March 29, 2016
Dear Shareholder:
MacDonald, Dettwiler and Associates Ltd. will hold its Annual and Special General Meeting of the Shareholders of
the Company at the Sheraton Vancouver Airport Hotel, 7551 Westminster Highway, Richmond, B.C., at 1:00 p.m.
(pacific time) on May 4, 2016. The items of business that you will be asked to act on are set forth in the enclosed
Notice of Annual and Special General Meeting of Shareholders and Management Proxy Circular.
We encourage you to ensure your common shares are represented at the meeting, whether or not you are able to
attend. Your vote on the various matters before the meeting is important. If you do not plan to be present in person,
we would ask that you take the time now to sign, date and return the enclosed proxy form so that your common
shares can be voted at the meeting in accordance with your instructions.
Non-registered shareholders (who beneficially own shares held by a broker or other intermediary) may receive a
voting instruction form or form of proxy from their intermediary with this Information Circular. See Advice to
Beneficial Holders of Shares.
Management will provide a review of the Company’s performance and financial results for the 2016 first quarter by
teleconference at 2:30 p.m. (pacific time) on May 4, 2016. Please refer to the Company’s website at
www.mdacorporation.com for further details.
We thank you for your participation as a shareholder of MacDonald, Dettwiler and Associates Ltd.
Robert L. Phillips (Signed)
Chair of the Board of Directors
Daniel E. Friedmann (Signed)
President and Chief Executive Officer
MacDonald, Dettwiler and Associates Ltd.  13800 Commerce Parkway, Richmond, British Columbia,
Canada V6V 2J3
www.mdacorporation.com  Tel: 604-278-3411  Fax: 604-231-2768
-2-
MACDONALD, DETTWILER AND ASSOCIATES LTD.
NOTICE OF ANNUAL AND SPECIAL GENERAL MEETING OF SHAREHOLDERS
March 29, 2016
TO THE SHAREHOLDERS OF
MACDONALD, DETTWILER AND ASSOCIATES LTD.
Take notice that the annual and special general meeting (the “Meeting”) of the shareholders of MacDonald,
Dettwiler and Associates Ltd. (the “Company”) will be held at the Sheraton Vancouver Airport Hotel, 7551
Westminster Highway, Richmond, B.C., on May 4, 2016 at the hour of 1:00 p.m. (pacific time) for the following
purposes:
1.
To place before the Meeting the consolidated financial statements of the Company for the fiscal year ended
December 31, 2015, together with the auditors’ report thereon;
2.
To elect Directors for the ensuing year;
3.
To appoint the auditors for the ensuing year;
4.
To consider, and if deemed appropriate, approve the non-binding advisory resolution to accept the Company’s
approach to executive compensation;
5.
To consider, and if deemed appropriate, pass an ordinary resolution approving the 2016 Long-term Incentive
Plan of the Company, for the purpose of the issue of common shares from treasury thereunder and the
reservation of common shares for issuance thereunder;
6.
To consider, and if deemed appropriate, pass a special resolution approving the continuance of the Company
under the Business Corporations Act (British Columbia); and
7.
To transact such other business as may properly come before the Meeting or any adjournment thereof.
The consolidated financial statements and the auditors' report for the year ended December 31, 2015 are available on
SEDAR at www.sedar.com.
The Directors have fixed the close of business on Tuesday, March 29, 2016 as the record date for determining
shareholders who are entitled to attend and vote at the Meeting. Shareholders who are unable to attend the
Meeting in person are urged to complete and sign the enclosed form of proxy and return it in the envelope
provided for that purpose. To be valid, proxies must be received at the office of Computershare Investor Services
Inc., Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1, no later than May 2, 2016 at
1:00 p.m. (pacific time), or if the Meeting is adjourned, no later than 48 hours (excluding Saturday, Sunday and
holidays) before the time of such adjourned Meeting.
Dated at Richmond, British Columbia, this 29th day of March, 2016.
BY ORDER OF THE BOARD OF DIRECTORS
Gordon Thiessen (Signed)
Corporate Secretary
MACDONALD, DETTWILER AND ASSOCIATES LTD.
MANAGEMENT PROXY CIRCULAR
SOLICITATION OF PROXIES
This management proxy circular (“Circular”) is furnished in connection with a solicitation of proxies being
made by the management of MacDonald, Dettwiler and Associates Ltd. (the “Company” or “MDA”) for use
at the annual and special general meeting of the shareholders of the Company to be held at the date, place
and time and for the purposes set forth in the notice of meeting accompanying this Circular and at any
adjournment thereof (the “Meeting”).
Except as otherwise stated, the information provided in this Circular is given as of March 29, 2016.
APPOINTMENT AND REVOCATION OF PROXY
The persons named as proxyholders in the accompanying form of proxy are Directors and officers of the Company.
A shareholder has the right to appoint as proxyholder a person (who is not required to be a shareholder)
other than the persons whose names are printed as proxyholders in the accompanying form of proxy, by
striking out said printed names and inserting the name of the shareholder’s chosen proxyholder in the blank
space provided for that purpose in the form of proxy.
To be valid, proxies must be received at the office of Computershare Investor Services Inc., Proxy Department, 100
University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1, no later than May 2, 2016 at 1:00 p.m. (pacific time), or if
the Meeting is adjourned, no later than 48 hours (excluding Saturday, Sunday and holidays) before the time of such
adjourned Meeting.
Any shareholder giving a proxy to attend and vote at the Meeting has the right to revoke the proxy:
(a)
(b)
by depositing an instrument in writing executed by such shareholder or by his or her attorney
authorized in writing
(i)
at the registered office of the Company c/o 25th Floor, 700 West Georgia Street,
Vancouver, B.C., V7Y 1B3, at any time up to and including the last business day
preceding the day of the Meeting, or an adjournment thereof, at which the proxy is to be
used; or
(ii)
with the chair of the Meeting on the day of the Meeting or an adjournment thereof; or
in any other manner permitted by law.
A proxy is valid only with respect to the Meeting.
ADVICE TO BENEFICIAL HOLDERS OF SHARES
The information set forth in this section is of significant importance to persons who beneficially own common
shares, as a substantial number of persons do not hold common shares in their own name. These meeting
materials are being sent to both registered and non-registered shareholders. If you are a non-registered shareholder
and the Company or its agent has sent these materials directly to you, your name and address and information about
your holdings of securities have been obtained in accordance with applicable securities regulatory requirements
from the intermediary/broker holding on your behalf.
Shareholders whose common shares are not registered in their own name are referred to in this Circular as
“Beneficial Shareholders”. There are two kinds of Beneficial Shareholders: those who have objected to their name
being made known to the Company (called “OBOs” for Objecting Beneficial Owners) and those who have not
objected (called “NOBOs” for Non-Objecting Beneficial Owners).
-2The Company can request and obtain a list of its NOBOs from intermediaries via its transfer agent and can use this
NOBO list for distribution of proxy-related materials directly to NOBOs. The Company has decided to directly send
proxy-related materials to its NOBOs. As a result, NOBOs can expect to receive a voting instruction form from the
Company’s transfer agent, Computershare Investor Services Inc. These voting instruction forms are to be completed
and returned to the transfer agent in the postage paid envelope provided or by facsimile. Alternatively, NOBOs can
call a toll-free number or access the transfer agent’s dedicated voting website (each as noted on the voting
instruction form) to deliver their voting instructions and vote the common shares held by them. The transfer agent
will tabulate the results of the voting instruction forms received from NOBOs and will provide appropriate
instructions at the Meeting with respect to the common shares represented by the voting instruction forms they
receive. By choosing to send these materials to you directly, the Company (and not the intermediary/broker holding
on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper
voting instructions. Please return your instructions as specified in the request for voting instructions. NOBOs that
wish to attend the Meeting and vote in person (or appoint someone else to attend the Meeting and vote on such
NOBOs’ behalf) can appoint themselves (or someone else) as a proxyholder by following the applicable instructions
on the voting instruction form.
With respect to OBOs, the Company intends to pay for intermediaries/brokers to deliver to OBOs meeting materials
for the Meeting. Applicable regulatory policy requires intermediaries/brokers to whom meeting materials have been
sent to seek voting instructions from OBOs in advance of shareholders’ meetings. Every intermediary has its own
mailing procedures and provides its own return instructions, which should be carefully followed by OBOs in order
to ensure that their common shares are voted at the Meeting. Often, the form of proxy supplied to an OBO by its
broker is identical to that provided to registered shareholders. However, its purpose is limited to instructing the
intermediary/broker how to vote on behalf of the OBO. The majority of brokers now delegate responsibility for
obtaining instructions from clients to Broadridge Financial Solutions, Inc. (“Broadridge”). Broadridge typically
prepares a special voting instruction form, mails those forms to the OBOs and asks for appropriate instructions
respecting the voting of common shares to be represented at the Meeting. OBOs are requested to complete and
return the voting instruction form to Broadridge by mail or facsimile. Alternatively, OBOs can call a toll-free
telephone number or access Broadridge’s dedicated voting website (each as noted on the voting instruction form) to
deliver their voting instructions and vote the common shares held by them. Broadridge then tabulates the results of
all voting instructions received and provides appropriate instructions respecting the voting of common shares to be
represented at the Meeting. The voting instruction form must be returned as directed by Broadridge well in advance
of the Meeting in order to have the common shares voted. OBOs who receive forms of proxies or voting materials
from organizations other than Broadridge should complete and return such forms of proxies or voting materials in
accordance with the instructions on such materials in order to properly vote their common shares at the Meeting.
OBOs that wish to attend the Meeting and vote in person (or appoint someone else to attend the Meeting and vote on
such OBOs’ behalf) can appoint themselves (or someone else) as proxyholder by following the applicable voting
instructions.
Beneficial Shareholders are not entitled, as such, to vote at the Meeting in person or to deliver a form of
proxy. If you are a Beneficial Shareholder and wish to appoint yourself as proxyholder to vote in person at
the Meeting or appoint someone else to attend the Meeting and vote on your behalf, please see the voting
instructions you received or contact your intermediary/broker well in advance of the Meeting to determine
how you can do so.
Beneficial Shareholders should carefully follow the voting instructions they receive, including those on how
and when voting instructions are to be provided, in order to have their common shares voted at the Meeting.
METHOD OF SOLICITATION
The solicitation of proxies by the Company will be made primarily by mail, but may also be carried out by officers
and employees of the Company. The cost of the solicitation of proxies will be borne by the Company.
VOTING SHARES
As of the close of business on March 29, 2016, there were 36,250,373 outstanding common shares entitled to be
voted at the Meeting. Each holder of common shares as of the record date of March 29, 2016 is entitled to vote at
the Meeting. Each common share entitles the holder to one vote.
-3VOTE REQUIRED
The resolutions to be presented at the Meeting for the election of Directors, the appointment of auditors, and the
approval of the 2016 Long-term Incentive Plan are ordinary resolutions requiring the favourable vote of a majority
of the common shares represented and voting in person or by proxy on such resolutions at the Meeting. The
resolution for the continuance of the Company under the Business Corporations Act (British Columbia) is a special
resolution requiring the favourable vote by not less than two-thirds of the common shares represented and voting in
person or by proxy. In addition, there is an advisory vote on executive compensation which requires the affirmative
vote of a majority of the votes cast on the resolution. See the sections “Approval of the 2016 Long-term Incentive
Plan and Reservation of Shares Thereunder”, “Continuance of the Company under the Business Corporations Act
(British Columbia)” and “Advisory Vote on Executive Compensation”.
PROXY VOTING
Common shares represented by any effective proxy given by any shareholder in the form provided will be
voted or withheld from voting in accordance with the instructions specified therein and, where no choice is
specified, will be voted FOR each of the nominees for Directors, FOR the appointment of KPMG LLP as
auditors, FOR the approval of the 2016 Long-term Incentive Plan, FOR the continuance of the Company
under the Business Corporations Act (British Columbia) and FOR the advisory vote on executive
compensation. The form of proxy confers discretionary power in respect of amendments to matters identified in the
notice of meeting and other matters that may properly come before the Meeting. At the date of this Circular, there
were no variations or amendments to such matters or any other matters to come before the Meeting known to the
Board of Directors.
PRINCIPAL SHAREHOLDERS
To the knowledge of the Directors and executive officers of the Company as at March 29, 2016, no person
beneficially owns or exercises control or direction over common shares carrying more than 10% of the votes
attached to all of the outstanding voting common shares of the Company, except as noted below:
Name of Shareholder
Franklin Resources, Inc.
(1)
Number of Common Shares Held(1)
% of outstanding Common Shares
3,730,818
10.3%
Number of common shares of the Company beneficially owned, directly or indirectly, by such person or over which control or direction is
exercised by such person. Information contained in this table is based on filings made by the relevant shareholder on www.sedar.com.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Board of Directors of the Company is committed to ensuring that the Company has an effective corporate
governance system which adds value and assists the Company in achieving its objectives. To this end, the Company
has designed governance practices to be consistent with these objectives. The Governance and Nominating
Committee is responsible for ensuring that the Company addresses all relevant corporate governance issues. This
Committee makes recommendations regarding the compliance of the Company's practices with the corporate
governance guidelines set forth in National Policy 58-201 (the "Guidelines") and oversees disclosure obligations
related thereto.
MDA acknowledges the benefits received by the Company, its shareholders and the business community in general
from the disclosure of corporate governance practices and is committed to an ongoing process of disclosure and
implementation of the Guidelines, where appropriate.
The Company's disclosure of corporate governance practices pursuant to National Instrument 58-101 - Disclosure of
Corporate Governance Practices is set out in Appendix A to this Circular in the form required by Form 58-101F1.
The following information highlights the structures and processes of corporate governance at MDA. It should be
read together with Appendix A.
-4Responsibility of the Board
The Board of Directors assumes responsibility for the stewardship of the Company and the enhancement of
shareholder value.
Composition of the Board
All of the Directors, with the exception of Mr. Friedmann, the Chief Executive Officer of the Company, are
independent within the meaning of the Guidelines.
Messrs. Phillips, Chambers, Chookaszian, Kenning and Zahler are directors of public companies other than the
Company. See the Section “Election of Directors” for further details.
Each year the Board, either through an outside consultant or on its own, with the assistance of the Governance and
Nominating Committee, formally reviews its own performance, the performance of each committee of the Board,
the performance of the Chair of the Board and, with the assistance of the Human Resources and Management
Compensation Committee, the performance of the Chief Executive Officer. In addition, a formal process of
individual director peer assessment has been adopted.
In Camera Meetings without Management
Before or after every meeting of the Board of Directors, the non-management Directors meet in camera and under
the chairmanship of the Chair, without the presence of management.
Risk Management
While the Board is responsible to review and assess the major risks facing the Company and to review, approve and
monitor the Company’s approach to addressing such risks, the Company’s management is charged with identifying
and managing risk. The Company has robust internal processes and a strong internal control environment to identify
and manage risks and to communicate with the Board on these issues through senior management. These include an
enterprise risk management program, disclosure committee meetings, a Code of Ethics, rigorous product quality
standards and processes which are ISO compliant, a foreign corrupt practices policy, and a comprehensive internal
and external audit process. The Board and the Audit Committee regularly monitor and evaluate the effectiveness of
the internal controls and the risk management program. Management communicates routinely with the Board and
the Audit Committee on the significant risks identified and how they are being managed. The Board implements its
risk oversight function both as a whole and through the Audit Committee and the Human Resources and
Management Compensation Committee. The Audit Committee oversees risks related to the Company’s financial
statements, the financial reporting process, accounting, audit and legal matters, the internal audit function, the
Company’s Code of Ethics, the foreign corrupt practices policy, and the ethics hotline. The Human Resources and
Management Compensation Committee oversees any risk related to compensation, including practices related to
equity programs and other executive or Company-wide incentive programs.
The Board regularly engages in discussion of financial, legal, technology, economic and other risks. To the extent
the Audit Committee or Human Resources and Management Compensation Committee identifies any material risks
or related issues, the risks or issues are addressed with the full Board. Because overseeing risk is an ongoing process
and inherent in the Company’s strategic decisions, the Board also discusses risk in relation to specific proposed
actions.
Audit Committee
The Audit Committee consists of five Directors. All of the members of the Audit Committee are independent and
none receives, directly or indirectly, any compensation from the Company other than for service as a member of the
Board of Directors and its committees. The Audit Committee acts on behalf of the Board in reviewing certain
financial information prepared for public distribution, in monitoring internal accounting controls and in monitoring
the business conduct of the Company. The Audit Committee has an oversight role for assuring that the Company’s
financial statements fairly present the consolidated financial position of the Company and the results of its
operations. The Audit Committee reviews other matters relating to the financial position of the Company as it sees
fit and recommends the appointment, change or reappointment of the external auditor. The Audit Committee meets
-5with the internal auditor at each Audit Committee meeting and the internal auditor reports to the Chair of the Audit
Committee. The Audit Committee meets in camera with the external auditor at each Audit Committee meeting. It
also reviews and approves the non-audit services provided by the external auditor. In doing so, the Audit Committee
considers whether the provision of these non-audit services may impact the objectivity and independence of the
external auditor. The Audit Committee is also responsible for overseeing the Company's ethics hotline. The Audit
Committee meets in camera at each meeting.
As required, the Audit Committee is composed entirely of independent Directors. In addition, all members of the
Audit Committee are financially literate. The Audit Committee met four times in 2015.
The Audit Committee Charter is included as Schedule II to the Company’s most recent Annual Information Form,
which can be accessed at www.sedar.com.
Governance and Nominating Committee
The Governance and Nominating Committee consisted of three Directors to July 30, 2015 and four Directors
subsequent thereto. All members of the Committee are independent. This Committee ensures that an effective and
efficient approach to corporate governance is developed and implemented and that the Board of Directors is
comprised of individuals with skills, expertise and competency that are necessary for, and of assistance to, the Board
and the Company. This Committee assesses the effectiveness of corporate governance at MDA and makes
recommendations accordingly. The Committee regularly: reviews the mandates and terms of reference of the Board,
committees and Chair of the Board; reviews and updates the Board competency matrix; oversees and reports to the
Board on the annual Director evaluation processes; reviews the skills and expertise recommended for the Board
based on continuing or proposed changes to the business of the Company and its subsidiaries; reviews and
recommends to the Board policies that govern size and composition of the Board; recommends nominees for
election to the Board; and assists in determining the composition of committees in consultation with the Chair. This
Committee conducts a robust review of the Board composition and regularly searches for and considers candidates
for addition to the Board to provide expertise or experience which would enhance the Board’s effectiveness. If
issues are disclosed as part of the Directors’ evaluation process, the Chair of the Committee, together with the Chair
of the Board, may determine the steps necessary to remedy or deal with such issues. The amount and form of
Director compensation are also reviewed by this Committee, with any resultant recommendations made to the
Board. This Committee meets in camera at each meeting. The Governance and Nominating Committee met three
times in 2015.
Board Diversity
The Governance and Nominating Committee annually reviews the composition of the Board, giving careful
consideration to factors such as age, ethnicity, gender, geographies, competencies and experience. The Board
considers candidates on merit, based on a balance of skills, background, experience and knowledge. In identifying
the highest quality directors, the Committee will take into account diversity considerations such as gender, age and
ethnicity and similar factors, with a view to ensuring the Board benefits from a broad range of perspectives and
relevant experience.
The Board approved a written board diversity policy in February 2016. Consideration of the number of women on
the Board, along with other diversity attributes, is an important component of the selection process of nominees for
election to the Board and the recruitment of new candidates for Board membership. The policy does not include a
target number or percentage of women on the Board because candidates for the Board are selected on merit. The
Board is committed to an identification and nomination process that will identify qualified women candidates. The
Committee completed a comprehensive review of Board composition and succession at its October 2015 meeting.
Director Orientation and Continuing Education
New directors are provided with corporate and other information required to familiarize themselves with the
Company and its subsidiaries, including the organization and operations thereof. The orientation program includes
presentations by officers or senior management on the Company’s organizational structure and the nature and
operation of the businesses of the Company and its subsidiaries, and a review with the Chair on the role of the Board
and its committees, a discussion on the contribution individual directors are expected to make and access to
-6appropriate information or outside resources as required. One new Director, Ms. Lori Garver, was added to the
Board in 2015. Mr. Eric Zahler was added to the Board in 2014.
The Company has a formal program to annually keep the Governance and Nominating Committee members abreast
of key legal and governance matters relevant to the operations of the Company and its subsidiaries, and to their roles
as directors. At the October 28, 2015 meeting, the Governance and Nominating Committee met with legal counsel
and reviewed and discussed current governance matters relevant to the Company and proposed regulatory related
governance changes that may impact the Company. The Governance and Nominating Committee regularly updates
the Board on these matters. As part of continuing education, senior management of the Company makes regular
presentations to the Board on the main areas of the Company's business and issues relating thereto, and existing
Directors are invited to any orientation presentations for new directors. The Board is provided with reading materials
on industry specific matters. Board meetings are scheduled at subsidiary business sites from time to time, which
generally include a tour of the site operations so that the Board may have a full understanding of the operations of
the Company and its subsidiaries. The Board met at the Company’s Palo Alto, California facility in April 2015,
which included a tour of the facility to better understand the operations conducted at that facility. In addition, the
Company ensures each Director is a member of the Canadian Institute of Corporate Directors.
In addition to regular presentations at the Board meetings to provide continuing education, the Company’s senior
management made separate comprehensive presentations to the Directors during the year on varying topics. These
presentations were attended by all non-management Directors. In addition, the Directors attended various courses
held by the Canadian Institute of Corporate Directors.
Competency Matrix
During 2015, the Governance and Nominating Committee reviewed and updated its Board competency matrix. The
purpose of the competency matrix is to ensure the skill set of the independent Directors, through their skills,
business expertise and experience, meets the needs of the Board and the Company.
The following table identifies the principal skills, expertise and other factors considered as part of the competency
matrix developed by the Governance and Nominating Committee:
Robert
Phillips
Tom
Chambers
Dennis
Chookaszian
Lori
Garver
Brian
Kenning
Fares
Salloum
Eric
Zahler
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
(1)
Board Experience
Strategic Planning
Operations
Project Management
Governance
Accounting / Finance
Executive Compensation
Government
Human Resources
Legal
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Industry Experience
(1)
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Mr. Chambers will not be standing for re-election as a Director at the Meeting.
Director Election and Majority Voting Policy
The Board believes that each of its members should carry the confidence and support of the Company’s
shareholders. Accordingly, the Board has a majority voting policy. To this end, the form of proxy for the vote at the
Meeting enables shareholders to vote in favour of, or to withhold from voting, separately for each nominee. At the
Meeting, at the discretion of the chair of the Meeting, a vote may be called by ballot and the scrutineers will record
with respect to each nominee the number of shares in his or her favour and the number of common shares withheld
from voting. If, with respect to any particular nominee, the number of common shares withheld exceeds the number
-7of common shares voted in favour of the nominee, then for purposes of the Company’s policy, the nominee shall be
considered not to have received the support of the shareholders, even though duly elected as a matter of corporate
law.
A person elected as a Director who is considered under this test not to have the confidence of shareholders is
expected to immediately submit to the Board his or her resignation. The Governance and Nominating Committee
will promptly consider the Director’s offer to resign and make a recommendation to the Board whether to accept it.
In making its recommendation, the Committee will consider the reason why the votes were withheld, the skills and
expertise of that Director, the overall composition of the Board and the skills and the expertise of the other
Directors. With the exception of special circumstances that would warrant the continued service of the applicable
Director on the Board, the Governance and Nominating Committee will accept and recommend acceptance of the
resignation of that Director, by the Board. Any Director who tenders his or her resignation will not participate in the
deliberations unless the remaining Directors do not constitute a quorum, in which case all Directors may participate
in the deliberations. Within 90 days of receiving the final voting results, the Board will decide whether to accept or
not accept the resignation of that Director. If the resignation is accepted, subject to any applicable law, the Board
may leave the resultant vacancy unfilled until the next annual general meeting, fill the vacancy through the
appointment of a new Director whom the Board considers to merit the confidence of the shareholders, or call a
special meeting of shareholders at which there will be presented one or more nominees to fill any vacancy or
vacancies. Following the Board’s decision on the resignation, the Board will disclose, via press release, its decision
whether to accept the Director's resignation offer including the reasons for rejecting the resignation offer, if
applicable.
Human Resources and Management Compensation Committee
The Human Resources and Management Compensation Committee consisted of four Directors to July 30, 2015, and
five Directors subsequent thereto. All members of the Committee are independent. The Committee ensures that the
Company has a plan for continuity and succession of its officers and an executive compensation plan that is
motivational and competitive in order to attract, retain and inspire the performance of executive management and
other key personnel. This Committee meets in camera at each meeting. The Committee also considers the
implications of the risks associated with the Company’s compensation policies and procedures. The Human
Resources and Management Compensation Committee met two times in 2015.
Succession Planning and Leadership Development
In 2015, the Committee reviewed the progress made in developing current and future leaders for the Company and
its subsidiaries, through the Company’s leadership development program. This formal program provides a solid
platform for the assessment and development of the Company’s talent pool. In addition, the Committee reviewed the
Company’s succession planning for the Company’s senior officers, including the President and Chief Executive
Officer. The succession plan for senior officers of the Company identifies specific individuals for each position and,
among other things, assesses their readiness and sets forth an expected time frame within which it is anticipated that
an individual will be ready to assume the position.
See the Section “Compensation Discussion and Analysis” for further details.
-8ELECTION OF DIRECTORS
The Articles of the Company provide for a minimum of seven and a maximum of 20 Directors, as determined by the
Directors. The proposed number of Directors to be elected at the Meeting is seven. The persons named on the
accompanying form of proxy intend to vote for each of the nominees proposed for election as Director, unless a
holder of common shares of the Company specifies in the form of proxy to withhold the vote of the common shares
held, for such nominee.
The following information states the names of all persons proposed to be nominated at the Meeting for election of
Directors, including the date they first became Directors, their principal occupation, their beneficial ownership of
common shares and deferred share units (“DSUs”) in the Company, their share ownership target holdings, their
business experience and professional qualifications, their directorships held, their principal occupations for the past
five years, their committee memberships, and the Board and committee meetings they attended. All of the nominees
are currently Directors. Each Director’s term of office will expire at the next following annual general meeting of
shareholders of the Company or when his or her successor is elected or appointed.
It is not contemplated that any of such nominees will be unable or unwilling to serve as a Director but if for any
reason prior to the Meeting any such nominee should become unable to serve or declare that he is unwilling to serve,
the Board of Directors reserves the right to nominate another person for election as Director, and in such event
proxies received by persons named on the accompanying form of proxy may be voted for such person.
Other than as disclosed, for the ten years ended December 31, 2015, the Company is not aware that any current
Director or executive officer of the Company had been a Director or executive officer of another issuer which, while
that person was acting in that capacity (a) became bankrupt or made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any proceedings, arrangements or compromises with
creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (b) was the subject of a cease
trade or similar order or was subject to an event that resulted, after the Director or the executive officer ceased to be
a Director or executive officer, in the company being the subject of a cease trade or similar order that denied the
company relevant access to any exemption under securities legislation for a period of more than 30 consecutive
days. Mr. Chambers was a Director of Catalyst Paper Corporation (“Catalyst”) from October 2003 to September
2012. On January 31, 2012, Catalyst was granted protection under the Companies' Creditors Arrangement Act by
the Supreme Court of British Columbia.
Robert L. Phillips
65
West Vancouver, B.C.
Canada
Director from October,
2003 to present
Independent
Mr. Phillips is a corporate director. He retired as President and Chief Executive Officer of the BCR
Group of Companies in 2004. Prior to joining BCR, Mr. Phillips was Executive Vice President,
Business Development and Strategy for MacMillan Bloedel Ltd. and previously held the positions
of President and Chief Executive Officer at the PTI Group and Dreco Energy Services Ltd. Mr.
Phillips has also enjoyed a prestigious law career and was appointed Queen’s Counsel in Alberta in
1991. Mr. Phillips has attained degrees in chemical engineering and law from the University of
Alberta.
Meeting
MDA Board and Committees
Attendance(1)
Other Current Public Company Boards(2)
Board (Chair)
8 of 8
100% Canadian National Railway Company
Governance
3 of 3
100% Canadian Western Bank
HR (Chair)
2 of 2
100% Precision Drilling Corporation
West Fraser Timber Co. Ltd.
Share Ownership
Securities Held:
Total
Target(d)
Total
(c)
Fiscal
Common
Meets
Current
Value
shares and
Year
Shares(a)
DSUs(b)
($)
target
status
DSUs
2015
5,000
23,133
28,133
2,342,354
Yes
10 times
2014
5,000
21,218
26,218
2013
5,000
19,330
24,330
(1) In addition, Mr. Phillips attended all Audit Committee meetings.
(2) In the past five years, Mr. Phillips has also been a director of Axia NetMedia Corporation,
Capital Power Corporation and TerraVest Income Fund.
-9Mr. Kenning is a corporate director. He was a Managing Partner of Brookfield Asset Management,
a company involved in the real estate, asset management and power generation sectors, from 1995
to 2005. From 1988 to 2005, Mr. Kenning was also Chairman and Managing Partner of B.C.
Pacific Capital Corporation, a Brookfield affiliate active in merchant banking and investing. Over
the past ten years, Mr. Kenning has served as Director of a number of public and private
corporations. In addition, Mr. Kenning is a past Governor of the B.C. Business Council and a past
Director of the B.C. chapter of the Institute of Corporate Directors. Mr. Kenning graduated from
Queen's University with an MBA in 1973.
Brian G. Kenning
66
Vancouver, B.C.
Canada
Director from May,
2003 to present
Independent
MDA Board and Committees
Board
Governance (Chair)
Audit
Securities Held:
Meeting
Attendance
8 of 8
100%
3 of 3
100%
4 of 4
100%
Other Current Public Company Boards(1)
British Columbia Ferry Services Inc.
Share Ownership
Total
Total
Target(d)
shares and
Fiscal
Common
Meets
Current
Value(c)
DSUs
($)
Year
Shares(a)
DSUs(b)
target
status
2015
Nil
10,031
10,031
835,181
Yes
8.4 times
2014
Nil
9,859
9,859
2013
Nil
9,014
9,014
(1) In the past five years, Mr. Kenning has also been a director of Royal Oak Ventures Inc.
Mr. Chookaszian is a corporate director. From November 1999 until February 2001, he served as
Chairman and Chief Executive Officer of mPower, Inc., a financial advice provider focused on the
online management of 401(k) plans. Mr. Chookaszian served as Chairman and Chief Executive
Officer of CNA Insurance Companies ("CNA") from September 1992 to February 1999. During
his 27-year career with CNA, Mr. Chookaszian held several management positions at the business
unit and corporate levels, including President and Chief Operating Officer from 1990 to 1992 and
Chief Financial Officer from 1975 to 1990. He served as Chairman of the executive committee of
CNA from 1999 to 2001. He served as Chairman of the Financial Accounting Standards Advisory
Council (FASAC) from 2007 to 2011. Mr. Chookaszian is a Certified Public Accountant.
Dennis H. Chookaszian
72
Wilmette, Illinois, U.S.A.
Director from July,
2005 to present
Independent
MDA Board and Committees
Board
Audit
Governance
Meeting
Attendance
8 of 8
100%
4 of 4
100%
3 of 3
100%
Other Current Public Company Boards(1)
Career Education Corporation
CME Holdings
Internet Patents Corporation
Share Ownership
Total
Target(d)
Total
(c)
Fiscal
Common
Value
Meets
Current
shares and
($)
Year
Shares(a)
DSUs(b)
target
status
DSUs
2015
14,071
14,338
28,409
2,365,333
Yes
24 times
2014
14,071
13,242
27,313
2013
14,071
12,284
26,355
(1) In the past five years, Mr. Chookaszian has also been a director of LoopNet, Inc.
Securities Held:
- 10 Mr. Salloum is a corporate director. Mr. Salloum retired from Verizon Communications in 2002,
where he was President, International-the Americas. He was Senior Vice President, International
Operations for GTE Corporation from 1997 to 2000. Prior to GTE, Mr. Salloum was with BC
Telecom Inc. in various senior executive positions from 1973 to 1997. Mr. Salloum holds a
Bachelor of Science degree in electrical engineering from the University of Alberta and an MBA
from the University of British Columbia.
MDA Board and Committees
Board
Audit
HR
Fares F. Salloum
67
Plano, Texas, U.S.A.
Director from October,
2003 to present
Independent
Meeting
Attendance
8 of 8
100%
4 of 4
100%
2 of 2
100%
Other Current Public Company Boards(1)
None
Securities Held:
Share Ownership
Total
Target(d)
Total
(c)
Fiscal
Common
shares and
Value
Meets
Current
Year
Shares(a)
DSUs(b)
DSUs
($)
target
status
2015
Nil
11,200
11,200
932,512
Yes
9.3 times
2014
Nil
11,008
11,008
2013
Nil
10,083
10,083
(1) In the past five years, Mr. Salloum has not been a director of any other public company.
Mr. Friedmann has been President and Chief Executive Officer of the Company since 1995. Mr.
Friedmann joined the Company in 1979 and has held a number of positions in the Company,
including engineering operations, sales and marketing and Chief Operating Officer. Mr. Friedmann
holds a Masters degree in engineering physics from the University of British Columbia.
MDA Board and Committees
Board
Securities Held:
Daniel E. Friedmann
59
Vancouver, B.C.
Canada
Director from December,
1999 to present
Non-independent
Meeting
Attendance
8 of 8
100%
Other Current Public Company Boards(1)
None
Share Ownership
Total
Total
Target(d)
Fiscal
Common
shares and
Value(c)
Meets
Current
Year
Shares(a)
DSUs(2)
DSUs
($)
target
status
2015
27,045
Nil
27,045
2,251,767
Yes
5.2 times
2014
36,882
Nil
36,882
2013
41,695
Nil
41,695
(1) In the past five years, Mr. Friedmann has not been a director of any other public company.
(2) Mr. Friedmann is not eligible to receive Deferred Share Units. Mr. Friedmann receives longterm incentives in the form of share appreciation rights (refer to the Section “Elements of
Compensation”). In addition to the total value of common shares of $2,251,767 held at December
31, 2015, the market or payout value of Mr. Friedmann’s share-based vested and unvested LTIP
Units was $2,011,572 at December 31, 2015 (combined total value of $4,263,339).
- 11 Ms. Garver is General Manager of the Air Line Pilots Association. Ms. Garver served as Deputy
Administrator of the National Aeronautics and Space Administration (NASA) from 2009 to 2013.
She previously worked at NASA from 1996 to 2001 within the Office of Policy and Plans,
culminating in reporting directly to the NASA Administrator on NASA’s policies and long range
plans. Outside of NASA, Ms. Garver was Executive Director of the National Space Society for
nine years and worked for Capital Space, LLC and DFI International as a Vice President.
MDA Board and Committees
Board
Governance
HR
Lori B. Garver
54
McLean, Virginia,
U.S.A.
Director from July, 2015
to present
Independent
Meeting
Attendance
5 of 5
100%
1 of 1
100%
1 of 1
100%
Other Current Public Company Boards(1)
None
Securities Held:
Fiscal
Year
2015
Common
Shares(a)
Nil
DSUs(b)
414
Total
shares and
DSUs
414
Total
Value(c)
($)
34,470
Share Ownership
Target(d)
Meets
Current
target(2)
status
No
0.3 times
(1) In the past five years, Ms. Garver has not been a Director of any other public company.
(2) Ms. Garver joined the Board of Directors on July 30, 2015. She has a period of five years from
that date to meet her recommended share ownership guidelines.
Mr. Zahler is Managing Director of Sagamore Capital Group LLC, a private equity firm pursuing
investments in the aerospace/defense, industrial electronics and selected business service markets.
From February 2000 to November 2007, Mr. Zahler was President and Chief Operating Officer of
Loral Space & Communications Inc., a global satellite communications services provider and a
manufacturer of commercial satellites. From 1992 to 2000, Mr. Zahler held varying senior level
management positions at Loral and its predecessor companies. From 1975 to 1992, Mr. Zahler was
an attorney at Fried, Frank, Harris, Shriver & Jacobson LLP, where he was elected Partner in 1983.
Mr. Zahler holds a Bachelor of Science degree in mathematics from Yale University and a law
degree from Harvard Law School.
Eric J. Zahler
65
New York, New York,
U.S.A.
Director from May, 2014
to present
Independent
MDA Board and Committees
Board
Audit
HR
Meeting
Attendance
8 of 8
100%
4 of 4
100%
2 of 2
100%
Other Current Public Company Boards(1)
exactEarth Ltd.
Securities Held:
Fiscal
Year
2015
2014
Common
Shares(a)
Nil
Nil
DSUs(b)
2,314
859
Total
shares and
DSUs
2,314
859
Total
Value(c)
($)
192,664
Share Ownership
Target(d)
Meets
Current
target(2)
status
No
1.9 times
(1) In the past five years, Mr. Zahler has not been a Director of any other public company.
(2) Mr. Zahler joined the Board of Directors on May 1, 2014. He has a period of five years from
that date to meet his recommended share ownership guidelines.
(a) Number of common shares of the Company beneficially owned or over which control or direction was exercised as of
December 31.
(b) Deferred share units are granted at a price equal to the closing price of the common shares of the Company on the day
before the date of grant. See also “Compensation of Directors”.
(c) The closing market price of MDA’s common shares on December 31, 2015 was $83.26 per share.
(d) Each of the Directors, with the exception of Ms. Garver and Mr. Zahler, has met the Company’s recommended share
ownership guidelines. The independent Directors have a recommended share ownership guideline of three times the sum of
the annual cash retainer and annual deferred share unit grant paid to them as a member of the Board. Ms. Garver and Mr.
Zahler have a period of five years to meet their recommended share ownership guidelines. Mr. Friedmann, as the President
and Chief Executive Officer of the Company, has a recommended share ownership guideline of three times base salary. See
the Section “Share Ownership Guidelines” for the President and Chief Executive Officer’s share ownership guidelines. See
the Section “Director Compensation” for the Directors’ share ownership guidelines.
- 12 Prior year Annual General Meeting (May 4, 2015) Voting Results for Election of Directors
Robert L. Phillips
Daniel E. Friedmann
Thomas S. Chambers
Dennis H. Chookaszian
Brian G. Kenning
Fares F. Salloum
Eric J. Zahler
Votes For
Number of Shares
29,827,753
30,638,762
30,597,325
30,527,638
30,136,007
30,597,165
30,640,971
%
97.3
99.9
99.8
99.6
98.3
99.8
99.9
Votes Withheld
Number of Shares
821,816
10,807
52,244
121,931
513,562
52,404
8,598
%
2.7
0.1
0.2
0.4
1.7
0.2
0.1
APPOINTMENT OF AUDITORS
Based upon the recommendation of the Audit Committee, the Board of Directors proposes that KPMG LLP
(“KPMG”) be reappointed as auditors of the Company for the ensuing year, at a remuneration to be determined by
the Board of Directors. KPMG has been the auditor of the Company since 2001.
Fees paid to KPMG
Fees paid or accrued by the Company for audit and other services provided by KPMG during 2015 and 2014 were:
Audit fees
Audit related fees
Tax related
Total fees
2015
$ 2,489,400
3,500
837,100
$ 3,330,000
2014
$ 2,484,700
0
759,700
$ 3,244,400
The Audit Committee determined that the provision of the non-audit services (comprised primarily of tax
compliance, tax advice, and tax planning) described above did not compromise the independence of KPMG for
purposes of performing audit services for the Company.
- 13 COMPENSATION DISCUSSION AND ANALYSIS
The following compensation discussion and analysis is provided to communicate and provide insight into the
compensation that the Company provided to the Chief Executive Officer, the Chief Financial Officer and the three
most highly compensated executive officers of the Company (the “Named Executive Officers”) for services
rendered in fiscal 2015.
Introduction
The Company’s compensation strategy is designed to accomplish the following objectives:






align compensation with the overall Company business strategy and business unit goals;
reward executive team members for their contribution to the overall success of the Company and for
achievement of planned business and financial objectives in their own area of responsibility;
attract and retain executive talent able to bring superior management skills to the Company;
implement compensation programs that are cost efficient and reflect the Company’s budget and financial
strength;
align the longer term interests of each executive with the investment objectives of the Company’s
shareholders; and
avoid and discourage short-term behaviour that is not in the best interest of the Company.
Compensation of employees is a significant expense of the Company. While the Company seeks to pay for
performance and remain competitive in the marketplace for executive talent, the Company considers the expense of
compensation and benefits in relation to the Company’s budget and financial strength as a significant factor in
determining compensation levels.
The Company’s compensation programs are designed to reward performance – both performance of the Company as
a whole and personal performance of executive officers. Although a base fixed compensation is provided to
executive officers, emphasis is placed on total compensation (including share-based compensation) that is “at risk”
in nature and encourages long-term value creation. This approach links compensation to performance by making a
significant portion of an executive’s compensation subject to decrease or increase based on performance during a
year and over a longer period, as required.
The Company also seeks to attract, retain and motivate its executives by offering compensation programs and
packages that are competitive with those offered by comparable companies. The Company collects comparator data
from annual compensation survey sources and based on this information, the Company targets total direct
compensation at the 50th percentile of the comparator group, with the opportunity to reach higher levels for superior
performance.
The Company’s compensation programs are designed to align the longer term interests of each executive with the
investment objectives of the Company’s shareholders. To accomplish this, the Company has implemented share
ownership guidelines and a share matching program, and grants share-based long-term incentive awards. In addition,
long-term incentive awards typically vest over a period of three years, and are generally forfeited by the recipient on
termination of employment prior to vesting, thus enhancing retention.
Setting Executive Compensation
Roles, Responsibilities and Process
The Human Resources and Management Compensation Committee (the “Compensation Committee”) is mandated
by the Board of Directors to exercise an oversight role in the provision of competitive compensation programs that
attract, retain and motivate management to enhance and sustain shareholder value. The Compensation Committee is
composed of the following Directors, each of whom is independent as defined in applicable securities laws and each
of whom has expertise and experience in compensation matters: Robert L. Phillips (Chair), Thomas S. Chambers,
Lori B. Garver (from July 30, 2015), Fares F. Salloum, and Eric J. Zahler. The experience and expertise of the
Compensation Committee members has been acquired through their positions in senior management roles of other
entities where they were involved in various human resources aspects, including the development of executive
- 14 compensation, and/or through their involvement on boards of other corporations and in certain circumstances, the
compensation committees of those boards. The Compensation Committee is responsible for reviewing and setting
compensation for the Named Executive Officers, except with respect to the Chief Executive Officer (“CEO”). The
CEO’s compensation is reviewed and set by the Board, based on recommendations from the Compensation
Committee. Members of management, including the CEO, are invited to Compensation Committee meetings from
time to time, but are excused from meetings with respect to their individual compensation decisions. The
Compensation Committee also oversees the potential risks inherent in the Company’s compensation programs and
practices.
Management and the Compensation Committee follow the process below in the determination of executive
compensation.
Management Analysis
Recommendation
Compensation
Surveys
Management
Compensation
Analysis
Committee
Decision
Recommend
Independent
CEO's
Directors'
Compensation
Approval
External
Compensation
Consultants
Committee’s
Approval
CEO's
May use
for NEO's,
recommendation
outside
excluding CEO
on executive
Consultant
compensation
The CEO is actively engaged in the development and determination of the Company’s compensation programs
(other than with respect to his own compensation). The CEO conducts an annual evaluation of each Named
Executive Officer’s performance for the previous year, and recommends salary adjustments, short-term incentive
awards and long-term incentive awards for each Named Executive Officer to the Compensation Committee. The
CEO annually reviews compensation surveys, which include comparator companies, in recommending
compensation and compensation mix for the Named Executive Officers. The recommendations of the CEO are
reviewed and approved by the Compensation Committee after discussion and adjustment, if appropriate.
The Compensation Committee conducts an annual review of the CEO’s performance. The Compensation Committee
determines the CEO’s base salary, specified performance goals to be achieved for the following year and long-term
incentive goals. Based on this, the Compensation Committee makes a recommendation to the Board and the Board
determines salary adjustments, short-term incentive awards and long-term incentive awards to be granted to the
CEO.
In addition, the Board has the discretion, with the input of the Compensation Committee, if required, to award
compensation to the CEO or the Named Executive Officers outside the compensation plan if deemed appropriate in
the circumstances.
The Compensation Committee is not aware of any significant changes in the Company’s compensation programs to
be implemented in the 2016 fiscal year.
Compensation Risk
The Board has an annual compensation risk review process, which is overseen by the Compensation Committee, in
addition to a long standing compensation review process. The compensation risk review process seeks to identify
inherent risks associated with compensation, reviews what policies and practices are in place to mitigate those risks,
and how effectively these risks are being managed. This analysis covers the following areas: pay philosophy and
- 15 governance, pay mix, incentives and performance measurement, share-based incentives, share ownership, and other
policies and procedures.
In connection with the adoption of the annual target performance objectives for 2015, the Compensation Committee
considered the extent to which the metrics (or others not selected) could potentially incentivize unnecessary or
inappropriate risk-taking or short-term decision making.
In addition to the metrics selected for performance-based compensation, the Compensation Committee believes that
certain other tools and policies mitigate the incentive for executives to take excessive or inappropriate risks. These
tools and policies include: share ownership policies, prohibiting hedging of equity-based compensation or common
shares held under share ownership guidelines, the Chief Executive Officer’s short-term incentives are measured over
several years and the fact that equity awards are generally not accelerated upon retirement. In addition, the
Compensation Committee has monitored trends and unusual impacts on compensation over a number of years. The
following additional aspects of the Company’s compensation programs also limit the amount of benefit that could be
obtained by executives through undue focus on short-term results and/or excessive or inappropriate risk taking:
long-term equity incentive is directly linked to the Company’s financial performance, short-term incentive awards
are generally capped at 150% to 200% of target value, short-term incentives are a relatively small component of
executive compensation (see the Section “Pay Mix” below), and non-financial or qualitative goals and objectives are
considered in the setting of future compensation for the Chief Executive Officer, Chief Financial Officer, and Chief
Operating Officer. In addition, compensation risks are further mitigated through the annual business planning
process. The Company’s strategic objectives and risk assessment process are used in preparing the annual business
plan which is then used for compensation planning, including compensation mix, and then further used to develop
specific objectives for the achievement by the executives of annual short-term cash incentives.
The Board considers that the processes adopted to be an effective method for examining compensation risk and
mitigation strategies. The Compensation Committee has considered the risks created by the Company’s
compensation policies and practices, including mitigating factors, and, based on its review, does not believe that the
compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the
Company.
Anti-hedging Policy
The Company’s share ownership guidelines prohibit hedging of share-based compensation or common shares for
officers and directors of the Company.
Clawback Policy
The Company implemented a clawback policy, effective January 2014, that applies to the Named Executive Officers
and certain other senior executives. The policy provides that the Company, at the direction of the Compensation
Committee, may seek reimbursement for variable cash compensation awarded to an executive in situations where (a)
there is a substantial restatement of MDA’s financial statements filed with the securities commissions in Canada
(other than a restatement caused by a change in applicable rules or interpretations) and the price of the common
shares has substantially decreased as a result of the restatement, (b) the incentive compensation would have been
lower had the financial results been properly reported and (c) the restatement is within three years after the first
filing of the financial statements.
Other
The Board, with input from the Compensation Committee, has carefully considered emerging practices aimed at
further aligning executive compensation with the interests of shareholders. The Board has adopted an advisory vote
on executive compensation. Refer to the Section “Advisory Vote on Executive Compensation”.
Compensation Benchmarking
To assess the market competitiveness of its compensation programs for executives, the Company participates in
compensation surveys on an annual basis with a number of companies, including Radford, Towers Watson, Mercer
and ERI (Economic Research Institute). Analysis of the market is conducted based on data from a broad spectrum
- 16 of business organizations with particular emphasis on the technology sector, revenue categories and geography
consistent with the executive’s respective area of responsibility. Each Named Executive Officer is matched to one or
more survey benchmark position(s) based on such Named Executive Officer’s role and responsibilities. Market data
is collected with respect to elements of total direct compensation for the 25th, 50th and 75th percentiles of the market
group for that Named Executive Officer. During 2015, the Company performed an internal compensation review,
using data obtained from various sources (including Towers Watson, Radford, ERI, and Mercer), to assess market
competitiveness of the compensation arrangements for Named Executive Officers.
In addition, independent compensation consultants are engaged by the Compensation Committee periodically, as
required, to assess the market competitiveness of the total executive compensation arrangements, including base
salary, annual incentives and long-term incentives. During 2015, Towers Watson was engaged to assess the market
competitiveness of the Company’s executive compensation arrangements for Named Executive Officers. The
consultant’s findings indicated that the Named Executive Officers are generally aligned to the market median on a
total direct compensation basis (salary, short-term and long-term incentives). The consultant’s findings also noted
that cash compensation (salary plus target bonus), on average, was below market. The consultant’s findings were
based on a review of its high technology sector surveys of 23 U.S. high technology companies with revenues of
US$900 million to US$4 billion and 30 Canadian high technology companies, with an even weighting being given
between Canadian and U.S. companies in the surveys with the exception of the President of Space Systems/Loral,
LLC who is compared only to U.S. data. The Board and Compensation Committee use the company survey group
for comparative purposes in determining the compensation for the CEO and Named Executive Officers.
The companies included in the high technology surveys noted above were as follows:
Accenture Canada
Arrow Electronics Canada Inc.
BCE Inc.
Boeing Canada - AeroInfo
CGI Group
Embanet Canada
IBM Canada Ltd.
MTS Allstream Inc.
Rogers Communications Inc.
Verizon Canada
Broadridge Financial Solutions
Cubic
IMS Health
Linkedin
Rackspace
Spotify
TomTom
VistaPrint
ACCEO Solutions Inc.
AT&T Canada
Bell Aliant Regional Communications Inc.
Broadridge Financial Solutions, Inc.
Cisco Canada
Ericsson Canada Inc.
IMS health Canada
Nintendo of Canada Ltd.
Tech Data Canada
Videotron Ltee
CDI
DST Systems
International Game Technology
Pitney Bowes
Sage Software
TeleTech
Tribune
XO Communications
Amazon.com
Ballard Power Systems
BlackBerry Ltd.
Celestica Inc.
Cogeco Inc.
General Electric Canada
Microsoft Canada
Pitney Bowes of Canada
TELUS Corporation
Yellow Media Limited
Citrix Systems
General Atomics
Knowles
Plexus
Sensata Technologies
Teradata
Unisys
The Company does not compare its performance to that of peers nor makes relative performance a factor in
determining grants under the Company’s incentive plans, as the Company is sufficiently unique to effectively
compare against a specific peer group.
Fees paid or accrued by the Company for the executive compensation market competitiveness review during 2015
were $18,400 (2014 - $nil). The external compensation consultant was not engaged to provide any other
compensation related services for the Company in 2015.
Elements of Compensation
Base Salary
The Company provides a base salary so that executives have a regular defined and certain income. Competitive
base salaries are important in attracting and retaining talented executives. However, it is balanced against the
objective to keep fixed compensation expense low. When reviewing market comparators, base salary is viewed as a
component of total annual cash compensation, which is targeted at the market median.
- 17 In addition to market comparables, base salary is determined with reference to the strategy of the Company, the
responsibilities of the position, the experience of the incumbent, the competitive marketplace for qualified executive
talent for that position and the recommendations of the CEO (for all Named Executive Officers other than the CEO).
In considering base salary levels, the Compensation Committee (and the Board with respect to the CEO’s base
salary) does not utilize any specific weighting of the above factors, and annual reviews do not necessarily result in
an increase to the Named Executive Officer’s base salary.
The CEO’s base salary and the rationale for setting his base salary are reviewed annually by the Compensation
Committee in making its recommendations to the Board. In addition to market comparables, the base salary for the
CEO is determined with reference to the strategy of the Company, the responsibilities and experience of the CEO,
and the competitive marketplace for qualified executive talent with respect to the role of the CEO in a company
similar to the Company. In considering the CEO’s base salary level, the Compensation Committee does not utilize
any specific weighting of the above factors, and the annual review does not necessarily result in an increase to the
CEO’s base salary.
Short-Term Incentives
As a component of variable pay, the Company provides Named Executive Officers with the opportunity to earn
short-term incentives that are paid annually as cash awards. These awards are based on the achievement of
performance goals discussed in further detail in Section “Performance Goals” below.
Target short-term incentive awards are set as a percentage of the CEO’s or a Named Executive Officer’s base salary,
with minimum thresholds and higher stretch targets depending on performance.
Performance goals are established individually for executive officers including the CEO, and are based on specified
financial goals of the Company and if applicable individual business units, achievement of certain strategic
initiatives and the achievement of specified personal goals. Nonetheless, achievement of the maximum target of
short-term incentives would require significantly above average performance of both the executives and the
Company to produce results that exceed expectations.
Long-Term Incentive Plans (“LTIPs”)
As another component of variable pay, the Company annually awards long-term incentives which, in 2015, were
awarded in the form of share appreciation rights (“LTIP Units”). Long-term incentive awards are key components
in attracting and retaining key executive officers and are intended to focus management’s attention on long-term
growth and shareholder value. In determining the total number of LTIP Units to be awarded each year to all
participants, including executive officers, the Compensation Committee follows a two-step process. First, the
Compensation Committee, with the assistance of a compensation consultant, calculates the value of an LTIP Unit
based on the Black-Scholes formula. The value is then divided into a percentage of the Company’s total base
salaries for that year to initially determine the total number of LTIP Units potentially available for award. This
percentage was determined by the Compensation Committee based on past determinations, which used the
assistance of an external compensation consultant, and with the recommendations and assistance from management
and from the Company’s human resources department. The Compensation Committee uses this approach as a
method to determine the appropriate proportion that the value of long-term incentives should be to the value of the
Company’s total compensation expense in a particular year. Second, once this initial number of LTIP Units is
determined, the Compensation Committee considers several factors, including in particular the overall financial and
operational performance of the Company in the prior year against pre-determined financial and operational
objectives for that year, to determine whether the total number of LTIP Units that are available for award should be
reduced. In the prior three years, the number of LTIP Units otherwise available for award was not reduced.
In determining the number of LTIP Units to be awarded to each of the Named Executive Officers in any year, the
CEO and the Compensation Committee (for the Named Executive Officers other than the CEO), and the
Compensation Committee and the Board (for the CEO) assess the target value of a long-term incentive award,
individual performance and other factors for each such position (based on the 50th percentile of the comparator
group for each Named Executive Officer) and then divide the value of the LTIP Unit into the target value. The
actual number of LTIP Units awarded to an executive in each year may be reduced if the total number of LTIP Units
available for award that year has been reduced.
- 18 Share Grants
The Company granted stock options in the past as long-term incentive awards, but the use of stock options has been
discontinued. In 2015, the Company granted only LTIP Units as long-term incentive awards. For more information,
see the Section “Executive Compensation” below.
The Company offers a share matching program (the “Matching Program”), whereby certain executives including the
CEO and the Named Executive Officers are granted one common share of the Company for every three common
shares that are held for a consecutive period of three years. Common shares are purchased on the open market to
satisfy obligations under the Matching Program. As the CEO and the Named Executive Officers only receive
common shares under the Matching Program after three years, the Matching Program promotes retention of those
executives. The Matching Program also provides an alignment with the investment objectives of the Company’s
shareholders.
As at December 31, 2015, 24 executives were eligible for participation in the Matching Program. Participation in the
Matching Program is capped at the encouraged level of ownership. See also the Section “Share Ownership
Guidelines”. The Company’s matching obligation terminates once the encouraged level of ownership is met and is
not adjusted or “re-started” if the executive was to sell his or her common shares.
Pay Mix
The information in the following table represents the percentage of total compensation for the CEO and the Named
Executive Officers for 2015. Actual pay mix will vary from year to year as the Company’s compensation programs
are designed to meet both performance and competitiveness objectives. In general, the programs are designed to
provide most executive compensation in the form of at-risk pay to align with shareholders’ interests. Base salary,
including benefits, provides a competitive foundation considering both internal comparability and external market
data. Annual short-term cash incentives reward against the delivery of results against objectives and subjective
measures primarily within a one-year period. Long-term incentives, or LTIP Units, reward against MDA’s sustained
performance as seen in the price appreciation of its common shares.
Position
CEO
CFO
Other NEOs
(1)
Base Salary
12 %
20 %
26 %
At-risk Compensation
Annual Cash Incentive
Long-term Incentive
11 %(1)
77 %
11 %
69 %
5%
69 %
Mr. Friedmann declined the payment of his 2015 short-term incentive compensation.
Performance Goals
The Company’s variable pay component of compensation is directly linked to and determined by financial,
strategic/business development and personal performance goals established in advance and measured against actual
performance annually.
Performance goals for the upcoming fiscal year are determined annually by the CEO with each Named Executive
Officer individually. Mr. Friedmann’s variable compensation is determined by performance goals determined
annually by the Board, in consultation with Mr. Friedmann and the Compensation Committee, and upon
recommendation of the Compensation Committee. Performance goals differ with respect to each Named Executive
Officer, and are discussed below.
Mr. Daniel Friedmann
Mr. Friedmann serves as President and Chief Executive Officer of the Company. Mr. Friedmann’s performance
goals are established on targeted financial objectives of the Company and as applicable, the Company’s business
groups, the achievement of specific strategic objectives, and personal goals or objectives. These vary each year and
are based on an assessment of the economic conditions affecting the Company and also reflect the Company’s
successful performance in specified programs that ensure the Company’s service excellence is maintained. Details
of Mr. Friedmann’s performance goals and target percentages for fiscal year 2015 are set out in the chart below:
- 19 Specific Performance Goal
Achievement of specific financial targets, including
operating earnings per share (“EPS”), revenues and
order backlog.
Actual results achieved(1):
Operating EPS
$6.08
Revenues
$2.1 billion
Order backlog
$2.9 billion
Achievement of specific strategic objectives.
(1)
(2)
Percentage of
Target ShortTerm Incentive
Percentage of
Target
Achievable
Results for year
– as a % of
target achievable
60%
0 to 200%
0%(2)
40%
0 to 200%
0%(2)
100%
0 to 200%
0%(2)
Disclosure of the specific financial targets is seriously prejudicial to the Company’s competitive position. The targets are not easily
achievable.
Mr. Friedmann declined the payment of his 2015 short-term incentive compensation, which would have been $435,000, as performance
targets at SSL were not achieved.
Mr. Friedmann’s target variable pay component was 100% of his base salary in 2015. Mr. Friedmann was paid 0%
of base salary (0% of target) for 2015. For the prior two years, Mr. Friedmann’s variable pay component earned and
paid was as follows: 2014 – 148% of base salary (148% of target); 2013 – 80% of base salary (80% of target).
Mr. Anil Wirasekara
Mr. Wirasekara serves as Executive Vice President and Chief Financial Officer of the Company. Mr. Wirasekara’s
performance is measured principally against performance goals that are within the scope of Mr. Wirasekara’s
responsibilities. For example, Mr. Wirasekara is rewarded for financial and strategic targets, which include the
Company’s efficiency at allocating and obtaining capital. Mr. Wirasekara’s performance goals and target
percentages for fiscal year 2015 are set out in the chart below:
Specific Performance Goal
Achievement of target operating EPS(1) and tax
efficiencies among the corporate group.
Strategic, corporate business development and
financing activities.
Percentage of
Target ShortTerm Incentive
Percentage of
Target
Achievable
Results for year
– as a % of
target achievable
57%
0 to 163%
159%
43%
0 to unlimited(2)
83%
100%
(1)
(2)
127%
The operating EPS target is the same as the target for Mr. Friedmann. The target is not easily achievable.
Although there is no cap on this target, the Company considers it highly unlikely to exceed 200% of target for this performance goal.
Mr. Wirasekara’s target variable pay component was 44% of his base salary in 2015. Mr. Wirasekara was paid 56%
of base salary (127% of target) for 2015. For the prior two years, Mr. Wirasekara’s variable pay component earned
and paid was as follows: 2014 – 42% of base salary (97% of target); 2013 – 45% of base salary (104% of target).
Mr. Peter Louis
Mr. Louis serves as Executive Vice President and Chief Operating Officer of the Company. Mr. Louis’s short-term
variable compensation is based on achievement of measured financial targets and achievement of specific strategic
objectives. Mr. Louis’s performance goals and target percentages for fiscal year 2015 are set out in the chart below:
- 20 Specific Performance Goal
Percentage of
Target ShortTerm Incentive
Percentage of
Target
Achievable
Results for year
– as a % of
target achievable
Achievement of operating earnings targets for the
operating units of the Company.(1)
57%
0 to 200%
0%
Operational and strategic objectives.
43%
0 to unlimited
315%
100%
(1)
135%
Disclosure of individual operating unit earnings targets is seriously prejudicial to the Company’s competitive position. The targets are not
easily achievable.
Mr. Louis’s target variable pay component was 39% of his base salary in 2015. Mr. Louis was paid 52% of base
salary (135% of target) for 2015. For the prior two years, Mr. Louis’s variable pay component earned and paid was
as follows: 2014 – 51% of base salary (131% of target); 2013 – 31% of base salary (79% of target).
Mr. Don Osborne
Mr. Osborne serves as Group Vice President and General Manager. Mr. Osborne’s short-term variable compensation
is based on achievement of measured financial targets and growing the business through development of new
opportunities and increased number and value of new contracts. Mr. Osborne’s performance goals and target
percentages for fiscal year 2015 are set out in the chart below:
Specific Performance Goal
Percentage of
Target ShortTerm Incentive
Percentage of
Target
Achievable
Results for year
– as a % of
target achievable
Achievement of an operating earnings target for an
operating unit of the Company.(1)
50%
0 to 200%
0%
Delivery of specific contracts and operational
objectives.(2)
50%
0 to unlimited
73%
100%
(1)
(2)
37%
Disclosure of the operating earnings target is seriously prejudicial to the Company’s competitive position. The target is not easily
achievable.
Incentive paid is a specified target per million dollars of contracts booked, on a sliding scale based on the dollar value of the contracts
booked.
Mr. Osborne’s target variable pay component was 44% of his base salary in 2015. Mr. Osborne was paid 16% of
base salary (37% of target) for 2015. For the prior year, Mr. Osborne’s variable pay component earned and paid was
58% of base salary (137% of target). Mr. Osborne assumed his current position on January 1, 2014, therefore
information prior to 2014 is not provided.
Mr. John Celli
Mr. Celli serves as President of Space Systems/Loral, LLC (“SSL”). Mr. Celli’s short-term variable compensation is
based on achievement of measured financial targets and growing the business through development of new
opportunities and increased operating margin of new contracts. Mr. Celli’s performance goals and target
percentages for fiscal year 2015 are set out in the chart below:
- 21 Specific Performance Goal
Percentage of
Target ShortTerm Incentive
Percentage of
Target
Achievable
Results for year
– as a % of
target achievable
Achievement of specified operating efficiency
targets for an operating unit of the Company.(1)
75%
0 to 140%
0%
Achievement of a specified operating margin target
from new contracts won in 2015.(2)
25%
0 to 200%
0%
100%
(1)
(2)
0%
Disclosure of the operating efficiency targets is seriously prejudicial to the Company’s competitive position. The targets are not easily
achievable.
Disclosure of the operating margin from new contracts target is seriously prejudicial to the Company’s competitive position. The target is
not easily achievable.
Mr. Celli’s target variable pay component was 75% of his base salary in 2015. Mr. Celli was paid 0% of base salary
(0% of target) for 2015, as threshold targets were not met. For the prior two years, Mr. Celli’s variable pay
component earned and paid was as follows: 2014 – 70% of base salary (94% of target); 2013 – 0% of base salary
(0% of target), as threshold targets were not met.
Pension
Messrs. Friedmann and Wirasekara are participants in the defined benefit pension plan operated by MacDonald,
Dettwiler and Associates Inc. since 2012. The individuals are required to make contributions under the plan and are
entitled to purchase an additional year of credited service for each year of credited service under the plan. The
timing and the number of years of credited service they can purchase is limited.
Benefits payable from the plan correspond to 1.5% of the average base salary in the 60 completed consecutive
months of service during which the executives are paid their highest salary (up to the maximum earnings according
to the Income Tax Act (Canada)) multiplied by the number of years of credited service. The benefits payable are
increased by a cost of living adjustment of the lesser of the percentage increase in the average consumer price index
and 3%. Bonuses and any other compensation are not considered in the computation of pension benefits.
A supplemental benefit is payable from retirement up to the first of the month the executive attains age 65. The
annual supplemental benefit is equal to 1/35th of the age 65 maximum Canada Pension Plan benefit available when
the executive retires, times years of credited service.
If the executive selects the normal form of benefit at retirement and later dies, his spouse will be entitled to a benefit
equal to 66 2/3% of the benefit the executive was receiving, excluding the supplemental benefit.
Mr. Celli is a participant in the defined benefit pension plan operated by SSL. Individuals who contribute 1% of pay
into the pension plan earn the following benefit: the annual accrual under the plan is 1.2% of Credited Compensation
up to the U.S. Social Security Wage Base, plus 1.45% of the compensation in excess of the wage base. Beginning
with the calendar year in which the individual attains his 15th year of service, the annual accrual is 1.5% of Credited
Compensation up to the U.S. Social Security Wage Base plus 1.75% of the compensation in excess of the wage
base. Credited Compensation above is defined as base pay plus overtime, bonuses, commissions, as well as certain
pay differentials and premiums. Under the qualified plan, compensation is limited to the IRC Section 401(a)(17)
compensation limit for U.S. tax qualified plans. Additional accruals for compensation above the IRC Section
401(a)(17) limit are provided under the Supplemental Executive Retirement Plan.
Effective December 31, 2013, benefits provided by the defined benefit pension plan operated by SSL were frozen,
and the possibility for future benefit accruals was eliminated.
- 22 Benefits and Perquisites
The primary purpose of providing benefits and limited perquisites to the CEO and the Named Executive Officers is
to attract and retain the talent to manage the Company.
The Company offers only limited perquisites to the CEO and the Named Executive Officers, and only when such
perquisites provide competitive value, promote the retention of those executive officers, or promote the efficient
performance of their duties. The Company does not believe that perquisites should represent a significant portion of
compensation to the CEO and the Named Executive Officers. In 2015, perquisites represented 0.8% (2014 – 1.0%)
of total compensation of the CEO and the Named Executive Officers.
Severance and Change of Control Benefits
The Company has an employment agreement with each of Messrs. Friedmann and Wirasekara which provides
severance and change of control benefits. These agreements were put in place prior to the Company’s initial public
offering in 2000. In addition, the Company entered into an employment agreement with Mr. Louis in 2015.
With respect to change of control benefits, compensation is provided if Messrs. Friedmann or Wirasekara are
terminated in connection with a change of control transaction on a “double trigger” basis, meaning that before such
executive can receive compensation: (i) a change in control, as defined, must occur; and (ii) within 24 months of
such change of control, Messrs. Friedmann or Wirasekara’s employment must be terminated without cause. Change
of control benefits are granted to motivate executive officers to act in the best interests of the Company’s
shareholders in a change of control transaction by removing the distraction of post-change of control uncertainties
faced by executive officers with regard to their continued employment and compensation. The Company believes
that “double trigger” change of control compensation is consistent with market practices and is attractive in
maintaining continuity and retention of key management personnel. For more information, refer also to the Section
“Termination and Change of Control Benefits”.
The Company entered into an employment agreement with Mr. Louis during the year whereby compensation is
provided if he resigns for good reason. For more information, refer also to the Section “Termination and Change of
Control Benefits”.
Severance benefits are appropriate, particularly with respect to a termination by the Company without cause or by
the employee for good reason, since in these scenarios, both the Company and the executive officer have a mutually
agreed upon severance package that is in place prior to any termination event. This provides the Company with
certainty and the flexibility to make changes in executive management if such change is in the Company’s best
interests. For more information on the Company’s severance and change of control benefits, see the Section
“Termination and Change of Control Benefits”.
Share Ownership Guidelines
The Company has common share ownership guidelines for its executives. The guidelines have two tiers for
ownership, a recommended tier and an encouraged tier, based on a multiple of the base salary of the executives. For
the purposes of the guidelines, common shares are valued at the higher of the original cost and the market price of
the common shares at the time of assessment:
President and CEO
Executive Vice President
Vice President, Officer or Senior Executive
Recommended
3 times
1.5 times
Nil
Encouraged
5 times
2.5 times
1 times
The recommended tier of ownership is expected to be attained within five years of the date of assumption of office
by the executives. To assist in the attainment of recommended and encouraged tiers, the Company offers the
Matching Program. See the Section “Long-Term Incentive Plans”.
The Company’s share ownership guidelines prohibit hedging of share-based compensation or common shares.
- 23 As at December 31, 2015, the Named Executive Officers, with the exception of Mr. Celli, met or exceeded the
recommended share ownership guidelines, based on the market price of the Company’s common shares as at
December 31, 2015. Mr. Celli joined the Company in November 2012 and has five years from that date to attain the
recommended share ownership guideline.
Named Executive Officer
Number of
Shares Held
Value of Shares
Held(1)
($)
Daniel Friedmann
27,045
2,251,767
Anil Wirasekara
10,949
911,614
Peter Louis
16,738
Don Osborne
John Celli
(1)
Recommended
Level
3 times
Value Required
to Meet
Guidelines ($)
Value Held as
Multiple of
Salary
1,305,000
5.2 times
1.5 times
478,500
2.9 times
1,393,606
1.5 times
541,500
3.9 times
4,932
410,638
1.5 times
412,500
1.5 times
1,950
162,357
1.5 times
934,200
0.3 times
Based on the closing market price of the Company’s common shares on the TSX on December 31, 2015 of $83.26.
- 24 EXECUTIVE COMPENSATION
The following tables set forth compensation earned by the Company’s CEO and the Named Executive Officers in
fiscal 2013, 2014 and 2015.
Summary Compensation Table
Name and Principal
Position
Fiscal
Year
Salary
($)
Share-Based
Awards(1)
($)
Non-Equity
Incentive Plan
Compensation Annual
Incentive Plans
($)
Pension
Value
($)
All Other
Compensation
($)
Total
Compensation
($)
Friedmann, Daniel
President and Chief
Executive Officer
2015
2014
2013
435,000
435,000
435,000
3,022,900
2,439,500
1,792,650
Nil(2)
643,800
348,000
133,600
111,600
129,500
16,172
15,446
14,804
3,607,672
3,645,346
2,719,954
Wirasekara, Anil
Executive Vice
President and Chief
Financial Officer
2015
2014
2013
319,000
319,000
319,000
1,145,520
1,033,200
755,820
177,500
135,100
145,000
135,800
113,100
122,500
14,022
13,397
12,804
1,791,842
1,613,797
1,355,124
Louis, Peter
Executive Vice
President and Chief
Operating Officer
2015
2014
2013
361,000
361,000
361,000
1,591,000
1,291,500
949,620
189,000
183,150
110,900
Nil
Nil
Nil
16,029
16,736
14,737
2,157,029
1,852,386
1,436,257
Osborne, Don(3)
Group Vice President
and General Manager
2015
2014
275,000
235,000
1,272,800
1,182,370(4)
43,900
137,390
Nil
Nil
13,866
11,478
1,605,566
1,566,238
Celli, John
Divisional President
2015
2014
2013
575,415(5)
497,115(5)
463,462(5)
477,300
602,700
290,700
Nil
349,348(5)
Nil
Nil
Nil
18,400(5)
19,473(5)
45,278(5)
24,722(5)
1,072,458(5)
1,494,441(5)
797,284(5)
(1)
(2)
(3)
(4)
(5)
Unless otherwise indicated, awards granted under the Share-Based Awards column are LTIP Units awarded pursuant to the Company’s
long-term incentive plans. For more information on the LTIP Units and the Company’s long-term incentive plans, see the Section “LongTerm Incentive Plans”. The LTIP Units are valued using the Black-Scholes option pricing model. The valuation method is chosen to reflect
the variability of the price of common shares on the value of the LTIP Units and the vesting and expiration dates of the LTIP Units. For
further information on the method used for the determination of the number of LTIP Units awarded to each of the Named Executive
Officers, see the Section “Long-Term Incentive Plans”.
Mr. Friedmann declined the payment of his 2015 short-term incentive compensation, which would have been $435,000, as performance
targets at SSL were not achieved.
Mr. Osborne assumed his current position on January 1, 2014, therefore information prior to 2014 is not provided.
Included in this figure is an amount of $34,370 representing Mr. Osborne’s entitlement to 362 shares, with a value of $94.95 per share as at
December 31, 2014, under the Company’s Matching Program.
Translated into Canadian dollars at the average exchange rate for the year (2015 - US$1 = Cdn$1.2787; 2014 - US$1 = Cdn$1.1047; 2013 US$1 = Cdn$1.0299).
During 2015, the CEO and the Named Executive Officers exercised certain share-based awards that were granted in
prior years. The pre-tax gain of the share-based awards exercised during the year was as follows: Mr. Friedmann $8,567,500; Mr. Wirasekara - $2,062,900; Mr. Louis - $2,501,400; Mr. Osborne - $933,800; and Mr. Celli $356,600.
- 25 Outstanding Share-Based Awards and Option-Based Awards Table
Option-Based Awards
Share-Based Awards
Market or Payout
Number of Shares
Value of Shareor Units of Shares
based awards that
that have not
have not vested(1)
Vested
(#)
($)
Number of
Securities
Underlying
Unexercised
Options
Option
Exercise
Price
($)
Option Expiration
Date
Value of
Unexercised
In-The-Money
Options
($)
Friedmann, Daniel
-
-
-
-
404,168
887,493
Wirasekara, Anil
-
-
-
-
157,000
374,330
Louis, Peter
-
-
-
-
209,334
374,002
Osborne, Don
-
-
-
-
140,002
230,743
Celli, John
-
-
-
-
54,000
162,700
Name
(1)
Calculated by using the closing market price of the Company’s common shares on December 31, 2015, which was $83.26 per share.
Incentive Plan Awards – Value Vested or Earned During the Year Table
Name
(1)
Option-based awards Value vested during the
year
($)
Share-based awards Value vested during the
year(1)
($)
Non-equity incentive
plan compensation Value earned during
the year
($)
Friedmann, Daniel
-
4,027,189
Nil
Wirasekara, Anil
-
1,698,450
177,500
Louis, Peter
-
1,953,695
189,000
Osborne, Don
-
1,196,341
43,900
Celli, John
-
357,140
Nil
LTIP Units vested in 2015 under the LTIPs for 2012, 2013 and 2014, based on the market value of the underlying units on the vesting date.
The applicable LTIPs provide for a holder of LTIP Units, upon exercise, to receive the positive difference between the average closing
price of the Company’s common shares on the TSX for the five trading days up to and including the exercise date and the base price at
which the LTIP Units were issued multiplied by the number of LTIP Units exercised. See the Section “Long-Term Incentive Plans” for a
description of the plans.
Pension Plan
Mr. Friedmann, Mr. Wirasekara, and Mr. Celli participate in a defined benefit pension plan to which those
individuals contribute. Mr. Friedmann and Mr. Wirasekara commenced participation in the plan in 2012 and provide
contributions to the plan. Mr. Celli was a member in the defined benefit pension plan of SSL, which was acquired by
the Company in November 2012.
For Mr. Friedmann and Mr. Wirasekara, benefits payable from the plan correspond to 1.5% of the average base
salary in the sixty completed consecutive months of service during which the executives are paid their highest salary
(up to the maximum earnings according to the Income Tax Act (Canada)) multiplied by the number of years of
credited service. The benefits payable are increased by a cost of living adjustment of the lesser of the percentage
increase in the average consumer price index and 3%. Benefits are payable at age 65.
Bonuses and any other compensation are not considered in the computation of pension benefits.
- 26 A supplemental benefit is payable from retirement up to the first of the month the executive attains age 65. The
annual supplemental benefit is equal to 1/35th of the age 65 maximum Canada Pension Plan benefit available when
the executive retires times years of credited service.
If the executive selects the normal form of benefit at retirement and later dies, his spouse will be entitled to a benefit
equal to 66 2/3% of the benefit the executive was receiving, excluding the supplemental benefit.
The executives can buy back benefits for years they did not participate in the plan but the timing and the number of
years they can purchase is limited. Executives are assumed to buy back all eligible benefits.
Mr. Celli earns the following benefits: the annual accrual under the plan is 1.2% of Credited Compensation up to the
U.S. Social Security Wage Base, plus 1.45% of the compensation in excess of the wage base. Beginning with the
calendar year in which the individual attains his 15th year of service, the annual accrual is 1.5% of Credited
Compensation up to the U.S. Social Security Wage Base plus 1.75% of the compensation in excess of the wage
base. Credited Compensation above is defined as base pay plus overtime, bonuses, commissions, as well as certain
pay differentials and premiums. Under the qualified plan, compensation is limited to the IRC Section 401(a)(17)
compensation limit for U.S. tax qualified plans. Additional accruals for compensation above the IRC Section
401(a)(17) limit are provided under the Supplemental Executive Retirement Plan. Effective December 31, 2013,
benefits provided by the defined benefit pension plan operated by SSL were frozen, and the possibility for future
benefit accruals was eliminated.
Years of
Credited
Service
Name
Annual Benefits Payable
($)
At Year End
At Age 65
Accrued
Obligation at
Start of Year
($)
Compensatory
Change
($)
Noncompensatory
Change
($)
Accrued
Obligation
at Year End
($)
Friedmann, Daniel
4.0
25,000
58,200
441,100
133,600
17,200
591,900
Wirasekara, Anil
4.0
25,000
65,900
445,500
135,800
17,400
598,700
31.9
288,300
288,300
2,917,200
nil
432,300
3,349,500
Celli, John(1)
(1) Amounts are translated into Canadian dollars using the beginning of year exchange rate of 1.1601, the average exchange rate of 1.2787, and
the end of year exchange rate of 1.3840.
Executive Compensation
The total aggregate 2015 annual compensation for the CEO and the Named Executive Officers as a percentage of
total market capitalization, as at December 31, 2015, was 0.3% (2014 – 0.3%) and as a percentage of total earnings
before income taxes was 5.5% (2014 – 12.0%). Total earnings before income taxes were lower in 2014 as compared
to 2015 due to several unusual items in 2014.
The following is a description of the significant terms of the Company’s equity-based compensation plans under
which awards are granted and are outstanding.
Option plan
The Company has a Stock Option and Compensation Plan (“Option Plan”) which was implemented to advance the
interests of the Company by attracting and retaining senior officers, executives and employees with an interest in the
growth and performance of the Company. No options have been issued under the Option Plan since 2004 and as at
December 31, 2015, there were no options outstanding.
See the Section “Securities Authorized for Issuance Under Equity Compensation Plans” for a more complete
description of the Option Plan.
Long-Term Incentive Plans
Beginning in 2007, the Company adopted a program of establishing long-term incentive plans (“LTIPs”) pursuant to
which share appreciation rights (“LTIP Units”) are granted annually. Under the LTIPs, the issue price of the LTIP
- 27 Units is the closing price of the Company’s common shares on the TSX on the date of the grant. The LTIP Units
vest over three years, in the amount of one-third per year, and are granted with a five-year term from their grant
date. The Board has discretion that may be exercised in certain stated events relating to the LTIP Units and their
treatment. In the event of a terminating transaction, as defined in the LTIPs, all LTIP Units vest and are paid out at
the value of the Company’s common shares at the date of completion of that transaction. In the event of voluntary
resignation or termination for cause, all vested LTIP Units are paid at the value of the date of such event and all
unvested LTIP Units are forfeited.
With respect to the 2012 and 2013 LTIPs, upon exercise of an LTIP Unit by the grantee, the appreciation of the
share value of the Company’s common shares between the grant date and the exercise date or maturity date is paid
in cash. The Company, at its sole discretion, may also deliver common shares to the grantee representing the
appreciation of the share value. The common shares delivered under the 2012 and 2013 LTIPs will be acquired in
the open market or issued from treasury. If common shares are purchased in the open market, the value of the
common shares delivered will be net of any deductions required to be made under applicable tax laws. If common
shares are issued from treasury, the grantee is required to pay an amount to the Company equal to all deductions
required to be made under applicable tax laws. The value of the LTIP Units on the date of exercise or maturity is
calculated based on the average closing trading price of the common shares of the Company for the five trading days
up to and including the date of exercise.
With respect to the 2014, 2015 and 2016 LTIPs, a grantee, other than a U.S. taxpayer, has two alternatives when
exercising the LTIP Units. Under the first alternative, the Company will deliver common shares based on the
number of LTIP Units exercised upon payment of the exercise price plus all deductions required to be made under
applicable tax laws. Under the second alternative, the appreciation of the share value of the Company’s common
shares between the grant date and the exercise date or maturity date is paid in cash plus all deductions required to be
made under applicable tax laws. The Company, at its sole discretion, may also deliver common shares to the grantee
representing the appreciation of the share value in which event the grantee shall pay to the Company an amount
equal to all deductions. The value of the LTIP Units on the date of exercise or maturity is calculated based on the
average closing trading price of the common shares of the Company for the five trading days up to and including the
date of exercise. Any common shares delivered under the 2014 and 2015 LTIPs are either acquired in the open
market or issued from treasury. Any common shares delivered under the 2016 LTIP are either acquired in the open
market, or at the Company’s option with all required regulatory and shareholder approval, issued from treasury. The
approval is being sought at the Meeting for the ability to issue common shares from treasury on the exercise of the
2016 LTIPs. U.S. grantees may only exercise under the second alternative, payment in cash for the appreciation of
the share value of the Company’s common shares between the grant date and the exercise date.
See the Section “Approval of the 2016 Long-term Incentive Plan and Reservation of Shares Thereunder”.
Other
Executive officers and Directors are not permitted to hedge equity-based compensation or common shares held
under the share ownership guidelines.
TERMINATION AND CHANGE OF CONTROL BENEFITS
The Company has an agreement with Mr. Friedmann, which provides for the payment of certain severance benefits
if Mr. Friedmann’s employment is terminated. If Mr. Friedmann’s employment with the Company is terminated
without cause, including any termination or deemed termination as a result of a change of control of the Company,
or a change of responsibility following a change of control, and any termination by Mr. Friedmann for good reason,
as defined in the agreement, he will be entitled to a lump sum payment in an amount equal to two years
compensation (based on the prior year’s annual salary and any incentive, annual and other cash bonuses) including
the cost to the Company of providing or maintaining his employee benefits for a period of two years after the date of
termination. In addition, the LTIP Units held by Mr. Friedmann in the event of a termination event vest and are paid
out at the market valuation of the common shares of the Company on the date of the completion of a transaction or
event that gives rise to a termination event. In addition to all other amounts payable to Mr. Friedmann under the
agreement, he shall be entitled to receive all benefits payable to him under any of the Company’s plans or
agreements relating to retirement benefits. In the event of voluntary retirement or resignation prior to Mr. Friedmann
reaching age 65, or in the event of termination by the Company for cause, the vested LTIP Units are paid out and
- 28 unvested LTIP Units are cancelled. In the event of voluntary retirement at age 65, death or disability, Mr. Friedmann
continues as a participant in the long-term incentive plans as if he were an employee.
Assuming severance or change of control took place on December 31, 2015 and based on the closing price of the
Company’s common shares on the TSX on December 31, 2015, Mr. Friedmann would have received $870,000 in
lieu of salary, $870,000 in lieu of bonus, and $5,403,600 in lieu of long-term incentive grants (based on the longterm incentives granted in 2015). On a change of control, Mr. Friedmann would have received $887,493 for the
value of LTIP Units that have not vested. In addition, in the event of a severance all unvested LTIP Units held by
Mr. Friedmann would vest.
The Company has an agreement with Mr. Wirasekara, which provides for the payment of certain severance benefits
if Mr. Wirasekara’s employment is terminated. If Mr. Wirasekara’s employment with the Company is terminated
without cause, including any termination or deemed termination as a result of a change of control of the Company,
or a change of responsibility following a change of control, and any termination by Mr. Wirasekara for good reason,
as defined in the agreement, he will be entitled to a lump sum payment in an amount equal to two and one half years
compensation (based on the prior year’s annual salary and any incentive, annual and other cash bonuses) including
the cost to the Company of providing or maintaining his employee benefits for a period of two years after the date of
termination. In addition, the LTIP Units held by Mr. Wirasekara in the event of a termination event vest and are
paid out at the market valuation of the common shares of the Company on the date of the completion of a transaction
or event that gives rise to a termination event. In addition to all other amounts payable to Mr. Wirasekara under the
agreement, he shall be entitled to receive all benefits payable to him under any of the Company’s plans or
agreements relating to retirement benefits. In the event of voluntary retirement or resignation prior to Mr.
Wirasekara reaching age 65, or in the event of termination by the Company for cause, the vested LTIP Units are
paid out and unvested LTIP Units are cancelled. In the event of voluntary retirement at age 65, death or disability,
Mr. Wirasekara continues as a participant in the long-term incentive plans as if he were an employee.
Assuming severance or change of control took place on December 31, 2015 and based on the closing price of the
Company’s common shares on the TSX on December 31, 2015, Mr. Wirasekara would have received $797,500 in
lieu of salary, $350,000 in lieu of bonus, and $2,559,600 in lieu of long-term incentive grants (based on the longterm incentives granted in 2015). On a change of control, Mr. Wirasekara would have received $374,330 for the
value of LTIP Units that have not vested. In addition, in the event of a severance all unvested LTIPs held by Mr.
Wirasekara would vest.
During 2015, the Company entered into an agreement with Mr. Louis, which provides for the payment of certain
severance benefits if Mr. Louis resigns for good reason. If Mr. Louis resigns for good reason, he will be entitled to a
lump sum payment of two years compensation (based on the prior year’s annual salary and short-term variable
compensation) including the cost to the Company of providing or maintaining his employee benefits for a period of
two years after the date of termination. In addition, the LTIP Units held by Mr. Louis immediately vest and
continue to be exercisable for the term of the applicable LTIP.
Assuming severance took place on December 31, 2015 and based on the closing price of the Company’s common
shares on the TSX on December 31, 2015, Mr. Louis would have received $722,000 in lieu of salary and $280,000
in lieu of bonus. Mr. Louis’s LTIP Units would vest in that event and be exercisable for the balance of the term.
Each of Messrs. Louis, Osborne and Celli holds LTIP Units granted to him under the Company’s long-term
incentive plans. As at December 31, 2015, the value of LTIP Units that have not vested that would be payable in the
event of a deemed termination as a result of a change in control was $374,000 for Mr. Louis, $230,700 for Mr.
Osborne and $162,700 for Mr. Celli.
- 29 PERFORMANCE CHART
The following chart shows the shareholder return on the common shares of the Company for the five-year period
from December 31, 2010 to December 31, 2015, together with the cumulative return for the S&P/TSX Composite
Index for the same period, based on the closing price on the last trading day of each year. The chart assumes an
initial investment of $100.
Total Cumulative Return on $100 Investment
250
200
150
100
50
0
2010
2011
2012
2013
2014
2015
as at December 31
MDA
Index
As at December 31
2010
100
MDA
S&P / TSX
Composite Index
2011
95
100
2012
116
89
2013
174
93
2014
203
101
2015
181
109
97
The compensation of the CEO and the Named Executive Officers was generally linked to the Company’s operating
earnings during that period. See the Section “Executive Compensation – Summary Compensation Table”.
DIRECTOR COMPENSATION
Director compensation table
Fees
earned
($)
Robert L. Phillips
126,000
Sharebased awards
($)
Optionbased
awards
Non-equity
incentive plan
compensation
Pension
value
($)
All other
compensation
($)
167,385
Nil
Nil
Nil
Nil
Total
($)
293,385
Daniel E. Friedmann
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Thomas S. Chambers
147,500
22,104
Nil
Nil
Nil
Nil
169,604
Dennis H. Chookaszian(1)
96,079
95,371
Nil
Nil
Nil
Nil
191,450
Lori B. Garver(1)
39,363
32,617
Nil
Nil
Nil
Nil
71,980
140,000
14,682
Nil
Nil
Nil
Nil
154,682
172,807
16,393
Nil
Nil
Nil
Nil
189,200
44,927
127,366
Nil
Nil
Nil
Nil
172,293
Brian G. Kenning
(1)
Fares F. Salloum
Eric J. Zahler(1)
(1)
(2)
Mr. Chookaszian, Ms. Garver, Mr. Salloum, and Mr. Zahler are paid in U.S. dollars. Their compensation has been restated in Canadian
dollars based on the noon rate of the Bank of Canada on the date of payment.
Deferred share units were granted during the year at an average price of $86.47. Deferred share units are granted quarterly through the year,
and are granted at the closing price of the Company’s common shares on the TSX on the day before the date of grant.
- 30 The value of the vested and unpaid deferred share units as at December 31, 2015 is as follows: Mr. Phillips $1,926,054; Mr. Chambers - $1,257,476; Mr. Chookaszian - $1,193,782; Ms. Garver - $34,470; Mr. Kenning $835,181; Mr. Salloum - $932,512; and Mr. Zahler - $192,664.
Compensation of Directors
The amount and form of director compensation is reviewed every two years by the Governance and Nominating
Committee. The Chair receives an annual cash retainer of $90,000 and each Director receives an annual cash
retainer of $40,000. The chair of each of the Human Resources and Management Compensation Committee and
Governance and Nominating Committee receives a $10,000 annual retainer and the respective Committee members
receive a $5,000 annual retainer. The Audit Committee Chair receives a $17,500 annual retainer and the Audit
Committee members receive a $5,000 annual retainer. Directors receive a fee of $1,500 for each Board meeting or
committee meeting attended. Audit Committee members receive a fee of $2,500 for each audit committee meeting
attended. Directors resident in the United States are paid in U.S. dollars. Directors are also reimbursed for
transportation and other expenses incurred for attendance at Board and committee meetings.
The Company has a deferred share unit plan to provide for an annual grant, calculated quarterly, of deferred share
units to independent Directors to be paid on retirement. Each Director receives deferred share units equal to one and
one-half times their annual cash retainer. Deferred share units are granted at a price equal to the closing price of the
common shares on the TSX on the day before the date of grant, and are paid out at retirement at the closing price of
the common shares of the Company on the day before the retirement date. Directors may also elect to have their
annual cash retainer, or a portion thereof, paid in deferred share units on a quarterly basis. The number of units in a
participant’s deferred share unit balance is adjusted for any dividends paid by the Company. In February 2015, the
Board, on recommendation of the Governance and Nominating Committee, approved a change to the deferred share
unit plan to allow Directors who have achieved a specific share ownership guideline to elect to have their deferred
share unit grant paid in cash. For purposes of this guideline, the minimum share ownership level is five times the
sum of the annual cash retainer and the annual deferred share unit grant, valued at the market value of MDA’s
common shares at the date of assessment. Three of the Directors have elected to receive their deferred share unit
grant in cash.
In 2015 the deferred share unit plan was amended to provide that the payment of deferred share units could be
satisfied by the issue of common shares from treasury. The Company has the sole discretion to make the payment of
deferred share units, on a Director ceasing to be a director, in the form of common shares issued from treasury at a
subscription price per common share equal to the closing market price of the common shares on the stock exchange
on the day prior to the date that the Director ceased to be such. The number of common shares to be issued will be
equal to the number of deferred share units held by the Director. In the event of common shares of the Company
being issued from treasury, the Director is required to pay the Company the amount of all deductions required to be
withheld under applicable income tax laws.
Mr. Friedmann does not receive an annual cash retainer or meeting fees, but is reimbursed for transportation and
other expenses incurred for attendance at meetings.
Directors’ Share Ownership Guidelines
Directors have a recommended share ownership guideline of three times the sum of the annual cash retainer and
annual deferred share unit grant paid to them as a member of the Board. Share ownership includes the value of
deferred share units held. The recommended guideline is expected to be met within five years from the date of
appointment or initial election as a Director. For the purposes of this policy, deferred share units and common shares
are valued at the market value at the date of assessment. All Directors, with the exception of Ms. Garver and Mr.
Zahler, meet or exceed the recommended guidelines. Ms. Garver and Mr. Zahler have five years from the date of
their election to the Board to meet the recommended share ownership guideline. See the Section “Election of
Directors”.
- 31 SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Option Plan
The purpose of the Option Plan is to strengthen retention of key management employees, to align their interests with
those of shareholders and to provide incentive compensation. The Option Plan was adopted on December 22, 1999
and was approved by the Company’s shareholders prior to the initial public offering of the Company. As at
December 31, 2015, there were no options outstanding under the Option Plan to purchase common shares.
Options were granted under the Option Plan to employees, officers and Directors of the Company and its
subsidiaries as determined by the Compensation Committee. The Compensation Committee also determines the total
number of options to be granted to participants. These decisions of the Compensation Committee are subject to
approval by the Board of Directors. In 2003, the Company discontinued the granting of options to Directors and no
options have been granted to employees of the Company subsequent to 2004.
Under the Option Plan, options are granted at not less than the closing price of the common shares on the TSX on
the day before the date of grant. Options may be issued with vesting provisions as determined at the time of grant.
The expiry date for options granted under the Option Plan can be any time up to ten years from the date of grant.
Options cannot be transferred or assigned by a participant.
The Board of Directors, subject to any regulatory or required shareholder approval, has the power under the Option
Plan to amend or terminate the Option Plan at any time, provided, however, that any such amendment or termination
shall not materially adversely affect the rights of a participant.
Long-Term Incentive Plans
The Company has share appreciation rights (LTIP Units) outstanding under the Company’s 2012 Long-term
Incentive Plan (the “2012 Plan”), the 2013 Long-term Incentive Plan (the “2013 Plan”), the 2014 Long-term
Incentive Plan (the “2014 Plan”) and the 2015 Long-term Incentive Plan (the “2015 Plan”) (the 2012 Plan, 2013
Plan, 2014 Plan and 2015 Plan are together called the “Plans”) pursuant to which common shares may be issued by
the Company from treasury. In 2015, shareholders approved the reservation of 800,000 common shares for issuance
under the Plans.
The Plans provide for the issuance to designated individuals of LTIP Units, the value of which is determined based
on the positive difference between the average closing trading price of the Company’s common shares on the TSX
for the 5 trading days up to and including the applicable date of determination under the Plans and the base price at
which the LTIP Units were issued. LTIP Units are issued to approximately 300 employees across the Company and
its subsidiaries in any one year.
The Plans provide that the base price of an LTIP Unit is equal to the closing market price of the Company’s
common shares on the date of grant. When LTIP Units are exercised, as permitted under the Plans, they are satisfied
by payments in cash or if elected by the Company by the delivery of common shares. The amount payable is the
increased value of an LTIP Unit which is the difference between the average of the closing trading price of the
Company’s common shares on the TSX for the 5 trading days up to and including the date of exercise and its base
price (the “AU Value”). The common shares issued under the Plans may be purchased in the secondary market
(through a third party independent of the Company) or at the discretion of the Company issued from treasury. In the
event of an issue of common shares from treasury, the grantee is required to concurrently pay to the Company an
amount equal to the Deductions.
The Plans provide that LTIP Units granted thereunder vest in the amount of 1/3rd of the award on the first
anniversary of the grant date, and thereafter, in the amount of an additional 1/3rd of the award on the second and
third anniversary of the date of grant. The LTIP Units have a maturity date of 5 years after the date of grant;
provided that if the maturity date occurs during a blackout period, the maturity date is extended by 10 business days
after the expiration of the blackout period.
The Plans provide that: (i) the aggregate number of the Company’s common shares reserved for issuance under the
Plans, when combined with all common shares issuable under all other compensation arrangements pursuant to
- 32 which common shares from treasury are being issued (“other compensation arrangements”), may not exceed 10% of
the issued and outstanding Company’s common shares; (ii) the aggregate number of the Company’s common shares
issuable to insiders under the Plans and under all other compensation arrangements may not exceed 10% of the
issued and outstanding Company’s common shares; and (iii) the aggregate number of common shares issued to
insiders under the Plans and any other compensation arrangement in any one year shall not exceed 10% of the issued
and outstanding common shares of the Company.
The Plans provide that the rights of a grantee thereunder may not be assigned, encumbered, pledged, transferred or
alienated in any way other than by will or pursuant to the laws of succession, as is provided in the Plans.
The 2014 Plan and the 2015 Plan also contain a provision which permits a grantee, other than a U.S. taxpayer, to
elect to exercise a right to receive common shares from treasury by paying to the Company an amount equal to the
base price multiplied by the number of LTIP Units being exercised plus the Deductions. The Company, at its sole
discretion, may also deliver common shares to the grantee representing the appreciation of the share value in which
event the grantee shall pay to the Company an amount equal to all deductions. In addition, the 2014 Plan and the
2015 Plan contain a provision which permits the Company to elect not to take any deduction for the purposes of
calculating its income tax, any amount payable to a grantee if a grantee is paid out in cash on the surrender of LTIP
Units under the 2014 Plan and 2015 Plan. The Company has made that election under the 2014 and 2015 Plans.
The Plans provide that in the event of: a dissolution or liquidation of the Company; any reorganization, merger,
amalgamation, arrangement, consolidation or business combination as a result of which the Company shall cease to
exist or will become a subsidiary of another non-related entity or there shall be a change of control (as defined in the
Income Tax Act (Canada)); a sale of all or substantially all the assets of the Company to an unrelated entity; or a sale
of equity securities to one or more persons resulting in such persons holding more than 80% of the voting power of
all equity securities of the Company, then all LTIP Units are accelerated and are earned. They will be vested and
exercisable on the completion of the terminating transaction, and the LTIP Units will be treated in the same manner
as common shares held by shareholders are treated in any such terminating transaction as hereinbefore described and
the Plans terminate on such event.
The Company may terminate the Plans provided that the grantees are not materially adversely affected as a result
thereof, without the grantees’ consent.
Deferred Share Unit Plan
The Company established a deferred share unit plan (the “DSU Plan”) in December 2003 in order to provide for
deferred share units (“DSUs”) to be granted to non-employee Directors as a component of their Directors’
compensation. The DSU Plan was established to enable the Company to attract and retain the highest stature of
Directors and through the grant of DSUs to align the interests of Directors with those of the shareholders.
The DSU Plan requires non-employee Directors to receive a portion of their Director’s compensation in the form of
DSUs and permits non-employee Directors to elect to receive DSUs in lieu of all or a portion of their Director’s
retainer, which is normally paid in cash, unless the Director is entitled to elect to receive cash. DSUs will not be
paid out until termination of service on the Board. The DSU Plan provides that DSUs could be satisfied, at the
discretion of the Company, by common shares of the Company issued from treasury rather than by the payment in
cash. Common shares would be issued on the basis of one common share for each DSU held in a DSU account, at a
price equal to the closing market price of a common share of the Company on the day before the date of the Director
ceasing to be a director. The Director is required to pay the Company an amount equal to the amount of all
deductions payable by the Director in this event. In 2015, shareholders approved the reservation of 100,000 common
shares for issuance under the DSU Plan.
See the Section “Director Compensation” for a further description of the DSU Plan.
The DSU Plan may be terminated by the Company and amended as may be required by applicable law without the
affected Directors’ consent, provided no amendment may adversely affect the rights of Directors with respect to
DSUs to which the Directors are then entitled under the DSU Plan.
- 33 Employee Share Purchase Plan
The purpose of the MDA Employee Share Purchase Plan (the "ESPP") is to encourage employees of the Company
and its subsidiaries to invest in common shares of the Company, thereby sharing in the growth and success of the
Company and its subsidiaries. The ESPP was established October 1, 2001 and has been approved by the
shareholders of the Company. As at December 31, 2015, there were 342,362 common shares remaining for issuance
under the ESPP. While insiders of the Company can participate in the ESPP, their participation is limited by the
maximum amounts that may be contributed as provided in the ESPP.
All active, permanent full-time or permanent part-time employees who work at least 20 hours per week on a regular
basis are allowed to be participants in the ESPP ("Participants"). Participants may elect to contribute up to 10% of
their annual base salary, to a maximum of $20,000 annually, through payroll deductions or lump sum payments with
all contributions to be applied to the purchase of common shares issued by the Company from treasury.
Common shares of the Company are issued to Participants at a price equal to 85% of the weighted average market
price of the common shares on the TSX for the five trading days preceding an investment date. Participants own all
common shares purchased for their accounts and may withdraw them periodically or place them in a registered
retirement savings plan. The rights under the ESPP are personal to Participants and may not be assigned by them.
Participants are paid out their allocated common shares under the ESPP upon termination of their employment.
- 34 General
The following table sets out equity compensation plan information as at the end of the financial year ended
December 31, 2015.
Equity Compensation Plan Information
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
Weighted average exercise
price of outstanding
options, warrants and
rights
(b)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
Option Plan(1)
Nil
N/A
231,138
Long-Term Incentive
Plans(2)
N/A
N/A
749,328
Deferred Share Unit
Plan(3)
N/A
N/A
100,000
Employee Share
Purchase Plan
N/A
N/A
342,362
Equity compensation plans
not approved by security
holders:
N/A
N/A
N/A
Total
Nil
N/A
1,422,828
Plan Category
Equity compensation plans
approved by security
holders:
(1)
(2)
(3)
No options have been issued under the Option Plan since 2004 and as of December 31, 2015, there were no options outstanding.
Common Shares may be issued from treasury to applicable grantees at the discretion of the Company.
Common Shares may be issued from treasury to independent Directors at the discretion of the Company.
Advisory Vote on Executive Compensation
The Board of MDA has spent considerable time and effort in defining and implementing an executive compensation
program, and believes that it achieves the goal of enhancing the growth and sustainment of long-term shareholder
value while attracting, motivating and retaining executive talent. The Board believes that shareholders should be
well informed as to, and fully understand, the objectives, philosophy and principles that it has used to make
executive compensation decisions and the oversight of any risks inherent in the Company’s compensation program.
For information regarding the Company’s approach to executive compensation, shareholders should review the
Section “Compensation Discussion and Analysis”.
The Board values and encourages constructive dialogue on compensation and other important governance topics
with the shareholders of the Company, to whom the Board is ultimately accountable. The Board has monitored
developments and trends relating to shareholders having an advisory vote on executive compensation (commonly
referred to as “say on pay”). In forming its resolution for the say on pay vote, the Company has reviewed
information set forth on this topic by the Canadian Coalition for Good Governance.
- 35 As this is an advisory vote, the results will not be binding upon the Board. However, the Board will take the results
of the advisory vote into account, as appropriate, when considering future compensation policies, procedures and
decisions and in determining whether there is a need to significantly increase their engagement with shareholders on
compensation related matters. In the event that a significant number of shareholders oppose the resolution, the Board
will consult with the shareholders of the Company to understand their concerns and will review the Company’s
approach to compensation in the context of these concerns.
Accordingly, the Board proposes that you indicate your support for the Company’s approach to executive
compensation disclosed in this Circular by voting in favour of or against the following advisory resolution:
“BE IT RESOLVED THAT, on an advisory basis and not to diminish the role and responsibilities of the
Board of Directors, the shareholders accept the approach to executive compensation disclosed in the
Company’s Management Proxy Circular delivered in advance of the Annual and Special General Meeting
of shareholders.”
The Board recommends a vote FOR the above resolution.
Approval of the 2016 Long-term Incentive Plan and Reservation of Shares Thereunder
At the Meeting, shareholders will be asked to pass a resolution approving the Company’s 2016 Long-term Incentive
Plan (the “Plan”) for the purposes of the issue of common shares from treasury, if determined by the Company, and
the reservation of 200,000 common shares in the aggregate for issuance under the Plan.
The Plan provides for the issuance to grantees of share appreciation rights (“LTIP Units”), the value of which is
determined based on the positive difference between the average closing trading price of the Company’s common
shares on the TSX for the 5 trading days up to and including the applicable date of determination under the Plan and
the base price at which the LTIP Units were issued. The Company establishes a long-term incentive plan, similar to
the Plan, annually, in order to provide long-term incentive compensation to its employees. LTIP Units are issued to
approximately 300 employees across the Company and its subsidiaries in any one year.
The Plan was established to attract and retain highly talented employees who are in a position to make long-term
contributions to the Company, to reward those employees for their contributions to the success of the Company and
to encourage employees to increase their proprietary interest in the Company and their personal interest in the
Company’s continued success and progress.
The Plan provides that designated employees are granted a number of LTIP Units, with a base price equal to the
closing market price of the Company’s common shares on the date of grant. When LTIP Units are exercised, as
permitted under the Plan, they are satisfied by payments in cash or if elected by the Company by the delivery of
common shares. The amount payable is the increased value of an LTIP Unit which is the difference between the
average of the closing trading price of the Company’s common shares on the TSX for the 5 trading days up to and
including the date of exercise and its base price (the “AU Value”). The common shares may be purchased in the
secondary market (through a third party independent of the Company) or subject to the Company receiving the
approval of the TSX and shareholders, be issued from treasury.
In order to have greater flexibility in managing its cash resources and cash costs and to encourage employees to hold
common shares in the Company, thereby having a stake and interest in the Company, aligned with that of
shareholders, the Company wishes to have the flexibility to issue common shares from treasury to grantees under the
Plan, other than U.S. taxpayers, to satisfy its obligations under the Plan.
In order to issue common shares from treasury, the reservation of common shares for that issuance under the Plan
and the Plan for that purpose has to be approved by the TSX and by the shareholders. The TSX has approved the
Plan and the reservation of common shares, conditional upon the shareholders approving same at the Meeting.
The Plan provides that 200,000 common shares in the aggregate be reserved for issuance thereunder. This
represents 0.55% of the Company’s issued and outstanding common shares. The number of LTIP Units currently
outstanding under the Plan is 975,359, at an average base price of $85.80. Additional LTIP Units may be granted
under the Plan, including to U.S. taxpayers.
- 36 In 2015, the shareholders approved the reservation of 800,000 common shares for issuance under the 2012 Plan,
2013 Plan, 2014 Plan and 2015 Plan. As at March 29, 2016, 57,208 common shares were issued from treasury under
the 2012 Plan, 2013 Plan, 2014 Plan and 2015 Plan. If the Company receives approval for the Plan, there would be a
total of 942,792 common shares (2.6% of the Company’s issued and outstanding common shares) approved and
remaining reserved for issuance.
The following is a summary of the Plan. If a shareholder wishes, a copy of the Plan can be obtained from the
Corporate Secretary at the offices of the Company, 13800 Commerce Parkway, Richmond British Columbia, V6V
2J3, by telephone at 604-278-3411, or email at [email protected].
Grants of LTIP Units
The Plan provides for the grant of LTIP Units to employees as determined by the Board or as delegated by it. This
delegation is generally to the Human Resources and Management Compensation Committee. The Plan states that no
LTIP Units may be issued to directors who are not employees. An LTIP Unit is a phantom unit accounted for on the
Company’s books, based on the trading value of the Company’s common shares from time to time. The base price
of an LTIP Unit is equal to the closing market price of a common share of the Company on the date of the grant of
that LTIP Unit.
The Plan provides that LTIP Units granted thereunder vest in the amount of 1/3rd of the award on the first
anniversary of the grant date, and thereafter, in the amount of an additional 1/3rd of the award on the second and
third anniversary of the date of grant. The LTIP Units have a maturity date of 5 years after the date of grant;
provided that if the maturity date occurs during a blackout period, the maturity date is extended by 10 business days
after the expiration of the blackout period.
Specifically, unless otherwise determined by the Human Resources and Management Compensation Committee at
or after the time of grant, LTIP Units shall vest upon the specified vesting date or expire, as the case may be, as
follows:

LTIP Units expire on the applicable maturity date; provided that if the maturity date occurs during a
blackout period, the maturity date is extended by 10 business days after the expiration of the blackout
period;

if a grantee’s termination of employment occurs before the applicable vesting date, the grantee’s LTIP
Units expire;

if a grantee is on a leave of absence as a result of sickness, disability, or military service before a vesting
date as determined through company policies or if a participant is on an approved leave of absence, and any
such leave extends beyond 30 days, all vesting is suspended until the participant returns to work and if the
employee does not recommence employment, the LTIP Units terminate and vested LTIP Units must be
exercised by that date or terminate. In no event does the maturity date get extended;

except as may otherwise be approved by the Company, if an employee reduces his or her work week to less
than 25 hours per week on a regular basis, the employment of that grantee is deemed terminated; or

if an employee is terminated for “cause”, all rights of that grantee with respect to his or her LTIP Units
terminate on the date of his or her termination.
The Plan provides that: (i) the aggregate number of the Company’s common shares reserved for issuance under the
Plan, when combined with all common shares issuable under all other compensation arrangements pursuant to
which common shares from treasury are being issued (“other compensation arrangements”), may not exceed 10% of
the issued and outstanding Company’s common shares; (ii) the aggregate number of the Company’s common shares
issuable to insiders under the Plan and under all other compensation arrangements may not exceed 10% of the issued
and outstanding Company’s common shares; and (iii) the aggregate number of common shares issued to insiders
under the Plan and any other compensation arrangement in any one year shall not exceed 10% of the issued and
outstanding common shares of the Company.
- 37 The Plan provides that the rights of a grantee thereunder may not be assigned, encumbered, pledged, transferred or
alienated in any way other than by will or pursuant to the laws of succession, as is provided in the Plan.
Payment of LTIP Units
The Plan provides that at any time after any LTIP Unit has vested, a grantee may exercise the LTIP Unit by notice in
writing by surrendering the LTIP Units for cancellation. The Company may pay to that grantee an amount in cash
equal to the number of LTIP Units being exercised multiplied by the AU Value, net of all amounts that must be
withheld under applicable income tax laws with respect to that surrender (the “Deductions”).
The Company also has the right under the Plan to elect, with respect to any grantee providing notice to the Company
to exercise any LTIP Unit, other than a U.S. taxpayer, (i) to deliver to the grantee a number of common shares of the
Company having a value equal to the AU Value multiplied by the number of LTIP Units being exercised less all
Deductions, by having same purchased in the secondary market; or (ii) by issuing to the grantee from treasury, a
number of common shares of the Company equal to the AU Value multiplied by the number of LTIP Units being
exercised and dividing that product by the closing market price of the common shares on the TSX on the day prior to
the date of exercise. In the event of an issue of common shares from treasury, the grantee is required to concurrently
pay to the Company an amount equal to the Deductions.
The Plan contains a provision which permits a grantee, other than a U.S. taxpayer, to elect to exercise a right to
receive common shares from treasury by paying to the Company an amount equal to the base price multiplied by the
number of LTIP Units being exercised plus the Deductions. In addition, the Plan contains a provision which permits
the Company to elect not to take any deduction for the purposes of calculating its income tax, any amount payable to
a grantee if a grantee is paid out in cash on the surrender of LTIP Units under the Plan.
The Plan provides that in the event of: a dissolution or liquidation of the Company; any reorganization, merger,
amalgamation, arrangement, consolidation or business combination as a result of which the Company shall cease to
exist or will become a subsidiary of another non-related entity or there shall be a change of control (as defined in the
Income Tax Act (Canada)); a sale of all or substantially all the assets of the Company to an unrelated entity; or a sale
of equity securities to one or more persons resulting in such persons holding more than 80% of the voting power of
all equity securities of the Company, then all LTIP Units are accelerated and are earned. They will be vested and
exercisable on the completion of the terminating transaction, and the LTIP Units will be treated in the same manner
as common shares held by shareholders are treated in any such terminating transaction as hereinbefore described and
the Plan terminates on such event.
Adjustments
LTIP Units are adjusted if there is a subdivision, consolidation, stock dividend, capital reorganization,
reclassification, exchange, or other change with respect to the common shares of the Company in a manner to reflect
such event.
Amendment and Termination
The Plan contemplates that the following amendments to the Plan or to awards granted thereunder must be approved
by the shareholders of the Company:

an increase in the number of treasury common shares reserved for issuance under the Plan;

amending the eligibility requirements for participating in the Plan, which would have the potential of
broadening or increasing insider participation;

amending the maturity date for the Plan or any award; or

amending the amending provisions of the Plan.
- 38 Subject to the foregoing, the Board may amend, suspend or terminate the Plan and any LTIP Unit granted
thereunder without obtaining the prior approval of the shareholders. However, the Board must obtain, where
necessary, the prior consent of applicable regulatory authorities and stock exchanges. Without limiting the
generality of the foregoing, the Board may, without shareholder approval, decide to:

amend, wind up, suspend or terminate the Plan or any awards granted thereunder;

amend the eligibility requirements for participating in the Plan, where such amendment would not have the
potential of broadening or increasing insider participation;

amend the manner in which a grantee may elect to exercise any LTIP Unit;

amend the provisions of the Plan relating to the LTIP Units and the dates for the exercise of the same;

make any amendment which is intended to ensure compliance with tax, securities and other laws applicable
thereto and the requirements of the TSX;

make any amendment which is intended to provide additional protection to shareholders of the Company
(as determined at the discretion of the Board);

make any amendment which is intended to remove any conflicts or other inconsistencies which may exist
between any terms of the Plan and any provisions of any tax, securities and other laws applicable thereto
and the requirements of the TSX;

make any amendment which is intended to cure or correct any typographical error, ambiguity, defective or
inconsistent provision, clerical omission, mistake or manifest error;

make any amendment which is not expected to materially adversely affect the interests of the shareholders
of the Company; or

make any amendment which is intended to facilitate the administration of the Plan.
No amendment may be made to the Plan or any LTIP Unit to change its base price or the determination of the AU
Value. No amendment, suspension or discontinuance of the Plan or of any granted LTIP Unit may contravene the
requirements of the TSX or any securities commission or regulatory body to which the Plan or the Company is
subject. Notwithstanding the foregoing, no amendment may materially adversely affect any grantee or the LTIP
Units granted without the grantee’s consent.
Long-term Incentive Plan Resolution
The Board recommends that shareholders vote FOR the Long-term Incentive Plan resolution set forth below. A
shareholder can vote for or against the resolution approving the Plan. Unless otherwise instructed, the persons
named in the Proxy Form will vote FOR the resolution approving the Plan and reserving the common shares
issuable thereunder.
The following is the text of the resolution to be considered by the shareholders at the Meeting:
“BE IT RESOLVED that:
1.
For the purpose of the issue of common shares of the Company from treasury under the 2016
Long-term Incentive Plan (the “Plan”), substantially as described in the information circular dated March
29, 2016, is hereby approved.
2.
The reservation of 200,000 common shares in the aggregate for issuance under the Plan is hereby
approved.
- 39 3.
The Board may revoke this resolution before it is acted upon, without further approval of the
shareholders.
4.
Any one or more directors or officers of the Company, are hereby authorized to execute and
deliver, whether under corporate seal or otherwise, the Plan referred to above and any other agreements,
instruments, notices, consents, acknowledgements, certificates and other documents (including any
documents required under applicable laws or regulatory policies), and to perform and do all such other acts
and things, as may such director or officer in his or her discretion may consider to be necessary or
advisable from time to time in order to give effect to this resolution.”
Shareholder approval of the Plan, for the purpose of the issue of common shares from treasury is required under the
rules, regulations and policies of the TSX. To pass, this resolution must be approved by a simple majority of more
than 50% of the votes cast by the shareholders who are present in person or represented by proxy at the Meeting.
CONTINUANCE OF THE COMPANY
UNDER THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)
Background
The Company is currently incorporated under the Canada Business Corporations Act (the “CBCA”). The
Board proposes to continue the Company into British Columbia (the “Continuance”) under the Business
Corporations Act (British Columbia) (the “BCBCA”). At the Meeting, shareholders will be asked to consider and,
if thought advisable, approve with or without variation the Continuance Proposal to approve the Continuance.
The BCBCA is a more recent statute than the CBCA and is more modern and provides more flexibility than
the CBCA does. In particular, the BCBCA, unlike the CBCA, does not have a directors’ residency requirement.
The Company needs flexibility to recruit directors who are knowledgeable in the business areas that the Company
operates in and who can contribute to its growth and development, mainly in accessing the U.S. market, including
the U.S. space and defence market. As a company under the BCBCA, the Company would be able to select
additional and future directors from a larger pool of qualified nominees than under the CBCA. Continuance under
the BCBCA will also provide the Company with some added flexibility with respect to corporate transactions.
Continuance Process
In order to effect the Continuance:
(a)
The Company must obtain the approval of its shareholders to the Continuance by way of a special
resolution to be passed by not less than two-thirds of the votes cast at the Meeting in person or by
proxy (“Continuance Resolution”);
(b)
The Company must make a written application to the Director under the CBCA for consent to
continue under the BCBCA, such written application to establish to the satisfaction of the Director
that the proposed Continuance will not adversely affect the Company’s creditors or shareholders;
(c)
Once the Continuance Resolution is passed and the Company has obtained the consent of the
Director under the CBCA, the Company must file a Continuation Application and the consent of
the Director under the CBCA, along with prescribed documents under the BCBCA, with the
Registrar of Companies under the BCBCA to obtain a Certificate of Continuation;
(d)
On the date shown on the Certificate of Continuation issued by the British Columbia Registrar of
Companies, the Company will become a company registered under the laws of the Province of
British Columbia as if it had been incorporated under the laws of the Province of British
Columbia; and
(e)
The Company must then file a copy of the Certificate of Continuation with the Director under the
CBCA and receive a Certificate of Discontinuance under the CBCA.
- 40 Effect of Continuance
Upon the Continuance, the CBCA will cease to apply to the Company and the Company will thereupon
become subject to the BCBCA, as if it had been originally incorporated as a British Columbia company. The
Continuance will not create a new legal entity, affect the continuity of the Company, result in a change in its
business or affect the share capital of the Company. The persons elected as directors by the shareholders at the
Meeting will continue to constitute the Board upon the Continuance becoming effective.
The BCBCA provides that when a foreign corporation continues under such legislation:
(a)
the property, rights and interests of the foreign corporation continue to be the property, rights and
interests of the company;
(b)
the company continues to be liable for the obligations of the foreign corporation;
(c)
an existing cause of action, claim or liability to prosecution is unaffected;
(d)
a legal proceeding being prosecuted or pending by or against the foreign corporation may be
prosecuted or its prosecution may be continued, as the case may be, by or against the company;
and
(e)
a conviction against, or a ruling, order or judgment in favour of or against, the foreign corporation
may be enforced by or against the company.
The Continuance will not affect the Company’s status as a listed company on the TSX, as a reporting issuer
under the securities legislation of any jurisdiction in Canada.
As of the effective date of the Continuance, the Company’s current constating documents – its Articles and
By-laws under the CBCA – will be replaced with a Notice of Articles and Articles under the BCBCA, the
Company’s registered and records office will be in British Columbia and will no longer be subject to the provisions
of the CBCA.
A copy of the proposed Articles under the BCBCA are attached to this Circular as Appendix C.
Comparison of CBCA and BCBCA
Upon the Continuance, the Company would be governed by the BCBCA. Although the rights and
privileges of shareholders under the CBCA are in many instances comparable to those under the BCBCA, there are
several notable differences and shareholders are advised to review the information contained in this Circular and to
consult with their professional advisors.
In general terms, the BCBCA provides to shareholders substantively the same rights as are available to
shareholders under the CBCA, including rights of dissent and appraisal and rights to bring derivative actions and
oppression actions. There are, however, important differences concerning the qualifications of directors, location of
shareholder meetings and certain shareholder remedies. The following is a summary comparison of certain
provisions of the BCBCA and the CBCA. This summary is not intended to be exhaustive and is qualified in
its entirety by the full provisions of the CBCA and BCBCA, as applicable.
- 41 Board of Directors
The BCBCA provides that a reporting company must have a minimum of three directors but does not
impose any residency requirements on the directors. Under the CBCA, at least one-quarter of the directors must be
resident Canadians. However, if a corporation has less than four directors, at least one director must be a resident
Canadian. Subject to certain exceptions, generally an individual has to be ordinarily resident in Canada to be
considered a resident Canadian under the CBCA.
Under the BCBCA, a director may be removed by shareholders by special resolution passed by 66 2/3% of
the votes cast in person or by proxy at a meeting (a “Special Resolution”) unless the articles provide for a lower
approval level, while under the CBCA directors may be removed by an ordinary resolution of shareholders. In
accordance with the CBCA, under the Company’s current By-laws, directors of the Company may be removed by an
ordinary resolution of the shareholders at a special meeting of the shareholders. Under the proposed Articles, the
removal of directors by the shareholders will require an ordinary resolution.
Conflicts of Interest
Under the BCBCA, a director or senior officer must disclose an interest (a “Disclosable Interest”) in a
material contract or material transaction entered into, or proposed to be entered into by the company, if the director
or senior officer: (a) has a material interest in the contract or transaction; or (b) as a director or senior officer of, or
has a material interest in, a person who has a material interest in the contract or transaction; provided, however, that
a director or senior office does not hold a Disclosable Interest in a contract or transaction if, among other things: (a)
both the company and the other party to the contract or transaction are wholly owned subsidiaries of the same
corporation; (b) the company is a wholly owned subsidiary of the other party to the contract or transaction; (c) the
other party to the contract or transaction is a wholly owned subsidiary of the company; or (d) the director or senior
officer is the sole shareholder of the company or of a corporation of which the company is a wholly owned
subsidiary. Further, a director or senior officer of a company does not hold a Disclosable Interest in a contract or
transaction merely because: (a) the contract or transaction is an arrangement by way of security granted by the
company for money loaned to, or obligations undertaken by, the director or senior officer, or a person in whom the
director or senior officer has a material interest, for the benefit of the company or an affiliate of the company, (b) the
contract or transaction relates to an indemnity or insurance contemplated under the BCBCA, (c) the contract or
transaction relates to the remuneration of the director or senior officer in that person’s capacity as director, officer,
employee or agent of the company or of an affiliate of the company, (d) the contract or transaction relates to a loan
to the company, and the director or senior officer, or a person in whom the director or senior officer has a material
interest, is or is to be a guarantor of some or all of the loan, or (e) the contract or transaction has been or will be
made with or for the benefit of the corporation that is affiliated with the company and the director or senior officer is
also a director or senior officer of that corporation or an affiliate of that corporation. A director who has a
Disclosable Interest in a contract or transaction is not entitled to vote on any directors’ resolution to approve that
contract or transaction, provided that if all of the directors have a disclosable interest in a contract or transaction, any
or all of those directors may vote on a directors’ resolution to approve the contract or transaction.
Under the CBCA, a director or senior officer must disclose an interest in a material contract or material
transaction entered into, or proposed to be entered into by the company, if the director or senior officer: (a) is a party
to the contract or transaction; (b) is a director or an officer, or an individual acting in a similar capacity, of a party to
the contract or transaction; or (c) has a material interest in a party to the contract or transaction. A director required
to disclose an interest in a material contract or transaction shall not vote on such material contract or transaction
unless the contract or transaction: (a) relates primarily to his or her remuneration as a director, officer, employee,
agent or mandatory of the corporation or an affiliate; (b) is for indemnity or insurance contemplated under the
CBCA or (c) is with an affiliate.
Charter Documents
The form of the charter documents for a BCBCA company is quite different for the form of a CBCA
corporation.
Under the CBCA, the charter documents consist of: (i) articles, which set forth, among other things, the
name of the corporation, the province in which the corporation’s registered office is to be located, the authorized
- 42 share capital including any rights, privileges, restrictions and conditions thereon, whether there are any restrictions
on the transfer of shares of the corporation, the number of directors (or the minimum and maximum number of
directors), any restrictions on the business that the corporation may carry on and other provisions such as the ability
of the directors to appoint additional directors between annual meetings, and (ii) the by-laws, which govern the
management of the corporation. The articles are filed with Corporations Canada and the by-laws are filed only at
the registered office.
Under the BCBCA, the charter documents consist of (i) a “notice of articles”, which sets forth the name of
the company, the company’s registered and records office, the names and addresses of the directors of the company
and the amount and type of authorized capital, and (ii) “articles” which govern the management of a company and
set out any special rights or restrictions attached to shares. The notice of articles is filed with the Registrar of
Companies and the articles are filed only with a company’s registered and records office.
A copy of the proposed Articles under the BCBCA are attached to this Circular as Appendix C. A brief
description of the material differences between the Company’s current By-laws and the proposed Articles is set out
under “Comparison of New Articles to Current By-Laws” below.
Changes to Charter Documents
The CBCA requires shareholder approval by Special Resolution to change the name of the corporation,
whereas under the BCBCA the board of directors may approve a change of name. The BCBCA permits changes to
be made to the constating documents with shareholder approval by ordinary resolution, unless a higher threshold is
specified in the articles. The proposed Articles of the Company generally do not specify higher threshold. Under
the CBCA, changes to the articles generally require approval by shareholders by Special Resolution while changes
to the by-laws require shareholder approval by ordinary resolution, unless a higher threshold is specified in the bylaws. However, the BCBCA is slightly less flexible with respect to the timing for adopting changes to the constating
documents. Changes to the articles of a BCBCA company require approval by shareholders in order to become
effective. The board of directors of a CBCA corporation, however, may amend the by-laws of the corporation with
immediate effect, subject to the amendment ceasing to have effect if it is not approved by shareholders at the next
shareholder meeting.
Shareholder Proposals and Shareholder Requisitions
Both statutes provide for shareholder proposals. Under the CBCA, a record or non-record shareholder may
submit a proposal, although the record or non-record shareholder must either: (i) have owned for six months not less
than 1% of the total number of voting shares or voting shares with a fair market value of at least Cdn$2,000, or (ii)
have the support of persons who, in the aggregate, have owned for six months not less than 1% of the total number
of voting shares or voting shares with a fair market value of at least Cdn$2,000. Under the BCBCA, in order for one
or more record or non-record shareholders to be entitled to submit a proposal, they must have held voting shares for
an uninterrupted period of at least two years before the date the proposal is signed by the shareholders and must own
not less than 1% of the total number of voting shares or voting shares with a fair market value in excess of
Cdn$2,000.
Both statutes provide that one or more record shareholders holding more than 5% of the outstanding voting
equity may requisition a meeting of shareholders, and permit the requisitioning record shareholder to call the
meeting where the board of directors of the company does not do so within the 21 days following the company’s
receipt of the shareholder meeting requisition. However, the BCBCA, unlike the CBCA, specifies that the
requisitioned shareholder meeting must be held within not more than four months after the date the company
received the requisition. The CBCA does not specify such an outside limit.
Comparison of Rights of Dissent and Appraisal
The BCBCA provides that shareholders who dissent to certain actions being taken by a company may
exercise a right of dissent and require the company to purchase the shares held by such shareholder at the fair value
of such shares. The dissent right is available to shareholders, whether or not their shares carry the right to vote,
where the company proposes:
- 43 (a)
to alter the articles to alter restrictions on the powers of the company or on the business it is
permitted to carry on;
(b)
to adopt an amalgamation agreement;
(c)
to approve an amalgamation into a foreign jurisdiction;
(d)
to approve an arrangement, the terms of which arrangement permit dissent or where the right of
dissent is given pursuant to a court order;
(e)
to authorize or ratify the sale, lease or other disposition of all or substantially all of the company’s
undertaking;
(f)
to authorize the continuation of the company into a jurisdiction other than British Columbia;
(g)
to approve any other resolution, if dissent is authorized by the resolution; or
(h)
a matter to which dissent rights are permitted by court order.
The CBCA contains a similar dissent remedy. However, the procedure for exercising this remedy under
the CBCA is different than that contained in the BCBCA. The dissent provisions of the CBCA are described in
Section “Rights of Dissent in Respect of the Continuance Proposal” below, and set forth in Appendix D to this
Circular. Under the BCBCA the dissenting shareholder must generally send notice of dissent prior to the resolution
being passed.
Oppression Remedies
Under the BCBCA, a shareholder of a company has the right to apply to court on the grounds that:
(i)
the affairs of the company are being or have been conducted, or that the powers of the directors
are being or have been exercised, in a manner oppressive to one or more of the shareholders,
including the applicant; or
(ii)
some act of the company has been done or is threatened, or that some resolution of the
shareholders or of the shareholders holding shares of a class or series of shares has been passed or
is proposed, that is unfairly prejudicial to one or more of the shareholders, including the applicant.
On such an application, the court can grant a variety of remedies, ranging from an order restraining the
conduct complained of to an order requiring the company to repurchase the shareholder’s shares or an order
liquidating the company.
The CBCA also includes an oppression remedy which is very similar. However, the CBCA will only allow
a court to grant relief if the effect actually exists, while the BCBCA will allow a court to grant relief where a
prejudicial effect to the shareholder is merely threatened. In addition, under the BCBCA non-shareholders require
the leave of a court in order to bring an oppression claim.
Shareholder Derivative Actions
Under the BCBCA, a record shareholder, non-record shareholder or director of a company may, with
judicial leave, bring an action in the name and on behalf of the company to enforce a right, duty or obligation owed
to the company that could be enforced by the company itself or to obtain damages for any breach of such right, duty
or obligation. There is a similar right of a shareholder or director, with leave of the court, and in the name and on
behalf of the company, to defend an action brought against the company. The court will grant leave under the
BCBCA for an application to commence a derivative action if:
- 44 (i)
the complainant has made reasonable efforts to cause the directors of the company to prosecute or
defend the legal proceeding;
(ii)
notice of the application for leave has been given to the company and to any other person the court
may order;
(iii)
the complainant is acting in good faith; and
(iv)
it appears to the court that it is in the best interests of the company for the legal proceeding to be
prosecuted or defended.
The CBCA extends the right to a broader group of complainants as it affords the right to a record
shareholder, former record shareholder, non-record shareholder, former non-record shareholder, director, former
director, officer and a former officer of a corporation or any of its affiliates, and any person who, in the discretion of
the court, is a proper person to make an application to court to bring a derivative action. In addition, the CBCA
permits derivative actions to be commenced in the name and on behalf of not only the corporation, but also any of
its subsidiaries. No leave may be granted under the CBCA unless the court is satisfied that:
(i)
the complainant has given at least fourteen days’ notice to the directors of the corporation or its
subsidiary of the complainant’s intention to apply to the court if the directors of the corporation or
its subsidiary do not bring, diligently prosecute, defend or discontinue the action;
(ii)
the complainant is acting in good faith; and
(iii)
it appears to be in the interests of the corporation or its subsidiary that the action be brought,
prosecuted, defended or discontinued.
Place of Meetings
Subject to certain exceptions, the CBCA provides that meetings of shareholders shall be held at the place
within Canada provided in the by-laws or, in the absence of such provision, at the place within Canada that the
directors determine. A meeting may be held outside Canada if the place is specified in the articles or all the
shareholders entitled to vote at the meeting agree that the meeting is to be held at that place. Under the BCBCA,
general meetings of shareholders are to be held in British Columbia, or may be held at a location outside of British
Columbia if: (i) the location is provided for in the articles, (ii) the articles do not restrict the company from
approving a location outside of British Columbia and the location is approved by the resolution required by the
articles for that purpose, or if no resolution is required for that purpose by the articles, is approved by ordinary
resolution, or (iii) the location is approved in writing by the Registrar of Companies before the meeting is held. The
Articles provide that general meetings may be held in the location determined by the directors.
Flexibility in Structuring Transactions
The BCBCA provides greater flexibility to implement certain transactions than the CBCA does. Unlike the
CBCA, the BCBCA permits a subsidiary to hold shares of its parent. The BCBCA also permits a corporate group to
implement horizontal short-form amalgamations even though all the shares of the amalgamating companies are not
held by the same company within the group and permits a company to amalgamate with a foreign corporation to
form a British Columbia company, if permitted by the foreign jurisdiction.
Constitutional Jurisdiction
Other significant differences in the statutes arise from the differences in the constitutional jurisdiction of
the federal and provincial governments. For example, a CBCA corporation has the capacity to carry on business
throughout Canada as of right. Similarly, under the BCBCA the registered office must be situated in British
Columbia, whereas under the CBCA, the registered office of the corporation must be situated in the province
specified in its articles. A BCBCA company is only allowed to carry on business in another province where that
other province allows it to register to do so. A CBCA corporation is subject to provincial laws of general
- 45 application, but a province cannot pass laws directed specifically at restricting a CBCA corporation’s ability to carry
on business in that province. If another province so chooses, however, it can restrict a BCBCA company’s ability to
carry on business within that province. Also, a CBCA corporation will not have to change its name if it wants to do
business in a province where there is already a corporation with a similar name, whereas a BCBCA company may
not be allowed to use its name in that other province. The Company does not expect that the Continuance will affect
the continuity of the Company or result in a change in its business.
Comparison of New Articles to Current By-Laws
Upon the Continuance, the Company’s By-laws will be repealed and new Articles in the form set forth in
Appendix C to this Circular will be adopted. There are many differences between the form of the current By-laws
and the proposed Articles. A number of these changes reflect the increased flexibility afforded to companies under
the BCBCA as compared with those governed by the CBCA. In certain cases, provisions contained in the
Company’s current By-laws which deal with matters which will, following the Continuance, be dealt with in the
BCBCA or applicable securities legislation, rules and policies, will not be contained in the new Articles. As well,
certain provisions in the Company’s current By-laws that reflect the provisions of the CBCA will be retained in the
new Articles but will be altered as required to reflect the provisions of the BCBCA. The following is a summary
comparison of certain provisions of the Company’s current By-laws and the proposed new Articles. This summary
is not intended to be exhaustive and is qualified in its entirety by the full provisions of the current By-laws
and proposed new Articles, as applicable.
1.
Number of Directors
Currently the number of directors of the Company are as set forth in the Articles as from 7 to 20. In the
proposed Articles on continuance, the number of directors is set forth as between 3 and 20.
2.
Advance notice of nomination of Directors
The Articles include an advance notice requirement for director nominations which were not included in
the Company’s By-laws. The new requirements will provide shareholders with a reasonable process for nominating
directors for consideration for election at the meeting. The purpose of the new advance notice requirement is to: (i)
inform the Company of nominees for election at a shareholder meeting proposed by a shareholder sufficiently in
advance of such meeting; (ii) provide an opportunity to inform all shareholders of any potential proxy contest and
proposed director nominees sufficiently in advance of the meeting; and (iii) enable the Board to make informed
recommendations or present alternative to shareholders. This permits the shareholders to make informed decisions.
The Articles provide that shareholders seeking to nominate candidates for election as directors must
provide timely notice in writing to the Company’s Corporate Secretary by personal delivery or facsimile
transmission at the number shown on the Company’s issuer profile on SEDAR at www.sedar.com.
To be timely, a shareholder’s notice must be received by the Company: (i) in the case of an annual general
meeting, not later than the close of business on the 30th day before the meeting date or, if the first public
announcement of the date of such meeting is less than 50 days after the date on which the first public announcement
of the date of the annual general meeting was made by the Company, the close of business on the 10th day following
the day on which public announcement of the date of such annual general meeting was first made by the Company;
and (ii) in the case of a special meeting called for the purpose of electing directors, not later than the close of
business on the 15th day following the day on which public announcement of the date of the special meeting is first
made by the Company. The Articles also prescribe the proper written form for a shareholder’s notice as well as
additional requirements in connection with nominations. Shareholders who fail to comply with the advance notice
requirements would not be entitled to make nominations for directors at the annual general or special meeting of
shareholders.
3.
Directors authority to set auditor’s remuneration
Under the CBCA, remuneration payable to the auditors is fixed by the board, unless fixed by shareholders
by ordinary resolution. The Company’s practice has been for the Board to fix the remuneration payable to the
- 46 auditors. In order to continue that practice under the BCBCA, the Articles need to specify that the directors are
authorized to set the remuneration paid to the auditors of the Company.
4.
Shareholder meeting matters
Various provisions of the Articles are aimed at providing additional clarity regarding the conduct of
shareholder meetings, including (i) confirming that access to ballots and proxies voted at the shareholder meeting
will be provided as soon as reasonably practicable after the meeting, (ii) confirming the authority of the chair of the
shareholder meeting and the Board to waive the time by which proxies must be deposited with the Company or its
agent in respect of a shareholder meeting, (iii) revising authority for determining which persons, in addition to
shareholders, proxy holders, directors and the auditors, may attend shareholder meetings, (iv) revising authority for
adjourning a shareholder meeting due to lack of quorum, (v) clarifying that the chair of the meeting has authority to
determine certain disputes in good faith and (vi) clarifying that both the chair of the meeting and the Board have the
authority to require evidence of ownership of shares and authority to vote at a shareholder meeting.
5.
Requirements for Special Resolutions
The CBCA requires that certain matters be approved by shareholders by Special Resolution. Under the
BCBCA, there is flexibility to provide for different approval requirements for some matters in the articles. The
Company proposes to adopt the more flexible approach under the BCBCA in order to be able to react and adapt to
changing business conditions.
As a result, as allowed under the BCBCA, management and the Board are proposing that the Articles
provide for the following matters (which currently require a Special Resolution of the shareholders) to require a
directors’ resolution only, and not require a shareholders’ resolution (recognizing that regulatory authorities may
require shareholder approval in certain cases in any event):
(a)
a subdivision of all or any of the unissued, or fully paid issued, shares;
(b)
a consolidation of all or any of the unissued, or fully paid issued, shares; and
(c)
a change of name of the Company.
Other capital and share structure changes will continue to require shareholder approval, however the
Articles would provide that unless otherwise specified in the Articles or the BCBCA, alterations to the Articles or
Notices of Articles will require shareholder approval only by ordinary resolution. The creation, variation or
elimination of special rights or restrictions attached to issued shares will nevertheless continue to require shareholder
approval by Special Resolution.
6.
Unclaimed dividends
The Articles would provide that unclaimed dividends revert to the Company after three years.
Continuance Resolution
In order to be effective, the Continuance requires the approval of not less than 66 2/3% of the votes cast by
shareholders represented at the Meeting in person or by proxy. Even if the Continuance is approved, the Board
retains the power to revoke it at all times without any further approval by shareholders. The Board will only
exercise such power in the event that it is, in its opinion, in the best interest of the Company. For example, if a
significant number of shareholders dissent in respect of the Continuance, the Board may determine not to proceed
with the Continuance.
As a shareholder of the Company, you are invited to vote with respect to the Continuance through the
following resolution:
Resolved as a special resolution, that:
- 47 (a)
the Company:
(i)
apply to the Director (the “Director”) under the Canada Business Corporations Act (the
“CBCA”) for a Letter of Satisfaction pursuant to Section 188(1) of the CBCA;
(ii)
apply to the Registrar of Companies of British Columbia to continue as a British
Columbia company pursuant to Section 302 of the British Columbia Business
Corporations Act (the “BCBCA”) in accordance with the Continuation Application
attached to the Management Proxy Circular (the “Proxy Statement”) prepared in
connection with the Meeting at which this resolution was passed, and such Continuation
Application is hereby approved; and
(iii)
deliver a copy of the Certificate of Continuation to the Director and request that the
Director issue a Certificate of Discontinuance under Section 188(7) of the CBCA;
(b)
subject to the issuance of such a Certificate of Continuation and without affecting the validity of
the Company and the existence of the Company by or under its existing Articles and By-laws and
any act done thereunder, effective upon issuance of the Certificate of Continuation, the Company
adopt the Notice of Articles set forth in the Continuation Application and the Articles attached to
the Proxy Statement, in substitution for the Company’s existing Articles and By-laws, and such
Notice of Articles and Articles are hereby approved and adopted;
(c)
notwithstanding that this special resolution has been duly passed by the shareholders of the
Company, the directors of the Company are hereby authorized, at their discretion, to determine, at
any time, to proceed or not to proceed with the continuance and to abandon this resolution at any
time prior to the implementation of the continuance without further approval of the shareholders
and in such case, this resolution approving the continuance shall be deemed to have been
rescinded; and
(d)
any one director or any one officer of the Company hereby authorized and empowered, acting for,
in the name of and on behalf of the Company, to execute or to be caused to be executed, under the
seal of the Company or otherwise, and to deliver and file or to cause to be delivered and filed, the
Continuation Application and such other documents and instruments, and to do or to cause to be
done, such other acts and things as in the opinion of such director or officer of the Company may
be necessary or desirable in order to carry out the intent of this resolution.
This vote requires the approval of not less than 66 2/3% of the votes cast at the Meeting, whether in person,
or by proxy or otherwise. You may vote “For” or “Against” on the special resolution. The Board recommends
that the shareholders vote FOR the Continuance.
Rights of Dissent in Respect of the Continuance Proposal
Record shareholders who wish to dissent should take note that strict compliance with the dissent
procedures is required.
The following description of rights of shareholders to dissent is not a comprehensive statement of the
procedures to be followed by a dissenting shareholder who seeks payment of the fair value of its Common Shares
and is qualified in its entirety by the reference to the full text of Section 190 of the CBCA which is attached to this
Circular as Appendix D. A dissenting shareholder who intends to exercise the right of dissent should carefully
consider and comply with the provisions of Section 190 of the CBCA and should seek independent legal advice.
Failure to comply strictly with the provisions of the CBCA and to adhere to the procedures established therein
may result in the loss of all rights thereunder.
Pursuant to Section 190 of the CBCA, a record shareholder is entitled, in addition to any other right that the
shareholder may have, to dissent and to be paid by the Company the fair value of the shares in respect of which the
shareholder dissents. “Fair value” is determined as of the close of business on the last business day before the day
on which the Continuance Resolution is adopted. A shareholder may dissent only with respect to all of the
- 48 shareholder’s Common Shares or shares held by the shareholder on behalf of any one non-record holder. Further, a
shareholder may only dissent in respect of shares registered in the dissenting shareholder’s name.
A record shareholder who wishes to dissent must send a written objection notice (the “Notice of
Objection”) objecting to the Continuance to the Company, 13800 Commerce Parkway, Richmond, British
Columbia V6V 2J3, Canada, fax number 604-231-2768, Attention: Corporate Secretary, at or prior to the
time of the Meeting or any adjournment thereof in order to be effective.
The delivery of a Notice of Objection does not deprive a record shareholder of its right to vote at the
Meeting, however, a vote in favour of the Continuance Resolution will result in a loss of its rights under Section 190
of the CBCA. A vote against the Continuance Resolution, whether in person or by proxy, does not constitute a
Notice of Objection, but a shareholder need not vote its Common Shares against the Continuance Resolution in
order to object. Similarly, the revocation of a proxy conferring authority on the proxy holder to vote in favour of the
Continuance Resolution does not constitute a Notice of Objection in respect of the Continuance Resolution, but any
such proxy granted by a shareholder who intends to dissent should be validly revoked (please see “Questions about
Voting”) in order to prevent the proxy holder from voting such Common Shares in favour of the Continuance
Resolution.
If the Continuance Resolution is approved at the Meeting or at an adjournment or postponement thereof,
the Company is required to deliver to each shareholder who has filed a Notice of Objection and has not voted for the
Continuance Resolution or not withdrawn that shareholder’s Notice of Objection (each, a “Dissenting Shareholder”),
within 10 days after the approval of the Continuance Resolution, a notice stating that the Continuance Resolution
has been adopted (the “Notice of Resolution”). A Dissenting Shareholder then has 20 days after receipt of the
Notice of Resolution or, if the Dissenting Shareholder does not receive a Notice of Resolution, within 20 days after
learning that the Continuance Resolution has been adopted, to send to the Company a written notice (a “Demand for
Payment”) containing the Dissenting Shareholder’s name and address, the number of Common Shares in respect of
which it dissents and a demand for payment of the fair value of such Common Shares. A Dissenting Shareholder
must within 30 days after sending the Demand for Payment, send the certificates representing the Common Shares
in respect of which it is dissenting to the Company or its transfer agent, Computershare Investor Services Inc.
(“Computershare”). The Company or Computershare must endorse the certificates with a notice that the holder is
a Dissenting Shareholder under Section 190 of the CBCA and forthwith return the certificates to the Dissenting
Shareholder. A Dissenting Shareholder who does not send the certificates within the 30 day period has no right to
make a claim under Section 190 of the CBCA.
Dissenting Shareholder ceases to have any rights as a holder of Common Shares, other than the right to be
paid their fair value, unless: (i) the Demand for Payment is withdrawn before the Company makes an Offer to Pay
(as defined below); (ii) the Company fails to make a timely Offer to Pay to the Dissenting Shareholder and the
Dissenting Shareholder withdraws the Demand for Payment; or (iii) the Continuation is not proceeded with.
Not later than seven days after the later of the date shown on the Certificate of Continuation is issued by the
British Columbia Registrar of Companies and the day the Company receives the Demand for Payment, the Company
must send a written offer to pay (“Offer to Pay”) in the amount considered by the Board to be the fair value of the
Common Shares in respect of which the Dissenting Shareholder has dissented. The Offer to Pay must be
accompanied by a statement showing how the fair value was determined. Every Offer to Pay made to Dissenting
Shareholders must be on the same terms, and lapses if not accepted within 30 days after being made. If the Offer to
Pay is accepted, payment must be made within 10 days of acceptance.
If the Company does not make an Offer to Pay or if a Dissenting Shareholder fails to accept an Offer to
Pay, the Company may, within 50 days after the date shown on the Certificate of Continuation is issued by the
British Columbia Registrar of Companies or within such further period as a court of competent jurisdiction may
allow, apply to the court to fix a fair value for the securities of any Dissenting Shareholder. If the Company fails to
so apply to the court, a Dissenting Shareholder may do so for the same purpose within a further period of 20 days or
such other period as the court may allow. A Dissenting Shareholder is not required to give security for costs in any
application to the court. Applications referred to in this paragraph may be made to a court of competent jurisdiction
in the place where the Company has its registered office or in the province where the Dissenting Shareholder resides
if the Company carries on business in that province.
- 49 If the Company makes an application to the court, it must give notice of the date, place and consequences
of the application and of the Dissenting Shareholder’s right to appear and be heard to each Dissenting Shareholder
who has sent the Company a Demand for Payment and has not accepted an Offer to Pay. All Dissenting
Shareholders whose shares have not been purchased by the Company must be made parties to the application and
are bound by the decision of the court. The court is authorized to determine whether any other person is a Dissenting
Shareholder who should be joined as a party to such application.
The court must fix a fair value for the shares of all Dissenting Shareholders and may in its discretion allow
a reasonable rate of interest on the amount payable to each Dissenting Shareholder from the effective date of the
Continuation until the date of payment of the amount so fixed. The final order of the court in the proceedings
commenced by an application by the Company or a Dissenting Shareholder must be rendered against the Company
and in favour of each Dissenting Shareholder.
The above is only a summary of the dissenting shareholder provisions of the CBCA. A shareholder of the
Company wishing to exercise a right to dissent should seek independent legal advice. Failure to comply
strictly with the provisions of the statute may prejudice the right of dissent.
OTHER MATTERS
Interest of Certain Persons in Matters to be Acted Upon
None of the Directors or senior officers of the Company, no proposed nominee for election as a Director, none of the
persons who have been Directors or senior officers of the Company since the commencement of the Company’s last
completed financial year, none of the other insiders of the Company and no associate or affiliate of any of the
foregoing persons has any substantial interest, direct or indirect, by way of beneficial ownership of securities or
otherwise, in any matter to be acted upon at the Meeting other than the election of the Directors.
Interest of Certain Persons in Material Transactions
None of the insiders of the Company, no proposed nominee for election as a Director and no associate or affiliate of
such persons or companies has any material interest, direct or indirect, in any transaction since the commencement
of the Company’s last completed financial year or in any proposed transaction, which, in either case, has materially
affected or will materially affect the Company or any of its subsidiaries.
Directors and Officers Liability Insurance
The Company and its subsidiaries have Directors and Officers liability insurance coverage for both Directors and
officers as a group. The Company indemnifies, subject to applicable law, all Directors and officers and is liable in
respect of Directors and officers for the deductible. Premium payments totaling $244,000 were made by the
Company for the period June 1, 2015 to June 1, 2016.
SHAREHOLDER PROPOSALS
FOR THE 2017 ANNUAL MEETING OF SHAREHOLDERS
A shareholder who is entitled to vote at the 2017 Annual Meeting of Shareholders may raise a proposal for
consideration at such Annual Meeting. The Company will consider such proposal for inclusion in the proxy
materials for the 2017 Annual Meeting of Shareholders only if the Company’s Corporate Secretary receives such
proposal (at 13800 Commerce Parkway, Richmond, British Columbia V6V 2J3, Canada, or by facsimile 604-2312768), submitted pursuant to Section 137 of the CBCA, if shareholders do not approve the Continuance Resolution,
on or before February 2, 2017. The use of certified mail, return receipt, is advised. In addition, in the event the
Company does not receive a shareholder proposal by February 2, 2017, the proxy to be solicited by the management
of the Company for the 2017 Annual Meeting of Shareholders will confer discretionary authority on the holders of
the proxy to vote the shares if the proposal is presented at the 2017 Annual Meeting of Shareholders without any
discussion of the proposal in the proxy materials for that meeting.
If the date of the 2017 Annual Meeting of Shareholders is advanced or delayed more than 30 days from the date of
the Meeting, shareholder proposals intended to be included in the proxy statement for the 2017 Annual Meeting of
- 50 Shareholders must be received by the Company within a reasonable time before the Company begins to print and
mail the proxy statement, or provide a notice to you with respect to accessing such proxy statement over the Internet,
for the 2017 Annual Meeting of Shareholders.
ADDITIONAL INFORMATION
The Company complies with the requirements of the TSX and securities authorities with respect to its disclosures.
As a reporting issuer subject to securities legislations of certain provinces in Canada, the Company is required to file
financial statements, an information circular and an annual information form with the various securities
commissions in such provinces. In addition, the Company has adopted a Disclosure Policy in order to ensure full
and timely disclosure of all material information regarding the Company. This policy is reviewed annually to keep
abreast of legislative and regulatory changes.
It is the policy of the Company to be receptive to shareholder comments or questions, including compensation, in
any form. Also, the Company will promptly provide answers to shareholder inquiries, while being guided by legal
requirements with respect to confidentiality and disclosure policies.
Additional information relating to the Company, including its Annual Information Form dated February 24, 2016 for
the fiscal year ended December 31, 2015, is filed with Canadian securities administrators. Financial information is
provided in the Company’s consolidated financial statements and related Management’s Discussion and Analysis
(“MD&A”) for the fiscal year ended December 31, 2015. This information can be accessed through the System for
Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com. Copies of the Company’s financial
statements and MD&A may also be accessed at www.mdacorporation.com and obtained by any person without
charge by writing to the Company to the attention of its Corporate Secretary, 13800 Commerce Parkway, Richmond,
B.C., V6V 2J3.
- 51 APPROVAL OF THE BOARD OF DIRECTORS
The contents and the sending of this Proxy Circular have been approved by the Board of Directors of MDA.
DATED at Richmond, British Columbia, this 29th day of March, 2016.
MACDONALD, DETTWILER AND ASSOCIATES LTD.
Gordon Thiessen (Signed)
Corporate Secretary
APPENDIX A
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Company seeks to attain high standards of corporate governance. The Board of Directors has carefully
considered the Corporate Governance Guidelines set forth in National Policy 58-201 (the "Guidelines"). A
description of the Company's corporate governance practices is set out below in response to the requirements of
National Instrument 58-101 "Disclosure of Corporate Governance Practices" and in the form set forth in Form 58101F1 "Corporate Governance Disclosure".
Form 58-101F1 –
Corporate Governance Disclosure
1. Board of Directors –
The Company's Practices
(a) Disclose the identity of directors who are
independent.
During 2015, the Board of Directors was comprised of
seven persons to July 30, 2015 and eight persons
subsequent thereto. The independent directors are
Robert L. Phillips, Thomas S. Chambers, Dennis H.
Chookaszian, Lori B. Garver, Brian G. Kenning, Fares
F. Salloum, and Eric J. Zahler.
(b) Disclose the identity of directors who are not
independent, and describe the basis for that
determination.
The only director who is not independent is Daniel E.
Friedmann, who is the President and Chief Executive
Officer of the Company.
(c) Disclose whether or not a majority of directors are
independent. If a majority of directors are not
independent, describe what the board of directors (the
board) does to facilitate its exercise of independent
judgement in carrying out its responsibilities.
The majority of Board members are independent
directors.
(d) If a director is presently a director of any other issuer
that is a reporting issuer (or the equivalent) in a
jurisdiction or a foreign jurisdiction, identify both the
director and the other issuer.
The directorships of all director nominees are described
under the heading "Election of Directors" in the
Management Proxy Circular (the “Circular”).
(e) Disclose whether or not the independent directors
hold regularly scheduled meetings at which members of
management are not in attendance. If the independent
directors hold such meetings, disclose the number of
meetings held during the preceding 12 months. If the
independent directors do not hold such meetings,
describe what the board does to facilitate open and
candid discussion among its independent directors.
The Board meets without management present at each
board meeting (whether regularly scheduled or special).
During the 12 months ended December 31, 2015, the
Board met 8 times.
In addition, all of the Committees meet without
members of management in attendance at each of their
meetings.
-2-
Form 58-101F1 –
Corporate Governance Disclosure
(f) Disclose whether or not the chair of the board is an
independent director. If the board has a chair or lead
director who is an independent director, disclose the
identity of the independent chair or lead director, and
describe his or her role and responsibilities. If the board
has neither a chair that is independent nor a lead director
that is independent, describe what the board does to
provide leadership for its independent directors.
The Company's Practices
The Chair, Mr. Robert L. Phillips, is an independent
director. The Chair has a written description of his role
and responsibilities. Mr. Phillips is generally responsible
for overseeing the Board in carrying out its
responsibilities, including overseeing that these
responsibilities are carried out independently of
management.
The Chair regularly reviews with the Governance and
Nominating Committee the size and composition of the
Board and its committees to ensure efficient decisionmaking and that the competency, skills and experience
of the Directors reflect those beneficial to the Board and
the Company. The Chair also acts as a liaison between
the Board and management, which involves working
with the Chief Executive Officer (the "CEO"). The
Chair also works with the Governance and Nominating
Committee to oversee the development of corporate
governance principles applicable to the Company.
(g) Disclose the attendance record of each director for
all board meetings since the beginning of the issuer’s
most recently completed financial year.
Refer to disclosure under “Election of Directors” in the
Circular.
2. Board Mandate –
(a) Disclose the text of the board's written mandate. If
the board does not have a written mandate, describe how
the board delineates its role and responsibilities.
The Board has a written mandate, a copy of which is
attached as Appendix B.
The Board assumes responsibility for the stewardship of
the Company and the enhancement of shareholder value.
The mandate of the Board specifically includes
identification and management of risks, strategic
planning, succession planning, director nominations and
governance. Responsibility for day-to-day operations is
delegated to management with the Board retaining
responsibility
for
evaluating
management’s
performance. Oversight of certain of the Company’s
risks is overseen by the Audit Committee and the
Human Resources and Management Compensation
Committee.
3. Position Descriptions –
(a) Disclose whether or not the board has developed
written position descriptions for the chair and the chair
of each board committee. If the board has not developed
written position descriptions for the chair and/or the
chair of each board committee, briefly describe how the
board delineates the role and responsibilities of each
such position.
The Board has developed a written position description
for the Chair and the chair of each Board committee
which describes the role and responsibilities of such
persons.
-3-
Form 58-101F1 –
Corporate Governance Disclosure
(b) Disclose whether or not the board and CEO have
developed a written position description for the CEO. If
the board and CEO have not developed such a position
description, briefly describe how the board delineates
the role and responsibilities of the CEO.
The Company's Practices
The CEO has a written position description.
The Board expects the CEO and his management team
to be responsible for management of the Company's
strategic and operational agenda and for the execution of
the decisions of the Board and for the management of
the risks of the Company and its subsidiaries. The Board
expects to be advised on a regular basis as to the results
being achieved and risk assessments, and to be presented
for approval of alternative plans and strategies, in
keeping with evolving business conditions. In addition
to those matters which by law must be approved by the
Board, the prior approval of the Board, or of a
committee of the Board to which approval authority has
been delegated by the Board, is required for all matters
of policy and all actions proposed to be taken by the
Company which are not in the ordinary course of its
operations or the approval of which has been delegated.
In particular, the Board approves the appointment of all
executive officers of the Company and approves all
material transactions.
4. Orientation and Continuing Education –
(a) Briefly describe what measures the board takes to
orient new directors regarding
(i)
(ii)
the role of the board, its committees and its
directors, and
the nature and operation of the issuer’s business
There is an orientation meeting held by senior
management for each new director. The orientation
meeting includes presentations by senior management
on business operations, corporate strategies and key
risks of the business. New directors are provided with an
extensive information package on the Company's
business, its strategic and operational business plans, its
operating performance, its governance system and its
financial position. New directors are also provided with
the Board mandate, committee terms of reference, codes
of conduct and applicable policies. New directors are to
tour the Company’s various facilities, as necessary, to
acquire a greater understanding of the Company’s
operations.
-4-
Form 58-101F1 –
Corporate Governance Disclosure
(b) Briefly describe what measures, if any, the board
takes to provide continuing education for its directors. If
the board does not provide continuing education,
describe how the board ensures that its directors
maintain the skill and knowledge necessary for them to
meet their obligations as directors.
The Company's Practices
The Company has a formal program to annually keep
the Governance and Nominating Committee members
abreast of key legal and governance matters relevant to
the operations of the Company and its subsidiaries and
their roles as directors. The Governance and Nominating
Committee regularly updates the Board on these matters.
As part of continuing education, senior management
makes regular presentations to the Board on the main
areas of the Company's business and existing directors
are invited to any orientation presentations for new
directors.
In
addition,
Directors
are
given
comprehensive tours of the facilities of the Company
and its subsidiaries which include presentations on
products being developed at those facilities. In addition,
each Director is encouraged to become a member of the
Canadian Institute of Corporate Directors. Refer also to
disclosure under “Director Orientation and Continuing
Education” in the Circular.
5. Ethical Business Conduct –
(a) Disclose whether or not the board has adopted a
written code for its directors, officers and employees. If
the board has adopted a written code:
The Company has a written code for ethical business
conduct for its directors, officers and employees.
(i) disclose how an interested party may obtain a copy of
the written code;
The Director Business Conduct Code is on the
Company’s website at www.mdacorporation.com and a
copy of the officer and employee business conduct code
may be obtained by writing to the Corporate Secretary at
the Company's head office in Richmond, British
Columbia.
(ii) describe how the board monitors compliance with its
code, or if the board does not monitor compliance,
explain whether and how the board ensures compliance
with its code; and
Each Board member is required to annually confirm that
he or she has complied with the Director Business
Conduct Code. The codes of conduct and ethics are
reviewed annually by the Governance and Nominating
Committee. Employees and officers are required to
agree to the employees’ and officers' business code of
conduct when they are hired. The Company has also
implemented a regular acknowledgement of the business
code of conduct for all employees and officers.
(iii) provide a cross-reference to any material change
report(s) filed within the preceding 12 months that
pertains to any conduct of a director or executive officer
that constitutes a departure from the code.
There have been no material change reports filed in the
preceding 12 months relating to any conduct of a
director or executive officer that constitutes a departure
from the code.
(b) Describe any steps the board takes to ensure
directors exercise independent judgement in considering
transactions and agreements in respect of which a
director or executive officer has a material interest.
In accordance with applicable law, when a conflict of
interest arises, a director is required to disclose his or her
interest and abstain from voting on the matter. In
addition, the Chair will ask the director to leave the
room during any discussion concerning such matter.
-5-
Form 58-101F1 –
Corporate Governance Disclosure
(c) Describe any other steps the board takes to
encourage and promote a culture of ethical business
conduct.
The Company's Practices
Through the above-noted methods, the Board
encourages and promotes a culture of ethical business
conduct. This is reinforced by the behavior of the Board,
as provided in its mandate, which is in strict compliance
with the terms and the spirit of these measures. In
addition, the Board, through the Audit Committee,
oversees risks related to the Company’s foreign corrupt
practices policy and receives periodic related reports
thereto.
6. Nomination of Directors –
(a) Describe the process by which the board identifies
new candidates for board nomination.
The Governance and Nominating Committee of the
Board is responsible for developing a competency
matrix for the skills and experiences that meet the needs
of the Board and the Company, reviewing and
monitoring criteria, as well as establishing procedures
for selecting directors by regularly assessing the
competencies, skills, personal qualities, availability,
geographical representation, business background and
diversified experience of the Directors and the
Company's circumstances and needs. The Committee
identifies candidates qualified to become Board
members and selects or recommends that the Board
select director nominees for the next annual meeting of
shareholders. The Committee maintains an active list of
prospective Board candidates. It also reviews annually
the performance and effectiveness of the Board, Board
committees, the Board and committee chairs and
individual directors. There is also an annual formal peer
review of individual directors. In certain circumstances,
the Committee may retain an independent recruiting
firm to identify director candidates and the Committee
will fix such firm's fees and other retention terms. There
is currently no retirement policy for Board members.
(b) Disclose whether or not the board has a nominating
committee composed entirely of independent directors.
If the board does not have a nominating committee
composed entirely of independent directors, describe
what steps the board takes to encourage an objective
nomination process.
The Governance and Nominating Committee
comprised entirely of independent directors.
is
-6-
Form 58-101F1 –
Corporate Governance Disclosure
(c) If the board has a nominating committee, describe
the responsibilities, powers and operation of the
nominating committee.
The Company's Practices
The Governance and Nominating Committee ensures
that an effective and efficient approach to corporate
governance is developed and implemented. The
objective is to ensure the business and affairs of the
Company are carried out in a manner that will enhance
shareholder value. This Committee assesses the
effectiveness of corporate governance at MDA and
makes recommendations accordingly. This includes the
mandates and terms of reference of the Committees and
Director evaluation processes, policies that govern size
and composition of the Board, the voting for directors,
recommending nominees to the Board and the
composition of Board committees in consultation with
the Chair. The Governance and Nominating Committee
has a written charter that describes the responsibilities,
powers and operation of the Committee. The charter is
available
on
the
Company’s
website
at
www.mdacorporation.com.
7. Compensation –
(a) Describe the process by which the board determines
the compensation for your company's directors and
officers.
The amount and form of director compensation is
reviewed every two years by the Governance and
Nominating
Committee,
with
any
resultant
recommendations made to the full Board, to ensure that
such compensation is consistent with the responsibilities
and risks involved in being an effective director. To
assist in this process, this Committee may retain
independent compensation consultants to assess the
market competitiveness of the total director
compensation. See "Compensation of Directors" in the
Circular for information on the compensation paid to
outside directors.
The Human Resources and Management Compensation
Committee determines the compensation for the
Company’s senior executives and oversees the risks in
the Company’s compensation plan. See “Compensation
Discussion and Analysis” in the Circular. This
Committee ensures that the Company has a plan for
continuity of its officers and an executive compensation
plan that is motivational and competitive, to attract,
retain and inspire the performance of executive
management and other key personnel and does not
encourage undue risk taking by employees.
(b) Disclose whether or not the board has a
compensation committee composed entirely of
independent directors. If the board does not have a
compensation committee composed entirely of
independent directors, describe what steps the board
takes to ensure an objective process for determining
such compensation.
The Human Resources and Management Compensation
Committee is composed entirely of independent
Directors.
-7-
Form 58-101F1 –
Corporate Governance Disclosure
(c) If the board has a compensation committee, describe
the responsibilities, powers and operation of the
compensation committee.
The Company's Practices
The Human Resources and Management Compensation
Committee ensures that the Company has a plan for
continuity of its officers and an executive compensation
plan that is motivational and competitive, to attract, hold
and inspire the performance of executive management
and other key personnel.
The Human Resources and Management Compensation
Committee has a written charter that describes the
responsibilities, powers and operation of the Committee.
The charter is available on the Company’s website at
www.mdacorporation.com.
(d) If a compensation consultant or advisor has, at any
time since the beginning of the issuer's most recently
completed financial year, been retained to assist in
determining compensation for any of the issuer's
directors and officers, disclose the identity of the
consultant or advisor and briefly summarize the mandate
for which they have been retained. If the consultant or
advisor has been retained to perform any other work for
the issuer, state that fact and briefly describe the nature
of the work.
Refer to disclosure under “Compensation Discussion
and Analysis – Compensation Benchmarking” in the
Circular.
8. Other board Committees –
(a) If the board has standing committees other than the
audit, compensation and nominating committees,
identify the committees and describe their function.
The Board has no standing committees other than the
Audit, Governance and Nominating, and Human
Resources and Management Compensation committees.
9. Assessments –
(a) Disclose whether or not the board, its committees
and individual directors are regularly assessed with
respect to their effectiveness and contribution. If
assessments are regularly conducted, describe the
process used for the assessments. If assessments are not
regularly conducted, describe how the board satisfies
itself that it, its committees, and individual directors are
performing effectively.
The Board of Directors has a formal, robust director, as
well as board and committee, evaluation process. In
2015, an external consultant was engaged to conduct the
Board, Board Committees, and individual Director
assessments, which included a formal peer review. The
consultant surveyed and interviewed all Directors and
four members of the senior executive management team
to reflect on the Board’s functioning and identify
potential areas for improvement.
In 2014, the
assessment was conducted by the Chair of the Board.
The process for 2014 consisted of the Chair having a
collective discussion with the Board on the effectiveness
of the Board and Committees of the Board, and Board
and Committee performance. He also met with each of
the Directors individually to discuss issues and
performance. In a separate meeting, he then met with the
entire Board to discuss the results of the Board
effectiveness and performance assessment.
-8-
Form 58-101F1 –
Corporate Governance Disclosure
10. Term Limits –
(a) Disclose whether or not the company has adopted
term limits for the directors on the board. If the company
has not adopted term limits, disclose why it has not.
The Company's Practices
The Company has not adopted term limits for the
directors on the Board. The Governance and Nominating
Committee last considered whether to implement term
limits in October, 2014, at which time the Committee
determined that a director’s length of tenure should not
be presumed to indicate anything problematic. The
business of the Company is complex. Recognizing this,
and to ensure optimal governance of the Company by
the Board, director renewal and replacement is managed
in a manner to ensure that the Board can function
effectively, while enabling new directors to gain a full
understanding of the Company’s businesses.
11. Policies regarding the representation of women
on the board –
(a) Disclose whether the company has adopted a policy
for the identification and nomination of women
directors. If the company has not adopted such a policy,
disclose why it has not.
The Board adopted a written board diversity policy in
February 2016.
12. Consideration of the representation of women in
the director identification and selection process –
(a) Disclose whether and, if so how, the board considers
the level of representation of women on the board in
identifying and nominating candidates for election or reelection to the board.
The Governance and Nominating Committee annually
reviews the composition of the Board, giving careful
consideration to factors such as age, gender, ethnicity,
geographies, competencies and experience. The Board
will consider candidates on merit, based on a balance of
skills, background, experience and knowledge, including
knowledge related to the Company’s businesses or that
which is compatible with or of assistance to the
Company, management and the Board. In identifying the
highest quality directors, the Committee will take into
account diversity considerations such as gender, age and
ethnicity, with a view to ensuring the Board benefits
from a broad range of perspectives and relevant
experience. The Committee ensures that the pool of
candidates being considered for open director positions
include a significant number of potential women
candidates. While women candidates satisfying the
requirements established by the Board may have been
identified in the past, they may not have been in a
position to join the Board due to their own
commitments.
-9-
Form 58-101F1 –
Corporate Governance Disclosure
13. Consideration given to representation of women
in executive officer appointments –
(a) Disclose whether and, if so how, the issuer considers
the level of representation of women in executive officer
positions when making executive officer appointments.
The Company's Practices
MDA is committed to creating an inclusive work
environment where a diverse range of talented people
can work together to ensure business objectives are met.
The Company considers candidates on merit, based on
background, experience and knowledge, regardless of
gender, ethnicity or similar factors. The Company has a
large and very diverse work force with numerous
women, and persons of various ethnicities, age and
religions in all levels of employment, including
managerial positions.
14. Targets regarding the representation of women
on the Board and in Executive Officer Positions –
(a) Disclose whether the company has adopted a target
regarding women on the board. If the company has not
adopted a target, disclose why it has not done so.
The Board has not adopted a target regarding women on
the board. The Board considers candidates on merit,
based on a balance of skills, background, experience and
knowledge, including knowledge related to the
Company’s businesses or that which is compatible with,
or of assistance to the Company. In identifying the
highest quality directors, the Committee takes into
account diversity considerations such as gender, age and
ethnicity, with a view to ensuring the Board benefits
from a broad range of perspectives and relevant
experience.
(b) Disclose whether the issuer has adopted a target
regarding women in executive officer positions of the
company. If the company has not adopted a target,
disclose why it has not done so.
The Company has not adopted a target regarding women
in executive officer positions. Senior management
considers candidates on merit, based on a balance of
skills, background, experience and knowledge.
15. Number of Women on the Board and in
Executive Officer Positions –
(a) Disclose the number and proportion of directors on
the Board who are women.
There is one woman (13%) on the Board of Directors.
(b) Disclose the number and proportion (in percentage
terms) of executive officers of the Company, including
all major subsidiaries of the Company, who are women.
There are two women (13%) in executive officer
positions of the Company and its major subsidiaries.
APPENDIX B
MANDATE OF THE BOARD OF DIRECTORS
The Board of Directors of the Company is responsible for the stewardship of the Company and satisfies its legal
responsibility to “manage or supervise the management” of the business, in the interest of shareholders, by proxy,
through the President and Chief Executive Officer.
The Board, under the leadership of the Chair, has expressly acknowledged its stewardship role in:
Appointment, remuneration and succession of senior management.
Strategic planning.
Identification and monitoring of the principal risks of the Company’s business.
Monitoring and evaluating internal controls and management information systems.
Reviewing systems and policies for effective and timely communications.
In addition to the preceding, and its statutory duties, the Board also considers:
(a)
All matters to be submitted to shareholders for approval.
(b)
Filling vacancies on the Board.
(c)
Issuing of all corporate securities and approval of all related underwriting or sales agency agreements.
(d)
Repurchase of the Company’s own shares.
(e)
Borrowing of funds.
(f)
Payment of dividends.
(g)
The making of capital and maintenance expenditures over certain threshold amounts.
The Board also manages its own affairs, including selecting its Chair, nominating candidates for election to the Board,
constituting committees of the Board, evaluating its own performance and determining director compensation.
The Board reviews its structure and mandate, and those of the committees of the Board, on a regular basis.
APPENDIX C
Incorporation number: ____________
MACDONALD, DETTWILER AND ASSOCIATES LTD.
(the “Company”)
The Company has as its articles the following articles.
Full name and signature of one director
Date of signing
Daniel Friedmann
Member of the Board of Directors
ARTICLES
1.
INTERPRETATION
1.1
Definitions
1.2
General
1.3
Special Majority
1.4
Business Corporations Act and Interpretation Act Definitions Applicable
1.5
Conflicts Between Articles and the Business Corporations Act
1
1
1
2
2
2
2.
SHARES AND SHARE CERTIFICATES
2.1
Authorized Share Structure
2.2
Form of Share Certificate
2.3
Shareholder Entitled to Share Certificate or Acknowledgement
2.4
Delivery by Mail
2.5
Replacement of Worn Out or Defaced Share Certificate
2.6
Replacement of Lost, Destroyed or Wrongfully Taken Share Certificate
2.7
Recovery of New Share Certificate
2.8
Splitting Share Certificates
2.9
Share Certificate or Acknowledgement Fee
2.10
Recognition of Interests
2
2
2
2
2
3
3
3
3
3
3
3.
ISSUE OF SHARES
3.1
Directors Authorized
3.2
Conditions of Issue
3.3
Commissions
3.4
Share Purchase Warrants and Rights
4
4
4
4
4
4.
SECURITIES REGISTERS
4.1
Central Securities Register
4.2
Appointment of Agent
4
4
4
5.
SHARE TRANSFERS
5.1
Registering Transfers
5.2
Form of Instrument of Transfer
5.3
Transferor Remains Shareholder
5.4
Signing of Instrument of Transfer
5.5
Enquiry as to Title Not Required
5.6
Transfer Fee
5
5
5
5
5
5
6
6.
TRANSMISSION OF SHARES
6.1
Legal Personal Representative Recognized on Death
6.2
Rights of Legal Personal Representative
6
6
6
7.
PURCHASE OF SHARES
7.1
Company Authorized to Purchase Shares
6
6
- ii 7.2
7.3
Purchase When Insolvent
Sale and Voting of Purchased Shares
6
6
8.
BORROWING POWERS
8.1
Borrowing Powers
8.2
Delegation
7
7
7
9.
ALTERATIONS
9.1
Alteration of Authorized Share Structure
9.2
Special Rights and Restrictions
9.3
Change of Name
9.4
Other Alterations
7
7
8
8
8
10.
MEETINGS OF SHAREHOLDERS
10.1
Annual General Meetings
10.2
Calling of Meetings of Shareholders
10.3
Location of Meeting
10.4
Notice for Meetings of Shareholders
10.5
Record Date for Notice and Voting
10.6
Failure to Give Notice and Waiver of Notice
10.7
Class Meetings and Series Meetings of Shareholders
10.8
Electronic Meetings
10.9
Electronic Voting
8
8
8
8
9
9
9
9
9
9
11.
PROCEEDINGS AT MEETINGS OF SHAREHOLDERS
11.1
Quorum
11.2
Other Persons May Attend
11.3
Requirement of Quorum
11.4
Lack of Quorum
11.5
Chair
11.6
Adjournments
11.7
Notice of Adjourned Meeting
11.8
Decisions by Show of Hands or Poll
11.9
Declaration of Result
11.10
Motion Need Not be Seconded
11.11
Casting Vote
11.12
Manner of Taking Poll
11.13
Demand for Poll on Adjournment
11.14
Chair’s Resolution of Dispute
11.15
Casting of Votes
11.16
Demand for Poll Not to Prevent Continuance of Meeting
11.17
Retention of Ballots and Proxies
9
9
9
10
10
10
10
10
10
10
11
11
11
11
11
11
11
11
12.
VOTES OF SHAREHOLDERS
12.1
Number of Votes by Shareholder or by Shares
12.2
Votes of Persons in Representative Capacity
12.3
Votes by Joint Holders
12.4
Legal Personal Representatives as Joint Shareholders
12.5
Representative of a Corporate Shareholder
12.6
Appointment and Instruction of Proxy Holders
12.7
Form of Proxy
12.8
Deposit of Proxy
12.9
Revocation of Proxy
12.10
Waiver of Proxy Time Limits
12.11
Chair May Determine Validity of Proxy
12.12
Revocation of Proxy Must Be Signed
12.13
Validity of Proxy Vote
12.14
Inquiry and Production of Evidence
12.15
Lack of Quorum at Succeeding Meeting
12
12
12
12
12
12
12
13
13
13
13
13
13
13
14
14
13.
DIRECTORS
13.1
Number of Directors
13.2
Directors’ Acts Valid
13.3
Qualifications of Directors
14
14
14
14
- iii 13.4
Remuneration and Reimbursement of Expenses
14
14.
ELECTION AND REMOVAL OF DIRECTORS
14.1
Election at Annual General Meeting
14.2
Nomination of Directors
14.3
Consent to be a Director
14.4
Failure to Elect or Appoint Directors
14.5
Directors May Appoint to Fill Vacancies
14.6
Remaining Directors Power to Act
14.7
Shareholders May Fill Vacancies
14.8
Ceasing to be a Director
14.9
Removal of Director by Shareholders
14.10
Removal of Director by Directors
14.11
Manner of Election of Directors
15
15
15
17
17
17
18
18
18
18
18
18
15.
POWERS AND DUTIES OF DIRECTORS
15.1
Powers of Management
18
18
16.
INTERESTS OF DIRECTORS AND OFFICERS
16.1
Director Holding Other Office in the Company
16.2
No Disqualification
16.3
Director or Officer in Other Corporations
19
19
19
19
17.
PROCEEDINGS OF DIRECTORS
17.1
Meetings of Directors
17.2
Voting at Meetings
17.3
Chair of Meetings
17.4
Meetings by Telephone or Other Communications Facilities
17.5
Calling of Meetings
17.6
Notice of Meetings
17.7
When Notice Not Required
17.8
Meeting Valid Despite Failure to Give Notice
17.9
Waiver of Notice of Meetings
17.10
Quorum
17.11
Validity of Acts Where Appointment Defective
17.12
Consent Resolutions
19
19
19
19
19
20
20
20
20
20
20
20
21
18.
COMMITTEES AND DELEGATION OF AUTHORITY
18.1
Appointment and Powers of Committees and Delegation of Authority
18.2
Audit Committee
18.3
Powers of Board
18.4
Transaction of Business
18.5
Procedure
21
21
21
21
22
22
19.
OFFICERS
19.1
Directors May Appoint Officers
19.2
Functions, Duties and Powers of Officers
19.3
Qualifications
19.4
Terms of Appointment
19.5
Appointment of Attorney of Company
22
22
22
22
22
22
20.
INDEMNIFICATION
20.1
Mandatory Indemnification of Eligible Parties
20.2
Indemnification of Other Persons
20.3
Non-Compliance with Business Corporations Act
20.4
Company May Purchase Insurance
23
23
23
23
23
21.
DIVIDENDS
21.1
Payment of Dividends Subject to Special Rights
21.2
Declaration of Dividends
21.3
No Notice Required
21.4
Record Date
21.5
Manner of Paying Dividend
21.6
Receipt by Joint Shareholders
23
23
23
23
23
23
24
- iv 21.7
21.8
21.9
21.10
No Interest
Method of Payment
Capitalization of Surplus
Unclaimed Dividends
24
24
24
24
22.
ACCOUNTING RECORDS
22.1
Recording of Financial Affairs
22.2
Inspection of Accounting Records
22.3
Remuneration of Auditors
24
24
24
24
23.
GIVING NOTICES AND SENDING RECORDS
23.1
Method of Giving Notices and Delivering Records
23.2
Deemed Receipt
23.3
Certificate of Sending
23.4
Notice to Joint Shareholders
23.5
Notice to Legal Personal Representative
23.6
Omission and Errors
23.7
Undelivered Records
23.8
Unregistered Shareholders
25
25
25
26
26
26
26
26
26
24.
SEAL
24.1
24.2
27
27
27
Who May Attest Seal
Mechanical Reproduction of Seal
25.
COMMON SHARES
25.1
Dividends
25.2
Voting Rights
25.3
Parity on Liquidation, Dissolution or Winding-Up
27
27
27
27
26.
PREFERRED SHARES
26.1
One or More Series
26.2
Terms of Each Series
26.3
Ranking of Preferred Shares
26.4
Cumulative Dividends and Payments on the Return of Capital
26.5
Conversion Into Common Shares
26.6
Voting
26.7
Variation of Rights
28
28
28
28
28
28
28
29
Incorporation number: ____________
MACDONALD, DETTWILER AND ASSOCIATES LTD.
(the “Company”)
1.
INTERPRETATION
1.1
Definitions
In these Articles, unless the context otherwise requires:
1.2
(1)
“Acknowledgement” means a non-transferable written acknowledgement of the shareholder’s
right to obtain a certificate for shares of any class or series, including a direct registration system
advice;
(2)
“applicable securities laws” means the applicable securities legislation of Canada and the United
States (if any), each relevant province and territory of Canada, as amended from time to time, the
rules, regulations and forms made or promulgated under any such statute and the published
national instruments, multilateral instruments, policies, bulletins and notices of the securities
commission and similar regulatory authority of the United States and each province and territory
of Canada;
(3)
“appropriate person” has the meaning assigned thereto in the Securities Transfer Act;
(4)
“board of directors”, “directors” and “board” mean the directors or sole director of the Company
for the time being;
(5)
“Business Corporations Act” means the Business Corporations Act (British Columbia) from time
to time in force and all amendments thereto or replacements thereof and includes all regulations
and amendments thereto made pursuant to that Act;
(6)
“business day” means any day other than a Saturday, Sunday or any statutory holiday in the
province of British Columbia;
(7)
“Interpretation Act” means the Interpretation Act (British Columbia) from time to time in force
and all amendments thereto and includes all regulations and amendments thereto made pursuant to
that Act;
(8)
“legal personal representative” means the personal or other legal representative of a shareholder,
and includes a trustee in bankruptcy of the shareholder;
(9)
“protected purchaser” has the meaning assigned thereto in the Securities Transfer Act;
(10)
“registered address” means a shareholder’s address as recorded in the central securities register;
(11)
“seal” means the seal of the Company, if any; and
(12)
“Securities Transfer Act” means the Securities Transfer Act (British Columbia), as amended or reenacted from time to time.
General
In these Articles:
(1)
expressions referring to writing include printing, lithography, typewriting, photography, facsimile,
-2Internet, e-mail, CD-ROM, diskette, electronic and other modes of representing or reproducing
words;
1.3
1.4
(2)
expressions referring to signing include facsimile and electronic signatures; and
(3)
the words “including”, “includes” and “include” means including (or includes or include) without
limitation.
Special Majority
(1)
For the purposes of the Articles and the Business Corporations Act, the majority of votes required
for the Company to pass a special resolution at a general meeting is two-thirds of the votes cast on
the resolution.
(2)
For the purposes of the Business Corporations Act, and unless otherwise provided in the Articles,
the majority of votes required for shareholders holding shares of a class or series of shares to pass
a special separate resolution is two-thirds of the votes cast on the resolution.
Business Corporations Act and Interpretation Act Definitions Applicable
The definitions in the Business Corporations Act and the definitions and rules of construction in the Interpretation
Act, with the necessary changes and unless the context requires otherwise, apply to these Articles as if the Articles
were an enactment. If there is a conflict between a definition in the Business Corporations Act and a definition or
rule in the Interpretation Act relating to a term used in these Articles, the definition in the Business Corporations Act
will prevail.
1.5
Conflicts Between Articles and the Business Corporations Act
If there is a conflict or inconsistency between these Articles and the Business Corporations Act, the Business
Corporations Act will prevail.
2.
SHARES AND SHARE CERTIFICATES
2.1
Authorized Share Structure
The authorized share structure of the Company consists of shares of the class or classes and series, if any, described
in the Notice of Articles of the Company.
2.2
Form of Share Certificate
Each share certificate issued by the Company must comply with, and be signed as required by, the Business
Corporations Act.
2.3
Shareholder Entitled to Share Certificate or Acknowledgement
Unless the shares of which the shareholder is the registered owner are uncertificated shares, each shareholder is
entitled, upon request and without charge, to (1) one share certificate representing the shares of each class or series
of shares registered in the shareholder’s name or (2) an Acknowledgement, provided that in respect of a share held
jointly by several persons, the Company is not bound to issue more than one share certificate or Acknowledgement
and delivery of a share certificate or Acknowledgement to one of several joint shareholders or to one of the joint
shareholders’ duly authorized agents will be sufficient delivery to all.
2.4
Delivery by Mail
Any share certificate or Acknowledgement may be sent to the shareholder by mail at the shareholder’s registered
address and neither the Company nor any director, officer or agent of the Company is liable for any loss to the
-3shareholder because the share certificate or Acknowledgement is lost in the mail, stolen or returned.
2.5
Replacement of Worn Out or Defaced Share Certificate
If the Company is satisfied that a share certificate is worn out or defaced, the directors must, on production of the
share certificate and on such other terms, if any, the directors determine:
2.6
(1)
order the share certificate to be cancelled; and
(2)
issue a share certificate or Acknowledgement.
Replacement of Lost, Destroyed or Wrongfully Taken Share Certificate
If a person entitled to a share certificate claims that the share certificate has been lost, destroyed or wrongfully taken,
the Company must issue a share certificate or an Acknowledgement if that person:
(1)
so requests before the Company has notice that the share certificate has been acquired by a
protected purchaser;
(2)
provides the Company with an indemnity bond sufficient in the Company’s judgment to protect
the Company from any loss that the Company may suffer by issuing a new certificate or
Acknowledgement; and
(3)
satisfies any other reasonable requirements imposed by the Company.
A person entitled to a share certificate or Acknowledgement may not assert against the Company a claim for a new
share certificate or Acknowledgement where a share certificate has been lost, apparently destroyed or wrongfully
taken if that person fails to notify the Company of that fact within a reasonable time after that person has notice of it
and the Company registers a transfer of the shares represented by the certificate before receiving a notice of the loss,
apparent destruction or wrongful taking of the share certificate.
2.7
Recovery of New Share Certificate
If, after the issue of a new share certificate, a protected purchaser of the original share certificate presents the
original share certificate for the registration of a transfer, then in addition to any rights on the indemnity bond, the
Company may recover the new share certificate from a person to whom it was issued or any person, other than a
protected purchaser, taking under that person.
2.8
Splitting Share Certificates
If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the
shareholder’s name two or more share certificates, each representing a specified number of shares and in the
aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel
the surrendered share certificate and issue replacement share certificates in accordance with that request.
2.9
Share Certificate or Acknowledgement Fee
There must be paid to the Company, in relation to the issue of any share certificate or Acknowledgement under
Articles 2.5, 2.6 or 2.8, the amount, if any and which must not exceed the amount prescribed under the Business
Corporations Act, determined by the Company or the Company’s transfer agent.
2.10
Recognition of Interests
The Company is not bound by or compelled in any way to recognize (even when having notice thereof): (a) any
equitable, contingent, future or partial interest in any share or fraction of a share or, (b) except as required by law or
statute or these Articles or as ordered by a court of competent jurisdiction, any other rights in respect of any share
-4except an absolute right to the entirety thereof in the shareholder.
3.
ISSUE OF SHARES
3.1
Directors Authorized
Subject to the Business Corporations Act and the rights of the holders of issued shares of the Company, the
Company may issue, allot, sell or otherwise dispose of the unissued shares, and issued shares held by the Company,
at the times, to the persons (including directors), in the manner, on the terms and conditions and for the issue prices
(including any premium at which shares with par value may be issued) that the directors may determine.
3.2
Conditions of Issue
Except as provided for by the Business Corporations Act, no share may be issued until it is fully paid. A share is
fully paid when:
(1)
(2)
3.3
consideration is provided to the Company for the issue of the share by one or more of the
following:
(a)
past services performed for the Company;
(b)
property;
(c)
money; and
the value of the consideration received by the Company equals or exceeds the issue price set for
the share under Article 3.1.
Commissions
The directors may from time to time authorize the Company to pay a reasonable commission to any person in
consideration of his purchasing or agreeing to purchase shares of the Company, whether from the Company or from
any other person, or procuring or agreeing to procure purchasers for any such shares.
3.4
Share Purchase Warrants and Rights
Subject to the Business Corporations Act, the Company may issue share purchase warrants, options and rights upon
such terms and conditions as the directors determine.
4.
SECURITIES REGISTERS
4.1
Central Securities Register
As required by and subject to the Business Corporations Act, the Company must maintain a central securities
register, which may be kept in electronic form and may be made available for inspection in accordance with the
Business Corporations Act by means of computer terminal or other electronic technology.
4.2
Appointment of Agent
The directors may, subject to the Business Corporations Act, appoint an agent to maintain the central securities
register. The directors may also appoint one or more agents, including the agent which keeps the central securities
register, as transfer agent for its shares or any class or series of its shares, as the case may be, and the same or
another agent as registrar for its shares or such class or series of its shares, as the case may be. The directors may
terminate such appointment of any agent at any time and may appoint another agent in its place.
-5-
5.
SHARE TRANSFERS
5.1
Registering Transfers
Subject to the Business Corporations Act and the Securities Transfer Act, a transfer of a share of the Company must
not be registered unless the Company or the transfer agent or registrar for the class or series of share to be
transferred has received:
5.2
(1)
in the case of a share certificate that has been issued by the Company in respect of the share to be
transferred, that share certificate and a written instrument of transfer (which may be on a separate
document or endorsed on the share certificate) from the shareholder or other appropriate person or
from an agent who has actual authority to act on behalf of that person;
(2)
in the case of an Acknowledgment in respect of the share to be transferred, a written instrument of
transfer that directs that the transfer of the share be registered, from the shareholder or other
appropriate person or from an agent who has actual authority to act on behalf of that person;
(3)
in the case of a share that is an uncertificated share, a written instrument of transfer that directs
that the transfer of the share be registered, from the shareholder or other appropriate person or
from an agent who has actual authority to act on behalf of that person; and
(4)
such other evidence, if any, as the Company or the transfer agent or registrar for the class or series
of share to be transferred may require to prove the title of the transferor or the transferor’s right to
transfer the share, that the written instrument of transfer is genuine and authorized and that the
transfer is rightful or to a protected purchaser.
Form of Instrument of Transfer
The instrument of transfer in respect of any share of the Company must be either in the form, if any, on the back of
the Company’s share certificates or in any other form that may be approved from time to time by the Company or its
transfer agent for the class or series of shares to be transferred.
5.3
Transferor Remains Shareholder
Except to the extent that the Business Corporations Act otherwise provides, a transferor of shares is deemed to
remain the holder of the shares until the name of the transferee is entered in a securities register of the Company in
respect of the transfer.
5.4
Signing of Instrument of Transfer
If a shareholder, or his or her duly authorized attorney, signs an instrument of transfer in respect of shares registered
in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to
the Company and its directors, officers and agents to register the number of shares specified in the instrument of
transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share
certificates or set out in the Acknowledgement deposited with the instrument of transfer:
5.5
(1)
in the name of the person named as transferee in that instrument of transfer; or
(2)
if no person is named as transferee in that instrument of transfer, in the name of the person on
whose behalf the instrument is deposited for the purpose of having the transfer registered.
Enquiry as to Title Not Required
Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the
person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of
transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered
-6or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder
of the shares, of any interest in the shares, of any share certificate representing such shares or any Acknowledgement
in respect of such shares.
5.6
Transfer Fee
There must be paid to the Company or its transfer agent, in relation to the registration of any transfer, the amount, if
any, determined by the Company or its transfer agent.
6.
TRANSMISSION OF SHARES
6.1
Legal Personal Representative Recognized on Death
In the case of the death of a shareholder, the legal personal representative of the shareholder, or in the case of shares
registered in the shareholder’s name and the name of another person in joint tenancy, the surviving joint tenant, will
be the only person recognized by the Company as having any title to the shareholder’s interest in the shares. Before
recognizing a person as a legal personal representative of a shareholder, the directors may require the original grant
of probate or letters of administration or a court certified copy of them or the original or a court certified or
authenticated copy of the grant of representation, will, order or other instrument or other evidence of the death under
which title to the shares or securities is claimed to vest.
6.2
Rights of Legal Personal Representative
The legal personal representative of a shareholder has the same rights, privileges and obligations that attach to the
shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided
appropriate evidence of appointment or incumbency, within the meaning of the Securities Transfer Act, and the
documents required by the Business Corporations Act and the directors have been deposited with the Company. This
Article 6.2 does not apply in the case of the death of a shareholder with respect to shares registered in the
shareholder’s name and the name of another person in joint tenancy.
7.
PURCHASE OF SHARES
7.1
Company Authorized to Purchase Shares
Subject to Article 7.2, the special rights and restrictions attached to the shares of any class or series and the Business
Corporations Act, the Company may, if authorized by the directors, purchase or otherwise acquire any of its shares
upon the terms authorized by the directors.
7.2
Purchase When Insolvent
The Company must not make a payment or provide any other consideration to purchase or otherwise acquire any of
its shares if there are reasonable grounds for believing that:
7.3
(1)
the Company is insolvent; or
(2)
making the payment or providing the consideration would render the Company insolvent.
Sale and Voting of Purchased Shares
If the Company retains a share, purchased or otherwise acquired by it, the Company may sell, gift or otherwise
dispose of the share, but, while such share is held by the Company, it:
(1)
is not entitled to vote the share at a meeting of its shareholders;
(2)
must not pay a dividend in respect of the share; and
-7(3)
must not make any other distribution in respect of the share.
8.
BORROWING POWERS
8.1
Borrowing Powers
The Company, if authorized by the directors, may:
8.2
(1)
borrow money in the manner and amount, on the security, from the sources and on the terms and
conditions that the directors consider appropriate;
(2)
issue bonds, debentures and other debt obligations either outright or as security for any liability or
obligation of the Company or any other person and at such discounts or premiums and on such
other terms as the directors consider appropriate;
(3)
guarantee the repayment of money by any other person or the performance of any obligation of
any other person; and
(4)
mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or
give other security on, the whole or any part of the present and future assets and undertaking of the
Company.
Delegation
The directors may from time to time delegate to such one or more of the directors or officers of the Company as may
be designated by the board all or any of the powers conferred on the board by Article 8.1 or by the Business
Corporations Act to such extent and in such manner as the directors shall determine at the time of each such
delegation.
9.
ALTERATIONS
9.1
Alteration of Authorized Share Structure
Subject to Article 9.2 and the Business Corporations Act, the Company may:
(1)
by ordinary resolution:
(a)
create one or more classes or series of shares or, if none of the shares of a class or series
of shares are allotted or issued, eliminate that class or series of shares;
(b)
increase, reduce or eliminate the maximum number of shares that the Company is
authorized to issue out of any class or series of shares or establish a maximum number of
shares that the Company is authorized to issue out of any class or series of shares for
which no maximum is established;
(c)
if the Company is authorized to issue shares of a class of shares with par value:
(d)
(i)
decrease the par value of those shares; or
(ii)
if none of the shares of that class of shares are allotted or issued, increase the par
value of those shares;
change all or any of its unissued, or fully paid issued, shares with par value into shares
without par value or any of its unissued shares without par value into shares with par
value; or
-8(e)
alter the identifying name of any of its shares;
and, if applicable, alter its Articles and Notice of Articles accordingly; or
(2)
9.2
by resolution of the directors, subdivide or consolidate all or any of its unissued, or fully paid
issued, shares and, if applicable, alter its Articles and Notice of Articles accordingly.
Special Rights and Restrictions
(1)
Subject to the Business Corporations Act and to the special rights and restrictions attached to any
class or series of shares, the Company may by special resolution:
(a)
create special rights or restrictions for, and attach those special rights or restrictions to,
the shares of any class or series of shares which have been issued; or
(b)
vary or delete any special rights or restrictions attached to the shares of any class or series
of shares which have been issued;
and if applicable, alter its Articles and Notice of Articles accordingly.
(2)
Subject to the Business Corporations Act and to the special rights and restrictions attached to any
class or series of shares, the Company may by ordinary resolution:
(a)
create special rights or restrictions for, and attach those special rights or restrictions to,
the shares of any class or series of shares for any shares which have not been issued; or
(b)
vary or delete any special rights or restrictions attached to the shares of any class or series
of shares which have not been issued;
and, if applicable, alter its Articles and Notice of Articles accordingly.
9.3
Change of Name
The Company may by resolution of the directors authorize an alteration of its Notice of Articles in order to change
its name or to adopt or change any translation of that name.
9.4
Other Alterations
Unless the Business Corporations Act or these Articles otherwise require, any action that must or may be taken or
authorized by the shareholders, including any amendment or alteration to these Articles, may be taken or authorized
by an ordinary resolution.
10.
MEETINGS OF SHAREHOLDERS
10.1
Annual General Meetings
The Company must hold an annual general meeting at least once in each calendar year and not more than 15 months
after the last annual reference date at such time and place as may be determined by the directors.
10.2
Calling of Meetings of Shareholders
The directors may call a meeting of shareholders at such time as they determine.
10.3
Location of Meeting
Subject to Article 10.8, the directors may, by resolution of the directors, approve any location for the holding of a
-9meeting of shareholders, which may be held in any location in Canada or the United States.
10.4
Notice for Meetings of Shareholders
The Company must send notice of the date, time and location of any meeting of shareholders, in the manner
provided in these Articles to each shareholder entitled to attend the meeting, to each director and to the auditor of the
Company, unless these Articles otherwise provide, at least 21 days before the meeting.
10.5
Record Date for Notice and Voting
The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of, and
to vote at, any meeting of shareholders.
10.6
Failure to Give Notice and Waiver of Notice
The accidental omission to send notice of any meeting of shareholders to, or the non-receipt of any notice by, any of
the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a
meeting of shareholders may, in writing or otherwise, waive or reduce the period of notice of such meeting.
10.7
Class Meetings and Series Meetings of Shareholders
Unless otherwise specified in these Articles, the provisions of these Articles relating to a meeting of shareholders
will apply, with the necessary changes and so far as they are applicable, to a class meeting or series meeting of
shareholders holding a particular class or series of shares.
10.8
Electronic Meetings
The directors may determine that a meeting of shareholders shall be held entirely by means of telephonic, electronic
or other communication facilities that permit all participants to communicate with each other during the meeting. A
meeting of shareholders may also be held at which some, but not necessarily all, persons entitled to attend may
participate by means of such communication facilities, if the directors determine to make them available. A person
participating in a meeting by such means is deemed to be present at the meeting.
10.9
Electronic Voting
Any vote at a meeting of shareholders may be held entirely or partially by means of telephonic, electronic or other
communication facilities, if the directors determine to make them available, whether or not persons entitled to attend
participate in the meeting by means of communication facilities.
11.
PROCEEDINGS AT MEETINGS OF SHAREHOLDERS
11.1
Quorum
Subject to the special rights and restrictions attached to the shares of any class or series of shares, the quorum for the
transaction of business at a meeting, or any adjourned meeting, of shareholders is two persons who are, or represent
by proxy, shareholders holding, in the aggregate, at least 25% of the issued shares entitled to be voted at the meeting
or adjourned meeting.
11.2
Other Persons May Attend
The only persons entitled to be present at a meeting of shareholders shall be those entitled to vote thereat, the
directors and auditor of the Company and others who, although not entitled to vote, are entitled or required under
any provision of the Business Corporations Act, the special rights and restrictions attaching to their shares or these
Articles to be present at the meeting. Any other person may be admitted only on the invitation of the chair of the
meeting or on the consent of the directors.
- 10 -
11.3
Requirement of Quorum
No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted
at any meeting of shareholders, including any adjourned meeting, unless a quorum of shareholders entitled to vote is
present at the commencement of the meeting, but such quorum need not be present throughout the meeting or
adjourned meeting.
11.4
Lack of Quorum
If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present:
11.5
(1)
in the case of a general meeting requisitioned by shareholders, the meeting is dissolved; and
(2)
in the case of any other meeting of shareholders, the meeting stands adjourned to a fixed time and
place as determined by the chair of the board or by the directors.
Chair
The following individual shall preside as chair at a meeting of shareholders:
(1)
the chair of the board, if any;
(2)
if the chair of the board is absent or determines not to act as chair of the meeting, the president or
chief executive officer; or
(3)
if neither the chair nor the president or chief executive officer is present, any director;
unless another person is or has been designated by the board to act as chair of such meeting and such person is
present and willing to act as chair at such meeting, in which case the person so designated shall preside as chair.
11.6
Adjournments
The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time
to time and from place to place, but no business may be transacted at any adjourned meeting other than the business
left unfinished at the meeting from which the adjournment took place.
11.7
Notice of Adjourned Meeting
It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned
meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned
meeting must be given as in the case of the original meeting.
11.8
Decisions by Show of Hands or Poll
Subject to the Business Corporations Act, every motion put to a vote at a meeting of shareholders will be decided on
a show of hands or the functional equivalent of a show of hands by means of electronic, telephonic or other
communication facility, unless a poll, before or on the declaration of the result of the vote by show of hands or the
functional equivalent of a show of hands, is directed by the chair or demanded by any shareholder entitled to vote
who is present in person or by proxy.
11.9
Declaration of Result
The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance
with the result of the show of hands (or its functional equivalent) or the poll, as the case may be, and that decision
must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary
majority or is defeated is, unless a poll is directed by the chair or demanded under Article 11.8, conclusive evidence
- 11 without proof of the number or proportion of the votes recorded in favour of or against the resolution.
11.10
Motion Need Not be Seconded
No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise,
and the chair of any meeting of shareholders is entitled to propose or second a motion.
11.11
Casting Vote
In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands (or its
functional equivalent) or on a poll, have a second or casting vote in addition to the vote or votes to which the chair
may be entitled as a shareholder.
11.12
Manner of Taking Poll
Subject to Article 11.13, if a poll is duly demanded at a meeting of shareholders:
(1)
11.13
the poll must be taken:
(a)
at the meeting, or within seven business days after the date of the meeting, as the chair of
the meeting directs; and
(b)
in the manner, at the time and at the place that the chair of the meeting directs;
(2)
the result of the poll is deemed to be the decision of the meeting at which the poll is demanded;
and
(3)
the demand for the poll may be withdrawn by the person who demanded it.
Demand for Poll on Adjournment
A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the
meeting.
11.14
Chair’s Resolution of Dispute
In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting shall
determine the dispute, and his or her determination made in good faith is final and conclusive.
11.15
Casting of Votes
On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.
11.16
Demand for Poll Not to Prevent Continuance of Meeting
The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the
continuation of a meeting for the transaction of any business other than the question on which a poll has been
demanded.
11.17
Retention of Ballots and Proxies
The Company must, after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the
meeting and, as soon as reasonably practicable after the meeting, make such ballots and proxies available for
inspection during statutory business hours by any shareholder or proxy holder entitled to vote at the meeting for
such period of time as required by the Business Corporations Act. At the end of such period, the Company may
destroy such ballots and proxies.
- 12 -
12.
VOTES OF SHAREHOLDERS
12.1
Number of Votes by Shareholder or by Shares
Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint
shareholders under Article 12.3:
12.2
(1)
on a vote by show of hands (or its functional equivalent), every person present who is a
shareholder or proxy holder and entitled to vote on the matter has one vote; and
(2)
on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share
entitled to be voted on the matter and held by that shareholder and may exercise that vote either in
person or by proxy.
Votes of Persons in Representative Capacity
A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands (or its
functional equivalent) or on a poll, and may appoint a proxy holder to act at the meeting to the extent permitted by
law, if, before doing so, the person satisfies the chair of the meeting that the person is a legal personal representative
for a shareholder who is entitled to vote at the meeting.
12.3
Votes by Joint Holders
If there are joint shareholders registered in respect of any share:
12.4
(1)
any one of the joint shareholders may vote at any meeting of shareholders, either personally or by
proxy, in respect of the share as if that joint shareholder were solely entitled to it; or
(2)
if more than one of the joint shareholders is present at any meeting of shareholders, personally or
by proxy, and more than one of the joint shareholders votes in respect of that share, then only the
vote of the joint shareholder present whose name stands first on the central securities register in
respect of the share will be counted.
Legal Personal Representatives as Joint Shareholders
Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the
purposes of Article 12.3, deemed to be joint shareholders.
12.5
Representative of a Corporate Shareholder
Any shareholder which is a corporation may authorize by resolution of its directors or governing body an individual
to represent it at a meeting of shareholders and such individual may exercise on the shareholder’s behalf all the
powers it could exercise if it were an individual shareholder. The authority of such an individual shall be
established by depositing with the Company a certified copy of such resolution, or in such other manner as may be
satisfactory to the secretary of the Company or the chair of the meeting. Any such representative need not be a
shareholder.
12.6
Appointment and Instruction of Proxy Holders
Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the
Company, entitled to vote at a meeting of shareholders may, by proxy, appoint one or more proxy holders to attend
and act at the meeting in the manner, to the extent and with the powers conferred by the proxy. A shareholder may
appoint one or more alternate proxy holders to act in the place of an absent proxy holder. The instructing of proxy
holders may be carried out by means of telephonic, electronic or other communication facility in addition to or in
substitution for instructing proxy holders by mail.
- 13 -
12.7
Form of Proxy
A proxy, whether for a specified meeting or otherwise shall be in such form as approved by the directors or the chair
of the meeting.
12.8
Deposit of Proxy
The board may specify in the notice calling a meeting of shareholders a time, not exceeding 48 hours (excluding
non-business days), preceding the meeting, or an adjournment thereof, before which proxies must be deposited with
the Company or its agent specified in such notice. Subject to Articles 12.10 and 12.11, a proxy shall be acted upon
only if, prior to the time so specified, it shall have been deposited with the Company or an agent thereof specified in
such notice or, where no such time is specified in such notice, if it has been so deposited or received by the secretary
of the Company or by the chair of the meeting or any adjournment thereof prior to the time of voting. A proxy may
be sent to the Company or its agent by written instrument, fax or any other method of transmitting legibly recorded
messages and by using available internet or telephone voting services as may be approved by the directors.
12.9
Revocation of Proxy
Subject to Articles 12.10 and 12.12, every proxy may be revoked by an instrument in writing that is received:
12.10
(1)
at the registered office of the Company at any time up to and including the last business day before
the day set for the holding of the meeting at which the proxy is to be used; or
(2)
by the chair of the meeting, at the meeting, before any vote in respect of which the proxy is to be
used shall have been taken.
Waiver of Proxy Time Limits
Notwithstanding Articles 12.8 and 12.9, the chair of any meeting or the directors may, but need not, at his, her or
their sole discretion waive the time limits for the deposit or revocation of proxies by shareholders, including any
deadline set out in the notice calling the meeting of shareholders, any proxy circular or specified in a proxy for the
meeting and any such waiver made in good faith shall be final and conclusive.
12.11
Chair May Determine Validity of Proxy
The chair of any meeting of shareholders may, but need not, at his or her sole discretion, make determinations as to
the acceptability of proxies deposited for use at the meeting, including the acceptability of proxies which may not
strictly comply with the requirements of this Article 12 as to form, execution, accompanying documentation or
otherwise, and any such determination made in good faith shall be final and conclusive.
12.12
Revocation of Proxy Must Be Signed
An instrument referred to in Article 12.9 must be signed as follows:
12.13
(1)
if the shareholder for whom the proxy holder is appointed is an individual, the instrument must be
signed by the shareholder or his or her legal personal representative;
(2)
if the shareholder for whom the proxy holder is appointed is a corporation, the instrument must be
signed by the corporation or by a representative appointed for the corporation under Article 12.5.
Validity of Proxy Vote
A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the
shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which
the proxy is given, unless notice in writing of that death, incapacity or revocation is received:
- 14 -
12.14
(1)
at the registered office of the Company at any time up to and including the last business day before
the day set for the holding of the meeting at which the proxy is to be used; or
(2)
by the chair of the meeting, at the meeting, before any vote in respect of which the proxy is to be
used shall have been taken.
Inquiry and Production of Evidence
The board or chair of any meeting of shareholders may, but need not, at any time (including prior to, at or
subsequent to the meeting), ask questions of, and request the production of evidence from, a shareholder (including
a beneficial owner), the transfer agent or such other person as they, he or she considers appropriate for the purposes
of determining a person’s share ownership position as at the relevant record date and authority to vote. For greater
certainty, the board or the chair of any meeting of shareholders may, but need not, at any time, inquire into the legal
or beneficial share ownership of any person as at the relevant record date and the authority of any person to vote at
the meeting and may, but need not, at any time, request from that person production of evidence as to such share
ownership position and the existence of the authority to vote. Such request by the board or the chair of any meeting
shall be responded to as soon as reasonably possible.
12.15
Lack of Quorum at Succeeding Meeting
If, at the meeting to which the meeting referred to in Article 11.4(2) was adjourned, a quorum is not present within
one-half hour from the time set for the holding of the meeting, the person or persons present and being, or
representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a quorum.
13.
DIRECTORS
13.1
Number of Directors
The number of directors shall be a minimum of 3 and a maximum of 20 and the number of directors may be fixed
within such range from time to time by the board of directors, whether previous notice thereof has been given or
not. Notwithstanding any limitation in Article 14.1, the board of directors, between annual general meetings, may
appoint one or more additional directors of the Company, but the number of additional directors must not at any
time exceed 1/3 of the number of directors elected at the last annual general meeting of the Company.
13.2
Directors’ Acts Valid
An act or proceeding of the directors is not invalid merely because fewer than the minimum number of directors set
or otherwise required under these Articles is in office.
13.3
Qualifications of Directors
A director is not required to hold a share in the capital of the Company as qualification for his or her office but must
be qualified as required by the Business Corporations Act to become, act or continue to act as a director.
13.4
Remuneration and Reimbursement of Expenses
The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time
determine. The Company must reimburse each director for the reasonable expenses that he or she may incur on
behalf of the business of the Company.
- 15 -
14.
ELECTION AND REMOVAL OF DIRECTORS
14.1
Election at Annual General Meeting
At every annual general meeting:
14.2
(1)
the shareholders entitled to vote at the annual general meeting for the election of directors are
entitled to elect a board of directors consisting of not more than the number of directors set by the
directors pursuant to Article 13.1; and
(2)
all the directors cease to hold office immediately before the election or appointment of directors
under paragraph (1), but are eligible for re-election or re-appointment.
Nomination of Directors
(1)
Only persons who are nominated in accordance with the procedures set out in this Article 14.2
shall be eligible for election as directors of the Company. Nominations of persons for election to
the board of directors of the Company may be made at any annual general meeting of
shareholders, or at any special meeting of shareholders if one of the purposes for which the special
meeting was called was the election of directors:
(a)
by or at the direction of the board, including pursuant to a notice of meeting;
(b)
by or at the direction or request of one or more shareholders pursuant to a proposal made
in accordance with the Business Corporations Act or a requisition of the shareholders
made in accordance with the Business Corporations Act; or
(c)
by any shareholder:
(i)
who, at the close of business on the date of the giving of the notice provided for
below in this Article 14.2 and on the record date for notice of such meeting, is
entered in the central securities register of the Company as a holder of one or
more shares carrying the right to vote at such meeting on the election of
directors (a “Nominating Shareholder”); and
(ii)
who complies with the notice procedures set forth in this Article 14.2.
(2)
In addition to any other requirements under applicable laws, for a nomination to be made by a
Nominating Shareholder, the Nominating Shareholder must have given timely notice thereof (in
accordance with this Article 14.2) and in proper written form (in accordance with this Article
14.2) to the secretary of the Company at the principal executive offices of the Company.
(3)
To be timely, a Nominating Shareholder’s notice to the Company must be made:
(a)
in the case of an annual general meeting, not later than the close of business on the 30th
day prior to the date of the annual general meeting of shareholders; provided, however, in
the event that the annual general meeting of shareholders is to be held on a date that is
less than 50 days after the date (the “Notice Date”) on which the first public
announcement of the date of the annual general meeting was made, notice by the
Nominating Shareholder may be made not later than the close of business on the 10th day
following the Notice Date; and
(b)
in the case of a special meeting (which is not also an annual general meeting) of
shareholders called for the purpose of electing directors (whether or not called for other
purposes), not later than the close of business on the 15th day following the day on which
- 16 the first public announcement of the date of the special meeting of shareholders was
made.
(4)
To be in proper written form, a Nominating Shareholder’s notice to the Company must set forth:
(a)
if the Nominating Shareholder is not the beneficial owner of the shares, the identity of the
beneficial owner and the number of shares held by that beneficial owner;
(b)
as to each person whom the Nominating Shareholder proposes to nominate for election as
a director:
(c)
(i)
the name, age and address of the person;
(ii)
the principal occupation or employment of the person;
(iii)
the class or series and number of shares in the capital of the Company which are
controlled or which are owned beneficially or of record by the person as of the
record date for the meeting of shareholders (if such date shall then have been
made publicly available and shall have occurred) and as of the date of such
notice; and
(iv)
any other information relating to the person that would be required to be
disclosed in a dissident’s proxy circular or other filings to be made in connection
with solicitations of proxies for election of directors pursuant to the Business
Corporations Act and applicable securities laws; and
as to the Nominating Shareholder and any beneficial owner respecting which the notice
was given, the class or series and number of shares in the capital of the Company which
are controlled or which are owned beneficially or of record by such person(s), each of its
respective affiliates and associates and each person acting jointly or in concert with any
of them (and for each such person any options or other rights to acquire such shares,
derivatives or other securities, instruments or arrangements for which the price or value
or delivery, payment or settlement obligations are derived from, referenced to, or based
on any such shares, hedging transactions, short positions and borrowing or lending
arrangements relating to such shares) as of the record date for the meeting of shareholders
(if such date shall then have been made publicly available and shall have occurred) and as
of the date of such notice, any proxy, contract, agreement, arrangement, understanding or
relationship pursuant to which such Nominating Shareholder or beneficial owner has a
right to vote any shares of the Company on the election of directors and any other
information relating to such Nominating Shareholder or beneficial owner that would be
required to be made in a dissident’s proxy circular or other filings to be made in
connection with solicitations of proxies for election of directors pursuant to the Business
Corporations Act and applicable securities laws.
The Company may require any proposed nominee to furnish such other information as may
reasonably be required under the Business Corporations Act, applicable securities laws or the rules
of any stock exchange on which the Company’s share are listed to determine the eligibility of such
proposed nominee to serve as a director of the Company.
(5)
Except as otherwise provided by the special rights or restrictions attached to the shares of any
class or series of the Company, no person shall be eligible for election as a director of the
Company unless nominated in accordance with the provisions of this Article 14.2; provided,
however, that nothing in this Article 14.2 shall be deemed to preclude discussion by a shareholder
or proxy holder (as distinct from the nomination of directors) at a meeting of shareholders of any
matter in respect of which it would have been entitled to submit a proposal pursuant to the
provisions of the Business Corporations Act. The chair of the meeting shall have the power and
- 17 duty to determine whether a nomination was made in accordance with the procedures set forth in
the foregoing provisions and, if any proposed nomination is not in compliance with such foregoing
provisions, to declare that such defective nomination shall be disregarded. A duly appointed
proxy holder of a Nominating Shareholder shall be entitled to nominate at a meeting of
shareholders the directors nominated by the Nominating Shareholder, provided that all of the
requirements of this Article 14.2 have been satisfied.
14.3
(6)
For purposes of this Article 14.2, “public announcement” shall mean disclosure in a news release
reported by a national news service in Canada, or in a document publicly filed by the Company
under its issuer profile on the System for Electronic Document Analysis and Retrieval at
www.sedar.com (“SEDAR”) or through the Securities and Exchange Commission’s electronic
data system called EDGAR at www.sec.gov.
(7)
Notwithstanding any other provision of these Articles, notice given to the secretary of the
Company pursuant to this Article 14.2 may only be given by personal delivery or facsimile
transmission (at such contact information as set out on the Company’s issuer profile on the System
for Electronic Document Analysis and Retrieval), and shall be deemed to have been given and
made only at the time it is served by personal delivery to the secretary of the Company at the
principal executive offices of the Company or sent by facsimile transmission (provided that receipt
of confirmation of such transmission has been received); provided that if such delivery or
transmission is made on a day which is a not a business day or later than 5:00 p.m. (Eastern Time)
on a day which is a business day, then such delivery or transmission shall be deemed to have been
made on the next following day that is a business day.
(8)
Notwithstanding the foregoing, the board may, in its sole discretion, waive any requirement in this
Article 14.2.
Consent to be a Director
No nomination, election, appointment or designation of an individual as a director is valid unless:
14.4
If:
(1)
that individual consents to be a director in the manner provided for in the Business Corporations
Act; or
(2)
that individual is elected or appointed at a meeting at which the individual is present and the
individual does not refuse, at the meeting, to be a director.
Failure to Elect or Appoint Directors
(1)
the Company fails to hold an annual general meeting on or before the date by which the annual
general meeting is required to be held under the Business Corporations Act; or
(2)
the shareholders fail, at the annual general meeting to elect or appoint any directors;
then each director then in office continues to hold office until the earlier of:
14.5
(3)
the date on which his or her successor is elected or appointed; and
(4)
the date on which he or she otherwise ceases to hold office under the Business Corporations Act or
these Articles.
Directors May Appoint to Fill Vacancies
The directors may appoint a qualified person to fill any vacancy occurring in the board of directors except a
vacancy:
- 18 -
(1)
resulting from an increase in the number of the minimum or maximum number of directors; or
(2)
resulting from a failure by the shareholders to elect the number or minimum number of directors
set or otherwise required under these Articles;
and a director elected or appointed to fill a vacancy on the board of directors shall hold office for the unexpired term
of his or her predecessor. For greater certainty, the ability of the directors to add additional directors as provided in
Article 13.1 is not filling a vacancy as contemplated hereunder.
14.6
Remaining Directors Power to Act
The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors
in office than a quorum of directors, the directors may only act for the purpose of appointing directors up to that
number, or of calling a meeting of shareholders for the purpose of filling any vacancies on the board of directors.
14.7
Shareholders May Fill Vacancies
If the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of
directors, the shareholders may elect or appoint directors to fill any vacancies on the board of directors.
14.8
Ceasing to be a Director
A director ceases to be a director when:
14.9
(1)
the term of office of the director expires;
(2)
the director dies;
(3)
the director resigns as a director by notice in writing provided to the Company; or
(4)
the director is removed from office pursuant to Articles 14.9 or 14.10.
Removal of Director by Shareholders
The Company may remove any director before the expiration of his or her term of office by ordinary resolution. In
that event, the shareholders may elect by ordinary resolution, a director to fill the resulting vacancy. If the
shareholders do not elect a director to fill the resulting vacancy contemporaneously with the removal, then the
directors may appoint a director to fill that vacancy.
14.10
Removal of Director by Directors
The directors may remove any director before the expiration of his or her term of office if the director ceases to be
qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to
fill the resulting vacancy.
14.11
Manner of Election of Directors
At any shareholders meeting at which directors are to be elected a separate vote of shareholders shall be taken with
respect to each candidate nominated for director.
15.
POWERS AND DUTIES OF DIRECTORS
15.1
Powers of Management
The directors must, subject to the Business Corporations Act and these Articles, manage or supervise the
- 19 management of the business and affairs of the Company and have the authority to exercise all such powers of the
Company as are not, by the Business Corporations Act or by these Articles, required to be exercised by the
shareholders of the Company.
16.
INTERESTS OF DIRECTORS AND OFFICERS
16.1
Director Holding Other Office in the Company
A director may hold any office or place of profit with the Company, other than the office of auditor of the Company,
in addition to his or her office of director on the terms (as to remuneration or otherwise) that the directors may
determine.
16.2
No Disqualification
No director or intended director is disqualified by his or her office from contracting with the Company either with
regard to the holding of any office or place of profit the director holds with the Company or as vendor, purchaser or
otherwise, and no contract or transaction entered into by or on behalf of the Company in which a director is in any
way interested is liable to be voided for that reason.
16.3
Director or Officer in Other Corporations
A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in
which the Company may be interested as a shareholder or otherwise, and, subject to the Business Corporations Act,
the director or officer is not accountable to the Company for any remuneration or other benefits received by him or
her as director, officer or employee of, or from his or her interest in, such other person.
17.
PROCEEDINGS OF DIRECTORS
17.1
Meetings of Directors
The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as the
directors determine, and meetings of the directors held at regular intervals may be held at the place, at the time and
on the notice, if any, as the directors may from time to time determine.
17.2
Voting at Meetings
Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality
of votes, the chair of the meeting does not have a second or casting vote.
17.3
Chair of Meetings
The following individual shall preside as chair at a meeting of directors:
17.4
(1)
the chair of the board, if any; or
(2)
any other director chosen by the directors present if the chair of the board is not present at the
meeting or any part of the meeting, determines not to chair the meeting or has advised the
secretary or any other director that he or she will not be present at the meeting.
Meetings by Telephone or Other Communications Facilities
A director who is entitled to participate in, including vote at, a meeting of directors or of a committee of directors
may participate:
(1)
in person; or
- 20 (2)
by telephone; or
(3)
with the consent of the directors present, by other communications facilities;
if all directors participating in the meeting, whether in person, by telephone or by other communications facilities,
are able to communicate with each other. A director who participates in a meeting in a manner contemplated by this
Article 17.4 is deemed for all purposes of the Business Corporations Act and these Articles to be present at the
meeting and to have agreed to participate in that manner.
17.5
Calling of Meetings
A director may, and the secretary or an assistant secretary of the Company (if any) on the request of a director must,
call a meeting of directors at any time.
17.6
Notice of Meetings
Other than for meetings held at regular intervals as determined by the directors pursuant to Article 17.1, reasonable
notice of each meeting of directors, specifying the place, day and time of that meeting must be given to each of the
directors by any method set out in Article 23.1 or orally or by telephone conversation with that director.
17.7
When Notice Not Required
It is not necessary to give notice of a meeting of directors to a director if:
17.8
(1)
the meeting is to be held immediately following a meeting of shareholders at which that director
was elected or appointed, or is the meeting of directors at which that director is appointed; or
(2)
the director has waived notice of the meeting.
Meeting Valid Despite Failure to Give Notice
The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any
director does not invalidate any proceedings at that meeting.
17.9
Waiver of Notice of Meetings
Any director may by way of a written instrument, fax, e-mail or any other method of transmitting legibly recorded
messages in which the waiver of the director is evidenced, whether or not the signature of the director is included in
the record, waive notice of any past, present or future meeting or meetings of the directors and may at any time
withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all
future meetings and until that waiver is withdrawn, no notice of any meeting of directors need be given to that
director and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of
notice not having been given to such director. Attendance of a director at a meeting of the directors is a waiver of
notice of the meeting unless that director attends the meeting for the express purpose of objecting to the transaction
of any business on the grounds that the meeting is not lawfully called.
17.10
Quorum
The quorum necessary for the transaction of the business of the directors may be set by the directors to a number not
less than 50% of the directors in office, and, if not so set, is deemed to be a majority of directors in office.
17.11
Validity of Acts Where Appointment Defective
Subject to the Business Corporations Act, an act of a director or officer is not invalid merely because of an
irregularity in the election or appointment or a defect in the qualification of that director or officer.
- 21 -
17.12
Consent Resolutions
A resolution of the directors or of any committee of the directors may be passed without a meeting:
(1)
in all cases, if each of the directors entitled to vote on the resolution consents to it in writing; or
(2)
in the case of a resolution to approve a contract or transaction in respect of which a director has
disclosed that he or she has or may have a disclosable interest, if each of the other directors who
are entitled to vote on the resolution consents to it in writing.
A consent in writing under this Article may be by any written instrument, fax, e-mail or any other method of
transmitting legibly recorded messages in which the consent of the director is evidenced, whether or not the
signature of the director is included in the record. A consent in writing may be in two or more counterparts which
together are deemed to constitute one consent in writing. A resolution of the directors or of any committee of the
directors passed in accordance with this Article 17.12 is effective on the date stated in the consent in writing or on
the latest date stated on any counterpart and is deemed to be a proceeding at a meeting of directors or of the
committee of the directors and to be as valid and effective as if it had been passed at a meeting of the directors or of
the committee of the directors that satisfies all the requirements of the Business Corporations Act and all the
requirements of these Articles relating to meetings of the directors or of a committee of the directors.
18.
COMMITTEES AND DELEGATION OF AUTHORITY
18.1
Appointment and Powers of Committees and Delegation of Authority
The directors may, by resolution:
(1)
appoint one or more committees consisting of a director or directors that they consider
appropriate;
(2)
delegate to a committee appointed under paragraph (1) or to any officer or officers of the
Company any of the directors’ powers, except the power to:
(3)
18.2
(a)
fill vacancies in the board of directors;
(b)
remove a director;
(c)
create a committee of the directors, create or modify the terms of reference for a
committee of the directors, or change the membership of, or fill vacancies in, any
committee of the directors;
(d)
declare dividends;
(e)
appoint or remove the chief executive officer;
make any delegation referred to in paragraph (2) subject to the conditions set out in the resolution
or any subsequent directors’ resolution.
Audit Committee
The directors shall appoint from among its number an audit committee to be composed of not fewer than 3 directors
in compliance with all regulatory requirements and to provide to the audit committee the powers and duties as
determined by the directors.
18.3
Powers of Board
The directors may, at any time, with respect to a committee appointed under Articles 18.1 or 18.2:
- 22 -
18.4
(1)
revoke or alter the authority given to the committee, or override a decision made by the
committee, except as to acts done before such revocation, alteration or overriding;
(2)
terminate the appointment of, or change the membership of, the committee; and
(3)
fill vacancies in the committee.
Transaction of Business
The power of a committee of directors may be exercised by a meeting at which a quorum is present or by resolution
consented to in writing by all members of such committee who would have been entitled to vote on that resolution at
a meeting of the committee. Meetings of such committee may be held at any place in or outside of Canada, by
telephone or by other communications facilities.
18.5
Procedure
Unless otherwise determined by the directors, each committee shall have power to fix its quorum at not less than a
majority of its members, to elect its chair and to regulate its procedure.
19.
OFFICERS
19.1
Directors May Appoint Officers
The directors may, from time to time, appoint such officers as the directors determine and the directors may, at any
time, terminate any such appointment.
19.2
Functions, Duties and Powers of Officers
The directors may, for each officer:
19.3
(1)
determine the title of the officer;
(2)
determine the functions and duties of the officer or permit the president or chief executive officer
to make that determination; and
(3)
revoke, withdraw, alter or vary all or any of the functions and duties of the officer or permit or
chief executive officer, or such other officer determined by the directors, to make such
determinations.
Qualifications
No officer may be appointed unless that officer is qualified in accordance with the Business Corporations Act. One
person may hold more than one position as an officer of the Company. Any person appointed as the chair of the
board must be a director. Any officer need not be a director.
19.4
Terms of Appointment
All appointments of officers are to be made on the terms and conditions determined by the directors or, if directed
by the directors, by the chief executive officer or such other officer designated by the directors, and are subject to
termination at the pleasure of the directors.
19.5
Appointment of Attorney of Company
The directors may from time to time, by power of attorney or other instrument, under seal if so required by law,
appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and
- 23 discretions and for such period, and subject to such conditions as the directors may determine. Any such power of
attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the
directors determine. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers,
authorities and discretions for the time being vested in him or her.
20.
INDEMNIFICATION
20.1
Mandatory Indemnification of Eligible Parties
Subject to the Business Corporations Act, the Company must indemnify an eligible party and his or her heirs and
legal personal representatives against all eligible penalties to which such person is or may be liable, and the
Company must indemnify, and pay expenses in advance of the final disposition of an eligible proceeding in
accordance with, and to the fullest extent and in all circumstances permitted by, the Business Corporations Act.
20.2
Indemnification of Other Persons
Subject to any restrictions in the Business Corporations Act, the Company may indemnify any person.
20.3
Non-Compliance with Business Corporations Act
The failure of an eligible party or any other person to comply with the Business Corporations Act or these Articles
does not invalidate any indemnity to which he or she is entitled under this Part.
20.4
Company May Purchase Insurance
Subject to the limitations contained in the Business Corporations Act, the Company may purchase and maintain
insurance for the benefit of any person referred to in this Article 20.
21.
DIVIDENDS
21.1
Payment of Dividends Subject to Special Rights
The provisions of this Article 21 are subject to the rights, if any, of shareholders holding shares with special rights as
to dividends.
21.2
Declaration of Dividends
Subject to the Business Corporations Act, the directors may from time to time declare and authorize payment of
such dividends as the directors may deem advisable.
21.3
No Notice Required
The directors need not give notice to any shareholder of any declaration under Article 21.2.
21.4
Record Date
The directors may set a date as the record date for the purpose of determining shareholders entitled to receive
payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than
two months. If no record date is set, the record date is 5:00 p.m. (Eastern Time) on the date on which the directors
pass the resolution declaring the dividend.
21.5
Manner of Paying Dividend
A resolution declaring a dividend may direct payment of the dividend wholly or partly in money, by the distribution
of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company or any other
corporation, or in any one or more of those ways.
- 24 -
21.6
Receipt by Joint Shareholders
If several persons are joint shareholders of any share, any one of such joint shareholders may give an effective
receipt for any dividend, bonus or other money payable in respect of the share.
21.7
No Interest
No dividend shall bear interest against the Company. Where the dividend to which a shareholder is entitled includes
a fraction of a cent, such fraction shall be disregarded in making payment thereof and such payment shall be deemed
to be payment in full.
21.8
Method of Payment
Any dividend, bonuses or other distribution payable in money in respect of shares may be paid by cheque sent
through the post or by electronic transfer, so authorized by the shareholder, directed to the registered address of the
holder or the account specified by the holder, or in the case of joint holders, to the registered address of that one of
the joint holders who is first named on the register or to the account specified by such joint holder, or to such person
and to such address as the holder or joint holders may direct in writing. Every such cheque shall be made payable to
the order of the person whom it is sent. The mailing of such cheque or the forwarding by electronic transfer shall, to
the extent of the sum represented thereby (plus the amount of any tax required by law to be deducted) discharge all
liability for the dividend, unless such cheque shall not be paid on presentation or the amount of tax so deducted shall
not be paid to the appropriate taxing authority.
21.9
Capitalization of Surplus
Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any retained
earnings or surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures
or other securities of the Company as a dividend representing the retained earnings or surplus so capitalized or any
part of thereof.
21.10
Unclaimed Dividends
Any dividend unclaimed after a period of three years from the date on which the same has been declared to be
payable shall be forfeited and shall revert to the Company. The Company shall not be liable to any person in respect
of any dividend which is forfeited to the Company or delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law.
22.
ACCOUNTING RECORDS
22.1
Recording of Financial Affairs
The directors must cause adequate accounting records to be kept to record properly the financial affairs and
condition of the Company and to comply with the Business Corporations Act.
22.2
Inspection of Accounting Records
Unless the directors determine otherwise, no shareholder of the Company is entitled to inspect or obtain a copy of
any accounting records of the Company.
22.3
Remuneration of Auditors
The directors may set the remuneration of the auditor of the Company.
- 25 -
23.
GIVING NOTICES AND SENDING RECORDS
23.1
Method of Giving Notices and Delivering Records
Unless the Business Corporations Act or these Articles provides otherwise, a notice, statement, report, document or
other record required or permitted by the Business Corporations Act or these Articles to be sent by or to a person
may be sent by any one of the following methods:
(1)
(2)
23.2
sending the record by mail addressed to the person at the applicable address for that person as
follows:
(a)
for a record mailed to a shareholder, the shareholder’s registered address;
(b)
for a record mailed to a director or officer, the prescribed address for mailing shown for
the director or officer in the records kept by the Company or the mailing address
provided by the recipient for the sending of that record or records of that class;
(c)
in any other case, the mailing address of the intended recipient;
delivering the record to the intended recipient personally or, alternatively addressed to the person
at the applicable address for that person as follows:
(a)
for a record delivered to a shareholder, the shareholder’s registered address;
(b)
for a record delivered to a director or officer, the prescribed address for delivery shown
for the director or officer in the records kept by the Company or the delivery address
provided by the recipient for the sending of that record or records of that class;
(c)
in any other case, the delivery address of the intended recipient;
(3)
sending the record by fax to the fax number provided by the intended recipient for the sending of
that record or records of that class;
(4)
sending the record by e-mail to the e-mail address provided by the intended recipient for the
sending of that record or records of that class; or
(5)
creating and providing the record that is posted on or made available through a generally
accessible electronic source and providing the person notice in writing, including by mail,
delivery, fax or e-mail, of the availability and location of the record.
Deemed Receipt
A notice, statement, report, document or other record that is:
(1)
mailed to a person by ordinary mail to the applicable address for that person referred to in Article
23.1 is deemed to be received by the person to whom it was mailed on the day (Saturdays,
Sundays and holidays excepted) following the date of mailing;
(2)
delivered to a person is deemed to be received by the person that day it was delivered;
(3)
faxed to a person to the fax number provided for that person referred to in Article 23.1 is deemed
to be received by the person to whom it was faxed on the day it was faxed;
(4)
e-mailed to a person to the e-mail address provided by that person referred to in Article 23.1 is
deemed to be received by the person to whom it was e-mailed on the day it was e-mailed; or
- 26 (5)
23.3
sent by posting it on or making it available through a generally accessible electronic source
referred to in Article 23.1 is deemed to be received by the person on the day such person is sent
notice in writing, including by mail, delivery, fax or e-mail, of the availability and location of such
notice, statement, report, document or other record.
Certificate of Sending
A certificate signed by the secretary, if any, or other officer of the Company or of any other corporation acting in
that capacity on behalf of the Company stating that a notice, statement, report, document or other record was sent in
accordance with Article 23.1 is conclusive evidence of that fact.
23.4
Notice to Joint Shareholders
A notice, statement, report, document or other record may be provided by the Company to the joint shareholders of a
share by providing the record to the joint shareholder first named in the central securities register in respect of the
share.
23.5
Notice to Legal Personal Representative
A notice, statement, report, document or other record may be provided by the Company to the persons entitled to a
share in consequence of the death, bankruptcy or incapacity of a shareholder by:
(1)
(2)
23.6
sending the record, addressed to such person:
(a)
by name, by the title of the legal personal representative of the deceased, bankrupt or
incapacitated shareholder or by any similar description; and
(b)
at the address, if any, supplied to the Company for that purpose by the persons claiming
to be so entitled; or
if an address referred to in paragraph (1)(b) has not been supplied to the Company, by sending the
record in a manner in which it might have been given if the death, bankruptcy or incapacity had
not occurred.
Omission and Errors
The accidental omission to give any notice to any shareholder, director, officer, auditor or member of a committee of
the directors or the non-receipt of any notice by any such person or any error in any notice not affecting the
substance thereof shall not invalidate any action taken at any meeting held pursuant to such notice or otherwise
founded thereon.
23.7
Undelivered Records
If any record sent to a shareholder pursuant to Article 23.1 is returned on two consecutive occasions because that
shareholder cannot be found, the Company shall not be required to send any further records to such shareholder until
that shareholder informs the Company in writing of a new address.
23.8
Unregistered Shareholders
Every person who becomes entitled to any share by any means whatsoever shall be bound by every notice in respect
of such share which shall have been duly given to the shareholder from whom he derives his title to such share prior
to his name and address being entered on the central securities register (whether such notice was given before or
after the happening of the event upon which he became so entitled) and prior to his furnishing to the Company the
proof of authority of his entitlement prescribed by the Business Corporations Act.
- 27 -
24.
SEAL
24.1
Who May Attest Seal
Except as provided in Article 24.2, the Company’s seal, if any, must not be impressed on any record except when
that impression is attested by the signature of:
24.2
(1)
any director;
(2)
any officer; or
(3)
any person authorized by any of the foregoing.
Mechanical Reproduction of Seal
The directors may authorize the seal to be impressed by third parties on share certificates or bonds, debentures or
other securities of the Company as they may determine appropriate from time to time. To enable the seal to be
impressed on any share certificates or bonds, debentures or other securities of the Company, whether in definitive or
interim form, on which facsimiles of any of the signatures of the directors or officers of the Company are, in
accordance with the Business Corporations Act or these Articles, printed or otherwise mechanically reproduced,
there may be delivered to the person employed to engrave, lithograph or print such definitive or interim share
certificates or bonds, debentures or other securities one or more unmounted dies reproducing the seal and such
persons as are authorized under Article 24.1 to attest the Company’s seal may in writing authorize such person to
cause the seal to be impressed on such definitive or interim share certificates or bonds, debentures or other securities
by the use of such dies. Share certificates or bonds, debentures or other securities to which the seal has been so
impressed are for all purposes deemed to be under and to bear the seal impressed on them.
25.
COMMON SHARES
The Common Shares shall have attached thereto the following rights, privileges, restrictions and conditions:
25.1
Dividends
The holders of the Common Shares shall be entitled, subject to the rights, privileges, restrictions and conditions
attaching to any other class of shares of the Company, to receive and the Company shall pay thereon, as and when
declared by the board of directors out of moneys of the Company properly applicable to the payment of dividends,
non-cumulative dividends in such amount or in such form, at such rate and on such class of shares as the directors
may from time to time determine.
25.2
Voting Rights
Each holder of Common Shares shall be entitled to receive notice of and to attend all meetings of shareholders of the
Company and to vote thereat, except meetings at which only holders of a specified class of shares (other than
Common Shares) or specified series of shares are entitled to vote. At all meetings of which notice must be given to
the holders of the Common Shares, each holder of Common Shares shall be entitled to one vote in respect of each
Common Share held by such holder.
25.3
Parity on Liquidation, Dissolution or Winding-Up
In the event of any liquidation, dissolution or winding-up of the Company or other distribution of assets of the
Company among its shareholders for the purpose of winding-up its affairs, subject to the rights, privileges,
restrictions and conditions attaching to any other class of shares of the Company, all of the property and assets of the
Company available for distribution to the holders of the Common Shares shall be paid or distributed equally, share
for share to the holders of the Common Shares without preference or distinction.
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26.
PREFERRED SHARES
The Preferred Shares, as a class, shall have attached thereto the following rights, privileges, restrictions and
conditions:
26.1
One or More Series
The Preferred Shares may from time to time be issued in one or more series.
26.2
Terms of Each Series
Subject to the following provisions, and subject to the filing of notice of articles in prescribed form and receipt of a
notice of articles, in accordance with the Business Corporations Act, the directors may fix from time to time before
such issue the number of shares that is to comprise each series and the designation, rights, privileges, restrictions and
conditions attaching to each series of Preferred Shares including, without limiting the generality of the foregoing,
the issue price per share, the rate or amount of any dividends or the method of calculating any dividends, the dates of
payment thereof, any redemption, purchase and/or conversion prices and terms and conditions of any redemption,
purchase and/or conversion, and any sinking fund or other provisions.
26.3
Ranking of Preferred Shares
The Preferred Shares of each series shall, with respect to the payment of any dividends and any distribution of assets
or return of capital in the event of liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, or any other return of capital or distribution of the assets of the Company among its shareholders for the
purpose of winding up its affairs, rank on a parity with the Preferred Shares of every other series and be entitled to a
preference over the Common Shares and over any other shares of the Company ranking junior to the Preferred
Shares. The Preferred Shares of any series may also be given such other preferences, not inconsistent with these
articles, over the Common Shares, and any other shares of the Company ranking junior to such Preferred Shares as
may be fixed in accordance with Article 26.2.
26.4
Cumulative Dividends and Payments on the Return of Capital
If any cumulative dividends, whether or not declared, or any amounts payable on the return of capital in the event of
the liquidation, dissolution or winding up of the Company, voluntary or involuntary, or any other return of capital or
distribution of the assets of the Company for the purpose of winding up the affairs of the Company, in respect of a
series of Preferred Shares are not paid in full, the shares of such series of Preferred Shares shall participate rateably
with the shares of all other series of Preferred Shares in respect of all accumulated cumulative dividends, whether or
not declared, or all amounts payable on the return of capital or distribution of the assets of the Company in the event
of the liquidation, dissolution or winding up of the Company, as the case may be.
26.5
Conversion into Common Shares
The Preferred Shares of any series may be made convertible into Common Shares.
26.6
Voting
Subject to the provisions of the Business Corporations Act, and Article 26.7, the Preferred Shares shall have no
voting rights as a class or series, and in particular, they shall have no such rights in respect of any proposal to amend
the notice of articles of the Company to:
(1)
increase or decrease any maximum number of authorized shares of Preferred Shares or increase
any maximum number of authorized shares of a class or series having rights or privileges equal or
superior to the Preferred Shares;
(2)
effect an exchange, reclassification or cancellation of all or part of the Preferred Shares; or
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26.7
create a new class or series of shares equal or superior to the Preferred Shares.
Variation of Rights
The provisions attaching to the Preferred Shares as a class or series may be amended or repealed at any time with
such approval as may then be required by law to be given by the holders of the Preferred Shares as a class or series.
APPENDIX D
CBCA DISSENT RIGHTS
Right to Dissent
190. (1) Subject to sections 191 and 241, a holder of shares of any class of a corporation may dissent if
the corporation is subject to an order under paragraph 192(4)(d) that affects the holder or if the
corporation resolves to:
(a) amend its articles under section 173 or 174 to add, change or remove any provisions restricting or
constraining the issue, transfer or ownership of shares of that class;
(b) amend its articles under section 173 to add, change or remove any restriction on the business or
businesses that the corporation may carry on;
(c) amalgamate otherwise than under section 184;
(d) be continued under section 188;
(e) sell, lease or exchange all or substantially all its property under subsection 189(3); or
(f) carry out a going-private transaction or a squeeze-out transaction.
Further right
(2) A holder of shares of any class or series of shares entitled to vote under section 176 may dissent if the
corporation resolves to amend its articles in a manner described in that section.
If one class of shares
(2.1) The right to dissent described in subsection (2) applies even if there is only one class of shares.
Payment for shares
(3) In addition to any other right the shareholder may have, but subject to subsection (26), a shareholder
who complies with this section is entitled, when the action approved by the resolution from which the
shareholder dissents or an order made under subsection 192(4) becomes effective, to be paid by the
corporation the fair value of the shares in respect of which the shareholder dissents, determined as of the
close of business on the day before the resolution was adopted or the order was made.
No partial dissent
(4) A dissenting shareholder may only claim under this section with respect to all the shares of a class
held on behalf of any one beneficial owner and registered in the name of the dissenting shareholder.
Objection
(5) A dissenting shareholder shall send to the corporation, at or before any meeting of shareholders at
which a resolution referred to in subsection (1) or (2) is to be voted on, a written objection to the
resolution, unless the corporation did not give notice to the shareholder of the purpose of the meeting and
of their right to dissent.
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Notice of resolution
(6) The corporation shall, within ten days after the shareholders adopt the resolution, send to each
shareholder who has filed the objection referred to in subsection (5) notice that the resolution has been
adopted, but such notice is not required to be sent to any shareholder who voted for the resolution or who
has withdrawn their objection.
Demand for payment
(7) A dissenting shareholder shall, within twenty days after receiving a notice under subsection (6) or, if
the shareholder does not receive such notice, within twenty days after learning that the resolution has
been adopted, send to the corporation a written notice containing
(a) the shareholder’s name and address;
(b) the number and class of shares in respect of which the shareholder dissents; and
(c) a demand for payment of the fair value of such shares.
Share certificate
(8) A dissenting shareholder shall, within thirty days after sending a notice under subsection (7), send the
certificates representing the shares in respect of which the shareholder dissents to the corporation or its
transfer agent.
Forfeiture
(9) A dissenting shareholder who fails to comply with subsection (8) has no right to make a claim under
this section.
Endorsing certificate
(10) A corporation or its transfer agent shall endorse on any share certificate received under subsection
(8) a notice that the holder is a dissenting shareholder under this section and shall forthwith return the
share certificates to the dissenting shareholder.
Suspension of rights
(11) On sending a notice under subsection (7), a dissenting shareholder ceases to have any rights as a
shareholder other than to be paid the fair value of their shares as determined under this section except
where:
(a) the shareholder withdraws that notice before the corporation makes an offer under subsection (12),
(b) the corporation fails to make an offer in accordance with subsection (12) and the shareholder
withdraws the notice, or
(c) the directors revoke a resolution to amend the articles under subsection 173(2) or 174(5),
terminate an amalgamation agreement under subsection 183(6) or an application for continuance
under subsection 188(6), or abandon a sale, lease or exchange under subsection 189(9),
in which case the shareholder’s rights are reinstated as of the date the notice was sent.
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Offer to pay
(12) A corporation shall, not later than seven days after the later of the day on which the action approved
by the resolution is effective or the day the corporation received the notice referred to in subsection (7),
send to each dissenting shareholder who has sent such notice
(a) a written offer to pay for their shares in an amount considered by the directors of the corporation
to be the fair value, accompanied by a statement showing how the fair value was determined; or
(b) if subsection (26) applies, a notification that it is unable lawfully to pay dissenting shareholders
for their shares.
Same terms
(13) Every offer made under subsection (12) for shares of the same class or series shall be on the same
terms.
Payment
(14) Subject to subsection (26), a corporation shall pay for the shares of a dissenting shareholder within
ten days after an offer made under subsection (12) has been accepted, but any such offer lapses if the
corporation does not receive an acceptance thereof within thirty days after the offer has been made.
Corporation may apply to court
(15) Where a corporation fails to make an offer under subsection (12), or if a dissenting shareholder fails
to accept an offer, the corporation may, within fifty days after the action approved by the resolution is
effective or within such further period as a court may allow, apply to a court to fix a fair value for the
shares of any dissenting shareholder.
Shareholder application to court
(16) If a corporation fails to apply to a court under subsection (15), a dissenting shareholder may apply to
a court for the same purpose within a further period of twenty days or within such further period as a
court may allow.
Venue
(17) An application under subsection (15) or (16) shall be made to a court having jurisdiction in the place
where the corporation has its registered office or in the province where the dissenting shareholder resides
if the corporation carries on business in that province.
No security for costs
(18) A dissenting shareholder is not required to give security for costs in an application made under
subsection (15) or (16).
Parties
(19) On an application to a court under subsection (15) or (16),
(a) all dissenting shareholders whose shares have not been purchased by the corporation shall be
joined as parties and are bound by the decision of the court; and
(b) the corporation shall notify each affected dissenting shareholder of the date, place and
consequences of the application and of their right to appear and be heard in person or by counsel.
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Powers of court
(20) On an application to a court under subsection (15) or (16), the court may determine whether any
other person is a dissenting shareholder who should be joined as a party, and the court shall then fix a fair
value for the shares of all dissenting shareholders.
Appraisers
(21) A court may in its discretion appoint one or more appraisers to assist the court to fix a fair value for
the shares of the dissenting shareholders.
Final order
(22) The final order of a court shall be rendered against the corporation in favour of each dissenting
shareholder and for the amount of the shares as fixed by the court.
Interest
(23) A court may in its discretion allow a reasonable rate of interest on the amount payable to each
dissenting shareholder from the date the action approved by the resolution is effective until the date of
payment.
Notice of subsection (26) applies
(24) If subsection (26) applies, the corporation shall, within ten days after the pronouncement of an order
under subsection (22), notify each dissenting shareholder that it is unable lawfully to pay dissenting
shareholders for their shares.
Effect where subsection (26) applies
(25) If subsection (26) applies, a dissenting shareholder, by written notice delivered to the corporation
within thirty days after receiving a notice under subsection (24), may:
(a) withdraw their notice of dissent, in which case the corporation is deemed to consent to the
withdrawal and the shareholder is reinstated to their full rights as a shareholder; or
(b) retain a status as a claimant against the corporation, to be paid as soon as the corporation is
lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of the
corporation but in priority to its shareholders.
Limitation
(26) A corporation shall not make a payment to a dissenting shareholder under this section if there are
reasonable grounds for believing that:
(a) the corporation is or would after the payment be unable to pay its liabilities as they become due;
or
(b) the realizable value of the corporation’s assets would thereby be less than the aggregate of its
liabilities.