SCHEDULE 14A INFORMATION
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:
/X/ Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12(c)
GSI LUMONICS INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than
the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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GSI LUMONICS INC.
105 SCHNEIDER ROAD
KANATA, ONTARIO K2K 1Y3
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
MAY 9, 2002
NOTICE IS HEREBY GIVEN THAT the annual and special meeting of the
shareholders of GSI LUMONICS INC. (the "Company") will be held on Thursday,
May 9, 2002 at 10:00 a.m. (Ottawa time) at the Chateau Laurier Hotel, Ottawa,
Ontario, for the following purposes:
(a) to receive the annual report of the Company and the consolidated
financial statements of the Company for the fiscal year ended
December 31, 2001, together with the auditors report thereon;
(b) to elect directors;
(c) to appoint auditors and to authorize the directors to fix the auditors'
remuneration;
(d) to consider and, if thought fit, to adopt Resolution No. 1 to amend the
Company's Articles of Continuance to increase the requirement for share
ownership percentages necessary for submitting shareholder proposals
nominating persons for election to the Company's Board of Directors, as
described in the management proxy circular accompanying this notice;
(e) to consider and, if thought fit, to adopt Resolution No. 2 to ratify,
confirm and approve the continued existence of Company's Shareholder
Rights Plan (which was previously approved on May 11, 1999), as described
in the management proxy circular accompanying this notice;
(f) to consider and, if thought fit, to adopt Resolution No. 3 to amend the
Company's 1995 Stock Option Plan (the "Plan") to increase the number of
shares reserved for issuance under the Plan by 2,000,000 shares, which
amendment is more particularly set forth in the management proxy circular
accompanying the notice; and
(g) to transact such further or other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Only those Company shareholders of record at the close of business on
March 12, 2002 will be entitled to vote at the meeting and at any adjournment or
postponement thereof, except to the extent that any such holder has transferred
any of the common shares after that date and the transferee of such common
shares establishes proper ownership and requests on or before the commencement
of the meeting that his name be included in the list of shareholders for the
meeting.
A copy of the management proxy circular and a form of proxy accompanies this
notice, as well as a copy of the Company's Annual Report which contains the
financial statements of the Company and the report of the auditors thereon for
the fiscal year ended December 31, 2001 and management's discussion and analysis
of financial condition and results of operation relating thereto. This notice,
the management proxy circular and the form of proxy will be forwarded on or
about March 28, 2002 to the registered holders of the Company's common shares on
March 12, 2002.
DATED at Ottawa, Ontario this 28th day of March, 2002.
By Order of the Board of Directors
(signed)
Eileen Casal, Corporate Secretary
March , 2002
Shareholders who are unable to attend the meeting in person are requested to
date and sign the enclosed form of proxy or other appropriate form of proxy and
return it to Computershare Trust Company of Canada in the addressed envelope
enclosed not later than Wednesday, May 8, 2002. In order to be represented by
proxy, you must complete and submit the enclosed form of proxy or other
appropriate form of proxy.
IMPORTANT
If your shares are registered in the name of a broker, only your broker can
execute a proxy and vote your shares and only after receiving your specific
instructions on certain resolutions to be voted upon at the Annual Meeting.
Please contact the person responsible for your account and direct him or her to
execute a proxy on your behalf today. If you have any questions or need further
assistance in voting, please call:
Georgeson Shareholder
17 State Street
New York, NY 10004
XXX-XXX-XXXX
GSI LUMONICS INC.
MANAGEMENT PROXY CIRCULAR
SOLICITATION OF PROXIES
THIS MANAGEMENT PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY THE MANAGEMENT OF GSI LUMONICS INC. (THE "COMPANY")
FOR USE AT THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD AT
10:00 A.M. (LOCAL TIME) ON TUESDAY, MAY 9, 2002 AT THE CHATEAU LAURIER HOTEL,
OTTAWA, ONTARIO, CANADA. The solicitation will be made by mail but proxies may
also be solicited personally by employees of the Company. The cost of
solicitation has been or will be borne by the Company. The Company may also pay
brokers or nominees holding common shares of the Company in their names or in
the names of their principals for their reasonable expenses in sending
solicitation material to their principals. The Company has retained Georgeson
Shareholder to aid in the solicitation of proxies, which company will receive a
fee and reimbursement of expenses estimated not to exceed thirty thousand
dollars ($30,000.00), all of which will be borne by the Company.
All monetary amounts referred to herein are stated in United States dollars
unless otherwise stated. Unless the context indicates otherwise, the Company
refers to GSI Lumonics Inc. and its subsidiaries.
The Notice of the Meeting, this Management Proxy Circular and the form of
Proxy will be forwarded on or about March 28, 2002 to the registered
shareholders of the Company's common shares on March 12, 2002.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the enclosed form of proxy are officers of the Company.
A SHAREHOLDER MAY APPOINT A PERSON TO REPRESENT HIM OR HER AT THE MEETING, OTHER
THAN THE PERSONS ALREADY NAMED IN THE ACCOMPANYING FORM OF PROXY, BY INSERTING
THE NAME OF SUCH OTHER PERSON IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY
OR BY COMPLETING ANOTHER PROPER FORM OF PROXY. SUCH PERSON NEED NOT BE A
SHAREHOLDER. The completed form of proxy must be deposited with the Company at
its principal executive offices at 105 Schneider Road, Kanata, Ontario, K2K 1Y3
or Computershare Trust Company of Canada, 100 University Avenue, 11th Floor,
Toronto, Ontario, M5J 2Y1, in either case no later than 5:00 p.m. (Ottawa time)
on Wednesday, May 8, 2002, or, if the meeting is adjourned, before commencement
of the reconvened meeting.
The shareholder executing the form of proxy may revoke it as to any manner
on which a vote has not already been cast pursuant to the authority confirmed by
such proxy a) by delivering another properly executed form of proxy bearing a
later date and depositing it in the manner described above; b) by delivering an
instrument in writing revoking the proxy, executed by the shareholder or by the
shareholder's attorney authorized in writing, i) at the registered office of the
Company, at any time up to and including the last business day preceding the
date of the meeting, or at any reconvened meeting following its adjournment, or
ii) with the chairman of the meeting on the day of the meeting, or at any
reconvened meeting following its adjournment; or c) in any other manner
permitted by law.
VOTING OF PROXIES
The officers named in the form of proxy accompanying this Circular will vote
the common shares of the Company in respect of which they are appointed proxy in
accordance with the directions of the shareholder appointing them. In the
absence of such direction, such shares will be voted FOR the election of
directors, FOR the appointment of Ernst & Young LLP as auditors, FOR Resolution
No. 1--Proposal to Amend the Company's Articles of Continuance to Increase the
Requirement for Share Ownership Percentages Necessary for Submitting Shareholder
Proposals Nominating Persons for Election to the Company's Board of Directors,
FOR Resolution No. 2--Proposal to Ratify the
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Continued Existence of the Shareholder Rights Plan and FOR Resolution
No. 3--Proposal to Amend the 1995 Stock Option Plan to Increase the Number of
Shares Reserved for Issuance.
The Board of Directors has fixed March 12, 2002 as the record date for the
determination of shareholders entitled to vote at the meeting. On that date
there were outstanding and entitled to vote [ ] shares of common
stock of the Company. Each share is entitled to one vote.
Each matter to be voted on, except for the election of directors and the
Proposal to Amend the Company's Articles of Continuance (Resolution No. 1),
requires the approval of a majority of common shares represented and entitled to
vote on such matter to be effective. Resolution No. 1--the Proposal to Amend the
Company's Articles of Continuance requires the approval of 66 2/3(rds) of the
common shares represented and entitled to vote on such matter to be effective.
The voting for the election of directors is described below. No votes may be
taken at the meeting, other than a vote to adjourn, unless a quorum has been
constituted consisting of the representation of at least twenty percent (20%) of
the outstanding shares as of the record date. Votes will be tabulated by the
Company's transfer agent subject to the supervision of persons designated by the
Board of Directors as inspectors.
The BUSINESS CORPORATIONS ACT (NEW BRUNSWICK) (the "Act") provides by
section 65(1) for cumulative voting for the election of directors so that each
shareholder entitled to vote at an election of directors has the right to cast a
number of votes equal to the number of votes attached to the shares held by such
shareholders multiplied by the number of directors to be elected and may cast
all such votes in favour of one candidate or distribute them among the
candidates in any manner. The Act further provides, in section 65(2), that a
separate vote of shareholders shall be taken with respect to each candidate
nominated for director unless a resolution is passed unanimously permitting two
or more persons to be elected by a single resolution. Where a shareholder has
voted for more than one candidate without specifying the distribution of votes
among such candidates, the shareholder shall be deemed to have divided the votes
equally among the candidates for whom such shareholder voted. If a shareholder
desires to distribute votes otherwise than equally among the nominees for whom
such shareholder has directed persons in the enclosed form of proxy to vote,
such shareholder must do so personally at the meeting or by another form of
proxy. ON ANY BALLOT THAT MAY BE CALLED FOR THE ELECTION OF DIRECTORS, THE
PERSONS NAMED IN THE ENCLOSED FORM OF PROXY INTEND TO CAST THE VOTES TO WHICH
THE SHARES REPRESENTED BY SUCH PROXY ARE ENTITLED EQUALLY AMONG ALL THE PROPOSED
NOMINEES WHOSE NAMES ARE SET FORTH IN THE TABLE UNDER "ELECTION OF DIRECTORS"
BELOW, EXCEPT THOSE, IF ANY, EXCLUDED BY THE SHAREHOLDER IN THE PROXY, OR UNLESS
THE SHAREHOLDER WHO HAS GIVEN SUCH PROXY HAS DIRECTED THAT THE SHARES BE
WITHHELD FROM VOTING IN THE ELECTION OF DIRECTORS.
The enclosed form of proxy confers discretionary authority on the person
named therein with respect to amendments to or variations of matters identified
in the Notice of Meeting and other matters that may properly come before the
meeting. At the date of this Circular, the management of the Company knows of no
such amendments, variations or other matters.
Proxies to be used at the meeting must be deposited with the Company or its
transfer agent and registrar, Computershare Trust Company of Canada, prior to
the commencement of the meeting. If you are unable to attend the meeting, please
date, sign and return the accompanying form of proxy to Computershare Trust
Company of Canada. Abstentions and broker non-votes will not be treated as votes
cast or common shares entitled to vote with respect to any matter described in
this Management Proxy Circular.
VOTING AND OWNERSHIP OF SHARES
A merger of equals involving General Scanning Inc. ("GSI") and
Lumonics Inc. ("Lumonics") was completed on March 22, 1999. In the merger, GSI
stockholders received common shares of Lumonics in exchange for their GSI common
stock. Following the merger, the GSI stockholders and Lumonics Shareholders
each, as a group, held approximately 50% of the outstanding common shares of the
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Lumonics, which was renamed GSI Lumonics Inc. as a result of the merger. Unless
otherwise stated herein, the disclosures set forth in this Management Proxy
Circular relate to the Company on a post merger basis current to the date
hereof.
As of the record date the Company had [ ] common shares
outstanding. Each shareholder of record, as of the close of business on
March 12, 2002 (the record date) is entitled to one vote for each common share
held, except to the extent that such shareholder has transferred the ownership
of any shares after such date and the transferee of such shares establishes
proper ownership thereof and demands not later than ten days before the meeting
to be added to the list of shareholders entitled to vote at the meeting in which
case such transferee will be entitled to vote such shares. The failure of any
shareholder to receive a Notice of Meeting of Shareholders does not deprive the
shareholder of a vote at the meeting.
OWNERSHIP
The following sets forth, to the knowledge of the Company, certain
information concerning the direct and indirect beneficial ownership of common
shares, the Company's only class of voting securities, as of March 15, 2002 by
each person known by the directors or senior officers of the Company to be the
beneficial owner of, or to exercise control or direction over 5% or more of the
outstanding common shares of the Company as of such date. This information is
based on the most recent statements on Schedule 13G filed with the Securities
and Exchange Commission or on other information available to the Company.
SHAREHOLDER SHARES PERCENTAGE
----------- --------- ----------
Sumitomo Heavy Industries Ltd.(1)........................... 4,078,238 10.19%
9-11, Kita-Shinagawa 5 Chome
Shinagawa-Ku, Tokyo, 141-8686, Japan
Oppenheimer Funds, Inc.(2).................................. 2,355,400 5.88%
498 7th Avenue
New York, New York 10018
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(1) Includes shares held by SHI Canada Inc. ("SHI"), a wholly-owned subsidiary
of Sumitomo Heavy Industries Ltd. ("Sumitomo"). Sumitomo has shared voting
and investment power with SHI as to all such shares.
(2) Consists of shares held by investors whose accounts are managed by
Oppenheimer Funds, Inc. ("OFI") and other subsidiaries of and investment
companies managed by OFI ("OFI Group"). The OFI Group has shared investment
power as to all such shares.
ELECTION OF DIRECTORS
During the fiscal year ended December 31, 2001, the board of directors of
the Company held eight (8) meetings. Committees of the board held eighteen
(18) meetings. During fiscal 2001, each director attended 75% or more of the
aggregate total of meetings of both the board and committees thereof on which
such director served, except for Mr. William B. Waite, who, as a result of a
serious injury, became physically incapacitated and was unable to attend any
meetings in 2001.
Below are the names of the persons for whom it is intended that votes be
cast for their election as directors pursuant to the proxy that is hereby
solicited unless the shareholder directs therein that his or her shares be
withheld from voting. Within the minimum and maximum number of directors
prescribed by the Company's articles, the board will consist of six
(6) directors. Each director will hold office until the next annual meeting or
until his successor is elected or appointed.
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Management does not contemplate that any of the nominees named below will be
unable to serve as a director, but if that should occur for any reason prior to
the meeting, where the proxy is granted to the management nominees, the
management nominees reserve the right to vote for other nominees in their
discretion unless directed to withhold from voting. The following table states
the name, position held with the Company by each person proposed to be nominated
for election as a director, the year first elected or appointed as a director,
committee memberships, and the person's principal occupation and employment
during the past five years.
YEAR
BECAME
NAME, AGE PRINCIPAL OCCUPATION AND MUNICIPALITY OF RESIDENCE(4) DIRECTOR
--------------------------------------------------------------- --------
Richard B. Black(1)(2), 68 .................................. 1999
Managing Partner
OpNet Partners, L.P.
Jackson, Wyoming, U.S.A.
Paul F. Ferrari, 71 ......................................... 1999
Independent Consultant/
Former V.P. & Treasurer
Thermo Electron Corporation
Hobe Sound, Florida, U.S.A.
Phillip A. Griffiths, Ph.D.(3), 63 .......................... 2001
Director of the Institute for Advanced Study
Princeton, New Jersey, U.S.A.
Byron O. Pond(1)(2), 65 ..................................... 2000
President and CEO
Amcast Industrial Corp.
Dayton, Ohio, U.S.A.
Benjamin J. Virgilio(1)(2), 62 .............................. 1998
President & CEO,
BKJR, Inc.
Toronto, Canada
Charles D. Winston(3), 61 ................................... 1999
President & Chief Executive Officer
GSI Lumonics Inc.
Pebble Beach, California, U.S.A.
------------------------
(1) Member, Audit Committee
(2) Member, Compensation Committee
(3) Member, Technology Committee
(4) The mailing address of each of Messrs. Black, Ferrari, Flowers, Griffiths,
Pond, Virgilio and Winston is c/o the Company at 105 Schneider Road, Kanata,
Ontario K2K 1Y3.
Richard Black is a General Partner for OpNet Partners, L.P., an investment
fund focused on companies in the fiber optics networking industry. He has served
as Vice Chairman of Oak Technology, Inc. ("Oak") since March 1999 and as
President of Oak from January 1998 to March 1999, and has been a director at Oak
since 1988. From 1987 to 1997, Mr. Black served as a General Partner for KBA
Partners, L.P., a technology venture capital fund. Prior to that time, he served
as president and CEO of AM International, Inc., Alusuisse of America, Inc., and
Maramont Corporation. He
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currently serves as a director of the following public companies: Altigen
Communications Inc., Gabelli Group Capital Partners, Inc., Morgan Group, Inc.,
and Benedetto Gartland, Inc.
Paul F. Ferrari has been an independent consultant since 1991. Previously,
he was Vice President of Thermo Electron Corporation from 1988 to 1991 and was
Treasurer of Thermo Electron Corporation from 1967 to 1988. He also served as a
director of Thermedics Inc. and ThermoTrex Inc.
Phillip A. Griffiths, Ph.D. is serving as the Director of the Institute for
Advanced Study in Princeton, New Jersey, where he is responsible for managing
the various research activities of the Institute. Prior to joining the Institute
in 1991, Dr. Griffiths was Provost and James B. Duke Professor of Mathematics at
Duke University for eight years. He has also taught at Harvard University,
Princeton University and the University of California, Berkeley. He currently
serves as a Director of Oppenheimer Funds, Inc., which company currently holds
more than 5% of the Company's outstanding stock, as discussed in the Section
entitled "Ownership" above.
Byron O. Pond has been serving as President and CEO of Amcast Industrial
Corp. since February 2001. Prior to that time and since 1990, Mr. Pond was a
senior executive with Arvin Industries, Inc. serving as its President and Chief
Executive Officer from 1993 to 1996 and as its Chairman and Chief Executive
Officer from 1996 to 1998. He retired as Chairman of Arvin Industries, Inc. in
1999. He currently serves as a Director of Cooper Tire and Rubber Company and
Precision Castparts Corporation.
Benjamin J. Virgilio is currently the President and CEO of BKJR, Inc. of
Toronto, Canada and was previously, from July 2000 until February 2001, the
Chairman of Robotic Technology Systems, Inc. Mr. Virgilio was the President and
Chief Executive Officer of Rea International Inc., an automotive fuel systems
manufacturer, from May 1995 to July 2000. Prior to May 1995, Mr. Virgilio was a
business consultant. Prior to November 1993, he was President and Chief
Executive Officer of A.G. Simpson Limited.
Charles D. Winston served as President and Chief Executive Officer of
General Scanning Inc. beginning in September 1988 and became a member of the
Board of Directors in 1989. Mr. Winston became the President, Chief Executive
Officer and a member of the Board of Directors of the Company following the
merger of General Scanning Inc. and Lumonics Corporation in 1999. Prior to
joining General Scanning Inc., from 1986 to 1988, Mr. Winston was a management
consultant. In 1986, Mr. Winston was an officer of Savin Corporation. From 1981
to 1985, he served as a Senior Vice President of Federal Express Corporation.
5
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table shows the number of common shares, the Company's only
class of equity securities, of the Company beneficially owned by each of the
directors, the nominees for election as a director, the Named Executive Officers
(see "Executive Compensation" below), as well as by the directors, the nominees
for election as a director, and the executive officers of the Company as a
group, as of March 15, 2002:
PERCENTAGE OF
NAME OF AMOUNT AND NATURE OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) SHARES
---------------- ----------------------- -------------
Patrick D. Austin, ....................................... 0(2) *
Vice President, Worldwide Sales
Richard B. Black, ........................................ 35,651(3) *
Director
Paul F. Ferrari, ......................................... 140,351(4) *
Director
Phillip A. Griffiths ..................................... 18,380(5) *
Director
Kurt A. Pelsue ........................................... 150,909(6) *
Vice President, Technology
Byron O. Pond ............................................ 24,334(7) *
Director
Felix I. Stukalin ........................................ 47,889(8) *
V.P. Wave Precision
Thomas R. Swain .......................................... 60,108(9) *
Chief Financial Officer and Treasurer
Benjamin J. Virgilio, .................................... 34,834(10) *
Director
Charles D. Winston, ...................................... 491,522(11) *
President, Chief Executive Officer
and Director
Victor H. Woolley ........................................ 145,129(12) *
V.P. Strategic Planning
All directors, nominees for directors and executive (13)
officers as a group (14 persons)........................ 1,206,915 [ ]%
------------------------
* Less than 1%.
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from March 12, 2002, whether pursuant
to the exercise of options or warrants, the conversion of securities or
otherwise. Includes an aggregate of 1,030,046 shares which are fully vested
and may be acquired within 60 days from March 12, 2002, by exercise of stock
options and warrants. Each beneficial owner's percentage of ownership is
determined by assuming that options that are held by such person (but not
those held by any other person) and which are fully vested and exercisable
(or convertible) within 60 days of March 12, 2002 have been exercised.
Unless otherwise noted in the footnotes below, the Company believes all
persons named in the table have
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sole voting power and investment power with respect to all common shares
beneficially owned by them. Statements as to ownership of common shares are
based upon information obtained from the directors, nominees and executive
officers and from records available to the Company.
(2) Mr. Austin served as V.P. Worldwide Sales until his resignation on
September 28, 2001. All outstanding stock options held by Mr. Austin which
were not exercised as of December 28, 2001, expired and were subsequently
cancelled on that date.
(3) Includes 28,916 common shares subject to options and warrants.
(4) Includes 28,916 common shares subject to options and warrants.
(5) All common shares subject to options.
(6) Includes 118,284 common shares subject to options.
(7) Includes [23,334] common shares subject to options.
(8) All common shares subject to options.
(9) Includes 51,358 common shares subject to options.
(10) Includes 30,834 common shares subject to options.
(11) Includes 483,051 common shares subject to options.
(12) Includes 126,111 common shares subject to options.
(13) Includes 1,030,046 common shares subject to options.
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EXECUTIVE COMPENSATION
The following table, presented in accordance with the rules of the United
States Securities and Exchange Commission, sets forth information with respect
to the compensation earned during the fiscal years ended December 31, 2001, 2000
and 1999 by the Company's Chief Executive Officer and the four other most highly
compensated executive officers of the Company (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
----------------------------
ANNUAL COMPENSATION SECURITIES
------------------------------------------------ UNDER
NAME AND FISCAL OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) GRANTED COMPENSATION(2)
------------------ -------- -------- -------- --------------- ---------- ---------------
Charles D. Winston(3)................... 2001 $400,000 $140,000 -- 250,000 $ 29,500(4)
President & CEO 2000 392,949 280,000 -- 105,000 --
1999 343,000 75,000 -- 506,074 $ 102,894(5)
Thomas R. Swain(6)...................... 2001 $196,167 $ 50,000 -- 100,000 $ 123,405(7)
CFO & Treasurer 2000 178,125 100,000 -- 30,000 --
Kurt A. Pelsue(8)....................... 2001 $196,000 -- -- 40,000 $ 8,500
V.P. Technology 2000 180,712 64,000 -- 20,000 --
1999 161,250 33,000 -- 143,866 --
Victor H. Woolley(9).................... 2001 $168,000 -- $ 18,719(10) 50,000 $ 8,500
V.P. Strategic Planning 2000 159,539 -- -- 45,000 --
Felix I. Stukalin(11)................... 2001 $160,000 $ 32,000 -- 40,000 $ 8,500
V.P. Wave Precision 2000 $146,346 $121,032 -- 45,000 --
Patrick D. Austin(12)................... 2001 $191,068 -- -- 50,000 --
V.P. Sales 2000 224,236 100,763 -- 30,000 --
1999 199,340 82,950 -- 50,000 --
--------------------------
(1) Unless otherwise noted, perquisites and personal benefits do not exceed the
lesser of $50,000 or 10% of the total of the annual salary and bonus of the
named executive officer.
(2) Unless otherwise noted, all other compensation consists exclusively of the
Company's contribution under the Company's Retirement and Savings Plans
established pursuant to Section 401(k) of the U.S. Internal Revenue Code
("401(k) Plan"). Under the 401(k) Plan each participant may defer up to
fifteen percent (15%) of his annual salary up to an annual maximum amount
prescribed by US IRS regulations (US$10,500 in 2001). The Company matches
such deferrals to the extent of achievement by the Company of certain profit
goals.
(3) Mr. Winston became the President and CEO following the merger of General
Scanning Inc. and Lumonics Inc. in 1999 and prior to that time served as
President, CEO and Director of General Scanning Inc.
(4) Includes $21,000 annual premium payment for key employee life insurance
coverage on Mr. Winston, under which The Company is the named beneficiary
and $8,500 with respect to 401(k) Company match. Excludes which
Mr. Winston has deferred pursuant to a July 20, 1994 Deferred Compensation
Agreement between Mr. Winston and General Scanning, Inc.
(5) Includes $82,946 with respect to relocation expenses and $17,470 with
respect to the 401(k) Company match.
(6) Mr. Swain became the Chief Financial Officer on September 1, 2000 and prior
to that time, from 1996 to 2000 served as Vice President and General Manager
of View Engineering, Inc., which was acquired by General Scanning Inc. in
August 1996.
(7) Includes $114,905 with respect to relocation and related expenses and $8,500
with respect to the 401(k) Company match.
8
(8) Mr. Pelsue became the V.P. Technology following the merger of General
Scanning Inc. and Lumonics Inc. in 1999 and prior to that time, from 1997,
served as V.P. Corporate Engineering for General Scanning Inc.
(9) Mr. Woolley became V.P. Strategic Planning in March 1999 and prior to that
time from 1995 to 1999 served as CFO, Treasurer and Clerk of General
Scanning Inc.
(10) Includes $3,318 with respect to health benefits; $8,700 as car allowance;
$4,000 reimbursement for tax preparation costs, and $2,701 for supplemental
long term disability insurance coverage for Mr. Woolley.
(11) Mr. Stukalin became V.P. Wave Precision in January 2001 and prior to that
time from March 2000 served as V.P. Components.
(12) Mr. Austin served as V.P. Worldwide Sales until his resignation on
September 28, 2001. Upon his resignation, the Company entered into a
Separation Agreement with Mr. Austin pursuant to which Mr. Austin will
receive salary payments and health benefit coverage for a period not to
exceed twelve (12) monthsfrom the date of his resignation.
STOCK OPTION PLANS
In conjunction with the merger of General Scanning, Inc., the Company
adopted outstanding options held by employees under nonqualified and incentive
stock options and issued 2,051,903 stock options in exchange. As of March 15,
2002, options to purchase [ ] shares of common stock remained outstanding
under the assumed General Scanning Inc. stock option plans. In addition, the
Company adopted outstanding warrants for the purchase of common stock issued to
non-employee members of the General Scanning Inc. Board of Directors. The
warrants are subject to vesting as determined by a committee of the Board of the
Directors at the date of grant and expire ten years from the date of grant. As
of March 15, 2002, [ ] warrants, of which [ ] are exercisable
remain outstanding at prices ranging from US$9.65 to US$15.41 per share.
Warrants have been included in all stock option tables included in this proxy
circular. Excluding the assumed options and warrants referenced herein, no
additional options or warrants are authorized to be granted under the assumed
General Scanning Inc. stock option plans.
Lumonics Corporation had three (3) stock option plans in existence for key
employees and/or directors prior to the merger with General Scanning, Inc, known
as the May 1994 Executive Management Plan ("May 1994 Plan"), the September 1994
Key Employee and Director Plan ("September 1994 Plan") and the 1995 Stock Option
Plan ("1995 Option Plan"). As of December 31, 2000 there were no outstanding
options under the May 1994 Plan and the September 1994 Plan. All outstanding
options under the May 1994 Plan and the September 1994 Plan expired on
September 14, 2001. No additional options will be granted under the May 1994
Plan and the September 1994 Plan.
The 1995 Option Plan referenced above, which was established on
September 14, 1995 by Lumonics Corporation") for the benefit of employees
(including contract employees), consultants, and directors of the Company,
remained in place following the merger with General Scanning, Inc. in 1999 and
as of the date of this proxy, is the only Company stock option plan under which
new options may be granted. Subject to the requirements of the 1995 Option Plan,
the Compensation Committee or in lieu thereof, the Board of Directors, has the
authority to select those directors, consultants, and employees to whom options
will be granted, date of the grant, the number of options to be granted and
other terms and conditions of the Options. The exercise price of options granted
under the 1995 Option Plan must be equal to the closing price of the Company's
common shares on The Toronto Stock Exchange, or in lieu thereof, The Nasdaq
Stock Market, on the day immediately preceding the date of grant. The exercise
period of each option is determined by the Compensation Committee but may not
exceed 10 years from the date of grant. The 1995 Option Plan initially
authorized the issuance of a maximum of 406,000 options to purchase common
shares. This authorization was increased to: 1,906,000 on May 6, 1997, 2,906,000
on May 11,1999, and 4,906,000 on May 8, 2000; with all such increases being
approved by the shareholders. Currently, a maximum of 4,906,000 options to
purchase common shares are permitted to be issued under the 1995 Option Plan.
The Compensation Committee
9
has the power to amend, modify or terminate the 1995 Option Plan provided that
optionee's rights are not materially adversely affected and subject to any
approvals required under the applicable regulatory requirements. As of
March 15, 2002 options to purchase an aggregate of approximately [ ]
common shares are outstanding under the 1995 Option Plan to employees and
directors at prices ranging from Cdn$6.50 per share to Cdn$41.25 per share, and
from US$4.38 per share to US$20.313 per share.
No past financial assistance has been given to participants to assist them
in purchasing common shares under the 1995 Option Plan, nor is such financial
assistance contemplated. The 1995 Option Plan contains no provision for the
Company to provide any such assistance.
OPTION GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
The following table provides information regarding options granted by the
Company during the fiscal year ended December 31, 2001 to the Named Executive
Officers:
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATE OF
PERCENT OF SHARE PRICE
NUMBER TOTAL OPTIONS APPRECIATION FOR
OF SHARES GRANTED TO OPTION TERM(1)
UNDERLYING EMPLOYEES EXERCISE -------------------------------------------
OPTIONS IN FISCAL OR BASE EXPIRATION
NAME GRANTED YEAR(2) PRICE ($/SH) DATE 5%($) 10%($)
---- ---------- ------------- ------------ ---------- -------------------- --------------------
Charles D. Winston ........ 250,000 13.62% $8.930 4/17/07 759,264 1,722,510
President & CEO
Thomas R. Swain ........... 100,000 5.4% $8.930 4/17/07 303,705 689,004
CFO & Treasurer
Kurt A. Pelsue ............ 40,000 2.2% $8.930 4/17/07 121,482 275,602
V.P. Technology
Victor H. Woolley ......... 50,000 2.7% $8.930 4/17/07 151,853 344,502
V.P Strategic Planning
Felix I. Stukalin ......... 40,000 2.2% $8.930 4/17/07 121,482 275,602
V.P. Wave Precision
Patrick D. Austin(3) ...... 50,000 2.7% $8.930 4/17/07 151,853 344,502
V.P. Worldwide Sales
------------------------
(1) This column shows the hypothetical gain of the options granted based on
assumed annual share appreciation rates of 5% and 10% above the exercise
price over the full term of the option. The 5% and 10% rates of appreciation
are mandated by the rules of the Commission and do not represent the
Company's estimate of future appreciation of the Company's common share
prices.
(2) All Options listed below Vest as to 25% of the total grant on each of the
first, second, third and fourth anniversary of the date of grant.
(3) Mr. Austin served as V.P. Worldwide Sales until his resignation on
September 28, 2001. All outstanding stock options held by Mr. Austin which
were not exercised as of December 28, 2001 expired and were subsequently
cancelled on that date.
10
OPTIONS EXERCISED AND YEAR-END OPTION VALUES
The following table provides information, for the Named Executive Officers,
concerning the number of shares for which stock options were exercised in the
fiscal year ended December 31, 2001, the realized value or spread (the
difference between the exercise price and market value on date of exercise), and
the number and unrealized spread of unexercised options held by the Named
Executive Officers at fiscal year end.
VALUE(2) OF
UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT AT
SECURITIES DECEMBER 31, 2001 DECEMBER 31, 2001
ACQUIRED AGGREGATE EXERCISABLE/ EXERCISABLE/
ON VALUE UNEXERCISABLE UNEXERCISABLE
NAME AND EXERCISE REALIZED(1) ------------------- ---------------------
PRINCIPAL POSITION (#) ($) (#) (#) ($) ($)
------------------------------------- ---------- ----------- -------- -------- --------- ---------
Charles D. Winston................... 405,412 455,662 691,489 464,280
President & CEO
Thomas R. Swain...................... 25,011 123,847 4,569
CFO & Treasurer
Kurt A. Pelsue....................... 102,896 90,970 181,690 124,482
V.P. Technology
Victor H. Woolley.................... 85,917 87,694 175,427 40,900
V.P Strategic Planning
Felix I. Stukalin.................... 32,889 83,846 83,240 44,805
V.P. Wave Precision
Patrick D. Austin.................... 25,000 120,750 (3) (3) (3) (3)
------------------------
(1) Market value of the underlying shares on the date of exercise less the
option exercise price. Values are in U.S. dollars unless otherwise
specified.
(2) Market value of shares covered by in-the-money options on December 31, 2000,
less the option exercise price. Options are in-the-money if the market value
of the shares covered thereby is greater than the option exercise price.
Values are in U.S. dollars unless otherwise specified.
(3) All outstanding stock options held by Mr. Austin that were not exercised
prior to December 28, 2001 expired and were subsequently cancelled as of
that date.
EMPLOYMENT CONTRACTS
The Company entered into an Employment Agreement with Charles D. Winston on
January 1, 2000 and an Amendment to such Agreement on February 26,2002, pursuant
to which the Company agreed to employ Mr. Winston as the CEO until December 31,
2003 and to pay him certain benefits upon his termination of employment without
cause, prior to such date, which benefits are further detailed in the severance
agreement referenced below. In addition, the Employment Agreement provides for
Mr. Winston to perform consulting services for the Company for a two (2) year
period commencing on January 1, 2004, at 50% of his base salary for the last
year of his Employment Agreement.
In addition, the Company has entered into severance agreements with certain
members of its executive management team, including the Named Executive Officers
but excluding Mr. Austin. The agreements, excluding the agreement with
Mr. Stukalin, supercede previously executed severance agreements and all of the
agreements provide for a severance payment if employment with the Company is
terminated without cause or upon or following defined change of control events.
The Severance Agreement with Mr. Winston was entered into on May 24, 2001
("Effective Date") and
11
amended on February 26, 2002. The effective date for each of the agreements with
Messrs. Swain, Woolley, and Pelsue and Ms. Palmer is May 24, 2001. The effective
date for the agreement with Mr. Stukalin is March 1, 2000
The severance agreement entered into with Mr. Winston is coterminous with
his Employment Agreement and is not subject to renewal; while the severance
agreements entered into with Messrs. Swain, Woolley, Pelsue and Stukalin and
Ms. Palmer continue for a minimum term of three years from their respective
effective dates and will automatically extend for periods of one year after the
initial term unless the Company or the executive gives notice at least ninety
days prior to the expiration of the current period that the agreement will not
be extended. Under the severance agreements the payment in the event of
termination without cause is equal to a minimum of one year and a maximum of two
years of the sum of (a) annual base salary; (b) targeted annual bonus;
(c) prorated portion of the annual bonus; and (d) the cost of certain employment
benefits, except that with respect to Mr. Winston the payment is equal to a
minimum of two years and a maximum of three years of the sum of (a)-(d) and that
with respect to Mr. Stukalin the payment is equal to a minimum of one year and a
maximum of two years of the sum of his annual base salary, his average targeted
annual bonus paid for the prior two years and the costs of certain employment
benefits. If the termination of employment occurs upon or following a defined
change of control of the Company, the payment is equal to three times the sum of
(a)-(d), except that with respect to Mr. Winston the payment is equal to four
times the sum of (a)-(d) and with respect to Mr. Stukalin the payment is equal
to his termination without cause payments discussed herein plus an additional
twelve (12) months. Also, pursuant to these agreements all unvested options then
held shall immediately vest, provided that such options shall expire upon the
earlier of (i) three years or the remainder of the option term in the event of a
change of control, or (ii) six months or the remainder of the option term in the
event of a termination for cause, except that with respect to Mr. Stukalin, his
options expire within six (6) months of the date of termination in either case.
Most of these agreements provide that a payment would be increased in the event
that it would subject the officer to an excise tax as a parachute payment under
the U.S. Federal Tax Code. The increase would be equal to the additional tax
liability imposed on the executive as a result of the payment.
COMPOSITION OF COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") determines all aspects of
compensation payable to the Chief Executive Officer and the other Named
Executive Officers (see "Summary Compensation Table"). As at December 31, 2001
the Committee was composed of three members of the then existing Board of
Directors: Benjamin J. Virgilio; Richard B. Black; and Byron O. Pond. The
Compensation Committee held seven (7) meetings during fiscal 2001.
REPORT ON EXECUTIVE COMPENSATION
The executive compensation policy of the Company has as its goals the
following:
(1) to provide executives with compensation that is fair and competitive in
the market place;
(2) to incent executives to meet and exceed financial and other strategic
objectives; and
(3) to raise the perspectives of executives from simply increasing the size
of the Company to taking a strategic path toward increasing shareholder
value.
SALARY
Base salaries are determined on an individual basis taking into
consideration the individual's position in the Company, the individual's ability
to contribute to the Company's performance and amounts paid by technology
companies of similar size for comparable positions.
12
ANNUAL BONUS
Each executive officer has the opportunity to earn an annual bonus. The
amount of the bonus is tied to the individual's performance and the achievement
of specific goals and objectives which, in some cases, may be difficult to
quantify. Cash bonuses may also, at the discretion of the Compensation
Committee, be used to recognize other significant contributions of an executive
to the overall success of the Company's objectives. All cash bonuses are paid at
the discretion and upon the approval of the Compensation Committee. The amount
of the potential bonuses varies based upon the executive officer's position in
the Company, ability to impact Company performance and contribute to the
Company's objectives, and degree of responsibility.
LONG TERM INCENTIVES
Executives may participate in the Company's stock option plans (the
"Plans"). The Plans are administered by the Compensation Committee which
designates the individuals who are to be granted options, the number of options
to be granted and other terms and conditions of the options. The number of stock
options granted to executive officers is based upon the same factors as are
relevant in setting their salaries and annual bonuses.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
During the year ended December 31, 2001, Charles D. Winston served as the
Company's Chief Executive Officer. In setting the Chief Executive Officer's
salary and target bonus for the year ended December 31, 2001, the Committee
reviewed salaries and bonuses paid to other chief executive officers of
technology companies of similar size and considered his ability to impact the
achievement of the Company's objectives. For the year ended December 31, 2001,
Mr. Winston's target bonus was 70% of his base salary and an option to purchase
250,000 common shares was granted to Mr. Winston in 2001 with an exercise price
of $8.930 per share.
Report submitted by: Benjamin J. Virgilio,
Richard B. Black, and
Byron O. Pond
13
REPORT OF AUDIT COMMITTEE
During 2001 the Audit Committee of the Company's Board had eight
(8) meetings. Its membership was compromised of Benjamin J. Virgilio, Richard B.
Black and Byron O. Pond.
Each member of the Company's Audit Committee is independent as defined under
the National Association of Securities Dealers' listing standards. The Company's
Audit Committee operates under a written charter approved by the Board.
The Company's Audit Committee assists the Board by overseeing the audit
coverage and monitoring the accounting, financial reporting, data processing,
regulatory, and internal control environments. Management has the primary
responsibility for the financial statements and the reporting process, including
the systems of internal controls. The primary duties and responsibilities of the
Company's Audit Committee are to: (1) serve as an independent and objective
party to monitor the Company's financial reporting process and internal control
systems; (2) review and appraise the audit efforts of the Company's independent
auditors and internal audit department; (3) evaluate the Company's quarterly
financial performance, as well as its compliance with laws and regulations;
(4) oversee management's establishment and enforcement of financial policies;
and, to (5) provide an open avenue of communication among the independent
auditors, financial and senior management, the internal audit department, and
the Board.
The Company's Audit Committee has
- reviewed and discussed the audited financial statements of the Company for
the fiscal year ended December 31, 2001 with the Company's management and
Ernst & Young LLP, the Company's independent auditors, including a
discussion of the quality and effect of the Company's accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements;
- has discussed the matters required by Statement on Auditing Standards
No. 61 (Communication with Audit Committees) with Ernst & Young LLP,
including the process used by management in formulating particularly
sensitive accounting estimates and the basis for the conclusions of
Ernst & Young LLP regarding the reasonableness of those estimates; and
- met with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls and the overall quality of
the Company's financial reporting; and
The Company's Audit Committee has also received the written disclosures and
the letter from Ernst & Young LLP required by Independence Standards Board
Standard No. 1 (entitled "Independence Discussion with Audit Committees"), has
discussed the independence of Ernst & Young and considered whether the provision
of non-audit services by Ernst & Young LLP is compatible with maintaining
auditor independence, and has satisfied itself as to the auditor's independence.
Based on the review and discussions noted above, the Company's Audit
Committee has recommended to the Board that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 for filing with the SEC. The Audit Committee
and the Board have also appointed, subject to shareholder ratification, Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
December 31, 2002.
Report submitted by: Benjamin J. Virgilio,
Richard B. Black, and
Byron O. Pond
14
PERFORMANCE GRAPHS
The following graph assumes an investment of Cdn$100 on September 28, 1995
(the date of the closing of the Company's initial public offering) and compares
the yearly percentage change in the cumulative total shareholder return on such
investment to the cumulative total return of The Toronto Stock Exchange
Composite for the six year period which commenced September 28, 1995 and ended
on December 31, 2001.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
TSE 300 GSI LUMONICS
9/29/95 100 100
10/6/95 99.24 99.14
10/13/95 99.51 98.28
10/20/95 97.98 96.55
10/27/95 95.71 94.83
11/3/95 100.15 98.28
11/10/95 101.06 103.45
11/17/95 101.54 119.83
11/24/95 103.14 121.55
12/1/95 103.18 127.59
12/8/95 104.65 133.62
12/15/95 103.16 129.31
12/22/95 103.99 136.21
12/29/95 104.06 133.62
1/5/96 106.84 135.34
1/12/96 104.93 129.31
1/19/96 106.43 134.48
1/26/96 108.2 141.38
2/2/96 111.09 150
2/9/96 111.22 162.07
2/16/96 111.37 165.52
2/23/96 109.56 162.93
3/1/96 109.42 166.38
3/8/96 108.07 178.45
3/15/96 109.36 171.55
3/22/96 109.34 172.41
3/29/96 109.74 175.86
4/5/96 110.74 179.31
4/12/96 110.87 182.76
4/19/96 111.92 201.38
4/26/96 113.64 193.1
5/3/96 113.13 186.55
5/10/96 114.28 197.24
5/17/96 115.25 197.24
5/24/96 115.46 196.55
5/31/96 115.82 195.86
6/7/96 113.41 193.1
6/14/96 111.05 193.1
6/21/96 111.43 192.41
6/28/96 111.35 193.1
7/5/96 111.77 191.38
7/12/96 111.3 191.38
7/19/96 110.49 186.21
7/26/96 108.91 189.66
8/2/96 110.73 188.28
8/9/96 111.4 187.59
8/16/96 112.35 187.59
8/23/96 114.64 189.66
8/30/96 113.55 188.97
9/6/96 113.69 186.21
9/13/96 115.75 186.55
9/20/96 116.73 179.31
9/27/96 117.03 193.1
10/4/96 119.56 173.1
10/11/96 120.56 175.86
10/18/96 121.26 181.38
10/25/96 122.52 177.59
11/1/96 123.44 175.86
11/8/96 127.13 182.76
11/15/96 129.6 193.1
11/22/96 130.64 175.86
11/29/96 132.83 172.41
12/6/96 128.26 175.86
12/13/96 125.99 179.31
12/20/96 129.58 165.86
12/27/96 130.31 168.97
1/3/97 130.68 167.59
1/10/97 132.12 177.59
1/17/97 135.52 177.59
1/24/97 133.2 175.86
1/31/97 134.88 186.21
2/7/97 134.7 200
2/14/97 137.19 203.45
2/21/97 137.47 207.24
2/28/97 135.94 199.66
3/7/97 138.38 193.1
3/14/97 136.82 195.86
3/21/97 134.11 182.76
3/28/97 130.95 182.76
4/4/97 128.42 182.76
4/11/97 125.47 181.03
4/18/97 128.62 181.03
4/25/97 128.82 184.48
5/2/97 134.82 186.21
5/9/97 137.52 181.03
5/16/97 137.92 179.31
5/23/97 141.76 177.93
5/30/97 140.89 178.62
6/6/97 143.32 185.17
6/13/97 144.61 189.66
6/20/97 143.75 200
6/27/97 141.87 198.97
7/4/97 145.38 196.55
7/11/97 146.29 194.83
7/18/97 148.75 206.9
7/25/97 149.68 217.24
8/1/97 151.25 220.69
8/8/97 152.22 217.24
8/15/97 147.8 191.38
8/22/97 148.13 193.1
8/29/97 145.96 193.1
9/5/97 148.87 193.1
9/12/97 149.37 186.21
9/19/97 154.15 188.28
9/26/97 154 191.38
10/3/97 156.56 193.79
10/10/97 156.97 200
10/17/97 155.34 196.55
10/24/97 155.27 195.17
10/31/97 151.05 192.41
11/7/97 151.26 186.21
11/14/97 148.49 172.41
11/21/97 149.54 172.41
11/28/97 143.78 152.41
12/5/97 148.45 165.52
12/12/97 146.63 165.52
12/19/97 144.28 163.79
12/26/97 144.37 165.52
1/2/98 148.16 186.21
1/9/98 138.47 181.72
1/16/98 141.7 175.86
1/23/98 143.3 167.24
1/30/98 147.92 164.14
2/6/98 151.16 165.52
2/13/98 153.92 165.52
2/20/98 152.78 179.31
2/27/98 156.58 161.72
3/6/98 158.63 161.72
3/13/98 163.03 159.31
3/20/98 163.65 156.9
3/27/98 168.28 158.62
4/3/98 168.06 155.17
4/10/98 168.24 118.28
4/17/98 171.42 118.97
4/24/98 170.06 120
5/1/98 170.03 117.24
5/8/98 169.97 115.52
5/15/98 169.63 117.24
5/22/98 170.54 113.79
5/29/98 167.55 109.66
6/5/98 165.75 104.48
6/12/98 161.4 96.55
6/19/98 157.92 87.93
6/26/98 162.01 91.38
7/3/98 163 94.83
7/10/98 163.14 93.1
7/17/98 163.77 68.97
7/24/98 158.3 68.97
7/31/98 153.02 66.55
8/7/98 146.61 67.59
8/14/98 139.03 62.07
8/21/98 138.95 68.97
8/28/98 127.3 58.62
9/4/98 126.77 55.17
9/11/98 130.02 55.52
9/18/98 127.41 55.17
9/25/98 129.05 54.83
10/2/98 121.8 52.76
10/9/98 121.02 50
10/16/98 129.81 53.79
10/23/98 128.97 56.9
10/30/98 137.06 50.34
11/6/98 141.68 50
11/13/98 139.88 49.31
11/20/98 143.99 48.28
11/27/98 142.8 49.66
12/4/98 139.94 51.72
12/11/98 138.17 51.38
12/18/98 140.26 51.38
12/25/98 142.73 51.72
1/1/99 143.19 51.03
1/8/99 151.64 69.66
1/15/99 149.22 55.17
1/22/99 145.57 55.17
1/29/99 148.56 54.14
2/5/99 146.44 52.41
2/12/99 142.03 52.76
2/19/99 141.5 52.07
2/26/99 139.36 54.14
3/5/99 141.62 53.79
3/12/99 144.87 47.24
3/19/99 145.68 54.48
3/26/99 146.48 53.79
4/2/99 146.25 46.9
4/9/99 152.1 38.28
4/16/99 154.83 41.38
4/23/99 155.16 44.83
4/30/99 154.86 43.1
5/7/99 153.63 45.52
5/14/99 152.03 46.55
5/21/99 153.78 48.28
5/28/99 150.18 45.86
6/4/99 153.21 44.48
6/11/99 152.7 44.83
6/18/99 154.65 40.34
6/25/99 153.19 38.28
7/2/99 157.58 38.97
7/9/99 158.91 44.83
7/16/99 160.84 56.21
7/23/99 156.07 51.72
7/30/99 156.32 43.45
8/6/99 151.86 45.17
8/13/99 154.67 48.97
8/20/99 157.39 53.45
8/27/99 156.88 54.48
9/3/99 154.67 55.52
9/10/99 158.14 63.1
9/17/99 155.91 68.28
9/24/99 149.31 63.45
10/1/99 153.02 61.72
10/8/99 157.1 60.69
10/15/99 151.98 55.17
10/22/99 155.42 62.41
10/29/99 160.19 63.45
11/5/99 161.1 79.66
11/12/99 166.15 89.66
11/19/99 169.84 87.93
11/26/99 174.18 91.72
12/3/99 172.08 91.38
12/10/99 175.61 100
12/17/99 178.78 102.07
12/24/99 186.61 99.66
12/31/99 185.74 88.28
1/7/00 186.09 93.45
1/14/00 184.5 105.86
1/21/00 190.62 125.86
1/28/00 185.23 110.34
2/4/00 203.3 128.62
2/11/00 202.15 121.38
2/18/00 205.21 154.48
2/25/00 201.8 223.79
3/3/00 208.91 255.86
3/10/00 209.44 220.69
3/17/00 210.36 179.31
3/24/00 221.93 194.83
3/31/00 208.89 167.24
4/7/00 208.96 191.38
4/14/00 187.06 156.9
4/21/00 197.8 171.72
4/28/00 206.36 191.38
5/5/00 211.87 195.86
5/12/00 203.36 210.34
5/19/00 205.16 221.38
5/26/00 199.15 188.28
6/2/00 215.19 234.48
6/9/00 214.78 262.07
6/16/00 221.55 278.97
6/23/00 222.77 289.66
6/30/00 225.08 357.93
7/7/00 229.16 375.86
7/14/00 237.96 372.41
7/21/00 239.35 400
7/28/00 228.33 247.93
8/4/00 233.29 238.28
8/11/00 238.18 241.38
8/18/00 245.79 253.1
8/25/00 248.27 269.66
9/1/00 251.42 279.31
9/8/00 238.86 235.86
9/15/00 244.24 216.9
9/22/00 233.26 200
9/29/00 229.11 170.69
10/6/00 230.31 156.21
10/13/00 227.84 144.83
10/20/00 231.47 135.86
10/27/00 205.79 129.31
11/3/00 214.59 138.97
11/10/00 203.08 121.72
11/17/00 197.65 116.21
11/24/00 199.23 132.76
12/1/00 197.39 117.24
12/8/00 210.8 107.93
12/15/00 199.13 92.76
12/22/00 193.61 82.41
12/29/00 197.22 83.45
1/5/01 191.85 91.03
1/12/01 192.43 112.07
1/19/01 202.24 132.41
1/26/01 202.18 119.31
2/2/01 203.63 134.48
2/9/01 197.75 118.97
2/16/01 185.29 115.86
2/23/01 177.25 97.24
3/2/01 176.76 94.48
3/9/01 179.6 105.17
3/16/01 171.14 94.07
3/23/01 168.66 87.1
3/30/01 167.96 83.45
4/6/01 165.01 77.03
4/13/01 172.97 100
4/20/01 178.81 106.55
4/27/01 175.89 87.93
5/4/01 176.21 105.86
5/11/01 177.13 97.79
5/18/01 182.58 108.48
5/25/01 183.08 114.41
6/1/01 182.15 104.97
6/8/01 179.44 100.34
6/15/01 172.55 96.55
6/22/01 170.86 88.83
6/29/01 170.79 96.9
7/6/01 167.65 92.76
7/13/01 171.44 87.24
7/20/01 168.84 81.52
7/27/01 169.59 79.31
8/3/01 170.96 89.59
8/10/01 168.77 88.97
8/17/01 165.63 85.72
8/24/01 168.44 90.9
8/31/01 163.35 88.62
9/7/01 162.67 86.21
9/14/01 152.12 75.86
9/21/01 143.79 67.38
9/28/01 150.97 73.86
10/5/01 152.2 74.97
10/12/01 155.22 78.41
10/19/01 152.57 79.31
10/26/01 154.64 84.41
11/2/01 155.06 84
11/9/01 159.16 91.72
11/16/01 161.49 91.03
11/23/01 164.08 91.72
11/30/01 163.93 82.76
12/7/01 168.15 92.9
12/14/01 163.93 83.79
12/21/01 166.2 81.72
12/28/01 169.43 94.83
The following graphs assume an investment of US$100 on March 22, 1999 (the
date on which the Company's shares commenced trading on the Nasdaq National
Market) and compare the percentage change in the cumulative total shareholder
return on such investment to the cumulative total return on (1) the Nasdaq
Composite Index and (2) the Standard and Poor Small Cap 600 Electronics
Equipment Subindex.
15
(1) The Nasdaq Composite Index
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DATE NASDAQ GSI LUMONICS
3/22/99 100 100
3/23/99 96.95 91.76
3/24/99 98.72 91.76
3/25/99 101.62 94.12
3/26/99 100.97 88.24
3/29/99 104.04 87.06
3/30/99 103.52 87.06
3/31/99 102.73 83.53
4/1/99 104.07 80
4/5/99 106.85 77.65
4/6/99 106.98 77.65
4/7/99 106.2 70
4/8/99 107.41 65.88
4/9/99 108.23 64.71
4/12/99 108.47 67.06
4/13/99 107.83 69.41
4/14/99 104.65 74.12
4/15/99 105.25 75.29
4/16/99 103.68 72.94
4/19/99 97.91 76.47
4/20/99 100.57 77.65
4/21/99 103.89 77.65
4/22/99 106.91 80
4/23/99 108.13 77.65
4/26/99 110.69 78.82
4/27/99 108.62 78.82
4/28/99 106.45 80
4/29/99 105.53 80
4/30/99 106.13 80
5/3/99 105.83 80.88
5/4/99 103.72 87.06
5/5/99 105.78 84.71
5/6/99 103.19 83.53
5/7/99 104.49 82.94
5/10/99 105.44 84.71
5/11/99 107.13 86.47
5/12/99 108.79 84.71
5/13/99 107.77 84.71
5/14/99 105.51 84.71
5/17/99 106.92 84.71
5/18/99 106.78 85.88
5/19/99 107.57 87.06
5/20/99 106.11 84.71
5/21/99 105.18 84.71
5/24/99 102.41 85.88
5/25/99 99.37 83.53
5/26/99 101.3 87.06
5/27/99 100.97 82.35
5/28/99 103.11 83.53
6/1/99 100.67 84.71
6/2/99 101.52 82.35
6/3/99 100.31 82.35
6/4/99 103.44 84.71
6/7/99 105.35 83.53
6/8/99 103.28 83.53
6/9/99 105.15 84.71
6/10/99 103.7 82.35
6/11/99 102.17 81.18
6/14/99 100.1 80
6/15/99 100.78 77.65
6/16/99 105.09 71.76
6/17/99 106.19 72.94
6/18/99 106.99 68.24
6/21/99 109.78 69.41
6/22/99 107.69 70.59
6/23/99 108.44 74.12
6/24/99 106.6 70.59
6/25/99 106.54 68.24
6/28/99 108.62 71.76
6/29/99 110.27 72.94
6/30/99 112.11 75.29
7/1/99 112.95 77.65
7/2/99 114.4 78.82
7/6/99 114.23 80
7/7/99 114.49 82.35
7/8/99 115.69 87.06
7/9/99 116.58 96.47
7/12/99 116.47 101.18
7/13/99 115.96 102.35
7/14/99 117.62 102.35
7/15/99 118.51 101.18
7/16/99 119.56 96.47
7/19/99 118.13 94.12
7/20/99 114.03 94.12
7/21/99 115.27 89.41
7/22/99 112.04 87.06
7/23/99 112.37 83.53
7/26/99 109.32 82.35
7/27/99 111.83 81.18
7/28/99 112.93 78.82
7/29/99 110.19 80
7/30/99 110.12 79.41
8/2/99 109.5 80
8/3/99 108.02 80
8/4/99 106.01 83.53
8/5/99 107.09 82.35
8/6/99 106.35 82.35
8/9/99 105.14 82.35
8/10/99 103.93 88.24
8/11/99 107.06 91.76
8/12/99 106.41 95.29
8/13/99 110.09 96.47
8/16/99 110.41 96.47
8/17/99 111.49 95.29
8/18/99 110.93 96.47
8/19/99 109.41 103.53
8/20/99 110.53 101.18
8/23/99 113.51 98.82
8/24/99 114.88 95.29
8/25/99 117.1 98.82
8/26/99 115.81 98.82
8/27/99 115.15 100
8/30/99 113.22 98.82
8/31/99 114.33 101.18
9/1/99 114.81 101.18
9/2/99 114.12 102.35
9/3/99 118.66 103.53
9/7/99 118.42 109.41
9/8/99 117.23 116.47
9/9/99 119.04 123.53
9/10/99 120.5 122.35
9/13/99 118.73 124.71
9/14/99 119.71 124.71
9/15/99 117.46 127.06
9/16/99 117.14 127.06
9/17/99 119.77 125.88
9/20/99 120.46 121.18
9/21/99 117.75 121.18
9/22/99 119.29 114.12
9/23/99 114.77 114.12
9/24/99 114.38 111.76
9/27/99 115.27 108.24
9/28/99 115.04 111.76
9/29/99 113.95 115.29
9/30/99 114.62 112.94
10/1/99 114.23 111.76
10/4/99 116.7 112.94
10/5/99 116.85 114.12
10/6/99 119.25 112.94
10/7/99 119.4 112.94
10/8/99 120.48 111.76
10/11/99 121.7 110.59
10/12/99 119.89 108.24
10/13/99 116.92 100.59
10/14/99 117.15 98.82
10/15/99 114.02 109.41
10/18/99 112.24 114.12
10/19/99 112.2 114.12
10/20/99 116.37 114.12
10/21/99 116.95 112.94
10/22/99 117.55 111.76
10/25/99 117.53 112.94
10/26/99 117.34 112.94
10/27/99 116.97 118.82
10/28/99 120 120
10/29/99 123.81 117.65
11/1/99 123.86 120
11/2/99 124.45 138.24
11/3/99 126.4 149.41
11/4/99 127.55 150.59
11/5/99 129.48 148.24
11/8/99 131.22 150.59
11/9/99 130.43 152.94
11/10/99 131.72 167.06
11/11/99 133.45 169.41
11/12/99 134.44 178.82
11/15/99 134.37 174.12
11/16/99 137.55 170.59
11/17/99 136.46 161.77
11/18/99 139.7 170.59
11/19/99 140.62 174.12
11/22/99 141.6 170.59
11/23/99 139.52 169.41
11/24/99 142.76 167.06
11/26/99 143.9 165.88
11/29/99 142.8 167.06
11/30/99 139.24 167.06
12/1/99 139.97 170.59
12/2/99 144.11 178.82
12/3/99 146.94 192.94
12/6/99 148 197.65
12/7/99 149.71 181.18
12/8/99 149.67 183.53
12/9/99 150.01 188.24
12/10/99 151.1 196.47
12/13/99 152.68 192.94
12/14/99 149.07 184.71
12/15/99 151.17 188.24
12/16/99 155.06 190.59
12/17/99 156.64 195.29
12/20/99 157.93 181.18
12/21/99 163.24 183.53
12/22/99 164.33 181.18
12/23/99 165.67 171.76
12/27/99 165.92 164.71
12/28/99 165.79 158.82
12/29/99 168.68 164.71
12/30/99 168.49 170.59
12/31/99 169.84 162.35
1/3/00 172.42 174.12
1/4/00 162.85 170.59
1/5/00 161.84 176.47
1/6/00 155.56 192.94
1/7/00 162.05 185.88
1/10/00 169.02 183.53
1/11/00 163.66 185.88
1/12/00 160.69 196.47
1/13/00 165.16 205.88
1/14/00 169.63 221.18
1/18/00 172.41 228.24
1/19/00 173.26 241.18
1/20/00 174.86 244.71
1/21/00 176.77 242.35
1/24/00 170.96 237.65
1/25/00 173.94 230.59
1/26/00 169.87 204.71
1/27/00 168.6 215.29
1/28/00 162.24 221.18
1/31/00 164.46 235.29
2/1/00 169.12 240
2/2/00 170.04 243.53
2/3/00 175.75 244.71
2/4/00 177.14 244.71
2/7/00 180.38 234.12
2/8/00 184.79 232.94
2/9/00 182.11 229.41
2/10/00 187.22 230.59
2/11/00 183.45 232.94
2/14/00 184.42 237.65
2/15/00 184.51 255.29
2/16/00 184.8 294.12
2/17/00 189.86 324.71
2/18/00 184.13 315.29
2/22/00 182.9 322.35
2/23/00 189.92 415.29
2/24/00 192.73 495.29
2/25/00 191.59 472.94
2/28/00 191.07 445.88
2/29/00 196.03 451.76
3/1/00 199.67 482.35
3/2/00 198.44 469.41
3/3/00 205.13 411.76
3/6/00 204.72 423.53
3/7/00 202.34 440
3/8/00 204.39 414.12
3/9/00 210.64 391.76
3/10/00 210.72 360
3/13/00 204.81 323.53
3/14/00 196.44 331.76
3/15/00 191.27 328.24
3/16/00 196.89 347.06
3/17/00 200.26 360
3/20/00 192.41 374.12
3/21/00 196.65 392.94
3/22/00 203.04 369.41
3/23/00 206.21 365.88
3/24/00 207.14 354.12
3/27/00 206.96 345.88
3/28/00 201.75 291.76
3/29/00 193.86 322.35
3/30/00 186.06 309.41
3/31/00 190.86 300
4/3/00 176.28 297.65
4/4/00 173.16 352.94
4/5/00 174.01 367.06
4/6/00 178.12 345.88
4/7/00 185.58 341.18
4/10/00 174.8 320
4/11/00 169.28 315.29
4/12/00 157.33 270.59
4/13/00 153.46 265.88
4/14/00 138.62 297.65
4/17/00 147.71 321.18
4/18/00 158.33 318.82
4/19/00 154.7 300
4/20/00 152.09 316.47
4/24/00 145.35 331.76
4/25/00 154.9 340
4/26/00 151.51 354.12
4/27/00 157.52 376.47
4/28/00 161.13 382.35
5/1/00 165.2 355.29
5/2/00 157.99 352.94
5/3/00 154.73 357.65
5/4/00 155.27 374.12
5/5/00 159.3 381.18
5/8/00 153.15 369.41
5/9/00 149.63 382.35
5/10/00 141.27 387.06
5/11/00 146.06 445.88
5/12/00 147.29 441.18
5/15/00 150.57 437.65
5/16/00 155.16 435.29
5/17/00 152.13 400
5/18/00 147.7 387.06
5/19/00 141.51 370.59
5/22/00 140.41 355.29
5/23/00 132.08 341.18
5/24/00 136.51 342.35
5/25/00 133.78 365.88
5/26/00 133.77 402.35
5/30/00 144.39 398.82
5/31/00 141.94 434.12
6/1/00 149.52 421.18
6/2/00 159.16 430.59
6/5/00 159.51 429.41
6/6/00 156.78 462.35
6/7/00 160.24 484.71
6/8/00 159.67 512.94
6/9/00 161.73 543.82
6/12/00 157.26 489.41
6/13/00 160.73 517.65
6/14/00 158.49 527.06
6/15/00 160.51 530.59
6/16/00 161.13 555.29
6/19/00 166.52 537.65
6/20/00 167.51 531.76
6/21/00 169.62 536.47
6/22/00 164.31 511.76
6/23/00 160.49 547.06
6/26/00 163.28 550.59
6/27/00 161.06 605.88
6/28/00 164.46 661.18
6/29/00 161.83 750.59
6/30/00 165.53 698.82
7/3/00 166.61 688.24
7/5/00 161.24 701.18
7/6/00 165.3 694.12
7/7/00 167.92 626.18
7/10/00 166.13 697.65
7/11/00 165.13 682.35
7/12/00 171.11 705.88
7/13/00 174.25 749.41
7/14/00 177.22 771.76
7/17/00 178.41 748.24
7/18/00 174.34 800
7/19/00 169.27 741.18
7/20/00 174.65 687.06
7/21/00 170.89 654.12
7/24/00 166.18 603.53
7/25/00 168.18 524.71
7/26/00 166.44 452.94
7/27/00 160.36 515.29
7/28/00 152.88 501.18
7/31/00 157.22 451.76
8/1/00 153.82 400
8/2/00 152.69 437.65
8/3/00 156.93 423.53
8/4/00 158.07 462.35
8/7/00 161.23 442.35
8/8/00 160.63 425.88
8/9/00 160.83 442.35
8/10/00 156.93 445.88
8/11/00 158.16 454.12
8/14/00 160.68 460
8/15/00 160.76 468.24
8/16/00 161.16 467.06
8/17/00 164.48 491.76
8/18/00 164.04 485.88
8/21/00 164.99 477.65
8/22/00 165.2 500
8/23/00 167.41 496.47
8/24/00 169.17 497.65
8/25/00 168.73 488.24
8/28/00 169.9 498.82
8/29/00 170.38 492.94
8/30/00 171.28 515.29
8/31/00 175.56 498.82
9/1/00 176.73 455.29
9/5/00 172.93 465.88
9/6/00 167.51 429.41
9/7/00 171.05 414.12
9/8/00 166.05 418.82
9/11/00 162.62 440
9/12/00 160.67 427.06
9/13/00 162.52 405.88
9/14/00 163.35 395.29
9/15/00 160.07 409.41
9/18/00 155.53 409.41
9/19/00 161.34 385.88
9/20/00 162.67 364.71
9/21/00 159.81 338.82
9/22/00 158.76 320
9/25/00 156.15 312.94
9/26/00 153.97 322.35
9/27/00 152.6 310.59
9/28/00 157.7 283.53
9/29/00 153.29 308.53
10/2/00 148.96 321.18
10/3/00 144.24 301.18
10/4/00 147.04 282.35
10/5/00 144.92 281.18
10/6/00 140.28 270.59
10/9/00 140.05 248.24
10/10/00 135.25 248.24
10/11/00 132.24 254.12
10/12/00 128.33 264.71
10/13/00 138.43 247.06
10/16/00 137.33 238.82
10/17/00 134.14 251.76
10/18/00 132.37 244.71
10/19/00 142.68 236.47
10/20/00 145.38 230.59
10/23/00 144.77 214.12
10/24/00 142.73 209.41
10/25/00 134.79 225.88
10/26/00 136.57 223.53
10/27/00 136.83 237.65
10/30/00 133.2 275.29
10/31/00 140.64 237.65
11/1/00 139.13 250.59
11/2/00 143.12 249.41
11/3/00 144.06 247.06
11/6/00 142.58 243.53
11/7/00 142.57 224.71
11/8/00 134.88 214.12
11/9/00 133.57 196.47
11/10/00 126.42 198.82
11/13/00 123.82 200
11/14/00 130.98 195.29
11/15/00 132.12 202.35
11/16/00 126.54 210.59
11/17/00 126.35 223.53
11/20/00 120.02 212.94
11/21/00 119.85 232.94
11/22/00 115 235.29
11/24/00 121.22 207.06
11/27/00 120.22 198.82
11/28/00 114.15 190.59
11/29/00 112.98 204.71
11/30/00 108.43 197.65
12/1/00 110.41 207.06
12/4/00 109.17 202.35
12/5/00 120.61 180
12/6/00 116.72 190.59
12/7/00 114.89 194.12
12/8/00 121.77 187.06
12/11/00 125.84 172.94
12/12/00 122.36 178.82
12/13/00 117.81 164.71
12/14/00 113.88 151.76
12/15/00 110.74 152.94
12/18/00 109.54 147.65
12/19/00 104.83 134.12
12/20/00 97.36 147.06
12/21/00 97.67 152.94
12/22/00 105.05 149.41
12/26/00 104.07 148.24
12/27/00 105.99 150.59
12/28/00 106.75 150.59
12/29/00 103.11 168.24
1/2/01 95.66 178.82
1/3/01 109.21 164.71
1/4/01 107.13 163.53
1/5/01 100.49 163.53
1/8/01 100 174.71
1/9/01 101.89 196.47
1/10/01 105.35 205.88
1/11/01 110.21 210.59
1/12/01 109.62 214.12
1/16/01 109.29 234.12
1/17/01 111.97 241.18
1/18/01 115.55 227.06
1/19/01 115.63 228.24
1/22/01 115.11 224.71
1/23/01 118.55 216.47
1/24/01 119.33 212.94
1/25/01 114.96 223.53
1/26/01 116.08 230.59
1/29/01 118.46 250.59
1/30/01 118.46 245.88
1/31/01 115.73 245.88
2/1/01 116.15 238.82
2/2/01 111.04 236.47
2/5/01 110.32 225.88
2/6/01 111.21 223.53
2/7/01 108.84 214.12
2/8/01 106.93 209.41
2/9/01 103.13 205.59
2/12/01 103.91 195.29
2/13/01 101.33 209.41
2/14/01 103.98 205.88
2/15/01 106.55 197.65
2/16/01 101.23 190.59
2/20/01 96.76 169.41
2/21/01 94.7 171.76
2/22/01 93.7 185.3
2/23/01 94.43 168.82
2/26/01 96.35 172.94
2/27/01 92.15 164.71
2/28/01 89.81 169.41
3/1/01 91.13 175.29
3/2/01 88.38 178.24
3/5/01 89.44 186.47
3/6/01 92.01 186.47
3/7/01 92.82 184.71
3/8/01 90.52 170
3/9/01 85.68 168.82
3/12/01 80.28 167.06
3/13/01 84.09 167.06
3/14/01 82.31 164.71
3/15/01 81 169.41
3/16/01 78.92 160
3/19/01 81.44 149.41
3/20/01 77.52 137.06
3/21/01 76.39 152.94
3/22/01 79.2 155.29
3/23/01 80.5 156.47
3/26/01 80.07 144.71
3/27/01 82.32 140
3/28/01 77.39 143.53
3/29/01 75.99 145.88
3/30/01 76.81 136.47
4/2/01 74.42 125.88
4/3/01 69.83 141.18
4/4/01 68.4 134.71
4/5/01 74.5 135.53
4/6/01 71.8 150.4
4/9/01 72.86 162.45
4/10/01 77.3 172.24
4/11/01 79.26 169.6
4/12/01 81.86 168.09
4/16/01 79.7 198.59
4/17/01 80.27 197.46
4/18/01 86.79 187.29
4/19/01 91.08 177.13
4/20/01 90.29 182.21
4/23/01 85.95 167.72
4/24/01 84.17 155.48
4/25/01 85.97 153.98
4/26/01 84.93 193.51
4/27/01 86.63 185.6
4/30/01 88.33 176.94
5/1/01 90.5 174.12
5/2/01 92.68 188.24
5/3/01 89.58 186.35
5/4/01 91.47 190.87
5/7/01 90.72 188.61
5/8/01 91.77 180.71
5/9/01 90.01 173.55
5/10/01 88.85 175.06
5/11/01 87.96 183.34
5/14/01 86.89 183.53
5/15/01 87.05 179.95
5/16/01 90.42 195.76
5/17/01 91.56 207.25
5/18/01 91.78 203.48
5/21/01 96.23 201.79
5/22/01 96.57 199.53
5/23/01 93.64 201.6
5/24/01 95.25 202.35
5/25/01 93.95 192.94
5/29/01 90.8 193.13
5/30/01 87 190.12
5/31/01 88.09 190.12
6/1/01 89.71 184.47
6/4/01 89.98 183.34
6/5/01 93.23 183.53
6/6/01 92.56 179.76
6/7/01 94.49 176.38
6/8/01 92.45 174.12
6/11/01 90.6 178.64
6/12/01 90.57 173.93
6/13/01 88.55 171.86
6/14/01 85.31 169.41
6/15/01 84.66 172.61
6/18/01 83 162.82
6/19/01 83.17 161.11
6/20/01 84.78 156.42
6/21/01 85.93 167.34
6/22/01 84.93 165.08
6/25/01 85.6 174.12
6/26/01 86.17 170.73
6/27/01 86.59 174.12
6/28/01 88.71 174.12
6/29/01 90.2 173.74
7/2/01 89.68 167.53
7/3/01 89.35 166.35
7/5/01 86.82 164.71
7/6/01 83.65 156.42
7/9/01 84.59 146.82
7/10/01 81.92 155.11
7/11/01 82.31 154.35
7/12/01 86.64 151.34
7/13/01 87.01 149.65
7/16/01 84.69 148.71
7/17/01 86.28 144
7/18/01 84.15 143.62
7/19/01 85.42 143.62
7/20/01 84.7 136.49
7/23/01 83 134.21
7/24/01 81.77 136.09
7/25/01 82.82 139.48
7/26/01 84.43 140.05
7/27/01 84.69 149.65
7/30/01 84.22 158.49
7/31/01 84.61 160.56
8/1/01 86.33 158.68
8/2/01 87.12 161.13
8/3/01 86.24 158.49
8/6/01 84.9 157.36
8/7/01 84.63 159.25
8/8/01 82.07 157.18
8/9/01 81.94 158.49
8/10/01 81.66 161.88
8/13/01 82.73 155.29
8/14/01 81.99 151.53
8/15/01 80.09 153.41
8/16/01 80.57 150.96
8/17/01 77.92 151.15
8/20/01 78.52 151.53
8/21/01 76.43 157.18
8/22/01 77.63 159.25
8/23/01 76.92 155.48
8/24/01 80 158.87
8/27/01 79.82 160.94
8/28/01 77.84 156.42
8/29/01 76.93 157.36
8/30/01 74.78 154.73
8/31/01 75.35 155.11
9/4/01 73.91 154.16
9/5/01 73.42 152.47
9/6/01 71.19 151.53
9/7/01 70.44 132.14
9/10/01 70.76 132.71
9/17/01 65.93 119.72
9/18/01 64.9 122.35
9/19/01 63.77 116.33
9/20/01 61.39 125.36
9/21/01 59.4 127.06
9/24/01 62.58 127.06
9/25/01 62.67 125.18
9/26/01 61.11 128
9/27/01 60.97 123.86
9/28/01 62.56 127.62
10/1/01 61.79 131.76
10/2/01 62.29 134.4
10/3/01 65.98 131.39
10/4/01 66.67 133.46
10/5/01 67 135.34
10/8/01 67.03 135.53
10/9/01 65.54 136.66
10/10/01 67.88 136.09
10/11/01 71.01 134.21
10/12/01 71.1 137.41
10/15/01 70.8 136.28
10/16/01 71.87 136.85
10/17/01 68.71 137.41
10/18/01 68.98 139.67
10/19/01 69.76 144.21
10/22/01 71.29 146.07
10/23/01 71.14 143.25
10/24/01 72.27 145.51
10/25/01 74.1 146.07
10/26/01 73.83 143.81
10/29/01 70.93 141.74
10/30/01 69.59 140.24
10/31/01 70.54 144.94
11/1/01 72.89 147.76
11/2/01 72.86 154.92
11/5/01 74.86 165.27
11/6/01 76.59 162.82
11/7/01 76.69 157.18
11/8/01 76.29 161.88
11/9/01 76.32 160.75
11/12/01 76.8 160.75
11/13/01 78.97 157.18
11/14/01 79.43 157.18
11/15/01 79.32 167.53
11/16/01 79.24 161.88
11/19/01 80.74 155.29
11/20/01 78.49 156.42
11/21/01 78.26 152.09
11/23/01 79.43 150.78
11/26/01 81.02 145.32
11/27/01 80.8 150.02
11/28/01 78.8 143.62
11/29/01 80.69 139.29
11/30/01 80.58 152.09
12/3/01 79.51 159.44
12/4/01 81.93 165.84
12/5/01 85.43 161.69
12/6/01 85.74 156.24
12/7/01 84.36 157.55
12/10/01 83.15 155.29
12/11/01 83.56 146.85
12/12/01 83.95 147.2
12/13/01 81.24 143.62
12/14/01 81.52 149.08
12/17/01 82.95 145.32
12/18/01 83.67 137.04
12/19/01 82.76 141.93
12/20/01 80.07 154.16
12/21/01 81.21 155.29
12/24/01 81.16 160
12/26/01 81.83 161.13
12/27/01 82.49 159.44
12/28/01 82.94 159.44
12/31/01 81.4 159.44
(2) Standard and Poor Small Cap 600 Electronics Equipment Subindex
16
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
S&P SMALL CAP
Electrical Equipment GSI
Index Lumonics
March 22, 1999 5.313 129.270
March 31, 1999 4.625 133.480
April 30, 1999 4.250 150.750
May 31, 1999 4.625 160.330
June 30, 1999 3.813 169.420
July 31, 1999 4.188 165.410
August 31, 1999 5.313 156.740
September 30, 1999 5.938 162.940
October 31, 1999 6.313 157.300
November 30, 1999 8.813 187.290
December 31, 1999 8.750 214.350
January 31, 2000 11.438 204.320
February 29, 2000 25.125 238.790
March 31, 2000 17.125 252.300
April 30, 2000 18.813 272.120
May 31, 2000 21.375 253.430
June 30, 2000 35.125 277.750
July 31, 2000 27.375 261.990
August 31, 2000 26.188 302.700
September 30, 2000 16.500 283.260
October 31, 2000 12.625 296.770
November 30, 2000 10.125 221.120
December 31, 2000 8.000 206.610
17
COMPENSATION OF DIRECTORS
During the most recently completed financial year, Company directors who
were not employees of the Company received an annual retainer of $15,000 and an
attendance fee of $1,500 for attending meetings of shareholders, the Board of
Directors and committees of the Board of Directors, and $750 for each meeting
conducted by telephone. Upon initial election they receive an option to purchase
40,000 common shares of the Company and for each annual election after the
initial election, they receive an option to purchase 10,000 common shares of the
Company. The options have an exercise price of fair market value on the date of
grant, a term of six years, vest as to 25% on each of the first, second, third
and fourth anniversary of the date of grant and are otherwise subject to the
terms of the 1995 Option Plan. Directors who are employees of the Company
receive no remuneration for serving as members of the Board of Directors. All
directors were entitled to reimbursement by the Company for all reasonable
expenses incurred in attending meetings of shareholders, the Board of Directors
and committees of the Board of Directors. The Chairman receives an annual salary
of $24,000. No additional compensation is paid to the chairs of the various
committees. All payments are made in the currency of the member's residence.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Company maintains directors' and officers' liability insurance in the
aggregate principal amount of $35,000,000 subject to a $1,000,000 deductible per
loss payable by the Company. The premium payable for such insurance is currently
$134,600 per year, which is paid by the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the U.S. Securities and Exchange Act of 1934, as amended,
as well as applicable Canadian securities laws, require directors, executive
officers and 10 percent holders of the Company's common shares to file reports
of their ownership of the Company's securities. Based on the review of the
applicable forms furnished to the Company and certain representations made to
the Company, the Company believes that its directors and executive officers has
complied with the applicable reporting requirements for transactions in the
Company's securities during fiscal 2001, except that Mr. Phillip Griffiths, a
Director of the Company, did not file reports within the prescribed time period
with respect to his initial statement of beneficial holdings and his purchase of
5,880 shares of Company stock on August 3, 2001.
CORPORATE GOVERNANCE
The Toronto Stock Exchange Committee on Corporate Governance in Canada has
issued a series of guidelines for effective corporate governance. The guidelines
address matters such as the constitution and independence of corporate boards,
the function to be performed by boards and their committees and the
effectiveness and education of board members. The Toronto Stock Exchange has
adopted as a listing requirement the disclosure by each listed corporation of
its approach to corporate governance with reference to the guidelines.
The Company's Board of Directors and senior management believe that good
corporate governance is important to the effective and efficient operation of
Canadian corporations. The Company's disclosure of its corporate governance
practices is set out in matrix form and attached to this management proxy
circular as Schedule "D".
INDEBTEDNESS OF DIRECTORS AND OFFICERS
Since the beginning of the financial year ended December 31, 2001 there has
been no indebtedness to the Company by any director or officer or associates, of
any such person, other than amounts owing
18
for purchases subject to usual trade terms, for ordinary travel and expense
advances and for other transactions in the ordinary course of business.
INTEREST OF INSIDERS IN MATERIAL TRANSACTIONS
During the most recently completed financial year, the Company recorded
sales revenue from Sumitomo Heavy Industries, Ltd. a significant shareholder, of
$4.2 million at amounts and terms approximately equivalent to third party
transactions. Transactions with Sumitomo are at normal trade terms. In
January 2001, the Company made an investment of approximately $2 million in a
technology fund managed by OpNet Partners L.P., a firm in which one of the
Company's Directors, Richard B. Black, is a general partner. In early 2002, the
Company received an interim distribution from OpNet Partners representing
sixty-five percent (65%) of the Company's balance on December 31, 2001, which
was approximately $1,296,124. The remaining investment made by the Company
continues to be maintained in OpNet Partners private investment portfolio. On
February 23, 2000 the Company entered into an Agreement with V2Air LLC relating
to the use of the LLC aircraft for Company business purposes. The V2Air LLC is
owned by the Company's President and Chief Executive Officer, Charles D.
Winston. Purusant to the terms of the Agreement, the Company is required to
reimburse the V2Air LLC for certain expenses associated with the use of the
aircraft for Company business travel. During the most recently completed
financial year, the Company reimbursed V2Air LLC approximately $150,000 under
the terms of such Agreement. Except for the foregoing, no director, officer,
nominee director, 5% holder of the Company's shares, or immediate family member,
associate or affiliate thereof, had any material interest, direct or indirect,
in any transaction since the commencement of the Company's last completed fiscal
year or has any material interest, direct or indirect, in any proposed
transaction, having value of $60,000 or more.
APPOINTMENT OF AUDITORS
The persons named in the accompanying form of proxy intend to vote for the
reappointment of Ernst & Young LLP as auditors of the Company to hold office
until the annual meeting of shareholders in 2003. Ernst & Young LLP have served
as auditors of the Company since 1993. Arrangements have been made for one or
more representatives of Ernst & Young LLP to attend the Meeting, which
representatives will be given an opportunity to make a statement if they so
desire, and to answer questions that are appropriate.
AUDIT FEES
The aggregate fees billed by Ernst & Young LLP for professional services
rendered for the audit of the Company's annual financial statements for 2001 and
their review of the financial statements included in the Company's quarterly
reports on Form 10-Q filed during 2001 were $ .
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
During 2001, Ernst & Young LLP did not provide any professional services to
the Company with regard to financial information systems design and
implementation.
ALL OTHER FEES
Fees billed for services provided to the Company by Ernst & Young LLP during
2001, other than the services described above under "Audit Fees", were $604,000,
including audit related services of $68,000 and non-audit services of $536,000;
consisting of $153,000 relating to review of federal and state income tax
returns, $122,000 relating to a customs audit, $182,000 relating to corporate
restructuring assessment, $30,000 relating to foreign taxation advisory
services, and $51,000 related to transfer pricing advisory services. Audit
related services generally include fees for business acquisitions, accounting
consultations and SEC registration statements.
19
RESOLUTION NO. 1--PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF CONTINUANCE TO
INCREASE THE SHARE OWNERSHIP REQUIREMENT NECESSARY FOR SUBMITTING SHAREHOLDER
PROPOSALS NOMINATING PERSONS FOR ELECTION TO THE COMPANY'S BOARD OF DIRECTORS
The holders of the common shares will be asked to consider and, if thought
satisfactory, to approve, with or without variation, Resolution No. 2, the full
text of which is set out in Schedule "A" to this Management Proxy Circular. The
resolution relates to the approval of an amendment to the Company's Articles of
Continuance (the "Articles") which would require that a proposal by a
shareholder may include nominations for the election of directors to the
Company's Board of Directors if the proposal is signed by one or more holders of
shares representing in the aggregate not less than 10% of the shares or not less
than 10% of the shares of a class of shares of the Company entitled to vote at
the meeting to which the proposal is to be presented (the "Percentage Ownership
Threshold"). The Company's Articles currently provide for a 5% Percentage
Ownership Threshold. Section 89(4) of the Business Corporations Act (New
Brunswick) permits the Company to raise the Percentage Ownership Threshold up to
10% with shareholder approval.
The Board of Directors believes that the primary effect of increasing the
Percentage Ownership Threshold will be to decrease the likelihood of disruptive
proxy contest by which a third party might seek to gain control of the Company
without going through the process of making a bid that is negotiated and fair to
shareholders. The Company cannot, however, assure shareholders that the increase
in the Percentage Ownership Threshold will not discourage or prevent an offer to
acquire the Company that the shareholders would find attractive. In addition,
the Board of Directors believes that increasing the Percentage Ownership
Threshold from 5% to 10% facilitates continuity and stability of leadership and
promotes effective long-term strategic planning and the creation of long-term
value for shareholders of the Company.
The Board of Directors is not proposing this amendment to the Company's
Articles in response to, or in anticipation of, any pending or threatened proxy
contest or take-over bid. Rather, the Board of Directors has observed that proxy
contests and unsolicited tender offers are highly disruptive and often used to
gain control of a company at an unfairly low price or, in the case of proxy
contests, by avoiding making any offer to shareholders. The Board of Directors
believes that increasing the Percentage Ownership Threshold, together with
approval of Resolution No. 2 (ratification of the continued existence of the
Rights Plan), will assist the Board of Directors in preserving its ability to
negotiate directly with a potential takeover bidder on behalf of the Company's
shareholders, thus increasing the fair and equitable treatment of all
shareholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the shareholders approve the
amendment to the Articles and vote for the adoption of Resolution No. 1. In
order to be effective, Resolution No. 1 must be approved by 66 2/3(rds) of the
votes cast at the meeting.
RESOLUTION NO. 2--PROPOSAL TO RATIFY THE CONTINUED EXISTENCE OF THE SHAREHOLDER
RIGHTS PLAN
On April 12, 1999, the Board of Directors of the Company adopted a
shareholder rights plan (the "Rights Plan" or the "Plan"), which was ratified by
the Company's shareholders at its annual meeting on May 11, 1999. Pursuant to
the terms of the Rights Plan, shareholders of the Company will be asked to vote
on a resolution ("Resolution No. 2") to ratify, confirm and approve the
continued existence of the Rights Plan. The full text of Resolution No. 2 is set
out in Schedule "B" to this Management Proxy Circular.
20
INTRODUCTION
The provisions of the Rights Plan are set out in a shareholder rights plan
agreement (the "Agreement") dated and effective as of April 12, 1999, between
the Company and Montreal Trust Company of Canada (the "Rights Agent"). Under the
Rights Plan, one purchase right ("Right") has been issued in respect of each
common share of the Company outstanding as of the date hereof and will be issued
in respect of each common share of the Company issued hereafter.
In order to continue beyond the date of the meeting, the Plan's existence
must be confirmed by resolution passed by a majority of the votes cast by
Independent Shareholders (generally, shareholders other than the Offeror or
Acquiring Person, their Associates and Affiliates, and Persons acting jointly or
in concert with the Offeror or Acquiring Person) who vote in respect of this
Resolution No. 2 at the meeting.
If ratified by a majority of common shares held by Independent Shareholders,
the Rights Plan will remain in full force and effect.
If the Plan's continued existence is not approved at the Meeting by the
affirmative vote of holders of a majority of the common shares voted by
Independent Shareholders present in person or represented by proxy, the Plan
will thereupon effectively become void and of no further force and effect.
All capitalized terms used without definition under the heading "Proposal to
Ratify the Existence of the Shareholder Rights Plan" have the meanings ascribed
to them in the Agreement.
OBJECTIVES OF THE RIGHTS PLAN
The Board of Directors implemented the Rights Plan to ensure that, to the
extent possible, in the context of a bid for control of the Company through an
acquisition of the Company's common shares, shareholders will be treated equally
and fairly and will be positioned to receive full value for their shares. In
deciding to implement the Rights Plan, of concern to the Board of Directors was
the widely held view that existing securities legislation provides too short a
response time to a Company that is the subject of an unsolicited bid for
control.
Also of concern to the Board of Directors is the possibility that, under
existing securities laws, the Company's shareholders could be treated unequally
in the context of a bid for control. These concerns are described in more detail
below.
The Rights Plan was not adopted and approved by shareholders in response to,
or in anticipation of, any pending or threatened take-over bid, nor to deter
take-over bids generally. Rather, the objectives of the Rights Plan are to give
adequate time for shareholders to properly assess a bid without undue pressure,
for the Board of Directors to consider value-enhancing alternatives and to allow
competing bids to emerge. In addition, the Rights Plan has been designed to
provide shareholders of the Company with equal treatment in a bid for control of
the Company.
In adopting the Rights Plan, the Board of Directors initially considered the
following concerns inherent in the existing legislative framework governing
take-over bids and considers these concerns to remain relevant today:
(a) Time. Current legislation permits a take-over bid to expire in 35 days
in Canada and 20 business days in the United States. The Board of
Directors is of the view that this is not sufficient time to permit
shareholders to consider a take-over bid and to make a reasoned and
unhurried decision. The Rights Plan provides a mechanism whereby the
minimum expiry period for a Take-over Bid must be 45 days after the date
of the bid and the bid must remain open for a further period of 10
Business Days after the Offeror publicly announces that the shares
deposited or tendered and not withdrawn constitute more than 50% of the
Voting
21
Shares outstanding held by Independent Shareholders. The Plan is intended
to provide shareholders with adequate time to properly evaluate the offer
and to provide the Board of Directors with sufficient time to explore and
develop alternatives for maximizing shareholder value. Those alternatives
could include, if deemed appropriate by the Board of Directors, the
identification of other potential bidders, the conducting of an orderly
auction or the development of a corporate restructuring alternative which
could enhance shareholder value.
(b) Pressure to Tender. A shareholder may feel compelled to tender to a bid
which the shareholder considers to be inadequate out of a concern that
failing to tender may result in the shareholder being left with illiquid
or minority discounted shares in the Company. This is particularly so in
the case of a partial bid for less than all shares of a class where the
bidder wishes to obtain a control position but does not wish to acquire
all of the Voting Shares. The Plan provides a shareholder approval
mechanism in the Permitted Bid provision which is intended to ensure that
a shareholder can separate the tender decision from the approval or
disapproval of a particular take-over bid. By requiring that a bid remain
open for acceptance for a further 10 Business Days following public
announcement that more than 50% of the Voting Shares held by Independent
Shareholders have been deposited, a shareholder's decision to accept a
bid is separated from the decision to tender, lessening the undue
pressure to tender typically encountered by a shareholder of a Company
that is the subject of a take-over bid.
(c) Unequal Treatment. While existing securities legislation has addressed
many concerns of unequal treatment, there remains the possibility that
control of a Company may be acquired pursuant to a private agreement in
which a small group of shareholders disposes of shares at a premium to
market price which premium is not shared with the other shareholders. In
addition, a person may slowly accumulate shares through stock exchange
acquisitions which may result, over time, in an acquisition of control
without payment of fair value for control or a fair sharing of a control
premium among all shareholders. The Plan addresses these concerns by
applying to all acquisitions resulting in the acquiror beneficially
holding greater than 20% of the Voting Shares, to better ensure that
shareholders receive equal treatment.
GENERAL IMPACT OF THE RIGHTS PLAN
In the past, shareholder rights plans have been criticized by some
commentators on the basis that they may serve to deter take-over bids, to
entrench management, and to place in the hands of boards of directors, rather
than shareholders, the decision as to whether a particular bid for acquisition
of control is acceptable. Critics of some shareholder rights plans have also
alleged that they cast a needlessly wide net, thereby increasing the likelihood
of an inadvertent triggering of the plan, while at the same time deterring
shareholders from participating in legitimate corporate governance activities.
The Board of Directors has considered these concerns, and believes that they
have been largely addressed in the Plan.
It was not the intention of the Board of Directors in adopting the Plan to
secure the continuance of existing directors or management in office, nor to
avoid a bid for control of the Company. For example, through the Permitted Bid
mechanism, described in more detail below, shareholders may tender to a bid
which meets the Permitted Bid criteria without triggering the Plan, regardless
of the acceptability of the bid to the Board of Directors. Furthermore, even in
the context of a bid that does not meet the Permitted Bid criteria, the Board of
Directors will continue to be bound to consider fully and fairly any bid for the
Company's common shares in any exercise of its discretion to waive application
of the Plan or redeem the Rights. In discharging that responsibility, the Board
of Directors must act honestly and in good faith with a view to the best
interests of the Company and its shareholders.
22
The Rights Plan does not preclude any shareholder from utilizing the proxy
mechanism of the Business Corporations Act (New Brunswick) to promote a change
in the management or direction of the Company, and has no effect on the rights
of holders of outstanding voting shares of the Company to requisition a meeting
of shareholders, in accordance with the provisions of applicable corporate and
securities legislation, or to enter into agreements with respect to voting their
common shares. The definitions of "Acquiring Person" and "Beneficial Ownership"
have been developed to minimize concerns that the Plan may be inadvertently
triggered or triggered as a result of an overly-broad aggregating of holdings of
institutional shareholders and their clients.
The Board of Directors continues to believe that the dominant effect of the
Plan will be to enhance shareholder value, and ensure equal treatment of all
shareholders in the context of an acquisition of control.
The Rights Plan will not interfere with the day-to-day operations of the
Company. The initial issuance of the Rights does not in any way alter the
financial condition of the Company, impede its business plans or alter its
financial statements. In addition, the Rights Plan is initially not dilutive and
is not expected to have any effect on the trading of common shares. However, if
a Flip-In Event occurs and the Rights separate from the common shares, as
described in the summary below, reported earnings per share and reported cash
flow per share on a fully-diluted or non-diluted basis may be affected. In
addition, holders of Rights not exercising their Rights after a Flip-In Event
may suffer substantial dilution.
The Rights Plan may, however, increase the price to be paid by a potential
Offeror to obtain control of the corporation and may discourage certain
transactions, including Take-over Bids for less than all the Voting Shares of
the Company. Accordingly, the Rights Plan may deter some Take-over Bids.
The Board of Directors believes that the results of several unsolicited
take-over bids in Canada demonstrate that shareholder rights plans can enhance
shareholder value without removing the ultimate decision from the shareholders.
In a number of instances, a change of control was achieved following an
unsolicited bid in circumstances where the ultimately successful bid was
substantially better than the original offer made by the bidder. There can be no
assurance however that the Rights Plan, if its continued existence is approved,
would serve to cause a similar result.
The Ontario Securities Commission has indicated that the board of directors
of a Company confronted with an unsolicited take-over bid will not be allowed to
maintain a shareholder rights plan indefinitely to keep a bid from the
shareholders; however, these decisions also indicate that so long as the board
of directors is actively and realistically seeking value-maximizing
alternatives, shareholder rights plans may serve a legitimate purpose.
TERMS OF THE RIGHTS PLAN
The following is a summary of the terms of the Rights Plan. The summary is
qualified in its entirety by the full text of the Rights Agreement, copies of
which will be made available to Shareholders of record upon request made to GSI
Lumonics Inc., 105 Schneider Road, Kanata, Ontario, K2K 1Y3, Attention:
Secretary.
ISSUANCE OF RIGHTS
One Right has been issued by the Company in respect of each common share
outstanding at 5:00 p.m. (Ottawa Time) on April 12, 1999, and one Right will be
issued in respect of each common share of the Company issued thereafter, prior
to the earlier of the Separation Time and the Expiration Time. Each Right
entitles the registered holder thereof to purchase from the Company one common
share at the exercise price of Cdn$200, subject to adjustment and certain
anti-dilution provisions (the
23
"Exercise Price"). The Rights are not exercisable until the Separation Time. If
a Flip-In Event occurs, each Right will entitle the registered holder to
receive, upon payment of the Exercise Price, common shares of the Company having
an aggregate market price equal to twice the Exercise Price.
TRADING OF RIGHTS
Until the Separation Time (or the earlier termination or expiration of the
Rights), the Rights will be evidenced by the certificates representing the
common shares of the Company and will be transferable only together with the
associated common shares. From and after the Separation Time, separate
certificates evidencing the Rights ("Rights Certificates"), together with a
disclosure statement prepared by the Corporation describing the Rights, will be
mailed to holders of record of common shares (other than an Acquiring Person) as
of the Separation Time. Rights Certificates will also be issued in respect of
common shares issued prior to the Expiration Time to each holder (other than an
Acquiring Person) converting, after the Separation Time, securities
("Convertible Securities") convertible into or exchangeable for common shares.
The Rights will trade separately from the common shares after the Separation
Time.
SEPARATION TIME
The Separation Time is the Close of Business on the eighth Business Day
after the earlier of (i) the "Stock Acquisition Date", which is generally the
first date of public announcement of facts indicating that a Person has become
an Acquiring Person; and (ii) the date of the commencement of, or first public
announcement of the intent of any Person (other than the Company or any
subsidiary of the Company) to commence a Take-over Bid (other than a Permitted
Bid or a Competing Permitted Bid, so long as such bid continues to satisfy the
requirements of a Permitted Bid or Competing Permitted Bid). In either case, the
Separation Time can be such later Business Day as may from time to time be
determined by the Board of Directors. If a Take-over Bid expires or is
cancelled, terminated or otherwise withdrawn prior to the Separation Time, it
shall be deemed never to have been made.
ACQUIRING PERSON
In general, an Acquiring Person is a Person who is the Beneficial Owner of
20% or more of the Company's outstanding common shares and any other shares in
the share capital or any voting interest of the Company entitled to vote
generally on the election of directors ("Voting Shares"). Currently, no Voting
Shares other than the common shares are outstanding. Excluded from the
definition of "Acquiring Person" are the Company and its subsidiaries, and any
Person who becomes the Beneficial Owner of 20% or more of the outstanding Voting
Shares as a result of one more or any combination of a Voting Share Reduction, a
Permitted Bid Acquisition, an Exempt Acquisition and a Pro Rata Acquisition. The
definitions of "Voting Share Reduction", "Permitted Bid Acquisition", "Exempt
Acquisition" and "Pro Rata Acquisition" are set out in the Agreement. However,
in general:
(a) a "Pro Rata Acquisition" means an acquisition of Voting Shares pursuant
to a dividend reinvestment plan, share purchase plan, stock dividend, a
stock split or other similar event. It also means the acquisition or
exercise of share purchase rights distributed pursuant to a bona fide
rights offering or a public or private distribution of Voting Shares or
Convertible Securities (including a conversion or exchange of such
Convertible Securities) but only if the acquisition allows the acquirer
to maintain its percentage holding of Voting Shares;
(b) a "Voting Share Reduction" means an acquisition or redemption by the
Company of Voting Shares;
(c) an "Exempt Acquisition" means a share acquisition in respect of which
the Board of Directors has waived the application of the Plan or which
was made prior to the date of the Agreement; and
24
(d) a "Permitted Bid Acquisition" means an acquisition of Voting Shares made
pursuant to a Permitted Bid or a Competing Permitted Bid.
Also excluded from the definition of "Acquiring Person" are underwriters
acting in connection with a bona fide distribution of securities to the public.
BENEFICIAL OWNERSHIP
In general, a Person is deemed to Beneficially Own common shares actually
held by others in circumstances where those holdings are or should be grouped
together for purposes of the Plan. Included are holdings by the Person's
Affiliates (generally, a person that controls, is controlled by, or under common
control with another person) and Associates (generally, relatives sharing the
same residence). Also included are securities which the Person or any of the
Person's Affiliates or Associates has the right to acquire within 60 days (other
than customary agreements with and between underwriters and/or banking group
and/or selling group members with respect to a distribution of securities, and
other than pledges of securities in the ordinary course of business).
A Person is also deemed to "Beneficially Own" any securities that are
Beneficially Owned (as described above) by any other Person with which the
Person is acting jointly or in concert.
The definition of "Beneficial Ownership" contains several exclusions whereby
a Person is not considered to "Beneficially Own" a security. A Person shall not
be deemed to be the Beneficial Owner of a security because the holder of such
security has either agreed pursuant to a Permitted Lock-up Agreement to deposit
or tender such security to a Take-over Bid made by such Person or such Person's
Affiliate or Associate or because such security has been deposited or tendered
to a Take-over Bid made by such Person or such Person's Associates or Affiliates
until the earlier of such security being accepted unconditionally for payment or
exchange pursuant to the Take-over Bid and such security being taken up and paid
for. "Permitted Lock-Up Agreement" is defined in the Agreement; however,
generally a "Permitted Lock-Up Agreement" is an agreement between a Person and
one or more holders of Voting Shares to tender shares to a Take-over Bid (the
"Lock-Up Bid") which agreement provides that the obligation to tender or deposit
is terminable at the option of the holder of Voting Shares if another Take-over
Bid is made at a price or value per Voting Share that is at least 5% in excess
of the Lock-up Bid or another Take-over Bid is made for a number of Voting
Shares at least 5% greater than a number of Voting Shares bid for under the
Lock-Up Bid at a price or value that is not less than the price or value offered
under the Lock-up Bid and in the event that the Lock-up Bid is not successful no
break-up fees, top-up fees, penalties or expenses or other amounts that exceed
in the aggregate the cash equivalent of 2 1/2% of the price or value payable
under the Lock-up Bid to the holders of Voting Shares who are party to the
Permitted Lock-up Agreement.
25
There are other exemptions from the deemed "Beneficial Ownership" provisions
for institutional shareholders acting in the ordinary course of business. These
exemptions apply to (i) a fund manager ("Fund Manager") which holds securities
in the ordinary course of business in the performance of its duties for the
account of any other Person (a "Client"); (ii) a licensed trust Company ("Trust
Company") acting as trustee or administrator or in a similar capacity in
relation to the estates of deceased or incompetent persons (each an "Estate
Account") or in relation to other accounts (each an "Other Account") and which
holds such security in the ordinary course of its duties for such accounts;
(iii) the administrator or the trustee (a "Plan Administrator") of one or more
pension funds or plans (a "Plan") registered under Canadian or U.S. law or
(iv) an agency (the "Crown Agent") established by statute, and its ordinary
business or activity includes the management of investment funds for employee
benefit plans, pension plans, insurance plans, or various public bodies. The
foregoing exemptions only apply so long as the Fund Manager, Trust Company, Plan
Administrator or Crown Agent is not then making or has not then announced an
intention to make a Take-over Bid, other than an Offer to Acquire Voting Shares
or other securities (X) by means of ordinary market transactions (including
prearranged trades entered into in the ordinary course of business of such
Person) executed through the facilities of a stock exchange or organized
over-the-counter market, alone or acting jointly or in concert with any other
Person, (Y) pursuant to a distribution by the Company or (Z) by means of a
Permitted Bid (as defined below).
Finally, a Person will not be deemed to "Beneficially Own" a security
because (i) the Person is a Client of the same Fund Manager, an Estate Account
or an Other Account of the same Trust Company, or Plan with the same Plan
Administrator as another Person or Plan on whose account the Fund Manager, Trust
Company or Plan Administrator, as the case may be, holds such security; or
(ii) the Person is a Client of a Fund Manager, Estate Account, Other Account or
Plan, and the security is owned by the Fund Manager, Trust Company or Plan
Administrator, as the case may be.
FLIP-IN EVENT
A Flip-In Event occurs when any Person becomes an Acquiring Person. In the
event that, prior to the Expiration Time, a Flip-In Event which has not been
waived occurs (see "Redemption, Waiver and Termination" below), each Right
(except for Rights Beneficially Owned or which may thereafter be Beneficially
Owned by an Acquiring Person or a transferee of such a Person, which Rights will
become null and void) shall constitute the right to purchase from the Company,
upon exercise thereof in accordance with the terms of the Plan, that number of
common shares having an aggregate Market Price on the date of the Flip-In Event
equal to twice the Exercise Price, for the Exercise Price (such Right being
subject to anti-dilution adjustments). For example, if at the time of the Stock
Acquisition Date the Exercise Price is $200.00 and the Market Price of the
common shares is $40.00, the holder of each Right would be entitled to purchase
common shares having an aggregate Market Price of $400.00 (that is, 10 common
shares) for $200.00 (that is, a 50% discount from the Market Price).
PERMITTED BID AND COMPETING PERMITTED BID
A Permitted Bid is a Take-over Bid made by way of a Take-over Bid circular
and which complies with the following additional provisions:
(a) the Take-over Bid is made to all holders of record of Voting Shares
wherever resident as registered on the books of the Company, other than
the Offeror;
(b) the Take-over Bid contains, and the take-up and payment for the
securities tendered or deposited thereunder is subject to, irrevocable
and unqualified conditions that:
(i) no Voting Shares shall be taken-up or paid for pursuant to the
Take-over Bid (a) prior to the Close of Business on the date which
is not to be less than 45 days following the date of the Take-over
Bid and (b) unless at the Close of Business on that date, the Voting
26
Shares deposited or tendered pursuant to the Take-over Bid and not
withdrawn constitute more than 50% of the Voting Shares outstanding
which are held by Independent Shareholders;
(ii) unless the Take-over Bid is withdrawn, Voting Shares may be
deposited pursuant to such Take-over Bid at any time prior to the
Close of Business on the date of the first take up of or payment
for Voting Shares;
(iii) any Voting Shares deposited pursuant to the Take-over Bid may be
withdrawn until taken up and paid for; and
(iv) if more than 50% of the Voting Shares held by Independent
Shareholders are deposited or tendered pursuant to the Take-over
Bid and not withdrawn, the Offeror will make a public announcement
of that fact and the Take-over Bid shall remain open for deposits
and tenders of Voting Shares for not less than 10 Business Days
from the date of such public announcement.
If a Permitted Bid ceases to be a Permitted Bid because it ceases to meet
any or all of the criteria at any time, any acquisition of Voting Shares made
pursuant to such Permitted Bid, including any acquisition of Voting Shares made
prior to such time, ceases to be an acquisition of Voting Shares made pursuant
to a Permitted Bid (or a Competing Permitted Bid, as described below).
A Competing Permitted Bid is a Take-over Bid that is made after a Permitted
Bid has been made but prior to its expiry, and satisfies all the requirements of
a Permitted Bid as described above, except that a Competing Permitted Bid is not
required to remain open for 45 days so long as it is open until the later of
21 days after the date of the Competing Permitted Bid and 45 days after the
earliest date on which any other Permitted Bid or Competing Permitted Bid then
in existence was made.
REDEMPTION, WAIVER AND TERMINATION
(a) Redemption of Rights. The Board of Directors acting in good faith may,
with prior shareholder approval, at any time prior to the later of the
Stock Acquisition Date and the Separation Time, elect to redeem all but
not less than all of the then outstanding Rights at a redemption price of
$.0001 per Right, appropriately adjusted for anti-dilution as provided in
the Agreement (the "Redemption Price").
(b) Waiver of Inadvertent Acquisition. The Board of Directors is required to
waive the application of the Plan in respect of the occurrence of any
Flip-In Event if (i) the Board of Directors has determined, following the
Stock Acquisition Date and prior to the Separation Time, that a Person
became an Acquiring Person under the Plan; and (ii) the Acquiring Person,
within 10 days after the determination by the Board of Directors or such
later date as the Board of Directors may determine (the "Disposition
Date"), has reduced its Beneficial Ownership of Voting Shares such that
the Person is no longer an Acquiring Person. If the person remains an
Acquiring Person at the Close of Business on the Disposition Date, the
Disposition Date shall be deemed to be the date of occurrence of a
further Stock Acquisition Date.
(c) Permitted Bid Acquisition. In the event that a Person acquires, pursuant
to a Permitted Bid or a Competing Permitted Bid, more than 50% of the
outstanding common shares (including shares held at the date of the bid),
the Board of Directors shall, immediately upon the consummation of the
acquisition, be deemed to have elected to redeem the Rights at the
Redemption Price.
(d) Discretionary Waiver with Mandatory Waiver of Concurrent Bids. The Board
of Directors may, prior to the occurrence of the relevant Flip-In Event,
upon prior written notice to the Rights Agent, waive the application of
the Plan to a Flip-In Event that may occur by reason
27
of a Take-over Bid made by means of a Take-over Bid circular to all
holders of record of Voting Shares. However, if the Board of Directors
waives the application of the Plan, the Board of Directors shall be
deemed to have waived the application of the Plan, in respect of any
other Flip-In Event occurring by reason of such a Take-over Bid made
prior to the expiry of a bid for which a waiver is, or is deemed to have
been, granted.
(e) Waiver on Agreement to Reduce Beneficial Ownership by Acquiring Person.
The Board of Directors may, prior to the Close of Business on the eighth
Business Day following a Stock Acquisition Date or such later Business
Day as it may from time to time determine, upon prior written notice to
the Rights Agent, waive the application of the Plan to a Flip-In Event,
provided that the Acquiring Person has reduced its Beneficial Ownership
of Voting Shares (or has entered into a contractual arrangement with the
Company, acceptable to the Board of Directors, to do so within 10 days of
the date on which such contractual arrangement is entered into or such
later date as the Board of Directors may determine) such that at the time
the waiver becomes effective, the Person having acquired the Voting
Shares is no longer an Acquiring Person. If such a waiver becomes
effective prior to the Separation Time, the applicable Flip-In Event
shall be deemed not to have occurred.
(f) Redemption of Rights on Withdrawal or Termination of Bid. Where a
Take-over Bid that is not a Permitted Bid is withdrawn or otherwise
terminated after the Separation Time and prior to the occurrence of a
Flip-In Event, or if the Board of Directors grants a waiver under the
circumstances described in (e) above after the Separation Time, the Board
of Directors may elect to redeem all the outstanding Rights at the
Redemption Price. Upon the Rights being so redeemed, all the provisions
of the Plan shall continue to apply as if the Separation Time had not
occurred and Rights Certificates had not been mailed, and the Separation
Time shall be deemed not to have occurred.
If the Board of Directors is deemed to have elected or elects to redeem the
Rights as described in paragraphs (a) or (c) above, the right to exercise the
Rights will thereupon, without further action and without notice, terminate and
the only right thereafter of the holders of Rights is to receive the Redemption
Price. Within 10 days of any such election or deemed election to redeem the
Rights, the Company will notify the holders of the common shares or, after the
Separation Time, the holders of the Rights.
ANTI DILUTION ADJUSTMENTS
The Exercise Price of a Right, the number and kind of securities subject to
purchase upon exercise of a Right, and the number of Rights outstanding, will be
adjusted in certain events, including;
(a) if there is a stock dividend (other than pursuant to any dividend
reinvestment plan) on the common shares, or a subdivision or
consolidation of the common shares, or an issuance of common shares (or
Convertible Securities) in respect of, in lieu of or in exchange for
common shares; or
(b) if the Company fixes a record date for the distribution to all holders
of common shares of certain rights or warrants to acquire common shares
or Convertible Securities, or for the making of a distribution to all
holders of common shares or evidences of indebtedness or assets (other
than regular periodic cash dividends or stock dividends payable in common
shares) or other securities.
No adjustment in Exercise Price will be made unless it represents, on a
cumulative basis with other unreflected adjustments, at least a 1% change in the
Exercise Price.
28
SUPPLEMENTS AND AMENDMENTS
The following changes may be made subject to subsequent ratification by the
holders of the common shares or, after the Separation Time, Rights:
(a) changes that the Board of Directors, acting in good faith, determines
are necessary to maintain the validity of the Agreement and the Rights as
a result of any change in any applicable legislation, regulation or
rules; and
(b) changes to the Plan in order to cure any clerical or typographical
error.
Subject to the above exceptions, any amendment, variation or deletion of or
from the Agreement and the Rights, is subject to the prior approval of the
holders of common shares, or, after the Separation Time, the holders of the
Rights.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors has determined that the continued existence of the
Rights Plan is in the best interests of the Company and the holders of its
common shares. The Board of Directors unanimously recommends that the
shareholders approve the continued existence of the Rights Plan and vote for the
adoption of Resolution No. 2. In order to be effective, Resolution No. 2 must be
approved by a majority of votes cast at the meeting.
29
RESOLUTION NO. 3--AMENDMENT TO 1995 STOCK OPTION PLAN TO INCREASE THE NUMBER OF
SHARES RESERVED FOR ISSUANCE UNDER THE PLAN BY 2,000,000 SHARES
The holders of the common shares will be asked to consider and, if thought
satisfactory, to approve, with or without variation, Resolution No. 3, the full
text of which is set out in Schedule "C" to this Management Proxy Circular,
which resolution relates to the approval of an amendment to the Company's 1995
Stock Option Plan, as amended (the "1995 Option Plan"). The Board of Directors
approved the amendment to the 1995 Plan and shareholder approval is required to
meet the Rules of The Toronto Stock Exchange. At the date hereof, the amendment
to the 1995 Option Plan is subject to regulatory approval.
The 1995 Option Plan is intended to encourage ownership of common shares by
employees (including contract employees), consultants, and directors and thereby
provide additional incentive for them to promote the success of the Company in a
highly competitive business environment. Under the 1995 Option Plan, the maximum
number of common shares which may be issued is 4,906,000. The 1995 Option Plan
is more fully described in this Proxy Circular under the heading "Stock Option
Plans." In the view of the Board of Directors, it is necessary and appropriate
to increase the specified maximum number of common shares issuable under the
1995 Option Plan in order to permit the continued grant of options to attract
and retain talented individuals in accordance with the purposes of the 1995
Option Plan. Accordingly, the Board of Directors has determined that the total
maximum number of common shares reserved for issuance under the 1995 Option Plan
should be increased by 2,000,000 to 6,906,000. The new specified maximum number
of shares that may be issuable under the 1995 Option Plan would represent
approximately % of the issued and outstanding common shares at the date of
this Proxy Circular. This increase in the 1995 Option Plan together with other
common shares reserved for issuance pursuant to share compensation arrangements
of the Company represents approximately % of the issued and outstanding common
shares as of the date of this Proxy Circular.
The Toronto Stock Exchange Policy requires a specified maximum number of
shares issuable under the 1995 Option Plan to be stated therein. The Toronto
Stock Exchange Policy also requires a shareholder vote to be taken where, among
other matters, the maximum number of shares reserved for issuance pursuant to
stock options may exceed 10% of the outstanding shares.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the shareholders approve the
amendment to the 1995 Option Plan and vote for the adoption of Resolution
No. 3. In order to be effective, Resolution No. 3 must be approved by a majority
of votes cast at the meeting.
OTHER BUSINESS
Management does not know of any matters to be brought before the Meeting
other than those set forth in the Notice accompanying this Circular.
PROPOSALS
Proposals of shareholders intended for inclusion in next year's Management
Proxy Circular must be received by the Company on or before January 1, 2003.
Shareholder proposals not intended for inclusion in next year's Management Proxy
Circular will be considered untimely if received later than February , 2003,
and proxies will confer discretionary authority with respect to such proposals.
DIRECTORS' APPROVAL
The contents and the sending of this Management Proxy Circular have been
approved by the directors.
Ottawa, Ontario
March , 2002
By order of the Board of Directors
(signed) Eileen Casal
Corporate Secretary
30
SCHEDULE "A"
AMENDMENT TO ARTICLES OF CONTINUANCE TO INCREASE
THE REQUIREMENT FOR SHARE OWNERSHIP PERCENTAGES NECESSARY FOR SUBMITTING
SHAREHOLDER PROPOSALS
NOMINATING PERSONS FOR ELECTION TO THE COMPANY'S BOARD OF DIRECTORS
BE IT RESOLVED AS AN ORDINARY RESOLUTION OF THE SHAREHOLDERS THAT:
1. the proposed amendment to the Company's Articles of Continuance increasing
the share ownership percentage necessary for submitting shareholder
proposals for the nomination of directors from not less than 5% to not less
than 10% of the shares outstanding, which is more particularly set forth in
the Management Proxy Circular for the Company's Annual and Special Meeting
of Shareholders on May 9, 2002 be and the same are hereby authorized and
approved; and
2. any officer or director of the Company be and is hereby authorized and
directed, for and on behalf of the Company, to execute and deliver all such
documents and to do all such acts and things as he or she may determine to
be necessary or desirable in order to carry out the foregoing provisions of
this resolution, the execution of any such document or the doing of any such
acts and things being conclusive evidence of such determination.
A-1
SCHEDULE "B"
APPROVAL OF THE CONTINUED EXISTENCE OF THE RIGHTS PLAN
BE IT RESOLVED AS AN ORDINARY RESOLUTION OF THE SHAREHOLDERS THAT:
1. the continued existence of the Shareholder Rights Plan evidenced by the
Shareholder Rights Plan Agreement made as of April 12, 1999 between the
Company and Montreal Trust Company of Canada, be and it is hereby ratified,
confirmed and approved;
2. any officer or director of the Company be and is hereby authorized and
directed, for and on behalf of the Company, to execute and deliver all such
documents and to do all such acts and things as he or she may determine to
be necessary or desirable in order to carry out the foregoing provisions of
this resolution, the execution of any such document or the doing of any such
acts and things being conclusive evidence of such determination; and
3. the directors of the Company may in their discretion revoke this resolution
before it is implemented, without further notice to, or approval of the
shareholders.
B-1
SCHEDULE "C"
AMENDMENT TO THE 1995 STOCK OPTION PLAN
BE IT RESOLVED AS AN ORDINARY RESOLUTION OF THE SHAREHOLDERS THAT:
2. the proposed amendment to the 1995 Option Plan increasing the number of
shares reserved for issuance under the 1995 Option Plan by 2,000,000, which
change is more particularly set forth in the Management Proxy Circular for
the Company's Annual and Special Meeting of Shareholders on May 9, 2002 be
and the same are hereby authorized and approved; and
2. any officer or director of the Company be and is hereby authorized and
directed, for and on behalf of the Company, to execute and deliver all such
documents and to do all such acts and things as he or she may determine to
be necessary or desirable in order to carry out the foregoing provisions of
this resolution, the execution of any such document or the doing of any such
acts and things being conclusive evidence of such determination.
C-1
SCHEDULE "D"
CORPORATE GOVERNANCE
DOES THE
COMPANY
TSE CORPORATE GOVERNANCE GUIDELINE COMPLY? COMMENTS
---------------------------------- -------- --------
1. The Board should explicitly assume
responsibility for the stewardship of the
Company, and specifically for:
(i) adoption of a strategic planning Yes (i) one Board meeting per year is
process set aside for a review of
management's strategic
direction, guidelines and plans
(ii) identification of principal Yes (ii) the Board has specifically
risks of the Company's business identified the Company's
and ensuring the implementation principal risks and manages
of appropriate systems to manage these risks through regular
these risks appraisal of management's
practices
(iii) succession planning, including Yes (iii) the Board reviews its
appointing, training and organization structure and
monitoring of senior management succession planning matters at
least annually
(iv) communications policy Yes (iv) the Board has approved and
reserves the right to review and
approve amendments to the
Company's policies relating to
communications between the
Company, it's shareholders and
the public. In furtherance of
this responsibility the Board is
obliged to approve any public
information releases of a
material nature
D-1
DOES THE
COMPANY
TSE CORPORATE GOVERNANCE GUIDELINE COMPLY? COMMENTS
---------------------------------- -------- --------
(v) the integrity of the Company's Yes (v) the Board, through the
internal control and management appointment of various
information systems committees, or through the
review and approval of the plans
of various committees of
management has assured itself of
an effective means of monitoring
the integrity of the Company's
system of internal control. Each
of the following committees is
responsible for periodically
reporting to the Board on the
noted areas:
- Audit Committee (held eight
meetings during fiscal 2001):
compliance of all financial
reporting with accounting
principles and oversight of
all financial plans
- Compensation Committee (held
seven meetings during fiscal
2001): fixing the remuneration
for the Chief Executive
Officers and other senior
executives who report to the
Chief Executive Officer, and
administration of the
Company's stock option plans
2. Majority of Directors to be "unrelated" Yes Mr. Winston (President and CEO) is the
only related Director
3. Disclosure for each Director Yes Related--Charles D. Winston, President
whether related or unrelated and and CEO of the Company
the basis of the conclusion For the remainder of the proposed
Directors none of them or their
associates have:
-- worked for the Company
-- material contracts with the
Company
-- received remuneration from the
Company in excess of Director
fees
Black Unrelated
Ferrari Unrelated
Griffiths Unrelated
Pond Unrelated
Virgillio Unrelated
D-2
DOES THE
COMPANY
TSE CORPORATE GOVERNANCE GUIDELINE COMPLY? COMMENTS
---------------------------------- -------- --------
4. a) Appoint a Committee of the Board Currently, the Board has responsibility
responsible for appointment/ for nominating new directors
assessment of Directors
b) Composed exclusively of non-
management Directors the
majority of whom are unrelated
5. Implement a process for assessing the Yes Currently, the Board monitors the
effectiveness of the Board, its effectiveness of the relationship
committees and individual directors between management and the Board, the
effectiveness of Board operations, the
operations of Board committees and that
of individual directors, to recommend
improvements to each of the above
6. Provide orientation and education Yes Currently, the Board is responsible for
programs for new Directors the orientation and education of new
Directors
7. Review and where appropriate, to reduce, Yes Board membership is set at six (6) which
the size of the Board to promote more is considered optimum
effective decision making
8. Review and ensure that the compensation Yes The Board ensures director compensation
of Directors reflects the levels are sufficiently reflective of
responsibilities and risks involved responsibilities and risks involved
9. Committees of the Board should generally Yes All Board committees are composed
be composed of outside Directors who are entirely of outside Directors
unrelated
10. Assign responsibility for the Board's Currently, the Company does not have a
approach to governance issues to a Corporate Governance Committee, but
committee of the Board regularly reviews matters pertaining to
governance including committee
membership and mandates, making
recommendations for change and for other
such initiatives which may be deemed in
the interest of the Board in order to
improve corporate governance
D-3
DOES THE
COMPANY
TSE CORPORATE GOVERNANCE GUIDELINE COMPLY? COMMENTS
---------------------------------- -------- --------
11. Define limits to management's The Board reviews and approves
responsibilities by developing mandates significant operational and financial
for: matters and provides direction to
a) the Board Yes management on these matters
b) the CEO, and approving the CEO's Yes The CEO's mandate, which includes the
corporate objectives general mandate to maximize shareholder
value is established year to year in the
form of the annual corporate objectives
and strategic directions which are
subject to Board approval
12. Ensure the Board is able to function Yes Five of six Board members are outside
independently of management Directors and all Board committees are
composed entirely of outside Directors
13. a) Establish an Audit Committee Yes The Company's Audit Committee is
with a specifically defined mandated to:
mandate
-- monitor audit functions and the
preparation of financial
statements
-- approve press releases on
financial results
-- review annual information
circulars as well as any
material change reports and
prospectuses
-- meet with outside auditors
independent of management where
appropriate
-- review and approve foreign
currency risk strategies and the
Company's investment policy
b) All members of the Audit Yes
Committee are outside Directors
14. Provide for the engagement of outside Yes Individual Directors may engage the
advisors by individual Directors at the services of an outside advisor with the
Company's expense approval of the Board
D-4
GSI LUMONICS INC.
PROXY FOR THE ANNUAL AND SPECIAL MEETING TO BE HELD ON MAY 9, 2002
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT OF THE CORPORATION
The undersigned shareholder of GSI Lumonics Inc. (the "Corporation") hereby
appoints Charles D. Winston or failing him, Thomas R. Swain, or instead of them
_________________________ as proxy of the undersigned with the power of
substitution to attend and vote for and on behalf of the undersigned at the
Annual and Special Meeting of the Shareholders of the Corporation to be held on
Thursday, May 9, 2002 and at any adjournment or adjournments thereof, in the
same manner, to the same extent and with the same powers as if the undersigned
were present at the said meeting or any adjournment or adjournments thereof and
without limiting the general authorization and power hereby granted, the persons
named above are specifically directed to vote as follows:
1. VOTE FOR / / AGAINST / / or ABSTAIN / /
(IF NO SPECIFICATION IS MADE, VOTE FOR) the resolution, if proposed at the
Meeting, permitting two or more director nominees to be elected by a single
resolution and vote as opposed to electing each director nominee by way of
separate resolution and vote.
2. ELECTION OF DIRECTORS LISTED IN THE ACCOMPANYING MANAGEMENT PROXY CIRCULAR.
The undersigned casts the number of votes equal to the number of common
shares held by the undersigned multiplied by 6: The distribution of votes
among the nominees is as indicated below. A vote in favor of the election
of more than one nominee without an indication as to how the votes are to
be distributed among the nominees shall mean that the votes are to be
distributed equally among all nominees voted for by the undersigned. IF NO
SPECIFICATION IS MADE FOR ANY NOMINEE, IT SHALL MEAN THAT THE PROXY
NOMINEES ARE INSTRUCTED TO VOTE FOR ALL OF THE FOLLOWING NOMINEES WITH THE
VOTES DISTRIBUTED EQUALLY AMONG ALL NOMINEES.
NOMINEE VOTE
Richard B. Black __________ FOR __________ WITHHOLD
Paul F. Ferrari __________ FOR __________ WITHHOLD
Phillip A. Griffiths, Ph.D. __________ FOR __________ WITHHOLD
Byron O. Pond __________ FOR __________ WITHHOLD
Benjamin J. Virgilio __________ FOR __________ WITHHOLD
Charles D. Winston __________ FOR __________ WITHHOLD
3. APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS AND AUTHORIZING THE BOARD OF
DIRECTORS TO FIX THEIR REMUNERATION.
/ / VOTE FOR / / VOTE AGAINST / / ABSTAIN
4. RESOLUTION NO. 1 - PROPOSAL TO AMEND THE CORPORATION'S ARTICLES OF
CONTINUANCE TO INCREASE THE SHARE OWNERSHIP REQUIREMENT NECESSARY FOR
SUBMITTING SHAREHOLDER PROPOSALS NOMINATING PERSONS FOR ELECTION TO THE
CORPORATION'S BOARD OF DIRECTORS.
/ / VOTE FOR / / VOTE AGAINST / / ABSTAIN
5. RESOLUTION NO. 2 - PROPOSAL TO RATIFY THE CONTINUED EXISTENCE OF THE
SHAREHOLDER RIGHTS PLAN.
/ / VOTE FOR / / VOTE AGAINST / / ABSTAIN
6. RESOLUTION NO. 3 - AMENDMENT TO 1995 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE PLAN BY 2,000,000.
/ / VOTE FOR / / VOTE AGAINST / / ABSTAIN
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If the officers named in this proxy are appointed
by the undersigned and no direction is made, such officers will vote in favor of
the resolution.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE. If not dated, this proxy is deemed to bear the date on which it is
mailed by the person making the solicitation.
Dated the ________ day of _________________________, 2002.
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(Signature of Shareholder)
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(Signature if held jointly)
NOTES:
1. This proxy confers authority for the above named to vote in their
discretion with respect to amendments or variations to the matters
identified in the notice of the meeting accompanying this proxy or other
matters which may properly come before the meeting.
2. Each shareholder has the right to appoint a person to represent such
shareholder at the meeting other than the persons specified above. Such
right may be exercised by inserting in the blank space provided the name of
the person to be appointed who need not be a shareholder of the
Corporation.
3. This proxy is not valid unless signed and dated. Where shares are held
jointly, tenants both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If the
shareholder is a corporation, this proxy must be executed by an authorized
person under corporate seal. If a partnership, please sign in partnership
name by authorized person.
(C)March 2002, GSI Lumonics Inc.
GSI Lumonics is a registered trademark
Printed in Canada, Item # 342