FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN ISSUER
------------------------
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May 2003
AETERNA LABORATORIES INC.
-----------------------------------------------
(Translation of registrant's name into English)
1405, boul. du Parc-Technologique
Quebec, Quebec
Canada, G1P 4P5
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F Form 40-F X
----- -----
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
Yes No X
----- -----
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- ____
DOCUMENTS INDEX
Documents Description
---------------------
--------------- -------------------------------------------------------------------------- --------------
1. AEterna Laboratories Inc. - Management's Proxy Circular Dated April 4,
2003
--------------- -------------------------------------------------------------------------- --------------
NOTICE OF ANNUAL AND SPECIAL MEETING
OF SHAREHOLDERS
AND
MANAGEMENT PROXY CIRCULAR
AETERNA LABORATORIES INC.
April 4, 2003
[LOGO]
NOTICE OF THE ANNUAL AND SPECIAL MEETING
OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the annual and special meeting of
shareholders of AEterna Laboratories Inc. (the "Corporation") will be held at
The Ritz-Carlton Hotel, 1228 Sherbrooke Street West, Montreal, Quebec, on
Thursday, May 29, 2003, at 10:30 a.m. (Montreal time) for the following
purposes:
1. to receive the audited consolidated financial statements of the
Corporation for the financial year ended December 31, 2002, and the
auditors' report thereon;
2. to elect directors;
3. to appoint auditors and authorize the directors to fix their
compensation;
4. to ratify and approve an amendment to the Stock Option Plan of the
Corporation to increase the number of Subordinate Voting Shares
available for issuance under such plan; and
5. to consider any other item which may properly come before the meeting.
Enclosed is a copy of the 2002 Annual Report of the Corporation
including the financial statements and the auditors' report thereon, together
with the Management Proxy Circular and a Form of Proxy.
By Order of the Board of Directors,
/s/ Claude Vadboncoeur
----------------------------
Claude Vadboncoeur
Vice President, Legal Affairs and Corporate Secretary
Quebec, Quebec, April 4, 2003
SHAREHOLDERS UNABLE TO ATTEND THE MEETING ARE REQUESTED TO COMPLETE AND
SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE STAMPED ENVELOPE PROVIDED.
TO BE VALID, PROXIES MUST REACH THE OFFICE OF NATIONAL BANK TRUST INC., 1100
UNIVERSITY STREET, 9TH FLOOR, MONTREAL, QUEBEC, H3B 2G7, NO LATER THAN AT THE
CLOSE OF BUSINESS ON THE LAST BUSINESS DAY PRECEDING THE DATE OF THE MEETING OR
ANY ADJOURNMENT THEREOF.
AETERNA LABORATORIES INC., 1405 BOULEVARD DU PARC-TECHNOLOGIQUE,
QUEBEC, QUEBEC, G1P 4P5
MANAGEMENT PROXY CIRCULAR
1. SOLICITATION OF PROXIES
THIS CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION, BY THE
MANAGEMENT OF AETERNA LABORATORIES INC. (THE "CORPORATION"), OF PROXIES TO BE
USED AT THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS OF THE CORPORATION (THE
"MEETING"), TO BE HELD ON THURSDAY, MAY 29, 2003, AT THE TIME AND PLACE AND FOR
THE PURPOSES SET FORTH IN THE NOTICE OF MEETING OR ANY ADJOURNMENT THEREOF.
Unless otherwise indicated, the information contained in this Circular
is given as of March 26, 2003.
The solicitation will be conducted primarily by mail; some proxies may
also be solicited directly in the case of directors, officers or employees of
the Corporation, but without further compensation. The Corporation may also
reimburse brokers and other persons holding Multiple Voting Shares or
Subordinate Voting Shares on their behalf or on behalf of nominees, for costs
incurred in sending the proxy documents to principals and to obtain their
proxies. The Corporation will assume the cost of solicitation, which should be
minimal.
2. APPOINTMENT OF PROXYHOLDERS
THE PERSONS NAMED AS PROXYHOLDERS IN THE ENCLOSED FORM OF PROXY ARE
DIRECTORS OR OFFICERS OF THE CORPORATION. A SHAREHOLDER MAY APPOINT A PERSON
OTHER THAN THE PERSONS INDICATED IN THE SAID FORM TO ACT AS HIS/HER PROXYHOLDER.
TO DO SO, THE SHAREHOLDER MUST WRITE THE NAME OF SUCH PERSON IN THE APPROPRIATE
SPACE ON THE FORM OF PROXY. In order to ensure they are counted, completed
proxies must be received at the office of National Bank Trust Inc., 1100
University Street, 9th Floor, Montreal, Quebec, H3B 2G7, no later than at the
close of business on the last business day preceding the date of the Meeting or
any adjournment thereof, or they may be delivered to the Chairman at the Meeting
or at any adjournment thereof. A person acting as proxyholder need not be a
shareholder of the Corporation.
3. REVOCATION OF PROXIES
A shareholder giving a proxy may revoke it at all times by a document
signed by him/her or by a proxyholder authorized in writing or, if the
shareholder is a corporation, by a document signed by an officer or a
proxyholder duly authorized, given to the Secretary of the Corporation at 1405
boulevard du Parc-Technologique, Quebec, Quebec, G1P 4P5, until the last
business day, inclusively, preceding the day of the Meeting or any adjournment
thereof at which the proxy is to be used, or to the Chairman of such meeting on
the day of the Meeting or any adjournment thereof.
4. NON-REGISTERED HOLDERS OF SHARES
THE INFORMATION SET FORTH IN THIS SECTION SHOULD BE REVIEWED CAREFULLY
BY THE NON-REGISTERED SHAREHOLDERS OF THE CORPORATION. SHAREHOLDERS WHO DO NOT
HOLD THEIR SHARES IN THEIR OWN NAME (THE "BENEFICIAL SHAREHOLDERS") SHOULD NOTE
THAT ONLY PROXIES DEPOSITED BY SHAREHOLDERS WHO APPEAR ON THE RECORDS MAINTAINED
BY THE CORPORATION'S REGISTRAR AND TRANSFER AGENT AS REGISTERED HOLDERS OF
SHARES WILL BE RECOGNIZED AND ACTED UPON AT THE MEETING. If shares are listed in
an account statement provided to a shareholder by a broker, those shares will,
in all likelihood, not be registered in the shareholder's name. Such shares will
more likely be registered under the name of the shareholder's broker or an agent
of that broker. In Canada, the vast majority of such shares are registered under
the name of CDS & Co. (the registration name for The Canadian Depositary for
Securities Limited, which acts as nominee for many Canadian brokerage firms). In
the United States, the vast majority of such shares are registered in the name
of CEDE & Co. (the registration name for The Depository Trust Company, which
acts as nominee for many U.S. brokerage firms). Shares held by brokers (or their
agents or nominees) on behalf of a broker's client can only be voted at the
direction of the Beneficial Shareholder. Without specific instructions, brokers
and their agents and nominees are prohibited from voting shares for the broker's
clients.
National Instrument 54-101 of the Canadian Securities Administrators
requires brokers and other intermediaries to seek voting instructions from
Beneficial Shareholders in advance of shareholders' meetings. For that reason, a
shareholder receives this Circular from his or her broker or other intermediary,
together with a voting instruction form. The various brokers and other
intermediaries have their own mailing procedures and provide their own signing
and return instructions to clients, which should be carefully followed by
Beneficial Shareholders in order to ensure that their shares are voted at the
Meeting. The voting instruction form supplied to a Beneficial Shareholder by its
broker (or the agent of the broker) is substantially similar to the form of
proxy provided directly to registered shareholders by the Corporation. However,
its purpose is limited to instructing the registered shareholder (i.e., the
broker or agent of the broker) how to vote on behalf of the Beneficial
Shareholder. The vast majority of brokers now delegate responsibility for
obtaining instructions from clients to ADP Investor Communications ("ADPIC") in
Canada. ADPIC typically prepares a machine-readable voting instruction form,
mails those forms to Beneficial Shareholders and asks Beneficial Shareholders to
return the forms to ADPIC, or otherwise communicate voting instructions to ADPIC
(by way of the Internet or telephone, for example). ADPIC then tabulates the
results of all instructions received and provides appropriate instructions
respecting the voting of shares to be represented at the Meeting. A Beneficial
Shareholder who receives an ADPIC voting instruction form cannot use that form
to vote shares directly at the Meeting. The voting instruction forms must be
returned to ADPIC (or instructions respecting the voting of shares must
otherwise be communicated to ADPIC) well in advance of the Meeting in order to
have the shares voted. If you have any questions respecting the voting of shares
held through a broker or other intermediary, please contact that broker or other
intermediary for assistance.
Since the Corporation does not have access to the names of its
Beneficial Shareholders, if a Beneficial Shareholder attends the Meeting, the
Corporation will have no record of their shareholdings or of their entitlement
to vote, unless the broker (or other intermediary) has appointed such Beneficial
Shareholder as proxy holder. Therefore, a Beneficial Shareholder who wishes to
vote in person at the Meeting, should insert his or her own name in the space
provided on the voting instruction form sent to him or her by the broker or
other intermediary. By doing so, the broker or other intermediary is instructed
to appoint the Beneficial Shareholder as proxyholder. Then the Beneficial
Shareholder should
follow the signing and return instructions provided by his or her broker or
other intermediary. The Beneficial Shareholder should not otherwise complete
the form, as he or she will be voting at the Meeting.
ALL REFERENCES TO SHAREHOLDERS IN THIS MANAGEMENT PROXY CIRCULAR AND
THE ACCOMPANYING FORM OF PROXY AND NOTICE OF MEETING ARE TO REGISTERED
SHAREHOLDERS UNLESS SPECIFICALLY STATED OTHERWISE.
5. VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The shares conferring voting rights at the Meeting are the Multiple
Voting Shares and the Subordinate Voting Shares. Each Multiple Voting Share
confers the right to 10 votes and each Subordinate Voting Share confers the
right to one vote. On March 26, 2003, there were 4,727,100 Multiple Voting
Shares and 35,966,427 Subordinate Voting Shares outstanding.
Holders of Multiple Voting Shares and Subordinate Voting Shares,
entered on the list of shareholders compiled at the close of business (Montreal
time) on April 18, 2003 (the "Record Date"), will have the right to vote at the
Meeting or at any adjournment thereof if they are present or represented by a
proxyholder.
To the knowledge of the directors and officers of the Corporation, the
only persons who are beneficial owners of, directly or indirectly, or exercise
power or control over shares conferring more than 10% of the voting rights
attached to each class of participating and issued and outstanding shares of the
Corporation are:
NAME OF SHAREHOLDER SUBORDINATE VOTING SHARES MULTIPLE VOTING SHARES TOTAL PERCENTAGE OF
VOTING RIGHTS
---------------------------- ---------------------------- ---------------------------- -------------------------
(#) (%) (#) (%) (%)
Eric Dupont 33,413 0.09 4,725,000 99.96 56.81
SGF Sante inc.* 5,333,334 14.83 - - 6.41
Solidarity Fund (QFL)* 4,996,525 13.89 - - 6.00
* 4,000,000 of these 5,333,334 Subordinated Voting Shares (in the case of
SGF Sante inc. ("SGF Sante"), a subsidiary of the Societe Generale de
Financement du Quebec) and 3,333,334 of these 4,996,525 Subordinate
Voting Shares (in the case of the Solidarity Fund (QFL) ("Fund QFL"))
were issued on April 9, 2002, in connection with a total overall
investment of $55 million from these investors in the Corporation in
the form of a private placement in Subordinate Voting Shares with
attached warrants. In respect to this placement, SGF Sante and Fund QFL
have each reached an agreement with Dr. Eric Dupont whereby Dr. Dupont
specifically agreed that, so long as he holds the majority of votes
attached to all voting shares of the Corporation, he will not vote in
favour of specific significant events that concern the Corporation and
its subsidiaries, without having received the prior approval of SGF
Sante and/or Fund QFL.
6. PRESENTATION OF THE FINANCIAL STATEMENTS
The Annual Report including the audited consolidated financial
statements of the Corporation for the year ended December 31, 2002 and the
Auditors' report thereon will be submitted to the Meeting.
7. EXERCISE OF VOTING RIGHTS BY PROXIES
The persons named as proxies will vote or withhold from voting the
shares in respect of which they are appointed or vote for or against any
particular question, in accordance with the direction of the shareholders
appointing them. IN THE ABSENCE OF SUCH DIRECTION, SUCH SHARES WILL BE VOTED IN
FAVOUR OF ALL MATTERS IDENTIFIED IN THE ATTACHED NOTICE OF MEETING. The enclosed
form of proxy confers discretionary authority upon the persons named therein
with respect to amendments or variations to matters identified in the Notice of
Meeting and to other matters which may properly come before the Meeting. At the
time of printing of this Circular, the Management of the Corporation knows of no
such amendment, variation or other matter expected to come before the Meeting
other than the matters referred to in the Notice of Meeting.
8. ELECTION OF DIRECTORS
Corporation by-laws provide that the Board of Directors of the
Corporation is formed of at least five (5) and at most fifteen (15) directors.
Directors are elected annually by the shareholders of the Corporation, but the
directors may from time to time appoint one or more directors, provided that the
total number of directors so appointed does not exceed one third of the number
of directors elected at the last annual meeting of the shareholders. The
Corporation proposes the nine (9) persons named herebelow as candidates for
election as directors. Each elected director will remain in office until
adjournment of the next annual meeting of the shareholders or until his/her
successor is elected or appointed, unless his/her post is vacated earlier.
Under the terms of a shareholders' agreement signed on November 12,
1999, between Fund QFL and the Corporation, Fund QFL was granted the right to
designate one (1) member of the Board of Directors of the Corporation, provided
that Fund QFL holds at least 499,999 Subordinate Voting Shares of the
Corporation's capital stock. Likewise, under the terms of contractual agreements
signed by the Corporation, SGF Sante and Dr. Eric Dupont, concerning, among
other matters, the election of directors, provided SGF Sante holds at least 5%
in number of the Corporation's voting shares issued and outstanding, (a) the
Corporation will propose for election as a director of the Corporation, at each
annual meeting of the shareholders, (i) one candidate designated by SGF Sante,
provided that the candidate receives a favourable recommendation from the
Corporate Governance Committee (this candidate will also be appointed to the
Audit Committee and the Corporate Governance Committee of the Corporation), and
(ii), except for the 2002 annual meeting of the shareholders, one candidate
jointly designated by SGF Sante and Dr. Eric Dupont, (b) the Corporation will
solicit proxies from its shareholders for the election of such candidates as
directors of the Corporation, and (c) Dr. Eric Dupont will exercise the voting
rights conveyed by his shares, concerning any resolution bearing on the election
of directors to be studied by the beneficial holders of any participating shares
of the Corporation, in favour of the election of the candidates so designated.
In this respect, and in accordance with the agreement mentioned above, Dr.
Francis Bellido is the candidate currently designated by SGF Sante and the
candidate to be jointly designated by SGF Sante and Dr. Dupont remains to be
selected.
UNLESS INSTRUCTIONS ARE GIVEN TO ABSTAIN FROM VOTING WITH REGARD TO THE
ELECTION OF DIRECTORS, THE PERSONS WHOSE NAMES APPEAR ON THE ENCLOSED FORM OF
PROXY WILL VOTE IN FAVOUR OF THE ELECTION OF THE NINE (9) NOMINEES WHOSE NAMES
ARE SET OUT HEREINBELOW. MANAGEMENT OF THE CORPORATION DOES NOT FORESEE THAT ANY
OF THE FOLLOWING NOMINEES LISTED BELOW WILL BE UNABLE OR, FOR ANY REASON,
UNWILLING TO PERFORM HIS/HER DUTIES AS DIRECTOR. IN THE EVENT THAT THE FOREGOING
OCCURS FOR ANY REASON, PRIOR TO THE ELECTION, THE PERSONS INDICATED ON THE
ENCLOSED FORM OF PROXY RESERVE THE RIGHT TO VOTE FOR ANOTHER CANDIDATE OF THEIR
CHOICE UNLESS OTHERWISE INSTRUCTED BY THE SHAREHOLDER IN THE FORM OF PROXY TO
ABSTAIN FROM VOTING IN THE ELECTION OF DIRECTORS.
NAME AND PLACE OF DIRECTOR NUMBER AND
RESIDENCE PRINCIPAL OCCUPATION SINCE CLASS OF SHARES HELD
---------------------------------------------------------------------------------------------------------------------
Marcel Aubut Managing Partner 1996 13,500 Subordinate Voting Shares
Sillery, Quebec Heenan Blaikie Aubut (law firm)
Francis Bellido, PhD (1) President and Chief Operating 2002 -------
Beaconsfield, Quebec Officer
SGF Sante Inc.
Stormy Byorum (1) Managing Partner 2001 -------
New York, NY Violy, Byorum & Partners
Eric Dupont, PhD (2) Executive Chairman 1991 4,725,000 Multiple Voting Shares
Sainte-Petronille, AEterna Laboratories Inc. 33,413 Subordinate Voting Shares
Ile d'Orleans, Quebec
Prof. Dr. Jurgen Engel (3) Managing Director 2003 -------
Frankfurt, Germany Zentaris GmbH
Executive Vice President, Global
Research and Development and Chief
Operating Officer
AEterna Laboratories Inc.
Gilles Gagnon President and Chief Executive 2002 3,950 Subordinate Voting Shares
Sherbrooke, Quebec Officer
AEterna Laboratories Inc.
Jean-Claude Gonneau General Manager 1995 182,126 Subordinate Voting
Louveciennes, France SG Cowen, Paris Shares
Pierre Laurin, PhD (2) Executive in Residence
Verdun, Quebec HEC Montreal 1998 -------
Pierre MacDonald (1)(2) President and Chief Executive 2000 4,500 Subordinate Voting Shares
Verdun, Quebec Officer
MacD Consult Inc.
---------------------------------------------------------------------------------------------------------------------
(1) Member of the Audit Committee
(2) Member of the Corporate Governance Committee
(3) Prof. Dr. Engel is Managing Director of Zentaris GmbH. Previously, he was
Chief Executive Officer of Zentaris AG after having been head of Corporate
Research and Development including Drug Discovery, at Asta Medica AG in
Frankfurt, Germany.
The Corporation does not have any direct information concerning shares
beneficially owned by the above-mentioned persons or concerning shares over
which such persons exercise control or direction. This information was provided
by the directors and nominees individually.
9. EXECUTIVE COMPENSATION
A. COMPENSATION OF DIRECTORS
Further to a revision of its directors' remuneration policy, each
outside director receives, as a basic remuneration, as of 2003, an annual
amount of $15,000. The Corporation has also granted to each of its outside
directors, during the last quarter of 2002, 15,000 stock options as an annual
retainer for the years 2003, 2004 and 2005. The outside directors are finally
receiving since January 1, 2003, an attendance fee of $1,500 for each attended
Board meeting. This fee is reduced to $750 per meeting for a director
participating by telephone, teleconference or any other telecommunication
device. Committee chairpersons receive an additional annual retainer of $5,000,
and an attendance fee of $1,000 is paid to each outside director attending
Committee meetings, such fee being reduced to $500 for participation by
telephone or by any other telecommunication device. Such chairpersons have also
been granted 9,000 stock options of the Company as remuneration for the years
2003, 2004 and 2005.
B. COMPENSATION OF EXECUTIVE OFFICERS
The table below shows detailed information on the compensation of the
Chairman of the Board and Chief Executive Officer in 2002 as well as the four
(4) other most highly compensated executive officers (collectively, the "Named
Executive Officers"), whose salaries and bonuses awarded exceeded $100,000 in
2002. The compensation is applicable to the 2002, 2001, and 2000 financial
years.
The aggregate amount of cash compensation paid by the Corporation to
the Corporation's eight (8) executive officers in consideration of services
rendered during the last financial year of the Corporation ended December 31,
2002 was $1,840,152.
SYNOPTIC TABLE OF COMPENSATION
-------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------------------------------------------------
AWARDS PAYOUTS
---------------------------------------
SECURITIES
OTHER UNDER
ANNUAL OPTIONS/ SUBORDINATE ALL
NAME AND PRINCIPAL COMPENSATION SARS VOTING SHARES LTIP OTHER
OCCUPATION YEAR SALARY BONUS GRANTED OR UNITS PAYOUTS BENEFITS
($) ($) ($) (#) ($) ($) ($)
-------------------------------------------------------------------------------------------------------------------
Eric Dupont, PhD 2002 300,000 100,000 - 175,000 - - -
Chairman of the Board 2001 300,000 100,000 - 55,000 - - -
and Chief Executive 2000 245,833 100,000 - - - - -
Officer
-------------------------------------------------------------------------------------------------------------------
Gilles Gagnon* 2002 191,300 100,000 - 60,000 - - -
President and Chief 2001 173,958 100,000 - 125,000 - - -
Operating Officer 2000 50,000 25,000 - - - - -
-------------------------------------------------------------------------------------------------------------------
Claude Hariton, PhD 2002 196,519 75,000 - 50,000 - - -
Vice President and 2001 189,883 75,000 - 68,750 - - -
Chief Medical Officer 2000 186,900 55,000 - - - - -
-------------------------------------------------------------------------------------------------------------------
Dennis Turpin 2002 150,000 75,000 - 140,000 - - -
Vice President and 2001 150,000 50,000 - 92,500 - - -
Chief Financial 2000 150,000 50,000 - - - - -
Officer
-------------------------------------------------------------------------------------------------------------------
Normand Tremblay 2002 150,000 50,000 - 73,000 - - -
Vice President, 2001 150,000 50,000 - 92,500 - - -
Planning and External 2000 150,000 50,000 - - - - -
Affairs
-------------------------------------------------------------------------------------------------------------------
(*) In the year 2000, Mr. Gagnon has been employed by the Corporation for
four (4) months. His annual salary was $150,000.
C. STOCK OPTION PLAN
The Corporation has established a stock option plan for the directors,
executive officers, employees, members of the Scientific Advisory Board and
persons providing continuous services to the Corporation (the "Plan") in order
to attract and retain these persons, who will be motivated to work toward
ensuring the Corporation's success. The Board has full and complete authority to
interpret the Plan and to establish the rules and regulations applying to it and
to make all other determinations it deems necessary or useful for the
administration of the Plan, provided that such interpretations, rules,
regulations and determinations are consistent with the rules of all stock
exchanges on which the securities of the Corporation are then traded and with
all relevant securities legislation. Subject to regulatory approval, the Board
may, at any time, amend, suspend or terminate the Plan in whole or in part.
Eligibility for the Plan will be determined by the Board of Directors or the
Corporate Governance Committee, as the case may be.
All of the options that are granted under the Plan may be exercised
within a maximum period of 10 years following the date of their grant. The Board
of Directors or the Corporate Governance Committee, as the case may be,
designates, in its discretion, the option recipients to whom the stock options
are granted and determines the number of Subordinate Voting Shares covered by
each of such options, the grant date, the exercise price of each option, the
expiry date and any other question relating thereto, in each case in accordance
with the applicable legislation of the securities regulatory authorities. The
price at which the Subordinate Voting Shares may be purchased may not be lower
than the greater of the closing prices of the shares on the Toronto Stock
Exchange and the Nasdaq National Market, on the last trading day preceding the
date of grant of the option. Any option issued is non-transferable.
The maximum number of Subordinate Voting Shares that are issuable under
the Plan shall not exceed 3,285,101 shares. The maximum number of Subordinate
Voting Shares that may be optioned in favour of any individual shall not exceed
5% of the number of outstanding shares.
On February 20, 2003, the directors of the Corporation passed a
resolution in order, among other things, to update and restate the Plan by
setting the maximum number of Subordinate Voting Shares that are issuable under
the Plan (Schedule "B"), the whole as more fully described in this Circular
under item 15 entitled "Modification to the Stock Option Plan". The confirmation
of that modification by the shareholders of the Corporation is solicited by this
Management Proxy Circular.
OPTIONS GRANTED DURING THE LAST FINANCIAL YEAR
The following table indicates the individual grants of securities to
the Named Executive Officers during the financial year ended December 31, 2002.
The aggregate number of Subordinate Voting Shares covered by options granted
during that period was 1,048,895 at prices varying from $4.31 to $8.85 per
share, establishing at 2,949,872 the total number of shares covered by options
granted and outstanding pursuant to the Plan at December 31, 2002. No stock
option is outstanding according to the options issued on an individual basis in
1995; all of these options have expired on December 31, 2001. During the
financial year ended December 31, 2002, 257,983 options were exercised at prices
varying from $4.30 to $6.00.
--------------------------------------------------------------------------------------------------------------------
% OF TOTAL OPTIONS EXERCISE PRICE MARKET VALUE
SECURITIES UNDER GRANTED DURING OR BASIC PRICE OF SECURITIES
NAME OPTIONS GRANTED FINANCIAL YEAR PER SHARE UNDERLYING OPTIONS EXPIRATION DATE
ON THE DATE OF GRANT
($ / SECURITY)
(#) (%) ($ / SECURITY)
----------------------------------------------------------------------------------------------------------------------
Eric Dupont, PhD 100,000 16.7 5.96 5.96 October 31, 2012
75,000 5.70 5.70 December 15, 2012
----------------------------------------------------------------------------------------------------------------------
Gilles Gagnon 60,000 5.7 5.70 5.70 December 15, 2012
----------------------------------------------------------------------------------------------------------------------
Claude Hariton, PhD 50,000 4.8 5.70 5.70 December 15, 2012
----------------------------------------------------------------------------------------------------------------------
Dennis Turpin 90,000 13.3 5.96 5.96 October 31, 2012
50,000 5.70 5.70 December 15, 2012
----------------------------------------------------------------------------------------------------------------------
Normand Tremblay 23,000 7.0 5.96 5.96 October 31, 2012
50,000 5.70 5.70 December 15, 2012
----------------------------------------------------------------------------------------------------------------------
OPTIONS EXERCISED DURING THE LAST FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION
VALUES
The following table summarizes for each of the Named Executive Officers
the number of shares acquired on options exercised, if any, during the financial
year ended December 31, 2002, the aggregate value realized upon exercise, the
total number of shares covered by unexercised options, if any, held at December
31, 2002, and the value of such unexercised options as at the same date.
----------------------------------------------------------------------------------------------------------------------
NAME SECURITIES ACQUIRED AGGREGATE VALUE UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED
ON EXERCISE REALIZED FY-END 2002 IN-THE-MONEY OPTIONS
AT FY-END 2002(1)
# ($) # ($)
EXERCISABLE / EXERCISABLE /
UNEXERCISABLE UNEXERCISABLE
----------------------------------------------------------------------------------------------------------------------
Eric Dupont, PhD nil nil --/217,500 --/16,500
----------------------------------------------------------------------------------------------------------------------
Gilles Gagnon nil nil 79,167/160,000 94,667/13,200
----------------------------------------------------------------------------------------------------------------------
Claude Hariton, PhD nil nil 100,000/109,375 82,000/11,000
----------------------------------------------------------------------------------------------------------------------
Dennis Turpin nil nil 6,250/220,000 --/11,000
----------------------------------------------------------------------------------------------------------------------
Normand Tremblay nil nil 6,250/153,000 --/11,000
----------------------------------------------------------------------------------------------------------------------
(1) The value of an unexercised in-the-money option at financial year-end is
the difference between the exercise price of the option and the closing
price of Subordinate Voting Shares on the Toronto Stock Exchange at
December 31, 2002, namely $5.92 per share. These values have not been and
may never be realized. The options have not been and may never be
exercised; and actual gains, if any, upon exercise will depend upon the
value of the Subordinate Voting Shares on the date of the exercise. There
can be no assurance that these values will
be realized. Values of unexercised options are based on the exercise
prices varying from $4.50 to $5.70, as applicable at the specific grant
dates.
D. REPORT OF THE CORPORATE GOVERNANCE COMMITTEE ON EXECUTIVE COMPENSATION
COMPOSITION OF THE COMMITTEE
At December 31, 2002, the Corporate Governance Committee (the
"Committee") was composed of:
Dr. Eric Dupont, Dr. Pierre Laurin and Mr. Pierre MacDonald.
MANDATE OF THE COMMITTEE
The Committee, which was formed on May 16, 1996, is entrusted with
examining matters related to the appointment and compensation of executive
officers of the Corporation, including that of the Executive Chairman and of the
Chief Executive Officer, in view of making recommendations to the Board. The
Committee also reports to the Board on options awarded. It reviews the
composition of the Board and of its committees and proposes and recommends
candidates for election or appointment to the Board. Finally, the Committee is
responsible for examining the terms and conditions of the aggregate compensation
plans of the Corporation and to verify the competitiveness thereof in relation
to companies carrying on activities similar to those of the Corporation.
EXECUTIVE COMPENSATION POLICY
An aggregate compensation policy has been established to acknowledge
and reward the contributions of the executive officers to the Corporation's
success and to ensure competitive compensation, in order that the Corporation
may benefit from the expertise required to pursue its objectives.
In accordance with this policy, the compensation of the officers is
based on three principal elements: the basic salary, the performance units and
the award of stock options. The Corporation intends to pay a competitive
aggregate compensation that includes an incentive related to the obtainment of
corporate results in addition to a basic salary in accordance with a reference
market. The incentive compensation is granted on the basis of criteria approved
by the Committee.
SHORT-TERM INCENTIVE COMPENSATION
The short-term incentive plan sets out the award of performance units
in the form of guaranteed value stock options based on the achievement of the
strategic objectives of the Corporation. These objectives are set at the
beginning of each financial year as part of the revision of corporation
strategies.
In the case of the executive officers, the number of performance units
in the form of exercisable stock options can be decreased according to the level
of attainment of financial and strategic objectives of the Corporation.
LONG-TERM COMPENSATION OF EXECUTIVE OFFICERS
The long-term component of the officers' aggregate compensation is
exclusively based on the Corporation's Stock Option Plan. This Plan permits the
granting of a number of options that varies in accordance with the contribution
of the officers and their responsibilities.
CONTROL AND REVISION OF THE COMPENSATION PLAN
The Committee must ensure that the compensation of the officers is
consistent with the aggregate compensation policy of the Corporation. The
relative situation of the Corporation with regard to compensation is determined
annually by means of studies, in respect of a reference market, composed of
comparable businesses. Internal equity analyses are also conducted in order to
make the required adjustments.
COMPENSATION OF THE EXECUTIVE CHAIRMAN
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation of the Executive Chairman is governed pursuant to an
individual contractual agreement. On October 23, 1993, Dr. Eric Dupont signed an
exclusive contract agreement with the Corporation having an initial term of five
(5) years and renewable annually thereafter. This contract included a
non-competition clause in favour of the Corporation. The compensation of the
Chief Executive Officer is along the lines of the corporate policy on management
compensation. The Chief Executive Officer's contract of employment also contains
a non-competition clause but does not provide for any specific plan of
remuneration.
CONCLUSION
In accordance with the executive compensation policy, a significant
portion of the compensation of the executive officers is related to the
performance of the Corporation, the responsibilities inherent in their duties
and, in particular, the performance of the shares and their long-term
appreciation. The Committee reviews the compensation programs of the executive
officers annually in order to ensure their competitiveness and compliance with
the objectives, values and strategies of the Corporation.
If the circumstances so require, the Committee may recommend employment
conditions that are different from the policies in effect as well as the
execution of non-standard employment contracts by the Corporation.
By the Committee:
Eric Dupont
Pierre Laurin
Pierre MacDonald
10. INDEBTEDNESS OF DIRECTORS AND OFFICERS
As at March 26, 2003, the directors and officers of the Corporation did
not owe the Corporation any amount in respect of the purchase of securities of
the Corporation or otherwise.
11. PERFORMANCE GRAPH
On December 31, 2002, the closing price of the Subordinate Voting
Shares on the Toronto Stock Exchange was $5.92 per share. The following graph
shows the cumulative return of a $100 investment in Subordinate Voting Shares of
the Corporation, made on December 31, 1997, initially, on the Montreal Exchange
and as at December 6, 1999 on the Toronto Stock Exchange (as of which date all
trading had to be effected on the Toronto Stock Exchange), compared with the
total return of the S&P/TSX Composite Index for each financial year shown on
this graph.
[GRAPHIC DATA]
12. STATEMENT OF CORPORATE GOVERNANCE PRACTICES
In conformity with the rules of the Toronto Stock Exchange, the
Corporation must disclose information as regards to its corporate governance
practices as compared to the guidelines provided for in the Toronto Stock
Exchange Company Manual (the "Guidelines"). The Board of Directors of the
Corporation considers good corporate governance to be important to the effective
operations of the Corporation. The Corporation's Corporate Governance Committee
makes recommendations regarding the compliance of the Corporation's practices
with the Guidelines and oversees disclosure obligations related thereto. The
Corporate Governance Committee has also been reviewing the proposed amendments
to the Guidelines published in the spring and fall of 2002, and has considered
the Corporation's governance practices in response to the United States
SARBANES-OXLEY ACT OF 2002 and the proposals put forward by the Nasdaq National
Market ("Nasdaq"). The majority of these new rules are not in final form or do
not apply with respect to disclosure as at December 31, 2002. As the proposed
amendments to the TSX Guidelines, the Nasdaq proposals and the provisions of the
SARBANES-OXLEY ACT
OF 2002 come into effect, the Board of Directors will review
and amend its governance practices on an ongoing basis in response to these
standards.
The information provided by the Corporation with respect to each one of
these Guidelines appears in Schedule "A".
13. INSURANCE OF DIRECTORS AND OFFICERS
The Corporation purchases liability insurance for the benefit of its
directors and officers, which covers them against certain liabilities contracted
by them in such capacity. In 2002, this insurance provided a maximum coverage of
$20,000,000 per event and policy year. For the financial year ended December 31,
2002, the premium paid by the Corporation was $63,220. When the Corporation is
authorized or required to indemnify insureds, a deductible of $50,000 applies.
14. APPOINTMENT OF AUDITORS
Management of the Corporation proposes that PricewaterhouseCoopers LLP,
Chartered Accountants, be appointed as auditors of the Corporation and that the
directors of the Corporation be authorized to fix their compensation.
PricewaterhouseCoopers have acted as auditors of the Corporation since the
financial year of the Corporation ended December 31, 1993.
UNLESS INSTRUCTED TO ABSTAIN FROM VOTING WITH REGARD TO THE APPOINTMENT
OF AUDITORS, THE PERSONS WHOSE NAMES APPEAR ON THE ENCLOSED FORM OF PROXY WILL
VOTE IN FAVOUR OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS.
15. MODIFICATION TO THE STOCK OPTION PLAN
During the annual and special meeting of the Corporation, the
shareholders will be asked to consider, and if thought appropriate, to approve
Resolution 2003-1 providing for certain amendments to the Plan which the
directors unanimously approved on February 20, 2003, subject to shareholders and
regulatory approval.
The material amendment proposed to be made to the Plan, which amendment
is blacklined in the Plan annexed herewith as Schedule "C", is to set the
maximum number of Subordinate Voting Shares which may be set aside for issuance
under the Plan at 4,069,352. Initially, the Plan was adopted by the Corporation
on November 7, 1995, and was amended on June 18, 1997, May 5, 1999, June 8,
2000, May 23, 2001 and June 12, 2002, to increase the number of Subordinate
Voting Shares issuable under the Plan.
The Corporation, like others in the biopharmaceutical industry,
considers the use of stock option plan to be an important means of attracting,
retaining and motivating qualified personnel. Management is of the opinion that
the fact that all of the Corporation's employees have options contributes to the
success and rapid growth of the Corporation. In making the decision to amend the
Plan, the Corporate Governance Committee and the Board of Directors considered a
number of factors, including the number of options currently outstanding under
the Plan, the Corporation's human resource requirements,
competitive benchmarks and the anticipated need to grant options in the future.
Based on a review of these factors, the directors have unanimously determined
that the proposed changes, including, among other things, the setting of a
maximum number of Subordinate Voting Shares reserved for issuance under the
Plan, are both reasonable and in the best interests of the Corporation.
The proposed new maximum is intended to allow the Corporation to
continue (as has been the Corporation's practice in the past) to have 10% of the
total of Multiple Voting Shares and Subordinate Voting Shares of the Corporation
available for issuance pursuant to the exercise of options in the form of
"Unexercised Options" and "Options Available for Issue". With the establishment
at 4,069,352, further to the inscription of 1,022,259 additional Subordinate
Voting Shares, there were 2,960,423 unexercised options outstanding at February
28, 2003 and 1,108,929 Subordinate Voting Shares available for issuance pursuant
to the exercise of options that have yet to be granted. This new number of
Subordinate Voting Shares available for the exercise of stock options will
represent 10% of the total aggregate number of issued and outstanding Multiple
Voting Shares and Subordinate Voting Shares as at February 28, 2003. An
aggregate of 2,130,342 shares have been issued further to exercises of stock
options since the enactment of the Plan and the granting of stock options on an
individual basis in 1995.
Resolution 2003-1 has been pre-cleared by the Toronto Stock Exchange
and must also be approved by the majority of the votes cast at the Meeting by
all the shareholders of the Corporation present or represented by proxy.
UNLESS INSTRUCTED OTHERWISE, THE PERSONS WHOSE NAMES APPEAR ON THE
ENCLOSED FORM OF PROXY WILL VOTE IN FAVOUR OF RESOLUTION 2003-1.
16. SHAREHOLDER PROPOSALS FOR 2004
Proposals from shareholders shall be submitted no later than January
24, 2004 in order that the Corporation may include them in the proxy
solicitation circular to be issued for the Corporation's annual meeting of
shareholders in 2004.
17. ADDITIONAL INFORMATION
The Corporation will provide the following documents to any person or
company upon request to the Secretary of the Corporation, at its head office at
1405 boulevard du Parc-Technologique, Quebec, Quebec, G1P 4P5:
(i) one copy of the comparative financial statements of the Corporation for
its most recent financial year together with the report of the auditors
thereon, both contained in the Corporation's 2002 Annual Report, and
one copy of any interim financial statements of the Corporation
published subsequent to the financial statements for its most recent
financial year; and
(ii) one copy of this Management Proxy Circular.
In addition, the Annual Information Form will be available from the
date of its filing with the securities commissions or similar authorities in
Canada as well as any other document incorporated by reference in such Annual
Information Form. The Corporation may require the payment of reasonable
expenses if a request is received from a person who is not a holder of
securities of the Corporation, unless the Corporation makes a distribution of
its securities pursuant to a short form prospectus, in which case such documents
will be provided free of charge.
18. DIRECTORS' APPROVAL
The contents and the sending of this Management Proxy Circular have
been approved by the Board of Directors of the Corporation as of April 2, 2003.
Dated at Quebec, April 4, 2003.
/s/ Claude Vadboncoeur
----------------------------
Claude Vadboncoeur
Vice President, Legal Affairs and Corporate Secretary
SCHEDULE A
AETERNA LABORATORIES INC.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
------------------------------------------- --------------------------------------------------------------------------
TSX CORPORATE GOVERNANCE GUIDELINES COMMENTS
------------------------------------------- --------------------------------------------------------------------------
1. BOARD SHOULD EXPLICITLY ASSUME The mandate of the Board is to assume stewardship of the Corporation's
RESPONSIBILITY FOR STEWARDSHIP OF overall administration and to oversee the management of the Corporation's
THE CORPORATION SPECIFICALLY FOR: operations.
-------- ---------------------------------- --------------------------------------------------------------------------
(a) ADOPTION OF A STRATEGIC Prior to the beginning of each financial year, the Board receives and
PLANNING PROCESS approves the annual budget and the strategic objectives of the Corporation,
which are submitted to it by Management. In addition, significant matters
such as those related to the annual budget, strategic investments, as well
as capital and operating expenditures exceeding a certain threshold of
materiality are submitted to the Board.
-------- ----- ---------------------------- --------------------------------------------------------------------------
(b) IDENTIFICATION OF PRINCIPAL The Board identifies the Corporation's principal risks and manages these
RISKS, AND IMPLEMENTING risks through regular appraisal of Management's practices on an ongoing
RISK MANAGEMENT SYSTEMS basis.
-------- ----- ---------------------------- --------------------------------------------------------------------------
(c) SUCCESSION PLANNING AND When choosing senior management members, the Board strives for quality
MONITORING SENIOR MANAGEMENT and loyalty which are basic elements needed for the realization of the
Corporation's objectives. Every year, the Corporate Governance Committee
examines the performance, development and remuneration of senior executives
in light of these objectives. The Board contemplates studying succession
planning in the course of next year.
-------- ----- ---------------------------- --------------------------------------------------------------------------
(d) COMMUNICATIONS POLICY The Vice President, Planning and External Affairs, is responsible for the
communications between Management and the Corporation's stakeholders. The
Audit Committee reviews press releases containing the quarterly results
of the Corporation prior to their release, these press releases being the
responsibility of the Vice President and Chief Financial Officer along
with communications with institutions and financial analysts. In
addition, all press releases of the Corporation are reviewed by the Vice
President, Legal Affairs. The communications policy has been established
in accordance with the relevant disclosure requirements under applicable
Canadian and United States
-------- ----- ---------------------------- --------------------------------------------------------------------------
------------------------------------------- --------------------------------------------------------------------------
TSX CORPORATE GOVERNANCE GUIDELINES COMMENTS
------------------------------------------- --------------------------------------------------------------------------
-------- ----- ---------------------------- --------------------------------------------------------------------------
securities laws.
-------- ----- ---------------------------- --------------------------------------------------------------------------
(e) INTEGRITY OF INTERNAL The Audit Committee is responsible for assisting the Board in the
CONTROL AND MANAGEMENT fulfillment of its duties with respect to financial accounting and
INFORMATION SYSTEMS reporting practices as well as the adequacy and integrity of internal
controls and of the management information systems.
-------- ----- ---------------------------- --------------------------------------------------------------------------
2. MAJORITY OF DIRECTORS SHOULD BE The Board is composed of 9 directors, of which 5 are unrelated directors.
"UNRELATED" (INDEPENDENT OF The Executive Chairman, Dr. Eric Dupont, is a significant shareholder in
MANAGEMENT AND FREE FROM the Corporation as he has the ability to exercise a majority of the votes
CONFLICTING INTEREST) TO THE for the election of the Board of Directors. The Board believes that the
CORPORATION AND THE CORPORATION'S current majority of unrelated directors provides appropriate independent
SIGNIFICANT SHAREHOLDER, IF ANY representation for the public shareholders of the Corporation.
-------- ----- ---------------------------- --------------------------------------------------------------------------
3. DISCLOSURE FOR EACH DIRECTOR Dr. Eric Dupont - Related - Executive Chairman of the Corporation.
WHETHER HE OR SHE IS RELATED, AND Mr. Gilles Gagnon - Related - President and Chief Executive Officer of
HOW THAT CONCLUSION WAS REACHED the Corporation.
Prof. Dr. Jurgen Engel - Related - Managing Director, Zentaris GmbH -
Executive Vice President, Global Research and Development and Chief
Operating Officer of the Corporation.
Mr. Marcel Aubut - Related - Senior partner of a law firm which provides
legal services to the Corporation on a regular basis.
For the remainder of the proposed directors, none of them or their
associates have any interest or any business or other relationship which
could, or could reasonably be perceived to, materially interfere with the
directors' ability to act with a view to the best interests of the
Corporation, other than interests arising from shareholding.
Francis Bellido Unrelated
Stormy Byorum Unrelated
Jean-Claude Gonneau Unrelated
Pierre Laurin Unrelated
Pierre MacDonald Unrelated
-------- ----- ---------------------------- --------------------------------------------------------------------------
4. (a) APPOINT A COMMITTEE OF At the present time, the Corporation has no formal procedures in place
DIRECTORS RESPONSIBLE FOR for recruiting new directors. It nevertheless proposes nominees annually
PROPOSING TO THE FULL BOARD for election to the Board and makes recommendations as to the composition
NEW NOMINEES TO THE BOARD of the committees of the Board.
AND FOR
-------- ----- ---------------------------- --------------------------------------------------------------------------
------------------------------------------- --------------------------------------------------------------------------
TSX CORPORATE GOVERNANCE GUIDELINES COMMENTS
------------------------------------------- --------------------------------------------------------------------------
-------- ----- ---------------------------- --------------------------------------------------------------------------
ASSESSING DIRECTORS ON
AN ONGOING BASIS
-------- ----- ---------------------------- --------------------------------------------------------------------------
(b) COMPOSED EXCLUSIVELY OF See item 4(a) above.
NON-MANAGEMENT DIRECTORS,
THE MAJORITY OF WHOM ARE
UNRELATED
-------- ----- ---------------------------- --------------------------------------------------------------------------
5. IMPLEMENT A PROCESS FOR ASSESSING The Corporate Governance Committee is responsible to develop and monitor
THE EFFECTIVENESS OF THE BOARD, the Board's corporate governance practices, the functioning of the Board
ITS COMMITTEES AND DIRECTORS and the powers, mandates and performance of the Committees.
-------- ----- ---------------------------- --------------------------------------------------------------------------
6. PROVIDE ORIENTATION AND EDUCATION The Board ensures that every new director possesses the capacities,
PROGRAMS FOR NEW DIRECTORS expertise, availability and knowledge required to fill this position
adequately. The Corporation also offers an orientation and training
program to new Board members.
-------- ----- ---------------------------- --------------------------------------------------------------------------
7. CONSIDER REDUCING SIZE OF BOARD, Management of the Corporation considers that the size of its Board is
WITH A VIEW TO IMPROVING adequate to maintain the Board's effectiveness and for the stewardship of
EFFECTIVENESS the Corporation.
-------- ----- ---------------------------- --------------------------------------------------------------------------
8. REVIEW COMPENSATION OF DIRECTORS The Corporate Governance Committee reviews periodically the compensation
IN LIGHT OF RESPONSIBILITIES AND policies in light of market conditions and responsibilities. The Board
RISKS has determined that the compensation paid to directors is adequate in
light of their risks and responsibilities. Only external directors are
compensated for acting as a director of the Corporation.
-------- ----- ---------------------------- --------------------------------------------------------------------------
9. COMMITTEES OF THE BOARD SHOULD The Board has two committees: the Audit Committee and the Corporate
GENERALLY BE COMPOSED OF OUTSIDE Governance Committee. All members of the Audit Committee are external and
(NON-MANAGEMENT) DIRECTORS, A non-related and a majority of the members of the Corporate Governance
MAJORITY OF WHOM ARE UNRELATED Committee are external and non-related.
Both the Audit Committee and the Corporate Governance Committee consist
of three members each. Audit Committee
Francis Bellido Unrelated
Stormy Byorum Unrelated
Pierre MacDonald Unrelated
Corporate Governance Committee
-------- ----- ---------------------------- --------------------------------------------------------------------------
------------------------------------------- --------------------------------------------------------------------------
TSX CORPORATE GOVERNANCE GUIDELINES COMMENTS
------------------------------------------- --------------------------------------------------------------------------
Eric Dupont Related
Pierre Laurin Unrelated
Pierre MacDonald Unrelated
-------- ----- ---------------------------- --------------------------------------------------------------------------
10. BOARD SHOULD EXPRESSLY ASSUME The Corporate Governance Committee is responsible for developing and
RESPONSIBILITY FOR, OR ASSIGN TO monitoring the Board's corporate governance practices.
A COMMITTEE GENERAL RESPONSIBILITY
FOR, THE APPROACH TO CORPORATE
GOVERNANCE ISSUES
-------- ----- ---------------------------- --------------------------------------------------------------------------
11. (a) DEFINE LIMITS TO
MANAGEMENT'S
RESPONSIBILITIES BY
DEVELOPING MANDATES FOR:
-------- ----- ---------------------------- --------------------------------------------------------------------------
(i) THE BOARD The Board oversees the conduct and supervises the management of the
business and affairs of the Corporation pursuant to the powers vested in
it by the CANADA BUSINESS CORPORATIONS ACT and in accordance with the
requirements of the said ACT. The Board meets regularly to consider
particular issues or conduct specific review whenever deemed appropriate.
Any responsibility, which is not delegated, to senior management or a
committee of the Board remains the responsibility of the Board.
-------- ----- ---------------------------- --------------------------------------------------------------------------
(ii) THE CEO There is no formal process of developing mandates for the CEO.
-------- ----- ---------------------------- --------------------------------------------------------------------------
(b) BOARD SHOULD APPROVE OR The CEO and Management establish the corporate objectives of the
DEVELOP CEO'S CORPORATE Corporation annually which, in turn, are expected to be implemented by
OBJECTIVES the CEO. These objectives receive Board approval.
-------- ----- ---------------------------- --------------------------------------------------------------------------
12. ESTABLISH PROCEDURES TO ENABLE The Corporation does not currently have a member of the Board that is
THE BOARD TO FUNCTION responsible for ensuring that the Board properly discharges its duties,
INDEPENDENTLY OF MANAGEMENT independent of Management. The Board does not deem it necessary to add
structures to those that already exist to ensure its independence
vis-a-vis Management.
-------- ----- ---------------------------- --------------------------------------------------------------------------
13. (a) ESTABLISH AN AUDIT The Audit Committee reviews the Corporation's annual and interim
COMMITTEE WITH A financial statements before they are approved by the Board, oversees
SPECIFICALLY DEFINED MANDATE Management reporting on internal audits and controls and reviews the
comments of the external auditors regarding internal control procedures.
The Committee is also responsible for ensuring that the Corporation has in
place adequate and efficient internal control systems to monitor the
Corporation's
-------- ----- ---------------------------- --------------------------------------------------------------------------
------------------------------------------- --------------------------------------------------------------------------
TSX CORPORATE GOVERNANCE GUIDELINES COMMENTS
------------------------------------------- --------------------------------------------------------------------------
-------- ----- ---------------------------- --------------------------------------------------------------------------
financial information and that transactions involving the Corporation with
related parties are made on terms that are fair for the Corporation. The
Committee also examines the audit fees of the external auditors and submits
the appropriate recommendations to the Board.
-------- ----- ---------------------------- --------------------------------------------------------------------------
(b) ALL MEMBERS SHOULD BE The Audit Committee is composed of non-management directors.
NON-MANAGEMENT DIRECTORS
-------- ----- ---------------------------- --------------------------------------------------------------------------
14. IMPLEMENT A SYSTEM TO ENABLE The Corporation has a practice of permitting the Board, any committee
INDIVIDUAL DIRECTORS TO ENGAGE thereof and any individual director to engage independent, external
OUTSIDE ADVISORS, AT advisors at the Corporation's expense. Up to the present time, the
CORPORATION'S EXPENSE members of the Board have not requested the assistance of an outside
adviser.
-------- ----- ---------------------------- --------------------------------------------------------------------------
SCHEDULE B
RESOLUTION 2003-1
RESOLVED AS RESOLUTION 2003-1 :
THAT the Corporation be and is hereby authorized to amend its Stock
Option Plan, substantially in the form of the amended Stock Option Plan attached
as Schedule "B" to the Management Information Circular of the Corporation dated
April 4, 2003, in order to allow the inscription of an additional 1,022,259
Subordinate Voting Shares to be reserved for issuance thereunder by increasing
the maximum number of Subordinate Voting Shares issuable thereunder from
3,285,101 to 4,069,352 Subordinate Voting Shares; and
THAT any director or officer of the Corporation is hereby authorized
and directed to sign and deliver for, and on behalf of the Corporation, all such
documents and do all such acts and things as may be considered necessary or
desirable to give effect to this resolution.
SCHEDULE C
STOCK OPTION PLAN OF
LES LABORATOIRES AETERNA INC.
1. PURPOSE OF THE PLAN
1.1 The purpose of the stock option plan for directors, officers,
employees, members of the Scientific Board and suppliers of ongoing
services (the "PLAN") of Les Laboratoires AEterna Inc. (the
"CORPORATION") is to secure for the Corporation and its shareholders
the benefit of an incentive interest in share ownership by directors,
officers and employees of the Corporation and its Subsidiaries, as the
case may be, and by the members of the Scientific Board and certain
designated suppliers of ongoing services.
2. ADMINISTRATION
2.1 The Plan shall be administered by the Corporation's Board of Directors
(the "BOARD") or the Corporate Governance Committee, as the same may be
constituted from time to time (the "COMMITTEE"). The Board or the
Committee shall have full and complete latitude to interpret the Plan
and to establish the rules and regulations applying to it and to make
all other determinations it deems necessary or useful for the
administration of the Plan, provided that such interpretations, rules,
regulations and determinations shall be consistent with the relevant
policy statements of the competent securities authorities and the rules
of the stock exchanges on which the securities of the Corporation are
listed.
3. SHARES SUBJECT TO THE PLAN
3.1 The shares subject to the Plan are the Subordinate Voting Shares (the
"SHARES") of the Corporation. The total number of Shares that may be
issued under the Plan shall not exceed 4,069,352 Shares of the
Corporation and no Optionee (as defined hereinbelow) shall hold options
to purchase more than five percent (5%) of the number of Shares issued
and outstanding from time to time. All of the Shares covered by options
that will have expired or have been cancelled without being exercised
shall become reserved Shares for the purposes of options that may be
subsequently granted under the terms of the Plan.
4. GRANT OF OPTIONS
4.1 The Board or the Committee shall from to time designate the directors,
officers or employees of the Corporation or any of its Subsidiaries, as
the case may be, or the members of the Scientific
Board or suppliers of ongoing services to whom options shall be granted
(an "OPTIONEE") and the number of Shares covered by each of such
options. For the purposes of the Plan, "SUBSIDIARIES" shall mean any
legal entity of which the Corporation holds or is the beneficiary, at
any time, directly or indirectly, otherwise than as security only, of
securities conferring over 50% of the votes enabling it to elect the
majority of the directors of such entity as well as any current or
future Subsidiary of such legal entity. Any Optionee may hold more than
one option. However, no Optionee may hold options to purchase over five
percent (5%) of the number of Shares issued and outstanding from time
to time. The granting of each option shall be evidenced by a letter
from the Corporation addressed to the Optionee setting forth the number
of Shares covered by such option, the subscription price, the terms and
conditions of exercise of the option and the option period.
5. SUBSCRIPTION PRICE
5.1 The subscription price of the Shares subject to an option shall be
established by the Board or the Committee at the time of the grant and
this price shall not be less than the greater of the closing prices of
the Shares on the Toronto Stock Exchange and the Nasdaq National Market
on the last trading day preceding the date of the granting of the
option (the "GRANT DATE"). If either of these exchanges is closed or if
the Shares did not trade on one of the two exchanges on the last
trading day preceding the Grant Date, the subscription price shall be
the closing price of the Shares at the open exchange ("SUBSCRIPTION
PRICE").
The closing price of the Shares shall be converted into Canadian
dollars, when this conversion is required, at the noon buying rate of
the Bank of Canada on the last trading day preceding the Grant Date
established in the previous paragraph.
6. OPTION PERIOD
6.1 Subject to the provisions of subsection 6.2, each option shall be
exercisable during a period established by the Board or the Committee
(the "OPTION PERIOD"); such period shall commence no earlier than the
date of the granting of the option and shall terminate no later than
ten years after such date.
6.2 Notwithstanding the provisions of subsection 6.1, an option shall not
be exercisable by an Optionee from and after each and every one of the
following dates (an "EARLY EXPIRY DATE"), unless the Board or the
Committee decides otherwise:
6.2.1 (i) in the case where the Optionee is an officer or an
employee, the date on which the Optionee resigns or
voluntarily leaves his employment with the Corporation or one
of its subsidiaries, as the case may be, or the date on which
the employment of the Optionee with the Corporation or one of
its Subsidiaries is terminated for just cause, as the case may
be, including, without limiting the scope of the foregoing, in
the event of a breach of his obligations to the Corporation,
or (ii) in the case where the Optionee is a director or a
member of the Scientific Board of the Corporation or one of
its Subsidiaries, as the case may be, but is not employed by
either the Corporation or one of its subsidiaries, the
date on which such Optionee ceases to be a member of the
relevant Board of Directors or the Scientific Board for any
reason other than death;
6.2.2 (i) in the case where the Optionee is an officer or employee,
six (6) months following the date on which the Optionee's
employment with the Corporation or any of its Subsidiaries, as
the case may be, is terminated by reason of death or (ii) in
the case where the Optionee is a director or a member of the
Scientific Board of the Corporation or any of its
Subsidiaries, as the case may be, but is not employed by
either the Corporation or any of its Subsidiaries, six (6)
months following the date on which such Optionee ceases to be
a member of the relevant Board of Directors by reason of
death;
6.2.3 in the case where the Optionee is an officer or employee,
thirty (30) days following the date on which the Optionee's
employment with the Corporation or any of its Subsidiaries, as
the case may be, is terminated for any cause or reason other
than those mentioned in paragraphs 6.2.1 and 6.2.2, including,
without limiting the scope of the foregoing, disability,
long-term illness, retirement or early retirement; or
6.2.4 in the case where the Optionee is a supplier of ongoing
services, thirty (30) days following the date on which the
Optionee ceases to act as a supplier of ongoing services to
the Corporation or any of its Subsidiaries, as the case may
be, for any cause or reason.
Such rules shall not be interpreted in such a manner as to extend the
Option Period beyond ten years.
6.3 All rights conferred by an option not exercised at the termination of
the Option Period or from and after any Early Expiry Date shall be
forfeited.
7. EXERCISE OF OPTIONS
7.1 Subject to the provisions of section 6, an option may be exercised in
whole, at any time, or in part, from time to time, during the Option
Period, but in all cases in accordance with the exercise frequency
established by the Board or the Committee and applicable at the time of
the grant.
7.2 An option may be exercised by written notice to the Secretary of the
Corporation. Such notice shall set forth the number of Shares
subscribed and the address to which the certificate evidencing such
Shares is to be delivered. Such notice shall also be accompanied by a
certified cheque made payable to the Corporation in the amount of the
Subscription Price. The Corporation shall cause a certificate for the
number of Shares specified in the notice to be issued in the name of
the Optionee and delivered to the address specified in the notice no
later than 10 business days following the receipt of such notice and
cheque.
8. NO ASSIGNMENT
8.1 No option or interest therein shall be assignable by the Optionee other
than by will or the law of succession.
9. NOT A SHAREHOLDER
9.1 An Optionee shall have no rights as a shareholder of the Corporation
with respect to any Shares covered by his/her option until he/she shall
have become the holder of record of such Shares.
10. OFFER FOR SHARES OF THE CORPORATION
10.1 In the event that, at any time, an offer to purchase is made to all
holders of Shares, notice of such offer shall be given by the
Corporation to each Optionee and all unexercised options will become
exercisable immediately at the Subscription Price, but only to the
extent necessary to enable an Optionee to tender his/her Shares in
response to the offer should the Optionee so desire.
11. EFFECTS OF ALTERATION OF CAPITAL STOCK
11.1 In the event of any change in the number of outstanding Shares of the
Corporation by reason of any stock dividend, stock split,
recapitalization, merger, consolidation, combination or exchange of
Shares or other similar change, an equitable adjustment shall be made
by the Board or the Committee in the maximum number or kind of Shares
issuable under the Plan or subject to outstanding options and in the
Subscription Price of such Shares. Such adjustment will be definitive
and mandatory for the purposes of the Plan.
12. AMENDMENT AND TERMINATION
12.1 The Board may, at any time, with the prior approval of appropriate
regulatory authorities, amend, suspend or terminate the Plan in whole
or in part. Subject to the provisions of section 11, in the event of a
material amendment (including an increase in the maximum number of
Shares issuable under the Plan) or a reduction in the Subscription
Price of an option, the approval of the holders of a majority of the
Shares present and voting in person or by proxy at a meeting of
shareholders of the Corporation shall be obtained.
12.2 In addition to the foregoing, any material amendment to an option held
by an insider (within the meaning of the SECURITIES ACT (Quebec), other
than a person who is an insider solely by virtue of being a director or
senior officer of a Subsidiary of the Corporation) or an associate of
an insider, including a change in the Subscription Price or expiry
date, shall be approved by a majority of votes cast at a meeting of
shareholders, other than votes attaching to Shares beneficially owned
by an Optionee and an Optionee's associates.
12.3 For the purposes of this section 12, an amendment does not include an
accelerated expiry of an option by reason of the fact that an Optionee
ceases to be a director, an officer, an employee or a member of the
Scientific Board.
12.4 The shareholders' approval of an amendment may be given by way of
confirmation at the next meeting of shareholders after the amendment is
made, provided that no Shares are issued pursuant to the amended terms
prior thereto.
13. FINAL PROVISIONS
13.1 The Corporation's obligation to issue options granted or Shares under
the terms of the Plan is subject to all of the applicable laws,
regulations or rules of any governmental agency or other competent
authority in respect of the issuance or distribution of securities and
to the rules of any stock exchange on which the Shares of the
Corporation are listed. Each Optionee shall agree to comply with such
laws, regulations and rules and to provide to the Corporation any
information or undertaking required to comply with such laws,
regulations and rules.
13.2 The participation in the Plan of a director, an officer, an employee or
a member of the Scientific Board of the Corporation or any of its
Subsidiaries shall be entirely optional and shall not be interpreted as
conferring upon a director, an officer, an employee or a member of the
Scientific Board of the Corporation or any of its Subsidiaries any
right or privilege whatsoever, except for the rights and privileges set
out expressly in the Plan. Neither the Plan nor any act that is done
under the terms of the Plan shall be interpreted as restricting the
right of the Corporation or any of its Subsidiaries to terminate the
employment of an officer or employee at any time. Any notice of
dismissal given to an officer or employee at the time his/her
employment is terminated, or any payment in the place and stead of such
notice, or any combination of the two, shall not have the effect of
extending the duration of the employment for purposes of the Plan.
13.3 No director, officer, employee or member of the Scientific Board of the
Corporation or any of its Subsidiaries shall acquire the automatic
right to be granted one or more options under the terms of the Plan by
reason of any previous grant of options under the terms of the Plan.
13.4 The Plan does not provide for any guarantee in respect of any loss or
profit which may result from fluctuations in the price of the Shares.
13.5 The Corporation and its Subsidiaries shall assume no responsibility as
regards the tax consequences that participation in the Plan will have
for a director, an officer, an employee or a member of the Scientific
Board of the Corporation or any of its Subsidiaries, and such persons
are urged to consult their own tax advisors in such regard.
13.6 The Plan and any option granted under the terms of the Plan shall be
governed and interpreted according to the laws of the Province of
Quebec and the laws of Canada applicable thereto.
13.7 Once approved by the Corporation's shareholders, the Plan will modify
the stock option plan adopted by the Corporation on November 7, 1995 as
amended. This Plan confers no other advantage to the beneficiaries of
the stock option plan.
Dated May 29, 2003
STOCK OPTION PLAN
OF AETERNA LABORATORIES INC.-
LES LABORATOIRES AETERNA INC.
SUBSCRIPTION FORM
(Date)
Les Laboratoires AEterna Inc.
1405 boul. du Parc-Technologique
Quebec, Quebec
G1P 4P5
Attention of the Secretary
I the undersigned, ____________________, hereby subscribe for
__________ Subordinate Voting Shares of Les Laboratoires AEterna Inc. (the
"Corporation") under the terms of the Stock Option Plan of the Corporation, out
of the ___________ Subordinate Voting Shares available for purchase by the
undersigned, and I enclose herewith my certified cheque (or money order) made
payable to the order of Les Laboratoires AEterna Inc., in the amount of
________________________________ dollars in payment of the said subscription.
-----------------------------------
(Signature)
-----------------------------------
(Full Address)
-----------------------------------
-----------------------------------
(Telephone)
* The French version of this Schedule shall prevail.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
AETERNA LABORATORIES INC.
Date: May 14, 2003 By: /s/Claude Vadboncoeur
------------------- ---------------------------------
Claude Vadboncoeur
Vice President, Legal Affairs and
Corporate Secretary