UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of January 2001
EXFO ELECTRO-OPTICAL ENGINEERING INC.
(Translation of registrant's name into English)
465 GODIN AVENUE, VANIER, QUEBEC, CANADA G1M 3G7
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
------- ------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
------- -------
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-______.
In December 2000, EXFO Electro-Optical Engineering Inc., a Canadian corporation,
issued its notice of annual and special shareholders' meeting, its form of
proxy and its management proxy circular. This report on Form 6-K sets forth
these documents.
[EXFO LOGO]
Vanier, December 1, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual and Special Meeting
of Shareholders (the "Meeting") of EXFO Electro-Optical Engineering Inc. to be
held at the News Theatre, located at 98 The Esplanade, Toronto, Ontario, on
January 17, 2001, at 10:30 a.m. (Toronto time).
Details of the business to be conducted at the Meeting are given in the
attached Management Proxy Circular and Notice of Annual and Special Meeting of
Shareholders.
It is important that your shares be represented at the Meeting. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. If you
send in your proxy card and then decide to attend the Meeting to vote your
shares in person, you may still do so. Your proxy is revocable in accordance
with the procedures set forth in the Management Proxy Circular.
ON BEHALF OF THE BOARD OF DIRECTORS, I WOULD LIKE TO EXPRESS OUR
APPRECIATION FOR YOUR CONTINUED INTEREST IN EXFO. WE LOOK FORWARD TO SEEING YOU
AT THE MEETING.
Sincerely,
/s/ Germain Lamonde
--------------------------------
Germain Lamonde
Chairman of the Board, President and
Chief Executive Officer
EXFO Electro-Optical Engineering Inc.
[EXFO LOGO]
EXFO ELECTRO-OPTICAL ENGINEERING INC.
-------------------------
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual and Special Meeting (the
"Meeting") of shareholders of EXFO Electro-Optical Engineering Inc. (the
"Corporation") will be held at 10:30 a.m. local time, on Wednesday, January 17,
2001, at the News Theatre, 98 The Esplanade, Toronto, Ontario, for the following
purposes:
1. to receive the consolidated financial statements of the Corporation for
the financial year ended August 31, 2000, and the Auditor's report
thereon;
2. to elect Directors of the Corporation;
3. to appoint PricewaterhouseCoopers LLP as auditors and to authorize the
Board of Directors to fix their remuneration; and
4. to approve a resolution modifying the subscription price of the
Subordinate Voting Shares covered by the options granted to employees,
officers, consultants and Directors, with the exception of the
President and Chief Executive Officer, in June, September and October
2000, the full text of which is joined as Schedule "A" to the
Management Proxy Circular;
5. transact such further or other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
Enclosed is a copy of the 2000 Annual Report of the Corporation including the
consolidated financial statements and the Auditor's Report thereon, together
with the Management Proxy Circular and a form of Proxy.
DATED at Vanier, Quebec, this 1st day of December, 2000.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kimberley Okell
----------------------------
Kimberley Okell
Secretary
SHAREHOLDERS UNABLE TO ATTEND THE MEETING ARE REQUESTED TO COMPLETE THE ENCLOSED
PROXY FORM AND RETURN IT IN THE ENVELOPE PROVIDED. TO BE VALID PROXIES MUST
REACH THE OFFICE OF CIBC MELLON TRUST COMPANY, 2001 UNIVERSITY STREET, SUITE
1600, MONTREAL, QUEBEC, CANADA, H3A 2A6, NO LATER THAN THE LAST DAY PRIOR TO THE
DATE OF THE MEETING OR ANY RECONVENING OF THE MEETING IN CASE OF ADJOURNMENT.
SHAREHOLDERS MAY ALSO HAVE THE PROXY FORM DELIVERED TO THE CHAIRMAN OF THE
MEETING PRIOR TO THE TIME OF VOTING ON THE DAY OF THE MEETING OR ANY ADJOURNMENT
THEREOF.
EXFO ELECTRO-OPTICAL ENGINEERING INC.
MANAGEMENT PROXY CIRCULAR OF THE CORPORATION
FOR THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE MANAGEMENT OF THE CORPORATION
The undersigned shareholder of EXFO ELECTRO-OPTICAL ENGINEERING INC. hereby
appoints (CHECK EITHER (A) or (B)):
[ ] (A) Mr. Germain Lalonde of Cap-Rouge, Quebec, or failing him, Mr. Pierre
Plamondon of Quebec, Quebec;
[ ] (B) ____________________________ of ______________________________
(Name) (Address)
as the representative of the undersigned to attend, act and vote on behalf of
the undersigned at the ANNUAL AND SPECIAL MEETING OF THE SHAREHOLDERS (THE
"MEETING") OF THE CORPORATION TO BE HELD AT THE NEWS THEATRE, LOCATED AT 98 THE
ESPLANADE, IN THE CITY OF TORONTO, PROVINCE OF ONTARIO, CANADA, ON WEDNESDAY,
JANUARY 17, 2001, AT 10:30 O'CLOCK A.M. (TORONTO TIME) AND AT ANY ADJOURNMENTS
OF SUCH MEETING.
THE UNDERSIGNED WISHES THAT ALL SHARES REPRESENTED BY THIS PROXY BE VOTED IN
ACCORDANCE WITH THE INSTRUCTIONS HEREINBELOW. ALL SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR, AGAINST OR BE THE SUBJECT OF ABSTENTIONS, AS SPECIFIED
BY THE SHAREHOLDER. HOWEVER, IN THE ABSENCE OF INSTRUCTIONS, THE SHARES
REPRESENTED BY PROXY WILL BE VOTED IN FAVOUR OF EACH OF THE PROPOSALS SET FORTH
HEREIN.
(MARK WITH AN X)
To elect Germain Lamonde, Pierre Marcouiller, FOR [ ]
David A. Thompson, Andre Tremblay and Michael
Unger, whose cities of residence are indicated ABSTENTION [ ]
in the Management Proxy Circular, as Directors
of the Corporation.
To appoint PricewaterhouseCoopers LLP as auditors FOR [ ]
and to authorize the directors to fix for
their remuneration. ABSTENTION [ ]
To approve a resolution modifying the subscription
price of the Subordinate Voting shares covered by
the options granted to employees, officers, FOR [ ]
consultants and Directors, with the exception of
the President and Chief Executive Officer, in June, AGAINST [ ]
September and October 2000, the full text of which
is joined as Schedule "A" to the Management Proxy
Circular.
A DISCRETIONARY POWER IS HEREBY CONFERRED as to any amendment or change made to
the matters mentioned in the Notice of Meeting or as to such other matters as
may legally come before the Meeting. The Management of the Corporation is not
aware of any amendments, changes or other matters which may come before the
Meeting.
* A SHAREHOLDER IS ENTITLED TO APPOINT, DATED this day of .
TO ATTEND AND ACT FOR AND ON BEHALF OF
SUCH SHAREHOLDER AT THE MEETING, A PERSON
OTHER THAN THE PERSON MENTIONED IN (A)
HEREIN ABOVE AND MAY DO SO BY CHECKING ________________________________
(B) HEREIN ABOVE AND ADDING THE NAME OF SIGNATURE OF SHAREHOLDER
SUCH OTHER PERSON IN THE SPACE RESERVED
FOR SUCH PURPOSE.
[ ]
[ ]
THIS PROXY MUST BE SIGNED BY THE SHAREHOLDER OR HIS PROXYHOLDER AUTHORIZED IN
WRITING OR, IF THE SHAREHOLDER IS A CORPORATION, UNDER ITS CORPORATE SEAL, BY A
DULY AUTHORIZED OFFICER OR PROXYHOLDER OF THE CORPORATION. PLEASE REMEMBER TO
DATE AND SIGN THIS PROXY. IF THIS PROXY IS NOT DATED, IT WILL BE DEEMED TO BEAR
THE DATE OF ITS MAILING BY MANAGEMENT.
YOU ARE REFERRED TO THE MANAGEMENT PROXY CIRCULAR APPENDED.
EXFO ELECTRO-OPTICAL ENGINEERING INC.
MANAGEMENT PROXY CIRCULAR
SOLICITATION OF PROXIES
THIS MANAGEMENT PROXY CIRCULAR IS PROVIDED IN CONNECTION WITH THE SOLICITATION
BY THE MANAGEMENT OF EXFO ELECTRO-OPTICAL ENGINEERING INC. (THE "CORPORATION")
OF PROXIES TO BE USED AT THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS (THE
"MEETING") OF THE CORPORATION TO BE HELD AT THE TIME AND PLACE AND FOR THE
PURPOSES STATED IN THE ACCOMPANYING NOTICE OF MEETING AND AT ANY ADJOURNMENT
THEREOF. UNLESS OTHERWISE INDICATED, THE INFORMATION CONTAINED HEREIN IS GIVEN
AS OF NOVEMBER 30, 2000.
It is expected that the solicitation will be made primarily by mail but proxies
may also be solicited personally by officers, employees or agents of the
Corporation. The Corporation may also reimburse brokers and other persons
holding shares in their names, or in the names of nominees, for their costs
incurred in sending proxy material to principals and obtaining their proxies.
The cost of solicitation will be borne by the Corporation and is expected to be
nominal.
APPOINTMENT AND REVOCATION OF PROXIES AND ATTENDANCE OF BENEFICIAL SHAREHOLDERS
The persons named in the enclosed Form of Proxy (the "Form of Proxy") are
officers of the Corporation. A SHAREHOLDER DESIRING TO APPOINT SOME OTHER PERSON
(WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM OR HER AT THE MEETING MAY DO SO
BY INSERTING SUCH PERSON'S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY
AND CHECKING ITEM (B).
To be valid, proxies must be received at the Montreal, Canada office of CIBC
Mellon Trust Company, 2001 University Street, Suite 1600, Montreal, Quebec,
Canada, H3A 2A6, the transfer agent of the Corporation, no later than the close
of business on the last business day preceding the day of the Meeting or any
adjournment thereof, or proxies may be delivered to the Chairman of the Meeting
on the day of the Meeting or any adjournment thereof. A beneficial shareholder
who completes a Form of Proxy and who wishes to attend and vote at the Meeting
personally must appoint himself or herself proxy holder in the foregoing manner.
A proxy given pursuant to this solicitation may be revoked by instrument in
writing executed by the shareholder or by his or her attorney authorized in
writing if such instrument is deposited either at the registered office of the
Corporation to the attention of the Secretary no later than the close of
business on the last business day preceding the day of the Meeting or any
adjournment thereof or with the Chairman of the Meeting on the day of the
Meeting or any adjournment thereof.
1
VOTING OF PROXIES
The shares represented by proxies appointing the persons, or any one of them,
designated by Management thereon to represent the shareholder at the Meeting
will be voted in accordance with the instructions given by the shareholder.
UNLESS OTHERWISE INDICATED, THE VOTING RIGHTS ATTACHING TO THE SHARES
REPRESENTED BY A FORM OF PROXY WILL BE VOTED "FOR" ALL THE PROPOSALS DESCRIBED
HEREIN.
The Form of Proxy confers discretionary authority upon the persons named therein
with respect to amendments or variations to matters identified in the
accompanying Notice of Meeting. As at the date hereof, Management is not aware
that any other matter is to be presented at the Meeting. If, however, other
matters properly come before the Meeting, the persons designated in the Form of
Proxy will vote thereon in accordance with their judgment pursuant to the
discretionary authority conferred by such proxy with respect to such matters.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
As at November 8, 2000, 8,757,264 Subordinate Voting Shares and 38,000,000
Multiple Voting Shares were outstanding, being the only classes of shares
entitled to be voted at the Meeting. Each holder of Subordinate Voting Shares is
entitled to one vote and the holder of Multiple Voting Shares is entitled to 10
votes for each share registered in his or her name at the close business on
December 13, 2000, being the date fixed by the Board of Directors for the
purpose of determining registered shareholders entitled to receive the
accompanying Notice of Meeting (the "Record Date"). In the event that such a
shareholder transfers the ownership of any of his or her shares after the Record
Date, the transferee of such shares shall be entitled to vote at the Meeting if
he or she produces properly endorsed share certificates or otherwise establishes
proof of his or her ownership of the shares and demands, not later than 10 days
before the Meeting, that his or her name be included on the list of shareholders
entitled to vote. This list of shareholders will be available for inspection
during normal business hours at the Montreal, Canada office of CIBC Mellon Trust
Company, the transfer agent of the Corporation, 2001 University Street, Suite
1600, Montreal, Quebec, Canada, H3A 2A6, and at the Meeting.
Unless otherwise indicated, the resolutions submitted to a vote at the Meeting
must be passed by a majority of the votes cast by the holders of Subordinate
Voting Shares and Multiple Voting Shares, as a single class, present at the
Meeting in person or by proxy and voting in respect of all resolutions to be
voted on by the shareholders of the Corporation.
To the knowledge of executive officers and directors of the Corporation, as of
November 8, 2000, the only person who is beneficial owner or exercised control
or direction, directly or indirectly, over shares carrying more than 10% of the
voting rights attaching to any class of shares of the Corporation is:
2
------------------------------ ------------- --------------- -------------- --------------- -----------------
PERCENTAGE OF
PERCENTAGE OF PERCENTAGE OF VOTING RIGHTS
NUMBER OF VOTING RIGHTS VOTING RIGHTS ATTACHED TO ALL
SUBORDINATE ATTACHED TO ALL NUMBER OF ATTACHED TO SUBORDINATE AND
VOTING SUBORDINATE MULTIPLE ALL MULTIPLE MULTIPLE VOTING
NAME OF SHAREHOLDER SHARES VOTING SHARES VOTING SHARES VOTING SHARES SHARES
------------------------------ ------------- --------------- -------------- --------------- -----------------
Germain Lamonde(1) -- -- 38,000,000 100% 97.7%
------------------------------ ------------- --------------- -------------- --------------- -----------------
---------------
(1) Mr. Lamonde exercises control over this number of Multiple Voting
Shares through GEXFO Investissements Technologiques inc. and G. Lamonde
Investissements Financiers inc., companies controlled by Mr. Lamonde
and through Fiducie Germain Lamonde, a family trust for the benefit of
Mr. Lamonde and members of his family.
1. PRESENTATION OF THE FINANCIAL STATEMENTS
The consolidated financial statements of the Corporation for the
financial year ended August 31, 2000 and the Auditors' report thereon
accompany this Circular.
2. ELECTION OF THE DIRECTORS
According to the articles of the Corporation, the Board of Directors
shall consist of a minimum of 3 and a maximum of 12 directors. At the
Meeting, Management proposes to nominate five individuals for election
as directors to hold office until the next annual meeting or until the
office is otherwise vacated in accordance with the Corporation's
by-laws.
Management does not anticipate that any of the nominees mentioned below
will be unable, or for any reason whatsoever, be reluctant to fulfil
their duties as directors. Should this occur for any reason whatsoever
before the election, the persons named in the Form of Proxy reserve the
right to vote for another nominee of their choice unless the
shareholder specified on the Form of Proxy to abstain from voting for
the election of the directors.
The following table and notes thereto set out, as at November 30, 2000,
the name of each of the individuals whom is proposed to be nominated at
the Meeting for election as a director of the Corporation, all other
positions and offices with the Corporation and its subsidiaries now
held by each such individual, if any, the principal occupation or
employment of each such individual, their respective period of service
as a director and the approximate number of shares of the Corporation
beneficially owned by each such individual or over which each of them
exercised control or direction.
3
------------------------ --------------------- ---------------- --------------- ---------------- -----------
NUMBER OF
NAME AND POSITION OR PRINCIPAL NUMBER OF MULTIPLE
OFFICE WITH THE OCCUPATION OR CITY OF SUBORDINATE VOTING
CORPORATION EMPLOYMENT RESIDENCE DIRECTOR SINCE VOTING SHARES SHARES
------------------------ --------------------- ---------------- --------------- ---------------- -----------
Germain Lamonde(1) Chairman of the Cap-Rouge, September 1985 - 38,000,000
Chairman of the Board, Board, President Quebec
President and Chief and Chief Executive
Executive Officer Officer, EXFO
Electro-Optical
Engineering Inc.
------------------------ --------------------- ---------------- --------------- ---------------- -----------
Pierre Chairman of the Magog, Quebec May 2000 6,000 -
Marcouiller(2)(3) Board,
Director Camoplast Inc.
(a supplier of
automotive and
recreational
vehicle parts)
------------------------ --------------------- ---------------- --------------- ---------------- -----------
Dr. David A. Director of Horseheads, June 2000 2,100 -
Thompson(3) Technology and New York
Director Strategy,
Corning Inc.
------------------------ --------------------- ---------------- --------------- ---------------- -----------
Andre Tremblay(2)(4) President and Chief Outremont, May 2000 7,000 -
Director Executive Officer, Quebec
Microcell
Telecommunications
Inc.
------------------------ --------------------- ---------------- --------------- ---------------- -----------
Michael Unger(2)(3) Executive Consultant Woodbridge, May 2000 6,000 -
Director Ontario
------------------------ --------------------- ---------------- --------------- ---------------- -----------
---------------
(1) Mr. Lamonde exercises control over this number of Multiple Voting
Shares through GEXFO Investissements Technologiques inc. and G. Lamonde
Investissements Financiers inc., companies controlled by Mr. Lamonde
and through Fiducie Germain Lamonde, a family trust for the benefit of
Mr. Lamonde and members of his family.
(2) Member of the Audit Committee.
(3) Member of the Human Resources Committee.
(4) Mr. Tremblay exercises control over this number of Subordinate Voting
Shares through 9044-6451 Quebec inc. and 9089-3082 Quebec inc.,
companies controlled by Mr. Tremblay.
In the past five years, each of the foregoing nominee Directors had the
principal occupation set out opposite his name, except that:
- Pierre Marcouiller has been the Chairman of the Board of
Camoplast Inc. since June 2000. Mr. Marcouiller is the
founder and has been the sole shareholder of Nexcap Inc.,
an investment company in the manufacturing sector, since
December 1996. From December 1986 to December 1996, Mr.
Marcouiller held the position of President and General
Manager of Venmar Ventilation Inc., a private ventilation
equipment manufacturer.
- Michael Unger was President of Nortel Networks Corporation's
Optical Networks Business Unit from May 1998 to April 2000.
From March 1990 to May 1998, Mr. Unger was Nortel's Group
Vice-President, Transport Networks.
The information as to Subordinate Voting Shares and Multiple Voting
Shares beneficially owned or over which the above-named individuals
exercise control or direction is not within the direct knowledge of the
Corporation and has been furnished by the respective individual.
4
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
In the financial year ended August 31, 2000, directors who were not
employees received US$4,138 as annual compensation and a fee of US$690
for each meeting of the Board of Directors or of a Committee attended
by them in person and a fee of US$345 if such participation was made by
telephone. The Chairman of any Committee of the Board of Directors
received an additional annual remuneration of US$3,450. These amounts
may be paid by cash, or by issuing the equivalent value of Subordinate
Voting Shares or by granting stock options. In the financial year ended
August 31, 2000, 8,000 options were granted to directors who were not
employees under the Corporation's Stock Option Plan (the "Stock Option
Plan").
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The table below shows certain compensation information for Mr. Germain
Lamonde, the President and Chief Executive Officer of the Corporation,
and the 4 other most highly compensated executive officers of the
Corporation and its subsidiaries during the financial year ended August
31, 2000 (collectively, the "Named Executive Officers"). This
information includes the US dollar value of base salaries, bonus awards
and long-term incentive plan payments, the number of options granted,
and certain other compensation, if any, whether paid or deferred.
-------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
---------------------- ------------- ----------- ----------- ----------------- -------------- ---------------
SECURITIES
OTHER ANNUAL UNDER ALL OTHER
NAME AND PRINCIPAL FINANCIAL SALARY BONUS(1) COMPENSATION OPTIONS(2) COMPENSATIONS
POSITION YEAR (US$) (US$) (US$) (#) (US$)
---------------------- ------------- ----------- ----------- ----------------- -------------- ---------------
Germain Lamonde, 2000 134,932 63,566 - 25,402 -
President and
Chief Executive
Officer
---------------------- ------------- ----------- ----------- ----------------- -------------- ---------------
Bruce Bonini, 2000 309,801 20,000 - 3,900 -
Vice-President,
North American
Sales
---------------------- ------------- ----------- ----------- ----------------- -------------- ---------------
Juan-Felipe 2000 153,502 15,879 - 6,900 -
Gonzalez,
Vice-President,
International Sales
---------------------- ------------- ----------- ----------- ----------------- -------------- ---------------
Mario Larose(3), 2000 25,880 - - 20,000 -
Vice-President,
Marketing
---------------------- ------------- ----------- ----------- ----------------- -------------- ---------------
Jean-Francois 2000 38,814 12,658 - - -
Boulet(3),
Vice-President,
Human Resources
---------------------- ------------- ----------- ----------- ----------------- -------------- ---------------
---------------
(1) A portion of the bonus amounts is paid in cash in the year for which
they are awarded and the balance is paid in cash in the year following
the financial year for which they are awarded.
(2) Indicates the number of Subordinate Voting Shares underlying the
options granted under the Stock Option Plan during the 2000 financial
year.
(3) Mr. Boulet and Mr. Larose commenced employment with the Corporation in
March and June 2000 respectively.
5
SHARE PLAN
In September 1998, the Corporation adopted a share purchase plan for
officers, directors and key employees, as amended in April 2000. On
April 3, 2000, the Corporation adopted a new share plan which replaced
the 1998 share plan and on June 29, 2000, at the time of the
Corporation's initial public offering, all of the 707,264 Class "F"
shares issued and fully paid under this plan were converted into
Subordinate Voting Shares. No additional shares will be issued under
the new share plan. The new share plan requires the Subordinate Voting
Shares to be held in trust by a trustee until August 31, 2004, except
for 249,977 Subordinate Voting Shares which will be released between
October 21, 2003 and January 20, 2004. The new share plan provides for
the earlier release of these Subordinate Voting Shares in the event the
employment of a holder of Subordinate Voting Shares terminates or upon
the occurrence of a change of control and establishes conditions
pursuant to which the Subordinate Voting Shares of a holder under this
plan are to be sold by the trustee on the public market. As of November
30, 2000, 678,059 Subordinate Voting Shares were being held in trust
under the plan.
The following table shows the breakdown, as of August 31, 2000, of the
Subordinate Voting Shares that have been allocated and released from
trust to the Named Executive Officers.
--------------------------------------------- --------------------- -------------------- ---------------------
VALUE OF
SUBORDINATE SUBORDINATE SUBORDINATE
VOTING VOTING SHARES VOTING SHARES
SHARES RELEASED FROM RELEASED FROM
NAME OF EXECUTIVE OFFICERS ALLOCATED(1) TRUST TRUST
(#) (#) (CDN$)
--------------------------------------------- --------------------- -------------------- ---------------------
Germain Lamonde(2) - - -
--------------------------------------------- --------------------- -------------------- ---------------------
Bruce Bonini 49,324 - -
--------------------------------------------- --------------------- -------------------- ---------------------
Juan-Felipe Gonzalez 51,452 - -
--------------------------------------------- --------------------- -------------------- ---------------------
Mario Larose(3) - - -
--------------------------------------------- --------------------- -------------------- ---------------------
Jean-Francois Boulet 11,703 - -
--------------------------------------------- --------------------- -------------------- ---------------------
---------------
(1) If the employment is terminated before the end of the trust period for
reasons other than death, retirement, disability or without cause, the
trustee will, on instruction from the Corporation, sell the holder's
Subordinate Voting Shares on the public market, reimburse the purchase
price paid by the holder, plus 8% interest annually, with the balance
being paid to the Corporation.
(2) Mr. Lamonde holds no Subordinate Voting Shares and, thus, does not
participate in the Share Plan.
(3) Mr. Larose joined the Corporation in June, 2000, and, as such, was not
eligible to participate in the Share Plan.
DEFERRED PROFIT SHARING PLAN
Under this plan, the Corporation contributes an amount equal to 1% of
each employee's gross salary to that employee's individual deferred
profit sharing plan to the extent that such employee contributes at
least 2% of his or her gross salary to his or her individual
tax-deferred registered retirement savings plan. The Corporation may
also make discretionary contributions of up to 4% of an employee's
gross salary to his or her individual tax deferred registered
retirement savings plan, depending on the Corporation's and the
employee's performance. Mr. Germain Lamonde is not entitled to
participate in this plan. In the financial year ended August 31, 2000,
the aggregate amount of contributions under the plan was US$137,000
(CDN$202,000).
6
OPTION GRANTS IN LAST FINANCIAL YEAR
The aggregate number of Subordinate Voting Shares covered by options
granted during the financial year ended August 31, 2000 was 609,734 at
a price of US$26.00 (CDN$38.55) per Subordinate Voting Share, subject
to the modification of the subscription price submitted to the
shareholders for approval at the Meeting. At the end of financial year
ended August 31, 2000, there were 609,734 Subordinate Voting Shares
covered by options granted and outstanding pursuant to the Stock Option
Plan. The table below shows information regarding stock option grants
made to the Named Executive Officers under the Stock Option Plan during
the financial year ended August 31, 2000. See "Report on Executive
Compensation by the Human Resources Committee - Long-Term Incentive
Compensation" for a description of the Stock Option Plan.
------------------------ -------------- ---------------- ----------------- ---------------- -----------------
PERCENTAGE OF MARKET VALUE OF
NET TOTAL OF SECURITIES
SECURITIES OPTIONS GRANTED UNDERLYING
UNDER OPTIONS TO EMPLOYEES IN EXERCISE OR BASE OPTIONS ON THE
GRANTED(1) FINANCIAL YEAR PRICE(2)(3) DATE OF GRANT
NAME (#) (%) (SECURITY/US$) (SECURITY/US$) EXPIRATION DATE
------------------------ -------------- ---------------- ----------------- ---------------- -----------------
Germain Lamonde 25,402 4.2 $26.00 $26.00 June 29, 2010
------------------------ -------------- ---------------- ----------------- ---------------- -----------------
Bruce Bonini 3,900 .006 $17.81 $17.81 June 29, 2010
------------------------ -------------- ---------------- ----------------- ---------------- -----------------
Juan-Felipe Gonzalez 6,900 .011 $17.81 $17.81 June 29, 2010
------------------------ -------------- ---------------- ----------------- ---------------- -----------------
Mario Larose 20,000 3.3 $17.81 $17.81 June 29, 2010
------------------------ -------------- ---------------- ----------------- ---------------- -----------------
Jean-Francois Boulet - - - - -
------------------------ -------------- ---------------- ----------------- ---------------- -----------------
---------------
(1) Underlying securities: Subordinate Voting Shares.
(2) The exercise price of options granted is determined based on the
highest of the closing prices of the Subordinate Voting Shares on The
Toronto Stock Exchange and the NASDAQ National Market on the last
trading day preceding the grant date, using the noon buying rate of the
Federal Reserve Bank of New York on the grant date to convert the
NASDAQ National Market closing price to Canadian dollars, as required.
These options were granted as of the date of the Corporation's initial
public offering at an exercise price equal to the initial price of the
Subordinate Voting Shares.
(3) Taking into account the modification of the subscription price, subject
to approval by the shareholders during the Meeting.
AGGREGATED OPTION EXERCISES IN LAST FINANCIAL YEAR AND FINANCIAL YEAR
END OPTION VALUES
The following table summarizes, for each of the Named Executive
Officers, the number of stock options, if any, exercised during the
financial year ended August 31, 2000, the aggregate value realized upon
exercise and the total number of unexercised options, if any, held at
August 31, 2000. Value realized upon exercise is the difference between
the market value of the underlying Subordinate Voting Shares on the
exercise date and the exercise or base price of the option. The value
of unexercised in-the-money options at financial year-end is the
difference between its exercise or base price and the market value of
the underlying Subordinate Voting Shares on August 31, 2000, which was
US$56.75 per share. These values, unlike the amounts set forth in the
column "Aggregate Value Realized," have not been, and may never be,
realized. The underlying options have not been, and may never be
exercised, and actual gains, if any, on exercise will depend on the
value of the Subordinate Voting Shares on the date of exercise. There
can be no assurance that these values will be realized. Unexercisable
options are those which have been held for less than the time required
for vesting. See "Report on Executive Compensation by the Human
Resources Committee - Long-Term Incentive Compensation."
7
------------------------- ----------- ---------- ------------------------------ ------------------------------
VALUE OF UNEXERCISED
SECURITIES UNEXERCISED OPTIONS "IN-THE-MONEY" OPTIONS AT
ACQUIRED AGGREGATE AT AUGUST 31, 2000 AUGUST 31, 2000 (1)(3)
ON VALUE -------------------------------------------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(2)
NAME (#) (CDN$) (#) (#) (US$) (US$)
------------------------- ----------- ---------- -------------- --------------- -------------- ---------------
Germain Lamonde - - - 25,402 - 781,112
------------------------- ----------- ---------- -------------- --------------- -------------- ---------------
Bruce Bonini - - - 3,900 - 151,866
------------------------- ----------- ---------- -------------- --------------- -------------- ---------------
Juan-Felipe Gonzalez - - - 6,900 - 268,686
------------------------- ----------- ---------- -------------- --------------- -------------- ---------------
Mario Larose - - - 20,000 - 778,800
------------------------- ----------- ---------- -------------- --------------- -------------- ---------------
Jean-Francois Boulet - - - - - -
------------------------- ----------- ---------- -------------- --------------- -------------- ---------------
---------------
(1) "In-the-money" options are options for which the market value of the
underlying securities is higher than the price at which such securities
may be bought from the Corporation.
(2) The value of unexercised "in-the-money" options is calculated using
the highest of the closing prices of the Subordinate Voting Shares on
The Toronto Stock Exchange and on the NASDAQ National Market on
August 31, 2000 using the noon buying rate of the Federal Reserve
Bank of New York to convert the NASDAQ National Market closing price
to Canadian dollars, as required, less the exercise price of
"in-the-money" options.
(3) Taking into account the modification of the subscription price,
subject to approval by the shareholders.
TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT
CONTRACTS
The Corporation concluded an employment agreement with Germain Lamonde.
The agreement provides for Mr. Lamonde's employment as President and
Chief Executive Officer at a base salary, without adjustment,
applicable from May 2000 to August 31, 2000 of US$134,932 per year. The
agreement is for an indeterminate period and the salary will be
reviewed annually after September 1, 2001. In the event of the
termination of Mr. Lamonde's employment other than for cause, Mr.
Lamonde will be entitled to severance payments (in no case exceeding 24
months of remuneration) and the vesting of all stock options, upon the
incapacity of Mr. Lamonde, a merger, acquisition by a third party of
substantially all of the Corporation's assets or of the majority of its
share capital or termination of Mr. Lamonde without cause.
The Corporation also has employment agreements with Mr. Bruce Bonini,
Mr. Juan-Felipe Gonzalez and Mr. Mario Larose.
The agreement with Mr. Bonini provides for Mr. Bonini's employment as
Vice-President, North American Sales at a base salary of US$135,000,
plus commissions of US$125,000 if sales objectives are met, for the
period from September 1, 1999 to August 31, 2000. The agreement is for
an indeterminate period and salary is reviewed annually. In the event
Mr. Bonini's employment terminates for any reason whatsoever and he is
unable to accept new employment due to his non-competition obligations
to the Corporation, Mr. Bonini may receive compensation for a period of
18 months following the date of termination in amounts varying from 5%
to 125% of his base monthly salary at the time of termination depending
on the cause of the termination.
8
The agreement with Mr. Gonzalez provides for Mr. Gonzalez's employment
as Vice-President International Sales at a base salary of US$95,000,
plus commissions on sales of US$58,502, for the period from September
1, 1999 to August 31, 2000. The agreement is for an indeterminate
period and salary is reviewed annually. In the event Mr. Gonzalez's
employment terminates for any reason whatsoever and he is unable to
accept new employment due to his non-competition obligations to the
Corporation, Mr. Gonzalez may receive compensation for a period of 18
months following the date of termination in amounts varying from 5% to
50% of his base monthly salary at the time of termination depending on
the cause of the termination.
The agreement with Mr. Larose provides for Mr. Larose's employment as
Vice-President, Marketing at an annual base salary of US$122,341 for
the period from his commencement in June 2000 to August 31, 2000. No
bonus is payable to Mr. Larose for the financial year ended August 31,
2000. The agreement is for an indeterminate period and salary is
reviewed annually. In the event of termination of Mr. Larose's
employment other than for cause, Mr. Larose will be entitled to
severence payments equivalent to 12 months of remuneration. In the
event of Mr. Larose's termination due to a merger or acquisition by a
third party of substantially all of the Corporation's assets or of the
majority of its share capital, Mr. Larose shall be entitled to
severence benefits ranging from 12 to 24 months of remuneration, based
on his length of service with the Corporation.
REPORT ON EXECUTIVE COMPENSATION BY THE HUMAN RESOURCES COMMITTEE
MEMBERS OF THE HUMAN RESOURCES COMMITTEE
During the financial year ended August 31, 2000, the Human Resources
Committee was composed of Michael Unger, as Chairman, Pierre
Marcouiller and David A. Thompson, none of whom were officers or
employees, or former officers or employees, of the Corporation or its
subsidiaries.
HUMAN RESOURCES COMMITTEE MANDATE
The Human Resources Committee is a committee of the Board of Directors.
It is responsible for assessing the performance and establishing the
annual compensation of all the Corporation's executive officers,
including the President and Chief Executive Officer. This Committee
also reviews and submits to the Board the salary structure and the
short-term and long-term incentive compensation programs for all
employees of the Corporation. Though the Committee is responsible for
the review and approval of the employees that will receive options to
purchase shares of the Corporation, in accordance with policies
established by the Board and the terms of the Stock Option Plan, these
functions have been performed through the Board of Directors during the
period from May to November 30, 2000. The remuneration to be paid by
the Corporation to its Directors is recommended to the Board by the
Human Resources Committee.
Since being formed in June 2000, the Human Resources Committee has held
one meeting prior to November 30, 2000.
9
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In establishing Mr. Lamonde's salary for the year ending August 31,
2000 and the following financial year, the Corporation relied on a
study completed by an independent consulting firm. Such study indicated
average salaries and bonuses, median salaries and bonuses and maximum
salaries and bonuses paid to chief executive officers by Canadian and
American computer hardware and software companies as well as by a
specific group of companies active in the fiber optics industry
identified by the Corporation that it considers to be the best
available comparisons. It was decided that Mr. Lamonde's salary and
bonus reflect the median of Canadian computer hardware and software
companies and of the specific group of companies in fiber optics
identified by the Corporation.
In the most recent financial year, the bonus portion of Mr. Lamonde's
salary was tied to the performance of the Corporation. For the year
that will end on August 31, 2001, his bonus will be tied to the
attainment by the Corporation of its Health Indicator. For the year
commencing September 1, 2000, the Corporation's Health Indicator is
established based on following factors: earning, profits, quality,
production and client satisfaction.
Mr. Lamonde's bonus will be payable in the same proportion at which the
Corporation attains the Health Indicator established by the Board of
Directors.
SHORT-TERM INCENTIVE COMPENSATION
The short-term incentive plan offers bonuses tied to the Corporation's
financial performance and the achievement of strategic corporate and
business unit objectives established on a yearly basis.
In the case of the Named Executive Officers eligible for incentive
bonuses in the year ended August 31, 2000, such bonuses constituted a
certain percentage of base salary which is tied to the achievement of
the financial and strategic objectives of the Corporation. When such
objectives are exceeded, bonuses are higher; when objectives are not
met, the incentive bonuses are lower.
LONG-TERM INCENTIVE COMPENSATION
The long-term incentive component is made up of the Stock Option Plan
for directors, officers and employees of the Corporation and its
subsidiaries and persons or companies providing ongoing management or
consulting services ("consultants") to the Corporation and its
subsidiaries.
Introduced in May 2000, the Stock Option Plan is designed to motivate
directors, officers, employees and consultants to share interest with
the Corporation's shareholders over the long-term. It is subject to
Committee review to ensure maintenance of its market competitiveness.
The Board has full and complete authority to interpret the Plan and to
establish the rules and regulations applying to it and to make all
other determinations it deems necessary or useful for the
administration of the Plan, provided that such interpretations, rules,
regulations and determinations are consistent with the rules of all
stock exchanges on which the securities of the Corporation are then
traded and with all relevant securities legislation.
10
The Stock Option Plan provides for the issuance of options to
directors, officers, employees and consultants to purchase Subordinate
Voting Shares. The Board of Directors designates the recipients of
options and determines the number of Subordinate Voting Shares covered
by each option, the date of vesting, the expiry date and any other
conditions relating to these options, in each case in accordance with
the applicable legislation of the securities regulatory authorities.
The Corporation has maintained a policy of granting a fixed number of
options to all of its employees, and to employees of subsidiaries, such
number being determined in relation to employment categories.
Additional options are granted pursuant to promotions. In addition,
further options may be granted based on merit.
The exercise price of the options is determined by the Board of
Directors at the time of granting the options, subject to compliance
with the rules of all stock exchanges on which the Subordinate Voting
Shares are listed and with all relevant securities legislation. In any
event, the price at which the Subordinate Voting Shares may be
purchased may not be lower than the highest of the closing prices of
the Subordinate Voting Shares on The Toronto Stock Exchange and the
NASDAQ National Market on the last trading day preceding the grant
date, using the noon buying rate of the Federal Reserve Bank of New
York on the grant date to convert the NASDAQ National Market closing
price to Canadian dollars. Any option issued is non-transferable.
The maximum number of Subordinate Voting Shares that are issuable under
the Plan shall not exceed 4,470,961 Subordinate Voting Shares. The
maximum number of Subordinate Voting Shares that may be granted to any
one individual shall not exceed 5% of the number of outstanding
Subordinate Voting Shares.
Options vest on a cumulative basis at a rate of 25% annually commencing
on the first anniversary date of their grant and may be exercised in
whole or in part once vested. All of the options that are granted under
the Plan may be exercised within a maximum period of 10 years following
the date of their grant.
Any option granted pursuant to the Stock Option Plan will lapse (i)
immediately upon the termination of the relationship with the
Corporation or one of its subsidiaries for a good and sufficient cause
for employees or officers or at the date on which an employee or an
officer resigns or leaves his employment with the Corporation or one of
its subsidiaries (or within 30 days if the holder is dismissed without
cause), and (ii) 30 days after a Director ceases to be a member of the
Board of Directors of the Corporation or one of its subsidiaries. In
the event of retirement or disability, any option held by an employee
lapses 30 days after the date of any such disability or retirement. In
the event of death, any option held by the optionee lapses 6 months
after the date of any such death.
On December 6, 2000, the Directors of the Corporation passed a
resolution modifying the subscription price of the Subordinate Voting
Shares covered by options granted to employees, officers, consultants
and directors in the months of June, September and October 2000, with
the exception of the options granted to Mr. Germain Lamonde, the whole
as more fully described in this Management Proxy Circular under item 4
entitled "Modification of the Subscription Price of the Options granted
to Employees, Officers, Consultants and Directors in June, September
and October 2000 under the Stock Option Plan". The confirmation of this
modification of the subscription price of the Subordinate Voting Shares
covered by options granted to employees, officers, consultants and
directors, with the exception of those
11
granted to Mr. Germain Lamonde, in the months of June, September and
October 2000 is solicited by this Management Proxy Circular.
COMPENSATION PLAN CONTROL AND REVIEW
The Corporation's relative position in terms of compensation levels is
determined annually through studies performed by independent consulting
firms using a selected reference market of comparable companies.
Internal pay equity studies are a key factor to complete the process
and provide necessary adjustments where required.
CONCLUSION
By way of application of the Corporation's executive compensation
policy, an important part of executive compensation is linked to
corporate performance and particularly to stock performance and
long-term improvement. The Human Resources Committee continuously
reviews executive compensation programs to ensure that they maintain
their competitiveness and continue to focus on the Corporation's
objectives, values and business strategies.
Depending on specific circumstances, the Committee may also recommend
employment terms and conditions that deviate from the policies and the
execution by the Corporation or its subsidiaries of employment
contracts on a case-by-case basis.
By the Human Resources Committee:
Michael Unger, Chairman
Pierre Marcouiller
David A. Thompson
12
PERFORMANCE GRAPH
The performance graph presented below compares the cumulative total
shareholder return of a $100 investment in the Subordinate Voting
Shares and the cumulative total return of the TSE 300 Stock Index for
the period commencing June 29, 2000, and ending August 31, 2000.
THE CORPORATION'S STOCK PERFORMANCE
(JUNE 29, 2000 TO AUGUST 31, 2000)
[PERFORMANCE CHART]
INDEBTEDNESS OF DIRECTORS AND OFFICERS
As at November 30, 2000, the Corporation had guaranteed loans made to
employees, directors, officers and senior officers by another entity in
an amount totalling US$170,228 for the purchase by such persons of
Subordinate Voting Shares in the share capital of the Corporation. The
following table indicates guarantees that were provided by the
Corporation to directors, executive officers and senior officers of the
Corporation for loans used by such persons to acquire shares in the
Corporation's share capital.
--------------------- --------------- --------------------- --------------------- -------------------
FINANCIALLY ASSISTED
SECURITIES(1)
LARGEST AMOUNT PURCHASES
INVOLVEMENT OF OUTSTANDING DURING DURING FINANCIAL
NAME AND PRINCIPAL THE FINANCIAL 2000 2000 SECURITY FOR
OCCUPATION CORPORATION ($US) (#) INDEBTEDNESS
--------------------- --------------- --------------------- --------------------- -------------------
Juan-Felipe Gonzalez, Guarantor 24,137.93 32,802 Guarantee by the
Vice-President, Corporation
International Sales
--------------------- --------------- --------------------- --------------------- -------------------
Pierre Plamondon, Guarantor 21,982.07 28,577 Guarantee by the
Vice-President, Corporation
Finance
And Chief Financial
Officer
--------------------- --------------- --------------------- --------------------- -------------------
---------------
(1) The underlying securities purchased were Class "F" shares, which were
converted into Subordinate Voting Shares on June 29, 2000 and which are
held in trust by a trustee and will be released between October 21,
2003 and August 31, 2004.
13
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Corporation maintains insurance protection against liability
incurred by its officers and directors as well as those of its
subsidiaries in the performance of their duties. The entire premium,
amounting to approximately US$ 21,000 from June 30, 2000 to August 31,
2000, is paid by the Corporation. The aggregate limit of liability in
respect of any and all claims is US$ 20 million for the financial year
ended August 31, 2000. The policy provides for the indemnification of
directors and officers in the case of claims for which the Corporation
has not indemnified or is not permitted by law to indemnify them, and
for the reimbursement of the Corporation, subject to a deductible of
US$ 250,000 for claims brought and maintained in the United States and
US$ 150,000 for claims brought and maintained in Canada in the case of
claims for which it has indemnified or was permitted to indemnify the
directors or officers involved.
3. APPOINTMENT AND REMUNERATION OF AUDITORS
Management, upon the advice of the Audit Committee, recommends that
PricewaterhouseCoopers LLP be appointed as Auditors of the Corporation
and that the Board of Directors be authorized to fix their
remuneration.
4. MODIFICATION OF THE SUBSCRIPTION PRICE OF THE OPTIONS GRANTED TO
EMPLOYEES, OFFICERS, CONSULTANTS AND DIRECTORS IN JUNE, SEPTEMBER AND
OCTOBER 2000
During the Meeting, the shareholders will be asked to consider and, if
thought appropriate, to approve Resolution 2000-I, as set out in
Schedule "A" to this Management Proxy Circular, confirming the
modification to the subscription price of the Subordinate Voting Shares
covered by options granted to employees, officers, consultants and
directors under the Stock Option Plan, with the exception of those
granted to Mr. Germain Lamonde, President and Chief Executive Officer
of the Corporation, for June, September and October 2000, in order to
establish such price at US$21.54 (CDN$33.00) per Subordinate Voting
Share.
On June 29, 2000, 584,332 options were issued to employees, directors
and officers at an exercise price of US$26.00 (CDN$38.55), excluding
those granted to Mr. Germain Lamonde. Of this amount, 68,222 options
were granted to officers and directors of the Corporation. On September
1, 2000, the Corporation granted 122,908 options to certain employees
and consultants at an exercise price of US$56.75 (CDN$83.66), of which
none were granted to officers or directors. On September 13, 2000,
313,835 options were granted to certain employees and officers at an
exercise price of US$45.94 (CDN$68.17), of which 71,500 options were
granted to officers. On October 11, 2000, 75,000 options were granted
to certain employees and officers at an exercise price of $US34.07
(CDN$51.25), of which 70,000 were granted to officers.
The proposed modification covers a total of 1,096,075 options on
Subordinate Voting Shares, of which 209,722 (or 19.13%) were granted to
officers and Directors.
In October 2000, Nasdaq and The Toronto Stock Exchange approved the
re-pricing of the options granted on September 1, 2000 and September
13, 2000. These options were granted at exercise prices of US$56.75
(CDN$83.66) and US$45.94 (CDN$68.17) respectively and were
14
all to be re-priced at US$34.07 (CDN$51.25). However, in December 2000,
the Corporation requested and received approval by Nasdaq and The
Toronto Stock Exchange of the re-pricing that is described above,
subject to obtaining required shareholder approval. In accordance with
The Toronto Stock Exchange Guidelines, shareholder approval is required
for the re-pricing of all options granted to officers and directors as
well as for the second re-pricing of the options granted to employees
and consultants on September 1, 2000 and September 13, 2000.
The guidelines of The Toronto Stock Exchange specify that a majority of
the votes cast in person or by proxy are required for the adoption of
Resolution 2000-I, excluding votes attached to the Subordinate Voting
Shares held by employees, officers, consultants and directors who are
holders of options that are the object of Resolution 2000-I.
Accordingly, the votes attached to the 285,632 Subordinate Voting
Shares held by the Corporation's officers and directors (excluding Mr.
Germain Lamonde), as well the votes attached to the Subordinate Voting
Shares held by the employees and consultants that received options
granted on September 1, 2000 and September 13, 2000, cannot be cast for
the adoption of Resolution 2000-I. Any and all options granted to Mr.
Germain Lamonde (being 25,402 options granted on June 29, 2000) are
excluded from this re-pricing.
UNLESS INSTRUCTED OTHERWISE, THE PERSONS WHOSE NAMES APPEAR ON THE
ENCLOSED FORM OF PROXY WILL VOTE IN FAVOUR OF RESOLUTION 2000-I.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
Both the Board of Directors and Management recognize the importance of
having appropriate structures and procedures in place to permit good
corporate governance. The Board members were elected in May and June
2000, just prior to the Corporation's initial public offering. At such
time an Audit Committee and a HR Committee were appointed to form the
starting point of a structure that will be defined and refined to
continue to ensure good corporate governance.
Early in the mandate of the Board members, the Corporation provided
them with two full days of orientation and education relating to its
activities, structures, policies and processes, which included a visit
of facilities and meetings with Management.
RESPONSIBILITIES OF THE BOARD
The Board is responsible for the stewardship of the business and
affairs of the Corporation by reviewing, discussing and approving the
strategic direction and organizational structure of the Corporation,
and supervising Management. The Board reviews and approves annually and
receives regular updates from Management on the Corporation's strategic
planning process and its internal control and management information
systems. The Board has identified the principal risks of the
Corporation's business and has reviewed present risk management
systems. Over the next financial year the Board will be analyzing
additional risk management strategies for the future. In addition, the
Board has identified the following objectives for the coming financial
year: the elaboration and implementation of a succession planning
process by the HR Committee and the establishment and implementation of
a communications policy for the Corporation.
The Board grants final approval with respect to each of the following
matters, in addition to those that require Board approval under
applicable laws: (i) the strategic direction of the Corporation;
15
(ii) material contracts, acquisitions or dispositions of the
Corporation's assets; and (iii) the annual operational plan and capital
and operating budgets.
The Board is responsible for the establishment and functioning of all
Board committees, the appointment of members to serve on such
committees, their compensation and their good standing. At regularly
scheduled meetings of the Board, the Directors receive, consider and
discuss Board committee reports.
As of November 30, 2000, the Board had met 9 times since the
Corporation became a public company in June 2000.
The Corporation does not currently have a member of the Board that is
responsible for ensuring that the Board properly discharges its duties,
independent of Management. At the present time, the Corporation has no
formal procedures in place for recruiting new Directors.
COMPOSITION OF THE BOARD
The Corporation's articles of incorporation provide for a Board of
Directors of a minimum of three and a maximum of 12 Directors. The
Board presently consists of five Directors, four of whom are
independent of Management and free from any interest and any business
or other relationship which could, or could reasonably be perceived to,
materially interfere with the Director's ability to act with a view to
the best interests of the Corporation, other than interests arising
from shareholding. The Directors are elected at the annual meeting of
shareholders for one-year terms and serve until their successors are
elected or appointed, unless they resign or are removed earlier. Under
the CANADA BUSINESS CORPORATIONS ACT, a majority of the Directors and
of the members of any committee of the Board of Directors must be
composed of resident Canadians.
The Chairman of the Board, Mr. Germain Lamonde, is a significant
shareholder in the Corporation as he has the ability to exercise a
majority of the votes for the election of the Board of Directors. Since
the other four Board members do not have interests in or relationships
with either the Corporation or Mr. Lamonde, the Corporation considers
that the interests of investors in the Corporation other than Mr.
Lamonde are fairly represented.
COMMITTEES OF THE BOARD
To facilitate the fulfillment of some responsibilities and to assist
its decision making, the Board of Directors has formed an Audit
Committee and a Human Resources Committee. These committees are
appointed annually and in addition, the Board may appoint ad hoc
committees periodically as may be needed. The Corporation has a
practice of permitting the Board, any committee thereof and any
individual director to engage independent, external advisors at the
Corporation's expense. All committees of the Board are entirely
comprised of independent Directors.
The following is a general description of the composition and general
duties of each Board committee as contained in its mandate as of the
year ended August 31, 2000.
16
AUDIT COMMITTEE
The Audit Committee approves the release of interim in-house financial
statements and reviews all annual audited financial statements and
related disclosure documents with Management and the external Auditors.
The Audit Committee meets regularly with external auditors, with and
without management, to consider the scope and results of their audits,
including analysis of the adequacy of the internal controls and the
effect of the procedures relating to the outside auditors'
independence. The Committee also recommends to the Board the selection
of the external auditors for appointment by the shareholders. The Audit
Committee is composed of Mr. Andre Tremblay, Mr. Michael Unger and Mr.
Pierre Marcouiller. The Chairperson of the Audit Committee is Mr. Andre
Tremblay.
HUMAN RESOURCES COMMITTEE
The Human Resources Committee is responsible for assessing the
performance and establishing the annual compensation of all senior
officers, including the Chief Executive Officer. This Committee also
reviews and submits to the Board the salary structure and the
short-term and long-term incentive compensation programs for all
employees. The Committee is responsible for the review and approval of
the employees that will receive options to purchase shares of the
Corporation, in accordance with policies established by the Board and
the terms of the Stock Option Plan. In addition, the Committee reports
annually to the Board on the organizational structure and the
succession plan for senior management. The Board's corporate governance
practices are monitored by the Human Resources Committee, as is the
functioning of the Board and the powers, mandates and performance of
the committees. The remuneration to be paid by the Corporation to the
Directors is recommended to the Board by the Human Resources Committee.
The Human Resources Committee is composed of Dr. David A. Thompson, Mr.
Michael Unger and Mr. Pierre Marcouiller. The chairperson of the Human
Resources Committee is Mr. Michael Unger.
SHAREHOLDER/INVESTOR COMMUNICATIONS AND FEEDBACK
The Corporation has an Investor Relations Manager that is responsible
for facilitating the communication between Management and the
Corporation's current and potential shareholders and financial
analysts. Communications to shareholders are disseminated through
annual and quarterly reports, the annual meeting and investor
presentations. The Investor Relations Manager receives and responds to
all shareholders' inquiries in an appropriate and timely manner and
provides feedback from the shareholders to Management.
ADDITIONAL INFORMATION
The Corporation shall provide to any person or company, upon request to
the Secretary of the Corporation, at 465 Godin Avenue, Vanier, Quebec,
Canada, G1M 3G7.
(a) one copy of the Form 20-F of the Corporation filed with the
Securities and Exchange Commission (the "SEC") in the United
States pursuant to the SECURITIES EXCHANGE ACT OF 1934, and
with securities commissions or similar authorities;
17
(b) one copy of the comparative financial statements of the
Corporation for its most recently completed financial year and
the Auditors report thereon, included in the Annual Report of
the Corporation, and one copy of any interim financial
statements of the Corporation subsequent to the financial
statements for its most recently completed financial year;
(c) one copy of this Management Proxy Circular.
DIRECTORS' APPROVAL
The contents and the sending of this Management Proxy Circular have
been approved by the Directors of the Corporation.
DATED at Vanier, Quebec, Canada, this 1st day of December 2000.
/s/ Kimberley Okell
------------------------
Kimberley Okell
Secretary
EXFO ELECTRO-OPTICAL ENGINEERING INC.
465 Godin Avenue
Vanier, Quebec, Canada, G1M 3G7
18
SCHEDULE A
RESOLUTION 2000-I
Resolved as Resolution 2000-I:
That the Corporation be and is hereby authorized to modify the subscription
price of the outstanding options granted to employees and consultants under the
Stock Option Plan on September 1, 2000 and September 13, 2000, in order to
establish such price at US$21.54 (CDN$33.00) per Subordinate Voting Share;
That the Corporation be and is hereby authorized to modify the subscription
price of the outstanding options granted to directors and officers, with the
exception of any and all options granted to Mr. Germain Lamonde, President and
Chief Executive Officer, under the Stock Option Plan on June 29, 2000, September
1, 2000, September 13, 2000 and October 11, 2000, in order to establish such
price at US$21.54 (CDN$33.00) per Subordinate Voting Share;
That the modifications to the subscription prices be, and are hereby approved;
That Mr. Germain Lamonde and/or Ms. Kimberley Okell be, and are hereby,
authorized to do any such acts or things as may be necessary or desirable to
give effect to this Resolution and to sign any instrument necessary or useful in
order to give full effect to this Resolution and, if deemed appropriate in the
best interest of the Corporation, to cancel this Resolution before effect is
given hereto.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EXFO ELECTRO-OPTICAL ENGINEERING INC.
By: /s/ Germain Lamonde
------------------------------------
Name: Germain Lamonde
Title: President and Chief Executive Officer
Date: January 4, 2001