UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
[ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
IMAX Corporation
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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.
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[ ] 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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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
Imax Corporation
2525 Speakman Drive
Mississauga, Ontario L5K 1B1
[IMAX LOGO]
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notice of annual meeting of shareholders
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of
shareholders of IMAX CORPORATION (the "Corporation") will be held at the Famous
Players IMAX(R) Theatre at Paramount Festival Hall, 259 Richmond Street, West,
Toronto, Ontario, on Wednesday, June 5, 2002 at 10:30 a.m., for the purposes of:
(1) receiving the consolidated financial statements for the year ended
December 31, 2001, together with the auditors' report thereon;
(2) electing directors;
(3) appointing auditors and authorizing the directors to fix the
auditors' remuneration; and
(4) transacting such other business as may properly be brought before
the Meeting or any adjournments thereof.
By Order of the Board,
[SIGNATURE]
G. MARY RUBY
Senior Vice President, Legal Affairs
and Corporate Secretary
Mississauga, Ontario
April 30, 2002
SHAREHOLDERS WHO ARE UNABLE TO BE PRESENT AT THE MEETING ARE REQUESTED TO
COMPLETE AND RETURN THE ENCLOSED FORM OF PROXY IN THE ENVELOPE PROVIDED FOR THAT
PURPOSE. PROXIES MUST BE DEPOSITED WITH COMPUTERSHARE TRUST COMPANY OF CANADA,
C/O STOCK AND BOND TRANSFER DEPT., 100 UNIVERSITY AVENUE, TORONTO, ONTARIO, M5J
2Y1 OR AT THE CORPORATE OFFICE OF THE CORPORATION NOTED ABOVE ON OR BEFORE 4:30
P.M. (EASTERN DAYLIGHT SAVING TIME) ON JUNE 4, 2002.
Imax Corporation
[IMAX LOGO]
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MANAGEMENT PROXY CIRCULAR AND PROXY STATEMENT
April 30, 2002
solicitation of proxies by management
THIS MANAGEMENT PROXY CIRCULAR AND PROXY STATEMENT IS FURNISHED IN CONNECTION
WITH THE SOLICITATION BY THE MANAGEMENT OF IMAX CORPORATION (THE "CORPORATION")
OF PROXIES TO BE USED AT THE ANNUAL MEETING OF SHAREHOLDERS (THE "MEETING") OF
SHAREHOLDERS OF THE CORPORATION TO BE HELD ON WEDNESDAY, JUNE 5, 2002 AT THE
FAMOUS PLAYERS IMAX(R) THEATRE AT PARAMOUNT FESTIVAL HALL, 259 RICHMOND STREET,
WEST, TORONTO, ONTARIO, AT 10:30 A.M., AND AT ANY ADJOURNMENTS THEREOF FOR THE
PURPOSES SET FORTH IN THE ACCOMPANYING NOTICE OF ANNUAL MEETING. While
management intends to solicit most proxies by mail, some proxies may be
solicited by telephone or other personal contact by directors or officers of the
Corporation. The cost of solicitation will be borne by the Corporation.
appointment, delivery and revocation of proxies
The persons named in the accompanying form of proxy are directors and officers
of the Corporation. A shareholder has the right to appoint a person, who need
not be a shareholder of the Corporation, other than the persons designated as
proxyholders in the accompanying form of proxy, to attend and act on behalf of
the shareholder at the Meeting. To exercise this right, a shareholder may either
insert such other person's name in the blank space provided in the accompanying
form of proxy, or complete another appropriate form of proxy.
To be valid, a proxy must be dated and signed by the shareholder or his
attorney authorized in writing. The proxy, to be acted upon, must be deposited
with the Corporation c/o its transfer agent, Computershare Trust Company of
Canada, c/o Stock & Bond Transfer Dept., 100 University Avenue, Toronto,
Ontario, M5J 2Y1, by 4:30 p.m., Eastern Daylight Saving Time, on Tuesday, June
4, 2002 or 4:30 p.m. on the last business day prior to the date of any
adjournment of the Meeting, or with the chairman of the Meeting on the day of
the Meeting or any adjournment of the Meeting prior to the commencement of the
Meeting or the adjournment, as the case may be.
A shareholder who has given a proxy may revoke it by depositing an
instrument in writing (including another proxy) executed by the shareholder or
his attorney authorized in writing at the registered office of the Corporation
at any time up to and including 4:30 p.m., Toronto time, on the last business
day prior to the day of the Meeting or any adjournment thereof, or with the
chairman of the Meeting on the day of the Meeting or at any adjournment thereof
at any time before it is exercised on any particular matter or in any other
manner permitted by law including attending the Meeting in person.
voting by proxy
On any ballot that may be called for regarding the matters listed in the Notice
of Meeting and in the form of proxy, the common shares represented by the
enclosed form of proxy will be voted or withheld from voting in accordance with
the instructions of the shareholder indicated thereon by marking an "X" in the
boxes provided for the purpose on the form of proxy. IN THE ABSENCE OF SUCH
INSTRUCTIONS THE SHARES WILL BE VOTED FOR, IN EACH CASE, AS REFERRED TO IN THIS
MANAGEMENT PROXY CIRCULAR AND PROXY STATEMENT.
Unless otherwise indicated, all references in this document to dollar amounts
are to U.S. dollars.
1
The person appointed as proxy has discretionary authority and may vote the
shares represented thereby as such person considers best with respect to
amendments or variations to matters identified in the Notice of Meeting, and
with respect to any other matter which may properly come before the Meeting. As
of the date of this management proxy circular and proxy statement, management of
the Corporation is not aware of any such amendment, variation or other matter
proposed or likely to come before the Meeting. However, if any such amendment,
variation or other matter properly comes before the Meeting, it is the intention
of the persons named in the enclosed form of proxy to vote on such other
business in accordance with their judgement.
voting shares and principal holders
The Board of Directors has fixed April 26, 2002 as the record date for the
Meeting. Accordingly, each holder of common shares of record on that date is
entitled to one vote for each common share shown as registered in the
shareholder's name on the list of shareholders prepared as of April 26, 2002. In
the event of any transfer of common shares by any such shareholder after such
date, the transferee is entitled to vote those shares if he or she produces
properly endorsed share certificates or otherwise establishes that he or she
owns the shares, and requests Computershare Trust Company of Canada at its
office noted above to include the transferee's name in the shareholders' list
not later than ten days before the Meeting.
On April 26, 2002, the Corporation had 32,915,858, common shares issued and
outstanding, each carrying the right to one vote at all meetings of the
shareholders of the Corporation.
To the knowledge of the directors and officers of the Corporation, the only
persons who beneficially own or exercise control or direction over shares
carrying more than 10% of the votes attached to all the shares of the
Corporation entitled to be voted at the Meeting are as follows:
Percentage of
Number of Outstanding
Name of Shareholder Common Shares Common Shares
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Wasserstein Perella Group: 10,195,384(1) 31%
Wasserstein Perella Partners, L.P.
Wasserstein Perella Offshore Partners, L.P.
WPPN, Inc.
Michael J Biondi as Voting Trustee
Wasserstein Capital, L.P.
(collectively, the Wasserstein Perella Group is referred
to in this circular as "Wasserstein Perella" or "WP")
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(1) Based on information contained in a Schedule 13G/A dated February 14, 2002
filed by Wasserstein Management Partners L.P., 1301 Avenue of the Americas,
New York, New York and information provided directly to the Corporation by
Wasserstein & Co., L.P. on March 12, 2002.
election of directors
The Board of Directors of the Corporation is comprised of three classes, each
elected for a three-year term. The Board of Directors is currently composed of
Kenneth G. Copland, J. Trevor Eyton, Richard L. Gelfond, Garth M. Girvan, Ellis
B. Jones, G. Edmund King, Murray B. Koffler, Sam Reisman, Marc A. Utay, Bradley
J. Wechsler and W. Townsend Ziebold. At the Meeting, the term of the Class II
directors expires. The term of the Class I directors expires at the annual
shareholders' meeting in 2003 and the term of the Class III directors expires at
the annual shareholders' meeting in 2004.
In February 1999, the Corporation, Wasserstein Perella, Richard L. Gelfond
and Bradley J. Wechsler entered into a Second Amended and Restated Shareholders'
Agreement (see description of this agreement under "interest of management in
certain transactions -- Shareholders' Agreement" below). Under this agreement,
each of Wasserstein Perella and Messrs. Gelfond and Wechsler agreed that they
are to be entitled, but not required, to designate certain individuals to be
nominated for election by the shareholders as directors of the Corporation.
2
Wasserstein Perella and Messrs. Gelfond and Wechsler also agreed to use their
best efforts to cause each of the individuals designated by the other party to
be elected as a director of the Corporation.
The individuals noted below are nominated for election to the Board of
Directors of the Corporation in Class II.
nominees for election
The following table lists certain information concerning the persons proposed to
be nominated for election as directors and the directors whose terms continue
after the Meeting. The information as to common shares has been furnished by the
respective individuals.
Nominees for election as Class II directors Current position
for the term expiring in 2005 with the Corporation Common Shares
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Kenneth G. Copland, Toronto, Ontario. Director 10,000
Mr. Copland is the Chairman of KGC Ltd. Mr. Copland was the
Vice-Chairman of BMO Nesbitt Burns Inc. from 1994 to May
2001. Mr. Copland is Chairman of Humber College Foundation
and HC Educational Ventures Limited. Mr. Copland is a
director of the Investment Dealers Association of Canada.
Mr. Copland has been a director of the Corporation since
June 1999 and is a Canadian citizen.
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*+- Garth M. Girvan, Toronto, Ontario. Director 25,898
Mr. Girvan is a partner of McCarthy Tetrault, Toronto,
Ontario, barristers and solicitors, Canadian counsel to the
Corporation. Mr. Girvan has been a director of the
Corporation since 1994 and serves as Chairman of the Audit
and Compensation Committees of the Corporation and is a
Canadian citizen.
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+ Murray B. Koffler, O.C., O.Ont., Toronto, Ontario. Director 4,200
Mr. Koffler founded Shoppers Drug Mart in 1968 and presently
serves as its Honorary Chairman. Mr. Koffler co-founded Four
Seasons Hotels Limited and presently serves as a director.
Since 1988, Mr. Koffler has been Chairman of the
International Board of Directors of the Weizmann Institute
of Science in Israel. Mr. Koffler holds numerous other
directorships. Mr. Koffler is an Officer of the Order of
Canada. Mr. Koffler has been a director of the Corporation
since May 1996 and is a Canadian citizen.
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- Marc A. Utay, New York, New York. Director 240,000
Mr. Utay has been a Managing Member of Clarion Capital
Partners since November 1999; prior to joining Clarion, Mr.
Utay was a Managing Director of Wasserstein Perella & Co.
Inc. and a member of Wasserstein Perella's Policy Committee.
Mr. Utay was co-head of Wasserstein Perella's Leveraged
Finance, Retailing and Media, Telecommunication and
Entertainment groups. Prior to his joining Wasserstein
Perella, Mr. Utay was Managing Director at Bankers Trust
Company where he specialized in leveraged finance and
mergers and acquisitions. Mr. Utay is a director of P & F
Industries, Inc. and FONS Corp. Mr. Utay has been a director
of the Corporation since May 1996 and serves as Chairman of
the Option Committee of the Corporation.
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Directors who continue in office after the Meeting Expiry of Term of Office Common Shares
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The Honourable J. Trevor Eyton, O.C., Cheltenham, Ontario. 2003 Nil
Senator Eyton is a senior director of Brascan Corporation,
and prior to May 2000 was a senior officer of Brascan
Corporation in various capacities dating back to 1979.
Senator Eyton is also a director of Noranda Inc., Coca-Cola
Enterprises, General Motors of Canada, Limited and Ivernia
West Inc., as well as a member of the Advisory Board of
Nestle Canada Ltd. Senator Eyton has been a member of the
Senate of Canada since September 1990 and is an Officer of
the Order of Canada. Senator Eyton has been a director of
the Corporation since June 1999 and is a Canadian citizen.
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3
Directors who continue in office after the Meeting Expiry of Term of Office Common Shares
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O Richard L. Gelfond, New York, New York. 2004 1,532,900
Mr. Gelfond has been Co-Chairman of the Corporation since
June 1999 and Co-Chief Executive Officer since May 1996.
From March 1994 to June 1999 Mr. Gelfond served as Vice
Chairman of the Corporation. In addition, Mr. Gelfond serves
on the board of Mainframe Entertainment, Inc. and several
private and philanthropic entities. Mr. Gelfond has been a
director of the Corporation since March 1994.
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Ellis B. Jones, Los Angeles, California. 2004 Nil
Mr. Jones has been the Chief Executive Officer of
Wasserstein & Co., L.P., a merchant banking and venture
capital firm since January, 2001. Prior to that Mr. Jones
was a Managing Director in charge of merchant banking at
Wasserstein Perella & Co., Inc. Mr. Jones serves as a
director for a number of privately held companies. Mr. Ellis
has been a director of the Corporation since June 2001.
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* G. Edmund King, Toronto, Ontario. 2003 Nil
Mr. King has been Deputy Chairman and a director of
McCarvill Corporation since January, 1996. Mr. King is also
a director of Falconbridge Ltd. and Afton Food Group Ltd.
From June 1994 to January 1998 Mr. King was Chairman of WIC
Western International Communications. Mr. King has been a
director of the Corporation since June 1999 and is a
Canadian citizen.
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Sam Reisman, Toronto, Ontario. 2003 81,000
Mr. Reisman has been the principal shareholder, Chairman and
Chief Executive Officer of The Rose Corporation, a real
estate finance and investment company which was previously a
real estate development company, since September 1986. Mr.
Reisman is currently the principal shareholder of Hayden
Industrial Products of Corona, California, formerly a
division of The Equion Corporation. Mr. Reisman has been a
director of the Corporation since June 1999 and is a
Canadian citizen.
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* Bradley J. Wechsler, New York, New York. 2004 1,407,800
Mr. Wechsler has been Chairman or Co-Chairman of the
Corporation since March 1994 and Co-Chief Executive Officer
with Mr. Gelfond since May 1996. Mr. Wechsler serves on the
boards of Mainframe Entertainment, Inc., NYU Hospital, the
Kernochan Center for Law, Media and the Arts, and the
American Museum of the Moving Image. Mr. Wechsler has been a
director of the Corporation in March 1994.
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+O W. Townsend Ziebold, New York, New York. 2003 Nil
Mr. Ziebold is currently President of the Venture Capital
Practice of Wasserstein & Co., L.P., formerly the private
equity arm of Wasserstein Perella Group Inc. Previously, Mr.
Ziebold was a Managing Director of Wasserstein Perella &
Co., Inc. and head of its Venture Capital Practice. Mr.
Ziebold was a director of Maybelline, Inc. and Collins &
Aikman Corporation and currently serves on several private
company boards in the media, entertainment and Internet
industries. Mr. Ziebold has been the Non-Executive Chairman
of the Board since June 2001 and has been a director of the
Corporation since June 1999.
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* Member, Audit Committee of the Corporation
+ Member, Compensation Committee of the Corporation
O Member, Nominating Committee of the Corporation
- Member, Option Committee of the Corporation
THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY INTEND TO VOTE FOR THE
ELECTION OF THE NOMINEES WHOSE NAMES ARE SET FORTH ABOVE. IF ANY OF THE ABOVE
NOMINEES IS FOR ANY REASON UNABLE TO SERVE AS A DIRECTOR, PROXIES IN FAVOUR OF
MANAGEMENT WILL BE VOTED FOR ANOTHER NOMINEE IN THEIR DISCRETION UNLESS THE
SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT SUCH SHAREHOLDER'S SHARES ARE TO BE
WITHHELD FROM VOTING ON THE ELECTION OF DIRECTORS.
Management does not anticipate that any of the nominees for election as
directors will be unable to serve as a director, but if that should occur for
any reason prior to the Meeting, the persons named in the enclosed form of proxy
reserve the right to vote for another nominee in their discretion. Each director
elected will hold office until the expiry of the term for which he has been
elected or until his successor is elected or appointed, unless his office is
earlier vacated. Each of Messrs. Gelfond and Wechsler and Wasserstein Perella
intend to vote in favour of the
4
nominees set forth above pursuant to the Shareholders' Agreement (see
description of this agreement under "interest of management in certain
transactions" below).
As contemplated under Section 124(4) of the Canada Business Corporations
Act, the Corporation has acquired insurance coverage with a yearly limit of
$70,000,000 in respect of potential claims against its directors and officers
and in respect of losses for which the Corporation may be required or permitted
by law to indemnify such directors and officers. The insurance, in respect of
which a $179,839 yearly premium was paid by the Corporation, includes a $100,000
deductible for each claim under the policy other than claims made under U.S.
securities law as to which a deductible of $500,000 applies.
DIRECTORS' COMPENSATION
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---
Directors are reimbursed for expenses incurred in attending meetings of the
Board of Directors and Committees of the Board. In addition, members of the
Board of Directors who are not also employees of the Corporation receive Cdn.
$20,000 per year (or may elect to receive options to purchase common shares of
the Corporation in lieu of this payment) plus Cdn. $1,500 for each meeting of
the Board of Directors attended in person and Cdn. $750 for each telephone
meeting of the Board of Directors or meeting of any committee of the Board of
Directors, whether participating in person or by telephone. In addition, each of
the directors who are not also employees of the Corporation are granted options
annually to purchase 8,000 common shares at an exercise price equal to the
market value of the common shares of the Corporation on the date of grant which
vest on the date of grant and expire on the earlier of the date which is two (2)
years after the termination of the Optionee's service as a director of the
Corporation or 7 years after the date of the grant.
5
executive compensation
SUMMARY COMPENSATION TABLE
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---
The following table sets forth, for the periods indicated, the compensation paid
or granted by the Corporation to the individuals who served during 2001 as Chief
Executive Officers and the four most highly compensated executive officers of
the Corporation, other than the Chief Executive Officers, who were serving as
executive officers at December 31, 2001 (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------------------------ -------------------------
Securities
Other Restricted Under
Name and Principal Year Annual Stock Options All Other
Position of Named ended Salary Bonus(1) Compensation(2) Awards Granted Compensation(3)
Executive Officer December 31 ($) ($) ($) ($) (#) ($)
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Richard L. Gelfond 2001 500,000 125,000(4) -- 1,305,000(5) -- 1,898
Co-Chairman and Co-Chief 2000 500,000 -- -- -- 800,000(6) 7,975
Executive Officer 1999 500,000 900,000 -- -- 400,000 8,396
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Bradley J. Wechsler 2001 500,000 125,000(4) -- 1,305,000(5) -- 1,898
Co-Chairman and Co-Chief 2000 500,000 -- -- -- 800,000(6) 7,975
Executive Officer 1999 500,000 900,000 -- -- 400,000 8,243
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Greg Foster 2001 286,057 150,000 25,000 -- 75,000(7) 176
President, 2000 -- -- -- -- -- --
Filmed Entertainment 1999 -- -- -- -- -- --
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Andrew Gellis 2001 290,000 50,000 60,000(8) -- -- 3,760
Senior Vice President, 2000 275,000 50,000 60,000(8) -- 25,000(9) 7,975
Film 1999 250,000 65,000 50,000(8) -- -- 8,396
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Richard L. Intrator 2001 371,634 150,000 -- -- -- 3,899
Executive Vice President 2000 305,254 130,685 -- -- 300,000(10) 270
and 1999 -- -- -- -- -- --
President, IMAX
Enterprises
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David B. Keighley 2001 251,559 122,853 -- -- 50,000 3,759
Senior Vice President and 2000 239,580 288,421 -- -- 15,000 8,119
President, David Keighley 1999 228,257 573,000 -- -- 15,000 8,639
Productions 70MM Inc.
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(1) These amounts are paid under annual incentive arrangements that the
Corporation has with each of the Named Executive Officers, as detailed
under "Employment Contracts".
(2) The value of perquisites and other personal benefits for each Named
Executive Officer does not exceed the lesser of $50,000 and 10% of his
annual salary and bonus.
(3) These amounts reflect (i) the payment by the Corporation of life insurance
premiums on the lives of the Named Executive Officers, and (ii)
contributions to the Corporation's defined contribution pension plans.
(4) In addition, in 2002, with respect of the bonus for 2001, the Named
Executive Officer received a grant of 100,000 options to purchase common
shares in accordance with the Stock Option Plan.
(5) This amount represents the value of 500,000 common shares, which were
issued to the Named Executive Officer pursuant to his employment agreement
dated April 3, 2001, of which 325,000 common shares were issued in
exchange for the surrender by the Named Executive Officer of 1,300,000
previously granted options, as detailed under "Employment Agreements".
(6) These options, together with 500,000 other options were surrendered to the
Corporation by the Named Executive Officer on April 13, 2001.
(7) These options were granted in accordance with the Named Executive
Officer's employment agreement as detailed under "Employment Contracts".
(8) This amount was paid on account of certain script writing services
provided by the Named Executive Officer.
(9) 20,000 of these options were cancelled in accordance with the Stock Option
Plan following the termination of the Named Executive Officer's
employment.
(10) These options were cancelled in accordance with the Stock Option Plan
following the termination of the Named Executive Officer's employment.
6
OPTIONS GRANTED
--------------------
---
The Corporation has a Stock Option Plan under which the Corporation may grant
options to officers, employees, consultants and eligible directors
("Participants") to purchase common shares on terms that may be determined,
within the limitations of the Stock Option Plan. The aggregate number of common
shares that remain reserved for issuance under the Stock Option Plan is
8,340,798 common shares as at December 31, 2001. Options to purchase 4,609,086
common shares have been granted and are outstanding under the Stock Option Plan
as at December 31, 2001. In 2001, 4,857,114 options were cancelled by or
forfeited to the Corporation. The Corporation expects to retire and/or cancel
additional options in the next twelve to eighteen months. The exercise price for
options issued under the Stock Option Plan is not to be less than the market
price of the common shares on the date of grant. An option will be exercisable
for a maximum period of 10 years from the date of grant, subject to earlier
termination if the Participant's employment, consulting arrangement or term of
office with the Corporation terminates. The Board of Directors determines
vesting requirements. If a Participant's employment, consulting arrangement or
term of office with the Corporation terminates for any reason, any options which
have not vested will be surrendered for cancellation without any consideration
being paid therefor. If the Participant's employment, consulting arrangement or
term of office is terminated without cause or by reason of such Participant's
resignation, death or permanent disability, the Participant (or the
Participant's estate) will generally be entitled to exercise the Participant's
vested options for a period thereafter. If the Participant's employment,
consulting arrangement or term of office is terminated for cause, such
Participant's vested options will be surrendered for cancellation without any
consideration being paid therefor. If the Participant is a party to an
employment agreement with the Corporation or any of its subsidiaries and
breaches any of the restrictive covenants in such agreement, such Participant
will be required to surrender all unexercised options for cancellation without
any consideration being paid therefor and will be obligated to pay to the
Corporation an amount equal to the aggregate profit realized by such Participant
with respect to any prior option exercises.
The following table sets forth information relating to individual grants of
options to purchase common shares of the Corporation to Named Executive Officers
under the Stock Option Plan during the financial year ended December 31, 2001 in
respect of services rendered or to be rendered to the Corporation:
OPTION GRANTS IN FINANCIAL YEAR ENDED DECEMBER 31, 2001
Potential Realizable Value
% of Total at Assumed Annual Rates
Options of Stock Price Appreciation
Securities Granted to for Option Term
Under Options Participants In ---------------------------
Granted Financial Year Exercise Price Expiration 5% 10%
Name (#) (%) ($/Common Share) Date ($) ($)
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Richard L. Gelfond Nil -- n/a n/a -- --
Bradley J. Wechsler Nil -- n/a n/a -- --
Greg Foster (1) 75,000 5.37 3.41 19-Mar-11 Nil 137,202
Andrew Gellis Nil -- n/a n/a -- --
Richard Intrator Nil -- n/a n/a -- --
David B. Keighley (2) 50,000 3.58 3.04 16-Apr-08 Nil 44,820
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(1) These options were granted pursuant to the Named Executive Officer's
employment agreement and entitle the Named Executive Officer to purchase one
common share for each option. The market value of the common shares
underlying the options was equal to the exercise price on the date of the
grant. These options vested on March 19, 2002 pursuant to such employment
agreement.
(2) These options entitle the Named Executive Officer to purchase one common
share for each option. The market value of the common shares underlying the
options was equal to the exercise price on the date of the grant. 8,333 of
these options vested on April 16, 2002, 16,667 vest on April 16, 2003,
16,667 vest on April 16, 2004 and 8,333 vest on April 16, 2005.
7
AGGREGATED OPTION EXERCISED DURING THE FINANCIAL YEAR
ENDED DECEMBER 31, 2001 AND FINANCIAL YEAR-END OPTION VALUES
Value of
Unexercised
Unexercised in-the-money
Options at Options at
Securities Aggregate Financial Year-End Financial Year-end
Acquired Value Exercisable/ Exercisable/
On Exercise Realized Unexercisable Unexercisable(1)
Name (#) ($) (#) ($)
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Richard L. Gelfond Nil Nil 438,000/Nil Nil/Nil
Bradley J. Wechsler Nil Nil 438,000/Nil Nil/Nil
Greg Foster Nil Nil Nil/75,000 Nil/Nil
Andrew Gellis Nil Nil 64,500/Nil Nil/Nil
Richard Intrator Nil Nil 100,000/Nil Nil/Nil
David B. Keighley Nil Nil 80,500/80,000 Nil/Nil
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(1) Calculated based on the December 31, 2001 closing price of the common shares
on Nasdaq of $2.02.
PENSION PLANS
-----------------
---
The Corporation maintains defined contribution employee pension plans for its
employees, including its executive officers. The Corporation makes contributions
to these plans on behalf of employees in an amount equal to 5% of their base
salary subject to certain prescribed maximums. During the financial year ended
December 31, 2001, the Corporation contributed an aggregate of $13,416 to the
Corporation's defined contribution employee pension plan qualified under Section
401(k) of the U.S. Internal Revenue Code on behalf of Messrs. Gelfond, Wechsler,
Foster, Gellis, Intrator and Keighley. The Corporation also maintains a defined
benefit pension plan covering its two Chief Executive Officers, which was
established on July 12, 2000 and is more fully described in Note 20 to the
Corporation's Consolidated Financial Statements filed in its Annual Report on
Form 10-K for the year ended December 31, 2001.
EMPLOYMENT CONTRACTS
----------------------------
---
On November 3, 1998 the Corporation entered into renewal employment agreements
(the "1998 Agreements") with each of Messrs. Gelfond and Wechsler ("the
Executives") with effect from July 1, 1998 for a three-year term. The 1998
Agreements provide that each of the Executives will receive a salary of $500,000
in each year of the term. These agreements also provide that each of the
Executives will receive a bonus for each of 1998, 1999, 2000 and the period
January 1, 2001 to June 30, 2001 of $605,000, $500,000, $500,000 and $250,000
adjusted by a multiple of zero to two times, tied to the performance of the
Corporation and certain qualitative and quantitative measures determined by the
Compensation Committee of the Board of Directors. In 1999, each Executive was
also paid $485,625 upon exercising their right to receive an amount equal to the
fair market value of 15,000 common shares of the Corporation which is equal to
the number of synthetic restricted shares ("phantom stock") which were
originally to be granted on January 1, 1998 and were later reduced pursuant to
the renewal employment agreement. Pursuant to the 1998 Agreements, the
Executives were each granted 400,000 options to purchase common shares in
accordance with the Stock Option Plan on October 15, 1999, which options expire
on October 15, 2009.
Under the 1998 Agreements, each of the Executives is to perform such
services with respect to the Corporation's business as may be reasonably
requested from time to time by the Board of Directors and which are consistent
with his position as Co-Chief Executive Officer. In addition, the Corporation is
to use its best efforts to cause the Executives to be elected to the Board of
Directors. In addition, a provision contained in their original employment
agreements, dated March 1, 1994, was continued, whereby each of the Executives
is also entitled to receive, upon a sale of the Corporation or the exercise
after March 1, 1999 by the Executives of their rights to require the Corporation
to take action to liquidate their common shares under a shareholders' agreement
among Wasserstein Perella Partners, L.P., Mr. Gelfond, Mr. Wechsler and certain
other investors dated as of June 16, 1994, a cash bonus in an amount equal to
the product of (a) 0.375% and (b) the amount by which the sale or liquidation
transaction imputes an equity value in excess of Cdn. $150,000,000 to the common
shares originally issued by the Corporation (on a fully diluted basis but
excluding the common shares issued upon the conversion of
8
the Class B convertible preferred shares of the Corporation formerly outstanding
which were converted into common shares on June 16, 1994 and the common shares
issuable upon the exercise of warrants owned by each of Messrs. Gelfond and
Wechsler). Under the 1998 Agreements, the Corporation is to equalize the
Executives to the taxes which each of the Executives would have paid had he
earned his employment compensation and paid taxes thereon solely in the United
States. The employment agreements also contain non-competition provisions.
On July 12, 2000, the Corporation entered into amendments to the employment
agreements of the Executives (the "Amended Agreements"). Under the Amended
Agreements, the last year of the Executives' employment term under the 1998
Agreements was cancelled, and the Executives' employment terms were extended for
three (3) additional years, with the new term running from July 12, 2000 through
June 30, 2003, with the same cash compensation as had been agreed to in the 1998
Agreements. Because no change of control of the Corporation was effected by the
end of 2000, however, the extension of the Executives' employment terms was
nullified, and the term of the 1998 Agreement was reinstated. Pursuant to the
Amended Agreements, the Executives were each granted 800,000 options to purchase
common shares in accordance with the Stock Option Plan, which options expire on
July 12, 2010, as well as 180,000 restricted shares which, in the event that
regulatory or shareholder approval is not obtained, are deemed phantom stock.
The options and restricted shares, or phantom stock equivalent, became fully
vested on June 30, 2001. Under the Amended Agreements, the Corporation agreed to
create a defined benefit plan, described in Note 20 to the Corporation's
Consolidated Financial Statements filed in its Annual Report on Form 10-K for
the year ended December 31, 2001, to provide retirement benefits for the
Executives. The Amended Agreements further provide for the extension of the
Executives' non-competition covenants to four (4) years beyond termination of
employment and for the agreement by the Executives to consult with the
Corporation for three (3) years following the end of their employment with the
Corporation.
On April 3, 2001, the Corporation entered into amendments to the employment
agreements of the Executives (the "2001 Amendments"). Under the 2001 Amendments,
the Executives' employment terms were each extended for one (1) additional year,
with the new term running through June 30, 2002. The 2001 Amendments also
provide that each of the Executives can receive a bonus for 2001 and the period
December 31, 2001 through June 30, 2002 of $500,000 and $250,000, respectively,
adjusted by a multiple of zero to two times, tied to the performance of the
Corporation and certain qualitative and quantitative measures determined by the
Board of Directors. Pursuant to the 2001 Amendments, each of the Executives
received restricted stock grants of 500,000 common shares, 325,000 of which were
granted in exchange for the surrender by each of the Executives of 1,300,000
previously granted options on April 3, 2001. The restrictive covenants,
including non-competition provisions, of the Executives' existing employment
agreements, as well as other provisions not modified by the 2001 Amendments,
remain in force. The Board of Directors has agreed to renew the Executives'
employment agreement beyond 2001 on terms to be finalized.
The Corporation and Greg Foster entered into an employment agreement on
March 9, 2001. The agreement is for a two-year term. Under this agreement, Mr.
Foster is to receive an annual base salary of $350,000 for the year ended March
9, 2002 and $375,000 for the year ended March 9, 2003. The agreement further
provides that Mr. Foster is entitled to receive a minimum annual bonus of
$150,000 for the first year of the term and a minimum annual bonus of $175,000
for the second year of the term, as well as a discretionary bonus based on a
percentage of base salary. Pursuant to the agreement, Mr. Foster was granted
75,000 options to purchase common shares in accordance with the Stock Option
Plan on March 19, 2001 and received an additional grant of 75,000 options to
purchase common shares in accordance with the Stock Option Plan on March 9,
2002. Under the agreement, Mr. Foster has given covenants regarding
confidentiality and non-competition. The agreement provides that the employment
of Mr. Foster may be terminated at any time for cause or without cause. If Mr.
Foster's employment is terminated without cause, the Corporation must continue
to pay Mr. Foster his annual base salary and benefits for the greater of the
remainder of his employment term and six months, subject to mitigation by Mr.
Foster.
The Corporation and Mr. Gellis entered into an employment agreement
effective January 1, 1998 under which he was employed as Senior Vice President,
Film of the Corporation. The agreement was for a two-year term. Under this
agreement Mr. Gellis received an annual base salary of $225,000 for 1998 and
$250,000 for 1999 plus an annual performance bonus at a target of 30% of salary,
with a guaranteed minimum annual bonus of $50,000. Mr. Gellis was also entitled
to receive a minimum of $50,000 in each year of the term in respect of script
writing services performed by Mr. Gellis for the Corporation. Mr. Gellis has
given covenants regarding confidentiality and non-competition. On August 17,
2000, the Corporation and Mr. Gellis entered into a letter agreement amending
9
Mr. Gellis' 1998 employment agreement and extending the term of Mr. Gellis'
employment through December 31, 2001. Under the amended agreement, Mr. Gellis
received a base salary of $275,000 for 2000 and a base salary of $290,000 for
2001. The amended agreement also provided that Andrew Gellis Productions, Inc.
f/s/o Andrew Gellis would receive a minimum in each year of the term of $60,000
in connection with writing scripts. Pursuant to the amended agreement, Mr.
Gellis was granted options to purchase 25,000 common shares in accordance with
the Stock Option Plan on September 27, 2000. The amended agreement also provided
that if Mr. Gellis was terminated other than for cause, or in the event that the
agreement was not renewed, he would have one (1) year after such termination to
exercise his options that were vested at the time of such termination. The
restrictive covenants, including non-competition provisions, of Mr. Gellis'
existing employment agreements, as well as other provisions not modified by the
amended agreement, remain in force. Mr. Gellis' employment terminated on
December 31, 2001.
The Corporation entered into an employment agreement with Richard Intrator
dated February 17, 2000, under which Mr. Intrator was employed as President,
IMAX Enterprises/Executive Vice President, IMAX Ltd. The agreement had a
three-year term and provided for an annual base salary to Mr. Intrator of
$350,000 for the year ended February 17, 2001, and annual increases of $25,000
in each of the following two years. The agreement further provided that Mr.
Intrator was entitled to receive a minimum annual bonus of $150,000, as well as
a discretionary bonus based on a percentage of base salary. The agreement
provided that the employment of Mr. Intrator may be terminated at any time for
cause. If Mr. Intrator's employment was terminated without cause, the
Corporation must pay Mr. Intrator his base salary, minimum bonus and benefits
for the balance of the term. The agreement contains non-competition and
confidentiality covenants. Mr. Intrator's employment terminated on December 31,
2001. Pursuant to the agreement, Mr. Intrator was granted 300,000 options to
purchase common shares in accordance with the Stock Option Plan on February 17,
2000, which options were cancelled following the termination of Mr. Intrator's
employment. The Corporation will continue to make payments and provide benefits
to Mr. Intrator as provided in the agreement.
The Corporation and David Keighley Productions 70 MM Inc. (formerly David
Keighley Productions and 70MM Inc.) ("DKP/70MM"), a wholly owned subsidiary of
the Corporation, entered into an employment agreement on July 15, 1997. The
agreement is for a five-year term. Under this agreement, Mr. Keighley is to
receive an annual base salary of $212,405 in the year ended July 15, 1998 and
will receive an annual base salary of 105% of the previous year's base salary in
each of the next four years during the term of the agreement. Mr. Keighley is
entitled to receive an annual bonus of one-third of his annual base salary if
DKP/70MM meets its pre-tax profit threshold as provided in the agreement. Mr.
Keighley is also entitled to receive a further profit-based bonus of 10% of any
excess of DKP/70MM audited profit before taxes over DKP/70MM's pre-tax profit
threshold. Under the agreement, Mr. Keighley has given covenants regarding
confidentiality and non-competition. The agreement provides that the employment
of Mr. Keighley may be terminated at any time for cause or without cause. If Mr.
Keighley's employment is terminated without cause, DKP/70MM must continue to pay
Mr. Keighley his annual base salary for the remainder of his employment term,
subject to mitigation by Mr. Keighley.
report on executive compensation
COMPOSITION OF COMPENSATION COMMITTEE
--------------------------------------------------
---
The Board of Directors constituted a Compensation Committee in November 1996.
The members of the Compensation Committee are Messrs. Girvan, Koffler and
Ziebold. As the Compensation Committee did not participate in executive
compensation decisions in respect of 2001, other than the compensation of the
Executives, the compensation of the Corporation's employees was established
through guidelines set by the Board of Directors.
EXECUTIVE COMPENSATION REPORT
--------------------------------------
---
Compensation for all the Corporation's employees, including its Named Executive
Officers, is based on each employee's job responsibilities and on his or her
individual performance over time. The Corporation's executive compensation
program has three principal components: base salary, annual variable incentive
compensation and stock options. The Corporation believes these components
collectively provide a fair and competitive pay package and an appropriate
relationship between an executive's compensation, the executive's performance
and the Corporation's performance.
10
BASE SALARY
--------------
---
A salary range is established for each salaried position in the Corporation,
including each Named Executive Officer position other than the Executives. The
midpoint of each salary range is generally equal to the average salary of
equivalent positions at other comparable companies. Each executive officer's
base salary is determined by reviewing his or her sustained job performance over
time, based on individual performance and performance of the business or staff
unit over which the executive officer exercises responsibility. Business or
staff unit performance is assessed on return on total capital, achievement of
sales or production targets, effectiveness of cost-containment measures,
progress toward implementation of process improvements and other factors
relevant to each executive officer's position. The relative weight attributed to
each factor, with respect to each executive officer, is an inherently subjective
judgement.
ANNUAL INCENTIVE COMPENSATION
--------------------------------------
---
Certain employees of the Corporation, including most of its executive officers
other than the Co-Chief Executive Officers, receive a portion of their annual
compensation in the form of bonuses under the Management Incentive Plan. Bonuses
are awarded under this plan provided annual operating targets are achieved by
the Corporation and provided that personal performance standards are achieved by
the participating employees. An aggregate of $696,064 as been paid to all
employees participating in this plan in respect of 2001.
STOCK OPTIONS
-----------------
---
The Corporation's long-term incentive compensation for executive officers and
other key managers is provided through grants of stock options. The Stock Option
Plan has received shareholder approval and is administered by the Option
Committee of the Board of Directors. The number of stock options granted is
determined by a competitive compensation analysis and is based on each
individual's salary range and responsibility and takes into account the number
and exercise price of options previously granted to individuals. All grants
pursuant to the Stock Option Plan are made with an exercise price equal to the
fair market value of the Corporation's common shares on the date of grant.
During 2001, stock options were granted to certain of the Corporation's
executive officers and other Stock Option Plan participants. Certain Named
Executive Officers received options to purchase common shares of the
Corporation, as detailed in the option grants table above. In determining the
number of shares to include in the Named Executive Officers' grants,
consideration was given to information about stock option grants to executive
officers in comparable companies and the number of shares granted to other
executive officers and the value of those options.
COMPENSATION OF CO-CHIEF EXECUTIVE OFFICERS
-------------------------------------------------------
---
The Compensation Committee of the Board of Directors was constituted in November
1996 to make recommendations to the Board of Directors regarding the
compensation of the Co-Chief Executive Officers of the Corporation, Messrs.
Gelfond and Wechsler.
The foregoing report has been furnished by G.M. Girvan, M.B. Koffler and
W.T. Ziebold, as members of the Compensation Committee and by K.G. Copland, J.T.
Eyton, G.M. Girvan, E.B. Jones, G.E. King, M.B. Koffler, S. Reisman, M.A. Utay
and W.T. Ziebold, as members of the Board of Directors.
April 30, 2002.
11
performance graph
The following graph compares the total cumulative shareholder return for $100
invested in common shares of the Corporation against the cumulative total return
of the Nasdaq Composite Index and The Toronto Stock Exchange (the "TSE") 300
Stock Index from June 10, 1994, the day on which the Corporation became listed
on the Nasdaq National Market, to the end of the most recently completed
financial year.
[PERFORMANCE GRAPH]
--------------------------------------------------------------------------------------------------------------------------
Imax 100 62.96 168.52 229.63 325.93 468.52 405.56 40.74
--------------------------------------------------------------------------------------------------------------------------
Nasdaq 100 103.17 144.35 176.78 216.34 298.60 546.91 336.29
--------------------------------------------------------------------------------------------------------------------------
TSE 300 100 99.99 117.58 150.42 165.71 152.32 212.76 219.65
--------------------------------------------------------------------------------------------------------------------------
Imax 14.96
---------------------------------------------------
Nasdaq 265.04
---------------------------------------------------------------
TSE 300 181.05
---------------------------------------------------------------------------
corporate governance
The TSE passed a by-law in 1995 which requires companies incorporated in Canada
and listed on the TSE to disclose their corporate governance practices in their
annual meeting materials. This by-law contains a number of guidelines
("Guidelines") relating to corporate governance practices which have been
considered in light of the unique opportunities and challenges facing the
Corporation, as well as the nature of its share ownership.
The Board of Directors of the Corporation is responsible for the
supervision of the management of the Corporation and for the overall strategic
direction of its business. The Board of Directors is also responsible, with the
assistance of management, for the identification of the risks and opportunities
of the Corporation's business and for monitoring how effectively the Corporation
meets these risks and capitalizes upon the opportunities. The corporate
governance practices of the Corporation have been designed and followed to
assist the Corporation in meeting its core objectives and to enhance shareholder
value.
The Board of Directors is currently composed of 11 directors. Two of the
directors, Messrs. Gelfond and Wechsler are inside management directors and are
considered to be "related" within the meaning of the TSE Guidelines. Messrs.
Copland, Eyton, Girvan, Jones, King, Koffler, Reisman, Utay and Ziebold are
outside directors and are considered to be "unrelated" within the meaning of the
Guidelines. The Board of Directors considers that directors who are "related"
within the meaning of the Guidelines are able to, and do, act with a view to the
best interests of the Corporation and that their relationships with the
Corporation are central to their ability to act in its best interests. If the
directors nominated in this circular are elected at the Meeting, the ratio of
inside management directors to outside directors will not change.
The corporate governance practices followed by the Corporation were
originally instituted prior to the time the Corporation went public as one
aspect of the efforts of the new owners of the Corporation to introduce new
strategic directions to the Corporation. Key elements of these corporate
governance practices are contained in the Shareholders' Agreement which contains
provisions relating to the composition of the Board of Directors and committees
of the Board of Directors (see description of this agreement under "interest of
management in certain
12
transactions" below) and the Articles of the Corporation which contain
provisions relating to the approval of certain matters by the directors (see
description of these provisions under "Articles of the Corporation" below).
To date, the Board of Directors has not thought it necessary for the
Corporation to have the extensive committee structure recommended in the
Guidelines. A corporate governance committee has not been created, as the Board
of Directors retains responsibility for these matters. The Board of Directors
appoints the Corporation's Audit Committee, Compensation Committee, Nominating
Committee and Option Committee. The Audit Committee is currently composed of Mr.
Wechsler and two outside directors, Messrs. Girvan and King. The Audit Committee
meets with the external auditors of the Corporation, both with and without
management present, to review the Corporation's accounting policies, its
quarterly and year-end financial statement information and their presentation,
and significant financial issues which may arise for the Corporation. The
Compensation Committee is currently composed of Messrs. Girvan, Koffler and
Ziebold. The Compensation Committee is responsible for setting objectives for
the Co-Chief Executive Officers, assessing their performance on a periodic basis
and reviewing the Stock Option Plan, from time to time. The Option Committee is
currently composed of Messrs. Girvan and Utay. The Option Committee is
responsible for performing the functions required of it under the Stock Option
Plan including the grant of options to participants under the Stock Option Plan,
from time to time. The Nominating Committee is currently composed of Messrs.
Gelfond and Ziebold. The Nominating Committee is responsible for identifying and
recommending potential candidates for election to the Board of Directors.
If the directors nominated in this circular are elected at the Meeting, the
new Board of Directors will determine Committee memberships for the next year.
The Board of Directors has not felt it necessary to add to the procedures
currently in place to ensure its independence from management. The Board of
Directors believes that the participation of those members of the management of
the Corporation who are on the Board of Directors has been an essential element
in the Board of Directors' ability to meet its objectives. All directors
exercise critical independent judgement and the outside directors have
unrestricted direct access to both the executives of the Corporation and its
external auditors. To date there has been no necessity for discussion of a
system enabling an individual director to engage an outside advisor at the
expense of the Corporation.
The Board of Directors regards its corporate governance practices as
appropriate for its business and shareholders and as an efficient and effective
tool in the discharge of its responsibilities.
STANDSTILL AGREEMENT
--------------------------
---
On July 9, 2001 pursuant to Section 3(c)(iv) of the Shareholders' Agreement (see
description of this agreement under "interest of management in certain
transactions" below) the Corporation and each of Messrs. Gelfond and Wechsler
entered into a Standstill Agreement (the "GW Standstill Agreement"). Under the
terms of the GW Standstill Agreement, each of Messrs. Gelfond and Wechsler
agreed to vote in any election for directors in favour of each person nominated
by the then current Board of Directors, not to participate in or facilitate
proxy contests, not to deposit into a voting trust or subject voting securities
to an agreement with respect to voting such securities, not to acquire or affect
or attempt to acquire or affect control of the Corporation or to participate in
a "group" as defined pursuant to Section 13(d) of the U.S. Securities Exchange
Act of 1934, which owns or seeks to acquire beneficial ownership or control of
the Corporation, and not to attempt to influence the Corporation except through
normal Board of Directors' processes; provided, however, that the GW Standstill
Agreement does not prevent either of Messrs. Gelfond and Wechsler from taking
any action in his capacity as an officer or employee of the Corporation or any
of its subsidiaries, including as Co-Chief Executive Officer or Co-Chairman of
the Corporation. As a result of entering into the GW Standstill Agreement, in
the event of the resignation, death, disqualification under the Canada Business
Corporations Act or the removal or expiration of the term of any director
designated by Messrs. Gelfond and Wechsler pursuant to the Shareholders'
Agreement, Messrs. Gelfond and Wechsler shall have the right to designate a
replacement for such director pursuant to the terms of the Shareholders'
Agreement, and WP shall use its best efforts to cause each such designated
director to be elected or appointed as a director of the Corporation. The GW
Standstill Agreement expires on July 8, 2002, and provides that Messrs. Gelfond
and Wechsler may, from time to time, extend the term of the GW Standstill
Agreement for additional one year terms thereafter (but in no event beyond March
1, 2004).
13
ARTICLES OF THE CORPORATION
-----------------------------------
---
The Articles of the Corporation set forth the requirement that certain matters
be approved by 75% of the directors then in office. These matters are: (i)
hiring or terminating the employment of the Chief Executive Officer or any
Co-Chief Executive Officer of the Corporation; (ii) issuing any shares of
capital stock for a purchase price, or incurring indebtedness, in an amount of
$25 million or more; (iii) disposing of any material single asset, or all or
substantially all of the assets of the Corporation or approving the sale or
merger of the Corporation; (iv) acquiring a substantial interest in any other
entity or entering into any major strategic alliance; and (v) entering into or
changing the terms of any agreement or transaction with WP or Messrs. Gelfond
and Wechsler (other than agreements in the ordinary course of business, such as
employment agreements).
interest of management in certain transactions
SHAREHOLDERS' AGREEMENT
---------------------------------
---
The Corporation, Wasserstein Perella Partners, L.P., Wasserstein Perella
Offshore Partners, L.P., WPPN, Inc., and the Michael J. Biondi Voting Trust
(collectively "WP"), and each of Messrs. Gelfond and Wechsler are parties to a
Second Amended and Restated Shareholders' Agreement (the "Shareholders'
Agreement") dated as of February 9, 1999, which amends and restates the previous
amended and restated shareholders agreement among those parties dated June 16,
1994. The Shareholders' Agreement includes, among other things, certain
restrictions on transfers of common shares, take-along rights and come-along
rights. If WP holds at least 35% of their original holdings and WP desires to
transfer all of their securities in a transaction in which a majority of the
shares of outstanding common stock are to be sold, then Messrs. Gelfond and
Wechsler will be required to sell their securities on the same terms as WP sells
its securities.
The Shareholders' Agreement also contains provisions related to the
composition of the Board of Directors and committees thereof. WP is entitled,
but not required, to designate individuals to be nominated for election as
directors as follows: so long as WP holds 3,685,759 or more common shares, it
may designate six nominees, of whom three may be employees of WP and its
affiliates (the "WP Employee Designees") and three shall be independent persons
and resident Canadians. If WP holds less than 3,685,759 common shares, but
1,842,879 or more common shares, it may designate four nominees, of whom two may
be WP Employee Designees and two shall be independent persons and resident
Canadians. If WP holds less than 1,842,879 common shares but 921,439 or more
common shares, it may designate two nominees, one of whom may be a WP Employee
Designee and the other of whom shall be an independent person and shall be a
resident Canadian. In addition to these provisions, each of Messrs. Gelfond and
Wechsler is entitled to be a director of the Corporation so long as he is either
a Co-Chief Executive Officer or is the Chief Executive Officer of the
Corporation or Messrs. Gelfond and Wechsler own more than 375,000 common shares.
In addition, Messrs. Gelfond and Wechsler are collectively entitled, but not
required, to designate individuals to be nominated for election as directors as
follows: so long as they hold 1,628,000 or more common shares, they may
designate three nominees, all of whom shall be independent persons and resident
Canadians. If they hold less than 1,628,000 common shares, but 1,075,000 or more
common shares, they may designate two nominees, both of whom shall be
independent and resident Canadians. If they hold less than 1,075,000 common
shares but 375,000 or more common shares, they may designate one nominee who
shall be an independent person and resident Canadian. If the requirement that
the Corporation have "resident Canadian' directors is changed, then neither WP
nor Messrs. Gelfond and Wechsler will be required to designate resident Canadian
nominees.
The Shareholders' Agreement also provides that the Corporation, WP and each
of Messrs. Gelfond and Wechsler shall use their best efforts to cause the
Corporation to establish a nominating committee of the Board of Directors
consisting of two directors, one designated by WP and the other designated by
Messrs. Gelfond and Wechsler. In addition, WP has the right, subject to the
approval of Messrs. Gelfond and Wechsler, to designate a WP Employee Designee
for appointment by the Board of Directors of the Corporation as the
Non-Executive Chairman of the Board, as long as WP holds at least 2,948,607
common shares. W. Townsend Ziebold has been approved as such designee. If Mr.
Ziebold no longer holds that position, then WP is to propose three replacements
and Messrs. Gelfond and Wechsler shall select one of those proposed for
appointment by the Board as the Non-Executive Chairman. Each of Messrs. Gelfond
and Wechsler is entitled to be appointed as a Co-Chairman or Chairman of the
Corporation as long as he is a Co-Chief Executive Officer or the Chief Executive
Officer of the
14
Corporation. The Agreement provides that the duties of the Non-Executive
Chairman and the Co-Chief Executive Officers shall be as set forth in the
By-laws, including the requirement that the following actions be approved by the
Non-Executive Chairman and at least one of the Co-Chief Executive Officers:
setting the dates and times of meetings of the directors and shareholders (other
than normal quarterly Board of Directors, and annual shareholders' meetings),
setting the agenda of such meetings, and appointing members of committees of the
Board of Directors other than persons designated by WP and Messrs. Gelfond and
Wechsler as provided in the Shareholders' Agreement. Each of WP and Messrs.
Gelfond and Wechsler have the right to designate one director to serve on each
committee of the Board of Directors of the Corporation, provided that each such
person meets applicable regulatory requirements.
Each of WP and Messrs. Gelfond and Wechsler agreed to use their best
efforts to cause there no longer to be CEO Advisors as of the date upon which
all of the WP Employee Designees are elected as directors of the Corporation.
All of the WP Employee Designees were elected as directors at the Corporation's
annual and special meeting of shareholders held June 7, 1999 and the CEO
Advisors were disbanded in June, 1999.
REGISTRATION RIGHTS AGREEMENT
--------------------------------------
---
The Corporation, WP and Messrs. Gelfond and Wechsler also entered into a
registration rights agreement (the "Registration Rights Agreement") dated as of
February 9, 1999, which carried forward the corresponding provisions of the June
16, 1994 shareholders agreement, and pursuant to which each of WP and Messrs.
Gelfond and Wechsler have certain rights to cause the Corporation to use its
best efforts to register their securities under the U.S. Securities Act of 1933.
WP is entitled to effect up to four demand registrations and Messrs. Gelfond and
Wechsler are entitled to make two such demand registrations. WP and Messrs.
Gelfond and Wechsler also have unlimited piggy-back rights to register their
securities under the Registration Rights Agreement whenever the Corporation
proposes to register any securities under the U.S. Securities Act, other than
the registration of securities pursuant to an initial public offering or the
registration of securities upon Form S-4 or S-8 under the U.S. Securities Act or
filed in connection with an exchange offer or an offering of securities solely
to the Corporation's existing shareholders. In addition to these provisions, if
Messrs. Gelfond and Wechsler hold at least 25% of their original holdings, WP
has recouped its original investment plus a 30% compounded annual return on such
investment, and WP initiates the sale of the Corporation, then for 60 days
thereafter, WP will enter into exclusive negotiations with Messrs. Gelfond and
Wechsler, and for another 60 days thereafter WP may not enter into an agreement
for the sale of the Corporation to a third party. The Corporation is required to
use its best efforts to cause at its option either (i) the sale of the
Corporation within a period of 180 days from receipt of the notice to liquidate,
(ii) the filing of a registration statement pursuant to the U.S. Securities Act
within a period of 120 days from its receipt of the notice to liquidate, or
(iii) purchase the securities owned by Messrs. Gelfond and Wechsler for cash at
the fair market value as agreed upon by the Corporation and Messrs. Gelfond and
Wechsler within 20 days of the notice to liquidate, or in the event of their
failure to reach an agreement, as determined by a procedure utilizing nationally
recognized investment banking firms. In the event that Messrs. Gelfond and
Wechsler exercise their rights to require the Corporation to take such action,
they may be entitled to certain cash bonus payments as described above under
"Executive Compensation -- Employment Contracts".
The former shareholders of the Corporation have substantially similar
piggyback registration rights that commenced on March 1, 1996 pursuant to the
terms of the Selling Shareholders' Agreement (as defined below).
WP, Messrs. Gelfond and Wechsler, and the former shareholders of
Predecessor IMAX have entered into another shareholders' agreement (the "Selling
Shareholders' Agreement") which includes, among other things, registration
rights, tag along rights and drag along rights.
15
appointment of auditors
At the Meeting, the shareholders will be asked to approve, by ordinary
resolution, the appointment of PricewaterhouseCoopers LLP, ("PWC") Chartered
Accountants, as auditors of the Corporation to hold office until the close of
the next annual meeting of shareholders at a remuneration rate to be fixed by
the Board of Directors. PWC, or one of its predecessors, have been the auditors
of the Corporation for more than five years.
Shareholders will be asked to approve the appointment by ordinary
resolution, which requires that a majority of the votes cast at the Meeting be
in favour of the resolution. IN THE ABSENCE OF ANY INSTRUCTION ON THE
ACCOMPANYING FORM OF PROXY, IT IS THE INTENTION OF THE PERSONS NAMED BY
MANAGEMENT IN THE FORM OF PROXY TO VOTE THE COMMON SHARES REPRESENTED BY THE
FORM OF PROXY IN FAVOUR OF THE RESOLUTION.
shareholder proposals
For the next annual meeting of the Corporation, shareholders must submit any
proposal that they wish to be considered at such meeting by January 30, 2003.
The contents and the sending of this management proxy circular and proxy
statement to each shareholder entitled to receive notice of the Meeting, to each
director and to the auditors of the Corporation have been approved by the Board
of Directors.
DATED at Mississauga, Ontario, April 30, 2002.
[SIGNATURE]
G. MARY RUBY
Senior Vice President, Legal Affairs
and Corporate Secretary
16
Imax Corporation
2525 Speakman Drive
Mississauga, Ontario L5K 1B1
LOGO
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FORM OF PROXY
The undersigned common shareholder of IMAX Corporation (the "Corporation")
hereby appoints Bradley J. Wechsler, failing whom, Richard L. Gelfond, failing
whom, Robert D. Lister, failing whom, G. Mary Ruby, or instead of the
foregoing, ______________________ as the proxyholder of the undersigned to
attend and act for and on behalf of the undersigned at the ANNUAL MEETING OF
SHAREHOLDERS OF THE CORPORATION TO BE HELD ON JUNE 5, 2002, and at any
adjournments thereof, to the same extent and with the same power as if the
undersigned were present in person thereat and with the authority to vote and
act in the said proxyholder's discretion with respect to amendments or
variations to matters referred to in the notice of the Meeting and with respect
to other matters which may properly come before the Meeting. THIS PROXY IS
SOLICITED BY AND ON BEHALF OF THE MANAGEMENT OF THE CORPORATION.
The said proxyholder is specifically directed to vote or withhold from voting
the shares registered in the name of the undersigned as indicated below:
(1) VOTE [ ] WITHHOLD FROM VOTING [ ]
In respect of the election of the nominees for directors of the Corporation
as a group listed in the Management Proxy Circular and Proxy Statement.
(2) VOTE [ ] WITHHOLD FROM VOTING [ ]
In respect of the appointment of PricewaterhouseCoopers LLP as auditors of
the Corporation and authorizing the directors to fix their compensation.
Date: ---------------------------- , 2002
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(Print name of Registered Holder of
Common Shares)
-----------------------------------------
(Signature of Registered Holder or
Authorized Signatory)
Notes:
(1)YOU HAVE THE RIGHT TO APPOINT A PERSON
OTHER THAN THE MANAGEMENT NOMINEES TO
ATTEND AND ACT FOR YOU AT THE MEETING.
SUCH PERSON NEED NOT BE A SHAREHOLDER
OF THE CORPORATION. In such case,
please delete the names of Messrs.
Wechsler, Gelfond, Lister and Ms. Ruby
as your proxy nominee and insert the
name of the desired person in the
blank space provided for this purpose.
(2) If the proxy is not dated in the
space provided for this purpose, it
will be deemed to bear the date on
which it was mailed by the
Corporation.
(3) To be valid, this proxy must be dated
and signed by yourself, as the
registered holder of common shares,
or as a person named as a proxy
nominee in respect of this Meeting in
an omnibus proxy containing a power
of substitution pursuant to
applicable securities laws, or your
attorney. If the registered holder or
the person named in an omnibus proxy
is a corporation, this proxy must be
signed by an authorized officer or
attorney of such corporation.