of grant of
an option. Options are granted at the fair market value of the common shares at
the time of grant of the options. Options may be for terms of not more than 10
years and may not be assigned.
As of April 28, 2000, there were 5,541,800 common shares which are subject to
outstanding options granted pursuant to the Stock Option Plan. The remaining
term of these options is from 5 to 10 years and the exercise price under them
ranges from $5.00 to $28.13.
BACKGROUND TO AMENDMENTS TO THE STOCK OPTION PLAN
The compensation policy of the Corporation is designed to provide a fair and
competitive pay package and an appropriate relationship between an executive's
compensation, the executive's performance, and the Corporation's performance.
The Corporation's executive compensation program has three principal components:
base salary, annual variable incentive compensation and stock options. The
number of stock options available for grant under the Stock Option Plan has been
reducing and, as a result of the annual grants to employees as well as grants to
new employees, there is insufficient capacity in the Stock Option Plan to effect
adequately our giving option grants in furtherance of the Corporation's
compensation policy. Therefore, an amendment to the Stock Option Plan is
proposed for approval by the shareholders which will increase the aggregate
number of common shares available for issuance under the Stock Option Plan to
10,210,836.
<PAGE>
-17-
On April 27, 2000, the Board of Directors of the Corporation approved an
increase in the number of common shares issuable under the Stock Option Plan,
subject to the approval of the shareholders of the Corporation and regulatory
approval. At the Meeting, shareholders will be asked to approve, by ordinary
resolution, the resolution set out in Schedule "A" to this management proxy
circular. This resolution would confirm the amendment to the Stock Option Plan
approved by the Board of Directors to increase the aggregate number of common
shares available for issuance under the Stock Option Plan from 7,710,836 common
shares to 10,210,836 common shares.
SHAREHOLDER APPROVAL
If approved by the holders of the common shares, the ordinary resolution will
approve the amendment of the Plan as set forth above in accordance with such
amendment. In the absence of any instructions on the accompanying form of proxy,
it is the intention of the persons named by management in the form of proxy to
vote the shares represented by the form of proxy in favour of the ordinary
resolution.
The contents and the sending of this management proxy circular and proxy
statement have been approved by the Board of Directors.
DATED at Mississauga, Ontario, May 2, 2000.
LOGO
G. MARY RUBY
Vice President,
Legal Affairs
and Corporate Secretary
<PAGE>
Schedule "A"
RESOLVED that the Stock Option Plan of the Corporation be amended to
increase the aggregate number of common shares available for issuance under the
Plan to 10,210,836.
<PAGE>
Imax Corporation
2525 Speakman Drive
Mississauga, Ontario L5K 1B1
LOGO
FORM OF PROXY
The undersigned common shareholder of Imax Corporation (the "Corporation")
hereby appoints Bradley J. Wechsler, failing whom, Richard L. Gelfond, failing
whom, John M. Davison, failing whom, G. Mary Ruby, or instead of the
foregoing___________________
as the proxyholder of the undersigned to attend and act for and on behalf of the
undersigned at the Annual and Special Meeting of Shareholders of the Corporation
to be held on June 7, 2000, and at any adjournments thereof, to the same extent
and with the same power as if the undersigned were present in person thereat and
with the authority to vote and act in the said proxyholder's discretion with
respect to amendments or variations to matters referred to in the notice of the
Meeting and with respect to other matters which may properly come before the
Meeting. This proxy is solicited by and on behalf of the management of the
Corporation.
The said proxyholder is specifically directed to vote or withhold from voting
the shares registered in the name of the undersigned as indicated below:
(1) VOTE [ ] WITHHOLD FROM VOTING [ ]
In respect of the election of the nominees for directors of the Corporation
as a group listed in the Management Proxy Circular and Proxy Statement.
(2) VOTE [ ] WITHHOLD FROM VOTING [ ]
In respect of the appointment of PricewaterhouseCoopers LLP as auditors of
the Corporation and authorizing the directors to fix their compensation.
(3) VOTE FOR [ ] AGAINST [ ]
The ordinary resolution set forth in Schedule "A" to the Management
Information Circular and Proxy Statement to approve an amendment to the
Corporation's Stock Option Plan.
Date: ___________, 2000
________________________________________________________________________________
(Print name of Registered Holder of Common Shares)
________________________________________________________________________________
(Signature of Registered Holder or Authorized Signatory)
Notes:
(1) You have the right to appoint a person other than the management nominees
to attend and act for you at the Meeting. Such person need not be a
shareholder of the Corporation. In such case, please delete the names of
Messrs. Wechsler, Gelfond, Davison and Ms. Ruby as your proxy nominee and
insert the name of the desired person in the blank space provided for this
purpose.
(2) If the proxy is not dated in the space provided for this purpose, it will
be deemed to bear the date on which it was mailed by the Corporation.
(3) To be valid, this proxy must be dated and signed by yourself, as the
registered holder of common shares, or as a person named as a proxy nominee
in respect of this Meeting in an omnibus proxy containing a power of
substitution pursuant to applicable securities laws, or your attorney. If
the registered holder or the person named in an omnibus proxy is a
corporation, this proxy must be signed by an authorized officer or attorney
of such corporation.
