Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

EXHIBIT 10.21    
    

August 27,
2003 

CONFIDENTIAL

Mr. Joseph
L. Reinhart

14591 NW Joseph Ct

Portland OR 97229 

	Re:
	Separation Agreement

Dear
Joe: 

        As
we have discussed, your employment with Electro Scientific Industries, Inc. ("ESI" or the "Company") will terminate effective at the close of business on November 30,
2003 (the "Separation Date"). Your last day worked will be August 29, 2003 at which time you resign your position as Vice President Business Development and an Officer of the Company and you
will no longer be be required to come into the office. During the period August 29 through November 30, you will remain an active full-time employee and will continue to
receive your current salary and benefits. 

        In
order to help you to transition to your next opportunity, the terms of a Separation Agreement (the "Agreement") are described below. Under this Agreement, if you choose to accept it,
you would receive severance compensation in the amount of $110,000 as set out below; and you would agree to the terms described below which include a general release of claims. 

A.    Separation Agreement  

	1.
	Resignation

        By
executing this Agreement, you resign your position as Vice President Business Development and as an Officer of ESI or an Officer or Director of any affiliated company of ESI effective
August 29, 2003. You will continue to be employed by the Company and receive your regular pay and benefits through the Separation Date. 

	2.
	Separation Pay

        You
will receive your final regular payroll and payout of your accrued, unused or otherwise unpaid Flexible Time Off on the Separation Date. If you accept the terms of this Agreement,
you will receive severance pay equivalent to 6 months of wages at the $220,000 per annum rate on the Separation Date. 

	3.
	Benefits 

 
	3.1
	Health and Dental Benefits

        Your
regular health and dental coverage will continue through November 30, 2003. As you may know, pursuant to COBRA, a federal law, you may, if eligible, continue your group
health benefits for a period of eighteen (18) months from termination of your employment at your sole expense. Subject to the terms of this Agreement, the Company will pay your COBRA premiums
for coverage through May 31, 2004, or until you find other employment through which you are eligible to receive group medical health insurance coverage, whichever happens first. You agree to
immediately notify the Company in writing upon obtaining such other employment. You will receive additional information explaining rates and your options under COBRA in separate correspondence. 

	3.2
	Other Qualified and Non-Qualified Plans and Programs

        Except
for health and dental benefits described above, effective on the Separation Date, you will cease participation in all benefit plans and programs of the Company, including, but not
limited to, vacation and sick leave programs and all employee stock programs. 

 

	3.3
	Stock Options and Grants

        Your
rights under the Company's Stock Incentive Plans with respect to stock options and stock grants shall be as stated in the plan documents or related agreements. For purposes of stock
option vesting and exercise your termination date will be the Separation Date. Please refer to the stock option agreements and stock option plans previously provided to you for details on your right
to exercise currently vested stock options. 

	3.4
	Deferred Compensation

        You
will receive all amounts owed to you under the Company's Deferred Compensation Plan (subject to applicable taxes and withholding) in accordance with the terms of the plan documents. 

	3.5
	Outplacement Services  

        ESI will provide certain outplacement services to you at its expense in an aggregate amount not to exceed $15,000. You will receive more information on the
outplacement services available to you in separate correspondence. 

	3.6
	No Other Benefits

        You
will not receive any other employee benefits except those specified herein. You acknowledge that you have no vested retirement benefits under any retirement plan or agreement based
on your service to the Company. You agree to waive the right to participate in any Company employee benefit plan and to receive other fringe benefits or separation benefits from ESI. 

	4.
	Release of Claims

	4.1
	Release  

        In consideration for these separation benefits, and except as set forth in Section 4.2 below, you agree to fully release the Company and its subsidiaries,
related corporations, affiliates and joint ventures, partnerships, predecessor and successor organizations and all current and former partners, members, joint venturers, officers, directors,
employees, agents, insurers, shareholders, representatives and assigns from any and all liability, damages or causes of action, direct or indirect, known or unknown including, without limitation, all
claims relating in any way to your employment with the Company or the termination of that employment. This release includes, but is not limited to, any claims for additional compensation, benefits or
wages in any form, damages, reemployment or reinstatement. This release also includes, but is not limited to, all claims for relief or remedy under any state or federal laws, including ERISA, 29 USC
§ 1001 et seq., Title VII of the Civil Rights Act of 1964, 42 USC § 2000e as amended, the Post Civil War Civil Rights Acts, 42 USC §§
1981-88, the Civil Rights Act of 1991, the Equal Pay Act, the Age Discrimination in Employment Act, the Americans With Disabilities Act, the Older Workers' Benefit Protection Act, the
Federal Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act, the Rehabilitation Act of 1973, the Uniformed Services Employment and Reemployment Rights Act, the Fair
Labor Standards Act, Executive Order 11246, and all other laws and contract, tort or other common or statutory law theories and all labor, employment or wage laws of Oregon or any other state. 

	4.2
	Exception to Release  

        Notwithstanding paragraph 4.1, you and the Company agree that nothing in this Release of Claims shall apply to or reduce or eliminate any rights to
indemnity that you now have under statute, contract, policy of insurance, or from any other source of indemnity for any claims that may be made against you, or the defense of such claims. You will
remit invoices for costs related to any indemnity rights to J. Michael Dodson, Vice President Administration and Chief Financial Officer until instructed to do otherwise. We also agree that in the
event any claims are made against you, or investigations made (including any investigations by any regulatory agency) the Company will provide you with full and 

2

 

complete
access to Company records as needed to defend against claims or to respond to any investigation. 

	5.
	Voluntary Release

        You
acknowledge that you have read the Agreement and understand that you are releasing legal rights, including those identified in the release of claims set forth above. You also
acknowledge that, as consideration for executing this Agreement, including the release of claims, you are receiving additional benefits and compensation to which you would not otherwise be entitled.
You are advised that you may choose to seek review and advice regarding this Agreement from an attorney. 

	6.
	Confidentiality and Non-Competition

	6.1
	Preservation and Non-Use of Confidential Information

        You
agree not to discuss this Agreement except with your financial, tax, and legal advisors and with members of your family, and not to discuss Confidential Information obtained during
your employment with the Company. For purposes of this Agreement, "Confidential Information" means any and all confidential or proprietary information concerning the Company or its affiliates, joint
venturers or other related entities, the disclosure of which could disadvantage ESI or which derives value from the fact that it is not publicly known. Confidential Information includes trades secrets
as defined under the Uniform Trades Secrets Act. 

        You
agree not to use Confidential Information, during the term of this Agreement or after its termination, for any personal or business purpose, either for your own benefit or that of
any other person, corporation, government or other entity. 

        You
also agree that you will not disclose or disseminate any Confidential Information, directly or indirectly, at any time during the term of this Agreement or after its termination, to
any person, agency, or court unless compelled to do so pursuant to legal process (e.g., a summons or subpoena) or otherwise required by law and then only after providing the Company with prior notice
and a copy of the legal process. 

        Finally,
you agree that you have already returned or will return upon execution of this agreement any confidential information which is in your possession. 

	6.2
	Non-Competition

        You
agree that you will not for a period through November 30, 2004 directly or indirectly, accept employment or enter into any business relationship of any sort whatsoever
(including, but not limited to, as a consultant, vendor, partner, officer or director, but excluding passive stock investments) with any customer or competitor of the Company or any entity with which
the Company has done business or with whom you know the Company intends to do business within the twelve (12) months following the Separation Date. You specifically acknowledge and agree that
the terms of this provision are reasonable in every respect and, in particular, because of the competitive and specialized nature of the Company's business, that it is reasonable not to include any
geographic limitation in this provision. 

	7.
	Litigation Defense

        In
the event the Company requests assistance, you agree to assist in defense of ongoing or future litigation or claims about which you have knowledge, at the Company's expense for out of
pocket costs. 

	8.
	Dispute Resolution  

        This Agreement shall be construed in accordance with and governed by the statutes and common law of the state of Oregon. Any disputes arising in connection with
the terms or enforcement of this Agreement shall be resolved by confidential mediation or binding arbitration in accordance with the 

3

 

procedures
of the American Arbitration Association or other procedures agreed upon by you and the Company. The costs of mediation and arbitration shall be borne equally by you and the Company. 

	9.
	Acknowledgement

        You
acknowledge that this Agreement contains the entire agreement and understanding between you and the Company and supersedes and replaces all prior negotiations and agreements
concerning the subjects of this Agreement. You acknowledge that (a) you have read the Agreement and understand the effect of your release and that you are releasing legal rights; (b) you
have had adequate time to consider this Agreement (as set out below); (c) as consideration for executing this Agreement, you have received additional benefits and compensation of value to which
you would not otherwise be entitled; and (d) you have been, and hereby are, advised in writing to review this Agreement with legal counsel of your choice. 

	10.
	Time for Consideration of Offer and Agreement

        You
acknowledge that the Company provided you this Agreement on or before August 29, 2003 and that this offer provided you with a period of at least twenty-one
(21) days, or until September 19, 2003, from the date of receipt to consider the offer and this Agreement (the "Consideration Period"). In order to be eligible for the severance pay and
benefits offered under this Agreement, you must execute and return this Agreement no later than September 19, 2003. After you execute this Agreement, you have a period of seven (7) days
in which you may revoke this Agreement in writing delivered to Barry Harmon, President & Chief Executive Officer or his designee and void your release of claims. In the event you have not
executed this Agreement by September 19, 2003 or if you revoke it, this offer will expire and you will not be entitled to the severance pay and benefits offered under this Agreement. If you
sign this Agreement by September 19, 2003 and do not revoke it, it will become effective and irrevocable on the 8th day after you sign it (the "Effective Date"), and only then will you be
entitled to the severance pay and benefits offered herein. 

	 	 	Sincerely,
	

 	
 	
ELECTRO SCIENTIFIC INDUSTRIES, INC.
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Barry L. Harmon
 President and Chief Executive Officer

        I
have read and understand the foregoing Agreement and, by signing below, I voluntarily enter into this Agreement and understand that I am waiving and releasing legal claims that I may
have against the Company. 

	Accepted	 	 	 	, 2003	 	 	 	 
	 	 	
	 	 	 	 	 	 
	

Joseph L. Reinhart	
 	

 
	

 Signature	
 	

 

4

QuickLinks

EXHIBIT 10.21Exhibit 4.2

 

Form F-10

 

 

ACETEX CORPORATION

 

MANAGEMENT PROXY CIRCULAR

 

as of April 21, 2003

 

Solicitation
of Proxies by Management

 

This management proxy
circular is furnished in connection with the solicitation by the management of
ACETEX CORPORATION (the “Corporation”) of proxies to be used at the Annual
General Meeting of shareholders of the Corporation to be held on the 28th
day of May, 2003 at 10:00 a.m. at Pan Pacific Hotel, 999 Canada Place,
Vancouver, British Columbia, and at any adjournment thereof for the purposes
set forth in the accompanying Notice of Annual General Meeting.  The cost of this solicitation will be borne
by the Corporation.

 

Appointment
of Proxyholders and Revocation of Proxies

 

The persons named in the
accompanying form of proxy are officers of the Corporation.  A shareholder has the right to appoint a
person, who need not be a shareholder of the Corporation, other than the
persons designated in the accompanying form of proxy, to attend and act on
behalf of the shareholder at the meeting. 
To exercise this right, a shareholder may either insert such other
person’s name in the blank space provided in the accompanying form of proxy, or
complete another appropriate form of proxy.

 

To be valid, a proxy must be
dated and signed by the shareholder or the shareholder’s attorney authorized in
writing.  The proxy, to be acted upon,
must be deposited with the Corporation, c/o its agent, Computershare Trust
Company of Canada, 600, 530 – 8th Avenue S.W., Calgary, Alberta T2P 3S8 or 100
University Avenue, 11th Floor, Toronto, Ontario M5J 2Y1, by the close of
business on the last business day prior to the date on which the meeting or any
adjournment thereof is held, or with the chairman of the meeting on the day of
the meeting or any adjournment thereof.

 

A shareholder who has given
a proxy may revoke it by depositing an instrument in writing (including another
proxy) executed by the shareholder or by the shareholder’s attorney authorized
in writing at the registered office of the Corporation at any time up to and
including the last business day prior to the day the meeting or any adjournment
thereof is to be held, or with the chairman of the meeting on the day of the
meeting at any time before it is exercised on any particular matter or in any other
manner permitted by law including attending the meeting in person.

 

Voting by
Proxies

 

On any ballot that may be
called for regarding the election of directors and appointment of auditors, the
common shares (“shares”) represented by the enclosed form of proxy will be
voted or withheld from voting in accordance with the instructions of the
shareholder indicated thereon.  In the absence of such instructions with regard to the
election of directors or the appointment of auditors, the shares will be voted for
the election of the persons nominated for election as directors and the
appointment of auditors, in each case, as referred to in this management proxy
circular.

 

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 Annual General
Meeting, and with respect to any other matter which may properly come before
the meeting.  As of the date of this
management proxy circular, management is not aware of any such amendment,
variation or other matter proposed or likely to come before the meeting.  However, if any such amendment, variation or
other

 

1

 

matter properly comes before
the meeting, it is the intention of the persons named in the enclosed form of
proxy to vote on such other business in accordance with their judgment.

 

Voting
Shares and Principal Holders

 

The number of shares
entitled to be voted on each matter to be acted on at the meeting as at
April 21, 2003 (the “Record Date”) was 25,499,864.  Each shareholder is entitled to one vote for
each share shown as registered in the shareholder’s name on the list of
shareholders prepared as of the Record Date. 
However, in the event of any transfer of shares by any such shareholder
after such date, the transferee is entitled to vote those shares if the
transferee produces properly endorsed share certificates or otherwise
establishes that the transferee owns the shares, and requests Computershare Trust
Company of Canada as transfer agent at 600, 530 – 8th Avenue S.W., Calgary,
Alberta T2P 3S8 or 100 University Avenue, 11th Floor, Toronto, Ontario M5J 2Y1
to include the transferee’s name in the shareholders’ list not later than ten
days before the meeting.

 

To the knowledge of the
directors and officers of the Corporation, the persons who beneficially own or
exercise control or direction over shares carrying more than 10% of the votes
attached to all the shares of the Corporation entitled to be voted at the
meeting are as follows:

 

Percentage
of Common Share Ownership Over 10%

 

	
  Name of Shareholder

  	
   

  	
  Number of
  Common Shares

  	
   

  	
  % of
  Common Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Brooke
  N. Wade

  	
   

  	
  8,040,846

  	
   

  	
  31.5

  	
  %

  
	
  Stephens
  Group, Inc.

  	
   

  	
  3,022,000

  	
   

  	
  11.9

  	
  %

  

 

Election of
Directors

 

The number of directors of
the Corporation to be elected at the meeting is five.  Each nominee for election as director is currently a director of
the Corporation.

 

The following table lists
certain information concerning the persons proposed to be nominated for
election as directors.  The information
as to common shares has been furnished by the respective nominees individually.

 

	
  Name and Municipality of

  Residence

  	
   

  	
  Present

  Positions and

  Offices With

  The

  Corporation

  	
   

  	
  Date First

  Became A

  Director

  	
   

  	
  Present
  Principal

  Occupation

  	
   

  	
  Number of

  Common

  Shares

  Beneficially

  Owned or

  Controlled

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Brooke N. Wade,

  Vancouver, B.C.

  	
   

  	
  Chairman, Chief Executive
  Officer and Director

  	
   

  	
  December 1, 1994

  	
   

  	
  Chairman and Chief
  Executive Officer of the Company.

  	
   

  	
  8,040,846

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kenneth E. Vidalin,

  Vancouver, B.C.

  	
   

  	
  President, Chief Operating
  Officer and Director

  	
   

  	
  December 1, 1994

  	
   

  	
  President and Chief
  Operating Officer of the Company.

  	
   

  	
  2,530,565

  

 

2

 

	
  Name and Municipality of

  Residence

  	
   

  	
  Present

  Positions and

  Offices With

  The

  Corporation

  	
   

  	
  Date First

  Became A

  Director

  	
   

  	
  Present
  Principal

  Occupation

  	
   

  	
  Number of

  Common

  Shares

  Beneficially

  Owned or

  Controlled

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  John B. Zaozirny, Q.C.

  Calgary, Alberta

  	
   

  	
  Director

  	
   

  	
  January 19, 1995

  	
   

  	
  Vice Chairman Canaccord
  Capital Corporation & Counsel, McCarthy Tétrault.

  	
   

  	
  36,960

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  John L. Garcia, Ph.D.

  London, U.K.

  	
   

  	
  Director

  	
   

  	
  May 11, 1995

  	
   

  	
  Managing Director AEA
  Investors Inc.

  	
   

  	
  536,960

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pierre Dutheil Paris,

  France

  	
   

  	
  Director

  	
   

  	
  November 22, 1995

  	
   

  	
  Independent corporate
  advisor.

  	
   

  	
  36,960

  

 

Management does not
anticipate that any of the nominees for election as directors will be unable to
serve as a director, but if that should occur for any reason prior to the
meeting, the persons named in the enclosed form of proxy reserve the right to
vote for another nominee in their discretion. 
Each director elected will hold office until the next Annual General
Meeting or until his successor is elected or appointed, unless his office is
earlier vacated.

 

Remuneration
of Directors and Officers

 

(A)                               Compensation of Named
Executive Officers

 

The aggregate compensation
paid to the five highest paid officers and employees of the Corporation (other
than directors) for the year ending December 31, 2002 was US$1,360,578.  The compensation disclosed in the following
table is that paid to the Chief Executive Officer and the three other executive
officers of the Company for the Company’s three most recently completed financial
years (collectively referred to as the “Named Executive Officers”).

 

3

 

SUMMARY COMPENSATION TABLE

 

	
   

  	
   

  	
   

  	
   

  	
  Annual
  Compensation

  	
   

  	
  Long-Term

  Compensation

  Awards

  	
   

  	
   

  	
   

  
	
  Name and

  Principal

  Position

  	
   

  	
  Year

  	
   

  	
  Salary

  	
   

  	
  Bonus ($)

  	
   

  	
  Other
  Annual

  Compensation

  ($)

  	
   

  	
  Options

  Granted (#)

  	
   

  	
  All Other

  Compensation

  ($)

  	
   

  
	
  Brooke
  N. Wade,

  	
   

  	
  2002

  	
   

  	
  $US

  	
  318,271

  	
   

  	
  $US

  	
  41,250

  	
   

  	
  $US

  	
  9,426

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  
	
  Chairman
  and Chief

  	
   

  	
  2001

  	
   

  	
  $US

  	
  325,000

  	
   

  	
  $US

  	
  165,000

  	
   

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  
	
  Executive
  Officer

  	
   

  	
  2000

  	
   

  	
  $US

  	
  325,000

  	
   

  	
  $US

  	
  162,500

  	
   

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kenneth
  E. Vidalin,

  	
   

  	
  2002

  	
   

  	
  $US

  	
  243,271

  	
   

  	
  $US

  	
  25,000

  	
   

  	
  $US

  	
  9,254

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  
	
  President
  and Chief

  	
   

  	
  2001

  	
   

  	
  $US

  	
  250,000

  	
   

  	
  $US

  	
  100,000

  	
   

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  
	
  Operating
  Officer

  	
   

  	
  2000

  	
   

  	
  $US

  	
  250,000

  	
   

  	
  $US

  	
  125,000

  	
   

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Donald
  K. Miller,

  	
   

  	
  2002

  	
   

  	
  $Cdn.

  	
  240,000

  	
   

  	
   

  	
  NIL

  	
   

  	
  $Cdn.

  	
  6,263

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  
	
  Chief
  Financial

  	
   

  	
  2001

  	
   

  	
  $Cdn.

  	
  240,000

  	
   

  	
  $Cdn.

  	
  150,000

  	
   

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  
	
  Officer

  	
   

  	
  2000

  	
   

  	
  $Cdn.

  	
  240,000

  	
   

  	
  $US

  	
  100,000

  	
   

  	
   

  	
  NIL

  	
   

  	
  175,000

  	
   

  	
  NIL

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jean
  Pierre Soufflet

  	
   

  	
  2002

  	
   

  	
  $US

  	
  260,472

  	
   

  	
  $US

  	
  90,181

  	
   

  	
  $US

  	
  1,729

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  
	
   

  	
   

  	
  2001

  	
   

  	
  $US

  	
  241,810

  	
   

  	
  $US

  	
  31,686

  	
   

  	
  $US

  	
  1,638

  	
   

  	
  100,000

  	
   

  	
  NIL

  	
   

  
	
   

  	
   

  	
  2000

  	
  (1)

  	
  $US

  	
  79,781

  	
   

  	
   

  	
  NIL

  	
   

  	
  $US

  	
  3,545

  	
   

  	
  100,000

  	
   

  	
  NIL

  	
   

  

 

(1)                                  Mr. Soufflet’s employment commenced
September 1, 2000.

 

4

 

(B)                               Options to Purchase
Securities

 

The Employee Stock Option
Plan allows the Board of Directors to determine eligibility for options, the
number of shares to be covered by each option and the terms of each option at
its discretion.  The exercise price may
be fixed by the directors but in no case may be less than the closing market
price on the day preceding the date of grant, or if no trades occur on such
day, the next previous day on which trading took place.  The number of options that may be granted
pursuant to the Plan is 3,950,000 and the aggregate number of options that may
be granted to any one person may not exceed 5% of the number of issued and
outstanding shares of the Corporation. 
Neither Mr. Vidalin nor Mr. Wade may receive any additional options
under the Plan as amended.  Any option
awarded under the Plan has a maximum term of ten years from the date on which
it is granted and all such options are non-transferable.

 

Aggregated
Option Exercises During the Most Recent Completed Financial Year and Financial
Year –end Values

 

	
  Name

  (a)

  	
   

  	
  Securities
  Acquired

  on Exercise

  (#)

  (b)

  	
   

  	
  Aggregate
  Value

  Realized

  ($ )

  (c)

  	
   

  	
  Unexercised

  Options at

  FY-End

  (#)

  Exercisable/

  Unexercisable

  (d)

  	
   

  	
  Value of
  Exercised in-the-

  Money Options

  at FY-End

  ($ )

  Exercisable

  (e)

  	
   

  
	
  Brooke
  N. Wade

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  
	
  Kenneth
  E. Vidalin

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  	
  781,088/NIL

  	
   

  	
  NIL

  	
   

  
	
  Donald
  K. Miller

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  	
  206,250/43,750

  	
   

  	
  $

  	
  153,750

  	
   

  
	
  Jean
  Pierre Soufflet

  	
   

  	
  NIL

  	
   

  	
  NIL

  	
   

  	
  125,000/75,000

  	
   

  	
  NIL

  	
   

  
											

 

(C)  Employment Contracts

 

The Corporation has entered
into contracts with Brooke N. Wade as Chairman and Chief Executive Officer and
with Kenneth E. Vidalin as President and Chief Operating Officer, which provide
that each will receive the equivalent of two years’ compensation upon
dismissal.  The agreements also prevent
each of the Officers competing with the Corporation for a period of two years
from the date of termination of employment. 
Mr. Soufflet entered into a written contract of employment on
September 1, 2000 for an unlimited period.  The contract provides for the equivalent of 3 years’ salary upon
dismissal or change of contract before September 1, 2003 and 2 years
salary if such events occur before September 1, 2005.  Mr. Miller, the Chief Financial Officer of
the Corporation has not entered into a written agreement of employment.

 

(D)  Indebtedness of Directors
and Officers

 

Pierre Dutheil received a
loan of $210,000 on July 11, 1995 which bears interest at 8% per
annum.  In each case, the purpose of the
loan was to allow the borrower to acquire securities of the Corporation.  As at the date hereof the aggregate amount
of indebtedness of all officers and directors of the Corporation is $210,000.

 

The following table sets
forth the current indebtedness and the largest aggregate amount of any
indebtedness of each director and officer to the Corporation or any of its
subsidiaries since the commencement of the Corporation’s last completed
financial year:

 

5

 

	
  Name and Principal

  Position

  	
   

  	
  Largest
  Amount

  Outstanding during

  year ended

  December 31, 2002

  	
   

  	
  Amount

  Outstanding

  as at the Date

  Hereof

  	
   

  	
  Number of

  Common

  Shares

  Purchased

  	
   

  	
  Security
  For

  Indebtedness

  	
   

  
	
  Pierre
  Dutheil

  Director

  	
   

  	
  $

  	
  210,000

  	
   

  	
  $

  	
  210,000

  	
   

  	
  36,960

  	
   

  	
  36,960
  Common Shares

  	
   

  
												

 

(E)                                 Performance Graph

 

The following graph assumes
that $100 was invested on December 31, 1997 in common shares of the
Corporation and in common shares of the S&P/TSX Composite Index (formerly
the TSE 300 Composite Index).

 

 

	
  At December 31

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  
	
  Acetex
  common

  	
   

  	
  100

  	
   

  	
  23.85

  	
   

  	
  46.92

  	
   

  	
  61.54

  	
   

  	
  46.15

  	
   

  	
  35.77

  	
   

  
	
  S&P/TSX
  Composite Index

  	
   

  	
  100

  	
   

  	
  92.22

  	
   

  	
  109.51

  	
   

  	
  147.19

  	
   

  	
  106.77

  	
   

  	
  98.57

  	
   

  

 

(F)                                 Corporate Governance

 

MANDATE FOR BOARD OF DIRECTORS

 

The Corporation has adopted
a Mandate for the Board of Directors which sets out the specific
responsibilities to be discharged by the Corporation’s directors and the
individual roles expected of them.

 

Board Responsibilities

 

The Board of Directors is
explicitly responsible for the stewardship of the Corporation. To discharge
this obligation, the Board will assume responsibility in the following areas:

 

Strategic
Planning – Process

 

•                                          Provide input to management on emerging
trends and issues.

•                                          Review and approve management’s strategic
plans.

 

6

 

•                                          Review and approve the Corporation’s
financial objectives, plans and actions, including significant capital
allocations and expenditures.

 

Monitoring
Tactical Progress

 

•                                          Monitor corporate performance against the
strategic and business plans, including assessing operating results to evaluate
whether the business is being properly managed.

 

Risk
Assessment

 

•                                          Identify the principal risks of the
Corporation’s businesses and ensure that appropriate systems are in place to
manage these risks.

 

Senior
Level Staffing

 

•                                          Select, monitor, evaluate the Chief Executive
Officer and other senior executives, and ensure management succession.

 

Integrity

 

•                                          Ensure the integrity of the Corporation’s
internal control and management information systems.

•                                          Ensure ethical behaviour and compliance with
laws and regulations, audit and accounting principles, and the Corporation’s
own governing documents.

 

Material
Transactions

 

•                                          Review and approve material transactions not
in the ordinary course of business.

 

Monitoring
Board Effectiveness

 

•                                          Assess its own effectiveness in fulfilling
the above and other Board responsibilities, including monitoring the effectiveness
of individual directors.

 

Other

 

•                                          Perform such other functions as prescribed by
law or assigned to the Board in the Corporation’s governing documents.

 

Director Attributes

 

To execute these Board
responsibilities, directors must possess certain characteristics and traits:

 

Integrity
and Accountability

 

•                                          Directors must demonstrate high ethical
standards and integrity in their personal and professional dealings, and be
willing to act on - and remain accountable for - their boardroom decisions.

 

7

 

Informed
Judgment

 

•                                          The ability to provide counsel on a broad
range of issues relevant to the Corporation’s business in order to understand
the assumptions upon which the strategic and business plans are based and to
form an independent judgment.

 

Financial
Literacy

 

•                                          Directors must have a high level of financial
literacy and should know how to read financial statements.

 

Communication

 

•                                          Openness to others’ opinions and the
willingness to listen should rank as highly as the ability to communicate
persuasively. Directors must approach others assertively, responsibly and
supportively, and be willing to put questions in a manner that encourages open
discussion.

 

Track
Record and Experience

 

•                                          Directors must bring a history of achievement
that reflects high standards for themselves and others.

 

Stock
Ownership

 

•                                          Directors must own or have plans to acquire
stock of the Corporation with have a value of approximately 2 times the
directors annual compensation.

 

Composition
of the Board of Directors

 

The Board of Directors
currently consists of five members.  The
articles of the Corporation provide for a minimum of three directors and a
maximum of ten.  The Board of Directors
is responsible to fix, from time to time, the number of directors within the
minimum and maximum number permitted by the articles of the Corporation.

 

A majority of the Board of
Directors are unrelated.  Two of the
current directors (Brooke N. Wade and Kenneth E. Vidalin) hold management
responsibilities in the Corporation and are therefore considered to be related
directors.  Three of the directors (John
B. Zaozirny, Q.C., John L. Garcia and Pierre Dutheil) were, during the 2001
fiscal year, independent of management and free from any interest and any
business or other relationship (including interests or relationships with the
Corporation’s significant shareholder) which could, or could reasonably be
perceived to, materially interfere with their ability to act with a view to the
best interests of the Corporation, other than interests and relationships
arising from shareholdings.

 

Relationship
to Management

 

The Board of Directors
together with the CEO works towards the development of position descriptions
for the Board and for the CEO including the definition of limits to
management’s responsibilities.  In
addition, the Board works with the CEO to develop the corporate objectives for
which the CEO will be responsible.

 

8

 

Brooke N. Wade is Chairman of
the Board and Chief Executive Officer of the Corporation.  Mr. Wade currently holds directly or
indirectly or beneficially controls approximately 30.4% of the outstanding
shares.  In order to ensure that the
Board of Directors can function independently of management, the responsibility
for administering the Board’s relationship to management has been assigned to
the Human Resources and Corporate Governance Committee, all are members of
which are unrelated directors.

 

Committees
of the Board of Directors

 

The Board of Directors does
not have an Executive Committee.  It has
formed three Committees, the functions and membership of which are as follows:

 

Audit Committee
-     The Audit Committee is charged with the
responsibility of reviewing all annual financial statements and if the
Committee so determines each of the Corporation’s interim financial statements
and to report thereon to the Board.  The
Audit Committee inquires into matters affecting financial reporting, systems of
internal accounting and financial controls, audit procedures and audit plans
and makes recommendations to the Board with respect to these and similar
financial matters.  The Audit Committee
has the responsibility of ensuring that management has implemented an effective
system of internal control.  Members of
the Committee are to review financial plans and objectives of the Corporation
from time to time and to review with management the risks inherent in the
Corporation’s business and any risk management programs that may be desirable or
necessary.  The Audit Committee has
direct communication with the Corporation’s internal and external
auditors.  The Audit Committee is
composed of John B. Zaozirny, Q.C., John L. Garcia and Pierre Dutheil, all of
whom are unrelated directors.

 

Human Resources and
Corporate Governance Committee -     The Human
Resources and Corporate Governance Committee is charged with hiring persons to
senior executive positions, succession planning, terms of employment and
compensation, including recommendations to the Board as to awards under the
Corporation’s Employee Stock Option Plan. 
The Committee is responsible for recommending nominees for appointment
to the Board and determining the adequacy and form of compensation for members
of the Board.  The Committee is responsible
to assess the effectiveness of the Board as a whole, the effectiveness of the
Committees of the Board and the contribution of individual directors and to
review the appropriate size of the Board. 
The Committee also ensures that new directors receive an
orientation  program and education
program.  The Committee is charged with
administering the relationship of the Board and management, monitoring
shareholder concerns, corporate governance issues and  formalizing responses to Toronto Stock Exchange guidelines.   The Human Resources and Corporate
Governance Committee is comprised of John L. Garcia, John B. Zaozirny, Q.C.,
and Pierre Dutheil, all whom are unrelated directors.  Mr. Dutheil is indebted to the Corporation as discussed below.

 

Environment Committee
-     The Environment Committee of the Board is
responsible to review the policies and practices of the Corporation with
respect to matters relating to the environment, occupational health and safety.  The Committee is composed of Pierre Dutheil,
John L. Garcia, John B. Zaozirny, Q.C. and Kenneth E. Vidalin.

 

CODE OF ETHICS APPLICABLE TO THE CHIEF EXECUTIVE OFFICER & CHIEF
FINANCIAL OFFICER

 

Acetex requires ethical
conduct in the practice of financial management throughout the world. The Chief
Executive Officer and Chief Financial Officer, hold an important and elevated
role in corporate governance. They are uniquely positioned and empowered to
ensure that the Company’s, and its

 

9

 

stockholders, interests are
appropriately balanced, protected and preserved. This code provides principles
that these officers must adhere to and advocate.

 

“As the Chief Executive
Officer or Chief Financial Officer, I will:

 

•                                          Embody and enforce this Code of Ethics.

 

•                                          Ensure that this Code of Ethics is
communicated at least annually throughout all financial departments.

 

•                                          Formally and promptly communicate any breach
of this Code of Ethics to the Board of Directors.

 

•                                          Act at all times with honesty, integrity and
independence, avoiding actual or apparent conflicts of interest in personal and
professional relationships.

 

•                                          Discuss with the Board of Directors, in
advance any transaction that reasonably could be expected to give rise to a
conflict of interest.

 

•                                          Provide full, fair, accurate, complete,
objective, timely and understandable financial disclosures in internal reports
as well as documents filed or submitted to the Securities Commissions in Canada
any other government agency or self-regulatory organization, or used in public
communications.

 

•                                          Comply with all applicable rules and
regulations including the Toronto Stock Exchange and other appropriate private
and public regulatory agencies.

 

•                                          Comply with the Company’s policies and
procedures.

 

•                                          Act in good faith, responsibly, with due
care, competence, diligence, and without knowingly misrepresenting material
facts or allowing my better judgment to be subordinated.

 

•                                          Protect and respect the confidentiality of
information acquired in the course of my work except when authorized or
otherwise legally obligated to disclose. Confidential information acquired in
the course of my work will not be used for personal advantage. Be recognized as
a responsible partner among peers.

 

•                                          Responsibly use and control assets and other
resources employed or entrusted to my supervision.

 

By signing this statement, I
acknowledge that I have read, understand, and agree to adhere to this Code of
Ethics. Violation of this Code may be grounds for termination from the Company.

 

Signed by Chief Executive
Officer and Chief Financial Officer

 

CORPORATE GOVERNANCE PRACTICES

 

Extensive regulatory changes
are in progress, many arising from the United States Sarbanes-Oxley Act and
anticipated further changes arising from discussions between the Toronto Stock
Exchange (TSX) and

 

10

 

the Ontario Securities
Commission. The Corporation continues to follow the changes and as
clarification on each is available, appropriate action will be contemplated.

 

Below the Corporation’s
governance procedures are compared with the TSX corporate governance disclosure
guidelines, including the proposed amendments published in April 2002.

 

	
  Toronto Stock Exchange Guideline

  	
   

  	
  Corporation

  Alignment

  	
   

  	
  The
  Corporation’s Governance Procedures

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  The board should explicitly
  assume responsibility for stewardship of the Corporation and specifically
  for:

  	
   

  	
  yes

  	
   

  	
  The Board, either directly
  or through Board committees, is responsible for management or supervision of
  management of the business and affairs of the Corporation with the objective
  of enhancing shareholder value. The Board has adopted a formal mandate
  setting out its responsibilities.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  adoption of a strategic
  planning process and approval of a strategic plan which takes into account
  the opportunities and risks of the business

  	
   

  	
  yes

  	
   

  	
  The Board approves strategy
  plans of the Corporation. These plans include details of the opportunities
  and risks of the business. A strategy session held in 2002 allowed the
  directors to appreciate planning priorities and provided an opportunity for
  directors to give constructive feedback to management. Throughout the year,
  directors also receive strategic updates at regular Board meetings.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  identification of the
  principal risks of the Corporation’s business and ensuring implementation of
  appropriate systems to manage those risks

  	
   

  	
  yes

  	
   

  	
  The Board, through its
  Audit Committee, considers risk issues and approves corporate policies
  addressing the management of the risk and return from credit, market,
  liquidity and operational risk and such other risk management controls as are
  considered by the Committee to be appropriate for prudent business practice.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  succession planning,
  including appointing, training and monitoring senior management

  	
   

  	
  yes

  	
   

  	
  The Board’s Human Resources
  and Compensation Committee reviews succession planning for senior management,
  including development and monitoring of senior management. The Board appoints
  senior management.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  communications policy

  	
   

  	
  yes

  	
   

  	
  The Board
  has approved a Disclosure Policy covering the timely dissemination of all
  material information. The policy establishes consistent guidance for
  determining what information is material, how it is to be disclosed and, to
  avoid selective disclosure, making all material disclosures on a widely
  disseminated basis. The Corporation seeks to communicate with its
  shareholders and other stakeholders through its annual report, quarterly
  reports, annual information form, news releases, web site, briefing sessions
  and group meetings.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  integrity of internal
  control and management information systems

  	
   

  	
  yes

  	
   

  	
  The Audit Committee of the
  Board requires management to implement and maintain appropriate systems of
  internal control. The Committee meets with the Chief Financial Officer and
  the Corporation’s external auditors to assess the adequacy and effectiveness
  of these systems. In addition the Board and the Audit Committee have arranged
  for the Corporation to have an internal auditor who will report directly to
  the Audit Committee and the Board.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  A majority of directors
  should be “unrelated”.

  	
   

  	
  yes

  	
   

  	
  Three of five directors
  standing for election are “unrelated” and have no connection or professional
  association with the Corporation other than as directors. These directors
  have no other connection or professional relationship with each other.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  The board has
  responsibility for applying the definition of “unrelated director” to each
  individual director

  	
   

  	
  yes

  	
   

  	
  Based on information
  provided by directors as to their individual circumstances, the Board has
  determined that two of the 5 persons proposed for election to the Board for
  2003

  

 

11

 

	
  Toronto Stock Exchange Guideline

  	
   

  	
  Corporation

  Alignment

  	
   

  	
  The
  Corporation’s Governance Procedures

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  and for disclosing annually
  the analysis of the application of the principles supporting this definition
  and whether the board has a majority of unrelated directors.

  	
   

  	
   

  	
   

  	
  are “related”. These related
  persons are the Chairman and Chief Executive Officer (Mr. Wade) and the
  President and Chief Operating Officer (Mr. Vidalin).

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  The board should appoint a
  committee of directors composed exclusively of outside directors, a majority
  of whom are “unrelated” directors, with responsibility for proposing new
  nominees to the board and for assessing directors on an ongoing basis.

  	
   

  	
  yes

  	
   

  	
  The Human Resources and
  Corporate Governance Committee is composed exclusively of outside directors,
  all of whom are “unrelated” to the Corporation. This Committee is responsible
  for identifying and recommending to the Board suitable director candidates.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  The board should implement
  a process, to be carried out by an appropriate committee, for assessing the
  effectiveness of the board, its committees and the contribution of individual
  directors.

  	
   

  	
  yes

  	
   

  	
  The Board annually assesses
  its own effectiveness and that of its committees and individual directors.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  The board should provide an
  orientation and education program for new directors.

  	
   

  	
  yes

  	
   

  	
  On an ongoing basis,
  presentations are made to all directors on various aspects of the
  Corporation’s operations. Site visits to the Corporation’s plants are
  arranged for all directors periodically.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  The board should examine
  its size and undertake, where appropriate, a program to establish the size of
  the board which facilitates effective decision-making

  	
   

  	
  yes

  	
   

  	
  The Board is of the view
  that the current membership has the necessary breadth and diversity of experience
  and its current size is appropriate to provide for effective decision-making.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  The board of directors
  should review the adequacy and form of compensation of directors in light of
  the risks and responsibilities involved in being an effective director.

  	
   

  	
  yes

  	
   

  	
  The Human Resources and
  Corporate Governance Committee of the Board annually reviews the compensation
  paid to directors to ensure that it is competitive, aligns the interests of
  directors with those of shareholders and is consistent with the risks and
  responsibilities involved in being an effective director.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Committees of the board
  should generally be composed of outside directors, a majority of whom are
  unrelated although some board committees may include one or more inside directors.

  	
   

  	
  yes

  	
   

  	
  All Board committees are
  composed solely of outside directors who are “unrelated”, except for the
  Environment Committee, of which the President and Chief Operating Officer is
  one of three members.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  The board should assume
  responsibility for, or assign to a committee of directors responsibility for,
  developing the approach to corporate governance issues. This committee would,
  among other things, be responsible for the Corporation’s response to these
  governance guidelines.

  	
   

  	
  yes

  	
   

  	
  The Board monitors best
  practices for governance and annually reviews the Corporation’s governance
  practices. The Board is responsible for the Corporation’s response to these
  governance guidelines.

  

 

12

 

	
  Toronto Stock Exchange Guideline

  	
   

  	
  Corporation

  Alignment

  	
   

  	
  The
  Corporation’s Governance Procedures

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  The board of directors,
  together with the chief executive officer, should develop position
  descriptions for the board and for the chief executive officer, including the
  definition of the limits to management’s responsibilities. The board should
  approve or develop corporate objectives which the chief executive officer is
  responsible for meeting and assess the chief executive officer against these
  objectives.

  	
   

  	
  yes

  	
   

  	
  Position descriptions are
  being developed for the Board and the Chief Executive Officer. These
  Guidelines will define the roles and responsibilities of the Board and
  management and delineate the lines of accountability that exist within the
  Corporation. The guidelines will set out those matters requiring Board
  approval and those of which the Board must be advised following action by
  management. The Human Resources and Corporate Governance Committee reviews
  and approves corporate objectives which the Chief Executive Officer is
  responsible for meeting. The Committee also conducts the annual assessment of
  the Chief Executive Officer’s performance against these objectives for
  purposes of determining the bonus.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  The board should implement
  structures and procedures which ensure that it can function independently of
  management. An appropriate structure would be to (i) appoint a chair of the
  board who is not a member of management with responsibility to ensure that
  the board discharges its responsibilities or (ii) assign this responsibility
  to an outside director, sometimes referred to as the “lead director”. The
  chair or lead director should ensure that the board carries out its
  responsibilities effectively which will involve the board meeting on a regular
  basis without management present and may involve assigning the responsibility
  for administering the board’s relationship to management to a committee of
  the board.

  	
   

  	
  yes

  	
   

  	
  Given that the Chairman and
  Chief Executive Officer have a substantial interest in the Corporation the
  Board believes that the interests of the Corporation and the management are
  aligned and that it is not necessary or appropriate to have any non-executive
  chair or lead directors. However, the unrelated directors of the Board must
  meet but do meet separate and apart from management to discuss the
  Corporations affairs and the performance of management.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  The audit committee should
  be composed of only unrelated directors. All of the members of the committee
  should be financially literate and at least one member should have accounting
  or related financial expertise. Each board shall determine the definition of
  and criteria for “financial literacy” and “accounting or related financial
  expertise”. The board should adopt a charter for the audit committee which
  sets out the roles and responsibilities of the committee. The audit committee
  should have direct communication channels with the internal and the external
  auditors to discuss and review specific issues as appropriate. The audit committee
  duties should include oversight responsibility for management reporting on
  internal control. While it is management’s responsibility to

  	
   

  	
  yes

  	
   

  	
  The Audit Committee is
  composed of unrelated directors and has determined that all members of the
  Committee are financially literate. Two of three members have accounting or
  related financial expertise. The roles and responsibilities of the Audit
  Committee are set out in the Committee’s mandate and an overview of those
  roles and responsibilities is included in the Report of the Audit Committee
  in this Proxy Circular.

  

  The Audit Committee meets separately (without the management present) with
  the Chief Financial Officer and Auditors and discusses with them the various
  aspects of the Committee’s mandate. 
  In 2003 the Audit Committee also plans to meet with the Corporation’s
  newly appointed internal auditor.

  

  As outlined in its mandate, the Audit Committee requires management to
  implement and maintain appropriate internal controls. The Committee approves
  the internal control policy and the audit planning process.

  

  The Audit Committee mandate, which sets out the roles and responsibilities of
  the Committee, is reviewed by the Board annually.

  

 

13

 

	
  Toronto Stock Exchange Guideline

  	
   

  	
  Corporation

  Alignment

  	
   

  	
  The
  Corporation’s Governance Procedures

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  design and implement an
  effective system of internal control, it is the responsibility of the audit
  committee to ensure that management has done so.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  The board should implement
  a system to enable an individual director to engage an outside advisor at the
  Corporation’s expense in appropriate circumstances. The engagement of the
  outside advisor should be subject to the approval of an appropriate committee
  of the board.

  	
   

  	
  yes

  	
   

  	
  Individual directors may,
  with the concurrence of the Chair of the Human Resources & Compensation
  Committee or the Audit Committee, engage outside advisors at the expense of
  the Corporation.

  

 

(G)                               Report on Executive
Compensation

 

The Corporation’s
compensation policies are designed to take into account the circumstances
surrounding the initial formation of the Corporation and generally to reward
executive officers for long term strategic management which results in the
enhancement of shareholder value.

 

Accordingly, Mr. Wade, being
the largest shareholder of the Corporation, was not awarded any stock options
and is paid a base salary which the Committee believes to be reasonable given
Mr. Wade’s responsibilities, position and experience.  Mr. Vidalin was previously awarded significant stock options in
order that Mr. Vidalin’s compensation would be commensurate with appreciation
in shareholder value and in order to ensure that Mr. Vidalin was a significant
equity holder in the Corporation.  Mr. Vidalin’s
salary is also believed by the Committee to be reasonable given Mr. Vidalin’s
responsibilities, position and experience. 
Mr. Miller is currently paid a salary the Committee believes to be fair
given Mr. Miller’s responsibilities, position and experience.  The Compensation Committee awarded bonuses
to Mr. Wade, Mr. Vidalin and Mr. Soufflet in respect of the 2002 fiscal year.

 

Submitted on behalf of the
Compensation Committee by:

 

	
  John L. Garcia, Chairman

  	
   

  	
  Pierre Dutheil

  
	
   

  	
   

  	
   

  
	
  John B. Zaozirny, Q.C.

  	
   

  	
   

  

 

(H)                               Compensation of Directors
& Attendance at Meetings

 

Each of the directors of the
Corporation (other than for Mr. Wade and Mr. Vidalin) is entitled to receive an
annual fee in the amount of US$27,500 and US$1,250 for each meeting of the
Board or Board Committee attended. 
Directors are reimbursed for their reasonable expenses incurred
attending meetings plus a travel allowance of $800 where applicable.  For the fiscal year ended December 31,
2002 the remuneration paid to the directors in aggregate was US$103,100.  (See also Statement of Corporate Governance
Practices.)

 

14

 

For the year ended
December 31 each of the directors had 100% attendance at the meetings of
the board and meetings of the committees of the board of which such director
was a member.  The number of board and
committee meetings was 10.

 

Appointment
of Auditors & Compensation of Auditors For Non-Audit Services

 

At the Annual General
Meeting of shareholders, it is proposed to appoint KPMG LLP, Chartered
Accountants, as auditors of the Corporation to hold office until the next
Annual General Meeting of shareholders at a remuneration to be fixed by the
board of directors.  KPMG LLP, Chartered
Accountants were first appointed auditors of the Corporation on May 14,
1996.  In 2002 KPMG LLP were paid fees
of approximately $263,886 of which $46,395 or 18% were in respect of non-audit
services.

 

15

 

Certificate
of the Corporation

 

Dated:  April 21, 2003

 

The foregoing contains no
untrue statement of a material fact and does not omit to state a material fact
that is required to be stated or that is necessary to make a statement not
misleading in the light of the circumstances in which it was made.

 

 

	
  (Signed)

  	
  Brooke N. Wade

  	
  (Signed)

  	
  Donald K. Miller

  
	
   

  	
  Chief Executive Officer

  	
   

  	
  Chief Financial Officer

  

 

16

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}]]